Marcopolo S.A. (POMO4) Earnings Call Transcript & Summary

[Audio Gap] We could establish not just the image but also to improve -- and what you have seen, it's solid that comes -- it has improved the right decision we took. And also in that period, we had a major transformation within the company, which is the cultural transformation. We changed the way we were thinking. We established some rules, some pillars, basically 3 pillars that generate trust, confidence, that generate engagement. And 1 word around these 3 pillars that I have always said, which is attitude. And in this period also, we managed to establish a transition process very well driven, very well done, which has led to Andre's position in my place. And this preparation period we have been working this transition with -- in the lightest way possible, sorry guys, the audio is really coming low here. The results we are presenting here to show -- is to show how correct and how specific the decisions have been. And with that in mind, I'd like to call Andre here to talk about -- to cover this part of perspectives and scenarios. Thank you very much.

It's nice to see some familiar faces. Hello, everyone. And we always say that everyone who sees Marcopolo is very excited. You leave very motivated. We see that with all the people, the suppliers, the clients, everyone is always very satisfied with what they see. And I'm sure you will leave here with a nice view of the organization. Starting with the transformation process, as covered by James. You will be seeing all the transformations James covered in a fast way. I think the cultural transformation without a doubt touches people and is one of the great aim change for this turn of the company. Intensive labor company. And we need to have this team gathered together so we can get the most efficiency taken out of this operation. As James said, the story starts -- dates back then thinking about the people, the fact that we had to fire in 2019, what do we want as the culture. The people who are not adequated to this culture need to be adjusted, and we did that. That transformation starts in the Board, in the -- So we start today to have a very strong and a very transparent team work. This transparency generates the confidence, as mentioned here. We also cover the urgency also bringing the problem in a clear way, solve the problem. So the company promoted by James has really worked a nice transformation process. Where are we? We are in the evolution of this process, which will be continuous, which will take time. It's not easy. We have seen the effects. But one of the goals I have here is to perpetuate to continue the work which was started by James. Where were we? July. So July last year, July 7 last year, we were here, and James presented what we were seeing at the moment of the company. We said it was a recovery moment. The market was being retaken, especially in the Road segment. Around '21, our main product, G8. We saw this recovery. We saw the interest of people in returning to the system. Just to keep in mind, in '22, the first quarter of '22, we still had Omicron. There was this need of people to get out, which was a very good card played by Marcopolo, which was to bring a car with all the features. We were 71 years in that time, knowing the client, knowing the market, knowing the requirement. So we developed a product that had a superior value added to the market. Speaking about safety, total cost of property, all these relevant values to our clients and the passenger. So that was -- the launch of this project was a very bold decision and we needed to boost the desire of people with the product that was connected to the market. We mentioned about signing that to the market because the market was being retaken, our business is a lot about renewal of the fleet. This process generating in the future, the cost of the operation increased. We could see in the expectation the launch of the G8, which was very well accepted to in the market. And besides G8, we had an important investment, which was the electric car, the integral car. So besides doing the body with outsourcing the body, we launched Marcopolo's own car, also restructuring the operational, international operations. Took this period to make some adjustments, the structures, improve the efficiency, develop new products, many things were done in international. And I think 1 of the main things is the cultural aspects and also other modes and [indiscernible]. James mentioned before the sustainability of our results. We were questioning if that would be something from the moment or continuous. And as it was a structured change, we could see this continuous work being done. So the profitability, the recovery of the profitability, the inter cities is a market leader again. So today, from the 3 road segments we have, the intercity represents 40% of the revenue. The G8 has a very good -- was very well received by the market. Very good purchase, people repurchasing both national and international. We have clients who buy and buy again the G8. You will see the double deckers. There are lots of G8s there. So we don't have G7s basically anymore. The export revenue growing. The electric running, our own car was presented in Portalegre. It was presented in [indiscernible] in Brazilian cities, many cities that we have tested. And we have had good results. Ricardo will be covering that, JP as well. We had some other issues, which will be covered, but you will see here -- we will be showing some consolidated information. Effectively we were talking about trains and rolling in the south of Brazil. We have closed the deal for Guarulhos Airport, which are 3 compositions of 2 cars, which are nearly finished within the beginning of the next year. And after we are still closing to Chile. So this was the year of 2022. We closed some deals here. We had 2 [indiscernible] and that represented a good increase in sales. Here, just covering quickly where we are as a company. We have revised, like redefined our view, our purpose which was the way we could see the organization, which is making people closer in a safe, comfortable way, sustainable way. So this is the basis of our organization which was to be protagonist -- this was behind the restructuring process. We cannot look only to bus segment. We need to look to all these modes where we have the opportunity to make this diversification to our core. The train is a good demonstration of that. And sustainability where we have economic sustainability, but also the product sustainability to start new segments, Marcopolo, besides the solutions in electrics, we have hybrid with diesel, ethanol, biomethane. We work with all these alternatives in system sustainability. Two points worth being mentioned. James is mentioned about the capacity of production of our company. With all the restructuring and closing the operations, we don't lose any of our capacity to serve the market as we can see in the next -- for the next year, our sales are growing, and we can see in the company these conditions to deliver. And the use of that was important in terms of cost without a doubt, makes us maintain our place in the market, which helps us to deliver and to give good numbers when we have such programs. And of course, the strength of our engineering more and more we say we talk about new materials, as you will see, in our technical center at Ed Hand, Luciano, our Engineering Director will take you there. You will see the innovation in the product. And besides that, we developed software engineering. We developed buses because we need to bring new competencies to the company. Today, we have a much stronger engineering with all these transitions, Euro 5 to Euro 6, the electricals coming in. And for all that, of course, an independent strong engineering is necessary, not just for our own solutions, but for all the distinctive chassis offers we have. This is a slide I want to show -- you know very well. And I want to highlight that with all the advance of the company, we are still inferior, lower comparing 2022 to 2019. So we need to retake this. We had lots of incentives, but I'd say standard results such as 2014 that we had such a good number of units. But this -- when we look at 2023, we can see we had a growth of 10% versus the first semester of '22. And we can talking -- we had some difficulty to receive the chassis that were developed from the assemblers, from the OEMs. I spoke about that accepting prices the new price of Euro 6 from the client. And even so, we had a growth of around 10% in volume. And speaking about '24, where are we? First year without pandemic, one of the worst years of story of Marcopolo. The transition that was done, we leave '22 the year we had a pandemic at the beginning, like I said, in the first quarter, and even so we could have an excellent year given the structural changes that we did in the organization. So in '23, we had a plan year without pandemic the material issue has been covered. We suffered 60%, 70% materials that increase in less than 2 years, 100%, 150%. We're talking aluminum brazing. We haven't seen we haven't seen more relevant growth in terms of costs of materials. We are seeing a more controlled situation than we had in the pandemic, the beginning of cycle with a high cost. The interests are slowing down. The tourism still continues very strong, nationally and internationally. The fit of G8, the consolidated G8 with the demand of the market, as we can see, like I said in the results meeting the conversion in sales in the last 3, 4 months are very superior to the same months comparing to the same period previously. And that says we're going to have a good growth in sales. We're preparing for the production ramp-up, we are already increasing the volume. We can see this growth daily. We need to produce more and more cars, not just in this or in this plant, but also in other places in Brazil because it's clear for us we can see that the end of the year will be very good for the company. We see the beginning of '24 being very good for the company. And this is a low period usually for us, but we already have good business. The record of passengers, we have also and public transportation being renewed, not just new ways of purchasing the city halls buying directly renewal, the average age being increased and all that makes the renovation in electric, of course, that brings this other factor, as you could see in Sao Paulo, for example, by the end of '24, around 3,000 buses could achieve 70 electric buses. So that process already going around with outsourced chassis, Salvador, many cities doing that. So this renewal will boost besides the economic scenario and the results of the company. G8, extremely consolidated. It's a product that has worked very well because Marcopolo, when Marcopolo, we had developed a product that is desired by the passenger and for everything that it offers in technical terms. We know the purchase of our bus is not impulsive. It's a product is a working tool that you really need to be technically differentiated, and this is what we need for D8. The growing demand, volumes a keep growing. We see that in the next months and year. We have been seen not just at the end of '23, but also the seasonality, the second semester that is very strong for the company, but '24 looks even better. The international operations are profitable. Basically, much more consistent on the results, structuring actions also applied, and we can see good results in the next years. And another cherry of the cake here is coming in this call. It's a program that represents 25%, 30% of the sales of the bus sector, the bus share. And as you could see, it was mentioned around 12,000 -- 16,400, which was 16,300. The delivery capacity is going to be an important point. So we see that 16,300 as a good opportunity for Marcopolo. They are historical numbers. Within [indiscernible] call, we have -- we expect very positively that this brings very relevant volumes for us next year. And we start next year besides this good acceptance on intercity, on urban. We want to start this with a good volume of the buses. Good expectation. We hope that at the end of 2023, beginning of 2024, I'd like to thank you. I will call Pablo now to talk about financial area. Thank you very much.

Good morning, everyone. Welcome. Well, here, you can -- we can translate a little bit of James and Andre mentioned before about our numbers that we have been delivering so far. The idea of my presentation is to talk about a little bit our margins, our gross margins with EBITDA. And also, we're going to talk a little bit about our key indicators for profitability. And we are also going to talk about cash flow and shareholders' remuneration and our perspective. Regarding profitability, I think it's really important in the context that we have been working strongly for this internal transformation, people, cultural transformation, it's being effectively as our main pillar. Within this context, we are going to talk about product processes and technologies where we can see that throughout the past years with all our investment in development that Marcopolo has put into practice. We have been able to deliver to the market products that are unique with added value with attributes that can actually help us to price our products a little bit higher. So if we look at our history, from 2015 to 2019 in this scenario, we used to have a gross margin of about 15% average 2020, '21, '22. Within the context, as we mentioned, we didn't only have the COVID impact, but a demand reduction and consequently, a process of fixed costs that were diluted in less products in thinking about a fixed cost of the industrial products, but also observing the whole scenario it got above 65% only related to materials. And within that, we can observe a scenario where in 2021, we have a gross margin of 10%, delivery in negative operational results. So in 2023, we are resuming our activities when we analyze it in a consolidated accumulated way with an impact of Omicron in the first quarter, second quarter with problems in delivering chassis, semiconductors also, and doing an industrial planning that would allow us to leverage higher. But when we look in an open way, we can see our resuming process happening from the third quarter of 2022 onwards, when we are showing signs of improvement in our gross margin. So in first quarter of '23, we have 24% and when 24% of gross margin. And in this period, we have -- it's our first quarter without [indiscernible], and we also have a difficulty to supply chassis because of this transition, Euro 5 to Euro 6, where we got all the difficulty and the assembler companies. And consequently, we need to homologate the complete product. It's a second quarter with more adversity. Our margins are around 20%, and that demonstrates the capacity of the company to keep its performance and also demonstrate that we have got a space. We have a demand volume a little that's stable. And for the first next quarters, we are going to resume our recovery, our knowledge. In 2020, 2021, we reduced our headcount, so now we are bringing new people for our industrial area, direct labor, the factory visits. We have a very intense labor. Now the knowledge of the operator is really important. And when we have the stable production and we acquire more experience and we can capacitate people, we are not only supporting, but also improving our margins. And another important thing even though we have effectively seen all the potential to generate results in our road line, especially the G8 line we can see that in the context of us recovering and transforming, we kind of reposition not only our road line but also urban and micro within a price range that allow us to have a good performance in the 3 segments. Talking about profitability, talking about EBITDA within the same context from 2015 to 2022 within a strategic planning of reaching at least EBITDA of 12%. Throughout time, we ended up delivering 1 digit. In 2021, 2022, we had a process of transformation related to costs. The company's lighter, we did some restructuring, especially in these 2 years, '21, '22. And then in 2022, we started improving. And on the fourth quarter, we delivered EBITDA results with 10% margin. First quarter of 2023, 17%. In the second quarter, 12%. In a context where we can actually see the factory running with better prices, better results, better gross margins, a lighter company regarding administrative and commercial aspects. So we have an EBITDA that's a little bit higher, and we reached our targets consequently related to profitability. When we look at our ROE, we delivered 21.8% in the first quarter of '23. And consequently, we focus on the profitability of the existing operations. And what can we see as potential? We did this transformation in Brazil strongly, and we did also abroad, we identified that the results are coming from this transformation. When we look at our numbers differently from our Brazilian operations and abroad operations, and we still have a lot of potential to increase because all the transformation applied in Brazil were translated to the international operations. Another important thing is that that's happening in a way that our ROIC is about 12% in our first quarter of '23. And within this context, we have worked strongly in the discipline and allocation of capital, so we can not only think where we are going related to new investments, but also to look at what we have of capital and to improve its applications in a way that we are consolidating all our ideas and plans. The pandemic reflected very significantly in our operations. Brazil started with the transformation before our other companies abroad because our backlogs and our portfolios. And it kind of -- it was a little bit slower. And when we talk about upsides in assets liquidity, so we have access to recovery in our balance. We understand that we have opportunities to make -- to monetize in the next months, where the operation will effectively bring results and taxes that will be deducted of our debt. And talking about fabric units, manufacturing units, we have 3 reels and fan auto units in these pictures. We have about BRL 15 million in these 2 units. And that's another potential of cash where we are trying to obtain monetization from these assets. And talking about free cash flow today, even though we have a lot of demand of working capital in our resumption process. And our liquid -- our net debt, we are in 0.6 EBITDA. So we can see that throughout the past years, we have done our homework, always trying to take care of our cash flow. The company did the necessary restructuring at the right time. And when we look back, we can see that if we had to do all the movements we did, definitely we would do it the same way because we were thinking about the preservation and sustainability of the company, and we can see that reflected in our free cash flow. And another important thing, despite of 2021, we were here neutralizing some investments leading from India and selling real estate in Duque de Caxias, we can see that throughout this period, we never stopped investing in new products. We are protagonists. Marcopolo effectively is a leader in mobility solutions, and you can see that reflected in our figures. That's a material kind of concern. We have applied a lot of resources in the development of solutions that can actually take solutions to the market, delivering value not only to the operators, but also to our clients that are users of public transportation. And related to cash flow. Also, we have an objective nowadays that is to work with capital that's already being used to make this capital to become profitable in the right way. And in cash flow generation, we have been able in our discussions to come back with policies that Marcopolo used to have, to have a quarterly remuneration to our shareholders, and this is something we are putting into practice since last year, we remunerate shareholders in 8.3%. But the most important thing to highlight as a reliable company that's trying to have a strong sound history is that in 2021, where we ended up remunerating a little bit lower. We have an average between 14%, 15% of results generated from the fiscal year, and that's being remunerated to the shareholders, and we are going to continue doing that. This continuous cash flow generation is permanent. So we can effectively remunerate our shareholders. And if we have capital that we can retain and optimize our operations. This way, we can think in a very strong way in new businesses where we can make Marcopolo even stronger and keep this scenario in a way that we can take this company to another level. I will thank you, and I will call Ricardo to come to the floor to talk about internal market, domestic market.

Good morning, everybody. I'm going to talk about the domestic market and marketing started with the vision of the bus market in Brazil. Our perspective for the next months or years, it's a growth perspective that's been boost by needs to renew our fleet and the other one is the program coming this pathway. I'm going to talk about it later. Related to the segments, the Brazilian bus market in a way of market segmentation, I will bring information about the road industry and tourism. People have resumed traveling again after the pandemic, people are traveling more because of. And in these 2 segments, road buses and tourism, there was a migration, airplane tickets are more expensive. So people are migrating to buses. And talking about price, it's very relevant in the pandemic. It grew significantly, and it kept volumes supported especially by the agri business and mining. The urban segment, it continues in a process, let's say, in the -- to renovate the systems, urban systems throughout the years. They were decreasing the number of passengers because of -- and during the pandemic, the situation aggravated because of the pandemic reasons and also because of the increase of operator costs, what's happening now and it's during the pandemic, it started, but it's happening now strongly after the pandemic. It's a kind of rebalance economically in the cities related to cost and the tickets. So as this balance returns between prices and tickets, people will start using again the bus as a transportation means. And also, there is a need to renew the fleet more significantly because of that. And related to the micro segment, it is -- it continues with a good volume of sales, a good volume in the market. During the pandemic, it hasn't been affected so much. It kept its historical volumes, complementing the previous segments. And when we talk about Brazilian market, our objective here is not talk about the numbers, the figures, but about the trends of volumes throughout the years. Here, we've got the past 16 years, including 2023 up to July. And our vision here we are considering 2 cycles of 8 years. And we can see the first cycle, the most recent one, where the volumes were reduced significantly compared to the previous cycle. And when we evaluate the average of the most recent cycles in the past 8 years, we can observe about 15,000 units per year. And in the previous cycle, it was above 25,000 buses per year. And then you can see in this perspective, how much the fleet has aged. And when we evaluate the previous cycle, you can see that the volumes could be a little bit above the historical numbers. we can see that the difference between the 2 cycles is relevant. And that shows the need for renovating the fleet because their average age has increased significantly. And as you can see that Marcopolo is part of this market, domestic market in the past 5 years from '19 up to this year, it's about 55%, our presence, except in 2021, where the segment of road buses has reduced, and we did actions to increase our share in general. When we talk about our actions in every single segment related to road buses, we launched the Generation 8 in 2021, a launch that happened during the pandemic, where you could see the resumption of the market in a way in a growing way. And that's what happened. Generation 8 could capture this growth in a very significant way. It's a success of sales. The G8 bus, the operators, the clients, they have valued the new generation. So the migration of the previous generation to the eighth generation happened in a very important way, up to the point that related to road buses in Brazil, we are not producing so much anymore. We're not selling the G7 so much anymore because people choose the G8 as an alternative. And there is also a purchase repetition. The clients that have purchased, they purchased again with the Generation 8. And then some of the clients are buying it for the fourth time, the G8. Our recent sales are very significant. We have more than 600 units in our backlog to be produced and delivered up to the end of the year, in the beginning of the year next year. And most of them are buses with more higher added value, such as the double decker. And there was also a migration in the Brazilian market of road buses from 1 floor to 2 floors, and the G8 also represents this movement. Our market share currently overcomes 70% of share in the domestic market. When we talk about the urban segment, Marcopolo has developed and launched a new product called Marcopolo Active with 2 acting lines just it is like a product that has been produced with an outsourced chassis. And the other one is an Integral Marcopolo product that started this year, it's production. And I mentioned also with demonstration and testing in the main Brazilian cities. It's been tested active, that's what's happening with the Active at this point. And related to micro buses, Volare is the absolute leader in this segment for many years. It's a business model that's unique in Brazil where Marcopolo or Volare sell a complete product with a sales team that's internal, external specifically for the micro bus segment, we have 48 dealerships in Brazil, very well distributed in all our territory and the relevance of Volare was about 25% Marcopolo revenue, represented 25% in our revenue. So it is a very important products. And this year, we are celebrating the 25 years of Volare. Volare was launched in 1998. So we are celebrating its 25th anniversary this year, and we did a campaign to celebrate it, a specific campaign with the special 25th edition anniversary, where we invite clients for an event. Clients that purchase more than 3 Volare units, it's a very segmented product. So 3 units is a very interesting purchase for us. If they bought more than 3 units, now on the 15th of September, we're going to be reunited for an event to celebrate this 25 years. And in a very innovative action, we are going to give a Volare. We're going to have like a price drop. And for the clients that purchased more than 3 units of Volare, they are going to get a number, a coupon. And then on the 15th, maybe 1 of them will get for free one of Volare units out of this event and this action. Talking about school to the pathway, a very relevant program. Marcopolo is a partner of the School pathway program since 2007 with very expressive volumes. This program has delivered to cities and states more than 60,000 units of microbuses. And Marcopolo has been present since the beginning of the program. And now on the 28th of August, we launched a public bid, a new public bid. It's a new phase of the program. And with 16,300 units divided in 18 versions, 18 different models, and now on the 12th of September, we are going to open 4 proposals and declare the winners for this new phase of the program. Marcopolo participates directly with products and also throughout supplying chassis for our partners. So our expectations is that in the end of the program and we are going to have a very high share as it has been so far. And to conclude, I'm going to talk a little bit about marketing. Last year, in the half of the year, Marcopolo started a new journey related to the communication. We started talking to the passengers to the clients of our clients. Last year, we started a campaign with more structured, more consistent to communicate with our clients' clients. This communication is a brand communication, but not also about brand, but also about our product attributes in different channels. I brought a few examples here. In the bus station Tiete in Sao Paulo, we do actions there independently as Marcopolo and also together with our clients. In the Brazilian airport also, we have another action and -- we have dozens of different physical locations in Brazil where we do actions and through open media, TV, radio, online channels just for you to have a look -- to have an idea of how is our distribution throughout our territory. And independently and also here together with our clients, we have actions, especially the ones that buy the G8 with some clients with a more relevant volume of purchase. We do actions with them also to communicate to their clients so they can effectively see the brand and recognize to understand that the dimension of our products, our attributes and how they impact and how they can bring these attributes can help with the journey experience. On my side, that was it. I will be available for questions, and now I will call Jose Luiz Goes.

Good morning, everyone. I am Jose Luiz. And I will be covering operational -- international operations, exports. Speaking a little about our bases here, we are basically the leaders in export in Brazil with 50% market share. The exports from the bases, intercities 48%, one of the main markets we can talk about, Espero in Chile. Urbans with 64%. This year, we're being reinforced by Guatemala operation, Angola operation, reaching the number of 64% and micro bus 76% -- South America, Chile. We are the leading body builder in Latin America and Africa. Our regular sales in 50 countries. This year, we have exported a few units to a few countries we are starting our operations such as Angola, Gambia, also in Doha. We have a few units in Qatar, and we are expanding our presence in other countries. Some offices in Latin America, regional offices, same way as Ricardo showed the shares basically at [ LatAm ] in all the countries, we have a presence with dealers. Some of them are very well structured, such as Peru, Argentina. We completed 20 years Chile, Paraguay, since the '70s, they have been representing Marcopolo, they know the market, also presence in South America, Latin America that helps us a lot in sales. U.S., we have a new development, a new operation in Dallas and also the -- what is our intention at the market also Africa. Johannesburg has been covered by that area. We have also an office in Dubai and Asia from our bases in China, we supply all the other markets. Speaking about the expansion, like I mentioned, we have a new development in the U.S.A., Polomex has been producing our product in Mexico, which is 120 kilometers from the border, so that helps us a lot. All of our chain is there. So that brings -- we bring the chassis from the U.S., replace the body, such as a mini bus. We have 2 versions, and we return to the U.S. that has been done in like a few units. We have some units to board in September. And by the end of the year, we hope to have around 35, 40 cars to place in that market. Also, the expansion in Africa and Middle East, we are working strong with KD operations, a few units being operated there and exporting parts, having some operations there, such as Kenya, we also have something going on in Tanzania and Angola and Middle East also. Right now, we are exporting to the African Nations Cup, a few units have been produced for exporting to the Ivory Coast. Our partnerships for growth in Asia and the globe. We're going to show a bit what has been developed mainly in China. We have this -- it's good that we have this possibility to develop components. There are some partners that want to be with us there to supply the markets of the region and also to export from there. Speaking about our affiliates, we have 70% operation in Rosario in Argentina, where we produce intercity bus, double decker, single decker heavy buses and also urban. We also have Superpolo, 50% Marcopolo around Bogota in Colombia. Also, when we don't have the TransMilenio, which fills the company with [indiscernible] and [indiscernible], we have the intercity bus and Colombia is a country where we are producing G8 locally. We are also sending some parts from here. But locally, we are also developing G8 in Colombia, Polomex, 74% in Mexico, focusing on intercity, urban and now with the possibility of exporting to the U.S., the New Flyer market share, 80.1%. And the other opportunity at the other places are 100% Marcopolo, South Africa, Australia and China. Going on them a little bit in MASA in South Africa, very positive results, good trends until the end of the year, record production with 42 units this month, 37 units, which should keep this trend until the end of the year. Argentina starts to have a rapid recovery, good results. Eduardo, Pablo mentioned that they had backlog situations that they got sales with previous numbers, previous prices and then inflation drops, everything. But somehow, they are recovering, they're reaching good results, and they are purging the old orders, backlogs and leaving this negative situation. Australia has been working strongly with a good recovery. I've been there twice this year, and their operational area is going really well, recovering. We have [indiscernible] units, but we depend mainly on government sales. And sometimes it doesn't work the way we want, but this can be an obstacle for the operation, but we are doing everything we can to go back to a profitable unit from 2024 on. MAC China, that is struggling. We used to export a lot to Hong Kong and the market stopped. It's recovering now. We have around 12 units exporting to Hong Kong this month. Australia, we used the operations in China to send to Australia. And today, we are using it mainly through development of new technologies. We have very good partners of batteries, for example, China has changed to hydrogen already. There are some electrics, but they are already aiming at hydrogen. So we are using China's operation to do this technological shift. Colombia, they have this backlog a bit complicated, but they are recovering, presenting good results until the end of the year and Mexico is doing well, showing good results and their main focus on the intercity vehicles. The big numbers now. Figures today, 38% of the revenue in Marcopolo comes from exports, 38 divided -- 67% for these operations, Australia, Argentina, Mexico, especially because of their mix and exports, 84% are for Latin America. And Africa with 15%. A bit of figures for the net revenue, we have good shares at the net revenue comparing the years of '22 with '23. Positive surprises looking at the term this semester. Polomex, Volgren, Metalsur, MASA marked with some difficulties, as we said. The net profit, a good recovery comparing quarter-to-quarter here and all of them at the side here, we can see Polomex leaving the negative, being positive, also the same trend with MASA and the others delivering negative results, but with improvements comparing to the previous periods. Now speaking a bit of electrics. In terms of strategies, we are not performing internationally. So in a way, we are searching for partners. Colombia, it's the leader of the variations, both in body as in chassis. We also developed an integral bus, a Marcopolo bus, fuel cell. So it keeps spreading all these possibilities of bodies with chassis that are already in the market. China comes strong with the electrics, working with ZTE, Foton, Golden Dragon and they have also done fuel cell that has been presented in a fair last year, and we are taking it to Europe in October. And Australia, we are working with Wrightbus, the -- a very strong bus body manufacturer there. And the chassis are BYD and Volvo. And in Brazil, we have delivered a car to Costa Rica for demonstration and also 2 cars to Chile, one which is already there and 1 we are deliver right now. And here, we have a big renewal of Transantiago that changed the name. We're talking about 3,000 cars and it's 100% electric. So we are already placing the car there for testing and to participate in the new bids. And we are taking a car to Busworld, which is the most important bus fair, which is going to happen in October in Brussels. Paradiso G8, which is our top-line product, which is going to Mexico later. There's a whole system here of cameras, no more mirrors, individual monitors, screens, USBs, 2 toilets -- 2 bathrooms divided by gender. Mexico uses this trends. There are some massage on the seats, reclinable seats about the external market -- that's it will be available, if you want to talk, we're going to a coffee break now. Also for the online people take a break for 15 minutes, and we return talking about strategy with Joao Paulo. Thank you very much. [Break]

Hello, everyone. Good morning, and welcome. Very pleased that we are all here together again. [ Hermes ] welcomed and he said, this is the winter weather, the winter season. But I'd like to say this is the European weather. It's a more charming way of saying that Caxias Do Sul offers a season with European weather, so we can enjoy the cold in a more pleasant way. My name is Joao Paulo Ledur but people come in JP. I can see some familiar faces from last year. I am responsible for strategy and digital transformation. So my approach here will meet -- we'll cover 3 different areas. First, I will explain the objectives, the goals of what within [ Hermes ], Pablo, they brought within the organizational transformation. What is the role, the strategy, the place to be a fundamental and essential pillar to boost to speed, to sustain this growth process inside the company. And the second point, in a very specific objective way I'll bring you some updates, maybe 3 or 4 of the main strategic projects which are considered nonorganic and they will bring this growth capacity to the company for the next years. And to finish, I will cover some initiatives we have in terms of innovation. It's an innovation of with the focus on the company transformation. As you may have seen in the booklet, I got a very [indiscernible] view of the strategic planning. The architecture of Marcopolo, the strategic architecture in a very simple way, but what do you have to do with that? So again, [ Hermes ], they have brought -- they highlighted the role of the people in the company. Very important guru used to say that the culture eats strategy for breakfast. And this is a major truth from the moment this transformation process started, we got that. We understood that. And from that on, we connected strategy, the company strategy, the top of the organization from -- to the bottom. No exception. And this is our architecture. As you can see, it is a traditional architecture. And what we have been doing different is the way we are communicating with everybody within the company. This top block, these 3 pillars, they are more long-lasting periods. The review process, as Andre explained, it was such a nice construction because it involved all the companies so we could reach, we could get our purpose, review, bringing people together. And with that, we also reviewed our vision, which is to be protagonist in mobility solutions in a sustainable way. And when we talk about solutions, we carry on with the product at our core. And more and more with Marcopolo bringing financing, bringing a different service, working to create new segments as a solution provider, whether on product plus product stream or even in other products we might have in the future. And to finish still within the future vision, we look on the long-term future vision in which we call the deployment of strategic drivers and at the core, the assets, we want to make this tangible, especially for our internal audience what are the main blocks, the main initiatives, which will drive Marcopolo to the future as a company that keeps growing and bringing bigger and bigger results. Stream blocks, even though they are placed at the top part, I could say that it could be upside down because they are the fundamental -- the supporting rock of the company. okay? Now going down to strategic planning now the difference at the planning, we need to make it tangible. We need to quantify this way. We need to make people responsible and not just the President, the CEO, the CFO, the Board in general. How can we make this into a cascade up from the top to the bottom. The way we created governance, so we can sustain this architecture. And here, from the pandemic as a trend, here's what we have. Number one, the planning cycle -- the strategic planning cycles, they must be shorter because the world is changing so fast. You will see, you will remember, as I will show later, our visual map, our current strategic planning, the plan 2025. It was designed, it was drawn in 2017 and it should be fulfilled in 2022. Of course, we had a pandemic. But in the past, it was possible to imagine a strategic planning with deployment happening in 5 years. And today, we understand that, no. It's a vision of the future with smaller cycles with a great commitment and delivery of results. And today, very nice thing we did. We had -- it's how to connect bus assemblers in the company. The people generating results every day with the company's strategy. How does he, how does she feel part of the strategy, embraced by the strategy. And this is when we placed an annual development of strategic planning. I brought a video, a short video about bringing -- that brings very nice results for our company. And obviously, to finish this part here, our growth goals showing the path the company will have to go. Our business lines, we divided again, thinking about this clear communication in engine 1, engine 2 because these engine 1, they are the core current core business especially supported by the bus business. Here, we have the Marcopolo business, the business -- Volares business. Even [indiscernible] bus here that has played such an important whole -- role nowadays with the school paths and all the other collegiates, affiliates internationally. Also, we have other 3 business -- making part of business 1. Components, we have joint ventures with strategic partners which helped Marcopolo to develop to enable their competitive advantages. And here, I will highlight Apolo because you might have seen current news in the last month of investments Marcopolo has made in this company, and we had we invested in 100% Marcopolo units to develop technologies in plastics, polymers, there's a lot to do with the future of the company. Also, we have Moneo bank, our service bank. Tecnopolo, that is a very interesting engineering initiative because there's a lot of knowledge from our engineering. And when we talk about validation, homologation, lab, I get to say that few companies have the capacity we have. And here, we can see the condition that -- in which we can support local suppliers, companies of the area and from that, should start a bit more this services area. And the most notorious service from New Flyer that Luiz mentioned that before, what is in engine 2? It's what will assure the growth -- the nonorganic growth to the company but is not present in the main business, in the core business. And here, the 3 initiatives achieved in the figure of the integral vehicle, the Volare chassis and finally, the rail business. Components, services investments here, it's because we have a radar identifying possible investment lines for our future, always focusing on the diversification of company and in the future. Last, but not least, the governance, it's the key, so the results can happen and how are we doing that? A good key indicator management. And the secret here is not to concentrate this on management only, but to unfold this to spread this around the organization. And for this more complex, more long-lasting projects, that require higher investments, we created a project office where the strategy area has a very important share -- participation in connecting the organization with the Board, with the executive committee of the company. I mentioned about this plan is to become a real materialization of our strategic planning. This within the company. It's worked for the company, for the collegiates, from the internal audience, it's very powerful. I will highlight these 2 annual plannings we have, the long-term unfolding short term, long term, we work in all the organization. Our financial goals, the indicators, what talks, what communicates with our day by day. The critical success factors, which are more tangible factors. People understand I need attention for the company to be successful. And I give you an example. We spoke about the transition from Euro 5 to Euro 6. We knew that if this process was well driven, well conducted, we could cross this moment in a painless way, and enter this growth period very strongly on the second semester or we could struggle, but this was present in the transition from Euro 5 to Euro 6. Engineering, production planning, materials, financial, they were all in the same -- on the same page. And working very strongly our values brought by [ Hermes ], by Andre, transparency, trust, engagement. Have a small clip and you can see how we have been doing this on our daily basis. [Presentation] Have you realized we are in the second semester of '23? Time flies. And that's why we want to talk about the overcoming plan of '23. You might have seen the math with the strategic planning or many places of the company. But do you know why it happens and why it's important that we understand the content? The overcoming plan of '23 was created to show fillers and short-term actions of this year. So everybody knows the goals and paths we are going to make it then. The basis is the cultural and digital transformation involves practices, policies and behaviors that are reflective of our culture. With that, how we can apply technology as a result booster and in continuous improvement because this defines our behavior, the way we conduct business and how we relate to the interested parts to reach results. Then we have the critical success factors, the engine 2, which involves ongoing projects that add value and revenue to our business, which are the essence of the company. These projects must be executed with excellence. So the results are -- get with success. And critical factors of success, engine one, focus on the current operation, driving -- driven to guarantee results and it's a key factor so we have a healthy growth. The indicators are the metrics, which can be monitored to analyze the project, targeting the objective, operational performance of the company and at the top of the plan, we have the monetary objective, which is the profit which is a result of everything mentioned before. Now that you know our plan better, think about ways of contributing to your area, with your knowledge, your ability and your work. Marcopolo is counting on you, so we can build the mobility future together. Let's advance together. This is a sample, but think about the power that this brings for people to connect, to come here every day to build better results, to make better results. And to finish, what we're looking now. I believe Pablo mentioned that one of the 2025 goals was one of these financial such as EBITDA. We reviewed and projected this in 2025, actually, we would be delivering this year. So we have already started a journey of a new future vision, a construction of a new vision. We are still ongoing. It's a work in progress, but we can see -- we can foresee a long-term view as I said before, with the division of the planning in smaller cycles. So maybe we can have 2 cycles with very clear goals by 2030, okay? Now our colleagues here, Ricardo and Luiz, they brought a little on how Marcopolo has been practically developing electromobility projects, new proportions and here I'll bring some more. We used this last year also, which is a visual board, how you can see our strategic positioning, the placement -- our Attivi will fit here on Marcopolo as OEM as a manufacturer, and it will be a share -- it will have a share in certain markets, in certain segments, it will be analyzed case by case in each segment wherever makes sense to Marcopolo, we will be choosing one of these pillars to place which also brings our core business, which is the share with our traditional partners. The bodies only and also making strategic alliances. So Marcopolo can have -- with the chassis of the partners can offer a complete product even though it doesn't manufacture the chassis. Here, we have a short video on our integral Attivi and you will see it's a video about Attivi. [Presentation]

We are very proud of this -- we are very proud to make a vehicle that is one of the best world standards found in the market today. About electromobility, what we see today, it brings this onset that the business is not just a product. And we are very -- paying attention, very attentive to this ecosystem because we have new players, second life of batteries, for example, there are many opportunities in services in aftermarket, telemetry and energy will be essential, new marketing models, financing, the energy supply relation and also the recharge infrastructure. We are very attentive to that, creating strategic partnerships, alliances. So Marcopolo can position the product in the center as a solution. It's not just about the product, but about solutions. And in the vehicles, the electric vehicle segment, this is very clear to Marcopolo. Here are some other examples on how we are tackling this energetic transition. Some people ask me now, what's your vision, Marcopolo's vision? Is it going to be everything electric. And I said it's not going to be electric. It's going to be eclectic because we won't have one solution that will cover all the markets. That will be for all the applications. And for that reason, we are investing very strongly on hydrogen solutions. We also have hybrid solutions like that, diesel hybrid and also an ethanol hybrid project. We have big opportunities for ethanol, bringing to Brazil, and this product will be soon tested, and it can be a very interesting alternative for our country. Ethanol, which we consider to be a clean matrix -- fuel. And to finish, we have vehicle that is being tested, that is moved by CNG and biomethane also an opportunity in Brazil to explore the generation of energy and biofuel, biogas from the waste treatment. And other products from engine 2, the Volare chassis, where are we standing on that? Our own chassis has been released, it's been prepared for Euro 6, it's an agnostic platform, all these future developments we're talking hybrid, ethanol, 100% vehicle, other propulsions. This vehicle will be ready to receive this kind of technology. We are going to start the pilot from the last quarter, the pilot lote and validation and after that is ramp up in 2024, and we will grow the share of Volare by building this integral model. And to finish here the engine 2 strategic, I will bring Marcopolo Rail, our business unit targeted to rail modes. And 2 highlights here this contract with GRU, the airport and the system. We will connect the Guarulhos Airport international terminal with the CTM. Today, I don't think we'll have time, but this is already a picture, a graphic representation on how we have evolved. And then we are already developing. We will deliver already in 2023 for the EFE company in Chile. And we are advancing gradually, we are advancing on a big opportunity of diversification in Marcopolo, connected to be a solution not just from old buses. And quickly, moving towards the end, we have Marcopolo Next and Marcopolo Zero, which are for accelerating innovation in Marcopolo, you will see lots of innovation at the training center. And what I want to highlight here that is important is the transformation of the company. One of the goals that we have, it's the promotion of innovation culture is that people change their mindsets. The growth mindset of our organization. And for that, we have brought many services within the organization. The events and training, project acceleration, mentoring at the [indiscernible] and has been supported at the transformation of Marcopolo. I need to mention that we had an award innovation value. And I think it was such an important recognition. We were in fifth place on the automotive segment. It was -- we were ahead of very important people, and we're very proud to see that it has been important. Some examples of how we have been working in the promotion of culture and bringing the MVP, which is a volunteer group trying to work with innovation within the company. It's been launched 1 year ago in this very auditorium. We had a perspective of having 30, 40 people engaged in working for us. And nowadays, we've got 491 people from all the areas of the company. Everyday in trying to find opportunities to improve, innovate, and speed up our growth. We brought a few statistics. So we realized that the turnover -- people in this group is -- that works in this group, they understand the process of transformation, and then they don't want to leave the company. This is why our turnover is 3x smaller that it used to be. Another highlight, probably you have seen the autonomous Volare, which is always a very important landmark for us. It's a partnership we did with some other dealerships and a start-up. So we were able to launch the first autonomous bus in Latin America. We did our first test in a live environment. It is a bit scary, but it works. This is a graphic representation of how the [ railers ] work. Another highlight, we are talking about digital transformation, looking at innovation. And we have many cases of promotion of innovation inside Marcopolo bringing solutions, helping, supporting growth and transformation. If I could just talk about one highlight, let's see how interesting it is. This is a counting of our inventory via artificial intelligence. It's -- I must say, a very hard process nowadays to count physically, all our profiles in the inventory, for example. And also, we have a lack of assertiveness, so now we are bringing this type of solutions to solve our problems to make it more effective. And now my last slide, but not less effective, we launched the entrepreneurship program last year. We didn't know exactly how the company would react to the program. We had more than 116 ideas registered, and it takes 45 minutes to register an idea. So it's not so easy. We demanded details of a business plan to build like a logical rationale. So it was amazing to see so many people engaged in doing that. And afterwards, the teams were lending resources to people, so they could use part of their time, because they were so engaged in participating. And in the end, we chose 3 groups that we were going to speed up their ideas because they could bring innovation to our company in a faster way. So these 3 ideas were presented here last week. These are the 3 ideas. We had a winner, but it's -- the 3 of them were brilliant. The Marco adjective, Focus and Fly Home, what were they proposing? The development of an excellent center for the manufacture of 3D printing. And we are going to have 3D printing for parts. And how are we going to bring this technology since its conception, design development, et cetera? Maybe in the future we are going to have a disrupt way of manufacturing our buses. And then we also had a digital sales platform with a calculator with -- and to show the importance of Marcopolo, to show added value to our clients. And this group brought it in their project in a very, very nice way because they built a very intelligent interface together with their clients. We have to be careful not to be so invasive with our clients, but they build it together. And in the end, Fly Home is an initiative we are studying so we can understand the Motorhomes market. We know globally it's a very big market. We have a small group looking at opportunities maybe in Brazil. But maybe it can also become another big initiative of Marcopolo and help our organic growth. From my side, that was it. Thank you for your attention. And I will call to the stage -- call to the floor, Edu.

We are going to have our Q&A session. We're just going to organize the chairs before so we can all sit together. And then we are going to start. Please. We are going to do it with all the people that are present physically here in person. So raise your hands to ask the question.

I would like to understand a little bit more -- how are the discussions with the assembly...

I'm sorry, his audio is really low. I can't understand really well.

Secondly, Achieve, related to the Achieve, how are the clients seeing? Are they looking, trying to buy it? Do you have a forecast about it?

For the assembling companies, we're the traditional ones. Our main concern -- were they going to jump on board [ Integro ] cars. It's a movement of entering in the company, an opportunity of a niche -- with a global company, we'll have to work with different models. We are going to have markets that we are going to have our own solution, and then others with our partners. And an additional range, it's the Asian market. [indiscernible] mentioning his presentation. Taking the opportunity of our physical presence in China, we are testing and developing field solutions together with the Chinese. If you look at the buses are running in Brazil with electric solutions, they are BYD. And we are -- this movement open up a range of options for Marcopolo. So we are bringing more technology and new knowledge.

And also about the Achieve?

Our strategy is to participate with the [ Integro ] and with our partners that produce chassis. Talking about the electric ones, effectively business volumes are very small when compared to the potential. We can see good opportunities in the concept with partners and the [ Integro ] concept also. Sao Paulo has the biggest volume. In Sao Paulo, we have a reduced share of the market because our competitor is also an operator in Sao Paulo. So our participation market share there is smaller. But for the [ Integro ] Achieve and also for the one that's built by -- with parts from partners, talking about it, just to make it tangible, I can assure that there is no other company producing bus in the world with so many projects of electric buses or with new proportions ready, available or being developed as Marcopolo has, through the strategies of our [ Integro ] vehicles are ordered or projects that are being developed with partners that build chassis, or even with the Asian people. There is no other company in the world so prepared to face this new movement in Brazil or in other markets. This is -- we are very happy with our structure. It's not going to be one recipe fits all. They are going to be designed for every application, every market in the specific moment. And also as well, it's worth complimenting talking about the variation, options of models of buses and combinations, but also capacity. Production capacity at Marcopolo, it's enough to meet the demands of Brazil in the proportion it comes.

Good morning, people. Thank you for the opportunity. I'm Gabriel from Santander. And I have a question more focused on the international side. Looking at New Flyer, how can you see the opportunities in the North American market and the growth of the electric buses? How can you see also the backlog recomposition, price adjustment? If you can explain a little bit.

We have been talking about the New Flyer. We are investors in the company. We decided not to be diluted because in this capital -- opening of capital, we wanted to keep our share, especially because we know the New Flyer, we have access to the CEO, and we check the situation of the company, and it's gone through this -- it's been through the same things that Marcopolo has been through, like long portfolios, big portfolios, and it kind of deteriorated, the results. They needed to change internally to recover this loss of results they were having, those negative results. So we see New Flyer as our investment, a partner. Involvement with Marcopolo, when we use one of our people in the North American market, when we sell our buses produced in Mexico, we end up knowing the American market better. So we are going to focus on what we are -- in our segments. We're going to keep investments with the New Flyer. And we are going to check what's going to happen with the New Flyer in the North American market. We want to grow internationally, and we want to look at all the other opportunities that may arise in the market. [ Andrea ], firstly, talking about the American market, we are also entering the market with the mini-bus in a petrol version. We can also change the chassis platform. The market is really interesting, especially related to the road buses. We are trying to understand the market. Our basis is [indiscernible] so we can understand the -- how the road buses are going to act there. Related to the challenges of prices, more or less complexity, we had a huge fight regardless. In Australia, there are government issues that limit purchases and sometimes inflation above than the government can handle. We can place that in the prices. So in a way, Gabriel, we are having positive results, and we are going to have more margins. In Colombia, we also had a bit of a struggle. And Argentina also because of the -- our portfolio to bring chassis that are exported from Brazil, it takes a while. Now we decide prices before. Inflation is the bit influence. Now it's a little bit more normal than before. So we completed our portfolio. And now we have a tendency to improve our results with the increasing prices that we have been practicing in the markets abroad. Related to Argentina and Australia, basically, when we look at our international businesses nowadays, you can see that these 2 operations approximately is 55 of the consolidated revenue. When you look at this business, this revenue come from these 2 operations. Argentina, we had a macroeconomic impact. It's still being a challenge to deal with the instability of the government. But the great benefit we had when we look at that operation is that we were able to stabilize it, to clean the bad portfolio we used to have that wasn't very aligned, with a -- within the unstable scenario in Argentina. And then we look forward, we're going to have a clean portfolio where, operationally, we're going to have good perspectives related to deliveries. And nowadays what we are doing is to diligence, with this instability of the government, we have diluted a lot our exposure throughout these 2 years, this past 2 years. And Australia as being a problem, is being harming us. It wasn't common Australia to go through inflation. We used to have long-term contracts, that, in the end, some of those contracts were not profitable anymore. So we did a very strong work with the government and transparency, because of the hindrances that we were suffering and price increase and other indicators that are referenced, for the means of pricing, they were being altered by the government. So our -- we can see that our perspective of operations is positive from now on because we've been cleaning this portfolio. We had big seasons in Australia. They have been delayed. They have been postponed. So we believe that for the next fiscal year, that might happen. Because Australia is also on board this electrification concept and potentially it's one of the markets where we're going to have a very relevant presence with electric products. So in these 2 operations, that represent our business a lot. We have good perspectives of growth there.

Here is myself from BTG. My question is related to margins. As you mentioned, the margins are back to historical levels of the first quarter, we noticed a margin that was above it. And how can you see that from now on, with the improvement of international operations, I would like to understand if the margins are going to grow? If you work on the 12%. I would like to understand a little bit better.

In terms of margins, in the context we have been talking about, we can see that, effectively, when we look at products, we could deliver a product with value-added that could allow us to work more intensively in the pricing -- in pricing. And then within this context, what could impact us would be the inflation, but in the current context, we can see something more stable. And then when we look at the margins, the numbers are the consolidated results. When we start looking at all the business units that compose the consolidated results and they start delivering better results, the renewal of backlogs, and we can see that there are many positive perspective that the margins are going to increase in percentage and in absolute figures also. Our growing volumes, we have seen in all the markets. And then operational leverage, we are going to have gains with that also, because we've done an amazing job in reorganizing the structure and operational improvement in our plants and support to international, the deliveries, the results, the efficiency, they are more prepared now to follow up this market demand that has been growing. Abroad, we have the dollar factor that goes up and down. So we always have to change our prices. We have to reprice. And what he said is really important. What we learned in these 2 years to deliver volumes, we have been -- we have more efficiency. It's a margin result for us. We are working on both ends, abroad, in the increase of prices, and internally to gain with efficiency in our rates and et cetera.

Good morning. This is Fernando from [indiscernible]. I would like to ask about the positioning of Achieve and Integro. How can you compare that with the other models that have been tested in capitals regarding to prices? And what are the characteristics that the city halls are looking for apart autonomy? If you could say qualitatively, how can you compare the profitability of the Integro model and other ones with outsourced chassis?

I just want to say something first. On our first testing in the product, we can notice a very interesting performance. Our chassis is being proved and tested for over 74 years. So now Marcopolo is bringing an innovation, is something new with good performance and good results where we can have a product with a superior passenger capacity.

Fernando, sorry. Great question. I would say, I'm going to comment on the example of the City of Curitiba. We started with [ La Chiavi ]. We placed a product to test together with BYD. And now we are starting to demonstrate with the Volvo chassis. So to simplify our strategy of participation with all the options, whether complete products or with the products with chassis from our partners. And that the clients identify the performance autonomy, efficiency, price positioning. And then this client can identify what's the best option within this combinations regardless of the choice for us, what if it's Marcopolo, it's good. But clearly, they have a few technical differences between themselves. And every solution will convince through the attributes of every single product. But the options, combinations, production capacity for clients, and the clients can decide what's the best option for them. From a point of view of comparing profitability, it's going to be similar to Volare. Volare is already an integro vehicle. We have been trying to grow our portfolio family -- is to deliver very aligned margins for this product, is not different. It's a product that has been tested. Also, the pricing -- prices have been tested. We can see discussions within the government of Sao Paulo. We are -- where the operator can choose between many options. But regardless, in the performance -- regarding performance, it's going to be the same as Volare, very similar to Volare.

Firstly, I would like to congratulate all the Executive Board for the results. My name is Andrea. I represent the shares part. To capture your point of view, of your management, related to after sales, customer service, the incorporation of new services that Marcopolo is going to a new technologies? And the second question is, talking about sales models, the methodology to foment -- to foster the renewal of the fleet for a longer period, does it go through the development and actions of the Executive Board?

Talking about the services, the growth of our services offered is very significant. It's in our radar. Observing the Brazilian market, the Volare network, 48 dealerships and also a network that sells Marcopolo products with 8 representatives and 7 branches. And we can see the power of sales very -- it's really strong. And the trend is to increase exponentially services, either repair for the chassis or services related to the chassis ecosystem, considering also integral products such as the Achieve is something that's in our radar. And we've got plans to see this growth of services. We can see that as a very important point. Just to take the opportunity of services, talking about the companies abroad. Australia lifetime of a bus is 18, 20 years. And during this life cycle, they send it back to the manufacturing company for the retrofit. Mexico works with original spare parts also. So that's also a source of revenue. We send original parts to the Mexican market. South Africa also has a retrofit in the products. These are services that we offer to our clients. And it generates profit to Marcopolo and local companies. And the electrical -- electric vehicle, it's inserted in an ecosystem. We can see great opportunities, yes, to exploit not only the after sales, but also all those technical apparatus that is part of a vehicle with an alternative propulsion energy. So I could say the telemetric system of that makes a very different -- a bit different in our -- the cost of this vehicle. We are developing partnerships investing more and more in the creation of a software engineering. So we can be very well positioned. We understand that the product itself is going to be the most important one. But for us to have a competitive advantage, we have to have different solutions. So we have international partners. And if it's in Brazil, we are still in our early days of electric mobility. In other countries, it's been flying. So we can use these potential partners so they can help us to speed up our opportunities. In this ecosystem that's a little bit different. I could mention batteries and the relationships with energy suppliers, which connects to your second question, the financing of models. Within this ecosystem that Marcopolo has, seen great opportunities to bring great results related to the diversification to our businesses. And the signatures is more connected to the electric model, but in shorter terms, it's already happening in other countries. The rental of electric fleets, not only the equipment but also a solution as a whole. This perspective of life span of 18, 20 years in a few markets in Latin America also, maybe 15, 16 years. We have [indiscernible] we can have a renovation of this fleet, the battery replacement in the -- throughout this life span. The funding companies in the rental business model, they must have the maximum assurance that these assets are going to last for 16, 17 years. And then I connect again with the opportunities because they are practically demanding this relationship with the manufacturers. So we give predictive maintenance. And these renovations throughout the lifespan to preserve the assets, the investment that has been done. So short-term rental is very complicated. That would be applied to eventual services. And we can see that collective public transportation in Brazil is highly regulated. So you need to register the vehicle in many -- bodies, the management -- for the management, that makes the short-term signatures a little further away from our reality.

Good morning, [ Ricardo Schweitz ]. Thanks for your presentation. I have 2 questions, but my second question has been -- I would like to pay important attributes to Jamie and Valiati because of the long journey and the patience you have had with me. You have tolerated me. So I'm very happy to be here. I would like to highlight a little bit the rental, talking a little bit in a more general wide way, not only related to electric vehicles. And we have seen in the past years the emergence of a very interesting rental market. I think one of the points that were raised, we have other questions related to product specification, different operations, fleet, that they demand throughout the country, a product that's less standardized. But I would like to understand what other opportunities in this way you can see? My other point is related of the external market, it's capital allocation. Marcopolo has a long tradition of international operation. And this work has been translated in excellent businesses with great results that historically deliver exceptional results. And because of all the reasons, they have -- they were not -- they didn't meet the expectations you had Marcopolo Portugal, [ Camas ], GB, [ Papa Marcopolo ] and some others that I don't remember. If my notes are correct, the first pact you placed at Volgren was in 2011. And from that onwards, you learned a lot. And sure, you had significant transformations related to this vision. Pablo raised a few positive points for the short-term period of the Australian market. I would like to understand your vision about long term. Has it changed throughout this pathway? And I would like also to take the opportunity to ask about Africa. You are opening new markets, especially Caldera from Brazil -- South Africa, a small operation in South Africa that has run well. But at a certain point, you might thought about concentrating specifically in South Africa because there was GB in Egypt. So there are opportunities of us having expansion in that operation.

Let me start here. Very long questions. Eduardo has given me 10 seconds to answer. Pablo and Goes, let me see. There's a lot to -- lessons learned in this period. At the entrance of Germany is what we did was to review all the international strategy of the company. What do we want to be? We want to increase the share on the markets, we can see some profitability. And to leave from operations, we don't see these results happening. And from there, many things happened. Consolidation of the 2 companies, 1 in Argentina, the closing Egypt, closing India, and basically, the adjustments done in Brazil. We understood that in this period, we really needed to own the operations where we have the opportunity. And part of the improvement we can see in the market also, the resumption of these international operations, there's a lot to do with that. But we need to focus more on the operations, the international operations. And that is, like I said before, better controls, better follow-up, key people who have gone through the improvement of the companies in Brazil, also focused on international operations. There is a bunch of actions, a range of actions we will do that will have results in these operations. I'd like to mention specifically in Australia, Australia and Africa, thinking about Africa first. In this wide field, this was the design of the international operations. What we see now with capital allocation. We want to extract the most results on the operations we have invested. Like Pablo said in his presentation, we invested a lot on these operations. The assets are there. We need to make them profitable now. And this is where we can see Mexico export into the U.S., Colombia, which is also exporting to Chile. And we take Argentina where we had a local urban product, which obviously doesn't have capacity to export today. What we include in our Argentina's portfolio, in the urban segment, the same product we use in all other Marcopolo companies, which is Torino. So in Argentina, now we have a potential for exports. And we have this view that international operations, they have a lot of room to bring results with the assets we have today. South Africa, today, we opt in this new context to expand in an intelligent way. Kenya is an example. There is a high tax of the importation, exportation. It's hard to get bids, and then we work with partners. Marcopolo, because of the experience we have in products, we have the distinct models of products to be sent to assemble in these countries: CBU, TKD, CKD. We have distinctive models of products. So we have a complete product in the market. And this was our bet in Africa, which was to increase our share in markets that they require a local assemble with partners. We don't have big investments, but we use the know-how to deliver CKD, SKD parts. So for example, South Africa has a fundamental role -- the right hand drive, driving on the right side. Today, the company specialized serving not just South Africa, but the countries around in the south parts of Africa, which are operations that drive on the right. So today, they don't do on the left models, but we see the models -- in Africa, we've seen African opportunity that it's a place to develop people because it's a small operation, bringing good results. But not just that, the people we take there. There's a big opportunity, anyone who has gone through Africa, from there, we can develop a lot of people. It's a small operation, but you have access to everything, sales after sales, services, the fleet -- the retrofit of fleets. And Australia, also a distinct operation for us, has a lot of technology involved. It's a product that is totally aluminum, a new assembly. There is a know-how we acquired without a doubt for the operation. There is a change, a big shift on electrification, as Pablo said. It's a market that goes through -- to electric. We invested, and this investment up to today, we haven't seen the results as we wished. We were hoping that '21, '22, they would be the big years of this operation, and then we were hit by pandemic. And now we're hoping, as we said before in our first conversation, that the segment, the positive side of it is that a nonrenewable fleet generates a future need for renovation. And what we see today in Australia is that there's a renovation need, mainly renewal need, mainly for the electrics. And then I have to stop so [indiscernible] and Pablo can speak.

A comment also Africa-wise. Africa has a small operation, a bit limited by the chassis. It's not easy to get certain types of chasses. In the local assembly, as we said before, about Kenya, also has an interesting appeal to modelize the market, opens this service area branch for the people who know the bus. And that gives us a nice range, not just Brazil. We're sending kits from China to take this opportunity we have from the company as abroad. And if we start a new operation, to study, so we don't make those mistakes from the past, learning lessons, because we struggled in international operations. And as for Australia, Pablo can talk a bit more.

Regarding Australia, basically, business case of Australia is justified by a few tenders that are recurring and concentrated, especially on the states of Brisbane, Perth and New South Wales, which are relevant significant volumes and -- then there's a recurring tenders that in our Australia track record, they are [ exit off ]. And today, when we look at Australia business case, we see that in fact, purchasing volume happening in a way that fulfills basically the slots available. Inside Victoria's unit and in Brisbane, we see a tender from the state not happening since 2021. And the reason why it's not happening, it's because of the electrification process in which we will have -- the Olympics will happen, and a fleet of vehicles will be available for when that actually happens. And now the discussion is regarding budget and the availability of resources to effectively make these bids happen. So we see this delay, as I said, since 2021. The operation in Perth in fact, this is happening. The volumes within process of electrification, they start to become more interesting. And in New South Wales, they have this budget discussion so they can publish the new tenders. As we see from the operational point of view with the operation in our hands, because it's a challenge on the other side of the world, effectively, we acquired this operation in which it's not a product that used to be part of our portfolio in Brazil. So we end up dominating. I'd say today, operation-wise, we have the operations in our hands, but the marketing demands we are now expecting. So if this effectively happens, we are going back to perform in Australia on the line we were -- the pay price when we acquired this share there. Within the current context, not happening this event that is repressed. But we can see positive cash flow at least, so that happens in fact.

So now the question-and-answer section is over. And Valiati, will close the event.

Initially, I would like to thank Eduardo and everybody, the event, thank our hosts, James, Andre, Pablo, Ricardo, Goes, JP, mainly the presence of everybody that could be brave to come here in such cold weather, the people who are remotely connected. Special thanks for all the trust you have in the company. And we hope to have you as investors and shareholders for a long time. So the scenario in the current moment of the company is very positive.

Thank you. We're going to -- the restaurant, unfortunately, the people online will not be able to taste our delicious food. So that's it. Thank you very much, all of you.

Thank you all. [Statements in English on this transcript were spoken by an interpreter present on the live call.]