Good morning, ladies and gentlemen. Welcome to Pague Menos and Extrafarma's Earnings Conference Call to discuss the Results of Quarter Four, 2022. This conference call is being recorded, and the replay will be available at the company's website ri.paguemenos.com.br. The slide presentation will also be available for download. We would like to inform that all participants will be in a listen-only mode during the company's remarks. Right after which, we will open for questions when further instructions will be provided. We also inform that this conference call is being recorded and simultaneously translated into English. The translation is available by clicking on the interpretation button on the bottom bar. For those listening to the conference in English, you can mute the original audio by clicking on Mute Original Audio. We would also like to inform that the presentation is available for download at ri.paguemenos.com.br In the results central session. Before proceeding, I would like to reinforce that any forward-looking statements made during this conference call are based on premises and beliefs of the company and the information currently available to the company. These forward-looking statements may involve risks and uncertainties, since they refer to future events and therefore depend on circumstances that may or may not occur. Investors, analysts, and journalists should understand that macroeconomic environment, events related to the macroeconomic environment to the industry and other factors may lead to results that differ materially from those expressed in such forward-looking statements. Today, we have with us Mr. Mário Queirós, CEO. Mr. Luiz Novais, CFO and IR Director, and Mr. José Rafael Vasquez, COO. Now, I would like to turn the conference over to Mr. Mário Queirós to start his presentation. Mr. Queirós, you may proceed. Hello, everyone. Good morning. Welcome to another Earnings Conference Call of Pague Menos and Extrafarma. We're going to talk about the numbers of the full year 2022 and quarter four, 2022. Let's start with quarter four. It was a very robust quarter, when it comes to our EBITDA, net income, and a robust integration process with Extrafarma. Looking at the year 2022, we had consistent growth of our sales. When we look at the CAGR for the past three years, our growth rate was about 10%. Our EBITDA was up on average 16% in the past three years, and the net income grew by 41.3% in the past three years. Pague Menos and Extrafarma are showing consistent numbers over the years. I will now turn it over to Mr. Novais, he's going to slice and dice these numbers for you. We will also listen to Rafael Vasquez, he's going to talk about integration with Extrafarma and how we are capturing the synergies from this acquisition. Then I'll come back and talk about the strategic pillars of the company. Mr. Novais, the floor is yours. Thank you, Mário. Good morning, everyone. Let's start on page number four. Here we have the highlights of quarter four, as you heard from Mário. We are seeing strong margin expansion, this was really marked in quarter four last year, also the capture of the synergies from Extrafarma. The highlights in quarter four were same-store sales for Pague Menos 6.8%. Ex-COVID tests, 7.6% of same-store sales, and for Extrafarma, 12%. In December, the last month of quarter four was a weaker month because of the comparison basis that we had in December 2021, where there was a strong influence of influenza and the COVID wave and also the World Cup. We're going to hear more about that later. The second indicator here, and perhaps the best news of quarter four was the expansion of our EBITDA margin. It increased by 150 basis points year-over-year, and 50 basis points for the consolidated. Our omni-channel sales showed consistent growth. They were up by 11.4% of the total sales of Pague Menos and 3.4% for Extrafarma. The fifth very positive indicator that we had in quarter four was the Extrafarma integration. We have completed the most complex part of the integration, which was integration of distribution centers and systems, and you're going to hear more about that from Vasquez. Finally, the capture of synergies. We already have BRL 34 million on an annual basis or 15% of the total synergies that we were planning to capture with this integration. On chart number five, here we have the highlights for the full year 2022. As you heard from Mário, we are in our third consecutive year of sustainable growth in our sales and profitability. 2020, 2021, and 2022 were three consecutive years of consistent growth. In gross revenue, we had an increase of 10.5% for the year and 9.5% in our CAGR in the past three years. Our EBITDA is 16.4% year-over-year and 15.9% for the CAGR in the past three years. Adjusted net profit, 8.7% year-over-year and 41% for the two-year CAGR. We grew more than BRL 200 million in the past three years. The fourth indicator here is the network expansion. In 2022, we had record-breaking numbers with more than 500 new stores. This combining the, you know, new openings and the integration of Extrafarma, which allowed us to recover the share that we had in 2019 and 2020. Digital acceleration was a very positive surprise. We reached close to BRL 1 billion in sales. Very constant growth, more than 52% year-over-year, more than 19 million customers in our customer base after intense work of our CRM team to capture and retain our customers. On page number six, we have additional information about Pague Menos' same-store sales. We've closed the year at 7.6% same-store sales, excluding COVID tests. Very important growth rates during 2022 in quarter four. As you can see on the chart, first chart on the right, we had close to double-digit growth. In December, the growth was slightly weaker, 3%, and this was due to the comparison basis of December 2021, which was very strong, also due to the World Cup that we had last year, which also had an influence on this December sales. We finished quarter four at 7.6% growth for same-store sales. The bottom chart on the right shows the distinct behavior that we had during the year 2022. In the South and Southeast, our stores grew close to 15%, and in the Northeast and North, this rate was lower, close to 6%. The South and the Southeast, still in Q4, was still quite impacted by a more severe winter, the cold weather, which lasted until the end of last year. This contributed to more robust growth in the South and Southeast. During 2022, we had some problems with supply in one of our DCs. This caused led to some reduction in our sales, but this was addressed during the year, and Vasquez is going to talk about the impact of the DCs in our integration. At the end of the year, the same-store sales was 7.3% and very robust growth for the year. On chart number seven, for Extrafarma, we had an exceptional evolution, which started in the end of 2021. The company grew greatly and continues to grow. In quarter four, we had a growth rate of 12%, slightly lower than in quarter three due to the comparison basis in the World Cup, and also due to the migration of our DCs, which had a temporary impact. We have very positive prospects for Extrafarma for 2023, particularly after quarter two, when we will complete the supply process for Extrafarma stores. We still have a lot of opportunities in assortment, incrementing our private label sales, partnerships, digital partnerships and partnerships with health plans. We still have a lot of opportunities to improve and decrease the difference in the average store sale between Pague Menos and Extrafarma. Market share was also very positive in 2022. With incorporation of Extrafarma, we had a 1% increase in our market share in Brazil. We reached 6%. In the Northeast, we had a nearly 2% increase, reaching 19.1% in the Northeast, and we also showed a lot of growth in the North. We grew 6.6 percentage points, and we reached 15% share in the North region. As I said in the beginning, we also recovered the share that we had in 2019–2020 because we didn't open any new stores in 2019 and 2020, and now we're recovering the share of Extrafarma. Now looking at Pague Menos standalone, in quarter four, we grew less than the market because the contribution of Pague Menos stores, new Pague Menos stores is still smaller than the contribution of new stores in the market as a whole. The good news here is that in December 2022, we were able to equalize the growth of the new openings. We grew our market share standalone for Pague Menos in 2022, and in January 2023, we already saw an increment for the market share for Pague Menos standalone. We have very good prospects for this indicator. On page nine, we see the evolution of our product categories. For Pague Menos, in the two first charts, we have a very favorable evolution of our gross margin. 21% increase for generics, 22% for hygiene and beauty, and OTC, so three categories that are delivering very good results, and we had very positive evolution in these product categories for our gross margin. The third column here shows for Extrafarma that we have a very important opportunity in R X. Extrafarma has 35% of the total sales, and in Pague Menos we have close to 40%. Here we have an important opportunity to increase the supply and assortment of Extrafarma, as we already mentioned in today's discussion. The third chart here for private label, excellent news here. Our private label team has been working intensively and has reached record-breaking share of our private label, 7.1% of the company's total sales, nearly one point increase year-over-year. We still have a lot of opportunities in Extrafarma here, because most of the stores are in markets where Pague Menos has a relevant share. Here we have an expectation and a very positive trend towards incrementing our private labels in Extrafarma, which will contribute to Extrafarma's gross margin. As a consequence, here on chart number 10, we see our gross profit and margin. There was a 20 basis points growth year-over-year, reaching 30.2% gross margin in the year. The effect of the mix, we had the effect of the pre-price increase, which was also important in 2022. We have continuous improvement in our stock losses. All our indicators were positive in 2022, which compensated for the negative pressure. The strategic growth, the important growth of our digital channels that we saw in 2022, of course, put some pressure on our margin of about 70 basis points, but all the positive effects here were more than enough to compensate for this pressure from our digital channels. In quarter four, now when we look at the consolidated numbers on the right, Extrafarma also had a gross margin close to 30%, which is a very good level, much better than in previous quarters, and we can already see in Extrafarma relevant volume of capture of synergies in our gross margin. We believe that Extrafarma will stabilize at a higher gross margin than that of Pague Menos, because it's more concentrated in regions where we have a more favorable mix for a margin closer to 31%. On chart number 11, in our selling expenses, we also have good news. Vasquez and the operations team, they have been working hard to improve productivity of our stores, we were able to reduce by 30 basis points the share of our selling expenses in the company as a whole. We see a constant trajectory, a constant decreasing trend since 2021 until the end of 2022, reducing the number of employees, the average number of employees per store. This is a relevant productivity increase, which allowed us to improve the EBITDA margin of the company. Also during 2022, we were also supported by a specialty consulting firm. We updated 12 rubrics of our expense groups, and we were able to run some bids during 2022, and we are now capturing the benefits of these bids that were ran during 2022, which allowed us to better control the company's expenses. As a consequence, in page 12, we see the contribution margin, a combination of a positive gross margin and control of our expenses and reduction of our selling expenses. Our contribution margin grew by 40 basis points year-over-year, despite the one-off pressure of the company's expansion that was resumed in 2021. Today we have about 200 stores with less than three years old, which have a lower contribution margin than that of mature stores. Even with this one-off pressure, one-time pressure of the expansion cycle which was resumed, we were able to gain contribution margin, and this is excellent news. This is due to important growth of our mature stores, and also the 200 new openings have a very good maturation curve, very steep, and they're already contributing to the positive results of the company. On page 15, another piece of good news, we have our expenses controlled. During the year, we were able to maintain 2.8% of our G&A expenses over the total gross revenue of the company. We reduced about BRL 50 million in quarter four compared with quarter three. This is, of course, an outlier. We were able to control really well our expenses. We had some projects during the year that finished closer to the end of quarter three, so we didn't have costs with consulting firms and services for these projects, and some of these projects are now being resumed in the first quarter of 2023. We are expecting to maintain this level of 2.8% of G&A expenses during 2023 as well, with this very good control of expenses that we have been doing. In quarter one, we have the collective bargaining contract and the salary adjustments in January. Like every other year, the first quarters of the year will have a larger share of G&A expenses in the company's P&L. This growth year is what, 2.8%-3.1% of G&A expenses over the gross revenue of the company is due to Extrafarma, which still has a lower revenue per store compared with Pague Menos. There's a lot of opportunities to capture synergies here. Here we should see numbers closer to 2.8% for G&A expenses in the next two years, which is the time we have to complete the integration of Extrafarma. On chart 14, as a consequence, our adjusted EBITDA grew by 50 basis points, which is a very important mark for us in quarter four. We went from 8.3% to 8.8% for Pague Menos. rate, nominal growth of 38% for Pague Menos and 48% consolidated. As we heard from Mário, very positive constant evolution in the past three years, so we still consider ourselves a catch-up store, and we still have a lot of value to be captured, so positive trends ahead. We are one of the few companies in our industry that is showing constant growth in its EBITDA margin in the past three years. We have also very good prospects for Extrafarma, which is already approximating its break-even point for its EBITDA. We believe that in the next few months, with all the evolution of all our synergies, we will achieve break even for Extrafarma, and we'll start seeing positive contributions. On chart 15, our net income, we reached BRL 192 million for Pague Menos standalone. The accounting result was much higher, close to BRL 263 million. The growth rate is close to 9%, very relevant. This combining operational improvements in our EBITDA, as we just heard, positive effect of the deliberation of our own capital interest over own capital, which compensated for the negative pressure of our financial results, which is something that we are seeing in Brazil due to the very high interest rates. Of course, this has an impact on our financial results. We were able to maintain the net margin at about 2.2%. In the consolidated numbers on the right, we see the impact of the negative results of Extrafarma in the five months since we acquired the company, since August. We see a gradual reduction of these negative results with a very positive trend. We believe that in the midterm, we should also achieve a break-even point for our results in Extrafarma. The last slide of my part of the presentation, cash cycle and debt. Here, we started doing an additional disclosure of the drawn risk information. We have information about that in the explanatory notes of the company. We will maintain draw risk as operational, which affects the working capital of the company. We see that during 2022, we had a relevant investment in stocks. We finished the year at 126 days of stock. The cash cycle is at 61 days, very similar to the previous quarters because we financed the incremental stocks by anticipating receivables, we decreased the receivables term in seven days, and we have an increase in the average payment term, a four-day increase. This is our cash cycle. We are expecting to maintain levels close to these levels in quarter one, starting quarter two, 2023, we will enter a reduction normalization cycle for our cash cycle. Right now, we're still replenishing our stocks to supply to our stores, and in our opinion, the main point to capture synergies are our stocks. We will start a cycle to reduce our working capital and reduce our indebtedness starting quarter two, 2023. We finished 2022 at 2.6x the net debt/EBITDA ratio. We did some important work during 2021 with an important extension of the average duration of our debt. The average duration is now 2.7 years. More than 80% of our debt will mature only in 2024, we're very well structured to go through these times of high interest rates in Brazil. Now I'd like to turn it over to Vasquez, and he's going to talk about the Extrafarma integration. Vasquez, the floor is yours. Thank you, Novais. Good morning, everyone. Good morning. It's an honor to be here, and it's an honor to be the sponsor of the integration project. On chart number 18, this is my third M&A process in my career, and we have some very solid information to share with you about Extrafarma. More than just going over each of the bullet points on this slide, I'd like to talk about some references that I think make a lot of sense and that I want to share with you today. We are today already a company that can be called Pague Menos Extrafarma with one single business and financial ERP, one single DC management system, and unified platform for management of our stores. Pague Menos and Extrafarma can be seen as one single company, and particularly starting in the end of the integration of our DCs and stores, which was completed on February seventh. We can see the results in our store productivity, partnership, and supply, so this is fundamental for this integration to progress, and it is progressing successfully, as you can see. Some important points. We reduced the stockout levels in Extrafarma due to the integration of our DCs, but we still have a learning curve, and I'm going to talk more about this later. As I said, we have migrated systems, so one single company, one single management of the two brands. We were able to anticipate this process because we were expecting that for March and April, but we finished everything on February 17th. Good news for both brands, since 2020–2021, we have been rolling out the new POS system, a more modern, more user-friendly system that leads to higher productivity in Pague Menos. This one was already rolled out for Extrafarma. Today, right after today's earnings conference call, I'm flying to Belém, and what I hear in our stores, both Pague Menos and also at Extrafarma, is that the POS is more user-friendly and much better serves our customer. In organizational structure, in the back office, we have been working on the redesign of our organizational corporate structure. Also for the front office today, I have an operations manager which is responsible for both brands. Also, centralization of contracts with single suppliers, both sell then resell contracts, engagement to align our corporate culture. This was the point that since the beginning, we had a lot of temperature surveys since the middle of last year to understand how the M&A was taking place from the cultural perspective. We had very positive results. We see that we were able to integrate, also integrate our cultures. In operational convergence, going back to suppliers, we talk about leveling of our payment terms, which goes along the line of what Novais said. We are all paying attention to the cash subject here in our company, considering the difficult times that we're going through right now with high interest rates. We are leveling our payment terms. We completed the effort of leveling of our payment terms with suppliers. Leveling of our purchase price is 70% completed. We believe that in the next 60 days, we will reach close to 100%. Another important point is the optimization of our store footprint for Extrafarma. We closed some of our Extrafarma stores which we considered harder to reverse, and we started converting some stores. We have converted seven stores, seven Extrafarma stores to the Pague Menos brand in the states of Pernambuco, Bahia, and São Paulo, and the initial results have been very positive, particularly in the first ones that we converted in the states of Pernambuco and Bahia. On chart 19, we give some more information about the DC process. In other calls, we had the chance to talk about this. This was one of the reasons for concern, the conversion of our DCs. Of course, that stores raise concern because of the customers, but DCs are serving our stores, right? Luckily, we didn't have any major incident, and I'm going to talk more about this on the next chart. Of course, we had some lessons learned during the process. We changed our WMS, we changed our supply algorithms, and the team had to learn how to work under this new optics. We didn't have any interruptions, we didn't have any major problems throughout the process of converting our DCs. One important point, which we heard from Novais, is that DC 1, Pague Menos DC 1 here in Fortaleza is the most important DC of the company. Right now, when we have more DCs and more distribution points, both to Pague Menos and to Extrafarma, we already see a good level of relief in the DC 1 of Pague Menos. We went from 580 stores being served by this DC to 460 currently. At the end of the wave, in February or March, we will finish the current wave, and we will have only 400 stores being served by DC 1. This optimization, in addition to everything that we already talked about, leads to a shorter lead time, a shorter supply curve, lower logistic cost, and tax benefits. This also leads to optimization of the main DC that we have, DC 1, and we are already seeing the results of that with better supply conditions in Extrafarma and Pague Menos stores, which used to be a concern, particularly in the second half of 2022. On the next slide, here we see some of these lessons learned that I mentioned. In every M&A, we will learn lessons, of course, and we have to think about how to fix these problems for the future. These are the most important learnings from the M&A process. For Pague Menos, what happened was that the teams, both in our stores and our DCs, how did they learn how to work with the new systems, new algorithms, the new WMSs? In December, from December to mid-February, there was an impact on our sales, and I'm going to give you more information about that when I talk about the synergies. We had very good sales. We saw a recovery of our sales in November, December. Starting December, with this learning curve, with the change of our systems and of also the effects of the World Cup in early December, we had an impact on our sales. In the end of February, we started to see a ramp-up gaining traction. Now in March, we are probably going through the best moment of our sales per square meter in our stores for Extrafarma. I saw a question here about our margin and opportunities in Extrafarma. I talked about the unified management of the two brands, and one example that I want to give you is that in our private label, from the common trunk that we have of products for both brands, we are at about 60%-65% of the items being supplied to Extrafarma as well. This is a very important sales leverage for us and margin leverage for it. We still have about 30%-40% to implement in Extrafarma. Another point is our pricing. Today, in the Pague Menos system, we have much more granularity and clusterization than we used to have in Extrafarma. For example, in Extrafarma, we had the same price in the metropolitan area of Belém. I had the same price in peripheral stores and central stores, and this is now being addressed in the past few months. We had the adaptation of our and the interruption of our supply when we changed our lead time and we changed our WMS, and there was also the market ruptured, which aggravated the problem. This was from mid-December to mid-February. Now we're seeing a ramp-up and regaining traction again. In my last slide, this is what Novais was talking about. We're very positive about the capture of synergies, which was another question that I saw on the chat window. Organizational restructuring, G&A expenses, assortment, which is another point. We already added more than 1,500 SKUs to be supplied to Extrafarma stores, we still have a lot of work to do in private label, we have synergies of about BRL 14 million in an annualized basis. We had the learning curve that I was talking about, particularly between mid-December and mid-February, the total synergies captured in an annualized basis that we see today is about 15% of what was projected at the time of the M&A. In running rates, this means we are already at a comfortable position. Of course, this is something that will continue to progress over the months, every month we see the evolution. This is my third M&A, as I said, and I think this is one of the most successful ones, and we have everything we need to deliver great value from the synergies that we constructed with the Extrafarma deal. Now I'd like to turn it back over to our CEO, Mário Queirós. Thank you, Vasquez. Next slide, please. Here, this slide shows our strategic pillars going through store expansion, both organic and inorganic. One example was the acquisition of Extrafarma, and I'm going to give you more details on the next few slides. Our omni-channel strategy, the performance of our digital channels, driving the growth of the company as a whole. Customer loyalty, the relaunch of our loyalty program. I'm going to talk more about this shortly. Our Health Hub, which is very well known by all of you, and how the health services offered at our stores are growing. Our complementary businesses or partnerships with startups, which are allowing for some innovation leaps that the company is taking. The next slide talks about our store expansion. In addition to the 392 stores that were added to the company with the acquisition of Extrafarma, here, excluding the remediation required by CADE, our competition authority, we were planning for 120 stores. We opened 118 new stores in 2022, and the two remaining ones were opened in January 2023. 200 new stores in the past two years. The impact of these stores, as you heard from Novais, the market was growing at higher rates compared to our new stores. Now in the second half of 2022, we started to grow more than the market. We're growing at by 9%— 10% of our bases, and the market is declining and dropped to 6% and now 4%. Here on the bottom right, we see the contribution of the sales of these new stores to the total sales of the company. The red line shows the levels of the market, and we see how the contribution of the market starts to decline. Pague Menos has a positive inflection point starting in quarter four and continuing in quarter one this year, so we are leveling this contribution. In December, we already gained market share when we look at Pague Menos standalone. In February, we also gained market share because the new stores that we opened in the past two years are now contributing more to the total sales of the company. This is what makes us comfortable and confident that we are on the right track regarding the recovery of our market share, in addition to the inorganic growth that came from Extrafarma acquisition. The next chart show the omni-channel strategy. We have very strong numbers, as you heard from Novais. We reached nearly BRL 1 billion in sales from our digital channels in 2022, reaching 11.4% share in Q4 2022. In the first quarter 2023, we still see a very strong trend, increasing trend. We are now one of the sponsors of Big Brother Brasil, and this has been driving our sales, particularly on our digital channels. On the bottom left of this chart, we see the participation of digital by region. We know that both in the Southeast and South, they have a much higher maturity in terms of adherence to digital channels. That's why we have this striking difference when compared with our core regions, the North and Northeast. This makes us confident and reassured that we still have a lot of potential to grow in our digital channel, because when the North and Northeast reach higher levels, the levels of the South and Southeast, we will be even more relevant in the sales that we have in our digital channels. Here we have the sales per digital channel. You see that e-commerce is driving more than 50% of our sales, both on our website and our app. We also have telephone sales accounting for 25% of our digital sales. This channel is very important, particularly in the North and Northeast, where people still use the telephone a lot. We have our super apps, Rappi and iFood, accounting for 10% of our sales. We also have the Infinite Aisle, which was one of our greatest moves. If customers don't find a product in a certain store because it's not part of the mix of that store, because we are out of stock, it's out of stock, they can receive the product at home, or they can go and pick the product at a different store, having paid in the first store. It is a true omni-channel strategy. The next chart talks about customer loyalty. Here, this is the result of the work that we have been doing for a few years now. We are recovering our customers, and we grew nearly 10% when we compare year-over-year. In December 2022, we reached more than 17 million active customers, as you heard from Novais. We have another two million, because it's four million active customers in Extrafarma, but there's an overlap between Extrafarma and Pague Menos, so the total was 17.2 million active customers for Pague Menos. On the right, we talk about our quick ratio. The quick ratio is the leaking bucket, as we call it. It is the ratio between the new customers that we're adding to the bucket, the customers that we are reactivating them, divided by the inactive customers. We want this ratio to be higher than one. This means that we're adding new customers to our base, and we see a constant growth resulting from all the work that we did in the past two quarters. On the bottom, we see for the total company, and on the bottom we see the same-store sales. Here we're looking at Pague Menos alone. In same-store sales we are also growing and adding new customers. This is very relevant. This is a number that we are always measuring. The next chart talks about our loyalty program. With the acquisition of Extrafarma, we unified and relaunched our loyalty program. Our loyalty program now is Sempre Bem. The Golden Sempre Bem customer, the customer that has more than 1,200 in purchases in over six months. Now we launched our paid category. We are the first company to offer a paid customer loyalty option, and by paying BRL 19.90 per month, they have all the benefits of our Golden customers and telemedicine on our app or at home. Pague Menos is here once again innovating in its customer loyalty program. The next chart shows our ESG journey. Last year we presented our ESG journey to the market. We reached all our goals in 2022. Here, the highlight goes to renewable energy. We have 100% of our stores being supplied with renewable energy with solar panels. Our target is to have every new store in up to two years, it has to be supplied by renewable energy, because of course there's all that bureaucracy of connecting the system. We have a two-year period that we allow for stores to connect to use renewable energies. We also have training being offered to our employees, scholarships, undergraduate and postgraduate courses. This is the end of our presentation. We can now open for questions. We will now open the floor for questions. We will take questions from investors and analysts. If you want to ask a question, please click on Raise Hand. If at any time your question is answered, you can remove yourself from the line, from the queue, by lowering your hand. The first question is by Danniela Eiger, she's from XP. Danniela, you can ask your question now. Can you hear me? Sorry, I had technical problems with my microphone. I'm sorry for the background noise. Thank you for answering my question. Congratulations on your results. I have two questions. The first one is a broader question about profitability. I want to ask a follow-up question because Novais talked about a gross margin of 31%. I want to know what we can expect in terms of the dynamics of your gross margin. Looking both at standalone and Extrafarma and also your EBITDA. I don't know if you're still expecting some efficiency gains that we will see during this year, still resulting from these initiatives that you implemented in 2022. Also very striking, the improvement that you had in Extrafarma's gross margin. I think Novais talked about the EBITDA breakeven for Extrafarma, but I think I missed the timing, so I want to understand how we should be thinking about the, your EBITDA line for Extrafarma during 2023. My second question, it's really striking to see how you are being able to exceed, both in terms of the amount and the speed, exceed the synergies expected to be captured with the integration of the two brands. I want to know when or if at some point you will revise your guidance, maybe increase your guidance. Thank you, Danniela, for your questions. I'm going to ask Novais to answer and Vasquez can also contribute and talk about synergies. Good morning, Danniela. Thank you for your question. As for the gross margin, our commercial team did some very important, had some very important initiatives to capture the benefits of the pre-price increase and all the improvements in our product categories, generics, private label, hygiene and beauty. We were able to grow our margin despite the negative pressure from the digital channel sales. The 31% that I mentioned is where we believe Extrafarma should stabilize its margin after we complete the capture of all the synergies. Extrafarma, most of the Extrafarma stores are in regions that are more favorable for product categories that have a higher margin. It should stabilize at a gross margin slightly higher than the current 30% of Extrafarma and Pague Menos. This positive evolution of Extrafarma's margin in quarter four was also due to the migration of the DCs, particularly in Pernambuco and Bahia, where we have relevant tax benefits. Because of these migrations, Vasquez and the team completed the migration of the DCs in Pernambuco and Bahia first. In quarter four, we were already reaping the benefits from that. Also all the work the commercial team has implemented in terms of commercial synergy and pricing synergies and other elements. We are going through a very important moment in the capture of these synergies. About the gross margin for 2023, we indeed have a negative pressure because the price readjustment will be much lower than it was in 2022. Since we have important levers, growth levers in generics and private label, as you already heard, and also in other lines of our P&L, for example, SG&A. This negative pressure will be mitigated and will be compensated, and we will continue to evolve the increment of the company's EBITDA. We consider ourselves a catch-up stores, as I said, and we are now in our third year of increasing profitability, but in our opinion, we still have a lot of room to grow our profitability, particularly now with the capture of synergies from Extrafarma and the dilution of the expenses of all the projects that we are implementing. She also asked about the Extrafarma EBITDA, about the break-even. In quarter three last year, we had an average negative EBITDA of BRL 8 million per month. In quarter four, it dropped to BRL 3 million negative average per month. In January and February, we're still at a negative level, but we should soon be achieving our break even for the Extrafarma EBITDA with this positive evolution that we have been capturing with our synergies. This is what you can expect, Danniela. I don't know if I answered all of your questions. Yes, Vasquez. Vasquez, about the synergies. Yes, I think the synergies that we contracted in our deal are the synergies that we are expecting to deliver. I don't see any changes, relevant changes in terms of the amount. Now, revisiting the timeline, I think it's too early to talk about revisiting our timeline. If we were to anticipate something, it would be in quarter three this year. I think we underestimated the human resources element and how long they would take to get used to the new processes. Now since we've been gaining speed, and since the second half of February, we are back on track. I wouldn't really revisit the timing before quarter three this year. In quarter three, that's when our initiatives will be very well implemented and segmented. I'm very positive with what we are seeing with this process. Excellent. Thank you. Next question is from Gabriela Moraes, Itaú BBA. Gabriela, you can open your microphone now. Can you hear me now? Yes, we hear you. Sorry, I had technical problems. Congratulations on your results. Thank you for answering my question. We have two points. The first one is about your stock-out levels. We saw a sequential worsening of this index, of this indicator. We know that the supply chain condition is still very challenging for the market as a whole, there are still some headwinds from the integration that are facing challenges. How do you see the evolution of this indicator, your stock-out levels in 2023? My second question is about Extrafarma. You had a very relevant evolution in your synergies in this quarter, and we see this showing consistently in your results. Looking forward, I think we still have several initiatives that you can implement over time. What is the top priority in your integration process? Looking forward, what is the main challenge that you see in this process? Thank you. Thank you, Gabriela. I will start with the stock-out levels. We think macro, just to give you an idea, I went to the U.S. recently, so I was in New York, Florida, Seattle, and stock-outs, if you visit Walgreens, Target, Walmart, they're still suffering with high stock-out levels. After 2.5 years, they're still suffering with high stock-outs. It is a global problem. We also have examples in Brazil. The main product in the market, Ozempic, is a quoted product. Just to give you an example, we ordered 100, and we get 15. There's a stock-out, global stock-out of the substance itself. Also when you look at the regular categories, insulin, antibiotics, children's products, they're still suffering with high levels of stock-out. Things are going back to normal gradually, and we also had the change in our main DC in Fortaleza. We had an operational problem in the middle of 2022 that we had to address. This was combined with the integration of Extrafarma. This is now past us. This is. We have addressed the problem. We now have nine distribution centers. Belém is now being supplied by the Benevides DC of Extrafarma. Maranhão is being supplied by Extrafarma's Maranhão DC. Here in Ceará, we had our DC, now we have Extrafarma's Aquiraz DC. Things are already balanced. This is something that we have been able to address successfully. The situation is normal now. As for the integration and the challenges for integration, Vasquez and Novais can add if they want. I think the greatest challenge is sales. We're focusing on our sales and growing the average sales per store in Extrafarma stores. This is our top priority and our main challenge right now. As you saw, we are ahead when it comes to capturing the synergies because we did excellent work, and we were even conservative in the timeline that we established for the replacement of our systems, the integration of our DCs and our supply. Everything is going according to plan, but we still have to grow our sales. As you heard from Vasquez, the learning curve and the drop that we had, every time that we turned a new Extrafarma store, we had to learn the systems. There was the learning curve for the systems. There was the change in the DC. There's an adaptation. Operationally speaking, when you turn off one system and you turn on the new one, there was a gap of eight to 10 days. This reduction in our sales that we're seeing in late February and early March, it will be our top priority to continue capturing our synergies at a very good pace. Anyone wants to add anything? I would just like to reinforce what we talked about when we talked about Extrafarma. The main pillar of this integration, and I think this was Gabriela's question, the main pillar was supply. We went from double-digit levels of stock out to now single-digit levels, and we are managing this proactively in all our DCs, and we are now completing our last DC in Guarulhos in March. Looking forward, what we want is a fluid process. We want to avoid having ups and downs in our supply chain. The second part, when we think about how we manage the two business models, one thing that I always say internally, Novais was talking about this, in the Pague Menos brand, we are delivering consistent results. We have been delivering consistent results since the fifth quarter to 2019. We created a culture of delivery in the organization. Despite headwinds or tailwinds, it's a culture of growth. In Pague Menos we had an exceptional work being done for customers, but the team still has to focus more on results productivity and business management. I don't see this as a risk, I see this as an opportunity, because as I said, we unified the management of the two brands in our operations division, so that with this more fluid management of our supply chain, after we address these things, we will improve our pricing strategy. This is something that we already started to do, particularly for some OTC categories. Part of the margin that we were able to capture, we are investing now to generate more sales, decrease our expenses, and this is the continuous model of retail, right? To be able to achieve better results. The challenge is to implement this culture and to make it linger. There's a positive example in Pague Menos, which is a concept result that we have been showing since 2019. Thank you. The next question is from Eric Huang, Santander. Eric, you can open your microphone now. Good morning. Thank you for answering our questions, and congratulations on your results. We have two questions. My first question, when we look at Pague Menos, you talked about the reduction in the average number of employees, and we want to understand whether this is a consequence of the larger mix of discount stores that you opened in the past years, or if you have true optimization of your existing stores, or if you still have opportunities to be captured here. My second question, when you talk about your expansion, regarding your CapEx, what we have been hearing from retail companies about the variation of their CapEx, we want to know from you what will be the CapEx per store and how this is evolving. Can I start, Mário? Yes. Thank you, Eric, for your question. Eric, regarding productivity for Pague Menos, I would say that we are in a very good shape for Pague Menos. Of course, we're still looking at opportunities. We have our workforce management tools. We also compare, we do benchmark for sale, for working hours, for the Farmácia Popular, which can slow down service at our stores. Do you have focal opportunities in Pague Menos? Yes. We have a few managers where we still have an opportunity, and it's more than the head count per se. We want to improve our sales per employee, and today at Pague Menos, we are close to BRL 40,000 per employee. In Extrafarma, our productivity is lower than that. If you ask me, can we do something today in Extrafarma in terms of productivity? Yes, we do have room for that, but probably this is not the way to go. When we go back to POS, we still have a lot of sales to unlock at Extrafarma, either through assortment initiatives, supply initiatives, or even the working hours of our stores. Just like we attempted in the past with Pague Menos, and we were very successful, we are adjusting the working hours of some of the Extrafarma stores, and we are even implementing the 24-hour model in some of our stores in São Paulo. Last week I visited some stores in São Paulo, and we're going to test the 24-hour model. We're going to make some of our stores in São Paulo 24 hours. Extrafarma, before Pague Menos, was working with a very contracted model. Contracting its expenses, contracting its investment, and now we want to unlock value and unlock sales. When we look at sales today at Extrafarma, sales per store, there seems to be a lot of opportunity, but this decision will still take two or three months to know for sure whether we have reached our full sales capacity. If we still have a challenge in terms of the sales per employee, then we can look at productivity. What I can tell you right now is something that we are monitoring month by month to look for opportunities and reductions. As you heard from Novais, that's something we have been doing at Pague Menos for the past three years, and we will continue to do at Pague Menos Extrafarma every month, because this is what we do in retail. I'd also like to ask Novais to talk about our CapEx and the capital cost. As for our CapEx, Eric, we saw important growth in the average investments per store during 2022 when compared with 2021. Happily, in the past few months, we are seeing stabilization in the average investment per store at about BRL 1.5 million-BRL 1.6 million. Until 1.5 years ago, it was closer to BRL 1.2 million. Investments were higher during 2022. What helped us maintain this level of BRL 1.65 million, BRL 1.6 million per store was the new discount store model, which allowed us to lower our investment costs in these stores, and this puts us in a better position. We're very happy with the evolution of these new stores, which account for most of the new openings that we had. As for your question about the cost of capital and cash control, this is one of the top priorities for us. Right now, we are under pressure because of the average stock terms, so we have a slightly high investment in stocks. We are planning to reduce our investments in stocks starting quarter two, leading to higher generation of cash after we finish the supply cycle of Extrafarma stores. The pre-price increase, right? Yes. Thank you. Very clear. The next question is from Maurício Cepeda, Credit Suisse. Mr. Cepeda, you can ask your question now. Hello, Mário, Novais and Vasquez. Thank you for answering my question. I have a few questions. My first question goes along the lines of my colleague's question about stock-out and some active ingredients that are now out of stock in the market. You talked about your intent to decrease your stock. How are you going to level this with your working capital? Because I understand that stocks are high in the services category, which is not traditional for the industry. Also, I'd like to ask about your leverage. What do you see looking forward in terms of the leverage of the company? I also want to ask about the drawn risk that you mentioned in your presentation. Knowing that great part of the supply comes from the pharma industry, what type of supplier today has been asking for anticipation of receivables? Because your payment terms sound very reasonable. Do you plan to somehow continue to use this financing model looking forward? How does this fit into your capital needs? Thank you for your question, Maurício. I'm going to talk about stock-out and stock reduction, and then Novais is going to talk about leverage and drawn risk. This is a natural process because we were obliged to buy earlier and then sell. We couldn't stop buying at the Fortaleza DC to start buying in Maranhão, so this is the price you pay when you have such an integration. During quarter two this year, we will start to see a normalization and a drop in the PME, because since quarter three, since the end of quarter three 2022, we have been supplying our stores, supplying Extrafarma stores. Now with its four DCs, we can expand because the DCs wanted to receive Extrafarma stores. This is something that we expected with the integration. We are projecting this normalization and reduction of our stock levels during 2Q 2023. Of course, that we are quite focused. Our business is focused on having products available at our stores. Service, customer service is important, price is important, but if you don't have the product, then it's useless, right? Every time we talk about reducing our stocks, we have to do this diligently. We have to do this wisely based on science and algorithm whenever we make changes to our stock levels. As I said, this is something that was already expected. As the other demands, as the demands from the store that are being implemented for HDF, settle down, this is something that is expected. Now, Novais is going to talk about leverage and drawn risk. About our leverage, considering the context that Mário just explained, we have a relevant volume of stocks to mobilize starting quarter two. We have 126 days of stock. If we go back to a level of 110 or 113 days, we have more than BRL 300 million in stock that we need to sell, and the working capital is a very important number for us. Also, we have other leverages that we need to deleverage. We have a relevant volume of tax credits that we need to monetize, and we're working on that. All the operational improvements that the company has been delivering, the incremental EBITDA, of course, this improves the operational cash generation of the company. We also have a volume of synergies that we've been able to capture at a faster pace than we had expected. We have other leverage that will allow us to decrease our leverage. The guidance that we gave for leverage is to reach 1.7x the net debt over EBITDA ratio by the end of 2024. We will start deleveraging starting in Q2 this year. We reached this high level because at Extrafarma, we still had a level of 1.7x because of Extrafarma, because before Extrafarma, we had a level of 1.7 x. About drawn risk, drawn risk is a tool that we have offered in our portal for suppliers that they can subscribe or not at their discretion. We reached a volume of BRL 240 million by the end of last year, and after the Americanas case, we saw that even this was an initiative of the banks. They are more restrictive now for this type of credit concession for some suppliers. We have different types of suppliers. We have multinational, huge companies. We have smaller local supplier. All suppliers can subscribe to this type of the tool to manage their cash flow. We are still offering this option, but we see a decrease in the adherence to this type of credit. I don't know if I answered your question, Maurício. Yes. Thank you. This question and answer session is now closed. Now I'd like to turn the conference over to Mr. Queirós for his final remarks. First of all, I'd like to thank all of you for attending and for your interest in our company. I want to once again say that the integration with Extrafarma is going according to what was planned, and we are capturing synergies that are faster paced than expected. The digital channels are still driving the company's growth, growing more than 50% with sales that approach BRL 1 billion, and we still see a lot of opportunities to continue expanding in our digital channels. Finally, we know that market now is going through a difficult time, that the cost of capital is very high, and we will be very diligent to protect our cash, particularly when going through these difficult times that we are going through right now in Brazil. Thank you very much. Pague Menos and Extrafarma's conference call is now closed. Thank you all for attending. Have a great day.