Genomma Lab Intl Sab Ord

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Genoma Lab fourth quarter 2021 results conference call. At this time, all participants are in 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. If anyone should require operator assistance, please press star zero on your telephone keypad. A replay will also be available shortly after the conclusion of the call. I'll now turn the call over to Barbara Cano with the Inspire Group. Please go ahead, Barbara.

Thank you, and good morning. We'll begin today's discussion with remarks from Jorge Brake, Hanoma Labs Chief Executive Officer, followed by Antonio Zamora, 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. Hanoma undertakes no obligation to update or to 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 filing with the Mexican Stock Exchange. With that, I'll now turn the call over to Mr. Jorge Bray. Jorge?

Thanks, Barbara, and thank you to everyone joining today. I am pleased with our fourth quarter performance and our results for the year. As you read in yesterday's press release, the NOMA achieved historic levels of both growth and profitability in 2021. We also continue to prepare and adapt to the changing needs of our customers and, at the same time, focus on delivering a strong resource for our shareholders. We ended the year announcing a new strategic pillar as we are unleashing the next evolution of our strategy with an evolved view of health and well-being for the future by leveraging partnerships with leading global companies to enter new categories while we take our partner brands to the next level in our regions. Genoma is a health and well-being company that is leveraging our truly understanding manufacturing, marketing, and commercialization capabilities to expand our positioning beyond the traditional personal care and OTC company. As our results for the year and for the final quarter demonstrated, we will continue to leverage Genoma's innovation strengths with line extensions and new product launches through our reinforced supply chain strong network economics, and robust product offerings. However, new alliances, such as Genoma's recently announced partnership with Oramed, subsidiary of Oramad, enable us to expand beyond our traditional scope. This new inorganic component to our growth strategy, therefore, and distributed brands within the market we know well and partnering with global companies that have outstanding products to go beyond what's possible through organic growth alone. Needless to say, the opportunities are exciting, and we look forward to making further related announcements in the near future. Let me now discuss our very solid results for 2021. the enormous third consecutive year of double-digit growth and profits, which are growing faster than sales in absolute terms. Full-year 2021 net sales reached more than 15 billion pesos, a more than 11% year-on-year increase. EBITDA for the full year increased by more than 10%, with a 21% margin driven by consistent execution organization. We continue to see performance of innovation initiatives, particularly line extensions, and a strong new category performance supported by aggressive external media campaigns and in-store marketing. To comment on just a few examples, our Cleo Natural Shampoo with new environmentally sustainable recycled and recyclable packaging, which we have built last quarter saw a double-digit increase in sales during the fourth quarter of 2021 as a result of this initiative. The new Carbon by Grumman Razors launched in the third quarter is also growing here in Mexico, boosted by a Grumman testimonial advertising campaign, which increased second half 2021 sales by more than 50% year-on-year. We have since also launched Carbon Grumman in Chile, with a favorable initial response. These are only a few examples of the power of Genoma's brand value coupled with outstanding advertising and consumer messaging launched through Genoma's multifaceted media produced in-house. 2021 sales growth, while tempered by the well-known headwinds of high inflation, exchange rates, and broad-based global supply chain challenges, was strong in most of our markets, this in detail shortly, but I'm very proud of how our teams manage costs related to this volatile volatility. Their strong execution combined with effective pricing actions across both segments mitigated effects to a large degree. Further, Genoma's supply chain was meaningfully bolstered by prior interventions with a new team in place for the last year and a half and a fully redesigned supply chain model. Our enhanced demand forecast in procurement and resulting improved fill rates and service levels are supported by our new sales and operations model, too. Both the processes and related cost reduction have improved, resulting in a lower cost and higher quality finished product, particularly compared to Genoma's third-party suppliers. Genoma's Latin American operation ended the year maintaining prior quarter momentum with net sales again reaching almost 2 billion pesos, a 12% year-on-year increase versus all of the 2020 results, supported by double-digit growth in the whole South America. Innovation and expansion strategies, as well as increased points of sales, supported these results, which were partially offset by a negative exchange rate impact in some countries where Genoma operates. In Mexico, fourth quarter 2021 net sales increased by 26% year-on-year, with initiatives which drove increased market share within key categories, as well as new core brand line extensions, including the examples I have already noted. This was supported by a slight recovery of common cold problems demanded in December, as Omicron symptoms were similar to a common cold for many. During the quarter, we made solid progress on our Mexico industrial cluster. Our personal care and beverage manufacturing plan is up and running. The suero shampoo and ointment line has completed the initial production phase, reaching roughly 6.5 million bottles of suero, 470,000 bottles of shampoo, and 22,000 bottles of ointments produced per month. OTC will begin shortly. and we continue making progress on expanding with an eye towards exports and diversifying product formats, which improved overall profitability for our personal care business. Turning to our U.S. operations, fourth quarter 2021 net sales increased by just under 2%. While we further advanced the U.S. market business model restructuring process that we began in 2020, also with a new team in place, we continue to face Omicron headwinds, delaying our full implementation. However, we believe we've reached an inflection point with increased consumption expected for the spring and better sell-out and selling optimization. Sheriffs at this point is performing extremely well in the U.S., expanding within points of sales in Puerto Rico, among other markets, including California. 2021 Shredox sales. Shredox can be found in major retailers in these states where we are a leading brand compared to competitors like Powerade and Payalite. The enormous e-commerce presence increased during 2021, approaching 6% of total four quarter 2021 sales. You will recall we targeted between 10% and 15% of personal sales for 2022, noting the general limitations that OTC product sales have through e-commerce. Finally, ESG is an important and long-standing pillar of Genomas growth strategy. Genomas was one of the 10 Mexican companies recognized for environmental, social, and corporate governance. Practices through our inclusion within the 2022, I'm sorry, S&P Global Sustainability Daybook for the first time. The 2022 edition assessed more than 7,500 companies across 61 industries globally and showcases the best performing companies among industry peers and in terms of financially material ESG metrics. We were also included within the Dow Jones Sustainability Mila Pacific Alliance Index. for the second consecutive year. And Genoma Labs' MSCI DSG rating was also upgraded to BB from B in 2021. In closing, while the environment in 2021 remained challenging, it also proved to be transformative for Genoma. We are advancing our strategic plan while adapting to a changing environment to capture exciting opportunities. Before I turn our call to Antonio for a discussion of our financial results, I would like to recognize the incredible and tireless work of all our associates and things through continued volatility in 2021. This was indeed Genoma Labs' year of our people.