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

Good morning, everyone, and thank you for waiting. Welcome to the earnings call for the second quarter of 2026 at Grupo Mateus. [Operator Instructions] We'd like to let you know that this earnings call is being recorded and will be provided on the company's IR website, where we also have the full earnings call material. It's possible to download the presentation as well on the chat icon in English. [Operator Instructions] The information contained in this presentation and in possible future statements that could be made during the earnings call, considering business perspectives, forecasts and operational and financial targets at Grupo Mateus represent the assumptions and beliefs of the company's management as well as information that's currently available. Future statements are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and thus depend on circumstances that may or not occur. Investors must comprehend that economic general conditions in the market and other operational factors may affect the Grupo Mateus performance and lead to results that differ materially from those future statements. Today, we have the presence of the company's executives, Mr. Ilson Mateus, the Founder and Chair of the Board, Jesuino Borges the CEO; Tulio Queiroz, our VP and Investor Relations Director. And Sandro Oliveira, the VP and Operations, Logistics and commercial rep. Now we're going to pass the floor to Mr. Ilson Mateus.

Good morning, everyone. Welcome to another earnings call. First of all, I want to once again start off by thanking God for allowing us to be here today this morning. I also would like to thank my dear friend, [indiscernible] Sandra Libera and [indiscernible] Tulio Queiroz as well as all of our directors and the almost 70,000 employees, suppliers and investors. It's a pleasure to be with you this morning. Now we'll move on to Slide 2 and start off with our earnings call. And I wanted to start off by saying that we are celebrating our 40th anniversary. When ever since the beginning, we always look to the future. We invested in logistics that would be strong and efficient and when we observe these trends, we set up our first cash and carry back in 2007, we saw this was an important trend and this business would be prosperous. And then as I've already mentioned in previous sessions, we saw this business model was really fitting in with the reality we had in retail and our wholesale distribution operation. So it was 40 years of a major struggles, lessons learned and especially in the last 6 years when we opened up our -- when we went public, right? So after the IPO, we had -- we entered 6 new states and 5 new business channels. But we always observe that we always wanted to make sure they would fit into our pillars that are the main floor logistics and also observing the potential that these business channels have and states, right? And they would fit in and if they would fit into our main business, right, which is logistics. So this is an important margin of about 200% and about 30,000 jobs generated. And so for us, this was a big challenge. And so it's been a long journey of maturing and however, we're structuring our teams, and we're really focused on improving processes and specialty governance. So we've been making major efforts for this. And we brought these different topics that are extremely important and we really learned a lot in this process, right, what should be done and what should not be done, and that's how we can learn, right? And so we're not only thinking about today, but really putting into practice everything we have learned these last few years and looking forward to the next 40 years. And that's where we are headed. With all of these lessons learned, we know where we are headed. And when I think about the future and the sustainable expansion, I think about logistics. And we're working hard to evolve even more in this important pillar, which is our backbone here in the business. So this was really important in the past and it's important in the present and it will be even more important as well in the future. And so all of these different initiatives we're looking forward, right? We need to consider what's happening with these new opportunities. And these are always connected to logistics. To celebrate the 40 years that we're achieving. This month, we have a major initiative here so these are special deals for our customers like promotes and Novo. And so we're going to show you this new slide. And so Julie will talk about this up ahead. But we'll start improving this partnership and with what we most expected, right? Synergies start happening. We also had this important movement to improve processes -- we also have the Nova team doing great work. Congratulations to their CEO, Victor Daniel, and so we had meetings in Sao Paulo that were really important talking to suppliers, speaking about our business, bring volume to always improve our business. And so moving to Slide 4. We're going to -- now we're going to talk about expansion. We had 7 stores that we opened. And an important highlight was this new store format. We opened up our first drugstore in June, and the store has been a real success. I've really received a lot of compliments and so I want to thank the team for doing excellent work. We've been also working and we're working for the new stores as well. And so we're already the drug so was the highest revenue per unit, right? So no other channel has this achievement, right? And so I think this is going to be really important now and in the future. So we also opened up a great store. And so we're being a lot more selective looking into what's going to happen in each region and really making sure it would be a store that could really make a difference. So 2 stores in Sao Luis, one in Imperatriz and 2 from Novotacarejo. And so here, you can see our current scenario, 234 stores and now with our new channel, our drugstore channel, which you're already seeing there as well. And I want to say that now, we'll also be investing in a very prudent manner in this channel, and we want to advance with it as well. Moving on to Slide 6. And to wrap up, we're going to finish -- we opened a store in Para and meta. This was a big surprise, and we were in a region with strong commerce but with major logistical challenges, right, that we've already learned about throughout these years, how to handle these difficulties, right? [indiscernible] and this has been a big challenge, right? So we've really learned a lot. And today, we work with all of the Cometa region and other regions that are also serviced with our external sales operations. Para has a lot of islands. So if you go to [indiscernible] these regions where the logistics are very challenging to reach these islands. But we've been working a lot with our distribution wholesale operations there. And these are challenges in each of these challenges also with each of these challenges, you bring an important learning curve, right? So after everything we've experienced in the last 6 years, we are a lot more mature when we choose new stores, and we also understand the details and barriers as well as the profitability of each business channel in each state. So just in retrospect, in the last 6 years, we enter different states and each state already has their specificities. But within the state, if you look at this per region, there are regions that differ a lot from one to another, right? And so we see how this fits in. We have these different brands, and we know where we have the biggest opportunities for each of these and each business channel and of course, always one business fitting in with this backbone, which is logistics. So we plan to reap the fruits of this, right, from now on. So that's how we have 6 construction projects underway. Now we're really focused on the opportunities and looking at the CapEx and tiers for each of these new stores because, we need to look forward with interest is high and this return rate needs to be closely looked at and so we've been looking at each piece of land, deep research. And with this, we've been able to be a lot more comfortable as well. to conduct our business, right? So now we want to pass it on to my friend, Jason Martin.

Okay. Thank you Mr. Ilson, and Sandro and everyone watching us. Now I'm going to quickly share with you guys some indicators of this second quarter of 2026. We can see our gross profit, and we reached BRL 11.2 billion. This is an important increment compared to the first quarter of '26 million, at least BRL 500 million more in sales that helped a lot. And a little below, you can see this increment of BRL 1.3 billion you compared with the same period last year and a growth of the bottom part of the first block, we also see our gross profit. Our gross revenue, sorry, BRL 21.9 billion and an increment of over BRL 2 billion in this semester. And so it's a quarter that is very challenging, and we see important evolution. We're going to share some of this during the call. On the second block, we can also see our same-store performance. On the upper part, we can see the performance in the quarter, and then we're at a level of about minus 8%, same stores. And at the bottom part, we can see the performance of the same stores in the semester of minus 7.7% growth. So here, we can also share some relevant points about the Brazil Northeast region. And we can also notice GMAT, The Mateus brand, having important evolution in the same store. [indiscernible] was also at different moments increasing this same-store deficiency. And with this, we can also reach this level of 8% negative. So it's important to highlight that in this quarter, we also see an important behavior in Brazil all over Brazil, if we look at Cash & Carry exclusively, we can notice that the whole country is dropping when it comes to same-store sales, Brazil, the Northeast, of course, in the Northeast, it's a little more accurate than the average in Brazil is 2 percentage points higher than Brazil. And of course, GMA is amidst all of this, but if we look at [indiscernible] Rio de Janeiro, Sao Paulo, interior the Midwest. All of them have a drop in same stores in this period with the exception of the Rio metropolitan region with an imported growth of 3.7%. So we noticed a national behavior when it comes to this growth of same store. But we also see an important slowdown. We also have a slowdown that in volume -- in Brazil, in the same period, there was a growth of about 3 percentage points in volume. In this quarter, the volumes sold also drops. And in the Northeast, they were also growing 2.4% now that's dropping volume as well. And so if we look at this as a significant slowdown also from a revenue perspective last year, compared to what Nielsen was auditing, which is modern retail as well. And this channel was growing 11% in Brazil. And so when we look at the same period, this year, it only grows about 1%. So if you look at the Northeast total revenue was about 10% more. In this quarter, it's going to be 0.9%. So we can see the slowdown that's very significant in the same-store growth and also in the volumes sold and in the total revenue in Brazil and in the Northeast, once again, in the Northeast in some of these indexes, it's a little more acute. If you look at the baskets audited by Nielsen in the Northeast in this quarter, at least 50% of the baskets had a drop in volume. This is a different scenario than what we've seen throughout these years. So all of this is happening because we are in this environment that we are all aware of the time interest rates, debt interest and inflation I don't think I need to talk about the narrow too much because everyone is aware of what's going on and the levels of interest and -- in the past, it was about 70%. The last reading almost 2% of debt. So it's a scenario and an environment that is really challenging. We also noticed that in line with this, you have a more intense impact on this drop when you look at consumers with lower income, right? They feel this a lot more. And besides this lower-income customer feeling this a little bit more. We also noticed that the channels that rely on these lower-income consumers also feel these drops a lot more. that we're mentioning. And an example of this is like for grocery, which is an important channel in the Northeast in Brazil, they're dropping more than 6 percentage points in this quarter. We know about the importance, grocery stores also represent for us in GMT. We service about 50,000 POSs every month. And this channel is also inserted in this context as one of the channels that most feel is in the Northeast, of course, we rely more on this audience. And of course, we will feel this the rest of the countries, right? But besides this, we also noticed an important slowdown or deflation in food especially commodities, and I wanted to share a different scenario, right, because you have categories that are -- where we see these rates dropping, where you have a drop in value, volume, price, and these 3 main indexes drop, right? If you look at coffee, it's included milk powders, well, rice, where there's a drop, a significant drop powdered soap sugar, flower. These are all categories that are very relevant. And when you see them, you have a drop in the value sold, volumes sold and price -- there's some other categories that are growing, but of course, they are less relevant, such as power drinks that are growing a lot, liquid soap, et cetera, but they don't offset this drop. Well, as besides all of this, we know about the strategic movement that we've had throughout the year -- the last few months. We know about the significance of the sale, the weight of telesales. And we've also had a planned and strategic movement that we consider to be intelligent as well because this is a sale where with all of the scenarios had related to strong value for the company because more and more we had to force prices downwards, volumes were not coming, and that ended up generating competition among ourselves, right? And it wasn't healthy anymore. So we adopted the strategy in this scenario. Upholding this channel of it. And so of course, when we held this, then the share was affected by this and at least 85% of this drop in sales comes from this counter channel that we held, right? So despite this macro scenario we're experiencing, this has a very significant impact in our performance of the same stores. Now we also have an important share in the Northeast in Brazil. We know that in the mid and long term, this is going to be extremely positive for us. We already see signs of improvement in the sense in this quarter now, and we're going to continue to find this optimal point between sales and margins. So this is a little bit of the scenario. I just wanted to share this with you and also tell you a little bit of what we've seen on our side, right? So when we look at the third quarter, just to give you a bit of a perspective, it's still challenging, right. Of course, there's an important improvement in the sense. It's still quite early, but we're in the middle of the third quarter, and it's also worth to share with you that we've already noticed this important improvement. The third quarter last year had a same-store growth that was smaller than the last quarters. And of course, that helps in the third quarter, and that could improve a lot more, right? So the counter volumes, and so this strategy can be more balanced. As I mentioned, in the third quarter, we also have our anniversary with significant seasonality. We're really excited about this. Mr. Ilson also shared a bit of the strategy. And we continue Tulio, Mr. Sandro to adjust the company to this new reality that we're experiencing Well, in the third column, we wanted to share our gross margin. We know our focus is in the EBITDA margin, but we wanted to highlight the resilience behind the gross margin. Due to all of the dedication from our commercial team, the trading team, especially a significant evolution from our 2 brands, right? GMA and Mateus as well as Novo Mateus. And so if we look at our gross margin in the third quarter and the first quarter, we already see significant evolution. Novo Mateus has a lot more evolution, of course, from the first to the second quarter. So both brands contribute a lot, and we reached this level of 23.5 million percent of gross margin and a significant evolution to [indiscernible] in regards to the first quarter of 2026 at least 0.6 percentage points more, and we're really happy with this. In the bottom part, we also see the evolution of the gross margin in the semester, 23.2% compared to the same period last year, and we dropped in our same stores. But even so, we are able to keep the significant resilience in the gross margin. And so in the third block at the bottom part, a little bit lower. You can see -- I wanted to share how happy I am also about our operational expenses. We have been sharing our main focus every Friday, we have meetings to talk about this at least 4 our meetings on Fridays with all of our leadership team. And it's great to see that we have achieved one percentage point less in the first quarter. And these 2 indicators, no doubt improving margins and everything else we discussed and the performance also of operational expenses and everything really contributes to this EBITDA that we're sharing with you. And you can see on the fourth column from the left to the right. And so we delivered an EBITDA margin of 6.9%. And I also want to highlight important evolution of like 1.2, 1.1 percentage points in vers the first quarter this year, and we're really happy about this. And at the bottom part, we have our EBITDA margin of 6.4%. Then we delivered EBITDA margin, and this is our main focus again. We're always trying to balance it, right, sales and gross margins and trying to deliver an EBITDA margin that really has the highest quality possible. We deliver EBITDA margin. We delivered gross profit as well as a more Brazilian more significant even in this scenario with the drop in same-store sales. And we know how challenging this is. So all of the variables that are in our control we've been trying to work on here, keeping strong expense control discipline, disciplined with our gross margin, CapEx and everything that we can control. But of course, the macro scenarios, I mean, we can't control. However, once again, we believe that we'll start to see signs of an improvement in this scenario now in the third quarter. Finally, in the last block, from left to right, we can see our net income and that's where we delivered BRL 237 million of net income. And I want to highlight the important evolution we've had in where the net income we delivered in the first quarter this year. at least 11% more. And in the bottom part, you can see our net income of BRL 449 million, about BRL 450 million in this semester. So we continue to keep moving in this direction. Our focus is really to improve more and more of our sales and keep discipline in these indicators that we shared. Well, I think that's it. And now we'll move on to Tulio, as he shares a bit more of the financial data, and then we'll head to the Q&A. Thank you all so much for now.

Thanks, Jesuino. Good morning, everyone. Mr. Sean Sandro. Now we're heading to Slide #11. In and we can see the numbers related to our top line and sales in the company. I'm not going to extend this too much here. I think Justin Bradar complete analysis on the sales performance, but we just observed that in the semester, we had BRL 19 billion. So there's a growth of 12.5% and also the pressure start to store, which brings a challenge when it comes to operational deleveraging, right? And so it's not simple to handle intensity start to store with this kind of magnitude, which is why it's so important to have consistency in the gross margin, working with productivity and so on. Moving on to Slide 12, we can see the numbers that are a little more detailed, and we talk about the performance of our gross margin. So here, it's important to highlight that you can see the resilience of our gross margin in the sequence. This quarter also had significant recovery in the gross margin with Novo. We left the 17.9% in the first quarter to 20.2%. And you can see this in the light blue line. But if we were to observe the sequence with Novo and [indiscernible] in regards to the fourth quarter, we can also see that the intensity in this evolution is quite similar, right? So when GMATs on the lack line, and it goes to 24.5% and Novo goes from 19.3% and goes to 20.2%, both evolve 0.9%. And both have a strategy, of course, with different intensities but this fashion alas we shared about rationalizing the [indiscernible] operation, right? Counter sales, right? And so Novo brings us more recent upgrade in this information and approach, right? So here, you can see this access for the gross margin. It's going to be a seasonality factor quarter-over-quarter, but this is really important and very much consolidated. When you look at this at the quarter, gross profit reached BRL 4.46 billion and that's a growth of 13.1% and we end the quarter with a gross margin of 23.2%. And so we can see the operational expenses as well on 13 -- on Slide #13, and this is a point that the company has been working on in the last quarters. And this quarter, I think, really brings more visibility on this topic. So the company can cap to one percentage point on net revenue. And of course, we know that when we look at the peer numbers of expenses upon our net revenue and this component of this evolution in the same stores. And so we wanted to really resume our sales pace with the quality of the EBITDA and the gross margin. So I think that through productivity gains, this is actually something that we designed and now we're just working on maintaining and we really need to focus on these 2 top line elements, right? If we recover sales with healthy gross margins, naturally, this value will fit in and the effects will have significant intensity. So this is the guidance. When you consider the accumulated results in the semester, we have a growth of 23%. And so it goes to 1,618 with 7 new stores at the base. So even in this scenario, we evolve with the amount of expenses that are lower in the sequence. So that makes us really excited for the second semester. As we know, we're on this ramp-up of a gradual recovery in intensity of sales, right? So now Slide #14, we can see the numbers related to EBITDA and Here, you can see that the EBITDA in the second quarter added up to BRL 682 million here. I also have a disclaimer, right, showing you what the number would be like excluding the nonrecurring effect, and we had a revision and we rectified this and that led to payable taxes. So this is a nonrecurring effect, if we excluded this effect, you about BRL 617 million EBITDA in the quarter and a margin of 1.3%. But I think it's really important to observe the sequence quarter-over-quarter. And understanding what's behind all of this. So when we look at this, we had this evolution of 1.1 point in the sequence of EBITDA margins, and that really makes us confident about the next semester, as I mentioned. And so it's not simple to manage this pressure to restore and still expand the EBITDA margin. But when you look ahead, the sales environment is going to improve. And so we know about the potential that we have to bring this EBITDA margin. Now GMA evolves evolved more. We had a quarter that was armor pressure. The improvement in the gross margin was really impacted. And the consequence of this is an important improvement, right? When you look at post IFRS and 81.1% pre-IFRS intensity is exactly the same. And so we can really fit this in well looking at this operational reality from now on, right? So moving on to Slide #15. We have the numbers related to the -- we have the same rationale. And if we were to exclude these, it would be BRL 0.60. But once again, all of the EBITDA work is contributing as well. From now on, of course, in this quarter, we've already had an effective rate in this sense. And in the first quarter, it was like a one-off effect. But now, we get into a more natural path with income tax, right, in this sense. But even so, the level of net income performed at a sequential level. We went from the BRL 213 million in the first quarter, and we reached BRL 237 million and 60 depending on the criteria used. So in the accumulated numbers for the year, the company adds up to BRL 450 million. And now as Jesuino mentioned, the main guidance is on the company's EBITDA and we know that if we can address this EBITDA margin, we'll be able to reflect this into the other indicators that the company has, right, either in regards to our earnings, but also our cash, as we'll discuss in the next slide. So on Slide 16, we start talking about our cash cycle and the company ended the quarter with 42 days cash cycle, which -- and here, you have an important point. We left 57 days and you move 42 days and that reflects the work we've been doing on this topic in the last few years. And this quarter, we'll see in the stock days and increases from 60 to 67. So there's a real seasonal factor related to the group's anniversary this year -- last year, if we were to see in the next slide. Net debt is -- the intensity is really similar. There is a seasonal component, and we're really confident that these numbers will get back to the levels we need them to be at, right? And just as we see the curve last year, you can see it went from 57% and 41% 47. And now -- we're already operating at a quality level, it's a lot better, but this component is really the component we are working on to acquire in the next quarters. On the next slide, you can see that this cash effect is a little more clear when you see all of the net debt mechanisms and here increased BRL 357 million from 1 quarter to another. And this happened in the same way last year, right, BRL 474 million, right? So this cash pressure due to the seasonality, which is something I just mentioned. And I remember that in the second quarter last year, at the earnings call, we explained this pressure at that moment. We had migrated from a pressure that happened in the third -- from the third to the second quarter. And we explained that this would happen in the second quarter, right, from now on. So that's what happened in GMAT. Novo had a real anticipation of receivables, about BRL 360 million. And that was the same case there. Mr. Ilson also explained in the beginning of the earnings call that we're experiencing the same moment. And we can see that in the first quarter, we had the operation and corporation of the company's emerging brands and quality of the stocks. And so we saw a breakage level, it was no that was really high. So we had a recomposition of the stock quality but for both brands, we expect that the seasonality will contribute positively in the third and fourth quarters. And I think this is something we need to keep an eye on closely. It's a topic that is included in all of the company's executives incentives, and this is a topic that we'll be closely watching throughout the second semester. On the next slide, #18, here, you have a really important topic. Ilson mentioned this in his opening speech, and we can observe the total CapEx in the quarter with a reduction of 36%. We were to consider the purchase and sale of assets. This is going to be even greater, 45%. But the fact is the company is really focused, as Mr. Ilson mentioned, on ensuring the quality of our capital allocation, being very diligent in how we choose new stores we're very strict in our criteria and more, we can expect behaviors in the sense naturally as we've seen in the second quarter because we can't play around when we have high interest scenarios, right? We must be very careful in capital allocating. And Mr. Ilson also mentioned that we have a big focus on logistics next year. So here, we're going to continue to be very diligent with this. And of course, this is going to help our free cash flow, no doubt. The company has been working on strong expansion levels and CapEx is always a very relevant number. And now we're going to be definitely having a positive effect in our cash flow, right? And so these are our initial comments and now we're going to start heading on to the Q&A with our full team available to answer.

[Operator Instructions] We're going to head to our first question from Rodrigo Gastim an analyst at Itau BBA.

I have 2 questions here. The first one is about the sales dynamic now throughout the beginning of the third quarter, as you mentioned in the presentation. I wanted to understand a little more detail of where you see this improvement. We've seen Nielsen's data [indiscernible] And as you've seen -- mentioned during the presentation. And so it's an important dynamic. And if you could share a little more about this perception, that will be really good. And then the second point is, if you could double-click on working capital. especially stock, as you mentioned during the presentation and maybe a little more detail, if there was something specifically related to novel, a bit of your perspectives on improving your dropping stock and how much of this really depends on an upside in your base case sales. And so if you could talk about the details here of the stock.

Well, thank you, Gastim for the questions. And I'm going to start off answering the first one. We know that 85% and these points on sales have been due to the strategic decisions we've taken on, right? So here, Gastim, you can see this recovery slowly but surely on the volumes. And we know about how important this channel is us, and we're trying to balance it out. Slowly but surely, but we believe that in the mid- to long term, this will be adjusted, right? What we're experiencing now is already the beginning of this process. And here, this is one of the main factors that will contribute to this evolution that we've been seeing. So as I've mentioned also in the third quarter last year, the growth of same stores was already a little more modest and that contributes, of course, but we had -- we have an important anniversary month, we had a very strategic dynamic as well, and we expect to have a special anniversary. And so -- we're involving the telesales team as well. And so the macro scenario hasn't changed, right? It's the same, and we're trying to do what is in our hands right now. Of course, trying to keep up a balance between margins and sales. So that's kind of a bit of a fact, right? In regards to stock, Tulio, do you want to answer this one?

Yes. So thank you, Gastim, for the question. On the working capital topic, especially stock pressure, I think there's 2 important components, right? The first one is the seasonal factor, as I mentioned in the presentation. So I think last year, when we observed the second quarter, we consumed BRL 474 million in cash. And this year, we're consuming BRL 357 we have a slight improvement of over BRL 100 million in the sequence year-over-year. But of course, the seasonality exists, especially because of this topic. And so we want to bring the supplier days to the stock days. And so the more we can bring these elements close, we'll be able to experience the seasonality dates with less impact and less cash consumption, right? So we've really been focusing on the basis and the foundation in this negotiation with suppliers and conversations and really in this approach, right, to bring the numbers closer until we reach the moment we would like to reach where the numbers of suppliers can really match the stock days, right? Because then you have the seasonality moments that are going to be a lot more stable when it comes to cash consumption. So all of our efforts are in this direction. Meanwhile, these seasonal effects were experiencing this topic, right? Just as we had last year, we're very convinced about this. Working capital will get back gradually. Cash will come back gradually throughout the quarters. But our understanding is that the curve will be very similar to the curve [indiscernible] back to normality scenario. And we closed the year demonstrating the evolution year-over-year and the days of this cash conversion cycle, right? So every year, we take on an important step to improve this cash conversion cycle. With Novo, an important point here, we have significant consumption there, considering the levels of stock. And then we have 2 components. One seasonal component with the anniversary and another specific component with merging the businesses, right? So as you saw, we had the results of the first quarter, a lot more dedicated with adjustments there. Operationally, emerging brands, discussing stock mix, so there were a series of operational elements to be able to put this in order. And our stock had a level of rupture that was really high. So investments in stock in the second quarter was stronger. We had a series of conversations with the Nova team and they were also very much convinced that this would be a curve at very similar to GMAT, right? So considering the anniversary in all of this and in the fourth quarter, it would remain, right? But Novo also has historically had numbers that are very good. and we're sure that the execution will take place in this direction, right? So on working capital, the pressure is pretty much this, right? We eliminate the seasonality effects. And we want to improve cash conversion cycle numbers. Last year was a super important year, right? Significant evolution. And this year, it shouldn't be very different, right? And so we're going to -- we closed with about 43 days and now our most challenging cycles for 2 days. And so I think the most difficult peak is going to be at the end of next year -- sorry, last year, and this is a number that we're really focused on with this topic. As I mentioned also, everyone sees this direct impact and you have these variable compensation indicators as well. So we're really confident about this topic from now on, right? And reinforcing a bit of what you're mentioning with the plan we had for the anniversary, we gathered all of our commercial team, and we structured everything. So because we have this strong hit of sales and if we didn't buy an upreach category, we would have another issue, which is losing sales, right? So we are trying to find this balance point, right? But of course, the team is quite mature, and we're very conscious of everything. And so we're really working on scheduling everything that's needed. And if we keep up working on this, I believe we continue to be able to handle this stock excessiveness. And that's still a point we must be careful, right, in regards to burning cash and losing sales, they?

Our next question is from João Soares at Citi.

I have 1 question here. First of all, congratulations on the work adjusting expenses and improving gross margins. I wanted to hear about this dynamic with the mergers of with the JV for the Novo brand, you even talk about opportunities for synergies, adding on efficiencies and all of this. So when we think about incremental gains, we've already seen some adjustments in the headcount and payroll, et cetera. And so I think these synergies will also bring in additional wins, right? So could you talk about a level of these opportunities? And maybe even like an ambition of the EBITDA margins. When these audience normalize, it's the structure you have, what kind of levels would we expect for the business? Together with Novo as well, of course.

This is a very important question, and thank you for that because it's a very strategic movement we had there in those 3 states. And here, we've already gone past the most acute phase. Now we're a company that has emerged all areas. And now what we've noticed is a very important evolution in the third quarter. So first, we see same-store evolution. It's still really early though, first to understand this, but we're already evolving significantly. And now more and more, we would like to evolve, right, with this -- and so you can see from the first to second quarter, more than 2 percentage points of the gross margin, and that's due to this work done merging our efforts. We just spent 15 days in Sao Paulo negotiating with the main companies with our team. And so it's a real important evolution in gross margin. And you see significant evolution also in expense efficiency of about BRL 0.70. So you can see EBITDA margin and so we want to continue to evolve, and we know that this level can and should be -- should have a better quality. And we go from a loss of net income. And so we see important signs when we look at the first and move to the second. And we know that -- we need to evolve more. Our whole team is focused there. We have the company, Daniel and Victor and we're just merging our brands and our system. And all of the AC work has been done already. So I didn't want to set any numbers with you yet, but I think it's worth sharing that our expectations are to continue to evolve in these indicators, as you've seen in the -- from the first to the second quarter. So this is a topic that's really being discussed now, and we're looking at it, and there's a lot of different initiatives being worked on, and we're really keeping our eyes open, right? Because this is like where you have to search for things slowly but surely and bring this into the final results, right? So each life here can really add a lot of value.

I just remembered another very specific thing, which is in regards to taxes and the rate this quarter recalled my attention. So I think it's worth mentioning the accounting rates and the cash rates and how we should imagine this structurally. That would be really great.

And so thank you, Joao, for your question. That's very important. This is -- income tax rates have been discussed, and we've been working on this for the past years, actually. We've always tried to have this level of efficiency, working on subvention topics. This was broadly discussed and especially at the end of 2023 and throughout '24 and '25. So we've brought this interest on equity and capital and the issues with ICMS, et cetera, [ PIS-COFINS ] and so I think in the second quarter, differently than what happened in the first one, we start getting into a more stable level. And the second semester, we should perform with an effective rate that I believe is about 15% on average. And so we get back to this normality and when you look at subvention, with nor the intensity of the subvention is a little bit at -- but when you look at this, we share the full disclaimer of the amazing, but when you look at all of this, you can see this number as well. And I think this is a topic that we need to consider. And we have a tax committee that continues to be really active and they've been working on all of the tax reform issues, and it's a long-term topic, of course. And so -- what we see in the second quarter is an important step, right, with positive taxes and ahead, we can also see this normality of the effective income tax between 15% and 18%.

Our next question is from Gustavo he is an analyst at Bradesco.