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
TeleTech Announces Third Quarter 2013 Financial Results
Press spacebar to pause and continue. Press esc to stop.