Grupo Casas Bahia S.A. (BHIA3) Earnings Call Transcript & Summary

Good morning to everyone, and welcome to our session of Q&A referencing results of Via in the first quarter of 2022. I hope you like the first time that we're [indiscernible] -- all of the time of our call exclusively for -- to answer questions. The vision with -- the presentation of the results is available since the last night. As far as the questions, Gabriel Succar, our manager will coordinate the line of questions. But first a few considerations. We're very happy with the evolution of our strategy in which we're delivering strongly in all of our -- in every quadrant. We're scaling up our business which go beyond our ecosystem. Via as a service is really a reality in transportation and with the recent acquisition of CNT. We also scale up our credit as a service in the next quarters. As always, I would like to make sure that I mentioned that we have an incredible assets, especially after the turnaround that we have done. And now it's time to put us on as a service principal objective of diluting costs and generate more revenue for Via. This strategy differentiates us and is even more relevant in macroeconomic moments -- complex macroeconomic moments such as those which the sector confronts at the moment. As you know, we have always been [ positive ] and optimistic. Since we arrived here, we declared that our route would be for growth. However, we're preserving profitability. In the first quarter, we've still -- with the impact of the pandemic on our numbers -- with the impact of the pandemic, our numbers prove that our optimism is based on a great deal of reality. We have an EBITDA margin of double digits with strong controls in SG&A. And as we always said, our credit is a strength and at this moment, has become even more important for the consumer as shown by our numbers. I would like to congratulate our team for the show that they've done on Mother's Day, which was exceptional for Via. Once again, optimism with reality -- with realism. Our stores were full and our sales team, super energized to give their best experience to our clients. This resulted in our best Mother's Day sales since 2018, excluding the Black Friday sales. Our omnichannel use has given us the real possibility of navigating very well, both offline as well as online. We're prepared to attend the consumer where and when he would like. Having said that, I'd like to pass over to Gabriel so that he can start with the Q&A.

Good morning. Thank you very much, Roberto. First question from Credit Suisse.

I like this idea of going straight to Q&A. So I wanted to get my thanks. I'd like to understand the dynamic of same-store sales. You see same-store is beginning to invert to a positive direction. At the same time, we have a certain difficulty of understanding the basis of comparison -- from the comparison of the pandemic compared to last year. So if you could comment how was this dynamic of same store during this quarter and what can we expect for the term, how it will be important. And the second question, the question was called -- called my attention, which was one of the biggest promises and sources for the future was the personal loans. This loan portfolio started to increase, is BRL 230 million. I want to understand a little bit what can we expect in that dynamic of personal loans going forward? These are my 2 questions.

I'm going to start here, and they can help you with the answer. Our same-store sales, what we've seen is that we had in January, which is very complex, really due to the variance [indiscernible] at that point was reducing a great deal, the flow of people in our stores. This last -- until the middle of February, more or less. And starting the second half of February, we started to see traffic of clients in the stores and the streets improving in a very important way. In March, it's better yet, and this continued during April. So we see good signs of improvements in the traffic -- in the store traffic, in our stores and in our streets, which means that our stores -- physical store sales has had a strong recovery, specifically now due to the most updated dates, on Mother's Day, we had a traffic -- store traffic, which was very, very strong, giving us the result of the best day of sales, excluding Black Friday, since 2018. 2018 and '19 when we didn't have the pandemic as well. So we see signs -- clear signs of recovery. Can we put -- can we write it on stone? No. But -- not yet, because we're accompanying this constantly, the after day of Mother's Day has also been good for us in the physical stores. So that continues to do well. Our expectation is that we'll have a good initiation of a recovery in same-store sales. For personal loans, as you mentioned, let me throw it up on the screen here to see if we can participate -- go ahead.

Victor, thank you for the question. First of all, banQi has 2 objectives; one, is the digital accounts with the offer of financial services, we have strength in that and the second objective is to be a payment means included in the Via ecosystem which brings us also a series of benefits. We talk about personal loans, we reached BRL 237 million, about BRL 150 million with -- 150,000 clients who have had -- who have chosen this solution. It's important to mention that about 28% of these clients have recontracted their personal loan. And why is that important? Because the personal loan has an objective of not only making the client more loyal, we already know with another credit offering beyond the credit -- the normal credit -- score credit as well as to capture new clients. So what we've done is a lot of these clients are clients who have -- already clients opened up. These are new clients who opened -- the clients with banQi had no banking relationships with Via ecosystem and they started to acquire our products because in our motors and credit engines, we received that they could have a credit loan that was preapproved. Finally, why is the personal loan so important? In fact digital accounts are only profitable and there are products, financial services added because otherwise, these accounts are just deficit -- in deficit. What we've seen over time is that we've -- of this indicator -- short-term indicators which are quite positive, growing this portfolio with the production -- growing production, and we've noticed some time ago that we begin 300 to 350 in the portfolio of 2022. Beyond that, over the year '22, we will also reduce -- launch other products -- credit products, which is [ business ] finance, the credit card beyond another line, which is the credit for partners -- credit card for partners which is another line of this company. I think it's -- I'm not sure if I answered your question, but if you have any further doubts, please.

Thanks, Victor. Our next question is from Joseph Giordano from JPMorgan.

Wanted to explore a little bit the 3P strategy. It seemed the company is more and more focused on the long tail and differentiating that and placing various products to be able to make a difference in this level of service. So I wanted to look a little bit at Alison and Abel. How are you working on this partnership with the sellers and to work better on the commercial side as well as the logistics to understand how we should see this 3P coming back? We've got BRL 1.2 billion -- BRL 1.1 billion, BRL 1.2 billion and the BRL 3 billion in this last quarter, BRL 700,000 per month. How should we think about this strategy? And the second question, which I direct it to Luiz, in the contingent of the liabilities, which we saw quite high losses during the last year, how do you see the evolution of these processes? We saw quite a few labor processes detailed and it seems that things are now more under control with the company winning more this case than it was last year. Looking at the stocks, the fair value of the stock is BRL 11 billion, how should we look at that -- at this turnover on the balance -- as we look at that stock on the balance sheet?

Let me start here, and then I'm going to have Alison to jump in, too. It's important -- first of all, thank you for the question, Joe. It's important to recognize that we have been declaring -- we've been stating that we're going to create our marketplace in a way that is sustainable. More and more, we're looking for a reduction of items -- of core items of the company, electro -- electronics, telephones, TVs, et cetera. And more and more, we're looking to reduce participation of these items in our marketplace and more and more we're going to grow the long tail items. This does not necessarily give us a huge GMV upfront because what brings GMV in most platforms, which are very robust are these categories in which we're very strong, in our 1P offering. We understand that this increase -- so this accelerated increase of the volume of orders will give us what we call a vision of 3P, which is the increase of frequency and recurrence for our consumers. This brings reduction to acquisition costs, it brings in more -- a better relationship to add more and more products for sale for our consumers. So I just wanted to make that point. It's not necessarily growth, which is very strong at GMV, which we see at this time because we see a very strong growth in the base orders and relationships with the consumers which will impact in the cost of acquisition and also impact our logistics as well. Let me talk to Alison here, so he can add.

Thanks, Roberto. Joseph, he described pretty much our strategy, our objective -- our macro objective to increase in our relationships with our client, offering them long-term products and incentivating the recurrence. This is the most important part. Second is to leverage our business of Via. The marketplace here in our company have an important role to leverage the logistics, which also bring benefits for 1P sales and also our credit operation, which are leveraged as we increase the volume of transactions in the marketplaces, especially in the long tail items, because the volume is what makes this wheel turn. And the third point in terms of your question is to grow the marketplace in a sustainable way, a profitable way. There's probably -- management between the different categories of long term [indiscernible] and so we're trying to do more and more going forward. In the material which we released, we saw the categories of the sales long tail which are growing by 500%, 600%, 700%. At the moment, it's growing strongly in every category into tail, testing our limit which right now, we have not yet in our limits and in parallel, again, increased the penetration of Envvias, which is our logistics solutions, which also gives us a better solution and is more competitive. [indiscernible] which is also a new thing and few months ago we lost the credit sales for these 3P items, and we think it's more close to these categories, and we're growing in all of these [indiscernible] long tail, and we're going to discover the real role of these categories as part of the game. We're not going to make an exact relation until we explore all the potential of these Vias.

One more question from Joseph -- 2 questions.

Let me -- you're correct, the labor law demand cases have been very positive results in the first -- first results -- the first part of the year have been very, very positive for the company. The reduction of -- by 43% of new cases, turnover would be much better for the company -- much better level of turnover. The increase in cases is improving and liquidating the most expensive cases in the older cases. We've been successful in that. We've had victories, yes, important victories. Today, we defend 100% of the cases and the person who request the expansion, the delays, which is unexpected. So we're more and more prepared for this [indiscernible]. We're being conservative in keeping our guidance, but we may have improvements to communicate to the market and the results start to appear. This quarter was encouraging, it was very positive. We're going to wait the other quarters with a great deal of sales. We also have been -- the true value of our -- fair value of stock because of better understanding of our liquidity [indiscernible] stock is accounted for at cost price without tax. And the difference between CMV and the gross price is approximately 67% to 70%. Our turnover is practically -- it's a -- a turnover can expect for some quarters, we expect 4 turnovers in the stock during a year. It's 4x per year, basically once per quarter. Thank you very much.

Next question are -- is from [indiscernible].

I have 2 questions. One in a follow-up on the level of service [indiscernible] acceleration you commented on. Are you looking at the base of 2020 compared to 2019 coming back to closer to the prepandemic level because we have a better pace in March and April due to the closing of last year. I want to understand this question of pace. And the second point is -- to call my attention is the -- in front of all of other retailers, the question of -- the problems in payments being lower than last year, at controlled level. Even though you've been -- had several new initiatives, which I think naturally should have a higher level of risk, which is not necessarily reflecting even though it reflects your macro effects on the margin. So I want to understand this dynamic, would it make sense to be a little more conservative on this front. And just to understand these 2.

Thank you for the question. Let's do the comparison. Mother's Day, as I mentioned, it was our best day of sales since 2018, looking outside of the pandemic period. Again, it cannot be put down -- write on stone that this is our new reality. We're covering it day by day. We see improvement in relation to if we look at the third and fourth quarter. With this scenario of traffic reduced as we saw in January and middle of February, we also see reduced traffic on the street. But it is coming back more and more. We're seeing the advantage, which is the omnichannel approach gives to the Via, both for our consumers, both in the physical stores as well as online or in a hybrid way with the online sellers -- with our salespeople online.

Thank you for your questions. I'm going to use a little bit the personal loan as an example. You observed that the scale-up of personal loans happened in a very, very safe way, very secured way. We have a policy of secured strategy in the credit area, always making the growth of our portfolios and our products as soon as we have the level of nonpayments that we have [indiscernible]. Talking about the credit offering, we're attentive, but very safe, very secure and not only risk to nonpayment, as well as in -- we also observed in the first quarter and also in April, an improvement in the indicators -- in short-term indicators, what we talked about these short-term indicators of late payments and nonpayments above 60 days. We are very secure and very attentive to all of these -- all the macroeconomic situations, but remember that all of our offerings -- our credit offerings are very, very adequate, and we do this -- we have said this on different calls. They're always adapted to the necessity and capacity of our clients to be able to make their payment. So this brings us an assertiveness in our strategy, our credit which is very strong and perhaps for that reason you have observed a difference compared to the other players in the market. Thank you for the questions.

I would like to just reinforce. It's a big tool, it's a great tool, however, we use it with absolute responsibility in all of these cohorts to be able to increase our numbers, but the expectation is to be able to increase our portfolio credit during the year. It's been growing. It's already reached BRL 5.2 billion, and we continue to raise it. We understand that's a huge differential for us, especially at this moment where Brazil is living such [indiscernible] we're able to facilitate and give access to the consumer within the limit of what it can able to be [indiscernible] per month, and that's a very important differential.

Next question is from Richard from Bradesco.

I have 2 questions here. The first is about your vision of 2025 Via. About a year since you published this guidance, of course, a lot of things have changed, many things that are outside of your control. I just wanted to ask if you're confident in this guidance? Or if you're going forward to that, if you're ahead of that or behind that as far as the plan that you had a year ago when you published that guidance? The second question is regarding -- and excuse me, if this is of same topic, but it little bit cut off for me. I wanted to ask about your coverage ratio of your credit portfolio. We understand that the coverage ratio is a little bit below in this quarter compared to the other quarters, even though we have seen an environment which is still very difficult.

Thank you for the questions. Yes, we understand that. We are on the -- on track to hit the guidance. We're doing better than the guidance in several respects. At the moment, we didn't have the expectation of transforming our platforms so quickly as we wind up doing. And in fact, this is what brings us to the assets of Via as a Service in a much more accelerated way than what we imagined at that point in time. So we understand that we're on the right route following the guidance that was given or even above that level. Anybody else like to add to that?

Richard, our provisions as far as the portfolio had a reduction in relation to the last quarter because our cohorts have less cohorts [indiscernible] have had a very good performance. So this translates into a reduction in the provisions of the portfolio and also suggest, as I commented that in the next quarter, we'll be able to have indicators of over 60 and over 90 with the reduction. Thank you for the question.

Our next question is from Felipe from Citi.

Can you hear me okay?

Yes.

We want to understand a little bit the dynamic of SG&A. It was an important reduction with greater productivity of the employees and also in the aspect of reduction of the people in the back office. Wanted to understand a little bit what were these gains in SG&A and understand a little bit if it reflects in the trade-off between margin and growth for the year. If in your mentality the idea is to maintain this focus on profitability.

I'm going to pass this over to Padilha but before I do, we're seeking -- constantly seeking better productivity for the company. So once we see that everything that we've got on the platform is generating a higher productivity. The fact is that we are putting logistics as a service, which for us, is also a gain in productivity, it's also revenue and it also dilutes our costs greatly. So it's a very -- it's a great opportunity. I'm going to pass this over to Padilha now and ask him to speak a little bit specifically about what caused this reduction in SG&A during the quarter.

Felipe, thank you very much for the question. First of all, we have here as a priority, the control and reduction of expenses. Various initiatives are seen not only impacting this quarter as well as it will also impacting the coming quarters, which is the case of logistics as Roberto mentioned. This better utilization of logistics as a service with partners and sellers, it brings benefits to the seller and it brings a benefit to us as well. The most recent acquisition of CNT makes more dilution with a better utilization of this asset. In this quarter, it absolutely generated a gain in productivity in the stores and the online sales with 1P, 3P, long tail, better penetration of services, better penetration of credit and online sales, those done through the online sellers, better utilization of the cost of client acquisition and better use -- less dependence on media -- paid media to bring clients with the moment -- difficult moment in the world and in Brazil, there's a lot of [ visionary ] pressure. There are certain delays and course corrections and we're determining that with a great deal of attention -- with a great deal of care. We're negotiating things a great deal and very intensely. All of our cost relating to logistics, our costs related to occupation. Revising -- deeply revising our accounting, our [ tax base of ] 1,500 stores, sometimes more than one piece of real estate, so the increase in real estate taxes [ seems like it's small ] small but we're revising that in detail. They find errors and we're recovering part of these expenses. So this is an exercise that's frequent for Via. We're moving forward in several directions. We're going to facing this thing head-on, and we've been successful in this quarter in that effort.

Next question is from Eric from Santander.

Want to understand a little bit better. Part of this is have you seen the evolution in a more regional area, difference in other countries and in the Northeast region, for example, due to -- are you seeing stronger advances in that area? To give an idea, a granularity about how is this recovery that will be going forward?

Thank you for the question. I sense that we had a little bit of noise in that. You want to know how are the regional question of the stores. Is that correct?

Yes.

Okay. We are not seeing, Eric, any -- in any specific market a bigger or smaller recovery. Recovery is being done in a very linear way all over Brazil. For us specifically, we see a growth -- a strong growth in the North, Northeast with the expansion that we've had last year and that we continue to have this year. We're talking about different stores and the focus continues to be the North, Northeast with a higher level of capillarity for the stores, service of the logistics and the banking services. However, this recovery of the flow in the city has happened nationally. There's not one market or another that requires a highlight. All of them have had a very strong evolution in traffic.

Our next questions is from [indiscernible] from Bank of America.

I've got 2 questions. One is a follow-up on the marketplace. We can see an evolution of the take rate and the increase in the fees that you announced at the beginning of the year. I want to see if you can comment if you've noticed any -- the impact in terms of new sellers, the availability of products with these new higher fees or if is there any additional difficulty of adding sellers to the performance services? And how do you think about the dynamics for the rest of the year? Since you revised this structure of fees? The second question is the structure of capital. How are you thinking about increasing your debt, especially with the BRL 900 million coming due in the this quarter?

Thank you for the question. We communicated with a review of fees at the end of December. We are the first the marketplace to take this position because the scenario changed, remembering that the new objectives are to grow the profitability in a sustainable way. The pace for that to achieve this movement, at the beginning of January, we spoke with all of our sellers and volume of sales continued to grow. We had a very interesting number of close to 140,000 sellers and a growing number of SKUs. This movement grew in February, and it's even improved more freely in March. It's something we've overcome and we're [indiscernible] company along with the rest of the market with the marketplace of Via. But again, with one eye on growth and one eye on profitability. Speaking about profitability, we have strong numbers. We've reached all our good numbers. But due to the nature of the return on marketing investments and with the acquisition of CNT, another front of opportunities for fulfillment. All of Envvias is an imprint in the labeling, the collection and fulfillment. All of this has been cooperating in our efficiency and in the possibility of generating more incremental income, is the generation of margin, is the credit itself, which is the promise made last year. We're already operating today with a group of sellers, more than 2 million SKUs being sold with the option of credit payment options. So we have a combination of credit solutions and operations [indiscernible] to help us keep growing. Our commission may vary even depending on the -- on this triangulation. Hope we answered your question.

As far as the debt which is coming due at the end of this quarter, first of all it's a debenture, the second tranche of the debenture which was contracted at the end of the first wave of the pandemic. It's an expected debt. Just to use it as a reference. We're doing operations today at half the spread contracted at that time. We're much more careful and selective today with this renewal. We have enough liquidity to liquidate that if this quarter should be [indiscernible], and we have several alternatives, much cheaper and much more long-term of 3 to 5 years, up to 7 years. We're evaluating all these alternatives, and we should be able to renew this. If we don't do a complete turnover of that equivalent value of the debenture, we'll do 70% or 80% of it at least. So it will not affect our operating cash and we can reduce a little bit the question of liquidity and security that we've always worked with due to the lower cost of the new debt. We're very comfortable with that, we're doing it carefully and we have been careful in the choice of renewal. So we have no problem to refinance a large part of that liquidity, certain of this safety net is security and liquidity that we have.

Our next question is from Gabriela Moraes from Itau BBA.

On our side here, we have one question related to the cost pressures which we imagine must be impacting your chain supply. One of the constant conversations about the eventual increases in the future, especially for durable goods, and do you have the capacity of the consumer to observe these increases in prices under big ticket items?

Thanks for the question. This conversation has been going on most constant. The biggest part of the impact has already happened. It's a lot of things that are tied to the dollar and this rise in the dollar, we felt that in the past. We have an expectation that a lot of that will be more positive in terms reductions with the dollar going down, but it's still unstable. So this possibility is still remote for now. We don't see any big impact to happen. Things that are some spot things but the most relevant factors of increases have already happened. How is the consumer dealing with that? In the case of Via, we have an advantage because we have our credit offering. So we're able to make it more adequate -- we're able to adapt in the number of payments item by item and creating a payment, a monthly payment that fits into the consumers. We've been doing this for a long time. That gives us a competitive advantage at this time. We've been carrying a higher level of inflation on these items going forward. What also happens as Alison mentioned are the items -- the 3P items, we've been very assertively growing the penetration of the credit offerings very recently as we saw last year. We already see in the result, important results, an important for growth. Eventually the consumer may have the same items that you find on different platforms but on the platform of Via, he has the possibility of doing this in a financial way with credit -- in a finance way with our own in-house credit.

Our next question is from [indiscernible] from Goldman Sachs.

The first question is going back to the SG&A, and I would like to know a little bit more the medium long term this time the macroeconomic challenges and our focus on the cost controls. Do you imagine that going forward you will have a big growth in the online sales in the marketplace because margins will come back to a level which is a little bit lower? Or do you think going forward you're going to be able to defend these margins and perhaps increase this margin going forward? And do you have an idea how much you're going to add in expense with this growth going forward? And the second question is a little bit more of a one-time question about the duration of the portfolio. How it is right now? What is the average duration of the banQi portfolio at this time.

Thank you for the question. As far as SG&A goes, we're absolutely -- we've always been absolutely focused on reducing expenses to make it more productive without ever hurting the level served to the consumer. So we've been doing this and continue to observe this quarter-by-quarter, our [indiscernible] growing. For example, in this first quarter, we were able to utilize the alternate of spending less money to attract these consumers with a lower cost of acquisition than we had to spend in the past. This will be perpetuated in our tactics. We'll be measuring this every quarter. And whenever we see an opportunity, everything that we're building on the platform -- on the Via platform at the end of the day, part of it is designed to reduce the cost of plan acquisition. We have very good assets here to utilize to reduce this cost. The marketplace is a great asset for reducing our members' acquisition cost. And we're going to increase the number of orders by 100% this quarter. So we're scanning up the marketplace. We have more and more consumers navigating to this whether it be online or in the physical stores through online salespeople. The credit -- the credit offering is also a strong source of acquisition -- of planned acquisition with a negative cost. As we scale up even more of the credit offering, we'll have more and more client acquisition spending 0 to acquire these new clients, and the [indiscernible] also continues to be an important factor for client acquisitions as well as our stores. We opened 101 stores last year. 55% of the stores are absolutely new clients for Via and 15% are reactivated. They're old clients that have been reactivated. So on this scenario, we'll be evolving more and more and growing these assets. And we have the reduction of contract as the next big goal that we have for our platform. We use this in a tactical way quarter-by-quarter. At the beginning, we have had to add a little more to incentivate the business that we may be able to do but always with the direction of creating a platform, which is more sustainable and we depend less and less on adding a lot of money for client acquisitions.

Is there growth preserving profitability [ or is there any space ]?

It's sustainable. At some point in time, we may have to hit the brakes a little bit as the [indiscernible] starts to appear in the next few quarters, especially right now with the lack of liquidity, we've had a change in liquidity compared to a few quarters in the market overall. However, now there's a lack of liquidity in the market. There's much more looking, much more attention to where it wants to place its liquidity at platforms that depend greatly on burning a lot of cash to make GMV, or have greater difficulty. Since the first day, we have been on the route of I think the least possible cash to go from here. We have [ 95 ] million clients in our base and more and more, we're being reactive bringing in and reactivating a good number of these plans. We're on a good trajectory. All of the other expenses of the company, we have under control so a lot of pressure. It's hard to say the new goal is the new target at this level because the inflation is so -- the pressure -- the inflationary pressure is very strong on the company's defenses, but everything really depends on productivity except versus before it was just the physical sales purchases in the stores. If you didn't have a client, you didn't have anyone. But now, when there's no physical client in the store, people are getting online. So we gained a huge amount of productivity gain of 100% on the store sales people. So that's the direction we're heading with Via, and we understand that the total expenses is fundamental, not only now but constantly. I'll pass this over to [ Eric ] to the rest of the guys here.

Thank you for the question. Personal loan is the 8-month period, in the credit world, it's 14 months for a long time. It's been the 14 months for quite a while. You mentioned on the recent calls that it's interesting to see that our average period continues stable even we haven't had any need to increase the payment period to reduce nonpayment or anything of that kind. So in the credit world it's 14 months and in personal loans, 8 months. Our next question is from Andrew from Morgan Stanley. [Operator Instructions]

Was hoping if you could please talk a bit more about the gross margin trends. What you're seeing in promotional intensity across the industry and how you're thinking about Via's price positioning versus peers and some core 1P categories?

Here -- we see here we've been working on margin -- a stable margin over the most recent quarters, at stable margins. The pressure to be competitive has been coming intensively for several quarters. We understand that the a level of margins that we have today is compatible with the scenario, which is very competitive in the market. We do not understand that we won't have any deterioration in our margins. We do competitive [indiscernible]. We're very balanced and able to maintain the growth of the company, preserving this level of profitability. I think that on the next quarter we'll have almost the profitability levels close to what we've had in this quarter and in these other recent quarters.

Anybody else like to make a question? Any other questions? So I think we can close now. I'm going to pass it over to you for your comments.

We'd like to once again thank you. We're so happy that you liked this more productive format of doing the video ahead of time. We're very focused on maintaining the route of growth. We're very optimistic but always realistic in relation to the return of the traffic to our physical stores which is an important component of our ecosystem, and we're always ready to attend to the customers where and when he wants to be attended. We're in this journey with absolute control of our cost and very optimistic about the coming quarters at the scale that we're doing in the long tail of the marketplace. Thank you all for participating, and I hope to everyone. Our greetings to everyone. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]