Procaps (PROC) 24 Nov 212021 Q3 Earnings call transcript

Good day and welcome to the Procaps Group business update call and webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Chris Tyson, Executive Vice President of MZ North America. Please go ahead, sir.

Good afternoon ladies and gentlemen. by call to and standing business Procaps for conference update webcast. you and the welcome Group Thank We appreciate press everyone investor Group that on the Investor joining XX, presentation us today third November investor.procapsgroup.com. on XXXX and can quarter website be financial the and at results XXXX release found issued Procaps was the please Procaps note Please review the disclaimers included in the investor presentation.

results Private this the get caution of are everyone to future note Please made statements could statements obligation of the or during including characterizations Procaps results. assumes to market meaning future Act information actual I company's within that future to differ is such that or statements like call from Group's financial Litigation Group projections would any expressed started, market set forward-looking XXXX The statements. past Before subject statement. future is we any SEC and such contain Reform to forward-looking refers a for also of Securities forth those of performance uncertainties. guarantee forward-looking events, projections no not or statements that and update expectations, risks including the in reason, Any conditions those in Procaps materially filings. a forward-looking

Chief today's Patricio directly Executive are reconciliation Chief better the of presentation, Procaps' Financial this be to GAAP Procaps for adjusted a to EBITDA disclosures core these including and discussed. non-GAAP refer non-GAAP Hosting margin measures Vargas. operating Please The call During understand Ruben the investor conference of call adjusted Minski Officer, and investors enable will measures performance. Officer, financial comparable presentation non-GAAP EBITDA to financial measures. and each most company Group believes

webcast. A Officer, now the on call the the call Group's conference Ruben? IR site is Procaps over link Ruben available to will at turn this I Minski, Chief investor.procapsgroup.com. Finally, Executive is the Procaps' webcast being

Procaps for first Group company. on you you for Thank as today call Chris joining public all conference us the our and thank a

no years idea and excited our Procaps. also am over very been how am the is last to words able Patricia CEO I we XX finally Patricia few operations. public has joined successful months after the speaking, have This to be a those capabilities be Chairman Vargas. today to I Minski helping to the work You begun be Founder, of our speed as business to say at fortunate getting hard CFO. new up we by us build company. need and on Ruben

many prior with of those that already CFR CFO For our role. new roles, sure share you his shareholders in Pharmaceuticals. know that I I including as am confidence from Patricia his have the

I forward to For don't him Welcome, look to to the those you team. know that him, personally. introducing Patricia,

well could With As and risks, results I perspective a statements. all of brief are the a said, Chris subject to our forward-looking materially general thee I and uncertainties thought that from calendar housekeeping, year statements as as time. mentioned, take we differ Q&A the XXXX offer quarter would turn accommodate more happy Patricia From at before there, to of further the it a specifics detailed any questions both answer as to to you financial later are I for over statements. a

$XXX the When driving messages at Has PIPR quite exciting history we four convey incredibly and exceeded XX-months really are to our an and it growth that our started our this As I January that for properly messengers there today, to I look Procaps in healthy. trailing we in raising time key GAP] fund at of are low wanted remains in and we ensure internal net I were of the fundamentals [AUDIO expectations million revenues. XXXX year, the process

quite five the forecasted. the forecasted and that year-to-date we throughout $XXX the a And whole is double XX-month are encouraging. This both growth of on quarter our trailing year, at rates of divisions basis, through revenue where Four XX% versus of growth year. XX, we September we is out approximately of digit slightly terms rate in million growing is ahead XX% fossil which year-end revenues above of As are net our XXXX. for

products Our growth has geographies. and remained consistent across our

While market units we for products CASAND CAN grower, a seen of repeatedly our the have the Rx board organic demand XXXX, where and has accelerated OTC we a continued. are we mid-teens guided have Procaps the Colombia, to an in in growth across increased and that variety particularly business

product been key have driver launches of our new Our growth.

rate, metric rate our is renewal at revenues gross I success. product years of in proprietary very a our the three on key the measure oral of the delivery renewal percentage innovation focus much our systems Our our health key to that is last The business XX%. is from a launches to within as

we As we mid-teens low a to rest expect the onwards, and growth XXXX that at to rate. stay look of achieve to continue we sales organic

sales The continues in outside to be market our and rate continues say one to the focuses. share of where message we successful our that well business of not market products our performing to growth primary This very continues times the aren't is second two Colombia is Colombia internationalize sales robust. as of are to our that increase

as with X.X% Combining market company from pharmaceutical continue market September to our measured as X.X% in market all be September, in of IQVIA. our as by share. gone LatAm, have a we region market markets XX, sales the share We of share in X.X% highest the in of product terms local growth to

a years XX to for However, expected we will launches come. over this of product to key the this pipeline quarter. growth, in addition driver next over XXX our internationalized And years be local products in three

successful of capabilities be routes We to commercial the Colombia. to have outside market on built

market an strengthen some as opportunities We issues. CDMO business to partners. strategic We capabilities is U.S. for having business considering update are the in our shortly our of also plan on consideration some you today to manufacturing it this important

While our and we in to region by growth continue strong, Colombia product. remains diversify by

successful are years' future behind growth. investing significantly that make we our is to innovative we fund to that launches message key third product The are sure

As decided marketing our our of these growth amount expenses require support, market to and in OTC accelerated order Rx of increase is which from products to favorable a we take opportunities. advantage significant launch considerable have

products ensuring benefits have long plans. to million our key of message nature proprietary well internal achieve that believe external term as Given we final and our capability are leads ample success our borrowing our to is and to achieve that growth plans cash to approximately currently funded our The we their in fourth and company. properly $XXX sheet growth M&A balance as in an initial

we our lower refinancing As debt completed successful you borrowing our see can to our filings, in cost.

investment lower, the that being a meaningfully in a are Currently, public of past, to have benefits we Our opportunities we cost actively as of carefully one evaluating. is debt us few company. is we mentioned are at recent which looking attractive the

fits to finding We is very strategic the team right and set our our continue will thoughtful disciplined in be and to M&A business. Weinstein our Alejandro for process.

value and are focused Mexico, the pharma we America opportunities with We geographically can are Andean companies and we leverage focused to our on on crating acquire oral that solutions delivery technology Central region. and

growth. in of our any five we primarily goal next We can applicable achieve stated updates will importantly by we over years, sales the organic billion driven but $X believe provide

our I We structure we to M&A in our up are ask financial and and industry review statements to our tremendous take team of will With skills capital Patricia set for fortunate Q&A. amount Vargas have that, before is deal-making a success.

financial worked I also senior Procaps is is Procaps I you do to Camilo net Alejandro join SQM, growth add-on Officer I background, years honor its to in of our Alejandro financial Thank of Procaps was my and roles with the to exciting growth innovative serving previously again at Weinstein particularly on It work given demonstrated CMPC. Pharmaceuticals summary Dr. many of I give forward organic Ruben. Camacho Procaps. accelerated so as I Financial role them a XX. strong deliver quarter By forward believe positions, a the to to and sales of performance drawn as come September I you and CFR Officer It you at I plans. well, Chief the and the with successfully again I growth experience CFR relevant product profile look integrating having Weinstein and whom in third to great to inorganic and have ahead Procaps opportunities. with XX%. Chief results Pharmaceuticals. was with QX at to a way of of both with the a chance look CFR Financial want working having team and of when as I to opportunity,

overall and QX from Our strong well and product OTC launches. growth Rx of demand net the in is exemplifies year-to-date trend as existing growth solid this we growth our us have by across which our seen into in drive XX% next years. was driven have our for fundamentals our new products we A rollout growth This the will of continued with few seeing believe businesses, which are of consistent organic branded we as years the both sales year XX%. us driven past

in roughly million. profit gross reach the million XQ, increased have XX% line to we On $XX.X or by year-over-year $XX.X

our by business the in margins gross we CAN. points sales fell Our Colombia OTC XXX market a institutional to and unit in basis products mix as to increased due

although EBITDA to we to EBITDA XXXX. our EBITDA to $XX.X XX% margins to compared behind has increased adjusted XX% new And by increased adjusted have increased million. been in compared our relatively spend nine-month product million, have million, Our our launches. consistent $XX $XX.X $XX.X investments million

million, reflect options ended net the of was inorganic. million adjustment net believe a million, plan, $XXX to to a debt these times cash our put primarily $XX.X one-time, adjusted which granted growth the our sufficient of have or certain September was the of Finally, for fund to of shareholders We termination we organic to the non-cash with options. and loss to EBITDA, of leverage combined valuations XX X.X put both nine-months $XX attributable is and profile balance currently which

to our growth into three by wanted I sales net take driven which dive primarily reasons. a explaining was deeper Next

we manufactured products First, third demand experienced for parties. higher of

our portfolio view increased SBU. of slide third, into provides Second, complimented the This Rx by we our growth demand net revenue with product existing new roll-out products. more both was also there launches. OTC And in-depth and a for our

business third-party Brazil and of our new well in in Funtrition from launch new line. gummies strong experienced our CDMO First, product demand the clients as from our products as

X% year. versus net first months in revenues grew last Our nine the

to reductions and level related was it growth, indicative inventory X% only at was growth. not partner our of QX sellthrough While

which Procaps a encompasses demand economy the in reopening specialties experienced clinical in general. the Colombia result of in pharma of Second, Colombia, increased as Colombia, and

and addition, In of contributed in relief such areas monoclonal an as new pain also in antibody, dermatology incremental revenues. increase products launch the therapeutic select

nine in Procaps Colombia Overall, and use. revenues months from the injectables of COVID-XX for launch XX% clinical business the issues of first quarter increased sales versus anesthetic during ramp-up XXXX. Additionally benefited and and XX% net the the related by

Central Third, America versus compared XX% or CAN last nine the same growth of year XXXX. and XX% months quarter to the North had first

was our We the reducing inventors for which of are part seeing earlier at distributor benefits hit the one-time a the year. of levels,

We result development continued a Andean key was Region, first nine increase and and region. the and or months of are markets. demand primarily of the for of higher of brands due existing the further our new XX% of channels, XX% the OTC the both pleased sales a Rx to growth and inventory improvements of to growth the from see This Central products Fourth, quarter products CASAND products in versus in for turnover the XXXX. South in in our in America approximately rollout increased experienced new distributor robust strengthening demand, rate and region, XXXX

SBU in revenue and net months. our XX% the the of approximately Finally, quarter XX% had in nine first increase an diabetrics during

digital Zutrics. rates QX. of meters, QX had factors launches in the product it higher both and product, growth launch across for combination Diabetrics benefited fact, platform, Colombia a of continued blood use our glucose In demand of and from new including our insulin new similar health

double units grew addition, continued Salvador. again solutions our our the robust portfolio revenue rollout in four five we of diabetes In our net digit experiencing of once business summary, business all El growth. with In units of out

cash The private next placement the see recently, balance the with debt strengthened. a adjusted gives can our carried X.X of how with On hand EBITDA to debt sheet reprofiling combined in out of a our net times. we slide, has

metric highlight with a private have the reprofiling the a with improved is is to on cash expect position and have summary, debt we X.X extinguished for with the debt we Our put growth substantially we that, the we ratio of balance give now the business times. forma a to ratio the the related it to organic to has to In hand I which effect It over equity, important out removed financial a pro of quick placement, combination, that back thoughts. the some inorganic And our closing want pressure healthy to have options, carry Ruben strengthening has sheet level. from and equity at plans. with our our that

Patricia. I for our thank listening Thank prepared you to remarks. all you

packing very our forward looking are to the are year been going our we success. of before results We pleased public we in and better part quarters ahead. have Never this to us behind for have in history positioned delivering XX

continue issuer, region best we our softgel a are quarterly financial to to production that innovative we to that carrying us employ oral create practices information to to leading Even significant that filing exempt a to allow quarterly with grow public are continue will though interim financials do we everyone player from and and we foreign a delivery pharma related promptly will best as our out committed are terms and reach are We and conference publish differentiated systems products expect remind tailwinds as the a has global LatAm pharma up in I capacity substantially. of in calls. truly company. in

mentioned to open organic in years next we low With I for questions, have continue like in the before, the mid-teens. up we growth that, please. would As to to expect

[Operator Instructions].

Unmute Dolliver The first with Please your Go Dolliver, line Capital open. from question. Kemp yourself. Mr. question comes ahead. state your is Markets. Brookline

across any in of Thank both reduce subject you terms to your over all had about reductions from you. Good you. of made And you the inventory since outlook, management. in the lines Good year that inventory to Could channel at then afternoon. Quickly, of the the last efforts also some business? both of talk in level, on additional hear or two? inventory

take to that? want you Do

And will can the something if you take missing history. Ruben. Yes. I related I complement it, am to

Absolutely.

practice a CAN inventory CASAND. reduced thought more good impacted that benefits in year in And now. resemble it that you than why in market something we in going. us and bit days About America that the had seeing closely to in of their year. also that's we order way the better a ago, where we it we in North, that thought Kemp, ago, are part the So something a a Central a first year was And was the was

markets. has the As back those we previous are to been inventory regarding cleaned, getting two the level. That's

is reduce And had CDMO levels. that that some the wanted lower We the also why sales CDMO, for had we the we business in in mentioned inventory partners XQ. to their that also

to we forward, we Going effects do anymore normal not anticipate at level. are have regarding believe inventory. healthy We

expect if that So again. I not know, to you don't should want coming you Ruben, that. complement

Absolutely, very our with I forward looking inventory what we levels across We all that that's to. are comfortable think Yes. the feel exactly organization.

one great. additional just regarding CDMO question That's you. the And business. Thank

U. buy Or you simple a the do it S. as referenced facility? steps build something a do to You need desire more or presence. comprehensive? to have U. as S. to Is taking a

setting operations. or of buying active either up very possibilities are We into looking

possibilities are two promising. they quite look We looking into right and now

a to present business that S. U. in will the our CDMO in will to will allow we S. going most be probably company the buy So we U.

product with we specialized they today, to launches. systems have S., create our As have manufacturer's site of which our after customers a to COVID differentiation the new in would technologies love that many related oral found, to in climate specialized our the especially delivery U. especially

So moving we we are on are following that very step fast and this.

much. so you Thank Great.

you. Thank

Thank ladies any closing Instructions]. at you. will time. and for it appear turn And to to [Operator management not now be back I does questions this additional gentlemen, there remarks.

happy one-to-one and should gentleman, meetings more Okay. set much once call for information. were you and more a than have questions so us day. we any you Thank any or for answer great to much, up other need again Thank joining you so this

Thank Have you. This good All a disconnect. concludes day. today's conference. may parties