TTEC TTEC Holdings Inc

Second Quarter 2024

Revenue was $534.1 Million, down 11.0 Percent
Operating Loss of $224.4 Million or negative 42.0 Percent of Revenue, due to $233.5 Million
Non-cash Goodwill Impairments and Related Tax Adjustments
(Operating Income of $29.5 Million or 5.5 Percent of Revenue Non-GAAP)
Net Loss of $296.8 Million or negative 55.6 Percent of Revenue
(Net Income of $6.6 Million or 1.2 Percent of Revenue Non-GAAP)
Adjusted EBITDA was $46.2 Million or 8.7 Percent of Revenue
Fully Diluted Net Loss Per Share of $6.23 (Net Income Per Share of $0.14 Non-GAAP)

Updated Outlook for Full Year 2024

DENVER, Aug. 8, 2024 /PRNewswire/ -- TTEC Holdings, Inc. (NASDAQ:TTEC), a leading global CX (customer experience) technology and services innovator for AI-enabled CX with solutions from TTEC Engage and TTEC Digital, announced today financial results for the second quarter ended June 30, 2024.

"Our results this quarter are impacted by non-cash goodwill impairment charges and related tax adjustments. We continue to operate in a dynamic macroeconomic environment where clients are facing softer demand and budget constraints putting pressure on our top line in the Engage business, while our Digital business had a solid quarter," commented Ken Tuchman, chairman and chief executive officer of TTEC.

Tuchman continued, "We have continued to implement material cost optimization and transformation initiatives to improve the profitability of our Engage segment. In addition, we are making meaningful progress on our diversification strategy expanding our geographic footprint, attracting new enterprise clients, launching new solutions and deepening our partnerships. With these initiatives, we are confident in our ability to return the company to sustainable long-term growth and increased profitability."

SECOND QUARTER 2024 FINANCIAL HIGHLIGHTS                  

Revenue        

• Second quarter 2024 GAAP revenue decreased 11.0 percent to $534.1 million compared to $600.4 million in the prior year.
• Foreign exchange had a $1.8 million negative impact on revenue in the second quarter of 2024.

Income (Loss) from Operations

• Second quarter 2024 GAAP loss from operations was $224.4 million, or negative 42.0 percent of revenue, compared to income from operations of $31.3 million, or 5.2 percent of revenue in the prior year. The significant decrease in operating income was primarily the result of a non-cash pre-tax $196 million impairment charge related to the fair value of the TTEC Engage reporting unit, in addition to other factors.
• Non-GAAP income from operations, excluding restructuring and impairment charges, equity-based compensation expenses, amortization of purchased intangibles, and other items, was $29.5 million, or 5.5 percent of revenue, compared to $50.6 million, or 8.4 percent, for the prior year.
• Foreign exchange had a $0.8 million positive impact on Non-GAAP income from operations in the second quarter of 2024.

Adjusted EBITDA    

• Second quarter 2024 Non-GAAP Adjusted EBITDA was $46.2 million, or 8.7 percent of revenue, compared to $67.2 million, or 11.2 percent of revenue, in the prior year.

Net Income (Loss) Per Share

• Second quarter 2024 GAAP fully diluted net loss per share was $6.23 compared to net income per share of $0.08 in the prior year.
• Non-GAAP fully diluted net income per share was $0.14 compared to Non-GAAP net income per share of $0.55 in the prior year.

CASH FLOW AND BALANCE SHEET 

• Cash flow from operations in the second quarter of 2024 was $49.3 million compared to $95.9 million for the second quarter of 2023.
• Capital expenditures in the second quarter of 2024 were $14.2 million compared to $19.3 million for the second quarter of 2023.
• As of June 30, 2024, TTEC had cash and cash equivalents of $79.8 million and debt of $933.2 million, resulting in a net debt position of $853.4 million. This compares to a net debt position of $804.2 million for the same period in 2023.
• As of June 30, 2024, TTEC's remaining borrowing capacity under its revolving credit facility was approximately $100 million compared to $265 million for the same period in 2023.
• On April 30, 2024, TTEC paid a dividend of $0.06 per share, or $2.8 million, to shareholders of record as of April 3, 2024.

SEGMENT REPORTING & COMMENTARY

TTEC reports financial results for TTEC Digital and TTEC Engage business segments. Financial highlights for the two business segments are provided below.

TTEC Digital – Design, build and operate tech-enabled, insight-driven CX solutions

• Second quarter 2024 GAAP revenue for TTEC Digital decreased 1.0 percent to $116.4 million from $117.6 million for the year ago period. Income from operations was $6.0 million or 5.2 percent of revenue compared to an operating income of $7.2 million, or 6.1 percent of revenue, in the prior year.
• Non-GAAP income from operations was $15.0 million, or 12.8 percent of revenue, compared to Non-GAAP income from operations of $14.7 million, or 12.5 percent of revenue, in the prior year.

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

• Second quarter 2024 GAAP revenue for TTEC Engage decreased 13.5 percent to $417.7 million from $482.8 million for the year ago period. Loss from operations was ($230.4) million, or negative 55.2 percent of revenue, compared to operating income of $24.1 million, or 5.0 percent of revenue in the prior year.
• Non-GAAP income from operations was $14.6 million, or 3.5 percent of revenue, compared to Non-GAAP income from operations of $35.9 million, or 7.4 percent of revenue, in the prior year.
• Foreign exchange had a $1.7 million negative impact on revenue and $0.8 million positive impact on income from operations.

BUSINESS OUTLOOK 

"While our second quarter Non-GAAP results were largely in line with our expectations, we see continued pressure in the back half of the year primarily in our Engage business where operational execution remains a top priority," commented Kenny Wagers, chief financial officer of TTEC.

Wagers continued, "We are taking measurable actions in our Engage business to strengthen the foundation for increased profitability. This includes broad actions to align our Engage and corporate cost structure with forecasted revenue as well as initiatives to improve our operating efficiencies at the client program level. Our bottoms-up approach has been meticulous to deliver the intended benefits without impacting the quality of our service delivery and go-to-market platform as we position ourselves for 2025. In our Digital business, clients across numerous industries are increasingly using our CX technology professional and managed services, with particularly strong demand for our cloud-based offerings."

Wagers concluded, "We continue to believe that the second quarter will be the peak of the headwinds in our Engage business. While we expect moderate sequential top- and bottom-line improvement in the third quarter, we are forecasting softer third quarter performance than originally anticipated before seeing stronger results in the fourth quarter."  

The Company has not quantitatively reconciled its guidance for Non-GAAP operating income, Non-GAAP operating income margins, Non-GAAP adjusted EBITDA, 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 restructuring and impairment charges, 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, operating income margins, EBITDA margins, and diluted earnings per share without unreasonable effort. Please note that the unavailable reconciling items could significantly impact the Company's 2024 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.

EARNINGS WEBCAST/CONFERENCE CALL

The Company will host a live webcast and conference call at 8:30 a.m. ET on Friday, August 9, 2024. You are invited to join a live webcast of the conference call by visiting the "Investors Relations" section of the TTEC website at www.ttec.com. If you are unable to participate during the live webcast, a replay will be available on the TTEC website.

ABOUT TTEC 

TTEC (pronounced T-TEC) Holdings, Inc. (NASDAQ:TTEC) is a leading global CX (customer experience) technology and services innovator for AI-enabled digital CX solutions. 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 technology, the Company's TTEC Digital business designs, builds, and operates omnichannel contact center technology, CRM, AI and analytics solutions. The Company's TTEC Engage business delivers AI-enabled customer engagement, customer acquisition and growth, tech support, back office, and fraud prevention services. Founded in 1982, the Company's singular obsession with CX excellence has earned it leading client, customer, and employee satisfaction scores across the globe. The Company's approximately 54,000 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 Press 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. Forward-looking statements include, but are not limited to, statements relating to our operations, expected financial position, results of operation, effective tax rate, cash flow, leverage, liquidity, business strategy, competitive position, demand for our services in international operations, acquisition opportunities and impact of acquisitions, capital allocation and dividends, growth opportunities, spending, capital expenditures and investments, competition and market forecasts, industry trends, our human capital resources, 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. Unless otherwise indicated or except where the context otherwise requires, the terms "TTEC," "the Company," "we," "us" and "our" and other similar terms in this report refer to TTEC Holdings, Inc. and its subsidiaries. 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, 2023 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.

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.