Good morning. It's a pleasure to be with all of you today talking about our first quarter of 2026.

I would like to resume a little bit of our strategy and which has been confirmed and is confirmed with the priorities for 2026. We continue absolutely focused on accelerating the growth in Brazil, accelerate the growth in international markets through having different perspectives in Europe where we already saw growth last year, we want to continue this growth; in the US, where we changed the business model this year, there we want to consolidate this new business distribution model by having a partner, a distribution partner that will expand this distribution and creates new growth perspectives; and in the international distribution markets where we have a big focus in countries where we already have a consolidated presence and there is where we want to make our brand to be even more relevant.

From a marketing point of view, we have already reached the investment levels that we want and we are keeping the discipline that aggregates and have a priority to ensure that this company has an international brand that is communicated across all geographies globally. Because all the campaigns in our last quarters have happened both in São Paulo and internationally, like in Sydney, West, New York, London, Manila.

This creates much more effectiveness and synergy across all geographies. As for the allocation of capital, we are carrying out a financial discipline which was started in 2023 and have been improving the company's margins.

Some of the highlights before we go into the details: we have reasons to believe that this focus are working. That one of the big limitations for our growth in Brazil, especially in the specialized channel, the direct-to-consumer, was our on-time in-full service levels, or, in other words, our capacity to deliver the orders in the right quantity in the right moment.

Now we have just reached 86% in our OTIF service levels, which is a good number, but yet below what we want to get to. We want to be above 90%, but it's already 90%, it's competitive.

This explains part of the growth we saw in Brazil OTIF. The second thing that demonstrates we are in the right path is that our market share in the grocery channel continues to grow.

We have a very high market share. We have just closed the month of March at 79% of market share, 1.4 percentage point above last year's.

We continuously have been gaining market share even in this channel where we are already leaders, and the same is happening to the other channels such as the specialized shoes channels. As for the international markets, I think the big news here, or the big confirmation here, is the fact that Europe also showed growth in this quarter after having a 2025 of growth, where we had already concluded our turnaround.

Our numbers had been decreasing before 2025. In 2025, we grew 80%, and this year we saw that there is also signals of growth in Europe in the first quarter, which is an excellent example of the consistency of our strategy in Europe.

In the US, as I said, we made a change in the business model. We started operating with this new partner, a distribution partner, in January.

Over these 3 months, we have got positive signals that this partner is going to have the capacity we expected to ensure our presence in the points of sales, in the regions and stores where before we did not get access to. In the international distribution markets, which was the only place where we did not see a growth year-over-year, there is this geopolitical issue in the Middle East which you all know about, but some of the markets are growing, which shows that our discipline and strategy is working in which we are building the brand in every geographies where we decided to operate in.

After this conflict is over, we probably should regain growth in these geographies. As from a portfolio perspective, the great signals are that we have announced that the men's and kids are two segments where we were not represented as well as in women's segment.

Ever since we have been putting a lot of focus into communication distribution in those adequate channels and in developing products, and the result has been coming. We are growing in our men's line, 16% quarter-over-quarter, and also in the kids segment, 13% growth year-over-year.

The second thing is the brand strength. We said that we were always going to have the discipline of reducing costs of other expenses, but preserve marketing because after all, this is our biggest asset at the end of the day, and this is the proof.

I think the brand strength continues to grow in Brazil. Our brand strength is already immensely higher than our competitors, but we are still gaining more room and space in the mind, heart, and lives of our consumers.

From a global perspective of activation, we had The Devil Wears Prada 2 Disney's movie launch, which received activations all over the year. As I said before, if you went to a Havaianas store in Brazil, Europe, US, Asia, or the Middle East or Africa, you would find the same communication about The Devil Wears Prada and the same product that we launched globally to use and enjoy and make sure we surfed the momentum of the movie.

This shows capacities and competencies that Alpargatas has been developing, as we get better at it, we gain global scope, we gain global impact by investing globally in our brands, which will work in further for us around all the globe. From simplification and allocation of resources, André will talk more about that.

Our margins have been showing this continuous effort of improvements in terms of our financial health and in our results. This has become the culture of the company.

We don't have anymore an intervention of, for example, ZBB, zero-based budget, because we do this all the time. No interventions needed.

Every year we have a program for cost reduction, looking for all opportunities to make the company be even leaner, more efficient, and make the money we invest work even more to deliver the best results for us. I think a good indicator is our return on invested capital, which was from 6% to 16%, and we still believe that we should continue on this journey.

We are confident that we will continue improving increasingly more the financial indicators of the company. I think overall the strategy is put, firm.

The priorities are clear for everyone in the organization, and we have good indicators, all of them showing that we have been managing to reach the results we had set and expected. Giving the floor now to André to talk about the results across the geographies.

Good morning everybody, this is pleasure for me to be here sharing our results. We had a quarter which I believe shows a good combination of all the fronts of this journey so far, and we are glad to say that this has been the largest EBITDA, quarterly EBITDA in our historical series, which is a very important milestone and makes us very satisfied with all the evolution in all fronts.

However, we don't feel accommodated or still we want to keep working to keep building the results of the company even better in the future. When we look at our global volume performance, this is an important performance in this quarter with a relevant growth of over 8% of volume.

This growth has been influenced by 8% growth in Brazil, which is our largest market. All of this growth numbers are related due to the sell-in for our clients.

In Brazil, after that I'm going to show this breakdown, which part of this is the anticipation of the inventory for the new season, which is the same strategy we used last year so we can keep the chain supplied during the change of inventory. I will show you this later on.

This is in line with what we also saw last year for the sell-out, which was about a growth of about 4% of sell-out in Brazil. This quarter we are again at the same rate, which is a very important growth of 4%, given the relevance we already have and the market share we already have.

That's why Liel said we have been gaining market gradually, gaining market share over time. When we look at international markets, we already have some important signals of the journey of the third wave that we announced back then 2 years ago, that it was extremely important to regain scale in international markets as a way to regain margins, and also to change the business model in the USA geography.

When we look at this volume in the US of 1.2 million pairs, it's 161% higher compared to the same period last year, but this does not indicate necessarily that it is a much better performance. This indicates a change in the model that goes changes from the seasonality that which was much more in the second and third quarters of the year, and now we are selling anticipatedly to our partner in that geography.

This happens in the fourth and first quarters of the year. In an annual comparison, you saw in the fourth quarter of 2025 a very high growth, and also in the very high growth in the first quarter of 2026, both related to this change.

Our seasonality now becomes stronger in the fourth and the first quarters, and then should be weaker in the second and third seasons where the season will be ongoing and our partner will be working with the retailers to replace the products that are sold throughout. When we look at the European market, we also see good signals in this first quarter, although it's still not yet the seasonal peak, quite the opposite.

Yet it indicates sell-in volume compared to last year that is very relevant, with a growth of 18% year-over-year. Just to remind you that last year we had already grown we we had already grown last year, we had a season in 2020 2025 that was 8% better than the year before, 2024.

This growth is extremely relevant, and we are even a little bit more accelerated compared to last year so far. The sell-out behind this performance in Europe is also showing a good development.

This sell-in development is not a of a movement of only supplying the channels to sell to the end consumers. The sell-out has also show shown interesting growth signals so far.

We cannot promise anything for the future, but so far we have had a very good performance in terms of sell-out. In the rest of the world, what we which we call here international distribution markets, we saw a contraction in the volume sold.

This is equivalent to about which is equivalent to about 412,000 pairs sold. This reduction is explained specifically because of a part of this region.

When we look at the Latin America and Asia and Pacific, we actually see a growth of about 500,000 pairs, or a little bit more than that, but we saw a volume contraction in the region known as Middle East and Africa, which is naturally a region that is going through a turbulent moment because of the geopolitical tensions that are happening, which we expect to be temporary, as Liel said before. There are no symptoms here from our point of view that shows deterioration of our deterioration of our business.

It's more something that it's a timely question that should pass. Moving on to the next slide, we see all of the reflecting the free cash flow, which was of 207 The cash generation was of 207 million Brazilian reais.

The company has been doing that for several consecutive quarters. Over the last 12 months, this added up to 352 million Brazilian reais, and this reinforces the usual characteristic of being a net generator of cash.

Naturally we're going to deleverage the business over time. We made a movement at the end of last year which was important.

We distributed almost 1.2 billion Brazilian reais to shareholders in terms of dividends and and capital over interest over capital, over own capital, which took us to a a leverage position of 0.8 times our net revenue, and we deleveraged even more to 0.5 right now. This is the format of our business.

As we generate cash, we make use of the capital, and whenever there is no use for the capital, then we should actually be considering the options of distributing capital to our shareholder and balance our shareholding structure. Moving on, we look at the working capital consumption.

We had a consumption in the last quarter. It's focused on the receivables.

This better performance in Europe made us issue more receivables, we have a working capital allocation at this moment. The same happening in the United States because of this seasonality, this changing seasonality that I explained a while ago.

There is a emission, an issuance of receivables which would be not typical for the first quarter, but it has happened because of this new business model implemented in the US for this year. There is also one part that can be explained by the higher level of inventory of raw material that we had in the quarter.

When we look at on the other side to CapEx or investments, we had a number very close to the first quarter of 2025 of 28 million. This the trajectory of our investments over time, over the years has been always to invest less in the first quarter and accelerate throughout.

The the projects are implemented throughout the year, and this this number is absolutely in line with our 240 million budget for CapEx investments. This has al- has already been approved by assembly, and it's part of our public announcements.

Looking with more detail to the Brazilian operation, Brazil saw a volume growth of 8%. This has been growing linearly since the worst results in 2023.

Now since last year and now even further, we have outperformed the volumes we saw in 2022 and 2021, which were at the time considered an all-time high, and we start to have the scale effect contributing to the margin expansion and not as a detractor to our margins expansion right now. As we explained in the past, 2 or 3 years ago, we explained that we were carrying out several actions to gain efficiency that would materializing to a bigger margin, but we were always fighting aga- against the smaller-scale products that we needed to to produce.

Our fixed costs were higher. Now this scale is playing in favor of us.

Selling 55 million pairs has allowed us to reach this this sell-out. The sell-out obviously it's an estimate based on several sources of information that we have, surveys and so on, with the points of sale, but using this metrics that we use, we try to always use, it signals to us whether or not there is an accumulation of inventory in the chain.

Right now, we should have about 6 million pairs in the chain, and this is intentional. We worked exactly in the way we had decided in our strategy last year, and which has proved proven advantages to us in our market share.

We didn't want Because we didn't want to lose market share in our collection moments of collection change. The expectation is that throughout the year, we are going to be managing our chain so we don't have a permanent accumulation of products in our inventory.

Whenever we have a higher sell-out in the retail, we can calibrate and we can align the sell-in to make sure we keep our inventory. This has been proven right by the performance on the on the graph on the right-hand side.

Although we had a very good strategy of accumulating a little bit more of products in the inventor- chain inventory during the first quarter, all of this was inventory was sold throughout the year in 2025, we finished the last 12 months with just 1 million 1.2 million pairs in the in the chain inventory. As our volume grows, the chain inventory should also levels should also grow.

This middle- to long-term strategy does not change, and we will keep this variable sell-in and sell-out aligned, as we have already informed you previously. On this graph on the left-hand side, we see the gross profit performance, which also shows that is pretty much double what we saw in 20 in the first quarter of 2021, and a trajectory of gross margin that reached an all-time high of 49% for the first quarters.

This is has been yielded by a series of actions that we have been bringing, and now the scale contributing to these results. This combination of higher efficiency with a higher scale has led us to reach increasingly higher levels of gross profit per pair.

We had the opportunity of sharing part of of our adjusted margins by the scale effect in our Investors Day last year to show you that our efficiency gains are much better than the previous years. What Now this has materialized, we can really see this as a a number that has materialized too.

Now we are talking about expenses. Looking at the expenses in Brazil, we thought it was important to keep our evolution in marketing expenses quarterly.

As we said, the window that we should be looking at these investments must be always a longer window because not necessarily the campaigns and most important actions, marketing actions, in in terms of being the most expensive, will be quarterly, you know. They not necessarily They not necessarily respect the quarterly timetable.

There might be some fluctuation, as you can see. In the third quarter of there was an increase of 4%, which was of 10%, and now normalized at about 7%.

This number of between 7% to 8%, we believe to be a healthy level of marketing investments, and it's a number we should be pursuing. This quarterly result has been much more has been very aligned to what we believe is right, and we understand this fluctuation is part of the business, and in average we should be investing about this amount every quarter.

When we look at the fixed expenses, we see favorable evolution in the fourth quarter and slight expansion in the costs versus expenses of expenses related to last year. I would say that the first reason is a benefit, it's a one-off that happened in the first quarter last year, which was a reversal of long-term incentives that occurred in the first quarter.

Part of that is also explained by the effect of bringing new head count. Those two effects basically explain the whole variation between this first quarter and first quarter last year.

With a better scale, higher gross margin, with expenses at a normalized level, we reach EBITDA margin of 26%, which we believe to be good and important to consolidate our resumption of growth and profitability in Brazil, which was pretty actually squeezed, so as to say, in 2023, and has been in this permanent evolution from there, from that moment to now. Moving on, we are going to be talking now about international markets.

The international markets also showed a quarter of growth of about 15% in volume. This is a combination of several effects from several geographies, but overall, it's this volume this gain, regain in volume is very important, especially in the key markets for building our brand.

Because in addition to build the the brand building effect, there is also the decompression of our margins, which were compressed We will see that on the next slide. Which were compressed for a long They were compressed for a long time, you can see that on this slide.

When we look at the pross the gross margin for international market in a consolidated line, we see consolidated margins right now above 60% after a harder period where we were at 50 in the 50s. The reason is the change of model in the USA.

The change in the model now is going to be a model with a distribution intermediary. We changed our precification now to accommodate the margin of our distribution partner.

What is expected here is that we are going to have a smaller distribution, sorry, a gross margin, but on the other hand, substantially higher EBITDA margin because of the elimination of all the expenses we don't have anymore because of this new distribution model. When we look at to the graph on the left-hand side, we see this reduction, important reduction of our in in our variable expenses in this lighter color line.

A a important explanation for this line, behind this line is the change and evolution in the model in the US, which allows us to have a much cleaner operation in the US from a expenses standpoint of view. The benefits captured here is much higher than the compression of gross margin that we need to make in order to accommodate the margins of our distribution partner.

The fixed expenses also have have shown also showed an important reduction of 13% for the same reasons I mentioned in the American market. This takes us to the right-hand side graph, which where we see EBITDA margins of about 20%.

Although this does not goes back totally to the 22%, 26% levels that we saw in 2022, it's much, much better and different from the margins we saw in the past 3 years, as you can see in the normalized numbers in the line. Yet we are playing We are still have the the negative scale effects here.

This is the results only of a more efficient operation, but we are yet to gain the volume benefits and the volume gains that we had in '21 and 2022. We have not yet been able to reach the the EBITDA, but we will keep working to go further and reach higher EBITDA numbers.

Now for the Rothy's results. Rothy's the first quarter and the third quarter of Rothy's are always seasonally weaken weaker quarters, but particularly there were two elements, and in from our perspective they are nonrecurring.

In 20 the first quarter 2026, one of them was the weather results, like there was a very severe winter, especially affecting several regions where we have a a high number of stores and sales. They opened up several new stores, about 10 new stores, and a large part of those stores needed to be closed for at least 2 weeks throughout this first quarter due to the blizzards and and and weather storm, the the the winter storms that we had there, which the winter storms which generated a a compression of our margins.

Another thing that can be observed in the gross margin is the tariffs. They work with a inventory policy which is FIFO, first in, first out.

The inventory that was contabilized in the costs for the first quarter were stocks which were predominantly imported under the tariffs that had been imposed on the the products brought from China. These tariffs are not in force anymore, this is not going to affect the company anymore, but naturally they affected the products that were sold during this moment because they were in effect when these products were bought.

When we look at the other symptoms and effects of the business, we see the business going very well, growing its revenue with a very strong success of brand awareness among consumers and high recurrence of customer and successful portfolio released or launched. The the the let's say the vital signs keep showing very good signs over this period of time.

This pretty much consolidates a number of advancements that we had over the last years, which materialized now in an important evolution. This all has show has led us to this better quarterly result, and we'll keep working to advance even further.

Good morning everybody. Thank you for taking my question and for the opportunity, and congratulations on your results.

I would like to explore a little bit better the trajectory that we are seeing of the business in Brazil. I think we have an interesting mix of products changed and you gained the space in the specialized channels.

From now on, how should I understand the average ticket of Havaianas in Brazil? I would like to understand better the additional opportunities to increasing your gross margin, and understand how you are in terms of sell-out, sell-in share.

Do you understand you can gain more market share in the market share you already have, which is pretty high?

Thank you for asking, João. I'm going to start talking about Brazil, about the business aspect, and André then can take a little bit your question on the margin side.

Brazil's status is what we have been talking about for a long time. In the grocery channels, we already have a very high market share of 79%, but beside that, we keep gaining market share.

The big reason behind that is that you have a subdivision, a breakdown of two: the traditional wholesalers channel where we have even higher market share, it's above 85% actually in those breakdown. In the modern channel, which are the cash-and-carries, our market share was smaller than the total.

That's where we are still gaining market share. Our work in this subdivision or this breakdown of the grocery channels have been proving with better displays, better communication, better spaces within points of sales, better let's call it brand activation.

This is what has been allowing us to gain market share in the grocery channel. We believe we still can grow there because again, in the modern, the cash-and-carry and supermarkets breakdown is still smaller than our overall market share.

We are talking about at a level of 65% against the overall market share of 80%. These are Nielsen's numbers, and which we can see monthly that this is positive and happens every month.

In the specialized channel, the opportunities are even bigger. There, our market share is much below 50% at the time.

We have been growing this specialized channel mainly because now we have a more competitive portfolio to compete there with all the innovation that we have made in the men's and kids lines. These more premium women's products have a even higher acceptance and selling rate in those specialized channels.

That's why what we have been growing of 16% of the larger strap for the men's line of products has been growing in this specialized market, in our specialized channel market share. Our OTIF has been accelerating and is still getting even better, which is our capacity, right, to serve the product at the moment they want and the product they want.

We continue that we will believe to grow, and if we have the right service levels and the adequate portfolio to our clients. Having said that, as André mentioned, when we put together, consolidate all of our sell-out, we have consistently growing.

We grew our sell-out in 4% last year, and this quarter, in the first quarter, we also saw a growth of 4% in the sell-out, which means sales to our consumers, right? The perspectives is the expectations that we are going to continue to grow in Brazil because of the specialized channel and because of the breakdown of the grocery channel, of the modern.

Remember that those two in the specialized channel and the modern, they are almost 50/50. Would you like to complement anything, André?

Thank you, João, for asking for your questions. I think your question is pretty good, and one way to answer is your question was a good question a year ago because we were already reaching record margins in Brazil, and yet from that time to now we have an evolution of the market share in the grocery channel where we already have very high market share, and we saw an evolution of 0.3 percentage points in volume, 0.7 percentage in value.

Which means that not only we are selling more, but we are actually selling at better prices. Despite the very relevant size we already have.

When you look from the average ticket perspective, when we look at the net sales per pair that we had in the previous quarter, it was above 5%, was at 5.3%. This was not all due to price increase.

There is about 1 percentage point was to better mixing of products and channels. There is a combination that as we advance further in those other channels that sell products at a higher pricing point, as you observed in yourself in your question, this leads us to this evolution in our margins.

We have just carried out a very large study on these opportunities that still exist in Brazil. There are many, they're large opportunities, just to comment.

When we look at them, they are in channels where the average ticket is higher, the evolution that we should seek is always an evolution compatible with the characteristics of those channels. If you look at this over the last year, we grew about 3% our total volume, our sell-out in the grocery channels whereas in the specialized and direct-to-consumer, we grew much more.

In the DTC, we grew double digits. In the specialized channels, we grew over 5%.

In this last quarter, we saw very characteristic trend that has already been happening for a while, and which translates into these net sales above inflation and above our average price increase. This is the nature of the actions we are carrying out and where the opportunities are.

There are opportunities in all channels, of course, and we believe that although we have a high market share, the translation of those opportunities will go in this direction. We cannot promise you that the margins will continue to grow because there are other elements that are contabilized, right, that go into this math.

In terms of operations efficiency, we believe that they are going to be recurring. There are the elements which are outside to the business that we do not control, such as the exchange rate and so on.

We see a trajectory of evolution of our business which should lead us to a better and more positive margin in our products.

Thank you very much for giving more light.

Good morning. Thank you for taking my question.

I have two questions here. The first, I think it was very clear during the opening the seasonality effects, especially in the USA.

Natal, you mentioned that in Brazil, you also have this movement of anticipation of volume, and which was done the same way last year in Brazil. Supposedly you are going to have a more comparable basis, right?

In Brazil, this is a noncomparable basis, right, since this is the first time. My point here is I wanted you to help us understand where you can have some comparable basis.

Maybe I have lost something about Brazil that you mentioned, and how much we can look at this as you said. You cannot promise that things will continue along those lines, but Europe has shown very good signs.

We shouldn't have any kind of basis effect here. It's more a result of everything that you have been doing there in Europe.

Is there any other consideration that we should know and take into consideration, and take into account in terms of seasonality for any of the geographies? As for marketing, I believe that there might be something more time-related here.

Maybe if you're considering the marketing for the soccer World Cup that's going to happen in the second quarter of the year. My second question is a little bit about price adjustment.

I found it your comment very interesting that you let's say you created some opportunity inventory levels in the beginning of the year before all of this raw material rallied prices, which make you guys to be in a very competitive position in terms of not readjusting the prices because of the raw material pricing freeze along the year. On the other hand, we also see something that you cannot anticipate about the freight, right?

Because prices increase because of the oil price increase. I would like to understand how you see those different components that affect cost and what you have in mind in terms of price adjustment, especially because you have been using this scale gains, and which you have been using as a tool to grow.

Thank you.

Liel, you can complement Thank you, Dani. I think you you didn't Liel, you can complement if you have anything to what I'm going to say.

Dani, you didn't lose anything. I think in Brazil is not a strategy, in fact.

It's more of a practical way of handling the inventory throughout the chain to have the the the inventory at the right places in the chain, especially in specific moments when we might have a breakdown of our supply chain in the inventory change. When we look at our historical series, there was a disruption in our performance when we had a turn in the collection, a collection change.

We started operating a new model of of our collection so we could navigate these most critical moments. Since we have already done this last year, you're right to say that in Brazil there is not a a really different basis that is relevant, or that's does not a a one-off effect, right, this year.

In the United States, we do have clearly. Clearly, the the the the sales to our distributor, distribution partner is much earlier than we would do directly to the retailer for physical reason.

We have to deliver all the products to them so they can to deliver the products to the retailers at the moment I was delivering the previous year. I naturally have to do that before.

That means that we are going to change our increase in sell-in to those distribution market in the end of the in the in the last quarter in the first quarter. I think our sell-in was in line with our expect- the expectations we had.

The most crucial part is to accompany the sell-in and sell-out numbers that are going to come throughout the year. We The first signs are pretty good, but we need to wait for more data to understand how we are performing.

Yes, you are right that we don't have a comparable basis in the US. In Europe, we don't see any relevant change or anticipation in model in the in the business model or in our volume.

We had sales according to what we expected. We didn't have any kind of operations that were critical specifically for this quarter.

It was similar to the first quarter last year. As I said in my presentation, we also see sell-out performing pretty well.

We're not going to give you details on the numbers, but again, the sell-out numbers for Europe and USA, they are not as relevant as they are in the other quarters. Although they are negative they might be negative positive in this first quarter, but this is not an indicator of how the season is going to be.

The real season is like the second quarter in both geographies. I would say that in Europe we don't have anything that is like a one-time-off event that will actually is worth being reported.

Where there is an effect that it doesn't seem recurring is in the IDM. As I said, there is this factor which is concentrated in the area.

We We saw good growth in other regions, but we saw a steep decrease in the volume in Africa and Middle East. We understand that is connected very strongly to this moment of conflict that in the in the region.

Again, we don't have a comparable basis in previous years because we didn't have this conflict in previous years. As for the marketing in Brazil, the marketing investment in Brazil was totally aligned to the trend we expect for the business.

As we have already been operating in the business last year and the year before, in both years in both previous years, we had marketing expenses of about 7% to 8% compared of our revenue, 7% or 8% of our revenue. In this quarter, we did not We are not much far away from that, and we're not going to give you any guidance of what we're going to do in the second quarter because it has not yet happened.

Of course, we know there is the soccer World Cup and other factors, but it's important to tell you that we have a extensive timetable and calendar where we have campaigns and and activations throughout the year, not only the soccer World Cup. It's important not to focus too much on one quarter.

What is important to say here is that we don't expect any radical changes in those levels for the trends of 2026 in the other quarters. This is aligned to what we have been doing for a long while.

As for the raw material, we didn't make any kind of decisions that was like speculative, so as to say. We couldn't anticipate that there was going to be any kind of, regional conflicts that would affect the the oil.

We just operate within like a threshold and a and a ceiling of in this and within this range, we operate based on the operational needs we might have, and also considering the the current price. This is nothing that must be, set or named as a strategic inventory of raw material, to offset the any disruptions that might might have in in oil prices or chemical prices throughout the year.

As for the freight, as well we have already explained that the because of the prices, because of the war effects, they have been going up, but they will only affect us like down longer, down in the road if the they they remain. When we look at the freight effect price effects, again, based on what we we have of knowledge and inform- current information, we see a moderate impact because of all the cushioning that we have already explained to you between the oil price transmission until the cost of our products.

There is a series of stages and factors that affect our products, for for for both sides, for good and for bad. Whenever the prices go up or down, the other prices go up and down, they do not at that moment affect our products.

Right now we don't have any pricing actions planned. We also don't have any kind of understanding that we should make any kind of price adjustment, and we understand that the size of the relative effects of those that of what has been happened happened in has been happening does not require to make any kind of action that we had already anticipated in terms of a price adjustment and that we implemented.

Right now we don't promise anything. We don't have an idea of what are the unfoldings of everything that's going to happen throughout the year, but we're following that up close and we will take measures as we are requested to.

Good morning Liel, Natal, Melina. I'd like to understand with you the effects of this scale benefit that you mentioned.

Natal said that during the Investor Day you shared a little bit of this information. I would like to understand two points about that.

This 6 million pairs, how much does that effect on your margin the first quarter? Secondly, looking down the road, the sell-out, which is quite healthy, a little bit higher than we imagined sometime ago, What can I expect of this incremental volume in the margin?

As the volume grows, how does that affect the margins? I can maybe explore a little bit some scenarios about future volume sold in the middle and long term.

Thank you for taking it.

Thank you, Vinícius, for your question. Let me try to explain to you how this scale effect happens.

This is a math that we can help you later on and give you some more details a little bit later. It depends on you understanding a little bit of our cost structure, how much of this is fixed and how much of this is variable so you can understand how much of this margin can be affected based on different scenarios that you can draw for the future based on the volume growth.

I'm going to show you to the past, looking at our historical records. When we compare now to 5 years ago, when we were in 2021, our EBITDA per pair in Brazil was of about R$2 per pair, R$2.04.

Now this EBITDA is about R$4.33. That's a very strong evolution, right?

Of let's say R$2.30 or almost double. Our EBITDA margin more than doubled in those 5 years.

This evolution has two important effects. One of them comes from the scale, which is favorable right now because when we compare the volume in the first quarter of 2026 with the first volume of 2021, we are already selling higher volumes than we were selling at that time in the first quarter 2021.

This has started to help us positively. This scale effect is of about 60%.

I'm kind of rounding this off, but out of those R$2-something, and the efficiency is equivalent to about R$1.70 in this improvement. It's of course not only efficiency in gross margins, also EBITDA expenses.

We cut costs in manufacturing, or we cut operational expenses, or SG&A. We gain EBITDA margin, we gain gross margin.

I could break down these effects of about 60% 60 cents for scale and 1.50 for efficiency, which shows that the biggest part of this evolution is an evolution that came from efficiency actions like better productivity in manufacturing, SG&A, OBZ, all of the actions that were implemented. When we talk about an evolution that was of 1.70 compared to a number that was of R$2 in 2021, and again, this all came actions that we were implementing in the business to make the business more efficiency.

The scale has an effect of about 60 cents. When we look at this comparison, you can try to get to the number you want.

We had a volume of about 55 million pairs. Our volume in 2021 was of 49 million pairs.

It's of about 6 million pairs, which is about the anticipation. At the end of the day, if you get to this effect and you try to make a comparison, we are 6 million pairs higher than in the first quarter 2021, and I'm telling you that this scale effect was of about 60%.

It is about the size of this anticipation. This doesn't mean that this volume is going to reduce over time.

It's just has been advanced so we can operate the stock in a more intelligent way, making it big now this sell-in rather than making it in smaller parts throughout the first months of the year. The scale, again, it is a recurring and deserved effect that affects our margins.

This is a way of you looking at this effect. Again, the biggest part of this margin comes from efficiency actions that we have implemented, and we have no reasons to believe that they are nonrecurring.

Again, we cannot make any promises or give any guidance, but they are not momentaneous effects because of a higher volume. On the other hand, we yet have space to keep growing.

We have been gaining sell-out and market share. We believe that the scale effect should be a positive let's say supporter all over the upcoming months.

Thank you, Natal. I appreciate it.

Do you hear me now?

I'm sorry. I think your results have been consistent and impressive.

I would like to understand a little bit more what you see in terms of reduction in the cost per pair, which might be pressured, right, by the higher price of commodities, and how you can offset this with a better expense control or in a better sell-out volume.

Gustavo, as André said, and we had been saying over the past quarters, the effect of raw material is not direct and total on our cost. We have already mapped of what we believe that can happen over the past 6 to 12 months, the next 6 6 to 12 months, and it's not going to be an effect only of the raw material.

As the oil costs go up, several prices also go up, like freight, example. We have mapped the effects that this would have.

As André said, we don't believe that this is substantial to change the trajectory of the performance we have been having so far. As this materializes, we have plans to compensate, to offset this.

Of course, we believe that our plan for gaining more efficiency, which is part of our culture of cost management, should be a supporting factor if necessary. When necessary, we also have space we can moderately and adequately add a little bit of price increase because we believe our brand is strong.

If we need to make any adequate adjustments, we believe we can do it. Of course, there is some pressure of the raw material that are actually putting pressure on the entire economy of the country and the world, but we have mitigation plans, and we believe that the trajectory of the performance of the business is going to continue over the next months as we have seen so far.

Thank you very much, Liel, for answering my question.

Operator, do you hear us? I would like to thank you all.

Since we don't have any more questions right now, we are happy to share all of the results we shared with you. Let's keep working, and again, our investor relations department is always available to answer any further questions, Liel and I, too.

Thank you all for your attention, and have all a good day.