2Q11 Results August 16, 2011
Jun 22, 2015
2Q11 Results
August 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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2Q11 Operating and Financial Highlights
• 681 points of sale, 323 own stores and 358 franchise stores
• 21 own stores opened in 2Q11, a total of 31 new own stores opened in the 1H11. 323 own stores in
operation at the end of 2Q11, with 43 new stores already contracted for 2H11
• Gross revenue growth of 24.8% versus 2Q10, reaching R$274.1 million in 2Q11 and R$514.1 million in
1H11
• Same-store sales (SSS) growth of 12.7% in the quarter
• Gross margin of 34.3%, a margin expansion of 3.9 p.p. when compared 2Q10
• EBITDA of R$15.2 million in 2Q11 reaching R$27.4 million in the 1H11. EBITDA margin of 5.5% in the 2Q11
and 5.3% in 1H11
• IPO: placement of 24,000,000 shares and gross proceeds of approximately R$414.0 million
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Pharmacy Retail
Sales Performance in the Brazilian Pharmacy Retail Sector from 1996-2010 (R$ Billion)
7.08.3
9.4 10.3 11.2 11.613.1
14.817.2
19.221.5
23.6
26.4
30.2
36.0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
1997-2000
• 1997: Asian Crisis
• 1998: Russian Crisis
• 1999: Real Depreciation
• 2000: Internet Bubble
burst
Avg. GDP Growth: 1,5%
Avg. Inflation: 5,5%
Avg. Interest Rate: 21,1%
Avg. Sales CAGR: 10,5%
2001-2002
• 2002: Crisis pre-Lula
election
• 2001: Argentine Default
Avg. GDP Growth: 2,9%
Avg. Inflation: 10,1%
Avg. Interest Rate: 21,9%
Avg. Sales CAGR: 8,2%
2003-2005
• 2003-04: First years of
Lula’s mandate
• 2004: Mensalão scandal
Avg. GDP Growth: 3,3%
Avg. Inflation: 7,5%
Avg. Interest Rate: 17,3%
Avg. Sales CAGR: 13,6%
2006-2007
• 2006: Second Lula
election
Avg. GDP Growth: 5,1%
Avg. Inflation: 4,5%
Avg. Interest Rate: 12,6%
Avg. Sales CAGR: 11,2%
2008-2010
• 2008: Subprime Crisis
Avg. GDP Growth: 3,4%
Avg. Inflation: 5,1%
Avg. Interest Rate: 9,6%
Avg. Sales CAGR: 13,2%
Sources: IMS and Brazil Central Bank.
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245
259 270
292 302
323
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
168 own stores
358 franchise stores
63 own stores
92 own stores
Brazil Pharma’s Expansion in 2Q11
National presence with regional focus and accelerated organic growth with the opening of 31 new own
stores in the 1H11
Our Platform (as of June 30, 2011)
681 points of sale
Acelerated Organic Growth
Number of own stores (Pro-Forma)
323 own stores e 358 franchise stores
Distribution of the Stores by Stage
(Existing stores on June 30, 2011)
70 22%
83 26%
55 17%
115 35%
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)
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Ownership Structure
Ownership structure after the IPO
Operating
Partners
Farmais Rosário
Distrital Guararapes Mais
Econômica
100.0% 100.0% 100.0% 100.0%
BTG
Pactual
34.8% 28.1%
Market
13.6%
FIPs1
23.5%
(1) Funds managed by Banco BTG Pactual
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Sales and SSS
Solid growth track record in sales and SSS
Gross Revenues
(R$ million)
SSS (Crescimento Vendas Mesmas Lojas)
SSS SSS mature stores (36 months)
192.4
219.6
249.4
259.8
240.0
274.1
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
6.7%
2.2%
4.2%
5.6%
1.9%
6.1%
13.8%
10.6%
13.4%
15.0%
8.4%
12.7%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
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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$)
33.5% 31.7% 31.1% 33.5% 31.6% 30.7%
47.0% 47.7% 47.1% 46.1% 46.7% 48.0%
19.6% 20.5% 21.8% 20.4% 21.6% 21.3%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Non-drugs Brands Generic drugs
33,5% 31,7% 31,1% 33,5% 31,6% 30,7%
47,0% 47,7% 47,1% 46,1% 46,7% 48,0%
19,6% 20,5% 21,8% 20,4% 21,6% 21,3%
1T10 2T10 3T10 4T10 1T11 2T11
Non medicines Branded Generic
26.89
27.69
28.31
27.74
28.05
29.47
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
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Gross Profit and Expenses
Gross margin expansion, given better mix and inventory management
Gross Profit and Gross Margin
(R$ million, % of gross revenues)
Selling, General, Administrative and Other
Expenses1 and % of Gross Revenue
(R$ million, % of gross revenue)
(1) Includes other net operating expenses of R$0.7 million. Excludes depreciation and amortization expenses
of R$4.9 million, non-recurring expenses related to the IPO of R$2.1 million and other non-recurring expenses
of R$1.6 million.
59.8
66.7
74.3
77.6 78.9
94.1
31.1% 30.4% 29.8% 29.9%
32.9% 34.3%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Gross Profit Gross Margin
50.2
55.3
60.8
67.7 66.7
79.0
26.1% 25.2%
24.4% 26.1%
27.8% 28.8%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
SG&A % of gross revenue
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EBITDA and Depreciation and Amortization
Higher EBITDA margin since the creation of Brazil Pharma
EBITDA and EBITDA Margin
(R$ 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 total depreciation and amortization expenses in 2Q11,
R$3.0 million represented the amortization of intangible assets
(commercial establishments).
9.6
11.4
13.4
9.9
12.2
15.2
5.0% 5.2% 5.4%
3.8%
5.1% 5.5%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
EBITDA EBITDA Margin
0.7 0.8 0.8 0.8
5.0 4.9
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
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Financial Result and Net Income
Lower financial expenses given Company’s capitalization and maintenance of profitability
Financial Result, Net Expenses
(R$ million)
Net Income and Net Margin1
(R$ million, % of gross revenue)
(1) Net income before non-controlling interest and adjusted to exclude the non-recurring expenses.
(3.4)
(4.4) (4.6)
(2.9)
(2.4)
(1.8)
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
2.0
4.7
4.6
5.4
6.1
4.0
5.2
7.8
2.4% 2.5% 2.4%
1.5%
0.8%
1.7% 2.2%
2.8%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Net Income Adjusted for key money amortization
Net Margin Adjusted Net Margin
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Working Capital, Cash Flow and Debt
Brazil Pharma as the most capitalized company in the sector and in a continuous process of financial
management improvement
Working Capital Operating and Investing Cash Flow
(R$ million)
Debt
(R$ million)
2Q11 1Q11 2010
Receivables
(in days) 23 20 26
Inventory
(in days) 87 86 89
Suppliers
(in days) 60 69 70
Working capital
(in days) 50 37 45
2Q11 1Q11
Loans and financing 75.6 117.4
Current 44.4 104.6
Non-current 31.1 12.8
Accounts payable
(acquisitions) 152.7 102.9
Current 85.1 36.3
Non-current 67.6 66.7
Total Debt 228.2 220.3
Cash and cash
equivalents 456.3 142.4
Net Debt (Net Cash) (228.0) 77.9
1H11 1H10
Audited
EBT 5.9 (0.6)
(+) Depreciation and amortization 9.4 0.4
(+) Others 0.9 0.1
Cash generated from operations 16.2 (0.1)
(-) Working capital (58.4) 1.4
(-) Deferred taxes (79.1) (0.1)
(-) Others (23.0) 11.4
Net cash generated from
operations (144.2) 12.6
(-) Capex (21.3) (1.6)
(-) Aquisitions (70.1) (30.6)
Cash flow from operations and
investments (235.6) (19.5)
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Recent Events
• E-commerce
• Integration process and Shared Service Center (SSC)
• Opening of new stores
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Integration
• Culture integration
Integration event realized: “Juntos Podemos Mais”
>> Themes:
1- Culture
2- Strategic Planning 2012-2014
3- Best Practices
>> Participants: 140 people (among directors,
managers, supervisors and multipliers)
• Shared Service Center
Holding
Lean corporate center
focused in strategic activities
SSC Business Units
Demand
Service
Services rendered with
excellence at competitive costs Business units focused on
their final activities
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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