Good morning, and thank you for waiting. Welcome to the video conference on the earnings of the third quarter of 2025 of Grupo Multilaser. Note that if you need simultaneous translation, this tool is available on the platform. To access it, simply click on the interpretation button through the globe icon at the bottom of the screen and choose your preferred language, Portuguese or English. For those listening to the video conference in English, there is also the option to mute original audio in Portuguese by clicking on mute original audio. We inform you that this video conference is being recorded and will be made available on the company's IR website, where the complete materials of the earnings release is also available. You can also download the presentation from the chat icon. That is also available in English. During the company's presentation, all participants will have their microphones disabled.
At the end of the presentation, we will start the Q&A session. To ask questions, click on the Q&A icon at the bottom of your screen and write your question. To join the queue, indicate whether you would like to enable your audio or video. When announced, a prompt to activate your microphone will appear on your screen. We advise that the questions be asked all at once. We emphasize that the information contained in this presentation and any statements that may be made during the conference call regarding the business prospects, projections, and operational and financial goals of the Grupo Multilaser constitutes beliefs and assumptions of the company's management, as well as on information currently available. Forward-looking statements are not guarantees of performance, as they involve risks, uncertainties, and assumptions as they refer to future events and hence depend on circumstances that may or may not occur.
Investors should understand that general economic conditions, market conditions, and other operating factors may affect Grupo Multilaser's future performance and lead to results that differ materially from those expressed in such forward-looking statements. For the full disclaimer, please refer to the end of this presentation. Today, we have the presence of the company's executives, André Poroger, CEO, and Eduardo Belelas, Controller. Before turning the floor to the CEO, we will show an institutional video on the company. After the video, I will turn the floor to Mr. André Poroger.
[Presentation]
Hello, good morning, everyone. First, thank you for attending. It is a pleasure to be here talking a little bit about the earnings of this third quarter of 2025. I believe that with good news. The net revenue results, we are talking about a 32% increase compared to the same period of last year.
That is important good news, a growth that we have been posting. I will talk a little bit more about the channels later, but mostly the corporate segment with the good news in terms of revenue. In gross margin, we see a slight improvement that we consider important, even though it is slight, especially focusing on the margin improvement with the tech retail and specialized retail channels. I also think that is good news to see this improvement on channels that retail today is struggling with a more complicated macro scenario with high interest rates, more controlled inventory from the retailer side. I believe we have been doing or following a good path in this recovery. Excellent news on EBITDA, as you can see, basically coming from a very harsh period last year, and we are very happy to see this consistency of the improvement in EBITDA results.
We had a 6.5% reversing the results from last year. It is important to highlight that it is still low. We still believe that it is below our expectations, considering what we can get to and what we are working on. But I believe that it is a good number if we compare especially with the previous periods. We are very happy to deliver this consistent improvement in EBITDA. That is a very strong focus here of our entire team. In net income, we also have good news, BRL 65 million in this period. Again, reversing, we increased more than BRL 64 million. It was close to zero last year, so it is positive profits. That is very important. Here, both in EBITDA and income, we believe we can do better, we can achieve more, but it is the path of an important journey.
This consistency today is something that we are really focusing on to bring this consistent improvement of these indicators. In operating cash flow, I believe that is even best news. A significant cash generation. We generated BRL 131 million in this period, which led us to already make pay off some of the debts we had, reducing our indebtedness level to 0.22x of EBITDA. We believe this is very important. As you know that in Brazil, with the Selic rate is very expensive, so we are happy to reduce this. Also the payment of interest. In the highlights, we see very positive numbers in the main indicators. I believe we have been presenting significant improvements. We still can do more, and we are finding more. Working hard, the focused team, but this improvement is important and makes me very happy with the work that is being done.
I will turn to Edu now, and he will give you more details of the finance, and I will come back for more information.
Thank you, André. Good morning, everyone. My name is Eduardo. I am the Controller of Grupo Multilaser, and I will discuss the financial highlights. As André highlighted, and as we have in our release, our revenue in the third quarter maintains the sequential improvement with significant growth when compared to the previous quarter and the same quarter of last year. We made BRL 1 billion net revenue. That is the highest level of this year. Here we have a strong contribution of our corporate segment. On the next chart, we also see a sequential improvement in gross profit, both compared to the second quarter of 2025 and the third quarter of 2024.
We reached 25.1% gross margin, showing that our efforts in profitability are bringing results, noting that this effort is not only in the corporate segment, but all segments. On the next slide, we will talk about EBITDA and net income. The EBITDA this quarter reached BRL 67.5 million , 6.3% of net revenue. Also, the best quarter this year and compared to the last quarters of last year. There are three main factors that led to this result. It is our sound revenue, the efforts in profitability, and the good management of our expenses. We continue the sequential improvements that we set out to do when the EBITDA this quarter is 100% operational. There is no reversion of provision or extemporaneous credit impacting our results this quarter. That gives us the confidence that we are on the right path.
Still on EBITDA, year to date, we reached BRL 103.9 million, and that is 2.5x all of our EBITDA of 2024. On the next chart, we show you net income, and this quarter, we had BRL 65.6 million and BRL 150 million year to date. At the same period of last year, in the first nine months, we were posting a loss of BRL 119.7 million, so we fully reversed the loss and generated a little bit more profit. This quarter, BRL 65.6 million of income is the result of the strong EBITDA generation that we had. The next slide, we have a little bit about the evolution of our inventories. The health of our inventory is an important indicator of our working capital management.
This quarter, we also had an improvement in the inventory turnover, reducing inventory days in two days when compared to the second quarter, 28% when we compare to the same period of last year. Here we maintain our discipline and the purchases, always making the connection between the forecast of purchases and our sales projections. This inventory performance allows us to also achieve a good performance impact in working capital that I will talk about on the next slide when we discuss cash flow. Operating cash generation this quarter was BRL 131.7 million , and we see three main contributors. The EBITDA, as we mentioned, working capital generation of 69.5 million BRL, as well as a great piece of news, which is the reduction of our tax credits.
We are consuming those credits and due to inventory turnover, the margin improvement. Then excess have tax to pay that allows us to use these credits, as well as the reflection of the incorporation of most of our Manaus operation on the second quarter. We are now using tax credits to offset in a volume of BRL 6 million-BRL 8 million per quarter. This operating cash generation of BRL 131.7 million has allowed us to reduce gross debt in BRL 145 million. This reduction, as André mentioned, in addition to indebtedness itself, also brings an aspect of the reduction of the cost of interest. At the current levels of the Selic rates, this will be a great benefit for cash generation in the future, as well as net income.
It's also important to mention that the reduction in gross debt as a result of the operating cash flow generation indicates that the management and the financial discipline of our working capital is allowing us to make Grupo Multilaser even healthier. On the next slide, I bring a little bit more about debt and the amortization schedule. As I mentioned in the previous slide, with the operating cash generation, we had the possibility of reducing gross debt. With that, as a result, we now have net debt of BRL 30.8 million compared to BRL 216 million in the first quarter of 2025 and BRL 157 million in the second quarter. This net debt reduction and our EBITDA generation led our leverage to the lowest level of 0.22x EBITDA, considering the EBITDA of the last 12 months.
This leverage used to be 2.92x in the first quarter of 2025 and 2.10x in the second quarter of 2025. Here, it's important to mention that over the last few quarters, we had a concern about the need of reprofiling the debt or seeking other opportunities with FIDC. But with this reduction of the net debt in our operating cash generation, we understand that this need is not as latent anymore. We are still mindful of opportunities in the market, especially with lower cost, but right now the company is in a position to do that more comfortably. In the coming quarters, our focus is to maintain this good operating cash generation and reduce indebtedness. I'll turn the floor back to André, and he'll talk about the results of the different operational segments.
Thank you, Edu. Just a reminder that our segments now are three at Grupo Multilaser.
Corporate, tech retail, with all the technology brands and own brands, as well as global brands that we represent in Brazil exclusively. So tech retail and specialized retail. Sales to retailers, either physical retail or digital retail, comprised of 3P and 1P. I'll talk a little bit about the different channels. Corporate first. On corporate this quarter, we had a good surprise in terms of revenue growth. This channel that was representing 50% of the revenue share now reached 59% in the quarter with a 34% increase versus the 2Q 2025. So that's good news in terms of revenue increase. Historically, gross margin moves sideways here. As you know, this channel is basically comprised of businesses we have at the corporate channel. So OEMs that we manufacture telecom equipment and sell to carriers and internet providers.
We have strong government sales that really helped us this quarter in the revenue increase, and contributes to a little bit more margin, and this makes, especially the sale of tablets that occurred in the third quarter. We also had an increase on our memory division. I don't know if everyone knows, but we have a memory plant that produces memory devices. The memory market today, just as a sideline here, is being disrupted. The price of memories is increasing around the world due to the technology. So that also helps in terms of price increase, contributing to the increase in revenue this quarter. This will or shall continue to happen over the next year as well. This scarcity of memory supply that may help us in this segment.
The manufacturing projects that we have as well, the companies that basically charge a manufacturing fee, we call it Factory-as-a-Service. Basically, we provide our platform and plant structure in Manaus, Extrema, marketing team, commercial team, that helps these companies. In the case of this quarter in particular, we also had good news in the ramp-up of the motorcycle manufacturing for Royal Enfield. We mentioned we were starting the partnership at the beginning of the year, and now this quarter there was an important growth wave in the plant already, basically at full capacity producing Royal Enfield's motorcycles. So basically, here it's good news in terms of revenue. Our estimate is that this revenue should remain robust. Margin is a lower margin indeed, but the mix may help this composition. We are very excited with the corporate segment in our group.
In tech retail, it contributed with a 31.4% share of the net revenue this quarter. The good news here to share with you is that we had been struggling. If you've been with us longer, you know about our daily battle to recover growth margins. That's the whole team very focused on the portfolio breakdown, and we have a more robust policy that we implemented in pricing that has been like the guardian of the margins here at the company, the department that approves all the orders and transfers, pass through, and price policies. We have a strong governance in pricing and this focus to maximize margin. This is already bringing results in this improvement. Although there's a drop in revenue, especially if we look at the mass of margin generated, it is even better that it used to be before.
We've been able to sell a little bit less, but to have a higher profitability, and that's very important. That's our focus right now, especially for these tech retail, specialized retail channels. I think the good news come from this, and there's also an impact on the macroeconomic scenario being challenging to retailers, especially physical retailers. As we've been saying in previous calls, they've been working with a lower number of days of inventory, and that reflects in the sales we made to retail. These sales end up being smaller. The sell-in also has an impact in this slight decrease. But again, we're very excited with the margin recovery. We've been renewing our product portfolios in portable appliances that are home appliances and the audio lines and other categories.
We've been doing very significant work with our teams in the China office to reformulate these lines with cost reduction. So really focusing on the cost effectiveness that is very important for us, especially in this scenario of high interest rates. If they have a higher turnover, we want to make the most of this opportunity to reformulate that line. The new lines are starting to come in now in the fourth quarter and for next year as well. We're reducing the portfolio, focusing on the cost and quality that's very important here to combine these two things, and we're very excited as well in terms of the margin and the resumption of growth of this channel, but always prioritizing margin, okay? We're not going to have the policy of growing without margin.
Here, we're going to focus on profitability, and we hope to bring growth as a result. In specialized retail, it was at 11%, and now it went down due to the corporate increase to 9.5% of the share in our net revenue. The good news here is on margin. As you can see, we've reached the level in 2025 that is much higher than our historical levels, and that's also reason to be excited with this recovery. Although there's a slight increase now in the third quarter, it is in line with what we have mapped and what we have as a target. If you look in the specialized retail, even with the margin reduction, we had a higher cash generation than the same period of next year that had a higher revenue. We've been able to sell less, generating more margin, which is more important.
That's also a strategy we've been adopting, and that also helps in the inventory reduction and the reduction of inventory days. As Edu mentioned, that's an important indicator that we're keeping track of. We've still considered we have high days of inventory, so there's a lot of working capital to be released if we are able to achieve more efficiency in these capital of inventory days. We have a very ambitious target to reduce days of inventory, and that also considers the increase of profitability. Here, there was an impact on revenue, a slight 6.2% decrease because there was an advance of purchases, especially for toys in the previous quarter. The previous quarter, this market grew significantly. In this quarter, we already see a retraction of purchases in the supply of stores. There was this slight adjustment in this revenue drop, but it's a one-off event.
We're very excited with this recovery of the margin here that helps compose our EBITDA and our net income. Just to reinforce, the agendas, they don't change. We have very strong work being done in profitability and the reformulation of lines, so renovating lines focused on profitability, reducing the portfolio, focusing strongly on the products that we have, and they carry revenue in this equation. We're focusing on the profitability driving strategy, and reduction of inventory is also an important part. Is the expense discipline, as you see, and we're very happy we've been able to increase revenue in 65%, maintaining the level of expenses. Even with inflation, even with all the adjustments, we've been able to not increase expenses and increase revenue. That brought much greater efficiency.
This daily work of expense control is something we've been doing here, and there's still opportunities to capture more reductions, more efficiency in this area. Today, we have a lot of people focused on that specifically, and the management of budget and expenses, that's very important. And the working capital optimization, we have got good news here in cash generation. Reduction of debt, we are worried or concerned with net income. We don't want to generate a bit, but then the bottom line paying very high interest rates and not generating profitability. We are focused on profit and this reduction. With this level of interest rates, we understand that deleveraging is very positive. We've been able to bring more efficiency, reducing days of inventory and capturing dozens of millions in cash due to this optimization and reduction of indebtedness. That's the path we're following.
And we see this is very positive for the company. The good news as well was the funding from BNDES that we announced a few weeks ago. This is a financing. We are funding at reduced interest rates due to the investment at the factories at Industry 4.0. We have some great projects in efficiency, productivity, cost reduction at the factories that will be able to use this, let's say, it is a cheaper debt to help us gain efficiency and reduce our costs, reflecting on gross margins. We had BRL 296 million that were approved. It is not a mandatory commitment. We will only invest in what we believe has a payback. Do this in a very controlled way. We are not going to start spending and generating debt. That is not the line we want to follow.
But of course, to have a subsidized fund and be able to improve the factory is something important, and we will focus on that, working with major global companies in manufacturing. This is a path that we are very excited and improving the manufacturing plants and improve efficiency that will help us in the future as well. These are the main agendas that we have for the second half of 2025. Here, just to bring you more color, we released the material fact a couple of weeks ago. Full transparency, bringing the status of this. I will not get into too many details, but if you want, we can talk about this at any moment. These are administrative losses that was an update from CARF, the Administrative Council of Tax Appeals. We were able to achieve a tie in the voting.
Until 2020 through 2023, ties were always favorable to the taxpayer. In 2023, with this trial and this result in 2023, we would have won, but there was a change in the law with the casting vote that was then unfavorable to the company. In this case, at CARF's ruling, the tie was unfavorable to us. The good news is that when we look into the detail of this casting vote bill, there is a provision of the exclusion of fines. This CARF lawsuit, it is important to clarify, there is no discussion about the tax moment. We paid all of the taxes. That is not the issue of paying or not paying taxes. We paid everything that was due.
This is a fine, a customs fine, due to a company that we acquired in 2019, a company in Santa Catarina, and this company had its own life in terms of imports, and there was a fine related to that. Since this provision of the fine exclusion exists, we are very confident. We are still trying to reverse this ruling at CARF itself. But in any case, if we cannot reverse this on CARF as we would like to, in the legal levels, in the court that we have not even started yet, has a very positive prognosis. The specialized firms, even with this tie, did not change our prognosis. There is no need for us to provision for this yet in the accounting provisioning and the balance sheet, so we are very confident. The thesis, that is very strong.
The merit is very strong, but there is a legal aspect of the exclusion for the provision of the exclusion of fines. We believe that there may be good news soon. This is just to bring you more color. We are confident on this case as well. Here we also released a material fact, and I would like to bring you more details with Edu. We had a pet business unit, a factory in Minas Gerais. This plant produces pet hygiene mats. It is one of the market leaders in the segment. We decided to sell this operation a few months ago. It was a strategic decision we made, and we should focus a lot in tech retail, in the lines that are important products that we can achieve better profitability. This line, we felt there was no real way to grow.
It was more of a portfolio, and it was not really part of our focus in terms of raising profitability, the focus of the company. It was an important initiative in strategic terms that will help us focus more on our current business units. Good news, a new partnership that we signed. The home appliances line is a line where we foresee significant growth in the future, a line we want to invest in with technology products focused on home use. As you know, we like to have international partnerships that complement our portfolio. We have our Multi brand focused on the cost-effectiveness market that remains very strong, and we will put great focus on that from now on. In addition, we are now bringing Cuisinart. That is a premium line, a brand that has been in the market for more than 30 years.
Global market leaders, recognized in Brazil as well. We start to operate exclusively Cuisinart in Brazil. With that, we believe we have a complete portfolio to offer our customers and our retail customers and consumers. We have a lot of cost-effectiveness with the Multi brand and Cuisinart as a premium brand, and this growth in our portfolio will help us grow both brands. We are also very excited with this new partnership with Cuisinart. Let us see if there is anything else here. I think that is it. We would like to thank you, everyone, for listening to us. I hope I have clarified our strategy and how we were in the quarter. Thank you, and now we will open to the Q&A, and thank you all for attending.
We will now begin the questions and answer session. We would like to remind you that to ask a question, please click on the Q&A icon at the bottom of your screen. Write down your question to join the queue. When announced, you will see a prompt to enable your microphone, when you should open your microphone and ask your question. We kindly ask that the questions are all asked at the same time.
The first question is in writing from Gustavo Farias, UBS. Can you please give us more detail on the growth drivers in corporate? We see a gross margin expansion even with the expansion of manufacturing projects. Can you please comment on these dynamics considering the rollout of partnerships? Can you also talk about the OpEx improvement and what we can expect in terms of efficiencies going forward?
Hello, Gustavo. Thank you for your questions. Let us go back to the corporate segment.
We had this revenue increase. Obviously, we had a share of government this quarter that helped us increase this government revenue by supplying tablets to the government. That's a growth driver. Second is that we had a ramp-up of the motorcycle factory, that we have a partnership, a manufacturing partnership with Royal Enfield. That's a global Anglo Indian company, and we've been producing for them in Brazil. This quarter was a quarter already filled with production, high capacity that also contributed positively to the top line. From now on, it's also the plant operating with this production starting now. We also had the memory devices that also helped us increase top line, and the partnerships that we've been working on, both with OPPO and Hisense. OPPO in the smartphone market is the fourth largest global smartphone company.
We have a very aggressive performance in Brazil, and Multilaser is one of the factories, the factories for them in Brazil. We have an exclusivity agreement with them, so we start to produce. We are producing it since last year, OPPO smartphones in the Factory-as-a-Service model where we don't join the risk of the business, but we participate with a tighter margin, a lower margin, but it is more stable since we don't take that risk. On Hisense, it's the same thing. We've been growing and ramping up this manufacturing of Hisense TV sets. Hisense, as most of you know, is the second largest TV manufacturer in the world. The first one is Samsung. It's coming hungry to grow, and we also have this very positive partnership. Definitely, they are lower margins, and bring us help.
When we talk about the partnerships, we understand that it helps less in profitability, but more in bringing interesting top line where we can reduce costs. Then it goes to the question that you asked about operating efficiency. We've been working hard with this expertise that they bring us and the gain in scale for a long time with the global market. We've been aligning the manufacturing efficiency here. We understand that there is the opportunity to reduce OpEx, and although margins, especially with the partnerships, are lower, they help us. Losses are very much under control, and we've been able to gain efficiency, and that may help us in this reduction. We are focused on that. I hope I answered. You can ask if you have any further doubts.
Our next question in writing from Leonardo Cintra, Itaú BBA. Could you comment on the expectation for the fourth quarter in terms of sales, especially considering Black Friday, and if we can expect a recovery of retail? How do we think about the consolidated revenue looking forward, corporate stronger and retail weaker? An order of magnitude of revenue growth of the coming quarters.
Good morning, Leonardo. Thank you for the questions. There's a lot on your question that we control and a lot of things that we can't control, so it's hard. We don't like to have a lot of forecasting because there are a lot of uncontrollable factors, and we'd rather focus on what we can control, which is basically our portfolio, expenses, working capital, and paying close attention to the market. We're very focused on what we can do. In terms of retail, in the fourth quarter, we still see a difficult situation.
There is good news because there is Black Friday and Christmas, and historically, the fourth quarter is a good period. I think we should see a robust top line. There is nothing in this fourth quarter that. We expect good sales results. Then along with our work to contain expenses and increase efficiency, we should not have any surprises.
We are quite excited with the results for the fourth quarter, even though we do not know. The situation of retail is still difficult. We see retail still trying to grow. They are very rigid in terms of their inventory, trying to have very strong negotiations. We have been trying to address that focus on retailers that we understand are better partners, where we can have a longer-term partnership. As for the future, this is the work in terms of consistency that we want to do. It is more than major leaps.
We are very focused on this improvement of efficiency and EBITDA. Although it increased, we still consider that it can increase further. We are very focused on profitability increase and capital efficiency.
Next question, also in writing. Matheus Rech, Ártica. Good morning. Congratulations on the improvement of your results. Please, I have a very straightforward question. Do you believe that the level of earnings that the company was able to deliver this quarter is sustainable? Thank you.
Hello, Matheus. Thank you for your question. Also reinforcing what André said, within what we can control, we are working very hard to improve profitability by controlling expenses, a strong pricing policy, the review of all of our commercial policies, and we do expect the fourth quarter, talking about EBITDA, to have a level between 5% and 6%, similar to what we had now in the third quarter.
The Q&A session is now closed. We would like to turn the floor to André for his closing remarks.
Thank you all for attending once again. I think that the agenda is very clear, and I hope that I made this very clear. Our agenda is this focus on profitability, expense control, improvement of inventory days. It is going to help a lot in working capital and reduction of debt and optimization of working capital. Linked to good projects, the renewal of our lines to help us achieve revenue growth that is consistent with this efficiency of seeking capital profitability, bringing EBITDA results and net income, which are our main focuses. Thank you for your presence once again.
Multilaser's earnings conference call on the third quarter of 2025 is now over. The Investor Relations Department remains available to ask any further doubts and questions. Thank you very much. Have a great day.