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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 September 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 November 2, 2022, there were 47,219,507 shares of the registrant’s common stock outstanding.

TTEC HOLDINGS, INC. AND SUBSIDIARIES

SEPTEMBER 30, 2022 FORM 10-Q

TABLE OF CONTENTS

Page No.

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

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

1

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

2

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

3

Consolidated Statements of Cash Flows for the nine months ended
September 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

41

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

42

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)

September 30,

December 31,

 

    

2022

    

2021

 

ASSETS

Current assets

Cash and cash equivalents

$

172,274

$

158,205

Accounts receivable, net of allowance of $5,855 and $5,409

 

384,793

 

357,310

Prepaids and other current assets

 

136,282

 

134,333

Income and other tax receivables

 

47,736

 

48,139

Total current assets

 

741,085

 

697,987

Long-term assets

Property, plant and equipment, net

 

181,343

 

168,404

Operating lease assets

93,658

90,180

Goodwill

 

805,592

 

739,481

Deferred tax assets, net

 

19,530

 

11,130

Other intangible assets, net

 

242,887

 

212,349

Other long-term assets

 

70,942

 

77,273

Total long-term assets

 

1,413,952

 

1,298,817

Total assets

$

2,155,037

$

1,996,804

LIABILITIES, STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY

Current liabilities

Accounts payable

$

98,496

$

70,415

Accrued employee compensation and benefits

 

141,220

 

156,324

Other accrued expenses

 

72,571

 

63,369

Income tax payable

 

7,150

 

9,471

Deferred revenue

 

90,916

 

95,608

Current operating lease liabilities

38,918

44,460

Other current liabilities

 

12,931

 

4,749

Total current liabilities

 

462,202

 

444,396

Long-term liabilities

Line of credit

 

955,000

 

791,000

Deferred tax liabilities, net

 

4,324

 

5,335

Non-current income tax payable

11,227

17,486

Non-current operating lease liabilities

69,269

64,419

Other long-term liabilities

 

72,996

 

79,827

Total long-term liabilities

 

1,112,816

 

958,067

Total liabilities

 

1,575,018

 

1,402,463

Commitments and contingencies (Note 10)

Redeemable noncontrolling interest

 

55,696

 

56,316

Stockholders’ equity

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

Common stock; $0.01 par value; 150,000,000 shares authorized; 47,213,561 and 46,990,031 shares outstanding as of September 30, 2022 and December 31, 2021, respectively

 

472

 

470

Additional paid-in capital

 

363,699

 

361,135

Treasury stock at cost; 34,838,692 and 35,062,222 shares as of September 30, 2022 and December 31, 2021, respectively

 

(593,337)

 

(597,031)

Accumulated other comprehensive income (loss)

 

(151,904)

 

(98,426)

Retained earnings

 

888,880

 

856,065

Noncontrolling interest

 

16,513

 

15,812

Total stockholders’ equity

 

524,323

 

538,025

Total liabilities, stockholders’ equity and mezzanine equity

$

2,155,037

$

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 

September 30,

Nine months ended 

September 30,

 

    

2022

    

2021

    

2022

    

2021

 

Revenue

$

592,453

$

566,734

$

1,785,429

$

1,660,747

Operating expenses

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

 

450,454

 

447,786

 

1,361,179

 

1,236,769

Selling, general and administrative

 

75,226

 

67,426

 

206,831

 

181,483

Depreciation and amortization

 

27,117

 

25,280

 

80,061

 

70,655

Restructuring charges, net

1,113

485

4,261

2,612

Impairment losses

 

2,939

 

(268)

 

13,299

 

3,949

Total operating expenses

 

556,849

 

540,709

 

1,665,631

 

1,495,468

Income from operations

 

35,604

 

26,025

 

119,798

 

165,279

Other income (expense)

Interest income

 

519

 

171

 

990

 

580

Interest expense

 

(10,565)

 

(3,504)

 

(20,525)

 

(8,687)

Other income (expense), net

3,946

3,288

 

11,317

 

3,537

Total other income (expense)

 

(6,100)

 

(45)

 

(8,218)

 

(4,570)

Income before income taxes

 

29,504

 

25,980

 

111,580

 

160,709

Provision for income taxes

 

(4,489)

 

(7,939)

 

(19,797)

 

(35,271)

Net income

 

25,015

 

18,041

 

91,783

 

125,438

Net income attributable to noncontrolling interest

 

(2,766)

 

(3,606)

 

(10,896)

 

(13,216)

Net income attributable to TTEC stockholders

$

22,249

$

14,435

$

80,887

$

112,222

Other comprehensive income (loss)

Net income

$

25,015

$

18,041

$

91,783

$

125,438

Foreign currency translation adjustments

 

(23,123)

 

(14,186)

 

(46,197)

 

(17,676)

Derivative valuation, gross

 

(4,430)

 

(8,314)

 

(12,096)

 

(11,760)

Derivative valuation, tax effect

 

1,150

 

2,164

 

3,138

 

3,056

Other, net of tax

 

70

 

23

 

424

 

35

Total other comprehensive income (loss)

 

(26,333)

 

(20,313)

 

(54,731)

 

(26,345)

Total comprehensive income (loss)

 

(1,318)

 

(2,272)

 

37,052

 

99,093

Less: Comprehensive income attributable to noncontrolling interest

 

(2,929)

 

(2,549)

 

(8,678)

 

(9,251)

Comprehensive income (loss) attributable to TTEC stockholders

$

(4,247)

$

(4,821)

$

28,374

$

89,842

Weighted average shares outstanding

Basic

 

47,207

 

46,984

 

47,087

 

46,857

Diluted

47,314

 

47,348

 

47,354

 

47,372

Net income per share attributable to TTEC stockholders

Basic

$

0.47

$

0.31

$

1.72

$

2.40

Diluted

$

0.47

$

0.30

$

1.71

$

2.37

Dividends declared and not paid per share outstanding

$

0.52

$

0.47

$

0.52

$

0.47

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 September 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 June 30, 2021

 

46,893

$

469

$

(598,627)

$

358,423

$

(78,328)

$

834,967

$

15,397

$

532,301

$

54,800

Net income

 

 

 

 

 

14,435

 

2,767

 

17,202

839

Dividends to shareholders ($0.47 per common share)

 

 

 

 

(22,085)

(22,085)

Dividends distributed to noncontrolling interest

 

 

 

 

 

 

 

(2,025)

 

(2,025)

(445)

Foreign currency translation adjustments

 

 

 

 

 

(13,968)

 

 

(218)

 

(14,186)

Derivatives valuation, net of tax

 

 

 

 

 

(6,150)

 

 

 

(6,150)

Vesting of restricted stock units

 

95

 

1

 

1,576

 

(6,266)

 

 

 

 

(4,689)

Equity-based compensation expense

 

 

 

 

4,570

 

 

 

 

4,570

Other, net of tax

 

 

 

 

 

23

 

 

 

23

Balance as of September 30, 2021

 

46,988

$

470

$

(597,051)

$

356,727

$

(98,423)

$

827,317

$

15,921

$

504,961

$

55,194

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 June 30, 2022

 

47,093

$

471

$

(595,331)

$

364,251

$

(125,450)

$

891,185

$

15,913

$

551,039

$

55,752

Net income

 

 

 

 

 

 

22,249

 

2,808

 

25,057

(42)

Dividends to shareholders ($0.52 per common share)

 

 

 

 

(24,554)

(24,554)

Dividends distributed to noncontrolling interest

 

 

 

 

 

 

 

(2,329)

 

(2,329)

(14)

Foreign currency translation adjustments

 

 

 

 

 

(23,244)

 

 

121

 

(23,123)

Derivatives valuation, net of tax

 

 

 

 

 

(3,280)

 

 

 

(3,280)

Vesting of restricted stock units

 

121

 

1

 

1,994

 

(5,910)

 

 

 

 

(3,915)

Equity-based compensation expense

 

 

 

 

5,358

 

 

 

 

5,358

Other, net of tax

 

 

 

 

 

70

 

 

 

70

Balance as of September 30, 2022

 

47,214

$

472

$

(593,337)

$

363,699

$

(151,904)

$

888,880

$

16,513

$

524,323

$

55,696

Nine months ended September 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

 

 

 

 

 

112,222

 

9,329

 

121,551

3,887

Dividends to shareholders ($0.90 per common share)

 

 

 

 

(42,217)

(42,217)

Dividends distributed to noncontrolling interest

 

 

 

 

 

 

 

(6,390)

 

(6,390)

(1,669)

Foreign currency translation adjustments

 

 

 

 

 

(17,598)

 

 

(78)

 

(17,676)

Derivatives valuation, net of tax

 

 

 

 

 

(8,704)

 

 

 

(8,704)

Vesting of restricted stock units

 

251