3 q08 results presentation
TRANSCRIPT
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Disclaimer
This presentation may include forward-looking statements about future events or results according to the regulations of Brazilian and international securities and exchange commissions. These statements are based on certain assumptions and analyses by the Company that reflect its experience, the economic environment, future market conditions and events expected by it, many of which are beyond its control. Important factors that may lead to significant differences between actual results and the statements of expectations about future events or results include the company’s business strategy, economic conditions in Brazil and abroad, technology, financial strategy, client business development, financial market conditions, uncertainty regarding the results of its future operations, plans, objectives, expectations and intentions, among others. As a result of these factors, the actual results of the Company may significantly differ from those mentioned or implicit in the statement of expectations about future events or results.
The information and opinions contained in this presentation should not be understood as a recommendation to potential investors and no investment decision should be based on the veracity, currency or completeness of this information or these opinions. No advisors to the company or parties related to them or their representatives will be responsible for any losses that may result from the use or the contents of this presentation.
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Card Market and the CardSystem
Source: Abecs, CSU
Private Label + Credit Market CardSystem
CAGR 05 to 08 19.5% 28.4%
CAGR 07 to 08 19.9% 21.8%
The cards market maintained a constant
and linear growth;
CardSystem’s Private Label and Credit
card bases consistently outperformed the
market growth;
CSU’s CAGR last year was 21.8%,
compared to the market’s CAGR of
19.9%. In the last 4 years average, CAGR
was 28.4% and 19.5%, respectively.
Growth of the Cards Market (ABECS)
End of September - Million
82 96 112 137165
5164
7689
106
2004 2005 2006 2007 2008
Private Label Credit
710,1
11,4
15,6
19
2004 2005 2006 2007 2008
Card Base
CardSystem Card Base Performance
End of September - Million
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CardSystem continues to grow year after year. A total of 5.2 million cards were issued in the past 12 months;
The chart illustrates the growth trend in card issues every quarter. Traditionally, card issues are higher towards the end of the year;
Sales to existing clients at the beginning of 2008, showing the positive scenario for co-branded cards.
CardSystem – Operational Data
Source: CSU
1.0431.119
1.353
1.724
4Q07 1Qq08 2Q08 3Q08
Issue of cards in CSU's base
(quartely issue - million)
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MarketSystem
Operational Data
High-growth market;
Consistent growth in the number of managed accounts;
Porto Seguro’s loyalty program grew above MarketSystem portfolio’s average in
the period.
Source: CSU
1.77 1.84 1.9 1.97 2.042.12
2.34
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08
MarketSystem - Processed Accounts
MarketSystem - Processed Accounts
(million)
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TeleSystem/Credit&Risk
A new decree regulating contact center services. Companies must comply with regulations by December 1, 2008;
TeleSystem is prepared to offer services that comply with the new regulations;
We shut down the Santo André site and transferred theoperations to Alphaville and Recife.
Workstations in operation TeleSystem and Credit&Risk
WS's Credit&Risk WS’s TeleSystem
646 737 758 776 763 619 435
3,331 3,193 3,114 2,546 2,612 3,476 3,445
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08
3,9773,930
3,8723,322
3,375
4,0953,880
São Paulo
Rio de Janeiro
Belo Horizonte
Recife
Barueri
Curitiba
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Santo André Migration Project
30562553
634
R$ 5.0 million spent for closing the
Santo André site and prepare the
Alphaville and Recife sites to which
operations were transferred;
With the consolidation, the company
intends to improve the quality of
services and save R$ 2.4 million per
year;
CSU has contact center operations in
Alphaville, Curitiba, Rio de Janeiro and
Recife.
The company’s DPC is in Belo
Horizonte and the backup site is in the
city of São Paulo.
11.33%
CSU (Consolidated)
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Growth driven mainly by CardSystem andMarketSystem;
Wider range of services rendered to a fewclients increases operational synergies
Economies of scale contribute to increaseGross Margin
18,1%
16,%
Gross Revenue (R$ million) Cost of Services Rendered (R$ million)
Gross Profit (R$ million)
8.8%
90.9
101.2
CSU
69.3
75.5
3Q07 3Q08
15.318.6
CSU
3Q07 3Q08
3Q07 3Q08
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Expenses with migration of contact center units impacted net profit by approximately R$2.5million in the quarter;
The 40% increase in EBITDA is due to the growth in the payment processing and management unit.
14%
General and Administrative Expenses (R$ millions)
EBITDA (R$ million) and EBITDA Margin (%)
Net Result (R$ million)
9.8% 40.8%
CSU (Consolidated)
17.7%
14%
15.617.1
2º Tri/08
3Q07 3Q08
11.9
16.7
1º Tri/08 (0.2)
1.0
2º Tri/08
3Q07 3Q08 3Q07 3Q08
13.7
16.9
15.2 18.2
CSU
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32.5% growth in gross revenue at CardSystem / MarketSystem between 3Q07 and 3Q08, driven by the higher card volumes in CSU’s base and managed accounts;
Gross profit up by 20.1% and EBITDA up by 23.3%
Higher card issues in 3Q08 reduced CardSystem’s gross margin. Cost of issues and dispatch of new cards have narrower margins than other services provided by the unit.
Gross Revenue (R$ thousand) Gross Profit (R$ thousand) and Gross Margin (%)
EBITDA (R$ thousand) and EBITDA Margin (%)
20.1%
23.3%
CardSystem / MarketSystem
32.5%
35.3%38.8%
32.8%35.1%42.0
55.6
CSU3Q07 3Q08 3Q07 3Q08 3Q07 3Q08
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Gross revenue fell by 6.7% between 3Q07 and 3Q08 due to the cancellation of unprofitable contracts at the end of 2007.
Cost of services rendered dropped from R$ 45.4 million in 3Q07 to R$ 42.2 million in 3Q08.
TeleSystem/Credit&Risk
-6.8%
-7.2%
48.9
45.6
45.4
42.2
3Q07 3Q08 3Q07 3Q08
Gross Revenue (R$ million) Cost (R$ million)
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Results improved significantly compared to 3Q07. CSU’s profitability increased, both in terms of Gross Profit and EBITDA, as a result of the restructuring in the Call Center unit.
Workstations in operation in 3Q08 offered products that are either different from or complementary to those offered by our competitors.
The company will maintain strict control over the TeleSystem and Credit&Risk units in order to optimize operations and achieve higher profitability.
Gross Profit (R$ million)
266% n.d.
TeleSystem/Credit&Risk
EBITDA (R$ million)
0.1
0.5
(1.8)
(0.2)
3Q07 3Q08
3Q07 3Q08
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Performance of Financial Indicators
Gross Revenue (million)
EBTIDA CSU (R$ million)
EBTIDA Margin (R$ million)
96.90
101.16
90.9
86.2
88.4
3Q07 4Q07 1Q08 2Q08 3Q08
16.7
15.011.3
11.9
15.8
3Q07 4Q07 1Q08 2Q08 3Q08
14.00% 14.10%18.27%
17.70%17.52%
3Q07 4Q07 1Q08 2Q08 3Q08
EBTIDA (R$ million)
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Results - Units
Gross Revenue (R$ million)
15.26
17.37
13.7013.61
15.42
(0.21)
0.54(0.42)(2.29)(1.83)3Q07 4Q07 1Q08 2Q08 3Q08
CardSystem / MarketSystem TeleSystem / CreditSystem
42.47 45.57
47.03
43.6141.96
55.59
50.01
41.23
46.85
48.91
3Q07 4Q07 1Q08 2Q08 3Q08
CardSystem / MarketSystem TeleSystem / CreditSystem
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Debt and Capex
Debt:
CSU reduced its net debt from R$ 98.0 million to R$ 95.2 million in 3 months;
Reduction in short-term debt and use of the overdraft account;
The company’s debt profile remains comfortable;
Cash generation and excellent working capital management are the main factors for the improved debt situation.
CSU has no debts indexed to the dollar, or derivatives contracts. The company’s debt is in reais and indexed to the interbank (CDI) rate.
Debt - R$ thousand
3Q08 3Q07 2Q08
Short Term Debt 49.7 48.9 47.4
Financing and Debt loan 35.1 25.0 29.7
Leasing 14.6 23.9 17.6 -
Long Term Debt 46.6 76.1 53.3
Financing and Debt loan 38.4 59.2 44.7
Leasing 8.1 16.9 8.6 -
Gross Debt 96.2 125.0 100.6 -
(-) Cash 1.1 3.5 2.7
Net Cash (Debt) 95.2 121.6 98.0
Working Capital
Short Term Working CapitalLeasing
BNDES
Debt Breakdown
(End of the Period– R$ million)
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Debt and Capex
CAPEX:
Investments focused on CardSystem and MarketSystem;
Development and customization of VisionPlus;
Reform of the contingency site;
Preparations at the Alphaville and Recife sites to receive call center operations from the Santo André site;
Debt:
The graph shows the impact of the recent variations in the interbank rate (CDI) on the Company's financial expenses.
100 98
114123
100 96 108 107
100 10390 85
4T07 1T08 2T08 3T08 (***)
Impacto da Política Monetária sobre Custo da Dívida
Dívida Bruta Total - Fechamento CUSTO FINANCEIRO - CDI
CDI (Média Mensal no período)
Capex - R$ million
3Q08 3Q07 Chg. % 2Q08 Chg. %
Systems (SW and HW) 6.2 10.3 -40.0% 4.4 39.7%
Caixa Project 0.1 3.1 -96.6% 0.1 15.4% Other 2.2 1.1 96.6% 0.8 181.0%
Capex 8.4 14.5 -41.7% 5.3 59.9%
4Q07 1Q08 2Q08 3Q08 (***)
Gross Debt
CDI - Average
CDI - Financial Cost
Impact of the Monetary
Policy on Cost of Debt
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CSU Institute
Provides job-oriented training.
CSU carries out the following Socio-Environmental
Responsibility projects:
Environmental Responsibility
Material collected from selective waste collection of the recycling project is
donated to the NGO Reciclar (Recycle), Santo André sanitation company and
the CSU institute.
Centro Crescer Sorrindo (Grow-up Smiling Center)
Crèche for children from low-income communities in Belo Horizonte
Socio-Environmental Sustainability
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Main Strategies
Growth with focus on the card processing unit ;
Rigorous control of operational management and profitability at TeleSystem and
Credit&Risk;
Improve profitability and margins of CSU as a whole.
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Questions ???
Décio Burd
Phones: (55 11) 3030-3821
Email: [email protected]
Site: www.csu.com.br/ri
CSU CardSystem S/A