Eternit S.A. ($ETER3)

Good morning, ladies and gentlemen. Welcome to the Eternit teleconference for the discussion of the results related to the year of 2025. This conference is being recorded, and the replay can be found on the internal website for the company, ri.eternit.com.br. This presentation will also be available for download. [Operator Instructions] Before we continue, I would like to stress that all prospect declarations are based on beliefs and assumptions from Eternit's administration and the current information available to the company. These declarations can involve risks and uncertainties seeing as they are talking about future events, therefore, depend on circumstances that may or may not occur. Investors, analysts and journalists should consider that events related to the macroeconomic environment, the segment and other factors may make the results be materially different than those that were expressed in the prospect declarations provided. Here with us today, we have Mr. Rodrigo Inácio, CEO; and Carisa Portela Cristal, CFO and DRI. I would like to go over to Mr. Rodrigo Inácio, who is going to start the presentation. Please, Mr. Rodrigo, go ahead.

Good morning, everyone, and thank you for being here once again following our 2025 results conference. I would like to start by bringing a quick overview of our agenda throughout the year. In 2025, we advanced in an important transformation for Eternit. Our main focus was strengthening industrialized construction, broadening solutions that can bring more productivity, less waste and more predictability to our customers. This movement actually started a clear repositioning of the company and has strengthened our commitment to the future of the sector. We also evolved in governance and efficiency. We've had, for example, the consolidation of the Caucaia site the adoption of SAP HANA and the creation of the shared services CSC. These are initiatives that integrate processes and bring corporate closer to operation and prepare the company to grow with more agility. Thinking about ESG and its agenda, we've had relevant advances as well. We worked with fiber-cement with our products, bringing visibility to a real environmental contribution. We've also strengthened our social agenda with an important program, Eternit for her, for them as in women, thinking about women and female protagonism in the company. This industrialization, social, ESG, diversity and focus on results was what created the base for the future of Eternit, a more modern, more integrated company that is prepared for a sector that is in full transformation. Throughout this presentation, I'm going to show how this vision is already being translated into our operations, financial indicators and the strategic initiatives that are going to strengthen our positioning in the market. We can move on to the next slide. So on Slide 4, this is a slide where we have a very full overview to show the strength of our portfolio. I've organized it in this way. On the top of the slide, we have operational data and at the bottom, financial data. I'll start with fiber-cement products that are still a very important pillar in our portfolio. Here, I'm able to consolidate the product lines for fiber-cement, which are roof tiles and industrialized construction. In 2025, we reached 672,000 tons, and that's a growth of 2.3%. Even in a challenging scenario, this product is still contributing in a very consistent way towards the development of the company. And the biggest contribution for industrialized construction became more and more relevant. Going over to chrysotile. We also had a positive development. We've got to 169,000 tons, 1.2% above compared to 2024. We can see what that contributed to net revenue. So BRL 772 million came from fiber-cement and BRL 52 million come from industrialized construction in terms of net revenue. BRL 373 million come from chrysotile. In the case of chrysotile, the main development -- the main challenge was the mix and the price of the product, other than exchange rates that have pressed the margins for the quarter and the year. Even with the solid volume, the exchange impact reduced profitability. In fiber-cement, we had the opposite movement. A more qualified mix considered by Industrialized construction brought a lot of margin gain, and that contributed to our raw numbers, and that's 12 percentage points. For chrysotile, even though we've had challenges, that contributed with BRL 141 million, reaching a gross margin of 38%. So to summarize, this really shows the resilience of our business and advancing the lines with more added value and the capacity of the company to continue to deliver operational growth even in more challenging scenarios. So on Slide 5, I will show you more of a financial overview, consolidating the results for 2025. Carisa is going to go deeper into each indicator next. But first, I would like to talk about some movements that talk about the evolution of the company throughout the year. We finished 2025 with a net profit of BRL 49 million. This is 26% points higher than 2024. And we also reached BRL 113 million in EBITDA. This is a 21% growth compared to the previous year. Another important pillar was net revenue, which reached BRL 1.2 billion. For the fiber-cement segment, which is our core business, that was 77% of the total revenue, showing consistency and relevancy in the portfolio. We finished the year in BRL 237 million in net profit with 21% margin. The negative variation shows a mix of invariable products and the exchange rates that really pressed the margins and ended up neutralizing part of the operational gains that we were able to have in the domestic market. This development administration approved the distribution of dividends related to 2025, and that's BRL 10.5 million to be distributed. Next slide. So here on Slide 6, I would like to talk a little bit about the macroeconomic background that influenced the sector in 2025. It's important because all of this is directly related to a dynamic of demand for our projects -- our products. Starting on the graph on the left that shows the general revenues of ABRAMAT with the deflation. Even with a reaction at the end of the year, the construction material sector ended up closing 2025 with a small drop. So there is recovery, but it's still very slow and highly dependent on credit and of a constant improvement of internal demand. For 2026, ABRAMAT is already projecting a growth of 1.9%. So the expectation is to have a more favorable scenario this year. Below that, I have some other indicators that are going to help to explain this behavior. So higher debt in families, nonpaying Brazilians and the consumer confidence index that is around 88 percentage points on average this year. All of these factors are very, very important for our results. With companies and more debt and consumer confidence and trust really oscillating, this doesn't make people want to invest in their homes and do big projects. And this is something that the material sector is going to feel right away. Now on the graph on the right-hand side, there's something that also impacted the sector, which is labor. According to the FGV research, 82% of the companies had challenges finding labor in 2025. And this is very, very high. And it's not only heavy construction, but around 70% of companies in specialized service such as installations and repairs are also showing challenges. This movement shows a known trajectory, very high scarcity in the beginning when there was a boom in construction and then a drop during the crisis and lower levels during the pandemic. And from 2022, a new increase that brought us to the 2025 stage. And it does make sense because we had a lot of interest in 2024, a lot of global uncertainty, and this brought a lot of caution to the economy. This delayed construction, reduced investments and are constantly pressing operational costs all over the entire chain. So to summarize, 2025 was a year that had smaller demand. It was more restrict and costs were also with a lot of pressure because of the lack of qualified labor. And this definitely shows the importance of operational efficiency and the way that we have been structuring our portfolio. So now I'm going to go over to Carisa, so she can show the main financial indicators.

Good morning, everyone, and thank you, Rodrigo. I'll start on Slide 7. On this slide, I have two important indicators for our strategy in 2025. On the left-hand side, we have a net profit that is growing 26%, reaching around BRL 49 million. This result shows that we are, in fact, on the right track. We're prioritizing a healthier product mix, and we have discontinued businesses that weren't bringing the appropriate returns for the company. Now directing our efforts to operations that have higher value potential. On the right-hand side, we have recurrent EBITDA. We have shown a drop of 16.6%, finishing 2025 at BRL 71 million. Recurrent EBITDA is the one that removes small things like recognition of credit that was showed in 2025, revenue related to the discontinuation of units and also impairment adjustments. Also in 2024, the main adjustments were provisions for low storage and mobilized assets, all related to the photovoltaic line. The reduction of BRL 14 million in EBITDA was actually influenced by a lot of dynamics in our main segments. And in the fiber-cement business, we were able to maintain the positive contribution of BRL 5 million, whereas in chrysotile, we had a retraction of BRL 27 million. This retraction basically comes from the exchange pressure that we've been under and the mix of products for chrysotile and pricing that wasn't favorable throughout the year. On the other hand, for EBITDA at CVM, we can see a growth of 26.6%, reaching BRL 113 million in 2025, as Rodrigo has already shown before. This indicator incorporates these nonrecurrent events that I've said, a lot of them related to strategic decisions that we've made to be able to strengthen our portfolio and prepare the company for a new growth cycle. A recurrent step for the company is still not showing the entire transformation that is ongoing, but it's important to highlight that we've had important adjustments, and we've made difficult decisions. We're building a more solid foundation to be able to capture the profitability in the most sustainable way. The focus now is to continue improving our product mix, strengthening our main operations and also accelerating the delivery of consistent results. Now on to Slide 8. On this slide, we can see the evolution of our net revenue. On the left side, you can see behavior year-on-year. We finished 2025 with BRL 1.150 billion of revenue. And this is a growth of 0.6%. This growth shows the resilience of our portfolio in a very, very challenging scenario. On the right-hand side, we have a breakdown of our revenue per segment. And here, we can see that there's an important movement, which is the advancement of industrialized construction that we have been talking about throughout this time. Within fiber-cement, industrialized construction has been gaining strength, and this is already a strategic focus of the company. And it went from 4% in 2025 -- 2024, sorry, to 5% in the total mix for 2025. Currently, this business represents 7% of the revenue of fiber-cement itself, but in the consolidated revenue, it's 5%. I'd like to highlight this topic because this is a pillar related to the growth of the company that shows superior margins and that strengthens our strategy of capturing value through solutions of more complexity and return. The advancement that is so gradual in this year shows that we are guiding our portfolio towards where we want to be in the future. And I'm going to soon talk about the other financial indicators going to gross profit and the other elements that are going to be a part of the financial results of the company. So Slide 9. On Slide 9, I'm going to show you the composition of gross profit that went from BRL 258 million in 2024 to BRL 237 million in 2025 with a reduction of 8%. When we look at gross profit per segment, we see that there is a positive development in the fiber-cement segment. The growth in this area grew 5.7% and reached 12.3%. And our chrysotile segment showed a drop in 16.1% in net profit and margin reduced 6 percentage points. This is impacted by exchange rate variables and also the mix of products and not favorable prices like we've mentioned. The transformation of the product mix is ongoing, especially in the fiber-cement segment. The contribution of fiber-cement to gross profit is advancing, as you can see in this chart. And the company is always trying to increase the participation of the fiber-cement business through the industrialized construction business. Fiber-cement is a portfolio that is increasing the mix, focusing on delivering more profitability. Even in a challenging environment, the company showed strength to go through the cycle as we have been saying, preserving volume, maintaining the necessary foundation to be able to capture value once the scenario is normalized. We're doing what has to be done so that the mix can continue to evolve in the right direction. Next slide, please. On Slide 10, we're going to talk about our expenditures. As you can see in the graph, the total went from BRL 222 million in 2024 to BRL 176 million in 2025, which is a reduction of 21%. This drop is influenced a lot by extraordinary expenses that we've had with tax opportunities, but it's also showing the control and rationalization movement of our expenditures. Even a year that is really full of changes and structural changes, we were able to have that. The revenue that is in 2025 is mainly coming from the acknowledgment of tax credits. DCMS, PIS/COFINS, and this has already been published throughout the year. The reversion of provisions related to discontinued operations of concrete roof tiles. This is also in terms of some real estate sales and things like that. And in 2024, this group had been pressured by expenses that were related to the discontinuation of the photovoltaic business. And expenditures in 2025 are BRL 114.5 million, and this is an advancement that is small compared to the previous year. And this came specifically from variable expenditures. At the same time, they were able to get reductions in shipping, marketing and other services. For general and administrative expenses, we got to 97.1% in 2025 and compared to 92%. So it's an increase in around 5%. And this is related to payment of employees, company restructuring and seniorizing our key positions, also spending on contract workers and legal expenses. When we adjust this with inflation, the real increase was around 1%, which really shows our discipline in cost management. To summarize, the year of 2025 was a year of active management. We've controlled expenditures where we needed to. We invested where it made sense. We've captured opportunities that were very relevant for the company. And now moving on to Slide 11. I'm going to show you the evolution of our financial results. As you can see in this graph, we had a retraction of the net margins. So that went from BRL 18 million in 2024 to BRL 15 million in 2025. This is a drop of 17% year-on-year. And this evolution mainly happened due to nonrecurrent factors, which were updates in tax credits that were temporary, especially PIS/COFINS and ICMS. This is something that we have been highlighting throughout the previous quarters, and that has helped to mitigate the financial expenditures in the period that have evolved together with the cost of the service of the debt. Going to Slide 12. This is the final slide in my presentation. I'm going to show you the evolution of our capital structure. At the end of 2025, the net debt of the company was BRL 111.1 million. And this is aligned with the previous quarters, and this is always showing the balance and financial discipline that we have. Higher volume of exports throughout the year allowed us to increase through ACE and ACC, our resources. And these are instruments that have very competitive costs around 7% and 8.5% per year, and they also work as a natural protection in exchange rate variables that may happen. This kind of alteration gave us flexibility to operate with a more comfortable cash flow position and reducing the exposure to exchange rates. Today, the company has an average debt cost that is around 11% per year that is very attractive and real cost is around 7% per year when we think about accumulated inflation. And this stage really shows the efficiency of our capital structure. Other than that, we continue to strengthen our cash flow policy, prioritizing liquidity and being more robust to face any kind of macroeconomic changes that may happen. We finished the year with a leverage of 1.6x, which is pretty sane and really preserves our capability of investment. And like I'd like to highlight, none of our debts have financial covenants. So I will finish my talk, and I'll go back to Rodrigo for his final remarks.

Thank you, Carisa. So I will finish the presentation on Slide 13 with our agenda for 2026 now. To be able to finish today, I would like to share our strategic agenda for 2026. This is a year that shows the continuation of our growth strategy. But above anything else, it's a new cycle of transformation for the company. We are going to focus our efforts in 3 main fronts. The first is innovation and modernization. We're going to accelerate investment in technology, process, products, making sure that the company is going to continue to evolve in efficiency, competitiveness and the capability of delivering results. Innovating is no longer an option. It is what is going to sustain our relevance in the long term. The second front is strengthening industrialized construction. This segment has already shown that it has a lot of potential, and it will be more and more central in our strategy. It has superior margins and really increases our solution portfolio and puts us in a position in the market that allows for consistent growth. In 2026, we're going to strengthen this movement even more, increasing capabilities, offer and capturing new opportunities as well. And the third front that we're going to focus on is perhaps the most symbolic one, which is people. We're starting a project, which is called sustainable habitat that is more than just moving our headquarters to the countryside of Sao Paulo, but it's actually about building a new chapter in our history. We're going to bring corporate closer to the operation, integrating competencies and strengthening the culture of the company, and creating a unique environment where exchanging of ideas, collaboration and innovation happen effortlessly. This is a movement that strengthens who we are and who we want to be. Sustainable habitat is not only a goal, but it's the materialization of a company that is preparing itself for the future, valuing its people and building every single day the foundation for the sustainability of the business. In 2026, this is going to be a year of execution, focus and advancements. We are ready for the next step together with courage, with discipline and with the certainty that the best is yet to come. Now I'm going to go over to the beginning of the Q&A with our Eternit team.

Thank you. We're going to start the Q&A session now. [Operator Instructions] We received a question from the investor.

I Congratulate the company, and I hope that briefly the construction system can be consolidated. I'm asking about SAMA. Is there a possibility of Eternit working on mining of rare lands in Goias?

Well, the answer is yes and no. This is a question that has been coming up in our results calls. The company has been studying rare lands in this region where we have our operation, where we already operate with mining chrysotile. Knowing that all around, there are companies that are working on mining rare lands, and this is something that has been consolidating itself in the market. But right now, we don't have any economic indication that shows that the location where we mine chrysotile, we have the economic possibility of mining. But yes, this is something that is on our radar. It is important and relevant for the company and for the country. But economically, we haven't found any economic information that really makes us feel safe to do that.

The next question is from another investor.

So related to the construction systems, is there the intention of the company in having a relationship with the building companies that work with Minha Casa and Minha Vida to increase the numbers of the company. And if these systems are feasible for popular homes.

Thank you for the question. This is a topic that is very related to our main strategic focus. The company has been developing solutions that are related to this sector of industrialized construction because industrialized construction has been growing at a very accelerated rate over the last couple of years, unlike traditional construction that highly depends on investment coming from the government, Minha Casa, Minha Vida, and they are very pressured by the interest rate that we have in the country currently. So industrialized construction is going to give the company the optimization of its assets, contributing to the results of the company. So we have been developing solutions to work with the construction companies, to work with the specifiers to be able to advance the construction model. So yes, the answer really is related to the question. The company has been developing solutions to work together with this kind of model and the construction companies that today work in the sector of construction.

The next question is, congratulations for the results. Do we have any updates on the authorization or prohibition of the mining of chrysotile by the Supreme Court or the Goias government? Do we have any deadlines? Is the 5-year deadline from the government of Goias already on? Now Mr. Rodrigo will answer.

Well, the process and the trial for SEMA is still with the Supreme Court. We don't have any final decision as of yet. And there isn't also a specific deadline for this judgment to be passed. The Goias law is still not active because it really depends on the decision from the Supreme Court. But we are doing everything aligned with what the state of Goias has been demanding of the company with this entire process. So we are paying attention to the process. We're making internal decisions and having the correct actions so that we can start this process of validation. And as soon as it starts, our operation is going to be in a phase-out process.

The next question is, industrialized construction still has barriers that have to be surpassed such as regulation and qualified labor. Is this aligned with the expectation of growth that the company has? And what is the destination of the Tégula assets? I'll go over to Mr. Rodrigo for the answer.

Thank you for the question. It is aligned with everything that we have been mentioning about the company. Yes, the company is paying attention to regulation. Industrialized construction, there isn't just one model. It's actually quite generic, what we usually call industrialized construction. In this context, industrialized construction goes through a steel frame, wood frame model, modular construction and even the replacement of traditional brick walls for systems that in the future Eternit could provide to the market. So when we talk about industrialized construction, it's actually much broader than just producing that cement plaque and offering it to the market so that they can close the wall on the inside or outside. So we provide the product today. We have solutions that are being developed that are going to go from the very floor, which is a subtract to be able to work with concrete until closing a wall in a traditional model of construction, replacing bricks. So I would say that industrialized construction has a context of optimizing labor, removing labor from the actual construction site and bringing it inside the organization and the industry to optimize the process. So I would say that the company understands that there is an important growth bias that is already open, although there are some blocks in terms of regulation. But even in that case, there is a very long path to still be on, and there's a lot of opportunity for the company. The second question is related to the asset that we have for Tégula. This is an operational asset that we had until last year. We ended up finishing the operation, and this asset today is being alienated.

The next question is, is there a prediction to change the current payment of dividends? Do we have payments in specific periods? What is the date of payment and the final date? I will go over to Carisa for the response.

Well, the company right now doesn't have any predictability of changing the current dividend policy. The current dividend policy predicts paying the minimum mandatory dividend, which is 25% of distributable net profit. And there is an annual payment that is predicted and then we have two installments. Now for this dividend that we have delivered in 2025, which was a total of BRL 10.54 million, this is going to happen in 2 days. June 22 is the first and the second one is September 18. And the ex date is March 31.

The next question is, I didn't understand the carbonization topic. Could you say if this is positive for the company? Now I'll go over to Mr. Rodrigo for the response.

Thank you for the question because this is very relevant for us within the context of ESG. Carbonization is a natural chemical process that happens with fiber-cement. This process captures CO2 in the atmosphere. And we've had recent provocation from one of our advisers on the topic, and there was a very important research that was done together with the University of Sao Paulo, USP. And this research lasted over a year. And the final conclusion was that equivalent to 2024, just so you can understand, which is when the study was performed, the products that we sold in 2024 had a CO2 sequester that was related to almost 130 million tons of CO2 removed from the atmosphere. So it's very, very relevant. Just so you can have an idea, this volume of CO2 capture is the equivalent of 6 million adult trees. So it's very relevant. It does put Eternit within this ESG environment, and it's a great position for us, and it is pro the environment. So I would say that our products other than bringing the comfort into people's home, bringing safety, we also have a very important role in the chain for CO2 capture. So this is something that we have been studying quite a lot, and we have been talking about it a lot because this is a very important fact for the sector.

The next question. I noticed that the company has been talking about efficiency and controlling expenses. But what are the actual actions? Now I'll go over to Ms. Carisa for the response.

Well, I think that talking about efficiency and expenditure control, we have been focusing on two fronts. One that we've been calling conscious management of company resources and the second front is trying to always find ways to optimize. On the first front, when we're talking about conscious management, what have we been doing? A lot of austerity when applying company resources, but always keeping in mind that the focus is also not losing sight of governance. And then aligned with governance, we've been looking for alternatives and more efficient solutions that can generate operational gain for the company, which is the movement that we've done with the implementation and migration to SAP HANA that we have strengthened governance at the same time as we're able to have more optimization and more efficient, faster results with less people doing manual processes. And in the same line as HANA, we have been doing process automatization. We created a shared services center, and our goal is to automate and standardize all processes in the company. And we have 8 sites all over Brazil. So this process of standardization is very important to us. And we've also been doing a process of simplifying the societal structure that is also going to reduce costs for the company. I think that along these lines, I'm also going to highlight our change in the HQ, as Rodrigo has mentioned, moving to Hortolandia. This also brings synergy for people as well as costs for the company because now we're going from a rented HQ to our owned HQ. Thinking about the optimization front, I would talk about our constant search for opportunities. And among them, I would highlight tax opportunities that were a highlight in the results of 2025 because they're able to make us maximize our cash flow and also selling nonoperational assets and discontinuing activities that today, as Rodrigo has mentioned, for Tégula, for example, they don't make sense for the company anymore, and it's something that helps us rebuild our cash flow.

Next question. Can Eternit transform all of its industrial plants for this revolution with no great cost? Or do we need new and heavy investment? Rodrigo?

Thank you for the question, and it's also very aligned with an industrialized construction. I understand that this is the focus of the question. The beauty of this segment for us is the understanding that we are using our installations and our industrial plants. We're using our expertise because the main input of these products for this segment is based on cement, which is exactly what we use for the fiber-cement roof tiles. We have the development of the channel as well. So we have the 3 main pillars, which are industry, supply and the logistics market, and all of it is aligned with our strategy. Today, the industrial plants are -- basically, we have 6 sites all over Brazil, so Paraná, São Paulo, Rio, Goias, Bahia and Sierra for fiber-cement with 14 machines. And to convert one of these machines, the investment is relatively small. So basically, the use of these assets is total. So the big challenge that we see here even more than the development, the conversion of these equipment and production lines is the development of product solutions. So today, you're going to go to Europe, the U.S. that are already using solutions that are aligned with this path of industrialized construction, and you can find products that have different kinds of finishes. So the challenge that we have is to internally be able to develop these products as well. These are products that in the future may replace wood where you have finishes that are already applied to the surface when you're installing a specific solution, which is going to be your final finish in the material. We understand that this is possible. It's not a relatively high investment, and this is the path that we're going towards. So the response is -- the biggest investment is already -- has already been done, which is the production lines for roof tiles, which the production lines can be converted to other products in the industrialized construction.

Next question. What challenge does the company see in order to attract women to the Construction segment? I'll go over to Mr. Rodrigo and then Carisa.

Well, thank you so much for the question because it's very aligned with our values, the company's values. We've been doing very important work within the company. Our company is a company that creates materials for the construction industry. And this is an industry that really has a challenge attracting women to work in everyday industrial operations. They are equipments that are heavy machinery. So we do have a challenge with attracting women. Even though we spare no efforts to do that, we have been developing some projects for some time, and we're very happy that we're able to attract or better yet create this movement that is aligned with our values. We had a partnership with the Institute Nós Por Elas, for us for them, and we created a project Eternit for them for women. Carisa, who is here with us, she's our CFO, and she is the representative that we have within the Board and the executive part of the company. And also recently, we were able to develop and promote internally an employee who today is our industrial manager. She's our first industrial manager, I think, out of the 86 years that the company has been in operation. So this is a very important accomplishment that we have been able to achieve and to be able to transform this value in action. So I'll leave Carisa with the words. She is our representative in the executive group, and she can collaborate a little bit better within that topic.

Thank you, Rodrigo. Thank you for your words. But truly, it is a challenge. We see this as a challenge. So that's why I think it's so important to have this awareness in the company and to have this project Eternit for women. And it's very interesting because we have a partnership with Nós Por Elas Institute. And I usually say that today, looking at the sector, only 10% of the formal workforce is composed by women, not only on Eternit, but the construction sector as a whole. And this shows a challenge that is not really a challenge for us, but it is a general challenge, but we are really working with diversity and gender inclusion. And in this project, Eternit for women, we have already had the commitment of reaching 20% of the entire group of employees represented by women and 15% of leadership positions until 2030. So this is a very important commitment that is very challenging for the company, no doubt, but we have been having a gradual process that obviously, it's not just a commitment it has practical actions. So we have 3 areas of the project. One of them, organizational culture that is more inclusive, so making sure we have no barriers in this process. The other is development and capacitation training for all of our employees. And the other one that's very important is creating future leaders that are women. So we've been working on all 3 fronts to make sure we are going to achieve this in 2030. Thank you.

If there are no further questions, the Eternit conference is now finalized. Thank you so much for your participation. And we remind you that the Investor Relations team is available at the e-mail [email protected]. [Statements in English on this transcript were spoken by an interpreter present on the live call.]