TTEC Holdings, Inc. reports 2.6 pp ROIC decline from 16.1% to 13.5% in 2018 in 2018 and 2.3% EBITDA decline
03/06/2019 • About TTEC Holdings, Inc. (
$TTEC) • By InTwits
TTEC Holdings, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- TTEC Holdings, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.2%. At the same time it's a lot of higher than industry average of 0.6%.
- CAPEX is quite volatile: $57m in 2018, $29m in 2017, $14m in 2016, $19m in 2015, $26m in 2014
- The company has highly profitable business model: ROIC is 13.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
TTEC Holdings, Inc.'s Revenue increased on 2.2%. Revenue growth showed slowdown in 18Q4 - it was -1.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 13.5 pp from 5.1% to 18.5% in 2018.
Gross Margin decreased slightly on 1.6 pp from 24.9% to 23.3% in 2018. Gross Margin followed a declining trend at -1.4 pp per annum in 2014-2018. SG&A as a % of Revenue showed almost no change in 2018. SG&A as a % of Revenue followed a declining trend at -1.1 pp per annum in 2014-2018.
Net Income margin increased slightly on 1.9 pp from 0.49% to 2.4% in 2018. During the last 5 years Net Income margin bottomed in 2017 at 0.49%.
Investments (CAPEX, working capital and M&A)
In 2018 TTEC Holdings, Inc. had CAPEX/Revenue of 2.9%. CAPEX/Revenue decreased on 2.3 pp from 5.2% in 2015 to 2.9% in 2018. It's average level of CAPEX/Revenue for the last three years was 3.5%. CAPEX as a % of Revenue followed a declining trend at -0.68 pp per annum in 2014-2018.
Return on investment
The company operates at good ROIC (13.5%) while ROE is low (10.2%). ROIC decreased on 2.6 pp from 16.1% to 13.5% in 2018. ROE increased on 8.2 pp from 2.0% to 10.2% in 2018. During 2014-2018 ROE bottomed in 2017 at 2.0%.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.3x and Debt / EBITDA is 1.7x. Net Debt / EBITDA dropped on 0.4x from 1.6x to 1.3x in 2018. Debt dropped on 18.0% while cash increased on 5.1%. During 2014-2018 Net Debt/EBITDA topped in 2017 at 1.6x.
The company has no short term refinancing risk: short term debt is zero.
Valuation and dividends
The company's trades at EV/EBITDA 11.2x and P/E 44.7x.
Management team
Kenneth D Tuchman is a TTEC Holdings, Inc.'s CEO. Kenneth D Tuchman is a founder and has spent 1 year with the company. TTEC Holdings, Inc.'s CFO is Regina M Paolillo. Regina M Paolillo has 1 year tenure at the company.
Financial and operational results
FY ended 12/31/2018
TTEC Holdings, Inc. ($TTEC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,242 | 1,287 | 1,275 | 1,477 | 1,509 | 2.2% |
| Gross Profit | 355 | 359 | 334 | 367 | 351 | -4.4% |
| SG&A | 199 | 195 | 176 | 182 | 182 | 0.1% |
| EBITDA | 154 | 155 | 121 | 165 | 161 | -2.3% |
| Net Income | 72 | 62 | 34 | 7 | 36 | 393.6% |
Balance Sheet
|
|---|
| Cash | 77 | 60 | 55 | 74 | 78 | 5.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 100 | 100 | 217 | 344 | 282 | -18.0% |
Cash flow
|
|---|
| Capex | 68 | 67 | 51 | 52 | 43 | -16.4% |
Ratios
|
|---|
| Revenue growth | 4.1% | 3.6% | -0.9% | 15.8% | 2.2% | |
| EBITDA growth | 3.5% | 0.7% | -21.6% | 35.9% | -2.3% | |
|
|---|
| Gross Margin | 28.6% | 27.9% | 26.2% | 24.9% | 23.3% | -1.6% |
| EBITDA Margin | 12.4% | 12.0% | 9.5% | 11.2% | 10.7% | -0.5% |
| SG&A, % of revenue | 16.0% | 15.1% | 13.8% | 12.3% | 12.1% | -0.3% |
| Net Income Margin | 5.8% | 4.8% | 2.6% | 0.5% | 2.4% | 1.9% |
| CAPEX, % of revenue | 5.4% | 5.2% | 4.0% | 3.5% | 2.9% | -0.6% |
|
|---|
| ROIC | 17.6% | 17.0% | 10.1% | 16.1% | 13.5% | -2.6% |
| ROE | 15.7% | 13.9% | 8.5% | 2.0% | 10.2% | 8.2% |
| Net Debt/EBITDA | 0.1x | 0.3x | 1.3x | 1.6x | 1.3x | -0.4x |
TTEC Holdings, Inc. ($TTEC) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 375 | 350 | 365 | 419 | | 10.9% | -1.0% | 1.6% | -1.8% |
| EBITDA | 43 | 31 | 32 | 55 | | 4.4% | -19.7% | -1.2% | 4.4% |
| Net Income | 5 | 6 | 5 | 20 | | -76.1% | -62.4% | -63.6% | |
Balance Sheet
|
|---|
| Cash | 82 | 71 | 94 | 78 | | 22.7% | -8.5% | 19.1% | 5.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 303 | 289 | 273 | 282 | | 66.2% | 12.5% | 6.9% | -18.0% |
Ratios
|
|---|
| Gross Margin | 24.5% | 21.6% | 21.4% | 25.2% | | -0.5% | -2.6% | -1.9% | -1.5% |
| EBITDA Margin | 11.5% | 8.8% | 8.9% | 13.1% | | -0.7% | -2.0% | -0.3% | 0.8% |
| Net Income Margin | 1.2% | 1.6% | 1.5% | 4.9% | | -4.5% | -2.6% | -2.6% | 14.6% |
Peers in Data Processing & Outsourced S
Below you can find TTEC Holdings, Inc. benchmarking vs. other companies in Data Processing & Outsourced S industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.1% | 7.7% | 10.1% | 7.5% |
|---|
| TTEC Holdings, Inc. ($TTEC) | | 3.6% | -0.9% | 15.8% | 2.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 39.3% | 39.6% | 39.5% | 39.5% | 41.0% |
|---|
| TTEC Holdings, Inc. ($TTEC) | 28.6% | 27.9% | 26.2% | 24.9% | 23.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.6% | 21.2% | 21.3% | 21.1% | 19.4% |
|---|
| TTEC Holdings, Inc. ($TTEC) | 12.4% | 12.0% | 9.5% | 11.2% | 10.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.2% |
|---|
| TTEC Holdings, Inc. ($TTEC) | 5.4% | 5.2% | 4.0% | 3.5% | 2.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 13.3% | 12.8% | 11.7% | 10.6% | 10.2% |
|---|
| TTEC Holdings, Inc. ($TTEC) | 17.6% | 17.0% | 10.1% | 16.1% | 13.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.6x | 0.7x | 1.6x | 2.3x | 2.2x |
|---|
| TTEC Holdings, Inc. ($TTEC) | 0.1x | 0.3x | 1.3x | 1.6x | 1.3x |
