Second Quarter Revenue of
New Business Momentum Continues with
“It was a very productive quarter as we gain momentum on our growth
strategy. We continued to make investments in leadership, innovation,
global expansion and our sales and marketing,” commented
Tuchman also discussed the Company’s progress in attracting new talent
to the leadership team. “Last quarter, we brought
SECOND QUARTER 2013 FINANCIAL HIGHLIGHTS
-
Second quarter 2013 revenue was
$289.7 million compared to$288.8 million in the second quarter 2012. The increase was primarily attributable to growth in new client programs and revenue contribution from acquisitions in the customer strategy and technology services segments, partially offset by$14.4 million from the exit ofSpain . Excluding the above reduction, revenue increased approximately 5 percent on a constant currency basis over the year-ago quarter. -
Second quarter 2013 income from operations increased to
$19.7 million or 6.8 percent of revenue compared to$6.4 million or 2.2 percent of revenue in the second quarter 2012. Second quarter 2013 non-GAAP income from operations was$23.5 million or 8.1 percent of revenue compared to$23.7 million or 8.2 percent of revenue in the year-ago quarter. 2013 income from operations includes approximately$3.0 million of incremental investment related to leadership, sales and marketing and R&D. -
Income from operations for the second quarter 2013 included
$3.8 million of restructuring and impairment charges associated with the exit of certain operations as well as the restructure of the acquisitions within our Customer Strategy Services segment. Additionally, in 2013 as reported within other income and expense, we recorded a one-time charge of$3.7 million related to the deconsolidation of a subsidiary within the Customer Strategy Services segment. TeleTech’s CFORegina Paolillo commented “these charges collectively reflect the actions we have taken to fully integrate our consulting capability into a single, unified, regionally led consulting footprint. Now fully integrated and capable of representing our full suite of customer experience consulting globally, we expect this segment to improve its financial profile in the second half of 2013.” -
Second quarter 2013 fully diluted earnings per share attributable to
TeleTech shareholders increased to23 cents from10 cents in the second quarter 2012. Second quarter 2013 non-GAAP fully diluted earnings per share attributable toTeleTech shareholders increased to 35 cents from31 cents in second quarter 2012. -
During the second quarter 2013,
TeleTech signed an estimated$105 million in annualized revenue from new and expanded client relationships. Across the bookings, 73 percent was attributable to recurring revenue, 40 percent was contributed by the emerging business segments and 33 percent was from international clients.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES AND STRATEGIC ACQUISITIONS
-
As of
June 30, 2013 ,TeleTech had cash and cash equivalents of$150.6 million and$122 .5 million of total debt, resulting in a net cash position of$28.1 million . -
TeleTech had$586.2 million of additional borrowing capacity available under its revolving credit facility as ofJune 30, 2013 . In June,TeleTech secured a new$700 million , five-year, multi-currency revolving credit facility with an accordion feature that permits, under certain conditions, an increase in total commitments to$1 billion . The credit facility providesTeleTech with additional financial flexibility under more favorable terms to fund working capital, strategic acquisitions and share repurchases. -
Cash flow from operations in the second quarter 2013 was
$33.7 million compared to$34 .0 million in the second quarter 2012. -
Capital expenditures in the second quarter 2013 were
$9.6 million compared to$11.0 million in the second quarter 2012. -
TeleTech repurchased approximately 937,000 shares of common stock during the second quarter 2013 for a total cost of$21.2 million . As ofJune 30, 2013 , there was$19.4 million authorized for future share repurchases.
SEGMENT REPORTING
Customer Management Services (CMS) – Customer Experience Delivery Solutions
-
In the second quarter 2013, the CMS segment continued to make top line
progress delivering 2 percent constant currency growth versus the
prior year when adjusted for the
$14.4 million from the exit ofSpain . The segment’s ability to optimize resources and dynamically align capacity and demand contributed to a non-GAAP operating income margin of 8.7 percent compared to 7.8 percent in the year-ago quarter. -
Second quarter 2013 revenue was
$220.6 million compared to$229.4 million in the second quarter 2012 and operating income was$16.5 million or 7.5 percent versus$0.7 million or 0.3 percent. The 2012 operating income included significantly higher restructure charges related to the exit ofSpain .
Customer Growth Services (CGS) – Technology-Enabled Revenue Generation Solutions
-
The CGS segment continues to progress in transforming its solution
portfolio. In the quarter CGS was impacted by a delay in a significant
integrated solution ramp for which the revenue generation component
will now launch in the third quarter 2013. Additionally, a large
client unexpectedly discontinued one of its products. The Company
expects the expanded capabilities of its pending acquisition of
WebMetro, a top digital marketing firm, to accelerate the segment’s
multichannel customer acquisition strategy. (See related press release
–
TeleTech Expands its End-to-End Revenue Generation Portfolio through the Acquisition of WebMetro) -
CGS second quarter 2013 revenue was
$22.4 million compared to$24.4 million in the second quarter 2012 and the loss from operations was$614 thousand versus operating income of$1 .1 million in the year-ago quarter.
Customer Technology Services (CTS) – Hosted and Managed Technology Solutions
-
CTS continued to execute its growth and investment strategy. Revenue
grew 46.8 percent in the second quarter 2013 compared to the second
quarter 2012. While the acquisition of TSG on
December 31, 2012 is a primary source of the sequential growth, the remainder of the business continues to grow, including momentum in closing new business related to the evolving cloud portfolio. -
CTS second quarter 2013 revenue was
$36.6 million compared to$25.0 million in the year-ago quarter. Income from operations was$5.8 million or 15.9 percent compared to$4.4 million or 17.5 percent in the year-ago quarter. The decrease in operating margin is primarily related to the amortization expense from the TSG acquisition.
Customer Strategy Services (CSS) – Customer Experience Strategy and Data Analytics Solutions
-
In the first half of 2013, the CSS segment was reorganized to reflect
a full integration of the recent consulting acquisitions including
Peppers & Rogers , iKnowtion and Guidon. The Company expects the integrated platform and related resource paring, which has prompted certain restructure and impairment charges, to enable both top-line growth and resource optimization. This is anticipated to result in improved financial performance in the second half of 2013. -
CSS second quarter 2013 revenue of
$10.0 million is flat to the year-ago quarter and the loss from operations of$2.0 million , including$1.1 million of restructuring and impairment charges compared to income from operations in the year-ago quarter of$0.3 million .
BUSINESS OUTLOOK
-
Revenue is expected to grow between 4.5 percent and 6.5 percent to
$1.215 and$1 .240 billion. - Operating margin is expected to range between 9.25 percent and 9.5 percent before asset impairment, restructuring or acquisition-related charges.
-
Capital expenditures are expected to range between
$50 million and $60 million with 70 percent expected to support growth initiatives.
SEC FILINGS
The company’s filings with the
CONFERENCE CALL
A conference call and webcast with management will be held on
NON-GAAP FINANCIAL MEASURES
To supplement the Company's consolidated financial statements presented
in accordance with generally accepted accounting principles (GAAP) in
ABOUT
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 HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (unaudited) |
||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue | $ | 289,692 | $ | 288,798 | $ | 578,075 | $ | 581,452 | ||||||||
Operating Expenses: | ||||||||||||||||
Cost of services | 208,809 | 209,121 | 417,041 | 421,016 | ||||||||||||
Selling, general and administrative | 46,168 | 45,709 | 91,915 | 93,844 | ||||||||||||
Depreciation and amortization | 11,263 | 10,229 | 21,818 | 20,345 | ||||||||||||
Restructuring charges, net | 2,572 | 16,296 | 3,423 | 18,254 | ||||||||||||
Impairment losses | 1,205 | 997 | 1,205 | 2,797 | ||||||||||||
Total operating expenses | 270,017 | 282,352 | 535,402 | 556,256 | ||||||||||||
Income From Operations | 19,675 | 6,446 | 42,673 | 25,196 | ||||||||||||
Other income (expense) | (3,099 | ) | (1,470 | ) | (5,103 | ) | (1,550 | ) | ||||||||
Income Before Income Taxes | 16,576 | 4,976 | 37,570 | 23,646 | ||||||||||||
(Provision for) benefit from income taxes | (3,854 | ) | 1,272 | (6,245 | ) | (581 | ) | |||||||||
Net Income | 12,722 | 6,248 | 31,325 | 23,065 | ||||||||||||
Net income attributable to noncontrolling interest | (407 | ) | (925 | ) | (1,049 | ) | (1,861 | ) | ||||||||
Net Income Attributable to TeleTech Stockholders | $ | 12,315 | $ | 5,323 | $ | 30,276 | $ | 21,204 | ||||||||
Net Income Per Share Attributable to TeleTech Stockholders | ||||||||||||||||
Basic | $ | 0.24 | $ | 0.10 | $ | 0.58 | $ | 0.38 | ||||||||
Diluted | $ | 0.23 | $ | 0.10 | $ | 0.57 | $ | 0.37 | ||||||||
Income From Operations Margin | 6.8 | % | 2.2 | % | 7.4 | % | 4.3 | % | ||||||||
Net Income Attributable to TeleTech Stockholders Margin | 4.3 | % | 1.8 | % | 5.2 | % | 3.6 | % | ||||||||
Effective Tax Rate | 23.3 | % | (25.6 | )% | 16.6 | % | 2.5 | % | ||||||||
Weighted Average Shares Outstanding | ||||||||||||||||
Basic | 51,861 | 55,125 | 52,104 | 55,809 | ||||||||||||
Diluted | 52,628 | 55,712 | 52,912 | 56,558 | ||||||||||||
TELETECH HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||
SEGMENT INFORMATION | |||||||||||||||
(In thousands) | |||||||||||||||
(unaudited) | |||||||||||||||
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue: | |||||||||||||||
Customer Management Services | $ | 220,641 | $ | 229,401 | $ | 443,223 | $ | 464,277 | |||||||
Customer Growth Services | 22,399 | 24,409 | 45,255 | 47,173 | |||||||||||
Customer Technology Services | 36,644 | 24,956 | 70,206 | 50,508 | |||||||||||
Customer Strategy Services | 10,008 | 10,032 | 19,391 | 19,494 | |||||||||||
Total | $ | 289,692 | $ | 288,798 | $ | 578,075 | $ | 581,452 | |||||||
Income (Loss) From Operations: | |||||||||||||||
Customer Management Services | $ | 16,460 | $ | 730 | $ | 37,191 | $ | 17,437 | |||||||
Customer Growth Services | (614 | ) | 1,052 | 662 | (1,078 | ) | |||||||||
Customer Technology Services | 5,819 | 4,356 | 8,717 | 8,035 | |||||||||||
Customer Strategy Services | (1,990 | ) | 308 | (3,897 | ) | 802 | |||||||||
Total | $ | 19,675 | $ | 6,446 | $ | 42,673 | $ | 25,196 | |||||||
TELETECH HOLDINGS, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(In thousands) | ||||||
June 30, | December 31, | |||||
2013 | 2012 | |||||
(unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 150,623 | $ | 164,485 | ||
Accounts receivable, net | 244,823 | 251,206 | ||||
Other current assets | 73,948 | 87,853 | ||||
Total current assets |
469,394 | 503,544 | ||||
Property and equipment, net | 108,523 | 112,276 | ||||
Other assets | 232,721 | 231,353 | ||||
Total assets | $ | 810,638 | $ | 847,173 | ||
LIABILITIES AND EQUITY | ||||||
Total current liabilities | $ | 160,310 | $ | 171,405 | ||
Other long-term liabilities | 176,628 | 175,431 | ||||
Total equity | 473,700 | 500,337 | ||||
Total liabilities and equity | $ | 810,638 | $ | 847,173 | ||
TELETECH HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (In thousands, except per share data) (unaudited) |
||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Reconciliation of Gross Margin: | ||||||||||||||||
Revenue | $ | 289,692 | $ | 288,798 | $ | 578,075 | $ | 581,452 | ||||||||
Cost of services | 208,809 | 209,121 | 417,041 | 421,016 | ||||||||||||
Gross margin | $ | 80,883 | $ | 79,677 | $ | 161,034 | $ | 160,436 | ||||||||
Gross margin percentage | 27.9 | % | 27.6 | % | 27.9 | % | 27.6 | % | ||||||||
Reconciliation of EBIT & EBITDA: | ||||||||||||||||
Net Income Attributable to TeleTech stockholders | $ | 12,315 | $ | 5,323 | $ | 30,276 | $ | 21,204 | ||||||||
Interest income | (575 | ) | (695 | ) | (1,244 | ) | (1,455 | ) | ||||||||
Interest expense | 1,911 | 1,583 | 3,776 | 2,681 | ||||||||||||
Provision for (benefit from) income taxes | 3,854 | (1,272 | ) | 6,245 | 581 | |||||||||||
EBIT | $ | 17,505 | $ | 4,939 | $ | 39,053 | $ | 23,011 | ||||||||
Depreciation and amortization | 11,263 | 10,229 | 21,818 | 20,345 | ||||||||||||
EBITDA | $ | 28,768 | $ | 15,168 | $ | 60,871 | $ | 43,356 | ||||||||
Reconciliation of Free Cash Flow: | ||||||||||||||||
Cash Flow From Operating Activities: | ||||||||||||||||
Net income | $ | 12,722 | $ | 6,248 | $ | 31,325 | $ | 23,065 | ||||||||
Adjustments to reconcile net income to net cash | ||||||||||||||||
provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 11,263 | 10,229 | 21,818 | 20,345 | ||||||||||||
Other | 9,732 | 17,516 | (12,932 | ) | 5,247 | |||||||||||
Net cash provided by operating activities | 33,717 | 33,993 | 40,211 | 48,657 | ||||||||||||
Less - Total Capital Expenditures | 9,555 | 10,994 | 13,660 | 17,368 | ||||||||||||
Free Cash Flow | $ | 24,162 | $ | 22,999 | $ | 26,551 | $ | 31,289 | ||||||||
Reconciliation of Non-GAAP Income from Operations: | ||||||||||||||||
Income from Operations | $ | 19,675 | $ | 6,446 | $ | 42,673 | $ | 25,196 | ||||||||
Restructuring charges, net | 2,572 | 16,296 | 3,423 | 18,254 | ||||||||||||
Impairment losses | 1,205 | 997 | 1,205 | 2,797 | ||||||||||||
Acquisition-related expenses | - | - | - | 159 | ||||||||||||
Non-GAAP Income from Operations | $ | 23,452 | $ | 23,739 | $ | 47,301 | $ | 46,406 | ||||||||
Reconciliation of Non-GAAP EPS: | ||||||||||||||||
Net Income Attributable to TeleTech stockholders | $ | 12,315 | $ | 5,323 | $ | 30,276 | $ | 21,204 | ||||||||
Add: Asset impairment and restructuring charges, net of related taxes | 2,527 | 10,843 | 3,121 | 13,278 | ||||||||||||
Add: Acquisition-related expenses, net of related taxes | - | - | - | 95 | ||||||||||||
Add: Deconsolidation of subsidiary | 3,556 | - | 3,556 | - | ||||||||||||
Add: Changes in judgement for uncertain tax positions recorded in prior periods | (231 | ) | 1,016 | (1,509 | ) | (537 | ) | |||||||||
Non-GAAP Net Income Attributable to TeleTech stockholders | $ | 18,167 | $ | 17,182 | $ | 35,444 | $ |
34,040 |
||||||||
Diluted shares outstanding | 52,628 | 55,712 | 52,912 | 56,558 | ||||||||||||
Non-GAAP EPS Attributable to TeleTech stockholders | $ | 0.35 | $ | 0.31 | $ | 0.67 | $ | 0.60 | ||||||||
Reconciliation of Non-GAAP EBITDA: | ||||||||||||||||
Net Income Attributable to TeleTech stockholders | $ | 12,315 | $ | 5,323 | $ | 30,276 | $ | 21,204 | ||||||||
Interest income | (575 | ) | (695 | ) | (1,244 | ) | (1,455 | ) | ||||||||
Interest expense | 1,911 | 1,583 | 3,776 | 2,681 | ||||||||||||
Provision for (benefit from) income taxes | 3,854 | (1,272 | ) | 6,245 | 581 | |||||||||||
Depreciation and amortization | 11,263 | 10,229 | 21,818 | 20,345 | ||||||||||||
Asset impairment and restructuring charges | 3,777 | 17,293 | 4,628 | 21,051 | ||||||||||||
Acquisition-related expenses | - | - | - | 159 | ||||||||||||
Equity-based compensation expenses | 3,386 | 3,457 | 6,577 | 6,845 | ||||||||||||
Non-GAAP EBITDA | $ | 35,931 | $ | 35,918 | $ | 72,076 | $ | 71,411 | ||||||||
TELETECH HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
SEGMENT INFORMATION | ||||||||||||||
(In thousands) | ||||||||||||||
Three months ended | ||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||
2012 | 2012 | 2012 | 2012 | |||||||||||
Revenue: | ||||||||||||||
Customer Management Services | $ | 234,876 | $ | 229,401 | $ | 224,041 | $ | 235,456 | ||||||
Customer Growth Services | 22,764 | 24,409 | 28,200 | 25,399 | ||||||||||
Customer Technology Services | 25,552 | 24,956 | 22,343 | 23,997 | ||||||||||
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 Services | $ | 16,707 | $ | 730 | $ | 21,001 | $ | 21,833 | ||||||
Customer Growth Services | (2,130 | ) | 1,052 | 2,487 | 849 | |||||||||
Customer Technology Services | 3,679 | 4,356 | 3,054 | 4,625 | ||||||||||
Customer Strategy Services | 494 | 308 | 819 | (1,319 | ) | |||||||||
Total | $ | 18,750 | $ | 6,446 | $ | 27,361 | $ | 25,988 | ||||||
Source:
TeleTech Holdings, Inc.
Investor Contact
Paul
Miller, 303-397-8641
or
Media Contact
Jeanna
Blatt, 303-397-8507