Mobly SA

BOVESPA:MBLY3

Earnings Call Transcript

[Rodrigo Ventura]

Good afternoon, and thank you for standing by. Welcome to the Fourth Quarter of 2024 Earnings video conference of Toky Group. Present with us today are Mr. Victor Noda, Chief Executive Officer; Marcelo Marques, Financial and Investor Relations Director; and Mario Fernandes, Director of Operations and Logistics Systems.

We would like to inform that the participants attending the video conference will be in listen-only mode during the presentation and we will then open the question-and-answer session when further instructions will be provided. We also inform that this video conference will be held in Portuguese by the company's management, and the video conference in English will have simultaneous translation.

Before proceeding, we would like to clarify that any statements that may be made during this video conference regarding the company's business prospects, projections and operational and financial goals, constitute beliefs and assumptions of Toky Group's management as well as information currently available to the company. Forward-looking statements are no guarantee of performance for they involve risks, uncertainties and assumptions.

These statements refer to future events and, therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors could affect the company's future results and could lead to results that differ materially from those expressed in such forward-looking statements.

I would now like to give the floor to Mr. Victor Noda, who will start the presentation. Please, Mr. Noda, you may proceed. Thank you.

[Victor Noda, executive]

Thank you, everyone, who's attending our conference. This is our first call presenting the results as Toky Group after the merger with Tok&Stok. It will be a pleasure for us to share the first results after this merge. And it's also the first time we are presenting ourselves as Grupo Toky or Toky Group. This is a new name for the group, and those who have been reading the news. So the rationale behind it, but it's important to show this before we get into the results why we change the name.

So on the one hand, of course, there is a purpose of unifying the communication with the shareholders and the markets are large. When it becomes clear that Toky Group would involve both companies no longer Mobly and Tok&Stok individually. So this is part of the unification. But the most important of all is to create this unicity within the company. In other words, to enhance the culture, showing the idea that we have a single objective. We are a single group, and we are working for the benefit of the group as a whole. It doesn't matter who the employee is from which company. Now we are unified after the merge, and we made this complete integration with the groups and why the name Toky?

As we see it, it's much more than just putting together to names. It really represents the strategic reason for this merger. So if you know the name of Tok&Stok, it would be the combination of Tok representing the artistic touch, the design of the product, this is a differentiator of what Tok&Stok products would represent and Stok the more objective part, it's a store with product that can be delivered immediately.

So we understand that this combination -- with this combination, the part of Toky still has a lot of relevance and it's also very clear to us not only to Tok&Stok, but also to Mobly. We have the strategic objective of bringing in this know-how that has being developed by Tok&Stok, bringing and offering differentiated products that would value the brand and the brand is going to be ever more enhanced and we have a differentiated store. And this is why we have a differentiated marginal contribution as Tok&Stok has already provided us with.

On the other hand, Stok does not have the relevance that they used to have because now we are, in fact, an omnichannel company. We have the Stok, we do all the products that can be taken from our fiscal stores, but we have the model using cross dock, drop shipping. And we also have the digital channel, the marketplace using the app and the physical store.

In other words, it's a much broader model, much more complex than it used to be. And it is fundamental in a technology-based way of working and Toky has this touch of innovation and that's why we chose this name and we are going to present ourselves to the market as Toky Group, Grupo Toky since we have both companies in a single company now.

And now we can move on to the main highlights for the period. I would like to present a relevant disclaimer. All those figures compare 2024 and we also included 2 months of Tok&Stok November and December. So both for the fourth quarter and for the full year, we have 2 months of Tok&Stok in the year of 2024, and we are only comparing Mobly alone for 2023. We understand that we're not comparing apples with apples. But after all, these are the figures, the numbers that were audited and recorded by the group. We made those official comparisons. And we are also going to provide some isolated vision from both companies later on.

Having said that, obviously, we had a significant growth, both for the quarter and for the whole year for the quarter was -- the growth was boosted by the entrance of Tok&Stok in the month of November, so GMV grew by more than 118%. And the growth of net revenue of [ 160.7% ], reaching BRL 373.4 million, as revenue for the quarter. Our gross margin has a significant growth of 4.5 percentage points. We closed at 48% as gross margin. When we look at the contribution margin II, it was even larger, so we closed at 36.3%.

And when we look at the contribution margin III, the results were even higher. So it was 1,220 bps and 26.8% and an adjusted EBIT of BRL 2.1 million in negative numbers. When we look at the whole year, we also had accelerated growth. So we closed at BRL 1.1 billion of GMV. As a reminder, I would like to say that Tok&Stok started operating only in November and December so we had nearly a 50% growth year-on-year, reaching BRL 811.2 million. Mobly also had a growth in revenue, and it has being accelerated with the entrance of Tok&Stok. Gross margin finished at 46.2%, also significant growth in comparison to the same period of the previous year with margin II of 33.3% and contribution margin III of [ 4.6 bp ], 20.6% when compared to the previous year, and we ended with an adjusted EBITDA of minus BRL 59.1 million, with a significant growth in relation to the previous period.

I believe that you can see some highlights that will show the figures that I have already commented on. And there are some points to draw your attention to. First is that Mobly is still increasing its gross margin. And now with the combination of Tok&Stok, this is likely to accelerate much more. We are likely to grow in for both companies, considering the synergies that we have completed. And the good news is that our logistics [ courses ] are fulfillment costs have already normalized.

Those who accompanied what we did understand that we had some challenges in relation to Mobly Log in the past quarter. And we solved this thing in the third quarter, and we can see that the fulfillment costs have normalized. And the most important impact was a significant reduction of the marketing costs of Mobly as of November, October, November and it had an impact on GMV. So we saw a de-acceleration of growth in terms of GMV. But on the other hand, we also saw a very significant growth in contribution margin III. So this reflect a very positive impact for us.

When we look at the fixed cost, of course, we can see a growth considering the combination of the company after Tok&Stok's started, but the net effect is very positive, leading to adjusted EBITDA of BRL 42 million, positive numbers. It's important to mention what is the difference from EBITDA to adjusted EBITDA, there's a difference in here of extraordinary experiences of [ BRL 48 million ] [indiscernible] and BRL 40 million are 100% related to the fees of the transaction of banks and lawyers and BRL 90 million associated with an expense of taxes of DIFAL from previous periods and other smaller expenses. So this explains the differences. All those expenses are non-recurrent. They are extraordinary one-off expenses and this number will be close to the EBITDA and EBIT without those expenses.

When we look at the year as a whole, we ended at BRL 111 million as net revenue and adjusted EBITDA of BRL 37 million, a margin of 4.6% positive numbers. So we can see a significant growth with what was reported in the previous year, and it shows the pathway in search of profitability and cash generation for the group considering the synergies that we have had with the merger.

Now speaking of GMV and how it comprises in the 2 companies. When we look at GMV only for Mobly, as I said, we see a slight decrease, 3% of drop in GMV of Mobly and this drop came from the Webshop. We see that the Webshop fell to 59 from [indiscernible]. So there was a growth in contribution margin III, I'm going to show you this at the end of the presentation when I show Mobly alone. So we can see the contribution margin in real, but the trade-off was worth it. It was a conscious decision that we made so that we can have the result in 2025. These stores were nearly flat when we look same-store sales we can see that the numbers are very close, very positive.

Some stores closed when outlet in the Eastern of Sao Paulo, an outlet in [indiscernible]. And if it weren't for those differences, we would have seen a growth in stores of Mobly. And the channel that continue growing in the marketplace growing by 30% year-on-year from BRL 59 million to BRL 76 million. So this is a very significant growth and this is a channel that is becoming ever more important.

Tok&Stok contributed with BRL 218 million of GMV between November and December and BRL 47 million of GMV for the Webshop. And with this, we saw this growth of 214 to 477 of GMV for the quarter nearly growth.

When we look at year-on-year the message is very similar with what we mentioned before. Here, Mobly stores are, results are practically flat. Those are the close stores, as I mentioned. The Webshop, when we look a year on year, there has been a slight drop, however that with much more profitability as I mentioned, and marketplace growing even more than we saw in the fourth quarter. So we see a growth of 33.6% for the year from BRL 195 million to BRL 206 million. When we look at Tok&Stok, of course, it has a very important impact only considering the 2 months of the fourth quarter, but we have already added BRL 203 million for the GMV. When we look at same store sales, we can see that the growth was of Tok&Stok, of course was 4.3%, and Webshop adding BRL 47 million in those 2 months. So this makes the year to grow by 38% Mobly by 10%, a little bit less, in fact, from 5% to 10%, and the difference comes from the addition of Tok&Stok by the end of the year.

So speaking about how this can be translated in terms of profitability. So the first point, we saw the net revenue. So net revenue Mobly grew by 10%, a little bit more reaching BRL 160 million. And with Tok&Stok for the quarter, we reached BRL 373 million. And for the year, we also come from BRL 442 million to BRL 600 million. And with Tok&Stok, we reached nearly 50% growth, BRL 811 million for 2024. Gross profit, we also grew quite significantly. So we see the generation of gross margin from BRL 62 million to BRL 70 million, with Tok&Stok, it reaches BRL 179 million and for the year, we come from BRL 235 million to BRL 265 million, a 15% growth. And with Tok&Stok, we reached a 6% growth yearly.

We can see this evolution quarter-on-quarter. So Mobly has been increasing its gross margin in a consistent manner. It closed the third quarter with 44.4%. And now with Tok&Stok come in we ended at 48%, and that includes the negative effect of BRL 6.7 million that was caused by the effect of the PPA from the combination of the business. If it weren't for that, the margin would have been even greater for this period.

As I mentioned, the good news in relation to the logistics costs or fulfillment costs, Mobly managed to had the same percentage of logistics comparing the same quarter of the previous year. And when we add Tok&Stok, this number reaches BRL 44 million and for the year we were a bit higher for Mobly and which is explained by the growth of 10% in the revenue and also the increase that we had in the second and third quarter for the year.

And then when we look at all this, when we see the contribution margin, we see that the results were very positive. It grew from BRL 44 million into 2023 to BRL 49 million in 2024 in the fourth quarter for Mobly and we added BRL 86 million of Tok&Stok, so we ended at 139%, 209% of growth. When we look at results for the year, there was a growth of Mobly from BRL 165 million to BRL 183 million. And with Tok&Stok, we reached BRL 270 million.

So the trend reflects what I have said before. So the marginal contribution II is also growing in line with the contribution margin I, the gross margin. And there has been a slight drop in the second quarter and in the third quarter, because of the challenges we had with Mobly Log, which have already been sold in the middle of the third quarter. And we see that in the fourth quarter, the numbers are clean, and it's also being boosted by the entrance of Tok&Stok, and we reached this level, this has been are all-time high.

And now talking about marketing and sales expenses and contribution margin III, we can see a drop in the marketing cost, a drop of about 20% in the investments for the quarter from BRL 24 million to BRL 21 million, and the contribution margin III of Mobly moved from BRL 19 million to BRL 28 million. And we can see this gain of 50% in the contribution margin, which is very significant in this trade-off a little bit less of GMV, but more profitability generated by the company.

When we see the investment in marketing as a whole with Tok&Stok, it reached BRL 36 million and for the year, it reaches BRL 105 million. And our contribution margin III is very boosted by Tok&Stok. So from BRL 19 million to BRL 100 million and reaching BRL 165 million for the year and we look at the percentage terms. And we see that this is a trend that Mobly had already been reporting in terms of gain and we also reached a historic margin level at 26.8%.

Talking about fixed costs. First, personnel expenses of Mobly. We recorded flat numbers from BRL 11 million to BRL 12 million in the fourth quarter. So practically, there was an increase related to inflation levels for the period. And when we look at the whole year, the impact is even lower from BRL 46 million to BRL 47 million. So it shows that the cost has been controlled and with the addition of Tok&Stok, in the fourth quarter, we moved from 11 to 26 and for the whole year from 46 to 61.

When we look at fixed costs, we had a drop in Mobly, but Mobly had a one-off effect for the quarter which was related to a provision that we had of one problem we had of Mobly that an attack that was solved, renegotiated. And therefore, the effect was significant for the quarter for Mobly. And the Tok&Stok effect comes from the fixed costs of stores that impacted the operation. Leasing costs and also the operation of physical stores. So from 16 we moved to 32 for the quarter and from 57 to 67 for the year.

When we look at the effect of the G&A, we had BRL 16 million, in terms of store expenses and also other G&A. And the effect of all this is reflected on our EBITDA numbers as well as EBIT and net result. So we referred from a negative number to 42 number positive. It would have been very positive only with Mobly alone, from 8 negative to BRL 30 million in positive numbers. So it shows a very significant evolution of Mobly and with addition of BRL 29 million coming from Tok&Stok, we reached BRL 42 million. And for the year, we moved from a negative number of BRL 18 million and reached a positive number of BRL 37 million with BRL 29 million as a contribution of Tok&Stok.

When we look at the EBIT, obviously, we see the effect of the brands distribution centers. And from negative 21 we moved to BRL 2 million in negative numbers in 2024 and from BRL 83 million negative numbers to negative BRL 59 million in 2024 with Mobly already running with positive numbers in the last quarter and also for the year. And when we look at the net result, and the EBITDA margin.

When we look at the EBITDA margin, we see that has been a significant growth in the last quarter. We were getting ever closer to the turning point from negative to positive, and we managed to make it by ourselves only with Mobly and Tok&Stok boosted it even more. And the net result was very much impacted by the financial expenses related to the debt that we have -- that there is in the Tok&Stok that came from the M&A.

Marcelo, will provide an update on all the synergy that were captured.

[Marcelo Marques, executive]

Good afternoon talking about synergy, it's worth remembering that we assume the control of the company on November 15. So the numbers that we bring here is related to about 100 days of control of Tok&Stok. We are more accelerated than the plan we had developed with the consultants and we ensured 22 million of synergies so far by the end of February.

When we look at the 3 major aspects and all the initiatives that are going to impact in the Phase I, II and III, they have not been completed so far. We have 6 months to complete the first part, and what's included in this first part? So it's an optimization of that administration structure. We put together the management of the companies, the senior management, and we made the company ever more lean. And we also have the reduction of costs in third-party service providers, and we decreased the cost of IT licenses and we no longer have some licenses that make no sense anymore. And within the first phase, we had a very important reduction in the COGS from national suppliers.

So these are the easy to catch fruit. So we negotiated with suppliers who had made increases unreasonable along the time. And we saw which were the suppliers that could provide the services to replace those who refuse to reduce prices. We also had a reduction in the warehouse, and we also have a reduction in terms of shipping cost is using Mobly Log and also making negotiations with service providers of Tok&Stok.

For our second phase that will go as far as the third quarter of 2025. We also have the reduction of COGS from imported product. Our team is going to China now. A reminder, we are talking about 15% or 25% of share of both companies. And we had a reduction, which is very significant in the second phase. We have a complete unification of logistics, thinking about Mobly Log, thinking about it, so that we can transform safe products to [indiscernible] products and capturing those synergies.

We are also going to continue and capture the infrastructure of IT. We had some long-term contracts and by the end middle of the year, we can reduce costs related to IT. And we are also going to start the marketplace strategy for some specific lines of Tok&Stok, especially reverse and products that have low turnover.

In the third phase, we are talking about the end of '25 beginning of 2026. We are going to have the full integration of IT, and we are going to use the best of both worlds. We are going to use systems for the third parties, and we're going to replace them with proprietary Mobly systems.

And we have been using drop shopping and Tok&Stok, and we're going to optimize this. And with that, we are going to have an optimization in the taxation, which will have a direct impact on the margin. We're also going to have a full logistic integration. There are many initiatives coming from reviewing the structure of assembling and delivering at the same time and also the structure we have for warehouses and also in-store -- of course, this is an ongoing process, by the way.

But we're going to have the cross-sell of products of Mobly and Tok&Stok both in-store and on the website. We are very happy because we are moving much faster than we had planned. You can see during the -- what we devised with the consulting companies. And we also have higher synergies, stronger synergies. And we understand that we're going to get from BRL 80 million to BRL 130 million of synergies in the run rate for the company.

I think we can move on to the next one.

[Victor Noda, executive]

I want to emphasize something. The idea is to provide an update of the synergies. As Marcelo said, there are many things going on. We are going to have some updates and news in the next quarters, and we are very confident with the plan that we devised, that is to accelerate the original plan of synergies and bring this profitable, profitability even at a faster pace, faster than when we first made the merge.

I'm going to go over some materials so that you can see how the performance of the different companies took place. I know it's difficult to compare because, in fact, we are talking about a period with Stok with a period that we did not have Tok&Stok. Mobly alone had a slight drop in GMV compared to 2023. And there was a significant increase in the contribution margin. And we also had a growth in the net revenue, we grew by 13% in the net revenue with margin practically flat, but just a little bit lower than the previous year.

On the other hand, we saw the logistics costs resuming the levels of 2023 with a very significant growth with marketing. So we closed 17.5% of net revenue, 42% of gains in absolute terms and this was the main driver. First, bring EBITDA to a positive level. Of course, we have the BRL 9 million effect that I mentioned, which was fair positive for G&A. If it wasn't for that, even so we would close the quarter with positive numbers in EBITDA. And when you look at the year, we grew both in GMV and net revenue 5% GMV rating at 808 and 11% in net revenue going back to the level of BRL 600 million.

And we gain more significant in gross margin, and we also had a gain in the contribution margin, too, in spite of the one-off increase of the logistics increase in the second half of the year, and it is makes a balance -- strikes the balance and the contribution margin III. We managed to maintain the increase of revenue with a reduction in fixed costs. And this moved us from negative EBITDA -- negative EBITDA to a positive number in 2024.

Now moving on. When we look at Tok&Stok, we cannot compare with 2023 obviously. However, when we look at the fourth quarter, only Tok&Stok alone, we can see that one of the differentiators of the margin of the business, gross margin, 51.2%, there was a negative effect of the PPA. If it weren't for that, the margin would be close to 55%. So the growth -- the margin is very significant. Obviously, this reflected in the contribution margin II and III. It closed the quarter at 33.9% of contribution margin III and 13.8% of EBITDA, positive BRL 29 million. So obviously, the major impact on the result that we reported for Tok&Stok, we will be in the interest of the debt.

A reminder, we still haven't started paying for the service of the debt. The cost was renegotiated and recovery of Tok&Stok, and we're only going to start paying the interest in 2026. And we have a lot of time to capture the synergies mentioned by Marcelo and make this number to be enough for cash generation and results to cover for the amortization of the debt as we will do in the long term.

Okay. Moving on to next one. Looking at Tok&Stok year-on-year as a whole, we had 4% drop in net revenue. But as I mentioned before, the same-store sales grew, but in 2023, in the middle of year Tok&Stok closed. If I'm not mistaken, 17 or 18 stores so this caused an impact on the sales results, but the company has been growing with the contribution margin which also stable if it weren't for the effect of PPA, otherwise, it would have been very stable.

Now with the synergies that we are capturing, it's going to grow a lot. So we have an expectation that the number will have an important impact on the business. And with the contribution margin II and III, basically flat, contribution margin III is a little bit better. And we can see the expenses with marketing and sales, but there was a significant reduction in fixed costs, both for personnel and for other operating costs. And that made EBITDA moved from BRL 15 million to BRL 63 million along the year, the EBIT effect is even greater from 122 negative to BRL 60 million negative only. So this number is going to very quickly close to positive numbers and close to the cost of interest, as I mentioned before.

So this was to give you a general view of the numbers that we had not shown before, and provide an update on the synergy. I would only like to emphasize that we are very optimistic with the business. We are very optimistic with the combination, the synergies and the gains that we have in the strategic dimension and especially in the economic and financial areas, which are very accelerated according to results.

With this, I would like to open the Q&A session, and it will be a pleasure for me to take your questions. Thank you.

[Rodrigo Ventura]

We are now going to start the Q&A session. [Operator Instructions] So beginning our session, Alexandre Namioka with Morgan Stanley. You may proceed, sir.

[Alexandre Namioka, analyst]

Good afternoon everyone. I have 3 questions on our side. First, I would like to start asking you to share your view on the performance of the industry and Mobly for 2025. And if you can make some comments on how you see the performance year to date Mobly and Tok&Stok for purposes of comparison. So this is my first question.

Second is specifically about the Webshop channel. We saw the channel dropped year-on-year. We understand that in the release, you mentioned that there was a drop in marketing investments. But if we look into the future from the strategic viewpoint, what can we expect in terms of performance of this channel? In the last quarter, we see the marketplace has been increasing its share considering the Mobly channels, specifically.

And the third question is in relation to the older news that we've been reading and also the material fact that you announced on Friday last week about the proposal of Home24 to remove a clause. So if you could provide a general context of how the conversations stand and any additional information that you might believe to be relevant about this topic?

[Victor Noda, executive]

Okay. Perfect. Alexandre, thank you for the question. So I'm going to answer your questions one by one. As you ask them. The first one was in relation to the industry performance and our expectation for 2025. So we see that the furniture market has been suffering a lot after the pandemic. So the pandemic anticipated many sales. It was a market that had been flat for many years before the pandemic and grew 20%, 30% in 2020, 2021 so it was an anticipation of nearly one decade of growth. And if interest rates continue to be high, it's a market that is going to be pressurized. It's a discretionary category if people are indebted, people tend to hold back this kind of purchase in this category.

In the 2 companies, we had a growth, which is higher than that of the industry. Mobly grew by 11% and Tok&Stok had a little drop. It sold some stores, but if you can see the same-store sales, it grew higher than the industry. When we look at 2025, we see a lot of pressure from the suppliers in relation to raw material costs, especially with the impact of high dollar, especially in the beginning of the year, we can see that would manufacturers asking for raise and the -- those supplies feel like exporting their products. And also the upholstery manufacturers that require inputs from abroad. So this all generates an inflation in the industry, and there is a pressure in the demand for the consuming market. So our expectation for this year is of low growth so we do not expect a growth of 2 digits. But on the other hand, obviously, in our specific case, we expect high level of profitability, considering the internal synergies that we're going to capture with little dependence on external factors in order to realize what we have planned.

When we talk about year-to-date performance for Tok&Stok, of course, providing information that I can disclose. In terms of revenue the group has been flat without major growth, but with profitability growing ever better and the synergies already being captured at a very fast pace. And this is reflecting on the results. And our expectation is that for the year, we are going to go along those lines.

And considering this, maybe giving more vision to the channel. We see growth in the marketplace not as accelerated as last year. So we see the marketplace platforms ever more concerned with profitability and the demand is lower as well. So this is something that happens to the market at large. And the Webshop is decreasing as a result of the our conscious decision of making large investment in marketing. We are going to show a large contribution margin free regardless of the growth in margin.

And in relation to your question about the Webshop, yes, in fact, this is very relevant. Since the post-pandemic period, this we have seen that Tok has been growing every year. The consumer is ever more directed to major marketplaces. So it's very difficult for Mobly as an independent brand to accelerate the traffic in the Webshop without, with the cost that would not make it visible. And this makes us -- makes sense for us to make all this investment. So the investment is to differentiate the assortment of products that we have in the Webshop in comparison to the marketplace.

So the [indiscernible] and the physical stores will have ever more core Mobly assortment with private label exclusive products, which are not going to be available in the other marketplace channels trying to direct the experience to within our channels for the consumers that value the brand value quality and always those customers who are looking for a differentiated products so that we can have a higher contribution margin. This is a movement that has been happening for a while, and this is going to be accelerated with Tok&Stok.

On the other hand, the marketplace assortment is much more aggressive in terms of price. Our products have less differentiators in the sense and the -- and we are going to look at the cost in this area. And these are places where we have a differential -- a competitive differential, which is very large. So Webshop continues to have a very important role for us. But always with the focus on the private label and profitability.

And the marketplace, we have a tighter margin or the price ranges will be low where we are going to have the competitive differential. And also talking about the material fact that you mentioned. I think we made it very clear in the material effect that the position of the company is that this is not beneficial to our shareholders or minority shareholders. So we recommend that this should not be voted in favor, Home24, I understand that it has an interest of selling its position in Mobly, especially now with the acquisition of XXXLutz.

So in no time, it had a strategy to have a share in Brazil, and it's not part of their strategy. So they want to sell their share, and they requested to remove after the IPO is that and they understand they are going to have fewer opportunities to receive offers, but we understand that this is part of the business. And as a company, we understand that we are here to protect all the other shareholders and not to the detriment of the interest of a single shareholder. So we have already had summoned a meeting that will take place in April 30.

[Alexandre Namioka, analyst]

Perfect Victor, it was very clear. Thank you very much.

[Rodrigo Ventura]

[Operator Instructions] The results of the conference of Toky's Group is closed. We would now like to turn the call over to Mr. Noda for his final remarks.

[Victor Noda, executive]

So reiterating what I've said before, we see that there is a clear evolution of both businesses in the past quarter. Mobly increasing its profitability on a clear pathway of going after this positive margin, Tok&Stok also. Now with the union of the companies, we are going to move faster with lots of synergies already captured and many of the synergies to be captured. We are very optimistic with the business. Even though the market is facing a very challenging moment, we understand that we are going to bring the results regardless of the market considering everything that we still have to do in company. We are very optimistic with all this, and we want to bring you only good news in the next quarter.

I would like to thank, everyone, for attending the conference, and have a good day. Thank you, everyone.

[Rodrigo Ventura]

The results of video conference of Toky's Group is closed. We would like to thank everyone. You may disconnect now, and have a good afternoon.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]