Ladies and gentlemen, we'd like to welcome everyone to the RD People, Health and Wellbeing conference call to discuss its 1Q 2023 results. The presentation can be found on RD's Investor Relations website, ir.rd.com.br, where the audio for this conference will later be made available. We inform that participants will only be able to listen to the conference during the company's presentation. After the company's remarks are over, there will be a Q&A session. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the beliefs and assumptions of RD's management and on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of RD and could cause results to differ materially from those expressed in such forward-looking statements. Today with us are Mr. Eugênio de Zagottis, IR and Business Development Vice President, and Flavio de Moraes Correia, Director of IR and Corporate Affairs. Now I'll turn the conference over to Mr. Eugênio de Zagottis. Sir, you may begin your presentation. Hello, everybody. Welcome to the Raia Drogasil Q1 2023 conference call. I would like to start by saying that this was another very strong quarter by the company. I think we are coming from a very strong year, which was 2022, a year in which we were able to expand margins to get back to the same EBITDA margin we had 4 years before, when we started the digital transformation, but with a much higher contribution margin, stock contribution margin, and also a higher G&A because of the investments in structure, IT, et cetera, that we did. We continued this trajectory of the Q1, posting very significant margin expansion, very robust top-line growth. This is a quarter, in my view, that underscores the defensiveness of our business, the fact that we are a business that feeds from the aging of the population. Brazilian senior population is growing 4% per year every year, will keep doing so for many, many years. We don't depend on GDP. We don't depend on consumer income. We don't depend on financing demand and things like that. We are at an industry that keeps posting very good growth. The fact that we have such a strong balance sheet allows us to maintain our operations, to maintain our expansion, absolutely untouched, while also leveraging the opportunities that the crisis bring from the fact that less capitalized players are suffering in terms of execution, are unable to maintain their growth. They have to cut costs, cut investments. This generates a ton of opportunities, and we're taking advantage of that. We ended the quarter with 2,746 stores in operation. We opened 55 stores and closed six stores in the quarter. We posted BRL 8.5 billion in revenues, 21.6% consolidated growth with mature stores doing 12.6%. Here it's important to mention that 4Bio has posted 60% top-line growth in the quarter, amazing performance, and this affects our numbers. It accelerates our top-line growth, but in a very significant way, something like 2.5, 2.4 percentage points. It also pressures our consolidated margins because 4Bio has lower structural margin than Raia Drogasil, even though it has very sound return on invested capital, as a specialty business, it has a different margin profile. It helped a lot on the top-line growth here, but it has an effect on the consolidated margins. I'll go there. Market share in the quarter, 15.3%. 1.3 percentage point increase on a national basis, gain in every single region in a very meaningful way. Digital reached BRL 1.1 billion in revenues, 63% growth over a comm base that was already very strong in terms of digital penetration. After a quarter of stable digital penetration, it's growing again and now to 13.7%. This is a very material figure. Contribution margin of 10%, 90 basis points expansion versus last year, 35% of growth. An adjusted EBITDA of BRL 563 million, 45% growth with a consolidated margin of 6.6%. The consolidated margin went up by 90 basis points, the retail margin went up to 1.4 percentage points. If we looked only retail without 4Bio, we're talking on EBITDA margin close to 7% in a quarter in which seasonally we have less sales because we have a short month in February, we have vacation in January. Q1 is always a quarter of seasonally lower margin, and still our retail margin is very close to 7%. The consolidated margin with 6.6% posting a very strong gain. Adjusted net income, BRL 204 million, 40% increase, 2.4 percentage point margin. Free cash flow versus 4Q, which is always the best seasonal quarter for cash flow, BRL 42 million in free cash flow, -BRL 98 million in total cash consumption. Here talking about our pharmacy count, we ended the quarter, as I mentioned, 2,746 quarters. We have opened in the quarter 55 stores and closed six. Of the six closures, five have been of mature stores. This is like optimization of the store portfolio. one closure is of a maturing store. This is a correction of expansion mistake. If we look last 12 months, 47 closures, we're talking 263 openings, so we are in fully lined with the guidance that we are providing. Store portfolio, 73% mature stores, 27% maturing stores. We maintain this guidance of 260 stores per year from 2023 to 2025. We already performing at this level. This means 780 additional pharmacies over three years. We are maintaining this broad geographic and demographic diversification, and we have a historical assertiveness of 98%, meaning maturing stores closed with a correction of expansion mistakes account no more than 2% of the total openings every year. This points to the quality of the growth we're doing. Here we see our geographic presence. We're present all over Brazil. We have reached the milestone of more than 400 stores in the North, Northeast area. This is a market where we have a very strong presence in all markets. We became the reference player in several main cities like Salvador and Recife, for example. This is an amazing operation. We have also an undisputed leadership here in the Midwest region. We're a leader in all four states, and we just opened a new DC in the state of Mato Grosso to better service the area. We're opening two new DCs still this year, one in Pará to serve these markets here. We are opening a small DC, which will be like an inventory buffer in Manaus. Manaus is in the middle of the Amazon. It's very difficult to deliver by truck. We currently have aerial delivery, which is very expensive. The only land route is through this side, to this side. Because of a very long lead time that this will take to do by truck, we'll have a local DC with an inventory buffer supplying the stores on a daily basis, but we'll be able to lower our shipment costs by leveraging this DC as well. Finally, market share. We reached 15.3% of national market share. 130 basis points gain, very strong gain, with gain in every market. São Paulo getting close to 27%. Southeast, 10.8%. Midwest, 18.6%. 200 basis points increase here. South, 9.9%. Northeast, 10.8%. North, 8.1%. Very strong performance all across the board. I think the main point here is when you think about our national expansion, we are swimming on the blue ocean because our brand is positioned all over Brazil. We grow in every single ZIP code of the country with the same margin and return expectation. This is what allow us to have such a distinguished expansion versus everybody else. Our competitors, they have a blue lake somewhere in the country, which is their native market, but the rest of the country is a bloody red ocean in which either they don't access or they do it very poorly because a very high entry barrier. Our brand is already a national brand, and our growth sees no boundaries these days. The growth diversification gets clear in this picture. We are now present in 549 different cities in Brazil. We entered 48 new cities over the last 12 months. São Paulo, which is our native market, accounts for only 22% of our recent expansion, last 12 months expansion, and only 42% of our of our store base. Obviously, we are still over-indexed in São Paulo. São Paulo generally represents something like 27% of the Brazil market, but not nearly as over-indexed as we once were. Nowadays, it's 42 São Paulo, 58 other states. This share will keep growing towards the other states here because we'll keep maintaining figures around 20% of growth in São Paulo. The fact that we're able to expand margins with 80% of growth outside of our core regions shows the robustness of the national growth platform that we have. The fact that this is indeed a blue ocean. Finally, when you look demographically, it's a similar effect. We have only 15% of upscale stores being open. Only 39% of total upscale stores in our overall portfolio. 61%, they are either hybrid or popular, so they service the emerging middle class. Still, despite this huge diversification, demographic, geographic, new cities, and this is also very interesting here. There are 316 cities in Brazil with 100,000 inhabitants and more. We are already in 301 of those. Obviously, I'm including not only pharmacy in operation, but also locations that are in the process of being opened. Still, this shows the level of horizontality we have built in this market. Regardless where we go, which economic class we serve, which geography we serve, which city size, the returns are always kind of the same. This is absolutely unique for Raia Drogasil in our market. Talking about revenues, BRL 8.5 billion a year, 21.6% of consolidated growth, 4Bio helping by 2.4 percentage points. Retail is doing 19.2%, which is very healthy. Finally, when you look at the mix, the only news here is OTC, because we are comping against the COVID surge that happened, the Omicron specifically surge that happened in the 1Q 2022 here. We have a very tough comp base for OTC, and as a result, OTC is growing only 8.6%. The flip side, HPC growing a staggering 26%. Here, there's a very interesting thing, which is the fact that despite the fact that, okay, all the defensiveness drivers that I mentioned, they relate to the pharmacy because the traffic in the stores is pharmacy-led, it applies to HPC as well. Because we are serving We are a lot of A-class, B-class still, even HPC has shown to be very resilient. We're talking mostly toiletries, some skincare, even skincare we do really well. 26 is an amazing number and then, we see both brand directs and generics above 20%, which is also very healthy. Obviously, we're talking 21.6% consolidated growth with 14.8% same-store sales growth. This is retail only, there's no 4Bio. Likewise, mature stores growing 12.6% retail only. This is way above of inflation. This is we're talking almost 800 basis points above CPI and 1.7 percentage point above the CMED price increase. Obviously here, the CMED price increase helps a lot because we are still suffering the 11% price increase. Next quarter, we'll see a new price increase, which is 5.6%. Obviously, when you compare to the Q2 comp base, it will be tougher. We still expect to keep posting mature stores growth ahead of inflation and generating operating leverage at the mature stores and increasing our contribution margin. This is something that we expect to see on a sustainable basis and even in the Q2. The number one asset for the company is our customers, and this is very clear for us. We have 41 million active customers within the year, and six of these is what we call frequent customers. This is a classification in terms of spending, frequency, et cetera. These are the top customers of the company. So they are six million out of 48 million total customers. For us, the main strategy to delight our customers, to maintain the engagement of the loyalty of the customer is obviously the experience we provide. We provide a unique experience at the stores with a net promoter score of 90. This is unmatched in the Brazilian retailing, and I know it's a benchmark or even on a global basis. Here we see the digital NPS, which is broken on two parts. Evaluation of delivery and collection services, in which we are at 81, growing very steadily here. The evaluation of our app is at 64, but this is still not where we wanna be. This is we have gone a long way since we started here in the 30s and 40s, not that long ago. This is progressing very well. There are a lot of advancements in our execution. Flávio will talk about them more towards the end of the presentation. Obviously, our aspiration is 90. We have to admit it took more than a century for us to get to the 90. Even if we don't get that easily to the 90, we want to be very quick at north of 70, at some point, north of 80% with our app NPS as well. Finally, we talk a lot about digitalization. The main message here is that digitalization is not the end goal of the company. It's a mean to an end. Digitalization exists as a leverage for higher loyalty and better experience of the customer. Out of the six million frequent customers, 1.4 million, they are both frequent and already digitalized customers. We're talking 25% of this total base. Over 100 years, our job has been turning casual customers into loyal customers. Casual customers buy five times a year on average. A loyal customer buys 21 times a year. Over recent years, we have found this new value lever, which is digitalization. We are coming, a frequent customer who's not digital, or buys at 21 times. A digitalized loyal customer buys 26 times, 23% more frequently. This is why digital matters because digital, in the end of the day, is a way to make the customer more loyal and spend more with us and engage more with us. That's why the growth of digital channels is so important, and it's been performing really well here. When we grow, we see digital channel penetration after a stable quarter at 11.8, we had another jump to 13.7. We're talking 63% growth over a very meaningful comp base here. This is doing really well. Our digital profile is completely different from anyone else. 91% of our digital sales come from channels that are both modern and proprietary, 80% of which is mobile and 60% of which is our app. Our app accounts for 60% of digital sales. This is a very important number, and I'll explain why. When you look channels that are either not modern or not proprietary, we're talking about super apps. Which is certainly modern but it's not proprietary. Super apps have very efficient delivery, very fast delivery, great app experience. As our app experience improves and as our speed of delivery increases, we start to compete more effectively with the super apps to try to keep the consumer within the reach of our channels. We see that click and collect is 61%, but now we're delivering up to two hours 18% of the transaction. This is amazing. As we do this better and better, the customer will migrate from this 8% probably here. Either we grow and maintain this% or even it can decline as we get more and more of customer share here. The reason the app is so important, you can see here. Even a digitalized customer, when you compare digitalized customer that buys only on the website versus the digitalized customer that buys primarily on the app but is also an omni-channel customer, we are talking 21 annual purchases versus 10 annual purchases. This has changed our strategy. We were in the past doing a lot of digital marketing, we learned that the customer we get from out from digital marketing in medias like Google, Meta, et cetera, ends up being a customer that is very opportunistic, very price driven and not as loyal a customer. We are de-emphasizing a lot the search for this kind of customer and focusing on this kind of customer, the customer who buys 21 times a year, not 10, who's service oriented and not only price oriented. Even when you compare frequent to frequent, the frequent customer who is app driven and omni-channel buys 28 times a year versus 17 from a digital frequent customer who only uses the website. This is why the app penetration is so important. This is why we emphasize it so much. Here we have a level of app penetration that no other competitor has or even publishes their data for us to be sure about. When you talk about gross margin here, shifting gears, we had 27.4% gross margin, 30 BPS pressure because of the 4Bio mix effect. 4Bio has a lower gross margin, it's growing 60%. It pressures the overall margins by 30 BPS here. We have a very good cash cycle here in the quarter. Q2 is generally a peak quarter for cash cycle because of the forward buying before the price increase. This time we were able to do really well with our buying to negotiate better the terms, to focus more on generics that had structured longer payment terms. We have a very similar cash cycle in the heaviest quarter than the one we have in the best quarter of the year, which is the Q4. This is, for me, a very good figure here. We're very proud of this. Talking about selling expenses. Selling expenses have been driven by real growth in mature stores. We are generating a ton of operating leverage, sales expenses go down from 18.6 last year to 17.4% this year. Obviously, when you compare on a sequential basis, Q1 is a more challenging quarter because of less sales, because of January being a vacation month and February having a small calendar. Still, we have a similar dilution to previous quarters even though they were normal seasonality and here this is a more difficult seasonality which shows the progress we're doing on selling expenses. This is driving contribution margin growth of 90 BPS, 10%, BRL 850 million in the quarter. G&A, this is another highlight of the quarter. After a sequence of many quarters with G&A growth, we started diluting our G&A very meaningful on a sequential basis, 30 BPS improvement over the Q4. Again, the fact that this is a seasonally this has a weaker calendar means even more because we are diluting same expenses by a lower sales base, so it should be even be slightly better than this. Significant sequential improvement but an improvement also over the same quarter last year. I think this is the beginning of a trend. We expect to see the G&A being diluted this year already. This is showing we are in the right direction. Finally, 100 BPS, EBITDA expansion, 6.6% of EBITDA. If we looked only at retail, our EBITDA is 6.9%, 140 basis points improvement over last year. Obviously, over lower sales volume because 4Bio pressures the margins on the mix side but it helps a lot on the top line as well. In the end, we're very happy that both things are happening, the development on retailing and the evolution of 4Bio as well. Finally, net income of 2.4%, BRL 204 million. We have here a one-off that is included in this figure which is booked on financial expenses and it's related to the outstanding options on some of our investees. What happens is when you have control of a company, if there is a call or a put option over the remaining share of that company, the way we account is we consolidate 100% of the startup, but then we book the outstanding payment for the minority equity as a liability. We do periodical re-evaluations, and because 4Bio is flying and is delivering much better performance than what we had forecasted, we have a correction of that amount payable. This is accounted as a financial expense. It means 40 bips here. Everything else constant, we would have 2.8% of net margin in the quarter. Finally, we have some one-time gains here that are also excluded in the. which are BRL four million that are related to previous years, especially tax effects here. Cash flow. We have a free cash flow consumption of BRL 42 million, a total cash flow consumption of BRL 99 million. We are comparing this to the Q4, which is always the best quarter in terms of cash utilization. Any quarter in the year that we compare to the Q4 gets penalized. We are not comparing first versus first here, but still, I think we did so well on the cash cycle side that the free cash flow pressure is very modest here. Finally, we maintain stable net debt to EBITDA of 0.9, sequentially stable, slightly better than some point last year. This stability is very important because in a market with high interest rates, tightening credit, this leverage means we can maintain our growth program untouched, our IT investment untouched, the number of people in the stores untouched, our prices untouched, et cetera, et cetera, et cetera. We take the opportunity to grab shares from those companies who are over-leveraged and who have to cut investments, expansion, increase prices, reduce overhead, reduce people at the stores, reduce inventory availability to clients, et cetera, et cetera, et cetera. We see this crisis as a big opportunity. Finally, before passing to Flávio, we saw in the quarter a share appreciation of 3%, 10% percentage points above the Ibovespa. Obviously, when you look the total shareholder return since the Raia or Drogasil IPOs, I mean, it only shows that we have an amazing capacity to compound returns. I'll now pass to Flávio to summarize on some of the points here. Thank you, Eugênio, and hi, everyone. As you could see, our market and financial performance is decoupled from the industry. Our growth remain accelerated with a 21% growth on the whole company, and mature stores growing 12.6%, which is 7.9 percentage points above the inflation, okay? Market share reached 15.3%, which is an increase of 1.3 percentage points considering last year. We opened 55 new pharmacies on the quarter, which means 263 pharmacies on the last 12 months, with IRR consistently above 20% for all these vintages of stores. NPS still above or in line with this 90 index on the physical stores, okay? Solid, we also have a very solid profitability performance with EBITDA margin of 6.6%, which is an increase of 100 basis points considering last period. G&A went down 0.1 percentage point, which is a sequential gain of 0.3 percentage point. This is a very good improvement we have been doing here in the company. Our financial leverage is of 0.9 times EBITDA. It's a very stable and healthy leverage for the company. Last comment here, considering our capital structure, we had this capital increase of BRL 1.5 billion this year, which with a 4% bonus share issuance for the shareholders, okay. The important message here is that all these KPIs or almost all these KPIs are related to the digital transformation we have been doing in the company for the past four years now, five years now, since 2018. Those were seeds we planted four or five years ago, that were expected to come to life as it is coming now. We can see that this digital transformation is helping us on gains with efficiency, leveraging the customer experience in our apps and the profitability on our digital channels, okay? The goals we defined in 2018, 2019, coupled with our proficiency in releasing more and more developments on our digital activity, which increased in a nine-fold on the last two years, helped us increase a lot the profitability of our digital activity. Think of these KPIs here, which are gross margin, marketing expenses or less mile expenses, logistic expenses. Think of these KPIs as the nightmares of any e-commerce business here in Brazil. We were able to capture in this year 1.5 percentage point increase in gross margin and on the last two years, not only one year. Also in the last two years, we were able to decrease expenses in marketing and logistics from 7% over sales to 3.3% over sales. This is again, considering these three lines of roughly five percentage points only in our digital activity. Okay? Other impacts on this digital activity are related to digitalized frequent customers, as Eugenio was mentioning before. Now our digital customers already account for 18% of sales in the company because they buy online, but they also buy offline. This is good indicator for us of engagement and loyalty and over our sales and this digitalization keeps increasing and expanding 63%. Okay, this e-commerce activity is a healthy and sustainable activity and with a very good contribution margin for the whole company. Another KPI here or initiative is the fast deliveries are already available in 258 cities. If you think only on the metropolis, the fast delivery already accounts for 80% of all the deliveries we are doing in those places. This is very important. We also have several back office digital initiatives such as credit analysis and microservices. Those are initiatives that the customer is not seeing, but that is helping the engine here inside the company works better in a faster way, in a more profitable way, and it's improving. This kind of initiatives is capturing savings and improving also the customer experience. Finally, all these things together were responsible for us increasing our NPS in the app activity to an index of 64, and on our deliveries for 81. This is for me. Thank you. Thank you, Flávio. Thank you, Eugênio. We'll now proceed to the Q&A session. The first question is from Igor G. Spricigo from UBS. Hi, Eugênio. Hi, Flávio. Thanks for taking our question. I actually have two, if I may. The first one is on the digital front. In this quarter, the company has reported a considerable increase to almost 14% of penetration following a quarter of stability. My question is or do you think you're reaping the benefits of past? Also, where do you think penetration can go? Are there any international benchmarks that we can look at? Is on the competitive environment. In this quarter, you have once again gained market share across all regions at a strong pace. Where do you think the bulk of the share is coming from? Is it coming from the large chains or smaller players? Thanks. Igor, thank you for your questions. O n the digital side, there is nothing different. It's the same execution continuously improving with a ton of consistency. if anything is different, maybe it's the acceleration of the delivery frequency. This is something that advanced a lot in the quarter. I think you can explain. I see this more as a correction because we had stayed flat in the Q4. If you look over the Q3, it's kind of a linear progression. There is nothing too different here. As we keep executing better, as the productivity at our squares improves the air quality and the experience, as the delivery is every time better, all these executional elements, they keep combining. The customer habit is building up. I think the stores keep adding new customers to digital. T he file keeps turning and the digital keeps growing. When you talk about benchmark, we have some regions in which we already have more than 20% of digital penetration. Believe it or not, São Paulo is not among the top digital penetrations in the country. We have regions like in the south, Rio de Janeiro, even Minas Gerais, they're even higher digital penetration than São Paulo, even though the one in São Paulo is good. over time, and likewise, there are a lot of markets with lower penetration capitals in the northeast that we're still in, maybe in the low teens or something at a. Not low teens, sorry. It's probably seven, eight, nine, 10 around that. T here'll be a catch up by these less penetrated markets. T here will be a sustained increase even if it's lower on the higher penetration markets. I don't know where this can takes us. I believe we have at least this year, next year, with a lot of digital growth. Maybe we go to 20%, maybe we go north of that. We will see where it grows. In terms of market share, if you look historically We're gaining more from chains as a whole. If you compare us with the other top five chains, there is a very sustained market share growth year after year. The fact that we grow faster than these guys on a combined basis growth, that our comps perform better than their comps. For sure, we are gaining share over the other top five players. Even though, I would say the top five players are in most of them in good shape and they're healthy, et cetera. When you look at chains below the top five or even below the top 10 position, there is a lot of pain there. A lot of chains who are highly leveraged, several players who have even gone out of market. We have a player in Goiás who have, who is going out of market trying to do a Chapter 11, which is not easy. We have a player in the countryside of São Paulo, in the literal part of São Paulo, in the shore part of São Paulo, that just got out of market. We have another player, in a very popular areas of the capital, that is also in dire straits. I would say that the pain that some of these me too chains, that they feel is the largest one in the market to the point of some of these guys going out of market. We gain share over the top players as well, and we gain share over, T he independents for sure, and I think we gain share also even over the associations. I would say outside of us, these associations are probably the player who are doing better. Eugênio, let me just contribute with this answer. Starting with the market share, just to keep up with your thoughts. There's a situation here that the more challenging the environment, the better we perform. Considering our company compared to the industry in general, we have a way bigger size than any other competitor, and we are also more profitable than any other competitor. Every time we have this challenging environment, we are able to capture the benefits of other companies that are not performing that well. This is important for us. We have been capturing market share roughly from 50 to 100 BPS every year. The more challenging the environment, the more it is close to this 100 BPS gain of market share. Also, considering the digital participation, Igor, you were asking about. One thing is to think of the digital sales we are doing in the company, this 13.7%, which are already good enough. This brings us to the most digitalized pharma in the Occident of the globe, on the Occident part of the globe, at scale of course. This is not important. The important message here is the digitalization of the customer. Remember that digital here for us is a business of engaging customers and of turning these customers more frequent and treated better by our company. If the participation of digital is 13, 15, 20, or 10, whatever, the important thing here is to have the customer digitalized. A digitalized customer means that these customers has our apps on their pockets or in their hands, so we can relate to these customers every day if we want. Not as fast as or faster than the 20 times, 20-ish times we have with our frequent customers, but here we can improve a lot, this engagement and relationship and everything. This enables us to provide. The digitalization of these customers enables us to provide solutions for customers anytime they want, everywhere they want, and as fast as they want with this very fast last mile activity. Digitalization here is related more to the customer than to the channel of digitalization. Important thing for us, you saw the numbers of marketing expenditure for digital. They are very low because this, our digitalization machine on the company is our store. Our store staff are the one teaching the customers in our app and helping the customers to understand the journeys, the digital journeys here. Those are the important movements we are doing in the company. Our next and final question is from Lucas Dias from Aster Capital. Hi, Flávio. Hi, Eugênio. Thanks for taking my questions. The first one is regarding 4Bio. The performance of this operation has been stunning, right? Very, very impressive, the top line growth. I'd like to understand, like, what are the drivers behind this? Like, why is this happening? Is 4Bio taking advantage of a good competitive scenario or has something changed in the operation? If you see any changes going forward, so through the remainder of the year and the coming years, if we should expect such incredible growth or if there is something specific happening which has changed the level of this operation and now it should stabilize in terms of growth but now in a new level of size, right? First for view and second, I found very nice the graph you showed on shipping and marketing expenses for the digital operation. I had never seen something like that and I'd like to understand which other expenses are relevant for this operation. Besides shipping and marketing which else matters and I understand why both of these expenses are much lower than in other e-commerce players because you have a lot of capillarity so logistics shouldn't take much of a toll and regarding marketing it's what Flávio just said so, the CAC is mostly the salespeople in the store, pushing the customer to download the app but I'd like to understand why has it gone down so much in the last couple of years. Is there an explanation for such a dilution? These are the questions. Thank you. Lucas, thank you for the questions. Let me start with 4Bio, then I'll talk about Digio and Flávio for sure will have some complementation on Digio as well. In terms of 4Bio, I think this is a company we bought eight, nine years ago and in this period the company is multiplying the top line by 20 times. 20 times. We're talking 4Bio, it was selling in 2014 I think or 2015 when we bought it. I think we bought in 2015 it was selling in 2014 BRL 120 million in sales. We'll do this year I don't know BRL 2.6 billion, BRL 2.7 billion, BRL 2.8 billion something like that. It's a staggering growth. It's not an easy business. This is because 4Bio is a business that it looks like more what an American pharmacy business looks like. It's a business in which there is a payers. We sell to companies like Sulamérica, Bradesco, Amil, et cetera. We deliver to the customer home and then we have to monitor the clinical state of the patients because it's an oncological product mostly that people are taking home. We have to make sure they are adhering to the treatment. We have to be aware of any side effects toward the physician. There's a big. It's a high touch business. It's a complex business to execute. Our competitors are mostly wholesalers who don't have this service DNA. Where 4Bio wins is on an amazing and very reliable logistics being able to deliver the products on time. An oncological product cannot get late to the customer and then doing all this clinical monitoring of the customer. It's a business with compressed gross margins because we are negotiating with payers. Gross margin over time they go, they decline but then the scale has to make our costs go down and this is what's happening as well. We have seen times in which we have difficult margins. It was not always amazing. Now I think we are in a moment in which this kind of growth plus some efficiency gains that we had in the business are delivering very healthy margins for 4Bio, are delivering ROICs at the high teen levels. 4Bio has a completely different margin structure versus Raia Drogasil. 4Bio has a lower EBITDA margin, but 4Bio doesn't have to, doesn't have working capital replicated over 2,700 stores. 4Bio doesn't invest every year the CapEx to open 260 stores Raia Drogasil does. 4Bio is very efficient in terms of capital deployment. It's less margin but less capital investment but getting to a nice ROIC. What's happening to deliver this 60% performance, I think part has to do with the execution. We have increased regional bases at 4Bio to make 4Bio more national. This is helping. There are new contracts with important health operators that are coming up. This is also helping us a lot there's a third factor that is related to this credit tightening. We, I, especially we have one competitor, who is very large and owned by a private equity company which is melting down and obviously they're losing credit of suppliers, and we are absorbing a lot of their sale. Not only us, there are other players as well, but we are absorbing a lot of their sales. We are seeing this amazing growth. I think the revenue we have today, they're fully sustainable but at some point we'll see a higher comp base so the 60% in the second semester will decline. I don't know what will be look, what's looking like in the Q2 but for sure in the second semester I expect to see a growth rate deceleration but because of the comp base not because of giving back what we are getting. We're very happy with how things are playing out at 4Bio and obviously, 4Bio, it harms our margins when you look at a consolidated site but it has a meaningful impact on consolidated top line as well. In the end both businesses are doing brilliantly. We see the retail business with a EBITDA margin close to 7% in the weakest quarter, in terms of seasonality. This is an amazing figure with huge margin expansion and we see 4Bio with good healthy margins growing like never before and posting amazing growth. Finally. On the digital side, I think, Flavio was very precise to summarize. I mean, if you look in the main challenges of a digital operation, and I would generalize here, whatever digital operation, not only in pharmacy, are one, maintaining gross margins. Two, customer acquisition costs. And three, delivery costs. What's happening here in terms of the gross margin is that our service is more and more a convenient service and less and less a price service. We still have a lower gross margin in the digital than in the pharmacies. This is still true, I'm not denying that, but the difference is shrinking up. Nowadays we're starting to have regional pricing for digital, which we didn't have in the past. For example, we have a level of competition for digital in São Paulo that we don't have in several capitals in Brazil, let alone in smaller cities. With regional digital pricing, we are able to differentiate the prices. We're able to be very competitive and aggressive where we need to be, but we're able to monetize better where we are alone or have much lower competition. This is what's driving the gross margin to increase over time. When we talk about the delivery expenses, for me, the main factor here is click and collect. Click and collect is growing faster than delivery. Delivery is using more and more the store capillarity and getting more efficient. The main effect is the click and collect. Finally, when you talk about digital, when we understand the economics of a web customer and see that a web customer is a guy who's searching online for prices, is very price-driven, way less loyal, we decided to invest less and less in terms of open ocean digital marketing, things like Google, Meta, et cetera. We are cutting on purpose the investment to bring customers through these channels, and instead we're focusing more and more on using the store as a customer acquisition machine. The customer who comes through store, the customer who uses the app, will have a much better economics, will be much more loyal, will be more about convenience and less about prices alone. In the end of the day, I think what these expenses and these figures show is the barrier of entry that we have here in the market. Any player, any pure-play internet player cannot replicate what we're doing. First of all, if they rely on price searches, if they do rely on digital marketing, digital marketing has to be combined with very low prices. The first challenge of a pure-play player is the gross margin. To win the customer, the gross margin will be much lower. Second, on top of this lower gross margin, it's paying customer acquisition costs to Google, Meta, and other players, TikTok, et cetera, which is very high. And third, a pure-play motorized delivery is always very expensive. Moving to the store reduces, but still expensive. What makes the overall number good is the mix between motorized deliveries and click and collect. A pure-play player doesn't have it. A marketplace won't have that economics. Nobody. A pure-play digital pharmacy won't have that economics. This shows that how important having the store base is for acquiring customer, for onboarding the customer, and for using the store for click and collect, and for faster and more efficient deliveries. Flavio, if you want to add any more color. No. Yes. Just to add one additional index here on the profitability of our e-commerce activity. One additional line is the investments and expenses on digitalization, on technology in general to develop the app, develop the sites. That is not, you can't not see this in the store P&L. This is. This is off itself. Yes. This is hurting a little bit more the P&L of the digital activity. But once again, forget about the reading P&L, separated P&L. Store P&L and independently from the e-commerce P&L, because we should read these P&Ls in the horizontal. Think about the customer P&L, once we improve engagements, once we gain frequency of this customer. It doesn't matter if the customer buys on the store or online, by any of our channels. This just keeps improving the engagement we have with this customer, the frequency, the share of wallet and everything. This helps NPS, this helps a lot of indicators. The e-commerce P&L, which is positive, sustainable, and we can keep this in the future, is part of our strategy to engage the customer. When you think in terms of contribution margin, obviously technology I think is very important, but it's more like a G&A line than a contribution margin line. In contribution margin, there are two other lines that we are addressing. One is picking. When we shift from centralized picking in the DC and we're doing more and more store picking, we're using existing store personnel and we are also diluting personnel expenses related to digital. Finally, one other line that I think is very punitive for digital and we're trying to address is acquiring the credit card. It's a mix between acquiring fee, fraud and fraud prevention. Mm-hmm. This is a highlight for everybody because there is, because of chargeback and digital is different from in the store. What we're trying to do is using our internal intelligence, because we have a lot of frequent customers who are buying every month, we don't need third party bureaus to tell us that this is a low-risk transaction. If I know Flávio is a recurring customer, if I know the purchase is within the realms of what he generally spends, I don't need a credit bureau to clear this transaction out. If I have a new customer, I will use the credit bureau. We used to take too much the credit bureaus. As we use internal intelligence, I don't know if the chargeback will fall down, but at least what we spend in credit bureaus will have to fall down. We're still looking for more opportunities. The main point here is what Flávio mentioned, is the role of digital in the overall journey of the customer, in making the customer overall more loyal. It's also for me amazing the fact that we came from 1% digitalization to 14% digitalization with same or higher margin than we had before. Nobody else, I think, has done that, and this for me is amazing. The Q&A session is now over. We'll return the conference call to RD's executives for their final remarks. Gentlemen, you may proceed. Okay. Just to summarize some of the things we said here and talked some of what the perspectives we see looking forward for the company. I think this was another amazing quarter. A quarter that underscores the resilience of this business, that underscores the strength of the balance sheet and how important a strong balance sheet is. In the end, they both point to the fact that this is a very low beta business. A lot of people talk about high multiples, but I don't listen to people talking about low beta, which for me is one of the main reasons of the high multiple. High multiple relate to beta and they relate to future value creation potential, and we have both in a very, very exciting way. The quarter, in addition to the resiliency, also underscores some of the competitive advantages that we have. I think we have three very important and structural competitive advantages. The first is scale. I mean, we have a completely different level of scale versus any other competitor. We are 40% larger than the number two player in the industry. The number three player is only one-third of our size. The number two is 40% of our size. Sorry, it's 40% of our size. The number three is one-third of our size. We are gaining every year. We're BRL five, BRL six billion in top line. Basically, it's like if we're adding more than the revenues of the number five player in the market every year on our scale. One thing is the scale gap today, but a completely different ballgame is if you look at where we'll be in terms of scale difference 5 years or 10 years down the road. Even if at some point the percentage, the top line growth, right now it's been similar or higher, but even if at some point the percentage growth is not higher than the other guys, the absolute growth will always be higher and it will always be adding scale. This is a very favorable element. We play today with a scale advantage we never had in the past, and we'll play in the future with a scale advantage we don't even have today. It's not only about scale, it's also about efficiency. We have the highest performance in sales per store. In March, our mature store sold an average BRL 1,150,000 per store per month. None of our competitors is even close to this figure. What this means is expense dilution. Any pharmacy in Brazil who opens 8:00 A.M. and closes 11:00 P.M. or 12:00 P.M. will have a similar fixed cost base. All depending on how, regardless of how they sell, they have one store manager, they have two assistant managers, they have three pharmacists. Two-thirds of the store expenses are there, are fixed. Obviously, if we sell more, maybe we have more cashiers, we have more people in the pharmacy counter. The big expenses, which are store managers, pharmacies, electricity, rentals, they are the same for everybody. Higher sales means higher operating leverage. Higher operating leverage means higher margin, means higher, and means that we can be structurally cheaper than anyone else while still delivering a higher margin than anyone else. If you read Michael Porter says that you have three forms of differentiating one company from competitors: niche, cost, and quality. Obviously, we're no niche player, we managed to do two at the same time, cost and quality. We are the highest quality provider. We have the best locations. We have more people in the stores. We have higher expenses per store because of the service we provide. We dilute these higher expenses over a much higher sales per store, which in the end allows our expenses to be much lower, allows our prices to be cheaper than our competitors. This is a very efficient flywheel. More dilution, less expenses, lower prices, and one is driving the other, and the flywheel keeps turning. The third competitive advantage is the capacity to replicate all these economics and multiply it very fast because of the high quality and very fast expansion that we have. The fact that we look at the whole map of Brazil and regardless of what ZIP code we open a store there, we have similar performance, we have same expected store returns and nobody else has this. All our competitors have a pocket of profitability. They do well in the native market when around, but then a huge barrier of entry and a very bloody red ocean besides those markets. This is a very structural competitive advantage that we have. In addition to this, we are executing in a very good way. Top line growth of 21%. We see huge market share gain. We see huge advancement in digitalization. We keep growing the store contribution margin because of digital, and we expect to keep growing this year and coming forward. We expect the contribution margin will keep increasing and at the same time we expect that the G&A starts falling down. This quarter showed an early signal of the G&A finally starting to come down. There was a big cycle of investing in structure, people, technology, and now we're starting a cycle of harvesting the investments that we have undertaken. When you look at the Q2, obviously we'll see a quarter of margin pressure. There is nothing bad about the Q2 this year. With a price increase of 5.6%, we'll have a very healthy quarter. We'll have a very good EBITDA margin compared versus the other quarters. What's exceptional was the Q2 last year because the price was 10.9%. Obviously we have an impossible comp base on the Q2. It's not that the Q2 will be weaker, it's that the Q2 last year was extraordinarily strong. In our, in our view, we're growing margin in this Q1. We expect to grow margin in the Q3. We expect to grow margin in the Q4. The blend for the year, I don't know it depend because we lose margin on the Q2, but the Q2 will always be a specific quarter related to the inflation. What shows the efficiency gains and what you can expect and project for the future is the structural gain, not the seasonal gain. You see the structural gain in Q1, Q3 and Q4. Regardless of where the blend points to, the fact is that the structural margin of this company is already increasing. Obviously, there is also the 4Bio effect. We have to see what the 4Bio effect will be in the second semester. There will be less mix effect I believe because the 4Bio start seeing a high comp growth. I don't know what the consolidated margin for the year will be and how it compares to last year, but I know that the structural margin will grow up, especially when you look at the retail. Finally, when we think longer term, that's when I think the best is there is... We are doing so many things that can be transformational for this company. First, we're in a market that feeds from the senior population growth that is growing 4% per year and need to be doing so for another 10 years. After that 3% for another 10 years on top of those 10 years. We have a huge growth runway ahead of us. We keep growing to 60 stores a year with amazing performance. We are seeing a sustainable margin improvement because of the contribution margin and because of G&A dilution. We are seeing that digital is getting better every year, providing a better experience, increasing loyalty every year. We have ads as a completely new avenue for growth and a very promising one. We have a health platform that we're building that is just in its infancy. There's a lot of functionalities that will point to a very bright future in my view. Thank you very much for attending this call and thanks for our long-term shareholders for their sustained support. Thank you. Our conference call is now over. We thank you for participating and wish everyone a good day.