B3 S A Brasil Bolsa Balcão : 3Q20 Results Presentation
11/13/2020 | 08:17am EST
3Q20 EARNINGS PRESENTATION
November 13, 2020
INFORMAÇÃO PÚBLICA
1
Forward looking statements
This presentation may contain certain statements that express the management's expectations, beliefs and assumptions about future events or results. Such statements are not historical fact, being based on currently available competitive, financial and economic data, and on current projections about the industries B3 operates in.
The verbs "anticipate," "believe," "estimate," "expect," "forecast," "plan," "predict," "project," "target" and other similar verbs are intended to identify these forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from those projected in this presentation and do not guarantee any future B3 performance.
The factors that might affect performance include, but are not limited to: (i) market acceptance of B3 services; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitive industries in which B3 operates; (iii) changes in (a) domestic and foreign legislation and taxation and (b) government policies related to the financial and securities markets; (iv) increasing competition from new entrants to the Brazilian markets; (v) ability to keep up with rapid changes in technological environment, including the implementation of enhanced functionality demanded by B3 customers; (vi) ability to maintain an ongoing process for introducing competitive new products and services, while maintaining the competitiveness of existing ones; (vii) ability to attract new customers in domestic and foreign jurisdictions; (viii) ability to expand the offer of B3 products in foreign jurisdictions.
All forward-looking statements in this presentation are based on information and data available as of the date they were made, B3 undertakes no obligation to update them in light of new information or future development.
This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities where such offer or sale would be unlawful prior to registration or qualification under the securities law. No offering shall be made except by means of a prospectus meeting the requirements of the Brazilian Securities Commission CVM Instruction 400 of 2003, as amended.
INFORMAÇÃO PÚBLICA
2
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
3Q20 Highlights - Operational Performance
3Q20
3Q20 / 3Q19
(%)
Listed - Equities
ADTV (R$ millions)
28,759.7
+67.7%
Equities
Average Fee (bps)
3.992
-0.290 bps
ADV (thousands of contracts)
2,659.2
+69.9%
Stock Indices
Average RPC (R$)
0.994
-1.3%
ADV total (thousands of contracts)
3,988.4
-1.7%
Listed - Derivatives
Average RPC (R$)
2.142
+45.2%
OTC
New issues (R$ bn)
3,468.2
+35.9%
Fixed Income
Outstanding volume (R$ bn)
3,452.3
+27.3%
New transactions (R$ bn)
2,409.5
-10.2%
Derivatives
Outstanding volume (R$ bn)
4,137.1
+56.3%
INFORMAÇÃO PÚBLICA
3
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
3Q20 Highlights - Financial Performance
R$ million
Total revenues
3Q20
3Q20 / 3Q19
2,535.5+48.6%
Listed
1,682.4
+48.0%
OTC
262.9
+9.5%
Infrastructure for financing
111.6
-19.0%
Technology, data and services
290.5
+51.1%
Net revenues
2,288.8
+49.6%
Adjusted expenses1
(216.1)
-23.1%
Recurring EBITDA1
1,665.7
+50.1%
Recurring EBITDA margin1
79.2%
+669 bps
Financial Result
(26.4)
+382.5%
Recurring net income2
1,143.2
+34.4%
INFORMAÇÃO PÚBLICA
¹ See reconciliation at the appendix on slide 17. 2
See reconciliation on slide 18.
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
4
Guidance
Guidance
Status
Current
Previous
2019
Leverage (Total Debt/EBITDA LTM)
REVISED
1.2x
1.5x
1.0x
Reasons for change
Consequence of making the company's gross debt compatible with the new level of expected EBITDA for the year, driven by the expressive growth of market volumes in 2020 and their respective impact on revenues. The target for this projection is up to 1.2x Gross Debt / EBITDA trailing 12 months (previously up to 1.5x).
Revenue-linked expenses (in
REAFFIRMED
170-200
n/a
239
n/a
R$MM)
Adjusted Expenses1 (in R$MM)
REAFFIRMED
1,125-1,175
n/a
1,074
n/a
Depreciation and amortization2
REAFFIRMED
1,030-1,080
n/a
1,030
n/a
(in R$MM)
CAPEX (in R$MM)
REAFFIRMED
395-425
n/a
279
n/a
Payout (% of IFRS Net Income)
REAFFIRMED
120%-150%
n/a
130%
n/a
Expenses adjusted for: (i) depreciation and amortization; (ii) expenses related to long-term incentive plans (compensation); (iii) integration-related expenses; (iv) provisions; and (v) revenue-linked expenses.
INFORMAÇÃO PÚBLICA2including amortization of intangible assets
5
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
Performance by segment
Listed - equities (44.2% of total revenues)
(R$ million)
Performance (vs 3Q19): +52.4%
1,120
▪ 67.7% increase in cash equities ADTV and 69.9%
1,053
in stock indices future contracts ADV
▪ Growth between Jan-Sep/20 of 84% in the number of investors in the equity depository (greater demand for investment diversification combined with the maintenance of the incentive program to brokers)
▪ Revenue from Stock Lending impacted by a 24.8% increase in the average financial volume of open positions
INFORMAÇÃO PÚBLICA
6
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
Performance by segment
Listed - equities (continuation)
Equities Depository Breakdown
▪ The increase in the number of individuals in the depository
Avg Balance (R$ billion)
continued in 3Q20.
▪ Local institutional investors decreased their participation in
ADTV, reaching 24% of the total
Investor's participation in the cash equities ADTV - 3Q20
INFORMAÇÃO PÚBLICA
7
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
Performance by segment
Listed - FICC (22.2% of total revenues)
(R$ million)
Performance (vs 3Q19): +40.0%
▪ FX related contracts1
▪ ADTV down by 1.7% reflecting mainly the decrease of 7.1% in ADV of interest rate contracts in BRL
▪ Average RPC (R$)
▪ The average RPC of the segment showed growth, mainly influenced by the appreciation of the US dollar against the Real
¹ The average RPC of FX Rate and Interest Rate in USD contracts in 3Q20 takes into account the average PTAX closing price at the end of Jul'20, Aug'20 and Sep'20 (R$5.38), while the average RPC for 3Q19 takes into account the average
INFORMAÇÃO PÚBLICA PTAX closing price at the end of Jul'19, Aug'19 and Sep'19 (R$3.97).
8
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
Performance by segment
OTC (10.4% of total revenues)
(R$ million)
Performance (vs 3Q19): +9.5%
▪ Fixed Income
▪ Treasury Direct: revenue of R$ 40.4 million (vs R$ 7.2 million revenue in 3Q19). Incentives in the expansion program are now classified as expenses
▪ Increase in issuances of corporate debt offset by redemption of debentures issued by leasing companies¹
▪ Derivatives
▪ An increase of 28.7%, mainly due to the appreciation of the US Dollar against the real, along with an increase in the average price of new issues resulting from the mix of contracts in the quarter
In Oct'16, the Central Bank published a resolution prohibiting the execution, extension and renewal of REPOS with securities issued by companies linked to the same financial conglomerate, including debentures issued by leasing
INFORMAÇÃO PÚBLICA companies.
9
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
Performance by segment
Infrastructure for financing (4.4% of total revenues)
(R$ million)
Performance (vs 3Q19): -19.0%
▪ National Liens System (SNG)
▪ 3.5% drop in the number of vehicles financed
▪ Contracts System
▪ Number of transactions in 3Q20 was 9.5% lower, reflecting the decreased number of financed vehicles, combined with a reduction in B3's market share
INFORMAÇÃO PÚBLICA ¹ Considers only the revenue-linked expenses related to the Infrastructure for financing segment.
10
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
Performance by segment
Technology, data and services (11.5% of total revenues)
(R$ million)
Performance (vs 3Q19): +51.1%
▪ Technology and access
▪ New OTC pricing schedule
▪ Increase of 6.3% in number of clients in the OTC segment
▪ Data and analytics
▪ Positive impact from the appreciation of the US Dollar against the Real (approx. 42.6% of this revenue is linked to the US Dollar in 3Q20)
INFORMAÇÃO PÚBLICA
11
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
Adjusted expenses1
(R$ million)
Adjusted personnel²
(+3.5%): annual inflation adjustment and new hires
5.9
280.9
Adjusted Expenses 3Q19
(in R$ million and % of total
Adjusted
adjusted expenses)
personnel
Data processing
Third-party services
Others³ (-23.7%)
(+7.0%): R$4.2 million
(+11.6%): increase in
increase due to the
project expenses
intensification of project
execution
4.2
1.7
(8.9)
1,0%
Data
Third-party
Others
processing
services
283.8
Adjusted Expenses 3Q20
3Q20
175.2 (61.7%)
63.3 (22.3%)
16.6 (5.9%)
28.6 (10.1%)
3Q19
169.3 (60.3%)
59.2 (21.1%)
14.9 (5.3%)
37.5 (13.4%)
¹ Adjusted to exclude (i) depreciation and amortization; (ii) long-termstock-based compensation (principal + payroll taxes); (iii) integration-related expenses; (iv) provisions and (v) revenue-linked expenses. ²
INFORMAÇÃO PÚBLICA
Excludes the long-termstock-based compensation (principal + payroll taxes). 3 Includes expenses with communication, maintenance, taxes, board and committee members compensation and others.
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
12
Financial highlights
Cash and Financial Investments1
Financial Leverage and Debt Schedule
(R$ million)
Debt Amortization Schedule (R$ billion) and Financial Leverage5
16,881
3Q20
6.8
6.9
14,719
2Q20
12,0223Q19
0.0
Third-party
Total
Restricted and unrestricted
4
Third-partycash of R$4.5 billion is not considered as B3's own cash, but the Company earns interest on most of this cash balance.
Short-term
Long-Term
Total Debt
Cetip Lux Loan
CCB
Local Bonds
Indebtedness includes:
R$1.25 billion in bank loans issued in Jun'20; and
a debenture of R$3.55 billion issued in the end of August'20
In June, B3 repaid the 2020 Global Bond which totaled (net of hedge position) R$2.3 billion
Gross indebtedness at the end of September was 1.2x recurring EBITDA
1 There was a change in the manner that we present the Company's cash position and financial investments for an easier reconciliation with the financial statements 2 Includes earnings and rights on securities
INFORMAÇÃO PÚBLICA
in custody. 3 Primarily composed of B3 Bank clients' deposits. 4 Does not include investments in Bolsa de Valores Mexicana, Bolsa de Comercio de Santiago, Bolsa de Valores de Colômbia, Bolsa de Valores de
13
Lima and B3 Inova.
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
Financial highlights
Cash Generation - 9M20
Cash Uses - 9M20
(R$ million)
(R$ million)
8,449
9M20
9M19
-246
Adj. net cash from operating activities¹
6,124
4,183
-2,483
Net cash from investment activities²
1,079
-54
Net cash from financing activities
1,247
972
before distributions³
5,720
Cash generation (before
8,449 5,026
distributions, capex and acquisitions)
9M20 cash
Distributions
Capex
related to the
generation
fiscal year 20204
Cash flow from operating activities, adjusted by the variation of financial investments and third-parties collateral. ² Cash flow from investment activities other than capex and acquisitions. ³ Cash flow from INFORMAÇÃO PÚBLICA interest and amortization paid and debt issued in the period. 4Distributions include dividends, interest on capital (IoC) and share buyback.
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
Cash generated and retained in the period
14
Appendix
INFORMAÇÃO PÚBLICA
15
Reversal of Provision (Spread's case)
R$ million
3Q20
Provision (06/30/2020)
R$379
(-) Settled payment
R$140
(=) Total reversal*
R$239
• Reversal in revenues
R$187
• Reversal in expenses
R$52
The reversal resulted in a fiscal impact of approximately R$81 million with no cash impact
INFORMAÇÃO PÚBLICA
Reversal allocation
(R$ million)
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
+ R$81 million fiscal impact
Expenses
Revenues
Breakdown
16
Financial Statements
Adjusted expenses reconciliation (R$ million)
(R$ thousand)
3Q20
3Q19
3Q20/3T19 (%)
2Q20
3Q20/2Q20 (%)
Expenses
(648,458)
(677,673)
-4.3%
(733,372)
-11.6%
(+) Depreciation and Amortization
264,348
257,295
2.7%
244,232
8.2%
(+) Long term stock-based compensation
39,992
41,407
-3.4%
35,125
13.9%
(+) Provisions (recurring and non-recurring)
4,135
49,198
-91.6%
138,123
-97.0%
(+) Revenue-linked expenses
56,167
48,854
15.0%
40,635
38.2%
Adjusted expenses
(283,815)
(280,919)
+1.0%
(275,312)
3.1%
EBITDA (R$ million)
(R$ million)
3Q20
3Q19
3Q20/3Q19 (%)
2Q20
3Q20/2Q20 (%)
EBITDA
1,904.7
1,109.4
65.6%
1,419.2
29.4%
(+) Reversal of Spread legal dispute provision (revenues)
(186.7)
-
-
-
-
(+) Reversal of Spread legal dispute provision (expenses)
(52.3)
-
-
-
-
Recurring EBITDA
1,665.7
1,109.4
50.1%
1,419.2
17.4%
EBITDA Margin
79.2%
72.5%
672 bps
74.4%
484 bps
INFORMAÇÃO PÚBLICA
17
INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION
Financial Statements
Net income reconciliation (R$ million)
(R$ thousand)
3Q20
3Q19
3Q20/ 3Q19 (%)
2Q20
3Q20/2Q20
(%)
Net income (attributable to shareholders)
1,136,984
719,830
58.0%
892,388
27.4%
(+) Reversal of Spread legal dispute provision (revenues & expenses)
(238,995)
-
-
-
(+) Impairment loss
67,723
-
-
-
-
(+) Tax impact from provision reversal and impairment loss
57,835
-
-
-
-
(+) Amortization of intangibles (Cetip combination)
119,660
131,177
-8.8%
119,567
0.1%
Recurring net income
1,143,207
851,007
34.3%
1,011,955
13.0%
(+) Deferred Tax (goodwill from the Cetip combination)
119,628
119,629
0.0%
119,628
0.0%
Recurring net income adjusted by goodwill tax benefit
1,262,835
970,636
30.1%
1,131,583
11.6%
Note: amortization of intangible amount net of taxes, calculated at a rate of 34% applied to the deductible portion.
B3 SA - – Brasil, Bolsa, Balcão published this content on 13 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 November 2020 13:16:02 UTC
Canada
Deutschland
España
France
Italia
Schweiz (DE)
United Kingdom
Report
