Earnings Call: Q1 2022

Jul 7, 2021

Earnings release

Welcome to the Management's Commons and the results of the 2021 of CAMILLA MENTOZ. It has been one year this first quarter since CAMIL began operating under the effects of the COVID-nineteen pandemic. As a food company, we have a unique responsibility and head to act fast and diligently to ensure that our consumers would receive the food they needed. This first quarter further stress es our solid growth and the resilience of our business model that focuses on sales and value generation to our company. Early in the year, we faced high costs of inputs and raw materials, followed by a sequential improvement in sales after the volatility of volumes experienced in the previous year. Currently, our gross revenue in the quarter stands at BRL 2,600,000,000.0, an all time record, growing 31% year on year even despite a comparative base that was highly affected by the pandemic and the regions where we operate. We remain focused on steering our efforts towards the safety of the population and our customers. As a food company, we also reinforced our contribution to help fight the impacts of the pandemic in the communities where we operate. We donated equipment and food to the most vulnerable people. On the ESG side, we reinstated our commitment to align our sustainability agenda for the next coming years. And in the beginning of this year, we included ESG targets in the variable compensation of all the officers of the company. We are confident that our actions will help us build an even stronger company that will continue to advance in its growth trajectory and will promote an actual difference to our business and the communities around us. Now moving to the results and highlights of the period. I would like to highlight the increased volumes in Brazil, even despite the fact that the comparative base has been affected by the COVID-nineteen pandemic with high raw material prices that allowed us to reach an all time record gross revenue of BRL 2,600,000,000.0 in the quarter. Volumes in Brazil, the quarter posted growth in all categories, a 6% increase in total volume. On the international side, there was a 32% reduction due to lower exports in Uruguay and the COVID-nineteen landscape in Peru. Net revenue was BRL 2,300,000,000.0 in the quarter, up 31%. Gross profit was BRL $448,000,000, up 8% with a margin of 20% in the quarter. It's worth mentioning our nominal growth driven by higher raw material prices and the dilution of cost with an effect on the margin. EBITDA was BRL 184,000,000 with a margin of 8% in quarter. Excluding the nonrecurring effects from the recognition of other fiscal expenses, adjusted EBITDA reached BRL 194,000,000 with a margin of 8.6%. And finally, net income of 108,000,000, down by 1% with a margin of 5% in the period. Starting the analysis with our operating results. In the rice category, volume reached 213,000 tons, up 3% in the quarter. The quarter experienced increased volumes with higher sales from the Camille brand and lower pricing brands, even considering that the comparative base was affected in the early days of the pandemic when people rushed to the supermarkets in the 2020. The average market price of raw material was BRL 85 per bag in the quarter, growing 55%. Camille's gross price was up 44%. It is worth mentioning that this quarter began with higher rice prices posting further stability due to volatility of market prices in the previous year. In the beans category, volume was 27,000 tons, up 14% in the quarter, driven by higher sales of Camille and lower pricing brands. The average market price of raw material was BRL $2.80 per bag in the quarter, an increase of 5%. Camille's gross price was also up 5% following the market trend. In the sugar category, volume was 158,000 tons, up 8% in the quarter. And in the annual comparison, this growth was mostly driven by the lower pricing brands. The average market price of raw material was BRL 110 per bag in the quarter, up 43%, and Camille's gross price grew 23%. The profitability of the sugar business is pressured due to the current competitive landscape. In the fish category, volume was 9,000 tonnes, up 23% in the quarter, driven by sales from brands. Camille's gross price increased 25% in the quarter as a result of higher raw material acquisition costs and difficulties with sardine origination, mostly in the exporting markets. It's important to point out that the sequential reduction was due to seasonality of the category. In the International segment, sales volume totaled 120,000 tonnes in the quarter, down by 32%, driven by lower availability of raw material in the Uruguayan season this year with lower year end inventories when compared to the same period of the year before. In Chile, they also experienced lower volumes year on year, considering the comparative base that was impacted by the supermarket rush in the early days of the pandemic. But on the other hand, there was sequential improvement driven by the rebound in sales after the price freeze of the 2020 in the country. Peru posted lower volumes due to the closing of some points of sales and COVID-nineteen effects over the country's economy. And finally, I would like to emphasize that we continue to support the food market in South America, which combines resilience, growth opportunities and tends to be a supporting sector when faced with scenarios like this one of the COVID-nineteen pandemic. With strong brands, a differentiated platform and a leadership position, we have many opportunities to grow organically and inorganically. Internally, we continue to stress the topic of efficiency and agility, and we remain increasingly confident that the company is on the right track to anticipate trends and straighten its position of being a food industry consolidator in South America. Now to elaborate on the financial performance in the fourth quarter, I'll give the floor to Flavio. Flavio, you may proceed. Thank you, Luciano. Welcome to the comments on the results of the 2021 of Camilo del Mentos. Starting with the analysis of the financial performance, gross revenue was BRL 2,600,000,000.0 in the quarter, up 31%. We reached a new level, mostly due to higher prices and the exchange in the period. Net revenue was BRL 2,300,000,000.0 in the quarter, growing 30%, driven by higher revenues in Brazil and partially compensated by lower revenues in the international segment. Cost of sales and services in the quarter totaled BRL 1,800,000,000.0, up 38%, driven by higher raw material costs and increased volumes in Brazil. Gross profit of BRL $448,000,000, up 8% with a margin of 20% in the quarter. There was a nominal growth with the increase of raw material costs in the market prices and cost dilution that had an effect on the gross margin in the period. SG and A in the quarter was BRL $296,000,000, up 14% and the equivalent amount of 13% of net revenue in the period, posting a reduction of two percentage points in the share of net revenue when compared to the same period of the previous year. This effect reflects the dilution of costs and expenses and initiatives to reduce the SG and A, which were put in place by the company in the last few years. Nominal growth was impacted by higher SG and A in Brazil, with increased sales in the country, partially compensated by a reduction in SG and A international and lower volumes in Uruguay, Chile and Peru. Other operating expenses reached BRL 9,000,000, mainly due to the nonrecurring effect from the recognition of an ICMS difference not recognized in previous periods, therefore, leading to total expenses of BRL 9,700,000.0. Taking all that into account, EBITDA was BRL 100,000,000 with a margin of 8% in the quarter. Now we would like to highlight the continuous recovery of 26% in EBITDA stemming from a sales rebound when compared to the 2020. Excluding the nonrecurring effects from other operating expenses. Adjusted EBITDA reached 194,000,000, down by 1% with a margin of 8.6% in the period. In regards to the financial result, our expenses amounted to BRL 25,000,000 in the quarter, up 49%, mainly due to higher financial expenses stemming from derivative instruments when compared to the revenue in the same period of the year before. Income tax and social contribution amounted to BRL 10,000,000 or 8% of the result before taxes, the effects from the exclusion of subsidies on investments related to ICMS credits and payment of interest on equity. Therefore, net income totaled BRL 108,000,000 in the quarter, down 1% with a margin of 4.8%. The company's total debt position stood at BRL 2,600,000,000.0, down 14% as a result of lower loans and financing between periods, partially compensated by an increase of debentures with new funding that allowed us to extend the debt further. Net debt totaled BRL 1,100,000,000.0, and the net debt over EBITDA ratio was 1.4 times, with a 0.7 time reduction year on year. CapEx was BRL 45,000,000 in the period, up 136% with investments earmarked to move the Sao Paulo unit to Osasco and other investments in technology and labor safety. It's worth mentioning that the comparative base of the 2020 was affected by the postponement of expansion projects in the early days of the pandemic of COVID-nineteen. And to conclude, working capital posted nominal growth year on year with higher inventories due to higher raw material acquisition costs and increased volumes in the period. Accounts receivable growth due to higher sales in the quarter and increases from suppliers due to higher inputs and raw material costs. This effect was partially offset by lower prepayment to suppliers, mainly as a result of the phasing out of the support program for the 2021 crop season. Luciano, our IR team and myself will be available to answer your questions on the results of the quarter on July 8 at nine a. M. Brazil time. The link for the webcast and the connection information are available on the Investor Relations website. Thank you very much.