Hypera Sa S/Adr

Good morning, ladies and gentlemen. Welcome to Hipera Pharma's Q1 2023 earnings conference. Joining us today are the company's CEO, Mr. Brenna Oliveira, and its IRO, Mr. Adelmario Cotto. We'd like to inform you that this event is being recorded and will be available for playback at the company's investor relations website, ri.hepera.com.br. Please be advised that during the company's presentation, all participants will be connected in viewer-only mode. Following that, the floor will be open for questions and further instructions will be provided. Before we move on, we'd like to underscore that the information shared during this conference may include projections or forward-looking statements. Such information is subject to known and unknown risks and uncertainties that may cause such statements to not materialize or ultimately prove to be materially different than expected. I will now hand over to Mr. Breno Oliveira, who will start the presentation. Mr. Oliveira, please proceed. Good morning, everyone. Welcome to our Q1 2023 earnings conference. We'd like to start the presentation by talking about our growth, which is highlighted on slide three. We achieved 5.9% organic sellout growth in Q1 2023, driven by strong performance in January and February, following the exceptional growth rates recorded in the same period last year. It's worth noting that we grew organically by almost 30% in the first two months of 2022, outperforming the market by almost 7 percentage points, thanks to significant growth in sales of anti-flu and respiratory medicines given the increase in influenza cases early last year. Because of the base effect from last year, we saw virtually no growth in the first two months of the quarter. However, in March, the normalized comparison base versus 2022, we grew 19.1% organically, a level of growth that's similar to last year's. and preliminary data for April point to an increase in the mid-teens. Our organic sellout CAGR for the last two years came to 14.1 in the quarter, outpacing the market in that period thanks to the accelerated pace of new product launches in recent years, the increased production capacity, and the investment in our leading brands. Speaking of our brands, our power brands, Buscopan, Torsalax, Stramin, Epoclair, and Engov, the line extensions for brands Vitamina's NeoChemica, VitaCy, and MentaCorp Skin Care, and the recently launched prescription products Ami, OnDiff, Kirk, and PicBam, were this quarter's main highlights. Moving on to slide five, let me comment on our new launches during this quarter. In prescription drugs, the highlights were ECOX and lisidocolica. In addition, we also launched our third cannabidiol-based medicine, Full Spectrum. In consumer health, the standouts were Benatasi Syrup and Tamarine Fibrous Max, a line extension of the Tamarine brand. In skincare, we launched important line extensions for the Episol, Epidroth, and Glycare plants. The recent launches and those expected for 2023 are essential for our sellout growth this year. Our current innovation pipeline adds up to about 450 products that will further strengthen our presence in Brazil's pharmaceutical retail sector in the coming years. Another important highlight of this quarter was our performance in the institutional market. Our net revenue grew 35% and our EBITDA margin widened considerably in this segment as a result of the initiatives adopted by the new structure fully dedicated to the institutional market we created in 2021. Today, the company already has over 90 products in its innovation pipeline for the hospital market, including projects from the oncology, specialties, and biological departments to boost our performance in this segment. During this quarter, we also approved the distribution of interest on shareholders' equity of 0.31 reais a share, keeping our commitment to continue to share capital with our equity or shareholders. I will now turn the conference over to Abel Mario so he can dive into our results starting on slide six. Thank you, Brenno, and good morning, everyone. I'm pleased to report that our net revenue grew 13.7% in Q1 23, reaching close to 1.7 billion years. This is also in line with the seasonal trend for previous years. our overall increase in sales was by nearly 14%. And when we exclude the revenue coming from center fees market to compare on the same basis, growth came to close to 10%. As Breno said before, I think it's important to highlight the recent growth to compare continue with the trend of growth in the products. And the products we launched in the last few months already had a contribution of four percentage points for our organic growth in the same period. When we look at a longer period, the products launched in the last five years account for 24% of our overall revenue, including the acquisitions we made in this period. During this quarter, we also saw an increase in profitability with a gross margin of 64%, which is 1.1 percentage points higher than in the same period. This came mostly from the update in prices that we had last year, which more than offset the worse mix because of our sales in the institutional market and our sales of generics. We also had positive contributions from other factories, such as reduced idleness in our plants in the first quarter, and also the devaluation of the U.S. dollar versus the Brazilian real, which has a positive impact in our raw material costs. The average exchange rate that we dealt with was 5.21 versus 5.31 last year. Our hedging policy remains in place and making the most of this time of depreciation to increase our exposure. Seeing that we have 50% of hedged exchange rate exposure at a rate of 515. Our sales and marketing expenses as the percentage of revenue were also in line with what we had last year. And both of them combined account for 28% of our net revenue. Our R&D expenses increased 21% when we excluded the Goodwill Act that we had this year, which understands we also had an increase of 28% that accounted for 9% of our revenue. the strategy was very much in line with what we have adopted in the last few quarters to ensure the company's sustainable growth via the development of our innovation pipeline. Our GNA went up 40 basis points, but was more than offset by the increased gross margin. With that, we ended the quarter with a a 16% growth and a margin of over 34%. Our net income, in turn, was slightly lower than the previous year, with an increase in leverage after we paid for the acquisition of Santa Fe products and also the increase in the CDI rate for the period. Now, talking about cash flow and indebtedness on slide six, I think it's important to highlight the higher operating cash generation in this quarter, which was closer to Q4 2022, but with significant growth when compared to Q1 2022. In this case especially, we saw an increase in unsold inventories and also in the days to receivables. We had a few items that led to this increase in working capital. The first of them, refers to our policy of working with a high level of raw material inventory, which is something the company has done since the beginning of the pandemic, and which was increased at the early last year after the crisis in China and the conflict between Ukraine and Russia. As we have said before, this is nothing new, but we've been working since late last year on lowering our inventories. This is not something that's easy to implement though. We can't do it overnight. It takes some time given the contracts that we have with our suppliers. In addition to that, we also had a shift in the company's temporary shutdown, which usually takes place at the end of the year with collective vacations. But last year we decided to postpone that temporary shutdown to early this year, which actually took place in the first two weeks of this month. During this period, we increased our inventory of finished products by about 200 million reais to really create that buffer and prevent gaps in the meaning of orders and lack of supply in the market. And lastly, with the lower sellout that we had in the End of the quarter, we ended with a little fewer products in our clients, which reduced the deadline for receiving, but that should come back to normal in the second quarter. We expect to reduce the inventory of finished products, moving back to the same level we had in Q4. That puts them in a very comfortable position and confident that the situation should go back to normal in the next few months and create a positive impact in cash generation for the company over the next few quarters. Even considering these working capital effects, our operating cash flow was over $300 million and was enough to cover our investments and our P&D or R&D and also investments. We also amortized and settled debts to the tune of $2 billion and the payment of interest on capital our equity as declared in 2022, which was made early in January. I think it's also important to say that even though the credit market has deteriorated since the beginning of the year, we continue to have great access to our line of credit and to execute the company's liability management very healthily. Our debt came to $300 million last in the beginning of the year and we also approved the issue of a new 800 million RAS debenture for a maturity of five years. With that, we should recover the company's revenue and our net debt should come to 7.7 billion or 2.5 times the evidence set in our guidance for 2023. Let me now turn the conference back to Brenno for his final remarks. Thank you, Adelmario. The results of the first quarter, combined with the strength and resilience of our portfolio of leading brands and the contribution from our recent product launches and acquisitions, bolster my confidence that we'll be able to meet the targets and our guidance we set for 2023. With the inventory reduction initiatives that Adel Mario mentioned, which we started late last year, we expect our operating cash generation to be significantly better over the next 12 months, starting in the following quarter. delivering solid sellout and EBITDA growth margin is part of our strategy. While we also don't lose sight of our commitment to generating cash flow, which is the main source of financing for our expansion projects. We continue to expand our production capacity and to intensify our investments in innovation to boost our medium and long-term sustainable growth. We are the only pharmaceutical company with a prominent position in all market segments and the company that's best positioned to seize the many opportunities Brazil's pharmaceutical market has to offer. I'd like to thank you all for joining and let's now move on to the question and answer session. We will now begin the Q&A session for investors and analysts. If you'd like to ask a question, please press the reaction button and then click on raise hand. If your question is answered before your name is called, you can leave the queue by clicking lower hand. Our first question comes from Mr. Vinicius Figueiredo with Itaú BBA. Vinicius, please, you can open your microphone. Good morning, everyone. Thank you for taking my question. I'd like to talk a little bit about your gross margin. You showed a significant improvement. I believe it was even a positive surprise. So I'd like to understand how that splits into the gross margin for retail and whether it was enhanced by better margins on the institutional channel. Also, with regard to your initiatives to internalize costs with the portfolio from M&A, I wonder if that's already translating into margin gains. And if I may You also mentioned that a huge share of your volume would come from your new product launches. What can you share with us in terms of KPIs? And is that already accounting for about two to three-thirds? As you said, that would be the case in terms of volume growth that would come from those new product launches. I wonder if that's already the case for early this year. Hi, Vinicius, how are you? Thank you for your questions. So your first question about our margins, yes, there's also been an improvement in our gross margin on the institutional channel. As we put new products on the market, we are being able to improve those margins and also With great focus, we can also expand our footprint in that market through other distributors that didn't work with us before. And as a result, see improvement in those margins. And we also see increased rationality from other players in this market. And this ultimately helped us expand that or widen that gross margin, even though our margins in the institutional market are narrower than the company's overall margins. But they did improve in Q1 on the institutional side. With regard to the positive effect that you mentioned, we do not see that yet, the effect from the internalization. We're still in that process of internalizing the products that we acquired from Takeda and Centofi. We expect to internalize Centofi's products a bit faster, even because of the provisions in our contract with them. We're also starting proceedings with Takeda as well, but we expect to see the effects late in 2024, early 2025. At this point, we continue to purchase semi-finished products in most cases, but we also see opportunity for improvement in those margins and not only our margins but also our working capital because currently our deadline to pay for these products is shorter than the average for the company at large. So that is likely to improve both our working capitals and our margins as we internalize those products. Now, as for new product launches, I've already shared with you this KPI, which essentially 40% of our organic growth during this quarter already came from these new products. And I'm talking about very, very new product launches from the last two years. So, as we move forward and increase the number of new products on the market, the idea is that that will account for even more of that share. So, updating our portfolio is very important to ensure growth, and especially as we move into segments we weren't in before, especially in prescription drugs and a few therapeutic areas where our portfolio was smaller. As time goes on, we'll be able to expand our portfolio in therapeutic classes that have a greater prominence in the market, so to speak. So I believe that for the year, of course, we do not have the figure yet. because it will depend on sellout, but it should be between 40% and 50% the share from our recent product launches. And also, as we make headway throughout the year, and we've said that before, but we have about 130 new products that we expect to bring to market throughout the year. And unlike what we saw last year, many of these product launches should take place in the first half of the year. So last year we saw most launches occur between Q3 and Q4 and that has taking effect mostly at the beginning of the year. And we should see these new products coming up, the pipeline, have an effect in Q3 and Q4 of this year. So we are confident that these new product launches will help us a lot in 2023 and also in 2024 and 2025. Thank you, Miguel Del Mario. That was very clear. Thank you, guys. Our next question comes from Mr. Joseph Giordano with JP Morgan. Mr. Giordano, you can please open your microphone. Hello. Good morning, everyone. Thank you for taking my question. Now, I'd like to explore with you a little bit of this credit environment, especially looking at the channel where you work with smaller retailers, especially smaller distributors. I wanted to understand how you guys see these companies work their inventories through this channel. We have seen companies in other industries where clients have more limited inventory. So I wanted to hear how that's going from you. And also, we're seeing the sellout growth that's a little bit lower than usual. And I wanted to hear from you what you expect from this year versus last year. And lastly, looking a little bit to the investment side, we saw a slightly lower volume, and I wonder whether that changes your forecast for CapEx in the very near term this year. Thank you. How are you doing, Giordano? This is Breno speaking. Starting with your second question, as we said earlier, The main reason for our slightly weaker sellout growth in Q1 was the effect from January and February, but we also believe there was some impact from that increase in prices. Current clients felt there was less of an incentive to stock up in March because of the rise in prices that was lower than the historical record and the funding costs were a bit higher. But this, we believe, is a temporary effect that should be recovered in the second half of the year. But it was mostly coming from January and February. Now on top of that, and this also touches on your other question about retailers and the credit landscape, we have been more careful in our credit supply, but our most important clients are major retailer networks and large distributors. We also work with local distributors, and that's where we have been most cautious. But with smaller networks, essentially we have no exposure. because we sell to them via our distributors. So there have been a few events in the credit segment with smaller distributors and networks, but we are very confident that our credit policy is more receptive. There has been some impact, but that's been virtually negligible. And that increase in delinquency is also provided for in our guidance for this year. Oh, you had another question also, whether that has any impact on our investments. And although Mario just reminded me of that. But the answer is no, not at all. The only impact is from the current level of interest rates. That's something we take into account when considering the return on additional investments on our projects, investments on our plants, or new product launches. The increased capital costs ultimately has an impact on our investments, but we think long term. It seems that starting in the beginning of next semester, we should see a decrease in interest rates, and if that's the case, that should have a significant impact on our net earnings given our debt level and the debt cost that weighs by about over $1 billion. So as interest rates go down, that should go down significantly as well. Perfect. Thank you, Breno. Thank you, Gio. Our next question comes from Mr. Bob Ford with Bank of America. Mr. Ford, please, you can open your microphone. Thank you very much. Good morning, Breno Adelmario. Thank you for taking your question. Could you talk a little bit about how much you expect in terms of working capital for the next few months and how do you currently see the opportunities on the institutional side considering the comparison basis? And lastly, how should we think about the fiscal incentives And how do you see the risk of changes in the goods and services tax ICMS? Hi, Bob. With regard to working capital, we believe there's significant room for us to reduce our working capital. And this is not for the very near term. We should start seeing that in the next quarter. But this is a process that's expected to last for at least 12 months. And according to our estimates, we should be able to release about $500 million in working capital soon. with that process that's already started, as Mario mentioned in his part of the presentation. This has already started late last year. But it takes time. We already had orders placed by our suppliers and we had a very sharp shift in demand last year, times when demand was much higher than expected and other times when it was much lower than expected. So it takes a while for us to adjust our in-house inventories. But we've taken the necessary steps and we've received a significant share of our raw material. And as Mario said, we changed the maintenance shutdown from the end of the year to the first couple weeks in Q1. So we have a slightly higher finished product inventories, which is likely to go back to normal now. as of Q2. So we are very confident that we will continue to conduct that adjustment. And this was a conscious policy of raising inventories, which we're now rolling back. And just as it took some time for us to boost our inventories, it will also take some time for us to move back to the levels we used to work with before the pandemic. Now, with regard to your second question about the institutional market, if I understood it correctly, you wonder about our performance moving forward, considering that we will not have a hemoglobin in the next few quarters. Am I correct, Bob? Yep, that's it. Very well. So this is also in our plans, and we've talked about this already. It's not part of our guidance, no additional sale of hemoglobulin, but we believe we'll be able to maintain the same level of sales that we had last year without hemoglobulin. So essentially without hemoglobulin. in the institutional market at large. Sales should come to about 400 million reais in this segment, which is a huge accomplishment considering that Our portfolio does not include products in this additional side that will take greater prominence starting next year. But only considering our baseline portfolio, we can already reach that level of sales, about 400 million, which amounts to close to 50% growth considering the same base of comparison versus 2022. Now, about your last question with regard to our corporate tax and the ICMS benefit, we are very comfortable with that. We have made a few investments, and our debt is related to that. We took... made a commitment with the State of Goiás to invest in expanding our product lines and we are still investing in our factory. That's something that's ongoing. So we have enough backing for that to not be taxed on our corporate tax returns. What risks do you see in terms of change? Oh, unification. Oh, okay, unification. You mean the potential tax reform involving ICMS and not just the VAT tax? Well, Bob, this is a discussion that we have been keeping track of for a long time. They have existed since, I think, 2013. And with the new administration, the topic has come back to the spotlight. And we believe this is a very complex issue. as we've seen in the last few months. So it's a very deep discussion involving all agencies, state governments, federal governments, local governments, and each of them with interests at stake. Now, what we believe is If we come to a point where the tax reform bill is approved this year, we believe that the transition period will be relatively long. From the time it is sanctioned to when it is actually enforced, it will take at least a year. And then there's the transition from the previous structure to the new structure, which should be very gradual. And if there's any impact, we expect that to be diluted over time and obviously we will adjust to the new text reality from that point on. I think that the important thing to highlight here as well is Every major Brazilian company in this segment or many of the most significant companies in this industry also deal with some sort of tax incentive. So our case in the states of Minas Gerais and states in the Northeast and other areas where we are offered tax benefits, that's the case. So this is not exclusive to Hypera. As it is true for companies and other industries, both in the medications chain and other industries. So it may take a little bit longer than the government initially alluded to. And as the last few months where this matter has been discussed have pointed to. Thank you very much. Thank you, Bob. Our next question comes from Mr. Mauricio Cepeda with Credit Suisse. Mr. Cepeda, please, you may open your microphone. Hi, Bruno and Mario. Thank you for taking my question. I have three questions, actually. The first of them even picks up on the last question and touches on the fiscal environment. I understand that we are very much in the hypothetical realm right now, but we know that There have been a lot of actors that are against charging subsidies, taxing subsidies, but how do you feel about this level of incentive for the competition? But I wanted to understand whether the industry will adapt to together or if you see any advantage or disadvantage in having more or less incentives. And also, what kind of contingency plan do you think of if you at any point need to raise any sort of tax shield? Also, I wanted to know, you have a guidance with a slightly larger margin, and the adjustment this year was a bit lower. So how do you think you'll be able to move forward with this margin? What levers do you have at your disposal right now? And the third question, also picking up on something that's already been talked about here, I wanted to hear about inventories across your chain. We've talked about a lower increase, so there are fewer incentives to keep inventories high now that the tax situation is not as good as before. interest rates are higher, but we see this as a proxy for the chain. I understand that last year it was more about collocation. So if you could talk a little bit about what has led to this increase in your receivables. Thank you. I will answer your first question and then Adel Mario takes your second and third questions. I don't have much to add to what I said answering the previous question about this issue. We do not have a lot of information about the competition. There's no listed company that's our direct competition, but What we know is that benefits offered by other states and other areas of the country that attract manufacturing companies are not that different from what we have working in our favor or the benefits that we enjoy. So, I mean, how much of our competitors' operations take place in those states is more difficult to gauge, but in percentage terms, we believe it should not be very different from what we have. So, if there's any increase in the tax burden, We believe that will not affect the margins for these companies even because they are not enjoying different levels of incentive. Turning over to Adel Mario now. Hi, Sepera. This 5% that you mentioned was already in our guidance for the market, so I don't think there's anything new here. It was very much in line with the level of inflation of the past 12 months. I think that the improved gross margin, especially, is likely to be mostly because of the improved exchange rates. So we're already working with a lower exchange rate than what we had last year. Because of our level of hedging through September, we can already see how that's going to go, and also taking the opportunity to increase our hedging and reduce our exposure. We know that that leads to a significant improvement in our costs. About 40% of our costs are pegged to foreign currency. So any decrease in the exchange rate has a very positive impact for us. I believe that in terms of synergies... especially now in Q1 when we saw some improvement in our margins, especially if we continue to invest in marketing at the same levels with what we had in Q3 plus $200 million coming from Santa Fe's portfolio. So there's also an increment coming from the synergies that we're realizing, and it's also implicit in the guidance that we offered for the year. I think these are the two most significant impacts that we should see on our margins. Now, when we look at inventories across our chain, we also mention our days for receivables. That's an average for the inventory that we have with our clients. I think this is a natural shift, especially – when in the first few months of the year we had a lower sellout growth, it's only natural that those inventories end the quarter at a lower level, but We will be making adjustments along the year, and also with the improved sellout that we saw late in the month, and now in April, we're already seeing demand from the market at very similar levels to what we used to see in our historical records. We will be making those adjustments, and we want to keep our client's inventory at a level of about 100 days, which we're likely to see again in this second half of the year. So there might be some imbalance, but we are very confident that we will be able to make that adjustment and move back to our historical levels at the end of the second quarter. That was very clear. Thank you. Thank you. Our next question comes from Mr. Leandra Bastos with Citibank. Mr. Bastos, please, you may open your microphone. Hello, guys. Good morning. I have a few questions. The first one about sellout. You mentioned your sellout will be at the mid-teens. I just wanted to understand whether that's a trend for the quarter or if there's any impact from the base effect on this result. That's my first question. The second question is a follow-up about a retail credit. In my understanding, you don't see any major impact, but I just wanted to understand whether you see your competition more exposed to these issues and if that has any impact on the competitive dynamics that you deal with. Thank you. Alejandro, about your first question, we believe that that's the level we'll be seeing in Q2. We're waiting for something in the mid-teens, bearing in mind that Q2 of last year was also a very significant base of comparison. We had about 25% growth in Q2 of last year, and then it started to go down in Q3 and Q4. Consequently, this year we expect growth to progress over the course of every quarter, considering the dynamics that we saw last year. Now, about our clients. and the credit issue, I believe that most of our competitors have a structure that's similar to us in that they sell directly to major networks and via large distributors and local distributors which are less exposed to minor networks. We have a few players that have their own distribution networks and they might be facing greater exposure to the level of credit that smaller networks or smaller pharmacies enjoy. And one trend that's already been in place for several years is likely to accelerate, which is large networks will be taking a little bit of control the market share from smaller local chains, which is essentially what we see. One share of Bra Farmer's market doesn't change much as a percentage of the overall market, but we do see changes within the network players. But no significant change or no significant shift should be seen. These are networks with few stores, so it's nothing that's very relevant within the market pool. Thank you, Brenno. That was perfect. Have a great day. Our next question comes from Mr. Artur Alves with Morgan Stanley. Mr. Alves, please you may open the microphone. Good morning, everyone. Thank you for taking my questions. This is a very quick question. How do you see the demand of anti-flu medicines now in the beginning of the influenza season? Is it moderate, or do you think it could be a positive surprise for the next quarters? Thank you. Hi, Arthur. The traditional flu season hasn't started yet. It starts in a few, sometime from now. But the demand has been good, especially in March and April has been better than we expected, which upsets the lower demand from the beginning of the year, much because of the basis for comparison from the year before. I mean, it's difficult to tell, but for now, everything's moving in a good direction, even better than we expected in this segment of the market. Thank you very much. That was very clear. Our next question comes from Mr. Gustavo Miele with Goldman Sachs. Mr. Miele, you may open your microphone. Good morning, Brenno and Adel Mario. Thank you for the presentation. I also have two questions. The first of them is about the line of doctor visits within marketing expenses. We saw an increase in the release you explained with the new samples because of the new product launches, but I also wanted to understand whether there's any behavioral aspect to this. I remember that early in the pandemic, you mentioned that doctors were responding well to the fact that visits were migrating to the online environment. Do you believe that post-pandemic, that behavior should change. Does that have an impact on that line or not directly? Do you see that as more of a one-off impact? What have you seen in that sense? That would be my first question. And my second question would be more of a follow-up on another question about the sellout growth in April. Breno mentioned early in the call that that was close to the mid-teens, but I wanted you guys to talk a little bit about each category and how each category is doing now early in the year. And if you see yourselves facing up to this more challenging macro environment, if maybe there's any change in generics because of a trade down that you didn't expect when you budgeted for 2023. Is that something that you're seeing in terms of sellout, or do you see a mix of categories that's similar to what you guys saw in previous years? That's it, guys. Thank you. Hi, Gustavo. Well, about doctor visits. I don't see any structural change. We continue to invest significantly in that. As we said, this is the market segment where we see the biggest opportunity to increase our market share considering that we are already the absolute leader in consumer health. We already have very much a leading position, and we stand to gain more market share in prescription drugs, which is the greatest share of the market. And one big share of promotional... promotional initiatives with doctors are samples. When we make the decision to leave those samples with the doctor, and this is something that we've been doing for many years that works really well, this is an investment that has a huge return, that offers huge returns. So it's only natural that as we launch new products, we see an increase in samples and doctor visits in general. Now, another point that I think is important to mention, free samples are accounted for when we produce them and not necessarily when we distribute them. So, in Q1, considering that we were running at full steam in our factories, we also saw greater production of samples, which is why you see those increments, but This is in preparation for the new product launches that we will have in Q2. So it's not necessarily when you hand out the samples, but when you produce them that you see that increase in spending. Now, as to your other point about the mix of categories, What we saw in terms of highlights this quarter was we saw great performance in vitamins in general. So VitaSci, Vitamina's, Neokimica's were showing a very significant increase this quarter. Not at the same level in vitamin D, but we still see that in the same levels that we've had since the end of the pandemic. So if we compare that to 2019, We are nearly 40% above in vitamin D cells, but still 20% below 2021 and 2022, which I think is normal. And on top of that, there's dermal cosmetics. This segment in general has been growing by about 20%. And for us, it's become very significant considering all the brands that we have within the Mental Corp Skin Care umbrella brand. Episol and Epidrot have also increased. It's performed really well, and we did mention Simp Organic, which is our organic and natural dermal cosmetic products, which has also performed really well, growing by nearly three times over what we had in Q1 last year. So I think these would be the most important highlights in terms of sellout performance in Q1. That was very clear, Mario. Thank you. Our question and answer session is now closed. I will now turn the conference over to Mr. Brenna Oliveira for the company's final remarks. Well, I'd just like to underscore the message that we're very confident in the delivery of our guidance for 2023. As we discussed throughout the call, we also see plenty of improvement to increase our working capital over the next few months. So I just wanted to stress that and thank everyone for joining us on this conference and also say that our IR team is also available if you have any additional questions. Have a great morning and a great day, everyone. The Hippera Pharma earnings conference is now closed. We'd like to thank everyone for joining and wish you all a great day.