TTEC Announces First Quarter 2022 Financial Results

First Quarter 2022

Revenue was $588.7 Million
Operating Income was $48.3 Million or 8.2 Percent of Revenue
Non-GAAP $67.2 Million or 11.4 Percent of Revenue
Net Income was $33.4 Million ($51.0 Million Non-GAAP)
Adjusted EBITDA was $85.5 Million or 14.5 Percent of Revenue
Fully Diluted EPS was $0.71 ($1.08 Non-GAAP)

Signs Bookings of $195 Million
Reiterates Outlook for Full Year 2022

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 first quarter, ended March 31, 2022.

“We kicked off the year with strong bookings and large deal activity as demand for our digital transformation technology and services continues to build. The growth in our Digital segment reflects the work we’ve done to create differentiated end-to-end CX technology solutions. The positive market response to our offerings demonstrates how our exclusive focus on CX will continue to differentiate us in the market,” commented Ken Tuchman, chairman and chief executive officer of TTEC.

“To serve our growing pipeline and ignite our next phase of growth, we are adding significant leadership strength to our senior executive team, including today’s announcement of a new chief executive officer for our Engage segment, Shelly Swanback. With proven experience launching and building Accenture Digital into a $20 billion plus digital transformation leader, Swanback is a dynamic executive with over 30 years of experience in digital transformation, strategic consulting, technology, services, analytics and M&A,” added Tuchman. “For almost forty years, we have been partnering with renowned brands to acquire, retain, and grow profitable customer relationships by delivering effortless, engaging experiences that build trust and brand loyalty. Today, we are as well-positioned as ever to continue to deliver these positive outcomes to our clients, their customers, our employees, and shareholders.”

FIRST QUARTER 2022 FINANCIAL HIGHLIGHTS                   

Revenue        

• First quarter 2022 GAAP revenue increased 9.2 percent to $588.7 million compared to $539.2 million in the prior year period.
• Foreign exchange had a $5.2 million negative impact on revenue in the first quarter 2022.

Income from Operations

• First quarter 2022 GAAP income from operations was $48.3 million, or 8.2 percent of revenue, compared to $73.4 million, or 13.6 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 $67.2 million or 11.4 percent of revenue versus $79.9 million or 14.8 percent for the prior year period.
• Foreign exchange had a $3.1 million positive impact on Non-GAAP income from operations in the first quarter 2022.

Adjusted EBITDA        

• First quarter 2022 Non-GAAP Adjusted EBITDA was $85.5 million, or 14.5 percent of revenue, compared to $95.9 million, or 17.8 percent of revenue in the prior year period.

Earnings Per Share

• First quarter 2022 GAAP fully diluted earnings per share was $0.71 compared to $1.06 for the same period last year.
• Non-GAAP fully diluted earnings per share was $1.08 compared to $1.26 in the prior year period.

Bookings

• During the first quarter 2022, TTEC signed an estimated $195 million in annualized contract value compared to $170 million in the prior year period. First quarter 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 first quarter 2022 was $13.7 million compared to $69.8 million for the first quarter 2021.
• Capital expenditures in the first quarter 2022 were $16.7 million compared to $11.6 million for the first quarter 2021.
• As of March 31, 2022, TTEC had cash and cash equivalents of $156.8 million and debt of $807.9 million, resulting in a net debt position of $651.1 million. This compares to a net debt position of $204.4 million for the same period 2021. The increase in net debt is primarily attributable to the acquisition of Avtex Solutions Holdings, LLC in April 2021 and capital distributions.
• As of March 31, 2022, TTEC’s remaining borrowing capacity under its revolving credit facility was approximately $525 million compared to $855 million for the same period 2021.
• TTEC paid a $0.50 per share, or $23.5 million, semi-annual dividend on April 20, 2022 to shareholders of record on March 31, 2022. This dividend represents a 16.3 percent increase over the April 2021 dividend and 6.4 percent over the October 2021 dividend.

SEGMENT REPORTING & COMMENTARY

TTEC reports financial results for 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

• First quarter 2022 GAAP revenue for TTEC Digital increased 78.6 percent to $113.6 million from $63.6 million for the year ago period. Income from operations was $6.3 million or 5.6 percent of revenue compared to operating income of $4.2 million or 6.6 percent of revenue for the prior year period.
• Non-GAAP income from operations was $14.0 million, or 12.3 percent of revenue compared to operating income of $6.7 million or 10.5 percent of revenue in the prior year period.

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

• First quarter 2022 GAAP revenue for TTEC Engage decreased 0.1 percent to $475.1 million from $475.6 million for the year ago period. Income from operations was $42.0 million or 8.8 percent of revenue compared to operating income of $69.2 million or 14.6 percent of revenue for the prior year period.
• Non-GAAP income from operations was $53.2 million, or 11.2 percent of revenue compared to operating income of $73.1 million or 15.4 percent of revenue in the prior year period.
• Foreign exchange had a $4.9 million negative impact on revenue and $2.9 million positive impact on income from operations.

BUSINESS OUTLOOK

“We had a solid start to the year as we execute on our strategic priorities,” commented Dustin Semach, chief financial officer of TTEC. “Demand is strong as evidenced by record first quarter revenue results and meaningful new business signings. We are capitalizing on a large, growing addressable market characterized by heightened levels of urgency and importance for our clients to distinguish their brands through the delivery of exceptional customer experiences and outcomes.”

Semach continued, “Based on a growing sales pipeline, strong bookings, and an increased revenue backlog, we are well positioned for continued profitable organic growth in 2022, augmented further with strategic acquisitions.  As a result, we are reiterating our 2022 guidance. Our expanding suite of integrated CX offerings, the client relationships we are building, and the important incremental investments that we are making in leadership, sales and marketing, product, and engineering talent, increases TTEC’s value proposition and continues to strengthen the long-term financial profile of the business.”

We estimate the first half – second half 2022 mix as follows:

• Revenue: 46 percent first half, 54 percent second half
• Non-GAAP Operating Income: 40 percent first half, 60 percent second half
• Non-GAAP Adjusted EBITDA: 43 percent first half, 57 percent second half
• Non-GAAP Earnings Per Share: 40 percent first half, 60 percent second half

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 2022 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.

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