Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Grendene's webinar Q&A to discuss the results of the Q3 of 2022. Today with us, we have Mr. Rudimar Dall'Onder, the CEO of the company, Gelson Luis Rostirolla, the Deputy Chief Executive Officer, and Alceu de Albuquerque, the Investor Relations Officer, as well as the company's main managers. We would like to inform you that the press release of the Q3 of 2022 is available on the website ri.grendene.com.br in Portuguese and English. We would like to inform you that this event is being recorded and it has simultaneous translation into English. During this event, all participants will be able to listen to the presentation. Afterwards, we will begin the Q&A session, when further instructions will be given. Before proceeding. Good morning, everyone. Our operator has been having problems with the audio, so I'm gonna start. Before proceeding, we would like to clarify that eventual declarations done during this presentation about the perspectives and estimates, operations and financials of the company are mere forecasts based on the expectations of administration regarding the future of the company. These expectations are highly dependent on the market conditions, the economic development of the country in general, the sector and international industry. I would like to give the floor to Mr. Alceu de Albuquerque now. Please, you can proceed. Good morning, everyone. I would like to apologize for the operational problems. Sometimes technology kind of plays tricks on us. Welcome once again, and thank you for your presence in our video conference for the presentation of the results of the Q3 of 2022. Before starting with the numbers of the quarter, I would like to tell you a little bit about the status of some of our projects and processes that we have had and we announced before. In the end of last year, we have disseminated the expansion of the production capacity of EVA in our Crato unit. The end of the completion of the works, foreseen for March 2023, and we are building a second plant, a second factory with 12 sq meters that will triple the capacity of production of our EVA products. We moved from a 15,000 pairs per day production to 25,000. We have acquired 16 new EVA injectors. This new unit located in Crato, as you can see in the last picture on the right, will have 4,038 photovoltaic panels with a capacity to generate up to 3 million kW per year. This expansion is the result of a demand for EVA products that we have observed since the end of the last year. These products are more value-added products with higher lightness. We increase lightness and comfort. From March onwards, we'll have this new capacity of 45,000 pairs production. Talking about the process of internationalization of the franchise network of Melissa, we are assuming the management of this franchise network with the objective of getting Grendene closer to its final consumers and to strengthen our relationship with the franchisees, have more control over the channel and to accelerate the capture of fashion trends and other trends. How can we do that? Since June, we have started to hire people that will assume the activities of the master franchisee. We have 71 employees hired out of 107 forecast. The 71 employees are inserted in the main verticals of businesses like expansion, network management, training, capacity, franchise marketing and technology and retail technology. Since it has been announced, we have met with all the franchisees and we have realized 106 meetings to build action plans to improve conditions, business conditions of our franchisees. Even though the contracts with the master franchisor will end in February next year, since November this year, Grendene will start to manage the network of franchises. Giving the numbers, we will end the quarter with 389 stores. We are in October, we have 394 stores, and we will have 410 stores until the end of the year. Melissa Clubs represent around 60% of sales in Brazil. Melissa sales in Brazil. Talking a little bit about our Bergamotta Labs. It's our lab of innovation. Here I have some of the projects that we have been testing at the Bergamotta Labs. If these projects prove to be viable economically, the idea is to scale this project. The first one I would like to share with all of you is the project of the franchise network of Rider. We inaugurated on the 26th, two days ago, the first physical store of Rider. It is located in São Paulo, in a building called the Copan. It's a very different building. It's inserted in a very highly cultural environment with a strong synergy with the profile of the products that we will sell in this store. It's more value-added kind of products that we are gonna sell in this store. The objective of this project is firstly to test the viability of a franchise, a Rider franchise, just like Melissa, to get Grendene to be closer to the final consumers and to strengthen the Rider brand. If it proves to be very successful, this project, the idea with this project is to scale that for the franchise network. Talking about the other project, MVP mode is Melissa Love Spot. It's the smallest franchise possible of Melissa. It's a unit that's completely autonomous, where consumers can actually purchase Melissa product by themselves through a self-service with a virtual reality experience. This person will kind of put on the virtual reality goggles, and they will like navigating inside a virtual Melissa store. This project tries to address two main factors, two main expenses of Melissa franchise, which is the expenses with in-person physical stores and employees. This unit costs. It just has 6 sq ft. It's a very small space that reduces a lot rental costs. The other expense reduction is that we don't have any people involved in this operation. Consumers will navigate virtually in this Melissa store. This person will buy online, and then they will receive the product at home. The pilot is already on from September, October to December. Afterwards, we are gonna evaluate the viability of scaling this model of business. Talking about a great conquest we had this quarter is we were one of the finalists in the finals of the top ten award, the 100 Open Startups final. It's a award about innovation, and it's a recognition award of all our work, the work that Grendene has been doing in the startup ecosystem. We had a program that's called Grendene Aproxima that tries to get Grendene closer to the startup environment. Monthly, we receive businesses, companies here at Grendene, where they pitch, and we evaluate how can we relate to the startups, either through equity or through contracting their services. We haven't realized yet any types of financial investment on share to share on that. Even though we have signed up with a few startups, we haven't advanced in purchasing shares. We have lots of contracts with startups as service providers. In the item retail, the segment retail, we are one of the fifth most innovative companies in Brazil. Talking a little bit about innovation and moving to our e-commerce, it has been growing quarter-over-quarter. We have migrated our operations of our online stores to our own Grendene management in 2020. In February 2021, we completed the conglomeration of all the stores, and we have been observing a continuous growth quarter-over-quarter. In this Q3 of 2022, we observed a growth of 59% on the number of sessions when compared to the Q3 of last year. The number of new clients grew 68.3%. This is the result of our investment, a strong investment in performance marketing, and our objective now is to bring flow to our stores, to bring clients to get to know our stores, and afterwards, we can convert that into purchase. The influence of the growth of sessions is the GMV. It's a higher GMV. It's up 56.4% when compared to the Q3 of last year. General penetration of the channel is still a little bit low, but it has been steadily growing. The penetration of the e-commerce got to 2% ago, when compared to 1.5% on the Q3 of last year. When we look at Melissa's penetration in this channel, it has a higher penetration because it has products with more higher added value. It has a different type of audience. It has an 8.2% penetration in the channel. In the sales in the domestic market, 8.2% of Melissa's sales comes from the e-commerce channel that has presented growth on the Q3 of last year. This percentage at that time was 70%. Our objective here in medium and long term is that this penetration in the online channel that nowadays it's only 2%, goes up to 10%, 12% in the medium long term. It's a penetration that is supposed to be below the industry, the footwear industry, because they are on 20% already. Given the profile of our products, most of them are of interest to C, D, E classes, they have a lower ticket. These products have lower penetration because when you account freight costs, for example, in relation to Ipanema shoes, 10 BRL of freight, they kind of increase a lot the costs. Regarding Melissa, which has a higher ticket, average ticket, sometimes a person buys it and has a free delivery, and then 10 BRL sometimes is the cost of delivery. That doesn't change a lot the interest of the consumer. Melissa and some of the Rider lines has a penetration that's higher. When we look in medium term, the penetration should be 10%. Reminding that this channel brings margins that are higher for the company when this channel is matured. Looking here, our year perspective, we have sold to more than 245,000 clients, an increase of 101% compared to last year. We have 560,000 pairs sold, an increase of 115%, GMV of BRL 48 million. Remembering that the Q4 is the strongest one for online sales when we have Black Friday and then we also have Christmas and Children's Day, which was a very positive date in our calendar, not only in our online channel, but also in retail. The number of cities covered reached 4,074 cities. We are in a process of integrating our main marketplaces with Magalu, and we have integrated in the Q3 with Netshoes and Fit. Now on the Q3, we are going to integrate with Shopee and C&A, Riachuelo, Renner, Via Varejo, and Zattini. You have an idea on how this percentage of sales is in these channels. The marketplace channel has a low representativeness, 2% of online sales. The omni-channel of Melissa, 6%, and the rest, 96%, comes from online stores themselves. A status of our Grendene Global Brands, I think it's really important here to talk about everything that we have accomplished, in this past nine months since Grendene Global Brands has been created. It didn't exist in January 2022, and from January 2022 onwards, we have structured diverse processes. When we talk about people, what have we done in the past nine months? We put a high performance team together with capabilities and complementary skills of highly skilled people. We brought global brand for the digital commerce of Crocs, Nike, New Balance, people with a very strong background and deep knowledge that adds a lot of value to us. In terms of processes, we have completed in the Q3 the transition of our logistics operations of Grendene USA to a third-party company that will actually do all the logistics of the e-commerce. Also the wholesale and retail. We didn't have during this transition process, which is a very delicate process, we didn't have a single stop day. The transition ran very smoothly, and now we manage to have a service level with a lot of quality, where delivery times are above 99%. The logistics of our business is running really impeccable. We have completed the IT structure, the front end. When we set the BI team in Portalegre, we completed the structure of technology to serve independent channel and the connection between retail and GGB to allow the flow of orders and requests. We have structured all the processes and governance of the company. We created committees, we have defined policies. The process' part and systems is highly advanced. We talk about brands, we understand that we have global brands and but with a local presence. We have finished the positioning of the brands and definition of the mix of products, and we have began with local campaigns in the U.S. and in China. This is very important to have this local cause. Because we have these campaigns using local agencies, using celebrities and actors and local personalities, local people who speak really the language of that region and what that can bring as a benefit for GGB. The content of this is being developed locally, and of course, it had a greatest engagement that we had twice as large as we had in the past when this was not produced in a local way. When we talk about the brand, we had many advances in terms of, for instance, Ipanema and Rider were relaunched on Amazon in the United States. Melissa is present in the main social networks, social platforms in China. Xiaohongshu, TikTok, Douyin, among others. We intend to repeat this work that has been done with Melissa to include also Ipanema. In terms of sales result, as I mentioned in the previous quarter, this year's sale in the main channel that is in the retail market, this is a reflection carried out by Grendene last year. The results that we had in the commercial team of GGB, they're having with the retailers this year, we're going to see into next year. What do we have as a feedback of all these dialogues? First of all, the North American market is in a challenging moment. The retailers have a large inventory of products, because during the pandemic, in the beginning, we could observe a rupture of the supply chains, and that made many retailers to be without any kind of inventory to offer to their clients. As soon as these supply chains were reestablished, as they saw a strong demand, they made larger orders, so they had high inventory confidence that there would be consumption. This consumption did not come. They have high inventory, and this is something to be careful about. Another thing is to try to reduce the number of manufacturers. We can see we have good hopes for 2023. Where can we see the reflex of GGB? In the online channel. The online channel, just as it showed in the Q1 and Q2, a growth that is over 100%. In the Q3, our online channel has brought 274.4% when compared to the Q3 of last year. When we look to the percentage of accumulated growth in the year, we reach about 180%. In summary, at GGB, we can see a bit of the reflection of the online channel, of the activities and commercial decisions on that online channel. Wholesale channel, we should see the results in the next year. International markets, and here I'm mentioning particularly the U. S., they are in a complicated situation right now. We project a year that can bring growth, but it's something to be careful. Here, I only want to show you some examples of the campaigns we have had in China that shows the actors, the celebrities that appear here are Chinese people from that region that speak people's language, right? They have the features of the region. That's on the left. On the right, just a couple of pictures of our product because they are again present in Amazon. You know, Rider and Ipanema are in Amazon. Now getting into the figures of the Q3 of 2022. I would like to begin sharing a bit of the vision we had and what happened throughout the term, the quarter in terms of the results of this Q2. We mentioned last time that we had a positive feeling during the Q3 because the volume of sell-in and sell-out was increasing from January 2022. We had a very weak month. Throughout the quarter, we saw there was a decrease in demand due to the challenging economic scenario. You know, high rates, high level of unemployment, that although is decreasing, it's still high. All this reduces the available income of the consumers, and that creates a reduction in the retail sales. This challenging scenario has brought two new elements that have brought more complexity to this. The first one of them is political uncertainty, and the second one is the temperatures below normal in the south and the southeast from the end of August 2022. If we look at the temperatures from August until now, we have seen temperatures below the average in these two markets, and this is very relevant. For you to have an idea, here in the south, we have an expectation of frost next week, and we are in the middle of November, and we are expecting a frost. Even though in this environment of lack of trust and contraction, we have kept the number of pairs stable, about a growth of 0.7% when compared to the same quarter last year. That growth was the domestic market has increased in 2% and the foreign market has been reduced in 5.2%. When we take a look at the domestic market, the growth in volume has come from the Division One brand. Which brands are these? All of the brands except Melissa. When we look at the Division One brands, this growth is very much concentrated in Ipanema, and we were right with the Sempre Nova collection that was launched in the second semester. This collection has already sold more than nine million pairs. Ipanema with a very positive result and the feminine division with a very positive result. Melissa had a decrease in the number of pairs embarked in this quarter. When we look at the revenue, the revenue has grown both in the domestic market and the foreign market. In the domestic market, both Melissa and Division One brands have been increased. In foreign markets, we also observed growth. As the revenue grows 11% and the volume is 7%, we have an increase of gross revenue from 10.4% in the period. When we look at this in our market and in the domestic market and the foreign market, the domestic market grows 9% and the foreign 14.7% in reais and 13.9% in dollars. The recurring EBIT has decreased. It reached BRL 89 million, and the EBIT recurring margin has decreased to 12.5%. These are the two main impacts on the recurring EBIT margin. The first is the pressure of the raw material that I'm going to show you how this dynamic is going on. This is the main impact. We had an increase of operational expenses coming from higher commissions, freights, publicity, and also investments that we are making today that consume more resources than generate nowadays. In the future, we believe that this will bring a higher EBIT and revenue for the company. About the net profit has grown 45% when compared to the Q3 of 2021. Strongly impacted here by the financial results. Our net margin was 20.3% and has come to 27.8% in the period. The net profit in the financial results have grown BRL 110 million in this semester. Let's talk a little bit, as I mentioned, about the COGS and the raw material. That's where we observe the main impact, both in the gross margin and the EBIT margin. What have I tried to bring to you here? How much each one of these components of the COGS represent of the net sales of the company. Here, first, you see that in the Q3, we have an adjustment because we had a recurring effect due to the transition of the activity and distribution of Grendene USA to GGB, where the operational activities in our operator in the United States will no longer be executed. We had 35,000 pairs there, and these were sold either to GGB or to other clients with a price below the cost. The revenue of these pairs was BRL 19.7 million, but their cost was BRL 21.5 million. As this is a non-recurring event, we have isolated these events to make the data interpretation easier. Just to clarify, the greatest part of these 335,000 pairs, these were pairs that were recovered from the old dealer of Melissa in the U. S., and they were recovered due to open debts that this distributor had with us. Now we can analyze the components that represent the cost of goods sold. If we take a look at the labor, the blue line represented 19.8% of the net revenue in the Q3 of 2018, 19.1% in 2019, and 18.6% in the Q3 of this year. We have maintained we were stable according to the period in the pre-pandemic, or we decreased in this case. If we look at the OGF, what is the representation about the net income and revenues of the company? To remind you that the depreciation, maintenance, and energy. In the Q3 of 2018, it represented 11.1%. In the Q3 of 2019, it represented 9.9%. In the Q3 of this year, 9.7%. That is to say, other manufacturing expenses have consumed a smaller amount of resources than previous to the pandemic, not only the OGF, but also labor. Now let's take a look at the raw material. It used to consume 23.1% of the net revenue, both in the Q3 of 2018 and 2019, and in the Q3 of 2022, it represented 30.2%. That is to say, it is an increase of 7.1 percentage points. That is precisely or very close to the component alone that is harming our gross margin, because in the Q3 this year it is 41% compared to the previous years. Now let's take a look at the cost of goods sold per pair. It represented BRL 2.7 in 2018, and then it represented BRL 2.98 in the Q3 of this year. It is an annual average growth of 2,059% per year. Let's take a look at the OGF bar. It was 151 in 2018 and 154 in this year. That's an average growth of 0.9% per year. All these volumes, they show an annual growth that is less than 1% on average. It was 16.4%-20.26%. What's the component that grows above the average growth in the price, raw material? With these two graphs here what I'm trying to show you is that the impact of our COGS and the impact with the reduction of the gross margin is isolated in the component raw material. In the other two components of labor and other manufacturing expenses, we are more efficient today than we were in the pre-pandemic period. Okay, but is not the raw material, is it not receding? Yes, it is. Here I can show you this graph. Here I bring the component of the PVC compound, which has the greatest representativity within the COGS of the raw material. The PVC resin between January of 2020 and September of 2022, it has grown 70.1%. It has already receded 35.9% in this year. Its peak was in December 2022, when it reached 165.6% growth from January 2020 to December of last year. Since then, it has been decreasing about 36%. The plasticizer has increased from the beginning of the pandemic until now. It was increased 80%. This year it represents a decrease of 3%. Soy oil, it grew 106% in the pandemic, and this year it's decreased 2%. Labor, in this year, 9.6%. We are just getting the PVC compound, that is the resin, the plasticizer, and soy oil, among other components, but these are the most representative ones. During the period of January 2020 until now, it grew 64.4%. In this year it has already decreased. Also, this will not show the improvement in your gross margin. There are some elements here during the pandemic. Our median average of stock of raw material. We used to have 30 days-45 days, and during the pandemic, we increased up to 90 days. There is a delay between the decrease of raw material costs in the market and the quotations we have received. That kind of reflected in our COGS. Just for you to have an idea, our PVC compound that represented a 17.3% fall during the year. Our average inventory cost of the PVC and which is what's going to influence the COGS, it represented a decrease of 9.9% during the year. Between the price and our average cost in our inventory, there is a delay between these two items in the reason that explains why the COGS didn't increase our gross margin is because of the average term of inventory. Grendene has some sort of a seasonality in our history. On the H2 capacity and on the H1, we have a use of the factory that's a little bit smaller. What do we do to keep the factory in a certain level of stability regarding capacity? On the H1 of the year, we produced strategic inventory, which are the products that they have no link with fashion, trend, design, they are basic lines. We produce these products on the H1, and when the factory use is smaller, to sell them, to ship them on the H2, when this use is higher. What happens is, from the 44 million pairs we ship on the Q3, about five million pairs are of this strategic stock inventory that are produced in the H1 of the year. They impose a higher cost of inventory that's. That influences the 9.9% decrease. This five million represent about 13% of the pairs shipped. The average term of inventory of raw materials for shipping strategic stock are two elements that justify this delay between raw material prices and COGS. The third element with the supply chains, global supply chains are becoming stabilizing. Our objective is to go back to our medium-term inventory of 30 days-45 days. We used to have a higher term. Now what we have been doing, we buy less raw materials for two reasons. One, because firstly, because we wanna reduce the average time of inventory for these levels to go down from 90- 45. As raw materials are consistently decreasing since the beginning of the year, there is no point in buying a high volume of raw material because prices can decrease. I buy smaller parcels to influence the cost. These three reasons are the main reasons for the decrease of raw materials prices not being observed or influenced in our COGS. When is that going to happen? Probably on the Q4, when we are supposed to act more intensely. We are gonna feel more intensely the impact of the decrease in the prices of raw materials there. If it's not clear, in the Q&A session, I can explain a little bit further about it. I mentioned that what has impacted the COGS in raw materials and our operational expenses. I'm gonna have recurring operational expenses that grew 15% on the period. 14.7% in the periods, and they represent today less than used to represent at the past. Nowadays, they are 28.2% of our net revenue when compared to the Q3 of 2018, where it used to be 30% or 28.7% in the Q3 of 2019. Why these expenses have been growing when compared to the Q3 of 2021, 2022? It's firstly because many initiatives are not being done anymore. They were not done during the pandemic, like travel expenses, conventions, participations in exhibition shows. These things didn't have during the pandemic, and now they are back. They are happening again. During this period of pandemic, when Grendene started to invest in businesses that we didn't have before, and that we are investing now to be able to reap the fruit in the future. What is GGB? It's our e-commerce department. This department didn't exist in 2019. Nowadays, it accounts on with 150 people. But temporarily, the online business, because it's not mature enough, it will consume more resources than it generates. It's 150 people that we didn't have before. Now we have this highly structured team ready to escalate the business further, to move from 2%- 10%, 12% with an incrementation in margins, and expenses if it's needed. This is an example of a business that we have been investing on. It's been making us expend more money, but in the near future, the EBIT and revenue to the company. They will bring EBIT and revenue to the company. Another example, our innovation lab, the Bergamotta Lab, didn't exist one year ago, two years ago. Nowadays, it has 20 people and many projects, MVP projects as the ones I mentioned before. The franchise network of Rider, the Melissa Love Spot, which is that franchise, the autonomous one. We also have other projects that I didn't mention to address the pet market. We are developing products, the smart leash for the pets. It's a smart leash for dogs and cats owners, monitor the activities of their pets. How long these pets have walked, licking, scratching themselves, drinking water. It's a product that will try to address a market that has a BRL 51 billion value. The thing about this product is that it will impact on the sales of this product and recurring through a subscription, because to have access to the app, you need to sign up. We have talked about it in our platform called Catarse, to test it, to test if it's attractive or not. It was really successful, this project. We have another project for the pet segment that are feeders and toys with a very different material to address also this market, this pet market, which is huge. All these projects have been tested, and we know that we don't know if they are going to become scalable products, but if they become, they have a huge potential to bring revenue and EBIT to the company. These are just some of the projects we have been doing at the Bergamotta Labs that temporarily consume more resources than generate. This team is our P&D of the pharmaceuticals. This is the one of Grendene. Other doubts, I mean, costs regarding publicity. There is low historic levels, but we are investing in the strengthening of our brands. We hired the singer Iza to be our spokesgirl of the Ipanema collection, Sempre Nova, always new. These are initiatives, our brands. Publicity costs are a little bit higher, but they are still below the 6.4%-6.5% that we used to have before the pandemic. This is the scenario of the Q3. When we talk about the accumulated results in the year, the volume has grown to 104.6 million. In the domestic market, the accumulated volume went down 2%, and the foreign market has a growth of 16%. I would like to remind you that on the Q1, it was a very weak quarter. The volume in the Q3 of the domestic market went down 30%, and we have been recovering from it throughout this year. Just reminding you that why did we have a weaker Q3? Firstly, Christmas sales were below expected. To avoid readjustments in December that we announced. Thirdly, because a comparison basis regarding January 2022. The revenue, gross revenue increased 15% in the period. Domestic market increased 13.7%, and external 18.6%. That shows we are presenting growth in revenue in the domestic and external markets, especially here because of price readjustments that we did in January, February this year. The recurring EBIT of the accumulated this year had a similar behavior of the Q3. It will decrease 36% and the margin from 3.4%- 8.7%, the recurring profit will grow because of the financial results that had a good performance in this nine months, the first nine months of this year. Here, I will briefly go through because the behavior is the same. Like labor and OGF, they are always stable regarding what they consume from the net revenue, and raw material will have a higher representativeness, eight percentage points when compared to 2018. Same thing with the indicator, labor plus OGF plus raw material, we have the highest growth, either in an average annual growth of 19.9% during the year when compared to the gross revenue, 5.8%. Operational expenses that are recurring grew in regard to the last Q3 of last year, associated to what I mentioned before. It's the same for the accumulated of the first nine months. We still are lower than the pre-pandemic period, where operational expenses used to be 32% or 30% of our operational revenues. Talking a little bit about our portfolio that we call investment committee, that we approved in the end of 2019 to invest in assets that are non-traditional banking and federal resources. This portfolio ended the quarter with BRL 481 million. 80% of this portfolio used to be on the sub-portfolio of real estate development projects, 11% in variable income. Our position in Vale represents 11% of this BRL 481 million. We used to have a position in Cyrela throughout the quarter, used to be our highest position, about BRL 100 million, but we don't have it anymore since it's lower in dividend. The other investments of the portfolio are the ventures and figures. How is the development, the performance of this portfolio since the beginning? The complete portfolio has the profitability of 92% during the period, which is the same as 452% of CDI. When we're getting to these portfolios in detail, the projects and real estate grew 44%, representing the private equity portfolio grew 226% of CDI. In variable income, 358%, which is the same as 1,000% of the CDI. Talking a little bit about dividend distribution, the net result of the period was BRL 365 million. In this BRL 365 million, 152 come from fiscal benefits, and they have to be stored in reserves. BRL 213 million, discounted 5% of legal reserve is BRL 10.6 million. We will have to distribute BRL 202.4 million. As we have already distributed BRL 109 million in the Q1 and the Q2, we have left to distribute BRL 93 million. How are these BRL 93 million going to be distributed? 59 million will be dividend, 34 million JCP, JDB. These BRL 34 million are gross. We deduct 15% of taxes. They will become 30.9 million. We will pay 10 cents per share for the shareholders, for shareholders that had shares in November 3rd. Then from that date onwards, they will become ex-dividend, and we will pay them on the 23rd of November. That's the graph I like to show. The accumulated of dividend paid since 2004. The amount on BRL 4.4 billion since we opened our capital. What I had to say at the moment is that I would like to start the Q&A session. Thank you so much. Thank you. We are gonna start the Q&A session. Questions can be asked by audio, clicking on the icon raise hand available at the bottom of the screen. If your name is announced and you are requested to open your microphone, you can open it to ask questions. To send questions by text, all you have to do is to click on the Q&A icon at the bottom of the screen and then type in your questions. We'll have our first question now. It's coming from Renan Sartori o from Bradesco BBI. Renan, we are gonna open your audio so you can ask your question. Renan, you can proceed. Good morning, Alceu. I would like to ask about the master franchisor. What do you think is gonna be the effects on the operation as a whole? Thanks for asking. I'm not going to give you any quantitative data. I'm just going to explain the dynamics. Nowadays, as I said, we have 394 franchises. The master franchisor receives commission on the sales for these 394 franchises. The contract we have with the master franchisor says that in the end of the contract, we will still pay commission on the sales of those franchisees with more than five years of existence or they are going to renew their contract. When in February, when they end the contract, the 394 franchises that we have nowadays, about 216, the commission of 216 franchises of the master franchisors would receive, they are not going to receive this commission. What's the dynamics? When I internalize this process, firstly, the biggest objective is not finance. It's not regarding to finances. Even though we have financial gains, the main thing here, the main gain is proximity. It's to getting closer to our final consumers and also with the franchisor. Franchisee, sorry. But we are going to have financial gains because the reduction in these commissions that we pay to the master franchisor is higher than the increment we are going to have with expenses to structure the teams here. When this process is complete, and it's only going to be complete in five years after the end of the contract. Why five years? Because if the master franchisors opens a store or captures a new franchisee this year, they are going to still receive money until it makes five years' time. From March this year onwards, from the 394 stores we have today, 216 stores, we will stop paying commission on those. I don't know if that's clear. For you to have an idea of how big is this impact, when this process is complete, we are going to have gains of 3%-4% of net operational revenue of Melissa in this business because reduction of expenses in commissions will be higher than increments with the expenses with the team. I don't know if that's clear. Thank you. It's clear. Next question is from [Will] Ramos. He is asking two questions. Could you talk a little bit about the sales in October? And secondly, about costs. Can we expect a change in the high COGS trend in the Q4 of 2022? Thank you for your question. Starting with the October sales. As you know, Grendene produces. Grendene takes the orders to produce. So the sales in October were penalized of the sell-out in retail and distributors. What's the dynamic we have observed here? The sell-out of the distributors of the retail channel, they started increasing throughout the year. They grew almost every month, excluding January. From February onwards, the sell-out in these two channels increased. The first negative sell-out when compared to the same month last year, it was September. Why it happened? Because in September we are having like political uncertainties and temperatures below expected in the south and the southeast. When we look at this drop, it is concentrated in the south and the southeast, this drop in sales. With smaller sellout sales, our clients kind of started to not place their orders. Even though they have less inventory levels when compared to other years, they are waiting until the last minute to place the orders. In October we can see the orders we are receiving now. We can see an improvement and a recovery, a resumption in sales. The October sellout shows a very good recovery. The second thing was regarding the margins. We expect that if the scenario we have projected of implementing volumes maintenance, price maintenance of our products and raw material prices, if they continue decreasing or if they remain stable, yes, we are going to see a recovery in margins, a very positive one. Next question comes from Wagner Salaverry. Vagner, please. You can open your mic, you can proceed with the question. Good morning, Alceu. Good morning to all. I have two questions. The first question is within the internalization of the master franchise on Melissa. I understand you have seen a need for that change. I wanted to understand, considering you have already visited some of these franchises and you are accelerating this process, is it more clear that the opportunities is in having a stronger online campaign in the franchises? Will you act more on the consolidation, maybe change the owners of some franchises to accelerate the opening of more stores? Do you have a clearer idea about this? The second question is, considering the resources of the company and also the dividend payment policy, the election environment says that both will probably have taxes on dividends in 2023, or at least their proposal goes in that direction. I would like to understand if you have already indicated some change in policies considering the dividend and considering this accumulated cash flow, or is this still in standby with no change? Thank you for your questions. I'm going to begin with the second one and then I'll go to the first. Yes, we have this scenario of tax over the dividends. First, we are waiting for clearer definitions, and then we're going to assess this in a more concrete way to see what are the alternatives. In this sense, as I mentioned in previous periods, we have two lawsuits that are going on, and if we succeed, it will allow us to distribute part of this cash flow without having any kind of taxes. Or if there is any kind of tax, it will be by SUDENE. Instead of taxing 34%, we would have 15% and 25%. What is the situation of these lawsuits? The first lawsuit we have, that I'm going to mention, is the one that says that we could distribute the fiscal tax incentives at the state level without any kind of taxes. I'm going to read here the situation so you understand. Grendene had a partially favorable sentence. It contested, and it was accepted, and we have precedence with our requests in Grendene. The union asked for special resources for the Superior Court, and it was not admitted. Nowadays, the process has an open deadline, so the union can contest this. Therefore, we have been successful. The federal union has contested it. We have also. We won our part, and the union has not. Now we are just waiting for the legal deadlines. The second lawsuit that says that we could distribute cash flow, but instead of paying no taxes, we would pay the SUDENE index, where we have reduction of 75% of the tax, and we add the social contribution. We would leave a contribution of 34% to 16.25%. What's it with the decision of the courts? The court understood that a decision in lawsuit one, the one I mentioned before, would bring effect to this process and determine the suspension of that until the lawsuit number one receives the sentence. I'm not sure if I was clear. We have some lawsuits that are being attended to, but we depend on legal procedures. Regarding ourselves without the legal universe, let's say, if we have approved these years in the case of Bolsonaro being elected, it will increase the probability of sharing the taxes on dividends. Then we could start distributing dividends regarding to the months of October and November as we did last year. That would be the number one answer. Number two, regarding the franchises network. The greatest opportunity we have is in a management that is closer to the franchisees. We want to help our franchisees to improve their marketing costs, the cost of occupancy. Help them manage better their purchases. We have to show them, "This is what is selling more. This has more sales potential." When we improve the purchase process and we make this more efficient for the franchisee, they will have the least investment in capital. When we help them negotiate this, we increase the profitability of this model. When we are closer to the franchisees, we can also better capture the trends in the retail market. We see some opportunities. Yes, we do. We have some business plans being developed and some that are ready. I would like to remind you that we are going to anticipate the management of the franchisees from February to November this year. I think that's it. I'm not sure if I answered your questions. Yes, you did. Thank you very much. You're welcome. We would like to finish now our Q&A section. I would like to give the floor to Alceu Albuquerque for his final consideration. Once again, thank you very much for your presence here. In case you have any additional question, our team is completely available to answer your questions. I wish you a great day. This webinar of Grendene S.A. is finishing. We appreciate your participation. Have a great day.