Transcom Q1 2014 investor presentation
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Transcom is a global customer experience specialist that provides outsourced customer care, sales, technical support, and credit management services. In Q1 2014, Transcom saw a 6.1% decrease in reported revenue due to exiting unprofitable operations, but revenue increased 2.8% on a like-for-like basis. The company's EBIT in the core CRM business benefited from cost savings programs in North America and North Europe. Transcom's strategic priorities are focused on improving key performance indicators like seat utilization and efficiency, capitalizing on growth opportunities in emerging markets, and delivering an outstanding customer experience to drive revenue and brand loyalty for clients.
Transcom Q1 2014 investor presentation
- 1. 25 April 2014 Transcom Q1 2014 Investor Presentation Johan Eriksson, President & CEO Pär Christiansen, CFO Outstanding Customer Experience
- 2. Transcom at a glance 1
- 3. 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 agents Transcom’s business is to help make sure that our clients’ customers form positive perceptions of their interactions with them. ” What is Transcom?
- 4. 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)
- 5. 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
- 6. 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
- 7. What is customer experience and how does Transcom add value? 2
- 8. 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.”
- 9. 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
- 10. How Transcom delivers Customer Experience 10
- 11. Multiple Tools Inconsistent 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
- 12. Process Maps and Decision Trees Frequently Asked Questions Simulators Product How To’s Feat ures B enef it s Gains Transcom developed a robust and dynamic knowledge base system
- 13. One St op One Source “One-Stop-Shop” repository of support tools and materials
- 14. R eport s A nalyt ics Most Viewed Content Rating Agent Feedback Site Utilisation Keywords Powerful analytical capabilities
- 15. 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
- 16. 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
- 17. Our performance in Q1 2014 3
- 18. 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.
- 19. 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 16.6 11.4 Q1 2013 Q1 2014 19 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% 160.1 170.6 • 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
- 20. 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%
- 21. 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
- 22. 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 +0.3 5.4 -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
- 23. 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%
- 24. 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
- 25. 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. 26 71.0 75.9 80.7 86.3 91.1 94.6 94.4 90.1 17.2 32.1 38.1 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
- 27. 4 Going forward – Transcom’s strategic direction
- 28. 28 Transcom’s brand promise Outstanding Customer Experience, driving revenue and brand loyalty ”
- 29. 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. 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
- 31. Stay up-to-date on Transcom 31 www.transcom.com blog.transcom.com LinkedIn