TTEC Announces First Quarter 2024 Financial Results

Published

First Quarter 2024

Revenue was $576.6 Million, down 8.9 PercentOperating Income was $22.7 Million or 3.9 Percent of Revenue($37.9 Million or 6.6 Percent of Revenue Non-GAAP)Net Income was $0.5 Million or 0.1 Percent of Revenue($12.6 Million or 2.2 Percent of Revenue Non-GAAP)Adjusted EBITDA was $54.9 Million or 9.5 Percent of RevenueFully Diluted EPS was $0.01 ($0.27 Non-GAAP)

Reiterates Outlook for Full Year 2024

DENVER, May 8, 2024 /PRNewswire/ -- TTEC Holdings, Inc. (NASDAQ:TTEC), a leading global CX (customer experience) technology and services innovator for AI-enabled CX with solutions from TTEC Engage and TTEC Digital, announced today financial results for the first quarter ended March 31, 2024.

"We met our first quarter objectives while navigating a fluid demand environment. We continued to make progress executing our diversification strategy that includes new clients, partnerships, solutions, and geographic delivery locations. We established new client relationships with over two dozen accounts, several of which are large enterprises that present strong long-term growth opportunities," commented Ken Tuchman, chairman and chief executive officer of TTEC.

Tuchman continued, "In TTEC Digital we are gaining momentum as one of the dominant CX partners working at the intersection of Contact Center technology, CRM, AI, and analytics. With our expert teams of CX strategists, data scientists, and engineers, TTEC Digital continues to deliver strong bookings and a growing pipeline."

"In TTEC Engage, we are attracting and ramping an exciting group of new enterprise clients leveraging our expanded geographic footprint and technology-enabled solutions. We are working through anticipated first half 2024 headwinds and are committed to returning the Company to long-term growth and increased profitability," Tuchman concluded.

FIRST QUARTER 2024 FINANCIAL HIGHLIGHTS                     

Revenue        

  • First quarter 2024 GAAP revenue decreased 8.9 percent to $576.6 million compared to $633.3 million in the prior year.
  • Foreign exchange had a $1.8 million positive impact on revenue in the first quarter of 2024.

Income from Operations

  • First quarter 2024 GAAP income from operations was $22.7 million, or 3.9 percent of revenue, compared to $44.4 million, or 7.0 percent of revenue in the prior year.
  • Non-GAAP income from operations, excluding restructuring and impairment charges, equity-based compensation expenses, amortization of purchased intangibles, and other items, was $37.9 million, or 6.6 percent of revenue, compared to $60.7 million, or 9.6 percent for the prior year.
  • Foreign exchange had a $0.5 million negative impact on Non-GAAP income from operations in the first quarter of 2024.

Adjusted EBITDA    

  • First quarter 2024 Non-GAAP Adjusted EBITDA was $54.9 million, or 9.5 percent of revenue, compared to $82.9 million, or 13.1 percent of revenue in the prior year.

Earnings Per Share

  • First quarter 2024 GAAP fully diluted earnings per share was $0.01 compared to $0.44 in the prior year.
  • Non-GAAP fully diluted earnings per share was $0.27 compared to $0.78 in the prior year.

CASH FLOW AND BALANCE SHEET 

  • Cash flow from operations in the first quarter of 2024 was ($15.6) million compared to $49.1 million for the first quarter of 2023.
  • Capital expenditures in the first quarter of 2024 were $13.5 million compared to $13.7 million for the first quarter of 2023.
  • As of March 31, 2024, TTEC had cash and cash equivalents of $91.5 million and debt of $956.8 million, resulting in a net debt position of $865.3 million. This compares to a net debt position of $781.8 million for the same period 2023.
  • As of March 31, 2024, TTEC's remaining borrowing capacity under its revolving credit facility was approximately $95 million compared to $335 million for the same period 2023.
  • On February 27, 2024, the Board declared the semi-annual dividend of $0.06 per share, or $2.8 million, which was paid on April 30, 2024, to shareholders of record as of April 3, 2024.

SEGMENT REPORTING & COMMENTARY

TTEC reports financial results for the following two business segments: TTEC Digital and TTEC Engage. Financial highlights for the two segments are provided below.

TTEC Digital – Design, build and operate tech-enabled, insight-driven CX solutions

  • First quarter 2024 GAAP revenue for TTEC Digital decreased 4.2 percent to $112.0 million from $116.9 million for the year ago period. Income from operations was $3.3 million or 2.9 percent of revenue compared to an operating income of $0.8 million or 0.7 percent of revenue in the prior year. 
  • Non-GAAP income from operations was $9.3 million, or 8.3 percent of revenue, compared to Non-GAAP income from operations of $10.5 million or 9.0 percent of revenue in the prior year.

TTEC Engage – Digitally-enabled customer care, acquisition, and fraud mitigation services

  • First quarter 2024 GAAP revenue for TTEC Engage decreased 10.0 percent to $464.6 million from $516.4 million for the year ago period. Income from operations was $19.4 million or 4.2 percent of revenue compared to operating income of $43.6 million, or 8.4 percent of revenue in the prior year.
  • Non-GAAP income from operations was $28.7 million, or 6.2 percent of revenue, compared to Non-GAAP income from operations of $50.2 million, or 9.7 percent of revenue in the prior year.
  • Foreign exchange had a $1.7 million positive impact on revenue and $0.4 million negative impact on income from operations.

BUSINESS OUTLOOK

"We delivered upon our plan in the first quarter, especially the momentum in our TTEC Digital business as an increased level of clients across industries modernize their CX ecosystems with our cloud technology solutions. Operational execution in our TTEC Engage business is a top priority as we focus on increased utilization of our expanded global footprint, deepen our relationships with new and existing clients, and integrate AI-enabled solutions. We are also resolute in our commitment to meaningfully improve our TTEC Engage profit margins in the second half of this year," commented Kenny Wagers, chief financial officer of TTEC.

Wagers continued, "I want to convey our confidence in the attractiveness of the CX marketplace, our differentiated TTEC Engage and TTEC Digital technology and service capabilities, and our fortitude to execute and deliver long-term value to our clients and shareholders. We still believe that the second quarter will be the low point in our performance this year as we transition through the peak of the headwinds in our TTEC Engage business. This, in addition to the profit optimization initiatives shared in our last earnings call, gives us the confidence in achieving our full-year outlook."

TTEC Full Year 2024 Outlook

Full Year 2024Guidance

Full Year 2024Mid-Point

Revenue

$2,275M$2,365M

$2,320M

Non-GAAP adjusted EBITDA

$215M$259M

$237M

Non-GAAP adjusted EBITDA margins

9.5% — 11.0%

10.2 %

Non-GAAP operating income

$150M$194M

$172M

Non-GAAP operating income margins

6.6% — 8.2%

7.4 %

Interest expense, net

($79M) — ($81M)

($80M)

Non-GAAP adjusted tax rate

25% — 27%

26 %

Diluted share count

47.4M — 47.6M

47.5M

Non-GAAP earnings per a share

$1.10$1.78

$1.44

Engage Full Year 2024 Outlook

Full Year 2024Guidance

Full Year 2024Mid-Point

Revenue

$1,790M$1,850M

$1,820M

Non-GAAP adjusted EBITDA

$149M$179M

$164M

Non-GAAP adjusted EBITDA margins

8.4% — 9.7%

9.0 %

Non-GAAP operating income

$95M$125M

$110M

Non-GAAP operating income margins

5.3% — 6.8%

6.1 %

Digital Full Year 2024 Outlook

Full Year 2024Guidance

Full Year 2024Mid-Point

Revenue

$485M$515M

$500M

Non-GAAP adjusted EBITDA

$66M$80M

$73M

Non-GAAP adjusted EBITDA margins

13.5% — 15.5%

14.5 %

Non-GAAP operating income

$55M$69M

$62M

Non-GAAP operating income margins

11.2% — 13.3%

12.3 %

The Company has not quantitatively reconciled its guidance for Non-GAAP operating income, Non-GAAP operating income margins, Non-GAAP adjusted EBITDA, 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 restructuring and impairment charges, 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, operating income margins, EBITDA margins, and diluted earnings per share without unreasonable effort. Please note that the unavailable reconciling items could significantly impact the Company's 2024 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, among other items.

ABOUT TTEC 

TTEC (pronounced T-TEC) Holdings, Inc. (NASDAQ:TTEC) is a leading global CX (customer experience) technology and services innovator for AI-enabled digital CX solutions. 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 technology, the Company's TTEC Digital business designs, builds, and operates omnichannel contact center technology, CRM, AI and analytics solutions. The Company's TTEC Engage business delivers AI-enabled customer engagement, customer acquisition and growth, tech support, back office, and fraud prevention services. Founded in 1982, the Company's singular obsession with CX excellence has earned it leading client, customer, and employee satisfaction scores across the globe. The Company's approximately 58,000 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 Press Release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995., Forward-looking statements include, but are not limited to, statements relating to our operations, expected financial position, results of operation, effective tax rate, cash flow, leverage, liquidity, business strategy, competitive position, demand for our services in international operations, acquisition opportunities and impact of acquisitions, capital allocation and dividends, growth opportunities, spending, capital expenditures and investments, competition and market forecasts, industry trends, our human capital resources, and other business matters that are based on our current expectations, assumptions, and projections with respect to the future, and are not a guarantee of performance.

In this Release when we use words such as "may," "believe," "plan," "will," "anticipate," "estimate," "expect," "intend," "project," "would," "could," "target," or similar expressions, or when we discuss our strategy, plans, goals, initiatives, or objectives, we are making forward-looking statements. Unless otherwise indicated or except where the context otherwise requires, the terms "TTEC," "the Company," "we," "us" and "our" and other similar terms in this report refer to TTEC Holdings, Inc. and its subsidiaries. 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, 2023 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

Our forward-looking statements speak only as of the date that this release is issued. We undertake no obligation to update them, except as may be required by applicable law. Although we believe that our forward-looking statements are reasonable, they depend on many factors outside of our control and we can provide no assurance that they will prove to be correct.

Corporate Comms

Investor Relations

Marji Chimes

Paul Miller

marji.chimes@ttec.com

paul.miller@ttec.com 

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

Three months ended

 March 31,

2024

2023

Revenue

$  576,638

$  633,286

Operating Expenses:

Cost of services

453,818

482,678

Selling, general and administrative

74,575

74,010

Depreciation and amortization

25,145

25,827

Restructuring charges, net

249

2,053

Impairment losses

140

4,307

         Total operating expenses

553,927

588,875

Income From Operations

22,711

44,411

Other income (expense), net

(19,882)

(15,572)

Income Before Income Taxes

2,829

28,839

Provision for income taxes

(2,329)

(7,922)

Net Income

500

20,917

Net (loss) / income attributable to noncontrolling interest

(2,805)

(2,270)

Net (Loss) / Income Attributable to TTEC Stockholders

$    (2,305)

$    18,647

Net Income Per Share

Basic

$       0.01

$       0.44

Diluted

$       0.01

$       0.44

Net (Loss) / Income Per Share Attributable to TTEC Stockholders

Basic

$      (0.05)

$       0.39

Diluted

$      (0.05)

$       0.39

Income From Operations Margin

3.9 %

7.0 %

Net Income Margin

0.1 %

3.3 %

Net (Loss) / Income Attributable to TTEC Stockholders Margin

(0.4) %

2.9 %

Effective Tax Rate

82.3 %

27.5 %

Weighted Average Shares Outstanding

  Basic

47,432

47,234

  Diluted

47,587

47,401

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

(unaudited)

Three months ended

 March 31,

2024

2023

Revenue:

TTEC Digital

$     112,031

$      116,927

TTEC Engage

464,607

516,359

Total

$     576,638

$      633,286

Income From Operations:

TTEC Digital

$         3,288

$            785

TTEC Engage

19,423

43,626

Total

$       22,711

$       44,411

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

March 31,

December 31,

2024

2023

ASSETS

Current assets:

   Cash and cash equivalents

$           91,514

$       172,747

   Accounts receivable, net

404,651

394,868

   Prepaids and other current assets

104,985

95,064

   Income and other tax receivables

16,328

18,524

      Total current assets

617,478

681,203

Property and equipment, net

185,242

191,003

Operating lease assets

113,060

121,574

Goodwill

807,134

808,988

Other intangibles assets, net

189,814

198,433

Income and other tax receivables, long-term

41,501

44,673

Other assets

160,825

139,724

Total assets

$      2,115,054

$     2,185,598

LIABILITIES AND EQUITY

Current liabilities:

   Accounts payable

$           90,473

$         96,577

   Accrued employee compensation and benefits

120,340

146,184

   Deferred revenue

87,787

81,171

   Current operating lease liabilities

36,457

38,271

   Other current liabilities

49,158

40,824

      Total current liabilities

384,215

403,027

Long-term liabilities:

   Line of credit

953,000

995,000

   Non-current operating lease liabilities

90,218

96,809

   Other long-term liabilities

75,212

75,220

      Total long-term liabilities

1,118,430

1,167,029

Equity:

   Common stock

474

474

   Additional paid in capital

412,768

407,415

   Treasury stock

(589,475)

(589,807)

   Accumulated other comprehensive income (loss)

(93,733)

(89,876)

   Retained earnings

865,277

870,429

   Noncontrolling interest

17,098

16,907

      Total equity

612,409

615,542

Total liabilities and equity

$      2,115,054

$     2,185,598

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 Three Months Ended 

 Three Months Ended 

  March 31

  March 31

2024

2023

Cash flows from operating activities:

     Net income

$                            500

$                        20,917

     Adjustment to reconcile net income to net cash provided by operating activities :

          Depreciation and amortization

25,145

25,827

          Amortization of contract acquisition costs

283

716

          Amortization of debt issuance costs

643

268

          Imputed interest expense and fair value adjustments to contingent consideration

(1,240)

3,178

          Provision for credit losses

(31)

2,263

          Loss on disposal of assets

510

605

          Impairment losses

140

4,307

          Loss on dissolution of subsidiary

301

          Deferred income taxes

(12,628)

(4,994)

          Excess tax benefit from equity-based awards

292

(1)

          Equity-based compensation expense

5,812

4,154

          Loss / (gain) on foreign currency derivatives

77

(493)

          Changes in assets and liabilities, net of acquisitions:

                Accounts receivable 

(11,301)

11,089

                Prepaids and other assets 

3,094

13,325

                Accounts payable and accrued expenses 

(25,845)

(22,352)

                Deferred revenue and other liabilities 

(1,080)

(10,052)

                    Net cash provided by operating activities

(15,629)

49,058

Cash flows from investing activities:

     Proceeds from sale of property, plant and equipment

25

26

     Purchases of property, plant and equipment

(13,473)

(13,669)

          Net cash used in investing activities

(13,448)

(13,643)

Cash flows from financing activities:

     Net proceeds / (borrowings) from line of credit

(42,000)

(30,000)

     Payments on other debt

(741)

(600)

     Payments of contingent consideration and hold back payments to acquisitions

-

(9,162)

     Payments to noncontrolling interest

(2,520)

(3,367)

     Tax payments related to the issuance of restricted stock units

(127)

(510)

     Payments of debt issuance costs

(1,100)

-

          Net cash provided by financing activities

(46,488)

(43,639)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

1,847

878

Increase in cash, cash equivalents and restricted cash

(73,718)

(7,346)

Cash, cash equivalents and restricted cash, beginning of period

173,905

167,064

Cash, cash equivalents and restricted cash, end of period

$                     100,187

$                      159,718

 

TTEC HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

(In thousands, except per share data)

(unaudited)

Three months ended

 March 31,

2024

2023

Revenue

$  576,638

$  633,286

Reconciliation of Non-GAAP Income from Operations and EBITDA:

Income from Operations

$    22,711

$    44,411

Restructuring charges, net

249

2,053

Impairment losses

140

4,307

Cybersecurity incident related impact, net of insurance recovery

-

(3,236)

Property costs not related to operations

1,033

-

Liability related to notifications triggered by labor scheme   (1)

(475)

-

Equity-based compensation expenses

5,812

4,154

Amortization of purchased intangibles 

8,445

9,003

         Non-GAAP Income from Operations

$    37,915

$    60,692

         Non-GAAP Income from Operations Margin

6.6 %

9.6 %

Depreciation and amortization

16,069

16,824

Changes in acquisition contingent consideration

(1,240)

3,178

Change in escrow balance related to acquisition

-

625

Loss on dissolution of subsidiary

-

301

Foreign VAT receivable write-off

770

-

Foreign exchange loss / (gain), net

1,192

634

Other Income (expense), net

206

655

         Adjusted EBITDA

$    54,912

$    82,909

         Adjusted EBITDA Margin

9.5 %

13.1 %

Reconciliation of Non-GAAP EPS:

Net Income

$        500

$    20,917

Add:  Asset impairment and restructuring charges

389

6,360

Add:  Equity-based compensation expenses

5,812

4,154

Add:  Amortization of purchased intangibles

8,445

9,003

Add:  Cybersecurity incident related impact, net of insurance recovery

-

(3,236)

Add:  Property costs not related to operations

1,033

-

Add:  Liability related to notifications triggered by labor scheme

(475)

-

Add:  Foreign VAT receivable write-off

770

-

Add:  Changes in acquisition contingent consideration

(1,240)

3,178

Add:  Changes in escrow balance related to acquisition

-

625

Add:  Loss on dissolution of subsidiary

-

301

Add:  Foreign exchange loss / (gain), net

1,192

634

Less:  Changes in valuation allowance, return to provision adjustments and other, and tax effects of items separately disclosed above

(3,806)

(5,035)

         Non-GAAP Net Income

$    12,620

$    36,901

             Diluted shares outstanding

47,587

47,401

         Non-GAAP EPS

$0.27

$0.78

Reconciliation of Free Cash Flow:

Cash Flow From Operating Activities:

   Net income

$        500

$    20,917

   Adjustments to reconcile net income to net cash provided by operating activities:

          Depreciation and amortization

25,145

25,827

          Other

(41,274)

2,314

   Net cash provided by operating activities

(15,629)

49,058

Less - Total Cash Capital Expenditures

13,473

13,669

        Free Cash Flow

$  (29,102)

$    35,389

(1) -  For further information, please see discussion in the Risk Factors section of the 2023 Form 10-K filed on February 29, 2024.

Reconciliation of Non-GAAP Income from Operations and Adjusted EBITDA by Segment :

TTEC Engage

TTEC Digital

Q1 24

Q1 23

Q1 24

Q1 23

Income from Operations

$    19,422

$    43,626

$     3,289

$        785

Restructuring charges, net

653

992

(404)

1,061

Impairment losses

140

1,453

-

2,854

Cybersecurity incident related impact, net of insurance recovery

-

(3,236)

-

-

Property costs not related to operations

1,033

-

-

-

Liability related to notifications triggered by labor scheme

(475)

-

-

-

Equity-based compensation expenses

3,783

2,676

2,029

1,478

Amortization of purchased intangibles 

4,107

4,650

4,338

4,353

         Non-GAAP Income from Operations

$    28,663

$    50,161

$     9,252

$    10,531

Depreciation and amortization

13,357

14,316

2,712

2,508

Changes in acquisition contingent consideration

(1,240)

3,178

-

-

Change in escrow balance related to acquisition

-

625

-

-

Loss on dissolution of subsidiary

-

301

-

-

Foreign VAT receivable write-off

770

-

-

-

Foreign exchange loss / (gain), net

1,378

701

(187)

(67)

Other Income (expense), net

44

512

163

143

         Adjusted EBITDA

$    42,972

$    69,794

$    11,940

$    13,115

 

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