Sendas Distribuidora S.A. ($ASAI3)

Welcome to the webinar of the management's presentation to the general shareholders' meeting and Sendas Distribuidora on the 29th of April tensions. For those of you who need simultaneous translation, i would like to mention that we have this tool available on the platform. In order to do so, please like the interpretation button through the globe icon on the bottom part of the screen, and choose your language of preference, Portuguese or English. I would also like to note this earnings call is being recorded and will be provided on the betas on the IR website, the addresses ir.assai.com.pr. [Operator Instructions]. Now I'll pass the plan to Gabrielle Helu, the Investor Relations Director at ASSAI.

Hello. Good morning, everyone, and thank you for participating in our webinar on the company's proposal. We would like to say that this presentation will be restricted the Q&A to the topics related to the General Shareholders' Meeting and the information on the manual. I'd like to present the Board members that are present, Oscar Bernardes, Lean Maria Dominion, our CEO; Saiki, our VP for People and Sustainability; and Samaras, our Governance Officer. Now I'll pass the front to Oscar for the beginning of the presentation.

Good morning, everyone. Sorry about that. I started off with on. As Gabriel mentioned, thank you all for participating. And let's move to the first slide. Great. Now we are still a relatively new company when it comes to being a true corporation, right? You probably remember that in 2023, we had the creation of the first board with the majority of independent shareholders. I mean, that was a dramatic meeting where we did not get the approval of the management. So the new board had to work to fix the situation, and we were able to have for most of our shareholders to approve this package -- that was a temporary transitionary pack in July, that same year. And we started off developing a permanent ongoing conversation with shareholders. So we've spoken in person with 30% of the total base of shareholders April 24. We had a meeting where we got the approval of a compensation plan that we call the executive partner program that we consider to be a long-term plan. That's extremely important. We spoke with over 44% of the shareholders' base, and we got an approval, a massive real 90% of shareholders improved . We have the fourth cycle, where we spoke with 57% of our base of shareholders. We also got a pro of almost 63%. And now in this cycle, we've already spoken with over 65% of our shareholders. And we do not foresee anything very complex for this shareholders' meeting where we focused more on obtaining their opinion and get some questions on strategy for the future and to session times and in preparation of this general shareholders' meeting in the fine . All of the interactions were always related to the ISS and Glass 1 agencies, but we were completely uncapable of convincing these companies and these agencies that were really doing the right thing in the right way. Although we explained this in my details, they always have 1 or another point providing contrary recommendation towards our compensation approval and proposal. And this is a major point of frustration. You must remember, and we're going to get into details about this a little more up ahead that we only have 3 statutory directors adding variation for compensation is a very big variation, especially when you have events that are onetime or one-off events, I won't repeat, themselves. So we must be very careful as we analyze the variations in the total compensation. And that's what we really want to focus on this today. . To make it very clear that there is no exaggeration in management's compensation. And we also want to emphasize, I want to remind you that the company to date is a much greater company than what it was 4 or 5 years ago. And Belmiro will share this growth a bit -- and we've had a series of new businesses and new services and projects going on. So the complexity of the company now with a lot more intense than it was 4 or 5 years, which also led to a series of adjustments and strategic changes that will continue to be ongoing. And with this, we'll have to have an executive profile that is really more comprehensive and complete, which is more difficult to find in the market. So I hope to count on your comprehension. And please submit all of your questions because we really want to get into the general shareholders' meeting without any questions left outstanding, about what's being proposed. So Belmiro tell us a little bit about the evolution of the company in the last few years.

Thank you for the introduction. The idea is that I'll share a little bit of the evolution of our growth and the numbers related to compensation and different research initiatives the company has. We have Sandvika, people and compensation and administrator Director. But of course, the completing the company became a lot greater where 1 of the biggest companies in Brazil, the biggest customer traffic in physical stores is over 40 million people. And most of these are almost all of them Assai reference in fastener in Brazil. And the company is also -- ever since we took over back in 2011, it was a company that was added deficit with $3 billion in revenue. And now the growth comes from the actual executives and not from the prior shareholders. So I always like to remind you that everyone I took on the role of CEO, I never received $0.01 of investments from abroad. Everything we did was then grown cash generation across our shareholder base. agents management has always been capable of transforming the company. . So we brought in an analysis that so from 2011 onwards, but from 2021 onwards with this transformation cycle, for over 6,000 to 9,000 employees. And this give is where you have an increase in net interest rates that results in leverage that's also where we have the biggest expansion project in the company and also positioning of Cash & Carry in with the acquisition of the Alta hypermarkets, which was not only an expansion of the amount of stores but also a change in the overall sector in Brazil, which is where you leave from a more specialized format that's more in the outset the city and you get into closer a more present model where you boost all of the different social levels in the fastest. So the results we see even in those periods and the food sector demonstrates the resilience, we're not only positioned are resilient also in the margins come from the broadness of our different diversity of pubic -- so we work from Fast A all the rig capacity. And so that this is the B2B and with a major capacity and we have issue that my terms more opinion easy the company really takes in gingers. And this has been really in line with the growth of the NPLs. When you have an expansion grid your customer experience may drop or any standards may drop from management's perspective or shareholders. 40 million customers visiting our stores monthly, and so I think it's not about -- that's not the topic that is were there today, but we're on a strength for deleveraging or nausea in 2022 with the acquisition of the Shonan the closing between 25 and mostly, we really committed to the reduction of our average rate. So I think on my side that it, I'm going to cover compensation in detail in tiara is actually been in touch with the people Cornelian she's the most stable person when it comes to SL and recent to get into more details on compensation. And later so portion this webinar and it will be available well for Q&A as well .

Thank you all so much. Good morning, everyone. As we've already mentioned by we are objective today is to explain this a transferal and go over all of our compensation and proposal that will be submitted to the general shaving, but before we get into the numbers that we're also going to add on here. I want to reinforce an important point on this compensation structure, right? I think it continues to be a be unmodified from again social perspective, aversion 2024, where we had over 44% of our shareholders was favorable. So we were able to keep the same architecture for compensation. And this is based on real which is the fixed compensation where we position our our big salary of the executives on a medium average market, which is our strategy. The position is based on research done annually. This year, we've already performed about 3 different research initiatives to assess our positioning in a level compared to the market. And also can see our competitiveness avoiding any obsesses in compensation. We identified that the fixed salaries of our executives were below 50. So that's when we proposed a readjustment in the salary. So we could be aligned with the defined strategy. Then we also have a strategy which is the total target compensation being a 75, including our variable compensation, of course, this favorable compensation is going to be achieved if all of our targets are reached and so the comp on a. Our short-term incentives, as you may see, have a very strong correlation with the financial performance, operational performance, including the metrics for resolve and also ESG. And we have a ceiling of 150% of our target value if the goals are achieved by 120%. And you also put up 80% of the EBITDA. And if this is not achieved, there's no premium. And on the long-term incentive program, we have an extended vesting we've also kept our metrics focused on cash generation and returns. Here, we have our targets to present here that represent 70% of our long-term incentive plan and the other 30% are in restricted shares. Besides this, we have also our executive partner program, which is already approved in our general showman in 2024, which reinforces our long-term alignment between executives and shareholders, and we don't see much of a need to have a new approval because it's already improved to avoid any duplication and decision-making process. And as you can observe, we have a structure which guarantee balance between competitiveness, mercy and also abate creation for the. This structure dip was not modified, and I want to reinforce this. It's been kept ever since the approval back but moving on, I want to present to you the movement or the explanation of the movement in 2026, highlighting the one-off effects that are nonrecurring and that were the main focus of -- that caused a bit of conclusion in the assessments of the agencies. In the proposal for 2026, we have a total proposal of about BRL 73 million. This number, when we analyze it must be -- we must consider that in this number, we have 12 million. Sorry, BRL 18.2 million of nonrecurring effects related to 2 specific parts that are involving the transition of the leadership we've had over the years. first signing a new executive in order to attract an executive to the market that have the conditions to take on the role as the finance that was empty for 8 months, we had a hiring bonus payment, and this is a nonrecurring cost. Then what we are getting in the next few years. And we also had the exit of another executive. So there's a cost also for a termination contract where you include termination budgets and also the anticipation of investing provided to this executive that is still available to the company for 3 years and also it's an amount that will be repeated in the next few years. And so when we excluded the pad, we can reach a base of $54.8 million. And with this, the increase does not reflect the expansion in compensation or in recent computation. But these one-off events that we will have in the next 3 months. And so moving on the next slide, we have an external analysis, as I mentioned. And part of these assessments somewhere pose 26, which was performed in '25, which generates a major distortion because we have a mix in the maximum value and the amount that was actually paid in addition to performance. When we analyze the proposals from a comparative base, and we compare the base 25 and 26, we observed with actual 0.4%. So here, there's no growth or adjustment in competition we have stability without the actual growth. And when we compare what was for 25 and what was performed 24, we have an increase in about 0.9, which is below inflation. And so what we can conclude when we analyze the different proposals in the actuals, is that we don't have a relevant growth in compensation, but instead, we have stability. And so just to make this clear here, as a policy, we always provision the maximum possible, which will be EUR 150 in the payment curve. And we would love it if we could pay those EUR 150 million, if performance would justify this. As you've seen, we have not paid this in all the plans we presented. But as a policy, we always provision for the maximum amount, right? And that's why you have this number that hasn't been achieved. And here on the next slide, we have this exact explanation that Oscar explained and why do we have the major differences, right, between the proposals and the actuals? Well, the value proposal always represent the maximum ceiling, right, which and that considers 150% of the target value if you achieve the goals by 120%. So . When you look at the unpractical trends, historically, the actuals have been below what we've been improving in general shareholders meeting. In 2025, we prove 19, that line achieved 3.7% below this, right? So it's a conservative model, and we're only going to be able to pay the 150 million or the 20% if we have achieved our goals and effective value creation for shareholders. So it's a model that we consider to be very conservative. And this is why we have such a big difference in the last few years between the proposals and the axle since we did not achieve 150%, and so when we look at this from another perspective, and we analyze this historically, as you can see on the next slide, we have a slight composition of our fixed compensation and long-term incentives as well as the instruments we have for shareholding alignment, which is our executive program and our proposal for '26 when we adjust it and we exclude the extraordinary amounts we keep coherent. So a growth of only 2.4% and compared to what was the actual in '25 and a reduction of 0.4% versus the pre-prior proposal, right? So we don't see in this proposal when we analyze the last 5 years, any kind of change in the profile or competition mix. What we see is the continuity of this mix, keeping up with the same percentages that are very close with just some occasional adjustments in the moment. So when we perform this take on a different perspective, from an economic perspective, adjusted for the and including extraordinary to know we observed a dropping trend of about 18% compared to 2021, as you can see. So what we reset when we can focus on now is that there was not an increase in the compensation on an abusive increase in compensation growth at a nominal level was lower than the accumulization and that demonstrates that the company has been keeping disciplined, despite being in a relevant expansion cycle, as Romero mentioned initially, and Oscar mentioned as well. So we had a very important change over the past years, but competition was kept really in line all these years and keeping up with alignment also with what was approved and all the strategy and certain executives, as we mentioned, initially, perform annual research to assess this compensation and verify our competitiveness in the last 3 years as a result of our research, we have the identification that our executives were below the P50, which is our strategy. We didn't perform any adjustments, but we did now, after all of this growth and expansion cycle. So I think this proposal and all of this pretty reinforces our commitment to this balance and responsibility in managing executive compensation, right? So our policy remains unmodified and consistent over the years. Our assessment in 2026 that you've seen things due to noncompetitive events, right? And the pace and discipline. And you see it's a model that has a strong alignment with Charles intend valuation as well in the company. So I think that's it. I think I'll cartons speak about this a little bit as well with our main tool for alignment with our shareholders as well. And as you've seen, when we get into the partner executive preponing numbers vary because we must follow the accounting rules and unfortunately, the value of our shares have been very long. As we take the vision loss, but these are only accounting structures, but because as promised when we have the approval of this fine plan will not that the shareholders kind of participation in state. So we've been buying shares and the base and we have treasury sheds as well that Seara means to support this program as well as the bone and some programs. So we see some variations also in the accounting rules they do not affect shareholders with these shares are in treasury, right? So this Executive shareholder program. I don't even like all in this this compensation program with a corporation an amount of where this is an increase in expanding and result, you probably on on 1 hand, which actual corporation we had with the and Board members are just transitional. We have no idea if we will beat our members next year. It depends on our Buaronto let us in these scenario. You must provide the long-term continuity to come that does not have a different shareholder that does not have a controlling shareholder. So that's where we've developed this program and under a lot of conversations with shareholders. And I'd say it's really a long-term commitment, right? So it's a program that's been besides the 7 years to 3 years lockup right? So it's really long-term programs and distribute fresh or memory here. This program will only start compensating executives in 7 years less to deliver over 20% increase annually expected by the inflation considering the profit per share, right? So this is a very ambitious target, and we still believe we'll be delivering this. We're not despite last year's not being maybe brilliant on this, we continue to believe that this is a possible objective. So please carefully look at this program and believe it or not, ISS complains that we don't provide visibility but it's absurd, right? It's more than explained in the document, but they want us to include on same spreadsheet that should be moved every of the year, right? But that's impossible, right? So it was already approved by a massive amount of shareholders and our executives this will be a contractual teloment of the company, and it's not feasible to changes every year, right? So that's why the Board is still really comfortable with this program that was created, and we hope we'll have stability in the long term, visiting a company with such disperse casual, right? And so I think that's what we had to present at this point in time. And please do feel free to ask this. We're here to answer any of your questions. Now we'll start the Q&A session.

[Operator Instructions] So we can wrap up. Let's just wait maybe 1 more minute and we share million option I know we expect things did you explaining that Well, come on, guys, any questions. So feel free, of course, to call Gabi, Rafa after this conversation, right? To ask us anything and even to me or Lee were all available, right, to clarify any other points you may have later on. So we still have no questions, then let's wrap. But thank you all so much for your participation. And as I mentioned, if you have any other questions, please do happen. This is Assai's policy in a current board, which is total transferring towards shareholders and ongoing contact. This is how we manage the company, which ones to you right at the end of the day. So thank you all very much. . So the webinar on the management's present proposal for the General Shareholders' Meeting is a fastened Investor Relations department will be available to clarify any other questions. Thank you all participants, and have a great day. .