TeleTech Holdings' (TTEC) CEO Ken Tuchman on Q2 2016 Results - Earnings Call Transcript

| About: TeleTech Holdings, (TTEC)

TeleTech Holdings, Inc. (NASDAQ:TTEC)

Q2 2016 Earnings Conference Call

August 4, 2016 8:30 AM ET


Paul Miller - Senior Vice President, Treasurer, and Head of Investor Relations

Ken Tuchman - Chairman and Chief Executive Officer

Regina Paolillo - Chief Financial and Administrative Officer.


Frank Atkins - SunTrust

Adam - Stifel Nicolaus

Eric Des Lauriers - Craig Hallum Capital Group

Elazar - Wells Fargo Securities


Welcome to TeleTech’s Second Quarter 2016 Earnings Conference Call. I would like to remind all parties that you will be in a listen-only mode until the question and answer session. This call is being recorded at the request of TeleTech.

I would like to turn the call over to Paul Miller, TeleTech Senior Vice President, Treasurer, and Head of Investor Relations. Thank you, sir. You may begin.

Paul Miller

Good morning. And thank you for joining us today. TeleTech is hosting this call to discuss its second quarter 2016 results ended June 30. Participating on today’s call are Ken Tuchman, our Chairman and Chief Executive Officer; and Regina Paolillo, our Chief Financial and Administrative Officer.

Yesterday, TeleTech issued a press release announcing its financial results for the second quarter 2016. While this call will reflect items discussed within those documents we encourage all listener’s to read our second quarter Form 10-Q.

Before we begin I want to remind you that matters discussed in today's call may include forward-looking statements related to our operating performance, financial goals and business outlook, which are based on management’s current beliefs and assumptions. Please note that these forward-looking statements reflect our opinions as of the date of this call and we undertake no obligation to revise this information as a result of new information that may become available.

Forward-looking statements are subject to various risks, uncertainties and other factors that could cause our actual results to differ materially from those described. Such factors include, but are not limited to, reliance on several large clients, the risks associated with lower profitability from or the loss of one or more significant clients, execution risks associated with ramping new business or integrating acquired businesses, and the possibility of asset impairment and/or restructuring charges. For more detailed description of our risk factors please review our 2015 annual report on Form 10-K. A replay of the conference call will be available on our website under the Investor Relations section.

I’ll now turn the call to Ken Tuchman, who is traveling and calling in from a remote location.

Ken Tuchman

Good morning. To provide clarity on the drivers of our performance this quarter, I'll first address this strategic asset of our business plan. And then Regina will focus on financial and business outlook. Over the past several years we've diversified our solution portfolio with technology enabled and outcome driven services to increase our strategic relevance to our clients in the marketplace. Our value proposition is proven when we provide our clients with solutions that help them deliver a better customer experience at a lower cost to serve, their customers stay longer, spend more and become advocates for their brands. So why are we needing our performance expectations. Our sales approach in its current form is not meeting our client objectives. For the investments we've made in our sales platform, it is simply not delivering the volume and quality bookings we need to achieve our top and bottom line goals. Quite simply we need far more predictable momentum to absorb the classic edge and flawless of a business of our scale and diversity.

Here are few examples. This quarter several mega deals with Fortune 500 companies with annualized contract value nearly $60 million were postponed or cancelled because of divestures. In one instance, we had already started the work with one of our client's division was sold. As you would expect they had no choice but to cancel work. In another incident, the company was sold to a private equity firm. In both circumstances, we'll recognize as a trusted customer experience partner and when the time is right we hope to reignite both these relationships. While these events were anomalies, they shed a bright light on our need to increase the volume of our opportunities in our pipeline to maintain our overall growth trajectory.

We are keenly focused on what needs to be done to get back on track. We are strengthening our sales execution and aligning our organizational priorities to drive more consistent, higher levels of profitable growth. We are deep in the building our plan and I look forward to sharing our progress in detail on our next quarter call.

Now on to a few examples of our business progress this quarter. Multiple segment deals are driving large bookings. While we acknowledge that we are currently do not have enough momentum with new logos and growth in our embedded face, this quarter we did deliver strong bookings in several industries, geographies and sectors. Several of the key deals combined solutions from our strategy, technology, growth and care segments. And we've several more multi segment opportunities in the pipeline. I'll focus on delivering outcomes, these driving profitable growth for our clients. Our Customer Growth Services segment grew double digit margin approaching 10% this quarter. With our digital outcome space revenue generation model, we are delivering as much as 10 to 1 return on investments. In addition, we introduced outcome space pricing with our customer management services segment and are seeing positive early results.

When we implement these more advanced solutions with our clients, we improve first contact resolution, reduced customer effort, increase customer satisfaction and reduce total cost to serve. Because our solutions cut across the entire business ecosystem from the C3 to operations, we are able to drive the tangible, sustainable outcomes that our clients need and value. This is evidenced in a number of key accounts, it will bring strategy and execution together we are consistently achieving double digit revenue growth. Prove points like this underline the strategic value of our platform. Our challenge is not the relevance of our solutions portfolio or the excellence of our operational delivery. Let me be clear, our challenge is specifically our ability to expand our market reach, develop more client executive relationships and accelerate deal closure. A market is strong and growing across industries and geographies more companies than ever requiring partners to help them imagine enable and differentiates their customer experiences. According to a report from [Force] 85% of companies surveyed new customer experience excellence has a differentiated in stark contrast a report from Dimension Data, less than only 22% of companies have the ability to integrate channels.

This gap between customer experience position and customer experience reality will only wide as the number of channels proliferate. This new environment is complex. Whether a brand is a multinational icon or emerging disruptor, their future will depend on their ability to create and cultivate meaningful customer relationships across every channel. All of our services coupled with our technology enabled platforms are positioned to support this complex ecosystem where brands, products and customers collide.

We are committed our value proposition and the market opportunity before us. Our reaching performance reflects neither our ability nor our ambition. Even our blue chip client base, outcome space value proposition and strong and committed management team, we can do better and we will. We are resolute in our direction and we are making the necessary changes to achieve our goals. Our focus is twofold, accelerating market adoption and improving profitability so that we can reap the full benefit of what we build. We are moving posting ahead to grow our top and bottom line. In parallel, our commitment to our shareholders remains top of mind. We will continue to leverage our strong cash flow and balance sheet to provide early returns and continued share repurchases and dividends. In addition, we will consider acquisition opportunities that drive more newly oriented revenue with scalar platform and advance our top and bottom line growth.

We are focused on what's required to execute successfully. I appreciate your continued support and look forward to sharing our progress over the next several months.

I'll now turn the call over to Regina.

Regina Paolillo

Thank you, Ken, and good morning, everyone. I'll start with a review of our second quarter 2016 results including segment performance. And then provide some context on our updated business outlook. To summarize the second quarter 2016 financial results on a GAAP basis, the company reported revenue of $305.1 million, down 1.6% over the prior year. Operating income was $16.2 million, up 5.3% operating margin versus 7.5% in the same quarter last year. Diluted earning per share was $0.24 down from $0.30 in the prior year period.

On non-GAAP constant currency basis, revenue increased 1.1% to $313.6 million, operating income decreased 23.5% to $18 million, or 5.7% of revenue. This compares to an operating margin of 7.6% last year, our diluted earning per share was $0.28 versus $0.34 in a year ago period.

In summary, the performance headwinds we are experiencing and which have led to a decline in our financial results relate to a limited set of issues. These include gaps in our sales execution and unprecedented number of M&A transactions in our client and prospect base. And a select set of industry and geographic specific challenges in a couple of our businesses. We deem these issues to be short term in nature and are thoroughly focused on resolution while advancing our profitability. We have an intense priority around balancing our long-term growth escalations with a current return on the investments we've made in sales, marketing and R&D.

We are disappointed in downward reset on our guidance. We are finalizing our plans relative to our top line challenges and will begin execution a number of initiatives within the third quarter. In parallel, we are executing a full review of cost structure to bring expenses in line with 2016 low single digit revenue growth and our near term priority. We see this is a significant opportunity to establish a faster pace to improve profitability.

Some additional details on our financial performance in the second quarter 2016. New business signing in the second quarter of 2016 increased 13% to $113 million from a $100 million in the prior year quarter. Over the last 12 months, bookings totaled $463 million, up 4% over the same period last year. We also achieved our 10th consecutive quarter of booking at or above $100 million, which continue to be well diversified across segments, geographies and industries as well as new and existing client relationships.

Our effective tax rate was 19.1%; this is down from 33.6% in the prior year. The prior year included a non-recurring reserve to chew up our international tax position. The normalized tax rate is 9.1% from 24.7% in the prior year, down due to the geographic mix of our taxable operating income. Our GAAP diluted earning per share was $0.24 in the second quarter versus $0.30 in a year ago period and our non-GAAP EPS was $0.28 versus the $0.34. The decline in EPS is primarily due to our lower operating income.

Cash flow from operations was $41.5 million in the second quarter of 2016, compared to $81.7 million in year ago period. DSO was 78 days versus 76 days last year. Sequentially DSO has improved by 5 days from the first quarter of 2016.

Capital expenditures were $12.8 million in the second quarter, compared to $16.5 million in the prior year period. We expect full year 2016 CapEx to approximate 4.2% of revenue versus 4.5% guidance and 5.2% in 2015. Capacity utilization in the second quarter was 70% is compares 77% in the prior year.

As we look beyond our seasonally low quarter second quarter and the SaaS or current and future estimated CMS and CDS backlog, we expect utilization to reach the mid to upper 70s by the end of the year. We are also evaluating our worldwide facilities portfolio to ensure appropriate alignment of our capacity with the anticipated business requirement.

While the Supersite build and migration continue to burden our capacity utilization in the second quarter, we now completely utilize in the Supersite and expect to be fully utilized in the sites that were vacated as we implement the $93 million of year-to-date CMS bookings.

In the second quarter of 2016 we repurchased a million shares for approximately $27.4 million as of June 30, 2016, there was $33.5 million authorized by the Board for future repurchases. The company also paid $0.185 per share semi-annual dividend in April to shareholder of record on March 31, 2016.

Cash and total debt at quarter end was $55.3 million and $146.2 million respectively, resulting in a net debt position of $90.9 million, this compares to a net debt position of $30.6 million in the prior year period and $66.3 million last quarter. Only the past 12 months beyond CapEx we returned $58.7 million to shareholders through share repurchases and dividend and invested $17.2 million in acquisition related activities. This was offset by positive cash flow from operations.

Moving now to a review of our segments. My comments will reference the non-GAAP constant currency results.

Customer Management Services revenue was $220.5 million in the second quarter of 2016, up 0.5% over the prior year period. While we are seeing strong performance across the majority of accounts, we are still working through the impact of one time challenges as we absorb the impact of lower exchange volumes in healthcare as a repatriation of offshore jobs in financial services. The healthcare exchange issue will not affect our second half. The repatriation of offshore job does have an impact in the second half of approximately $60 million. We originally expected incremental onshore volumes from this client to beat the impact of this repatriation. But the timing of its additional onshore work has shifted towards the end of 2016 versus our original expectations. This is one of our longest standing, top five clients with strong relationship across our four segments. CMS' operating income in the second quarter of 2016 was $9.9 million, or 4.5% compared to 6.1% of revenue in the year ago quarter. This operating margin decline is primarily a function of the above noted churn, lower capacity utilization and increasing mix of revenue onshore. While CMS' bookings doubled in the second quarter both sequentially and year-over-year, it fell short of expectations. As mentioned earlier, we experienced changes in strategy in several established Fortune 500 companies and TDO that were postponed or cancelled.

For the full year 2016, we expect CMS revenue to be relatively flat year-over-year with operating margin in the range of 7.6% to 7.8% with its last year's 6.8% including the impact of foreign exchange movement.

Customer Growth Services' second quarter 2016 revenue was $37.4 million, up 22.4% over the year ago period. Operating income increased 73% to $3.7 million were 9.8% of revenue, compared to $2.1 million, or 6.9% in the prior year. CGS' double digit growth continues to reflect the market demand for our outcome based sales outsourcing capability. In the first half of 2016 alone with five new clients program demand and we are expecting three others for existing client. Already in the third quarter, three new client program launches are schedule. CGS is also experiencing need for program expansion from several existing clients as well as those abroad with approximately 20% of revenue now generated from international clients. CGS' improved operating margin in the second quarter was a function of higher revenue and increased scale. Based on our current and estimated backlog, we expect the full revenue growth in a high teen year operating margin in the 7.4% to 7.6% range versus last year's 7%. We estimate CGS will achieve an operating margin of 10% in the fourth quarter.

Customer Technology Services' second quarter of 2016 revenue was $37.4 million, down 1.9% compared to $38.1 million in the prior year period. Operating income was $3.4 million or 9.1% of revenue in the second quarter, up from 8.5% was $3.3 million in the same period last year. Despite absorbing incremental SG&A to fund addition to the leadership and sales team as we navigate through changes we are making to the avia platform and on premise to cloud conversion.

We continue to see a division in the performance profile of our CTS Cisco versus CTS avia businesses. Our Cisco business is performing well in the second quarter with double digit operating margin in all five competencies inclusive of managed services cloud consulting 50 generation and product. We also saw year-over-year growth in all areas except product sales, which were down due to increased client migration for virtualization and cloud based solutions. The recovering revenue solution including managed services and cloud grew 16% and the related operating income grew 34%.

Conversely our avia business volumes continue to struggle into product and decision making delays which we largely attribute to delays in avia's product refresh. While the avia business represents less than 15% of CTS' total seven quarter revenue, its performance is nevertheless weighing on the otherwise stronger overall CTS business. For the full year, we estimate CTS' revenue to be down by 5% to 6% with an operating margin of near 10% versus 8.5% in the prior year including the impact of foreign exchange movement. While CTS' booking remains strong to lower full year outlook primarily relates to avia headwinds and Cisco revenue mix towards the virtualization and cloud based solutions. While SaaS based offerings are preferred in the short run the time to revenue is longer in on premise solution.

Customer Strategy Services' second quarter revenue was $18.1 million, down 17.5% from $22.3 million in the year ago period. The segment's operating margin was $1.1 million, or 5.8% of revenue in the second quarter of 2016 versus $4.8 million, or 21.6% of revenue in the prior year period. As shared last quarter, the decline in revenue and operating income was primarily a function of lower volume in our CSS Middle East business. While we work to do the macroeconomic challenges in that region of the world, we are outperforming in the Americas across most of practice areas. We are also seeing an uptick in C3 conversation that are building deeper, strategic relationship and fostering new opportunities both within CSS and other segment. Sequentially, second quarter versus full first quarter 2016 CSS revenue grew 15% and return to profitability.

Despite strong bookings and higher quality consulting engagement in the Americas and Europe, the higher demand for insight, analytics and content collaboration services, CSS has challenges in the Middle East in negatively way on the full year for the year compare. For full year 2016, we estimate CSS' revenue to decline by 5% to 6% with operating margin in the mid-teen including impact of foreign exchange movement.

A quick comment regarding our progress to remediate the material weaknesses in our internal control systems. We are advancing the actions we outlined in our Form 2016 Form 10-K and continue to expect somewhat weakness by the filing of our 2016 10-K.

Regarding our full year adjusted guidance; we estimate revenue to range from $1.285 billion to $1.295 billion compared to $1.335 billion to $1.345 billion including estimated impact of foreign exchange movement.

We estimate our operating margin before asset impairments and restructuring charges and including the impact of foreign exchange movement to range between 8.4% and 8.6% versus 8.1% to 8.3% in our original guidance. This includes actions we will take to reduce our expense based in line with our commitment to increase the test at which we get to higher profitability.

We estimate our capital expense at approximately 4.2% of revenue and versus 4.5% in our original guidance. While we are achieving strong operational results and seen increased client adoption of our suite of offering, we are not realizing our full worth potential. We expect the sales execution challenges we are facing to be resolved within a next couple of quarters. In the meantime, we have every intention of advancing the pace in which we get to higher profitability by increasing our focus, rationalizing non-strategic activities and continuing to streamline our cost structure across our segments and shared services.

We look forward to sharing the details and progress against our plans during our third quarter earnings conference call. I'll now turn the call back to Paul.

Paul Miller

Thanks Regina. As we open the call we ask that you limit your question to one or two at a time. Operator, you may now open the line.

Question-and-Answer Session


[Operator Instructions]

Our first question is from Frank Atkins with SunTrust. Your line is now open. Please go ahead.

Frank Atkins

Hi. Thanks for taking my question. I wanted to ask first in prepared remarks you talked about the divestures, M&A as well as the private equity acquisition and impact of the business. Can you give us a little bit more color and perhaps which segments were impacted and what gives you confidence this is temporary in nature?

Ken Tuchman

You asked about three different questions reported in question there so I do the best I can to skin across some of them and if Regina wants to join us that are fine. Our confidence is that we are in the process of completing our plan as we speak. We've already into segment side of the plan and making good progress and we see opportunities where we can do some streamlining and increase our bottom line at pretty rapid pace. And so as we said on the call we look forward to sharing details of that in the next quarter. But it will be in the next quarter that we will be sharing these details and we think to give people what they are pleased with what we will be able to achieve. And it relates to M&A, we are still very focused on acquisitions and we are going to continue to be focused on acquisition. M&A it relates to anything it might have -- that might have to do with divestures, it's suffice to say that if we would do everything possible to make sure that every aspect of our business is performing often and we find an area where it's not then we will look at whatever alternatives right in front of us.

Regina Paolillo

So let me just add a little bit because I think maybe the question also was getting at the client and the prospects that we did not close relative to the $60 million was related to almost exclusively all CMS business. In some of those cases we believe that as Ken said in its script we can reignite those opportunities but we suggest given those businesses have some seasonality to them that would not happen until 2017. That's the bulk of them; there was an additional what I would say change in a strategic direction of an existing client that will be including in that set that was in CGS. And now while a recent client made their change at the high executive level relative to not outsource but to in fact redirect that back inhouse. So that will affect the little bit CGS' growth into the second half but still expect them to have near 20% growth rate year-over-year.

Frank Atkins

Okay, great. That's helpful. And to my follow up just wanted to ask about the hiring environment for people in sales particular?

Ken Tuchman

As far as we are having we are actually very excited by several new senior business development executives that we recently brought on. And several more that we will be bringing on so we feel very positive about the hiring environment. As a matter of fact I'd say we never felt better about the environment as far as the quality of the candidates, the people who are really interested in selling an integrated type of solutions, it's more end to end.


Our next question is from Shlomo Rosenbaum with Stifel your line is now open. Please go ahead.


Hi. This Adam on Shlomo. What is the non-GAAP operating margin guidance going up due to the lack of [grand pass] because of the weak expectations?

Regina Paolillo

No. I mean what we've certainly in particular in our CMS and CGS businesses have some volatility relative to ramp. But as I said our focus will be balance in the near term relative to certainly closing the gap that we have on sales execution ensuring that we retain our focus importantly on those things that have long-term strategic value. But at the same time, balancing our profitability. As we step back we believe that true more now we are focused on the things that are more strategic and will grow that long term value for the company. With more now focused and with a rationalization of certain unproductive activities or at least activities that are not hitting the threshold of return or profitability and then last but not least just continuing to streamline our cost structure, then we have a multiple enterprise services and multiple segments we see an opportunity through things like consolidation and rationalization without a major impact on the company's top line execution and/or slowdown in the execution of our strategy.


Thank you. Our next question is from Eric Des Lauriers of Craig-Hallum Capital. Your next question. Your line is open.

Eric Des Lauriers

Hi, guys. Thank you for taking my questions. So I know you talked about financial services company some repatriation had a $60 million impact. Just kind of going along that and the CMS margins decreasing from 2014, 2015 and 2016. Are you guys seeing a problem with attrition or is it mainly just sort of one time event?

Regina Paolillo

Yes. So I'd characterize the CMS margin as the impact by the healthcare exchanges which did impact the first half but will not impact the second half. Repatriation which did impact first half and will impact the second half to the tune of $60 million. But certainly as we get into next year we will have flush that through. The third piece would be utilization which we've continued to talk about. I think the good news there is that we will see utilization in the mid-70s to high 70s and that we do have that Supersite filled and that client, Supersite excite and vacated other spaces that space will be filled by the end of the year given that we have $93 million of CMS bookings at the half. It's not tie as we thought it would be but certainly strong bookings relative to 2015. I think if you look at the growth in CMS, we are probably going to see about 4% growth second half of 2016 versus first half of 2016 versus a decline that we saw in the first half of 2016 versus 2015. And on a margin basis we have -- we expect to see in the second half a 9% margin in CMS versus 5.5% in the first half. So I think that we had some challenges from that Supersite build and had some challenges but a one time from the exchanges or the clients who deep into that, it didn't work out, they exited the exchanges so our year-over-year compare difficult and a one time from this repatriation from one of our top financial services client.

Eric Des Lauriers

Okay. Thank you.

Ken Tuchman

And I'd like to just add real quickly and say that it's no secret that TeleTech somewhat double down on the exchanges. We were -- we saw a very significant opportunity in the healthcare space. Every major carrier in the United States let just say the top 10 carriers will all doubling down and heading in that direction and it's no secret without making any type of political comments that there has been dull face with exchanges. All one has to do is read the front page of the Wall Street Journal. Every major carrier has now gone from doubling down and expanding dramatically into that area space and saying, it is an area that does not work for them and in many cases it's not profitable for them. And so consequently look for the forged carriers basically the majority of them have withdrawn from that exchange space. And so that obviously has impacted us and something that frankly we got client certifies and did not anticipate. So last thing I'd like to point out is that if you look at 2014 to 2016, with increase in our healthcare business and some of the increases in our financial services business, there has been a bit of shift in mix as it relates to offshore to onshore. And that obviously has somewhat of muting impact or degradation impact of profitability. That said the exchange situation we feel is behind us. Our focus is now back to classic healthcare and merit out various that healthcare companies are not shall we say experimenting with. And we are confident that we will get this back on track.

Eric Des Lauriers

Okay, great. And then second could you just speak about the hire of Michael Wellman? Is this a new position or existing and could you just give us a little more color on why you hired him and sort of what are you looking to get out of that?

Regina Paolillo

Yes, sure. So Michael Wellman has been with us just about a year. He joined to lead our Human Capital of our Healthcare businesses, of our BPL businesses, CMS and CGS, we have made a decision that at a certain point given the emerging businesses had a very different profile of employees that we needed to divide and conquer and so we did divide our human capital for a period of time to make sure that we have the appropriate focus. We always intended to reunify that and given, he has great background in human capital, has led a number or organization including competitive organization, and has definitely proved himself over the last year. And we took the opportunity to, as I said unify human capital and that in fact as we do that is one of the areas that we see is a consolidation and there will be natural rationalization. So he has been with the company for over a year and very happy to have him to take the helm in union capital which is such a critical role for us in terms of creating obviously a great platform for talent acquisition and talent management but he going to create a culture where many, many people across geographies and very different types of role are able to come together in single culture forged the purpose of driving great customer experience engagement.

Eric Des Lauriers

Great. And then finally could you guys -- in Q1 you guided that SG&A expenses will be relatively flat amid this new cost cutting and streamlining. Are you guys still expecting SG&A to be relatively flat year-over-year? Are you anticipating a bit of decrease?

Regina Paolillo

No. We will -- we would expect a more significant decrease year-over-year. And I look forward to talking in more detail in and around the activities and the actions that we take relative to that.


Thank you. Our next question is from Bill Warmington with Wells Fargo. Your line is now open.


Hi. This is [Elazar] for Bill Warmington. I am just wondering what percent of clients are using multiple services and what are some of the biggest pairings within the segments or between segments?

Regina Paolillo

Yes. I'll start by giving you just I think an interesting fact relative to second quarter. If I take our top 21 bookings which were all booking over $1 million, it's kind of interesting that eight of them have multiple capability in that booking and what I'd say is pairing that we see much more frequently and consistently are CSS, CTS and CMS. On our year-to-date or life to date basis at this point we have 76 of our clients taking in technology integrated solutions multiple capabilities. So we continue to see progress there. I'd say that we would expect even more momentum and/or at least see get in the pipeline and in the competition for having it with client as our consulting business really including its stride in terms of leading through regional partners and practice partners and vertical partners driving very rich transformative conversation with our clients. And then there is a natural connect as client drive their strategy, tweak their strategy into CTS and then either CMS or CGS depending the focus of the particular client.


Thanks. And can you talk about sales execution gap that you had during the quarter? Maybe provide a little more color on that. Are they specific to one segment?

Ken Tuchman

So what I would say to you is that just overall we feel that we could be doing the better job in our offer management and in how we are reaching the marketplace as far as the quantity of opportunities and so what I'd just simply say to you without giving anything that's too proprietary is we are very focused, we are stepping up in areas that we think will allow us to expand our sales opportunities. We are very happy with the closing ratios, so our closing ratios are good. We just would like to see more overall opportunities that can take advantage of our complete end-to-end platform and what we find is that we get in front of the opportunities we are quite successful. And so it's really more of a quantity situation. And that's something that I thin you'll see -- we'll start to mend itself over the next couple of quarters with some of the increased focus, the new hires and some of the other strategic areas that we are focusing on.


Thank you for your questions. That is all the time that we have today. This concludes the TeleTech Second Quarter 2016 Earnings Conference Call. You may disconnect at this time.

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