Grupo LALA, S.A.B. de C.V. 4 th Quarter, 2016 Earnings Conference Call February 21 st, 2016
DISCLAIMER This material does not constitute an offering document. This material was prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities. Any offering of securities will be made solely by means of an offering memorandum, which will contain detailed information about the Company and its business and financial results, as well as its financial statements. Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the U.S. Securities Act of 1933, as amended. This presentation includes forward-looking statements or statements about events or circumstances which have not yet occurred. We have based these forward-looking statements largely on our current beliefs and expectations about future events and financial trends affecting our businesses and our future financial performance. These forward-looking statements are subject to risk, uncertainties and assumptions, including, among other things, general economic, political and business conditions, both in Mexico and in Latin America as a whole. The words believes, may, will, estimates, continues, anticipates, intends, expects, and similar words are intended to identify forward-looking statements. We undertake no obligations to update or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Therefore, our actual results could differ substantially from those anticipated in our forward-looking statements. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. We and our affiliates, agents, directors, employees and advisors accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. This material does not give and should not be treated as giving investment advice. You should consult with your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary, and make your own investment, hedging and trading decision based upon your own judgment and advice from such advisers as you deem necessary and not upon any information in this material. 2
MACRO ECONOMIC REVIEW 4Q-2016 Market Fluctuations impacting Mexican economy: Positive Consumption Environment: Impact in the Mexican Peso 19.5% on a year on year basis National Producer Price Index grew 8.5% in December, 2016 Consumer Confidence declined 7.8% in December, 2016 Consumer Private Consumption increased 2.8% in 2016 3
ACCELERATING OUR SALES GROWTH YEAR-ON-YEAR GROWTH 3M ended December 31 st NET SALES Organic Growth 6.6% Inorganic Growth 8.0% 12,530 14,354 4Q-15 4Q-16 (*) Company Data, in Mexican Pesos ( 000). SALES BY SEGMENT 62.6% YoY 9.4% 32.4% YoY 25.7% 5.0% YoY 17.0% MILK (1) Other Dairy Products: Cream, butter, cream-based spreads, yoghurt, cheese, ice cream and desserts. (2) Beverages and Others: Beverages, tea, juices, cold cuts and other income. OTHER DAIRY PRODUCTS (1) BEVERAGES & OTHERS (2) 4
MEXICO EBITDA IMPROVING MEXICAN BUSINESS 3Q 2016 vs 4Q 2016 EBITDA (1) 152 bps expansion Margin (2) 12.6% 14.1% 1,573 1,805 3Q-16 4Q-16 (*) Company Information, in Mexican Pesos ( 000). (1) EBITDA= Earnings Before Interest, Taxes, Depreciation and Amortization. (2) EBITDA Margin= EBITDA/Net Sales. 5
4Q-2016 EBITDA IMPACTED BY RECENTLY INTEGRATED BUSINESSES YEAR-ON-YEAR COMPARISON 3M ended December 31 st $1,802 $31 ($86) ($146) $1,601 (1) (2) 14.4% (3) 323 bps 11.2% (3) (*) Company Information, in Mexican Pesos ( 000). (1) CAM: Guatemala, Nicaragua, Costa Rica, Honduras & El Salvador. (2) Net dilutive effect from consolidating 3 months of the US Branded Business. (3) EBITDA Margin= EBITDA/Net Sales. 6
TRACKING LALA US U.S Yoghurt (1) We are outpacing the category 24.4% 17.0% (2.0%) Total Yoghurt Category Drinkable Yoghurt Lala Drinkable Yoghurt (1) Source: IRI, US MULO (MULti-Outlet) 26 Weeks Ending 12-27-16., 3Q 16 (3) 4Q 16 (3) Sales $548 $840 EBITDA (2) (80) (146) EBITDA/Sales (14.6%) (17.4%) (*) Company Data, in Mexican Pesos ( 000). (2) EBITDA=Earnings Before Interest, Taxes, Depreciation and Amortization. (3) Figures include 2 months of consolidated results in 3Q 16 and 3 months in 4Q 16. 7
FULL YEAR NET SALES INCREASED 11% FULL YEAR DECEMBER 31 st NET SALES Organic Growth 6.7% Inorganic Growth 4.3% 48,183 53,468 12M-15 12M-16 (*) Company Data, in Mexican Pesos. ( 000). SALES BY SEGMENT 63.3% YoY 7.6% 31.0% YoY 16.9% 5.7% YoY 19.2% MILK (1) Other Dairy Products: Cream, butter, cream-based spreads, yoghurt, cheese, ice cream and desserts. (2) Beverages and Others: Beverages, tea, juices, cold cuts and other income. OTHER DAIRY PRODUCTS (1) BEVERAGES & OTHERS (2) 8
FULL YEAR EBITDA INCREASED 51 MILLION PESOS FULL YEAR DECEMBER 31 st EBITDA (1) Margin (2) 14.1% 12.8% 6,810 6,861 12M-15 12M-16 (*) Company Information, in Mexican Pesos ( 000). (1) EBITDA= Earnings Before Interest, Taxes, Depreciation and Amortization. (2) EBITDA Margin= EBITDA/Net Sales. 9
INVESTMENT IN 2016, TOTALED $8.7 BILLION PESOS CAPEX reached: $2.9 Billion Pesos Cheese, yoghurt and specialty milk Production capacity increased 23% Point of sale and go to market Productivity improvements M&A Activity: $5.8 Billion Pesos La Perfecta in Nicaragua Alliance with FIFCO and acquisition of production plant in Costa Rica Lala U.S. branded products (*) All figures and dates are according to Company s estimations. 10
STRONG FINANCIAL POSITION AT CLOSE OF 2016 AS OF DECEMBER 31 st Financial Position 2015 2016 Total Assets $34,474 $40,664 Cash 9,277 5,283 Fixed Assets 13,843 17,858 Total Liabilities 8,832 11,671 Total Debt 50 2,375 Shareholder Equity 25,643 28,993 Key Metrics 4Q-15 4Q-16 Net Debt / EBITDA (1.4)x (0.4)x EBITDA / Interest Paid 558.3x 274.1x Earnings Per Share $1.58 $1.67 4 th Installment of the cash dividend 0.135 pesos per share paid on November 25 th, 2016 (*) Figures in Mexican Pesos ( 000). Source: Company Information. Ratios are calculated in local currency. 11
LALA 2016 STRATEGIC PRIORITIES STRATEGIC 1st PRIORITY Accelerating Organic Growth in Mexico STRATEGIC 2nd PRIORITY Developing Internal Capabilities STRATEGIC 3rd PRIORITY Expanding & Consolidating Central America Operations 4th STRATEGIC PRIORITY M&A and Alliances 12
2017 OUTLOOK: CHALLENGES IN MEXICO Increased Inflation Negative impact on consumers Mexican Peso Devaluation COGS exposure 13
LALA 2017 STRATEGIC PRIORITIES STRATEGIC 1st PRIORITY Protect our base business in Mexico STRATEGIC 2nd PRIORITY Strengthen our product portfolio via innovation STRATEGIC 3rd PRIORITY Consolidate & Expand CAM & U.S. Operations 4th STRATEGIC PRIORITY M&A and Strategic Aliances 14
CAPEX BUDGET 2017: STRENGTHEN OUR PRODUCT PORTFOLIO AND ACCELERATE EXPANSION IN CAM Allocated in: 4 MANUFACTURING PLANTS DIGITAL TECHNOLOGY OUR FIRST DELI MEAT FACILITY IN MEXICO POINT OF SALE 15
CONTACT INFORMATION Investor Relations Anaid Sustaita +52 (55) 9177 5900 investor.relations@grupolala.com Stock Information Grupo LALA has been traded under the ticker LALA B on the Bolsa Mexicana de Valores (BMV) since October 16 th, 2013. For more information: www.grupolala.com Forward-looking statements This document contains certain assumptions, projections and forward-looking statements regarding the Company s financial situation, operative results and information, Grupo LALA s business and that of its subsidiaries as well as with regards to the Company s related plans and objectives. This executive summery does not constitute a public securities offering on behalf of LALA and is intended to be used for informational purposes only.