Brph apresentação call 3 q14 (eng)
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Transcript of Brph apresentação call 3 q14 (eng)
3Q14 Conference Call Presentation
November 13, 2014
3Q14 Conference Call Presentation
2014 PUBLIC ANALYST MEETING
• Gross revenues of R$976.3 million, an increase of 6.6% over 3Q13;
• Total SSS of 6.3% with 3.5% in mature stores;
• Gross margin of 27.0% over gross revenues, 7.4p.p above 2Q14 figures;
• EBITDA:
• Negative EBITDA of R$34.8million with EBITDA margin of -3.6%, 5.1p.p. above 2Q14 figures;
• Negative EBITDA of R$13.2million with EBITDA margin of -1.4%, 7.3p.p. above 2Q14 figures
(ex- REFIS);
Operational & Financial
* EBITDA for the period excludes the effects of the Company’ s joining the Tax Recovery Program (REFIS)
254 Owned stores
128 Owned stores
153 Owned stores
486 Franchises
188 Owned stores
723 Owned stores
486 Franchises
1,209 stores
REGIONS
Owned stores
North 131
Northeast 258
Midwest 146
Southeast
South 188
15
2
122 22
15
33
16
178
10
63
128
5
10
5 Distribution centers
97
7
National Footprint
154 153 153
193 188 188
127 128 128
259 249 254
2 5
17
0
2013 Organic growth Closings 1S14 Organic growth Closings 3Q14
733 718 723
4.1%
10.5%
10.8%
74.6%
Stores with up to 12 months
Stores with 12 to 24 months
Stores with 24 to 36 months
Stores with more than 36 months
External Factors:
• Weakening of domestic demand;
• World cup holidays.
Internal Factors:
• Price increases: leveling with the market;
• Change of commercial management system (“Gestão”) in Mais Economica;
• Qualitative adjustments to adequate inventory profile in each platform;
• Basis of comparison affected due to additional sales in the 3Q13 related to “Ruptura Zero”.
Generic penetration in medicine sales
Main focus:
Rosario, Mais Economica e Sant’Ana
• Generic sales mix:
July August September
15.9% 16.6% 17.4%
Negative effects:
• Reduction of purchase volume: less trade revenues;
• Obstacles to DC performance.
Recovering of gross margin :
• Price increases: leveling with the market;
• Shrinkage reduction;
• Better mix of generics in Rosario, Sant’Ana and Mais
Economica operations.
• REFIS: R$18.4 million
• Reduction of workforce
• REFIS: R$5.4million
R$214.5 million (ex-REFIS)
R$65.4 million (ex-REFIS)
(ex-REFIS)
(ex-REFIS)
-141.0 -82.8 -34.8
1T14 2T14 3T143Q14 2Q14 1Q14
1 - Portion related to commercial establishments amortization (2013 only).
2- Adjustments made in the 2013 results when published were maintained
• REFIS: R$21.7 million
• REFIS: R$24.7 million Net income (loss) 42,325 (185,296) (143,138) (92,466) 36,870 (420,900)
% Net margin 4.6% -19.9% -15.0% -9.5% 1.4% -14.7%
(-) Non recurring expenses (35,000) - - - (32,406) -
(-) SOP expenses 3,205 - - - 8,904 -
(-) D&A Commercial establishments¹ 2,987 - - - 10,594 -
Adjusted Net Income (loss) 13,518 (185,296) (143,138) (92,466) 23,961 (420,900)
% Adjusted net margin 1.5% -19.9% -15.0% -9.5% 0.9% -14.7%
Lucro líquido (prejuízo) ajustado (ex REFIS) 13,518 (185,296) (143,138) (67,771) 23,961 (396,205)
% Margem líquida ajustada (ex REFIS) 1.5% -19.9% -15.0% -6.9% 0.9% -13.9%
Net Income reconciliation (R$'000) 3Q13 1Q14 2Q14 3Q14 9M13 9M14
-15.2%
-8.7%
-3.6%
-1.4% (ex-REFIS)
R$-13.2 million (ex-REFIS)
• Real change in net debt was R$77.2 million, considering the variation of derivatives (assets)
of R$ 15.6, not deducted from the balance of the debt;
• Additional short-term borrowings: R$ 98 million;
• Debt restructuring plan (Lengthening of debt maturity).
Cash position and indebtedness (R$'000) 3Q13 4Q13 1Q14 2Q14 3Q14
(+) Loans and financing 247,170 209,490 204,884 454,124 532,457
Short term 150,963 124,507 125,800 386,812 461,246
Long term 96,207 84,983 79,084 67,312 71,211
(+) Debentures 260,704 549,809 555,276 12 0
Short term 11,982 15,249 555,276 12 0
Long term 248,722 534,560 0 0 0
(+) Accounts payable for investment acquisition 179,652 147,837 156,615 92,619 93,004
Short term 82,681 70,300 108,039 44,110 43,556
Long term 96,971 77,537 48,576 48,509 49,448
(=) Total Indebtedness 687,526 907,136 916,775 546,755 625,461
Short term (%) 35.7% 23.2% 86.1% 78.8% 80.7%
Long term (%) 64.3% 76.8% 13.9% 21.2% 19.3%
(-) Cash and cash equivalents (213,132) (405,914) (98,131) (51,340) (37,224)
(=) Net Debt 474,394 501,222 818,644 495,415 588,237
Net debt/Adjusted EBITDA (LTM) 2.5 X 3.3 X NA NA NA
• The increase in inventories is due to the seasonality effects in Big Ben
operation, which was partially offset by longer payment terms from
suppliers;
Working capital 3Q13 4Q13 1Q14 2Q14 3Q14
Accounts receivable 5 6 15 6 8
Inventories 112 107 88 86 94
Suppliers 56 77 57 47 51
Working capital in days 62 36 46 46 51
1- The variation in working capital includes the change in accounts receivable, inventories and suppliers.
Cash flow Statement (R$'000) 3Q13 1Q14 2Q14 3Q14 9M13 9M14
EBT 50,559 (196,448) (151,019) (88,907) 54,164 (436,374)
(+) Depreciation and amortization 18,732 28,591 20,664 19,210 52,248 68,465
(+/-) Others (34,379) 19,572 27,221 27,954 (14,165) 74,747
Operating cash generation 34,912 (148,285) (103,134) (41,743) 92,247 (293,162)
(+/-) Change in working capital¹ (39,520) (110,467) 12,634 (17,304) 36,415 (115,137)
(+/-) Change in other assets and liabilities 6,498 (10,682) 50,453 28,000 (110,719) 67,771
Cash consumption (33,022) (121,149) 63,087 10,696 (74,304) (47,366)
Income Tax & Social Contribution payed (4,646) (1,235) (342) (3,470) (6,098) (5,047)
Net cash generated by operating activities (2,756) (270,669) (40,389) (34,517) 11,845 (345,575)
(-) Capex from operations (31,280) (33,934) (25,288) (19,720) (105,232) (78,942)
(-) Acquisitions (1,542) 3,688 (70,089) (493) (114,293) (66,894)
Net Cash from investing activities (32,822) (30,246) (95,377) (20,213) (219,525) (145,836)
(+/-) Loans and financing 92,508 (7,167) (311,024) 40,613 51,091 (277,578)
(+/-) Equity funding / Dividends (6,005) 299 399,999 1 970 400,299
Net Cash from financing activities 86,503 (6,868) 88,975 40,614 52,061 122,721
Change in cash and cash equivalents 50,926 (307,783) (46,791) (14,116) (155,619) (368,690)
Cash and cash equivalents - opening balance 162,205 405,914 98,131 51,340 368,751 405,914
Cash and cash equivalents - closing balance 213,132 98,131 51,340 37,224 213,132 37,224
• Mr. Igor Rongel, previously responsible for Farmais’ operation, took over as
Commercial Director. Mr. Igor Rongel and Mr. Renato Lobo, Director of
Operations, report directly to the CEO of the Company;
• Intensify partnership with key suppliers seeking greater specialization with
emphasis on the above categories;
• Proximity to the other EBM: more objective and faster strategic decision making.
Monetize investment made:
• Distribution Centers
WMS system implemented in all DCs – appropriate service level
Controlled Drugs’ authorization still pending;
• SAP
Implemented in 3 platforms: (Mid-west, South and Bahia);
Implementation in the South completed in July;
• “Gestão” (commercial management system):
Implemented in 3 platforms: (Mid-west, South and Bahia);
External support to guarantee full use of its functionalities;
• POS System
Under evaluation for exchange;
Commercial e Competitive Intelligence:
• Sales enhancement using the correct positioning of each brand (platform) in each of the regions where we operate;
• Inventory optimization;
• Improvement of generic medicine and HPC mix of sales (focus in
convenience products);
• Negotiation of supply contracts and trade marketing revenues for 2015, aiming to enforce strategic long-term partnerships and uniform negotiation conditions to every platforms;
• Improvement of margin level with intelligence in the pricing without losing competitiveness;
• Reduction in shrinkage level (cyclical inventory rounds, mapping and renegotiation of pre-expired products, greater quality in inventories, constant focus on loss prevention.
Operations:
• Platforms Accountability (accounted for the P&L of the platform);
• Daily management of KPIs (sales, progressions, mix of sales between categories, POS margin, inventory level and shrinkage, P&L per store, operational expenses etc.);
• Continuous management of headcount productivity;
• New remuneration policy;
• Complete analysis of active service contracts;
• Continuous management and centralization of every spending decision;
• Focus on recovering stores with operation deficit;
• Lengthening of the debt structure with proper grace period aligned to the
expected generation of results.