July 21, 2020 Q2 2020 Presentation · Presentation July 21, 2020. Today’s presenter Jonas...
Transcript of July 21, 2020 Q2 2020 Presentation · Presentation July 21, 2020. Today’s presenter Jonas...
Q2 2020Presentation
July 21, 2020
Today’s presenter
Jonas DahlbergPresident & Chief Executive OfficerTranscom 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)
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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
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Company and strategy
Utilities BFSI Gov &Health-
care
Media Travel
What we do: outsourced customer relationship management
We are a global customer care provider offering 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
26,000customer experience specialists
serving customers via
Services & utilities
Commerce & Logistics
Auto-motive
Logistics Retail/ e-commerce
IT/Tech White-goods
Telco & Cable
Social media MessagingTelco Cable
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Serving Western Europe and Global English markets from four continents
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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 revenueQ2 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
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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
206208 188
208 179 175
Q2 2020LTM
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
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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)
12 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
13 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 584544 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 16Adj. 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 millionsLTMBy 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 operational 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. 14
0
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
3.12.2
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
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EURm 2019Jan – 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
020406080
100120140160
6,5
8,5
3,5
0,0
3,0
0,5
7,57,0
1,5
5,0
1,0
8,0
5,5
2,0
6,0
2,5
4,04,5
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
6.45.5
18
Q2 2018
5.3 5.5
30 31 31 26 27 31 22 29 34 25 3036
NWC %
Prepaid expenses and accrued income
Trade receivables
Trade payables
Other receivables - Current
Accrued expenses and prepaid income
Other liabilities - Current
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
Summary
Thank you.