UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
|
☑ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2018
OR
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 001-11919
TTEC Holdings, Inc.
(Exact name of registrant as specified in its charter)
|
Delaware |
|
84-1291044 |
|
(State or other jurisdiction of |
|
(I.R.S. Employer |
|
incorporation or organization) |
|
Identification No.) |
9197 South Peoria Street
Englewood, Colorado 80112
(Address of principal executive offices)
Registrant’s telephone number, including area code: (303) 397-8100
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer ☐ |
Accelerated filer ☑ |
Non-accelerated filer ☐ |
Smaller reporting company ☐ |
||||
|
|
|
(Do not check if a |
Emerging growth company ☐ |
||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
As of July 31, 2018, there were 46,172,246 shares of the registrant’s common stock outstanding.
TTEC HOLDINGS, INC. AND SUBSIDIARIES
JUNE 30, 2018 FORM 10-Q
TTEC HOLDINGS, INC. AND SUBSIDIARIES
(Amounts in thousands, except share amounts)
(Unaudited)
|
|
|
June 30, |
|
December 31, |
|
||
|
|
|
2018 |
|
2017 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
71,260 |
|
$ |
74,437 |
|
|
Accounts receivable, net |
|
|
315,756 |
|
|
385,751 |
|
|
Prepaids and other current assets |
|
|
70,956 |
|
|
63,668 |
|
|
Income tax receivable |
|
|
13,380 |
|
|
11,099 |
|
|
Assets held for sale |
|
|
9,163 |
|
|
7,835 |
|
|
Total current assets |
|
|
480,515 |
|
|
542,790 |
|
|
Long-term assets |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
156,210 |
|
|
163,297 |
|
|
Goodwill |
|
|
203,518 |
|
|
206,694 |
|
|
Deferred tax assets, net |
|
|
17,477 |
|
|
12,012 |
|
|
Other intangible assets, net |
|
|
87,321 |
|
|
92,086 |
|
|
Other long-term assets |
|
|
43,489 |
|
|
61,857 |
|
|
Total long-term assets |
|
|
508,015 |
|
|
535,946 |
|
|
Total assets |
|
$ |
988,530 |
|
$ |
1,078,736 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
45,121 |
|
$ |
46,029 |
|
|
Accrued employee compensation and benefits |
|
|
75,773 |
|
|
83,997 |
|
|
Other accrued expenses |
|
|
17,828 |
|
|
18,993 |
|
|
Income tax payable |
|
|
10,444 |
|
|
7,497 |
|
|
Deferred revenue |
|
|
25,132 |
|
|
21,628 |
|
|
Other current liabilities |
|
|
24,162 |
|
|
22,312 |
|
|
Liabilities held for sale |
|
|
3,788 |
|
|
1,322 |
|
|
Total current liabilities |
|
|
202,248 |
|
|
201,778 |
|
|
Long-term liabilities |
|
|
|
|
|
|
|
|
Line of credit |
|
|
289,000 |
|
|
344,000 |
|
|
Deferred tax liabilities, net |
|
|
11,466 |
|
|
11,285 |
|
|
Non-current income tax payable |
|
|
37,820 |
|
|
47,871 |
|
|
Deferred rent |
|
|
15,124 |
|
|
15,714 |
|
|
Other long-term liabilities |
|
|
101,208 |
|
|
95,243 |
|
|
Total long-term liabilities |
|
|
454,618 |
|
|
514,113 |
|
|
Total liabilities |
|
|
656,866 |
|
|
715,891 |
|
|
Commitments and contingencies (Note 10) |
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Preferred stock; $0.01 par value; 10,000,000 shares authorized; zero shares outstanding as of June 30, 2018 and December 31, 2017 |
|
|
— |
|
|
— |
|
|
Common stock; $0.01 par value; 150,000,000 shares authorized; 46,033,516 and 45,861,959 shares outstanding as of June 30, 2018 and December 31, 2017, respectively |
|
|
460 |
|
|
459 |
|
|
Additional paid-in capital |
|
|
352,784 |
|
|
351,725 |
|
|
Treasury stock at cost; 36,018,737 and 36,190,294 shares as of June 30, 2018 and December 31, 2017, respectively |
|
|
(612,841) |
|
|
(615,677) |
|
|
Accumulated other comprehensive income (loss) |
|
|
(129,325) |
|
|
(102,304) |
|
|
Retained earnings |
|
|
712,775 |
|
|
721,664 |
|
|
Noncontrolling interest |
|
|
7,811 |
|
|
6,978 |
|
|
Total stockholders’ equity |
|
|
331,664 |
|
|
362,845 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
988,530 |
|
$ |
1,078,736 |
|
The accompanying notes are an integral part of these consolidated financial statements.
1
TTEC HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
(Amounts in thousands, except per share amounts)
(Unaudited)
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
||||
|
Revenue |
|
$ |
349,853 |
|
$ |
353,429 |
|
$ |
725,102 |
|
$ |
691,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization presented separately below) |
|
|
274,260 |
|
|
268,004 |
|
|
557,630 |
|
|
521,902 |
|
|
Selling, general and administrative |
|
|
44,245 |
|
|
43,985 |
|
|
91,290 |
|
|
87,205 |
|
|
Depreciation and amortization |
|
|
16,811 |
|
|
16,258 |
|
|
34,735 |
|
|
30,758 |
|
|
Restructuring and integration charges, net |
|
|
1,034 |
|
|
3,593 |
|
|
1,883 |
|
|
3,762 |
|
|
Impairment losses |
|
|
— |
|
|
— |
|
|
1,120 |
|
|
— |
|
|
Total operating expenses |
|
|
336,350 |
|
|
331,840 |
|
|
686,658 |
|
|
643,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
13,503 |
|
|
21,589 |
|
|
38,444 |
|
|
48,079 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
1,471 |
|
|
695 |
|
|
2,539 |
|
|
1,121 |
|
|
Interest expense |
|
|
(7,765) |
|
|
(2,912) |
|
|
(14,224) |
|
|
(5,230) |
|
|
Other income (expense), net |
|
|
1,741 |
|
|
1,197 |
|
|
(9,775) |
|
|
2,157 |
|
|
Loss on assets held for sale |
|
|
(2,000) |
|
|
(3,178) |
|
|
(2,000) |
|
|
(3,178) |
|
|
Total other income (expense) |
|
|
(6,553) |
|
|
(4,198) |
|
|
(23,460) |
|
|
(5,130) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
6,950 |
|
|
17,391 |
|
|
14,984 |
|
|
42,949 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
(653) |
|
|
(1,597) |
|
|
(2,755) |
|
|
(6,988) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
6,297 |
|
|
15,794 |
|
|
12,229 |
|
|
35,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interest |
|
|
(779) |
|
|
(1,100) |
|
|
(2,120) |
|
|
(2,022) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to TTEC stockholders |
|
$ |
5,518 |
|
$ |
14,694 |
|
$ |
10,109 |
|
$ |
33,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
6,297 |
|
$ |
15,794 |
|
$ |
12,229 |
|
$ |
35,961 |
|
|
Foreign currency translation adjustments |
|
|
(20,285) |
|
|
3,339 |
|
|
(25,884) |
|
|
9,567 |
|
|
Derivative valuation, gross |
|
|
(2,019) |
|
|
7,517 |
|
|
(784) |
|
|
21,492 |
|
|
Derivative valuation, tax effect |
|
|
513 |
|
|
(3,038) |
|
|
(729) |
|
|
(8,829) |
|
|
Other, net of tax |
|
|
106 |
|
|
130 |
|
|
214 |
|
|
259 |
|
|
Total other comprehensive income (loss) |
|
|
(21,685) |
|
|
7,948 |
|
|
(27,183) |
|
|
22,489 |
|
|
Total comprehensive income (loss) |
|
|
(15,388) |
|
|
23,742 |
|
|
(14,954) |
|
|
58,450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Comprehensive income attributable to noncontrolling interest |
|
|
(516) |
|
|
(1,240) |
|
|
(1,958) |
|
|
(2,254) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to TTEC stockholders |
|
$ |
(15,904) |
|
$ |
22,502 |
|
$ |
(16,912) |
|
$ |
56,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
46,016 |
|
|
45,662 |
|
|
45,944 |
|
|
45,805 |
|
|
Diluted |
|
|
46,401 |
|
|
46,150 |
|
|
46,424 |
|
|
46,224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to TTEC stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.12 |
|
$ |
0.32 |
|
$ |
0.22 |
|
$ |
0.74 |
|
|
Diluted |
|
$ |
0.12 |
|
$ |
0.32 |
|
$ |
0.22 |
|
$ |
0.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share outstanding |
|
$ |
— |
|
$ |
— |
|
$ |
0.27 |
|
$ |
0.22 |
|
The accompanying notes are an integral part of these consolidated financial statements.
2
TTEC HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders’ Equity
(Amounts in thousands)
(Unaudited)
|
|
|
Stockholders’ Equity of the Company |
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock |
|
Common Stock |
|
Treasury |
|
Additional |
|
Comprehensive |
|
Retained |
|
Noncontrolling |
|
|
|
|
|||||||||||
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Stock |
|
Paid-in Capital |
|
Income (Loss) |
|
Earnings |
|
Interest |
|
Total Equity |
|
||||||||
|
Balance as of December 31, 2017 |
|
— |
|
$ |
— |
|
45,862 |
|
$ |
459 |
|
$ |
(615,677) |
|
$ |
351,725 |
|
$ |
(102,304) |
|
$ |
721,664 |
|
$ |
6,978 |
|
$ |
362,845 |
|
|
Cumulative effect of adopting accounting standard updates |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(6,584) |
|
|
— |
|
|
(6,584) |
|
|
Net income |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
10,109 |
|
|
2,120 |
|
|
12,229 |
|
|
Dividends to shareholders ($0.27 per common share) |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(12,414) |
|
|
— |
|
|
(12,414) |
|
|
Dividends distributed to noncontrolling interest |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,125) |
|
|
(1,125) |
|
|
Foreign currency translation adjustments |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(25,722) |
|
|
— |
|
|
(162) |
|
|
(25,884) |
|
|
Derivatives valuation, net of tax |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,513) |
|
|
— |
|
|
— |
|
|
(1,513) |
|
|
Vesting of restricted stock units |
|
— |
|
|
— |
|
172 |
|
|
1 |
|
|
2,836 |
|
|
(5,124) |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,287) |
|
|
Exercise of stock options |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Equity-based compensation expense |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
6,183 |
|
|
— |
|
|
— |
|
|
— |
|
|
6,183 |
|
|
Purchases of common stock |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Other, net of tax |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
214 |
|
|
— |
|
|
— |
|
|
214 |
|
|
Balance as of June 30, 2018 |
|
— |
|
$ |
— |
|
46,034 |
|
$ |
460 |
|
$ |
(612,841) |
|
$ |
352,784 |
|
$ |
(129,325) |
|
$ |
712,775 |
|
$ |
7,811 |
|
$ |
331,664 |
|
The accompanying notes are an integral part of these consolidated financial statements.
3
TTEC HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
|
|
|
Six Months Ended June 30, |
|
||||
|
|
|
2018 |
|
2017 |
|
||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
12,229 |
|
$ |
35,961 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
34,735 |
|
|
30,758 |
|
|
Amortization of contract acquisition costs |
|
|
758 |
|
|
809 |
|
|
Amortization of debt issuance costs |
|
|
494 |
|
|
341 |
|
|
Imputed interest expense and fair value adjustments to contingent consideration |
|
|
5,128 |
|
|
31 |
|
|
Provision for doubtful accounts |
|
|
257 |
|
|
313 |
|
|
(Gain) loss on disposal of assets |
|
|
35 |
|
|
12 |
|
|
Gain on sales of business |
|
|
— |
|
|
(30) |
|
|
Impairment losses |
|
|
1,120 |
|
|
— |
|
|
Impairment on equity investment |
|
|
15,632 |
|
|
— |
|
|
Gain (adjustment) on bargain purchase of a business |
|
|
(685) |
|
|
— |
|
|
Non-cash loss on held for sale assets |
|
|
2,000 |
|
|
3,178 |
|
|
Deferred income taxes |
|
|
(2,327) |
|
|
5,901 |
|
|
Excess tax benefit from equity-based awards |
|
|
(274) |
|
|
(703) |
|
|
Equity-based compensation expense |
|
|
6,183 |
|
|
4,836 |
|
|
(Gain) loss on foreign currency derivatives |
|
|
149 |
|
|
575 |
|
|
Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
65,698 |
|
|
26,669 |
|
|
Prepaids and other assets |
|
|
(37) |
|
|
(22,656) |
|
|
Accounts payable and accrued expenses |
|
|
(9,943) |
|
|
27,281 |
|
|
Deferred revenue and other liabilities |
|
|
(26,446) |
|
|
12,179 |
|
|
Net cash provided by operating activities |
|
|
104,706 |
|
|
125,455 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Proceeds from sale of long-lived assets |
|
|
8 |
|
|
22 |
|
|
Purchases of property, plant and equipment, net of acquisitions |
|
|
(16,883) |
|
|
(29,589) |
|
|
Payments for contract acquisition costs |
|
|
— |
|
|
— |
|
|
Proceeds from sale of business |
|
|
— |
|
|
250 |
|
|
Investments in non-marketable equity investments |
|
|
(2,119) |
|
|
(1,384) |
|
|
Acquisitions, net of cash acquired of $4.5 million and zero, respectively |
|
|
(2,002) |
|
|
(79,574) |
|
|
Net cash used in investing activities |
|
|
(20,996) |
|
|
(110,275) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from line of credit |
|
|
1,093,800 |
|
|
1,151,700 |
|
|
Payments on line of credit |
|
|
(1,148,800) |
|
|
(1,112,000) |
|
|
Payments on other debt |
|
|
(2,841) |
|
|
(3,025) |
|
|
Payments of contingent consideration and hold back payments to acquisitions |
|
|
(785) |
|
|
(435) |
|
|
Dividends paid to shareholders |
|
|
(12,414) |
|
|
(10,069) |
|
|
Payments to noncontrolling interest |
|
|
(1,125) |
|
|
(1,800) |
|
|
Proceeds from exercise of stock options |
|
|
— |
|
|
2,150 |
|
|
Tax payments related to issuance of restricted stock units |
|
|
(2,287) |
|
|
(1,876) |
|
|
Payments of debt issuance costs |
|
|
(35) |
|
|
(3) |
|
|
Purchase of treasury stock |
|
|
— |
|
|
(18,328) |
|
|
Net cash (used in) provided by financing activities |
|
|
(74,487) |
|
|
6,314 |
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(12,400) |
|
|
1,152 |
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents |
|
|
(3,177) |
|
|
22,646 |
|
|
Cash and cash equivalents, beginning of period |
|
|
74,437 |
|
|
55,264 |
|
|
Cash and cash equivalents, end of period |
|
$ |
71,260 |
|
$ |
77,910 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
8,593 |
|
$ |
4,857 |
|
|
Cash paid for income taxes |
|
$ |
20,213 |
|
$ |
5,905 |
|
|
Non-cash operating, investing and financing activities |
|
|
|
|
|
|
|
|
Acquisition of long-lived assets through capital leases |
|
$ |
7,539 |
|
$ |
874 |
|
|
Acquisition of equipment through increase in accounts payable, net |
|
$ |
248 |
|
$ |
(1,274) |
|
|
Contract acquisition costs credited to accounts receivable |
|
$ |
— |
|
$ |
| |