Frasle Mobility S.A. ($FRAS3)

Welcome to the video conference of Frasle Mobility to present the results of the fourth quarter of 2025. Before we start, we'd like to say a few important announcements. This video conference is being recorded. And after it's finished, it will be made available in our website, ri.fraslemobility.com. [Operator Instructions] Furthermore, we iterate that the information discussed in the video conference are not a guarantee of performance and involve risks and uncertainties as it refers to future events and is therefore dependent on situations that may or not occur. Thank you for joining us for another results video conference. Present with us today, we have our President, Daniel Randon; our CEO, Anderson Pontalti; Executive Director of North America IR and M&A, Hemerson de Souza; and our IR specialist, Jessica Cantele; and as a guest, the Director of IR and Finance of Randoncorp, Esteban Angeletti. Now I give the floor to Hemerson, who will begin the presentation.

Good morning, everyone. It's a pleasure to be with you in another Frasle Mobility video conference. Thank you to the analysts, investors, and partners who are calling us. I inform you that due to difficulty of connections and flights, Pontalti will not be able to participate fully in today's meeting. Meetings and agenda abroad. Unfortunately, the connections and flights don't work as expected. We continue here. As soon as possible, he will connect, but not likely. It's important to highlight that 2025 was a very important, relevant year for Frasle Mobility. We made relevant decisions simplifying the structure when we decided together with the shareholders to approve in the general assembly in December, the incorporation of Nakata and also the update of Fras-le S.A. to Frasle Mobility S.A. These movements, they update, reinforce, and bring a different seal for the next cycles. We want to be more simple. We want to be more efficient, and this brings a connection to what we designed for our strategy. Obviously, the incorporation also bring operational, economic, and financial benefits and also tax benefits like Lei do Bem and the amortization of goodwill and capital generated approximately BRL 10 million impact on tax. 2025 also was a very consistent responsible progress when we look at ESG. And emblematic example of this, we closed the year of the Green Boiler recognized by Automotive Business Award, a project that we invested in 2024 BRL 17 million that replaces natural gas with biomass that's renewable and allows us to reduce 60% of emissions of Frasle Mobility, 10,000 tonnes of CO2 approximately per year, and reduces the gas consumption in 440,000 cubic meters also. We had a close and transparent communication throughout the year and Frasle Mobility Universe 2025 in a hybrid format -- in Sao Paulo in person, but a hybrid also connected with a lot of people, deepening our strategy and a long-term plan, including details on the recent integration of Dacomsa in Mexico. Going to the next chart. We bring and extract our numbers, the results, and goals that we proposed when we showed our guidance -- published our guidance in '25. We changed it in the middle of the year with net EBITDA of BRL 5.5 billion. The guidance had a cap of BRL 5.8 billion. Therefore, in interval that we expected the same way external market to BRL 520 million of our revenue in the middle of the range from BRL 500 million to BRL 540 million that we had published in our guidance. Closed the year with EBITDA margin of 17.8%, also in the range that we proposed, and investments around BRL 190 million in the middle of the range that was designed when we published this. And it's important to emphasize, we had a complex year in many dimensions, and we will detail later these aspects, especially the line, the commercial that's related to manufacturing. I remind you that 7% of the Frasle revenue is connected with -- to sales with OEM and the heavy area occupies 90% of this total amount for this market. It was hard with drop in production in the main markets where we act, especially Brazil and U.S. Especially in these 2 markets, we had a reduction in demand, also in spare parts in heavies, and partly, that's 25% of revenue. Also, we had a complex year regarding exchange rate and other agents in Argentina. We're going to detail this more. But the conclusion of the guidance bring us the joy to present to the market a historic year where we consolidated the acquisition of the asset purchased by Frasle. We had very good integration. We're going to detail in this meeting. In this -- in the 6th Slide, we have some highlights of the quarter. We should mention our leverage closed in 1.5x, a reduction of 1.1x. We cannot say it's half, but we reduced a lot of leverage this year due to several actions that are still being taken, but the results are seen in this quarter with more working capital. After our acquisition, we have space to combine businesses. The invested capital is around 14.2%. Adjusting the effects of the acquisition, we're talking about almost 15%. Obviously, invested capital here is higher due to the relevant acquisition that I mentioned, 95.7% for the fourth quarter in '24. Dacomsa, we're going to detail it more. We announced the first wave of synergies to implement sales offering discs of Fremax brand and brake pads produced in Caxias do Sul and the biggest plant of friction for commercial vehicles in the world, where we produce Frasle brand and very proud now to produce Fritec brand partner right before the acquisition, but now with Frasle brand. In domestic market, the end of the year recess and destocking in the OEMs had a higher cost of capital, made life a little bit complex, and the impacts, despite small, are perceived in our revenue. I reinforce here, very connected to the heavies line and Argentinian market as a whole. But during the year, we were able to maintain positions and also increasing our market position. I reinforce this because I want to tell you that the company has great support, maintaining its position. Obviously, we're not immune to these hardships in a complex market in some lines, but we are resilient with geographic position, diversified portfolio connected to the consumer market, an attractive market, and we're able to support moments of instability in these markets. External market, higher competitivity for price. So consumption is cautious due to macroeconomic issues. I don't talk about loss in position and price war, no. On the contrary, we have grown in some lines, including the consolidated ones. I pass the floor to Jessica that will present the results, and I will be back to comment a part of the results. and for the Q&A.

Thank you, Hemerson. Good morning, everyone. Thank you for being with us in another results presentation. Starting with net revenue, this slide, I'm going to mention the fourth quarter and also the year of 2025. We closed the year, as Hemerson mentioned, with a net revenue of BRL 5.5 billion. The growth is 38% compared to 2024. This performance was mainly supported by the acquisition of Dacomsa, but also by disciplined commercial strategy, which allowed us to move forward, registering organic growth of 3.3%, even in a challenging macroeconomic scenario, with volatility in external markets, interest rates high in Brazil, exchange rate effects, which highlighted our resilience and growth capacity, even in nonfavorable environments. When we look specifically at the fourth quarter, net revenue was BRL 1.4 billion with growth of 25% year-on-year. From an organic point of view, the quarter reflected a contraction of 8.6%, and this was influenced by exchange rate effects in conversion. The real appreciated almost 8% against the dollar in a period that's more cautious in the U.S. and Mexico market and more competitiveness in the Argentinian market. In terms of quality of revenue, the quarter maintains the structural characteristic of our model from the dominance of spare parts, 93% in this, and OEMs has 19% (sic) [ 7% ]. When we look at our mix of the portfolio, one of our strengths given that diversity, which helps to explain the consistent performance throughout the year. The volumes are higher compared annually in all family of products in the quarter, and in the year with the strongest growth in components for engine transmission and powertrain. This reflects Dacomsa's consolidation that happened in January this year. So in summary, we had a year of scale expansion with record revenue, organic growth that's positive in a nonfavorable scenario and a fourth quarter that reflected occasional market pressures. I'm going to detail in the next slide, within the year, we had 2 very distinct semesters in terms of market and demand. The first quarter more robust with consistent demand. And starting with the announcement of tariffs imposed by the U.S. government, the market felt the uncertainties and became more cautious, which was reflected in demand, mainly in the heavy line in our main markets of operation, which are Brazil, United States, and also Mexico. In the second semester, there was also a slowdown in restocking in important geographies such as Brazil, given the maintenance of high interest rates and the need for distributors to adjust their working capital. Even with this scenario, due to our ecosystem and uniting the brands with reputation, market leadership, service level, and customer service, the set of attributes sets us apart. With this, we were able to boost our growth even in an environment that was deaccelerating with our distributors because they choose better product they will put in their shelves. With this, they choose reference brand with reputation, which boosted this growth in the light line. Another point, the opening of the Argentinian market generated a better supply region. And as a consequence, the competition intensified in this market. Although we had an increase in volumes in the region, revenue didn't follow this movement this year. In addition, we ended the year with the consolidation of 11 months and 14 days of Dacomsa in the company's results, which is our main positive leverage here for the result of BRL 5.5 billion revenue in the year total. Moving to the next slide, I'm going to talk about the internal and external market without being too repetitive. So the result of the internal market was the commercial team's work with price repositioning strategies, portfolio development, greater availability of products. We should remember that in the second semester of this year, we put capacity in the brake disc line in Joinville at Fremax and also especially the capacity and the power and reputation of our brands, the distributors, as I said, they qualify their stock better when credit is restricted and our brands are reference and market leaders, they end up benefiting from these movements contributing to the improvement of results in our internal market. The year-on-year decline due to seasonality of period where we had collective holidays of greater scope this year. And you should remember, we had the shutdown -- system shutdown at the Nakata unit due to the migration for SAP. This was shutdown period, but some operations had to stop before to make feasible the migration. Regarding external market, we spoke about it. The result is leveraged strongly by the acquisition of Dacomsa and the main retraction in the quarter and the year from Argentinian market. Going to operational performance now. This slide shows the bridge of the EBITDA from '24 versus '25. The main positive leverage or drivers was the increase in net revenue, reflecting the gain in scale, the contribution of Dacomsa in the year's consolidation. This growth, however, was partially offset by the increase in COGS, which generally reflected mainly exchange rate effects and product mix. It's worth mentioning here, especially of the fourth quarter, the quarter that was marked by profitability pressure with lower margins than observed in previous periods. This is mainly explained by 4 factors: first one is a less favorable mix with a greater share of lower value-added items; the second one is the devaluation of the dollar against the real that I mentioned before, the devaluation is 7.5%; the reduction in working days in December due to collective vacations in large parts of the operations and also the system shutdowns; and the reduction in sales volumes destined for the commercial line, especially destined to the United States. So the elements help to contextualize the margin composition for the close of '25. When we look at operational expenses and revenues, they increased in nominal terms following the larger scale of the business, but with discipline, the dynamics remained controlled in the reading relative to revenue. In sales expenses, there was greater commercial intensity and participation in events. And administrative expenses, the increase reflects the structure necessary to support the company's expansion, in addition to expenses related to M&A and expenses associated to the ERP migration at Nakata. Finally, looking at the one-off items, we highlight the business combination of Nakata in a value of BRL 7.2 million in this quarter and the impairment of BRL 400,000 in Alabama operation. Considering also the one-offs like processes and sales of assets, the impact is a total of BRL 16.5 million in reconciliation. Considering these effects, the adjusted EBITDA will close the year of '25 at BRL 975.1 million with margin of 17.8%, maintaining a solid level of recurring profitability and reinforcing the operational generation capacity of the business. Now going to the next chart, talking a bit about the financial performance. This line explains the variation in free cash flow from '24 to '25, the main factors that impacted cash generation during the year. In '24, our cash flow was positive in almost BRL 200 million in '25 and the year ended with a retraction of BRL 1.7 billion. It was a year with pressured cash due to capital allocation and consumption of working capital associated with the company's new scale level. Starting with the bridge on the positive side, the operation brought a significant contribution of EBITDA with an effect of over BRL 300 million in the annual comparison. Going to the investments, the impact was almost BRL 25 million, reflecting the main initiatives of productivity, modernization of machinery, and also projects related to sustainability and health and safety of employees. The CapEx total was BRL 190 million. Subsequently, the financial results had a significant negative impact with higher level of indebtedness and higher financial costs to capture credit higher during this fiscal year. In terms of income tax and social contribution, net profit is 11.8% in '25, mainly favored by tax benefit related to interest on equity, which helped to partially mitigate the financial impacts on net income. The variation in working capital also consumed cash during the period. It's worth reinforcing that the company ended '25 with 66 days of working capital requirement, higher than '24, mainly influenced by the inclusion of Dacomsa, which operating model has characteristics of a distribution center, requires a higher stock, demanding greater working capital. At the same time, it's important to highlight that throughout the year, we implemented strategies and initiatives to reduce the need for working capital. And in the beginning of the year, this result was 106 days, and we finished the year with 66 days. So a reduction of 40 days in this interval where the greatest gain was in the stock line and suppliers -- inventories and suppliers. Another point, and maybe the main point, in the free cash flow is the block -- capital integration block, which totaled a retraction of BRL 1.8 billion. This mainly reflects the disbursements of M&A, the acquisition of Dacomsa was BRL 2.2 billion, and is partially offset by the net inflow from follow-on realized July last year an offering of BRL 231 million. Now moving on to the net income and net debt result. The company ended the year of 2025 with a net income of BRL 283.2 million and a net margin of 5.2%. The main pressure came from the financial result, reflecting the higher cost of debt in a high interest rate environment, combined with increased indebtedness and credit volume contracted throughout the period. Moving on to the capital structure. The graph on the right shows the evolution of the net debt and leverage throughout 2025. The peak leverage was in March. We are showing the period from March a leverage of 2.6% (sic) [ 2.6x ] and the company ended December with 1.5x, an important reduction of more than 1.1% (sic) [ 1.1x ] throughout the year, reflecting mainly the operational generation and the capital management movements that were executed during the year. Now I return the floor to Hemerson that will talk about -- a bit more about the first year of Dacomsa integration, and we'll continue the presentation.

Thank you, Jessica. We had a different year in many aspects. And obviously, it's not a simple year, a year of many good things. Also I would like to update you regarding the synergies mapped and how we expect them and the impact of them during this year and how this is a highlight in the next years. It's important to highlight, we have already brought this data. It was smaller in November last year when we did the Universe Frasle Mobility. So I'd like to rescue this model, with discipline every quarter, showing the effects that we are having from this. The plot in dark gray shows the expectation we had during 5 years of what could be the integration we would have in the year of 2029, approximately $5 million added to the last years would give us a percentage close to BRL 300 million, the number that we estimated in 5 years of synergies -- adding the 5 years. After 1 year of integration, the Dacomsa acquisition was January 14 in 2025. Therefore, closed 1 year now last January, but it didn't close a year of the work fronts that involved the integration that were announced in the end of March. After 1 year, almost we have mapped out $20.5 million, a percentage above what we had mapped out for the year -- for the end of the fifth year. I highlight here that the synergies already start to compose the results of Dacomsa. And obviously, they're not immediately set or put because during the year, they will become material. One example of this, but when we go to the site and we have more synergies is in the front of finished products, we call co-manufacturing products. Obviously, once you visit the co-manufacturers, the vendors, you align your product portfolio in adequate according to the market specifications, which are different in each geography and you make an order, there is some time before you make an order and the order arrives. First was October last year and the deliveries happened between the end of January and the beginning of February this year. Therefore, we are already selling products with cost level better than we had before. But we still have old stock. And once the old stock are concluded in sales, the reflect is seen faster in the results demonstration from the operation. I reinforce this because during this year, other orders are being made. some, for example, were forecast for August to arrive in September or August or September. That's why they take 6 to 24 months before you have full margins combined in the results of the DRD of the company. Another important point, not all of the BRL 20.5 million are synergies just from Dacomsa. Once we combine volumes, a part -- the majority stays with Dacomsa -- is with Dacomsa, but another part benefits the current Frasle Mobility operations like Nakata, Fras-le, Fremax, Controil, the units we have abroad like Juratek in U.K., 85% directly from Dacomsa and another part is combined in other geographies. Another important point, the synergy -- cost synergies we have not necessarily go directly to benefit the margins. They benefit the growth. As a consequence, the return on margin we have as a goal to improve efficiency and margin, 60% in terms of savings, the other 40% to give to the market the condition to award us with more exposure with higher market share with better margins as happened in Fremax integration and Nakata integration also. We expect also in Dacomsa, we will see this again. We evaluate. We have a few synergies coming from revenues. As I explained at the beginning, the 2 products that we started to offer are connected with a line of light linings in Mexico and premium disc Fremax brand also. But we started the Eagle project to sell in the U.S. more. We have -- it has brought results, but it's not fast we have mentioned. And the expansion in Latin America also, we still need to have the portfolio in this front. This will bring returns fast. We have adjusted inputs, but we have to do an operational efficiency and automation. When you -- in Mexico, we have 33% in brake pads. We are market leaders in Brazil. We have 46%, 47%. We dream with this position in Mexico. It's possible to do because we can increase. Brakes in Mexico were 30% of revenue. But as we advance and grow our position, selling more brakes means having less margin because we have to have the wave of automation and efficiency. Basically summarized in 3 points: reduction of complexity. I mentioned this many times; an adaptation of formulation that are made in Mexico; and finally, a critical look at production assets that will demand not only investments, but readaptation that are important for us not only to -- for the Mexican market, but the American market with huge potential. The pace of integration is very, very good, and these results will be seen stronger this year. Another important point, we were able to occupy the spaces due to the leaving of relevant competitors. It's the case of the ending of product line related to brakes from First Brands, a known market case. First Brands with American brake blocks brand was a leader with blocks in Mexico. And we are together with partners that are selling there already, but with Fritec brand also seeking to occupy as much as possible the space left by this competitor. I can anticipate, we didn't close the quarter yet, but I'm very happy that it's possible that in the first quarter results, we can show strongly how we're occupying the space. We have, as I mentioned, increased the offer of products outside of Mexico. In the United States, this has been stronger, but also in Latin America as a whole, we have starting more sales this year. With this, I finish the update chapter regarding Dacomsa integration, and I go to this slide, we update our outlook for the next -- for the year of '25 (sic) [ '26 ], but for the next quarters as a whole. I've mentioned the integration continues focused in the operational synergy. We are in a good level, good track, and very connected above expected, as we mentioned. Less than 1 year of integration reinforce this. The results are coming strong. Dacomsa last year closed a result very similar to what they did in '24, good margins. And when we remove the one-offs or the cost of integration, which involves consulting fees and other aspects, Dacomsa did a better year operationally, reflecting a bit of the synergies already. We won't give Dacomsa numbers separate. We will do this if there is a meaningful event because it's an operation that is a part of the whole. We have the pleasure to share that, yes, the synergies results, this will be seen as consolidated Frasle as a whole. We should highlight that the light line in Brazil, when we talk about spare parts, 75% of what we sell in terms of market is still very resilient and has been sustained of gains in market share with the distributors due to the dynamics that we offer a competitive portfolio, even if we can see an economic difficulty that's moderate. It's notorious that brake items, you don't have elective items that you cannot delay the maintenance or items related to the driving of the vehicle. This continues strong, especially in the light line, we're growing our positions. As in Mexico, half of last year and the end of the year last year, we see that higher price maintenance that can be delayed, the families on a tight budget end up doing this. This by any means, hurts the spare parts market that continues to grow. The fleet is growing. The fleet is getting older, and this is always positive. But yes, here, we see the strength of finding in the market space to grow even when the market is a bit more skeptical. And the short term, with discipline, we've done an asset management very active, developing the portfolio, trying to price adequately the items that needed to be adjusted, and obviously, looking at our market position, sustaining the volumes, maintaining competitiveness. I should highlight that there are 2 important things that can affect in a small way, but it's worth mentioning. We showed the January results already, but we have important ingredients there. In comparison of the heavy market that was very strong in the first semester of '25 and starts '26 slow compared, we'll keep in the first semester -- we'll maintain in the first semester. This brings to us -- we need to look for space in other geographies. We've done this with discipline. We have the month of March that is very well still in the incorporation of Nakata, implementation of new ERP, especially also, it's not mentioned here, the implementation of all stock. Structuring movement for the Nakata business that will bring more competitiveness, reduction of costs, improving processes, and brings a little bit of instability. So we have not figured this out completely in January. We continue with a little bit of instability in January, very close to ideal already. We hope it won't affect the results during the year, and we will recover easily. Finally, before we open for Q&A, we have in our next chart, and I share with you the expectation for the year. We have moderate optimism in the maintenance of the growth rate of the company. You saw that we grew organically a bit less this year in the year of 2025. We're reporting now and talking about this, we believe there is space to maintain the level of growth that we proposed in a consistent manner and our guidance reflects this. We have good things happening in Mexico, good things growing in the lines that we gain market share. We have contracts with OEMs. We continued with a very strong position. And we maintain the perspective to grow a little bit in foreign market with the increase in the portfolio, expansion of portfolio also in Europe. And obviously, there's always an alert with geopolitical uncertainties and lower demand in a few markets, which is the case of the North American market. Our margin expected for the year varies between 17.5% to 20%. We have a price of sale that's very stable. We have capturing the synergies in Dacomsa that will be a part of this result, as I mentioned. And we will seek, where we can, efficiency, operational efficiency and productivity in terms of cost and expenses overall. These are always projects that are continuous. We focus with higher emphasis like the second semester last year that should bring results this year. The investments, we continue cautious with a forecast of BRL 170 million to BRL 210 million, maintaining the manufacturing, increasing automation. Now I'll finish. I'm going to open for Q&A now. And in the end, we have a message from the President, Daniel Randon, that recorded for all of us as a demonstration of what was the year of '25, reinforcing the positive expectation for next year. Monica, it's with you.

Thank you, Hemerson. Our first question comes from Gabriel, sell-side analyst of Santander.

My question is about the margin. There was a difference in terms of raw material in this quarter in stock. You can tell us a bit more the mix and the co-manufacturing issue, how that impacted the line, if there was any impacts that are relevant? And the second one, focus on guidance, you can mention the main factors, talking about range in revenue and margin, special focus to perspective on USMCA and the exchange rate. That's it on my side.

Thank you, Gabriel, for your question and your participation. I'm going to start answering the question about margin. And I will add gross margins, then guidance. When we analyze, Gabriel, gross margin, especially of the quarter where we had a higher gap in the year, we maintained the gross margin above 32%. I don't know how many years in a row, but we were able to maintain this gross margin for some time, but the semester was affected. When we look specifically at raw material, what is the main impact? It's the product mix where we have a higher participation of lower added value products, as I mentioned, I will mention a few examples to make it clear. For example, the Controil line talking at the co-manufactured, as you said, the hydraulic line, we have a higher participation of items that are co-manufactured this year that have -- the margin is lower in these items. When we look at the consolidated and relevant impact, we have Dacomsa that in this quarter specifically ended up having a mix of sales that has higher friction material sales. We know the efficiency of their manufacturing of friction is not the same efficiency from our factory in Caxias do Sul, the biggest friction material factory. And the mix in that operation ended up hindering a bit when we look at consolidated terms. The other impact that we can be seen here is the exchange rate, Gabriel. There's nothing expressive when we look at related to the inflation. The year was very stable in the consolidated in terms of raw material. But the exchange rate affected the conversion of the export margin, which is over 50% of our business. So when we look at the decrease in the gross margin, it is impacted by these 3: the mix, co-manufacturing, part of conversion of exports due to the exchange rate. Now I'll let Hemerson add and talk about our guidance for '26.

Jessica covered well overall margin. We always make choices as a company for growth. We look at a large diversity of products. We focus always, as much as possible, to be a company with a geographic exposure that's good in mature markets and opportunity markets, emerging markets, Brazil is the best position. But in a few moments, you have specific performance in a few lines that can impact. And Jessica mentioned this. There's nothing structuring here. There wasn't any change in the dynamics of suppliers or inflation that could bring a red light in terms of an alert. We continue very well here. And during the next once this is equalized, the margins will come back to the level of margins that we usually have. Regarding your question about guidance, we have moderate optimism for the year to be very frank. And I understand that the main risk for the year is connected, yes, to exchange rate and dollar. Real, that's more valued. We have a lot of exposure to external market. On the other side, we were able to -- and when we talk about margin, give a good balance because we have a level of purchasing and imports that's good in all geographies due to the model that we have which is a mix of own manufacturing and co-manufacturing. Today, we talk about 40%, 42% co-manufacturing, and the rest 58% of own manufacturing. But in our own manufacturing, there's a lot of raw material, the use of oil and resins made with oil that can vary -- your costs can vary and you have to adjust prices. We have a good expectation to grow our sales in some geographies in the case of OEM that I already said. We have celebrated deals last year that will start stronger this year. Obviously, we forecast to grow suspension, steering, brake discs that started around August-September. We have a year with this -- a full year of sales of blocks in Mexico. It's not so relevant, things that had the expectation. When we talk about foreign market, the uncertainty is in the North American market. We probably won't have a strong production revamp. The customers are destocked strategy last year. Now they're buying more. Our gaps will be smaller than we had forecasted. Initially, I mentioned we started a comparison, it's hard. We had a '25 first semester that's very good. Now our first semester of '26 is weaker. Latin America, we have a portfolio in different geographies that support this. Argentina, the instability issue, political and economic can affect the execution. We're growing our portfolio of products, suspension steering in Europe, and this has brought good results. When we look at margin, we noticed a price scenario that's very stable with specific issues like the inflation. We had program did in Mexico and some in Brazil, the adjustments that had to do with inflation, loss in margin where it's possible. We want to continue consolidating synergies in our supply chain with manufacturers and raw material. This is in route at Dacomsa. We still have space to do, waves will happen, and a part of this is reflected during the year. Some take longer. And we continue strong in productivity in operation as our focus. With this, the biggest driver or risk is having a super-valued real, which is not forecasted in what we have as planning and the other side, we have a positive impact also with this. I hope I answered your questions, Gabriel.

Our next question from Lucas, analyst from XP.

I want to explore a bit more the lines that are not in the guidance, which has generated more discussion and doubts in the conversations we have had between yesterday and today here. Regarding the EBITDA, the guidance that was set, it's clear if we consider the exchange rate at the end, the low end of revenue. But considering the market scenario as is today, the midrange margin would make more sense from what I understood from the previous question. But our doubt is more financial result and tax. You look at the financial results run rate of the fourth quarter, the BRL 400 million of expenses for '26, I want to understand if there's a factor of debt -- net debt that can reduce the runway of financial investment in '26. In tax, we understood there's a difference in the liquida Brazil, abroad the JCP issue that reduces the effect of liquida. But I want to understand what is the level that we can work on as a reference for '26 because when you compare '24 with '25, there's a big gap, JCP, but to understand for '26, what we can see in the combination of financial results and tax to get to a bottom line here in the end, considering the market dynamics that you mentioned with a lot of detail today to help us, because we have had doubts in the recent talks.

Thank you, Lucas. I'm going to start answering, Hemerson then will add. We're doing this together today. Well, talking about the financial result, Lucas, we have an expectation of interest rate reduction expectation for '26. The expectation is our financial result should be lower than reported in '25 and more or less BRL 100 million. We have this leverage when we look at the net profit. Our expectation is based very much on the reduction of the interest rate. We're going to depend on the collaboration, the macroeconomic for the financial result to lower it because we don't see any structuring changes when we look at the level of debt of the company. Talking about effective liquida tax, yes, we had a change, a meaningful change, regarding previous years. It ends up being a question, but what we used to forecast, what we are considering as a base for '26 is something around between 20% and 25%. This is what we use as a base of effective liquida for the following years.

Yes. I think Jessica said, well, we don't know the rules regarding our own capital. We have used benefits for some time. But what I want to say there's space -- relevant space of us to follow -- to continue to reduce our net debt due to improvements in working capital, the focus, and also having better profitability. One of the points that I always highlight, we continue to be a company with good space of growth in the market. We are impacted by the market. We gained space in several lines in '25, even in the harder lines, heavy, for example, we gained space. Obviously, there is a sacrifice here because it's a smaller market stability, the margins are not that good and the cost is not great. But this year, we're better prepared to face the market. We don't have the recurring expenses. For example, a 6x2 shift that we had, we finished it during the year of '25. This was cost. We're better prepared. We're going to have better results, bringing more cash, to improve the working capital efficiency in the second year of Dacomsa. Dacomsa still has too much inventory. We have space to optimize this. You can notice the evolution we have in the fourth quarter. This is not the fourth quarter. It's a legacy that we have of what was implemented during the year. So yes, we have not just the interest rate correction and others, but the efficiency and use of capital, less expenses during the year.

Next question from Luiza Mussi, analyst of Safra Bank.

You answered a part of my question, which was about the initiatives to reduce working capital that you had during the year. The evolution is clear here. But I want to understand in the fourth quarter, there was an effect of destocking due to vacations or the SAP of Nakata issue and if we can see somehow a turnaround even partially in the first quarter. And another question about tariffs, if you expect positive effect in the reduction of tariffs in the United States, if there is an effect in this in the guidance and about the tariffs in Mexico and Brazil, how this affects the expansion strategy? That's what I had on my side.

Thank you, Luiza. Thank you for your questions. Jessica, do you want to start?

Hemerson, no go ahead.

In fact, we had additional stock at the end of the year because we're preparing Nakata for the system change and a reverse effect. Despite we have good experience, we had good integrations, we use this with cautious. Obviously, we structure instrument -- financial instruments, especially in Mexico, to reduce. I see today. I'm more positive in terms of working capital efficiency. The strategy we use cannot be measured with 1 quarter. Sometimes you have quarter -- we're stocking a lot in Mexico now due to brake lining. We want 40% market share there. For the year, this might be very low, but this can impact stock now. It is very specific. The strategy is not defined with 1 quarter or another. We look at the entire year. I'm sure we will have at the end of '26, the use of capital is lower than we have today. We can have higher monetary terms because we're growing and we're focusing on growing. We want to grow market share. It was always very diligent in taking our space and advancing. Regarding tariffs, yes, they are beneficial in terms of maintaining and increasing Brazil competitivity in a good range. We had difficulties before due to the tariff differences in different geographies that could impact us not in the short term, but long term, middle terms, 2 or 3 years will be really harder. Regarding Mexico, tariffs we have today there that Mexico imposed in some lines to Brazil doesn't affect our business directly, isolated. They affect the market as a whole. And the strength we have of being a group -- purchasing from Mexico as far as the mobility, not small fractions. Dacomsa isolated is a great advantage compared to competition. 40% of the gain that we have today don't go straight to our pocket. There are growth in sales and they go back to our pocket in the fixed cost absorption. I'm very optimistic with Mexico. It has been a privilege to conduce the Dacomsa integration. And I invite you those that have an agenda in Mexico, go meet and know Dacomsa. They are very structuring, 25% of the revenue of the company today. A lot of good things to explore and a lot of opportunities still. There's a lot of opportunity there. We can do a lot with the opportunities we see. I'm very happy that we got it right, this year especially. We can make material all the year of work in the results forecast. It's just the beginning, guys. There's a lot to come. Thank you, Luiza, for your question. And I reiterate one point. The year of 2025 is the best year in the history of Frasle. It's the best year in the history of Frasle. We have an acquisition linked to it, but we grew a little bit less organically, but we grew in a very hard year, market instability, exchange rate oscillating. It shows the resilience of our business model. As a company, we leave stronger. We reached in shock absorbers over 30% share. In a few days, we're dedicated, and we will grow more. This strategies that take years. And yes, we're focusing for more results because the structure we assembled, we have a turbulent beginning of the year, an important operation, Nakata did its system conversion of its in distribution. In the middle of the year, we want to do a site visit, so you can get to know the cost reduction, the fixed cost reduction that will happen there will be great in the long term. Does it impact? Impacts a little bit. The expectation is great for great growth.

Our last question from Marcelo Motta, analyst from JPMorgan.

2 questions. First, if you can tell us more of the outlook of Argentina. You said a little bit that it wasn't a lower volume. Maybe the price was impacted by higher competition. To understand, do you think this is a trend or this space to recompose price maybe a bit? Another point, the potential change in the working schedule to stop the 6x1, what could be the impact for you? How do you see this? These are the 2 points.

Thank you, Motta, for your questions and your participation. I'm going to start talking about Argentina. It's important to give you context when you talk about Argentina. In '24, we had a different context compared to 2025. We leaped market that was closed with barriers in terms of imports to a fully open market. This scenario favored competition because an open market has products once again. We had shortage before. So '24, we had margins that are above the normal margins for that business structure when in '25 it was more of regular. An important point that I'd like to mention, we are doing super-healthy margins in Argentina. Despite we conceded a lot of discounts during the year '25, it was to adequate to the market that now has an open structure, a normal market like Brazilian market or any other market in Latin America. We grow a lot of volume. This was portfolio development work that was done in the region. The open market, we started to develop the portfolio to service that region and some specific products, we grew over 100%. Some are smaller lines where we had a smaller share, but we had very important results. But the expectation for '26 is a volume growth. When we do the planning, the expectation was of a higher growth. The scenario we see today is a scenario that is more challenging in Argentina where we don't have a lot of space to increase price. The market is very competitive. The strategies in that region are really an increase in volume with a few concessions that can happen. We still have space for these concessions to be able to increase the volume and share in that market. This is a sales strategy to be able to advance in that geography. The important point, Argentina today in our consolidated result is around 7% to 8% at the most of our result, a high dilution after the acquisition of Dacomsa. Hemerson, would you like to comment about the extension of 6x2 shift and add anything about Argentina.

You covered well, Argentina. Thank you, Motta, for your participation. You want to know about the labor laws changer and the shift changes in the legislation. As an operation and industrial operation overall, we are less affected because we operate already in other shift regimes. I don't have an impact opinion or information that can be relevant to be shared. I won't risk to make a comment to say something that I don't have a lot of information regarding. I can tell you we need to keep competitiveness in our operations. And this surpasses not only labor, we need to automate more, to be more efficient with vendors and suppliers in Asia, especially we see the space that we have to advance to keep our operations competitive. The mindset that we have today is that all the investment that we make has to have the highest efficiency in terms of standardization, efficiency, operational cost. Yes, we want to have people working with us in the operations, reducing the manual operations where there's safety risk, where we won't have a lot of people to find in the future. The changes in the labor law also bring a direct view, a confrontation to accelerate these changes. This is what I have. It affects the production as a whole. This brings costs. But I don't have an answer that can tell us an impact study. We look -- we have cautious -- we're cautious when we see these changes because we can impact our competitiveness, which is not great when you look at other countries. As a manager, we have to pay attention. Mexico is happening something similar. They work 48 hours a week. They want to lower it to 40 hours a week. So we always see how we can be more efficient, reducing the cost of initiatives that like this can have as the operation as a whole. And we will always await the legislation as we always did.

The Q&A session is finished. Any other questions can be sent to the RI e-mail. Now I pass the floor to Daniel Randon to talk -- for his final and final considerations.

Hello. Good morning. I want to thank the participation of everyone in this video conference, especially the trust of our shareholders, investors and partners. We closed the year of '25 as a year of strengthening Frasle Mobility, a period marked by the acquisition of Dacomsa, which increased the scale, reinforcing Mexico as a key geography and opened a new cycle of integration synergies and expansion of our platform in the Americas. From the perspective of the capital markets, we continue to move forward with transparency and proximity to the market. The follow-on offering contributed to expanding our shareholder base, strengthening liquidity, and supporting our growth and internationalization strategy. On the ESG agenda, we continue to evolve with structuring and measurable initiatives. 1 example is the Fremax Energy substation in Joinville, which reinforces our trajectory of efficiency and energy transition, increasing the reliability, contributing to the reduction of emissions, improving the quality of air. And above all, I believe in our purpose to connect people and wealth, generating prosperity and also because we count on people that impact every day the growth of the company. I want to thank the CEO of Frasle Mobility, Anderson Pontalti, the entire Board and the other leaders and the over 7,500 employees who make Frasle Mobility a company that's consistent, sustainable that contribute meaningfully to the business of Randoncorp and the construction or building a better tomorrow. Thank you very much for your participation. Our Investor Relations team is available for any additional clarifications. Have a great day. Thank you so much.