3 q11 results conference call presentation
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3Q11 Results November 16, 2011
description
Transcript of 3 q11 results conference call presentation
3Q11 Results
November 16, 2011
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Disclaimer
This material contains statements that are forward looking and information related to the Company and its subsidiaries which reflect current views and/or
Company’s and its management expectation with respect to its performance, its business and future events. This presentation contains forward-looking
statements which were not based on historical data, and they reflect expectations of Company’s management. The words “foresees”, “estimates”, “wishes”,
“expects”, “intends”, “plans”, “believes”, “projects”, as well as other similar words were used to identify these statements. Although the Company believes
the expectations and hypothesis reflected in those forward looking statements are reasonable and were based in current information made available to
Company's management, the Company can not guarantee its results or future events. Please consider that real results may differ significantly from those
expressed or implicit in forward looking statements. The Company and its subsidiaries, as well as its board members, directors, agents, employees,
consultants or representatives, are not liable for any losses arising from the herein presented information nor for any damage arising from it, correspondent
or specific. The information presented in this material is based on internal research, market research, public information and corporate editorials, and the
Company did not check the accuracy of these date with the respective sources. Therefore, the Company does not provide any guarantee on the accuracy
and integrity of these data. Such data involve risks and uncertainties, as well as remain subject to changes based on several factors. The Company does
not assume responsibility for the veracity of such information. Except for the figures for the 2nd quarter of 2011, which were object of limited review, the
other financial information presented herein, as well as possible comparisons and/or resulting inferences, were not the object of a limited review or audit
and corresponds to pro-forma internal management information and should not be considered in an isolated manner as sufficient for any investment
decision and should be read jointly with the Company’s financial information that are the object of limited review or audit filed with the CVM. For a complete
analysis of the Company, please verify all the information related to it on its website and at the CVM. This presentation and its content are property of the
Company and can not be reproduced or circulated, partial or entirely, without the Company’s previous written consent.
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3Q11 Operating and Financial Highlights
• 716 points of sale, 352 own stores and 364 franchise stores
• 29 own stores opened in 3Q11, a total of 60 new own stores opened in the 9M11. 352 own stores in
operation at the end of 3Q11, with 23 new stores already contracted for 4Q11
• Gross revenue growth of 22.4% versus 3Q10, reaching R$305.2 million and R$819.3 million in the 9M11
• Same-store sales (SSS) growth of 10.3% in the quarter
• Gross margin of 33.5%, a margin expansion of 3.7 p.p when compared 3Q10
• Adjusted EBITDA of R$21.1 million in 3Q11, growth of 57,5% when compared to 3Q10.
• EBITDA margin of 6.9% in the 3Q11, growth of 1.5 percentage points when compared to the 3Q10
• Adjusted Net profit of R$18,9 million in 3Q11, growth of 372,5% compared to 3Q10
• Moving up new store opening guidance to 85 from 75 in 2011
• Big Ben acquisition
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Brazil Pharma’s Expansion in 2Q11
National presence with regional focus and accelerated organic growth with the opening of 60 new own
stores in the 9M11
Our Platform (as of September 30, 2011)
716 points of sale
Acelerated Organic Growth
Number of own stores (Pro-Forma)
352 own stores e 364 franchise stores
Distribution of the Stores by Stage
(Existing stores on September 30, 2011)
101 own stores
364 franchise stores
74 own stores
177 own stores
87 25%
73 21%
63 18%
129 36%
Stores with less than 12 months
Stores with 12 to 24 months
Stores with 24 to 36 months
Stores with more than 36 months(mature)
14 11 22
10 21
29
245 259 270
292 302 323
352
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
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192,4
219,6
249,4
259,8
240,0
274,1
305,2
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Sales and SSS
Solid track record in sales and SSS growth
Gross Revenues
(R$ million)
SSS (Crescimento Vendas Mesmas Lojas)
SSS SSS mature stores (36 months)
6,7%
2,2%
4,2%
5,6%
1,9%
6,1%
4,4%
13,8%
10,6%
13,4%
15,0%
8,4%
12,7%
10,3%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
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26,89
27,69
28,31
27,74
28,05
29,47
30,70
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Sales Mix and Average Ticket
Increase in average ticket even with the growing relevance of generics in our sales mix
Sales Mix
(% of sales)
Average Ticket
(R$)
33,5% 31,7% 31,1% 33,5% 31,6% 30,7% 31,1%
47,0% 47,7% 47,1% 46,1%
46,7% 48,0% 47,3%
19,6% 20,5% 21,8% 20,4% 21,6% 21,3% 21,6%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Non medicines Branded Generic
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Gross Profit and Expenses
Gross margin expansion, given better mix and inventory management
Gross Profit and Gross Margin
(R$ million, % of gross revenues)
Selling, General, Administrative and Other
Expenses1 and % of Gross Revenue
(R$ million, % of gross revenue)
(1) Includes other net operating revenues. Data adjusted to exclude non-recurring expenses occurred during
the quarters. On the 3T11 non recurring expenses were R$5.9million, being R$4.3 million related to
severance paid, in view of the headcount cut in the South platform and R$1.6 million expenses related to the
stock option plan.
59,8
66,7
74,3
77,6 78,9
94,1
102,1
31,1% 30,4%
29,8% 29,9%
32,9%
34,3% 33,5%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Gross Profit Gross Margin
50,2
55,3
60,8
67,7 66,7
79,0 81,0
26,1% 25,2%
24,4%
26,1%
27,8% 28,8%
26,6%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
SG&A % of gross revenue
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EBITDA and Depreciation and Amortization
Highest EBITDA margin since the creation of Brazil Pharma
EBITDA and EBITDA Margin
(R$ million, % of gross revenue)
Depreciation and Amortization Expenses
(R$ million)
Starting January 2011 there was a change in our accounting criteria and
the key money (commercial establishments) amortization was classified
under depreciation and amortization expenses in the income statement.
This same line includes the depreciation of our plant and equipment and
the investments in the layout adjustment at our stores.
Out of the R$6.8 million depreciation and amortization expenses booked in
3Q11, R$3.9 million represented the amortization of intangible assets
(commercial establishments).
9,6
11,4
13,4
9,9
12,2
15,2
21,1 5,0% 5,2% 5,4%
3,8%
5,1% 5,5%
6,9%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
EBITDA EBITDA Margin
0,7 0,8 0,8 0,8
5,0 4,9
6,7
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
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Financial Result and Net Income
Lower financial expenses given Company’s capitalization and maintenance of profitability
Financial Result
(R$ million)
Net Income and Net Margin1
(R$ million, % of gross revenue)
(1) Net income before minority interest and adjusted to exclude non-recurring expenses in the period.
(3,4)
(4,4) (4,6)
(2,9)
(2,4)
(1,8)
4,1
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
2,0
4,7
15,0
3,2
3,0
3,9
4,6 5,4
6,1
4,0
5,2
7,8
18,9
2,4% 2,5% 2,4%
1,5%
0,8%
1,7%
4,9%
2,2%
2,8%
6,2%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Net Income Adjusted for key money amortization
Net Margin Adjusted Net Margin
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Working Capital, Cash Flow and Debt
Brazil Pharma in a continuous process of financial management improvement
Working Capital Operating and Investing Cash Flow
(R$ million)
Debt
(R$ million)
3Q11 2Q11 1Q11 2010
Receivables (in days) 24 23 20 26
Inventory (in days) 96 87 86 89
Suppliers (in days) 53 60 69 70
Working Capital (in days) 67 50 37 45
3Q11 3Q10
EBT 12,5 (6,7)
(+) Depreciation 6,8 1,9
(+) Others 6,2 0,1
Cash generated from
operations 25,5 (4,7)
(-) Working Capital (47,2) (11,7)
(-) Others 5,1 (7,2)
Net cash generated from operations (16,7) (23,6)
(-) Capex (23,5) (12,4)
(-) Acquisitions (82,3) 22,1
Cash flow from operations
and investments (122,4) (14,0)
3Q11 2Q11
Loans and financing 70,8 75,6
Current 23,0 44,4
Non-current 47,8 31,1
Accounts payable (acquisitions) 70,4 152,7
Current 17,7 85,1
Non-current 52,7 67,6
Total Debt 141,2 228,2
Cash and cash equivalents 324,0 456,3
Net Debt (Net Cash) (182,8) (228,0)
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Recent Events
• Big Ben acquisition
177 own stores
364 franchise stores
220 own stores
+
101 own stores
862 points of sale
498 own stores
364 Franchise stores
Founded in 1994, with head offices in the state of
Pará;
CEO and Founder : Raul Aguilera;
Brazil’s 8th largest drugstore chain;
Largest drugstore chain in Brazil’s northern region, 68%
top of mind in the state of Pará, according to “Diário do
Pará”;
146 stores in the states of Pará, Maranhão, Amapá, Piauí,
Pernambuco and Paraíba;
50 stores in the northeast region;
24% of stores are under maturation;
Sales per store of approximately R$500 thousand/month;
Sales in 2010: R$712.4 million; and
EBITDA in 2010 : R$40.2 million. Total acquisition amount of R$453,644,000.00(1)
• R$178.6 million in Brazil Pharma shares, issued at a price of R$15 per share;
• R$100.9 million in cash; and
• R$174.1 million in 3 annual installments, adjusted by IGP-M (General Market Price Index).
Indemnity and Sureties
• Last installment in cash and equity interest in Brazil Pharma will be secured by indemnities as contractually agreed.
Corporate Governance
• Raul Aguilera remains as Big Ben’s CEO with 3-year renewable management contract; and
• 3-year lock-up for issued shares. (1) Includes transaction fees.
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Brazil Pharma Post Acquisition
Ownership structure post acquisition.
Operating
Partners
Farmais Rosário
Distrital Guararapes Mais
Econômica
100.0% 100.0% 100.0% 100.0%
BTG
Pactual
30.33% 24.45%
Market
11.83%
FIPs1
20.41%
(1) Assets managed by Banco BTG Pactual.
Big Ben
Aguilera
Family
12.98%
100.0%
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Integration
• Culture integration
Creation of the Integration Department, headed by Flávio Sanchez;
“Juntos Podemos Mais” integration event with the participation of 150 platform and corporate managers; and
Contracting of TOTVS Consulting to implement Brazil Pharma’s shared service center
1. Centralization of the call center in the South platform:
Project aimed to unify the phone sales operations of 4 units located in the South region (Canoas, Novo Hamburgo, São
Leopoldo and Andradas) into a single structure in the Canoas-RS center. The centralization is aimed at:
2. Workshops:
a. Purchases: Definition of a single step-by-step flow chart for the purchase of sellable and non-sellable products. Definition of
a single model for the registration of products and suppliers.
b. HR: Definition and validation of the Probationary Stage Evaluation Form concluded, mapping of all the benefits for
subsequent integration.
c. Regulatory: Standardization of the store opening process.
d. DC: Standardization of modus operandi
e. Account Plan: Standardization of accounting plans and cost centers.
3. Goals Outspread Process:
We started to develop our compensation program focused on meritocracy. Setting of clear and measurable individual
objectives to obtain results:
.
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Strategy 2011-2014
We maintain our growth, optimization and differentiation strategy for value creation
Market Consolidation
Highly fragmented market
with large room for
consolidation
Organic Growth
Opening of new stores to
consolidate local leadership
and enter new states
Differentiation
Product development,
private label and loyalty
programs
Operational
Efficiency
Strong synergy to come
through integration
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Contact Details
Investor Relations
Renato Lobo IR Officer
(55 11) 2117 -5200
www.brazilpharma.com.br/ri
Brazil Pharma S.A.
Rua Gomes de Carvalho, 1629
6th and 7th floors
CEP 04547-006
São Paulo, SP, Brazil
