PR Newswire | Nov 9, 2021 04:06PM EST

11/09 15:05 CST

TTEC Announces Record Third Quarter 2021 Financial ResultsThird Quarter 2021Revenue Increased 15.0 Percent to $566.7 MillionOperating 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 RevenueFully Diluted EPS was $0.30 ($1.01 Non-GAAP)Bookings of $171 million DENVER, Nov. 9, 2021

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 marginof approximately 12.6 percent.

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

Adjusted EBITDA marginof 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.

ABOUTTTEC

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 operatingactivities :

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 1,046 1,949consideration

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 (11,517) (48,686)acquisitions

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 (6,272) (104)cash

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 - - - 6,273Motif acquisition

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 (3,691) (3,855) (11,368) (6,925)and other, and tax effects of items separately disclosed above

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

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SOURCE TTEC Holdings, Inc.