JHSF Participacoes SA

BOVESPA:JHSF3

Earnings Call Transcript 2022-Q4

[Mara Dias, executive]

Good afternoon, and welcome to the webcast of JHSF Participacoes to discuss the results of Q4 and 2022. Today with us are Mr. Oliveira, CEO; Nilson Nunes, CFO; and myself, Mara Boaventura Dias, IRO. We also have [ Ayla Rosalibras ], interpreter to attest to our willingness to present information in a transparent and inclusive manner.

This presentation is being broadcast simultaneously on YouTube and via webcast from the company's website. If you are watching our webcast, you can ask your questions using Ask the Speaker.

Before proceeding, we would like to clarify that any forward-looking statements that may be made during this conference call relating to the company's business projections are based on assumptions on the part of the company's management and on information currently available. They involve risks and uncertainties and have to do with future events, which may be changed by macroeconomic policies or legislation. Now I turn the floor over to Mr. Oliveira.

[Thiago de Oliveira, executive]

Good afternoon. Thanks for the introduction. We are going to highlight the company's performance in 2022 relative to 2021. We will begin with Real Estate Development. What we saw in 2022 was that despite the challenges we faced, the performance in terms of sales was flat in terms of contracted sales. And you may look on the left-hand side of the Slide 3, and we decided to give you a bit of what we think in terms of the new level that the company now finds itself. We went from BRL 375 million in 2019 to BRL 1.6 billion in 2022. We have also seen throughout the years, some variation between the Real Estate Products and the land plots.

So if you analyze the current financial statements and the future financial statements, you have to note that we now focus a lot more on the percentage of completion. In addition to sales, which remained flat between 2021 and 2022, which was good, we are looking at 2023 as a year where we will continue to sell projects that we have launched, and we are being a little bit more cautious in terms of new launches, unless -- until we have more visibility about the macroeconomic scenario.

We expect that this macroeconomic scenario be more favorable, more benign relative to what we saw before. So it's just something I wanted to share with you. We have been focusing on this, and we have been quite cautious as well.

And then something else that is extremely important and that has to do with this share between Real Estate Products and land plots, the different mix. You see that in terms of the plots, the sales were smaller and this has to do with the fact that we had no inventory of the plots up to 3,000 square meters, which turn over quickly.

But for 2013, we have other plots that will be ready for sales. So we believe we are going to recover the contracted sales level a bit.

And then as we have been working on the land bank, and developing the land bank in 2019 and 2020, the land bank accounted for a greater share in our mix, this decreased in 2022. And for 2023, we don't expect any relevant deals unless we have an opportunity that makes sense in the middle to long term. Having said that, despite the fact that sales remained stable, when we think in terms of gross revenue, you see the curve that has changed from 2019 to 2022.

This follows what we see on the left-hand side in terms of gross revenue, and this has been going down. So we did not recognize revenue at the level of BRL 1.5 billion, although we have sold that, but we didn't recognize that revenue. And what I'm saying here is that because in our accounting, we work with percentage of completion. Whenever we sell real estate products, there is a mismatch between the sale and the recognition of revenue. So our number here is that for the next few years, we have contracted revenue, which has not been recognized at the level of BRL 578.3 million. So in 2023, 2024, this volume of BRL 578 million is going to be reflected in our balance sheet as the revenue is recognized.

And although the Real Estate Development segment generates cash, we also saw an increase in the volume of working capital which is tied to financing our clients. This financing has always property that is tied to that. The debtors balance is between 70% and 75%. And this is realized into 3 years. So it's safe from the point of view of the quality of the credit quality. And it's always indexed either to an inflation index, which can be INCC or IPCA. So there is a fairly good degree of protection from a financial standpoint.

So last year if we look at the lighter brown bar here, BRL 400 million of our working capital is employed in this line of business. So the Real Estate Development segment generated cash, and part of the cash generated was reinvested in this kind of financing of accounts receivable.

So in terms of direct cash generation, we generated BRL 550 million of which BRL 400 million were reinvested in the accounts receivable. And this is very important for us. During the presentation, we are going to explain this a little bit more. But our strategy is to deleverage the company. So we'll use our free cash flow from the Real Estate Development to service the debt and to also amortize the debt.

When we look at the net debt of the company, the amortization schedule, which is quite long and at the same time, our accounts receivables, those performed and to be performed. We feel that the flow and the debt schedule is extremely comfortable. I will now turn the floor over to Nilson, who's going to make -- who's going to give you some more details about our results.

[Nilson Nunes, executive]

Thank you, Thiago. Good afternoon to all. So in terms of numbers, we have sales at a stable level for the Real Estate business at BRL 1.5 billion -- BRL 1.6 billion. That is a very substantial growth relative to the pre-pandemic period. What we sold but have not recognized yet is going to be recognized. So these are contracted sales. And as the POC of these projects increases, those amounts get into our balance sheet. And all the portfolio that we have sold, as you can see, 2/3 have already been earned, being performed, and this gives us a buffer level of liquidity, which is huge once we look at the capital structure as a whole.

So this is a snapshot of our Real Estate business for 2022. Strong sales, a different mix in terms of plots and units, but with a strong generation of cash in 2022 and with a very healthy cash balance for the next few years.

[Thiago de Oliveira, executive]

On the next slide, we see a snapshot of our shopping mall business. Let me give you a little bit more color in terms of the operations. We have been talking to the market about expansions, and this is a good time for us to tell you how these projects are progressing. Just yesterday, we opened the third expansion of the Cidade Jardim Shopping, SCJ and 100% of the shops have been leased. So this attests to the quality of this enterprise in terms of those retailers who sell to a more upscale market.

And then in terms of expansion, Catarina Fashion Outlet, the construction is going on. The expansion and the sales are very good. In terms of the works of the costs, of the sale of the stores. And by the beginning of Q2, we should see an increase in revenue and profit from this business unit after the expanded area has been added to the main area.

The key message here is that we see an increase in interest rates, but we always look at our priorities. So when should we start new construction works of new projects? And I remind you all that the company's business in this division are discretionary that is in terms of size and in terms of time line so we continue to monitor market conditions.

We also monitor the tenants, the stores, whether they want to go to one region or to a different region, and we can adjust our priorities in terms of additional projects. And in terms of the graphs here, the main message for those of you who are abroad, is that the shopping mall industry in Brazil has to be compared now to the levels before the pandemic. Some graphs here make a comparison between what we see now and what we saw in 2019.

When we look at the sales from 2019 relative to 2022, we have already increased the sales, the volume of sales. We are 56% above pre-pandemic levels. When we compare 2022 to 2021 the growth was nearly 28% in total sales in the stores. And the message here is that stores in our shopping malls, in the shopping malls we operate, these stores have been able to grow, which is extremely important. These are brands, these are business people who are becoming stronger. And their financial health, the financial health of our partners is good for us. That's something that we want to see more of.

We monitor this very carefully because in the long term, this is what's going to account for our financial health as well. When we look at the operational indicators, you see that same-store sales, SAS, SSR, SAR, all those indicators have grown above 20%, which reflects the growth in sales. Again, very healthy indicators. And if our partners are happy, so are we.

And now if we look at 2019 again, for those of you who follow us from abroad, you can see that we hear things about the health of this sector, but our numbers, our figures are completely different from what we see elsewhere in the world.

In terms of gross revenue, between 2021 and 2022, we saw a growth of virtually 32% in gross revenue, which is slightly above the growth in sales. So we have been able to improve the cost of occupation for the company. When we compare the gross revenue with 2019 point of view. When we compare the gross revenue with 2019, we grew nearly 41%. So there is some space there for us to convert this gross revenue to a historic level of revenue over sales. So when we look at sales and adjusted EBITDA, you see the same performance today in terms of what we saw in the pre-pandemic days, 56%. And there was also a substantial improvement from 2021 to 2022. Adjusted EBITDA grew even stronger than the growth in tenant sales. So from an operational point of view, the business is doing well. From the point of view of investments, we are going to complete what is going on, and we are going to look at the macroeconomic scenario to see when we should start the process of continuing to grow this business unit. And going to ask Nilson to make any comments he might have about the performance of our shopping malls.

[Nilson Nunes, executive]

In the shopping mall business, we see that in 2022, the strategy paid off, that's what we see. We decided to have assets for higher income brackets. And when we look specifically at the numbers of Cidade Jardim and Catarina Fashion Outlet, Cidade Jardim almost doubled its sales relative to pre-pandemic levels. And yesterday, we opened the expansion of this mall. Before the expansion, there was zero vacancy. We added a little bit less than 1/3 of gross leasable area, which was 100% occupied. So there is zero vacancies. And this is what we saw also in our other assets, especially those targeting higher income brackets.

This attests to our good strategy. We wanted to have assets focusing on this audience, and we have reaped the results. The stores -- the store owners are very happy with the performance of their stores. And also the figures for the company in terms of gross revenue and EBITDA attest to the healthy strategy that we have adopted.

[Thiago de Oliveira, executive]

Moving on to Hospitality and Gastronomy. This is another segment and we analyze here pre-pandemic levels, 2021 and 2022. And all the numbers are extremely sound and healthy. If we begin with the hotels, we have a daily rate 1.8x the daily rates of 2019. In 2022, there was a 25% growth in the daily rates. So if you look at us from abroad, and sometimes questions come relative to being able to pass through the inflation that we have to the costs, here, we see that our daily rates are absorbing the inflation.

But daily rates are just one measure of the operating efficiency of this business. The second element is the RevPAR, the revenue per available room. And here, you see that the figure is even better we grew 95% practically relative to 2019 and 45% relative to 2021. And this growth comes from the fact that the occupancy rate of the company has improved. So the daily rates have increased and the occupancy rate also has increased. So these both drivers account for this very healthy RevPAR.

On the lower side, you see a snapshot of our restaurant business. And you can see an increase in the number of couverts sold and this was 31% last year. So we sold 1 million couverts in 2021. And we now -- we sold 1.3 billion in 2012 (sic) [ 2022 ]. So this is real growth in terms of quantities of couverts that we are serving, and we will see how this is going to play out in terms of the growth of Hospitality and Gastronomy as a whole.

The average couvert in the last year grew by over 22%. And relative to 2019, it grew by 41%. So when we put together the fees, the occupancy rates, the number of clients who come to the restaurants and the average couvert, when you see all those drivers together, we can understand why the gross revenue grew practically 42%. This division now generates 73% more revenue than in 2019.

You see very strong figures in terms of performance in the long term and in the short term as well. When we assess all of this and we look at the adjusted EBITDA, you can see that from 2021 to 2022, EBITDA grew 55% and 181% relative to 2019. So the operational leverage of an activity, we keep adding hotels and adding restaurants, and to manage these hotels and these restaurants, this has allowed us to optimize costs and expenses.

So price, occupation, quantity, revenue, profitability, all the elements we monitor point to an activity that generated BRL 77 million of EBITDA last year. And this year, we should see some growth because we're going to open some more units.

Let's now talk about the Airports on the next page. In Q4 2022, we completed 3 years of operation for an infrastructure project. This is a very short period, but we are certain that this is an investment that is beginning to show those elements of optimization of operations just as we saw in Hospitality and Gastronomy. This is a division that will still require some CapEx to add new hangars and to build a street -- a taxiway to connect the runways, and this will allow us to optimize the operation of the airport.

So when we look at last year in terms of landings and takeoffs which is the main driver of our revenue, the Airport has practically doubled in size. These 2 figures grew by 91%. And then this tells us about the profile of the airplanes that land and take off from there. The number of liters increased by 213%. It is the largest Executive Airport in Brazil, more than 100 airplanes use our hangars. It's very well connected to Sao Paulo, it's very efficient. And it's beginning -- we are beginning to see that there is higher volume of operations, allowed us to have a growth in gross revenue by 124%. So the revenue includes the landings and takeoffs, the hangar space and the sale of fuel inside the airport. A growth in revenue by 124% allowed us to have growth in adjusted EBITDA by 202%. And this tells us that we are reaping the fruit of better operations. The addition of further hangars will allow us to increase the number of liters and the number of take-offs and landings. And this will allow us to have more revenue and even more adjusted EBITDA. So this translates -- this attests to the greater operational leverage.

We monitor the level of satisfaction of the clients from a very, very close range, and there is no doubt that this is the best infrastructure in the country. And I believe there are very few airports in the world that have this level of efficiency and have this level of satisfaction on the part of its clients. Would you like to make any comments, Nilson?

[Nilson Nunes, executive]

And there's just one comment, which goes for the 3 business units. Short time ago during the pandemic, there were many restrictions for hotels, for restaurants, for shopping malls and for airports as well. But we -- we're confident in our strategy. And here, we can see again that we were able to go through the pandemic with growth and increased profitability. So operational leverage is huge. So we grew in terms of the overall numbers and we also grew in terms of profitability and efficiency. In the shopping malls, we didn't give any discounts. In the case of Hospitality and Gastronomy, we grew the number of couverts and the price of the average couvert, the same for Hospitality and in the Airport as well.

So again, this attests to the healthy strategy we have achieved.

[Thiago de Oliveira, executive]

So here, we have the consolidated numbers for 2022. In terms of gross revenue, there was a drop by 5.5% relative to 2021. And this happened because of the change in the mix of products in the Real Estate business unit. We now sell more constructed products rather than plots. So we have to recognize revenue according to the POC. In 2022, we saw an impact of the POC, which is greater than 5.5%. Were it not for the adoption of the POC, there would have been a growth in revenue.

In 2022, the profitability was greater. So in terms of 2019, 2021, 2022, today, we are a company that is 200% greater than the company when was -- when the pandemic started. We have been able to grow all of our business units and very strongly. When we look at what happened to the GDP of the country, and we compare that with the company's growth, we see how much we managed to grow because of the engagement of our team.

In terms of net income, a lot of the difference in the numbers is associated with the POC. In all divisions, except for Real Development, and retail and digital, we saw a growth in gross profit, in gross income. And by the way, I just wanted to give you some information about digital. At the end of last year, the company's management made an important decision relating to our digital arm. We changed our focus, and we transferred the digital operation to the JHSF ID. This decision for 2023 will allow us to save BRL 35 million per year in terms of expenses of this business unit.

This was a strategic decision of a business model. We understood that the players of that market are not going to make money. Those making money were marketing companies, systems development, whereas companies were burning cash and taking a lot of risk. So we didn't feel it was comfortable to continue to lose that much money. So we decided to keep the most important part of the digital for JV -- JHSF. So for concierge, for personal shopping and it's now going to be exclusive for those companies that participate in JHSF ID. This allows us to make significant savings.

Moving to adjusted EBITDA. I'd like to point at some aspects. There was a loss in revenue and in gross income coming from the POC, but this effect of the expenses of the digital, which are here, and also some expenses we had in the holding company. Some investments we made, and we decided to expense those investments at BRL 20 million. So BRL 20 million from the holding, plus BRL 35 million from the digital. So these are one-off expenses, and we don't expect those amounts to be expensed again.

In terms of numbers, we're very happy with the revenue growth of 200% relative to 2019. And we are happy also that our adjusted EBITDA grew 370% relative to 2019.

The last item is our net income. So we have the effect of the new mix, the POC, the digital and the expenses in the holding. So there was a negative financial result, which has to do also with the level of interest rates that we now see in Brazil.

So because of the higher interest rates, the team as a whole, is focusing on some fronts. We are now prioritizing the cash flow coming from the Real Estate unit to deleverage the company. Then -- now that we are closing the presentation, we have to see and look at the recurring income unit, and these are the Shopping Malls, Gastronomy and Hospitality, the Executive Airport, houses for rental and clubs. So we look at this unit that generate recurring income and we have a net operating income of BRL 400 million as of the second semester.

This is going to be after the inauguration of the wave swimming pool, the inauguration of the Cidade Jardim, the Catarina Fashion Outlet in the second semester. So again, a very healthy source of income that will allow us to generate cash, together with the Real Estate business and this will allow us to deleverage the company to reinvest and also to distribute dividends going forward.

We have also great discretion in our CapEx. Our management team is focusing on managing expenses. And I have illustrated this with 2 examples, the digital units and the holding. So all the expenses now have been revisited with an even greater focus on streamlining expenses. We were focused on supporting the company's growth now that we have a stable level of growth, we are looking deeper and deeper into the efficiency so we can create value for our shareholders.

And then last but not least, remember that the POC is going to allow us to recognize revenue at BRL 600 million. With this, I close the presentation and we will now open for the Q&A session. This can be sent through the chat or on the webcast. Mara is going to collect the questions and is going to ask them so that Nilson and I can provide you with further information.

[Mara Dias, executive]

Thank you, Thiago and Nilson for the presentation. We are going to start the Q&A session. If you're watching us on the webcast, click Ask the Speaker and send your question. Please hold.

Thiago, there are some questions here about the expense management. There was an increase in expenses in digital and retail and what is the company's strategy to manage expenses?

[Thiago de Oliveira, executive]

Thank you for the question. I'm going to just give a little bit more color about this issue. We started our digital journey in 2018. This was -- we were certainly the first company to start a project like that. And in the last 4 years, we had been asking ourselves how we could make this business feasible but we saw that the way it is structured in JHSF and in the market. The more you grow, the bigger the loss and once we realize that, we had to make a decision, were we going to continue to burn cash or were you going to find a good place to use what we had learned that could give benefits to the clients.

And we decided to preserve the perceived value to the client, but bring this value to those who participate in JHSF ID in our program. Once we made that decision, we had to make a series of adjustments in the service providers, in the teams. And this is what we did in the beginning of 2023.

The numbers you're going to see in '20 -- in Q1 show that we are converging to have savings at BRL 35 million, which is the number that I showed you. And in terms of expenses, this year, we know there are challenges ahead to grow because of the macroeconomic scenario. So we want to focus more on revisiting expenses.

So I just want to make it very clear, we prioritize client satisfaction, we prioritize quality and excellence in everything we do. So we are not talking about decrease in the quality. No, we want to improve the quality, but we are looking at the efficiency of the structure that is able to deliver good quality products to its customers.

It's a huge task. Many people are working to help us increase this efficiency by reducing expenses in 2023.

[Mara Dias, executive]

Thank you Thiago. There is another question about the leverage of the company. What level should we expect for the next few quarters?

[Thiago de Oliveira, executive]

What we want to do and this is not a decision that we made just now. If you have been following the company, you will remember what we have been saying since the end of 2017, we, as a company, want to have a suboptimal capital structure that is a leverage that is more on the lower side rather than on the average side. Because of the investments we made in the shopping malls, in the airport, we use a little bit more cash and we also invested some money in our land bank.

But now and in the next few years, we think it differently. We don't want to tie capital in shopping malls or in the land bank. We acquired the land bank very quickly and the land bank that we have today will allow us to work for many years. It's a high-quality land bank that is going to allow us to have very good profitability.

All the projects are greenfield projects with a very low commercial risk and this is what we had to do back then. But in terms of Real Estate Development, with the cash generation that it gives us, the receivables and the POC as it is, we know that there's going to be a lot of money coming from Real Estate Development. And with that, we want to reduce the gross leverage of the company, we focused on improving our debt profile and we want to have a long debt profile, but work rather from now on, on reducing the gross debt.

I don't want to give you a number because we are not working based on the number or a percentage. We are working with generating cash, and we are going to prioritize the cash we generate to reduce the gross leverage of the company as a whole.

Our priority #2 is to disburse CapEx where it makes sense. And then we also want to pay out dividends to our shareholders. So operating cash generation, that's what we're going to focus on, capital structure, future growth and payout to the shareholders.

[Mara Dias, executive]

I think you have answered this question. But what about the CapEx for the next few years? What is going to be the CapEx level for the next few years?

[Thiago de Oliveira, executive]

I can give you a brief summary. If we look at the opportunities for the company to invest, there are 3 shopping malls and other investments that we are going to make. The question is when should we make these investments? So as I said just a minute ago, we want to prioritize the cash generated to deleverage the company. We want to invest in an operation that generates recurring cash in the region of BRL 400 million per year. We want to have a strong cash position along that profile. So we have to think about all of this every day so that we can understand the time lines and what moves have to be made.

So the division which is going to receive the most CapEx will be homes for location -- for lease and clubs. And on the other side, shopping malls and then a lot less of the CapEx will go to the airport. So this is the CapEx going forward. But when? That will be at our discretion. When it makes sense for us. When the time is right. Our commitment will always be to ensure customer satisfaction and high-quality products. We want the company to be sustainable in the long term.

We will make ad hoc decisions according to macroeconomic conditions in the short term.

[Mara Dias, executive]

There are some other questions around the scenario for 2023, 2024. There were also 2 specific questions. And I was asked whether the fundamentals spreadsheet is updated on the site. Yes, it is and everything you see in this spreadsheet, of course, the information may change. So there is a disclaimer. As you are aware, this is what we know now, but macroeconomic conditions, strategies, the company's decisions may change the fundamentals spreadsheet.

The other question has to do with the date of opening of Catarina Fashion Outlet and that's going to be in Q2. And now Thiago, if you could make comments about new launches, new projects and the scenario for 2023 and 2024.

[Thiago de Oliveira, executive]

Well, whatever the scenario is today, it is going to change. So we need to look in the long term whilst acting in the short term. We monitor the macroeconomic condition, but we also act based on what we see. So our vision for shopping malls is positive. The outlook for Hospitality and Gastronomy as well is positive and the outlook for the Airport is also positive. We are being a little bit more cautious now in the Real Estate Development business. We are going to continue to develop the projects that we have launched. These are large-scale projects with multiple phases that will move on for many years.

So in this scenario, I'm describing, one of the projects we had plans for, in terms of launches was a project in the city of Sao Paulo in Real Parque. So we decided to postpone the residential part, but we are going to launch the Sao Paulo Surf Club. We looked at the demand for the surf club. We looked at the macroeconomic scenario. And you're all aware of what's happening. And we believe the best thing to do was to postpone the launch of the residential units.

We have recently launched Reserva Cidade Jardim, which is doing well. And we think that this is going to be enough to meet a large part of the demands coming from our client base.

In Parque Catarina, we also decided to delay the project in Boa Vista Village because the first flat of the surf complex have been delivered, and we had sold all the inventory. We decided to launch the last building close to the surf pool and we launched that and the level of price is good, the clients are coming. So from the point of view of the Real Estate Development business, we have to be cautious when we look at the macroeconomic scenario but there might be some tactical actions that we may take.

[Mara Dias, executive]

There is one more question which is important. In the release for the first time, we have a special balance sheet for rental houses. What are these houses? Can they be sold in the future? So how does that business work?

[Thiago de Oliveira, executive]

Thank you for the question. For 3 years now, we decided to take a little bit of the cash flow of the development business and reinvested buying plots and also building houses. 15 houses actually that we rent out for the same client profile, the same kind of customers that would buy our properties, our units. And we were pleasantly surprised. The yield is actually very good because people like to use that kind of houses, but don't want to tie up capital in that kind of property. It is just one more element for us to deliver, so to speak, a house to the client.

So the client has the right to use the house whilst not owning it. All the houses we own are rented out with a good yield. And this business unit has grown. Going forward, it might make sense to add some more units, whilst keeping our discipline. But even more importantly, instead of looking just at the rental houses, we have to look at the clubs. This is a business model that is not very well known in Brazil but given the type of club we want to build, the return is very attractive.

We sell memberships and once we sell the membership, we make the investment and then the yearly fees that are paid to the club become part of our recurring revenue. It seems that this business unit made a lot of success. So I think the IR team should maintain this business division separate in the release so that we can tell this story and people can see how this business line is going to evolve, this business line of rental houses and clubs.

Then can these houses be sold? Yes. We have no objection to that. If we think that there is a better use for the capital or if we want to realize that value, we can sell. This is -- this was not our objective when we started, but it is a possibility. We don't rule that out. That business last time was valued at BRL 250 million in terms of market value. So this is yet another reserve of value should we decide to sell those properties.

[Mara Dias, executive]

Thank you, Thiago. We've been talking for over an hour. I think we have touched upon all the subjects or we might have all the questions and the IR team is going to answer any questions. You know that we are always available to answer any questions. And I'll now turn the floor over to Thiago and Nilson for your final remarks.

[Thiago de Oliveira, executive]

Thank you, Mara. Thank you all. It's a pleasure to be here today with you all. And let's move on. Whenever we end a call, I have to thank the energy, the dedication of the team -- of our team and the effort they put into our company every day. They wake up early, they go to sleep late. They are always focusing on quality and excellence. Our journey year-on-year and in these last few years, the success of our journey was possible because of the dedication of the team to the company's values and to our customers.

I would also like to thank all the team for the support we receive, for the feedback we receive. I would also like to thank the support of the Board of Directors. All of us in the management have received a lot of support and I would like to end by saying that we also focus on solidarity. We have now been more active with the community and we are now more open about -- because as we support that are very dear to our heart, we interact with different organizations. And I would just like to focus today on Gerando Falcoes.

During carnival, you saw what happened with the rain and Gerando Falcoes, mobilized and put their feet in the muds to take solidarity, support material goods, to bring emotional support also to hundreds of families who lost everything during the rain and the land slides. The leader of Gerando Falcoes is an exceptional guy. He tries to make the lives of those who live in Favelas better. He always says that before thinking about colonizing Mars, we should put an end to Favelas. Favelas shouldn't be a bad place for people to live in. And for those of us who have listened to us, you can click on the QR code of Gerando Falcoes. You can go to their site, and you can have a look at what they've been doing. They are very transparent in terms of what they are doing with all the donations they receive.

And if you want to contribute either with money or with your time, you can give it to Gerando Falcoes and to the other organizations that we also support. Part of our legacy is also the help we give to these communities. Thank you so much for taking an interest in our company. Thank you, Mara. We missed you.

[Mara Dias, executive]

Yes, I'm back. I'm back.

[Thiago de Oliveira, executive]

Thank you for being today, here with me again, Nilson. And if you have any questions, any doubts, our IR department is available to take any questions you might have. We have a phone number. We have a dedicated e-mail. You can also follow Mara on Twitter and Cleidiane as well. We want to answer your questions as fast as possible on digital platforms and on traditional channels. Thank you so much again.

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