Procaps (PROC) 16 Nov 222022 Q3 Earnings call transcript

Good day and welcome to the Procaps Group Business Update Call and Webcast. Today's conference is being recorded. Please note that some statements made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Any statements that refers to expectations, projections and/or future events, including financial projections or future market conditions is a forward-looking statement. The company's actual results could differ materially from those expressed in such forward-looking statements due to a variety of risks, uncertainties and other factors including, but not limited to set forth in Procaps Group's SEC filings. to such obligation statements. no assumes update forward-looking any Procaps or the is results. Please that performance market future also note of past information guarantee not a this over the the to I'd Relations Melissa Investor Procaps. Angelini is At conference of Director time, like to turn Melissa. ahead go Please

and everyone appreciate being press you on and on for hello We at is link the webcast in to today. and and standing our presentation. conference This available Thank update Procaps' webcast business can a Please Procaps' call. us found the investor.procapsgroup.com. note that website. everyone. included joining IR on release Please be call you the by IR was Monday welcome Thank disclaimers the the investor review issued is website Procaps' also the also to

measures the most Investor the be better financial to Procaps' refer ahead? each these a our today's we Vargas, directly GAAP Procaps' non-GAAP During to Please presented. disclosures of now non-GAAP We the enable to discussed the go measures CEO. financial Hosting for Please will performance. investors call our Minski, call, believe Ruben, and of the core operating understand reconciliation presentation Patricio turn and over have CEO I measures call, will Ruben to. CFO. comparable non-GAAP

and XXXX conference call. results Melissa joining us and of months today all you, thank Thank for quarter you nine for our first third

of both and happy as well financial any you or to very I Patricio or Patricio have performance of From to update to As the the with free provide perspective an overview forward. our and us turn strategy call, with with as our our detailed going through statements. up will you there, it our for specifics agenda, may well with I to follow more podcast give of wanted my period take an At Melissa. feel answer questions the I please as over to an additionally, end of everyone are

to quarter share to months highlights some the X, Moving Slide nine of the you. and I wanted with

and market very results positions to right and the and top solid show resilience am our headwinds. of the of and Overall, our share segments are other the to with new track. our new macro diversification our sales delivered that currency results products We exchange I on geographies. on Our business numbers constant foreign date. line significant evolve with and backdrop for continues the year quarter pleased portfolio

Patricio in people, for increase months and business that to You and currency the very processes. we the and growing company quarter revenues with our organic the will in structuring posted in future systems an We from for in constant nine year-over-year. XX% XX% investing for growth, also hear net XX% committed are CDMO inorganic in

in in quarter currency the and -- products. XX% months. constant we months our the the supported posted the performance terms All a business, BXB growth except currency constant and divisions year, Our nine in revenue in diabetrics of are our by OTC Rx for for growing our positive for of the nine very BXC of

of revenues US our quarter begin construction The XX% to renewal is of our drivers launch and year. percentage overall the operations from facilities of been rate next product Our first in gummy our at expect on year-to-date. in growth, last key the launches have is months in the of we track our XX product that is the

our our by geographic dynamic to new investment to remain to through we continue and value product in very research production portfolio, footprint. development our the and chain our environment, increasing businesses, navigate operating and continued capacity, organisational structure investments and As fortify we committed diversifying

the year's Somar close to expect acquisition also Grupo before end. We

X, another important new is products. research growth future and Moving developments in driver to Slide our for

of much our properties around a very As our innovation success. always have to I delivery is a said, key or systems

products we our well. execute The one geo of of expansion diversification As these in September, strategy. to ramp-up XXX products continue region, going is over the launched

continue business to approximately much that opportunities We to in the realize and front value the in research in of term near the us. invest and X% long revenues and pipeline are development of very of net

Moving take X, performance. a I to business deeper explaining want dive Slide to into segments

top Region for market the products, higher third Andean and the America Our growth portfolio demand and with general, areas. products the based and the in broad demand penetration new parties. existing performance services drivers line of rollout south and Rx therapeutic product both launches, region the was across of for our OTC main for the increased higher Central for In of our several were

line segment the is growth business execution. partners quite business and of demand the diversified brand Nextgel Procaps portfolio, global top is share growing Colombia, by currency our businesses The remained indicative market the regional market impacted biggest today. unit Our and is strong. as from our was Columbia most consistently and devaluation,

of a products relevant ICU in decrease for clinical sales experienced lines. it devaluation, the currency the our to in addition the specialty units In most

Looking OTC lines supported on Colombia, launched products. the of and almost substantial performance by for was last XX% in existing at products our year Rx growth increased demand

sales Andean Region lower trade, CAN Central started to in demand and constant period after America The than over XX% is growth and of as [ph] whole, several grew to quarter positively the impacted in related a South [ph] of in areas new X% almost rollout The care. bases. increase was such on Central the which its a XXXX American CASAND result brands. XX-month the in of base grew quarter Colombia nine caused in quarter and XXXX comparison previous of months [indiscernible] XXXX. existing and increase third or low high a months nine sales and products a constant basis. is this of the first products in and currency for the the CAN, therapeutic portfolio by as quarters. normal the in higher expansion the North Procaps rollout X% normalization However, share new for market in in increased region that was the inventory

that Finally, Impacted in registration delay our the products, nine to register during of got supplier, in issues already very we promising. SBU constant the looks the XX% one was affected in increased a the product launch year delay quarter product the Colombian of XXXX the insulin much third and current delayed. very a and device issue by We the are that which acceptance cyber month happy and on to [indiscernible] the of some quite resolved were suffered XX% Registration a has also due our of several diabetrics been processes Office security products. in with basis. this [indiscernible] by

a Patricio follow-on products waiting going was for market we were For in that that, and the statements launched. our all products the to yet replace review I financial diabetrics, specifically new to ask before not take we will Q&A. With versions on were those

you Thank to XXXX third color months you, Ruben. I first on little results. of and would quarter In give the a the more like next slide, nine

months, you. the we and nine in already driven with million products revenues XX% an and X, Currency net by $XX to few the mainly was by negatively and Ruben million Rx Moving you the impacted of a segments sales next last the in performances Slide nine in CASAND OTC the quarter evolution. XX% constant growth devaluation, months. can consolidated The increase see our quarter $X of by equivalent showed first positive in year especially line in business months. and view, and top as for ended In our currency

where given the Although transfer monitor currencies continue must in long the we our in to that impacts the of to these weight term, ways its the evolution in peso, have results. particular, of but we Columbian to of most market, the we operate,

be Our correct fourth soon. the affected quarter not revenues negatively if Colombian does may peso

rate a line, impact $XX nine We're result sales in which This 'XX a Moving months consolidated and costs expenses. includes of $XXX quarter showing on marketing for impact to better the both a is gross also sales due third Slide of margin mix. and periods. margin, we XX, million gross and to on the contribution first exchange with XXXX our the positive in million XX% reached profit

with these defend higher the markets, have we margin in but the business you and are challenging even able see have that in we Here that solid, period. can the improving the performance is we to expenses been

the next SG&A. our breakdown of have to we on Moving the slide,

and the expenses cost in this can the In new our we inorganic in share, promotional with the product company EBITDA with we being in as line marketing to exchange reinforcing hires, the XXXX. you of SG&A and nine in for the and due rate, our higher that XX% have market brands efforts, top we to slide, and future return XX% in by the the the continue also restructured and and in structure the for fact impacting increase months growth. events preparing This addition that improvements. to associated invest was publicly a costs company growth in-person organic impact future is headcount company by the stronger systems increased had quarter see the personal increase commercial organizational and and to processes mainly the listed SG&A of of

in part were quarter million $XX All EBITDA, in which the $XX negatively of year of not of the totaled most million these XXXX. nine expenses, the XXXX, impacted and which adjusted of first months our

our so to measure to whenever product contract forward. we new launches we're our increases, improvement price working this, mix with going compensate margins continue a cost, As containing possible, protect of on adjustments and can

we will most planned, our be as as efficient of reducing a them in these organization diluting context. we well more as to As grow continue become we some as expenses of new

quarter will results to deliver area, Looking about in now we adjusted early adjust into could and believe with our remain ability far with it's even fourth low happy growth that these think we the full the see so long a hurdles, the closer 'XX our challenges for to for we well beyond, to conditions, affecting term. negatively the fourth XXs the market and XXXX. current We we're and while. facing Despite guidance year EBITDA reasonable move the as quarter optimistic linger

continue quarter-over-quarter. disciplined improve challenges, and in being, time we're to not a results to the will creative way to blind work For these as we our

a as XXXX, have we of balance on Finally, Slide XX, our XX, sheet. of view September

operating financing that balance been see have the to challenges facing, decreased can expenses chain increased as working we of You increased increase and come we of restrictions chain supply to Grupo needs and such that acquisition. facing CapEx capital the has see summary, result support cash and supply will are increased as to inventory the to growth M&A confident our as economic support future provide we EBITDA and I leverage uncertainties, a in and the the we although super our on this, to agency increase deal. after to pressures in devaluation, associated public remain some debt financial ratio, projects. challenges times net with markets slightly net and revenues position inflationary integrating to debt we to executing M&A Somar but the on with Ruben. it global our resulting leverage are a increased X.X we Due will operations the have fundamental pass external a back currency will our our In take healthy levels that, being we strong continue believe to grow back to and With adjusted

all Thank for participating. you

said I very we before, As are proud our performance. of

belief we our advantage capabilities, support challenging the scenarios. growing even continue that results to team the effective competitive and have right in strategies Our

businesses. necessary in We with and are constant investments control. we our that the demonstrating variables a our across business are making within our all of in environment, always global in currency very resilience growing challenging We're are impressive aspects

We also and drive has the expect integrate remained see remain growth key their as consistent drivers and more operating The unchanged. to synergies. demand leverage we quite M&A

lead our related with double-digit expenditure. growth under to trends continue very to welcome aging will benefit much from innovative listening will questions to This continue that and may higher have. product we up Thanks any portfolio. growth you We population and for

Thank you.

question [Operator first session. now Pactual. with BTG from [indiscernible] comes will go question-and-answer the Please We begin ahead. instructions] Our

on are pressuring Ruben, question Patricio, I Melissa, my in revenues effect business evening, growth we there too net see about unit. one that Good I just Colombia, side have -- main well, here here the Procaps

this currency depreciation distributor stocks the is local timing regarding of The products the and, the is question My demand, other one the is the of specialties clinical pandemic. the right. first here and one normalization of after effect for sales the

it currency, levels. to ex Procaps growth expect back That's you you. do this Thank Colombia resume So organic when normal to guys. of

been our time, pushing what we thank We know amount market. inventories that that last and estimate have an don't they at some the the you need question. nervous your of therefore to year end with Okay, the is of It's were distributors did into themselves the exact product and a make. they at bit for stop happened of the

say I quarter. an to in think fourth it's the early too to have or effect

should we we of likely the sure think maybe more more quarter, it's I the levels normalized first by should be the by see year. levels first for by these -- second quarter, normalizing, quarter next that

Thank you. That's clear. pretty

next Brookline [Operator from Capital Kemp Please Dolliver Our Markets. comes go instructions] question with ahead.

of good have couple a questions. I Hi, day.

first working question to -- capital. relate The a of couple questions

Your that be the bit how days a reflection How a of little macro receivable environment, your translation extended is much yearend. whether of of help or of extension since of have and to seasonality it is much receivables customers? terms that

I to are of you? had environment. the current the is would have How Kemp. in most question. say expansion Hi, that for related Thanks your receivables we

times. you You look tightness you air, can or in that the see complicated people there's -- can themselves whatever preparing more for see

those an you extension So see receivables. can of

wisdom. So that basically is the

And inventory How that. rate for to supply success far. chain few would last you the the so months is related built somewhat your you you of over that had effort issues. up then address -- Thank

think the comfortable. Kemp, where we reached have feel I point we

We inventories, have increased million of we when in us have than you of end the a more compare terms of bit $XX by XXXX year, with value. end

spread course, every line. evenly of business is that So not across

be I we the may want. to that reached adjustment that need still say have make, average, on we some we there So but level would

more start start this side to year hopefully, normal So much we more levels. back to we to not can on pressure beginning go will see and next

formulas business adjusted in you. inflationary How across been to the causing relates a my lag pressure the with some Is payment environment? current Thank have the question or it adjustments have higher And government to Great. effect on that's region. you cost the last pharmaceutical increases? reimbursement closer the

just able to been of am have for able the that the been to pass the product system. been them to we product. not to have do, able discontinue selling I most stop happy or whatever have them We very we

very in end, just the So able been we have answer of way, rates of in difficulties, solid have yes, this to high quite evolution, move market question able we in been would of XX% to difficulties the find been system, in XX% seeing is next all in some will quarter pass these ecosystem inflation solid of logistics the almost will we at high more to cases. first of them fourth actual a in and this than to quarter. that see raises most but In -- prices, we you the but already of the that probably until -- them, already your I say them have not are or XXXX, them

you. Thank Great.

This instructions] [Operator well as today's conference. as further presentation. are for fashion There Thank you attending today's no question-and-answer questions. concludes our

may You disconnect. now