TELUS International (Cda) Inc. (TIXT) Earnings Call Transcript & Summary

Ladies and gentlemen, the 2023 TELUS International Annual General Meeting is about to begin. Welcome to the Third Annual Meeting of the Shareholders of TELUS International. I'm Josh Blair, and I am pleased to be your Chair for this meeting. As we look to ensure that we are making ourselves and our company as accessible as possible to all of our shareholders on an effective and efficient basis. We are again having you attend our annual meeting in a virtual format via a live webcast. This environmentally friendly approach allows all our shareholders and appointed proxy holders from any location worldwide to attend, participate and vote at the meeting. Guests are also welcome to attend and listen to our meeting. Now I would like to formally introduce the great people helping me conduct this meeting today. The first is Jeff Puritt, our long-standing President and Chief Executive Officer and a Director on our Board, and of course, a heartfelt champion of our teams and our company's caring culture and customer-centric vision. Also helping me today is Michel Belec, our Chief Legal Officer; and a stellar one at that. Michel will be acting as the Secretary of this meeting. As well, we have Abi Sills with us, our talented Vice President, General Counsel and Assistant Corporate Secretary. Abi will be acting as our moderator for the question period that will immediately follow the completion of the formal items of business and termination of the meeting. Now before we begin, please read the cautionary statement on the screen. Today's meeting will contain forward-looking statements as is typical at these kinds of meetings. These are based on assumptions and subject to risks, including those described in our public filings. Before we proceed with the business of the meeting, let me turn the call over to Jeff, who has a few remarks.

Thank you, Josh, and good afternoon, everyone. 2022 was another fast paced and action-packed year for TELUS International with exciting highlights and achievements amid persistent challenging macroeconomic and geopolitical circumstances. Thanks to the grit and resilience of our highly engaged team members, TELUS International achieved annual revenue growth of 16% on a constant currency basis. Once again demonstrating our ability to adapt in order to deliver solid performance even in the face of headwinds impacting the global economy and its trickledown effect on many businesses regardless of scale, scope or industry. Despite this difficult environment, our team continued to deliver on our commitment to operate a highly profitable business with adjusted EBITDA in 2022, growing at 12% year-over-year with industry-leading margins, confirming our ability to manage that, which is within our control. Notably, in the fourth quarter of 2022, TI announced our intention to acquire WillowTree, a full-service digital product provider with premium front-end design and high-end build competencies. Upon the closing of the transaction completed in January. This acquisition enables us to further elevate and enhance our differentiated end-to-end value proposition in the market and greatly benefit existing and prospective clients. With the addition of WillowTree, we're now even better positioned to support the digital transformation of our parent and anchor client TELUS Corporation. Indeed, TI is already supporting and will continue to enable, amplify and accelerate growth within some of the most exciting areas at TELUS, and this unique relationship offers a meaningful countercyclical strength to TI, especially during uncertain times. While it's still early days in the WillowTree integration, we've already made good progress on back-office alignment and excitingly launched several mid- and longer-term multiyear projects with TELUS as well as progressing incremental opportunities beyond TELUS. All in, we're now an even stronger global team of over 75,000 with 71 delivery centers and design studios operating across 32 countries. Our carefully cultivated client base has now grown to surpass 650 and counting. We've also had a solid start to 2023 with revenue growth of 15% on a consolidated reported basis and 16% in constant currency. And we've continued to grow profitably with our adjusted EBITDA increasing a healthy 9% year-over-year. Our outlook for 2023 was reaffirmed earlier this month, which calls for continued profitable growth and assumes macroeconomic conditions begin to stabilize. Looking longer term, we believe we're at the beginning of our next chapter of growth with disruptive tech like generative AI, augmented and virtual reality applications and the metaverse, having the potential to impact all industries. TI is at the center of these opportunities, working with clients who seek to streamline, optimize and modernize their processes to enable scalable digital solutions and premium customer experiences. In addition to our diversified end-to-end digital capabilities, a key enabler of TI's value creation remains our sustained industry-leading standing as an employer of choice. As demonstrated by our highly engaged team members around the world. In 2022, we once again earned a global engagement score of 80%. Making this the ninth consecutive year of ranking in the top quartile of engagement scores relative to organizations of comparable size and global footprint. To bolster our unique and caring culture, we remain committed to working alongside all our stakeholders to give meaningfully where we live, work and raise our families. In 2022, our passionate team members volunteered more than 75,000 hours and our company donated $500,000 through our 5 TELUS International community boards. We know that healthier, stronger communities are the most powerful renewable resource to fuel profitable growth and our activities in 2022 included 13 TELUS Days of Giving focused on strengthening social infrastructure and environmental stewardship across the globe. Including assembling beehives to house 3.6 million bees in Bulgaria to building our 12th school from the ground up in Guatemala. Our commitment to sustainability and social responsibility isn't just the right thing to do. It's the right thing for business. As a company driven by environmental, social and governance, ESG priorities and principles, TELUS International stands out as a high-value partner for globally disruptive brands as well as an attractive investment for financial stakeholders. Not only is our caring culture a source of resilience during uncertain times. It also unlocks some of the most meaningful opportunities for our team members, clients and shareholders. Think, for instance, of how mitigating bias from AI technology is mission-critical for delivering positive customer experiences on our clients' digital platforms. Thanks to our award-winning commitment to hire, motivate and promote a diverse and talented team, including through inclusive sourcing programs. TELUS International is equipped to develop and deliver cutting-edge AI solutions that have diversity baked in from the start to the benefit of our clients and the online users who count on them to provide safe, inclusive spaces. Last month, we published our first stand-alone sustainability report, delivering on our promise to progress our ESG communications. This year's theme speaks to our commitment to continue unlocking opportunity for all our stakeholders by leading digital innovation and exceptional customer experience, living our values around the world and caring for one another and our planet. If you haven't done so already, I invite you to read our sustainability report available on our website. And if you have any further questions, I encourage you to connect with our Investor Relations team to engage further on this topic. And last, but certainly not least, I'd like to take a moment to thank our shareholders and our Board of Directors. On behalf of our entire TI team, thank you for your unwavering support of TELUS International and your trust in our ability to achieve our ambitious goals. I'll return for some closing remarks at the end of the meeting. But for now, I'll ask Michel to review today's agenda and outline some procedural matters. Michel, over to you.

Thank you, Jeff. Hello, everyone. As outlined on the agenda, in addition to tabling our financial statements, there are 2 matters that we will be voting on. The election of directors and the appointment of auditors. Once both matters have been voted on, we will announce our preliminary voting results, and the business of the meeting will officially come to a close. If you have any comments not related to the business of the meeting, please save them until after the meeting. At that time, we will have a question-and-answer session during which we would be pleased to answer your questions. Let us now turn to the meeting procedures. I'm pleased to advise that we have the necessary quorum. The preliminary scrutineer's report indicates that approximately 99.3% of eligible votes are represented here today at this meeting. I will add the final scrutineers' report to the minutes of the meeting when available. We have also received the declaration of mailing from Computershare, confirming that it sent the notice of today's meeting to all registered holders of TELUS International shares as well as a notice advising them how to view and download our information circular. I am tabling the declaration and will add it to the minutes of this meeting. Now let me turn the call back to you, Josh.

Thank you, Michel. I declare this meeting to be properly constituted. I would like to appoint Stephen Bandola, Representatives of Computershare as a scrutineer for this meeting. Let me now introduce you to the 11 board members standing for election and reelection. All 11 the nominees are attending this meeting virtually. I'm honored to serve as a member of the TELUS International Board, and I have already, of course, introduced Jeff Puritt, our President and CEO and also a member of our Board. In addition to Jeff and I, our other nominees include Mathuri Andrews, Olin Anton, Navin Arora, Darren Entwistle, Doug French, Tony Geheran, Sue Paish, Carolyn Slaski and Sandra Stuart. Each nominee's biographical information can be found in our information circular. I am also pleased to confirm that following this meeting and with the support of your Board of Directors, Darren and I have agreed to serve again as Chair and Vice Chair, respectively, of the Board. Importantly, as was the case last year and despite the fact that he is entitled to compensation, Darren has again requested that the company in TELUS not provide them with any compensation for his service as a member and Chair of the Board should he be reelected. I would also like to note that members of our executive team are attending our virtual meeting today. They provide the leadership and commitment that drive the success of our company day in and day out. And on behalf of the Board, I thank each and every one of you. Now let's proceed with those matters that require a vote at this meeting. Michel, would you please explain the voting procedure that shareholders will be following?

Yes. Thank you, Josh. However, perhaps before we discuss the voting procedure, I would like to table TELUS International's audited annual financial statements for the year ended December 31, 2022, which are included in our 2022 annual report. These were made available to shareholders in February. Additional copies are available by sending an e-mail request to our Investor Relations department at [email protected]. Now back to the voting procedure. So we will be voting on 2 matters at the meeting today, voting on both matters will be conducted by an online poll, which I'll explain shortly. Let me first explain some of the basic features of our virtual meeting platform and how you can vote at our meeting. When you're logged in today, either as a shareholder or a guest, you should see the info screen displayed. Here, you can do information about TELUS International and ask questions related to the business of the meeting. To see our slide presentation while you are listening to the webcast, simply click the broadcast icon or the arrow. We are using the Lumi virtual meeting platform for today's meeting. This platform has online voting for the items of business to be voted on today. Only registered shareholders or validly appointed proxy holders may vote on the items of business. We've asked Nicole Gutierrez as a shareholder to make motions today, and this is simply intended to make the meeting flow more smoothly. How to vote? Well, when the chair declares the poll open, you will see a voting icon on your screen and the resolution wording will be displayed. To vote, select 1 of the voting options. Your response will be highlighted and a confirmation message will appear to show that your vote has been received. To change your vote, simply select the other voting option. If you would like to cancel your vote, just press cancel. In order for your vote to be properly recorded, it's important that you remain connected to the Internet at all times. If you are not connected, your vote will not be recorded. Josh will open a poll on both items of business at the same time, again, being the election of the directors and the appointment of our auditors. This will enable you to have ample time to vote. He'll remind you of your choices for each item. After the last item of business, you will provide a reminder for you to vote if you have not already done so and then he will close the poll. Now let me explain the procedure for asking questions. Again, only registered shareholders or validly appointed proxy holders are permitted to ask questions. Questions related to the business of the meeting should be asked during the meeting. Any other questions are welcome, but should be held until the question period that will immediately follow the completion of the formal items of business and termination of the meeting. When you wish to ask a question, please select the messaging tab and then type your question within the chat box at the top of the messaging screen. Click the arrow button to submit and you should receive a confirmation that your message has been received. If you have a question related to the resolution that is being discussed, please submit it at the time the resolution is being presented. As mentioned, if you have a general question that is not related to the resolutions, please wait until after the business of the meeting is complete to submit your question. Abi Sills will monitor all questions submitted and will relay them to Josh. If there are many similar questions on the same topic, Abi may pick one question or summarize the nature of the questions. Any questions that are personal in nature or related to customer service will be directed to a representative who will be in touch with you by e-mail after the meeting. Also, any questions pertinent to our meeting that cannot be answered today due to time constraints will be answered and posted on TELUS international.com/investors. A transcript of the questions and answers will be available on the Investor Relations sections of our website as soon as practical after today's meeting and will remain online for 1 week. Once shareholders and proxy holders have had a reasonable opportunity to express their views, both for and against the matter, in the interest of keeping to our schedule, Josh may end the discussion even if not everyone has had a chance to speak. We will now turn to the first item of business to be voted on. Josh, over to you.

Thank you, Michel. We'll cover it as always. I now open the polls for both items of business. Please feel free to vote while I am speaking on each of the items. The first voting item is the election of directors for the upcoming year. The Board has set the number of directors to be elected at 11. The 11 nominees I introduced earlier in this meeting represent a cross-section of diverse experience and background. They have all agreed, if elected at today's meeting, to help direct the future of TELUS International for the next year. Further to our advanced notice requirements for director nominations, Michel has advised me that no additional nominations for election as directors were received. May we please have a motion for the nomination of these 11 individuals.

Mr. Chair, my name is Nicole Gutierrez, and I'm a registered shareholder. I move that the 11 individuals identified as nominees in the information circular be elected as directors of the company to hold office for the ensuing year.

Thank you, Nicole. Michel, are there any questions on the election of directors?

There are no questions, Josh.

Thank you, sir. For the election of directors, you will see the names of all 11 nominees. Please scroll down to ensure you have voted on all 11. To cast your vote for a nominee, please select 4, to withhold your vote from a nominee, please select withhold. The next item of business to be voted on is the appointment of auditors for the ensuing year. The recommendation to appoint Deloitte LLP was made by the Audit Committee of your Board and supported by our full Board. May I please have a motion for the appointment of the auditors.

I move that Deloitte LLP Chartered Professional Accountants be appointed as the auditors of the company for the ensuing year at a remuneration to be fixed by the directors.

Thank you again, Nicole. Michel, are there any questions on the appointment of the auditors?

There are no questions on this matter, Josh.

Thank you, Michel. On the motion to appoint the auditors, to cast your vote for the auditor's appointment, please select 4, to withhold your vote, please select withhold. We will now continue with the voting. If you have not already done so, please vote on both items of business. I will give you some additional time to finalize your vote selections. [Voting]

All right. I trust everyone has now voted. So I declare the poll closed on all items of business. Thank you. And through the magic of technology, the scrutineer has tabulated the results, and we can confirm the results. On the first motion, the election of directors, the 11 nominees listed in the information circular are elected and I so declare them elected. On the second motion, the appointment of auditors, Deloitte LLP they indeed have been appointed as the company's auditors at a remuneration to be fixed by the directors, and I so declare them appointed. A copy of the scrutineers' report with the tabulated results will be available upon request after the meeting. The official results of the meeting will be available on our profile on sedar.com, sec.gov and as well, telusinternational.com following today's meeting. Now that we have completed the formal items of business for this meeting, I propose that we terminate the meeting and move on to the question-and-answer session. With the consent of the meeting, I declare the meeting terminated. This officially concludes the meeting. At this time, I invite shareholders and proxy holders to submit their questions online. As Michel noted earlier, you can select the messaging tab and then type your question or comment in the chat box at the top of your messaging screen. Please remember to press the arrow button to send your question. You should receive a confirmation that your question has been received. To ensure there is adequate time for your questions, we will continue the session for 20 minutes or until there are no further questions, whichever comes first. Questions pertinent to the meeting that cannot be answered at this time will be answered and posted on telusinternational.com/investors and will be available for 1 week following their posting. Abi, can we have the first question, please?

Thanks, Josh. But it appears that there are no questions for us to address today.

Okay. Thank you, Abi. A reminder to all on the call that shareholders are always welcome to ask questions by e-mailing our Investor Relations department at [email protected]. Again, that's [email protected]. We appreciate your attendance at TELUS International's 2023 and Third Annual General Meeting. With that, I'm going to turn it over to Jeff for some closing remarks.

Thanks very much, Josh. As some of you may recall at our Investor Day this past February, I shared my aspirational vision for growing the enterprise value of TELUS International tenfold over the next 5 years. While my comments generated some excellent discussion and healthy debate, my objective was to drive home the message that our focus remains on positioning our business and your investment for success over the long term. I certainly believe the 10x aspiration is achievable over that time horizon by driving consistent double-digit organic revenue growth incrementally expanding our margins with continued service mix shift to higher value, more complex engagements, bolstering our capabilities with incremental strategic acquisitions like WillowTree, and harnessing our market leadership within the AI value chain and trust and safety ecosystem, along with continued market share growth in our digital IT segment. Although we can't control the equity markets, I believe the strong fundamentals of our business, our vision, our strategy and most importantly, our track record of successful execution of our strategy will help drive meaningful valuation multiple expansion over the study period. With that, I'd like to once again thank our shareholders and investors for their trust and confidence in our team. as well as to extend my heartfelt thanks to the more than 75,000 TELUS International team members around the world whose infectious energy, passion and commitment for our business for our customers and for our communities is so remarkable. In closing, I'd like to share with you a short video compilation of highlights from our recent TELUS International Days of Giving events which showcases how our caring culture creates value for the benefit of our communities, thanks to the giving hearts and hands of our inspiring team members. Thank you for joining us today. Please feel free to reach out to me directly with any further questions you might have. Goodbye for now. [Presentation]