Institutional Presentation October, 2017 DISCLAIMER
The material that follows is a presentation of general background information about International Meal Company Alimentação S.A. (“IMC” or the “Company”) as of the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to the Company that reflect the current views and/or expectations of the Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like “believe”, “anticipate”, “expect”, “envisages”, “will likely result”, or any other words or phrases of similar meaning, which speak only as of the date the statement was made. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. Neither the Company nor any of its affiliates, directors, officers, agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or for any consequential, special or similar damages.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.
The market and competitive position data, including market forecasts, used throughout this presentation was obtained from internal surveys, market research, publicly available information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any material respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without the Company’s prior written consent. Please, for any investment decision, read the risk factor section in the Company’s “Formulário de Referência”, available in our IR website.
2 A RESTAURANT COMPANY WITH OVER 10,000 EMPLOYEES, OPERATING IN FOUR DIFFERENT COUNTRIES FOCUSED ON AIRPORTS, ROADS AND MALLS INTERNATIONAL MEAL COMPANY WHO WE ARE – PRESENT IN 4 COUNTRIES
248 Points of Sale
182 BRAZIL
20 USA
24 COLOMBIA
22 PANAMA
as of September, 2017
4 2016 PERFORMANCE
Consolidated Net Revenues (R$M) Consolidated EBITDA (R$M)
R$22M | 2.3%
EBITDA 4.1% -1.2% 8.2% 24.0% 6.5% Margin
Brazil’s Net Revenues (R$M) Brazil’s EBITDA (R$M)
EBITDA 11.8% 4.9% 8.5% -4.9% 4.1% Margin
5 IMC’S EVOLUTION
2017 & ON 2006 - 2014 2015 - 2016 EXECUTION, FAST GROWTH RESTRUCTURING EFFICIENCY & GROWTH
Management restructuring and 1 Leaner Structure + ZBB Growth: M&A Driven professionalization 2 PMO based execution Restaurants: 12 413 Deleveraging: Net Cash Position 3 Live KPI Monitoring
Sales: R$6M R$1.7B Airport Contracts renegotiated Demand Generation & 4 Organization by Brand Simplified Structure (Countries 5 Alignment & Training Footprint (Countries): 1 7 and Brands)
6 Processes Leverage: 0 4.5x Brands and Concepts defined 7 Expansion
6 IMC’S OPPORTUNITIES
Margin Improvement Operational Leverage Expansion
• Zero Based Budget • Olive Garden – Brazil • Demand Generation and 3-4 Restaurants/Year • Live KPIs Monitoring Organization by Brand • Corporate Restructuring • MargaritaVille – US (central kitchens optimization) • Training and Alignment 2-3 Restaurants/Year • Labor Reform
PMO Based Execution
Processes
7 FINANCIAL HIGHLIGHTS – 2Q17
Same Store Sales¹ Net Revenues¹ EBITDA¹
Total: -0.4% R$ 390 M R$ 39 M +0.6% +67% Brazil: +2.4% US: -6.1% Caribbean: +1.5%
EBITDA Margin Cash Flow² Net Cash Position
10.1% +R$ 32 M +R$ 35 M +400bps 85% (Over Adj. EBITDA)
¹ Constant Currency ² Operating Cash Flow After Maintenance Capex 8 LTM PERFORMANCE
Consolidated Net Revenues (R$M) Consolidated EBITDA (R$M)
R$34M | 3.6%
EBITDA 5.1% -1.0% 8.8% 25.6% 7.6% Margin
Brazil’s Net Revenues (R$M) Brazil’s EBITDA (R$M)
EBITDA 11.5% 5.8% 7.7% -3.9% 5.1% Margin as of 2Q17 9 IMC’S TEAM
Global CEO
COO Head of CEO CEO HR, PMO & Purchasing Catering & Malls & Air Frango CFO Caribbean USA Engineering and S&OP Kitchens Brazil Assado Head of Olive Finance & IT Finance & IT FP&A and IR Garden
Marketing Marketing Head of Viena Legal
Head of Batata Accounting & Operations Operations Inglesa Treasury
Head of Operations’ Brunella Auditing
Head of IT Airports
Marketing Pricing
10 IMC’S OPPORTUNITIES BREAKDOWN PER REGION
Brazil Caribbean USA
Roads: restaurants revamps (internal bathrooms, increased seating area, new equipment); new menus; marketing Panama: New Terminal bid at Tocumen calendar/campaigns; digital media Airport; Carl’s Jr expansion at selected malls Malls: Olive Garden; new menus; loyalty New restaurants: Cleveland 3Q17; Daytona programs marketing calendar / campaigns; Colombia: J&C Delicias expansion in 1Q18 + 2-3/Year digital media; Brunella kiosks’ conversion; selected at selected malls; new catering footprint optimization (stores’ mergers) Same Store Sales: Group Sales; agreements Assortment; Increased Capacity; Day-parts; Air: restaurants revamps (store look&feel); LSM; Pricing & Menu Engineering product mix changes (new offering: day parts and traffic flow focus); guerrilla Efficiency Efforts: G&A Adjustments; Loss marketing making store closure (Cincinnati – April/17) Efforts to improve food and labor cost Corporate restructuring – Central Kitchens Corporate restructuring (lower tax burden) Social Media Activation Better terms with suppliers Partnership with suppliers Online satisfaction surveys – SMG
Zero Based Budget + Live KPIs Monitoring + PMO + Processes
11 IMC Footprint WHO WE ARE – USA FOOTPRINT
20 Points of Sale as of September, 2017 Same Store Sales Group Sales
Syracuse Minneapolis Assortment
Mohegan Sun Chicago Cleveland Increased Capacity Atlantic City Day-parts La Vegas LSM Pigeon Forge Nashville Myrtle Beach Store refurbishments
San Antonio Destin Panama City New Restaurants Orlando th Miami MIA – 7 floor (4Q17) Key West Daytona (2018) Margaritaville – 16 units LandShark – 2 units Cost Initiatives Other – 2 units Zero Based Budgeting (implemented for 2017)
○ LAST 12 MONTHS G&A Adjustments (executed in 1Q17) (JUL/16 – JUN/17) Loss making store closure (Cincinnati – April/17)
NET SALES US$ 116.1 M USA OPERATING INCOME US$ 10.2 M / 8.8% MARGIN
13 WHO WE ARE – CARIBBEAN FOOTPRINT
Colombia Panama PANAMA 24 Points of Sale + 8 Catering Units 22 Points of Sale
Barranquilla
Cartagena
Panama City Bucaramanga Medellin
Rionegro
Pereira Bogotá
Cali Air Retail – 14 restaurants
Catering – 8 units Malls – 8 Carl’s Jr Air Retail – 9 restaurants Malls – 15 J&C Delicias Operational Excellence New Opportunities Continuous efforts to improve New Terminal bid at Tocumen food and labor cost Airport - Panama Zero based budgeting Carl’s Jr at selected malls - ○ LAST 12 MONTHS (JUL/16 – JUN/17) implemented Panama Corporate restructuring (lower J&C Delicias at selected malls – COLOMBIA NET SALES R$ 183.2 M tax burden) Colombia + Better terms with suppliers PANAMA OPERATING INCOME R$ 46.8 M / 25.6% MARGIN
as of September, 2017 14 WHO WE ARE – BRAZILIAN FOOTPRINT
Airports: 56 Points of Sale + 6 Catering Units Highways: 25 Restaurants + 19 Gas Stations
BSB GYN MG
CNF
VCP GRU SP
CGH
Catering – 6 units Air Retail – 56 units: POA GRU: 27 Frango Assado – 25 units CNF: 15 BSB: 14 Gas Station – 19 units Frango Assado + Gas Station
○ LAST 12 MONTHS ○ LAST 12 MONTHS (JUL/16 – JUN/17) (JUL/16 – JUN/17)
NET SALES R$ 241.1 M NET SALES R$ 447.4 M AIRPORTS HIGHWAYS OPERATING INCOME R$ 14.0 M / 5.8% MARGIN OPERATING INCOME R$ 51.4 M / 11.5% MARGIN as of September, 2017 15 WHO WE ARE – BRAZILIAN FOOTPRINT
Shopping Malls: 101 Points of Sale 1 79
Brasília
16
Malls – 101 units Ribeirão Preto São Paulo Metro: 57 Rio de Janeiro: 37 Campinas 2 Brasília: 3 Rio de Janeiro Campinas: 3 São Paulo Metro Ribeirão Preto: 1
○ LAST 12 MONTHS (JUL/16 – JUN/17) 1
NET SALES R$ 245.7 MM MALLS 1 – Includes: Viena Express (37), Viena Delicatessen (9), Viena Gourmet (4), Viena Delish (1), Viena Café (16), V. Café (10) and Viena Snacks (2); OPERATING INCOME R$ 19.0 MM / 7.7% MARGIN *Other Brands: Wraps (1), Frango Assado Express (1) and Grano (1). as of September, 2017 16 WHO WE ARE – BRAZIL
Efficiency OPERATING INCOME LAST 12 MONTHS¹ Zero Based Budget: 550+ cost center reviewed; impact on headcount – over 300 (JUL/16 – JUN/17) G&A restructuring: higher concentration + fewer layers S&OP + Sourcing: higher productivity and lower purchasing costs Gas Station’s agreements: improved rebate and overall conditions + renewed visual 19.0 merchandising and equipment's (paid by supplier) (36.2) Corporate restructuring: tax efficiency + higher productivity at central Kitchens with specialized production 51.4 Execution PMO: 300+ initiatives mapped out with weekly monitoring 48.1 Live KPI Monitoring: daily reports (sales and costs KPIs) 14.0 Teams Strengthened: G&A IT: Higher focus on operations – day-to-day AIR ROAD MALL BR (Incl. Others) Engineering: focus on preventive maintenance vs. corrective Same Store Sales 182 Points of Sale² Focus on Demand Generation Capex Intensive: restaurants’ revamps Non-Capex Intensive: Pilots Office (ie: R$/Kilo flat rate; combos); LSM, Consumer 101 Mall Restaurants Intelligence, Digital Media, Promotional Calendars Expansion 56 Airports Points Opportunities for organic expansion of proven concepts Olive Garden: new restaurant in SP in 4Q17 Roadside 25 Service Plazas
¹In R$ Million; ² as of September, 2017 17 EFFICIENCY, EXECUTION & GROWTH EFFICIENCY, EXECUTION & GROWTH
First achievements are encouraging, and there is still a lot of room for further improvement based on our 7-Pillar Strategy
Leaner Structure A cost control oriented effort and Zero Based 50+ meetings / 70 people involved / 550+ cost centers reviewed Budget Systemic locks implemented (Headcount and expenses) Impact on Headcount: over 300+
PMO Based 300+ initiatives mapped out (180+ projects & Capex related initiatives) execution Weekly monitoring Project management software implemented used by the whole Company
Live KPI Closer monitoring of operations Monitoring Daily reports (Sales and Costs KPI’s) Prompt actions if needed
19 EFFICIENCY, EXECUTION & GROWTH
Demand Higher focus on the brands and operations that “move the needle” Generation & New store look and feel Organization by Product innovation (with a Chef for each brand) Brand Special campaigns and marketing calendar for each operation/brand
Alignment & Focused on day-to-day execution Training Proper incentives aligning store Managers’ individual goals with the Company’s
Proper execution and improved results Processes Strategic Sourcing: better terms with suppliers Engineering: systemic control of assets and the focus on preventive vs. corrective maintenance
Opportunities for organic expansion of proven concepts Expansion Olive Garden: new restaurants in SP Margaritaville/LandShark: new location in the USA
20 I - LEANER STRUCTURE + ZERO BASED BUDGETING
50+ meetings with 550+ cost centers 70 people involved CEO and/or CFO reviewed
ZBB Headcount and expenses review: April – December
Austerity initiatives: Main results 2Q17 vs.: Impact on Headcount: over 300+ 2Q16 1Q17
Matrix control of expenses with monthly monitoring -R$1.9M -R$1.6M -12.0% -10.7% G&A + Holding G&A + Holding Monthly blockages of budgetary "leftovers" with rigid governance -R$1.1M -R$1.2M -6.6% -9.1% Budgetary supplements with compensation proposal Utilities, Maint. Etc (SSS) Utilities, Maint. Etc (SSS) and defined approval hierarchy
Stricter costs and expenses controls Higher visibility on efficiency opportunities
21 II - PMO BASED EXECUTION
Key Objectives: Committees: Improved controls and execution of IMC’s most important projects, with defined cadence, stages and gates BRAZIL USA COLOMBIA PANAMA Closer monitoring of daily routines Higher productivity Projects’ Assumptions: SUPPORT FINANCE OPERATIONS PURCHASING Clear beginning and end dates May need an additional Opex or Capex Involves usually 2 areas and requires visibility and proper cadence 2017 - Projects per Area: Tangible benefits and/or products
Basic Rules: 20 9 21 Weekly PMO Committees (Project Owner, Top- 6 Executives & CEO) 20 Projects’ completion represent from 40% to 55 182 50% of individuals’ annual variable compensation 51 Brazil Fin. Supp. Purc. US Col Pan TOTAL
22 II - PMO BASED EXECUTION: PROJECTS
Expansion Daily KPIs BRAZIL FINANCE Frango Assado 2.0 Working capital management 51 55 Lossmakers Pricing – Elasticity model
Menu analysis & Pricing Engineering – LED illumination USA SUPPORT ZBB TI – Politics & KPIs 21 OPERATIONS Digital display Ads 20 HR – Standardization of remuneration pack
J&C restructuring S&OP COLOMBIA PURCHASING Real costs versus nominal costs Registry reorganization 20 6 Lower energy costs Purchasing centralization
Inventories - Audit PANAMA New Airport terminal 9 Intranet implementation
23 II - PMO BASED EXECUTION: SOFTWARE TOOL
WRIKE – Practical Project Management Enables its users to manage and track projects, activities, deadlines, schedules, and other workflow processes. Provides real-time reports and status for all users involved in the project
Daily morning email Tasks and deadlines sent daily by email to all users Online Interaction Centralized communication with stakeholders enabling easy and fast contact between different areas
Timeline (Gantt–Chart) Project schedule, clear accountability for each stage (or gate) of the project
Key Users’ Reports Individual performance measured by KPIs of each specific activity
24 III - LIVE KPI MONITORING
Sales Monitoring: Peer Comparison / Benchmarks Actual vs. Target (D-1 + MTD) KPI Quartile Comparison Tickets and Ave. Ticket Breakdown KPIs measured: Items/Ticket Key Objectives: Ave. Price/Item Better and faster Desserts/Ticket understanding of operating Drinks/Ticket results Sales/Employee Stronger support to Sales/m² operations Prompt reaction to any deviation
Daily monitoring of most important KPIs: Labor Cost Control Revenue Related # of Employees vs. Budget Cost Related Overtime Absences
Food Cost / Deviation Control Daily Reports Sent to: Cancellations Store Managers Discounts Regional Managers Waste Segment Directors
25 IV – DEMAND GENERATION & ORGANIZATION BY BRAND
New Store Look & Feel
26 IV – DEMAND GENERATION & ORGANIZATION BY BRAND
Chefs Focused on Main Brands
Chef Chef Chef Chef Daniel Ugarte Francisco Santana Du Cabral Leo Pimenta FRANGO ASSADO BRUNELLA VIENA OLIVE GARDEN
27 IV – DEMAND GENERATION & ORGANIZATION BY BRAND
Product Innovation
100+ new recipes and products at Viena Express 30+ new recipes and products at Frango Assado 10+ new recipes and products at Brunella 10+ new recipes and products at Batata Inglesa
28 IV – DEMAND GENERATION & ORGANIZATION BY BRAND
Marketing Calendar Daniel Ugarte – Chef Sep ‘16 New Menus Implemented in 2016YE: Buffet + Snacks 2Q17 SSS +9.1% 5th Campaign (with new products + marketing) Implemented in 2017
Jan-Feb April Jun-Jul Aug-Sep Oct Nov-Dec
New Sandwiches Easter: Hot Drinks “Arraiá” Pizza Festival Frango Assado 65 Fit-Summer and Sweets Hot-dog Festival Years Burger Festival Light Sandwiches and Fruits
29 IV – DEMAND GENERATION & ORGANIZATION BY BRAND
Marketing Calendar
Sep Oct Nov-Dec
50-new recipes Loyalty Program Fit-Summer “Salad Time”
30 IV – DEMAND GENERATION & ORGANIZATION BY BRAND
Across the board efforts
Consumer Trade Branding Client Loyalty Digital Media Intelligence Marketing Online satisfaction Partnerships: surveys – SMG Social Media activation investments from Behavior surveys – Top-5 Brands suppliers and third Aggressive loyalty Centralized customer parties (benefit program: interactions – Voxline Digital media planning programs, Pay 4 Take 5 for Frango Assado entertainment, travel agencies) Online promotions at airports – 99 Taxi / In-store visibility Uber (suppliers support) Repositioning and new Better understanding value proposition for Market share gains of opportunities Promotional digital Guerilla actions: brands driving assertive partnerships coupons, surrounding strategic decisions partners
31 V – ALIGNMENT & TRAINING
Field Action – Managers and Regional Managers Operational Tool Kit
Planning Year-round calendar Personal planning (working days, vacations) Strategic planning (new products, pricing, inventories) Planning Functional planning (monthly reviews, feedback meetings) Variable planning (budgeting, HR) Prepare Field Work Monitoring Focused on each restaurant needs based on KPIs: Prepare and Results Financial Field Work Evaluation Operation Qualitative (mystery shopper) Standards Assurance Quality Service Cleanliness Restaurant Goals Focus on tangible results End-of-day Standards End-of-day Wrap-up Wrap-up Assurance Constructive feedback Identify opportunities Share best practices Restaurant Celebrate improvements Goals Monitoring and Results Evaluation Track results (daily/weekly/monthly reports, budget/goals comparisons) Track restaurants’ evolution
32 V – ALIGNMENT & TRAINING
Operational Excellence – M.A.I.S. Incentives Program (“Os Excelentes”) Operational Excellence Ranking:
M From 80% to 84.99%
A From 85% to 89.99%
I From 90% to 94.99% Incentives program for store managers S Above 95%
A restaurant grade is established after 3-months in any giving ranking Monthly evaluation MRV (“My Restaurant View”) Evaluation: Quarterly payments • Weekly evaluation conducted by the store manager (not considered for the final ranking) • Operational Excellence monthly evaluation: conducted by a different the regional manager
ATTITUDES THAT GENERATE GREAT RESULTS Evaluation Metrics:
1. Sales Sep/16 Oct/16 Nov/16 Dec/16 Jan/17 Feb/17 2. Contribution Margin 3. MAIS Program 4. Mystery Shopper / SMG
33 VI – PROCESSES: STRATEGIC SOURCING
Before – Decentralized Purchasing Process After – Centralized Purchasing Process
DEPARTMENTS EXPANSION FINANCE MKT FISCAL EXPANSION FINANCE MKT FISCAL
PURCHASING DEPARTMENT
PROVIDERS CONSTRUCTION FINANCE PRINT FISCAL CONSTRUCTION FINANCE PRINT FISCAL COMPANIES SERVICES SHOP CONSULTING COMPANIES SERVICES SHOP CONSULTING
Each department used to contact its own providers Purchasing dep. is involved in all processes Lack of negotiation know-how Better negotiations / bidding process (if applicable) This flow used to exceed budget expenses Controlled expenses (budget focus)
NEGOTIATION / SOURCING GAINS
Disposable Items Cleaning & Gardening Gas Station’s Agreements Average gain after Average gain after Adjustments on rebates and Negotiations: +19.2% Negotiations & Sourcing: conditions resulting in better +17.8% margins.
34 VI – PROCESSES: ENGINEERING
Maintenance Process Management People Engagement System
Overall Assessment of CMMS (Computerized Task Force: Workshops with each restaurant Maintenance multidisciplinary team to operational teams Management System) reduce backlog Complexity ranking Incorporation of implementation Activities during the suggestions Support by cluster Service Orders received nocturnal period Schedule alignments Scope defined in by the Shared Services Preventive planning Responsibility Matrix Center Standardized metrics
Service Orders - Casual
465 443 454 333 273 172
Feb/17 Mar/17 Apr/17 May/17 Jun/17 Jul/17
35 VII - EXPANSION: OLIVE GARDEN
Concept: IMC’s footprint: Olive Garden is a casual dining restaurant 2 2 Brazil chain specializing in Italian-American cuisine Restaurants with more than 800 locations globally
Arrived in Brazil aiming at offering the R$1.0M Average sales per store genuine Italian gastronomic experience per month
Recent opening – OG Center Norte Expansion planning: First Olive Garden in Malls Sales/Day R$k +242% +4% 3 to 4 new restaurants per year
Apr-16 Mar-17 Apr-17 Viena 36 VII - EXPANSION: MARGARITAVILLE
Concept: Caribbean-inspired brand created by the IMC’s footprint: American singer Jimmy Buffett 20 18 USA + 1 Brazil + 1 PA Margaritaville is a cocktail bar and restaurant Restaurants with an extensive drink and food menu. Our restaurants have strong presence in major US touristic destinations U$0.7M Average sales per store per month Margaritaville’s “sister” brand – LandShark is a bar inspired by the traditional beach bars of the Atlantic Coast with an extensive drink and food menu.
2 to 3 new Expansion plan: restaurants per year
37 VII - EXPANSION: FRANGO ASSADO, VIENA EXPRESS & BRUNELLA
Significant presence in São Paulo Most of Viena’s restaurants are Potential rebranding of our state in the main highways with located in São Paulo and Rio de cafés to Brunella and/or high traffic Janeiro states cross selling at the current Wide room for growth still in SP as 500+ shopping malls in the country restaurants well as other states +
Current presence Current presence
37 units located in 25 units located in SP, RJ and DF 3 units in SP SP and MG states states
38 +55 11 3041.9653 [email protected] INTERNATIONAL MEAL COMPANY www.internationalmealcompany.com/ir Appendix WHO WE ARE – BRAND PORTFOLIO: BRAZIL
41 25 2
1 3
38 16 23
2 4 15 3 OTHERS 19
1 – Includes: Viena Café, V. Café, and Viena Snacks 2 – Includes: Viena Delicatessen, Gourmet and Delish 3 – Includes: Eat & CO, Grab N’ Fly, Wine & CO, Beer & CO, Juice & CO, Eat Snacks 4 – Includes: Black Coffee, BC Express, Naturally Fast, The Collection, Wraps, Grano, Espresso Mineiro, Sports Bar, Margaritaville, Carls Jr, Red Lobster as of September, 2017
41 2Q17 Results Summary FINANCIAL HIGHLIGHTS
Same Store Sales¹ Net Revenues¹ EBITDA¹
Total: -0.4% R$ 390 M R$ 39 M +0.6% +67% Brazil: +2.4% US: -6.1% Caribbean: +1.5%
EBITDA Margin Cash Flow² Net Cash Position
10.1% +R$ 32 M +R$ 35 M +400bps 85% (Over Adj. EBITDA)
¹ Constant Currency ² Operating Cash Flow After Maintenance Capex 43 EBITDA BRIDGE 2Q17
+16 +14 Brazil +10.5 10.1% 1,8 10.1% (1.5) (0.1) 1,2 2,2
6.1% 0,8 1,3 (1.1) 9,7 39,4 37,9 23,7
EBITDA 2Q16 Road Air Mall Other G&A USA Caribbean Holding EBITDA 2Q17 FX EBITDA 2Q17 Constant Fx
Adj. EBITDA 2Q17 in Constant Currency: R$39.4M | +R$16M / +400bps or R$37.9M | USA: +R$1.2M at constant currency +14M in BRL New stores + labor, selling & operating and store pre-opening expenses Brazil: +R$10.5M improving margins Operating Income: +R$0.8M Caribbean: +R$2.2M at constant currency Road: +R$0.8M: Higher SSS + lower labor (ZBB) and rent expenses Positive SSS + Operating Excellence improvement = higher margins Air: +R$1.3M: lower rent (new contracts), utilities (ZBB) and S&OPEX (ZBB) Holding: +R$1.8M expenses Rationalization of corporate structure – ZBB related Malls:-R$1.1M: lower SSS pressuring margins (operational leverage) G&A: -R$0.1M: Local team strengthening (IT, Marketing and Engineering) Other: +R$9.7M: ~R$5M on tax recoveries
44 CASH FLOW HIGHLIGHTS
Improved results combined with lower working capital needs 85% Op. Cash / EBITDA from 66% in 2Q16
EBITDA Reconcilation to Operating Cash Flow (R$ Million) 2Q17 2Q16 Var. (%) 2017 2016 Var. (%) Adjusted EBITDA 37.9 23.7 60.3% 55.0 42.3 30.2% Special Items (0.7) (3.0) n.a. (1.8) (4.5) n.a. (+/-) Other Non-Cash Impact on IS (3.5) 10.4 10.4 19.9 (+/-) Working Capital 3.6 (8.9) (19.3) (15.8) Operating Cash Before Taxes and Interest 37.3 22.1 68.8% 44.3 41.8 6.0% (-) Paid Taxes (3.1) (1.4) (10.1) (3.1) (-) Maintenance Capex (2.0) (5.1) (7.9) (9.2) Net Cash Generated by Operating Activities 32.3 15.6 106.8% 26.3 29.5 -10.8% Operating Net Cash/EBITDA 85.1% 65.9% 19.1 p.p. 47.8% 69.8% -22 p.p.
45 IMC CONSOLIDATED
(in R$ million) 2Q17 2Q16 %HA 2Q17³ % HA³ 2017 2016 %HA 2017³ % HA³ Net Revenue 376.9 387.8 -2.8% 389.9 0.6% 727.5 776.3 -6.3% 764.3 -1.5%
Cost of Sales and Services (259.3) (264.7) -2.0% (266.4) 0.6% (512.7) (542.0) -5.4% (534.6) -1.4% Direct Labor (100.2) (103.8) -3.4% (103.4) -0.4% (194.6) (206.2) -5.6% (204.9) -0.6% Food (85.5) (89.3) -4.2% (88.3) -1.0% (164.7) (182.4) -9.7% (172.8) -5.3% Fuel and Automotive Accessories (40.2) (34.6) 16.1% (40.2) 16.1% (87.1) (78.7) 10.6% (87.1) 10.6% Depreciation & Amortization (13.4) (13.9) -3.9% (13.9) -0.3% (27.3) (29.3) -6.7% (29.2) -0.3% Others (20.1) (23.2) -13.4% (20.6) -10.9% (39.0) (45.3) -13.9% (40.6) -10.3% Gross Profit 117.5 123.1 -4.5% 123.5 0.4% 214.8 234.3 -8.3% 229.8 -1.9% Operating Expenses¹ (100.7) (123.3) -18.3% (105.9) -14.1% (203.2) (241.6) -15.9% (216.1) -10.6% Selling and Operating (43.8) (46.2) -5.2% (46.0) -0.3% (84.5) (89.7) -5.8% (91.5) 2.0% Rents of Stores (38.1) (42.9) -11.3% (39.5) -7.9% (71.9) (84.3) -14.7% (76.0) -9.8% Store Pre-Openings (0.8) (0.9) -6.8% (1.9) 105.9% (1.9) (1.8) 9.9% (2.0) 12.1% Depreciation & Amortization (7.2) (9.5) -23.6% (7.4) -21.7% (16.1) (20.2) -21.0% (16.8) -17.8% Equity income result 2.7 2.6 5.4% 3.0 15.7% 4.7 5.4 -13.0% 5.4 -0.1% Other revenues (expenses) 7.4 (3.1) -337.8% 7.4 -339.9% 8.4 (4.3) -295.0% 8.8 -303.5% General & Administative (17.9) (18.4) -2.7% (18.5) 0.3% (36.2) (37.4) -3.1% (38.1) 1.9% Corporate (Holding)² (2.5) (4.4) -42.6% (2.5) -41.6% (5.7) (9.3) -38.1% (5.8) -37.4%
(+) D&A and Write-offs 21.1 23.9 -11.8% 21.8 -8.7% 43.4 49.5 -12.4% 46.1 -7.0% (+) Special Items - Other 0.7 3.0 - 0.7 - 1.8 4.5 -59.0% 1.8 -59.0% Adjusted EBITDA 37.9 23.7 60.3% 39.4 66.6% 55.0 42.3 30.2% 59.8 41.5% ¹Before special items; ²Not allocated in segments and countries; ³In constant currencies as of the prior year
46 BRAZIL
(in R$ million) 2Q17 % VA 2Q16 % VA % HA 2017 % VA 2016 % VA % HA
Net Revenue 224.0 100.0% 225.1 100.0% -0.5% 462.7 100.0% 483.0 100.0% -4.2% Restaurants & Others 174.6 78.0% 181.5 80.6% -3.8% 356.9 77.1% 385.0 79.7% -7.3% Gas Stations 49.3 22.0% 43.6 19.4% 13.3% 105.8 22.9% 98.1 20.3% 7.9% Cost of Sales and Services (174.5) -77.9% (172.5) -76.6% 1.2% (359.3) -77.7% (368.4) -76.3% -2.5% Direct Labor (61.0) -27.2% (60.8) -27.0% 0.3% (122.8) -26.5% (125.2) -25.9% -1.9% Food (52.1) -23.3% (53.2) -23.6% -2.1% (105.7) -22.8% (115.0) -23.8% -8.1% Fuel and Automotive Accessories (40.2) -17.9% (34.6) -15.4% 16.1% (87.1) -18.8% (78.7) -16.3% 10.6% Depreciation & Amortization (8.1) -3.6% (8.4) -3.7% -3.4% (16.3) -3.5% (17.4) -3.6% -6.6% Others (13.2) -5.9% (15.6) -6.9% -15.3% (27.4) -5.9% (32.1) -6.6% -14.5%
Gross Profit 49.5 22.1% 52.6 23.4% -6.0% 103.4 22.3% 114.6 23.7% -9.8% Operating Expenses¹ (49.9) -22.3% (65.8) -29.2% -24.1% (108.7) -23.5% (132.5) -27.4% -18.0% Selling and Operating (17.7) -7.9% (17.7) -7.9% 0.0% (36.3) -7.8% (36.3) -7.5% 0.0% Rents of Stores (21.4) -9.6% (26.2) -11.6% -18.2% (43.2) -9.3% (54.5) -11.3% -20.7% Store Pre-Openings (0.5) -0.2% (0.2) -0.1% 217.0% (1.5) -0.3% (0.5) -0.1% 222.1% Depreciation & Amortization (4.9) -2.2% (6.8) -3.0% -27.9% (10.4) -2.3% (13.4) -2.8% -22.1% Other revenues (expenses)² 6.3 2.8% (3.4) -1.5% -285.8% 6.7 1.4% (4.7) -1.0% -242.3% General & Administative² (11.7) -5.2% (11.5) -5.1% 1.2% (23.9) -5.2% (23.1) -4.8% 3.4% (+) Depreciation & Amortization 13.0 5.8% 15.2 6.8% -14.4% 26.7 5.8% 30.8 6.4% -13.3% Operating Income 12.5 5.6% 2.1 0.9% 509.6% 21.4 4.6% 13.0 2.7% 65.6%
Maintenance Capex 1.4 0.6% 1.5 0.7% -9.0% 5.6 1.2% 2.3 0.5% 146.5% Operating Inc. - Maintenance 11.2 88.9% 0.5 25.7% 63.2% 15.9 74.1% 10.7 82.6% -8.5% Capex³
¹Before special items; ²Not allocated in segments; 3 VA vs. Op. Inc.
47 BRAZIL ROADS
(in R$ million) 2Q17 % VA 2Q16 % VA % HA 2017 % VA 2016 % VA % HA Net Revenue 106.2 100.0% 98.4 100.0% 7.9% 225.9 100.0% 219.5 100.0% 2.9% Restaurants & Others 56.8 53.5% 54.8 55.7% 3.7% 120.1 53.2% 121.4 55.3% -1.0% Gas Stations 49.3 46.5% 43.6 44.3% 13.3% 105.8 46.8% 98.1 44.7% 7.9% Cost of Sales and Services (88.9) -83.7% (82.3) -83.6% 8.0% (188.2) -83.3% (181.5) -82.7% 3.7% Direct Labor (22.2) -20.9% (22.3) -22.7% -0.5% (45.8) -20.3% (45.9) -20.9% -0.1% Food (18.3) -17.2% (16.8) -17.1% 8.8% (38.0) -16.8% (38.7) -17.7% -2.0% Fuel and Automotive Accessories (40.2) -37.8% (34.6) -35.2% 16.1% (87.1) -38.5% (78.7) -35.9% 10.6% Depreciation & Amortization (3.1) -3.0% (3.2) -3.2% -0.7% (6.4) -2.8% (6.4) -2.9% 0.0% Others (5.1) -4.8% (5.4) -5.5% -5.7% (10.9) -4.8% (11.8) -5.4% -7.5% Gross Profit 17.3 16.3% 16.1 16.4% 7.2% 37.7 16.7% 38.0 17.3% -0.6% Operating Expenses (10.7) -10.1% (10.4) -10.6% 2.6% (22.0) -9.7% (21.3) -9.7% 3.0% Selling and Operating (6.1) -5.7% (5.2) -5.3% 16.5% (12.4) -5.5% (10.6) -4.8% 16.9% Rents of Stores (3.5) -3.3% (4.3) -4.4% -19.0% (7.6) -3.3% (9.0) -4.1% -16.1% Store Pre-Openings (0.2) -0.2% 0.0 0.0% 0.0% (0.2) -0.1% 0.0 0.0% 0.0% Depreciation & Amortization (0.8) -0.8% (0.9) -0.9% -2.8% (1.8) -0.8% (1.7) -0.8% 2.9% Other income (expenses) 0.0 0.0% 0.0 0.0% 0.0% 0.0 0.0% 0.0 0.0% 0.0% (+) Depreciation & Amortization 4.0 3.8% 4.0 4.1% -1.1% 8.1 3.6% 8.1 3.7% 0.6% Operating Income¹ 10.6 10.0% 9.7 9.9% 8.7% 23.9 10.6% 24.7 11.3% -3.2% Maintenance Capex 0.9 0.8% 0.4 0.4% 114.6% 2.6 1.1% 0.5 0.2% 379.6% Operating Inc. - Maintenance 9.7 91.9% 9.3 95.9% -4.0% 21.4 89.3% 24.2 97.8% -8.5% Capex² ¹Before special items; ²VA vs. Op. Inc.
48 BRASIL - AIR
(in R$ million) 2Q17 % VA 2Q16 % VA % HA 2017 % VA 2016 % VA % HA Net Revenue 57.8 100.0% 64.1 100.0% -9.9% 116.1 100.0% 135.6 100.0% -14.4% Cost of Sales and Services (41.8) -72.3% (45.4) -70.8% -8.0% (83.2) -71.7% (94.3) -69.5% -11.8% Direct Labor (20.1) -34.9% (20.2) -31.5% -0.3% (40.0) -34.4% (41.9) -30.9% -4.5% Food (15.8) -27.4% (17.6) -27.4% -10.0% (31.7) -27.3% (37.2) -27.5% -14.9% Depreciation & Amortization (2.4) -4.2% (2.6) -4.1% -9.0% (4.7) -4.1% (5.5) -4.1% -13.7% Others (3.4) -5.9% (5.0) -7.7% -31.8% (6.8) -5.9% (9.7) -7.2% -29.7% Gross Profit 16.0 27.7% 18.7 29.2% -14.5% 32.9 28.3% 41.3 30.5% -20.5% Operating Expenses (18.7) -32.3% (24.5) -38.2% -23.8% (38.0) -32.7% (50.8) -37.5% -25.3% Selling and Operating (6.0) -10.5% (6.8) -10.6% -10.8% (12.4) -10.7% (14.3) -10.5% -12.7% Rents of Stores (9.0) -15.6% (12.4) -19.3% -27.2% (17.9) -15.4% (26.2) -19.3% -31.7% Store Pre-Openings 0.0 0.0% (0.1) -0.2% -100.0% (0.0) 0.0% (0.3) -0.2% -86.3% Depreciation & Amortization (3.6) -6.3% (5.2) -8.2% -30.7% (7.6) -6.5% (10.1) -7.4% -24.6% Other income (expenses) 0.0 0.0% 0.0 0.0% 0.0% 0.0 0.0% 0.0 0.0% 0.0% (+) Depreciation & Amortization 6.0 10.4% 7.9 12.3% -23.4% 12.3 10.6% 15.6 11.5% -20.7% Operating Income¹ 3.4 5.8% 2.1 3.3% 61.2% 7.3 6.2% 6.1 4.5% 19.3% Maintenance Capex 0.3 0.5% 0.3 0.5% -20.7% 0.8 0.7% 0.8 0.6% 5.0% Operating Inc. - Maintenance 3.1 91.8% 1.7 83.4% 8.4% 6.4 88.3% 5.3 86.8% 1.6% Capex² ¹Before special items; ²VA vs. Op. Inc.
49 BRASIL - MALLS
(in R$ million) 2Q17 % VA 2Q16 % VA % HA 2017 % VA 2016 % VA % HA Net Revenue 60.0 100.0% 62.6 100.0% -4.2% 120.7 100.0% 127.9 100.0% -5.6% Cost of Sales and Services (43.8) -73.1% (44.8) -71.6% -2.2% (87.9) -72.9% (92.6) -72.4% -5.1% Direct Labor (18.6) -31.1% (18.3) -29.2% 2.0% (37.0) -30.7% (37.5) -29.3% -1.2% Food (17.9) -29.9% (18.8) -30.0% -4.4% (36.0) -29.9% (39.0) -30.5% -7.6% Depreciation & Amortization (2.6) -4.3% (2.6) -4.1% -1.1% (5.2) -4.3% (5.6) -4.4% -7.1% Others (4.7) -7.9% (5.2) -8.3% -9.6% (9.6) -8.0% (10.5) -8.2% -8.3% Gross Profit 16.2 26.9% 17.8 28.4% -9.0% 32.8 27.1% 35.3 27.6% -7.1% Operating Expenses (15.2) -25.3% (16.0) -25.5% -4.7% (31.5) -26.1% (32.5) -25.4% -3.0% Selling and Operating (5.6) -9.3% (5.7) -9.1% -2.4% (11.5) -9.5% (11.5) -9.0% 0.2% Rents of Stores (8.9) -14.9% (9.5) -15.2% -6.0% (17.8) -14.7% (19.3) -15.1% -7.9% Store Pre-Openings (0.3) -0.4% (0.0) 0.0% 736.0% (1.2) -1.0% (0.2) -0.1% 688.2% Depreciation & Amortization (0.5) -0.8% (0.7) -1.2% -37.3% (1.0) -0.9% (1.6) -1.2% -34.1% Other revenues (expenses)² 0.0 0.0% 0.0 0.0% 0.0% 0.0 0.0% 0.0 0.0% 0.0% (+) Depreciation & Amortization 3.0 5.0% 3.3 5.3% -9.1% 6.2 5.2% 7.2 5.6% -13.0% Operating Income¹ 4.0 6.6% 5.1 8.2% -22.4% 7.5 6.2% 10.0 7.8% -24.8% Maintenance Capex 0.3 0.4% 0.8 1.3% -66.3% 2.2 1.8% 0.9 0.7% 135.4%
Operating Inc. - Maintenance 3.7 93.3% 4.3 84.7% 8.7% 5.3 71.3% 9.1 90.8% -19.5% Capex³ ¹Before special items; ²VA vs. Op. Inc.
50 USA
(in US$ Million) 2Q17 % VA 2Q16 % VA % HA 2017 % VA 2016 % VA % HA Net Revenue 33.7 100.0% 33.1 100.0% 1.6% 55.3 100.0% 53.1 100.0% 4.2% Cost of Sales and Services (19.9) -59.2% (19.7) -59.4% 1.3% (35.2) -63.7% (33.7) -63.5% 4.5% Direct Labor (9.7) -28.9% (9.7) -29.4% 0.1% (17.6) -31.8% (17.1) -32.1% 3.2% Food (6.6) -19.7% (6.4) -19.4% 3.6% (10.9) -19.8% (10.4) -19.5% 5.7% Depreciation & Amortization (1.5) -4.6% (1.5) -4.4% 5.4% (3.3) -5.9% (2.9) -5.4% 13.5% Others (2.0) -6.0% (2.1) -6.2% -2.9% (3.4) -6.1% (3.4) -6.4% -0.8% Gross Profit 13.7 40.8% 13.5 40.6% 2.1% 20.1 36.3% 19.4 36.5% 3.7% - - - - Operating Expenses¹ (10.5) -31.1% (10.7) -32.4% -2.5% (18.8) -33.9% (18.2) -34.2% 3.2% Vendas e Operacionais (6.2) -18.5% (6.3) -19.2% -2.1% (11.4) -20.5% (11.0) -20.6% 3.7% Rents of Stores (3.7) -11.0% (3.4) -10.2% 9.7% (6.0) -10.9% (5.3) -10.0% 13.7% Pré-Aberturas de Lojas (0.1) -0.3% (0.1) -0.4% -19.4% (0.1) -0.2% (0.1) -0.3% -1.8% Depreciação e Amortização (0.1) -0.3% (0.1) -0.3% -1.3% (0.2) -0.3% (0.2) -0.4% -1.1% Amortização de Invest. em J.V. (0.2) -0.5% (0.2) -0.5% 0.0% (0.3) -0.6% (0.3) -0.6% 0.0% Equivalência Patrimonial 0.8 2.5% 0.7 2.2% 15.8% 1.5 2.7% 1.5 2.8% 0.8% Outras 0.3 0.8% (0.0) -0.1% -667.0% 0.4 0.7% (0.1) -0.1% -586.8% General & Administative (1.3) -3.8% (1.3) -3.9% -1.5% (2.6) -4.6% (2.7) -5.0% -3.3% (+) Depreciation & Amortization 1.8 5.3% 1.7 5.2% 4.6% 3.8 6.8% 3.4 6.4% 11.5% Operating Income 5.1 15.1% 4.4 13.4% 14.0% 5.1 9.3% 4.6 8.7% 11.5% Maintenance Capex 0.1 0.3% 0.4 1.3% -74.1% 0.2 0.4% 0.6 1.2% -68.3% Operating Inc. - Maintenance 5.0 97.8% 4.0 90.4% 7.4% 4.9 96.1% 4.0 86.2% 9.9% Capex²
¹Before special items; ²VA vs. Op. Inc.
51 CARIBBEAN
(in R$ million) 2Q17 2Q16 % HA 2Q17² % HA² 2017 2016 % HA 2017² % HA² Net Revenue 44.5 46.7 -4.7% 48.1 2.9% 88.4 100.2 -11.8% 100.1 -0.1% Cost of Sales and Services (20.7) (23.3) -11.3% (22.1) -5.3% (41.2) (50.1) -17.9% (46.1) -8.1% Direct Labor (7.9) (8.9) -11.2% (8.3) -6.9% (15.7) (18.4) -14.8% (17.3) -5.8% Food (12.0) (13.6) -11.8% (13.0) -4.8% (24.1) (29.8) -19.2% (27.2) -8.8% Depreciation & Amortization (0.3) (0.4) -18.4% (0.4) -11.9% (0.6) (1.2) -45.4% (0.7) -38.2% Others (0.4) (0.4) 12.8% (0.4) 20.2% (0.8) (0.8) 0.5% (0.8) 9.4% Gross Profit 23.8 23.4 1.8% 26.0 11.1% 47.2 50.1 -5.8% 54.0 7.8% Operating Expenses¹ (14.6) (15.6) -6.3% (15.8) 1.2% (29.0) (33.4) -13.0% (32.7) -2.1% Selling and Operating (6.0) (6.2) -2.8% (6.5) 4.7% (12.0) (13.3) -9.6% (13.5) 1.5% Rents of Stores (4.7) (4.9) -4.1% (5.1) 4.1% (9.4) (10.5) -10.5% (10.8) 2.6% Store Pre-Openings 0.0 (0.3) -100.0% 0.0 -100.0% 0.0 (0.8) -100.0% 0.0 -100.0% Depreciation & Amortization (2.0) (2.3) -13.1% (2.2) -6.2% (4.0) (5.0) -18.8% (4.5) -8.5% Other revenues (expenses) 0.3 0.4 -38.7% 0.3 -33.5% 0.6 0.6 -7.8% 0.8 29.3% General & Administative (2.2) (2.3) -8.3% (2.3) -1.1% (4.2) (4.4) -6.0% (4.7) 5.4% (+) Depreciation & Amortization 2.3 2.7 -13.9% 2.5 -7.1% 4.7 6.2 -23.9% 5.3 -14.3% Operating Income 11.5 10.5 9.7% 12.7 21.2% 22.8 22.9 -0.2% 26.6 16.4%
Maintenance Capex 0.2 0.4 -65.6% 0.2 -62.8% 1.4 1.6 -13.0% 1.5 -1.4% Operating Inc. - Maintenance 11.4 10.0 13.0% 12.5 24.9% 21.5 21.3 0.8% 25.1 17.7% Capex³ ¹Before special items; ²Not allocated in segments; 3 VA vs. Op. Inc.
52 +55 11 3041.9653 [email protected] INTERNATIONAL MEAL COMPANY www.internationalmealcompany.com/ir