Ouro Fino Saúde Animal Participações S.A. (OFSA3) Earnings Call Transcript & Summary

And I would like to welcome everyone to our first quarter of results for 2025, and I will give the floor to a person that will give the main highlights for the first quarter of 2025. And then I will talk about the numbers of the company in this first quarter. Good morning. The floor is yours.

Thank you for the introduction. My name is Kleber. It's a pleasure for me to be here once again, explaining a little bit regarding the last month on Ouro Fino regarding animal health. And we had a very positive moment. And the last year, we had very good launches, and we had a good recovery, and we started the year in a very positive way. We know that our business is seasonal. So we always need to think about the first quarter that is a little bit low at the beginning, but later, we have better results that are way stronger. And we have explanations due to the climate change and also rains. But -- also regarding the businesses that we have. And in the third quarter, we have a fare that is very important for us, and we have the sale fare that is very important. And by the way, we have the production and other things, so the numbers get better soon. So regarding the fourth quarter, we had a quarter that growth a lot, highlighting that when we talk about production, we need to discuss what happened last year and what we have now. And a lot of units of products are growing, and this is very good for us. And by the other side, we have a market that is growing and it's not an easy market. As you know, you need to be a very competitive and very strong as us. So it's a year that we are fighting for to have a year once again with a better growth and compared to 2024. And we have the margin that is better in this quarter. And in this year, we had a gross margin growth. And this year, we hope to increase our investments. And also, this is highlighted by the launches in 2025. And we have the animals of production. And I would like to highlight the main ones from 2025, and we have some launchings worldwide, and we launched it on February. LeanVac, the best option for the freedom of choice. And this is for porks, and this was made by our team. And -- and this is part of our -- a lots of clients, and we have a lot of other clients that are already buying this product. And I'm quite sure that this product has a huge potential to be global. And we will expand that in the future because we are focused on establishing this operation in a more focused way. So sometimes we have this service of applying the vaccine, and that's why we will work with that, and we have excellent results. And we have lots of hope with the growth of this vaccine for the next years. So as you know, we had a great work to bringing this product for us because this product is in Brazil for decades, but we had a negotiation with the Korean market, a company that work with electronic products with LG. But they have their divisional chemicals, and they produce this boosting, but this was produced by another competitor here in Brazil, but now this product is in our hands is with us, and this will help us in our growth. Besides that, this is a product that brings an increase on the milk production. And this is very important. So we are talking about health well-being, and we are talking about health care. So besides that, we also have our presence on the milk production and our milk portfolio is very good. So with all the tools, we have a great work and the Boost started to be sold in April, and we have great expectations. And we have another launch that is being organized for June. And I will talk about this product on the second quarter. So as I commented, we had a good growth. So I would like to comment regarding the structure of the company. We have a very good structure. You have been doing a very good work. So everything is very good in all senses. So Marcelo will talk about it later. But the introduction regarding the capital is very good. We have BRL 120 million during the quarter, and we had another amount -- significant amount in April. And a new investments from FINEP regarding our dividends, and we generated cash flow and we increased everything improving everything. So we have a very good perspective on the financing level. So we have an excellent financing perspective, and we have the expectations to be very strong this year and in the future. Thank you so much. And I give the floor to Marcelo to talk about the numbers. And I am at your disposal at the end of the presentation, if you have any doubts. Marcelo, the floor is yours.

Thank you, Kleber. So continuing with the presentation of the financial results of the company, we had a growth of 6.3% in the first quarter, and we had the gross margin increase in 48.5% in the period. So we had the highest numbers since 2021, and we have to show it with details because this shows the increase of the participation of the Fats unit and also the international transactions that were included to a better performance of the company. So we had a growth on Pets and international hirings, and this brings a lot of money to the company. So following to the second unit, just a moment -- to the cattle sector. We had production animals regarding cattles. So this is important to be said because we had revenue that grow, and we had 6.2% of growth. We had regarding the food and disease net revenue grew of 6.2%, and we also had a growth on pork. And also, we mentioned it that the first quarter revealed the total increase of the units, as you can see, so everything is captured here. So we have some launchings that were done on the second and the third quarter and fares and a lot of parts. So the tendency is to have a decrease of the sales for the next quarter, bringing a lot of gross margin for the production. So we have to mention that the Pigs line is a line that is growing because we did investments in regarding the launching of products and investment on structure of sales to support the increase in the next years. Following for the Fats, we had a growth of 7.9% and the net revenue of BRL 36.6 million. And it's a business that is growing in the last years in all the quarters, it's something that was growing and it's bringing money to the company in all senses. And we've been working on the management of demand and everything, and we've been working with the profitability of the company, and we had the growth of 7.9% and considering all the data, as you can see. The international unit operation had a growth of 45.1% compared to the first quarter '24. And we -- this growth reflect the high sales volume in the period, mainly in Mexico and Colombia. And Mexico and Colombia exports in more than 14 countries in Latin America and these countries represented a very representative growth. And we had a unit that was very expressive and we had better numbers, and we had the gross profit that is 64.2% of the margin, representing the growth of 11.3%. And regarding the SG&A, we had the first quarter of 2025 and compared to '24, we had a growth. And this represents the investments on commercial and marketing and the business. So this was an investment that was needed to support the business growth in this year and in the next year. So we hope we have results regarding these investments for the revenue of the company. So we have the investments and research and development. So we had reached BRL 9.9 million of net revenue in the first quarter, and we had BRL 18.7 million of investments. So the increase of the amount of expenses on investments may press the margin of the results of the company because if you remember, we can see that the investments on research should not be considered as expenses, but future expenses. So this might press a little bit results, and we might have a little bit more of expenses because this was part of the expenses, and we had also expenses with the commercial, and this brings us a little bit of pressure on the first quarter of 2025. In the next quarters, we have the plans to deliver better numbers that this is what happened in 2024, too. And regarding cash flow, bringing a little bit more of information, we finished it and the cash availability of BRL 148.5 million of cash availability and considering the structures and our capital structure and the capacity of the company to keep with this agenda after this operation, we had the approval of the assembly that of BRL 57.7 million on the first quarter. And we had a very robust cash flow that is embedded by the results of the company. And for -- and this only happens due to the results of the first quarter of 2025. So we closed the last year with a leverage of 0.9 leverage EBITDA. And the company always had a management that is nonconservative, but was adequate, was customized regarding the Brazilian market, but was very low in 2024. And I though we need the operation on the generation of capital, we closed the trimester or the quarter with 0.9 leverage. And we do not have in our economical policies, the leverage for the company in the next years to have conditions to finance our growing with our own cash flow, and we need to keep the agenda of the most relevant investments, focusing on investments and innovation. And the EBITDA closes with these numbers, as you can see, to keep the agenda of growing. Besides that, we have a structure of the capital. So we have the long-term debt that we have -- and we have the aging of the bank debt. And looking forward regarding the 85%, most of them will expire in more than 5 years. So this gives us a little bit of comfort in this sense. So in regarding our investments, we have general comfortable results. So this is the end of my presentation. I come back to Kleber. I give the floor to Kleber, if you have any questions. So I'm at your disposal.

So Marcelo, I'm here. Well, Marcelo, thank you so much. Since I'm seeing here the chat, we do not have any questions so far. So thank you, everyone, for your participation. And we are very confident to have an amazing year -- next year with launching. And since we did some, we will do others. And I hope we have a year of very good profitability. So we are there to finish our second quarter in the future. huge hug to everyone.