good morning everyone. I want to start off with our earnings call by thanking God for the opportunity to be here today, as well as our CEO Jesuíno, our VP Túlio, our VP Sandro.

Welcome everyone to our first earnings call for the first quarter of 2026. We are here to share some important points about our business and tell you that our main focus for this year is the efficiency.

I think we had a wonderful expansion effort in the last few years. Now we are once again looking inwards to the company, and our focus is efficiency.

We have been working on a marathon looking at assessing all of our units, all of our routes that were opened, and we've been working group by group, supervising each department, each director, each supervisor. With cash and carry, we've been really thinking about this model and we've been looking in-house into our stores and everything that was already created so far, as well as the services we've been providing, understand what we can do to offer a 2.0 cash and carry, right?

What can we do to think out of the box within the categories we already work with, and how we can verticalize this within the categories and bring profitability above all. We've been also discussing a lot internally, and we've been thinking about a lot of stuff.

This is our focus and way of doing things. Within the supervision, we have 5 directors in Maranhão, 1 manager, and 21 supervisors, 84 stores there, where we've been discussing detailed perspectives on the business model and how we can gain efficiency in the logistics, in the expenses, and how we can bring more profitability.

Each business unit: in Pará we have a director, 2 managers, 6 supervisors, and 39 stores. In Piauí we have a director, 2 supervisors, and 11 stores.

Within these three states that are more mature, we can still see how to search for even more efficiency. With the Armazém brand, we have one director, and in Maranhão we have 167 stores, in Pará we have 66 stores, and in Piauí 13.

It's a business model and channel that was created to occupy this space and has also been gaining relevance in our business. Then in regards to governance, we've continued to evolve with the arrival of our new board members and our fiscal council and some that were also referred by new shareholders and investors that have been really thinking about with our mind open, trying to capture as much as we can.

We've been adjusting and adapting this to our way of working. Besides this, we also have capital allocation, right, Túlio?

This is something we've been closely looking at with our engineering team, and we've been a lot more rigorous as we consider new store openings, and we've been discussing this intensely with Túlio and Sandro stores we're opening really need to be right on check and carefully analyzed and patiently assessed. Then on this slide here, I want to show you the nine stores we opened in 2026.

Just to give you an idea, from these nine stores, five are retail stores, which is the Teresina store. It's a store that already starts off with a potential for revenue generation and margin.

Then you have Paço do Lumiar in Maranhão, one of the stores to sell R$5 million to R$6 million. This is already considering a tier that is above 20% or 25%.

It's a retail store that already starts off on a rush, and in the second month it already led to excellent results. Then the Luzilândia store that was the last one we opened from the smaller units, and this is also in Maranhão in a city called Imperatriz.

It's a little retail store really well-positioned and located. We have a employee team that's really lean, and the store already starts off with a lot of efficiency.

Then you have the Bacabal in Pará that is also pretty much equivalent to the first store we had in Balsas, which is like a service hyper. It really tends to occupy the blank space to work B2B and C customers.

Real high revenue and a lot of services, and in Balsas the store is on this R$123, which has an EBITDA above 9% if I'm not mistaken. Then also the Spazio stores are all in this row of stores.

Then you have stores in São Luís that also bring in a lot of services and add high revenue, and the Spazio stores as well. We are sure we're on the right path with these, and that it's a channel and our business that we can scale up on because now we're prepared.

We have a logistic structure that's specific, a commercial structure, an operational structure. Now we feel ready to verticalize this channel because we already understood and structured this, and we have a real broad market ahead of us.

Then on the next slide, I want to bring in our DC, where it's even been thinking about a way to optimize this logistical process for the company as a whole. How can we perform the integration of our distribution centers with the new business, right?

This is very important for us because, and we need to emphasize, right, we've always said that our company is a logistics company that by chance has stores, right? Now it's really the moment for us to gain this efficiency because we're plugging into all of our business.

As I was mentioning, for the cash and carry you can improve all of the categories a lot, and with the DC that's the same case. How can we increase productivity with less costs and more efficiency?

Separating this by store, we have many different businesses that we need to separate per unit and look at in detail, make our business more profitable. We have our condo stores that are going to be supplied, we have the Eletro stores which are direct to consumers, they are ordering at the POS, the Spazio stores, the hyper for services as well that will also be delivered per unit.

Then we have all of the food line as well that could enter our DC. Also structuring within our DC, and this is something we discussed broadly, a new area to receive business in our DC with higher margins and more added value, such as healthy products and other business opportunities that could also bring in more volume and more margin.

With this, we have the certainty that we're going to be diluting costs. On the next slide, we have the expansion stores.

We have five projects underway, and we also have stores that are focused on margin. We have the store here on the left side.

It's a store with a revenue of R$6 million to R$7 million. Just as those that I mentioned previously, they bring in a lot of profitability.

From now on, as I've already mentioned, all stores, and especially the smaller stores, have the strategy of having one neighborhood where you have relevant supply. Here we're already bringing in these stores also strategic stores that can attract more volume, and you can see that they're also defined very carefully.

Finally, to wrap up, this is the current scenario in our first quarter: 228 stores split by six different formats, besides our Eletro and our cash and carry and the promising condo stores which are already bringing in. So 228 stores, 88 stores of the Armazém brand which became very relevant.

These are brands that can still become even more verticalized. We have been finishing the learning curve for a lot of these brands.

We really have the certainty that in the next years we're going to be reaping fruit of these investments, such as food, Spazio, and even the Armazém brand, and Eletro as well. We optimize and remove some stores and then it became super profitable for our business.

I always used to talk about this, the Eletro brand is a complementary category, and I think that bring a lot of profitability. I think we've finally found the point for this channel.

With all the channels, we can think about this 2.0 cash and carry, and all of these brands can really grow a lot more. Novo is one of these points that we worked on, and we had a lot of energy dedicated to this.

Now it seems we really found the optimal level, and we've always been searching for the best in these cases. Now we've really started to merge this all and really search for ways to improve our results even more.

That's what I wanted to share now, and now pass the word on to our dear CEO Jesuíno Martins.

Hi, good afternoon Túlio, Sandro, and everyone. I just wanted to quickly share some of our main indicators in this first quarter, and I wanted to start off from left to right.

Sharing our gross revenue, we reached R$2.7 billion of gross revenue in this quarter, and this is a growth of 13%. Now once again, this is consolidated with Novo ever since the last quarters we've been sharing this.

This consolidated balance sheet, you can observe a little more below the first block that there's this increment in revenue of R$1.3 billion in this quarter when we compare with the same quarter last year. In the second block, we have our same-store performance.

You can notice about 7% in same stores. Here I wanted to share with you guys some of the main impact that the same stores suffered in the first quarter, and no doubt at all, to make these results keep up at this level that's a little more pressured, it's really important to share that macroeconomic scenario that we've all been experiencing and watching in the last quarters of 2025 and the first quarter specifically.

The scenario is pretty much the same, and maybe I don't have to talk about all the points that are more macroeconomic that I've been experiencing. You guys have been seeing this closely.

With this macro scenario and pressure in the pockets of consumers in this first quarter, we've seen big impact on a deflation, especially in commodity categories in the first quarter. I wanted to share that with you, that if you look at the rice category in the first quarter of [2026?]

, this category drops 32% in the market in the Northeast. Very significant impact.

We know about the wheat that has and in Brazil as well. We see a category that's so important like this, and I just wanted to share the level that the market's been suffering.

If you look at the sugar category in the first quarter in the Northeast, drop more than 20%, milk powder, and so on. We have this scenario that is very pressured, and you have this deflation scenario as well that we've been watching.

Ever since the second semester last year, the market's been slowing down a lot in Brazil and in the Northeast as well. That's pretty much the case.

When we look at the first quarter of 2025, the market in the Northeast was growing in total amount of stores above two digits, right? Then we noticed the total growth that the market has been kind of lowering.

It drops to 5%, and then it reaches a level of 1 percentage point of total growth in the first quarter. We noticed that there's a slowdown.

There was a slowdown in revenue. You also have a slowdown in volume growth.

In the first quarter last year, the Northeast market was growing 2 percentage points. In the second semester, this kind of flattened out, which is an example of what happened to the revenue, and finally it reached an impact of -1% growth in volume in the first quarter.

This is a scenario that you have all been watching, and it's been pretty much the same in this first quarter. We were noticing that, not only there are some important regions like even in the Midwest where you have the cash and carry brand and the Northeast that drops almost 4 percentage points in same-store sales in the Midwest.

It's a very specific scenario we've been experiencing, and we're in this context, right? I think here you have an important factor in the same-store performance in this scenario I just mentioned.

There's another factor which is also significant for the same-store performance, which is especially in this first quarter where we had to implement a measure that we planned because we have an operation that is very relevant within our business, which is telesales. You all know about the importance of telesales in our operation.

We service over 50,000 small retailers in the northeastern region. This operation is pretty important.

Cash and carry has telesales as well, and represented almost 28% of the revenue for these cash and carry stores. With this macro scenario, we've been experiencing, discussing each over the last quarters.

This has become more speculative. That has always brought margins that are very low, and we understood that it was a sale that would start destroying value.

Then we decided to balance this out a bit with this. We start prioritizing more of the gross margin.

Although there was a pressure in the volume, we started noticing that there's this cycle, right, because it would push it downwards, margins were more pressured, more destructive, volume wasn't coming in, and that ended up generating competition among us. That's when we started to see this was a detractor factor, and we started shifting a bit of the strategy.

We cut down a bit on these store telesales, and in a way where this has an important impact. We believe that in mid to long term the market's going to once again find itself in this.

We know about the importance we have in more mature markets, Maranhão, Pará, and Piauí. Our stake is important, relevant share, and we believe that over time, in the mid to long term, the market will accommodate again and we'll have a healthier share.

This movement, we believe in the long term will be very positive. No doubt, it did contribute a lot to this same-store scenario we're looking at along with the macroeconomic scenario we're experiencing.

The positive side on all of this, the upside is that there's a gross margin impact in the company, and it's very significant. When you look at comparing with the same period last year, this quarter has an increment, as you can see, this third pillar of 0.70% in our gross margin.

That was super significant for us and very relevant. If we look at the GMAT brand and we compare with the fourth quarter of 2025, we have an increment of almost 1 percentage point more.

We believe our strategy was assertive and it really reached what we expected. Our challenge, Túlio, Mr.

Ilson, and Sandro, is to find this optimal point, right, between the gross margin, sales, and expenses. We're definitely going to find it, right, because this is in our hands and we can control this, right?

In this margin point here, we've been also carefully controlling our stock levels. Working capital is really controlled and very consistent, and evolving quarter-over-quarter.

Túlio will share this with a little more clarity and the evolution. We're really confident.

I want to take advantage, Túlio, Mr. Ilson, and Sandro.

We can have a profitability strategy and then you have support of the trading. We would be able to use our multi-channel approach and adjust, and really consider this new market reality.

We could also consider our EBITDA margin. This would also be a little more pressured than the last ones we've been reporting.

Here I think it's worth saying that no doubt at all, this entire scenario and this shift in strategy that we had with telesales and the macroeconomic scenario, there's a significant weight in this EBITDA margin, no doubt. I also want to remind you all about the impact that there was in this first quarter of expenses.

It was a important impact, and we've been working on this topic strongly because the company was projecting an expansionist level for growth, and we noticed that the market unfortunately slowed down a bit. We've been adjusting this expense level.

Túlio will share a bit more of the evolution we had there, and you'll see the results we had. I want to thank our team also for their dedication and discipline for this topic.

No doubt here, this macro scenario and the shift has an important weight, and the impact on expenses also has a relevant point to pressure this EBITDA margin. We know that in Novo Mateus, we have an important impact also in the EBITDA margin because it's an operation that is relatively new compared to ours, and here it suffers a bit more because of Novo also.

We implemented this counter policy and that was even more intensive because we were respecting the specificities of the local market, we had a different telesales model. No doubt, the three states there are really experiencing one of the most important moments in the integration because in the first quarter, we finished all of the topics related to integration.

We are a single company now, a single system, a single commercial area, and literally we are a single company, right? These movements no doubt have a significant weight in all of this, but I'm super confident about all the planning that has been worked on with the team there in Novo Mateus.

I really want to thank everyone for their support, and say that I really believe in this strategy. I think, God willing, we'll start sharing this evolution of this scenario.

Then when we look at our EBITDA margin and we exclude these effects of expenses and the effects of the three states, when we exclude these elements, we deliver an EBITDA margin of 7.4%, which is at a level that's very similar to what we've been reporting. Túlio will also break down this information and we'll understand what this EBITDA margin is without the effects I mentioned.

Then now from a EBITDA margin perspective and our results, we want to find this optimal, as I mentioned, so that all of these variables, right, Túlio, Mr. Ilson, and Sandro, all these points that are in our hands we're carefully caring for.

If we look at expenses, we have an important track being worked on. If you look at margins, that's an important point as well.

You saw this effect in our balance sheet, and working capital and other important back as well. Whatever we can work on, we're going to continue to do, right?

The macro scenario is kind of not under our control. I wanted to share a bit of what is in our hands to control.

Finally, our net profit, R$213 million. I wanted to just quickly share these points with you.

Then I'll pass the word on to Túlio, our financial VP, and he's going to break down a little more details on the information.

Thank you, Jesuíno. Oh, good morning everyone.

Thank you for your presence. We're just going to quickly go over slide number 10, where we have sorry, slide 11.

We have the consolidated gross debt of the group, added up to R$10.7 billion in the first quarter, as you've already seen. I brought in the main element, same-store indicator of -7.3%.

Here there's an important point on the combination of the macro elements along with the decision of bringing in more profitability, not only efficiency, and all of this led to a reduction in the sales levels of our counter operation. The main two elements that contributed to this were the macro elements and also the sales at the counter.

As Jesuíno mentioned, you have the effect of the operational deleveraging, which is a little tougher. You have a lot of areas maturing.

For the macro effects, this would represent about 30%. Then we have the effects of the counter.

You have the intensity of this that was stronger. On the right of the slide, we can see the numbers in regards to the gross debt and margins.

In this first quarter, we closed at R$2.150 billion, a growth of 16% compared to the same period last year. Here you can see an important point, which is a gross margin in regards to the fourth quarter of '25.

We go from 22.5%, and that improves this. Then when you see this Grupo Mateus universe without the without the other three states, it goes from 23.7% to 24.6%, right?

It's really in line with the strategy we've been adopting to focus on profitability. We've observed a price elasticity that is very low.

We performed some tests like this, and we're really convinced that it's important to think about the operational expense and also the profitability gross margins that at the moment this is also kind of causing some competition against the company itself. We brought in an interesting point.

We have this support also in the profitability agenda from now on. Moving on to the next slide, number 12, we have the numbers related to operational expenses adding up to R$1.6 billion in this quarter.

Here we can also share that here how the company has been working in a very structured manner with efficiency gains as well on this operational expense segment. We created this efficiency committee with the president leading this committee.

We perform a broad productivity analysis and then calculating these possibilities for store functions and administrative functions of each structure. All of the main productivity analysis points are working on, so that includes this kind of control, productivity, pure productivity, as well as other tower analysis of the administrative areas.

All of the main blocks are being worked on and analyzed. I think the numbers in March for operational expenses really reflect this behavior.

In March, it was already 1 percentage point almost less than the average in the quarter when you exclude the effects of the of the terminations and contract terminations of people that were fired. Then that, of course, brings in a relevant But when market's difficult, where you have a lot of price elasticity and where it's really difficult to bring in volumes, fundamental to bring in the expenses due to the pressure of operational deleveraging, right?

It's a topic we're really looking at. From now on, as Jesuíno mentioned, it's all about looking at the balance point between sales and margins and fitting in the expenses at the right levels, considering the size and volumes of the operation.

Then on the next slide, we have the numbers related to the EBITDA adding up to R$542 million in the quarter. When you exclude the effects of this, it would be 69.

Then you have an important point here, right? When you look at the EBITDA margin at 5.8%, and the three states, as Jesuíno mentioned, with all of the dynamics that's been working that's been occurring there when it comes to integration and systems and teams, you have a lot going on there in the beginning of this first quarter.

The EBITDA margin for the states excluding the states in the business combination would be at 7%. When you eliminate this topic, it goes to 7.4%.

I think here, as I mentioned, you have a big point with the next semesters how we manage this pressure, right, in the top line, finding the optimal point for the margins and the correct point for operational expenses. Then on the the right side of the slide, you can see the net income points.

We closed the quarter, R$213 million. You have two different pressures, right?

One coming from depreciations due to organic growth throughout the last 12 months, and the lease expenses related to this growth and the growth of the operation. Here you have an important point.

When we look up ahead in the slide 14, we can observe the working capital numbers, and here really looking at this profitability and working capital ratio. The numbers in this quarter represent a significant improvement, as Jesuíno mentioned, an improvement of 16 days.

We closed the cash conversion cycle at 40 days. This is a reflex of intense work that has been going on in the last quarters and years.

This is a big movement from the commercial team and commitment from As you've seen, every quarter, this a bit of this journey, right? The focus now is discipline.

When we look at the stock numbers and supplier numbers, we observe and see that there's still an opportunity for efficiency gains. We work every single day to bring this stock number closer to the supplier numbers.

We know the importance of this for the company's cash consumption and return rates as well. We're really focused on this, the work remains, and it's been consistent and ongoing.

An important point is that there are no additional themes in regards to volumes. Actually, the receivable anticipation was smaller than what it was at the fourth quarter.

That does that does not exist as a factor, right? This is a topic we've really been biting into, and we're going to continue to do so from now on.

On the next slide, you can see the numbers of the net debt and the cash generation. It was a quarter with cash generation that was very significant, R$323 million in the quarter.

Here you have R$70 million from sales and fixed assets, and all the rest comes from the working capital operation. Here you can see this diligence, consistency, and getting back to the guidelines.

I becoming a company with less debt, becoming less and less leveraged, and clearly having the growth happen with our own cash only. From this profitability agenda, we talk about results and earnings, but there's a driver we look at a lot as well so we can understand the cash flow of the company.

It's an agenda we're closely looking at to make sure that at moments that are difficult, in years that are challenging, the company can keep up with a strong balance sheet and financial quality. On the next slide, you can see the CapEx.

I think Ilson gave us a clear guideline here when it comes to any kind of capital allocation. This is a topic that we've been closely looking at.

It's related to profitability and reduction. I think the CapEx it's been And so that's going to bring in important achievement when we show the stores that have already been opened, right, throughout 2026.

These are the main points, and from now on, the team is all available to answer the questions you may need.

Good morning Mr. Ilson.

First question is about the reduction of 9% in the amount of employees versus September 2025. We want to understand if you have more employee reductions planned up ahead.

The second question also is during the conference you had mentioned on the integration with Novo, you can see that this was 100% complete, or if we should wait for this in the next quarters, and consider any switch in systems or any other adjustments in regards to this topic. Finally, in the working capital, the stock dynamic kind of surprised this in regards to the top-line context.

If you can explain the details of the main drivers for this dynamic. We want to thank you.

Thank you for the question. We had an important reduction.

We have a very rigorous discipline trying to be the more assertive possible. The store operation doesn't have much of an error margin.

We understand that we need to find this optimal point between the margin and sales. Of course, there are other expenses that we're going to continue to work on.

That's kind of what our mind is like at this moment. In regards to the integration with Novo, Sandro has been watching this closely.

In regards to the working capital, I'm going to anticipate this, but I think working capital, what we've implemented a lot when you look at the different layers of our cash conversion cycle, and we understand that there's an important back still with a mismatch in the supplier payment terms, and we want to keep this up. We have to be very prudent and careful, and we want to share this.

We still see that there's a path to be searched for. I'm going to pass this on to Sandro, and he's going to pass this on.

Victor, thank you for the question. The answer is, well, in regards to systems, there's nothing else to invest in.

We integrated the back office and all of the synergies, the trade marketing, and we've been integrating ever since mid-second semester of 2025, and more towards mid-third quarter of 2025. We worked on the integration of the systems.

We've been carefully working on these shifts, and calculating the impacts of the business models and how we operationalize this. We were calculating each of these movements and looking at the results.

In February, we had all of the systems turnarounds at our stores and at our cash and carry stores. They finished now in the end of March, right?

All of the stores and distribution centers are already operational with the system we decided to keep. Up ahead now, we're going to really keep looking into the synergies that we have for execution.

We still have a lot of commercial things to conquer, a lot of lessons learned. We'll be able to look at this jointly with a lot of opportunities so we can be even more efficient.

That's where we're at when it comes to all of the integration and this movement with the Novo Atacarejo.

Thank you so much. Just a quick follow-up on Jesuíno's answer on working capital.

I understand there's this gap of stock days and suppliers, but in Q1 specifically, what was done there to be able to deliver this positive result with stock? Was there something specific done that should be explained?

Here, Victor, what we did was we implemented a big part of our compensation that was geared to working capital, and we dedicated a lot of energy in this sense. Of course, we're focused on sales a lot and this indicator.

What happened here and what we've been implementing were just day-to-day measures, maybe in a more intense manner. I think here happened is we had support from our commercial team and this dynamic, Túlio, Sandro.

The team's really been dedicated to all of this, and so this is kind of what we've been doing. I think this indicator, Victor, really considers this maturing period now as we are conscious of these new parameters.

I'm super confident that this is our recurring level. From now on, we want to evolve even more.

That's kind of the view, and I hope that was clear.

Yes. Thank you, Jesuíno.

Thank you very much, guys.

good morning Mr. Ilson, Jesuíno, Túlio, Sandro.

Thanks for the opportunity here. I think it was really clear through your presentation how there's been this shift in focus.

In your guys's business, it's really difficult to keep the margins when you see the top line being challenged so much as it has been. I want to understand if you could bring in a little bit more about the magnitude of what this affected in the same-store sales, and break this down into what were external factors or food deflation, drop in volumes, and the endogenous factors, right, with the ending of the counter sales channel, and also besides getting into this magnitude of the initiatives that could be impacting these challenges so we can get back to growing in a quicker way regardless of macro, right?

How do you think about reversing the situation? Thanks.

Great question, thanks. I'm going to start off here, and feel free to contribute as well.

Lucas, I think that in regards to counter sales and the share of this business and the macro scenario here, the wholesale counter sales, we reached almost 28% of our operation in cash and carry taking place through telesales or counter sales as they call it. It was almost 30% at one point in time.

I know if we have to divide this, I think the first point is on this side, excluding the perimeter of the Novo Mateus, the importance of this is 50% on the same-store dynamic and the other 50%, no doubt, is the macro scenario. This is kind of the stake it has, right?

Then at Novo, maybe you have a different scenario because there the counter telesales had a more acute impact as we had to respect the regional specificities. There, I'd say it was about 70% almost coming from this movement, and maybe 30% from the macro scenario, right?

What's important here, Lucas, is considering the significance in that market share in the region, in some way we have a margin that we can balance this out a bit because we have a very important relevance, right, when it comes to price parameters. Here you have an important factor, and what I say here is this is going to contribute significantly so that once again we can try to balance out margin and growth in volumes for the next months, considering this relevance we've had here in the multi-channels where we operate.

Our strategy to reverse this is really in this area, right? Using profitability gains, looking at this dynamic and the macro scenario, and trying to balance out these two fields.

That's basically what's in our minds, right? Our team is very committed to this, and we know about the importance of this same-store dynamic for the business.

We are not comfortable with this, and on our side this is an indicator that is very focused on, right, maybe in the company in the last few days. That's kind of what's in our mind here, Lucas.

I hope I answered, but

just a comment here, Jesuíno, on your point. Margin is something we can control, and we achieve this.

Now we're going to be channeling this to some other channels, and it could be that we're having the external wholesale shifting more to food service or to retail, maybe spend a little more of the margin on retail with more campaigns, etc. We're searching for this balance point to solve this sales gap, right?

We've been really looking into where we can reinvent ourselves in cash and carry, where can tighten things up a little more in retail, where have better margins, and I can kind of burn down a bit of this. Where do I think it's healthier for the company, right?

Then at the end of the day, is it worth to recover all of this if I don't bring 100%, but 80% or a higher EBITDA? We're really focused on finding this balance point.

Thank you, Jesuíno. Thank you, everyone, for the answers.

Good luck.

Good morning and thank you for taking my question, Mr. Ilson, Túlio, Jesuíno, and Sandro.

First, just a follow-up here on your last comment. Do you think it's the correct understanding that in this quarter you still have not been working on this So should we imagine that these should be lowering a little bit and maybe even recover part of this counter sales and try to compensate this with between the channels?

Is this the correct understanding, and that we should maybe see like a bigger balance point for the second quarter onwards? That's my first question.

I wanted an update on the channel strategy. We've seen some tests.

You talked about the multi-channel format perspective, but And so we see this If you could share a little bit of how you've been prioritizing this, and these formats that you're seeing more value in, or maybe discontinuing or deprioritizing, and along with this, maybe it's more conceptual, or from a dissident point, why you closed the disclosure of sales per channel, because this used to help us a lot as it helped us understand the business. It's not very easy, right, to foresee what's going on as there's so many variables.

Now we need to understand why this movement.

About this with the balance of margin sales, and so we've been analyzing each division and each management with the groups of stores. Each regional and each supervision can have like a different strategy sometimes, right?

I may have to tighten up a bit more, or maybe I'm going to be working on counter sales a bit more or external sales, or even our retail instead of spending more cash in cash and carry. I can tighten up a bit in neighborhood store retail stores and bring in a more balanced level of growth, considering expenses that are really already well defined.

If I have a store that sells R$7 million and you increase the level of expenses tightening up a little bit more by half a percent margin, we could bring even more profitability. Your question is very important, right?

We're constantly searching for this, and we have external sales. We've been really focusing a lot on the projects that Jesuíno brought in with the growth as well.

If we look at the external side, we may also have seen improvements, but the retail stores also, they we have some stores in some of these areas that were already tightened up a bit, and they responded really well to this. The service stores, such as the hypers, like the one we opened now in Belém and the docas and the the Docas area.

These are all benchmarks even for EBITDA at the moment. Our expansion as well, as I've already mentioned, we're understanding if it's a lot better to open up a cash and carry store, or a Spazio, or a hyper, or a super in a neighborhood such as we have an open at the Nilton Bello, Imperatriz stores.

The store we also opened in São Luís in a little satellite city here, and that brought in quick results as well. This is an important balance, which is this multi-channel approach that we're looking at in detail.

That's why we we see a a strong path ahead, right? If we're going to be able to measure what's going to happen in the quarter, no, but it's really delicate work, and it requires this, and we're going to be structuring our routes, training more people, and but we do guarantee that we have a pretty good track in the next.

Do these different channels generate complexity? No, actually these channels help us understand where we can allocate this.

We can see that this is normal complexity, right? We've started off like this and we have this DNA.

We're understanding where we're going to have the best results. Then

about when we look at the sales performance per channel, there are some important elements. First, the company, as Ilson mentioned, has a multi-channel strategy.

At some moments we prioritize the wholesale channel compared to the counter, and vice versa. That kind of already generated some confusions, right, in the number interpretation, right?

Here you can see an important point when you look at the consolidated numbers, it becomes very clear what the direct impact is for the company, right? Because before when we showed that number, there wasn't necessarily an operational problem, or sometimes it was more like a strategic decision, sometimes even just to service the customer itself, right?

Because sometimes B2B customers would rather go to the cash and carry store to buy in person, or sometimes they just choose the wholesale. Then we maybe have to focus a little more on that.

There was an operational interpretation confusion that was sometimes more related to some strategies in the company, or even guidance from the from the customer himself. Then another important point was we closed some information that was sometimes even generating a bit of a reaction among competition, right?

We we noticed our competition was moving into into some different movements, considering the disclosure we're providing. Here I think we need to be very careful as we choose the best information in the additional market, considering how this could also impact the delivery also of information to competition.

Quite frequently we have these tradeoffs and we have to make these decisions. Here you have a combination of both points in regards to direct impacts.

This becomes more clear, and so And so more recently, we noticed this. We really kind of we understand how to improve each of these channels, right?

We spend a lot of energy, and that's kind of what me, Jesuíno, and Sandro have been working on to try to understand each micro-region, and then we can redirect it also. What's our advantage?

We have this logistics that we can shift to a channel that we think is more interesting. This is super important, right, because we really need to think about this a lot.

We've been working on a lot of different exercises and really raking into this as much as we can to search for the efficiency in the cash and carries in in different categories and channels, and we are bringing in some improvements. It's really a lab still, and we've been discussing this day after day with each supervision.

Understood. Thank you for the answers.

Thanks guys for taking my question. I wanted to understand if you guys could talk about the performance in each channel.

If you could talk about the qualitative aspects that would help us a bit, and where you see the biggest opportunities. If you could talk about the expansion in the last few years, and are there stores that are at a deficit, and if so, how many do they represent in the base?

What have you been doing to improve the performance in these stores? Is just a logistical issue, or if there's any other points for improvement?

About performance of the channels, as you mentioned, one example is our Eletro. We reduced the stores and we improved our sales and results.

This is one of our biggest examples, right? From the stores that are deficit, we can really be using all of our resources, and understanding in these stores what would be the solution for each of these.

Because since we opened up a lot of new stores in the last five years, it's kind of like what we've been talking about, we're doing our homework, integrating each of these stores. You can see that there's results, and sometimes they haven't been reaching the results expected because they need to have some adjustments.

That's a fine-tuning looking in-house and doing our homework at each detail and point in each of these stores. We estimate that in the next few months all of these stores will be more efficient.

Thank you, Mr. Ilson.

Great.

Good morning guys. I have a question.

I wanted to understand the strategy here. There's this discourse that's been quite consistent on focusing on the profitability and not wanting to enter the promotional strategy too much.

We also see industry data and we see that the region is more challenging, and you have unique investment level, right, in that region. Although you're focusing on profitability, it's the second quarter where we see this drop in EBITDA margins.

In this quarter, this was a significant drop. At the end of the day, considering the drop in volumes, you've had operational deleveraging that at the end of the day kind of ends up hindering profitability at the EBITDA level.

I wanted to hear how you can readjust, and if there's space to maybe shift focuses and recover the volume, bring in the EBITDA margin, and avoid the operational deleveraging. I understand it's really difficult to foresee this in the region.

Everyone has been surprised with this deterioration, right? It's clear what's the new reality, and although you have changes in the inflation, consumer pockets are already pressured, let's say.

I wanted to hear your views on this.

This is the main focus of our debate. As you've seen, there's been an important slowdown.

Considering the scenario, the company also had an important efficiency in operational expenses discussion underway. The month of March demonstrates this as well with some work that's been done in a very careful manner to reduce about 1% on the net revenue as you showed.

This is one of the important effects to treat the operational deleveraging. Here you have an important block.

If we think if you're going to lower prices and sell more, sometimes you don't sell more when you worsen your top line. It's a trade-off that's really tough.

We're using the experience of 40 years of the company to really find this optimal point and understand, of course, how this works per channel, right, as Ilson mentioned. Then a third block that's important to be considered, and we've been discussing this and so we've also had some lessons learned with Novo.

You see this is a topic that we've been discussing more ever since 2022 with the supplier budgets and marketing budgets from suppliers. This is a topic that we've been learning a lot with Novo and we can really gain more speed, right, on this topic.

You have these three big blocks of points to be discussed when we think about our profitability and the absolute results. This balance point of sales and margins, because any sales elements in the quality can help us with the operational deleveraging, the expense block that we've already worked on, and this committee is really alive and continues to fight for these opportunities.

Just to give you a concrete example, one thing we were looking at was a energy track, right, the second main expense of the company. No doubt there are opportunities up ahead.

When you equalize these elements, then you have what it takes to be able to have this performance throughout the next quarters, right? I wanted to reinforce this.

One thing that's really important is what we've been doing, right? We have these different supervision blocks and we understand where competition is a little tighter, and we're also going to be directing this margin and this cushion wherever we need to, right?

There's some regions where we don't need to, and other regions where we have to. We're kind of balancing this out and calibrating this as much as we can, but it's an important step.

We have supervision blocks that we understood what the reduction would be of expenses would be very efficient. Now we can search for the sales to balance this out after growing the sales with the same expense level.

Of course, we had some months where we had all of the employee contract termination costs. Now that we're going to have to balance this margin out and so this margin will certainly be used to be able to bring in more volume.

This is, of course, has to be balanced and we have to be conscious of where we're going to allocate this.

Very clear, considering this policy of extending this and having something a little more specific, is this kind of not considered right now?

This policy of selling in installments is something that needs to be carefully handled, right? We have to be very careful about this.

We have some cities with some stores that I'm actually testing, but it's really customized. If I do this for the whole company, then I think the financial market will kind of massacre me.

Two to three times, yeah. Very few stores, and we're testing this to be able to understand what will be the efficiency in bringing these volumes, right?

We've been measuring this really well.

Sounds good.

Thank you, Mr. Ilson, Jesuíno, Sandro, and Túlio.

Thank you for your questions. I had one related to the gross margin, if you could explain a bit of the company taking care of the margins.

I wanted to understand different levers in this gross margin in this quarter, and understand the breakdown of how much the channel was, or if you guys had a reduction a bit on the counter sales, and maybe how you had lower productivity. We saw that you also had some benefits maybe with the fiscal things for cold beverages.

That was really helped. If in your case it was also some help, right, in the gross margins as well.

Thank you, Nicolas, for this. This cold beverage topic is a topic we've been working on ever since mid last year.

Here we have the legal entities not only one, and wholesale is 100% taxation, the impact there, the opportunity is a lot smaller in regards to legacy and current. Not only because of the fact that they have two legal entities, but the fact that the store network here and the expansion is still very recent, there's a lot of young stores.

I just wanted to make it very clear that this topic did not impact anything. In regards to the gross margins of the company, the main point, as Jesuíno can add on, essentially the focus on profitability was very important in all of the different segments due to the low sensitivity to price.

Of course, with the counter sale movement, it's been maybe the main point for improving the gross margins. That was a sale where Jesuíno knows the operation really well, and quite frequently we were very aggressive.

Then that would end up kind of feeding competition of small businesses against ours, right? Because they would go buy at our store at very good conditions, and then they would sell in the neighborhoods with prices that were lower than ours, competing with ourselves.

Sometimes we were even competing with our own selves, right, when the prices were too competitive as well. No doubt, this was the main point.

The guideline on profitability was provided as a whole. The commercial areas, as Jesuíno mentioned in his presentation, was this issue with a very high diligence in stock and margin levels.

No exaggerations, right, with the search for the sales in the last two days of the month, giving a lot of margin to be able to try to recover sales. Just to mention some examples, right?

I just wanted to share an observation is the following, right? Maybe we have 10 how much am I going to spend to be able to force this kind of counter sale, and how much would I spend to force a sale?

This is something we've been doing a lot of exercises for. If I spend all of these 10 and I bring this amount of sales, then especially in the retail stores and neighborhoods, if I spend less and I can recover the sales, right?

This is an exercise that needs to be done. This answer is not going to come in 30 days.

We're calibrating this, right? I think that was answered.

Hope that's clear, Nicolas.

Yes, very clear. Thanks so much.

I wanted to once again thank God, and thank everyone on behalf of our chair, Jesuíno Martins, Túlio, Sandro, and the over 75,000 employees that really make the business happen. I was recently in a region with a director, and we had big projects.

We adapted with new measures. We also had different measures in Pará, where we visited this recently.

Yesterday I called them and I said the thing I wanted to thank them all for was their desire and willpower to really implement everything we planned, right? They really bought into our projects, and at the end of the day, they're the ones that make things happen, right?

I think we want each of these employees to feel they're embraced by us, right? We stand together on this, and I'm guaranteeing that I'm their lawyer, right?

To say, I'm defending their interests, right? Also I want to thank all of our investors and say, look, these are moments of challenge that we're going to go by.

We've already gone by a lot of them, but I can guarantee that we are in the business. We're looking at each step.

We're discussing solutions, right, for each of these that are really going to be able to show what's going on, right? Sometimes a solution of a moment like this we're experiencing, and the market demands this, right?

We're in it, looking at each of these details. All of this is really to help us keep the credibility in our work, and we understand we must work more, but we're working hand in hand, and I want to thank you all.