Raia Drogasil S.a. · BMFBOVESPA:RADL3
Raia Drogasil — FY2011 Earnings Presentation
20 slides from Raia Drogasil's earnings presentation, Mar 27, 2012
Slide 1: Earnings Presentation - 2011
Earnings Presentation - 2011 March, 27th 2012
Slide 2: Disclaimer
Disclaimer This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees of future performa
Slide 3: Annual Highlights
Annual Highlights: RaiaDrogasil: Industry leader in revenues and in store count (Abrafarma Ranking, 2011) Drugstores: 776 stores in operation (99 new store openings and 11 closures) Gross Revenues: R$ 4.7 billion, 19.7% growth (10,0% same-store sales) Adjusted EBITDA: R$ 271.5 million, an in
Slide 4: Leading the Consolidation of the Drugstore Industry in Brazil
Leading the Consolidation of the Drugstore Industry in Brazil Foundations for Growth Accelerated Growth Merger 906* IPO 776 (Raia) 688 4,730 IPO (Drogasil) 582 3,949 515 3,382 2,311 409 1,860 2,474 1,595 331 291 304 1,837 267 1,538 1,148 243 1,304 228 831 1,081 2,419 894 721 745 645 2,089 673 558 1,
Slide 5: One-time events adjusted: PPA amortization, accounting alignment, transaction expenses
The creation of RaiaDrogasil resulted in one-time events that were adjusted: PPA amortization, alignment of accounting practices and transaction expenses. Non Recurrent Expenses Net (In R$ thousands) - Fav. / (Unfav.) EBITDA Profit PPA Amortization (7.091) (6.456) Inventories (7.091) (7.091) Intangi
Slide 6: Brazilian pharmaceutical market growth levered by generics penetration
The Brazilian pharmaceutical has sustained accelerated growth levered by the increasing penetration of generics. Pharmaceutical Market Generics Market (R$ Billion) (R$ Billion) 43,0 8,8 36,2 30,2 6,2 26,4 23,6 4,5 3,7 2,9 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Slide 7: RaiaDrogasil consolidated its leadership in the drugstore industry in Brazil
Already in our first year, RaiaDrogasil consolidated its absolute leadership in the drugstore industry in Brazil Gross Revenues (2011) Store Count (2011) 1º 1º 2º 2º 3º 3º 4º 4º Source: Abrafarma Ranking 2011. Acquisitions that happened in 2011 and at the beggining of 2012 (acquisition of Big Ben an
Slide 8: 2011 was a landmark year in sector consolidation
2011 was a landmark year in the consolidation of the sector, as several transactions took place involving the Top 5 players, who reached 29.2% of joint market share. % of Stores % of Revenues 1,9% 1,9% 2,0% 2,1% 2,2% 2,4% 2,7% 15,8% 16,4% 16,8% 18,3% 19,7% 0,7% 0,7% 0,8% 4,5% 22,2% 22,6% 0,9% 1,0% 0
Slide 9: We opened 99 new stores and closed 11 in the year
We opened 99 new stores and closed 11 in the year, reaching a total of 776 stores by year-end. Currently, more than a third of our stores are still undergoing maturation. Age Structure of Store Portfolio Store Count (Store count, % of existing stores) 776 743 YEAR 1 (97) 12.5% 715 YEAR 2 (106) 696 1
Slide 10: National market share increased; entering 3 new states
Our national market share increased by 0.3 percentage point, including strong share gains in PR and in SP. We are entering into 3 new states, increasing our coverage to 84% of the Country. Market Share Geographic Presence (Dec/11) 20.3 19.4 DF: 45 stores 16.0 MG: 64 stores 15.4 GO: 33 stores Raia: 2
Slide 11: Total revenue increase of 20.4% in 4Q11
We accelerated growth through the year and reached a total revenue increase of 20.4% in the 4Q11, with 12.9% for same-stores sales and 8.1% for mature stores. Growth – Total Sales Growth – Same Store Sales Growth – Mature Stores 12.9% 8.1% 20.9% 7.5% 20.4% 19.7% 19.6% 11.0% 7.0% 10.3% 17.4% 6.4% 16.
Slide 12: Droga Raia and Drogasil revenue growth through the year
Droga Raia achieved strong revenue growth through the year, while Drogasil started in a softer way but presented a significant recovery, approaching the growth level of Droga Raia in the 4Q11. Growth – Total Sales Growth – Same Store Sales Growth – Mature Stores 15.0% 14.7% 13.8% 10.5% 25.7% 10.0% 2
Slide 13: Revenues increased 19.7% with Generics as the highlight
Our revenues increased by 19.7% in the year with Generics as the highlight (31.1%). OTC was affected by mandatory shelf removal and HPC by weak seasonal sales in the 4Q11. Gross Revenues (R$ million) Sales Mix 4,730.0 2010 vs. 2011 (%) HPC 28.8% 29.4% 30.7% 30.6% 3,951.8 Year: 22.5 4T: 20.1 OTC 15.3
Slide 14: Gross margin expansion from trade allowances and purchasing model
Strong gross margin expansion coming from an overall increase in trade allowances, opportunistic purchases and through the adoption of Raia´s new purchasing model in the 1Q11. Adjusted Gross Profit Cash Cycle (R$ million, % of gross revenues) (COGS days, gross revenues days) 25.6% 26.2% 86.8 24.5% 1
Slide 15: Sales expenses increased due to store openings and inflation
Sales expenses increased due to the acceleration of store openings in the 2H11, to the headcount increase at Droga Raia in the 3Q11, to the opening of a new DC and to inflationary pressures. Sales Expenses Sales Expenses (R$ million) (% of gross revenues) 16.6% 17.0% 786.5 16.5% 15.8% 626.3 218.9 17
Slide 16: General & Administrative expenses increased due to HR structure upgrade
General & Administrative expenses increased due to an upgrade in our HR structure to support new store openings and to inflationary pressures. Adjusted General and Administrative Expenses Adjusted General and Administrative Expenses (R$ million) (% of gross revenues) 154.1 119.0 3.3% 3.3% 3.0% 3.0%
Slide 17: EBITDA margin expansion of 0.1 percentage point in 2011
EBITDA margin expansion of 0.1 percentage point (5.7%) in 2011 and of 0.9 percentage point (5.9%) in the 4Q11. Gross margin improvement offset expense increases. Adjusted EBITDA Adjusted EBITDA by Brand (R$ million) (R$ million, % of gross revenues) 5.9% 5.7% 4.9% 5.7% 5.6% 5.0% 271.5 113.8 221.0 6.
Slide 18: Adjusted net income of R$ 151.4 million, up 66.8%
We reached an adjusted net income of R$ 151.4 million, a 66.8% increase over 2010. Depreciation Net Financial Expenses/(Income) Adjusted Net Income (R$ million, % of gross revenues) (R$ million, % of gross revenues) (R$ million, % of gross revenues) 0.6% 0.4% 3.4% 2.0% 2.1% 3.2% 1.9% 2.3% 2.0% 2.0%
Slide 19: Cash flow: store CAPEX and working capital investments
Store development CAPEX and working capital investments aimed at increasing gross margins generated a cash consumption of R$ 226,0 million. Cash Flow 4Q11 4Q10 2011 2010 (R$ million) EBT 3.4 27.6 144.2 124.2 (-) Income Tax (+) Depreciation 27.2 21.5 94.4 73.6 (-) Other Adjustments (1.8) (0.6) 10.3 9
Slide 20: Share price increased 201% since Drogasil's IPO in 2007
Our share price increased 201% since Drogasil´s IPO in 2007, an average annual return of 29.1% (R$ 16.85 of share price on March 23, 2011). RADL3 IBOV 301 121 100 6/29/2007 12/29/2007 6/29/2008 12/29/2008 6/29/2009 12/29/2009 6/29/2010 12/29/2010 6/29/2011 12/29/2011 Number of Shares (thousand) 330.