VIPS Acquisition Perfect Fit, Alsea Continues on the Right Path. September 2013

Transcription

1 VIPS Acquisition Perfect Fit, Alsea Continues on the Right Path September 2013

2 Disclaimer This presentation contains certain forward-looking statements that reflect the current views and/or expectations of Alsea and its management with respect to its performance, business and future events. We use words such as believe, anticipate, plan, expect, target, estimate, project, predict, forecast, guideline, should and other similar expressions to identify forward-looking statements, but they are not the only way we identify such statements. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. Alsea is under no obligation and expressly disclaims any intention or obligation to update or revised any forward-looking statements, whether as a results of new information, future events or otherwise.

3 Agenda 1 Transaction Overview 2 2 VIPS Leading Company, Right Compliment, Long-Term Value Creation Opportunities 4 3 Impact on Alsea 12 4 Perfect Fit, Alsea Continues on the Right Path 15

4 1 Transaction Overview Transaction Alsea S.A.B. de C.V. ( Alsea ) has reached definite agreements with Wal-Mart de Mexico S.A.B. de C.V. ( Walmex ) to acquire 100% of VIPS VIPS operations include a total of 362 restaurants: 263 VIPS, 90 El Portón, 7 Ragazzi and 2 La Finca The Transaction also includes: (i) 18 owned outlets, (ii) 214 constructions, (iii) food processing plant that contributes to product standardization, wholesale purchasing, centralized procurement as well as dessert and sauces manufacturing; and (iv) all applicable intellectual property VIPS Mexico s largest full-service restaurant chain One of the most iconic and well regarded consumer brands 362 units distributed throughout Mexico with four flagship formats Serves more than 6.0 mm clients per month Aggregate 2012 revenue and EBITDA of Ps.$6,193 mm and Ps.$963 mm, respectively 2

5 1 Transaction Overview (Cont d) Purchase Price Purchase price of Ps.$8,200 mm Implied 8.4x LTM EV/EBITDA multiple Transaction on a debt free and cash free basis Funding Alsea intends to fund the Transaction with peso-denominated debt instruments Financing intended from a solid group of both local and international banking relationships Timing Transaction has been approved by both Boards of Directors Customary regulatory approvals, shareholder vote and closing conditions expected in due course Closing expected following customary authorizations 3

6 2 VIPS at a Glance Company Overview Geographic Footprint (1) VIPS is Mexico s largest full-service restaurant chain and one of the most iconic and well regarded consumer brands Units Leader in the full-service restaurant chain sector with 16% market share in terms of number of visits 41 Primarily targets the rising middle-income class (D+/C-/C/C+ segments) Company with aggregate 2012 revenue and EBITDA of Ps.$6,193 mm and Ps.$963 mm, respectively LTM Revenue Contribution by Format (%) (2) VIPS operates four formats: 263 VIPS (cafeteria), 90 El Portón (Mexican), 7 Ragazzi (Italian) and 2 La Finca (traditional Mexican) Presence in 65 Mexican cities Founded in 1964 and acquired by Walmex in % 1.2% 18.7% 79.7% (1) As of June 30, (2) LTM Restaurant level revenue as of June 30,

7 2 VIPS Attractive Brand Portfolio Key Operating Statistics by Format Vips El Porton Ragazzi La Finca TOTAL # Units Average Sales per Unit (1) $18.5 $12.7 $10.4 $14.6 $16.9 % Contribution of Total Sales 79.7% 18.7% 1.2% 0.5% 100.0% EBITDA Margin (2) 19.5% 16.8% 13.1% 17.6% 18.9% Description The leading Mexican cafeteria chain Flagship format with nationwide geographic presence Favorite among customers seeking traditional Mexican dishes Offers customers a complementary, differentiated value proposition Italian restaurant with a traditional Tuscan ambience At La Finca, customers enjoy quality Mexican dishes combined with a homely, rustic décor Note: Restaurant level figures as of June 30, (1) Restaurant level revenue in Ps.$ million. (2) Restaurant level EBITDA margin. 5

8 2 Mexico s Largest Full-Service Restaurant Chain Attractive Dynamics in the Foodservice Industry Mexico Total Foodservice Sales 2011 Fast Food 12.2% Cafes & Bars 9.2% Home Delivery Take Away 1.5% Immediate Leadership Position Largest full-service restaurant chain in Mexico Street Stalls/ Kiosks 23.7% Full-Service Restaurant (US$28 bn market) 53.4% Significant growth potential as 90% of full-service restaurants are still independent #1 in the Mexican Full-Service Restaurant Industry Independent 90% Full-Service Industry Chain 10% 1Q13 Share in Visits Others 50% 4% Peer #6 16% 6% 4% Peer #5 6% 14% Peer #4 Peer #3 Peer #2 16% market share in the Mexican full-service restaurant chain industry Brand with more than 50 years of presence in the Mexican market Source: Euromonitor. 6

9 2 Concept Focused on Expanding Middle Class VIPS Clientele Profile VIPS Format Clientele Profile Age Breakdown Socio-Economic Breakdown Largest socio-economic segment of the Mexican population Years 46% < 24 Years 34% D+ 56% B/C+ 18% Segments of influence represents 65% of total population Middle income segment expected to grow at a faster pace > 49 Years 20% El Porton Clientele Profile C 26% High growth potential given age dynamics profile at the VIPS format and El Porton Years 54% Age Breakdown < 24 Years 25% D+ 65% Socio-Economic Breakdown B/C+ 14% C 21% > 49 Years 21% Source: BrandTrack. 7

10 2 Customers and Format Profile Complimentary to Alsea s A / B 7% Represents an entry level for customers C+ 14% C 17% C- / D+ 36% D / E 26% Focus on service as it represents first full-service restaurant experience for a significant number of customers Identify consumer trends on the lower part of pyramid and trade up to other Alsea s formats Complimentary offerings through the day filling the breakfast gap Alsea has the tools to drive additional traffic to stores Expand/enhance presence in largest segment of the Mexican population Source: Socio-economic distribution based on AMAI. Note: Percentages reflect 2012 % of Total Households by category in Mexico. 8

11 2 Solid Financial Performance Revenue (Ps.$ mm) EBITDA (Ps.$ mm) $6,000 $6,193 $6,245 $880 $963 $977 $5,711 $662 $639 $5,213 Y-o-y LTM (1) (1) LTM Growth 9.5% 5.1% 3.2% Margin 12.7% 11.2% 14.7% 15.5% 15.6% EBITDA Units FCF Conversion 362 (2) 58.8% 43.6% 73.9% 72.1% (1) LTM for the period` ended June 30, (2) FCF conversion calculated as pre-tax free cash flow divided by EBITDA. 9

12 2 Positive Long Term Industry Fundamentals Demographic Trends Large and Young Population In millions E Women Men Chain Units Penetration Potential Chain Outlets per 000 People Argentina Chile Colombia Brazil Mexico U.S. Japan High Informality Could Drive Consolidation Full-Service Segment Set for Continued Growth Formal Independent/ Non Chain Units 34% 2011 Number of Units % Sales CAGR Chain Units 3% 6.7% 4.7% 9.0% Informal Independent/ Non Chain Units 63% E Source: Euromonitor, INEGI. Industry fundamentals would likely favor VIPS long-term development 10

13 2 Value Creation Opportunities Strategy for Long Term Profitable Growth Economies of Scale and Scope Overhead Distribution Margin Enhancement Optimize Menu Offering Target menu offering and pricing to clientele Focus on Improved Service Invest in Ambience and Customer Experience Restructure Non-Profitable Units Prudent New Openings Strategy 11

14 3 Financial Impact on Alsea VIPS would represent more than 31% and 37% of the combined revenue and EBITDA, respectively Expected margin expansion at Alsea of at least 50 bps by 2014 Transaction multiple of 8.4x significantly below Alsea s current EV/LTM EBITDA multiple EPS accretion since the first year, +5% during the second year 12

15 3 Pro Forma Financial Highlights 2012 Pro Forma: Alsea + VIPS Complimentary format at all levels Mexican Food 1,786 Ps.$19,713 Ps.$ 2,572 Lower-Middle Class Concept Offering 20.4% 31.4% 37.4% 20.4% 6.4% 26.4% VIPS Casual Coffee Shop Significant economies of scale could drive profitability 79.6% 68.6% 62.6% 46.7% QSR Margin expansion at Alsea of approximately 100 bps (Pro Forma 2012 impact) Units Revenue EBITDA Concept Standalone Alsea Contribution from VIPS Note: Ps.$ figures in millions. 13

16 3 Leverage Impact Consolidated Net Debt / EBITDA Below 3.0x by 2015 Alsea seeks an efficient leverage structure with debt at Alsea and at VIPS levels $12,721 Intended package fully denominated in Pesos from a solid group of local and international banks $8,200 Alsea s intention to promptly reach historical leverage levels $5,037 $516 $4,521 The Company is considering different alternatives to achieve desired leverage level below 3.0x Net Debt/EBITDA Strong cash conversion Total Debt (1) Cash & Cash Equivalents Net Debt New Debt Leverage Ratio (Net Debt/LTM EBITDA) Proforma Net Debt 2.6x 2.3x 4.4x (1) Note: As of August 31, Figures in Ps.$ million, except for multiples. (1) Total debt and LTM EBITDA have been adjusted to reflect the Southern Cone acquisition. 14

17 4 Perfect Fit, Alsea Continues on the Right Path A Accelerated Growth Compliment Alsea s strong organic and inorganic proven growth B Become a Leader in the Mexican Full-Service Restaurant Industry Acquire the largest restaurant chain in Mexico C Acquire Iconic Brand One of the highest recognized brands within the Mexican restaurant consumer space D Complimentary Business to Alsea s Concepts Mexican concept Attack lower middle class E Upside Potential Cross fertilization and best practices adoption Clear strategy to deliver returns to Alsea 15

18