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

Good morning, everyone. Thank you for waiting. Welcome to the earnings call for the first quarter 2025 at Grupo Mateus.[Operator Instructions] We would like you to know that this earnings call is being recorded and will be provided on the website at the IR website where you can also find the full material for our earnings release. You can download the presentation as well on English as well [Operator Instructions] We'd also like to let you know that the information in this presentation and possible statements that could be made during the earnings call related to business perspectives and operational and financial targets at Grupo represent beliefs and assumptions of the company's management as well as information that's currently available. Future statements are not a guarantee of performance involve risks, uncertainties and assumptions as they refer to future events. and they, therefore, depend on circumstances that could not occur. Investors must comprehend that general market conditions and other operational factors could also affect future performance at Grupo Matos and lead to results that differ materially from those that were listed in such future statements. Today, we have the presence of the company's executives, Mr. Ilson Mateus, Founder and President of the Board; Mr. Jesuino Martins, CEO; Tulio Queiroz, the Financial VP and Investor Relations; and Sandro Oliveira, the VP for Operations and Commercial. Now I'll pass the word on to Mr. Ilson Mateus.

First, we want to thank God for the opportunity to be here in one more earnings release. And we would like to thank you all for being with us today. Now we're going to have the results of another quarter of Grupo Mateus. We started off 2025 in the same way as the last few years, advancing in regions that were promising and at the same time, creating greater density in regions we're already present, as you can see on our screen. Here, you can see a store in Ilhéus, a very important city in Bahia, where we reached the city, and we were able to have a very important advance as well as in Bahia. As you can see also Jaboatão dos Guararapes, a very important city in Recife but I also want to mention a bit of the density in Maranhão. Although we already have many stores, as we've been mentioning, it's a density in our route. These are stores that are already retail stores where we really work our margins very well. And on the next slide, on Slide 5, I want to present a bit more about the current scenario and how we already have over 276 stores in different channels, 92 cash and carry stores already, where we hope to reach these 100 stores, which is really an important channel for our business. We have 45 stores, we have 35 Camino stores, where we've already reached an important milestone, and we have these stores with route density and that improves our margins, 104 margins and 227 Armazzem stores and 226 stores. Then on the next slide, I'm going to present the scenario here where in April, we had 3 cash and carry stores and another store for Electro. Within the scenario of new stores opened, you can see that we've brought 2 stores, one in Rosario, one in Marituba and another one in Ananindeua. These are important stores also in Pará. And in Rosario, we also have a small city that's part of this route density. On the next slide, moving on, we already present our expansion plan. And you can see we have 16 stores underway in different states as we complement the routes, and we've already started the year a little better than last year with a lot more stores, always focusing on our route density vision, where we search for volume and also search for our margin balance. Now I'll pass the word on to Mr. Jesuino Martin.

Good morning, everyone, Tulio and Sandro. Now we would like to share some highlights on our results for the first quarter this year, which really makes us happy. And as always, I would like to start talking about our net revenue. We were able to reach a level of BRL 8.3 billion in the first quarter of this year. And you can notice that we have a growth of 12.9% of this net revenue and also an increment of BRL 1 billion. Here, you have an important point to share because we've been sharing the growth of our net revenue and in a more intense manner. and especially the reduction of our expansion due to our operation with Jaboatão dos Guararapes in Recife. And we're in this final phase for integration. As you can see, hopefully, this will work well. But the reduction of the new stores opened will make our growth in the net revenue drop a little bit. But you can also see that we're going to be having over 30 cash and carry stores. due to this strategy. So I think it's worth mentioning that this in some way contributed to a bit of a slower growth, but this is strategic. To give you an idea in the last 12 months, we opened up at least 10 or 12 stores of Cash & Carry less than in the same period last year. So that's just to give you a bit more clarity on why we've had growth of 12.9%. And then here, I think another important point is that even if we grow 12.9%, this is the growth that's more than the Northeast market grew. And this makes us very happy as once again, we have confidence that our strategy is right and on the right path. We would also like to share this next pillar, which is the same-store growth. the second block, you have the growth of 7.1%. And here, it's worth mentioning also because we know about how our calendar suffered a bit in the first quarter this year with Easter in a different date, a day less in February. And we thought that the most precise manner to perform this interpretation, we look at the first 4 months. That's why we bring the same-store growth in the 4 months of 7.1%. We're quite happy with this because with this, we come from a strong basis last year. In the same period last year, we grew almost double digits, 9.6%. And another point that I think is worth mentioning is at 7.1%. If you look at the 4 months, we can improve the growth of the same stores if we compare with the fourth quarter of 2024. We have more quality. Then another important point also to share with the market and with you guys is that the stores and the expansion in year 1 strategically, I'm going to share this information with you as well. We choose to bring in margin gains. And so initially, the stores start off with a major efforts. And then we've been working also in a more acute accentuated ramp-up in the margin. So the stores we opened up in our expansion, we prioritize the margin and not the growth. And that's why our same-store growth in a strategic manner and we grow almost double digits in the same-store growth. So we're trying to find a balance so we can always deliver the best results possible. I would like to share with the market that we have a very strong factor, which is our indirect purchasing channel because we're a multichannel company and our indirect sales channel is going through a big transformation at this moment. And this channel has contributed a lot to the growth due to the strategy for transformation that we're experiencing now. And when we merge our multichannel approach and our strategy to prioritize margins instead of volumes, we deliver this same-store growth that's better than the fourth quarter, which makes us very happy. Then I want to share also about the gross margin. As you see, we've achieved a level of 22% in the gross margin, and we're really happy about this, which is almost 1 percentage point higher than the same period last year. And as I shared with you, this gross margin, you've been monitoring, and you can see it's quite resilient over the last quarters. The 23% we reported in the fourth quarter pretty much at the same level. And that's due to this maturity of this new regional considering the profitability and besides this also the external sales with the transformation as we grow in sales, profitability and overall, this strategy makes our gross margin really be very resilient as we've been sharing with you. So in the last few months, we've also implemented an improvement in the pricing. This has contributed significantly and dedication throughout this topic, the dedication of our commercial team as well when it comes to the care and preservation of our gross margins. And this makes our gross margin reached this level that really makes us very happy. It's important to remember that during this period in the last few months, we also had an increase in ICMS in certain regions in the Northeast. But despite all of this, our gross margin has reached this level. And besides this, I want to share what we've achieved as the EBITDA margin, which also makes us very happy. And here, you can see this gross margin gain really reflects our EBITDA margin automatically. And we also have the efficiency with expenses that contributes to the EBITDA margin. So will talk about this in just a bit. And I think this is the central part of our discussion as we mentioned this if we want to continue to deliver this. And this makes us very happy as we can have the possibility to deliver this EBITDA margin with high quality. So we've been growing compared to last year. And finally, I want to share our net revenue, considering the margins and the net income, which makes us very happy because even despite all of the tax impacts that we've overcome, and we've been able to deliver a very resilient net income and net margin, which makes us very happy. As you see, this has been growing when we compare to the same period last year. So we're very happy with the next quarter through Sandro, Mr. Ilson, I want to take advantage of this final phase to really thank our team for the dedication towards our results. I know a lot of them are watching us at this moment. So I want to really thank them all. Now I'll pass the word on to Sandro, our Commercial VP and Marketing Director as he talks about the achievements I mentioned in the evolution of our efficiency processes in our new regional.

Thank you, [indiscernible] . Good morning, everyone, Mateus and Tulio and everyone listening to us and watching us today. We're going to zoom into our performance with the Northeast expansion team. As our President mentioned, this is due to many different issues we've been trying to balance. And part of this is really due to the performance of the team that's been handling the states under expansion. And in the first quarter of 2025, you can see that we've maintained a performance of the evolution, and we've delivered 1.6 percentage points above the EBITDA of these quarters of these stores, which represents currently 39 stores under operation under operation for over 12 months in these states. So for everyone to have this information, we have 51 stores under operation in these states that already contribute to 35% of what we are building in retail in our company. And we have a path ahead of us when we look at the opportunities ahead of us, but this is something that really makes us happy to share with you as this is the fruit of everyone's work really dedicated to continue occupying the space and keeping up this balance, and of course, we've been able to more and more search for this balance between the sales and margin. And then just for informational purposes, we also see our evolution in the market with 1.1 percentage points. So we reached the last week that was measured by Nielsen with 26.4% participation. And this is also due to the consistency and the path we've been following throughout the last years with our entire team operating in these stores and in these regions. So we know that there's still a path ahead of us, but we've already seen results that are becoming more consistent and that already deliver something as we observe this and have more confidence that we're on the right path. So yes, we know retail is about every day at all times, but we've been moving ahead consistently towards this. So this is what I wanted to share with you from the expansion area. So now I'll pass this on to Tulio.

Good morning, everyone. And now we'll get into Slide #13 in our presentation. And here, we have a panorama of our gross profit in the company. It's a topic we've been discussing for a few quarters with a focus on the consistency in regards to the gross margin, and this is sequential in the last quarters, and it demonstrates this path. This is another quarter that as the team mentioned, I just want to highlight the important contribution. And so the evolution of the gross margin and of course, an important highlight for cash and carry, that's really in line with the agenda [indiscernible] mentioned here. I want to remind you that the company ever since the fourth quarter has really adopted a strategy focused on profitability at this moment. So the gross margin numbers really reflect the strategy and the path we've been following. And so the gross profit adds up to BRL 1.917 billion and a growth of 16% compared to the first quarter of '24. Moving on to the next slide, #14. We have the numbers related to the operational expenses and operational expenses grew 11%, going from 15.4% to 15.2% in the first quarter. And this comes from our agenda that we've been sharing with you, so we can really share a bit more about the freight and logistics expenses with the expansion and route density. And we also have a specific point on the dilution of the team, which is an important point as well despite the very important expansion pace and also the administrative, which grows 5%, demonstrating a focus on this expense dilution, looking at an important expansion process from now on. So moving on to Slide 15. We have the numbers from the EBITDA here in the group. And Jesuino mentioned the main highlights. The company reached a total with over 27% in regards to BRL 510 million and an important expansion of the EBITDA margin, an important topic we've been discussing throughout the last quarters. We've been able to improve the level of profitability. And this is another quarter despite the calendar effect, we've been able to have an important expansion in the EBITDA margin in a scenario where you still have very important expansion. With the calendar effect, we expand the EBITDA margin and grow 27%. So we become very happy, as Jesuino mentioned. And when we move on to Slide 16, we have the gross profit, which add up to BRL 219 million. a growth of 32.5% compared to the BRL 240 million reported in the first quarter of '24, in line, the main focus here is the EBITDA with the net income, considering all of the administration of the actual income tax rate. We were able to have a level that was very similar to what it was in the first quarter of 2024. And we worked with the same pillars. All of the pillars we've been working on or exactly these. So with this, as we've seen in the first quarter of '24. Moving on to Slide 17. So we have a cash cycle, there's an improvement in regards to the 74 days reported. And year-over-year, it's a stable scenario. You have some different characteristics and important evolution in the suppliers account year-over-year and a growth year-over-year also in the stock count. But for suppliers, we've been working on some initiatives ever since the end of last year with some internal campaigns for incentives and this negotiation with suppliers as well when it comes to terms. So we also have this important component, this perennial but there's also a mathematical effect in the growth of the stock where, of course, you also have to increase the suppliers account and part of this is a mathematical component. Part of this is a consistent component from now on after this round of negotiations that took place ever since the end of last year. Then when you look at stock, this is something we've been working on. We understand that there are opportunities for improvement. And just to share some points, we had a calendar effect in Easter, of course, with some components in the sense. And then you have a component of the amount of store openings in April, you had free cash and carries in April 2025 against retail in April '24. So there's also an important starting point difference here when it comes to volume of the stock. All of this does not change our perception of our diagnosis that there are opportunities and these opportunities are going to be worked on during 2026, '25, sorry. So we have a big focus from administration and looking at all of the variable compensation indicators as well for the commercial teams, especially when it comes to stock items for 2025. Another important point is that for the first time, the commercial team the payment now of the bonus that was paid in April related to the exercise of 2024. And for the first time, the commercial team was really engaged with the topic entirely for variable compensation. And those that performed below targets for '24 were then impacted in the variable compensation. So this is a topic that works and brings in major intensity and results to the period of 2025. Moving on to the next slide, #18. We have a graph that shows us our cash generation and consumption. So first block on the left side, the company has a cash generation of about BRL 315 million, BRL 316 million almost. This is an important point because you had the payment of taxes. It was a significant amount and almost half of this is a PIS/COFINS related to the interest on equity, but the payment takes place in the first quarter. So that's why it's important to highlight this topic because before we wouldn't pay this and distribute interest on equity. But on the right side of the slide, you have the composition of what is the CapEx consumption essentially and also the purchase and sale of properties. So there's a component here of a down payment for a purchase of property. And from an inflow perspective, we have an installment of that also came in, in this quarter where you have the column of the sale of properties. So it was consistent this quarter when it comes to the guidance, as Jesuino mentioned, to help the company grow with its own cash generation in the group. Then moving on to Slide 19. We have the consequence of this movement, which is a level of leverage that is smaller than what was reported in the end of the year. So strong discipline here with the level of leverage at 0.27% of the EBITDA in line with the first quarter last year. And you can see the comparison with the end of '24. So we have major discipline daily with a strong expansion pace. We have a lot of stores, as you all know, that are in the initial maturity process, but the company is still working on strong expansion with its own cash generation, keeping a level of leverage that is quite conservative. So for us, this is very relevant. On the next slide, #20, we have an overview of the CapEx composition. And here, I think you already know about this, the main CapEx consumption comes from the new stores, of course, but the BRL 72 million, as I mentioned, is the composition. But here, you have this scenario of consistency in regards to the expansion pace in the last 3 years. As Jesuino mentioned, last year was a bit atypical due to the transaction with Novo, but now we're getting back to a pace that's very similar to the last 3 years in the company. These are initial comments. And now our whole team will be available to answer questions.

Now we're going to start with our Q&A session. [Operator Instructions] And we'll start with our first question, which comes from Rodrigo Gastim Itaú Corretora de Valores.

Two questions on our side. The first one is about the sales dynamic. I think this is a topic that was very much discussed in the earnings call. And the beginning of the year was a little tighter. But I wanted to understand how this we wanted to check in based on the first 4 months, and you mentioned that if we isolate April, same-store sales is closer to 5%, but we also want to validate this rationale. And so that's the first question. How are you feeling this? And then about the working capital. You mentioned this in your explanation, but when you consider the amount of questions we received last night, we wanted to get a little more details on what really happened with the suppliers and the stock levels. And what's most important from these 10 days, what's the comfort you currently have of the recurring component of this improvement in the line? And how do we imagine this improvement over the last quarters? These are the 2 questions, guys.

We'll start off with the sales dynamic. And I want to say that we've noticed, especially in the first quarter this year and in Northeastern Brazil, an inflation rate in the Northeast that is slightly above the food inflation overall Brazil. And there's an interesting point that contributes to this dynamic, which is also due to many other factors, but the Northeast had an increase in the ICMS rates, which affects the competitive dynamic up ahead. So, to give you some examples, you look at some categories that are important, like groceries, and what Nielsen audits in this quarter reaches about 15% more inflation. So this weighs in, right? And the Northeast really feels this a lot more than the rest of Brazil, with all of these different movements. And so even in the scenario that's so volatile, we continue to grow. If you look at our total growth, we have grown more than the Northeast market. So, April also, we can see that it has a lot more quality, and April receives the seasonality that should be considered. And that's why I think we should have a complete quarter view to help with this rationale, right? So, April has had better quality than what we've been reporting now. So this dynamic, we've been trying to find a balance with everything, considering the inflation and this competitive scenario on the market, so we can continue to deliver the same margin and the same results that we've been able to deliver with the EBITDA margin and net income. And moving on to the second point, which is the working capital. One important point to share is, well, for suppliers, we have some different initiatives we're working on, but especially for suppliers. Now, what you have been seeing is due to the planning that helped us change this level when it comes to suppliers. We consider that our stock has been influenced significantly. We've been working with this, and we've seen the fruit of this. So we want to continue to work with this. We still have a path we must follow, but certainly, we're taking an important step. Then, from a stock, we want to reinforce this. Of course, we're aware, and we should need to do things better than this, right? We've been working more accurately on this. And of course, we're not happy with this level, but we understand that there are different initiatives, and we're going to work with the stock, and I would like to share new and better levels with you. So we are going to have our team focus on this more and more. I'm sure this is going to help us to start sharing the results with you as well. And in March, we had a lot of seasonality impacts. We know about the significance of Easter for the Brazilian market. But we know that generally, what I think is really important to highlight is that we are really aware that we have to work with this. So with working capital, we have gains, but we also have this challenge to continue to pursue the stock performance. But yes, I think that answer is complete. Just an observation here is that as there were many openings in the first quarter in April, and generally, we have a stock that's a lot greater for the stores that are going to be opening, because in the opening, we have strong measures, and that's why some have a mismatch. And you can see that these openings in the future, after a year, they will also end up impacting the growth in the same stores because the store, after a year, reaches normality and then it reaches a level of normality. And whenever we open up stores, especially in regions like others, we understand that we're going to have to impact the population. So we have very aggressive approaches in these moments.

Okay. So moving on, the next question comes from Ruben Couto.

Well, I want to get a few more details here on what you mentioned about the distribution and the transformation process. And what should we expect in the short and long term? It is really the maintenance of this growth. And so I wanted to hear a bit more about this and if there is something that happened between '23 and '24 that made you guys make this decision, right, to go through this transformation process in this distribution part.

Well, thank you for this question, Ruben. I wanted to share with you this. I'm not sure if you guys keep up with our company, but you probably know that our origin was as a distributor. That's how we started off. And we had an indirect channel that was a lot stronger than the direct channel, it took about 15 years. 95% of our company was in the direct channel. So, an important topic was to share our essence. That's when after the company started investing in physical stores as a strategic plan. And today, we had a big change because physical retail represents 85% of our operations. So in direct, even though it's smaller, they continue to grow. And here, it's important to mention that due to our essence and having come from this origin, we have been working in the last few years with many transformations. I'll give an example. You see some legacy states, where you have small retailers today, and they receive visits of an army of commercial representatives, right? But this generated major efforts. Now what's happening is a whole another transformation. And what I want to say without getting into too many details is that you can expect this growth. It should be recurring. and we want to intensify this channel with the amount of commercial reps. And from a growth perspective, you can consider it to be recurring, as Tulio mentioned. And so since indirects are growing, it could have ended up making a profitability drop. But you can see that the margins are also growing here due to a strong distribution strategy in the Northeast. So we're very happy and once again, trying to find a balance because we're a multichannel company. We have different channels that are interconnected and they set up this ecosystem together. Sometimes, we've been trying to share this with the market so that the market can understand us as a multichannel company. As we can't isolate a business on -- on as this can maybe just give us an incomplete photograph of our overall results. That's why I mentioned our same-store growth, which is built as a multichannel company with everyone contributing to each other, contributing to different strategies that connect. I hope to answer your question. And then after I can get into more details if you want to get into more discussions about the distribution strategy for the Northeast. Just to add on to what you mentioned, our wholesale distribution is very important for the business, and it's a strong division. And we've been able to create teams that are more specialized so that eventually, we can also help find this balance because we have a wholesale that's pretty dense. But when you consider 1 or 2 or 3 categories of products, you have a trend of having a growth that can dilute the cost of distribution. So this is an important point that we have to be discussing with our shareholders so that they can understand the shift in the scenario, which is a bit here, a bit there, and we're going to act accordingly to our results needs.

Next question comes from Gustavo Fortini at Bank of America.

I wanted to get a bit more detail on the growth that was very strong and we saw in distribution. Could you guys talk about how you're seeing this up ahead in regards to new routes, how much share you're able to achieve in the new customers and the old customers and if you've been increasing the old customers or also if you could I think it was very impressive to see the gain in the gross margin and maybe this is counterintuitive because normally distribution business has smaller margins. But I want to understand how much of the gross margin came through an improvement in the margins in the distribution business. You guys mentioned this in the release, but it would be great to get a more quantitative vision of this.

Well, Gustavo, maybe to help you understand a bit more in the legacy states, one of our customers received a visit normally of at least 25 commercial reps. from our team. And maybe this will help give a little more clarity in the expansion states, our customers are serviced by one commercial rep exclusively today. So the process in the Northeast states goes through the same process we had in legacy Maranhão. What we're doing is to increase this density and maybe this will give us a little more clarity. So when you imagine the Northeast is in Phase 1, maybe you can get a feel of how much more is left to be done in this channel in the states in the Northeast, which is why I mentioned to Ruben that we would like to have this result keep resilient and recurrent. The margin, of course, should be affected, you're right, but this is a mature process. We have customers that have been in the base ever since the company was started. So it's a mature process, a mature team. And this business is going to evolve in margins just as the physical stores as Sandro mentioned, also evolve. So it's due to a maturity process, we've been sharing with you guys throughout this path that we really want to have more density and maturity in these routes and indirect are going through this phase as well. So I hope that was clear, Gustavo, but feel free to hop in if you need a follow-up.

Just one point, Gustavo, thank you for the question. Just to contribute here with [indiscernible] answer. When we look at the wholesale operation, was the biggest growth in the gross margin if you look at the different formats in the company. Of course, this is not what most contributed because it represents 15% of the business. But I think that both of the 2 big highlights were the wholesale, of course, but most contributed due to the bigger share in the business is the Cash & Carry division because of the profitability. That's explained. And so that's what most grew in the gross margin in the company that reinforces the strategy that has been shared with you guys. So we have a retail channel where we also open a lot of stores, and we need to consider this and also the maturity of the cash and carry stores, right? You have a trend to improve the margin as well. So when you have density with stores that are maturing and you operate in all channels, there's a trend that you'll be able to keep up this balance in the margin. And that's what we've always been discussing. We want to always find the best for us at that moment within the scenario we're experiencing. So we always try to find a balance in this.

The next question comes from Luiz Guanais.

Two questions here on my side. If you guys could talk about the drivers and improvement of productivity and what we should expect ahead for retail operation, but also in cash and carry. And the second question, taking advantage of Sandro's presence is if you could talk about the CapEx evolution per store, especially considering the new regional.

[ Jesuino ], if you want to start? Well, I'm going to start off here with the first question. First of all, thank you for your questions. When we talk about productivity in the stores, we have a few different segments to consider. First, we've been working on an improvement in the gross profit, focus on the growth of the gross profit, which is really related to the profitability agenda that Jesuino highlighted in the beginning of this presentation. As you know, we have an agenda that is very aggressive. Whenever we have a new store, to really make a message come across. So consumers experiment the brand. And then after the next year, we start off a strong agenda to adapt the profitability to make sure that the stores are arriving at the return rate we need them to. So this is something we've been doing in a very disciplined manner. Now of course, when we have a structural agenda to improve our gross margin, which is also the case with as Jesuino mentioned and other elements also that started off when all of the tax rules changed back then, we had an effect, we really promoted this among the commercial areas so that everyone in the company could bring in solutions to help solve this more difficult moment we're going through. And then we had a lot of interesting initiatives. And I think this point is really something we've been seeing in the improvement of the gross profit and in the margins. And another approach is about the expenses. Here, you have an important point where the company has been looking at this more rigorously when it comes to the levels of returns in the new stores and no doubt, expenses are an important point. So the stores start off with adherence. That's a lot more disciplined and a prior discussion the sales potential instructors that also have more adherence. That makes the adjustments to be born with more adjustments, but with more flexibility, and that's an important point. In relation to the administration and the management, I don't know if you company the important work that we did last year, we did a lot of reductions. And this year, as you observed, the increases is just this everything has been stable even with the company being in full expansion. The salaries have remained the same. The working force has remained the same. We asked ourselves if we did an extra work of reduction of capital? No, we haven't. We've preserved our store structures in function of the capacity of sales of each center at this moment. So it's not just because we had one bad or better quarter that we would change our structure. No, we have been following all of our costs. Everything is being monitored. We've been taking advantage and managing along with the Vice President or even the President on the main purchases. We have monthly rights of monitoring. So the mechanics are the same, but we haven't made any movements of reduction of our working force. But adherence movements and working for more profitability to preserve the profitability of the growth is important, but the net profitability is something that we have been looking at more deeply.

If I could make an observation, Tulio, it's the maturity of the processes we are going through because we opened in a lot of regional markets, and we had to train a lot of people and those processes are still entering into maturity. I'm sorry, Tulio. If I could add in the expansion, when we look at our different kinds of stores, we continue looking at the profile of each store. average investment in cash and carry, we try to preserve it. We try to preserve what we carry out, but the amount that is invested will vary according to the profile of the store, the profile of the city, if the city has a higher or lower populational density, that is something that we still look at in a very detailed manner because that will impact what Tulio commented on the stores maturity at the delivery of the rates of return of that return rates of that store. And it has helped us have a lot of assertiveness. And the work with our internal work is right now more stable in relation to costs, but with a lot of care and a lot of resilience so we can have the right amount of money in the right time and with the right speed. And for the last thing I can complement, the issue of pre-operational CapEx is also very important. We have a very well-defined process, the way we implement CapEx, the pre-operational CapEx and that's how we manage and balance out each levels. If some stores will be more costly or less costly depending on the region, but it has been very well managed by us. So we can guide the team so we can have the quality that we need and without losing control of what we have in terms of plans for the new stores that are opening in the new cities. So that is the context that we have been living through in these new stores.

The next question is from [ Daniela Dag ], XP.

I have a comment on what Tulio was talking about now in relation to the store returns. Maybe you could share with us since we see the top line is very pressured because of the conjuncture, be it because of the recovery of gross margin recovery or the macro position, I think it dilutes the position of how the stores are performing. So maybe you can give us a high level ROIC, maybe the legacy numbers and then maybe the first and second years of for maturity. Just want to have an idea of the path of profitability of the ROIC of the stores. So maybe that could help us in understanding your strategy. And my second question is in relation to CapEx. We saw there was a stronger opening in purchasing land and real estate. So maybe the expansion is for [indiscernible]. So maybe just to see what your ideas are with this mix of real estate purchases in the future.

Daniela, thank you so much for the questions. In relation to the ROIC and the returns from the store, I think that's an important question. Last year, we were inaugurating stores with a minimum rate of return of 28%. And then we dropped it to the minimum of 25%. What we have seen more and more is that we have more trust in the curve of maturity of 25. In the beginning, the stores were very young, and we had to work with a high level of uncertainty. When we look at the data of the gross margin of the stores that are existing for more than 13 months, we have more certainty on the sensibility of the ROIC. So in the beginning of the quarters, it evolves with a higher ROIC, and then the adherence in terms of those levels are at the level of 25%. The more stores are open and the more they complete 3 years, we will have more certainty. From the first year, we have more uncertainty. But after the second year, we can have a better idea of profitability. When the second to the third year becomes very adherent, then we have a more certain knowledge on the profitability. So now that we have more stores that reach the maturity of 2, 3 years, we are more certain about the level of maturity. However, the stores that are in Maranhão and Pará are higher than 30% in general, that has to do with the strategy that Wilson mentioned and the expansion of retail, which is a lighter model. It's a model that brings us a strong level of ROIC, especially in Maranhão, Pará, and Piauí. But when we look at the cash and carries that we have now, they bring us a higher level of confidence. I think you know this a lot, but just to reinforce, Jesuino told us about the improvements that we made with suppliers. And right now, we're very focused on the stocks issue. If we are successful in this strategy in terms of cash by the end of the year, we will know how strong that will be for all of the stores of the company when they are consolidated as a whole. So I think the agenda is transversal to all of this. So when we talk about 25%, we do not consider the improvement in the working capital. So I think that's a factor that's very important, just like you are demanding this from us, we demand this from ourselves because we know how important that is in generating value, especially in those lines. Do you want to comment?

Yes, I would like to comment, Tulio. That's an excellent question from Daniela. And we know that when we entered in the new states that we wanted to go to the larger cities, the capitals, where we wanted more visibility, where we wanted to show our brands and showcase our brand. Once that was done, now we are not only dealing with the legacy, but in the new states, we are more surgical. We are being more detailed. Now we are capturing better neighborhoods, not only with cash and carry, but also with the retail stores, as everyone knows, that gives us better margins. And we are able to capture much more revenue, and we can choose more calmly the stores that independent of the size, the numbers will be much better. We look at legacy states where we already have a logistical structure, we are not really worried, for we are not worried about supplying for a store of 500 square meters or 1,500 square meters because we already have all of the back office for them. So this is the real strategy of the business. And answering the other question that Daniela had in relation to BTS, in fact, Daniel, we tightened things up a lot. And now going back to our strategy on legacy, we have a lot of opportunity to buy smaller properties and many properties, and we made a plan, but the idea is that, that will go all into BTS because we have an expansion plan that is very consistent from now into the future, and we need these BTS partners.

The next question is from Vinicius from UBS.

I would like to ask about the performance of the mature stores. If you could comment on what you have seen in terms of gross margin and same-store sales, especially in Pará and Maranhão, for us to observe the maturity of the stores that have effects on the final results? And the second question is a follow-up on the issue of the caution carry margins and the wholesale margins. You've had important evolutions. Maybe I would just like to see what you see, if you think that's the level that's satisfactory, or if you think that there's more space to grow in terms of store maturity?

Well, Vinicius, thank you for your questions. I'm going to start from going backwards for us. First of all, talking about the margin of cash and carry and wholesale, in general, Vinicius, what we've tried to do is always to deliver an EBITDA margin with the max quality possible. Another important point, what we are doing in this quarter is exactly that we are trying to find a balance in a way that the margin comes with the most quality possible. Now with the margins of wholesale and Cash & Carry, maybe I would tell you to wait a little bit because we will continue working in the same lines in both lines. In wholesale, we already started a little, and we were gaining a lot of efficiency in this area, and the new regions are gaining a lot of efficiency in this sense as well. So I would say that we are going to try to find balance, always monitoring the perspectives that we are based on, but there is a limit for that. There's an important point here. We are very happy with the balance that we have found, let's say, an optimum point, it's a bit of that. So in relation to the legacy stores, your question is important because Vinicius, what are you asking an expansion the stores from year 1, even the stores are retracting a bit because we have a lot of sales, as we commented on. And now we are opting for a line of profitability. So once again, that's a strategic action. When we look at the legacy auctions, that changes a lot. We have legacy stores, as I commented previously, that are growing at 9%. So those are realities that are very different when you look at states that are legacy states, and the same-store sales change a lot and also because of the strategic actions that we have. So I hope I answered your question as well, Vinicius.

Jesuino, I just want to add because this subject is always questioned by us internally. And since we are a multichannel company, it's a very interesting question. As we advance Vinicius, all of our channels at some point or the other, retail helps wholesale, and other moments, wholesale helps retail because we are in a very strong dynamic. We've done excellent work with some suppliers to distribute using our structure of stores that we have that are very strong, especially with the legacy stores. And that distribution improves our pricing for the existing stores. So when we show that the suppliers that we are a solution, all the time, we are trying to show these suppliers that we are distributors and wholesalers. And Jesuino is a very important point, the suppliers can't penalize us because we have stores, so they can't give us a different price chart. So it's important to raise awareness with the suppliers that we are no longer just a channel, that we are also distributors. And there's a gap that we will walk slowly with to improve this situation.

The next question comes from Joseph Giordano, JPMorgan.

I would like to talk about same-store sales because you talk a lot about pricing. You talk about optimization of profitability. At some moment of your speech, you mentioned that some legacy operations you have same-store sales going into the different levels. So I would like to ask you about this change in profitability in the new areas. The new states that have expanded a lot, I would like to understand it a little bit first. What is the internal inflation that you see in the company? And secondly, how have you seen the traffic in the different regions to understand better the greater focus on profitability?

I'm also going to start with your last question. In relation to traffic, we feel very certain about it, and we gain a lot of faith in the way it has been going in terms of expansion. We are not ever going to leave that behind, and we're always trying to balance everything. So we're very certain in terms of traffic. It's within what we propose to do and delivered. I think that's one point. It's not a point of concern. In relation to internal inflation, it's smaller, it's lower even if we compare it to the general inflation in food, especially in the Northeast, the food inflation is lower than the rest of results. I think I hope I answered your question. I'm not sure if I was too direct.

The next question comes from Joao Pedro Citi.

I'll try to be as quick as possible. Just a few points to clarify. First of all, I would like to thank you for the explanation of the ROIC. It was very interesting. Just to make it very clear and to understand the CapEx, what is the number of CapEx and investments per unit in terms of BTS? Maybe you could quantify about the number of capital invested. And then the second question is about the working capital. What is the objective? Looking at the operation, obviously, with the new discussions, what is the expectation that you have this year? Maybe if you could share more about that, it would be very interesting. And there are other points I would like to share, first of all, in relation to depreciation, has there been any loss of the dynamic of profitability, because we saw that some of it has dropped. Would you like to answer first in relation to shelf life?

Well, first of all, in terms of investment per unit, as you already know, we are following a line of advancing with all of the store models that we have. So we are going to open retail stores and cash and carry stores at the same time. When I talk about retail stores, those stores can vary from 1,500 to 3,000 square meters of sales. I'm not sure if I understood your question very well, but it tends to be a smaller value in the average of the different units. Just to clarify, in relation to the cash and carry, mix Mateus. Today, Mix Mateus has land and construction and equipment. It would probably be BRL 70 million besides stock. And then João, just to make it clear, the ROIC strategy, of course, it's a case-by-case strategy that value in terms of the land and the construction can also involve rental costs. So if we have smaller stores, sometimes we adjust it with the CapEx as a whole, and that doesn't include rental. So it's a case-by-case strategy. There are some specific cases where we rent out land, but now we are buying more land, just to make it more clear to João. All of that is within line when we put it into the model. And just if you could repeat your question about working capital, please, João?

Could you quantify your expectation of improvement for this year?

Well, João, what we have is I mean, of course, as we said, we focused a lot on the suppliers. Now we just shared with you that we are going to be very focused on the stock issue. We have internal goal for varied compensation, not only for us as the leaders, but also for the commercial teams and the executive seniors as a whole. So we have every year one level up in the cycle of cash as a whole, and we share those responsibilities case by case. So you could be sure that there is an important level for this year in the cash cycle as a whole. So in this first quarter on this indicator, everyone is losing. So that's the homework that we have to do until the end of the year to reach our goal because if we just to reinforce that term based on the discussion that we had with Jesuino wants to change some of those pillars and bring in a bigger piece of that bonus to the working capital and to the stock. We think that, that will obviously help us a lot because we are very concerned about disruption. So that will bring us more balance. That was an idea and a suggestion that Jesuino had that was very innovative in our last meetings.

Another thing to say, Joao, the first thing is that we are very conscious of the focus that we need to give more to this subject. Now we come from higher levels, much higher levels than our cash cycle is today. But we were able to get this evolution. And as you can see in this first quarter, we take a second important step João, in the gains of suppliers. That's an important and structural point. We would like these suppliers to be recurrent and to continue working with us in these markets. We already have 2 very important evolutions in this sense. Obviously, when we talk about stock, it's what Tulio said, we are very conscious that we have to work with that market and take the next step. Maybe it will be hard to give you the exact number, give you a certain number. But on one side, we're very conscious that we need to intensify the line of retail. João, going on to your third question about the issue of the depreciation of the shelf life. Of course, there is an accelerated depreciation because of what happened different than last year, which the depreciation was lower in relation to cash. The cash depreciation was a construction over the quarter. The first quarter cash was more pressure because of the expenses that we had of acquisition of land, as Wilson commented and then we started rebuilding the cash position over the next quarter. So that's probably why.

The next question is from [indiscernible] from Safra.

I would like to ask one more question about working capital for the next quarter with the acceleration of sales that we have seen. Should we see a worsening in the quarter in the average term for suppliers? And the other question that I have is in relation to the competitive dynamic in Bahia. It's a state that you are entering now more recently with more stores, and there is a player there that's very well established for a longer time, a regional player. I would like to know what the competitive dynamic is in that state specifically.

Thank you for the question, [Tal]. In terms of suppliers, we have the report of 10 days plus, and we are taking an important step, maybe 10 days are not exact, just like you said. Because the increase in stock contributes to this, but it will probably begin in the third quarter and maybe it won't be the fully correct numbers, but we will continue with significant gains in the players that's recurrent. It may have a few variations lower to higher, but nothing expressive in that sense. In relation to Bahia, maybe Sandro can talk about that.

Well, we have a competitive dynamic in all of the states of the Northeast that are pretty similar to each other because when we come in, there's always a regional player that's very well established already. And talking about Bahia specifically, that regional competitor is more concentrated in the metropolitan area and not so much in the countryside, and we decided to come into Bahia a lot in the countryside. So we started having some competition with him in some cities, but the team has been competing with them for 2 years ever since we were in the same city as that specific competitor, but it's very similar to what we've seen in other states. And we have continued to gain relevance as we open stores, improving performance for us to become more and more stabilized in our results. So there, it's similar to what we have been seeing in the other states as well, which is the need to mature even with that competitor there that's a bit older.

I think that in this subject, Sandro, it's also very important to mention which logically we have that concern with Bahia. But I think that whenever we consolidate in the 3 states, Pará, Pernambuco and Alagoas will have some relevance there. And I think we create more muscle to be able to fight in the states that have more competition. That's why I think we do not need to run away and precipitate any pressures that may come because we are very certain. We have a lot of certainty, and we're very calm about all of this expansion.

The session of questions and answers has closed. Now I'd like to pass the floor to the final considerations of the company.

Well, my final considerations is that I would always like to thank God, who has allowed us to be here this morning, delivering these results. I would like to, in the name of Jesuino Martin, thank Sandro and Tulio and all of the other 60,000 employees that we have today that are working in the stores, in the field, in the CDs, giving the best they have, in the DCs giving the best they have. So we can be talking about these results. It's also important to remember that our suppliers that are great friends and partners that we depend upon. We have a lot of respect for them. And I would also like to thank our investors once again, as I always say, and ask all of you to continue trusting our work because we are really here dedicated and focused. As Jesuino always said, that's all we know how to do. We breathe in and out retail. And I would like to thank our consumers who also trust our brands to consume our products. I would like to thank everyone who is listening to us, a hug to everyone, and have a blessed day.

Our video conference for earning results of the first quarter of 2025 is closed. The Department of Investor Relations is available to answer any further questions and issues. Thank you so much to the participants, and have an excellent day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]