Hello, everyone. Thank you for standing by, and welcome to RD Saúde's Fourth Quarter 2024 Earnings Conference Call. This presentation is available on our investor relations website, ri.rdsaude.com.br, where a recording of this call will also be made available later. During the presentation, all of the participants will be in a listen-only mode. After that, we will open the floor for a Q&A session. Before we begin, we'd like to clarify that any statements made during this call regarding the company's business outlook, forecast, and operational or financial goals reflect the beliefs and assumptions of RD Saúde's management, as well as the information currently available to the company. Forward-looking statements are no guarantee of future performance. They involve risks, uncertainties, and assumptions as they relate to future events and therefore depend on circumstances that may or may not occur. Our investors should understand that general economic conditions, industry trends, and other operational factors may impact the company's future results, and potentially, they can lead to outcomes that differ materially from those expressed in these forward-looking statements. Today, joining us from the RD Saúde studio, we have Renato Raduan, our CEO, and Flávio Correia, our IRO and Corporate Affairs Officer. Good morning, everyone. Good morning, Flávio. I'm going to give you the floor in a moment. Welcome, everyone. Good morning. Welcome to our earnings presentation for the Fourth Quarter and 2024 results. It is a pleasure to be here as a moderator. I used to be there on the side, so it's a great debut for me. My name is Renato Raduan. People normally call me by my last name, Raduan. I've been with the company for 12 years, and I will, or rather, I have been in Marcílio's position since the 1st of January. This is my first call, Marcílio, of course, with us here today, and I'll try and be as clear as possible in explanations and try and answer any questions you may have. Good morning, Flávio. Would you like to say anything? No, we can get started, so just to try and be concise and also to have more time for the Q&A, I am going to give you an overview with the first slides, and then Flávio is going to delve deeper into the content, so let's start off with this slide. We had 3,300 pharmacies operating at the end of the year. We had 300 new pharmacies open and very profitable new stores, so we're quite proud of them. We only closed 23 pharmacies. We had 404 million tickets in the year with an NPS of 91. It's as if every Brazilian had bought at our pharmacies twice, and 50 million clients have visited us about eight times. We're very proud to have this amount of tickets with this level of NPS. From a financial perspective, at the end of the year, our gross revenue was BRL 41.8 billion, a 15.1% rise year- on- year, so this is a very good result, and we had a 2-point increase compared to CMED. It's a very substantially solid year, and there was a slowdown in the fourth quarter, however. The top line was, well, a step behind of what we expected, and I'm going to also clarify that in the coming slides. In spite of this decrease in the fourth quarter, we still sustained an increase in our market share. We had a 16.5% market share at the end of the year. That's a 0.3 percentage points increase, and I'm going to talk about that later as well. Another highlight is our digital operation. We had BRL 7.1 billion in the year, a 41.7% rise. We know that many retailers, by and large, benefited from the multi-channel approach that we had from the start of the pandemic up to 2023 and then had more challenges to continue to thrive from then on. But we can see here that we had a 20% penetration in retail in the fourth quarter. And health services, 6.3%, 6.3 million services performed. That's part of our clients' and customers' lives. And our EBITDA was in line with growth revenue, 15%. So our EBITDA was BRL 3 billion, and our margin was 7.2%. Adjusted net income was 16.6%, not 15%. It was higher than that, and Flávio is going to shed more light upon that. And our margin was 3.1%, very much driven by the 3.5% margin we had in the fourth quarter. Flávio is also going to explain that further. And our free cash flow was BRL 188.5 million, BRL 651 million in total consumption. Well, that was a very good year. As I said, 300 new pharmacies opened, almost 100 in the last quarter. And what's important for us to continue to increase our market share is that this increase was very profitable with over 20%, which is our historical figure. So we're quite happy with that. And with that increase, we still have only 75% of our pharmacies as mature stores, and there's still some stores to be matured. We've changed our guidance, and in 2025, we're going to open between 330 and 350 new stores. We're quite confident we'll be able to take this next step with the results and the IRR that we have been having in the past years. We are now present in 619 cities. We continue to grow. That's the largest footprint that we have in cities that we're already present at and also new cities. IRR is quite healthy. If you look at this chart, you can see there has been a change in our strategy. In 2021 and 2022, we had fewer stores open in the state of São Paulo and more in the North and Northeast of the country. We had 33%-31% share in our expansion. In more recent years, we have, of course, we are always fine-tuning our strategy as per our profitability and the whole context, but we have been accelerating our footprint in São Paulo. 40% new stores opened in São Paulo. Here we see that 35% was the state of São Paulo, and we have decreased the share of the Northeast in our expansion strategy. Now, when we combine our expansion with the fact that mature stores are growing more than CMED and inflation, that takes us to our record share, so 16.2%-16.5%, so a 0.3% increase. Let's look at this breakdown. If we look at São Paulo and the Southeast, we have almost 50% of the pharmaceutical market. We see a 0.7 percentage points increase in our share. That's quite robust. The South and the North have a 0.5% increase. The Northeast, as I said, we reduced our expansion strategy slightly. There was an increase, but a more timid increase, and the Midwest is only about 19%. There was a minor decrease in our share. There is a sell-in point more than a sell-out point. But the mature store growth is well in line with the rest of the country. We're growing in the Midwest with mature stores above the CMED rate and the average in the country. So by and large, I believe that we have performed very well. Well, as for the digital channels, I'm not going to be speaking so much about the charts, but about the heading. There are four pieces of information that are quite important here. First is that after years of growth, and on top of this accelerated base, we grew another 41.7% in the year, which is different to what you see in retail in general. So I think this is worth a mention. And digital in and of itself is already BRL 7.1 billion in sales a year. When we look at all of the orders and the digital channels, they amount to over BRL 7 billion. It's more than most other players in the market. The third highlight here is the penetration, which was 20%. When we look at the states, we see that every state has made headway. All of them have 15%-20% penetration, and you see that in some of them, it's 25%. One out of four orders placed to a pharmacy, one is online, and three are offline. The fourth piece of information here is that everything is taking place in our proprietary channel, which is in everyone's pocket and their mobile phone. 75% of the orders were made in our app. It used to be 68% in the fourth quarter last year. This year is 76%. We see that these orders are being made in our app, in our proprietary channel, so we're not involving other third players, third-party players. That would be a feebler type of link than our own application, right? So this acceleration improves the experience as well. Our NPS was 73% at the start of the year, and we ended at 79%. So in the course of the year, we have substantially improved the customer journey. And that's the customer's voice. It's their vote telling us how much the app has improved in the past year. So this is also worth a mention. And before I turn the floor over to Flávio, I think we can talk a little bit about this slide because it's certainly going to answer some of the questions you're going to be asking later. As we said, we have grown 15.1% in our revenue, so it's an increase of BRL 5.5 billion in revenue and sales. The last quarter was a bit slacker, and it had a slight slowdown. When we look at the categories, we can understand that better. We see that this is not seen in medication as a whole. In the fourth quarter, we see the medications continue to grow 18% more than the year to date, more than the whole year of 2024. In OTC, we had a slight decrease, analgesics and fever medication. We see that cosmetics has gone down. It was 12% in the year, 5.6% in the fourth quarter. It's not too far from the average of the market, but there are three main factors that will explain what's happened in cosmetics in the last quarter. Black Friday was not as strong as we had in previous years. Black Friday had a negative impact on cosmetics. The second aspect, and I believe this is the most important point in this context, is the sunscreen, the sunblock. It was really weak. Other skincare products, they're normally very important in the summer period, and sunblock had a negative growth. That is due to the weather. We see that cosmetics was brought down by sunscreen in this quarter, especially in December. Last but not least, normally, shortly before Christmas and New Year's Eve, there is a peak in sales in the three days prior to these dates. We did not see this increase at the very end of the year. That impacted negatively the results of cosmetics. It was not evenly distributed between October, December, and December. October, November, they fared normally, and as of Black Friday and December, we saw a stronger dip in performance. And you don't have much time to react to that. So this is what explains what has happened. It's related to cosmetics and these three points. And sorry, let me just wrap up. And structurally, this is not a concern. If we look at two years, in 2023, we grew 37% in cosmetics. In OTC, it grew 20%, but in 2022, there was a lot of COVID tests. So that's why you have some of this impact. And in the past two years, even in the last two years, even in or in spite of direct competition and other digital platforms and marketplaces, they have been our competition in these past years, we see an increase of 37%. It's quite solid. And in line with the rest of the company, but yes, we can see a dip in the fourth quarter in cosmetics. January, I cannot give you a guidance. Well, sunscreen products have picked up again. January is going to be better than what had been in December. Would you like to build up on anything, Flávio? Good morning. Good morning, everyone. And thank you very much for being here with us. Something that is worth mentioning, Raduan, is the fact that December was not very heated because of the schedule of the year, because Christmas, New Year tends to be a three- or four-day off. But this year, it was like a 10-day holiday period because the days off were just in the middle of the week. So it brings down the demand during those two weeks where the holidays were. The strategy of growth, it also changes our sales mix. In the fourth quarter last year, 27% of sales came from cosmetics and branded medication, 41%. As we've had now a difference, we had 25% cosmetics and medication, 42%. This has also impacted margins, as Flávio is going to tell us. Great. Moving on, Raduan has already told us what has happened in our gross sales year- over- year. Same store growth, 9% increase year- over- year and in mature stores, growth has been 6.5% year- over- year. For those who are not really familiarized with the Brazilian context, it seems to be a huge difference, 7.9%- 6.5% in same store growth that we had in 2024 over 2023, but if we're excluding inflation, we can see that the real growth has been maintained. Real growth of 2 percentage points over inflation in same stores, 4.5% growth over inflation rate. It's been a very good pace of growth and very positive. Now, talking about gross margin, gross margin was 27.7% in the year, 11.5 billion BRL. The quarter closed with gross margin of 27.6%. For those periods, there was a decrease over the previous year, 3.30 basis points of gross margin in the year and for in the quarter. When we analyze the effects and the causes, we can see a situation of PIS/COFINS, a change in our tax regimen comparing 2023 to 2024, which really impacts 0.1% our gross profit. There is also a 4Bio performance with recurring growth over retail and with gross margin below retail. Because of the mix effect, the 4Bio means really a 20% difference year- over- year. If I may add on what Raduan has said about the increase of each category, there is also a mix effect here because of the different share of categories. Cosmetics, for example, runs at about 30%. HPC is different from medication, where we have about 17%, 15%-17%. So you can see the mix of less sales on HPC and cosmetics and more sales of medications is a detractor of 10-20 basis points because of this category mix. It's worth saying that selling proportionally more medication is better. Semaglutide, for example, and other typical medications have been selling a lot, 40% share of sales of these categories in the Brazilian pharma market. So very positive points in this situation. Our cash cycle with 60 days, very expected, very much aligned with the previous year, just one day difference, super well balanced. Now, going into details with selling expenses, we closed the year with 17.4% selling expenses in the quarter. It was 18%. Both periods showed a dilution of 10 basis points. It's a very positive result, something that we've been really focusing on. It is structural leveraging of our retail. We are really speaking about diluting expenses, personnel, and also rental costs from leases. When comparing the third and the fourth quarter, we can see an acceleration of expenses, 17.1%-18%, and there was an acceleration for two main reasons. First, because there is a readjustment of our personnel in the stores. We had already pointed it out. Our operations needed more headcount in operation. We brought them in, and it meant an increase in expenses. But that's fine. The results were obtained. It will be translated into, for example, more customer engagement, and it will just get absorbed over time. Finally, an increase in structural expenses, more lease, also the payment of the 13th salary, the additional salaries in the end of the year, then air conditioning costs because of summer, and also marketing expenses because of seasonality. That's traditional recurring, really, expenses. The other part had already been mentioned in the previous call. The impact on contribution margin was obtained because of that, and also the gross profit. In general administrative expenses, we have 3.1%, which is very positive results, 20 basis points year- over- year. We closed the quarter with 3.3%, also over the same period last year. We can see a 10% difference or 10 percentage points difference. These are all due to the fact that we had personnel expenses and structuring expenses being added. It's something recurring, as I mentioned. It's also important to say that this increase of expenses in the third to the fourth quarter of 30 basis points, which is non-structural, and it was due to the fact that there were two launches. First, labor provisions, because now the labor market is leading to more turnover in the operations, which generates more pressure. So we need to make labor really provisions for that. And there's about 10 basis points, which is charged back in our digital operations, but this is just one-off effect. Now, considering it all, our EBITDA was 7.2%, absolute value of BRL 3 billion, really comparing year- over- year and maintaining the same levels. Now, let's see the lines below EBITDA. We have income tax, which has been increased year- over- year. It was BRL 137 million in 2023, going into 244 in 2024. This is fully aligned with tax issues because of the tax reform and the loss of some subsidies that we had experienced. There is a 77% increase in the operation. Let me emphasize that the result indicates an effective tax rate of 15.9%. However, there had been some specific gains, some tax gains, really, of about BRL 77 million. When we compensate these tax gains from previous years, it gets to a specific tax rate of 21.9%, which should be a stabilized tax rate for us from now on. It's important to understand the total amount and how much that tax reform has brought to our P&L. We have the adjusted net income of BRL 1.2 billion at a level of 3.1%. And if we considered the effects of the tax reform in such results, it would be something like BRL 200 million discounted in it. There is no need to go into any further details in terms of cash flow, fully controlled. It was BRL 1.4 billion operating cash flow, BRL 1.3 billion in terms of investments, very positive cash flow, BRL 200 million. Total cash flow, BRL 651 million, which goes into our net debt, BRL 3.4 billion, very well controlled, 1.1 times our EBITDA. It's a very healthy running rate for the company. And finally, our stock performance, which had a loss in our share price, 25%, as opposed to Bovespa, but we decreased 10%. Difficult year for the financial markets, especially for retailers in general, and we are just part of that. Thank you, Flávio. There are three more important slides to be shared with you. It's really worth mentioning them. Now, reinforcing that first part of the presentation, yes, it has been a good solid year, but the fourth quarter had shown some decrease. We are not here neither to belittle problems nor to enhance them. We just show that there was a deceleration, a reduction of that because of Black Friday, because of sunscreen. This is why there had been a slowdown. Yes, there was a decrease in the fourth quarter of our top line in sales and also a dilution of EBITDA. Even though we've managed to manage quite well our SG&A, our selling expenses, there was a delta of gross profit because of PIS/COFINS and 4Bio. This was fourth quarter, actually, but it's important to have a full understanding of the previous cycle. Once again, I would like to acknowledge the leadership of Marcílio Pousada. It was after the merger we had a four-fold increase in number of pharmacies. Our revenue increased by nine times. EBITDA got to BRL 30 billion, 10-time increase. We joined in 2012, 2013. We were part of that, Marcílio and I, and we've all done that, increasing pharmacy NPS in 31 points. But that's history now. The assets that have been built in the past 10 years are not forgotten. What we have here are 50 million customers with very high satisfaction rates, very well-trained staff with the culture, pursue of excellence, two brands which are extremely strong throughout the country, average sales, and very little variation throughout Brazil. The assets behind these numbers are still with us, and they are extremely important for the beginning of the new cycle, which is becoming now in reality, and there are six important points and topics that I would like to talk to you as guiding our future, the six most important topics in my agenda, in Raduan's agenda for the next cycle starting from 2025. First, we are going to go into organic growth. We are going to focus on organic growth. Despite everything that I've just shown you, we only have 16.5% market share, and we have a huge potential. We have our internal capacity to speed up our footprint expansion. There is room in the market, profitability, and return on investments, which are very good, and coupled with that, we see that our expansion and our footprint, all of that has really allowed us to leverage our digitization, so we see that we're capturing new customers and delivering the results or the medication satisfactory. These are going to continue to be focuses for the next cycle. Another important point is a further step and even greater focus on the customer. We're client-obsessed, customer-obsessed, as we like to say. The prices are very similar. Other pharmacies have digital channels for them, but the experience makes a difference. That got us to have an average sale of over 50% higher than the average. And this is a different experience. It's a premium experience. We have a smile on our faces when we are servicing the customer. And I've had the privilege to be in operations when I started with an NPS of 60, and now it's 91 with this customer-centric focus. Alongside Flávio, we started five years ago with these figures in our close to 90. We're going to continue to focus on customer experience. We know how big a role that plays. And of course, we see room for growth in healthcare. We have the assets that will allow Brazilian society to take better care of themselves. We have 49 million customers, 8 million loyal customers that we really have a relationship with, and that entitles us and allows us to really focus on primary healthcare. The end customer can already see this focus: 6.3 million services. So these are customers that, like us, understand they can go to the pharmacy to have a diagnosis, to get some instruction, to have a vaccine administered. And on top of the end customer, we also understand there is room for growth in supporting companies and operators in population healthcare, reducing the costs and management for companies and for operators. And we're going to be our carriers, and we're going to be focusing on that. So we really have the right to win there. The fourth point that is going to have a lot of focus for me and the team is AI. I used to say jokingly that we're going to have AI setting my future. You're either seen as someone who's able to use something to grow or not. So we can use AI to grow and really bolster the results that we already have and improve the results for customers, or you'll be seeing someone who failed to do so, who failed to use AI to improve the company's results. So this is going to go hand in hand with the tagline in the future of what my term as CEO was. So this is going to continue to be a major focus. One of the first meetings I had with the CEO was also with the chief analytics officer and the AI companies that we're working with. So we're really engaged into that. And none of that can happen if we're not sustainable and if we're not fostering our culture. I, for one, really believe that culture is not just one point amongst many others. It really is a point that will drive people's behavior. Our culture is to look after our people, to have focus in our activities as we build the future. That is what allowed Droga Raia to get to 120 years of operations and Drogasil to 90 years. So Droga Raia is 120 years old and Drogasil is 90 years old. And why? Because of our culture. We look after people. We execute with a laser focus and we always adapt to build a brighter future, a better future. And the last subject, it is of course last but not least, is that we're always effectively seeking to be more efficient and more accurate in our increase of profitability and also in reducing costs. I come from within. Marcílio didn't have this opportunity, right? He joined the company as the CEO, but I climbed up the company, right? So I was part of the everyday operations. So I have this privilege to understand what the pain points are. I've been here for 12 years. So this is something that I see sets me apart and really allows me to understand where the decisions have to be made, where efficiencies have to be found without losing anything in the present or the future. So these are the six top items in my agenda, not only in 2025, but in the following years too. And my last slide here is, yes, we know that 2025 is going to have challenges. In spite of them, we believe we'll at least sustain profitability and potentially increase it. There is a challenge to grow sales. We know that CMED is going to be lower than inflation. Nonetheless, we believe that improving our experience and restructuring our personnel at the stores, we believe we will be able to sustain mature shops at a higher level than inflation. We really believe we'll be able to do that. And we know this has happened in the past. And this is no belief only. It's based on evidence from the past. When CMED was lower than inflation, every competitor will readjust the discounts they give. As every expense is going to have an increase greater than CMED, then people try and find a trade-off. And well, in other points, this has happened in the market in the past whenever CMED was lower than inflation. Gross margin will be impacted by a lower CMED too, especially before the increase. The spread is going to go from, well, the old inventory at the old price and sold at a new price. There's a difference in price there, so the result, the profit in the second quarter is going to grow, but it's going to grow less, but in the course of time, the price will be normalized, and we know that in gross margin, the biggest impact comes from 4Bio 0.2, and 4Bio went from BRL 725 million to BRL 3 billion in 10 years. It's an amazing growth rate, and this year, we have a clear direction in sight to reprioritize margin and limit growth, and this is in line with their board as well. Expenses. Flávio mentioned this already. We knew that the second and third quarters last year were slightly lower than what would be healthy in expenses for the pharmacy, but we have reorganized that. We reorganized that in the fourth quarter, and we struck a balance. In the yearly average, well, we're going to be closer to the level that we are in headcount. But we do understand that there is a lot of room for growth when it comes to the G&A reduction, be it by eliminating non-priority initiatives that will not yield the results that we would wish they would, or by looking at priority initiatives that are going to continue to exist, but that could be delivered with fewer resources and higher efficiency. Again, I come from within, so I know the system and I've worked closer to people, and I know where the decisions can be made alongside the leaders. There is an expectation to reduce G&A at a faster pace than we had before to set off other reductions. Now going on to the consolidated view, there is a chance to have efficiency in expenses here as well. In the consolidated view, our EBITDA is five or 50 basis points lower than a controlling company. The numbers have been increasing in the past year, but when we consolidate that with the other companies, we have a 0.5% decrease, and that has increased. It used to be 0.3%, 0.4%, but now has increased, so 4Bio is being adjusted because it's the biggest share in terms of investment, but there are more strict decisions that we need to take. Maybe we can capture value faster within Impulso, for example, or there are other companies we invest in that are going to have value in the longer term, so we can maybe rebalance the expenses and the operating costs so that we really can have better results for the companies we invest in, so this is a more specific item to 2025. Of course, 2025 will have its challenges, and the first quarter already has the dengue fever as a reference, right? We had a peak in repellents. CMED being lower, well, then customers may not buy earlier, but we may not have the impact that we normally have at the start of April for the same reason. So the second quarter, we know that the margin over the inventory is going to be slightly lower, but we're very confident. We're quite confident that with these actions that we have to create value, we know that we'll be able to offset all of the impact and have a thriving second quarter. So this is the overview I'd like to give you. Now we can open up for the Q&A. I find it a bit challenging sometimes to have three questions sent to me at the same time, but let's see how we're going to do this. Thank you very much, Flávio and Renato Raduan, for your excellent presentations. Let's go into our Q&A session. First, Joseph Giordano with JP Morgan. Please move on. Hello, good morning, Renato Raduan, Flávio. Thank you very much for the question. I would like to welcome you for the call. I have three or four questions. The first one very much aligned to the top line. You've mentioned something about sun block products, then the recovery of margins. How do you see that in terms of channel? Because there is a migration of some categories to some Vitat channels and horizontal sales channels. Do you see any changes? Do you anticipate any changes in migration of channels? And going into my second question, and that's a question that's constantly asked. What is the OTC competition? Any partial impact in sales of these products and the digital channels and the role they play? Now let me go into the price issues. Maybe you haven't addressed that yet. PIS/COFINS over ICMS products that have about 30% of your mix could be subject to tax reduction. Do you see an impact, a potential of impact? Do you think that it's going to change? Maybe not in absolute numbers, but it would be good if you could shed some light on it. And finally, working capital. Do you see any space, especially in terms of inventory? We can see the profile of stores. 25% of them are under maturation, getting more and more mature. But do you think there is still more room for improvement there? What is it specifically about OTC growth and pressures of other segments getting into that? That's my understanding of it. So I'll go into the first and third question. HPC, consumers migrating to digital channels. It's a given, and this is something that we see in our numbers. The average penetration of digital channels is 20% of total sales. When you see HPC, that's much higher. It's about 25% and up. This category of HPC, digital share tends to be higher, and it's going to be like that, and we've been benefiting from that. We are prepared. We have our app gaining more and more market penetration. This is a trend, which is a given, really, and we are well positioned to deal with that because we have our app and digital channels working quite well. The last quarter, what happened in the last quarter has nothing to do with that natural migration. It is just a limited sales of sunscreen. It was negative, and it applied to physical stores and digital stores. The total sum was negative. So I think it was something concerning weather conditions, really. This is something which is going to impact all competitors. Likewise, it depends where your pharmacies are in the South, in the Northeast, all over Brazil. The effect may vary depending on that, and OTC is at a very regular level. Because of COVID tests, we had increased sales. Now things are going to a regular pace, and it's going to have an expected performance. Let me build up on two points. In HPC, there is a competition mentioned by Joseph, but the reality is we have always been part of the competition with all different players throughout the years, really. It's not something new. It's not something specific against pure digital players in HPC. This is something that has always been. It's our business as usual, really. A second point is if we just set apart HPC in our structure, it's combined with someone buying medication. Very few transactions are just pure HPC purchases. So this is why there is resilience with this combined sales. For working capital, we also have the ambition of getting more efficiency there. Where we have fee increase and CMEDs going to be lower, we have to be more aggressive, of course, because the percentage of CMED in terms of inflation will be lower. Of course, it's going to drive us to buy more in the second quarter, but we believe that this can be offset throughout the year. Especially in a year that there are going to be pressure on our margins, we have to work with our suppliers, making good negotiations, which are also part of our purchasing volume. It's part of our radar. I do not expect any significant impact in our working capital, in our cash cycle, but there might be some marginal improvements. However, it's important to point out that the company has been growing significantly, 15% or even more on a yearly basis, and logistics has kept its pace. We've been talking about new stores. We rarely talk about our new distribution centers and their capacity of operation. Throughout the year, we've planted very solid roots on improving optimization of automation, of having better processes in our distribution centers, something that's going to be addressed throughout the year. And in the midterm, we are going certainly to see that. Your last part of the question about the taxes, I wouldn't like to say anything really unique about it. PIS/COFINS, it's part of the price structure, our pricing strategy. It's not by the book price, cost plus. It is a market price. It is the competition price, in other words. A situation that increases the cost of the market at a large reference will impact all players. So it does not change the competitive status. And we believe we are a very solid player with a profitability margin with stronger. So I believe we can deal with even more commercial aggressive conditions. Great. Second question coming from Ruben Couto from Santander. Good morning, Renato and Flávio. I have one quick question here. Concerning SG&A, and it's fine, we are talking about reduction and not only dilution, so to speak, but how big are those adjustments and what are the areas that you've been revisiting? And when should we expect that to be seen? No guidance, I know, but to what extent we should expect that? Is it going to be a reduction in our percentage of revenues? Is it digitalization? Is it going to meet halfway? Just for us to have an idea of where we are heading to. Well, everyone looking at me and saying, "No guidance, no guidance." They are looking, "Be careful, don't give any guidance." And yes, I cannot give you any guidance. But let me just take two steps back. We've made investments which were very relevant to take us to our current position. Marcílio has led this movement of changing the models operating from where we were and reinventing the way we did things. Development of digital products, digital transformation, healthcare solutions, and we've made very significant investments. They were necessary. They had to be done. Four, five years later, we can certainly benefit from the legacy of this transformation, and we can also understand quite clearly where there are additional efficiency benefits that can be derived from that. Based on what we've learned, we know where there are opportunities for reduction and cuts. I cannot give you guidance, but I can tell you that it's something more than natural dilution. It is natural dilution plus a forced reduction at some specific spots where we know we can do it without impacting future deliverables and without impacting anything that we are currently doing. It's also important to point out that for the past six years, in three years, we increased our SG&A from 2.5% to 3.5%, and the other three years, for two years, we've been reducing from 3.5% to this level of 3% as we have it today. The machine we have is hybrid, physical and digital at the same time. What we used to have in the past, it was just a physical running machine, so to speak, and digital brings different things on board, cloud processing and others. Structurally, our SG&A, it's not something that will ever go back to 2.5%, but still we can clearly see a potential of reducing from the level we currently are. But we have to be responsible and not try to do things overnight. It's a journey. It is something that is going to be built progressively to get to a fully diluted level. But we have to be careful not to do anything silly in short term. And this is going to really deserve my emphasis here. Before I took over this position, controllers were very clear about that. And they've asked me always to think long-term, sustainability. Are there adjustments to be made? Absolutely. And they have to be done thinking about the future. They've really assured me that they do not expect me to take over and obtain short-term results, which are amazing, if they are not aligned with long-term plans. Yes, there is going to be a reduction in our expenses, but always think about long-term sustainability without impacting the operation of the company, rather really being assertive and precise in our initiatives. There is a question from Irma Sgarz from Goldman Sachs. Irma? Oh, okay. I would like now to go back to gross margin in the fourth quarter and also anticipating what you see in 2025. Yes, there is a pressure over gross margin, as you've highlighted in your initial remarks and also in the release. But was it more of a mixed thing or some of the factors that you've mentioned about the sales of HPC and Black Friday impacting your gross margin in the fourth quarter? Now, looking ahead to 2025, you've talked about the pre-increase discount adjustments, but I would like to understand to what extent other initiatives in, let's say, advertisement and health services, do you think they could offset these pressures? And of course, I don't expect any guidance, but conceptually speaking, how can we see stability of your EBITDA margin for 2025? Because gross margin is under pressure, but it can be offset by efficiencies or SG&A adjustments that you've been talking about. Just to understand the P&L, that kind of dynamics that you expect for 2025. Thank you very much for your question, which is very timely and relevant. Everything you've said is true. Maintaining our gross margin per se is a challenge. There are pressures going against it. We have to wait for prices to settle down in the market, and for bio mix prices take some time to happen. So there are a number of negative pressures on our gross margins, as you very well pointed out, and some other points that can be offset. Ads, revenues from services going up, other some internal operational issues, for example, reducing the level of losses because it goes directly into margins. It's a combination of a number of initiatives that we work here. Another thing that we've mentioned before, using a logistic hub that was opened this year in Goiânia just to have part of the goods of our inventory to supply the Northeast, just offering some tax benefits as well. It's an operation that logistically would make sense, not only from the tax perspective. Everything has been mapped in our radar of our team knows exactly what the pressures are. And since day one in January, we know exactly what the elements are. We've already talked about expenses. We expect SG&A decrease. Selling that from the pharmacies has changed. The third and fourth quarter last year had fewer personnel than we wanted, which takes us to the header of the last chart. Maintain at least our EBITDA at the same level, but still believing that we can move on into higher levels. First half of the year, more challenging than the second half where we can try to pick up. Hope I haven't given any inappropriate guidance here and hope I have been really specific here. There are just two comments I'd like to make. Not on this call, but we have recently talked a lot about digital items, right? And the digital would have a negative impact on the gross profit and the gross income because it's normally something that runs at lower prices. But we see that that is an impact that has been decreased of late. The contribution margin in the digital front is closer and closer to the brick- and- mortar shops as well. So it was a possibility to tap into other markets, but used to be a bit of a slowdown when it came to higher prices, but now it's getting more and more profitable. And our own brands, right? Our own brand products. And we have brands that are pretty well established and recognized. So these are two points I just wanted to raise. Thank you. Rodrigo Gastim from Itaú BBA will ask the next question. Renato and Flávio, I've got two questions. Renato, speaking about HPC, you have already mentioned that during the first answer, but strategically speaking, as you become more and more digital, how does HPC fit into that strategy when it comes to pricing, margin? And there's a point that I've been watching every quarter. Flávio says it's always been a competitive market, right? There are some players that are speeding up, especially these marketplaces. But I'd like to hear from you what the mixed product and price adjustments you believe will come in HPC, especially. And you also mentioned sunscreen, Renato, right? That impacts HPC, but in a broader perspective, we look at the Ebit proprietary data, and there is a connection with retail and the market. And we see that the whole market or the whole economy was impacted in December. From a quality perspective, have you adjusted or did you adjust your operations in any way? Not sales per se, but in the quality of the activities. That's very important for retail analysts to understand how the market has been behaving. I've asked this question to many companies. Thank you. I'll start off with the second question and go back to the first. So yes, December was slack, especially the last 10 days of the month. In our business, the last 10 days of December tend to be stronger prior to Christmas and prior to New Year's Eve, but we did not see that last year. It didn't happen to us. And of course, we're out there in the field. We're in shopping malls and we're in the streets, and we see that the whole of the market has been slower, or rather, was slower in December. Have we recovered? Not fully, but we see that there was an improvement in January already. So December is, or January is better than December anyway. As for HPC, we have been doing everything that you mentioned. Part of the product mix. We're basically the only digital player that will deliver in 60 minutes. There's one other competitor, but the others don't. So when it comes to HPC, people really want a 60-minute delivery. It can be a basic item or something for children or soap or something for the skin, skin care or sunblock. So our reach and our inventory, as spread out as it is, it's a five-minute delivery away from millions and millions of people. So that really allows us to stand out. It really is a strength for our HPC. That's no reason for our digital journey to lag behind. Clients will migrate more and more to digital journeys. And our own digital experience can't lag behind other players, other marketplaces. We are making substantial investments to improve experience in other categories so that we can have more possibilities, more content, more experiences to improve HPC, beauty, personal care, and also choosing specific categories so that we can focus on the mix with more depth. São Paulo is our largest market, and most 3P deliveries can be done in D+1 and the same day in the city of São Paulo, and that's quite important. This journey, this customer journey improvement is very important. Of course, the price war is even stronger online. We can find how competitive our price is much more easily than in brick- and- mortar shops. We can always marshal our prices based on what's going on in the market. Yes, this is a focus we have. We want to continue to be competitive in beauty and well-being. If we are no competitor there, if we're not in a competitive position, then we can't make a summer only with being close. Daniela Eiger from XP Investments, you may ask your question, please. Thank you for taking my question. My first question has to do with a trade-off perspective. Renato, you mentioned all of the leverages that you have to make sure that you're going to grow and achieve good margins in 2025, but also going back to Gastim's question on productivity. In a scenario that looks like it's going to be more challenging in the year, you may be forced to make a choice between growth and profitability. Not only you, I mean the whole of retail. So what are your thoughts on that? You mentioned you're focusing on the long term, but sometimes the short term will impose some difficult decisions. This year seems to be a year like that. 2024 was no trivial year, and you have delivered on margin and growth, but this is yet another challenging year that seems to be yet more challenging. What is the trade-off that will be there if it really happens, or how are we going to make the decision if you're faced with that? I don't know if I missed the answer. How do you see the price transfer onto customers, also considering the PIS/COFINS tax issue? This is another headwind that we have when it comes to pricing. How can you adjust all of that and also have the price transfer while making all the adjustments? These are my questions. Thank you very much. Thank you for your questions. I'll answer the first one, and then Flávio will talk about the second. We will do our utmost not to be faced with Sophie's Choice. We started the year with clarity around the challenges posed. So the earlier you find out what the challenges are, the sooner you can set out your strategy. So we are unlikely to have to focus on margin or growth. So the very first step we have already taken, every leader at the company has clarity on what's going on, is of course proud of what we have already achieved, but is also aware that this year is going to be more challenging. So we have to be yet better managers, yet better leaders to face these challenges. And as for the second part of your question, what controllers and shareholders have told me is we have to have as a reference the long-term development. So do your best for today, but also focus on the future. I don't think we're going to get to this point of having to choose either or, but if you have to choose between the best EBITDA for the year and growth in the long term, I don't think I can choose the former over the latter. So our value proposition, our competitiveness, all of that will be sustained, focusing on profitability as well. If we do have to make a choice, we will focus on the long term over present day. But I do not, and I state that again, I do not believe we're going to have to make that choice and choose profitability or choose something else over profitability to remain competitive. On the price transfer, as the pass-through, I think, right? So it's the moment we have before the CMED price adjustment takes place. Our understanding and the application of that is that this will have an impact on CMED and inflation. So the net impact of these situations is going to bring the CMED growth down. There's a variation of different product types within every state. The worst-case scenario would be a negative price transfer of 2.5%, but of course, our whole inventory is not based on that state, that case. So on average, we see that the CMED price transfer would be pulled down. But our understanding is that it doesn't impact us alone, but the whole of the market. And of course, we also have CMED as a Factor X and Factor Y. And this is slightly different to what we have seen in these past three years. These two factors were zero in these past years. But if you look at the historical figures we have in the last 10 to 13 years, we see that X and Y are in line with what we used to have in the past. So when we look at this longer term, then we can go back to the charts that Renato's shown us during the call. In the past 13 years, we have consistently been able to grow growth, market share, and profitability. Whether it's a good or a bad president at the helm of the country with high or low inflation, with high or low CMED, whatever the scenario, we have been able to make headway because we have a stronger company, a more profitable company. So we understand these macro situations are just part of the game, but we know how to play the game. Leandro Bastos from Citi will ask the next question. Morning, Renato and Flávio, thank you for taking my questions. I've got two. The 4Bio commercial policy will be focusing more on ROIC and margins. You're going to be more selective in categories. Can you clarify what exactly you mean with that? That's my first question. My second question is, when it comes to a competitive environment in retail, and of course, the discount is one of the possibilities we can have for the profitability to be sustained. So how do you expect these discounts to be made? And there's so much going on when it comes to taxes and other points. Concerning 4Bio, there are a number of ongoing plans, so to speak, but the macro perspective is the most important one. 4Bio is an activity separated from our retail. It's an independent company, independent CEO, running fully independently. It is a business that went from BRL 120 million to almost BRL 3,100 million on a yearly basis, so no complaints whatsoever. But this expansion has led to some challenges of profitability. When it was small, nobody saw this delta, but now, once the company is much bigger, we can clearly see that in our results. Some other issues have made 4Bio get out of our radar because of tax issues that it had in the past. And then the EBITDA was very close to that of the retail. So even with a lot of increase in activity, we could not see the impact. But now, with a number of changes, we start saying our structuring EBITDA margin, which is structurally below than the retail. Can we go back to the previous level as with retail? Of course not. It's a different activity. Distribution of specialized products is different. But we can somewhat reduce this effect, reducing the incentive for sales that the company has always had to get that balance between a positive sale, which should be better than retail because it operates in markets that have increasing demand than regular retail, and trying to capture some more profitability. Building up on that, 4Bio tends to have its payers are our healthcare insurance plans. And they've been quite tight in their negotiations. So because of the context where they operate, they tend to be very strict in their negotiations. But we don't want to keep on growing or doing business without having minimum profitable levels. It seems to be a nuance, but it's not, because when you are at a negotiation table, it's important to have a clear understanding that the team has to focus on profitability more than growth. Secondly, concerning competition, well, I think the competition is running fine. It's expected. Part of what has set us apart from competition is stability, no ups and downs, but more flat performance. Our competitors have had fluctuations, better moments, worse moments. And I would say much of the competitors are now running quite flat. Competitors from the Northeast, last year, one of the brands, the local players, was being purchased. And of course, with an incorporation and merger, there has been a value proposition increase, and that's better. All of them will have to face the same challenge that we have of inflation going up, adjustments of prices, salaries, rental costs. Profitability that they have is not different from ours, right? They start from lower EBITDA than we do, so it means they have to be more responsive in making adjustments to discounts because of compensations. We are a company with low leverage levels, interest rates about 13%-15%. And if we are operating at less leverage, we have some room, some additional room to operate in this context than those that have higher leverage. I fully respect and honestly respect all our competitors. The more I know them, the more I believe we can move on. But challenges are given to us and to anyone else. If the competitors do not have such a strong balance as we do, I believe the year is going to be even harder for them. Well, thank you. Let's move on with our questions. There is a question by Mauricio Cepeda with Morgan Stanley. Hello, Renato and Flávio. Thank you for taking my question. I have two questions, actually. First, going back to CMED, you, similarly to all retailers, operate below the maximum price. You can make discounts and try to compensate the effects. I also know that the industry, manufacturers, especially with interest or the current rate pressure, they have also reduced discounts, right? Discounts over their manufacturing price. Do you think that it might happen again? The industry having a reduction, you reducing the price to consumers, do you think that the effect it will have will still be positive to you? This is my first question. Second question concerns strategy. We've seen the management letter, very interesting and very well describing your strategic plan. In your pursuit for excellence, would you try to simplify diversification? RD Saúde, would it lead to simplification? Vitat has been incorporated, but you also say that in healthcare, you have some pilots with payers. Do you think about simplifying diversification towards more efficiency? These are my questions. Thank you. Thank you, Mauricio. Thank you for the questions. First question. There is still no clear indication of the industry that they are going to reduce the price on their manufacturing prices today. If it happens, it will be a positive surprise to us, but we are not relying on it. When we are planning what to do to be able to offset the pressure of margins, we are not considering it as a lever. If it comes into play, it's going to be A plus. Secondly, you were right. Maybe in my last slide, I didn't go into the level of details that you were asking to hear. Yes, we are simplifying somewhat our health strategy. It was very broad at first, and we had to do it to identify the areas which would be more attracting. Vitat has been incorporated. It still exists, but with a reduced scope. There are other investments that we've made that we really think we have to simplify, whereas others are going to be boosted. Expanding our health action from pharmacy services, using our footprint, our relationship with customers, and the assets we currently have, and using it as a platform to expand our health services. This has given us a much clearer journey and understanding. This is part of what we expect to have in the year to make adjustments and to gain more efficiency. Next question comes from Vinicius Strano with UBS. Good morning. Thank you very much for taking my question. I would like to know more about selling expenses. I know there is some staff reallocation in stores, but have you also seen some pressure on salary levels? And what do you anticipate in terms of new hires concerning the employment rates? Have you had any difficulties in hiring and just complementing your headcounts concerning the ads? How have you seen the development of this vertical? Do you see it as an important contribution margin? Can you tell us anything more about your footprint? Thank you. Let me answer your questions. First, we haven't been a problem, really, to hire more staff. There was a problem in the third quarter, but in the fourth quarter, we've just resumed our headcount. It's not a limiting factor. It's not an operational problem at all. Salary pressure, well, it's always relative. In our pharmacy proposition, we offer very good salaries, and we also offer them career development. When they join us, much more than getting a good salary, they have a possibility of growth, development of developing a career, and this is one of the things that sets us apart. This is what's nice about opening 300, 350 pharmacies per year. Does it mean salary doesn't matter? Of course not. We have to really pay what is fair, what is a reasonable offer. There might be some adjustments concerning benefits, nothing major, but we still have got room for that. In terms of distribution center, there is more pressure because sometimes in one logistic center, there are distribution centers from different brands. If there is a shortage of labor, there might be less fight for staff. And now and then, we might face some challenges, but things end up settling down. In addition to that, we have to do our homework, that is, to make sure that people are being compensated accordingly. And the combination of these two things is what really reassures us that we are not going to have any impact on that in terms of sales expenses. But we will have to impact and work on our G&A, as we've mentioned, and also in additional points. But no major pressures there. We are at a level of quite good stability. Concerning ads, this is a bet we've been making. We've been getting to know more about the ads business, one year better than the other. It was a new activity. It has never been our core, really. But we've really evolved in recent years. We've brought the person responsible for Mercado Livre Ads. She's been with us for six months, highly experienced, has brought her know-how and expertise to complement our internal assets. And we have a very aggressive plan moving ahead for very fast development. Ads is part of the things that we believe can offset the other pressures that we've mentioned today. But one step at a time. You see, nothing happens overnight. It's one step at a time, and we are very optimistic with ads. One of our very optimistic bets. Well, it brings us almost to the end. We have one last question. Gustavo Fratini from Bank of America. Thank you all very much. Good morning, Flávio. Good morning, Renato. Two questions here. In terms of expenses, and Renato talked about the potential point of pressure, expenses with lease might need more adjustment this year, especially because of the increase of IGP-M and your expansion pattern. What have you been talking about making adjustments to that in your mature stores and new stores? Are you thinking about changing the indexation reference that you've been using going from IGP-M to IPCA? Raduan has also talked about the first half of 2025 being somewhat more challenging than the second half. How is that in your budget in terms of your assumptions? Do you think inflation rates are going down in the second half of the year? Because you have to think about mitigation and correlating inflation rates and the increase of CMED prices. First question, if I'm not mistaken, in 2019 or 2020, I do not recall exactly when, IGP-M and IPCA just got very separated, something close to 20%. At that time, we understood that IGP-M had been subject to more oscillations, and we renegotiated most of our contracts to be based on IPCA rather than IGP-M. All of them? No, but more than half of them were negotiated. Likewise, new contracts since then, since 2020, 2021, all of them are now by default based on IPCA. If the owner of the real estate, we had that exception rule to have it correlated with IGP-M, so right now, we run with IPCA in most of our contracts, and in addition, we have an area of relationship with landowners, and we work very closely with them. We are a dream tenant for them, you see, because we close what, 23 pharmacies every year. We pay no vacancy. We understand that we've really built a relationship with the store owners, and they value really that relationship much more than specific price negotiations, so we can see the owners being able to negotiate, to make concessions, most of them agree, so the relationship we've built with these owners of stores, plus the negotiations based on IPCA, have protected us from major fluctuations. That's part of your first question. What was the second one? The inflation was the focus of the second question. We've been considering that inflation is not at its highest yet. It's going to continue to rise, probably finding its peak between July and August before it slowly goes down. This is what we have considered for our budget, and I believe this is in line with the market forecasts. It is what it is. Everything is considered in our 2025 action plan that Renato Raduan has already mentioned. If there's any pressure, it's going to be offset by other approaches. This is the end of the Q&A session, and now our executives will make their final remarks. Renato Raduan and Flávio, I'd just like to give a word of optimism. You say like that the last quarter was a bit slower. You're concerned about the macro market, the macroeconomic scenario. Yes, that's true. However, we're optimistic here. We have really built assets in these past 10 years alongside Marcílio, and these are really absolutely crucial for our new era. We couldn't possibly be better positioned. We have the best assets. We have great leaders. We have 49 million customers. We've got strong brands. Our digital platform is strong and expanding. We couldn't be better positioned for this new cycle that I am handed over as a CEO, but that I also helped build as an employee in these 12 years. We have raw material that is fantastic for this new phase, for the company to be even better. If one company is 120 years old, the other is 90, they have come this far because they know how to lead. They know how to do business. I am optimistic and confident that I'm going to be delivering an even better company in the future, in spite of the short-term challenges that we may have to face. Again, the six focuses that we have, we're going to focus on organic expansion. We do that better than anyone else and everyone else. We can also adjust our routes and veer in another direction if we need to. We're going to continue to be customer-obsessed, but even more than you used to be. There has been a strength so far, and it's going to be dialed up. In every channel, we're going to continue to be client and customer-obsessed. We're not going to dial back there, much to the contrary. We're going to dial it up. We're going to make headway in healthcare. We'll continue to work there too. We are adamant that we have a business there as well, looking after the population. That strengthens how we fulfill our purpose, and it's also a business that we have with the end customers or supporting operators and carriers companies, so we'll continue to grow there too. I have already mentioned AI. It's going to be a watershed in my management as well, either as someone who was able to bring it in or who failed to do so and help us use AI to improve our business and culture. That's the foundation of everything. It has always been a strength and will continue to be a strength. It's going to be more important than it ever was, and we've got the knowledge. We've got the elements, and this is the best time to be more aggressive in expense management. We have had a major investment cycle. We have had the transformation, and the investment cycle has made this company a much better company than we had five years ago. The asset I'm handed over is much more digitized. It has got a lot more loyal customers with more modern tools. And we know how, when, and what to do in terms of adjustments and fine-tuning. This fine-tuning, this efficiency will bring an even better value proposition or better profitability and will strike a balance between the two. So I would like to end this call with a lot of optimism. It couldn't be any different at the start of a new cycle. This is my very first earnings call with you, and I will see you in three months' time so that we can tell you how much further we have got. Thank you very much. Enjoy the rest of your day. Have a good one. Thank you. Thank you very much. Thank you, Renato. Thank you, Flávio. Thank you, everyone, for joining us on our earnings call. And this is the end of our call. Have a great day. Thank you.