2018 Highlights. Events affecting the equity by 35% and cash, over the upcoming quarters, by R$ 543 million

Transcription

1

2 Disclaimer This presentation may include declarations about Springs Global s expectations regarding future events or results. All declarations based upon future expectations, rather than historical facts, are subject to various risks and uncertainties. These risks and uncertainties include factors related to the following: the Company s business strategy, the international and the Brazilian economies, technology, financial strategy, developments in the textile and retail sectors, market conditions, among others. To obtain further information on factors that may give rise to results different from those forecasted by Springs Global, please consult the reports filed with the Brazilian Comissão de Valores Mobiliários (CVM, equivalent to U.S. SEC ). 2

3 2018 Highlights Events affecting the equity by 35% and cash, over the upcoming quarters, by R$ 543 million Agreement to combine its North American operations, valued at US$ 126 million, including cash proceeds of US$ 90 million at closing; and Tax recovery of R$ million, recorded in 4Q18, with estimated cash effect for the upcoming quarters, through the compensation of PIS and COFINS. 3

4 Agreement to combine our North American operations Springs Global s North American operations were valued at US$ 126 million, equivalent to R$ 488 million 1 Agreement with Keeco: US$ 90 million in cash, equivalent to R$ 349 million 1, at closing US$ 36 million in common shares of the combined company Closing concluded in March 2019 Expected book value gain, before taxes: US$ 69 million Absorption of deferred income tax and, therefore, with no cash effect 2018 Result Discontinued operations Revenue : R$ million EBITDA: R$ 66.7 million Combined company Keeco Holdings, LLC Springs Global will have 17.5% equity ownership interest Product portfolio and leading brands curtains, utility bedding and decorative bedding Diversified customer portfolio, including the major companies in the North American traditional retail and e-commerce market 1 Considering exchange rate of R$ /US$ at the end of

5 2018 Highlights Consolidated - Continuing Operations Net revenues of R$ 1,370.8 million, with gross margin of 31.0% Tax recovery EBITDA of R$ million, of which R$ million related to continuing operations Increase of 7.7% in average price, year-over-year (yoy), in the South America Wholesale business unit Growth of 8.4% in sell-out revenue from the South America Retail business unit Growth of 150% in e-commerce sales Debt reduction and term extension, in 1Q19, due to US$ 90 million in cash proceeds and renegotiation of maturity terms. 5

6 Financial Performance - Consolidated In R$ million Revenue and Gross margin (%) EBITDA and EBITDA margin (%) 2,500 2,000 2, , , , % 31.0% 33% 31% 29% % 40% 30% 1,500 1, % 26.9% 26.8% 1, % 1, % 25% 23% % 20% % 19% % 9.5% 11.2% 11.6% 10% 17% R % R % Revenue Gross margin EBITDA EBITDA margin 2018/2017R - 3.1% pp % pp 2017R Reclassified, excluding discontinued operations, for comparison purpose 1 Adjusted EBITDA and adjusted EBITDA margin for the years 2015 and

7 2018 Consolidated Results In R$ million Net Revenue EBITDA 1, , Continuing operations 2, , Pro forma* Continuing operations Pro forma* South America - Wholesale South America - Retail North America - Wholesale 2 EBITDA margin (%) Continuing operations 30.0% 3.5% n.a. Pro forma* 30.0% 3.5% 4.8% Total 24.7% 17.8% * Pro forma result, including discontinued operations for comparison purpose 1 Includes non-allocated expenses of R$ 4.4 million in Includes intercompany revenue of R$ 77.2 million in

8 Tax recovery positively impacted EBITDA In R$ million EBITDA 2017 South America - Wholesale South America - Retail North America - Wholesale - Continuing operations North America - Wholesale - Discontinued operations Non-allocated expenses EBITDA

9 Discontinued operations decreased working capital by R$ 139 million In R$ million Working Capital 992 1, Suppliers Variation (%) -30.9% Advances to suppliers +52.4% Inventories -24.7% Accounts receivable +1.2% Working capital -6.2% Discontinued operations -15.3%

10 Financial deleveraging due to higher EBITDA 4.9x Net debt/ebitda 1 4.3x 3.8x 3.6x 3.3x 3.2x 2.1x Excluding non-recurring results of R$ 17.1 million in 2015 and R$ 7.2 million in

11 Reduction of net debt by R$ 543 million over next quarters Per source of resources Tax recovery R$ 194 million US$ 90 million - received in March 2019* R$ 349 million * Considering exchange rate at the end of 2018, of R$ , for calculation of value in Brazilian Reais. 11

12 Debt : term extension with renegotiation of maturity terms in 1Q19 60% Amortization Schedule % of net debt 50% 40% 30% 20% 10% 0% 1 Year 1 Year 2 Year 3 Year 4 onwards 4Q18 4Q18 - after renegotiation 1 Net of cash and marketable securities 12

13 2018 Highlights - South America - Wholesale Net revenue of R$ 1,189.4 million 1, 3.7% lower yoy Gross profit of R$ million, with gross margin of 25.4% Higher share of intermediate products in our sales mix Negative effect from the deep recession in Argentina Negative effect from the hyperinflationary adjustment for Argentinean assets Tax recovery of R$ million in 4Q18 EBITDA of R$ million, with EBITDA margin of 30.0% 1 Including intracompany revenue of R$ 77.2 million 13

14 Financial Performance - South America - Wholesale In R$ million Revenue 1 Gross profit and gross margin (%) 1, % 1,240 1, , % 1,200 1,180 1, , % 30.3% % 1,160 1,140 1, , % 26.0% 25.4% 25% 1,120 1, % Revenue Gross profit Gross margin 2018/ % - 5.9% pp 1 Including intracompany revenue 14

15 2018 Highlights - South America - Retail Sell-out revenue of R$ million, 8.4% higher yoy Net revenue of R$ million, with a yoy growth of 2.3% In Artex chain, seven new franchises and two conversions Launch of the digital franchise model, the Santista virtual store, and the store front-end system PIX E-commerce growth of 150% yoy Gross profit amounted to R$ million, and gross margin of 51.4%, both with expansion yoy EBITDA of R$ 9.0 million, versus R$ 5.0 million in

16 Financial Performance - South America - Retail In R$ million Revenue Gross profit and gross margin (%) % % % % 51.3% 51.4% % 45% 40% 35% 50 30% % Revenue Gross profit Gross margin 2018/ % + 2.5% pp 16

17 Number of Artex franchises increased by 28% yoy Number of Retail stores Owned MMartan Franchise MMartan Owned Artex Franchise Artex 17

18 Technologies released in 2018 Digital Franchise Santista Website and App PIX 18

19 Digital Franchise enabling the concept of omni channel Better customer satisfaction... lower total cost lower delivery time better customer service... and better franchisee satisfaction Complete view of customer Unified customer data across the different channels enabled by integrated communication, profile and payment information. Exchange, pick up and delivery via store Combines the digital and physical shopping experience, using the stores as point of exchange, pick up and shipping for online orders, thus reducing delivery cost and time. higher geographic coverage higher sales higher profitability

20 2018 Highlights - North America Wholesale Pro forma 1 Net revenue of R$ million, 15.4% higher yoy, in line with the 12.9% appreciation of the US Dollar against the Brazilian Reais in the same period Gross profit amounted to R$ million, with gross margin of 13.4% Negative effect from non-recurring cost related to a product return EBITDA of R$ 43.4 million, with EBITDA margin of 4.8% Agreement with Keeco to combine operations, in which it will own 17.5% of the combined company EBITDA from continuing operations was negative R$ 23.2 million 1 Pro forma results, including discontinued operations, for comparison purpose 20

21 Financial Performance - North America - Wholesale In R$ million Revenue Gross profit and gross margin (%) 1, % 1, % 15.1% % % % % 10% % Pro forma* Pro forma* 0% Revenue Gross profit Gross margin 2018/ % - 3.8% pp * Pro forma results, including discontinued operations, for comparison purpose 21

22 Opportunities for 2019 Expansion of consumption and sales of our products, increasing the utilization rate of existing plants Expansion of e-commerce sales, due to: digital franchises digital marketing New franchise stores Financial deleverage Asset optimization in North America Tax recovery Better cash generation from operations Monetization of non-operational assets 22

23 Investment Properties São Gonçalo do Amarante Commercial complex Land: 843 thousand m 2 / built area: 119 thousand m Launch of Power Center 2019 Start of commercialization of the outlet Fair value 1 : R$ 248 million São Gonçalo do Amarante Residential complex Land: 520 thousand m 2 Fair value 1 : R$ 44 million Montes Claros Investment property Real estate received from the municipality of Montes Claros, as part of the payment for the property sold in 2015 Six lands, with a total area of 155 thousand m 2 Fair value 1 : R$ 55 million South Carolina Grace complex Land: 515 acres Estimated market value: US$ 5-13 million Book Value 1 : US$ 5 million 1 Values registered in the balance sheet as of December 31,

24 2019 Guidance 2019 in R$ million Guidance Net revenue South America - Wholesale* 1,300-1,400 South America - Retail North America - Wholesale - Total net revenue 1,500-1,700 EBIT** EBITDA** CAPEX * Including intercompany revenue **Excluding result from asset combination 24

25 SPRINGS GLOBAL B3: SGPS3