Genomma Lab Internacional Sab De Cv Class B · BMV:LAB/B
Genomma Lab Internacional Sab De Cv Class B — Investor Presentation (March 2020)
50 slides from Genomma Lab Internacional Sab De Cv Class B's investor presentation, March 2020
Slide 1: Corporate Presentation March 2020
INVESTOR RELATIONS CORPORATE PRESENTATION Ma r c h 2 0 2 0
Slide 2: Safe Harbor Disclosure
SAFE HARBOR DISCLOSURE This presentation may contain certain forward-looking statements and information relating to the Company that reflect the current views and/or expectations of the Company and its management with respect to its performance, business and future events. Forward looking statements
Slide 3: Who We Are
WHO WE ARE Genomma Lab Internacional, S.A.B. de C.V., one of the leading pharmaceutical and personal care products companies in Mexico with an increasing international presence, develops, sells and markets a broad range of premium branded products, many of which are leaders in their categories. Marc
Slide 4: A Leading OTC & Personal Care Company
A LEADING OTC & PERSONAL CARE COMPANY • Develop, sell and market a broad range of leading OTC and personal care brands throughout Mexico & LatAm • Diversified portfolio of trusted brands- many of which are category leaders • Growing international presence and revenue base • Success based on: • Effec
Slide 5: Power Brands in Multiple Categories
POWER BRANDS IN MULTIPLE CATEGORIES Cold & Cough Skin Care Anti-mycotics & Sexual Health Pain Relief Isotonic Beverages Antihemorrhagic & Gastro Hair Care Infant Nutrition New Category Marzo 2020 5
Slide 6: Our Footprint
OUR FOOTPRINT “Innovation is part LatAm 45.7% Points of Sale of our DNA” of net sales 300,000+ Mexico 44.0% of net sales Countries 18 USA 10.3% Production of net sales facilities 1 1,000+ Brands 40+ employees As of December 2019 March 2020 6
Slide 7: Business on Track for Sustained Profitable Growth
BUSINESS ON TRACK FOR SUSTAINED PROFITABLE GROWTH • Strong trend of strengthened consolidated earnings, cost reduction and EBITDA expansion • Sustainable business model • Mexico manufacturing facility: improves value, margins, product quality and fill-rate • Positive impact from the vertical integra
Slide 8: Growth Achieved in OTC and PC
GROWTH ACHIEVED IN OTC AND PC 48.1%* Total Net Sales Personal Care (PC) 51.9%* Total Net Sales Over-The-Counter (OTC) * As of December, 2019 March 2020 | 8
Slide 9: A Year of Innovation and Trusted Brands
A YEAR OF INNOVATION AND TRUSTED BRANDS 2019 Outlook Extension of the Premium Hair De-niching of the Line in all New Formula Care Line Brand for Mexico markets with Infinitri launched in Technology Brazil Premium Line Renewed launched in New Category New multi- presentation in Argentina for Mexico s
Slide 10: Well Diversified by Region & Currencies
WELL DIVERSIFIED BY REGION & CURRENCIES 100% 100% US Dollar (10.3%) Other currencies (45.7%) International 23.2 1. Argentine Peso 2. Real 56.0 3. Colombian Peso 4. Chilean Peso 5. Sol 6. Uruguay Peso 7. Guarani 76.8 Mexico 44.0 Mexican Peso (44.0%) 2010 2019 FY FY 15 18 countries countries *Co
Slide 11: OTC Market Share by Country
OTC MARKET SHARE BY COUNTRY Top Two Countries Highly Fragmented As a percentage of sales By category penetration Hispanic OTC position 46.1% position 3rd. PLACE Total OTC 1st. MEXICO PLACE 8.8% USA 0.5% 14.9% position position 1st. 42nd. ARGENTINA PLACE PLACE BRAZIL CHILE ECUADOR PERU COLOMBIA CAM1
Slide 12: Corporate Platform Efficiently Supports Growth
CORPORATE PLATFORM EFFICIENTLY SUPPORTS GROWTH March 2020 13
Slide 13: Leadership Evolution
LEADERSHIP EVOLUTION RODRIGO MÁXIMO JORGE LUIS HERRERA JUDA BRAKE 1998 – 2015 2015 – 2018 As of Sept. 10, 2018 Experience: Experience: Experience: • Founder of Genomma • COO, Head of • Senior Vice President Lab Internacional International at Laureate Education • Chairman of the Board • Launched Geno
Slide 14: Management Team
MANAGEMENT TEAM ANTONIO MARCO CÉSAR ZAMORA SPARVIERI JARAMILLO CFO COO CMO JOINED DEC 2015 JOINED APRIL 2014 JOINED SEPT 2017 Prior Experience: Prior Experience: Prior Experience: • CCO Cydsa • EVP Sales P&G • 20-year career in • CFO Grupo LALA • 20+ years of marketing with P&G • Strategic & experie
Slide 15: Successful Cost Containment Strategy
SUCESSFUL COST CONTAINMENT STRATEGY Warehouse Space (m2) Corporate Office Space (m2) 165,000 6,000 2,800 36,047 2014 2019 2014 2019 March 2020 15
Slide 16: Increased Efficiency with Cost Containment Strategy
INCREASED EFFICIENCY WITH COST CONTAINMENT STRATEGY Employees 1,107 MEXICO 805 (27.3)% INTERNATIONAL 332 238 39.5% Sep 2014 Dec 2019 March 2020 16
Slide 17: Cash Conversion Cycle
CASH CONVERSION CYCLE1 250 “New management team has improved the 205 200 Cash Conversion Cycle1” 158 155 150 144 114 97 101 100 93 82 50 0 Q3'14 Q4'15 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q4'14 Q1'15 Q2'15 Q3'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18
Slide 18: Financial Position
FINANCIAL POSITION Net DEBT profile 5,724 5,112 4,454 4,459 3,980 3,689 3,610 2,575 Q4'16 Q4'12 Q4'13 Q4'14 Q4'15 Q4'17 Q4'18 Q4'19 Net Debt / 1.0x 1.2x 2.3x 2.5x 1.4x 1.4x 1.8x 2.0x Adj. EBITDA Free Cash Flow (2,795) (851) (1,324) 2,062 1,942 1,510 1,470 1,145 (LTM) March 2020 18
Slide 19: Debt Profile
DEBT PROFILE Ps. 2,966 In million pesos CEBUR Long-term CEBUR Short-term 178 Banks IDB 105 IFC 244 Ps. 1,550 2,500 98 Ps. 1,139 852 Ps. 380 524 600 200 180 615 2020 2021 2022 2023+ Q4-2019 Debt Profile Total Debt $6,034 Currency Mix (%) Maturity Mix (%) Net Debt / EBITDA 2.0x 3% Average Cost of Debt
Slide 20: Pillars of the New Strategy
PILLARS OF THE NEW STRATEGY 1 3 Product World-class innovation and manufacturing portfolio and supply chain optimization Growth and Industrial Integration Strategy 2 Corporate culture 4 Best in class go-to- focused on market consumers and internal talent March 2020 20
Slide 21: Pillars of the New Strategy: Product Innovation
PILLARS OF THE NEW STRATEGY 2) Product innovation and portfolio optimization New Categories Complemantary products Product Innovation and Infant Nutrition / Self-testing Portfolio Optimization Premium Shampoo Line Affordable Luxury New Packaging Line Extension Marketing Execution De-Niching (+ consu
Slide 22: Pillars of the New Strategy: Go-to-Market
PILLARS OF THE NEW STRATEGY 2) Best in class go-to-market Agreements with International Retailers among the Reinforcing advertising & Visibility Regions Direct Distribution Partnership March 2020 22
Slide 23: Pillars of the New Strategy: Manufacturing & Supply Chain
PILLARS OF THE NEW STRATEGY 3) World-class manufacturing & supply chain capabilities New Manufacturing Plant (San Cayetano, State of Mexico) New pillar for supply chain Demand planning Sanitary license authorized in July 2019 Logistics capabilities Manufacturing capacity March 2020 23
Slide 24: Pillars of the New Strategy: Corporate Culture
PILLARS OF THE NEW STRATEGY 4) Corporate Culture (Costumers & Internal Talent) GenBook, new corporate philosophy Centers of Genomma innovation Way Upgrade of teams and talent March 2020 24
Slide 25: Marketing & Communication Strategy
MARKETING & COMMUNICATION STRATEGY New Social Media Strategy Innovative social media strategy with 40 of the top influencers gathering in one place… Instagram More than +2,300,000 followers …Trying to improve the well-being of people March 2020 25
Slide 26: Net Sales & EBITDA Outlook
NET SALES & EBITDA OUTLOOK MXN (million) Net Sales +8.2% CAGR 16’19: +4.1% +6.7% 12,756 12,000 +1.1% +2.5% -2.3% 9,000 6,000 3,000 0 EBITDA1 2015 2016 2017 2018 2019 MXN (million) 2,571 CAGR 15’19: +9.4% 28% 2,500 21.5% 24% “Consolidated Yearly 2,000 20.2% 20.2% 20% Earnings reflect trend of 1,500 1
Slide 27: New Production Facility
NEW PRODUCTION FACILITY March 2020 28
Slide 28: Investment Rationale
INVESTMENT RATIONALE Enhanced Value Equation Higher Superior Gross Product Margin Quality Reliable Product Supply March 2020 28
Slide 29: Economies of Scale and Scope Driving Higher Gross Margins
ECONOMIES OF SCALE AND SCOPE DRIVING HIGHER GROSS MARGINS Opportunity Outsourcing Producing areas Buying finished Direct control in all Raw products COGS components Materials and Packaging Fragmented raw Economies of scale material procurement Low scale, labor State-of-the-art fully Labor Cost inten
Slide 30: Synergies Identified in Raw Material
SYNERGIES IDENTIFIED IN RAW MATERIAL March 2020 30
Slide 31: Economies of Scale and Scope Driving Higher Gross Margins
ECONOMIES OF SCALE AND SCOPE DRIVING HIGHER GROSS MARGINS Opportunity Outsourcing Producing areas Higher COGS due to Eliminate co-packers Suppliers co-packers profit profit margin margin Suppliers scattered Integration of throughout the suppliers to country industrial park Logistics Leverage freight
Slide 32: Example of Removing Inefficiencies in Inbound Logistics
EXAMPLE OF REMOVING INEFFICIENCIES IN CURRENT INBOUND LOGISTICS Additional Expenses Shipping & Handling, Storing, Cleaning Filling PE bottles Pallet with shampoo Plastic in Toluca Additional freight Blowing PE 195 km bottles 4:17 hrs in Puebla March 2020 32
Slide 33: Profitability Through COGS Reduction
PROFITABILITY THROUGH COGS REDUCTION 37 Genomma Acquired in 2012 from Sidus Market 2.3x Share in 19.0 Units (%) 15.0 16 Competitor 1 ‘13 ‘14 ‘15 ‘16 ‘17 ’18 ’19 43 38 34 25 Sales in 21 Million 14 10 USD OTC product portfolio ‘13 ‘14 ‘15 ‘16 ’17 ’18 ’19 Source: Cid Latina – N02B + M01A. March 2020 33
Slide 34: Investment Profile: EBITDA Synergies
INVESTMENT PROFILE Investment Benefits Benefit from economies of EBITDA scale and efficient Synergies production ~ 700 bps1 capabilities Market Expansion: Long-term financing provided by: Genomma Lab will reinvest between 200 - 250 bps for growth (1) Genomma Lab estimation. March 2020 34
Slide 35: Manufacturing Facility Render
MANUFACTURING FACILITY RENDER OTC Plant FP Warehouse PC Plant Render of final look of plant. March 2020 35
Slide 36: Manufacturing Facility Update
MANUFACTURING FACILITY UPDATE Equipment Installed at the OTC Production Line March 2020 36
Slide 37: Manufacturing Facility Update
MANUFACTURING FACILITY UPDATE Manufacturing Facility (December 2019) March 2020 37
Slide 38: Manufacturing Facility Update
MANUFACTURING FACILITY UPDATE Main Warehouse for Finished Products March 2020 38
Slide 39: New Plant Located in Central Mexico
NEW PLANT LOCATED IN CENTRAL MEXICO Strategically PLANT located in central (79 ACRES) Mexico Close to the largest market Highly efficient export logistics (rail freight) to Latin America and USA San Cayetano, State of Mexico. March 2020 39
Slide 40: Strategically Located Plant Close to Market and Export Logistics
STRATEGICALLY LOCATED PLANT CLOSE TO THE MARKET AND EFFICIENT EXPORT LOGISTICS PLANT (79 ACRES) INTERMODAL TERMINAL “PUERTA MEXICO” March 2020 40
Slide 41: Production Facility Layout
PRODUCTION FACILITY LAYOUT Top Load +4.0X Expansion +2.2X +1.8X +2.2X View Access Modular design concept design provides flexibility for future growth Raw materials 20.000 pos Main Office OTC Warehouse Personal Main Access building Plant 42.000 pos. Care plant plant Lateral view March 2020 41
Slide 42: New Manufacturing Equipment
NEW MANUFACTURING EQUIPMENT State of the art technology, fully automated Uhlmann Bec 700 Coater March 2020 42
Slide 43: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 44: Financial Results
FINANCIAL RESULTS In millions of MXN Income Statement Growth FY-2019 % FY-2018 % Net Sales +8.2% $ 12,755.9 100.0% $ 11,794.4 100.0% Gross Profit +4.7% $ 8,130.1 63.7% $ 7,764.7 65.8% Operating Income +5.8% $ 2,435.0 19.1% $ 2,301.1 19.5% EBITDA +8.1% $ 2,571.2 20.2% $ 2,378.4 20.2% LatAm 46% Mexico
Slide 45: Financial Position
FINANCIAL POSITION In thousands of MXN pesos As of December 31, Financial Position 2019 2018 Total Assets $19,332,591 $18,077,257 + $1,255,334 Cash and Equivalents $922,946 $1,414,641 - $491,695 Total Liabilities $11,087,762 $10,649,438 + $438,324 Stockholders Equity $8,244,829 $7,427,819 + $817,010
Slide 46: Key Valuation Metrics
KEY VALUATION METRICS • Lowest valuation in peer group • Historical results do not reflect potential upside from new 2020 manufacturing plant $1,048.0mm 64.7% 10.6x 20.1x Shares Outstanding Free Float EV / EBITDA P/E EV / EBITDA P/E 37.0x 32.3x 25.0x 35 30 23.8x 20.1x 18.4x 30 18.1x 18.7x 18.5x 25 2
Slide 47: Key Valuation Metrics: ROIC
KEY VALUATION METRICS ROIC including Intangibles 23.1% 23% 33.1% Genomma’s 15.9% 18% 12.4% 11.2% 10.3% 10.6% ROIC excluding Intangibles 13% 7.7% Average 12.0% 8.0% 8% 3% -3% Source: Company Information. Standardized ROIC calculations made via Bloomberg on December 31, 2019. Calculated ROIC Excluding
Slide 48: Stock Performance
STOCK PERFORMANCE Market Cap: 19,471.9 mm 90% 31-Dec-2019 70% Market Cap: 12,502.6 mm 50% 02-Jan-2019 $18.58 $11.93 30% 10% 01/19 -10% 12/19 Change in IPC: +3.3% (31-Dic-2019) -30% LABB IPC March 2020 49
Slide 49: Appendix - Video Links
APPENDIX - VIDEO LINKS March 2020 50
Slide 50: Contact
CONTACT: Enrique González Head of Investor Relations Barbara Cano InspIR Group - NY inversion@genommalab.com +52 (55) 5081-0000 STOCK INFORMATION: Genomma Lab has been traded under the ticker ‘LAB B’ on the Mexican Stock Exchange (BMV) since June 18, 2008. FOR MORE INFORMATION: www.genommalab.com/in
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