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TTEC Announces Record Third Quarter 2020 Financial Results

·16 min read

Revenue was $493.0 Million, Representing 24.6 Percent Growth

Operating Income was $53.4 Million or 10.8 Percent of Revenue

($55.6 Million or 11.3 Percent Non-GAAP)

Net Income was $21.4 Million ($42.4 Million Non-GAAP)

Adjusted EBITDA was $77.2 Million or 15.7 Percent of Revenue

Fully Diluted EPS was $0.45 ($0.90 Non-GAAP)

Signs Bookings of $170 Million

Raises Outlook for Full Year 2020

DENVER, Nov. 4, 2020 /PRNewswire/ -- TTEC Holdings, Inc. (NASDAQ: TTEC), a leading global Customer Experience as a Service (CXaaS) partner for many of the world's most iconic and disruptive brands, today announced financial results for the third quarter and nine months ended September 30, 2020.

"Our record results and business pipeline reflect the heightened demand for customer experience digitization and virtualization solutions across our clients and prospects," commented Ken Tuchman, chairman and chief executive officer of TTEC. "Our ability to rapidly enable large commercial enterprise and government clients with frictionless and fully digitized employee and customer experiences has never been more critical and relevant. We continue to build sustainable momentum with our agile operating model and proprietary Humanify® Cloud Technology Platform."

Tuchman continued, "Our end-to-end approach to designing, building, and operating CXaaS is resonating with organizations that are handling increasingly complex, high-end and mission-critical customer engagement. The market is requiring large brands to make a rapid shift to digital first, fully virtualized customer experience. TTEC has emerged as a partner of choice in this substantial transformation for global enterprise customers."

THIRD QUARTER 2020 FINANCIAL HIGHLIGHTS

Revenue

  • Third quarter 2020 GAAP revenue increased 24.6 percent to $493.0 million compared to $395.5 million in the prior year period, or 24.1 percent growth in constant currency.

  • Foreign exchange had a $2.0 million positive impact on revenue in the third quarter 2020.

Income from Operations

  • Third quarter 2020 GAAP income from operations was $53.4 million, or 10.8 percent of revenue, compared to $26.0 million, or 6.6 percent of revenue in the prior year period.

  • Third quarter 2020 Non-GAAP income from operations, excluding $2.2 million in restructuring charges, was $55.6 million or 11.3 percent of revenue versus 6.6 percent for the prior year period.

  • Foreign exchange had a $0.8 million positive impact on income from operations in the third quarter 2020.

Adjusted EBITDA

  • Third quarter 2020 Non-GAAP Adjusted EBITDA was $77.2 million, or 15.7 percent of revenue, compared to $46.2 million, or 11.7 percent of revenue in the prior year period.

Earnings Per Share

  • Third quarter 2020 GAAP fully diluted earnings per share was $0.45 compared to $0.39 for the same period last year. The earnings per share was negatively impacted by a 32 cent non-cash charge related to the planned dissolution of a foreign subsidiary.

  • Third quarter 2020 Non-GAAP fully diluted earnings per share was $0.90 compared to $0.40 in the prior year period.

Bookings

  • During the third quarter 2020, TTEC signed an estimated $170 million in annualized contract value compared to $114 million in the prior year period. Bookings were diversified across segments, verticals, and geographies.

STRONG CASH FLOW AND BALANCE SHEET FUND INVESTMENTS AND DIVIDENDS

  • Cash flow from operations in the third quarter 2020 was $81.5 million compared to $63.1 million for the third quarter 2019.

  • Capital expenditures in the third quarter 2020 were $15.9 million compared to $16.0 million for the third quarter 2019.

  • As of September 30, 2020, TTEC had cash and cash equivalents of $135.3 million and debt of $338.3 million, resulting in a net debt position of $203.0 million. This compares to a net debt position of $133.5 million for the same period 2019.

  • As of September 30, 2020, TTEC had approximately $570 million of additional borrowing capacity available under its revolving credit facility compared to $575 million for the same period 2019.

  • Declared a 40 cent per share, or $18.7 million, semi-annual dividend on September 25, 2020, paid to shareholders on October 29, 2020, representing a 25 percent increase over the dividend paid in October 2019 and a 17.6 percent increase over the April 2020 dividend.

SEGMENT REPORTING & COMMENTARY

TTEC reports financial results for the following two segments: TTEC Digital (Digital) and TTEC Engage (Engage). Financial highlights for the segments are provided below.

TTEC Digital – Design, build and operate tech-enabled, insight-driven CX solutions

  • Third quarter 2020 GAAP revenue for TTEC Digital was $76.6 million, compared to $78.6 million for the year ago period. Revenue in the cloud and related systems integration collectively grew 13.4 percent over the year ago period. The 2.6 percent decline in total revenue is attributable to the exit of certain digital offerings as clients increasingly pivot to virtualize and digitize cloud-based solutions.

  • Income from operations was $13.0 million or 17.0 percent of revenue compared to operating income of $11.7 million or 14.9 percent of revenue for the prior year period.

  • Third quarter 2020 Non-GAAP income from operations was $13.5 million, or 17.6 percent of revenue compared to operating income of $11.8 million or 15.0 percent of revenue in the prior year period.

  • Third quarter 2020 Non-GAAP Adjusted EBITDA was $18.2 million, or 23.7 percent of revenue, compared to $15.1 million, or 19.2 percent of revenue in the prior year period.

  • Foreign exchange had a negligible impact on revenue and income from operations in the third quarter 2020.

TTEC Engage – Digitally-enabled customer acquisition, care, and fraud prevention services

  • Third quarter 2020 GAAP revenue for TTEC Engage increased 31.4 percent to $416.4 million from $316.9 million for the year ago period. Revenue growth was 30.8 percent in constant currency.

  • Income from operations was $40.4 million or 9.7 percent of revenue compared to operating income of $14.3 million or 4.5 percent of revenue for the prior year period.

  • Third quarter 2020 Non-GAAP income from operations was $42.1 million, or 10.1 percent of revenue compared to operating income of $14.4 million or 4.5 percent of revenue in the prior year period.

  • Third quarter 2020 Non-GAAP Adjusted EBITDA was $59.0 million, or 14.2 percent of revenue, compared to $31.0 million, or 9.8 percent of revenue in the prior year period.

  • Foreign exchange had a $1.9 million positive impact on revenue and $0.8 million positive impact on income from operations in the third quarter 2020.

BUSINESS OUTLOOK

"This has been an incredibly busy year met with its own unique set of challenges and opportunities, and we are extremely pleased with how we are executing across the business," commented Regina Paolillo, chief financial and administrative officer of TTEC. "We are winning in the marketplace due to the wide-range of tech-enabled services and support capabilities that our CXaaS platform delivers to clients both rapidly and reliably. It is our end-to-end differentiated offering that is resulting in year-to-date record financial results. With third quarter overperformance and strong fourth quarter revenue backlog, we are raising our full-year 2020 outlook. While we are mindful of the continued uncertainty that persists in the global economy, we are increasingly more optimistic on the ability of our business to capitalize on near and long-term CX demand."

Our raised full-year 2020 outlook, which excludes restructuring and impairment charges, is as follows:

Revenue between $1.881 and $1.893 billion, an increase between 14.5 and 15.2 percent over the prior year.

Operating Income margins between 10.1 and 10.3 percent.

  • Margins of approximately 15.2 percent for TTEC Digital and 9.2 percent for TTEC Engage

Adjusted EBITDA margins between 14.9 and 15.0 percent.

  • Margins of approximately 21.0 percent for TTEC Digital and 13.8 percent for TTEC Engage

Earnings Per Share between $2.92 and $3.02.

Capital expenditures are estimated to be between 3.1 and 3.3 percent of revenue, of which approximately 70 percent is growth oriented.

Effective tax rate for the full year is estimated between 21 and 24 percent.

Diluted share count for the full year is estimated between 46.9 and 47.1 million.

We estimate the Digital - Engage segment 2020 mix as follows:

  • Revenue: 16 percent Digital, 84 percent Engage.

  • Operating Income: 24 percent Digital, 76 percent Engage.

  • Adjusted EBITDA: 22 percent Digital, 78 percent Engage.

NON-GAAP FINANCIAL MEASURES

This press release contains a discussion of certain Non-GAAP financial measures that TTEC includes to allow investors and analysts to measure, analyze and compare its financial condition and results of operations in a meaningful and consistent manner. A reconciliation of these Non-GAAP financial measures can be found in the tables accompanying this press release.

  • GAAP metrics are presented in accordance with Generally Accepted Accounting Principles.

  • Non-GAAP - As reflected in the attached reconciliation table, the definition of Non-GAAP may exclude from operating income, EBITDA, net income and earnings per share restructuring and impairment charges, among other items.

About TTEC

TTEC Holdings, Inc. (NASDAQ: TTEC) is a leading digital customer experience (CX) technology and services company focused on the design, implementation, and delivery of transformative solutions for many of the world's most iconic and disruptive brands and government agencies. The Company delivers outcome-based customer engagement solutions through TTEC Digital, its digital consultancy that designs and builds human centric, tech-enabled, insight-driven customer experience solutions for clients and TTEC Engage, its delivery center of excellence, that operates customer acquisition, care, fraud prevention and detection, and content moderation services. Founded in 1982, the Company's 56,200 employees operate on six continents across the globe and live by a set of customer-focused values that guide relationships with clients, their customers, and each other. To learn more about how TTEC is bringing humanity to the customer experience, visit www.ttec.com.

FORWARD-LOOKING STATEMENTS

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of TTEC Holding, Inc.'s management and are subject to significant risks and uncertainties. Specifically, we would like for you to focus on risks related to COVID-19 global pandemic and the various government mandates designed to contain the pandemic, and how these risks may impact our business in the short and longer term; the risks related to our strategy execution; our ability to innovate and introduce technologies that are sufficiently disruptive to allow us to maintain and grow our market share; cybersecurity; consolidation activities undertaken by our clients; changes in laws that impact our business and our ability to comply with those and other laws governing our operations; the reliability of our information technology infrastructure and our ability to consistently deliver uninterrupted service to our clients; the need to forecast demand for services accurately and the impact of such forecasts on our capacity utilization; our ability to attract and retain qualified and skilled personnel at a price point that we can afford and our clients are willing to pay; our M&A activity, including our ability to identify, acquire and properly integrate acquired businesses in accordance with our strategy; and our equity structure including our controlling shareholder risk, and the potential volatility of our stock price resulting therefrom. Risk Factors that could cause TTEC's results to differ materially from those described in the forward-looking statements can be found in TTEC's Quarterly Report on Form 10-Q for the quarter ended on September 30, 2020 and Annual Report on Form 10-K for the year ended December 31, 2019, which has been filed with the U.S. Securities and Exchange Commission (the "SEC") and is available on TTEC's website www.ttec.com, and on the SEC's public website at www.sec.gov. TTEC Holdings, Inc. does not undertake to update any forward-looking statements.

Investor Relations Contact

Paul Miller

+1.303.397.8641

Public Relations Contact

Nick Cerise

+1.303.397.8331

Address

9197 South Peoria Street

Englewood, CO 80112

Contact

ttec.com

+1.800.835.3832

TTEC 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,




2020


2019


2020


2019











Revenue


$492,980


$395,507


$1,378,274


$1,182,378











Operating Expenses:










Cost of services


368,405


304,622


1,027,268


897,193


Selling, general and administrative


49,473


48,062


146,667


148,646


Depreciation and amortization


19,522


16,659


57,054


50,452


Restructuring and integration charges, net

1,233


183


2,564


1,572


Impairment losses


948


-


1,644


3,569

Total operating expenses


439,581


369,526


1,235,197


1,101,432











Income From Operations


53,399


25,981


143,077


80,946












Other income (expense), net


(20,852)


(806)


(31,058)


(6,870)











Income Before Income Taxes


32,547


25,175


112,019


74,076












Provision for income taxes


(8,415)


(5,196)


(29,653)


(20,007)











Net Income


24,132


19,979


82,366


54,069












Net income attributable to noncontrolling interest

(2,766)


(1,878)


(8,141)


(5,168)











Net Income Attributable to TTEC Stockholders

$ 21,366


$ 18,101


$ 74,225


$ 48,901





















Net Income Per Share




















Basic


$ 0.52


$ 0.43


$ 1.77


$ 1.17












Diluted


$ 0.51


$ 0.43


$ 1.76


$ 1.16











Net Income Per Share Attributable to TTEC Stockholders



















Basic


$ 0.46


$ 0.39


$ 1.59


$ 1.06












Diluted


$ 0.45


$ 0.39


$ 1.58


$ 1.05





















Income From Operations Margin


10.8%


6.6%


10.4%


6.8%

Net Income Margin


4.9%


5.1%


6.0%


4.6%

Net Income Attributable to TTEC Stockholders Margin

4.3%


4.6%


5.4%


4.1%

Effective Tax Rate


25.9%


20.6%


26.5%


27.0%





















Weighted Average Shares Outstanding








Basic


46,732


46,481


46,617


46,335

Diluted


47,031


46,768


46,885


46,693

TTEC HOLDINGS, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

(unaudited)





















Three months ended


Nine months ended



September 30,


September 30,



2020


2019


2020


2019










Revenue:









TTEC Digital


$ 76,571


$ 78,620


$ 231,270


$ 222,992

TTEC Engage


416,409


316,887


1,147,004


959,386

Total


$492,980


$395,507


$1,378,274


$1,182,378










Income From Operations:









TTEC Digital


$ 13,043


$ 11,704


$ 37,677


$ 27,172

TTEC Engage


40,356


14,277


105,400


53,774

Total


$ 53,399


$ 25,981


$ 143,077


$ 80,946

TTEC HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)








September 30,


December 31,



2020


2019











ASSETS





Current assets:





Cash and cash equivalents


$ 135,317


$ 82,407

Accounts receivable, net


338,263


331,096

Other current assets


158,794


136,322

Total current assets


632,374


549,825






Property and equipment, net


178,941


176,633

Other assets


665,705


650,330






Total assets


$ 1,477,020


$ 1,376,788






LIABILITIES AND EQUITY





Total current liabilities


$ 404,112


$ 363,289

Other long-term liabilities


533,693


532,846

Redeemable noncontrolling interest


53,004


48,923

Total equity


486,211


431,730






Total liabilities and equity


$ 1,477,020


$ 1,376,788

TTEC 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,







2020


2019





2020


2019



















Revenue


$492,980


$395,507





$1,378,274


$1,182,378



















Reconciliation of Adjusted EBITDA:






























Net Income


$ 24,132


$ 19,979





$ 82,366


$ 54,069




Interest income


(566)


(522)





(1,421)


(1,291)




Interest expense


2,755


4,041





15,451


13,537




Provision for income taxes


8,415


5,196





29,653


20,007




Depreciation and amortization


19,522


16,659





57,054


50,452




Asset impairment, restructuring and integration charges


2,181


183





4,208


5,141




Gain on sale of business units


(208)


(391)





(596)


(1,141)




Gain on sale of trademarks


-


(700)





-


(700)




Gain on recovery of receivables in connection with division in winddown

-


(1,416)





-


(1,416)




Changes in acquisition contingent consideration


-


-





(4,349)


(2,424)




Loss on disolution of subsidiary


17,438


-





19,905


-




Equity-based compensation expenses


3,495


3,129





9,471


9,663



















Adjusted EBITDA


$ 77,164


$ 46,158





$ 211,742


$ 145,897


































Reconciliation of Free Cash Flow:






























Cash Flow From Operating Activities:















Net income


$ 24,132


$ 19,979





$ 82,366


$ 54,069




Adjustments to reconcile net income to net cash















provided by operating activities:















Depreciation and amortization


19,522


16,659





57,054


50,452




Other


37,852


26,493





47,364


79,876




Net cash provided by operating activities


81,506


63,131





186,784


184,397



















Less - Total Cash Capital Expenditures


15,912


16,010





47,827


44,438



















Free Cash Flow


$ 65,594


$ 47,121





$ 138,957


$ 139,959


































Reconciliation of Non-GAAP Income from Operations:




























Income from Operations


$ 53,399


$ 25,981





$ 143,077


$ 80,946




Restructuring charges, net


1,233


183





2,564


1,572




Impairment losses


948


-





1,644


3,569



















Non-GAAP Income from Operations


$ 55,580


$ 26,164





$ 147,285


$ 86,087



















Non-GAAP Income from Operations Margin


11.3%


6.6%





10.7%


7.3%


































Reconciliation of Non-GAAP EPS:






























Net Income


$ 24,132


$ 19,979





$ 82,366


$ 54,069




Add: Asset restructuring and impairment charges


2,181


183





4,208


5,141




Add: Interest charge related to future purchase of remaining 30% for Motif acquisition


-


757





6,273


2,533




Less: Changes in acquisition contingent consideration


-


-





(4,349)


(2,424)




Less: Gain on sale of business units


(208)


(391)





(596)


(1,141)




Less: Gain on sale of trademarks


-


(700)





-


(700)




Less: Gain on recovery of receivable in connection with division in winddown


-


(1,416)





-


(1,416)




Add: Loss on disoluion of subsidiary


17,438


-





19,905


-




Add: Changes in valuation allowance, return to provision adjustments and other, and tax effects of items separately disclosed above


(1,100)


212





(159)


2,046



















Non-GAAP Net Income


$ 42,443


$ 18,624





$ 107,648


$ 58,108



















Diluted shares outstanding


47,031


46,768





46,885


46,693



















Non-GAAP EPS


$0.90


$0.40





$2.30


$1.24


































Reconciliation of Adjusted EBITDA by Segment:


TTEC Engage


TTEC Digital


TTEC Engage


TTEC Digital


















Q3 20


Q3 19


Q3 20

Q3 19


YTD 20


YTD 19


YTD 20

YTD 19
















Earnings before Income Taxes


$ 19,470


$ 13,470


$13,077

$11,705


$ 74,242


$ 46,769


$37,777

$27,310

Interest income / expense, net


2,223


3,528


(34)

(9)


14,132


12,247


(101)

(2)

Depreciation and amortization


15,985


14,147


3,537

2,512


46,951


42,396


10,103

8,055

Asset impairment, restructuring and integration charges


1,745


85


436

98


2,755


2,694


1,452

2,447

Gain on sale of business units


(208)


(391)


-

-


(596)


(1,141)


-

-

Gain on sale of trademarks


-


(700)


-

-


-


(700)


-

-

Gain on recovery of receivables in connection with division in winddown

-


(1,416)


-

-


-


(1,416)


-

-

Changes in acquisition contingent consideration


-


-


-

-


(4,349)


(2,424)


-

-

Loss on disolution of subsidiary


17,438


-


-

-


19,905


-


-

-

Equity-based compensation expenses


2,353


2,306


1,142

823


6,551


7,178


2,920

2,486
















Adjusted EBITDA


$ 59,006


$ 31,029


$18,158

$15,129


$ 159,591


$ 105,603


$52,151

$40,296

TTEC Logo (PRNewsfoto/TTEC Holdings, Inc.)
TTEC Logo (PRNewsfoto/TTEC Holdings, Inc.)
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SOURCE TTEC Holdings, Inc.