Procaps Group, S.A.

Good day and welcome to the ProCAPS Group Business Update call and webcast. Today's conference is being recorded. Please note that some statements made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Any statement that refers to expectations, projections, and or future events, including financial projections or future market conditions, is a forward-looking statement. The company's actual future results could differ materially from those expressed in such forward-looking statements due to a variety of risks, uncertainties, and other factors, including but not limited to those set forth in ProCap Group's SEC filings. ProCap assumes no obligation to update any such forward-looking statements. Please also note that past performance or market information is not a guarantee of future results. At this time, I would like to turn the conference over to Melissa Angelini, Investor Relations Director of ProCAPS. Please go ahead, Melissa.

Thank you, and hello everyone. Thank you for standing by, and welcome to the ProCAPS Business Update Call. This conference call has also been webcast, and a link to the webcast is available on the ProCAPS IR website. We appreciate everyone joining us today. Please note that our earnings release and our 20F were issued last Friday and can also be found on the ProCAP's IR website. Please review the disclaimers included in the investor presentation. During this call, non-GAAP financial measures will be discussed and presented. We believe non-GAAP disclosures enable investors to better understand ProCap's core operating performance. Please refer to the investor presentation for all reconciliation of each of these non-GAAP measures to the most directly comparable GAAP financial measures. Hosting today's call are Ruben Minsky, our CEO, Patricia Vargas, our CFO, and myself. I will now turn the call over to ProCap's CEO. Please, Ruben, go ahead.

Thank you, Melissa, and thank you all for joining us today for our full year 22 results conference call. I want to start by addressing the negative effect of our results that impacted the second half of 2022, most especially the fourth quarter, in which those impacts were higher and worse than expected. As you can see in the slide, up to nine months of the year, we're able to compensate some business units performance with current devaluation with the overperformance of others. But in the fourth quarter, even with overperforming of part of the portfolio, such as RX, it was not enough to compensate the negative effect that were even stronger quarter in this quarter. The main impact of our COVID-related clinical specialty portfolio, we, as most players in the industry, made the mistake thinking that the prices and demand with the Omicron variants would be similar or higher than the first wave. However, distributors and hospitals ended up with very high inventories due to the low demand for this type of products generated by these new variants. We learned our lesson, and we have adjusted our forecast price and demand according to this new reality. Due to this, we made the necessary provisions, and for 2023, this is already adjusted to the new demand forecasted. The other major impact is currency devaluation, accounted for approximately $28 million of negative impact in our revenues for the year and $12 million only for the fourth quarter. As expected, we had to comply with some of our contracts, which were agreed upon in local currency, preventing us from increasing prices fast enough to compensate the negative effect devaluation was having in our margins. Diabetics was especially hit by current devaluation, and next year was also impacted by dronaviril, with the still ongoing change of API manufacturing site and progesterone with ongoing bioequivalent tests. Both matters affect the sales of 2022, since we cannot sell those products until those matters are resolved. Both are expected in commercialization by the first quarter of next year. We're very pleased with the execution of our value creation initiatives taking place this year as an important measure to protect our margins and results going forward. Looking ahead in 2023, with our focus on our strengths for growth and the substantial efforts we're putting in our strategic improvement initiatives, I am cautiously confident that we are well positioned to achieve our near and long-term goals. We expect 2023 to be a year to stabilize and substantially improve our results so we can continue with our expansion plans. We reaffirm our guidelines, which you will see in the next slides. We will certainly find challenges, but we're confident that we will properly address each and any one of them as they appear. Moving to slide four, our new product launches have been a key driver of our growth. $111 million in revenues from new products in 2022, and over 170 products in the registration phase. Our renewal rate, that is the percentage of our revenues from products launched in the last 36 months, was 27% in 2022. We have now commenced operations in our West Palm Beach facility, providing R&D services with a growing pipeline of contracts, RX and OTC products in development. Packaging services start in our new Gumi manufacturing facility in Florida. Full Gumi production will commence in the second half of this year. Additionally, we have implemented multiple initiatives to reduce costs, improve margins, and near-term profitability, as well as to expand our global reach with our roll-up strategy and to fund our growth. Moving to slide five, I want to share an update of the value creation initiatives we announced at the beginning of the year. The goal, our goal, is to achieve up to 15 million of recurring savings to be realized over the next 18 months. Since the beginning of this year, we have been focused on these initiatives, including but not limited to SG&A efficiency, processes, operations, streamline, R&D optimization, and corporate expenses efficiency. As of March 2023, total execution of our savings capture rate was approximately 20% of our goal. As of today, I can tell you that we have captured more than 30%. Moving to slide six, Another important driver for our future growth is research and development on new products. As I always said, innovation around our proprietary order delivery systems is key to our success. Our renewal rate, that is the percentage of net revenues from new products launched in the last 36 months, was 27% during 2022. Launches depend on registration approval from regulatory agencies And we could have phasing from quarter to quarter, depending on the time of these approvals. We continue to invest approximately 4% of our net revenues in R&D. And we will continue to prioritize investments in our pipeline and business to realize the value of near and long-term opportunities in front of us. Ramp-up for product launches during 2022 is quite strong, highlighted by Allobel, oncological prostate cancer, Tolofen Extra, that's an OTC product, Menci, and Papilocare in Colombia. Geo-expansion launches including women's health, cardiovascular, and gastro products are also performing very well according to the ramp-up trajectory. Moving to the next slide. And looking into the year 2023, combined with our cost reduction plans to optimize our business in the near term without compromising our long-term objectives, we are forecasting our adjusted EBITDA range to approximately 90 to 100 million in 2023 in constant currency. Our preliminary results for the first quarter are showing a positive turnaround with mid-single in net revenues and high single digit growth in adjusted EBITDA in cost and currency. Now, I will pass it to Melissa, who will share with you a little bit of our ESG progress.