Raia Drogasil S.A. · BMFBOVESPA:RADL3
Raia Drogasil — Q2 2018 Earnings Presentation
16 slides from Raia Drogasil's earnings presentation, 2018
Slide 1: Earnings Presentation: 2Q18
EARNINGS PRESENTATION: 2Q18 Taking Close Care of People´s Health and Well-Being during all Times of their Lives 1
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: Quarterly Highlights
QUARTERLY HIGHLIGHTS: › Drugstores: 1,708 stores in operation (62 openings and 5 closures) › Gross Revenues: R$ 3.8 billion, a 11.6% growth (2.5% retail same-store sales growth) › Gross Margin: 29.1% of gross revenues, a 0.3 percentage point decrease › EBITDA: R$ 316.6 million, a margin of 8.4%, an
Slide 4: Store Development
STORE DEVELOPMENT In the 2Q18, we opened 62 new stores and closed 5. At the end of the period, 36.2% of our stores were still maturing. We reiterate the guidance of 240 new stores per year for both 2018 and 2019. Store Count* Age Structure of Store Portfolio MATURE YEAR 3 YEAR 2 YEAR 1 1,708 1,651 1
Slide 5: We Have Gained Market Share
WE HAVE GAINED MARKET SHARE We reached 11.8% of national market share, an increase of 0.1 p.p. Entry in Pará, extending our presence to 22 states. Expansion in SP reduced from 125 LTM stores in 2Q16 (10.9% expansion share) to 79 in 2Q18 (5.7% share) Geographic Presence Market Share 22.8% 2Q17 PA: 3
Slide 6: Industry Acceleration Was Likely Boosted by Sell-in Peak in April
INDUSTRY ACCELERATION WAS LIKELY BOOSTED BY SELL-IN PEAK IN APRIL Market was growing in-line with Abrafarma until 1Q18, but accelerated to 9.6% in the quarter (17% in April), which was driven by small chains and independents who report sell-in data to IMS instead of real demand. RD vs. Pharma Indust
Slide 7: Gross Revenues Increased 11.6%, with 10.6% for Retail and .3% for 4Bio
GROSS REVENUES INCREASED 11.6%, WITH 10.6% FOR RETAIL AND 36.3% FOR 4BIO OTC was the highlight (1.4 p.p. mix increase), benefitting from Branded Rx switches (0.4 p.p.). Generics lost 0.8 p.p. due to a change in our pricing and mix strategy that penalized average ticket (13.7% volume growth) Consolid
Slide 8: Revenue Growth of 11.6%, with -1.4% for Mature Stores
REVENUE GROWTH OF 11.6%, WITH -1.4% FOR MATURE STORES Mature stores declined 1.4%, considering a positive calendar effect of 0.6%, which was fully offset by the adverse impact of the FIFA World Cup in June. Consolidated Revenue Growth Same Store Sales Growth* Mature Stores Growth* 25.5% 17.1% 17.4%
Slide 9: Gross Margin and Cash Cycle
GROSS MARGIN AND CASH CYCLE Gross margin pressure of 0.3 p.p. in 2Q18 due to lower gains on inventories (0.2 p.p.), and to a 0.2 p.p. pressure from 4Bio, partially offset by commercial gains (0.1 p.p.). Cash cycle pressure driven by calendar effect in June. Gross Margin Cash Cycle* R$ Million, % of
Slide 10: Selling Expenses Pressured by 0.4 p.p. While G&A Diluted by 0.2 p.p.
SELLING EXPENSES PRESSURED BY 0.4 P.P. WHILE G&A DILUTED BY 0.2 P.P. Personnel expenses pressured by 0.3 p.p., while rentals and logistics pressured by 0.1 p.p. each, partially offset by 0.1 p.p. dilution from 4Bio. New stores pressured by 0.1 p.p. G&A diluted by 0.2 p.p. due to lower variable compe
Slide 11: EBITDA Totaled R$ 316.6 MM, with 8.4% Margin and 5.2% Growth
EBITDA TOTALED R$ 316.6 MM, WITH 8.4% MARGIN AND 5,2% GROWTH EBITDA margin pressure of 0.5 p.p. Gross margin pressured by 0.3 p.p. and selling expenses pressured by 0.4 p.p. on weaker sales growth, partially offset by G&A expense dilution. New stores penalized EBITDA by R$ 14.4 MM. Adjusted EBITDA R
Slide 12: Net Income Totaled R$ 141.8 Million in the 2Q18
NET INCOME TOTALED R$ 141.8 MILLION IN THE 2Q18 Net margin of 3.7%, an increase of 2.8% over the 2Q17. We recorded R$ 6.2 MM in non-recurring net expenses, which included R$ 9.6 MM related to consulting expenses for our Strategic Planning and 3.3 MM in tax credits. Adjusted Net Income Non-recurring
Slide 13: Negative Free Cash Flow of R$ 67.7 Million
NEGATIVE FREE CASH FLOW OF R$ 67.7 MILLION Total cash consumption of R$ 154.1 million versus 134.0 million in the 2Q17 Cash Flow 2Q18 2Q17 YTD '18 YTD '17 (R$ million) Adjusted EBIT 216.4 219.6 392.5 386.1 NPV Adjustment (12.6) (11.1) (21.1) (32.2) Non-Recurring Expenses (6.2) - (6.2) (2.2) Income T
Slide 14: Shareholder Return
SHAREHOLDER RETURN Since the IPO of Drogasil, we achieved a cumulative share appreciation of 1,266.3% with an average annual return of 27.3%. Considering the IPO of Raia, the average annual return was 28.1%. Share Appreciation RADL3 IBOV 1,366 134 Sep-08 Sep-14 Sep-15 Sep-17 Sep-07 Sep-09 Sep-10 Sep
Slide 15: Operating Highlights
OPERATING HIGHLIGHTS Short Term Achievements › Successful entry in Pará, with very strong initial results and great growth opportunities (20 other locations already signed). Aspiration to become a large #2 player in the state and the reference for A/B class; › New generics pricing strategy driving h
Slide 16: Capital Markets Highlights
CAPITAL MARKETS HIGHLIGHTS 2018 Earnings › 3Q: October 30th, 2018 RD Day 2018 › October 11th, 2018 › Vila Bisutti, São Paulo Scheduled Investor Conferences › August 22nd: Brazil Consumer and Healthcare Check-Up, J.P. Morgan (São Paulo) › September 10th to 12th: 21st Latin America Conference, Morgan