Under Armour says it is ready for synergies, says Vulcabras president

“Under Armour is fully prepared to benefit from synergies with other brands,” said Pedro Bartelle, president of Vulcabras Azaleia.

The CEO highlighted that the company worked hard on integration and absorption
of Under Armour's business areas during 2019, resulting in above-average expenses. And that starting in the fourth quarter, with the internalization of the e-commerce operations of Olympikus and Azaleia, the existing structure of the Under Armour brand was leveraged.

“With the joining of e-commerces of all brands under the management of a
single structure, and with all other departments completely integrated, Under
Armour is fully prepared to benefit from synergies with other brands,” said Pedro Bartelle, president of Vulcabras Azaleia.

In the fourth quarter, the company also completed its second factory expansion in Bahia and Ceará. This will provide productivity gains for all of the company's other brands. Bartelle also highlighted sales growth in Brazil in the fourth quarter, with "good sales" on Black Friday and during the Christmas season.

Vulcabras Azaleia ended the fourth quarter of last year with net revenue growth of 5.6%, totaling R$373.9 million in net revenue. Net income fell 2.4%, totaling R$45.1 million in net revenue, with expense growth outpacing revenue growth. Costs, however, increased at a faster pace, causing the company's gross margin to decline 2 percentage points, from 37.8% to 35.8%.

Vulcabras, in his opinion, states that there was an increase in the costs of some raw materials and other manufacturing costs. "In 2019, as a percentage of net sales revenue, cost of sales represented 65.3%, compared to 64.1% in 2018. In the fourth quarter of 2019, as was observed in the first nine months of the year, there was an increase in the cost of products produced due to the increases in prices."
in some raw materials and other manufacturing costs, without there being any possibility of
pass-through to sales prices.” they stated.

In the last quarter of the year, Vulcabras managed to reduce administrative expenses by 6.5% to R$29.8 million (R$$) by cutting personnel, travel, and electricity expenses. This was compounded by an increase in expenses for third-party services. However, this was not enough to offset the 9.4% increase in selling expenses—which, according to the company, reflected higher freight expenses and provisions for doubtful accounts. There was also a worsening in the "other operating income/expenses" line, which was negative by R$2.2 million (R$$).

The financial sector saw improvements due to reductions in interest expense, foreign exchange gains, and the recognition of R$10.2 million in revenue related to the present value adjustment of the ICMS debt in Sergipe. Financial revenue grew by almost R$4,901,000, to R$15.2 million, while financial expenses fell by R$191,000, to R$7.7 million. As a result, the net financial result remained positive at R$45.7 million in the same period in 2018. Earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled R$60.2 million, down R$12.91,000, from the previous year.