HETA4

Hercules S.A. is a publicly traded company with shares listed on B3 under the tickers HETA3 and HETA4, with a long track record in the cutlery and tableware segment. Its origins date back to 1936, when the company “Hercules Ltda.” was incorporated, the first Brazilian manufacturer of stainless-steel cutlery, at a time when the market was still dominated by alpaca and nickel-plated cutlery and imported products. In 1947, the company became a publicly held corporation, changing its name to Hercules S/A – Fábrica de Talheres and moving its manufacturing facilities to a new address in line with business expansion. 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 during 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 an adjacent city block to the existing plant, inaugurating new facilities with 21,297 m² of built-up area. The production line was then expanded to include, in addition to a wide range of cutlery, chafing dishes and other tableware. In 1983, the company took over the controlling interest in Zivi S/A – Cutelaria, strengthening its position 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 strategies, focusing its revenue on brand licensing and temporarily shutting down 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. The current corporate purpose covers the manufacture, sale 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 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 domestic cooking, such as pots, knives, cutlery, chafing dishes and other household utensils. These products are manufactured abroad, in plants located in several Asian countries, approved 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 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, representing 100% of net revenue, and resulted in net income of R$ 723 thousand for the period.

From a commercial standpoint, Hercules essentially operates 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 the domestic territory. The company has not engaged in 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 licensed customer. This model is based on national-level distribution and licensing royalty agreements, which underpin the presence of the Hercules brand across different sales channels.

The distribution of licensed Hercules-branded products in Brazil is carried out by Mundial Distribuidora, which serves retail chains, distributors and other customers throughout the country. The items in the Food Service division are present in hotels, restaurants and also in Brazilian homes, covering the food preparation and table service segment. In the foreign market, Hercules products are also sold, with a presence in Latin America through Mundial Uruguay and in Europe through Mund Europe, based in Portugal, although the company itself reports that it had no revenue from abroad in its 2024 financial statements. In terms of market share, Hercules estimates that it holds approximately 5% of the serving-at-the-table segment in the Brazilian market, in a context of strong competition, including private-label brands of large retail chains and a large volume of imported products with widely varying quality and prices.

For investors, it is important to note that although Hercules does not operate in a regulated market or one subject to specific government authorizations, its recent history includes tax regularization and tax liability management initiatives, such as joining the Special Tax Regularization Program (PERT) in 2017 and entering into 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 reported the adoption of government assistance measures linked to the Covid-19 pandemic context, such as extensions of deadlines for payment of federal taxes and submission of ancillary obligations, although it stated that these measures did not significantly affect its financial information at the end of 2020.

In the environmental, social and governance (ESG) field, Hercules explains that, due to its business model focused on brand licensing, with no own industrial plant, 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 environmental and social topics. The company also does not currently follow recommendations from frameworks such as the TCFD or guidelines related to the UN Sustainable Development Goals, justifying these choices by the low materiality of environmental and climate impacts arising from its activity. Even so, it mentions that it seeks to conduct its business ethically and responsibly and does not make financial contributions to political parties, candidates or activities aimed at influencing public policy. Thus, HETA3 and HETA4 shares represent an equity interest in a lean-profile company focused on managing a traditional cutlery and tableware brand, whose revenue generation is based on licensing agreements with an exclusive distributor in the Brazilian market.