C&A Modas SA
BOVESPA:CEAB3
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C&A Modas SA
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Good afternoon. Welcome to C&A's 2023 Quarter 2 Earnings Results Call. Today, we have with us Mr. Paulo Correa, CEO; Mr. Laurence Beltrao Gomes, CFO and IR Director; Fernando Brossi, Vice President for Operations and Financial Services; and Donatti, our Commercial VP.
This presentation and the earnings release are available in the Results Center on the C&A IR website. This call is also being recorded and simultaneously translated into English. Click on the interpretation icon to listen to the English version. The replay of the conference will also be available on our IR website.
After the company's remarks, we will open the floor for questions. [Operator Instructions].
Before proceeding, let me point out that any forward-looking statements made during this conference call relative to the company's prospects, projections, operating and financial targets are based on beliefs and assumptions of the company's management as well as on information currently available to C&A.
These forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions. They refer to future events and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions and other operational factors may affect the future results of C&A and lead to results that differ materially from those expressed in set forward-looking statements.
Now I would like to turn the conference over to Mr. Correa to start his presentation.
Thank you, Carol. Good afternoon, everyone. We will now start our presentation to announce the results of quarter 2 2023. It's important to highlight that this quarter was a quarter with a very challenging macro environment and 2 very specific dynamics of our industry: we had a higher baseline last year, particularly due to the temperatures, which were much lower in '22 than in '23. But despite this challenging context, we can say we had some important highlights in our results for quarter 2.
But let me start by mentioning our winter collection, which was very well received. And despite the challenging context and scenario, this led to an increase in our apparel sales. Even with a more promotional environment, which characterized quarter 2, we were able to increase the company's apparel gross margin and the total gross margin of the company. This -- combined with a very efficient expense management that we have been conducting, this led to an increase in our EBITDA of about 12%. This increase in our EBITDA, combined with our efficient working capital management led to a very relevant free cash flow generation of BRL 76 million. And at the same time, we were also able to reduce the gross debt of the company by more than 25% in the period.
On the next slide, we give more details about how these results are a direct consequence of our main strategic levers as you can see here. We have our 3 main strategic pillars here: the first one is related to our capacity to continue to efficiently and effectively manage our cash; the second is how we can ensure this operational improvement and the capture of all the investments that we made post IPO.
And because we want to connect stronger and stronger with our customers and understand the moment they're going through with better offers and creating an environment that is appropriate for this ever-changing consumer that we have. So we have the dimension of a better connection with our customers.
So to explore on the next slides, each one of these pillars, let me start with our efficient and disciplined cash management. Just like in previous quarters, we continue to seek better efficiency in our expenses and costs to ensure operating leverage. And we have been successful controlling our expenses. So our expenses are growing at a lower pace than the growth of the company overall, and this has allowed the development and improvement of our leverage.
The initiatives that we have been implementing since the middle of last year relative to the management of the company's working capital and reduction in the level of investments so that we can achieve faster and better returns in the short term, they have all contributed to the generation of free cash flow of BRL 76 million in the quarter.
As you can see, we also ended quarter 2 with our stocks practically flat compared with 2022. And this is the result of the maturation of the structural actions that we have been implementing since our IPO, particularly when it comes to distribution and logistics. And here, I give highlight to the push-pull modality. In addition to a very relevant advance in our inventory management process with intensive use of artificial intelligence and also demand forecast for every store at the SKU level.
Another element worth highlighting is that we paid down BRL 639 million in our principal debt which matured in quarter 2, and this led to a reduction of 27% in our gross debt year-over-year.
The second element of our strategic direction today is constant and consistent operating improvement. And you heard when I announced our highlights, our gross margin continues to evolve despite the challenging context that we had in quarter 2. And this has been taking place not just this quarter. This is actually the sixth consecutive quarter where we see an evolution of our gross margin of nearly 4 percentage points, or to be more precise, 3.5 percentage points, compared with the pre-IPO period in 2019.
And this is mainly due to the support that we get from the evolution of our push-pull model which has now reached a 35% share of the total distribution volume of the company in quarter 2. This is allowing for a better assertiveness in our inventory management at the store level and a better level of service for the products that are distributed through this modality, which is now largely available to our customers.
We are focusing on high turnover products. And at the same time, we are seeing a continuous evolution in our dynamic pricing algorithms which contain some elements of artificial intelligence as well, in addition to a procurement and supply management process for our main products, which ends up helping our gross margin and also our sales.
The fourth element of this operational improvement in C&A Pay. C&A Pay has been seeing a greater and greater penetration, a greater and greater share of our sales, and it actually reached 20% of the total sales of the company in quarter 2. And we're advancing not just in terms of penetration of the product, but the product itself is evolving consistently.
In quarter 2, we started allowing payment through facial recognition. This technology now ensures that our customer can quickly complete a purchase. All our C&A customers can pay for their products by only smiling at a camera. This provides them with a more agile, easy and streamlined experience, which is, at the same time, more secure. Now we can prevent identity frauds and protect their data.
So this operational improvement has everything to do with the investments that we have been making since our IPO. We talked about consistent and strong improvements in logistics, distribution, the push-pull technology, which already accounts for 35% of our volumes. C&A Pay, which allowed us to recover our capacity to grant credit to our customers. We're doing this very diligently, and C&A Pay already accounts for 20% of C&A sales, not just with high penetration, but also with constant evolution.
Third, we talked about digitization in our omnichannel strategy. Our digital sales continue to improve. But most importantly, digital is now in the core of the company. Our most important processes such as price management, procurement management, replenishment management for our inventories, these all has been done now through very sophisticated digital model.
And four, we talked about the operational improvement in our stores, the stores that we opened during this period, our expansion strategy. We opened 3 new stores during the period, and we will continue to advance in this search for better capturing the impact on our sales and the profitability of the new stores that we are opening.
On the next slide, we talk about the third element of this equation, which is connecting to our clients, to our customers. We must understand that the results of the COVID pandemic left very deep marks in the behavior of our consumers. And one of these marks was the value perceived by consumers. Apparel, at times of very difficult economic conditions for the middle and low middle class, led to a perception of value. So now apparel is seen almost like an investment.
And over the past few quarters, we are building our collections, always taking into account these changing perceptions and this change in demand and consumer requirements. One of these requirements is versatility. And our fall and winter collection this year was much more versatile and more connected with the current context.
Also, one of the elements that we have been hearing a lot from our consumers is the perception of deal -- of a good deal. So how can we create this perception of a good deal, a good opportunity to buy? One example of this is our Mother's Day campaign where we had this concept of deals you can't miss. And we were able to incorporate this dimension of value perception much more clearly to our consumers. So this tactic management of our deals and promotions, we were able to do this without any major impact on our gross margin like you could see when we talked about our numbers.
Also another proof of this better connection with our consumers is that our program C&A [ VC ], I would say, reached 26 million clients this quarter, which shows how strong this program is and how now we're being able to identify more than 80% of our sales, which provided us with more complete data. Data we can use for further promotions in the future and more relevant offers to our consumers in the future.
Another important connection milestone was the easiness of this journey. So we were able to complete the integration of C&A Pay into our main app. And now this is generating an additional flow of consumers in our app, which leads to better recurrence and a higher LTV of these customers which are using C&A Pay and the C&A app at the same time.
So I would just like to note that I think that all this evolution that we have been achieving despite these mor challenging quarters that we had recently with a more challenging macro context and a more strict baseline to higher temperatures during the winter season, but still with a lot of discipline in our management and very good execution of our strategy, also absolute determination in capturing the impact of the investments that we made and operationally improve our business. And with a closer proximity with our consumers, we continue to see an evolution. And we see that the company is ever stronger and very well prepared for the expected improvement that we should see in the upcoming periods. We have very high expectations, very good expectations and we believe that the upcoming quarters will help us show this evolution.
I stop here and now I'd like to turn it over to our CFO. Welcome to this first earnings conference call, Laurence. And Laurence will continue to present this quarter's results.
Thank you, Paulo. On Page 7, we have our revenue for apparel with highlight to the performance of apparel, with a revenue that was up 1.7% year-over-year despite the stronger comparison basis. So winter and fall collection was well received and our inventories have reached very adequate levels.
In respect to Fashiontronics and Beauty, as you have been hearing for the past few quarters, the handset market continues to be very challenging. And the start the higher share of beauty in this category, the total results was an 18% decrease year-over-year. Considering this setting, we are now focusing even more on apparel and beauty, and we have recently removed some of our handset and smartphone kiosks from some of our stores and we will assess the results over time.
On Page #8, we show that the extension of the gross margin for merchandise continues to be a highlight in quarter 2. Here, we understand that we are capturing the benefits of different investments that we made in the past few years, which allowed for this expansion in our gross margin for apparel of 0.5 percentage point expansion year-over-year and a 3.5 percentage point expansion compared with quarter 2 2019.
Even with a higher level of promotions and a higher level of competition, the Fashiontronics and Beauty margin was flat compared with quarter 2 2022 and benefited from the increased share of beauty within the category.
On Page #9. Here, we have our operating expenses. Here, it's important to note that we continue to see positive operating leverage. The percentage -- the ratio of our G&A sales over the total net revenue was lower than that of the same period in 2019, and this was due to the continuous work that we do to control and reduce our expenses that we have been doing to control and reduce our expenses since the second half of 2022. Our operating expense dropped by 5.3% in quarter 2 2023. Our post IFRS16 adjusted EBITDA was BRL 274 million in quarter 2 2023.
We are now on Page 10. This result allowed for an expansion of 1.6 percentage point of our margin. And we reached an adjusted EBITDA margin of 16.7%. This continuous margin expansion results from the expansion of our gross margin, combined with this operating leverage that results from very well disciplined execution and also the benefits that we're reaping from the investments that we made in the past few years.
On the next page, we see the evolution of our financial services and the good performance that we have been seeing with C&A Pay. In quarter 2, the revenue from C&A Pay reached BRL 72 million, which is a relevant increase that is proved to the good acceptance of the product. Our portfolio ended the quarter at BRL 702 million and 3.6 million digital cards issued. We will continue focusing on the strategy to further engage our customer base, providing them with this streamlined and easy experience.
Also, we will continue to pay attention to the origination and renting of credit and also efficiency in recovery. The over 90 was 21.4%. C&A Pay is an essential tool to support retail sales and to better know the behavior of our consumers in all our sales channels. We're very happy to see how C&A Pay is evolving and already accounts for 20% of our sales.
On the next slide, we have our investment plan. And here, we can see that in quarter 2, we realized a CapEx of BRL 56 million, 51% less compared with quarter 2 2022. These investments were targeted at technologies to improve the understanding we have of our consumers and to strengthen our omnichannel positioning in addition to the opening of 3 new stores.
On Slide 13, we see the evolution of our cash position in quarter 2 2023. The chart shows the movements in the quarter. And here, we see that we generated an operational cash of BRL 132 million in quarter 2 '23. Investments consumed BRL 56 million and our financing activities consumed BRL 571 million. The financing activities this quarter also comprise the payment of bank debt in the amount of BRL 854 million, combined with the raising of funds in a total of BRL 250 million.
This is the end of this presentation, and now I turn the conference over to Carol to open the floor for questions.
[Operator Instructions] The first question is from Danniela Eiger, XP Investimentos.
My first question is about profitability. I think this has been a -- an important highlight of your results for the past few quarters, the strong expansion in your gross margin, particularly for apparel due to the strategic projects that you implemented in the past few years, and also the strong control of your operating expenses. What I want to know is whether there's room, looking forward, to continue to see gains in these lines? Or if we will only see smaller expansions of your margin more focusing on operating leverage?
And the second question is about growth. I want to know what is your expectation for the second half? And considering the evolution during the quarter and also in the month of July and now August with Father's Day? And also, I'd like to know about the competitive environment. We saw a lot of markdowns in quarter 2 due to the higher temperatures. So I want to know what is your impression of this environment, considering a more normal climate scenario in terms of -- both in terms of your physical sales and digital sales?
Thank you, Danniela, for your questions. So I'll answer them in 2 parts. First, about profitability. I think the growth that we are seeing in our gross margin has been very consistent. It's the sixth consecutive quarter that we have an increase in our gross margin. And this is due to the capturing of the impact of our strategic leverage and the investments that we made recently.
Looking forward, we understand that there's still room to evolve and we are working every day diligently towards that objective. First, because we said that we want the push and pull penetration to reach 40% by the end of the year, and this should help us further.
And also the artificial intelligence algorithms, they become more and more robust over time. They learn and they improve, so we understand that their effectiveness also improves, and there's still room to improve in this sense. So yes, we still see room and opportunities to advance with our gross margin looking forward for the upcoming quarters.
And your second question about our growth dynamics. We finished a quarter with a very harsh macroeconomic situation and with a very high comparison basis, particularly quarter 2 due to the higher temperatures. And we are now entering second half with very different characteristics. I don't know if you remember, but last year, the baseline effect was the opposite. We had a preelections period, which was very turbulent and affected consumption.
And then in the period, closer to Christmas, we had the World Cup and some of our stores were closed. We had an intense traffic reduction at some point. So this combination of factors. And we had even mentioned this when we discussed the results of quarter 1, but we are very positive and very confident about our growth this second half. We already saw this evolution in the month of July. And we are now halfway through the quarter through quarter 3, and we see a clearly higher speed of growth than what we saw in quarter 4 last year.
So we're cautiously optimistic with good expectations for the second half of the year. We are focusing on building good collections. Today, we have the capacity to build our collections very fast. Our phase of suppliers is very well evolved and established. So as I said, we are cautiously optimistic about the second half compared with the first half of the year.
The next question is from Ruben Couto, Santander.
It was interesting to hear what Paulo said about the change in the perceived value of apparel. And I think C&A adapted really well to this new situation. So how are you balancing this new positioning strategy? And the communication between brick-and-mortar and digital? I think you had another reduction in your investments in digital marketing this quarter.
But for your online channel, not necessarily e-commerce, but digital as a communication. Don't you think it is a good fit for all these initiatives in terms of capturing this change in perception in your target public? So I want to understand what this dynamics is like considering the growth of your digital sales, even with the reduction in your investments in digital market, which sounds counterintuitive, but actually makes sense. So can you comment on that?
Ruben, thank you for your question. Yes, we do need to give you more context in order to connect all these elements. Since last year, we started looking at our e-commerce channel in a more balanced way as soon as our physical stores went back to opening and we started to see more consistent traffic. And when I say balanced, balance means 2 elements: first, the cost of acquisition of our clients, so with the higher inflation rate, the situation became economically challenging.
And the other factor is transportation, shipping and freight itself, so we have been focusing strongly on these elements since the second half of last year to optimize these 2 dynamics. So this is one element. The second element to this story, which is also important to highlight is because we were focusing more on this -- on our sales channels, so e-commerce as a sales channel. So there's website and the application.
When you look at this broadly, the channel -- the digital channel is also very important when it comes to the customer journey itself. Journeys are no longer online-only or physical-only. Customers now have a multiple -- multi-channel journey, interconnected and much more fluid. So both our website and our app, as well as the social networks, as you mentioned yourself, they are critical for the customer journey, which includes the brick-and-mortar stores.
A lot of people will go to our website and our app to see the product for the first time to look at prices, and then they'll visit a brick-and-mortar store. Or like you said, they see something on social media, they're impacted by that advertisement or communication, and that generates a starting point for the brick-and-mortar store journey.
And the third element in this equation is that in our channel or in our channels, digital sales are also done through WhatsApp. And WhatsApp has been a very relevant channel in this increasing trend of our digital sales, and it has actually been a driver. And actually, it's the link that you were asking about the link between the growth in our digital sales and the reduction in investments in digital marketing.
And this has to do with our relationship program, C&A and You and the customer base that we have 26 million customers which give us the condition to build a more objective and relevant CRM story, so that we can actually converge using this channel and provide customers with an omnichannel experience. Their experience sometimes starts on digital and then finishes on our physical store or vice versa.
There are different formats and different orders that have been driving our digital sales, particularly when it comes to WhatsApp sales. And when you combine all this, going back to the value perception that I talked about. And that's why we are using the same type of communication that you saw on that slide for Mother's Day.
For example, if you see this in our store through the window, inside the store, on social media, on our website, this message of deals you can't miss, this was an integrated message that customers could see in all our channels. And what we wanted, our goal with this type of strategy, and this was detected in our dynamics, in our conversations with customers that right now due to the world situation, there is a much greater interest for deals and specific promotions.
And on the other hand, we didn't want to stop focusing on the evolution of our margin. So we tried to find a middle way here, how can we communicate these promotions to our customers and at the same time, evolve with our brands and with our margin. And I think we did this really well during quarter 2.
Our expectations looking forward are very similar. If you go to one of our stores today, for Father's Day, or if you visit our website today, the Father's Day campaign, you'll see that there's also a very interesting set of deals you can't miss to reform this communication and this positioning that in C&A, you can get good deals, you can find beautiful products at very attractive prices. This has been the rationale and dynamics behind what we have been doing lately.
The next question is from Joao Soares, Citibank.
First of all, I'd like to congratulate the company's management for the very consistent results you have been presenting. They have been consistent since your IPO. So first, I want to congratulate the company's management for that.
And I have 2 questions. My first question, let me go back to Danny's question about the gross margin. Paulo, can you please help us quantify what are the expectations and the prospects at least for some of these structural changes? For example, the push and pull technology, how much will this add in terms of gross margin looking forward? What is the level of capture of benefits that you expect for this year?
And my second point is you have been reducing your investments, so looking forward, how do you see the store expansion strategy? What is your plan? Not just in terms of new openings, but also capital allocation, investment allocation? What are your greatest targets in terms of investments looking forward? And do you need any additional technology to further improve your omnichannel experience? So I'd like to know about your capital allocation.
So let me start with the gross margin. I think there are 2 very clear drivers, very clear benefits that we're capturing here and we should see an evolution in the coming quarters. First, the increased penetration of the push and pull technology; and second, the use of artificial intelligence algorithms for demand forecast, product distribution and dynamic pricing. This integrated combination is what is allowing for this evolution that we saw in quarter 2.
And there's another element in this equation that we cannot go without mentioning, which is the market dynamics, the competitive dynamics of the market. We made different investments in these deals you can't miss campaigns. And we're still going through this context. If the context changes are evolved, it could be an additional opportunity. So how can we help you quantify?
I think the most important point here is to understand that if you consider this context that we went through and the dynamics we'll be able to achieve, this is -- we want to at least have the same dynamics in the upcoming quarters. There may be better opportunities, and the market might become even harsher or more promotional. And that will prevent us from capture of the benefits that we had in the first half of the year. So both things can happen.
So what I can tell you is that what we are seeking is something similar to what happened in quarter 2. But we have to have this caveat, very clear, that the economic [ condition ] can speed this up or slow this down, of course, depending on what happens in the second half of the year.
Now the second part of your question, which is about new openings and investments, we continue to see very high interest rates, and our financial cost was very significant this quarter. This means that in the very short term, we shouldn't be accelerating our investments. This is not realistic at all. We are starting to discuss the investment plan for 2024.
And we understand that, first, we have a very clear opportunity to improve -- to increase our footprint and increase the portfolio in our stores. This is something that still remains a priority, it's still real and concrete. But at the same time, considering the very high cost of capital, these projects are -- we're still having difficulty approving these projects. So we think the prospects will evolve and improve in the upcoming quarters in this sense. And as they improve, this will open up new possibilities and new opportunities for this type of investment.
But right now, what I can tell you is that we are very focused on increasing our same-store sales. And we are taking on a lot of initiatives simultaneously to build even more attractive and impactful formats when it comes to our sales per square meter -- to increase our sales per square meter in our already existing stores. So this is one element.
Now regarding the technology aspect, I think investments in technology are [ endless ]. Everything we heard today about artificial intelligence and data management and evolution to more attractive offer to our customers, we still have a lot of opportunities to tap. We still have a lot of homework to do when it comes to tapping all these opportunities because this will create perceived value to our consumers, and this will lead to better indicators and better results as a consequence.
So overall, I think this is our take right now in terms of investments for the upcoming months.
Now I will read some of the questions that we received through the Q&A window. The first question is from Andrew Ruben, Morgan Stanley. Andrew is welcoming Laurence. And his first question is about C&A Pay. Can you please remind us of the percentage of sales that you are comfortable achieving over time? And how do you see the risk profile of this incremental credit?
And his second question is, how are you thinking the profitability of your financial services business alone versus the P&L management of the company as a whole?
Andrew, thank you for your questions. Thank you for being here once again joining us for our call. And Brossi is going to answer your questions.
What we want, the ratio that we want is what we discussed with you during our IPO which is how the competition looked in 2019. Our plan was to reach that number over 5 years, but we will actually anticipate the achieving of this number in terms of cards issued and the penetration of C&A Pay is now better than what was originally designed.
In terms of risk, it's worth highlighting that after a little bit more than 1 year since the launch of C&A Pay, we already have new models and new credit policies, which are leading to new cohorts with better performance than our historical performance despite the more turbulent macroeconomic scenario that we're going through right now. So all the information that we have so far for C&A Pay, we understand that we are taking a different way. We're gaining relevance. We had an increase of 7 points in C&A Pay's penetration, delinquencies under control and the models are evolving.
Now as for financial services and profitability, we must go back to why we launched C&A Pay and our objective was to accelerate and increase retail sales. It is a private label card. So this is its utmost purpose. We already launched some insurance and services products linked with the C&A Pay card to improve the profitability of the service and everything is going according to what was planned.
The next question was also sent through our Q&A window. It's from Joao Andrade, Bradesco BBI. Joao says congratulations for your results. So in respect to your gross margin, particularly the push and pull project, can you give more color about how far these gains can go with this project? What is the maximum level of penetration that you plan to see?
And then there's another question about C&A Pay, but I think that Brossi already talked about this, about the penetration. So he's asking what is the -- if the penetration is the same of that of comparable players, but we see that these other players have been seeing a drop in their financial services revenue. So does this change something in your strategy? Or do you see this as something circumstantial? And would this change your expectation of how far they can go?
So let me ask Donatti to answer the first part of your question about push and pull and penetration. And then Brossi can answer about C&A Pay.
Thank you, Paulo. Well, we know that the gross margin is a broader project. And of course, there's an impact of the push pull technology, but it's actually a broader work that has been going on for 2 years now. As you heard from Paulo, we are seeing this massive use of artificial intelligence and analytics so that we can sustain this growth in our margin and so that it can be sequentially consistent.
So our push-pull project, dynamic pricing, procurement management of our [ Curve A ] products, which account for more than 40% of our sales. We developed a new markdown project. We just installed a new tool called [indiscernible] which is for store supply. So all this technological framework is pushing up our margins. But this is a work of speed that we're doing with our national suppliers, when we have been doing this work to increase the speed for the past 3 years. So we talk a lot about speed, but it's been 3 years since we started working on this.
Just to give you an idea of the impact, 42% of our women's products today, the lead time between procurement and the receipt at the store is 60 days. And of this volume, 50% is received between 30 and 45 days. So we're being much more assertive with our collections. We can respond much faster to what customers need and want.
So in addition to having better initial margins, this also allows for a lower markdown level. And another point, which is just as relevant as our inventory management, we have been very diligent managing our stock at C&A. And on average, we are working with a coverage time shorter than the average of the industry. So fewer days than the average of the industry. So this gives us a better reaction speed. This gives us the capacity to be much more diligent with our markdowns.
For example, we just finished a very difficult quarter, perhaps the most difficult in terms of baseline this year. And our inventories are within planned levels, very well controlled, and we have newer stocks than we had last year. This allows us to start quarter 3 with a better expectation in terms of continuity of this increase in our gross margin.
And as you also heard from Paulo, in the second half of the year, we will continue to see the evolution. Of course, this will depend on the market and how the market will react. But we are well prepared and the decision is not either margin or competitiveness, the decision is margin and competitiveness at the same time.
So Joao, your question about C&A Pay, I think there's a very important dimension here, which was the very good acceptance of C&A Pay among our consumers. As I said, we have been seeing a sales and production curve, which is above what was designed originally, and we never stopped evolving the product. Recently, we had some new launches, for example, facial recognition for all transactions at the brick-and-mortar stores and in the app itself, and this has been making the customer journey much easier and secure.
The second part is when C&A Pay started, it was supposed to be fast product, 5 minutes. And now we have the PayExpress at the cashier at our stores, people can sign up for the product in less than 1 minute. So we have very positive expectations for this product. And we understand that other competitors are seeing a drop in the penetration of their credit product. But we are not seeing that. We think C&A Pay will continue to evolve and be incorporated into the core of the company, and we will continue to see increasing shares in the future.
So this is the end of this question-and-answer session. Now I'd like to turn the conference back to Mr. Paulo Correa for his final remarks.
Thank you all for joining our earnings conference call. And my final takeaway for all of you is that we continue to believe that we are building a never stronger company. We are showing this through our results. And even when we compare ourselves with the competition, we are seeing very interesting numbers in terms of increase in sales, increase in our gross margin, and this makes us very confident that we are on the right track, and we are evolving with our business, and we still see a lot of potential, a lot of opportunities to bring this company to the level of value that it truly deserves.
Thank you all for joining us, and we hope to see you and to announce even better results in the future. Thank you.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]