Welcome to TeleTech’s First Quarter 2017 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 now like to turn the call over to Paul Miller, TeleTech’s Senior Vice President, Treasurer, and Head of Investor Relations. Thank you. Sir, you may begin.

Good morning. And thank you for joining us today. TeleTech is hosting this call to discuss its first quarter financial results for the period ended March 31, 2017. 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. While this call will reflect items discussed within those documents, we encourage our listeners to read our quarter report on Form 10-Q, ended March 31, 2017. 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 as of the date of this call and we undertake no obligation to revise this information as a result of new developments that may occur. Forward-looking statements are subject to various risks, uncertainties and other factors that could cause our actual results to differ materially from those expected and described today. 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, the possibility of asset impairment and/or restructuring charges and the potential impact to the financial results due to foreign exchange rate fluctuations and legislative developments in the United States or other countries, where we do business. For a more detailed description of our risk factors, please review our annual report on Form 10-K. A replay of this conference call will be available on our website under the Investor Relations section. I’ll now turn the call over to Ken Tuchman, TeleTech’s Chairman and Chief Executive Officer.

Thank you, Paul and good morning, everyone. We are off to a strong start for the year and I am excited to update you on several topics this morning. As you see from our first quarter results, the sales execution and the profit enhancement strategies we implemented in 2016 are paying off and have laid a solid foundation for 2017. Momentum is evident in our first quarter year-over-year results. Revenue and profitability are up, booking are up and reflect a solid mix of offerings from across our segments. Earnings per share are up, operating and free cash flow are up, growth within our embedded base is strong, with several clients adding new services from multiple segments. We are attracting new customer centric companies, who are choosing TeleTech specifically for our end-to-end customer engagement as a service offering. Shortly, Regina will review our first quarter 2017 financial results and improved outlook for the year. But first, allow me to share some highlights. Last month we completed the strategic acquisition of healthcare services company Connextions from OptumHealth. This acquisition further enhances the diversity of our healthcare payer, provider and lifesciences client base. In addition, it expands the breadth and depth of our core member service capabilities into health and wellness management. Tele Health support, financial member services and expands our back office competencies. It also enhances our technology portfolio with bConnected a robust proprietary engagement platform currently in use by several Connextions clients and it provides a multitude of long-term contracts that will be additive to our revenue backlog. This acquisition offers us a funding growth opportunities, consumerism in healthcare is raising the member expectations and it is no secret that the industry must respond with accelerated innovation and customer focus. Payers, providers and life sciences companies need ways to quickly digitize…

Thank you, Ken and good morning, everyone. There are three primary topics that I’ll address in my comments this morning: Highlights of our first quarter 2017 financial performance; additional inside into the acquisition of Connextions, inclusive of our integration and restructuring plans; and last, I’ll provide updated 2017 guidance. As ken noted, the year is off to a strong start. Further we are experiencing positive trends in our financial performance and forward guidance. We are reaping the benefits of the restructure activities we executed in the second half of 2016, as well as continued optimization activities related to the utilization of our technology, facilities, talent and corporate overhead. The acquisition of Connextions in early April on the back of the Atelka acquisition in late 2016 are enabling our strategic goals related to vertical, geographic and solution diversification, and importantly adding scale that will continue its trend of improved utilization. Turning to the first quarter 2017. I’ll first summarize the financial results on a GAAP basis, before focusing on the non-GAAP results, which excludes restructure and impairment charges and the assets we are exiting, which we discussed in our last quarterly release. A reconciliations of our GAAP to non-GAAP numbers excluding restructure and impairment charges and assets we are exiting is included at the last page of the tables attached to our press release. On a GAAP basis, first quarter 2017 revenue is $338.3 million versus $312.4 million in the same period last year, an 8.3% increase. The Atelka acquisition contributed $17.7 million of revenue or 5.7 percentage points of growth. Our operating income was $26.5 million in the first quarter with 7.8% of revenue compared to $17.8 million or 5.7% in the prior year period. EPS was $0.42 versus $0.23 in the prior year. Year-over-year first quarter 2017 revenue grew…

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

[Operator Instructions] The first question comes from Mike Malouf of Craig-Hallum Capital Group. Sir, your line is open.

Okay, great. Thanks for taking my questions. Ken, I am wondering if you could talk a little bit about the sales cycle, I know that on the last quarter you talked actually that the sales cycle was I think you used the term compression, which was actually quite positively surprising. So I was wondering if you could give a little bit of commentary on that.

Yes, I think -- good morning. I think the word I used was that it’s compressing, which is a positive thing not a negative thing in that. Historically over the last multiple decades we were typically seeing a sales cycle of 9 to up to 18 months on deals and what we are seeing is a much higher sense of urgency. And we are seeing deals gets done in as little as -- some deals are getting done as little as 90 days and other deals are probably taking more in the six to nine months range. And so overall we are seeing that there is demand across the industry, people are looking for broad changes in their business. I think that the sense of urgency is clearly being caused by the upheaval that digitization is causing to their marketplace. And the fact that they are now acknowledging that having brand differentiation through, how they are delivering services now become paramount. And so I think that we’re right now our big issue to be very frank is, we feel very good about the marketplace and about our opportunity and now it’s about us continuing to hire and add more people that can actually get in front of the various different global opportunities.

Great. And then sort of segue into that last comment. How especially given the unemployment rate continues to dip lower how are the wage pressures out there that you are seeing here in the U.S. And then maybe a commentary on Brazil would be helpful as well? Thanks.

Well I mean, I think the wage pressures are real and it’s something that we have been talking about with our clients for the last frankly two years. As unemployment continues to drop the bottom-line though is we have always been very focused on educating our clients on how critical it is to focus on keeping employees engaged and for them to try to mitigate attrition. And so consequently what I would say is that a high percentage of our clients either because of the cost of living cola [ph] increase in their contracts were able to pass through wage increases. And in cases where there are not colas that are in the contract we are having ongoing dialog and continuing to show clients the benefit of us being able to keep up with the wage in that particular market that we are in. So what I would say to you is again wages are real, wage pressure is real. By the way really just at the front line actually what I tell people all the time is that I think we’re going to start to see that middle and upper management wages are actually pretty stable. And now what’s happening is the front line is seeing the pressure due to the fact of; A, where the economy is; B, just where unemployment is; and C, with some of the minimum wage laws that have been changed in various different cities as well as states et cetera. So I think we feel very confident that our clients really understand the need for us to be providing a competitive wage. And we’ve been very upfront in even in our scripts and transparent at telling everybody that we are going out of our way to seek clients that truly either are already an iconic brand and want to maintain that status. Or they want to strive to be an iconic brand and they want the highest possible net promoter score. And they’re not going to get that by us hiring people that have to make a decision between us or Burger King. They’re going to get that from us being able to provide a competitive wage. And so we think that we’re providing a higher end capability and that capability may be cost a bit more on what we actually have to pay the people, but we think we’re delivering overall far better value and we think our clients understand that.

I’d just add that I think it also provide an opportunity to open up the conversation with our clients for investment in technology, digitization, ability to kind of do work anywhere, any place, relegate transactions that are voice today to digital platform. And given we’ve got these three other businesses we’re well positioned to be able to play in those activities with our clients to maintain the price or improve the price, but cover the wage increase burden.

And we actually have multiple projects going on right now where clients have asked us if we could intercede with technology to offset some of the increasing cost. And so as far as we’re concerned we’re just as happy the revenue is every bit is good. And obviously what comes in some of the other segments has the potential for more profitability. And then I guess the last point I'm sorry that I'm waxing on so much about this is that many of our contracts were starting to add variable performance clauses. And so that also benefits us as well where we’re actually getting paid for the increase in performance.

Great, thanks for the color and congrats to your whole team on a strong execution.

Thank you very much.

Thank you. The next question comes from Frank Atkins of SunTrust. Your line is open.

Thank you for taking my questions. Wanted to ask a little bit about the CTS segment so nice sequential performance there, can you talk about areas that strength and growth you’re seeing in the CTS segment?

Yes, well for sure we’re seeing most of the interest and activity in our cloud area where people are moving from premise based capabilities to cloud base capabilities. So that’s one area where clients are very interested. And then secondly, they are very focused on everything that can be connected to that cloud base solution. So everything from CRM solution to analytical solutions to voice analytic solutions, just a Marriott of capabilities to then bringing in and introducing Omni channels. So everything from click to talk to chat to proactive chat to video, live video, with a customer service professional or sale professional, et cetera. So that’s really where the focus of the practice is and is going and we’re actually very excited about the potential as more and more customers are realizing the benefits of a cloud based solution.

Okay, great. And as my follow-up wanted to ask, can we expect any additional cost that is around the acquisition of Connextions or integration on where that and then can you talk a little bit about the strategic and cultural fit with the rest of the firm?

Yes, so I would -- as in my prepared remarks, I am going to make it very clear that we acquired the business on April 3rd, so we will be accounting for it in the second quarter. We will -- I don’t expect any cost outside of the $15 million to $16 million of restructure and transition charges that I outlined. And that includes really -- our guidance on CMS includes any and all integration costs related to this acquisition. From a cultural point of you, I’ll let Ken go first.

Well, I would say if any acquisition we could do this is probably one of the best cultural fits ever and the reason for that is several of -- we have multiple executives as well as folks in the management ranks that multiple years ago worked at Connextions. So Martin DeGhetto from Connextions as well as several other people. So that’s one point. The second point is that we have enjoyed a relationship with UHG and their respective companies that stands well over 15 years. So there is a good cultural fit from our client standpoint as far as who we acquired the business from. And then lastly we’ve made decision about three, four years ago that healthcare was going to be an area that we were really going to lean into and pivot. And so it’s an area that where we have been very focused on and always wanting to continue to expand. And so we think that this helps us with our overall healthcare platform. And I think that will become very obvious as the quarters come in. Just so the folks listening to this call are aware, I mean, we are truly honored to be doing business with UHG. They’re the 6th largest company in the United States and they are the 16th largest company in the world. I think that when you look at a company that has revenues that are $180 billion and growing very rapidly and when a high percentage of their expense is in the administrative area, we think that we can provide a lot of valuable services to that organization. And then the clients that have come along with the business are just they are all stellar let’s just say in the Fortune 100, Fortune range and with long-term relationships and taking advantage of technology. So it’s not just simply us providing the services, but we are also providing the technology as a service as well and hosting it.

All right, great. Thank you very much.

Thank you.

Thank you. The next question comes from Jun Tong [ph] of Sidoti. Your line is open.

Good morning, guys. Can you just talk about your exposure in healthcare and how much of your revenue right now is from that particular vertical? And Ken you obviously are very optimistic about long-term view for that industry, but can you just talk about some of the near-term operating environment dynamics as well? Thanks.

Yes, I guess, what I would say is we haven't disclosed each of these verticals as a percentage of our revenue. I will say that with the acquisition of Connextions and after a number of years of refocusing on healthcare, it will be right away our third largest vertical right behind comm media and financial services. And we would expect that over the next year the opportunities we have there with the client, the diversified solutions and the diversified footprint in providers that could very well get to position to over the next 12 to 15 months.

Okay. And then maybe you guys can talk a little bit about the pipeline and Ken you mentioned about the compressing of the sales cycle. Are you referring to the just the EMS business or is across the board to these higher growth area the CTS, CGS and CSS also can you talk a little bit about the pipeline and you also mentioned about hiring people, just some color there would be helpful. Thanks.

It's definitely across the board, that we're seeing this. And I would expect anybody by the way that is in the business of helping companies with experience engagements in growth services to be seeing similar types of sense of urgency. I don't think it's necessarily just unique to us. I think there is a huge shift that people looking to do wholesale automation refits or changeovers and modernization. I think that's happening across the globe because so much has happened with technology and there has been so much change in just the last frankly 24 months. I think that again as I said, there is digitization and the disruption to retail is very real and we're frankly we’re really excited by it. Because when you think about it if you go all the way back to our history, we basically started out as one of the first true direct marketing companies that was where our routes were from. And if you look at what is taking place in the digital world, it is now all of these brands are now realizing the consumerism is here to stay, and that the world is going direct. And so we're seeing it across the automotive sector, we're seeing all these traditional sectors that have historically either have their products represented by dealerships or represented by distributors or represented by retailers are now realizing the need to go direct. And so it's really an interesting phenomenon. And I think a lot of that has to do with quite frankly the fact that you can order product and you can get it shipped to you in as little as two hours. And so I'm sure everyone saw yesterday the delivery wars with Target and Wal-Mart and Amazon where they're all competing on who is going to give away the most free delivery and who's going to deliver to your home the fastest. So all of that requires our type of capabilities and interface for the logistics and the coordination. And that's why we represent those types of clients. So I don't see this trend per say slowing down. It's a matter of fact I think it's going the other direction. And thank god we're not a retailer right now. So I don't know if I'm answering your question you had multiple facets in your question, I probably should have written so I'm in doubt.

You mentioned down people right hiring additional people.

Meaning?

Yes the follow-up question I think you enter like a previous participant’s questions regarding, like are you done with the restructuring going forward, you feel pretty comfortable but you might hire additional marketing people, sales people, can you just give us a little bit more color like how many you’re talking about that would be helpful. Thanks.

Go ahead, Regina.

Yes we have discussed the fact that as part of the restructure that we did last year getting ahead of our challenges in sales and marketing that we were going to bring in and form a new role CMO. Importantly driving the offer management, Kyle is with us today and very quick out of the gates working and more on that in the future as it crystallizes. But as part of that we will be investing in folks to fill out that whole product management, solution management area. One of the other important changes we made was to intensify our focus on the embedded base and that there we would add client partners, a set of client partners, we had two we’re adding three. And I think that that pretty much covers the majority we have the typical sourcing the business as necessary, but those are I think were the main points.

Yes, but I do think I want to stress because, I think I know where you might be going. We are very budget oriented and extremely I would say that all of us are conservative and fiscally responsible. So if you’re asking of the people that we’re going to be adding is that going to impact our margins or is that going to impact our forecast. I can assure you that it is all built into our forecast that we created all the necessary runway so that we can afford the adds that we’re bringing on. And so that we can deliver on the outlook that Regina has communicated.

Thank you. The next question comes from Bill Warmington of Wells Fargo. Your line is open.

Good morning, everyone.

Good morning.

So a question initially on the improved sales execution and looking at the bookings number, it looks like the bookings were basically flat on a year-over-year basis. And I know that that can move around from quarter-to-quarter so we typically look at on a trailing 12 months basis. And it was down 6% on a year-over-year basis and it’s actually the third quarter in a row it’s been down. So the question is when do you start to see the bookings number improve or is that am I looking at the wrong variable?

Yes hi Bill it’s Ken, what I would say to you is the following, bookings don’t -- we’re very conservative about what we count as a booking Regina and her team only allows bookings when all paper work, all contracts are signed, all MSAs, all SOWs are signed et cetera. And so therefore it’s a timing issue. And so if a booking gets done 24 hours after the quarter closes it gets pushed to the next quarter. So as much as we do think that the bookings metric matters we think what matters the most is the cumulative bookings not the individual quarter bookings. We feel very good about the pipeline and we think that we’re experiencing as right now that our bookings in fact are growing that our clients -- that the clients that we’re bringing on and the embedded base are activating more so now and that they are taking us up on more of our service offerings. So Regina do you want to say something?

Yes, I mean the only other thing that I think you have to take into consideration is when you look comparatively and over the LTM you’re leading a net LTM a couple of businesses that we’re exiting. And so I think you have to understand we reset the top-line of the company. We have a new baseline I have not provided the baseline for bookings we can do that. So that you can also understand on an LPM basis that there are three -- there are parts of our business that are not a major focus. And just by definition are going to a bit of an anchor on a traditional comparison of...

And so on the topic of sales, Ken you mentioned the variable performance clauses. Are those bonus and penalty or just bonus arrangement?

They're both. I mean whenever you're entering into a contract where you're asking for upside performance you have to balance the upside performance with the fact that there is the potential for not delivering and therefore there is penalties. But thankfully we're not a big penalty payer. I'm not going to say that we never have to pay a penalty here or there, but it's relatively immaterial because we perform. And I realized that every provider you talk to says that they're ranked number one, what I would just simply tell you is all you have to do is call our clients and they will tell you we are consistently ranked their number one, top performing performer and it's why we're not providing penalties. But again I want just stress the clients are buying a little bit differently. When you look at who we’re now interfacing with we're moving away from the vendor manager and we are dealing much more with the CMO, the Chief Digital Officer, Chief Experience Officer the Head of the Business Unit or in multiple cases the CEO of these very large companies. And it's that in itself is why we think that there is -- the deals have the potential to get done faster because there is higher level people that are shall we say pushing away some of the bureaucracy to expedite deals that are coming in. The other thing is that when you're leading with strategy and consulting that allows us to have deep inside as to what these companies are trying to accomplish and let's just look down the continuum to see other opportunities that frankly we weren't aware of prior to. And then the proof-of-concept deals that we do, when they're successful are leading the larger deals whether it would be with embedded based customers or net new customers. And this is really all driven by our client's need for speed to market that there are various new different solutions and new ways of addressing the marketplace.

Got it. And then on the Connextions business, how much does that compete with whereas health advocate business? It seems like fairly similar business, so that's why I'm asking.

Yes, I mean, I would say there is some overlap, but I believe that the health advocate business in West is largely focused towards let's say wellness population management, those kinds of activities. There is some of it in that, but by and large right, we're working with payers and providers here on what I would say a set of services we have today, which would include license stage and selling insurance, as well as managing, member interactions around enrollments, inquiries this allows us as Ken said in his comments to extend into back office claims processing Tele Health. So there is some overlap there, but I would say it's much broader and a smaller piece of what health advocate is doing.

And by the way just for the just FYI [ph] that particular division that you're mentioned within West is their most profitable position.

Got it. The -- is the revenue model for Connextions per employee per month?

Is the revenue model per month I mean, the headcount person.

Yes well I'm just saying for health advocate, I know the revenue model is up per employee per month.

I don’t have how they...

I don’t want to answer it.

Okay. All right, well thank you very much.

Thank you.

Thank you for your questions. That is all the time we have today. This concludes the TeleTech’s first quarter 2027 earnings conference call. You may disconnect at this time.