Genomma Lab Internacional Sab De Cv Class B · BMV:LAB/B
Genomma Lab Internacional Sab De Cv Class B — Investor Presentation (November 2019)
52 slides from Genomma Lab Internacional Sab De Cv Class B's investor presentation, November 2019
Slide 1: Investor Relations Corporate Presentation
INVESTOR RELATIONS CORPORATE PRESENTATION N o v e mb e r 2 0 1 9
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. Nove
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 Anti-acne Anti-mycotics Anti-mycotics Skin Care Sexual Health Isotonic Beverages Pain Relief Anti-hemorrhoids Gastro Shampoo Hair Care Hair Care November 2019 5
Slide 6: New Categories
NEW CATEGORIES Novamil® & Novalac® • Exclusive license agreement to commercialize infant nutrition products in Mexico • Fourth largest player, behind Nestle, Reckitt and Abbott • According to Euromonitor the Mexican infant formula market annual sales est. Ps. 19.2Bn. Infant formula market share (%)
Slide 7: Our Footprint
OUR FOOTPRINT “Innovation is part LatAm 41.2% Points of Sale of our DNA” of net sales 300,000+ Mexico 48.6% of net sales Countries 18 USA 10.2% Production of net sales facilities 1 1,000+ Brands 40+ employees As of September 2019 November 2019 7
Slide 8: 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 9: Growth Achieved in OTC and PC
GROWTH ACHIEVED IN OTC AND PC Sales by Category (Million MXN) CAGR 12,629 +7.9% Personal Care 51% 6,264 PC 45% 49% OTC 50% Over The Generics 5% Counter 2010 3Q-2019 LTM November 2019 9
Slide 10: Growth Complemented by Acquisitions
GROWTH COMPLEMENTED BY ACQUISITIONS “M&A represents 27.4% of Genomma’s consolidated sales1” 2014 - 2008 2019 2018 2012 2013 2017 1996 2007 2009 2010 2011 Turnaround (manufacturing Consolidation capabilities) Process (1) Consolidated Sales as of December 2018 FY. November 2019 10
Slide 11: Well Diversified by Region & Currencies
WELL DIVERSIFIED BY REGION & CURRENCIES 100% 100% US Dollar (11.2%) Other currencies (45.9%) International 23.2% 1. Argentine Peso 57.1% 2. Real 3. Colombian Peso 4. Chilean Peso 5. Sol 6. Uruguay Peso 76.8% 7. Guarani Mexico 42.9% Mexican Peso (42.9%) 2010 3Q-2019 FY LTM 15 18 countries count
Slide 12: 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 13: Corporate Platform Efficiently Supports Growth
CORPORATE PLATFORM EFFICIENTLY SUPPORTS GROWTH November 2019 13
Slide 14: 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 15: 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 16: Successful Cost Containment Strategy
SUCESSFUL COST CONTAINMENT STRATEGY Warehouse Space (m2) Corporate Office Space (m2) 165,000 6,000 2,800 36,047 2014 2018 2014 2018 November 2019 16
Slide 17: Increased Efficiency with Cost Containment Strategy
INCREASED EFFICIENCY WITH COST CONTAINMENT STRATEGY Employees 1,107 (40.6)% MEXICO 687 INTERNATIONAL 238 13.9% 295 Sep 2014 Dec 2018 November 2019 17
Slide 18: Cash Conversion Cycle
CASH CONVERSION CYCLE1 250 “New management team has improved the 205 200 Cash Conversion Cycle1” 158 155 150 144 114 103 101 97 100 91 90 93 90 93 91 86 78 82 82 71 74 50 0 Q4'13 Q3'14 Q2'18 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q1'14 Q2'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q
Slide 19: Financial Position
FINANCIAL POSITION Net DEBT profile 5,724 4,825 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 Q3'19 Net Debt / 1.0x 1.2x 2.3x 2.5x 1.4x 1.4x 1.8x 1.9x Adj. EBITDA Free Cash Flow (2,795) (851) (1,324) 2,062 1,942 1,510 1,470 1,145 (LTM) November 2019 19
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 November 2019 20
Slide 21: Pillars: Product Innovation and Portfolio Optimization
PILLARS OF THE NEW STRATEGY 1) Product innovation and portfolio optimization “De-niching” Product line extension “Affordable luxury” From “Uni-sympton” Product innovation to “multi-sympton” in LatAm New Premium shampoo in Brazil November 2019 21
Slide 22: Pillars: Best in Class Go-to-Market
PILLARS OF THE NEW STRATEGY 2) Best in class go-to-market Agreements with International Retailers among the In-store visibility Regions Direct Distribution Partnership November 2019 22
Slide 23: Pillars: World-Class Manufacturing & Supply Chain
PILLARS OF THE NEW STRATEGY 3) World-class manufacturing & supply chain capabilities New Manufacturing Plant (San Cayetano, State of Mexico) New Supply Chain Organizational Structure Sanitary license authorized in July 2019 S&OP Implementation Continuous fill-rate improvement November 2019 23
Slide 24: Pillars: 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 November 2019 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 +1,000,000 followers …Trying to improve the well-being of people November 2019 25
Slide 26: Marketing & Communication Strategy
MARKETING & COMMUNICATION STRATEGY Sales increase off-season high double-digit Andy Ruiz, Triple • No sugar added World Heavyweight • No artifitial sweeteners. champion; Proudly ambassador of A high growth category Suerox® November 2019 26
Slide 27: Net Sales & EBITDA Outlook
NET SALES & EBITDA OUTLOOK Net Sales (in MXN$ mm, accumulated periods considering last twelve months LTM) $12,629 $12,274 $12,078 $11,898 $11,886$11,900 $11,921 $11,794 “Consolidated $11,669$11,741 $11,556 $11,287$11,316 $11,043$11,125$10,988 Quarterly Earnings reflect trend of 2015 2016-1Q2016-2Q20
Slide 28: New Production Facility
NEW PRODUCTION FACILITY November 2019 28
Slide 29: Investment Rationale
INVESTMENT RATIONALE Enhanced Value Equation Higher Superior Gross Product Margin Quality Reliable Product Supply November 2019 29
Slide 30: 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 31: Synergies Identified in Raw Material
SYNERGIES IDENTIFIED IN RAW MATERIAL November 2019 31
Slide 32: 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 33: 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 November 2019 33
Slide 34: Profitability Through COGS Reduction
PROFITABILITY THROUGH COGS REDUCTION 38.2 Genomma Acquired in 2012 20.8 from Sidus Market Share in Units (%) 12.1 Competitor 19.7 ‘13 ‘14 ‘15 ‘16 ‘17 ’18 51 34 25 Sales in 21 Million 14 10 USD OTC product portfolio ‘13 ‘14 ‘15 ‘16 ’17 ’18 Source: Cid Latina – N02B + M01A. November 2019 34
Slide 35: Investment Profile
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. November 2019 35
Slide 36: Manufacturing Facility Render
MANUFACTURING FACILITY RENDER OTC Plant FP Warehouse PC Plant Render of final look of plant. November 2019 36
Slide 37: Manufacturing Facility Update
MANUFACTURING FACILITY UPDATE November 2019 37
Slide 38: Manufacturing Facility Update
MANUFACTURING FACILITY UPDATE Tanks system for liquid OTC production Water chiller system for OTC Plant November 2019 38
Slide 39: Manufacturing Facility Update
MANUFACTURING FACILITY UPDATE NordenPAC 702 Uhlmann BEC 700 Tube filling equipment for Blister production line semi-solid production line November 2019 39
Slide 40: 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. November 2019 40
Slide 41: Strategically Located Plant Close to the Market
STRATEGICALLY LOCATED PLANT CLOSE TO THE MARKET AND EFFICIENT EXPORT LOGISTICS PLANT (79 ACRES) INTERMODAL TERMINAL “PUERTA MEXICO” November 2019 41
Slide 42: 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 November 2019 42
Slide 43: New Manufacturing Equipment
NEW MANUFACTURING EQUIPMENT State of the art technology, fully automated Uhlmann Bec 700 Coater November 2019 43
Slide 44: Experienced Manufacturing Team
EXPERIENCED MANUFACTURING TEAM Team leading the construction and operation of new production facility KATHERINE VILLAMIZAR JOHN PINZÓN HÉCTOR CARRILLO MANUFACTURING CONSTRUCTION EXTERNAL MANAGER ADVISOR 19 YEARS 15 YEARS 45 YEARS EXPERIENCE EXPERIENCE EXPERIENCE Food, pharma, chemical Plant design &
Slide 45: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 46: Financial Results
FINANCIAL RESULTS Income Statement Growth 3Q-2019 % 3Q-2018 % Net Sales +12.5% $ 3,077.3 100.0% $ 2,734.8 100.0% Gross Profit +7.8% 1,962.1 63.8% 1,819.9 66.5% Operating Income +10.9% 581.4 18.9% 524.1 19.2% EBITDA +14.3% 617.1 20.1% 539.9 19.7% In millions of MXN LatAm 41.2% Mexico 48.6% USA 10.2%
Slide 47: Financial Position
FINANCIAL POSITION In thousands of MXN pesos As of September 30, Financial Position 2019 2018 Total Assets $19,105,562 $16,855,315 + $2,250,247 Cash and Equivalents 1,133,191 1,128,902 + 4,289 Total Liabilities 11,088,194 9,771,218 + 1,316,976 Stockholders Equity 8,017,368 7,084,097 + 933,271 Novemb
Slide 48: Key Valuation Metrics
KEY VALUATION METRICS • Lowest valuation in peer group • Historical results do not reflect potential upside from new 2019 manufacturing plant $1,048.0mm 64.7% 8.8x 14.4x Shares Outstanding Free Float EV / EBITDA P/E EV / EBITDA P/E 37.0x 18.2x 25.6x 20 30 15.6x 23.6x 18 14.6x 13.4x 25 18.4x 16 12.5x
Slide 49: Key Valuation Metrics: ROIC
KEY VALUATION METRICS ROIC including Intangibles 21.9% 23% 33.4% Genomma’s 16.1% 13.3% 18% 12.6% 11.8% ROIC excluding 10.0% 10.5% Intangibles 13% Average 13.0% 7.6% 8% 3% -3% Source: Company Information. Standardized ROIC calculations made via Bloomberg on July 26, 2019. Calculated ROIC Excluding In
Slide 50: Stock Performance YTD
STOCK PERFORMANCE YTD 90% Market Cap: Change in 22,385.7 mm LAB B: +78.9% 29-Oct-2019 $21.34 70% Market Cap: 50% 12,502.6 mm 02-Jan-2019 30% $11.93 Change in MERVAL: +4.7% 10% 01/19 -10% 10/19 Change in IPC: +3.7% -30% LABB IPC MERVAL November 2019 50
Slide 51: Appendix - Video Links
APPENDIX - VIDEO LINKS November 2019 51
Slide 52: 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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