HETA3 Hercules

Hercules S.A. is a publicly traded company with shares listed on B3 under the tickers HETA3 and HETA4, with a long history linked to the cutlery and tableware segment. Its origins date back to 1936, when the company “Hercules Ltda.” was incorporated, the first Brazilian manufacturer to produce stainless steel cutlery at a time when the market was still dominated by alpaca cutlery, nickel-plated pieces and imported products. In 1947, the company became a publicly held corporation, changed its name to Hercules S/A – Fábrica de Talheres and moved its manufacturing facilities to a new location, in line with the expansion of the business. In 1968, it was registered with the Brazilian Securities and Exchange Commission (CVM), reinforcing its presence in the Brazilian capital markets.

Over the following decades, Hercules significantly expanded its industrial capacity. In 1970, after a period in which it reached a leading position in South America in cutlery production, the company identified the need to expand its industrial operations and invested in the acquisition of a city block adjacent to the existing plant, opening new facilities with 21,297 m² of built area. The production line was then expanded to include, in addition to a wide range of cutlery, serving dishes and other tableware. In 1983, the company took over the controlling interest in Zivi S/A – Cutelaria, strengthening its role in the cutlery and metal utensils segment, and in 2003, after the merger of Zivi S/A into Eberle S/A, it became a shareholder of Mundial S.A. – Produtos de Consumo.

From the 2000s onward, Hercules’ business model underwent a significant transformation. In 2004, the company redirected its strategy, focusing its revenues on brand licensing and temporarily discontinuing its own production process. Since then, its operations have focused exclusively on licensing the Hercules brand for cutlery and tableware intended for domestic and professional use, operating through contracts with third-party licensees. Its current corporate purpose covers the manufacture, commercialization and licensing of cutlery and other tableware, as well as the import and export of these products and of raw materials and equipment, in addition to the possibility of taking equity interests in other companies. In practice, however, the effective activity described in the reference form is brand licensing, with no direct production since 2004.

The company’s main operating segment is so-called Food Service, which comprises products aimed at both professional and home cooking, such as pans, knives, cutlery, serving dishes and other household utensils. These products are manufactured abroad, in plants located in several Asian countries, certified and supervised by Hercules, using mainly stainless steels, aluminum, polymers and silicone. The production process involves forging, injection or stamping, heat treatments, grinding, polishing and the application of thermoplastic polymer components, before final packaging. In the fiscal year ended December 31, 2024, the company’s net revenue from this segment totaled R$ 4.118 million, accounting for 100% of net revenue, and resulted in net income of R$ 723 thousand for the period.

From a commercial standpoint, Hercules operates essentially as a brand licensor, with all of its revenue tied to licensing the use of the Hercules brand to Mundial Distribuidora de Produtos de Consumo Ltda., which holds the exclusive right of use in Brazil. The company has not carried out production or direct sales of goods since 2004, which reduces its exposure to operational risks typical of manufacturing and logistics, but concentrates its revenue on a single client-licensee. This model is based on nationwide distribution and licensing royalty agreements that support the presence of the Hercules brand across different sales channels.

Distribution of licensed Hercules-branded products in Brazil is carried out by Mundial Distribuidora, which serves retail chains, distributors and other clients throughout the country. Items in the Food Service division are present in hotels, restaurants and Brazilian households, covering the food preparation and table service segment. In foreign markets, Hercules products are also sold, with a presence in Latin America through Mundial Uruguai and in Europe through Mund Europe, based in Portugal, although the company itself reports that it had no revenue from abroad in its 2024 statements. In terms of market share, Hercules estimates it holds approximately 5% of the Brazilian table service segment, in an environment marked by intense competition, including private-label brands of major retail chains and a large volume of imported products of highly varied quality and price levels.

For investors, it is worth noting that although Hercules does not operate in a regulated market or one subject to specific government authorizations, its recent history includes initiatives related to tax regularization and management of tax liabilities, such as its adherence to the Special Tax Regularization Program (PERT) in 2017 and the execution of an individual settlement agreement with the Office of the Attorney General of the National Treasury in 2023, involving installment payment of tax debts, discounts and the use of tax loss carryforwards. Over the years, the company has also made use of government assistance measures related to the Covid-19 pandemic, such as extensions of deadlines for payment of federal taxes and for filing ancillary obligations, although it emphasized that these measures did not significantly affect its financial statements at the end of 2020.

In the environmental, social and governance (ESG) field, Hercules explains that, due to its brand-licensing-based business model, without its own industrial facilities, logistics fleet or direct production chain, it does not publish a specific ESG report, does not adopt a formal materiality matrix, and does not use key performance indicators related to social and environmental issues. The company also does not currently follow recommendations from frameworks such as the TCFD or references related to the UN Sustainable Development Goals, justifying these choices on the grounds of the low materiality of environmental and climate impacts arising from its activity. Even so, it mentions that it seeks to conduct business in an ethical and responsible manner and does not make financial contributions to parties, candidates or activities aimed at influencing public policy. Thus, HETA3 and HETA4 shares represent an interest in a lean company profile, focused on managing a traditional brand of cutlery and tableware, whose revenue generation is anchored in licensing agreements with an exclusive distributor in the Brazilian market.