TELUS International (NYSE and TSX: TIXT), a leading digital
customer experience innovator that designs, builds, and delivers
next-generation solutions, including AI and content moderation, for
global and disruptive brands, today released its results for the
fourth quarter and full-year ended December 31, 2023. TELUS
Corporation (TSX: T, NYSE: TU) is the controlling shareholder of
TELUS International. All figures in this news release, and
elsewhere in TELUS International disclosures, are in U.S. dollars,
unless specified otherwise, and relate only to TELUS International
results and measures.
“At the close of 2023, our management team at TELUS
International reflected on a challenging year across our industry
and the impact it had on our long-term track record of consistently
delivering on expectations. Whilst we took meaningful action to
improve performance and our results in the second half of the year
started to show signs of stabilization, with significantly improved
profitability, our industry is not yet back to a normal operating
rhythm, as macroeconomic uncertainty remains and our clients
proceed cautiously,” said Jeff Puritt, President and CEO of TELUS
International. “In addition to streamlining our operations to match
near-term client demand and improving efficiencies at all levels of
our company, we’ve also made further progress with the integration
of WillowTree and our Digital Solutions services to ensure TELUS
International is well positioned to combine our scaled design and
build capabilities along with our technology-led operations and
managed services across all of our service lines, going to market
as an AI-fueled customer experience partner of choice.”
Jeff continued, “In the fourth quarter, our global sales team
won new business with a North American customer engagement software
and analytics company, Western Canada's premier heavy-duty truck
and bus dealership, and a German research institution focused on
innovative visual systems, to name a few. We continued to broaden
relationships with our existing clients, such as Google, driven by
AI-related momentum, and a Canadian multinational banking and
financial services corporation. Our parent company and anchor
client TELUS Corporation remains a unique long-term tailwind for
our business, as demonstrated in 2023 through expanded project
mandates, including with TELUS’ Health business unit, which
continued to ramp in the fourth quarter.”
Jeff added, “Illuminating our commitment to create value through
technology to delight customers with exceptional experiences, in
the fourth quarter, TELUS International was recognized as a Leader
in the IDC MarketScape, Worldwide Data Labeling Software 2023
Vendor Assessment, on the merits of our data labeling software
technologies and capabilities. Additionally, in their recent
industry report, the IDC featured TELUS International’s Fuel iX
solution, and specifically our GenAI Jumpstart eight-week
accelerator program, among the examples of successful
implementation of generative AI in customer care business process
services. In another accolade, Five9, the partner we chose for our
intelligent, cloud-native Contact Center as a Service (CCaaS)
application platform, recognized TELUS International as the
Canadian Partner of the Year and the Global Partner of the Year in
2023, as we work together to reimagine customer experience in the
cloud, with agile and scalable solutions like Fuel iX that harness
the power of generative AI to deliver end-to-end CX and innovation,
while driving better performance and cost efficiencies for our
clients.”
Vanessa Kanu, CFO said, “In the fourth quarter of 2023, TELUS
International delivered solid revenue growth amidst a challenging
operating environment, aided by the continued momentum we are
seeing in AI Data Solutions as well as expanded mandates with TELUS
Corporation. Importantly, we also exited 2023 with a meaningful
improvement in our profitability, driven by our cost efficiency
efforts that allowed us to deliver on our commitment to bring
margins back to the prior levels we have grown accustomed to.”
Vanessa continued: “In setting our outlook for 2024, we remain
conscious of the prolonged decision-making cycles we are seeing
from both existing and new clients. Our current view of client
demand assumes a continuation of the industry-wide challenging
business climate for roughly the first half of the year, while we
are hopeful to start seeing broader demand recovery in the latter
half of 2024.”
Vanessa concluded, “TELUS International’s balance sheet remains
solid, with the business demonstrating its ongoing ability to
generate meaningful cash flow that we have used to lower our debt
levels, resulting in a further improved leverage position. Our
capital allocation priorities remain focused on enabling long-term
growth by also reinvesting into our business, through technology
and innovation, which we believe will support our long-term
success. Meaningful growth opportunities for our business over the
long term continue to support our conviction in the strong
investment thesis around TELUS International, driven by digital
transformation, differentiated premium CX offerings, digital trust
& safety, all underpinned by agile and scalable AI
capabilities.”
Provided below are financial and operating highlights that
include certain non-GAAP financial measures and ratios. Note that
beginning in the first quarter of 2024 and in connection with its
full-year outlook for 2024 presented further below under "Outlook",
the company will no longer exclude share-based compensation expense
and changes in business combination-related provisions, and the tax
effects of these items, as applicable, in our presentation of
Adjusted Net Income, Adjusted Basic and Diluted EPS, and Adjusted
EBITDA. See the “Non-GAAP” section of this news release for more
information regarding this change, including a presentation of each
of these non-GAAP financial measures and ratios for full-year 2023
under the modified presentation.
Q4 2023 vs. Q4 2022 summary
- Revenue of $692 million, up $62 million, an increase of 10%
year-over-year on a reported basis and 9% on a constant currency
basis1, of which $41 million was from WillowTree. Excluding
WillowTree, our revenue was $651 million, an increase of $21
million, or 3%, reflecting growth in services provided to existing
large clients, including TELUS Corporation and Google, offsetting
lower revenues from one of our largest clients, a leading social
media company. Revenue growth included a favourable foreign
currency impact of approximately 1%, associated with the weakening
U.S. dollar exchange rate against the euro.
- Net income of $38 million and diluted EPS of $0.10, compared
with $34 million and $0.13, respectively, in the same quarter of
the prior year, with revenue growth outpacing the increase in
operating expenses, while higher interest expense and income taxes
were offset by impacts from changes in business combination-related
provisions related to the revaluation of the provisions for written
put options arising from our acquisition of WillowTree. Net income
margin, calculated by dividing net income by revenue for the
period, was 5.5%, up from 5.4% for the same quarter in the prior
year. The decrease in diluted EPS was due to a higher count of
weighted average diluted shares outstanding, which incorporated a
potential dilutive effect of our provisions for written put options
referenced above. Net income and diluted EPS include the impact of
changes in business combination-related provisions, share-based
compensation, acquisition and integration charges and amortization
of purchased intangible assets, among other items. Adjusted Net
Income1, which excludes the impact of such items, was $72 million
in the fourth quarter of 2023, compared with $95 million in the
same quarter of the prior year, with higher operating expenses,
interest expense and tax expense outpacing revenue growth.
- Adjusted EBITDA1 was $164 million, an increase of 4% from $157
million in the same quarter of the prior year, driven by the
favourable impact of cost efficiency efforts from earlier in the
year and increased volumes in AI Data Solutions, namely with
Google, and digital enablement of TELUS. This helped offset
reductions in service demand, principally in Europe, wage inflation
and accelerated ramp-up costs in the quarter for certain clients.
Adjusted EBITDA Margin1 was 23.7% compared with 24.9% in the same
quarter of the prior year. Adjusted Diluted EPS1 was $0.26,
compared with $0.35 in the same quarter of the prior year.
- Cash provided by operating activities was $142 million and Free
Cash Flow1 was $115 million, with a year-over-year growth of 69%
and 92%, respectively, due to lower income tax payments and higher
net inflows from working capital in the quarter.
- Net Debt to Adjusted EBITDA Leverage Ratio1 as per credit
agreement of 2.8x as of December 31, 2023, an improvement from 2.9x
as of September 30, 2023, and remaining within our target
steady-state range of 2-3x.
- Team member count was 75,347 as of December 31, 2023, an
increase of 3% year-over-year. On a quarter-over-quarter basis, the
team member count also increased 3%, reflecting project onboarding
and training, which offset team member reductions in the fourth
quarter as part of cost savings efforts in 2023 to right-size
staffing with near-term client demand volumes, particularly in
Europe.
2023 vs. 2022 summary
- Revenue of $2,708 million, up $240 million, an increase of 10%
year-over-year on a reported basis and 9% on a constant currency
basis, of which $186 million was from WillowTree. Excluding
WillowTree, our revenue was $2,522 million, an increase of $54
million, or 2%. The increase was due to growth in services provided
to existing clients, including TELUS Corporation and Google, as
well as new clients, partially offset by lower revenues from one of
our largest clients, a leading social media company, as well as a
global financial institution client. Revenue growth included a
favourable foreign currency impact of less than 1%, associated with
the weakening U.S. dollar exchange rate against the euro.
- Net income of $54 million and diluted EPS of $0.18, compared
with $183 million and $0.68, respectively, in the prior year. Net
income margin was 2.0%, compared with 7.4% in the prior year.
Adjusted Net Income, as defined above, was $252 million, compared
with $332 million in the prior year, primarily due the increase in
operating expenses and interest expense outpacing revenue growth,
which were partially offset by lower income taxes.
- Adjusted EBITDA was $583 million, compared with $607 million in
the prior year, primarily due to the increase in salaries and
benefits outpacing revenue growth, resulting from lower utilization
of team members in certain regions, and changes in our revenue mix.
Adjusted EBITDA Margin was 21.5%, compared with 24.6% in the prior
year, impacted by cost imbalances arising from reductions in
service demand, principally in Europe and from some of our larger
technology clients, which were partially offset by cost efficiency
efforts initiated in the second quarter of 2023 and realized during
the year. Adjusted Diluted EPS was $0.91, compared with $1.23 in
the prior year.
- Cash provided by operating activities was $498 million and Free
Cash Flow was $405 million, with a year-over-year growth of 14% and
22%, respectively, primarily due to higher net inflows from working
capital, which included higher cash receipts from TELUS
Corporation, and lower income tax and share-based compensation
payments. These increases were partially offset by lower operating
profits and cash expenditures for transaction costs associated with
our acquisition of WillowTree.
A discussion of our results of operations is included in our
2023 Management’s Discussion and Analysis dated February 9, 2024
and filed on SEDAR+ and “Item 5: Operating and Financial Review and
Prospects” in our Annual Report on Form 20-F, dated February 9,
2024 and filed on EDGAR. Such materials and additional information
are also provided at telusinternational.com/investors.
Outlook
As described above, beginning in the first quarter of 2024, we
will no longer exclude share-based compensation expense and changes
in business combination-related provisions, and the tax effects of
these items, as applicable, in our presentation of Adjusted Net
Income, Adjusted Basic and Diluted EPS, and Adjusted EBITDA. We
believe this presentation is more indicative of underlying business
performance, and better aligns the presentation of these non-GAAP
financial measures and ratios with comparable measures and ratios
of TELUS Corporation, our parent company. See the “Non-GAAP” and
“Non-GAAP reconciliations” sections of this news release for more
information regarding this change, including a presentation of each
of these non-GAAP financial measures and ratios for full-year 2023
under the modified presentation.
Management has released the following full-year outlook ranges
for 2024 (Adjusted EBITDA and Adjusted Diluted EPS are calculated
under the modified presentation described above):
- Revenue in the range of $2,790 to $2,850 million, representing
growth of 3% to 5%
- Adjusted EBITDA in the range of $623 to $643 million,
representing growth of 7% to 10%, and Adjusted EBITDA Margin in the
range of 22.3% to 22.6%
- Adjusted Diluted EPS in the range of $0.93 to $0.98,
representing growth of 7% to 13%
TELUS International announces transition of Chief Financial
Officer and appointment of successor
TELUS International Chief Financial Officer (CFO), Vanessa Kanu,
has decided to leave the company effective March 31, 2024. Vanessa
has held the role since September 2020, and during that period of
time was a pivotal member of the leadership team through a period
of global expansion and growth, guiding TELUS International’s
strategic acquisitions, supporting the company’s expansion into
Africa, and most notably providing financial leadership through the
company’s initial public offering in February 2021. Vanessa quickly
and adeptly built a strong foundation for TELUS International as a
public issuer, and will remain at the company until the end of
March to ensure an orderly transition to her successor, Gopi
Chande, FCPA, FCA, Senior Vice-president (SVP) Finance and
Treasurer at TELUS, who will assume the role of CFO at TELUS
International on March 4, 2024.
Over the past 14 years, Gopi has proven herself a trusted
leader, advisor and advocate at TELUS. In her most recent role as
Senior Vice-president and Treasurer, she successfully managed a
comprehensive portfolio covering treasury, corporate development,
investor relations, pensions and sustainability. During her tenure,
Gopi has overseen substantial financial initiatives, including over
$2 billion in bond raises, $1 billion in M&A transactions, and
the evolution of a pioneering Sustainable Finance Framework.
Throughout her career, Gopi has excelled in driving growth,
diversification and transformation and has guided TELUS through
strategic financial decisions, such as the formative rollout of its
multi-billion dollar TELUS PureFibre network, as well as the
transformation of the company’s end-to-end customer solutions
through the growth of the TELUS Digital platform. Gopi also brings
a strong understanding and wealth of experience in international
business to TELUS International. Prior to TELUS, Gopi developed 10
years’ experience with KPMG, working in Vancouver, Budapest and the
Silicon Valley, and was the Controller at multinational tech
startup, E2open, for two years. Gopi is a Board Member of the
Telecommunication Workers Pension Plan, Concert Properties, and the
BC Women’s Health Foundation. Gopi earned her CPA, CA (Certified
Public Accountant, Chartered Accountant) designation with Gold
Medal distinction, and recently was elected to Fellowship (FCPA).
She also holds a CPA (Illinois) designation.
“I look forward to welcoming Gopi to my leadership team. Her
transparent and personable approach has fostered a highly engaged
team, and her adept financial acumen has led her to build strong
connections with the TELUS Executive Leadership Team, Board of
Directors and investment community,” said Jeff Puritt. “Gopi brings
a wealth of experience to TELUS International as we continue to
drive growth and diversification, and we expect a smooth transition
to ensure our team and company’s continued focus on profitable
growth and industry leading free cash flow yield in 2024 and
beyond.”
The organizational change announced today reflects the
implementation of a robust, collaborative and ongoing succession
planning program between TELUS International and TELUS for their
Executive Leadership Teams and Finance organizations.
“On behalf of the Board of Directors, I would like to sincerely
thank Vanessa for her many, many contributions to our company,
including her strong and capable guidance through our IPO journey,
her learned counsel as we navigated a global pandemic and other
challenging macroeconomic conditions, and her unwavering dedication
to our team members throughout her tenure; we wish her well in her
future endeavors and she will be missed here at TELUS
International,” concluded Jeff Puritt.
Q4 2023 investor call
TELUS International will host a conference call today, February
9, 2024 at 10:30 a.m. (ET) / 7:30 a.m. (PT), where management will
review the fourth quarter and full-year results, followed by a
question and answer session with pre-qualified analysts. A webcast
of the conference call will be streamed live on the TELUS
International Investor Relations website at:
https://www.telusinternational.com/investors/news-events and a
replay will also be available on the website following the
conference call.
Non-GAAP
This news release includes non-GAAP financial information, with
reconciliation to GAAP measures presented at the end of this news
release. We report certain non-GAAP measures used in the management
analysis of our performance, but these do not have standardized
meanings under International Financial Reporting Standards as
issued by the International Accounting Standards Board (IFRS-IASB).
These non-GAAP financial measures and non-GAAP ratios may not be
comparable to GAAP measures or ratios and may not be comparable to
similarly titled non-GAAP financial measures or non-GAAP ratios
reported by other companies, including those within our industry
and TELUS Corporation, our controlling shareholder.
Adjusted EBITDA, Adjusted Net Income, Free Cash Flow and revenue
on a constant currency basis are non-GAAP financial measures, while
Adjusted EBITDA Margin, Adjusted Diluted EPS, revenue growth on a
constant currency basis and Net Debt to Adjusted EBITDA Leverage
Ratio are non-GAAP ratios.
Beginning in the first quarter of 2024, we will no longer
exclude share-based compensation expense and changes in business
combination-related provisions, and the tax effects of these items,
as applicable, in our presentation of Adjusted Net Income, Adjusted
Basic and Diluted EPS, and Adjusted EBITDA. We believe this
presentation is more indicative of underlying business performance,
and better aligns the presentation of these non-GAAP financial
measures and ratios with comparable measures and ratios of TELUS
Corporation, our parent company.
Adjusted EBITDA is commonly used by our industry peers and
provides a measure for investors to compare and evaluate our
relative operating performance. We use it to assess our ability to
service existing and new debt facilities, and to fund accretive
growth opportunities and acquisition targets. In addition, certain
financial debt covenants associated with our credit facility,
including Net Debt to Adjusted EBITDA Leverage Ratio, are based on
Adjusted EBITDA, which requires us to monitor this non-GAAP
financial measure in connection with our financial covenants.
Adjusted EBITDA should not be considered an alternative to net
income in measuring our financial performance, and it should not be
used as a replacement measure of current and future operating cash
flows. However, we believe a financial measure that presents net
income adjusted for these items provides a more consistent measure
for management to evaluate period-over-period performance and would
enable an investor to better evaluate our underlying business
trends, our operational performance and overall business
strategy.
We exclude items from Adjusted Net Income and Adjusted EBITDA,
including changes in business combination-related provisions,
acquisition, integration and other, share-based compensation,
foreign exchange gains or losses and, additionally, with respect to
Adjusted Net Income, the interest accretion on written put options
entered into in connection with our acquisition of WillowTree, real
estate rationalization-related impairments, amortization of
purchased intangible assets, and the related tax effect of these
adjustments. Full reconciliations of Adjusted EBITDA and Adjusted
Net Income to the comparable GAAP measures are included at the end
of this news release.
We calculate Free Cash Flow by deducting capital expenditures
from our cash provided by operating activities, as we believe
capital expenditures are a necessary ongoing cost to maintain our
existing productive capital assets and support our organic business
operations. We use Free Cash Flow to evaluate the cash flows
generated from our ongoing business operations that can be used to
meet our financial obligations, service debt facilities, reinvest
in our business, and to fund, in part, potential future
acquisitions.
Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA
by consolidated revenue. We regularly monitor Adjusted EBITDA
Margin to evaluate our operating performance compared to
established budgets, operational goals and the performance of
industry peers.
Adjusted Diluted EPS is used by management to assess the
profitability of our business operations on a per share basis. We
regularly monitor Adjusted Diluted EPS as it provides a more
consistent measure for management and investors to evaluate our
period-over-period operating performance, to better understand our
ability to manage operating costs and to generate profits. Adjusted
Diluted EPS is calculated by dividing Adjusted Net Income by the
weighted average number of diluted equity shares outstanding during
the period, excluding the potential dilutive effect of the written
put options related to the acquisition of WillowTree.
Revenue on a constant currency basis is used by management to
assess revenue, the most directly comparable GAAP measure,
excluding the effect of foreign currency fluctuations. Revenue on a
constant currency basis is calculated as current period revenue
translated using average foreign exchange rates in the comparable
prior period.
Revenue growth on a constant currency basis is used by
management to assess the growth of revenue, the most directly
comparable GAAP measure, excluding the effect of foreign currency
fluctuations. Revenue growth on a constant currency basis is
calculated as current period revenue growth translated using
average foreign exchange rates in the comparable prior period.
Net Debt to Adjusted EBITDA Leverage Ratio as per credit
agreement is calculated based on Net Debt and Adjusted EBITDA, both
as per credit agreement. We seek to maintain a Net Debt to Adjusted
EBITDA Leverage Ratio in the range of 2-3x. We may deviate from our
target Net Debt to Adjusted EBITDA Leverage Ratio as per credit
agreement to pursue acquisitions and other strategic opportunities
that may require us to borrow additional funds and, additionally,
our ability to maintain this targeted ratio depends on our ability
to continue to grow our business, general economic conditions,
industry trends and other factors.
We have not provided a quantitative reconciliation of our
full-year 2024 outlook for Adjusted EBITDA Margin and Adjusted
Diluted EPS to our full-year 2024 outlook for net income margin and
diluted EPS because we are unable, without making unreasonable
efforts, to calculate certain reconciling items with confidence,
which could materially affect the computation of these financial
ratios and measures.
Cautionary note regarding forward-looking statements
This news release contains forward-looking statements concerning
our business, operations and financial performance and condition,
as well as our plans, objectives and expectations for our business
operations and financial performance and condition. Any statements
contained herein that are not statements of historical facts may be
deemed to be forward-looking statements. In some cases, you can
identify forward-looking statements by terminology such as “aim”,
“anticipate”, “assume”, “believe”, “contemplate”, “continue”,
“could”, “due”, “estimate”, “expect”, “goal”, “intend”, “may”,
“objective”, “plan”, “predict”, “potential”, “positioned”, “seek”,
“should”, “target”, “will”, “would” and other similar expressions
that are predictions of or indicate future events and future
trends, or the negative of these terms or other comparable
terminology.
These forward-looking statements are based on our current
expectations, estimates, forecasts and projections about our
business, the integration of WillowTree, and the industry in which
we operate and management's beliefs and assumptions, and are not
guarantees of future performance or development and involve known
and unknown risks, uncertainties and other factors that are in some
cases beyond our control. We assume no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events, uncertainties or otherwise, except as
required by law.
Specifically, we made several assumptions underlying our
financial outlook for the full-year 2024 results, including key
assumptions in relation to: our ability to execute our growth
strategy, including by expanding services offered to existing
clients and attracting new clients; our ability to maintain our
corporate culture and competitiveness of our service offerings; our
ability to attract and retain talent; our ability to integrate, and
realize the benefits of, our acquisition of WillowTree; the
relative growth rate and size of our target industry verticals; our
projected operating and capital expenditure requirements; and the
impact of global conditions on our and our clients’ businesses,
including a potential economic recession, inflation, rising
interest rates, the Russia-Ukraine conflict and the variants
arising from the COVID-19 pandemic. Our financial outlook provides
management’s best judgement of how trends will impact the business
and may not be appropriate for other purposes.
Risk factors that may cause actual results to differ materially
from current expectations include, among other things:
- We face intense competition from companies that offer services
similar to ours.
- Our business and financial results have been and could be
adversely affected by a number of global conditions and the effects
of these same conditions on our clients’ businesses and demand for
our services.
- Because the majority of our costs is fixed in the short-term,
we may experience a delay in our ability to immediately adjust our
cost structure in response to prolonged lower client demand.
- Three clients account for a significant portion of our revenue
and loss of or reduction in business from, or consolidation of,
these or any other major clients could have a material adverse
effect on our business, financial condition, financial performance
and prospects.
- Our ability to grow and maintain our profitability could be
materially affected if changes in technology, including without
limitation generative artificial intelligence (GenAI), and client
expectations outpace our service offerings and the development of
our internal tools and processes or if we are not able to meet the
expectations of our clients.
- Our growth prospects are dependent upon attracting and
retaining enough qualified team members to support our operations
and competition for talent is intense.
- If we cannot maintain our unique culture as we grow, our
services, financial performance and business may be harmed.
- Our business could be adversely affected if we lose members of
our senior management.
- We could be unable to successfully identify, complete,
integrate and realize the benefits of acquisitions, including our
acquisition of WillowTree, or manage the associated risks.
- The unauthorized disclosure of sensitive or confidential client
and customer data, through cyberattacks or otherwise, could expose
us to protracted and costly litigation, damage to reputation and
cause us to lose clients / revenue.
- Our business may not develop in ways that we currently
anticipate due to negative public reaction to offshore outsourcing,
content moderation and proposed legislation, our use of artificial
intelligence (AI) or otherwise.
- Our policies, procedures and programs to safeguard the health,
safety and security of our team members, particularly our content
moderation team members, may not be adequate, which could adversely
affect our ability to attract and retain team members and could
result in increased costs, including due to claims against us.
- Our business would be adversely affected if individuals
providing data annotation services through TIAI’s crowdsourcing
solutions were classified as employees (not as independent
contractors).
- The dual-class structure contained in our articles has the
effect of concentrating voting control and the ability to influence
corporate matters with TELUS.
- TELUS will, for the foreseeable future, control the TELUS
International Board.
- The market price of our subordinate voting shares may be
affected by low trading volume and the market pricing for our
subordinate voting shares may decline as a result of future sales,
or the perception of the likelihood of future sales, by us or our
shareholders in the public market.
These risk factors, as well as other risk factors that may
impact our business, financial condition and results of operation,
are also described in our “Risk Factors” section of our Annual
Report available on SEDAR+ and in “Item 3D—Risk Factors” of our
Annual Report on Form 20-F filed on February 9, 2024 and available
on EDGAR.
TELUS International (Cda)
Inc.
Consolidated Statements of
Income
Three months
Twelve months
Periods ended December 31 (millions except
earnings per share)
2023
2022
2023
2022
REVENUE
$
692
$
630
$
2,708
$
2,468
OPERATING EXPENSES
Salaries and benefits
406
349
1,664
1,393
Goods and services purchased
122
124
461
468
Share-based compensation
—
5
21
25
Acquisition, integration and other
7
23
55
40
Depreciation
39
36
141
124
Amortization of intangible assets
45
32
183
134
619
569
2,525
2,184
OPERATING INCOME
73
61
183
284
OTHER (INCOME) EXPENSES
Changes in business combination-related
provisions
(20
)
—
(20
)
—
Interest expense
37
12
144
41
Foreign exchange loss (gain)
4
18
—
(7
)
INCOME BEFORE INCOME TAXES
52
31
59
250
Income tax expense (recovery)
14
(3
)
5
67
NET INCOME
$
38
$
34
$
54
$
183
EARNINGS PER SHARE
Basic
$
0.14
$
0.13
$
0.20
$
0.69
Diluted
$
0.10
$
0.13
$
0.18
$
0.68
TOTAL WEIGHTED AVERAGE SHARES
OUTSTANDING (millions)
Basic
274
267
274
266
Diluted
294
269
286
270
TELUS International (Cda)
Inc.
Consolidated Statements of
Financial Position
As at (millions)
December 31, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
127
$
125
Accounts receivable
498
428
Due from affiliated companies
62
81
Income and other taxes receivable
5
7
Prepaid and other assets
35
35
Current portion of derivative assets
16
19
743
695
Non-current assets
Property, plant and equipment, net
517
449
Intangible assets, net
1,546
1,008
Goodwill
1,963
1,350
Derivative assets
—
13
Deferred income taxes
29
14
Other long-term assets
25
27
4,080
2,861
Total assets
$
4,823
$
3,556
LIABILITIES AND OWNERS’ EQUITY
Current liabilities
Accounts payable and accrued
liabilities
$
290
$
289
Due to affiliated companies
178
111
Income and other taxes payable
57
67
Current portion of provisions
2
1
Current maturities of long-term debt
122
83
Current portion of derivative
liabilities
—
1
649
552
Non-current liabilities
Provisions
191
2
Long-term debt
1,628
881
Derivative liabilities
12
—
Deferred income taxes
290
264
Other long-term liabilities
16
19
2,137
1,166
Total liabilities
2,786
1,718
Owners’ equity
2,037
1,838
Total liabilities and owners’
equity
$
4,823
$
3,556
TELUS International (Cda)
Inc.
Consolidated Statements of
Cash Flows
Three months
Twelve months
Periods ended December 31 (millions)
2023
2022
2023
2022
OPERATING ACTIVITIES
Net income
$
38
$
34
$
54
$
183
Adjustments:
Depreciation and amortization
84
68
324
258
Interest expense
37
12
144
41
Income tax expense (recovery)
14
(3
)
5
67
Share-based compensation
—
5
21
25
Changes in business combination-related
provisions
(20
)
—
(20
)
—
Change in market value of derivatives and
other
7
25
2
2
Net change in non-cash operating working
capital
6
(7
)
43
(26
)
Share-based compensation payments
—
(5
)
(2
)
(19
)
Income taxes paid, net
(24
)
(45
)
(73
)
(94
)
Cash provided by operating activities
142
84
498
437
INVESTING ACTIVITIES
Cash payments for capital assets
(31
)
(29
)
(89
)
(105
)
Cash payments for other assets
—
—
—
(13
)
Cash payments for acquisitions, net of
cash acquired
—
(1
)
(852
)
(1
)
Cash used in investing activities
(31
)
(30
)
(941
)
(119
)
FINANCING ACTIVITIES
Shares issued
1
1
4
3
Withholding taxes paid related to net
share settlement of equity awards
(1
)
—
(4
)
(1
)
Repayment of long-term debt
(178
)
(475
)
(613
)
(682
)
Long-term debt issued
85
411
1,161
411
Debt issuance costs
—
(8
)
—
(8
)
Interest paid on credit facilities
(25
)
(7
)
(105
)
(23
)
Cash (used in) provided by financing
activities
(118
)
(78
)
443
(300
)
Effect of exchange rate changes on cash
and cash equivalents
2
6
2
(8
)
CASH POSITION
(Decrease) increase in cash and cash
equivalents
(5
)
(18
)
2
10
Cash and cash equivalents, beginning of
period
132
143
125
115
Cash and cash equivalents, end of
period
$
127
$
125
$
127
$
125
Non-GAAP reconciliations
Three Months Ended
December 31
Twelve Months Ended
December 31
(millions, except percentages)
2023
2022
2023
2022
Revenue, as reported
$
692
$
630
$
2,708
$
2,468
Foreign exchange impact on current period
revenue using prior comparative period’s rates
(7
)
21
(12
)
87
Revenue on a constant currency
basis
685
651
2,696
2,555
Revenue growth
10
%
5
%
10
%
12
%
Revenue growth on a constant currency
basis
9
%
9
%
9
%
16
%
Three Months Ended
December 31
Twelve Months Ended
December 31
(millions, except per share amounts)
2023
2022
2023
2022
Net income
$
38
$
34
$
54
$
183
Add back (deduct):
Share-based compensation
—
5
21
25
Acquisition, integration and other
7
23
55
40
Real estate rationalization-related
impairments
5
—
5
—
Amortization of purchased intangible
assets
43
30
174
121
Changes in business combination-related
provisions
(20
)
—
(20
)
—
Interest accretion on written put
options
4
—
13
—
Foreign exchange loss (gain)
4
18
—
(7
)
Tax effect of the adjustments above
(9
)
(15
)
(50
)
(30
)
Adjusted Net Income
$
72
$
95
$
252
$
332
Adjusted Basic Earnings Per
Share
$
0.26
$
0.36
$
0.92
$
1.25
Adjusted Diluted Earnings Per
Share1
$
0.26
$
0.35
$
0.91
$
1.23
1 Diluted weighted average number of
equity shares outstanding, excluding the potential dilutive effect
of the written put options, was 276 million and 277 million,
respectively, for the quarter and the year ended December 31, 2023,
calculated by subtracting the potential dilutive effect of the
written put options of 18 million and 9 million, respectively, from
the weighted average number of diluted equity shares outstanding of
294 million and 286 million, respectively. No adjustments were
required for the comparable periods ended December 31, 2022.
The following table presents the
adjustments to the reconciliations of full-year 2023 Adjusted Net
Income and Adjusted Diluted EPS to reflect the modified
presentation of such measures that we will begin to report in the
first quarter of 2024, along with the comparable 2024 outlook for
Adjusted Net Income and Adjusted Diluted EPS under the modified
presentation.
(millions, except per share amounts)
2023
Adjustments to Presentation
2023 (modified
presentation)
2024 Outlook (modified
presentation)
Net income
$
54
$
54
Add back (deduct):
Share-based compensation
21
(21
)
—
Acquisition, integration and other
55
55
Real estate rationalization-related
impairments
5
5
Amortization of purchased intangible
assets
174
174
Changes in business combination-related
provisions
(20
)
20
—
Interest accretion on written put
options
13
13
Foreign exchange loss (gain)
—
—
Tax effect of the adjustments above
(50
)
(3
)
(53
)
Adjusted Net Income
$
252
$
(4
)
$
248
Adjusted Diluted Weighted Shares
Outstanding
277
9
286
Adjusted Diluted Earnings Per
Share
$
0.91
$
0.87
Range of $0.93 to $0.98
Three Months Ended
December 31
Twelve Months Ended
December 31
(millions, except percentages)
2023
2022
2023
2022
Net income
$
38
$
34
$
54
$
183
Add back (deduct):
Share-based compensation
—
5
21
25
Acquisition, integration and other
7
23
55
40
Depreciation and amortization
84
68
324
258
Changes in business combination-related
provisions
(20
)
—
(20
)
—
Interest expense
37
12
144
41
Foreign exchange loss (gain)
4
18
—
(7
)
Income taxes
14
(3
)
5
67
Adjusted EBITDA
$
164
$
157
$
583
$
607
Net income margin
5.5
%
5.4
%
2.0
%
7.4
%
Adjusted EBITDA Margin
23.7
%
24.9
%
21.5
%
24.6
%
The following table presents the
adjustments to the reconciliation of full-year 2023 Adjusted EBITDA
to reflect the modified presentation of such measure that we will
begin to report in the first quarter of 2024, along with the
comparable 2024 outlook for Adjusted EBITDA under the modified
presentation.
(millions, except percentages)
2023
Adjustments to Presentation
2023 (modified
presentation)
2024 Outlook (modified
presentation)
Net income
$
54
$
54
Add back (deduct):
Share-based compensation
21
(21
)
—
Acquisition, integration and other
55
55
Depreciation and amortization
324
324
Changes in business combination-related
provisions
(20
)
20
—
Interest expense
144
144
Foreign exchange loss (gain)
—
—
Income taxes
5
—
5
Adjusted EBITDA
$
583
$
(1
)
$
582
Range of $623 to $643
Adjusted EBITDA Margin
21.5
%
21.5
%
Range of 22.3% to 22.6%
Three Months Ended
December 31
Twelve Months Ended
December 31
(millions)
2023
2022
2023
2022
Cash provided by operating activities
$
142
$
84
$
498
$
437
Less: capital expenditures
(27
)
(24
)
(93
)
(104
)
Free Cash Flow
$
115
$
60
$
405
$
333
As at (millions, except for ratio)
December 31, 2023
December 31, 2022
Outstanding credit facility
1,463
742
Contingent facility utilization
7
7
Liability related to provisions for
written put options1
68
—
Net derivative liabilities
—
1
Cash balance2
(127
)
(125
)
Net Debt as per credit
agreement
$
1,411
$
625
Adjusted EBITDA (trailing 12
months)
$
583
$
607
Adjustments required as per credit
agreement
(85
)
(63
)
Net Debt to Adjusted EBITDA Leverage
Ratio as per credit agreement
2.8
1.1
1 Reflects the undiscounted amount payable
in cash on the estimated provisions for written put options arising
from our acquisition of WillowTree.
2 Maximum cash balance permitted as a
reduction to net debt, as per the credit agreement, is $150 million
as at December 31, 2023 and 2022.
About TELUS International
TELUS International (NYSE & TSX: TIXT) designs, builds and
delivers next-generation digital solutions to enhance the customer
experience (CX) for global and disruptive brands. The company’s
services support the full lifecycle of its clients’ digital
transformation journeys, enabling them to more quickly embrace
next-generation digital technologies to deliver better business
outcomes. TELUS International’s integrated solutions span digital
strategy, innovation, consulting and design, IT lifecycle including
managed solutions, intelligent automation and end-to-end AI data
solutions including computer vision capabilities, as well as
omnichannel CX and trust and safety solutions including content
moderation. Fueling all stages of company growth, TELUS
International partners with brands across strategic industry
verticals, including tech and games, communications and media,
ecommerce and fintech, banking, financial services and insurance,
healthcare, and others.
TELUS International’s unique caring culture promotes diversity
and inclusivity through its policies, team member resource groups
and workshops, and equal employment opportunity hiring practices
across the regions where it operates. Since 2007, the company has
positively impacted the lives of more than 1.2 million citizens
around the world, building stronger communities and helping those
in need through large-scale volunteer events and charitable giving.
Five TELUS International Community Boards have provided $5.6
million in funding to grassroots charitable organizations since
2011. Learn more at: telusinternational.com.
___________________________ 1 Revenue growth on a constant
currency basis, Adjusted EBITDA Margin, Adjusted Diluted EPS and
Net Debt to Adjusted EBITDA Leverage Ratio are non-GAAP ratios,
while Adjusted Net Income, Adjusted EBITDA and Free Cash Flow are
non-GAAP financial measures. See the Non-GAAP section of this news
release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240209673106/en/
TELUS International Investor Relations Jason Mayr (604)
695-3455 ir@telusinternational.com TELUS International Media
Relations Ali Wilson (604) 328-7093
Ali.Wilson@telusinternational.com
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