Grupo Mateus S.A. (GMAT3) Earnings Call Transcript & Summary

[Audio Gap] for the numbers in the Fourth Quarter of 2024 of Grupo Mateus. [Operator Instructions] We'd like to let you know that this earnings call is being recorded and will be provided on the IR website of the company, where you can also find the full earnings release material. It's possible to download the presentation as well on the chat icon in English. [Operator Instructions] We'd also like to say that information in this presentation and possible same insight could be made during the earnings call, related to business perspectives, forecasts and operational targets and financial targets at Grupo Mateus represent beliefs and assumptions of the company's management as well as information that is currently available. Future statements are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and thus rely on circumstances that could not occur. Investors must comprehend that overall business conditions and other operational factors could affect the future performance of the Grupo Mateus and the results that refers -- today, we also have the presence of our executives, Mr. Ilson Mateus, the Founder and President, Chair of the Board; Jesuíno Martins, is the CEO; Tulio Queiroz, the Financial VP; And Sandro Oliveira, the VP of Operational Logistics and Commercial.

Well, great day to all of you guys. We would like to thank for allowing us to be here once again. During this presentation for our results in 2024. I would also like to thank our team with our management Jesuino Martins, Tulio, and our VP Sandro. And I want to thank all of you for also stopping a bit now to listen to us. So as we begin our presentation, I would like to share our expansion in 2024. We had 15 stores opened in 11 cities in 5 different states. And in the fourth quarter, we opened up 4 stores. So I would like to call your attention -- and I want to call your attention to the store here, em Recife, Boa Viagem, where we bring some new bets and opportunities. And we would also like to reinforce our commitment to the store openings. And as I've always mentioned, guaranteeing our cash position and our level of debt. So on Page 5, we would also like to highlight this service store, where we also have the store here in Boa Viagem into the [indiscernible] with more details, and we also have our level of services, which is the bakery and fish service. And we also bring in major innovation at the winery, Boteco Gelado, which is I recall that [ 2.0 ] and that is related to -- you already have a self-checkout opportunity for those who wish to come into the store and buy cold beverages. And we also have in the store so that we can really reinforce the small entrepreneurs that stand out with local services. As you can see, we also have the TAPIOCA [indiscernible] is a local service, but we also have other services, our traditional Pastel with [indiscernible], these traditional fried pastries in Brazil. And we tried to -- where we have the store located, we see that there is an [ A&B ] public, and we have been making an effort to think about the store model and really find out how we can service the [ A&B ] public without -- at the same time, we could service the consumer public, and we think it's going to scale up still. We've been really thinking about this, and we learned a lot with the last stores we had, and we've continued to innovate. So our Chair -- our CEO, Jesuino Martins, he's very detail-oriented, and he's been very careful with the preparation of these stores. So we're super happy with these results as well. And then when we talk about Boa Viagem besides this, we also brought in a gallery here, as you can see, with a lot of innovation, we can see 100% of these stores were already negotiated, and they bring in a pretty good customer flow and also dilute costs and we focused a lot on this gallery with the services. So we have a great gym and a drug store, et cetera. But we also brought in a lot of ready food, that's the profile. People really eat out a lot. And so we brought in many options for this. And this gallery has brought in a great flow, and that helps a lot with the store. And then moving on to Slide 7. We also had a major expansion in 2024 and we had less stores because we were really focused on this expectation and then we reached the final stretch. And we hope that in the next few days, where we really have major expectations for this merger. And on Slide 8, we also bring in our current scenario with everything we've done in 2024. And we ended the year with this duty fulfilled feeling where we reached 272 stores, plus 90 Cash & Carry stores. We have 44 stores in the Super format, 34 Camino stores, 104 Electro stores and 206 many market stores. And I want to reinforce one point here, which is these stores have really been a strong growth factor for distribution wholesale. And these 206 stores already generate the same amount of revenue as a Cash & Carry stores. So this is giving us a lot of positive expectations. And in this business, the wholesale business, we have many -- 4,400 commercial reps, and we have 18 distribution centers. So with all of this, we can constantly restate our commitment to greater density and other brand that we certainly want to be in all of these municipalities as we had promised when we went public, we want to be in all of these municipalities in all of these different states in the Northeast, plus the state of Pará, really stating our commitment to greater density. Now moving on to Slide #9. We've already started the year pretty heated with 2 stores there, Jaboatão dos Guararapes and São Mateus, where we really have this commitment to working on greater density and this is an important complementation. We're adding on to this. These are stores that help us reach our results with greater speed and balance as well between margin and sales volumes. We're constantly working to keep this balance. And now on Slide #10, you can already see how we've been progressing with our construction work. We have 20 projects underway in progress at the moment. And as you can see, that were more and more concerned with our tiers. So we just worked on this current moment, the countries and the interest rates we have we're being a lot more selective thinking about the returns on capital. We have to be very precise with this so that we don't have an imbalance in our cash position. And now I'll pass the word on to our Chair, Mr. Jesuino Martins.

[Interpreted] Thank you, Mr. Jose. And good morning, everyone. Before continuing here, I just want to thank you all for being with us and watching our performance during the fourth quarter and the year 2024 as well. And I just wanted to share my happiness considering the results we've been able to report in this quarter and this year. When we look back and we see how we started 2024, it was a year with a lot of uncertainty and many questions and really seeing the results we have today make us very happy, and I want to recognize. [Foreign Language] On the bottom part, we can also share annual EBITDA BRL 2.5 billion. We grew 26% and historical margin of 7.8%, which is 0.4% more than the year of 2023. So our EBITDA is something we're sharing and we're really happy to share. And finally, I want to share our net income results, which have reached BRL 380,000 net income despite all of the impacts we suffered in this -- in that year. So it's really -- I mean, we're very happy about sharing because our net margin and results were still very resilient. And in the bottom part here, we also have been sharing our net income for 2024 BRL 1.285 billion and so we're growing consistently and resiliently despite everything we've suffered, as I mentioned. And I was also saying in the beginning of my speech, we've seen something it's very important for us. And so, if we consider the same-store sales, we would like to have something a little more significant, but the results overall make us very happy despite this difficult scenario of experience this year. And I want to thank Mr. Ilson, Tulio and [indiscernible], but also our team because without everyone's contributions, the way we started the year, if it weren't for everyone's participation, we would have not been able to deliver these results. So it's a real significant day for us, and we've been going through -- we have our full team gathered here in São Luís and we're in the middle of a big convention here together. And so we have a lot to share and work on. But finally, I want to pass the floor on to [indiscernible] and he's going to share the achievements we've had from a financial perspective in the Northeast and also contribution of the new expansion and results. And I want to thank everyone once again for watching us today.

[Interpreted] Thank you, Jesuino. Thank you. Mr. Ilson and Tulio and everyone watching us here. It's a pleasure to be here to share the result of our expansion in the Northeast in 2024. And here, just to shed some light here on the expansion in the Northeast and that region, where we've been advancing so quickly along with our stores and our people. And so today we already have 50 stores operating and that's already 20% of our store network, and that represents 34% of our sales in our retail. And so we've been working more and more to make this an expansion reach normal -- and in some way, the numbers demonstrate this. We've been going through a ramp-up on the acquisition. And with the results of the EBITDA margin have been achieving in the tenth month of operation. We went from 6.7%. And so when we compare with the previous year, we had an evolution of 1.2 percentage points and that is due to this maturity. So Mr. Jesuino and the team, based on this understanding from everyone's knowledge about the regionality and all of this has led to positive results. So we're really happy to share these numbers with you guys. And yes, just to give you some input here on this. In the fourth quarter, we had a margin expansion above 2% in this region, and that helps us contribute to the company's results, although we know there's still a long path ahead of us just as every challenge in an expansion, but more and more the stores have been a natural path with our deliveries and results. So as we talk about the results and consequence of this expansion, we've been expanding our share in regions we've been operating in. So when we take a look at the Northeast and Para, we can see that there is an expansion of about 2.8 percentage points, which is due to our performance with the team operating in that region. And of course, the support of the entire company that geared towards ensuring that the expansion is really more productive and relevant within our company. And we can see that these numbers really make us happy as we know about the size of the responsibility we have as a team and as a company with an understanding that we are on the right path, and that will reach the point we expect to reach step-by-step quarter-over-quarter, so that we can make people understandings better and really deliver what we've been predetermining and so that's what I wanted to share with you guys. And then after this important slide here with our results and expansion. And then now I'll pass the floor to Tulio, our VP -- our financial VP. Tulio, good morning.

[Interpreted] Good morning, Sandro. Thank you, Jesuino and Sandro. Now we're going to talk about the financial numbers. And I think Jesuino has given us a great Panorama, but just to go deeper on some points here. On Slide #16, we have a general panorama of the performance -- with the macro performance of Grupo Mateus, when we consider the working capital and we also went public, right? So on this slide, you can see a lot going on with the company's commitment to working on this expansion and above all, an expansion with value creation. So as you all know, it's very common to have strong growth acceleration and then have a lot of pressure on profitability initially. But here, when you look at our numbers here, with maybe the exception of the beginning of the process in year one and the consistency of the profitability was something very present, during the expansion years and I want to remind you all that '21 and '22 were the initial years of our arrivals in the states in the Northeast, and we really needed to develop all of the logistics. And this was the beginning of a process that was very important and despite all of this, you can notice that we had very significant growth in the top line and going on from BRL 14 billion to BRL 36 billion. And so the EBITDA has been following a very similar trajectory and so 123%. This is a CAGR that is very close to the gross revenue, BRL 22.3 million, and the net income also ramps up at a very intense pace to 74% in the period. And here in the net income, as Jesuino mentioned, we have a huge challenge with important tax changes from '23 to '24. And so here, I think it's really important to see the company's commitment towards expansion and strong expansion, but above all, a lot of value creation and a lot of consistency. And I also want to highlight a number in detail here. When I think about this up ahead during 2021, '22 and '23, the growth was always greater. And -- but as I mentioned, it's still -- the EBITDA grew maybe a little less than the sales. But for the first time in the history, the EBITDA is growing more than sales. So I think it's worth mentioning the potential this represents of really bringing value to the company, and we've been sharing this with you guys, this group of stores initially is going to complete 13 months or a full year, let's say, and that generates a bit of pressure in the same-store sales, but major growth in the gross profit. And then, of course, if it's a natural maturity curve. And then now we already have a significant volume of stores. So that's why the component of contribution to the EBITDA is really important from 2024 onwards. And so moving on, on Slide #17, we have the numbers related to the gross profit. And so about the main points and the company made a decision about managing this, where you have an important inflation -- food inflation in the overall country actually -- but in the Northeast this is more intense, and we had an increase in taxes as well in the States in the region. So we understood that it was an important moment to focus on profitability. And so I think the gross margin numbers demonstrate this. So this is especially -- and that's where with the company was able to ramp-up and really we understand the respecting the seasonality quarter-over-quarter. This is an important level that's here to stay, right, and we're very confident about all of this, and the strategy and how the commercial area got into this daily to be able to reach these levels in the year. The gross profit which is BRL 7.2 billion. And the gross margin goes from BRL 22.4 billion to BRL 22.6 billion. And so as I mentioned, this is, of course, a lot more intense from the second semester onwards. And so when you remember, here, you had an increase of PIS/COFINS on [indiscernible]. And so I think this is a relevant point. And no doubt, this is going to bring in an additional focus on expanding this gross margin. So moving on to Slide #18. We have the operational expense numbers here, and I think this was a year of a lot of discipline on this point. And we understand that we're in this important expansion process. We know we have to be very careful with this, especially do not hinder our expansion. So we've been very careful. Our first year was a lot more focused on administrative expenses. But we did share a greater discipline on the budgeting work and monitoring the targets and so that we could really control the expenses related to all of the expansion block to be able to generate the increase in the EBITDA. So we experienced a moment in the first quarter of huge pressure. And from then on, we were able to keep an important dilution process going on. So we ended the quarter with 14.6% of the net revenue. And then we went from 15.1% to 14.9%. So I think here, we have -- it's one of the elements that is really important, when we consider the ins and outs of our management daily. So we know there's group of stores that are in a maturity process. And here, we need to really keep the discipline so that this contribution in the EBITDA can continue to happen. And I would also highlight the freight and logistics expenses, which in the second and fourth quarter were pretty much the same. And this is -- we're able to dilute this, and this is because of our route work and maturity as well as the greater volume of stores that the company has been operating with. And so moving on to Slide 19, we have the numbers related to the EBITDA. And I think, Jesuino brought in this important highlight with the expansion of the EBITDA margin. We ended the quarter with 8.4% of the EBITDA margin. And then if we look at this throughout the year, we go from a first quarter of 6.9%, and we have -- then 7.9% -- 7.4% then we get into the agenda with the gross margin that lead down to 8.2% and then 8.4%. And so the focus on profitability, that's really significant. And of course, anchored upon some important factors like the gross margin, the ramp-up of different processes as well. And of course, the issue related to the maturity of the stores and dilution of the operational expenses. So these are the main -- the 3 main factors for the EBITDA margin. And in the year, this now is pretty much the same. So we end the year with BRL 2.5 billion in EBITDA. The growth is 26% in the quarter. This was even greater. But I think here, it's important to highlight this from an annualized perspective with an expansion of 0.4 in a macro scenario that is super challenging. Moving on to #20, we have the numbers in the net income with BRL 382 million in the first quarter, a growth of 17% year-over-year. And here, it's important to mention that we just exclude the nonrecurring effects. But essentially, it was the numbers related to 2023, where we had a PIS/COFINS credit upon the accelerated depreciation. And here, another very important point is observing this net income trajectory despite a huge challenge from the tax perspective. So at the end of '23, the beginning of '24, we had a lot of people questioning, as if it would be possible to keep the same levels of results in '23 and '24 because we also knew that everyone was aware of the size of the tax changes. So I think this was significant pressure. And as Jesuino talked about our convention today and I remember that last year, Mr. Jose and Jesuino really pushed the team in this direction, right? So that the operational team could really overcome this tax challenge. And when we look at the numbers, we can really [indiscernible]. So this was another important element, right, during 2024. A -- and so moving on to Slide #21. We have the numbers related to the cash flow and the working capital. And here, it's worth highlighting that we've been able to bring to the fourth quarter the working capital topics considering a market trend improvement. Once again, we went from 74 days to 82 and that -- and then in the fourth quarter, despite the challenge with the sales in December, as Jesuino reminded us, we were able to bring in the stock and improve this -- we improved the cash cycle by 5 days, and we essentially got back to this trajectory of improvement. So we know the company has opportunities. We know that throughout 2025, this topic will continue to be worked on. And it's in goals for our executive teams and an important point to share. Is that now in 2025, we're going to have the payment of the variable compensation regarding 2024, and that's where the executives are going to start feeling the actual impact of this. So those who had excellent results in the stock are going to make a bit more and those that haven't done well, will be impacted by this as well. So I think the main message here is that we cut back on track with the improvements and the ideas that will continue to work intensely on this topic. So moving on to Slide #22. I wanted to highlight the cash generation during this period. I think it's very important. And that includes profitability and growth in the business. This is an important factor. We've been working on a lot and we really value this. And here you have a third point. And so as we consider our own cash generation, this is a topic that Mr. Jesuino really highlights a lot, and we were able to once again achieve this with the fourth quarter generating major cash. And this is mainly due to the generation of the business itself, but also considering the sequential improvement in the working capital. So I think these 2 factors really generated a lot of stability and cash generation in the fourth quarter. And the next slide, we'll see some more stability in the level of leverage. And so we closed the year with 0.29x the EBITDA and a little better than the closing in '23. And this is all, of course, considering major expansion. It's been a challenging year from a tax perspective. But we've been really -- we've been combining these elements of the profitability we're searching for together as well as the commitment to keep up with the level of leverage, 100% as the numbers demonstrate. So on Slide # -- on the next slide, we also considered the CapEx issues -- and -- we also think it's really important to confirm the construction project underway. And during '24, we held on to the expansion agenda a bit because we had to start considering this and that was something we migrated a bit. And so here, we have a bit of a disclosure of this BRL 178 million within the block of new stores, which were at that moment, projects that were still underway and also the block of land and properties that's already considering the future stores. So just to give you an overview and demonstrate that the expansion pace is really in alignment with the level of leverage that the company had been proposing. So these are our initial comments and from then on, will all be available with the questions. Thank you very much.

[Interpreted] [Operator Instructions] Let's move on to our first question from Rodrigo Gastim at Itau BBA.

[Interpreted] 2 questions on my side. The first one is about the impact within the same-store sales of the stores that were opened in the fourth quarter of '23. I think there are some quarters you guys have been talking about this impact on the sales and the ramp-up of the gross margins and also a worsening in the sales. And if you could share this a bit with how this impact was considering the high pace of openings and also how the same-store sales were for the mature stores? That would be a point we'd like to understand. And then a lot of people asked about suppliers as well. And if the working capital is pretty stable year-over-year, with good improvements in the receivables, but the suppliers year-over-year may worsen a bit. And our big question is, whether the impacts with suppliers, is there any exchange in the gross margins and understanding a bit of this dynamic?

[Interpreted] Gastim. First of all, thank you for the question. I think you brought in a very important topic, which is the design of our maturity curve. And we've experienced the fourth quarter of '23 with a huge amount of openings and this made the stores fulfilled 13 months of life in there -- in the fourth quarter. So basically, at this moment, where it comes into the same-store sales base, what's happening at the store at that moment is an agenda to recover profitability. We normally open up the stores with a very aggressive approach to capture sales and gross margins. So it starts off selling quite a bit. And then throughout the year, when we already move on to our second year, we are getting into this agenda to recover profitability. And so what's happening normally in the store during this period is that the sales drop a bit year-over-year but there is strong expansion in the gross profit. So our year 2 for the store to fulfill full year of existence, and heading to its second year of existence there's a drop in the year-over-year comparison because the store opening process, and the initial ramp were really aggressive in the margins. The sales are very strong. But then we start this agenda with the expansion of the profitability. So the peak in the gross profit is very big. And so if you exclude this effect with the fourth quarter, I think our same-store sales were maybe head to a level that's closer to the inflation the average inflation rate. So I think that's an important point. And then about suppliers, I think here, there's another point that's important to reflect on which is if we take a look at the number of suppliers, in the cash cycle from a sequential perspective. We were already operating at this level of 45 days ever since the first quarter for. The first quarter was 44, then 45 and then now 45 again. And so the number that was really different or stood out was the fourth quarter of '23. So we understand that 45 is the level we should continue to work on. Of course, as I mentioned during our presentation, we continue to be focused on working capital topics. And so there are some tactical initiatives that we've been working on with the commercial team as well. And there is no type of correlation between the number of suppliers and the cash cycle and the margin perspective for performance. So if we look at the third quarter, we had already taken on an important leap in our gross margin as we had mentioned and the level of the supply is also about 45 days. So we kept the 45 days, and we took on another step in regards to our gross margin.

[Interpreted] Let's move on to the next question from Ruben Couto at Santander.

[Interpreted] Just a follow-up here on the same-store sale sales. Could you share how this year started off? And if you had some reversal and the impact that you mentioned now Tulio, if it's just more of a market situation? Was it something that's like occasional? And the second question for you Tulio is, when you had the beginning of '24, the market questioned this way between 10 and 20. And we would also like to understand what we could expect in 2025. And so maybe that's not as relevant. But if there's any range of the level of that we should expect from 2025 onwards?

[Interpreted] Well, Ruben, the first point is that January started off better than December, but still at a level that is below what we expect. But no doubt, it's better than December. And I want to call your attention to another point, Ruben. We noticed that there's an important trend in some categories that are super important for retail, such as beverages, hygiene and beauty and cleaning with higher inflation in the Northeast than in the rest of the country. So if you look at a basket of beverages, there's like 3 points more than in the Northeast and in the rest of the country. So there's this movement going on. We've been very dedicated to this topic, Ruben, to be able to understand in greater depth what could be done. And so we could also reverse this scenario and try to maybe easing it up a bit, but the results in January must continue -- are still a little lower than what we imagined but better than December. And that's a bit of the scenario. I hope I have answered. And then we had another question also. Well, just to add on a bit. Jesuino, I think this vision on the profitability continues in the same-store sales, as you mentioned. But we have this agenda sale going on, focused on profitability and working on the ins and outs in our day-to-day activities. So searching for opportunities to keep the profitability levels. And then when you consider the effective array movement, which is your second question, I think that is a point, maybe we dedicated our time to quite a bit at the end of '23 and of course, he had a potential impact to the company. That was really a significant. In '24, I think the entire team really dedicated their time to the tax committees working on these different levers as we've been sharing with you all. Of course, we continue to search for opportunities. But I agree. There was some elements that when you kind of turn the key, the impact is more intense initially. And so I would start off with an effective rate of income tax of about [ 18, 19 ] or so to be a more consistent topic from now on. We experienced some quarters this year with an effective rate. That was maybe 1%, very low because of some turnarounds and some topics that we see great intensity with. But anyways, I think we've created some pillars that are very important. And of course, we're focused on continuing to work on some other pillars because we know that the issue with the loss -- accumulated losses are definitely a point that we have a date for it to finish, right? So we need to develop this pillar to substitute this and that's what we're working on, really on focusing and continuing to keep up with the discipline and the tax committees and -- we have a weekly routine working on this topic. And I want to remind you that there is a tax reform work also to take place, and we actually created a program in the company focusing on this topic that we understand it's going to be something perennial because the size of this change is very relevant, and you need to have a team dedicated to this, looking at this closely. And so I think that's pretty much it.

[Interpreted] Our next question is from Joao Soares at Citi.

[Interpreted] Question here that I think I want to restructure. And if you were to extend the payment terms for suppliers today, do you think that would affect this agenda? You mentioned here with the improvement in profitability and gross profits. And the second point -- and so when we consider the same-store sales, that's going to be closer to the inflation I imagine you're talking about the headline, not the food inflation, right? So I just wanted to understand this better. We had this conversation with other competitors as well on the work with the inflation, the Cash & Carry and how there's still this lag in the food inflation. So I wanted to explore, if there's an opportunity to catch up a bit more and closer to what's going on with the food sector and how we should imagine this?

[Interpreted] Do you want to start off, Tulio?

[Interpreted] Well, I think the first point in regards to the payment conditions for suppliers. Joao, first of all, thank you for the questions. And I think here, just to make things clear, we've been working on this topic. And I remember that in '22, we continued some initial work that have been initiated and we saw some improvements in the cash conversion cycle. But the first concern was due to this, if this would maybe have effects in the margin or since the working capital was changing at the time we had about 115 days in the cash conversion cycle and operating with 77 days with the gross margin at levels that are pretty positive, right, for profitability. So we understand that 45 days would be a topic we're going to continue to work on, right? But ever since the beginning, we've been talking about this, right? We're not going to do the working capital work by giving up on pricing or profitability. We're going to test the limits of where we can fit this in and how we can work on this. And we know that in some segments, we have opportunities. And we have suppliers. That's one of the points. We have opportunities even to have some tactical initiatives in this front. And we're already working on this for the first quarter. And then also for negotiation. And so suppliers when they negotiate, there's maybe a direct negotiation process and -- for example, for the stock aspects, we understand that there's in-house opportunities, if you think about processes and if you think about our variable compensation, as you see this example of connecting this topic more and more an encouraged teams, et cetera. So when we think about the relationship with the DC in the stores -- and so this is a path that we consider to be very important. And we must continue to work on this. We understand that there are opportunities. But we have never -- in the work we've already done, the work we intend to do, we're not working on an assumption of searching for payment terms in exchange for pricing, right, when we negotiate. So when we get into your second question here, -- and Jesuino feel free to hop in, if you'd like to, as well as in a view. When it comes to food inflation, when I referred to this, I was talking about average general inflation, not specifically for food. But here, it's worth mentioning what's the best strategy to search for at this moment, right? So we need to understand the context that Jesuino mentioned initially and really considering an important food inflation context within tax intensity, and we're experiencing an increase of taxes in basically all of the states we operate in and even Maranhão, where the intensity was very significant. So I think customers need to really consider this, right? And we know that profit doesn't necessarily follow the same pace at the same moment. So you must understand the strategy you're going to have for this context. And we understood that we should mention the profitability strategy. And so in this scenario, we also need to consider the objectives when we consider the net income and the dilution of expenses in regards to the gross profit. And when we see the entire strategy for this cash generation, but you need to make a choice, right? So within this, are you going to focus on generating more volume or also considering our profitability agenda considering this, then you need to balance it out and understand how you're going to change these intensities, right? So what we're thinking is really this and that's a bit of the context. And so, we also discussed the need to choose our battles and we need to consider the last line of our results, right? And what we expect and so we also have this multichannel approach. We need to balance these different aspects and understand at some moments you could sell more on wholesale or Cash & Carry or maybe through retail. And so working on density of these new routes and that could help us a lot more on the margins and that is one of the advantages, right? In this multi-channel approach.

[Interpreted] Our next question is from [ Denny Engel ] from XP.

[Interpreted] Congrats on the results. I have 2 here on my side. We heard from you guys, and it's really important for us to get the competitive perspective, right, from the regionals and even -- they all mentioned the Northeast as a region that's more competitive since you guys are involved in this region, you have more visibility. We wanted you guys to bring in some color on how you've been seeing this, right? You mentioned you're adopting this strategy for profitability. And just so we can understand this and is there is some movement towards in a more mandatory manner. So it would be great, if you guys could maybe mention this competitive dynamic? And also from another side, when we get into efficiency, especially when it comes to operational expenses, how much you guys still view in this regard? This is an important -- and also, when it comes to the stock -- and so if you could give us some more color on payment terms? And if you think we are going to be normalized in the next 3 years -- just so we can try to understand a bit of the opportunity here.

[Interpreted] So well, Denny, about the competitive scenario, what I can share with you is, first of all, we noticed that there's inflation, it's a little more acute. This is something that we're still studying. But we want to really be able to share this with you guys during the teleconference as well. But this is an important point, right? And this more acute inflation with the ICMS transfers, as we mentioned, we really noticed that the consumers' income have been -- having a bit of a challenge. And so our growth is mainly price oriented, right, in this quarter. And now on the competitive scenario itself, Denny, it didn't really change significantly in this quarter. So this scenario is a lot more related to the market scenario, inflation and taxes, as I shared with you. So we don't feel any impact from the perspective of payment conditions and installment options, et cetera. But the market has worked on that, but we decided to not get into this and we don't want to lever this in any way. So we follow with a spirit of optimism in this quarter. The first quarter, of course, has some specific points because we have seasonality aspects. Easter is going to change. February has a day less. So there -- it's a moment where we have to fine-tune adjust and that's, of course, something that we're always keeping our eyes open, but we're very disciplined in how we take care of this so that we can work towards these different initiatives and improve as much as we can. But it's important to also say that despite this entire scenario we're going through, our focus has been to deliver the best results possible, especially for EBITDA margins as we delivered this year in the fourth quarter, as Mr. Jesuino and Tulio already mentioned, keeping up balance with everything. And so this multichannel approach contributes to this entire scenario because external sales keep up. So we have 45,000 sales points just for B2B and this channel grows a lot. So you've probably saw this in our release and we've been trying to, in every way we can, soften up these impacts, but overall this is a bit of what we're seeing, not only in regards to the competitive scenario, but because of the inflation and ICMS transfers considering consumer purchase power, et cetera. And so we're going to share with you guys the next discussions to share more clarity on this. And when it comes to the stock, we're going to -- we can also talk about this from a stock perspective, yes, we do see perspective on this. And this is something Tulio has brought as well. We've been very disciplined with this. And so we have the bonuses of our teams connected to this indicator. But we want to work on this more and more. It's may be difficult to give you a vision of what this is going to be in the next 2 years. But we are aware -- what's important to mention is the expense issue, right? So thanks for the questions. And on the expenses here, this is a topic we've been working on with a lot of caution, right, to be able to not face any risks with getting things wrong or hindering the company. So I think the first perspective is always about handling the expenses that don't have direct contact with the end consumer. So that was the main agenda in '24, and that's something we worked on with the administrative expenses. We also worked on the sales expenses really considering direct contact with the service levels as well. But I think that this first phase was a lot more related to discipline than to actual searches for or intense searches for greater productivity. And as we knew there was this movement towards maturity of this group of the regionals. We really needed to have this agenda with the necessary disciplines that the dilution could happen among this group as switching maturities. So I think most of the strategy was administrative, but also intense discipline in markets that are under maturity. Another point Ilson mentioned is -- in his initial presentation, definitely helps this process in the macro, is the development and growth of wholesale and also with the vector of the convenience stores. So when you consider the convenience stores, where -- is there growth and billing sources of revenue. Well, that's definitely from the wholesale. And when it grows, there really helps dilute expenses as a whole. So -- and that's an important vector as well, Ilson and Mr. Jesuino also talked about this. So the growth of wholesale is an ally in this process overall. And so that's another agenda where we're keeping our eyes open. And we really believe in from now on.

[Interpreted] Our next question comes from Nikolas [indiscernible] from JPMorgan.

[Interpreted] I have 2. Actually, the first one is still in the inflation topic. We understand food inflation is not 100% adherent to the Cash & Carry market. So if you could give us some color on what your internal inflation is like versus the general inflation and food inflation and specifically for Cash & Carry? And the second question is about working capital. Could you talk about how the situation is with the stock? Maybe that was a bit different or out of the curve. So I wanted to know, if the receivables have the same impact, right? We had a drop in the receivables. I wanted to understand the dynamic it is -- or if it really was just because the base was better?

[Interpreted] Well, I think I'll answer the first question. And then you can -- my team will help with the other one. But that's a great question. If you take a look at the month of October, for example, Nikolas, our internal inflation is very similar to the market's inflation. The month of November was maybe a little lower than the market inflation and December was higher than market inflation. So there's a mix. But generally, it's a bit of this, right? If you look at the month of December, if you -- since it is 1 percentage point above the market inflation. So very similar. There's no like big delta that calls our attention, so they're walking hand in hand, and I hope I answered that question.

[Interpreted] Well, then Nikolas about the working capital -- so about the stock, we were able to improve this a little bit compared to the third quarter. And I had mentioned that if the sales in December had been at a level that was normalized in the quarter, then this level would have improved a bit better. We also consider this to have a level of performance. And in December was a little below. As we discussed here, that kind of feeds the receivables account a little more, a little less, right? So however, there's 2 other elements that are similar. One element that's important is the provision we had created of about BRL 30 million compared to the receivables of funds and also from receivable -- from suppliers. So that also reduced our receivables. And so I'd say these are the 2 effects that went from 37 days in the third quarter to 34 days in the fourth quarter. And that's the effect of December and this provision as well of approximately BRL 30 million that we created. But if you look up ahead, as Jesuino mentioned in the block of previous question, since we don't have in our plan any kind of idea with differential payments. I think the accounts receivable here shouldn't generate any surprises. And if you look at the quarters over the year, we can see that this -- in the first quarter of '24, we had 35 days. In the second quarter of '24, we had 35. And then in the third quarter, it went up a bit, to 37. And now we go back to the level of 34, which is pretty much the same axis as the first and second quarter. So here, it's not about -- not something we should be so surprised about. The 2 main box we continue to work on, when we consider the working capital, it's a stock focus and also, when it comes to suppliers, where you have a level of limitation due to renegotiations, but there are some tactical opportunities as well to implement, which is what we're considering in the first quarter as well.

[Interpreted] Our Q&A session is officially ended. And now we would like to pass the floor back to the company for their final remarks.

[Interpreted] On behalf of our company here, I want to thank god for allowing us to be here and wrapping up another earnings call. And I also want to personally thank Jesuino, our Chair -- our CEO; and Tulio, our VP; and Sandro, our VP; and all of our directors and managers, we're over 60,000 employees that work so much to -- day and night to be able to achieve these results definitely important warriors that are really focused on our success, and that's our main focus, right? What we are searching for is the final results, and we're searching for -- we had a lot of restructuring done and we're actually working on the restructuring in variable compensation as well over our operational base. And our focus is to really be able to search for these objectives daily and reinforce what Jesuino mentioned, with how tomorrow, we're going to have a meeting with all of our team, all of our directors and managers, and we're going to be really happy to organize this big celebration here. We are going to have each of the directors here tomorrow and we also want to deliver major results, and we're really happy and want to thank everyone, our investors, et cetera, for continuing to trust us. Thank you, guys.

[Interpreted] The earnings call for the fourth quarter of 2024 of Grupo Mateus is officially ended and the Investor Relations department is available to answer any other questions. Thank you so much, and have a great day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]