Ouro Fino Saúde Animal Participações S A : Institutional Presentation

August 2020

33 year history

1987

2000

2010

2014

2015

2018

Founded by	Entered in foot-	Intensification
of actions
Norival
and-mouth
abroad
Bonamichi and
disease
focusing on
Jardel Massari.
vaccine
Mexico and
		market.
		Colombia

Entered into	IPO	Inauguration of
biological plant
the pet market.	At the highest
and launch of
	level of
	the vaccine of
	governance
	circovirus.

2

Animal Health Global Market

9.6

2018 (US$ bi)

3o

5.4

1.6

1.4 1.1

0.4 0.3

Source: company information

3

Animal Health in Brazil

Market of

6 billion

reais (2018)

CAGR (13-18)

9 %

	77%	53%
	Production
21%	CAGR (13-18)
CAGR (13-18)	8 %
16 %

13%

2%11%

Others

Source: Sindan

4

Animal Health in México

Market of

437million

dollars (2018)

CAGR (13-18)

15 %

	78%	40%
	Produção
22%	CAGR (13-18)
CAGR (13-18)	12 %
22 %

26%

12%

Source: Kleffmann

5

Animal Health in Colombia

Market of

251million

dollars (2018)

CAGR (15 -18)

8 %

86%

14%	Produção	62%
CAGR (15 -18)
CAGR (15 -18)	8 %
7 %

15%

9%

Source:Aprovet e GMI (Global Marketing Information)

6

Highlights

Latin America is responsible for 17% of total meat production in the world. Brazil answers for 9%.

Markets still incipient in the use of animal health products

Growing need to improve animal productivity as a key driver of demand for animal health products

Source: company information, FAOstat

7

Growth Drivers

Production Animals

Population and income growth drive demand for meat and dairy

Lower availability of land puts pressure to increase productivity

Gap

Animal age at	Carcass
slaughter (months)	weight (kg)
18	371
	+1.5x
36	249

Source: company information, FAOstat, ABIEC, IBGE

8

Growth Drivers

Companion Animals

Humanization and growth in			Gap
pet spends				Health Expenditures
	Pet population
	Total pet market	and veterinary
	(million)	(US$ Bi)	in the pet market (%)
Aging and growth of income
driving demand for pets	184	73	22,1%
	78	5	17,7%

Source: Abinpet, Euromonitor,

9

Our portfolio

Products per Category

Vaccines

Antiparasitics

Antibiotics

Therapeutic

Nutritional

Others

• of net revenues
  9.8%

38.1%

17.6%

21.3%

2.5%

10.7%

4-

203

175

1411

45

111

Ourofino currently exports to 15 countries throughout the world

• • of net revenues (2019)
• of products from current portfolio

75%14%

7025

11%

58

Source: company information

10

Our portfolio

Products per Category

Vaccines	Antiparasitics	Antibiotics	Therapeutic	Nutritional	Others

Products

Ourovac Aftosa

Fluatac DUO

Ciprolac

Sincrocio

Enragold

Herbalvet T.A.

Safesui

Master LP

Celesperin

Dermotrat

Ractosuin

Maxicam Gel

Source: company information

11

Products

Evol

Broad-spectrum endectocide for cattle; its formulation is based on ivermectin and albendazole sulfoxide

12

Products

Regepil

Treatment and healing of general, chronic and localized wounds

13

Products

Resolutor

Antibiotic prescribed for the quick treatment of respiratory diseases in animals

14

Products

Fluatac DUO

Complete solution against internal and external parasites in a single application.

15

Leading Position and Proven Ability to Gain Market Share

Ourofino plays a key role in the animal health market, being the largest local player.

brasileiro

Brazilian Animal Health Ranking

1 18%

2
3	9% 3o
4
5
6

Source: SINDAN

1 Based on revenues as of full year of 2018

16

Productivity solutions targeting the Brazilian climate and herd

Taurus herd	Zebu herd
Typical of colder climates	Tropical weather.
Confinement: intensive livestock	Open pasture: extensive livestock
Prevalence of respiratory diseases	Prevalence of parasitic diseases

Production Animals

Sales and clients breakdown inside Brazil (2019)

Sales breakdown Clients breakdown

Total clients:

4,298

Client breakdown

(% of 2019 net revenues)

3.4%

7.1%

14.7%

19.5% 55.3%

Resellers		Rural Producers
Cooperatives		Agroindustry
Others

Source: Company information

7.8%

15.7%

9.4%

6.8%

			17.3%
Client concentration
(% of 2019 net revenues)	12.7%
			36.9%
22.4%			43.5%
	15.3%
		10.9%
			29.6%
			20.3%
Top	Top	Top	North
Northeast
10	5	3

Southeast

Mid-west

South

18

Production animals

Differentiated distribution model

Competitors

Distributors

Resellers

Diversified client base and broad distribution network

Resellers

Companion animals

Sales and client breakdown in Brazil (2019)

14.0%

Total

distributors:

41

5,0

30,0

25,0

Current	Potential	Expected stores
	increase	coverage

• of Pet stores covered ('000 stores) (As of Dec 2019)

Source: Company information

Sales breakdown

Clients breakdown

26.0%

3.2%

12.4%

9.0%

9.0%

63.3%

37.0%

12.0%

14.0%

North

Northeast

Southeast

Mid-west

South

20

High Entry Barriers

Entry Barriers in the Sector

Ourofino's Main Strengths

Products

• Complete portfolio of products
• Products customized for Brazil

Distribution / Sales

• • Nationwide and efficient distribution network
• Well trained sales force with a solid network of
• 
  clients

Brand

• • Track record
• Customer loyalty

Approximately 100 products Flexibility to produce different types of formulas, dosages and application methods

Presence in all Brazilian states

More than 4,500 clients across Brazil

and internationally

32 year track record

Fonte: informações internas

21

Entry Barriers

Entry barriers in the sector

Regulatory Framework for Manufacturing

Process

Guidance for the inspection of veterinary products and

manufacturers' facilities

Product Registration

Need operating plant to apply for a new registration

4 years, on average, to have a new product registered

Fonte: informações internas

Ourofino's main strengths

State of the art industrial facilities

Plants that meet Brazilian authorities' regulatory

requirements and are also fully compliant with international

standards

Know-how in product development

Fully operational plant

36 products launched in the last 5 years

22

State-of-the-art production facilities

The largest production facility of animal health products in Brazil

8

7

5

6

4

3

2

1

Highway Anhanguera, 298km Cravinhos (SP)

1	Headquarters	4	Warehouse / shipping facilitiy	7	Foot-and-mouth vaccine production facilities
2	Laboratory for quality control and R&D	5	Animal defensives production facility	8	Biological QC and general vaccines production facility
3	Pharmaceuticals production facilitiy	6	Hormones production facilities

23

State-of-the-art production facilities

One of the	Designed to be able to	Advanced
most modern	comply with top	IT system
plants in the	international	(SAP)
veterinary	standards for quality	implement
segment	certification: US FDA,	ed
	GMP and EMEA

24

Beginning of operations in the biological plant

February 2019 - First sales of the new vaccine

25

Expertise in product development with best-in-class R&D practices

R$ 110 mm of R&D investments in the last 3 years, an average of 6.5% of net revenues invested every year

Ourofino has its own internal research center to lead clinical studies and field experiments established in our farm

Open innovation model: transformation of ideas into products and having strong relationships with innovation powerhouses

R&D team with more than a 100 highly capacitated employees

R&D and Marketing teams mapping the trends in the animal health industry

26

Expertise in product development with best-in-class R&D practices

Focus in education profile in order to get maximum R&D results

Education profile of the R&D team

Fonte: informações internas

7% 6%

18%

20%

47%

PhD

Master's degree

Bachelor's degree

Technical specialization College education and others

27

Open innovation and strategic portfolio management

Evaluation between internal and external options to enable the desired solution

Business		Problem	Prototype	Viable
opportunity	definition	validation	solution

Goal

Fonte: informações internas

Outside in

inside out

Ecosystem

Needs assessment and possible solutions

Research, design and

development

*Capture and prioritize

Prioritization that takes into account value creation potential

Prototypes production	Application and
	Dissemination

Scale production and marketing

Execute quickly		Commercialize	Track results
		and grow
Prototyping and		Market introduction	Return
testing		of the prototype	Measurement
		Market solution
		scale and
		monetization

28

Expertise in product development coupled with relationships drive

Dedicated farm for product experiments and for training on artificial insemination protocol

29

Launches in 2020

30

2019: Strategic Planning

Ourofino as a company with a wide portfolio, multispecies and a incremental innovation strategy

International expansion

Go-To-Market

Operational

Efficiency

Ourofino

2.0

Governance and

Organization

Research,

Development,

Innovation

Transactions

and new business

Financial Highlights

Net revenues (R$ mm)

CAGR (14-18): 7%

Source: Company information

32

Financial Highlights

Gross profit (R$ mm) and margin

Source: Company information

33

Financial Highlights

SG&A (R$ mm) and percentage on net revenue

Source: Company information

34

Financial Highlights

Adjusted EBITDA (R$ mm) and margin

Source: Company information

35

Financial Highlights

Adjusted profit (R$ mm) and margin

Source: Company information

36

Financial Highlights

Cash position (R$ mm)

Source: Company information

37

Financial Highlights

Net debt (R$ mm) and leverage (net debt/LTM EBITDA)

228	229	222	205	216	220	238	212

188

1.8x	1.7x	1.7x	1.7x	1.9x	2.2x	2.2x	1.9x	1,6x
2Q18	3Q18	4Q18	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20
		Average cost of debt (year)
7.1%	7.0%	7.2%	7.3%	7.0%	6.6%	5.9%	5.4%

Source: Company information

38

Financial Highlights

Financial cycle* (days)

210	224	232	240	245	222	229	210	200	218
91	92	90	93	89	88	94	92	92	89
193	197	202	205	219	207	202	192	186	186
-74	-65	-60	-58	-63	-74	-67	-75	-78	-73
1Q18	2Q18	3Q18	4Q18	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20
			Accounts receivable			Inventory		Accounts payable

Source: Company information	39
*On LTM basis and average of quarter balance sheets from the last 4 quarters

Ownership Breakdown

Others

15%

BNDESPAR 12%

Founder

shareholders

Opportunity

17%

Fonte: informações internas

56%

40

Highlights	Unique combination of
	a widely recognized
Leading position in the	brand, diversified client
base and wide
attractive Brazilian
distribution network.
animal health market.

Strong corporate governance and a best-in-class management team.

Expertise in product development with best-in-class R&D

practices and extensive	State-of-the-art
pipeline.	production facilities.

41