transcom q113 results presentation
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18 April 2013
Transcom First Quarter 2013 Results Presentation
Johan Eriksson, President & CEO
Outstanding
Customer
Experience
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Transcom at a glance
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• A global customer experience
specialist...
• ...providing outsourced
customer care, sales,
technical support, and credit
management...
• ...through an extensive
network of contact centers
and work-at-home agents Transcom’s business is to
help make sure that our
clients’ customers form
positive perceptions of their
interactions with them.
”
What is Transcom?
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Transcom in numbers
• 30,000 people
• 70 contact centers, onshore, off-shore and near shore
• 27 countries
• Delivering services in 33 languages...
• ...to over 400 clients in various industry verticals
• €605.6 million revenue in 2012
• Market cap: SEK 1046.2 million as at March 28, 2013. Listed on NASDAQ OMX Stockholm
(TWW SDB B and TWW SDB A)
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We have an extensive global footprint
Home markets
Austria
Netherlands
Slovakia
UK
Belgium
Germany
Norway
Spain
Australia
Near Shore Locations Offshore Locations
Chile*
Peru*
Philippines*
Tunisia
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Czech Republic
USA
Canada
Italy
Poland
Sweden
Denmark
Portugal
Switzerland
Croatia
* Developing into home/near shore markets
Canada
Croatia
Estonia
Latvia
Czech Republic
Hungary
Lithuania
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Transcom’s organization
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• Corporate management
- CEO, CFO, CIO, Head of Operations, Head of Global
Sales & Accounts
• Regional management
- North region (25% of revenue)
- Iberia (19% of revenue)
- North America & Asia Pacific (19% of revenue)
- South (16% of revenue)
- Central Europe (10% of revenue)
- Credit Management Services (CMS) in eight European
countries (10% of revenue)
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Transcom’s service portfolio
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• Customer service
Customer experience specialists trained to support
best-in-class product, service and brand experiences
for our clients’ customers
• Technical support
Tiered support models, from the simplest questions to
more complex support scenarios
• Customer retention
Preventing defection and maximizing the lifetime of a customer
• Customer acquisition
Acquiring new customers cost-efficiently, and building
strong customer relationships as a basis for future interactions
• Cross- and upselling
Building relationships and identifying customer needs
during any type of interaction, and taking appropriate
action to satisfy the customer’s need
• Credit management services (CMS)
Early collections, Contingent collections and Legal collections
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Recap of our situation and focus areas
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Situation today and short-term focus
• Transcom’s profitability has decreased
in recent years, but is now improving
• We see positive effects as a result of
restructuring actions
• Continuous focus on underperforming
areas
• Growth in selected areas and efficiency
improvements
• Broadening client base
Market trends
• Growth driven by domestic Asia Pacific
and Latin America markets
• Diversification (geography and
business models)
Going forward - Strategic direction
• Creation of outstanding customer
experiences, while helping clients to
reduce cost and drive growth
• Flexibility is critical
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Our performance in Q1 2013
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Revenue in Q1 2013 increased 15.9% compared to Q1 2012
38.1 43.2
25.4 31.6
30.6
33.2
24.6
28.0 14.0
16.7 14.4
17.8
Q1 2012 Q1 2013 10
Central Europe
South
Iberia
North America
& Asia Pacific
North
Growth
+13.5%
CMS
Net revenue, Q113 vs. Q112
€m
+24.5%
+8.3%
+13.9%
+19.3%
+23.3%
170.5
147.1
• All units contributed positively to the top-line growth
• Main driver is increasing volumes with our installed base clients
• Several new clients added during the year also contributed
• Revenue benefited from €3.8m in compensation received for transferring the right to collect on a Swedish debt portfolio
• France deconsolidated from March 1 (effect in Q113: -€0.9m)
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EBIT increased by €5m in Q1 2013 compared to Q1 2012
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Restructuring
net effects
Volume &
efficiency-
driven
gains
Expansion
investments
Other
EBIT
Q113
EBIT
Q112
1.1
+2.3
+4.3 -1.7
+0.1 6.1
• €3.8 million positive impact in Q113 as a result of compensation that Transcom has
received in exchange for transferring our right to collect on a Swedish debt portfolio
• €6.0 million positive impact in Q113 due to a capital gain following the
deconsolidation of our former French subsidiary, offset by €6.0 million in
restructuring and other non-recurring costs
• EBIT in Q112 included a non-recurring cost of €1.3 million related to site closures in
North America
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EBIT margin improvements in North America & APAC, Central Europe, South and CMS, counterbalanced by North and Iberia
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2013
Jan-Mar
2012
Jan-Mar
EBIT margin
North
Central Europe
South
Iberia
North America & AP
CMS
TOTAL
0.2%
3.4%
4.7%
2.0%
-2.0%
23.4%
3.6%
3.4%
-1.9%
-4.9%
5.5%
-4.8%
6.0%
0.7%
• Volume and efficiency-driven performance improvements
in North America & Asia Pacific, Central Europe and
South
• Deconsolidation of France as well as higher volumes and
efficiency in Italy benefited South
• North: Volume fluctuations against forecast, leading to
overstaffing, and salary increases
• Iberia: Impact of early Easter
• CMS: Compensation received for transferring our right to
collect on Swedish debt portfolio
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We need to successfully address a number of short- and medium-term operational and financial challenges
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Stop the losses in France (€1m/month in 2012). Transcom plans to stop financing
the French subsidiary’s loss-making operations beyond March 1, 2013.
Increase onshore seat utilization in North America
Successfully resolve tax claims
Germany – renegotiate labor agreements
Return UK CMS to profitability
Successfully implement action plan to improve operational performance in the North region
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What will it take for Transcom to return to historical margins?
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Key performance driver
Trend vs. Q1 2012 Q1 2013 vs. Q1 2012
Average Seat Utilization ratio
(89% vs. 83%)
Share of revenue generated offshore
(21% vs. 16%)
Average Efficiency ratio (billable over
worked hours)
n/a (positive development)
Monthly attrition n/a (unchanged)
Improvements on four KPIs vs. previous year
Continue improving key performance indicators
• Seat utilization
• Efficiency
• Offshore/onshore split
• Attrition
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111.2
65.3 65.0 71.0
75.9 80.7
86.1
73.4
13.2 11.9 17.2
32.1 38.1
59.3
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
0.0
20.0
40.0
60.0
80.0
100.0
120.0
Q311 Q411 Q112 Q212 Q312 Q412 Q113
Gross debt (€ m) Net debt (€ m) Net debt/EBITDA
• Gross debt increased by €5.4m vs. Q412
• Net Debt increased by €21.2m compared to the Q412 level
• Net Debt/EBITDA ratio: 2.51 (1.97 in Q412)
• Interest charge €0.9m (€0.7m in Q412)
Debt & leveraging
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Going forward – Transcom’s strategic direction
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Transcom’s brand promise
Outstanding Customer
Experience, driving
revenue and brand
loyalty
”
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North America and Asia Pacific • Continue expanding in local markets in Asia Pacific
Latin America • Serving domestic markets and the US,
in addition to Spanish clients
North Europe
Central Europe • Near shore
Short- and medium-term growth opportunities
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Short-term focus
• Continuous focus on executing turnaround in underperforming areas
• Continued focus on revenue expansion and efficiency improvements
• Increased focus on quality and service delivery to support significant ramp-up of new volumes
Medium-to long-term priorities
• Grow revenue in line with overall market growth in the markets where we choose to compete
• Improve profitability and decrease earnings volatility
- Continuously strengthen operational efficiency
- Optimizing our geographic delivery mix
- Focus on broadening our client base
Summary: key priorities going forward
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Thank you! Questions?
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