Americanas S.A. (AMER3.SA) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for standing by. Welcome to Americanas S.A. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Inform you that this video conference is being recorded and will be available on the company's IR website, ri.americanas.io, where the full earnings release materials can also be found. The presentation is also available for download icon, including in English. [Operator Instructions] We remind you that the information contained in this presentation and any forward-looking statements made during this video conference regarding Americanas' business outlook, projections and operation and financial goals are based on the beliefs and assumptions of the company's management and on information currently available. Forward-looking statements are not guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions and other operational factors may affect Americanas' future performance and lead to results that differ materially from those expressed in such statements. Today, we are joined by the company's executives, Fernando Soares, CEO; and Camille Faria, CFO and Head of Investor Relations. I'll now turn the floor over to our CEO, Mr. Fernando Soares, who will begin the presentation. Please, Mr. Fernando, you may proceed.

Good morning, everyone. Good morning, everyone. I'd like to start by thanking everyone that helped to deliver yet another quarter, our store teams, distribution centers, logistics and administrative teams who continue working together with commitment to the recovery of rebuilding of Americanas. I'd like to thank the assistant that has been leading this company in this very complicated period. This third quarter marks the 96th anniversary of Americanas and also a new chapter in our important history. The numbers show clearly an improvement in our operation. We are focusing on the retail operations, leaving the restructuring phase, aiming to consolidate our efficiency, operational improvement and business transformation. There is a lot happening in this new stage. We are rebuilding our partnerships, restructuring our loyalty program, Cliente A and accelerating the offering of financial service, all to ensure the best shopping experience to -- for our nearly [ 50 ] million clients that visit our stores every month. We have been unlocking the sales potential through targeted promotional actions for a specific period such as the SKU vacation season, expanding our presence in high potential categories like hygiene and personal care and even establishing a day of the week Friday. And we have our Friday today, our proprietary Friday, and we called it Super Friday Americanas. In our operational agenda, I'd like to emphasize our technological and AI-driven solutions that enhance our supply chain, improving planning and replenishment, predictability, logistics and especially our inventory. Today, we'll go through the accumulated results year-to-date, and we'll discuss the strategy that has been implemented throughout this year and all the paths that we're taking forward toward the company's transformation. Well, on this slide, I'll go over some highlights from the first 9 months of the year and after that, Camille will detail in the figures for the next slides. So in the first 9 months of the year, our consolidated net revenue reached BRL 8.6 billion, growing by 1.4% compared to last year. In addition, same-store sales grew 10.1% in this period, reflecting the progress in our commercial and operational initiatives. The Customers and Partners platform, which includes services, insurance and the new credit card Cliente A that, by the way, reached over 400,000 card issuances showed -- grew by more than 53% during the same period. In parallel, we continue to reduce expenses. SG&A decreased 10.5% in comparison to the same period last year, and now it represents 28.3% of our net revenue. And this number in '23 was over 32%. So our adjusted EBITDA is gradually upward, reaching BRL 240 million, an improvement of BRL 215 million compared to the previous period, reflecting thus a stronger physical store sales, operational efficiency and the improvement of our management strategies, as we said before. Finally, we report net income of BRL 367 million in the third quarter. It's important to note that this figure is not comparable to the same period of last year due to accounting effects from the debt restructuring carried out under the judicial recovery plan. And we detailed that last year, right? These results demonstrate that we are on the right track towards sustainable growth, pursuing higher productivity and profitability. With that, I'll now hand it over to Camille, who will walk you through the company's financial results. Camille, the floor is yours.

Thank you, Fernando. Good morning, everyone. On Slide #4, we present the evolution of the physical store GMV as well as the performance of same-store sales. As Fernando said, the physical GMV continues to grow gradually, showing consistent improvement in store sales. And thus, between the first 9 months of '23 and the first 9 months of '25, this indicator grew by 18%. This performance reflects advances in the company's commercial initiatives as we've talked before and the advancement of strategic supplier partnerships, category expansions such as home and personal care, as we said before, greater efficiency of promotional actions through the period as well as increased contribution from service revenue as we could see in this -- on this highlight slide. Additionally, in the first 9 months of '25, same-store sales continued to show double-digit growth compared to the previous period, expanding by 10.1%. It was driven by a strong seasonal events, assortment and pricing initiatives and solutions of planning and replenishment that improved better analysis of our supply chain and the forecast of our demand and product availability in stores, ensuring more intelligence and efficiency to our operation and ensuring that products reached the right source in the right quantities at the right time. With only a few months of the implementation of those solutions that we have mentioned previously, we have already seen encouraging results, such as cutting out of stocks for priority items in -- across categories like can and snacks, food, cleaning, hygiene and beauty, et cetera. It also improved the execution of seasonal events such as the special market that happened in Q3 '25. And in this event, we grew by 19% the same-store sales in this concept compared to the same event last year. So it was a very significant growth in this event, highlighting the cleaning category that grew this revenue and the number of orders and items per ticket that was a very, very sound indicator. Moving on to Slide #5 now. We see gross profit and pro forma gross margin. And why pro forma? Because we've been showing that because we purged the extraordinary effects, especially the recoveries of VPC and extraordinary tax events. So we want to look at the operation in a more pure way. So we do that too to make your analysis easier. So in the annex, there's a reconciliation of those effects. Pro forma consolidated gross profit in the first 9 months of '25 grew 2.7% compared to the same period last year with stable margin. It shows that the company has been able to grow revenue in a healthy way without compromising the margins even in this challenging macro scenario. This result stems from the maturation of assortment, optimization, pricing, planning and replenishment initiatives, focus on profitability and operational efficiency. The development of these initiatives strengthens the company's strategy to maximize returns from the physical footprint, diversifying revenue sources and attracting new customers, consolidating thus Americanas as an innovative and resilient player in the Brazilian retail market. Moving to Slide #6. Now we talk about SG&A. Once again, the SG&A expenses in the first 9 months of '25, excluding depreciation and amortization, were reduced. They totaled BRL 2.4 billion showing once again a reduction in this time by 10.5% compared to the same period of '24. This result reflects a 26.5% decline in G&A expenses, excluding depreciation and amortization, combined with a 5.5% reduction in selling expenses. Beyond the absolute improvement in this reduction, we keep diluting that, representing now 28.3% of net revenue in the first 9 months of '25, that is equivalent to 3.7 pps -- a reduction of 3.7 pp compared to the first 9 months of '24. This performance that we present systematically is a result of our continued focus on operational efficiency and shows our commitment to keep optimizing the cost structures and expenses focused on profitability. On the bottom of the slide, you see the adjusted EBITDA ex IFRS 16, excluding as we've been systematically presenting since the first -- our tenure, the expenses related to the judicial recover and all the effects regarding rent. In the first 9 months of '25, the adjusted EBITDA reached BRL 240 million, and this result was impacted positively by extraordinary events -- extraordinary tax agreements as ICMS, PIS and Cofins and renegotiations on a federal and state level and renegotiations in our partner and clients platform in IT. Everything represents an improvement of BRL 215 million compared to the same period in the previous year. I think that it's important to highlight here that as we said a year ago, the result of the first 9 months of '24 was positively impacted to extraordinary events like haircut from the judicial recovery plant in the suppliers, the self-regularization plan, recovered some extraordinary credits regarding ICMS and VPC and thus, when we exclude the impacts of those extraordinary events and consider only the recurring operational results, the adjusted EBITDA ex IFRS 16 improved even in a better way when we take into consideration the extraordinary impacts. So with the extraordinary effects, we grew -- we improved by BRL 215 million. Excluding those effects, we improved by BRL 254 million in the period. So this performance demonstrates a meaningful operational improvement, especially due to the maturation of those initiatives of operational efficiency that we have been talking a lot and the continuous improvement of SG&A. And I think it's important to mention the quarter. So when we look at the adjusted EBITDA in the quarter, we had an evolution of BRL 353 million, far superior to the evolution of the revenue that shows our operational efficiency once again. Excluding the extraordinary impact, this improvement is even more expressive and it reaches up to BRL 500 million in improvement of EBITDA when we compare '25 to '24. To illustrate this evolution throughout the time. So let's repeat the slide that we showed in the last earnings conference call. It shows our journey. So on the first graph, we have the evolution of the same-store sales that keep evolving, presenting a consistent growth throughout the time with a year improvement of 14.6% in the first 9 months of '24 regarding '23. And we kept this double-digit growth by 10.1% in the first 9 months of '25 in comparison to last year. So despite the strong sales growth that could come not taking into consideration the margin. But if you could see here, we had a growth of 0.4 p.p. in the first 9 months of '24 in relation to '23, and we kept this stable scenario in '25, even with this challenging macroeconomic scenario in same-store sales, I mean. So it shows the focus on growth, but with profitability. Additionally, the cost and expense optimization efforts led to a 38% reduction in SG&A, 37% since '22 to '24, the whole year. But when we look at the first 9 months, 38% reduction between '23 and '25, which shows that even delivering that before, we kept delivering and our SG&A has been reduced by almost 50% since 2020. Well, the adjusted EBITDA ex IFRS 16 at the right bottom part of the slide, kept evolving. It went from negative BRL 2 billion in the first period -- in the first 9 months of '23 to positive BRL 240 million in the first 9 months of '25, a BRL 2.2 billion improvement. So in '22, almost BRL 4.5 billion negative and in '24, practically 0, like minus BRL 41 million. So when we exclude the extraordinary effects in the analysis of the first 9 months, the adjusted EBITDA for the first 9 months of '25 keeps presenting a considerable improvement, around BRL 1.1 billion. So those results reinforce a trajectory of sustainable and consistent growth, seeking more profitability to our shareholders and stakeholders. Moving to Slide #8. So we ended September '25 with a gross debt of approximately BRL 1.9 billion, entirely composed of public debentures issued under the judicial recovery plan. And why? I said this time because we highlight that the loans from Uni.Co that were being accounted in our consolidated debt from this quarter on are no longer included in our consolidated numbers. So obviously, it's not in our consolidated debt, as we said before to the market because now we have a binding proposal from Uni.Co we received that and the operation of Uni.Co is a discontinued operation now. So at the bottom of the slide, we show the debentures. Just to remind you that they have maturities for 5 years in the first [ 28 ] and a 2-year interest grace period. We are in the grace period now ends in the second semester of next year when we start paying interest. Our total cash and equivalent reached BRL 1.3 billion at the end of the first 9 months of '25 and BRL 736 million in card receivable. So in September [ 30 ], '25, the company had net debt considering receivables at BRL 596 million. I believe that here, it's important to highlight that this third quarter is seasonally more pressured. If you look at the third quarter last year, you're going to see that a little polluted by the judicial recovery plan, but this is natural because we have the process of replenishment of the inventory for the end of the year events like Friday and Christmas. So naturally, our cash is a little more pressured and it goes up again until the end of the year. And we considered that the debt with suppliers under the judicial recovery plan and up to 60 installments, and we started paying in the first semester of '24 and we consider that the financial obligation of the company and brought to present figures. Those debts were up to BRL 446 million in September 30, '25. And now they are under the suppliers category. So since it's not in our everyday situation, we'd like to show the capital structure. We also have the creditors' obligation that opted by the first option or the general modality that's 20 years and the present value that the outstanding balance of those operations ended this period being BRL 17 million. So considering all the remaining judicial recovery liabilities, the net debt stands at the end of September at around BRL 1.1 billion. So let's move to Slide #9. We're going to talk about our cash flow. So here, we detail the changes in cash equivalents and receivables between September 30, '24 and September 30, '25. Why 12 months? We would like to show you 12 months just to show you the seasonality involved. So it's a complete cycle of the company. So initially, we have -- we saw that cash at the end of September '24. So Americanas, HNT and Uni.co operations. So the initial balance contains everything. So since HNT and Uni.co are now discontinued operations, we announced that publicly that we are in the process of market sounding. The cash from HNT and Uni.co is not consolidated in our numbers. So it has an impact of BRL 313 million. So excluding that consolidation of the discontinued operations, the initial balance of '24 is BRL 1.9 billion. So as we can see along the last 12 months, looking at the right part of the graph related to the PGFN settlement and judicial recovery related supplier payments, we had BRL 257 million in nonoperational outflows. What do we mean by nonoperational? As we said, as we published and talked to the market, we had a transaction with PGFN. So we excluded part of that judicially. And now we had BRL 125 million in cash outflow in July this year. And not related to the operation, but to the judicial recovery, we have the monthly payment of suppliers that is divided in installments up to 60 installments, and we have been paying them monthly. So we had in this period, BRL 132 million in payment to those suppliers that are not under our recurring operation. It's regarding to this -- to the liability negotiated under the judicial recovery. So the effective operational cash consumption was by BRL 371 million. So mind you that inside those BRL 371 million, we have some other liabilities from the judicial recovery, we have like the attorneys and several costs related to that. So operationally, our consumption is around BRL 340 million, BRL 350 million. There are some remains of the judicial recovery costs here mixed here. So I'd like to talk about the working capital management as we've been doing -- putting a lot of effort in trying to reduce inventory and accounts receivable and accounts payable, and we reduced allocated capital by BRL 165 million this period. So these were the financial highlights for the first 9 months. So I hand the floor back to Fernando that will update you on our strategy. Thank you all. Fernando, it's up to you.

Thank you, Camille. So at the end of this call, let's talk a little about our agenda for the end of the year. So moving to the next slide. So here, we have a slide that repeats what we called we said before in the latest call, the last call. So historically, we had 3 different companies, independent companies, physical retail, digital and Ame. The strategies were separated, a little conflicting, different metrics and different investments. So what we built in '25 was a more integrated company with a more integrated strategy. And we had, okay, different metrics, isolated investments. And last call, we talked about future, but this future is now. Now we're talking about Q4 '25, where the client is in the center of our company and physical, digital and services are part of our ecosystem, focused on client. So the teams are integrated. Everybody is integrated. And and the same metrics for all the ecosystem. So I'd like to show you that we are preparing to our 100th anniversary. I have just turned 96. So we want to keep accelerating performance, but with a mindset of transformation. We have our agenda in 2 agendas. People and culture is the most important basis of our business. So when you see those 2 houses, this is our the teams divide the agendas. One house talks about performance, what we have been delivering and the other talks about transformation. So if we look at the supply agenda, supply and operations in stores is a little more on the left. It talks to the performance area talking about logistics costs, occupation costs of stores and distribution, sales, productivity, planning and replenishment, store operations, but our -- in the future, our store footprint and where we're going to open stores in the future. And of course, the layouts revision. But when we see in the future, you have like management of assortment and margin growth and the transformation, what is category versus purchase journey, it tends to lean on the transformation category. Exclusive items and some other topics are things that we're going to talk a lot. So the previous PCP platform, and we are calling it consumer and growth is on the right side of the agenda, talks with the new digital, the new financial services, loyalty, card, Cliente A. And as I said before, a unique version of client. And we have identified projects that will bring a lot of value for the future of the company. We're talking about complementary categories that we've been developing and a new platform of media and insights. It's going to be independent and it will connect everybody with the customer. So moving to the next slide, I'd like to show you -- give you an example of this performance house. Freight delivery. So BRL 194 million in margin mass increase comparing '24 to '25, 11% of growth of GMV per square meter, a reduction of 15% in logistic cost reduction year-to-year and a reduction of our SG&A by 11%. So the accumulated from '23 is 38% reduction of SG&A. And last, BRL 165 million in working capital reduction. So at the center of the slide, you can see one of our favorite numbers, almost BRL 490 million of operational improvement in our EBITDA excluding extraordinary impacts and showing almost BRL 0.5 billion of improvement in our company. So moving to next slide. Let's talk about the transform house. What are the new opportunities? And of course, we're talking about October now. So this area should generate integrated flow from physical to digital, from digital to physical and from service to both. So we needed to be ready for cross-sell, and we talked about our loyalty program, and we talked about CRM. Everything has happened in October. And in October, we launched our new loyalty program called Cliente A. They are exclusive offers, points that become discount, everything boosted by the credit card that, as I said at the opening, we issued more than 400,000 cards and with a series of missions of shopping that talks exclusively with each profile of clients, showing them sales, improving the recurrence in our stores and our digital. And on the right side, you have exclusive pricing depending on the profile of clients, customer intelligence with a personalization engine. So new format for digital sales for different profiles. The O2O journey activate, updating of the customer life cycle journey, reinforcing recurrence and an integrated communication with purchase data, browsing history and financial services. So in the next slide, this transformation has already started. Part of that is our new campaign where we invited [indiscernible] as our marketing figure. It's a character that is highly popular, light and close to the public. So this is what we want to show the customers, very like -- it looks like our brand, highlights affection in the present, brings modernity. The campaign before was transactional, so. Now it's an emotional marketing campaign. Americanas Tudo que Você Ama” everything you love. So we are recovering our brand and the good experiences that every Brazilian person brings in their hearts, and we'd like to invite them to help transform our business with our customers and of course, with our internal teams. So to finish this call, I'll play the video that was the symbol of this change and reflects everything that we talked here, not only an operational improvement in the numbers, but everything we have been thinking and transforming the future of our company. Everybody loves something. Pedro loves to play and studying when he's on plane. Rafael, on the other hand, loves to find new things in the store close to house. Some people love music. Some people love music so much that invites everybody in the neighborhood. Roberto loves to play and somebody -- some people love to play with their kids. Some people like to give treats to their kids, some people like to make kids. And the parents love this baby that has only 2 months, and they love her when she wake up, loves to travel. Her mother loves when she travels, but she gets worried. Some people love to buy on the app and pick up on the store. Some people love to be together. Some people love to live together, some people love to cook, to swim, to hug, to give presents and some people don't know what they're going to love. Americanas, everything you love.

[Operator Instructions] Our first question comes from [indiscernible].

Is there any solid interest from a group or investor in relation to HNT?

Thank you, Carlos, for your question. We have said in August or September that we recovered the market selling of HNT. Unfortunately, it's under judicial confidentiality. We are bound to some NDAs with some participants. So we cannot disclose details on the process. As soon as I have a relevant fact, the company will communicate to the market. But at this moment, I can't go over further details, I'm sorry.

Our next question comes from an investor.

Congratulations to the whole team that has been doing an exceptional restructuring. And I ask, in spite of this judicial recovery, it's very clear that leaving this condition is critical for the company to recover the credibility with the market. Is there any strategy of the company to accelerate, to speed up this exit of the judicial recovery and think that you're restructuring the company, is there any guidance perspective from '26?