Vivara Participações S.A. ($VIVA3)

Good morning, everyone. Welcome to the video conference for results of the Fourth Quarter and for the Full Year of 2025 of Vivara. In this quarter, the company will dedicate 100% of the video conference to the questions-and-answer session. The audio with the initial comments and the analysis of the financial performance being done by Thiago Borges, CEO of the company; and Elias Leal, CFO, and is available since yesterday and can be accessed at any time in the IR site. For the simultaneous translation, we have this tool available on icon of interpretation in the bottom of your screen. You can select and choose the language of your choice. To listen in English, silence the original audio -- mute original audio, and you will hear only English. [Operator Instructions] If your question is not answered during this video conference, the IR team will enter into contact to answer any questions you might have. We're now presenting the team we have here, Thiago Borges, Director, President; Elias Leal, CFO and IR; and Caio Barbuto, CIO and Director of Investment and Treasury. We now collect your questions. [Operator Instructions]

We go to our first question from Guanais from BTG.

Two questions from our side. First of all, if you can comment on the excess of gold stock, which is on your balance and for how long this will guarantee your production and the pass-through of prices during the next few months in the gold. And the second topic, if you can examine this, if you could comment on the position of prices in the assortment in life that we can understand a little bit how is the product reduction of the lower price entry-level products and the higher-priced products? And how do you see the possibility of passing on prices over the next months?

Thank you, Guanais. This is Thiago speaking. It's a pleasure to be talking to you again. Thank you for the question. It's very important, what we're focusing on here in the business. It's a competitive advantage of the company, our stock of gold above that of our competitors, which gives us space -- a little more space to make our strategy of price positioning and price marking and the adequate timing to not surprise negatively our clients. In our considerations, we mentioned that we had 8 months of gold in the raw material. And we need a little bit less than half of that to run our productive process. Over the year, we're going to be making some meltdown of finished products in gold and also to lengthen a little more this necessity for the -- avoid the necessity of purchasing gold from third parties. Beginning of this year, we have gold raw material in the format of the gold, which we have in these two formats, and the rate of exit of the products and the purchase of new products -- of new raw material, whether it be in the format of purchasing in our stores. We also have a long period of time to position ourselves in a price to pass this through to the current levels of the price of the commodity of gold. We have 18 months, at least 18 months above that period of time to be able to reposition ourselves the gold -- with gold prices. So we have quite a bit of time to adjust to that. Since we have this -- second question has to do with the prices of life. This also applies to both categories to share a bit of the levers we work on at home. And historically, these levers. The first thing is the product engineering goes back to X or Y to offset eventual to improve our profitability. To cite a few examples of what the clients can do, we can design lighter products from 0. So I'm going to talk about lighter bracelets, lighter products where the design does not compromise the quality of the surface of the product and the touch of the product permits us to look at this perception of value. It's a very big job, methodology of production. Historically, it was preponderance about the direct conditions. We saw everything that's possible to each one of these methods due to their direct function. We make a product which is 20% to 30% lighter just by the production methods that we utilize. And in gold, we have invested in modeling more products to use this technology, hiring a team -- a 2D and 3D team to get the current portfolio of tools that we have and applying this technology, maintain the continuity of the factory and passing this to the store with a product with 20% or 30% less metal, according to the need to repositioning our prices, look at the commodities. We can also increase our margin about monetarily. So this is the other alternative that we have in-house. We see this, and we're always looking at these possibilities. Another lever that we have is the internalization. We look at the location of the factory, and what we have purchased from third parties instead of producing in-house and invest again in the process of prototyping and sampling and planning the demand so we can make our products in-house, because in-house, we're able to have a better control than the portfolio of the subsidies. And we have these other alternatives. And also worth mentioning that we have categories which we do within the jewelry category and the subcategory and other subcategories. But in Principio, we do the management of a markup of jewelry as a whole is going up and also diminishing the necessity of increasing prices and the positioning of the life products and vice versa as was last year. We have a multi-metal company and in this scale, and we have also silver, and we work with the dynamic of long term and short term looking at these questions in the subcategories within these metals. So we see within Life, for example, products which are more comparable with the competitiveness -- competitors, which represent a certain percentage of our prices, 10% or 12% of our company. And these, we have a comparability with the market and better elasticity in terms of passing through prices. And the commercial products and the collections within life, we have elasticity, which is slower in the repositioning of prices. In the categories within Life and Vivara being worked on and cost-plus structure in terms of what is with the commodity prices. Beyond that, we have the work being done, a project being done of the optimization and efficiency in fact in manufacturing so that we can have a reading of the demand and the production line, which is more constant and products which are continued and collections with a better planning, permit that the factory itself, we are able to have better efficiency and that we have efficiency in the factory and avoid also having to raise prices in the short term. So I gave you a long answer, but it's a little bit more the rationale in relation to how we see the pass-through and positioning of prices. And as we look at all of the initiatives -- internal initiatives, we balance all these things in the medium, short and long term. We -- at the first -- in the first quarter, we have done a price positioning with the price -- for these brands in different magnitudes by category, and we're monitoring the elasticity, and we see space to continue -- over the year to continue matching if commodity prices remain at their current levels. As we look at what was done, it gives us visibility that the management of the markup, when we look at the short term, we look at levels which are equal to those which we are practicing.

The next question is from Danniela from XP.

Welcome to the first results call -- official results call, Thiago. I have two from my side. First, I would like to explore a little bit more your comment you made about, I think, it was on the video about the opportunity for the reduction of stocks in the stores and the volume of pieces and also connecting this comment with -- as you mentioned, with the expansion of the affiliates and the soft guidance you've given the acceleration in the number of stores even in this more challenging scenario of raw material costs. If you can look at similar levels or even higher levels of profitability. Well, we can imagine what we see in the way of opportunities without compromising your sales since we see this inverse movement in the last year, 1.5 years, and understand a little bit what is being done to improve that this can be done without compromising the sales and talk a little bit about this point. And also looking at Life, I'm going to go back a little bit to the subject of competition and its position. It would be good to understand a little bit more about how you're thinking about the strategy for that brand. We see Pandora very strong in this question of the moment -- of their moment in the bracelets and charms and pieces, which have been very strongly involved in that. And we've also seen that Life is a little bit -- the commercial lines, these angles in the moments line, but also looking at this focus in the windows, we see this point. So I want to see what's your strategy in these different categories that you mentioned. And if you could give a little more detail, but that's connected with this question of life, if you can also comment that you didn't cover in your first question in relation to the levers to evaluate the new composition of mixtures of metals in a global way, the alloys which are covered in the composition of these products, if there's any metal which isn't silver or gold? And how do you see eventually a new line in this direction to pilot this product with a mixture, which is cheaper and a cover that's covering which is more premium.

I'm going to divide this with the reduction of our stocks in the stores. And I'm going to continue to talk about the strategy of the Life brand and the alloys that we'll be utilizing.

This is Cassiano. Thank you for the question. In relation to our vision of the management of our stocks, we look at an overall view on the evolution. We look at these categories of products. And it's important to mention that our products -- finished products is 2/3 of our total. And we look at the overall management of -- the chain of management and looking at the total value of our stocks. We're also working on two fronts. First of them as began with the demand and the increase of the visibility of the projection of demand as well as the model of supply of the stores, which is the assortment of each store. And the second front, we're talking about the policies both for raw material as well as product -- finished products and the availability of the employment of capital. Another front is the consumption of both in raw materials, such as gold and chains as well as the life lines. And the fourth front is looking at the continuous with the reallocation of pieces as well as the lower performing items. And in the vision of our policies of covering, we have looked at the current numbers going back to 2006, the gold, as Thiago mentioned in the question, we have today 8 months of stock, and we plan to reduce that by half with looking at the need of suppliers and the different components of raw material where we have approximately 11 months of stock, the reduction will go through the analysis in the -- of the materials, searching for the material with the development of new products. This makes the product more lengthy, and we have the potential for an expressive reduction of the stocks. And to answer your question about in terms of what we can expect of this work with the total results of stocks, looking both the finished products as well as raw material, we see potential in this first movement to go back to the levels of -- historical levels of coverage, 400 to 450 days of stock in a gradual way and in a controlled way. And we have -- since we have an expressive seasonality during the year and the comparisons are always with periods with comparable periods. And once again, we have success, and we go to the second movement, which is to look at the work -- the continuous work in the management of products and the integral management of the stock of our inventories.

Thank you, Cassiano. Going forward, as far as your strategy for Life, what we see is the movement of maintaining Life with the perception of a complete jewelry store. Beyond the categories of collectibles, we also have collection -- commercial collections for the general public, which is our wide-ranging public. And the brand reached 15 years this year. So we're at this moment, the brand in the history of Life to make it a special year in terms of launching products. And so the characteristic, as we always comment, to be very much used for presents. And it's also a brand which has lots of variations in price. So connecting with your last question, there was a question of the alloys, it's true that we have to study this question always and go back to it with the answer; as when I say we're studying this question as these other levers also it comes in as one of the levers that we have. I'd like to see what is the positioning that we have to do with the understanding -- of having a complete understanding of what this means in relation to the dynamics of this market, and we respect having a global operation and looking at the company and the different movements. So we think there is space to study these alloys. And over the year, getting a little more knowledge about our market, we're going to -- before we get to this question, there's lots of things to do in-house as we commented with technology in the factory. And in the question of life specifically, only 58% of what we sell is produced in our factories. To understand exactly what we have the vocation and these other 42% to do in-house in the factory, to maintain the freshness in the stores and also buy something from outside would make sense, but with 42% of -- could be inferior depending on the investment on our part, in team and processes to be able to get to a level. And this obviously will offset the increase of the need for repositioning of prices in the brands. So there will always be a consequence as we look at -- and we have competitors, as you mentioned, who are producers in producing this, look at the receptivity of this and react to it or anticipate it. And at this moment, the testing that was being done around the world, and we're being -- we're very close to this topic to understand the changes in the dynamics of the silver market, and how we maintain the evolution of the Life brand differentiating more and more the Vivara brand, gaining its own life, maintaining its sophistication of being a jewelry store, which differentiates itself from the other local competitors and it puts it into a category or into the custom jewelry category, and it changes making it -- positioning it differently from them.

Next question is from Gastim from Itau.

One question from my side -- a couple of questions from my side. The first is about the gross margin, which is important to understand how we will behave with this gross margin. For the third quarter, was something deliberate on the part of the company, your investment in the fourth quarter with the increase of your turnover of your products which sell more slowly. I talked about Black Friday. We saw many -- and how much, in fact, you're comfortable with the strategy that this is a onetime for the fourth quarter? And how much the strategy for the first quarter for the short term, as you mentioned, will go back to the dynamic of preservation of gross margin. If I understood correctly, your first question about the markups year-over-year and this dynamic of gross margin which appear very concerned about the price of the commodities. And the second point which you mentioned about the elasticity. This is something which for us here on our side is almost impossible to calculate. How much you can pass through prices would affect your volumes. So specifically, in this question of Life, talking about Life now due to the silver prices, whatever you can share with us about how is the dynamic at the beginning of the year of elasticity, the elasticity is being relevant. It happens, but nothing very relevant due to the markup and not very high markups that we see in same-store sales for Life, these two questions.

Thank you. It's a pleasure to interact with you. I'm going to also invite Elias to help me with this answer, specifically in relation to the quarter that's beginning in the management of gross margin, you have the component of the markup. And within the markup, you also have the way that we have started to look at it inside the company, you have an initial markup, which you hit, right? And then the final markup, which is a consequence of the discounts that you have to give and the depth of these discounts and the wideness of these discounts. If you have to discount 70% on your products and a discount -- average discount of 30% and you have 40% for your final markup. So looking at the data that we analyze here, I'm going to pass this to Elias. We saw an entry markup was at the levels that would maintain the falloff of gross margin in the fourth quarter due to the discounts which are offered. So the indicator that we have is an entry-level markup and then the discounts which were delivered for the company to be able to follow the strategy. So looking at linking this up in the first quarter, in the same analysis of markup already considering the final markup and not just the initial markup. In the first quarter, we see stability in relation to the same quarter in last year, even though the gross margin is not just markup. You have other components in gross margin, which influence such as CMV, which affect the final markup. We have the component of optimization of the factory, cost of importation, which not necessarily are in the management that we do of the markup, which we are not able to look at product by product. Daily, we have markups. We have to include these other effects. We would not have the precision that we have in the management of the markup as we look at this at the closing of the month and several other effects -- these other effects, which affect -- principally the effect of the optimization and efficiency of the factory. In this quarter, the data which was analyzed in the quarters of 2025 showed increased production, we've had a factory which is more efficient in the first quarter due to the optimization of stocks and the planning of the factory. And so this is -- as far as gross margins, that's my comment. And before I pass it over to Elias, I want to add, as far as elasticity, this concern that you commented on is very valid. It's obviously something that we monitor, and there are categories in Life in which we see greater elasticity than in others. So we're looking here, for instance, a category by category and price level by price level, understanding what we're able to position without impacting too much our volume. And then the strategy of the jewels because jewelry, we have a greater elasticity in Life, a little bit less elasticity, but we're going to manage the gross margins of the company as a whole. These are company's own stores. We have to look at the P&L of the stores, and we have to look at it store by store, but we also have to look at the company overall, not taking away the necessity of looking at the gross margin, specific gross margin of each category, but for each one of us, there are other levels which we can work with to demystify this. I am going to pass this now over to Elias to talk a little bit more about gross margin.

Thank you for your question. This is -- we've been able in a way that is very consistently to be successful in our strategy of the quarter from last year. We looked at -- we saw this on Black Friday, principally where we selected several quantities -- quantity of items that we always put on promotion on sale, thinking that how to put together the strategy of optimization of stocks with the strategy of looking at this in this commercial period in our favor and looking differently this year to do a bigger acceleration in the amount of sales and concentrate sales in these products. We gave a bigger discount on this level of products which we put on sale. And it was very, very successful in the measure that we -- the sales were concentrated in these items. So we see here at the beginning of 2026, a return to the normal level of sales and pricing. On Black Friday, normally, we had a very relevant increase in quantities, which is no more this year. In watches and jewelry, we had excellent receptivity in our products -- for our products. And we saw also very important changes, Life growing almost 50% year-on-year in digital and also which Thiago brought, which is important in the category has as a present category, the present market and online sales has brought to Life. And now looking at 2026, the first quarter, as we know, is not so representative of sales when we look at the whole year, but we have already done the price adjustments in Life. And we also have several other adjustments over the year during the year, which is part of our strategy as it always has been. But looking at 2025, we understand that, as Thiago said, we had -- we maintained our markups, which are stable as we have been maintaining, and we have opportunity to be more efficient in our gross margin. Since in 2025, we had the factory, which was still in the process of ramping up and gaining efficiency and maturing of the professionals that we've hired -- and even with the subsidies, it was very strong in the third quarter -- in the fourth quarter. And this comparability compared with the first quarter where we have this comfort to us. So I think that gross margin is part of the value of our day-to-day here. We're also comfortable with the route for 2026, also talking about this first quarter.

We're going to go off to the next question now, Joseph Giordano.

This is Joseph Giordano. To those who are new to the call, I wanted to explore with you a little bit more as you -- the focus on the generation of cash and the question of looking at this focus, focusing on the tax credits and the assets of the factory, it was clear that there will be some pressure on margins due to that. So I wanted to look at with you, was a little bit about -- as you mentioned at the beginning of the call that you wrote -- you run your stock with the raw materials that you have, which is reasonable you have 8 months versus 4 months as you -- 8 months to pass through prices, a cushion, which is quite long of stock. So I wanted to see how we should look at this in the credits and the discounts on the revenues over time. We understand that last year was perhaps a wider band than it might have been. This year, once this focus is consuming the stock and generate cash, how can you quantify up until where this might fluctuate, and what would be the value of the regime of this line? And also compatible with that, how do you see your stocks moving from current levels for the consumption of long term? We also see this movement that extends these credits in the long term.

Hi, Joseph, good to talk with you. As you mentioned, your question -- the answer to your question and that's going -- pass it over to Elias. We've tried to in this beginning of the year to present a little bit of how we analyze the business internally. Our management of the markup, which we spoke quite a lot about in the answers, we don't take into consideration the subsidies and credits. It's something which is considered by itself in our management. We're going to, over the next quarters and the next years, show what we have to do with these subsidies and credits and see what we need to do about these gross margins, which is something that we manage internally. This dynamic of sometimes having lots of subsidies in one quarter because the factory had a bigger need for production, which was the sale associated with the final clients. And this wind up bringing a result, which is not reflected necessarily in cash. So this oscillates in the first quarters going from the level of the last two years, the subsidies went up from above revenue to 8.5% of revenue in '23 -- in 2024 and 2025. But in the other years, it was closer to 7%, 7.5%. In 2024, we had an increase in production and in '25 and beyond that, we had the entrance of the distribution center in Espirito Santo, which had additional stocks -- carrying stocks, which gave us -- helped us to maintain this level even though in the second semester, we had a level of production, which is more in line with the sale and reduction of stocks. When we look at '26, these credits and subsidies in the year of 2025, which was BRL 330 million. When we look at the DC in Espirito Santo in a full year of operation and needs for -- with all of the previous answers for the utilization of gold in the raw material that we have of 8 months of stock, we see that this volume -- absolute volume of credits of between BRL 300 million and BRL 330 million is more or less what we should deliver for 2026, assuming our premises of growth and internal production. With that, we also had an impact in all the lines and comparisons. So let's try always to isolate these two effects, both going up as was the case in the year of 2025, this year helped us. We took out January for the effects of -- in the fourth quarter, which winds up changing it, but the annual vision is the same. An important point is the metric of generation of cash. How much of the EBITDA will turn into cash in a recurring way. And I think that historically, we have a level in the years of '24 and previously, which grew quite a bit. This is another indicator that we're able to accompany of how much EBITDA will turn into cash, and it's a number for which I have seen bigger demand from the Board for the cycle of cash conversion and the working capital compared to net revenue and cash conversion. So obviously, the company, which is ready to turn into net cash, again, this vision of generating cash will not be a necessity for indebtedness -- gross indebtedness, but also for the health of our business and the EBITDA to bring higher levels of return. So to generate the same earnings with capital gains as well as the business which is higher than in the previous scenario. So we're going to be bringing this indicator to the table, and we're going to be starting to communicate this more clearly.

Just to finish up what he's saying, the effect here that the reduction of stocks of inventories and this lower level of use of the factory, which have been happening since the first quarter of last year. This is reflected in our subsidies. We also see starting from the second quarter of last year, this revenue from subsidy being lower and also being offset in the second quarter by this DC distribution center in Espirito Santo, and we also -- the third quarter of last year was very strong with the subsidies. So in the first of this year, we have a lower production, much lower production than we had last year. We're producing roughly half of what we produced last year. This is partially offset by the Espirito Santo distribution center. So we have a lower level than we had last year in nominal terms. Over the year, this revenue -- the production of the factory should maintain the same level, more or less the same level that we had in the second, third and fourth quarters and the Espirito Santo center will offset this number. And so we think that this number will be very close. Naturally, with the reduction of these inventories, producing less than I'm selling, we have an effect -- the opposite effect than we had in 2024 with the deferred -- income tax being deferred. In the day, we recognize the sale at the cost of the product and the unrealized profits under Conipa and are, in fact, passed to our financial statements. The accounting effect, which means that we have this remission of this deferred tax, but it does not have any cash effect on business. The effect -- the cash effect is brought by the efficiency of our inventory efficiency, the effect of the subsidy and not of the income tax effect. So the tax in an effective rate, when we look at the cash rate of the company, it should remain very close to what it was in recent years and this year.

Thank you, Joseph. This is Cassiano. Also complementing the last part of your question, talked about the expectation of time to arrive at our historical levels of stock -- of days of stock being 400 or 450 days. We see this as a gradual process, continuous process with great responsibility due to our rhythm, our sales rhythm, our velocity of sales, but we see a horizon of 12 to 24 months for this movement, and then we're going to look at the second movement, the management and efficiency of stocks of inventories.

Next question is from Citi, Joao.

I have here three questions -- three quick questions. The first is looking at 2026, the effect of subsidies due to seasonality over these different quarters. We understand that in your mind, is this due to the increase of commodity prices, the management of markups. What should we imagine in terms of the pass-throughs for the gross margins during the year? And the second point is in relation to expenses, we saw -- when we saw the plan elaborated to compensate the increase in the commodity prices, we saw adjustments in expenses. And naturally, we have an increase in marketing expenses. I want to understand your thinking about the expenses for 2026. And finally, if you allow, we see this credit -- PIS/COFINS credits, if there's more opportunities, looking at your point, Thiago, in relation to the cash. If you could explain the reduction of inventories, how do we imagine this conversion? Is this a recurring thing that you want to have and would like to understand your management, your mentality regarding that?

Hi, Joao, thank you for your question. We -- the following, the gross margin for the year, trying to bring this vision to -- of the subsidies -- stable subsidies, which has a series of factors, which influence it. I want to remember here that we did during 2025 and '26, a year in which we gained more efficiency in our factory, starting with -- we're producing more. And over the year, this has helped the efficiency of the factory. We had a Black Friday, which is very promotional, as we mentioned. But when we look at breakdown by categories, we see that between jewelry and watches and Life that, in this process, we see commodity prices going up. We have an opportunity to elevate our gross margin. In the jewelry line, for instance, beyond the values, we have a buffer -- a huge buffer with which we can increase prices, reposition prices where we understand which is the correct price and gain margin in this period of time. In Life, this work of generating value is very much -- a very hot theme in the company. So we're developing a lot of new products. We're changing several products, the internalization, which began in 2023. And today, we have a labor pool with a great deal of maturity, which also brings us the comfort that we're going to be able to bring all the knowledge that we've gained over these years with gold and apply it to the silver market. And in watches, the negotiation that we've done to increase our markups has continued and continues this year. During the year, it's not a year in which this will be the biggest highlight in terms of gross margin, but we understand that there are opportunities for us to bring increased gross margins, starting with the work that we've done in 2025. And afterwards, we're going to look at other lines. We see that we've had more marketing expenses in 2025 than we had in '24. And I think we reached a level -- a more stable level in that line, about 4.5% of our net revenue. And we've had less inauguration in 2025. We're going to have more in 2026, which will have a pressure on our sales force expenses, all to gain in the other lines of expenses -- repeat expenses. We have the line of logistics and freight, which is very strong in the first quarter of '25, which will not maintain the same rhythm in the second quarter of '26. We did a lot of reallocation considering that the first half and this will continue. But when we look at the whole year, we see this more in line with revenue. And the other lines we'll see in the quarter such as CRM, which has increased the expenses in the fourth quarter bringing a little bit less expenses during the rest of the year. So one thing that winds up with one question or another is the potential to continue maintaining or gaining profitability during the year. And then looking at our cash generation, this is the biggest highlight of the year. This should be the highlight of the year. We have a big opportunity for us to continue growing and maintain the profitability, high level of profitability at the end of the year with lots of returns, and we do this generating cash. And what we've been working on, and these are the points which we can expect for the year. As far as credits and taxes and PIS/COFINS, this is part of the business. And this is part of any company in Brazil seeks tax efficiency, and how to optimize our operation. However, we have -- there's nothing structural looking going forward. These are incremental changes, which will...

Just to -- what do you think is possible when I think about cash conversion of the inventories and the cash, what is the conversion of cash that you see?

This year, naturally, we're projecting to purchase less raw materials, especially gold with the optimization of our inventories, we hope that it will be -- we expect it will be a year with cash generation higher than we saw as a more stable period. We see a year in which the percentage will be higher during the year. And looking forward, this should also return to levels which were lower and more similar to what we've seen in the past. We understand that there's lots of space to hit a number, a percentage number, but we understand that it will improve a great deal, the level that we see today.

Next question is from Eric from Santander.

The first question, Thiago, you mentioned about the -- in the release, you mentioned that in the third quarter, you will come back to a dynamic of pass-through of prices. So I wanted to understand much more from the standpoint of the consumer. How do you observe this in practice, elasticity during 2026, if you had consistent growth? And how do you understand this will bring any impact in the first reading at the beginning of the year? I'm not looking for guidance, but much more to understand your perception of the consumers. And also, if you can look a little more at this window of 18 months for the pass-through of prices. How can we think about this eventually we look at the raw material costs, if there's any opportunity? Is this something that we should keep in mind or, due to the volumes of inventory, the high level of inventory that you have, especially in raw material, do we have very little chance of seeing movements in that direction. But thinking much more about the context of raw materials, should we continue with this during the rest of the year.

Thank you for your question. I'm going to start here, and I'm going to share it with my colleagues here. I think that as far -- from the standpoint of the consumer, when we talk about jewelry and gold and in the Vivara brand, we see elasticity and that the price increase will obviously is very positive. And what we're seeking in terms of quantities are categories in which we have stable quantities. And we see this within gold, a resilience, a very high level of resilience in this first quarter. Obviously, in moments such as this in the recent past, these were not things that we live through. So we're looking at when in this category, we're able to go to this excellent level of elasticity that we have seen. We're looking at this period, more than 10% of our stores -- we visited more than 10% of the stores. And we only see this has been decades of work with the team of the founders of the company, closing these points in the principal shopping centers all over Brazil, corner stores in the principal corridors. This is something also that has to be taken into consideration, obviously, when you're positioning your price and your brand. And there's no competitor, national competitor in our price points with the capillarity anywhere near the capillarity that we have. So we understand that the change the locations when we look at the top 10 stores, we have stores in the north of the country, stores in the Northeast, which are not necessarily in the principal centers of Rio, Sao Paulo, or BH access. So this is a company that works with all of Brazil in a relevant way. In our conversations with shopping centers and the operators of shopping centers, we see clearly our relevance in the mix in the categories of the shopping and working always to give us excellent condition, excellent locations because they know that this for the public of the shopping is good. It's good for the shopping centers. So on this side of the pass-through of prices, we have seen an ocean -- a very good ocean when we're talking about the gold market. When we talk about silver, it's an ocean in which we also have -- it is also comparable and not to be repetitive, but it's something that we have seen in some categories and subcategories within a high level of elasticity. And we also have a work of engineering -- our product engineering, which in our reality has to be done so we can position our collections and our commercial areas in a way that we're able to offset some of this effect in the products as well.

Our next question comes from Bob Ford from Bank of America.

As you have migrated to a bigger investment in marketing, how do you measure your return on the investment? And if necessary to migrate to more, how can we understand these investments, and how long this process would take? And finally, what do you -- how do these recent store openings compare to previous store openings?

Thank you, Bob. We've gone back to making investments in marketing aimed at the branding. These investments do not have the same metrics of return on investment in the short term and the conversion that we see in digital marketing, but they are very important to build the brand in the long term, maintain the strength that Vivara has built and the awareness in the mind of all of our clients. So all these branding investments, whether they be in the channels or the physical channel, thinking about events, et cetera, or whether they be in the digital world, they all have long-term returns. When we see what happens on the growth of the digital in the quarter of 82%, almost 82%, this investment has come very much anchored in the investments in media and performance which we saw in the fourth quarter and also in the new app in the personal shopper team and the higher availability of stores. But we also maintain a return in our investments -- digital investments above that, which we've seen and looking at the branding, we see a separate measurement. The behavior, and I'll pass this over to talk about this a little bit. We see that these the previous stores of Life -- the previous store openings of Life since they've gone into smaller shopping centers and shopping centers in the interior, they start off with the lower level of investments, and we -- but they have a lower expectation of return on investment. But we understand that they will arrive an opportunity that we always projected above 35%. And what we've seen in practice is that these stores have been reached the maturity more quickly than we thought, even faster than the third -- even ahead of the third year, which brings us the confidence, the comfort that even when we put a Life inside of a shopping center, which already had a Vivara, we see the combined sales of these two stores improving. So the grouping of '23 and '24, but also the previous harvest -- previous store openings have more and more quickly reached the maturity that we projected and which is necessary to hit these return on investments of 35% to 40%. So this gives us comfort that we can -- we have space for a lot more Life stores in Brazil, and that's why we've made this guidance higher than what we had in 2025 of 55 to 65 stores, and that a lot of the store openings will happen in shoppings where we already have Vivara stores, and where we have identified potential sales in shopping, how much we can sell life even with these Vivara stores in the same shopping, and we open a Life store in these same shopping centers. We have a better performance than we had previously by itself. So we're very satisfied with the behavior of these 22, 24 stores, and we're ready to open up more stores going forward.

Thank you for your question. And this question of new alloys, we're going to use the sequence of understanding all about the product engineering, the types of categories and the alloys are within these studies on an ongoing basis. We have the advantage, a very big advantage that we have a factory. We're able to test and react very quickly. It doesn't seem to be rocket science to evolve alloys, which are -- which have a positioning and a perception, which may be gold coatings or rose coatings, and you have an excellent receptivity by the clients. So this is something that we're prepared to react as necessary.

This will not require a bigger investment in production?

No. The process -- the production process where you create this alloy, what you have to do is test it, test the quality, the reception. And I think that in the production process, understand that we have a line dedicated to an alloy to a certain alloy to not have any loss of productivity, but it does not require any significant investments in both those.

And if it was a stainless steel covered in platinum, it's the same for you?

Yes. Okay. Today, Life already does steel with platinum. The category specifically has already adopted this practice since its founding.

The next question is from Morgan Stanley, Alexandre.

Two questions from my side. What I've seen in the video, you talked about the level of internalization at Vivara of about 86% and Life 58%. I understand that one of the levers to mitigate this increase in the prices of silver, I wanted to understand if there's any guidance for you to increase even more this penetration, specifically of Life as we should think about the velocity of Life to reach the same levels of production -- of internalized production that Vivara currently has. And the second question, Elias, and is also a follow-up from the previous question. You commented that the ROIC of the new stores is reaching the desired level more quickly than imagined. And I want to understand the data that you shared of the return per square meter, showing that the new stores are growing, but they're growing more slowly. So I wanted to reconcile if you are in truth, if you have the ROIC truly lower, or is there another explanation for us to be able to make these numbers tie up?

Thank you, Alexandre. This is Thiago speaking. Afterwards, I'll share this with Cassiano and Elias to add. But the question of internalization, we see space to continue evolving in the life even as much as Vivara itself, which is 86%, you have to naturally invest in team, in the design -- product design team and also investing in the model of supply, the development of the collection. The lead time when you talk -- when you buy a finished product is lower than the lead time when you develop a product in-house. Naturally, we have -- beyond these initiatives, we have the initiatives of transference of the SKUs, which today using in a new function which competes. So we're reinforcing the team for the product development, design from 3D to 2D to -- for factory samples. This is the initial bottleneck. And we also have the bottleneck of understanding the location of the factory for certain types of pieces to maintain the parts and the quality necessary to be able to have a receptivity of the clients. The factory also has to do its homework to know the methodologies and ways of working to bring these parts, these pieces that we have been purchasing outside. We have to sell what the clients want and not necessarily what the factory wants to produce, whether it be by location or by volume. This is our goal, our guiding saying that to be able to produce these products, to not take advantage of the factories around the world and bring us velocity and innovation. You have to test these stores, and the strength of being verticalized and these products in-house would be a waste. So having said that, these percentages that Life has is a good way to go forward. And even the jewelry on the long-term is also we're able to increase.

Thank you. This is Cassiano. And adding to Thiago's answer, we have had in February a visit to our factory in Manaus, which is a motive of pride of our -- is very impressive. The capacity to produce different types of products with the same level of quality and flexibility. This decision to produce internally or outside of Brazil is seen by the product, looking at the possibilities. In fact, as Thiago mentioned, space to increase the internalization both in Vivara, which is an 86% as well as in Life, which is 58%. There's another possibility for this, and we're looking -- we're evaluating the different types of products to see what makes sense based on the allocation of the factory and to start to migrate. But we also have a second opportunity here, which is the integration, even higher integration between the planning of demand and the factory. And together, we're able to get the best possible advantage of this investment. This is a giant potential for us, looking from the store to the client and looking at this motor, which is making -- to make our business more viable.

And talking about the Life ROIC, we see the stores which we opened in the past in '21, '22 and even earlier had a -- with less data than we have now, but they opened in shopping centers with high sales potential. And the sales of those stores grew. The brand was consolidating and became more better known and the sales continue to evolve. So we see that the return on investment that we projected previously, it was -- we actually went way past that in the original stores, and it leaves us very comfortable that the brand has tremendous potential. Looking at the products in the more recently opened stores. As I mentioned, they start off with a potential sales, which is lower. This is within the other lines of the area that we're looking at and also the invested capital that we're putting into that store. So we start off with lower expectations in the shopping centers, which have Life -- they have a life together. It's very important for the construction of the mix. And we -- in many cases, we have to have an allowance to build our store. And gradually, we see the evolution in our store model to see so we can have a CapEx which is lower, a CapEx, which continues to bring all of the quality that we wanted to be seen, but also influences on the size of the store and is reflected in the need for storage of products at each store. We don't necessarily have so many drawers to save so many. So we're able to save on the construction cost of one of the most expensive parts of building the store, and we're able to take advantage of part of the windows, take advantage of the air conditioning and the electrical installations in ways that are more efficient in the CapEx per store, which helps us to reach the ROIC that we have projected even with sales per square meter that are lower than imagined. So when we look at the 2025 stores, it's very recent and most of the stores opened at the end of the year. But for 2024, those stores are on average getting close to what we projected. They're still in the second year in complete years of operation. They still haven't reached the ROIC that we understood is correct initially, but we're seeing this improve consistently as time goes by. So we're very confident that 2024 will continue to evolve and that store by store, looking at this history, some have already arrived at the desired levels and others are on the way. And the 2025 stores are very, very recent. So looking at 2026, we're going to provide more details of how these stores in '24 and '25 have been behaving and then reaching the return on investment that we projected.

The next question is from Felipe from Goldman Sachs.

I wanted to explore a little bit more the pipeline of innovation in Life. You mentioned that you see a lot of old stock over the fourth quarter to open up the space for the new collection. I want to understand how should we think about the timing and impact of the sales over 2026? And what will be the counterpart in the stocks, and how these new launches will fit into the company's plan to reduce the number of items per store. Can you give us more details about that, that would be very interesting.

Thank you, Felipe. To start, I'm going to start with your answer. This is Thiago speaking. Life is on the way of having more and more commercial collections and diminishing eventually the elegance of the collections. This is a route which we're following with gold more and more expensive, more and more scarce, and the price-line, we have silver and chains and so forth of the Life brand in these categories. This year, we celebrated 15 years of that brand. We are very strong on our launches, and we want to maintain the participation of products which are launched less than 12 months ago, which is our innovation period to bring freshness and follow the trends in that world. And this last part in relation to how we see this in stores. And we see the first movement of this new relevance of new stores and launches. And even in the category of moments, we see more launches during the -- as we mentioned, the brand is maintaining itself fresh, with the current vision that we have to separate the stocks, which have to be diminished from those which have to be increased. When we look at the total stock of the company, we know that the tendency is to be reduced, but there are subcategories in which we have to increase because it's selling, it's reacting well. And so we aren't going to be pressured by the total stock and miss the opportunity for sales. All the stores of -- all the life stores today, which we can optimize the stores by the salespeople, by the sales being more efficient. We're going to increase these products, which we perceive have good turnover and a good entry.

The next question is from Isabella from UBS.

I'm going to be very direct with respect to your time. Two questions as far as the pass-through of prices, which you mentioned in the first quarter. Can you give more detail what was the magnitude of this pass-through? And how much you are behind in relation to the commodity prices, especially in silver, which is the principal major doubt that we have, that would be great. And also the second question about the debts from IPI for the tax reform and with the losses of 2021 to 2024. I want to understand what was that in 2025, and if this doesn't apply. And so we recognized if these are one-offs or this is something that we need to pay attention to going forward.

Thank you, Isabella. The magnitude of the pass-through of the company practiced in both categories in the beginning of the year, as Thiago mentioned, each category has its own Vivara has that accretive, while Life has separate performance. As far as our costs, we look at the gold of the fact that we have between 20% or 30% below the spot price, but it's very important. These are finished products, which naturally there's a gap which is even bigger. There's a buffer of finished product, which is much bigger than my raw material buffer. So as we mentioned here, eventually to evaluate these pass-throughs and consider this dynamic of expansion of profitability of that category. As far as the IPI, thank you, Isabella. We, as along with many other retailers, the generator of the IPI for the imported product is -- this was judged by the Supreme Court, and its changes had general repercussions. So we adjusted our operation, and we do the importation of finished products utilizing the trade. And so we're able, therefore, this was done in 2024. In 2025, we already run this new format in this new format besides beyond changing our how we do our importation. We've recalculated how much we should have to pay here in IPI, and we made this payment for the periods from 2021 to 2024. So with that, we closed this question in 2025 without any type of effect beyond that, which we already reported as a nonrecurring expense. So the operation in 2025 was done in this new format. There's nothing in this nonrecurring adjustment, which you need to think about to put into your models going forward.

The question-and-answer session is now closed. We'd now like to pass the word over to Thiago for his final comments.

Thank you all for all your questions. Always very rich this interaction. And I think that the call had a very high level of participation as we like. And I'd like to close here reinforcing a little bit the enthusiasm and energy, which is in the company currently and the level of leverage and the growth that we see in our business and our business -- core business, which is very big in the category management and as we mentioned, a very high level of generating products, the opportunity for expansion, physical stores. We do not comment here. We had the opportunity for e-commerce and other opportunities in relation with our clients, and looking at the -- it's a company which has strong basis and it's very difficult to be replaced by its international competitors. And we're going to strengthen all of these strengths and maximize our returns for our shareholders. So we're very, very excited about the year of 2026 with all that we have to do going forward and all that the company has a solid structure to help us to execute a very, very strong year. We're going to now close the call, and we're placing the entire IR team at your service for any answers or perspectives that you might have in our results. And we desire you all a great weekend and especially for 2026 for everybody. Have greeting from us.

The videoconference of results for the fourth quarter of 2025 is now closed. The IR team is available for any other questions you might have. Thank you for your participation, and have a good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]