Genomma Lab Internacional B de C : Q4 2022 Earnings Release

Q4 & FY 2022 Results

HIGHLIGHTS

FY-2022 Sales increased by

Ps. 1.37 billion; +8.9% year-on-year

FY-2022 EBITDA increased +8.1% with a 20.6% margin

FY-2022 Operating Income

increased by

Ps. 216.3 million; +7.1% year-on-year

Q4-2022 Net Debt to EBITDA

ratio closed at 1.40x

Capex Investmentsfor the

twelve months ended

December 31, 2022 reached

Ps. 256.0 million.

Genomma Lab Internacional Reports Fourth Quarter & Full Year 2022 Results

Mexico City, February 22, 2023 - Genomma Lab Internacional, S.A.B. de C.V. (BMV: LAB B)

("Genomma Lab" or "the Company"), today announced its results for the fourth quarter and full year ended December 31, 2022. All figures included herein are stated in nominal Mexican pesos and have been prepared in accordance with International Financial Reporting Standards (IFRS).

The following tables provide an abridged Income Statement, in millions of Mexican pesos. The margin for each figure represents its ratio to net sales and the percentage change in the fourth quarter and full year 2022 as compared with the same audited period in 2021:

	FY 2022	% Sales	FY 2021(2)	% Sales	Var. %
Net Sales	16,858.8	100.0%	15,487.1	100.0%	+8.9%
Gross Profit	10,195.6	60.5%	9,563.2	61.7%	+6.6%
Operating Income	3,262.9	19.4%	3,046.6	19.7%	+7.1%
EBITDA(1)	3,470.9	20.6%	3,209.8	20.7%	+8.1%
Net Income	1,396.8	8.3%	1,307.9	8.4%	+6.8%
	Q4 2022	% Sales	Q4 2021(2)	% Sales	Var. %
Net Sales	4,171.1	100.0%	4,090.1	100.0%	+2.0%
Gross Profit	2,383.7	57.1%	2,576.2	63.0%	(7.5)%
Operating Income	788.4	18.9%	834.3	20.4%	(5.5)%
EBITDA(1)	839.9	20.1%	889.6	21.8%	(5.6)%
Net Income	253.6	6.1%	216.0	5.3%	+17.4%

1. EBITDA defined as operating income before depreciation and amortization
2. FY-2021audit adjustments were allocated to Q4-2021 as presented herein. Largest effects were related to the audited financial statements of Marzam, affiliate company not controlled by Genomma.

Comments from the CEO

Mr. Jorge Luis Brake, Genomma Lab's Chief Executive Officer, commented:

"Full Year 2022 set a new record in sales & EBITDA and represented the Company's fourth consecutive year of solid growth based on the strategy launched at the beginning of 2019. Genomma has been achieving more than 4,000 million pesos in net sales and over 800 million pesos in EBITDA in recent quarters. Fourth quarter results therefore are not a reflection of our business performance, but rather a 'bump in the road' due to specific circumstances which occurred during the last months of the year, including FX headwinds, the significant revaluation of the Mexican Peso, a supply disruption of a few APIs, and the complex transition from third party contractors into the Personal Care manufacturing plant. Further, excluding the foreign exchange1 and hyperinflationary2 impact, Genomma's net revenues would have increased by 8.5 percent for the fourth quarter 2022."

He added: "Today our Company is in a position of strength, and we remain committed to achieving our vision of 20 billion pesos in annual sales and 24-25% EBITDA margin by 2024-2025 while we continue building our business. We look forward to sharing more details on our strategy with you at our March 8 Investor Day and Manufacturing Plant site visit."

1. Applying constant currency FX rate to the non-hyperinflationary subsidiaries.
2. Hiperinflationary adjustments to the previous quarter results (Q1-Q3), using the Q4 inflation rate and the ending period FX.

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Q4 & FY 2022 Results

KEY DATA

FY-2022 % of Sales by

Segment:

OTC 58.1%

PC 41.9%

New Suerox® 1 liter Launched in Chile for convenience store channel

Launch of new

Tio Nacho Sachet

Business Review Full Year and Fourth Quarter 2022

Genomma Lab's focus on innovation, marketing effectiveness and operational excellence enabled the Company to sustain its growth momentum during 2022; a fourth consecutive year of sales and profit growth. Full year sales reached Ps. 16.86 billion; an 8.9% year-on-year increase primarily attributed to new product line extensions, effective media campaigns and strong in-store presence during 2022.

However, fourth quarter 2022 sales closed at Ps.4.17 billion; a +2.0% year on year increase. While Genomma's OTC categories increased by +8.5% during the quarter, Personal Care categories were adversely impacted by supply chain delays, aggressive competition in the Isotonic Beverage category in Mexico, and by the transition from third party contractors to the Company's Personal Care facilities. FX headwinds from a stronger Mexican Peso and Argentina hyperinflationary accounting effects also adversely impacted the company's year-over-year top line and profitability results for the fourth quarter 2022.

Genomma Lab's full year EBITDA margin closed at 20.6%; a 10 bps year-on-year decrease primarily attributable to FX headwinds in certain countries where the company operates, raw materials inflationary impacts, as well as non-recurrentgrowth-related investments at the end of the year.

The fourth quarter 2022 EBITDA margin closed at 20.1%, a 170bps decrease due to higher COGS inflation and lower operating leverage, FX headwinds from a stronger Mexican Peso and IAS-29/IAS-21 hyperinflationary adjustments when restating the prior periods' comparative figures in terms of the measuring unit at the end of the reporting period. Argentinian Peso depreciation was significantly higher than local inflation during the fourth quarter 2022.

Progress related to Genomma's overall strategy during the quarter follows:

Product Innovation and Portfolio Optimization

Successful line extensions and new product launches were an important growth driver during 2022. Notable fourth quarter 2022 examples include: 1) new line extension of Teatrical® with stem cells in Mexico 2) increased Suerox® market share within Latin America, expanding Suerox® Chile through a new Chile market-focused one liter presentation; the preferred format for convenience store clients and 3) US market launch of Silka® Antifungal, a specialized nail care product with enhanced formulation and a revamped marketing strategy. Importantly, the expansion of product innovation and line extensions will drive future growth

Strengthened Marketing and Perfect Go-To-Market Execution

Genomma continued its successful commercial strategy during the fourth quarter 2022, aligned with focusing the business on the cough and cold, pain relief and gastro categories with increased presence within convenience stores as well as national, regional and independent pharmacies. During the fourth quarter Genomma also

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Q4 & FY 2022 Results

18 Countries

&

+500,000 POS*

*Points of Sale

strengthened its growth strategy in the traditional channel with the expansion of Groomen® disposable razors in Chile and the introduction of a new Tio Nacho® Sachet presentation format.

World-Class Supply Chain

Genomma's five Personal Care Manufacturing facility lines are now fully operational. During Q4-2022, the facility's shampoo manufacturing line produced more than three million bottles of Tio Nacho® and Vanart®, while achieving its pomade line target with a 93% efficiency rate. The Suerox® manufacturing line continues delivering levels of production exceeding initial expectations, to reach 76 million bottles produced during 2022.

Genomma's pharmaceutical manufacturing plant production levels also increased during the fourth quarter 2022, with 27 million Next® tablets and more than one million semi-solid units produced for the Mexican market, including the successful completion of the production transfer process of the Unesia®, Xray® Dol, Silkamedic® and Ultra Bengue® brands to Genomma's internal manufacturing lines.

The Mexican Health Authority (COFEPRIS) inspection of Genomma's Pharmaceutical Manufacturing Facility was completed during the fourth quarter 2022, representing an initial critical step towards obtaining the operating license for the oral liquid, topical liquid and coating manufacturing lines. Once operating licenses for these processes have been granted, the Company will begin the process of obtaining its Good Manufacturing Practices (GMP) certificate for Mexico. Genomma will then also pursue GMP certification for the export markets.

The following table provides detail on the status of pending Pharma Manufacturing Plant permits:

In-house production of

Next®

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Q4 & FY 2022 Results

Inclusion within the

Sustainability Yearbook

(click for more info)

FY 2022 MEXICO

Sales in MXN: 7.00 billion

EBITDA Margin: 20.7%

Investments related to Genomma's manufacturing facilities reached Ps. 256.0 million during full year 2022. Future CAPEX investments will be focused on maintenance and tactical innovation.

Sustainability and Organization Development

The Company continued stregthening its organizational development programs (recruiting, training, performance assestments and corporate culture) during 2022, to consistenly ensure the right talent in the right roles.

Genomma was included within the 2023 S&P Global Sustainability Yearbook for the second consecutive time, as one of 14 Mexican companies recognized for environmental, social and corporate governance (ESG) practices. The 2023 edition assesses more than 7,800 companies across 61 industries globally and showcases the best performing companies among industry peers and in terms of financially material ESG metrics. The Company's sustainability performance was ranked within the top 15% of the industry's category with an S&P Global ESG score within 30% of the industry's top-performing companies.

Results by Region for the Fourth Quarter and Full Year 2022

Mexico

Genomma's Mexican operations sales reached Ps. 7.0 billion for the full year 2022; a Ps. 318.1 million increase primarily driven by an increased market distribution as well as new core brand line extensions. Full year 2022 OTC sales grew +3.9% year-on- year. Shortages of palm and sunflower oils resulted in supply chain disruptions for Novamil. The growth rate of the OTC category excluding Novamil was +11.2% in 2022.

Full year 2022 Personal Care category sales grew +5.8% when compared to 2021. Certain co-packing contractors unable to meet Genomma's increased standards, as part of the manufacturing transition process into Genomma's plant, were phased out. As a result, the fill-rate of certain brands was adversely impacted during 2022. Excluding these brands, Genomma's Personal Care category would have increased by +9.6% on a like-for-like basis.

Genomma's fourth quarter 2022 Mexico net sales increased by +1.4%, closing at Ps.

1.87 billion, a Ps. 26.3 million year on year sales increase. Net sales of OTC category increased +2.3%, however, sales were adversely impacted by a non-recurrent shortage of certain APIs (paracetamol, pharma grade caffeine and dextromethorphan, among others) in light of extraordinary demand for medicines in China following the country's COVID outbreak. The Personal Care category increased by 0.1% during the fourth quarter 2022, primarily due to heavy discounting by Isotonic Beverage competitors. Personal Care would have grown +6.8% excluding Suerox® brand sales.

Full year 2022 EBITDA closed at Ps.1.45 billion, representing a 20.7% margin; a 20 bps year on year difference. Fourth quarter EBITDA margin reached 21.5%; a 110 bps year on year contraction primarily attributable to COGS inflation and a lower operating leverage.

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Q4 & FY 2022 Results

FY 2022 U.S.

Sales in MXN: 1.51 billion

EBITDA Margin: 6.0%

USD* (5.2%)

* Average Exchange rate Q4-2021 vs. Q4-2022.

FY 2022 LATIN AMERICA

Sales in MXN: 8.35 billion

EBITDA Margin: 23.2%

U.S.

Full year 2022 U.S. net revenues increased by 14.6%, reaching Ps. 1.51 billion. Net revenues benefited from strong Cough & Cold category performance, including the Next® and Tukol® brands during the first and third quarters of 2022, as well as an aggressive expansion of Suerox® within points of sale in Puerto Rico throughout 2022. It is important to note that 86.3% of total full year 2022 growth was driven by OTC product sales, which today represents 62% of total U.S. sales.

The winter season began earlier in 2022 than the previous year and was particularly strong during the month of September, rebalancing the growth between third and fourth quarters. However, Genomma's Personal Care category was adversely impacted by supply chain delays on Tio Nacho® production as well as the third party contractor transition as was previously described.

Finally, the strengthening of the Mexican Peso adversely impacted the Company's reported top line, to reach Ps. 316 million for the fourth quarter 2022; a 3.4% year on year decrease.

Full year 2022 EBITDA reached Ps. 91.0 million, representing a 6.0% EBITDA margin, while fourth quarter 2022 EBITDA closed at Ps. 11.8 million, an EBITDA margin of 3.7%. EBITDA for the region was adversely impacted by a lower operating leverage, FX headwinds and to COGS inflation effects during fourth quarter 2022.

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