TTEC Holdings, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; the supplied text does not provide a standalone fourth-quarter income statement or quarterly financial results. TTEC provides customer experience technology and managed services through TTEC Digital and TTEC Engage.
Financial results and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $2,443.7 million | $2,273.1 million |
| Operating income / margin | $168.5 million / 6.9% | $217.2 million / 9.6% |
| Net income attributable to TTEC stockholders | $103.2 million | $141.0 million |
| Diluted EPS | $2.18 | $2.97 |
| Cash from operating activities | $137.0 million | $251.3 million |
| Capital expenditures | $84.0 million | $60.4 million |
| Free cash flow (non-GAAP) | $53.0 million | $190.9 million |
- Revenue grew 7.5%; foreign currency movements reduced growth by 1.9%, or $42.4 million.
- Digital revenue was $471.5 million, up 13.9%; segment operating income was $33.7 million and margin was 7.2%, versus 8.6% in 2021.
- Engage revenue was $1,972.2 million, up 6.1%; segment operating income was $134.8 million and margin was 6.8%, versus 9.8% in 2021.
- At year-end, cash and cash equivalents were $153.4 million, current assets $750.0 million, and current liabilities $411.4 million. Credit-facility borrowings were $960.0 million, versus $791.0 million a year earlier; reported remaining borrowing capacity was approximately $335 million. The company reported compliance with its credit-facility covenants.
- The $1.5 billion senior secured revolving facility matures November 23, 2026. Average borrowing interest rate rose to 3.1% in 2022 from 1.3% in 2021.
Material changes and unusual items
- Operating income fell $48.7 million despite revenue growth. Engage results were affected by lower contribution from COVID-surge programs, new-program ramp costs, growth and sales investments, Faneuil integration and acquisition amortization, and restructuring, impairment, and accelerated software amortization charges.
- Company-wide restructuring and asset impairment charges were $19.4 million in 2022, compared with $15.1 million in 2021. Engage included $18.4 million of restructuring and impairment charges and $6.8 million of accelerated software amortization.
- Interest expense rose to $36.1 million from $12.4 million, primarily due to greater credit-facility utilization and higher rates.
- In April 2022, TTEC paid $142.4 million for selected Faneuil public-sector assets and contracts. The acquisition added $61.3 million of customer-relationship intangible assets and $75.9 million of goodwill. Acquired operations contributed $112.3 million of revenue and $6.0 million of net income in 2022, according to the filing.
- Net income attributable to stockholders declined 26.8%; operating cash flow declined $114.2 million, primarily reflecting lower operating cash income and a $96.9 million reduction in net working capital.
- The effective tax rate was 18.8%, compared with 23.9% in 2021. Management reported that specified tax benefits and other items lowered the 2022 rate; excluding the listed items, it would have been 22.9%.
Outlook, risks, and contingencies
- No specific revenue or earnings guidance is provided in the supplied filing text. Management expects 2023 capital expenditures of 3.3%–3.5% of revenue, with approximately 65% for growth and 35% for maintenance.
- Management said operating cash, cash on hand, and available credit were expected to meet operating and capital needs over the next 12 months, while cautioning that restricted capital access or higher borrowing costs could adversely affect the business.
- Key exposures include client concentration (the five largest clients generated 35% of revenue; one client generated 10%), contract termination or volume reductions, labor and inflation costs, client demand and program ramp execution, and competition and automation/AI adoption.
- Remote-work delivery, cybersecurity and data privacy, third-party technology partners, foreign currency, and operational concentration in international delivery markets are material risks. TTEC reported two significant 2021 cyber incidents; related 2022 allegations were settled without material operating impact, while government and regulatory actions, fines, penalties, and private legal actions occurred. The filing does not quantify their total cost.
- COVID-19 had no material adverse impact on 2022 results, and TTEC reported no continuing COVID-related surge work. Management said client post-pandemic buying decisions and the future delivery mix remain uncertain.
- Ordinary-course legal proceedings were not expected by management to have a material adverse effect, except for amounts specifically reserved. A $22.3 million purchase of the remaining 30% interest in First Call Resolution was expected to be documented in the first half of 2023.
- The company paid $1.02 per share in 2022 dividends and authorized a $0.52 per-share dividend payable April 20, 2023. Future dividends remain subject to Board approval and credit-facility restrictions.
Important facts for investors to verify
- Whether client renewals and volumes—especially contracts expiring from 2023 through 2025—sustain revenue and offset concentration risk.
- Whether Engage margins recover as new programs ramp and acquisition, impairment, and accelerated-amortization costs change.
- Cash conversion and working-capital trends, planned capital spending, debt utilization, interest-rate exposure, and covenant headroom.
- Faneuil’s final purchase accounting, contingent payments and receivables, and realized contribution relative to acquisition expectations.
- Further developments and potential costs from cybersecurity-related claims, investigations, insurance coverage, and remediation investments.
- The filing reports audited GAAP financial statements and effective internal control over financial reporting; Faneuil, representing 1.9% of assets and 5.0% of revenue, was excluded from the internal-control assessment.