Research Update: Sweden-Based Transcom Upgraded To 'B' On Operational Improvements And Deleveraging; Outlook Stable

Customer relationship management services (CRM) company Transcom TopCo AB (Transcom) has significantly improved its performance in 2021 and 2022, increasing sales 11.7% and 15.1% respectively and expanding its S&P Global Ratings-adjusted EBITDA margins to 11.9% in 2022 from 8.5% in 2020. We forecast Transcom will continue to perform strongly in 2023 and 2024, helped by its focus on the technology and e-commerce sector as well as increased near and offshoring of its services, resulting in deleveraging to about 3.5x by year-end 2024 and positive free operating cash flow (FOCF) of about €35 million. We therefore raised our long-term issuer credit ratings on Transcom Holding AB (publ) and Transcom Topco AB to 'B' from 'B-', as well as our issue rating

...- Customer relationship management services (CRM) company Transcom TopCo AB (Transcom) has significantly improved its performance in 2021 and 2022, increasing sales 11.7% and 15.1% respectively and expanding its S&P Global Ratings-adjusted EBITDA margins to 11.9% in 2022 from 8.5% in 2020. - We forecast Transcom will continue to perform strongly in 2023 and 2024, helped by its focus on the technology and e-commerce sector as well as increased near and offshoring of its services, resulting in deleveraging to about 3.5x by year-end 2024 and positive free operating cash flow (FOCF) of about 35 million. - We therefore raised our long-term issuer credit ratings on Transcom Holding AB (publ) and Transcom Topco AB to 'B' from 'B-', as well as our issue rating on the group's 315 million senior secured floating rate notes due 2026 to 'B' from 'B-'. - The stable outlook reflects our expectation of solid sales growth of about 10.5%-11.5% in 2023 and further adjusted margin expansion toward 12.5%,...

Research Update