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Good morning everyone and thank you for waiting.

Welcome to the earnings call for the third quarter of 2024 at SAE Atacadista. I would like to highlight that if you need simultaneous translation, we have this tool available on our platform.

In order to do so, please select the interpretation button through the globe icon on the bottom part of your screen and choose your language of preference. Portuguese or English. We would like to let you know that this earnings call is going to be available as well as on ir.sa.com.br where you can already find the earnings release. During the presentation in the company, all of the participants will have their mics off. Then we'll begin the 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 announce, a request to activate your mic will appear on the screen. Then, you must activate your mic to submit a question. We would like to instruct you that all questions should be submitted at once. We would also like to highlight that the information in this presentation and possible statements that could be performed during their call related to future perspectives in the business, forecasts, and operational goals and financial targets that Açaí believes are based on assumptions and beliefs of the company's management, as well as based on information that's currently available in the market. Future statements are not a guarantee of performance. They involve risks, uncertainties, and assumptions. as they refer to future events and, therefore, rely on circumstances that could or not occur. Investors must comprehend that economic, general conditions, market conditions, and other factors operationally can affect the performance of a site and lead to results that differ materially from those listed in such statements. Now, I'll pass the floor to Gabriel Ilu, the Investor Relations Director at SAI.

Hello, good morning everyone.

Thank you once again for participating in our earnings call for the third quarter. We're going to present the executives that are currently with us on the earnings call. We have our CEO, the VP for finances and IR, the operations VP, our commercial VP and logistics. and Sandra Vicari, the People and Management and Sustainability VP. Before we begin the presentation, I'm going to pass the floor to Belmedo for his initial remarks.

Sorry, I was on mute.

Good morning, Gabi, and thank you, everyone. for your participation today in our earnings call. We're gonna share the numbers for the third quarter of 24, as well as our plans and strategies in the company for the moment we're in. I think the third quarter has an important point because it really sets the scene for turnaround in the net debt cycle in the company since the first quarter where the company reduces not only the debt from a leverage perspective, but also the nominal value of the debt and a drop of 208 million, but that's 18 million, sorry, but the last drop in the cycle happened in the fourth quarter last year with seasonality factors, but from now on, we'll keep this trend and this cycle, dropping the level of debt and, of course, also the leverage ratio. So I want to thank all of the SAE team for their work and the numbers we're going to be presenting here in the third quarter. And I want to share the measures we're implementing to be able to face the scenario with the higher interest rate that we're experiencing at the moment. As I mentioned previously, We had a reduction in the debt of $218 million, and today, on the 17th of October, you probably saw we issued a relevant event reviewing the company's projections for investments in 2025, and the objective was to take constant balance measures to face the scenario with higher interest rates due to the company's leverage.

but also keep the growth rate in the company considering the fact that we're still not present in cities and markets that are very important to us.

And based on the numbers we're going to be presenting up ahead, you'll see the capacity for cash generation, maintenance of the margins, and stability in the expenses, and especially in the business model that SAI has, which continue to have assertiveness and acceptance very strongly in the markets where we're present. So you can see in the presentation, we have a photograph of a store that's still in the Guarulhos region, a super important region, the store in Pimentas, another region in Guarulhos with over 400,000 inhabitants. It's still the first store at SAI there in that region. So with that, we reached 21 openings in the last 12 months. a net add of another 8% in our total sales area, and four new stores were delivered now in the third quarter. We should be delivering the 15 stores expected for 2024, and we'll be going over 300 units as our milestone of stores under operation in the month of December with a company that grew with 38 years of existence, and all of this growth was always supported by its own cash generation. SAE, over this journey, ever since 2011, is a company that never received investments. With its own cash generation, it was always able to sustain growth and projects and investments. So now in the third quarter, we have... Revenue is going over 20 billion reais. It's an add of 1,714,000,000 compared to the third quarter of last year. And the growth in the total store base of 9.3%. And that reaches a milestone of 77.7 million tickets, an important add-on of 1,700,000 tickets compared to the third quarter last year. And if you look at our business model, because we're a company that's not purely retail, 60% of our sales are still done to B2C, but 40% is done to B2B. And this kind of customer is split in between resellers, utilizers, and food service people, where food service and utilizers represent a more recurring public, but the reseller public is a lot more geared towards price, especially paying on credit. So the market dynamics can affect this public a little more maybe than the other publics, and that's one of the reasons why the same stores in the quarter has an advance of 2.7. considering the lower performance in the reseller public that's mostly motivated by price and payment conditions. So the EBITDA pre-IFRS, in this case, with Açaí, there's an evolution above the sales, and it goes over 1 billion reais. So in our case, 100% of the EBITDA In the pre-IFRS vision, as you've seen, it's cash back, so the EBITDA margin in the post-IFRS lands at 7.3 and 1.4 billion reais, so you have an important highlight also for the LAIR, which are the profits before income tax, and that, of course, impacted our income tax line and then the net income. And so we're gonna present this in more details with Peter's presentation. where you measure the financial performance of the company and the cash generation capacity of the company as well. If you can advance to the next page, please. Here we brought in, within the third quarter, how the evolution is of part of the stores. The first stores now that are still reaching their second anniversary, the first converted stores, which is probably the biggest project SA has ever worked on with the hypermarkets. So those stores reached in the third quarter 27.3 million of revenue, and they reached a pre-IFRS EBITDA less in line with the company's margin, 5.4. The stores have better location, and they pressure the EBITDA line due to the higher lease costs because of the locations, but they follow the intentions of the project, and these are stores that are very determining. Of course, there's still maturing some of the services.

We still haven't been able to begin yet.

There's still stores from 22 that are suffering a bit with a bit of the construction projects and work to implement the services with some advances also the galleries and the additional services in the same location. So when it comes to new service and exploring other types of activities that we're gonna highlight a little bit later after in the investor day that we'll be having You can advance to the next page, please. Well, we also bring important evolution of the gross profit in the company. The company, as we all know, went through a cycle that was really strong for growth in the last five years. We had a CAGR of 21.5 year over year within this geography of five years. We're talking about the period before the pandemic and the impacts we had. There's a pandemic, COVID-19, and the purchase of the extra stores and the entrance of the hypermarket stores and the inflation period, the deflation period within this year, in the year of 24. We had many impacts with the increase of the rates of ICMS in many states in Brazil and the gross margin. is really stable. So even with 117 stores open in three years, we've still achieved about 40% of the store network with less than 36 months. And so if over 50% of the stores receive services, at least three services that are already available, but the strategy commercially and the negotiation with the team and the value proposition really makes us go from $1.1 billion in gross profit in 2019 to over 3 billion reais now in the third quarter of 2024. We can advance to the next page, please. These changes, because we're talking about not only a cycle of expansion that's very strong, but also an actual modification in the business model, so a performance model, an operation model. that Açaí has been having because Açaí has been really one of the most innovative players in the sector when it comes to increasing penetration in all of the different social levels. It's a model that's super democratic, and I think it's going to be one of the most unique models in the world because it services consumers from all social levels in Brazil. Considering the Nilson perimeter, the channel has over 50% supply in the households in Brazil, Açaí. is the cash and carry that's most well known in physical and digital retail in Brazil. We are present in over one of every three or four households in Brazil with a customer flow of over 40 million people visiting our stores per month.

And of course, this evolution and this achievement of customers would not have been achieved with the prior model we used to operate in. So on this side,

We present how the expenses, when we consider, when you deduct the lease factor, then of course you have the real estate costs that are a little higher, and that's more of a real estate factor. But without that, we wouldn't be able to have stores for the Class A, B public, or even service the food service better. And in this graph, we can see that expenses, when you look at the pre-IFRS vision, which is practically the accounts without the leases, they're completely stable. So the pre-IFRS expenses that closed in the third quarter in 2024 was lower than the expenses we operated with back in 2011, 2015, where the model would not be able to deliver this purchase experience in price. So that demonstrates the company's discipline and how much productivity gains we've had over the years and... We're invested in this purchase experience to increase the coverage of these amounts of customers and evolve in the sales that we were able to evolve in the last few years.

So we can advance that.

I'd already mentioned in the first page initially that the EBITDA had an advance of 12%. We reached $1,021,000,000 of EBITDA pre-IFRS, that's cash, and an evolution within the nine months of 21% compared to last year, and a constant evolution in our purchasing experience. So even in the year of 2024, where

We have a cycle with expansion, and we're still advancing this rollout of services from this year all the way to January.

We had 184 services added in our stores.

We have a huge amount of the customer part of the area covered, and that's one of the biggest transformations that SAE and Kashukeri have been going through.

So on September 4th, we opened our fourth unit in Manaus. It was followed with our distribution center. which is going to be an important support to our operations in that capital in a region that is so important in Brazil.

And I want to wrap up with Iepira. We can advance.

And I want to show you, and then I'll pass it on to Vitor so he can talk to you about the financial aspects and the debt and other details on the financial performance. Thank you, Belmiro.

Good morning, everyone.

We're going to talk about, as Bamedou just mentioned, what are the details of the financial results, the debt, the leverage, and profits. So here you can see on this page, you have an improvement in our financial results when it comes to nominal aspects, as well as the percentage of the net sales. So going from 3.0% of the net sales to 2.6 now, and this improvement in the financial results are really related to higher profitability in our cash. As we mentioned in our release, our average cash invested has grown, and we'll get into details about this, and also a reduction on the anticipation of receivables. And finally, we have the non-incidents when we compare with the previous quarter. of the interest related to the debt we had from the acquisition of the hypermarket. So these three factors together brought in this financial result to a level that's a lot better and that contributes nominally. And as a consequence of this, we have a strong evolution in our profits after income tax. We grew 83% and That's a direct combination of the evolution of the EBITDA and, of course, with this improvement of the financial results as well. So profits before income tax go from $142 million to $260 million. in the comparison of this last quarter compared to the same period last year. And finally, the net income evolving. The net income in the pre-IFRS vision grows 10%, and so that's a consequence of the evolution of the profits before income tax, but they're also affected by a shift considering a lower positive impact if you consider the subventions for investments that's not a new topic we've discussed this in the two previous quarters and so that impacts the credit in this year and that makes the comparison with the last year not as strong as the comparison we've seen in the income

So here we can bring a comparison, and it's important to highlight that the investments that were performed, and as we've already described here, this transformation of the hypermarket, which gave us a huge boost, this strong investment cycle was almost all funded by our own cash generation.

90% of the investments were funded with our own cash generation. So when you look at the operational cash generation in the period, it was $7.7 billion. And we can see that on the left side of the slide. And we can also see investments of $8.5 billion. So it's really important that Acai should be a strong cash generator. and how it was able to support this cycle that was so strong for investments and growth, placing SAI in a highlighted position within what we've seen in the retail market and generating cash and funding its own growth.

When we move on to the next slide, it's important to also mention that we must consider the deleveraging of the company.

So deleveraging is a focus for the company, and it's going to be a focus in 2025, as we've already mentioned in the last presentation, and especially when we consider the rather than the fact that we've just launched recently. So here we need to highlight the evolution of the net debt upon the EBITDA with the leverage indicator, the third quarter, where we've reached levels of 3.52 times, and that's a reduction of 0.13%. and a reduction of almost one time EBITDA, 0.93 times EBITDA when we compare with the end of the last quarter last year. So this is a strong level of leverage. We're going to continue with this process and we hope to reach the end

with this indicator below 3.2 times EBITDA.

And so that's the reduction of the debt. And so in the quarter, we had a reduction of the net debt when it comes to the end of the third quarter last year, excluding any seasonality effects, and also when we compare with the prior quarter.

So that's a nominal evolution of the debt.

And when we consider this from 2025 onwards, it's a continuity of this deleveraging, and we will wait till the end of 2025 up to 2.6 times in this epida. And besides this, we see the composition of this, right? So the deleveraging, this is happening due to reduction of the epida, and we do expect the continuity of this up until the end of 2024. But especially 2025, the deleveraging must happen in a more balanced way between the evolution of the EBITDA and reduction of the nominal debt. Now, we must also highlight that I'm, of course, improving this breakdown of the results of financial indicators so that you can have the best understanding about this. And here, We bring in cash availability, and when it comes to this point, we had 5.9 million. The availability is 16% higher than what we had.

But just as importantly, we can see this breakdown of availability. And so maybe it's like three times more. And we ended the quarter with 1.86 billion riais. that were not discounted at almost 700 million and a discounted receivable.

And so we can see higher availability and also a bigger volume of non-discounted receivables.

On the other hand, you have an increase of the average cash position.

That's also something gradual, quarter over quarter. So we have in the previous quarter 835 million euros. cash on average and now we've gone over 1.3 billion applied in the quarter and this cash position also evolved a lot when you compare with the third quarter last year. So more and more we're searching for liquidity and a more robust cash position and then of course discounting less receivables.

And we would be able to have this in the closure of each quarter.

And so we've already detailed this.

There's a cycle of cash, so that varies a lot. due to the cycle of payments. And that's mainly because we would like to have a strategy of three payment dates. So it's important to highlight besides this reduction of the leverage, the initiatives we've implemented in the last few months, especially when it's related to the liability management for the company.

So these were three important debt operations we performed together with the market. And the two most important debenture issuances, the first one we completed at the end of the second quarter, and the second one that we completed in the beginning of the month of October. These operations allowed us to have, first of all, an evolution that was very significant in the debt profile at two relevant dimensions.

And so, these two main issuances went out through And they had this coupon of CDI plus 125.

And then we reach the end of this process, already considering the prepayment that was associated to the second issuance of debentures for some bonds that were maturing but a little bit in 2006, as I'll detail in the graph, but then reached the level of CDI plus 140 as an average cost for our debt in October 2024.

And then an evolution of the average term, which was 32 months, and that becomes 41 months.

And so now we're going to detail the maturities in the last few years. and so the maturities for 2025 and 2026 had a reduction of almost 3 billion, 2.1 plus 2.9 billion, and then that goes on to 2028, 2029.

And so this extension in the profile and reduction of the maturities for the next two years, we'll see them appear, in 2028, 2029, and this extension of the term, providing this payment flow that's a lot more constant throughout the next few years, providing more safety and more stability for our cash flow.

And so that's what we wanted to... share with the financial aspects when it comes to sustainability.

And so, thank you. Considering sustainability, I want to highlight in this quarter we had

alongside our strategy and we had the publication of the animal well-being that sets the standards for our animal protein products and animal origin products and this guideline intends to really engage our commercial partners to have better quality standards and more ethical practices.

When we get into our diversity assessment and we were able to identify the over 67% of our employees,

self-declare black. And so as a, we also identified over 43% black people in leadership positions.

And also, and so these were really significant. And so when we consider the social impact action,

We promoted the donation of over 3.5 million meals during the year, all of them through projects and campaigns, emergency campaigns, etc.

And then what we talked about, they have the 7th edition of the Açaí Academy, where we had... They received technical capacity. So these are 2,100 entrepreneurs that are awarded.

And so when we consider the ethical and transparent management, we considered our data that was audited. They were certified for the third consecutive year with the gold seal. in the public record for the issuance at the GHG protocol.

So, we had many awards, and so they also consider the ranking of the best and greatest.

We were elected as the best retail and wholesale company. We also had the Top of Mind Award as the most well-known in the supermarket and wholesale sectors. And also for the first time, we were present in the ranking for the GPTW, where we occupy the top. 18th position with companies that have over 10,000 employees. There are many different awards, and I want to highlight that these advances are a result of the commitment from all of our team that has been searching for ways to build a company that's ethical, inclusive, and sustainable. Thank you so much. So we can move on to the next slide. As you've probably seen, the transformation of the cash and carry and SIE and the movement really seems very proud to have been one of the protagonists of the company. And to be honest, if we were to see the company operating with the free operational expenses at a total considered the best retail company or the most well-known brand in the country as top of mind and most known in the cash-incurring supermarket. That would be like almost unbelievable if you've seen our journey as a SAIC.

So this is an achievement, and yes, we're very proud of it, but actually the basis for, and it's translated through the other 500 million people that visit our stores, and so that would be translated into results, cash generation and reduction of the debt, which is something that I'm really concerned about. We can move on. Next slide, please. And so this is an important reason for much pride.

So just to give you a bit of the perspective, Vitor also highlighted this quite a bit.

with the beginning of the cycle and so we're considering a drop in leverage.

So this expectation you had as estimated not only with us but in the overall market when you had the addition of the extra and the board and the company management as well are really walking hand in hand when it comes having this focus so that from now on we can reduce level of leverage and that has been proven in this quarter.

And to reinforce the guidance we already had in the end of 2025 of 2.6, we also didn't reduce expansion entirely so There's some very important markets and projects that are extremely important for the company when we consider the evolution of the business model, but this is going to be a joint effort.

And so what we're trying to do is prioritize cash generation, especially when it comes to this focus on the leveraging.

And the stores coming in for 2025, we have projects for them for the end of this year, projects that are very important. And so that was an important focus, right? So we could focus on this and have, we also had an important evolution in digital, which is the evolution of the app, which you hear quite a bit in the anniversary campaign and other partners that we're also establishing with Glass Mile Partners, as well as other projects that the company should implement from now on.

As a basis, considering the biggest strong point we have, which is the brand that's most well-known and the company that's most present in any sector and a flow of almost 500 million people that go through our stores annually, which gives us a strong point and opens up a series of opportunities From now on. So from my side, that's it. Now I'll pass the floor back to Gabi for us to get into Q&A. Thank you. Thank you, Belmiro. We can start the Q&A now.

Now we're going to begin the Q&A session. And we want to remind you that if you have any questions, you can select the Q&A icon on the bottom part of the 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 that mic to submit questions.

So we would like to ask you to all send your questions in at once. As we begin, our first question comes from Joseph Giordano and JP Morgan. We'll open up your mic so that you may proceed, please. Hi, good morning, everyone. Good morning, Peter, Bomito, and Gabi. Thanks for taking my question.

I want to start off exploring three points that are quick.

The first one may be is the most important, right, which is how you're looking at the evolution of this food inflation.

We see some categories that have prices growing. So I want to understand how you're seeing this situation and also if there's any substitution effects as well in this context.

The second point is going to be a little more related to the expansion, right, the 10 stores for next year.

and what's actually higher for this possible upside, and if we would think about changing the strategies with the BTS model and anything.

We also had a margin gain this quarter, and I want to understand what you guys are looking at when it comes to margin gains, trying to break down a bit between what's operational leverage and maturity of this portfolio that's relatively new, and then the second point also, looking at efficiency. Thank you so much.

Thanks, Joseph.

Well, these are really broad topics. So you have inflation in sequence, and then we've seen this deflation movement as well. And in July and August, but in September, that's already an initial inflation sign. And then you have some categories already demonstrating the sinkings in price. So we already have this scenario with food inflation, and we also have a scenario of demand. Considering consumers, it's also pretty pressured.

But, yes, there is an inflation scenario.

And then in October, that was already visible in some categories. We have this inflationary movement, but of course we have currency influence depending on the level they're in, even in climate events. We've had with the main issue of the drought, and all of that is reflected in some product categories.

So we do expect inflation movement in the fourth quarter.

than what we had seen in the third quarter.

So when you consider the expansion for the next year, we have five or six that are hired.

These are projects that were underway. Some of them were even expected already for this year, and that's why some of them could still be reviewed. But what we still see today is the number that we considered in the relevant fact for that level of investment that we set. And so it's important to mention that part of that investment, we have a maintenance expenses and most of the stores, although they're new, the cash and carry model itself doesn't have such a high investment, right?

So our expenses for survivors, CapEx is about like 20% of the depreciation we have. But there's still important projects to be involved in and to be able to extract more value and create the assets so that there's major advantages also in the self-checkout and other issues. So expectations, the company has 40% margin. We can notice that the market only comes to competitive advantages, but the objective of all is to gain more margin. So here we do have an increase in margin, but the ICMS rates kind of drop because of the rate that we had Many states we had an increase of the ICMS rate in the first and second quarters of this year, so if not, we wouldn't. We can't obviously know what's coming from a tax perspective or from a competitive market scenario, but when you look at the basis of the progression, we do expect an increase in the margins for 2025. Considering that for 2024, of course, everyone has to be very careful.

We can get the trade down aspect.

The worst is gone behind this, right? So from now on, consumers will be able to resume this and also can expect a bit of the inflation that also helps us as an overall sector. The sector was always very benefited by the inflation period, so either because of the supply capacity of the small businesses and also because of the price differences we have with regards to the different traditional retail channels that are still very, So that's where you see the Nielsen vision, right?

And that's where we see that there's still advances in this possibility for our sector. I hope that was clear.

Muito obrigado, Belmiro.

Thank you, Belmiro. Continuando. A próxima pergunta vem do João Soares. Coming from João Soares at Citi. João will enable your audio so you can proceed. Please, João.

Obrigado. Bom dia, pessoal.

Thank you, guys. Good morning. Well, following this logic, I wanted to understand the competitive advantage that Açaí has.

Could you make a lot of margins?

And I think this is a very positive point.

But when you consider the growth, we see the scenario that's still quite challenging, right?

We have a lot of information here from the last two years, and I want to understand What the competitive advantage is with Açaí and getting into a broad topic here.

You said it's a business model that's changing.

So you must adapt and you need to have a store that's different with services, etc.

So I wanted to understand what's the positioning like?

How do you get into this context and how do you participate in this scenario, right? And what do you think Açaí needs to do to position itself even better?

Thank you.

Well, let me see if I understood your question. From a competitive vantage point, what I mentioned in the first page, I think it's really important to mention that the cash and carry model, a lot of people say, oh, wow, the biggest retail model reaches this percentage of the homes. But it's a model that has 40% of its sales done to B2B customers with very different dynamics. when compared to the B2C customers. So we have the food service public, for example, with a whole set of customers that we consider to be recurring, and customer and food service and most of the utilized. And that's where Açaí always has a competitive level that's very strong. Just take a look and you'll see maybe the best indicators when you look at the sales per square meter and the sales per store. If we weren't competitive, obviously, It's not only about prices, you see, it's also about the store locations and other factors, but we keep our competitive advantage. And then you have a reseller public that's really geared towards price and payment terms, if you consider the pressure and the capital costs they have in Brazil. This public is not very loyal, though, by any cash carry based on opportunities and When we look at this kind of public, sometimes we don't really follow this dynamic that is the same as that of the market because in this period, if the customer is buying a competitor, they're not going to stop buying from us. So that's why when you look at the final numbers and the total base in sales per store, we are looking at a combination of factors.

almost like as if it were two businesses that must be analyzed separately. So the strategy that the company has been taking on in the third quarter was to not burn cash. If you look, we have not burnt cash, actually. We've generated cash to be able to amortize our debt, and so, well, did you lose competitive advantage? No. The recurring public No.

Although, of course, some of the sales dynamics for the retailers, for strategies geared towards price and payment conditions, we've decided to not follow, even if this led to an impact in the same store sales. But when we look at our numbers and we see this public, we also see we're competitive.

I hope that was clear that I was able to address your question.

Yeah, I'm taking advantage of this quick point here about the It's an era with food inflation. How are you looking at B2B? Are B2Bs getting back to buying and stocking up, or how is that?

No.

To be honest, we don't see this trend yet because maybe the prices, as there we should call, where you have a drop in inflation based on a price of a high basis. So maybe some changes in the behaviors, especially last year and this year, that reduced this a bit. In the food sector, it was below expectations for the actual market. And the trade-down movement, that was also going to happen, already happened. And this year, we had major reductions in the sizes of packaging, especially in categories that are involved with the purchase, like indulgent shopping, like basic products don't. But for like indulgence items, you'll see they have the same size of package but a lot less products inside. So the levels of working capital pressure and all of this creates concerns also because for now actually sometimes time that payment conditions could even be better than price. We actually don't see a big stock up movement unless you have like some sign of an even higher peak in prices than what we're seeing now. And we get back to the curves in 23 and 24, you can see there's some periods where everyone was really surprised with the deflation, right? So this creates some concerns among resellers as they could be the public that can stock up more. Food service normally buy, they have like a recurrence of over 11 times per month. They normally buy perishable goods that they can't stock up that much. And that's where they have the shelf life risk. And so we haven't seen this that much. Okay, perfect. Thank you so much. Well, moving on, our next question is from Daniela Ager at XP. Daniela will enable your audio so that you may proceed. Hi, guys. Thanks for taking my question. My first one is, about the opening dynamic for 25. We just reviewed your plans because of the macro scenarios, but we've seen a worsening in the margins in the macro dynamic, especially when you look at interest, indicating an increase that's even bigger next year. So what's the mindset for the company about possible new revisions?

and these are opening plans and also some levers to potentialize or mitigate the expansion and the leverage.

You talked about the sales lease back and the guidance revision, but I'm not sure if with the peak in interest, it's more difficult to have some more attractive agreement. So it's kind of like an update. I know you talked about this recently, but if you look at the macro context, it changes a lot. That way you can see how you're looking at this with 2025. And then my second point is in regards to the volumes. You mentioned the tickets are going up 6%, and it seems more like due to new customers than the volume per customer. But also how you've been seeing this movement up ahead and also as the campaign progresses.

anniversary campaign matures more and more.

So yeah, we just reviewed the stores for 25 and the interest curve has been worsening as we've seen. And so by what we have now with some work between the management and the board of the company, but it's important to take a look at this from this perspective, right, with this production cash generation the company has. Despite the expectations we have, we should reach a deleveraging curve with the reduction and drop of the EBITDA for one year here, and of course the EBITDA was partially

hindered, but we may go through a revision process for 26, but not for 25.

Most of them are already hired, and we're keeping that wide because the company is a major cashier. And so we can see what's the landing point and what we're projecting for 26.

And we kind of know where the company's reaching, right?

There's some other levers with the sales leaseback, but as long as this actually makes sense, right? The moment we're in, considered a high-level 10, 15 years, and that could be something that in just like two or three years, we would be in a debt cash scenario that's maybe a lot worse than what we have today. So obviously, any other measure, the management and board will sit down, make the best decisions for the company, and look at the balance point between this in the short and long term.

So what we could see in our hands is the working capital cash generation in every quarter and really being able to not only deleverage when it comes to the ratio, but also drop the EBITDA.

So really focus on disciplined working capital, but we don't seem to have been working towards this as well as I understand what the operations team and the levels of stocks we have. So the company is a strong cash generator and we have part of the EBITDA also above what we would like for payments of debt of interest at this moment, but we really believe in our cash generation and this quarter is going to be

providing more demonstrations towards this clear sign.

So then getting back to what I answered to Joelle, the volumes we lost to the reseller public, but when you consider the consumer public, there's definitely a gain in the tickets, and you can notice some stability and reduction.

in the trade down, a lot of the trade down that took place happened. But the categories that we consider indulgence that are some products that were affected due to the reduction of the package size. If the customer used to buy four packages of cookies or 200 grams, four of 180, then four of 160, four of 120, four of 100 grams and just gradually reducing. That's their way to keep the penetration after the inflationary period. But what we noticed is that in the last few months, this trend has also reached a level that is not going to advance anymore. So although we also expect that the worst has passed us, when you look at the economic activity, the levels of unemployment and all of this, Even with this new cycle and peaks, we don't imagine any reduction in the purchase power of the population. So we didn't have this volume, and you would notice this, and this new drop. It's not something we looked at among consumers and imagined this could happen, right? Excellent. Thank you so much for that.

The next question comes from Eric.

Eric will open up your audio so you can proceed. Please, you may proceed.

Good morning, everyone. Thanks for taking our questions. We have two points. One is looking at the services a bit.

When you see, even in some stores, they haven't been 100% deployed, but I want to understand what this could represent when it comes to the upside, revenues and margins for 2025. Also, the second point is when you look at the working capital dynamics, when we look You mentioned that we should keep our eyes open in regards to this and search for ways to optimize cash generation. But we've seen things a little more stable, and maybe even your communication has been another stability line. But I just want to understand if you've seen new opportunities and things like that. or if this is more about maintenance in this discipline focus. Thank you. Obviously, when it comes to working capital, we've seen stability that we've already mentioned in the previous quarters, and the company is always searching for ways to find new opportunities. But we think that even though they have this, it's probably not going to be that different for 2025. There's more of a management perspective when it comes to stock and some of you can add on to this. I think when we talk about optimization of the stock, the discipline, of course we're always searching for a little more payment conditions, but of course Anderson also wanted him to talk about this because a lot of the stores still, need licenses or other things that we're implementing.

So a good part of these stores have upsides that are still pretty good in the margins.

And when they consolidate the flows, they'll even explore new product categories. Do you want to talk about the working capitals, Amir?

Well, yeah. First of all, good morning, everyone.

And to add on to this, In the last quarter, they talked about disciplinary law and how we have this reporting capital. And this is going to be maintained, right, because sometimes you may have some seasonality like we see now. in the end of the third quarter, beginning of the fourth quarter where we stock up a little more considering Black Friday and set up a stock for seasonal items where we can balance this out in December and we have these movements.

I think we had in the past some volatility in our working capital, but then that's more related to our expansion rhythm and the growth of the 117 stores. From now on, considering expansion pace, it's a little bit...

slower we should keep a working capital that's pretty balanced and of course we're always negotiating longer terms and to be able to support a good part of our operations that are not supplied by distribution centers and so we really need to have more stock in these markets but of course finding a balance point between seasonality and sales and setting up the stocks and so we have to keep up this that we've been demonstrating in the last few years. I hope to have answered your question, Eric. All right, Anderson.

Thanks, Lamir.

Once again, when we take a look at the new services, we still have many ramps. And so just to mention, we add this to over 90 stores, and so it's over 190 services. And we're still working on this. There's stores that have many opportunities. And these are projects with stores that started a month ago, two months ago. And so we're still working on evolving with this. And so we start within this month. We have about over 40 services. And they've been gaining evolution and greater substance. And that brings, of course, new customers and customers. We've been adding even more, and so we end the year adding even more in this project. So that's an opportunity, and it's a project that has very positive results. So considering this is a new project, there's significant evolution, It's been growing year over year, and there's still a lot to mature and many opportunities for us to continue to work on. This is a learning process. We're evolving and growing, and we've seen categories we can evolve in still. And so within the services, we've been working on the evolution, and I hope that – well, this has been very positive. We've been growing year over year. And so – That's very clear. Thank you. Our next question is coming from Luis Felipe Guanais from BTG. Luis, we'll enable your audio so you may proceed.

Good morning.

My question here, if you could talk about the dispersion and the performance per region throughout the quarter and how you've seen this, if there's a specific region that maybe has stood out more when it comes to performance. And then a second question, if you could talk about catabolization. especially for the stores that are converted. So you talked about a sales number for the converted store compared to the legacy stores.

Thank you. Thank you, Buenas.

For region, we haven't noticed much of a difference. Of course, you have markets where you had more expansion, like the north or the northeast of other competitors, where you obviously have a bigger impact. But When it comes to the behavior of the customary rip performance, it's really in line with the numbers we've seen in the second and third quarters.

So you can notice that the big movements have been taking place nationally.

And there's no type of atypical conditions in any other region. So cannibalization was something that was already expected in the project. So there's a project we're working on in the legacy. with this revitalization, deploying new services. And if you look at the sales per square meter, so customers would go to Açaí, they were more distant, and as you open a new store that's really closer to them, especially considering the food service, they migrate to stores that have better locations. Sometimes because we have prices that are more competitive from the beginning, which is the opening period, and then we also want to attract customers to the other stores, right? And maybe lost customers. So we'll still see some more stability in this front with a major...

not only ours but also with the conversions that the market has had and that of course made us consider the cash and carry has converted a lot of customers especially with end customers when it comes to store opening.

So you have this period where the stores continue, and so we should have a more stabilized vision.

And so we'll be able to start the cycle, and that really has been for quite a while, but we're still reaching two years from now on, and so then we should start seeing this more stable from 2025 onwards. So thank you so much, Bumiru. The next question we have is coming from .

We'll enable your audio so you can proceed, please.

Good morning. Actually, almost good afternoon. But thanks for the question, taking my question. I want to just quickly ask about the inclusion of new categories of products in certain stores or even in the mix of products. overall in stores and how this has been advancing. I know we're still in the beginning of this project, but we wanted to think a little more on this and understand how this can impact not only the sales but also the margins and the lessons learned you've seen so far.

Obviously, Irma. We've already highlighted that considering our flow and everything we've been discussing, we've seen improvements in the current existing capacities and on the 13th we'll have the Investor Day and we'll bring in some interesting numbers that are probably going to be impressive for a lot of people listening.

I didn't want to give you... the spoiler, right, but when we switch back to the investor day. But, yes, that gives us a lot of opportunities, right? We have a lot of opportunities.

And we have players that sell products that are sometimes not that obvious when you talk about the food sector, right?

So a lot of the things I would talk about were almost unimaginable that a cash-and-carry company in Brazil would be the brand that's most well-known for or even get an award from. Isami was the best and greatest.

So as I mentioned...

We had to perform some adjustments also on the products that we were working with but there's some other product projects underway and there's an opportunity that's really clear in our vision for sales of services but also new products looking at the current existing flow. So you can see customers have become more omnichannel. They resist less if the product's at a good price.

At the moment of the purchase, when it comes to the actual online or when it comes to physical stores, that's something that's valid for both sides, right? So there's a lot of opportunities, yes.

And if you guys could be with us on the 13th, I think it's really worth it. Okay, perfect. Thank you. We're very excited. Thank you.

Next question comes from Rodrigo Destin, Itaú BBA.

Well, open your mic, Rodrigo, so you may proceed, please.

Good morning, guys.

Two questions here on my side. First, Phil Medo was talking about, I just wanted to know if you could help us understand the tradeoff between the gross margins and sales, because you had a same store that was below inflation, but you had 20 bps of margin growth.

So how do you equate this internally?

because same-store below inflation may seem a little more difficult, but on the other hand, you didn't have pressure from the gross margin.

So how do you imagine this over time?

How do you balance this out commercially and when you consider this trade-off, right? And so the second one for Fagar, if you could give us some updates strategically on what you're expecting to do at the financial level.

Well, I'm going to answer that first one.

And when it comes to balancing out the sales and margins, I think it's super important for us to see this in a very separate manner between what is for the consumer and what's considered for the individual.

or B2B customers at the first point.

We need to highlight, right, we've brought this in many speeches because now we've seen some market movements where it's not only about margins or volumes of sales, but obviously we work with the resellers, right, and then we have to look at this separately, right, what's considered for consumers. It didn't really make sense to increase the promotional levels,

especially when you consider the production of the packaging. And our search is to really improve purchase experience and conquer new customers when it comes to the consumer.

And of course, also keeping up this recurrence in the public. And so when you consider the volume of sales, we analyze it separately, right? So the levels of efforts we need to have for this reseller product to have the better sales where we see the public goes by us for competitor A, B, C, D, E, and they're always going to look at what's the best opportunity.

And then we have pricing and also timing or payment conditions. And then when you consider the timing for a public that's not going to be loyal, we always view this.

This is part of the model of the cash and carry model. And so once again, you're going to have a same story that's below.

But if they're concentrated in this public and the level of investments, margins, the working capital that we would have to have to keep this at an adequate level, and that could in some way contaminate another public. We judge this to be uninteresting.

So we can coexist with stores that are better when you look at the total geography.

As long as we look at this, we can still be in line with the inflation, maybe because of the level of efforts or even risking capital would be really...

and that wouldn't change the future decision on this customer, right?

So that happens in hotel distribution, but also when you're part of the sale, the cash carries. I hope that was clear.

Super, claro, Belmiro.

Antes só de falar de FIT e FH, só deixa eu entender aqui um pouco melhor, Belmiro.

So when you consider this, payment conditions timing, it's really relevant. You haven't accompanied this, and I think that was very clear. So do you guys see other competitors monitoring this? Eventually, the regional players that maybe still have a good profitable position

going through part of this excessive ROIC onto the payment terms.

Is this a specific condition for the Atacadão, or do you also see other competitors that are migrating in this kind of payment condition situation? Well, we saw one occasional initiative in São Paulo, but I think that now with this new interest curve and this other issue of the financial costs, Apparently, no one really desires to keep up with this. So it's like as if you were to pay a meal at the restaurant and read Stallman's, right?

So it doesn't really make sense.

So anyways, each company has their own way of deciding their strategies, but our focus is to not do this, right? So most of the market also has chosen to not follow this trend that Atacadou started. Great, thank you, Domino. And so now we're going to talk about FIC, our FIC credit negotiations. So first, how is this doing? Well, it's a good operation right now, and it's an operation that supports our customers as individuals, and that has been generating good dividends, as you've been saying.

And operationally, there's not that much friction. But... That's an operation that works for... Of course...

with the other partners that are part of the FIC, we search for additional alternatives and possible changes and improvements of the business model so that we can service customers even better as individuals. So this is part of this analysis. Another part of this analysis is the development of products. For B2B customers, something that APIC doesn't have, we've been working on the development of a project that could provide some services at this moment that are specifically related to subacquiring. And also, along with this, work with the increase in loyalty from these B2B customers and, of course, monitor the information and data from these customers. So this is a project that is underway. We're developing this business model and we'll bring in more evolution as soon as we have other points to highlight. Great, Fagar. Thanks for the answer.

The next question comes from Vinicius Estrano, UBS.

The next question comes from Vinicius Rano, UBS. We'll enable your audio so you may proceed, please. Hey, thanks, guys. Good afternoon, Romero, Victor, Gabi. Could you talk about how the dynamic has been when you look at the legacy store versus converted store? And what do you imagine when you consider the ramp up, when you consider the maturity of the extra stores? And when you look at a second question and if you could see the profile of the cities that you tend to go into and how you consider the competition in these new areas and also the size of the stores that you expect. to work with up ahead. Okay, thank you.

Thanks, Vinicius.

And the stores that are converted, they operate with a gross margin level that's higher considering the location and even the greater amount of customers, especially A and B customers. In our vision, there's still room for evolution of this gross margin, as you mentioned at the beginning of the project. We looked at the food sector in 23 and 24.

And maybe that was below what we expected, so we were more careful about these events.

And there's a lot of adjustments also when it comes to category assortments that could be included in our vision, bringing in, we want to leave some surprises to the investor today, right? We'll be able to provide even more details or granularity about this, and the stores are determining for this new evolution, the Keshekeri, and if you've been accompanying us, you know how much we were able to rapture paradigms, and we've already talked about how this model is either at its end or at its limit is really wrong, right? So yes, there's room, even when it comes to the location and the level of customers that we were able to deliver today, keeping our expenses under control. So when it comes to expansion, we have two important movements. One is really occupying the cities and states, that were already present where we don't have stores, SA stores. So the first store is going to come in this year.

The second one, which is a point in San Jose, that's going to be open in 2025. And we're trying to place also. We still don't have stores there. Osasco as well. We only have one store there. We have important projects there. And as we hold this land bank, and we want to make sure the break even is happening as quick as possible, and we want to make sure we have the best projects in the company.

We have stores that are smaller that are being assessed. For example, Rio de Janeiro, two projects there that have 3,000, 3,800 square meters. So there's some granularity, but if you consider all of the players in Brazil, the player that has the biggest diversity in store networks is Açaí. We have stores that are like 1,800 square meters all the way to 9,000 square meters sales there. So this capacity we have in the store network really gives us the expertise. And so when we talk about this area, we're not only talking about the store.

We're talking about logistics. We're talking about the equipment we supply and expose merchandise at the stores.

It changes the load of the flooring in each store. And so if you have a region, where you need to have a store that's 5,600 or 6,300. That's going to be done anyways. And it's necessary.

We understand that a store that's like 2,800, 3,000, as you can see, will also be done.

So this diversity also gives us the necessary capacity to expand in the future. especially when we consider central markets, right? So Zona Nara to the northern region with two and a half million inhabitants who only have three stores there.

So there's still a lot of room.

And when you see opportunities in the real estate market, there's definitely difficulties.

But no, we're very much...

Metropolitan regions are going to consider obtaining the licenses in quite a while, but that's one of the main motivators within the evolution of the extra points. But expansion is really focused in regions where SA is already present with quick break-evens and ROIC in the levels that the company expects. Perfect. Thank you, Bumidu.

The next question comes from Gustavo Fraccini, Bank of America.

Gustavo will enable your mic, so you may proceed, please. You may proceed, Gustavo.

Hey, Belmiro and Fagar.

Thanks, guys, for the question. I just want to get back to the performance of B2B. if you could give us a little more color on that and how different that was when you look at the same-store sales performance considering B2B versus B2C and how much the B2B is maybe impacted by this offering of credit from your competitor. And also another point, I don't want to anticipate things too much, I don't want to give us a spoiler about the Investor Day, but some of the new categories that you're going to introduce, maybe can they be done with private labels, or is that not considered yet? Thank you. Well, nothing is just considered actually and these truths kind of change within the innovation area. We're always reviewing this and the trend of what we're going to be presenting in the investor day, right?

Of course, Brazil always had some difficulties when it comes to private brand and so in the future, new opportunities can come up.

Nothing is going to be discarded. And so when I had this invitation to see how many modifications and how many things we started working on that no one really believed in and that were very successful later on. So the dynamic is a little bit different in B2C and B2B. It's always been like a new component with the timing, which of course makes, for this kind of customer, the interest in the month is what they're getting as credit card anticipation, right? So it's how much it costs to anticipate receivables. So this kind of customer has a bit of sensitivity, and that did lead to different dynamics. For example, we had a strong competitive movement on B2B with proposals in terms of a little higher, and we chose to not follow along with that because that could impact the other publics in the company. So we need to keep up with even more importers to see what this dynamic is going to be. So as you've seen, this is really focused on and if we need to work on this recurring level, the company could maybe take on more competitive measures, but that's not what we've seen at the moment, right? That's always been part of our market dynamic, and even when you see what's affected, you can see maybe adjusting one or two percent of the overall sales, but maybe the level of efforts we would have wouldn't have led to the cash deliveries, and we wouldn't have said that the debt dropped or that we were mentioning this within the fourth quarter, for example. I think that's it. Thank you. Moving on to the last question today, we have a question from Daniela Brenhauer from HSBC. We'll enable your audio, Daniela, so you can see. Please, Daniela.

Thanks for taking my question.

The last one, really. Let's see. We have a question for Victor. I want to understand the issue with the strategy, considering the discount on receivables, because you guys had a reduction in the average discount, as we were seeing last year, about 2.6 billion, now it's about 1.6 billion, and of course this reflex is in your average applied cash position, but not specifically in the fourth quarter, but where you have better seasonality, but naturally you're going to have a lower need for discounts, but when you consider this in 2025, what can we include in our models, in our strategy models when you consider the discount receivables? And alongside this component, we have two other derivatives, right? One is if you guys would be able to share. what the savings were like when we didn't have that debt anymore for the hypermarket payments and how much each of these decisions to reduce the discount for receivables would also generate as savings, right?

Oi, Daniela. Well, hi, Daniela. Obrigado pela pergunta. Thanks for the question.

When we look at the discount receivables, we can see that from now on, gradually, the company has more capital and Also, when you see the need for discounts that are smaller for receivables throughout the quarters. So that's also, of course, from a relative perspective, right? Because the company grows and will generate more receivables, taking on similar conditions for payment. So we expect to have a reduction gradually in the discount from receivables.

And that's because of the strategy that the company has with more capital and needing less discounts on receivables in a recurring manner in between months and quarters. So that's the first point.

And then, of course, when you see this deleveraging and reduction of debt over the year 2025, as we've already discussed here, this becomes even more evident.

But this strategy must be readjusted as we... have more conditions in the debt market, right?

As we've already mentioned, we took advantage of two important operations this year, considering the debt market also that was quite favorable. And if we have more opportunities throughout the next quarter, we'll be able to use these. When it comes to the impact of the markets with the non-recognition of interest rates, considering the debt, there's a net effect of about $40 million that's annualized, our financial results of the quarter, right? Yeah, quarterly, for this quarter. And that was quite similar to the previous quarter where we had the payment of the last installment in January.

And so that's where you can see the result of this saving, right?

about the discount on receivables, we can see in the comparison quarter over quarter that there is a cost of 10 million less than the discount on receivables. So that was 30 million in the third quarter of last year to 20 million.

And so you have a significant reduction in the discount. And on the other hand, of course, you have debts in the balance sheet that are structured in the long term.

So specifically when it comes to discounts on receivables, the count was $30 million in the third quarter of last year. Sorry, of last quarter versus $20 million in this quarter. Okay, so just to make sure I got that and wrap up the explanation, for 2025, we'll have two types of savings, right? One is where you don't have the payment anymore for the hypermarket, so you have the savings, and then also in your strategy of being more capitalized and reducing the discounts on receivables, you also have the savings that I'm understanding will lead to a cost that's actually greater than what you are being able to equate in your profile of debt. Is that it? Well, first of all, yes. We don't have this expense anymore for 2025, and then also the expense of discounts on receivables should be proportionally lower. But, of course, always considering this disclaimer, right? We're increasing sales, so you generate more receivables. At that moment, you may nominally have a higher cost, but proportionally, the trend is that you'll have a reduction in this discount on receivables. Okay, that's clear. Thank you. The Q&A session is officially ended and we would like to pass on the word to the company for their final remarks.

So once again, great questions that were addressed and we want to reinforce the invitation to our investor day and want to thank you all and also thank the board and the employees with all of their support to our work. Thank you so much.

Let's head to the fourth quarter, which is the most important period of the year when it comes to seasonality. It's really where the companies focus, and that's where we plan to really provide more information on the challenges and expectations for gains and improvements in the future. Thank you so much. The earnings call for the third quarter of 2024 is ended and the Department for Investor Relations is available to answer future questions. Thank you all so much and have a great day.