Unicasa Indústria de Móveis S.A. (UCAS3) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Thank you for waiting. Welcome to the conference call of Unicasa Indústria de Móveis S.A. to review third quarter 2022 earnings results. Today, we have Mr. Guilherme Possebon de Oliveira, CFO and IRO. We would like to inform you that this event is being recorded. [Operator Instructions] This event is also being broadcast simultaneously on the Internet via webcast, and can be accessed at www.unicasamoveis.com.br/ri, where the respective presentation is available. The selection of slides will be controlled by you. [Operator Instructions] Before proceeding, let me mention that forward-looking statements that might be made during this conference call relative to Unicasa's business perspectives, projections and operating and financial goals are based on the beliefs and assumptions of the company's management and on information currently available to Unicasa. Forward-looking statements are not a guarantee of performance. They involve risks, uncertainties and assumptions because they relate to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors and analysts should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Unicasa and could cause results to differ materially from those expressed in such forward-looking statements. Now I'll turn the conference call over to Mr. Guilherme Possebon de Oliveira, CEO (sic) [ CFO ], to start the presentation. Mr. Oliveira, you may begin.

Good afternoon. Please go to Slide 5 for the highlights of the quarter. The company's revenue grew 8.6% in Q3, slowed down -- an expected slowdown in growth when considering the first half of this year. And given the strong performance in the second half of 2021, net income in Q3 grew 1.3% to BRL 7.3 million with annualized ROIC of 23%. On Page 4 of the release, you can see the P&L for the quarter and for the half year, excluding nonrecurring effects of the recovery of tax credits recognized during the year. Moving to Slide 7, 8, 9, 10 and 11. You can see the individual performance of each sales segment. In general, our brands performed well with the highlight going to the corporate segment, which grew more than 60%. On Slide 12, we can see that average productivity in the quarter per Dell Anno and Favorita store, reached BRL 155,000 per month, up 19.3%. While average productivity per New and Casa Brasileira store was BRL 73,000 per month, an increase of 24.4%. On Slide 13, we have the graph with the evolution of our exclusive and multi-brand POS. We ended the quarter with 180 for exclusive stores, 102 multi-brand stores. On Slide 14, you can see that we ended the quarter with 56 Dell Anno and Favorita operations, 110 New and Casa Brasileira operations and 18 exclusive stores abroad. Moving on to operating expense on Slide 16. We can see the graph of the evolution of selling, general and administrative expenses, which increased 38% in the quarter, regarding the main expense increases we highlight. Personnel expenses, due to increase in headcount to support the growth of the operation in the United States, replacements in the team that provides support to domestic retailers postponed due to the pandemic and also the collective bargaining agreement. Advertising expenses increased BRL 1.2 million, especially due to the resumption of trade shows, conventions and advertising campaigns, which in 2021 were held back due to the COVID-19 pandemic. Market costs increased by almost BRL 1 million, mainly due to expenses related to the COVID and export segment, such as shipping, customs clearance and assemblies. The partial resumption of travel contributed to the increase of BRL 0.4 million in this line of expense, and the expenses of the U.S. operation which increased due to favorable sales expenses related mainly to shipping and freight. On Slide 17, we present the summary of Q3 2022 results. It is worth highlighting the gross margin. 36.3% growth, 3.5 percentage points of growth when compared to what we had in Q1 of this year. On October 3, the company got from the Brazilian IRS, the credit of inflation in financial investments, as mentioned in the release of Q2, the value of the credit totaled BRL 100.8 million, and its use will start in November. On October 24 and 28, we disclosed material facts regarding the company. They joined that -- in a process that was in the material fact, and there is a project with details. The next step will be the signature of the term of adjustment with [indiscernible] in the end of September, as part of the plan to expand Dell Anno brand in the U.S. market. We signed contracts to rent a POS in the city of New York, with approximately 300 square meters of selling area. The store is located in one of the main fashion hubs in the city, about 200 meters from Madison Square Garden and the Fifth Avenue. The opening of the store is expected for the first quarter of 2023. I'll now give the floor to the operator to start the Q&A session.

[Operator Instructions] Thank you very much. We are ending the Q&A session. I would like to turn the floor now to Mr. Guilherme Possebon de Oliveira for his final statements. Mr. Oliveira, please go ahead.

I'd like to thank all of you for joining us, and I wish you all a great weekend. Have a great rest of day. Thank you.

Unicasa's conference call is ended. We would like to thank all of you for participating and have an excellent afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]