TTEC Announces Third Quarter 2022 Financial Results

Third Quarter 2022

Revenue was $592.5 Million
Operating Income was $35.6 Million or 6.0 Percent of Revenue
($50.2 Million or 8.5 Percent of Revenue Non-GAAP)
Net Income was $25.0 Million or 4.2 Percent of Revenue
($35.0 Million or 5.9 Percent of Revenue Non-GAAP)
Adjusted EBITDA was $72.2 Million or 12.2 Percent of Revenue
Fully Diluted EPS was $0.53 ($0.74 Non-GAAP)

Signs Bookings of $200 Million
Reiterates Outlook for Full Year 2022

DENVER, Nov. 9, 2022 /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, 2022.

"I'm pleased with our solid execution and results for the third quarter. We continued to accelerate our diversification strategy by expanding into new nearshore and offshore delivery locations, growing with new and embedded base clients across strategic verticals, innovating in our comprehensive portfolio of digital CX solutions, and deepening collaboration with our best-in-class CX technology partners," commented Ken Tuchman, chairman and chief executive officer of TTEC.

Tuchman continued, "We also continue to strengthen our executive leadership team. We welcome digital industry leader, Dave Seybold, as CEO of TTEC Digital. In addition, Shelly Swanback, CEO of TTEC Engage, will assume expanded responsibilities as President of TTEC. With these two proven executives at my side, among many others, I am energized about the caliber of our leadership, our differentiated approach to CX, and our vision for the future."

THIRD QUARTER 2022 FINANCIAL HIGHLIGHTS

Revenue

• Third quarter 2022 GAAP revenue increased 4.5 percent to $592.5 million compared to $566.7 million in the prior year period.
• Foreign exchange had a $14.1 million negative impact on revenue in the third quarter 2022.

Income from Operations

• Third quarter 2022 GAAP income from operations was $35.6 million, or 6.0 percent of revenue, compared to $26.0 million, or 4.6 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, and other items, was $50.2 million or 8.5 percent of revenue versus $59.4 million or 10.5 percent for the prior year period.
• Foreign exchange had a $3.9 million positive impact on Non-GAAP income from operations in the third quarter 2022.

Adjusted EBITDA

• Third quarter 2022 Adjusted EBITDA was $72.2 million, or 12.2 percent of revenue, compared to $78.7 million, or 13.9 percent of revenue in the prior year period.

Earnings Per Share

• Third quarter 2022 GAAP fully diluted earnings per share was $0.53 compared to $0.38 for the same period last year.
• Non-GAAP fully diluted earnings per share was $0.74 compared to $1.01 in the prior year period.

Bookings

• During the third quarter 2022, TTEC signed an estimated $200 million in annualized contract value compared to $171 million in the prior year period. Third 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 third quarter 2022 was $27.5 million compared to $42.2 million for the third quarter 2021.

• Capital expenditures in the third quarter 2022 were $28.8 million compared to $17.2 million for the third quarter 2021.

• As of September 30, 2022, TTEC had cash and cash equivalents of $172.3 million and debt of $959.2 million, resulting in a net debt position of $787 million. This compares to a net debt position of $662.9 million for the same period 2021. The increase in net debt is primarily attributable to the Faneuil public sector asset acquisition in April 2022 and capital distributions made in the second and fourth quarter of 2022.

• As of September 30, 2022, TTEC's remaining borrowing capacity under its revolving credit facility was approximately $370 million compared to $390 million for the same period 2021.

• TTEC paid a $0.52 per share, or $24.6 million, semi-annual dividend on October 26, 2022, to shareholders of record on October 11, 2022. This dividend represents a 10.6 percent increase over the October 2021 dividend and 4.0 percent over the April 2022 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

• Third quarter 2022 GAAP revenue for TTEC Digital decreased 5.0 percent to $117.9 million from $124.1 million for the year ago period. Income from operations was $8.1 million or 6.8 percent of revenue compared to operating income of $8.7 million or 7.0 percent of revenue for the prior year period.
• Non-GAAP income from operations was $15.9 million, or 13.5 percent of revenue compared to non-GAAP operating income of $15.6 million or 12.5 percent of revenue in the prior year period.

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

• Third quarter 2022 GAAP revenue for TTEC Engage increased 7.2 percent to $474.5 million from $442.6 million for the year ago period. Income from operations was $27.5 million or 5.8 percent of revenue compared to operating income of $17.4 million or 3.9 percent of revenue for the prior year period.
• Non-GAAP income from operations was $34.3 million, or 7.2 percent of revenue compared to non-GAAP operating income of $43.8 million or 9.9 percent of revenue in the prior year period.
• Foreign exchange had a $13.2 million negative impact on revenue and $3.5 million positive impact on non-GAAP income from operations.

BUSINESS OUTLOOK

"We are pleased with our execution and financial performance in the third quarter as we continue to navigate the dynamic macroeconomic environment alongside our clients," commented Dustin Semach, chief financial officer of TTEC.

Semach continued, "Our outlook remains unchanged from last quarter and continues to account for the uncertainties surrounding the global economy. Ahead of 2023, we continue to optimize our cost structure while enhancing our offerings and delivery footprint to meet our client's quickly evolving needs, positioning us well to capitalize on the current market opportunities. We remain committed to maximizing shareholder value through continuous technology innovation, operational excellence, and long-term profitable growth."

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.

ABOUT TTEC

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 and growth, content moderation, fraud prevention, 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 62,700 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 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, relating to our operations, expected financial position, results of operation, 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.

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, 2021 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. Important factors that could cause our actual results to differ materially from those indicated in the forward looking statements include, among others, the risks related to our business operations and strategy, including the risks related to 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 cybersecurity 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 dependence on third parties for our cloud solutions; risks inherent in our 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 impact on our operations, including rapidly changing laws that regulate our and our clients' business, such as data privacy and data protection laws, regulatory changes impacting our healthcare businesses, financial and public sector specific regulations, our ability to comply with these laws timely and cost effectively; and the cost of wage and hour litigation in the United States; the impact of the COVID-19 pandemic and post-pandemic economic and regulatory realities on our business and our clients' business; and risks inherent in our equity structure including our controlling shareholder risk, and Delaware choice of dispute resolution risks.

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.

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SOURCE TTEC Holdings, Inc.