transcom q213 results presentation
DESCRIPTION
TRANSCRIPT
18 July 2013
TranscomSecond Quarter 2013 Results Presentation
Johan Eriksson, President & CEO
Outstanding
Customer
Experience
Transcom at a glance
1
3
• 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 agentsTranscom’s business is to
help make sure that our
clients’ customers form
positive perceptions of their
interactions with them.
”
What is Transcom?
Transcom in numbers
• 29,000 people
• 62 contact centers, onshore, off-shore and near shore
• 26 countries
• Delivering services in 33 languages...
• ...to over 400 clients in various industry verticals
• €605.6 million revenue in 2012
• Market cap: SEK 865.6 million as at June 28, 2013. Listed on NASDAQ OMX Stockholm
(TWW SDB B and TWW SDB A)
4
We have an extensive global footprint
Domestic markets
Austria
Netherlands
Slovakia
UK
Germany
Norway
Spain
Australia
Near Shore Locations Offshore Locations
Chile*
Peru*
Philippines*
Tunisia
5
Czech Republic
USA
Canada
Italy
Poland
Sweden
Denmark
Portugal
Switzerland
Croatia
* Developing into domestic/near shore
markets
Canada
Croatia
Estonia
Latvia
Czech Republic
Hungary
Lithuania
Transcom’s service portfolio
6
• 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
Recap of our situation and focus areas
7
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
Our performance in Q2 2013
2
Revenue in Q2 2013 increased 13.0% compared to Q2 2012
38.0 43.9
27.031.6
28.9
34.6
25.7
27.514.0
15.813.8
13.1
Q2 2012 Q2 20139
Central Europe
South
Iberia
North America
& Asia Pacific
North
Growth
+15.5%
CMS
Net revenue, Q213 vs. Q212
€m
+17.0%
+19.7%
+7.0%
+12.9%
-5.1%
166.5
147.4
• Stable growth in our CRM operations
• Main driver is increasing volumes with our installed client base
• Several new clients added during the year also contributed significantly
EBIT Q212 Cost savings programs
Volume & efficiency Expansion investments
Corporate costs EBIT Q213
EBIT increased by €1.5m in Q2 2013 compared to Q2 2012
10
1.4
+2.5
+1.0 -1.0
-1.0
2.9
EBIT margin improvement driven by Central Europe and South
11
Including corporate
cost allocations*
2013
Apr-Jun
2012
Apr-Jun
EBIT margin
North
Central
South
Iberia
North America & AP
CRM
CMS
TOTAL
1.0%
1.9%
3.6%
3.2%
0.0%
1.9%
0.0%
1.7%
1.3%
-10.0%
-3.1%
4.8%
3.0%
0.4%
6.5%
0.9%
• North: Shortfall compared to projected
call volumes impacted profitability. New
pricing model to be implemented
gradually from Q413.
• Central: Higher volumes and
performance improvements in Germany
and the Netherlands.
• South: Deconsolidation of France as well
as higher volumes and efficiency in Italy.
• Iberia: Lower volumes in Chile with
associated dismissal costs.
• North America & Asia Pacific: Low
capacity utilization onshore in North
America offset profitable growth in Asia.
• CMS: Impact of sale in Q113 of right to
collect on a debt portfolio. Evaluation of
strategic alternatives for CMS
progressing; further details to be
communicated when decision is made.
Excluding corporate
cost allocations*
2013
Apr-Jun
2012
Apr-Jun
EBIT margin
North
Central
South
Iberia
North America & AP
CRM
CMS
TOTAL
4.8%
5.7%
7.3%
6.9%
3.5%
5.5%
3.8%
5.4%
4.7%
-7.1%
0.4%
8.3%
6.3%
3.7%
10.1%
4.3%
* Corporate costs increased from €5m in Q212 to €6m in Q213. This increase is of a
temporary nature, and we expect corporate costs to begin decreasing in Q413.
We need to successfully address a number of short-and medium-term operational and financial challenges
12
Stop the losses in France (€1m/month in 2012).
Increase onshore seat utilization in North America
Successfully resolve tax claims
Lower corporate costs
Improve operational performance in Latin America
Successfully implement action plan to improve operational performance in the North region
What will it take for Transcom to return to historical margins?
13
Key performance
driver
Trend vs. Q2 2012 Q2 2013 vs. Q2 2012
Average Seat
Utilization ratio
(88% vs. 85%)
Share of revenue
generated offshore
(19% vs. 16%)
Average Efficiency
ratio (billable over
worked hours)
n/a (positive development)
Monthly attrition n/a (slight increase)
Improvements on four KPIs vs. previous year
Continue improving key performance indicators
• Seat utilization
• Efficiency
• Offshore/onshore split
• Attrition
14
65.3 65.071.0
75.980.7
86.391.1
13.2 11.917.2
32.138.1
59.3 56.7
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
Q411 Q112 Q212 Q312 Q412 Q113 Q213
Gross debt (€ m) Net debt (€ m) Net debt/EBITDA
• Gross debt increased by €4.9m vs. Q113
• Net Debt decreased by €2.6m compared to the Q113 level, despite €5.3m
transfer in relation to former French subsidiary
• Net Debt/EBITDA ratio: 2.38 (2.51 in Q113)
• Financial cost €1.1m (€0.9m in Q113)
Debt & leveraging
3
Going forward– Transcom’s strategic direction
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Transcom’s brand promise
Outstanding Customer
Experience, driving
revenue and brand
loyalty
”
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
18
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
Thank you!
Questions?