May 7, 2020 Q1 2020 Presentation
Today’s presenter Jonas Dahlberg President & Chief Executive Officer Transcom since June 2019 Previous roles: CFO, Transcom Holding AB (2019-2020) • CFO, Sweco Group (2012 – 2019) • President, Sweco Russia (2008 – 2012) • Associate Principal, McKinsey (1998 – 2008) • 2
Agenda Q1 highlights • Company and strategy • Financial performance • Summary •
Q1 highlights Solid demand proving resilience of business model – • Stable or increasing volumes with existing clients Strong inflow of new contracts – Contract value Q1>FY19, • YTD 2xFY19 WAH mobilization to safeguard production – 50% of • workforce WAH end Q1, 60% currently COVID-19 subduing financials short term – Capacity • limitations and increased operational cost amid lockdowns Transcom standing strong in the pandemic – Additional • 30 MEUR funding secured 4
Company and strategy
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 customer experience specialists commerce serving customers via Utilities BFSI Gov & Media Travel Health- care Digital Gamification channels Commerce & Logistics Core services Call Chat Email Auto- Logistics Retail/ IT/Tech White- motive e-commerce goods Robotic Chatbots Process Automation Telco & Cable Interaction Social media Messaging Analytics Telco Cable 6
Solid foundation as basis for profitable growth 2. Profitable growth 1. Building the foundation • Reduction of 30 MEUR OH and support cost • Client focus • Attractive segments and delivery locations • Operational Excellence • Developing strong digital offering • Culture & Leadership From 5 to 9% EBITDA Double digit margin and 2015-2019 solid organic growth 7
Next phase is about profitable growth – Achieving double digit margins and solid organic growth Client focus Operational excellence Culture and leadership Leadership for people performance Strengthen market presence Operational performance • • • in North America management Clear, decentralized accountability Best practices for productivity, • • Accelerate sales in Europe recruiting, retention and workplace and lean OH • presence Client-by-client improvement Culture of client and customer • • Develop and protect existing clients approach centricity • 8
Transcom is highly competitive in the “new normal” The new normal Transcom’s position • Strong references in ecom, fin-tech and digitally Continued social distancing drives consumers from physical channels to distance channels enabled businesses • Strong portfolio of digital services and CX Clients looking for improved efficiency and improved customer experience services • Leading WAH service and globally diversified Increased demand of resilient business continuity options in case of coronavirus site operations resurgence 9
Amid COVID-19 our business model is more relevant than ever As consumers are socially distanced … Transcom is available to from physical retail… service consumers 26,000 customer experience specialists serving customers via Call Chat Email Social media Messaging 10
Transcom is growing in attractive customer segments Revenue by industry segment, MEUR EBITDA Developments during the quarter 544 541 534 Q1 2020 LTM Telco 6.3% • 179 Q1 organic growth 5% adjusted for 176 208 & Cable the loss of INPS contract in December • COVID-19 impact on revenue 2.8 208 198 6.5% Service 206 MEUR due to capacity limitations & Utilities • Solid growth in the most profitable Commerce 160 155 14.3% 130 segments & Logistics 2018 2019 Q1 2020 LTM 11 Note: 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). Adj. EBITDA% per industry includes allocation of unallocated/group-wide expenses.
Strong development in sales of new contracts In year revenue of new contracts, MEUR New logos: Expansions: 26 • • US grocery delivery Nordic bank • • US fintech European ecom • • Nordic grocery Global fintech 18 • • Global fintech German media • • 13 Global FMCG Spanish bank • • Global ecom Spanish bank • German fintech • Nordic FMCG • European FMCG FY 19 Q1 20 YTD Apr 20 12
Serving Western Europe and Global English markets through diversified delivery Europe Global English • • Delivery across US Markets • Europe UK • • 33 languages Philippines • Off-shore from • On-shore in 8 the Philippines countries Delivery model • Work-at-home in • Near- /off-shore the US and from 9 countries Canada Share of total 35% Europe revenue Global English 65% Q1 2020 LTM Site locations Serviced geographies 13
Unprecedented WAH mobilization supported by strong purpose Workforce, Percent Transcom’s missions in COVID-19 56% WAH-enabled • Keep our people safe and avoid further WAH 50% virus transmission in society • Continue to service people and keep society up and running 10% 6% Mar 16 Mar 23 Mar 31 14 WAH enabled: number of HC that there is a WAH solution in place for, if forced to move them home "tomorrow“ As of May 6, 62% and 66% of the direct workforce is working at home and enabled to work at home respectively.
60% of staff working from home… … also making our sites safer 15
Key recent appointments Brent J. Welch Aaron Favara Don Berryman Snejana Koleva Member of the Board SVP, Global Accounts & Virtual Work EVP – CCO– North America CFO Mgmt consultant, Uinta Managing Partner, Concept Global EVP – CCO, Sitel (’13-’19) Finance Director, Rock Tools • • • • Consulting (‘17-present) Quarry (’15-’19) President – Americas, Sitel (‘11- Division, Sandvik (‘17-’20) • COO, Teleperformance (‘12-’17) VP, Arise Virtual Solutions (’10- ’13) Senior positions, Sandvik (’13- • • • ’15) ’17) 16
Financial performance
Q1 results subdued by the COVID-19 pandemic • Q1 EBITDA ex EO – 10.1 MEUR, -1.9 MEUR – 7.9%, -0.9pp – Corona impact -1.7 MEUR • Significantly lower EO items: Q4 -1.6 MEUR (-4.0) • Net debt/EBITDA 4.2x (Dec 2019: 4.2x) 1) • Additional 30 MEUR funding secured in the quarter 18 1) Net debt / EBITDA 2020 calculated in line with the definition of Leverage Ratio in the terms and conditions of the outstanding senior secured notes based on an EBITDA of EUR 46.9m (not including non-recurring items in excess of 15% of EBITDA) and Net Interest Bearing Debt of EUR 198.6m (excluding Subordinated Loans and pension liabilities)
Quarter effected by COVID-19, however solid EBITDA considering last year includes divested and exited business Sales and EBITDA development 1) Summary of historical P&L 1) EURm EURm 2016 2017 2018 2019 2020 LTM 2019 Q1 2020 Q1 Sales 586.1 584.0 543.6 541.5 534.1 135.1 127.7 586 584 Cost of sales -458.7 -456.3 -419.3 -399.3 -392.5 -100.5 -93.7 544 541 534 -8.2 -7.7 -10.9 -11.7 -2.1 -2.9 D&A 2) -8.0 D&A leasing -0.4 -0.3 -0.1 -0.1 (11.4%) Gross profit 119.4 119.5 116.7 130.9 129.6 32.4 31.1 9,0% 8,8% % margin 20.4% 20.5% 21.5% 24.2% 24.3% 24.0% 24.3% 7,2% SG&A -96.2 -89.5 -85.1 -79.3 -81.0 -18.7 -20.3 6,5% 5,3% D&A leasing -12.5 -11.8 -3.9 -3.1 Adj. EBITA 1) 23.1 30.0 31.6 39.0 36.9 9.9 7.7 % margin 3.9% 5.1% 5.8% 7.2% 6.9% 7.3% 6.0% 49 47 38 39 31 62.8 60.7 16.0 13.8 Adj. EBITDA 1) % margin 11.6% 11.4% 11.8% 10.8% 2016A 2017A 2018A 2019A 2020LTM Adj. EBITDA excl. 31.2 38.2 39.4 48.8 46.9 11.9 10.1 Sales Adj. EBITDA excl IFRS 16 IFRS 16 Adj. EBITDA excl IFRS 16 % % margin 5.3% 6.5% 7.2% 9.0% 8.8% 8.8% 7.9% 19 1) 2016 figures represents consolidated TWW accounts, 2017-2018 is consolidated at Issuer level, and adjusted for the acquisitions of TWW and Xzakt group. On July 27, 2018, the group acquired Awesome OS which has been consolidated from this date. 2019 and onwards are fully including recording of IFRS 16 Leases, no retroactive calculation done for comparison periods. 2) M&A amortization not included in D&A.
Q1 EBITDA impact due to COVID-19 11,8 1,9 10,1 0,2 9,3 0,6 0,1 0,1 Extra ordinary costs due to COVID-19 EBITDA Impact from Mitigated EBITDA Logistics Employee IT and EBITDA excl. COVID- lost revenue costs excl. NRI and lodging cost facilities incl. COVID- 19 impact due to of staff costs 19 impact absenteeism and lockdowns 20
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