Btg pactual ceo conference presentation

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Btg pactual ceo conference presentation

  1. 1. CSU CardSystem – 3Q10
  2. 2. CSU: leader in technology and BPO services in Brazil Card base of more than 20 million The largest independent electronic payment processor in Latin America 55% market share among independent vendors Business model: Full BPO (Business Process Outsourcing) for issuers and 20 years of customization focused on acquirers of electronic payment the Brazilian market transactions Market intelligence team to maximize clients’ cardholders base profitability Relaunching of contact center 3,500 workstations providing inbound infrastructure, management and BPO (Customer Care and HelpDesk) and services outbound (Telemarketing and The best and most efficient site Collection) services (Alphaview) in Latin AmericaGross Revenues (last 12 months)(in % of total revenues) R$ 419.3 million 40% 60% 2
  3. 3. Consistent track record of profitable growth Innovation and consolidation Business and client Sustainable of the business model diversification growth 5x EBITDA and 4x Net Revenue Relaunch of CSU Contact Center: new site Entry of Creation of the Launch of solution for Best of the Century Private Equity CSU Institute the acquirer´s market marketing award professional investor R$ 395 Start of Launch of the Contact Center R$ 314CSU: first first Private CSU develops operationsindependent Label cards electronic IPOcard processor voucherin Brazil First company to operate with 3 brands R$ 96 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 50%+ market EBITDA share in 15 years with 15 million cards under management Brazil Net Revenue (in R$ million) 3
  4. 4. Renowned customers in each market segment Net Revenues (last 12 months) Banking (in % of total revenues) Credit Retail & Institutions Manufacturing 12% Banking 35% Convergence 33% Credit Insurance & Institutions Healthcare 11% 9%Insurance & ConvergenceHealthcareRetail &Manufacturing 4
  5. 5. • Brazils electronic payment industry has experienced significant growth in recent years (CAGR 17%+) • The penetration of cards in total spending made by Brazilian households rose from 8% in 1999 to 25% in 2010. It is expected to reach 55% by 2025. Number of Cards (in million of units) & Number of Transactions (in billion of units) Participation of cards in household consumption (% of total) CAGR 04- CAGR 04- 10E 10E 17% 20%700 8,00 628 55%600 565 7,00 514 7.13 6.11 6,00 45%500 453 5.32 38% 388 5,00 4.43400 336 31% 4,00 277 3.70 25%300 222 3.16 3,00 183 2.52200 151 1.94 2,00 1.63100 1.37 1,00 0 0,00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2010 2013 2017 2020 2025 * Source: ABECS 5
  6. 6. Electronic payment chain Money Money Brands Request for Approval Request for Approval Approval Approval Issuers (Banks and Retailers) Acquirers Capture ofMoney Card / Billing Electronic Money Transactions Commercial Transactions Cardholders Merchants 6
  7. 7. CSU offers a full range of services to card issuers • Financial Information • Authorization • Interchange • Information System • Electronic Transaction Processing • Contact Center • Accounting Brands • Processing • Fraud Prevention • Operational Control Issuers(CSU Clients) Acquirers CSU plays a central role CSU CardSystem in Brazil’s electronic • Billing transaction industry • Invoicing • Conflict Resolution • Customer SupportCardholders Merchants 7
  8. 8. • Brazilian acquirer market is under a new regulatory framework: Previous situation Current situation • Two acquirers dominated the • Market is open to competition Brazilian market Antitrust authorities • Exclusivity agreements with Visa forced the end and MasterCard limited of the exclusivity competitiveness agreement as of July’2010 Opportunity • Acquirers generated extraordinary • New operators in Brazils acquirer profits market Number of Acquirers (in units)Net Income and Net Margin and of Transactions (in billion of units)(in USD million and % of revenues) 62.713 771 8.185 700 6.110 45.4% 42.4% 215 105 101 10 0.851 12.7% 2 12 2.7% Cielo Redecard Fidelity Tsys USA Brazil UK MexicoSource: Companies’ Annual Reports Source: BIS, Central Banks and ABECS 8
  9. 9. CSU offers a complete solution for acquirers and merchants New Services • Operation management • Authorization • Billing Brands • Network • Accounting • Processing • Back Office • Information System Issuers Acquirers(CSU Clients) (CSU Clients) • Network Capture (POS) CSU CardSystem • Contact Center • Conflict Resolution • BillingCardholders Merchants 9
  10. 10. Brazilian demand per type of client • Brazilian market estimated at R$ 12 billion in 2011, (in R$ million) with a CAGR of 12/13% p.a. in the upcoming years; Financial Institutions 6.430 • Growth in demand for customer service; Convergence 3.980 Retail 424 • Recognition of those providers best able to meet Manufacturing 355 contracted SLAs; Services 239 Insurance 208 • Continuous growth in collection, telemarketing and Utilities 165 on-site customer services; Government 117 Healthcare 34 • Merger of Dedic into Contax. 0 2000 4000 6000 8000Brazilian demand per type of service Market Share(in % of sales) (in % of sales) Collection Customer Contax Collection Agencies 21,5% 38% Care 23,0% 40% Other Call Atento Centers 18,0% 22% Tivit Other players Teleperfor Dedic 4,5% Telemarketing mance CSU Algar4,0% 7% 15% 2.5% 1,6% 2,7% 10
  11. 11. Growth strategy is supported by a differentiated platform TECHNOLOGY INDEPENDENCE• Flexible, secure and robust PERFORMANCE infrastructure (mainframe) • Independent shareholding• World-class systems and structure with no commercial applications, extensively • Accelerated time to market activity competing with customized for the Brazilian to new clients prospects and clients market • Dedicated commercial teams to • Lower operating costs• Highly qualified team of leveraged by scale gains each business lines professionals • First vendor to receive • Excellent infrastructure and• Innovation and new products, superior operations facilities MasterCard certification to among a complete range of provide services for acquirers solutions • Opportunity for various partnerships and M&A 11
  12. 12. Our strategy prioritizes growth with sustainable profitability Keep expanding Continue investing in in the card issuers technology and software segment: development: organic + inorganic competitive advantage Relaunch market Improve and expand intelligence & CRM contact center/BPO andsolutions and expand increase profitability:commercial approach: self sustainable value added service Consolidate entry as a vendor into the acquiring segment: greenfield growth 12
  13. 13. Main focus in the short term• Tap new market segments, beyond financial institutions• Attract mid-sized banks as funding partners to specific projects• Serve as strategic partners to global players• Successful launch the first project• Second flight in commercial expansion• Serve as strategic partners to global players• Market repositioning with broader range of services• Commercial approach outside CSU´s clients base• Effective turn around of the business unit• Focus on reaching full capacity• New offerings in Collections and Telemarketing 13
  14. 14. Continuous investments and substantial improvement in net debtInvestments(in R$ million) 43.7 46.9 40.6 • CSU continuously invests in its 28.9 21.0 11.4 25.4 24.4 13.9 4.3 21.0 2.2 technological platform a minimum 19.3 15.0 25.9 21.1 29.2 18.8 of 6/7% of net revenues. 2005 2006 2007 2008 2009 9M10 Software OutrosNet Debt and Net Debt/EBITDA(in R$ million and ratio) 109.1 95.0 59.5 55.5 • Significant reduction in 3.2x 21.6 1.5x 16.0 indebtedness over the last 2 years. 0.5x 1.5x 0.7x 0.2x 2005 2006 2007 2008 2009 9M10 14
  15. 15. Consistent recovery in profitability Net Revenues (in R$ million) 395 Recent commercial achievements will present 364 314 318 319 292 major contribution to revenues as of 2Q11. 229 178 134 96 Strong cash generation as measured by EBITDA. EBITDA 2001 2002 2003 2004 2005 2006 2007 2008 2009 9M10 (in R$ million) 79 60 64 61 46 50 34 34 23 17 Net Income and Net Margin (in R$ million and % of net revenues) 2001 2002 2003 2004 2005 2006 2007 2008 2009 9M100,0 6.7% 8,0% 6.8% 5.7% 5.6%0,0 5.1% 18 20 Second year of record net income generation: 4,8% 16 13 1.8% .4.5% 4,0% 10 • Dividend distribution0,0 7 7 7 0,0% • Share buy back program0,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 9M10 • Consistent investments -4,0% -3.9% • Reduction in indebtedness0,0 -5.0% -120,0 -17 -8,0% 15
  16. 16. -> strong and consistent operating performanceCardbase(in million of units) • Track record of cardbase growth, despite punctual 23 clients leave; CAGR 06-09 19 20 • Constant investment in technology and scale lead 26% 16 to higher margins; 11 • Operational leverage gains of scale are shared with clients to increase loyalty and discourage competition. 2006 2007 2008 2009 9M10Gross Revenue Gross Income and Gross Margin(in R$ million) (in R$ million and % of net revenues) CAGR 06-09 CAGR 06-09 17% 253.7 20% 94.3 213.9 189.5 186.6 71.2 67.3 74.9 156.7 159.2 54.4 50.9 43.4% 40.4% 37.7% 36.0% 38.6% 34.4% 2006 2007 2008 2009 9M09 9M10 2006 2007 2008 2009 9M09 9M10 16
  17. 17. -> positioned for profitable growthNumber of Workstations • Top 10 among Brazilian contact centers;(in units) • Important structural changes concluded in 2010 to 4.796 strengthen repositioning; 4.283 4.225 3.494 3.468 • Effective creation of a business unit; • Dedicated sales team: new offerings and expanded prospects base; 2006 2007 2008 2009 3Q10 • Specialized HR professionals: labor intensive activity.Gross Revenue Gross Income and Gross Margin(in R$ million) (in R$ million and % of net revenues) 197.6 174.3 177.2 172.7 132.6 128.4 11.6 9.7 8.1 0.9 2.4 7.8% 7.7% 6.7% 0.5% 1.5% 2006 2007 2008 2009 9M09 9M10 -3.2% -5.4 2006 2007 2008 2009 9M09 9M10 17
  18. 18. Consolidated Financial Information(in R$ million and % of net revenues) 2006 2007 2008 2009 9M09 9M10 Net Revenue 317.9 318.6 363.7 394.8 298.4 292.4 Gross Income 46.3 45.5 73.7 106 76.4 82.9 Gross Margin 14.6% 14.3% 20.3% 26.8% 25.8% 28.4% 54.4 50.9 71.2 94.3 67.3 74.9 Gross Margin 37.7% 34.4% 36.0% 40.4% 38.6% 43.4% -8.1 -5.4 2.4 11.6 9.6 8.1 Gross Margin 0.5% -3.2% 1.5% 7.2% 7.8% 6.7% EBITDA 39.2 33.9 64.4 78.9 62.3 61.3 Net Income -16.9 -6.3 9.5 17.9 14.8 19.6 Net Debt 59.5 109.1 95.0 55.5 67.2 16.0 Capex 28.9 46.9 25.4 40.6 31.5 21.0 18
  19. 19. CARD3 is traded at inexpensive levels as compared to peers Net revenue Gross Margin EBITDA Margin Net Margin Company name (US$ million- EV/EBITDA P/E (%) (%) (%) 12M) 2,315.2 72.5% 66.3% 46.5% 6.4 9.2 10,235.7 66.7% 17.6% - - - 1,707.3 64.6% 22.3% 10.9% 9.1 19.4 1,535.2 77.6% 65.7% 55.8% 8.6 9.5 1,712.4 - 28.6% 12.1% 6.7 16.3 Financial Services Average 3,501.2 70.4% 40.1% 31.3% 7.7 13.6 1,383.8 17.1% 14.3% 5.9% 5.1 12.6 2,314.6 39.5% 8.1% 5.8% 9.4 15.6 594.6 25.0% 18.2% 7.3% 10.0 23.5 Contact Center Average 1,431.0 27.2% 13.5% 6.3% 8.2 17.2 229.5 28.8% 20.9% 6.0% 3.7 12.41. Current data: Last 12 months - Last balance sheet and income statement - reference date Jan. 31, 20112. Methodology for calculating EBITDA standardized by Economática 19
  20. 20. Awards and Certifications Award Year and Seal Award Year and Seal 2009 2006 2005 2004 National Teleservices Award 2010 2003 2002 1999 Marketing Best 1998 1997 1996 Grupo Padrão 2009 1995 Ernest & Young – Entrepreneur of the 2002 YearMarketing Best – 20 Years Special Edition 2007 Marketing Man of Brazil and São Paulo 2000 Gazeta Mercantil – Highlights of the 90s 2000Consumidor Moderno magazine – Quality 2007 Standard in Contact Center award Computerworld magazine - 100 Largest 1999 in IT 2007 2006 2005 2004 ADVB - Top of Internet 1999 2003 Marketing Best – Best of the 20th 1999 ADVB – Top of Marketing 2000 (2 categ.) Century 1999 Marketing Best – Best of the Decade 1998 1998 (2 categ.) 1997 1996 Certification Year 2006 PROBARE – Maximum Maturity of ABEMD – Direct Marketing Award 2004 Dec 2009 and Dec 2010 (Recertification) Management – Grade 4 2001 PROBARE – Seal of Ethics 2010 Jan 2001 (9001:1994 version) 2006 Marketing Best – Social Responsibility Jan 2004 and Feb 2007 (9001:2000 2005 ISO 9001 Certification version) May 2010 (ISO 9001:2008 version) 2nd rank in ABRASCA Annual Report 2010 PCI Certification 2010 20
  21. 21. High level of Corporate Governance100% common shares and 44% free floatNovo Mercado (100% tag-along rights; no poison pills)Majority of independent board membersFiscal Council3 members, with 1 appointed by minority shareholdersSolid investor relations cultureInvestment by private equity funds since 1997Well structured internal controlsStock based compensation plan for executivesActive Sustainability Arm (CSU Institute) 21
  22. 22. CSU Executive Board Organizational Chart CEO Chief Financial, IR and CorporateCommercial Director Operations Executive Officer Legal, HR Officer Development CSU CardSystem Director of CSU Contact and Controller Officer 22
  23. 23. Additional Information Mônica Hojaij Carvalho Molina Carlos Montenegro Investor Relations Tel: +55 (11) 2106-3821 E-mail: ri@csu.com.br Web Site: www.csu.com.br/riThis material is the property of CSU CardSystem S.A., and any partial or total reproduction without the Company’s writtenapproval is prohibited. All rights reserved. Opinions expressed in this document are subject to change without prior notice.

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