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    ASAI3   BRASAIACNOR0

SENDAS DISTRIBUIDORA S.A.

(ASAI3)
  Report
End-of-day quote. End-of-day quote Bolsa de Valores de Sao Paulo - 09/23
19.19 BRL   -0.52%
09/16SENDAS DISTRIBUIDORA S A : Institucional Presentation
PU
09/16SENDAS DISTRIBUIDORA S A : MATERIAL FACT (Form 6-K)
PU
09/16SENDAS DISTRIBUIDORA S A : Form 6-K)
PU
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Sendas Distribuidora S A : TAX CREDITS (Form 6-K)

07/28/2021 | 06:14am EDT

TAX CREDITS

On March 15, 2017, the Brazilian Supreme Court (STF) recognized the unconstitutionality of the inclusion of ICMS in the calculation base of PIS and COFINS. In May 2021, the STF ruled in favor of taxpayers, concluding that all ICMS identified must be excluded from the PIS and COFINS calculation base. Based on the decision, on June 30, 2021, the Company recognized a credit, net of provision, in the total amount of R$62 million (R$40 million under net revenue and R$22 million under the financial result due to monetary adjustment), which is subject to adjustments. The individual lawsuit filed by the Company became final and unappealable on July 16, 2021.

The comments on the Company's performance in 2Q21 and 1H21 mentioned below exclude the effects from these credits, except where indicated otherwise.

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SALES PERFORMANCE

Net Sales in the quarter posted strong growth to over R$10 billion, representing increases of 22.2% on 2Q20 and 53.9% on 2Q19. The result is mainly explained by a strong organic growth (+13.2%), supported by the accelerated maturation of the 19 stores inaugurated in the last 12 months, as well as the higher share of sales to end consumers and inflation remaining at high levels.

Another important driver was same-store sales growth (+9.2%), reflecting the resilience of Assaí's business model and its capacity to adjust to the pandemic, which imposed restrictions on customer traffic at all stores and on business hours at over 20% of stores, as well as the impacts on key publics for Assaí, such as food processors (bars and restaurants) and users (hotels, schools, churches, etc.), whose activities remain affected by severe restrictions.


In 1H21, Net Sales came to R$19.5 billion, improving 21.6% from 1H20 and 51.6% from 1H19. Sales performance was driven by the excellent performance of stores inaugurated in the last 12 months (+12.6%) and by solid performance of same-store sales (+10.2%).

Net revenues surpassed R$10 billion in 2Q21, reflecting the excellent performance of the organic expansion and the strong same-store sales growth.

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Assaí ended the quarter with 187 stores, including 3 new stores inaugurated in the quarter, two in the country's Midwest and one in the Southeast, kicking off the organic expansion plan for 2021. Currently, 25 stores are under construction in 14 states, and 25 to 28 stores are expected to open in 2021.

Assaí surpassed the mark of 50,000 employees, and the new stores will create more than 6,000 new jobs by year-end.

OPERATING RESULT

Gross profit came to R$1.7 billion in 2Q21, with gross margin of 16.8% (+60 bps), explained by the accelerated maturation of new stores, increased share of end consumers on sales and appropriate level of competitiveness, as a result of assertive sales campaigns in the quarter, especially the Northeast Football Cup, Easter, Mother's Day, the St. John/June Festivals and specific campaigns targeting the B2B public.

Selling, General and Administrative Expenses corresponded to 9.6% of net revenue, reflecting the inclusion of expenses with the new health protocols adopted during the pandemic, which were allocated at Other Operating Expenses line in 2Q20, as well as the expansion of the corporate backoffice team after the spin-off from GPA. For the purposes of improving comparability between periods, by allocating Covid-19 expenses in 2Q20 to the line Selling, General and Administrative Expenses, the expenses as a ratio of net sales improved by 10 bps.

Equity income reached R$14 million in the quarter, which refers to the 18% interest held by Assaí in FIC (Financeira Itaú CBD). At end-June, the number of Passaí cards issued surpassed 1.45 million.

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Other operating expenses, which came to R$30 million, mainly refer to additional costs related to the spin-off. We do not expect significant costs in the line Other operating expenses in the coming quarters.

Adjusted EBITDA amounted to R$753 million in the quarter, growing 26% and outpacing sales growth, with margin of 7.5%, up 30 bps. In 2Q20, Covid-related expenses were recognized in Other Operating Expenses; however, if allocated under Selling, General & Administrative Expenses to ensure comparison with 2Q21, adjusted EBITDA margin expanded by 90 bps, confirming the Company's operating efficiency and effective organic expansion.

In the first semester, adjusted EBITDA was R$1.4 billion, increasing 27%, with margin of 7.2%, 30 bps higher than in 1H20. If we allocate the Covid-related expenses in 1H20 to Selling, General & Administrative Expenses, EBITDA margin expanded by 70 bps.

FINANCIAL RESULT

The quarterly net financial result after IFRS 16 was an expense of R$145 million, corresponding to 1.4% of net sales. Excluding the effects from interest on lease liabilities, which amounted to R$69 million in 2Q21, the net financial expense was R$76 million, equivalent to 0.8% of total net revenue, an improvement of 10 bps from 2Q20. Excluding the positive effect from tax credits of R$22 million, as described in the section 'Tax Credits' (page 3), the financial

expense pre-IFRS16 as a ratio of net sales remained practically in line (1.0%) with 2Q20 (0.9%), despite the positive effect from exchange variation on dividends received from Éxito in 2020.

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In 1H21, the net financial expense pre-IFRS 16 was R$146 million, or 0.7% of net sales, down 50 bps from 1H20. Excluding the effects from tax credits, the net financial expense corresponded to 0.9% of net sales, an improvement of 30 bps, mainly due to the reduction in debt costs.

NET INCOME

Net Income came to R$305 million in the quarter, an increase of 62.2%. Net margin stood at 3.0%, gaining 70 bps, attesting the gains in operating and financial performance and the ongoing trend of solid growth with profitability. Excluding the effect from tax credits, net income came to R$264 million, representing growth of 40.4%, with net margin expanding 30 bps to 2.6%.

In the first half of 2021, net income improved 81.1%, or 67.4% excluding the effect from tax credits, substantially outperforming the growth rates in Net Sales and Adjusted EBITDA, to reach R$545 million, or R$504 million ex-tax credits. Net margin expanded 90 bps, from 1.9% in 1H20 to 2.8% in 1H21, reflecting Assaí's efficient business model, despite the highly challenging scenario posed by the pandemic. Even after excluding the effects from tax credits, net margin still registered significant improvement, expanding 70 bps.


NET DEBT

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The deleveraging process remains strong, with net debt including credit card receivables, declining R$388 million, to R$4.9 billion, and the net debt/adjusted EBITDA ratio registering significant improvement of 0.8x EBITDA, from
-2.73x in 2Q20 to -1.90x in 2Q21.

In 2Q21, the Company issued the 2nd debenture issue in the amount of R$1.6 billion, the proceeds of which will be used to settle the 2nd series of the 1st debenture issue coming due in August 2021, which will reduce debt costs and lengthen the maturity. On July 27th, the Company also approved the issue of certificates of real estate receivables (CRI1), in the amount of R$1.5 billion, and of promissory notes2, in the aggregate amount of R$2.5 billion. The transactions will have average maturity of over four years and adress payments coming due in 2022 and 2023.

INVESTMENTS

Total gross capital expenditures in the quarter came to R$610 million, reflecting the accelerated organic expansion plan, with 25 to 28 stores to be opened during the year and inaugurations concentrated in the second half of the year. 3 stores were opened in the quarter, while 25 stores are under construction in 14 states.

ESG STRATEGY: OUR COMMITMENT TO SOCIETY

The Company's sustainability strategy has 6 work fronts that encompass various commitments, targets, actions and indicators. In the quarter, the Company published its sustainability report covering actions in 2020 on its Investor Relations website (https://ri.assai.com.br/en/financial-information/annual-reports/).

The key social and environmental results in the quarter include:

- Combating climate change: Assaí announced a target to reduce by 30% the carbon emissions from its operation by 2025, with total emissions in 2015 as the baseline. The annual targets for achieving this result are linked to the variable compensation of the Company's midlevel and senior leaders, reinforcing its commitment to the environment. The Company also undertook to reduce the amount of solid waste sent to landfills and, thanks to its waste-reduction initiatives, the rate of recyclable items rose to 41% and the percentage of solid waste sent to landfills decreased by 2 p.p. compared to 2Q20.

- Engagement with society: As part of its ongoing support for socially vulnerable populations, food donations in the quarter amounted to 220 tons, benefiting over 23,000 families. In addition, through the Solidarity Campaign, which was resumed in May 2021, Assaí stores already have collected 240 tons of non-perishable food, personal hygiene and cleaning items, which were redistributed to partner social organizations.

1 The conclusion of the public offer is subject to obtaining registration from Brazilian Securities and Exchange Commission (CVM) and to fully meeting the conditions precedent established in the respective documentation.

2 The conclusion of the Promissory Notes offer is subject to fully complying with the conditions precedent established in the respective documentation.

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- Integrated and transparent management: To enhance its social and environmental policies and practices, in the quarter, Assaí formalized a partnership with Instituto Ethos de Empresas e Responsabilidade Social.

- Valuing our people: The Company also made significant progress in diversity and inclusion:

· The number of women in leadership positions (management and above) reached 25.2%, increasing 5 p.p. from 2Q20;
· 65.0% of our employees declare themselves as black or brown, according to the Ethnic-Racial Self-Declaration Campaign;
· 42.1% of leadership positions are held by blacks;
· An Anti-Racist Manual was distributed to all employees to strengthen our commitment to combating discrimination and respecting human rights;
· Adherence to the LGBTI+ Companies and Rights Forum, undertaking a commitment to foster respect for and the rights of LGBTQIA+ persons;
· Partnership with Transempregos to support the promotion of job opportunities for transsexual people;
· Organization of the 5th Diversity Week, with daily activities on topics involving LGBTQIA+, Generations, Gender, Persons with Disabilities and Race, which engaged employees from offices, DCs and stores.

STOCK SPLIT

On August 11th, 2021, the Extraordinary Shareholders Meeting will be held to vote on the stock split at the ratio of 1 to 5 of the shares traded on the B3, which will have no effect on the current value of the capital stock or on the interests held by shareholders. As per the Management Proposal dated July 8, 2021, the stock split aims to increase trading liquidity in the market, since it makes the stock price more attractive and accessible to a wider range of investors.

The number of ADRs traded on the NYSE will not change; however, the program will be changed so that each ADR is equivalent to 5 common shares.

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ABOUT SENDAS S.A.

Founded in 1974, Assaí is the only pure cash-and-carry player listed on the São Paulo Stock Exchange (B3) since March 2021, trading under the ticker ASAI3. Assaí also trades on the New York Stock Exchange (NYSE) under the ticker ASAI. Assaí currently operates in all five regions of Brazil through 187 stores in 23 states (including the Federal District), with total sales area of 824 thousand Sqm. Assaí is one of Brazil's largest employers, with over 50,000 professionals, and welcomes to its stores 30 million customers each month. Assaí is one of the 20 most valuable brands in Brazil according to the annual ranking compiled by Interbrand and ranks 19th in the country in terms of net sales.

INVESTOR RELATIONS CONTACTS

Gabrielle Helú

Investor Relations Officer

Ana Carolina Silva

Beatris Atilio

Daniel Magalhães

E-mail: ri.assai@assai.com.br

Website:https://ri.assai.com.br/

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APPENDICES

OPERATING INFORMATION

I - Store network and sales area

II - Breakdown of sales

% of Gross Revenue

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FINANCIAL INFORMATION

The following tables reflect the amounts presented in the quarterly financial information of Sendas Distribuidora and of the operations under the Assaí brand (Cash & Carry business), i.e., how the Company began to operate after its spin-off from GPA, in 2021. The following amounts do not exclude any adjustment or other non-recurring items.

III - Income Statement (Cash & Carry)

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IV - Income Statement (Sendas Distribuidora)

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V - Balance Sheet

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VI - Cash Flow

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Disclaimer

Sendas Distribuidora SA published this content on 28 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2021 10:12:47 UTC.


ę Publicnow 2021
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Financials
Sales 2021 42 527 M 8 020 M 8 020 M
Net income 2021 1 236 M 233 M 233 M
Net Debt 2021 7 363 M 1 389 M 1 389 M
P/E ratio 2021 20,7x
Yield 2021 0,89%
Capitalization 25 839 M 4 877 M 4 873 M
EV / Sales 2021 0,78x
EV / Sales 2022 0,65x
Nbr of Employees 50 000
Free-Float 59,0%
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Sendas Distribuidora S.A. Technical Analysis Chart | ASAI3 | BRASAIACNOR0 | MarketScreener
Technical analysis trends SENDAS DISTRIBUIDORA S.A.
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Income Statement Evolution
Consensus
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Mean consensus BUY
Number of Analysts 11
Last Close Price 19,19 BRL
Average target price 22,27 BRL
Spread / Average Target 16,1%
EPS Revisions
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Belmiro de Figueiredo Gomes Chief Executive Officer
Daniela Sabbag Papa Director-Administration, Finance & IR
Jean-Charles Henri Naouri Chairman
Anderson Barres Castilho Operations Director
Luiz Nelson Guedes de Carvalho Independent Director
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