INVESTOR RELATIONS Asia & Middle East 2018 Non-Deal Roadshow C O R P O R A T E P R E S E N T A T I O N September 2018
SAFE HARBOR DISCLOSURE This presentation may contain certain forward-looking statements and information relating to the Company that reflect the current views and/or expectations of the Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like believe, anticipate, expect, envisages, will likely result, or any other words or phrases of similar meaning. 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 and in oral statements made by authorized officers of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2
WHO WE ARE Genomma Lab Internacional, S.A.B. de C.V., one of the leading pharmaceutical and personal care products companies in Mexico with an increasing international presence, develops, sells and markets a broad range of premium branded products, many of which are leaders in their categories.
A LEADING OTC & PERSONAL CARE COMPANY Develop, sell and market a broad range of leading OTC and personal care brands throughout Mexico & LatAm Diversified portfolio of trusted brands- many of which are category leaders Growing international presence and revenue base Success based on: Effective new product development process Marketing and Sales Execution Machine Broad retail distribution network Low-cost, highly flexible operating model. 4
POWER BRANDS IN MULTIPLE CATEGORIES Anti-mycotics 5
OUR FOOTPRINT LatAm 49.3% of net sales Points of Sale 270,000+ Innovation is part of our DNA Mexico 40.3% of net sales Countries 19 USA 10.4% of net sales Production facilities 1 Brands 35+ 781 employees *As of June 2018 LTM. 6
BUSINESS ON TRACK FOR SUSTAINED PROFITABLE GROWTH Strong trend of strengthened consolidated earnings, cost reduction and EBITDA expansion Sustainable business model Mexico manufacturing facility: improves value, margins, product quality and fill-rate Positive impact from the vertical integration of manufacturing activity to begin in late 2018. 7
GROWTH ACHIEVED IN OTC AND PC Sales by Category (Million MXN) CAGR +9.2% 12,089 53% Personal Care 6,264 PC 45% OTC Generics 47% 50% 5% 2010 Q2-2018 LTM Over the Counter *Consolidated Net Sales as of June 2018 LTM. 8
20+ YEARS OF EXPERIENCE Genomma was founded 1996 2004 Private Equity Fund investment for 30% equity Initial Public Offering - BMV 2008 Added to the Stock Indexes and first Local Bond Issuance 2013 2010 Began operations in Brazil & United States New management team, strengthened policies 2015 and processes Top-line growth and EBITDA margin expansion 2017 2018 Own production facility* *Estimated to be opening by November 2018. 9
GROWTH COMPLEMENTED BY ACQUISITIONS M&A represents 30.3% of Genomma s consolidated sales 1 1996 2007 2008 2009 2010 2011 2012 2013 2018 (1) Consolidated Sales as of June 2018 LTM 10
100% 100% WELL DIVERSIFIED BY REGION & CURRENCIES US Dollar (10.4%) Other currencies International 23.2% 76.8% 59.7% (49.3%) 1. Argentine Peso 2. Real 3. Colombian Peso 4. Chilean Peso 5. Sol 6. Uruguay Peso 7. Guarani Mexico 40.3% Mexican Peso (40.3%) 2010 FY 2Q-2018 LTM 15 countries 19 countries *Consolidated Net Sales as of June 2018 LTM. 11
OTC MARKET SHARE BY COUNTRY Top Two Countries As a percentage of sales Highly Fragmented By category penetration Hispanic OTC MEXICO position 3rd. PLACE 8.8% Total OTC position 1st. PLACE 46.1% USA ARGENTINA position 1st. PLACE 14.9% 0.5% position 42nd. PLACE BRAZIL CHILE 3.7% ECUADOR 4.9% PERU 5.7% COLOMBIA 2.9% CAM 1 6.7% position 6th. position 4th. position 5th. position 9th. position 3rd. (1) Central America: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Puerto Rico, Dominican Republic and Trinidad y Tobago. S e p t e m b e r 2 0 1 8 12
CORPORATE PLATFORM EFFICIENTLY SUPPORTS GROWTH
LEADERSHIP EVOLUTION RODRIGO HERRERA MÁXIMO JUDA JORGE LUIS BRAKE 1998 2015 Experience: Founder of Genomma Lab Internacional Chairman of the Board of Directors Main Shareholder 2015 2018 Experience: COO, Head of International Launched Genomma s Argentina, Brazil and US operations From Sept. 10, 2018 Experience: Senior Vice President at Laureate Education Inc. CEO of P&G s Latin America division 14
MANAGEMENT TEAM ANTONIO ZAMORA CFO MARCO SPARVIERI COO SANTIAGO VÉLEZ VP Manufacturing and R&D CÉSAR JARAMILLO EVP Marketing JOINED DEC 2015 JOINED APRIL 2014 JOINED FEB 2017 JOINED SEPT 2017 Prior Experience: CCO Cydsa CFO Grupo LALA Strategic & Financial Planning PEPSICO McKinsey & Co Prior Experience: EVP Sales P&G 20+ years of experience in consumer goods Prior Experience: 25 year as: CEO and Founder of Quala in Venezuela, Dominican Republic & Mexico 7 years as CMO Quala Colombia. Prior Experience: 20-year career in marketing with P&G Head of marketing at Grupo Televisa, S.A.B. 15
SUCESSFUL COST CONTAINMENT STRATEGY Warehouse Space (m 2 ) Corporate Office Space (m 2 ) 165,000 6,000 2,800 36,047 2014 2017 2014 2017 16
INCREASED EFFICIENCY WITH COST CONTAINMENT STRATEGY Employees 1,107 (41.9)% MEXICO 481 238 INTERNATIONAL 300 Sep 2014 Dec 2017 17
NEW BUSINESS MODEL Strengthens advertising and online marketing Management team reinforcement Increase Value, Market Share & Ensure Sustainability Develop manufacturing capabilities Improve point of sale execution 18
GROWTH STRATEGY STRATEGY ACTIONS RESULTS Marketing & sales Innovation and channel diversification Top-line growth New production facility Cost reduction, higher fill-rates, increased sales and capacity expansion Strengthened profitability Margin expansion 19
NEW MANAGEMENT TEAM S STRATEGIC DIRECTIVE STRATEGY ACTIONS RESULTS Operational & business initiatives Price elasticity Innovation & capacity expansion Geographic footprint and channel diversification Cost and SG&A efficiencies New production facility Top-Line growth Profitability Strengthened financial policies Results with transparency Commitment to strong balance sheet Investments aimed at improving productivity Solid financial position and positive FCF Transparency TextoConfidence Best practice corporate governance 82% independent Board Members 100% Independent committees Focus on social responsibility World class practices IPC Sustainability Index 20
NET SALES & EBITDA OUTLOOK Net Sales (in MXN$ mm, accumulated periods considering last twelve months LTM) $12,765 Consolidated Quarterly Earnings reflect trend of positive compounded growth $4,000 $3,000 $2,000 $1,000 $0 Adjusted (2) EBITDA (1) $1,798 $1,851 $1,792 16.3% $11,043 $11,125 $10,988 $11,287 $11,316 $1,986 (1) EBITDA is calculated by adding depreciation and amortization to the Operating Income. (2) Adjusted by adding restructuring non-recurring charges and one-time, non-cash charges in 2015 and 2016. $11,669 $11,741 $11,898 $2,205 $2,337 $2,401 $2,503 $2,601 $2,868 16.6% 16.3% 17.6% 19.5% 20.0% 20.5% 21.0% 21.5% 22.5% 2015 FY 2016-1Q 2016-2Q 2016-3Q 2016 FY 2017-1Q 2017-2Q 2017-3Q 2017 FY 2018E EBITDA $12,078 2015 FY 2016-1Q 2016-2Q 2016-3Q 2016 FY 2017-1Q 2017-2Q 2017-3Q 2017 FY 2018E Margin 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 21
NEW PRODUCTION FACILITY
INVESTMENT RATIONALE Enhanced Value Equation Higher Gross Margin Superior Product Quality Reliable Product Supply 23
ECONOMIES OF SCALE AND SCOPE DRIVING HIGHER GROSS MARGINS Opportunity areas Outsourcing Producing Raw Materials and Packaging Buying finished products Fragmented raw material procurement Direct control in all COGS components Economies of scale Labor Cost Low scale, labor intensive processes State-of-the-art fully automated lines Process Un-synchronized Supply Chain Network High setup times for changeovers Vertically integrated Supply Chain Network Highly efficient and flexible processes 24
ECONOMIES OF SCALE AND SCOPE DRIVING HIGHER GROSS MARGINS Opportunity areas Outsourcing Producing Suppliers Higher COGS due to co-packers profit margin Eliminate co-packers profit margin Logistics Inventories Suppliers scattered throughout the country Inefficient inbound and outbound truckbased logistics Higher inventories due to multiple warehouse network Integration of suppliers to industrial park Leverage freight consolidation and lowcost train logistics for exports Lower safety stocks required for raw materials and finished products 25
EXAMPLE OF REMOVING INEFFICIENCIES IN CURRENT INBOUND LOGISTICS Additional Expenses Shipping & Handling, Storing, Cleaning Filling PE bottles with shampoo in Toluca Pallet Plastic Additional freight 195 km 4:17 hrs Blowing PE bottles in Puebla 26
PROFITABILITY THROUGH COGS REDUCTION 36.2 Genomma Acquired in 2012 from Sidus Market Share in Units (%) 20.8 19.7 12.0 Competitor 12 13 14 15 16 17 34 40 Sales in Million USD 10 14 21 25 OTC product portfolio 13 14 15 16 17 18E Source: Cid Latina N02B + M01A. 27
INVESTMENT PROFILE Benefit from economies of scale and efficient production capabilities Investment Equation (mm MXN) Total Investment Financing 1,398 1,000 Investment Benefits EBITDA savings 700-910 bps 1 Market Expansion: Genomma Lab will reinvest between 200-250 bps to capture market opportunities ROIC > 30% (1) Genomma Lab estimation. 28
MANUFACTURING FACILITY UPDATE 29
MANUFACTURING FACILITY UPDATE 30
MANUFACTURING FACILITY UPDATE 31
INSIDE OTC MANUFACTURING FACILITY 32
INSIDE OTC MANUFACTURING FACILITY 33
INSIDE OTC MANUFACTURING FACILITY 34
STRATEGICALLY LOCATED PLANT CLOSE TO THE MARKET AND EFFICIENT EXPORT LOGISTICS PLANT (79 ACRES) INTERMODAL TERMINAL PUERTA MEXICO J u l i o 2018 35
PRODUCTION FACILITY LAYOUT Load Access +4.0X Expansion +2.2X +1.8X +2.2X Top View Modular design concept design provides flexibility for future growth Main Access Office building OTC Plant Warehouse 42.000 pos. Personal Care plant Main plant Raw materials 20.000 pos Lateral view 36
NEW MANUFACTURING EQUIPMENT State of the art technology, fully automated Uhlmann Bec 700 Coater 37
EXPERIENCED MANUFACTURING TEAM Team leading the construction and operation of new production facility KATHERINE VILLAMIZAR MANUFACTURING MANAGER JOHN PINZÓN CONSTRUCTION HÉCTOR CARRILLO MEMBER OF THE BOARD SANTIAGO VÉLEZ CM MEXICO & VP MANUFACTURING 19 YEARS EXPERIENCE 15 YEARS EXPERIENCE 45 YEARS EXPERIENCE 25 YEARS OF EXPERIENCE Food, pharma, chemical and cosmetic industry manufacturing Plant design & construction for the Food and PC industries Former CEO Apotex Mexico & Latam Former CEO of Quala in Venezuela, DR & Mexico. CMO of Quala Colombia 38
FINANCIAL HIGHLIGHTS
FINANCIAL RESULTS In thousands of MXN pesos Income Statement Growth 2Q-2017 LTM % 2Q-2018 LTM % Net Sales +3.0% $ 11,741,124 100.0% $ 12,089,490 100.0% Gross Profit +1.0% 7,890,622 67.2% 7,969,253 65.9% Operating Income +66.1% 1,547,903 13.2% 2,570,896 21.3% EBITDA +63.3% 1,615,548 13.8% 2,638,558 21.8% LatAm 49.3% of net sales Mexico 40.3% of net sales USA 10.4% of net sales 40
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 CASH CONVERSION CYCLE 1 250 200 150 205 158 155 144 New management team has improved the Cash Conversion Cycle by 68 days 1 114 100 91 78 90 93 90 93 91 97 86 76 50 0 Prior Management New Management (1) Cash Conversion Cycle = Days of accounts receivable + days of inventories days of trade payables 41
Q4'12 Q4'13 Q4'14 Q4'15 Q4'16 Q4'17 Q2'18 FINANCIAL POSITION Net DEBT profile 5,724 3,689 4,454 3,980 3,610 3,732 2,575 Net Debt / Adj. EBITDA 1.0x 1.2x 2.3x 2.5x 1.8x 1.4x 1.4x Free Cash Flow (LTM) (2,795) (851) (1,324) 2,062 1,942 1,510 1,312 Adjusted EBITDA for 2015 and 2016. FCF adjusted by plant investments in 2017 and 2018. 42
FINANCIAL POSITION In thousands of MXN pesos As of June 30, Financial Position 2017 2018 Total Assets $16,142,468 $16,742,413 + $599,945 Cash and Equivalents 1,874,429 1,187,030 (687,399) Total Liabilities 9,829,760 9,060,601 (769,159) Stockholders Equity 6,312,708 7,681,812 + 1,369,104 43
8.1x 10.7x 13.1x 14.2x 12.8x 12.9x 13.5x 15.4x 16.8x 16.4x LAB B OVERVIEW $1,048.0mm Shares Outstanding 64.7% Free Float EV / EBITDA 8.1x EV / EBITDA 18 16 14 12 Avg.13.4x 10 8 6 4 2 0 Source: Company Information, Yahoo Finance 44
CONTACT: Enrique González Head of Investor Relations Barbara Cano InspIR Group - NY inversion@genommalab.com +52 (55) 5081-0000 STOCK INFORMATION: Genomma Lab has been traded under the ticker LAB B on the Mexican Stock Exchange (BMV) since June 18, 2008. FOR MORE INFORMATION: www.genommalab.com/inversionistas FORWARD-LOOKING STATEMENTS: This document contains certain assumptions, projections and forward-looking statements regarding the Company s financial situation, operative results and information, Genomma Lab 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 Genomma and is intended to be used for informational purposes only.