Intelbras SA Industria de Telecomunicacao Eletronica Brasileira

BOVESPA:INTB3

Earnings Call Analysis

Revenue Climbs by 22.1%, EBITDA Grows 15% Amid FX Challenges

Intelbras has reported a strong performance in the first half of 2024, with revenue climbing 22.1% year-on-year to BRL 1.185 billion and EBITDA growing by 15%, approaching BRL 160 million. Despite some FX rate challenges, net income remained stable, and the return on invested capital (ROIC) was 22.7%. The company experienced slight margin compression due to supply issues in Manaus and a higher exchange rate but expects margins to stabilize for the rest of the year. Future growth is anticipated from investments in the projects department and advancements in ICT and AI technologies within their security products.

Strong Start to 2024

The earnings call began with the company highlighting a robust financial performance for the first half of 2024. Revenue surged by 22.1% year-on-year, reaching BRL 1.185 billion. This growth stemmed from multiple segments within the company, indicating a strong market demand.

EBITDA Growth and Profitability

EBITDA also reflected a positive trend, growing by 15% to nearly BRL 160 million. The net income remained stable despite facing headwinds from foreign exchange fluctuations, reflecting the company's resilience. The return on invested capital (ROIC) was in line with expectations at approximately 22.7%, ensuring the management's capital efficiency is on target.

Margins Stability and Challenges

While the gross margin showed slight fluctuations, it remained steady around the 32% mark, with adjustments to be made to cope with rising logistics costs and higher exchange rates. The company is cautious about segment-specific discrepancies but aims to keep its overall margins robust. They observed a minor dip in margins due to supply challenges in specific plants but maintained a focus on expense control, keeping expense growth slower than revenue growth.

Segment Performance: Security, ICT, and Energy

The security segment, accounting for 56% of total revenue, achieved remarkable growth thanks to improved product availability. The ICT segment also grew impressively, up 16% year-on-year and 21% quarter-on-quarter, attributed to the introduction of new products and strategic partnerships. The energy segment reported stable contributions and ongoing profitability, with strong expectations for further growth, particularly in solar energy.

Outlook for the Second Half of 2024

Looking ahead, the company expects continuous growth across all its segments. Specifically, they predict an increase in both revenue and operating results for the second half, aligning with their previous forecasts. The emphasis lies on a steady EBITDA margin that may surpass historical levels as they control expenses closely.

Cash Flow and Investment Strategy

While operating cash flow was slightly lower than usual, this is attributed to ongoing inventory restructuring. With an end to the expansion capital expenditure (CapEx) cycle, the company plans to allocate resources more effectively in the coming months. By adjusting prices in response to foreign exchange rate changes, the company aims to keep its portfolio competitively priced while ensuring profitability.

Competitive Landscape and Strategic Adjustments

The management has acknowledged competition pressures but remains confident in their market position. They plan to monitor competitors closely while maintaining strategic pricing adjustments as necessary. The company anticipates possible drought conditions impacting logistics and is proactively working to mitigate any supply chain risks.

Conclusion

The earnings call concluded on an optimistic note, with management expressing confidence in meeting their growth objectives for 2024. With a solid strategy in place, strong segment performances, and proactive adjustments in operations and pricing, the outlook for the coming quarters appears promising, reinforcing the company’s commitment to enhancing shareholder value.

Earnings Call Transcript 2024-Q2

[Bruno Teixeira, executive]

Good morning, everyone, and welcome to our video conference to discuss the results of the second quarter of 2024. My name is Bruno Teixeira, I'm the Chief Investor Relations Officer, and it's a pleasure to be with you today. We have our CEO, Altair Silvestri, our CFO, Rafael Boeing; and our heads, the Head of Security, Paulo Daniel Correa, the Head of Communication, Henrique Fernandez and the Head of Energy, Marcio Ferreira. And to start, our conversation would like to inform you that this video conference is being recorded, and it will be made available at the company's IR website alongside the slide deck, which is already available.

So, you can already download the slide deck right now. And at the end of the presentation, we'll be able to see the video. [Operator Instructions] The information contained in this presentation and any statements that may be made during the conference call about the business perspectives, projections and forecasts as well as the operating financial targets for Intelbras are based on the beliefs and assumptions of the company's management and on currently available information. Forward-looking statements do not guarantee performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not come to pass. Investors should understand that general economic and market conditions as well as other operating factors may affect the future performance of Intelbras and lead to results that differ materially from those expressed in such forward-looking statements. Now that we have clarified these items. We're going to formally start the presentation.

So, let's take a look at our slides, and we'll start with the financial highlights. This first half of the year was well in line with our perspectives for the year. We see a substantial increase in revenue year-on-year, 22.1%, amounting to BRL 1.185 billion. EBITDA grew 15%. We're almost hitting the BRL 160 million mark, and this is a 15% increase year-on-year. The net income is impacted by FX, but it's rather stable in comparison to last year. And our ROIC is also well in line with the company's management expectations of about 22.7%. It's important to look at the year-to-date results. Last year, we had decreasing revenue due to some specific challenges in specific segments. And now we have this 22% increase year-on-year with an 11% increase year-to-date. And when we look at the operating results and our EBITDA results, we see an increase of 19%. So, we see we're bouncing back and we're increasing revenue, and we're delivering better results. We can see this quite clearly in the second quarter.

When we look at our EBITDA performance when we compare it to last year, we see a slight decrease in our margin that is impacted due to a challenge for supply in Manaus. When we look at the revenue coming into the results that can be seen and the new inventory, the new materials have arrived in the course of the second quarter, and we had a higher exchange rate. So, this had an impact on the gross margin. We see the expenses in line with our expectations for the year. Expenses growing at a slower rate than revenue, but we see a slight decrease in our margin. When we look at our gross margin, we ought to be careful and look attentively at our consolidated gross profit. We discussed these data in the first quarter in detail and would like to insist on this perspective. Our gross margin is quite resilient.

We see results that are even better than historical results. And if we want to look at more recent figures and look at the fourth quarters of 2023, we see there has been some fluctuation of the margin last year, but it ended at 31%, 32% in gross margin. And we have to be careful because each segment will have different dynamics and different moments.

And it's important that we look at the consolidated gross profit, and we understand that the company is much more resilient than the sum up of the segments, right, and the combination of the segments. When we look at the first quarter, we see the margin even higher than it was last year at 32.6%. This is the margin that we had for the first half of the year. So, it's clear that we have stable gross margins, healthy gross margins for our operations that are in line with what we expected for the year. And now delving deeper into the segments. We start with security that accounts for 56% of our revenue, and we see a substantial increase in our revenue here. That is due to the better availability in product supply. If you listen to the first quarter video conference, you will remember that we had pent-up revenue because of the lack of availability of products.

In the Manaus plant, we were able to push forward more volume and unlock this revenue. And it's important that we mention that because this increase in logistics costs took place during the loading and the replenishing of materials in the plant, and that has an impact on the security margins. But when we look at the full picture, we see that security has been operating as expected, and the growth in revenue in the quarter that can be seen in the sellout is quite healthy. And it's important to mention as well that there is an exchange rate component that we will look at very carefully. And if we need to pass on costs, we will do that and adjust prices so that we can keep our portfolio competitive and so that we can keep the company profitable. When we look at information communication technology, which accounts for 23% of our revenue in the second quarter of 2024. We also see substantial increase as a result of the new portfolio that we have. We grew 16% year-on-year and 21% quarter-on-quarter. So, we see an accelerating curve.

And the dynamics that we have here is to price it, understanding the local production and manufacturing costs so that we can put out an adjusted offer to the market, so that we have the prediction starting at the San Jos plant and the products that are in adjusted price. We can see the performance is as expected. We have positive expectations for communication in the second half of the year. We're also going to be seeing communication contributing to our revenue in the whole of 2024. And lastly, energy, that accounted for 21% of our revenue in the second quarter of 2024. We had a substantial increase year-on-year. The base for comparison was a bit weaker. So that was rather expected. The solar power last year was rather brisk in the first half and impact to the second quarter. And now we see a more stable revenue in comparison to what we had last year. Our business focus here is on the growth avenues that we have in all of the energy businesses, focusing on profitability and consistent revenue growth.

So, energy in the first and second quarters of the year is also well in line with our expectations, and we expect it to continue to be so in the second half. Now moving on to the last slide. We see our cash flow performance. Our operating cash flow is slightly lower than we normally have. And that is because the company understands that in this moment where we're restructuring our industry, especially the A-curve inventory so that we can read ourselves of possible supply issues as we had in the fourth quarter 2023, in the first quarter of 2024. We are improving our inventory levels so that we can have all the material need.

And now there may be a drought in the second half of the year, and that may impact the Amazon River and the transport. So that's why we're bringing it forward. And we remind you that the transportation problem is with receiving raw materials and not with transporting the ready products after they've been manufactured. So, we are anticipating this problem so that we can mitigate any risk to our operating cash. But this is what we see now on the 30th of July 2024. As for investments, what do we see? Well, we're at the end of an investment cycle. Our warehouse in Sao Jose is ready. It will start operating I August. It's going to open this week. So, everything as planned. So, the expansion CapEx is going to go down in the course of the year. So, the expansion CapEx should be lower in the coming 18 months than the recent history, and the expansion CapEx is also as per our historical data.

And to conclude the presentation, inside the Q&A session. Would like to highlight the inventory approach. We should see the numbers slightly higher in the coming months than what we normally see structurally. And the message when it comes to pricing is also quite clear here in the company. As we understand that the FX rate is higher, we will adjust prices. We had a first adjustment made to the price list in June, and we're going to look at it again in August. And if you're watching us closely, you know that, if necessary, we make these adjustments. And we maintain our portfolio competitive and we look after our business profitability.

And the second half of the year is certainly going to deliver good growth in our 3 business areas. Our strategies are well in line. We have good perspectives for the new portfolios. The growth avenues are well paved and are being well delivered by our commercial and product teams. So, we here the second half of the year moving towards an end of the year that is going to conclude in line with our expectations for the year, with an increase in revenue in our 3 business lines and delivering results that are even better than the revenue growth. So, this is the end of the actual presentation. And now we're going to start the Q&A session. We already have a couple of questions. And I would like now to allow Marcelo Santos to unmute. Marcelo Santos from JPMorgan, please.

[Marcelo Santos, analyst]

Good morning. Thank you, Bruno, and everyone, I'd like to focus on the gross margins. Working as security, the pressure came from FX and from shipping costs, right? These problems seem to be temporary. You've already adjusted the pricing to match the FX rate and shipping has been adjusted, is back and track back on track. So, do you expect these margins to be better or the competitiveness of the market won't allow for it? And the second point has to do with ICT. When can we expect to have local manufacturing help us improve margins as well?

[Bruno Teixeira, executive]

So, I'd like to give Paulo, the floor and then Henrique, to answer your questions.

[Paulo Correa, executive]

Thank you very much for your question. We had a larger impact in logistics, as you said Bruno mentioned that at the start of the presentation talking about replenishing our inventory and there was also the FX rate issue. We understand that our margin will be in line with what we had in the first half of the year. So, there is room for an improvement, but we should be -- we should be close to the average of what we had between the first and the second quarters this year. The impact we had in logistics and the start of the year had an impact on the second quarter 2024.

[Henrique Fernandez, executive]

Thank you for your question, Marcelo. We expect margins to improve in ICT. As Bruno said, we're priced correctly in comparison to the market. So, we have the battleground set, but we have the wrong costs. But that took place because of mismatches and FX rate because of air shipping and local production, which has to do with your question. We have already started the production in our factories. So, we will see an improvement in the third and fourth quarters. So, this is in our plans.

[Bruno Teixeira, executive]

Thank you, Marcelo for your question. Felipe Cheng from Santander. Can we unmute him, so that he can ask his question.

[Felipe Cheng, analyst]

Good morning, everyone. I'd like to understand the dynamics for security revenue growth. Can you talk a little bit about the sellout dynamics? I understand there was an impact in sell-in in the first quarter, even though sellout was healthy. And in the second quarter, was there any mismatch between sell-in and sellout? So, I just wanted to understand how this is faring so that we can understand what we can expect for the coming quarters.

[Bruno Teixeira, executive]

Paulo, please?

[Paulo Correa, executive]

Felipe, thank you for your question. What we saw in the first half of the year was very positive sell-out ratio and rates, and this will continue in the third quarter. There was no mismatch between sell-in and sell-out and the market performed well. So, the sales we had in the second quarter could be seen in that sell-in sell-out wind hand-in-hand, and that's quite positive. With the second quarter production and manufacturing, we were able to replenish the market. And we had sell-out happening naturally without additional inventory. So, both sell-in and sellout performed as we expected and hand-in-hand as we replenished raw materials and finished products into the market.

[Bruno Teixeira, executive]

Bernardo from XP is also here with us.

[Bernardo Guttmann, analyst]

I have got 2 questions. The first question is to do with ICT. We see this improvement in revenue, and would like to understand how the new partnerships contributed to this improvement and what we can expect when it comes to the new SKUs in the coming quarters would growth come from more maturity? And is there an increase in this portfolio? Is there a pipeline of new products to be launched in the second half of the year? And my second question is to Paulo, we hear there is a Chinese player coming in a bit more aggressively in some product lines. Is the company concerned about that? Could that have an impact on our margins?

[Bruno Teixeira, executive]

Well, there's both things, right? There are new products helping increase revenue, but there's also the acceleration of existing products. So, a bit of both. The acceleration of existing products is what contributes the most to growth. We're well in line with what we had forecast, which is a gradual increase in growth in the first half, a bit flatter in the first quarter, stronger in the second and even stronger in the third and fourth. And this also is connected to our partnerships. What I can tell you about the partnership is that it's allowing for more and more growth, but I can't give you an exact figure. We don't have a breakdown on these figures to present here. And it's also important that we understand that as operations adjust, there's more availability and what the commercial team sells starts to improve as well. So, you see more growth in the second quarter and the third quarter, as we had said would happen in the first quarter with these new partners coming in and helping our revenue. And Paulo, please.

[Paulo Correa, executive]

When it comes to competition in the market, we've always had to deal with competitors. A year ago, 2 new players joined the market. And of course, we're always watching the market. We always understand how competition is playing, and we respect every competitor. But I believe that the increase in revenue shows that we're well in line with what we had planned. So, we will continue to work with competitive pricing, good deliveries, good solutions, nothing very much different than what we have had to deal with in the past. So, it's not very much different from what we have already seen. Of course, we're always watching the market carefully. Always looking at what the other players are doing so that we can maintain our position levels.

[Henrique Fernandez, executive]

Bernardo, we're quite clear on the challenge we had in the first quarter in revenue because of the lack of products. And now we have products available. So, it isn't pricing that is going to improve revenue, rather the reverse. We have had to make adjustments. Paulo has been making the adjustments in the first month of the third quarter as well or we'll be doing that, rather, but we are keeping. And Paulo, we're still standing strong with our market share. There is no change there.

[Bernardo Guttmann, analyst]

Thank you, Henrique, Paulo, Bruno. Thank you, everyone. Have a great day.

[Bruno Teixeira, executive]

Now I'd like to ask you to unmute Andre from UBS.

[Andre Salles, analyst]

My first question has to do with securities. You showed strong acceleration in the second quarter comparing to the first quarter. Native in agencies mentality. Some of this increase may be arising from the orders placed in the first quarter, but they were only built in the second quarter because of the logistics challenges you had in the first quarter. Is my understanding correct? And if it is, can you try and give us more color on how much growth stemmed from these pent-up orders in the first quarter. You mentioned the expansion CapEx cycle has come to an end, the company should then be generating more cash in the coming quarters, right? So, what is the company expecting to do with this increased amount of cash?

[Bruno Teixeira, executive]

Paulo, you may answer the first question, please.

[Paulo Correa, executive]

Some of that happened from the first quarter to the second quarter, but that is not very significant -- that is not the reason why we had the growth we did. So, I wouldn't say that revenue grew because of that. A lot of sales took place in January and February, and it happened or didn't happen. And the second quarter, when you look at sellout and the resulting inventory from distributors, we see that these are sales that took place in the second quarter. So, there wouldn't be an impact on the second quarter because of what happened in the first quarter.

[Bruno Teixeira, executive]

Rafael, can you please answer the second part of the question?

[Rafael Boeing, executive]

In the second half of the year, we don't expect to see cash go up yet. The inventory restructuring that we had recently is still to be paid. So, there will be that, and we also anticipated issues due to the likely drought there may be in Manaus. It may be even more challenging than last year. So, because we have been working on reorganizing our inventory, we shouldn't see any substantial increase in cash in the second half of the year yet. And as for the CapEx cycle, our expectation for the future is that expansion investments should be much smaller in the future in comparison to the last 2.5 years, 3 years. So, no major investments inside to increase capacity. We have all of our plants. We have enough storage. We have everything we need as per the plan.

[Bruno Teixeira, executive]

Thank you, Andre. Csar also wants to ask a question.

[Unknown Analyst]

Hello, everyone. There were some negative surprise in SG&A, an increase that was better than expected. Could you please detail out what happened there? It was just a one-off? And what we could expect when it comes to a normalized margin. Margin was higher in the first quarter, lower in the second. So, what can we expect for the future?

[Bruno Teixeira, executive]

May I start the answering then you can complement it. Csar, when we look at revenue and expenses in the first half of the year, when it comes to revenue, we have a bigger increase than the increase in expenses. If you look at history, you see the expenses are bigger in the second quarter. In the second quarter, activities really gained traction. There's no use or events in the first quarter. The market is still warming up after the end of year holidays. So, our expenses are well in line with what we had in the forecast. Now when we look at the EBITDA margin, we see that the margin is higher than historical data. The first quarter is performing or performed better than expected. We try to say that we didn't expect the margin to be like that in the rest of the year. The second quarter had its margin impacted by the gross margin, as Paulo already explained, but we expect margin to be higher than historical our historical margins.

And the first half is a good reference for the results when it comes to what to expect in the second half of the year. There should be an increase in revenue and there should be an increase in operating results. Mr. Altair, would you like to say anything else?

[Altair Silvestri, executive]

No, you said it well. There's no surprise there. There were just some spot adjustments for costs and logistics and due to FX rates. And we expect to perform better than the historical margin.

[Bruno Teixeira, executive]

Thank you for your question. And then we have 2 questions from Verena in writing. I think Paulo should maybe answer the first question. She's asking about our sales performance and profitability in bigger projects. That's one of the growth avenues, I believe, and that's going to be supported by the ICT line. So maybe Paulo can complement that answer.

[Paulo Correa, executive]

Hello Verena, when it comes to the projects, as Bruno said, this is an important measure that's at with security, but it's also strengthened now with our new ICT portfolio. It's strengthened our results, allowing us to grow stronger than the other sales trends. Profitability is also quite healthy. And we have positive expectations. In the ICT portfolio, we understand that we'll be able to deliver solutions that are thorough integrated not only in security, but also bearing in mind the end customers' needs. Whatever they need, what they need to be done. So, with security and with the improvements and complements that we had in ICT, we gain more traction, and we're sure we're going to perform even more than we have been performing recently.

[Bruno Teixeira, executive]

Would you like to complement it Henrique?

[Henrique Fernandez, executive]

Absolutely nothing. And looking at ICT isolatedly thinking about major projects. Paulo mentioned the Intelbras solution, which is for all our business lines, right? So, security and ICT. And when we look at ICT isolatedly, there is an IT-focused market, right. We have a partnership with the Chinese market leader, and we're working on that. We're training a number of integrators. We have brought a number of integrators to our base. We're also training our partners on how to sell, and we see more and more steps being taken and a pipeline being built, the development of a number of projects and solutions that are going to merge into the SMB pyramid. So, the full IT solution for our whole market with cutting-edge quality.

[Bruno Teixeira, executive]

All right. Thank you. And Verena had a second question around the competitive environment. I think we have addressed that already. She asked more specifically about the price adjustments. Paulo, would you like to say anything else?

[Paulo Correa, executive]

I think that question has been answered already. And when it comes to price adjustment, you also mentioned that we have had the adjustment in the pricing for this year. The competition did too. So, the competition has been doing the same as us.

[Bruno Teixeira, executive]

Thank you for your comment. I think Thiago, the Itau BBA analyst has a question, maybe can you unmute him?

[Thiago Kapulskis, analyst]

Hello, everyone. Can you hear me?

[Bruno Teixeira, executive]

Yes, we can.

[Thiago Kapulskis, analyst]

All right. Thank you for taking my question. I have got a single question, and it has to do with marketing and sales expenses. We see that they are diluting. But with the accelerated expenses, I think this dilution was a bit smaller. I'd like to hear from you in the past 3 quarters, this was an important line to help you with the margin expansion. So, what do you expect? Do you expect more dilution in the future? Could that have an impact on the EBITDA margin in the course of the year?

[Bruno Teixeira, executive]

Thank you Thiago. I'm going to start and Rafael or Altair you can complement my answer. Well, in the second half, we expect revenue to go up. Paulo will talk a little bit about the gross margin and how it should perform. If we want to extrapolate the margin from the first half of the year, we let suppose that it's going to be close to the average of the first half in the second half. And with expenses being controlled, we see an increase in our EBITDA. We want to deliver EBITDA margins that are better than historical margins with an operating result that is better than the revenue.

So, this is also well set to take place in the second half of the year. I'm just going to say it again that commercial expenses are always higher in the second quarter, but we don't expect them to be higher in the third quarter than they were in the second. So, we could see some fluctuation in the course of the second half of the year, but lower than this increase will certainly be lower than our revenue increases. So, you can use the first half as a base for comparisons.

[Altair Silvestri, executive]

I have some comments, but I'll say them for the final remarks.

[Bruno Teixeira, executive]

I don't think we have any -- oh, sorry, we do. There is one question here in writing. Marcio had been speaking a lot in previous calls been now he's been quiet the whole day. In Energy & Power, what is our expectation for the stabilization and profitability of the segment when it comes to solar energy and others? So, if you can tell us a little bit about the initiatives and what do you expect for the second half?

[Marcio Ferreira, executive]

Good morning, everyone, and thank you for this opportunity. The person asked anonymously, right? But what we did our homework in solar power and we stabilized our margin and our inventory. Our numbers have been growing faster than the other businesses in the company, and our gross margin is going to get stronger and stronger. And our forecast is that it's a bit more -- it's a bit more conservative than what we had this year. But better than historical figures, especially when you exclude what happened in 2023. So, we did a homework. Power has been going up. And as I always say, power and energy is not only solar power. And power has been doing its share more and more so that we can get the stability we expect to have in margins.

[Bruno Teixeira, executive]

There is one question from Jerome -- capital analyst. Is asking about Mr. Altair's successor, so who is to take over in the future?

[Altair Silvestri, executive]

Well, the succession is going on as planned. I have recently spoken to my team, this morning, actually. The Board and the family have decided to take it easy. I'm going to continue to be on the board. So, we don't need a very lengthy transition period. So, this time is being taken advantage of so that we can make a very good choice. So, there is no concern on that front. They're very, very good applicant for the position, right? So, it is a tough choice, but everything is going as planned.

[Bruno Teixeira, executive]

Thank you, Mr. Altair. And Marcelo Santos, JPMorgan asked for a follow-up question. I think we could do that. There's still time.

[Marcelo Santos, analyst]

Just to make sure I understand it correctly. Csar from Santander asked a question, and you answered that. The first half of the year would be a good reference for the margin of the year. Are you talking about EBITDA margin or gross margin, just to make sure I understand.

[Bruno Teixeira, executive]

I spoke about the EBITDA margin just now. Paulo spoke about the gross margin, and he said that margin of the second half should be somewhere where the margin of the first quarter was. We have our history of our gross margins in the presentation. And we feel very comfortable about our gross margins, profitability of the business, and so we're quite comfortable. Every segment has its moment and differences when it comes to supply, competition in the market, but we're not concerned that the margin is going to fluctuate between what happened in the first quarter and the first half of the year when it comes to gross margin. And the EBITDA margin could have the first quarter margin as a reference.

Paulo talked about security. And we have 3 business lines that move differently. They behave differently. Paulo spoke about this expectation around the fluctuations. We know that energy has been fluctuating within certain stable interval in this first half of the year. But we always know that one business line is more volatile. Marcio mentioned that we're being a bit more conservative when it comes to margins. But if we factor that all in into the revenue growth that we expect in the second half, we see that the margin will fluctuate very little and seem to be matching what we had in the first half of the year. So, what we had in the second quarter as a bottom reference and what we had in the first half as another reference for us to fluctuate between.

So, we're drawing to a close for the second quarter 2024. No further questions. So, Mr. Altair is now going to make his final remarks. Mr. Altair, please.

[Altair Silvestri, executive]

Hi, everyone. It's a pleasure to be here. This year is behaving as we expected it to. It's a very positive environment. If we compare it to times fast, we'll see that the setting is different. This quarter specifically performed slightly lower than we expected it to, but it was just one-off issues such as the FX rate, the dollar price increase, right? We always wait for a 5% accumulated change to make a change to the pricing list. Our growth avenues continue to stand strong as we said during the conference call.

Projects department has been growing more than the rest of the company, and we have more and more investments made there. Our partnerships in ICT, which in spite of having good large portfolio that leads to additional costs and production. We see it stabilizing in the coming months, and it's going to be another growth avenue, new technologies in security product now taking advantage of AI, tapping into new possibilities in the market in energy with substantial growth in new products coming out. Consumption as well, which is products from our 3 BUs that we focus on to really have a clear focus on this market.

So, it is also performing well with growth rates higher than the rest of the company. Expenses are well controlled. We already expected it to contribute to better revenues this year. We have had some structural changes this year to focus on strengthening the BUs. We have the departments being managed very efficiently by our heads of departments. The sales partners ever more loyal. And we have had our initiatives for better inventory levels so that we have no product unavailability.

And our brand continues to be strengthened. There's nothing there concerning us. So, our plan is coming true. You all know what our objectives are. Our EBITDA is going to grow a bit more or even a lot more with expenses being controlled than this percentage of the expenses. So, it's a good environment. There are some one-off issues like we had this half of the year, but we're very excited. Thank you very much for joining our video conference, and we'll see you at our next video conference, and you can call us whenever you need us.

[Bruno Teixeira, executive]

Thank you, Mr. Altair. So, we thank you for joining us, and this is the end of the second quarter 2024 earnings video conference. Thank you, everyone.

[Altair Silvestri, executive]

Thank you. Bye-bye. Have a good day.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]