Genomma Lab Intl Sab Ord

Greetings, ladies and gentlemen. Thank you for joining Genoma Labs' fourth quarter 2024 earnings conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. As a reminder, this meeting is being recorded and will be available for replay on the Investor Relations section of Genoma's website following the call. I'll now turn the call over to Christian Ibanez, Genoma's Head of Investor Relations. Please, go ahead.

Thank you, and welcome, everyone. On today's call are Marcos Barbieri, Chief Executive Officer, and Antonio Zamora, Chief Financial Officer. Before we get started, I'd like to remind you that the remarks today will include forward-looking statements, such as the company's financial guidance and expectations, including long-term objectives and forecasts, as well as expectations regarding Genoma's business, assets, products, strategies, demands, and markets. These statements are subject to risks and uncertainties that could cause actual results to differ materially. They are also based on assumptions as of today, and the company undertakes no obligation to update them as a result of new information or future events. Let me now turn the call over to Mr. Marcos Calderi.

Good morning, everyone, and thank you, Chris. I am thrilled to share our strong Q4 and full year 2024 results. 2024 was an outstanding year for the company, marked by exceptional profitability gains and steady growth across key markets. Each line of the P&L showed increasing momentum, with EBITDA growing faster than sales and net income outpacing both. We surpassed our internal targets across all key metrics. Next sales grew 32.4% in Q4 and 13% for the full year, driven by strong performance in key markets, including Mexico, Argentina, Brazil, and the U.S., alongside a favorable FX environment. Gross margin expanded 312 basis points in Q4 to 63.1% and 289 basis points for the full year to 64.1%. EBITDA margin expanded 351 basis points in Q4 to 24% and 235 basis points for the full year to 23.3%. Fueling 55% EBITDA growth in Q4. and 26% for the full year 2024. These remarkable profitability gains were driven by company-wide productivity initiatives and manufacturing efficiencies. Net income increased by 97% for the full year, driving EPS to double in 2024, a significant milestone in our financial performance. Our cash conversion cycle reached 110 days, temporarily impacted by Suerox's inventory buildup amid capacity constraints. Cash flow generation for the full year 2024 hit a record high of 2.8 billion pesos, representing a 36% increase. Our business remains healthy, with 68% of our sales maintaining or gaining market share and 85% of sales outpacing inflation. The following chart shows the performance of core categories during the period. As you can see in the last column, we showed healthy levels of growth across the board. In the case of skincare, we executed the Mexican market asepsia relaunch in Q1, 2025. In the case of blades and razors, we implemented a new communication strategy and revitalized in-store displays for 2025. This chart simply shows graphically what we already discussed in terms of category performance for the full year 2024. Isotonic beverage, infant nutrition, and all the OTC categories are driving the portfolio's growth. And the same chart but now showing countries' performance. During full year 2024, Mexico, the U.S., and Brazil exceeded expectations, while other Latin markets such as Argentina, Colombia, and Central America performed well. We also faced headwinds in Peru and Chile. Regarding our skincare turnaround project, we have taken a bold new approach with Asepsia, launching a new formula with a fresh execution to drive sales growth. In terms of product, we aim at increasing usage frequency by expanding from facial to full body use and shifting from acne treatment to daily care with a new formula that combines anti-acne, and hydrating properties for healthier skin. In terms of execution, we are seeking increased traffic by moving from pharmacy shelves to the general soap aisle with a competitive price. This slide shows the excellent execution and strong promotion of our Asepsia relaunch in the Mexican market. I am confident that our relaunch plan will drive a swift turnaround in skincare sales. Overall, annual sales have grown steadily at an 8% CAGR over the past five years, while EBDA has outpaced this growth at a 12% CAGR over the same period with EVDA margin growing strong hikes over the past couple of years. These long strides in profitability start at the gross margin level, which has grown an impressive plus 6.1 points. We improved our gross margin from 57% to 63%. since the past couple of years, a testament of the impact that our productivity initiatives and manufacturing capabilities are having in the business. We firmly believe that this improvement in gross margin is sustainable. Let's now zoom into EBITDA margin improvements. In the chart, you can see how we grew 4.2 points of EBDA margin over the same two years period. More than half of the gross margin gains have been translated into EBDA growth, and the balance was reinvested in business to continue accelerating top-line growth in the core categories. Looking forward, we will continue to strengthen core brands by reinvesting savings from future productivity gains while maintaining a stable UDA margin. The following chart highlights our accelerating momentum down the P&L. with EPS significantly outpacing sales and EVDA growth, achieving a 25% failure over the past five years. The company is delivering on CapEx efficiency. You can appreciate how margin is expanding with less CapEx needs. This is resulting in a higher free cash flow where we have reached a historical high at a 77% CAGR over the past five years, while returning a healthy dividend to our shareholders. All the efficiency has resulted in a much better ROIC, a variable that is becoming a central focus for our leadership team. In the chart, you can see the evolution of LABS ROIC over the past four years. Our current business model is delivering 1.4 times more value for every invested peso than four years ago. We will continue to seek ROIC growth through further efficiency projects. Our cash conversion cycle has improved over the past few quarters and we expect further gains by optimizing inventory days. In preparations for the high season, we have been building Suerox inventories aimed limited production capacity. The new Suerox production line set for commissioning in mid 2025 will enhance manufacturing efficiency and help reduce inventory days. We continue to make progress against the 1.8 billion pesos in our accumulated productivity savings target. In 2024, we completed 57% of the target and looking forward, we will continue to strengthen core brands by reinvesting savings from future productivity gains while maintaining a stable EVDA margin. Our latest productivity initiative has generated 277 million pesos in annual savings of optimizing media spending, enhancing point-of-sale marketing, and streamlining headcount to increase automation in daily operations. Before handing the call over to Tonio, I want to take a moment to express my deep appreciation for our team. Their dedication, resilience, and commitment have not only surpassed expectations, but also driven us to achieve our goals. I have no doubt that we have best-in-class team capable of taking Genoma to the next level. I also want to sincerely thank our investors for your continued trust and support. We remain committed to delivering lasting value for all our stakeholders, and we look forward to the opportunities ahead. Please, Tonio, go ahead.