Iochpe-Maxion S.A. (IOCJY) Earnings Call Transcript & Summary

[Interpreted] Hello, and good morning. Thank you very much for attending this event, and thank you very much for following everything online. We are now going to start another Investor Day for Iochpe-Maxion. It's with great joy that we host you here today. It's a great opportunity for us to advance along with the company and establish this relationship with all of the Board, show you all of the challenges, the opportunities and share with you the connection between the market analysis, investors and the company. So thank you again. Today, we are going to have a presentation featuring the CEO with some updates concerning the strategy. Our CFO is also going to present the information in regard to our financial status and some updates in regard to all of the business units with structural components and wheels. So this is the schedule for today. We have Pieter Klinkers today with us, our President and CEO for Iochpe-Maxion; Renato Salum, our CFO and Investor Relations Director; Mark Gerardts is our CEO for Maxion Wheels; and Renato Brighenti, the CEO for Maxion Structural Components. I'm Rodrigo Caraça, and I will help you during this event. So with this, I'm going to give the floor to our CEO, Pieter Klinkers. Pieter?

Okay. Welcome to everybody again, and thank you for coming. This time in the hotel, not in the plant. We're running out of plants close to Sao Paulo so we thought it is better to do it in the hotel this time. Thank you very much for being here with us. Some of you -- most of you I hope who have seen me before know a little bit who I am, but maybe some of you have not seen me before do not yet know who I am. So maybe a few words about myself. So, I'm Pieter Klinkers. I am 55 years old last week. I'm married and have 2 kids, 10 and 13 years old. I have a Dutch passport, but I have an office in Sao Paulo here. My family lives in Holland. I'd like to be there as well. Most importantly our operations are around the world and I make an effort to visit as many operations every year that I can because I think it's important to see people face-to-face and not only in the [indiscernible]. So when you ask me where are you or where are you from? I will tell you I'm global. Is that okay? All right. And then you can ask then, what the hell are you looking at, right? What are you doing there in this [indiscernible]. So I think this photo was made in my old office in Germany, and I was probably looking a little bit to the Southwest to see where my office in Sao Paulo because I think when I was going there, okay. Let's talk about Iochpe-Maxion a little bit just to open it up. I think all of you know that we are global wheel supplier in the world. We try to produce about 50 million wheels every year and we are also making a lot of structural components [indiscernible] now only in North and South America. I think those 2 plants that you see there we've talked about a lot and you will hear a little bit more about it when Renato and Mark will present our new investment in Turkey for aluminum wheels and our investment this time is in Mexico. But overall, we have 33 plants and when we open our CVA plant or commercial vehicle steel wheel plant in Turkey and this is will be 34th plant, 14 countries with around 70,000 employees all over the world. That's important. I think what's even more important are the products that we make in all these operations. We are kind of proud and we are kind of excited about many new and innovative and cost competitive products that we're making all over the world. And I hope you were able to see a few displayed already there, and you will, for sure, hear more about it when Renato, Brighenti and Mark will present in a little bit. We already talked about the 2 businesses that we have. And you may notice a little difference here. We used to talk a lot about divisions. I'm not a big fan of the word division because it comes from dividing and I don't like to divide. I like to put people together. And so now we talk about businesses. And I think actually, we can do even more there. I think there is more to be done from a synergetic point of view between wheels and components, mostly in the Americas because that's where we are with the 2 businesses that impact globally, when you think about organization, when you think about supply chain, when you think about sustainability, when you think about AI or digital, these are all things for product development, innovation. These are all things that I think we can do even more when we work even more together between those 2 businesses. And so there will be a little bit more emphasis even more on this going forward than what we have done in the past already. Now when we look on our operations around the world, these are not all because some of the dots that you see here, one country, but we have more operations in that one country, right? But here, you see back the 14 countries where we are. I'm sure there's many companies around the world that are more global but I'm most sure that at least from a wheels point of view, we are the most global company in that industry. This is a pretty good map. Only Russia is not there. And today, we're not disappointed about that. There's a few dots here that are highlighted in blue for components and in orange for wheels that by the way has nothing to do with Holland. Orange, this was already the case before I started in the company, I think. Of course, in Mexico, you see the blue dot, and we're talking here about more than average growth that we are planning in these locations. Of course, in Mexico, this has to do with the expansion and the transformation of the plant in Castaños that, again, Renato will talk about more. Turkey, of course, as well has to do with the new CVA plant that Mark will talk about more to give you an update. But there is more that we're going to do. And you will hear that story a little bit when you go forward. I think the last few years, we have been having a couple of key priorities, 2 of those were, one is to delever the company, and I think we're on track. We are making that happen. And second is make these 2 big investments happen. And when you think about the standards and you think about the plant in Turkey, these are really, really big investments for a company of our size. So you may ask, again after hearing about this a lot, why did you do that again? I ask myself sometimes. And the answer is always the same. It was the right choice. It is the right choice. And we're very happy that we're at the end of it because it's costing a lot of money, but it was the right thing to do in North America because right now, the market is down, it's a cycle it goes 5 years up and it goes 1 or 2 years down. Right now, the good news is we believe we're at the bottom of that cycle. So it will go up. And when it does go up, we would not have had enough capacity. And if you don't have enough capacity, I think the customers will not stop making trucks they will find another supplier, right? That's not what we want. So we needed to be ready in time for when the cycle goes back up again. Now you will ask me when did this back up again. I'll ask that same question as well and it may still happen this year, may happen next year, but that will happen, right? So we need to be ready and we will be ready with [indiscernible] when that happens, okay. Then in Turkey, we make steel wheels for passenger cars. We make aluminum wheels for passenger cars. We make a lot of steel wheels for trucks. But that the market in Europe is shifting a little bit, not too much. It's moving a little bit from steel wheels for trucks to aluminum wheels for trucks [indiscernible] to be 10% then its 12% then its 15%. I think the market is growing a little bit faster [indiscernible] than the overall market is growing. Then we have one big competitor there. It's a public listed company. Today all this presents this very nice EBITDA [indiscernible] my EBITDA, so we kept [indiscernible] the markets is going very little bit fast. So we need to also be [indiscernible] and by the way, it seem that as is a very profitable [indiscernible] here as well. That's what we did it, okay. So those 2 investments are these dots but there is more we can do and we call [indiscernible] do more if its less. And that means do more projects with less CapEx, not less CapEx overall, but spend it on many more small projects. Mark will talk a little bit more about that. Renato will talk about that because I think there's more we can do in Brazil. We will do more in Brazil. We will invest a little bit more in our site rail capacity in Brazil because the market is a good market for us in Brazil it will grow, and we want to be ready, right? And so we will do that. This is nowhere near. This is similar investment in Mexico or Turkey. It's small, but it's meaningful. Same on wheels. I mean the market is good in passenger car in Brazil. We love it. We like it. It's very favorable to us. And on top of that, we are doing good in that market. And so I think there's the room and there is, in fact, the need to do something more. And so for instance, redeploying some of our assets from around the world to Brazil, to serve the market here is something we will do in Brazil. This doesn't take a lot of CapEx. But in the last few years, when everything was focused on these 2 big projects, our list of low-hanging fruits became longer. And so we look forward to execute on some of that low-hanging fruit, same in India. We're not going to build a new plant, but we're going to do something more in our existing infrastructure, okay? China, we already invested and we will start utilizing that capacity more in the next 10 years, that's our plan. So these are the regions where we will grow a little bit more, hopefully meaningfully more than average. In a nutshell, before I turn the word to Renato Salum, the world is dynamic. You can also say challenging, I prefer the word dynamic, right? There's a lot going on in the world, geopolitics, et cetera, with a lot of impact on industry also in automotive industry. But our goal will be to be resilient and more than resilient. I will come back to that at the end of the day -- at the end of the morning. But for sure, our strategic global presence that we have, we have a global presence, but we have a local focus. We are not big exporters. We don't build a plant in China or a plant in India to then export those products all over the world. We serve the local markets. And right now, that's, I think, a situation that is giving us a little bit advantage instead of a little bit of a headache. We do have a very complete portfolio. We have an innovative portfolio. So when you see some of those revenues that go more up in 2025 than what the market is going up. I think this has a lot to do with this. And therefore, we are proud to show the products, and we will be proud to show you in the presentations from Renato and Mark, what we're doing from a product portfolio point of view. But I can guarantee you, no matter how dynamic the market is now, we will be focused on shareholder value. I'm not only saying that in this meeting here, where there's a lot of analysts and a lot of shareholders but I'm saying that internally, I'm saying that everywhere, shareholder value. And so to do that, we need to operate efficiently because whenever we do nice products or whatever, we do nice from a footprint point of view. If we don't run our plant efficiently and more efficient every year than it will not work. So that's our base. We have been delivering strong productivity over the last years. We need to do it going forward. Our customers want it, and we need it from a financials point of view. That's the base. But then also, we want to outpace the market. Now if the market doesn't grow and you grow 0.1%, that's not so very meaningful. We want to outpace the market. Now what that exactly means? Let's see how that develops, but I think we're on a good track in 2025. If we do that, if we have the operational efficiency and if we grow a little bit faster than the market shows, I think there is this potential for what I call smart growth, the growth in our existing facilities, not $80 million investment, but $3 million, $5 million, $8 million and do 10 of those and have quicker paybacks in our existing infrastructures. That's a little bit in a nutshell brand that we will talk about with you more in detail in the presentations from Renato Salum, Brighenti and Mark Gerard. By the way, Mark is also Dutch. I apologize for that. Nobody is perfect. All right. Renato, do you want to take it from here?

[Interpreted] Thank you, Pieter. Well, first of all, thank you very much for attending this event. Today, we have the main investors in the company and banks and investors. I remember that 1 year ago, I didn't know even 50% of who's here. But today, I can say that I know at least 90% of the ones who are here in this room. So each and every one of you, I believe I've already spoken to each of you during this year and several times. So thank you very much. And I promise that next time we meet, I will have achieved the goal of getting to know everyone in this room. Well, this is me. I am the company's CFO, and I am also the Investor Relations Officer for the company. I'm going to talk about the current scenario concerning vehicle production and light vehicles as well. And we are also going to talk about our financial performance. We are going to recall some of the 2Q '25 earnings results that have already been published. We just recently had our earnings results call, and I'm also going to talk about the sustaining financial discipline of this company. Well, in terms of global vehicle production, when we look to the chart on the left side, we see the projection for light vehicles. This is the global production. The numbers that have been updated in 2025 in August. And we can say that in 2025, with the numbers excluding China, we see growth of 1%. And obviously, this includes the production in China. And considering our participation in China is not that relevant, we exclude this number. And then on the lower portion of the screen, you see the numbers excluding China. So for light vehicles, we see a drop of 1% for 2025, which is close to flat when we look at our earnings results. And obviously, we don't tell you how many wheels have been produced, but I can say that the quantity for the second quarter was a little bit larger than the second quarter, and this does not reflect this minus 1% to date. I could say this is a little bit of a flat number. And on the right side, you have the production of commercial vehicles data from global data. Information is not that updated anymore, not as much as the first chart, but still within the second quarter of 2025. But just to keep consistency of what we've been presenting to you every year, we decided to include this chart. We see a drop when we exclude the numbers from China, which is minus 5%, but within this minus 5%, we include all the other regions in the world. We can say that for North America, we have a more prominent drop in terms of sales, but also this is part of our annual results call for the second quarter. And you could see this drop that we had for North America. Next slide. Let's just recall some of the highlights for the 2Q '25. We bring a net revenue of BRL 4.1 billion, a little bit above the gross profit. The net revenue for the first quarter, which was BRL 8 billion for the first half 2025. As for the gross profit, we've reached BRL 535 million with gross margin of 13%. And we believe this is important, especially when we compare the previous quarters, numbers were smaller, and we have managed to reach this 30% -- 13% again. Our EBITDA for the second quarter, we have brought the numbers to the historical numbers, 11%. The net income for the second quarter had a smaller impact especially due to fiscal reasons. We had numbers updated in Turkey and Mexico, and the currency is different from the local currency when we consider. Of course, there is tax-related situations. Assets are all in dollars and in euros. And when there is valuation or devaluation of the local currency, we end up suffering some impact on your results, especially concerning tax because the net income is going to be decreased. So for our first quarter, we had this impact, which was a little bit more to a neutral number especially. But for the first semester, we see BRL 98 million with a margin of 1.2%. And as for the leverage, close to 2.38 fold. And as we have been talking to you about, the idea is to be close to 2. This is the idea in the short term and also in the medium term to be 1.5 fold as a priority, and this continues to be a high priority for the company. And when we talk about our net revenue, we have seen in the previous slide that we have reached BRL 8 billion in the first semester of '25 compared to BRL 4 billions in the first semester of '24. And of course, here, we have the effect of the exchange rate. And when we talk about a flat volume compared to last year, we see revenues that are higher than the first semester. If for any moment we use the same conversion or exchange rates for the first semester of '24 for the first semester of '25, we would observe the same volume of revenues for the semester. And when we look at the year-over-year evolution of the revenues, it's important to mention the BRL 16 million, almost BRL 17 million we had. In 2022, we had an event that was expected and we didn't have in '23 and '24. And so far in '25, we had an increase in the price of aluminum and steel. Aluminum, I'd say that compared to '23, '24 and '25 that are more stable, they are -- the cost is 20% lower than aluminum, while for CRU, depending if we're in Germany or in the United States, it can get to 20% to 30%. And since we have a pass-through system in our raw materials cost, when you talk about our company revenue, this BRL 17 million in 2022 had to do with the cost of raw materials at that time. But BRL 8 billion, if we do a forecast multiplying basically by 2, we would be talking about BRL 16 billion that is still higher than 2024. Now a little bit about our revenues per product by product. What's worth mentioning and where we really see a difference would be between the second quarter of '25 and the second quarter of '24, we see a drop of 4 percentage points. And from this 4 percentage points, I see that 3.8 percentage points are related to products in structural components for commercial vehicles in North America, and that is why we see that change. As for the first half of the year, we are very much in line. We have the exchange rates that end up favoring regions where we have euro or dollars as their main currency in the -- that is why we see more difference in some products that are more concentrated in regions where we have a stronger currency. So at the end of the day, this is the devaluation we have. As for the revenue by customer, the top one for the company is Daimler, and we see for Daimler, we have gone from 13.9% by client in 2024, we go to 11.7%. We have a drop of 2% that are related to the drop we had in North America. When we go to other clients such as Ford, we see the opposite. We see the second quarter of 2024, we see about 8.6% of the company's consolidated net revenue. And for the first quarter of -- the second quarter of 2025, we see 10% with an increase that is mostly related to the increase of volume of this client in Europe. And the rest, we have a less variation, but we can clearly see an improvement in Europe. And I would say that it is an increasing volume, and Mark is going to talk a little bit more about that, but that is reflected in the company's revenue and what you have seen in the semester, the drop that we had in North America ends up reflecting in this in one of these important clients we have that is Daimler. This next slide, we have the company's EBITDA and EBITDA margin. You see for the second semester of 2024, we have BRL 389 million in terms of EBITDA for the second quarter and then BRL 454 million for the second quarter of '25. And when we compare the semester, we see a margin in the second quarter of last year, we have gone now back to our historic margin in the second quarter of '25. When you look at the semester, we have a combination of a 9% EBITDA margin in the first semester and a 10% margin for the first half of 2025. And look at the margin, it's important to mention that we have a combination at this time of the first quarter of '24, we have 8% and then in 2025, we had a result of 9.5% for the semester when we combine the 2 first quarters. So when you look at this financial situation of the company, the financial position of the company, when you look at the left here, we see the composition of the company's debt per currency, we have 44% of our gross debt in reals, 28% in dollar, 34% in euro, and this is the gross debt and the company has a policy that we follow the progression of our gross debt and net debt, and we try to have the net debt aligned with our revenue. So any time we have changes, we will make decisions to make sure we have a balance in that sense. And when we look at the right here, we have seen the maturity tower and the company has closed in June, almost BRL 1.7 billion in available cash. We have credit lines that have not yet been used that add up to BRL 760 million. And the total is BRL 2.4 million. In terms of last year, we understand that the cash generation for the company would be enough to face the payments that we have ahead of us. So the company would not need any liability for that. So we are in a very comfortable position and puts us ahead of other competitors that are going through financial difficulties. So you see that the company's financial position is very solid. And when you talk about 2028, we have the bonding maturity and an issue that we had in something that we issued in 2021. And we did a swap to euro. This debt is now in euro and it cost 3.49% a year. So this is a debt the company considers cheap compared to what we have today in the market. And of course, obviously, the company considering the possibility of a drop in interest rates in the United States. The company believes that the 3.49% we have been paying still 2026, we should maintain and we should think about changing that for the -- by the end of '26 and in beginning of '27. And until then, we can combine 2 things, which is continue paying 3.49% and mainly a possibility of reducing up to 1% total of interest paid in the United States and so that you can have a good moment for a new issuing of bonds for that period. And when it looks to the lower part on the right, you see the cost of our debt in the second quarter of '24, we had that's in reals at CDI plus 1.9% rate. We did some liability management during this time in today, we have a more reduced spread with the CDI plus 1.2%, which is the average for the debt in Brazilian reals. And when we talk about euros, we're talking about that those bonds where we did a swap, and we now have a 3.49%. So we swapped some debts we had in euros. And at that time, we had that 3.49%, but we had other debts for which the cost of the company were 4.2%. And today, we have only that one in 3.49%. And for dollars, we have a so far if I'm not mistaken the overnight is 4.2% and the difference will be the spread. But as a whole, when you look at the cost, we have about 9% consolidated cost, which I consider, which I say when we compare that to other companies, it's a cost that I would consider quite competitive for the company. And on the left -- on the bottom left, you see the short term. Today, the company has 6.3% of its debt in the short term. While last year, we had 17.5% for the short term. So this is a very good scenario for the company. This is something we have been working on for the last 2 years to be able to get to this financial position for the company. So here, we have a celebration of FINEP in the beginning of this year. And I was very careful to change it, so I wouldn't be using -- wearing the same one, but the delivery here was a work that was very well done by our treasury. When we compare this work to other companies in Brazil, you see that we have really managed to achieve investments that we're going to do for the next 4 years and -- or what were 4 years at that time, we have 3 years and a few months. Now -- but we were able to prove to FINEP that we are really going to have sustainable growth, bringing new equipment that are going to increase the company's competitiveness compared to other companies abroad. And this is a very important point. We were able to raise more than BRL 300 million with a system that where you have reimbursable funding. We had reimbursements in the past of BRL 60 million. And now, we have about BRL 300 million to be reimbursed in the next 3 years and 4 months and a 3.3% rate that is very good for the company and will help in the company's financial position. And considering now that this was my last slide, and I'm going to give the floor to my colleague, Renato.

[Interpreted] Good morning again. Thank you for being with us. My name is Renato Brighenti, I am responsible for structural components business. I've been with Maxion for 26 years. Let me move to this side. So the idea for today, I have only 9 slides. And my idea today is to give you -- talk a little bit about our strategy for the next years in our business. And I'll start with a very simplified slide about our product portfolio. And although it is simplified, I think it manages to capture all segments and products. We provide light vehicles, commercial vehicles and a whole range of products, but it's hard to bring in 100% of our reality. We're talking about more than 15,000 products that we produce in our business. And that is why we have one of the first strategies in this for the last 3 years, which is focusing on our core business. We know funding is finite. Money is finite. People are finite. So we have to make intelligent good decisions. And when we remember last year, many of you were with us. We thought about bringing our business to historical margins. And I can tell you today that we are in the right path. We continue working strongly in that strategy and for us to be able to achieve and sustain this new margins. I'll start by telling you how we're going to do that. And first, Pieter talked about this previously. We need to start transforming our production lines, focusing on the core of our business, which are the side rails. In this, the first one is related to our factory in Brazil. We are going to make small investments in the current lines bringing new technologies to the existing equipment and adding and bringing new equipment that will allow us to work more efficiently and be able to produce some products that today are not possible that we can produce not us in our competitors and I'm going to talk a little bit about that and the consequences. So some investment in Brazil and one of the big -- a large investment in Latin America, in North America and why that difference? Smaller investment in Brazil, larger one in North America. In North America, the side rails and truck market is about 4x larger than the truck market in South America, and that requires large investments. And this is an investment we started about 3 years ago, it's quite complex. We're talking about a plant that is completely new and that will bring more technologies, more efficiency and the capacity to produce new products, but we'll ensure capacity for the future. And our idea is that our clients have a greater perception of our business and of our products. And you can ask, capacity will bring that perception? Yes, it will. And one characteristic that is important about this product is that without it, you don't have a truck. It's the first product used assembled in a truck. A truck can be produced without a mirror, without a panel, but it cannot be started. The production cannot be started without a side rail. So any client new or old or potential, they aimed to ensure available capacity for long-term confidence. And to give you a little pick on that, we'll show you a video about the point that we started 3 years ago and in a smart way we structured this investment a little bit differently. [Presentation]

It's a new plant, but it's a modular plant divided into 4 stages. What you see now is the first stage ready. It's been ready for 2 months now, and there are still 3 additional lines being built, and they will allow us to work in parts and with the CapEx, of course, the first part was much more difficult. But the next ones are going to be of a shorter deadlines. And apart from this, this plant will allow us to be efficient when we are in low seasons, and we are going to be more efficient in these periods. We will be able to phase these lines, keep our costs, especially the variable costs low and this is important for our clients as well. And there's more. Of course, it's important because of the long-term agreements. The clients are looking into finding future capability. This will allow us to work with 3 of the largest clients that we have with good contracts and -- of course, apart from the existing once the new clients as well. With new capacity and new technology, we'll be able to attract more clients. I have 2 examples for you. One, having the manufacturer hybrid trucks and electric trucks, they came after us. And we are the only ones who have the technology to design the product and the design that they need. These are products that were created for electric vehicles, which are different from what you see in other companies, which are adaptations only. So we have something new. Class 4 and Class 6 vehicles are being served with these products. These are lighter vehicles, and we are betting on these segments. We have a smaller participation, a smaller share. And our participation is much larger than the ones that we have in large vehicles. The second client that we are working strongly with, I don't have the name here, I call the screen, but that would be the main vehicle assembler in the world. We are just about closing deals with them now. And what is specific for Class 8 trucks is that we are leaders for Class 8 trucks in North America. And in case in the future, the electric vehicles are representative of our larger share in the market, we are going to be ready because we are not going to lose this market share. And of course, we're going to have more market share than today because part of it is with the competition. So what comes with it? And I think I've mentioned this last year, too. They need -- electric vehicles need components that do not exist today. And we are creating everything. We've at first everything that can be done in this segment for now. And we are working with material and equipment that are not what we have in our core business today. We started 3 years ago asking the following questions. How can we minimize and actually maximize to facilitate with a product and commit the requirements and with the partnership with [ Novelis ]. And I believe you all know Novelis, there is a product that we are going to allow in the second semester for the year. It's a battery box. 100% stamped in aluminum. And this is going to be developed by Novelis and 33% lighter on the aluminum battery compartment, which is different from everything that is done in the market today. We can say that if we work challenging our engineers and our personnel, we are able to work differently and more intelligently using our own resources. And of course, it's important to have capacity, investment because this is going to attract clients. But you just mentioned something else. We are 100% focused on efficiency, growth, and continuous improvement, especially after last year with the new tools with artificial intelligence, we've focused on a few things. I have 3 examples of what is represented through these technologies. We are looking into bringing more quality and making our products stand out from competition. This is our strategy, trying to reduce our cash and capital in use. And of course, the profitability part is something important. This is a very interesting work we carry out because everything that you see, all the decision-making processes during 18 months is based on this profitability portal because it indicates where and what we need to work with, whether this is pricing or negotiation of items, components, process improvements. This guides us and shed light on what we need to change. Each product is worked on according to what is shown in this model, and it reflects the investment we've been doing in the last 12 months. Of course, we cannot do this without people. And I believe Pieter is going to resume this subject. People are in the center of everything we do. Artificial intelligence is said to steal job positions everywhere in the world. Maybe yes, it will. But it's going to get the jobs of those who do not use these technologies in their daily routine or for the decision-making of their processes. If they don't use it, they're going to have a hard time. This is why with Maxion, we have a system being implemented that not only allows people to work with the technologies, but also stream them on the technologies and then they are challenged to really use that during their daily routines. And we've been really successful with this. We have a program called [indiscernible]. And last year, we had a very good and prominent at the lives of these programs and many of the great ideas we received from this program using artificial intelligence. And lastly, same way people are challenged to be part of programs increasing capability, we are also challenged by the subject of sustainability, which is the reduction of emissions. Working with reductions of emissions within processes on Scope 1 and 2 is easy. If we have infinite money and infinite resources, you can transform a company and bring the company to net zero. But the challenge is to do this in a way that I not only have the reduction, but I can also transform this to a process that can reduce emissions, benefit the company and benefit clients. So these 2 examples are really important. First one, for panels in Mexico. This was the first plant in the out of ours sector with solar panels. This was created with 0% CapEx with a partnership, and it's reducing 5% to 6% in our consumption or at least the price in consumption of electricity. And we've managed to take [indiscernible] plant close to 0 waste for certification. We have changed. We reduced CO2 with component with very low CapEx and a very interesting return of investments. These were the examples I wanted to share with you. Of course, I would have a lot more to say, but I believe the message was given. Some years ago, we decided to focus on the core business. We needed some decisions -- important decisions with the money that we have and maximize our results. We are going to transform our operations and make them be more efficient to make our product and our ability to stand out. We are going to deliver value, and this is how we're going to grow, not only with the current customers, but also with the new ones. We are already managing to increase our participation in the market, not only in North America, but also in South America. And we are getting ready for the future with regard to capacity. And it's perceived very strongly by our customers. And this is how we are going to transform the business. And with this, I would like to thank you all and give the floor to Mark.

Good morning, everybody. So I think Pieter already revealed the secret when he was talking about nationally. So let me also quickly introduce me to yourself and maybe later on we have the opportunity to also interact face-to-face. So Mark here. I has been with the company now for more than 10 years. In wheels business, I am close to 20 years of experience since April this year in a position to represent also Maxion Wheels. Now when you look at this picture, where was I looking at most probably within the office I was looking to Brazil [indiscernible] in Germany. So I'm being based in Germany and from that role traveling around the globe as well, visiting our plants across the globe. The agenda for today is that I would like to update you on our growth engines, how are we achieving our growth in the market. When you achieve growth, the key question is how you execute that growth in the market. So with a strong focus also into the operations in order to achieve our ambitious targets. And last but not least, when you have the right product, when you have the right strategy in place, you need to have to use capital also to make it happen. So that's the business story line for today. So let us start first what is the bit of the background and you see here one vehicle, the [indiscernible] model and you see also the cars of today. Maxion has been around for more than 100 years. And for more than 100 years, we've been supplying the OEMs across the globe whether it was in passenger car or in commercial vehicles. And that has resulted in the fact that we have a global footprint. We really have become a very trustworthy engineering partner for [indiscernible] all those companies. And that's very important for a component like[indiscernible]. Today, we do consider very much a design element for the vehicle. But we should never forget that the wheel is also a safety part. So making sure that you can engineer these components in a perfect way is very key to our value proposition. So when we follow the journey and our growth strategies, and that's what I will talk you through the next couple of slides, whatever we do, and we can explain that also from the wheels being lined up at the backside of this meeting room. We always keep affordability in mind, and we also want to add value to that market. So that's part on how we develop, whether it is in the existing business, whether we use the existing technologies to develop new segments or whether we use it for new applications. That's kind of the core of the matter so that we use the assets in the right and proper way. I think Pieter discussed in his opening speech, the local approach. With the experience that we have in the market, we have a local footprint. And I think in today's dynamic environment or you can call it a complex business environment, it's very good to have that local opportunity and to serve our customers globally in that perspective. And last but not least, it's all about the operational excellence in the end because you need to achieve your productivity targets, you need to make sure that you work also with the future when you talk about digitalization, when you talk about artificial intelligence, you need to be on top of those trends and make sure that you can process them into your industrialization. When you then talk about our transition, I think 5 years ago, when the pandemic hit in, we had to cope with a lot of fluctuations in the volumes. We had inflationary pressures. We've had lack of components. And I think the big transition we made is we've been able to adapt our organization to react very swiftly to this kind of situations. So that's very important because i think this is going to be the new norm going forward. So in nice words people call that these days resilience, but as I think it's very important to be able to adapt your operations and to adapt your structures as quick as you can. When we talk about affordable products, we want to show you a couple of examples how we are approaching the market. It's very important that we start from the affordability and value add perspective. And as an example, especially in the steel business, you can already see from this example that when we compare the first half year '25 compared to first half year '23, we've been able to grow our convention steel business with 8.5%. However, with the focus that we've had because a couple of years again said, no, we have to look again to our steel because wheels was being considered around wheel with a couple of ventilation for us. But if you can add styling to that wheel you're going to combine the best of both worlds. We have line up at the back end of to show. But in the meantime, we've been able to grow this segment much more than we've been able to grow the business on the steel side with 27.5%. And that means we're adding value to the organization. And this look again, is not only from our side. I think when you look at the real market need and you ask the questions today to OEMs. The big question today is how can you produce an affordable vehicle. So they need to look again to those components and see if some items can be changed for more affordable solutions. And that has been driving the business, and we're supporting that also with anything that we're running. So that looks totally different scene in the past. And I think we have some examples there. We're very proud that we can start to [indiscernible] market is much more, and it's also very scalable in our existing steel facilities. Now when you look at what we're doing today, you also looking what you're going to do in the future. So you want to bring 2 examples of where we are developing. One wheel, we are just a second. All right. This seems to be better. I think one technology that we're showing is basically where we again bring 2 parts of the world together. We have the experience on the aluminum side, which delivers the design element. Then you can bring steel into the equation, which gives you not only a new innovation, but it also will add functionality at the very end. We call that today Maxion Fusion because you bring the best of 2 worlds together. At this moment in time, we're running some vehicle test with 2 OEMs in different parts of the world. And at the moment that those vehicles has shown positive results, we will be able to scale that process into our various locations. So we are very excited to follow up on this project and to move forward. And how you think what does it mean? NVH? Well, those who drive electrical cars today, it really changes the way you're driving it. Most of the people enjoy the silence in the parts. But when you develop the car, today, there is a lot of attention to how you can reduce the noise in the car. So NVH stands for noise, vibration and harshness. And there's many ways how you can innovate on that topic and to reduce noise that enter through the cavity into the vehicle. But through our network where we are cooperating with tire manufacturer and with OEMs, we have been able to develop a wheel that has the ability to exactly break those frequencies to the wheel that help and increase the comfort in the car. So still [indiscernible] of this year, one of the North American OEMs were launched a vehicle with steel wheels that adds just functionality better. So we are very much looking forward as this product and [indiscernible] of other innovation, very sustainable. So we have the ability to [indiscernible] wheels and all of our new locations. So we've had some really exciting stuff going forward. When we talk to your applications, we're really about looking on how you can use the existing technology and apply them. On the picture, you see an example of the forklift truck, but there's more opportunities there. And the thing over the past couple of years, we've been able to basically diversify our business and enter into more different niches, we call them and new applications. And as you can see, some of those applications are really starting to take traction. We've been able to sell already more than 1.2 million wheels in light trailer applications, the picture in the middle, but also in the area of recreational vehicles. And when we look in today's global environment, there are more and more structures are being spent on defense. We've been in this industry for many years. We pick up these orders when they run through normal OEMs and trailer customers by putting more structure in place, we have the ability to grow a 2D business in this segment. Now Pieter talked about new applications. talked about our new plant in Turkey for aluminum Wheels. In the commercial vehicle sector, our company has traditionally been very strong. We have a market-leading position in that segment. But we also, let's say, could not supply the complete portfolio because there is a certain portion in the market that is choosing for forged aluminum wheels because payload really met us. Think here about the liquid trailers, I think you hear about specific truck applications or construction applications. So having now the opportunity to build a new plant that will be SOP by the end of the year and completing our assortment that really helps us to build even stronger relationships with our commercial vehicle OEMs and to really leverage not only the steel business, but really our customer relationship. Now it's very exciting. I think it's a technology -- it's a new technology for us. But I think over the last couple of years, we've developed the technology in-house, and we're confident that we will be able to execute the plan at the end of the year, and we'll be adding also what is called surface treatment during the course of 2026 to grow this plant going forward. To show you the progress and that it's really happening, just a small video of the plan in progress. [Presentation]

So we're getting very close. Still the last pieces of equipment are being installed. And soon, we will really start to manufacture the first wheels off tool, off process. And that's really going to be the most exciting moment for this investment that is going on. So definitely looking forward to the launch of this plant. Last engine, it's about continuously looking in the market what is coming. When we talk about new customers, we are already supplying more than 100 OEMs globally. As I referred to earlier on, it gives us a lot of input also on the requirements from those customers. But more important that if we look 5 years back from today, the landscape is changing. No players have come to the market. If we most probably 5 years ahead of today, again, we will see a change in the landscape. So as an organization, we really need to stay on top of those new OEMs that are popping up. And today, many of them are coming from China. So with our footprint and office also in China, we have the ability to really serve those Chinese OEMs with a strong focus on those Chinese OEMs that really also have the intention to build a global footprint outside of China because that's another opportunity that lies ahead of us. So we already start to work closely with them. And our target is to really capture share with those Chinese OEMs using our wheel expertize and using our local knowledge, which they are lacking. That has also translated into the fact that when you start to compare your new business wins. So most of the time, those are programs that will come to market or 2 or 3 years from now that we've been able to increase our new business wins when you compare first half year '25 to first half year '24 with 7%, which is a solid foundation also going forward. Now when you talk about the growth engines and when you talk about how you execute on plans, I want to dedicate just very a few slides on how we bring this to life in the plants. And one of the key purpose here is [indiscernible]. And how do you do that? That means in order to [indiscernible] we believe in a sure that plant that we closely follow up with organization. That goes hand-in-hand with discipline capital management and the case of hand-in-hand with a structured approach [indiscernible] we call that really helps us to follow up on [indiscernible] in a structured way. And as you can see, I think we're very strong in this area. We have already more than 320,000 valves in the organization with more than 130 well, and that really helps us to keep on navigating structured approach to reach those productivity. And this is supported, what I would call high impact low CapEx. Through the process of natural work units, we scale. We have many small projects every year close to 7 or 8 whether you will come up with ideas that we can share across the plants. And that really helps us in an additional way to achieve those productivities that we really need going forward. Similar to Renato when you did talk about [indiscernible] if you look towards the future, there is no way that we can be a digitalization of assets. So that means it's not only that we need to embrace, let's say, this digital transformation. We need to work with the data. So data-driven manufacturing processes need to be embedded in our DNA, and we're doing so. And we're also being recognized for that in the market. And we're doing that not only in a couple of locations like we're seeing already through the funding of the [indiscernible], we're doing that across the globe using our standard approach. And to demonstrate that we have [indiscernible] showing this how we execute that in our location. [Presentation]

So what it shows that it is [indiscernible] process generally have a strong competition for the future. And when you look at the opportunities whether [indiscernible] detection. If you need to have this kind of data [indiscernible] that's what we're working for. That's what we're looking for towards the future. All of that then finally lease, I would say, it's almost a logical result. But if you have a growth plan, if you have the right product into place, you can excel to your operations by default, you will have an engaged workforce. Because in the end, they are driving the organization, and they are capable of generating a lot of new innovative ideas that we can then filter and implement them to the organization. So we're very proud that we have the human capital in place and also have the ability to develop new skills and with that attract and retain also new talent going forward. So as a summary, we've been able to adapt our organization to today's dynamics and being capable to being resilient into the market. We have been able to outpace the market and to grow our businesses. I think with the innovations that we have ahead of us, that is the way forward. And yes, we continuously need to invest in the right talent to make sure that we can secure also for that business going forward. And with that, I would like to hand over to Pieter.

Thank you, Mark. There was a lot of components and even more wheels. Are you guys hanging there? Still okay? Okay. On slides between me and coffee. I'll keep it short. 2 or 3 more topics before I wrap it up. Sustainability. We talk about that a lot and rightfully so, I mean our Chairman of the Board talks about that a lot rightfully. So it's a very important topic. It's not only necessary topic it's a nice topic as well, right? I mean it's a good thing for the world. But I think we believe it can only work if we make it affordable. If it's only coming through governments that are penalizing the industry by forcing them to pay penalties if they don't apply, short term [indiscernible] long term, mid term, long term, we believe that we need to come up with solutions that are both more efficient and more sustainable. If we make that happen, then we really get some traction on this in the world. And for sure in Maxion, we don't have the opportunity to invest a lot of CapEx and making this happen. We must make it happen, but we will do it in an affordable way. That's our strive when we talk about sustainability. People, sometimes now I come a little bit more to the end a little bit more informal. My kids, now they are 10 and 13, a few years ago they asked me that papa, what are you doing? You're always gone and trembling on [indiscernible], right? And so I got a wave by telling them I'm going to make a wheel, a few more wheels, right? And that was good a few years ago. Today, they don't take that anymore and they say what do you really do right when you go to all these places. Think about I think what I try to do and what my team tries to do is to make a good global team, right? And that's what has been talking about or Mark has been talking about we have more than 40 nationalities, we have 33 soon to be 34 operations in 40 countries. These people need to be developed. These people need to be trained because people need to be engaged, right? And we are very proud about our engagement scores that are benchmarked in the industry. I think a lot of the time that the management spends during the day, when they travel around the world is to try to make a better and better team globally in this company. Not only do we work the people in the company. Of course, we work with a lot of external people as well but also I don't want to miss the opportunity in this conference to talk about the [indiscernible]. This is pretty well known I believed in the Americas for South America then we expanded to Mexico. Last year, you may -- some of you may know, some of you may remember, we expanded this program international, let's say, and we started in India. It was very successful, and we are launching the second program there in India as we speak. I can also tell you that we're already working on launching in the next program outside of Americas in EMEA regions. This is just an example of what we do. We don't brag about it too much. We don't talk about it so much as we talk about our results in the market and all of that, but this is also very nice just like sustainability and very necessary thing to do as well. I think [indiscernible] once said, if we're only good in making the business better, we're not good enough, right? We also need to make a little effort in our social responsibility. And so that's what we do as well besides trying to deliver all the numbers have we talked about with you guidance that we will continue to talk about. Now, coming to the 2 more slides. I hope you the take away from this 1.5 hour that we believe even though the markets are dynamic, challenging, there's a lot of going on, we believe we are in a more favorable position than some of our competitors and some other suppliers with a strong global footprint and flexible operations and an agile workforce, flexible workforce. We will focus a little bit more on doing more with less CapEx projects. We talked about that both components as well as in wheels. And so smaller with a quicker payback projects, more applications, more new products worked on that a lot in the last 10 years, and we will work more on that in the next coming years and more AI and digital transformation. And last but not least, I repeat, we will continue to drive to grow to strengthen our balance sheet and deliver the shareholder value. So markets are dynamic. That's a fact of life. Sometimes it's a little bit more sunny sometimes it's a little bit more rainy, but I can guarantee you that Maxion, no matter how the weather is, we will try to perform as we promised to you. Now coming to the very last slide talking about sunny days. I think that is one of [indiscernible]. So I thought about this. I saw this and then I thought about something that on the right there, and I don't want to compare the guy arrives my son 10 years old and he's driving in the local cutting championship, which is very different than driving Formula 1 world championships. But he told me something that, we started late, he's 10 years old should start with 5 or 6 years old, right, not 9 years old, like it did last year. But this is getting there. It's becoming faster and I actually like the raining and not the dry, [indiscernible] I don't like the rain, right? Normally, I like the sunny days. I come from Holland. There's not a lot of sunny days like. I like the rain because you can do things different. Guys that are already now in 4 or 5 years, I can [indiscernible] quicker because they also don't have so much experience in the rain. So I like the rain. And then I saw this raised from [indiscernible]. That's true. It's not only true in racing [indiscernible] it's truly business as small can be sunny days, and we like that and everybody goes faster on a sunny track. But times can also be rainy. And with raining, you can make a difference. And I can promise you that Maxion to continue to make a difference, whether it's sunny or also when it's ready. So I hope you enjoyed this conference. I hope you enjoyed the many wheels and components that you saw, and I hope you will think about us and have many questions that I hope we will also be able to answer. So the I think we go to questions and answers.

[Interpreted] Well, we're now going to start our Q&A session. Please feel free to pose your question in Portuguese or English for Pieter, Renato. Just raise your hand, state your name and then you're going to have a microphone to pose your question. Okay?

So I'm [indiscernible] Investor Manager from Investors for the Future. Congratulations on your presentation. I like the tone. Welcome, Pieter. I was happy to hear this energy from you, the long-term relationship with the stakeholders. We purchased Iochpe shares in 2018 after an event from APIMEC, just like this one when they showcased some of the products, I was really impressed with the quality at that time. And again, some years later, the products are still here. The quality is still the same, focus on innovation. And I think it's really nice. But the story has shown that Iochpe still has some things to do, and it was emphasized by Pieter really well. Having good product is not enough if you do not execute everything with the product in an orderly fashion. I think it was the tone that you set for the presentation. You went right on target and your diagnosis was really aligned with doing more with less. When I purchased the share, costed less. Of course, there was some loss in the capital. And as a shareholder, we have this fiduciary obligation of looking for the return. But I was really happy to see that you are in this pursuit of this historical margin. You perceived all of the nuances, the market volatility, things that the company does not have any control over. I have one question. So within all of these challenges and it -- everything that the company is exposed to, and in view of everything that the company has already delivered in regard to profitability, and remembering that the EBITDA margin is not profitability -- is about profitability. It is the cost of capital and return of capital to the shareholders. We need ROE that is in alignment with the cost, right? My question then is many companies share and disclose this piece of information. How can you see the deadline so that we can reach that return of investment to the shareholders, 2 digit that is aligned with the cost of capital. In view of everything that the company can do despite market conditions and what are you going to do to get there? What can we expect for the coming years? What is within the company's scope and what we can do so that we can get to these returns to the shareholders because it's been a harsh time for the...

Thank you. And thank you for the support [indiscernible]. So I'm learning Portuguese so I could understand most of what you're saying and the rest Renato was telling -- for me. So yes, that's a very good question. That's something -- a challenge that many companies have including ours. And so I think when you listen to what we're trying to say when we say want to do more with less, and we want to have new products. Those are important things. It's not the slides on a piece of paper, but if we say we want to do smaller projects. 10 projects of BRL 5 million instead of one project of BRL 50 million, those projects need to have 2-years payback, 3-year payback [indiscernible] payback. That's different then what we had to do in the last year. So that's one thing. We want to do more projects with quicker payback, less CapEx and quicker payback. Then if you talk about new products. First of all, it's necessary to grow a little bit faster than the market. If you want to share gain in a very competitive market, it's very difficult if you don't decrease the price to the lowest price that is there in the market. This is not something that is very good for your profitability. So our aim to come up with new products that give the value to customers that they don't have yet, I'm not saying these new products, we will be the only one for the next 10 or 20 years, but at least for some time, we may be the first one, we may be the only one. Those products, of course, want to have a little bit better return and understand the understand the product. So doing better projects, doing quicker projects, doing -- having new products that customers like, customer needs and they don't have yet, I think those are two ways of trying to improve margin a little bit further, and decrease the costs that we need to make those volumes happen. Now at the same time I also believe that right now cost of capital, we are competitive but it's kind of expensive, right? I hope over the next 1, 2, 3 years, the cost to capital would rather go down than go rather up. So it's a combination of both, the cost of capital needs to come down a little bit more, and our margins need to improve a little bit further. And that's our target. It was our '23 to '24, it was our target from '24 to '25, and we are committed to the target and that will also be our target for next year.

Just to finish, I'm trying to understand, 1.5 years from now, you said that margin EBITDA, historical levels would be reachable, and you delivered. Congratulations. Again, I would like to listen in some way, how is the time to reach adequate return of shareholder that's the main goal as shareholder we would like to see.

Yes, I don't have the data. But I think we're on the right track. I think we're almost -- then, of course, we need to see how the markets develops, right? We -- some markets have been developing a little bit more negative in the second half of this year than people were originally expecting, think about North American truck for example. But I also believe that everybody would agree that at some point in time shortly, this market will come back, and we are ready for it. This is investment that we talked about a few times. So I can't give you an exact timing, but I think our target will definitely be on the short term, if we get to such a situation.