Fras Le SA

BOVESPA:FRAS3

Earnings Call Transcript 2023-Q1

[Monica Rech, executive]

Welcome to the conference call of Fras-le Mobility for the earnings of Q1 2023. Before beginning, some announcements. This conference call is being recorded, and after the end will be available on our website, fraslemobility.com. We have simultaneous translation into English to access, please click on the button interpretation with the globe at the bottom of the screen. At the end of the presentation, there will be a Q&A session. [Operator Instructions] Apart from that, we would like to clarify that the declarations made concerning business perspectives of the company, projections on the results are based on assumptions and are based on the expectations of management concerning the future of the company. These expectations are highly dependent on changes in the market, general economic performance of the country and international markets, thus it may suffer changes. We have with us... My name is Monica from Fras-le Mobility, the CEO of Anderson Pontalti and also the Director for M&A and RI, Hemerson de Souza and as a guest Director of Investor Relations, Esteban Angeletti.

I wish you a good conference call, and I pass the floor to Mr. Anderson Pontalti, who will begin the presentation.

[Anderson Pontalti, executive]

Sorry, Monica. Thank you. Good morning. Thank you for being with us. It's a great satisfaction to talk in a historical way, a memorable quarter and also now our name is Fras-le Mobility and shows what we have been doing in the last few years through our expansion and internationalization of the company. So speaking specifically of the highlights and markets, we had a very positive quarter. The demand in the domestic market is growing, continues to grow. And we noticed this for 2 years now, and this quarter is not different. So we have a growth of 5% in relation to December 2022.

When I look at the U.S. market we had in Q1 due to market trends, economic political situations, our clients, the distributors preferred to decrease their leverage, their inventory. They're working short, but we believe this is now going to change in Q2. The opening of China brings many elements. It helps us. We have revenue in the region. We have a strong export basis. International freight is now favorable. This is the positive side, the negative side, global competition, especially in geographies where China and other competitors can also be present, whether it be in Europe and Latin America.

When I look at results, Hemerson will give details. We're very happy with the quarter approximately BRL 840 million, here in net revenue, 19% growth in relation to Q1 '22, gross margin, 35.3% and also EBITDA margin, 21.1%. This 21.1% represent BRL 177 million in EBITDA in the period. When we look at our operations, we have the inflation effects in the world due to the Ukraine-Russian war. We believe this is stabilizing. We see a recovery in volumes and market dynamics being more stable. And we saw this at the end of last year in this quarter. Also, we included Juratek in our operations.

So now we are beginning to see the results, and this helps the growth of revenue and the consolidation of good results. The exchange rate rev variation generate some important effects. We have a natural hedge of our operations. But when the U.S. dollar drops, initially, we have a drop in margins of the companies that export. But soon when I have imported inventory, I have the opposite. Inflation in Argentina has given us good results. Although there are difficulties in Argentina to receive products. We have a very experienced team working with materials that are basic necessities because if the vehicles cannot move, they will have problems. In Argentina, we're operating in a positive way. Next slide, please.

A short time ago, we gave our guidance. Just reminding you consolidated net revenue expected at the end of 2023, BRL 3.3 billion, BRL 3.7 billion. Revenue from export market between $230 million and $280 million. We hope to grow in relation to the previous year. EBITDA margin between 15% and 18%, also going up in relation to the past. And we may get to 18%, which is very positive. Investments between BRL 110 million and BRL 140 million. Here, these are organic investments. This Juratek is not in this number. This is only for maintenance of our projects. Next slide.

It was very important to us to go back to this Expo, very successful, 120,000 visitors, Automec 2023. Ours was the largest stand in the fair. We were positioned as the largest supplier of Brazilian auto parts. We had many launches, this with [ Nano painting NIONE ]. As you know, with paint with nanoparticles, we launched brake pads for hybrid vehicles, also new items for suspension from our composite materials company. We were able to see our friends, reposition the company. And I know that many of you who are with us were there. We thank you for visiting us our team, our shareholder team was with us there. Here, we'd like to thank the recognition that honors us that makes us very happy. In 2022, Fras-le recognized as the best in Apimec.

Thank you for those who were with us in the stream and those who were present in a remote way. So this also, we know the challenge this year will be greater, and we want to continue with this great recognition. Once again, thank you for your presence. We already mentioned a relevant acquisition of Juratek and now on the 28th, we launched with Randon, the sustainability report, the third edition, where once again, we talk about our ambitions for ESG, all the evolution of what we have done to guarantee that our commitments be honored and other practices that we have for decades.

One more slide. Here, my last slide, we will see the video, then we can talk about our new brand, a new business unit. You know what you want. This is a great project, a legacy. The innovation that you are sure will make a great difference for the market where you work, the world where you live, for your life, for my life, for the life of the planet. We are sure. It is totally possible a world that is totally new made of ideas, the willingness to invent new products from ambitious projects, many parts.

What was complex become simple. What was always this way now can be in different ways, 1,000 different ways. This is what you want. And this is what the planet wants. What you want is made of fiber, resins, intelligence, trust, all of this together with ideas. We are composites, an intelligent way to create the future. We have infinite possibilities what you want, what today wants, what tomorrow will need is totally possible. We are Smart Composites. We are Composs. It's completely possible.

Such as Fras-le, Nakata, they began in this last fair. We began the journey of Composs with a strategy based on innovation, greater performance with high-performance materials, high technology materials. And now together with Fras-le Mobility, independent of the way this will happen. Vehicles will need to be more economical with less carbon emissions. So we believe that weight reduction, intelligent materials, using our knowledge to deal with these materials is what Composs does. We already have a good business with Iveco.

It is growing in the Brazilian market and sales guaranteed for 2023. And we have a series of results and more projects, other applications inside Iveco in Brazil and outside Brazil, 6 of the top-selling trucks in Brazil are working with a letter of intent with us. This means that the technology is being very well received by the market, and we hope to be announcing new partnerships with clients for heavy vehicles in Brazil, but also outside Brazil with great initiatives in Europe for this solution. Now I'd like to pass the floor to Hemerson.

[Hemerson de Souza, executive]

Thank you, Pontalti. I'd like to thank you all for participating. And as Pontalti showed, we're during good times for the company, those who sent messages, thank you. We have been working on this for many years. The results in this quarter are the highest in the company. And in the last decade, we may have had a better quarter, but this is one of the best quarters in the history of the company. Obviously, these almost BRL 840 million brings us a relevant support for the operations we purchased in the past, especially in Fremax, Nakata, our unit in India, very special, a unit that was in the beginning of operation now with great gains.

And in general, a situation that is very good for all our business, all in the right direction in terms of results, support to business growth in the geographies. Fras-le is a company 60% of the revenue is in Brazil, but we have a global footprint, and we want to continue growing. And those who want to know, Juratek contributed in March with BRL 13 billion in revenue. But Juratek has contributed, and we have a good idea of what this business will become in the years to come. Our EBITDA, 21.1%. Later on, I'll give you more details. CapEx of BRL 31 million. It's important to see the small drop in the export market has to do with the seasonality in some areas. And in March, April, we see a recovery. We should maintain ourselves close to 40% with Juratek. And one of the important points, I'm sorry, many of you have heard this, 90%, 87.6% of our business is aftermarket. And this really...

Yes, Fras-le works with the automotive market. Fras-le has a relevant support with iconic brands, high-reputation brands or traditional brands such as Fras-le, such as Controil, Fremax, Nakata. And we built a portfolio that helps us to be a one-stop shop for our clients. We have solutions when we look at complete products for the undercarriage and this helps us to really grow and be strong in the Latin American market in Brazil, Latin America, complete solution -- and this is the model that we want to take to new markets and we're doing this.

And the most important, we sell parts for giant fleet parts that are mandatory, they wear, they break, they will break again. They will wear. They will [ suffer wear ]. One important thing, friction material that was the history of Fras-le. We're very proud to be leaders in many lines. Today, when we look at Fras-le Mobility, it's a little less than half of the revenue. So we have diversified the company in the last few years, especially in the last 6 years. Next chart.

Here, we show the greatness of the brands we have. I'd like to show these brands. Some are under license and we work with them on a global basis. Now about the revenue. We grew in the quarter, 12.3% when we compare with Q4 and 19% with Q1 last year. And this has to do with what I say. Fras-le has an adequate condition. I've been saying this for 3 years to grow organically, double-digit growth, 15% a year just with our own business. We have a lot of space to win market share. We have capacity restrictions in other lines. So we have a fast-growing company and I'm talking here only about organic growth without acquisitions. We had the purchase of Juratek.

So with Juratek, Juratek can give us 5% or a little less in terms of growth this year. Well, I mentioned almost 90% of sales aftermarket. This market doesn't suffer with high interest rates, with credit problems, economy problems. If you use the car, if you use the truck, the bus, it will suffer where, and you will have to change parts, and we have these parts. And this makes our revenue very, very resilient. So this is the time to show this. Those who -- so in times of stress, this period shows how strong we are. And this also with the export market, too.

Now we evaluate. We grew more in the domestic market due to the points that Pontalti mentioned. We have an important client that had high inventory last year. They bought a little less in Q1. But they are buying more and we're seeing other markets like Europe, Eastern Europe, buying more -- now in this quarter, independent of their geopolitical problems. We see some difficulty. I have to be fair, difficulty with prices in Brazil and the U.S., freight prices stabilized. They went back to pre-pandemic values. And this helps us to be more competitive and also the opening of the Chinese market. Of course, we have excellent margins, and they will continue very well. But yes, we have to maintain our competitiveness. I'm talking about some discounts, 5% to 10% in some of these markets.

We continue being a company that works a lot with the light line, with the arrival of Fremax. I remember in 2010, we were a company that dependent 75% on truck parts. So today, we're fortress also in the aftermarket for light vehicles. When we look at the sales profile, the importance of suspension powertrain with Nakata brand and the businesses acquired in 2020, almost 30%. When we look at non friction [ disc cranks actuators ], we have another 25%. And the most important line where Fras-le Mobility began friction, disc brakes and pads, disc pads represent 47%.

Next chart, here, the performance, it's important to say, I received many questions so we see here the results are 100% operational and also a greater efficiency in Q1, especially in Q1 because we spend less, expenses were lower. And we were waiting for the guidance. We launched our guidance a few weeks ago. And now we have a clear idea that yes, this is a very special moment for aftermarket. Although these results are expressive, it's not a dream. And here, we can see 21.1%, and we will see this in 2023. So we are reaping what we build. This was not only due to acquisitions, but we have many gains in productivity, in efficiency and support that we have been working on for many years, especially some difficulties we had in some countries.

I remember when our management team, Sergio, [ Conrado ] Anderson, Guilherme, [ Casario ], Paulo, our team of leaders. We made many choices, and we treated very serious problems in 2017, 2018. And today, the company is much more resilient and growing. So these BRL 177 million in EBITDA. We're very proud of this. And this really came with the work of many people and the combination of exports, aftermarket and even what our products. The reputation, we have 90% share in Brazil for commercial vehicles in friction, more than 50% market share in the U.S. for heavy vehicles. So we're sure that we're in the right direction, and this will help us to be even better in aftermarket.

And here, I will declare we have won many businesses in mature markets with this competence that we created as a company, we're competitive in all the markets. So this is a legacy that we will not lose not because of price, not because of problems. This is a legacy that we will have and will continue in Fras-le Mobility in the next years. Obviously, we have a good response here. We had an exceptional net result that shows us that we can continue with this profit, which is good for distributing dividends and also the taxes we pay that help our country to be efficient.

Here, financial performance, our debt, most of it is domestic. It is low here. We have payments of BRL [ 16 ] million for the acquisition of Juratek in the U.K. and there is part that we haven't paid yet BRL 10 million for contingencies. And as I mentioned, we invested well in this quarter, more concentrated in our controlling company investments. And now we should continue. If we look at this BRL 31 million annualized, it is connected with what we showed in our guidance, [ 140 ] million in investments this year.

Next chart, our cash flow with impact due to the payment for the acquisition, Juratek, working capital. This is a very good level. Our business grew. We needed more resources. We include Juratek, the data from the numbers from Juratek are here, but we're well aligned, a drop, and we have to get closer to 60 days. It's a target that we have. Next chart, obviously, all the support, all these results had a result on capital invested in our equity, we can take a good look. We're improving our ROIC. We believe Fras-le can work closer to 15%. We're close to this. If we look at last year, we're very close to 14%, and this gives us a good support. We believe this is necessary for the business and also we want to reduce what can be reduced.

All the investments we make are concentrated on our core business, Nakata, Fremax are examples, real estate. Also, we have chosen assets that give us a faster return with speed efficiency, giving support to our capacity and also at the same time, we're cautious in investments. And also below 15% is adequate. This can be even better in the future. And before passing the floor to Anderson, I'd like to talk about the stock market in a very special way. Today, we have Randon Group and the Randon family 66% and the rest free float, although we have relevant shareholders, we have many institutional investors, pension funds, and we have made offers of shares. And today, we are in New York.

We participated in the conference of Itau Bank. This is very good for us. We have a market cap, small caps in order to grow. So the value of the share, we had higher numbers and the quarter, the results, the resilience will really be perceived in the market, and they will see our value. We're more connected to consumption, retail, automotive retail. And if you compare our company with others, you will see the advantages. And we have all the facts about the business here, but we work to have global benchmarks and the position we should be in.

Now I'd like to pass the floor to Anderson and then we will have also a statement for the Q&A session.

[Anderson Pontalti, executive]

So before going on to the Q&A session. Thank you, Hemerson, talking about the future. It's very important. Our result is operational. And this is due to the work of competent executives, a solid strategy, a robust capture of synergies through acquisitions. The team is doing a professional cross-selling, and we're using the elasticity that the market allows us, and this makes the margins -- our margins are high. We know that there is fluctuation, but we have the right strategy to position the brand, a complete solution to the market. And this shows that the company will continue to be very resilient in its results in the next few years. In Q2, we see it as strong although there have been some concessions in price margin.

So this is due to the earnings of Brazilian citizens that look for lower price parts. But we see that Q2 will be very positive. The opportunities for growth in the export market exists. The market is stabilizing the export market. We see many opportunities in India, and we can compete with the giant country, China. Strategic movements have helped us to access the markets. And we use our intelligence in manufacturing. We use our intellectual property. And right now, the company is delivering a very positive operational result. We trust in the future when we look at the medium-term and long-term. There is some uncertainty. And we know that the aftermarket may require repositioning of the prices in the market in the future.

Monica, let's begin our Q&A session.

[Monica Rech, executive]

Thank you, [ Anderson ]. We would like to begin the Q&A session. Our first question comes by audio, Fernanda Urbano, analyst from XP.

[Fernanda Urbano, analyst]

Congratulations for the excellent results. 2 questions. The margins that are higher than the guidance. You mentioned some factors that contributed for this positive performance with less inflation. I'd like to know what factors were more relevant for the gains in margins. What are your expectations for the next quarters? Will there be a drop or an upside? And the second point on the integration of Juratek. You told us it has been contributing with revenue since March. Please give us more details about the integration of Juratek and the main synergies expected in the medium and long term.

[Hemerson de Souza, executive]

Thank you, Fernanda. Pontalti, would you like to talk about Juratek?

[Anderson Pontalti, executive]

Okay. And you will talk about inflation and guidance. So Juratek. Thank you for the question. On day 1, we were there signing the contract and capturing synergies, capturing synergies in the short, medium and long term. First, synergies in the supply chain. We have common vendors, common suppliers. Our strategy depends on efficiency. And I'm going to China with a group of executives from Juratek and Nakata on May 26 to look for better contracts and synergies. We have developed brands and new products. Apart from those we have, we want to see how we can position ourselves in the main market of Juratek and then introduce new products and brands through Juratek. And in the long term, optimizing head count, warehouses. This is all part of our long-term plan. So I would say these are the 3 points. But I can tell you that what we paid for the company, we paid - this has already growth due because of the work. So we are already receiving value that is in excess of what we saw before the acquisition.

[Hemerson de Souza, executive]

Just a supplement. We had a video conference for the acquisition of Juratek. We had estimated GBP 5 million in 5 years. So this is what we designed, this is possible. We want to expand by 30%, 40% of the EBITDA of the company. These are conservative numbers. We know that there are opportunities that we will see later. In Nakata, the logistics integration, we had many additional gains, challenges, too, of course. It continues to be -- this continues to be very relevant. Those who need more details, this conference call is being recorded, and we are also available for clarifications. So talking about margins and a taste of what we saw. We can divide this into 3 points.

First, our clients and partners. We have not sacrificed then. The market tells us what the price will be. We need to have the competitiveness to get to the price that the market can pay. We know very clearly sometimes we have to give discounts. And then we have adequate prices. We have had a discipline to be competitive based on the main point right now in the market. Our level of productivity in many plants, our level of efficiency and use of resources together with the strategy of sourcing and adequate strategy of sourcing. We have some price increases, for example, this breaks more than 20% this year. But we have been efficient to do more with less, exploring other ways of doing the same thing, combining sourcing, combining manufacturing with outsourcing.

So this management is responsible for our success. And as I said, this doesn't die. This doesn't go away. So this is part of Fras-le Mobility. It can only get better with investments, with support to our teams for efficiency. So what are the perspectives for the next quarters? So the first quarter, we know a little of the results for April. April is a month with very few work days in comparison with others. When you look at revenue, take this into consideration. Sometimes we say, okay, revenue dropped, but how many work days did we have? We had holidays, but April is did very well, and we will report this the revenue in the next report. Second semester, I can say, well, 18% for us is marvelous. We already have 15%. So 18% is marvelous in our business.

We will work here, Pontalti and all our team to have a result on the same level, but we know that it depends on many factors that may not be present in all the quarters. But we're very positive. There is a positive outlook. I don't know if in Q4, we will have 21%. But I can tell you that our business model is concentrated on markets where we can get good results to grow, to be fair with clients and with our suppliers from all the angles. So where will we continue being optimistic. We have our feet on the ground, and we are working to maintain this in the next few quarters.

[Monica Rech, executive]

Our second question comes from Fernanda Recchia, sell-side analyst from BTG.

[Fernanda Recchia, analyst]

Congratulations for the results. 2 questions. The first, I'd like to hear an update on M&A. How is the pipeline for [ assets ] I know that you closed Q1 with a comfortable leverage. Should we expect new acquisitions this year? Second point, new technologies. You mentioned in the introduction that there are opportunities. How are the sales of NIONE? Also numbers, what you expect in revenue from these 2 fronts from innovation and margins we can expect this year?

[Hemerson de Souza, executive]

Thank you, Fernanda. I joke Fernanda. Most of the analysts that cover Fras-le have the same name, Lucas and Fernanda. Thank you for the questions. And it's great to have this opportunity to talk to you. I'll begin with M&A and Pontalti can talk about the rest. When we did the follow-on last year, we were beginning a new expansion cycle. And M&A, I always say it's not something simple. Sometimes, we begin and we can't and because the company doesn't have a good governance. Some didn't we didn't buy because of price. It's a journey. It's not 100% certain. In this direction, we purchased Juratek. It wasn't only a company. We looked at many companies, but we made progress with Juratek but sometimes things stopped, then we made adjustments in Fras-le, we have experience in this, we evaluate companies. And we make a few acquisitions per year, but we try to choose those that make sense in our strategy. And we've done this in a diligent way to deliver the results. And this, we don't want to lose.

Yes, we have projects. There is a chance of having something in the next quarters a new acquisition, but it may not happen. So as these projects begin to make progress, we will announce, we will make announcements and get the right approvals. We're very diligent in this area. We look at the quality of the results, and this will soon affect the price of our shares, we want convergence. But I have said this to some investors, one of the best alternatives we have is our own company. And people say, why don't you repurchase shares? We look at the values. We look at the things that will really affect the growth of the company and the value of the company.

So this is what we're doing. This is what we evaluate to make decisions. So you can believe the level of the business in a company like Fras-le is difficult to find with the same results. But we have to look at liquidity and not only the picture of the company on a certain day. We bought Fremax by paying 8x EBITDA, and we were criticized 1 year later. We're now 4 years later, we have many times the EBITDA. Yes, we look at the future, not only. Pontalti, would you like to talk about technologies?

[Anderson Pontalti, executive]

Fernanda, thank you for the question. Talking about Smart Composites, we have developments in design, but it's a journey that involves validation, testing, discipline. So we are working and developing products. We have many projects we're working on with Smart Composites. We have a goal by 2027, BRL 70 million. We believe it's very possible the level of revenue we getting close to BRL 21 million. It's a startup. It's 1 year old. Now it has its name. So everything is very new in Smart Composites, but every time we talk to the market, apart from improving our approach, we've seen a great and significant acceptance. We have patents to guarantee that we will have a temporary sovereignty, but weight reduction with green solutions has really grown a lot in the automotive market.

NIONE continues to be the cherry of the cake together with Randon Corp, we're working and pros has 100% of the revenue of NIONE. Fras-le can already see products from NIONE. We have rotors with nano particles in the paint to increase the life cycle, especially in places where it's very cold where the result. Hemerson is leading an automated line for these products to fight corrosion. And we're in the U.S. market, European market, where [ rough ] protection is very important. We have many initiatives to use these particles and cast parts in parts that will bring weight reduction, carbon footprint.

But apart from helping together with what we manufacture, they are also going in other direction, batteries, public health, electro-electronics, cosmetics, great potential for NIONE. They're doing research. Some projects are more advanced. There's less and we're getting approvals too, but we continue every day. We understand better the more opportunities we see. Talking about revenue is this type of company will begin small, but then we'll have exponential growth. When this will happen, we cannot tell you today, but we are very optimistic.

[Monica Rech, executive]

A question from Andre, but I believe it was already answered about EBITDA margin, which is well above the guidance and whether you expect a drop. I believe we talked about this already.

[Hemerson de Souza, executive]

And it's important to stress, we don't expect any catastrops in terms of margin. We will, of course, review the guidance. We're based. We based ourselves on the information we had at the time of the guidance but we can make these adjustments. Normally, we do this in the second semester. And if we're comfortable to review or make changes, we will. But we're not expecting any catastrophe. As I said, the whole team is working to maintain these levels.

[Monica Rech, executive]

Our last question from Gabrielle from Itau Bank.

[Unknown Analyst]

Just a quick question. You talked about price as something that is a challenge in the short term. Can you explain how this works in your segment in Fras-le in scenarios like this one that is more sensitive? So clients giving preference to inferior brands because of buying power.

[Hemerson de Souza, executive]

Anderson, you can begin.

[Anderson Pontalti, executive]

Thank you, Gabriel, for the question. Yes. There are 2 factors: Price, Hemerson said correctly - when he said correctly that the market makes the price, the market defines the price. So we work with large fleet owners that look at the efficiency of the product and not only the price. Fleet owners look at the efficiency, the quality, not only the price. When we look at individuals and mechanics, so the mechanic will install what they trust in. And our brands have an excellent reputation. And this is one of the drivers in our acquisition. We never buy brands with bad reputation. But there are times when individuals have less buying power, inflation corrodes part of their income, energy jobs. So people look for alternatives to continue using their vehicles. If we understand that the economy continues with high-interest rates and the acceleration that can lead to unemployment, yes, we see that, and we react.

And for example, mechanics, mechanics don't want to install bad quality products and the customer coming back a week after. Now how do we measure this through the portfolio? How many days of orders, how many days of orders in portfolio do we have without increasing the level of inventory? This is what we look at. When the portfolio becomes smaller, then we have to make adjustments. We have to look at the segments. And then we make some concessions if it makes sense. When the portfolio is strong, robust and -- we look at the data then we know that the market is strong. So we follow this every day. What can I tell you today until the end of May, we don't see any signs that will require concessions.

[Hemerson de Souza, executive]

1 or 2, yes. But Pontalti, the sell-out, the sales of our clients. This is an indicator that we look very closely. And that's why we're optimistic. For the time being, aftermarket, those who are at the fair in Automec, the market is fantastic, and we see how it's a safe market, a market that can grow and Pontalti, I'll give you an example, Controil. We made some price increases, but we gave also many discounts. Sometimes one item needs a discount. But in general, we have a very competitive line. What I said about legacy, we're being able to sell products that show our efficiency, our competence in in-sourcing. This doesn't fluctuate. We're talking about the domestic market. We're very close to the clients to have a fair price and adequate price.

What we see during crisis, people make an effort to buy better parts because they will continue with the same car for a longer period during crisis. We talked to [ Conrad ] from [indiscernible]. During crisis, people buy better parts, high-quality parts because they will keep the car for a longer period. So people now are interested in more maintenance for their vehicles because they will stay with their vehicles more time. In the export market, it's a little different. We have many agents, local competitors, imports from mature countries and also Chinese products.

And with the freight, with better freight, with lower prices for freight, for example, some containers, $2,500, some places even less. So the Chinese producers are becoming more competitive because of freight. We're saying this since November last year. So we have seen this, but we know that in some markets, we will have to make more concessions. And since margins were excellent. We will continue with maybe not excellent margins, but very good margins. It's simply an adjustment and with our legacy with doing more with less, we'll continue to level this. So we're not concerned. I'm not going to say we're concerned. Thank you.

[Monica Rech, executive]

The Q&A session is concluded. Now I'd like to pass the floor to Hemerson to make his final comments.

[Hemerson de Souza, executive]

Very well, I'd like to thank you all for participating in our excellent conference call. And our Investor Relations team is available for any further clarification. And I'd like to see with Pontalti, our trust in the business in terms of continuing to build a great company with a great team in Fras-le Mobility. And since we need mobility, we'd like to say goodbye, and please count on us. Thank you.