Hypera Sa S/Adr

Good morning, ladies and gentlemen, and welcome to Ipera Pharma's earnings call for the first quarter of 2025. We have with us Mr. Brenno Oliveira, CEO, and Ramon Sosh's CFO and Investor Relations Director. We'd like to inform you that this event is being recorded. You may watch a recording of this on the company's investor relations website, ri.ibera.com.br. We'd like to inform you that all participants are in listen-only mode during the company's presentation. Then we will begin the questions and answers session when further instructions will be given. Before we continue, I'd just like to underscore that some of the information contained in this call may have projections or statements about future expectations. They are subject to risks, uncertainties that may make them not come to pass or to be substantially different from what was expected. Now, I would like to hand it over to Mr. Breno Oliveira, who will begin the company's presentation. Go ahead, sir. Good morning. Thank you for being here for our earnings call for the first quarter of 2025. I'd like to begin on slide three. Our sell-out grew 7% in the first quarter of 2025. In the institutional market, this represented 21%, and in the retail market, it was 6%. We continued to grow significantly in the non-retail market with a huge market share for one additional quarter. Sell-out in retail grew around 5.8%, which is in line with the operating market. and this is due to the strong performance of patented medication that grew 28%. The first quarter was a bit weaker than expected due to this pre-high, which was lower than expected. We expect to have faster growth in the next quarters due to some important launches for the year, which will contribute to a growth of about 8% in sell-out as we expect for 2025. our sell-out growth was not translated into net revenue due to our working capital optimization process. For this quarter, net revenue had a reduction of about 40% as expected. I'd like to underscore that the working capital optimization strategy aims at boosting our cash generation by reducing inventories with clients and reducing account receivable days. Moreover, we hope to reduce inventories in our customers' distribution centers, maintaining availability of products in points of sale without compromising sell-out growth. I'd also like to underscore that thus far, we have not had any supply problems in points of sale due to this strategy. We have reduced inventories with our clients significantly this quarter, and we advanced in the working capital optimization strategy with a significant reduction in receivable terms. This has already impacted our operational cash growth, which has already grown to 560 million, a record level for a first quarter in the company. Besides these significant advances in the working capital optimization strategy, this quarter we also posted interest on capital of 185 million BRL, and we reinforced our portfolio with important launches, such as line extensions for significant brands. in sun screening we launched sun aqua and in painkillers we launched muscular nosaldina which is playing in a new market ramon will give us more details about this quarter's results on the next slide Thank you, Bruno. Good morning, everyone. For the first quarter, our net revenue reached $1.08 billion, a reduction of around 41% versus the same quarter last year. This lower sales level is due to working capital optimization, as we had mentioned before, and is in line with our plans for the year. Gross income was 580 million, which led to a gross margin of about 47%. This reduction in gross margins is due to the lower revenue level, which reduces our operational leverage by diluting fixed costs. The company's gross margins should go back to historical levels after concluding the working capital optimization process. Marketing expenses came to a total of 367 million, 40% higher than the same period last year. Selling expenses grew at a higher level than sellout, due especially to the lower level of expenses as we saw in the first quarter of last year. and also investments in point-of-sale marketing to boost sell-out growth for our brand portfolio. Selling expenses had a growth of 22%, especially due to increase in commercial expenses, which is closer to what we saw in the last 12 months. General and administrative expenses reached 86 million this quarter, which is also similar to what we saw in the last quarters. With that, continuing operation EBITDA was negative by about 149 million, and net earnings from continuing operations was negative 139 million, as expected given this optimization in the working capital process. Continuing with cash flow, we had the highest level of operating cash flow in our history, even with the reduction in EBITDA. This cash flow was 19% higher than the first quarter of 2024, especially due to advances in the working capital optimization process. Our growth in operational cash flow has allowed us to continue to invest significantly into innovation and expanding production capacity, and we reached a free cash generation 9% higher than the first quarter of 2024. With this free cash flow and interest on our indebtedness, Net debt at the end of the first quarter was at $7.5 billion, in line with what we saw in the first quarter of 2024. This is the level expected for the quarter, and we do not believe that we will not comply with our covenants. As a reminder, our covenants are reviewed on the first and fourth quarter of every year, considering the highest value in the EBITDA in the last 12 months and the normalized quarters EBITDA. Covenants are only not met if we are above 3.75 times net debt to EBITDA in two measurements in a row. Now I'll give the floor to Breno for his closing remarks. Thank you, Ramon. As I mentioned in the last call, we're very happy with the working capital optimization process thus far. This has had a significant impact in our short-term results, but it will create huge benefits for the company in the next months. We are concluding this quarter with 70-day terms in March, and in April, we made a final adjustment, reducing the average term to 70 days. And as of May, we will be normalized on our operations, selling in as much as sell out. This was a significant moment for Ipera, and with the conclusion of this process, we're going to combine sustainable growth and better returns on invested capital with a significant reduction in working capital. And this will give great opportunities in value generation for our long-term shareholders. Thank you, and we will now continue with the questions and answers session. Thank you. We will now begin the questions and answers session for investors and analysts. If you would like to ask a question, please click on the raise hand button. If your question has been answered, you may remove yourself from the queue by clicking on the same button. Please hold while we poll for questions. The first question comes from Leandro Brastos, Citibank. Go ahead, Mr. Leandro.

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