Earnings Call: Q1 2018

May 11, 2018

Good morning, ladies and gentlemen. Thank you for waiting. At this time, we'd like to welcome everyone to Natura and Co Conference Call on the First Quarter Results. Today with us, we have Mr. Roberto Marc, Executive Chairman of the Board for Natura and Co Mr. Joao Paulo Ferreira, Natura's CEO Mr. Marcel Goya, Director of Finance and Investor Relations Mr. Luis Ballades, Investor Relations. This event is being recorded and all participants will be in a listen only mode during the company's presentation. After Natura's remarks are completed, there will be a question and answer session. At that time, further instructions will be given. We have simultaneous translation into Portuguese and questions may be asked normally by participants connected from abroad, either in English or Portuguese. We have a simultaneous webcast that may be accessed through Natura's IR website, www.natura dotnet/investor. This live presentation may be downloaded from this website. There will be a replay facility for this call on the website after the end of the event. Before proceeding, please be informed that forward looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward looking statements are based on the beliefs and assumptions of Natura Management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Natura and could cause results to differ materially from those expressed in such forward looking statements. Now, I'll turn the conference over to Mr. Roberto Marques, Natura and Co's Executive Chairman of the Port. Mr. Marques, the floor is yours. Thank you, Nathalie. Good morning to all of you, and thanks again for joining us on this conference call to present Natura and Co first quarter results. As this call comes short after our Natura and Co day, during which the CEOs of the 3 brands made extensive presentation, we are in a slightly smaller configuration than our previous call. I'm joined today by Juan Paulo, the CEO of Natura, who will present his company's Q1 performance and Marcel Goya, Finance and Investor Relations Director, who will present the key consolidated figures for the quarter. I'll comment on the performance of The Body Shop in Aesop, and then we'll be happy after our remarks to take your questions. As usual, I'll be referring during this call to the presentation that you can also download on our website. Let me start on Slide 3, which are the key highlights of Q1. Overall, I would say that Natura and Co is off to a strong start of the year with solid top line and bottom line growth in the quarter. Pro form a consolidated net revenue was up 11%, and comparable consolidated EBITDA rose by a very solid 58.4% on a pro form a basis. I think we are firing up in all cylinders, with each of our 3 businesses contributing to this very satisfactory performance. Natura regained its leadership position in the cosmetic, toiletries and fragrance market in Brazil, confirming that the company is back on track on its home market, and it continued to post strong growth elsewhere in Latin America. The Body Shop turnaround is already underway, and it posted its best Q1 in 8 years with very encouraging sales, EBITDA and EBITDA margin growth in the quarter. And Aesop continues to show rapid growth and improved profitability. Our net debt to EBITDA ratio at 3.3x is ahead of our estimates for the period. The group also made its successful debut on international capital markets through a EUR 750,000,000 dollars bond issue, which is fully hedged to protect us against any exchange rate fluctuation. This bond matures in 2023 with a coupon of 5.375%. And this quarter, also, we saw further advances in sustainability. With this, let me now hand over to Marcel Goya to provide greater detail on our consolidated financial performance. Thank you, Roberto. On Slide 5, we begin with our consolidated net sales, which stood at almost BRL 2,690,000,000 in the quarter. On a reported basis, this represents record sales growth of 50 5.5%. While on a pro form a basis, including The Body Shop in both periods, this represents a healthy year on year increase of 11% in Brazilian reais. All 3 brands posted growth in the quarter, with Natura up 6.7 percent, The Body Shop up 8.5% on a pro form a basis and Aesop growing by a very strong 30.8% in a constant currency. Pu will go into this in great detail shortly. On Slide 6, we look at our EBITDA, which grows by a strong 58 0.4% on a comparable and pro form a basis in Brazilian reals. Just to remind you, in Q1 'seventeen, our reported EBITDA was BRL365 1,000,000. However, excluding this PISCOFINS inspection version of BRL155 1,000,000 and including The Body Shop's EBITDA, which was a negative BRL8.5 million, our comparable and pro form a EBITDA stands at BRL 201,000,000. On a comparable basis, Natura, The Boy Shop and Aisuke all contributed positive to EBITDA in the quarter. Before talking about net income, let me provide some details on Slide 7 about our financial results. In Q1 'seventeen, we had a positive impact of BRL 106,000,000 from the interest accrual PISCOFINS reversal. In Q1 'eighteen, our cost related to financing the acquisition of The Body Shop was BRL 95,000,000, which is fully hedged. So in the comparable financial results, again, excluding The Body Shop related effects, we have a cost of BRL 60,700,000 versus BRL 118,600,000 in 2017. Let's turn on on Slide 8 to our consolidated net income, which rose substantially to a net profit of BRL 88,000,000 in Q1 'eighteen from a loss of BRL 1,300,000 in the same quarter last year on a comparable pro form a basis. Again, we are looking at comparable Q1 'seventeen figures, which exclude the benefit of the tax reversal and include a net loss at The Body Shop, as you can see in the graph. Similarly, in Q1 2018, our net income of BRL 88,200,000 excludes interest of BRL 64,000,000 on costs related to the Body Shop acquisition. Reported net income was BRL 24,400,000. Let me conclude on Slide 9 with some balance sheet consideration. The free cash outflow in the period was BRL351,000,000, in line with our expectations. This is due to the inclusion of the boy shop number in a period of cash consumption, which accounts for BRL124,000,000. In addition, we had BRL64,000,000 coming from financing costs related to the acquisition of the Body Shop. Finally, Natura had a temporary increase of BRL 200,000,000 in inventory to haul out its operation plan. As Roberto said in his introductory remarks, we are ahead of our estimates regarding our net debt to EBITDA ratio, which stood at 3.3x at the end of Q1. Let me reiterate our target to return to pre acquisition indebtedness ratio of 1.4x EBITDA by 2021, 1 year ahead of our initial plan. At the end of 2018, we expect to improve our net debt to EBITDA ratio. I will now hand over to JP, who will comment on Natura's performance in the quarter. Thank you, Marcel. Hello, everyone. We'll begin on Slide 11 with our net revenues, which grew by 6% in the quarter to nearly BRL 1,700,000,000. This growth was driven both by Brazil and especially by our remaining operations across Latin America. Building on the success of our new relationship selling model, which is driving continued productivity gains. In Brazil, according to Euromonitor, we regained market leadership in the CFT market in 2017. And our key categories continued to perform well in Q1. Net sales in Brazil grew by 0.8% in the Q1 or 3% adjusted for the commercial calendar effect. As this year, our Mother's Day campaign shifted to Q2. Consultants productivity continued to show very strong growth of 21.8%, more than compensating the already expected 18.8% drop in the average number of consultants. We continue to make further inroads in our multichannel approach, and our online business almost doubled, now accounting for almost 4% of sales in Brazil. As mentioned in previous occasions, our business is becoming increasingly digital, and more than 550,000 consultants are now using our exclusive app that supports their beauty consulting activity. Latin America continues to be a growth engine with sales up 20.2% on a reported basis and 23.1% at constant exchange rates. We saw very solid growth in Argentina, Mexico and in Chile. By the way, Chile is the 1st country to introduce the new relationship selling model and is already seeing encouraging results. The region is also posting significant consultant productivity gains with a 9.5% improvement in the quarter. Let's now turn to Slide 12 to Natura's EBITDA in the quarter. On a comparable basis, EBITDA grew by 30.3% in the quarter to BRL 250,000,000. Considering that our EBITDA in Q1 of last year benefited from a tax reversal of the PIS and COFINS taxes of BRL 155,000,000. So our Q1 'eighteen margin rose 200 basis points to 14.9%. In Brazil, on a comparable basis, EBITDA grew by 9.4 percent to BRL 187 1,000,000, with margin growing by 120 basis points, driven by improved SG and A costs. These figures also exclude last year's PISCOFINS tax reversal. And in Latin America, EBITDA grew by 83.3% and an even stronger 88.7% at constant exchange rates. EBITDA margin improved by 4 70 basis points to 13.6 percent from better operating leverage and strict cost control. You know that Natura and Co pursues triple bottom line results. So on Slide 13, we highlight some advances in sustainability. In Q1, Natura's carbon emissions were ahead of target, benefiting from more favorable category mix and a more efficient order cycle. Also worth mentioning that The Body Shop has already collected 5,800,000 signatures for its campaign to end animal testing on a global scale and is well on its way to achieving our objective of gathering 8,000,000 signatures. As of the end of Q1, Natura has added its voice to that campaign. I will now hand back to Roberto to comment on the key highlights of Aesop's and The Body Shop's performance. Thank you, JP. And again, congratulations to you and to all of our Natura associates to a great start of the year running our Natura business. Let me now talk a little bit about Aesop. So on Slide 15, Aesop continued its growth story in Q1, as shown on Slide 15, which details its net sales. As you see on this graphic, sales rose by a very strong almost 31% at constant current and an even stronger 39.2% on our reported base in Q1 to over BRL 200,000,000. Most interesting, on a like for like basis, sales were up 18%. Aesop continued its expansion. And at the end of Q1, it counted 305 own retail doors, of which 208 Signus Tour Stores and 97 Counters and Department Stores. This represents a total of 40 additional points of sales over the past 12 months. On Slide 16, you see also similar strong growth in Aesop EBITDA and margin. At BRL 27,000,000, EBITDA in Q1 was up by 118.4% at constant exchange rates, while margins grew by 500 basis points to 13.4%. This is very exciting performance, and Aesop is steadily contributing to the group growth. Again, I want to congratulate Michael O'Keefe, CEO of Aesop and its entire associate group at Aesop for posting such a strong result to start the year in 2018. Let's now turn to The Body Shop on Slide 18. In Q1, we already started seeing the initial positive effects of the 5 pillar turnaround plan that is being implemented at The Body Shop. On a pro form a basis, net sales were up 8.5% at constant exchange rates and 16.5% on our reported base to over BRL 800,000,000. Let me give you a heads up that half of this growth is coming from a favorable commercial calendar effect in Q1. This will have an impact in Q2. The reminder was driven by franchise, owned stores and double digit growth in online in terms of channels. Now in terms of geographies, growth was driven by India and Asia Pacific as well the retail channel in North America. The Body Shop ended the quarter with a total of 3,006 stores with a net reduction of 43 stores, of which 31 owned stores as we continue to selectively adjust our network. Also, on a positive note, our like for like of our own stores grew 5%, and our e commerce grew 20% in the period. On Slide 19, let's look at Body Shop EBITDA. Body Shop EBITDA stood at BRL 57,100,000 in Q1 with a margin of 7.1%. This compares with a negative margin in Q1 2017. This improvement is largely due to lower discounts and occupancy costs in owned stores and better franchise sales. I also want to take this opportunity and congratulate David Boyden and all of our Body Shop associates throughout the globe for a very strong start of the year. To conclude, on Slide 20, what are the key takeaways of this quarter? 1st, Natura and Co is clearly making headway with solid top and bottom line growth in this Q1. 2nd, all the 3 brands and businesses contributed to this solid performance. Centura, as JP talked about it, saw a confirmation of its recovery in Brazil as evidenced by its growing market share and regained market leadership in CFT and continues to expand in Latin America. The Body Shop's turnaround is already underway, and the teams are fully mobilized around the company's 5 pillars transformational plan. And Isopp continues its growth story. And 3rd, with a solid first quarter performance, Natura and Co is on track to deliver the medium term targets we presented recently, namely high single digit growth in net sales and low double digit growth in EBITDA on a compound annual growth rate basis through 2022. Thank you for your attention. And now we are happy to take your questions. Our first question comes from Guilherme assist with Brazil to touch a few points here. And the first question actually goes to Roberto Marquez. And Roberto, in your remarks, you mentioned that The Body Shop results were benefited by like a positive calendar impact, if I'm not mistaken, right? Can you talk a little bit more about these impacts on the quarter? And what should be the impact on the 2nd quarter? So we should expect a lower growth rate for The Body Shop because of that. And also, I think one of the surprises of the quarter was the good margin for The Body Shop. I had the impression that actually since it was a low seasonality quarter, you're going to deliver a lower EBITDA margin, right, for The Body Shop. Can you talk about the impact of this potential calendar effect on The Body Shop as well? That's one question. And also, can you also give us a breakdown of how much Argentina represents of your LatAm operations? And if you see any risks with the current situation there and the devaluation of the peso for your business? Those are my questions. Guilherme, Roberto here. So I'll start with The Body Shop, and then I'll ask JP to comment on Argentina specifically for Natura. But on The Body Shop, I mean, you saw the growth on Q1, which is roughly 8%. We believe half of that was benefit on this commercial calendar year. So if you think about we are still very confident for the remaining of the year in delivering plans and some of our commitments that we already shared with all of you. But of course, the benefit on this commercial calendar was some of the changes in holidays that benefit The Body Shop globally, also some activities that will pull from end of the year to the beginning of this year that also had a positive impact. But again, overall, we feel very good about how the business is performing and very confident about this year in terms of the results for The Body Shop. I'll turn to JP to comment specifically on Argentina. Thank you, Guilherme. Okay. All right. Good morning, Guilherme. Hi, JP. How are you? We don't disclose the relative the exact size of each operation in Latin America. However, as you know, Argentina is one of the largest CFT markets in the region, right, and is one where we are very well established for long. So Mexico is a larger market, but we have been there for fewer years, right? So from that, you can roughly estimate. Now as it comes to the risks, first of all, let me highlight that not only we are very committed to, but more importantly, grateful for the Argentinian consumers and consultants. They have awarded us an outstanding business, outstanding business. We are now the 3rd brand in the CFT market, and we have been gaining market share consistently over the last few years, becoming the preferred CFT brand in the country. So just to highlight that how important it is for our business and for our hearts. Now having said that, the volatility that we are seeing in the economy does not worry us much because it's within our with the ranges that we had in our plans, and we are fully protected. We are fully protected for many reasons. 1 is that part of our manufacturing is local. 2nd is that we also export products and services, right, not only importing some goods from Brazil but also exporting from Argentina. So with that said, we are very confident that the risks are fully manageable in the Argentinian business. Okay. Thanks, JP. I think that's clear. If I could just go back for Roberto a few for a follow-up. You mentioned about that about half of the 8.5% growth was related to these calendar adjustments or changing commercial policies or practice within the calendar. Is it fair to expect then more flattish results for the second quarter since we should see a comeback of this calendar effect? And also if you comment a little bit on the impact on the EBITDA margin of these changes as well because my impression at least is that The Body Shop also not only had good growth, but also very positive margins. I just wanted to have a grasp of how much of this good margins is sustainable as well. That's my follow-up question. Guilherme, thank you again for the follow-up. I mean, we're not going to provide specific guidance for Q2, as you know. But again, what I can tell you is that this is a factor of many other factors on the performance of the sales. Again, fair to say that we shouldn't be expecting an 8% growth on The Body Shop since half of that was the commercial calendar, but I can't comment specifically what to expect on Q2 other than, again, as I indicated, we continue to be very confident in The Body Shop performance of this year and probably improving versus prior year, both on top line and bottom line. From a margin perspective, as you know, we are putting a lot of effort on the turnaround plan in terms of really looking at stores that are not profitable, looking at our footprint overall. So I think it is expected that we're going to improve margin, as we indicated in our guidance for 2022. Our goal is to double the EBITDA margin for The Body Shop, and we are on track to deliver that. Next question, Robert Ford, Bank of America. Hey, thank you for taking my questions and Congratulations on the international growth and the underlying improvements. JP, I was very impressed by the expense reductions in Brazil. The sales, marketing and logistics were down 5.2%. And I was curious, is that a timing issue or is there something structural in the cost structure? And then given the competitive dynamics, are you comfortable with your existing brand investments in Brazil or do you see a need to take some of these savings and redirect them into the brand? Bob, thanks for the question. It's not a temporary effect at all. It already includes also some negative news in it, as mentioned before. I mean, amortization and depreciation costs of intangible assets, which increased, is already embedded in these numbers. So you see there a portion of that has to do with the higher productivity of the new direct selling model that we've introduced primarily to that, plus some tight management of costs, right? So this is sort of structural levels we should be running at. Now as it comes to reinvesting, we have already been investing significantly to grow our market position in recent years. The market started the year quite flattish, so to say, and we've increased competitive activity. Having said that, we do think that the current level of investment is enough for us to achieve our planned performance. But we are looking back very closely because I haven't seen so much competitive activity in many years as we saw in Q1 this year. Yes. It seems intense, and I think that Avon was indicating that they were down kind of mid to high single digits in Brazil across every CF and T category. And I guess in that context, I was anticipating that maybe you'd have an opportunity to take a little bit of market share or a little bit more. Sorry, Bob. Can you repeat the ending of the question, please? I guess from your perspective, do you see an opportunity because of maybe a precision of weakness with your biggest direct selling competitor? Right. Because of the relatively poor results. Yes, but everyone else is very active. So as I mentioned, I have not seen so much activity in many, many years. That's helpful. Thank you very much. And again, congratulations. Thanks. Next question, Marco Calvi, Itau BBA. Hi, good morning, everyone. A question regarding the market share in Brazil. You guys showed some figures during the Natura Day showing an increase in market share in Brazil for most of the important lines of products to Natura. My question is regarding what you guys have been seeing during 2018. Is that still happening? Have you guys been seeing an increase in market share gains in the most important line of products? Thank you. I cannot JP speaking. Thanks for the question. And luckily, I cannot disclose and open all the market share most recently most recent market share numbers at this stage. Having said that, we are working to defend and continue gaining market share throughout this year, right? And so far, there's no reason for us not to believe that we are not going to achieve that. Okay. Thank you. Next question, Tobias Stendling, Credit Suisse. Yes, good morning to everyone. Just a question, JP. Specifically in regards to the Q1, there was still kind of a positive impact from the lower taxation on a year over year basis of about BRL 23,000,000, right, which was about 12% of EBITDA. This effect is kind of going to normalize in the Q2 of the year, right? Which tax to this? Taxes, sorry. If you just look for instance, if you look at your EBITDA breakdown, you basically mentioned that about BRL 23,000,000 of the EBITDA growth is coming from lower taxes from Carga Tiburitaria. And this was basically because of the change in the taxation that was implemented last year, right? Yes. Part of that, a significant portion, yes. And there are other taxes that we are pushing to optimize going forward. But yes, there is an effect in Q1 on that. Just one thing looking to understand because if I'm not wrong, this effect will kind of normalize in the Q2, right? My only concern is here is that in the Q2, you start off you have kind of comparables, which already include also the lower tax benefit and so you will not see this effect. I'm just trying to see if I'm wrong or if I'm right. Don't expect any significant change in gross margin for that purpose because there are so many other activities going on. Don't expect any swing in any significant swing in gross margin for that. So there should continue to be kind of a positive impact going forward? Yes. Yes, in Q2, yes. Probably this is Marcel, sorry. If you are talking about the IPI, it started in the Q3. Okay. So you still have another quarter with this benefit. And then in the second half of the year, your top line will be you face tougher comps because of that? That's it. Okay, perfect. And just another question is that given that during the Investor Day, you mentioned that JP mentioned that that the number of consultants was expected to stabilize as of now more or less and given the strong increase in productivity. So should we expect to see a major acceleration in top line in the Q2? Well, what I can repeat is that we do expect the number of consultants to stabilize somewhere within Q2 towards the end of Q2. So if we manage to continue to deliver an increased productivity, that will reflect on top line. Let's see. Okay. So the end of the second quarter. Perfect. Thank you. Next question is Alex Robert, Citibank. Yes. Hi, everybody. Thanks for taking the questions. I wanted to start with, first of all, top line trends in Brazil and then second on the negative free cash flow here. When you look at the top line, I guess it was 1% sales growth just about, but then adjusting for the Mother's Day effect, it was 3%. How could you give us a sense of how that top line was among your 3 categories? I know you've been the past, I guess at the end of last year, you were talking about indications of trading up in toiletries. And I was wondering if you had seen some trading up or there were signs of trading up in the other two CFT categories. And if you could perhaps comment generally on your demand environment. Do you feel like a recovery is firming up? Do you feel like we're still in transition? So that's the first question, then I'll come back on free cash flow. Alex, JP speaking. Well, as it comes to the demand, I cannot open by category at this stage. But on an aggregate level, when it comes to the demand, what we saw in Q1 is that the market has slowed down quite a lot. Based on external figures, the market has slowed down quite a lot. So is that going to recover? Well, most likely in the second half, our modeling of the market suggests that we'll recover a little bit towards the second half of the year, mainly driven by disposable income of families. So this is a variable we have to watch. If that doesn't happen, the market may remain a little bit flat. We'll see. But it started very slow. Okay. Okay. Interesting. And a follow-up on this. I know you guys kind of relaunched the 19th cycle right of the catalog that I understand was part of the motivation is to kind of have and set up sales for January or at least stimulate some incremental sales in January. How did that 2019 cycle work? Are you happy the effects and impact? And did it have an influence on this Q1 sales? No. We add cycles as we see higher activities in the channel activity levels in the channel. That's what drives us to increase the number of cycles. It helped in Q4. Q1, we basically did some short cycles to adjust the calendar of our activities to sort of the Gregorian calendar. So no special reason for driving that additional sales there. But you want I hope it helps, but you wanted to ask about the cash flow, isn't it? Yes. That's right. Thanks. And so we see this €351,000,000 negative free cash flow. And thanks for breaking it out among the segments. And I was just wondering if there was some color that you could give us around for The Body Shop, we saw $125,000,000 of cash burn and then the $165,000,000 in Natura. How what do you think were the drivers behind this? I mean, I guess I'm specifically interested in the TBS outflow. Are these movements with some of the accounts receivables? Is it some other element around investments? And could this level of outflow that we're seeing here for TBS end that to continue for a quarter or 2 or not? Thanks very much. Hi, Alex. This is Marcel. How are you? So regarding TBS, it's very seasonal. Indeed, this cash outflow is better than the previous year. So I think they are in a good trend. And regarding Natura, we have, I think, 3 main effects. One, as JP mentioned, we have a phasing, a different phasing in the previous year when you compare with this year. So the Q2 last year was, how can I say, not so strong? And I think you have difference from the last year of this year. Besides that, you have the LatAm growth. I think part of these stocks to support the LatAm growth. And the last one is that internally, we took some measures intentionally to increase our inventory level of some top selling products in order to reduce the risk of stock out. So those effects all of those effects are temporary and we are I think during the remaining year, we are going to reduce this level of working capital in the all in the two companies, Cbias and Natura. Okay. Thank you. Our last question comes from Franco Belardo, Morgan Stanley. Hi, good morning, everybody. Thanks for taking my question and congrats on the strong results. My question is for JP related to the calendar impact in Brazil related to the change in the Mother's Day campaigns that you mentioned in the press release. Could you try to quantify the impact that you had in the Q1 related to that? Or maybe now that we are close to the Mother's Day, how much has been the growth, the normalized growth, including the comparable calendars for the Mother's Day? And of course, not in terms of numbers, but at least directionally, are the trends much better or worse or similar than the growth we saw in the second half last year in Brazil? That's my question. Thank you. Franco, well, I think that one of the questions you asked, we have already provided some sort of answer. We said that nominally, the Brazilian operation grew 0.8%, but adjusted for the calendar effect, it will have gone 3%. So that you can quantify out of that how much actually shifted to Q2, right? Just to take into account the calendar effect. As it comes to the underlying business, this year, I mean, we are in a much better shape than we were early last year. You followed up with us how the business has improved its health throughout last year, then we started to gain share and recover consultants' productivity. You may recall that Q2 last year was the moment was actually just before the moment we introduced the new relationship sales model. So we were leaving the preparation phase for that and that we had to hold back a little bit because of that reason. So we are this year in a healthy position. Very clear. And the second question related to the sports channel. You mentioned that you are preparing expansion to new states or new place, new locations in Brazil. Do you have any guidance in terms of how many stores and which regions you can open those stores this year? Well, I cannot give you the exact numbers. But if you have friends walking around, shopping malls, you're going to see already in some of them Natura's signs as we are refurbishing those stores, and not only Sao Paulo and Rio, but also in Curitiba and going to Central West part of the country as well. So you will see a much higher activity from now to middle of the year. Perfect. Thank you. Excuse me. As we still have some minutes, our next question comes from Olivia Petronello, JPMorgan. Hi, guys. Thank you for taking my question. I have two questions. The first one is on the new channels. If you can talk a little bit about the development on the stores and on the online channel, more specific of what you saw in this quarter and what to expect for the year? And the second question is a little bit on Brazil top line going back to the subject. We continue to see the productivity of the sales representatives going up, but still top line is flattish. So just wanted to understand if from here onwards you would like you wish to see top line growing coming from further productivity or if these sales representatives are still taking share of those that are living the bases? Thank you. Hi, Olivia. Don Paulo speaking. So as mentioned before, I mean, it is our intention to recover or continue to gain market share in Brazil. So we should grow above market. It's certainly is not the nominal 0.8% of Q1 that will deliver that, but we are on track to gain market share once again. Productivity of consultants help. And of course, as mentioned before, we do see a stabilization and modest growth of the channel going forward, which will help. And on top of that, the new channels, new for us, at least, play an important role, especially the online channel, which is almost doubling year on year and already represents almost 4% of sales in our Brazilian operation. So that will play an important role. And add to that the stores, but it's a much smaller base, although a much higher growth rate, but on a very small base. Excuse me. This concludes today's question and answer session. I would like to invite Mr. Roberto Marques to proceed with his closing statements. Please go ahead, sir. Thank you, Nathalie. And again, I'd like to thank you all for participating in this call and look forward to our future exchanges. Let me also remind you that we recently announced that Jose Filippo will be joining us later this month as the group and Natura CFO and will be with us on the next call on August 10. I also want to take this opportunity and thank Marcel Goya for helping us throughout this transition. So thank you, everybody, and have a great weekend. Thank you. That concludes the Natura audio conference for today. Thank you very much for your participation. Have a good day.