TTEC Announces Record Third Quarter 2021 Financial Results

Third Quarter 2021

Revenue Increased 15.0 Percent to $566.7 Million

Operating 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 Revenue

Fully Diluted EPS was $0.30 ($1.01 Non-GAAP)

Bookings of $171 million

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 margin of approximately 12.6 percent.

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

Adjusted EBITDA margin of 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.

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