Investor Presentation JP Morgan European High Yield & Leveraged Finance Conference Sep 10, 2020
Today’s presenters Jonas Dahlberg Snejana Koleva Chief Executive Officer Chief Financial Officer Transcom since June 2019 Transcom since August 2020 Previous roles: Previous roles: CFO, Transcom (2019) Finance Director, Rock Tools Sandvik (2017-2020) CFO, Sweco Group (2012-2019) VP Strategy Sandvik Mining & President, Sweco Russia (2008-2012) Rock Technology (2013-2017) Associate Principal, McKinsey (1998-2008) McKinsey (2005-2013) 2
Highlights Transcom provides world class customer services to leading • consumer brands predominately in Europe and North America Since the buy out by Altor in 2017, Transcom is on a • transformation journey aiming at profitable growth and double- digit margins Strategy is focusing on client focus and operational excellence, • driven by strong culture and leadership . Moreover, Transcom has a strong portfolio of digital services and is shifting the mix towards attractive client segments and delivery locations During 2018-2020H1 Transcom shows improvements on all key • financials : EBITDA, margins, E/O-items, cash flow and leverage Transcom is resilient in Covid due to Work-At-Home (increased • from 6% to >60% in the span of 8 weeks), Digital and a diverse footprint As consumers chose to interact with brands at distance, Transcom • experiences strong demand and inflow of new contracts , driving 3 organic growth
Agenda Company overview and • strategy Industry trends • Financial development • 4
Transcom overview 5
Who we are: Transcom at a glance 26,000 1.5m+ 532 €M 200+ people, 50+ sites, 22 Customer 2020 Q2 LTM sales international countries interactions clients on a daily basis 33 1,000+ 40+ 11 sites in 49 €M the Philippines Languages distributed sites in serving the spoken workforce in North Europe English America (US & 2020 Q2 LTM speaking Canada) markets EBITDA (1) Global presence : Albania, Bosnia Herzegovina, Canada, Croatia, Egypt, Estonia, Germany, Hungary, Italy, Latvia, Lithuania, Netherlands, Norway, Philippines, Poland, Portugal, Serbia, Spain, Sweden, Tunisia, United Kingdom, USA 6 (1) Adjusted EBITDA excl. IFRS 16
What we do: outsourced customer relationship management We are a global customer care provider …supporting our clients’ digital agenda …delivering services in 33 languages to offering future proof customer facing by combining our core services with international brands in various concepts delivered by our global leading digital capabilities and tools… industries team of local specialists… Services & utilities 26,000 Conversational commerce customer experience specialists serving customers via Utilities BFSI Gov & Media Travel Health- Digital care Gamification channels Commerce & Logistics Core services Call Chat Email Robotic Auto- Logistics Retail/ IT/Tech White- motive e-commerce goods process Chatbots automation Telco & Cable Interaction analytics Social media Messaging Telco Cable 7
Transcom has an extensive portfolio of satisfied clients… Selected clients by vertical (1) Cumulative share of revenue by client (1) % Revenue 100 Services & utilities Commerce & logistics 75 50 25 0 IPSY +200 clients NPS • No single client >10% of revenue 49 (2) • Top 10 clients <55% of revenue • Top 10 client relations 13-year long on average Telco & cable (1) As of H1 2020 (2) Net Promoter Score as of August, 2020, calculated in line with the industry 8 practice
… and is growing in attractive customer segments EBITDA Revenue by industry segment, EUR Millions Q2 2020 LTM Developments during Q2 2020 544 541 532 • Strong demand in commerce and logistics from existing clients Telco 179 175 6.8% 208 & Cable • Continued intake of new contracts, of which some COVID-driven 188 6.5% 208 Service • COVID-driven delays of tenders and 206 & Utilities ramp-ups of new contracts • Travel and hospitality subsegment at 169 14.6% Commerce 155 130 standstill (<1% of Transcom revenue) & Logistics 2018 2019 Q2 2020 LTM Notes: On July 27, 2018, the group acquired Awesome OS which has been consolidated from this date. 2019 includes Latin America until Feb 2019 (0.9M Sales and -0.1M EBITA). 9 Adj. EBITDA% by industry segment includes allocation of unallocated/group-wide expenses, excludes IFRS16 adjustments
Serving Global English and European market through global delivery Europe Global English • • Delivery across US • Markets Europe UK • • 33 languages Philippines • • On-shore in 8 Off-shore from the countries Philippines Delivery model • • Near- /off-shore Work-at-home in from 10 countries the US and Canada Share of total Europe 33% revenue Global English 67% Q2 2020 LTM Site locations Serviced geographies 10
Continued shift towards more profitable delivery locations Share of revenue by delivery location Current % of Revenue EBITDA levels 100% 584 544 541 532 Low teens Nearshore 8% 9% 10% 12% Offshore 18% 20% 25% 25% High teens Onshore 74% 71% 65% 63% Single digit 2017 2018 2019 2020 Q2 LTM Of which WAH <3% ~60% Notes: FY 2017 is consolidated at Issuer level, adjusted for EO items and full year adjusted for the acquisitions of TWW group and Xzakt group. On July 27, 2018, the group acquired Awesome OS which has been consolidated from this date. 11 2019 includes Latin America until Feb 2019 (0.9M Sales and -0.1M EBITA)
Highly competitive digital offering Customer Experience Digital Process Digital Interactions Gamification (CX) Management Automation • • • • Global Business Digital channels Chatbots: AI serving as Gamification : application of Intelligence: data-driven customer service game-design elements in a - Messaging (Conversational analysis and reporting representative to both agent non-game context. Game commerce) and end-consumer. Often types cover the full agent • Interaction Analytics : - Webchat embedded in chat or life-cycle needs: insights from in-depth messaging channel analysis of communications - Social media - Leadership • between end-customer and Robotic process - Rating-apps Transcom’s clients automation: automation of - Employability - Self-service repetitive manual back-office • CX Advisory Services: - Operational process advisory on designing, - Commercial • implementing and Robotics desktop management of the best-in- automation: real time class customer experience automation of front-end solutions tasks on the screen of the agent • Digital solutions implemented for 45% of top 20 clients • Launch of T:Labs – Transcom’s hub for rapid digital innovation and experimentation with our clients • Innovation & CX Awards Best Cloud Implementation Best Use of Customer Insights, Finalist 12
Acquisitions supporting growth and increasing its exposure to attractive segments and geographies M&A transactions since take-private in 2017 June 2017 July 2018 August 2018 March 2019 April 2019 Transcom Holding AB Transcom Holding AB Transcom Holding AB TopCo AB Transcom Rostock acquires acquires Xzakt acquires Awesome OS acquires a site in acquires TMS ASA Informationsdienste Kundralatiom AB Durrës connected! (1) GmbH to strengthen European to create a center of to expand footprint on the to further strengthen its to strengthen digital nearshore and multilingual excellence for utilities and German market and position in the Nordic within capabilities and position on services with +500 strengthen exposure to strengthen capabilities in the SME market in the e-commerce industry employees German market the media industry Going forward, Transcom is looking for “polished pearls”, i.e. companies with double digits profitability, • attractive growth potential and complementary assets ASA Informationsdienste was Transcom’s first carve-out transaction, transaction type growing in importance for • the future 13 (1) Acquired outside bond group, intended to be incorporated at a later stage
Overview of strategic roadmap Financial objectives 2017 2018 2019 2020 2021 2022 2023 Establish platform OH cost out 30 MEUR • Developing strong digital offering • Repositioning towards attractive • segments and locations • Solid double digit EBITDA Drive profitable organic growth Increased Client focus • • Organic growth above Drive Operational Excellence • industry average Strong Culture & Leadership • • Further inorganic value Accelerate development creation Invest in near- and offshore • Carve outs • M&A to support repositioning • 14
Industry trends
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