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Good morning, everybody, and thank you for holding. Welcome to another Earnings Release for the Quero-Quero stores. We're going to be speaking about the Results for the First Quarter '24. With me today are Peter Furukawa, the CEO; Jean Pablo de Mello, IR and CFO. I am Flavio Abrantes, the Manager of IR. Now to begin the presentation, we will go on to Slide #3 that contains our agenda. Our agenda today will refer to our pillars, projects and expansion, the discussion of the results for the first quarter '24 and of course, we will end with a question-and-answer session. We will now go on to Slide #4 and I will turn the floor over to Peter Furukawa. You may proceed, Peter.
Well, thank you, Flavio. Good morning to all of you. Once again, it is a pleasure to be here addressing you. I was thinking here -- what it is that I could share with you, and I remembered what the first quarter last year was like. And I think that at this point, last year, with the beginning of the second quarter. It was when I had my greatest concern. I did not know which would be the evolution, the number of clients had fallen considerably, and this was a reason of concern. Today, we're somewhat more enthusiastic because we see the resiliency of this company. We have been able to navigate through this difficult moment. We have reached a stable position in a number of clients, and I will refer to this further ahead. I'm more positive than I was last year. I'm also quite happy, I think the organization has observed that despite the suffering, we have been able to build something positive. We have some tax benefits that have not turned into cash. We hope this will happen. So I'm referring to BRL 50 million. We didn't need cash to further expand, but this additional cash allows us for greater tranquility, it's cash that comes from PIS, COFINS, and as soon as all of this goes through our cash, we will capture this with positive results. And this will give us new thrust beginning the next year. And of course, this will be positive for everybody. We will see an increase in our cash and investments increasing, of course. Now, what happened in the first quarter here. We had same-store sales of 3% -- minus 3%, this was negative, but there is a makeup of deflation and number of clients. When we look by category, the results are quite similar. Construction material with the greatest impact compared to house appliances and furnitures, which are positive at this point. And this has brought us a more positive scenario. We worked with store opening this year at the very beginning of the year with 20, 30 stores. This had already been contracted last year in Paraná, Panamá to the left of the -- south of the State of Sao Paulo with very positive results, thank goodness. Now when we come to credit and collection, we continue to be quite conservative. We had BRL 11.9 million overdue in the VerdeCard portfolio. And our perception is that everything is under control. We go from 0, 30; 30 to 60 and onwards. We don't see any difference in our credit collection. Last year, we had some fluctuation in the recovery above 180 days. And I have focused and try to believe in the program called Desenrola, which was not exactly what we thought it was. But this year, the results are good. We continue to be conservative, and we have no warning signs when it comes to our portfolio. The portfolio has grown further because our share in the card is once again resuming what it was back in 2019, now we believe it will continue to grow. We have more of sales with the implementation of the Elo Card, which has aided and abetted this. In terms of costs, we're quite focused on cost. Every real is very important. When we look at the impact of new stores, the growth was 5%. We had a salary adjustment that was higher than this because of the collective bargaining, but we were able to control the cost at that level, net -- adjusted net debt, BRL 303 million. We decided to put more money in [indiscernible], which is our own funds and part of that increase of net revenue comes from that net debt over EBITDA in the last 12 months, still very healthy at 1.0x. We don't want to expand the company by taking on debt, and we're holding true to that concept. The best in the world is to have no debt whatsoever, I really prefer not to be indebted. It's part of the good leverage we have in terms of digital retail, 23% of products that are not in our stores, which is positive. And when we compare this to 2019, it's interesting. We still have a significant gap of clients from the C&D social bracket. Well, people will say that revenues are being recomposed and I agree with this, but -- if you will look at the price of a kilo of rice in the supermarket today compared to 2019, you will be surprise, how many packages of rice a person combined with their minimum wages. We're still quite far from seeing the recovery of the C&D bracket. Several benefits are being offered. We still have not enjoy these benefits, but there is significant room for the CD bracket to go back to buying as they used to. And well, the levels in 2018 were not that high, but we should get closer to those levels once again, the digital retail does take some time for Quero-Quero to implement projects, we have to assess things in the inter lens. The process is slower, but we begin to see a higher number of a and b bracket clients, simply because we have improved the product assortment geared to the A&D bracket on our digital platform. This is good news for us. When we look towards the future and for years, I think we have been on the right path with this. Now regarding a high-performance culture, we have 6 store managers trained and 57 managers undergoing training. Perhaps this is the most difficult thing. I said this 4 years ago and I repeated today the greatest challenge of Quero-Quero is not the stores, but to continue producing well qualified managers. It's not easy to find qualified managers to train them. We have a turnover that is quite high. We have 358 employees being prepared in the Despontes program with ever more greater quality. This is good, but we will need more managers. And this is what I say to the store people to have a Despontes manager that is well prepared. This will enable us to grow. Next slide, please. This is the inauguration of the stores where you see the red dot, the first store inaugurated this year. Once again, our level of new stores is 20, 25 stores. We have already signed the contract for all of them. And in terms of expansion, there won't be any surprises, only good surprises. Evidently, we continue to focus on the smaller cities. And this year, the great majority will be in Paraná, Santa Catarina and Rio Grande do Sul. We're not going to expand beyond this territory this year. We're going to get the low-hanging fruits to obtain faster results and, of course, invest in refurbishments whenever we can change a store from Level 1 to 2 or 3, we do this, we carry out renovations. And this is important to better service the units where we work. Next graph, please. Very well. I will give the floor to Jean Pablo. At the end, I will be back for some remarks. Regarding this year, we're quite satisfied here. We have a great deal to do. And of course, this is wonderful. Jean Pablo, you have the floor.
Good morning, everybody. It's a pleasure once again to present the company results. We're on Slide #8, where we're going to begin to speak about the revenue of the company. We had a retail sector with gradual improvement. As you can see to the left bottom, the same-store sales that has been improving since the second quarter of '23. Consequently, we had a drop of 6% in the second quarter, then a drop of 6% in the third quarter, 4% in the fourth quarter '23, and now a drop of only 3%. So we have improved in terms of sales number of tickets sold and we have that negative factor, which is deflation in sales. The total sales are quite stable, BRL 460 million for the retail and continuity in the growth of financial services and credit cards. There is a growth of 15% in financial services this quarter and 16% in terms of the credit card. So we end the first quarter with a growth of 4% in revenue, a growth very similar to previous quarters. Now in the next slide, we have a growth of 4% in revenues and 9% in gross profit, which has been something continuous in the last 3 quarters, showing margin improvement in the retail part as well as in financial revenues. BRL 206 million in terms of gross profit, a growth of 9% and gross revenue over gross [ margining ] 13.9%, retail, 23.7% compared to 23% in the previous quarter and services rendered, 43.5% vis-a-vis 48%, so we ended the quarter with 30.9% margin on revenues. And you can see that improve, these are margins that are slightly higher than those consolidated in the first quarter of 2022, better than the first quarter '23 and a higher consolidated result vis-a-vis '22. So we see this enhancement in the margin of products and categories we sell. In the next slide, 4% of growth in revenue, 9% of growth in gross profit. And if we look at the adjusted figures in operational results, a growth of 5.2%. And we have grown the number of stores by 3.2%. Now with the growth below inflation, we began to work in a focused way to hold back expenses way back in 2021, anticipating an exacerbation in the macro scenario, and we have been able to maintain our expenses controlled. So selling expenses rose by 6%, and we have an additional credit of BRL 61.4 million of net tax credits. Once again, from the calculation of PIS, COFINS that had a decision in the fourth quarter, and we have now heard the decision this quarter, and it shows us how this will not have an impact on the company. And because of this, we were able to recognize these additional credits at present. As Peter mentioned, we now need to wait for the result of this sentences, once we have the sentence, these credits will be put in our cash, which, of course, will be a significant benefit for the company and growth in profit. And on Slide 11, a growth of EBITDA, both in adjusted EBITDA, where we had nonrecurring effects. We have an EBITDA of BRL 11 million vis-a-vis BRL 4 million in the same quarter last year. And we observed this return to the operational leverage in the company and we have an EBITDA of BRL 99.6 million compared to BRL 29 million in the same period last year. We're still performing below the potential of the company, especially in the retail area, where we have a negative same-store sales, but with an enhancement in margin and expense control, and we see an increase in our EBITDA. We now go on to Slide #12, and this has an impact on adjusted net profit. The accounting profit was BRL 54 million, which is relevant for the company because of the tax effects. Even without that, the results are better than the first quarter last year, where we have BRL 18 million compared to -- BRL 18 million compared to BRL 30 million. And all of this shows an enhancement in the income statement of the company. We'll go on to the following slide, where we see that the great goal of the last 2 years remains to have a strong cash position, controlled debt in the company and very low default levels. You can see that our credit portfolio has been growing in a very robust way. We had 11.9% delay in terms of the portfolio, very similar to what we had in previous quarters. We now go on to the next slide, and we see that this credit portfolio has been growing because of an increased use of our cards in and out of our stores. We're being more conservative vis-a-vis the granting of credit vis-a-vis 2019, but with a gradual increase in penetration and number of clients, we see a greater use of cards, and I have shown you this in the previous slide. Default continues to be under control, which was one of the goals. And in Slide #15, you will see that we have been holding back on our short-term cash. We invested less than the previous year. We have inaugurated a lower number of stores and now you will see that the pace of CapEx is highly aligned with previous years. And this will be the trend for this year, BRL 11.3 million growth this year compared to BRL 12 million in the first quarter of '23, the opening of 1 store and 5 renovations that are underway. We will continue to inaugurate stores and renovate them as they bring us a rapid return on investment. With this, we go on to Slide #16. And we show you that our debt is under control in the first quarter. Our debt was [ 1x ] over EBITDA. And we have BRL 303 million in debt, nominally, very similar to the first quarter of '22. It's important to highlight that historically because seasonality of sales in retail, we have cash burn in the first quarter and generation of cash in the second half of the year. Always very aligned with what we have done in previous years. The debt continues to be well aligned, a total of 526 gross loan for the long-term. And with this, I would like to go on to the next slide and return the floor to Flavio, who will moderate the question-and-answer session.
Well, thank you, Jean. We begin the question-and-answer session.
Therefore, the first questions are from Robert from Bank of America and will be answered by Peter Furukawa. Congratulations for the enhancements. What is happening with tools construction material and consumption goods? Are we doing well going forward? And what is happening in terms of the industry consolidation? Are you observing a greater exit of companies from the market?
Bob, it's always a pleasure to speak to you, and thank you for your questions. In terms of deflation, we will have some deflation still this first half of the year. A bit of carryover of what has been happening in the previous year. The deflation is quite low. When we look at our ticket of minus 3%, it means that we have a few less customers and a bit of deflation. Now part of this deflation, I haven't really broken down this. Perhaps I could do this subsequently. But there's also a bit of trade down as well. The person was buying floors of 1.20 meters time 1.20. They have begun buying 80 by 80 because the price is lower. It's that perception of deflation, but when you measure what the industry is selling us, it's not the products per se that are having a deflation. And I hope this will extend until June of this year. In the second half of the year, this factor should practically disappear. This is my perception when we analyze the figures. Now in terms of competition, Bob. Construction materials truly has had an impact. If we think of the a bracket, they have survived well in terms of growth, but for those who are servicing B&C brackets, there have been a lot of impact of minus 10% or 15% vis-a-vis the previous year, and high interest rates that make it difficult for the construction market. At that level, I think we will continue to have significant impact. Those who are closing down the stores, and we always have stores that are closing down, but I haven't seen an increase in the figures. The figures have remained flat during the year. There are stores at Colas, we go there, we buy their stock and try to sell it up somewhere. But we haven't seen high figures for this. What we do observe is that the larger companies are suffering more than the smaller companies. The smaller companies have greater sensitivity perhaps, and we can help them survive for a period. This is the answer I have for you, Bob.
Well, thank you, Peter. The next question is from Gabriel and will be answered by Jean Pablo. You spoke about deflation, but there has been an increase in the retail margins. Is this due to a price markup or a slowdown of inflation?
Well, Gabriel, deflation has been accompanying the company in the last quarters during this entire period. It's important to keep in mind that it was stronger at the end of 2022, especially in the first half of last year. We saw a sequential deflation with a drop of prices month-after-month when you made purchases for the industry with exceptions, and it began to slow down last year already. Well, when we think about deflation now in terms of procurement prices, there is some deflation, but the trend is towards stabilization, and we will compare the impact this has on average ticket and the price of products. So there has been a negative effect vis-a-vis the first quarter '23, the prices are still lower, and this has a negative impact on the company. Now in the last few years, especially in the last year, we have attempted to mitigate the impact that the deflation can have on the company margin, especially in the retail market. Last year, we had quarters with a higher impact, but when we began to observe is stabilization. And once we see that this extends for some months, we make adjustments in our inventory prices with a lower impact on our margin. In some places, we see a better retail margin, but deflation still has an impact on same-store sales, but seems to be stabilizing in the last few months, and we will be observing that effect still throughout the second quarter. We will still have some deflation during the second quarter, a negative impact of deflation in the average ticket, especially in same-store sales.
Well, thank you, Jean. The next question will be answered by Peter made by Cassimiro from Bradesco BBI. I would like to understand the impact for Quero-Quero of the merger that we have just seen?
Cassimiro, it's always a pleasure to address you about the [indiscernible] merger. I'm very happy for them Juliano and Rodrigo, our fantastic managers are extremely good. The fact that they have come together is very positive. Their model is to be somewhat larger than us. There are a few cities where we will have an overlap. We participate in the same group with [indiscernible]. And we truly do not feel as if we were competitors. Quite the contrary, we converse, we exchanged ideas, but there is a great deal of respect towards them. And I think this will be very positive. There are several opportunities in the commercial area. And I think this will be a positive merger. It does not have a direct impact on us, but I'm very satisfied with the merger. I have congratulated both, and I have great respect for both of these companies. This does not raise any concern regarding our company.
Well, thank you, Peter. The next question is by Rogatis from Itau BBA, and will be answered by Jean. If you could speak about the dynamic or the expansion of your credit portfolio in coming quarters. And this in view of the slowdown in the pace of interest rates, will this impact your portfolio in any way? Jean?
Well, we believe that the credit portfolio will maintain the trend that we have observed recently. We don't expect any surprises. It's not part of our strategy to change anything. Our credit strategy, we're going to continue on as we are. What we have seen in the last quarters is a gradual growth. We continue to grow the number of stores and gradually, we see a growth in the penetration of the card. It has grown in beyond, as part, but it is still slow compared to 2019. So we have room for improvement, but we need to wait for the macro situation to improve. It will be a better year than 2023, but we don't foresee great changes in the short-term. We're not intending to change our policy because of this. The idea is to see a very similar performance. And we hope that the interest rate will benefit us in several accounts [ of court ] in terms of credit. We have the funding cost of the company that should be cheaper, and this should alleviate the cost for consumers. And this is very important for the retail market. We have construction material and a drop in interest rates leads towards peak of interest in construction and refurbishment with a benefit to our business. Yes, the interest rate has been dropping in the last quarters, but it is still too steep. We hope that with this sequence of reduction of interest rates during the year, we will have a more favorable macro scenario for companies for individual people who wish to obtain funding for refurbishments or construction as well.
Well, thank you very much, Jean. With this, we would like to end the question-and-answer session. If your question has not been answered, we can answer it subsequently. I will return the floor for final remarks to Jean, and then to Peter.
I would like to thank all of you once again for your attendance. We have shown you that the company has been improving gradually in a scenario of greater capability in the retail and enhancement in financial services, and this leverage rate is very positive for growth of EBITDA. We're always in the search for low default rates. This is another quarter that is highly aligned with other quarters of a gradual improvement, and we hope to observe this improvement in coming quarters. Thank you once again for your attendance, and I will give the floor to Peter.
Well, thank you for your attendance in the call. Once again, as Jean said, we hope that in the coming quarters, we will continue to have positive results as well as in future years. We hope to have several years of growth and to be able to build this dream company. I believe that few retail companies -- well, we're part of a select group of companies that are navigating through this very difficult process in terms of consumption in the quest for a stronger company. And the team I have here has been able to do this. Well, the horse is good, the rider of the horse is very good. And this environment that we live in, is no walk through the park. I'm very happy to be part of the organization with strong horses with very motivated jockeys or horse riders. We're fighting to continue to build this company. Well, the other day, somebody said, why doesn't everybody leave Quero-Quero all the stock options are low in Quero-Quero, nobody leaves. What are you doing there? This company is very pleasurable. We're building a dream company. It's a company where we want to wake up in the morning and say, oh good, I'm going to work. It's a company that is very pleasant to be and we have positive fundamental values. The team is highly focused with a great deal of strength. We're not building something for the quarter. We're building a company that we want to ensure will have longevity, a company that will be ever stronger. I think we have been able to do this without increasing our net debt vis-a-vis last year, and by expanding and strengthening the company. A reason of pride to be part of this team to have phenomenal colleagues that allow me to wake up in the morning with a passion to come to work. Thank you very much for your questions. Thank you for your attendance, and let's continue forward.