MAY 22, 2014
1Q14 EARNINGS RELEASE
Highlights | Corporate
2
The only Brazil’s mixed market player that features exposure and expansion capacity
in the segments of Retail, Hospital & Specialties and Distribution;
Strategic partnership with AmerisourceBergen, the world’s largest player in the
pharmaceutical specialties, resulting in the creation of the company Profarma
Specialty;
The Company carried out four acquisitions over the last three years, including its
entry into the Retail pharmaceutical segment, and the attainment of a market position
as one of the major players within this segment in the state of Rio de Janeiro;
Proven capacity to integrate acquisitions.
Highlights | Period
3
CONSOLIDATED
• The EGM held on May 12, 2014 approved the capital
increase-totaling R$ 187.0 million at least and R$ 335.6
million at most-that will allow AmerisourceBergen to
become one of Profarma’s shareholders.
RETAIL
• In relation to 1Q13, Drogasmil / Farmalife’s sales rise by 45.5% and Tamoio’s sales by14.8%;
• The new IT (SAP + ITEC) platform was implemented at Drogasmil/Farmalife in Feb.14;
• A guidance for the opening of Drogasmil / Farmalife stores has been announced: between 33 and 37 stores in the next 12
months.
SPECIALTIES
• Profarma started a strategic association with the world’s largest distributor of specialties, U.S. company
AmerisourceBergen, to create Profarma Specialty;
• The remaining portion of Arpmed (20%) was acquired;
• Sales up 5.4% year-over-year.
PHARMACEUTICAL DISTRIBUTION
• A 11.9% drop in total operating expenses quarter-over-quarter;
• A 13.1% rise in sales to independent customers;
• Cash cycle shortened by 9 days, which corresponds to a R$ 70 million decrease in working capital.
Highlights | Breakdown by Division – 1Q14
4
Specialties
1Q13 1Q14
138.9
16.5
14.6
1.5
146.3
17.6
14.8
2.1
Retail*
1Q13 1Q14
124.4
33.1
41.9
-9.3
155.8
47.3
47.8
0.1
Consolidated*
1Q13 1Q14
1,036.7
128.9
115.9
9.5
1,031.2
135.9
117.8
15.1
Pharmaceutical
Distribution
1Q13 1Q14
847.4
79.4
59.4
17.3
818.7
70.9
55.2
12.9
Gross Revenues
Gross Profit
SGA
Ebitda
(*) Pro-forma figures: 100% of revenues from Tamoio and Drogasmil / Farmalife (unaudited figures for 1Q13)
CONSOLIDATED PERFORMANCE
Consolidated Performance
6
Gross Revenues Evolution (R$ million)
1Q13 4Q13 1Q14
986.3 985.2 976.6
-0.5%
-1.0%
Pharmaceutical Distribution
Specialties
Retail
Sales growth by 13.1% in the
segments of independent clients and
by 29.2% in the OTC category in
comparison with 1Q13.
5.4% growth in revenues from the
Specialties division, with particular
mention to Prodiet’s sales increase
of nearly 18.7% to the private sector.
Year-over-year sales increases of
14.8% from Tamoio and of 45.5%
from Drogasmil / Farmalife.
50.4 56.2 54.6
1,036.7 1,041.4 1,031.2
Accounting Consolidated Gross Revenues
Pro-forma Consolidated Gross Revenues: 100% of revenues from
Tamoio and Drogasmil / Farmalife (unaudited figures for 1Q13)
Performance by Division
Pharmaceutical Distribution
1Q13 4Q13 1Q14
847.4
816.4
818.7
0.3%
-3.4%
Specialties
1Q13 4Q13 1Q14
138.9
156.0 146.3
-6.2%
5.4%
Retail(*)
1Q13 4Q13 1Q14
42.0
25.3%
7
Gross Revenues Evolution (R$ million)
82.4
95.2 94.6
66.1
61.2
124.4
161.3 155.8
-3.4%
Accounting Gross Revenues
Pro-forma additional Gross
Revenues
(*) Pro-forma figures: 100% of revenues from Tamoio and Drogasmil / Farmalife (unaudited figures
for 1Q13)
Consolidated Performance
8
1Q14 1Q13
95.8
4Q13
115.9 106.5
Pro-forma (*)
Gross Profit (R$ million and % Net Revenues)
16.6%
1Q14 1Q13
14.1%
128.9
4Q13
145.9
15.8%
135.9
(*) Pro-forma figures: 100% of revenues from Tamoio and Drogasmil / Farmalife (unaudited figures for 1Q13)
11.2%
13.4% 12.6%
Consolidated Performance
9
12.7%
1Q13
115.9
14.9%
4Q13
130.5
13.7%
1Q14
117.8
8.6%
1Q13
74.0
12.3%
4Q13
105.7
11.1%
1Q14
93.3
Operating Expenses – SG&A (R$ million and % Net Revenues)
Pro-forma (*)
(*) Pro-forma figures: 100% of revenues from Tamoio and Drogasmil / Farmalife (unaudited figures for 1Q13)
Consolidated Performance
10
1Q13
2.2%
18.8
4Q13
1.7%
14.8
1Q14
1.4%
11.9
-19.5%
-36.7%
1Q13
1.0%
9.5
4Q13
2.1%
18.3
1Q14
1.6%
15.1
-17.4%
58.8%
EBITDA and EBITDA Margin (R$ million and % Net Revenues)
Pro-forma (*)
(*) Pro-forma figures: 100% of revenues from Tamoio and Drogasmil / Farmalife (unaudited figures for 1Q13)
Consolidated Performance
11
1Q13
-0.6%
-5.6
4Q13
-0.3%
-2.9
1Q14
-1.4%
-11.9
1Q13
0.8%
6.9
4Q13
-0.5%
-4.6
1Q14
-1.6%
-13.5
Net Profit (R$ million and % Net Revenues)
Pro-forma (*)
(*) Pro-forma figures: 100% of revenues from Tamoio and Drogasmil / Farmalife (unaudited figures for 1Q13)
Consolidated Performance
Reduction of 6.9 days in the Cash Cycle.
Cash Flow
(R$ million)
* Average
(1) Average of Gross Revenues in the Quarter
(2) Average of COGS in the Quarter
(3) Average of COGS in the Quarter
1Q14 4Q13 1Q13
Cash Cycle - Days * 50.7 55.0 48.1
Accounts Receivable (1) 59.5 45.8 45.1
Inventories (2) 49.8 58.2 49.2
Accounts Payable (3) 58.5 49.0 46.2
Cash Cycle
(Days)
1Q14 1Q13 4Q13
Cash Flow Generated /
Used) in Operating Activities 81.0 (61.9) 7.9
Internal Cash Generatio 5.1 14.0 9.8
Operating Assets Variation 75.9 (75.8) (1.9)
Cash Flow (Used)
in Investing Activities (10.3) (1.1) (12.6)
Cash Flow Generated /
(Used) by Financing Activities (16.0) 132.3 6.7
Net Increase /
(Decrease) in Cash 54.7 69.4 2.0
12
Consolidated Performance
13 Capex
1Q14
3.9
Others
1.1
Remodeling
of Stores
1.9
IT
0.1
Machinery and
Equipment
0.8
Acquisitions – Last 12-Months Period (R$ million)
Capex (R$ million)
12.2
80.4
98.9
275.5
Indebtedness: Net Debt and Net Debt / EBITDA
(R$ million)
1Q13
236.5
2.6X
4Q13
458.5
4.8x
1Q14
412.0
4.6x
275.5
136.5
Net Debt
Debt related to Acquisitions (last 12-months
period)
275.5
183.0
CSB
Investment
CSB
Debt Total Tamoio
Acquisition
Remaining
Acquisition
of Prodiet
74.0
PHARMACEUTICAL DISTRIBUTION
Pharmaceutical Distribution
Financial Data (R$ million and % Net Revenues)
15
EBITDA Margin
(%)
1.8
1Q13 1Q14
2.4
Op. Exp. SG&A
(%)
7.9
1Q13 1Q14
8.1
Gross Margin
(%)
10.1
1Q13 1Q14
10.8
Gross Revenues
(R$ million)
818.7
1Q13 1Q14
847.4
Reduction in total operating
expenses in absolute terms, of
7.1% year-over-year and 11.9%
quarter-over-quarter;
Sales growth by 29.2% in the
OTC category over 1Q13;
Year-over-year growth by
18.1% in the Southern region;
Sales growth by 13.1% in the
segments of independent
clients;
Reduction of 9 days in the
Cash Cycle, representing
working capital savings in the
amount of R$ 70 million.
SPECIALTIES
Financial Data (R$ million and % Net Revenues)
17
1.6
1Q13 1Q14
1.2
11.3
1Q13 1Q14
11.9
13.4
1Q13 1Q14
13.5
146.3
1Q13 1Q14
138.9
Specialties
Sales growth by 5.4% in this
division, with highlights to
Prodiet reaching 18.7%;
Total operating expenses in
absolute terms fell by 25.3%
from 1Q13 and by 12.5% from
4Q13.
Strategic partnership with
AmerisourceBergen, resulting
in the creation of Profarma
Specialty;
Ebitda Margin
(%)
Op. Exp. SGA
(%)
Gross Margin
(%)
Gross Revenues
(R$ million)
RETAIL
Financial Data (R$ million and % Net Revenues)
19
5.1
1Q13 1Q14
2.8
25.9
1Q13 1Q14
25.7
31.1
1Q13 1Q14
28.5
94.6
1Q13 1Q14
82.4
Retail | Tamoio
Sales from Tamoio chain
stores rose by 14.8% year-
over-year;
Average monthly sales per
mature store grew by 9.1%,
from R$ 481,700 in 1Q13 to
R$ 525,500 in 1Q14;
EBITDA of R$ 4.9 million in
1Q14, with a 5.1% margin,
up 2.3 p.p. year-over-year;
Net income came to R$ 3.3
million in 1Q14, with a 3.5%
net margin.
Op. Exp. SGA
(%)
Gross Margin
(%)
Gross Revenues
(R$ million)
Ebitda Margin
(%)
1Q13
481.7
1Q14
525.5
4Q13
537.8
9.1%
1Q13
78.8
1Q14
88.1
4Q13
92.4
11.8%
1Q13
76.7
1Q14
84.8
4Q13
86.0
10.6%
Retail | Tamoio
-2.3% -1.4%
20
-4.6%
SSS Mature Stores (R$ million)
Monthly Average Store's Sales (R$ thousand)
Same Store Sales (R$ million)
1Q13
24.9
1Q14
26.1
4Q13
25.9
4.6%
0.9%
Retail | Tamoio
# of Stores (units)
1Q13
57
4Q13
59
1Q14
60
Average Ticket (in reais)
21
1 Opening
0 Close-downs
0 Reformulating
46 Mature
4Q13
vs.
1Q14
5.3%
1.7%
Financial Data (R$ million and % Net Revenues)
22
-7.8
1Q13 1Q14
-27.7
38.1
1Q13 1Q14
49.4
29.3
1Q13 1Q14
22.9
61.2
1Q13 1Q14
42.0
Retail | Drogasmil/Farmalife
Average monthly sales per
store climbed by 98.2%, from
R$ 164,300 in 1Q13 to
R$ 325,700 in 1Q14;
Gross margin rose by 6.4 p.p.,
from 22.9% in 1Q13 to 29.3% in
1Q14;
The SAP system was
implemented in February 2014;
Introduction of the ITEC
operational system in the
stores in February 2014;
Improvement of the negative
operating result by 58.6%,
changing from (R$ 11.6) million
to (R$ 4.8) million in 1Q14.
Ebitda Margin (%)
Op. Exp. SGA
(%)
Gross Margin
(%)
Gross Revenues
(R$ million)
Retail | Drogasmil/Farmalife
SSS Mature Stores (R$ million)
Monthly Average Store's Sales (R$ thousand)
1Q14
325.7
4Q13
333.6
98.3%
164.3
1Q13 1Q13
11.9
1Q14
19.6
4Q13
20.5
65.2%
1Q13
11.6
1Q14
19.4
4Q13
20.3
66.7%
23
-4.4%
Same Store Sales (R$ million)
-4.4% -2.4%
Retail | Drogasmil/Farmalife
24
1Q13
24.3
1Q14
30.1
4Q13
29.1
23.8%
1Q13
85
1Q14
63
4Q13
65
-25.9%
-3.1%
Average Ticket (in reais)
3.3%
# of Stores (units)
3 Openings
5 Close-downs
0 Reformulating
58 Mature
4Q13
vs.
1Q14
ANALYST COVERAGE
Analyst Coverage
26
Company Analyst Telephone E-mail
Banco Fator Pedro Ivo Barreto Zabeu +55 (11) 3049-9478 [email protected]
Brasil Plural Guilherme Assis +55 (11) 3206 8285 [email protected]
BTG Pactual João Carlos dos Santos +55 (11) 3383-2384 [email protected]
Credit Suisse Marcel Moraes +55 (11) 3841 6302 [email protected]
HSBC Luciano Campos +55 (11) 3371 8194 [email protected]
Itaú BBA Juliana Rozenbaum +55 (11) 3073 3040 [email protected]
Merrill Lynch Mauricio Fernandes +55 (11) 2188 4236 [email protected]
Morgan Stanley Javier Martinez de Olcoz +55 (11) 3048 6088 [email protected]
Votarantim Andre Parize +55 (11) 5171 5870 [email protected]
Max Fischer | CFO and IRO & Beatriz Diez | IR Manager
www.profarma.com.br/ir | Tel.: 55 (21) 4009-0276 | E-mail: [email protected]