csu second quarter results
DESCRIPTION
TRANSCRIPT
CO
NF
IDE
NC
IAL
CS
U S
eco
nd
Qu
art
er
Resu
lts
Au
gu
st
/ 2006
Ric
ard
o R
ibeir
o L
eite
Inve
sto
r R
ela
tio
ns
Dir
ect
or
inve
stid
ore
scsu
@csu
.co
m.b
r
2
Co
mp
any
Ove
rvie
w
Th
e P
ro
file
of
3
Lead
ing
Tech
no
log
y S
erv
ices P
rovid
er
In B
razi
l
CardSystem
35.2
%
TeleSystem
48.8
%
Credit&Ris
k15.4
%
MarketSystem
**0.8
%
Reve
nu
e in
2005
R$ 336
mm
CardSystem
74.3
%
TeleSystem
20.5
%
Credit&Ris
k4.6%
MarketSystem
**0.8
%
Gro
ss P
rofi
t in
2005
R$
64 m
m
** Reflects
the
MarketSystem
'sresults since its acquisition in
December of 2005.
Th
e l
arg
est
ind
ep
en
den
t a
dm
inis
tra
tor
of
cre
dit
ca
rds
12
.8 m
illio
n c
ard
s*
14
2 m
illio
n p
roc
essed
tra
ns
acti
on
s
44%
of
mark
et
sh
are
Larg
est
in
dep
en
den
t call c
en
ter
in B
razi
l123
mil
lio
n c
all
s
Le
ad
ing
co
lle
cti
on
ser
vic
es p
rovi
de
r41
.6 m
illi
on
co
lle
cti
on
co
nta
cts
Le
ad
ing
lo
yalt
y p
rog
ram
s
man
ag
em
en
t2
.7 m
illio
n m
an
ag
ed
acco
un
ts
* It
includes cards of theCaixa Econôm
ica Federal contract
4
CS
U I
s T
he
Backb
on
e O
f T
he C
red
it C
ard
B
usin
ess O
f It
s C
lien
ts
�A
uth
ori
zati
on
�C
ard
Iss
ua
nce
�B
illi
ng
�C
usto
mer
Su
pp
ort
/ C
all
Ce
nte
r
�C
red
it a
na
lys
is a
nd
p
roces
sin
g�
Co
lle
cti
on
s�
Pro
cess
ing
�O
pera
tio
nal
Co
ntr
ol
�D
ata
exch
an
ge
�F
rau
d P
reve
nti
on
�P
urc
has
e�
Wit
hd
raw
al
CR
ED
IT C
AR
D B
RA
ND
Issu
ers
AC
QU
IRE
R –
NE
TW
OR
K COMM
ER
CIA
L
ES
TA
BL
ISHM
EN
T
Other
CA
RD
HO
LD
ER
CS
UP
rovi
des
its
Clie
nts
aF
ull
y O
uts
ou
rced
So
luti
on
to
Card
Ad
min
istr
ati
on
5
Ou
r Excellen
ce I
n C
red
it C
ard
Ad
min
istr
ati
on
F
oste
red
Oth
er
Lead
ing
Bu
sin
ess U
nit
s
Sys
tem
s d
evel
op
men
t/
Imp
lem
enta
tio
n
Car
ds
Is
suan
ceT
ran
sact
ion
P
roce
ss
Fu
ll S
erv
ice
Cre
dit
an
d
Co
llec
tio
n
anal
ysis
Cu
sto
mer
Su
pp
ort
Lo
yalt
y P
rog
ram
s
�N
ew b
usi
nes
s o
pp
ort
un
itie
s/ cross
-selling
�L
ow
er
cost
s fr
om
sca
le g
ain
s
�H
igh
switching
cost
Fra
ud
P
reve
nti
on
Op
erat
ion
al
Co
ntr
ol
Div
ers
ific
ati
on
bro
ug
ht
us
:
Inte
rch
an
ge
6
Very
Att
racti
ve In
vestm
en
t O
pp
ort
un
ity
Att
racti
ve In
du
str
y G
row
th
Fu
nd
amen
tals
Market
Lea
der
ship
Seaso
ned
Man
agem
ent
Team
Str
on
g G
row
th P
rosp
ects
Div
ers
e P
rem
ium
C
lien
t P
ort
folio
wit
h Exce
llen
t R
elat
ion
ship
Tra
ck R
eco
rd
Imp
ressi
ve G
row
th In
All
F
inan
cial
Met
rics
7
Lead
ing
Co
mp
eti
tive P
osit
ion
Am
on
gIn
dep
en
den
t P
laye
rs
Sources: Gazeta
Mercantil,Revista
Época, ABECS
,ABT
/ www. callcenter.inf.br
(200
4) /
SERASA
(2004)
CS
U44%
ED
S9%
Orb
ita
ll*27%
Ce
rte
gy*
20%
Cre
dit
Ca
rd P
roce
ss
ing
Ma
rket
By M
ark
et
Sh
are
Cre
dit
Ca
rd P
roce
ss
ing
Ma
rket
By M
ark
et
Sh
are
To
p 1
0 C
all
Ce
nte
r O
pe
rato
rsB
y M
ark
et
Sh
are
To
p 1
0 C
all
Ce
nte
r O
pe
rato
rsB
y M
ark
et
Sh
are
* Orbitalland Certegybelong to Ita
ú andABN/Bradesco, respectvely.
Tel
eph
on
e’s
Co
mp
anie
s
75%
Ind
epen
den
ts25%
Te
lefu
tura
21%
Te
lep
erf
orm
an
ce
9%
Oth
er
24%C
SU
28%
So
ftw
ay
18%
8
Pre
miu
m C
lien
t P
ort
folio
Wit
h S
tro
ng
His
tori
cal R
ela
tio
nsh
ips
Excellent contract renewal track record
provides a
steady steam
of revenue
9
Co
mp
any
Ove
rvie
w
In
du
str
y
10
Att
racti
ve I
nd
ustr
y F
un
dam
en
tals
To
Cre
dit
Card
s…
Cre
dit
Pen
etra
tio
n
Cre
dit
Pen
etra
tio
n
23.6
28.0
35.3
41.5
47.5
52.5
68.0
1999
2000
2001
2002
2003
2004
2005
CA
GR
18%
CA
GR
18%
Nu
mb
er o
f C
red
itC
ard
N
um
ber
of
Cre
dit
Car
d
Cre
dit
Car
ds
per
‘000
In
hab
itan
ts*
Cre
dit
Car
ds
per
‘000
In
hab
itan
ts* 1
,990
Japan
1,2
57USA
1,200
United Kingdom
83
5Singapore
26
4Brazil
Millions
In 2003
349.8
480.7
62
8.3
874.9
1,1
87.3
2000
2001
2002
2003
2004
Est
abli
shm
en
ts(P
OS)*
Est
abli
shm
en
ts(P
OS)*
CA
GR
36%
CA
GR
36%
* POS
for creditanddebitcards.
Millions
73.0
06/06
Pe
rso
nal
Lo
an O
pe
rati
on
s
98,
198,
5122,6
158,
117
7,1
2002
2003
2004
2005
2006*
R$/Billions
* Balances in
December,
except
June
(2006).
11
59.0
68.0
78.2
2002
200
3200
4
2.0
2.5
3.0
2002
200
3200
4
Sources: Brazilian associationof company/customer relations
( ABRAREC
), CSU.
CA
GR
23%
CA
GR
23%
Market
Rev
enu
eR
$ b
illio
ns
Market
Rev
enu
eR
$ b
illio
ns
…A
nd
th
e C
all
Cen
ter
Ind
ustr
y Exp
eri
en
cin
g
Co
nsis
ten
t G
row
th W
ith
Gre
at
Po
ten
tial
CA
GR
15%
CA
GR
15%
Wo
rks
tati
on
s00
0
Wo
rks
tati
on
s00
0
Ou
tso
urc
ed40%
In-C
om
pa
ny
60%
Ca
llC
en
terM
ark
et
(Wo
rkst
atio
ns)
Ca
llC
en
terM
ark
et
(Wo
rkst
atio
ns)
12
Ele
ctr
on
ic P
aym
en
t M
ea
ns
•CreditCards represent
79%
of the
financial transactions;
•Bradesco
andABN
AMRO
form
eda
joint-venture
and
changed
Certegy
into
Fidelity;
•Fidelity bought Proservice
, a
Ban
k’s back-office
processer;
•Carrefour hassignedwithVisa
;•Ita
ú acquired
Ban
kBoston
;•Bradesco
acquired
Ame
x;•Losango
announcedVisa
Card
, withan
expectation
of 2
million
cardsfor
2007
;•Im
plementation
of the
”multiplopurposecard
Nossa
Caixa
”;•
Migration
of Caixa
Econ
ômica
Federal’s
card
base
in Oct/06.
Cre
dit
an
d C
oll
ec
tio
n
•Credit amount raised0.7
% in
June
;•Insolvency stays
in 40%.
Call C
en
ter
an
d T
ele
mark
eti
ng
•Call center:
outsourced
represents
53%
of the
market;
•Industrygrows
3 times m
ore
thantheeconomy.
Source: ABECS
2006
Bra
zilian
Scen
ary
2006
Tra
nsa
cti
on
s (
Cre
dit
Ca
rds
in
Bil
lio
ns)
69.4
55.9
123.0
151.2
020406080100
120
140
160
1H05
Total 2005
1H06
Total
Estimate/2006
Esti
mate
d A
nnua
l V
aria
tion 2
3%
13
•T
he
Car
d In
du
stry
in B
razi
lis
sti
ll u
nd
erd
evel
op
men
t:
•L
arg
erac
cess
an
dm
ore
peo
ple
usin
gel
ectr
on
icp
aym
ents;
•M
ore
Iss
uer
s;
•M
ore
en
ab
led
issu
ers;
•C
on
seq
uen
t in
crea
seo
f th
e co
mp
etit
ion
am
on
g i
ssu
ers.
Market
2006
Mo
re C
om
pe
titi
on
Imp
rove
men
tsfo
r th
e C
on
sum
ers
•M
ore
tech
no
log
y
•L
arg
er
acce
ss
•G
rea
ter
pu
rch
ase
po
ten
tia
l
•B
ett
er
pro
du
cts
off
er
•M
ean
wh
ile
con
pet
itio
n in
crea
ses:
•T
he
acce
ss t
o t
he
cre
dit
mean
so
f p
aym
en
tare
faci
lita
ted;
•T
he
con
sum
er’s
pu
rch
ase
po
ten
tial
incre
ases;
•T
he
Ind
ust
rykee
ps
reco
veri
ng
.
Summarizing...
14
An
d t
his
eff
ect
s al
read
y sta
rt t
o b
e n
oti
ced
in
th
e m
ark
et:
•T
he
gro
wth
in 2
005 w
asth
ela
rges
to
ne
in t
he
last
5 y
ears
: 27.1%;
•In
2005, 14 m
m n
ew c
ard
s w
ere
issu
ed;
•In
crea
sein
th
ecre
dit
card
use
hab
it:
•M
ore
freq
uen
cy
an
d t
ran
sact
ion
so
f lo
wer
val
ue;
•N
ew s
tab
lish
men
ts;
•In
crea
sein
th
eu
se o
f ca
rd a
s a
cred
itin
stru
men
t;
•P
aym
ent
of
oth
er
bills
an
d s
ervi
ces
wit
hca
rds.
Imp
rove
men
tsto
th
eco
nsu
mer
Ma
rket
deve
lop
men
t
Eco
no
my
reco
very
Mo
re C
om
pe
titi
on
Market
2006
Summarizing
15
Gro
wth
Op
po
rtu
nit
ies
Org
an
icM
arket
Gro
wth
Cro
ss-S
elli
ng
Op
po
rtu
nit
ies
En
tran
ce
inN
ew M
arkets
Acq
uir
ing
New
Clie
nts
& O
uts
ou
rcin
g
16
Fin
an
cia
l In
form
ati
on
Fin
an
cia
l In
form
ati
on
17
Gro
ss R
eve
nu
e (R
$ m
illio
ns)
2005
2004
2003
40
4648564957
64
7668
8387
98
9090
1T2T3T4T1T2T3T4T1T2T3T4T1T2T
Seazo
nalit
y
2006
18
Str
on
g G
row
th T
rack R
eco
rd
41,627
23,
162
25,
347
2003
2004
2005
5,238
5,78
77,421
2,1
492,290
2,6
38
2003
2004
2005
Credit Cards
Private
Label
3,30
8
991
2,096
2003
2004
2005
Ca
rds
bas
e*
(‘000)
11%
7,38
78,077
10,0
59
Wo
rks
tati
on
s*
Bil
lin
g c
on
tac
ts**
(‘000)
CA
GR
17%
CA
GR
83%
CA
GR
28%
19%
* Monthly
average
** Active and
receptive
* Annual average
Source: Company Filings
19
$91.2
$11
8.0
$97.6
2003
2004
2005
Bu
sin
ess U
nit
s’G
ross R
even
ue P
erf
orm
an
ce
Sh
ow
s C
on
sis
ten
t In
cre
ase
Card
Sys
tem
Card
Sys
tem
Tele
Sys
tem
Tele
Sys
tem
$66.4
$10
7.3
$16
3.3
2003
2004
2005
Cre
dit&
Risk
Cre
dit&
Risk
MarketS
yste
mM
arketS
yste
m
$32.3
$41.1
$51.8
2003
2004
2005
2.6
$22.6
$14.9
2003
2004
2005
Source: Company Filings
Full year
prior to
acquisition
$23.
7
R$
MM
R$
MM
R$
MM
R$
MM
CA
GR
14%
CA
GR
27%
CA
GR
57%
20
$51.6
$64,8
1H05
1H06
Bu
sin
ess U
nit
s’G
ross R
even
ue E
vo
luti
on
–1H
05
x 1
H0
6
Card
Sys
tem
Card
Sys
tem
Tele
Sys
tem
Tele
Sys
tem
$78.2
$78.4
1H05
1H06
Cre
dit&
Risk
Cre
dit&
Risk
MarketS
yste
mM
arketS
yste
m
$21.
1$20.5
1H05
1H06
$10.5
1H
05
1H06
Source: CSU.
$16.4
R$
mm
R$
mm
R$
mm
R$
mm
CA
GR
26%
CA
GR
–2%
CA
GR
0.3%
CA
GR
56%
Result before
the
acquisition
21
$30.6
$3
7.0
$42.3
$5
5.3
$6
3.7
200
12002
200
3200
4200
5
$60.3
$46.3
$3
4.2
$22.9
$1
7.0
200
12002
200
3200
4200
5
$96.7
$1
34.4
$1
77.9
$229.4
$3
13.6
200
12002
200
3200
4200
5
Imp
ressiv
e G
row
th In
All
Fin
an
cia
l Metr
ics
Net
Rev
enu
esN
et R
even
ues
EB
ITD
AE
BIT
DA
Source: Company Filings
R$
MM
R$
MM
$6.6
$6.5
$10.2
$12.9
$16.1
200
12002
200
3200
4200
5
Net
Pro
fit
Net
Pro
fit
R$
MM
Gro
ss P
rofi
t G
ross
Pro
fit
R$
MM
CA
GR
37%
CA
GR
34%
CA
GR
20%
CA
GR
25%
22
$2
3.2
$2
5.3
1H0
51H06
$32
,1 *
$22
,6
1H0
51H06
$1
41.
4
$16
7.6
1H0
51H06
Fin
an
cia
l Metr
ics E
vo
luti
on
–1H
05 x
1H
06
Net
Rev
enu
eN
et R
even
ue
EB
ITD
AE
BIT
DA
R$
mm
R$
mm
$4
,0
1H0
51H06
Net
Pro
fit
Net
Pro
fit
R$
mm
Gro
ss P
rofi
tG
ross
Pro
fit
R$
mm
Var
. 42%
Var
. 19%
Var
. 9%
Var
. –73%%
$1
,1*
* E
xcluding IPO
'se
xpenses
23
$1
5.4
$16.5
$2
3.6
$1
8.0
$2
8.4
200
12002
200
3200
4200
5
200
5Pro
Form
aPostIPO
NetDebt
NetDebt/ EBITDA
So
lid A
nd
Pre
dic
tab
le C
ash
Gen
era
tio
n
Source: Company Filings
Solid
and predictable
cash generation
with low
indebtedness
Net
Deb
t* / E
BIT
DA
Net
Deb
t* / E
BIT
DA
R$
MM
R$
MM
Cas
h F
rom
Op
erat
ion
sC
ash
Fro
m O
per
atio
ns
* Bank debt -cash
+ leasing
CA
GR
17%
NetDebt
NetDebt/ EBITD
(0.2
x)
NetDebt
NetDebt/ EBITDA
200
5
$82
,61,4
x
$30
,9
0,6
x
1H06
24
Investm
en
t A
cti
vit
ies Exp
en
dit
ure
s A
nd
Div
iden
d P
ayo
ut
Inve
stm
en
t A
cti
viti
es Exp
end
itu
res
Inve
stm
en
t A
cti
viti
es Exp
end
itu
res
Div
iden
d P
ayo
ut
Div
iden
d P
ayo
ut
R$
MM
Source: Company Filings
$1
1.4
$4.0
$1
1.8
$3.2
$5.6
2001
2002
2003
2004
2005
R$
MM
$4
3.6
$1
5.6
$10.9
$12.5
$9.8
2001
2002
2003
2004
2005
85%
49%
116%
31%
71%
Payo
ut*
* Payout is
calculated as dividend
+interest on shareholder’s e
quity divided by net profit
25
Caixa E
co
nô
mic
a F
ed
era
l
Fonte: CSU
Caixa P
roje
t:
•Adjusted Contract ValueR$ 20
4 m
m;
•Stronggrowthpotential;
•Beginningof monthlyrevenue starting on Out/06;
•Rendering
servicesperioddoes not suffer alteration.
26
•E
nla
rgem
en
t o
f th
e m
arketshare
for
the C
ard
Syste
man
d
Mark
etS
yste
m u
nit
s:
•Im
plementation of theCaixa Pro
ject
(out./06);
•Acquisition of New
Clients
; •Attention to the cards change trend from
Private
Labelto
Branded.
•E
nla
rgem
en
t o
f t
he
pro
fita
bili
tyo
f th
e T
ele
Syste
man
d
Cre
dit&
Risk U
nit
s:
•Action plan e
xecution focused on the enlargement of
business
profitability
of both
units.
Mo
st
Imp
ort
an
t S
trate
gic
Acti
on
s (
2006)
27
Excellen
t P
erf
orm
an
ce A
gain
st
Co
mp
ara
ble
s
36.7%
36.7%
19.2%
19.2%
34.0
%Certegy
7.5%
16.8
%
30.4
%Heartland
38.5
%7.9%
20.0
%FirstData
4.8%
29.8
%
20.8
%Total S
ystem
Svcs
35.0
%27.3
%
22.5
%EuronetWorldwide
39.4
%14.1
%
18.9
%Alliance Data
Systems
23.5
%22.6
%
19.0
%Global P
aym
ents
8.8%
26.7
%
12.0
%EFunds
(9.1
%)
23.9
%
n.m.
Global C
ash
12.7
%21.7
%
12.5
%ICT
Group
23.3
%8.
8%
10.7
%Sykes
6.0%
10.6
%
8.4%
Sitel
8.7%
0.0%
7.3%
Teletech
3.2%
9.0%
7.6%
Techteam
30.1
%7.6%
Peer
Gro
up
Peer
Gro
up
RO
E ‘
05
RO
E ‘
05
Sal
es ‘
05
vs. ‘
04S
ales
‘05
vs. ‘
04E
BIT
DA
Ma
rgin
EB
ITD
A M
arg
in
22.2%
22.2%
9.3%
9.3%
17.9%
17.9%
21.2%
21.2%
14.3%
14.3%
9.0%
9.0%
Financial Processing Outsourcers
Financial Processing Outsourcers Call Centers Call Centers
30.2%
30.2%
28
Su
peri
or
Co
rpo
rate
Go
vern
an
ce
100%
co
mm
on
sh
ares
No
vo M
erca
do
(10
0%
Tag
Alo
ng)
Fre
e fl
oat
of 39%
vo
tin
g s
har
es
Tw
o in
dep
end
ent
bo
ard
mem
ber
s:�
Maílson
Ferreira
da N
óbrega
(Form
er
Minister of
Finance
in Brazil)
�Rubens
Barbosa
(Form
er Ambassador from
Brazil in London and
Washing ton)
So
lid
rel
atio
nsh
ip t
rack
rec
ord
wit
h m
ino
rity
sh
are
ho
lders
�Private
Equity
funds
investment
in 1997
29
Su
peri
or
Co
rpo
rate
Go
vern
an
ce
Au
dit
Co
mm
itte
e an
d I
nte
rnal
Co
ntr
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Web
site
Sec
tio
n f
or
the
inve
sto
rs
Co
mm
un
icat
ion
wit
h t
he
marke
t�Press
releases results
in Portuguese
and English
�Conference Calls
and webcasts in
Portuguese
and
English
Pre
par
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f a
Sto
ck
Op
tio
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rog
ram
fo
r th
e exe
cu
tive
s
Alignment of
interests between administration and
shareholders
30
Sh
are
ho
lder
Co
mp
osit
ion
The controlling grouprepresents61%
of CSU’s
total capital
48,571,5
97 s
hare
s
Sh
areh
old
er
Co
mp
osi
tio
nS
har
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lder
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mp
osi
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n
FR
EE
F
LO
AT
39%
Co
ntr
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61%
31
Co
nclu
sio
n
Co
nclu
sio
n
32
Very
Co
mp
elli
ng
In
vestm
en
t O
pp
ort
un
ity
Att
racti
ve In
du
str
y G
row
th
Fu
nd
amen
tals
Marke
t L
ead
ersh
ip
Seaso
ned
Man
agem
ent
Team
Str
on
g G
row
th P
rosp
ects
Div
ers
e P
rem
ium
Cli
ent
Po
rtfo
lio
wit
h Exc
ellen
t R
elat
ion
ship
Tra
ck R
eco
rd
Imp
ressi
ve G
row
th In
All
F
inan
cial
Met
rics
CO
NF
IDE
NC
IAL
CS
U S
eco
nd
Qu
art
er
Resu
lts
Au
gu
st
/ 2006
Ric
ard
o R
ibeir
o L
eite
Inve
sto
r R
ela
tio
ns
Dir
ect
or
inve
stid
ore
scsu
@csu
.co
m.b
r