Becle, S.a.b. De C.v. · BMV:CUERVO
Becle, S.a.b. De C.v — Santander's 19th Annual "Cinco de Mayo" Mexico Conference in New York (May 2019)
25 slides from Becle, S.a.b. De C.v's conference presentation, May 2, 2019
Slide 1: Santander's 19th Annual Cinco de Mayo Mexico Conference in New York
BECLE, S.A.B. de C.V. Board Meeting Santander’s 19th Annual “Cinco de Mayo” Mexico Conference in NewApr York 25 2018 May 2nd, 2019
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Becle, S.A.B. de C.V. (“Becle”, “Cuervo” or the “Company”) for informational purposes. Nothing in this presentation is intended to be taken by, or should be taken by, any individual recipient as investment advice, a recommendation to buy, hold or sel
Slide 3: A Leading Global Spirits Company and Undisputed Leader in Tequila Worldwide
A Leading Global Spirits Company and Undisputed Leader in Tequila Worldwide Created in 1758, Cuervo is today an 11th generation managed, the only Latin American public spirits company ✓ Undisputed leader in tequila globally, ~30% Key Figures – Financial Statements 2018 market share(1) Volume (9L cas
Slide 4: Our Company
Our Company 1 Undisputed leader in tequila worldwide Unique portfolio of iconic brands in key fast-growing spirit categories, built 2 upon an innovation focus and value enhancing M&A Global spirits company with leading presence in most profitable spirits markets 3 with significant upside potential 4
Slide 5: Undisputed Leader in Tequila Worldwide
Undisputed Leader in Tequila Worldwide Tequila Global Market Share Tequila Market Share by Region As % of volume – 2017 As % of volume – 2017 Total Market Size 31.2mm 9L Cases 1st 29.7% United States (56.2% of Global Volume) 12.9% 24.5% 1st 7.8% 6.8% 4.6% Rest of the World 2015 (15.1% of Global Volu
Slide 6: Tequila Portfolio Across Price Points
Tequila Portfolio Across Price Points • Most comprehensive tequila portfolio across price segments • Focus on premiumization with a strong portfolio of ultra premium and prestige tequila brands … With a Focus on Fast-Growing Portfolio of Powerful Established Brands… Ultra Premium and Prestige Segmen
Slide 7: Extensive Portfolio of Leading Non-Tequila Brands
Extensive Portfolio of Leading Non-Tequila Brands Net Sales by • Over 15 brands in non-tequila categories Family / Category • 8 brands in #1 / #2 position within their segment 2018 Total Ps$28,158 MM Irish & American Whiskey Rum Premium / Ultra Premium Premium Premium / Premium Standard Ultra Premiu
Slide 8: Focus on Innovation…
Focus on Innovation… Fast-Growing Recently Developed Brand Continuous Brand Development and Rejuvenation Premium Rum Tequila Launched in 2009 Reserva de la Maestro Tequilero Familia 2005 Key Market 2016 Ultra Premium 3 Prestige Growing above category average and gaining market share in the U.S. Whis
Slide 9: … and Value-Enhancing M&A
… and Value-Enhancing M&A Value-Enhancing M&A 2007 2010 2010 2011 2015 2018 Bushmills Irish Whiskey: a Milestone in our M&A Strategy Key Acquisition Criteria ✓ Value Creation Potential: Irish Whiskey Irish Whiskey #2 #3 in the U.S. by in the world by volume volume ✓ Category with Attractive Growth P
Slide 10: Right Brands / Right Categories / Right Markets
Right Brands / Right Categories / Right Markets U.S. Spirits – Growth Spirits Categories – Global Market Share 2013-2017 Volume CAGR % Volume – 2017 13.5% Vodka 13.8% 6.0% 4.9% 1.6% 2.4% (0.9%) (1.0%) (1.1%) Whiskey 0.3% 8.6% Tequila Irish U.S. Vodka Gin Rum Scotch Total Whiskey Whiskey Spirits Iris
Slide 11: Global Reach and Established U.S. Platform
Global Reach and Established U.S. Platform Continued Geographic Diversification: U.S. and Canada Represent ~64% of the Company’s Revenues in 2018 Net Sales by Region 2013A ROW 2018 ROW 10% 14% 1 in Tequila 2 in Irish Whiskey Mexico 33% 22% Mexico 57% U.S. and 64% U.S. and Canada Canada Source: Compa
Slide 12: Tequila's Attractiveness in the U.S.
Tequila’s Attractiveness in the U.S. Tequila: Among the Fastest Growing Spirits… …Benefiting from Favorable Secular Trends 11A – 17A Volume CAGR in the U.S. 1 Younger ● Millennials eager to try and embrace variety and differentiating innovation Consumer ● Willing to pay a higher price for distinctiv
Slide 13: Untapped International Growth
Untapped International Growth Key Categories Underpenetrated Outside Core Markets Cross-leverage Platforms to Accelerate Expansion Tequila As % of Total Spirits Retail Sales – 2017 Cuervo derived ~86% of its 2018 net sales in value from the (1) U.S., Canada and Mexico… $2.7 $49.0 $51.1 ~US$490 MM Po
Slide 14: Integrated Platform…
Integrated Platform… 1 Agriculture 2 Production Competitive Advantage Resulting from Appellation of Flagship Distilleries and Bottling Facilities Support Origin for Tequila Route-to-Market Strategy La Rojeña (Tequila) Tamaulipas Camichines (11 Municipalities) (Tequila) Guanajuato EDISA Bottling faci
Slide 15: … with Unique Route-to-Market Distribution
… with Unique Route-to-Market Distribution 3 Distribution Own Distribution Platform to Control Route-to-Market and Brand Building Strategy Volume through own distribution network • Vertical integration of profits Benefits from ~25% in 2007 to ~90% as of 2015 • Control and focus of own brands Mexico
Slide 16: Route-to-Market Control Was Key to U.S. Success
Route-to-Market Control Was Key to U.S. Success Sales Turnaround Story in the U.S.: Jose Cuervo Especial Case Study Key Turnaround Initiatives Since Since Proximo Proximo took took over the over the distribution 1 Enhancing brand health distribution of Jose Cuervo of Jose volume from Diageo, Cuervo
Slide 17: Track Record of Sustainable Growth
Track Record of Sustainable Growth Combined Volume Combined Net Sales (000s of 9 Liter Cases) (Ps$MM)(1) 20,424 20,491 21,279 28,158 18,248 24,396 25,958 17,274 14,210 18,475 15,314 12,305 2013A 2014A 2015A 2016A 2017A 2018A 2013A 2014A 2015A 2016A 2017A 2018A Combined EBITDA(2) and Margin Cash Flow
Slide 18: Above Sector Growth
Above Sector Growth Income Statement Past Performance – 2013A-2017A CAGR (Fiscal Years, in Reporting Currency) 20.5% CAGR in US$ Net Sales 9.3% 6.5% 1.6% 1.2% 1.2% -2.1% (1) 28.2% CAGR in US$ Operating Profit 16.3% 2.7% 2.4% 1.3% 1.2% -1.8% (1) Source: Company Audited Financial Statements and most r
Slide 19: Value of Heritage and Corporate Governance
Value of Heritage and Corporate Governance A True Mexican Success Story Lasting Over 250 Years Supported by Robust Corporate Governance 1758 2017 Post IPO Ownership Independent Board 1795 First license ever to sell tequila 15% 29% 1812 Oldest distillery in Mexico 85% 71% Beckmann Family Independent
Slide 20: Financial Results
Financial Results 20
Slide 21: Statement of Comprehensive Income
Statement of Comprehensive Income For the three months ended Mar 31 2019 2018 2019 Var (19-18) (MXN MM) Abs %NSV Abs %NSV Abs % Volume 9L 3,433 3,884 451 13 Net sales 4,307 5,278 971 23 Cost of goods 1,662 38.6% 2,493 47.2% 831 50 Gross profit 2,645 61.4% 2,785 52.8% 140 5 AMP 830 19.3% 1,065 20.2%
Slide 22: IFRS 16 adoption effect
IFRS 16 adoption effect 1Q19 without IFRS 16 effect 1Q19 with IFRS 16 effect Effects from (Figures in millions) (Pesos) % of net sales (Pesos) % of net sales IFRS 16 Operating profit 987 19 987 19 0 Financial results, net 2 0 37 1 35 Net income 738 14 703 13 (35) Depreciation and amortization 131 2
Slide 23: Q1 2019 Statement of Financial Position
Q1 2019 Statement of Financial Position Assets Dec 31, 2018 Mar 31, 2019 (Ps$ MM) 2018 2019 MXN Cash and cash equivalents 12,028 12,789 Accounts receivable, net 8,536 5,097 Inventories, net 8,162 10,343 Other current assets 2,502 2,727 Total Current Assets 31,228 30,956 Inventories (Non-current) 6,8
Slide 24: Q1 2019 Cash Flow Statement
Q1 2019 Cash Flow Statement Mar 31, 2018 Mar 31, 2019 (Ps$ MM) 2018 2019 Income before income taxes 178 950 Items related to investing activities 133 157 Items related to financing activities -296 -150 Changes In Working Capital -562 147 Net Cash provided by operating activities -547 1,104 Net Cash
Slide 25: Investor Relations Contact
Investor Relations Contact Mariana Rojo marojo@cuervo.com.mx Alfredo Rubio alrubio@cuervo.com.mx 25