2Q11 Earnings Presentation
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2Q11 Earnings Release August 5, 2011
Transcript of 2Q11 Earnings Presentation
2Q11
Earnings Release
August 5, 2011
2
Disclaimer
● This notice may contain estimates for future events. These estimates merely reflect the expectations of the
Company’s management, and involve risks and uncertainties. The Company is not responsible for investment
operations or decisions taken based on information contained in this communication. These estimates are subject to
changes without prior notice.
● This material has been prepared by Multiplus S.A. (“Multiplus“ or the “Company”) includes certain forward-looking
statements that are based principally on Multiplus’ current expectations and on projections of future events and
financial trends that currently affect or might affect Multiplus’ business, and are not guarantees of future performance.
They are based on management’s expectations that involve a number of business risks and uncertainties, any of
each could cause actual financial condition and results of operations to differ materially from those set out in
Multiplus’ forward-looking statements. Multiplus undertakes no obligation to publicly update or revise any forward
looking statements.
● This material is published solely for informational purposes and is not to be construed as a solicitation or an offer to
buy or sell any securities or related financial instruments. Likewise it does not give and should not be treated as giving
investment advice. It has no regard to the specific investment objectives, financial situation or particular needs of any
recipient. No representation or warranty, either express or implied, is provided in relation to the accuracy,
completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute
for the exercise of their own judgment.
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1Q11 Highlights
OPERATING HIGHLIGHTS
• 18.5 bln points issued, a growth of 51.4% versus 2Q10 and of 9.2% versus 1Q11
• 10.9 bln points redeemed, compared to 3.2 bln points in 2Q10 and 9.0 bln points in 1Q11
• Average Breakage rate (12 months) of 23.3%, versus 23.0% in both periods 2Q10 and 1Q11
FINANCIAL HIGHLIGHTS
• Gross Billings of points of R$ 354.6 mln, an growth of 34.3% versus 2Q10 and of 4.3% compared to 1Q11
• Net Revenue of R$ 285.1 mln, compared to R$ 93.5 mln in 2Q10 and R$ 242.0 mln in 1Q11
• Net Income of R$ 81.2 mln, versus R$ 23.1 mln in the 2Q10 and R$ 70.9 mln in 1Q11
(margin of 28.5%)
• Adjusted EBITDA of R$ 81.3 mln, 3% higher than 2Q10 and 8.8% lower than 1Q11
(margin of 24.8%)
7,2 7,6
8,0 8,3 8,6
2Q10 3Q10 4Q10 1Q11 2Q11
125 133 151
166 161
7 7 12 15 19
2Q10 3Q10 4Q10 1Q11 2Q11Accrual Coalition
4
+4.0%
MEMBERS PARTNERSHIPS
#
+19.5% +28.8%
-3.0%
Operating Performance
In millions
23,0% 22,6% 22,6%
23,0% 23,3%
2Q10 3Q10 4Q10 1Q11 2Q11
BREAKAGE RATE (12 MONTHS AVERAGE)
% +30 bps
+30 bps
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NOTE: Some partnerships with bad performance were canceled in 2Q11.
Furniture and
Decoration
Coalition Partnerships Network (members can earn and redeem points)
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Apparel Education Travel Agency Gas Stations Bookstore Magazine
Suscriptions Pay-TV Telecom Hotels Air Travel
Gym
Food
Stock Exchange
e-Commerce Pension Plan Home Centers Groceries Car Rental
Universities
Insurance Beauty and
Healthy
Note: blank slots refer to targeted segments
Drugstore
Group buying
12,2
14,4 16,1
17,0 18,5
2Q10 3Q10 4Q10 1Q11 2Q11
264,0
300,0 325,2
339,9 354,6
2Q10 3Q10 4Q10 1Q11 2Q11
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+9.2% +4.3%
34.3% +51.4%
Points Issued and Gross Billings
POINTS ISSUED GROSS BILLINGS OF POINTS
In billions R$ millions
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Currency Hedge
FUNDAMENTALS
• Multiplus is exposed to
foreign exchange risk as
most of the agreements with
financial institutions are
denominated in USD.
• These partners represented
approximately 70% of
Multiplus’ gross billings in
2Q11.
• The Financial Risk
Policy determines coverage
limits and the list of eligible
financial instruments
5,3 5,3 5,3 5,3 5,2
4,0
3,5 3,3
1,9 1,9
0,6
2,9 2,9 2,9 2,9 3,1
2,5 2,2 2,1
1,3 1,3
0,4 0,6 0,6 0,6 0,6
1,0 1,0 0,9 0,9 0,7 0,7
0,2
3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
R$1,45/USD
R$1,55/USD
R$1,65/USD
SENSITIVITY ANALYSIS
Impact on company’s cash flow (Notional: USD 171.0 mln)
R$ million
POSITION IN JUN 2011 (USD mln)
2011 2012 2013 2014 Total
NOTIONAL 48.0 84.0 37.0 2.0 171.0
PUT* 1.67 1.68 1.74 1.77 -
CALL* 1.78 1.80 1.85 1.87 -
* average strike prices (BRL/USD)
11,1 13,5
32,6
22,2 20,6
2Q10 3Q10 4Q10 1Q11 2Q11
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OPERATING EXPENSES (SG&A)
NET REVENUE
COSTS OF SERVICES RENDERED (COGS)
POINTS REDEEMED
3,2 4,6
7,7 9,0
10,9
2Q10 3Q10 4Q10 1Q11 2Q11
93,5 130,0
205,6 242,0
285,1
2Q10 3Q10 4Q10 1Q11 2Q11
51,2 69,0
132,3 136,2
174,1
2Q10 3Q10 4Q10 1Q11 2Q11
-7.0%
+86.5%
+17.8% +205.0%
+21.7%
+242.8%
+27.8% +240.0%
Financial Performance
In billions R$ million
R$ million R$ million
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ADJUSTED EBITDA
78,9 88,5
59,9
89,1 81,3 82,1
95,0
46,2
103,3
84,7
2Q10 3Q10 4Q10 1Q11 2Q11
Adjusted EBITDA
Adjusted EBITDA with previous periods effects
32,5% 19,9% 32,2% 28,6%
+3.0%
+3.2%
33,8% 15,4% 34,6% 33,2%
EBITDA
R$ millions
Margin
NOTE: “previous periods effects” refer to unit cost and Breakage rate variation effects on
the balance of points to be redeemed in the previous period
-8.8%
-18.0%
24,8% 25,8%
31,2
47,5 41,7
84,6 91,5
2Q10 3Q10 4Q10 1Q11 2Q11
33.4%
Margin
EBITDA
35.0%
+8.2%
+193.5%
R$ millions
32.1% 36.5% 20.3%
23,1
44,5 43,3
70,9 81,2
2Q10 3Q10 4Q10 1Q11 2Q11
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24.7% 21.0%
Margin
NET INCOME
34.2% 29.3%
+14.5%
+250.9%
Net Income and Free Cash Flow
R$ millions
28.5%
304,3 326,6
285,5 259,4
327,7
2Q10 3Q10 4Q10 1Q11 2Q11
+7.7%
R$ million
+26.3%
FREE CASH FLOW TO EQUITY
Note: Excluding dividends and capital reduction effects
R$ millions
Main Long Term Goals
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Sources of Profit
z
Gross Billings of points Costs of rewards
Long Term Target
98%
2%
Current*
Air Tickets
Others
Long Term Target
26%
3%
71%
Current*
TAM
Retail, Industry and Services
Banks
15 to 20% 15 to 20%
Spread Margin between point price and
cost of rewards
Breakage Points expiring without being
redeemed
Interest income on the float Gap between sales and redemptions
of points
Cross-selling of services Outsourcing and CRM
Multiplus sells points …
…and buys rewards
*2Q11 data
Capilarity Project
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Accrual and balance checking at the point-of-sale
• spread the loyalty concept
• speed up the capillarity strategy penetrating new market segments
• increase sales in retail market
Standard rule: 1 Real ($) = 1 Multiplus point
Special rules allowed (such as minimum ticket) adding more value to the partner
Multiplus as one product of Redecard’s sales team
Since June 2011: Pilot at 2 restaurants (Japengo)
August 2011: rollout to 50 merchants in São Paulo
December 2011: rollout to at least 350 merchants in Brazil
CONCEPT
Collect points
here
TIMELINE
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Non-airline tickets redemptions
0,2% 0,2% 0,4% 0,4% 0,4% 0,5% 0,4% 0,5% 0,5% 0,5%
0,8%
2,1%
2,5%
jun/1
0
jul/
10
ago/1
0
set/
10
out/
10
nov/1
0
dez/1
0
jan/1
1
fev/1
1
mar/
11
abr/
11
mai/
11
jun/1
1
Attractive offers to members POINTS REDEEMED IN NON-AIRLINE TICKETS
As % of total points redeemed
OPERATIONAL IN SETUP PROCESS ROADMAP
COALITION AND REDEMPTION PARTNERS
Car rental
Groceries
Entertainment
Restaurants
Beauty
Others
NOTE: it includes points issued before 2010 (TAM’s inventory)
Books
Clothing
Courses
Donations
DVDs
Electronics
Fuel
Hotels
Magazines
Pay-TV
Telecom services
Tickets
