WEG SA

BOVESPA:WEGE3

Earnings Call Analysis

Strong Q1 2024 Performance with 4.4% Revenue Growth

In Q1 2024, WEG reported a 4.4% increase in net revenue compared to Q1 2023. Their EBITDA grew by 4.8%, achieving a margin of 22%. Significant growth in long-cycle products, particularly in the wind energy sector in Brazil, contributed to this performance. Return on Invested Capital (ROIC) reached 38.9%, increasing by 7.5 percentage points from the previous year. The company continues to expand its investments, with BRL 351 million allocated this quarter across Brazil and international markets. Looking ahead, WEG expects stable operational margins bolstered by a strong product mix and stable raw material costs.

Introduction and Key Participants

The earnings call for WEG's first-quarter results of 2024 kicked off with key personnel including Andre Luis Rodrigues, the Superintendent and Financial Administrative Director, leading the charge. This segment set the stage for the presentation of financial achievements, strategic initiatives, and operational highlights.

Revenue Growth and Market Performance

WEG reported a 4.4% increase in net revenue compared to the same period in 2023. In Brazil, the company saw significant growth in the transmission and distribution of wind energy, while internationally, robust demand was noted in North America, particularly in generation, transmission, and distribution aspects. The EBITDA for the quarter stood at BRL 1.8 billion, marking a growth of 4.8%, with an EBITDA margin of 22%.

Return on Invested Capital (ROIC)

The company's ROIC saw a marked improvement, climbing 7.5 percentage points to 38.9% compared to the first quarter of the previous year. This increase was partly due to tax incentives recorded in the fourth quarter of 2022. When excluding these nonrecurring effects, the ROIC would have been 35.8%.

Segment Performance

In Brazil, the demand for short-cycle products remained strong, particularly medium voltage electric engines used in oil and gas and mining industries. The Generation, Transmission, and Distribution (GTD) segment also performed well, driven by the delivery of large-sized transformers and substations. Internationally, while short-cycle products saw a decline, especially in China and Europe, long-cycle products such as high-voltage engines and automation systems did well.

Investments and Capital Expenditure

WEG invested BRL 351 million during the quarter, with 64% allocated to Brazil and 36% internationally. The company advanced the expansion of its industrial engine plants and electrical engines in Brazil and increased production capacity in Mexico and China.

Recent Accomplishments and Outlook

March saw WEG announce an investment of BRL 100 million in a new plant in Mexico focused on Industrial Coatings. Additionally, the acquisition of the industrial electric motors and generators business from Regal Rexnord was finalized. Looking ahead, WEG anticipates maintaining good operational margins supported by a stable cost of raw materials and the continued demand for electric infrastructure.

Challenges and Strategic Focus

Despite a positive outlook, WEG remains cautious of global macroeconomic conditions which may affect demand for short-cycle products. The integration of Regal Rexnord is expected to pose some short-term challenges for the company, but a structured action plan has been put in place to enhance future profitability.

Operational Dynamics

The company noted lower demand in short-cycle products and a reduction in inventory levels from significant customers post-pandemic. The FX rate, especially in China and some European countries, further influenced the results of this quarter. However, long-cycle product demand remains stable, providing a buffer against these fluctuations.

Market Expansion and Innovation

Future growth is anticipated in the areas of electric vehicle charging infrastructure, with WEG developing products that meet international market standards, particularly for the U.S. and EU markets. The company has partnered with several OEMs in Brazil and other countries to advance this segment.

Earnings Call Transcript 2024-Q1

[Operator]

Good morning, and welcome to WEG's conference call to announce the results of the first quarter of 2024. [Operator Instructions]. And any statements made during this conference call about future events, business prospects, operational and financial projections and goals and the future potential of growth of WEG, they are mere beliefs and assumptions of WEG's management, and they are based on information currently available. Forward-looking statements involve risks and uncertainties, and therefore, depend on circumstances that may or may not occur.

Investors should understand the general economic conditions, industry conditions and other operational factors may affect the future performance of WEG and may lead to results that will be materially different from those expressed in such forward-looking statements.

Today with us in Jaragua do Sul are Andre Luis Rodrigues, Superintendent and Financial Administrative Director; and then Menegueti Salgueiro, IRO; Wilson Watzko, Controller; and Felipe Scopel Hoffmann, Investor Relations Manager.

Please, Mr. Andre Rodrigues, the floor is yours.

[André Rodrigues, executive]

Good morning, everyone. It's a pleasure to be with you once again for the conference call to announce the results of -- I start with the highlights of the quarter on Slide 3, where the net revenue grew 4.4% as compared to the first quarter of 2023.

In Brazil, we had a good performance with a highlight of long cycle equipment in the areas of transmission and distribution of wind energy. In the international market, we have good demand in the areas of generation, transmission and distribution and with good opportunities in North America and generation businesses with a robust order portfolio that we built along the last portfolio.

EBITDA has reached BRL 1.8 billion, with a 4.8% growth as compared to the first quarter of 2023. The EBITDA margin ended the quarter at 22%, a growth of 0.1 percentage points as compared to the same period last year. Along the presentation, Andre Salgueiro is going to give you more details about these points.

ROIC continued to evolve, with 38.9%, an increase of 7.5 percentage points as compared to the first quarter of 2023. And you can see more details on the next slide where the improvement in our operating performance with revenues and margins more than offset our higher need of working capital and more investments in fixed assets.

One important point to be emphasized is the ROIC had the positive impact of tax incentives that were booked in the fourth quarter of 2022. So taking out this nonrecurring effect, ROIC would have been 35.8%.

Now, I give the floor to Andre Salgueiro to continue.

[André Salgueiro, executive]

Thank you, Andre. Good morning, everyone. On Slide 5, you can see the evolution of our business revenues. In Brazil, industrial performance had a good performance with demand for short-cycle products. We continue with good performance in long cycle products, especially medium voltage electric engines with a highlight oil and gas and mining industries.

In GTD, we had another quarter of good results, driven by deliveries of large-sized transformers and substations, 2 projects related to transmission auctions and distribution networks and a highlight to the wind generation. In distributed solar energy despite the good growth in the volume of sold, we had the same performance as last year, influenced especially by the reduction in solar panels prices, which impact the prices of products sold.

In terms of Commercial and Appliance Motors, we had a good demand in many segments with a strong growth with a highlight to air conditioning and pumps for residential use. In coatings and varnishes, we had stable demand, pulverized in different segments of operation with a highlight of oil and gas and maintenance. In the external market, internationally, we had a drop in short-cycle products, especially low-voltage industrial engines.

In addition to the FX rate, lower demand in China and in some countries in Europe, a reduction of inventory and important customers have contributed for the results of the quarter. For long cycle products, we had good results in high-voltage engines and automation systems, especially in the segments of oil and gas, or water and sanitation.

In GTD, we continue with a very warmed up market, especially with transformers for renewable energy complexes and reinforcing the electric grid in the United States. In Commercial and Appliance Motors, demand dropped in the same markets where we operate, especially as compared to the lower inventory replacement of our customers in the United States. In Paints and Varnishes, we saw a growth in revenue with good results of our operations in Mexico.

On Slide 6, you can see the evolution of the EBITDA with a growth of 4.8%. EBITDA margin ended the quarter at 22%, practically stable as compared to the excellent level that we had in the same period in the previous year. This is a consequence of cost of raw materials, combined with a mix of products sold.

Finally, on Slide #7, you can see the evolution of our investments. We had invested BRL 351 million this quarter, 64% in Brazil and 36% internationally. In Brazil, we advanced with the expansion of industrial engine plants and electrical engines and internationally, we increased our production capacity with our plants in Mexico and the expansion of our low-voltage engines in China.

And now, I end my part, and I give the floor back to Andre.

[André Rodrigues, executive]

Thank you very much, Andre Salgueiro. On Slide 8, before we move to the Q&A session, I would like to talk about some of our most recent accomplishments and the outlook for the rest of the year. As to our recent achievements, I would like to highlight that in March, we announced an investment of BRL 100 million in a new plant in Mexico for Industrial Coatings to increase our manufacturing capacity and meet the demands in the market in Central America. We finalized the acquisition of industrial electric motors and generators business from Regal Rexnord. On May 1, we started the transition and consolidation of our new businesses.

Finally, I would like to talk a little bit about the outlook for the rest of the year. We continue with a healthy operational dynamics with a good mix of products sold and stability in the cost of the main raw materials. This should continue supporting good operational margins and a positive return on capital for the rest of the year. We should continue to benefit from structurally favorable conditions, especially those related to electric infrastructure such as T&D businesses.

On the other hand, we are still paying attention to the global macroeconomic scenario and the possible risks and volatility of our operations, especially with regards to the demand of equipment of short cycle, despite the consolidation of industrial electric motors and generators of Regal Rexnord in May that contributed for higher revenue. This also means that we have some short-term challenges, especially operationally. Our action plan was very well structured, and the transition team is already working for the gradual improvement of the profitability of our operations in the future periods.

Now I end my presentation. Operator, we may move to the Q&A session, please.

[Operator]

[Operator Instructions]

So let's go to our first question from Lucas Marquiori from BTG.

[Lucas Marquiori, analyst]

I have 2 questions. On the integration of Regal, for us to understand the process here, if you could update the information of the closing? What is the revenue of all the assets that you're buying, margin and utilization level, so that we can gauge the integration for us to update how much is going to come in, in terms of Q2?

And my second question, I think that it is the second question, where CapEx is different in Brazil and internationally. I think that this is related to the use of utilization capacity domestically, which is much higher than internationally. I could ask what about this mix that used to be on the same basis, both in Brazil and overseas. But I think here, there is capital allocation exercise. But could you explain this trend that we have seen in the last 2 quarters?

[André Rodrigues, executive]

Lucas, thank you for your question. This is Andre Rodrigues. First, let's talk about the merger. Well, we do not yet have all the numbers of Regal Rexnord and they manufacture industrial system, and this is the entire scope of our acquisition, but what we have are the numbers for 2023, where this division had an operating revenue of BRL 500 million, EBITDA BRL 39 million and adjusted margin of 7.5%.

So where are we in the process? So this is very recent, on Tuesday, we announced it. So we took over the company 2 days ago on May 1. And between the closing and our objective was to have a good preparation of the entire preparation process of the company. Obviously, the teams are not yet too involved, but we could structure our integration teams.

So we created a formal committee for the transition with many of the executive officers of our company and the meetings are overseen by the Executive Committee and also by the Board of Directors. I think that at first, WEG's concern was focusing on new employees. So after May 1, we received 2,800 new employees. So to have a good communication process, reassure employees. We acquire the company to promote continued and sustainable growth and also, obviously, to have very precise and clear information with our customers. So this was the focus from now on.

The teams will go to the field to start the integration process that will take a few years as we indicated until we reap all the benefits that we are expecting for the future. When we talk about CapEx, undoubtedly, in the first quarter, we had a concentration, especially in Brazil with 64% in Brazil, and this was relative to investments, increasing capacity, process improvements, productivity improvements.

As we announced, we have a new industrial engine factory that is almost ready in Jaragua do Sul, investments in a new batteries factory. But you should remember that there may be an oscillation between quarters, so they may be more concentrated on the first quarter. Just as a reminder, for the full year, our CapEx is expected to be BRL 1.9 billion and 55% in Brazil and the rest in the international market. So this may vary a little bit, but as a reminder, recent years, investments in foreign markets became much more relevant.

But sometimes we need to concentrate depending on capacity depends, new businesses and to allocate the CapEx. So this is the main design of everything that happened in the first quarter.

[Operator]

Our next question comes from Lucas Laghi, sell-side analyst of XP.

[Lucas Laghi, analyst]

There are 2 things that I would like to ask you. Number one, in the segment of external or foreign markets looking year-on-year and considering FX, with what you can see today in terms of backlog and new orders, is it possible to think of a reversal for the growth of this market, which is quite significant, thinking in terms of revenue?

And then thinking in terms of the short cycle? So external markets are weaker in China and Europe and also in the United States, which must be one of the most important when we look at the integration of Regal.

And now a more specific question about taxes. We saw a rate there is not too difference between the first and second quarter last year, and this is related to the transfer price. So we effectively see a benefit of transfer price in this quarter. But in terms of tax benefits, it compensated. So what can we think about the future, about the combination of these factors that reduce the rate? And these are the 2 main points.

[André Salgueiro, executive]

Lucas, this is Salgueiro. So starting with the electro-electronic and industrial equipment. In the international market, we saw a slightly weaker demand this quarter. So here, we have the short cycle and long cycle and outside Brazil. And on the whole equipment, there is a higher predominance of short cycle. And this is important because here, because here -- this is where we see some demand oscillation.

So we tried to qualify the main geographies that are impacting, especially China, which is something that has been going on since last year and more recently, an oscillation on demand, especially in some countries in Europe. What I can say about the U.S. that you asked your question, we started seeing some oscillation that is not so significant as we see in China and some countries in Europe. But on the whole, this is kind of a global movement.

So part of this, this is an adjustment of the industry as a whole. And also the adjustment of an inventory of some significant customers after the normalization of our global supply chain. There was very strong demand after the first impact of the pandemic and then this lasted for quite some time, and now we are seeing the industry as a whole and the chain as a whole, going back to normal and this inventory effect coming.

Looking into the future, it's a little bit more difficult considering that our portfolio is not too long, considering the product features because it's a shorter cycle. But we have a visibility, and we expect this inventory adjustment to take place and to be normalized. And then we can see an improvement when we look into the horizon for upcoming quarters.

As to your second question, the rate, you said correctly that when we see the impact of foreign operations, they contribute too. They have a smaller share this quarter and we are seeing an adjustment in transfer price rules, but other lines are flat. So we have some benefits in Brazil. Especially if we look at the performance of commercial and appliances and home appliances, most of the incentives are concentrated in Brazil, both in Linhares and Manaus. So this contributed to this movement. And in the end, we had a rate that was more or less at levels that are similar to previous quarters for different reasons.

So looking into the future, we expect this rate to go up a little bit, especially because of the changes in transfer prices.

[Operator]

Our next question comes from Gabriel Rezende from Itau BBA.

[Gabriel Rezende, analyst]

I would like to talk with you, the dynamics that we saw in the first quarter and maybe what we expected was a scenario of accommodations during the quarter, and we had a positive surprise in Q4 and another positive surprise in your performance. So you've talked about the mix and the dynamics with raw materials.

And if possible, could you give us some more detail on how you see the dynamics of margins, profitability and EBITDA for the rest of the year? So which are these factors that are nonrecurring and how much can it change along the future quarters? And what could hold your margins at levels that would be higher than we had imagined before?

[André Rodrigues, executive]

Hi, Gabriel. So I think that some points you have already mentioned, we have said that this time of stability of costs and most of the raw materials have contributed the product mix with different margins. It's always good to remember that we are through a positive time for the demand for long cycles with better margins along the years.

And the company has always invested in cost reduction programs, process improvements, both industrial and administrative and this has also contributed for better margins overseas. So in analyzing what happened so far, when we look into the future, I think that we can comment that the consolidated margin has proven to be more resilient, especially because of the good performance in the long cycle.

And in this scenario, I think that we have no expectations of significant changes, and we should continue with a better performance along last year, the recent historical average. It's good to remember that the consolidation of businesses in Regal starting in May will have a negative impact for short-term margins.

But as we said before, and we have mentioned it, the impact is not so significant, but it goes down a little bit. So we always say that oscillations in margins are common in our industry. But our objective is to always deliver margins that are above the market.

So I think that a point here and the good news is that the consolidated margin has proven to be more resilient. And in the current scenario, we are not seeing too many relevant changes.

[Gabriel Rezende, analyst]

Great, Andre. So as a follow-up, and I would like to hear from you how you've been seeing it for the different segments? I ask this especially because we've heard from global competitors of WEG that the price dynamics is healthy and companies have been working to improve the strategies seeking to preserve margins, especially after the inflation that we've been seeing after -- in these recent years in Europe. Could you give us more details about the price dynamics?

[André Rodrigues, executive]

Well, Gabriel, we are kind of confirming what we've been seeing in the market. So we are not seeing any pressure so far.

[Operator]

Our next question comes from Felipe Lenza from Citibank.

[Felipe Lenza, analyst]

And I have 2 questions. The first question is about the possibility of including power storage system in batteries. The use has been going up and prices have been going down. So you could give us some more color how much including batteries in the auction and how relevant this would be to WEG and the performance for the rest of the year?

Regarding the [indiscernible] program, WEG was allowed to take part in this program, so with investments in P&D which can be very relevant for your company. So could you give us a little bit more color and the percentage of your reported caps that you would be able to create this financial credit and how much credit you would be expecting for the whole year?

[André Salgueiro, executive]

Felipe, thank you for your question. This is Salgueiro. As to power storage in the auction, we are debating it. We are monitoring it close up and this can be positive for the development of the market and also for demand for this type of equipment in Brazil. So WEG has already positioned as a provider of power storage systems. We've done that a while ago. Also, because we bought an American company a few years ago, we already have this company.

In terms of power storage, we are producing batteries for electric buses. So we've been investing. But in practice, what happens is that, especially in power storage, we are not seeing a structured demand in Brazil. So what we are seeing now are some P&D projects, very one-off, stand-alone opportunities. And once this goes into the auction, this could be the beginning of a more structural demand. And this can be positive for the development of the market as a whole.

[André Rodrigues, executive]

Felipe, this is Andre Rodrigues. About the [indiscernible] program, we see this positively. Undoubtedly, this is a way to foster the growth of technologies related to mobility in Brazil. So this movement is likely to be beneficial for WEG as we continue to develop solutions that are related to powertrains and battery packs and all of this is directly related to this program.

And we also have a significant presence in recharge stations and we have all the infrastructure necessary for the generation, distribution of energy. Based on information that we have so far, it's small. The most important for us are the financing and incentives.

[Operator]

Our next question comes from Victor Mizusaki from Bradesco BBI.

[Victor Mizusaki, analyst]

Congratulations on your results. I have 2 questions. The first, could you talk a little bit about the backlog -- the P&D backlog in Brazil and U.S.?

And the second one is about cost. In the last 30 days, we saw a spike in copper prices. How do you see this scenario in copper?

[André Salgueiro, executive]

Victor, this is Salgueiro. Thank you for your questions. As to P&D backlog, we've been reporting for a few years and maybe this is the business segment where we have the longest backlog right now. So both here in Brazil and especially because of all the projects that are taking place, in relation to transmission auctions. Not just that, we have all the investments of distribution, power distribution companies and all investments in the generation of renewable energy. So we have a quite positive portfolio for this year and also for next year.

Now when we look at the international markets, we talk a lot about Mexico and U.S. And those are the most significant operations for us with a quite healthy portfolio. And this year in building our portfolio for next year, sometimes with even longer cycles, which can be positive. But I think that you should remember that it's not just U.S. and Mexico. In South Africa, we also have T&D operations.

So we see a favorable market demand because of electrification, investments in renewable energy. And what makes it clear is an investment that we announced at the end of last year, BRL 1.2 billion to increase T&D capacity both here in Brazil, expanding our factory in Betim, [indiscernible] also in Itajubá and also in Mexico with a new plant in our new plot of land in Mexico and also a new factory in Colombia. This is the visibility that we have and the prospects that it will continue to grow with along next year.

As to copper, if we look back, we did not see such a significant impact, but it's fair to say, especially in the last few weeks, we started to see an increase that is slightly more significant. So we need to monitor this. Always in terms of copper, we see a hedge, and we project the consumption for up to 12 months, and then we do the proportional hedge for 3 to 4 months and in trying to have a protection curve to make all these short-term oscillations more smooth, but we need to monitor this, and we need to see the strength. And maybe looking into the future, we should think of something else. It might be just a market movement.

So at first, without any major impacts, I think that hedge helps a little bit. And along the next few weeks or months, we should try and define and see if we need to change anything in our strategy, but for the time being no major impacts for the company.

[Operator]

Our next question comes from Marcelo Motta from JPMorgan.

[Marcelo Motta, analyst]

I have 2 questions. Just going back to Regal. Just to confirm if to you the idle capacity was still at 50%, as you said, at the time of acquisition? And to think of low-hanging fruits, what are they in terms of margin? So once you can plug it into your structure, in terms of supply chain and verticalization, there could be a significant increase in margin in the short term. So these 2 points, if you could share some more information about Regal with us.

[André Rodrigues, executive]

Marcelo, this is Andre Rodrigues. Well, the information that we have so far, yes, we have a 50% utilization capacity. So this is positive and we'll continue to grow outside Brazil without any major capacity constraints.

As to all the gains and synergies that this is going to provide, we know the level of verticalization. We know if each unit is here. We know that we have many opportunities. The first will always be the acquisition of raw materials. How much we can buy more steel, copper at a wider scale. But after this, we need to take the process of WEG's verticalization.

Maybe the first step, which might be the simplest. We have capacity available in Mexico is that we can manufacture engine carcasses and Regal. The other processes we will invest and will depend on some investments of WEG into tools to produce Regal's parts. So WEG has one question, which is our manufacturing growth with the level of technology, which is along this integration process as it develops.

Our objective is to bring the operational margins close to what we operate our factories in China is very much likely to be to what we have in other places. Just as Monte. Very close to the margins that we have in other nearby locations. So we want to bring each unit's margins closer to the closest WEG plant.

[Operator]

Our next question comes from Gabriel [indiscernible] from the Bank of America.

[Unknown Analyst]

I also have a question. So can you tell us the revenue shrinking this quarter? Is it due to a drop in volume? Or is there a drop in prices too?

[André Rodrigues, executive]

Hi, Gabriel. Well, actually, the price effect was small. It's more an effect of volume, especially because of the dynamics that I have just explained. So there is a normalization of the supply chain and inventory adjustment and also inactivity in industrial, investments similar to what happened in recent years and in the main geographies?

[Operator]

Our next question comes from Alejandro Demichelis from Jefferies.

[Alejandro Anibal Demichelis, analyst]

I am going to ask the question in English. So couple of questions. Just to follow up on your hedging on the copper side of things. So the hedge that you have in place, does that also cover the Regal Rexnord side of things? That's the first question.

And then the second question is, how should we think about your working capital, given that the copper price is going up. You're talking about some of the destocking that also needs to take place. So what kind of working capital should we assume for the rest of the year there?

[André Salgueiro, executive]

Hello, Alejandro, I'm going to answer in Portuguese so that we keep the program. As to copper hedge, so we have it structured for all operations in the world. But for the operations that we have now, they are not yet within this process. And now we are going to start the integration and we have started already. We are going to look into those operations, and we are going to bring this volume projection of those operations into our hedging methodology for each one of the locations. And so it's in our pipeline to solve this. So we will look at this from now on.

[André Rodrigues, executive]

Alejandro, this is Andre Rodrigues. As to the working capital, along the recent quarters, we have improved our inventory turnover. So we had a normalization of the supply chain. And in the first quarter, if we take consolidated, 4.5% or 4.4%, it's a substantial improvement as compared to what we had in previous quarters.

The integration is going to reduce this turnover which was not fully integrated or verticalized. It also suffered greatly with the pandemic, and we have worked to improve the turnover. But I don't see this as a reduction. So we are not expecting any major changes going -- looking into the future.

Also because with a very positive long cycle dynamics. So all these operational working capital indicators have improved greatly recently.

[Operator]

Our next question comes from Lucas Esteves from Santander.

[Unknown Analyst]

Rodrigues, this is [ Felipe ]. Going back to what you said about electrification and all the opportunities on the segment. If we -- if you could update us on the evolution of market potential with the recharging of electric vehicles. Also in the U.S. but as you said, South Africa, Mexico, could you share more with us about that?

[André Salgueiro, executive]

This is Salgueiro. As to the recharging of cars, so we have the third generation of charging stations. We've changed the product portfolio and this is growing at a fast pace. It's still small business as part -- as a share of our total revenues, but it's been growing a lot, especially here in Brazil. We have announced many partnerships with many OEMs here in Brazil. We also announced partnerships with OEMs in other country. So it's not just here in the Brazilian market.

In Brazil, we are more advanced because of our presence, recall of brand. This evolved more fast but we have the intention of having this in other geographies. This has started slightly more relevantly in other markets in South America, but we also want to develop this market in other geographies, especially in North America and maybe even other regions in the near future.

Just to consolidate the knowledge, the product that you develop for charging stations, it is prepared and thought to have access to international markets, especially U.S. and EU, right or not? Everything that is collected to the electric grid depends on certifications, that depends very much on local standards. So whenever we travel around the world, even the plugs -- the plug outlet to charge a cell phone is different in each country.

So there are a few unique features depending on the geography, depending on the product but they are related to the features of each market and the certifications. The equipment in itself and the constitution of the equipment doesn't change so much from one geography to the other.

[Operator]

And now our next question comes from Victor Antoniuk from Legacy Capital.

Victor, Mr. Antoniuk, could you ask your question? Victor Curi Antoniuk, you raised your hand, you may ask your question, please.

So I think Mr. Antonio does not want to ask the question. He's taken out his question.

And we're going to wrap up our question-and-answer session. Now I would like to turn it over to Mr. Andre Rodrigues for his closing remarks. Please, Mr. Rodrigues.

[André Rodrigues, executive]

I would like to thank, once again, everyone, for your presence here today to wish you an excellent weekend until we meet again next quarter.

[Operator]

WEG's conference call has now ended. Thank you so much for your participation. Have a good day. Thank you.

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