Q2 2020 Presentation Todays presenter Jonas Dahlberg President - - PowerPoint PPT Presentation

Q2 2020 Presentation

July 21, 2020

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

• Q2 highlights
• Company and strategy
• Financial performance
• Summary

Q2 highlights

• Strong quarter in the midst of the pandemic – Revenue

from continuing business +11%, EBITDA excl NRI +19%

• Transcom more relevant than ever – Strong demand and

continued inflow of new contracts from new and existing clients

• Resilience based on WAH, digital solutions and

diversified footprint – 60% of workforce WAH during Q2

• Production bottlenecks and COVID-related NRIs

tampering off from June – Positive outlook for H2, provided no major COVID resurgence

• Transcom standing stronger than before – Going for

profitable growth through client focus and operational excellence, driven by great culture and leadership

4

Company and strategy

Utilities BFSI Gov & Health- care Media Travel

What we do: outsourced customer relationship management

We are a global customer care provider

• ffering future proof customer facing

concepts delivered by our global team of local specialists… …supporting our clients’ digital agenda by combining our core services with leading digital capabilities and tools… …delivering services in 33 languages to international brands in various industries Core services

Conversational commerce Digital channels Robotic Process Automation Interaction Analytics Chatbots Gamification

Call Chat Email

26,000

customer experience specialists

serving customers via

Services & utilities Commerce & Logistics

Auto- motive Logistics Retail/ e-commerce IT/Tech White- goods

Telco & Cable

Social media Messaging

Telco Cable

6

Serving Western Europe and Global English markets from four continents

7

Europe Global English Markets

• Delivery across

Europe

• 33 languages
• US
• UK
• Philippines

Delivery model

• On-shore in 8

countries

• Near- /off-shore

from 10 countries

• Off-shore from

the Philippines

• Work-at-home in

the US and Canada

Share of total revenue

Q2 2020 LTM

67% 33%

Europe Global English

Site locations Serviced geographies

Digital solutions

• Increased productivity & business resilience
• Improved customer experience
• Increased sales conversion

Diversified footprint

• Flexibility and scalability from more sites
• De-risked footprint - clients’ and Transcom
• Larger talent pool and sourcing capabilities

Work at Home flexibility

• Increased business resilience
• Increased business agility & flexibility
• Larger talent pool and sourcing capabilities

Transcom’s resilience is based on WAH, digital solutions and a diversified footprint

8

Transcom is growing in attractive customer segments

9

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.

Developments during the quarter 6.8% 6.5% 14.6% EBITDA Q2 2020 LTM

Revenue by industry segment, MEUR

130 155 169 206 208 188 208 179 175 Q2 2020 LTM 2018 Telco & Cable 2019 Service & Utilities Commerce & Logistics

544 541 532

• Strong demand in commerce and

logistics from existing clients

• Continued intake of new contracts, of

which some COVID-driven

• COVID-driven delays of tenders and

ramp-ups of new contracts

• Travel and hospitality subsegment at

standstill (<1% of Transcom revenue)

Next phase is about profitable growth – Achieving double digit margins and solid organic growth

10

Client focus Operational excellence Culture and leadership

• Leadership for people performance
• Clear, decentralized accountability

and lean OH

• Culture of client and customer

centricity

• Operational performance

management

• Best practices for productivity,

recruiting, retention and workplace presence

• Client-by-client improvement

approach

• Strengthen market presence

in North America

• Accelerate sales in Europe
• Develop and protect existing clients

Financial performance

Strong quarter in the midst of COVID-19

• Strong revenue growth in continuing business

– Revenue 132.2 MEUR (134.0) – 11% growth, adjusted for INPS exit and divestiture in Spain

• Q2 EBITDA ex NRI +19%

– 11.5 MEUR, +1.8 MEUR – 8.7%, +1.5pp

• NRI: -7.2 MEUR (-3.1)
• Net debt/EBITDA 4.5x (Mar 2020: 4.2x) 1)

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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 45.6m (not including non-recurring items in excess of 15% of EBITDA) and Net Interest Bearing Debt of EUR 206.4m (excluding Subordinated Loans and pension liabilities)

Strong EBITDA and growth on top line, adjusting for last year divested and exited business

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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.

586 584 544 541 532 31 38 39 49 49 5,3% 6,5% 7,2% 9,0% 9,2% 2016A 2017A 2018A 2019A 2020LTM

EURm

Sales

• Adj. EBITDA excl IFRS 16
• Adj. EBITDA excl IFRS 16 %

(11.9%)

Sales and EBITDA development 1) Summary of historical P&L 1)

EURm 2016 2017 2018 2019 2020 LTM 2019 Q2 YTD 2020 Q2 YTD 2019 Q2 2020 Q2 Sales 586.1 584.0 543.6 541.5 532.3 269.1 260.0 134.0 132.2 Cost of sales

• 458.7
• 456.3
• 419.3
• 399.3
• 387.1
• 202.0
• 189.9
• 101.5
• 96.2

D&A2)

• 8.0
• 8.2
• 7.7
• 10.9
• 12.1
• 4.5
• 5.7
• 2.4
• 2.8

D&A leasing

• 0.4
• 0.4
• 0.2
• 0.2
• 0.0
• 0.1

Gross profit 119.4 119.5 116.7 130.9 132.8 62.5 64.3 30.0 33.2 % margin 20.4% 20.5% 21.5% 24.2% 24.9% 23.2% 24.7% 22.4% 25.1% SG&A

• 96.2
• 89.5
• 85.1
• 79.3
• 82.1
• 38.8
• 41.6
• 20.2
• 21.3

D&A leasing

• 12.5
• 12.5
• 6.0
• 6.0
• 2.1
• 2.8
• Adj. EBITA 1)

23.1 30.0 31.6 39.0 38.2 17.6 16.7 7.8 9.0 % margin 3.9% 5.1% 5.8% 7.2% 7.2% 6.6% 6.4% 5.8% 6.8%

• Adj. EBITDA 1)

62.8 63.1 28.3 28.5 12.2 14.7 % margin 11.6% 11.9% 10.5% 11.0% 9.1% 11.1%

• Adj. EBITDA
• excl. IFRS 16

31.2 38.2 39.4 48.8 48.9 21.6 21.6 9.7 11.5 % margin 5.3% 6.5% 7.2% 9.0% 9.2% 8.0% 8.3% 7.2% 8.7%

NRI increasing due to COVID and accelerated transformation efforts

Non-recurring items, EUR millions

LTM By quarter

Q2 NRI EUR -7.2 million

• Of which -3.6 relating to COVID

business continuity cost

• Of which -3.0 relating to Transcom’s
• perational and commercial

transformation

• Of which EUR -0.5 million transactional

NRI totaled EUR 13.2 million for 2020 LTM

Note: FY 2017 is consolidated at Issuer level and full year adjusted for the acquisitions of TWW group and Xzakt group.

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5 10 15 20 25 30 35 40 45 50 16.6 2.2 37.3 7.2 Q2 2017 7.0 6.0 Q1 2017 9.5 Q3 2017 20.0 3.5 Q4 2017 23.8 Q1 2018 34.5 20.6 Q4 2018 4.3 Q2 2018 34.4 Q3 2018 3.6 4.0 32.5 Q2 2019 Q1 2019 15.0 3.1 2.2 Q3 2019 0.8 11.5 0.5 8.4 Q4 2019 1.6 Q1 2020 6.0 Q2 2020 10.1 7.2

Solid cash flow in the quarter

• Q2 operating cash flow

amounted to EUR 13.6 million (4.6)

• Q2 working capital change

amounted to EUR 6.2 million (-7.2)

• Working capital developing

positively – Partly swing of temporary nature, partly tax deferrals enabled by government support programs

15

EURm 2019 Jan – Dec 2019 Q2 YTD 2020 Q2 YTD 2019 Q2 2020 Q2 Profit/loss before tax 2,143

• 3,345
• 7,855
• 2,437
• 6,932

Adjustments for non cash items 33,429 19,220 16,887 12,009 8,817 Net financial items 17,565 8,429 10,373 4,388 6,081 Income taxes paid

• 7,456
• 2,834
• 642
• 2,171
• 516

Changes in working capital 5,684

• 3,819

2,160

• 7,216

6,157 Operating cash flow 51,366 17,651 20,924 4,573 13,606 Investments

• 16,522
• 5,182
• 6,950
• 2,837
• 3,807

Acquisitions/disposals of business, net of cash

• 1,101

5,936

• 6,781

6,540

• 6,781

Other

• 560
• 84
• 3

9

• 29

Cash flow from investing activities

• 18,183

670

• 13,733

3,712

• 10,617

Cash flow from financing activities

• 32,055
• 7,120
• 12,123
• 4,880
• 10,881

Cash flow for the period 1,127 11,201

• 4,933

3,405

• 7,892

Q2 working capital slightly lower

Note: 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.

EUR millions

16

• 120
• 100
• 80
• 60
• 40
• 20

20 40 60 80 100 120 140 160 6,5 8,5 3,5 0,0 3,0 0,5 7,5 7,0 1,5 5,0 1,0 8,0 5,5 2,0 6,0 2,5 4,0 4,5 4.3 6.1 Q3 2018 Q4 2018 Q2 2016 5.4 Q4 2017 Q1 2017 Q1 2019 Q2 2019 6.3 5.3 24 4.7 4.9 Q1 2016 3.0 Q3 2016 Q4 2016 4.0 Q2 2017 Q3 2017 Q1 2018 6.4 5.5 18 Q2 2018 5.3 5.5 30 31 31 26 27 31 22 29 34 25 30 36

6.1 33 Q3 2019 Q4 2019 5.6 30 Q1 2020 5.9 31 3.9 Q2 2020 5.2 28

Summary

• Strong quarter in the midst of the pandemic – LFL revenue

+11%, EBITDA ex NRI +19%

• We are more relevant than ever – And we have a resilient

delivery model

• Our priorities remain – Profitable growth through client focus

and operational excellence, driven by great culture and leadership

Summar ummary

Thank you.