Natura &Co — Q1 2024 Earnings Presentation
26 slides from Natura &Co's earnings presentation, May 16, 2024
Slide 1: Distribution channel breakdown
Distribution channel breakdown Digital sales, which include online sales and social selling, showed some deceleration in the quarter. Natura reported a 2 percentage point (p.p.) decrease to 4% of total sales, offset by the solid retail channel performance, amid omnichannel investments and strategic
Slide 2: Net Revenue Breakdown by Channel (%)
‘Net Revenue Breakdown by Channel (%) om bg 0c! shea (oun ores ‘Share of Digital Sales per Brand (%) sea (oentors+ actin) atl TrastonsDrecSebng eels 1% au nas De!
Slide 3: Net income to underlying net income (UNI) reconciliation
Net income to underlying net income (UNI) reconciliation (116.3) (934.8)
Slide 4: Net Debt/EBITDA ratio
Net Debt/EBITDA ratio, 156% 126 3.96 417% 0.664 09% oi 0am “07% 3 ne oeeyearOA indutng HAS 16 ets ner oneyeaA ex FAS 1 fects
Slide 5: Natura &Co Q1-24 Earnings Conference Call invitation
Natura &C0 env) is pleased to invite you to join its Q1-24 Earnings Conference Call: Tuesday, May 14th, 2024 08:00am.| New York Time 09:00m.| rasta Time 13:00p.m.| London Time Glitk hece to connect to. the conferens The sda lb dn Portugese wth taneous eS Uonsaton to eg ‘nhac we = Sf eon ay 3 Monday
Slide 6: Disclaimer
Disclaimer The words “anticipate," "wishes,“ "expects," "estimates," "intends," "forecasts," "plans," "predicts," "projects," "targets" and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. Known risks and uncertainties incl
Slide 7: Initiatives in Rio Grande do Sul
Initiatives in Rio Grande do SulIn the face of the largest climate tragedy in the history of Rio Grande do Sul state, we have offered our network medical, social, and psychological assistance through free telemedicine services and our social center 1 We have an important connection with Rio Grande d
Slide 8: Key Highlights Natura &Co Performance 1Q24
Key Highlights 4Natura &Co Performance 1Q24 Sales deleverage at Avon International Wave 2 implemented countries driving margin expansion and showing improvements in metrics Strong performance at Natura Brand in BrazilExpected soft performance from Avon Latam Very strong mid-single digits margin ex
Slide 9: Consolidated Financial Performance
Consolidated Financial Performance Guilherme Castellan, CFO
Slide 10: Natura &Co net revenue: strong Natura Brand, offset by Avon
Natura &Co: Strong performance from Natura Brand, partially offset by Avon Latam and sales decreased at Avon International Net Revenue (BRL million) Highlights Natura &Co Latam + 3.1% at CC - 3.3% in BRL Avon International- 4.7% at CC - 13.1% in BRL -5.7% 6 • Another solid performance at Natura Braz
Slide 11: Solid YoY Adjusted EBITDA expansion
Solid YoY Adjusted EBITDA expansion Partially offset by: +120 bps YoY Natura &Co Latam mainly driven by Wave 2 initiatives and country mix further reduction of corporate expenses +20 bps YoY Corporate Expenses Highlights Adjusted EBITDA Margin expansion YoY1 The increase also reflects a BRL 44 milli
Slide 12: Underlying net income (UNI) and net income
Underlying net income (UNI) and net income UNI improvement vs. BRL -373 mn loss in Q1-23 or BRL -260 mn ex-TBS and Aesop • Higher adjusted EBITDA • Lower Net Financials Expenses More than offset by:• Higher tax expenses given the mix of profitable and unprofitable countriesExcluding BRL-137 mn of lo
Slide 13: Free Cash Flow in Q1-24 improved
Free Cash Flow in Q1-24 improved BRL +368 million YoY or BRL +803 million compared to Q1- 23 reported cash outflow Mainly driven by: • Higher Adjusted Cash Net Income • Improved accounts payable from higher purchases in Q1-24 • Lower Capex from phasing Partially offset by:• Cash consumption for the
Slide 14: Indebtedness ratios and Amortization Schedule
Indebtedness ratios and Amortization Schedule Q1-24 Net debt and net debt-to-EBITDA ratio (BRL billion) Amortization schedule (BRL billion)(a) Gross debt excludes PPA impacts and excludes lease agreements(b) Excluding foreign currency hedging and including Avon’s Bond 2043 BRL 5.9 billion Cash balan
Slide 15: Natura &Co Latam Financial Performance
Natura &Co Latam Financial Performance
Slide 16: Latam operations: inventory and consultant base
Coordination of delivery time frames • Inventory • shortage continues to improve but remains challenging • SKUs from key categories showed inventories levels back to normality which enabled a healthy performance at Natura • Stable base of consultants QoQ and its relationship with leadersHispanic Lat
Slide 17: Net Revenue by brand (Natura &Co Latam)
Net Revenue (BRL million) Natura CFT: Avon CFT: Home & Style: • D ecline in C C , directly related to the planned portfolio optim ization strategy and com m ercial incentives reduction• Brazil: 11.3% YoY decrease, im pacted m ainly by the channel and SKU reduction • Hispanic: 11.8% decrease and -24.
Slide 18: Adjusted EBITDA and margin, Natura &Co Latam
Adjusted EBITDA¹ and Adjusted EBITDA margin (BRL million, %) 1 Excluding effects that are not considered recurring nor com parable betw een the periods under analysis, such as integration costs and net n on-recurring other (incom e)/expenses 13.0% 14 Fifth consecutive quarter of profitability expans
Slide 19: Avon International Financial Performance
Avon International Financial Performance
Slide 20: Avon International: Challenging quarter with topline decline
Avon International: Challenging quarter with topline decline Net Revenue (BRL million) Adjusted EBITDA¹ and Adjusted EBITDA margin (BRL million, %)1 Excluding effects that are not considered recurring nor com parable betw een the periods under analysis, such as tra nsfo rm a tion costs and restructu
Slide 21: Closing Remarks
Closing Remarks Fábio Barbosa, CEO
Slide 22: Key Takeaways
Key Takeaways 1 2 3 Continuing to evolve on the studies of a potential separation of AvonThe solid start to the year gives us confidence that the initiatives we are implementing are starting to deliver the expected results Margin and cash continue our priorities in the short term, while resource all
Slide 23: Key Takeaways
Natura&co 18 Key Takeaways 1 Continuing to evolve on the studies of a potential separation of Avon D) The solid start to the year gives us confidence that the initiatives we are implementing are Starting to deliver the expected results Margin and cash continue our priorities in the short term, while
Slide 24: Debt Profile Q1-24
Q1-24 by type 20 Q1-24 by currency Debt Profile Earnings Presentation | Q1-24 39% 61% BRL USD 61.1% 30.7% 8.1% 0.1% Bonds Debentures Comercial notes Other instruments
Slide 25: Net Revenue Breakdown by Channel (%)
Net Revenue Breakdown by Channel (%) Share of Digital Sales per Brand (%) NATURA BRAND AVON BRAND Earnings Presentation | Q1-24 5% 4%1% 90% Digital Retail (own stores + Franchise) Wholesale Traditional Direct Selling 94% 92% 4% 5% 1% 1% 1% 1% Q1-23 Q1-24 Wholesale Retail (own stores + Franchise) 90%
Slide 26: Net Revenue Breakdown by Channel (%)
Net Revenue Breakdown by Channel (%) Share of Digital Sales per Brand (%) NATURA BRAND AVON BRAND 5% 4h, iS 6% 1% 1% =Digital ‘Retail wn stores + Franchise) = Wholesale Traditional Direct Seling 1-23 1-24 1-23 1-24 Retail (own stores + Franchise) 20% = Digital = Wholesale ‘= Traditional Direct Selli