TeleTech Announces Third Quarter 2013 Financial Results

           TeleTech Announces Third Quarter 2013 Financial Results

Non-GAAP Revenue of $305 million and Non-GAAP Fully Diluted EPS of 41 Cents

(Adjusted for Negative Foreign Currency Translation and Non-Recurring Items);

Third Quarter Revenue of $297 Million and Fully Diluted EPS of 34 Cents;

Updated Full-year 2013 Revenue and Operating Margin Guidance

PR Newswire

DENVER, Oct. 30, 2013

DENVER, Oct. 30, 2013 /PRNewswire/ --TeleTech Holdings, Inc. (NASDAQ: TTEC),
a leading global provider of data-driven, technology-enabled customer
engagement solutions, today announced financial results for the third quarter
ended September 30, 2013. The Company also filed its Quarterly Report on Form
10-Q with the Securities and Exchange Commission for the quarter ended
September 30, 2013.

"We continue to make progress executing our strategy. While our results this
quarter were impacted by certain external factors, most notably a negative
impact from foreign currency translation, we are encouraged by the progress in
our emerging businesses. These businesses showed meaningful improvement with
CSS and CTS delivering double-digit revenue and operating margin growth. We
signed $80 million in new business including attracting 15 new clients to our
growing roster of leading global brands. The acquisition of WebMetro was
completed and is being integrated into our CGS segment. We continued to
deliver early returns to shareholders and repurchased an additional 857
thousand shares at a cost of $20.6 million in the quarter.Cash flows from
operations were a strong $36 million in the quarter. Our normalized operating
margin, adjusted for foreign exchange and other non-recurring items, was
9.8%," commented Ken Tuchman, chairman and chief executive officer of
TeleTech.

THIRD QUARTER 2013 FINANCIAL HIGHLIGHTS

Revenue

  oThird quarter 2013 revenue was $297.0 million compared to $286.3 million
    in the third quarter of 2012.
  oAdjusted revenue was $305 million reflecting $6.9 million in foreign
    currency translation and $1.2million in non-recurring items. This
    represents a 6.9% growth rate over the year-ago period when adjusted for
    $5.2 million in exited business from Spain.

Income from Operations

  oThird quarter 2013 income from operations was $26.0 million or 8.7 percent
    of revenue compared to $27.4 million or 9.6 percent of revenue in the
    third quarter 2012. This change was primarily due to foreign currency
    translation, incremental investment, and other non-recurring items, but
    was partially offset by increases in capacity utilization and income
    related to acquisitions.
  oAdjusted income from operations was $29.9 million or 9.8 percent of
    revenue reflecting $2.3million of foreign currency translation and $1.6
    million in other non-recurring items. This compares to $29.8 million or
    10.3 percent of revenue in the year-ago quarter.

Earnings Per Share

  oThird quarter 2013 fully diluted earnings per share attributable to
    TeleTech shareholders was 34cents from 52 cents in the third quarter
    2012, which included a one-time significant tax benefit of 16.2 cents in
    the year-ago period.
  oFully diluted earnings per share, adjusted for 3.3cents of foreign
    currency translation and 4.0cents of non-recurring items, increased to
    41cents from 39 cents in third quarter 2012.

Bookings

  oDuring the third quarter 2013, TeleTech signed an estimated $80 million in
    annualized revenue from new and expanded client relationships. The
    bookings mix included approximately 80 percent from existing clients, 66
    percent in recurring revenue, 50 percent from emerging businesses and 20
    percent from international clients.

STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES AND
STRATEGIC ACQUISITIONS

  oAs of September 30, 2013, TeleTech had cash and cash equivalents of $144.9
    million and $129.4million of total debt, resulting in a net cash position
    of $15.5 million.
  oAs of September 30, 2013, TeleTech had $578.5 million of additional
    borrowing capacity available under its revolving credit facility.
  oCash flow from operations in the third quarter 2013 was $36.4 million
    compared to $14.8million in the third quarter 2012.
  oCapital expenditures in the third quarter 2013 were $18.2 million compared
    to $15.8 million in the third quarter 2012.
  oTeleTech repurchased approximately 857,000 shares of common stock during
    the third quarter 2013 for a total cost of $20.6 million. As of September
    30, 2013, $23.8 million was authorized for future share repurchases.

SEGMENT REPORTING

TeleTech reports financial results for the following four business segments:
Customer Management Services (CMS), Customer Growth Services (CGS), Customer
Technology Services (CTS) and Customer Strategy Services (CSS). Financial
highlights for the segments are provided below.

Customer Management Services (CMS) – Customer Experience Delivery Solutions

  oIn the third quarter 2013, the CMS segment revenue was $217 million from
    $224 million in the year-ago quarter. Adjusted for $6.4 million of
    foreign currency translation, $5.2 million related to the exit from Spain,
    and $1.2 million from other non-recurring items, revenue grew 2.4 percent.
  oOperating income was $17.9 million or 8.3 percent compared to $21.0
    million or 9.4percent in the year-ago quarter. Adjusted operating income
    margin was 9.9 percent reflecting $2.3 million of foreign currency
    translation and $1.5 million of non-recurring items.

Customer Growth Services (CGS) – Technology-Enabled Revenue Generation
Solutions

  oCGS third quarter 2013 revenue was $25.9 million compared to $28.2 million
    in the year-ago quarter. Income from operations was $0.6 million or 2.3
    percent versus $2.5million or 8.8percent.

Customer Technology Services (CTS) – Hosted and Managed Technology Solutions

  oCTS third quarter 2013 revenue was $40.6 million compared to $22.3 million
    in the year-ago quarter. Income from operations was $5.2 million or 12.7
    percent compared to $3.1 million or 13.7 percent in the year-ago quarter.
    The change in operating margin is primarily related to the amortization
    expense from the TSG acquisition, which represented 1.6 percent of
    revenue, and investments in the cloud platform and sales channel.

Customer Strategy Services (CSS) – Customer Experience Strategy and Data
Analytics Solutions

  oCSS third quarter 2013 revenue grew 14.8 percent to $13.4 million from
    $11.7 million in the year-ago quarter. Income from operations grew to
    $2.3 million or 16.9 percent of revenue from $0.8 million in the same
    period last year.

BUSINESS OUTLOOK

"Based on our expectation that current foreign currency trends extend into the
fourth quarter, in combination with temporary delays in four sizable client
ramps and the decision to reduce certain unprofitable seasonal volumes, we are
updating our guidance," commented Regina Paolillo, executive vice president
and chief financial officer of TeleTech.

Updated full-year 2013 guidance is as follows:

  oRevenue is expected to range between $1.175 and $1.185billion.
  oOperating margin is expected to range between 8.75 percent and 9.00
    percent before asset impairment, restructuring or acquisition-related
    charges.
  oCapital expenditures are expected to range between $50 million and $55
    million with 70 percent expected to support growth initiatives.

SEC FILINGS

The company's filings with the Securities and Exchange Commission are
available in the "Investors" section of TeleTech's website, which can be found
at www.teletech.com.

CONFERENCE CALL

A conference call and webcast with management will be held on Thursday,
October 31, 2013 at 8:30 a.m. Eastern Time. You are invited to join a live
webcast of the conference call by visiting the "Investors" section of the
TeleTech website at www.teletech.com. If you are unable to participate during
the live webcast, a replay will be available on the TeleTech website through
Thursday, November 14, 2013.

NON-GAAP FINANCIAL MEASURES

To supplement the Company's consolidated financial statements presented in
accordance with generally accepted accounting principles (GAAP) in the United
States, the Company uses the following Non-GAAP financial measures: Free Cash
Flow, Non-GAAP Revenue, Non-GAAP Income from Operations, Non-GAAP EBITDA and
Non-GAAP EPS. TeleTech believes that providing these Non-GAAP financial
measures provides investors with greater transparency to the information used
by TeleTech's management in its financial and operational decision making and
allows investors to see TeleTech's results "through the eyes" of management.
TeleTech also believes that providing this information better enables
TeleTech's investors to understand its operating performance and information
used by management to evaluate and measure such performance. These financial
measures are not intended to be used in isolation or as a substitute for the
financial information prepared and presented in accordance with GAAP. A
reconciliation of these Non-GAAP financial measures is available in the
financial tables attached to this press release. We also encourage all
investors to read TeleTech's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2013.

ABOUT TELETECH

TeleTech, founded in 1982, is a leading global provider of data-driven,
technology-enabled services that puts customer engagement at the core of
business success. The Company offers an integrated platform that combines
analytics, strategy, process, systems integration, technology and operations
to simplify the delivery of the customer experience for Global 1000 clients
and their customers. This holistic multichannel approach improves customer
satisfaction, increases customer loyalty and drives long-term profitability
and growth. From strategic consulting to operational execution, TeleTech's
more than 39,000 employees deliver results for clients in the automotive,
communications and media, financial services, government, healthcare,
technology, transportation and retail industries. Through the TeleTech
Community Foundation, the Company leverages its innovative leadership to
ensure that students in underserved communities around the globe have access
to the tools and support they need to maximize their educational outcomes. For
additional information, please visit www.TeleTech.com

FORWARD-LOOKING STATEMENTS

Statements in this press release that relate to future results and events
(including statements about future financial and operating performance) are
forward-looking statements based on TeleTech's current expectations. Actual
results and events in future periods could differ materially from those
projected in these forward-looking statements because of a number of risks and
uncertainties including: achieving estimated revenue from new, renewed and
expanded client business as volumes may not materialize as forecasted,
especially due to the global economic slowdown; the ability to close and ramp
new business opportunities that are currently being pursued or that are in the
final stages with existing and/or potential clients; our ability to execute
our growth plans, including the successful integration of acquired companies
and the sales of new products; the possibility of lower revenue or price
pressure from our clients experiencing a business downturn or merger in their
business; greater than anticipated competition in the customer management
industry, causing adverse pricing and more stringent contractual terms; risks
associated with losing or not renewing client relationships, particularly
large client agreements, or early termination of a client agreement; the risk
of losing clients due to consolidation in the industries we serve; consumers'
concerns or adverse publicity regarding our clients' products; our ability to
find cost-effective locations, obtain favorable lease terms and build or
retrofit facilities in a timely and economic manner; risks associated with
business interruption due to weather, fires, pandemic, or terrorist-related
events; risks associated with attracting and retaining cost-effective labor at
our delivery centers; the possibility of asset impairments and restructuring
charges; risks associated with changes in foreign currency exchange rates;
economic or political changes affecting the countries in which we operate;
changes in accounting policies and practices promulgated by standard setting
bodies; new legislation or government regulation that adversely impacts our
tax obligations, healthcare costs or the customer management industry; service
interruptions, security threats or other disruptions at our facilities
relating to our computer and telecommunications equipment and software
systems; our ability to develop and protect our intellectual property and
contractual rights and avoid infringement; disruptions in the supply chain of
the Customer Technology Services segment; risks associated with unauthorized
disclosure of sensitive or confidential client and customer data; compliance
with credit facility covenant restrictions; and our ability to obtain
financing and manage counterparty credit risks from financial institutions. A
detailed discussion of these and other risk factors that could affect our
results is included in TeleTech's SEC filings, including its Annual Report on
Form 10-K for the year ended December 31, 2012. The Company's filings with
the Securities and Exchange Commission are available in the "Investors"
section of TeleTech's website, which is located at www.teletech.com. All
information in this release is as of October 30, 2013. The Company undertakes
no duty to update any forward-looking statement to conform the statement to
actual results or changes in the Company's expectations.



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
                                Three months ended      Nine months ended
                                September 30,          September 30,
                                2013        2012        2013        2012
Revenue                         $296,995    $286,268    $875,070    $867,720
Operating Expenses:
  Cost of services              208,648     201,766     625,689     622,782
  Selling, general and          50,165      43,845      142,080     137,689
  administrative
  Depreciation and              11,463      10,695      33,281      31,040
  amortization
  Restructuring charges, net    758         2,440       4,181       20,694
  Impairment losses             -           161         1,205       2,958
 Total operating        271,034     258,907     806,436     815,163
expenses
Income From Operations          25,961      27,361      68,634      52,557
  Other income (expense)        (434)       (1,252)     (5,537)     (2,802)
Income Before Income Taxes      25,527      26,109      63,097      49,755
  (Provision for) benefit from  (6,358)     3,611       (12,603)    3,030
  income taxes
Net Income                      19,169      29,720      50,494      52,785
  Net income attributable to    (1,526)     (1,291)     (2,575)     (3,152)
  noncontrolling interest
Net Income Attributable to      $ 17,643   $ 28,429   $ 47,919   $ 49,633
TeleTech Stockholders
Net Income Per Share Attributable to
TeleTech Stockholders
  Basic                         $   0.35  $   0.53  $   0.93  $   0.90
  Diluted                       $   0.34  $   0.52  $   0.91  $   0.89
Income From Operations Margin   8.7%        9.6%        7.8%        6.1%
Net Income Attributable to      5.9%        9.9%        5.5%        5.7%
TeleTech Stockholders Margin
Effective Tax Rate              24.9%       (13.8)%     20.0%       (6.1)%
Weighted Average Shares
Outstanding
 Basic                         50,732      54,093      51,643      55,233
 Diluted                       51,678      54,905      52,499      55,991



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(unaudited)
                                Three months ended    Nine months ended
                                September 30,        September 30,
                                2013       2012       2013       2012
Revenue:
Customer Management Services    $217,035   $224,041   $660,258   $688,318
Customer Growth Services        25,893     28,200     71,148     75,373
Customer Technology Services    40,649     22,343     110,855    72,851
Customer Strategy Services      13,418     11,684     32,809     31,178
Total                           $296,995   $286,268   $875,070   $867,720
Income (Loss) From Operations:
Customer Management Services    $ 17,944  $ 21,001  $ 55,135  $ 38,438
Customer Growth Services        588        2,487      1,250      1,409
Customer Technology Services    5,165      3,054      13,882     11,089
Customer Strategy Services      2,264      819        (1,633)    1,621
Total                           $ 25,961  $ 27,361  $ 68,634  $ 52,557



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
                              September 30,     December 31,
                              2013               2012
                              (unaudited)
ASSETS
Current assets:
 Cash and cash equivalents  $     144,903  $     164,485
 Accounts receivable, net   245,080            251,206
 Other current assets       77,026             87,853
 Total current assets    467,009            503,544
Property and equipment, net   120,111            112,276
Other assets                  251,249            231,353
Total assets                  $     838,369  $     847,173
LIABILITIES AND EQUITY
Total current liabilities     $     178,998  $     171,405
Other long-term liabilities   188,000            175,431
Total equity                  471,371            500,337
Total liabilities and equity  $     838,369  $     847,173



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(unaudited)
                                  Three months ended      Nine months ended
                                  September 30,           September 30,
                                  2013       2012         2013       2012
Reconciliation of Revenue:
Revenue                           $296,995   $286,268     $875,070   $867,720
 Changes due to foreign         6,886      4,451        3,949      17,702
currency fluctuations
 Lost revenue from typhoon      1,216      -            1,216      -
Non-GAAP Revenue                  $305,097   $290,719     $880,235   $885,422
Reconciliation of Gross Margin:
Non-GAAP Revenue                  $305,097   $290,719     $880,235   $885,422
Cost of services                  208,648    201,766      625,689    622,782
 Adjustments related to         4,939      4,575        1,769      16,012
Non-GAAP revenue adjustments
Non-GAAP Gross margin             $ 91,510  $ 84,378    $252,777   $246,628
NON-GAAP Gross margin percentage  30.0%      29.0%        28.7%      27.9%
Reconciliation of EBIT & EBITDA:
Net Income Attributable to        $ 17,643  $ 28,429    $ 47,919  $ 49,633
TeleTech stockholders
Interest income                   (938)      (780)        (2,182)    (2,235)
Interest expense                  1,799      2,129        5,567      4,810
Provision for (benefit from)      6,358      (3,611)      12,603     (3,030)
income taxes
EBIT                              $ 24,862  $ 26,167    $ 63,907  $ 49,178
Depreciation and amortization     11,463     10,695       33,281     31,040
EBITDA                            $ 36,325  $ 36,862    $ 97,188  $ 80,218
Reconciliation of Free Cash
Flow:
Cash Flow From Operating
Activities:
 Net income                     $ 19,169  $ 29,720    $ 50,494  $ 52,785
 Adjustments to reconcile net
income to net cash provided by
operating activities:
 Depreciation and        11,463     10,695       33,281     31,040
amortization
 Other                   5,770      (25,661)     (7,162)    (20,414)
 Net cash provided by           36,402     14,754       76,613     63,411
operating activities
Less - Total Capital              18,172     15,781       31,832     33,149
Expenditures
Free Cash Flow                    $ 18,230  $  (1,027)  $ 44,781  $ 30,262
Reconciliation of Non-GAAP
Income from Operations:
Income from Operations            $ 25,961  $ 27,361    $ 68,634  $ 52,557
Restructuring charges, net        758        2,440        4,181      20,694
Impairment losses                 -          161          1,205      2,958
Net affect of foreign currency    2,343      (124)        2,576      1,690
fluctuations
Net affect of revenue lost from   820        -            820        -
typhoon
Acquisition-related expenses      -          -            -          159
Non-GAAP Income from Operations   $ 29,882  $ 29,838    $ 77,416  $ 78,058
Reconciliation of Non-GAAP EPS:
Net Income Attributable to        $ 17,643  $ 28,429    $ 47,919  $ 49,633
TeleTech stockholders
Add: Asset impairment and
restructuring charges, net of     501        1,835        3,616      15,097
related taxes
Add: Acquisition-related         -          -            -          95
expenses, net of related taxes
Add: Deconsolidation of          -          -            3,556      -
subsidiary
Add: Net affect of foreign
currency fluctuations, net of     1,697      (81)         1,801      1,200
related taxes
Add: Net affect of revenue lost
from typhoon, net of related      574        -            574        -
taxes
Add: Changes in judgement for
uncertain tax positions recorded  1,000      (8,904)      (509)      (9,441)
in prior periods
Non-GAAP Net Income
Attributable to TeleTech          $ 21,415  $ 21,279    $ 56,957  $ 56,584
stockholders
 Diluted shares outstanding    51,678     54,905       52,499     55,991
Non-GAAP EPS Attributable to     $0.41      $0.39        $1.08      $1.01
TeleTech stockholders
Reconciliation of Non-GAAP
EBITDA:
Net Income Attributable to        $ 17,643  $ 28,429    $ 47,919  $ 49,633
TeleTech stockholders
 Interest income                (938)      (780)        (2,182)    (2,235)
 Interest expense               1,799      2,129        5,567      4,810
 Provision for (benefit from)   6,358      (3,611)      12,603     (3,030)
income taxes
 Depreciation and amortization  11,463     10,695       33,281     31,040
 Asset impairment and           758        2,601        5,386      23,652
restructuring charges
 Acquisition-related expenses   -          -            -          159
 Net affect of foreign          2,343      (124)        2,576      1,690
currency fluctuations
 Net affect of revenue lost     820        -            820        -
from typhoon
 Equity-based compensation      3,265      3,465        9,842      10,310
expenses
Non-GAAP EBITDA                  $ 43,511  $ 42,804    $115,812   $116,029



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
                            Three months ended
                            March 31,     June 30,      September  December
                                                          30,       31,
                            2012           2012           2012       2012
Revenue:
Customer Management         $  234,876   $  229,401   $       $    
Services                                                  224,041    235,456
Customer Growth Services    22,764         24,409         28,200     25,399
Customer Technology         25,552         24,956         22,343     23,997
Services
Customer Strategy Services  9,462          10,032         11,684     10,409
Total                       $  292,654   $  288,798   $       $    
                                                          286,268    295,261
Income (Loss) From
Operations:
Customer Management         $   16,707  $          $      $    
Services                                   730           21,001     21,833
Customer Growth Services    (2,130)        1,052          2,487      849
Customer Technology         3,679          4,356          3,054      4,625
Services
Customer Strategy Services  494            308            819        (1,319)
Total                       $   18,750  $    6,446  $      $    
                                                          27,361     25,988



(Logo: http://photos.prnewswire.com/prnh/20131017/LA99244LOGO)

SOURCE TeleTech Holdings, Inc.

Website: http://www.teletech.com/
Contact: Investor Contact, Paul Miller, 303.397.8641, Media Contact, Jeanna
Blatt, 303.397.8507
 
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