Q2 2019 Presentation Agenda Presenters Company overview - - PowerPoint PPT Presentation

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Q2 2019 Presentation Agenda Presenters Company overview - - PowerPoint PPT Presentation

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August 27, 2019 Q2 2019 Presentation Agenda Presenters Company overview Financial performance Summary Todays presenters Michael Weinreich Jonas Dahlberg Chief Executive Officer Chief Financial Officer Transcom

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Q2 2019 Presentation

August 27, 2019

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Agenda

  • Presenters
  • Company overview
  • Financial performance
  • Summary
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Today’s presenters

Michael Weinreich Chief Executive Officer Jonas Dahlberg Chief Financial Officer

Transcom since June 2019 Previous roles: CFO, Sweco Group (2012 – 2019) President, Sweco Russia (2008 – 2012) Associate Principal, McKinsey (1998 – 2008) Transcom since September 2017 Previous roles: VC Partner, FinLeap (2016 – 2017) CEO, Arvato Financial Services (2009 – 2016)

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Company overview

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About us

200+

International clients

1.5m+

customer interactions

  • n a daily basis

27,000

People, 50 sites, 20 countries

546€M

2019LTM sales

33

Languages spoken

2017

Privately owned since 2017 with Altor as majority

  • wner

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Global presence

20 countries, serving 33 languages in 50 sites

North America +1 000 Work at Home agents Philippines +10 sites delivering

  • ffshore services to

English speaking region Europe 40 European sites 16 countries 30 languages

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ASA

(Media)

Work-at-home

Overview of strategic priorities and development

Other Telco & Cable

43% 65% tms connected!*

(Utilities)

Continued margin expansion (adj. EBITDA margin) Diversify industry vertical exposure (% sales) Cement the ”European platform”

At delisting Target Q2 2019 LTM

Invest to grow ahead of market Nordics, IT, NL, Iberia DACH Top 3-5 Top 10

  • New digital value propositions and brand identity
  • New client centric organizational model
  • Investing in next gen sales capacity and support

Top 20 Deliver cost out program (run-rate)

  • EUR 23m

EUR 33m Client centric Talent and delivery M&A Durrës

(client growth)

Awesome OS

(eCom)

Xzakt

(SME)

  • Standardized way of working
  • Rolled-out new digital recruitment process

75% Adapt US delivery Brick & mortar Nearshore Expand near shore delivery

  • Focus on strengthen leadership teams

Onshore Offshore Continue to invest

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8.4% 5.3%

*) Acquired outside bond group, intended to be incorporated at a later stage
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Key Highlights Second Quarter 2019

  • Doubled the the volume of automated processes for clients – 120 robots going for 20 clients
  • T:Insights analytics platform and T:Buddy agent engagement platforms launched
  • Awarded Best Cloud Implementation by NICE Nexidia for conversational analytics outbound project

Increased focus on innovation

  • Cost reductions realized in line with People, Passion, Performance program
  • Shared services center expanded to Porto
  • Restructuring of Spanish operations

Transformation process well under way

  • Acquisition of Awesome continues to deliver – Strong double digit organic growth – Awesome Europe first

client successfully launched from Belgrade

  • New clients in profitable and high growth segments – Retail/ecommerce, financial services, logistics, and

energy/utilities

  • Continued investements in offshore and nearshore capabilities – Expansion of site in Elblag, Tunis

Organic growth to support strategy

  • Acquisition of Asa Informationsdienste integrated
  • Transcom NA certified COPC Customer Experience Standard for Work-From-Home Technical Support
  • 2019 Platinum Contact Center Award for Best Employee Experience Strategy

Strengthened

  • rganization

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Key financials

Key financials1) Sales breakdown Q2 LTM 2019

Sales by segment Sales by client vertical

Note: 2015–2016 figures represents consolidated TWW accounts adjusted for EO items and D&A, FY 2017 is consolidated at Issuer level, adjusted for EO items and D&A and full year adjusted for the acquisitions of TWW group and Xzakt group. 2018 is adjusted for full effect of the acquisition of Awesome group. 2019LTM includes Latin America until Feb 2019 (3.6M Sales and -0.4M EBITDA). Group total sales growth adjusted for discontinued/divested operations , Adj. EBITDA margin calculated as Adj. EBITDA/Total sales.

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20% 15% 14% 13% 12% 10% 6% 5% 2% 2%

Telecom Retail Gov & Healthcare Media Financial Services Cable Consumer goods Logistics Energy Other

33% 66% 1%

English Speaking Latin America Europe

2 4 6 8 10 12 14 100 200 300 400 500 600 700 6.5% 546 5.2% 2015A 5.3% 2018 7.9% 2017A 2016A 8.4% 2019LTM 557 627 586 584
  • Adj. EBITDA (%)
Sales from discontinued/divested operations Sales from acquired operations Sales adj. for discontinued/divested operations
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Financial performance

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Solid improvement of financials

  • Improved EBITA: Q2 EBITA ex EO
  • 7.8 MEUR, +2.7 MEUR
  • 5.8%, +1.9 pp
  • Significantly lower EO items: Q2 -3.1 MEUR (-21.0)
  • Improved operating cash flow: H1 17.7 MEUR (2.7)

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Continued improvement of profitability

627 586 584 557 546 32 31 38 44 46 5,2% 5,3% 6,5% 7,9% 8,4% 2015A 2016A 2017A 2018A 2019LTM

EURm

Sales

  • Adj. EBITDA
  • Adj. EBITDA %
(11.1%)

Sales and EBITDA development 2) Summary of historical P&L

EURm 2015 2016 2017 2018 2019 LTM 2018 H1 2019 H1 2018 Q2 2019 Q2 Sales 626.5 586.1 584.0 557.2 546.3 281.6 270.7 135.2 134.0 Cost of sales
  • 492.7
  • 458.7
  • 456.3
  • 424.3
  • 411,0
  • 216.9
  • 203.6
  • 104.7
  • 101.5
D&A1)
  • 8,9
  • 8.0
  • 8.2
  • 8.5
  • 8.9
  • 4.2
  • 4.6
  • 2.0
  • 2.4
Gross profit 125.0 119.4 119.5 124.3 126.5 60.5 62.5 28.5 30.1 % margin 19.9% 20.4% 20.5% 22.3% 23.1% 21.5% 23.1% 21.0% 22.4% SG&A
  • 101.6
  • 96.2
  • 89.5
  • 88.7
  • 89.6
  • 44.4
  • 45.4
  • 21.6
  • 22.7
  • Adj. EBITA
23.4 23.1 30.0 35.6 36.9 16.1 17.1 6.9 7.3 % margin 3.7% 3.9% 5.1% 6.4% 6.8% 5.7% 6.3% 5.1% 5.5%
  • Adj. EBITDA
32.3 31.2 38.2 44.1 45.7 20.2 21.7 8.9 9.7 % margin 5.2% 5.3% 6.5% 7.9% 8.4% 7.2% 8.0% 6.6% 7.3%
  • Adj. EBITDA
  • incl. IFRS 163)
60.6 28.4 13.1 % margin 11.1% 10.5% 9.8% 1) M&A amortisation not included in D&A. 2) 2014 – 2016 figures represents consolidated TWW accounts, 2017-2018 is consolidated at Issuer level, and adjusted for the acquisitions of TWW and Xzakt group, 2018 is also adjusted for full effect of the acquisition of Awesome group. 3) The change of recording leases, IFRS 16 Leases, have an adjusted EBITDA effect in LTM 2019 of 14.9mEUR (margin 11.1%)

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Our transformation program (PPP) delivers – On track to meet or exceed 33 MEUR target

Identified areas Target Identified today Realized 20171) Realized 20182) Realized Q2 20192) Status English speaking segment EUR 12.3m EUR 14.2m EUR 5.0m EUR 10.8m EUR 12.5m Continued cost reductions through administration and HR efficiency increases and transfer to Shared service centers Europe segment EUR 10.6m EUR 12.0m EUR 6.0m EUR 8.4m EUR 11.0m Continued headcount reduction through delayering and transfer of services to Shared service centers Central functions EUR 10.2m EUR 6.0m EUR 0.0m EUR 1.8m EUR 2.3m Continued headcount reductions in HR, IT and operations Investments EUR -1.5m EUR -2.3m Investment in sales, innovation, RPA, digitalisation and in Centres of Excellence for HR and Operations Total EUR 33.1m EUR 32.2m EUR 11.0m EUR 19.5m EUR 23.5m

1) Realized 2017 was the annualized savings decided in 2017. 2) Realized accumulated annualized effect.

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E/O items trending downwards

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5 10 15 20 25 30 35 40 45 50 3.1 7.2 9.5 2.2 38.0 16.6 Q1 2017 7.0 35.6 Q2 2017 Q3 2017 20.0 3.5 Q4 2017 24.0 Q3 2018 6.3 Q1 2018 21.0 Q2 2018 35.5 4.7 15.4 3.6 Q4 2018 33.4 4.0 Q1 2019 Q2 2019 2.2

Non recurring items, EUR millions

LTM By quarter

Q2 non recurring items totalled EUR 3.1 million

  • Of which EUR 4.7 million operational
  • Of which positive EUR 1.6 million

transactional Q2 E/O mainly related to the continued restructuring of the Spanish operations Transactional items including divestiture of part

  • f Spanish operations

Transactional items including EUR 3.3 million of divested goodwill, i.e., non-cash impact Cash impact of Q2 E/O +0.2 MEUR

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Solid H1 operational cashflow

  • H1 operational cash flow

EUR 17.6 million (2.7)

  • Q2 operational cash flow

slightly below LY, impacted by working capital fluctuation

  • Q2 NWC fluctuation within

normal variations

EURm 2018 2018 H1 2019 H1 2018 Q2 2019 Q2 Profit/loss before tax

  • 32 226
  • 30 164
  • 3 345
  • 21 813
  • 2 437

Adjustments for non cash items 30 050 18 696 19 220 15 853 12 009 Net financial items 19 674 11 780 8 429 4 209 4 388 Income taxes paid

  • 2 288
  • 1 301
  • 2 834
  • 1 026
  • 2 171

Changes in working capital

  • 12 716

3 677

  • 3 819
  • 2 774
  • 7 216

Operating cash flow 2 495 2 688 17 651 5 596 4 573 Investments

  • 8 803
  • 3 415
  • 5 182
  • 1 974
  • 2 837

Acquisitions/disposals of subsidiaries, net of cash

  • 34 033
  • 5 936
  • 6 540

Other 1 048 99

  • 84
  • 85

9 Cash flow from investing activities

  • 41 788
  • 3 316

670

  • 2 059

3 712 Cash flow form financing activities 34 072 3 017

  • 7 120
  • 4 970
  • 4 880

Cash flow for the period

  • 5 222

2 389 11 201

  • 1 433

3 405

Note: 2014 – 2016 figures represents consolidated TWW accounts, FY 2017-2018 is consolidated at Issuer level, adjusted for EO items and D&A and full year adjusted for the acquisitions of TWW and Xzakt group, 2018 is also adjusted for full effect of the acquisition of Awesome group. Please refer to Supporting financials in IM. 1) Operating cash flow excludes change in provisions, result from disposal of business, non-cash adjustments and income taxes paid and includes adjusted EBITDA, change in NWC and operational capex (excluding M&A).

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Q2 operational cash flow impacted by higher NWC – Within normal variations

Note: 2014–2016 figures represents consolidated TWW accounts, 2017-2018 figures are consolidated at Issuer level. Q2 2017 and onwards includes the acquisition of Xzakt group. Q3 2018 and onwards, includes the acquisition of Awesome group.

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  • 120
  • 100
  • 80
  • 60
  • 40
  • 20

20 40 60 80 100 120 140 160 6,5 3,5 3,0 7,0 4,5 0,0 5,0 8,5 0,5 5,5 7,5 2,5 1,5 8,0 1,0 2,0 6,0 4,0 Q1 2016 18 Q3 2017 5,4 Q1 2018 4,7 Q4 2016 40 31 6,5 Q1 2015 3,4 Q2 2019 Q2 2015 6,1 4,6 5,4 Q4 2018 Q3 2015 21 4,8 Q4 2015 Q4 2017 4,9 3,0 Q2 2016 Q3 2016 5,4 5,3 24 6,1 Q1 2017 Q2 2017 30 4,3 4,0 36 Q2 2018 5,2 Q3 2018 30 Q1 2019 5,4 31 3,9 30 26 27 31 22 29 34 25 34

Trade receivables NWC % Other liabilities - Current Trade payables Accrued expenses and prepaid income Prepaid expenses and accrued income Other receivables - Current

EUR millions, Percent of LTM revenues

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Summary

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Agile, client centric, global way

  • f working

Shared service centers expanded, W@H COPC certified

Investing in innovation & future tech

More than 120 RPA robots live in 20 international clients

Growth in strategically selected verticals

Sales and pipeline in line with strategy

Clearly identified initiatives for improved profitability

EUR 32.2m identified, 23.5m annualized effect realized by Q2

Complementary M&A strategy

Investments into e- commerce, utilities, media

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Thank you.