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TTEC Announces Record Third Quarter 2021 Financial Results
Nov 9, 2021
Third Quarter 2021
Revenue Increased 15.0 Percent to $566.7 Million
Operating Income was 26.0 Million or 4.6 Percent of Revenue
(Non-GAAP $59.4 Million or 10.5 Percent of Revenue)
Net Income was $14.4 Million ($47.7 Million Non-GAAP)
Adjusted EBITDA was $78.7 Million or 13.9 Percent of Revenue
Fully Diluted EPS was $0.30 ($1.01 Non-GAAP)
Bookings of $171 million

DENVER, Nov. 9, 2021 /PRNewswire/ -- TTEC Holdings, Inc. (NASDAQ: TTEC), one of the largest, global CX (customer experience) technology and services innovators for end-to-end digital CX solutions, announced today financial results for the third quarter ended September 30, 2021.

"We delivered strong results this quarter and continue to gain momentum in the market. Our robust sales pipeline heading into the fourth quarter, combined with our strong bookings momentum, positions us for continued long-term profitable growth as our clients leverage the full depth and breadth of our technology enabled solutions and services," commented Ken Tuchman, chairman and chief executive officer of TTEC. "Leading brands are looking for a comprehensive solution - a purpose-built, technology-enabled service provider who can solve their end-to-end CX challenges and deliver measurable value-based outcomes. The fastest growing digital brands and the elite Fortune 500 leaders alike are choosing TTEC to successfully compete and win in the customer-centric economy," continued Tuchman.

THIRD QUARTER 2021 FINANCIAL HIGHLIGHTS                     

Revenue        

  • Third quarter 2021 GAAP revenue increased 15.0 percent to $566.7 million compared to $493.0 million in the prior year period.
  • Foreign exchange had a $3.1 million positive impact on revenue in the third quarter 2021.

Income from Operations

  • Third quarter 2021 GAAP income from operations was $26.0 million, or 4.6 percent of revenue, compared to $53.4 million, or 10.8 percent of revenue in the prior year period.
  • Non-GAAP income from operations, excluding restructuring and impairment charges, equity-based compensation expenses, amortization of purchased intangibles, cybersecurity incident related impact, and other items, was $59.4 million or 10.5 percent of revenue versus $63.1 million or 12.8 percent for the prior year period.
  • Foreign exchange had a $1.3 million positive impact on income from operations in the third quarter 2021.

Adjusted EBITDA        

  • Third quarter 2021 Non-GAAP Adjusted EBITDA was $78.7 million or 13.9 percent of revenue, compared to $77.2 million or 15.7 percent of revenue in the prior year period.

Earnings Per Share

  • Third quarter 2021 GAAP fully diluted earnings per share was $0.30 compared to $0.45 for the same period last year.
  • Non-GAAP fully diluted earnings per share was $1.01 compared to $1.00 in the prior year period.

Bookings

  • During the third quarter 2021, TTEC signed an estimated $171 million in annualized contract value compared to $170 million in the prior year period. Third quarter 2021 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 third quarter 2021 was $42.2 million compared to $81.5 million for the third quarter 2020.
  • Capital expenditures in the third quarter 2021 were $17.2 million compared to $15.9 million for the third quarter 2020.
  • As of September 30, 2021, TTEC had cash and cash equivalents of $148.9 million and debt of $811.8 million, resulting in a net debt position of $662.9 million. This compares to a net debt position of $203.0 million for the same period 2020. The increase in net debt is primarily attributable to the acquisition of Avtex Solutions Holdings, LLC in April 2021 and capital distributions.
  • As of September 30, 2021, TTEC had approximately $390 million of additional borrowing capacity available under its credit facility compared to $570 million for the same period 2020.
  • Paid a $0.47 per share, $22.1 million in the aggregate, semi-annual dividend on October 22, 2021, an approximate 17.5 percent increase over the semi-annual dividend paid in October 2020 and a 9.3 percent increase over the April 2021 dividend.

SEGMENT REPORTING & COMMENTARY

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

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

  • Third quarter 2021 GAAP revenue for TTEC Digital increased 62.1 percent to $124.1 million from $76.6 million for the year ago period. Income from operations was $8.7 million or 7.0 percent of revenue compared to operating income of $13.0 million or 17.0 percent of revenue for the prior year period.
  • Non-GAAP income from operations was $15.6 million or 12.5 percent of revenue compared to $15.4 million or 20.1 percent of revenue in the prior year period.
  • Foreign exchange had a $0.4 million positive impact on revenue and $0.1 million positive impact on income from operations.

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

  • Third quarter 2021 GAAP revenue for TTEC Engage increased 6.3 percent to $442.6 million from $416.4 million for the year ago period. Income from operations was $17.4 million or 3.9 percent of revenue compared to operating income of $40.4 million or 9.7 percent of revenue for the prior year period.
  • Non-GAAP income from operations was $43.8 million or 9.9 percent of revenue compared to $47.7 million or 11.5 percent of revenue in the prior year period.
  • Foreign exchange had a $2.7 million positive impact on revenue and $1.2 million positive impact on income from operations.

BUSINESS OUTLOOK

"Our strong business fundamentals reflect our successful delivery of outcome-based customer experiences," commented Regina Paolillo, chief financial and administrative officer. "Our integrated CX technology and service offerings are a marketplace differentiator within a dynamic, growing addressable market. Our business momentum is reflected in our robust sales pipeline and strong bookings. We anticipate full year 2021 results relatively consistent with our previous guidance, despite the one-time costs related to the cyber incident."

Paolillo continued, "We remain highly encouraged by our near- and longer-term outlook. We are confident in our strategy and the strength of our business model. Importantly, we are making the leadership, R&D and go to market investments necessary to execute on our strategy and drive further growth. The breadth and depth of our technology rich offerings sets us apart, enabling us to win new client relationships and increase our wallet share in our expansive embedded client base."

Including the third quarter impact of the cybersecurity incident, which is offset by the underlying strength in the business, our current estimate for 2021 full year results remains consistent with our previous guidance. Adjusted for the one-time revenue loss and expenses, we are at the high end or exceeding our previous guidance.

Revenue of approximately $2,255.0, an increase of 15.7 percent over the prior year.

Non-GAAP Operating Income margin of approximately 12.6 percent.

  • Margin of approximately 13.2 percent for TTEC Digital and 12.5 percent for TTEC Engage

Adjusted EBITDA margin of approximately 15.6 percent.

  • Margin of approximately 16.1 percent for TTEC Digital and 15.5 percent for TTEC Engage

Non-GAAP Earnings Per Share of approximately $4.57

Capital expenditures of approximately 2.9 percent of revenue, of which approximately 70 percent is growth oriented.  

Effective tax rate of approximately 22 percent.

Diluted share count of approximately 47.4 million.

The company has not quantitatively reconciled its guidance for Non-GAAP operating income margins, Non-GAAP adjusted EBITDA margins, or Non-GAAP earnings per share to their respective most comparable GAAP measures because certain of the reconciling items that impact these metrics, including asset impairment, restructuring and integration charges, cybersecurity incident-related costs, gains or losses on the sale of business units or other assets, equity-based compensation expense, changes in acquisition contingent consideration, depreciation and amortization expense, and provision for income taxes are dependent on the timing of future events outside of the company's control or cannot be reliably predicted. Accordingly, the company is unable to provide reconciliations to GAAP operating income margins, net income margins, and diluted earnings per share without unreasonable effort. Please note that the unavailable reconciling items could significantly impact the company's 2021 financial results as reported under GAAP.

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, equity-based compensation expenses, amortization of purchased intangibles, cybersecurity incident-related costs, among other items.

ABOUT TTEC 

TTEC Holdings, Inc. (NASDAQ: TTEC) is one of the largest, global CX (customer experience) technology and services innovators for end-to-end, digital CX solutions. The company delivers leading CX technology and operational CX orchestration at scale through its proprietary cloud-based CXaaS (Customer Experience as a Service) platform.  Serving iconic and disruptive brands, TTEC's outcome-based solutions span the entire enterprise, touch every virtual interaction channel, and improve each step of the customer journey. Leveraging next gen digital and cognitive technology, the company's Digital business designs, builds, and operates omnichannel contact center technology, conversational messaging, CRM, automation (AI / ML and RPA), and analytics solutions.  The company's Engage business delivers digital customer engagement, customer acquisition & growth, content moderation, fraud mitigation, and data annotation solutions. Founded in 1982, the Company's singular obsession with CX excellence has earned it leading client NPS scores across the globe. The company's nearly 62,300 employees operate on six continents and bring technology and humanity together to deliver happy customers and differentiated business results. To learn more visit us at https://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 Holdings, Inc.'s management and are subject to significant risks and uncertainties. We caution you not to rely unduly on any forward-looking statements. Actual results may differ materially from those expressed in the forward-looking statements, and you should review and consider carefully the risks, uncertainties and other factors that affect our business and may cause such differences as outlined in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020 and any subsequent filings with the U.S. Securities and Exchange Commission (the "SEC") which are available on TTEC's website www.ttec.com, and on the SEC's public website at www.sec.gov. Specifically, important factors that could cause our actual results to differ materially from those indicated in the forward looking statements include, among others, risks related to our business operations and strategy, including our strategy execution in a competitive market; our ability to innovate and introduce technologies that are sufficiently disruptive to allow us to maintain and grow our market share; risks inherent in the reliability of our information technology systems; risks related to our information  technology infrastructure's cyber security in general, and criminal activity such as ransomware, other malware and data exfiltration or destruction in particular, which can impact our ability to consistently deliver uninterrupted service to our clients; our dependance on 3rd parties for our cloud solutions; risks inherent in our rapid transition to a work from home environment; 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; the risk related to our international operations; the risks related to legal and regulatory impacts on our operations, in particular rapidly changing laws that regulate our and our clients' business, such as data privacy and data protection laws and regulatory changes impacting our healthcare business, financial and public sector specific regulations, our ability to comply with these laws timely and cost effectively; impact of COVID-19 pandemic and post-pandemic economic and regulatory realities on our business and our clients' business; cost of wage and hour litigation in the United States; and risks inherent in our equity structure including our controlling shareholder risk, and Delaware choice of dispute resolution risks. TTEC Holdings, Inc. does not undertake to update any forward-looking statements.

 

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,




2021


2020


2021


2020











Revenue


$ 566,734


$ 492,980


$ 1,660,747


$ 1,378,274











Operating Expenses:










Cost of services


447,786


368,405


1,236,769


1,027,268


Selling, general and administrative


67,426


49,473


181,483


146,667


Depreciation and amortization


25,280


19,522


70,655


57,054


Restructuring charges, net


485


1,233


2,612


2,564


Impairment losses


(268)


948


3,949


1,644

         Total operating expenses


540,709


439,581


1,495,468


1,235,197











Income From Operations


26,025


53,399


165,279


143,077












Other income (expense), net


(45)


(20,852)


(4,570)


(31,058)











Income Before Income Taxes


25,980


32,547


160,709


112,019












Provision for income taxes


(7,939)


(8,415)


(35,271)


(29,653)











Net Income


18,041


24,132


125,438


82,366












Net income attributable to noncontrolling interest

(3,606)


(2,766)


(13,216)


(8,141)











Net Income Attributable to TTEC Stockholders

$   14,435


$   21,366


$   112,222


$     74,225





















Net Income Per Share




















Basic


$       0.38


$       0.52


$         2.68


$         1.77












Diluted


$       0.38


$       0.51


$         2.65


$         1.76











Net Income Per Share Attributable to TTEC Stockholders



















Basic


$       0.31


$       0.46


$         2.39


$         1.59












Diluted


$       0.30


$       0.45


$         2.37


$         1.58





















Income From Operations Margin


4.6%


10.8%


10.0%


10.4%

Net Income Margin


3.2%


4.9%


7.6%


6.0%

Net Income Attributable to TTEC Stockholders Margin

2.5%


4.3%


6.8%


5.4%

Effective Tax Rate


30.6%


25.9%


21.9%


26.5%





















Weighted Average Shares Outstanding








  Basic


46,984


46,732


46,857


46,617

  Diluted


47,348


47,031


47,372


46,885

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

(unaudited)





















Three months ended


Nine months ended



 September 30,


 September 30,



2021


2020


2021


2020










Revenue:









TTEC Digital


$     124,086


$       76,571


$    295,668


$     231,270

TTEC Engage


442,648


416,409


1,365,079


1,147,004

Total


$     566,734


$     492,980


$ 1,660,747


$  1,378,274










Income From Operations:









TTEC Digital


$        8,670


$       13,043


$      22,438


$       37,677

TTEC Engage


17,355


40,356


142,841


105,400

Total


$       26,025


$       53,399


$    165,279


$     143,077

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)








 September 30,


 December 31, 



2021


2020






ASSETS





Current assets:





   Cash and cash equivalents


$        148,853


$       132,914

   Accounts receivable, net


349,382


378,397

   Other current assets


235,733


145,491

      Total current assets


733,968


656,802






Property and equipment, net


171,508


178,706

Operating lease assets


97,866


120,820

Goodwill


736,398


363,502

Other intangibles assets, net


218,556


112,059

Other assets


85,837


84,519






Total assets


$      2,044,133


$    1,516,408






LIABILITIES AND EQUITY





Current liabilities:





   Accounts payable


$          84,464


$         66,658

   Accrued employee compensation and benefits


174,272


163,658

   Deferred revenue


88,870


39,956

   Current operating lease liabilties


42,643


43,651

   Other current liabilities


93,894


82,247

      Total current liabilities


484,143


396,170






Long-term liabilities:





   Line of credit


805,000


385,000

   Non-current operating lease liabilities


73,172


98,277

   Other long-term liabilities


121,663


126,223

      Total long-term liabilities


999,835


609,500






Redeemable noncontrolling interest


55,194


52,976






Equity:





   Common stock


470


467

   Additional Paid in Capital


356,727


360,293

   Treasury stock


(597,051)


(601,214)

   Accumulated other comprehensive income (loss)


(98,423)


(72,156)

   Retained earnings


827,317


757,312

   Noncontrolling interest


15,921


13,060

      Total equity


504,961


457,762






Total liabilities and equity


$      2,044,133


$    1,516,408

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)






 Nine Months Ended 


 Nine Months Ended 


 September 30,  


 September 30,  


2021


2020





Cash flows from operating activities:




     Net income

$                125,438


$                   82,366

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




          Depreciation and amortization

70,655


57,054

          Amortization of contract acquisition costs

575


332

          Amortization of debt issuance costs

719


549

          Imputed interest expense and fair value adjustments to contingent consideration

1,046


1,949

          Provision for credit losses

(34)


563

          Loss on disposal of assets

524


77

          Loss on dissolution of subsidiary

-


19,905

          Impairment losses

3,949


1,644

          Deferred income taxes

514


(1,153)

          Excess tax benefit from equity-based awards

(5,284)


(708)

          Equity-based compensation expense

11,969


9,471

          Loss / (gain) on foreign currency derivatives

134


(25)

          Changes in assets and liabilities, net of acquisitions:




                Accounts receivable 

48,816


(5,450)

                Prepaids and other assets 

(42,455)


14,333

                Accounts payable and accrued expenses 

19,406


70,441

                Deferred revenue and other liabilities 

(60,910)


(64,564)

                    Net cash provided by operating activities

175,062


186,784





Cash flows from investing activities:




     Proceeds from sale of property, plant and equipment

42


16

     Purchases of property, plant and equipment

(40,778)


(47,827)

     Acquisitions

(481,718)


(38,739)

          Net cash used in investing activities

(522,454)


(86,550)





Cash flows from financing activities:




     Net proceeds / (borrowings) from line of credit

420,000


35,000

     Payments on other debt

(5,288)


(6,602)

     Payments of contingent consideration and hold back payments to acquisitions

(11,517)


(48,686)

     Dividends paid to shareholders

(20,132)


(15,843)

     Payments to noncontrolling interest

(8,059)


(8,268)

     Tax payments related to the issuance of restricted stock units

(11,369)


(4,456)

     Payments of debt issuance costs

(1,102)


(35)

          Net cash provided by / (used in) financing activities

362,533


(48,890)





Effect of exchange rate changes on cash and cash equivalents and restricted cash

(6,272)


(104)





Increase in cash, cash equivalents and restricted cash

8,869


51,240

Cash, cash equivalents and restricted cash, beginning of period

159,015


105,591

Cash, cash equivalents and restricted cash, end of period

$                167,884


$                 156,831

 

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,







2021


2020





2021


2020



















Revenue


$  566,734


$  492,980





$ 1,660,747


$ 1,378,274



















Reconciliation of Adjusted EBITDA:






























Net Income


$   18,041


$   24,132





$    125,438


$      82,366




   Interest income


(171)


(566)





(580)


(1,421)




   Interest expense


3,504


2,755





8,687


15,451




   Provision for income taxes


7,939


8,415





35,271


29,653




   Depreciation and amortization


25,280


19,522





70,655


57,054




   Asset impairment and restructuring charges


217


2,181





6,561


4,208




   Gain on sale of business units


-


(208)





-


(596)




   Changes in acquisition contingent consideration


-


-





1,046


(4,349)




   Grant income for pandemic relief


(131)


-





(8,175)


-




   Cybersecurity incident related impact, net of insurance recovery


19,455


-





19,455


-




   Loss on dissolution of subsidiary


-


17,438





-


19,905




   Equity-based compensation expenses


4,570


3,495





11,969


9,471



















 Adjusted EBITDA


$   78,704


$   77,164





$    270,327


$    211,742


































Reconciliation of Free Cash Flow:






























Cash Flow From Operating Activities:















   Net income


$   18,041


$   24,132





$    125,438


$      82,366




   Adjustments to reconcile net income to net cash















       provided by operating activities:















          Depreciation and amortization


25,280


19,522





70,655


57,054




          Other


(1,098)


37,852





(21,031)


47,364




   Net cash provided by operating activities


42,223


81,506





175,062


186,784



















Less - Total Cash Capital Expenditures


17,185


15,912





40,778


47,827



















Free Cash Flow


$   25,038


$   65,594





$    134,284


$    138,957


































Reconciliation of Non-GAAP Income from Operations:






























Income from Operations


$   26,025


$   53,399





$    165,279


$    143,077




Restructuring charges, net


485


1,233





2,612


2,564




Impairment losses


(268)


948





3,949


1,644




Grant income for pandemic relief


(131)


-





(8,175)


-




Cybersecurity incident related impact, net of insurance recovery


19,455


-





19,455


-




Equity-based compensation expenses


4,570


3,495





11,969


9,471




Amortization of purchased intangibles 


9,269


4,067





22,752


11,788



















Non-GAAP Income from Operations


$   59,405


$   63,142





$    217,841


$    168,544



















Non-GAAP Income from Operations Margin


10.5%


12.8%





13.1%


12.2%


































Reconciliation of Non-GAAP EPS:






























Net Income


$   18,041


$   24,132





$    125,438


$      82,366




Add:  Asset  impairment and restructuring charges


217


2,181





6,561


4,208




Add:  Equity-based compensation expenses


4,570


3,495





11,969


9,471




Add:  Amortization of purchased intangibles


9,269


4,067





22,752


11,788




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


-


-





-


6,273




Add:  Loss on dissolution of subsidary


-


17,438





-


19,905




Add:  Cybersecurity incident related impact, net of insurance recovery


19,455


-





19,455


-




Less:  Changes in acquisition contingent consideration


-


-





1,046


(4,349)




Less:  Gain on sale of business units


-


(208)





-


(596)




Less:  Grant income for pandemic relief


(131)


-





(8,175)


-




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


(3,691)


(3,855)





(11,368)


(6,925)



















 Non-GAAP Net Income


$   47,730


$   47,250





$    167,678


$    122,141



















    Diluted shares outstanding


47,348


47,031





47,372


46,885



















 Non-GAAP EPS


$1.01


$1.00





$3.54


$2.61


































Reconciliation of Adjusted EBITDA by Segment :


TTEC Engage


TTEC Digital


TTEC Engage


TTEC Digital



Q3 21


Q3 20


Q3 21

Q3 20


YTD 21


YTD 20


YTD 21

YTD 20
















Earnings before Income Taxes


$   17,193


$   19,470


$     8,787

$   13,077


$    138,111


$      74,242


$   22,597

$   37,777

   Interest income / expense, net


3,366


2,223


(33)

(34)


8,214


14,132


(105)

(101)

   Depreciation and amortization


16,344


15,985


8,936

3,537


49,343


46,951


21,312

10,103

   Asset impairment and restructuring charges


616


1,745


(399)

436


6,092


2,755


468

1,452

   Gain on sale of business units


-


(208)


-

-


-


(596)


-

-

   Grant income for pandemic relief


(131)


-


-

-


(8,069)


-


(106)

-

   Changes in acquisition contingent consideration


-


-


-

-


1,046


(4,349)


-

-

   Loss on dissolution of subsidiary


-


17,438


-

-


-


19,905


-

-

   Cybersecurity incident related impact, net of insurance recovery


19,221


-


234

-


19,221


-


234

-

   Equity-based compensation expenses


3,472


2,353


1,098

1,142


8,505


6,551


3,464

2,920
















 Adjusted EBITDA


$   60,081


$   59,006


$   18,623

$   18,158


$    222,463


$    159,591


$   47,864

$   52,151































 

Investor Relations Contact

Paul Miller

+1.303.397.8641

Public Relations Contact

Tim Blair

+1.303.397.9267

Address

9197 South Peoria Street

Englewood, CO 80112

Contact

ttec.com

+1.800.835.3832

TTEC Logo (PRNewsfoto/TTEC Holdings, Inc.)

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SOURCE TTEC Holdings, Inc.