Arezzo&Co reported its financial results for the second quarter of 2014, with gross revenue reaching R$327.5 million, an increase of 7.2% compared to the second quarter of 2013. EBITDA for the quarter amounted to R$42.3 million, a growth of 4.5% year-over-year, with a margin of 16.7%. Net income reached R$31.6 million, an increase of 8.9% compared to the second quarter of 2013, with a net margin of 12.5%. The company also expanded its sales area by 15.7% over the last 12 months through new store openings and expansions.
2. 2
Important Disclaimer
Information contained in this document may include forward-looking statements and reflect Management’s current view
and estimates of the evolution of the macroeconomic environment, industry conditions, Company’s performance and
financial results. Any statements, expectations, capabilities, plans and assumptions contained in this document, which do
not describe historical facts, such as information about declaration of dividend payment, future direction of operations,
implementation of relevant operating and financial strategies, investment program and factors or trends affecting the
financial condition, liquidity or results of operations, are forward-looking statements, as set forth in the “U.S. Private
Securities Litigation Reform Act of 1995”, and involve several risks and uncertainties. There is no guarantee that these
results will occur. Forward-looking statements are based on several factors and expectations, including economic and
market conditions, industry competitiveness and operational factors. Any changes in such expectations and factors may
cause actual results to differ from current expectations.
The Company’s consolidated financial statements presented herein are in accordance with the International Financial
Reporting Standards - IFRS, issued by the International Accounting Standards Board - IASB, based on the audited
financial statements. Non-financial information and other operating information have not been subject to an audit by
independent auditors.
3. 3
Gross revenue reached R$327.5 million in the 2Q14, an increase of 7.2% against 2Q13.
Gross
Revenue
In 2Q14, gross profit was R$112.9 million, a growth of 6.5% over 2Q13.Gross Profit
EBITDA for 2Q14 amounted to R$42.3 million, a growth of 4.5% in relation to 2Q13, with a
margin of 16.7%.
EBITDA
In this quarter, Arezzo&Co opened nine stores and expanded six stores, with a growth of
15.7% in sales area over the last 12 months.
Sales Area
Expansion
In 2Q14, net income reached R$31.6 million, with net margin of 12.5%, and an increase of
8.9% in comparison with 2Q13.
Net Profit
2Q14 Highlights
4. 293.9 310.8
535.4
577.1
11.6
16.7
27.5
26.2
305.5
327.5
562.9
603.4
2Q13 2Q14 1H13 1H14
Domestic Market External Market
4
Gross revenue reached R$327.5 million in the 2Q14, an increase of 7.2% against 2Q13.
Company Growth
Gross Revenues – Domestic and Export Market (R$ million)
5.8%
44.1%
7.2%
7.8%
-4.6%
7.2%
5. 171.5 175.0
322.3 339.6
110.6 117.2
189.6
205.4
9.1 16.5
17.0
28.3
2.7
2.1
6.6
3.8
293.9
310.8
535.4
577.1
2Q13 2Q14 1H13 1H14
Arezzo Schutz Anacapri Others¹
5
Growth of 5.8% from the domestic market gross revenues in 2Q14, namely the growth of 82.3% for the
Anacapri brand, leveraged by the opening of 26 stores in the last twelve months.
1) Others: Reduction of 21.5% in the 2Q14 and 42.1% in the 1H14.
Gross Revenues by brand – Domestic Market (R$ million)
Gross Revenue Breakdown by Brand –
Domestic Market
2.0%
82.3%
5.8%
5.4%
66.6%
7.8%
8.4%
6.0%
6. 134.5 151.1
251.4
297.0
69.8
74.9
131.3
138.8
87.6
83.6
147.6
139.2
1.9 1.2
5.2
2.1
293.9
310.8
535.4
577.1
2Q13 2Q14 1H13 1H14
Franchise Owned Stores Multi-brand Others¹
In 2Q14, monobrand stores (Franchises and Owned Stores) increased sales, namely a 12.3% growth in
Franchise channel, leveraged by the opening of 58 stores and expansion of 14 in the last twelve months.
Gross Revenue Breakdown by Channel –
Domestic Market
6
SSS Sell-out (owned stores + franchises)
SSS Sell-in (franchises)
1) Others: Decreasing 38.7% in 2Q14 and 60.2% in 1H14.
Gross Revenue by channel – Domestic Market (R$ million)
SSS Sell-out (owned stores + web + franchises)
1.2%
5.5%
6.7%
1.1%
2.5% 7.7%
3.7%
6.7%
5.3 %
5.1%
4.7%
5.9 %
18.1%
5.8%
7.8%
12.3%
7.3%
5.8%
-4.5%
-5.7%
7. 276
309
361
417
31
50
56
51
18.4
23.1
28.0
32.4
2Q11 2Q12 2Q13 2Q14
Franchises Owned Stores Area
The sales area increased 15.7% in the 2Q14 due to the opening of 51 stores and expansion of 17 stores
in the last 12 months.
Distribution Channel Expansion
7
Owned Stores and Franchises Expansion
1) Includes 6 outlets with total area of 2,217 sqm
The numbers of Multi Brand stores refers to the domestic market
21.1%
15.7%
25.6%
+45
+50
+51
Franchises
Multi Brands
Owned Stores
43
26
1.383
Multi Brands
Owned Stores 2
9
Franchises 26
Multi Brands
Owned Stores 6
987
Franchises
Multi Brands
Owned Stores
348
17
1.040
307
359
417
468
1
8. 106.1 112.9
195.5
205.0
2Q13 2Q14 1H13 1H14
40.5 42.3
69.1 69.6
2Q13 2Q14 1H13 1H14
In 2Q14, gross profit reached R$112.9 million, an increase of 6.5%, with gross margin of 44.5%. EBITDA
for 2Q14 amounted to R$42.3 million, with a margin of 16.7%.
Gross Profit and EBITDA
8
Gross Profit (R$ million) EBITDA (R$ million)
Gross profit Gross Margin EBITDA EBITDA Margin
6.5%
4.5%
44.6% 44.5%
4.8%
44.6% 43.9%
17.0% 16.7%
15.8% 14.9%
0.7%
9. 29.1
31.6
48.4
49.1
2Q13 2Q14 1H13 1H14
The Company’s net income totaled R$31.6 million in 2Q14, a growth of 8.9% in the quarter with a 12.5%
net margin.
Net Income and Net Margin
9
Net Income (R$ million)
Net MarginNet Income
8.9%
12.2%
12.5%
1.3%
11.0% 10.5%
10. Cash Flow
10
Arezzo&Co generated R$8.8 million of net cash flow in 2Q14, in line with the generation of operating cash
of the same period last year.
Operating Cash Flow (R$ thousand)
2Q13 2Q14
Change
in R$
Change
in %
1H13 1H14
Change
in R$
Change
in %
38,759 43,033 4,274 11.0% 66,850 70,030 3,180 4.8%
2,385 3,097 712 29.9% 4,970 6,306 1,336 26.9%
973 1,754 781 80.3% (286) (1,430) (1,144) 400.0%
(19,522) (20,855) (1,333) 6.8% (11,285) (11,653) (368) 3.3%
11,471 9,189 (2,282) -19.9% 9,097 11,692 2,595 28.5%
(2,716) (18,161) (15,445) 568.7% (14,190) (35,935) (21,745) 153.2%
(25,464) (17,130) 8,334 -32.7% 8,049 22,270 14,221 176.7%
(2,813) 5,247 8,060 n/a (14,241) (9,680) 4,561 -32.0%
(13,935) (18,200) (4,265) 30.6% (17,598) (20,542) (2,944) 16.7%
8,660 8,829 169 2.0% 42,651 42,711 60 0.1%
Operating Cash Flow
Income before income tax and
social contribution
Depreciações e amortizações
Change in other noncurrent and
current assets and liabilities
Payment of income tax and
social contribution
Net cash flow generated by
operational activities
Other
Decrease (increase) in current
assets / liabilities
Trade accounts receivables
Inventories
Suppliers
11. 4.2 2.5
6.5 5.7
4.0
10.0
12.0
16.1
0.8
1.8
1.6
2.3
8.9
14.3
20.2
24.2
2Q13 2Q14 1H13 1H14
Stores Corporate Others¹
In 2Q14, the Company invested R$14.3 million, mainly due to corporate investment in infrastructure
technology. Indebtedness policy remained conservative.
Capital Expenditure (CAPEX) and
Indebtedness
11
CAPEX (R$ million) Indebtedness (R$ million)
1) Others: increasing of 114.2% in 2Q14 and 44.2 in 1H14.
-12.6%
34.2%
19.8%
-39.0%
152.3%
60.1%
2Q13 1Q14 2Q14
Cash 214,411 207,553 159,196
Total debt 107,862 96,652 80,853
Short term 60,763 59,680 49,753
% total debt 56.3% 61.7% 61.5%
Long-term 47,099 36,972 31,100
% total debt 43.7% 38.3% 38.5%
Net debt (106,549) (110,901) (78,343)
EBITDA LTM 155,575 158,113 159,916
Net Debt/EBITDA LTM -0.7X -0.7x -0.5X
Cash position and Indebtedness
12. Contacts
Thiago Borges
Leonardo Pontes, CFA
Telephone: +55 11 2132-4300
ri@arezzoco.com.br
www.arezzoco.com.br
CFO and Investor Relations Officer
IR Manager
Vanessa Sorechio
Leandro Vieira
IR Specialist
IR Analyst