GPS Participações e Empreendimentos S.A. (GGPS3) Q3 FY2025 Earnings Call Transcript & Summary

[Interpreted] Good morning, everybody. Welcome today for the presentation of our earnings results for the third quarter '25. We have Marcelo here, our Head of Technology, M&A and much more. And I am Maria Bernhoeft, the CFO, Governance and Relations with the company. We consolidated net revenues of BRL 4.462 million in the quarter, 8% growth above the third quarter '24 and 10% organic growth; quite positive compared to the same period last year. We're going to speak in more detail about our organic growth further ahead. Adjusted EBITDA of BRL 435 million, 3% higher than the same period last year with a 9.8% margin; somewhat below the 2 digits that we have as a target. And as part of all of this, you will see the effect of the organic growth and the capture of synergy of GRSA. Adjusted net profit, BRL 188 million in the quarter, 6% above the third quarter with a net margin of 4.2%. Net revenue continues to be diversified. The largest customer has 6%, somewhat above the 4%, but with a great diversification between the 4,774 customers. Now score that we're careful with, and diversification has a good fragmentation among the different lines of solutions. We offer facilities with 24%, but we have a good distribution with maintenance, catering, security that has had a drop for some time. Temporary labor services and field marketing and indoor logistics of 6%. On our NPS around 75%, which is very normal, and this will be updated at the end of the year. As I mentioned, net revenue of 8%. And the highlight is that organic growth of 10%. We had already been remarking with you that positive delta between contracts acquired, contracts lost. As part of this movement in the third quarter, we were able to have several important achievements with a growth of 2 digits in the third quarter. This growth continues to have a positive effect, a higher delta between achievements and losses. In the third quarter, this is due to the fact that we carried out implementations, and we have already measured the results for this. We know that 10% is a rather positive figure. Nowadays, it represents a high level. And our vision is that what we have linked to 1 digit, but because the quarter was more impacted by that capacity of implementation that we had and the achievements. We already had organic net revenue, the accumulation of five companies in 2024. The highlight is GRSA and an additional two companies. Now when we look at the 9 months of the year, there's a growth of 20% in net revenue because of the companies acquired with a highlight for GRSA and a 7% increase in organic net revenue vis-a-vis the same period last year. In inorganic net revenue, we had five companies in '24 and two companies in '25. GRSA only came in June of last year, and that is why we have that leap in '25 vis-a-vis 2024. I'll now give the floor to Marcelo to speak about our M&A program for the '24, '25 harvest.

[Interpreted] Here, you have a summary of what we have achieved in the last 2 years. Last year, we acquired BRL 4.2 billion in gross revenue. We worked very intensely in M&A activities, especially because of the acquisition of GRSA, our greatest acquisition so far. As a consequence, we had a relevant increase in our leverage. We were aware that for some time, we would be without acquisitions, waiting for leverage to return to a level of normalcy. Now this year, we have more security. Leverage is converging with those levels of 1.6, 1.7x. And we did not have comfort to begin again with M&A, but we have done this, this year. We have integrated a company in our system, RHMED. The second acquisition was Nutricar, which is still undergoing integration. It will become part of the system in January. And recently, we acquired Tagg, a field marketing company, which is undergoing approval through the CADE, the antitrust agency of Brazil. If we could go on to the next slide to speak about our acquisitions. Well, here, you have that summary that we always present of what we have done in terms of acquisitions. Since the IPO, we have acquired 26 companies with a gross revenue of BRL 8.6 billion. Now we are focusing on acquiring medium-sized companies. The exception was GRSA, especially because of the environment we are in Brazil with very high interest rates. These are companies that offer the highest return potential, immediate returns for us. And consequently, they are companies that enable us to grow inorganically. Of course, making relevant investments, but not impacting our leverage through time. They have a high synergy potential and a payback that is quite fast as well. We have used that M&A tool broadly to expand our actions into new segments where we had a very timid action last year. We carried out five acquisitions in temporary labor, field marketing, eight acquisitions in facilities and security -- I'm sorry, in maintenance and industrial services. Now these acquisitions, especially the ones from maintenance and industrial services, have added a level of complexity for our organizational structure. They have added new services. We have regional teams, the Executive Board and the administration board had to adapt to learn how to work with these new systems. The last 3 years have been years of intense learning. I'm now satisfied that this is over, and this activity is well accommodated in our management system and as part of our operational logic. And I now feel sufficient, comfort to resume M&As in the maintenance sector as well. Now the two segments that continue in a test phase to which we're adapting our maintenance of telephony and maintenance of electric networks that have a higher concentration and complexity because of the type of clients. We're still in the learning phase with these. And in fact, we do not intend to carry out new acquisitions. All the other segments of maintenance and field marketing are fully adapted to the GPS management system, and we're comfortable resuming M&As in coming months. Now regarding the future, you will see our leverage indicator that has converged to 1.5x, which was our expectation. When we acquired GRSA, I think it reached 2.2x. We've already captured synergies, and we're, therefore, going to resume the M&A program. Now our pipeline is quite busy. We have a qualified pipeline of companies in the more advanced levels. We have BRL 2 billion in revenues there. In the coming year, we will begin disclosing relevant news, companies with a rapid payback and within our zone of comfort. Now the market is very competitive and the synergy practically reduces the cost and can increase EBITDA. So we're quite enthusiastic with the outlook going forward for M&A. That's my part.

[Interpreted] Let's speak a bit about EBITDA. As you saw, we've reached a margin of 9.8%. Basically, we have three effects that I would like to underscore. First, the organic growth. When we increased the pace, it was necessary to spend more to hire the team for training, for equipment and other utensils. And this expense that takes place when implementing the contract stabilizes only after a few months when we are able to fully recognize the revenues and have stabilization of the expenses, which at the beginning of contract is always higher. Now this quarter, we had a greater accumulation of expenses referring to the implementation. Another effect that you see is that of the GRSA. Although it has an additional margin, we have captured most of the synergies and continue with some measures to be captured until the end of the year. They're still at a margin level, which is below what we work with at GPS. And consequently, it has an impact on the 9 months as well. We continue to have a target with GRSA to stabilize that margin at 2 digits in the fourth quarter and the beginning of next year. Following the logic of capturing synergy and making adjustments and profitability of contracts, opting for those that are more profitable. This will happen in 2026. And the third effect is, because of those companies, the new businesses, as Marcelo mentioned, that we're still stabilizing at GPS, and we're also stabilizing them in the management system. So the margin has been impacted by these three factors, and the 9-month margin once again includes those three factors. And basically, in this quarter, what was stronger was organic growth. Now regarding our net profit, once again, we have the same factors I pointed out in EBITDA, but we still have the impact of the financial expenses. They were higher vis-a-vis last year because of two reasons basically. First, because of an increase in the debt because of Selic. Last year, as you were able to observe, we increased our debt. We've reached a leverage of 2.2x. In that same period, there was an increase in the Selic rate. And another effect was a noncash effect of the monetary restatement of our contingencies that represent BRL 90 million in the 9 months of our net profit. Now these contingencies are for the S System and profit, they need to be updated or restated every month. And of course, this impacts net profit because Selic is the base of that monetary stabilization and Selic had a considerable growth. Now regarding our cash generation. Traditionally, the third quarter has a positive cash generation. In the first quarter, we are impacted by the payments of PLR in the second quarter, impacted by the payment of dividends and the payment of the 13th salary. The third quarter tends to be more positive. We created operational cash flow of BRL 1,300 million, representing 106% of adjusted EBITDA for the period. Well, we have the effect of the debt amortization and the payment of interest rates, which totaled BRL 256 million. But you will observe that income tax had a very small readjustment year-to-year, and we have been very efficient in using the compensation of our credits. In terms of financing activities, we had the payment of dividends of BRL 228 million. The purchase option of the acquired companies that still had BRL 197 million. Amortization of loans and debentures, BRL 256 million. And financial instrument payments, BRL 46 million. The payment of taxes and share subscription when we carried out the share option program in April of this year. As far as the payment of investments, [indiscernible] us of the results of our investments. We highlight the impact of the change of the accounting policy. In the last quarter, we already carried out that adjustment. Now financial applications are recognized in the cash line item, and you will see BRL 1.3 billion, the net redemption of the BRL 1.6 billion that is possible, the acquisition of immovables, tangible BRL 79 million and receivables of BRL 6 million. Loans linked to the share option program with cash and equivalents of almost BRL 2.8 billion in September. So it was a positive quarter when it comes to cash generation and consistent with what we have been saying here. In net debt, we have reached 1.5x. This allows us to feel comfortable and proceed full speed with our M&A program. We have a leverage of 1.5x net debt over adjusted EBITDA in the third quarter, with 32 months duration for the loan portfolio. We still do not have the two debenture issues that we carried out in October, that will be reflected only in the fourth quarter, but will bring a positive impact as they will be lengthening our debt. And this is a negotiation that will reduce the spread in our financial expenses consequently. Well, with this, we would like to end the presentation, and we will go on for questions and answers. Well, before we go on to the questions, we would like to inform you that we have a new GPS Talks with Vinicius de Luca. This will be available at our site. For those who did not see the first one, it was with Marcos Pedreira. Now with Vinicius, we will continue on with this initiative, sharing with you our history, offering you more information about our executive directors and our leadership. For those who still don't have that habit, we also have a historic Excel Spreadsheet in our site, both in Portuguese and English. Formally, it was only in Portuguese. We have the English translation as well now.

[Interpreted] Very well, we'll go on to the questions and answers. The first question on our list is Andre Ferreira from Bradesco.

[Interpreted] Congratulations for your strong results. I would like to refer to the organic growth. Now Marita, you commented in the call, and I did come in somewhat late. If you could speak about the impact of the changes in consolidated EBITDA margin. And the second topic, what has led to a doubt. Organic growth was very strong, but you have a contract with Japan and the organic growth should be much higher. And still speaking about this, the difference quarter-on-quarter was of BRL 172 million. I understand it's difficult to explain how much of this refers to those six new contracts that you implemented, the churn. But if we should think that it could be a BRL 100 million from these contracts, and which is the total potential of revenues from these contracts per quarter or per year, which is perhaps easier with mature companies.

[Interpreted] Very well. To speak about the margin, we're estimating that this implementation has caused an impact of BRL 30 billion on our margin. We had a significant concentration in this quarter. We don't expect that same pace of organic growth will extend to the fourth quarter. The achievements we had were because we were able to implement all of this in the third quarter. Now if you think about this in terms of achievement, you can think that we had a concentration of implementation of achievements in the third quarter. And the fourth quarter will slow down somewhat, it will go back to normalcy. And we don't have new contracts being implemented with the same speed that they had in the third quarter. Now the contracts in the third quarter will appear again in the fourth quarter. And their match will be within what we're saying about our losses, which always take place. We're expecting a fourth quarter that will not necessarily reach the 2 digits. We're aware of the losses we will have in the fourth quarter. So consequently, it will return to a 1-digit level. In the coming year 2026, of course, there will be a positive effect from these contracts achieved this year, but we also know that we will have losses eventually. And these losses can be associated to the work that we customarily carry out with our acquired companies, reviewing the contracts in a deficit. And this will be applied to GRSA in the coming year. So this organic growth has a structural level of a digit, a high digit. This is a level that we deem to be structural within our business. Once we have attained a relevant volume of revenue and that will bring us a 2-digit growth consistently through the quarters and the years is not that feasible. I always say this, at some point, you will see a 2-digit organic growth, but the rules of the game will tend to be more of 1 digit, a high single-digit or something of that sort.

[Interpreted] It's important to mention what we believe is sustainable in the long term. And what is sustainable is what Marita said, we have grown organically a qualified growth with a high single-digit. Well, GPS is very large. We have almost BRL 20 billion in net profit and a growth of 10% -- net growth 10%, with gains and losses represents BRL 2 billion per year. So it's not feasible to grow in a qualified way above that single digit. Our challenge is around 10%, but it is a qualified growth. If we grow above that, we will impact the company. So growth always fluctuates. It's never a linear thing through the quarters. What we foresee as being sustainable in the coming 2 or 3 years is around 9%, 10% or even 8%, something along those lines.

[Interpreted] Now I would like to comment on what Marcelo said. In the institutional presentation, we have a 10-year vision. Our priority, of course, are revenues. We look at the organic growth at the level of 10%. We're obviously satisfied and confident in that, but we can't bring in revenues. If the revenues are not qualified through time, those margins will fall below 2 digits. This is not how we work. We bring in stability, and we will have more volatility in organic growth going forward.

[Interpreted] Allow me a follow-up simply for modeling purposes. If it's fair to have as a proxy that the organic growth is strong quarter-on-quarter, it went to 10%. Now can the proxy assume that it will impact the margins in the quarter? Can we work that way?

[Interpreted] Yes, certainly can.

[Interpreted] We'll give the floor to Lucas Marquiori from BTG, please.

[Interpreted] We have two topics, perhaps the inorganic growth besides the topic of implementation. I'll go back to what we saw in the second quarter and what we saw in the release. That impression that we're improving the environment, we're in the phaseout of the impact of the PERSE for several sectors because of its inappropriate use. Now thinking about the contracts that are being implemented at present and thinking about the negotiation environment and its dynamic, what has changed? Has it improved quarter-on-quarter? Do you have that help of the inappropriate use of the PERSE? This is the first question. The second question, simply to gain better understanding that note in the release on your expectation of performance of GRSA at an ideal level in 2026. It allows us to understand that at the end of the year, you expect to get to a margin of almost 10% at the end of the year with GRSA. Is this delayed or not? Is the schedule maintained? And at what phase of integration is GRSA as a whole?

[Interpreted] I'll speak about negotiation. Lucas, it's very difficult to speak about the impact of the discontinuity of PERSE. I will mention some factors, so you can better understand the organic growth. It's very probable that the contracts that were sold with a benefit from PERSE are no longer sustainable. And our competitors that were using PERSE has to go back to their clients with a letter of stabilization, and it makes sense to work with some bidding. Now this may have contributed, but it's very difficult to say if this had a positive impact on organic growth. Now yes, it could have, of course, as far as we know, and this is public information, One of our large competitors was using PERSE until the beginning of 2024. If they sold a contract in 2023 with a reduced price because of the PERSE application. In 2024, this client would have had to get reorganized and had to go back to the client for a new negotiation. Another effect that we see something that is more cyclical is a more structural effect. The effect where the client at some point will choose a price reduction, will bring in a lower cost supplier and will look at that price and say, this is not sustainable, this cannot be put into practice, it's not sustainable. And they will begin to operate with this new supplier. The supplier will face difficulties because the pricing is at a level that cannot be sustained. And once again, they have to go back to the client for a new negotiation or drop the contract perhaps. So these are the moments that we have already seen in the past. For some reason, the client, because of cost pressure, decides to change suppliers and price, it becomes the most relevant criteria. There's always an incident, a problem with that supplier and the supplier himself or herself may come back for a new balance. And of course, the vision will change, it won't only be the price. Now when we look at the behavior of organic growth, you see that it follows cycles. Now these are the two effects.

[Interpreted] And to complement, PERSE will also help in organic growth. At the last call, I mentioned that we made very few acquisitions in the last 2 years in our sectors of security and others because of the PERSE. The PERSE was that elephant in the room, temporary nonrecurrent exceptional margins with which most of the companies were performing. The buyer did not want to use this price because it was temporary and debatable, and the seller did not want to sell the company without that benefit, of course. Now that changed our M&A program in that sector, especially in the field of security. Now once this issue has been addressed, we go back to the pipeline of those companies. It will aid in a bit in organic growth as well. Many companies, perhaps most of them have priced the PERSE and transferred benefits to the client, making our life more difficult because the difference in competitiveness was enormous. PIS/COFINS is 3.5%. It could have gotten to a difference of 7% vis-a-vis competitors. We're highly satisfied with GRSA. Please remember that we priced it with an EBITDA margin of 4%. I think it was 4%. It was BRL 170 million of EBITDA that was part of the pricing, approximately a 4% margin. And in the last quarter, we performed with approximately 9%. And with GRSA, we're very close to the margin that we expected to attain of above 10% or 10%. So we're highly satisfied with GRSA. We have been able to capture synergies in the volume and at the speed that was expected. And this will tend to be a business with a rapid payback. We paid 7x EBITDA has doubled that multiple, and it is now below 3x.

[Interpreted] So very much in line with what we're saying, Lucas Marquiori. We'll get to the end of the year with almost 2 digits and enter 2026 with a stable situation.

[Interpreted] Thank you. It was my reading of the release. Thank you very much.

[Interpreted] Let's go on and offer the floor now to Lucas -- I'm sorry, André Mazini.

[Interpreted] We have two questions as well, a follow-up on organic growth. Still, if you could speak about the segments that are doing better. You did remark on this, but which are the segments with a better performance? We're under the impression that catering is doing very well, but GRSA is not in the organic growth, it's inorganic. Now the new contracts in catering, [ Alfa Masters ] and others. If this were inorganic, how many bps would this represent? This is the first question. The second question, your labor expenses, that was flat in revenue. If that level should stabilize at 2%. Now do you have visibility about this going forward?

[Interpreted] Those offshore contracts -- offshore catering contracts are not included in inorganic growth. We always mark the contracts we have acquired, and everything that is managed and commercially originated by GPS is deemed to be organic. So most of the organic growth has a positive effect. Now sea or maritime hotels, which was a highlight in the period with a very large and relevant contract is of BRL 35 million a month.

[Interpreted] And to add to this, we achieved these contracts through a company that was already ours called the LC. This was our first acquisition in 2017, I believe, for catering companies. It was a large business, and they were working with marine catering for Petrobras. The concentration is on private clients. They don't have Petrobras. So LC was for our contracts with Petrobras. LC had a relevant stake in Petrobras in a bid where we lost most of our contracts. And then what Marita mentioned, those companies that won the bid did not perform, they did not deliver, and we're now recovering most of the companies we lost and something additional. It was already one of our companies. So this is an inorganic growth. Now the achievements are quite fragmented. Now we have that important achievement in marine hotels. It's technically quite complex. It's not any company that can operate that because Petrobras is quite stringent. This is for offshore companies, but we gain contracts in all of our businesses, and the achievements are very well distributed throughout our business.

[Interpreted] We remind you that the offshore business were in it since 2017 when we brought in LC and Marfood. So we're expanding our position in that segment. And as Marcelo commented, GR, of course, does not act in that field. Now growth is quite diversified. And from among those businesses, what you will see and that is more stable is security. It's a typical system. You take away a card, you will put in a quarter. But with the rest, we have very good organic growth.

[Interpreted] Now regarding the labor expenses, last year, we performed at 1.1% of net revenue. In the last few years, this percentage increased to 2%. And I think it reached 2.2% or 2.1% in the first half of the year. Now what have we thought about? It's structural due to the country because of the dilution of benefits, there's a structurally worse impact. There's the impact of our growth that -- well, it's interesting, this labor issue. You have regions that are much better, the North and Northeast, Rio de Janeiro. The expenses on net revenue are quite a lot, and there are regions that are very poor, especially Sao Paulo and Rio Grande do Sul and the hinterlands. Our labor expenses are threefold higher than Rio de Janeiro and the Northeast or North. It's very dependent on the region where you are operating. What happened in the last 2 or 3 years is that we had significant growth through acquisitions in Sao Paulo and in the South. In highly complex businesses when it comes to labor, maintenance, the maintenance of electric networks and telephony, you have very complex labor thesis in those companies. So it's that structural element that increased our percentage. On the other hand, since last year up to present, we began a strategy to reduce our inventory of suits underway. Now these are the ones that can cost 6 or 7x more on average than the agreement you will make at the initial stage. To give you an idea, since January of last year up to present, we have reduced our stock without including GR that came in, in the middle of the road. But without including the suits from GR, we have reduced our stock in the phase of execution of 2,300 to 1,300, a reduction of 1,000 of these suits. Until we get to a level of 0, which is ideal, we will maintain this strategy. So there are three phases that are difficult: the execution, extraordinary review and the strategy. Now to settle at those phases, also increased our expenses. And this increase is not structural, it is simply temporary. When we go back to a lower level of suits and phases, we will reduce our recurrent label costs. I don't know at which level this will stabilize. My feeling today is that it will be around 1.3% or 1.4%. We need to resume that level once we are able to have a suit, inventory reviews and execution that is reduced significantly.

[Interpreted] If you allow me a very quick follow-up in terms of your labor contingencies. Now you seem to have had high cost in the cleaning market. Is this due to the market development where the salaries are very high? Or are we far from working with robots and cleaning in Brazil as happens internationally?

[Interpreted] Well, we have a great deal of productivity gains with automation. You can reduce headcount and number of people by using equipment, of course. We already have tractors cleaning highways or cleaning pastures or areas. And at GPS, we are creating a follow-up simply to look at the use of machinery in our services. It is a trend. Now when it comes to the full automation of this service, I'm somewhat skeptical. I don't know how, if this will be economically feasible in the coming 30 or 40 years to have a robot cleaning your office. I don't think this will be feasible. What will happen, and we have to be attentive to this is that combination of labor and the intensive use of equipment, that will increase the productivity of people. And this is included in our contracts, not only in cleaning, we have it in security, monitoring, access control and logistics. In all of our activities, we make broad use of equipment.

[Interpreted] We'll activate the floor for Lucas Nagano.

[Interpreted] I have a question that involves some components on the GRSA contracts. You said that next year, you could have a renegotiation organic, and I'd like to explore some points. First of all, with the systems already integrated, can you give us more color on the magnitude of this negotiation? Secondly, the timing to begin the process. And in the third place, can we expect upside? Initially, you've already attained a 10% margin that has been consolidated when renegotiating the contracts, can you still expect that level?

[Interpreted] Now regarding that adjustment that we carry out, first of all, we have to go through an entire planning cycle to have a clear vision of which are the elements that are impacting profitability. It could be something internal, something that we can control. And by adjusting this internally, we can resolve the problem. Now if we don't reach an ideal level, we'll have to sit with the client. Now this process will extend throughout the coming year. We can't say it will extend for a quarter. It has already begun and will extend through 2026. There is no critical situation among the contracts of GRSA. Nothing that will lead to an expectation that is very different from what we had in the past. I'm thinking of what happened in the past with companies where we have the experience of making these adjustments. Well, we'll receive 8% to 10% of the revenue in exchange for margins that will be above 2 digits. And we hope that this will happen with GRSA throughout 2026. It's a process that we go through with all of the companies. Of course, at GRSA, we're being very cautious to do this in a consistent fashion because of the higher volumes, a larger number of contracts, and we know some clients that we service within GPS. We used to service them before the acquisition of GRSA. There could be an upside in margin. We have that base of contracts that will extend throughout next year. But the benefit of the acquisition has already been captured this year, as Marcelo said. We're reaching 2 digits at the end of the year based on what we paid. And this is our significant payback from the acquisition of GRSA. We hope that all of this will take place throughout the year 2026 with 10% that we have had historically in revenue and an upside in margin, somewhat beyond the 10%. Let's now give the floor to Daniel Gasparete.

[Interpreted] I have two of them. First, explore inorganic growth. If I could get an update from Marcelo about the pipe. You spoke about the evolution, your engagement and how this is working, if we could go on with this. We had one or two announcements since last year. And how will this unfold at the end of the year and in 2026? I know M&As are difficult. And Marita, still regarding margins, a more accounting issue that drew our attention. The right for lease was somewhat higher than in previous quarters. In the third quarter, it has been almost equivalent to the first quarter. Is this something recurrent? Or will it normalize?

[Interpreted] I'll answer first and then give the floor to Marcelo. It's very simple. We had a loss in the close of a contract that was leasing a warehouse and equipment. That effect happened this quarter when we had to demobilize that contract. So it's a one-off effect. It is not recurrent and will not be repeated in the fourth quarter. When you demobilize what was leased, the warehouse and the equipment upon returning this, you have to carry out a recognition. It's a noncash and nonrecurring effect.

[Interpreted] Daniel, thank you for the question. Now regarding inorganic growth, I don't have full precision in terms of the figures. We're in diligence, negotiation of contract. And at the end, we should have about 10 companies with combined revenue -- companies that we're going to close contracts with next year. And next year, we will be announcing several deals. We have new security companies among these. I would say that they predominate in this new pipeline. We have cleaning, security and catering, new sectors that we have entered. I always remark with you about acquisitions. You can't have very much stability in the frequency in which you disclose the transactions. It depends on the negotiation with the seller. And you have to have several options on the table to expect the best from each seller, the time at which a seller is willing to make a deal that we are interested in. We know that the acquisition of companies is a highly risky action. There are several movable parts. There's that probability that it will go wrong. So you have to have that extra fat in acquisitions to get what you expect. You have to have several options on the table to have that ability to wait for the ideal time of each seller. And this matures at different speeds throughout the years. Our global pipe includes several companies. There are companies that appear, they disappear. We have companies we audit today. And for some reason, we get to a price disalignment. And the same client will come back in 2 years. So that is the principle that we work with to have several companies interacting with us in the pipeline, so that we can be very selective and work with the deals that offer the highest return potential. And now we have 10 companies with those BRL 2 billion in revenue. And I think that what predominates here are companies in security and cleaning.

[Interpreted] Well, if you allow me a follow-up with Marita. If we add the effect of implementation of new contracts and that right of use, would the effect be 30 to 50 points in margin, bps in margin?

[Interpreted] Yes, absolutely. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]