25 April 2014 Transcom Q1 2014 Investor Presentation Johan Eriksson, President & CEO Pär Christiansen, CFO Outstanding Customer Experience
Jan 13, 2015
25 April 2014
TranscomQ1 2014 Investor Presentation
Johan Eriksson, President & CEO
Pär Christiansen, CFO
Outstanding
Customer
Experience
Transcom at a glance
1
3
• 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 agentsTranscom’s business is to
help make sure that our
clients’ customers form
positive perceptions of their
interactions with them.
”
What is Transcom?
4
Transcom in numbers
• 29,000 people…
• …representing more than 100 nationalities
• 62 contact centers, onshore, off-shore and
near shore…
• …in 26 countries
• Delivering services in 33 languages...
• ...to over 400 clients in various industry verticals
• €653.2 million revenue in 2013
• Market cap: SEK 1,525.8 million as at March 31, 2014. Listed on NASDAQ OMX Stockholm
(TWW SDB B and TWW SDB A)
A global player serving clients in many industries
5
North Europe
Iberia &
Latam
North
America &
Asia
Pacific
Central & South
Europe
CMS
30%
25%20%
18%
7%
Communi-
cations
Financial
Services
Retail
Public Sector
Services
61%14%
6%
4%
7%
4%
Healthcare
3%
Other
Business mix
By region By industry
We have an extensive global footprint
Domestic markets
Austria
Netherlands
Slovakia
UK
Germany
Norway
Spain
Australia
Near Shore Locations Offshore Locations
Chile*
Peru*
Colombia*
Philippines*
Tunisia
6
Czech Republic
USA
Canada
Italy
Poland
Sweden
Denmark
Portugal
Switzerland
Croatia
* Developing into domestic/near shore
markets
Canada
Croatia
Estonia
Latvia
Czech Republic
Hungary
Lithuania
What is customer experience and how does Transcom add value?
2
What is customer experience?
• There is a multitude of “touch points” where
a customer can interact with an
organization, e.g. when evaluating,
purchasing, using, or getting support for a
product
• Customer Experience = The sum total of
a customer’s experience with a product, a
service, or a brand
8
“Customer experience is how your customers
perceive their interactions with your company.”
What is Transcom’s role?
9
Transcom’s principal role is to positively impact customer loyalty and, thus, revenue
through making service and support interactions as effortless and enjoyable as possible
How Transcom delivers Customer Experience
10
Multiple ToolsInconsistent Information
High Handle Time Low Productivity
• At the start of this project, we did not have a dynamic and well-designed knowledge
base system that could aid our agents in supporting and resolving our client’s
customers’ issues
• The reference information that our agents had to use was spread out across many
different documents, affecting their productivity negatively:
Client case example – innovative knowledge base for a world-leading consumer electronics company
Process Maps and Decision Trees
Frequently Asked Questions
Simulators Product How To’s
F e a t u r e s B e n e f i t s G a i n s
Transcom developed a robust and dynamic knowledge base system
O n e S t o p O n e S o u r c e
“One-Stop-Shop” repository of support tools and materials
R e p o r t s A n a l y t i c s
Most Viewed Content RatingAgent
FeedbackSite Utilisation Keywords
Powerful analytical capabilities
89.00%
97.00%
80.00%
82.00%
84.00%
86.00%
88.00%
90.00%
92.00%
94.00%
96.00%
98.00%
100.00%
May June July August September
First Call Resolution
First Call Resolution Linear (First Call Resolution)
Our first call resolution is significantly better since the implementation of the system
69%
85%
50.00%
55.00%
60.00%
65.00%
70.00%
75.00%
80.00%
85.00%
90.00%
95.00%
100.00%
Q1 Q2 Q3 Q4
Customer Satisfaction Rating
Customer Satisfaction Rating Linear (Customer Satisfaction Rating)
And we have seen a significant increase in customer satisfaction
Our performance in Q1 2014
3
599.2
631.8
560.2
589.1
554.1
605.6
653.2
2007 2008 2009 2010 2011 2012 2013
6.0%
4.4%
2.2%
0.7%
1.5%
2.7%4.3%
Revenue (€m)
Operating margin*
3.4%
Q1 2014
18
• Efficiency improvements
and continuous focus on
underperforming areas
• Targeted sales efforts
- Growth with existing
clients in new
geographies
- Broadening client
base
Positive progress on turnaround
We are focusing on enhancing Transcom’s performance
* Excluding non-recurring items.
Reported 6.1% revenue decrease due to exit from unprofitable entities and focus on CRM business in prioritized geographies
49.4 48.6
39.6 39.7
33.2 31.4
31.6 28.9
16.611.4
Q1 2013 Q1 201419
Central &
South Europe
Iberia & Latam
North America
& Asia Pacific
North Europe
Change
-1.7%
CMS
Net revenue, Q1 2014 vs. Q1 2013
€m
+0.2%
-5.3%
-8.5%
-31.2%
160.1170.6 • Decrease is due to divestments and
closures in order to exit unprofitable entities and focus on the core CRM business in prioritized geographies
• Negative currency impact: €-4.1m
Q1 2013 Q1 2014
Excluding divested or closed operations and currency effects, revenue increased by 2.8% on a like-for-like basis
20
160.1155.8*
* Like-for-like revenue in Q1 2013 adjusted for currency effects (€-4.1m) and a number of divestments and closures (€-10.6m)
Most significant closures and divestments:
- Sale of CMS Germany
- Closure of Valdivia site in Chile
- Sale of Belgian operation
- Downsizing of Canadian operation
- Demerger of former French subsidiary
Net revenue, Q1 2014 vs. Q1 2013
on a like-for-like basis
€m+2.8%
EBIT Q1 2013 Cost savings programs
Volume & efficiency Expansion costs Other EBIT Q1 2014
EBIT in CRM business benefited from cost savings in North America and North Europe, and improved performance in Central & South Europe
21
1.8
+2.1 -0.2
+0.8 3.4-1.1
EBIT, core CRM business
Q1 2013 vs. Q1 2014
• We are improving our performance in the core CRM business, mainly driven by
North Europe, Central & South Europe, and North America & Asia Pacific
• Temporary drop in performance in Iberia & Latam: Ramp-down in Chile and
simultaneous ramp-up in Colombia
EBIT Q1 2013 Cost savings programs
Volume & efficiency Expansion costs Other EBIT Q1 2014
EBIT comparison including CMS is influenced by sale of right to collect on debt portfolios, and by restructuring cost in Q114*
22
6.1
+2.1 -1.9
+0.35.4
-1.1
* The comparison is influenced by the €3.8 million positive effect as a result of compensation that Transcom received in exchange for
transferring the right to collect on a Swedish debt portfolio to another party in Q1 2013 (corresponding effect in Q1 2014: €0.9 million).
EBIT in Q1 2014 was also impacted by a €0.5 million cost as a result of rationalization and reorganization in CMS. Excluding these
effects, EBIT improved by €2.7 million.
EBIT, Transcom Group
Q1 2013 vs. Q1 2014
EBIT margin increase in core CRM business driven by North Europe, Central & South Europe and North America & Asia Pacific
23
• North Europe: Closure of loss-making Danish
operations, ended unprofitable client contracts,
and higher efficiency in a number of countries
• Central & South Europe: Deconsolidation of
former French subsidiary, and profitable growth
in Italy and Germany
• Iberia & Latam: Lower volumes and efficiency in
Chile and Portugal, ramp-up of volumes at new
site in Colombia, and investments in Spain to
expand with installed client base
• North America & Asia Pacific: New profitable
business won in Asia, and cost savings in North
America
• CMS: Comparison influenced by €3.8m sale in
Q1 2013 of right to collect on Swedish debt
portfolio (corresponding effect in Q1 2014:
€0.9m). Q114 impacted by €0.5m restructuring
cost.
2014
Jan-Mar
2013
Jan-Mar
EBIT margin*
North Europe
Central & South Europe
Iberia & Latam
North America & AP
CRM
CMS
Total
3.1%
5.3%
-1.1%
0.3%
2.3%
18.1%
3.4%
1.3%
2.8%
2.0%
-2.0%
1.2%
26.0%
3.6%
Key priorities in 2014
24
• Increase onshore seat utilization in North America
• Increase focus and accountability
• Focus on creating opportunities for profitable growth, also expanding onshore footprint
• Improve operational performance in the North Europe region
• We have ended a number of unprofitable client contracts
• Greater financial predictability through the implementation of a new agreement with one of our largest clients
• Improve operational performance in Latin America
• Higher costs due to ramp-down in Chile while simultaneously ramping up in Colombia
• Presence in Colombia will support strategy to expand in fast-growing Latin American markets
What will it take for Transcom to return to historical margins?
25
Key performance driver Trend vs. Q1
2013
Q1 2014 vs. Q1 2013
Average Seat Utilization
ratio
88% vs. 89%
Share of revenue generated
offshore
19% vs. 20% (decrease in Chile impacted)
Average Efficiency ratio
(billable over worked hours)
n/a - positive development
Monthly staff attrition n/a – positive development (decrease in staff attrition)
Improvements on four KPIs vs. previous year
Continue improving key performance indicators
• Seat utilization
• Efficiency
• Offshore/onshore split
• Attrition
26
71.075.9
80.786.3
91.194.6 94.4
90.1
17.2
32.138.1
59.3 56.7
49.7
36.2
55.3
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
Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114
Gross debt (€ m) Net debt (€ m) Net debt/EBITDA
• Gross debt decreased by €4.3 million compared to the Q413 level
• Net Debt increased by €19.1m compared to the Q413 level
• Net Debt/EBITDA ratio: 2.40 (1.40 in Q413)
• Financial cost €1.3m (€1.3m in Q413)
Debt & leveraging
4
Going forward– Transcom’s strategic direction
28
Transcom’s brand promise
Outstanding Customer
Experience, driving
revenue and brand
loyalty
”
Transcom’s long-term strategic priorities are informed by these important trends
What we are seeing… Transcom is responding by…
More channels and increasing complexity• Rising interaction volumes with an increasingly
sophisticated customer base
• Social networks are emerging as important
customer channels
• Increasing product complexity
• Developing integrated channel competencies
• Providing more insight due to increasing
customer demands
• Developing analytic platforms and KPIs specific
to customer service via non-voice channels
Business Focus• While price is still an issue, more and more, the
focus is on generating revenue – up-sell/cross-
sell and customer retention – and customer
loyalty
• Sourcing, training and retaining the best agents
to deliver higher levels of customer service
Market• Stagnant growth in mature, Western
outsourcing markets
• Significantly higher growth in emerging markets,
particularly APAC and Latin America
• Seeking to capitalize on domestic opportunities
in developing markets to drive growth and
diversify revenue
• Developing traditional offshore locations as
delivery centers
• Increasing focus on community engagement
30
Growth opportunities
North America and Asia Pacific
• Continue expanding in local markets in Asia Pacific
• Expand onshore volumes in North America
Latin America
• Serving domestic markets and the US, in addition to Spanish clients
North Europe
• Leverage strong position in home market
Central Europe
• Primarily near shore opportunities
• Strong capability in expanding Eastern European markets
Stay up-to-date on Transcom
31
www.transcom.com blog.transcom.com
Thank you!
Questions?