JUNE JUNE 2017 2017 INVESTOR PRESENTATION INVESTOR PRESENTATION
SAFE HARBOR Certain statements made during the course of this presentation as it relates to SYKES’ business and financial performance are forward-looking. It is important to note that actual results may differ materially from those projected in any such forward-looking statements. Factors that could cause actual results to differ from those projected are identified in the Company’s press releases and filings with the SEC from time to time. Non-GAAP Non-GAAP Financ Financial Measur Measures Non-GAAP income from continuing operations, non-GAAP operating margins, non-GAAP tax rate, non-GAAP income from continuing operations, net of taxes, per diluted share and non-GAAP income from continuing operations by segment are important indicators of performance as these non-GAAP financial measures assist readers in further understanding the Company’s results from operations and how management evaluates and measures such performance. These non- GAAP indicators of performance are not measures of financial performance under U.S. Generally Accepted Accounting Principles (“GAAP”) and should not be considered a substitute for measures determined in accordance with GAAP. Refer to the exhibits in the release for detailed reconciliations. 2
SYKES’ EVOLUTION ($MILLIONS) IPO: 1996 at IPO: 1996 at $18, split $18, split 1977 adj:$8 adj:$8 1996 1977- Founded by John Sykes as • Engineering Staffing Firm 1992- Acquire Sterling, Colorado-based 2000 • Jones Tech. to Enter Call Center Industry Pioneer in leveraging rural delivery in the • U.S. Target tech & comm. verticals to capitalize 2010 • on PC and DSL penetration Enhance fulfillment capabilities to • capitalize on e-Commerce end-to-end Industry leader in leveraging offshore • solution delivery capabilities (particularly Philippines & LATAM as opposed to just India) to Bolt-on and hybrid strategic acquisitions • diversify from tech and comm. verticals into totaling 12 to drive global scale in EMEA • Leverage financial strength to drive financial services while lowering client and differentiation acquisition of ICT Group - vaults revenue concentration base beyond $1 billion, adds new geos, Establish beachheads in healthcare and • Divest non-core assets (SHPS, fulfillment & strengthen existing verticals (FS & Telco) and • transportation verticals localization presence in U.S. 2000-2001) broadens healthcare beachhead John Sykes retires in 2004; Chuck Sykes • Invest in new delivery geographies for the • named CEO EMEA region (Romania & Egypt) Further expansion of offshore delivery • Complete strategic review and exit non- • footprint in Latin America and EMEA to strategic geographies (Spain, Ireland, South capitalize on globalization trends Africa, Netherlands and Argentina) impacted severely by the 2007-2008 global recession Continue accelerating growth through three • Key I Indust stry T Trends & & Driv ivers: ers: and changes in the political landscape bolt-on and strategic acquisitions (including KLA and Apex in 2005 & 2006) • Impact from the recession manifesting in expiration of programs and dissolution of Break into wireless and retail banking De Demand Le Led Gr Growth • client relationships market segments Tech cycle (PCs & Peripherals) Data Table Data Table • • Strategic acquisition of best-of-breed and lift off best-in-class virtual agent customer care Dial-up and DSL penetration provider Alpine Access; Qelp acquisition • Cost R Reduc duction ion & & Glob obalizat alization ion Year Yea Re Revenues rates soar • Acquisition of digital marketing & demand Dot.com bubble implosion & 911 • Some demand volume overflow generation player Clearlink • Cost reduction & pricing pressure First wave of customer care • • Introduction of Do Not Call List 1996 $117 • industry IPOs (SYKES, Teletech, compounds price pressures Vendor ndor C Consolid olidat ation ion, N New D w Delive livery M Mode dels, D ls, Digital & l & Sales les Sitel, APAC, ICT Group, West, Excess capacity in the U.S. & EMEA Telco (Broadband & Wireless) & Financial Services (Credit Cards • RMH, PRC, Telespectrum) • 2000 $604 Some industry consolidation & Mortgages); impacts from regulation of financial inst. • Telemarketing takes-off • Rapid adoption of off-shoring to Exit from non-strategic geos • • Industry-wide rollup • Excess capacity being rationalized in the U.S. as demand India & later Philippines & LATAM • Three largest verticals: 2010 $1,122 • drives further outsourcing backdrop remains choppy Communications, financial Global delivery model takes hold Vendor consolidation address demand destruction and • • services and technology performance consistency Rise & fall of niche offshore delivery • 2017E $1,587 players (PeopleSupport & eTelecare) Product cycle disruption iPad/PCs • Strong overall economic growth At Home platform gains traction • • 2003-2008 Chat gains traction and social garners interest • 2008 recession hits, demand Cyclical vs. secular growth debate continues • • subsides Digital channels and customer journey • Product cycle disruption & Digital marketing and demand generation converging with • • customer care smartphone penetration led by iPhone launch (2007)
SYKES PROFILE Global BPO Focused on Comprehensive Customer Engagement Services • Full Customer Lifecycle from Digital Marketing to Customer Support • Brick & Mortar and At-Home Agent Delivery Capabilities • Founded: 1977 • IPO: April 29, 1996; Two 3-for-2 splits (7-28-96 & 5-29-97) • Locations: 20 countries • 30+ languages • 70+ global centers • 47,900 seat capacity • April 24, 2017: Signed Agreement to Acquire Customer Engagement • Assets of Global 2000 Telecommunications Services Provider Public Listing: (NASDAQ GS: “SYKE”) • 2016 Revenues: $1,460 Million • Healthy Balance Sheet • 4
SYKES’ INVESTMENT CASE Healthy Large Balance Sheet to Addressable Further Market with Enhance Secular Growth Shareholder Backdrop Value Strong Strong Operating Operating Margin Margin Profile ile w with O Oppo pportu rtunitie ities for Further Expan for Fu rther Expansio sion 5
IV. Historical Financials II. Industry Snapshot III. Growth Strategy V. Appendix Overview AGENDA I. 6
Overview I.
TECH + DATA TRENDS IMPACTING INDUSTRIES & COMPANIES GLOBALLY WITH IMPLICATIONS FOR CUSTOMER ENGAGEMENT STRATEGIES….. Rapidl pidly Changin y Changing Consumer Habits Consumer Habits Pace of Change Accelerating Pace of Change Macro-economic Dislocation Macro-economic Dislocation Technol chnology A Adoption/A option/Automation omation Customer Lifetime Value Channel Fragmentation Channel Fragmentation Reputational Risk Reputational Risk Transparency Transparency Network Effects Network Effects Speed & Conveni Speed & Convenience nce Shor t er Pr oduct Cycl es Shor t er Pr oduct Cycl es Cost Pressures & Lower Switching Costs Cost Pressures & Lower Switching Costs Entry Barriers Entry Barriers Accelerating Demographic Shifts & Demogr aphic Shifts & Labor Dynamics Labor Dynamics Globalization Globalization Security Secur ty 8
…LEADING TO A GRADUALLY SHIFTING SERVICE PARADIGM Digital Customer Technology Journey • Awareness • Speed • Interest • Proactive • Consideration • Real-Time • Intent • Data • Evaluation • Personalized • Purchase • Experience • Loyalty • Measurement 9
DIFFERENTIATED FULL LIFE-CYCLE OFFERINGS ADDRESS THE PARADIGM SHIFT Cu Custom stomer Enga Engageme ment Management nagement 10
CORE DELIVERY STRATEGY TO CAPITALIZE ON THE ADDRESSABLE MARKET Global Footprint Addresses Approximately 80% of Global Customer Engagement Market & Demand Generation Extends Presence Across 40 of the 50 U.S. States and Canada UK UK Finland Fi Sweden Swed Delivery Location Denmark De Norway Norwa Customer Location NORD NORDICS • 14 Markets • 20 Delivery Geographies • 15+ Years Experience in Nearshore and 11 Offshore Models
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