Companhia Brslra Dst Adr

The conference called to discuss the results for the first quarter of 2025 of GPA. For those who need simultaneous translation, we have this tool available on the platform. To that end, just click on the interpretation button through the globe icon at the bottom of the screen and choose your preferred language, Portuguese or English. For those listening to the video conference in English, there is an option to mute the original audio in Portuguese by clicking on Mute Original Audio. We inform you that this video conference is being recorded and will be made available on the company's IR website, where the complete material of our earnings release is available. You can also download the presentation using the chat icon. During the company's presentation, all participants will have their microphone disabled. Then we'll start the question and answer session. To ask a question, click on the icon Q&A at the bottom of the screen and write down your question to get in line. When being announced, a request to activate your microphone will appear on the screen and then you must unmute your microphone to ask your questions. We recommend that the questions should be asked all at once. We point out that the information contained in this presentation and any statements that may be made during the video conference regarding business prospects, projections, operational and financial goals of GPA constitute the beliefs and assumptions of the company's management. as well as information currently available. Forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions, and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions and other operating factors could affect GPA's future results and could lead to outcomes that differ materially from those expressed in such poor-looking statements. With us here today are the CEO of GPA, Marcelo Pimentel, and the CFO and Investor Relations Officer, Rafael Ruzovsky. I will now turn the call to Marcelo Pimentel for him to start the presentation. You may proceed, sir.

Good morning, everyone. It is a great pleasure to share the results for the first quarter of this year, a period that marks the beginning of a new cycle for 2025 through 2027, during which we've reaffirmed our strategic direction anchored in six core pillars, sales, customers, digital, expansion, profitability, and ESG and culture. Our performance in this quarter is encouraging, especially considering our progress in sales margin and volume. It reinforces the solid work we've carried out over the three initial years of our turnaround journey. Despite a still volatile and uncertain macroeconomic environment, I can confidently say that our premium focused business model has been instrumental in protecting and sustaining our operations while supporting our growth trajectory. Let me now walk you through this quarter's highlights. As always, our strategy remains guided by our six strategic building blocks, which have driven consistent and progressive results quarter after quarter. From January through March, we posted same-store sales growth of 7.3%, an outstanding result with gains across all banners. Proximity accelerated its growth to 7.8%, strongly supported by units opened since 2022. Extra Mercado continued its positive recovery trend, growing 6.6% following implementation of the assortment and category management review project launched at the end of Q2 2024. Pau de Sucre maintained its consistent and resilient growth trajectory, with a 6.5% increase in same-store sales underpinned by our strategic focus on three key pillars – premium assortment, high-quality perishables, and top-tier service. Growth was driven by higher sales volumes and increased average ticket size. This sales performance is further validated by our gains in market share. We've now seen over two consecutive years of market share growth in Sao Paulo, with an additional 0.4 percentage points gained in the first quarter of 2025. This consistent growth reflects our strategic focus on the premium segment, bolstered by the strengthened value proposition of the Pau de Sucre brand, as well as the ongoing expansion of Minuto Pau de Sucre. According to Nielsen, we gained 0.7 percentage points of market share in the premium supermarket segment across all cities where the Pau de Sucre banner is present. The proximity format now commands an impressive 63% market share in São Paulo, up 2.4 percentage points year over year. We also continued improving our customer service quality across all brands. Our Net Promoter Score, NPS, increased by 3.2 points compared to the first quarter of 2024, reaching 79.7 points with Extra Mercado standing out at 83.8 points, a 5.7 point improvement over the period. These results stem from a set of initiatives focused on delivering an excellent customer experience, including ongoing staff training, store refurbishments, and improvements in price perception, product assortment, and in-store environment. Our private label brands also continued to gain relevance, reaching a 24.6% market share nationally, up 2.6 percentage points year over year. Private label penetration in total sales also rose to 21.1% in Q1 2025. A particular highlight is Qualita, which now ranks 20th among the top-selling food brands in the country, according to Nielsen. We also maintain our leadership in Brazil's online food retail market. Digital channel sales reached R$ 588 million during the quarter, a 16.9% increase over the same period last year, accounting for 12.6% of total sales. Efficiency initiatives we implemented helped us achieve a strong pre-IFRS 16 EBITDA margin of 9.9%. a key contributor to our consolidated margin. Our omnichannel strategy remains a strategic differentiator. Multi-channel customers shop 3.3 times more frequently and have an average ticket 4.0 times higher than single-channel customers. Organic expansion remains central to our growth strategy and brand presence. The strong profitability of the proximity model continues to drive expansion, reflecting high customer acceptance in major urban centers. This quarter, we opened 10 new proximity units and a new Pão de Açúcar store in the Ipica neighborhood of Campinas, launching a new store model focused on delivering a differentiated shopping experience, and enhanced services. Since the beginning of our expansion plan in 2022, we've opened 169 new proximity stores and 12 Pajasuker units. On the financial front, from January through March, we reported a gross profit of 1.3 billion reais, reflecting a solid 27.6% margin and maintaining a consistent upward trend at a robust level. Adjusted Consolidated EBITDA continued on its positive path, growing 9.9% year-over-year, with a 0.5% point margin increase to 8.6%, driven by the efficiency gains we implemented across all channels. Rafael will provide more detail on the financial performance in a moment. Now moving to our sixth strategic pillar, social, environmental, and cultural initiatives. On waste management, we expanded our partnership with Food2Save to include 400 proximity stores. In just this past quarter, we helped prevent the disposal of 81 tons of food, and since the start of the initiative, we've sold over 148,000 surplus food bags. In our diversity and inclusion agenda, we reinforced our commitment by joining the UN Global Compact's Ellas Lideron, They Lead movement. setting a target of having women occupy 50% of senior leadership roles by 2030. We also joined the Business Forum for Refugees and launched a project focused on hiring refugees and migrants. Also, this quarter we launched the fourth edition of our Affirmative Internship Program for Black Students, welcoming 20 new interns. I'm also pleased to announce that GPA is now part of the B3 Corporate Sustainability Index portfolio, reaffirming our strong ESG commitment. Our environmental transparency was also recognized by the Carbon Disclosure Project, CDP, where we score A- on the climate change questionnaire and B on forests. Before handing things over to Rafael for the financial deep dive, I'd like to highlight the release of GPA's 2024 Annual and Sustainability Report published last week. The report provides visibility into our value chain initiatives, climate change efforts, and broader social engagement, touching on our business activities and sustainability indicators. The full report is available on our corporate website and investor relations page. With that, I'll conclude my initial remarks and turn the conference over to Rafael.

Thank you, Marcel. Good morning, everyone who's attending our conference. Starting with slide eight, we highlight the evolution of our profitability reflected in the growth of gross profit and adjusted EBITDA. We remain focused on operational excellence with increased sales and volume. combined with ongoing efficiency initiatives in costs and expense management. As a result, we delivered yet another quarter of margin improvement with consistent and sustainable performance. As shown in the chart above, gross profit reached 1.3 billion in the first quarter of 2025, with a margin of 27.6%, representing a 0.4% increase versus the same period in 2024. The chart also highlights the positive trajectory since we've begun our turnaround efforts, demonstrating our long-term strength of these results. In the quarter, we posted advances across all banners and formats. The proximity format continues to gain profitability, driven by improved promotional efficiency. Extra Mercado remains on its recovery path, benefiting from the assortment revision, category management improvements, and store enhancements that began in the second quarter of 2024. Meanwhile, Ponte Açúcar maintains a solid same-store growth, reinforcing its resilience and margin-generating capacity. We have robust initiatives to consolidate our performance and profitability, including reduction of ruptures, expansion of retail media, and store portfolio optimization, all reinforcing our commitment to sustained margin evolution and long-term results. The chart below shows that adjusted EBITDA reached $409 million in the first quarter of 2025, an increase of 9.9% when compared to the previous year, and a margin of 8.6%, up 0.5 percentage points for Q1 2024. It's worth noting that even in a less favorable calendar this quarter, with Easter moving Q2 and February having one fewer day, we were able to capture 0.1 percentage points in our SG&A efficiency. This improvement reflects our ongoing efforts in workforce efficiency and our disciplined execution of zero-based budgeting approach. We remain committed to pursuing new expense optimization opportunities with a focus on a sustainable efficiency gains. Now, move on to slide 9. We'll discuss the net income performance. As illustrated in the chart, in the first quarter of 2025, we reported a continued net loss of $93 million, a significant 77% reduction compared to the loss of $107 million recorded in Q1 2024. This improvement stems primarily from the positive evolution of our operating results, as previously mentioned, and a 120 million reduction in other operating expenses, mainly due to lower provisions related to tax settlements, particularly the agreement reached with the State of São Paulo in 2024. Additionally, the quarter was favored from a positive impact of 187 million reals in income tax and social contribution line, primarily due to the partial reversal of interest and fines related to CSLL charges from 2022. The provisions had been booked following a ruling by the Supreme Court where significant reduced through settlements over the past years. Finally, in the first quarter of 2025, the net loss from discontinued operations was 75 million, a significant reduction of 70% compared to the Q1 2024. Now, moving on to slide 10, we present the managerial cash flow for the past 12 months, during which we generated 1 billion reals operating cash flow. The result was driven by a significant improvement in the pre-IRFRS-16 adjusted EBITDA, which reached 840 million reals, an increase of 307 million versus 2024, supported by efficiency inventory working capital management, resulting in 157 million in generation during the period, a four-day improvement in the working capital cycle compared to Q1 2024. It's important to note that this performance was specially impacted by the shift in the Easter seasonality in Q2 2025, which limited stronger gains in EBITDA and working capital. Continuing the cash flow analysis, CapEx totaled $709 million, reflecting an increase versus the prior period, mainly driven by higher disbursement from store opening and refurbishment in late 2024 and early 2025. We expect that this effect should be less significant in the upcoming quarters. Other operating expenses totaled R749 million, a reduction compared to the previous period. It's worth noting that this figure still reflects the non-recurring effects, which totaled R571 million over the last 12 months, mainly related to the tax settlements and labour claims associated with extra EPIR. Lastly, we saw a 67 million improvement in financial expenses, mainly due to a reduction in gross debt over the period. In slide 11, we provide details on the reduction in our financial leverage. As shown in the chart, net debt increased by 681 million over the past 12 months. mainly due to non-recurring effects, as mentioned in the other operating expenses line. It's important to highlight that a significant portion of these effects is tied to tax settlements, which, while representing one-time disbursement, led to a meaningful reduction in the company's contingent liabilities due to discounts on interest and fines. To conclude, Leverage on our finances stood at 2.8% in the quarter, a reduction of 0.2% versus the previous period, driven by a 58% increase in pre-IFRS 16 adjusted EBITDA. That concludes our financial results presentation. We'll now open the Q&A session.