Transcript
Net Revenues (in R$Million) EBITDA (in R$Million)
São Paulo, April 6, 2009 – Tempo Participações S.A. (Bovespa: TEMP3; Reuters: TEMP3.SA; Bloomberg: TEMP3 BZ), a leading
provider of healthcare administration, dental benefit plans and assistance services, announces today its results for 4Q08. The
operational and financial information contained herein, except where otherwise indicated, is presented in Brazilian Reais and in
accordance with accounting practices adopted in Brazil including the guidelines of the Brazilian Stock Exchange Commission (CVM).
Highlights
Tempo announces a 28% YoY growth in
Net Revenues & 20% YoY growth in EBITDA
FY07A FY08A
572,8 731,9
27,8%
FY07A FY08A
55,0 65,9
19,7%
Capital Stock (12/31/09)162.576.788 CS
R$Million 4Q07A 4Q08A Var.% FY07A FY08A Var.%
Net Revenues 168,3 213,0 26,6% 572,8 731,9 27,8%
Adjusted EBITDA 23,3 15,1 -35,2% 55,0 65,9 19,7%
Adjusted EBITDA Margin 13,9% 7,1% -6,8 p.p. 9,6% 9,0% -0,6 p.p. -0,6 p.p.
Note 1: The EBITDA mentioned in this report excludes the effect of non recurring expenses.
Note 2: The Net Earnings mentioned in this report excludes non recurring expenses and goodwill amortization, net of tax effects.
Note 3: The figures in this table do not include pro-forma results from acquisitions made in the Dental segment in 2008 and not yet approved by regulatory agency.
Note: Due to the Company´s IPO in 2007, the 4Q07 presented better than usual results. Therefore, 4Q07x4Q08 comparison is negatively
impacted. For a better view of the business a YoY comparison should be considered.
Highlights
» CEO Change: As of 04/01/2009, Carlos Formigari will be the new CEO for Tempo
Participações. José Bonchristiano leaves his current position to become Co-President of the
Board of Directors along with Dimas Maia, who is the current president of the Board. Mr.
Formigari comes from a 9-year career at Unibanco as General Director of Unicard, Unibanco´s
credit card company.
» Stock Buyback Program: Tempo concluded its first stock buyback program in the 4Q08. The
total amount of shares purchased were 8.168.500, which totals a R$ 22.2Million investment.
Following the conclusion of the first buyback program, Tempo initiated its second buyback
program on November 27, 2008, allowing it to buy up to 10% of the current Free Float during
the preceding 365 days. As of March 31, 2009, Tempo purchased 2.2 Million shares.
» SAP: In December of 2008, Tempo decided to implement SAP software. The implementation is
currently taking place and should be concluded by 3Q09.
162.576.788 CS46,1% Free Float
Net Cash (12/31/2008)R$237M
Conference Call 4Q08PortugueseDate: 04/07/2009Time: 09h00 (08h00 NY) Phone: +55 (11) 4688-8114
EnglishDate: 04/07/2009Time: 10:30 (09h30 NY) Phone: +1 (571) 527-1024
IR ContactsPhone: +55 (11) 4208-8025ri@tempopar.com.br
1
About TEMPO
» Tempo Participações S.A. is a leading provider of healthcare administration services, dental benefit plans and specialized assistance
services. Within the group, each business manages a fragmented network of more than 60,000 specialized service providers with
nationwide coverage. The Company benefits from cross-selling opportunities in its client base, which is comprised of: leading
insurance companies, HMOs, government entities and private corporations. Tempo benefits from economies of scale by using a
uniform operating platform and proprietary IT systems to manage its contact center, service provider network, and auditing/
» Tempo has a low risk business model (frequency risk only) with predictable and recurring revenue and strong operational leverage.
In addition, the Company enjoys major entry barriers, low level of fixed assets and strong cash flow generation (Asset Light).
uniform operating platform and proprietary IT systems to manage its contact center, service provider network, and auditing/
processing. The illustration below details the process:
2
Coming from a year when the Company was created, four acquisitions and a record-time setting IPO,
2008 presented yet another challenging year for Tempo to continue persuing leadership in each
business segment.
In 2008 it was no different. Tempo continued to pursue efficient M&A activities while having solid
organic growth. Tempo acquired five companies and established a joint-venture. Most of the 2008
acquisitions propelled Tempo´s dental segment to become part of the major players in Brazil and the
fastatest growing dental company coming from 120k lives in January of 2007 and finishing the year
2008 with 833 thousand. As cause and effect pans out, these events also brought new challenges to
Tempo with integration and restructuring of the newly acquired companies and previous investments
from 2007.
With the global economic crisis that started during the second half of 2008, Tempo was forced to make
adjustments and deal with difficulties not foreseen in its forecast. The Company managed to keep
COMMENTS BY TEMPO´S MANAGEMENT
Barueri, April 6, 2009
Investor Relations
adjustments and deal with difficulties not foreseen in its forecast. The Company managed to keep
modest organic growth in its business segments due its unique business model that it less sensitive
than most, within its respective business segments, during such turbulent scenarios. Furthermore, it
gave the Company an opportunity to start focusing more attentively on internal efficiencies and less on
market consolidation. On October of 2008, the Board of Directors approved the first stock buyback
program. Given the economic mood and Tempo´s long tradition of acquisitions, the stock buyback
program was, and still is, an attractive alternative that ultimately adds value to our shareholders. With
the goal to promote internal efficiencies, in December of 2008, Tempo decided to implement SAP as its
ERP. The program will encompass all business segments and the heart of the company – back office, by
consolidating all acquired companies into a solid platform.
Due to acquisitions in 2008 and changes in Brazilian Corporate Law (“Corporate Law”) somehow
equivalent to IFRS accounting rules (Law 6,404/76, as amended by Law 11,638/07 and Executive
Decree 449/08), Tempo took measures to improve its accounting processes and to comply with the
new law. Our financial statements are in accordance with generally accepted accounting standards in
Brazil, pursuant to Corporate Law and the rules of the Brazilian Securities and Exchange Commission
(CVM). As explained throughout this release, the changes in reporting are non-recurring events which
do not reflect losses in sales and/or productivity during 4Q08.
3
R$Million 4Q07A 4Q08A Var.%
Health Dental Assistance Tempo Health Dental Assistance Tempo Tempo
Net Revenues 102,8 5,6 59,9 168,3 122,6 24,7 65,7 213,0 26,6%
Cost of Rendered Services 82,2 3,1 34,0 119,3 94,9 12,2 42,1 149,3 25,2%
Adjusted EBITDA 13,7 3,6 6,1 23,3 6,2 3,9 5,0 15,1 -35,2%
Adjusted EBITDA Margin 13,3% 64,7% 10,1% 13,9% 5,1% 15,6% 7,7% 7,1% -6,8 p.p.
40,6% 16,3% 43,1%
R$Million FY/07A FY/08A Var.%
Health Dental Assistance Tempo Health Dental Assistance Tempo Tempo
Net Revenues 321,3 21,6 229,9 572,8 429,5 56,7 245,8 731,9 27,8%
Cost of Rendered Services 257,9 11,4 124,4 393,7 334,9 27,6 146,4 508,8 29,3%
Adjusted EBITDA 22,5 5,7 26,8 55,0 26,8 10,7 28,4 65,9 19,7%
Adjusted EBITDA Margin 7,0% 26,4% 11,7% 9,6% 6,2% 18,9% 11,6% 9,0% -0,6 p.p.
Operational Performance
SUMMARY OF TEMPO´S RESULTS BY SEGMENT
Note: Values do not include Pro-Forma
Adjusted EBITDA Margin 7,0% 26,4% 11,7% 9,6% 6,2% 18,9% 11,6% 9,0% -0,6 p.p.
-54,4%
R$Million 4Q07A 4Q08A Var.% FY07A FY08A Var.%
Beneficiaries (in Millions) 1,30 1,38 6,2% 1,30 1,38 6,2%
Net Revenues 102,8 122,6 19,3% 321,3 429,5 33,7%
Cost of Rendered Services 82,2 94,9 15,5% 257,9 334,9 29,9%
Selling, General & Administrative Expenses 6,9 21,4 208,5% 41,0 67,8 65,5%
Adjusted EBITDA 13,7 6,2 -54,4% 22,5 26,8 19,1%
Adjusted EBITDA Margin 13,3% 5,1% - 8,2 p.p. 7,0% 6,2% - 0,8 p.p.
HEALTH SEGMENT
Note: Due to the Company´s IPO in 2007, the 4Q07 presented better than usual results. Therefore, 4Q07x4Q08 comparison is negatively
impacted. For a better view of the business a YoY comparison should be considered.
Highlights
» New Clients & Renewal: Gama Saúde continues to be a major player in the TPA services for the public sector. Two new clients
joined Tempo´s Health Segment: Tribunal Superior do Trabalho and Infraero, which are both public entities. Also, Tempo renewed its
contract with SABESP for four more years, through a public bid;
» Beneficiaries: The number of lives increased by 6,2% YoY;
Note: Cost of rendered services represents medical cost passed through to Tempo’s clients along with HomeCare costs.
Note: Values do not include Pro-Forma
» Net Revenues: Posted a 33,7% YoY increase with strong influence from the HomeCare division.
4
2004 2005 2006 2007 2008
0,43 0,73 1,06 1,30 1,38
33,8%
Operational Performance
Beneficiaries - Lives Covered
» In the past 12 months, Gama Saúde experienced a 6,2% growth in number of
lives covered. This growth was fueled by the capture of new clients as well as a
modest growth in existing client base.
» These numbers do not include beneficiaries covered under the HomeCare
division.
4Q07A 4Q08A
1,30
1,38
6,2%
(In Millions)
0,43 0,73
1,06 1,30 1,38
33,8%CAGR
4Q07 4Q08 FY07 FY08
HomeCare 0,0 0,0 0,0 0,0
Gama Saúde 0,0 0,0 0,0 0,0
2004 2005 2006 2007 2008
154,2 214,5 262,8 321,3 429,5
29,2%
Adjustments to Net Revenues (in R$Millions) 4T08 FY/08
Reported Net Revenues 117,0 423,9
NPV Adjustments* - 3,0
Retroactive Taxes Adjustment (5,0) 2,6
Adjusted Net Revenues 122,6 429,5
Net Revenues
» In the Health Segment, Renenues are calculated by combining: 1.) Gama Saúde´s
fees for TPA services; 2.) Gama Saúde´s Pass-Through; 3.) Revenues from
HomeCare service.
» Net Revenues presented a strong growth of 33,7% YoY and a 19,3% growth
QoQ. The Health Segment showed consistent client retention and also a
conservative growth in its client base. The consolidation of HomeCare division has
also been a strong driver for the Health Segment in 2008 by contributing 16,4% of
the top-line growth.
FY07 FY08
321,3 429,5
33,7%
4Q07 4Q08
102,8
122,6
19,3%
(In R$Million)
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
154,2 214,5 262,8
321,3 429,5
29,2%CAGR
* Ajustments made reflecting Law 6,404/76, as amended by Law 11,638/07 and Executive Decree 449/08
5
Adjustments to Costs of Rendered Services (R$Million) 4Q08 FY/08
Operational Performance
Cost of Rendered Services
» Cost of Rendered Services include Pass-Through costs incurred in Gama Saúde´s PPO network and costs associated with
the HomeCare business. However, these costs incurred by Gama Saúde’s network of service providers cannot be
considered loss ratio (MLR) as the Company underwrites no medical risk. Fees are charged based on fixed price per life,
regardless of cost variances in medical expenses (which are passed on to clients).
» Overall, when comparing YoY, it should be noted that Tempo´s HomeCare unit was only acquired and running jointly
with the business segment starting October 2007.
4Q07A 4Q08A
82,2
94,9
15,5%
FY07A FY08A
257,9 334,9
29,9%
(In R$Million)
Adjustments to Costs of Rendered Services (R$Million) 4Q08 FY/08
Reported Costs of Rendered Services 92,7 332,7
NPV Ajustments to Costs of Rendered Services* 2,3 2,3
Adjusted Costs of Rendered Services 94,9 334,9
* Ajustments made reflecting Law 6,404/76, as amended by Law 11,638/07 and Executive Decree 449/08
9,0%
SG&A Adjustments (in R$Million) 4Q08 FY/08 17,5%
Reported SG&A 25,1 69,2
Integration & IPO Expenses - (0,9)
Shared Structure 5,0 8,1
Other Operating Results (8,7) (8,6)
Adjusted SG&A 21,4 67,8
12,8%
15,8%
Selling, General & Administrative Expenses
» Gama Saúde accumulated SG&A expenses of R$ 21,4Million for the
4Q08 and a R$ 67,8Million for teh year. Due to a different business
model, the HomeCare division contributed with a higher SG&A ratio than
Gama Saúde.
FY07A FY08A
41,0
67,8
12,8%15,8%
Margin (%)
(In R$Million)
4Q07A 4Q08A
6,9
21,4
9,0%17,5%
4Q07A 4Q08A
Margin (%)
6
Operational Performance
Adjusted EBITDA
» The adjusted EBITDA for the fiscal year of 2008 had a strong growth of
19,1% YoY. However, on a QoQ analysis the Health segment showed a
significant decline, mostly due to 4Q07 results that accumulate results from
other 2007 quarters (as per accrual accounting rules). The HomeCare
division sparked a new momentum for the segment, later complemented by
the acquisition of Staff Builders, which contributed to a strong YoY EBITDA
growth.
7,0%6,2%
(In R$Million)
52,1%CAGR
4Q07A 4Q08A
13,7
6,2
-54,4%
13,3%
5,1%
Adjusted EBITDA Margin
2004 2005 2006 2007 2008
5,0 7,3 8,9 22,5 26,8
52,1%
FY07A FY08A
22,5 26,8
19,1%
Adjusted EBITDA Margin
2004 2005 2006 2007 2008
5,0 7,3 8,9
22,5 26,8
CAGR
7
HEALTH SEGMENT 1T08 2T08 3T08 4T08 2008
Gross Revenues 98,6 101,8 114,9 122,7 437,9
Deductions (2,7) (2,8) (2,9) (5,6) (14,0)
Net Revenues 95,9 99,0 112,0 117,0 423,9
Costs of Rendered Services (73,5) (77,3) (89,2) (92,7) (332,7)
Net Profit 22,4 21,7 22,8 24,3 91,3
SG&A (13,9) (14,1) (16,1) (25,1) (69,2)
Depreciation & Amortization (1,6) (1,8) (0,6) 1,1 (3,0)
Financial Result (0,4) (0,2) (0,1) 0,2 (0,5)
Other Operating Results 0,0 (0,0) 0,1 (8,7) (8,6)
Income Tax & Social Contribution Expenses (2,8) (2,1) (3,7) (8,8) (17,5)
Impairment - - - (30,0) (30,0)
Net Income (Loss) 3,7 3,5 2,4 (47,1) (37,5)
Operational Performance
Reconciliation Between Net Profit & EBITDA
» The table below reconciles net earnings and EBITDA:
Net Income (Loss) 3,7 3,5 2,4 (47,1) (37,5)
Equity Income - - 1,4 4,3 5,7
Net Income (Loss) with Equity Income 3,7 3,5 3,8 (42,8) (31,8)
EBITDA
Net Income (Loss) with Equity Income 3,7 3,5 3,8 (42,8) (31,8)
Income Tax & Social Contribution Expenses 2,8 2,1 3,7 8,8 17,5
Other Operating Results (0,0) 0,0 (0,1) 8,7 8,6
Financial Result 0,4 0,2 0,1 (0,2) 0,5
Depreciation & Amortization 1,6 1,8 0,6 (1,1) 3,0
Equity Income - - (1,4) (4,3) (5,7)
Impairment - - - 30,0 30,0
EBITDA 8,5 7,6 6,7 (0,8) 22,1
Non-Reoccuring Costs (1,9) 0,3 (0,7) 7,0 4,7
Integration & IPO Costs 0,2 0,3 0,4 - 0,9
Shared Structure Adjustments (2,1) - (1,0) (5,0) (8,1)
PVA Ajustments to Gross Revenues - - - 3,0 3,0
PVA Ajustments to Costs of Rendered Services - - - (2,3) (2,3)
Other Non Operating Results (0,0) 0,0 (0,1) 8,7 8,6
Tax Adjustments - - - 2,6 2,6
Adjusted EBITDA 6,6 8,0 6,0 6,2 26,8
8
Net Revenue 56,7 26,4 83,1 21,6
Cost of Rendered Services 27,6 11,5 39,1 11,4
Loss Ratio (%) 46,4% 41,7% 44,2% 51,3%
Administrative Expenses 18,4 10,0 28,4 4,5
Adjusted EBITDA 10,7 4,9 15,6 5,7
Adjusted Margem EBITDA 18,9% 18,7% 18,8% 26,4% -7,6 p.p.
174,4%
-7,1 p.p.
531,3%
242,8%
Operational Performance
NOTE: In order to better present Tempo's operation in the Dental Segment, all figures in this section consolidates the acquisitions
made in 2008 since its acquisition dates rather than its ANS approval, when applicable. The table below indicates the reconciliation
between the Dental Segment reported results and Pro-Forma results.
Summary of Adjustments:
1. Fleming: 5 months Pro Forma in 2008 (Acquired in 05/2008 and approved by ANS in 10/2008);
2. OralTech: 4 months Pro Forma in 2008 (Acquired in 11/2007 and approved by ANS in 05/2008);
3. Prevdonto: 3 months Pro Forma in 2008 (Acquired in 06/2008 and approved by ANS in 10/2008);
4. Odonto Empresa: 3 months Pro Forma in 2008 (Acquired in 11/2007 and approved by ANS in 04/2008);
5. Presdental: 3 months Pro Forma in 2008 (Acquired in 09/2008 and pending ANS approval).
Reported Numbers
in 2008
Pro-Forma
AdjustmentsDental Pro-Forma (R$MM)
FY08
Pro-Forma
284,9%
VAR (%)FY07
Beneficiaries
» At the end of 2008, our Dental Segment had a strong growth of 75,4%
over the same period in 2007, surpassing 833 thousand lives. Dental
Segment´s strongest growth came from Affinity channels, which also had a
positive influence on the overall loss ratio. The combination of efficient
acquisitions and solid organic growth boosted Tempo´s revenues, placing
Tempo among the leading Dental players in Brazil.
» In the midst of acquisitions and integration, the Dental Segment had a
solid organic growth of 32% in 2008.
Note: Due to the Company´s IPO in 2007, the 4Q07 presented better than usual results. Therefore, 4Q07x4Q08 comparison is negatively
impacted. For a better view of the business a YoY comparison should be considered.
4Q07A 4Q08A - Pro Forma
0,48
0,83
75,4%
(In Millions)
58% 42%
Growth Breakdown - Dental Segment
43%32%
Profile of the Growth - Dental Segment
Acquisitions 2008 Organic Growth Growth Through Acquisitions Organic Growth
9
Beneficiaries (in Millions) 0,48 0,83 75,4% 0,48 0,83 75,4%
Net Revenues 5,6 25,8 362,7% 21,6 83,1 284,9%
Cost of Rendered Services 3,1 13,8 348,8% 11,4 39,1 242,8%
Loss Ratio (MLR %) 53,3% 51,2% -2,1p.p. 51,3% 44,2% -7,1p.p.
SG&A 0,7 8,6 1146,7% 4,5 28,4 531,3%
Adjusted EBITDA 1,8 3,4 85,7% 5,7 15,6 174,4%
Adjusted Margem EBITDA 32,4% 13,0% -19,4 p.p. 26,4% 18,8% -7,6 p.p.
12,4% 33,5% 20,8% 34,2%
Net Revenues
» At the end of 4Q08, Net Revenues reached R$ 25,4 Million representing a
355,3% growth from the same period in 2007. Year on Year, this growth was
expressed at 287,2% reaching R$ 83,6 Million for the fiscal year of 2008. This
growth was influenced by strong M&A activity and solid organic growth in number
of lives.
Var.%
Operational Performance
FY08A - Pro
FormaR$Million 4Q07A
4Q08A - Pro
FormaVar.% FY07A
25,8
362,7%
(In R$Million)
### 2005 2006 2007 2008 Pro Forma
15 18,1 20,5 21,4 83,1
###
Adjustmentes to Net Revenues (R$Million) 4Q08 2008
Reported Net Revenues 21,9 53,9
NPV Ajustments* 0,8 0,8
Retroactive Tax Adjustments 2,0 2,0
Pro Forma Adjustments 1,0 26,4
Adjusted Net Revenues 25,8 83,1
* Adjustments made reflecting Law 6,404/76, as amended by Law 11,638/07 and Executive Decree 449/08
4Q07A 4Q08A - Pro Forma
5,6
FY07A FY08A - Pro Forma
21,6
83,1
284,9%
2004 2005 2006 2007 2008 Pro
Forma
15,1 18,1 20,5 21,4
83,1
53,2%CAGR
10
Margin (%)
Loss Ratio (%)
4Q07 4Q08 FY07 FY08
53,3% 47,3% 51,3% 44,2%
Adjustments to Costs of Services Rendered (R$Millions) 4Q08 FY/08
Costs of Services Rendered
» Although the Dental segment went through a challenging year of acquisitions and integration, its Loss Ratio (MLR) showed
significant improvement QoQ and YoY with 6.0 p.p. and 4.9 p.p. decrease, respectively. A strong contributor was the Affinity
channels. The Dental segment now counts with seven strong Affinity partnerships such as: Ampla (Energy distributor in Rio de
Janeiro), Citi Credicard, Brasil Telecom (a major Brazilian telecommunications company) and Fininvest (Unibanco’s credit card
company).
Operational Performance
4Q07A 4Q08A - Pro Forma
53,3%47,3%
3,1
13,8
Loss Ratio (%)
FY07A FY08A - Pro Forma
11,4
39,1
51,3%44,2%
Loss Ratio (%)
(In R$Million)
Adjustments to Costs of Services Rendered (R$Millions) 4Q08 FY/08
Reported Cost of Services Rendered 12,2 27,6
NPV Ajustments* 0,0 0,0
Pro Forma Adjustments 1,6 11,5
Adjusted Cost of Services Rendered 13,8 39,1
* Ajustments made reflecting Law 6,404/76, as amended by Law 11,638/07 and Executive Decree 449/08
Adjustments to SG&A (in R$Millions) 4Q08 FY/08
Reported SG&A 10,0 19,7
Non-Operating Results 0,4 0,4
Shared Structure (1,7) (1,7)
Pro Forma Adjustments 0,0 10,0
Selling, General & Administrative Expenses
» M&A and organic growth in Dental during 2008 were fueled by SME and Affinity accounts, which carry significantly lower broker´s
commissions. Additionally, key infrastructure investments were made to support the integration.
4Q07A 4Q08A - Pro Forma
0,7
8,6
12,4%
33,5%
Margin (%)
(In R$Million)
FY07A FY08A - Pro Forma
4,5
28,4
20,8%34,2%
Margin (%)
Adjusted SG&A 8,6 28,4
11
2004 2005 2006 2007 2008 Pro Forma
2,4 3,7 4,7 5,7 15,6
60%
Adjusted EBITDA
» EBITDA for the Dental Segment showed strong growth. On a QoQ
comparison, EBITDA grew by 179,5% and reached R$ 5,0 Million. When
comparing YoY, the company achieved an Adjusted EBITDA of R$18,3
Million, a 221,8% growth.Adjusted EBITDA Margin showed a slight
downturn, mainly due the strong M&A activities in the segment.
» Several factors positively impacted the result of the Segment, such as
Affinity channels and the reputable client base that came with the
acquisitions (noticeable in the case of Fleming and Prevdonto).4Q07A 4Q08A - Pro
Forma
1,8
3,4
85,7%
32,4%
13,0%
Adjusted Margem EBITDA
26,4%18,8%
(In R$Million)
60%
CAGR
FY07A FY08A - Pro Forma
5,7
15,6
174,4%
Adjusted Margem EBITDA
2004 2005 2006 2007 2008 Pro
Forma
2,43,7 4,7 5,7
15,6
12
ODONTO 1T08 2T08 3T08 4T08 2008
Gross Revenues 5,6 11,7 16,2 25,1 58,5
Deductions (0,2) (0,5) (0,8) (3,2) (4,7)
Net Revenues 5,4 11,2 15,4 21,9 53,9
Costs of Rendered Services (2,6) (5,8) (6,9) (12,2) (27,5)
Net Profit 2,7 5,4 8,5 9,7 26,3
SG&A (1,7) (3,4) (6,3) (10,0) (21,4)
Depreciation & Amortization (1,7) (3,3) (4,6) 0,3 (9,3)
Financial Result 0,1 0,9 1,2 0,7 2,8
Non Operating Results (0,1) (0,0) 0,1 0,4 0,4
Income Tax & Social Contribution Expenses (0,2) (0,5) (2,0) (6,2) (8,9)
Impairment - - - (92,0) (92,0)
Net Income (Loss) (0,9) (0,9) (3,1) (97,1) (102,0)
Operational Performance
Reconciliation Between Net Profit & EBITDA
» The table below reconciles net earnings and EBITDA:
Net Income (Loss) (0,9) (0,9) (3,1) (97,1) (102,0)
Equity Income (0,4) (0,1) 1,0 (3,0) (2,5)
Net Income (Loss) with Equity Income (1,2) (1,0) (2,1) (100,1) (104,5)
EBITDA
Net Income (Loss) with Equity Income (1,2) (1,0) (2,1) (100,1) (104,5)
Income Tax & Social Contribution Expenses 0,2 0,5 2,0 6,2 8,9
Non Operating Results 0,1 0,0 (0,1) (0,4) (0,4)
Financial Result (0,1) (0,9) (1,2) (0,7) (2,8)
Depreciation & Amortization 1,7 3,3 4,6 (0,3) 9,3
Equity Income 0,4 0,1 (1,0) 3,0 2,5
Baixa por Impairment - - - 92,0 92,0
EBITDA 1,0 2,0 2,2 (0,3) 5,0
Non-Reoccuring Costs 0,3 0,5 0,9 4,1 5,7
Integration & IPO Costs 0,1 - - - 0,1
Aquisition Costs 0,1 - - - 0,1
NPVA - Gross Revenues - - - 0,8 0,8
NPVA - Cost of Rendered Services - - - (0,0) (0,0)
Technical Provisions (0,2) 0,5 0,7 - 1,0
Shared Structure Adjustments 0,2 - 0,3 1,7 2,2
Taxes adjustments - - - 2,0 2,0
Adjusted EBITDA 0,1 0,0 (0,1) (0,4) (0,4)
Adjusted EBITDA 1,3 2,6 3,0 3,9 10,7
13
R$Million 4Q07A 4Q08A Var.% FY07A FY08A Var.%
Items (in Millions) 17,3 20,9 20,9% 17,3 20,9 20,9%
Adjusted Net Revenues 59,9 65,7 9,6% 229,9 245,8 6,9%
Adjusted Cost of Rendered Services 34,0 42,1 23,8% 124,4 146,4 17,6%
Loss Ratio (%) 50,4% 58,2% 7,8 p.p. 48,4% 53,5% 5,1 p.p.
Adjusted SG&A 23,2 18,5 -20,0% 90,6 71,0 -21,6%
Adjusted EBITDA 6,1 5,0 -17,0% 26,8 28,4 5,8%
Adjusted EBITDA Margin 10,1% 7,7% -2,5 p.p. 11,7% 11,6% -0,1 p.p.
38,7% 28,2% 39,4% 28,9%
Highlights
» New Clients & Renewals: Tempo had a relevant contract renewal with Tokio Marine for additional seven years. Moreover, two new
clients joined our base: Marítima and Confiança;
» Items: Number of Itens covered increase 20.9% YoY to 20.9 Million;
» Adjusted Net Revenues: QoQ had a solid performance with 9.6% growth and a moderate growth of 6.9% for YoY.
Operational Performance
2004 2005 2006 2007 2008
14,5 16,8 16,0 17,3 20,9
9,6%
» Adjusted Net Revenues: QoQ had a solid performance with 9.6% growth and a moderate growth of 6.9% for YoY.
Items
» At the end of 2008, the number of covered items in the Assistance
Segment amounted to 20.9 Million, representing a 20.9% growth over
the same period in 2007.
4Q07A 4Q08A
17,3
20,9
20,9%
(In Million)
2004 2005 2006 2007 2008
14,5 16,8 16,0 17,3
20,9
9,6%CAGR
14
2004 2005 2006 2007 2008
151,0 178,7 206,8 229,9 245,8
13,0%
Operational Performance
Net Revenues
» The Assistance Segment had a solid growth of 9.6% QoQ amouting
R$65.7 Million. In 2008, Net Revenues grew by 6.9% to R$245.8
Million. Part of the growth is attributed to new clients such as Marítima
and Confiança.
4Q07A 4Q08A
59,9 65,7
9,6%
(In R$Million)
229,9 245,8
6,9%
151,0 178,7
206,8 229,9 245,8
13,0%CAGR
Adjustments to Net Revenues (R$Million) 4Q08 FY/08
Reported Net Revenues 58,1 238,2
NPV Ajustments* 1,8 1,8
CDN Adjustments** 6,5 6,5
Retroactive Tax Adjustments (0,7) (0,7)
Adjusted Net Revenues 65,7 245,8
* Ajustments made reflecting Law 6,404/76, as amended by Law 11,638/07 and Executive Decree 449/08
** Consists of costs incurred in USS as a result of services rendered to Consórcio Dia e Noite (Bradesco), which are eliminated in its
consolidated financials (in revenues and SG&A, thus not impacting the company’s results).
Costs of Services Rendered
» Following the trend of 2008, Cost of Rendered Services rose by R$8.1 Million QoQ and R$22 Million YoY, partially due
to increasing frequency. In 2008, additionally, USS also offered services of greater complexity which contributed to a
higher Loss Ratio.
FY07A FY08A
124,4
146,4
17,6%
4Q07A 4Q08A
34,0
42,1
23,8%
(In R$Million)
FY07A FY08A2004 2005 2006 2007 2008
15
Adjustments to Costs of Rendered Services (R$Million) 4Q08 FY/08
Reported Costs of Rendered Services 43,9 148,2
NPV Ajustments to Costs of Rendered Services* 1,6 1,6
Provisions for Termination of Bradesco´s Contract (3,4) (3,4)
Adjusted Costs of Rendered Services 42,1 146,4
* Ajustments made reflecting Law 6,404/76, as amended by Law 11,638/07 and Executive Decree 449/08
1Q07 2Q07 3Q07 4Q07 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
50,4% 47,1% 45,9% 50,4% 52,1% 49,7% 53,5% 58,2%
Operational Performance
50,4%47,1% 45,9%
50,4%
52,1%49,7%
53,5%
58,2%
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
2007 2008
Assistance Segment - Loss Ratio (%)
Adjustments to SG&A (R$Million) 4Q08 FY/08
Reported SG&A 13,5 69,3
Other Operating Results 1,8 1,8
CDN Adjustments** (3,3) (6,6)
Non-Recurring Expenses 6,5 6,5
Adjusted SG&A 18,5 71,0
** Consists of costs incurred in USS as a result of services rendered to Consórcio Dia e Noite (Bradesco), which are
eliminated in its consolidated financials (in revenues and SG&A, thus not impacting the company’s results).
Selling, General & Administrative Expenses
» In 4Q08, USS continued to show significant decrease in SG&A of 20% and the YoY also showed a strong reduction of 22.6%
reduction, proving that USS is benefiting from economies of scale and synergies in shared structure.
2007 2008
4Q07A 4Q08A
23,2 18,5
-20,0%
38,7%28,2%
Série1
FY07A FY08A
90,6 71,0
-21,6%
39,4%
28,9%
Série1
(In R$Million)
16
2004 2005 2006 2007 2008
6,6 19,2 24,0 26,8 28,4
44,0%
EBITDA
» Adjusted EBITDA for the Assistance Segment for the 4Q08 was R$5.0
Million. For the year, however, Adjusted EBITDA grew by 5.8% YoY
reaching a total of R$28.4 Million.
» Overall, the Assistance Segment has been able to keep a consistent
growth along the years, showing a CAGR of 44.0%.
Operational Performance
4Q07A 4Q08A
6,1 5,0
-17,0%
10,1%7,7%
Adjusted EBITDA Margin
(In R$Million)
5,8%
11,7% 11,6%
44,0%
CAGR
FY07A FY08A
26,8 28,4
Adjusted EBITDA Margin
2004 2005 2006 2007 2008
6,6
19,2 24,0
26,8 28,4
17
ASSISTANCE SEGMENT 1T08 2T08 3T08 4T08 2008
Gross Revenues 66,3 65,5 69,4 64,1 265,2
Gross Revenues with CDN Adjustaments 66,3 65,5 69,4 70,7 271,8
Deductions (7,4) (6,6) (7,0) (6,0) (27,0)
Net Revenues 58,8 58,8 62,4 58,1 238,2
Net Revenues with CDN Adjustaments 58,8 58,8 62,4 64,7 244,7
Costs of Rendered Services (34,5) (32,6) (37,1) (43,9) (148,2)
Net Profit 24,3 26,3 25,3 14,2 90,0
SG&A (21,0) (17,8) (16,9) (13,5) (69,3)
SG&A with CDN Adjustaments (21,0) (17,8) (16,9) (20,1) (75,8)
Other Operating Results - - 0,0 1,8 1,8
Depreciation & Amortization (0,5) (0,5) (1,1) (1,8) (3,9)
Financial Result 0,1 0,4 0,0 1,2 1,7
Operational Performance
Reconciliation Between Net Profit & EBITDA
» The table below reconciles net earnings and EBITDA:
Financial Result 0,1 0,4 0,0 1,2 1,7
Income Tax & Social Contribution Expenses (1,0) (2,2) (3,0) (1,4) (7,6)
Net Income (Loss) 1,9 6,1 4,4 0,5 12,9
Equity Income - - - (0,0) (0,0)
Net Income (Loss) with Equity Income 1,9 6,1 4,4 0,5 12,9
EBITDA
Net Income (Loss) 1,9 6,1 4,4 0,5 12,9
Income Tax & Social Contribution Expenses 1,0 2,2 3,0 1,4 7,6
Financial Result (0,1) (0,4) (0,0) (1,2) (1,7)
Depreciation & Amortization 0,5 0,5 1,1 1,8 3,9
Equity Income - - - 0,0 0,0
Other Operating Results - - (0,0) (1,8) (1,8)
EBITDA 3,3 8,4 8,4 0,6 20,8
- - - - -
Non-Reoccuring Costs 2,3 0,1 0,9 4,4 7,6
Integration & IPO Costs 0,2 0,1 0,1 - 0,3
Aquisition Costs 0,4 0,0 - - 0,4
PVA Ajustments to Gross Revenues - - - 1,8 1,8
PVA Ajustments to Costs of Rendered Services - - - (1,6) (1,6)
Provisions for Termination of Bradesco´s Contract - - - 3,4 3,4
Shared Structure Adjustments 1,7 - 0,8 3,3 5,9
Other Non Operating Results - - (0,0) (1,8) (1,8)
Tax Adjustments - - - (0,7) (0,7)
Adjusted EBITDA 5,5 8,5 9,4 5,0 28,4
18
Capex (R$ Million) FY/08
Software 3,2
IT Equipment 2,4
Buildings 0,1
Furniture & Equipment 0,2
Others 1,9
Total 7,9
» The graph below demonstrates CAPEX x EBITDA relationship at Tempo´s asset light model:
2005 2006 2007 2008
Operational Performance
CAPEX - Investments
» Maintaining its Asset Light model, Tempo ended the year OF 2008 with CAPEX at R$7,9MM representing 11% of Adjusted EBITDA. For
4Q08, only R$ 530k was CAPEX.
10,6%
9,3%
12,0%
12,0%
14,0%
70
80
90
2005 2006 2007 2008
EBITDA 30,2 37,6 55,0 65,9
CAPEX 2,5 4,0 5,1 7,9
% of EBITDA 8,3% 10,6% 9,3% 12,0%
Cash Position & Debt
» The company ended 4Q08 with a cash position at R$ 237 million. During 4Q08, Tempo had its first Stock Buyback Program that started
on October 20th, 2008, and ended on November 27th, 2008. The buyback was for up to 10% of the Free Float at that time. During this
period, Tempo invested R$ 22.2MM, purchasing 8.168.500 TEMP3 shares, which were cancelled following the termination of the
program.
30,237,6
55,065,9
2,5 4,0 5,17,9
8,3%9,3%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
0
10
20
30
40
50
60
70
2005 2006 2007 2008
EBITDA
CAPEX
% of EBITDA
19
Health Segment R$k
Gross Revenue
Healthcare administration service expenses 70.088
Reimbursement of healthcare administration pass through expenses 279.428
Revenue from home and chronic assistance services 88.409
437.925
Deductions from gross service revenue (13.996)
Net Service Revenue 423.929
Pass Through (278.106)
Operational Performance
II - INCOME STATEMENT – Health Segment (in R$ thousands)
20
Pass Through (278.106)
Cost of home and chronic assitance services (54.558)
Gross Profit 91.265
Selling, general and administrative (69.208)
Depreciation and amortization (2.978)
Goodwill Amortization (3.275)
Equity Result 5.717
Financial result (488)
Non-operating result (8.602)
Impairment Deductions (30.034)
Income and Social Contribution taxes (14.189)
Net Income (Loss) (31.792)
20
Dental Segment R$k
Gross Revenue
Dental effective premiums 58.539
Changes in risk provisions (109)
58.430
Deductions from gross service revenue (4.682)
Net Service Revenue 53.747
Dental benefit plan indeifiable events (26.614)
Changes in the provision for dental benefit (807)
Operational Performance
III - INCOME STATEMENT – Dental Segment (in R$ thousands)
21
Changes in the provision for dental benefit (807)
plan claims incurred but not reported - PEONA
Gross Profit 26.326
Selling, general and administrative (21.367)
Drepreciation and amortization (828)
Goodwill Amortization (8.476)
Financial result2.836
Equity Income (2.521)
Equity Result
Non-operating result 432
Income and Social Contribution taxes (8.902)
Impairment Deductions (92.002)
Net Income (loss) (104.500)
21
Assistance Segment R$k
Gross Service Revenue
Assistance Services 259.009
Reinbursement of Assistance Services Expenses 6.233
265.242
Deductions from Gross Service Revenue (27.034)
Net Services Revenue 238.208
Assistance Service Expenses (148.173)
Operational Performance
IV- INCOME STATEMENT – Assistance Segment (in R$ thousands)
22
Assistance Service Expenses (148.173)
90.034
Gross Profit
Selling, general and Administrative Expenses (69.276)
Depreciation and Amortization (3.881)
Other Operational Revenues 1.830
Financial Result 1.735
Non operating Result -
Tax Benefit Amortization (8.706)
Defered Income and Social Contribution Taxes 1.138
Net Income (Loss) 12.875
22
top related