Genomma Lab Intl Sab Ord

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Genoma Lab first quarter 2021 results conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'll now turn the call over to Enrique Gonzalez, IRO of Genoma Lab. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining us today. We welcome you to Genoma's first quarter 2021 earnings conference call. Joining today are Jorge Rey, Genoma's lab CEO, and Antonio Zamora, our chief financial officer. Please note that today's discussions could contain forward-looking statements about the company's future business and financial performance. These are based on management ruling expectations and are subject to risk and uncertainties. Factors that could cause actual results to differ materially are included in our reports on file with the Mexican Stock Exchange. In particular, there is significant uncertainty about the duration and contemplated impact of the COVID-19 pandemic. This means genomics results could change at any time, and the impact of COVID-19 on the company's business results and outlook is a best estimate based on the information available as today's date. I am now pleased to turn the call over to Mr. Jorge Brink. Jorge, please go ahead.

Thank you, Enrique, and welcome, everyone. While it was a challenging quarter with continued COVID-19-related headwinds, Genoma's strong execution helped mitigate its effects, a reflection of our company's resilience and adaptability. Importantly, we also made progress on our long-term operational goals and objectives. As you have read in yesterday's release, Genoma achieved solid operational results for the first quarter of 21 despite obstacles with a 6.4% year-on-year net sales growth and a noteworthy contribution by our Latin America operations reflected in an 11.6% year-on-year increase with particularly remarkable performance in Chile, Colombia, Peru, and Bolivia. This quarter's results were again driven by new product launches outstanding point-of-sale execution, and an increased presence and visibility within the region's key trade channels. Further success on Genoma's four-pillar strategy ensured continued strides towards our long-term strategic objectives despite COVID challenges across the different regions. Reduced food traffic and significantly lower cough, cold, and flu incidents during the northern hemisphere winter season led to significant declines in demand for related products mainly in Mexico and the U.S. However, the transformation and growth strategy we have successfully implemented has strengthened genomic business, and today we benefit from continued demand for our stent-based and advantaged personal care products portfolio. which we have been able to seriously fulfill through a resilient supply chain with no major COVID-related disruption. Along these lines, let me share a few brief highlights from the quarter and some insight based on what we are seeing. To begin, consumers today remain focused on their hygiene and self-care. These habits accelerated in the current environment, and we believe they will remain post-pandemic. Our ability to deliver related transformational products again resonated during the first quarter of 2021 with important innovation and portfolio optimization projects as well as new product launches. As a few examples, by quarter's end, we successfully launched a new , promoting shampoo line and the relaunch of Systema GV brand alopecia hair loss treatment in Mexico. These shampoo line initiatives were complemented by the Tio Nacho line extension in Brazil. Additionally, our suerox children or infantil we launch for the Mexican market reflects our continued focus on the beverage category within this market. We are particularly enthusiastic about the continued success of our grooming brand, disposable razors, which recently, has been performing better than expected. You will recall that we have launched women in the new in the Mexican market in retail chains and saw a strong initial response during the last quarter of 2020. In the first quarter of 2021, we launched this disposable razor specifically target to the traditional channel while also increasing women's overall presence at the point of sale during the quarter, including club stores, pharma chains, additional retailers such as Walmart, Soriana, and Chedragui in Mexico. Three factors are driving Gourmet Brand's significant success, also as an excellent example of Genoma's multi-phase model. First, Gourmet is truly a superior firm to the extent that we are able to offer a 30-day guarantee. Second, we recalibrated Gourmet's advertising campaign during the quarter and added customer testimonials. which have truly resonated. Finally, Grumman's success within the traditional channel is a strong testament of the capillarity and diversity of genomic go-to-market network reach. We are currently in Grumman's ramp-up phase, but we are very encouraged by its prospects. We plan to extend this launch abroad to Mexico in the coming quarters. Also in Mexico, you will recall that in September 2019, we signed an exclusive license agreement with UP International to market UPI's full range of Novamil brand infant specialized nutrition products, a significant transition and exciting new frontier for our company. This product showed continuous success during the quarter with a double-digit sellout increase. Turning to other relevant updates related to our growth strategy as discussed, today consumers are buying their products and services online wherever possible. affecting most categories with increased consumption, both through e-commerce and the convenience of informal traditional mom-and-pop channels, a trend that has deepened during the pandemic. In today's age of e-commerce, Genoma is ensuring we evolve with a balanced strategy to ensure we successfully address the many channels critical to our continued success. Retail is changing at a staggering speed. and omnichannel consumers require our attention to ensure we win. It therefore became clear that a centralized decision-making system was critical to Genoma's omnichannel success. Based on the success Genoma has had in these diverse channels, order management is now needed for better inventory visibility and order routing logic across the broader supply chain, in addition to basic store fulfillment. To address these challenges, we developed outside the new-gen order, primary digital platform, which is currently in its data phase. Order management has become the new retail paradigm and the key enablers to a holistic commerce strategy. And our new-gen order platform makes it possible for us to directly connect with client businesses as well as traditional channel points of sales. further commercializing Genoma's corporate portfolio based on our new logistics model and enabling us to more quickly and efficiently reach a greater number of points of sale. We are now also able to move a given order to the optimal fulfillment source based on the retailer criteria, which is such as profitability, proximity, store dynamics, and inventory level. Needless to say, then order is a critical component to our company's continued evolution. We believe this enables us to balance flexibility, modularity, and time to market as a roadmap specifically focused on driving our continued omni-channel retail success in line with the second pillar of our goals and innovation strategy, which is to perfect our best-in-class go-to-market execution. As mentioned, During the quarter, we were challenged by the historically soft cough, cold, and flu season, primarily in the US and Mexico, resulting in decreased sales of related product categories with a challenging 2020 comparison base due to consumers' pandemic-related panic home inventory stocking in the first quarter of 2020. However, we are pleased to note encouraging demand for our personal care and other OTCs can use in this market in the U.S., particularly in California, Texas, and Puerto Rico, as well as in key local Mexican markets. During the quarter, U.S. sales of fuel have further strengthened within the traditional channel in those states, and Genoma Cerific's sales team has gradually been expanding the brand within key retail channels or chains, such as Walmart, which helped offset the challenging quarter. It's important to note that Puerto Rico is an important engine for future growth within this region, too. Robust sales at our South American operations were reflected in a double-digit year-on-year sales increase, led by particularly strong performance in Chile, Colombia, Peru, and Bolivia, as said before. This was achieved through successful new product launches and line extensions. supported by outstanding point-of-sale execution and an increased presence and visibility within the region's key e-commerce channels, as well as added sales for more than 100,000 new MAMABAP traditional points of sales, resulting from our new distribution strategy and expansion in Central America and Andean markets. Regarding supply chain and logistics, in Brazil, we are pleased to announce that we began operation of our new warehouse site located in Minas Gerais. The new site has a 31,000 pallet capacity and 21 more truck docks than our prior warehouse, enabling increased transport by more than 50 trucks a day. Further, the new warehouse is located at a key logistics hub in southeast Brazil, providing access to important logistics channels to the south Southeast, and Central East regions. This favorable location ensures expedited online purchase fulfillment from Genomas Warehouse, aligned with the company's omnichannel focus on both e-commerce and physical store channels with cost savings through improved efficiencies. In Mexico, Genomas Personal Care Manufacturing Plant and Central Logistics Warehouse at our industrial cluster formally began operations during the first quarter, as was reported on Feb 24, 2021. Genoma's pseudo-isotonic beverage line began production, with several million of bottles being manufactured as we speak. Finally, I'm very pleased to share that in March, we unveiled our comprehensive 2025 sustainability strategy, entitled A Commitment to the Future. based on an extensive in-depth evaluation of Genoma's business model as it relates to social, environmental, and governance. This detailed plan is closely aligned with our company's corporate culture and mission, and reviews Genoma's 10 primary areas of operation, which clearly outline goals and objectives, as well as specific target dates. is aligned with the United Nations Sustainable Development Goals to ensure we address the world's most important sustainability challenges. Needless to say, one of the ambitious goals we have established as a company. We plan to share relevant updates with you twice a year on related accomplishments. To conclude, we are capitalizing on the growing consumer focus on health and well-being. trusted brands as well as digital engagement and purpose-minded practices. These long-term trends have only accelerated during the pandemic, and our alignment, which, combined with the breadth and reach of our portfolio and continued success building on our growth plan, sustainably positions us for continued growth. We also remain focused on identifying exciting opportunities for potential inorganic growth through alliances, partnerships, M&A, within our two core categories. As we look to the year ahead, while uncertainty remains, with limited visibility to the pace and magnitude of COVID recovery, we are confident that our continued disciplined execution, financial prudence, and the strength of our underlying operations will drive . Thank you for your attention. It's now my pleasure to turn over to Antonio. Antonio?