transcom q4 2012 results presentation
TRANSCRIPT
![Page 1: Transcom Q4 2012 Results Presentation](https://reader035.vdocument.in/reader035/viewer/2022062406/55877165d8b42af23e8b4696/html5/thumbnails/1.jpg)
14 February 2013
Transcom Fourth Quarter and Full-Year 2012 Results Presentation
Johan Eriksson, President & CEO
Outstanding
Customer
Experience
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Transcom at a glance
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• 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.
”
What is Transcom?
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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)
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We have an extensive global footprint
Home markets
Austria
France
Netherlands
Slovakia
UK
Belgium
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 home/near shore markets
Canada
Croatia
Estonia
Latvia
Czech Republic
Hungary
Lithuania
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Transcom’s organization
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• 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)
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Transcom’s service portfolio
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• 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
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Recap of our situation and focus areas
8
Situation today and short-term focus
• Transcom’s profitability has decreased
in recent years, but is now improving
• 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
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Our performance in Q4 2012 and FY 2012
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Revenue in Q4 2012 increased 14.1% compared to Q4 2011
37.9 45.4
25.8 31.9
28.5
31.0 21.4
25.2 14.3
16.0 14.9
13.5
Q4 2011 Q4 2012 10
Central Europe
South
Iberia
North America
& Asia Pacific
North
Growth
+19.7%
CMS
Net revenue, Q412 vs. Q411
€m
+23.8%
+8.6%
+17.5%
+11.5%
-9.0%
162.9
142.8
• Increasing volumes with our installed base clients
• New clients contributed meaningfully to growth, not least in North America & Asia Pacific
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Revenue in 2012 was 9.3% higher than in 2011
140.5 162.4
98.3 112.1
108.9
119.4
92.6
98.5 55.6
57.8 58.1
55.3
2011 2012 11
Central Europe
South
Iberia
North America
& Asia Pacific
North
CMS
Net revenue, 2012 vs. 2011
€m • Growth in all regions
• CMS revenue decreased
• Some of our offshore locations evolving into home markets as well
- Grow in new attractive markets
- Diversifying our client base
- Increasing seat capacity utilization
605.6
554.1
Growth
+15.6%
+14.0%
+9.6%
+6.4%
+4.0%
-4.8%
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Underlying EBITA in Q4 2012 improved compared to Q4 2011
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* Underlying performance, excluding restructuring and other non-recurring costs
** Underlying performance, excluding restructuring and other non-recurring costs, and a reassessment of
accrued revenue in the CMS business unit
Restructuring
savings
Volume &
efficiency-
driven
gains
Expansion
investments Sales &
support
Non-
recurring
costs
related to
France EBITA
Q412*
EBITA
Q412** EBITA
Q411
Reassess-
ment of
accrued
revenue in
CMS
2.2
+3.0
+1.3 -4.4
-0.1 +0.8 2.9
3.3 +0.4
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Underlying EBITA in 2012 improved compared to 2011
13
* Underlying performance, excluding restructuring and other non-recurring costs
** Underlying performance, excluding restructuring and other non-recurring costs, and a reassessment of
accrued revenue in the CMS business unit
Restructuring
savings
Volume &
efficiency-
driven
gains Expansion
investments Sales &
support
Reclass-
ification of
amorti-
zation
EBITA
2012*
EBITA
2012** EBITA
2011
Reassess-
ment of
accrued
revenue in
CMS
Non-
recurring
costs
related to
France
6.8
+7.6
+3.5 -7.4
-0.7 +1.2 +1.7 12.8 +0.4 13.2
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EBITA margin improvements in North America & APAC, Central Europe and South, offset by lower margins in North and CMS
14 * Underlying performance, excluding restructuring and other non-recurring costs
2012
Oct-Dec
2011
Oct-Dec
EBITA margin*
North
Central Europe
South
Iberia
North America & AP
CMS
TOTAL
3.1%
4.0%
-2.4%
4.4%
-0.6%
2.0%
1.8%
10.5%
-8.8%
-14.0%
4.9%
-1.6%
9.9%
1.5%
FY 2012 FY 2011
EBITA margin*
North
Central Europe
South
Iberia
North America & AP
CMS
TOTAL
3.1%
0.2%
-2.5%
4.5%
0.6%
7.2%
2.1%
5.9%
-0.1%
-8.8%
4.7%
-3.5%
8.7%
1.2%
• Volume and efficiency-driven performance improvements
in North America & Asia Pacific, Central Europe and
South
• North: operational performance issues on some client
projects and ramp-up costs for a new clients. Action
expected to yield results in Q1 2013.
• CMS: Decrease in volumes handled and increased price
pressure. Performance in the UK has improved, and we
expect a full turnaround during 2013.
• Volume and efficiency-driven performance improvements
in North America & Asia Pacific, Central Europe and
South
• North: lower operational efficiency on some client
projects, higher attrition and higher training costs.
• CMS: Decrease in volumes handled impacted results.
Cost reduction initiatives lowered SG&A by €2.1m.
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We need to successfully address a number of short- and medium-term operational and financial challenges
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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
Germany – renegotiate labor agreements
Return UK CMS to profitability
Successfully implement action plan to improve operational performance in the North region
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What will it take for Transcom to return to historical margins?
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Key performance driver
Trend vs. 2011 Q4 2012 vs. Q4 2011
Average Seat Utilization ratio
(87% vs. 78%)
Share of revenue generated offshore
(20% vs. 16%)
Average Efficiency ratio (billable over
worked hours)
n/a (positive development)
Monthly attrition n/a (positive development)
Improvements on four KPIs vs. previous year
Continue improving key performance indicators
• Seat utilization
• Efficiency
• Offshore/onshore split
• Attrition
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126.8
111.2
65.3 65.0 71.0
75.9 80.7
89.1
73.4
13.2 11.9 17.2
32.1 38.1
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Q211 Q311 Q411 Q112 Q212 Q312 Q412
Gross debt (€ m) Net debt (€ m) Net debt/EBITDA
• 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)
Debt & leveraging
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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
”
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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
Growth opportunities
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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
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Thank you! Questions?
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