Scotiabank Institutional Investors Meeting - October 2019
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Scotiabank
Institutional Investors
Meeting
October 2019
D I S CLA IME R GENERAL INFORMATION The following material is submitted by way of general information regarding Controladora Mabe, S.A. de C.V., “Mabe”, as it stands to date. Said information is presented in a summarized fashion and is not intended to be comprehensive. Nor does it constitute a recommendation for potential investors. This presentation is strictly confidential and shall not be divulged to any other person. No representation or guarantee, either expressed or implied, is intentional, and its exactness, precision or comprehensive information herein presented shall not be emphasized. This presentation may contain declarations that express the expectations of management regarding future events or results in lieu of historic events. These forward-looking declarations imply risk and uncertainty that may cause the real results to differ materially from those forecast, and Mabe cannot ensure that said declarations will prove to be correct. These risks and uncertainties include factors related to all the economies where we operate, which in turn may show volatility and may be adversely affected by factors pertaining to other countries, related to the business of retail sales, that by its very nature is cyclical and linked to the highly competitive industry of which Mabe is a part and in which it operates. COMMENTS ON FINANCIAL INFORMATION: This presentation contains our unaudited financial information. EBITDA is not a measure of financial performance under IFRS and should not be considered as an alternative to net income or operating income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. INDUSTRY & MARKET DATA: Certain data is based on our estimates, which are derived from our review of internal surveys, as well as independent sources. TERMS AND CONDITIONS OF USE: Viewers or recipients of the information herein that do not agree with the term and conditions of use, should not utilize any information contained herein. Decisions based on information contained herein are the sole responsibility of the person viewing it. In exchange for utilizing the information you agree to indemnify and hold Mabe, its officers, directors, employees, affiliates, agents, licensors and suppliers harmless against any and all claims, losses, liability, costs and expenses (including but not limited to attorneys' fees) arising from the use of the above mentioned information or from any decisions that the viewer makes based on such information. These terms and conditions and this Site are governed by the federal laws of Mexico applicable therein, excluding any conflict of laws which would lead to the application of any other laws. You hereby irrevocably submitted to the federal courts located in Mexico City for any disputes or matters arising from, connected with, or relating to this information or any related matters.
L E A D I N G P L AY E R I N T H E H O M E A P P L I A N C E S I N D U ST RY I N T H E
A M E R I C A S W I T H A S T R AT E G I C PA R T N E R
Well Diversified
Revenue Profile 2Q19 LTM
US$3.2Bn Revenues US$273 MM EBITDAR
8.6% EBITDAR Margin
+12 mm Units Sold Home Appliances Leader [3]
Refrigerators
Ranges
24%
Others 29%
(24%) (35%)
Laundry Others 9% 17%
Competitor 4
Revenue Breakdown 9% 12% Competitor 1
US Exports (44%)
Competitor 3
Mexico (25%) Competitor 2
South America (11%) [1]
Canada (11%)
Central America (6%) [2] (11%)
Other Exports (3%) (30%)
____________________
(1) South America includes: Argentina, Colombia, Peru, Chile, and Ecuador
(2) Central America includes: Guatemala, Honduras, Nicaragua, Costa Rica, Panama, Dominican Republic and El Salvador
(3) Total Units MarketL E V E R AG I N G O U R J V W I T H G E A P P L I A N C E S & H A I E R F O R 3 0 +
Y E A R S ( 1 9 87 )
Pursuant to the JV agreement, GE Appliances, a Haier company (48% Mabe ownership), is
Mabe’s largest customer and sole distributor of products in the US
General
Mabe is the exclusive distributor of GE Appliances and Haier brands in Canada, Mexico, and
Terms the rest of Latin America
GE Appliances, Haier, and Mabe have a strong interaction among their R&D centers
Mabe is the largest product supplier for GE Appliances in the US market
Export
Long term manufacturing contract with fixed margins (cost-plus)
Agreements
Mabe designs and develops many GE Appliances products sold in the US
Haier licenses GE Appliances trademarks & patents to Mabe and provides access to relevant
manufacturing technology
Mabe has a preferred raw material sourcing arrangement with Haier’s suppliers
Synergistic
Integrated decision-making process that operates in synchrony between Mabe and GE
Relationship
Appliances, a Haier company
Additionally, Mabe’s leading R&D facilities operate in conjunction with Haiers’ in the U.S.,
Germany, China, South Korea, Japan, and New ZealandM A R K E T L E A D E R S H I P AC R O S S T H E A M E R I C A S W I T H S T RO N G
BRAND RECOGNITION
Ultra 1.0%
Premium
Premium 6.6%
Brand
Segmentation Mass
72.1%
Market
Local 20.3%
Strong product portfolio in all core product categories
Differentiated brands for different customer segments
Constant segment strategy optimization to better serve customers
#1 #3 #4 #1 #2
#1
Market Share (3) Central Andean
America1 Region2
____________________
(1) Central America includes: Guatemala, Honduras, Nicaragua, Costa Rica, Panama, Dominican Republic and El Salvador
(2) Andean includes: Colombia, Peru, Chile, and Ecuador
(3) UnitsP R O D U C T O F F E R I N G A N D C U STO M E R B A S E
Refrigerators Ranges Laundry Others
Top / Bottom Mount Free Standing Laundry Center Dishwasher
Side by Side HP A/C
Key Products Top Load Washer &
Dryer
Range Hoods
Bottom Freezer Built-In
Targets End-Consumers Through Multiple Channels(1) Well-Balanced Customer Base
Retail Outlets Segmentation (% of Revenues) (% Revenues)
High End: 4%
Other Channels: 6%
Regional Chains: 31% 30%
+2,500 48%
Clients
National Chains: 59%
23%
Top 20
Apr
Apr
Apr
Apr
Dec
Dec
Dec
Aug
Aug
Aug
Aug
2016 2017 2018 2019
(1) Mexico only.E X T E N S I V E D I ST R I B U T I O N N E T W O R K B A S E D O N K E Y
PA R T N E R S H I P S
Strategic Partnerships
Canada
Mexico
Central
America
South
America
Over 4,000 customers, between large retailers and mom-and-pop stores
Strong relationship with leading distributors throughout the region support Mabe’s position as the market
leader
Mabe’s products are sold through a diversified base of retail channels to reach all customer segments
We also sell in: Egypt, The Philippines, Saudi Arabia, United Arab Emirates and China.S TAT E O F T H E A R T M A N U FAC T U R I N G FAC I L I T I E S
Manufacturing Plants
San Luis Potosí (1989) Saltillo (1996) Celaya (2000) Other Facilities
Capacity: 2.8MM Components and parts
Capacity: 3.7MM Capacity: 2MM
Utilization: Capacity: 63M
Utilization: 98% 74% / 94% / 94% / 95% Utilization: 86%
Key Products: Utilization: 85%
Key Products: Washers / Dryers / Key Products: Compressors and motors
Gas / Electric Laundry Centers / Refrigerators Capacity: 3.2MM
Ranges / Ovens Components
Utilization: 88%
Manizales (1996) Guayaquil (1995) San Luis (2007) Electronic Boards
Capacity: 10.2MM
Capacity: 992K Capacity: 1M Capacity: 330K
Utilization: 83%
Utilization: 56% Utilization: 44% Utilization: 38%
Hoods
Key Products: Key Products: Capacity: 500K
Key Products: Gas and Refrigerators
Refrigerators Electric Ranges Utilization: 83%
139
Capital104
Expenditures106
(US$MM) Outstanding Characteristics
100
139
Expansion Hard-to-replicate manufacturing footprint provides efficiencies of
60 58 scale and acts as a barrier to entry in key markets
Maintenance
104 106
32
CapEx for automation is being invested on a yearly basis
29
44 100 48
39 58 24 21 Our most relevant supplier represents no more than 8% of our raw
60
8 858 51 material purchases
2016 2017 2018 1Q18 1Q19
36 Facilities operate under a “Lean Enterprise Principle” of continuous
32
44 48 improvement and incorporation of new market trends &
39
22 20 technologies
2016 2017 2018 1H18 1H19R E S U LT S OV E RV I E W
CONCEPT YTD 19 YTD18 D VS 2018
Sales 1,545 1,428 8%
EBITDA 116 112 3%
EBITDA Margin 8% 8%
EBITDAR 127 122 4%
EBITDAR Margin 8% 9%
CapEx 51 58 ´(11%)
Net Debt 686 722 ´(5%)
Net Leverage 2.6x 3.1x
Net Interest Coverage 4.5x 2.9x
Figures in US$MM, unless otherwise noted
June YTDD E BT P R O F I L E
Average life of debt: 6.1 years
DEBT 4 370
17
2Q18 722 134 Gross Debt:
856 175
131
8 8 8 8 2
11 11 11 11 11
2Q19 686 95 Gross Debt: 2019 2020 2021 2022 2023 2024 2026 2028
786
Proforma Debt Profile with a
Net Debt Cash Bank Loan as of YE19
Average life: 7.0 years
During June we signed a commitment for a 370
US$150MM bank loan and we made a
US$54MM drawdown from it to fully prepay our
MXN loan. 175
8 8 8 8 2
Loan pays a quarterly interest of 3.83% fixed 30 30 30 30 30
and will begin to amortize in January 2020 and
year2020 2021 2022 2023 2024 2026 2028
mature in 2024.
Notes 2028 Notes 2019 ST Debt
Private Placement Club Deal CAD Loan
Figures in US$MM, unless otherwise noted.FINAL REMARKS AND HIGHLIGHTS
FINAL REMARKS HIGHLIGHTS
Market leadership in North Recognized manufacturing
and Latin America with excellence and product
Strong US demand for GE strong brand recognition quality with world class R&D
Appliances products. facilities
Successful track record of
continuous FCF Strategic Partner (GE- Haier)
with access to R&D and
Mixed results in Latin Extensive distribution and Sourcing Teams
America for remainder of supplier network based on
2019. strategic partnerships Digital Era- Automation and
operational manufacturing
efficienciesQ&A Session
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