transcom q4 2014 results presentation
TRANSCRIPT
5 February 2015
Transcom Fourth quarter 2014 results presentation Johan Eriksson, President & CEO
Pär Christiansen, CFO
Outstanding
Customer
Experience
At a glance
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• A global customer experience specialist…
• …employing 29,000 people…
• …representing more than 100 nationalities...
• …operating 54 contact centers, onshore, off-shore and near shore…
• …in 23 countries…
• …delivering services in 33 languages...
• ...to over 400 clients in various industry verticals…
• …generating €616.8 million revenue in 2014…
• …with a market cap of SEK 1,649.1 million as at December 30, 2014. Listed on Nasdaq Stockholm (Mid Cap segment) under ticker TWW.
Transcom in numbers
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• Founded in Sweden in
1995
• European expansion;
focus on organic growth
• Presence in 15 European
countries at the end of
2001
• Transcom WorldWide
formed in 2000,
headquartered in
Luxembourg
• Shares were listed in
2001
• Acquisition-led growth
• Diversification into debt
collection via acquisitions
• Expansion of near-shore
services
• Establishment in Latin
America, serving Spanish
clients
• Expansion into North
America & Asia through
acquisition of NuComm
and Cloud10
• Restructuring program to
strengthen
competitiveness and
improve profitability
• Focus on growth in
prioritized geographies;
divestment of smaller
country operations
• Divestment of Credit
Management Services
(CMS) unit, to focus on
core customer care
business
• Re-domiciliation to
Sweden
• Growth with clients while
creating more balanced
client portfolio
• Continuously improve
service offering, focusing
on advanced, value-
added services
• Strengthen global
footprint
• Ensure competitive
operational platform
This year, Transcom celebrates 20 years in business
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599.2
631.8
560.2
589.1
554.1
605.6
653.2
616.8
2007 2008 2009 2010 2011 2012 2013 2014
6.0%
4.4%
2.2%
0.7%
1.5%
2.7%
4.3%
Revenue (€m)
Operating margin*
* Underlying performance, excluding restructuring and other
non-recurring costs
3.5%
We are now leaving the turnaround phase that we initiated at the end of 2011
• Focus on core customer care
business
• Targeted sales efforts
- Growth with existing clients in
new geographies
- Broadening client base
• Efficiency improvements and
continuous focus on
underperforming areas
• Like-for-like revenue growth
• Significant margin improvement
• Re-domiciliation to Sweden completed in Q4 2014
• Leaving the turnaround phase that we initiated at the end of 2011
• Mid-term financial targets externally communicated
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Key messages
Our performance in Q4 2014 and FY 2014
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Q4 2013 Q4 2014
Like-for-like revenue, Q4 2014 vs. Q4 2013
€m
158.7 152.6 • Like-for-like revenue in Q4 2013
adjusted for currency effects (€+1.1m),
CMS divestments and site closures (€-
8.7m)
• All regions contributed to the €6.1m
like-for-like revenue increase
On a like-for-like basis, revenue in Q4 2014 increased by 3.8%
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EBIT Q4 2013 One-off items 2013
One-off items 2014
CMS divestment Cost savings programs
Volume & efficiency
Expansion costs
Other EBIT Q4 2014
2.2* +1.0
+1.2
+2.5
+3.8
-0.2
EBIT (mEUR)
Q4 2013 vs. Q4 2014
-0.4 9.2
• Strong margin progression in the North America & Asia Pacific and North Europe regions
* Excluding €21.1m intangible asset impairment in Q4 2013
-0.9
EBIT margin in Q4 2014 improved to 5.8% (1.3% in Q4 2013*)
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• North Europe: Higher business volumes in the
region, and higher efficiency in Sweden and
Norway
• Central & South Europe: Higher efficiency in
Italy mitigated start-up costs for new sites in
Hungary and Serbia
• Iberia & Latam: Positive impact from reversal of
personnel-related accrual
• North America & Asia Pacific: Increased
efficiency and cost reductions. Positive
development in Asia continues.
2014
Oct-Dec
2013
Oct-Dec*
EBIT margin
North Europe
Central & South Europe
Iberia & Latam
North America & AP
CRM*
CMS
Total
7.3%
3.8%
5.0%
6.4%
5.8%
n/a
5.8%
2.3%
4.7%
1.1%
-4.6%
1.3%
2.9%
1.3%*
* Excluding €21.1m intangible asset impairment in Q4 2013
Particularly strong development in North America & Asia Pacific and North Europe regions in Q4 2014
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2013 2014
Like-for-like revenue, 2014 vs. 2013
€m
616.8 613.6 • Like-for-like revenue in 2013 adjusted
for currency effects (€-7.9m) and a
number of CMS divestments (€-31.7m)
On a like-for-like basis, revenue in 2014 increased slightly, by 0.5%
EBIT 2013 One-off items 2013 One-off items 2014 Cost savings programs
Volume & efficiency
Expansion costs EBIT 2014
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14.2* -2.9 +0.3
+1.8 -3.3 +11.4
EBIT, core CRM business (mEUR)
2013 vs. 2014
21.4
• Considerable improvement in the North America & Asia Pacific region
• North Europe and Central & South Europe regions also developed strongly
* Excluding €21.1m intangible asset impairment in Q4 2013
EBIT margin in the core CRM business improved to 3.5% in 2014 (2.3% in 2013*)
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* Excluding €21.1m intangible asset impairment in Q4 2013
• North Europe: Higher volumes in the region and
improved performance in the Netherlands, as well
as divestment of loss-making Danish CRM unit
• Central & South Europe: Growth and Increased
efficiency in Italy, Germany and Poland.
• Iberia & Latam: Volume decreases, mainly in
Chile, impacted negatively.
• North America & Asia Pacific: Increased
efficiency and cost reductions. New profitable
business in Asia.
• CMS: Strategic review completed. All units sold or
integrated with core CRM business.
2014
2013*
EBIT margin
North Europe
Central & South Europe
Iberia & Latam
North America & AP
CRM*
CMS
Total
5.3%
3.3%
0.9%
3.5%
3.5%
n/a
3.5%
3.8%
2.9%
2.3%
-1.1%
2.3%
4.6%
2.4%*
Margin increase in 2014 mainly driven by improvements in North America & Asia Pacific and North Europe
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Key performance driver Trend vs. Q4
2013
Q4 2014 vs. Q4 2013
Average Seat Utilization
ratio
89% vs. 85%
Share of revenue generated
offshore
23% vs. 22%
Average Efficiency ratio
(billable over worked hours)
n/a – slight negative development
Monthly staff attrition Decrease – positive development
Improvements on four KPIs vs. previous year
Continue improving key performance indicators
• Seat utilization
• Efficiency
• Offshore/onshore split
• Attrition
We are continuing to focus on our key performance indicators
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80.7 86.3
91.1 94.6 94.4
90.1 85.7
67.0 62.8
38.1
59.3 56.7
49.7
36.2
55.3 54.3
38.4
24.6
0.00
0.50
1.00
1.50
2.00
2.50
3.00
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414
Gross debt (€ m) Net debt (€ m) Net debt/EBITDA
• Gross debt decreased by €4.2 m compared to the Q314 level
• Net Debt decreased by €13.8m compared to the Q314 level
• Net Debt/EBITDA ratio: 0.9 (1.70 in Q314)
Debt & leveraging
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2014 key priorities Status
Increase onshore seat
utilization in North
America
• We returned our North American business to profitability
in 2014
• Focus on further improving capacity utilization, and
driving future growth
Improve operational
performance in the North
Europe region
• Major improvements compared to last year
Improve operational
performance in Latin
America
• We have won new business with domestic clients, but
volumes are still too low
• Strong focus on improving capacity utilization and
efficiency
We have made good progress our key priorities for 2014
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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
”
Transcom has adopted a set of mid-term financial targets
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• Like-for-like revenue growth of at least
5 percent per year
• EBIT margin of at least 5 percent
• Net debt/EBITDA ratio of maximum 1.0
• Provided that the net debt/EBITDA target is
met, Transcom would be in a financial
position to start paying a dividend in 2016,
i.e. for the 2015 financial year
We have a solid foundation from which to take the next steps in our
development, our mid-term targets are:
Transcom strategic priorities
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Grow together with our clients, while creating a more balanced
industry and client portfolio
Continuously improve our
service offering, focusing on advanced,
value-added services
Strengthen Transcom’s
global footprint
Competitive operational
platform
Organizational changes to be implemented in 2015 in order to increase focus and accountability in important areas
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CEO
North Europe Central & South
Europe Iberia & Latam North America Asia Pacific
Operations Finance
Commercial HR
• Chief Operating Officer (COO) appointed
• Chief Commercial Officer (CCO) and Group HR Director to be appointed
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