Good morning, everyone, and thank you for waiting. Welcome to the video conference to announce Alpargatas' first quarter 2025 results. I would like to point out to those who need simultaneous translation that we have this tool available on the platform. To access it, simply click on the interpretation button via the globe icon at the bottom of the screen and choose your preferred language, whether Portuguese or English. For those listening to the video conference in English, there is an option to mute the original audio in Portuguese by clicking on "Mute Original Audio." We would like to inform you that this video conference is being recorded and it will be made available on the company's RI website, ri.alpargatas.com.br, where the complete material of our earnings release can be found. You can also download the presentation using the chat icon, including the English version. During the presentation, all participants' microphones will be disabled. After the presentation, to ask a question, click on the Q&A icon at the bottom of your screen and type your question to be queued. When you are announced, a prompt to activate your microphone will appear on the screen, and you must then activate your microphone to ask your question. We recommend that you ask all questions at once. We emphasize that information contained in this presentation and any statements that may be made during the video conference regarding Alpargatas' business prospects, projections, and operating and financial goals are based on beliefs and assumptions of the company's management, as well as information currently available. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions, as they refer 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 operating factors may affect Alpargatas' future performance and lead to results that differ materially from those expressed in such forward-looking statements. Today, we are joined by the company's executives, Mr. Liel Miranda, CEO, Mr. André Natal, Vice President of Finance and Investor Relations, and Ms. Melina Rodrigues, Director of Investor Relations, M&A, Strategy, and Treasury. I will now hand the floor over to Mr. Liel. Mr. Liel, you can proceed. [Foreign language] Good morning, everyone. [Foreign language] I'm very pleased to open this video conference for the results of the first quarter 2025, and I would like first to start with an overall vision of what the quarter was like and what the results were. [Foreign language] First of all, our marketing and portfolio strategy, which has been pursued, this strategy has been pursued since last year, and it basically tries to cover and address a few gaps in our portfolio. Maybe the most important to emphasize is the men's portfolio, where we do not have as much of a diversified portfolio as for other women, including the fact that we did not have products for some occasions last year. Despite this, we are seeking new opportunities in portfolio. We are completely disciplined in not proliferating the number of portfolios. Everything that we make in terms of launches means that we continue to simplify the number of portfolios. Now we are at a stage of maturity, and it is important that we discontinue some SKUs and therefore the manufacturing efficiency, distribution, and execution at the points of sales. The second thing is our discipline in market investment. We have been keeping our market investment at an adequate level for all of our operations, both in Brazil as well as internationally, but we have been focusing on measuring the return on invested capital. One big change is that in the past, we used to put a lot of money into performance marketing, and now we are focusing much more on brand building in that market, which is that market investment that's going to add value to our brand and therefore to the results of the business in the future. As for the commercial results, starting with Brazil, the BU Brazil, there are several indicators of the strategy that we outlined, and the first one is that we continue to grow in the channels where we have less penetration and where we have more opportunities to grow in the specialized shoe stores and at our own stores, at our stores of our franchise network, network of franchise stores. We have been growing our sellout in double digits in the modern channel where we are less represented, especially in the cash and carry. We have also been growing our sellout in double digits, which show that this is where we have a bigger chance of growth. We are performing better there. We have been regaining our market share since the beginning of last year, and in this first quarter of 2025, we went back to the level we were in the first quarter last year, and this is a trend that we continue to, we expect to continue because our execution is more effective at the priority channels, and we believe we have conditions to continue to gain market share participation. As for the margin expansions, we are going to talk a lot about that, especially because of the best discipline, financial discipline. We are not resulting in, we not giving too much discounts in order to grow our sellout and to focus in the channels where we have better margins, including our franchise stores. This has been also helping our margins and also the benefits of costs, the rationalization of costs and manufacturing and distribution efficiency. We started in the past, we start, we continue to yield results out of that. Better financial discipline, growth in channels where we have a better margin and better manufacturing and distribution margins and efficiency. I want to reemphasize that in this quarter, we use a tactic in the supply of the Brazilian market of anticipation about 10% of the additional volume that would be the sales for the first quarter. That was a strategy used to ensure that in the second quarter, we start out with a new collection without creating any destock in the market, any stockouts in the market. This is a learning from past years where some clients believed that they wanted to get their hands in the newer collection faster, so they needed to destock their old collections. The problem is that sometimes this creates a stockout for consumers who arrive at the store and the new collection is not there yet, and maybe the old collection has already been sold. We used to sell sales. We anticipated about 10% of what would be the normal sell-in to ensure that the market is going to be stocked. Whatever happened in the market, we ensured that we are going to have products until our distribution is fully completed of the new collection. We are going to come back to that a little later on to this, but we are going to be aligning sell-in and sellout throughout the year because we know that our business depends on sellout. The sellout is the biggest indicator of the performance of the sales of the company. In the international market, we continued with the same strategy, where the first results appeared. Europe, after several quarters losing scale and losing volume, we found our first growth of volume in Europe, which is already a result of the launch of the new collection, which is started now for the summer of Europe. In the U.S.A., we have the constant pursuit for the improvement in profitability. We already saw that in this quarter by improving our margins because we focused in the channels where we had best, better profitability and margins and reducing our presence in the channels where we have a higher discount rates. This has improved our profitability. In the distribution markets, we continue focusing in the main geographies, but especially in the standardization of our commercial policy. In other words, markets where we do not have so much of a good profitability, we are reviewing our portfolios in there, and we are focusing in the markets where we have a better profitability. This group of distribution markets can show profitability aligned with the rest of the business. I would like to emphasize that all of this is a part of the strategy that started last year, where we are establishing a culture of cooperation between the several areas of the business. We are eliminating overlapping in positions of our processes, our OTIF. The result is our capacity to supply the market in the correct way. This has already been a pain for the business in the past. It was a big problem, especially in Europe and in Brazil. Now we are already at the mark of 78% OTIF level. In Brazil, we are at 73%. In the international market, we are above 80%. Overall, we are at 78%. It is not the best in class. It is not our ambition. We want to be above 80%-85% of OTIF, which means that for every 10 orders, 8 or 9 are delivered on time and in full. Right now, we are delivering almost 8 orders on time and in full, but this is not a problem anymore in our operation. Quite the opposite, it is helping us in our performance recovery. We have optimized our factories. We have reduced our distribution costs and logistics costs. I have already mentioned before, our pricing disciplines have yielded good results both in Brazil and internationally. As for the expenses, we have a culture of always looking to do more with less, ensuring return on investment. This year, this quarter, we saw a reduction of 5 percentage points in SG&A. It is important to mention that we preserve the market investments because this is what will ensure the growth of the brand, the business, and the future of the business. As for Rothy's, we continue to improve the profitability of Rothy's. It starts to be a company that actually brings financial results to Alpargatas' results, considering its financial impact, and especially because we have a very clear channel strategy. The e-commerce is very, very successful in the U.S.A., and we have a network of stores, a chain of stores, which is now approximately 25 stores, all of them showing excellent potential, including for expansion and bringing innovative and sustainable products. There is this problem right now that we are facing between the tariffs dispute between the U.S.A. and China. We built an inventory that's going to take us forward within the U.S.A., so we are not subjected to the impacts of tariffs in the short term. This is a topic which is being continuously discussed internally, and we are assessing the reality of the American market concerning tariffs so we can react whether in terms of the strategy of costs, distribution, or pricing. Right now, this is not a problem, and we focus on the good performance of Rothy's. Now I give the floor to André Natal so he can talk about the numbers in all of our results. [Foreign language] Good morning, everyone. I think Liel has made a very good summary of this quarter. I'm going to be presenting a little bit of the numbers behind everything that you mentioned. I will start with the discipline, financial discipline of the business. I think we materialized a long period of cash flow release. In this quarter, we have a small consumption of cash consumption. This effect has a very specific reason connected to what Liel mentioned about anticipation of volumes that we performed in Brazil in the first quarter. As for the seasonality, this quarter was expected to be of small reliefs, a positive release of working capital. The consumption of working capital is connected to the fact that we are only collecting the typical receivables that we have from the fourth quarter of the end of the year, which is stronger, seasonally speaking. In addition to receiving, we were also issuing new deliverables at a higher level than what is common for this quarter. This is what boosted a little bit to this small capital consumption in the first quarter, but this is connected to a higher sales level, which is a healthy symptom. As for the investments in the company, we are back to an investment level that we understand to be healthy and normalized. It is likely higher than we did in the first quarter last year. It had been a quarter where we did little investment. It is within the budget we programmed for the year, the capital allocation program we had for the year. We keep on this natural movement of ramping up throughout the quarters. We start with smaller investments in the first quarter, and we ramp it up throughout the year with the execution of projects. For now, it's totally within what was expected and planned in our spending plan. As for cash generation, we have already had eight consecutive quarters of cash generation, of positive cash generation, which is extremely healthy. We generated BRL 128 million in this quarter and BRL 439 million in the past 12 months, March to March. Obviously, with this financial discipline, we went to a position of liquid cash that brought us our leverage to minus 0.6, which consolidates the movement that we have seen for a while of deleveraging the business. The business right now is at an extremely healthy level from a financial standpoint of view. We can move on to the next slide, please. When we look at the point of view of volume and revenue overall, this is a quarter we see an expansion of 10% in the consolidated vol, all of our volumes globally. This is a composition in the composition of this growth. We see a concentration of what happened in Brazil, in the sell-in in Brazil. Liel has already mentioned of this movement that we did in this first quarter in Brazil. As for the international operations, we have a small decrease in sales of pairs compared to one year ago. When we go specifically to the regions, we see the United States, a contraction of sales. This is connected to the basis comparison, in fact, because last year we had sold an extraordinary level of products in the off-price channels. It was a sale that had a smaller return. When we look at the revenue in the U.S.A., we see that the revenue went above, went up 1%, despite the fact we lost 500,000 in sales of pairs. It is a sales which is much less concentrated in the off-price channel than one year ago. The same way, the volume seasonality is not much relevant for the explanation of the full results. When we look at Europe, we can see a sell-in growth, which we understand to be an important indicator for the health and for the building of the international operations in Europe. We have to gradually return the sales volume in Europe because we know there was a loss in the volume sold in Europe. We will continue observing and obviously working hard to be able to have a great growth season of growth. We believe that having showing the first quarter plus 5% up in the results is already a symptom of recovery in this market, which is mainly a priority market for our recovery. When we look at the international distribution markets, we saw that we have more significant results of about 31% in the number of pairs sold compared to one year ago. There are a few effects that can be mentioned to explain it. There is one effect, which is the continuous prioritization of the markets where we have a better profitability. This is something we have been doing for a while. We have been correcting the pricing and focus in the priority markets, which explains parts of this trade-off between volume and return, which will obviously yield positive results in the future for our business. There is also another effect, which is the destocking of the inventory in the chain. This gradual movement had been already happening. It's not anything new, but it's not totally over yet. This is also partially an explanation for the reduction in the volume sold in the distribution markets. Now focusing in Brazil on the next slide, we see the expansion of 14% compared to a year ago in the sell-in volume, expanding our revenue in 22%. However, when you look at the right-hand side, we see an expansion in sell-out of around 2%. In this green and yellow graph on the right-hand side, we can show this movement. As Liel said, this is not a change in the strategy. It's a tactical initiative that we performed so as to avoid a movement that we observe typically in this period of the year in the change of the collection because we don't have, we usually, we historically didn't have the market appropriately supplied, and we ended up losing market share. We anticipated the volume without changing our perspective and our understanding of the growth throughout the year. Also, the strategy that the sell-out will be the great driver for our sales performance. We have to work to make sure that consumers desire our products and not to increase or decrease the inventory levels in the sales chain. This is what we did only technically this quarter, but again, we did not change our perspective for the rest of the year. Throughout the year, we're going to be observing the sell-out performance, especially as we will make all adjustments to sell-in throughout the year to ensure that we have a higher window of alignment between the sell-in and sell-out in Brazil and in all markets worldwide. Moving on to the next slide, we can see again a movement that is not new. It's something that we have been seeing over the last quarters of expansion of gross margin in Brazil. Partially, this is explained by a higher productivity in our factories, higher efficiency in our distributions, and higher overall margin because of the efficiency, but also the recovery of the scale versus, for example, in 2022, when we had to step in the break as for our sell-in. There was a compression in the gross margin that was generated, and this now is being recovered. There is this scaling up efficiency that takes us to improve our gross profit per pair. Compared to the last five years, this is an extremely interesting and healthy mark where we have more opportunities to be exploring new activities and initiatives for productivity efficiency, but we are actually, we have a better performance than in the past five years compared to only the first quarter. This also has this obviously the higher sell-in number that I just showed to you, the tactical decision we made, but this is a smaller, a lesser explanation for this bigger gross profit that we saw for a pair, which is mainly due to the efficiency in the operations that we saw. Moving on to the next slide. On this slide, you can see a graph of our history for the SG&A, selling, general and administrative expenses. We see that since 2023, this has been aligned with the information that we had been presenting to you and discussing with you. We are in this trajectory, which is relevant. We went from 20%, this is expressed as a percentage of the net revenue. We went from 20% to 15%. We are excluding just the bonus factor here to compare, to allow the seasonal comparison because some of the years we have paid bonuses to employees and some we have not. We excluded that from the comparison. What we can see is that there is a clear strategy of gaining efficiency in the internal expenses. All the expenses are included except for the bonus. On the other hand, we preserved or amplified our investments in marketing, in the brand, investing more in the brand than we used to do in the past. There is a clear change in the level compared to comparing 2022 to 2023. We are now more aligned to what we believe to be healthy for this industry and sustainable, considering the long-term health of the business. We made sure to separate those two groups of expenses to show our clear focus on gaining efficiency and show you that the gains in efficiency are not actually harming the brand in the future. Quite to the opposite, we actually are gaining more breathing capacity to invest in the brand in the future. When we look at the EBITDA capacity, this has been growing, especially boosted after 2023 by the recovery of the operational scale. We have been reinforcing this over time with you. This was lost overall in 2023 because of the stepping in the breaking of the sell-in in 2023. Obviously aligned and allied to all the productivity gains, we have been managing to regain the EBITDA levels to levels that we consider to be healthier for the business. We also see here the effect of having advanced in the best levels among the five last years' first quarter, which where you can also see a little bit of the result of the anticipation of the sales for the first quarter. Yet, this is not an isolated explanation. We have seen, as you can see in the graph, a higher EBITDA margin for the first quarter last year compared to the recent history of the company. Moving on to the next slide, we are going now into the international operations. As I said at the beginning, the international as a whole has seen a compression in the volume sold. Part of this is explained by the prioritization of the profitability in the main and priority markets, especially in the U.S., having less of off-pricing sales in the composition. As for the priority, as for distribution priority markets, which are Latin America, not Brazil included, Africa and Asia. We have been making these movements. There is also some effect of destocking of the inventory levels in our chains. On the next slide, we show you the path of the gross margin of our international operations. We can also see that we have been recovering. Even though we are losing the economy of scale, we see margin expansion. We see obviously as an explanation of the prioritization of more profitable channels and markets and also partially explained by a favorable mix of geographies which are being exploited because the Asian markets, for example, have a margin that has smaller margins. There is also a currency effect here. Since the cost is in reais, the depreciation of reals compared to the dollar also captures some effects here as an expansion of gross margin in the international operations. Here we see the SG&A effect in the international operations. The recovery of the marketing expenses, they had not been compressed so much, so they were kind of aligned to what they used to be. Even though we have a healthier composition because we emphasize much more brand building and brand preservation and communication of the attributes of our brands than performance marketing. On the other hand, when we look at the rest of the expenses, which are part of the SG&A, we see an increase of these expenses in contrast to the net sales. This increase is naturally connected to a simple factor, which is the compression of sales volume over the past two years. This means that we have a structure which is a little bit more efficient. However, the size of the structure we have is big compared to the volume sales we lost over the last two years. So these expenses, comparably, they get bigger. When we look at the graph on the right-hand side, we see that the EBITDA margin also decreased. When we look and analyze this reduction of the EBITDA margin and we try to separate what comes from the scale effect and what comes from the efficiency, over 100% of the decrease, we understand that can be explained by the scale. The efficiency from a perspective of the sizes of the expenses was quite big. We have gained efficiency over this period. The EBITDA margin per pair has increased 103% due to the efficiency, but our scale effect is stronger than that. Partially, the solution is to regain the sales volume that we expect to see in Europe, and that is what we expect to see in the other markets in the future. To conclude now, we have Rothy's performance, which is also nothing new. The ramp-up of results that we have seen over the last two years is already known in the market. In 2023, we were at the minus $28 million, minus $30 million, and now we are reaching $20 million positive. We are always having better margins. This has been a dynamic of the operation of Rothy's throughout 2023. Right now, this is a positive contribution and reasonably relevant of $20 million to the operations of the overall results of the business. Again, the strategy of Rothy's continues the same. Obviously, there is a tariff thing that is going on right now and being analyzed on a daily basis. Right now, we understand that we have results that we understand that are healthy. We have a lot of brand awareness, a lot of opportunities also for expansion in the market. We can see increasingly better performance with healthy margins of gross margins of 62%. This is a business that has been performing much better than in the past. Now I will close the presentation and start the Q&A session. We will now begin the Q&A session. Please note that to ask questions, you must click on the Q&A icon at the bottom of the screen and type your question to enter the queue. When you are announced, a request to activate your microphone will appear on the screen, and you must then activate your microphone to ask your questions. We kindly ask that all questions be asked at once. Let's go to our first question. It is from Dani Eiger, sell-side analyst with XP in Brazil. We will open your audio so you can ask your question. Dani, go ahead. [Foreign language] Good morning, everyone. Thank you for taking my question. I have two questions from my side here. I know you have already explored a little bit about the anticipation of your sell-in. I would like to understand a little bit more of details of why the need thinking of the operational side. You said that you needed to be prepared for the demand, but OTIF is getting better. I want to understand exactly why this is happening. Because of you having any logistic or production gaps, or if this already had happened in previous years. You mentioned that you tried to make, is this going to be your new normal to have better distributed volumes throughout the quarters? I would like to understand what is on the backstage. Connected to that, I'd like to understand the convergence and alignment between sell-in, sell-out. If this is something that's going to happen over time, more gradual, or when this alignment will happen, I would like to understand what is going to be the normalized volume, sales volume, sell-in, sell-out volumes along the quarters throughout 2025. My second question related to the international operations, you obviously said a few times about the alternatives for the U.S. market. Along the way, how do you see a structure to support the business in the U.S., and can you make any adjustments over time while you're looking for a business model alternative? Can you adjust the structure so you can have better operations in the U.S.? I would like to have some visibility on that. [Foreign language] Thank you, Dani, for your two questions. This is Liel. We'll start answering the anticipation of volume in Brazil in our selling channel. What is important is that we understand that the sell-in in a quarter not necessarily is turned into a sell-out in the same quarter. We have a delivery cycle of about 90 days. So between the orders being placed, supplying the market, and consumers buying, usually this takes place from one quarter to the other. That's why we supply the quarter for, for instance, when we are going to supply the market for the summer, we are going to supply the market in the third quarter. So when the season starts in the fourth quarter, we already have the products available for consumers. This is a natural dynamic of trying to anticipate. There is a seasonality. In some quarters, we're going to sell more, such as in the summer in Brazil. We sell approximately 20% more than we sell in the other quarters in Brazil. This sell-in and sell-out movements throughout the quarters is a natural process in our business. This year, what we did was try to avoid a stockout in the second quarter. As I explained, when there is the change of collection, consumers avoid buying the older collection, waiting for the new collection to bring them a competitive advantage because consumers are going to be looking forward to get the new item. We try to force the queue the first quarter. When the new collection arrives in the second quarter, the consumers have not been impacted by the lack of the stockout of products at the stores. At any moment, consumers will always find all the products that they want from both collections. This was a commercial and selling tactic that we used. It's quite our capacity, our logistic capacity, and our on-time in full levels are quite the opposite. They allow us to do that. There's not a limitation right now to our business. It's not because we have any kind of limitation in our distribution that we have decided to use this tactic. It's more to streamline the operation. I wouldn't pay too much attention to that. We put more of a weight in the first quarter to ensure that the second quarter is well supplied. The same way we're going to do the same for the third quarter in Brazil, to ensure that in the fourth quarter, the summer in Brazil, we are going to be well supplied. This is the dynamics between the quarters that we see right now for the business. As I said, we don't have any limitations in terms of finance or distribution or logistics. As I said, our OTIF level is at 78% globally. In other countries, we are above 80%. In Brazil, we have already arrived at 73%, and we want to be above 80%, the 80% mark for the OTIF levels in Brazil as well. As for the sell-in and sell-out trends, we cannot anticipate what the sell-out will be, right? How much consumers will purchase? What we can say is that whatever it is, we will be pursuing to make sure that our sell-in is close to our sell-out, not exactly quarter by quarter, but that throughout the year, the average of sell-in and sell-out is close. What we cannot and should not do is to create a stock inventory or inventory level so big in the channels because this is not going to help our clients to sell more to consumers in the end. Quite the opposite. This is going to be a problem for us to manage our pricing and stock and discount policies in the future. Quite the opposite. We want to have a level of inventory that is adequate for the clients. I would like to reinforce that a positive sell-out is also because of our strategies. We have been improving our portfolio. We have been improving our on-time in full levels. We have been improving our execution, especially in the channels where we have a smaller representation. This has actually resulted in a real growth in sale to consumer, which is the sell-out, where there was a growth of 2%. This is what we are going to be pursuing not only along the year, but over time, because this is the best indicator of growth of the performance of the company. I hope I have answered your question. As for the U.S., I will get started, and maybe André can complement what I say. Basically, we are already doing everything we can do in the current business model. As you can see, the profitability of the U.S. has improved over this quarter, and this is due to two movements. The first one is the cost reduction that we started out last year to try to approximate our structure, our cost structure to the size that the American market has for us right now. This has been contributing to the good results. The second thing we try to do is to be more strategic in the channels where we operate in the U.S.. U.S.A. is a market where prices are extremely competitive. As André said, we did not operate much in the off-price channels where we offer lower prices. We focused on the channels where we have better profitability. Even though we lost volume sales, we grew our revenue. U.S.A. is a place where we are working hard to improve in terms of costs and improve our operational aspects to be profitable. We are looking for partnerships because this could unlock regions and clients where we did not penetrate before. Since we are small in the U.S., it is harder to penetrate in some geographies, some clients. As soon as we find a partnership or a business model that allows this to happen, we believe we're going to be boosting our operations in the U.S. The brand is well known. It's valued by consumers, and we know that as long as it is well communicated at the points of sale, we will tend to grow the volumes we will sell there. That's what we are seeking nowadays. We are seeking a strategy to grow in the U.S., and we are advancing in the conversations with many potential partners. We don't have anything concrete to announce, but as we have something concrete, we are going to be announcing that to the market. [Foreign language] Hi, Dani, just to complement what Liel mentioned, the operations right now need to continue, and we are looking for the efficiencies. We are still trying to find within the model we are in the best way to operate. We obviously cannot advance what we are studying to do in the future, but we can tell that last year we studied this market in detail by analyzing the business model of other companies to understand what is the size, the operational scale that is necessary to really justify the choice of a direct operation business model in the U.S.. What we realize is that the model we are operating right now is not very common among companies that have a small operation such as we have in there to justify all the SG&A and infrastructure that we have there. What we have been studying is what kind of partnerships can, at the same time, allow us to have greater access to the channels, the priority channels for us. Just as a reminder, this is a consumption that is made by impulse. To be well distributed, it is very important. It is a very complex and large market in the U.S. One of the channels that we access very little right now, in which it has very relevant volumes of flip-flop, we do not have access to those channels. Depending on the partners that we find, we understand we can leverage our access to those channels. On the other hand, we also want to have an operation where we can have a higher efficiency level, where we do not have to have an operation totally dedicated to our volume, which right now is small for this decision. This is a little bit what we would like to do, but this is still under construction and being elaborated. Whenever we have something concrete to announce, we will do so. [Foreign language] Thank you very much for taking my questions. Congratulations on your results. The next question is from Joseph Giordano, sell-side analyst with JP Morgan in Brazil. Joseph, proceed with your question, please. [Foreign language] Good morning, everyone. Good morning, Liel. Thanks for taking my question. I'd like to explore a little bit. We start to see the gross margin progressing a lot, which is, in my opinion, a lot about the efficiency. I'd like to understand a little bit about the cost. We see this depreciation of the Brazilian real, the oil prices. Many of your materials, your raw materials are derivatives of oil. I want to understand how you understand the cost side of your operation and how you can understand the potential to gain gross margins. On the other side, I see the company emphasizing marketing. What do you have in mind to try to leverage your sales? Last, when you look at the net cash, we see a generation of cash, which is very healthy, as you mentioned, including the working capital levels. I'd like to ask you, what do you intend to do with the working capital? Do you intend to return this as dividends to investors? We also know that Rothy's is a decision to be made in the next year. What is your strategy of capital allocation for the near future? [Foreign language] Thank you, Joseph, for your questions. I'm going to be taking them. First of all, about the costs. You're right. We are in a path where we are growing our gross margin, which is a combination of what you said. It has a lot of our improved efficiency in there, our better distribution, the operation is more streamlined, etc. In other words, we are able to have a lighter, cheaper, and more efficient operation. This has been helping us to leverage our gross margin. There is also an important effect of the scale that we have been regaining. As for the oil prices, there are a few points to be mentioned. First of all, the correlation is direct in the sense that over time, oil prices will go up and down. In the short term, anything could happen, especially because the dynamics of prices for one of the main indicators that we use to measure our costs are they have their own dynamics in terms of demand and offer, not directly connected to the oil prices. Secondly, I can tell you that up to this first quarter of 2025, we did not see any effect whatsoever, which is relevant. I'm not even talking about the average price of the inventory in the entry raw material price. We don't see the reflect of lower oil prices so far. This might happen at a certain moment if the oil continues at the level where it is and the butadiene and hysteridine converge to a lower pricing point. If all of this becomes true, possibly at a certain moment, we are also going to see some trend of expanding our gross margins because of that. It's very hard to do that. We don't give any margin guidance here. It is not clear to us whether or not these petrochemicals are going to have their prices following the oil prices decrease and for how long they would be at these lower levels. What I can tell you is that for right now, we have no effects whatsoever of those. On the other hand, even if all of these happen, which might happen, but we do not really know, there is also a lead time before this goes through our results. Because first of all, this is going to take us some time recycling the new inventory at this new pricing if it comes to change in the future. After that, there is all the fabrication of the products, the finished products at these new prices of the raw materials. This is going to take a few quarters before this capture is actually absorbed in our chain to be shown in the results. To effectively affect our COGS, there will be a higher time because we have an inventory of raw materials and finished products. This is something we cannot anticipate at all. Again, if all of your premises are right, at a certain moment, again, we might have a favorable effect in our gross margins. Again, we cannot anticipate. As for the marketing expenses that you asked, we understand that we have already regained the market investment levels. You saw that the international levels were at a level that we understood to be reasonable, even though in a different breakdown. We adjusted mainly the composition of this marketing spending so it was more effective in the long term. This has already been done. In Brazil, we used to have a smaller level of what we consider to be healthy for the long-term sustainability of the brand. We regained these levels in the numbers I showed you. Understand we are at a level right now, which is reasonable. We do not see, as you increase the marketing investments, you start to lose the efficiency of your margins. We believe we are at a level that is compatible with the industry and with our results right now. We do not have the intention to do anything different from what we are doing right now. All of that is part of a global agenda, which includes collabs, partnerships, etc. We do not see any reason to do a different game from what we have planned right now. We understand we should be operating at the levels we are right now. Last, talking about the net cash position, we do not have any interest in continuing to carry liquid net cash position in the company. We believe this is an inefficient capital structure. It was very important to be pursued for a certain time because the company was burning our cash levels and we saw a trajectory of leveraging that was actually worrying. We reverted that. We managed to revert that and bring that back to a very healthy level. We also do not believe that for the long term, this is the right place for the liquid cash to be. We want to have this correction without performing any kind of unnecessary investment to correct the capital structure or any kind of strategic movement that is too different only for this sake. The limitation in distributing dividends in the past was because of the consumption of the historic money we had in the business. We were limited to the options we had. Our intention right now, when we are studying the alternatives to proceeding this way, is to, at a certain moment, whenever possible, have an adjustment of the capital structure to a level that is obviously not risky, but is more optimized in terms of the leveraging, and also do it in a way that is legally bound and that follows all compliances and rules in a safe way. Right now, this accumulation of cash was not connected to any kind of intention of this capital. We are not preparing to invest it or use it up. Quite the opposite. It was more of a limited up due to the limited options we had in using this capital structure in the past. Whenever we have a new direction in this sense, we are going to be announcing it to the market. The next question is from João Soares, sell-side analyst with Citibank in Brazil. João, please go ahead. [Foreign language] Good morning, Liel and Natal. I have three points I'd like to ask you. I'm sorry if I'm going to be repetitive in some of them. One point is about Brazil, one about the international markets, one is about the cash flow. In Brazil, Liel, I am a little bit, I'm trying to understand a little bit this strategy. What is the expected seasonality for Brazil right now? Imagining that in Brazil, it was well balanced when you look at the volumes, sell-in and sell-out every quarter. Also, we did not see big sell-out advancements. I am trying to understand why you had this worry, this concern with this pre-supplying of the market. I want to understand a little bit more of this and how this can somehow affect the gross margin in Brazil. Secondly, about international operations, what should we expect? I know that we always go back a little bit to this point, but without considering too much the U.S.A., what do you see as an ideal volume for the international operations? Now that you know that you have reached a balanced level of marketing expenses, what should I understand as a sustainable level of sales volume so we can have a kind of a better understanding of what you are pursuing? Last, how could I understand the cash flow cycle? You showed that there was an increase in the first quarter of cash consumption, but what could we see for the future considering that last year we closed the year with a very favorable cash flow level? [Foreign language] Thank you, João, for your questions. I'm going to try the first two questions and André can take the third one about the cash flow cycle. Going back to the strategy of supply the market, as I said, the quarters are not necessarily everything that you see as sell-in also becomes a sell-out in that same quarter. The retail has their inventory depending on the channel that could be of up to three months of products. We also have a time between our lead time. This makes the sell in of quarter to be better reflected in the follow-up in the upcoming quarters than in that quarter itself. In this first quarter, we saw a sell in of 2% in sell out. We saw a growth of 2% in the sell out. Of course, we celebrate this, which means that the game has been gaining traction, gaining momentum, gaining market share. The market is looking for our projects more than it did in the past. Our sell in was designed in a way that our channels and our clients were supplied for this second quarter where we are going to be launching the new collection. Naturally, the inventories of our clients and our own inventories will be reduced so that the new collection can be sold. An error would be to keep too much of a large inventory in-house because after the new collection is launched, the older former collection is not desired by consumers so much anymore. You need to end up giving discounts to sell it. This might eventually become a write-off at the end of the year in the business balance. Trying to prevent this from becoming a write-off, our decision was to anticipate as much as possible the selling of this current collection, ensuring that the new collection will arrive with our inventory levels much smaller. With a smaller discount level, risk of having to give a discount and as a result, a write-off in the end of the year. On the other hand, we want also, we wanted our clients to have an option to attract consumers to a new collection. We also wanted our clients that even if they decided to reduce their inventories to receive faster the new collection, that they were supplied. The benefits that we expect are first that our current collections inventory is lower. So we won't have to practice discounts and we'll have a smaller risk of write-off. We wanted that our clients' inventories are a little bit higher, like we're talking about 10% that it would be. We're not talking about anything extraordinary. This 10% extra inventory, surplus of inventory, we ensure that our clients' inventories are enough to supply the market until the new collection arrives. In the second quarter, when the new collection arrives, from the third quarter and on, we will normalize these dynamics. If necessary, we can reduce the sell in. If there is no excess and the sell in becomes the sell out for the upcoming quarters, we will continue with the sell in that we planned. This is a strategy that we tried to implement to avoid the problems we saw in previous years, to avoid write-offs, to avoid stock out in the market, and to avoid larger discounts throughout the year. That the new collection does not arrive, that consumers do not find the old collection anymore. In between the two collections, we are talking about 5 million pairs of products in a quarter where the sell out was about 45 million and the sell in was about 50 million. This is the difference between the sell in and the sell out. This is the story of seasonality or supply. As for the second quarter, we're going to be the sell-in probably growing because we're going from a level of 15 million pairs in the first half of the year to a second 15 million pairs per month in the first half of the year to the 20 million pairs per month in the second half of the year because we are going to be supplying for the summer, which is where we have our best sales levels in the year. This is a supply. [Foreign language] [Foreign language] Exactly. We also have a learning curve. This did not happen. Usually, in between collections, we lose market share. When we analyze it, that market share loss was because we were not able to match the new collection arrival with the end of the inventory of the older collection of clients, which leads to market participation or market share loss. Based on this learning, is why we decided to try this tactic. Again, we are going to manage both sell-in and sell-out levels and make sure that they are aligned. Not necessarily quarter by quarter or month by month, but throughout the year, they should be in line. As for the international markets, we obviously cannot give you any kind of guidance of what kind of volume we expect, what kind of profitability we are looking for. What we can say is that the current volume and the current profitability is not what we expect for the international operations. Obviously, we expect to regain the scale of volume that we lost over the past three years. In Europe, we see the first signal of recovery. As André said, it is very early in Europe. The good season for us starts in the second quarter. Having a first quarter, we can already see a 5% growth reflected in both sell-in and sell-out. It kind of signals to us that we can expect some growth. We expect that this is only the first step. We expect that Europe is going to go back to the volume sales levels that it had in the past. What we know is that in Europe, consumers have already purchased more of Havaianas in the past than before. Clients used to sell more Havaianas. We do not have to build a brand. The brand is well known. Consumers like it. We do not have to create a consumer experience. We just have to come back to supplying the market, having a more competitive portfolio of products, having a better pricing point because we have made a few mistakes in the past. We are also executing all of that. We have to execute this well in each one of the points of sales in Europe. Europe is already showing very shy signals of recovery, but it is very below what we expected to be in the future. Also for the distribution markets, we are not comfortable with the profitability and scale levels of the international markets. This is one of the biggest, if not the biggest, priority in the business right now. One of the biggest priorities or the biggest priority is to recover the scale of volume sales for the international operations and regain the profitability. [Foreign language] Excuse me, Liel, just to complement this question about the international operations, obviously, we do not give guidance and we will never give any guidance. What we can say strategically is that we do not see any kind of structural reason to believe that our margins will be smaller than were in the past. I showed you the EBITDA graph. When we look at the performance loss of the EBITDA margin, a big percentage of the decrease was due to the scale, not to the efficiency. The efficiency was positive. The efficiency effects were positive. We imagine if we regain the scale, at a certain moment, we should always be benefiting from the efficiency improvement that we have seen and that we are having at the moment. The right way to think that is that we do not have any structural reason that is going to oblige us to have a smaller margin. Nothing has changed in the market, but our scale, for the reasons that we already know. That's why this is the focus and priority that Liel mentioned to go back to the size of the operation we used to have. As for the cash flow cycle, since even we have consumed a little bit of the working capital in the first quarter, this does not affect at all our cash flow consumption cycle. We were at a pretty much equal level from what we saw in the fourth quarter 2024. What actually means that our working capital is due to a higher level of receivables, but also to a higher level of revenue. We didn't extend our receivable time. In practice, what we see is that we collected all the receivables from the fourth quarter. Seasonally, this is what happens. We sell seasonally in Brazil much more in the fourth quarter. In the first quarter, it is much more of a quarter where we are going to be collecting these receivables from the fourth quarter. Obviously, we also issued new receivables. This has not changed our expectation of the receipt of our receivables, or there was not a growth in the default from clients. It is just because of the higher sell-in, because we anticipated a higher sell-in to the client. From the perspective of health of our cash flow, it remains absolutely healthy and much, much better. It is impossible to compare to what we saw in 2021. If you compare in days, right now, we are much less exposed to the risk we had in 2021. Just to give you a number, the inventory time was close to 130 days in 2021. Now we are close to half of that, about 60 days. We had a clear evolution, and now we are inside a stabilized and normalized level. We have no concerns with the cash of the business. [Foreign language] No, I was not concerned. I was just wanting to understand if these were the levels that he wanted to sustain. Just one point that remained about Brazil. I understand that this strategy is positive for the gross margin. The idea is to keep this level of gross margin in Brazil. Can we understand this gross margin level as sustainable for Brazil? [Foreign language] The relationship you mentioned is correct. It depends on the window you are comparing, of course. A part of the scale effect compared to the past is the recovery of volume. Because we saw a compression in sales, a decrease in sales, and we have been regrowing. This is a structure. A part of this, which is the anticipation of inventory that we sold to the clients because of the tactics we mentioned before, this also has some sort of benefit to the margins. You can make the math of how much these 5 million pairs contributed to a higher dilution of the fixed costs. Because if we do not have the same volume from now on, considering that we are going to equal the sell-in to the sell-out, then this gross margin will not be sustainable. This math has to be done, depending on whether or not we continue our selling levels. Again, we do not give any margins guidance, but it is very hard to make an estimate because there are several variables that we do control, like oil prices, petrochemical prices. We do not see building blocks that are as clear as to allow us to say that these are going to be our gross margin expected from now on. We are not certain of that, and we cannot offer the certainty. Everything else remaining the levels where they are, this gross margin does not have any other kind of effect that is the result in addition to these plus 5 million pairs that we sold in advance. This is a little bit of the uncertainty that we see from now on. The positive aspect of this story is that we have on the radar other actions. We are always studying other actions to gain even more efficiency at our factories that we might employ or deploy at any moment. This also should allow us to gain more efficiency over time and as we scale up our operations. Again, I cannot give you numbers. [Foreign language] I appreciate you answering my question fully, and congratulations on your results. Our next question is from Pedro, sell-side analyst with UBS in Brazil. Vinícius, go ahead. [Foreign language] Good morning, everyone. Thank you for taking my question. I'd like to separate a little bit the pricing topic. I'd like to hear from you, what do you see as the elasticity of pricing to consumer and a little bit to talk a little bit about evolving the pricing per pair, a little bit about inflation thinking of the portfolio and mix. As for the U.S.A. tariffs topic, you mentioned Rothy's, but is there any kind of change in the tariffs topic that might give competitive advantage to Havaianas in the future in the U.S.? [Foreign language] Vinícius, thank you for your questions. I will start addressing your questions here and I can complement my answers. From the pricing standpoint of view, as you can see, we have had a discipline of focusing in the channels and in the markets where we have a better profitability. It is not necessarily to pass on a price increase to consumers, but also to make our efforts and our investments and our focus where we have a better profitability. We used that in the United States, where we had this migration of volume, where we had an off-pricing, and we moved it. We migrated into channels where we have better profitability. This was also made in Brazil. When we see in Brazil that our volume in specialized shoes and in our own stores has been growing, this helps in our margins because the portfolio there is more innovative, more premium, and the pricing point is also higher. This helps us in our results. This pricing strategy, due to our channel and market strategy, is aligned with our strategy, pricing strategy of aligning our pricing to what consumers can afford. We do not have a strategy of pricing our products above the inflation. We believe we have to keep our prices aligned with inflation and what consumers are spending possibilities. This was our strategy in 2024, and we will continue it in 2025. We will try to regain the costs that we lose due to inflation. On the other hand, we are going to try to have a strategy for channels and markets that brings us results of a better margin per pair. We can already see this happening in several geographies and channels. This is my vision about pricing. As for the elasticity, price elasticity, we have not seen this yet. Our sell-out grew 2%, and we did not observe any negative elasticity in pricing. Throughout the year, we are going to be applying our pricing strategy aligned to inflation in Brazil. We are going to continue our strategy of focusing in the more profitable channels and market, always providing that this does not impact the consumer spending possibilities. Because André mentioned, scale is fundamental for our business. We're always going to be seeking this balance between those two dimensions to ensure that we have the portfolio, the channel, and the price, which is the most competitive, as competitive as possible for the market. As for the tariffs, for how this affects Havaianas for the U.S., we're not so much impacted because Brazil right now is in a less problematic situation compared to China, which is where Rothy's produces its product and the largest majority of manufacturers produce the products. We produce in Brazil to export to the U.S. At first, we do not have a very big negative impact. The potential of a positive impact is that our producers bringing their production from China to the U.S., we have to wait to see what's going to happen with this dispute. If this is going to be real, the final tariff that's going to be imposed, and if the manufacturers will pass on this increase to the pricing in the U.S. Right now, we don't see any benefits for Havaianas. What we do know is that this is not going to affect Havaianas negatively. We know that for sure. [Foreign language] The only thing I'd like to add here, André speaking, is that any kind of effect of net sales effect per pair that we can do in a sustainable way, because I think your question is more like thinking long term, this should come through the items that Liel mentioned. It's a mixed portfolio and also a strategy. We do not believe it's something that we have already exercised in the past to have a substantial increase in prices above the inflation, which generated all of the consequences that we have found out. We found out that this elasticity in pricing exists, but we understand that sustainably growing our prices above inflation in the long term is something that we don't think yields good results in the long term, which doesn't mean that we are not going to innovate and have a better mixed strategy and a channel strategy that can provide us better profitability over time, but always being super careful about the price. I want to make this distinction between pricing and the strategy to not generate the perception that we have a capacity of increasing prices too much above the inflation in the long term, because this could be very damaging for the business. We do not have this intention at all. Thank you for your question. [Foreign language] Thank you for taking my questions. The next question is by Gustavo Fratini, sell-side analyst with Bank of America. Gustavo, go ahead. [Foreign language] Good morning, guys, for taking our questions. I have two questions here, relatively simple questions. What can you see in terms of a sell-out after this strategy that you have implemented? Has your sell-out been accelerated? Has it been impacted anyhow after your strategy tactic? Can you give me some more details about the discussions about finding partners in the U.S. market and how to conduct the turnaround of this operation? [Foreign language] Hey, Gustavo, thank you for your questions. Good morning to you as well. I will take the first few questions. This sell-out, about the sell-out, this is a strategy. The tactic is something that we have just deployed. We cannot have right now an understanding, a full understanding of how much this selling will affect, because there is a time for this product to arrive at the clients and then to the stores and then to the shelves and then to generate a higher stimulation. Here we're talking about a compare something that is a little more accelerated compared to the past. It's not completely different from what we have ever done before. We will only be capable to read the effectiveness of this tactic movement in maybe one or two months when we start to see how this is going to produce or what the results will be in terms of our traction or momentum in our sales levels. If this is going to, we are going to maintain the sales levels or if this is going to accelerate our sell-out without producing any kind of effect. This is something that we cannot anticipate right now. We have to observe this throughout the second quarter mainly. Because this historical loss in market share happens in like between March and April, we do not have data yet on that. We need to go through this period before we are able to answer this question. About your next question concerning business partners, what I can anticipate is that we have had several conversations in the U.S. We went to several prospect partners to understand, to have information, to have data, and to feed our ideas on what would be the best path to pursue in the operations in the U.S.A. What I can tell is that there are several businesses, many companies that opened the doors to us and are interested in having conversations with us because of the relevance of our brand, and maybe because of an appetite that Havaianas seems to be a brand that is not very well developed on the side from the standpoint of view of volume and market share. This makes us very attractive, and therefore many companies are interested in listening to us and interacting with us. Obviously, these companies are also interested and willing to make eventual changes to their business models to fit into a business model that we would like to have in our operations in the U.S. What I can tell you is that there is a certain receptivity on the part of the businesses in the U.S., but that does not make it any simpler for us to actually make a decision and do like the first movement. There is a lot of room for us to reach out to partners, but the materialization involves a lot of risks to be mitigated, discussions to be made, conversations to be carried out. We are in this process right now. We do not have any novelty to offer to you right now. This is the stage we are at right now. We have a prospect for the future, but we will keep working on that, and we have no news to announce at this time. The Q&A session is now closed, and I would like to give the word to turn the floor over to the company, to Liel, for his final considerations. [Foreign language] Before anything else, I'd like to thank you for your participation and for all of your questions. I hope we have been able to answer all of them and to clarify. I think this quarter shows the materialization of our strategy. We have been pursuing it with focus and aligned with an alignment between our supply chain, financial, and manufacturing areas. This means that the company has finally found its ideal management where we can ensure consistent performance in the future. We have a clear strategy in Brazil with focus on the channels where we have smaller penetration, with a clear definition for our portfolio. We have a strategy for recovery of our scale in Europe, mainly and all in internationals, and the profitability in the U.S. We have a clear strategy of managing our operations through the improvement of continuous improvement through efficiency or supplying our products to the market. The summary of the strategy that was presented last year, I believe that this first quarter consolidates and proves that we have achieved all of that and confirmed that the strategy has been implemented correctly with the correct discipline and focus, and they already yield some positive results. Thank you all very much, and see you next quarter. This videoconference for our prepared results for the first quarter of 2024 is now concluded. The investor relations department is available to answer any further questions and queries. Thank you very much to the participants, and have a good day.