Grupo LALA, S.A.B. de C.V. 2 nd Quarter, 2016 Earnings Conference Call July 26, 2016 1
DISCLAIMER This material does not constitute an offering document. This material was prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities. Any offering of securities will be made solely by means of an offering memorandum, which will contain detailed information about the Company and its business and financial results, as well as its financial statements. Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the U.S. Securities Act of 1933, as amended. This presentation includes forward-looking statements or statements about events or circumstances which have not yet occurred. We have based these forward-looking statements largely on our current beliefs and expectations about future events and financial trends affecting our businesses and our future financial performance. These forward-looking statements are subject to risk, uncertainties and assumptions, including, among other things, general economic, political and business conditions, both in Mexico and in Latin America as a whole. The words “believes”, “may”, “will”, “estimates”, “continues”, “anticipates”, “intends”, “expects”, and similar words are intended to identify forward-looking statements. We undertake no obligations to update or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Therefore, our actual results could differ substantially from those anticipated in our forward-looking statements. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. We and our affiliates, agents, directors, employees and advisors accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. This material does not give and should not be treated as giving investment advice. You should consult with your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary, and make your own investment, hedging and trading decision based upon your own judgment and advice from such advisers as you deem necessary and not upon any information in this material. 2
MACRO ECONOMIC REVIEW 1H-2016 POSITIVE VARIABLES • Nominal Wage grew 4.4% in June, 2016 • Mexican Annual Inflation reached 2.5% in June, 2016 • Remittances in MXN terms, growing 28.3% during the first half of 2016. NEGATIVE VARIABLES • Consumer Confidence declined 1.3% in June, 2016 • Exchange Rate (Peso/Dollar) depreciated by 17.9% YoY. 3
SECOND QUARTER RESULTS HIGHLIGHTS 3 MONTHS ENDED JUNE 30, 2016 NET SALES (MXN$mm) Margin 100.0% 100.0% 8.9 % 12,903 11,847 2Q-15 2Q-16 1. Company Data, in Mexican Pesos. ( ´ 000) 2. EBITDA=Earnings Before Interest, Taxes, Depreciation and Amortization. SALES BY SEGMENT 62.8% 31.0% 6.2% 4 YoY 6.2% YoY 12.4% YoY 21.9%
SECOND QUARTER RESULTS HIGHLIGHTS 3 MONTHS ENDED JUNE 30, 2016 EBITDA NET SALES NET INCOME (MXN$mm) (MXN$mm) (MXN$mm) Margin Margin Margin 14.1% 14.6% 100.0% 100.0% 8.4% 8.5% 12.9% 10.1% 8.9% 1,888 1,101 12,903 1,672 11,847 999 2Q-15 2Q-16 2Q-15 2Q-16 2Q-15 2Q-16 1. Company Data, in Mexican Pesos. ( ´ 000) 2. EBITDA=Earnings Before Interest, Taxes, Depreciation and Amortization. 5
LALA 2016 STRATEGIC PRIORITIES Accelerating Organic Growth in Mexico Developing Internal Capabilities Expand & Consolidate Central America Operations M&A and Alliances 6
ACCELERATING ORGANIC GROWTH IN MEXICO “ Organic Growth Through Disruptive Innovation” LALA 100 Fresh Milk • 70% more Protein • 30% more Calcium • Lactose free • 35% less Carbohydrates Nano and Ultrafiltration patent pending Innovative aseptic PET packaging with extended process concentrates protein and calcium, shelf life and capacity to maintain the flavor of and removes lactose. fresh pasteurized milk. 7
ACCELERATING ORGANIC GROWTH IN MEXICO “ Organic Growth Through Better Go-To-Market Execution” National consumer promotions bring excitement to the fresh milk category and extend the reach of other product categories. Enhanced selling procedures and handheld technology implemented in more than 4,800 distribution routes in Mexico. 8
DEVOLOPING INTERNAL CAPABILITIES Strategic Procurement Sales & Operational Planning Shared Service Structure ERP Upgrade 9
DEVOLOPING INTERNAL CAPABILITIES MXN $1,226mm CAPEX investment for the 6 months ended june 30, 2016 Automated Industrial Cheese Production Capacity New Tetra Pak Equipment of Nano Filtration – Lala 100 Milk Water Treatment Plant Warehouse 1.5L UHT Products Our 2016 CAPEX will: Add +22.0% production capacity to Mexico´s Manufacturing Footprint 10
EXPAND & CONSOLIDATE CENTRAL AMERICA OPERATIONS On July 6 , Grupo LALA announced a strategic agreement with Florida Bebidas, S.A. to start operations in the Costa Rican market. The agreement provide LALA access to a platform that includes: • Production Plant San Ramón Alajuela, Costa Rica Distribution Raw milk Production Capacity Supply assurance Capacity This strategic agreement is subject to the corresponding closing conditions and regulatory approvals 11
M&A AND ALLIANCES On May 30 , Grupo LALA announced an agreement to acquire TRANSACTION KEY DATA the branded business of Laguna Dairy company in the United States. ~US$200 Million 2 US$246 Million 1 “Building brands to grow the business” OMAHA, NEBRASKA FLORESVILLE, TEXAS SINTON, COLORADO 5 Value-Added 3 Production Brands Facilities 12 1. Value Transaction, Estimated to Consolidate by August 1 st , 2016. 2. Estimated Sales FY 2016.
2Q-2016 P&L RESULTS 3 MONTHS ENDED JUNE 30, 2016 Income Statement (1) 2Q-15 % 2Q-16 % Growth $ 11,847 100.0% Net Sales $12,903 100.0% 8.9% 4,702 39.7% Gross Profit 5,050 39.1% 7.4% 1,381 11.7% Operating Income 1,543 12.0% 11.8% 1,672 14.1% EBITDA (2) 1,888 14.6% 12.9% Net Income 999 8.4% 1,101 8.5% 10.1% 1. Company Data, in Mexican Pesos. ( ´ 000) 2. EBITDA=Earnings Before Interest, Taxes, Depreciation and Amortization. SALES BY QUARTER YoY 8.9% 12,903 12,530 12,509 12,176 11,847 13 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16
STRONG FINANCIAL POSITION AS OF JUNE 30, Financial Position 2015 2016 $8,824 Total Assets $32,041 $36,484 $7,914 Cash 7,914 8,824 Total Liabilities 8,059 9,855 Shareholder Equity 23,982 26,628 $260 Key Metrics 2Q-15 2Q-16 $65 (1.3)x Net Debt / EBITDA (1.2)x 2Q-15 2Q-16 542.3x EBITDA / Interest Paid 509.8x Total Debt (MXN$mm) $1.37 Earnings Per Share $1.69 Cash (MXN$mm) Source: Company Information Ratios are calculated in local currency Figures in Mexican Pesos (´000) 14
SOLID CASH FLOW CASH FLOW FROM OPERATIONS (LTM) 7,000 6,000 6,125 5,000 MXN$mm 3 rd. Installment of the cash dividend 4,000 0.135 pesos per share 3,505 3,000 Ago 25th, 2016 2,000 1,000 0 2Q-15 2Q-16 Company Data, in Mexican Pesos. Source: Company Information. 15
CONTACT INFORMATION Investor Relations Enrique González +52 (55) 9177 5900 investor.relations@grupolala.com Stock Information Grupo LALA has been traded under the ticker ‘LALA B’ on the Bolsa Mexicana de Valores (BMV) since October 16, 2013. For more information: www.grupolala.com Forward-looking statements This document contains certain assumptions, projections and forward-looking statements regarding the Company’s financial situation, operative results and information, Grupo LALA’s business and that of its subsidiaries as well as with regards to the Company’s related plans and objectives. This executive summery does not constitute a public securities offering on behalf of LALA and is intended to be used for informational purposes only. 16
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