ENGLEWOOD, Colo., Feb. 21 /PRNewswire-FirstCall/ -- TeleTech Holdings, Inc. , a leading global business process outsourcing (BPO) provider of customer management and transaction-based processing solutions, today announced fourth quarter 2005 financial results. The Company also filed its Annual Report on Form 10-K with the Securities and Exchange Commission for the year ended December 31, 2005.
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TeleTech's fourth quarter revenue grew 16.6% over the year-ago quarter and 10.9% over the third quarter with record quarterly revenue of $304 million. Net income was $10.1 million, or 14 cents per diluted share. Approximately ten percent of the fourth quarter 2005's revenue was from hurricane relief work. These results compare to quarterly revenue of $261 million and net income of $9.7 million, or 13 cents per diluted share, for the year-ago quarter. Included in the year-ago quarter's operating results was a benefit of $4.8 million, or 4 cents per diluted share, arising from the reversal of certain employee-related healthcare liabilities. Please refer to the Company's "Management's Discussion & Analysis" section of the Form 10-K for a complete discussion of items affecting comparability to prior periods.
"We are extremely pleased to have achieved the majority of our planned strategic goals during 2005, including the implementation of worldwide best operating practices and the global standardization, centralization and virtualization of our technology platform," said Ken Tuchman, Chairman and Chief Executive Officer. "We believe this solid operational foundation and increased demand for our complex back office outsourcing solutions puts us in a strong position to report record revenue again in 2006."
"Going forward, we are focused on continuing to deliver innovative new offerings and driving profitable revenue growth," continued Tuchman. "Towards this end, we have made significant progress having announced significant new, renewed and expanded client relationships since June of 2005. These new business wins and client renewals are the basis for our belief that revenue in 2006 will grow between 8 to 10 percent over 2005."
SHARE REPURCHASE PROGRAM
During 2005, TeleTech repurchased 7.1 million shares, or approximately 10 percent of its common stock outstanding, for $67.8 million. In February 2006, the Board of Directors authorized an additional $50 million share repurchase program.
BUSINESS OUTLOOK
For the full year 2006, TeleTech expects organic revenue to grow between 8 to 10 percent over 2005 and believes its fourth quarter 2006 operating margin will approximate 6 to 7 percent, excluding unusual charges, if any.
SEC FILINGS
The Company's filings with the Securities and Exchange Commission are available in the "Investors" section of TeleTech's website, which can be found at http://www.teletech.com/.
CONFERENCE CALL
TeleTech executive management will hold a conference call to discuss fourth quarter 2005 financial results on Wednesday, February 22, 2006, at 11:00 a.m. Eastern Time. You are invited to join a live webcast of the call by visiting the "Investors" section of the TeleTech website at http://www.teletech.com/. If you are unable to participate during the live webcast, a replay of the call will be available on the TeleTech website through Wednesday, March 8, 2006.
ABOUT TELETECH
TeleTech is a leading global business process outsourcing (BPO) company that provides a full range of front-to-back office outsourced solutions including customer management, transaction-based processing, and database marketing services. TeleTech's comprehensive solutions include fully managed, OnDemand services including infrastructure, software, and business intelligence. TeleTech's ability to deliver innovative solutions globally over a centralized and standardized delivery platform ensures a high quality, consistent customer experience enabling clients to increase revenue, improve profitability, and develop stronger customer relationships around the world. TeleTech is a valued partner for clients that include Global 1000 businesses and governments. Approximately 60 percent of TeleTech's revenue is generated internationally with services offered in 150 languages from nearly every continent on the globe. For additional information, visit http://www.teletech.com/.
FORWARD-LOOKING STATEMENTS
This press release may contain certain forward-looking statements relating to future results. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause TeleTech's and its subsidiaries' actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to the following: the Company's belief that it's continuing to see strong demand for its services; estimated revenue from new, renewed and expanded client business; the belief that the prospects for new business remain strong; achieving the Company's expected profit improvement in its International operations; the ability to close and ramp new business opportunities that are currently being pursued with existing clients and potential clients; the ability for the Company to execute its growth plans, including sales of new products (such as TeleTech On Demand(TM) and TeleTech In Culture(TM); to increase profitability via the globalization of its North American best operating practices; to achieve its year-end 2006 and 2007 financial goals and targeted cost reductions; the possibility of the Company's Database Marketing and Consulting segment not increasing revenue, lowering costs, or returning to historic levels of profitability; the possibility of lower revenue or price pressure from the Company's clients experiencing a downturn or merger in their business; greater than anticipated competition in the BPO and customer management market, causing adverse pricing and more stringent contractual terms; risks associated with losing or not renewing client relationships, particularly large client agreements, or early termination of a client agreement; the risk of losing clients due to consolidation in the industries we serve; consumers' concerns or adverse publicity regarding the products of the Company's clients; higher than anticipated start-up costs or lead times associated with new ventures or business in new markets; execution risks associated with performance-based pricing metrics in certain client agreements; the Company's ability to find cost effective locations, obtain favorable lease terms, and build or retrofit facilities in a timely and economic manner; risks associated with business interruption due to weather or terrorist-related events; risks associated with attracting and retaining cost-effective labor at the Company's customer management centers; the possibility of additional asset impairments and restructuring charges; risks associated with changes in foreign currency exchange rates; economic or political changes affecting the countries in which the Company operates; changes in accounting policies and practices promulgated by standard setting bodies; and, new legislation or government regulation that impacts the BPO and customer management industry.
Please refer to the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2005, for a detailed discussion of factors discussed above and other important factors that may impact the Company's business, results of operations, financial condition, and cash flows. The Company assumes no obligation to update its forward-looking statements to reflect actual results or changes in factors affecting such forward-looking statements.
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
Revenue $304,155 $260,814 $1,086,673 $1,052,690
Operating expenses:
Costs of services 232,608 187,308 813,271 774,521
Selling, general
& administrative 45,534 43,415 182,262 165,630
Depreciation and
amortization 12,910 14,886 53,560 59,378
Restructuring
charges, net 1,193 (58) 2,673 2,052
Impairment losses 2,174 -- 4,711 2,641
Total operating
expenses 294,419 245,551 1,056,477 1,004,222
Operating Income 9,736 15,263 30,196 48,468
Other income
(expense) 490 85 2,020 (3,861)
Debt restructuring
charges -- -- -- (10,402)
Income Before
Income Taxes 10,226 15,348 32,216 34,205
Income tax expense
(benefit) (688) 4,639 2,516 9,464
Income before
Minority Interest 10,914 10,709 29,700 24,741
Minority interest (829) (1,054) (1,542) (738)
Net Income $10,085 $9,655 $28,158 $24,003
Basic
Earnings
Per Share $0.14 $0.13 $0.39 $0.32
Diluted
Earnings
Per Share $0.14 $0.13 $0.38 $0.32
Operating Income
Margin 3.2% 5.9% 2.8% 4.6%
Net Income Margin 3.3% 3.7% 2.6% 2.3%
Effective Tax Rate
after Minority
Interest (7.3)% 32.5% 8.2% 28.3%
Weighted Average
Shares
Basic 69,646 74,804 72,121 74,751
Diluted 70,711 76,709 73,631 76,109
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT DISCLOSURES
(In thousands)
Twelve months ended Three months ended
December 31, December 31,
2005 2004 2005 2004
Revenue:
North American
Customer Care $678,803 $638,359 $203,951 $157,038
International
Customer Care 325,038 315,938 80,881 79,705
Database Marketing
& Consulting 82,832 98,393 19,323 24,071
Total $1,086,673 $1,052,690 $304,155 $260,814
Operating Income (Loss):
North American
Customer Care $61,655 $58,580 $20,903 $16,774
International
Customer Care (22,134) (18,414) (9,946) (3,615)
Database Marketing
& Consulting (9,325) 8,302 (1,221) 2,104
Total $30,196 $48,468 $9,736 $15,263
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $32,505 $75,066
Accounts receivable, net 207,090 148,627
Other current assets 59,558 51,238
Total current assets 299,153 274,931
Property and equipment, net 133,635 145,220
Other assets 85,443 76,644
Total assets $518,231 $496,795
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $160,183 $136,192
Other noncurrent liabilities 58,130 30,186
Minority interest 6,544 7,872
Total stockholders' equity 293,374 322,545
Total liabilities and stockholders' equity $518,231 $496,795
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF CASH FLOWS
(In thousands)
Twelve months ended Three months ended
December 31, December 31,
2005 2004 2005 2004
Cash flow from
operating activities:
Net income $28,158 $24,003 $10,085 $9,655
Adjustments to
reconcile net income
to net cash provided
by (used in)
operating activities:
Depreciation and
amortization 53,560 59,378 12,910 14,886
Other (40,232) 29,300 (34,241) 28,241
Net cash provided by
(used in) operating
activities $41,486 $112,681 $(11,246) $52,782
Total Capital
Expenditures $37,606 $41,677 $10,843 $13,285
Free Cash Flow $3,880 $71,004 $(22,089) $39,497
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands)
Twelve months ended Three months ended
December 31, December 31,
2005 2004 2005 2004
Reconciliation of EBITDA
Net Income $28,158 $24,003 $10,085 $9,655
Interest income ($2,790) ($4,045) ($341) ($764)
Interest expense $3,510 $8,542 $1,580 $346
Provision for
income taxes $2,516 $9,464 ($688) $4,639
Depreciation and
amortization $53,560 $59,378 $12,910 $14,886
EBITDA $84,954 $97,342 $23,546 $28,762
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