Sendas Distribuidora S A : Earnings Release 2Q21

2Q21 EARNINGS RELEASE

EARNINGS RELEASE

SECOND QUARTER 2021

EARNINGS RELEASE VIDEOCONFERENCE

Wednesday, July 28, 2021

11:30 a.m. (Brasília) | 10:30 a.m. (New York) | 3:30 p.m. (London)

Conference in Portuguese (with simultaneous translation)

Video conference via Zoom: click here.

This quarter, the Company will hold its videoconference via Zoom. The information and links will be available on our

website and financial materials.

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2Q21 EARNINGS RELEASE

São Paulo, July 27, 2021 - Assaí Atacadista announces its results for the second quarter of 2021. The numbers presented and commented in this earnings release reflect the pure Cash & Carry business, except where indicated otherwise. All comments referring to adjusted EBITDA exclude any adjustment for other operating revenues or expenses in the periods. Moreover, the results include the effects from IFRS 16/CPC 06 (R2) - Leases, which eliminates the distinction between operating and financial leases, except where indicated otherwise.

Gross Sales

R$11bn

Net Sales

+22%

Adj. EBITDA

R$793M

+33%

Net Income

2Q21: +62%

1H21: +81%

Net

Debt/EBITDA

-1.90x

• Gross Sales came to R$10.9 billion in 2Q21, growing R$1.9 billion, led by the successful expansion in the last 12 months, with the opening of 19 stores, which drove the period's strong growth;
• Net Sales improved 22%, reflecting the robust organic expansion (+13.2%), which exceeded expectations, and the solid performance of same-store sales (+9.2%), with market share gains, despite the restrictions on business hours and customer traffic at our stores, the pandemic's persistent impact on the activities of B2B clients and the strong comparison base last year;
• Inauguration of 3 stores in 2Q21 and another 25 stores under construction in 14 states, in line with the expansion plan for 2021. Sales area increased 14%, corresponding to 100 thousand sqm, in the last 12 months;
• Adjusted EBITDA was R$793 million, an increase of 33%, above sales growth, with margin expanding 70 bps to 7.9%. In the first semester, adjusted EBITDA was R$1.4 billion, increasing 30%, with margin expanding 50 bps to 7.4%;
• Net Income came to R$305 million, an increase of 62%, with net margin gaining 70 bps to 3.0%. In 1H21, it was R$545 million, up 81%, significantly outpacing the growth in both sales and adjusted EBITDA, with net margin expanding 90 bps to 2.8%;
• Significant improvement in net debt/adjusted EBITDA ratio¹, which ended the period at -1.90x, down 0.8x EBITDA from 2Q20 (-2.73x),attesting to the ongoing deleveraging process.

1Adjusted EBITDA Pre-IFRS 16.

"Assaí delivered robust results in the quarter, supported by continued solid growth accompanied by profitability and cash generation, following the trend of prior periods. The 2021 expansion plan was kicked off by opening 3 stores, with another 25 stores under construction, advancing the organic expansion plan, which remains an important growth driver. In addition, important progress in ESG were made with the announcement of the target to reduce by 30% carbon emissions by 2025, which is linked to the variable compensation of Company's management, and the adherence to the LGBTI+ Companies and Rights Forum. We remain confident in the resilience of our operations and expect, as vaccination accelerates and business activity gradually resumes, the return of food processors and users to our stores, further strengthening Assaí's operations. By growing ethically, sustainably and on a solid foundation, Assaí will continue to create value for shareholders, clients and employees. We thank all our stakeholders for accompanying us on this journey."

Belmiro Gomes, CEO of Assaí

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2Q21 EARNINGS RELEASE

(R$ million)			2Q21	2Q20		1H21	1H20
Net operating revenue		10,049	8,224	22.2%	19,497	16,033	21.6%
Depreciation (Logistic)		(13)	(8)	67.1%	(25)	(15)	69.2%
Gross Profit			1,722	1,335	29.0%	3,229	2,550	26.6%
Gross Profit Margin		17.1%	16.2%	0.9 p.p.	16.6%	15.9%	0.7 p.p.
Selling, General and Administrative Expenses	(956)	(747)	28.0%	(1,849)	(1,465)	26.2%
% of Net Revenue		-9.5%	-9.1%	-0.4 p.p.	-9.5%	-9.1%	-0.4 p.p.
Equity income			14	-	n.d.	29	-	n.d.
Other operating expenses, net	(30)	(59)	-49.2%	(31)	(119)	-73.9%
Adjusted EBITDA	(1)(2)		793	596	33.1%	1,434	1,100	30.4%
Adjusted EBITDA Margin	(1)(2)	7.9%	7.2%	0.7 p.p.	7.4%	6.9%	0.5 p.p.
Net Financial Result		(145)	(132)	9.8%	(279)	(288)	-3.1%
% of Net Revenue		-1.4%	-1.6%	0.2 p.p.	-1.4%	-1.8%	0.4 p.p.
Net Income - Total Controlling Shareholders	305	188	62.2%	545	301	81.1%
Net margin - Total Controlling Shareholders	3.0%	2.3%	0.7 p.p.	2.8%	1.9%	0.9 p.p.

1. Earnings before Interest, Taxes, Depreciation, Amortization
2. Adjusted for Other Operating Revenue (Expenses)

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.

(R$ million)		2Q21	2Q20			1H21	1H20
Net operating revenue - ex fiscal credits (*)	10,009	8,224	21.7%	19,457	16,033	21.4%
Depreciation (Logistic)	(13)	(8)	67.1%	(25)	(15)	69.2%
Gross Profit - ex fiscal credits (*)	1,682	1,335	26.0%	3,189	2,550	25.1%
Gross Profit Margin - ex fiscal credits (*)	16.8%	16.2%	0.6 p.p.	16.4%	15.9%	0.5 p.p.
Selling, General and Administrative Expenses - ex fiscal credits (*)	(956)	(747)	28.0%	(1,849)	(1,465)	26.2%
% of Net Revenue - ex fiscal credits (*)	-9.6%	-9.1%	-0.5 p.p.	-9.5%	-9.1%	-0.4 p.p.
Equity income	14	-	n.d.	29	-	n.d.
Other operating expenses, net	(30)	(59)	-49.2%	(31)	(119)	-73.9%
Adjusted EBITDA (1)(2) - ex fiscal credits (*)		753	596	26.4%		1,394	1,100	26.8%
Adjusted EBITDA Margin (1)(2) - ex fiscal credits (*)		7.5%	7.2%	0.3 p.p.		7.2%	6.9%	0.3 p.p.
Net Financial Result - ex fiscal credits (*)	(166)	(132)	25.8%	(300)	(288)	4.2%
% of Net Revenue - ex fiscal credits (*)	-1.7%	-1.6%	-0.1 p.p.	-1.5%	-1.8%	0.3 p.p.
Net Income - Total Controlling Shareholders - ex fiscal credits (*)	264	188	40.4%	504	301	67.4%
Net margin - Total Controlling Shareholders - ex fiscal credits (*)	2.6%	2.3%	0.3 p.p.	2.6%	1.9%	0.7 p.p.

1. Earnings before Interest, Taxes, Depreciation, Amortization
2. Adjusted for Other Operating Revenue (Expenses)

* Excluding tax credits detailed in the "tax credits" section, page 3

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2Q21 EARNINGS RELEASE

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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2Q21 EARNINGS RELEASE

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.

Tancredo Neves Store (SP)

Cuiabá Store (MT)

Caldas Novas Store (GO)

OPERATING RESULT

(R$ million)					2Q21	2Q20		1H21	1H20
Net operating revenue - ex fiscal credits (*)	10,009	8,224	21.7%	19,457	16,033	21.4%
Depreciation (Logistic)			(13)	(8)	67.1%	(25)	(15)	69.2%
Gross Profit - ex fiscal credits (*)	1,682	1,335	26.0%	3,189	2,550	25.1%
Gross Profit Margin - ex fiscal credits (*)	16.8%	16.2%	0.6 p.p.	16.4%	15.9%	0.5 p.p.
Selling, General and Administrative Expenses - ex fiscal credits (*)	(956)	(747)	28.0%	(1,849)	(1,465)	26.2%
% of Net Revenue - ex fiscal credits (*)	-9.6%	-9.1%	-0.5 p.p.	-9.5%	-9.1%	-0.4 p.p.
Equity income					14	-	n.d.	29	-	n.d.
Other operating expenses, net		(30)	(59)	-49.2%	(31)	(119)	-73.9%
Adjusted EBITDA	(1)(2)	- ex fiscal credits (*)	753	596	26.4%	1,394	1,100	26.8%
Adjusted EBITDA Margin	(1)(2)	- ex fiscal credits (*)	7.5%	7.2%	0.3 p.p.	7.2%	6.9%	0.3 p.p.

1. Earnings before Interest, Taxes, Depreciation, Amortization
2. Adjusted for Other Operating Revenue (Expenses)

* Excluding tax credits detailed in the "tax credits" section, page 3

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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