Institutional Presentation. February 2010

Transcription

1 Institutional Presentation February 2010

2 Success Track Record Foundation Strengthening / Expansion Operating Leverage Gross Revenue (R$ million) and EBITDA Margin (%) 1 Startup of Microsiga Franchising System ISO Argentina 24 Proprietary Technology % 63 Focus on management and results 10.0% % ISO 9001: 2000 (Franchises) % Growth in Margin % Mexico % Acquisition % Midbyte and BCS Acquisitions Acquisition 247 IPO 13.9% CMMI % % Growth: 17x EBITDA 8.5x Revenue ,6% 1, % (1) EBITDA Margin does not include extraordinary expenses. 33x EBITDA 11x Revenue 2

3 Expanded Business Technology TOTVS Structure of Business Model TOTVS Customer Service and Relationship Software Base and New Clients Services Consulting Digital TV Cross-Selling Value-Added Service 2 ERP CRM Business Intelligence Vertical Modules Synergies Core Synergies 62 Full TOTVS Distribution Channels Flexible Technology + 24,800 customers ~ 5,000 direct employees¹ (1) Does not include close to 4,000 employees of our franchises (2) Inclues Infrastructure, HR BPO, Education and Service Desk 3

4 Fundamentals TOTVS Success Equation in 2009 Strong Fundmentals Companies basic need Eletricity, water, telephone and software Macro/Market changes SPED, WC 2014, Olympics 2016, PAC (infra-structure) Brazilian SMB market is 7.0% penetrated according to Gartner Underpenetrated market Latin America Environment and in 2010! 4

5 5 TOTVS Differentials Fundamentals and Business Model Market Technology and Product Distribution Licences Services LICENÇA Maintenance

6 Source: Forecast: Gartner Enterprise Software Markets, Worldwide, , 1Q09 Update 6 Market Latin America growth and TOTVS market share Estimates Market Share LA ERP estimated growth Latin America Asia/Pacific Japan 11.9% 11.5% 10.5% 38.8% 40.9% 40.7% 38.8% A N. America 7.4% Middle East Venezuela 8% Europe Chile 3% 5.0% 2.3% Latin America ERP spend Peru 3% Colombia 2% 15.4% 14.6% 20.4% 18.1% 16.0% 13.2% 12.2% 12.8% 8.4% 7.8% 7.9% 8.6% B C Argentina 10% Brazil 46% 3.7% 3.2% 2.9% 2.5% H09 D Mexico 28% Latest Update Source: IDC Latin America Semiannual ERM Applications Tracker 1H09

7 Market 7 th Worldwide and leadership in Brazil 2008 ERP Worldwide Ranking Market Share Brazil SAP Oracle Sage Infor Microsoft Lawson ,313 1,696 2, % 33.2% 34.4% 34.1% 37.9% 32.0% 41.7% 30.0% A TOTVS 284 Exact Concur Agresso Cegid Epicor IBM Kenexa % 5.6% 8.8% 8.3% 8.5% 5.2% 4.9% 5.5% 3.9% 3.2% 2.9% 2.3% H09 Latest Update B C D E License and maintenance revenues, in USD million Source: Gartner - ERP Software, Worldwide, Source: IDC Latin America Semiannual ERM Applications Tracker 1H09 7

8 TOTVS Business Revenue/Business Model Licences New Customers Base Customers New Licenses Corporate Model Traditional model New Customers Basic Implementation Services Base Customers New Licenses New Modules Consulting and VAS+ Updates Maintenance Upgrades (New version) Corporate model Help-desk new license sold per year No new licenses sold Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 8

9 Market Positioning Users # Companies 1 Penetration Large ~ 24,800 Active customers 64.2% Market Share Medium ~ 38,700 using ERP 468,000 Small 5-50 (revenues of over R$15 million/ year) 468,000 SMB market size Micro 0-5 5,297,000 ~ 8.2 % Penetrated (1) IBGE estimates about the Brazilian market. (2) Source: Gartner Dataquest Insight: TOTVS and the Brazilian SMB ERP Landscape, mar 09 Gartner Estimates % Penetrated 9

10 10 TOTVS Business Diversified client base Client Breakdown by Sector 1 Revenue Concentration 1 Financial 11% Other 12% Industrial 46% 10 Largest 5% Largest 12% Retail 10% Others 83% Services 21% Datasul and RM Sistemas contributed to diversify even more the company s client base (1) Based on TOTVS 2008 revenue. (2) Industrial sector includes: chemicals, food, plastic, rubber and metallurgy industries as well as others.

11 Hard ware O.S. Database 11 Technology Flexible middleware allows product integration ERP User View. Middleware TOTVS Tec flexibility Framework The language is responsible for communicating application commands, as ERP, to the next technological layer, the middleware. ADVPL 4GL Languages Progress ABL.NET The middleware acts as an interpreter and facilitator, translating and connecting the language commands with the framework. TOTVS Tec, the middleware developed by TOTVS, translates and communicates the ADVPL and 4GL languages to a wide range of operating systems, working with any hardware. It provides platform independence and access to the most advanced resources, such as SOA and Web Services. Oracle SQL DB2 Others The middlewares available in the market work based on a framework. TOTVS Tec s framework is developed in C++ and is able to operate on any operating system, giving the customer flexibility in the choice of the technology platform. Unix Linux Windows Others Intel PowerPC (Intel) Others

12 12 Strategy Segment approach Agrobusiness Distribution Logistics +200 sugar cane producers = 50% national crop, 120 grain producers = 1 million hectares Financial Services 22k portfolios, 4k funds, 120k/day consumer credit transactions, R$1.5 tri assets under custody, LA Financial Market Top provider Legal Health Manufacturing +1,110 extractive and processing customers, +1,000 metal and plastic, +1,400 capital goods 50 out of 100 biggest Brazilian and 20 international builders, 450 engineering and design customers +700 Brazilian institutions, +1.5 million students, choice of 67% of the consolidating groups Educational Retail Small Business Construction and Projects Services

13 13 Strategy Segment approach Agrobusiness Distribution Logistics +1,600 wholesaler distributors, 20% of shippers customers also have CRM Financial Services Legal 7 out of 10 top law firms, 10,000 lawyers 12 million lives, +9,700 beds, medical registers to 35 specialties Health Manufacturing +900 department stores, +140 supermarkets, +280 building materials distributors Specific offering : Vitrine, First, Personal Med and 4Transport 2,300 services providers, 400 Utilities providers, 470 travel and passengers transportation Educational Retail Small Business Construction and Projects Services

14 14 Distribution International Market Latin America Gartner: expected growth: 12% CAGR IDC: TOTVS SMB Market Share: 31% in 2007 vs 27% in st company! Products over 17 countries Excluding Brazil: +600 clients, +25 distribution channels, +380 employees. Subsidiaries Franchises Products only Other geographies 1 subsidiary, Portugal 1 franchisees, Angola +30 clients, over 6 countries Source: Forecast: Enterprise Software Markets, Worldwide, , 1Q09 Update

15 4Q08 4Q Abstract Strong Fundamentals Success equation Segment Approach Consistent Results Main challenges Brand Datasul integration Distribution channels Investments in several brands Different processes and politics between Companies Distinct models and politics to each product Strengthening of a unique brand Bigger acknowledgement Unique Corporate ERP Processes unification Negociation with Datasul development franchisees Alignment of 95% of the Brazilian channels Uniformization of the totality of Latin America channels

16 16 Distribution channels Evolution in TOTVS products distribution 2007 Channels divided by brand 77 direct channels 2009 Unification concluded and new channels in Latin America 62 Full TOTVS channels 1H08 Multi-brand channels 39 TOTVS franchisees 2H08 New integration with Datasul +47 new franchisees

17 17 4Q09 and 2009 Results 4Q09 and 2009: Revenue record in all lines Financial Highlights Operational Highlights Historical record in all revenue lines: Net Revenue: organic growth of 14.6% compared to 4Q08, reaching R$ million in 4Q09. The year totaled R$ million, 17% higher than Licenses Revenue: R$ million in 4Q09, 5.4% over 4Q08. Considering 2009, growth of 6,7% over last year, equivalent to R$249.4 million. Services Revenue: growth of 8.7% (4Q09 vs. 4Q08), amounting to R$ million. The progress of 16.6% between 2009 e 2008 corresponds to R$332.1 million in Maintenance Revenue: R$ million. Growth of 18.7% in comparison to 4Q08. The year amounted R$498.8 million or 18.1% superior to Costs and Expenses: lower than revenue s growth between 4Q09 vs. 4Q08 and 2009 vs EBITDA: R$ million in 4Q09, 24.5% over 4Q Margin is 25.2%, 400 basis-point bigger than License sales to 4,823 clients (new + existing clients) in the quarter. 22.9% superior to 4Q08. In the year, 17,754 clients bought new licenses, growth of 22.1% over new clients in 4Q09, growth of 22.7% over 4Q08. Client base amounts approximately 24.8 thousand active clients. Recent Events According to Gartner, TOTVS is already the 7th largest ERP Company in the world. Interest on Capital amouting to R$22.5 million. Acquisition of distribution channels, M2I and M2S in Salvador/BA.

18 Financial Performance In 4Q09, new revenue record is reached... Gross and Net Revenue (R$ million) Q05 4Q06 4Q07 4Q08 4Q09 Gross Revenue Net Revenue Gross Revenue Net Revenue The gross and net revenues reached historical record in both 4Q09 and (1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed. 18

19 Financial Performance...with operational indicators improvement... Clients Served License Revenue (R$ million) 1 New Clients Base Clients 2,591 15,163 2,476 12, ,358 8, The number of served clients reached historical record in both 4Q09 and The licenses revenue reached historical record in both 4Q09 and Such as the mark of 2,591 new clients in the year... (1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed. 19

20 Financial Performance and robust growth of services and maintenance. Services Revenue (R$ million) 1 Maintenance Revenue (R$ million) The services revenue reached historical record in both 4Q09 and The maintenance revenue reached historical record in both 4Q09 and (1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed. 20

21 Financial Performance EBITDA and margin grow leading to guidance review EBITDA (R$ million) 1 Integration gains 25.2% Growth 2009 x % 21.8% 21.2% Net Revenue 17.0% 18.6% Cost of Services (+) R&D 15.9% G&A (+) Management fees 5.5% Selling expenses Licenses Costs -15.3% 7.3% Margem EBITDA New guidance 2 : EBITDA margin from 27% to 30% between 2013 and 2016 (1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed. (2) To complete information about the margin EBITDA guidance update. consult the 4Q09 Earnings Release. 21

22 Financial Performance Revenue Breakdown Gross Revenue (R$ million) % % % 24.6% 51.6% % 27.3% 48.7% 23.3% 29.4% 47.3% 30.3% 44.9% 30.7% 46.2% Licences Services Maintenance (1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed. 22

23 Financial Performance Costs and Expenses Dashboard 1 R&D (R$ million) x R&D / NR Costs and Expenses 2 (R$ million) 10.9% % 10.7% % Q08 4Q Q08 4Q G&A (R$ million) x G&A / NR Marketing Expenses (R$ million) x Mkt. Exp. / NR 8.2% 7.2% % % 2.5% % 3.1% 3.1% Q08 4Q Q08 4Q (1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed. (2) Excluding depreciation. amortization expenses and non-recurring expenses. 23

24 24 Financial and Operational Performances Financial Dashboard 1 R$ million 4Q08 4Q09 Δ Q/Q Δ Y/Y Net Revenue % % Gross Profit % % EBITDA % % EBITDA Margin 22.1% 24.0% 190 b.p. 21.2% 25.2% 400 b.p. Net Income Adjusted % % (1) Values are pro forma as they include the numbers of RM Sistemas, acquired in April 2006 and Datasul, consolidated in September 2008 in the period analyzed. (2) Net income adjusted refers to net income excluding the effects of goodwill, amortization, net of tax. Hence, it can be understood as net income from the Company s regular operations.

25 25 Net Debt Cash and Debt on 12/31/2009 Debt by the end of the period : R$427.2 million PROSOFT: 3Q08, BNDES Amount: R$ million Current estimated cost: 8.5 ~ 9% p.a. Period: years Debentures: 3Q08, Debentures holders (BNDES and others) Amount: R$ million Current estimated cost: 10% p.a. Period: years (-) Cash: R$207.7 million = Net debt by the end of the period: R$219.5 million (0.9 x EBITDA 2009) (-) Short-term trade accounts receivable: R$231.0 million = Net debt by the end of the period: R$(11.5) million

26 26 In 4Q08 Challenges What it was like in Results» REVENUE RECORD 1 Licenses: R$249.4 million, +7% Services: R$332.1 million, +17% Maintenance: R$498.8 million, +18%» OPERATIONAL RECORD 1 New clients: 2,588, +5% Base clients: 15,163, +26% (1) Growth over Main drivers» EBITDA RECORD 1 R$249.3 million, +39% Margin of 25.2%, +400 basis-point Fundamentals + Execution

27 27 Contacts Safe harbor The material that follows is a presentation of general background information about TOTVS and Datasul activities as of the date of the presentation in February It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors. This presentation may contain statements that express management s expectations and/or forecasts about future events. These expectations and/or forecasts involve risks and uncertainties that could cause actual results to differ materially from those projected in such forward-looking statements. Therefore, the future results of the company may differ from current expectations and readers must not base their expectations exclusively on the information presented herein. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on the accuracy, fairness, or completeness of the information presented herein. This document does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever. QUESTIONS ir@totvs.com