TTEC Announces Fourth Quarter and Full Year 2022 Financial Results

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 fourth quarter and full year ended December 31, 2022.

“We ended 2022 with solid execution and financial results despite the increased uncertainties surrounding the macroeconomic environment. Our performance reflects our broad and diverse base of global clients, our expertise across key strategic verticals, and our full range of CX technology, AI, and service capabilities,” commented Ken Tuchman, chairman and chief executive officer of TTEC. “In this dynamic environment, we will continue to execute on our strategy to accelerate the diversification of our geographic and language footprint, and capitalize on the growing adoption of the modern capabilities enabled by the CX cloud.”

Tuchman continued, “Over the last forty years, we have thoughtfully managed through uncertain business cycles and always come out stronger. We have proven time and again that we are resilient, innovative and have what it takes to turn challenges into opportunities. Our strategy for 2023 is prudent and designed to set us up for accelerated growth in 2024. The plan will enable us to operate efficiently in the short term while investing in capabilities our clients need today and into the future.”

FULL YEAR 2022 FINANCIAL HIGHLIGHTS                  

Revenue        

• Full year 2022 GAAP revenue increased 7.5 percent to $2.444 billion compared to $2.273 billion in the prior year.
• Foreign exchange had a $42.4 million negative impact on revenue for the full year 2022.

Income from Operations

• Full year 2022 GAAP income from operations was $168.5 million, or 6.9 percent of revenue, compared to $217.2 million, or 9.6 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 $248.5 million, or 10.2 percent of revenue, compared to $286.2 million, or 12.6 percent for the prior year.
• Foreign exchange had a $13.9 million positive impact on Non-GAAP income from operations for the full year 2022.

Adjusted EBITDA        

• Full year 2022 Non-GAAP Adjusted EBITDA was $326.6 million, or 13.4 percent of revenue, compared to $354.4 million, or 15.6 percent of revenue in the prior year.

Earnings Per Share

• Full year 2022 GAAP fully diluted earnings per share was $2.48 compared to $3.34 for the prior year.
• Non-GAAP fully diluted earnings per share was $3.68 compared to $4.62 in the prior year.

Bookings

• During the full year 2022, TTEC signed an estimated $762 million in annualized contract value compared to $751 million in the prior year. Full year bookings mix was diversified across segments, verticals, and geographies.

FOURTH QUARTER 2022 FINANCIAL HIGHLIGHTS                  

Revenue        

• Fourth quarter 2022 GAAP revenue increased 7.5 percent to $658.3 million compared to $612.3 million in the prior year period.
• Foreign exchange had a $12.6 million negative impact on revenue in the fourth quarter 2022.

Income from Operations

• Fourth quarter 2022 GAAP income from operations was $48.7 million, or 7.4 percent of revenue, compared to $51.9 million, or 8.5 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, and other items, was $69.9 million, or 10.6 percent of revenue, compared to $68.3 million, or 11.2 percent for the prior year period.
• Foreign exchange had a $4.5 million positive impact on Non-GAAP income from operations in the fourth quarter 2022.

Adjusted EBITDA        

• Fourth quarter 2022 Non-GAAP Adjusted EBITDA was $84.8 million, or 12.9 percent of revenue, compared to $84.1 million, or 13.7 percent of revenue in the prior year period.

Earnings Per Share

• Fourth quarter 2022 GAAP fully diluted earnings per share was $0.54 compared to $0.69 for the same period last year.
• Non-GAAP fully diluted earnings per share was $0.89 compared to $1.08 in the prior year period.

Bookings

• During the fourth quarter 2022, TTEC signed an estimated $197 million in annualized contract value compared to $206 million in the prior year period. Fourth 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 fourth quarter 2022 was $18.2 million compared to $76.2 million for the fourth quarter 2021. For the full year 2022, cash flow from operations was $137.0 million compared to $251.3 million for the same period 2021.
• Capital expenditures in the fourth quarter 2022 were $19.4 million compared to $19.6 million for the fourth quarter 2021. For the full year 2022, capital expenditures were $84.0 million compared to $60.4 million for the same period 2021.
• As of December 31, 2022, TTEC had cash and cash equivalents of $153.4 million and debt of $963.6 million, resulting in a net debt position of $810.2 million. This compares to a net debt position of $638.9 million for the same period 2021. The increase in net debt is primarily attributable to the acquisition of Faneuil in April 2022.
• As of December 31, 2022, TTEC’s remaining borrowing capacity under its revolving credit facility was approximately $335 million compared to $565 million for the same period 2021.
• TTEC paid a $0.52 per share, or $24.6 million, semi-annual dividend on October 26, 2022. On February 23, 2023, the Board declared the next semi-annual dividend of $0.52 per share, payable on April 20, 2023 to shareholders of record as of March 31, 2023. This dividend is unchanged over the October 2022 dividend and 4.0 percent over the April 2022 dividend.

SEGMENT REPORTING & COMMENTARY

TTEC reports financial results for the following two business segments: TTEC Digital (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

• Fourth quarter 2022 GAAP revenue for TTEC Digital increased 4.2 percent to $123.4 million from $118.4 million for the year ago period. Income from operations was $8.4 million or 6.8 percent of revenue compared to operating income of $13.0 million or 11.0 percent of revenue for the prior year period.
• Non-GAAP income from operations was $16.5 million, or 13.3 percent of revenue compared to operating income of $20.2 million or 17.1 percent of revenue in the prior year period.

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

• Fourth quarter 2022 GAAP revenue for TTEC Engage increased 8.3 percent to $534.9 million from $493.9 million for the year ago period. Income from operations was $40.3 million or 7.5 percent of revenue compared to operating income of $38.9 million, or 7.9 percent of revenue for the prior year period.
• Non-GAAP income from operations was $53.4 million, or 10.0 percent of revenue, compared to operating income of $48.1 million, or 9.7 percent of revenue in the prior year period.
• Foreign exchange had a $11.6 million negative impact on revenue and $4.2 million positive impact on income from operations.

BUSINESS OUTLOOK

“Our solid fourth-quarter performance capped a year in which we grew revenue 9.4 percent on a constant currency basis, reflecting the contribution from strategic acquisitions partially offset by emerging macroeconomic headwinds in the second half of the year,” commented Dustin Semach, chief financial officer of TTEC.

Semach continued, “We are confident we will successfully navigate the dynamic environment ahead of us and position the company for accelerated growth as we exit the year. We are excited about our future, supported by our 40-year track record of delivering innovation and value-driven CX outcomes for our clients, a strong executive leadership team, and an unmatched CX technology and services platform.”

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 2023 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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