Sendas Distribuidora S.A. (ASAI3) Q4 FY2025 Earnings Call Transcript & Summary

Good morning, everyone, and thank you for waiting. Welcome to the earnings call for the fourth quarter of 2025 at Assai Atacadista. I want to highlight that if you need simultaneous translation, we have this tool available on our platform. [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, ir.assai.com.br, where you can already find the earnings release. [Operator Instructions] We would also like to let you know that all the information in this presentation and possible statements that could be made during the earnings call about future business perspectives, projections and operational targets, and financial goals at Assai represent beliefs and assumptions of the company's management as well as information that is currently available. Future statements do not represent -- do not guarantee performance. They involve risks, uncertainties and assumptions as they relate to future events and thus rely on circumstances that could or not occur. Investors must understand that overall economic conditions, market conditions, and other operational factors can affect the future performance of Assai and lead to results that differ materially from those listed in such future statements. We would now like to pass the floor on to Gabrielle Helu, the Investor Relations Director.

Hi, everyone. Good morning, ladies and gentlemen. Thank you for participating in our earnings call for the fourth quarter and the year of '25. Now we're going to be presenting the executives that are present here. We have Belmiro de Gomes, our CEO; Aymar Giglio, our CFO; Anderson Castilho, our Operations Director; Wlamir dos Anjos and Sandra Vicari, our Human Resources and Sustainability Director. Now I'll pass the floor to Belmiro to begin the presentation.

All right. Hi, Gaby, and thank you, everyone. First of all, we want to say sorry, we had to make an adjustment for our agenda. We originally had scheduled it for tomorrow, but we -- considering that we have Carnival and a lot of people traveling, we decided to anticipate this, right, instead of having it on Friday prior to Carnival. So about the fourth quarter and 2025. We are going through a quarter with some effects that we had already mentioned and that the market is most likely aware of from a consumption and debt level. So first, I want to highlight the aspects of the fourth quarter. And as we talk about 2025 and reinforce this, just how the company is really focused on reducing leverage due to the volumes of the interest rates we have. And we can reach levels that we had actually presented as guidance to the market that we're considering an interest rate that was a lot higher than what we're subject to reaching, 2.55x leverage and a total volume of sales of BRL 84.7 billion in the year, the growth of the same-store sales of 2.6% and the opening of 10 new stores, which would wrap up 2025 with 312 stores under operation. We were able to look at the commercial execution and store maturity and the new pricing systems we've been implementing. Despite some tailwinds that I'm going to explain up ahead, we had some important evolution in our margin of 0.3 percentage points in 2025. Our expenses were a bit pressured. We have a lot of new projects going on in the company, and we're going to highlight this up ahead. We are entering into a new cycle of changes in cash & carry, and we have a lot of new projects up ahead and some initiatives that are going to be unleashing value and also growing customer loyalty and sales volumes. With this, the company's EBITDA also had an evolution of 0.2% and a margin of 5.8%, with a volume of the net income of BRL 847 million in the pre-IFRS view and BRL 645 million in the post-IFRS view. You've probably already seen this in the release that the impact with impairment considering the split with the FIC. About the environment in the fourth quarter, what we've seen. We had a very significant trend of deflation that took place simultaneously in different commodities. So ever since we -- life is life, we've seen commodities go up and down, and that's normal. But normally, what happens is you have deflation in a certain category, and this is quite common. But then in another category, you normally have some kind of inflation. But what we've seen in the fourth quarter is that there was deflation that was persisting in multiple categories that have a big share among low-income customers and also in the overall food basket, right? Because they're low added value products and normally, farmers and producers don't deliver door-to-door, which is different than, like, health and perfume and cleaning supplies. Commodities are a big channel that supply cash & carry, right? So as commodities drop a bit, you'll see that rice had a drop of almost 37% compared to the prior system; milk, 16% drop; sugar, 11% drop; beans, 10%. So wheat as well with almost 5% drop in prices within this normal variation. And of course, this, as this category has a high share, will reflect in the volume of sales. So in the fourth quarter, we brought a breakdown of what the volume would be, right, in tonnes, and we also increased sales in kilos compared to last year. But of course, with the category that's so important in this deflation, the nominal volume considering this the same-store sales is below IPCA, right, once we're quite exposed within this commodity. Another factor we've been highlighting also that we also have data in the release, which is what we've been demonstrating here with the K effect, let's say, with inflation, right? So now I was going to complain about the interest rate. No, but regardless of this, when we look at the mix of the basic food baskets the population buys, we've seen an expansion at a level we've never seen before, which is when you look at the formats that service high income, they continue to gain volume. They continue to gain sales value because there's a switch for more expensive products, right? So in the fourth quarter, what we've seen the formats geared towards high income and a growth of 4%. When you look at the same formats that are normally supplying themselves with us, which is where you have this persistence of trade downs, these formats dropped to about 9%. And so of course, maybe high income was going more than low income. Yes, but that variation of 4% to 9% is on one side positive, but also negative, right, yes, compared with the previous year, right? So this is what we call the K effect. So with interest, a part of this becomes consumption and then part of the population, of course, loses this effect and then it becomes formats it, right? Because most of the volume of interest obtained was also headed to consumption. So we have BRL 7 trillion in fixed income in Brazil according to the data that ANBIMA has been receiving. On the other hand, we have low income with BRL 4 trillion of debt paying really high interest rates. So this, of course, influences the pack of who is more subject to low income. And EBITDA in the fourth quarter was stable compared to the previous year. There's a negative variation, considering the volume of deflation with a margin of 6.3%. So we can advance to the next slide. So this is where Aymar will be able to highlight this considering the efforts in leverage from a debt perspective and how things have been evolving. Aymar, it's you.

Hi, there. Good morning, everyone, and thank you for your presence. With this context that Belmiro's mentioned, the company was able to, in 2025, reduce its net debt. The net debt was reduced by BRL 1.2 billion. And this was all in a year where according to our judgment was a very positive year when it comes to operational cash generation, a major EBITDA conversion of BRL 3.7 billion. And this cash generation was enough to pay for the CapEx. It was enough to pay for the services of the debt and the dividends, and still had a final cash generation of almost BRL 600 million. So this, combined with a reduction in the anticipation of receivables, explains this variation of BRL 1.2 billion -- sorry, BRL 1.2 billion in the net debt of the company, which led to this leverage here on the right side of the chart and of 2.56x, right? So we reached the guidance that was provided back then for this leverage mix of about 2.60x, we had the 2.56x here. And for 2026, the idea is that this financial discipline and effort in the reduction of leverage can really not only remain, but be intensified in the sense that multiple actions and initiatives can positively impact this reduction, such as a CapEx that we estimated at BRL 700 million. We've been keeping, although we have already provided a new expectation for the new stores, 5 new stores, but obviously, these BRL 700 million at this moment remain because the 5 new stores compared to the 10 previous stores were BTS -- build-to-suit. So the equipment for the stores, which would be an investment in the BRL 700 million, we've been keeping here considering all of the new projects that we've been working on and prioritizing for 2026. So we keep the value of BRL 700 million, but we also have the possibility of reviewing the portfolio and monetizing assets. So when a company reaches the size we've reached in the amount of 312 stores, we can and should begin to have this ongoing task of reviewing the portfolio, seeing what we can leverage in this portfolio, and maybe some monetization as well through SLB, that could happen throughout 2026. So from a debt leverage perspective, I think this was pretty much the information we had that we wanted to share with you. Next, well, Belmiro.

Now here, at this point, Aymar shared and we should look at the portfolio as well, and the company is super focused on reducing leverage. And this focus doesn't make the company stop growing, right? Of course, we all know that cash & carry went through a very strong expansion cycle and became the company with the most valuable brand in food retail and the biggest customer flow as well. And so we've mentioned these initiatives to increase the share of wallet and different projects the company's been working on with a focus on this investment, right? So here we can show you one point that was actually a bit of a polemic, which was the butchery and the cold cuts or deli area, right, which represents 5% of the total sale at Assai. But that's 5% of a company that's making almost BRL 90 billion. So 5% divided by this amount made Assai really become the biggest protein seller in South America. So this was a challenging project, and there was actually a certain level of CapEx with a higher cost. But in our view, it was also a way to adapt to this change, which is a trend of switching carbs or reducing carb volumes and increasing the general consumption of protein. So these 2 projects help position the company within this point. As Wlamir mentioned, we saw BRL 1 billion per year, and this is a category, right? The drop in the rice prices, but other categories as well that are growing within this moment. So I want to show you this, quickly here, just to mention how each of these avenues for growth are behaving, right? And what's the biggest point we base on our activities on? Well, the 40 million people that go to our stores monthly. And in the fourth quarter, this was completely stable. So moving on to the first point. You've probably seen that we announced a partnership yesterday with Mercado Livre. We're going to be starting with Assai in the marketplace through a fulfillment model. We had a challenge in the food sector as a whole to have our own efforts in the sense, but there are some operations that are a lot more efficient because they have other categories and other products that dilute their costs. And so this is an important partnership. We will be the first cash & carry in Mercado Livre for about 400 SKUs that should be worked on. Of course, these are nonperishable products. And since we're one of the biggest operators in the food format, we have the conditions, prices that are differentiated. I believe this is an important partnership because we'll have a new pillar in the digital channel. And for Mercado Livre, they'll also having more competitive prices. So we should evolve into other initiatives with the supply and the use of consumption of our stores and with Mercado Livre performing adjustments, and Mercado Livre has best and biggest logistical structure as well. So another channel that's also going to be accelerated is our partnerships with the last mile, and that's highlighting the partnership with iFood that goes from 56 stores. We should have 100 stores within the platform by the end of the first quarter. And on average, the mature stores add about 3% of additional sales. We have also brought [ Wlamir ] in together with Julio leading this project. We still see big potential because the Assai brand is very strong and the customers are searching for this. So some optimizations in the store as well as the expansion of the Meu Assai app with 60 million registrations and customers on the app have unique prices and frequency that's almost 61% greater, and they spend 40% more in the stores. We can move on to the next page, please. The other initiative, which here is a means to replicate, let's say, as you've seen in previous opportunities, Assai became one of the biggest tire sellers in Brazil. And if you look at this flow of 40 million people, of course, we've been trying to expand the share of wallet. So the In & Out project basically is to replicate what Costco does very well. So we have one product with an unbeatable price and this product is not going to get into the regular assortment. But it's going to be there today, if the guy comes back a month later, it probably won't be there. We brought in 2 examples. One is a Philco refrigerator that's on sale today. If you go to the [ Anhanguera stores ], it's only 3,599. It's a side-by-side, 486 liters. We're going to be exclusive. It's a smart refrigerator. It's a lot cheaper than what you'll find on the Internet or any other channel, just to provide characteristic for this opportunity sale. So in 60 days in 20 stores, we sold more than 1,000 units of these motorcycles. And then you have a bunch of other items that are going to get in -- like televisions for World Cup -- and all of this we're going to be replicating into the Brazilian reality and what we see abroad. So why am I mentioning this? Well, because remember, the butchery project and some other projects, where since we put in services, a lot of people looked at it and said, "Oh, it's going to be a hypermarket." Well, what's the reference operation? Well, it's probably the Costco American operation that sells a refrigerator, the motorcycles, jewelry, Rolex. No one calls it a hypermarket, right? But the fact that we're putting in durable goods as opportunity items really demonstrate that this is an evolution because we have a potential for sale. We already have a fixed cost in most stores, and the increment of this other product line should help in this customer flow to help set the positioning of the company when it comes to low prices. And in our view, there's a lot of potential for sales, and we should see results that are quite interesting. And we'll bring this with a break down quarter-over-quarter, and we can advance into the next slide. Another important initiative that's been gaining traction is Sergio Leite together with Rene, we brought from the market with a lot of expertise and within the private label operation, and we're just going to start having the Chef brand, which was already exclusive besides Econobom, and we're going to start using the Assai brand in a bunch of different categories of products. We hope to have about 200 SKUs with good penetration until the end of '26. These are very important items. The Assai brand will start now in the first quarter. And the objective of this project is to, first of all, if we've seen that most of our customers are searching for low prices, of course, they're trading down, but they want to continue to have quality, right? So it's a product that's similar to the leading brand, and we want to have a category with a level of margin that's higher. Always -- there is always this challenge in private label. You needed to have a really big volume and density, which is what we currently have in some markets. Within the Sao Paulo metropolitan region, we have about 60% penetration in most municipalities. And we expect that with the entrance of the private label products, we should also start having our own commercial conditions with big industries because they're going to start having one more competitor within the POS. So it's a super important project that's keeping up with a pretty fast pace. Now the other project, just to give you an overview, is a product that most people already know about, which is dividing 2 initiatives, right? One initiative we're already going to be starting now in the first quarter, which is space created specifically for supplements like creatine, whey protein, protein bars and all of this. This is the first plan we're implementing in 93 stores. And also, we've seen this acceleration in a shift in habits and maybe the GLP-1 analogs, and that probably helped lever this movement. And of course, now we have to anticipate this movement and adjust, right? So this is an important project that we've been calling the Health World. And while we do this, we're advancing this pilot also with the drug stores. We have 25 stores that are going to be deployed and under operation until July 2026. And this is a pilot, right, because the systems part is really different than what we operate today. We have a team that's very dedicated to this and yes, Sergio also brought in someone that's a specialist in this area. And so in the first phase, the stores are going to be implemented, coexisting within the store area. We're still discussing the approval to have access within the same stores. So they're going to be at the entrance, coexisting with the stores, faced with specific entrance according to the current legislation. But as we advance with this discussion -- since we got approval at the Senate and it should be approved at the House of Representatives -- then we're going to modify the layout, so customers from inside the store can also access it. So it's an important category as well. Just as the In & Out, you have the fixed costs, IP, property tax and all of this already included, right? So most of our contracts are fixed rates, right? So if the IPCA goes up, our sales and inflation is 0.9%. And so you add more sales and that increases the share of wallet as well. We can advance into the next slide. Now I want to go back because I think there is no one that's more specialized here in this than us to explain the FIC transaction, right? And share this. We've already had multiple opportunities. But this FIC topic, I'm going to -- since it's a topic that's a little more difficult, and we highlighted this in the release, well, you can contact our IR department. And we have someone also in the tax area to explain. We'll get into these topics, and you can concentrate any questions you may have about this directly in the IR department.

Well, this is just like a background to explain why we have this transaction with FIC and also to get into our next initiative here with the development of our financial services, right? So we've already talked about this over time. We had this FIC that started off with GPA and Itau back in 2004. And over time, it gained complexity because they added Casas Bahia then after with the split between Assai and GPA, Assai also became a partner at FIC, right? So in the last 5 years, let's say, we had 3 retailers. Sorry, he's on mute. Sorry about that. So we had these 3 retailers and each of them had a different business model, a different moment. And even the Itau partner or shareholder was not very excited with this design and this partnership that had lost its essence that used to be more dynamic over time. So we had already been talking about this for a while, all of the partners agreed. And then we announced a split from the FIC, that should be approved. And so we hope this happens before, right, by the Central Bank. But this split from FIC represents the exit from GPA and Casas Bahia, and Assai and Itau would continue with this FIC for another 2 years. We actually value our Passai card a lot and this partnership. And so when you start the approvals, we begin to have the permission of exploring a series of other products that in the current partnership was not really the focus or the interest justified by partners. But through the approval of the Central Bank, within this period, we can explore immediately. Then I'm getting into the next slide. But I just want to say that this phase with the FIC finishes in 2028, right? So we'll be able to have a new card that can substitute the Passai card, that continues extremely valid and it's operating in the same characteristics, the same value creation for the company and for customers. Value creation, that is, especially the value proposal by FIC, where customers can buy one unit for the wholesale price, the Passai customers paying with the Passai card and equity method that we're going to continue to apply together with Assai -- sorry, together with Itau. And this new stake and this new design representing 40%. So from the approvals, we can demonstrate the new products we plan to explore quickly. And the first one is the private label card. The private label card is here to add on to the existence of our co-branded Passai card because it will be able to penetrate customers that have lower purchase power and also in B2B, right? So B2B customers that quite frequently are confused with B2C customers that own a very small business sometimes, have a huge -- have a greater chances of using this private label card, right? So we've seen the experiences of our regional competitors and all of them have a private label that's really -- and they've been really successful. And that shows adhesion from this closed loop model for this type of customer as well. So we have a very big expectation to generate earnings and results with this product in the first years. And once again, this is a product that's complementary to what we already have at the FIC. And that's also a product that generates a lot of value, but it's to a smaller amount of B2C customers. Maybe 20% of them can actually access or use this card. So the private label will be an important -- we take on an important role. And this card, depending on the partnership or contract we develop through the split here will be -- it could be operating by the end of the year, of course, subject to the approvals of the Central Bank. Then the other processes and products we're considering here, we also have positive expectations about -- because we have 44 million customers circulating our stores every month. And the companies operating that already sell and have partnerships in these other products have always been really interested in starting this channel and working on this with us. So through this approval, we can work on partnerships with these companies in these different sectors. And the expectation is that we'll have a very significant volume of financial revenue generation. All of these with assistance, consortiums, insurance are all revenues coming from origination. We don't want to have companies that are like an insurance company or a consortium. We just want to originate or provide these services to our customers through a partner. So we understand that there is a very restrained demand for these products that are massified, although there is a context of reduced income, et cetera, but these products have their place, let's say. And so we're really placing a lot of expectation on this and some other digital solutions as well for B2B customers. And all of these products are connected and included into our app. And our idea is that our customers through the Meu Assai app can have these other products as well embedded in the app, and the initiatives for acquirers through the Assai Pay terminal, credit card terminal. This pilot project is already going to be applied to some stores, so we can quickly conquer about 1,000 customers using this machine. And from this moment, where the first phase of these 1,000 customers are at a state or level of operation that we consider to be ideal, we'll roll this out into the other stores in 2026. So the idea here is -- we're working on this through a partnership -- the funding, the discounts and processing is all going to be under the responsibility of this partner company. And as a final result of this initiative, we really want to have a relationship with the B2B customers and be able to have initiatives that can make the B2B customers have exclusive advantages here in the store, not only generic, but also very much connected to their segment, right? So the transformers will have specific advantages and so on. So this is our plan for 2026, when it comes to financial services as we create this new ecosystem within the company based on the approvals, of course, of the Central Bank.

Thank you, Aymar. Let's go back one slide, please. One point here. A lot changed in this market. And so I think this FIC had adherence, as we have 42% of the sales to B2B and the other 58% are for individuals in all social levels. At the end, Assai was adherent to about 20% of our public, right? So we're talking about 8 million people, let's say, and that actually generated a revenue and will continue to generate revenue of over BRL 150 million net per year, and that considers the equivalence of these value propositions. And then now you have the opportunity for the other 80%, right? So this is a market that changed a lot with the growth of the digital banks, and they don't need that much the retail operation that much to access this. But when it comes to cash & carry, we believe that this is where we have the biggest opportunities, right, with individuals. And also in the owners of these commerces that have -- that prefer to do some credit operations within the actual business, right? So these 2 products have a bigger potential than the revenue we currently have, and we'll be working on this to have something by the end of this year already when it comes to private label. So before we get into the next slide, you probably saw the communication about the arrival of the new CFO, Rafael Sachete. He's going to join the team in the second half of March. He had here a period to close his activities in the other company he was in. So in a few days, we'll have a new CFO that will be able to support us. And I think it's a role that will really help us when it comes to capital discipline. It will be an important reinforcement for the team. I want to take advantage also for this moment to thank Aymar. Of course, he continues working as an interim second Director, and he will be involved in this a lot when it comes to financial services. But I just wanted to publicly thank Aymar for his effort, his work in these different initiatives and for taking all these dual roles, let's say, balancing out both dishes at the same time. So on behalf of Assai and all shareholders, I want to thank you.

Thank you, Belmiro. It was a very important period, and you can count on me as well for the next projects and development.

Aymar can't leave before we pay off all of our debt. So that's it. Anyways, next slide, we talked about different initiatives, and we've been spending a little more time than what we expected. But from a perspective here on reinforcement, we're a low cost business, right? So we have some different initiatives and the SG&A of Assai is stable ever since 2011. So we continue to evolve with low costs. And when you look at new categories, we're searching for ways to reduce expenses. Of course, the incremental margin is equal or the same and also -- and there are other projects, some other processes as well as we are getting into an expansion cycle. And we should readjust this within our group. We have different projects even in the operation, which is the remote supervisor or inspector. And so we have someone servicing the checkout person remotely. So that reduces the time to 22 seconds. We have another pilot as well that we're processing receipts. So instead of having 1 person per store with technology, you can have the receipt of the invoices and receipt. We're also changing our safety systems. And we're also reducing the amount of people that we have even with a better level of coverage. And we've also been working on pricing improvements. We've been considering the artificial intelligence and the biggest gains were in the marketing areas, where we can create in just 2 minutes a video that's directed to that store with a personality price and to consider this in social media and a lot of productivity. We'll have a new people management system as well that will simplify this ecosystem when it comes to training, selection of talent and within the system that's under deployment at this moment. So there are different initiatives as we search for ways to reduce operational costs and expenses, since we're still in this deflation period in commodities. Also last but not least, we have also kept our initiatives from an ESG perspective. Of course, the company once again received a series of awards and recognition to the benefit of the time. We're also highlighting this in the release with -- when it comes to brand positioning, respect for consumers and work consistency and other initiatives, right, where Assai is really a reference, right, including black people leadership, some strong efforts also with our employees that are immigrants and refugees, as well as some other initiatives we have been working on. So thank you, everyone. And now I'm going to quickly go up to Q&A now, okay, due to the benefit of our time limitations.

[Operator Instructions] Moving on to our first question from Danniela Eiger at XP.

We have some here on my side, but I'll focus on two, so we have time for others. But the first one is from a market dynamic. You've been very vocal on all of the challenges with purchase power, even deflation. What calls our attention when we look at what we had already known about in the previous quarter with the same-store of 5% in October and with the same-store of 1%, but at the same time, you bring in this variable volume. If you could help us a little bit on equating this and how we can think about this up ahead, if you're also bringing this initiative with supplements, which I think is a super interesting movement, as we've seen consumer changes in habits as well. But just to get a view on what your impression is throughout the year, right, with these components of volume, price, et cetera. That would be interesting to get a view on. But about your comment on portfolio reviewing, what can we think could be a sale of a certain group of stores in a specific region? Are you talking about closing certain stores? What store profile is this, right? Are these stores that maybe have a more outdated model than what you're searching for today? Would it be worse profitability? Just anything you can share with us would be great. And congratulations on the results.

Thank you, Danni. Well, we brought in data about the volume in the fourth quarter. But as you can see, the basket of cash & carry is very different. We have this mismatch between high income and low income, right? And we already see this performance difference, but it's not as high as what we've seen at this moment, right? So you still have an important trade down movement. And when you look at what we broke down in the release, the format -- it's not like they're selling less in kilos, they're just selling a cheaper product. So that's why we call it this K effect, right? Because you see the opposite actually. Brazil is a world of inequality. And sometimes we forget about this, right? So especially in cash & carry, where it's present in many different social levels, which is different than retail, where you normally have like a niche focused on a specific group, right, like Sam's Club. Normally, you have customers with a similar profile. In our case, we have a lot of different movements taking place at the same time. One we've highlighted is this loss in purchase power due to the level of debt and unfortunately, you have the bets that are still kind of stealing away a lot of resources. And we're seeing how this really impacts especially the Northeast of Brazil. So customers are buying or trading down still on brands. And there's this movement that's almost the opposite, right? So that's why we brought in this volume. Of course, if you have deflation, that's really high with a lot of commodities at the same time, you'll have this variation. Just as when you have inflation in commodities were benefited as well. So that considers the flow in volume in the fourth quarter that's been growing, right? But now what we've seen is an acceleration in consumer behavior trends and also with carbs and protein. So with this, the company has been really well positioned, and we have this movement throughout 2026 migration that's been more accelerated between consumption of beef and protein. And so also how to adjust these changes. So normally, these changes can be quicker even than people imagine, right? When it comes to our portfolio revision, we normally consider an inflationary cycle of over 313 stores, right? So we're looking at each region, and there could be that when we closely look into the study, there are some stores that maybe are at a deficit, that we could decide to close down or sell to another business format or even in regions where we grow a lot, you could possibly even have an internal overlap, right? So we're going to try to optimize this, and we're not discarding the revision of our current portfolio with adjustments in our store network and stores that are maybe not performing as planned. I hope to have answered.

Our next question is from Rodrigo Gastim at Itau BBA.

Two questions here. First, Belmiro, I would like to keep discussing this topic on the sales dynamic. 2026 is an election year, and that's where you normally have better consumption, a lot of fiscal incentives, et cetera. And of course, we're talking about a category that is not discretionary, but that had a lot of trade down in the last few years, as you mentioned, right? So when I look at the profile, especially, we can see this in different regions, right? So when you consider this and all of these challenges, in the last quarters, but where you have a lot more cash in the economy in regions where you operate and considering the profile of income you have, how do you equate this variable in your budget or your perspectives for sales in the year? And also if you've ever seen something in the first 45 days of 2026, let's say? That's the first question. The second one, I know you asked us not to talk about details on the tax credit. I don't want to get into details here, but when you consider the relevance of the topic, I just think it's important to ask you one thing, which is, do you see this as something recurrent? Do you consider this to be a recurring event? And did you recognize this over time? Or do you really think that this is something that in your perception, you would be able to continue to capture considering a lower cost throughout the next quarters. So I think I just wanted to focus on this part of the question, right, which I think is very relevant.

Well, as -- there's 2 factors, right? The 2 things that are certain, debt and taxes, right? But taxes in Brazil are very complex. So this could also be answered by the tax team a little better. But in practical terms, we considered this as a contingency asset, and that's probably going to become result as we are able to monetize it. So today, what we have is an estimated value of BRL 1.5 billion in this topic, we continue to assess the next few years. But at a coincidence, we'll have a change in 2027 for the new tax reform. And what we can see at this moment is, yes, it will be at least until '26. And then we will look into '27, because from then on, you have a new tax that would stop existing, right? So you would lose the recurrence considering the basis generating these different items in category. But the results are not related to this. That's related to the capacity to transform it into cash. Since it's an uncertain asset, the accounting rules make us only take -- consider the results when we are certain that this became cash. So as it becomes cash, you transform that into results. And then it's still a topic that later on, we can look into because we'll have the tax team actually working closer on this to provide more explanation on this. But the expectation is that this will be monetized within 2 years. Looking at the curve, of course, is there's no legal changes in this period, right? About income, of course, we've seen that it's a World Cup year. There's -- it's an election year. We should have some government programs and even exemption of income tax, et cetera. But we haven't seen this effect yet. But what we have to be careful about is we have 2 phenomenons. One is the level of families that are really carrying on heavy debt levels. So interest rates were kept too high for too long. And when we see there's still a part of the population that has real high debt. And so a lot of people had 0 payments because there are even some credit granting programs. And so there's a service of debt that has to be paid. And you're concerned when that's going to be transformed, but it is a positive expectation here. When you eliminate this variation in the commodities, you see rice is not going to keep at that level, right? There's rice like 5 kilos and it costs BRL 12. That's not going to be there for too long, right? When you consider they would pay 53 sacks with a production cost of BRL 75. So there's going to have to be an adjustment into the prices because commodities are perishable goods. If they drop because of different market factors, you're going to reflect that into sales, but that doesn't mean it's going to be a new price basis, right? So if rice for BRL 12, goes minimally back, you'll have an important sales add-on, right? So this is also applicable to rice, beans, sugar. And this is a movement that is adjusted per area, right? So the reduction in the area will probably be very significant in the next year due to the prices that producers received per sack, right? I hope that answered your question.

Our next question comes from Joseph Giordano at JPMorgan. It seems Joseph off the list. We'll move on to our next question that comes from Joao Soares at Citi.

I wanted to understand 2 points about keeping up the guidance for the CapEx with a lower amount of stores, right? What's the amount of build-to-suit? And is there going to be breakdown on this, if there's going to be more maintenance CapEx? If you could show us a bit more on these 2 points. Since you guys have been able to do the sales leasebacks and you guys have been delivering the guidance also on tax credit monetization, et cetera, it seems that the balance sheet would allow you to keep up a consistent expansion pace, right? So I want to understand, because there's a more strategic aspect with markets that are maybe a little more challenging to open up new stores. And I wanted to understand if there's something else besides this environment, right, of the balance sheet that could have led to maybe this revision, right?

Well, just we have 2 or 3 years where we had an estimate. And even if you look at the focus report, the guidance actually of 2.6 when we made that, if I'm not mistaken, the expectation was that we would be landing at around 12.5% and it's up 15%. So there are other components that until we're able to reduce our leverage more, we have to be careful about with expansion, which are investments that are higher. So what we did was postpone some projects that were really important. So we're going to be opening up some projects that are all in the state of Sao Paulo, where the brand is stronger, the ramp-up of the stores quicker and higher. And as we also review the portfolio revision, but also consider the changes in the new business that were added to the current model. So well, we should have 25 drugstores July, but if maybe we even have 100 till the end of the year. So we can gain speed and scale, right? So why is the CapEx still capped? Well, we have a bit of a carryover as well. The CapEx last year was smaller. We have the maintenance of the investments. And there's also an initiative for the new products -- projects, right? So we could even review this. But at this moment, we can't. So that's why we kept this number of BRL 700 million, because we understand that there are going to be some factors that are going to reduce this. Most of these stores, we already -- we're working on with third-party capital. So not necessarily reducing the amount of stores will be reduced proportionately in CapEx, right? But at this moment, we still have already BRL 700 million in CapEx. And so there's a strong investment in technology, even in the areas for picking with iFood's operation and also Rappi as well as some other initiatives of the stores as well. So that's why we didn't want to mess this number yet. We prefer that the market can work with this number, which is more certain at this point in time. I hope I've answered, Joao.

Yes, you did. So I just have 2 follow-ups here. In regards to what we should consider as the average CapEx for these stores, and if it's worth keeping these 10 openings from '27 onwards?

We're not going to be disclosing this information yet until we have a better view on this, because we are already have 3 projects that are being done with BTS, and 2 with our own capital. It could be that this is going to change a bit. So we're also looking at this and the ramp-up curve and the legal licensing processes, and we could still maybe switch the projects a bit. So now in the beginning of March, we should have a better view on this. And so from the network we have, we still don't have complete certainty of which 5 stores they'll be.

Moving on here. Now our question from Joseph Giordano at JPMorgan.

I know it's a year where we've seen the company work a lot on G&A, and I wanted to separate this question a bit here into 3 parts, right? First, looking at the selling line, where are we now? Which would -- versus what would be the ideal number for the headcount of the store? I think that's the first point. Second point, I understand the company also works on corporate efficiency work. That was very relevant in January. So if you could also share what could be possible gains coming from this line. Finally, I wanted to explore the disparities between the profitability of legacy stores for 2022, we had maybe a significant margin drop of 30, 40 bps as well as those that are maturing. So maybe we can consider a more difficult year where expansion was a little tighter. And if we should also consider revisiting this store network.

Well, thank you, Joseph. Let me see if I understood your question, right? There is a performance difference again, right? So our older stores have a greater stake in commodity, right? So if that drops, it's going to be more affected than the store network at Extra or the more central stores that have a different product mix, right? So maybe this difference is not that obvious. We brought in a little more detail in the Investor Day, but it was huge, right, between high-income stores such [ Goiania ] Goias all the way to Teotonio Vilela, right? So it's a whole another universe. What you saw in one is liquid soap, then powdered soap and successively. So the mix is affected differently, right? So there's a drop of 37% in the rice, 10% in beans, right? So for big sales reps, this won't be affected, right? But of course, you still have -- why do we have to be careful about some points, right? Well, because rice is not going to keep this price forever, right? It's going to go up again. And anyways, whether due to a reduction in the planted areas, et cetera, we don't know how this is going to keep on, but we'll have some more. So when you look at these important movements, considering the reduction in expansion and some products that were finished, we also had some changes within the administrative front. We had a reduction in our employee base, and these are all readjustment movements. Also in the store, stores with the checkout, self-checkouts and other points as well, where we also readjusted, looking at the headcount per store. So we had over 92,000 employees. Now we have a lot less employees. But of course, we're also hiring some people for picking, but our expectation is that while the company is really well positioned and focused on these different initiatives for innovation, but we also see the numbers, in Brazil, things happen after Carnival, right? So January is a month where people have a lot of expenses to pay, with back-to-school and other taxes. And so you start having better consumption normally at the end of February and March, when things kind of get back on track in Brazil.

Our next question is from Irma at Goldman Sachs.

About the partnership with Mercado Livre, I would like to understand 2 points, right? If you could discuss how we should think about profitability with these sales made through the platform? And also, how we should consider if these are going to be incremental sales or potentially there would be a migration from store sales to online. And so how you're going to perform this analysis, considering how you're going to identify who's going to perform the sales, et cetera. So the second question is about the strategy, the two brands, Chef and I wanted to understand your mindset, right? We have 2 different -- and if could be more diversified considering if there's some other SKU doesn't work. So I wanted to understand how you're looking at these 2 strategies. I hope that's clear this question here on private label. So those are the 2 points.

Thank you, Irma. We should also use the Econobom brand for first price products, right? Of course, the product is starting now and it's going to go through a lot of adjustments. Brazil still has, when you compare with other countries around the world, 2 historical conditions, right, in Brazil, logistics and taxes. So you have an expectation also for the tax reform with greater standardization. We have a lot of regional brands with specific regimes and the logistics issue, which is super difficult, especially with low added value products where you have to transform things and transport things to Sao Paulo. And so in our view, for the product to be successful, you have to have a level of density and low logistical costs. And today, we have a big volume, right? You have products sometimes -- it's not that they're going to be focused only on Sao Paulo and Rio de Janeiro, right, where we have more than 150 stores in a very small or low perimeter and the volume, the Assai in some categories, we had 35%, 40% of everything that the category sells in both states, right? So that's why we finally -- I believe we finally reached the right moment to reach this private label product strategy. Of course, the Assai brand is a brand that's loved by consumers. But at the same point, you can't get it wrong with this kind of brand, right? So if I can contaminate other products. So we separated the Chef brand, and it's going to gain a lot more strength in some categories within the food service public and also Econobom that should also have some of the first price products. The main focus is going to be to launch the Assai brand products. So we plan to have an improvement in the margins and also an increasing competition, right? And so about the partnership with MELI, we believe that it's an incremental sale, right? So customers buy through the platform, and we see customers have a purchase occasion that's very different and for different categories. So when you look at the food sector, a lot of people talk about how it's sometimes like a single group, but these are actually unique categories, when you consider products you choose like tomatoes or perishable goods, and also soap products where you know exactly what products you're getting, right? So what we negotiated with Mercado Livre is really that will be the first cash & carry. We also want to keep our low price level without compromising margins, right? So we've seen -- the objective is to have an additional channel with incremental sales for Assai. I hope I answered that.

So our next question comes from Lucas Esteves at Santander.

We noticed that there's a relevant factor in cash generation, which is the increase of revenue related to commercial contracts suppliers for allocation of media space, exposure of products and other commercial conditions. And I wanted to know if you consider this to be a structural change and how we should look at this recurrence up ahead.

Well, I'm going to pass this on to Wlamir. We had a very unique negotiation that was made and that ended up leading to this impression, let's say, right? So Wlamir, if you could discuss this.

Thanks for the question, Lucas. The effect is just accounting, right? We were negotiating contracts for the backlight and suppliers and the allocation also annually. And this year, we made the decision, considering the scenario and difficulty we had in the market to work on this, right? Instead of having an annual contract, we created a biannual contract, right? And to the detriment of this, we increased balance sheet revenue, but for cash effect, this was 0, right? So this is going to be considered during 24 months as we receive these amounts. So this is an accounting effect. What we modified, however, was instead of selling this contract that's annual, we started having a biannual contract. And so there's no change or perspective. And we should probably keep this up in 2027 when we renew this, we should probably keep up as biannual. Of course, we're going to understand this step up ahead and see if it really makes sense for us and for the suppliers. The suppliers understood this as a positive point as well this negotiation with some compensations and agreements we had with suppliers. So it's just like an accounting balance sheet effect, right? There's no actual cash effect.

Okay. Just a correction point. I saw that Joseph Giordano wrote the tax credits that were billion there. The credits are not in the results. The tax credits are not in the results. They're just a contingency asset. So it's only going to become a result, as it is monetized. So considering that we identified the accounting procedures of registering this as a contingent asset, which is just notifying the market, but it's not included in the results, Joseph.

Moving on. Our next question comes from Gustavo Fratini.

Two questions on our side. First, how do we consider the gross margin from now on, right? You showed significant gains during 2025, but some of the main levers are maybe a little lower, which is store maturity and expansion of the services. And we also have all of the discussions with the ICMS-ST that also hindered this delta between the net revenue and the gross revenue and that also impacted the margins? The second is about the G&A expenses. So as selling is very well controlled. G&A has been increasing a lot due to the new projects that are going to lead to a lot of positive results. But how should we look at this from now on? Maybe like a phaseout of the expenses now that projects are more developed?

Well, obviously, you have one part of this, which is the deflation. So when you have a deflation, you dilute this, but the expenses keep on as the same, right? And so this not necessarily will affect the store results, right? So there is a phenomenon, which is temporary. As these commodities recover pricing some way or the other. They're always -- you have to be careful, right, because sometimes it looks like everything is here forever. No, it's not going to be BRL 12 a package, right? You're going to go back to the price even because of the reduction of the planted area, and also because of the balancing out of the supply and demand law, right? So even if you suffer a bit of this during the period, if it's because of this as an identified and reversible reason, you don't want to make the wrong decisions, especially for store operation. There was an increase considering the new projects. Of course, first you plant and then you reap, right? So there's no way out. And we are investing in people, training, skills until these projects can once again generate the impact. So when it comes to the expansion of margins, I disagree. Private label is a project. We're not here just to make the story look cute, right, and fill out a big portfolio of products with the Assai brand. We want to increase margins. This is one of our objectives. So there's also been an advance in our negotiation systems and advances also in pricing that allow us to have margin gains as well. So even with these new projects, the sales when they're accretive, they also help with the margins at the end. So once again, we still see a sea of opportunities and especially when it comes to financial revenue.

Well, our next question comes from Tales Granello at Safra.

My first question is coming at the store network. I want to know how many stores are being reassessed in the company. If you can break this down, and if there are stores that are at a deficit or not, and if there's a specific market that's been more difficult, where these stores should be reassessed. Then you have this 5x2 works shifts and some companies in the sector are already testing this model of having 2 days off and 5 days of work. And looking at the reduction of the employees in the beginning of the year, how will this interact with this new scale as it is today? Or if you maybe have to increase in the future the amount of employees.

Thank you, Tales. Well, first, the 5x2 scale, well, we've obviously kept up with this, and we've seen some pilot projects. But most of them are in retailers, right, not any cash & carry or wholesalers. So I think it's going to be a very strong political demand this year. And I'm not going to say whether I think this is right or wrong, but I want to say that if this is applicable to everyone in cash & carry, we have a labor expense that's lower than retail. So normally, 50%, let's say. And that impacts everyone, but it's going to be basically null at the end of the day and offset. And we have a lower impact in cash & carry, right? So if it's a change that's approved, we'll adapt to it. And maybe we'll have a little less pressure, right? Because there are days we have a purchase cycle that's very different. But of course, if it did come in, we would have to increase this to be able to manage this modification and the shift scheme. In the store network, we already provided some initial signs. We ended the results this year, we're reallocating this per store. So it could be that there's some closings of the margins with negative contributions. But obviously, we're going to be reassessing the store network, and we should bring in more data about this in the first quarter.

Keeping on here, we'll head to our last question. It's a question in English from Andrew Ruben at Morgan Stanley.

Maybe could we get an update on how you see the B2B business? First, just a general view on the health of the B2B customer set overall? Then second, as some food categories go into deflation, any relevant behavior changes you're seeing from B2B customers, if that's having an impact on results, would be curious to understand it.

Thank you, Andrew. Very interesting question, because the behavior of this B2B customer is different than B2C. So you can imagine businesses that are seeing price and price dropping month after month, right? They reduced the volume of purchase because they're afraid of losing cash upon their stock levels, right? So maybe they're not going to be able to resell. So decision-making for who's going to resell is very different than who's going to be consuming, right? So when you have an increase in inflation, normally, you'll increase volume. But when you also have a deflation, then you also have a drop in volume in this public, because they're afraid of setting up -- accumulating stock, because they've been keeping up with the price. In the B2B basic items, they normally keep up pretty well. But it's a customer that's been impacted by the lack of cash and low income. So they've been working with a stock cycle that's pretty short. There's a demand for credit. And when there's a price drop, then they get into what they consider cautious mode. And so actually, there is some other points where the market was not expecting we would increase margins, even in the sales scenario, right? Because there are some categories where there's no point in dropping prices because customers are not necessarily going to increase their purchases, right? Because they're afraid of their stock cycle, right? And I hope I answered your question, Andrew.

The Q&A session is officially ended. And now we'll pass the floor back to the company for their final remarks.

I think I want to thank the team, Anderson, Wlamir, Sandra, Aymar, and Gaby. And 2026 is a year where we have really good expectations, right? We expect that we'll have a drop in our interest rates. And we consider we have 40 million people visiting us every month in our stores. So maybe we have a vision that is very significant in the food sector, right? And so this has really been highlighting the effect, and we see low-income customers suffering a lot, right? So there's a big expectation. But generally, Assai has been keeping up with this transformation, and there are years with challenges. So -- but of course, the company's moving along with new projects and initiatives to be able to lever and continue to deliver customer satisfaction and shareholder satisfaction. So I want to thank the team for the year of 2025, and we're getting into 2026. I want to mention also support from our Board as well when it comes to positioning changes, and that's going to help us have a company that's very different than what we currently have. So thank you, everyone, very much.

The earnings call for the fourth quarter of 2025 at Assai is officially ended. The Investor Relations department is available to clarify any other comments or questions. Thank you so much for participating, and have an excellent day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]