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Transcom Q4 2014 results presentation
This document summarizes Transcom's fourth quarter 2014 results presentation. Some key points: - Transcom is a global customer experience specialist with 29,000 employees generating €616.8 million in revenue in 2014. - In Q4 2014, Transcom saw a 3.8% increase in like-for-like revenue compared to Q4 2013 and an improved EBIT margin of 5.8%. - For all of 2014, Transcom's core customer relationship management business saw an EBIT margin increase to 3.5%, driven by improvements in North America & Asia Pacific and North Europe. - Going forward, Transcom has set mid-term targets for revenue growth and EBIT
Transcom Q4 2014 results presentation
- 1. 5 February 2015 Transcom Fourthquarter 2014 results presentation Johan Eriksson, President & CEO Pär Christiansen, CFO Outstanding Customer Experience
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- 3. 3 • A globalcustomer 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
- 4. 4 • Founded inSweden 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
- 5. 5 599.2 631.8 560.2 589.1 554.1 605.6 653.2 616.8 2007 2008 20092010 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
- 6. • Like-for-like revenuegrowth • 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 6 Key messages
- 7. Our performance inQ4 2014 and FY 2014 2
- 8. 8 Q4 2013 Q42014 Like-for-like revenue, Q4 2014 vs. Q4 2013 €m 158.7152.6 • 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%
- 9. 9 EBIT Q4 2013One-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*)
- 10. 10 • 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
- 11. 11 2013 2014 Like-for-like revenue,2014 vs. 2013 €m 616.8613.6 • 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%
- 12. EBIT 2013 One-offitems 2013 One-off items 2014 Cost savings programs Volume & efficiency Expansion costs EBIT 2014 12 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*)
- 13. 13 * Excluding €21.1mintangible 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
- 14. 14 Key performance driverTrend 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
- 15. 15 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 55.354.3 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
- 16. 16 2014 key prioritiesStatus 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
- 17. 3 Going forward –Transcom’s strategic direction
- 18. 18 Transcom’s brand promise OutstandingCustomer Experience, driving revenue and brand loyalty ”
- 19. Transcom has adopteda set of mid-term financial targets 19 • 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:
- 20. Transcom strategic priorities 20 Growtogether 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
- 21. Organizational changes tobe implemented in 2015 in order to increase focus and accountability in important areas 21 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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