Apresentação 1Q17

1Q17 Earnings Release

1Q17 | Capital Allocation Strategy

Profarma2017 | Focus in profitability

3

Company in

Ramp up

Pharma market

Increasing

FOCUS: ROIC AND NET INCOME

Sharp drop in

Interest RateInflation

Decreasing

Better Return

SegmentsEbitda Margin

EvolutionCapital

Reallocation

Dilution of

Operating Costs

20

17

20

18

611 641

76 102

396

658

1,083

1,401

1Q16 1Q17

10.8% 10.9% 10.9%12.2%

13.4% 14.0% 14.3%

Profarma2016 - 2017 | | Capital Allocation Strategy for Best Return Segments

Invested Capital Evolution – Profarma Group

4

625 631 662 776578 571

709

41 68101

53 6896

156

272389

571

625 672 730

1,032903

1,028

1,376

2010 2011 2012 2013 2014 2015 2016

13.9%14.8%(R$ million)

Pharma Consolidated potential ROICSpecialties Retail

Invested Capital: Equity + Net DebtROIC: NOPAT /Invested Capital

Po

ten

tial

RO

IC

Pharma: 10.6% - last 5 years average.Specialties: 12.6% - last 5 years average for a adjusted EBITDA margin of 3.2%.Retail: 19.2% - top 3 players average.Consolidated: Weighted average potential ROIC, considering each division’s potential ROIC.

Drugstore Market✓

Wholesalers with lower dependence on big chains and market share growth with

higher rates.

Profarma | Histórico Alocação de CapitalProfarmaVerticalization | Profarma’s Model Benefits

5

Lower Working Capital✓

Optimized working capital and a cash cycle 30 days shorter than the average of

other retail players.

Supply Agility✓

Integrated logistic structure enables a promptly accelerated inventory recovery

in various regions.

Relevance to Suppliers✓

Combined purchsing power between retail and wholesale assures more

competitive prices.

Tax Optimization✓

More competitive prices when buying inside the state directly from the

wholesale.

G&A Sinergies✓

Shared Services Center: legal, fiscal, internal audit and human resources.

Distribution center shared with wholesale clients – 35 thousand clients supplied

nationally.

ProfarmaRosário Performance

Financial Indicator

6

Operating Expenses(R$ Million)

(18.9)

(14.5)

Operating Indicators

Ebitda(R$ Million)

(6.3)

(1.5)

Monthly average sale 1Q17 - RosárioDec/16 Mar/17 - RosárioSep/16

Monthly average sale(R$ thousand)

165

289

536

Service level(%)

56

9093

Clients served(# thousand)

573

781

1.900

Average Ticket(R$)

43

52

36

Mar/17 - d1000 varejo farma RJ

ProfarmaConsolidated | Leverage

7

Gross Debt Aging Annual Decrease of Financial Expenses*

1Q17Cash

294

(R$ Million)

273

2018

89

2019

75

2020

50

2021

* Estimate based on Financial Expenses calculated at 14.25% CDI compared

to Financial Expenses calculated at 9.5% CDI. Average level of debt and

spreads kept constant as of 1Q17.

25

2017 From 2018

38R$690 Million

2017

204

(R$ Million)

Consolidated Performance

Profarma1Q17 | Key Highlights

9

PROFARMA GROUP | CONSOLIDATED

• Total sales grew by 8.1% in the period, highlighting the

Retail Division, with a 56.7% growth.

• Reduction of indebtedness (w/o Rosário) from 2.7x to

2.5x.

• Adjusted Net Income R$ 3,9 million higher, excluding

the effects from the Retail Division’s investments and

the Rede Rosário’s results.

• Sales 3.4% higher, including a double-digit increase for

the fifth straight quarter in the Independent customers

segment.

• Gross margin increased, which resulted in an EBITDA

5% higher, totaling R$ 18.8 million.

• 2.5-day shorter cash cycle in comparison to 1Q16.

PHARMA DISTRIBUTION

Profarma | Histórico Alocação de CapitalProfarma1Q17 | Key Highlights

10

SPECIALTIES

• Gross revenue rose for the ninth straight quarter,

12.8% in the 1Q17.

• Operating expenses reduction in the last years, being a

1.2 p.p. drop this quarter when comparing to 1Q16.

• Sales grew by 13.6% against 4Q16, and monthly

average sales per store grew 75% comparing mar/17

with sep/16.

• Average monthly EBITDA shot up by 76.6% from

December 2016, with a 23.3% decrease in the operating

expenses.

• Average monthly Net Loss improved, 67,8% up from

December 2016.

REDE ROSÁRIO

d1000 VAREJO FARMA RJ

• Gross margin rose by 0.9 p.p. to 30.5%.

• Adjusted EBITDA totaled R$ 4.1 million, 17.1% higher.

Consolidado | Receita Bruta

8.1%

Consolidated IFRS (R$ million)

Sales increased by 3.4% year-over-year.

Pharma Distribution

Retail

ProfarmaConsolidated | Gross Revenues

11

Sales increased by 56.7% year-over-year.

Pharma Distribution Retail

1Q16 3Q16 4Q162Q16 1Q17

930 945 9651,022

910

196 205 198

241

307

1,126 1,150 1,163

1,2631,217

Consolidado | Ebitda e Margem Ebitda AjustadaProfarmaConsolidated | Adjusted EBITDA and EBITDA Margin (w/o Rosário)

12

2.1%5.4%

1.8% 2.1%3.5%

* Excluding additional of corporate expense

18

45

30

16 19

4

10

7

54

-1 -1 -2 0 -1

21

54

35

21 22*

Pharma Distribution Retail Equity Income -Specialties

Consolidated IFRS (R$ million and % Net Revenues)

1Q16 3Q16 4Q162Q16 1Q17

Consolidado | Ebitda e Margem Ebitda AjustadaProfarmaConsolidated | Ebitda Bridge per Division 1Q17 vs 1Q16 (w/o Rosário)

13

Pharma

Distribution1Q16 1Q17Equity Income

Specialties

d1000

RJ


0.9

0.6

-0.420.7

21.9

ProfarmaConsolidated | Capex and Indebteness

14

Capex(R$ million)

288

* Ex-Rosário

1Q17OthersITMachinery and

Equipment

10.82.2

1.5

7.1428

398 397

3.3x

3.8x

3.1x3.3x 3.3x

415

353*

326*

2.7x2.5x

Net Debt and Net Debt / EBITDA(R$ million)

1Q16 3Q16 4Q162Q16 1Q17

Consolidado | Lucro LíquidoProfarmaConsolidated | Adjusted Net Income (w/o Rosário)

15


Net Income Adjusted Net Income

1Q17

(1.4)

(27.1)

4Q163Q16

2Q16

1Q16

8.5

(5.3)(9.3) (9.5)

(3.9)

20.7

4.9

(38.6)

-0.9%-0.5%

0.8%

2.1%

-0.9%

0.5%

-3.5%

-0.4%

-2.6%

-0.1%

Consolidado | Ebitda e Margem Ebitda AjustadaProfarmaConsolidated | Adjusted Net Income Bridge per Division 1Q17 vs 1Q16 (w/o Rosário)*

16

1Q16 1Q17d1000

RJOthers

Pharma

Distribution

* Excluding Non Recurring Expenses and Financial Expenses on Retail Investment

Equity Income

Specialties


0.4

3.70.2

-0.4

-5.3

-1.4

Attachments

Consolidado | Receita BrutaProfarmaConsolidated | Gross Revenues

18

8.1%

Consolidated IFRS (R$ million)


1Q16 3Q16 4Q162Q16 1Q17

930 945 9651,022

910

196 205 198

241

307

1,126 1,150 1,163

1,2631,217

Consolidado | Lucro Bruto


ProfarmaConsolidated | Gross Profit

19

75

11494 88 82

58

63

60 7296

133

178

154160

178

13.6%

17.8%

14.6%

17.1%

15.2%


1Q16 3Q16 4Q162Q16 1Q17

Consolidado | Despesas Operacionais SGAProfarmaConsolidated | Operating Expenses - SGA

20


60 66 6979

70

5253 51

74 99112

120 120

153

168

1Q16 3Q16 4Q162Q16 1Q17

11.5%12.0%

14.0%16.1%

11.8%


Consolidado | Ebitda e Margem Ebitda AjustadaProfarmaConsolidated | Adjusted EBITDA and EBITDA Margin (w/o Rosário)

21

2.1%5.4%

1.8% 2.1%3.5%

* Excluding additional of corporate expense

18

45

30

16 19

4

10

7

54

-1 -1 -2 0 -1

21

54

35

21 22*

Pharma Distribution Retail Equity Income -Specialties


1Q16 3Q16 4Q162Q16 1Q17

Consolidado | Lucro LíquidoProfarmaConsolidated | Net Income (w/o Rosário)

22


Net Income Adjusted Net Income

1Q17

(1.4)

(27.1)

4Q163Q16

2Q16

1Q16

8.5

(5.3)(9.3) (9.5)

(3.9)

20.7

4.9

(38.6)

-0.9%-0.5%

0.8%

2.1%

-0.9%

0.5%

-3.5%

-0.4%

-2.6%

-0.1%

ProfarmaConsolidated | Capex and Indebteness

23

Capex(R$ million)

288

* Ex-Rosário

1Q17OthersITMachinery and

Equipment

10.82.2

1.5

7.1428

398 397

3.3x

3.8x

3.1x3.3x 3.3x

415

353*

326*

2.7x2.5x

Net Debt and Net Debt / EBITDA(R$ million)

1Q16 3Q16 4Q162Q16 1Q17

Gross profit shot up by 9.3% to

R$82.4 MM, with 9.1% gross

margin;

EBITDA climbed by 5.0% to

R$18.8 MM, with 2.1% EBITDA

margin;

The Independent customers

segment grew by 19.9%.

Pharma DistributionFinancial Performance

24

1,003

1,021

1,136

1,056

1,041

13.3

8.6 8.99.1

10.57.7

6.8

8.1

7.77.75.3

2.01.6

2.1

3.3

3Q16 4Q161Q16 2Q16 1Q17 3Q16 4Q161Q16 2Q16 1Q17 3Q16 4Q161Q16 2Q16 1Q17 3Q16 4Q161Q16 2Q16 1Q17

Financial Data (R$ million and % Net Revenue)

EBITDA Margin

(%)

Op. Exp. SG&A

(%)

Gross Margin

(%)

Gross Revenues

(R$ million)

Especialidades

Crescimento de 6,3% nas vendas da

categoria de genéricos.

Sales rose by 12.8%;

Operating expenses slid by 1.2

p.p., from 8.7% to 7.5%;

Sales to the private sector rose

by 23.9%;

SpecialtiesFinancial Performance

25

Vaccine sales boomed by

89.1%.



246.5230.9

249.0

260.5

241.5

13.7

11.410.2 9.9

10.6

9.08.7

8.2

7.5

9.0

2.3

2.1

2.6

0.3

0.9

EBITDA Margin

(%)

Op. Exp. SG&A

(%)

Gross Margin

(%)

Gross Revenues

(R$ million)

Varejo

Gross margin rose by 0.9 p.p.

to 30.5%;

Adjusted EBITDA totaled R$4.1

million, 17.1% higher.

d1000 varejo farma RJ Financial Performance (w/o Rosário)

26

d1000 varejo farma RJ

Rede Rosário

Sales grew by 13.6% against

4Q16, and monthly average

sales per store grew 75%

comparing mar/17 with sep/16;

Average EBITDA monthly shot

up by 76.6% from December

2016.

EBITDA Margin

(%)

Op. Exp. SG&A

(%)

Gross Margin

(%)

Gross Revenues

(R$ million)


204.8

195.9

202.4

197.5198.1

31.0

29.6 29.4

30.530.3 26.026.6 27.0

27.9

25.8

4.4

1.8

2.3

1.0

3.2


d1000 varejo farma RJ Operating Performance (w/o Rosário)

27

Total Sales Growth (%) Same Store Sales (%) SSS Mature Stores (%)

3.2%

2.2%

3.7%

10.5%

1Q16 3Q16 4Q162Q16

-11.2 p.p.

12.4%

0.8%

1Q17

1.4%

3.9%

11.1%

1Q16 3Q16 4Q162Q16

-8.1 p.p.

11.3%

1Q17

0.0%

2.5%

8.5%

1Q16 3Q16 4Q162Q16

-8.7 p.p.

9.6%

0.9%

1Q17

d1000 varejo farma RJ Operating Performance (w/o Rosário)

28

Monthly Average Store's Sales (mature)(R$ thousand) # of Stores (units) Average Ticket (R$)

580.1

564.0

589.7

1Q16 3Q16 4Q162Q16

2.2%

549.2

561.0

1Q17

129

130

129

1Q16 3Q16 4Q162Q16

-3.9%

128

123

1Q17

36.36

35.8335.82

1Q16 3Q16 4Q162Q16

4.4%

34.49

36.01

1Q17

4 opening

9 close-down

8 reformulated

102 mature

Max Fischer - CFO & IRO | Beatriz Diez - IR ManagerTel.: 55 (21) 4009-0276 | E-mail: [email protected]

www.profarma.com.br/ir

Apresentação 1Q17

Investor Relations

Transcript of Apresentação 1Q17