Transcom reported its fourth quarter and full-year 2012 results. Revenue increased 14.1% in Q4 2012 and 9.3% for the full year 2012 driven by growth in all regions. Underlying EBITA improved in Q4 2012 and for the full year compared to prior year periods due to volume and efficiency gains, though some regions faced challenges. Key priorities going forward include continuous focus on underperforming areas, revenue expansion, efficiency improvements, and improving quality to support new volume ramp-ups, as well as growing revenue in line with markets and improving profitability over the medium to long term.
3. What is Transcom?
โข A global customer experience
specialist...
โข ...providing outsourced
customer care, sales,
technical support, and credit
management...
โข ...through an extensive
network of contact centers
โ
and work-at-home agents
Transcomโs business is to
help make sure that our
clientsโ customers form
positive perceptions of their
interactions with them.
3
4. Transcom in numbers
โข 30,000 people
โข 70 contact centers, onshore, off-shore and near shore
โข 28 countries
โข Delivering services in 33 languages...
โข ...to over 400 clients in various industry verticals
โข โฌ605.6 million revenue in 2012
โข Market cap: SEK 896.8 million as at February 11, 2013. Listed on NASDAQ OMX Stockholm
(TWW SDB B and TWW SDB A)
4
5. We have an extensive global footprint
Home markets Near Shore Locations Offshore Locations
๏ง Austria ๏ง Czech Republic ๏ง Canada ๏ง Chile*
๏ง France ๏ง USA ๏ง Croatia ๏ง Peru*
๏ง Netherlands ๏ง Canada ๏ง Estonia ๏ง Philippines*
๏ง Slovakia ๏ง Italy ๏ง Latvia ๏ง Tunisia
๏ง UK ๏ง Poland ๏ง Czech Republic
๏ง Belgium ๏ง Sweden ๏ง Hungary * Developing into home/near shore
๏ง Germany ๏ง Denmark ๏ง Lithuania markets
๏ง Norway ๏ง Portugal
๏ง Spain ๏ง Switzerland
๏ง Australia ๏ง Croatia
5
6. Transcomโs organization
โข Corporate management
- CEO, CFO, CIO, Head of Operations, Head of Global
Sales & Accounts
โข 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
7. Transcomโs service portfolio
โข Customer service
Customer experience specialists trained to support
best-in-class product, service and brand experiences
for our clientsโ customers
โข Technical support
Tiered support models, from the simplest questions to
more complex support scenarios
โข Customer retention
Preventing defection and maximizing the lifetime of
a customer
โข Customer acquisition
Acquiring new customers cost-efficiently, and building
strong customer relationships as a basis for future interactions
โข Cross- and upselling
Building relationships and identifying customer needs
during any type of interaction, and taking appropriate
action to satisfy the customerโs need
โข Credit management services (CMS)
Early collections, Contingent collections and Legal collections
7
8. Recap of our situation and focus areas
Situation today and short-term focus Market trends
โข Transcomโs profitability has decreased โข Growth driven by domestic Asia Pacific
in recent years, but is now improving and Latin America markets
โข Continuous focus on underperforming โข Diversification (geography and
areas business models)
โข Growth in selected areas and efficiency
improvements
โข Broadening client base
Going forward - Strategic direction
โข Creation of outstanding customer
experiences, while helping clients to
reduce cost and drive growth
โข Flexibility is critical
8
10. Revenue in Q4 2012 increased 14.1% compared to Q4 2011
Net revenue, Q412 vs. Q411
โฌm 162.9 Growth โข Increasing volumes with our installed
base clients
13.5 -9.0%
142.8 โข New clients contributed meaningfully
16.0 +11.5% to growth, not least in North America
CMS 14.9
& Asia Pacific
Central 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 2012
10
11. Revenue in 2012 was 9.3% higher than in 2011
Net revenue, 2012 vs. 2011
โฌm 605.6 Growth โข Growth in all regions
554.1 55.3 -4.8% โข CMS revenue decreased
58.1 57.8 +4.0% โข Some of our offshore locations
CMS evolving into home markets as well
55.6
Central 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 2012
11
12. 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 costs
12 ** Underlying performance, excluding restructuring and other non-recurring costs, and a reassessment of
accrued revenue in the CMS business unit
13. 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 costs
13 ** Underlying performance, excluding restructuring and other non-recurring costs, and a reassessment of
accrued revenue in the CMS business unit
14. EBITA margin improvements in North America & APAC, Central
Europe and South, offset by lower margins in North and CMS
2012 2011 โข 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% โข 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% โข 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 โข 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% โข 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% โข CMS: Decrease in volumes handled impacted results.
CMS 7.2% 8.7% Cost reduction initiatives lowered SG&A by โฌ2.1m.
TOTAL 2.1% 1.2%
14 * Underlying performance, excluding restructuring and other non-recurring costs
15. We need to successfully address a number of
short- and medium-term operational and financial
challenges
Stop the losses in France (โฌ1m/month in 2012). Transcom plans to stop financing
the French subsidiaryโs 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 โ renegotiate labor agreements
Return UK CMS to profitability
15
16. What will it take for Transcom to return to historical margins?
Continue improving key performance indicators
โข Seat utilization
โข Efficiency
โข Offshore/onshore split
โข 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
17. Debt & leveraging
Gross debt (โฌ m) Net debt (โฌ 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
โข Gross debt increased by โฌ4.8m vs. Q312
โข Net Debt increased by โฌ6.0m compared to the Q312 level
โข Net Debt/EBITDA ratio: 1.97 (1.71 in Q312)
โข Interest charge โฌ0.7m (โฌ0.8m in Q312)
20. Growth opportunities
North America and Asia Pacific
โข Continue expanding in local markets in Asia Pacific
Latin America
โข Serving domestic markets and the US,
in addition to Spanish clients
North Europe
Central Europe
โข Near shore
21. Summary: key priorities going forward
Short-term focus
โข Continuous focus on executing turnaround in
underperforming areas
โข Continued focus on revenue expansion and
efficiency improvements
โข Increased focus on quality and service delivery
to support significant ramp-up of new volumes
Medium-to long-term priorities
โข Grow revenue in line with overall market growth
in the markets where we choose to compete
โข Improve profitability and decrease earnings
volatility
- Continuously strengthen operational efficiency
- Optimizing our geographic delivery mix
- Focus on broadening our client base
21