Conference Call
1Q15 results
05/11/2015
Quarter’s highlights
Alpargatas’ 1Q15 consolidated results were aligned with
the 2015 Operational Plan which projects:
• Higher revenue and profit margins
• Strong cash generation
Consolidated
R$ million, except margins
1Q15
1Q14
Net revenue
948.9
873.1
8.7%
Gross profit
423.5
368.6
14.9%
Gross margin
44.6%
42.2%
2.4 p.p.
EBITDA
161.0
139.1
15.7%
EBITDA margin
17%
15.9%
1.1 p.p.
Recurrent net income
99.2
84.6 (1)
17.3%
9.7% (1)
0.8 p.p
31.1
149.2%
Net margin
Operating cash generation
(1)
2
10.5%
77.5
Excluding the sale of a factory in Natal, state of Rio Grande do Norte
Quarter’s highlights
Adding Osklen numbers to Alpargatas in 1Q14 (pro forma) the
consolidated indicators grow as well
Alpargatas Consolidated with Osklen
( Proforma 1Q14)
R$ million, except margins
3
1Q15
1Q14
Proforma
Net revenue
948.9
914.3
3.8%
Gross profit
423.5
400.1
5.8%
Gross margin
44.6%
43.8%
0.8 p.p.
EBITDA
161.0
140.2
14.8%
EBITDA margin
17%
15.3%
1.7 p.p.
Net revenue
Business/Country
Changes in
Net Revenue
1Q15 x 1Q14
Net Revenue
1Q15 x 1Q14
Explanations
Average price increase
Sandals Brazil
• 3.8%
R$ 560.9 million
X
R$ 569.4 million
Sporting Goods Brazil
• - 28.4%
Osklen
• 4.1%
Argentina
International Sandals
Businesses
4
Growth in sales volume of Havaianas brand
extension products: 73.3%
- 1.5%
consolidated
domestic
businesses
R$ 197.5 million
X
R$142.5 million
• 38.6%: (Reais)
• 28.2%: (Pesos)
R$ 190.5 million
X
R$161.2 million
• 18.2%: (Reais)
• 23.9%: (USA)
• 9.9%: (Europe)
• 3.6%: (Havaianas exports)
Lower sales volume of sports footwear: - 23.8%
Higher sales volume of lifestyle apparel and
footwear: 6%
Footwear price increase + better sales mix: 29%
FX (peso appreciation x real): 5.4%
Higher sales volume of Havaianas: 9.4%
FX: (dollar appreciation x real): 21.1%
Net revenue breakdown
41% of Alpargatas’ revenue was generated by the international operations
CONSOLIDATED NET REVENUE
CONSOLIDATED NET REVENUE
BREAKDOWN BY BUSINESS
BREAKDOWN BY REGION
1Q14
1Q15
5%
6%
1Q14
4%
19%
58%
37%
Sandals
Sporting Goods
Textiles
Argentina
32%
58%
59%
21%
Brazil
Brazil
Argentina
Argentina
Sandals
International
Sandals
International
Sporting Goods
Textiles
Argentina
20%
65%
16%
Sandals
Osklen
5
1Q15
Gross profit
In the 1Q15, the average cost of rubber in dollars
was the lowest since January 2013
Country/
Business
Brazil
Gross profit
1Q15 x 1Q14
R$ 242.8 million
X
R$ 228.7 million
Margins
1Q15 x 1Q14
43.3%
X
40.2%
Explanations
Increased share in sandals revenue (as a percentage in
the domestic revenue): from 60% to 63% (or 69% exOsklen)
Consolidation of Osklen
Average cost of rubber in reais 5.4% lower than in 1Q14
6.2%
3.1 p.p.
Impact of FX on cost of imported sports footwear
Increase in general manufacturing expenses
Argentina
R$ 55.8 million
X
R$ 34.9 million
28.2%
X
24.5%
Growth in revenue
Greater manufacturing efficiency
59.9%
3.7 p.p.
R$ 124.9 million
X
R$ 105.0 million
65.6%
X
65.1%
Increased share in sales to more profitable channels, such
as the exclusive Havaianas retail in the US
19%
0.5 p.p.
Increase in import tax in Europe: from 12% to 17%
2% decrease in the average cost of cotton in pesos
Growth in revenue
International
Sandals
Businesses
6
EBITDA
The 21.5% margin in March was the highest since September 2010
Country/
Business
EBITDA
1Q15 x 1Q14
Margins
1Q15 x 1Q14
12.9%
X
12.5%
Growth in gross profit
Brazil
R$ 72.6 million
X
R$ 71.1 million
2.1%
0.4 p.p.
Increase in G&A due to consolidation of Osklen
R$ 24.0 million
X
R$ 13.0 million
12.1%
X
9.1%
Growth in gross profit
84.6%
3.0 p.p.
R$ 64.4 million
X
R$ 55.0 million
33.8%
X
34.1%
17.1%
- 0.3 p.p.
Argentina
International
Sandals
Businesses
7
Explanations
Decrease in selling expenses
Increase in operating expenses above local inflation
(communication and Topper sponsorships)
Growth in gross profit
Increase in operating expenses: communication and
more Havaianas stores in operation in the US and
Europe
EBITDA
Excluindo gastos não recorrentes e a variação cambial, o EBITDA
55%R$
of consolidated
EBITDA
was generated
atinge
156,9 milhões
e a margem
17,9%
by the international businesses
CONSOLIDATED EBITDA
BREAKDOWN BY REGION
1Q14
49%
Brazil
8
1Q15
51%
International Businesses
55%
Brazil
45%
International Businesses
Net income – R$ million
Sale of a factory in Natal
Lower volume of cash invested
resulted in less financial revenue
140
120
21.9
0.4
4.0
100
(7.9)
80
60
(3.8)
(32.0)
116.6
84.6
99.2
+ 17.3%
40
20
0
Net
Income
1Q14
Sale
of a
non-operating
factory
in 1Q14
Sub-total EBITDA
Income
Tax
Financial
Result
Others
Net
Minority
Shareholders Income
1Q15
Osklen
% of Net Revenue
13.4%
9
9.7%
\
10.5%
Cash flow – R$ million
Operational cash generation was R$ 240.6 million
492.4
(109.2)
9.0
(9.2)
(142.6)
(33.6)
(251.7)
(64.1)
835.1
Cash
Balance
as of
03/31/2014
10
(140.2)
1,075.7
726.1
Operational cash
generation:
BRL$ 240.6 million
EBITDA
Working
Capital
CAPEX
Subtotal
Financial
Result
Payment
of
taxes
Debt
Amortization
Payment
of
Osklen
Others
Subtotal
585.9
Payment
to
shareholders
Cash
Balance
as of
03/31/2015
Cash net of debt – R$ million
POSIÇÃO
835.1
670.5
539.6
309.7
485.6
585.9
269.3
140.1
12.6
(28.4)
(401.2)
(399.5)
(514.0)
(525.4)
Mar/14
Jun/14
Cash
11
Sept/14
Debt
Dec/14
Cash net of debt
(573.3)
Mar/15
Payment to shareholders – R$ million
231.4
54.4
27.5
26.9
2014
Payout
12
82.5%
Payment in June, 2015
Payment in March, 2015
2015
55% of 1Q15 net income
Share performance in 1Q15
Preferred shares was up 40.4% and voting 35% in the quarter
SHARE PERFORMANCE
1Q15
150
140,4
140
135,0
Index 100
130
120
110
102,3
100
90
80
Dec/14
Jan/15
Preferred
Source: Infomoney
13
Feb/15
Voting
Mar/14
Ibovespa
Thank you !
14