TTEC Holdings, Inc. (NASDAQ:TTEC) Q2 2020 Results Earnings Conference Call August 6, 2020 8:30 AM ET Company Participants Paul Miller - Senior Vice President, Treasurer, Investor Relations Officer Ken Tuchman - Chairman, Chief Executive Officer Regina Paolillo - Executive Vice President, Chief Administrative and Financial Officer Jonathan Lerner - President of TTEC Digital Conference Call Participants George Sutton - Craig-Hallum Capital Group, LLC James Faucette - Morgan Stanley Mike Latimore - Northland C ...

Table of Contents 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, 2020 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) (State or other jurisdiction of (I.R.S. E ...

TTEC Holdings, Inc. (NASDAQ:TTEC) Q1 2020 Earnings Conference Call May 5, 2020 8:30 AM ET Company Participants Paul Miller - Senior Vice President Treasurer & Investor Relations Officer Ken Tuchman - Chairman & Chief Executive Officer Regina Paolillo - Chief Financial & Administrative Officer Conference Call Participants George Sutton - Craig-Hallum Mike Latimore - Northland Capital Markets Maggie Nolan - William Blair Bryan Bergin - Cowen Josh Vogel - Sidoti Operator Thank you for standing by, and welcome ...

Table of Contents 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 March 31, 2020 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) (State or other jurisdiction of (I.R.S. ...

TTEC Holdings, Inc. (NASDAQ:TTEC) Q4 2019 Earnings Conference Call March 5, 2020 8:30 AM ET Company Participants Paul Miller - SVP, Treasurer & IR Officer Ken Tuchman - Chairman & CEO Regina Paolillo - Chief Financial & Administrative Officer Conference Call Participants George Sutton - Craig-Hallum Michael Latimore - Northland Capital Markets Maggie Nolan - William Blair Jared Levine - Cowen Joshua Vogel - Sidoti & Company Bill Warmington - Wells Fargo Operator Welcome to TTEC's Fourth Quarter and Full Yea ...

Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) TTEC Holdings, Inc. is a global customer experience technology and services company, restructured into TTEC Digital and TTEC Engage in 2019, reporting **$1.644 billion** in total revenue FY 2019 Revenue by Business Segment | Segment | Revenue (USD) | Percentage of Total | | :--- | :--- | :--- | | TTEC Digital | $305 million | 19% | | TTEC Engage | $1.338 billion | 81% | | **Total** | **$1.644 billion** | **100%** | - The company restructured its reporting segments in the second quarter of 2019 from four segments (CSS, CTS, CGS, CMS) to two new segments: TTEC Digital and TTEC Engage[21](index=21&type=chunk) - TTEC's core strategy includes deepening relationships with existing clients, pursuing new industry-leading clients, executing strategic acquisitions, and investing in technology platforms and partnerships[36](index=36&type=chunk) - The company operates globally in **22** countries with **49,500** employees as of fiscal year-end 2019, serving over **300** clients in industries such as automotive, communications, financial services, and healthcare[23](index=23&type=chunk)[27](index=27&type=chunk) - The company's top five and ten clients represented **37%** and **50%** of total revenue in 2019, respectively. Relationships with its top five clients have ranged from **13** to **23** years[46](index=46&type=chunk)[47](index=47&type=chunk) [Item 1A. Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including intense competition, rapid technological change, cybersecurity threats, client concentration (top ten clients **50%** of 2019 revenue), labor challenges, international operational risks, and the controlling influence of its CEO who owns **61%** of common stock - The company faces significant competition from large multinational providers, offshore service providers, and niche solution providers. The trend of industry consolidation may create new, larger competitors[59](index=59&type=chunk)[60](index=60&type=chunk) - A large portion of revenue comes from a limited number of clients. In 2019, the top five and ten clients accounted for **37%** and **50%** of revenue, respectively. The loss of a major client could materially impact financial results[69](index=69&type=chunk) - The business is exposed to significant cybersecurity risks, including data breaches, cyber-fraud (such as phishing scams), and DDoS attacks, which could disrupt operations and harm the company's reputation[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - The company's operational delivery is geographically concentrated in locations like the Philippines and Mexico, exposing it to risks from natural disasters, political unrest, and health epidemics[75](index=75&type=chunk) - Chairman and CEO Kenneth D. Tuchman beneficially owns approximately **61%** of the company's common stock, giving him control over all matters requiring stockholder approval, which may create conflicts of interest[116](index=116&type=chunk) [Item 1B. Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved written comments from the SEC staff as of the 2019 fiscal year-end - There are no unresolved staff comments from the SEC[120](index=120&type=chunk) [Item 2. Properties](index=25&type=section&id=Item%202.%20Properties) As of December 31, 2019, TTEC operated **89** global customer engagement centers, primarily in the United States, Philippines, and Canada, with lease terms up to **13** years Customer Engagement Centers by Country (as of Dec 31, 2019) | Country | Total Centers | | :--- | :--- | | United States of America | 46 | | Philippines | 18 | | Canada | 6 | | Australia | 3 | | Mexico | 3 | | Brazil | 2 | | Bulgaria | 2 | | United Kingdom | 2 | | Other | 7 | | **Total** | **89** | - The company's customer engagement centers are classified into three types: Multi-Client Centers (leased by TTEC for multiple clients), Dedicated Centers (leased by TTEC for a single client), and Managed Centers (owned/leased by clients but managed by TTEC)[127](index=127&type=chunk) [Item 3. Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal actions, but management expects no material adverse effect on its financial position or operations beyond existing reserves - The company accrues for legal exposures when losses are deemed probable and reasonably estimable[124](index=124&type=chunk) - Management does not expect current legal proceedings to have a material adverse effect on the company's financial condition[125](index=125&type=chunk) [Item 4. Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[127](index=127&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) TTEC common stock trades on NASDAQ, paid **$0.62** per share in dividends in 2019, and has **$26.6 million** remaining for stock repurchases as of December 31, 2019 Dividends Per Common Share | Year | Dividend per Share (USD) | | :--- | :--- | | 2019 | $0.62 | | 2018 | $0.55 | - On February 27, 2020, the Board of Directors authorized a semi-annual dividend of **$0.34** per common share, payable on April 16, 2020[130](index=130&type=chunk) - No shares were repurchased during 2019. As of December 31, 2019, approximately **$26.6 million** remained authorized for future repurchases under the existing program[131](index=131&type=chunk)[132](index=132&type=chunk) [Item 6. Selected Financial Data](index=30&type=section&id=Item%206.%20Selected%20Financial%20Data) The company's 2019 financial performance showed revenue growth to **$1.64 billion**, income from operations increasing to **$123.7 million**, and diluted EPS rising to **$1.65** Selected Financial Data (Years Ended December 31, in thousands, except per share data) | Metric | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | **Revenue** | $1,643,704 | $1,509,171 | $1,477,365 | | **Income from operations** | $123,709 | $92,054 | $100,489 | | **Net income attributable to TTEC stockholders** | $77,164 | $35,817 | $7,256 | | **Diluted EPS** | $1.65 | $0.77 | $0.16 | | **Dividends per common share** | $0.62 | $0.55 | $0.47 | | **Total assets** | $1,376,788 | $1,054,508 | $1,078,736 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2019, TTEC's revenue grew **8.9%** to **$1.64 billion**, with operating income rising to **$123.7 million**, and strong liquidity supported by **$238.0 million** in cash from operations and a **$530 million** available credit facility [Results of Operations](index=44&type=section&id=Results%20of%20Operations) In FY 2019, TTEC Digital revenue grew **27.9%** to **$305.3 million** with operating income up **17.8%**, while TTEC Engage revenue increased **5.4%** to **$1.34 billion** with operating income up **43.7%** TTEC Digital Segment Performance (FY 2019 vs. FY 2018) | Metric | 2019 | 2018 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $305,346 | $238,799 | $66,547 | 27.9% | | Operating Income | $38,927 | $33,054 | $5,873 | 17.8% | | Operating Margin | 12.7% | 13.8% | - | - | TTEC Engage Segment Performance (FY 2019 vs. FY 2018) | Metric | 2019 | 2018 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,338,358 | $1,270,372 | $67,986 | 5.4% | | Operating Income | $84,782 | $59,000 | $25,782 | 43.7% | | Operating Margin | 6.3% | 4.6% | - | - | - The effective tax rate for 2019 was **23.3%**, a decrease from **29.3%** in 2018. The change was influenced by earnings in jurisdictions with tax holidays and various tax benefits and expenses[211](index=211&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is strong, with **$238.0 million** in cash from operations and **$177.2 million** in free cash flow in 2019, alongside **$530.0 million** in available credit facility capacity Cash Flow Summary (in millions) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $238.0 | $168.3 | | Net cash used in investing activities | ($162.9) | ($47.6) | | Net cash used in financing activities | ($47.4) | ($102.1) | Free Cash Flow Reconciliation (in thousands) | | Year Ended December 31, | | :--- | :--- | | | **2019** | **2018** | | Net cash provided by operating activities | $237,989 | $168,345 | | Less: Purchases of property, plant and equipment | 60,776 | 43,450 | | **Free cash flow** | **$177,213** | **$124,895** | - As of December 31, 2019, the company had **$290.0 million** in borrowings under its credit facility and a remaining borrowing capacity of approximately **$530.0 million**[218](index=218&type=chunk) - Total capital expenditures for 2020 are expected to be between **3.6%** and **3.8%** of revenue, with approximately **65%** allocated to support business growth[233](index=233&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations on its variable-rate debt and foreign currency exposure on **22%** of 2019 revenue, mitigated by **$209.2 million** in cash flow hedging instruments - The company is exposed to interest rate risk on its **$290.0 million** of outstanding variable-rate debt. A **1%** (100 basis points) increase in interest rates would increase annual interest expense by **$1.0 million** for every **$100 million** borrowed[254](index=254&type=chunk) - Foreign currency risk is significant, as **22%** of 2019 consolidated revenue was associated with foreign exchange risk, where revenue is collected in U.S. dollars but costs are incurred in local currencies like the Philippine Peso and Mexican Peso[256](index=256&type=chunk) Cash Flow Hedging Instruments (as of Dec 31, 2019) | Currency Pair | Notional Amount (USD) | | :--- | :--- | | Philippine Peso | $147,654,000 | | Mexican Peso | $61,529,000 | | **Total** | **$209,183,000** | [Item 8. Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The company's consolidated financial statements and supplementary data are included in the report, starting on page F-1 - The financial statements required by this item are located beginning on page F-1 of this report[267](index=267&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=54&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable to the company - Not applicable[268](index=268&type=chunk) [Item 9A. Controls and Procedures](index=54&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2019, excluding the recently acquired FCR - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2019[272](index=272&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2019[275](index=275&type=chunk) - The assessment of internal control over financial reporting excluded First Call Resolution, LLC (FCR), which was acquired in 2019[276](index=276&type=chunk) [Item 9B. Other Information](index=55&type=section&id=Item%209B.%20Other%20Information) There is no other information to report under this item - None[280](index=280&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=57&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2020 Definitive Proxy Statement - Required information is incorporated by reference from the 2020 Proxy Statement[282](index=282&type=chunk)[283](index=283&type=chunk) [Item 11. Executive Compensation](index=57&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2020 Definitive Proxy Statement - Required information is incorporated by reference from the 2020 Proxy Statement[285](index=285&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=57&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the 2020 Definitive Proxy Statement - Required information is incorporated by reference from the 2020 Proxy Statement[286](index=286&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=57&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the 2020 Definitive Proxy Statement - Required information is incorporated by reference from the 2020 Proxy Statement[287](index=287&type=chunk) [Item 14. Principal Accountants Fees and Services](index=57&type=section&id=Item%2014.%20Principal%20Accountants%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2020 Definitive Proxy Statement - Required information is incorporated by reference from the 2020 Proxy Statement[288](index=288&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=57&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Form 10-K report, including Consolidated Financial Statements and an Exhibit Index - This section contains the index to the Consolidated Financial Statements (located at page F-1) and the Exhibit Index[290](index=290&type=chunk)[291](index=291&type=chunk) [Item 16. Form 10-K Summary](index=60&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided - None[297](index=297&type=chunk)

Financial Data and Key Metrics Changes - Year-to-date revenue increased by 8.5% to nearly $1.2 billion, with over 99% being organic growth [9] - Adjusted EBITDA rose by 17% to $146 million, adjusted operating income increased by 46% to $86 million, and adjusted EPS grew by 44% to $1.24 [10] - On a GAAP basis, organic revenue increased by 8.4% to $395.5 million, with operating income at $26 million or 6.6% of revenue [35] Business Line Data and Key Metrics Changes - TTEC Digital revenue grew by 31.8% and operating income by 43% [29] - TTEC Engage revenue increased by 4.2% and operating income by 48.2% [29] - TTEC Digital's cloud subscription-based offering grew by 197% with a gross margin of 44% [30] Market Data and Key Metrics Changes - The overall addressable market for TTEC's technology and services is estimated at $460 billion, with TTEC Engage at the center of a $360 billion market and TTEC Digital adding an incremental $100 billion opportunity [13] - The company reported a 10% increase in total client engagements over the last 12 months [21] Company Strategy and Development Direction - The company is focused on transitioning from legacy contact centers to digitally enabled customer experience hubs, emphasizing the integration of Digital and Engage solutions [8][11] - TTEC aims to enhance growth through strategic acquisitions and partnerships, including a recent acquisition of FCR [31][45] - The company is leveraging partnerships with Cisco and LivePerson to expand its cloud-based offerings and enhance customer experience [24][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong top and bottom line growth in 2020 and beyond, despite some short-term challenges [26][46] - The company anticipates a reduction in revenue churn from 15.6% to 12.5% in 2020, which is expected to support future revenue growth [34] Other Important Information - Capital expenditures were $16 million in Q3 2019, reflecting investments in facilities and technology [38] - The Board approved a $0.32 annual dividend per share, representing a 14.3% increase over the previous year [39] Q&A Session Summary Question: Capital allocation strategy regarding dividends, debt repayment, and acquisitions - Management emphasized a focus on organic growth, strategic acquisitions, and maintaining dividends, with a strong balance sheet to support these initiatives [51][52] Question: Contribution of FCR acquisition in Q4 and guidance implications - FCR is expected to contribute approximately $12 million in Q4, with a double-digit growth rate anticipated [54][55] Question: Percentage of business from government-related work and margin profile - Government work constitutes about 20% of overall business, with margins in line with other segments [61][88] Question: Improvements in Days Sales Outstanding (DSO) - DSO improvements are attributed to process enhancements rather than changes in payment terms [62] Question: Impact of Cisco and LivePerson partnerships on demand and margins - The partnerships are expected to enhance demand and margins by leveraging existing client bases and expanding service offerings [64][72]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents TTEC Holdings, Inc.'s unaudited consolidated financial statements, including Balance Sheets, Income, Equity, and Cash Flows, with detailed notes [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents TTEC Holdings, Inc.'s unaudited consolidated financial statements, including Balance Sheets, Income, Equity, and Cash Flows, with detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The company's total assets increased to $1.18 billion as of September 30, 2019, from $1.05 billion at year-end 2018, primarily driven by the adoption of the new lease accounting standard | Balance Sheet Items | September 30, 2019 ($ thousands) | December 31, 2018 ($ thousands) | | :--- | :--- | :--- | | **Total current assets** | 515,610 | 526,477 | | **Total long-term assets** | 666,256 | 528,031 | | **Total assets** | **1,181,866** | **1,054,508** | | **Total current liabilities** | 358,306 | 235,418 | | **Total long-term liabilities** | 436,417 | 466,241 | | **Total liabilities** | **794,723** | **701,659** | | **Total stockholders' equity** | 387,143 | 352,849 | - The company adopted the new lease accounting standard (ASC 842) as of January 1, 2019, resulting in the recognition of **$146.1 million** in operating lease assets and **$167.5 million** in operating lease liabilities on the balance sheet[10](index=10&type=chunk)[38](index=38&type=chunk)[136](index=136&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) For Q3 2019, TTEC reported significant profitability growth, with revenue up 8.4% to $395.5 million and net income more than tripling to $18.1 million | Metric | Q3 2019 ($ thousands) | Q3 2018 ($ thousands) | YTD 2019 ($ thousands) | YTD 2018 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 395,507 | 364,936 | 1,182,378 | 1,090,038 | | **Income from operations** | 25,981 | 14,657 | 80,946 | 53,101 | | **Net income attributable to TTEC stockholders** | 18,101 | 5,375 | 48,901 | 15,484 | | **Diluted EPS** | $0.39 | $0.12 | $1.05 | $0.33 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2019, the company generated $184.4 million in cash from operating activities, an increase from $166.1 million in the prior year | Cash Flow Activity | Nine Months Ended Sep 30, 2019 ($ thousands) | Nine Months Ended Sep 30, 2018 ($ thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | 184,397 | 166,109 | | **Net cash used in investing activities** | (44,083) | (35,966) | | **Net cash used in financing activities** | (119,603) | (95,782) | | **Increase in cash, cash equivalents and restricted cash** | 17,560 | 19,442 | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies and financial results, highlighting the Q2 2019 strategic shift to two new reporting segments: TTEC Digital and TTEC Engage - Effective Q2 2019, the company realigned its reporting structure from four segments (CSS, CTS, CGS, CMS) into two new segments: TTEC Digital and TTEC Engage[23](index=23&type=chunk)[24](index=24&type=chunk)[28](index=28&type=chunk) - On October 26, 2019, subsequent to the quarter end, the company acquired a 70% interest in First Call Resolution, LLC (FCR) for **$104.2 million** in cash[58](index=58&type=chunk)[59](index=59&type=chunk) Segment Performance (Q3 2019) | Segment Performance (Q3 2019) | Revenue ($ thousands) | Operating Income ($ thousands) | | :--- | :--- | :--- | | **TTEC Digital** | 78,620 | 11,704 | | **TTEC Engage** | 316,887 | 14,277 | | **Total** | **395,507** | **25,981** | - The company utilizes foreign exchange forward and option contracts to hedge against currency fluctuations, primarily for the Philippine Peso and Mexican Peso, with a total notional amount of **$175.4 million** as of September 30, 2019[84](index=84&type=chunk)[85](index=85&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting the strategic shift to two new segments, TTEC Digital and TTEC Engage, and strong Q3 2019 growth - In Q2 2019, the company changed its strategy and market approach, leading to a new two-segment reporting structure: TTEC Digital and TTEC Engage[165](index=165&type=chunk)[171](index=171&type=chunk) Financial Highlights | Financial Highlights | Q3 2019 ($ millions) | Q3 2018 ($ millions) | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $395.5M | $364.9M | 8.4% | | **Income from Operations** | $26.0M | $14.7M | 77.3% | | **Operating Margin** | 6.6% | 4.0% | N/A | - TTEC Digital's Q3 revenue grew **17.9% YoY**, driven by its cloud platform and systems integration practice, with operating margin expanding from **12.7% to 14.9%**[185](index=185&type=chunk)[186](index=186&type=chunk) - TTEC Engage's Q3 revenue grew **6.2% YoY** due to new client programs, with operating income increasing **130.7%** and margin expanding from **2.1% to 4.5%**[187](index=187&type=chunk)[188](index=188&type=chunk) - The company expects total capital expenditures for 2019 to be between **$60 million and $65 million**, with approximately 65% allocated to support business growth[218](index=218&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is primarily exposed to market risks from changes in interest rates on variable-rate debt and foreign currency exchange rates, mitigated by hedging programs - The company's primary market risks are interest rate fluctuations on its variable-rate debt and foreign currency exchange rate volatility[223](index=223&type=chunk) - As of September 30, 2019, the company had **$199.0 million** of outstanding variable-rate borrowings, where a 100 basis point interest rate increase would result in an additional **$1.0 million** of annualized interest expense per **$100 million** borrowed[224](index=224&type=chunk) - To mitigate foreign currency risk, particularly for the Philippine peso and Mexican peso, the company uses a cash flow hedging program with a notional value of **$175.4 million** as of September 30, 2019[227](index=227&type=chunk)[230](index=230&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes in internal control over financial reporting - Based on an evaluation as of September 30, 2019, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[239](index=239&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[241](index=241&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers other information, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business, with management expecting no material adverse effect on its financial position - The company accrues for legal exposures that are probable and reasonably estimable, and management does not expect current proceedings to have a material adverse effect on its financial statements[128](index=128&type=chunk)[129](index=129&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section outlines key risks including intense market competition, challenges in adapting to technological changes, cybersecurity threats, client concentration, and operational risks from geographic concentration - **Competition:** The market is highly competitive, with pressure from large multinationals, offshore providers, and niche players, where consolidation could create stronger competitors[246](index=246&type=chunk)[247](index=247&type=chunk) - **Technology Adaptation:** Failure to adapt to new technologies like automation, AI, and chatbots could reduce business volumes and make service offerings obsolete[249](index=249&type=chunk)[250](index=250&type=chunk) - **Cybersecurity:** The business faces risks from cyber-attacks, fraud, and data breaches, which could harm its reputation, cause liability, and result in service outages[251](index=251&type=chunk)[252](index=252&type=chunk) - **Client Concentration:** A large portion of revenue comes from a limited number of clients, with the top five clients accounting for **37% of revenue** in the first nine months of 2019, making the loss of a major client materially adverse[256](index=256&type=chunk)[257](index=257&type=chunk) - **Geographic Concentration:** The business model is dependent on customer engagement centers in a few key locations, with significant concentration in the Philippines, exposing the company to natural disasters, political instability, and other operational risks[261](index=261&type=chunk)[262](index=262&type=chunk) - **Controlling Shareholder:** The Chairman and CEO, Kenneth D. Tuchman, beneficially owns approximately **68%** of the company's common stock, giving him significant control over all matters requiring stockholder action[307](index=307&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2019, the company did not repurchase any equity securities, with approximately $26.6 million remaining authorized for future repurchases - No shares were repurchased by the company during the three months ended September 30, 2019[311](index=311&type=chunk) - As of September 30, 2019, the remaining authorized amount for stock repurchases under the company's program was approximately **$26.6 million**[311](index=311&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) There is no other information to report for this item [Item 6. Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files

TTEC Holdings, Inc. (NASDAQ:TTEC) Q2 2019 Earnings Conference Call August 8, 2019 8:30 AM ET Company Participants Paul Miller - SVP, Treasurer & IR Officer Ken Tuchman - Chairman & CEO Regina Paolillo - Chief Financial & Administrative Officer Conference Call Participants George Sutton - Craig-Hallum Bill Warmington - Wells Fargo Operator Welcome to TTEC's Second Quarter 2019 Earnings Conference Call. [Operator Instructions] This call is being recorded at the request of TTEC. I would now like to turn the ca ...

Table of Contents 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, 2019 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) (State or other jurisdiction of (I.R.S. E ...