• Net Sales Growth: 32.4% increase in Q4; 13% increase for the full year 2024.
• Gross Margin: Expanded by 312 basis points in Q4 to 63.1%; 289 basis points for the full year to 64.1%.
• EBITDA Margin: Expanded by 351 basis points in Q4 to 24%; 235 basis points for the full year to 23.3%.
• EBITDA Growth: 55% increase in Q4; 26% increase for the full year 2024.
• Net Income: Increased by 97% for the full year 2024.
• EPS: Doubled to MXN2.14 for the full year 2024.
• Cash Flow Generation: Record high of MXN2.8 billion for the full year 2024, a 36% increase.
• Cash Conversion Cycle: 110 days, impacted by Suerox inventory buildup.
• Free Cash Flow: Increased by 35% year on year to MXN2.793 billion for 2024.
• Dividend Payment: MXN0.80 per share for the year, totaling MXN800 million.
• Leverage Ratio: Less than 1 times net debt to EBITDA.

• Warning! GuruFocus has detected 6 Warning Signs with GNMLF.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Genomma Lab Internacional SAB de CV (GNMLF) reported a strong Q4 and full-year 2024 with net sales growing 32.4% in Q4 and 13% for the full year.
• The company achieved significant profitability gains with EBITDA growing 55% in Q4 and 26% for the full year, driven by productivity initiatives and manufacturing efficiencies.
• Net income increased by 97% for the full year, resulting in EPS doubling in 2024, marking a significant milestone in financial performance.
• Cash flow generation hit a record high of MXN2.8 billion, representing a 36% increase, with 68% of sales maintaining or gaining market share.
• The company maintained a strong balance sheet with a leverage ratio of less than 1 times net debt to EBITDA, providing increased capital allocation flexibility.

Negative Points

• The cash conversion cycle reached 110 days, temporarily impacted by Suerox inventory buildup amid capacity constraints.
• The company faced headwinds in Peru and Chile, despite strong performance in other Latin American markets.
• There is uncertainty regarding the ability to repatriate cash from Argentina due to local economic conditions.
• The company is cautious about providing specific growth guidance for 2025 and 2026, indicating potential uncertainty in future revenue projections.
• Despite strong financial performance, the company is not planning significant CapEx, which may limit future expansion opportunities.

Q & A Highlights

Q: With strong cash generation and stable dividends, what are your plans for cash usage going forward? A: Antonio Zamora Galland, Executive Vice President, CFO, and CAO, stated that while significant CapEx is not planned, there are projects for innovation and productivity. The company does not intend to further reduce leverage significantly but will reinvest in the business to accelerate growth.

Q: What is the medium-term plan for dividends from Argentina and margin targets? A: CEO Juan Marco Sparvieri mentioned plans to extract cash from Argentina when possible. The company aims to sustain a 24% EBITDA margin, with reinvestment in the business not affecting this target due to productivity initiatives.

Q: How are you preparing for the high season for Suerox in 2025? A: CEO Juan Marco Sparvieri explained that inventory buildup began in November 2024 to ensure sufficient product availability. Antonio Zamora Galland added that this practice aligns with industry standards to meet peak demand.

Q: Can you provide more details on CapEx plans and potential for increasing dividends? A: Antonio Zamora Galland noted that while major manufacturing CapEx is not needed, there may be investments in logistics and distribution capacity. The focus is on reinvesting excess margins from productivity gains to accelerate growth.

Q: What are your growth expectations for 2025 and 2026? A: CEO Juan Marco Sparvieri indicated that while specific guidance is not yet available, the company expects to accelerate growth faster than in the past, driven by strategic investments in core brands.

Q: Do you foresee any impact from tariffs in the US? A: CEO Juan Marco Sparvieri stated that 80% of products sold in the US are produced domestically, minimizing tariff impact.

Q: What are your plans for growth in the US market? A: CEO Juan Marco Sparvieri highlighted the potential for Suerox to continue expanding in the US, with plans to increase distribution and consumer reach.

Q: Can you provide more details on the Asepxia and Cicatricure relaunches? A: CEO Juan Marco Sparvieri shared that the Asepxia relaunch is underway with new shelf executions, and Cicatricure's new variant, Neurosen, is performing well. Data on Asepxia's performance is forthcoming.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.