55 percent revenue growth to $1.6 billion in
2020 demonstrates operational momentum and efficacy of strategic
acquisitions
Digital strategy and scale efficiencies
drive 73 percent Adjusted EBITDA Growth to $391 million and Net
Income growth of 49 percent to $103 million
Robust Free Cash Flow of $189 million in
2020, more than double over the prior year, including cash from
operating activities of $263 million
Adjusted diluted EPS growth of 65 percent to
$0.71 and GAAP diluted EPS growth of 28 percent to $0.46 for the
full year 2020
Expansion of Google Cloud strategic
partnership to drive enterprise digital transformation
Successful recent IPO represented largest
technology offering in TSX history
TELUS International (NYSE and TSX: TIXT), a digital customer
experience innovator that designs, builds, and delivers
next-generation solutions for global and disruptive brands, today
released its results for the fourth quarter and full-year ended
December 31, 2020. TELUS International is a subsidiary of TELUS
Corporation (TSX: T, NYSE: TU). All figures in this news release,
and elsewhere in the TELUS International disclosure, are in U.S.
dollars, unless specified otherwise, and relate only to the TELUS
International results and measures.
“In a year marked by an unprecedented and challenging global
environment, our highly-engaged TELUS International team rapidly
virtualized our operations to continue meaningfully growing our
business in 2020 and achieve outstanding results,” said Jeff
Puritt, president and CEO of TELUS International. “This included
the acquisitions of CCC early in the year, and Lionbridge AI in the
fourth quarter, which further bolstered our digital trust and
safety practice and advanced the execution of our digital strategy
in the data annotation space. These natural adjacencies to our
existing capabilities and services are helping us deepen the
high-value relationships we enjoy with some of the world’s largest
and fastest growing technology companies. We also added many new
technology brands in 2020 to our growing list of over 600 clients,
and today we announced an exciting expansion to our long-term,
strategic Google Cloud partnership that will support an incremental
acceleration to our clients’ ongoing digital transformations.”
“TELUS International’s initial public offering (IPO) earlier
this month, dual-listing on both the New York and Toronto Stock
Exchanges, was a momentous milestone for our company, and I am
grateful to our team members and many stakeholders around the world
who contributed to our journey from a single delivery location in
the Philippines to a globally scaled, digital customer experience
leader, operating in over 20 countries,” continued Jeff.
“Additionally, I continue to be inspired by our global team’s
heartfelt dedication to giving back. Last year, despite physical
distancing restrictions that meant we could not organize our
large-scale, in-person TELUS International Days of Giving events,
they found new ways to make a difference in their local
communities. Team members packed and distributed food baskets and
knit scarves and blankets for families in need; delivered care
packages to frontline healthcare workers; donated and delivered
computers to students to permit them to attend school virtually;
and created online storybooks to help entertain young children.
Altogether in 2020, they volunteered over 15,000 hours – an
increase of more than 1,000 hours over 2019, demonstrating the true
essence and resiliency of our caring culture.”
Vanessa Kanu, chief financial officer said, “TELUS
International’s financial results in 2020 were highlighted by
strong revenue growth and robust cash flow driven by healthy
margins. Revenue grew 55 percent to $1.6 billion in 2020, which
does not include contributions from our Lionbridge AI acquisition,
which closed on December 31. We also delivered strong adjusted
EBITDA growth of 73 percent to $391 million and Net Income growth
of 49 percent to $103 million, particularly impactful given the
backdrop of the global pandemic. This combination of strong
top-line growth and profitability drove significant free cash flow
of $189 million which was more than double what we achieved in
2019.”
“TELUS International’s successful IPO provided significant cash
proceeds of nearly half a billion dollars that were used to repay a
large portion of the debt incurred under our credit agreement in
connection with the recent Lionbridge AI acquisition. With our
track record of meaningful cash flow generation, we will continue
to focus on reducing leverage in the near-term. We are indeed very
proud of our financial results, along with the momentum we have
been able to build throughout 2020, and are excited about our
future growth opportunities in 2021 and beyond.” Vanessa
concluded.
TELUS International’s fourth quarter and full-year 2020 results
include the Competence Call Center (CCC) acquisition, effective
January 31, 2020, and the TELUS Managed IT Services business (MITS)
acquisition, effective April 1, 2020. The acquisition of Lionbridge
AI closed on December 31, 2020 and did not contribute to our net
income performance in 2020. Provided below are financial and
operating highlights that include certain non-GAAP measures.
Reconciliations to GAAP measures are provided at the end of this
news release.
Q4 2020 vs. Q4 2019 highlights
- Revenues of $442 million, up 62 percent, driven by growth from
existing and new clients, as well as contributions from our CCC and
MITS acquisitions. Growth in our Tech and Games vertical was strong
with revenue growth of 109 percent.
- Net income of $21 million, compared with $27 million, and
adjusted net income of $66 million, up 154 percent. Net income
margin was 4.7%.
- Adjusted EBITDA more than doubled to $129 million, with strong
adjusted EBITDA margins of 29.2 percent, an improvement of 580
basis points, driven by strong revenue growth and scale
efficiencies from our digital capabilities and acquisition
execution.
- Free cash flow more than doubled to $71 million with cash from
operating activities of $96 million, driven by strong revenue
growth and margins.
FY2020 vs. FY2019 highlights
- Revenues of $1,582 million, up 55 percent, driven by growth
from existing and new clients (primarily Tech and Games), as well
as contributions from our CCC and MITS acquisitions.
- Net income of $103 million, up 49 percent, and adjusted net
income of $160 million, up 94 percent. Net income margin was
6.5%.
- Adjusted EBITDA of $391 million, up 73 percent, and adjusted
EBITDA margin of 24.7 percent, an improvement of 260 basis points,
reflecting strong revenue growth, scale efficiencies, and the
accretive impacts of successful integration of past
acquisitions.
- Adjusted diluted EPS of $0.71, up 65 percent from $0.43 and
GAAP diluted EPS of $0.46, up 28% percent, with strong revenue and
income growth across the organic and acquired businesses as noted
above.
- Free cash flow more than doubled to $189 million, with cash
from operating activities of $263 million, driven mainly by revenue
and EBITDA growth.
- Team member count was approximately 50,600 as of December 31,
2020, an increase of 33 percent over the prior year, inclusive of
our Lionbridge AI acquisition.
For discussion of our fourth quarter and full-year 2020
performance, including management’s discussion and analysis of
results of operations and financial condition, financial statements
and notes, see our Annual Report on Form 20-F, which has been filed
with the SEC and on SEDAR. Please visit
telusinternational.com/investors for additional information.
Our continuous disclosure and other regulatory filings are also
available on the EDGAR and SEDAR filing systems.
First quarter (2021) investor call
TELUS International is expecting to host an investor call to
discuss 2021 first quarter results on or about May 7. More specific
details will be shared when available.
Non-GAAP and other financial disclosures
This news release includes non-GAAP financial information, with
further explanation and reconciliation to GAAP measures as outlined
later in this release. We report certain non-GAAP measures used in
the management analysis of our performance, but these generally do
not have a standardized meaning and may not be comparable with
similar measures presented by other issuers. For definitions and
more information on the use of the non-GAAP measures, please see
our Annual Report on Form 20-F filed with the SEC and on SEDAR.
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 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. As a result, any or all of our forward-looking statements
may turn out to be inaccurate. Factors that may cause actual
results to differ materially from current expectations include,
among other things, those factors listed under "Risk Factors" in
our Annual Report on Form 20-F filed with the SEC and on SEDAR.
Consolidated Statements of
Income
Fourth Quarter
(unaudited)
Full Year
In US$ millions except per share
amounts
2020
2019
2020
2019
REVENUE
Revenue arising from contracts with
customers
442.3
272.5
1,581.6
1,019.6
OPERATING EXPENSES
Goods and services purchased
79.6
50.0
299.0
182.9
Employee benefits expense
271.5
166.9
979.5
630.4
Depreciation
26.8
20.0
99.4
73.1
Amortization of intangible assets
23.1
4.7
82.8
19.1
401.0
241.6
1,460.7
905.5
OPERATING INCOME
41.3
30.9
120.9
114.1
OTHER (INCOME) EXPENSES
Changes in business combination-related
provisions
(0.1)
(12.1)
(73.5)
(14.6)
Interest expense
11.1
8.3
45.4
36.3
Foreign exchange gain
(3.7)
(0.3)
(1.5)
(2.6)
INCOME BEFORE INCOME TAXES
34.0
35.0
150.5
95.0
Income taxes
13.0
7.7
47.6
26.0
NET INCOME
21.0
27.3
102.9
69.0
EARNINGS PER SHARE
Basic ($)
0.09
0.14
0.46
0.36
Diluted ($)
0.09
0.14
0.46
0.36
Consolidated Statements of Financial
Position
As at December 31
In US$ millions
2020
2019
ASSETS
Current assets
Cash and cash equivalents
152.5
79.5
Accounts receivable
303.3
176.6
Due from affiliated companies
49.1
30.2
Income and other taxes receivable
17.8
10.9
Prepaid expenses
23.7
27.9
Current derivative assets
1.8
3.3
548.2
328.4
Non-current assets
Property, plant and equipment, net
362.1
301.0
Intangible assets, net
1,294.3
89.7
Goodwill
1,500.0
418.4
Deferred income taxes
6.5
4.7
Other long-term assets
33.7
26.8
3,196.6
840.6
Total Assets
3,744.8
1,169.0
LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities
254.7
152.2
Due to affiliated companies
31.0
26.0
Income and other taxes payable
101.0
40.6
Advance billings and customer deposits
7.6
4.0
Provisions
17.4
10.3
Current maturities of long-term debt
92.3
42.8
Current portion of derivative
liabilities
1.1
-
505.1
275.9
Non-current liabilities
Provisions
19.7
160.5
Long-term debt
1,673.4
477.7
Derivative liabilities
57.2
3.2
Deferred income taxes
366.2
1.7
Other long-term liabilities
12.3
4.2
2,128.8
647.3
Total Liabilities
2,633.9
923.2
Owners’ equity
1,110.9
245.8
Total Liabilities and Owners’
Equity
3,744.8
1,169.0
Consolidated Statement of Cash
Flows
Fourth Quarter
(unaudited)
Full Year
In US$ millions
2020
2019
2020
2019
OPERATING ACTIVITIES
Net income
21.0
27.3
102.9
69.0
Adjustments to reconcile net income to
cash provided by operating activities
Depreciation and amortization
49.9
24.7
182.2
92.2
Interest expense
11.1
8.3
45.4
36.3
Income taxes
13.0
7.7
47.6
26.0
Share-based compensation expense, net of
payments made
6.3
2.4
15.0
1.8
Changes in business combination-related
provisions
-
(12.2)
(73.3)
(13.5)
Change in market value of derivatives and
other adjustments
25.8
0.3
31.6
0.7
Cash provided by operating activities
before net change in non-cash working capital, interest paid, and
income taxes paid
127.1
58.5
351.4
212.5
Net change in non-cash operating working
capital
(11.6)
(2.6)
1.1
(28.2)
Interest paid
(10.7)
(2.8)
(32.7)
(14.7)
Income taxes paid, net
(9.3)
(5.5)
(56.8)
(28.0)
Cash provided by operating
activities
95.5
47.6
263.0
141.6
INVESTING ACTIVITIES
Cash payments for capital assets
(21.3)
(16.5)
(59.2)
(52.7)
Cash payments for acquisitions, net
(936.8)
-
(1,741.9)
-
Payment to acquire non-controlling
interest in subsidiary
(20.0)
(50.8)
(70.0)
(50.8)
Cash used by investing
activities
(978.1)
(67.3)
(1,871.1)
(103.5)
FINANCING ACTIVITIES
Shares issued, net of financing costs
296.6
-
655.6
-
Repayment of short-term borrowings,
net
(11.1)
(0.6)
-
-
Repayment of long-term debt
(93.3)
(44.2)
(819.0)
(96.0)
Long-term debt issued
709.0
62.0
1,854.0
72.0
Cash provided (used) by financing
activities
901.2
17.2
1,690.6
(24.0)
Effect of exchange rate changes on cash
and cash equivalents
(5.0)
(1.3)
(9.5)
(0.2)
CASH POSITION
Increase (decrease) in cash and cash
equivalents
13.6
(3.8)
73.0
13.9
Cash and cash equivalents, beginning of
period
138.9
83.3
79.5
65.6
Cash and cash equivalents, end of
period
152.5
79.5
152.5
79.5
Non-GAAP reconciliations
TI Adjusted Net Income
Reconciliation
Fourth Quarter
Full Year
In US$ millions except per share
amounts
(unaudited)
2020
2019
2020
2019
Net income
21.0
27.3
102.9
69.0
Add back / (deduct):
Changes in business combination - related
provisions
(0.1)
(12.1)
(73.5)
(14.6)
Restructuring and other costs
25.5
2.1
58.7
6.1
Share-based compensation expense
12.3
6.0
29.4
13.2
Foreign exchange gain
(3.7)
(0.3)
(1.5)
(2.6)
Amortization of purchased intangible
assets
20.8
3.8
74.4
14.9
Tax effect of the adjustments above
(10.2)
(1.0)
(30.4)
(3.6)
TI Adjusted Net income
65.6
25.8
160.0
82.4
TI Adjusted Basic EPS ($)
0.27
0.14
0.71
0.43
TI Adjusted Diluted EPS ($)
0.27
0.14
0.71
0.43
TOTAL WEIGHTED AVERAGE SHARES
OUTSTANDING (in millions)
Basic
244.5
189.7
224.2
189.7
Diluted
246.5
190.7
225.5
190.3
TI Adjusted EBITDA
Reconciliation
Fourth Quarter
Full Year
In US$ millions, except for adjusted
EBITDA margin
(unaudited)
2020
2019
2020
2019
Net income
21.0
27.3
102.9
69.0
Add back / (deduct):
Interest expense
11.1
8.3
45.4
36.3
Income taxes
13.0
7.7
47.6
26.0
Depreciation and amortization
49.9
24.7
182.2
92.2
EBITDA
95.0
68.0
378.1
223.5
Add back / (deduct):
Changes in business combination - related
provisions
(0.1)
(12.1)
(73.5)
(14.6)
Foreign exchange gain
(3.7)
(0.3)
(1.5)
(2.6)
Share-based compensation expense
12.3
6.0
29.4
13.2
Restructuring and other costs
25.5
2.1
58.7
6.1
TI Adjusted EBITDA
129.0
63.7
391.2
225.6
TI Adjusted EBITDA margin
29.2%
23.4%
24.7%
22.1%
TI Free Cash Flow
Reconciliation
Fourth Quarter
Full Year
In US$ millions
(unaudited)
2020
2019
2020
2019
Cash provided by operating
activities
95.5
47.6
263.0
141.6
Less: Capital expenditures
(24.6)
(16.2)
(73.7)
(62.8)
TI Free Cash Flow
70.9
31.4
189.3
78.8
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 and enable them to more quickly embrace
next-generation digital technologies to deliver better business
outcomes. TELUS International’s integrated solutions and
capabilities span digital strategy, innovation, consulting and
design, digital transformation and IT lifecycle solutions, data
annotation and intelligent automation, and omnichannel CX solutions
that include content moderation, trust and safety solutions and
other managed solutions. Fueling all stages of company growth,
TELUS International partners with brands across high growth
industry verticals, including tech and games, communications and
media, eCommerce and fintech, healthcare, and travel and
hospitality. Learn more at: telusinternational.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20210223005462/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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