, Inc. (NASDAQ: TTEC), a leading global provider of technology-enabled customer experience solutions, today announced financial results for the first quarter ended March 31, 2012. The Company also filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission for the quarter ended March 31, 2012.
“TeleTech’s first quarter results reflect our success in delivering a differentiated experience that is helping our clients increase the lifetime value of their customers,” said Ken Tuchman, TeleTech chairman and chief executive officer. “Our next generation customer experience platform is enabling leading global brands to design, build, grow and manage superior multichannel customer experiences that are driving dramatic gains in customer satisfaction and Net Promoter® scores.”
FIRST QUARTER 2012 FINANCIAL HIGHLIGHTS
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES AND STRATEGIC ACQUISITIONS
- First quarter 2012 revenue increased 4.2 percent to $292.7 million compared to $281.0 million in the first quarter 2011.
- First quarter 2012 income from operations was $18.8 million or 6.4 percent of revenue compared to $21.5 million or 7.6 percent of revenue in the first quarter 2011. Income from operations for the first quarter 2012 included $3.9 million of restructuring, impairment and acquisition-related charges. Excluding these charges, first quarter 2012 non-GAAP income from operations was $22.7 million or 7.7 percent of revenue.
- First quarter 2012 fully diluted earnings per share attributable to TeleTech shareholders increased 55.6 percent to 28 cents compared to 18 cents in the first quarter 2011. First quarter 2012 non-GAAP fully diluted earnings per share attributable to TeleTech shareholders was 29 cents.
- During the first quarter 2012 TeleTech signed an estimated $85 million in annualized revenue from both new and expanding client relationships. Approximately 80 percent represents recurring revenue.
NEW SEGMENT REPORTING INTRODUCED
- As of March 31, 2012, TeleTech had cash and cash equivalents of $172.8 million, $85.0 million of borrowings on its credit facility and total other debt of $8.0 million, resulting in a net positive cash position of $79.8 million.
- TeleTech had $410.6 million of additional borrowing capacity available under its revolving credit facility as of March 31, 2012. During the first quarter 2012, the company exercised the $150 million accordion feature under its revolving credit facility thereby increasing the total committed capacity to $500 million. This provides TeleTech with the financial flexibility to continue to fund organic growth, share repurchases and the pursuit of accretive acquisitions.
- Cash flow from operations in the first quarter 2012 was $14.7 million compared to $24.6 million in the first quarter 2011. The reduction is primarily due to the timing of certain working capital items.
- Capital expenditures in the first quarter 2012 were $6.4 million compared to $3.9 million in the first quarter 2011. The higher capital expenditures were primarily related to the select expansion of capacity in line with TeleTech’s new business wins as well as increased investment in its technology-based offerings.
- TeleTech repurchased 1.4 million shares of common stock during the first quarter 2012 for a total cost of $22.7 million. As of March 31, 2011, there was $34.0 million authorized for future share repurchases.
To provide greater clarity as to the financial profile and performance of TeleTech’s key business segments, the company introduced new segment reporting in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012. TeleTech will now report financial results for the following four business segments: Customer Management Services (CMS), Customer Growth Services (CGS), Customer Technology Services (CTS) and Customer Strategy Services (CSS). Corporate expenses will be reported separately from the above. Highlights of the financial performance of the primary segments are provided below.
- The Customer Management Services (CMS) segment includes the company’s customer experience delivery solutions which integrate innovative technology with highly-trained professionals to optimize the customer experience across all channels and all stages of the customer lifecycle from an onshore, offshore or work-from-home environment. CMS first quarter 2012 revenue was $234.9 million, representing 80.3 percent of total first quarter 2012 revenue, and compared to $246.1 million in the first quarter 2011. CMS first quarter 2012 income from operations was $45.4 million, or 19.3 percent of revenue, compared to 19.6 percent of revenue in the first quarter 2011.
- The Customer Growth Services (CGS) segment includes the company’s technology-enabled revenue generation business. CGS first quarter 2012 revenue was $22.8 million, representing 7.8 percent of total first quarter 2012 revenue, and compared to $22.1 million in the first quarter 2011. CGS first quarter 2012 income from operations was $1.1 million or 4.7 percent of revenue, compared to 13.5 percent of revenue in the first quarter 2011. CGS first quarter 2012 operating income includes a $1.8 million charge associated with the impairment of the Direct Alliance trade-name intangible asset given the renaming of the subsidiary to Revana TM. Excluding this charge, first quarter 2012 operating income was $2.9 million or 12.6 percent of revenue.
- The Customer Technology Services (CTS) segment includes the company’s hosted and managed technology offerings. CTS first quarter 2012 revenue increased more than five-fold from the first quarter 2011 to $25.6 million, primarily as a result of the acquisition of eLoyalty and representing 8.7 percent of total first quarter 2012 revenue. CTS first quarter 2012 income from operations was $3.6 million or 14.2 percent of revenue compared to $2.7 million or 58.2 percent of revenue in the first quarter 2011. CTS first quarter 2012 operating results reflect the mix shift of services from purely hosted solutions in the year-ago quarter to both hosted and managed solutions in the first quarter 2012 along with an increased investment in sales and marketing to support this segment’s continued growth initiatives.
- The Customer Strategy Services (CSS) segment includes the company’s customer experience strategy and data analytics businesses. CSS first quarter 2012 revenue increased 16.7 percent to $9.5 million from $8.1 million in the year-ago quarter. CSS first quarter 2012 income from operations was $0.9 million or 9.4 percent of revenue compared to $0.5 million or 5.7 percent of revenue in the first quarter 2011.
- The first quarter 2012 operating income of the above segments excludes $32.3 million of corporate expenses which were lower by $0.6 million or 2.0 percent from $32.9 million in the first quarter 2011. TeleTech expects to continue to further leverage its corporate expenses as a percentage of revenue across its expanding suite of services.
- In the fourth quarter 2011, TeleTech began the process to exit certain unprofitable markets and programs, which could reduce 2012 revenue up to $100 to $115 million while positively impacting operating income up to $10 to $12 million on an annualized basis when fully realized. These actions could result in asset impairment and restructuring costs in the range of up to $15 to $18 million during 2012.
- TeleTech continues to expect 2012 revenue will range between $1.15 billion and $1.2 billion. Growth in both existing and new client relationships is expected to offset any revenue reduction resulting from the decision to exit certain unprofitable markets.
- TeleTech continues to expect 2012 operating margin will increase from 2011 and range between 8.5 and 9.0 percent, before any unusual charges.
The company’s filings with the Securities and Exchange Commission are available in the “Investors” section of TeleTech’s website, which can be found at
A conference call and webcast with management will be held on Wednesday, May 2, 2012 at 8:30 a.m. Eastern Time. You are invited to join a live webcast of the conference call by visiting the “Investors” section of the TeleTech website at
. If you are unable to participate during the live webcast, a replay will be available on the TeleTech website through Wednesday, May 16, 2012.
NON-GAAP FINANCIAL MEASURES
To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP) in the United States, the Company uses the following non-GAAP financial measures: Free Cash Flow, Non-GAAP Income from Operations, Non-GAAP EBITDA and Non-GAAP EPS. TeleTech believes that providing these non-GAAP financial measures provides investors with greater transparency to the information used by TeleTech's management in its financial and operational decision making and allows investors to see TeleTech's results "through the eyes" of management. TeleTech also believes that providing this information better enables TeleTech's investors to understand its operating performance and information used by management to evaluate and measure such performance. These financial measures are not intended to be used in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures is available in the financial tables attached to this press release. We also encourage all investors to read our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.