Fleury SA
BOVESPA:FLRY3
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Fleury SA
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Good morning, and thank you for waiting. We welcome you to the earnings call of Grupo Fleury concerning the results and earnings of Q4 2017. We have with us today Mr. Carlos Marinelli, Chairman; Mrs. Viviane Behar de Castro, Investor Relations Director; and Mr. Fernando Leão, CFO and Legal. We inform that this event is being recorded. [Operator Instructions] This event is also being transmitted simultaneously through the Internet via webcast, and can be accessed at the address www.fleury.com.br/ri and on the MZiQ platform, www.mziq.com, where you will find the presentation. The selection of the slides will be controlled by you. A replay of this event will be available right after the end of the call. We remind you that the participants in the webcast may send via website questions to Grupo Fleury.
Before proceeding, we would like to clarify that any declarations that may be made during the earnings call having to do with the business perspectives of Grupo Fleury, projections, operation and financial goals are based on beliefs and assumptions of the company's management as well as information currently that's available to Grupo Fleury. Future considerations are not guarantees of performance and involve risks, uncertainties and assumptions because they refer to future events and, therefore, demand -- depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, sector conditions and other operational factors may affect the results in the future of Grupo Fleury and may lead to results that will differ materially from those expressed in these future considerations.
Now I'd like to pass the floor to Mr. Carlos Marinelli, who will begin the presentation. Sir, you have the floor.
Good morning. I thank you very much for your presence and interest for our earnings call for Q4 and 2017. I would like to begin highlighting the main financial indicators in Q4 and the year of 2017 on Slide #3 of the presentation. Net revenue had a growth of 11.2% in the quarter and 13.7% in the year, totaling BRL 2.4 billion in 2017, a record historical record for the company. Cancellations reached 1.5% and 41.7% (sic) [ 1.7% ] in the year with a strong evolution of 90 basis points and 98 basis points, respectively.
In the quarter, EBITDA grew 29.7% reaching a margin of 22.4%, which represents a growth of 320 basis points in relation to the same period in the previous years. The costs related to the expansion had an impact of 79 basis points. We'd like to highlight that it is the 9th consecutive quarter with growth in the EBITDA margin when compared to the previous years.
During the year, EBITDA grew 28.1%, reaching a margin of 26%, which represents a growth of 292 basis points in relation to 2016. This is the best margin since the IPO of the company. Our net profit reached BRL 64.6 million in the quarter, and BRL 320.6 million in the year, which represents a growth of 40.2% in relation to the previous year.
Finally, we had a return on invested capital without premium, 44.5%, a strong growth in comparison with 32.9% recorded in 2016. This set of indicators confirms the sustainable growth of our results during the year of 2017 and correspond to our expectations for the period, marked by a consistent execution of our expansion plan.
During the year, we added 30 new units in São Paulo, Rio de Janeiro, Paraná, Rio Grande do Sul and Brasília. These inaugurations include the brands Felippe Mattoso, Weinmann and a+, reinforcing our portfolio.
Now let's go on to Slide # 4, showing the evolution of our expansion plan between October 2017 and February 2018. We delivered 12 new units, among them 6 fast sites in Rio de Janeiro with direct offer of clinical analysis and ultrasound: Five of these were Labs a+ and one of them Felippe Mattoso; 3 average units of [indiscernible] in São Paulo were offering clinical analysis, imaging including MRI, and a mix of women's tests; 1 unit fast site a+ in Curitiba; 2 units, average units Felippe Mattoso Ipanema; 1 in the western zone of São Paulo and 1 in the city of Santo André with clinical analysis, image, MRI and women's exams. As you can see, we show the pictures of the units in Rio de Janeiro and Curitiba.
Next, we show the pictures of the units of Fleury and a+ in São Paulo. We'd like to mentioned that between October 2016 and February this year, the company expanded its network by 34 units. These Inaugurations correspond to a significant part of our expansion plan, which foresees inauguration between 73 and 90 units until 2021. This year, we should have more focus on the brands, a+ in São Paulo and Labs a+ and Felippe Mattoso in Rio de Janeiro.
Now on Slide 6, we see that the growth is continuously based on the recognition of the quality of our services, evidenced by our NPS metric, Net Promoter Score. We follow this to guarantee the satisfaction of our clients. In the quarter, this indicator grew 455 basis points, and reached 76.8%.
Among the highlights of Q4, we issued debentures for BRL 300 million through a third issuance of debentures. This happened in November and reinforces the company's cash position in order to carry out its expansion plan. In January 2018, we became part of the Ibovespa, the stock market index. This brand is the first in diagnostic medicine. It is the most important indicator of the most negotiated shares in the Brazilian stock market. Our weight is 0.70% (sic) [ 70% ], representing the 37th position in the São Paulo stock market index.
Also in January, for the fifth consecutive year, we were part of the ISE, the Sustainability Index of B3. The portfolio has only 30 companies, and our presence is the result of a business model that includes continuously the concept of sustainability as a basis for decision-making and the way we work with our stakeholders, thus showing -- guaranteeing the perennity of the business and maximizing the return for our shareholders.
In February this year, we included the operation clinical analysis at hospital A.C. Camargo Hospital, the largest Cancer Center in Latin America. This confirms the recognition of the excellence of our diagnostic services in this area.
We announced the third profit distribution concerning the results for 2017, BRL 204.2 million. If we add this to previous distributions, we will have BRL 304.6 million, representing a payout of 95% and dividend yield of 3.1%. I highlight that in 2017, we used the distribution limits for interest on invested capital, generating benefit for the company and its shareholders.
We also informed the acquisition of 100% of the capital of Instituto de Radiologia de Natal, a traditional company in diagnostic medicine and image in the city of Natal, in the state of Rio Grande do Norte, in the city -- in the north of the country. This acquisition helps us to enter a new market for Grupo Fleury, reinforcing our presence in the northeast of the country with quality assets aligned with medical excellence, technical excellence, excellence in good services.
I'd like to highlight the awards that the company won during Q4. We were recognized by the [indiscernible] 2017 from the secretariats of Pro-Ethics linked to the controllership secretariat of the government due to our commitment with ethics, integrity and transparency. Only 23 companies received this recognition due to the actions internally to disseminate concepts that have to do with compliance and ethics between employees and doctors. For the second consecutive year, the Fleury Medicina e Saúde brand was elected as Best Service in Diagnostic Medicine services category, published by the newspaper, O Estado de S. Paulo.
And for the seventh consecutive year, we are part of the Guia Exame de Sustentabilidade, the -- due to the good practices and corporate responsibility. We were also highlighted as the most innovative company in a survey made by A.T. Kearney. These recognitions are due to our differentiated position in the health sector, characterized by focus on excellence in our technical services and also other services.
To these attributes, we also have reached excellence in management, as can be observed in our results after a robust corporate governance was installed and a strategy was executed. We developed a management system that guarantees differentiated results and especially sustainable results. This is how we concentrate our efforts to make Grupo Fleury a company that is more and more relevant, generating results and benefits for all the stakeholders and the health sector.
Now I'd like to pass the floor to Viviane, and she will continue presenting the results. I'll be available at the end for questions. Viviane, you have the floor.
Thank you, Carlos. Good morning. We continue with the presentation on Slide 7, where we will detail the gross revenue for this line of business. First of all, we'd like to say that apart from gross revenue, we also get net revenue, and we highlight the positive impact of our management of accounts receivables. These results were within the plans and with a strong -- we had a strong impact in the calendar with 2 long holidays and 2 work days less in relation to the previous years. And this has had an impact on all our brands and segments.
With this, we presented a growth during the quarter of 10.1% in gross revenue, total gross revenue, reaching BRL 630.2 million. The growth in total gross revenue was impacted by the performance of our service centers, which grew 9.7%: 9% for Fleury brand; 14.3% for regional brands, excluding Rio de Janeiro; 7.1% in Rio de Janeiro brands. Our operations in hospitals had a growth of 12.8%.
On the graph on the right, we see a comparison of gross revenue in 2017 where we had a growth of 12.4%, with the highlight of the double-digit growth in all the segments and brands. Service units had an increase of 12.5%: 10.8% in Fleury brand; 17.4% in regional brands, excluding Rio; and 13% in Rio de Janeiro brands.
Our operations in hospitals reached 12.3% growth. The net revenue in the quarter had a growth of 11.2% with an improvement in the indicator of cancellations, which reached 1.5%. In the year, net revenue had a growth of 13.7%.
We closed the year with an important growth in the -- with the revenue of our brands and a good execution of the expansion plan to capture more growth in the following years. On Slide #8, we see in more detail the growth of our brands. On the graph, we can observe that more than half of the growth came from the growth of the Fleury brand, which represented BRL 25.9 million growth; followed by BRL 14.3 million in the regional brands, ex Rio; BRL 6.7 million in the brands in Rio de Janeiro.
On the table below, we see the growth according to gross revenue and same-store sales for each segment. Beginning with the regional brands, excluding Rio de Janeiro, we observe a growth of 14.3% in gross revenue with same-store sales of 9.7%. We can notice in this result the beginning of the effect of the expansion of our units a+ in São Paulo and Paraná, which contributed 4.9 percentage points for the increase in revenue. And in spite of the fact that they are in the beginning of their maturity phase, we highlight that apart from the negative impact of the holidays, longer holidays, we have also the effect of a retrofit and substitution of large equipment for image in the unit in São Paulo. From now on, this unit has a new layout, new equipment, including 2 MRIs.
In the brands in Rio de Janeiro, we observe an increase of 7.1% in gross revenue, and 7.4% in same-store sales, apart from the calendar effect due to long holidays that we discussed, and Rio de Janeiro with the current -- where the use of services is greater. We had an interruption in the services of regional operator in one of the Labs a+. We'd like to remind you that of the 6 units we inaugurated in Rio de Janeiro in Q4 '17, 4 were inaugurated in December and, therefore, had an irrelevant impact on the revenue of the quarter. We would like to highlight that this shows that in the next quarter, we will have a better performance in Rio de Janeiro.
In the Fleury brand, we saw an increase of 9% in gross revenue, with 2.1% in same-store sales. The total growth of gross revenue is due to the new units. In spite of the fact that they are in the initial curve of maturity, they represented 7 percentage points of this growth. We'd like to remind you that about 60% of the new units are less than 6 months old. The same-store sales of the brand reflects the problem of the long holidays, the strong effect of the expansion made in 2017, the inauguration of 10 units, 5.7 thousand square meters. This effect is related to the distribution of clients, old and new between the existing units in the same geographic area, that we call clusters.
Opening a new unit, we really plan again the existing units through retrofit or by also altering the mix of services, which impacts same-store sales. The guidance and redirecting clients is supported by our call center and social media. Our objective is to develop the Fleury brand as a reference in the premium sector. These investments, together with the calendar effect, had an effect on the growth indicators. Our attention will continue to focus on the growth in the clusters. We will make mix adjustments and also adjustments in offering clients according to our demand plan.
On the next slide, #9, as mentioned by Mr. Carlos, we carried out a significant expansion plan with 33 units inaugurated until December 2017. This represents an extra 10,500 square meters, or 10% more area. It is important to stress, as we can see in the graph, that 68% of these new footage is less than 6 months old.
Here, we see per segment. The Fleury brand's 54% of the areas inaugurated and with less than 6 months of operation; 58% in the regional brands, including Rio de Janeiro; and 100% of the brands in Rio de Janeiro, showing the beginning of the maturity curve and great potential in Fleury for these units.
On the other hand, on Slide #10, we'd like to share with you the specific details about the Fleury brand with the analysis of the clusters made up by 2 large units in Anália Franco and Morumbi in São Paulo, inaugurated in June and July 2017. These units together represent more than 55% of the footage inaugurated in the brand, and had a significant effect on the investments in expansion. As can be noticed in the bars of the graph, these 2 clusters had a relevant growth in gross revenue generation immediately after the inauguration of these units. Also, the growth during the year can be seen here with a significant growth, which before was -- and as we can see, 3% to 10%, to more than 30% in Q3 and Q4.
Now Slide #11, where we highlight the cancellations and net revenue. In the graph on the left, we see cancellations reaching 1.5% in the quarter, a reduction of 90 basis points. This was the result of continuous improvement in the processes and systems and also better accounts receivable in the year. We had 1.7% of reduction, of 98 basis points. On the right, we see net revenue, which grew 11.2% in the quarter, totaling BRL 582 million in the year, an increase of 13.7%, reaching BRL 2.4 billion.
On the next Slide, #12, we see here our costs in the graph. In the quarter, an increase of 9.5% and a dilution of 119 basis points in relation to net revenue. During the year, the increase of costs was 10.2%, with an even more expressive dilution of 21 -- 221 basis points.
On the graph on the right, we see our expenses. In the quarter, we had a reduction of 8.8% and a dilution of 236 basis points in relation to net revenue. In the year, the reduction reached 1.1% with a dilution of 163 basis points. Our strict discipline in managing costs and expenses, with the evolution of our controls and incessant search for efficiency, resulted in these important gains, even with the expansion.
We continue on Slide #13, where we show the evolution of EBITDA, which reached BRL 130.7 million in the quarter, an increase of 29.7% in relation to Q4 '16. The EBITDA margin grew 320 basis points, reaching 22.4%. The impacts related to the expansion presented 79 basis points in the quarter's margin. In 2017, EBITDA grew 28.1% and reached a margin of 26% in comparison with 23% in the same period 2016, representing a growth of 292 basis points. We highlight that the margin of 26% is the largest reached by the company since its IPO.
Now Slide 14, where we show net profit, which reached BRL 64.6 million in the quarter, BRL 320.6 million in 2017. Net margin was 11.1% in the quarter, 13.5% in 2017. For a better understanding of the comparison of the net profit between the periods, we highlight in gray on the graph the benefit of the distributions of interest on invested capital. So this was concentrated in a single quarter in 2016, the payment of interest on invested capital. In 2017, we dilute this recognition during the quarters. Therefore, if we include this effect, the profit would have grown 53.3% in comparison between Q4 '17 and Q4 '16. In the year, net profit had an increase of 40.2%.
On Slide 15, we present a graph on the left with operational cash flow, which registered BRL 111.8 million in the quarter, and BRL 529.6 million in the year. The conversion of operational cash and EBITDA reached 85.5% in the quarter and 85.6% in the year. In both the comparisons, we had a reduction due to increase in working capital because of our expansion plan.
On the right, we see the evolution of CapEx, which went up 12.4% in Q4 '17, totaling BRL 101.1 million with concentration of 53.5% in expansion and improvement. During the year, CapEx grew 60.7% and reached BRL 295.6 million, with 61.5% concentrated in expansion and improvements.
On Slide 16, we highlight our return on invested capital without premium, which reached 44.5% in the quarter with a strong growth in relation to Q4 '16. The growth of return on invested capital shows that the investments had been made, even with the beginning of the maturity of the new units, that we are on the right track. We'd like to say that the growth of return on invested capital happens in all segments, including the Fleury brand.
On Slide 17, we see the performance of shares. We saw an appraisal of 0.5% in the quarter and 70.7% in the year. We can see here the graph on the lower left that the average volume of shares being sold negotiated reached BRL 57.5 million, 2.6x more than in the same period in 2016. Also, our company shares now are part of the stock market index, Ibovespa Index, which also contributed to more liquidity.
On Slide 18. We see that the council of administration approved the Board of Directors' suggestion to pay dividends worth BRL 204.2 million, which represents 0.65% -- BRL 0.65 per share. And the payments will happen on April 2, based on the shares owned on March 6. So this has to do with 2017, representing BRL 0.97 per share. With this last distribution, we distributed BRL 304.6 million. At the end of Slide 19, we conclude our agenda with the events in the market.
Now we will begin the Q&A session. And Carlos, I and Fernando will be available to answer questions. Thank you very much.
[Operator Instructions] Our first question comes from Mr. Rodrigo from BTG Pactual Bank.
Two questions. The first has to do with same-store sales, regional brands. We see an acceleration in Q4. I'd like to understand what really happened. And January, February, was there a recovery? What are the expectations for same-store sales in regional brands? That's the first question. The second, accounts receivable, we saw an increase year after year. I'd like to understand what really happened, if you can explain better? And what we can expect in the next quarters for accounts receivable?
Carlos. Thank you for your question. Concerning same-store sales, regional brands, we have a great importance of a+ São Paulo. a+ São Paulo in the last quarter, we did a lot of corrective actions, especially regarding unit that has a large volume. Large equipment was installed, 2 MRIs and doing this is not simple. You have to stop an important part, not only where you installed the equipment, but you also stop other areas that are necessary. And also, there's the issue of regional brands. Some brands have clusters. In Curitiba, we had a great expansion, also within clusters, so we have to look at these regional brands. It was -- this happened in Q4 once, and we're very happy with the effect we have in Q1 2018 in line with our plans. Apart from this, also, there is the -- we had long holidays. We had the calendar effects, and this also had an impact on us and had an impact on other companies, too, as we saw. Now we will hear about the other parts -- the next question.
Thank you for the question. In Q4, we had an impact on accounts receivable, but this did not result in losses for the company. And what we're observing at the beginning of the year, we're going back to normal levels. And we hope to conclude Q1 with numbers in line with our plans.
So this was a negotiation in Q4 with health care plans, and it will become normal in Q1.
Yes. Yes, and we don't expect any new impact. There will be no other impacts in the next quarters.
Mr. Thiago Macruz from Itaú BBA would like to ask a question.
I have 2 questions. First, cost of material. I saw a positive impact in Q4. I'd like to understand better the cost with vendors exiting you. Is it a one-off case or higher cost? Also looking forward, can you suppose that you will expand with the speed you are expanding? Is this a scenario we should expect?
Macruz, thank you for the questions. Well, concerning the cost of material, we're working all the time to make this account more efficient. In 2016, when we had a large project, we gained efficiency. In materials, we've been working with our vendors to have more efficiency and usage and also price. And the impact that you see on the slide is this, trying always to increase efficiency. What we have ahead of us, we will not have on the slide. We will continue to use resources in a better way, aided with less resources, and negotiations that will be more and more important. Due to our size and volume, our operations allow us to have activities like this. In terms of expansion, we can have other comments, too. Now concerning expansion, there is no doubt -- there is pressure on margin because of expansion. You know that the dynamics of our business has fixed costs. Before the beginning of the operation of the units, we have to hire people. Also, we have to have an inventory material before the inauguration, so there is pressure because of new units. But we have done this with great care and good planning in order to have a minimum impact. Now when you inaugurate 34 units, like we did with this expansion plan, there is no doubt that these units will have pressure on margin in the beginning. But you know that we don't have guidance in relation to margin. The company's objective as a whole, and we're focused on this, to avoid losing what we want. And the margins we have. We know how we work to reach them, and then we will continue to maintain and give these margins and these returns to shareholders.
To supplement Carlos' point on materials, this a line that is very sensitive. We have invested a lot to gain efficiency with vendors. But the effective control, the effective management of consumption of materials is important. We have worked on this. We have a project where we're rolling out inventory control at the edge in the same -- in the units. All these controls contribute for the improvements of this line. And concerning revenue, we hope to continue to stay on this level or even better.
Just a follow-up question. Is it reasonable to expect a more dramatic plan, maybe revisiting technical centers to reach a different level in terms of cost? Is it possible in the next few years?
Macruz, we have very strict controls in this area. When we look at costs of operations, we're always thinking of everything we can do in a different way to have -- gain more significant gains. You can be sure that our team in supply and our technical team, they are looking at many possibilities and alternatives. Now having a lower unit cost recently, we bought equipments that can help us to increase production in comparison with the past. So with this, we have the cost of infrastructure that is lower -- use of less space, so we have a clear path ahead of us for reduction in costs. We have a very lean process. This was borne in our technical areas within the company and then went to all the units. And we have a partnership especially with our vendors. So this is what we see right now. You can be sure that if there are new opportunities, we will be looking at them. This involves a lot of work, a lot of adjustments in process, some small variables that help us have gains. We're working on this right now.
Mr. [indiscernible] from Santander Bank has a question.
Two questions. The first, in hospitals. How is the average ticket and volume with A.C. Camargo Hospital that was included? And also the acquisition, could you tell more about the acquisition, the profile and possibility of growth?
[ Dromo ], thank you for your question. Concerning hospital's average tickets, we have -- within the contract with A.C. Camargo Hospital, they are a high-complexity hospital. What do you expect from a high-complexity hospital? So tests that are more advanced, clinical tests that have to do with customized precision medicine. So then these are more complex tests than average. On the other hand, they also work with social security of the government, so we have to find the balance that will be feasible for the hospital and for us. But the -- it continues to be important for the company in terms of expectation of return on investment, so we're very happy to be in this hospital. It's a reference hospital for all of Brazil in cancer treatment, and we already worked there in the past. Now we're back, and we have a good contact with the medical community. And we're working with them to win the battle against this complex illness, and we're very happy to bring our excellence in services to help them. Now concerning pipeline, we're very active in the pipeline. It's a business that is very important for us. It brings a lot of knowledge for our day-to-day operation, knowledge for our doctors. Also, we're working different geographies with the acquisition in the northeast, and so this adds value to us. And we have a strong pipeline in hospitals. We will continue growing in hospitals this year. Concerning your question about the acquisition, it had an excellent reputation, the company we bought in the city of Natal in the northeast of the country. They have 56 doctors, almost 350 employees working in this company, and they have a positioning that is intermediate and premium. They have a city that -- where segmentation is not as strong as in São Paulo, so intermediate and premium. And it is a city that has a considerable volume of health care plans. There are also private clients. There's UNIMED health care plan, and we have a good relationship with the doctors there. And the reputation and the equipment they have are very important for the city, for the medical community of the city of Natal, and they have 6 MRIs in the 4 units that are very advanced. I was there in the beginning of the negotiation. I liked very much what I saw. The installation and the processes are very good. There was a positive surprise to see the organization, and we want -- we're very happy to be in a new geography in Brazil, the northeast of the country.
Mr. Joseph from JPMorgan would like to ask a question.
I'd like to go back to the same-store sales and understand the issue of the maturity of the new units. We see there the activity in the clusters, but it seems that we haven't reached the potential, the full potential. I'd like to understand how much revenue these units generate in the first year in comparison with your projections. So how much same-store sales can increase, especially after the middle of the year? And looking at margin expansion, I'd like to know about the seasonal movements this year. Last year, we had new units inflation, and I'd like to understand how things should look in margin expansion in Q1 with more efficient expenses and in inflation-free.
Thank you. Yes, if I don't cover all your questions, tell me. What you said about the maturity curve, we're working on this. We don't have thousands of units. We have hundreds of units, and we have these new areas that are similar to the current areas. So sometimes, we send clients to the new units, so we can revamp older units and change the equipment in order to be equivalent to the new units. And this affects a little same-store sales. Our focus when we do this, when we do these expansions is never linked to a specific unit. We always aim at the cluster. So if in total, I'm adding value, then we're very comfortable with this. And we look at the portfolio of the brands and expansion, and we do this every month. We have the indicators in all the lines, and we make these comparisons. Every time we look at the portfolio, we are aware of these movements, especially in a sector like ours, where new units don't generate the demand. The demand already exists, so we offer our services. Maybe some people did not know Fleury in that region. Now when we have little by little also these new clients. Now we -- how much we can win with the increase in satisfaction, the doctors' preference for our services, and you do find that we have new advanced units. Concerning the maturity curve that you mentioned, we always look at this maturity curve. It is not like in other sectors of the economy, we can say, where you have impulse buying. Everything I do at the unit, I need a doctor's prescription. We're -- and in reality, we want to capture these services, and we believe that we will continue growing. Now concerning margin expansion, as you mentioned, in Q1. In Q1 2017, we have purchases. As you said, last year, we had the highest margin of the company, and this is -- has to do with demand, but also other factors as the a+ brand. So now with the -- we've implemented SAP, we had a cut-off date in January, and this brought -- affected many processes in the company. We were well prepared to install SAP, and we prepared ourselves, not only with technology, but with physically. We took inventory in advance to the units, we guaranteed some payments in order not to reduce the services. We had high demand and a better composition because of our efforts in this area. And in the end, SAP was a success, and we were able to have a differentiated margin in the first quarter of 2017. Now in relation to 2018, with our analysis, when we do planning, more than looking at the quarters, we're also looking at the year. So quarter-by-quarter, we look at profit, building the profit and capturing demand. And we're also looking at the year, as I said. We're in line with what we had planned.
Mr. Tobias from Crédit Suisse would like to ask a question.
I was surprised with the strong control. Will you continue with this strong control? How we should look at this slide? And in Rio de Janeiro, we know that there were calendar problems. Do you believe this has business back to normal after the long holidays? Do you believe in a quick recovery in Rio de Janeiro?
Tobias, thank you for your question. Concerning D&A, we work here in -- we're very concerned. We're always looking at this in all the processes of the company, and there's always something we can do better or in a more efficient way. And we, as a company, changing processes, making adjustments and some expenses that we have, using better the resources of the company, we're always finding something to do better. I can tell you that the level we reached now is probably sustainable. And concerning expansion, you will have more of this. That's the name of the game. We have the new units, and we're always controlling costs, corporate costs and we can do this. We're on the right track in all the units, and we have worked in a more and more efficient way. And thus, we want to have more and more gains in efficiency. We're working on this. Concerning Rio de Janeiro, I can tell you that we have this variance. It was a single case, local operator that takes care of some units. And this is -- was the reason but now in Q1, we are back. We're working strongly to compensate, offering services, capturing demand. And in Q1, we're okay, and we will be within the plan.
You are opening many units. Are you working on the efficiency of the units? Are they learning faster in the new units? Is there a difference in relation to the previous year? Do you believe you're more efficient now, preparation, timing, purchasing?
You can be assured of that. The issue is experience, as you said. We were a company that opened 1 unit every 4 months. We opened 34 in 15, 16 months. So we learned a lot with this process, faster inauguration of units. We have more standardized units now. We are seeing more opportunities, and even in the implementation. I was visiting our units in a+ in São Paulo a little before the inauguration. Everything was ready, we were checking the equipment, the vendors -- making final adjustments in ultrasound. But everything was ready, the rest was ready. We inaugurated 15 days before the official date. And in the end, we won 15 days of billing. We opened in advance the units. And it's there, so we can use this. There are other things, too. For example, the plan for hiring employees and training. So you begin, when you have this pipeline, you begin to adjust. You mix employees from older units with new units for a faster learning. Some units, for example, begin working only in the morning. So with these details, we decreased costs and optimized the generation of revenue. So after inaugurating 34 units, we learned a lot with these many new units.
[Operator Instructions] Mr. Roberto Otero from Bank of America would like to ask a question.
My question has to do with cancellations. And from now on, what are the plans? What are the expectations?
Thank you for the question. Yes, we're working with improvements -- continuous improvement in this area. We saw a great difference in the last quarters. We learned that we will continue this way, lowering. We -- so, as I said, we have new projects. We have the pipeline, new units, and we hope to continue improving but not at the same speed we -- some -- we may have some pieces. It's a level that is sustainable with marginal improvement in the processes.
Thus, we conclude the Q&A session. Now I'd like to pass the floor back to Mr. Carlos Marinelli for his final comments.
Well, thank you very much for being with us during this earnings call. 2017 was a challenging year in terms of evolution for the company, but also a very good year with growth, growth in margin that we had, you saw in the numbers, distribution of dividends, and also in our numbers concerning expansion. I'm very happy that we did all of this. And with all the problems we had in the economy of the country, we were able to grow. And we're really rendering excellent services to the clients with our value proposal, and you can see this in the recognition we have and, thus, we will continue in this way. As I said, a challenging year, but a year when the company's management showed that it has a robust plan and an excellent execution with results. And in 2018, we hope to have another year where we will really have good results, higher than the expectations in the market. So on April 26, we will have the next call. And you can see in our presentations. Once again, thank you.
Thank you. Thus, we conclude the earnings call for Q4 2017. We thank you very much for your participation. We wish you a good afternoon.