TeleTech Announces Second Quarter 2012 Financial Results

TeleTech Holdings, Inc. (NASDAQ: TTEC), a leading global provider of technology-enabled customer experience solutions, today announced financial results for the second quarter ended June 30, 2012. The Company also filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission for the quarter ended June 30, 2012.

“Our results this quarter reflect our previously announced plans to exit certain underperforming markets while at the same time actively investing in innovation and revenue diversification,” said Ken Tuchman, TeleTech chairman and chief executive officer. “Our diversified business segments comprised 21 percent of revenue up from 15 percent in the year-ago quarter,” continued Tuchman. “Clients are coming to TeleTech because of the breadth and depth of our customer experience expertise as demonstrated by the eleven new clients we signed during the quarter. Our ability to holistically design, implement and manage a brand differentiating experience across multiple channels is helping our clients generate long-term customer equity.”

SECOND QUARTER 2012 FINANCIAL HIGHLIGHTS

• Second quarter 2012 revenue was $288.8 million compared to $293.6 million in the second quarter 2011. Second quarter 2012 revenue was lower by approximately $13 million due to the company’s previously announced decision to exit certain underperforming markets and programs in addition to a $9.7 million negative foreign currency impact. Excluding the above reductions, revenue increased approximately 6 percent over the year-ago quarter.
• Income from operations for the second quarter 2012 included $17.3 million of restructuring and impairment charges which was in line with the Company’s previously announced range of $15 million to $18 million in charges to be incurred in 2012. These actions are expected to positively impact operating income by $10 million to $12 million on an annualized basis when fully realized.
• Second quarter 2012 income from operations was $6.4 million or 2.2 percent of revenue compared to $24.6 million or 8.4 percent of revenue in the second quarter 2011. Excluding the restructuring and impairment charges discussed above, second quarter 2012 non-GAAP income from operations was $23.7 million or 8.2 percent of revenue.
• Second quarter 2012 fully diluted earnings per share attributable to TeleTech stockholders was 10 cents compared to 38 cents in the second quarter 2011. Excluding restructuring, impairment and other items, second quarter 2012 non-GAAP fully diluted earnings per share attributable to TeleTech stockholders was 31 cents compared to 29 cents in the year-ago quarter.
• During the second quarter 2012 TeleTech signed an estimated $55 million in annualized revenue from both new and expanding client relationships. Approximately 70 percent represented recurring revenue.

STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES AND STRATEGIC ACQUISITIONS

• As of June 30, 2012, TeleTech had cash and cash equivalents of $170.6 million, $78.0 million of borrowings on its credit facility and total other debt of $13.0 million, resulting in net cash of $79.6 million.
• TeleTech had approximately $418 million of additional borrowing capacity available under its revolving credit facility as of June 30, 2012. This provides TeleTech with the continued financial flexibility to fund organic growth, share repurchases and pursue accretive acquisitions.
• Cash flow from operations in the second quarter 2012 increased 45 percent to $34.0 million from $23.4 million in the second quarter 2011. The increase was primarily due to the timing of certain working capital items.
• Capital expenditures in the second quarter 2012 were $11.0 million compared to $8.5 million in the second quarter 2011. The higher capital expenditures were primarily related to the selective expansion of capacity in line with TeleTech’s new business wins as well as increased investments in its technology-based offerings.
• TeleTech repurchased 1.2 million shares of common stock during the second quarter 2012 for a total cost of $18.1 million. As of June 30, 2012, there was $15.9 million authorized for future share repurchases.

SEGMENT REPORTING

To provide clarity as to the financial profile and performance of TeleTech’s primary businesses, TeleTech reports 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 are reported separately from the above. Highlights of the financial performance of the primary segments are provided below.

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