4 q11 results conference call presentation
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1 2011 and 4Q11 Results March 20, 2012
Transcript of 4 q11 results conference call presentation
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2011 and 4Q11 Results
March 20, 2012
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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 , 3rd and 4th 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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2011 Highlights
• 737 points of sale, 378 own stores and 359 franchise stores
• 86 new own stores opened in 2011, 26 new stores in 4T11
• New store opening guidance of 100 stores for 2012
• Gross revenue growth of 24.0% when compared to 2010, reaching R$1.1 billion in 2011
• Same-store sales (SSS) growth of 11.1% in 2011
• Gross margin of 34.7%, a margin expansion of 4.5 p.p when compared to 2010
• Adjusted EBITDA of R$70.9 million in 2011, growth of 59,7% when compared to 2010.
• EBITDA margin of 6.2% in 2011, growth of 1.4 percentage points when compared to 2010
• Issuing of Debentures up to R$250.0 million: Moody’s assigned ratings of "Aa3.br" (national scale) and
"Ba2" (global scale) • Acquisition of Drogarias Big Ben and Farmácias Sant´ana chains: Brazil Pharma becomes the 3rd largest
Brazilian chain in number of stores and largest operation outside Southeast
• Integration process in 4 fronts: Administrative, Commercial, Operation and Cultural
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2 / 79 / 159 15.3%
-5.2%
9.3%
North
18.7% 15.3%
33.0% Northeast
20.0% 23.3%
42.2% Mid West
17.3%
6.8%
23.2% South
14.8%
-8.8%
5.1%
Southeast
14.0%
-13.3%
São Paulo
CAGR 4 years
CAGR region v.s CAGR Brazil
CAGR region v.s CAGR São Paulo
Market Growth – 2007 a 2011
The growth of the regions which we are acting were higher than the growth of São Paulo State
Source: IMS 2011
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14 11 22 10 21 29
26
245 259 270 292 302
323 352
378
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
National presence with regional focus and accelerated organic growth with the opening of 86 new own
stores in 2011
Our Platform (as of December 31, 2011)
737 Points of Sale
378 own stores and 359 franchise stores
359 franchise stores
194 own stores
Own Stores Franchise stores
104 own stores
80 own stores
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89 8
5
7
203
27
23
26 3
73
4
7
68
187
Brazil Pharma’s Expansion in 2011
Accelerated Organic Growth
Number of own stores (Pro-Forma)
Distribution of the Stores by Stage
(Existing stores on December 31, 2011)
96 25%
72 19%
60 16%
150 40%
Stores with less than 12 months
Stores with 12 to 24 months
Stores with 24 to 36 months
Stores with more than 36 months(mature)
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921.2
1,142.5
2010 2011
Sales and SSS
Solid track record in sales and SSS growth
Gross Revenues
(R$ million)
SSS (Same Stores Sale)
SSS SSS mature stores (36 months)
192.4
219.6
249.4 259.8
240.0
274.1
305.2
323.2
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
6.7%
2.2%
4.2% 5.6%
1.9%
6.1%
4.4% 4.2%
13.8%
10.6%
13.4%
15.0%
8.4%
12.7%
10.3%
12.4%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
4.7% 4.2%
13.3% 11.1%
2010 2011
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27.70
29.46
2010 2011
Sales Mix and Average Ticket
Sales Mix more profitable compared to the rest of the market
Sales Mix
(% of sales)
Average Ticket
(R$)
26.89
27.69 28.31
27.74 28.05
29.47
30.70
29.41
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
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Gross Profit and Expenses
Gross margin expansion, given better mix and inventory management
Gross Profit and Gross Margin
(R$ million, % of gross revenues)
Selling, General, Administrative and Other
Expenses1 and % of Gross Revenue
(R$ million, % of gross revenue)
59.8 66.7
74.3 77.6 78.9
94.1 102.1
121.1 31.1% 30.4% 29;8% 29.9% 32.9% 34.3% 33.5% 37.5%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
278.5
396.2 30.2%
34.7%
2010 2011
50.2 55.3
60.8 67.7 66.7
79.0 81.0
98.7 26.1% 25.2% 24.4% 26.1%
27.8% 28.8% 26.6%
30.5%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
234.1
325.3 25.4%
28.5%
2010 2011
(1) The figures disregard each period’s SOP expenses and “non-recurring expenses”. In 4Q11, our non-
recurring expenses came to R$3.4 million, relating to M&As.
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EBITDA and Net Income
Positive EBITDA evolution since the creation of Brazil Pharma
EBITDA and EBITDA Margin
(R$ million, % of gross revenue)
9.6 11.4
13.4
9.9 12.2
15.2
21.1 22.4
5.0% 5.2% 5.4% 3.8%
5.1% 5.5% 6.9% 6.9%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
44.4
70.9
4.8%
6.2%
2010 2011
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.
2.0 4.7
15.0
7.9 3.2
3.0
3.9
6.1
4.6 5.4 6.1 4.0
5.2 7.8
18.9
14.0
2.4% 2.5% 2.4% 1.5% 0.8% 1.7%
4.9%
2.4% 2.2%
2.8%
6.2%
4.3%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11Adjusted for key money amortization Net Income
Net Margin Adjusted Net Margin
29.6
16.2 20.1
45.8
2.6% 2.2%
4.0%
2010 2011
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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)
4Q11 3Q11 2Q11 1Q11
Receivables (in
days) 21 24 23 20
Inventory (in days) 114 96 87 86
Suppliers (in days) 62 53 60 69
Working Capital
(in days) 72 67 50 37
4Q11 4Q10
EBIT 0.7 (20.1)
(+) Depreciation and
amortization 9.3 3.4
(+) Others 1.9 -
Cash generated from
operations 11.8 (16.7)
(-) Working capital (11.7) 6.5
(-) Others (18.1) (3.6)
Net cash generated from
operations (18.0) (13.8)
(-) Capex (18.1) (4.1)
(-) Aquisitions (16.9) (14.8)
Cash flow from operations
and investments (53.0) (32.6)
2011 2010
EBIT 19.0 (27.4)
(+) Depreciation and
amortization 25.5 5.8
(+) Others 9.0 0.2
Cash generated from
operations 53.5 (21.4)
(-) Working capital (117.3) (3.8)
(-) Others (39.3) 0.4
Net cash generated from
operations (103.1) (24.8)
(-) Capex (77.6) (18.1)
(-) Aquisitions (230.3) (23.2)
Cash flow from operations
and investments (411.0) (66.1)
4Q11 3Q11
Loans and financing 64.4 70.8
Current 22.4 23.0
Non-Current 42.0 47.8
Accounts payable -
(acquisition) 54.4 70.4
Current 17.7 17.7
Non-Current 36.7 52.7
Total Debt 118.8 141.2
Cash and cash equivalents 263.6 324.0
Net Debt (Net Cash) (144.8) (182.8)
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Brazil
4o
2o
1o
3o
North
n/a (2)
n/a (2)
Northeast
n/a (2)
Mid-West
n/a (2)
Southeast
n/a (2)
South
n/a (2)
(1). Number of Stores Number of Stores Revenue
2011 Abrafarma Ranking
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The New Brazil Pharma Brazil Pharma consolidates its leadership position in four of the five regions of Brazil, becoming the
largest retail pharmacy, excluding Southeast. (1)
986 points of sale 627 own stores
359 Franchise stores
359 franchise stores
228 own stores
104 own stores
101 lown stores
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1
95 20
14
89 7
8
187
7
1
7
85
101
194 own stores
(1)Ranking by number of own stores as on September 30, 2011, considering the four largest drugstore chains in Brazil; and
(2)n/a: other chains do not have operations in the region.
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Creation of value and scale post acquisition
(1) Pro-Forma data based on the 12 last months ended December 31, 2011
(2) Net Profit ajusted by the amortization of points-of-sale
Volume (R$ million)
Combined (1)
Gross Revenue 1,142.5 1,415.9 2.558.4
Gross Profit 396.2 405.3 801.5 Gross Margin 34.7% 28.6% 31.3%
EBITDA 70,9 84.5 155.4 EBITDA Margin 6.2% 6.0% 6.1%
Net Profit 45.8 49.9 95.7 Net Margin 4.0% 3.5% 3.7%
Sales Mix
(R$ million)
(2)
The New Brazil Pharma
Distribution of the Stores by Stage
(Existing stores on December 31, 2011)
123 20%
96 15%
76 12%
332 53%
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)
36.7%
46.6%
16.7%
Non medicines
Branded
Generic
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• Moody’s assigned ratings of Aa3.br (national scale) and Ba2 (global scale)
• Issuance of 25.000 debentures
• Unit nominal value of R$ 10 (ten thousand reais) on the issue date
• The first and second series mature in four and five years, respectively, from the issue date
• The debenture´s remuneration will be established by the Bookbuilding process which will be held in April 03,
2012
Debentures issuance up to R$250 million Assignment of Aa3.br rating (national scale) and, Ba2 (global scale)
Debt Pro-forma
83% of our debt is indexed by IPCA or IGPM (without Coupon)
Breakdown indexes
(considers Big Ben and Sant’ana´s acquisition)
The New Brazil Pharma - Debt
Net Debt (Net Cash) 4Q11 (144.8)
(+) Debt of Big Ben´s acquisition1 314.4
(+) Debt of Sant'ana´s acquisition2 333.0
Net Debt (Net Cash) 4Q11 Pro-forma 502.6
(1) Considers the installment in cash of the acquisition (R$293.0 millions) and net debt of R$21.4 millions in October
31, 2011.
(2) Considers the installment in cash of the acquisition (R$347.0 millions) and net cash of R$14.0 millions in the data
which occurred the assignment.
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Integration – full power
1- Administrative
2 - Commercial
“Integrating talents and services, sharing excellence"
“Building Long-standing Partnerships”
3 - Operations “More with Less”
4 - Cultural “We are Brazil Pharma”
Brazil Pharma’s Shared Services Center (CSC) was inaugurated on March 5, 2012..
Our integration process is represented by 4 work-fronts
“Newsletter” nationally circulated to all employees
Monthly meetings with regional stores managers and RH of each operation: makes them spreaders of BRPH culture
“We are Brazil Pharma” Project: visit stores carrying our “Dream, Mission and People (values)”
Implementation of variable remuneration in the platforms: “Meritocracy to recognize our talents”
Implementation of standard training for store front and back office
Project “More with Less”: increase sales per store, average ticket and decrease expenses
Objective: standardize and speccially improve the actual stores´ performance, increasing productivity of our portfolio
2º event “Brazil Pharma with the Pharmaceutical Industry”: a closer relationship with the industry and strengthen the Group Brazil
Pharma
Objective: always be the best long-term solution for our supplier, to position ourselves as the first choice of our suppliers
Result: improvement in our trading conditions, optimizing the performance of point of sale and priority in the new product launches
The CSC centralizes support functions such as finance, human resources, procurement, management and systems, so that the other
areas can focus on the company’s core business.
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Strategy 2012-2014
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
Mara Boaventura
IR Manager
(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
