Fleury SA Q4 2023 Earnings Call (English, Portuguese) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ricardo Boiati - Safra Research - Analyst : Good morning and thank you for taking my question. The question that I have refers to your top line growth. You gave us -- mention some very interesting remarks in the fourth quarter, we see a slowdown of organic growth, perhaps this is related to the calendar effect that seems to be more relevant for the Fleury brand because of the brand's positioning. If you could perhaps expand a bit more on the market dynamic on the main markets where you have a footprint and in the core, which is diagnosis. If there is a factor that has contributed to this slowdown that we see beginning with the fourth quarter. And we already have gone through two REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 08, 2024 / 2:00PM, FLRY3.SA - Q4 2023 Fleury SA Earnings Call (English, Portuguese) thirds of the first quarter. If you could perhaps give us more color regarding the beginning of this year and see if there is a dynamic that could just by a dynamic for a resumption of growth in the diagnostic vertical for the company. This is my first question. My second question refers to costs, especially the synergy of cost and material. Filippo perhaps you could give us an update on what is happening with the capture of synergies in this line item specifically, as it has already been implemented, why you still have to do the magnitude of this and additional details. So we can better understand, what is happening with the capture of synergies. These are all my questions. Thank you.

Question: Rafael Barros - XP Investimentos - Analyst : Good morning. Can you hear me?

Question: Rafael Barros - XP Investimentos - Analyst : Thank you for taking my question. In truth, I have two very short questions. The first refers to investments and expansion when we look going forward and see what you intend to invest in expansion, how would you qualitatively divide these investments in M&A's and organic growth, there are several growth opportunities for organic growth. That is the first question. The second question refers to your working capital. The sector is under some stress and there is the pressure of operators on all of the service renders because of the longer payment terms, we have also seen that you had a better payment term dynamic during the quarter. Do you think that there is room to enhance your working capital when it comes to receivables and payable in the year 2024. Do you think this will materialize? Thank you very much.

Question: Joseph Giordano - J.P. Morgan - Analyst : Hey, good morning, everybody. Jeane, Filippo, Renato, thank you for taking my question. I would like to explore a point mentioned by Jeane the refers to the payers. We look at the cash cycle of the company and we see accounts receivable deteriorating. Even when we look at the pro forma metric, there is a difference of seven days regarding payment, I would like to explore two points with you. Shouldn't there be a normalization of this during the year because the B2C grows more than B2B, there are also changes due to contractual situations with hospitals, for example, so which would be the trajectory of these receivables. And secondly to speak about negotiations going forward, we refer to the issue of ticket versus mix. How do you foresee that transfer throughout the year? And there have been some taxation changes in ICMS. Will this have an impact in terms of costs when you purchase inputs? Thank you.

Question: Joseph Giordano - J.P. Morgan - Analyst : Thank you. Thank you very much.

Question: Vinicius Figueiredo - Ita· Corretora de Valores S.A - Analyst : Good morning, everybody. Thank you for taking my question. First of all, I would like to explore the behavior of your margins, given that we have a components in the fourth quarter that became more evident showing that the Fleury brand is slowing down more than the others. I am curious in terms of how this mix effect could impact the margins of the company in 2024 and if throughout 2023, by analyzing operation by operation, brand by brand, separating B2B is you had a margin expanding, if there's still room for this in 2024? And the second point I would like to remark on refers to SG&A. I know there is a seasonal component here and the fourth quarter ends up having a greater impact. But I would like to understand if there is a bonus linked a call -- a closing for Pardini or is it simply that season component? Thank you very much.

Question: Vinicius Figueiredo - Ita· Corretora de Valores S.A - Analyst : Yes, I do hear you now.

Question: Vinicius Figueiredo - Ita· Corretora de Valores S.A - Analyst : Thank you. Have a good day.

Question: Gustavo Tiseo - BofA Global Research - Analyst : Good morning, everybody. Jeane, Filippo and Renato. I'd like to explore new links, speak about margin expansion during 2024 and the top line growth of new links, they grew 12% this year. The growth outlook is about what was diagnosed, but how can we think about this going forward? Will it continue on that base of 12%? And the second question is regarding CapEx for 2024, it was stable in 2022, 2023. What's your expectation for CapEx in 2024? And which was the CapEx at the end of the quarter? Simply so that we have an idea of what happened. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 08, 2024 / 2:00PM, FLRY3.SA - Q4 2023 Fleury SA Earnings Call (English, Portuguese)

Question: Gustavo Tiseo - BofA Global Research - Analyst : Thank you very much. Thank you for the answer. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 08, 2024 / 2:00PM, FLRY3.SA - Q4 2023 Fleury SA Earnings Call (English, Portuguese)

Question: Yan Cesquim - BTG Pactual - Analyst : Good morning, Jeane, Filippo and Renato. Good morning, everybody. I have only one question a question that is a little out of the box. Considering that Fluery as always at the forefront in terms of options and technology. I'd like to understand how AI could change this segment, if you're testing and using this in some of your positions?

Question: Yan Cesquim - BTG Pactual - Analyst : Thank you. That was very clear.

Question: Emerson Vieira - Goldman Sachs - Analyst : Good morning, Jeane, Filippo, and Renato. I have three questions here. The first question is to explore the top line, you spoke about the boom of growth in 2024. That will be based on volume, which are the main reasons for this. Is it because you're expanding the offer exam, acquisition of new contracts or the expansion of mobile services. If you could refer to more details on this. Secondly, capital allocation, one more quarter of very robust capital. Our location now looking at M&A, which is the type of asset that would make more sense for you, diagnostic medicine, new links for other markets like oncology, as an example, that is my second question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 08, 2024 / 2:00PM, FLRY3.SA - Q4 2023 Fleury SA Earnings Call (English, Portuguese) The third question refers to the cost dynamic for materials, non-oncologic material, that has grown significantly in the company, it has gained scale, so which are the conditions for the procurement of material for infusion, for example, you'll see a gain because of the increase in scale in those line? And the if the pressure for this should be reduced as you gain scale infusion, for example?

Question: Emerson Vieira - Goldman Sachs - Analyst : Thank you. That was very clear. Have a good day.

Question: Leandro Bastos - Citi - Analyst : Thank you. Simply one question at my end. If you could speak about how you foresee the evolution of your premium plans in the Flury brand, have you seen a fluctuation in these contracts? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 08, 2024 / 2:00PM, FLRY3.SA - Q4 2023 Fleury SA Earnings Call (English, Portuguese)

Question: Leandro Bastos - Citi - Analyst : Thank you, Jeane.