3Q13 Conference Call Presentation November 14, 2013
3Q13 Conference Call Presentation
November 14, 2013
• Gross revenues of R$916.2 million, an increase of 13.9% over 3Q12.
• Gross Margin of 30.7%, in line with 3Q12
• Total SSS of 10.7%, with 6.5% for mature stores
• Adjusted EBITDA of R$51.7 million, with adjusted EBITDA margin of 5.6%
• Adjusted net income of R$13.5 million, with adjusted net margin of 1.5%
• With the opening of 13 new owned stores and 31 franchises, we ended 3Q13 with 1,186 stores.
Operational & Financial
253 Owned stores
123 Owned stores
149 Owned stores
458 Franchises
203 Owned stores
728 Owned stores
458 Franchises
1,186 stores
REGIONS
Owned stores
North 132
Northeast 251
Midwest 142
Southeast
South 203
15
2
123 20
15
30
15
191
7
70
123
1
12
5 Distribution centers
97
7
National Footprint
47 openings in 9M13 (13 in 3Q13)
27 closings (12 in 3Q13, all of them from Mais Econômica)
38.6% of owned stores not yet at mature stage
132 143 149
210 213 203
118 121 123
248 250 253
34 13
15 12
2012 Organic Growth Closing 1H13 Organic Growth Closing 3Q13
11.8%
11.3%
15.5%61.4%
Stores open less than 12 months
Stores open 12 to 24 months
Stores open 24 to 36 months
Stores open more than 36 months
• 77 openings in 9M13 (31 in 3Q13)
• Accelerated expansion strategy
• Gain of scale (for franchisees and Brasil Pharma)
388 433 458
46 31
1 6
2012 Openings Closing 1H13 Openings Closing 3Q13
804,4 916,2
2.250,6 2.565,1
3Q12 3Q13 9M12 9M13
15,1%
12,0% 10,8%
9,8% 10,7%
7,8%
5,2% 4,3%
5,3% 6,5%
3Q12 4Q12 1Q13 2Q13 3Q13
SSS Total
SSS mature stores (36 months or older)
Generic penetration in medicine sales
37,1% 38,4% 37,9% 37,6% 38,4%
17,0% 16,4% 16,5% 16,9% 15,8%
45,9% 45,2% 45,6% 45,5% 45,8%
3Q12 4Q12 1Q13 2Q13 3Q13
Non-medicines Generic Medicine Branded medicine
31,3
35,2
3Q12 3Q13
• Increase in Trade marketing revenues
• Supply chain strategy
• Sales Mix
247,1 265,3 232,9 266,0 281,5
30,7% 31,5% 29,0%
31,5% 30,7%
3Q12 4Q12 1Q13 2Q13 3Q13
682,6 780,4
30,3% 30,4%
9M12 9M13
50,1 55,2 153,5 154,3
144,7 174,6
393,6 491,3
194,8 229,8
547,1
645,6
3Q12 3Q13 9M12 9M13
General & Administrative Sales expenses
6,2% 6,0% 6,8% 6,0%
18,0% 19,1%
17,5% 19,2%
24,2% 25,1% 24,3% 25,2%
3Q12 3Q13 9M12 9M13
G&A % Sales expenses % SG&A total %
3Q11 3Q12 3Q13 9M11 9M12 9M13
Proforma Proforma Proforma
Gross Revenues 673,570 804,393 916,194 1,839,403 2,250,596 2,565,085
General and administrative expenses (G&A) (55,939) (50,123) (55,179) (139,701) (153,476) (154,296)
% Gross Revenues 8.3% 6.2% 6.0% 7.6% 6.8% 6.0%
G&A Dilution (R$'000)
Adjustments on 3Q13:
• Adjustment of R$35 million in non-cash revenue: reducing the balance of a future installment of one of
our acquisitions.
• In regard to our integration process, we continue to make no adjustments.
Non recurring SG&A (7,639) 35,000 6,874 32,406
IPO /Debenture issuance expenses (108)
M&A/Branding (426) (2,630) (684)
Income related to Santana insurance 21,653
Platforms Integration/Downsizing (3,080) (7,908) (1,763)
Other (263) 35,000 (263) 34,853
3Q12 9M133Q13Non recurring expenses (R$'000) 9M12
52,3 51,7
135,5 134,8
6,5% 5,6% 6,0%
5,3%
3Q12 3Q13 9M12 9M13
9M12 9M13
Proforma Proforma
Net income (loss) 7,610 42,325 26,735 36,867
% Net margin 0.9% 4.6% 1.2% 1.4%
(-) Non recurring expenses (7,639) 35,000 6,874 32,406
(-) SOP expenses (5,751) (3,205) (8,601) (8,904)
(-) Adjustments on Depreciation and amortization¹ (5,905) (2,987) (22,862) (10,594)
(-) Income tax and social contrib. from non recurring expenses² - (9,940) -
Adjusted Net Income (loss) 26,905 13,518 61,264 23,960
% Adjusted net margin 3.3% 1.5% 2.7% 0.9%
Net Income reconciliation (R$'000) 3Q12 3Q13
1 - Portion relating to commercial establishments amortization and brand amortization.
2 - Due to adjustments in non-recurring expenses and revenues during 2012, in 1Q12 we excluded the effects of Income and Social Contribution
Taxes on the insurance coverage for Sant’ana’s distribution center, which was destroyed by a fire in December 2011.
Cash position and indebtedness (R$'000) 3Q12 4Q12 1Q13 2Q13 3Q13
(+) Loans and financing 149,124 177,049 169,079 160,228 247,170
Short term 43,953 83,229 44,864 41,694 150,963
Long term 105,171 93,820 124,215 118,534 96,207
(+) Debentures 260,759 253,642 258,937 253,964 260,704
Short term 12,461 5,237 10,427 5,348 11,982
Long term 248,298 248,405 248,510 248,616 248,722
(+) Accounts payable for investment acquisition 333,591 345,333 264,430 232,581 179,652
Short term 97,971 99,711 82,833 81,986 82,681
Long term 235,620 245,622 181,597 150,595 96,971
(=) Total Indebtedness 743,474 776,024 692,446 646,773 687,526
Short term (%) 20.8% 24.2% 19.9% 19.9% 35.7%
Long term (%) 79.2% 75.8% 80.1% 80.1% 64.3%
(-) Cash and cash equivalents (404,783) (368,751) (183,870) (162,205) (213,132)
(=) Net Debt 338,691 407,273 508,576 484,568 474,394
Net debt/Adjusted EBITDA (LTM) 1.9 X 2.1 X 2.7 X 2.5 X 2.5 X
Working capial 3Q12 4Q12 1Q13 2Q13 3Q13
Accounts receivable 24 23 24 18 5
Inventories 95 95 108 109 112
Suppliers 49 58 56 73 56
Working capital in days 70 60 76 53 62
Cash flow Statement (R$'000) 3Q12 3Q13 9M12 9M13
EBT 8,668 50,559 26,689 54,164
(+) Depreciation and amortization 13,367 18,732 41,727 52,248
(+) Others 28,246 (34,379) 54,284 (14,165) -
Operating cash generation 50,281 34,912 122,700 92,247
(+) Change in working capital¹ (62,962) (39,520) (214,054) 36,415
(+) Change in other assets and liabilities 15,283 6,498 (25,461) (110,719)
Cash consumption (47,679) (33,022) (239,515) (74,304)
Income Tax & Social Contribution payed (1,728) (4,646) (16,525) (6,098)
Net cash generated by operating activities 874 (2,756) (133,340) 11,845
(-) Capex from operations (48,652) (31,280) (96,375) (105,232)
(-) Acquisitions (20,460) (1,542) (348,358) (114,293)
Net Cash from investing activities (69,113) (32,822) (444,733) (219,525)
(+/-) Loans and financing (20,142) 92,508 238,612 51,091
(+) Equity funding / Dividends 81,897 (6,005) 480,689 970
Net Cash from financing activities 61,755 86,503 719,302 52,061
Change in cash and cash equivalents (6,484) 50,926 141,228 (155,619)
Cash and cash equivalents - opening balance 411,267 162,205 263,555 368,751
Cash and cash equivalents - closing balance 404,783 213,132 404,783 213,132
1- The variation in working capital includes the change in accounts receivable, inventories and suppliers.
Integration Status
Mais Econômica repositioning
“Go Live” SAP
2nd Debenture Issuance
“Best in People Management” Award
New Vice-President
Administrative
BackOffice activities
(SSC)Logistics - New DC's
Trade Marketing
Integration
Procurement
IntegrationSales Force Training Expansion
SAP - BackOffice
Module
WMS - Logistics
Module
Front Office
Systems
(Continuous
improvement)Nov.2012
(Continuous
improvement)
(Continuous
improvement)
"Vendo Mais"
in practiceExpansion focus "Go Live" 1Q14 Implemented
Single System under
analysis
Not integrated
(expected to 2014)
Pernambuco DC
Jun.2013 / Pará DC
under analysis
Not integrated Not integrated"Vendo Mais" being
implementedExpansion focus
"Go live"
(expected to 2014)
To be implemented
in 2014
Single System under
analysis
(Continuous
improvement) Out.2013 On going
(Continuous
improvement)
"Vendo Mais"
in practice
Repositioning of
stores "Go Live" 2Q14
Under
implementation
Single System under
analysis
(Continuous
improvement)Oct.2012
(Continuous
improvement)
(Continuous
improvement)
"Vendo Mais"
in practiceExpansion focus ok Implemented
Single System under
analysis
Systems IntegrationCommercial Integration Operations
Layout adjustments
- 56 stores renovations
- 3 stores completely reformed (1 new Concept store)
Sales mix revision
Sales force training
Repositioning of stores
- 16 closings (12 in 3Q13), 6 more stores expected to be closed by the end of the year
- 9 openings, 7 of them in the new standard (2 in 3Q13)
New DC in Canoas:
- Increase the volume purchased from the industry
- Better supply efficiency
• Traditional façade
• Indoor layout: visual pollution
Traditional standard Pilot standard New standard
• New yellow façade: lost of
brand identity
• Indoor layout: “clean” visual
over sophisticated
• Traditional façade
• Indoor layout: “clean” visual
with popular appeal
SIG6 Gestão Procfit Proteus
Benefits from an Integrated System
Process standardization
Better integration capacity
Faster and more precise information
Higher quality information to shareholders
Steps
1º wave: Oct/13 - “Go live” Rosário
2º wave : 1H14 - “Go live” Santana, Mais Econômica and Farmais
3º wave : 1H14 - “Go live” Big Ben/SSC integration
2º Debentures Issuance
1st Series
Principal: R$213 million
Issue Date: September 15, 2013
Term: 5 years
Coupon: CDI + 1.70 p.a.
Interest Payments: Biannual
Maturity: September 15, 2018
2nd Series
Principal: R$73 million
Issue Date: September 15, 2013
Total: 7 years
Coupon: IPCA + 7.48 p.a.
Interest Payments: Biannual
Maturity: September 15, 2020
Allocation:
(i) 50% for amortization of the company’s short-term debt along its contractual maturities
(ii) 50% for cash reinforcement and working capital
R$ 287.7 million
captured
(15.1% additional to the
initial offering)
“Best People Management”
PEOPLE-FOCUSED strategy
Construction of a strong MERITOCRACY based culture
Consolidating a PERENNIAL and PROFITABLE company
Ranking category over 15,000 employees
1º EMBRAER
2º BRADESCO
3º TELEFÔNICA/VIVO
4º ITAÚ UNIBANCO
5º BRASIL PHARMA
The assessment takes into account the employees’
satisfaction and the degree of their engagement: the
winning companies have best practices in managing
people, contributing not only to their employees’
satisfaction, but also to their engagement, which
directly influences the business’ results.
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Brasil Pharma
IBOV
Source: Bloomberg, as of September 30st, 2013.
Company’s IPO on June 24, 2011.
BPHA3 09.30.13 Market closure
Shares outstanding 256,384,419
Price (R$/share) 7.80
Annual Performance -45.8%
Ibovespa Index -14.1%
Perfomance since IPO¹ -9.5%
Ibovespa Index -14.2%
Market Cap (R$ Bn) 2.0
Average daily trading volume in 2013 (R$ million) 12.1