Apimec 2010 presentation
Transcript of Apimec 2010 presentation
CSU CardSystem - 2010
Disclaimer
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This presentation may include forward-looking statements involving expectations about
future events or results in accordance with Brazilian and international securities
regulations. These statements are based on certain assumptions and analyses made by
the Company based on its experience and the economic scenario, as well as on industry
conditions and expected future events, over many of which the Company has no
control. Important factors that could lead to significant differences between actual
results and these forward-looking statements involving expectations about future
events or results include the Company’s business strategy, the Brazilian and
international economic conditions, technology, financial strategy, client developments,
financial market conditions, uncertainty regarding the results from its future activities,
plans, goals, expectations, among others. In view of these factors, the Company’s
actual results may differ significantly from the results stated or implied by these
forward-looking statements.
The information and opinions contained in this presentation should not be construed as
a recommendation to potential investors and no investment decision should be based
on the veracity, timeliness or comprehensiveness of this information or these opinions.
None of the Company’s advisors or related parties or their representatives will be
liable for any losses resulting from the use of or content of this presentation.
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• Rapid industry growth driven by stronger consumption and increased use
of financial services;
• Largest independent processor of electronic payment means in Brazil;
• The opening up of the Acquirer industry in July 2010 created an important
opportunity for CSU;
• Our Contact Center is well positioned to grow and increase profitability;
• Our strategy is supported by an operational platform developed over 20
years and adapted to the needs of the Brazilian market.
CSU is an important investment opportunity in Brazil's electronic
payment means processing industry
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Brazil's card industry has experienced
explosive growth in recent years
277336
388
453514
565628
2004 2005 2006 2007 2008 2009 2010E
210263
309369
444
509
594
2004 2005 2006 2007 2008 2009 2010E
Number of Cards
(million)
Number of Transactions
(million/month)
CAGR 04-10E
15%CAGR 04-10E
19%
Source: ABECS, Central Bank
Brazil's GDP registered a CAGR of 3.6% from 2004 to 2009,
while GDP growth of 7.55% and 4.5% is expected for 2010 and 2011, respectively
Private Label Debit Credit Private Label Debit Credit
Card growth is supported by
strong macroeconomic trends
5
8%
21%
38%42%
1999 2008 2017E* 2008
Card use in household consumption
Brazil USA
Source: ABECS, CPS/FGV based on PNAD/IBGE data * ABECS forecast
Population by consumption level
(% of total)
• The penetration of cards in spending by Brazilian households rose from 8% in 1999 to 21%
in 2008;
• Increased access to banking services in Brazil has been driven by the intense migration
from the "D" and "E" income classes to the "A", "B" and "C" income classes;
• Brazil's higher income levels and increased access to banking services represent a
powerful driver of growth in card use and transaction volume.
47.4%
50.1%
54.3%56.6%
59.6%
65.0%
52.6%
45.7%43.4%
40.4%
35.0%
2004 2005 2006 2007 2008 2009
ABC DE
• Rapid industry growth driven by stronger consumption and increased use
of financial services;
• Largest independent processor of electronic payment means in Brazil;
• The opening up of the Acquirer industry in July 2010 created an important
opportunity for CSU;
• Our Contact Center is well positioned to grow and increase profitability;
• Our strategy is supported by an operational platform developed over 20
years and adapted to the needs of the Brazilian market.
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CSU is an important investment opportunity
in Brazil's electronic payment means processing industry
Electronic payment chain
Issuers
(Banks and Retailers)
Card Holders
Card / Billing
Commercial Transactions
Capture of
Electronic
Transactions
Request for
Approval
Approval Approval
Money Money
Request for
Approval
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Money Money
Brands
(Visa, MasterCard, Amex)
Merchants
Acquirers
CSU offers a full range of services
to card issuers in Brazil
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CSU CardSystem
• Billing
• Invoicing
• Conflict Resolution
• Customer Support
• Authorization
• MIS
• Contact Center
• Accounting
• Processing
• Fraud Prevention
• Operational Control
Brands
(Visa, MasterCard, Amex)
Card Holders
CSU plays a central role
in Brazil’s electronic
transaction industry
• Financial Information
• Interchange
• Electronic Transaction Processing
Acquirers
Merchants
Issuers
(CSU Clients)
54.4 50.9
71.2
94.3
74.9
2006 2007 2008 2009 9M10
Gross Income and Gross Margin(R$/million)
3,014.9
1,741.9 1,688.1
182.2
First Data Fidelity Tsys CSU
Total Revenue and EBITDA Margin(US$ million/2009)
Our Business Model: multiple revenue sources,
high client loyalty and economies of scale
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• We generate the same amount of revenue per card
as the United States, despite the lower transaction
volume;
• Gross margin of First Data is the highest due to the
royalties from Vision Plus, which represent the bulk
of its revenue;
Source: CSU and websites of companies cited.
• Low client turnover
• High-quality services and attractive prices;
• High transition cost;
• Long contracts and high penalties for
terminating contracts.
• CSU's high fixed processing costs give it competitive
costs as market leader;
• We share our competitive costs with our clients to
increase loyalty and limit competition.
16 16 1719
2 1 1 0
2006 2007 2008 2009
Client Turnover(unit)
34.8% 29.5%32.3%
36.2%
37.7% 34.4%36.0%
40.4%43.4%
Number of Clients Clients Turnover
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• Rapid industry growth driven by stronger consumption and increased use
of financial services;
• Largest independent processor of electronic payment means in Brazil;
• The opening up of the Acquirer industry in July 2010 created an important
opportunity for CSU;
• Our Contact Center is well positioned to grow and increase profitability;
• Our strategy is supported by an operational platform developed over 20
years and adapted to the needs of the Brazilian market.
CSU is an important investment opportunity
in Brazil's electronic payment means processing industry
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771700
101215
Cielo Redecard Fidelity Tsys
Net Income and Net Margin in 2009
(US$ million/%)
• Two acquirers dominated the
Brazilian market
• Exclusivity agreements with
Visa and MasterCard limited
competitiveness
• Acquirers generated
extraordinary profits
• Market open to competition
• Several acquirers
With the New Regulations
Antitrust authorities
forced the end
of the exclusivity
agreement
in June 2010 New operators in Brazil's acquirer
market
Source: Companies’ Annual Reports
42.4%45.4%
2.7%12.7%
Source: BIS, Central Banks and ABECS
58.116
5.3227.701
0.8011032 10 12
USA Brasil Reino Unido México
Number of POS Transactions and Number of Acquirers
Número de Transações (bilhões/2008)
Número de Adquirentes
Previous Situation
Acquirer business is undergoing significant changes in Brazil
driven by new regulatory framework
CSU is ready to offer a complete package of processing services
to Acquirers and Merchants
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CSU CardSystem
Acquirers
(CSU Clients)
New Services
• Operations management
• Authorization
• Billing
• Network
• Accounting
• Processing
• Back Office
• MIS
Issuers
(CSU Clients)
Card Holders Merchants
Brands
(Visa, MasterCard, Amex)
• Network Capture (POS)
• Contact Center
• Conflict
Resolution
• Billing
• Rapid industry growth driven by stronger consumption and increased use
of financial services;
• Largest independent processor of electronic payment means in Brazil;
• The opening up of the Acquirer industry in July 2010 created an important
opportunity for CSU;
• Our Contact Center is well positioned to grow and increase profitability;
• Our strategy is supported by an operational platform developed over 20
years and adapted to the needs of the Brazilian market.
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CSU is an important investment opportunity
in Brazil's electronic payment means processing industry
Our Contact Center underwent major changes
and is positioned for profitable growth
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• 9th Largest Contact Center in Brazil;
• Changes concluded in February 2010
• 5 sites closed;
• 1 site opened with lower
operational costs;
• More than 10 contracts
terminated due to poor financial
performance.
• Financial results improved and
continue improving as a result of the
higher capacity utilization – current
focus is on sales efforts.
0.9
-5.4
2.4
11.69.7
8.1
2006 2007 2008 2009 9M09 9M10
Gross Income and Gross Margin(R$ million)
CAGR 06-09
135%
0.5%-3.2%
1.5%
7.7% 7.8%6.7%
-16.3%
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• Rapid industry growth driven by stronger consumption and increased use
of financial services;
• Largest independent processor of electronic payment means in Brazil;
• The opening up of the Acquirer industry in July 2010 created an important
opportunity for CSU;
• Our Contact Center is well positioned to grow and increase profitability;
• Our strategy is supported by an operational platform developed over 20
years and adapted to the needs of the Brazilian market.
CSU is an important investment opportunity
in Brazil's electronic payment means processing industry
Our strategy is supported by an operational platform developed
over 20 years and adapted to the needs of the Brazilian market
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• Our new Vision Plus software was developed over 20 years and has been extensively
customized for the Brazilian market and is the only platform in Brazil that is fully
prepared to handle multiple clients;
• Highly qualified development team and technicians;
• Alphaview Contact Center is state of the art in terms of facilities and its low operating
costs.
Belo Horizonte Back-up site (São Paulo) Alphaview site
Our strategy seeks growth with strong profitability
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Continue expanding
in the card
processing segment
for issuers
Consolidate our entry
into the card
processing segment
for acquirers
Expand the Contact
Center segment while
increasing
profitability
Continue investing in
technology and
software
development
Financial Information
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54.4 50.9
71.2
94.3
67.374.9
2006 2007 2008 2009 9M09 9M10
Gross Income and Gross Margin(R$ million)
156.7 159.2
213.9253.7
189.5 186.6
2006 2007 2008 2009 9M09 9M10
Gross Revenue(R$ million)
Payment transaction services: strong operational performance
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• Rapid industry growth and new clients support
expansion in the company's card base;
• Growth above industry average in past 4 years;
• Our complete range of financial services assures
higher profitability per card;
• Negative variation in 12 months is due to loss of
Banco Nossa Caixa after its acquisition by Banco do
Brasil, which processes internally;
• Competitive costs due to constant investment in
technology and the large card base;
• Scale gains shared with clients to increase loyalty
and discourage competition.
CAGR 06-09
20%
CAGR 06-09
17%
Source: CSU
CAGR 06-09
26%
37.7%34.4%
36.0%40.4%
38.6%
43.4%
11.2%
-1.5%
11.315.6
19.023.2
20.0
4.9
24.9
3T06 3T07 3T08 3T09 3T10
CSU Card Base(million)
Banco
Nossa Caixa
CSU Base
0.9
-5.4
2.4
11.69.7
8.1
2006 2007 2008 2009 9M09 9M10
Gross Income and Gross Margin(R$ million)
197.6174.3 177.2 172.7
132.6 128.4
2006 2007 2008 2009 9M09 9M10
Gross Revenue(R$ million)
4,2834,796
4,2253,494 3,468
2006 2007 2008 2009 3T10
Number of Workstations(thousands)
Contact Center: positioned for profitable growth
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• Changes concluded in February 2010;
• Number of workstations begins to grow once
again;
• Management focused on margin expansion;
• Profitability should increase as capacity
utilization recovers.
• Higher revenue per workstation keeps the unit's
revenue stable, despite the lower number of
workstations;
• Expectations of revenue growth due to focus on
sales efforts;
Source: CSU
-3.2%
0.5%-3.2%
1.5%
7.7% 7.8%6.7%
-16.3%
21.6
59.5
109.195.0
55.5
16.0
2005 2006 2007 2008 2009 9M10
Net Debt and Net Debt/EBITDA(R$ million)
Continuous investment in our software and
substantial improvement in net debt
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• Strong cash generation:
CSU generates sufficient
cash to support its
investment plan (CAPEX),
reduce net debt and make
shareholder payments.
0.5x1.5x
3.2x
1.5x0.7x 0.2x
Source: CSU
19.3 15.0 25.9 21.1 29.2 18.8
24.4 13.9
21.0
4.3
11.4
2.2
43.7
28.9
46,9
25.4
40.6
21.0
2005 2006 2007 2008 2009 9M10
CAPEX(R$ million)
Software Outros
Consolidated Financial Information
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(R$ million) 2006 2007 2008 2009 9M10
Net Revenue 317.9 318.6 363.7 394.8 292.4
Gross Income
Gross Margin
46.3 45.5 73.7 106 82.9
14.6% 14.3% 20.3% 26.8% 28.4%
Processing Services
Gross Margin
54.4 50.9 71.2 94.3 74.9
37.7% 34.4% 36.0% 40.4% 43.4%
Contact Center
Gross Margin
-8.1 -5.4 2.4 11.6 8.1
0.5% -3.2% 1.5% 7.2% 6.7%
EBITDA 39.2 33.9 64.4 78.9 61.3
Net Income -16.9 -6.3 9.5 17.9 19.6
Net Debt 59.5 109.1 95.0 55.5 16.0
Capex 28.9 46.9 25.4 40.6 21.0
Source: CSU
High level of Corporate Governance
Well structured internal controls
Stock option plan for executives Alignment of management's and shareholders' interests
Solid investor relations cultureInvestment by private equity funds since 1997
Fiscal Council3 members, with 1 appointed by minority shareholders
6 independent board members
Novo Mercado (100% tag-along rights)
100% common shares and 44% free float
No poison pills
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Questions?
Investor Relations
Tel: +55 (11) 3030-3821
E-mail: [email protected]
Web site: www.csu.com.br/ir