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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to          

Commission File Number 001-11919

TTEC Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

84-1291044

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

9197 South Peoria Street

Englewood, Colorado 80112

(Address of principal executive offices)

Registrant’s telephone number, including area code: (303) 397-8100

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class

Trading Symbol

Name of each exchange on which registered

Common stock of TTEC Holdings, Inc.,
$0.01 par value per share

TTEC

NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 

Accelerated Filer 

Non-accelerated Filer 

Smaller Reporting Company 

Emerging Growth Company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   No

As of July 31, 2020, there were 46,733,591 shares of the registrant’s common stock outstanding.

Table of Contents

TTEC HOLDINGS, INC. AND SUBSIDIARIES

JUNE 30, 2020 FORM 10-Q

TABLE OF CONTENTS

Page No.

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019 (unaudited)

1

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2020 and 2019 (unaudited)

2

Consolidated Statements of Stockholders’ Equity and Mezzanine Equity as of and for the three and six months ended June 30, 2020 and 2019 (unaudited)

3

Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (unaudited)

4

Notes to the Consolidated Financial Statements (unaudited)

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

33

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

42

Item 4.

Controls and Procedures

44

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

45

Item 1A.

Risk Factors

45

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

47

Item 5.

Other Information

47

Item 6.

Exhibits

47

SIGNATURES

49

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TTEC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Amounts in thousands, except share amounts)

(Unaudited)

June 30,

December 31,

 

    

2020

    

2019

 

ASSETS

Current assets

Cash and cash equivalents

$

482,255

$

82,407

Accounts receivable, net of allowance of $5,795 and $5,452

 

353,289

 

331,096

Prepaids and other current assets

 

87,950

 

96,287

Income and other tax receivables

 

35,358

 

40,035

Total current assets

 

958,852

 

549,825

Long-term assets

Property, plant and equipment, net

 

177,099

 

176,633

Operating lease assets

142,701

150,808

Goodwill

 

307,139

 

301,694

Deferred tax assets, net

 

10,508

 

13,263

Other intangible assets, net

 

108,205

 

115,596

Other long-term assets

 

62,485

 

68,969

Total long-term assets

 

808,137

 

826,963

Total assets

$

1,766,989

$

1,376,788

LIABILITIES, STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY

Current liabilities

Accounts payable

$

73,640

$

64,440

Accrued employee compensation and benefits

 

119,476

 

114,165

Other accrued expenses

 

37,892

 

79,171

Income tax payable

 

24,627

 

11,307

Deferred revenue

 

33,820

 

39,447

Current operating lease liabilities

45,121

45,218

Other current liabilities

 

10,214

 

9,541

Total current liabilities

 

344,790

 

363,289

Long-term liabilities

Line of credit

 

700,000

 

290,000

Deferred tax liabilities, net

 

10,008

 

10,602

Non-current income tax payable

25,208

25,208

Non-current operating lease liabilities

116,558

127,395

Other long-term liabilities

 

68,472

 

79,641

Total long-term liabilities

 

920,246

 

532,846

Total liabilities

 

1,265,036

 

896,135

Commitments and contingencies (Note 10)

Redeemable noncontrolling interest

 

54,026

 

48,923

Stockholders’ equity

Preferred stock; $0.01 par value; 10,000,000 shares authorized; zero shares outstanding as of June 30, 2020 and December 31, 2019

 

 

Common stock; $0.01 par value; 150,000,000 shares authorized; 46,682,482 and 46,488,938 shares outstanding as of June 30, 2020 and December 31, 2019, respectively

 

467

 

465

Additional paid-in capital

 

355,968

 

356,409

Treasury stock at cost; 35,369,771 and 35,563,315 shares as of June 30, 2020 and December 31, 2019, respectively

 

(602,117)

 

(605,314)

Accumulated other comprehensive income (loss)

 

(128,528)

 

(106,234)

Retained earnings

 

810,234

 

773,218

Noncontrolling interest

 

11,903

 

13,186

Total stockholders’ equity

 

447,927

 

431,730

Total liabilities and stockholders’ equity and mezzanine equity

$

1,766,989

$

1,376,788

The accompanying notes are an integral part of these consolidated financial statements.

1

Table of Contents

TTEC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(Amounts in thousands, except per share amounts)

(Unaudited)

Three months ended June 30,

Six months ended June 30,

 

    

2020

    

2019

    

2020

    

2019

 

Revenue

$

453,081

$

392,515

$

885,294

$

786,871

Operating expenses

Cost of services (exclusive of depreciation and amortization presented separately below)

 

337,306

 

299,237

 

658,863

 

592,571

Selling, general and administrative

 

47,360

 

50,864

 

97,194

 

100,584

Depreciation and amortization

 

18,660

 

17,050

 

37,532

 

33,793

Restructuring charges, net

793

428

1,331

1,389

Impairment losses

 

 

2,063

 

696

 

3,569

Total operating expenses

 

404,119

 

369,642

 

795,616

 

731,906

Income from operations

 

48,962

 

22,873

 

89,678

 

54,965

Other income (expense)

Interest income

 

491

 

429

 

855

 

769

Interest expense

 

(3,104)

 

(4,208)

 

(12,696)

 

(9,496)

Other income (expense), net

(1,761)

1,865

 

1,635

 

2,663

Total other income (expense)

 

(4,374)

 

(1,914)

 

(10,206)

 

(6,064)

Income before income taxes

 

44,588

 

20,959

 

79,472

 

48,901

Provision for income taxes

 

(11,039)

 

(7,345)

 

(21,238)

 

(14,811)

Net income

 

33,549

 

13,614

 

58,234

 

34,090

Net income attributable to noncontrolling interest

 

(2,224)

 

(1,816)

 

(5,375)

 

(3,290)

Net income attributable to TTEC stockholders

$

31,325

$

11,798

$

52,859

$

30,800

Other comprehensive income (loss)

Net income

$

33,549

$

13,614

$

58,234

$

34,090

Foreign currency translation adjustments

 

10,980

 

4,749

 

(18,834)

 

6,380

Derivative valuation, gross

 

5,101

 

6,082

 

(5,448)

 

10,262

Derivative valuation, tax effect

 

(1,317)

 

(1,630)

 

1,429

 

(2,749)

Other, net of tax

 

119

 

(38)

 

246

 

17

Total other comprehensive income (loss)

 

14,883

 

9,163

 

(22,607)

 

13,910

Total comprehensive income (loss)

 

48,432

 

22,777

 

35,627

 

48,000

Less: Comprehensive income attributable to noncontrolling interest

 

(1,867)

 

(1,787)

 

(3,567)

 

(3,290)

Comprehensive income attributable to TTEC stockholders

$

46,565

$

20,990

$

32,060

$

44,710

Weighted average shares outstanding

Basic

 

46,619

 

46,318

 

46,559

 

46,261

Diluted

46,861

 

46,684

 

46,838

 

46,636

Net income per share attributable to TTEC stockholders

Basic

$

0.67

$

0.25

$

1.14

$

0.67

Diluted

$

0.67

$

0.25

$

1.13

$

0.66

Dividends declared per share outstanding

$

$

$

0.34

$

0.30

The accompanying notes are an integral part of these consolidated financial statements.

2

Table of Contents

TTEC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity and Mezzanine Equity

(Amounts in thousands)

(Unaudited)

Three months ended June 30, 2020 and 2019

Stockholders’ Equity of the Company

 

    

    

    

    

    

    

    

    

    

    

    

    

    

Accumulated

    

    

    

    

    

    

 

Other

 

Preferred Stock

Common Stock

Treasury

Additional

Comprehensive

Retained

Noncontrolling

Mezzanine

 

Shares

Amount

Shares

Amount

Stock

Paid-in Capital

Income (Loss)

Earnings

interest

Total Equity

Equity

 

Balance as of March 31, 2020

 

$

 

46,597

$

466

$

(603,531)

$

355,734

$

(143,208)

$

778,909

$

13,036

$

401,406

$

53,367

Net income

 

 

 

 

 

 

 

 

31,325

 

1,664

 

32,989

560

Dividends to shareholders ($0.00 per common share)

 

 

 

 

 

 

Acquisition of noncontrolling interest

99

Dividends distributed to noncontrolling interest

 

 

 

 

 

 

 

 

 

(3,000)

 

(3,000)

Foreign currency translation adjustments

 

 

 

 

 

 

 

10,777

 

 

203

 

10,980

Derivatives valuation, net of tax

 

 

 

 

 

 

 

3,784

 

 

 

3,784

Vesting of restricted stock units

 

 

 

85

 

1

 

1,414

 

(2,823)

 

 

 

 

(1,408)

Equity-based compensation expense

 

 

 

 

 

 

3,057

 

 

 

 

3,057

Other, net of tax

 

 

 

 

 

 

 

119

 

 

 

119

Balance as of June 30, 2020

 

$

 

46,682

$

467

$

(602,117)

$

355,968

$

(128,528)

$

810,234

$

11,903

$

447,927

$

54,026

Stockholders’ Equity of the Company

 

    

    

    

    

    

    

    

    

    

    

    

    

    

Accumulated

    

    

    

    

    

    

 

Other

 

Preferred Stock

Common Stock

Treasury

Additional

Comprehensive

Retained

Noncontrolling

Mezzanine

 

Shares

Amount

Shares

Amount

Stock

Paid-in Capital

Income (Loss)

Earnings

interest

Total Equity

Equity

 

Balance as of March 31, 2019

 

$

 

46,297

$

463

$

(608,490)

$

353,639

$

(119,878)

$

729,930

$

9,610

$

365,274

$

Cumulative effect of adopting accounting standard updates

Net income

 

 

 

 

 

 

 

11,798

 

1,816

 

13,614

Dividends to shareholders ($0.00 per common share)

 

 

 

 

 

 

Capital contribution from noncontrolling interest

2,032

2,032

Dividends distributed to noncontrolling interest

 

 

 

 

 

 

 

 

 

(1,350)

 

(1,350)

Foreign currency translation adjustments

 

 

 

 

 

 

 

4,778

 

 

(29)

 

4,749

Derivatives valuation, net of tax

 

 

 

 

 

 

 

4,452

 

 

 

4,452

Vesting of restricted stock units

 

 

 

90

 

1

 

1,486

 

(2,937)

 

 

 

 

(1,450)

Equity-based compensation expense

 

 

 

 

 

 

3,366

 

 

 

 

3,366

Other, net of tax

 

 

 

 

 

 

 

(38)

 

 

 

(38)

Balance as of June 30, 2019

 

$

 

46,387

$

464

$

(607,004)

$

354,068

$

(110,686)

$

741,728

$

12,079

$

390,649

$

Six months ended June 30, 2020 and 2019

Stockholders’ Equity of the Company

 

    

    

    

    

    

    

    

    

    

    

    

    

    

Accumulated

    

    

    

    

    

    

 

Other