Genomma Lab Intl Sab Ord

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Genoma Lab third quarter 2021 results conference call. At this time, all participants are in a listen-only mode. Following today's discussion, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. Should you require operator assistance during the conference, please press star zero to signal an operator. A replay will also be made available shortly after the conclusion of the call. I'll now turn the call over to Barbara Cano of the INSPIRE Group. Please go ahead.

Thank you and good morning. We'll begin today's discussion with remarks from Jorge Braque, Ponoma Labs Chief Executive Officer, followed by Antonio de la Mora, Chief Financial Officer. And we'll close with a question and answer session. Our call will include projections and other forward-looking statements. And it's important to note that actual results could differ materially from those projected. Tenoma undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or other factors. Investors are urged to carefully review various disclosures made by the company, including the risk and other information, disclosed within the company's filings with the Mexican Stock Exchange. With that, I'll now turn the call over to Mr. Jorge Brin.

Jorge Brin Thank you, Barbara, and good morning, everyone. And thanks for joining us today. Genoma's third-quarter performance reflects our sustained growth momentum. We delivered record sales and EBITDA results in the third quarter of 2021, in absolute terms. Net sales for the quarter reached almost 4 billion pesos, a 16% year-on-year increase with a more than 6% EBITDA increase to reach 819 million pesos for the first time in the life of the company. Portfolio strengthening line extensions, new formulations and new product launches throughout Latin America again drove our success. To call out a few specific examples, we launched our new Grooming Carbon Razor with a more than 100-day cartridge life at key Mexico retailers. And we have unveiled our new environmentally sustainable recycled and recyclable Tio Nacho shampoo packaging. Nine extensions within the quarter included our Asepsia Gen Facial Cleanser launch, which is Genoma's first specialized line dermatologically, tested for oily skin, and a new cicatric cure vitamin C serum. Novamil also gained further traction while we continued to span our Mexico retail presence during the quarter. Market share for both segments of Genoma's portfolio, personal care and OTC, are therefore growing in all countries in Latin America where we have presence. Our industry-leading innovation was again supported by strong marketing, sales, and overall go-to-market capabilities during the quarter, which continue increasing the presence of our new or upgraded formulations and brands, which benefits from fully optimized market coverage in terms of channels and distribution. This enables Genoma to expand high-growth products through strategic and often disruptive partnerships in key countries where we are present. an example of which was our Grumman and Suero launches in Chile during 2021. Genoma's Latin American operation continued its prior course momentum, with net sales reaching 2 billion pesos, a 27% year-on-year increase, driven by increased points of sale and expanded distribution within the traditional channel, coupled with new launches, line extensions, and product restaging with enhanced visibility. All of these as part of our strategy launched initially in 2019. In Mexico, third quarter 2021, net sales increased by just over 12% year-on-year, primarily due to the strong new category performance of products such as Sonoga Meal and Groovement, as we have described. as well as successful new line extensions and synergies within the traditional channel through new products and presentations. We are pleased to have announced on September the 7th that Genoma received COFEPRIS GMP certification for our solids and semi-solids manufacturing facility in Mexico, an important milestone related to our strategic goals. As we speak, the SWEROX line will produce close to 6.5 million bottles this month, representing more bottles produced than our third-party suppliers make on a monthly basis. We are focused on our second phase for liquids, which we expect to complete in the second half of 2022, and are receiving GMP certification in other Latin American countries to enable export from Mexico. Turning to our U.S. operations, While third quarter 2021 net sales decreased by approximately 12 percentage points due to abnormally elevated third quarter 2020 hand sanitizer sales, EBITDA margin reached nearly 13%. A year-on-year increase reflecting improved productivity, successful cost, and expense controls during the quarter. Worth to mention is that within the hand sanitizer sales in the base, The growth of the U.S. sales in Q3 of this year would have been double-digit. It's important to note that we began implementing our new approach to Genoma's U.S. business during the pandemic at the end of 2020, replicating our winning Brazil strategy. An example of our success in the U.S. market has been Genoma's Suedox Isotonic Hydration Drink, where we identified an innovative and cost-effective way to expand this product presence by leveraging Budweiser distribution to major retailers throughout California, enabling rapid brand recognition and growth. Sueros can also be found today at major retailers not only in California but also in Puerto Rico, where today we are a leading brand compared to competitors like Powerade and Pedialyte. We attribute our progress to Genoma's strength and new U.S. team and to our unique approach to this market by targeting first, second, and also third-generation Hispanics, as well as a broader U.S. consumer. Each state geography is considered now a standalone business unit with a state-specific general manager and PML. We are also taking a state-by-state approach to our U.S. expansions. beginning with California and Puerto Rico to next move to Texas and then to Florida. It's important to note that these four states combined have economies larger than many countries in Latin America. Additionally, other examples of this initial success of our new strategy in the U.S. are Puerto Rico double-digit growth in 2021, behind this new focused approach with an exclusive team dedicated to the region, and our explosive growth in e-commerce sales, mainly with Amazon. Therefore, while we are seeing important signs that our U.S. market strategy and approach are gaining traction, we expect this to fully develop during the next few months, mainly in 2022. Genomic e-commerce presence has also increased during the quarter, approaching 5% of total third quarter 2021 sales with room to grow. We're targeting 10% of personal care sales for this year and between 15% and 20% of personal care sales in 2022, noting the general limitations that OTC product sales have through e-commerce. The growth I have described and that of the last three years but no required corresponding increases to fixed costs, nor do we expect anything material in the midterm. Genoma has instead reduced fixed costs as a percentage of sales by identifying areas to enhance efficiency and cost savings, which fuels our goals with major increases. Today, we have achieved the uniquely advantaged position with solid foundation that enables us to now fully leverage our increased scale. In addition to our relevant and consumer-driven innovation, another element of our winning strategy is a refresh of our product's packaging and formulation. We continue contemporizing and restaging our brands to better match our growing millennial consumer base while improving our products and their overall shopability, then leveraging Genoma's marketing and commercial power to broaden our reach. Grumman and Novamil are interesting examples. Together, these products contributed $25 million to our Mexico sales since 2020, with no fixed cost increases. We created two new innovative products, piloted them in Mexico, then leveraged strong marketing and go-to-market execution to expand their presence to other countries in Latin America. As I have noted, Mexico's sales this quarter were primarily driven by a strong new category performance with products like snot on meal and grooming. While the pandemic continued to present challenges during the third quarter, I'm exceedingly proud of the new teams we put in place as part of our operational turnaround and how our teams particularly our frontline and supply chain teams adapted and rallied to an exceptionally challenging environment to maximize our products' potential in their respective markets, collaborating and bringing to life what we are doing successfully in other markets. Having said that, I would like to highlight how we have successfully turned around our Brazil business, where profitability and sell-out are growing double digits today. These achievements lie squarely with the new local team that began implementing a strategy of selecting the right portfolio of brands while optimizing consumer communications strategies and expanding market coverage some two years ago. On behalf of the entire Genoma leadership team, I'm deeply grateful for the dedication of our on-the-ground teams everywhere. Our company's success is a strong testament to our team's skill, experience, and leadership, despite the significant headwinds we have become familiar with this reporting season. Along these lines, I would like to say a few words about the current cost environment's impact on our third quarter results. We are operating in a dynamic cost environment, and like the rest of the industry, our experience is cost pressures with broad-based inflation across industries. raw and packaging materials, as well as transportation costs. However, Genoma has largely mitigated these increases through close relationships with a handful of select suppliers with whom we work closely to negotiate costs. We have also raised prices where and when appropriate. Our performance in this regard is further testament to our revitalized new teams, which were restructured in the second half of 2020. particularly Genoma's expanded supply chain team. We are realizing the benefit of our highly experienced new team members running plant, procurement, and finished products, which has enabled us to manage global supply headwinds and our COGS impact. Genoma improved service levels and fill rates during the third quarter of 2021 to reach levels which exceeded 90% despite all of these global supply chain disruptions. With that, let me turn the call over to Antonio to discuss in more detail our financial results. Antonio?