earnings teleconferenceconsolidated result (in brl million) 1q17 1q16 % variance4q16 net income 952...
TRANSCRIPT
EARNINGS TELECONFERENCE
1st Quarter 2017
Highlights
Improved Results
Working Capital
Wood
Deca
improvement in profitability vs. 1T16 Slightly more favorable scenario; Harnessing of gains arising from our Internal Agenda.
Lower investment in working capital Extension of supplier payment lead times.
Announcement of price increase Panels |+8% to 15% | Implementation in March and April.
Greater volumes shipped and leaner cost base. Announcement of price increase Entire Deca portfolio | +6% | Implementation in April.
2
Consolidated Result
(in BRL million) 1Q17 1Q16 % Variance 4Q16 % Variance
Net Income 952 901 5.6% 1,029 7.5%
Wood Division 609 608 0.1% 692 -12.0%
Deca Division 343 293 17.1% 337 1.9%
EBITDA Adjust. & Rec. 148 106 39.4% 217 31.8%
EBITDA margin Adjust. & Rec. 15.6% 11.8% - 21.1% -
Net Profit (7) (30) 74.6% 25 -129.8%
Recurring Net Profit (9) (30) 68.6% 6 243.5%
ROIC 1.3% 0.1% - 3.6% -
4%
2012 2013 2014 2015 2016 1Q16 1Q17
4% 10%
15% 19% 20%
16%
Participation in External Market
3
Lower financial outlay
Nominal reduction in G&A Expenses
Free Cash Flow
Maintenance & Projects
Forest OPEX
Mergers & Aquisitions
446
262 190
2014 2015 2016 1Q17
162 178 191
2014 2015 2016 1Q17
152 116
93
2014 2015 2016 1Q16
55
44
In millions of BRL
Working Capital incorporated into the Duratex Management System;
Investments restricted to sustaining operations;
Implementation of new S&OP model in both divisions;
Renegotiation of lead times with suppliers;
Land sales of around ~ R$ 2m.
44
1Q16
42
1Q16
67
1Q17
(in days) 1Q17 1Q16 4Q16
Receipt Lead time 64 69 63
Stock lead time 94 98 94
Payment lead time 28 23 25
Cash cycle 130 144 132
4
Working
Capital Capex Taxes Others Financial
Result
Free Cash
Flow EBITDA
148
106
29
(31)
(99)
(153)
(8) (2)
2 -
(42) (46)
30
(126)
2017 T1
2016 T1
(in BRL million) 1Q17 1Q16 Variance R$ 4Q16 Variance R$
Short term debt 620 850 (230) 681 (61)
Long term debt 2,634 2,048 585 2,776 (142)
Total Indebtedness 3,254 2,898 356 3,457 (203)
Availability 1,219 748 472 1,416 (197)
Net Indebtedness 2,034 2,151 (116) 2,041 (6)
Net Indebtedness / PL (in %) 44.5% 47.8% - 44.6% -
Net Indebtedness / Ebitda Rec. UDM 2.81 2.95 - 2.99 -
1,219
Cash Gross
debt 2017 2018 2019 2020
2021 &
beyond
3,254
620 628 720 470
816
Amortization Schedule (BRL million)
Reduction of net indebtedness and of
leverage in the quarter;
Impact of the decrease in interest rates,
reducing expenses;
Indebtedness
Average timescale 3.3 years (1Q16: 3.0 years) 5
WOOD DIVISION
Source: IBÁ In millions of m³
Panels Market in Brazil
7 2009 2010 2011 2012 2013 2014 2015 2016
2,4 3,0 3,1 3,5 3,9 4,0 3,6 3,5 0,9 0,9
21% 20% 21% 18%
2009 2010 2011 2012 2013 2014 2015 2016
2,4 2,9 3,0 3,2 3,2 3,0 2,5 2,5 0,6 0,6
38% 40% 39% 35%
MDF
MDP
4,4 4,0 4,0 3,8 3,6 3,4 3,2 2,6
2,7 3,2 3,7 4,0 4,6 4,9 5,2 5,4
0,6 0,4 0,3 0,2 0,1 - - -
0,3 0,1 0,3 0,2 0,1 - - -
0,1
1,3
1Q17
1Q17
0,1
1,1
0,2
1,4
1Q16
-
1,0
1Q16
% Iddle Capacity Exports Domestic Market Demand
Installed Capacity
Installed Capacity
1Q17
Volume Shipped
(m³)
585
4Q16
639
1Q17
609
4Q16
692
Net Income
(BRL m)
1Q17
92
4Q16
175
Recurring EBITDA
(BRL m)
20.2% 20.7% Gross
Margin % 15.0% 11.6%
Ebitda
Margin %
Price base deteriorated since end of last
year
Concentration on line maintenance during the
quarter, resulting in tighter profit margins
1Q16 1Q16 1Q16
601 608 71
25.3%
Performance of the Wood Division
Utilization of
Capacity
With
Itapetininga
Ex
Itapetininga
MDF 59% 78%
MDP 53% 68%
Wood Division 56% 71%
24.6%
Sale of surplus forestry assets
8 Price increase in March ~15%
-2.5% 0.1% 29.7%
DECA DIVISION
4.5%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
5.1% 8.5%
-6.3%
11.9%
4.0% 0.7% 1.1%
-5.9%
-12.5% -11.5%
Measures revenue growth in the domestic market of the construction materials industry,
relating performance to the same period the previous year.
ABRAMAT INDEX – DOMESTIC MARKET
Abramat forecasts that the performance of the civil construction materials market
in 2017 will be unchanged from 2016
Source: ABRAMAT
Construction Materials Market
- 6.3%
1Q17
10
1Q17
6,806
4Q16
5,944
1Q17
343
4Q16
337
1Q17
57
4Q16
42
26.4% 31.0% Gross
Marin % 16.5% 12.2% Ebitda
Margin %
Volume Shipped
(‘000 items)
Net Income
(BRL m)
Recurring EBITDA
(BRLm)
Increase in Volumes
Strong performance from new launches
1Q16
5,422 293
1Q16
36
1Q16
12.4%
Performance of the Deca Division
Utilization of Capacity
Metals and
Showers 81%
Bathroom ware 62%
Deca Division 75%
28.2%
Improvement in results triggered mainly by the
capture of gains from the Duratex Management
System 11
25.5% 17.1% 58.5%
Expo Revestir
Once again our positioning centered on innovative products, displaying sustainable products and solutions which bring together design and technology.
We participated for the 15th time as Master Sponsor of the Furnishing Exhibition, (Expo
Revestir) in São Paulo, the largest construction and architecture fair in Brazil
12
Sustainability Strategy
People
Working Conditions and People Development To have absenteeism level equal or lower than 1 for own employees and third
parties
Engagement of Clients & Consumers To have 50% of the product portfolio developed using co-creation models models
Relationship with Communities and Local Development 80% approval from the community of the engagement project
Processes
Eco-efficiency To reduce the relative consumption of water by 10%
To reduce relative landfill waste by 20%
Climate Change To reduce absolute GEE Duratex emissions by 25% (scope 1)
Sustainable Management of Forests To reduce water consumption per hectare by 50%
Responsible Supply Chain 100% strategic purchasing with socio-environmental criteria
Products & Services
Sustainable materials and Solutions To develop 2 alternatives for renewable raw materials for Deca and Hydra
Revenue of R$20 million from Pró-Água services Deca portfolio to be 100% eco-efficient finished metals and basins
New Business
Exploratory Fronts
2025
13
Message from the Management
Focus on advancing the Internal Agenda, with initiatives relating to cost reduction, efficiency gains and growing working capital
Investment restricted to sustaining the operations
Liquidation of iddle assets
Reduction of debt and deleveraging
Consolidation of the journey of cultural transformation
14
Disclaimer & Glossary
14
The information herein has been prepared by Duratex S.A. and does
not represent any form of prospectus regarding the purchase or subscription to
the company’s shares or securities. This material contains general information
relating to Duratex and the markets the company operates in. No
representation or guarantee, expressed or implied, is made herein, and no
reliance should be placed on the accuracy, justification or completeness of the
information provided.
Duratex does not offer any assurances or guarantees regarding the
fulfilment of expectations described.
April, 2017
1) Recurring EBITDA: EBITDA adjusted for events not arising from the fluctuation in the fair value of biological
assets, a combination of extraordinary business and events.
2) Recurring EBITDA UDM: Sum of Recurring EBITDA from the previous 12 months