TTEC (US:TTEC)2021-08-03 20:50Revenue Growth - In Q2 2021, TTEC's revenue increased by $101.7 million, or 22.4%, to $554.8 million compared to the same period in 2020, with TTEC Engage contributing $446.8 million (80.5%) and TTEC Digital contributing $108.0 million (19.5%) to the total revenue [167]. - TTEC Engage segment revenue increased by 18.8% to $446.8 million for the three months ended June 30, 2021, compared to $375.9 million in the same period of 2020 [191]. - TTEC Digital's revenue increased by 40.0% year-over-year to $107.995 million, with a notable growth of 107% when excluding the large multi-year government contract [187][189]. - For the six months ended June 30, 2021, TTEC Engage revenue reached $922.4 million, a 26.3% increase from $730.6 million in 2020, with operating income up 92.9% to $125.5 million [200]. Operating Income and Margins - TTEC Engage's operating income improved by 62.7% year-over-year, driven by increased revenue from financial services and public sector clients, while TTEC Digital's operating income decreased by 33.5% due to a reduction in a large government contract [178]. - Operating income for TTEC Engage rose by 62.7% to $56.3 million, with an operating margin of 12.6%, up from 9.2% in the prior year [192]. - TTEC Digital segment revenue grew by 10.9% to $171.6 million, while operating income decreased by 44.1% to $13.8 million, resulting in an operating margin drop to 8.0% from 15.9% [198]. - The overall operating margin for TTEC in Q2 2021 was 11.9%, up from 10.8% in Q2 2020, reflecting improved operational efficiency [178]. Cash Flow and Financial Position - Positive operating cash flows of $132.8 million were generated during the six months ended June 30, 2021, compared to $105.3 million in 2020 [214]. - Free cash flow increased to $109.2 million for the six months ended June 30, 2021, up from $73.4 million in the prior year [217]. - Net cash flows from operating activities increased to $132.8 million for the six months ended June 30, 2021, compared to $105.3 million in 2020, driven by a $46.9 million increase in net cash income from operations [214]. - Cash and cash equivalents totaled $174.7 million as of June 30, 2021, up from $132.9 million at the end of 2020 [212]. Acquisitions and Investments - The company has been actively acquiring firms to enhance its service offerings, including acquisitions of cloud contact center service providers in 2021 and 2020 [169]. - The company drew down approximately $500 million from its Credit Facility in April 2021 for the acquisition of Avtex Solutions [209]. - Net cash flows used in investing activities rose significantly to $505.3 million for the six months ended June 30, 2021, primarily due to acquisitions [215]. - Total capital expenditures for 2021 are expected to be between 2.9% and 3.1% of revenue, with approximately 60% allocated for business growth and 40% for maintenance of existing assets [221]. Client Relationships and Risks - TTEC serves over 575 clients globally, including Fortune 1000 companies and government agencies, across various industries such as automotive, healthcare, and technology [170]. - One client represented over 10% of total revenue during the six months ended June 30, 2021, while the five largest clients accounted for 36.4% of consolidated revenue for the same period [223]. - The company has long-term relationships with its top five clients, ranging from 15 to 21 years, which mitigates the risk of client concentration [223]. - Some contracts with the five largest clients are set to expire between 2021 and 2023, but historical renewal rates have been high [224]. Future Outlook - The company expects to continue refining its site strategy and capacity post-COVID-19, with a focus on a diversified geographic footprint and a mix of work-from-home and on-site delivery [182]. - The company expects future capital requirements to depend on investments in infrastructure and may require raising additional capital through debt or equity financing [222]. - The effective tax rate for the six months ended June 30, 2021, was 20.3%, down from 26.7% in the same period of 2020 [205]. - Interest expense decreased to $5.2 million for the six months ended June 30, 2021, down from $12.7 million in the same period of 2020 [202].