Americanas S.A. (AMER3) Earnings Call Transcript

Welcome to Americanas S.A. conference call to discuss the company's second quarter 2026 results. I would like to highlight for those who require simultaneous interpretation that this feature is available on the platform. [Operator Instructions] Please note that this conference call is being recorded and will be made available on the company's Investor Relations website, where the complete earnings release materials can also be found. This presentation can also be downloaded through the chat icon including the English version. [Operator Instructions] We would like to emphasize that the information contained in this presentation as well as any statements that may be made during the video conference regarding Americanas' business outlook, projections and operational and financial targets, are based on the beliefs and assumptions of the company's management as well as information currently available to the company. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions, and they relate to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions, and other operational factors may affect Americanas' future performance and may lead to results that differ materially from those expressed in such forward-looking statements. Today, we are joined with the company executives, Fernando Soares, CEO; Sebastien Durchon, CFO and Investor Relations Officer of Americanas S.A.; and Fabio Medeiros, Executive Vice President of Legal Affairs. Mr. Fernando will begin the presentation. Please go ahead.

Good morning. One more time, I'd like to thank to all the members over 50,000 consumers every week in our stores, and also to our partners, suppliers that have been fundamental for this journey of transformation and construction. For those who follow us in the first call of the year, we started the year very strong. This opening influenced by Easter, that was part of the month of March, therefore, helped the growth of the company. And the second semester continued very strong as May and June with rate of growth high, and Durchon will go about these numbers very soon. In the next slide, talking about this first half of the year, I would say that we are proud of the first results of the transformation that we have been doing in our business model. I have a repeated slide to remind you of what is the transformation of the business. In 2022, we had a business, the half of it was digital and e-commerce. We had a business units that were independent, distinct strategies, and investments isolated. Our digital was constituted of the modality of a 1P and 3P marketplace. We still had the structure of Ame as a fintech, and we had the strategic acquisition and customer retention through this model of e-commerce. In 2025, we are another company, a company that has the store at the center. The structure is absolutely integrated, the strategy is converging and a new proposal value. The physical core of our business and the digital delivered one channel to the same client, therefore, complementing fees. We have revised our 1P, reduced our marketplace having the focus as our strategic partners, deactivated Uni.co, relaunched our service platform, repositioned the brand, and now have worked with a lot of financial discipline and operational efficiency. The main result of this model is in the graph on the right, and it's the improvement of a consistent operation. We still do not have a profitable business, but the journey looks very positive and we have now the ability to balance our cash. So this number is mainly an operation, an improvement of BRL 200 million in this semester compared to the last semester, where there was already an improvement of BRL 238 million compared to the first 6 months of 2024. So this operational result is a combination of the efficiency of our resources, of our retail top line above market average, and the contribution of the new digital and all the services that we have been adding to this new transformation. The main highlights of the semester before I hand the floor to Durchon are an expressive growth in gross revenue, 5.22%, a performance that is very important in the same-store sales. A growth of 9.3%, a growth even bigger of our gross revenue per square meter due to our restructuring work of the stores, 10.3% growth compared to the semester last year. And our new digital strategy delivering a growth of 74.6%. This is in the modality O2O, which is online to offline, where we remove the -- where you take the product out of our stores that is spread over 1,000 stores in Brazil, 1,448 stores to be exact. So this has a BRL 76 million reduction and EBITDA improved -- an adjusted EBITDA of BRL 161 million. And as I mentioned before, 250 million operational improvement in this semester compared to the previous semester. The Client A card growth over 100,000 cards every month in our stores and a very relevant growth of our revenue for service of 34.9% service gross revenue. Those are the main indicators that highlight the improvement in our growth in same-store sales, and Durchon will now go into detail in the following slides, our figures.

Thank you so much, Fernando. Good morning, everyone. So this is the evolution of gross sales. In a general way, as Fernando mentioned, it was a semester of a robust growth. Our gross revenue had a growth of 17.8% -- of 9.2% and then 9.3% compared to the same period. And we had Easter falling in March. So this was favored compared to the 2025 as we had a good Easter sales in the month of March. In the same way, the second -- this first semester in a way was penalized. The second -- I'm sorry, the second quarter was penalized due to this. From January, same-store sales grew 17.8%. This growth of our sales, especially in May and June, were double digit. And this has led us to a 9.3% growth of same-store sales. So we have a rhythm of -- a growth rhythm of 2x the period. It's very noticeably as many retailers had almost a 0 or negative type of result. As Fernando highlighted, the sales per square meter was even bigger, showing 10.3%. This is an improvement of our structure. So let's move on to the next slide. We have a better commercial performance in this first -- in this second quarter. And here, we have our gross profit due to our physical stores. The 2 operations combined have 96% -- represent 96% of our sales. So we have had a growth that is very elevated in the quarter. But looking at the whole semester, the gross profit grew almost 7%, BRL 1.7 billion. It's important to highlight our margin gross profit improved 0.5% to consolidate at -- Moving on to Slide 7, our key capacity to operate events along the year. Besides the high sales, BRL 1.1 billion in the Easter period, we also had an expressive sales in the World Cup period. Our operation in general was able to sustain this growth with almost 30% compared to its peer. We still had -- the sales grew 40% in number of items. We can see clearly through the Easter and World Cup, our capacity to operate events is a big strength of our sales, and we have more events coming ahead. We have the Black Friday in November and Christmas, which are very strong in Americanas, but we still have several other as our anniversary in September, Children's Day and Halloween. In summary, they have one great event per month, which is a great opportunity to increase our sales and surprise our clients. In Slide 8, I want to spend some time to explain the performance of 2 of our operations that are growing in a very fast way. You can see the main indicators of performance in the middle block. We had a growth almost of 75% of growth in this -- in the first semester and represents 5% of our gross revenue due to many modalities that are available to our customers, partnerships with the Smiles. We also implement in our stores over 1,400 stores. As I mentioned, we also used our digital to achieve new -- to capture new customers, especially in the big event of the year. In the graph below, we have our gross revenue and also the sales of insurance and cards in the first semester. It grew 35% compared to last year. This growth was driven by the Client A card. We sold over 100 cards per month in the first semester. And now we have -- they have generated in the last 6 months, a total turnover of BRL 1.2 billion. So even as this is growing, these have a key performance in understanding better our customers, 38 million in the -- of customers in our physical stores and online. So we're still growing intensively in our CRM to strengthen even more this identified customer base. Our program of loyalty launched last year already demonstrated a great promising results on average. They spend 3x more than a non-loyalty client. Now talking about our expenses and EBITDA. In the last years, this first semester was marked by a significant improvement of our operational efficiency. Our general expenses reduced year-to-year 4.5%. We absorbed 100% of the operation in the period, and we had a gain of productivity in percentage point, our expense of 3.3 percentage points compared to 2025 in the last semester. This is robust growth of our sales, our improvement and our margin of gross sales that I mentioned. We were able to have a relevant improvement as highlighted by Fernando. In the adjusted EBITDA, IFRS 16, we finished the semester at 250. We had fiscal credits, remember, in 2025. Our operation improved BRL 251 million. And now it went from minus BRL 68 million to show an improvement of basically BRL 0.5 billion in just 2 years. On the Slide 10, we have Hortifruti Natural da Terra update. It appeared in our P&L in a separate line. It discontinued, but I would like to highlight 2 facts that are important. At first, we started the second semester last year with a turnaround in Hortifruti. Then with a little bit over a semester with a strong intense work from our team, the results of 2026 already shown an improvement, very clear. The sales of same-store sales is up 6%, while most of the retailers, food retailers had a fall in sales and a very low same-store. So we are replicating this -- improving this model of Hortifruti. We had a margin increase of 1.5% higher. Also, we are gaining some efficiency in Hortifruti with a fall of SG&A and working capital of 80 days. And this has generated a positive cash result. The second point that I'd like to highlight refer to Hortifruti is that we are advancing in the sales of the Natural da Terra stores in Sao Paulo. In May, we signed a contract of 10 of these stores. All the stores that are being sold, they are deficit stores. And this has a gain in -- this demonstrating a gain of cash. And this will be removed from our debentures. We also intensifying our efforts to sell the 6 remaining stores Natural da Terra. Now going to Slide 11 to talk about our capital structure and our net debt. So we have BRL 2.1 billion with interest. With cash and equivalents, we had BRL 1 billion. So adding the recovery -- judicial recovery that we are paying in installments and removing to receive from the sales of Uni.co, the net debt is BRL 1.2 billion, total net debt. So here, we have a cash flow in the last 12 months, focusing in the cash generation of the operation. We can see in the graph, even though our operations is still consuming cash, this consume has been -- this consumption has been reducing semester per semester. The impact on cash of this first -- of the first semester was with a reduction compared to the semester last year, another positive evolution, the working capital of the company improved BRL 284 million. We also are investing in the future with BRL 220 million. But we cannot forget in this cash generation that we took the decision to use part of our cash generation to reduce our BRL 430 million that was used in extraordinary expenses. And now I will give the floor to Fernando again to talk about our advances, strategic advances.

Let's talk about our plan. That this is the plan that will lead us to the anniversary of 100 years. So if you go to Slide 14, I brought here once more a slide that we used in the beginning of the year and explains a little the plan for 2026 with its combination of performance and transformation. We executed our commitments with a lot of discipline, but also provoking not only planning, but also plant the first seeds of the future that will improve even more our results in the following years. Remembering that the main pillars of the year's operations and supply, all the commercial area, consumer net growth, which is our business unit, digital and financial services, loyalty program, Americanas Ads, which is a business unit that is new, that we launched at the beginning of the year. And at last, a multidisciplinary group that looks at daily all of our opportunities of optimization of costs and expenses. In the next slide, we are going to go through all the costs related to performance, to then talk a little bit more about transformation. The evolutions of the indicators in this slide explain our consistent operational improvement. A same-store sales growth of 9.3% are even stronger sales of gross revenue per square meters of 10.3%, digital in the semester growing 74.6%, with SG&A with a reduction of BRL 76 million. This represents a reduction of 3.3 percentage points. Associated productivity of our employees of 12%, customer identification growing at 9 percentage points, and our rent cost, we are able to negotiate 2 percentage points below the inflation, which obviously contributes to the graph on the right, which is the same graph that I showed in the beginning of this meeting. I would like to highlight the operational improvement is fundamental so that we can build a healthy position and advance to the future. As was highlighted by Durchon, I'd like to say once more that our company still does not generate a result, but it comes from a journey to -- we are bringing BRL 297 million, still negative, but with an improvement of BRL 251 million coming from the growth of top line, but also our disciplined execution in the bottom line. And there, we advance to the future in the next slide and our future is already planned. Our core of our business in the center of the line are our stores. And within our stores, management of assortment of variety is smart pricification and excellent operation. This wheel allows better service to over 50 million customers, 38 million identified. And the more we are able to work on this front, we improve our sales, average ticket and consequently, the margin of our main business. We added to this core, what I call organic growth through CRM loyalty program, digital mobile and all the financial service and store expansion, which is not a short-term pillar, although our recent inaugurations, and reinauguration that have happened in the last 6 months. On top of that, we have 2 new sources of global revenue, very strong. Our Ads unit -- business unit was launched in the beginning of this year and now our vision to logistics that stopped being a cost center and became a service center. All of this structure serving at our core is supported by our excellence center, financial, legal, technology, people and management, and procurement, and we want to be a reference in the Brazilian retail in each one of these areas. I'd like to highlight to give one example of the front, one of the most important ones within our core in the Slide 17. I'd like to share with you a little bit of what has been happening in our stores in our -- due to our operational excellence. We have just launched the mobile store. It's a new one. It's a support for our store managers with artificial intelligence in the palm of their hands. And the most important, the AI will help the daily routine. Besides all the process and all the indicators, AI delivers to the store managers, what are the opportunities they need to prioritize, giving a cluster of the store due to the class -- due to the state and to the model of the stores that this manager is running. AI not only helps the routine, but also says what is the main opportunity. What should be dedicated to be treated with the meeting with the team. And when this is executed, AI reads the results and learns, becomes even stronger to prioritize in the following days. Our store managers do not receive at the same time, the same messages. They receive the prioritized message that makes a big difference in the results of the store in that day and also that hour and the system keeps on learning. Besides that, all the services are within mobile, like stock control, price ticketing, and all of this doesn't need to go into the -- back to the office. It stays at the hand of our managers. It's one of the fronts. It's already happening. It's undergoing some tests. We say that the future has already started. Then I'll move on to Fabio. I'll give the floor to Fabio. While all the transformation is happening, we are not -- we are still talking about sustainability and responsibility, and that's what Fabio will talk about to close our call today.

Thank you, Fernando. Good morning, everyone, and good morning. I'd like to present one single slide that shows many of the initiatives of sustainability that Americanas is working on. It's important to highlight and register and underline that although the huge challenges and obstacles we have had over the last 3 years, Americanas kept following its sustainability agenda, being loyal to its values and principles. Here at Americanas, we know and we believe that the most important and more important than the results are to deliver results doing the right thing. So deliver results doing the right thing is one of the most important pillars that sustain our culture and moving our agenda and sustainability is to do what's right. So I will start by illustrating our participation in the defense codes for the consumers, for the Black consumers as one of our initiatives. We participated, elaborated and adhere to this Black consumer customer defense. It was led by L'Oreal. It started with the equity ratio equity movement, and it was one of the measures to combat racism in the consuming market. Besides Americanas, other 17 companies signed and a commitment to follow this consumer rights, L'Oreal itself, Alpargatas, Carrefour. And this group is very active in discussions over guidelines, improvements of practice, advances in the commitment in the reduction -- absolute reduction in the case of racism in retail. Moving on, the campaign SOS Southeast. As everyone knows, the Southeast region of Brazil was -- had a lot of mudslides, flooding, that many families left, many families homeless and municipalities in state of emergency, Americanas together with Uniao BR movement with a group of volunteers that work since 2020 to vulnerable communities across Brazil launched a campaign SOS Southeast with the objective of mobilizing its customer base to support these areas affected by the rain. Through this initiative, Americanas has donated over 17 million items of hygiene and dressing, and to this, and cleaning to many areas affected. And it is still concerned, it has its nucleus of mental and emotional therapy to provide services to the employees that were impacted by this climate situation. And at last and most important, Americanas came back in -- will come back in September 2026 to publish in a volunteer manner, its annual report of sustainability and why voluntarily? Because a company with a judicial recovery has a different treatment and is not obligated to publish this report, but we understand that it's about time following our principles of transparency and ethics to show what we have been doing in the company overall because we have had a great advance in accomplishing the judicial recovery plan, we requested to leave. And therefore, we will publish in a voluntary way this report, the annual report in 2026. We did not publish in 2023, '24, '25. And now it's our opportunity to make this change in this fraud crisis, chapter with judicial recovery. And most important than turning the page, this report will show and demonstrate our plans or the plans to the future. In Americanas, we know that the future has already started. And one of the objectives of this plan will be celebrating 100 years of the company, of Americanas company, that is already at our doorstep. This report will also include the new study of materiality -- our new ESG plan in Americanas. That's what I had to share. Now giving the floor back to Fernando.

So let's advance to Q&A. My closing message. I like very much this slide. The image of this slide represents our team, and this team will keep on working hard with a lot of discipline, with a lot of energy so that we can keep improving and transforming the company, which now has a future vision, a strategic plan that is very robust. And I'm sure that we will -- we will get stronger and better in this anniversary. So I'd like to really thank who have been following us in this last 40 minutes, who have been questioning us, giving us feedback and supporting us to rewrite the story of our company that is one of the most cherished companies in Brazil. Thank you so much.

[Operator Instructions] Our first question was sent by Angelo Luis. He says, what is the forecast for the company to conclude the judicial recovery, buy the shares by the main managers and start generating a profit?

About leaving judicial recovery, we cannot say a date because it is not up to us. Who will make this decision is being analyzed. What we can say is that, it's already in our mind, we have already left. We are looking ahead. We will have decisions in the following months.

Our next question comes from Thiago. He says, the initial beliefs that the results present reflect a company that is very structurally profitable, or we are still looking at the transitional effects due to the judicial recovery. In other words, what is the capacity to generate cash in Americanas in a normalized scenario without extraordinary situations and renegotiations of liabilities and using fiscal credits?

I will start the answer, then I will move on to Durchon. We believe that we are showing a journey that is very positive, and this journey is composed by 2 fronts that are very healthy, which is the top-line growth, and also our discipline that has been represented by economy of BRL 76 million. So the combination of what I call pure operation explains a journey that is very positive that we are delivering. Durchon will complement with the numbers that I mentioned?

Just complementing, we talked about the result of EBITDA, adjusted EBITDA, operational, very consistent, BRL 250 million a year. In this semester, it will last BRL 297 million, so we can see that we continue in this rhythm. We will improve even more up ahead. This EBITDA reaching 0, we stop consuming cash. Another point that I would like to highlight is that what we are doing, we can see in the -- we're doing a very intense work of our working capital. And in the last 12 months, we have improved. I will talk a little bit -- the other part of your question, which is a very dense question. We talked about the extraordinaries. We have a very valuable assets that we cannot totally use up to now, but this company has many fiscal -- we have BRL 3.8 billion of fiscal credits, ICMS, PIS/COFINS that we will use in the following years. Not in the far future, we have accumulated fiscal losses. We have fiscal loss BRL 6 billion that we have not placed in the balance. We don't plan to use right now. But it's important to remember this because it's BRL 4 billion in fiscal credits. So we have a reduction from now on of the taxes to be paid by the company that are very big, and this will have the cash generation in the future for sure.