1) The company reported strong growth in the first quarter of 2011, with net revenues increasing 23.1% and net income growing 42.0% compared to the first quarter of 2010.
2) EBITDA margin was 15.0% in the first quarter, a 19.3% increase in EBITDA from the prior year.
3) The company maintained a conservative indebtedness policy and generated a positive cash flow from operating activities despite cash consumption in working capital.
2. Important Disclaimer
The information contained here may include forward-looking information and reflects the executive office’s current
perception and prospects for the macroeconomic environment, the industry situation, the Company's performance and
financial results. Any statements, expectations, capacities, plans and projections contained here which do not describe
historical facts, such as information about the dividend payment statement, the future course of operations, the
introduction of relevant financial strategies, the investment program and the factors or trends affecting the financial
condition, liquidity or the operating results are considered forward-looking information as defined by the “U.S. Securities
Litigation Reform Act” of 1995 and involve a number of risks and uncertainties. These results are not guaranteed to
materialize. These statements are based on several factors and expectations, including the economic and market
conditions, level of competition in the industry and operating factors. Any changes in these expectations and factors may
lead to real results materially different from the current expectations.
The consolidated financial information of Arezzo Indústria e Comércio S/A – Arezzo&Co presented here complies with the
International Financial Reporting Standards – IFRS, issued by the International Accounting Standards Board – IASB,
based on audited financial information. The non-financial information, as well as other operating information, was not
audited by the independent auditors.
2
3. 1Q11 Highlights
Net
Net Revenues increased by 23.1% in 1Q11, reaching R$138.6 million
Revenues
EBITDA 15.0% EBITDA Margin in 1Q11, amouting R$20.7 million, 19.3% growth
Net Income Net Income amounted to R$ 14.7 million and margin to 10.6%. Up 42.0% from 1Q10
Public Listing of shares on the Novo Mercado segment of BMF&Bovespa, strengthening the
Offering Company’s cash position by R$182.0 million
3
4. Company Growth
Gross Revenues – (R$ million)
25.3% .
174.4
9.8
.
139.2
.
-12.9%
11.3
.
28.7%
164.6
.
128.0
.
1Q10 1Q11
Domestic Market External Market
The Company’s Gross Revenues amounted to R$174.4 million in the first quarter of 2011, a
25.3% year-over-year rise
4
5. Gross Revenues Breakdown by Brand
and Channel
Gross Revenues by brand – Domestic Market (R$ million) Gross Revenues by channel – Domestic Market (R$ million)
28.7% 164.6 28.7% 164.6
4.1
. 1.8
.
128.0 128.0
51.8% 46.2
. 47.4
.
2.1
. 0.9 40.3%
.
30.4
. 33.8
.
38.6% 26.9
.
19.9%
19.4
.
114.4
.
95.4
. 19.9% 88.5
.
73.9
.
1Q10 1Q11 1Q10 1Q11
Arezzo Schutz Other - DM¹ Franchise Own Stores Multi-brand Other - DM²
SSS³ Own Stores 21.9% 11.0%
Growth Franchise 53.4% 9.0%
Strong growth for the main brands with special performance delivered by Schutz, presenting a
51.8% year-over-year gross revenues increase in 1Q11
¹ Other – DM: Alexandre Birman’s and Anacapri’s Domestic Market Gross Revenue Growth of 90.8%.
² Other – DM: Growth of 94.2%. 5
³ SSS Lojas próprias (Sell Out); SSS Franquias (Sell In).
6. Distribution Channel Expansion
Own Stores and Franchises Expansion
14.6% 17.6
.
15.2%
15.3
.
124%
13.3
. 296
+29
11.8
. +29 267
29
+23
238 22
215
14
6
267
245
209 224
1Q08 1Q09 1Q10 1Q11
Own Stores Franchise Area
We ended the first quarter with a 296 store chain and Sales area expansion of 14.6% year-
over-year
Note: area given in thousand m² 6
7. Gross Profit and EBITDA
Gross Profit (R$ million) and Gross Margin (%) EBTIDA (R$ million) and EBITDA Margin (%)
41.5%
. 40.7%
. 15.4%
. 15.0%
.
56.4
.
20.7% 19.3% 20.7
.
46.8
.
17.4
.
1Q10 1Q11 1Q10 1Q11
Gross Profit Gross Margin EBITDA EBITDA Margin
In 1Q11, Gross Profit rose 20.7% and EBITDA rose 19.3% with EBITDA margin of 15.0%
7
8. Net Income and Net Margin
Net Income (R$ million) and Net Margin (%)
10.6%
.
9.2%
.
14.7
.
42.0%
10.4
.
1Q10 1Q11
Net Profit Net Margin
Company s Net Income growth resulting in a 1.4p.p. margin expansion
8
9. Cash Generation
Operating Cash Generation (R$ thousand)
Cash flows from operating activities (R$'000) 1Q10 1Q11 Variation
Income before income taxes 15,707 21,321 5,614
Depreciation and amortization 608 879 271
Other 94 (1,868) (1,962)
Decrease (increase) in assets (27,145) (36,649) (9,504)
Trade accounts receivable (20,063) (18,366) 1,697
Inventories (9,270) (15,723) (6,453)
Recoverable taxes (201) (871) (670)
Other current assets 2,389 (1,689) (4,078)
(Decrease) increase in liabilities 11,316 24,318 13,002
Suppliers 18,105 22,157 4,052
Tax and contributions (1,695) 205 1,900
Other current liabilities (5,094) 1,956 7,050
Decrease (increase) in Working Capital (15,829) (12,331) 3,498
Tax and contributions (856) (2,366) (1,510)
Net cash generated by operating activities (276) 5,635 5,911
Operational results in 1Q11 enabled the Company to generate positive Operational Cash Flow
despite of cash consumption in working capital
9
10. Capital Expenditure (CAPEX) and
Indebtedness
CAPEX (R$ million) Indebtedness (R$ million)
Indebtedness 1Q10 4Q10 1Q11
3.7
45.5% Cash & Equivalents 46,705 13,004 187,293
0.2
. Total Debt 45,807 46,769 33,586
2.5 Short Term 28,755 27,370 12,813
1.2
.
0.1
. % of Total Debt 62.8% 58.5% 38.1%
74.5% Long Term 17,052 19,399 20,773
0.7
.
% of Total Debt 37.2% 41.5% 61.9%
31.1% Net Debt (898) 33,765 (153,707)
2.2
.
1.7
.
LTM EBITDA 68,201 95,491 98,848
Net Debt to EBITDA -0.01x 0.35x -1.55x
1Q10 1Q11
Stores Corporate Others¹
In 1Q11, capital expenditure amounted to R$3.7 million, out of which R$2.2 million in Owned
Stores. The company maintained its conservative indebtedness policy
¹ Other: Growth of 74,8% in 1Q11 compared to 1Q10. 10
11. Contacts
CFO and IR Officer
Thiago Borges
IR Manager
Daniel Maia
Phone: +55 11 2132-4300
ri@arezzoco.com.br
www.arezzoco.com.br
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