Kepler Weber S.A. (KEPL3) Earnings Call Transcript & Summary

[Audio Gap] Following all of the safety protocols that we have for COVID-19. This morning, we have with us our Chairman, our CEO, and our commercial and marketing superintendent. We have our strategic agenda. We're going to be talking about industry trends, opportunities, some highlights and some opportunities for growth. And then we would like to invite you to join our Q&A session. [Operator Instructions] Let's start with a short video showing history. [Presentation]

We are very proud about our success story, and we're very excited about our future. I'd now like to invite Marcelo Lima on to the stage. Marcelo?

Hello, Paulo, good morning. Good morning, everyone. Thank you for joining us on such a special day. It is a special day because this is our first Kepler Day. And it's also very special because it's a special moment for the company, for the company's history. We have been around for almost 100 years. And I'd like to start off by talking about our results, our financial results. And as the investors know, we have record-breaking results in our company. And these results are a consequence of a work that I need to stress here. The team that is led by Piero, also represented by Paulo and Tadeu here. And in this 1.5 years of so many challenges, we have been able to really deliver results to our clients. We've always wanted to understand our clients' needs better to deliver the best solutions possible. And there were a number of challenges in the pandemic, be it in the industry or in the supply chain. And I was in Goias last week and next week, I'm going to be in Mato Grosso. And from what you hear on the field, you can see how strong the Kepler brand is because of customer service. And I'd also like to talk about the future. So it's not only about the past and what has brought us thus far. The assumptions that have brought us this far are still valid, they still apply. There is a storage deficit in Brazil that's going to be 100 million tons. And the demand for food is going to continue to grow. China is going to be needing more grains and Kepler, as a market leader, needs to continue to improve yields and reduce waste. Kepler has always been a reference in innovation and technology as well, and therein lies the opportunity that we want to share with you today. We see the opportunity of bringing in even more innovation into our storage structures, which will allow that our clients can look after the grains better and have better results and that allows for the company to have more recurring revenues, which arise from a better quality type of business that we believe in. So based off of this context, we would like to invite you to look at this opportunity and understand that with us this morning. Thank you, Paulo. Over to you.

Thank you, Marcelo. [Operator Instructions] I'd like to invite Piero Abbondi to talk a little bit about how we have been growing and how we see the opportunities in the market. Welcome Piero.

Thank you, Paulo. Good morning, everyone. I'm very happy to be here. And I want to talk to you about Kepler, what we are doing and what we will be doing. I've been the CEO of Kepler for 3 years, and I've been working in agribusiness for about a decade. These past 3 years have been quite intense, and I believe the years to come are going to be very promising, and there will be many challenges ahead of us. Let's talk a little bit about our purpose, our essence, which supports our journey. We have a clear purpose. We want to look after live protecting what comes from the land with post-harvest solutions. The grain is a living being that needs to be taken care of. And that is part of our mission, which is to have great solutions that are innovative in post-harvest. So we need to see what happens after the corn buying. What happens after the grain has been harvested. We are inserted. We are part of the food chain. Brazil is a great producer and exporter especially of grains such as soybeans and corn, and Kepler is part of the supply chain. We want to be a global reference in the post-harvest market. Let's tell you a little bit about what's happened in the past years. In the past years, when you look at historical data, you can see that we have suffered quite a bit from 2014 to 2018 when it comes to results. And in 2018, we started focusing on 3 main tenets. First is profitability for 2019, and we were able to do that through lean manufacturing and operating efficiency and better management of pricing and costs. We showed our results in 2019 and '20 and in the first quarter 2021. Then we sought to have consistency and robust results. In 2020, we delivered good results, but we had significant challenges. We had the pandemic and the global supply chain was also affected with an acute crisis. Kepler was able to act and overcome these challenges and deliver the results that you can see in 2020 and in the first quarter of 2021. After delivering results and becoming sustainable with our results, we seek to grow. We have a solid base into these results so that we can continue to grow into the future. Of course, the very base, the foundation is people and sustainability. And when I say sustainability, I'm not only talking about results, but I'm talking about sustainability when it comes to people, the environment and social and governance aspects. Efficient risk management keeps a company healthy and keeps the company's revenue consistent. Kepler's team is extraordinary. We have been performing really well, and we have been overcoming the challenges that we face. Let's talk a little bit about Kepler and our position in the market. Kepler is 96 years old. We've been a public company for 40 years, and we command market recognition. When you speak to farmers and growers, I can assure that 9 out of 10 growers will mention Kepler as a reference in the post-harvest market. The company has always sought to stand out based on 3 pillars. We've always been people-centered. Agribusiness is all about relationships. We need to forge good relationships with people. So we are really people-centered. We are close to the farmers, and we have great relationships with them. The other pillar is products. Kepler has developed a thorough product portfolio in the course of time that our clients trust in, and we have innovated, and we will continue to innovate. We can name a number of examples like KW MAX our dryer, and we'll talk more about that later. And the last pillar is services. Our job isn't over when we deliver a project. It is over when a farmer's plant is operating. So we put together the project. We set it into gear, and then we support the project in post sales with spare parts and with technical assistance. So we really care about our clients, and we support them. It's also important to mention that sustainability is also aligned with our values. Sustainability is at the core of what we do. We are inserted in the grain journey. When we talk about food safety, we talk about quality of food, the amount of food available, traceability and the origins of the products. Society has been demanding responsible agriculture. And we, at Kepler, are inserted in this chain. And with our commitment, we want to improve efficiency and transparency for the supply chain. In our internal journey, we also have that concern regarding responsible production. So we optimize the consumption of inputs like energy, steel, looking at minimizing environmental impacts. This is done through an integrated management system that allows us to follow up and control to achieve our goals. And we also have many certifications that support our work. Regarding products, we are concerned about technology and innovative solutions that allow us to minimize environmental impact. A lot of our products, like our driver -- dryer tend to minimize those impacts and consume less energy. Last but not least, the care for our employees to overcome all our challenges. In 2021, we were certified by Great Places to Work, and we are very proud of it. Very well. So we talked about our basis for growth. And here is a summary of it. We have important results, a significant increase of revenue, good cash flow. We are leaders in the market in Latin America. We have a good market share, and we have operations to support the demand. Over 5 million tons of grains are delivered annually and we have several plants located strategically. And the basis of all that is our people. With our employees, we are able to deliver and overcome all of those challenges. So we've talked about Kepler, where we are. Let's talk about global trends and where Kepler is inserted. So regarding macro trends and opportunities, Kepler is aligned to the strong increase of global food demand, emerging countries have been feeling the global population growth. China has inserted over 500,000 people in the middle class. And that is due to urbanization and cultural change. So people in the middle class end up consuming more animal protein and that demands more soybeans and corn, which is the basis of our product. Brazil is also a great producer and an exporter of food. In the next '21, '22 season, we have over 290 million tons. And that -- and agribusiness represents 50% of Brazilian exports. So we have been observing this trend for a few years, and it's predicted to continue in the next years or decades. So talking now about market potential. Kepler is strategically positioned to meet the restrained demand for the post-harvest sector. So when we compare the demand and production of grains versus the capacity of storage. We've had a storage deficit of 76 million tons. And compared with the United States, which is our benchmark. United States is the is a great producer and exporter of grains. They have the ability to storage one yield. And we have a capacity of 76 million, and we will reach 100 million in the next season. So we have an excellent opportunity for Kepler there, and Kepler is really well positioned to seize that opportunity. So we've talked about market potential. And I would like to mention the benefits of post-harvest for the society, for producers and consumers. So items 1 and 2, food security and safety in terms of quality and price to logistics. Brazil is a great exporter, and we cannot expect to export a whole season. We have to storage grains and farms at the origin and streamline logistics, putting less pressure on the system. So Kepler is part of the logistics of grain transport. Items 3, 4 and 5 are directly linked to the farmers, more productivity and efficiency. The increase of negotiating power, so farmers will own their time. And with digital technology, we will have better productivity in farms. So we've seen the benefits that are motivation for the farmers and also to invest in the post-harvest plant. So here, you can see the main avenues of growth for Kepler, be it market growth, added value products and digitalization of our services. Talking about market growth now. So you've seen that we have an immense storage deficit. With that, Kepler will go into the market to convince the farmer to invest and seize those opportunities. We are also looking at different financial solutions. We've seen the post-harvest generating efficiency for the logistics systems. We've been seeing a lot of investment in ports and terminals, especially in the north area region of Brazil. And there's great potential of development of that item. It's a great market and we have lots of opportunities for growth. Regarding added value, we seek innovation constantly to deliver more value to our clients. We also have premium prices regarding our competition, because our clients value what we deliver. This is an optic grain selector. We've obtained that last year, and that demonstrates our focus. Tadeu will also mention other examples, because that means we're adding value to our business for our clients. And regarding digitalization, we want to enter Agriculture 4.0, leveraging all services related to digitalization, delivering more value, generating recurrent revenue for our clients, for us, and create a long-term relationship with our clients. With that, we open new business opportunities and new service opportunities in the future. Regarding digitalization, we will talk about that in more detail in a little bit. So thank you so much. Paulo, going back to you to move on with our Kepler Day.

Thank you. All right. [Operator Instructions] So now I would like to invite Tadeu Vino on the stage.

Thank you, Paulo. Good morning, everyone. It's a pleasure to share with you some information about Kepler Weber. I'm Tadeu Vino, the marketing superintendent. I've been working with post-harvest since 1988 when I graduated in agricultural engineering. Back then they said that agribusiness was the future and the future is now. So I would like to talk about a little bit about innovation, but also about Brazilian agribusiness. Brazil is an agribusiness power. When we look at production and exports, we are positioned among the 3 top leaders in the world. Exports of soybeans and corn corresponded to 130 million tons. And the good news is that it is growing. Looking at Kepler specifically, we are present in 7 of 10 major agribusiness supply chains, offering solutions for most of them, soybeans, corn, coffee, rice, sugar, animal protein and also wheat. With all that, we have solutions for all stages of post-harvest, after harvesting and before exports. So origination is where the farmers storage the grains, and farms or trading companies or grain dealers. There's also solutions for logistics to improve transportation with trains or boats to bring grain to ports. And for transformational, which are the industries that prepare grains for export. Industry has to have storage, enough to operate between one season and the other. And how do we serve these clients and seize those opportunities? We have 4 business units that are constantly evolving: Storage; solid bulk handling; exports; and spare parts and services. Just like Piero mentioned, we have a deficit in storage of 76 million tons. When we look at the map, we see that 50 million tons are in the Midwest region, which is the highest grain producer. The rest is divided between South, Northeast and North regions. There's only a surplus of production in the Southeast area, but we still have deficit in the producing areas. We storage at farms only 14% of our production, which is far from the proper capacity of our countries. Other countries go over 40%, reaching up to 85% in Canada. So here, we have a great opportunity. It is at the farm that storage has more value added. With that, we increase income for farmers who can invest that money in innovations. And how can we even capture resources and build these facilities? Live storage facilities have resources to be built. These are probably built by cooperatives, for example. Other companies may find credit lines abroad. And farmers mainly use what we call PCA, which is the program to build and expand storage. In the season '21, '22, we have 85% more than the previous plan in terms of resources. With payment terms in up to 12 years, a grace period of up to 3 years, and interest rates of 5.5% to 7% per annum, this is the most attractive credit line that you can find in the market. According to the Ministry of Agriculture, these resources are enough for us to build 5 million tons and 500 new plants for storage. To meet this demand, Kepler has a team with over 50 commercial agents that are highly trained and are specialized in finding the most suitable solutions for our clients. This is a heat map showing the darker states as the top producing states. And our teams are strategically spread throughout Brazil, as Piero mentioned. We have relationships built on being present and closed with our clients, and we believe this is one of the company's fortes. And we have a market share that verges on 40%. And we are second to none, we're leaders in this market. I'd now like to talk about solid bulk handling. We call it MGS as the acronym in Portuguese goes. This map shows the main lines of transport in Brazil. We have 2 points of exit. We have the northern arc, where we have the concentration of the northern states, then we have the midwest and the south, where we concentrate the exports for south and southeastern part of the midwest states' exports as well. To get to the ports where we're going to have exports take place, we need to have transshipment terminals, and we are specialists in solutions for bulk content. At these terminals, commodities are transported by trains or barges. And in the past 3 years, we grew exported volumes by 50% in the North Arc and 12% in the South Arc. All of them will need investment to meet the growing demand that we see nationally and internationally. To meet the needs of our solid bulk handling operations, we have a structure that meets all needs of transportation, be it ports terminals or sea or river ports. This segment also covers agribusiness. With characteristics such as 24/7 operations, 365 days a year. That will not have any maintenance downtime, that is not planned beforehand, we are thus meeting the needs of our clients. And that strengthens our market and our market position in our brand. Let's go on to the third segment, which we call spare parts and services. This is where we have our recurring revenue. In 2015, we devised a strategic plan to grow our spare parts and services department. And with this plan, we were able to increase our revenue in 5 fold, increasing our recurring revenue in over BRL 100 million. This success was based on the equation factored in availability plus proximity equaling agility. We opened 5 new distribution centers, well located in the agricultural regions in Brazil, and that allowed us to be close and gave us proximity. We have the suitable inventory for each region. So we have the right availability of spare parts, and in that, we are solving the equation. And in providing services quickly, we have been able to grow. The machines are available during the harvest season because one day without operations could have an impact of million tons. So speed is the name of the game. Let's now talk about our fourth segment, which is exports. Kepler started exporting at the start of the '70s. Delivering products to Paraguay. And today, Kepler is present in over 50 countries. Our company is the biggest exporter in this market segment. And we have 40% or virtually 40% market share. And our objective is to market post-harvest solutions abroad, solutions that are developed by the other 3 segments I mentioned earlier. To Kepler, exports is not only a very important source of revenue. But exports is also the door to new technologies being developed all over the world. With that, we are contending with world-class competitors. And that forces us to be up-to-date with the cutting-edge technology all over the world. As I said at the start of the presentation, our segments continue to evolve constantly. And we are also updating the names of these segments so that we can materialize what we expect from our actions. The post-harvest market is broader than the storage market, so that opens up new growth avenues for us to market more or higher value-added products also increasing our market coverage and improving our customer relationship. Going from exports to international businesses, we're also expanding our opportunities in the international market. We'll be able to market products alongside other companies that manufacture in different continents. Now the ports terminals and agribusiness segment will be delivering our expertise to the agribusiness companies. And to wrap up, I'd just like to talk a little bit about what is to come, what we'll be launching. And then I'll turn the floor over to Piero, who will delve deeper into this subject. In the past 3 years, we've brought many products into the market. We launched our 4.0 platform called Sync that allows us to monitor and have real-time operation monitoring as well as automation in our units. And this is going to be the foundation for many other innovations that are yet to come. And in 2020, we acquired the brand Seletron, which opened doors so that we could offer solutions in optical sorting of grains by color and shape. And we launched [ KW ] Max, our dryer. That was developed to optimize the drying process, consuming less thermal and electric power and making better use of biomass, also issuing fewer particulates. And all of these dryers have Sync technology built into them. All you need is Internet to be able to use it. And I'll let Piero talk about what is to come as of 2022. But I have to say, I'm very enthusiastic about our future. And this is the end of my presentation. Thank you for having me. And have a great day.

Now Paulo will talk about some of the financial highlights. Paulo, the floor is yours.

Thank you, Tadeu. All right, everyone. So let's continue with our presentations. Piero showed a strategy in his presentation based on 3 pillars: sustainability; profitability; and growth. And I want to show you what results we have been reaping. But before that, I want to talk a little bit about our discipline in capital allocation at Kepler. When we look at our company's growth strategy, we're going to have a strong cash flow generation. And with that, we need to reinvest into business. And how are we going to be doing that? We do it in 2 ways. Organically, with organic growth with our CapEx program investing in productivity and in new products. And with inorganic growth that is through acquisitions. We have a clear pipeline with opportunities that we have already mapped, but new opportunities may crop up, and we need to be ready to deliver them, or rather, we need to be ready to seize them. How are we going to be doing that? We need to have a clean balance sheet. We have to have funding and loan possibilities that are suitable with good terms, good payment terms and good cost for the company. If we do that in a well-structured way, we will be able to have good return to shareholders with dividends payout, interest over owners' equity and with a share buyback program. But in the short term, we want to have a dividend's policy that will allow for transparency and a clear view of the future and sustainability around dividends as well. How are we going to execute that in a balanced way? With robustness of cash generation and working capital optimization. That will allow us to have a balance and be able to grow with financial robustness. So here, in the first slide, we have a growing gross cash generation. And in 2021 first quarter, we had over BRL 400 million. We also had issuing of new shares with an increase of 149%, and the company generated over 80% in that period. Another important information is working capital. Kepler is a company that delivers projects. We sell on one day, we will work with raw material and deliver it in the future. With that, we need working capital. So you can see here on the chart that in the last few years, the company used up a lot of working capital. And then after programs of optimizing vendor payment and stocks, we brought the working capital to a negative value. So the company generates a lot of working capital that allows us to finance other projects. Also talking about debt. The company works with low debt. We have the same standard of net and gross debt. As the company grows, we will need more debt, and we will work on that equation to have the balance between growth and the balance sheet. Now looking at revenue in the last few years. After a period of stability, which we have to consider the domestic scenario, the company increased about 15% in 2020. And when we look at the first quarter, there was a jump of over 116%. When we compare with the first period of the pandemic, the company did not have much revenue. So it's not such a fair comparison. So we want to compare with the first half of 2017. And in the first half, the company grew over 16%. Where does that revenue come from? It comes from business units and diversification of revenue, which I'm going to show in the next slide. So here, we have the 4 business units of the company: storage; exports; spare parts and services; and solid bulk handling. Regarding storage, it's the most relevant business unit. Almost 70% of the revenue comes from this sector. It showed a significant growth with a rise of 154% this half. So the company seizing opportunities in the market, the commodities are positive. Exchange rates are positive. We have a strong management as well. So we are able to deliver expressive growth in storage. Regarding exports, it's a sector that has been responding very well with a sustainable growth in the last 4 years with a rise of over 79% in the last half. And this is a very important business unit because it has 2 unique trends, diversification. So when a company has some difficulties, we are able to focus on that and diversify our revenue sources. The other important factor is the perennial revenue, which provides balance so that the company is able to fight the recurrent cycles. Regarding spare parts and services, it's a very positive area. The company invested in the company with 5 new distribution centers and has been seizing the moment in agribusiness in Brazil with over 70% increase in the last half. So it's a source of recurrent revenue, which stabilizes the company and allows for a balance during times of volatility. Regarding solid bulk and handling, it's been presenting a balanced performance. In the last half, the clients of this unit felt price pressure and experienced volatility. So postponed their buying decisions. So that's why the perspective is not so good as the others. But projects are back on track. So we have 2 projects back, and we will have this area back on running. Regarding the performance of these four business units, we have to look at 3 items: the mix of products with higher added value. Piero talked about that a bit at the beginning. The company will work to develop this mix of products. Another important item is the increased share of services. So we are increasing the participation of our company to work closer to farmers. That is really important to growth. And also the efficient price and service management. So lean manufacturing is very important. We are -- we have a process that flows very well and lean manufacturing helps us a lot. Also regarding prices, we've been through a high volatility price, the input prices were very high. And so we were able to deliver growth results and pass on the inflation. So we have growth already hired for the next quarter. Moving on to profitability. Again, it sounds like I'm repeating myself, but I would like to show the consistency on the recovery of profitability, shown that our strategy is showing results. So we have stabilized the gross profit and gross margin. And when we look at adjusted EBITDA, we have a stabilization between 15% and 16%. In the first half, we've had an increase of over 139%. In the first half, the prices of raw materials increased a lot, and the company was not able to pass on the increase of cost. So this profitability tends to increase in the next few months. Here, we are going to look on the return on invested capital. This is an important number, both for investors to look at the allocation of capital. And this is an important indicator for our decision-making in the company. So we observed the same positive performance. Moving on from negative values, going up to 44.5%. This is the highest figure of the company. And with that, we still have room for growth. Talking about investments now. So here is the CapEx of the last few years, we moved on from a stability position. And as the market is growing, there is increased demand. We've seen over 100 -- 370 growth of CapEx. Where are we investing? 76% of that is invested to increase manufacturing capacity to meet the demand that is growing and tends to continue next year. Obviously, the company is disciplined. So we are still investing in other areas: in developing new products, in reforms and legislation. We also take care of information technology, both for our internal processes and also for manufacturing processes. All of that combined presents the return for shareholders. So we have profitability, discipline in allocation of capital, so that we use this to -- so we see this ascending curve. We had no distribution in 2017. Moving on to pay out of 50% in 2020, and more recently, combining a robust portfolio and distributed dividend and interest on equity capital in BRL 270 million, so we are basically returning to the market with a good performance that we've been delivering in the last few years. With that, we see here our performance, the performance of our shares in the last few years. So we can see here since December 2017, we've reached almost 200% of valuation compared with the B3 and small-caps index. Other than that performance that relies on the market -- relies on us, but also in the market, we have the financial volume as well which was very small in December 2017 and increased almost 1,000%, reaching BRL 1 million. So this shows that the work that we've been doing is providing results. And this is a very important indicator and that we value so much. And that's why we want to attract the investors because of the work that we have done and will continue to do. This is basically what I wanted to show you. Now I would like to invite Piero back on the stage to talk a little bit about our digital strategies and the territories where we intend to grow. Thank you so much. The floor is yours. Piero, please.

Thank you, Paulo. These results show our commitment to our results and deliveries. We are well prepared, and we are ready to continue to grow in our strategies. And we have already started tapping into new possibilities. That's also related with our digital strategy. So let's take a look at what we are doing. Our journey stands in 2019 when we launched the platform called Sync. Tadeu already mentioned that to you. This platform called Sync is technology involved with all of our machines and devices, which allow for the control automation and data sharing on to the cloud. This is a 4.0 industry concept applied to the post-harvest. We want more. We don't want only technology, but we want to support post-harvest management and thus, make sure that we have more efficiency and profitability for farmers. So what benefits are there for post-harvest and how can that benefit growers, consumers and the environment? There are many benefits on many fronts. To the consumer, the grain quality and safe food. These are very important factors. Sustainability for the environment. So resource efficiency, resource management and waste reduction. As for the grower, we have operating safety, and we have optimized plans and increased profitability. With our services, we continue to monitor our clients' journey, constantly in touch with them and making sure that we have recurring revenues with the services we provide. So that we can have clarity and maximize our benefits in our digital journey. We have devoted a lot of efforts, and we did a detailed study that helped us understand the whole ecosystem we're in. We also had a specialized consulting firm support us in that. We map different territories where we could improve our digital competencies and we could increase our reach. This is a slide that shows the territories that we have to explore that we can explore. We have sync, our digital platform, as a foundation from there on, we're going to explore the possibilities in this digital system. Then we have operations and logistics as the first item. This is our core operations, and this is where we deliver value to the growers, improving drying process and the storage processes and remember storage process is quite dynamic. We have to monitor what's going on with grains all the time. And from there, we will also develop the other ones with commercialization. We want to support growers with data. We want financial solutions with crop loans, and we want to use data to improve credit lines that growers have access to, traceability of the whole supply chain as we monitor the rain, journey and development. And also we have a lot of data that can support us improve safety and security. This is the path we need to tread and these are the actions we need to take to make progress in this journey. So we need to digitalize storage. That's the first step we are already doing it. We have over 100 [indiscernible] being linked into the sync platform. And from this fantastic base, we will go into act 2, where we are going to be delivering the maximum potential storage has. And that's what we're going to be delivering to growers through support and recurring services. And we're also including other items to the journey. Act 3, enter farm. We want to combine the combine with post-harvest. So we want to be there for the whole process. We want to follow the grains journey. And last but not least, verticalization. We want to have all of the elements necessary for the whole process. We have already done act 1. We're making progress on act 2 and act 3, and we're going to be delivering our competencies, which will enable us to be present and journeys in other ecosystems. And what are the basis that we need for a digital strategy? We have value creation for farmers, first of all, with our post-harvest solutions. And then second, we have all of the clear growth avenues and all of the territories we're going to go into. So that we can increase revenue, also have recurring revenues and improve our margins. And lastly, as a third growth item, we're going to be using all of our installed capacity. Brazil has circa 18,000 plants, and Kepler is present in about 50% of these plants. This whole context only strengthens the foundation for the [indiscernible] we're planning for Brazil. What are we trying to say here? We have industrial Kepler delivering plants and grain processors. We have a lot of growth avenues in this territory. We can improve yields and we can increase sustainability. We can help the market grow, and we can tap into new territories with more value-added machines. For us to make progress on the digital front, we are implementing a new business unit to allocate resources and competencies that will be devoted to technological development and digital development. And this is our journey. We have a solid foundation. We know our destination, and we want to continue to innovate equipment device and machinery as well as on the digital front. We really believe in the future. And with that, we're getting to the end of our presentation. Now I'd like you to bear with us for about 30 seconds as we prep the stage for our Q&A session. Thank you very much. See you in a moment.

Let's start our Q&A session. I'd like to have Paulo and Tadeu here with me. Hi, Piero. All right. So we've shared a lot of information with everyone here and the updates. Let's now have our conversation with the analysts. And questions are committed. Please ask your questions on the platform. We already have a few questions here. I have the very first question here ready. This is a question from Catherine Kiselar, She's analyst from Banco do Brasil from the sell side. Congratulations on Kepler Day, and thank you for having my question. She's got 2 questions. Let me read the first one. We'll answer the first question, and then we'll go into the second question. In a very competitive environment, with a very fragmented action. What is Kepler's strategy to grow their market share. This is something Piero or Tadeu could answer. Tadeu, maybe you could start and then Piero, you can complement his answer.

Thank you very much for your question, Catherine. This is a very interesting question. How to increase our market share. The first question should be why should we increase our market share? It's not only about how we should do it, but why do it? When you increase your market share, you're capturing or tapping into new business opportunities, and we have to prioritize it. It's not healthy to try and seize every opportunity in the market. So our market share is based on what opportunities we want to seize or not. And we do that basically every day. So I'm not going to give you a clear answer, I'm sorry. So market share is all about analyzing opportunities at a given time. We can't just give you an answer. I think this is an important point to mention. And what is your second question?

May I just say something here, complementing on what Tadeu said. As you said, we look at the market and how the market is behaving every day. We analyze that every day. our financial team also help us bear our margins in mind. But I think it's important that we also talk about the long run. Kepler has 40% market share because that's what we have built in the course of time with innovation and standing out from the competition and always reinvent ourselves. And we are always reinventing ourselves with this new commercial structure. We want to be closer to clients and customers, we want to have more value-added products, and we want to have digital products. And these are great levers for future when it comes to market share as well.

Thank you very much, Piero. Her second question is the following. On top of organic growth, can we expect M&As, mergers and acquisitions, considering the favorable debt position the company is in right now.

I think I'll start answering this question and do complement my answer, please, if you would like to. I mentioned that during my presentation, we focus on organic growth. We have a robust CapEx plan and there are also inorganic opportunities. M&A will always be a growth avenue. We have a lot of discipline. And first of all, we need to look at the low-hanging fruit. So what opportunities are closer to us. There are a lot of opportunities, but they have to make sense. There must be synergy. So we're ready to look at those, and we're going to then pursue these opportunities as they crop up. There's another aspect which has to do with technology, and this is something we also touched on during the presentation. And we also have our focus on that. On companies that may be performing already or performing well with good results or start-ups, companies that may plug into the technologies of what we're doing and can just accelerate our opportunities. So we're looking at all of these options, and we have our operations. We have a large vertical company. We have a favorable balance sheet with all of that we can have discipline and continuous look at M&A opportunities.

Well done. Thank you, Paulo. All right. We have another question. [Arnaldo Pelezaro]. He's an investor. What are the sales arguments that Kepler uses to convince farmers to invest in storage. He mentions your, for example, return on capital, for example. This is for you to answer right, Tadeu.

Obviously. Well, we can answer that question in many ways. The first point is exactly what you've already answered in asking your question, return on investment. This is quick. When we got quick return on investment, it will happen between 5 -- in between 5 and 8 years' time. And this is very good. And after that, you will be taking on revenue of products that you've already produced. And you don't want to miss this opportunity, right? And there are other advantages as well. And these are more difficult to measure. Well, you plan your harvest. When you plan, your harvest. You won't miss opportunities. When you go on to the field with your combine, as soon as you have the favorable weather for it, you'll start harvesting. If you're sitting idle because you can't start harvesting, you're going to be losing a few thousands of bushels because you won't be able to storage that -- to store that, pardon me. You also have, again when you think about transport, you have to have fewer semis to have the transportation. So there are a lot of benefits that are there too, which are difficult to measure sometimes, but can amount to more substantial values than commercialization itself. So there are a number of benefits that when combined will show you that it makes perfect sense to invest in storage and invest more in storage in the future. So when a grower has a new farm, they will already invest in storage as they start working on agriculture and tilling as well.

So another question is from [Pedro Afonso Viera]. How does Kepler see the storage market for 2022. So Piero, if you could start and Tadeu then afterwards.

So I'll go with the macro vision. So right now, we have a robust portfolio that allows us for a stable operation over the next few months. The macro situation regarding commodities, offer a very robust prospect for 2022. So we have 220 tonnes predicted for 2022. The commodity prices are also well -- good. The financing programs for storage has also been very good. So we are very optimistic regarding 2022, and we believe that it's going to be a very good year. Tadeu, would you like to complement on that?

Yes. One other interesting thing is that the market has good -- it's good for the producers, but also for logistics, just like I told you during the presentation. So in the segment, we have investments that make grains leave the farms and transshipment points are growing with the increase in growth and demand of market -- the external market. There are several opportunities that have been building up with this new opportunities that we are building in the country. So we have terminals and ports in the north and south arches and they are optimizing of unities. So units have to be optimized and our spare parts and services business unit is the area that serves this type of modernization. So with that, we have recurrent revenue because you are constantly optimizing and improving. And with sync we will be able to increase yield. And so it's another opportunity that we have. And I'm not going to say that it's going to be perfect, because that would be extremely, how can I say, just extremely optimistic, but it's really good.

I would also like to add, Tadeu, that Kepler will also seize the opportunity regarding the territorial expansion in Brazil, which have been seen in the last few years. So now we will have expansion of areas using cattle areas. So we have a focus on planting, seeds, fertilizers. And now we're looking at the efficiency in post-harvest, and we are a key element on that chain. So we have great opportunities to come.

Excellent. So question. The structure of distribution centers have been key to grow the services pillar. What are the plans for the company to increase revenue for services? This question was -- again, so what are the plans of directing revenue for services? And how Kepler is going to do that?

I'm going to start to answer and everyone can comment a little bit on that. So our perspective of growth in services, I'm going to talk a little bit about that. You've seen in our presentation that we haven't put a lot of effort to diversify revenue and grow in other areas. So we are leaders in storage, and we are investing in other sectors. One [indiscernible] testing in that since 2018, and the results are showing up. Of our revenue today. That is important, but we're still not satisfied. So we are aiming at recurrent revenue. We want to grow in that area with spare parts and services and post sales and also with digital services. So that we can have recurrent revenue, support the farmer and have a recurrent relationship. We will be able to be there for the farmer in the farmers journey all the time. So we will want to replicate in the digital area what we do in spare parts and services.