Good morning, ladies and gentlemen. Welcome to Hypera Pharma's video conference for clarifications regarding the material fact released by the company on October 18. We have with us Mr. Breno Oliveira, Chief Executive Officer, and Mr. Adalmario Couto, Executive Director of Investor Relations, IRO. We would like to inform you that this event is being recorded. You may watch a video of the recording on the company's investor relations website, ri.hypera.com.br. Please be advised that all participants will only be watching the video conference during the presentation, and then we will start the question and answer session when further instructions will be provided. Before we continue, I would like to emphasize that some of the information contained in this conference call may be considered as statements of future expectations. Such information is based on the company's perception and is subject to known and unknown risks and uncertainties that may cause such expectations not to materialize or to be substantially different from what was expected. We would now like to give the floor to Mr. Breno Oliveira, who will begin the presentation. Please, Mr. Breno, you may proceed. Good morning. Thank you for being here for our conference call. Our goal is to talk about the company's working capital optimization process, which was announced last Friday. I'd like to start our presentation on slide three. The main goal for the company's working capital optimization strategy is to increase our cash generation by 2.5 billion BRL by 2028, and 7.5 billion BRL over the next ten years. This additional cash generation will bring greater flexibility for the company to drive value creation for its shareholders. The additional cash can be used to boost our organic and inorganic growth, to pay dividends through share buybacks, and can also be used to deleverage the company on the medium term. This optimization will reduce accounts receivable in number of days and will also reduce inventory levels with our clients. This will have a sell-out scenario above our sell-in scenario for the next quarters. We will also get operational goals since we will have a lighter operation, reducing discounts and returns. There are two very important points in this process. First, optimizing working capital, which will not compromise our sell-out growth, which will continue to speed up in the next months and will be benefited by the launches we will have in the next quarters, and also by the normalization of flu medication. Secondly, our long-term growth strategy, the main investments that we have on the way and shareholder payments will continue throughout this process. We will invest in marketing to boost the growth of our Power Brands and other leading brands, especially on digital media. We will continue to make relevant investments in R&D and innovation to strengthen the company's innovation pipeline, which now has about 500 products to be launched in the next few years. We will continue investing in production capacity increases to support retail and non-retail markets, internalizing the production of some of the brands that have been acquired, new biological and oncological production plants, and verticalization of scopolamine production. That's the active ingredient for Buscopan. We're also going to preserve the remuneration for shareholders, always prioritizing payment of interest on our own capital. Continuing with slide five, here we have the main drivers for this decision right now. The benefits of using working capital have been discussed with the company and its board since we have seen for some time that our supply chain has stabilized and that the company's operational efficiency and our clients' operational efficiency is higher. Interest rate outlooks are still challenging here in Brazil. At the end of the COVID pandemic, the supply of raw materials was normalized. It had been impacted during the COVID pandemic, but this normalization served as a basis to normalize our own internal inventories of raw materials and other inputs at the end of 2023. Besides that, we have advanced significantly in internalizing acquired brands from Takeda and Sanofi, and this is going to give us greater agility and reduce our response time to demand changes. We also reduced product delivery lead time to customers by 30% since 2022, and we can be even faster with our new distribution center, which is state-of-the-art. It was just opened two months ago. We have improved demand predictability, and we've invested in creating a demand and production planning area with AI in 2022. We're also using new data intelligence tools. With that, we have reduced errors by 20% in the last three years. We're also seeing more stable demand for acute drugs, especially flu and respiratory drugs, but also pain and fever. Their performance has been very volatile since the COVID pandemic. Since the first half of 2023, we also started some pilots with smaller clients, and we've been more careful in providing credit. These clients have been having lower inventories for our products, and they did not have any stock-outs or failures that affected our sellout rates. Our best clients opened new distribution centers in recent years, which reduces the lead time for delivering products to points of sale in pharmacy chain stores, but also in independent pharmacies. This all happened in a time in which interest rates were high. Recently, the company's net debt to EBITDA position was at 2.5x, with 2.5 billion BRL in net financial expenses in the last 36 months. With the projected interest rates for the next years, we would see a potential increase in net financial expenses in the short to medium term if we did not implement this new working capital optimization strategy. Due to all of these factors, we started this optimization process at the end of the third quarter, and this will lead to significant financial benefits, which I'll show on the next slide. We foresee a potential increase in operating cash generation of 2.5 billion BRL by 2028, and 7.5 billion BRL over the next 10 years. During the capital optimization period for the next 18 months, we will see an additional cash improvement, even despite net revenues growing less than sellout throughout this time. We are also expecting a reduction in the level of returns, discounts, and discards. It's also worth mentioning that this reduction will reduce credit risk, and this will be mitigated by reduced accounts receivable and defaults. The next slide shows our optimization schedule. As we mentioned, our focus was on reducing to 203 days, and this took place in the second quarter of 2024. Now, our expectation is to reduce from 116- 60 days, our accounts receivable by the end of 2025. This is very close to what is done by our main competitors. This reduction will lead to significant financial gains, which we will show on the next slide. With this reduction in accounts receivable, as a consequence of a reduction of sell-in versus sellout on the short term, we can increase our cash generation by BRL 1.6 billion by 2028 and by BRL 4.7 billion over 10 years, considering savings with income, excuse me, with interest rates during this time. We can also reduce discounts related to logistical services and shipping, and this would reduce our discounts by about BRL 70 million per year. With lower inventory levels with our clients, we can also reduce returns, which have a negative impact to our COGS. This can improve our gross income by about BRL 35 million per year. Finally, this will also reduce discards and inventory losses by about BRL 50 million per year. When we consider all of these synergies, income tax and savings on interest rates come to a total of BRL 900 million by 2028 and BRL 2.8 billion over the next 10 years. That refers to the BRL 2.5 billion increase in cash until 2028, and BRL 7.5 billion over the next ten years. If you have any questions, you can speak to our investor relations team after this conference call for further details. Continuing with slide nine. Here, we can see how this will impact the main account lines and cash lines for the company. Again, we do not foresee any impact on our sellout growth for the next years, and sellout is the best proxy for short-term, or excuse me, long-term growth for the company. If we compare the second half of 2024-2025 with this new scenario, there will be a reduction in net revenue and a negative impact on EBITDA and net profits.... But our main investments will be preserved. We will see a positive impact to operating cash flow. And after this adjustment period, from 2026 on, revenue will go back to the projected levels that you had, but with a much lower working capital investment and with all the positive impacts to our results and the efficiencies that we mentioned. Continuing on slide 10. We decided to do this over six quarters, starting with the third quarter of 2024, to capture operational and financial results or benefits as soon as possible, so that 2026 will be the first full year of the new strategy. Optimizing gradually will allow us to better balance product mix at our clients per SKU and per distribution center, and this will guarantee a smooth, seamless, and gradual process for our clients. Besides that, we're going to have better use of production capacity with a reduction of discards and possible inventory losses. We announced on Friday that the guidances for the year will be replaced, and this is mentioned on the next slide. It's important to mention that this withdrawal is a consequence exclusively of the new working capital strategy being implemented. Sell-out grew by 6.5% in the first quarter, and it went up to 11% in the third quarter. Preview figures for October are at 13%. This puts our sell-out at 9%, year to date, which is slightly above what we use as a basis for the guidance that we have defined for this year. We also published partial results for the third quarter, which have been already impacted by this new strategy. We also announced a new share buyback program of up to 30 million shares, representing 7.5% of the company's free float. On slide 12, we have our final remarks. I'd just like to underscore that with this, we're going to boost our cash generation, but this does not change our commitment to sell-out growth and the investments that we've made in growing sustainably. This process is also going to provide several financial and operational benefits, which will provide greater flexibility to boost shareholder returns by reducing the company's financial expenses and by providing more flexibility to reinforce organic and inorganic growth, pay back our shareholders through share buybacks, and also increased dividends. We're confident that despite the negative short-term impacts, this is the best strategy for the company on the medium and long term. We're going to operate in a much more efficient way, and we see a huge potential to generate value for our shareholders. Thank you. We will now continue with the questions and answer session. We will now begin the questions and answer session for investors and analysts. If you'd like to ask a question, please click on the Raise Hand button. If your question has been answered, you may leave the queue by clicking on Lower Hand. The first question will be asked by Mr. Leandro Bastos from Citibank. Go ahead, sir. Hi, everyone. Good morning. Thank you. I have three questions on our side. You mentioned the reasons for this adjustment, but if you can tell us about the timing, was there a specific trigger that led you to implementing this right now? That's the first question. Secondly, if you can tell us about the impact to specific categories during this adjustment period. Will any of the categories be more significantly impacted for the next months? And finally, if you can tell us about what you're considering and how this will happen gradually, will it be mostly over 2025, or how will it go? Thank you. Alejandro, thank you for your questions. So to answer your question about timing, this was a discussion that we had in the company when we started thinking about the strategy. So this was based on the following assumptions: 2026, having 2026 as a clean year, as a full year with this new structure, and also to do this gradually so that inventories are not disbalanced for our clients. We know that this is a very complex process. We have over 1,000 SKUs. Clients have many distribution centers across Brazil, so this reduction needs to be done gradually. And we understood that a process taking 18 months or six quarters would be ideal... That's why we started this process already at the end of the third quarter. This also relates, and this refers to your third question on pacing. We decided to start gradually, but to do it more intensively in the third quarter, so we hope to do a good share of this adjustment right now. It's easier in the beginning, and then we will fine-tune throughout the next year. It's also important to mention that since we will have a better comparative basis for the third quarter, because we already started the process, we already expect net revenues to grow in the second half of 2025, but this will not affect the company's run rate. This will only be seen in 2026, and I'd like to underscore that we've seen reports from some analysts on the sell side that have also made adjustments to the figures related to 2026. As a reminder, what really matters for our growth, for our revenue in 2026, is sell-out growth during this time. Just taking an example, a fictional number. If we expand our sell-out by 20%, our revenue in 2026 will be around. Well, it will be compounded and will be a 10% growth versus 2023. The adjustment period for 2024 and 2025 should not be impacted or should not have any impact on 2026 revenues. This is how we believe it will happen. It will all be determined. 2026 revenues will be determined by sell-out growth throughout this time, regardless of what happens now to our net revenue in 2024 and 2025. Of course, for this adjustment to happen, our revenue will be smaller throughout this time. To answer your next question on impacts on different categories, we don't really see any impacts to specific categories. Maybe it will be stronger in OTC, prescription drugs and branded drugs versus generics and biosimilars. But this strategy is going to affect our entire portfolio. So this 60 days account receivable level will be used for the entire company's portfolio and the institutional market as well. So the entire company will follow this new policy. Thank you. you. Thank you. The next question will be asked by Ms. Estela Strang from J.P. Morgan. Go ahead. Hi, everyone. Good morning. Thank you for taking my question. I'd like to understand how the company intends to reach this 60-day receivable level. When we look at accounts payable for most drugstores, it is at around 70-80 days. So our question is: What is the company's strategy among its clients? Will there be any difference, and we'd also like to know a little bit more about the calculation behind this figure. Hi, Stella. Good morning. When you look at the average, the first thing you see, based on the information that has been made public, is an average from accounts payable and their cost, and this varies from category to category. So we worked on the consumer goods industry. It tends to be a bit higher, and this is usually an average of everything they buy. Maybe a better proxy to look at is our competitors. If we look at accounts receivable for the companies that publish these figures, that disclose them, it is about 60-70 days. It varies because it's a proxy. It's not the real term offered to clients, but it's a proxy. What we intend to do to get there is basically to reduce sales, and as a consequence, we will see reduced inventories for our clients. One basic assumption with clients is that, and what the industry does is it usually finances accounts receivable or accounts payable for our clients. So it's a proxy for inventory levels, and we're very confident that with all of these improvements that we mentioned throughout this call, that we will be able to bring it to that level, to operate in a more efficient way without impacting stock-out. So this will make our connection to clients different, but this is aligned with the practices that our competitors have with weekly orders and deliveries and quick deliveries to DCs. And this is something that is feasible very soon. Thank you. That was very clear. Thank you. The next question will be asked by Gustavo Miele from Goldman Sachs. Go ahead. Hi, Breno and Adalmario. Good morning. Thank you. I have two questions. First, I'd like to ask about margins. If you can tell us a little bit about your margins during this adjustment time, that would be very helpful. Do you expect any changes to that, especially considering commercial expenses? That would be the first question. I'm just trying to understand how you're modeling margins for this transition period. The second point we'd like to ask about, and this connects to Breno's comment during his presentation. I'd just like to ask about your short-term growth. In 2026, we expect that sell-in and sell-out will become closer, but how do you assess the risk of having a tougher response from your clients due to these restrictive processes? You mentioned more austerity with clients, right? We see interest rates going up, credit going down. So how do you expect smaller clients will respond to these tighter receivables? If you could tell us a little bit more about that, that would be very helpful. Thank you. Hi, Gustavo. Good morning. So I'll answer about margins, and then Breno will answer the second question. Throughout this process, as Breno said, the company's priority has continued to be sell-out growth. So in order for that to happen, according to our plan, we need to continue investing on marketing, making commercial investments. So throughout this process, we don't expect to see any significant changes to SG&A expenses. We will continue investing on these brands, strengthening launches, so not much will change when it comes to our structure. With that, considering that, revenues will be lower, we will see an impact to our margins, but it should be temporary and all of the operational synergies and the operational efficiency will take place after 2026, so we're being conservative. The margin reductions that we will see throughout this time, we hope to recover permanently in the future. So as we start operating fully on this new level, we will also receive all of these benefits from working more efficiently. So for 2026, the operational margin should be larger than the company's current run rate but throughout this process, we will have this impact until 2025. Good morning, Gustavo. So about the second question, this strategy is in line with our main clients. It goes in line with what they seek, and there are two points here. One thing will be neutral for new clients, which is basically this reduction in terms, which is also related to reduced inventories. So for our clients, this investment in working capital will not have an impact on them, will not affect them, and there is a positive factor for clients, which is releasing space in distribution centers. We know that this is a bottleneck for some clients. This is an investment that they need to make, but this will release space for them, and will allow them to work more efficiently. Basically, what we're doing is seeking more efficiency across the entire chain and capturing these benefits with lower working capital used by Hypera, and for clients, this will not impact their working capital and will also create a positive effect, which is releasing some space in their DCs. And also reducing the investments that they will need to make into expanding their capacity. So I don't think that this will impact anything besides, you know, the operational impact of rebalancing inventories. But when it comes to negotiations, I think we're aligned, and we've spoken to most of our main clients about this. Great. Thank you, Breno and Adalmario. The next question will be asked by Caio Moscardini from Santander. Go ahead. Good morning. I have one question. When you look at this working capital strategy change, are you considering the higher number of plants that you all have, considering, you know, the plants that are under construction? And what logistical costs will that implicate in? If you could tell us a little bit more about that, that would be very helpful. Thank you. Hi, Caio. I'll answer your question. Concerning new plants, we are going through an expansion process for the institutional channel. That's the main investment that we have for our pilot oncology plant. It should conclude by early 2026, but it's focused on the institutional channel. For the other plants, we have some improvement processes going on, upgrading machinery, but we don't have any expansion projects that are relevant. Over the last months, we've invested in a new distribution center, which is fully automated. We've reduced the lead time in our new distribution center, and this will allow us to achieve the accounts receivable levels that we mentioned before, becoming much more efficient in logistics. We haven't made any additional investments in new DCs or expanding plants for the retail channel, which is the company's core, which is our company's main business. When it comes to logistics, many of the deliveries that in the past were concentrated in the last quarters. This was our process, and that made us focus our logistical efforts during this time, and that even created additional costs for the distribution center and coordinating this entire flow. With the new model, we're going to have scheduled deliveries, and with that, as we program our logistics better, we're going to have lower costs as well. So we expect to see a reduction in logistics costs. You know, with these routinely scheduled deliveries. Great, thank you. The next question will be asked by Vinicius Figueiredo from Itaú BBA. Go ahead. Thank you for taking my question. One of my questions is a follow-up question, actually. I can understand that this strategy has been designed and considered based on the distributor's desires, and that this should not impact your relationship. I'd just like to know if you believe that operating with higher inventories was a differential to getting additional sales. On slide seven, you mentioned reductions to receivables and how this follows a linear trend. You also mentioned the impact to your cash flow. I'd just like to know if we should expect a linear reduction and if your cash flow will be impacted by the third or fourth quarter. Thank you. Hi, Vinicius. I'll take your questions. I think operating with higher inventories is something that the company has always worked on. Our inventory has always been higher than our competitors. At some points in the past, this policy was very good, especially during the COVID pandemic. We saw product shortages, especially related to flu, and having a bigger inventory was a benefit. But I think this policy is also related to some of the inefficiencies we had in the company. We mentioned everything we've done in the last years to try to operate at this lower level of inventory for our clients. And some products here, especially more seasonal products, will probably have a bigger inventory to meet the demand. These are more volatile or seasonal demands, but with all the investments that we've made, with all the efficiencies that we have on our side, but also our clients... No clients have been opening their distribution centers over the last years as well, so we can see that service levels are much better for the stores. If you consider that four or five years ago, there were basically no pharmacies that delivered to homes within one or two hours, I mean, now most main drugstore chains do that. So service levels are much better. That means that we're very comfortable with the fact that we can work on this level without getting in the way of our sellout, which is the most important thing at the end of the day. Also, as you saw, sellout has been improving. Sellout levels are higher in the second half of the year, and our expectation is for it to continue to go at this level, and that this will not impact sellout. This is our main goal. Considering receivables, what we imagine is that this process will be faster in the beginning. So in the fourth quarter, it should be faster, and then throughout 2025, it will be more gradual. So we expect to finish the year at a lower inventory and accounts receivable level, and then we're going to assess it quarter by quarter to not impact our final sales and to not have any product shortages. But over 2025, it should be gradual. Thank you. That was very clear. This concludes the questions and answer session. We will now give the floor to Mr. Breno Oliveira for his closing remarks. Thank you, everyone, for listening to our conference call. We know that this is an aggressive strategy that we're pursuing. We believe that this can add a lot of value to what we do and help our shareholders. I'd like to encourage you to look at the benefits beyond the adjustment period from 2024- 2025. We see a lot of potential for the company's valuation with this new strategy, and we will use our resources more efficiently, too. As I mentioned before, we're very confident that this is the best strategy, the best way forward for the company on the medium and long term, and that this will generate a lot of value for our long-term shareholders. Our entire investor relations team is available, our management is also available. In the next weeks, we hope to answer your questions. We hope that this call has answered many of them already, but we will be available for the next weeks to go deeper into it and answer your questions about our new working capital strategy. Thank you, and have a good week. This concludes this video conference. Thank you for your participation, and have a good day.