Frasle Mobility S.A. (FRAS3) Earnings Call Transcript & Summary

Hello. Good afternoon to everyone. Welcome to the Universe Fras-le Mobility 2023. I'm Jessica and I am Investor Relations Specialist of Fras-le. And we have this meeting today along with the executive team of the company. This event is held in person in Joinville in Santa Catarina, the city that is the home of Fremax, one of our business units and also has live broadcast via our YouTube channel. Before we start, I'd like to reinforce that the information addressed in this event are not a guarantee of performance, involve risks and uncertainties and regard to future events, therefore, depend on circumstances, which may or may not occur. Fras-le Mobility is the company with the purpose of providing the best experiences to their stakeholders Collaboratively and responsibly delivering consistent results with the innovative profile. With this purpose, we plan today's agenda in summarized format. Sergio de Carvalho will start with a brief word followed by following speeches. We are not capital goods, a panel on the value of being nearby. Then we'll have value of being close, then strength of working together, a coffee break. Panel growth is constant journal, mobility routes, the future has already been mapped out, then we'll give out the appendix seal. And then a Q&A session at the end of all the presentations. As we showed you in our agenda, you can interact with us. [Operator Instructions] If you're here in person, you can raise your hand and ask your question at the end of the presentations. Now to officially give start our agenda today, I'd like to invite to the stage our director of Apimec, [indiscernible] and the Director of Investor Relations, Hemerson De Souza, to give the Quality 2022 award.

Good afternoon, everyone. Thank you all. It's great to be here. And we deserve this quality award. I think that the service the company provides to the market throughout the year, and to answer a lot of difficult questions you know our team of analysts and market professionals. So it's a pleasure and a source of great pride to give you this quality award from the meeting of last year. I think you're super competitive. Just from the meeting today, we can tell how this team has worked disclosure being close to the market and with company governance. Congratulations. You all the deserve this award. And to give you this, it's more than an award. It's thanking you for how well you attend the markets, the financial markets. Quickly, I'd like to say that Fras-le won the award in 2022. We know our size. We like to grow. And this is an answer. And it's the quality of our personnel, the market and what we do every day. Thank you very much. We have great respect for Apimec. 22 years that we've counted on the support of Apimec. You know how important you are to the capital markets, and it's a source of pride to be able to collaborate with you. Thank you very much. Congratulations. Thank you.

Thank you, [ Amada ]. Thank you, Hemerson. Hemerson already commented, but I'd also like to say that this meeting supported by Apimec, and they've been supporting us over the last 22 years. Always connected with the future Fras-le Mobility, it's connected to the latest mobility trends. This strategy is based on pillars if you project the company towards a more promising future for each of its units, employees and business partners. Now for opening words, I'd like to invite our CEO, Sergio Carvalho. Sergio, welcome.

Thank you, Jessica. Everyone, good afternoon. Welcome. Once again, it's a pleasure to be here with you and to be able to share a bit about Fras-le Mobility. You saw on the agenda Jessica shared with you, it's a very rich agenda. We'll have panels and presentations. And all of this, we hope helps you understand a bit more where we're going with Fras-le Mobility in its new journey. We have this team that's here in white with you. Almost everyone's wearing white tennis shoes and within the company which has always been great. You've covered Fras-le Mobility for several years. You know this, was always a very good company. But in the last several years, this team took what was good and made something much better. And now we'd like to write another page for the company and elevate it to an even a higher level of what we're facing today. What we want to do with all these presentations this time with you is to share a bit about how we want to take the company to a higher level. And I hope that at the end of this presentation, you'll be able to see that we have a history, we're cohesive. We have the capacity to make this happen. So I hope you all have a great event. And I'd like to call Jessica back to the stage who will continue our event.

Thank you. Sergio. We've had a few technical problems with the presentation. And so now I'd like to invite Hemerson, our Director of Investor Relations, come back to stage to talk on we're not capital goods.

Thank you, Jessica. Today, I want to be able to share with you very clearly how different we are, how distant we are from a capital goods company. Insist on stating, this because oftentimes we'll have a sort of difficulty in understanding the industry or the style or the nature of our business. We have huge respect for the analysts who cover the company. But we know that many or most even who cover Fras-le cover industrial companies and companies cover capital goods. When you cover companies they're with these. And we need to do our part to be able to show off the differences of Fras-le. And that's my role for you here today. I want to share with you the story of Lucas. I joked around saying that we have a lot of people here called Lucas. I chose this name on board on purpose. Imagine Lucas, a head of a household, around 40 years of age, 2 kids, one -- the oldest is 17, and the younger one, 7 years old. He does a routine in the morning where they eat breakfast together. They schedule their day. And Lucas will leave his younger child at school and the older child plays sports. And so then he leaves his wife at work and then goes to his job. When he returns in the evening, he'll gather everyone back up. They have a farm outside the city, where they want to go and celebrate a special day, a very relevant and day date. They're buying a new apartment. And their life is dynamic and fluid. It's in movement. Lucas all of a sudden had a problem. Saw that there was a hole, but unfortunately, he fell in the hole and his car was damaged. His car was damaged. Oh, man, that's a bad thing. No one expected this to happen. He got frustrated. He said he would go to that great event and celebrate the new apartment. But now my car broke down. I didn't see the hole, but it was there. Why? I was driving. Unfortunately, Lucas had some unscheduled expenses. He didn't want to know if the dollar was at 5 or 3 or 6. If the GDP would be 3% or 4% growth or 10%. He didn't care if there were challenges in certain markets. The agricultural market went up or down, or if there were credit lines to buy to sell trucks, to sell agricultural machines. He went to the mechanic and resolved this problem. The mechanic said, Lucas, a pivot broke here. I'll have to change it. And I'm going to tell you something else. I work for Fras-le. I would put Controil parts. After resolving all this, Lucas went home and he was able still that same day see his family again. And they went out and they were happy. All this happened because life is dynamic, has. Life is fluid. Life happens. If we're a company that has a fast response so that Lucas won't waste a week waiting for his car or won't have to get approved to buy another car. He decided to fix his car, that's our market. Lucas' story happens every day. At any point in time, we need to switch out our brakes. And there's no choice. It's mandatory. If you don't have a brake, you have to switch it out. If your pivot broke, can you drive without a pivot? No. You have to switch it up. And best of all, Fras-le sales products. This will happen every cycle. Here another year or 2, they'll have to switch it out again. It doesn't matter if the economy is going up or down. Obviously, there are elements which interfere in the dynamic of the business, but we sell parts and solutions to the market is here. The fleet that is circulating that's not connected with production. It's connected with people's day-to-day. Look at the profile of our company. We are a company in the development developed an ecosystem. We were able to deliver that part quickly. We have a huge network, and Paulo will talk about this, but we're able to be very effective very quickly to deliver. Going back here. We also have support which is important. Go back to the slide, please. One more. One more. We created an ecosystem where we have support for parts. We don't have to manufacture everything because we have sourcing that supplies us globally, that sourcing is quite developed. We can have a reoccurrence of demand, which is much more connected to the fleets that circulate. And yes, we have some things that we sell to OEMs, but the replacement parts, spare parts market is so great that the variations impact us little as a business. And obviously, we created a logistical know-how that with our clients allows us to be agile and the primary solution for our customers. Please go back one slide. We are a benchmark. We're #1 in the market with over 5,500 employees in over 125 countries, with an EBITDA margin in these 9 months so far accumulated 21.4%. 35% of what we deliver and sell, we don't even manufacture. We use global sourcing, which supports us. And thus, we're able to be very efficient in the delivery of our products. And finally, we have a connection that's not just domestic. Almost 40% of what we sell is not in Brazil. We have a footprint that's global whether it be in production or a client basis. But we support through these brands with our global products in all the continents in over 120 countries. Almost everything is related to the spare parts market, which is connected to what I told you about Lucas. And last but not least, we have greater space in just regular cars, not commercial vehicles. We're leaders there as well. But the fact is, that fact that we have a connection with passenger cars allows us to have elasticity to surf the demands that the market presents because the size of the fleet is quite larger. Very well. I'd like to thank you. And thank you for the opportunity. We're not a capital goods company. I hope it's helped you understand this and the dynamics that our market goes through. And I'm available if you have any questions. Thank you.

Thank you, Hemerson. Recognized as one of the largest global factories of friction materials and as a market leader and replacement of auto parts, Fras-le Mobility, places high-quality products available to consumers as well as original parts, OEM iconic brands with global reach. This year, we changed. Now we're Fras-le Mobility, and we can be seen as a company for with brand new identity. [Presentation]

I would like Hemerson to return to the stage to mediate the first panel of the afternoon. That will be done by Paulo Gomes, the director of Fras-le Brands; and [ Sergio Martinelli ], Sales Director, Marketing of the other Fras-le Mobility brands.

Good afternoon to you all. Well, we need to clearly approach the predicates we've built, with the Fras-le history trying to show quickly the capillarity we have. But it's great to hear somebody from the market, Paulo and [ Sergio Martinelli ] are the guys that are in the forefront, they define, they have the sales strategies at hand. Paulo, I would like to ask, from the bottom of your heart, tell us why do the customers see Fras-le Mobility as a different option in aftermarket Brazil?

Very well, Hemerson. Good afternoon to you all. It's a pleasure to be here once again, another year. Fras-le, we are a group of companies with a vast portfolio. Can you go back just to explain? We don't see in the screen, in the front, I can't see what -- we are a group of companies. We started with friction, and we started adding to the product portfolio correlated. We started with disks, cubes, drums, light line. We entered with the motorcycles, then shock absorbers, bars, suspension. And we've created a product portfolio with over 2,000 SKUs. These 12,000 SKUs we have, they serve a portfolio of over 20,000 applications. This makes us a company of -- oh, here we go. It's an extremely relevant company to the market essential. We have a product -- complete product portfolio. Our sales person goes out with his material. He gives the entire portfolio to the market for several applications, different vehicles. We cover almost all vehicles running in Brazilian domestic market with a vast number of options in direction, suspension. So with this, what happens? With this, we gain a lot of relevance in our distribution in Brazil. If we look at the top 10 distributors in Brazil, we are the #1 supplier, most important supplier for 7 of them. From the first supplier, the third, the 10 biggest in Brazil, we are there as the main source of supply. Why? We have a vast portfolio of products. We have many brands. We have many brands, 17 more brands in the market, serving all access, high price, medium price, competitive price, economically. For different lines of products. We have different brands. They don't compete amongst themselves. We are in every niche, different regions of Brazil and the world. You know this topic of brands we like to talk about. It's very recurrent. We want to know, does a brand have a value? And I want to know brand has a value in reposition or no? So it might be seen as just auto parts go in the car. Do you know the auto part that goes into your car? Yes. This makes a lot of sense because when we're talking about the auto parts market, we divide in two markets. The manufacturers that are our leaves brand new. So the consumer doesn't know what part is in there, but in Lucas and the mechanic that repaired Lucas' car, this, yes. Lucas opens the wallet to pay. And the mechanic opens the box with a brand to do the repair. So this is a big difference of the importance that the auto parts have for the different segments of market. When we talk about the industry, a brand-new car. If the brand goes in the vehicle embarked or aftermarket? What's a strong brand? One more. See that brand? It's not just to generate demand to repeat the purchase. You will only do this if the experiences you had with that brand are statutory. And here, brands that give good experiences will make you repeat them even with a small price variation. Well, I started talking about price. We're talking about strong brands that make their price more resilient. This is value. This is already a value. And when we talk about mobility, I will attend to the main brands in Brazil, 17 in the world. But we talk about brands that have [ Nakata ] 70 years. Fras-le will be 70 years old. We're talking about iconic brands known -- important brands for the segments and this is value. Not just for the value itself, but for the entire mobility brand. Am I clear?

Yes, you are.

We had support materials to bring. We can bring a bit of the experience of these brands. You want to tell us more? Our brands are manually elected by independent institutes as you want to separate per product because I have several products. For each product, our brands are amongst the second and first chance of the mechanic. Making a reference to what I said, the choices, the good experiences generate recurring choices. Recurring choices, make your product -- the price of your product be more resilient to variations. Very good, Sergio. They are elected every year. Every brand, that's great. We talked about brand. We said we became a Deere company. But tell me if I am Lucas, and there's an issue with my car, it's easy to purchase a Fras-le Mobility part. Where do I find your parts, Paulo? Without a doubt, any region of Brazil, any city of Brazil, he will be well served. We have -- the Brazilian market is huge. It's vast. There's huge coverage. For example, we have in Brazil over 75,000 workshops. And we are fully convinced if we don't cover them all, we're very close to that. And some of our brands are in -- some of our brands will be there. Some of our brands will serve the mechanic, will serve Lucas car. We have a network. Over 500 distributors in Brazil buy directly our product. We deliver in over 13 points of sale in Brazil or delivery points. We have all cities mapped out in all Brazilian cities, over 50,000 inhabitants. We have a distributor or a sales rep in the city. One of our brands, if not all. As I said, we have over 12,000 SKUs. This is diverse. We have 5 distribution centers, all distributed in Brazil to serve better the different regions. A lot concentrated in the south due to Fremax control in Fras-le. But we have in Extrema, the center of the country to be close to the market. We have -- for example, to have an idea of space over 39,000 square meters of warehouse to store our product with 47,000 pallet positions. This makes us a huge player. We read about the American cases and logistics and distribution cases. We are a huge case of success made in Brazil, covering all of our market, a strong sales force. What I'm showing here, all of the product families are extremely relevant in the market. Some family like lining -- brake lining, over 50%, truck lining, brake pads over 30%. But we have a products with a lot of path to grow. It's the case of shock absorbers, less than 20%, discs. We have a brilliant market. A lot of space to grow still. And I'm sure that with the sales force, this market coverage, with the product portfolio, with the spaces we are occupying in all territories in Brazil, we're going to grow with the other brands. Paulo, it's great to know that we are evolving our presence. You talked about 75,000 workshops. And there's a lot of people that we need to communicate with. And I want to give back the question to [indiscernible]. 75,000 guys in the front line and we need to get -- relate to these people. Another 30,000 guys to sell to these. When we think -- we talk about mechanics, but we use an expression, business agents that act in the value chain both the purchaser, the buyers, the sellers and the mechanics, brand is very important and it's a critical success factor. The presence of the part -- these spare parts is a pizza. Nobody's willing -- the consumer is not willing to leave his car stopped for a week. Lucas is not going to leave his car stopped 1 week to be fixed. I've left a car 1 week stopped waiting for a spare part. I bet you all have a story like this, but we don't accept this. It's like a pizza. It must be delivered in 45 minutes. Well, we need stock, a chain that provides the best service at the best cost. This we call ecosystem. This ecosystem, if it works well, you provide good experiences, be it for the end consumer or the mechanic or the salesperson, right? You talked about 12,000 SKUs. The items, those items. To cover a fleet of 45 million. Let's round it out. One auto part is small. 200,000 SKUs. How do you find the correct SKU? Your vehicle model, that was a pain. But I say it was because I want to show you a video where we will uncover a bit of a solution, has started like an electronic catalog. But I will talk more about it because the topic is how to be closer, right? Let's watch it. Yes. [Presentation]

Auto experts. Welcome to the service platform that accelerates your businesses. A true ally of distributors, retailers, wholesalers, mechanics and workshops to facilitate your day-to-day in an intuitive, easy way. Very easy to navigate, several brands available in one place to serve those that need with different functionalities and services to make more agile. Search by license plate. You put your license plate, you find out all the parts available for it. Simple like this. If you want, you can use a comparing filter, comparing products, solving doubts quickly. Where to find? Developed so you gain time, find the parts that you need in the closest point of sales to where you are. The platform also brings instructive videos with tips, information and relevant content for those that sell and use. PDF catalogs, this functionality was made so nobody is left out. Enhance the catalogs you want in PDF, checking the parts you want even offline. And a lot more services and functionalities are coming. Don't miss. Access auto experts, Got parts and no more.

Well, auto experts was born to solve a pain, to find the right part. What's the next step in a mechanic's journey? Where do I find this part? Which price is the part? How do I purchase the part? How do I do better diagnostic? When we look at the ecosystem, we see that up to now, we did a management of it, but without several tools that were brought by the digital universe. When we face the today and tomorrow, it's not going to be only digital. It's not going to be only the brick-and-mortar world. From now on, we're going to dive into the digital world. And auto experts is exactly the platform that makes this connection with all those agents to provide the best service. We're starting a journey. Today, with a digital robust catalog, you can find 4,000 points of sales. We just said about -- we said we have 75,000 shops. So let's say, 14,000, 15,000 auto parts were present in 4,000 -- no, it's a journey. We still have a path to -- a long path to go, but we know the path. And this is what we want to show you. Sergio, I usually say that. It's hard to operate an auto parts. Not consider our brand -- you have an auto parts and not have our brand. The mechanics are going to ask for it. I saw here 36 million access. Well, I was doing the math. It's almost 1,000 access per hour and converts in parts. It sells more than selling. It gets closer to be present. Of course, the brands are relevant, and we're going to sell product. But if you have -- if you're present in the success journey of the mechanic, this will generate a value that will be constants. With the parts we have today, the brands we have today. It's also for the future. We can grow a lot.

First of all, I'd like to thank you. We can share a little bit more about the commercial side of how we operate. I think we have to get short questions. If you have more, there's a QR code. We'll put it on the screen. And after that, we can answer more questions regarding the topic. Very well. Before I go back to Jessica, I'd like to leave things nice and ready for Anderson. And if you could put a return on the screen, that would be really great, so we can make the presentation more dynamic. Thank you, Paulo and Sergio. We'd like to thank Paulo for his participation. Sergio, as well. And Hemerson for mediating in our first panel this afternoon. [Operator Instructions] In a 70-year history, Fras-le has a solid reputation recognized throughout the market, leading the auto parts market and friction material. In the brand systems Randon Corp has almost 75 years of history. So now I'd like to invite the CEO of Fras-le Mobility, Anderson Pontalti, to talk about the synergy and the strength in working together.

Good afternoon, everyone. We apologize for some of the technical difficulties, but it's not going to remove the essence of our event. Thank you, Joinville. This beautiful, exciting city that received us, all our friends, investors and colleagues, professor -- the people from investor relations, everyone who is doing this so kindly. I want to talk a little bit about the past and creating value. As Sergio said, making what's already good very good, but also the confidence that we want to go forward respecting all the stakeholders of Fras-le, whether it be people, environment, investors, shareholders, employees. That's my main role here. And so I want to start by talking about what we've just finished talking about, where our ecosystem are supported by a complete solution which is present in Fras-le Mobility, that Fras-le Mobility is in a place of arrival, not a starting point. So we have a more complete solution than any other aftermarket player in Brazil. The undercard, I'm sure we can navigate other seas with the supply of products. As Paulo mentioned, we have a presence in 18 of the largest distributors in Brazil. We're almost always the most relevant between first and third place. So we have a significant capillarity and market access. But this isn't just true in Brazil, this is true in Argentina. Fras-le is the market leader in many product lines in Argentina, especially the friction lines and the boring lines as well as engines. And there's huge space for growth. This leadership in Brazil and this leadership which we have in Argentina is a situation where we're learning what works here, and we're taking it to other geographies. We've seen this in the Pan-American region, where we have a presence in Colombia and neighboring regions. After we purchased Juratek, we started this journey in Europe, and we're starting this journey in North America as well. Our business and everything we do, everything we think about on a daily basis has to have this word included. We can't not work with synergy. We want to create value at the end of the day. We need to do more with less. And so when we look at synergies. This is part of the Fras-le DNA and Randon Corp. We're not looking at the market. We go after what's lacking. And we want something to work better. So we knocked on the doors of Fremax [indiscernible] Juratek because we understood that they wanted value. They wanted to create value. Respecting the singularity and the strength of each of these companies which joined us. And we want to understand that as buyers, we're not perfect. But the sum of the good qualities of all the purchased companies place us closer to what we desire, what we have in mind. We always say that 1 plus 1 has to equal 3. In synergy, in terms of projects, it's constant. You have to always be learning. We have to be challenging between units, geographies, teams so that we can have a more competitive and appropriate solution. When we look at our brands, Fras-le has a global presence. So over 4 decades ago, we conquered the world when it comes to brake linings. And the Fras-le brand, it's very recognized because of the value it delivers. It's a high-performance product. It's a product with zero recall in the history of -- it's very safe. And I'm not talking about just Brazil, but the world. And so it's hard to imagine this. In Fremax, we had Controil, but with Fremax, we took an extra positive leap in the perception of a strong brand, a premium brand, light line with a very strong position. It's larger than Fras-le. Fremax has a DNA with very quick releases. Controil also brought several interesting things to Fras-le in terms of working with hydraulic pieces is much more complicated, warranties, assistance, mechanical knowledge, et cetera. And so one of the -- this is one of the best acquisitions of a publicly traded company in our segment, to add the synergies here. And so we have very unique expertise where we have knowledge, where we have a flexibility to connect, act more quickly in periods of higher demand and affect results. And with this, you know that there are other markets that we can affect competitively. Juratek also came with new movements that we promised shareholders. With a stronger step towards the foreign market. It's very successful, delivering more than promised. We have an objective of collecting GBP 50 million pounds in a year. But we closed last meeting, with the capture of GBP 10 million pounds in 5 years, already captured in the first work of year -- working in synergy. Also should be here with Fras-le. But this shows us that we want to grow and this is Fras-le Mobility. And this is what we're -- where we're sure that there's space to grow. We continue knocking on the door of companies that we believe contribute value to this brand. We continue with our agenda very active in this regard. The results of all this, we see each other as a company with sourcing expertise, logistic expertise, whether inbound or outbound, which is fundamental to what Sergio and Paulo mentioned. We have the right part at the right place. We want to have the best offer, whether it's manufactured or outsourced. But we want to be the first option for all our consumers. That's our mantra is to be the consumer's first choice. We have a long path ahead of us. There's a lot of synergies still needs to be built. It gives us a sense that we're in the right direction. I moved a little quicker here. Very proud of being part of Randon Corp. They're not just a shareholder. They are our main shareholder with lots of experience, 74 years of experience in the automotive market, especially the Brazilian market. This allows us to have safety and robustness with brilliant minds to help us calibrate our strategic plans. There are many people helping us, correcting us and exhorting us, giving us tips. I think it maximizes all the synergies which are behind the scenes, not just the value chain, but all the others are being consolidated with a level of professional governance that's at the highest level. This happens when we join our efforts. Another thing that's really positive for us is our history of results. It's fantastic, both Fras-le Mobility and [ Randon ]. We have technologies and products. We have Cesar who reports to Sergio and many people separate from our units, the issue of technology so that we don't get distracted on the day-to-day with the latent demand, but that we can think and extrapolate looking into the future. And this has brought a lot of results, and you're familiar with some of them like [indiscernible], which is fruit of being able to share knowledge. And using technology in a joint manner. Solid governance and policies as I already mentioned. We share our best practices and we learn a lot. Together, we share open innovation ecosystem. We our [indiscernible] venture. We have and also [indiscernible], we have all the service area, the entire service area which has various characteristics which will contribute to an ecosystem. And we have an area of financial services bundle that's playing a part. So we think that all these products and services can be shared. We have cross-selling which you don't need to mention. Paulo has not only Fras-le, but also other auto parts. Also leverage, we wouldn't have the same competitiveness in various commodities if we weren't with Randon. And obviously, we have opportunities to have the best funding conditions regarding of the location of the product when we seek a financial product. And a bit of our history just very quickly. I want to say that we're restless. We're never stopped. We've already had Fras-le Mobility this year, Juratek. We've had [indiscernible]. And we continue -- and next year, there'll be more things to share. So we look at revenue growth that's very promising. You have only 10 months so far here with the adherence to the guidance, which is mentioned a little bit ago. But behind all this, we create demand. This is something that is growing the ROI as well. We quadrupled our EBITDA in 4 years. And we are -- we have adequate levels of debt. I acquired companies with low assets for a reason who were less capital intensive. And so we don't want to compromise our working capital in any way, allowing value creation to be front line. We generate cash flow, but we don't consume the cash. This has to do with our strategic movement to improve performance in all our units, growing with market share. We have some of our executive directors here. The secret to all this is the people. We have an experienced team. It was set up before the journey started. It's like the chicken and the egg. We set up a team, and we have a team that can double the size of the company, and they're already in -house. The people that are here have -- and there are several that are not here with the same talent or energy. And this gives us confidence that we can take the company to the 8 billion level, starting from the 4 billion where we are right now. We're going to continue talking about economies of scale, and acquisitions and organic growth. We don't do this at any price. There's a way to do it. There's a right way to do it. This is an agenda that we share with Randon ESG is a significant directive for the company. We shared our goals in 2021 to meet by 2025. And we want to reduce greenhouse gases by 40% by 2030 and 0 explosion in landfill by 2025. We're also committed to doubling the amount of females in leadership role and reduce serious accidents within our factories. When it comes to businesses, we have the obstination to always produce revenue with innovation, new things that can add value to the customer and improve the conditions for our company. When we look at the planet, you have to look at this tripod. We have to look at having a more effective carbon footprint, whether it be the selection of the raw material, the manufacturing process, the disposal, also looking at renewable energy and a circular economy. Fras-le has an initiative in production with technology products that are completely different. We have this new part used for rail equipment, just this technology, changing the raw material and the manufacturing, using less energy to consolidate the product. Just with this item, we reduced our carbon footprint for the item by 43%. If we produce 10,000 brake shoes with this technology, we produce between 15 and 20 normally, this would represent 46,000 kilos reduction in carbon, carbon dioxide with the equivalent of 46 automobiles. It's a small solution calculated within our company. When we look at reverse logistics, today we are collecting around 50 tons per week of brake disks in Santa Catarina [indiscernible] Parana, and starting at the border of Sao Paulo, bringing it back to our soil and bringing the material which doesn't require mineral extraction. We can reverse this in a circular economy, and it's already a significant part of our inputs. And we're just bringing it back and bringing in new part and making -- using it to make new parts. What is relevant and is a source of pride is the green boiler. And this will reduce the emission of carbon and greenhouse gases of Fras-le by 60% just with this project. We're also going to eliminate natural gas used and substitute it with biomass. Just carbon for biomass, we're doing it 2%. And for us, it's our key emission point. This contributes for 50% the goal of 20% of carbon emissions of greenhouse gases. And this project will cover -- we're investing 17 million to be concluded by the end of next year in operation in 2025. People, by far, the most important. We're working diversity and inclusion, separate three topics, diverse, inclusion, self -- and occupational safety, community. Talking about female career that is linked to our goal of having twice the number of women. We have clear, structured goals in the company, over 250 women in this program today, which is leadership in motion for those that are already a leader. And their journey is for women that are not in leadership in position that can understand their calling, their profile. And for each area, this profile makes more sense. Like we have career mentoring for all the women of the organization and guarantee that they have the conditions to navigate as equal as possible. This industry is hard. I'm a mechanical engineer. I've graduated. We have 20 students. We had 1 woman when we did the entry test. We have this need in Brazil. We have time. It's a journey. As the base qualifies and we incorporate more women in the corporation, we improve equal opportunity and we have 4 groups of affinity. It's a group that we want to understand more and make this so everybody can enter happy in a respectful way because it brings a lot. When we look at safety, the work is distant, our goal. The last 2 years, we have invested strongly in culture. Culture starts by sharing information. We have the main risks of the organization are identified and shared among the different people in the industrial areas, and we seek the best solution, the quickest solution to lower the risk level that line that operation. This work is huge. 74 years of 32 productive sites. There's a lot of knowledge, but also many things. They need an effort and work every day. And our community arm, I want to bring this picture, the individual. We intended for research in several units. Fras-le Brazil is the second. We only have Fras-le [indiscernible] and Fremax also has the ecological support of [indiscernible] that was made by Randon 25 years ago. And with this more children can -- we have good practices, removing them from vulnerable situations that we see a lot in our country. And governance, finally. When I talk about governance, we have to talk about product. We put a lot of product inside. [indiscernible], the head of engineering, is going to talk with you. We have invested and grown a lot, investment in R&D. We believe in organic growth, not only inorganic. And this is a belief, always creating value, always seeking a better way to do things, an alternative to get far from the competition. This is only done through innovation. Serious innovation without committing the short term -- not affecting the long term with the short term. This permeates. And when we look at governance, our main shareholders, this makes us very proud. We're not -- we know that our practices in the CPM 586 have a positive adherence. 2023 our indicator is 80.4% assessment we did above the minimum of 78% for a new market. This shows the governance level that the company has with being traded. Since it's under our radar, we believe the investors and analysts can trust in what we report always. About governance, we've talked about [indiscernible]. It represents what we represent. It's important to have a brand represent Fras-le Mobility and all the ecosystem. We have Sunrise project. We're migrating SAP of all of our units that have SAP for cloud, leaving servers, conventional servers going to cloud solution, SAP for Hana. This is happening in the turn of the year. The project is going well. It's not a new system implementation. It brings transparency, governance, robust -- and makes more robust. An important topic, when we look at all the evolutions, risk, corporate risk management well structured. We have several risks we identified for all of them. We have actions, projects, road maps to mitigate and eliminate them or control all them. More important, we call safe connections has to do with cybersecurity. It's our main risk. We declared internally. This is what we have done, a huge amount of investment and actions. We created a safety of information department. We've -- what I meant -- in 2018, we declared when we saw as a risk, cybersecurity. As of May 2022, we created a 3-year road map for everyone to be able to evolve the maturity of cybersecurity in the company and high levels in good part of our investments are [indiscernible] with a dedicated team, our level of governance allows us to say that we are quite satisfied with the obtained results. We are protected, but the threats are always knocking at our door, more modern, more sophisticated hackers and we are learning, constantly monitoring and evolving. This is something very serious in the company. We know how many of our competitors, players and market equivalent have suffered. And we, in some cases, have gotten open doors to talk with the ones that suffered attacks to improve our process and our system to make it more robust. That's what I had guys. I hope I didn't take you delay you from the coffee break. We want to talk about the past, the future. We have more than what we did in the past and not at any price. We must deliver respecting what we must respect. Thank you, everyone, have a great event.

Thank you so much, Anderson. In this moment, we have a brief break in our program and invite you -- those that are watching us online, please stay with us. We will be back. [Break]

The next panel is the division of support for organic growth for broadly Mobility in its strategy. Let's visualize the important avenues for growth in the business without considering our acquisition process. Mediating this process, we'll count on Hemerson together with Guilherme Adami, Business Director for Lights Line and Ms. [indiscernible]

Let's start [indiscernible] asking a question for Guilherme Adami. Guilherme?

As Director of Light Line and friction materials has also -- we know that Fras-le basically -- approximately 50% of Fras-le is composed of friction material. We have consolidated this inside the company, market share that's important in Brazil and Latin American markets like Argentina. How do you expand a line that is so consolidated inside the company?

Nice. Good afternoon you all. It's a pleasure to see difference from the last cycles, tell you about the news, novelties. As Jessica said, we're very consolidated in friction lines. I'll try to divide the answer talking a bit about Light line Friction, in fiction in the Heavy Line, 2 segments that have -- despite having attrition material, the market is very distinct. I will divide the answer in 2 parts. Start answering a bit about Light Line, we have a leadership position in Brazil, well consolidated with expressive market share, as you can see in the screen. This doesn't stop us from continuing to have a path of growth, basically divided in 2 big avenues. Before we seek avenues, we must define what we are building. We have this concern in heavy and light friction is very competitive segment. It's a segment that in the lines of Fras-le we have granular competition with a higher number of players. Even if we want to maintain what we have, we have to do a lot, we do a strategy, we don't design objectives to walk sideways, we want to walk forwards. Looking at the Light Line stock, specifically about friction and Light Line trying to translate leaving our day-to-day, translating for those that are not in tune to our market. We're talking about brake pads that our payer with Fremax. Hemerson is going to talk a bit. It's a set disc and pad that stops the car. Some vehicles work with shoes, especially in the rear brakes, drum brakes. So talking about pads and shoes, Lucas didn't arrive here if you didn't have a pad or a shoe, other components that we like to talk about. It goes through the portfolio management. Those that follow the market, the market -- the Light Line was held back with the pandemic, less launches. Now that they were held back, they're accelerated, new cars are coming in this last cycle. Next few years, all manufacturers are making choices, working their niches, each one of their strategy. This will continue to bring a distinct range of vehicles. The accelerate -- we will have launches accelerated due to hybrid and electric vehicles, new motors, new configurations of vehicles. So management of portfolio and Light Line that looks into Nakata, [indiscernible] Controil, it's a differential. We do this very well. It seems basic, it seems trivial, but it's not. Each vehicle in a same year can have 1 or 2 different pads and manage the portfolio correctly, granularly. It's very important to keep the growth of our operation. We have a very robust process that I can assure you is a model in Brazil and in the Americas, guarantees a coverage of portfolio that's extremely robust. Today, our level of launches is the level of Chinese companies. Chinese today in terms of portfolios are the ones that do the most good management and Fras-le in heavies and commercial line was able to reach this level of fluidity, quickness and speed in development. We are -- the last cycles of 5, 6 new launches, we launched products to the market. This is new money. The money that we liked the most arrive first, Fras-le first, does pricing first and enjoys the first path. This has been a success, the market share is of 2022. It's outdated. I can't let you know because the year has not ended, but we've growth on top of our leadership. This confirms what I'm telling you. We grew well this year. We're going to bring the new number, and it goes through artful management. The new portfolio created in the last 3 years. I can measure, especially in the Light Line in the fiscal volume that we saw Fras-le friction is 15% of our revenue. We want to keep this pace, a strong pace, a pace that makes us proud. So part of management is a way of growth. The second way of growth. Let me skip one in the middle, then I go back to it. Due to several factors and choices, we slowed down on the assembly, the manufacturers market, and we're coming back stronger. We evolved the factory, evolved the dynamics of doing business with the segment that's completely different than aftermarket, as we always highlight here. We learned how to do business differently. We're better prepared in term of product and factory in terms of concept and model, mental model, how to operate the market. We were nominated recently by manufacturer -- automobile manufacturer in Brazil, the main one. Last year, we were nominated, I mentioned an important project with an important manufacturer. The one that we won this year, one of the main platforms are vehicles in Brazil. This project alone gives us 7% market share. We always talk about aftermarket. It's always our main path of growth, but we also understand that after market must drink of the reputation that the manufacturer gives us, the state-of-the-art technology in terms of product and process, we will continue to invest in this path. When we look at the aftermarket level, they are leveraged a lot more in the commercial line. In commercial line, you will see it's almost 90% of market share in Brazil. We don't bring this to the Light Line. It's an avenue to explore. And the moment to explore is very opportune. This is what I want to let you know those at home, we have several factors worldwide at global level that make Fras-le a candidate to enjoy this avenue. We have conflicts in the world. We have a trend of near-shoring due to the pandemic and conflicts and logistic crisis we've gone through. This makes local players in the original market change a bit their strategy. The strategy was more global, that was for the mainstream parallel market ended up benefiting. We saw a change in this, and Fras-le in a solidified way. Also with the weakening of our competitors -- global competitors, we have a very promising avenue ahead of us that we're going to explore in the next cycle as part of our strategic planning. The second path of growth that's very relevant for us, the Light friction. Light is very dependent on Brazil, resilient aftermarket currently and seeing the complexity of building a portfolio in Light, we are going to build the line of 60, 70 SKUs, we can cover a good part of fleet when we're trying to advance in Latin American market, in global markets. We're talking about 1,000, 1,500 SKUs and we created this know-how also. We created a factory of launches. Today, the Light Line can launch a bar number 30 days after the car leaves the manufacturing, 30 days after the vehicles running in the streets, you can already put parts if we had in the market a fallacy. If I can say that the change comes after 2 or 3 years, it's not like this. Projects are not perfect. We have potholes in the road. We have a lot of potholes. We have seen the need of change before the cycle. Many locuses are out there throughout Brazil. We developed this know-how. We're very fast to launch. We lost 1,500 references in 2 years for Latin America. It's in our backyard that we explored. The heavy line, we didn't explore, it was a weakness we had in the white line, we must admit. We're exploring this. We grew 115% in one year. It's 1% of the total market. So imagine now with the portfolio that's created, not only the Light line friction, raising shoes and others, there's [indiscernible] everybody is bringing to you the -- that will freeze the system. Cross selling and aftermarket is very powerful. We're prepared to attack and path was preparing strongly [indiscernible] Also the synergy has opened many avenues for us in Light Line and not only in the point of view of the business, but compared -- we have capacity in the Light Line, we don't have to go a lot for investment. We have a continuous improvement culture in our operations we've gained low CapEX , very low CapEX around 5% a year.

This within the Light Line is very competitive, it's very combative, and that's how we're going to attack it, with launch, with portfolio agility, a competitive factory, a flexible factory. We have 3 operations, one in Uruguay, one in Caxias, and a headquarters in Sorocaba, and this footprint allows us to attack and keep growing. Answer to the Light Line. It's the commercial line, that's not my focus. Representing Alfredo, our colleague, who coordinates and gives direction to the commercial line, but he's in China. We have a lot of synergy. We have a lot we can talk about our other businesses and the commercial line is in even stronger position, it's the leader in Brazil. It the leader in OEM, it is leader in aftermarket with significant percentages, it already has penetration in Latin America that is very significant and a participation of 45% of market share in the United States. We can look at these numbers along with what Jessica says and says, where does it grow? There's room to grow. We have a lot of room to grow. I'm going to divide my answer into 2. It's worth noting that the commercial line, it divides into 2 types of brakes, disc brakes and drum brakes, each has its own particularity and share within these technologies. Brazil, Latin America is a market that lives off of drum brakes. We have this leadership position, and we're going to continue exploring this. This has room to go from 15% to 30%. That's what our goal is over the next 5 years of strategic planning. We also have Europe, which we can explore. Especially when it comes to trucks, we've already migrated to disc brakes. There's still trailers and carriages, which use liner brakes. And so we work in this market share, which is significantly we don't have. We have the market for India and China. We have a growth of Asian fleet, not in Latin America that we don't explore. We were recently in Colombia and it's impressive. The number of Chinese vehicles that are part of the top 10 of commercial vehicles, something that we didn't see 5 years ago with a lot of American European models. This is a full line that is an avenue for us. We're in India and China with factory in the portfolio. I think the main thing for us to not take more of your time, the main driver is the migration of technology. We're #1 player when it comes to drum solutions or lining solutions and we want the same relevance for this -- relevance with the ADB, air disc brakes and for the brake pads. Brake pads we have 2 major investments this year and 2 automated lines, it is very important first to do this transition for technology. These were the biggest investments in recent cycles. We have 2 automated lines with the idea of having the same level of competitiveness. When it comes to linings, no one produces brake lining with the competitiveness and productivity that Fras-le has and the same expertise is what we want to create for the commercial line. Equipment arrive, we're going to install in the U.S. It's already installed actually. It's operating -- started operating at the end of this year. And there are projects for that plant in Alabama. And we bought a second line, which is arriving mid next year and coming to Brazil. We're preparing the factory for this migration. We're already an ADB player and heavy pads. but we want to play a big time like we do in lining. There's a lot of projects in the pipeline. And my colleague is going to talk about that later. We have a pipeline in ADB, it's very strong. The pipeline is growing every year. And Fras-le has been standing out being a very relevant player in ADB. And I can affirm to you that we're going to be successful in this transition. And a good part of this success will go through this pathway. We are already preparing this before with this equipment. We're in the main centers today, main production centers for auto parts of the world. We have a factory in India, which is focused on commercial, another in China, focused on commercial. We have a factory in Brazil, we have a factory in Alabama. Our footprint to do this is ready. We have the formulations, we have technologies and we have capacity. We mentioned this last year, talking about lining. With 0 CapEx, we increased 15%, and we can increase our capacity a bit more. We lived this for some period during the pandemic, living through a restriction in Heavy Lines. And we resolved this with 0 CapEx or minimal, minimal CapEx. Thank you very much.

I have to ask a question from [indiscernible] in shock absorbers, we grew a lot, not just in shock absorbers but other lines, I wanted to understand a little bit about the future. Does the growth continue? What are the opportunities in the content?

Good afternoon, we are going to grow a lot. Before I talk about shock absorbers, we have 3 years now that we've been part of the Fras-le and Fras-le -- put Nakata in gross module. Nakata was entering this ecosystem with strategic investments where we made transformational movements, it put us in a growth pathway. And so how do we -- why do we highlight shock absorbers? That's a key part for our growth. The shock absorber is a market of $3 billion just in Brazil. And if we talk about just the replacement or spare parts, it's $1.8 billion. Nakata inaugurated the factory 2 years ago. And once we switch the factory from [indiscernible] we created a complex and we gained activity, competitiveness and we placed shock absorbers in the growth module. And in the last 2 years, we're able to stay, we're the second strongest player in the market. But we have around 20% market share. In other words, with this strength, being part of this large group, we're going to challenge the leader and we're going to grow our market share. We're well positioned to be part of the group brought us access to raw materials that are much more competitive. We're working with more competitiveness and synergy for distribution. And beyond the capacity which we have in the factory, we have our co-manufacturers, which are companies that are approved to produce with our features and specifications. So beyond our capacity, our installed capacity, we have another 3x to 4x that capacity to grow. And we are already very well positioned in the main distributors and there are various distributors who want to enter with our shock absorbers because when we're part of Fras-le Mobility, we are seen as a shock absorber for all types of vehicles, not just old cars. Shock absorbers are a journey which is transformational for Nakata and it is transformational because shock absorbers in [indiscernible] didn't provide results, but changing the shock absorbers to Extrema, we free up the other product lines, which had to subsidize the shock absorber which can generate cash. Now the shock absorber performs well. And with this, we're growing very strongly when it comes to suspension and steering. Another 4.5 [indiscernible] we're talking about 45 million parts per year. So the shock absorber generating cash grows and makes us to be more competitive. And our second line where we have a broad portfolio of various products to close up to the powerhouse and make a full solution and ecosystem efforts for the market. And not only that, we also like to highlight parts for motorcycles. This was always a marginal business with growth and where the pandemic showed us that the auto parts market for motorcycles kept us active during the pandemic and Nakata ends up being a solution offering powerhouse for motorcycle parts. So we expanded our portfolio. And for the next several years, we have a road map to be completing a full line for motorcycles even entering not just in suspension steering for motorcycles, but the engine as well. So with the strength of the group and with these products, we have a pathway for growth, we have space for growth because we were the first or second, we're not in contest such as this with linings and pads. We will be the second contest in shock absorbers and other products, yes, CV joints, et cetera. Thank you.

Those of you who are with us had an opportunity to visit the factory. What are the substation show in terms of advantages for the company? There's the advantage of people circulating and doing more Fremax. We saw the bus, we had the exchange [indiscernible]. And so Fremax didn't need to switch out again. Fremax suffered some pain of having limited capacity. The company had around 20% of market share, and we made a giant effort, invested around BRL 20 million and we went from 4 million to 4.8 million parts, which is our current capacity. We put in diesel generators to support additional demand. It's energy that's not very good. It's unstable and has various operational challenges and is very expensive. When we did this, we're talking about diesel around BRL 3, now it's more than BRL 6, BRL 7. And ever since we bought it, we started the journey to get the environmental licenses for that expansion. To show you the pictures of where we're doing that is a source of great pride. You have no idea how many meetings we've had with Julio, who is our main person in Fremax in this field, he had a lot of meetings with the government agencies to get this permit. But at the end of next year or the beginning of 2025, we're going to have a plan with 60 million additional capacity. Here is a photo which shows the lower left portion will have a substation. We're already working to get this ready. And so we've mapped out for Fremax 1,200,000 parts, we've mapped out for that unit. Other businesses around 4 million additional parts. And so at some point in time, we're going to have to make a decision thinking about a new plant. We even have a candidate for a new plant. We're discussing what state and what location. We've been checking out possibilities here Minas Gerais, Sao Paulo. We have our business case on hold, trying to add a lot of the opportunities that we see. We have a leadership position, but we can still do a lot more. As an Investor Relations manager, not as Operations Director, I say that we can grow at a single-digit rate, large single-digit rate without thinking about acquisitions, there's a lot of opportunity. We have a lot of markets where we can grow and continue to grow in robustness, quality business, quality margins. Now I'm going to share with you a question about the market abroad. Are there any opportunities there? How is Nakata in this? Nakata will be a global brand. But to be a global brand, we don't necessarily have to have manufacturing activities. We've already been successful and we already created a powerhouse, and we launched Nakata brand products in Cartagena, where we have a warehouse and these parts go through Brazil. Nakata has co-manufacturers developed in various product categories with the capacity to develop manufacturing for any product. We have no barriers to entry other than know-how and technical knowledge of the product and process to select the best partners and place these products. For example, and in 6 months, you put in a full line of motorcycle transmission parts in Colombia in the Nakata brand. And in Colombia, we have a market of 15 million motorcycles on the roads. We're already selling suspension and steering parts from Colombia as well as Argentina. We already have a powerhouse consolidated. We already sell several parts. And so we're just growing more leverage with our co-manufacturers, give us an opportunity to scale the Nakata brand and the model globally. It's not our boldness. With Juratek, we have the possibility to start now to scale the Nakata brand based on our co-manufacturing because this co-manufacturing base has this portfolio. We're just going to adapt our features. And in the future, the U.S. market. So we can scale Nakata without having to think about investment in assets in manufacturing. Using increasingly these co-manufacturers that we have approved where we can develop to meet the needs of all these markets and all the powerhouses, which we will place in various locations.

Great, you have a long pathway to travel. What about Controil? How about the market share advancement in the last several years? What are the opportunities in this business?

I'd like to say that Controil was a second line -- second level B line and now is market leader. Our problem there is capacity. I'm always looking at Sergio saying that we need investment funds. We bought this in 2012. We started investing more in 2018. We increased our market participation. We grew more than 10 points. Today, we are strong leaders in several segments to advance with our exports. We have support from the gains which we had on a daily basis. The video behind us shows some of the improvements that we did in our factories, putting our house in order and being very competitive. It's a difficult product. It's a hydraulic product. So it has a demand level and the care level, it's very significant. Also, it's a braking system, but it goes away from the mechanical contact. There has to be an actuator, it doesn't leak. It's more complex to do a hydraulic product than to do a hard product. And we've had a great journey, and there's a lot of potential. We sell almost nothing to exports. We have our OEMs. We have space to grow in the domestic market. So Controil had around BRL 90 million, BRL 100 million in revenue, now more than BRL 200 million, and we dream of BRL 300 million and we think that may be a too small of a dream. There's a lot of space to grow. And all this shows that we're a company that has organic capacity for growth going from a follower to a leader.

Then we can finalize with the last question.

We believe your -- probably you have the composite materials, then talk about composites. Tell us about compass? Tell us about this journey.

A bit of history for those that are joining now. This -- as a source of research started at Fras-le more or less 5 or 6 years ago and the business is being incubated at Fras-le, we effectively started to transform this study. This platform of R&D at the end of 2021, this will complete 2.5 years now. Last meeting, I came to tell that we started to supply support for mud-stoper and [indiscernible] for trailers. I want to tell you a story. Some of you were at the show and we were able to see the components. Right after in a very fast, very quick time, we were able to prospect this business, close this business, to put the factory there. It was 6 months OEM segment for automotive, it's very singular, not any competitor, not any partner, not any product. We can do this. We're nominated by Iveco, we can say. We have an open partnership with Iveco in this sense. We're supplying all the support for mud-stops for the heavy trucks, and we delivered several benefits, the weight reduction that's significant. The -- a lower number or par number this compass, the form freedom we have to create. We put 3 components in one, supporting the mud-stop and the light support and the license plate support, the journey was fast and the composite technology comes with the process technology and a bit of synergies that Anderson said, part of Hendon Corp brings benefit beyond the synergy of back office and business interaction, synergy and product and service technology, the development of the line was done in-house by [indiscernible] team in partnership with Alton, one of the random corp companies specialized in automation, process development, machines development. The machine, it's not a factory yet, I was joking. Compass is a small start-up incubated in Fras-le. Today, it's a production line and in the future, we will become a unit, a BU with relevance, so we can speak about it, was created by us. It's a disruptive process, a process that we're going to see throughout the world to find something similar to what we did, it's been done by our people. This fast cycle gave us in 6 months of supply the honor of being nominated as the Supplier of the Year. Supply of the Year in all categories of supplier awards they have there, 2 awards, Supplier of the Year overall and also supplier awarded in the technology and innovation. And this brings me to a second project with second nomination we received for second solution together with Iveco with heavies, vehicles that have pneumatic suspension. We created a business, we're preparing the line, very nice that will we use the line that we already have. So we're going to use better the assets we have. It's going to be the first compass export. It's 100% Brazil, 40% with Argentina. Due to them, we delivered in Brazil. We started to put compass outside of the domestic market. And I want to draw your attention beyond the material technology, and we're going to talk more about this, the tooling, the prototyping, the issue of automation of the factory is also by Fras-le, by [indiscernible] technology. Many things are to come. We were an important meeting with other customers. We have a pipeline that's packed. We are not going to promise here, but every manufacturer has their speed, their need, has their pain, reaccelerated here because we had other pains to solve, but we have a packed pipeline. Many hours of engineering have been scheduled already. We have contact with 100% of the heavy vehicle manufactured in Brazil talking about composite materials. What's nice about composite and [indiscernible] was going to mention this. What we're doing in terms of support, like we say, is the first pack of compass. Compass is going to be a lot bigger than that. A lot of new products are being habilitated for '24 through our research institute, [indiscernible] was going to mention, but new things are coming for the next cycles.

Perfect. It's clear that even in a leadership position Fras-le has Fras-le Mobility, there's a lot to grow. Thank you for your participation. Thank you. I invite now Alexandre Casaril, our Engineering Director, to present the roots of mobility.

Nice. Let's go. I came here basically for one message. Fras-le Mobility invests in research and development for innovation, generating competitive differential for products. This is one of the main leverage just to generate an expansion of the business and profitability in the business. Innovation is one of the main pillars of our strategy -- business strategy. Half of our strategic process make mobility, none are anchored in research and development. This is basically the message that I came to bring and I'll try to illustrate now with some historic facts. This is not done overnight. A few cases, a few of them, not many. The next few minutes, we're going to talk a bit about this, bringing a bit of history of our route. We're going to bring 5 historic milestones. In 1995, we launched the first Edmonton free product. It was a big discussion in this industry. They were starting some demand. This debilitated us in the next 10 years to create a position of leadership in the OEM Brazilian market that we sustained until to date. We have 85%, 95% market share for brake pads, brake linings. It started in the '90s and consolidating to the mid-2000s. It is still seen due to these pioneers in the Brazilian market. In 2004, we started a recycling -- recycliability journey to reduce materials to raise competitivity. We have 45% market share for trucks in -- due to the competitiveness that this project brought. We guarantee the recycling of material from losses from the friction line, we stopped sending material to landslide in 2018. A [indiscernible] for the ESG journey, we have this in other units, but we started this in 2008. This isn't very nice. I had a participation -- a small participation in this project in the U.S. in 2005 [indiscernible] the regulating agency for stock businesses reduced in 30% this [brought] for Class 8 tractors at that moment, this would be, in effect, 2009, many of the market players wanted to do a technological change. Market of drum brakes, which is our strength and our partner may differ. There was a movement to change to disc brakes at that moment. We invested in research and development together with our partner, and we offered a solution that met the standards. It's our bet against a market trend and we have currently for drum brakes in tractors over 60% market share due to this. That gives us return until now. 2022, we were bold. We dared to do something that assured to you. If somebody does in the world, it's not very explicit or a meaningful way because it's not widely known. To do a brake, a shoe brake with that phenolic, Anderson mentioned, a meaningful impact in the reduction of emissions of greenhouse gases from cradle to the grave. But in the company, the reduction of the emission of greenhouse gases in the productive process, the reduction is over 80% in our industry. Now in '23, Guilherme just mentioned a bit about compass, we have the first product that -- the first product of composite material, the structural function for commercial vehicles with OEM nomination, you had the possibility to see at Fremax this morning. Max coating paint, nanostructured paint involves NI1 and offers the potential performance several times. It's still competitive paint, water-based with a facility for the production line, for the healthy -- health of the employees, and we're working to make this a business. We are in a journey of innovation. The company invests historically in innovation, research and development or innovation to leverage the business. This comes from the belief -- this is our tripod what supports the process, the continuous process. I would say, the culture we have internally. We have a research center in Caxias City. Here [indiscernible], over 100 people inside focused in engineering distributed throughout the world, [indiscernible] in the U.S. and Netherlands, China connected to this research development in a continuous process of engineering, CTR more than a test field, the consolidated center for experimental engineering for validation in vehicles and IHR. IHR that consolidated as our big hub for scientific knowledge. We go to IHR to connect to several institutions, science and technology institutions, in Brazil and abroad. As I said we have people in [indiscernible] Germany, they were in Canada last week through IHR, a big hub of connection of science and technology, not just Brazil, but outside of Brazil also. Now I'm going to talk about a few cases, research, development for innovation, traditional and disruptive. I'm going to bring a case of traditional, a battle that we won against the disc break that we had against the disc brake. Now we want to have a leadership position in this segment also. We have a strong, robust, competitive position of technology and financial competitiveness in brake lining. We're working to be one of the major players with technology, competitiveness, presence also in disc brakes. The two technologies for heavy vehicles, the drum disc and the disc brake -- the disc brake and the drum brake. We're working to be a relevant player, maybe a leader in this segment also. So we're working in this main axis, U.S., China and Europe. Europe is very much consolidated. China is changing the technology from drum to disc, U.S. also. And we, due to several factors, it's not a legislation specifically in the U.S., but many other factors, the relationship of manufacturers, many things are making that market change to disc brakes. We enjoy another legislation change here in 2015. They started the larger legislation restriction of copper. It's essential for disc brakes. We made a [ batt ]. It was a gradual restriction. We made a batt since we had a weak position in that technological moment and market also go to the last stage of the technology, we would be less competitive in the beginning of the journey versus our competitors, but we would bet that at the end of it in the entry of 2025 in a stronger position. We would take the directs that [ batt ] into the copper restriction would not only be in California and the state of Washington where it's at the legislation, but it would influence the entire American market and other markets also onto Latin America, especially China and Europe. And this is happening. We started this journey working materials. Friction material, we did a technology journey that started in [ 2006 ]. We're investing, testing, investment, research fast investment, research test. This is one of the dimensions. The other is the manufacturing process since we have -- in 2016, our position was weak. We needed a process that was competitive that would put us to be competitive in the market. There are processes that are available in the market, very high technology process, an automated process, which the competitors use, and we bet on the development, not a new technology, but using our expertise, lessons learned from other projects to reduce the amount of investment for the capacity even so with variable costs, that was competitive compared to the market, and it's what we did. We arrive now in the beginning of the party, let's put it this way, where the market is moving, legislation in California restricts the last stage -- '25. It's a moment that everybody is making their moves. And we are an improvement process or already supplying for the main disc brake manufacturers of the U.S. The three systemic leaders, two of them. We have approved products -- two products, three products are being supplied to within SOP for next year. We're doing Lean one product currently. We already have with the same openness players. These are global players. We already have business open in Europe and China the same way. We -- they're still challenging us, and we believe that it's feasible to add. Since the beginning of the journey, the business -- our first approved product was '21 -- between '21, '27, we're going to add $50 million of new business only in disc brake. But now we're around $7 million already added in the business. We want to get to $20 in a few months. We have a journey of getting to $50 million by '27. That's what we're challenging ourselves and we believe it's feasible. This is traditional Composs. We innovated this. Composs is a good example, maybe the biggest example. I won't talk about the megatrends of the automotive industry. It's well known by everybody. I will -- from this recover the belief that it's consolidated, the definition that has consolidated automotive industry needs lightness and robustness. We need lightness and robustness because it means energy efficiency means reduction of emissions. It means increase in productivity, especially in transportation. When we talk about lightness, reducing the mass. We're talking about making up for electrification. Many things are not. When you remove the mass of the vehicle, that doesn't mean it emits less greenhouse per ton or trip, then we need this. The automotive industry is demanding this. This is a big potential for Composs material. It's a big message that we need to leave about Composs. The specific properties of these materials -- the new materials. I was talking during lunch with a gentleman, composite materials are from the '50s. Last century, they were born with the war, evolved consolidating the '90s and the 2000 in the aero's -- aerospace, aerospace industry and their use. They consolidated and they expanded their participation, and we think that this is a moment for Composs material. We have batt and investigated and invested in research and development in real cases. And our feeling, our vision is that is the right time. It's a pioneering journey, but the pioneers will have stronger positions in the future, and we'll have the benefit of entrepreneurship and technology. My comment was -- understood on the next quartile way. We'll have two more certifications with new technologies, new businesses. So we believe that this is a source of new business for Fras-le Mobility. This is the vision of future for this division. I also like to highlight the role of the technology hub and technological certification, [indiscernible] illustrated in our first case with Iveco. And line one to finalize, Nione case is one that you've had the opportunity to see this story. The story is very well told. The small message I wanted to give you is Nione came about after a challenge that there was regarding the niobium oxide. And when this challenge was placed, we had an ability to answer it because of another project that we're working on for 3 or 4 years, the skills that people everything necessary to answer this challenge was placed because of another project. Nione was born because of another project. This is when we aim at the post, but we also hit the aisle. And we're happy when it arrives for us to hit. So this is one of the major advantages of learning how to take advantage and manage innovation. Taking advantage of these opportunities when they appear, when they happen, and we need to pay to this -- are we going to have Nione every year. I don't think so, but we can have others. That's the message that I have today. Nione is escalating to several segments using nanomaterials, not just niobium oxide but other things as well. That's the message I have for you. Thank you.

Thank you. I want to remind you that you can interact at all times with us, online, just scan the QR code on the screen and send a question, we will have our Q&A panel. At this time, I'd like to invite to return to the stage our President and CEO, Sergio Carvalho to talk about our future that was already decided. The future has already been mapped out.

You can see on the screen that we believe we have a future mapped out. You mentioned other opportunities, that we had a lot of clarity through our processes to where we wanted to go as a company in terms of the ambition, in terms of numbers 5 years from now. Strategy for us to arrive there is also clear. It's already been mapped out. There are things in our history churn by accident, they've happened because we're well executing our plan, which we created ourselves. As it already exists, therefore, the title. But just to redeem a bit of this last cycle, I think that Anderson already mentioned Hemerson perhaps as well. We had 2,400 employees. Now we have 5,500 employees. We have 9 distribution centers now, friction material this time was almost 100% by -- in 2017, it was about 90%. And today, it's 48% and expansion of our product portfolio. We have 3 iconic brands that are now 5 brands, and our market cap was BRL 1.2 billion and now is BRL 4.2 billion. And there's still a long way to go. When we look at the guidance that we provided to you, I think it was in February of this year, we had net revenue of BRL 833 million in 2017. Going to BRL 3.5 billion to BRL 3.7 billion. And in these 9 months, BRL 2.6 billion. We showed in the 10 months, BRL 3.1 billion in 10 months. So you can see how we'll wrap up the year in terms of EBITDA of 15.3% EBITDA margin. We had a guidance a few months ago, where we did our guidance to a much higher performance than we had originally planned. And we're looking at around 21% during these 9 months. And our guidance is around 18% to 22%. So it's been exceptionally good. International market had a traditional $130 million. Our guidance was $230 million to $280 million, and the actual number was $209 million in 9 months. We wrap up the year closer to the top line of this guidance in terms of investment of BRL 45 million in 2017. BRL 110 million to BRL 140 million, it is our guidance. And -- by the end of October, we had BRL 74 million with an acceleration in the final quarter of the year. So great results, excellent growth which talks about everything that we've done We have problems like every company can have. We don't want to look just to the past, thinking that we know everything, forget about the future. We live in an environment that changes very quickly. Competition is strong and consumer habits are changing. Technology is changing. If we don't maintain this ability to self-criticize and a desire to improve, that will be the beginning of the end. Therefore, we must pay attention to the future. When we look starting at 30,000 feet of altitude, you can see like you do on the screen, a traditional company but it's a fast-growing company, a financially strong company with a diversified model within the Fras-le universe of all the diversity of the product line and diversity in terms of geography and product and other types of diversity, a very innovative profile, a lot of commitment to ESG concepts, and valuing people and acting very quickly. We make decisions very quickly here. This is a very important part of our story. When we look at the future. We look at 30,000 feet of outstated. We look at internationalization, wanting to increase international revenue, innovation and technology is a competitive advantage. We want growth with responsibility, controlling our debt levels. We don't want to go more quickly than we're able to. We are committed to decarbonization. We want to work with smart materials. I'm not sure if it's clear to you yet, but that's a core aspect with heavy investment, going to be a major business unit, where a lot of confidence when the specimen was done and made and moving in the right direction. And we're going to start our journey. Not that we're going to start to work with artificial intelligence. We already have done this for some time, but we're going to structure our initiatives surrounding artificial intelligence in a more robust manner. We think this is the time to consider and we've done enough experiments in terms of management, in terms of industrial environment. We're going to start a more robust journey regarding the use of artificial intelligence. [ Favia ] was one of the pioneers in the formulation, of the use of artificial intelligence. And so there are various initiatives, specific initiatives where we can work with a plan in this regard. We have a strategy, it's really clear. I think that's a strong point for our processes. We have a very clear vision. We have strategic planning that involves our ESG goals. But with strategic planning, we have a 1-year operational plan and forward for 5 years and 10 years. And when we know exactly where we want to go, that we can achieve the objectives that we want. Some plans are more numerical and operational, specifically the 1-year plan. And then we have our strategic guidance, which reflects the way we think where the differential technology is important. The focus on products for clients are financial robustness, sustainability and being a company where people want to work using these synergies, which has already been addressed by my colleagues. So the future is mapped and we're going to move forward with pioneering spirit in new technologies, developing smart materials. That will be a huge competitive difference and will pay major dividends. You can hear me already listed the advances where all the OEMs in Brazil are working with us, and we're expanding now to U.S.-based OEMs and in the 5 years, this technology will -- something we'll look back on and see that we are right to celebrate. Since the beginning of the beginning of the beginning, it's a new technology, composed within other technologies and overall be developing new technology to the table, emphasis on products reducing carbon footprint. And the second point has to do with internationalization in the presence of relevant markets, internationalization, expansion of replacement, powerhouse and the best offer with brands and products as we already mentioned here. And our powerhouse and diversification. We have a pipeline for M&A, a robust agenda in this regard. We have some projects that are more in the final phase. We have other projects that are in the initial phase. We have more projects and we can manage, so to speak. But we have some opportunities here to talk about some of these projects. What I can tell you is that there's a lot of good things on the way. And until we sign on the dotted line, anything can happen. Until then, we don't have anything, but there's a lot of good things we are expecting in a not-too-distant future, our main drivers are our know-how and access to markets within our know-how, you saw our executives made great presentations. And I hope you have the same opinion, which I do. This is an extremely strong team where everyone spoke with knowledge, and this is one of our strong points. You know how to do things, we have manufacturing as a basis, you have make or buy process. We're going a lot on Nakata in this processes, pedicle competency, technologies and our intellectual property, all those things which we project. And then on access, we have access to the market, the customers, the brands, the portfolio, sourcing and people. All this along with what Anderson said, which is synergy, everything that we do, if there's not a synergy, it won't make sense. Sometimes internally, we joke that our last name should be synergy. It's sort of like a implicit mantra, any project if it doesn't have synergy, it won't bring about the right results. When we've been very happy at adding value, doing more with less. We need to change that 1 plus 1 is 3 to 1 plus 1 is 4. We need to adjust our arithmetic but there's a lot of good things coming. We operate globally. And the purpose of this slide is to show where we participate in the heavy and light line. Obviously, in Brazil, we always have participation in both segments. In South America as well, we work in having in light. In North America, dominantly in the heavy line. We have exports little to the U.S. Yes. and Fras-le sends a little to Mexico, but it's very incipient. We can't consider a strong presence there. When we look at Europe, it's very similar. We have heavy and light, but the heavy is more predominant. Africa and Middle Asia, heavy; Asia Pacific, heavy. The main message is that North America, which is one of our targets. We only act in the heavy line that we want to participate in this huge market, in the light line as well. Said in other words, you see in this graph, the size of the vehicle population between light and heavy that you have in these geographies. For Brazil, [ Paulo ], as you mentioned, 45 million, 46 million vehicles in Brazil. We went to the U.K. and 44, actually is very giant fleet size of Brazil. So we wanted to enter the U.K. But the U.S. with 279 million, Mexico were 35 million, almost the size of the Brazilian fleet as well. Canada, 28 million. This is one of the reasons why we think we have great opportunities for growth within Fras-le mobility. Disruptive look towards tomorrow, the company, which was focused on products. Today is an automotive consumer ecosystem with smart and sustainable solutions, adding value to our customers with sustainability. Most important messages, which we mentioned today, you can see in this word cloud. We have a strategic planning process. We have delivery of results. We have expansion, significant expansion. We have solutions that are environmentally friendly. We've created a powerhouse for replacement parts, iconic brands, technologies, disruptive technologies and things that will make us equivalent to what you find in more developed economies. Our technology is cutting edge for them. It's a cutting edge for them. And a lot of people have hard time believing that. We receive a lot of international visitors, leave with their mouths open. Anderson mentioned this, the team is fundamental. People are the center of everything. And so once again, I want to repeat what I said earlier. The Fras-le mobility team is very strong. There are excellent leaders here. And there are several others who haven't had an opportunity today, that are super strong teams with great talent. And this really gives us lots of certainty that we'll reach our objectives. The strategic pillars not at 30,000 feet, but a little closer to ground is a global activity. We have little activity where 40% of our revenue is international, but we have opportunities abroad and competition is healthy. You saw several people mention that there are several opportunities in the domestic market and the opportunities abroad are at an even more significant scale. Our house of brands and all these iconic brands some of them abroad. And those of you who participate with us for several years, remember how we spoke years ago that we want to create a replacement parts firehouse, you saw Paulo Gomes say that we're one of the largest companies in the replacement parts or spare parts market. We're larger than many foreign multinationals that are giant and well known. And this team delivered what they promised and we're confident that we can deliver on a plan that we have now. I'm not going to repeat everything that was already said. But there's a lot of good things happening in terms of technology and innovation. And just to give you an idea, the American market where leaders with brake linings is quickly migrating to disc brakes. It represented a threat to us. We were leaders in drum brakes, and we had zero participation in disk brakes. We're now trying to go from zero to be the leader in the American market for disk brakes in maybe another year, max two. We want to be more conservative with 2 years? We're going to quickly take on a leadership position for a new product dominated by large companies, leaving from a starting point of zero and becoming a leader in a short period of years. This is a source of great pride. ESG was something we mentioned a lot new products, respecting the planet. And we also talked about the customer experience [Foreign Language]. The customer is a set of everything. If we can learn to deal with our customer transforming their journey and facilitating their life, creating value for our customers business will be increasingly growing for us to increase this growth. We're very pleased with our current performance, and we have a path of how we can go forward. Thank you, everyone. We continue with Jessica.

Sorry if we went over time. Thank you so much, Sergio. We are getting close to the end of the event. Before we get to the Q&A session, I'd like to invite [indiscernible] to come to the stage and Hemerson to receive the [ CEO ] of this edition.

Thank you, Hemerson. It's not just delivering a shield for 22 years. Thank you for the commitment to Fras-le with the market 22 years. And Brazil this has a higher meaning because this shield is given by the companies that do this meeting as a routine finding in the market, answering the questions that analysts have in the moment when the market is growing with good news, that's easy. But the Brazilian market, we have a hard questions to be answered moments. In the last 22 years, we had moments that answers must be given and you were present with the market in 22 years, is a very important meaning to the market, the commitment to information independent of what information you're giving, independent of the question that's coming. So the commitment of the company, this has a lot of meaning. I saw in the results, in the award -- quality award last addition. The main item that made this company win the award was the commitment and being close to the executive -- closeness of the executives to the market. It's not just delivering a [ CEO ] for 22 years, but thank you for the partnership. [indiscernible] management of the company to service us and having this meeting 22 years. We will continue this in this journey. This is what guides us. Thank you so much.

Thank you, Mara and Hemerson. I invite now the speakers to sit in the chairs in front of the stage so we can start our Q&A session. It's mediated by Hemerson de Souza. The people that are in person here can raise their hands. And the team brings the mic to you and those that are watching us online, questions have been captured during the presentation will be answered in this moment. You can continue to send in your questions.

Very well. So let's start. I'm going to give it who's closer to me. Lucas to start, don't be jealous, the others. I'm going to start with Lucas.

Thank you, Lucas. Thank you for the event for the information. A lot of things we see in the last few years evolving. My question, one of the points that you pay attention during the year '23 was what you mentioned in the end session. How much the result of '23 was stronger and expected with a review of margins during the year. And then, of course, our exercise here is to debate what's recurrent, what's sustainable? I think the message is to confirm the synergy information seems to be sustainable. But some people look ahead and have a bias, we see a company at a certain level. We want to understand what's the new level, what of the gain of profitability is sustainable or not? Where do you think is the new sustainable margin level of the company? When I don't know if it's stable or not?

I take that question. I can answer you with several aspects. First, we did create from our results, we have to be vertices, one is legacy. The other is more opportunistic in the good sense. We were competent of being able to seize a market moment where we had high inflation, it wasn't possible to continue to evolve the price and its a moment of the turnaround when there was a price decrease. We were able to rescue support for more vendors in terms of reductions. We were able to keep the price at a higher level for some time. We're giving it back for more in here, we started to do discounts November last year -- but every month that goes by, we noticed that we have a legacy, which is the other part. We think about it the interval that we positioned our guidance speaks about what we believe in the company. The bias brings the impression of the opportunistic. It seems to be bad to say eventually, we're going to see margins dropping. We're very distant from the history of the company. The company did 15% EBITDA. We are adjusted 21.4% or 20.9% due to accounting. It's a different level, very different from what the company was. The legacy stays. The opportunism, we as an executive team guided by Sergio and Anderson, we must be as competent as possible to leave the opportunity, leverage the result above the legacy position that we have a different phase. I think Anderson wants to add, feel free.

Anderson said it very well. I would just like to mention that some of the new technologies that we're bringing contributed very little. It is still -- we're still crawling, they bring a margin a lot higher, twice the traditional margin. The point here is once we -- once the new technology is advanced and gain space, a bigger space, this will bring a margin improvement also.

Great. Thank you. I'd like to thank you for the presentation, its glad to be here. Two questions. First one, I understand with you if there's any other segments that you would like to enter? I want to hear from the market of batteries. Why not enter the battery market, you had this the discussion in the past. It's important to hear from you, how is this currently? And second, I want to hear your opinion about a competitive market? How the competitive market has changed for you guys?

Well, I want to share. Anderson is going to talk about competitive market, Paulo can add if its necessary. Regarding batteries we can start with this, Sergio can talk about the diversity of items we have seek a product that's different. It's a reposition item. You want to start with the battery Sergio.

Yes. Not with Fras-le mobility, but random core, we developed our own battery as part of our system. So we have initiatives in this field, but we want to approach, redevelop the assembly. BMS has been developed. We're developing technologies that will improve the longevity of these batteries, but we know that science through associated materials to batteries evolves very fast. We don't want to invest too much in this segment, knowing that in 12 months, 48 months, there might be a new technology that can make the technology that we created 100% obsolete with random [indiscernible] we do have initiatives. We are selling batteries, but we're doing this in a cautious way. The world is investing billions and billions of dollars searching for alternative materials to light lithium. And there are promising materials in the horizon, and we don't want to invest in something that will become obsolete soon.

Before I answer about competitiveness, I would like to add batteries. Yes, it's not electric. It's quick reposition and its fits our business, but that's not a priority. I would answer it this way. We don't close our eyes to it, but it's not a priority. We understand that there are others that are ahead, when I look at under car solution, where our synergy is higher, we have expansion portfolio opportunities in this route. The transmission line is very promising in Brazil. We can leverage in other geographies. We have the part of control, Nakata for bushings, metal, rubber. There's a lot of space and synergy. Many lines, we are still investigating, be it greenfield or in-house investment. There are many product lines that fit in our thesis. And it's not complete. We have a lot of the space to expand. When we talk about competitiveness, it grew a lot post pandemic, it's notorious. It has been set. I would say that average price practice in the end of this year, are lower than the prices than the turn of the year. We had more discount than price increase this year in average, but the results are here. The results have the current prices. We were able to capture the discounts in the international market with vendors, with the chain with internal productivity. We have revenue reduction due to price already. The numbers, the dollar we forecast and last year's dollar was a bit higher than today's dollar. All of this reflects in one way or another in margin. But I would say we have more conditions than ever to compete internationally. When we did acquisition of Nakata and Juratek, we had access to the competitive sources that disturb the [indiscernible] . Now we shine in Asia. We produce in Asia. We have competitive sources in Asia, be it Nakata or Juratek, Fremax in Netherlands. The geography -- dynamics of geography and Chinese are buying -- trying to recover lost time on the reposition or the eversion of Chinese product in the U.S. market, they want to allocate anywhere. It's important to remember that we were able to articulate our price dynamic and cost dynamic through Asia. We have pressure, but we have more weapons to fight in this sense also.

Next question?

Lucas of [indiscernible]. As they continue with Lucas. A topic that I wanted to explore with you. We saw a lot of data of market share that you shared in the presentation. We see the difference that you have a higher participation in specific lines with smaller market share. I think that is shock absorbers. At the same time, we see a position broadly, which justifies is respective of higher profitability. I want to understand in market share. What's the real space that you see for market share without going the barrier of higher price, how much you can gain in market share, similar to [indiscernible] without having to give price. In whole context, I think it's an important metric needed to show. But the house of 17%, if you contemplate somehow giving a return to gain market or if you can gain market share, including [indiscernible] depending on the sector, these two points I want to hear.

Perfect. I'll pass to [ Montagnoli ] to answer how much market share we can gain without losing price. But I would like to say that we don't do a disclaimer. We don't open for a product line. It would not be very prudent to give the goals to the [indiscernible]. The competitor is watching the -- our mobility. But the premium lines we have, the Fremax, brand that has a great reputation. They have participation of 22% market share but as in line has stages inside it. And I can say the lines we have less market share, we have higher profitability.

I think it's clear that for us, brand is priced, if it's not brand is priced, the biggest -- bigger the reputation, more interest from our customers and the customers of our customers and working with our brands more resilient we will be to changes or price reductions but we must consider that the fleet somehow will age. So if you think about the reason of the price of the vehicle and the cost of the repair, we must pay attention to this. So I will put together two [ talks ] in stock. We're launching new products all the time -- new products for new cars, premium price is higher, great. For other existing product for an old car, premium price smaller. When we promote premium price at smaller, you leverage market share. Does it make sense?

I will answer that Sergio. We have advanced a lot with structures. Acquisitions we made, the Nakata and Juratek are recent access markets to support customers, strong brands with smaller production assets, asset like, this contributes to be able to launch return on invested capital. I would say that, of course, we have an EBITDA margin that is better. It helps a lot. They should return more than investing in assets. We have an intention of growing in this direction with high return margins with adequate market support, seeking for geographies we're not in yet. So the growth is coming from there. And what's organic is more of the same leverage what should bring even more return. When I look at the M&As, Sergio mentioned, we're looking for know-how and access, then we look at synergies. And we have accelerated not only assets like Nakata model, but the ones that had the industrial part because when we put in our platform, in our ecosystem, we can explore additional things, product offer leverage sourcing. The synergy, 1 plus 1 is 4 now, right?

Yes.

What do you want to mention?

All [indiscernible], it has to do with the maturation of synergies. We passed moments. We had a ROIC that was more or less stable then we have this strategy acquisitions -- stress from acquisition of all is, but once we understand the synergies consolidate the warehouses. So -- this helps our management of the supply chain, we get closer to our customers, more data-driven, connected to all this. We sold in one place, we associate that with the supplier that company is very dynamic now to be able to manage the capital which we've invested. The movements which we've done. We're always not wanting the whole set to be like Juratek, but at least partially. And this favors the return on invested capital. We can't forget that we've reduced our fixed cost significantly. We had historically 24%, 25%, 26%. Now we're around 22%. And over the long term, we like around 20% leaving the company leaner. And that's the beauty of synergy doing more with the same structure that we currently have.

All right, folks. Thank you for the event. I have two questions. I want to understand how you see manufacturing? And what percentage do you think you can have in terms of revenue over the long term, looking at co-manufacturing. And the second question, we talked about several M&A possibilities in the markets you're looking at. I wanted to understand how do you look at Latin America. What are the opportunities? In terms of market size, what do you see in terms of being able to replicate what you have here in Brazil in markets, which are more similar in terms of average freight age, the purchasing power of the population, things like that.

So I'm going to let different people on the team to answer. I have one colleague who'll answer your first question and other colleague, who will answer your second question.

First of all, we have to maximize the use of our manufacturing assets. This factory is a full factory. The Market without question is much larger than a small capacity. To do this, we have co-manufacturing, which allows us, today, we have a lot of know-how to quickly allow co-manufacturing to produce their features in all of our product categories. The speed putting products into the market and the speed in which we have to gain market share, today doesn't depend on the assets in manufacturing as we can be used in co-manufacturing. But I think the answer is, first of all, all our factories need to be full because this maximizes the use of our assets. And anything we need to grow is with co-manufacturing. Putting in a number, right now, is hard because what we can do right now is the limit is infinitive because our capacity is infinite.

Let me just add to that, today, more or less 35% of manufacturing. Why am I saying that we're not going to float so much, whether it's 50-50 or maybe 70-30, depending on the M&As, this all affects this. But as I'm able to have stable demand in a particular location where access to market, for example, Armetal when we purchased in Argentina, Juratek when we purchased in U.K. This gives us volume of things which we already produce or manufacture. When I have consolidated volumes, I start to think about the possibility of manufacturing. Obviously, I have the confidence for this so this is the calculation that you're going to do. At some point in time, you're going to decide to make because outsourcing manufacturing is not a marriage. It's just like a dating relationship. There's several risks. You know the risk. There's not a lot of loyalty. There's not -- or there are sometimes where you have some issues over quality control or efficiency in delivering what was promised. We lack some of the maturity that we'd like. There's also a problem in China, especially in China, which I've observed, where we have family transitions. This is usually based on an owner or a person. You have to have a second and third sources. These things are very dynamic. You can't go so deeply and expose ourselves to outsourcing too much or too little to keep you from growing as the market wants to grow.

The second part of the answer was about Latin America. We're very prepared for growth. We have a sales structure, which covers the region. We have over 25 people to sit for all Latin America outside of Brazil. The markets start in Mexico with the most relevant fleets. Colombia is another large market. I've Argentina despite all the economic restrictions. We think over the long term, this will resolve -- be resolved. We went through something even harder in Brazil in the '80s. But I think that as Brazilians, sometimes we don't notice this. Hemerson and I came back from a journey in Latin America, made in Brazil is very relevant. Brazil, along with our brands have a lot of brand power, both in Fras-le and Fremax. We even want to select which brand to use in the region, regardless of the brand to use in Brazil, most relevant brand we have in Latin America is Fremax. A lot of the -- as we sell with the Fremax brand, with the reputation of Made in Brazil, plus that, it's very valuable. We did a little homework and we want to manage our portfolio better and guarantees full success. I think in 2, 3 years, we'll be telling a great story and we'll talk about M&As as well.

All this is related to the access to markets, which are so great, we don't have relevance. The Mexican market is even more than what we showed here, almost 40 million vehicles, portfolio totally different than Brazil, but with similar aspects because for a long time, in Mexico and Brazil, exchange manufacturing basis. There are a lot of products manufactured there that are made here and vice versa. It's very complex to do this alone. But I think that in Latin America, Mexico closes the circuit. We have a relevant position in Argentina and Colombia. And the other countries wouldn't bring to us any significant growth. We went past our scheduled time. It's -- so we're going to open for a final question. I like you to be quick. We have some of you going to another event tomorrow. So you have flights to catch, we don't want to harm anyone. So we're going to go with one more question. And if you want us, email us a question, we can answer it at another time. And if we hit it from Bradesco.

I'd like to ask about the growth avenue in OEM, I wanted to understand Fras-le, 3 to 5 years from now, what do you see that this segment will represent? What percentages are you thinking of -- and related to this, I imagine that the changes in regulations and the product requirements are more relevant for the OEM. And I wanted to know if there's anything else related to the area, which would be a change, it would be relevant for you guys?

As [indiscernible] mentioned that not only is our Head of Technology. He's also responsible for OEM. I think that Anderson can talk about this in terms of the size we want to have with OEM and [indiscernible] unit regarding the features.

The questions may be centered around the light line. I don't know I'll start then maybe Anderson, one front that we're facing once again, is the light line and disks and batts, we decided for several reasons. The possibility of volume. If we do our work right, we'll have a long-term business. So our vision, which we established as we can't fight over less than 25% of market share. That's the challenge which we brought internally. Once we decide to participate in the market with all the resources and now everything that we showed you here today, with our research center and all the other strengths, we can't allow less than 25% market share. That's what we're going after in the next several years. Composite journey is very connected to this. It's hard to put in a market share. We started supporting mud flaps. This -- charge is 5%, 6% of the market, will go up to 7%, 8%, and we have open opportunities to develop with 6 of the top 10 trucks in the Brazilian market. And so we have view of other components as well. We talk about this. We can be even more clarifying in talking about market share.

You mentioned the number 25%, that's our target. I think that -- looking at pads and disks.

I think that your question, what would be the market slice for Fras-le. We want at least 25%. I think that friction, we're not going to change a lot this 12% and the revenue of the company, we're going to keep growing in replacement, very aggressive in how we're growing, composed, don't have any similar -- composites don't have any similar product. And so we love OEM, because it gives us the chance to leverage replacement in terms of reputation and premium price, but it also pulls us to deliver quality and value with excellent performance. This will bring us a great differential in the market, remembering that all the parts that we sell, you sell one at the OEM and 7, 8 in replacement at a higher price than what you sell to the OEM, always 10, 15% share.

I think there's time for one more question. Last question.

I wanted to do a follow-up regarding the first question of Lucas related to the margins, the dynamic of the margins. I think we can congratulate you for your excellent performance. But at the last quarterly release, you commented some factors which contributed to this margin. I think that there was the aspect of costs. There are also other synergies that you mentioned. So to follow-up, I'd like to understand a little bit about how much is a cost dynamic and how much is synergy. We had a jump in 5% of gross margin. If you could explain how much is related to costs and how much is synergy, that would be interesting. And the other thing I wanted to understand is looking at investments from here forward in terms of CapEx, we have guidance for 2023. Historically, looking at the company. We have always done investments based on generation of operational cash in a relatively conservative manner. I want to understand from '24 onward, what are the premises that you'll consider when you think about this CapEx amount.

I want to concentrate CapEx is always guided around 25% -- around 20% to 25% of operational cash flow. I think it's necessary. But as we buy assets, they don't require such investment, we are at level 30. We modulated around 25, and I think we'll follow this obviously, new projects might demand more. But we want the operation to evolve. When it comes to the gross margin, I always repeat that there's more legacy just synergy and operational skill and the productivity, which we achieved and being more efficient in switching out our sources, all this productivity. There's more legacy there than opportunity. I'm very comfortable. I think we're going to have a company at another level, it's competitiveness with our customers. We need to sell -- does not get increase margin if you don't sell. So I can't separate out what's cost or what synergy, but I can tell you that it's a lot more in terms of the whole collection, in terms of joining all these aspects than any one opportunity. Very well. Those of you who didn't have your questions answered, please seek us out for us to do this through our investment team. I'd like to thank everyone who is present and joined [indiscernible] at this great center for innovation here in the [indiscernible]. And I'd like to thank those of you who are with us in our YouTube channel. We had a great audience today, and we're very happy with the team to be hosting this event for Fras-le mobility. Once again, we're always available to answer your questions. Thank you very much. We'll close now. [Statements in English on this transcript were spoken by an interpreter present on the live call.]