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
3. 3
• A global customer 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 in Sweden 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 2009 2010 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 revenue growth
• 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
8. 8
Q4 2013 Q4 2014
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 2013 One-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-off items 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 €21.1m intangible 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 driver Trend 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
55.3 54.3
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 priorities Status
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
19. Transcom has adopted a 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
Grow together
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 to be 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