Sendas Distribuidora S.A. (ASAI3) Earnings Call Transcript & Summary

[Interpreted] Good morning, everyone, and thank you for waiting. Welcome to the earnings call for the Assaí first quarter results. For those who need simultaneous translation, we have this tool available on our platform. It's like the icon -- the globe icon on the bottom part, and choose interpretation, like English or Portuguese. Please note that this earnings call is being recorded and will be provided on the company's IR website online, where you can already find the earnings release. [Operator Instructions] Soon after, we'll begin the Q&A session. [Operator Instructions]. Information in this presentation as well as possible statements that could be made during the earnings call related to future perspectives on the business forecast and operational targets represent beliefs and assumptions of the company's management as well as information that is currently available. Future statements are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events relying on circumstances that could or not occur. Investors must comprehend that economic general conditions, market conditions and other operational factors may affect the future performance of Assaí and lead to results that differ materially from those listed in such statements. Now I would like to pass the floor to Gabrielle Castelo Helu, our Investor Relations Director.

[Interpreted] Hello. Good morning, ladies and gentlemen. Thank you for your participation during our earnings call in the first quarter of '25. We're going to present the executives that are present today. Our CEO, Belmiro Gomes; Aymar, our Interim CFO; Anderson Castilho, our VP for Operations; Wlamir dos Anjos, VP for Commerce and Logistics; and Sandra Vicari for People and Sustainability. Now I'll pass the word on to Belmiro to begin our presentation.

[Interpreted] Thank you, Gabi. So first of all, I want to thank all of you for being present today. Our objective today, as you already saw our numbers, is to quickly present these results, so we have more time for Q&A as well. First of all, we would like to share some information we received this week. Assaí was listed by Deloitte as the 100 biggest retailers in the world. The first time a Brazilian company enters this ranking. [indiscernible] it's has been done for over 30 years. It's the first time a Brazilian company is part of the 100 greatest world retailers. So moving on to the numbers of the first quarter. We have a calendar effect that's important because you have February 29th and a shift also in Easter, which affects the total base in the same-store base. We reached BRL 20.3 billion in revenue, growth of 7.8% and the sales and the same-store sales was at a level of 5.5%, below the inflation rate. So this is mainly due to strong trade down effect we've already talked about and these trends towards the reduction due to the inflation. So I think our presentation just went off, but -- and also because of consumer choices. This trend we've observed strongly among lower income customers, especially in the Northeast region of Brazil. What we've observed is that when you look at the volume in the first quarter in the same-store base, the volume is positive. So positive volume without trade down would represent the same-store sales that should be in line with the inflation, which is at about 7.5% and 8% with the trade-down effect and the switch of some brands and reductions in sizes of packaging, which has not been kept. It's not a standard trend for all regions of Brazil. It's really connected to CDE social levels. And besides this, Assaí has been expanding with 4.4%. And this quarter is really set by the consistency and continuity of our performance, our discipline to generate cash and have really good balance between growth and also discipline for cash generation, considering the focus on deleveraging. The EBITDA is above BRL 1 billion, and it reaches 5.5%, which is a level that in 2021, which is prior to a big expansion project we had with the conversion in the extra stores. So what do we attribute this to? Well, mainly because of maturity, we have a store network that we're going to see in the next quarter that's still under maturity and the rigorous control on expenses and discipline as well as the evolution that our team has been implementing, and I want to thank my team for the results. Cash generation, as we mentioned, reached BRL 1.6 billion. This detail, the EBITDA is also going to get -- we're going to get some more details on this from Aymar, but there's a factor that we should mention when we look at the pre-IFRS EBITDA, it's double our financial expense. So considering that our conversion rate of EBITDA into cash is very strong, and the company is generating double the amount of cash than the cost of carrying over the debt even in this scenario with high interest rates we have. So with this movement in the net income has been under recovery obviously, but there's an important advance in regards to the first quarter of last year with an increase of 74% and 95% when you look at the pre and post vision. Another highlight in the first quarter is as we all know, the company is really focused on the reduction of leverage. So we've been keeping up the same level of drop that we had in the first quarter from '24 to '23 to 0.60. When you consider the net debt to EBITDA ratio as discounting the receivables versus the EBITDA accumulated with the last 12 months. So the last Central Bank report considered another increase of interest rates. The company had already provided some pre signs for this, but now we officially consider the new guidance for store openings in '26 with the postponing of some developments and projects to be able to handle the cost of capital we have and this increase. And so the expansion plan in '26 will be just as 2025 with the target of opening up 10 new units, simulating the same results as '25. We can move on to the next slide, please. Here, we share a bit of the vision on the store conversions with the extra and hypermarkets. That's one of the biggest projects we've ever done in Brazil. So it requires a lot of our attention. But when we look at the EBITDA, especially in the pre-IFRS vision in the network of the stores in 2022 to the first 47 stores we converted, they're already above the total EBITDA with a 6% milestone. The stores from '23 that are still advancing into their second year of operation, they're already at 3%, leading to an average of 5.3% and an increase of 1.3% compared to last year, which explains the increase of 0.3% that we had in our total base. So here it's worth mentioning that due to the profile of the stores, especially the store -- the hypermarket stores is a profile when you consider the cost of occupation and location of the stores, operational costs and expenses. The stores, some of those have escalators and more elevators. So there's some natural skepticism in the market about if this store network will be able to operate within a Cash & Carry standard of expenses, and an EBITDA level similar to the other stores. But this is what allowed us to enter regions, which would be almost impossible to reach if we had organic expansion only as well as expanding our penetration and share within AB customers. So I think that's what I have to share. I'll pass the floor to Aymar, who gives us more details on the financials, and then I'll get back to discuss the last slide. Thank you, everyone. Aymar?

[Interpreted] Okay. Thank you, Belmiro. Good morning, everyone. Thank you for watching our conference. Giving a bit more details on the cash generation and reduction of our debt. We had an operational cash generation of BRL 3.1 billion in the CapEx, which was BRL 1.5 billion in the last 12 months, in a way where we consider the free cash flow generation of BRL 1.6 billion. Cost of debt of BRL 1.9 billion, and BRL 0.3 billion cash generation in total. I want to remind you that we discounted BRL 700 million less receivables, which makes the net debt dropped from BRL 13.8 billion to BRL 13.4 billion. When you look at this differently on the right side of the screen, you see a gross debt that's almost stable despite all of the evolution in the interest rates, BRL 15.9 billion compared to BRL 15.7 billion. A gross cash position of very stable, BRL 4.5 billion compared to BRL 4.4 billion in this quarter. And total amount of discounted receivables of BRL 2.6 billion last year versus BRL 1.9 billion this year. So the adjusted cash position goes up from BRL 1.9 billion to BRL 2.5 billion. And therefore, the net debt drops from BRL 13.8 billion to BRL 13.4 billion. This is a shift that will be accentuated as the quarters move along, where a CapEx in 12 months will get closer to BRL 1 billion from BRL 1.5 billion to BRL 1.2 billion. The cost of debt will remain on a downtrend, most likely at a level that's still very similar. And in compensation, we have the operational cash generation that continues to grow due to the store maturity and operational gains, et cetera. On the next slide, we'll also see that this trend with the net debt made our net debt ratio on adjusted EBITDA dropped from 3.75x last year to 3.15x a year ago, demonstrating a reduction of 0.6x, almost BRL 500 million. And that also demonstrates that the company in the last 12 months was already anticipating everything that had been going on before as well as the CapEx modulation decision and the store network gets more mature, so that in a year that was so complex, the company was able to have this deleveraging effect. 3.15, which is a seasonal position, which will be a seasonal impact that's negative compared to the other quarters, should achieve according to our guidance previously disclosed 2.6x the EBITDA by the end of 2025. And so I think that when it comes to detailing this, that's pretty much it. And I'll pass the floor back to Sandra and Belmiro.

[Interpreted] All right. Thank you, Aymar. Well, as you saw, the company is really focused on deleveraging at Assaí and we've been -- Assaí is really well known for its strong cash generation. We've been growing with our own cash generation [indiscernible] even in this scenario with higher interest rates. So to wrap up the presentation, of course, we also want to get into ESG and points where Assaí is also a market reference, and an important acknowledgment considering that the company starts off in Sao Paulo, that we were elected for the 10th consecutive time to receive an award from [indiscernible] from Sao Paulo as the best Cash & Carry operator in Sao Paulo. That includes, of course, Brazil, and we operate differently in each region, of course, but recognizing this as the biggest market in the country really makes us proud as well as some other acknowledgments as well. So besides this, you also have the company's maintenance within B3's index sustainability. We've been integrating our new annual sustainability report now in the first quarter of '25. And I want to invite you all to please access this report. The material is exceptional, very good with excellent information. And besides this, the company has 87,000 employees. So we have the biggest flow of stores and customers in physical stores, 38 million Brazilians that visit our stores. And so of course, this is also the development of our role as social responsibility and inclusion players are very easy to view in all of the results in the company, with over 48% black people in leadership positions, 25% of women in leadership, 33.5% of employees that are 50 or more years old, and we have 8 editions of the Assaí Academy award with over 2,100 entrepreneurs being awarded with -- we already have over 70,000 small entrepreneurs signing up already, and that's something we've been able to do, promoting prosperity for everyone and really being recognized for our actions and measures within social responsibility. So I think that's it. And now we can get straight into Q&A.

[Interpreted] [Operator Instructions]. Our first question comes from Rodrigo Gastim, Itaú BBA.

[Interpreted] Two questions here on my side. First is about the sales dynamic now for the second quarter. I want to understand are you noticing this capture of the favorable calendar effect? If you look at the data, Easter helps, of course, but how has this dynamic of the acceleration of sales in your perception is happening, and how can this help the dynamic for working capital throughout the second quarter? And the second is about the gross margin. That was a highlight in the quarter. I'd like to know what are the main contractors and promoters of the gross margin. And how much do you think this is structural or recurring to the rest of the year? Those are my 2 questions.

[Interpreted] Thank you, Rodrigo. Well, our sales in the second quarter, we have this Easter effect with sales a lot higher from a growth in the same-store's perspective. It was a lot higher than what we've seen in the first quarter. But that's also because you have this Easter effect. I think the main thermometer the second quarter is going to be now in May. Because in April, we're going to finish the calendar effect. Now in the second quarter, we'll see the continuity of the first quarter. The trade down of brands has been a lot more intense than what we expect, not the first time results going through an inflationary cycle, but we attribute this fade out effect, especially in the lower income customers and the shift in behaviors that are going on in society. When we look at the numbers, the macroeconomic scenario, like unemployment, credit in the market, social programs and other efforts. To add more income, there wasn't an expectation for this level of trade down. So yes, we had high increases in prices, but it's definitely above what we expected. From a working capital perspective and performance as well, we've been searching for advancements in this and especially with delivering the evolution of the EBITDA. And so when we look at the gross margins, of course, you have a series of components. There's the effect of the actual trade down. Well, someone could be looking at the numbers and say, if the margin improved, then how come there's not more sales? Well, because the volumes are dropping. So what has actually led to not making the sale reach this is not a drop in volumes. So we had an increase in volumes. And in this scenario, reducing the prices more won't bring in more volume. On the other side, a positive aspect is that we already had an expansion in the EBITDA margin or the EBIT that was higher, which was the store network ramping up. Of course, you have a store-by-store assessment, not necessarily does the entire network is it promoted or scaled up on prices, but you have the trade down that's impacting. You have the competitive advantages. We also have initiatives in projects that impact the increases of margins. The new stores also lead to an increase and other projects that the company has been working on to add more sales and also more margin volumes. I hope to have answered.

[Interpreted] Belmiro, you guys talked about the working capital.

[Interpreted] All right, Wlamir.

So you asked about working capital, right?

[Interpreted] Yes, exactly.

[Interpreted] Actually, to make it clear here, we've been talking about for many quarters, we kind of kept the same discourse and in practical terms. We kept discipline in our working capital. That's very strong. We plan to keep this up ahead, and we should not have an improvement in the working capital. Just as the interest rate impacts our business, it also impacts it for suppliers. So we should not have an improvement in the working capital. But we have to look at this from now on, right? We have discipline also. And also to keep good levels of stocks and payment terms so that we can consider this during the year. We should not have variations. Of course, you have points that are seasonal, such as the increase in stock in our Easter as well as in our anniversary campaign during the third quarter. But every quarter closes with some form of variation. But what I want to make very clear to everyone is that even with our leverage and our debt, this does not impact the commercial dynamic. We don't reduce the stock or block sales and purchases to the detriment of this. So we have a level of stock and coverage that is adequate for our format and model and the way we supply the stores. So we're very comfortable to keep up what we've been delivering in the last quarters.

[Interpreted] Next question comes from Danniela Eiger at XP.

[Interpreted] Congrats on the results. I have 2. It's kind of like a follow-up of the first. The first is about accelerating sales. You mentioned, for example, Belmiro, that you still have a bit of pressure from trade down and you talked about a slight recovery in volumes. But what are you considering to be levers to accelerate these sales? What's in your hands? What have you been working on already? And my second question is about the gross margin dynamic. As you mentioned, you presented this breakdown for batch of stores that were converted, and there's a margin that's still coming. But wouldn't it make sense if this is a reinvest in competitive advantages to try to promote an increase in sales? Or do you want to increase your margins and just flow it into the margins? Those are the 2questions.

[Interpreted] Well, we discussed this, and we actually had some tests in certain regions. The fact that we're in 25 states makes it easier to analyze the dynamics. But what we observed is that there's not much elasticity like the investments you place into margin, will not reach much of a difference in the sales. It would actually be pretty much the same or even smaller. So due to some factors that we have when it comes to the population's income and food inflation as well, this movement and according to the tests we worked on wouldn't really make sense. When it comes to the levers, we also have always been searching for ways to improve the current operation and supply. And there's always an area and I say that's really focused on innovation, right? So since we have the biggest flow of customers in our stores, among all the players, we are the ones with the biggest diversity of social levels of customers and sizes of stores, et cetera, which allows us to explore many new categories. If you were at the Investor Day, you saw the highlights for the air fryers and the tires. But of course, there are other initiatives underway to really transform and increase the share of wallet, reduce expenses and move along with an increase in margins besides the [indiscernible] from the expansion. I hope I have answered your question.

[Interpreted] Our next question comes from Eric Huang, Santander.

[Interpreted] Congrats on the results. Two questions here. The first, if you guys could talk about how you're looking at the same-store dynamic per region. You even mentioned that the Northeast had a more complex reality, how are you looking at this around the country? Give us a better view, especially here in the Southeast in Sao Paulo? And the second question is about the reduction in the anticipation of receivables. We just want to understand and direct just a bit more to what we should expect for improvement and how is that interacted with the average cash position. You guys have reported throughout the period.

[Interpreted] Well, I'll start off, and then Aymar will talk about the reduction of receivables. So there is a difference in the regions in Brazil. Maybe it's a lot less regional based, but a lot more social level based, where you have a bigger amount of CD classes, is where you have more trade down in the northeast and the north of Brazil, and when you see most of this movement, the shift in brands and we monitor this very closely region by region. So this is a lot more connected to social levels and consequently, Brazil was not a standard process. This also impacts the results. Aymar, can you talk about the receivables?

[Interpreted] About the receivables, the volume of receivables that have been discounted, we should keep a similar level as what we've done in these last quarters. The gross receivables have been kept in line quarter-over-quarter, year-over-year. The sales structure with the different sales on cards et cetera, has been very stable in the last quarters. So we understand that the volume of receivables will continue and also the level of receivables discounted will continue in the levels we've seen in the first quarter. And so about the average cash position, we've been keeping this level at a minimum cash level of about BRL 1.4 billion, BRL 1.5 billion applied and invested daily. But of course, due to our behavior of cash flows, we have some situations, where it's a little higher, a little lower. But throughout the periods, it's normally a bit higher, close to BRL 1.7 billion or BRL 1.8 billion. We should also not see much of a change in behaviors in this sense. We'll continue to keep the same level throughout the next period.

[Interpreted] Moving on to our next question from Tales Granello from Safra.

[Interpreted] I want to explore a little bit of the performance of the stores that were opened and converted in '23. When we look at their performance now in the first quarter of '25 and the performance of the stores that were converted in '22 in the first quarter of '24, we see a gap in the average sales per store and the EBITDA margin. I want to understand why this gap? Is it about location, competition or other factors involved? Maybe because you converted the best stores, first?

[Interpreted] Perfect, Tales. I think there have both factors. One is, of course, the location of the stores, although there was also a licensing factor like in Sao Paulo, we had bigger stores opened first, but most of the EBITDA has a difference from the opening year. So the store network that's going to have maybe achieving 3 or 2 years, 1 year makes a huge difference, right? And also the store network in '22, a year before was a lot more painful [indiscernible] margins. So these are stores that are different sizes and our expectation is that throughout 2025, we'll have a better view of the first quarter in 2026. So it's just a year difference, but it's very relevant.

[Interpreted] Our next question comes from Joseph [indiscernible].

[Interpreted] I wanted to explore about this. I wanted to explore how you guys are considering CapEx for next year due to the volume of openings and how you're looking at the costs for the opening per store. These 10 stores you're going to be opening, and what is already mapped out within the pipeline? And the second question, maybe a low-hanging fruit as an opportunity. How do you see the opportunity to leverage your distribution wholesale operation a bit more?

[Interpreted] Thank you, Joseph. The store network in '26, we still can't forecast exactly. We had an expectation for 20 stores. But of course, it depends a lot on the stores. You have a store considering the size, the location, the model. It's a store that's completely leased or if it's a sales leaseback agreement or a BTS agreement. But we still don't have visibility. You still have to get the licenses with the -- and we should get this information probably a little more clear throughout the second and third quarter of '26. Of course, the company is focused on deleveraging and the idea is that we should balance this out with the ramp-up time. They're not going to necessarily be the stores with the least investment, but the stores with the biggest ROI. But we still can't give you a clear vision on this yet. Distribution wholesale is always an opportunity. When you look at the Cash & Carry per store sales, we still have our competitor that operates with both formats, right, with Cash & Carry stores, but they also have distribution wholesale. And this is a format that, to be very honest, has opportunities. The company has interest in this, but there's a market that's really focused on price and logistics. There's not a good window of opportunity at this moment because we still have a lot of challenges with store maturity -- maturity of the new store formats we implemented with services. So I understand, can talk about the self-checkout. We had 100 self-checkouts already being deployed. Now we have another 100. So this could, in some way, make us lose a bit of our focus on the recurring sales. But it's always an opportunity that the company can explore, of course. I hope to have answered.

[Interpreted] Our next question comes from [indiscernible] at Citibank.

[Interpreted] Belmiro, we always kind of look into the net revenue minus the sales area to understand the productivity and the same-store sales. And differently than the other quarters, if we're calculating this correctly, we saw a slight improvement in productivity. Is there any dynamic that improves or explains this? Maybe locations with less competition or more aggressive dynamic?

[Interpreted] So I would have to look at this later on. We have the analysis we can perform, but there was an improvement in this first quarter, but it's really coming from store productivity issues. So you can remember that we're at the end of the project, we saw a lot of stores that receive batteries and bakeries. So maybe you could be a little more explicit on this. Well, here, you have some different thesis, on what would be the objective for this improvement, there will be stores with better locations, et cetera. But of course, this is maybe more connected to the services company, et cetera. Yes, probably, yes. If you look at productivity effects, no, undeniably so because we already had occupation costs in a lot of the stores, the organics in '21 and the conversions in '22 and '23. Initially, the focus was to open up the store. And after we got into services and licensing, which is a little different. So as you mentioned, when you consider the ramp, the ramp is not only about preference and if the company is going to -- if the customers will get back to that store. But within that, we also have our work to adjust the mix, include products and services. And all of this is what's going to guarantee this ramp-up. You can't have an improvement in the EBITDA if you don't have an improvement in productivity as well. So it's not only about price.

[Interpreted] Our next question is in English, and it comes from Andrew Ruben. Andrew from Morgan Stanley.

I'm curious about your view on the potential for consolidation in the Cash & Carry sector. When you think about the 10 stores for next year, is that only organic openings? Or would you consider any type of M&A? And what do you think would be needed industry macro or otherwise to open up for the consolidation opportunity?

[Interpreted] Well, all of the stores are organic and our expectation for '25 and '26. Obviously, the company has been looking at possibilities because M&A processes have a long period between planning and execution. So the organic stores takes an average of 2 to 3 years between the decision and when you're actually able to open up the store. But initially, the focus is deleveraging, right? But there was some uncertainty from an interest perspective, we just got back a year ago to what the interest expectation is. If you consider the focus is on deleveraging and not that the company is not looking at this, but the focus is still organic growth. If there's not a reduction in the interest rates and a more balance in the entire market when it comes to purchase power for food as well as the absorption of the amount of stores that were open, you would avoid the market consolidation that would end up happening eventually when the possible companies and buyers are more leveraged or even a merger between companies. When you consider the macroeconomic scenario in Brazil today and the cost of capital, this -- in my vision, this kind of gets in the way or hinders this process. I hope I have answered your question.

[Interpreted] Our next question is from Irma at Goldman Sachs.

[Interpreted] I just want to go back to the point on trade down and understand if you guys are seeing this as a potential movement in a more structural manner? Or is this more of a cyclical issue connected to the moment of the leverage and the current inflation environment in certain categories that's still pretty high. And then maybe considering this, do you think it's more of a structural matter or if you maybe switch some brands to more like regional brands or explore the topic also of private label? And the second question is just quickly about understanding this new partnership you guys signed with iFood. And also, of course, that brought in a lot of growth, but I wanted to understand more about the economics there and the profile of the consumer that this is attracting to the platform.

[Interpreted] All right. So we'll split this into 3 phases. Anderson will talk about iFood. Wlamir will talk about the regional brands. Private labels are still not a project that we're focused on in the company. Of course, we've been assessing some possibilities, but it's not what we're focusing 100% on now. Because at this moment, you have a big trade down actually impact. And when it comes to the trade down, yes, there is also a shift that's structural within the country. So this inflation we've always had in Brazil. There's one side that's the response of to this, but especially lower income classes, Brazil became one of the biggest countries with activities on sports bets, websites, and that represents about over BRL 400 billion per year. So this has impacted people's available income. And this is one of the factors besides the inflation, of course, and the income not really keeping up with the food consumption, but there's something else that's structural happening, especially with the lower social levels that have been contributing to the trade-down effect and they're very quick in adjusting brand choices. And then Anderson will talk about iFood's partnership. So then I'll come back at the end. And if you have any other questions, it will be a pleasure to answer them. Anderson, do you want to talk about iFood?

[Interpreted] Thanks for the question, Irma. The partnership comes into the last miles. We started last year, and we have about 60 stores working with this platform. They're very strong. So that leads to very positive results. But believe it or not, due to the purchase power of the stores, you have stores in regions that have a lower purchase power that have excellent results in stores with lower purchase power that also have strong results. So it's been servicing pretty well, but it's another opportunity also with our customers. We have some adaptations we're constantly searching for. But generally, it's had pretty good acceptance. So we assess each store and region and we can, of course, service the customer and understand our radius of operation. But we've been very well serviced. And within the last mile public, I think it's another service we can share with our customers.

[Interpreted] Wlamir?

[Interpreted] Irma, thanks for the question. About the regionality and the trade down, the company normally has the capacity to adjust the volumes purchased, right? And not necessarily the assortment because even in the regional brands, Assaí, for example, grew our operation and our business model, really strengthened by the national brands and regional brands. That was always something that was really concerning. We had to keep an eye open on this matter constantly. And so if you look at the average assortment that comes from stores when we look at the items that I work with, from regional brands, I basically doubled the amount of SKUs sold on average per store because of the regionality, and what's the concern? Well, this speed that Belmiro mentioned with really being able to reallocate the volumes purchased to service the trade down, stop buying brand A to buy brand B. Then you have to migrate the supply and purchase volumes and besides the inclusion of these new categories. So this is something that's already on our radar. We didn't have to like register suppliers or do something very new. We just have to balance out the stocks and how we supply the stores. But this is already pretty much set forth. We're just maybe having an occasional market situation. We saw this strongly in the pandemic, but then it kind of adjusted. And now we have strong trade down. So what makes us a little more at ease is that we don't lose volume. We gain volumes. And the trend is that this should be kept for the future. I hope to have answered.

[Interpreted] Now we're going to head to our last question that comes from [indiscernible].

[Interpreted] I have 2 questions on our side. The first is about the store expansion that should be -- if you should consider the participation in another region and understanding if it's another region, where you see the biggest opportunities in the Northeast and Midwest. And the second question is about how the plans will be for the financial services after Faga's exit. Do we have any postponing in these plans?

[Interpreted] All right, [ Yago ]. No, we are not postponing our plan. Faga's exit -- after his exit, me and Aymar have been keeping up with all of the projects, and we should provide more information on the second quarter. It obviously didn't happen at the same speed we had mentioned initially, but we're not in any way impacted when it comes to the execution of the company's projects when it comes to discipline our capital, considering that the support team is very experienced and very -- and our team has the capacity to keep up with all of this. So we have other regions under analysis. But yes, we can concentrate in the Southeast and Midwest, where you have agribusiness activities, which is where we have important projects for expansion. But of course, if we have to choose the reduction in stores due to the increase in cost of capital, of course, we're always going to value the projects that you look at and have -- of course, you have a bunch of components in the decision-making. The only one that's not in our power is licensing, right? But what we always look at and analyze is the breakeven, the returns on invested capital and the paybacks, et cetera. Naturally, we'll have a bigger focus in the Southeast and Midwest of Brazil. I hope I answered your question.

[Interpreted] The Q&A session is officially ended. Now we would like to pass the floor to the company for their final remarks.

[Interpreted] Thank you, everyone, for participating. First quarter in our vision has results that demonstrate solidity and consistency, and this is visible in our operations. Not only this period, if you look at the last 10 years, you'll see disciplined cash generation, adjusting to market changes. And the company always tries to be a benchmark and a reference for innovation in the sector, but we also obviously have to adapt to changes in the economic reality, but we're continuing to be strong in this process, and we went to this period with strong levels of project execution. We're experiencing a scenario with challenges involving labor and expectations, also the purchase power of the population that has not been responding as we expected. But on the other hand, this brings even more volumes for Cash & Carry, which is a channel that is the cheapest for the population to buy from and more penetration in the Brazilian households as well, which makes us continue to evolve, and we hope to present results that are positive and consistent. This expansion project gave us very relevant points, interest there, the cost of debt is here. And we have stores like [indiscernible] that are going to continue. And 10 years from now, they'll still be contributing and generating positive results for the company. So once again, I want to thank my team, and we keep on strongly on the consistency of our results, cash generation and cutting down on our debt. Thank you so much to everyone for participating.

[Interpreted] The earnings call for the first quarter of '25 at Assaí is officially ended. The Investor Relations department will be available to clarify any other questions or doubts you may have. Thank you for participating, and have an excellent day, everyone. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]