Sendas Distribudra S/Adr

Good morning, everyone, and thank you for waiting. Welcome to the earnings call for the fourth quarter of 2023. If you need the simultaneous translation, we have this available on our platform on Zoom. In order to access this, please select the interpretation button through the icon on the globe at the bottom part of your screen and choose your language of preference, Portuguese or English. We'd like to let you know that this earnings call is being recorded and will be provided on the IR website, the company, at ir.sie.com.br. where you can also find the earnings release. During our presentation, all participants will have their mics off. Soon after, we'll begin our Q&A session. To submit a question, please select the Q&A icon on the bottom part of your screen. Write your name, company, and language to enter the queue. As you're announced, a request to activate your mic will appear on the screen. Then you must activate your mic to submit your questions. we'd like to instruct you that you submit all your questions at once. All of the information in this presentation and possible statements that could be made during the earnings call related to business perspectives, forecasts, and operational targets at SAE represent beliefs and assumptions of the company's management, as well as information that's currently available. Future statements are not an insurance that performance. They involve risks, uncertainties, and assumptions as they refer to future events and thus rely on circumstances that may or not occur. So investors should understand that other operational conditions and market conditions could affect the performance at SA and lead to results that differ materially than those mentioned in future statements. Now I will Pass on the floor to Gabriel Leilu, our Investor Relations Director at Asahid. Welcome, everyone, to our earnings call for the fourth quarter at 2023. Today we have with us Belmedo Gomes, our CEO, Daniela Zabaguer, CFO of LaMira dos Anjos, our VP for Commercial VPN Logistics, and Anderson Castillo, our Operations VP. Before we begin the presentation, I'll pass the phone to Belmedo for his initial remarks. Belmedo? Thank you, Gabi. I would like to thank you all for being here in this earnings call as we present the numbers in the fourth quarter of 23. And of course, the closing of 2023 is a full year, which was very symbolic going outside history and a year where we have the closing of an internal process with the expansion and conversion of our stores. So the numbers we see now in our results during 2023 are numbers that reflect the over 82,000 employees in our company that are operating different stores and logistical centers and offices and administrative functions as well, as well as all the support within your management, within your board. And throughout 2020, Fiance became a true corporation with the exit of the former controller shareholder in a year where we have an environmental deflation in the food sector that's very strong. So in our perspective, we ended the fourth quarter in a very positive way. The company is ending the fourth quarter with 16% growth in total throughout the year where we had no inflation. And we saw, as you probably saw, the household inflation was 0.50 ending the year of 2023. And the 16% are very relevant as they come along after the fourth quarter of 2022 where we had a total growth of 38%. due to the fact that the growth in the fourth quarter of 2022 had an important cycle of openings, with 38 new stores opened in the fourth quarter of 2022. So the 16% really makes the company at the end of the fourth quarter reach a level of growth of 60% in two years. So when you add up both years of growth. And this is representing the growth of the fourth quarter represents an increase of 2.7 billion reais, which were added on to sales. The fourth quarter continues its process for expansion of the 27 stores open last year. And 12 of these were done in the fourth quarter. And then with this, SIE ends the year with 288 stores under operation. We're still missing two stores for the closing of the extra project. The main stores have already been opened. And in our vision, we'll provide some more details. The number of this important project would be conversion from the perception of results and earnings, but also the achievement of new customers, considering it was a new positioning, demonstrates the company is really on the right track to perform this project, making us have a growth of almost 60% in two years and almost 90% when you look at the three-year period where you actually have a strong cycle of expansion. and new store openings that the company went through. So what we've seen throughout this fourth quarter is an improvement in the fourth quarter ever since the second half of November. Throughout 2023, we saw an environment of deflation, debt among consumers, greater caution to have the volumes of purchases, but especially the Airbnb public, that at this moment, when you have a drop in prices, also becomes a little more cautious with how they're going to set up their stocks, which impacts the volumes in the second and third quarters. And this is not repeated in the fourth quarter. So from the second half of November, we already noticed an improvement in volumes. And we ended the fourth quarter with a progression in sales of approximately 3%. And an important market share gain in the fourth quarter, but also in the end of 2023. with a positive combination in the fourth quarter of growth in the sales of the same store space and tickets as well as the volumes. And so, of course, this scenario we've seen throughout 2023 makes us have cash and carry and not be immune to the economic scenario when it comes to debt and the families and the trade downs. But in our vision, it also brought benefits when we look at the the gains of customers and the amounts of tickets that were performed. In this scenario, the more difficult and complicated economy, we can see that customers start searching for a channel as a source of supply. Those customers that need to keep their supplies in their business, but also families that are searching for ways to save. Even in a period where you have a drop in inflation, the volume of purchases for replenishment and home supplies kept very strong in the growth rates. So we ended the year with a growth of, and those of our tickets was very positive, 79 million tickets in this fourth quarter, a total of 290 million tickets. And this represents a store flow of approximately 400, 420 million people throughout the year of 23. And from this volume, 45 million of people have been visiting our stores ever since December. So just as everyone knows, we went through an intense store opening process for organic stores, but also for conversions. Alongside this process, we also had important changes in our business model. Changes that, in our perception, keep the characteristics of Asahi of having a strategy that is quite bold, anticipating any changes in the market, and especially anticipate any purchase trends and movements in the So the penetration has been even greater in the Brazilian households and customers. And it comes from the strategy, the conversion process with actual stores and our entrance into more regional, more central regions to be closer to the mid- and high-income public and closer to customers that are in the food service sector was a strategy that was very precise. The innovation of the butcheries and the cold cuts and bakeries Increasing service levels and improving customer service made us in 2023 have one of the biggest achievements in the year because we became the company for physical store commerce, regardless of the sector that's most present in Brazilian households. We were able to reach one in every four households that are currently in Brazil. In some cities and regions, especially in the southeast and major regions, we are already close to almost 50% penetration in the households. And we've been able to enter new social levels as well. So this combination and change in the business model, especially including new services, stores in more downtown regions and an increase in occupation costs in these stores also represented a possible issue where maybe we would lose the cash and care model But I think this is very strong in the fourth quarter when we see the efforts of the team combining productivity gains, ongoing maturity of the stores, and due to the strong process and the expansion we went through, but also the culture in the company, which is a low-cost culture, searching for ways to do more with keeping up a strong balance in the purchase experience where the is demonstrated through the drop in expenses and expenses have a reduction compared to the fourth quarter of about 90 beeps considering the productivity gains we had. And the fact that the stores open and that cycle of new stores open in the end of 2022 is already in this process for maturity. And this team effort made us have a better level of expenses. which also allowed us to invest more in our competitive advantages, especially in the stores that are reaching maturity. And so this is a reflex of our strategy. We have this impact of 50 beeps, and this is also impacted by the smaller volume of openings. As we can see, a strong expansion cycle, which increased the gross margins, So that's also, as you can see in our earnings release and this presentation, we're really focusing on our free IFRS vision, considering that this in our perception reflects our operational performance better because it's a lot more connected to the cash generation and it's the EBITDA that's already considering the lease. And when we close the fourth quarter, we reach 6.1. A nominal value that's above our increase in sales. And especially considering that even with the impacts of the second and third quarters, the end of 2023 brings in an EBITDA and a pre and post IFRS vision that is really connected to what we've seen throughout 2022. Fulfilling the guidance provided by this administration at the end of last year, where even in the environment we were in with deflation that could impact the EBITDA at a pre-operational level, this would be stable compared to last year. And so the company, as you all know, went through a very important cycle of investments. But the total amount of investments in the year is over 5 billion reais through the carryover we had with the CapEx and the stores opened and all the rest of the payments as well that we had to be made to GPA, which ended now in January 2024. But the company, even in this process, with strong expansion, It's almost doubling in size, almost 60% growth in the last two years. The company kept its strong cash generation, and this operational cash generation reached $4.6 billion in 2023. And we all know that the execution of this conversion project and the acquisition of the commercial points, the organic stores and the investment costs increased our debt levels. And Danny will talk about this a little more. And it also pressured the financial expenses considering the level of leverage in the company. But even with this entire cycle and this strong opening process, the net income reaches 1.9 and a total per year of 1.2%. And at this moment, where the company gets back to the closing of the project focused on deleveraging, this is the line that we think should have a strong increase from now on. You can advance on to the next page, please. So we did bring in a bit of this, considering the magnitude and relevance of the project, how the conversion network has been behaving. So, of course, this shift in positioning was important, and it's the first time I think that Cash & Carry can really get into major regions and big cities and locations where, due to restrictions in the real estate market and difficulty to get approvals, it becomes very difficult to add this organic store throughout 2023, even with this environment. This was not only the Selic rate or the higher interest rate. And we see that the store network, so the average we see, So we have an average of revenue of 20 million going to 28 million in the end of the fourth quarter, which is very close to those three times we had mentioned, which was the objective in the company. And in our perception, we still have a lot of ramp up and growth in our sales. So when we look at this in an isolated way, only in the food sector perimeter, since we also don't sell home appliances, which is something that hypermarkets had very strong, This multiple can reach over 3.8 times, very close to the target of the project, which was about three times more. So another behavior is that the growth in sales is also accompanied by maturity in the pre-IFRS and EBITDA vision. And as we all know, these stores do have an occupation cost that's higher. And so they also have an average ticket that's a lot higher. There's also... the issues with the commercial galleries as we can, should also bring in some important profitability gains, leaving 2.6 in the first quarter to 5.6, which is in the closing of the fourth quarter and also very close to the legacy network that here we want to remind you that the higher cost is already affected in this margin perspective. So once again, covering the EBITDA pre-IFRS and also in the post-IFRS vision, which is the base for cash generation in the company, you can see this evolution, the evolution of the maturity, expense, discipline, and the consistency and efforts of the commercial area to adjust the product mix, which is very important to ramp up the stores, commercial dynamics, communication in our marketing teams, promotional campaigns, and Then at the end, you can see this positive set of factors. And this also makes the company have an important leap in its growth, demonstrating how these conversions and how this expansion has been very precise, even though it did lead to a higher leverage level than what we imagined in the beginning of the project. So with this, the value of the EBITDA is completely stable. Even with 115 stores, this percentage is quite stable. And we have an increase of 20% compared to the previous year and 33% when we look at this fourth quarter. So the EBITDA, the post-IFRS EBITDA also has a shift in geographies considering that most stores are already operating and the leases we have are already completely operational. So now I would like to pass the floor on to Gabrielle as she talks about the net income and our leverage level. Hi, this is Daniela. Good morning, everyone. And now we're going to move on to slide five, where we get into our earnings and our net income. So in the fourth quarter, our earnings reached $736 million. And if we exclude interest on the liability, on the lease interest, the results reach almost 2.6% of sales. of the net sales and 478 million. So this increase is about a bit more than 200 million year over year. And in the full year, we have a financial result of 1.8 billion and 800 million more. Now, when we get into the effects, the main effects, we can see a bigger volume in the gross debt, especially when we consider the maturities of the debts and commitments in the company for 2024. sorry, the commitments in 2023, but throughout the year, we were able to have a PRI in July, and then we had some fundraising for the maturities in 24, in December, and some other debt rollout processes that we also operationalized. So then we also have a smaller effect from an accounting perception, which is the capitalized interest due to the final phase of the conversion project. And so in the quarter, we have a capitalized interest that's lower and all the rest is in the IFRS 16. And in the year, this effect is over 400 million. And in the cost of the net debt is 344. So in the year, we have the impact of the average interest, which also affects our debt and went from 12.4 in 22 to approximately 13 in this average interest in 23. So these are the main effects. And of course, we have an impact in our net income, which ended the quarter with 3.3 million and the greatest level in the year with a margin of 1.9% with all of the seasonality in the quarter. And we also had operational leverage that was very important in the quarter as it was very positive. And we have the quality of expansion maturity of these 115 stores in the last three years also helps a lot and leads to this net income in the quarter. So with this, we can also demonstrate the resilience of our business model even in a context with inflation, sorry, deflation in 23 and interest at so high. And so in our year, our profit reaches $776 million and a margin of 1.2. Then we reach the cash generation side and leverage. And so as Bomido mentioned, $4.6 billion. And this is a growth of 453 million year over year. So this result comes from the growth of the free evidence that grew 20% leveraged by everything we had already discussed with the sales, growth, maturity of the stores, and the control of expenses, as you mentioned, and also an improvement, and it's important to highlight, the improvement of our cash cycles. which at the end of the day is translated into a lower need for working capital. And so we can see this generation is sufficient to fund all of the investments and expansion and the payments. However, we still have this high level of interest that affects the cost of the debt of $1.8 billion. So we'll end the year with a net debt of $13.1 billion And our leverage reached 3.8. And so the results you see here on this graph, on the blue line of this graph, the 3.8, and this leverage came above what we expected, especially due to this operational generation and everything we mentioned with the maturity. And we had mentioned that in the investor's day, we had talked about how the leverage in 22, in the end of 22, was representing a reduction of 0.3 times. So this drop of 0.6 year over year is even higher than this sign presented there. And so here, I think we can really, everything we've seen from analysts, we can really surprise And when we consider the leverage has between 0.8, 0.9 on receivables, and this number includes the receivables in the company. When we look at the gray line, we have the vision we presented here that we normally used to disclose until the second quarter. But here we don't have the receivables and also the payment of the real estate, the commercial real estate. And also in 23, we paid $2.4 billion in the installments and the acquisition of the commercial spots. And in January, we already paid off the last installment, which was $900 million. So in the concept of the covenants or financial contracts, our leverage was $179, which was a lot lower than the limit we have of three times that. which represents a difference of almost $6 billion compared to our very comfortable position with our covenants. And so when we get into the deleveraging process for 24, it should be continuing this process to intensify the deleveraging of the company with an ongoing and growing cash generation and the end of the payments as well. as I mentioned previously, as well as a lower level of investments that we have for 24 with 15 stores due to our last factor that contributed to the deleveraging, which is also a lower level of interest in 24. So now I've finished my slides here, and I'll pass it on to Valmita to finish our presentation. Hi, Denny. Thank you so much, and I'll go back to And highlighting what this three-year period was all about, considering that this, when we had the decision to search for the stores in downtown regions and include more services, all this happened in 2020 and 2021. We had a whole other reality and interest rates in Brazil we knew. that it was a low rate, but the movement we had that was quite bold and strategic to position new stores demonstrates that from a perception of resolve, it was a very positive movement. We had a strong level of investment. The company invested in the cost of debt and what we already had in previous debts, a total amount of about 16 billion reais, but the company was able to generate over 11 billion already in this period. So the generation of cash is a strong, we have a strong cash generation operation. And this is one of the important milestones in the company. And this makes this level of leverage fund a project at a beginning, middle, and end. And when we complete this project, we'll start seeing the deleveraging process in spirit. But all of this allowed the company went from 184 stores to 180 stores with 39 billion reais and over 73 million dollars is one of the biggest companies in Brazil, one of the biggest private employers in Brazil, and we're able to keep our strong cash generation. So in 23, although there have been turbulence in the year, the maintenance of the free IFRS EBITDA really gives us the certainty and trust of the strong deleveraging trend we're facing in the near future. We can move on. About ESG, as we also need to highlight, Asahi is a reference. We had many highlights now throughout the fourth quarter. And as I say, it was kept very present in sustainability index at B3. We also kept our carbon efficiency index. We had an advance of over 10% reduction in the emissions of scope one and two with an increase in the reuse of waste. I want to thank all of our sustainability team and the different departments involved. This is all part of the culture of the company and part of our business model. Within the decisions that really make the company keep on a sustainable trend, but also be sustainable when it comes to social responsibility in our role of responsibility with over 480 tons of food each year. delivered to over the 54 social organizations, some work that continued in 2020, besides the strong work we've done during the period of the pandemic with all of the efforts that ASAI performed in the communities we're in. But we also had an important seal, which is about women on board. And we have important advances to be made, as well as the inclusion of people that are over 50. So the indicators in the company, of course, represent ongoing improvements. And they had an important abolition of over 43% of black individuals, 25% women in leadership positions, and the amount of employees that have disabilities, which is above the legal quota or minimum, which is 5.4. And that's an important achievement with a company that has over 82,000 employees. This here you'll see in the report, Some of our strategic pillars in this revision of the work we performed. And this is all based on three pillars. So operations that are efficient reducing our climate impacts. Of course, always promoting the guarantee of responsible supplies. Continuing our work with the development of people and communities. that where we are present in a country that has a lot of social inequality, like Brazil, and a big difference from one region to another. And then, of course, we always try to encourage entrepreneurs, and we perform many different projects with the Açaí Academy, and we try to also implement a very entrepreneurial vision, of course, keeping the ethics and transparency in our business based on the best practices, as she mentioned, in the overall market. we have a strong focus to deleverage. We've been highlighting a conversion project, which had a beginning, middle, and end. And now we've completely finished it. The last part of the stores we had, of the installment we had to pay to GPA, we paid in January. But the level of debt in the company in the first quarter should drop compared to the fourth quarter, which allows us to set a positive scenario in the leverage position And we expect that at this moment, we'll see a reduction in the leverage considering the indicator index that we had already highlighted in the investor day we had in 2023. And this is due to the fact that we ended our payments to GPA. We have a reduction in the levels of investments and expansion. We have 15 stores expected for 2024. And so we have a huge difference when it comes to the level of investments the company performed in the last few years to this level we're in now. And when we add this all up alongside what we've already seen in the fourth quarter, the growth of the sales, maturity of the stores, leading to greater cash generation combined with a rate that's also part of the expectation of the reduction in the interest rates today that allow us to have improvements in our net income and also the reduction of the financial costs and deleveraging the company. So when you look at the macro scenario, you can see the levels of expenses we delivered in the fourth quarter. which are, of course, a result of the operational efficiency and they're sustainable in the long run. And they, of course, the company will continue to balance out its competitive advantage, the ramp up of the stores. And this will also lead to an abolition of the EBITDA margin in 2024 compared to what we had now in 2023 with a series of opportunities with profitability of the assets, as well as in this network of stores. We still have a lot of stores that have maturity, and this gives us the opportunity to explore our galleries better and include new categories of products, adjustments in the evolution also in the service areas. And of course, we can estimate a scenario that's more positive in 2024 than what we had in 2023. besides our continuity in the strategy. So from my side on the presentation, this is pretty much it. Now I'll pass the floor back to Gabriel Ailu, our IR Director. So thank you, Bometo. We're going to start the Q&A session now. Now we'll begin our Q&A session. We want to remind you that if you have any questions, you must select the Q&A icon on the bottom part of the screen. write your name, language, and company, and enter the queue as you're announced, a request to activate your mic will appear on the screen. Then you must activate your mic to submit questions. We'd ask you to all please submit all of your questions at a single time. Our first question comes from Thiago Macros or Salcedanos at Itaú. Thiago, we'll open up your mic so you may proceed, please. Hi, guys. Good morning and congratulations. about the quarter and year. My question is related to sales in the beginning of the year. We've received some feedback that the return of the food inflation has helped with the sales in the beginning of the year. But I wanted to ask you guys, if you guys have experimented something like this, if you guys have seen this happen, and if there is an expectation of a possible recovery in the stock levels of the B2B customers, do you guys consider this to be reasonable? that this would happen in the next periods in 2024. And finally, great work controlling expenses this quarter. But I just wanted to understand if we can imagine that this is a whole new journey and that these expenses really changed in the levels they had before. So thank you, Jaguars, that the answers here at the beginning of the year has been very positive, a lot more positive and in line with what we saw earlier. And the fourth quarter was a little more positive also. And now we want to pass the floor on to Vlamir as he talks about expectations for inflation and stocks. And others will also talk about our expenses as we had an important reduction in the fourth quarter. We invested more in our competitive advantages and have been working on being more aggressive in this process. And this is really connected to expense discipline. Vlamir, you can start. Good morning, everyone. Thank you for the question, Tiago. When it comes to inflation here, we have an expectation this year of about 4% to 5% inflation. We still see a scenario of volatility in commodities, which is a reality ever since forever. But when we look at the industrialized products, we have an expectation for inflation. But of course, the inflation helped. in the first days of the year. So just as we grow in our volumes in the fourth quarter, this is something that's very important for us because customers are buying at the same store of base. And so when we looked at the stock in B2B, we still have to be a little bit careful. I believe that the purchase movement and taking care of the working capital these small entrepreneurs will be kept. I don't think we're going to have, like, greater stock than normal. But, of course, the improvement in the sales and the macroeconomic scenario will make them buy greater volumes. But I don't think we're going to have any problems with this. Now I'll pass the floor back to Anderson so he can talk about expenses. Thank you, Vamir. Thank you, Tiago, Vamir, and everyone. I think expenses are a big highlight and it demonstrates our discipline in our team and the stores. And we know that it's always about controlling line after line. So we have another point that's very important that we mentioned with the maturity of the stores. We worked at over 60 stores last year, plus the year before. And we still have important productivity gains in the stores with the value proposition we presented in our stores in the past few years. with more services like butchery, cafes, all of this, really brought greater maturity and experience in our lessons learned. So this helped us control more of our costs so we can be a low-price operator. So we think this cost reduction is sustainable. Of course, we always have to control the expenses on an ongoing basis. So we always have to be as efficient as possible to be able to keep our expenses in line. And so I think it is feasible and we are super controlled when it comes to expenses. But I think the main effort with the team is to store productivity, being more efficient so that we can keep these levels of expenses low. And I think that's pretty much it. Thank you. Excellent, guys. Thanks for the answers. As we move on, our next question is from Felipe Casemiro, our sell-side analyst at Bradesco BPI. Felipe, we'll open up your mic so you can proceed. Please, you may proceed. Thank you. Good morning, everyone. First question here is, could you give us a little more details on the drivers and the drop of the gross margin in the fourth quarter, just so we can understand the trend up ahead? So the fourth quarter is very seasonal and this time the gross margin went below 17%. So, sorry, you can continue. Yeah, great. So, no, you can answer, Belmeida, already. But the fourth quarter has two combinations of factors. We were searching for more operational efficiency. So as we saw, we would have an important reduction in expenses. We had a mix of investments like but of advantage. We also have an impact from the previous year, considering that the stores we opened up in the end of 2022, considering that we had a new mix of services and many different agreements with suppliers as well for the store openings, and when we consider the drop in margins, we have approximately 0.40 or 0.30, which would be equivalent to the agreements for the store openings. And the fourth quarter of 22 had a huge amount of stores open, especially extras where we had some important renegotiations. And we highlighted in the call that from a deadline perception and also support for the suppliers, we had achieved some gains in our perception. This positioning brings us an opportunity to that's very important to have a lower cost format and lower sales format for individuals and businesses. So obviously having a cash and carry store, such as the Congoya store, and when you have an amount of almost 10,000 SKUs. And so this also represented a lot in the fourth quarter. we always have to expect to maintain the gross margin. And you also have the store maturity. So you have a big amount of stores still, and the objective of these stores has always, the main objective is, of course, to consider our EpiDecker free IFRS. We'll always search for sales improvements, and that's always going to be more important than expenses. So there's also an effect in the gross profit as we search for ways to be more competitive, but we do imagine a stable level in the gross margin. Okay, perfect. Thank you so much. And then my second and last question is about CapEx. We think this has been a very recurring topic and in the last quarter, so 80 million per store, I think this was in a year. So is there another initiative to reduce expenses per store in the next two years, for example? Yes. Okay. Thank you, Felipe. We do have initiatives. And I think we also have to look into the fact that we have these store conversions. And when we look at this, we have had quite a bit of expertise with the conversions. We had an initial batch when I say it was still a GPA subsidiary and the stores that came from extra conversions. such as Concordia, for example, is a store that has over 40,000 square meters of built areas. So these stores have a structure reinforcement process that is more expensive. This normally doesn't happen in an organic store. So this, of course, pressured the investment line with, of course, with the amount of ABLs or the extra stores and gatherings we have at the stores. But what we tried to do in the conversions of these stores is that even if there was an investment, they would have an OPEX and maintenance level that's just as an organic network, store network. So we didn't leave anything for later when it comes to execution. Even though we would have to handle a higher investment, we could even postpone certain services that would have to be done a year or two later. But it would be a lot more expensive to do this with a store open. So the switch in the firefighting system, which is different, but especially when it comes to the stores that require higher investments, considering the size. So this amount, of course, changes a lot according to the store network. And then you also have the execution of organic stores, which are stores with a big area. We have stores that are being built with over 15,000 or 16,000 square meters of plus the hypermarket. So yes, there have been many initiatives to reduce capex. We had a really high cycle due to food and also construction materials, but also other equipment like pallet boards, metals, air conditioning, and firefighting systems that also were impacted. So this is also connected to the size of the stores. So if you notice our average sale per store, how that grows as well. So this is connected to the sizes as well. If we have a store that's 4,000 square meters, it's one amount, or 9,000 would be another amount. So, of course, it's a high investment, but we must also consider that this store network adds on an area in the sales area, but also the constructed area, galleries, and especially parking areas. So a lot of the projects we have for the new stores are mainly because, on average, an organic store had 400 parking spots. And the stores that came from Extra had an average of 800 parking spots. So this allows us to work in other categories without bottlenecks. that we would see in certain cash and carry stores where there's a lack of parking spots on the weekends, for example. Okay, that sounds perfect. Thank you. Next question is from Vinicius Estrano. He's our Southside analyst at UBS. Vinicius, we'll open up your mic so you may proceed. Vinicius? Hi, guys. Good morning, and thanks for taking my question. you are presenting major evolution in the maturity of the conversions stores, but I wanted to know more about the organic stores. So for example, do you think you'd give us a little more detail on the performance of these stores, the legacy stores compared to these conversion stores and any comments on same-store sales or possible cannibalization in stores and any kind of perception towards the future about the store network would be great. And again, Another point also that called our attention in the CRI was the level, sorry, in the quarter was a reduction of the stock level. So could you also explore some of the drivers in the stock improvements and how we can consider the dynamics for working capital up ahead? Well, thank you, Vanessa. I'll start answering and then I'll pass it on to the mayor to talk about the stock. So cannibalization was something that we already expected would happen in the beginning of the project, although it was low in our perception initially. due to the fact that historically Acai would not have stores close to where the extra hypermarkets were because we used to be part of the same group. But even so, B2B customers that represent about 40% of our sales, and these kind of customers sometimes drive a little farther to find cheaper prices. So customers sometimes would buy at a store in Acai Zanitas, which was organic, and then he now can buy closer. It might not be in Acai. We had an impact of about 2% to 3% of cannibalization in the legacy network that was impacted by the actual project, which was already expected by the company's numbers. Part of the same store sales do have part of the store that already matured. That influences this. So most of the store openings that were done in 2022 in the fourth quarter took place in a sequential manner between October, November, December. So most of them in November, December. There should be a higher impact on our same stores. with the first quarter of 2024. But the legacy network is still stable. So when you look at the fourth quarter, there is still, if we were to exclude the restore maturity factor, we still have the same store. So that's positive. Of course, not in the total amount that we presented here. But what's important to highlight is that for the store network converted that used the expertise we had, the organic network, but also the organic store network will also be benefiting from the conversion project extra. So most of the services included, now they're so mentioned, that were highlighted within the extra store network, will now be replicated also in the organic store network. So same dynamics with categories and even other realities of suppliers and commercial conditions that also benefit the organic network. So the legacy stores, organic stores, also receive benefits from the extra stores. Even if we just consider the maturity effect, there was still a positive impact, although it's still a small percentage. So cannibalization is in line with what we expected. The expectations for 24 is that as most of the services that are being included in the organic stores, so we still have quite a big batch to be delivered, will also lead to growth in this store network before the extra conversion project. talk about the stock a bit now. Thank you. Vlamir, I think you're on mute. I think Vlamir just had a connection issue. Well, I will answer the rest of this, but I can give you a little bit of the inputs on the stock. I think that may have some issues, technical issues, but the stock has like a normalization line in the fourth quarter, considering that, especially in the end of 22, with the new stores, you open up with a higher amount of employees and stock and a higher level of expense and margins that are lower, of course. But when you look at the pre-EBITDA curve that we demonstrated throughout the quarter, it's the first time we show this kind of ramp up due to the importance of that the conversion stores had to investors. But this also happens in the opposite side with the stock. Until you balance things out between categories, product mixes, what we sell more in one store or the other makes you have to have a higher stock initially. But in our vision, now we've reached a normalization and level that is sustainable for stock levels. I hope that's clear. That's great. Thank you so much, Bermuda. Moving on, our next question is from Louise Gwenaes, our sell-side analyst at BTG. Louise, we'll open up your mic so that you can proceed. Please, Louise, you may proceed. Hi, good morning. My question is about competition. Could you talk about this competitive environment a bit from the end of last year as well as the beginning of this year? with that scenario of the acceleration, the inflation that we mentioned at the beginning of the call, but also hopping into the second question that's related, is if you could help us think about this growth at a marginal level, when we consider this year and the next years as well, what do you think will be taking place in the share gains or productivity gains? And now you also mentioned some initiatives that are taking place in the stores. So if you could mention this. Okay, yeah, sure. Thank you, Gwenice. What we expect is when we look at other competitors in cash and carry, the value proposition is very unique compared to the rest of the market. And so when it comes to entering higher social levels and also supply of B2B customers with service where we have high focuses, our vision is that this will help us attract customers from three different segments, competitors that operate in the same format as us, and also have an important impact in the retail processes, considering that these new stores, including cafes, high levels of service, lighting, cleaning, makes the store become more attractive for the replenishment purchases as well. So we've seen this increase in the flow, especially in these stores that are more central. in the extra stores with very strong customers coming in for retails, especially in the most, but also in the supermarkets. So we also see another factor that supports us and helps us with this, which is the increases in logistical costs in Brazil. which if you've seen in the middle of last year, there was a decision from the Supreme Court about the measure of the new truck driver law that also impacts a series of obligations in companies and industries that operate door-to-door that makes the advantages and logistical costs for deliveries door-to-door, especially in big cities, making us become more attractive for these B2B customers that buy with us. that also have an advantage of not having such a big working capital demand. So competition is always very intense. The sector went through an intense movement with high growth with regional players. And in our vision, the numbers we saw in the fourth quarter demonstrate that although we're in a challenging environment with more competitive scenario, ASEI was able to reach its levels of sales persevere meter And cash generation, that really makes competition adjusting its policies and trying to find ways to pay and find the best performance in the market. But the market is always very competitive. So this, of course, is apart from the inflation. We do have a difference in inflation in 2024, but that's not that relevant, especially when we take a look at the beginning of 2024. Gains are coming mostly related to volume than inflation. And this also allows us to estimate that the actual consumers and customers would have a little more resources, considering that we've gone through three years with a huge trade-down effect, a switch in brands and product trade-downs, which is about 10% to 12%. So we do expect an improvement in the economic scenario and the interest rates that are really high at the moment. But part of this will also allow us to capture what we've seen at least now in the beginning of the year. Thank you, Gwenaes. Thank you, Belmedo. Our next question is from Felipe Hache, Southside Analyst at Goldman Sachs. Felipe will enable your mic so that you can proceed. Felipe, please, you may proceed. Thanks, guys, for taking my question. I wanted to start off with a quick follow-up on my Chris's question at the beginning of the call. To get into more details here, the line of personnel seems to have grown way below revenue. So I wanted to get into a little more details that we should consider and any details you can mention would be great. So moving on to a different topic here in the investor day in the end of last year, we talked about some initiatives and to increase monetization based on this initiatives you already have. And so when you consider this process, commercialization of the deficit spaces, but also some aspects related to financial services. And so maybe creating new products, considering receivables of B2B customers, credit in the stores, and other initiatives that are very interesting. I wanted to let you know if you could give us an update on how you would expect these initiatives to move on in 2024, if there's a different focus. important. I think soon I'll be talking about the new services. Some of these have higher levels of prioritization. So, of course, there's a series of new initiatives and we should provide some new visibility and We should also see the possibilities of gains and also execution. And also, we'll have some more solid data. But of course, also from the perspective of exploring some categories of products, we actually almost finished the refurbishing work we had to do now with the starting process of the increase of flows. And this will also help us with the allocation of this space. There's an intention to explore these advertising spaces. So we can also see that in December, we had 45 million people coming through our stores. And so in total, we're talking about 450 million. So this represents an opportunity not only to explore major stores, but also... stores that have big spaces and for the advertising media. And not only for our supplier, which is the Nestle products, et cetera, but even for companies in other segments. So considering also customers in class A, B, C. And so, yes, the company does expect to generate important, raise importance of revenue. And of course, in the maturity phase, The main focus initially was to guarantee the execution from a product sale perception and that's the core. Then now we'll start seeing a focus of having a bigger volume for expansion. And this also leads to possibility of having more maturity in new categories. And so that as they can continue being a reference, I'll pass this on to Anderson to talk about productivity gains as well. Well, Felipe, once again, thank you and good morning. Actually, when we look at expansion, we haven't seen major volumes open, but in every store we open, we have like our top four. And the expectation is always you have a new team, it's an experienced team, But we always look at good level of service, which is a concern we have in our operation. As we mentioned already, previously, we tried to find in this value proposition ways to stand out. And so we consider that we do have a big differential in this model. But of course, we had the experiences and the maturity and lessons learned in the new services. There's no major structure change. Actually, now I think we have a value proposition that is very positive already. We're going to focus on providing excellent services to customers. And when you open up a store, the level of maturity requires some natural changes and adjustments at some moment or another. And the store that sells more, you position more people there. If the store sells a little less, you adjust the team. But at the same time, you have a lesson learned and gains in productivity in the operation. So I think we've been maturing positively. And we've been working on this team to deliver more productivity. And the main point is productivity, scale gains, and so that we can deliver better services. So that's what we've been working with over the years. Thank you. Very clear. Now moving on, our next question is from Jean Suarez, the Southside Analyst at Citi. Jean, we'll enable your audio so you can proceed, please. You may proceed. Okay, thank you. Good morning. First of all, I wanted to hear about you in regards to the organic expansion. And also when it comes to competition, one point I thought was interesting is that you mentioned bringing customers from traditional retail and attracting these people. So where do you see bigger opportunities? Which states or markets do you think you can attract this kind of customers to do like their monthly shopping or also their replenishment shoppings? and explore how we can see this mix evolving between B2B customers and B2C customers. And the second question is also about the CapEx. I think it's clear that you'll have smaller CapEx when you look at organic versus conversions, but I wanted to understand if we can quantify this, and we have a number of about 70 million. I wanted to understand how you can compare this up ahead And what's the sustainable levels of the capex per batch? So for the organic straw network, and so I'll say from all of the players in Brazil, is one of the players that has the biggest expertise. We have stores with 1,400 square meters up until stores with 10,000 with all the differentials that this brings. So we have a group of stores that we mentioned in the investor day and also other opportunities. And we can see that we have stores that are different sizes. So to give you an idea, in the organic store network in the Sierra, we have stores that are 4,000 meters, but others that are even bigger or smaller. So in the southeast, the expansion in the Sierra area, is really well distributed. But we have other expansions also in the north, in Makapa, Belém, Manaus. And so even in Guarulhos, we have stores there. So the store network is still, we want to highlight that the expertise to operate allows us to have a broader perception when it comes to organic growth. So we're assessing projects that have 3,000 square meters and even others that are 8,000 square meters. So the search for these kind of customers really grew with the inclusion of these new services and location of these other location stores as well. So most of the expertise with the actual stores will help us in the organic expansion as well. So we're going to be opening up a store between Trabajadores and Dutra, which is the first store in the region with 400,000 inhabitants. And so even in the southeast or metropolitan region of São Paulo and Rio de Janeiro, we still have major opportunities for açaí. In the other network stores in the northeast and north of Brazil, where açaí already has a pretty good level of penetration, but there's still room for growth, such as Manaus, Belém and Macapá. But as you balance things out with these stores and you bring them into more downtown regions, with a bigger offering of services, cash and carry also stops being searched for only for like monthly shopping. So we've seen a bigger search for smaller shoppings as well for customers that used to mix our channel with other channels and even for customers that aren't used to performing big purchases. So when you look at this public worker, government workers or people that receive monthly purchases salary, buying a big monthly shopping is more interesting. But there's also a lot of people that are informal and they buy daily, right? They don't have like a monthly salary. So we can also service this kind of customer now as they are used to buying smaller purchases here and there. So our objective is to continue to penetrate about 25% penetration demonstrates this. And for CapEx effects, there's a big variation. So the project also has some variations in the sales area. For organic stores, we should still be working with the 70 million reais, as you mentioned, with the projects that we expected for this year in 2024, where we hold on to a few stores. And besides this one in Guadalupe, we also want to highlight this one in Chirateng. We're going to be doing the reopening now with the store in Vila Maria, the first cash and carry in Brazil. And we were able to renegotiate this. It's a very important store as well. We also have a project for our store in Guadalajara and Ventos Haze. These are other stores that are very heavy when it comes to investment prospectives. So what's the balance point for this project, right? The ROIC, when we look at the invested capital versus the expectation for sales and what we generate for cash versus working capital in these stores. And so we should have a network of organic stores that's going to be a little more mixed. So not only stores that are like 6,000 square meters, 7,000 square meters, So we would see stores that are 3,000, 4,000. We see that there's room to continue to advance. I think that my answer was a little long here, but I hope that was clear. I wanted to give you a little more info here. So maybe just to focus here, do you think that this greater investment versus competition, you guys have been investing more And I wanted to understand a bit of this dynamic comparing with other players. So we see values that are a little smaller for some players. In organic stores, no, because if it's a comparable project, I don't think there's going to be a difference in the value between what we do or what another player can do. For organic stores, it's a lot simpler. Then you have this variation according to the size of the project. So if you have a project for stores that are a lot greater, there will be a big variation. So if you consider from a Construction project per section is going to cost maybe $30 million. So to not only look at the average investment per store, you have to look at the average. Well, is it possible to have a store with $40 million? Yes. There's some stores that are going to cost that. But, of course, the volume of sales in the store is not going to be the same as a store that maybe costs $70 or $80 million to build. So the Guadalajara project is the big store there. It's our first store there in Guadalajara. So it's a store that we expect to sell about 380 to 400 million per year. So that's really important to look at because we always have to consider the average revenue perception perspective per store. So we have 280 stores with over 20 million in revenue, over 20 million in revenue. So in the conversions, yes, we do have a great investment in cap banks and stores where you have a conversion of a store, you're going to have to, you're going to choose the stores that require less investments, which are normally ground level stores or smaller stores. So in the extra store network, when we looked at competitors, for example, that the hypermarkets before that were ground level stores, the conversions cost is a lot lower than the conversion cost for a store that's on multiple floors where you have underground parking and all of this. The cost to increase the load on the flooring to three or four tons is a lot higher, which is what we require in our store format. So what this estimates is the expectation and how this is. It can only be a metric. Okay. Understood. Great. Thank you. Next question is from Ruben Cole to our Southside analyst at Santander. Ruben will enable your audio so you may proceed. Please, Ruben, you can proceed. Good morning, everyone, and thank you for the question. I think all of my points were already covered, but I just have a last follow-up here on the discussion of expenses. to give us some tangibility here. Do you think you can quantify the relevance of the pre-op expenses in the fourth quarter of 22 when you had a lot of store openings and comparing this with how much this was now in 23? Thank you. Well, in 23, it was very low. In 23, you had pre-op expenses that were impacting. Of course, I wouldn't be able to quantify this, but I think Gabriela can send you this information later. Because in 23, it's not that relevant. In 22, it is. In 22, we had an impact of our expenses still. So we already expected that in the fourth quarter of 22, there would be an impact. So then you have the effect of the store ramp up. Normally, I say from 14 stores to 288 stores. So, coincidentally, year over year, we were adding on a new store network. But, of course, the proportional level was never that significant as it was in the end of 2022. And so margins that are lower and all of this, of course, reflects the ramp that was expected. So I think that in 22, we had about half, 0.70 or 0.50 beeps of pre-operational expenses. But I think Gabrielle can get back to you with this information in greater precision. And not only pre-op, but also there is another aspect that we also highlighted. But because we have new stores, you have costs that are a lot higher at the beginning of the operation and you're searching for ways to attract customers. in stores that are more downtown regions, customers also have a sales curve that is gradual. And then, of course, it makes you have to work with this higher expense level initiative. So, yeah, I can also get the rest of the information with Gabby later on. But also, I think this point really calls our attention, which is where these expenses actually helped you guys to make the decision to invest a little more on your competitive advantages in this quarter. And I think this is a pretty different dynamic compared to what you guys were discussing throughout the year, where the elasticity and price investments wasn't really bringing major returns that would be equivalent. So you guys weren't working on this that much. So could you notice what changed from now on? to have this elasticity? Is it something related to the profile of stores and the socioeconomic level? So, of course, we were balancing out this process throughout the quarter, but the perception in the fourth quarter, considering that we already estimated this, considering the volume of sales where you would have a dilution in expenses, and that we would have room for investments. And so you can notice that there's more caution from customers throughout the entire year. In December, you have the festivities, and of course you have parties and celebrations. So if there's a moment where you could use this strategy that was a little different, the investments that we had in markets and prices you would sell at the lower margin, but you wouldn't bring any impact on the volume. But in November, with the entrance of the 13th salary people received, and also in December, this equation would maybe be a little different. And that's what happened. So it was really supported by the lower expenses. with the stores and the conversions. So the next question is . Oregon Stanley. We will enable your audience if you may proceed, please. You may proceed. So thanks for taking my question. I think most of the questions are already answered, but I wanted to talk about a point regarding the forfeit. And in the fourth quarter, it was 1.5 million. And this was related to suppliers of products. But then when you compare these 1.5 or 1.1 compared to the numbers that you guys had, had provided in the third quarter, we can see that there's an increase in this forfeit factor. And this was mostly related to the point with products. So I just wanted to understand if the effect for the third to the fourth quarter was something that's more seasonal or if there's something different involved that impacted this. Okay, great. So this is not our decision. It's the supplier that decides to do this. with the deadlines and contracts and terms. But our suppliers, of course, obviously, this is something where they can decide to discount this, which doesn't depend on our agreements. So we register these operations. So our perceptions. is that we have high interest, the cash position is tight for everyone, and it's natural that these suppliers will have an increase of their volumes, discounts, to be able to handle expenses at the end of the year, especially in the 13th salary. So this is an operation with the supplier. So we just monitor these activities, considering the agreements we have, but this is a decision from the supplier, as well as So the discount on receivables is one of the oldest kind of operations in history, right? So it's something we create in the market. That's the decision of the suppliers. And so that they can define the anticipation. And so we search for this with the banks we have agreements with. Okay, perfect. Very clear. So our last question comes from Joseph Jordan of the Southside Analyst. Joseph, we'll name your audio so you can proceed. Thank you, guys. So I wanted to explore this issue with the price, what you guys have seen as a gap And we've been starting to see how Asahi is transferring less prices as the main competitor, a lot more in line with the transfer of prices from the regionals. So then the second question is about the working capital. We've seen an extension of about 10 days, excluding the forfeit and also in the suppliers. So I wanted to understand if this is structural, if we should see these 75 days we've seen get back to those 60 or lower than 60. Okay, thank you. Let me answer this. Remember, forfeit is a decision of the supplier. So just about competition here. Obviously, we look at these competitive movements And for competition, we have the variation store over store, cluster over cluster. So it could be that in a certain period, it depends. So it's kind of like you have to consider two or even more that according to competition, whether it's national or major, it doesn't matter from a competitive perspective, the company becomes more competitive. So it's a lot more individualized. So the size of the company, and the amount of places we're located in. You can't say it's a single policy, right? The strategy is operated according to the region's reign. And if you have a regional competitor that's more competitive, that will also be more competitive. It seems like we had an issue with the connection. We'll be coming back in just a few seconds. We did have a technical issue here with the connection. We'll all be hopping back in just a second. the company continues to work with deleveraging and we're continuing to search for ways to consider growth. And this is a positive expectation for 2024. So I want to thank all of my team for the work that has been done throughout 2023. As I mentioned, I didn't discuss all of the numbers here, but This is all because of the 450 million people that visited our stores and bought from us and also our daily efforts done by the major team we have that was able to build a company that tripled in size in the past three years with a growth taker of 28% and a company that always grew with its own cash generation. Ever since we switched the SAE model, we never received any investments from former controllers. The company has always generated strong revenue leverage, deleveraging capacity. And now we consider that we'll be able to deliver as we already invested in important differential or value proposition and what we have been working towards to keep this kind of differential in the market. Thank you all so much. The earnings call for the fourth quarter at SAI 2020 is officially ended. The investor relations department is willing to answer any future questions that may exist. Please have a wonderful day and thank you for participating.