Raia Drogasil S.a. · BMFBOVESPA:RADL3
Raia Drogasil — FY2016 Earnings Presentation
20 slides from Raia Drogasil's earnings presentation, Feb 17, 2017
Slide 1: Earnings Presentation – 2016
Earnings Presentation – 2016 February 17th, 2017
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: Consolidated Highlights
Consolidated Highlights* Drugstores: 1,420 stores in operation (212 openings and 27 closures) Gross Revenues: R$ 11.8 billion, a 25.5% growth (14.3% retail same-store sales growth) Gross Margin: 29.6% of gross revenues, a 0.6 percentage point margin increase EBITDA: R$ 987.6 million, a 8.4%
Slide 4: Another Year of Strong Growth with Value Creation
Another Year of Strong Growth with Value Creation Combined Gross Revenues & Store Count Combined EBITDA (R$ million, Units) (R$ million, % of Gross Revenues) MERGER 8.4% 7.9% 1,420 7.0% 11.828 1,235 356 6.1% 6.2% 6.0% 5.7% 1,094 9.425 4.8% 5.8% 970 186 Raia 866 7.784 IPO 125 778 6.558 689 94 Drogasi
Slide 5: Leading the Consolidation of the Drugstore Industry in Brazil
Leading the Consolidation of the Drugstore Industry in Brazil % of Stores % of Pharma Revenues Pharma Revenues per Store (R$/Month) 0.6 0.8 0.9 0.9 1.1 1.2 1.3 1.4 1.5 1.7 6.2 6.7 7.3 8.6 8.4 8.9 1.4 1.3 1.3 1.9 9.2 9.1 9.5 10.2 1.5 1.6 11.2 0.6 0.8 500,000 0.9 1.0 3.3 3.5 10.6 1.1 3.8 3.9 11.6 12.4
Slide 6: Five years since the merger: store count, revenues, EBITDA and net income growth
In the five years since the merger, store count increased by 79.9%, Gross Revenues by 147.7%, EBITDA by 236.0% and Net Income by 228.4%, with a ROIC expansion of 8.8 p.p. 2011 2016 Var. % Combined Operational Highlights Store Count 778 1,420 82.5% Sales Area (sqm) 109,095 214,965 97.0% 9 states 18 s
Slide 7: Store openings and closures; store count and age structure
We opened in 2016 a total of 212 stores and closed 27. In the 4Q16, we opened 62 stores and closed 12. At the end of the period, 34.7% of our stores were still maturing. Store Count* Age Structure of Store Portfolio MATURE YEAR 3 YEAR 2 YEAR 1 1,420 1,370 12.7% 13.8% 14.8% 15.5% 15.0% 1,330 10.5% 10
Slide 8: Share gains in all regions; market share of 12.5%
We have gained share in all regions, achieving 12.5% of comparable market share in Brazil, an increase of 2.2 percentage points compared to the previous year. Geographic Presence Market Share** 4Q15 24.9% 4Q16 RN: 10 stores 21.9% PB: 9 stores PE: 28 stores TO: 2 stores AL: 7 stores SE: 9 stores 13.7
Slide 9: Branded Rx highlight of 2016; Generics highlight of 4Q16
Branded Rx was the highlight of 2016 (growth of 25.1%), while Generics was the highlight of 4Q16 (growth of 26.8%). 4Bio grew by 92.1% in 2016 and 81.4% in the quarter. Consolidated Gross Revenues Retail Sales Mix Services 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 2016 vs. 2015 (%) 2016 vs. 2015 11,828 (%)
Slide 10: Revenues grew 25.5% in 2016
Our revenues grew by 25.5% in 2016, with 9.8% growth for mature stores. In the 4Q16, revenues increased by 23.3% with 8.1% for mature stores, including a positive calendar effect of 0.3%. Consolidated Revenue Growth Retail Same-Store Sales Growth Retail Mature Stores Growth 26.3% 26.1% 16.0% 12.2% 2
Slide 11: Gross margin increased 0.6 p.p.; cash cycle
Gross margin increased +0.6 p.p. driven by inflationary gains in pharmaceuticals arising from the annual price cap increase. Annual cash cycle reduction of 0.2 day. Gross Margin Cash Cycle (R$ million, % of Gross Revenues) (COGS Days, Gross Revenues Days) 31.6% Receivables Inventories Suppliers Cash
Slide 12: SG&A increased by 0.2 p.p. in 2016
SG&A increased by 0.2 p.p. in 2016 and by 0.1 p.p. in the 4Q16. G&A increased by 0.3 pp in the 4Q16 due to transitory pressures in variable remuneration (0.2 pp) and contingencies (0.1 pp). Operating Expenses Operating Expenses (R$ million) (% of Gross Revenues) 2,518.0 298.2 21.1% 21.3% 21.4% 21.4%
Slide 13: Annual EBITDA of R$ 987.6 MM, 8.4% margin
The annual EBITDA totaled R$ 987.6 MM, with a margin of 8.4% (7.4% in the 4Q16). New stores penalized EBITDA by R$ 29.2 MM. EBITDA margin of 8.5% for Raia Drogasil and of 4.8% for 4Bio. EBITDA (R$ million, % of Gross Revenues) 1,208* stores operating since 2015: 10.4% (performance in 2016) 8.4% 8.3%
Slide 14: Adjusted net income of R$ 499.1 MM
We reached an adjusted net income of R$ 499.1 MM in 2016, a growth of 27.6%. Reported net income grew 32.0% vs. 2015. We had R$ 7.7MM of non-recurring expenses in the 4Q16. Adjusted Net Income Non-Recurring Expenses (R$ million, % of Gross Revenues) 5.7% 4.2% 4.2% 4.2% 3.7% 3.8% 3.2% 499.1 Non-Recur
Slide 15: Positive Free Cash Flow for the 4th consecutive year
Positive Free Cash Flow (R$ 34.9 MM) for the 4th consecutive year. Total Cash Flow was negative in R$ 107.0 MM. Operating Cash Flow of R$ 524.0 MM funded CAPEX of R$ 489.1 MM. Cash Flow 2016 2015 4Q16 4Q15 (R$ million) Adjusted EBIT 713.2 516.5 161.6 128.0 NPV Adjustment (67.3) (53.2) (20.4) (18.2)
Slide 16: ROIC increased by 2.1 percentage points
ROIC increased by 2.1 percentage points versus 2015, reflecting a higher margin and an increased capital efficiency. ROIC* 21.5% 19.4% 15.1% 12.8% 10.5% 2012 2013 2014 2015 2016 16 * Raia Drogasil recorded a ROIC of 21.3%, an increase of 2.0 percentage points versus 2015, while 4Bio recorded a ROIC
Slide 17: Total Shareholder Return of 74.1%
We generated a Total Shareholder Return of 74.1% with average annual returns of 29.1% for Drogasil IPO investors and of 34.5% for the Raia IPO investors. Share Appreciation RADL3 IBOV 1.093 111 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Sep-07 Dec-07 Mar-08 Sep-08 Dec-08 M
Slide 18: What We Accomplished in 2016
What We Accomplished in 2016 Delivered High Quality Organic Growth Accelerated openings to 212 New Stores Well-balanced expansion throughout the year with improved execution Better than expected return on new projects Maintained our Focus on Execution Lowest cash cycle, inventory losses
Slide 19: Challenges and Opportunities for 2017
Challenges and Opportunities for 2017 Advance with the Implementation of our Strategic Plan Accelerate organic growth Develop new formats Enhance category management and shopping experience Engage, analyze and potentialize customers Expand our Market Share Still challenging environment
Slide 20: IR Highlights for 2017
IR Highlights for 2017 2017 Earnings 1Q: April 27th, 2017 2Q: July 27th, 2017 3Q: October 26th, 2017 Next Investor Conferences February 21st and 22nd: XVIII CEO Conference, BTG Pactual (São Paulo) March 13th and 14th: 5th LatAm Consumer Event, (London) March 29th and 30th: X Brazil C