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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, 2022

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class

Trading Symbol

Name of each exchange on which registered

Common stock of TTEC Holdings, Inc.,
$0.01 par value per share

TTEC

NASDAQ

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 þ   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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 

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 August 2, 2022, there were 47,209,213 shares of the registrant’s common stock outstanding.

TTEC HOLDINGS, INC. AND SUBSIDIARIES

JUNE 30, 2022 FORM 10-Q

TABLE OF CONTENTS

Page No.

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (unaudited)

1

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2022 and 2021 (unaudited)

2

Consolidated Statements of Stockholders’ Equity and Mezzanine Equity as of and for the three and six months ended June 30, 2022 and 2021 (unaudited)

3

Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)

4

Notes to the Consolidated Financial Statements (unaudited)

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

38

Item 4.

Controls and Procedures

40

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

40

Item 1A.

Risk Factors

41

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

41

Item 5.

Other Information

41

Item 6.

Exhibits

41

SIGNATURES

43

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TTEC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Amounts in thousands, except share amounts)

(Unaudited)

June 30,

December 31,

 

    

2022

    

2021

 

ASSETS

Current assets

Cash and cash equivalents

$

163,204

$

158,205

Accounts receivable, net of allowance of $5,406 and $5,409

 

391,587

 

357,310

Prepaids and other current assets

 

142,947

 

134,333

Income and other tax receivables

 

43,095

 

48,139

Total current assets

 

740,833

 

697,987

Long-term assets

Property, plant and equipment, net

 

167,293

 

168,404

Operating lease assets

99,731

90,180

Goodwill

 

810,929

 

739,481

Deferred tax assets, net

 

21,409

 

11,130

Other intangible assets, net

 

252,943

 

212,349

Other long-term assets

 

72,055

 

77,273

Total long-term assets

 

1,424,360

 

1,298,817

Total assets

$

2,165,193

$

1,996,804

LIABILITIES, STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY

Current liabilities

Accounts payable

$

98,241

$

70,415

Accrued employee compensation and benefits

 

148,432

 

156,324

Other accrued expenses

 

52,640

 

63,369

Income tax payable

 

11,670

 

9,471

Deferred revenue

 

97,740

 

95,608

Current operating lease liabilities

43,721

44,460

Other current liabilities

 

8,920

 

4,749

Total current liabilities

 

461,364

 

444,396

Long-term liabilities

Line of credit

 

930,000

 

791,000

Deferred tax liabilities, net

 

4,685

 

5,335

Non-current income tax payable

13,313

17,486

Non-current operating lease liabilities

72,288

64,419

Other long-term liabilities

 

76,752

 

79,827

Total long-term liabilities

 

1,097,038

 

958,067

Total liabilities

 

1,558,402

 

1,402,463

Commitments and contingencies (Note 10)

Redeemable noncontrolling interest

 

55,752

 

56,316

Stockholders’ equity

Preferred stock; $0.01 par value; 10,000,000 shares authorized; zero shares outstanding as of June 30, 2022 and December 31, 2021

Common stock; $0.01 par value; 150,000,000 shares authorized; 47,092,968 and 46,990,031 shares outstanding as of June 30, 2022 and December 31, 2021, respectively

 

471

 

470

Additional paid-in capital

 

364,251

 

361,135

Treasury stock at cost; 34,959,285 and 35,062,222 shares as of June 30, 2022 and December 31, 2021, respectively

 

(595,331)

 

(597,031)

Accumulated other comprehensive income (loss)

 

(125,450)

 

(98,426)

Retained earnings

 

891,185

 

856,065

Noncontrolling interest

 

15,913

 

15,812

Total stockholders’ equity

 

551,039

 

538,025

Total liabilities, stockholders’ equity and mezzanine equity

$

2,165,193

$

1,996,804

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,

 

    

2022

    

2021

    

2022

    

2021

 

Revenue

$

604,250

$

554,794

$

1,192,976

$

1,094,013

Operating expenses

Cost of services (exclusive of depreciation and amortization presented separately below)

 

463,510

 

400,323

 

910,725

 

788,983

Selling, general and administrative

 

66,766

 

61,300

 

131,605

 

114,057

Depreciation and amortization

 

26,314

 

24,916

 

52,944

 

45,376

Restructuring charges, net

2,528

1,725

3,148

2,126

Impairment losses

 

9,248

 

700

 

10,360

 

4,217

Total operating expenses

 

568,366

 

488,964

 

1,108,782

 

954,759

Income from operations

 

35,884

 

65,830

 

84,194

 

139,254

Other income (expense)

Interest income

 

271

 

230

 

471

 

409

Interest expense

 

(6,194)

 

(3,381)

 

(9,960)

 

(5,183)

Other income (expense), net

6,111

1,047

 

7,371

 

249

Total other income (expense)

 

188

 

(2,104)

 

(2,118)

 

(4,525)

Income before income taxes

 

36,072

 

63,726

 

82,076

 

134,729

Provision for income taxes

 

(7,274)

 

(11,353)

 

(15,308)

 

(27,332)

Net income

 

28,798

 

52,373

 

66,768

 

107,397

Net income attributable to noncontrolling interest

 

(3,564)

 

(5,004)

 

(8,130)

 

(9,610)

Net income attributable to TTEC stockholders

$

25,234

$

47,369

$

58,638

$

97,787

Other comprehensive income (loss)

Net income

$

28,798

$

52,373

$

66,768

$

107,397

Foreign currency translation adjustments

 

(23,370)

 

2,263

 

(23,074)

 

(3,490)

Derivative valuation, gross

 

(8,515)

 

219

 

(7,666)

 

(3,446)

Derivative valuation, tax effect

 

2,208

 

(59)

 

1,988

 

892

Other, net of tax

 

313

 

(24)

 

354

 

12

Total other comprehensive income (loss)

 

(29,364)

 

2,399

 

(28,398)

 

(6,032)

Total comprehensive income (loss)

 

(566)

 

54,772

 

38,370

 

101,365

Less: Comprehensive income attributable to noncontrolling interest

 

(2,134)

 

(3,668)

 

(5,749)

 

(6,702)

Comprehensive income (loss) attributable to TTEC stockholders

$

(2,700)

$

51,104

$

32,621

$

94,663

Weighted average shares outstanding

Basic

 

47,047

 

46,840

 

47,026

 

46,792

Diluted

47,383

 

47,409

 

47,381

 

47,388

Net income per share attributable to TTEC stockholders

Basic

$

0.54

$

1.01

$

1.25

$

2.09

Diluted

$

0.53

$

1.00

$

1.24

$

2.06

Dividends declared and not paid per share outstanding

$

$

$

$

The accompanying notes are an integral part of these consolidated financial statements.

2

TTEC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity and Mezzanine Equity

(Amounts in thousands)

(Unaudited)

Three months ended June 30, 2021 and 2022

Stockholders’ Equity of the Company

 

    

    

    

    

    

    

    

    

    

Accumulated

    

    

    

    

    

    

 

Other

 

Common Stock

Treasury

Additional

Comprehensive

Retained

Noncontrolling

Mezzanine

 

Shares

Amount

Stock

Paid-in Capital

Income (Loss)

Earnings

interest

Total Equity

Equity

 

Balance as of March 31, 2021

 

46,819

$

468

$

(599,851)

$

359,030

$

(80,713)

$

787,598

$

13,709

$

480,241

$

54,674

Net income

 

 

 

 

 

47,369

 

3,654

 

51,023

1,350

Dividends to shareholders ($0.00 per common share)

 

 

 

 

Dividends distributed to noncontrolling interest

 

 

 

 

 

 

 

(1,980)

 

(1,980)

(1,224)

Foreign currency translation adjustments

 

 

 

 

 

2,249

 

 

14

 

2,263

Derivatives valuation, net of tax

 

 

 

 

 

160

 

 

 

160

Vesting of restricted stock units

 

74

 

1

 

1,224

 

(3,978)

 

 

 

 

(2,753)

Equity-based compensation expense

 

 

 

 

3,371

 

 

 

 

3,371

Other, net of tax

 

 

 

 

 

(24)

 

 

 

(24)

Balance as of June 30, 2021

 

46,893

$

469

$

(598,627)

$

358,423

$

(78,328)

$

834,967

$

15,397

$

532,301

$

54,800

Stockholders’ Equity of the Company

 

    

    

    

    

    

    

    

    

    

Accumulated

    

    

    

    

    

    

 

Other

 

Common Stock

Treasury

Additional

Comprehensive

Retained

Noncontrolling

Mezzanine

 

Shares

Amount

Stock

Paid-in Capital

Income (Loss)

Earnings

interest

Total Equity

Equity

 

Balance as of March 31, 2022

 

47,036

$

470

$

(596,279)

$

362,601

$

(97,464)

$

865,951

$

16,547

$

551,826

$

56,666

Net income

 

 

 

 

 

 

25,234

 

3,512

 

28,746

51

Dividends to shareholders ($0.00 per common share)

 

 

 

 

Dividends distributed to noncontrolling interest

 

 

 

 

 

 

 

(2,768)

 

(2,768)

(965)

Foreign currency translation adjustments

 

 

 

 

 

(21,992)

 

 

(1,378)

 

(23,370)

Derivatives valuation, net of tax

 

 

 

 

 

(6,307)

 

 

 

(6,307)

Vesting of restricted stock units

 

57

 

1

 

948

 

(2,493)

 

 

 

 

(1,544)

Equity-based compensation expense

 

 

 

 

4,143

 

 

 

 

4,143

Other, net of tax

 

 

 

 

 

313

 

 

 

313

Balance as of June 30, 2022

 

47,093

$

471

$

(595,331)

$

364,251

$

(125,450)

$

891,185

$

15,913

$

551,039

$

55,752

Six months ended June 30, 2021 and 2022

Stockholders’ Equity of the Company

 

    

    

    

    

    

    

    

    

    

Accumulated

    

    

    

    

    

    

 

Other

 

Common Stock

Treasury

Additional

Comprehensive

Retained

Noncontrolling

Mezzanine

 

Shares

Amount

Stock

Paid-in Capital

Income (Loss)

Earnings

interest

Total Equity

Equity

 

Balance as of December 31, 2020

 

46,737

$

467

$

(601,214)

$

360,293

$

(72,156)

$

757,312

$

13,060

$

457,762

$

52,976

Net income

 

 

 

 

 

97,787

 

6,562

 

104,349

3,048

Dividends to shareholders ($0.43 per common share)

 

 

 

 

(20,132)

(20,132)

Dividends distributed to noncontrolling interest

 

 

 

 

 

 

 

(4,365)

 

(4,365)

(1,224)

Foreign currency translation adjustments

 

 

 

 

 

(3,630)

 

 

140

 

(3,490)

Derivatives valuation, net of tax

 

 

 

 

 

(2,554)

 

 

 

(2,554)