Welcome to the First Quarter 2013 Earnings Conference Call. [Operator Instructions] This call is being recorded at the request of TeleTech. I would now like to turn the call over to Karen Breen, TeleTech's Vice President of Investor Relations.

Thank you, and good morning to everyone. TeleTech is hosting this call to discuss its first quarter 2013 results ended March 31st. Participating on the call today will be Kent Tuchman, our Chairman and CEO; and Regina Paolillo, our Chief Financial Officer. Yesterday, we issued a press release announcing our financial results for the first quarter and also filed our quarterly report on Form 10-Q with the SEC. This call will reflect items discussed within the those documents, and we will make reference to them several times on the call today. We encourage everyone to also read our quarterly report on Form 10-K. Before we begin, I want to remind you that matters discussed on 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 only as of the date of this call, and we undertake no obligation to revise this information as a result of new data 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 major clients, the risks associated with lower profitability from or the loss of one or more significant client relationships, execution risks associated with ramping new business or integrating acquired companies, and the possibility of additional asset impairments and/or restructuring charges. For a more detailed description of these Risk Factors, please review our most recent SEC filings, along with our 2012 annual report on Form 10-K. A replay on this call will be available on our website through May 16. And I will now turn the call over to Ken Tuchman, our Chairman and CEO.

Thank you, and good morning to everyone joining us today. We continue to execute on our mission to become the preeminent customer experience transformation company of the 21st century. Numerous industry reports from Forrester to Gartner and most recently to PwC confirmed that the customer acquisition, growth and retention is the #1 strategic imperative of every CEO. The good news is we are well-positioned at the epicenter of this sea change and are actively helping clients solve their most pressing challenges around the customer experience management. From strategy to technology, and, ultimately, delivery, we are enabling clients to enjoy greater growth, brand loyalty and advocacy. This, in turn, is enabling deeper and longer-term client relationships for TeleTech. In this quarter alone, we signed $100 million in new business. This represented the highest bookings since the first quarter of 2011. Our outcome-based approach enables clients to grow and retain the value of their customers, migrate to the best-in-class technologies and operate with increased scale and efficiencies. The explosion of data is fueling the world where companies increasingly require real time customer insights to both sense and respond with timely, relevant and personalized communications. In addition, the rapid advances in consumer technologies have left companies struggling to keep up. To address this perfect storm of disruption, clients need to rewire and to deliver a new data-driven customer experience. Our emerging businesses provide the technology-enabled solutions required to deliver this next-generation approach. These businesses now comprise 23% of our revenue, up from 20% in the year ago period. We are well on our way to achieving our revenue diversification goal of having 30% of our total revenue derived from our emerging businesses by 2014. We continue to achieve solid operating margin performance while proactively investing in the business. The 170 basis point improvement…

Thank you, Ken, and good morning, everyone. Let me first highlight and then provide greater detail on our first quarter results. After which, I'll review our 2013 business outlook. Q1 revenue was $288.4 million, compared to $292.7 million in the first quarter of 2012 and down primarily from the exit from certain underperforming business during 2012. Adjusted operating margin increased 60 basis points to 8.3% from $23.8 million of adjusted operating income. This compared to $22.7 million or 7.7% in the same period last year. Adjusted EPS grew 10% to $0.32 from $0.29 in the year ago period. Importantly, we continue to return capital to shareholders with the acquisition of approximately $10 million of stock. Let me now review our results in more detail. The $4.3 million revenue decline to $288.4 million from the year ago quarter was attributable to $16.3 million of decreased revenue from exiting certain unprofitable, underperforming programs, partially offset by the revenue contribution from certain acquisitions. Our first quarter GAAP operating income was $23 million or 8% of revenue, compared to 6.4% in the year ago quarter. Our charges related to asset impairment and restructuring were $900,000, down from $3.8 million in the year ago quarter. Excluding these items, adjusted operating income was $23.8 million or 8.3% of revenue, compared to $22.7 million or 7.7% of revenue in the year ago period. SG&A expenses in the quarter was 15.9% of revenue, down from 16.4% in the year ago quarter. These improvements are the result of ongoing efficiencies we continue to realize from leveraging our G&A expenses across an expanding suite of service. These increased efficiencies have and will continue to enable us to make additional investments during the year in both sales and marketing along with R&D. Our effective tax rate this quarter was 11.4% and…

Thank you, Regina. [Operator Instructions] Pat, you may now open the line.

[Operator Instructions] Our first question comes from Mr. Mike Malouf with Craig-Hallum Capital Group.

A question on the utilization continues to remain high. And I'm just wondering, Ken, if you can give us just a snapshot of where we are in sort of the traditional call center business? And I mean, how the pricing is, how the business seems to be going, the new business wins. Even though 40% of that was in the new emerging areas, it still seems pretty strong for you.

So is this a question about utilization or pricing?

Can you answer both?

Sure. So our utilization, we feel very good about. When we look at it, going forward and projecting it, we think through the year, it's going to bounce around between probably 79% and up to 83% or so and kind of go back-and-forth. And the reason for it going back-and-forth is because we're in the process of expanding and adding some more capacity based on client demand, et cetera. And so, as you know, when you open these new sites, it takes time to infill the sites, et cetera. And so we don't really expect to see the utilization drop below the 79%, per se, but we also don't necessarily think it's going to go above around 83%. Now that said, we think that the following year that we can, in fact, get our utilization in the 85% range and possibly a slight bit above that. And that's kind of where we feel it needs to be so that we have the headroom to be able to always be there, to be able to take on growth with many clients having short expansion notice, et cetera. As far as the second part of the question, was I think towards pricing. We actually feel very good about how we're pricing our deals. I think that we're really not necessarily going against the traditional kind of commoditized business opportunities that are out there. We've been very selective. We're really only working with clients that have made the decision that they want to be top in their category from a Net Promoter Score. They're looking at all the clients we are representing. They're looking at the impact we're having on their Net Promoter Score, which is, of course, computed by a third party. And they understand that to drive a higher Net Promoter Score and to drive higher retention and to drive higher revenue per customer, that they need higher quality. And so, that's my way of saying to you that we think we've created a pretty differentiated capability, and we're selling our services really based on total value delivered versus getting out of the muck of price per minute or price per hour, et cetera. And we can do that because we bring forth so many technology capabilities into the deal that we can show our clients that we're actually the lowest-cost provider or, another way of looking at it, the lowest cost to serve. And so I would say that right now, we're feeling just fine with where we're pricing our deals and I'm not concerned that there's any threats looking around the corner as it relates to pricing.

Howard Smith with First Analysis.

Question on the top line at CGS. I understand the back half of last year was strong in bookings. The revenue hasn't quite responded, at least as I had modeled. I was hoping for some color, maybe the timing of the revenue growth.

Howard, it's Regina. I think it's really just a matter of timing. The booking -- the strong performance in the back end, I think is a typical lift-up in the back half. We have a lot of technology mix in the customer base in that segment. I think the other thing's that's happening, the other dynamic is we had pretty strong bookings in CGS in the back half of last year, just under $10 million. Match that at about the same level in Q1 and it's just a matter of ramp. We can see the backlog of that ramp and the additional backlog that we've created in Q1. So just I would expect we see that same lift going into Q2, Q3, Q4. And as we said earlier in the script, we reiterated our guidance relative to the performance of these emerging businesses, albeit a little slow out of the gate for a variety of reasons across the segments. We have good visibility from CMS ramp, CGS ramp in terms of backlog, consulting backlog, and managed services backlog.

Just a quick follow-up on that. I know in CMS it takes several quarters sometimes to ramp customers, so you can get a booking, and it can be many quarters before you see the revenue. What is that in CGS as a general rule? Is that a faster ramp, or can it still take several quarters?

Yes, we don't see any difference in the ramp between those 2 BPO businesses. I think the difference is sometimes when we're adding to a particular line of business in an existing client that we can certainly ramp faster versus we're starting a new line of business and/or a new logo.

Tobey Sommer with SunTrust.

This is Frank in for Tobey. Quick question on kind of growth trajectories. If you look across your segment, you spent some time rationalizing or kind of adjusting your offerings, exiting some underperforming businesses. What are you doing in terms of initiatives to grow those businesses that you're happy with? And then, two, in terms of the client signings, $100 million, any particular areas of strength and weaknesses?

So I guess what I would tell you is we're doing the things that one would expect. We are significantly expanding our investment in sales and have been doing so on a consistent basis and we'll be making, in the very near future, some -- bringing on some significant additional folks that will totally be focused on our sales efforts around the world. Secondly, we are putting much more energy into our verticalization, which has to do with taking advantage of all of our deep consulting capabilities so that we can demonstrate to each and every vertical that we serve that we have deep domain expertise. The bottom line is that our pipeline, without getting into it because we don't really get into specific details, is growing at a very significant rate. And we're very comfortable with the pipeline and what our outlook looks to -- as it relates to or deals to be closed in second quarter and beyond. So what I would say to you is that we're taking a very methodical approach and we are increasing our investment significantly in sales, which we stated in our previous conference call as to the overall dollar amount that we were stepping up that investment and we're on track to, in fact, take advantage of that. As it relates to the various different areas that are doing well, actually it pretty much -- although we pointed out health care and we pointed out financial services, the reality is -- as well as transportation, the reality is that we're actually seeing opportunities across the entire spectrum right now. I think that we really are at a tipping point in the marketplace where companies are so desperate for growth, number one. And number two, they're so desperate to keep and maintain their existing clients. And number three, many of them made a lot of very rash decisions where they potentially offshored to markets that are not working out or they try to build a captive that they're not successfully managing and that's creating some very significant opportunities for us. As they are realizing that they're running out of time due to the fact that their third-party satisfaction scores, along with their NPS scores, are demonstrating that they're just not executing well. And so what we really do well is when clients are in that situation and where we can demonstrate that we have a solution that would immediately turn that around. I hope I'm being helpful. Regina, you want anything to add to that?

The only thing I'd add is, relative to the bookings, it was a strong $100 million with a strong back pipeline behind that. 60% of it was in CMS and 40% in our emerging businesses. And when you look at that comparably from Q1 of last year, that's nearly a 75% increase, and, yes, some of it came from the fact that we acquired TSG and now they're contributing bookings, but a good piece of it was strong performance across those segments, which bodes well for the uptick that we need in the revenue to get to our full year numbers.

And last point that I would just like to make is that early into the second quarter, we're very -- we feel very good about what we've already signed. So I think that we're tracking where we need to and that's why we're continuing to reiterate our guidance and stick with it and look forward to updating you as we have more to share with you.

[Operator Instructions] Kevin McVeigh with Macquarie.

This is actually Derek Sbrogna in for Kevin. I was wondering if you could just touch on capital allocation strategy. You guys bought back roughly 10 million shares. It looks like you only have about $15 million or so, a little more than $15 million remaining on the current authorization. Would it be fair to assume, at some point in Q2, we would see a step-up in that authorization? And then secondarily, as it relates to capital allocation, could you talk about the acquisition appetite right now, if there are deals out there and if there's anything you guys are working at?

Well, as a chairman of a board, what I would say to you is that you probably should judge us by our historical past. It would be unfair for me to just automatically assume that our board will increase. But I would tell you that it would be out of character for our board to not continue to be supportive for us to continue to increase our stock purchase. We have been the most consistent at purchasing our stock of anyone in this entire space -- anyone in the entire BPO space and have been consistent over the last decade. And we have no plans to change that and we will keep that up. So maybe another way of putting it is that I don't think you have to worry about that $16 million going to 0. So I hope I'm answering your question, but I'm sure I have board members listening to this call and I never want any of my board members to think that I'm being assumptive or presumptuous because we have not yet had our board meeting, but we feel okay. As M&A goes, the answer is we're very interested in doing strategic acquisitions that are infills to our strategy that give us more girth in areas where we feel would be beneficial. That said, we are only going to do what's in the best interest of shareholders and we're not going to do something that is stupid or that's going to create an M&A hangover. And so as much as we have the desire to execute on M&A, we have to be realistic about the realities of the market. And as you can only imagine, you have sellers that are looking at where the market is today and you have buyers that are more realistic, and so there's a pretty good disconnect in the marketplace right now as it relates to M&A as to what buyers are willing to pay and what sellers believe their companies are worth. And so I don't have a crystal ball. I can tell you that we have a good pipeline, but I can also tell you that you can go through a lot of deals before one actually gets done just based on the realities of, a, when you get to do due diligence, is the company a high-quality company; and b, is it in fact going to be accretive immediately and that's determined based on a lot of different characteristics. So what I would say to you is we're in a great position to do a multitude of strategic acquisitions and our teams are in place and now it's really just simply a matter of us making decisions on deals that are ultimately accretive.

Got it. Okay. And if I can just ask one more follow-up. The longer term or 2014 target for 11% to 12% operating margin, and then can you maybe talk about how you bridge that with the emerging business getting to 30% and CMS, legacy business, say, it's 70% and how -- or what that kind of implies for the margin profile of each of those 2 maybe broader segments?

Yes, sure. First of all, I make the comment that our view is, as we said from a revenue perspective, we feel that we've got the platform to get to a $1.4 billion organically. And that we have a good landscape to buy with, but that has less predictability to get that other $200 million, which would be acquired. Our comment on getting to 11% to 12% kind of stands, regardless, at least at the 11%. So our view is on the $1.4 billion of organic growth, we see our way to that 11% largely due to the expansion of the margins in the emerging businesses, which we attributed about 80 basis points, as well as efficiencies in the CMS business. So if you look at our 2013 projected margins, which we articulated as above 10% and then add that 80 basis points, we expect those businesses, collectively with continued investment, to drive double-digit revenue growth, to be in the early to mid-teens depending on the segment.

Josh Vogel with Sidoti. Josh Vogel - Sidoti & Company, LLC: Can you tell us how many clients today are using one or more of your services versus a year ago? And are you having any success in cross-selling CMS to existing clients within the emerging businesses or is it mostly the other way around?

Well, I'll just answer the last part and let Regina answer the first part. The answer is definitely on the cross-selling. And we've, actually, I believe, given some examples on our last conference call. And we're feeling very good about the other significant opportunities that we're working on right now where they would come out of -- where they would come from the other direction. It's out of our CSS and then move to CTS [ph], et cetera. So the answer is yes, we are seeing success. That being the case, although this is a significant priority of ours, the fact of the matter is we are still fairly new at this. And so what we've said is that we will double the account base by the end of this year from what we had last year that was using across all of our capabilities. And we think that trend will kind of continue for the next 2 to 3 years as more and more of all the various different clients understand what our overall capabilities are.

Yes, and just on the data point, it's just about 25 clients today that are taking multiple capabilities across the segments. And I guess the other noteworthy point, which is part of our strategy, is that it is our existing clients and our larger clients, which I think is a demonstration of the relationship and the power of that embedded base relative to these emerging segments.

And our last question comes from Steven Shui with Stifel. Steven Shui - Stifel, Nicolaus & Co., Inc., Research Division: Just wanted to get a little more color on Customer Strategy Services. Were the rationalization you guys made mainly in PRG? And if so, how is that business different from what you expected when you guys bought it?

Yes, so I'd say if you look at the performance of PRG, it was flat. And it was flat for a couple of reasons: one, timing of bookings; two, timing of the delivery; and third, and most importantly, we made a movement to strategically align the consulting segment with the overall business and then specifically to integrate what has been 3 logos that we purchased over the last couple of years into one holistic global consulting firm. And that caused a bit of a shift, which caused a reduction in the revenue, although we can see again from the $9 million of bookings that this business will pop up -- pop back to the low- to mid-single digits in terms of revenue per quarter. Yes, I would say that the bulk of the rationalization happened within PRG, relative to span of control of partners and directors. But what we've created across the world with Brian Shepherd's leadership and direction are really 2 consulting groups: one, covering the Americas and Asia Pac; and the other, EMEA under 2 distinct individuals who lead those businesses and now have full command of the practice areas and the consulting base, which is going to allow us much greater, I think, penetration into our account -- accounts in terms of prioritizing, account managing and focus, but also much greater improvement in the utilization of the consultants given the fluidity of a good part of those folks. 50% to 60% of those consultants would be capable of moving across the consulting practices. So not much changing in terms of the capability in IP that we got from PRG in terms of segmentation and helping our clients figure out their customer experience strategy, but definitely organizationally and focus and additionally we're adding things like call center consulting and learning and change management to fill out that full offering to be aligned with our overall customer experience strategy. So let me stop there. Hopefully, that helped. See if you have any follow-up.

Thanks, guys.

Thank you. This concludes the First Quarter 2013 Earnings Conference Call. You may disconnect at this time.