Ouro Fino Saude Animal Participacoes SA

BOVESPA:OFSA3

Good morning everybody. Welcome to the webinar of Ouro Fino S.A., where we are going to bring you the results of the fourth quarter of the year 2024. My name is Kleber Cesar Gomes and we are here with Marcelo Da Silva.

To begin with our webinar, I would like to invite Mr. Kleber Gomes, to give you an overview of our business.

Good morning. Marcelo, we are in different places. Today, I'm talking from a network room. I hope we don't have any problems due to this. So good morning, everybody. It's a pleasure to be here with you and deliver the results that we had in 2024, a year full of challenges, but as Marcelo already mentioned, year that was very positive.

I've been in the Presidency for years in the first year we had years that were impacted by the market, but the company reacted. We did our homework, and I'm very happy to be here delivering the results that we promised for you.

So we've resumed our historical margin. We have improved our profitability. We grew in relation to last year. 2024, with the exclusion of the foot-and-mouth disease, we had a growth of 14% during the year. The quarter was spectacular. We grew 26% in the quarter, and we've worked a lot during that year. And we are happy because all business units met the results.

Production Animals had a very good growth, Pet also strong growth, International Actions grew a little bit less, but even so we had a positive result. And so we did some restructures at the beginning of the year that really deliver the expected results. We worked on our expenses and the result now is that the year was really positive for our cash generation. Marcelo is going to give you details later.

We had an assembly. We did a capital reduction, and we delivered a significant amount to our shareholders without compromising our investments in research and in everything that is needed by the company. We also launched 7 products during the year. Very good launching in Chapeco in the south of Brazil we've launched this Glasser, Safesui Glasser vaccine, unique in the country. Also, we have launched FerAppease. We are exclusive supplier for some countries. It's a product that diminishes the sensation of stress in the animal, swine and cattle. Because the stress reduces productivity and you can really minimize the impact of the stress in the animals.

Also, we have launched FosBion, our organic phosphorus with B12 vitamin that helps a lot with productivity. We've launched our vaccine CDV Feedlot as a partnership with Argentine for cattle reproduction. And for Pets, we've launched Banni, our endectocide for dogs. We've launched before the Banni 3 for cats that is performing very well. And also, we have launched Enziclim, it's a product to reduce odors and stains due to urine of animals. So this year was really good.

You hear me, don't you? Okay. So I'll continue. I don't see the screen, but I know that you hear me. And then we have a sequence of positive news on the 19th of January, we did a very big event to launch the LeanVac vaccine. We brought all the -- the most important growers of swine in Brazil, they met us, they visited our plants. This is the second product of this category in the world. There was another company that launched also something like this, but it was not available in most of the places here in Brazil.

And now Ouro Fino is bringing this to the producers, LeanVac, I'm sure that this is going to have great results. In next week, we'll launch another very important product for dairy cattle, it's Boostin. It's a product that is already market, it was distributed by another company. It's a product that increases the productivity of milk. And Ouro Fino with its positioning in the market is now able to bring this product that is produced by a giant company from South Korea. We are bringing it to Brazil.

Now we have 2 products in the category, and we are really now going strongly with it in the market and reinforcing our portfolio. It's a very positive movement. We expect to have other positive surprises during the year, and we are going to continue working hard during this year.

I would like to highlight the BU of Poultry and Swine. You know that last year, we've segregated Poultry and Swine and it had the greatest growth in the history of Ouro Fino, more than 30% last year. So we are really obtaining good results. We are happy for these deliveries. We are aware of the difficulties, the market is very competitive, we know, but we are really relying on what we have planted.

And Marcelo is going to explain the financial results now, and I'll be back with you in the Q&A session. So Marcelo, the floor is yours.

Thank you, Kleber. So now I'm going to continue talking about the financial highlights of the company. Kleber has already mentioned the growth of the company in 2024 compared to '23. It's very relevant if we don't take into consideration the foot-and-mouth disease, we have consolidated 14% of growth, BRL 1 billion of net revenue. So we obtained a gain or market share.

And this growth happened in all the BUs even in those who were challenged by the macro scenario. And also we need to mention the commitment that we had to deliver in 2024, more profit and revenue with the reduction of costs, we wanted to grow EBITDA more than gross profit. We began with some actions of cost reduction still in '23, but the impact didn't came in '23, it really came in '24. We grew EBITDA more than the gross profit.

Our expenses were really below inflation. And it was really very good also that the net profit was very good and we had -- we closed the year with this very good tax management of the company. So we had a reduction in the leverage combined with this structure of investment that is aimed at innovation.

And now I'm going to talk about the BUs. This graphic brings us the numbers. We grew the revenue, the growth margin consolidated with the exception of foot-and-mouth disease. We had a very good growth, relevant, bigger than the historical margins. The gross margin is now 51.4% in the year, so this was really relevant.

Production Animals. It's the biggest BU and we have here beef cattle, dairy, cattle, we had this relevant growth in Swine and Poultry. Poultry that is now headed by Marcelo, and we are now focusing on the market. We have a launching of products. So this line really grew compared to '23. And it helped with consolidated growth of the company. The unit grew 8.6%. But if you look compared base, we have [ 43 million ] of foot-and-mouth disease that we didn't have this is that we didn't have this year. So the growth is really big and expressive and strong with this line of Swine that was contributed even more than the good periods that we have in the previous years.

The gross margin ex foot-and-mouth is 46.6%, even bigger than the gross margin of '22 and '21. So this is the result of the cost reduction, the right position, the fair positioning of our pricing in the market.

In Companion Animals, this is the segment that grows more. We have very good results. If we look since 2021, this unit grew 29%. It's very important growth in the -- gross margin is bigger than Production Animal. So it really contributes for gross margin of the company as a whole. So we have 67.6% in 2024. This is the result of the good job done by Bruno and everybody of the team. We are really close to the veterinarians to our partners, and this is making the difference in the market.

International Operations also, we have here in comparison with '23. Well, we had the impact of the foot-and-mouth disease. We have an interesting performance in the countries of distribution. We have a challenge for the growth of the unit caused by Mexico because Mexico is undergoing difficult situations, but the plans are to resume the growth in Mexico as well in 2025, a very important market in Latin America.

But we have growth in Colombia, in other countries, dollar exchange rate favored us with an important positive impact, with the margin that reaches 62%.

And now talking about the structure of the expenses of the company, you can observe that we had a dilution of the expenses compared with previous years. The expenses were 28.7% and the nominal growth is nice. This shows our dilution of expenses over revenues. We had this inflation that was high in '24. And even with that, even growing 14% and accommodating an inflation that pressures the company, we were able to keep the SG&A of the company below the inflation of the year. So the efforts that we did in '23 and '24 contributed to keep profitability.

And I'm going to show you now this happened without compromising our investments that totalized BRL 75.8 million. So we didn't have contingencies. The variation of total expenses is condition to the execution of the staging of the Project [indiscernible].

So, we had 7 launches in 2024. And sometimes is we need to overcome all the challenges regarding to the regulatory institutions in Brazil, but we have searched for new partners and everything went okay.

The adjusted EBITDA with a margin at 21.6% against a margin of 14.2% in '19 compared to '23 and '22 that were the best profitability that we've had so far. So, you can see that we control the expenses, and we were able to expand this margin with this growth of 65%. And it's a very good growth.

The company has still capacity of growing even more, creating cash because we don't impact the leverage of [indiscernible]. So we have a good management from our point of view of the capital. So you can observe that we had situations with the stock with the inventory of the company, but this is part of our strategy. The sale is going -- the sale of those stocks are going to be done now in '25, but everything was planned so that we can increase our relevance in the market. So we have still this pressure in the stock, but we have a very good cash generation that is very relevant of BRL 73.9 million. This is a very good cash flow. We can pay like 2 years ahead.

And another important point is that we've finished the capital reduction we paid in the 31st of January. We respected all the terms and deadlines. And if we get our debt on the 31st of January, our -- we do the math of everything, our leverage is 1.1x against the real of 1.6x. So if you look at the last 10 years, you will see that we are really aligned with what we've done in the last 10 years. So this is going to really allow us to continue with our investments agenda from now on.

And the combination of growth, cash generation, the management contributed for the reduction of leverage from 0.9x to 0.6x of EBITDA. We closed the year with [ 7.9% ] of debt, and we have plans for investments in research, innovation, increasing of productivity capacity. So it's very adequate in our point of view.

We have a very good structure in terms of cost composition and also of allegation of debt. We have 17.3% of the debt in the short term. And the 83.7% in the long term and 40% of it is due to be paid in 5 years. So this gives us some comfort.

Well, I finish now my presentation regarding the figures and numbers of the company. I'll be back for the Q&A session. And again, I give the floor to Mr. Kleber Gomes.

Thank you, Marcelo for your presentation about our numbers. And we have a question here from Andre [ Pratts ], I mean 3 questions. I'm going to read them, and I will answer. He is congratulating us for the results and he has 3 questions.

First, can we go deeper into the potential of the launchings in the internal and external markets?

Well, I cannot tell you about potential of growth of product. Because we don't give guidance, but I can tell you that the products were launched at the end of the year, the main ones and they are important ones for our future, especially for our biological lines that are on which I see the potential for internationalization. The Glasser vaccine the immunocastration vaccine, the second in the world, I do believe that they have potential for going abroad. And we are going to work on this in the next years.

This is not a short-term thing it involves a registration in other countries. It takes time, but I believe that these products have a big potential.

Second, can we comment about the synergies in the Asian market with Mitsui?

Well, yes, as you know, Mitsui is giant in the Chinese conglomerate. It's very strong in terms of investment in other companies. And I don't know the accurate numbers because they change daily, but they have more than $110 billion invested in the world, more than 500 companies in which they've invested and years and years of experience.

So it's a very strong company that opened doors and helps us with the synergies and the synergies that are more obvious are with the local ones but we search for strategic ones, strategic synergies aiming to bring new technologies that are sometimes created from -- in Japan and come to Brazil.

And I commented about the distribution of the Boostin product, and we had the help of Mitsui that have this relationship with LG Chemical that is the producer. So this is already fruit of this partnership and you know that we have visited Asia with Mitsui. We've visited Korea, China, Japan, and we are not going to stop. So I see a very good partnership with a very good potential and long-lasting.

I would like to thank all the shareholders from Mitsui, the corporate planning director, [indiscernible], our advisers from Mitsui that are supported us [indiscernible].

And the third question, is it possible to comment about the closure of capital that was spread out in the media?

Well, we don't have any decision made in regards to the closure of capital, I don't know where this news came from. The company has no decision regarding capital closure in this moment. So these were the questions from Andre.

I don't see any other questions on the chat. So I give the floor back to Marcelo so that he can make his final comments.

And I would like to thank all the Ouro Fino team that has worked so hard to deliver such good results. We had a lot of barriers that we over came, and I would like to thank also Mr. Jardel, Mr. Norival, our founders and our advisers, our management board, all the committees, I would like to thank also our financial agencies, especially in FINEP, our -- by that incentivates innovation, BNDES and other partners from the banking segment.

And thank everybody and especially to our clients and customers that believe in our daily work that walk together with us, and they are the reasons why we exist, thank you so much.

Marcelo, the floor is yours.

Kleber, thank you. And I would like to thank also everybody. Thank the international relation team, all the stakeholders. And I would like then to finish this call reaffirming our commitment of continue working to create this relevant agenda to create value to all the stakeholders, all the important people that Kleber mentioned.

So have a nice weekend and see you in our next webinar. If you still have questions, you can send them. We are at your disposition. So thank you so much. Have a nice weekend. Thank you.

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