4Q17 and year-end 2017 Press Release

Transcription

1 4Q17 and year-end 2017 Press Release

2 4Q and FY Results CONTROLADORA MABE, S.A. DE C.V. Net revenues during the fourth quarter of 2017 reached US$851MM, recording growth of 4.7% versus the prior year quarter, driven by solid performance from higher volumes. For the full year, Mabe registered total net revenues of US$2.9Bn, an 8. increase against the previous year, propelled by strong growth across our geographies. Canada, the US and Mexico remain the largest revenue generators, representing the bulk of the Mabe s sales. The US and Canada contributed with 34% and 11% for the quarter and 37% and 11% for the full year. Mexico showed an increase of 8% vs last year in MXN and 7% in USD. Latin America posted growth for both the quarter and the year. Our International business reported unchanged sales for the quarter, while on a full year basis, revenues contracted. Affected by a couple of specific events, EBITDA for the quarter scaled back 3 to US$65MM and 15% during the full year to US$240MM. As part of our commitment to continue deleveraging, our total gross debt contracted 0.8% from US$784MM as of 4Q16 to US$778MM as of 4Q17, similarly our net debt decreased from US$670MM to US$637MM. Units Sales EBITDA EBITDA MARGIN FY FY FY FY vs vs vs vs ,419 10,890 5% 2,959 2,736 8% (15%) 8.1% 10.3% (2%) 4Q 4Q 4Q 4Q vs vs vs vs ,342 3,268 2% % (3) % (5%) CapEx Net Debt Net Leverage Net Interest Coverage FY FY FY FY vs vs vs vs (5%) x (0.95x) 4Q 4Q 4Q 4Q vs vs vs vs % (5%) x (0.23x) (*) Net leverage = Net debt / LTM EBITDA (**) Net interest coverage = LTM EBITDA / Net interest expense

3 Press Release Press Release December 2017 OPERATING RESULTS AS OF 4Q17 33% Total Mabe 3 38% 35% North America 30% 38% Mexico 30% 31% North America Mexico 28% 27% 2 29% 4 44% 29% 31% 25% 4% 29% 4% 100% 25% 11% 24% 5% 32% Total Mabe 100% 5.3% 6.5% (0.2%) 4.3% 21% 33% Mabe 22% 34% 14% Latin America 5 International 43% 3.5% 4.7% 35% 2 7% Latin America 57% International 23% 17% 14% 25% 4% 15% 19% 10% 10% 13% 1% (11%) 4.9% 2.5% 0.8% % Δ in LC % Δ in USD 11% 37% Q Net sales: Sales In Q Mabe sales increased 14% in local currencies and USD vs same quarter last year despite the devaluation of Total Mabe sales increased 3.5% in local currencies and 4.7% Latin America had better quarterly results, with an increase of in US dollars vs. last year These sales were distributed 6.1% in the quarter in USD, as follows: vs 4Q16, cooking reaching products US$851MM. 4.9% in local currencies and of 2.5% in USD terms, when 33%, refrigeration 3, laundry 25% and global products. compared Latin America to 4Q16 region results, had an and increase contributed of 13% in with local 25% currency of Our total sales were distributed as follows: refrigeration 35%, Mabe s and 1% total in USD revenues. vs the fourth Colombia, quarter Ecuador, of 2015, Peru Argentina and Chile which cooking The North ranges America 32%, laundry region 2, increased and global 11% products in USD 7%. vs last grew is one 4.3%, of the 3.4%, biggest 8.7% countries and 5.9%, in the respectively region continues vs the to same be the quarter Our exports in sales to the US increased 11% period most of affected last year. by devaluation Argentina and decreased consumption. 4.9%, due Mabe to is the able North vs. America last year; contributed however our with sales 4 in of volume total sales, increased increasing 9 %. country s to easily macro adjus situation the Argentinian as well as production the entrance and of inventories imported to This difference is the result of selling products with higher the market demand. In all of the remaining markets in Andina 6.5% when compared to 4Q16. Our sales from exports to the goods with lower prices. prices which represent better margins. Our sales in Canada Mabe had outstanding growths. Chile and Ecuador had a US increased 6.5% vs last year with an 8% expansion in increased 11% in $USD vs Q4 2015, this is the third positive significant growth vs the same period of last year increasing volume. quarter As for we Canada have in mentioned this year in bouncing previous back times, from our Mabe International rose 0.8%, while we maintain our the their sales by 45% and 38% respectively in $USD. Peru sales products negative sold results in the of US have stronger margins, from lower commitment had a 19% to increase achieve vs better Q margins and Central and profitability America and in costs of products due to constant negotiations with suppliers; their Colombia markets; sales therefore, had a 5% we and continue 3 % increase analyzing respectively the optimal vs similarly, Mexico represented we have 29% competitive of Mabe manufacturing sales during Q4 costs product Q mix in to $USD. reach our targets. attributable Mexico private to the consumption integration of has factories remained and production solid since in last Mexico. year retail Mexico in represented Mexico had 25% an increase of total sales vs 2015 during the white Finally Mabe International s sales were 11% lower than Q4 lines products. Mabe increased sales by 24% vs last year 2015 in this region but with better margins. quarter, showing a 4.3% growth in USD and 0.2% fall in local in Mexican Pesos, being the fourth quarter with double digit currency. growth in local currency Mexico delivered a 5% increase in

4 Press Release Press Release December 2017 OPERATING RESULTS AS OF DECEMBER 30 TH, 2017 FY % Total Mabe 3 38% 35% North America 30% Mexico 30% 37% 29% North 44% America 28% 29% Mexico 2 29% 31% 4% 9% 47% 30% 25% 27% 100% 25% 11% 4% 24% 5% 11.3% 7.9% 11.9% % 21% 33% Mabe 14% % Latin America 5 International 43% 22% 23% 17% 4% 14% 54% International 10% 23% 18% 5% Latin America 13% 1% (11%) 7.9% 7.9% 6.4% (4.8%) (9.4%) % Δ in LC % Δ in USD 13% 35% 38% 17% 10% Q Net sales: Sales In Q Mabe sales increased 14% in local currencies and USD vs same quarter last year despite the devaluation of in US dollars vs. last year These sales were distributed 6.1% in the quarter Total Mabe sales increased 8. in local currencies and 8.1% Results in Latin America were also favorable, presenting an as follows: cooking products 33%, refrigeration 3, laundry in USD, vs FY16, reaching US$2,959MM. increase 25% and global products. Latin America of 7.9% region in local had currencies an increase and of of 13% 6.4% in in local USD currency terms, when and 1% compared in USD vs to the FY16 fourth results, quarter while of contributing 2015, Argentina with which 23% Our The total North sales America were distributed region increased follows: 11% refrigeration in USD 3, vs last of is Mabe s one of the total biggest revenues. countries Colombia, in the region Ecuador continues and Peru to be grew the cooking quarter ranges %, Our laundry exports 2, in sales and to global the US products increased 7%. 11% 4.7%, most 44.1% affected and by 3.7% devaluation respectively and consumption. vs the same period Mabe of is able last vs. last year; however our sales in volume increased 9 %. year. to easily Chile adjus and the Argentina Argentinian decreased production and 2.8% inventories and 5% to North This America difference contributed is the result with of 47% selling of total products sales, escalating with higher respectively. the market demand. In all of the remaining markets in Andina 11.9% prices when which compared represent to FY16. better Our margins. sales from Our sales exports in to Canada the Mabe had outstanding growths. Chile and Ecuador had a US increased 11% 13.7% in vs $USD last vs year, Q4 along 2015, with this is a 12.0% the third volume positive significant growth vs the same period of last year increasing Mabe International decreased 9.4%, despite having positive quarter for Canada in this year bouncing back from the their sales by 45% and 38% respectively in $USD. Peru sales rise. results during our fourth quarter. negative results of had a 19% increase vs Q and Central America and Colombia sales had a 5% and 3 % increase respectively vs Mexico Mexico represented represented 25% 29% of total of sales Mabe during sales the during year, Q4 having Q in $USD. a rise Mexico in revenues private consumption of 7.0% in USD has and remained 8.4% growth solid since local last currency. year retail in Mexico had an increase vs 2015 in white Finally Mabe International s sales were 11% lower than Q4 lines products. Mabe increased sales by 24% vs last year 2015 in this region but with better margins. in Mexican Pesos, being the fourth quarter with double digit growth in local currency Mexico delivered a 5% increase in

5 4Q Volume Sales EBITDA 3,268 3, , Q15 4Q16 4Q17 4Q15 4Q16 4Q17 4Q15 4Q16 4Q17 FY Volume Sales EBITDA 10,890 11,419 2,747 2,736 (M $USD) 2, ,366 FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17

6 Press Release Press Release Press Release December 2016 December 2017 COGS AND CONTRIBUTION MARGIN: Cost of goods sold for the quarter reached US$728MM, denoting a 10% hike when compared to 4Q16 COGS of US$662MM, pressured by higher raw material costs mainly energy prices coupled with the effects of FX. With a gross profit of contribution margin: US$123MM, ourmargin gross margin a 4% loss to 14%. Considering 12-month operations, COGS rose 11% to US$2.5Bn, The contribution for Q4suffered 2016 was US$150 million, which translates to a gross profit of US$475MM withmillion, a 1 gross margin. 8% below vs Q and for FY 2016 was US$493 5% below vs last year This industry is very sensitive to price adjustments; therefore, it is not possible to translate OPERATING EXPENSES: immediately all the commodity or currency variation to the alongside Haier, coupled with growth across our geographies, As mentioned in previous quarters, the launch of new projects clients. our SG&A for 4Q17 grew 14% compared to 4Q16 standing at US$85MM, also affected by FX. For the year-end, our SG&A were 1 lower, ending the year at US$342MM FiXEd costs and EXpENSES: Fixed costs and expenses for Q decreased 12% OPERATING ANDstanding EBITDA: at US$75 million, which compared to PROFIT Q Operating 9% profit down 50% US$38MM for 4Q17, represents of was net sales. Fixedtocosts and expenses forwhile EBITDA totaled US$65MM, showing a 3 drop when FY compared 2016 decreased to 4Q16. 2% Consequently, compared our to last EBITDA year margin standing decreased at to 7. for the quarter. On a full-year basis, operating US$310 million, which represents 11% of net sales. profit stood at US$133MM and EBITDA at US$240MM, with an EBITDA margin of 8.1%. The decreases respond to lower contributions from our operations in LatAm and product recalls. operating profit and EbiTda: Market volatility and currency translation effect impacted our COST OF FINANCING: results. Operating profit was US$76 million in Q4 2016, and Our netmillion financial back to US$20MM in 4Q17. We saw this same behavior during 2017 as our financing US$183 in expenses FY pulled EBITDA in 44% Q4 was US$100 MM costanretracted 41% toof US$64MM. with EBITDA margin 12.4%. EBITDA in 2016 was US$282 MM with an EBITDA margin of 10.3%. We have been able to RESTRUCTURING CHARGES: maintain for the lastand yearsother historical levels around 10 %. Restructuring expenses rose to (US$1MM) for the fourth quarter of 2017 and to US$5MM for the full year, which are related cost of FiNaNciNg: to severance payments and restructuring expenses from Canada. Net comprehensive financin cost stood at US$36 million in Q and US$108 million in FY Net interest expense CAPEX: and commissions were US$17 million in last quarter During the quarter, capital expenditures reached US$32MM, of which US$20MM were used for expansionary purposes. As Foreign exchange loss during Q was US$19 million vs thru December afor lossthe of January US$1 million in period, CapEx reached US$139MM. As mentioned in previous quarters, in order to support future growth, CapEx during 4Q17 as well as YTD, is higher than in previous years due to the following: RESTRUcTURiNg and other charges: Restructuring expenses were US$9Blend million for FY These LatAm inceased Prime offering expenses are related to the fixed assets cost and severance Mexico and Colombia invested in new eco-friendly refrigerators with the R-600 gas payments. NAOS launching new modular kitchens across our markets capex: Mexico strengthen presence in automatic washers, on-site warehouses We invested US$ 25 MM on CAPEX; 21% less than Q Plants increase capacities across our sites Capex FY was US$ 103 MM; 10% above last year which is USour andbudget Canadainvestment. launch ofthis new was products in all categories. Additionally, we are increasing capacity in order to satisfy in line with mainly because the biggest in summer In of allproducts the year in wethe United States GEinvestment Appliances finished incremental demand invested 42% approximately on Maintenance and 58% in new product development WORKING CAPITAL:projects for our 3 core categories. As of the end of 2017, we had a working capital variation of US$58MM. Changes respond to the following: first, our WoRKiNg capital: inventories by US$60MM; second, accounts rose US$61MM and finally, our accounts payables grew Mabe had a grew working capital of US -$123our million at thereceivables end ofus$179mm. the 4th quarter of 2016, this represents an improvement of US$92 million compared with Q We reduced our inventories by US$35M USD and increased our accounts DEBT STRUCTURE: receivable by US$12 M USD. Total gross debt reached US$778MM by the end of the year, just below our 2016 figure of US$784MM. Long-term debt contracted 3% to US$745MM and represents 9 of the total debt. The average life of our debt is 3.77 years, with an average interest rate of 7.44%. Currency mix is 86.23% in USD, 9.23% in MXN, 3.5 in CAD, and the remaining 0.98% in ARS. On a net debt basis, we closed the year with a total of US$637MM, resulting in a net leverage to EBITDA ratio of 2.65x.

7 Controladora Mabe S.A. de C.V. Consolidated Condensed Income Statement (Unaudited) (US$MM) 4Q FY Net Sales ,959 2,744 COGS ,484 2,169 Gross Income SG&A Operating Income Net Interest (Income) / Expense Commissions FX (Gain) / Loss (1) 19 (14) 53 Net Financing Cost Restructuring & Other Charges (1) (4) 5 (7) Income / (Loss) Before Income Tax Income Tax Expense (7) Consolidated Net Income / (Loss)

8 Controladora Mabe S.A. de C.V. Consolidated Condensed Income Statement (Unaudited) (US$MM) Assets FY Current Assets Cash and Cash Equivalents Accounts Receivables, net Tax Receivables Inventories, net Total Current Assets Net PP&E Deferred Taxes Other Assets, net Liabilities Current Liabilities Total Assets 2,446 2,218 Current Maturities of LT Debt & ST Debt Notes and Accounts Payables to Suppliers Other Accounts Payables and Accrued Liabilities Income Tax Payable Total Current Liabilities 1, Long-Term Debt Employee Retirement Obligations Financial Instruments - - Deferred Taxes Other LT Liabilities Total Liabilities 1,951 1,742 Total Equity Total 2,446 2,218

9 CONTACTS José Calvillo Mauricio Gil Rocha José CFO Calvillo Mauricio Corporate Gil Treasury Rocha Director CFO Phone: Corporate Phone: Treasury Director Phone: Phone: Daniela Garza Laura Alvizo Corporate Treasury Manager Treasury && Investors Relations Jr. Manager Jr. Manager Phone: Phone: COMMENTS ON OUR FINANCIAL STATEMENTS: This Press Release contains our unaudited condensed consolidated financial statements as of December 31 st, 2017 and December 31 st, Since January 1 st, 2010 we have prepared our condensed financial statements in U.S. Dollars, which represent the functional currency applicable to Controladora Mabe. Other periods were translated by using the average foreign exchange rate of the reported period for income statement accounts. Furthermore, since January 1 st, 2012, our financial statements are reported in accordance with the International Financial Reporting Standards, referred to as IFRS. Before January 1 st, 2012 our condensed financial statements were prepared according to the Mexican Financial Reporting Standards, referred to as MFRS. MFRS differs in certain significant respects from IFRS and from the generally accepted accounting principles applied in the United States, referred to as U.S. GAAP. The latter might be material to the financial information contained herein. We have not prepared a reconciliation of our financial statements and related notes from IFRS to MFRS, MFRS to U.S. GAAP or IFRS to U.S. GAAP and we have not quantified those differences; therefore, we cannot assure that a reconciliation would not identify material quantitative differences. EBITDA is not a measure of financial performance under IFRS and should not be considered as an alternative to net income or operating income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. You should review EBITDA, along with net income and cash flow from operating activities, investing activities and financing activities, when trying to understand our operating performance. INDUSTRY & MARKET DATA: Certain data and other statistical information used throughout this Press Release are based on independent industry publications, government publications, reports by market research firms or other published independent sources. Other data is based on our estimates, which are derived from our review of internal surveys, as well as independent sources. Our estimates for South America and Central America are based exclusively on our beliefs and information we have obtained ourselves and not from independent sources. Although we believe our sources are reliable, we have not independently verified the information and cannot guarantee its accuracy or completeness. All market share information presented in this press release is based on unit sales.