2Q18 Results | 3Q18 Information contained in this document may - - PowerPoint PPT Presentation

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2Q18 Results | 3Q18 Information contained in this document may include forward-looking Important statements and reflect Managements current view and estimates of the evolution of the macroeconomic environment, industry conditions, Disclaimer

SLIDE 1

2Q18

SLIDE 2

Results | 3Q18

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

relevant

perating

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

perational factors. Any changes in such expectations and factors

may cause actual results to differ from current expectations.

SLIDE 3

3Q18 Highlights

Net revenue in 3Q18 reached R$ 410.4 million, a 10.7% increase against 3Q17. Arezzo&Co recorded a 870bps increase in ROIC, reaching a level of 32.6%. In 3Q18, Gross Profit totaled R$ 190.6 million (gross margin of 46.5%), a 12.3% increase against 3Q17. Arezzo&Co opened 13 stores (net) and closed 3Q18 with a growth of 8.0% in store area in the last twelve months. EBITDA for 3Q18 totaled R$ 70.7 million with a net margin of 17.2% and a 8.1% increase against 3Q17.

Net Revenue Gross Profit ROIC EBITDA Sales Area

Results | 3Q18

Same-Store-Sales growth of 1.6% in the quarter.

SSS

In 3Q18, Net Income totaled R$ 40.2 million (net margin

9.8%) 6.6% increase against 3Q17.

Net Income

SLIDE 4

Company Growth

GROSS REVENUE / DOMESTIC AND FOREIGN MARKET (R$ MILLION)

THE COMPANY REACHED A GROSS REVENUE OF R$ 497.9 MILLION IN THE 3Q18, A 9.4% GROWTH COMPARED TO THE 3Q17, WITH HIGHLIGHT TO THE EXTERNAL MARKET WITH GROWTH OF 39,4%. US OPERATIONS INCREASED 49,7% IN THE PERIOD, WHILE EXPORTS GROWED 26,2%.

Results | 3Q18

416,0 443,6 1.117,0 1.225,8 39,0 54,3 113,7 134,5 455,0 497,9 1.230,7 1.360,3

3Q17 3Q18 9M17 9M18

Domestic Market External Market

9,7% 18,3% 10,5% 6,6% 39,4% 9,4%

SLIDE 5

Gross Revenue by Brand | Domestic Market

GROSS REVENUE BREAKDOWN BY BRAND / DOMESTIC MARKET (R$ MILLION)

IN 3Q18, WE HAD HIGHLIGHT THE ANACAPRI BRANDS WITH 45.8% GROWTH HIGHLIGHTING.

1. OTHERS: INCREASE OF 85.1% IN 3Q18 (INCLUDES ONLY DOMESTIC

MARKETS FOR ALEXANDRE BIRMAN, FIEVER AND OWME BRANDS AND OTHER REVENUES).

Results | 3Q18

238,1 245,4 637,3 691,1 125,9 118,1 343,9 335,8 41,5 60,5 107,1 154,1 10,6 19,6 28,7 44,7 416,0 1.117,0

3Q17 3Q18 9M17 9M18

Arezzo Schutz Anacapri Others

6,6%

443,6

9,7% 56,0% 43,9%

2,4%

8,5% 85,1% 45,8%

6,2%

3,1%

1.225,8

SLIDE 6

Gross Revenue by Channel | Domestic Market

GROSS REVENUE BY CHANNEL / DOMESTIC MARKET (R$ MILLION)

Results | 3Q18

2,7% 7,2%

SSS SELL-IN

(FRANCHISES)

SSS SELL-OUT

(LOJAS PRÓPRIAS + WEB + FRANQUIAS)

SSS SELL-OUT

(OWNED STORES + WEB + FRANCHISES)

1,2%

1,6% 6,5% 4,4% 3,0% 4,4% 201,7 210,9 537,8 587,1 67,9 70,1 207,2 211,0 110,7 118,7 276,3 308,6 35,3 43,6 93,1 117,7 0,4 0,3 2,6 1,4 416,0 443,6

3Q17 3Q18 9M17 9M18

Total Others Web Commerce Multi-brand Owned Stores Franchise 23,3% 4,6% 3,3% 9,7% 7,2% 6,6% 9,2% 1,8% 26,4% 11,7%

1.117,0 1.225,8

SLIDE 7

Distribution Channel Expansion

OWNED STORES AND FRANCHISES EXPANSION1 NUMBER OF STORES – DOMESTIC MARKET 3Q18

AREZZO&CO’S OPENED 13 NET STORES AND ENDED THE QUARTER WITH 8.0% GROWTH OF SALES AREA OVER THE LAST 12 MONTHS.

1. INCLUDES SEVEN OUTLET TYPE STORES WITH A TOTAL AREA OF 1,961 M² AND STORES OVERSEAS.

Results | 3Q18

FRANCHISES__ 393 OWNED STORES 14 MULTIBRANDS 1,215 FRANCHISES 68 OWNED STORES 22 MULTIMARCAS 1,129 FRANQUIAS 129 OWNED STORES 3 MULTIBRANDS 1,435 OWNED STORES 4 MULTIBRANDS 27 OWNED STORES 5 MULTIBRANDS 398 OWNED STORES 2 MULTIBRANDS 176

2. INCLUDES ALEXANDRE BIRMAN AND SCHUTZ STORES, 3 IN NEW YORK AND ONE IN LOS ANGELES.

525 568 576 584 595 51 50 49 52 54 39,4 41,2 41,5 42,0 42,6

10,0

20,0 30,0 40,0 50,0 60,0 70,0

100 300 500 700 900 1.100 1.300 1.500

3Q17 4Q17 1Q18 2Q18 3Q18 Franchises Owned Stores Area (000 m2)

+8 +3

4,7% 0,7% 1,3% 1,3%

+43 +8 +2 +11

SLIDE 8

Gross Profit and EBITDA

GROSS PROFIT (R$ MILLIONS) EBITDA (R$ MILLIONS)

GROSS PROFIT TOTALED R$ 190.6 MILLION IN 3Q18 WITH AN INCREASE OF 12.3% (+ 70BPS IN GROSS MARGIN). EBITDA GREW BY 8.1% IN 3Q18 TO R$ 70.7 MILLION (EBITDA MARGIN OF 17.2%).

Results | 3Q18

169,8 190,6 454,2 515,9

45,8% 46,5% 45,6% 46,3%

0% 20% 40%

50,0

50,0 150,0 250,0 350,0 450,0 550,0 650,0 750,0

3Q17 3Q18 9M17 9M18 Gross Profit Gross Margin

65,4 70,7 151,8 168,0

17,6% 17,2% 15,2% 15,1%

4,0 6,0 8,0 10,0 12,0 14,0 16,0 18,0 20,0 22,0 24,0 26,0 28,0 30,0 32,0 34,0 36,0 38,0 40,0 42,0 44,0 46,0 48,0 50,0 52,0 54,0 56,0 58,0 60,0 62,0 64,0 66,0 68,0 70,0 72,0 74,0 76,0 78,0 80,0 82,0 84,0 86,0 88,0 90,0 92,0 94,0 96,0 98,0 100,0 102,0 104,0 106,0 108,0 110,0 112,0 114,0 116,0 118,0 120,0 122,0 124,0 126,0 128,0 130,0 132,0 134,0 136,0 138,0 140,0 142,0 144,0 146,0 148,0 150,0 152,0 154,0 156,0 158,0 160,0 162,0 164,0 166,0 168,0 170,0 172,0 174,0 176,0 178,0 180,0 182,0 184,0 186,0 188,0 190,0 192,0 194,0 196,0 198,0 200,0 202,0 204,0 206,0 208,0 210,0 212,0 214,0 216,0 218,0 220,0 222,0 224,0 226,0 228,0 230,0 232,0 234,0 236,0 238,0 240,0 242,0 244,0 246,0 248,0 250,0

3Q17 3Q18 9M17 9M18 EBITDA EBITDA Margin 10,7%

+70 bps +70 bps

40 bps
10 bps

13,6% 12,3% 8,1%

SLIDE 9

Net Income

NET INCOME (R$ MILLIONS)

THE COMPANY POSTED A NET MARGIN OF 9.8% IN 3Q18 AND A NET INCOME OF R$ 40.2 MILLION, 6.6% INCREASE AGAINST 3Q17.

Results | 3Q18

37,7 40,2 99,1 100,4

10,2% 9,8% 9,9% 9,0%

0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 12,0%

20,0

40,0 60,0 80,0 100,0 120,0 140,0 160,0

3Q17 3Q18 9M17 9M18 Net Income Net Margin 1,3%

40 bps
90 bps

6,6%

SLIDE 10

Operating Cash Flow

OPERATING CASH FLOW (R$ THOUSAND)

AREZZO&CO GENERATED R$ 38.5 MILLION CASH FROM OPERATIONS IN 3Q18, LOWER THAN THE AMOUNT PRESENTED IN 3Q17.

IT IS WORTH HIGHLIGHTING THE PAYMENT OF INTEREST ON EQUITY RELATED TO 1ST SEMESTER OF 2018, IN JULY 25TH IN THE AMOUNT OF R$21.0 MILLION

Results | 3Q18

Operating cash flow

3Q18 3Q17 9M18 9M17

Profits before income tax and social contribution 53.762 58.213 122.206 141.147 Depreciation and amortization 10.667 9.218 27.880 22.630 Others (191) (2.925) 13.972 (4.271) Decrease (increase) in assets / liabilities (17.898) (18.260) (53.368) (3.655) Trade accounts receivables (51.604) (50.078) (50.007) (30.567) Inventories (5.883) 5.014 (34.924) (9.794) Suppliers 20.193 19.670 23.129 42.575 Change in other noncurrent and current assets and liabilities 19.396 7.134 8.434 (5.869) Payment of income tax and social contribution (7.855) (13.040) (13.996) (27.911) Net cash flow generated by operational activities 38.485 33.206 96.694 127.940

SLIDE 11

Investments (CAPEX) and Indebtedness

CAPEX (R$ MILLIONS) INDEBTEDNESS (R$ MILLIONS)

IN 3Q18, AREZZO&CO INVESTED R$ 13.7 MILLION IN CAPEX, INCLUDING:

BRAZIL: (I) AREZZO&CO NEW OFFICE IN SÃO PAULO, (II) INVESTMENTS IN TECNOLOGY IN ALEXANDRE BIRMAN BRAND FACTORY, (III) REMODELING OF SCHUTZ STORES (IV)

CONSTRUCTION OF AN ADDICTIONAL OWNED FACTORY, FOCUSED ON SNEAKERS AND COMFORT SHOES, (V) OPENING THE FIEVER STORE IN PÁTIO HIGIENÓPOLIS.

UNITED STATES: (I) DESIGN AND IMPROVEMENT IN ALEXANDRE BIRMAN BRAND INTERNATIONAL WEB COMMERCE (II) INVESTMENTS IN BRANDING FOR THE SCHUTZ BRAND.

Results | 3Q18

1,8 2,2 5,5 9,4 2,5 6,4 6,0 16,1 0,8 5,1 2,5 10,5 5,1 13,7 13,9 36,0

3Q17 3Q18 9M17 9M18 Stores Corporate Others total 157,9% 314,4% 71,7% 170,4% 170,2% 559,1% 154,9% 25,0%

Cash position and Indebtedness 3Q18 2T18 3T17

Cash 283.745 283.172 218.254 Total debt 172.421 175.501 93.221 Short term 161.180 162.002 72.946 % total debt 93,5% 92,3% 78,3% Long-term 11.241 13.499 20.275 % total debt 6,5% 7,7% 21,7% Net Debt (111.324) (107.671) (125.033)

SLIDE 12

ROIC (Return on Invested Capital)

RETURN ON INVESTED CAPITAL (ROIC) AGAIN SHOWED GROWTH IN 3Q18, REACHING 32.6%, 870BPS INCREASE VS 3Q17.

NCREASE OF 42.5% NOPAT AGAINST 3Q17, WHICH IS PARTIALLY DUE TO AN INJUNCTION OBTAINED IN 4Q17 EXEMPTING THE COMPANY FROM THE PAYMENT OF INCOME AND SOCIAL CONTRIBUTION TAXES (IR AND CSLL – 34%) ON AN ICMS TAX BENEFIT RETROACTIVE TO 2017, WHICH REMAINED VALID DURING 9M18;

(1) Working Capital: current assets minus cash, cash equivalents and financial investments less current liabilities minus loans and financing and dividends payable. (2) Less deferred income tax and social contribution. (3) Average invested capital in the period and same period previous year. (4) ROIC: NOPAT for the last 12 months divided by average invested capital.

Results | 3Q18

Income from operations 3Q18 3Q17 3Q16 Δ 18 x 17

(%)

EBIT (LTM) 184.643 176.535 142.470 4,6% + IR and CS (LTM) (8.247) (52.742) (38.381) (84,4%) NOPAT 176.396 123.793 104.089 42,5% Working Capital¹ 393.950 314.394 344.943 25,3% Permanent assets 156.666 151.562 162.540 3,4% Other long-term assets² 35.180 32.025 31.450 9,9% Invested capital 585.796 497.981 538.933 17,6% Average invested capital³ 541.889 518.457 4,5% ROIC4 32,6% 23,9%

SLIDE 13

Contacts

CFO RAFAEL SACHETE IRO ALINE PENNA IR COORDINATOR VICTORIA MACHADO

+55 11 2132 4300 RI@AREZZOCO.COM.BR WWW .AREZZOCO.COM.BR