Sendas Distribudra S/Adr

we have the store available on the platform for this uh you can select the interpretation button through the globe icon at the bottom part of your screen and choose your language of preference portuguese or english we would also like to know that this earnings call is being recorded and it's going to be provided on the company's website, ir.sia.com.br, where you can already find the earnings release. And then we'll have our off, and soon after we'll begin the Q&A session. To submit questions, select the Q&A icon in the bottom part of the screen, write your name, company, and language, enter the queue. and as you're announced a request to activate your uh and so then you should um activate your mic to submit questions and we'd like to let you know that all questions should be submitted at once information contained in this presentation and possible statements that could be made during the earnings call related to business perspectives projections and operational targets and financial targets represent assumptions and beliefs of the company, as well as information that's currently available. And so future statements are not a guarantee of performance, and they involve risks, uncertainties, and assumptions as they relate to future events and rely on circumstances that could or not occur. investors must comprehend that economic conditions generally and market conditions and other factors can also affect the future performance at SAE and lead to results that differ materially from those listed in future statements. Now, we're going to pass on the word to Gabriel Lillo, the Investor Relations Director. Thank you. Hi, good morning, everyone. Thank you for participating in our earnings call for the third quarter. I'm going to present our executives here today with us today. Gomi Dugomis is our CEO. Aymar is our CFO. And Anderson Cachilou is our Operations VP. Granville Desangeus is our Logistics MVP. And Sandra Vicari is our People and Sustainability Manager. I'm going to pass the phone to Bill Meader for his initial comments and presentation. And so, thank you, Grebby. Thank you, directors, for keeping up with us. Good morning, everyone. We're going to talk about our numbers in the third quarter. This is a very challenging quarter, the first page here of the presentation. And from a very positive perspective, the company's firm and its trajectory for deleveraging, even in this very restricted environment. We're going to talk about this stuff ahead, but ever since the beginning, the company has been going through deleveraging and reaching a level of debt that is the lowest when it comes to the EBITDA ratio, what we've been registering ever since 2021. and the company has been very strong with this in line with an important margin advance and especially in this third quarter due to major rigid control in the levels of expense um

And during 2025, we had a result when it comes to expenses in this third quarter.

We brought in, as you can see, the release and the presentation, the vision of sales in the quarter. Well, is that because October was better? No. This vision is a fair vision because it brings in the effects of our campaign, and last year we brought in this. strong campaign, which was the anniversary of 50 years at Asahi. And this year, it was in the third quarter. And this year, we were able to perform the displacement into the month of October, which is our anniversary month. And that was positive because that was very...

And then we also bring in this release separating both universes.

And so we're exposed to all of the social levels from AB all the way to class E, and we're exposed to B2B as well, which is small businesses that supply with us. And so that represents about 40, 45% of the sales, and in some cash and carries it's almost 50%, and others 20%. What we saw in this quarter, maybe one of the biggest differences in performance between sectors and same stores, which meet high income of sectors that also serve as low income. So what we saw is in our own customer flow, we have this complete stability in regards to last year with a minimum variation in the flow and trade down level that's very equivalent to what was going on in the first quarter and second quarter. without the operation and so we look at the consumer as a whole but then we separate this consumer per social level what we see is we have cost a and b gain a volume and cde with the retraction in volumes and in this quarter brazil reached the highest level of interest in the last years and in our vision And so that led to a level of debt for families, about 80 million CPFs and about 8 million and that reached an all-time high, and that reached an interest rate of 15% that was higher. So that was a very visible one. We looked at channels that supply low income, and these channels also supply with us. So when we look at the B2B public, it normally has a bigger retraction in volumes. The last Nielsen research at B3 demonstrates this difference in performance when it comes to volumes. That's very important. between different retail formats that service classes A, B had an increase in volume of 2.7, where actually the volumes of retail formats that are normally the mini markets, grocery stores, and independent players really supply strongly at the cash-incurrent. They had a setback in volume of 8. third quarter 8.3 barter of had to step back up 12 in third quarter and that's also because of methanol which should impact a bit more in q3 and then food service had a drop of about six percent so basically we're at a level um if i talk about high interest rates i'm just going to be one more person but in practical terms what's the understanding we have well we have seven percent of the population with fixed income, and 8 trillion reais applied to fixed income. So you have about 83% with the debt service really compromised at about half a trillion reais. the actual interest rate and causes the transfer of income and you can see clearly that the sector the formats in the business with a b class gaining a lot of volume and cde class losing capacity and so you have the scenario where you have a job full employment and lower income So you have this increase of income reaching city population, but a purchase power that's at all times lower and lower. That demonstrates our B2C public doesn't have much of an impact, but in B2B there's a significant impact. So when we look at any number, even cash and carry overall will register. And that's a level of performance that's mixed, right? So... That's what's going to service high income and low income. And so that considers the better performance of who's servicing low income. So we noticed that this increase in the credit comes from mainly because of the buy now, pay later possibility. And so... In some cases, that was even higher, and what we can see is higher exposure to risk with a lot of consumers and employees also with this payment. So despite this, well, with the company's position, we saw that there's not elasticity, and that's where we reflect a lot of this volume. And we...

And so this is visible with EBITDA.

It goes up 0.2, and that demonstrates the level of resilience. So if you consider the same stores, that's the levels there are that you could expect. this and uh this level of the drop in volumes is not uh insufficient to impact the objective so uh net income is really impacted by this debt service and the third quarter is the quarter that reflects uh in totality it's a leak rate at 15 and this percentage of interest almost 450 beats in regards to the third quarter of 2024. And, of course, with this, it's still high. But despite this, the company's leverage, of course, if interest was lower, we would be leveraged quicker, but it's following this journey as we had disclosed. And we saw that the numbers of retail in the third quarter generated a lot of concerns. We wanted to provide this vision that the company really has been keeping up with the leveraging You can advance to the next page, please. So, gross profit has an improvement due to store maturity, especially when it comes to services. That really contributed a lot in improving the gross profit. And when you reduce this, the purchase makes in B2B with lower margins, you also generate a positive effect in the gross margin. Expenses are the biggest point on this quarter. And so we consider the self-checkout, and that really helped us when it comes to productivity with a high turnover scenario and lack of labor, so expensive. If we take a look at the volume of sales, there's elevation. It goes up more than sales, but below inflation. And the highlight here in our view is the EBITDA that goes from 5%. 0.5 to 5.7 in the post IFRS view. We reached 7.6 EBITDA margin. And so that's what I wanted to say. I'll pass this on to Amar to advance into the next slide. He's going to talk about debt and cash. Amar, the floor is yours. Well, good morning, everyone. I'm going to add on to the explanation and what Bermuda was mentioning. We have some information here, such as cash generation debt and leverage. I think that this page shows how açaí is really resistant, even in a more difficult period. So even with this evolution in the third quarter, Below what we would like it to be, we were still able to reduce the net debt year-over-year by 500 million reais. This is not insignificant. It's also starting out from an operational cash generation of 4.2 billion, and this is reasonably greater than the second quarter. If you pay a capex of 1.1 billion in the last 12 months, it's going to have a free cash generation of 13.1 billion, and you pay the interest of the debt of 2.2, and you improve the final cash position by 900 million euros. When we talk about the 500 million in reduction of the net debt, it's because we're presenting that variation of receivables, and then we reached those 500 million. But before the receivables, the variation was 900 million reais, almost 1 billion reais in each generation in 12 months post-dead services. Then when we see another view on this issue, we can understand that the actual growth debt was also reduced by 500 million. So we added all of the interest during 12 months, and we paid all of the debt service, and it still went, so as growth, it was lowered by 500 million. So it wasn't because of a cash increase, because it was very similar to what it was in the previous year, but the gross debt also dropped. And I think this is another indicator that's important. Not only the net debt's dropping, but also the gross debt on the next chart. I'll show you our maturities chart here, and then I'll talk about the cross debt as well a bit more. On the right side, you can see that it's very clear that the leverage continues on a trend that is very strong. If we imagine the level of the interest rate in the last two quarters really changed from a year-over-year comparison. And so in the third quarter, the effective CDI was almost 4% greater than the effective CDI of the same quarter last year. And even so, you have the deleveraging trajectory that continues to reduce half and every day in the period. and there's we keep up the guidance that's about 260 for the next quarter if we head to the next slide have observations on financial results and these always cause a negative impact that's very significant in the net income due to the debt size but it's still a financial result that grows about 22 percent quarter over quarter compared to the interest variation of 40 percent and so of course um it could really in a very um worsened scenario, if we hadn't performed progress in the debt situation and cash management, then that could be greater if it was just following the interest variation year-over-year. And so in the net income, we had 195 million in the quarter against 198, and that reflected the weight of the financial results and a bit of a credit in income tax this year, making the net income be proportionally greater. And if you had an income tax credit, that was similar to the previous year. But even so, considering all of these differences, the net income was kept at about $200 million in these quarters that are considered intermediate. So a net margin of 1.1%. So we believe that even at a moment where The scenario is very complicated. The company has been deleveraging, continues with strong cash generation, and the company continues to present net income, even after paying $600 million in a quarter. In this way, we understand these results to be very consistent. On the next slide, you have something else that I never lose track of, which is the maturity flow. of the debt, right, so you can see our generation of cash year-over-year. We need new cash in 2025. We have normal maturities in 2025. We had a prepayment still in the third quarter. That helped to extend our payments, our future maturities, and we have this low in 2026. that allows us to say, or at least to infer with a big level of security for 2026, almost 100% of this actually, that we would not need new cash for refinancing. And then in 2029 and 2028, the volumes are concentrated, but you can remember that Our capacity for payment when it comes to cash generation is going to grow over the next years, 26 and 27. And we'll have two years in 26 and 27 to continue working on debt extension transactions. So we understand that the 6.2 billion in 28 and the 5.3 billion in 29, since we don't need new cash in 26 and 27, we'll continue to perform repayment transactions to reduce this concentration of these maturities in 28, 29, and throw more maturities into 30 and 31. So even with the need for funding in 29, 28, that's not going to be significant. And so I think that's what I wanted to say about the capacity of the company, which I believe is something that even in a scenario that is maybe more complex, it provides us with a little more comfort and tranquility. okay thank you next slide please um we're gonna have uh sandra from our she's our vp of people and management and she's gonna talk about our initiatives with sustainability uh in line uh with a topic that's very important at the moment where we have cope 30 going on Good morning, ladies and gentlemen. I've been talking about our sustainability strategy a bit, and we've been advancing in this strategy And when we consider this pillar where our work is to fight emissions and climate change conditions, we launch a public goal to reach up until 2035 the reduction of the use of landfills. We would like to reach the goal of being zero landfill. And so we also have been advancing with reuse of waste. We're increasing composting processes and also in the correct disposal projects. We've been involving 96% of our stores already in the program. And this gives us positive numbers when it comes to our efficient pillars. when we consider fighting climate change. We talk about ethical and transparent management. We have significant recognition in integration and ESG. We were the first food retail company in the ranking. So we're firmly working in this sense when it comes to ethical and responsible practices in the company. And in people development, we've been advancing in our diversity and inclusion work with numbers that are very positive. leadership of black people in leadership positions, women in leadership positions. And today we have a significant amount of refugees that are immigrants, refugees, over a thousand actually, and we continue to be working on fighting hunger and other programs related to food safety and so we've also had some strong work involving in volunteering programs during this year especially with the focus on our regionals and In October, we also had this award of the Academy is also supporting entrepreneurs and we were the eighth edition of our award with over 2,100 entrepreneurs receiving support financially and training. And we also have the national phase now in September, now in Sao Paulo, sorry. And we also have the special awards for special categories, technology, innovation, sustainability. And in the eight editions we've already had, we add up over 9,000 awarded entrepreneurs, so consistent work supporting entrepreneurship. And in all of these advances, we've been able to have operations that are more sustainable, and that's been strengthening our governance. We've been advancing with development of communities that are part of our history. So now I'll pass this on to Belmiro, and then we're going to highlight this recognition as well. So InfoMoney is what's most conscious as well as one of the most valuable as well as a series of other awards presented among companies that are most admired by consumers for the fourth consecutive year in Top of Mind.

And so...

a series of other recognitions as well and acknowledgements that the company has had in this period we can move on to the next slide but as we talk about the future as i use the biggest and most present company in food retail when you look at the cash and carry operation exclusively it's the most valuable brand our cash flow our customer flow is stable with 40 million people visiting our stores monthly and the company now reached 60% penetration among homes in Sao Paulo. So that gives us space, considering the strength of the brand volume and customer sales, and a series of projects up ahead. So we've spoken about the Salah, and this is what we're going to be discussing as well in the human environment in the short term. that's most challenging, and the company has a series of avenues for growth, right, when it comes to health, and we've been believing that there's major potential when it comes to medication, vitamins, supplements, and HPC, which is personal health and And so the company saying this project taking advantage of this process with part of the population being more willing to having products with better prices and we have a very relevant project with private label, especially in regions where you have more density. of stores due to this brand strain. So we also have the financial services front. We have a pilot on the street when it comes to the B2B public as well. We're testing the terminals and soon we should have some news as well as we have one of the main value levers. And one important point is also in the digital channels, especially with our partnerships for Last Mile. That's considering iFood, and we've had more adhesion from customers and logistics that's better when provided by Last Mile providers than if we were to do it ourselves. There's also an expectation, as we've seen, how performance among social levels has been. With the income tax exemption, there should be some more relief for the CDE public that's spending most of their income paying off their debt. And so that's it. And now I'll pass the floor back to Gabby, and we can get back into Q&A.

Now we're going to begin our Q&A session.

And I want to remind you that if you have questions, you should 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 your mic to submit questions. It asks you to please send in all of your questions at once. To begin, our first question comes from Daniela Eger at XP. Dani will enable your audio, so you may proceed. Please proceed, Dani. Hi, good morning, guys, and thanks for taking my question. I have some on my side. The first one is a follow-up of the last comment you had, Bermuda. I want to understand more about the financial services dynamic. You talked about the terminals, and I want to understand what this would represent, what would be the context in Açaí, if it's something that you're going to do on your own. If you could give us more information, I think that would be great. And so my second point is maybe a little bit more on this context here, where you have a little more space to do something. And I think you guys have been doing exit work in gross margins and expense controls, but we want to understand a little bit more. about what could be done in the core business, right? So when it comes to expenses, do you still see space to keep up expenses as they are? You've been quite lean for a while, right? So I want to understand if this is something you can still imagine as something very controlled or if we're going to see some acceleration, and then on the side of the store, I know you're presenting new categories, but what else would you be able to do? I don't know, with financial services, if you could maybe do something when it comes to payments for B2C and B2B, considering income challenges, because I would be interested to get to know a little more. Well, actually, heading to the opposite side here, when we talk about expenses, I think Anderson's here, and he can even highlight some different initiatives and how we've been able to really keep up with this level of expenses that, in our view, is obviously... Well, first of all, good morning. Great question. First, expenses in SAE is something that we're very disciplined with. So it's not like a single line, right? If you have different initiatives to work on, and I always mention as a main pillar with customers at the center of the business, right? So we have some different initiatives with recurring expenses.

And so...

We also have self-checkout with this labor scenario. We're talking about 90% of the stores already having this equipment. We're talking about an average of 6 to 12, depending on the store. especially for customers that are buying for replenishment or even like owners of restaurants, et cetera, which this is a big differential. But what we see as a team is that, well, expenses in the company are involved in all areas. There's not like a single approach, right? It's something that we do. Over the years, and our expenses are pretty stable, I don't see anything very different from this. From now on, we kind of have the same dynamics, trying to be more efficient, trying to be quicker with our processes, but without losing track of the customer. I think this is the main work we do, right? So when we look at expenses up ahead, there's nothing very different compared to what we've been doing. Yeah, so just to add on, when we look at the stability of the customer flow, we see that obviously we're already preparing for a scenario where inflation would obviously reach a point where monthly shopping or bulk shopping would lose a bit of attractiveness, and you increase the replenishment levels, right? So this is very efficient, including services. There's actually a lot of criticism when we have the petri, café compound, and even the self-checkout. But this is for people that want to buy day-to-day shopping, right? If you want to have an actual... So there's a bunch of projects when it comes to investment in using technology to keep expenses under control. Besides the checkout, there's some other data also. And important advances with cameras and data transfers. in good quality, which allow certain functions in the store to be done in an essentialist manner, reducing costs, etc. And we've assessed this in other departments, so there's a bunch of projects the company's been working on at this moment. Some are really focused on what we consider to be innovation, or some projects that I highlighted that we should be discussing more now in the fourth quarter, but there's a lot coming when it comes to efficiency and productivity. We also have an IT lab, and we have some initiatives for artificial intelligence that have been helping us in marketing and content production, et cetera, that could also help us with productivity within administrative fronts.

And so...

We have a JV with JPA and Via Varejo. We're discussing this, and we're very close to wrapping up with this negotiation process. And so we had a waiver. from Itao to develop the sale of the terminals with the B2Cs and customers of B2Cs. We see big opportunities also to sell insurance and other financial services as well. So this is one part that's kind of released. but there's an expectation to unleash relevant value in the company with VC, especially in lower income levels. So we don't expect to increase our credit concession. The company is actually focused on deleveraging, and also because we don't believe this is going to bring in a bigger volume of sales for us. with partnerships for that customer, public, B2C, and B2B, then, yes, there is a demand for data, and that could help us to expand our sales. I hope that answers your question, Danny. Yes, that's very clear. Thank you, Bomido. Well, our next question comes from Louise Glenise, B2C. Louise, we'll enable your audio. You may proceed, please. Hey, good morning, Kiru. Good morning, Gabi. Good morning, Aymara. I have a question here about profitability. I'm looking into a bit of what you mentioned with expense control. And if you could break this down maybe into the delivery path. For next year, you reinforced the company's guidance, and part of this is also strengthening and improvement in margins. But if you could give us a little more details in regards to CapEx and working capital, which is also a highlight in the last quarter, that would really help us in our projections. Thank you very much. Well, the deleveraging path, of course, there's one aspect that's not in our hands, which is the relief rate. Okay. And that would be one of the biggest components, right? But what's in our hands, which is the manageable perimeter with like working capital, we expect to have stability, of course, and we're always searching for improvements. But our view at this moment, if we're tightening up a bit more, with our suppliers because high interest rates apply to everyone, right? So that would probably come in pricing, right? But the objective is to keep this disciplined. Then in the closing of the third quarter, we actually were a little more stocked up. Now, in this scenario, what we've seen, especially in B2B, with this volume, we for example, wouldn't have any stock elevation because these customers are really pressured with their working capital and they have to replenish the amount of products they sell. So the third quarter, in our view, was an unfortunate point. especially for food service. In September, the bar was almost 12% down, and we saw the methanol crisis with the bar industry. People don't go, they don't order portions of food. And this is a public, we have a lot of penetration with so far than snacks at Stafford, and because of this methanol scandal, we had a major impact, right? So when it comes to the levels of investment, we've already actually, we gave them a warning, and there was an expectation of about 1.2, maybe it's only going to become material, but for the next year in 2026, it's going to be really restricted. So the forecast we have is that it should be at most $700 billion, and that's kind of what we have when it comes to projects. The new stores that are important, almost all of them have projects that are done in BTS to have quicker deleveraging. So the objective throughout 2026 is to focus even more on deleveraging. since the interest rates are still a bit higher than what we expected. So I think that's it, Gwenaes. I hope I answered. I'm not sure if you have any questions still. That's excellent, Bermuda. Thank you. Well, our next question comes from Alexandre Mamioka. Alexandre?

Thank you.

If we explore a bit of the private label issue that you mentioned in the beginning of the presentation, if you could give us a little more of an update. And when we should see the rollout of this initiative. When we focus on the short-term results as well, and we take more of a high-level base considering the cash and carry industry as a whole, I think that over the last few years, this was very clear, right? The cash and carry movement was capturing these sales. And I think that throughout last year, you guys started talking about cash and carry a little more, starting to capture supermarket sales. And I just wanted to maybe get an update on how your guys' mind is. about this industry trend overall, not only acai, right, but to start capturing the sales of supermarkets as well. Thank you. I think going backwards, first, the cash and carry model, we always try to make it very clear because sometimes people get a little confused with the cash and carry model and other formats. and now most of the distribution uh uh offers to small businesses are done in farmers that operate within caution carriers and so what we see is this difference of performance among social levels which is really um strong right so you're at this moment where you're strongly moving towards uh income transfers right to lower income to higher income at an interest rate level that you see uh well high interest rates are necessary yes but what we've seen is sometimes when you look at the economy look at all of the social levels in a single package but on average what you think well because This year, we're going to have a payment of over $600 billion in fixed income, which is going to go to 17% of the population. So that's going to push inflation as well as other aspects. So when you look at CDE classes, you have an all-time high of debt levels month over month. So that's where you create that, right? And the cash and carry format is more exposed to low income than to high income. So when you look at retail formats, we notice that that's where performance is even worse than cash and carry because it reflects that public entirely. So that's where we brought in the information to highlight this. And while interest rates remain high, we should remain. I think there's some improvements expected now after this methanol crisis. And we have this end of year period where the consumption is always a little bit higher. Then you also have the exemption of income tax. It's going to help with this public. And part of this should be headed to consumption, right? This is the movement that we see in the industry, the private label project, and why we believe this is going to be the moment of Brazil as a continental country and the difficulty with private labels, because if you look at the map behind me, you can see that we have very high distances So if we try to take this to the Northeast, it's going to arrive a lot more expensive. But that's because of the Brazilian tax scheme. It's so crazy, right? But then we were able to reach a level of peace where the logistics costs are less high and the band strength. And then we brought in a lot of expertise and the expectation that in the first quarter we already have products, considering that should help us to capture margins, but also meet customer demand as they're searching for products with lower costs. And we believe that this is persistent. I've seen this not only here in Brazil, but in other markets as well. And so, perfect. Bill Meader, thank you so much. Our next question comes from Thales de Granelo at Safra. Please, Thales, we'll enable your audio so you may proceed. Good morning, Belmiro, Eymar, Gabi. We have a question about the CapEx. You talked about $700 million next year. Is there a discussion with the company on maybe interrupting the expansion momentaneously? to really accelerate the leveraging due to higher interest rates that were not in the base scenario case last time you guys reviewed an expansion. And also in regards to the batch of stores in 2023, There's a level of sales that's already similar to the legacy stores pre-conversion, but margins are below. So this is mainly due to the cost of the lease, or is there another factor? And so is there another factor that's not on our radar? Well, yes, we did discuss this. the stores that are being open now are going to definitely be the stories with the best levels of returns of phrase ever had because these are projects that are very selective and these are projects where the values paid with the new stores of about 700 million $220, $240 million would be the equipment part. So all of the other projects, we stock them up within the land bank with projects that require the company's capital to acquire properties, etc. All of this we won't be investing in, as you mentioned, because interest rates got way above expectations. But now, especially in markets where we have a little quicker maturity, next year we're actually going to open up this number, and we already received a lot of questions in regards to this. And now, for example, in Osasco, basically our first store there, we're discussing, we're opening on Tuesday in Uchinga, inside Sao Paulo, but we don't have an assay store yet. So, as you see, we have low levels of investments. The return rates for these stores can be really high. And in our view, they have a ramp-up. It really justifies the maintenance of this level. And the $200 million are important, of course, for deleveraging, but that would also not be relevant enough to the point of removing these 10 units of stores. So, all of them, with the exception of one in Alagrania,

So these are projects where the SAE brand is really high.

And so in 2023, then you have a significant weight of lease. And this is something we've been working on as well to bring in this strong network when it comes to profitability. But we need to at least take a look at the strong network in 2025 and 2026. which is better than what we had. So I think, I know that the moment in cash carrying the market could cause some skepticism, but it is going to be a store network with better performance and a better ramp up. And that's very, very much convinced about the store openings. Thank you, Bumidu. That's very clear. Well, our next question comes from Peter Hargit, at Itaú BBA. Peter, we'll enable the audience to make the speech, please.

Thank you.

Well, first of all, with October coming in stronger, maybe you could imagine that Q4 would have a sales website similar to what you presented in the first session. That's the first question. The second one is about when we think about increasing the hygiene and beauty category. How is this growth going? Do you imagine that it could be impacted in some way in the markets, considering competition in the marketplace? Thanks, guys. Yeah, there is an impact. It's not going to reach the lower social levels, but it does affect A and B and the movements that have been going on in the marketplace. So we've also been assessing this and the social levels. It's not something that's relevant from a volume perspective, but there is an impact. Actually, the movement we had in the drugstore project so that we could also put this pharmacy in the store, and that would also help us in this category, which sometimes people use the pharmaceutical channel for. so normally they can deliver non-perishable products with higher value which is uh what you can justify as volume right so any product that reduces added value especially when it comes um well there's an impact now he's um getting more from pharma and super geared towards high income uh so If you consider this is going to be regression, right? And this is probably if you consider the Nielsen research that shows independent pharmaceuticals and pharmacies that did receive the Monjaro already. So the performance difference is huge, right? So you actually see this anomaly within pharmaceuticals. at this moment, which in some way distorts and brings pharma to a performance level that's a bit distorted or very different than the other sectors. And with the first question, if you could think about how the fourth quarter should be very similar, considering that this is very strong, and yes, expectation. October is strong, there is an effect with the campaign, but there's also other initiatives in November and December. And what can we say? Well, of course, you have to be careful because in September, no one was expecting the impact we had for the overall market, right? So if you look at the sectors, right, as a whole, and so that's why you have to be more cautious. But we do look at this to consider the sectors that are setting back, and we believe the bar sector should recover a little bit. And Of course, it is an expectation we have. There are some strong Black Friday initiatives for the end of the year. But, of course, we're subject to reflecting on what this B2B public is all about. So, we have to be careful about this. We can't look at October with a one-month only campaign, right? So... Our next question comes from Felipe Hachete at Goblin Facts. Felipe will enable your mic so that you may receive. Hey, Felipe. Hey, guys. Thanks for taking my question. I want to explore a little bit more of the self-checkout topic. I understand that helps us. Since the name, they have a... The list of items is relatively low, but could you open up the percentage of the trucks, of the carts that are below the limit of items? And, well, then just a quick follow-up on expenses. How much would the S&H be impacted if you were to... Consider all of the open vacancies, right, and how the challenge of hiring employees and checkout operators and how this could be impacting the value of the format and how this could be impacting the sales. Well, thank you for that question. We've definitely had a lack of labor for businesses as a whole. And what we've noticed is that cash and carry, you know, it's a format that's more geared towards middle income businesses. There's a bit more tolerance there. But, of course, it's difficult to say how much we're losing in sales because the lack of personnel has been a general factor for all sectors, for super, mini markets, cash and carry, and the fact that you have a bigger amount of employees in our cash and carry sector. or even a higher rate of absenteeism than a store that operates with like 20. In our case, we have an average group of about 300 people per store, 200 and some, but it's going to depend on the size of the store, of course, but obviously you have an impact. But the objective of having self-checkout was two points, right? In our view, it was a sequence of services to make the model also more attractive for smaller day-to-day shopping, and also because there's pressure in finding employees, right? So when it comes to sales, I can't break down the number or share this, but in transactions, we're about 20% of the tickets. Of course, a business is not going to go, like a B2B is not going to go to self-checkout, but we have so many shoppings that are 50 or 60 reais, but other purchases that are 7,000, 10,000, right? But it really helps reduce the perception of the queue at the checkout and also helps, right? So Our levels, we're going to have a turnover. This is the overall commerce. We have 95% of our vacancies filled out, and our people management department has been doing really good work trying to replace these vacancies. But overall, people get debts, then they have to be fired to get their benefits, and they spend money on their bets, and And that's something that's going on, right? And that's going to be 5.5, .20, et cetera. But anyways. Persistent for at least two or three years. Now, this level is already pretty persistent, right? So, from the base perspective, that wouldn't be too much of a difference. Well, perfect. Thank you. Very clear. Well, our next question comes from Bob Ford at Bank of America. Bob will enable your audio so that you can proceed, please. Thank you very much. Thanks for taking my question. Tomito, could you update us on the app to leverage sales and how the treasure hunt work has been evolving as well? And also in the Black Friday motel. And while we've been working on some changes, we brought someone else here to help us with In-N-Out. And in Black Friday, we're going to have some products that are going to be very cheap. So we already have most of the products we received in the end of the third quarter, and they're going to be in the stores for Black Friday. And especially from next year onwards, there's different products. Of course, we're going to start testing these categories. We have some that are geared towards higher customer level, social levels, and others for lower social levels. But I can't give you the numbers of the prices yet. But if you can visit the store, you're going to see you can buy a set of suitcases at spectacular prices. So these are some items that are going to come in. as well as other home utilities, utensils, sets of cups and plates and dishes, etc. So these products are all available in the store. Then the app has a penetration rate that's really strong. You can see numbers with 21 million customers registered with 16 million contactable. And so... We finished for the month of October and there is that increased adhesion rate and the base that we're building with the CRM should, in our view, be really important because that's why we're so anxious about the financial services because we really believe it's going to help us explore 16 million customers, right? Which is one of the biggest customer bases in Brazil. And with a level of loyalty to the brand that's also really high, that creates a lot of avenues for growth in this sense. Thank you, Bob. I hope I answered your question. Yes, you did. Thank you so much. Our next question comes from Luca Biazzi, UBS. Luca? We'll enable your audio so you may proceed, Luca. Good morning, guys. Most of our questions were answered, but it would be interesting if you guys could talk about possible updates in regards to the preliminary injunction issued with the GPA in Casanova. Thank you. We're still having the judge listening to the parties, and that's why we can't talk about this yet. We should have a decision, but the judge is still listening to the parties. He required some information and asked for more assessments, so we're still waiting on some decisions in the sense before we can disclose information. But from the contingency perspective, there's a big effort on behalf of GPA to perform a transaction with the fiscal authority. They want to They actually highlighted this in their release call. Of course, this is a topic that we understand that we can't be jointly responsible, of course, but if they can find a solution on their own, consider that to be something positive. And we also see... It has to be very positive with the changes in GPA with the shareholders and controllers, and this is something that will always be more positive with the big potential. So we've seen these changes very positively as they occurred at GPA. Very clear. Bermuda, thank you so much. Our next question comes from Eric Huang at Santander. Eric will enable your audio. may proceed please hi guys thanks for taking my question here we wanted to cover the gross margin event we've seen a significant evolution and we want to understand a bit about how you've been considering this gross margin level when it comes to sustainability and also additional opportunities Part of this comes from the other store network that's in maturity, and these more relevant habits with conversions are going to reach maturity. So what would be additional levers here, and what can we think about in regards to your gross margin from now onwards? Thank you. Thank you, Eric. Well, there's an effect, as I mentioned previously, and the fact that B2B reduced versus the two prices in the sales area. We have the consumer prices, 17, 18, 19, and the price for businesses, which are people that buy quantities of about 12%. As you have a drop in B2B, you're obviously going to improve margins, right? And then along with this, you have a series of measures, right? So from a pricing perspective, the company has also been working on a project that's going to improve our capacity for pricing as when we look at this, social inequality in the country. One example I like giving is if you look at the Congolese store that's right in front of the airport there, then you have the Iker Lagos store, five kilometers area, Cidade de Dutra, Cidade de Grajaú, then All this is in the same avenue, right? So you have an income level of 20,000 riyals monthly to level about 3 to 4 riyals monthly. So you're going to be operating as if they were different countries. So that requires a discipline in the assortment, different pricing. But in our view, especially these stores that are more like venture or downtown, and the cost of services we deliver really allow us to continue with the evolution of the gross margin, of course, looking at competitiveness. So there's also an expectation in our private label project that should bring in significant contributions when it comes to gross margin. So we believe that we went through some positive cycles, negative cycles, and the margins keep up quite stable. Well, thank you, Bomiru, and just to follow up here on this point in regards to the benefit that the mix of B2B and B2C brought, could you guys quantify this a little bit just so we can get some more color on this? Well, there's an impact of approximately... 0.10, 0.15. We also have B2B reduces the volume of purchases. We increase this and reduce the prices to them. But what we noticed is that this customer obviously has, they do replenishment. So if they have a drop-off in the volume of sales, since their supply cycle is very short, for food service, for example, customers that come in every day, The average of food service, when we presented yesterday, last year was 162 visits per day. So almost one day yes, one day no customers at the store. When they reduce volumes, they reduce immediately. And with service, you can't reduce prices. You can't reduce the price of food. cheese or ham, it's a perishable good, right? So, fruits and vegetables, it's perishable, right? If a pizza has a drop in their volume of pizzas delivered, they just stop immediately buying the amount of perishable goods. And the dispute for prices are a lot more in regards to disputing with other cash and carriers, but not really increasing customer volumes, right? Which they won't do. Very clear, Belmido. Thank you. Our next question comes from Joseph Giordano, JP Morgan. Joseph will enable your audio so you may proceed. Please, Joseph. Hi, guys. Good morning, everyone, and thank you. Two topics here. I think the first one is going back to the top line and looking more towards the end of the year as we have performance in October. As you mentioned, it's not 100% comparable due to the university campaign, but I want to understand what you're seeing when it comes to food inflation when we see the third quarter. There was still a gap compared to year-over-year, so it was favorable, two points favorable, but now maybe it's going to be a turnaround because of the food inflation in the same store base last year was a lot stronger. So how are you looking at the ticket issue, and can you imagine... a possible trade up as i mentioned uh i guess not but the second question is about this invention right and understanding at the tax if this higher level that we've seen throughout the first semester should be something more recurring thank you uh imr will answer after we'll talk about the inflation and then i'm i can talk about the suspension If there's any questions later on, we can come back. So, of course, as I mentioned, we don't see any trade-up. Actually, as you mentioned, what we see is one thing that's called our attention a lot, which is SAE has a penetration rate in social levels that's very equivalent, right? So the same penetration rate we had in Class A, we have in Class B, C, and D, and E, and even considering age ranges, So a slide we had in some presentations really called our attention. So when we can have this vision and the time in the market of the behavior, right? So we had never seen, like, this disparity among social levels in Brazil as we've seen now. So you see AB gaining purchase power, gaining volume in some categories of products, increasing sales. And then when you look at the other side, you have a trade-down that's significant. And so if you observe their volume, which is what Nielsen brings in, the independent players have a drop of 8% of volume, and that's relevant. Those small businesses that are close to their home, et cetera, So these are the customers that supply at our stores. So that's a receipt. We have to be careful with the top line because we can see that the last impact was this. Because in August and September, people saw the size of the debt they have. And we see this movement is still persistent. Of course, we have many different initiatives, maybe. was a month that was kind of standing out of the curve. But we expect that the fourth quarter will be better than what we had in the third quarter. But the structural issues leading to this loss in purchase power, as we already talked about, the beds, et cetera, will continue. And then data is difficult to analyze because, as I mentioned, when you see this income transfer among social levels and the highest level increasing purchase power, you generate pressure, and that's why interest rates are already at a level where they can be inflated, and maybe there's not a better sector to demonstrate this than the food sector, right? As we like mentioning, Brazil is a country with social inequality, and there's this movement going on. And so that's why we believe that keep up the volumes, and we're actually registering an increase in sales to social levels with higher. And so that's where we have to be very careful about any signals, right? What we don't see as risks are the leverage trajectory. And I think the third quarter, what it shows us is that even in a sales level, that's below what the market expected. And as we're trying to understand this, of course, this could be happening quicker. And I think that's the main point, Joseph.

Okay, thank you.

Joseph, we had 34 million from previous periods, but from a recurrence, we and are getting about 10 million per quarter. We had actually already talked about this number before, but there's nothing that will change this trend of recurrence normally, with the exception, of course, of some extraordinary event that is not on our radar related to income tax. Okay, perfect. I hope I answered. Thank you. Our next question comes from .

Pedro, we'll enable your audio so you may proceed, please.

Hi, guys. Thank you. Good morning, everyone. Well, two quick questions here on my side. One is a follow-up about the issue related to the urinary injection, just about the timing, as you mentioned. it's been about 30 days since we spoke about this, and 30 days was the period for the companies to provide their responses. Of course, it depends on the orders and requests from the judge, but I'm imagining if we're going to have any additional answers from a timing perspective also, and that's the first one. But the second one is about calendarizing the capex right so if we could see what was done as capex here to date considering the guidance and you guys talk about how you're gonna have delivered leveraging and so we mentioned maybe we won't reach $1.2 billion this year and $700 million next year, but I'm imagining, would it be lower than $1 billion and would be something left to next year to be applied? But I want to understand this issue a little better and really see if this leverage really is preservable or if the company is really doing more. spending more projects, postponing them. Those are my main points here. Thank you very much, Pedro. Obviously, we had a series of cuts to reduce the volume of CapEx. One is related to the PMG, which is this model that helped us reduce the cost of construction very well. And we still don't have the closing of the fourth quarter, but the levels we saw are the maximum levels of investments but we would like the market to work on these with this number, right? So some initiatives we had actually in this sense are not totally guaranteed or captured, right? But we're working on the maximum levels of investments, and it could be lower than this. But at the moment, it's the maximum we could talk about. And, yes, of course, we've also been assessing different measures, right? We're a strong cash generator, and ever since we began this, we never had investments from previous shareholders. Everything the company did was done with its own cash generation. We have a huge debt, as you all know, but it's difficult, right? We see half of the cash generation being consumed by the cost of debt. No one was considering a sale at this level, right? So that's an important lesson from a company perspective. And we want to get back to comfortable cash levels in a short period of time. So all of the initiatives we can capture will be captured. Some are still being assessed. And so the company is not intending to deliver as quick as possible, right? But from the preliminary injection in this lawsuit, the expectation would be to have another 15 days, right? And that's, of course, the judge will provide as much as possible information. And then, of course, later we would expect a period of another 15 days. Thank you, Belmiro. Thank you, Pedro. The next question comes from Daniela Bretthauer at HSBC. Daniela, I want to ask you to proceed, please. Okay, good morning. Good morning, everyone. Can you all hear me? Yes, we can hear you. You may proceed. Oh, two questions here. The first one is that I would like to explore the issue with the B2B, B2C dynamic. You shared some comments that I believe were very interesting. But I wanted to understand if you had considered the drop in the average ticket and also the reduction in the volume of small businesses.

And so we also had the methanol issue.

I don't know if you can break down the weight of beverages. And I wanted to understand how you've been seeing this trend now in the beginning of the fourth quarter and how you've been working on this mix of B2B, B2C. And so maybe interest rates would just drop around April, but what would be the main tools, right, to work on this, on these two channels? And so I think both channels, you can split this by about eight subtitles, right? When you look at B2C, our share in the sales, and that's very close to what each class has within B2C. so the councils have a real elevated perspective on this right but as i mentioned i've never seen such a intense movement with this right in such a disparity right sorry my dog don't worry don't worry we can um You can go and buy some dog food at an acai store if you need. But anyways, even in businesses that service high-income customers, we didn't have much of an impact. But in low-income, which is most of the population, that's way above what we expected. So that was the issue with the ban operator and the level of high interest rates. So you're at this clear perspective, right, getting a lot of money with fixed income. and so you can just see the levels of didn't consider we reached right but of course in a challenging snare like this we're going to have to review this from an assortment perspective we should really consider the more effective price of these items it's not too much more of the same uh for these items that we can work with but of course uh and that's almost one um indirectly we have products for portions for food and other things people are going to consume and so And so maybe you can just look at the results of two companies of beer now in the third quarter, and there's a significant reduction in consumption. So alcohol is a category that's been dropping and advances with the GLP-1 that are going to also lead to a drop.

And also, while the interest rates remain high, you can see the impact.

And so, we expect that part of this should be converted to consumption. I hope to have answered. That was clear. Just a follow-up here, a question about the decision of the company to launch or enter So considering that the company has a limited number of SKUs, and so you can consider your competitor that's very resistant to enter into a private label.

And so now you can share with us

with the team you set up, with the amount of SKUs, if it's going to be just a few categories. So in the net, would this bring a lot more than the investment in the structure, in the sourcing? That was kind of surprising me. Well, Asai has always been the most innovative format, right? Even though this sometimes can be challenged, common sense, right? This is when we implemented services and the stores were reaching central stores. And when you consider, like, a store in Congonhas could be successful, people would say it would be impossible, right? But we were able to service and reach these higher social levels, right? But private label is a reality around the world. If you notice, this has been growing, and the scenario where you have a reduction in purchase power has always appeared where private label grows. But in Brazil, of course, this has never... I mean that worked very well because some characteristics because you have to have more scale in a specific region. to make sure there's success, right? But in practical terms, if you observe cash and carry, as it grows, industry overall looks at our former and says, okay, this guy has a lower operational cost, but maybe this reduced levels of discounts, but a private label's going to help, not only in the items of private labels, but really balancing this out. So the 60% penetration in the houses, And so the strength of the brand, and especially the moment where the population is willing to do this, right? So we would understand that this would be an additional margin, right? And so Sergio Leite was... one of the most experienced professionals in this front. We also bring Liany, a professional with a lot of knowledge and experience in the market with private label, and so we'll have a full team to make this project advance. And I'm very convicted that when we look at the SAE brand as the most valuable brand in SAE, it's a very high credibility. And so that's where, Brazil's an exception, right, when you consider this. And... We also believe that this movement, not that it's simple or easy. If not, we wouldn't have this kind of tuition rate of 3%, but we believe we have the skills and capacity just as we shifted other paradigms that maybe three years from now we're going to be talking about a high share rate, right? And I think this is the moment, right? So there's also, we looked at this and say, we would consider that there would not be adherence, right? So there needs to be major scale, right? And you can't transfer products with low added value, right? So if you try to take this product here and take it to see if you're going to spend on freight and income and taxes, it's going to be more expensive, right? So That's why even if we don't want to provide details, it's not going to be the same in every region in Brazil. There may be regions where if you don't have supplies, you're not going to receive unless it's an imported product. So the objective is not to have a private label. full portfolio, but we want to have private labels in certain categories where it can be cheaper compared to the leading brand and also help us with more negotiations in the brands we have today. And they can also add, of course, a higher level of margins than what we have today. So we're being very cautious about this project, and we believe it's going to be very interesting. Well, we're going to monitor this closely, and good luck on the project, and thank you for the answers. Thank you, Tamela. The Q&A session is officially ended, and now we will pass the floor to the company for their final comments. And so I want to thank everyone for being here. Of course, it's a more challenging environment, and the main messages that were transmitted last night is a model or a company that's always been innovating, creating, and continuing this process. And it's also very stable from a cash perspective. with this movement that we believe this is going to stabilize as a measure in the next year. Thank you so much, everyone. Well, the end of this call for the third quarter, planning 25 for Açaí is officially ended. The rest of the relations is available to answer other questions. And so thank you all for participating and have an excellent day.