"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
THIRD QUARTER 2013 FINANCIAL HIGHLIGHTS
Revenue
- Third quarter 2013 revenue was
$297.0 million compared to$286.3 million in the third quarter of 2012. - Adjusted revenue was
$305 million reflecting$6.9 million in foreign currency translation and$1 .2 million 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 fromSpain .
Income from Operations
- Third 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. - Adjusted income from operations was
$29.9 million or 9.8 percent of revenue reflecting$2 .3 million 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
- Third quarter 2013 fully diluted earnings per share attributable to
TeleTech shareholders was 34 cents from52 cents in the third quarter 2012, which included a one-time significant tax benefit of16.2 cents in the year-ago period. - Fully diluted earnings per share, adjusted for 3.3 cents of foreign currency translation and 4.0 cents of non-recurring items, increased to 41 cents from
39 cents in third quarter 2012.
Bookings
- During 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
- As of
September 30, 2013 ,TeleTech had cash and cash equivalents of$144.9 million and$129 .4 million of total debt, resulting in a net cash position of$15.5 million . - As of
September 30, 2013 ,TeleTech had$578.5 million of additional borrowing capacity available under its revolving credit facility. - Cash flow from operations in the third quarter 2013 was
$36.4 million compared to$14 .8 million in the third quarter 2012. - Capital expenditures in the third quarter 2013 were
$18.2 million compared to$15.8 million in the third quarter 2012. TeleTech repurchased approximately 857,000 shares of common stock during the third quarter 2013 for a total cost of$20.6 million . As ofSeptember 30, 2013 ,$23.8 million was authorized for future share repurchases.
SEGMENT REPORTING
Customer Management Services (CMS) – Customer Experience Delivery Solutions
- In 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 fromSpain , and$1.2 million from other non-recurring items, revenue grew 2.4 percent. - Operating income was
$17.9 million or 8.3 percent compared to$21.0 million or 9.4 percent 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
- CGS 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 .5 million or 8.8 percent.
Customer Technology Services (CTS) – Hosted and Managed Technology Solutions
- CTS 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
- CSS 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
Updated full-year 2013 guidance is as follows:
- Revenue is expected to range between
$1.175 and $1 .185 billion. - Operating margin is expected to range between 8.75 percent and 9.00 percent before asset impairment, restructuring or acquisition-related charges.
- Capital 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
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 |
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 administrative |
50,165 |
43,845 |
142,080 |
137,689 |
|||||
Depreciation and amortization |
11,463 |
10,695 |
33,281 |
31,040 |
|||||
Restructuring charges, net |
758 |
2,440 |
4,181 |
20,694 |
|||||
Impairment losses |
- |
161 |
1,205 |
2,958 |
|||||
Total operating expenses |
271,034 |
258,907 |
806,436 |
815,163 |
|||||
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 income taxes |
(6,358) |
3,611 |
(12,603) |
3,030 |
|||||
Net Income |
19,169 |
29,720 |
50,494 |
52,785 |
|||||
Net income attributable to noncontrolling interest |
(1,526) |
(1,291) |
(2,575) |
(3,152) |
|||||
Net Income Attributable to TeleTech Stockholders |
$ 17,643 |
$ 28,429 |
$ 47,919 |
$ 49,633 |
|||||
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 TeleTech Stockholders Margin |
5.9% |
9.9% |
5.5% |
5.7% |
|||||
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 September 30, |
Nine months ended September 30, |
|||||||
2013 |
2012 |
2013 |
2012 |
|||||
Reconciliation of Revenue: |
||||||||
Revenue |
$296,995 |
$286,268 |
$875,070 |
$867,720 |
||||
Changes due to foreign currency fluctuations |
6,886 |
4,451 |
3,949 |
17,702 |
||||
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 Non-GAAP revenue adjustments |
4,939 |
4,575 |
1,769 |
16,012 |
||||
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 TeleTech stockholders |
$ 17,643 |
$ 28,429 |
$ 47,919 |
$ 49,633 |
||||
Interest income |
(938) |
(780) |
(2,182) |
(2,235) |
||||
Interest expense |
1,799 |
2,129 |
5,567 |
4,810 |
||||
Provision for (benefit from) income taxes |
6,358 |
(3,611) |
12,603 |
(3,030) |
||||
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 amortization |
11,463 |
10,695 |
33,281 |
31,040 |
||||
Other |
5,770 |
(25,661) |
(7,162) |
(20,414) |
||||
Net cash provided by operating activities |
36,402 |
14,754 |
76,613 |
63,411 |
||||
Less - Total Capital Expenditures |
18,172 |
15,781 |
31,832 |
33,149 |
||||
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 fluctuations |
2,343 |
(124) |
2,576 |
1,690 |
||||
Net affect of revenue lost from typhoon |
820 |
- |
820 |
- |
||||
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 TeleTech stockholders |
$ 17,643 |
$ 28,429 |
$ 47,919 |
$ 49,633 |
||||
Add: Asset impairment and restructuring charges, net of related taxes |
501 |
1,835 |
3,616 |
15,097 |
||||
Add: Acquisition-related expenses, net of related taxes |
- |
- |
- |
95 |
||||
Add: Deconsolidation of subsidiary |
- |
- |
3,556 |
- |
||||
Add: Net affect of foreign currency fluctuations, net of related taxes |
1,697 |
(81) |
1,801 |
1,200 |
||||
Add: Net affect of revenue lost from typhoon, net of related taxes |
574 |
- |
574 |
- |
||||
Add: Changes in judgement for uncertain tax positions recorded in prior periods |
1,000 |
(8,904) |
(509) |
(9,441) |
||||
Non-GAAP Net Income Attributable to TeleTech stockholders |
$ 21,415 |
$ 21,279 |
$ 56,957 |
$ 56,584 |
||||
Diluted shares outstanding |
51,678 |
54,905 |
52,499 |
55,991 |
||||
Non-GAAP EPS Attributable to TeleTech stockholders |
$0.41 |
$0.39 |
$1.08 |
$1.01 |
||||
Reconciliation of Non-GAAP EBITDA: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 17,643 |
$ 28,429 |
$ 47,919 |
$ 49,633 |
||||
Interest income |
(938) |
(780) |
(2,182) |
(2,235) |
||||
Interest expense |
1,799 |
2,129 |
5,567 |
4,810 |
||||
Provision for (benefit from) income taxes |
6,358 |
(3,611) |
12,603 |
(3,030) |
||||
Depreciation and amortization |
11,463 |
10,695 |
33,281 |
31,040 |
||||
Asset impairment and restructuring charges |
758 |
2,601 |
5,386 |
23,652 |
||||
Acquisition-related expenses |
- |
- |
- |
159 |
||||
Net affect of foreign currency fluctuations |
2,343 |
(124) |
2,576 |
1,690 |
||||
Net affect of revenue lost from typhoon |
820 |
- |
820 |
- |
||||
Equity-based compensation expenses |
3,265 |
3,465 |
9,842 |
10,310 |
||||
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 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 |
(Logo: http://photos.prnewswire.com/prnh/20131017/LA99244LOGO)
SOURCE
Investor Contact, Paul Miller, 303.397.8641, Media Contact, Jeanna Blatt, 303.397.8507