TTEC (TTEC)2024-08-08 20:19Financial Performance - In Q2 2024, TTEC reported revenue of 66.3 million or 11% compared to Q2 2023, with TTEC Digital contributing 417.7 million (78%) to total revenue [87]. - TTEC Digital's revenue decreased by 65.1 million (13.5%) due to client exits and lower demand [91][92]. - Operating income for TTEC Digital decreased by 16% to 230.4 million, a decline of 1,054.4%, with an operating margin of (55.2)%, compared to 5.0% in the previous year [92]. - For the first half of 2024, TTEC Digital revenue was 234.5 million in the same period of 2023, while operating income increased to 882.3 million, a decrease of 11.7% from 211.0 million [99]. Tax and Interest - The effective tax rate for Q2 2024 was (22.3)%, significantly lower than 61.9% in Q2 2023, influenced by income distribution and impairment charges [96]. - The effective tax rate for the six months ended June 30, 2024, was (23.5)%, significantly lower than 36.2% in 2023, influenced by income distribution and tax holidays in international jurisdictions [102]. - Interest income decreased to 2.3 million in the same period in 2023, while interest expense increased to 36.4 million due to higher interest rates [100]. Cash Flow and Capital Expenditures - Operating cash flows were positive at 144.9 million in the same period in 2023, primarily due to a 79.8 million as of June 30, 2024, down from 6.0 million for the six months ended June 30, 2024, compared to 75.7 million for the six months ended June 30, 2024, down from 20.0 million net change in the line of credit [108]. - Total capital expenditures in 2024 are expected to be between 2.5% and 2.7% of revenue, with 60% allocated for business growth and 40% for maintenance of existing assets [113]. Client Concentration and Relationships - Client concentration remains significant, with the five largest clients accounting for 31.7% of revenue in Q2 2024, down from 36.3% in Q2 2023 [114]. - The five largest clients accounted for 31.7% of consolidated revenue for the three months ended June 30, 2024, down from 36.3% in the same period of 2023 [114]. - For the six months ended June 30, 2024, the five largest clients represented 33.8% of consolidated revenue, compared to 35.4% in 2023 [114]. - Long-term relationships with top five clients range from 7 to 24 years, with multiple contract renewals completed [114]. - Contracts with the five largest clients expire between 2025 and 2027, but many have multiple contracts with different expiration dates [114]. - The risk of client concentration is mitigated by long-term contracts, although some contracts can be terminated for convenience [114]. - Historical contract renewals with largest clients have been successful, but future renewals are not guaranteed [114]. Strategic Plans - TTEC plans to continue investing in innovation and service offerings to enhance competitive positioning and expand its global client base [87]. - The company aims to selectively retain and grow capacity while expanding into new offshore markets, managing foreign currency risks through a multi-currency hedging program [87]. - The company expects capital requirements over the next 12 months to depend on investment levels in infrastructure for maintaining or upgrading existing assets [113]. - The company may need to raise additional capital through debt or equity financing due to potential acquisitions or joint ventures [113]. - The anticipated capital expenditures in 2024 are driven by site expansions, new builds in emerging geographies, and technological enhancements [113].