SOURCE: TeleTech

August 04, 2008 06:05 ET

TeleTech Announces Second Quarter 2008 Financial Results

Second Quarter Revenue Reaches Record $357 Million; Signs Estimated $65 Million of New Annualized Revenue During the Second Quarter; Generates $12 Million of Free Cash Flow; Reaffirms $100M Share Repurchase Authorization

ENGLEWOOD, CO--(Marketwire - August 4, 2008) - TeleTech Holdings, Inc. (NASDAQ: TTEC), one of the largest and most geographically diverse global providers of business process outsourcing ("BPO") solutions, today announced business highlights for the second quarter ended June 30, 2008.

TeleTech reported record second quarter 2008 revenue of $357 million, an 8.4 percent increase over second quarter 2007 revenue of $330 million. Revenue in TeleTech's BPO segment grew 10.4 percent from the year-ago period.

TeleTech believes it has one of the largest and most geographically diverse offshore footprints of any global BPO provider with approximately 24,000 offshore workstations representing more than 60 percent of its total delivery capacity. Second quarter 2008 revenue from TeleTech's offshore delivery centers grew approximately 18 percent to $156 million and represented 44 percent of total revenue. TeleTech's offshore workstations currently span seven countries including Argentina, Canada, Costa Rica, Malaysia, Mexico, the Philippines and South Africa.

TeleTech's income from operations was $29.7 million or 8.3 percent of revenue. Income from operations for the second quarter 2008 included $0.4 million of restructuring charges and, as previously disclosed, $3.4 million of audit, legal and other professional fees associated with the Audit Committee's review of the Company's equity-based comensation practices and the subsequent financial restatement. Excluding these charges, which totaled $3.8 million, TeleTech's income from operations in the second quarter 2008 was $33.5 million or 9.4 percent of revenue, an increase from a 9.1 percent operating margin, excluding unusual charges, in the year-ago quarter. Furthermore, excluding $2.0 million of non-cash expense in the 2008 second quarter for equity-based compensation, operating margin would have been 9.9 percent.

Fully diluted GAAP earnings per share for the second quarter 2008 were 28 cents on net income of $20.4 million. Excluding the unusual charges discussed above, which totaled $3.8 million pre-tax or approximately 4 cents per share after-tax, second quarter 2008 non-GAAP earnings per share were 32 cents, up 28 percent from 25 cents non-GAAP earnings per share in the year-ago quarrter.

EXECUTIVE COMMENTARY ON TELETECH'S SECOND QUARTER FINANCIAL RESULTS

"I am pleased that we delivered record second quarter revenue of $357 million," said Kenneth Tuchman, chairman and chief executive officer. "Our year-to-date BPO revenue grew 11.4 percent and our year-to-date operating margin, excluding unusual items, increased to 9.6 percent. We continue to perform well in a dynamic global economy and our leading industry position enabled us to win an estimated $65 million in annualized new business during the second quarter of 2008. We believe the third quarter of 2008 will again represent a strong level of new business wins, based on the size and number of deals we are currently working to complete."

SECOND QUARTER 2008 FINANCIAL HIGHLIGHTS

Solid Balance Sheet Continues to Fund Organic Growth

--  As of June 30, 2008, TeleTech had cash and cash equivalents of $127
    million and total debt of $90 million.
--  Capital expenditures were $21 million in the 2008 second quarter of
    which approximately 80 percent were for growth related needs with the
    balance for improving TeleTech's embedded infrastructure.
    

New Business

--  During the second quarter of 2008, TeleTech signed an estimated $65
    million in annualized long-term revenue from new and expanded client
    relationships.
    

Business Outlook

--  Consistent with our previous guidance, TeleTech expects 2008 revenue
    will grow a minimum of between 6 and 8 percent and 2008 operating margin
    will range between 9 and 10 percent, before unusual charges.
    

CONFERENCE CALL

A conference call and webcast with management will be held on Monday, August 4, 2008, at 8:30 a.m. Eastern Time. You are invited to join the live webcast of the conference call by visiting the "Investors" section of the TeleTech website at www.TeleTech.com. If you are unable to participate during the live webcast, a replay will be available on the TeleTech website through Monday, August 18, 2008.

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 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. The presentation of 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.

ABOUT TELETECH

TeleTech is one of the largest and most geographically diverse global providers of business process outsourcing solutions. We have a 26-year history of designing, implementing, and managing critical business processes for Global 1000 companies to help them improve their customers' experience, expand their strategic capabilities, and increase their operating efficiencies. By delivering a high-quality customer experience through the effective integration of customer-facing front-office processes with internal back-office processes, we enable our clients to better serve, grow, and retain their customer base. We use Six Sigma-based quality methods continually to design, implement, and enhance the business processes we deliver to our clients and we also apply this methodology to our own internal operations. We have developed deep domain expertise and support approximately 250 business process outsourcing programs serving 100 global clients in the automotive, communications and media, financial services, government, healthcare, retail, technology and travel and leisure industries. Our integrated global solutions are provided by more than 50,000 employees utilizing 39,000 workstations across 89 Delivery Centers in 17 countries.

FORWARD-LOOKING STATEMENTS

Statements in this press release that relate to future results and events (including statements about future financial and operating performance) are forward-looking statements based on TeleTech's current expectations. Actual results and events in future periods could differ materially from those projected in these forward-looking statements because of a number of risks and uncertainties including: general economic, business and industry conditions; the loss of business or lower volumes from significant clients; delivery center utilization and labor rates; the pace at which we are able to ramp new business; the effect of TeleTech's failure to timely file all of its required reports under the Securities and Exchange Act of 1934 and its restatement of previously issued financial statements, including shareholder litigation and action by the SEC and/or other governmental agencies; negative tax or other implications for TeleTech resulting from any accounting adjustments or other factors; unexpected regulatory changes, tax laws, and data privacy measures; data privacy issues; our ability to accurately predict geographic revenue mix and seasonal sales trends; information technology and/or delivery center interruptions; issues or matters that may arise from governmental and/or administrative agency investigations; our ability to successfully remediate identified internal control deficiencies; litigation and governmental investigations or proceedings arising out of or related to accounting and financial reporting matters; fluctuations in foreign currency exchange rates along with our ability to effectively hedge exposure to changes in foreign currency exchange and/or interest rates; the ability to attract, retain and motivate key personnel; and political instability, the effect of armed hostilities, terrorism and natural disasters. A detailed discussion of these and other factors that could affect our results is included in TeleTech's SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2007.

                 TELETECH HOLDINGS, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share data)

                              (Unaudited)


                                 Three months ended     Six months ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
                                          As Restated           As Restated

Revenue                         $ 357,416  $ 329,608  $ 725,052  $ 662,348

Operating Expenses:
  Cost of services                265,833    237,228    535,933    474,470
  Selling, general and
   administrative                  45,858     48,611     97,230    100,707
  Depreciation and amortization    15,624     13,794     30,784     27,348
  Restructuring charges, net          440        262      2,642        262
  Impairment losses                     -     13,515          -     13,515
                                ---------  ---------  ---------  ---------
         Total operating
          expenses                327,755    313,410    666,589    616,302
                                ---------  ---------  ---------  ---------

Income From Operations             29,661     16,198     58,463     46,046

  Other income (expense)             (543)    (2,235)    (1,591)    (3,512)
                                ---------  ---------  ---------  ---------

Income Before Income Taxes and
 Minority Interest                 29,118     13,963     56,872     42,534

  (Provision) benefit for
   income taxes                    (7,536)    (4,737)   (15,329)   (15,111)
                                ---------  ---------  ---------  ---------

Income Before Minority Interest    21,582      9,226     41,543     27,423

  Minority interest                (1,220)      (508)    (2,056)      (942)
                                ---------  ---------  ---------  ---------

Net Income                      $  20,362  $   8,718  $  39,487  $  26,481
                                =========  =========  =========  =========

Net Income Per Share:
  Basic                         $    0.29  $    0.12  $    0.56  $    0.38
                                =========  =========  =========  =========

  Diluted                       $    0.28  $    0.12  $    0.55  $    0.36
                                =========  =========  =========  =========


Income From Operations Margin         8.3%       4.9%       8.1%       7.0%
Net Income Margin                     5.7%       2.6%       5.4%       4.0%
Effective Tax Rate after
 Minority Interest                   25.9%      33.9%      27.0%      35.5%


Weighted Average Shares
 Outstanding
  Basic                            69,977     70,580     69,957     70,474
  Diluted                          71,729     73,104     71,649     73,430




                TELETECH HOLDINGS, INC. AND SUBSIDIARIES
                            SEGMENT INFORMATION
                              (In thousands)

                                (Unaudited)

                                 Three months ended     Six months ended
                                      June 30,              June 30,
                                --------------------- --------------------
                                  2008       2007       2008       2007
                                ---------- ---------  ---------  ---------
                                          As Restated           As Restated


Revenue:
North American BPO              $  243,238 $ 225,792  $ 505,700  $ 460,237
International BPO                  114,178    98,111    219,352    190,516
Database Marketing and
 Consulting                              -     5,705          -     11,595
                                ---------- ---------  ---------  ---------
   Total                        $  357,416 $ 329,608  $ 725,052  $ 662,348
                                ========== =========  =========  =========

Income (Loss) From Operations:
North American BPO              $   26,457 $  28,742  $  59,001  $  62,347
International BPO                    3,113     4,689       (143)     4,974
Database Marketing and
 Consulting                             91   (17,233)      (395)   (21,275)
                                ---------- ---------  ---------  ---------
   Total                        $   29,661 $  16,198  $  58,463  $  46,046
                                ========== =========  =========  =========





                 TELETECH HOLDINGS, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (In thousands)

                                                    June 30,   December 31,
                                                      2008         2007
                                                  ------------ ------------
                                                  (Unaudited)

ASSETS
Current assets:
   Cash and cash equivalents                      $    126,914 $     91,239
   Accounts receivable, net                            275,691      270,988
   Other current assets                                101,350       97,598
                                                  ------------ ------------
     Total current assets                              503,955      459,825

Property and equipment, net                            180,979      174,809
Other assets                                           121,311      125,661
                                                  ------------ ------------

Total assets                                      $    806,245 $    760,295
                                                  ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities                         $    186,723 $    186,810
Other long-term liabilities                            137,791      118,729
Minority interest                                        4,514        3,555
Total stockholders' equity                             477,217      451,201
                                                  ------------ ------------

      Total liabilities and stockholders' equity  $    806,245 $    760,295
                                                  ============ ============




                TELETECH HOLDINGS, INC. AND SUBSIDIARIES
             RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
                  (In thousands, except per share data)

                                (Unaudited)


                                 Three months ended     Six months ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
Reconciliation of EBIT:

Net Income                      $  20,362  $   8,718  $  39,487  $  26,481
  Interest income                  (1,388)      (492)    (2,474)      (885)
  Interest expense                  1,489      1,594      3,054      3,062
  Provision (benefit) for
   income taxes                     7,536      4,737     15,329     15,111
                                ---------  ---------  ---------  ---------
EBIT                            $  27,999  $  14,557  $  55,396  $  43,769

Reconciliation of Free Cash Flow:

Cash Flow From Operating
 Activities:
   Net income                   $  20,362  $   8,718  $  39,487  $  26,481
   Adjustments to reconcile net
    income to net cash
    provided by operating
    activities:
      Depreciation and
       amortization                15,624     13,794     30,784     27,348
      Other                        (2,856)    (3,274)   (10,966)    (3,758)
                                ---------  ---------  ---------  ---------
   Net cash provided by
    operating activities        $  33,130  $  19,238  $  59,305  $  50,071
                                ---------  ---------  ---------  ---------

Total Capital Expenditures         21,223     15,514     36,408     29,020
                                ---------  ---------  ---------  ---------

Free Cash Flow                  $  11,907  $   3,724  $  22,897  $  21,051
                                =========  =========  =========  =========

Reconciliation of Non-GAAP
 Income from Operations:

Income from Operations          $  29,661  $  16,198  $  58,463  $  46,046
    Restructuring charges, net        440        262      2,642        262
    Impairment losses                   -     13,515          -     13,515
    Equity comp review and
     restatement expenses           3,386          -      8,354          -
                                ---------  ---------  ---------  ---------
Non-GAAP Income from Operations $  33,487  $  29,975  $  69,459  $  59,823

Reconciliation of Non-GAAP EPS:

GAAP Net Income                 $  20,362  $   8,718  $  39,487  $  26,481
  Add:  Asset impairment and
   restructuring charges, net
   of related taxes                   295      9,341      1,770      9,341
  Add: Equity comp review and
   restatement expenses, net of
   related taxes                    2,269          -      5,597          -
                                ---------  ---------  ---------  ---------
Non-GAAP Net Income             $  22,925  $  18,059  $  46,854  $  35,822

  Diluted shares outstanding       71,729     73,104     71,649     73,430

Non-GAAP Net Income per Diluted
 Share                          $    0.32  $    0.25  $    0.65  $    0.49

Contact Information


  • Investor Contact:
    Karen Breen
    303-397-8592

    Media Contact:
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    303-397-8325