Procaps Group, S.A.

Q3 2021 Earnings Conference Call

11/23/2021

spk_0: good day and welcome to the pro cap scoop business update call and webcast today's conference being recorded at this time i would like to turn the conference over to chris tyson executive vice president of and the north america please go ahead sir
spk_1: good afternoon ladies and gentlemen thank you for standing by a welcome to the pro caps group business up a conference call and webcast we appreciate every one joining us today and please note that the pro catch third quarter twenty twenty one financial results press release was issued on november nineteen twenty twenty one and the investor presentation can be found on the pro cats investor website as investors dot protest group dotcom please review the disclaimers included in the investor presentation before we get started with everyone that stevens me during his cock and take forward looking statements within the meaning of the private securities litigation reform act of ninety nine five and are subject to risks and uncertainties any statements that refers to expectations projections or characterizations a future events including financial projections are few sure market conditions is a forward looking statements the company's actual future result could differ materially from those expressing said forward looking statements for any reason including those set forth in pro caps groups as he see violence pro caps group assumes no obligation to up the any such forward looking statements please also note that the past performance or market information is not a guarantee of future results during his conference home presentation not gap financial measures including just a it up and adjusted ebitda margin will be discussed the company believed non gaap disclosures enable investors to better understand protest core operating performance please refer to the investor presentation for reconciliation of each of these non gaap measures to the most directly comparable gap financial measures hosting today's call or protest group chief executive officer ruby minsky and chief financial officer patricio vargas finally this conference calls be a webcast a link to the webcast is available on the protests i our site had investor that pro cats group dotcom i will now turn the call over to protest groups chief executive of
spk_2: other ruby minsky ribbon
spk_3: pinker greece and think you all for joining us today on our first conference call for the brokers group as a public company you have no idea how excited i am to finally be able to say those words forty four years if we we began operations is it ruins gives became the founder and chairman and ceo of broke up i'm also very fortunate to be joined today by our new see a full patricia vargas but there's your has been hard at work over the last few months leading up to speed on or obese is on helping us build a cop abilities we need to be successful as a public company for those of are many shareholders dunno know patricia already from his prior roles including a feel for with you for pharmaceuticals i'm sure you're sure they confuse that i harvey his new wrong for those the don't know him i look forward to introducing him to you personally welcome patricia to them as a dual housekeeping a screws mentioned all forward looking statements are subject risks and uncertainties on our resource could be for materially from the statements with that said i thought i would offer a brief perspective was a quarter and calendar year twenty twenty one before it through over to pursue to take you through the more details specific financial statements from there we are both happy to answer q and a as well as a couple of to any further questions at a later time a federal court programs to the weird are incredibly exciting time for history and therefore key messengers and messages that i really wanted to ensure that it properly conveyed to as a has exceeded our internal expectations in twenty thirty one and the fundamentals rubbing our growth remains a quite healthy when we started the pipe fund raising process in january of this year we were in the law three hundred millions of trading twelve months net revenues are so sit the mercedes are slightly above four hundred millions of literary news when a talk more scrolling basis which is ahead of where we forecasted for year and twenty twenty one this is quite encouraging for our a far cry from tv shows are growing a double digit growth rates in terms of revenue throughout the whole year both to a quarter under year on are you today growth rate is thirty three percent versus approximately twenty or twenty percent that we forecast or growth has remained consistent across our products on geography is where we have repeatedly got a to the market that were a meet these are gonna grow or we have thing accelerated growth in twenty twenty one particular in our pockets columbia can and guess and least as units where the increase demand across the board for a variety of our a our eggs or dc provokes has continued are you pro product launches have been key driver of our growth or in your rate the percentage of are gross revenues from problem is within the law last three years he said twenty two percent there are no a raid is a key metrics that i focus on to measure the health of our business as innovation are properly or of lyricist since he's very much a key to success as we look at the rest of twenty twenty one on or works we continue to stay that we expect to achieve a lot to meet these organic sales growth rate the second message is that our business continues to internet to internationalize or the south of success of products outside of columbia continues to be one of my primary focus is this not to say that we are in perform me while in colombia where our marketshare continues to increase two times the market growth rate on or so
spk_4: those are very rare last
spk_3: we have gone from three and a half percent market share in terms of product sales two to five point three percent market share in our local market as of september as measured by i q v or yea mighty all our markets a lot on a subset the mercedes we continue to be the highest growth pharmaceutical company in the region with a two point four percent market share however in addition to his work and growth we didn't allow internationalized over sixty seven pro of this quarter on are expected by blame over six hundred program to see the next three years will be a key driver for the years to come we have been the commercial cup abilities are routes to market to to be successful outside of color mia
spk_5: whereas the considering some opportunities to strengthen our see the a more business in the us market as having manufacturing capabilities it is today an important consideration to some of our business partners we plan to update you shortly only sister the duke
spk_3: issues when our growth in colombia remain strong we continue to diversify by region on by products the third key message is that we're investing significantly behind our intimate the fraud lotus to make sure that we are successful the phone future years growth as a considerable amount of oryx are separated growth is remotely see on our explodes which require significant alone support we have decided to increase or market expenses the north to take advantage of the fairbanks market opportunities given our products are properly nature ensuring their initial success least long term benefits to our company the fourth and final key message is that we believe that were properly found it to achieve our growth plans and currently have approximately one hundred million dollars of cash in our abolish it as well as an ample borrowing cup ability to achieve our external a money and internal growth plans as you can see in our filings we completed our successful that refinancing through are boring cost or costs of that is me know where we just one of the benefits to us being up on the company currently as we have mentioned in the recent bass were actively looking at a few attractive investment opportunities that we are carefully about writing we will continue to be very the supreme a thoughtful in our am on a process on the lander wasting our team he said to finding the right so digit feeds for our business where focus on value creating opportunities to leverage our or of the leery solutions and technology with pharma companies that we cannot choir a job or of really do graphically we're focused on mexico central america and the and them region we would provide any updates as predictable but importantly we believe we can achieve our stated goal of one billion dollars who sells where the next five years primary driven by organic growth were fortunate to have a tremendous amount of deal making an industry skills in or him on a team on our capital structure he said
spk_6: up for success we that i will ask patricia vargas to reveal our financial same as before we take una you've than it is a great honor to join for cops in my role as chief financial officer and i look forward to working with you and a team to the dinner gross them he's also exciting to where we doctor can be look at my children on a centralized and again as well both of whom i work with previously when i was a chief financial officer of see if i from the city called my with background i can to pick up sobbing serving senior finals holes at sqm too far from a city calls and cnbc it was particular drawn to the broke up support unity given it's in know that he put a profile and accelerator organic and inorganic growth opportunities i believe i have relevant experience except for integrating hard on acquisitions many of them with a decentralized senate seats are and i look forward to having the chance to do so again in the years ahead at two cups i want to give you a summary of a third quarter financial results as of september thirtieth hookups demonstrate a strong cute we performance with a net sales growth of thirty five percent our net sales growth was driven by strong demand that was branded rx i know to see business in both our existing products as well as from our continued out of new product launches a cute growth of the five percent is consistent with the overall growth we have seen year to date of thirty two percent these trends were seeing this year exemplifies are solid fundamentals organic growth which have driven us in the past few years and which would lead will drive us into the next year's on the gross profit line in this week you we have increased by forty five million dollars you have a year or roughly thirty percent which sixty two point three million dollars a gross margin so by two hundred basis points due to a business business unit mix as week with ourselves to the institutional marketing columbia an odyssey boroughs in can or a destiny to digress by thirty percent to twenty five million dollars compared to make completely million dollars on our nine month adjusted ebitda has increased thirty eight percent to fifty seven point six billion dollars compared to forty one point nine million dollars and twenty twenty are the dumb ideas have been relatively consistent although we have increase or investments been behind you of launches finally or net loss for the nine months ended september thirty was fifty four point six million dollars which was primarily attributable to a one time noncash adjustment of fifty nine million dollars to affect determination of the put options granted to second shareholders and evaluations of these productions we currently have a cash balance one hundred million dollars which combined with our leverage profile of one point two times med det to adjusted really sufficient to fun of growth blood both organic and inorganic next i wanted to take a deeper dive into explaining or net sales growth which was primarily driven by three reasons first we experienced higher demand of birds manufactures with their parties second there was also increase demand for both are rx i to see products and third we complimented the run over existing before you with new pair of lunch this like provide some more in depth viewing to our net revenue growth eight as the you first or i see the ammo business experience trump demand from a third party lines as well as some of the launch of new products in brazil a new products enough and christian gummy slight i'll never use grew nine for same the first nine months vs last year while guess we was only three percent girls he was related to invent to reductions are partner level and not indicative of cells two girls second pickups columbia which encompasses farmer and vinegar specialties columbia experience increased a man as a result of the reopening of the economy in colombia general in addition the launch of new products and selected to carry such as monoclonal antibody pain relief and a mythology also contributed and to mental increasing liberties additionally the business benefited from the launch and ramp up in sales of anesthetic injectables for can be making related issues it can produce overall pickups columbia increase net revenues by fifty percent during the quarter and sixty five percent versus the first nine months of twenty twenty third can or central american or of eighty four percent growth versus the same quarter last year and sixteen percent compared to the first nine months of twenty twenty we're seeing the benefits of reducing inventors or distributor levels which was a one time heat for the earlier part of the year we're pleased to see increase demand for both are are ex i noticed he brought up in the region source guess and or central america south and and good region experience a robust growth rate of approximately sixty seven percent for the quarter as sixty five percent in the first nine months of twenty twenty one versus turned twenty they increase disagrees was a result of high demand primarily due to promising than to eat and over from distributor and sales channels they want out of new products in the region the further development of new products and to continue strengthening of our existing brands in key growth markets finally a diabetics as be you had an increasing their revenue of approximately twenty five percent in the quarter and twenty eight percent during the first nine months fact it had similar growth rates across both few one and two to diabetics benefited from a combination of factors including the launch of new piece of bread have continued demand for a blood glucose meters new product launches in colombia and higher use of our digital felt that from the text in addition we continue to run out of our diaby solutions portfolio in a southerner in summary all of our business units grew with for out of our fight this is units once again experiencing robust double digit net revenue growth on the next flight we can see how are balance you to strengthen the cash in hand combined with the reaper fighting of our debt with the private placement carried out we simply use a net debt to adjusted ebitda of one point two times a quick ways use a metric that has substantially improve with the cash in hand and if we give effect to the providing of the debt with a by replacement we've talked to her performer ratio of one point one tight it is but to hide level with a business combination we have extinguish the dead related to the put options which has remove the pressure from our equity strengthening our balance sheets at the equity level in summary we now have a healthy financial position to carry out organic and inorganic growth blacks
spk_3: and we that i want to turn back over to the when for some closing thoughts thank you patricia i thank you all for listening to our pre prepared their remarks we're very pleased to have their this back in part of our going public behind us and we're looking forward to deliver results in the corps ahead never before in our forty four year history have we do better position for success we will continue to lose our best to employ best practices as a public company you was were accent from file quarterly three financials as were for he probably shirt were committed to and expect to promptly polish quarterly financial information on carrying out the related conference calls i remind everyone that we are olivia farm a player in lot on in terms of social promotion capacity by withdrawal reach in a region that has significant pharma their wings or know what people are a delivery systems truly create differentiated products that will allow us to continue to grow substantially
spk_0: as we have mentioned before we a spade organic growth to continue the next year's in the low to mid teens we that i would like to open up for questions please thank you and at the time will conduct or question and answer session if you'd like to ask the question please press star one on your telephone keypad a confirmation tone would indicate that your line is in a question que you may press the starkey followed by the number two is even like to remove your question from the que for participants using speaker equipment and may be necessary to pick up your handset before pressing starkey
spk_7: once again to ask a question please press star one on your telephone keypad
spk_8: i first question comes from kept oliver with brookline capital markets please their question mr dollar your line is up and go out a me yourself thank you good afternoon good to hear from both of you quickly on the subject of in inventory management could you talk about the outlook both in terms of any additional
spk_3: image or reductions in the channel across all lines of business and then also at the met your level
spk_6: since you'd had made some efforts to reduce inventory over the last year too do you wanna think that that the yes yes yes i would say get when air an and you can compliment if i'm missing something related to the history of philip lots of didn't we we we we reduce the inventory days at that we had him in there in central america not and can i also get some air about a year ago read more than a year ago it was something that we thought he was a good day of practice in order to it's a something that closely resembling a better way what the market was going on and that impacted us in the first part of the year and that's why you're seeing the benefits now as as they meant to be high as has been cleaned it's it's a were getting back to their to the biggest level data regarding a those to my kids we also mentioned that for their die
spk_3: diabetes sorry if a day for the city ammo a we had some partners that wanted to play reduce their during the two levels and that also is why we had lower sales in there in the city and business
spk_8: in to tweak you a going for way we do not anticipate to have any more effects regarding a inventory we believe we are at a normal healthy level so as you should not expect that coming coming coming again and i will benefit want to company that yeah you know absolutely nothing to do that's exactly what we're looking forward to we we feel very comfortable with the imagery levels all across our organization you know it's great to do am just one additional question regarding the see the ammo business you referenced desire to have a us
spk_3: president said is it is simple is a taking the steps to build or by us the so sony word are you do you need to do something more comprehensive and we're we're very active looking into possibilities of either by are setting up our operation say we were looking right now into two two possibilities and and a look quite promising to you will most probably a will go into into buying a company in the us that will allow our see the a business to be person in the us as as we have we have fun of many of our customers today especially with the new climate the up to covet thy womb there will be a they will love to have a manufacturer side in the us especially related to our especially technologies to a specialized or of delivery systems which
spk_8: ray differentiation a product launches
spk_0: so we're we're following that step and we're moving very fast on this great thank you so much
spk_9: and cute
spk_0: thank you sir minor ask a question press star one on your phone now apostrophe moment always pop the question thank you
spk_3: and ladies and gentlemen their does not appear to be
spk_0: any additional questions at the time
Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

-

-