10-Q
TTEC HOLDINGS, INC. filed this Form 10-Q on 11/07/2018
Entire Document
 

Other Income (Expense)

Included in the three months ended September 30, 2018 was a $0.6 million gain related to the quarterly royalty payment for the June 30, 2017 divestiture of TSG.

Included in the three months ended September 30, 2017 was a $3.2 million gain related to the dissolution of a foreign entity and a release of its cumulative translation adjustment.

For further information on the above items, see Part I. Item 1. Financial Statements, Note 2 to the Consolidated Financial Statements.

Income Taxes

The effective tax rate for the three months ended September 30, 2018 was 21.9%. This compares to an effective tax rate of 11.7% for the comparable period of 2017. The effective tax rate for the three months ended September 30, 2018 was influenced by earnings in international jurisdictions currently under an income tax holiday and the distribution of income between the U.S. and international tax jurisdictions. Without $0.7 million of benefit from restructuring expenses, $0.2 million of expense related to return to provision adjustments, $1.1 million of benefit related to the release of a tax contingency, and $0.1 million of other benefit, the Company’s effective tax rate for the third quarter of 2018 would have been 26.8%.

Results of Operations

Nine months ended September 30, 2018 compared to nine months ended September 30, 2017

The tables included in the following sections are presented to facilitate an understanding of Management’s Discussion and Analysis of Financial Condition and Results of Operations and present certain information by segment for the nine months ended September 30, 2018 and 2017 (in thousands). All intercompany transactions between the reported segments for the periods presented have been eliminated.

Customer Management Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

    

2018

    

2017

    

$ Change

    

% Change

 

Revenue

 

$

817,214

 

$

798,508

 

$

18,706

 

2.3

%

Operating Income

 

 

25,627

 

 

43,804

 

 

(18,177)

 

(41.5)

%

Operating Margin

 

 

3.1

%  

 

5.5

%  

 

 

 

 

 

 

The increase in revenue for the Customer Management Services segment was attributable to a $95.7 million net increase in organic and inorganic client programs including Connextions and Motif, a $4.8 million increase related to the adoption of ASC 606 for revenue recognition offset by a $2.8 million decrease due to foreign currency fluctuations and program completions of $79.0 million. 

The operating income as a percentage of revenue decreased to 3.1% for the nine months ended September 30, 2018 as compared to 5.5% in the prior period. The operating margin declined primarily due to an increase in U.S. related labor costs and increased launch costs associated with the higher new business volumes and a $3.2 million increase in amortization related to the acquisitions. Investments in strategy, rebranding, product development, marketing programs and incremental sales resources also negatively affected operating income as similar expenses were not in the same period during 2017. These were offset by the acquisitions, a $3.9 million increase related to the adoption of ASC 606 and a $4.8 million positive benefit due to foreign currency fluctuations. Included in the operating income was amortization expense related to acquired intangibles of $6.2 million and $3.0 million for the nine months ended September 30, 2018 and 2017, respectively.

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