TTEC (US:TTEC)2024-05-08 20:33Revenue Performance - TTEC's revenue for Q1 2024 was $576.6 million, a decrease of $56.7 million, or 8.9%, compared to Q1 2023, with TTEC Digital contributing $112.0 million (19.0%) and TTEC Engage contributing $464.6 million (81.0%) [151] - TTEC Digital segment revenue decreased by $4.9 million, or 4.2%, while TTEC Engage segment revenue decreased by $51.8 million, or 10.0% [156] - The five largest clients accounted for 35.7% of consolidated revenue in Q1 2024, compared to 34.6% in Q1 2023 [190] Operating Income and Margins - Operating income for Q1 2024 was $22.7 million, a decrease of $21.7 million, or 48.9%, with an operating margin of 3.9% compared to 7.0% in Q1 2023 [157] - TTEC Engage's operating income decreased by $24.2 million, or 55.5%, with an operating margin of 4.2% in Q1 2024, down from 8.4% in the prior year [168] Cash Flow and Liquidity - TTEC generated negative operating cash flows of $15.6 million in Q1 2024, a decrease from positive cash flows of $49.1 million in Q1 2023 [181] - Free cash flow decreased to ($29.1) million for the three months ended March 31, 2024, compared to $35.4 million for the same period in 2023 [184] - Net cash used in operating activities was ($15.6) million for the three months ended March 31, 2024, a decrease of $64.7 million from $49.1 million in 2023 [181] - Cash and cash equivalents totaled $91.5 million as of March 31, 2024, down from $172.7 million at the end of 2023 [179] - Cash and cash equivalents decreased to $91.5 million as of March 31, 2024, down from $172.7 million as of December 31, 2023 [179] Expenses and Taxation - Interest expense increased to $21.1 million in Q1 2024 from $17.4 million in Q1 2023 due to higher average utilization of the line of credit and rising interest rates [169] - The effective tax rate for Q1 2024 was 82.3%, significantly higher than 27.5% in Q1 2023, influenced by various factors including international earnings and stock-based compensation [174] Capital Expenditures and Financing - Total capital expenditures in 2024 are expected to be between 2.7% and 2.9% of revenue, with 55% allocated for business growth and 45% for maintenance of existing assets [188] - Capital expenditures for the three months ended March 31, 2024, were $13.4 million, slightly down from $13.6 million in 2023 [182] - Net cash flows provided by financing activities increased to $46.5 million in Q1 2024 from $43.6 million in Q1 2023 [183] - The company may need to raise additional capital through debt or equity financing due to potential increases in working capital and capital expenditure requirements [189] Strategic Initiatives - TTEC plans to selectively retain and grow capacity while expanding into new offshore markets, managing foreign currency risks through a multi-currency hedging program [161] - The company continues to invest in innovation and service offerings to enhance its competitive position and broaden its product capabilities [152] - The company has long-term relationships with its top five clients, with contracts ranging from 18 to 24 years [190] - There were no material changes to the company's contractual obligations and future capital requirements since the last filing [187]