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TeleTech Meets 2Q Expectations

Parrying the off-the-mark results afflicting its outbound counterparts, TeleTech Holdings, Inc. a company serving the inbound market, reported earnings on target and expects positive results for the second half of 1998.

The leading provider of customer care management solutions reported a revenue increase of 30.2 percent for the second quarter of 1998 to $88.1 million, up from $67.6 million for the same period last year. In total, the company's acquisitions of Digital Creators, Inc., Boulder, CO, and EDM Electronic Direct Marketing Ltd., Montreal, contributed $2.5 million and $6.4 million, respectively, to 1997 and 1998 second quarter revenues.

While second quarter net income decreased because of expenses associated with the acquisitions of Digital Creators and EDM, the results were accurately estimated by the company. Net income for the quarter was $4.5 million or 7 cents per share on a diluted basis compared to a net income of $6.5 million or 10 cents per share on a diluted basis for the same period in 1997.

“Those numbers were expected,” said John Larson, analyst at GS2 Securities. More importantly for the company, “no negative words were issued about coming results.”

Demand for the services is high, Larson said. Teletech's focus on long term customer service contracts with emphasis on customer care safeguards the company against the short term, campaign-based business fluctuations plaguing most of the vendors this quarter.

Inbound calls, as well, tend to fare better on the market than outbound, he said.

While operating margins are down from those of a year ago, those numbers have stabilized. The operating margin for the second quarter ended June 1998 was 8.7 percent compared to 15.1 percent in the same period of 1997.

TeleTech's 1998 second quarter international revenues grew 147 percent over 1997, reaching $23.9 million and representing 27.1 percent of 1998 consolidated second quarter revenues. This increase was primarily attributable to growth in TeleTech's Canadian, Australasian and Mexican markets. International revenues for the first six months of 1998 represented nearly 25 percent of consolidated revenues.

“We achieved a 30 percent top line growth through the first six months of 1998, despite experiencing a 40 percent decline in revenues during that same period,” said Kenneth Tuchman, president and CEO for the company.

Achievements in the second quarter included the successful launch of its CIBC Insurance relationship in Canada, the further expansion into Canada through the acquisition of EDM, and the acquisition of Digital Creators.

Future growth initiatives are expected. Citing high demand for its services, the company recently opened a call center in Uniontown, PA and renovated its Enfield, CT, center.

At June 30, 1998, TeleTech had over $68 million in cash and cash equivalents and total debt-to-capitalization of 11.5 percent. TeleTech operates more than 8,100 communication center workstations and employs more than 9,600 people.

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