MPM Corpóreos S.A. (ESPA3) Earnings Call Transcript & Summary

Good morning to everyone. Thank you so much for waiting. I'm Beatriz, Manager of Investor Relations for Espaçolaser. And today, I'm here to present the results with reference to the second quarter of 2025, which were released yesterday to the market. The release is available on the CVM and in our IR site. We wanted to inform you all that this video conference and slides are being transmitted by Internet through the site ri.espacolaser.com.br and is also available for download. [Operator Instructions] Before going on, I would like to clarify that any declarations which may be made during this teleconference relative to the perspectives of business of the company, projections and operational goals and financial goals are beliefs and premises based on the -- of the management of Espaçolaser based on information currently available to the company. Future considerations are not guarantees of performance as they involve risks, uncertainties and premises, and they refer to future events and therefore, depend on circumstances which may or may not happen. The general economic conditions, conditions of the industry and other operational factors may affect the results -- the future results of the company and lead to results which are materially different from those mentioned in these considerations. Today, we have with us in this conference, Magali Leite, CEO of the company; Fabio Itikawa, CFO and Director of Relations with Investors. I would like to now pass it over to Magali to start the presentation. Magali, please go ahead.

Thank you, Bea. Good morning to everyone, and thank you for participating in our results call for the second quarter of 2025. We're going to start with the slide of highlights on Slide #4. We closed the quarter with important advances in every front of our business, both from an operational risk point of view as well as the financial point of view with consistent improvements in practically every area of our results. Our system-wide sales grew by 10% in the quarter, reflecting not only the strength of our brand, but also the advances of our commercial strategy. In the quarter, the growth was 12%. Same-store sales also presented a solid performance with an increase of 8% in the quarter and 10% in the first half, which represents a gain of 11 percentage points in relation to the same period of last year. These numbers reflect the consistent trajectory of our -- trajectory of recovery. Our average ticket grew 8% in comparison with the second quarter of '24. And accumulated for this first half of the year, the advance was approximately 16%. On the financial side, we closed the quarter delivering a gross profit of BRL 101 million with a growth of 11% in annual comparison with a gross margin of 38%. The EBITDA -- adjusted EBITDA was BRL 65 million, an advance of 14% with a margin of 24%. In the year-to-date, we have reached BRL 145 million in adjusted EBITDA with growth of 11% with a margin of 26%. A solid performance, which reflects the operational gains and our discipline of execution. Our net profit -- adjusted net profit was BRL 9 million for the quarter, a growth of 82% in relation to the second quarter of '24. On the accounting vision, we also had an expressive advance of 63%. In the first half, the first -- the adjusted net profit got reached BRL 32 million, an increase of 75% compared to the same period of 2024, while the net profit -- accounting profit grew by 108%. We have also been advancing in the front of structuring our capital structure. Our net debt fell by BRL 31 million in relation to the first quarter -- same quarter of last year. And the level of leverage has been falling, closing the quarter at 1.97x net debt to EBITDA in the 13th quarter -- consecutive quarter of reduction in this number. Giving continuity to a process of the strengthening of our management and execution, we announced in June the arrival of João Véras as our new Director of Operations and the entrance of João represents an important step in the consolidation of our operational leadership with focus on standardization of processes, resolution of challenges from the day-to-day and improvement -- continuous improvement in the client -- customer experience. Going to Slide 6 (sic) [ Slide 5 ]. As I mentioned previously, we had one more quarter of growth in sales with system-wide sales growing by 10% in the quarter and 12% in the first half. In the graph on the right, we see that same-store sales accompanied this dynamic with an increase of 11% and 10% in the first half. Going to Slide 6, we look at the principal vectors of this growth. We have continued adjusting our policy of prices in the quarter, our average ticket went by -- increased by 8%, reflecting our new strategy -- commercial strategy aimed at higher value. We have tried to capture the pricing competitive differentials of our brand, which translates into a better monetization, both of the current client base as well as the new clients that are captured. The demand for treatment in traditionally relevant areas such as legs has continues high. The highlight recently, however, has been the growth in the search for treatments more complete in the intimate regions with a number of more and more of clients opting for 3 areas instead of just 2. In Slide 7, we reinforce that Espaçolaser continues to be a reference in client satisfaction. We closed the quarter with NPS of 86. And in July, we reached a high rate of 8.1 in Reclame Aqui, above the average in the sector, while other players have confronted challenges with this indicator. These results reinforce our leadership and our commitment to the customer experience. Over the quarter, we also observed a continuous movement of closing of stores for other players in line with what we have shared with you in the third -- since the third quarter of '24, which in a certain way, contributes to increase our space, our competitive space and create opportunity -- additional opportunities for advances in participation in the market. These were the highlights for the quarter. And with that, I'm going to close this first section of our presentation and pass the analysis of our financial performance, which will be conducted by our CFO, Fabio Itikawa.

Thank you, Magali. Starting on Slide 9, we registered a gross revenue of BRL 349 million in the revenue in the quarter, a growth of 7% in relation to the same period of the previous year, a reflection of our strategic commercial strategy and repositioning in price. In the first half, we saw a growth of gross revenue of BRL 722 million with growth of 6% in the quarter -- in the period. With this, the index of the rate of cancellations went from 11.7% to 10.6% in the year-to-date, in line with other recent periods. On Slide 10, we see that net revenue has totalized BRL 267 million in the quarter, with growth of 7% in relation to the second quarter of '24. Year-to-date, the growth was 6%. On the graph on the right, we see that the gross profit reached BRL 101 million in the quarter with a gain of 11% and a gross margin of 38%. In the year-to-date, the gross revenue was approximately BRL 220 million with a gross margin -- adjusted gross margin of 39.5%. The gains in margin reflect the efficiency initiatives and operational initiatives implemented in the last 12 months and a larger -- greater austerity in cost management. Going to Slide 11. The adjusted EBITDA has added up to BRL 65 million in the quarter, a margin of 24%. But in the year-to-date, we reached BRL 145 million of adjusted EBITDA, corresponding to a margin of 26%. We continue with our efforts to improve our profitability -- the profitability of our operation. We have delivered this quarter growth in margin and EBITDA margin of 140 bps -- in the semester, the growth was 110 bps. On the right, we point out that the net profit -- adjusted net profit was BRL 9 million in the quarter, an advancement of 82% in the same period of 2024. For the half, the adjusted net profit totaled BRL 32 million, a growth of 75%. The accounting net profit -- accounting profit also had expressive growth of 63.4%. For the year-to-date, it has more than doubled, presenting growth of 108%. These results reflect both the evolution -- operational evolution as well as the fiscal efficiency of the company during the period. On Slide 12, we reinforce our discipline in the allocation of capital and focus on the generation of cash. We closed the quarter with BRL 63 million in cash -- operational cash and the rest of 4% and conversion of 97% of EBITDA in cash. And year-to-date, we generated BRL 113 million in cash and operating cash with a conversion of 78% in cash. Passing over to Slide 13, we point out the evolution -- the consistent evolution of our structure of capital over the second quarter of 2025. We continue to reduce our level of leverage, which reached 1.97x net debt to EBITDA, a level which reflects both the operational performance as well as our discipline in the management of resources. Even though this -- in the scenario of high interest rates, the investments of BRL 11 million done in the quarter, we've been able to reduce our net debt to BRL 31 million comparison to the second quarter of '24 and BRL 6 million compared to the previous quarter, reflecting the resilience of our business and the continued focus on the generation of cash with the objective to reduce our leverage. As a reflection of this financial discipline and as we mentioned in the previous result release we received from Moody's, the classification of A for the corporate rating better than that attributed to by another agency to the company. Now I'm going to hand it back over to Magali, who's going to give you a brief update of other initiatives that the company is making.

Thank you, Fabio. Going to Slide 14. We advanced in a relative way in the project of coolers, which focuses to improve the customer experience in our stores as well as reducing our operational costs. In this quarter, we accelerated the implementation, and we closed a period with 248 stores equipped with equivalent of 44% of our [ park ] compared with 165 stores at the closing of the first quarter of this year. This initiative has contributed to optimize the routine -- the operational routine and elevate the level of comfort, which are important factors for the retention and reactivation of clients who value the experience, which is more complete and receiving. On Slide 15, we highlight the economic perspectives, which we have with the impact on the capital markets. The stock market has been impacted by a series of factors, starting with the tariffs announced by the United States against Brazilian products, which has generated strong repercussion and contributes to the increase of perception of risk on the part of investors. Beyond that, the maintenance of inflation in levels that is high above the head -- above the target of the Banco Central Bank and returning to an environment of fiscal insecurity has also pressured local assets. But even in this scenario, the stock -- the shares of ESPA3 have shown resilience with a valuation of 47.9% in the first half of 2025. We also see a highlight the strength of the beauty sector in which laser hair removal is inserted. According to data from the Itaú economic activity, this segment led the growth of services in the first half of '25, pushed by the habits of consumption, recurring and the constant search for well-being factors, which helped to sustain the demand even in a macroeconomic environment, which is challenging. On Slide 16, we present laser shop, our new concept, which has started in the beginning of July. The purpose of laser shop is to increase the reach of the brand, principally for the masculine public, connecting well-being and personal care in where it is closer and less complicated. The initial kickoff was in our flagship store in São Paulo with the presence of Marcelo and more than 45 influencers, business people and special invited guests connected with the universe of masculine aesthetics. The strategy during the second half of the year is that each region of Espaçolaser in Brazil will be receiving a laser shop big starter kit as well other activations aimed at activating this public and attracting this public. This is part of our commitment to self-care -- make self-care more accessible and more natural for every profile of clients. Finally, on Slide 17, we reinforce our position in the wellness and well-being area, partner strategies. We count with more than 700 partners between national and regional brands, [ Cillipines ], [ Clay ], Centauro, Smart Fit and finally, Hydratta, which partner was recently established. We also increased our actions with the [ SA ] networks and developing initiatives of cross-selling with events promoted by Smart Fit, including Beach Tennis Championships and other activations in public spaces. With that, I will close our presentation, and we're going to go over to our Q&A, which will be connected by Beatriz Silva, our Head of our Investor Relations. Beatriz?

We'll now start our session of questions and answers for investors and analysts. [Operator Instructions]

Our first question comes from Kelvin Dechen from Itau BBA.

I have 2 from my side. First is about sales. You've had a very resilient performance, especially with the strategy that you're using of composing prices in the last quarter. When we look at the numbers you've shown today, we see some segments that have started to have some acceleration even when we look at this service of beauty, which was always weaker in this period. Have you seen any acceleration in the final -- in the first quarter? That's my first question. And my second question is about your debt. Any update about the situation of your debt? And what are the conditions to reduce this cost and also the transfer of the debt from the holding to the operational company?

Thank you, Kelvin. This is Magali. Thanks for the question. In fact, we have been doing a series of initiatives, which have helped a great deal to have this constructive vision in relation to demand. Our business is very resilient and consistent in the operational delivery has given us an increase in our base. We have also in a recurring way and consistently a composition which has helped to work a great deal in a proactive way in the recovery of our mix. Looking at this table of the mix where we have been able to capture more sales through more body parts per package, which is a gain not only in our -- but also not just onetime sales, but a resilience as it has built a lifetime value more interesting, which has brought the same clients back to -- in the time they're with us, approximately 5 body parts during the 4 years that they stay with us. The newest groups of clients have contracted more body parts in the same package, which shows that we are continuing to observe a level of activity in our stores and a behavior which is very coherent with our value proposition.

Thank you. This is Fabio. In relation to the debt, your question about debt, your understanding is what we are doing, to put the debt in the right place and having an adequate credit cost in relation to the profile of the company. So we are evolving our conversations with our financial partners, our current financial partners and also opening fronts with other financial agents to optimize our capital structure and to obtain a better cost of the debt. We're evolving also in this front. Our expectation is that by the end of the year, we will see this subject resolved with the debt in the right place, paying with the cost appropriate for the profile of each company.

[Operator Instructions] Our next question comes from [ Alexandre Caruso ].

Can you hear me?