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TTEC Announces Fourth Quarter and Full Year 2019 Financial Results
Mar 4, 2020
Signs Bookings of $120 Million in the Fourth Quarter and $488 Million in 2019
Provides Outlook for Full Year 2020

Full Year 2019
Revenue was $1.644 Billion
Operating Income was $123.7 Million or 7.5 Percent of Revenue (Non-GAAP $129.2 Million or 7.9 Percent of Revenue)
Net Income was $77.2 Million ($88.4 Million Non-GAAP)
Adjusted EBITDA was $209.1 Million or 12.7 Percent of Revenue
Fully Diluted EPS was $1.65 ($1.89 Non-GAAP)

Fourth Quarter 2019
Revenue was $461.3 Million
Operating Income was $42.8 Million or 9.3 Percent of Revenue (Non-GAAP $43.1 Million or 9.3 Percent of Revenue)
Net Income was $28.3 Million ($30.3 Million Non-GAAP)
Adjusted EBITDA was $63.2 Million or 13.7 Percent of Revenue
Fully Diluted EPS was $0.60 ($0.65 Non-GAAP)
 

DENVER, March 4, 2020 /PRNewswire/ -- TTEC Holdings, Inc. (NASDAQ: TTEC), a leading digital global customer experience 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, today announced financial results for the fourth quarter and full year ended December 31, 2019.

"We delivered record revenue and profit in 2019 and overperformed against many of our internal targets," commented Ken Tuchman, chairman and chief executive officer of TTEC. "Our journey over the past decade has included significant investments to grow our overall portfolio of technology-rich CX solutions, culminating in a set of integrated capabilities that today allows TTEC to deliver everything from management consulting to recurring technology services and outcome based operational execution. This has optimized our access to the highest growing areas within the customer experience ecosystem. The current CX market tailwinds, combined with our reputation of excellence, history of innovation, and unrivaled CX technology and services, position us to advance our revenue growth and margin expansion in 2020 and beyond."

FULL YEAR 2019 FINANCIAL HIGHLIGHTS                

Revenue        

  • Full year 2019 GAAP revenue increased 8.9 percent to $1.644 billion compared to $1.509 billion in the prior year.
  • Foreign exchange had a $0.8 million positive impact on revenue for full year 2019.

Income from Operations

  • Full year 2019 GAAP income from operations was $123.7 million, or 7.5 percent of revenue, compared to $92.1 million, or 6.1 percent of revenue in the prior year.
  • Non-GAAP income from operations, excluding $5.5 million in restructuring and impairment charges, was $129.2 million or 7.9 percent of revenue versus 6.9 percent for the prior year.
  • Foreign exchange had a $7.0 million positive impact on income from operations for full year 2019.

Adjusted EBITDA        

  • Full year 2019 Non-GAAP Adjusted EBITDA was $209.1 million, or 12.7 percent of revenue, compared to $188.7 million, or 12.5 percent of revenue in the prior year.

Earnings Per Share

  • Full year 2019 GAAP fully diluted earnings per share was $1.65 compared to $0.77 for the same period last year.
  • Non-GAAP fully diluted earnings per share was $1.89 compared to $1.49 in the prior year.

Bookings

  • During full year 2019, TTEC signed an estimated $488 million in annualized contract value. Full year bookings mix was diversified across segments, verticals, and geographies.

FOURTH QUARTER 2019 FINANCIAL HIGHLIGHTS                

Revenue        

  • Fourth quarter 2019 GAAP revenue increased 10.1 percent to $461.3 million compared to $419.1 million in the prior year period.
  • Foreign exchange had a $4.0 million positive impact on revenue in the fourth quarter 2019.

Income from Operations

  • Fourth quarter 2019 GAAP income from operations was $42.8 million, or 9.3 percent of revenue, compared to $39.0 million, or 9.3 percent of revenue in the prior year period.
  • Non-GAAP income from operations, excluding $0.3 million in restructuring and impairment charges, was $43.1 million or 9.3 percent of revenue versus 11.0 percent for the prior year period.
  • Foreign exchange had a $2.5 million positive impact on income from operations in the fourth quarter 2019.

Adjusted EBITDA        

  • Fourth quarter 2019 Non-GAAP Adjusted EBITDA was $63.2 million, or 13.7 percent of revenue, compared to $64.0 million, or 15.3 percent of revenue in the prior year period.

Earnings Per Share

  • Fourth quarter 2019 GAAP fully diluted earnings per share was $0.60 compared to $0.44 for the same period last year.
  • Non-GAAP fully diluted earnings per share was $0.65 compared to $0.63 in the prior year period.

Bookings

  • During the fourth quarter 2019, TTEC signed an estimated $120 million in annualized contract value. Fourth quarter bookings mix was diversified across segments, verticals, and geographies.

STRONG CASH FLOW AND BALANCE SHEET FUND INVESTMENTS AND DIVIDENDS

  • Cash flow from operations in the fourth quarter 2019 was $53.6 million compared to $2.2 million for the fourth quarter 2018. For the full year 2019, cash flow from operations was $238.0 million compared to $168.3 million for the same period 2018.
  • Capital expenditures in the fourth quarter 2019 were $16.3 million compared to $11.6 million for the fourth quarter 2018. For the full year 2019, capital expenditures were $60.8 million compared to $43.5 million for the same period 2018.
  • As of December 31, 2019, TTEC had cash and cash equivalents of $82.4 million and debt of $307.5 million, resulting in a net debt position of $225.1 million. This compares to a net debt position of $226.3 million for the same period 2018.
  • As of December 31, 2019, TTEC had approximately $530 million of additional borrowing capacity available under its revolving credit facility compared to $360 million for the same period 2018.
  • Paid a $0.32 per share, or $14.9 million, semi-annual dividend on October 17, 2019. On February 27, 2020, the Board declared the next semi-annual dividend of $0.34 per share, payable on April 16, 2020 to shareholders of record as of April 1, 2020. This dividend represents a 6.3 percent increase over the October 2019 dividend and 13.3 percent over the April 2019 dividend.

SEGMENT REPORTING & COMMENTARY

Effective June 30, 2019, TTEC reports financial results for the following two business segments:

  1. TTEC Digital (Digital) - Previously TTEC's Customer Strategy Services and Customer Technology Services segments.
  2. TTEC Engage (Engage) – Previously TTEC's Customer Growth Services and Customer Management Services segments.

Financial highlights for the two segments are provided below.

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

  • Fourth quarter 2019 GAAP revenue for TTEC Digital increased 18.4 percent to $82.4 million from $69.6 million for the year ago period. Income from operations was $11.8 million or 14.3 percent of revenue compared to operating income of $12.5 million or 17.9 percent of revenue for the prior year period.
  • Non-GAAP income from operations was $11.9 million, or 14.4 percent of revenue compared to operating income of $12.7 million or 18.3 percent of revenue in the prior year period.

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

  • Fourth quarter 2019 GAAP revenue for TTEC Engage increased 8.4 percent to $379.0 million from $349.6 million for the year ago period. Income from operations was $31.0 million or 8.2 percent of revenue compared to operating income of $26.5 million or 7.6 percent of revenue for the prior year period.
  • Non-GAAP income from operations was $31.2 million, or 8.2 percent of revenue compared to operating income of $33.2 million or 9.5 percent of revenue in the prior year period.
  • Foreign exchange had a $4.1 million positive impact on revenue and $2.5 million positive impact on income from operations.

NON-GAAP FINANCIAL MEASURES

This press release contains a discussion of certain Non-GAAP financial measures that the Company 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.

BUSINESS OUTLOOK

"2019 was a milestone year for us, exceeding many of our key goals," commented Regina Paolillo, chief financial and administrative officer. "We achieved record financial results, completed a strategic acquisition, entered into new and expanded technology channel partnerships, significantly grew our CX cloud market share, and added a meaningful number of new hypergrowth and Global 1000 clients across our expanded global footprint. We expect these positive developments alongside the size and diversity of our bookings, revenue backlog and sales pipeline to enable revenue growth and profit margin expansion in 2020."

Paolillo continued, "With regard to any impact from the coronavirus, we have reflected our initial assumptions in our guidance. Given the diversity of our industry coverage and client delivery footprint, alongside our virtual Digital and Engage services capabilities, we currently do not expect a material impact to our 2020 financial and business results."

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

Revenue between $1.757 and $1.773 billion, an increase of 6.9 and 7.9 percent over the prior year. 

Operating Income margins between 8.2 and 8.4 percent.

  • Margins of approximately 12.9 percent for TTEC Digital and 7.3 percent for TTEC Engage

Adjusted EBITDA margins between 13.3 and 13.5 percent.

  • Margins of approximately 18.4 percent for TTEC Digital and 12.4 percent for TTEC Engage

Earnings Per Share between 2.03 and 2.10 cents.

Capital expenditures are estimated to between 3.6 and 3.8 percent of revenue, of which approximately 65 percent is growth oriented.  

Effective tax rate for the full year is estimated between 25 and 27 percent.

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

We estimate the first half - second half 2020 mix as follows:

  • Revenue: 48 percent first half, 52 percent second half
  • Operating Income: 45 percent first half, 55 percent second half
  • Adjusted EBITDA: 47 percent first half, 53 percent second half
  • Earnings Per Share: 45 percent first half, 55 percent second half

We estimate the Digital - Engage 2020 mix as follows:

  • Revenue: 17 percent Digital, 83 percent Engage, of which 51 percent of Digital and 48 percent of Engage in the first half, respectively.
  • Operating Income: 26 percent Digital, 74 percent Engage, of which 56 percent of Digital and 41 percent of Engage in the first half, respectively.
  • Adjusted EBITDA: 23 percent Digital 77 percent Engage, of which 54 percent of Digital and 44 percent of Engage in the first half, respectively.

About TTEC 

TTEC Holdings, Inc. (NASDAQ: TTEC) is a leading global customer experience technology and services company focused on the design, implementation and delivery of transformative customer experience for many of the world's most iconic and disruptive brands. 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 49,500 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 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 risk and risks inherent to our equity structure. Actual results may differ from what is expressed in the forward-looking statements. 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 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)

                 
                 
   

Three months ended

 

Twelve months ended

   

 December 31,

 

 December 31,

   

2019

 

2018

 

2019

 

2018

                 

Revenue

$461,326

 

$419,133

 

$1,643,704

 

$1,509,171

                 

Operating Expenses:

             
 

Cost of services

345,694

 

313,372

 

1,242,887

 

1,157,927

 

Selling, general and administrative

53,894

 

47,817

 

202,540

 

182,428

 

Depreciation and amortization

18,634

 

17,127

 

69,086

 

69,179

 

Restructuring and integration charges, net

175

 

1,532

 

1,747

 

6,131

 

Impairment losses

166

 

332

 

3,735

 

1,452

         Total operating expenses

418,563

 

380,180

 

1,519,995

 

1,417,117

                 

Income From Operations

42,763

 

38,953

 

123,709

 

92,054

                 
 

Other income (expense), net

(6,428)

 

(6,336)

 

(13,298)

 

(35,816)

                 

Income Before Income Taxes

36,335

 

32,617

 

110,411

 

56,238

                 
 

Provision for income taxes

(5,670)

 

(11,835)

 

(25,677)

 

(16,483)

                 

Net Income

30,665

 

20,782

 

84,734

 

39,755

                 
 

Net income attributable to noncontrolling interest

(2,402)

 

(449)

 

(7,570)

 

(3,938)

                 

Net Income Attributable to TTEC Stockholders

$  28,263

 

$  20,333

 

$     77,164

 

$     35,817

                 
                 

Net Income Per Share

             
                 
 

Basic

$     0.66

 

$     0.45

 

$        1.83

 

$        0.86

                 
 

Diluted

$     0.65

 

$     0.45

 

$        1.81

 

$        0.86

                 

Net Income Per Share Attributable to TTEC Stockholders

             
                 
 

Basic

$     0.61

 

$     0.44

 

$        1.66

 

$        0.78

                 
 

Diluted

$     0.60

 

$     0.44

 

$        1.65

 

$        0.77

                 
                 

Income From Operations Margin

9.3%

 

9.3%

 

7.5%

 

6.1%

Net Income Margin

6.6%

 

5.0%

 

5.2%

 

2.6%

Net Income Attributable to TTEC Stockholders Margin

6.1%

 

4.9%

 

4.7%

 

2.4%

Effective Tax Rate

15.6%

 

36.3%

 

23.3%

 

29.3%

                 
                 

Weighted Average Shares Outstanding

             

  Basic

46,487

 

46,193

 

46,373

 

46,064

  Diluted

46,830

 

46,390

 

46,758

 

46,385

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

                 
                 
   

Three months ended

 

Twelve months ended

   

 December 31,

 

 December 31,

   

2019

 

2018

 

2019

 

2018

                 

Revenue:

               

TTEC Digital

 

$  82,354

 

$  69,552

 

$   305,346

 

$   238,799

TTEC Engage

 

378,972

 

349,581

 

1,338,358

 

1,270,372

Total

 

$461,326

 

$419,133

 

$1,643,704

 

$1,509,171

                 

Income From Operations:

               

TTEC Digital

 

$  11,754

 

$  12,475

 

$     38,927

 

$     33,054

TTEC Engage

 

31,009

 

26,478

 

84,782

 

59,000

Total

 

$  42,763

 

$  38,953

 

$   123,709

 

$     92,054

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

         
   

 December 31,

 

 December 31, 

   

2019

 

2018

         
         

ASSETS

       

Current assets:

       

   Cash and cash equivalents

 

$          82,407

 

$         78,237

   Accounts receivable, net

 

331,096

 

350,962

   Other current assets

 

136,322

 

97,278

      Total current assets

 

549,825

 

526,477

         

Property and equipment, net

 

176,633

 

161,523

Other assets

 

650,330

 

366,508

         

Total assets

 

$     1,376,788

 

$    1,054,508

         

LIABILITIES AND EQUITY

       

Total current liabilities

 

$        363,289

 

$       235,418

Other long-term liabilities

 

532,846

 

466,241

Redeemable noncontrolling interest

 

48,923

 

-

Total equity

 

431,730

 

352,849

         

Total liabilities and equity

 

$     1,376,788

 

$    1,054,508

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

(In thousands, except per share data)

                 
   

Three months ended

 

Twelve months ended

   

 December 31,

 

 December 31,

   

2019

 

2018

 

2019

 

2018

                 

Revenue

 

$461,326

 

$419,133

 

$1,643,704

 

$1,509,171

                 

Reconciliation of Adjusted EBITDA:

               
                 

Net Income

 

$  30,665

 

$  20,782

 

$     84,734

 

$     39,755

   Interest income

 

(622)

 

(536)

 

(1,913)

 

(4,476)

   Interest expense

 

5,576

 

6,040

 

19,113

 

28,674

   Provision for income taxes

 

5,670

 

11,835

 

25,677

 

16,483

   Depreciation and amortization

 

18,634

 

17,127

 

69,086

 

69,179

   Asset impairment, restructuring and integration charges

 

341

 

1,864

 

5,482

 

7,583

   Impairment of equity investment

 

-

 

-

 

-

 

15,632

   Gain on sale of business units

 

(225)

 

(320)

 

(1,366)

 

(1,973)

   Gain on sale of trademarks

 

-

 

-

 

(700)

 

-

   Gain on recovery of receivables in connection with division in winddown

 

-

 

-

 

(1,416)

 

-

   Changes in acquisition contingent consideration

 

-

 

(331)

 

(2,424)

 

(331)

   Loss on asset held for sale reclassified to asset held and used

 

-

 

(384)

 

-

 

1,616

   Gain on bargain purchase of acquisition

 

-

 

-

 

-

 

(685)

   Allowance for doubtful accounts receivable from customer in bankruptcy

 

-

 

2,706

 

-

 

2,706

   Writeoff of contract acquisition costs

 

-

 

1,436

 

-

 

1,436

   Writeoff of value added tax due to change in foreign tax law

 

-

 

966

 

-

 

966

   Equity-based compensation expenses

 

3,151

 

2,853

 

12,814

 

12,145

                 

 Adjusted EBITDA

 

$  63,190

 

$  64,038

 

$   209,087

 

$   188,710

                 
                 

Reconciliation of Free Cash Flow:

               
                 

Cash Flow From Operating Activities:

               

   Net income

 

$  30,665

 

$  20,782

 

$     84,734

 

$     39,755

   Adjustments to reconcile net income to net cash provided by operating activities:

               

          Depreciation and amortization

 

18,634

 

17,127

 

69,086

 

69,179

          Other

 

4,293

 

(35,673)

 

84,169

 

59,411

   Net cash provided by operating activities

 

53,592

 

2,236

 

237,989

 

168,345

                 

Less - Total Cash Capital Expenditures

 

16,338

 

11,609

 

60,776

 

43,450

                 

Free Cash Flow

 

$  37,254

 

$   (9,373)

 

$   177,213

 

$   124,895

                 
                 

Reconciliation of Non-GAAP Income from Operations:

               
                 

Income from Operations

 

$  42,763

 

$  38,953

 

$   123,709

 

$     92,054

Restructuring charges, net

 

175

 

1,532

 

1,747

 

6,131

Impairment losses

 

166

 

332

 

3,735

 

1,452

                 

Non-GAAP Income from Operations

 

$  43,104

 

$  40,817

 

$   129,191

 

$     99,637

                 

Non-GAAP Income from Operations Margin

 

9.3%

 

9.7%

 

7.9%

 

6.6%

                 

   Allowance for doubtful accounts receivable from customer in bankruptcy

 

-

 

2,706

 

-

 

2,706

   Writeoff of contract acquisition costs

 

-

 

1,436

 

-

 

1,436

   Writeoff of value added tax due to change in foreign tax law

 

-

 

966

 

-

 

966

                 

Adjusted Non-GAAP Income from Operations

 

$  43,104

 

$  45,925

 

$   129,191

 

$   104,745

                 

Adjusted Non-GAAP Income from Operations Margin

 

9.3%

 

11.0%

 

7.9%

 

6.9%

                 

Reconciliation of Non-GAAP EPS:

               
                 

Net Income

 

$  30,665

 

$  20,782

 

$     84,734

 

$     39,755

Add:  Asset restructuring and impairment charges

 

341

 

1,864

 

5,482

 

7,583

Add:  Loss on asset held for sale reclassified to asset held and used

 

-

 

(384)

 

-

 

1,616

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

 

2,124

 

1,939

 

4,657

 

9,928

Add:  Impairment of equity investment

 

-

 

-

 

-

 

15,632

Less:  Changes in acquisition contingent consideration

 

-

 

(331)

 

(2,424)

 

(331)

Less:  Gain on sale of business units

 

(225)

 

(320)

 

(1,366)

 

(1,973)

Less:  Gain on sale of trademarks

 

-

 

-

 

(700)

 

-

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

 

-

 

-

 

(1,416)

 

-

Less:  Gain on bargain purchase of acquisition

 

-

 

-

 

-

 

(685)

Add:  Allowance for doubtful accounts receivable from customer in bankruptcy

 

-

 

2,706

 

-

 

2,706

   Add:  Writeoff of contract acquisition costs

 

-

 

1,436

 

-

 

1,436

   Add:  Writeoff of value added tax due to change in foreign tax law

 

-

 

966

 

-

 

966

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

 

(2,626)

 

791

 

(580)

 

(7,355)

                 

 Non-GAAP Net Income

 

$  30,279

 

$  29,449

 

$     88,387

 

$     69,278

                 

    Diluted shares outstanding

 

46,830

 

46,390

 

46,758

 

46,385

                 

 Non-GAAP EPS

 

$0.65

 

$0.63

 

$1.89

 

$1.49

 

 

 

 

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SOURCE TTEC Holdings, Inc.