Published on March 8, 2013
14 February 2013TranscomFourth Quarter and Full-Year 2012Results PresentationJohan Eriksson, President & CEOOutstandingCustomerExperience
Transcom at a glance1
What is Transcom?• 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.3
Transcom in numbers• 30,000 people• 70 contact centers, onshore, off-shore and near shore• 28 countries• Delivering services in 33 languages...• ...to over 400 clients in various industry verticals• €605.6 million revenue in 2012• Market cap: SEK 896.8 million as at February 11, 2013. Listed on NASDAQ OMX Stockholm (TWW SDB B and TWW SDB A)4
We have an extensive global footprintHome markets Near Shore Locations Offshore Locations Austria Czech Republic Canada Chile* France USA Croatia Peru* Netherlands Canada Estonia Philippines* Slovakia Italy Latvia Tunisia UK Poland Czech Republic Belgium Sweden Hungary * Developing into home/near shore Germany Denmark Lithuania markets Norway Portugal Spain Switzerland Australia Croatia5
Transcom’s organization • Corporate management - CEO, CFO, CIO, Head of Operations, Head of Global Sales & Accounts • Regional management - North region (28% of revenue) - Iberia (19% of revenue) - North America & Asia Pacific (20% of revenue) - South (15% of revenue) - Central Europe (10% of revenue) - Credit Management Services (CMS) in eight European countries (8% of revenue)6
Transcom’s service portfolio• 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 collections7
Recap of our situation and focus areas Situation today and short-term focus Market trends • Transcom’s profitability has decreased • Growth driven by domestic Asia Pacific in recent years, but is now improving and Latin America markets • Continuous focus on underperforming • Diversification (geography and areas business models) • Growth in selected areas and efficiency improvements • Broadening client base Going forward - Strategic direction • Creation of outstanding customer experiences, while helping clients to reduce cost and drive growth • Flexibility is critical8
Our performance in Q4 2012 and FY 20122
Revenue in Q4 2012 increased 14.1% compared to Q4 2011Net revenue, Q412 vs. Q411€m 162.9 Growth • Increasing volumes with our installed base clients 13.5 -9.0% 142.8 • New clients contributed meaningfully 16.0 +11.5% to growth, not least in North America CMS 14.9 & Asia PacificCentral Europe 14.3 25.2 +17.5% South 21.4 31.0 +8.6% Iberia 28.5 31.9 +23.8%North America 25.8& Asia Pacific 45.4 +19.7% North 37.9 Q4 2011 Q4 201210
Revenue in 2012 was 9.3% higher than in 2011Net revenue, 2012 vs. 2011€m 605.6 Growth • Growth in all regions 554.1 55.3 -4.8% • CMS revenue decreased 58.1 57.8 +4.0% • Some of our offshore locations CMS evolving into home markets as well 55.6Central Europe 98.5 +6.4% - Grow in new attractive markets 92.6 - Diversifying our client base South +9.6% - Increasing seat capacity 119.4 utilization Iberia 108.9 +14.0%North America 112.1 98.3& Asia Pacific +15.6% 162.4 North 140.5 2011 201211
Underlying EBITA in Q4 2012 improved compared to Q4 2011 +1.3 -4.4 +3.0 Volume & efficiency- +0.4 3.3 driven +0.8 2.9 2.2 gains -0.1 Reassess- Restructuring Expansion Sales & Non- ment of savings investments support recurring accrued costs revenue in related to CMS EBITA EBITA EBITA Q411 France Q412* Q412** * Underlying performance, excluding restructuring and other non-recurring costs12 ** Underlying performance, excluding restructuring and other non-recurring costs, and a reassessment of accrued revenue in the CMS business unit
Underlying EBITA in 2012 improved compared to 2011 +3.5 -7.4 +7.6 +0.4 13.2 +1.7 12.8 Volume & +1.2 -0.7 efficiency- Reassess- driven Non- 6.8 Expansion Sales & ment of gains Reclass- recurring investments support accrued ification of costs revenue in Restructuring amorti- related to CMS savings zation France EBITA EBITA EBITA 2011 2012* 2012** * Underlying performance, excluding restructuring and other non-recurring costs13 ** Underlying performance, excluding restructuring and other non-recurring costs, and a reassessment of accrued revenue in the CMS business unit
EBITA margin improvements in North America & APAC, CentralEurope and South, offset by lower margins in North and CMS 2012 2011 • Volume and efficiency-driven performance improvements Oct-Dec Oct-Dec in North America & Asia Pacific, Central Europe and EBITA margin* South North 3.1% 10.5% • North: operational performance issues on some client Central Europe 4.0% -8.8% projects and ramp-up costs for a new clients. Action South -2.4% -14.0% expected to yield results in Q1 2013. Iberia 4.4% 4.9% North America & AP -0.6% -1.6% • CMS: Decrease in volumes handled and increased price CMS 2.0% 9.9% pressure. Performance in the UK has improved, and we TOTAL 1.8% 1.5% expect a full turnaround during 2013. FY 2012 FY 2011 • Volume and efficiency-driven performance improvements in North America & Asia Pacific, Central Europe and EBITA margin* North 3.1% 5.9% South Central Europe 0.2% -0.1% • North: lower operational efficiency on some client South -2.5% -8.8% projects, higher attrition and higher training costs. Iberia 4.5% 4.7% North America & AP 0.6% -3.5% • CMS: Decrease in volumes handled impacted results. CMS 7.2% 8.7% Cost reduction initiatives lowered SG&A by €2.1m. TOTAL 2.1% 1.2%14 * Underlying performance, excluding restructuring and other non-recurring costs
We need to successfully address a number ofshort- and medium-term operational and financialchallenges 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 Successfully implement action plan to improve operational performance in the North region Germany – renegotiate labor agreements Return UK CMS to profitability15
What will it take for Transcom to return to historical margins?Continue improving key performance indicators • Seat utilization • Efficiency • Offshore/onshore split • Attrition Improvements on four KPIs vs. previous year Key performance Trend vs. 2011 Q4 2012 vs. Q4 2011 driver Average Seat (87% vs. 78%) Utilization ratio Share of revenue (20% vs. 16%) generated offshore Average Efficiency n/a (positive development) ratio (billable over worked hours) Monthly attrition n/a (positive development)16
Debt & leveraging Gross debt (€ m) Net debt (€ m) Net debt/EBITDA 140.0 4.50 126.8 4.00 120.0 111.2 3.50 100.0 89.1 3.00 80.7 73.4 75.9 80.0 71.0 2.50 65.3 65.0 60.0 2.00 38.1 1.50 40.0 32.1 1.00 13.2 17.2 20.0 11.9 0.50 0.0 0.00 Q211 Q311 Q411 Q112 Q212 Q312 Q412 • Gross debt increased by €4.8m vs. Q312 • Net Debt increased by €6.0m compared to the Q312 level • Net Debt/EBITDA ratio: 1.97 (1.71 in Q312) • Interest charge €0.7m (€0.8m in Q312)
Going forward– Transcom’s strategic direction3
Transcom’s brand promise” Outstanding Customer Experience, driving revenue and brand loyalty19
Growth opportunitiesNorth America and Asia Pacific• Continue expanding in local markets in Asia PacificLatin America• Serving domestic markets and the US, in addition to Spanish clientsNorth EuropeCentral Europe• Near shore
Summary: key priorities going forward 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 base21
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