TTEC Holdings, Inc 10-Q for FY2021 Q1

TTEC Holdings, Inc. (TTEC)

10-Q 2021-05-04 For: 2021-03-31

Added on April 08, 2026

About this 10-Q

TTEC Holdings, Inc filed this 10-Q on May 4, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $539.22M; up 24.8% from $432.21M a year earlier
Net income: $50.42M; up 134.1% from net income of $21.53M a year earlier
Diluted EPS: $1.06; up 130.4% from $0.46 a year earlier

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Delaware		84-1291044
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)


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


Large Accelerated Filer ☑	Accelerated Filer ☐	Non-accelerated Filer ☐	Smaller Reporting Company ☐
			Emerging Growth Company ☐


		Page No.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 (unaudited)	1

	Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020 (unaudited)	2

	Consolidated Statements of Stockholders’ Equity and Mezzanine Equity as of and for the three months ended March 31, 2021 and 2020 (unaudited)	3

	Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)	4

	Notes to the Consolidated Financial Statements (unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39

Item 4.	Controls and Procedures	41

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	42

Item 1A.	Risk Factors	42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 5.	Other Information	43

Item 6.	Exhibits	43

SIGNATURES		45


	March 31,		December 31,
	2021		2020
ASSETS
Current assets
Cash and cash equivalents	$	144,213	$	132,914
Accounts receivable, net of allowance of $4,997 and $5,067, respectively		350,307		378,397
Prepaids and other current assets		125,849		104,597
Income and other tax receivables		43,489		40,894
Total current assets		663,858		656,802

Long-term assets
Property, plant and equipment, net		168,697		178,706
Operating lease assets		112,129		120,820
Goodwill		362,862		363,502
Deferred tax assets, net		15,534		15,081
Other intangible assets, net		107,525		112,059
Other long-term assets		65,048		69,438
Total long-term assets		831,795		859,606
Total assets	$	1,495,653	$	1,516,408

LIABILITIES AND STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY
Current liabilities
Accounts payable	$	49,343	$	66,658
Accrued employee compensation and benefits		161,792		163,658
Other accrued expenses		72,004		55,915
Income tax payable		36,503		19,709
Deferred revenue		34,220		39,956
Current operating lease liabilities		43,043		43,651
Other current liabilities		6,041		6,623
Total current liabilities		402,946		396,170

Long-term liabilities
Line of credit		339,000		385,000
Deferred tax liabilities, net		6,400		7,747
Non-current income tax payable		22,271		22,291
Non-current operating lease liabilities		89,967		98,277
Other long-term liabilities		100,154		96,185
Total long-term liabilities		557,792		609,500
Total liabilities		960,738		1,005,670

Commitments and contingencies (Note 10)

Redeemable noncontrolling interest		54,674		52,976

Stockholders’ equity
Preferred stock; $0.01 par value; 10,000,000 shares authorized; zero shares outstanding as of March 31, 2021 and December 31, 2020		—		—
Common stock; $0.01 par value; 150,000,000 shares authorized; 46,819,468 and 46,737,033 shares outstanding as of March 31, 2021 and December 31, 2020, respectively		468		467
Additional paid-in capital		359,030		360,293
Treasury stock at cost: 35,232,785 and 35,315,220 shares as of March 31, 2021 and December 31, 2020, respectively		(599,851)		(601,214)
Accumulated other comprehensive income (loss)		(80,713)		(72,156)
Retained earnings		787,598		757,312
Noncontrolling interest		13,709		13,060
Total stockholders’ equity		480,241		457,762
Total liabilities and stockholders’ equity and mezzanine equity	$	1,495,653	$	1,516,408


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three months ended March 31,
	2021		2020
Revenue	$	539,219	$	432,213

Operating expenses
Cost of services (exclusive of depreciation and amortization presented separately below)		388,660		321,557
Selling, general and administrative		52,757		49,834
Depreciation and amortization		20,459		18,872
Restructuring charges, net		402		538
Impairment losses		3,517		696
Total operating expenses		465,795		391,497

Income from operations		73,424		40,716

Other income (expense)
Interest income		179		364
Interest expense		(1,802)		(9,592)
Other income (expense), net		(798)		3,396
Total other income (expense)		(2,421)		(5,832)

Income before income taxes		71,003		34,884

Provision for income taxes		(15,979)		(10,199)

Net income		55,024		24,685

Net income attributable to noncontrolling interest		(4,606)		(3,151)

Net income attributable to TTEC stockholders	$	50,418	$	21,534

Other comprehensive income (loss)
Net income	$	55,024	$	24,685
Foreign currency translation adjustments		(5,753)		(29,814)
Derivative valuation, gross		(3,665)		(10,549)
Derivative valuation, tax effect		951		2,746
Other, net of tax		36		127
Total other comprehensive income (loss)		(8,431)		(37,490)
Total comprehensive income (loss)		46,593		(12,805)

Less: Comprehensive income attributable to noncontrolling interest		(3,034)		(1,700)

Comprehensive income (loss) attributable to TTEC stockholders	$	43,559	$	(14,505)

Weighted average shares outstanding
Basic		46,743		46,498
Diluted		47,355		46,813

Net income per share attributable to TTEC stockholders
Basic	$	1.08	$	0.46
Diluted	$	1.06	$	0.46

Dividends declared and not paid per share outstanding	$	0.43	$	0.34


	Stockholders’ Equity of the Company
											Accumulated
											Other
	Preferred Stock			Common Stock			Treasury		Additional		Comprehensive		Retained		Noncontrolling				Mezzanine
	Shares	Amount		Shares	Amount		Stock		Paid-in Capital		Income (Loss)		Earnings		interest		Total Equity		Equity
Balance as of December 31, 2019	—	$	—	46,489	$	465	$	(605,314)	$	356,409	$	(106,234)	$	773,218	$	13,186	$	431,730	$	48,923
Net income	—		—	—		—		—		—		—		21,534		2,216		23,750		935
Dividends to shareholders ($0.34 per common share)	—		—	—		—		—		—		—		(15,843)		—		(15,843)		—
Acquisition of noncontrolling interest	—		—	—		—		—		—		—		—		—		—		3,750
Dividends distributed to noncontrolling interest	—		—	—		—		—		—		—		—		(1,850)		(1,850)		(241)
Foreign currency translation adjustments	—		—	—		—		—		—		(29,298)		—		(516)		(29,814)		—
Derivatives valuation, net of tax	—		—	—		—		—		—		(7,803)		—		—		(7,803)		—
Vesting of restricted stock units	—		—	108		1		1,783		(3,594)		—		—		—		(1,810)		—
Equity-based compensation expense	—		—	—		—		—		2,919		—		—		—		2,919		—
Other, net of tax	—		—	—		—		—		—		127		—		—		127		—
Balance as of March 31, 2020	—	$	—	46,597	$	466	$	(603,531)	$	355,734	$	(143,208)	$	778,909	$	13,036	$	401,406	$	53,367


	March 31, 2021		December 31, 2020

Cash and cash equivalents	$	144,213	$	132,914
Restricted cash included in "Prepaid and other current assets"		16,023		26,101
Restricted cash included in "Other noncurrent assets"		—		—
Total	$	160,236	$	159,015


	Acquisition Date
	Fair Value
Accounts receivable, net	$	3,758
Prepaid and other expenses		345
Tradename		400
Non-compete		150
Customer relationships		6,550
Goodwill		35,881
	$	47,084

Accounts payable	$	289
Accrued employee compensation		741
Deferred revenue		170
	$	1,200

Total purchase price	$	45,884


	Preliminary
	Estimate of
	Acquisition Date
	Fair Value
Cash	$	1,300
Accounts receivable, net		937
Prepaid and other expenses		115
Income tax receivable		30
Property, plant and equipment		274
Tradename		300
Customer relationships		3,100
Goodwill		14,418
	$	20,474

Accounts payable	$	960
Accrued employee compensation		113
Deferred revenue		236
Deferred tax liability		1,013
Other accrued liabilities		(78)
	$	2,244

Total purchase price	$	18,230


							Depreciation		Income
	Gross		Intersegment		Net		&		from
	Revenue		Sales		Revenue		Amortization		Operations
TTEC Digital	$	63,609	$	(22)	$	63,587	$	3,887	$	4,202
TTEC Engage		475,632		—		475,632		16,572		69,222
Total	$	539,241	$	(22)	$	539,219	$	20,459	$	73,424


	Three Months Ended
	March 31,
	2021		2020
Capital Expenditures
TTEC Digital	$	1,532	$	2,438
TTEC Engage		10,033		14,375
Total	$	11,565	$	16,813


	March 31, 2021		December 31, 2020
Total Assets
TTEC Digital	$	268,063	$	277,365
TTEC Engage		1,227,590		1,239,043
Total	$	1,495,653	$	1,516,408

	March 31, 2021		December 31, 2020
Goodwill
TTEC Digital	$	127,717	$	128,211
TTEC Engage		235,145		235,291
Total	$	362,862	$	363,502


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities
Net income	$	55,024	$	24,685
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		20,459		18,872
Amortization of contract acquisition costs		176		130
Amortization of debt issuance costs		175		183
Imputed interest expense and fair value adjustments to contingent consideration		877		3,220
Provision for credit losses		21		162
(Gain) loss on disposal of assets		46		14
Impairment losses		3,517		696
Deferred income taxes		(1,090)		4,589
Excess tax benefit from equity-based awards		(1,775)		(195)
Equity-based compensation expense		4,028		2,919
(Gain) loss on foreign currency derivatives		61		485
Changes in assets and liabilities, net of acquisitions:
Accounts receivable		27,053		11,611
Prepaids and other assets		(22,669)		19,219
Accounts payable and accrued expenses		15,972		(933)
Deferred revenue and other liabilities		(32,088)		(23,492)
Net cash provided by operating activities		69,787		62,165

Cash flows from investing activities
Proceeds from sale of long-lived assets		25		15
Purchases of property, plant and equipment, net of acquisitions		(11,565)		(16,813)
Acquisitions, net of cash acquired of zero and $3,123, respectively		(267)		(5,243)
Net cash used in investing activities		(11,807)		(22,041)

Cash flows from financing activities
Net proceeds (borrowings) from line of credit		(46,000)		410,000
Payments on other debt		(1,871)		(2,400)
Payments of contingent consideration and hold-back payments to acquisitions		—		—
Dividends paid to shareholders		—		—
Payments to noncontrolling interest		(2,385)		(2,091)
Tax payments related to issuance of restricted stock units		(3,927)		(1,810)
Payments of debt issuance costs		—		(35)
Net cash (used in) provided by financing activities		(54,183)		403,664



	Three Months Ended March 31,
	2021		2020
Revenue
United States	$	358,326	$	277,676
Philippines		102,252		91,105
Latin America		29,439		25,098
Europe / Middle East / Africa		25,917		16,944
Asia Pacific / India		16,167		15,168
Canada		7,118		6,222
Total	$	539,219	$	432,213


	Three Months Ended March 31,
	2021		2020
Balance, beginning of year	$	5,067	$	5,452
Provision for credit losses		21		162
Uncollectible receivables written-off		(83)		(208)
Effect of foreign currency		(8)		(4)
Balance, end of year	$	4,997	$	5,402


	Three Months Ended March 31,
	2021		2020

Aggregate unrealized net gain/(loss) at beginning of period	$	8,431	$	4,182
Add: Net gain/(loss) from change in fair value of cash flow hedges		(3,773)		(7,913)
Less: Net (gain)/loss reclassified to earnings from effective hedges		1,059		110
Aggregate unrealized net gain/(loss) at end of period	$	5,717	$	(3,621)


							Effect of
	December 31,		Acquisitions /				Foreign		March 31,
	2020		Adjustments		Impairments		Currency		2021

TTEC Digital	$	128,211	$	10	$	—	$	(504)	$	127,717
TTEC Engage		235,291		—		—		(146)		235,145
Total	$	363,502	$	10	$	—	$	(650)	$	362,862


	Local
	Currency	U.S. Dollar			% Maturing		Contracts
	Notional	Notional			in the next		Maturing
As of March 31, 2021	Amount	Amount			12 months		Through
Canadian Dollar	1,400	$	1,059		100	%	July 2021
Philippine Peso	5,645,000		109,143	⁽¹⁾	58.3	%	December 2023
Mexican Peso	1,009,500		45,454		56.2	%	December 2023
		$	155,656


	March 31, 2021
	Designated		Not Designated
	as Hedging		as Hedging
Designation:	Instruments		Instruments
	Foreign		Foreign
Derivative contract type:	Exchange		Exchange
Derivative classification:	Cash Flow		Fair Value

Fair value and location of derivative in the Consolidated Balance Sheet:
Prepaids and other current assets	$	5,430	$	40
Other long-term assets		2,657		—
Other current liabilities		(156)		(106)
Other long-term liabilities		(206)		—
Total fair value of derivatives, net	$	7,725	$	(66)


	Fair Value Measurements Using
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		At Fair Value
Cash flow hedges	$	—	$	7,725	$	—	$	7,725
Fair value hedges		—		(66)		—		(66)
Total net derivative asset (liability)	$	—	$	7,659	$	—	$	7,659


							Imputed
	December 31,						Interest /		March 31,
	2020		Acquisitions		Payments		Adjustments		2021

VF US	$	14,085	$	—	$	—		481	$	14,566
VF ASEAN		3,947		—		—		396		4,343
Total	$	18,032	$	—	$	—	$	877	$	18,909


	Reduction		Facility Exit and
	in Force		Other Charges		Total

Balance as of December 31, 2020	$	156	$	543	$	699
Expense		—		402		402
Payments		—		(502)		(502)
Change due to foreign currency		—		1		1
Change in estimates		—		—		—
Balance as of March 31, 2021	$	156	$	444	$	600


	Location in Statements of	Three Months Ended March 31,
Description	Comprehensive Income (Loss)	2021		2020
Amortization of ROU assets - finance leases	Depreciation and amortization	$	1,804	$	1,916
Interest on lease liabilities - finance leases	Interest expense		40		56
Operating lease cost (cost resulting from lease payments)	Cost of services		10,439		12,038
Operating lease cost (cost resulting from lease payments)	Selling, general and administrative		606		542
Operating lease cost (cost resulting from lease payments)	Restructuring		240		—
Operating lease cost (cost resulting from lease payments)	Impairment		1,697		—
Operating lease cost (cost resulting from lease payments)	Other income (expense), net		310		242
Short-term lease cost	Cost of services		966		997
Variable lease cost (cost excluded from lease payments)	Cost of services		318		—
Less: Sublease income	Selling, general and administrative		(228)		(182)
Less: Sublease income	Other income (expense), net		(676)		(496)
Total lease cost		$	15,516	$	15,113


	March 31, 2021		December 31, 2020
Weighted average remaining lease term - finance leases		2.34 years		2.46 years
Weighted average remaining lease term - operating leases		3.60 years		3.73 years
Weighted average discount rate - finance leases		1.72%		1.64%
Weighted average discount rate - operating leases		6.88%		6.95%



Description	Location in Balance Sheet	March 31, 2021		December 31, 2020
Assets
Operating lease assets	Operating lease assets	$	112,129	$	120,820
Finance lease assets	Property, plant and equipment, net		10,947		12,659
Total leased assets		$	123,076	$	133,479

Liabilities
Current
Operating	Current operating lease liabilities	$	43,043	$	43,651
Finance	Other current liabilities		5,558		6,193
Non-current
Operating	Non-current operating lease liabilities		89,967		98,277
Finance	Other long-term liabilities		3,766		4,763
Total lease liabilities		$	142,334	$	152,884


	Operating		Sub-lease		Finance
	Leases		Income		Leases
Year 1	$	49,738	$	(3,500)	$	5,609
Year 2		45,668		(3,488)		2,150
Year 3		26,224		(2,947)		1,402
Year 4		16,167		(2,940)		355
Year 5		6,467		(2,695)		—
Thereafter		7,581		—		—
Total minimum lease payments	$	151,845	$	(15,570)	$	9,516
Less imputed interest		(18,835)				(192)
Total lease liability	$	133,010			$	9,324


	Foreign
	Currency		Derivative
	Translation		Valuation, Net		Other, Net
	Adjustment		of Tax		of Tax		Totals

Accumulated other comprehensive income (loss) at December 31, 2019	$	(107,480)	$	4,182	$	(2,936)	$	(106,234)

Other comprehensive income (loss) before reclassifications		(29,298)		(7,913)		258		(36,953)
Amounts reclassified from accumulated other comprehensive income (loss)		—		110		(131)		(21)
Net current period other comprehensive income (loss)		(29,298)		(7,803)		127		(36,974)

Accumulated other comprehensive income (loss) at March 31, 2020	$	(136,778)	$	(3,621)	$	(2,809)	$	(143,208)

Accumulated other comprehensive income (loss) at December 31, 2020	$	(78,139)	$	8,431	$	(2,448)	$	(72,156)

Other comprehensive income (loss) before reclassifications		(5,879)		(3,773)		108		(9,544)
Amounts reclassified from accumulated other comprehensive income (loss)		—		1,059		(72)		987
Net current period other comprehensive income (loss)		(5,879)		(2,714)		36		(8,557)

Accumulated other comprehensive income (loss) at March 31, 2021	$	(84,018)	$	5,717	$	(2,412)	$	(80,713)



	For the Three Months Ended				Statement of
	March 31,				Comprehensive Income
	2021		2020		(Loss) Classification
Derivative valuation
Gain (loss) on foreign currency forward exchange contracts	$	1,431	$	151	Revenue
Tax effect		(372)		(41)	Provision for income taxes
	$	1,059	$	110	Net income (loss)

Other
Actuarial loss on defined benefit plan	$	(80)	$	(146)	Cost of services
Tax effect		8		15	Provision for income taxes
	$	(72)	$	(131)	Net income (loss)


			Maturing in the
	March 31, 2021		Next 12 Months
Canadian Dollar	$	56	$	56
Philippine Peso		5,845		3,969
Mexican Peso		1,824		1,248
	$	7,725	$	5,273


Exhibit		Incorporated Herein by Reference
No.	Exhibit Description	Form	Exhibit	Filing Date

10.1	Equity Purchase Agreement, dated as of March 1, 2021, by and among NEPAS Holdings, LLC, Avtex Solutions Holdings, LLC and TTEC Digital LLC (incorporated by reference as Exhibit 10.1 to TTEC’s Form 8-K filed on March 3, 2021)	8-K	10.1	March 3, 2021

10.89	Employment Agreement between TTEC Digital LLC and George S. Demou (incorporated by reference as Exhibit 10.89 to TTEC’s Form 8-K filed on April 9, 2021)	8-K	10.89	April 9, 2021

10.95*	Fifth Amendment to Amended and Restated Credit Agreement and Restated Security Agreement for a senior secured revolving credit facility with a syndicate of lenders led by Wells Fargo Bank, National Association, as agent, swing line and fronting lender

31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

32.1*	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

32.2*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

101.INS	XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

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104		The cover page from TTEC Holdings, Inc’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL


	*	Filed or furnished herewith.


		TTEC HOLDINGS, INC.
		(Registrant)

Date: May 4, 2021	By:	/s/ Kenneth D. Tuchman
		Kenneth D. Tuchman
		Chairman and Chief Executive Officer

Date: May 4, 2021	By:	/s/ Regina M. Paolillo
		Regina M. Paolillo
		Chief Financial Officer