20-F: Sendas Distribuidora S.A. Files 20-F Report, Details Strategy and Performance

Sentiment:

Annual Report (Form 20-F) 31 March 2025 11:23 PM

Sendas Distribuidora S.A. releases its 20-F filing, outlining financial results, strategic initiatives, and future outlook for the Brazilian retailer.

Worse than expectedThe company's effective tax rate increased in 2024 due to the loss of certain tax incentives, resulting in a higher tax expense.Net financial expenses increased due to higher indebtedness and interest rates, negatively impacting net income.

Summary

Sendas Distribuidora S.A., a major Brazilian retailer, filed its 20-F report with the SEC on March 31, 2025.
The report covers the fiscal year ended December 31, 2024, detailing the company's financial performance, operations, and future prospects.
Sendas operates 302 stores under the Assa banner across 24 Brazilian states and the Federal District.
The company's net operating revenue for 2024 was R$73.819 billion, an 11% increase from 2023.
Net income for the year reached R$769 million, up 8.3% from the previous year.
The company is focused on digital transformation, expanding purchasing options, and enhancing the customer experience.
Sendas completed its first share buyback program in 2024, acquiring 3,800,000 common shares.
The company voluntarily delisted from the NYSE in January 2025, maintaining its listing on the B3.
A second share buyback program was approved in March 2025, authorizing the acquisition of up to 8,000,100 common shares.
Management has proposed amendments to the bylaws and a new composition for the board of directors, to be voted on in April 2025.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While revenue and store growth are positive, increased expenses, tax rate, and financial risks temper the overall outlook. The delisting from the NYSE is a neutral event.

Positives

Net operating revenue increased by 11% in 2024, indicating strong sales performance.
Net income rose by 8.3% in 2024, demonstrating improved profitability.
The company successfully completed its first share buyback program.
The company is focused on digital transformation and enhancing the customer experience.
The company maintains a strong focus on sustainability and ESG practices.

Negatives

The company's effective tax rate increased in 2024 due to the loss of certain tax incentives.
Net financial expenses increased due to higher indebtedness and interest rates.
The company faces competition from internet sales and may not be able to respond effectively.
The company is dependent on credit card sales, and changes in merchant acquirer policies may adversely affect it.
The company is subject to environmental laws and regulations, and non-compliance may adversely affect its reputation and financial position.

Risks

The Brazilian cash and carry industry is sensitive to decreases in consumer purchasing power and unfavorable economic cycles.
The company faces significant competition and pressure to adapt to changing consumer habits.
The company's indebtedness could adversely affect its business.
The company's systems are subject to cyberattacks and security and privacy breaches.
The company could be materially adversely affected by violations of anti-corruption laws.
The company may not be able to renew or maintain lease agreements on acceptable terms.
The company's product distribution is dependent on a limited number of distribution centers.
The company is dependent on credit card sales, and changes in merchant acquirer policies may adversely affect it.
Labor shortages and increased turnover could have adverse effects on the company's profitability.
Accidents in the company's stores and distribution centers could have a material adverse effect on its business, results of operations, and image.
Failure to protect the company's employee, commercial partner, supplier, and customer database could have an adverse effect on its business, financial condition, or results of operations.
The company may be unable to attract or retain key personnel.
The company's sales depend on the effectiveness of advertising and marketing campaigns.
The company may not be able to provide a sufficient volume and variety of products at competitive prices or properly manage its inventory.
The company does not have a controlling shareholder or control group, which may leave it susceptible to shareholder alliances and conflicts.
Risks related to the financial situation of a shareholder may adversely affect the market price of the company's shares.
The company was previously part of Casino's economic group and may be held jointly or severally liable in legal proceedings involving such entities.
Unfavorable decisions in legal or administrative proceedings could have a material adverse effect on the company.
The company's business depends on its brand, and it may not be able to maintain and enhance its brand.
The company may not be able to protect its intellectual property rights.
The company's business is subject to substantial fluctuation due to the seasonal buying patterns of its customers.
The company faces competition from internet sales.
Losses not covered by the company's insurance may result in a material adverse effect on its business.
The company may encounter difficulties in opening and operating new stores.
Unfavorable decisions or unfolding of investigations in judicial or administrative proceedings involving members of the company's board of directors or executive officers may have a material adverse effect on the company.
The company cannot guarantee that its service providers or suppliers do not engage in irregular practices.
Some categories of products that the company sells are principally acquired from a few suppliers.
Restrictions of credit availability to consumers in Brazil and Brazilian government rules and interventions affecting financial operations may adversely affect the company's sales volumes and operations.
The company is subject to the risk of ratings reassessments.
The company may be held responsible for consumer incidents involving adverse reactions after consumption of products sold by it.
Health risks related to the food industry may adversely affect the company's ability to sell food products.
The company's inability to implement stakeholderand community-oriented social measures where its stores are located could negatively affect its reputation.
The company is subject to environmental laws and regulations, and any non-compliance may adversely affect its reputation and financial position.
The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy.
Political instability in Brazil has adversely affected and may continue to adversely affect the company's business, results of operations, and the trading price of its shares.
Changes in the Brazilian tax legislation, tax incentives, benefits, or different interpretations of Brazilian tax laws may adversely affect the company's operations.
Brazilian government efforts to combat inflation may hinder the growth of the Brazilian economy.
Exchange rate volatility may adversely affect the Brazilian economy and the company.
Monetary regulations imposed by the Brazilian federal government may adversely affect the company.
The company is currently operating in a period of economic uncertainty, which has been significantly impacted by geopolitical instability.
Any further downgrading of Brazil's credit rating may adversely affect the trading price of the company's shares.
Developments and the perception of risk in other countries may adversely affect the price of securities of Brazilian issuers.
The outbreak of communicable diseases around the world may lead to higher volatility in the global capital markets and recessionary pressure on the Brazilian economy.
The volatility and illiquidity of the Brazilian securities markets and of the company's shares may substantially limit your ability to sell the shares underlying the ADSs at the price and time you desire.
If a liquid and active trading market is not developed or maintained, the trading price of the company's shares may be negatively affected.
Future sales, or the perception of future sales, of substantial amounts of the company's shares could adversely affect the market price of the shares.
If you exchange the Sendas ADSs for Sendas common shares, as a result of Brazilian regulations you may risk losing the ability to remit foreign currency abroad.
Holders of Sendas ADSs are not entitled to attend shareholders meetings and may only vote through the Sendas Depositary.
Holders of Sendas ADSs may not be entitled to a jury trial with respect to claims arising under the Sendas Deposit Agreement.
You might be unable to exercise preemptive rights with respect to the Sendas common shares underlying the Sendas ADSs, as a result of which your investment may be diluted.
Holders of Sendas common shares and Sendas ADSs may not receive any dividends.
U.S. securities laws do not require the company to disclose as much information to investors as a U.S. issuer is required to disclose.
Holders of Sendas common shares and Sendas ADSs may face difficulties in serving process on or enforcing judgments against the company and other persons.
Holders of Sendas common shares are required to resolve disputes with the company, its senior management, and holders of Sendas common shares only through arbitration in Brazil.
The protections afforded to minority shareholders in Brazil are different, and may be more difficult to enforce, than those in the United States and some European countries.
Acquisition, ownership and disposal of Sendas common shares or Sendas ADSs could result in substantial U.S. tax liability for you.
The company may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. Holders of the Sendas common shares and the Sendas ADSs.
Acquisition, ownership and disposal of Sendas common shares or Sendas ADSs could result in substantial Brazilian tax liability for you.

Future Outlook

The company aims to open approximately 10 new stores in 2025 and is focused on maintaining efficient operations and a low-cost structure.

Management Comments

Management believes that the Extra Transaction allowed the company to accelerate its expansion through the conversion of stores in dense regions without significant overlap with its existing operations.
Management believes that existing resources and operating income will be sufficient for the company's capital expenditures and investment plan and to meet its liquidity requirements.

Industry Context

The Brazilian cash and carry industry is highly competitive and has grown over the past few years. The market share of cash and carry stores improved by 12.1% in comparison to December 2019, mainly due to the macroeconomic context and the strong expansion throughout the last five years, a period when 683 cash and carry stores were opened.

Comparison to Industry Standards

According to ABAAS, Sendas was the largest pure cash and carry player in Brazil in terms of consolidated gross revenue in the year ended December 31, 2023 and the second largest retailer in Brazil.
The company competes with other retailers such as Atacado, Grupo Mateus, GPA, Supermercados BH, Grupo Muffato (Max Atacadista) e Grupo Pereira (Fort Atacadista), as well as various regional players.
According to the Nielsen, a consulting firm specializing in audience measurement, data, and analysis, 74.0% of Brazilian homes made at least one purchase from cash and carry stores in 2024, and the sales in the segment reported an increase of 14.0% in 2024, as compared to 2023.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Vice Chairman of the Board of Directors	Jos Guimares Monforte	Jos Roberto Meister Mssnich	March 18, 2025	Resignation
Member of the Corporate Governance, Sustainability and Nominating Committee	NA	Oscar de Paula Bernardes Neto	March 18, 2025	Appointment
Coordinator of the Corporate Governance, Sustainability and Nominating Committee	NA	Julio Cesar de Queiroz Campos	March 18, 2025	Appointment

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Bylaw Amendment	Proposed amendments to bylaws related to public offerings, corporate purpose, capital increases, related-party transactions, board composition, and dividend distribution.	April 25, 2025 (if approved)	Aims to improve corporate governance and align with market practices.

Legal Proceedings

The company is party to legal and administrative proceedings related to civil, regulatory, environmental, tax and labor matters.

Stakeholder Impact

The company's performance and strategic decisions impact shareholders, employees, customers, suppliers, and creditors.
The company's commitment to sustainability and ESG practices affects the environment and local communities.

Next Steps

Shareholders will vote on proposed amendments to the bylaws and a new board composition in April 2025.
The company will continue to execute its expansion plan, aiming to open approximately 10 new stores in 2025.
The company will continue to monitor and manage its financial risks, including indebtedness and interest rate exposure.

Key Dates

Date	Description
1974	Founding year with the opening of the first Assa Atacadista store.
December 18, 2003	Sendas Distribuidora S.A. was formed.
December 14, 2020	Sendas entered into a Separation Agreement with CBD.
December 31, 2020	CBD completed a corporate reorganization, transferring its equity interest in xito to CBD.
March 3, 2021	CBD completed the Spin-Off, distributing Sendas common shares to CBD shareholders.
March 5, 2021	Sendas ADSs were distributed to holders of CBD ADSs.
March 8, 2021	Sendas ADSs began trading on the NYSE under the ticker symbol ASAI.
October 14, 2021	Sendas' board approved the Extra Transaction.
December 16, 2021	Sendas entered into a definitive agreement with CBD governing the terms of the Extra Transaction.
February 24, 2022	The definitive agreement with CBD governing the terms of the Extra Transaction was amended.
February 25, 2022	Sendas entered into definitive agreements with the Real Estate Fund for the sale of up to 17 properties owned by CBD.
April 13, 2022	The Brazilian antitrust authority (CADE) approved the sale of the 17 properties to the Real Estate Fund.
August 17, 2022	Sendas and CBD approved the conclusion of credit assignment agreements with a financial institution.
December 2, 2022	Wilkes Participaes S.A., Gant International B.V., and Helicco Participaes Ltda. completed the sale of an aggregate of 140,800,000 Sendas common shares, including 400,000 ADSs, through a global offering.
December 23, 2022	Sendas and CBD approved the postponement of the installment that would be paid on December 29, 2022, to CBD in the amount of R$956 million to October 23, 2023.
March 21, 2023	Wilkes Participaes S.A. concluded the sale of an aggregate of 254,000,000 Sendas common shares, including 2,340,957 ADSs, in a second global offering.
April 27, 2023	Sendas appointed a new board of directors, consisting of a majority independent members.
June 23, 2023	Wilkes Participaes S.A., Gant International B.V., and Segisor S.A.S. finalized the sale of 157,582,580 Sendas common shares, representing 11.67% of its share capital, through a block trade operation.
June 25, 2024	Sendas' board of directors approved its first share buyback program.
August 1, 2024	Start date of the first share buyback program.
August 8, 2024	Our board of directors approved the issuance of 256,799 new common shares due to the exercise of stock options granted to certain employees under the terms of our share-based compensation plans.
November 7, 2024	Our board of directors approved the issuance of 54,881 new common shares due to the exercise of stock options granted to certain employees under the terms of our share-based compensation plans.
December 10, 2024	Sendas disclosed that the Buyback Program was concluded due to the acquisition, at market prices, of the maximum amount of 3,800,000 Sendas common shares authorized under the Buyback Program.
December 11, 2024	Our board of directors approved the issuance of 70,767 new common shares due to the exercise of stock options granted to certain employees under the terms of our share-based compensation plans.
December 19, 2024	Sendas' board of directors approved the voluntary delisting of the Sendas ADSs from the NYSE.
December 30, 2024	Sendas filed a Form 25 with the SEC to delist the Sendas ADSs from the NYSE.
December 31, 2024	End of fiscal year 2024.
January 8, 2025	The last day of trading of the Sendas ADSs on the NYSE.
January 10, 2025	The Sendas ADSs were delisted from the NYSE prior to the market opening.
January 13, 2025	Sendas raised US$100.0 million with a maturity date of 3 years.
March 12, 2025	Our board of directors announced the resignation of Mr. Jos Guimares Monforte from his roles as vice chairman of our board of directors, as well as a member of the finance and investments committee and the corporate governance, sustainability and nominating committee.
March 14, 2025	Date of share ownership information in the report.
March 18, 2025	Our board of directors appointed (i) Mr. Jos Roberto Meister Mssnich as vice chairman of our board of directors; (ii) Mr. Oscar de Paula Bernardes Neto as a member of our corporate governance, sustainability and nominating committee, with a term unified with the other members of the committee; and (iii) Mr. Julio Cesar de Queiroz Campos as the coordinator of our corporate governance, sustainability and nominating committee.
March 18, 2025	Our board of directors approved a capital stock increase of R$184,074,731, without the issuance of new shares, through the partial capitalization of our expansion reserve (reserva para expanso).
March 18, 2025	Our board of directors approved an issuance of 29,538 new common shares due to the exercise of stock options under Series B9, B10, and B11 of our Stock Option Plan.
March 18, 2025	Our board of directors approved our second share buyback program, or the Second Buyback Program, pursuant to which we were authorized to acquire up to 8,000,100 Sendas common shares.
March 31, 2025	Date of the 20-F filing.
April 1, 2025	Start date of the second share buyback program.
April 25, 2025	Extraordinary general shareholders meeting scheduled to vote on proposed amendments to our bylaws.
April 25, 2025	Ordinary general shareholders meeting scheduled to vote on a new composition for our board of directors.
March 31, 2026	End date of the second share buyback program.

Keywords

Sendas Distribuidora, 20-F, financial results, retail, Brazil, Assa, ADS, share buyback, delisting, corporate governance, risk factors, financial statements

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