Natura &Co — Q4 2023 Earnings Presentation
27 slides from Natura &Co's earnings presentation, Mar 13, 2024
Slide 1: Distribution channel breakdown
Distribution channel breakdown Digital sales, which include online sales and social selling, showed some improvement in the quarter. Natura reported a 1 percentage point (p.p.) increase to 8% of total sales, while at Avon penetration was stable at 7%. Use of digital tools : T he penetration of digit
Slide 2: Gross margin
Gross margin Consolidated gross margin was 63.0% in Q4-23, up 310 bps vs. Q4-22 and closing the year as planned with all 2023 quarters showing profitability expansion amid pricing increases and favorable mix mainly driven by the portfolio optimization underway Fourth quarter gross margin YoY expansi
Slide 3: Free cash flow and cash position
R$ million Q4-23 Q4-22 Ch. % 2023 2022 Ch. % Free cash flow and cash position Net income (loss) (2,661.8) (890.4) 198.9 2,974.5 (2,858.6) (204.1) Depreciation and amortization 364.4 428.6 (15.0) 1,588.0 1,596.3 (0.5) Non-cash adjustments to net income 1,662.3 1,623.2 2.4 3,458.0 3,327.2 3.9 Discount
Slide 4: Liability management
L iability management In Q4-23, Natura &Co Luxembourg Holding (Natura Lux) concluded the Tender Offer of USD 550m for Bonds with maturity in May 2028 and USD 330m for Bonds with Maturity in April 2029. The repayment was in line with the Company’s deleveraging plan following the completion of the sal
Slide 5: Q4-23 Earnings Conference Call invitation
Natura &C0 perro is pleased to invite you to join its Q4-23 Earnings Conference Call: Tuesday, March 12th, 2024 08.003.m.1 New YorkTime 09:00.2.m.] Brasilia Time 1200p.m. 1 London Time The broadcast wil be eld searaiaton ito Portage ” ‘The Q4-23 Results willbe okra ‘available on March 11th, Monday,
Slide 6: Disclaimer
. Disclaimer This presentation may contain forward-looking statements. Such statements are not statements of historical facts and reflect the beliefs and expectations of Natura &Co’s management The words “anticipate," "wishes,“ "expects," "estimates," "intends," "forecasts," "plans," "predicts," "pr
Slide 7: Natura &Co Performance
. Natura &Co Performance 2023 was a landmark year for Natura &Co, with important and significant advances on the strategy, operational, financial, and balance sheet fronts Simplification Gross Margin, main driver of profitability improvement: +310 bps Adjusted EBITDA margin: +370 bps FCFF in positiv
Slide 8: Advances on ESG Agenda
. Advances on ESG Agenda Natura &Co Natura &Co Latam Avon International Expanding Agroforestry Systems (AFS) for palm oil and implementing the 'Amazônia Viva Mechanism' Avon’s make-up range is now Leaping Bunny approved, the company has pledged to and has undergone independent verification for adher
Slide 9: Consolidated Financial Performance
. Consolidated Financial Performance Guilherme Castellan, CFO
Slide 10: Solid performance from Natura Brazil offset by Avon brand
. Natura &Co: Solid performance from Natura Brazil offset by Avon brand Net Revenue (BRL million) +4.5% in CC |-5.1% CC Ex-Argentina Avon International -6.1% at CC-16.9% in BRL Natura &Co Latam + 8.5% at CC-17.9% in BRL Highlights Robust performance from Natura Brazil +8.6% YoY Offset by: Expected r
Slide 11: Another quarter of solid Adjusted EBITDA margin expansion
. Another quarter of solid Adjusted EBITDA margin expansion Q4-23 Consolidated Adjusted EBITDA Margin Adjusted EBITDA Margin expansion YoY The increase also reflects a BRL 204 million expense reallocation from G&A to Selling line driven by gross margin and transformational savings impacting SG&A exp
Slide 12: Underlying net income and net income
. Highlights Underlying net income (UNI) and net income Net income to underlying net income (UNI) reconciliation Q4-23 (BRL million) Expansion in adjusted and cash EBITDA Offset by: Higher net financials impacted by Argentina hyperinflation and FX Tax expenses given mix of profitable and unprofitabl
Slide 13: FCFF in FY23 turn positive to BRL +59 million
. FCFF in FY23 turn positive to BRL +59 million Highlights FCFF in FY23 turn positive to BRL +59 million Free cash flow is mainly impacted by: BRL 1.5 billion settlement of the derivatives related to liability management and higher WK consumption Working capital was impacted by: accounts receivables
Slide 14: Net cash position and further liability management
. Net cash position and further liability management Q4-23 BRL7.8 billion Cash balance at period-end -0.79x Group net debt-to-EBITDA ratio Concluded the Tender Offer ofUSD 880 million Bonds maturing in May 2028 and April 2029 Net debt and net debt-to-EBITDA ratio (BRL billion) Amortization schedule
Slide 15: Brazil: challenges highlighted in Q3-23 have been mitigated
. Brazil The challenges highlighted in Q3-23 have been mitigated Delayed deliveries were resolved by early 2024 Reorganization of sales leadership is showing promising signs of stabilization Level of inventory shortage has seen improvements Adjustments are ongoing as understanding of the new demand
Slide 16: Natura &Co Latam Financial Performance
. . Natura &Co Latam Financial Performance
Slide 17: Natura &Co Latam: Revenue trends
. Natura &Co Latam: Revenue trends were shaped by robust Natura Brazil and a lesser decline of Avon in the same market Net Revenue(BRL million) +8.5% in CC |-4.7% CC Ex-Argentina -17.9% + 8.6% in CC + 48.7% in CC -11.9% in CC + 0.7% in CC -40.7% in CC -27.1% in CC Natura CFT: Avon CFT: Home & Style:
Slide 18: Adjusted EBITDA margin expanded to 11.4%
. Adjusted EBITDA margin expanded 250 bps YoY to 11.4% Adjusted EBITDA¹ and Adjusted EBITDA margin (BRL million, %) 8.9% 11.4% 1Excluding effects that are not considered recurring nor comparable between the periods under analysis, such as integration costs and net non-recurring other (income)/expens
Slide 19: Avon International Financial Performance
. Avon International Financial Performance
Slide 20: Avon International: Further profitability expansion despite revenue contraction
. Avon International: Further profitability expansion despite revenue contraction Net Revenue(BRL million) -6.1% CC -16.9% Adjusted EBITDA¹ and Adjusted EBITDA margin (BRL million, %) 5.8% 11.3% 1 Excluding effects that are not considered recurring nor comparable between the periods under analysis,
Slide 21: Closing Remarks
. . Closing Remarks Fábio Barbosa, CEO
Slide 22: Key takeaways
Key takeaways Unlocking sustainable shareholder value … Continue to expect volatility in top-line but with margins improvements in the FY, particularly ex-Argentina Marginsand cash continue to be short term priorities, paving the way for additionalinvestments in brands and technology 2. Resource all
Slide 23: Key takeaways
Key ta keaways naturaaco 1, 2. 3. Margins and cash continue to be Resource allocation is still a critical Continue to expect volatility in top- short term priorities, paving the way driver for value generation in the line but with margins improvements for additional investments in brands future as w
Slide 24: Appendix Q4-23
. Appendix Q4-23
Slide 25: Debt Profile
. Debt Profile Q4-23 by type Q4-23 by currency
Slide 26: Net Revenue Breakdown by Channel
.. Net Revenue Breakdown by Channel (%) Share of Digital Sales per Brand (%)
Slide 27: Net Revenue Breakdown by Channel
Net Revenue Breakdown by Channel (%) 88% Earnings Presentation | Q4-23 ax a% 1% Share of Digital Sales per Brand (%) NATURA gral etal (own stores + Franchise) 1 Tadtons Direct Seling = Dieta etal own sores + Franchise) Wholesale