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

Good morning. It's a pleasure to have you here. Welcome to Marcopolo. We're always very proud to have people from our home. People who live our everyday routine. We always say that being here is different from being connected, but I also would like to thank people who are connecting. It's to see how we are doing in terms of production, the energy of the team, how we are evolving as a team. It's a pleasure to have you here. Let's talk about the current moment and the protagonism of Marcopolo. Why protagonism? The view, sustainable view. We understand our role. And in our role, looking at the current market today, we can see the market lacks as a provider, what is that? And then I bring a little what Marcopolo did in its history. We have gone through many complex years. And in these complex years, we thought about new solutions and some I can highlight that are important. The market was retracted and looking at the market, we thought what we can do different, what can we present to the market. And then we thought about biosafety solutions, looking on that difficult time in the market. As a manufacturer, I need to propose new ideas and to bring new solutions. And the year of '21, a market moment that was very retracted. The company launched G8 and the purpose of G8, that was what the company was doing. So that we looked at the market and we thought I'll bring a new product in a reduced moment. Yes, and that is the role of the organization to understand how to propose new ideas in this time. Ricardo will talk a little about the market. We have been growing on the market from '15 to '19, we grew and then from '21 to '24. And now we have a bit of a flat curve again. On a way, we understand -- it's okay. But on the other side, we carry this view of renewal. We need renovation. In this curve, we understand the renovation will come faster. And this is one of the big advantages on our business to know there is this innovation need and showing more efficient products. Customers are seeking for better products. And then we -- as a company, we are looking for alternatives. Today, we are connecting the market more and more. We're looking at this moment, and we understand our relevant role as a bus manufacturer. And that goes through many things for public transportation share. It goes through impacts on taxes. It goes through a number of different things. Let's see here what was our proposal. Besides products, we have already presented panels. The proposal of the panels is to spread around the sectors. As you saw, President of we had discussions with banks, financial discussions, panels on tax reform. We had panels about new energy. So the goal of the company in that moment was really to get the sector all mobilized -- the cities that they could structure themselves with renovation. And among the good examples, we have electric bus sales, gas bus sales in a city where the passenger -- the level of passengers is very similar to what it was pre-pandemic. So this is the message I want to leave you, continuous fleet renewal necessity, and we are restructuring. The cities are renewing. They are bringing rescuing the system. We have the role of mobility, whether urban or road or mobility, connected to contamination reduction, quality of life, and that goes to the other not just life quality in the cities, how much that moves the economy and avoid waste. And that's what we are trying to do, trying to bring a number of different institutions for discussion. I covered transportation. I covered the public transportation. But besides that, we need to talk about our core, our products, understand the current moment in the market, bringing solutions that reduce this gap. The current gap besides renovation that is happening in a lower way, we see the costs, war impact, diesel costs, how much that impacts around 40% cost in operator that is diesel. And I will be showing you the new launches we have in some players, GA they come with this idea of reduce, bring more competitiveness and improve the value to our operator; and also trying to bring them back to the system using Goiania, Brazilian city example again. When you create a system that works efficiently, we call -- when you synchronize the move of the traffic lights, you create a more -- a better mobility environment, and that's what you see in our products in our market. So this proposal, this is the message I would like to leave you this proposal, move of proposing things. Again, the biggest role is to be the main protagonist in solutions. And I'm talking about a 5 double deck, and here is our portfolio. Today, we are global leaders. We have the largest global product portfolio in terms of buses. And we understand our global presence also allows this range. We have a very good share of procurement of purchasing in global markets. We will have markets mainly where we have production, where the urban presence is strong. And now talking a little about energy transition, the companies, what they have been trying to do. We don't have a crystal ball to get the right technology that the market will use next. But based on geographic location, the range of portfolio, the technology solution will be varied. So I will reach a certain market and the energy will be different. The technology will be different, either energy electric or gas. So we really need to understand what kind of technology that better makes the transition makes it happen. Today, we see that our operators in many markets to renew to change from diesel to another solution, either because they don't have infrastructure or because the solution is not available or because the energy solution, it wasn't a good idea. The cost of operation and from the moment we understand which solution better brings competitiveness to the market, this is the one the company develops, for example, Argentina. Main discussion in Argentina today are the market. They have a competitive cost, the product, the fuel is cheaper, the solution that is better for the market. Besides all the panels and all the discussions we had, we brought some solutions of propulsion electric works very well for São Paulo, very well-established infrastructure. We have other solutions in other regions of Brazil of power plant and biomethane transformation. We brought our hybrid bus. When we look Brazil's market, we understand how ethanol is important because we are the global producer of ethanol. So we understand this is one of the most competitive solutions to sell in the Brazilian market, and we have been carrying out tests, the you saw at the We have a similar product to the companies that make passenger transportation to the power plant. We can see the competitiveness of product. The cost is relatively cheap. And it serves the decarbonization issue. We covered that before. Ethanol works as a generation engine, and all the mobility is done through the electric motor. So it is an electric product, but there is an ethanol generator and it's in it, light production, what generates in the engine also in a sustainable way. So I think the big message here is not when we are searching for mobility solutions is what -- this is the big message we have here. And in fact, what we have in Brazil working international market, talking about gas, talking about bringing electric solutions. This amplitude, this range of portfolio is what will make us invest in solutions that will generate business for Marcopolo. Our presence, we are acting in all these places. Australia, it's been a big result for us. It was in 2025, is in '26, will be '27, very major presence in this market, very focused as you can see here. China with a smaller operation, more strategic. We have been working new technologies coming from China. Of course, the company learned to develop all its supply chain very close, but we keep China as a hub to be explored in terms of technology and global sourcing. Also at South Africa, an operation with good results. All of them in this year, the market is a bit more retracted except for Australia, but operations are being adjusted in aligned with the market, Brazilian market, our biggest development center for the company. We have this strong work of creating a technology basis an engineering basis that can serve the other plants as well. Many of the global platforms of products we are developing. Brazil is one of the big centers that form that develops. But the company has brought technology from other places. Yesterday, we were writing about that -- we got a lot of solutions and ideas from the Australian market. So we have been working with consolidation. Australia, Pablo will talk later, relevant operation, 100% ours. Colombia that comes in a very interesting moment of renovation, especially Transmilenio. We will see in the next months growing results in operations. And Mexico, as we will cover later, talk about their market moment, but also everything generating And our presence in the U.S.A., the second biggest shareholder and the American market is a market that Marcopolo has been looking consistently. European market is a market to be explored by Marcopolo. In the case of Europe, we have done some contacts after the end of this year, beginning of next year, we will have G8 in Europe. We have been doing a few exportations from Mexico to the U.S. We are also looking at that market as a global company who wishes to grow and wants to expand its geography. Speaking a little what I said before, our position as a company. I want to be -- we want to be more and more competitive in the sense of mobility markets where the company performs in a very relevant way with important market share. Many of the markets we act today. They are purchasing markets with big fleets. And that's what we understand. Our role is important as a market leader to bring new products, new technologies, we were also talking about joining and getting all the ideas together. Our engineering teams are developing products in a more global way, bringing and taking technologies from one place to other. In Europe, products coming from Brazil with some adjustments, of course, to meet the demands of the European market. The products we develop in Brazilian market has a very interesting global acceptability. China has just launched a G8 that was produced in China to serve the Australian market and some new launches we are doing, they are looking more and more to bring big platforms, modules globally that we can enter and implement each of those markets. Two big products looking at the current moment. The client wants to renew. I think this is an important message that is worth telling here. I know you talk. I know you have the opportunity to talk with all the -- to all the markets. The markets, they want to renew. They want a new product. They want to attract passengers. But I said before in terms of urban bus diesel materials related to internal situations that we have, they are things that have made this view a bit harder. They need availability, they need products, they need efficiency, they need alternatives. And then in this moment, Marcopolo brings two important solutions, Torino and G8. Let's talk about Torino first. It's our flagship of urban segment. We launched it 40 years ago. So it's well established, over 120,000 units. And what we bring analyzing the market and the needs, we need to work some things to mobilize. First, efficiency, especially a product where the maintenance time is faster, that it is less stocked in the places. It's more efficient for longer. This is a moment that we need the fleet on the road. I have the impact of diesel in my operation. So thinking about that, we need to bring solutions that really got the market together. You will see some alternatives we are bringing to the market. Speaking about comfort, about seats, thermal comfort, temperature distribution, the operator, comfort, the driver, we're trying to create a more comfortable environment for the driver, fleets, roading for longer, the availability of the product. An urban operator today needs the fleet roading, circulating. And here, we say when we launch a product that is over 40 years of history with established structure, we are offering reliability to the market, some fronts of Marcopolo, some of the solutions to make the maintenance easier to the bus from the garage [indiscernible] of the bus in the garage. So we are -- we need accessibility solutions to shorten this operation for the passenger. Let me show you guys a video. [Presentation]

Torino has launched bus is August. We -- it has been well approved and accepted. We started producing it. So we're going to produce most of them in plant. We might have it in supply too. Besides being an amazing design, we see that the operator is another big hit. What they aim at? People want the buses to be connection to be on the road. They need to be forecastable. They need to be available. When we talk about engineering, it needs to meet the needs of each geography. We need to bring solutions to really move the sector, and that's what we've been doing. So the new version of Torino, Torino 2027, it brings this goal. It has this goal on it to really reduce all these costs from our operators. Talking about road, we launched G8 Tech. It aims at technology efficiency and comfort. Some solutions aimed at the operator and the passenger as well, and the system in general, considering the driver, we think about solutions that are connected to acoustics, thermal and also seats, some options that bring comfort to passengers and drivers. We also improved some effectiveness in this efficiency, considering the reduction in fuel use. The company has worked on -- has worked with ITA for a while. And we proposed a challenge to them to reduce the -- basically the coefficient of and some solutions were connected to the side and to the rare of the vehicle. And together with the change of mirrors -- the change of mirrors to cameras, we also were able to reduce the consumption of fuel. We also worked on some technology options, talking about safety for passengers, we are using AI in our vehicles. So they recognize the 15 levels of the drivers. And if they are too tired, they basically suggest the driver to stop and take a break. So which is related to safety also to passenger comfort and also... [Presentation]

Also in 2021, as we said before. It was -- and it was well received by the market -- More than 500 units exported. It's our flagship in road as Torino is in urban. We basically have always been trying to anticipate and understand the needs of markets, trying to reduce operational costs, trying to make the fleet available for the operator. So looking at all that, we put solutions into this vehicle that could benefit them. I've spoken a lot to our operators from Brazil and others in order to provide a very competitive business -- and the way has been launched, the feedbacks show us that it basically is a great competitive advantage for those who use it. We have been producing a lot to Brazil to Latin America. It is also going to be produced from other plants around the world. In Mexico, we are going to be able to export it soon. It will be produced -- it has already been produced in China to also deliver to Australia. The idea is to have technology on board with all our solutions. As I spoke about last, what our operators are worried the most is the cost, is the uptime to have the space available and the cost of diesel. So when we work more widely, try not only to reduce weight, but also to reduce the drive efficiency. We are able to reduce about 3.5% in the consumption of diesel, which is one of the bigger costs. We show that we are together. [Presentation]

So this is what we want as a company. At the moment, we need to look at -- we need to be protagonist inside out. We need to rescue what Marcopolo has done over the years. So the story of our company goes through moments where we have to propose new things. We have been through a lot of challenges in the 60s in the '90s in '98 when we launched a new segment. After that, the pathway to... And when we look at the moment right now, it's an interesting moment aiming at solving problems from our operators and also to suggest alternatives to the sector in a wide way. And looking inside, the company has been working in this competitiveness, innovation and technology to be more and more competitive. JP is going to talk about that later, where we have to look at the system, we have to look at the product, and we have to look into our plants to find solutions. -- we are very strong and you're going to see inside the plant that we want to check people when they come here, but we also see a lot of energy. We see a lot of people aiming at providing solutions to the company. We have adjusted our operations in order to look ahead and find solutions to bring some new topics. I am going to be also available here for the Q&A. Once again, I thank you all for having you all here. And it's great to see that you're going to be able to see what we have been doing in the company.

Good morning. We will be talking a little about the financial scenario, about performance, some indicators and bring some additional data. When we look Marcopolo -- ecosystem, we also prepared for a market. We knew all this repressed demand. We thought it would be stronger, especially in some segments such as the urban segment. So we have seen the reflect of the depressed demand. Ricardo will cover more in terms of production. We can see in the added value also impact on the revenue, the expected revenue. And when we look at the net revenue point of view, our second semester information where we see here the company shows a growth in the second quarter of '26 comparing '25, net revenue increase of 3%. We can also see that in the first 6 months. And here, in fact, what helped to compose this revenue micro plus around 8%, 9%, representing the revenue coming to 18% So the micro volume is very important. So the road to school program represents a lot. And also the Ministry of Health concentrates a lot in our first semester, generating this significant volume in number of cars, added value in terms of revenue. But when we look at the accumulated the consolidated number, we can see the growth in the year, and that reflects when we talk about our profitability, our EBITDA margin, we get from a margin of 17.3% to a margin of 14.3%. So our added value in terms of revenue because of the micro number, we see with these contracts, they were -- the prices that were in the last years with few more the last deliveries and that makes our profitability numbers to drop 3% when we talk about absolute value when we deliver, but we can see in practical terms that smaller profitability. This is the big point, the number -- when we look at these numbers, we have a discipline inside our business from the point of view that we are looking expenses, capital reduction to maintain this level. And effectively, this is what we are searching more and more. So in terms of SG&A, we could deliver less with the S&A as we delivered last year. But as André said, we are working a lot the competitiveness because we know that, at least, in a short-term horizon, our demand doesn't come in a level we have designed it. the Marcopolo protagonism to try to strengthen the ecosystem. It's a system that comes with sort of degradation. The operators, they suffered impact in the last years in our operations in tariffs, tax point of view, they didn't suffer the necessary adjustment costs like diesel, tax reform or other things that this segment is trying to restructure itself, but not to the point of big purchases. And that makes our operations to have an impact since this is the biggest volume, especially in the Brazilian market. We are always reinventing ourselves, and that's what Marcopolo has been showing through the years, even in the pandemic or in fact, making the necessary movement to bring this or when we launch new products in the market, I think this is the moment we challenge internally to discipline ourselves in terms of costs and having an EBITDA margin that we are delivering in the moment. And when we talk about revenue, we look at the operations that consolidate our results. The first semester of '26, first half, Brazil has more representativity. Micro buses help a lot this revenue composition, but we also see impact in two big markets, they end up effectively contributing for global results, Australian market, Argentinian market. We see the Australian market having more representativity. We have more the exportations from Brazil. we see South America and despite keeping the same number of share, we see our currency real stronger in this first semester and our margins -- and the margins we delivered last year, also summing the competitiveness challenge. We also see an operation in terms of volume. We had a big renewal in '24, '25. So when we see the Australian market, we have a long line. The main markets we act in Australia and markets that didn't even start the renewal markets that we had big clients. When we look at the scenario that we are performing the volumes we are delivering in Australia, we are still not considering the most relevant market starting the renewal process. What we have in Australia, it's a restructuring process. And in Brazil from '21, '22 when we basically have a big skip a big jump in our business model where we adjust volumes and we have a more disciplined operation in Australia, not just capturing a market -- relevant market, we see, but also profitability, rentability. So the first term here, the first semester, you can see the numbers comparing to '25 and the operation maintains in '25, '26, especially because of that happened. We have a portfolio that is enough to occupy all of our operations. And in terms of portfolio here in Australia, we have a wide -- operation performance segment, urban road 1.5 years ago, we launched it. There's a very interesting perspective to be acting performing in a segment where we weren't relevant. And it's still not generating all the potential of results we can see here. It's a fact something we can think it's an operation that still can generate good results, can deliver good results. From the international market point of view here covering Mexico, Mexico is going through a discussion with U.S., Canada and that has delayed their renewal of the decision-making, the investments in Mexico. When we look at the volume in the market, the total market was around 2,000 buses and years before, the number was 7,000, 8,000 buses. So there was a drop -- significant drop in the Mexican market. We see the coach segment is concentrated in 5 big customers and these customers are discussing financing. And last year, recently, we see the decision-making issue for the clients was the financing. And we have very competitive lines of credit for -- that ends up making a difference for this client. So the solutions we showed you, they are being taken, delivered to Mexico, showing what can be done to the clients from the operational point of view. We have demanding customers and this demand tends to come in the next years and for the Mexican operation. Also worth mention, in Argentina, it's one of the most relevant markets. We have both coach and urban buses. Marcopolo is a leader in this market. But in renovation since 2018, we have -- we can see the market purchasing only what's necessary. And in this context, what is local is being manufactured by local bus bodies manufacturers. And the segment on the road. So Marcopolo doesn't have such a market share there. We see a strong movement in the cities adopting policies to adopt to renew the fleet. And when we look in -- we see the vehicles we can enter either with GMV or electric. So we combine product solutions that Marcopolo is developing that it's much more about the financial scenario in Argentina to promote fleet renewal, but we can see conversations starting. And we haven't seen that since 2019. So from the point of view, we can see that, in fact, clients things in Argentina may start getting stronger. Last year, we saw a significant difference. We produced 578 buses, and we see how much that is sustainable because of the market today, if we take the track record, we have around [ 45,600 ] buses -- coach buses from what we exported from Brazil to Argentina or what we produced entirely year. And from until seen here until '24 with things related especially to economy, we saw this purchasing moment because of systems the government created to tweak the system. And after the peak, we had some other we can see in terms of Argentina. We should see this market flat, but we can see a credit scenario in Argentina. It's gradually growing. So when you see the GDP on 10%, 12% credit versus GDP, it's a high scenario facing other markets comparing to other markets, but we see it's a market that is restructuring itself creating the mechanisms that people can go back to credit. When we look to some acquisition in Argentina, the client can maybe most of the times finance just part of this bus. So we need the client to have an immediate capital allocated. And now we can see it also depends on the bigger construction on the financial market. We can also see a portfolio in Marcopolo. Argentina is Marcopolo that serves the necessary demand. And in the terms of customer relations, we have in Argentina for the last 20 years, we have created a good relationship with customers. And the key relation is availability of the car of the vehicle. And that puts us as a good partner when there is fleet renewal. And then in net income, we have a favorable scenario in 2025. We are not doing much here in '26, but there is a restructuring in the second semester, always thinking that if this demand is coming in a situation, we are ready, we adjust the demand in a way we can be fast and we don't lose any resources. International market, Argentina, Mexico with good expectations with the adjustments made. So we don't have losses in these operations and the Australian market relevant from the results point of view, the ones we have in the first semester. Now New Flyer, Colombia. We have in the first semester here relevant operations. New Flyer, we have this recovery process. We follow up this operation as an investor. We are very close to the operation because we see the market is -- a market where New Flyer is a big player. There were some important players who left and they can access the federal resources and that differential relevance when they offer products. They have adjusted prices. We expect they have good profitability. And Colombia, it's a reasonable value when we look medium term, we have We have the renewals happening 6 to 12 months. We might have a specific ramp-up production moment in Colombia, and that will also make that it generates a significant value for nuclear company. So the profitability, when we look to our ROI, we have 1.2 percentage points also -- almost 95% we had distributed last year, and our ROIC impact in our margins, they have 3.1 percentage points in our ROIC. The working capital micro helped us in revenue, but also established the volume of capacity. We see working capital analysis. I'll go back after -- in the second quarter, what we have here is BRL 49 million in our operating cash. And a lot of that is because of receivables around BRL 500 million, and that is a lot to do with the programs of Ministry of Health, school and they bring us this difference of competitiveness. But from the financial point of view, the system of payment of the government is longer. And we also have the elections in Brazil that have a wait. We have some government issues coming from amendments. So we have to wait until the end of elections to receive -- to have some receivables paid. And that's what happens when we have longer cycles like the school. And we can see that, in fact, the company has been kept the indebtedness even with longer financial cycles with other kinds of distribution, we, in fact, can maintain the indebtedness of the company because we have a strong discipline in terms of expenses and capital allocation. When we talk about capital allocation, we have definitely especially '24, '25. We understand we must be keeping this level. We launched some products, we launched new families. We have been acting different and also seeking more and more vertical processes that make sense within this technological renewal project and deliver products that are more suitable globally. So here, you have the opportunity to meet the operations of Marcopolo, a very relevant investment We made in plastics in the most diverse technologies and here is where something we can bring to the product, especially in terms of competitiveness. When we think about the levels we have today, we see we are preparing. So the 3 big markets, Argentina, Brazil and Mexico, they have this repressed demand. The demand will come, and we need to be prepared. So when these markets return, we have the capacity and the technology to depend less on people, but also use the operational leverage and bring a bit more. And then from the shareholder remuneration, we have following what we have been talking along with you guys, we had in the first semester 2021 of payout also summing the dividend that we paid related to the second quarter. We had 95% of profits that were distributed and also our liquidity scenario and taking the opportunity that we see to repurchase we have approved the biggest program in the company bigger than 2024. We are working the possibilities, but we need to take these opportunities to have a lot of added value so the company can be effectively delivering more than that the request demand from the market that we believe will be better in the next months. If you have any doubt or you need to clarify anything, I'll be here to talk to you. Thank you so much. [Break]

[Interpreted] Let's get back to business. It's a pleasure to be talking to you today and to the ones remotely. I'll talk about the market scenario, the way the bus business is now and how Marcopolo has been capturing the opportunity in this current challenging scenario. I start by the graph of the Brazilian bus production. We talk about the total production in Brazil for the Brazilian market and for export. We divide it by trade lock in the [indiscernible] light gray foreign market and in dark gray internal market. Since void started, we have sold the integral unit, body and chassis. And for exports this graph actually shows the growth over the years as previously said by Pablo -- and the beginning of this year, when we see the first half considering the perspective of production, we see some growth. And later, I'll talk about in terms of segment, both speaking about the domestic market since the post pandemic period every semester there is a growing market. And this growth has been consistent overtime and through the middle of 2025 when the second half showed a reduction in comparison to this previous second semester business. And we could see this reductions coming up, since last year and the first half of 2026. When we remove the purchases from the government, speaking firstly about coaches and then charter, a reduction of 20% and a reduction of 18%. In micro without considering the purchases from government, they have performed better, but also dropping about 8%. And then when we consider the governmental purchases focus on micro there is an increase comparing the first half of this year to the same of last year, mainly because of the pathway to school program. So we had some volumes from the previous batch and also the pathway to health, that's a new program that has also brought in additional volume. And we also had some small demand from municipalities and other states. When we see the first half of this year, the volume is higher, mainly brought by the government purchases. Otherwise, there would be a reduction in volume. When we talk about exports, as you can see comparing to the first half the year-over-year 2024 to 2025, we could see growth mainly because of exports to Argentina. This year, the volume of exports is lower. As Pablo mentioned, the Argentina market has changed and Marcopolo is responsible for more than 50% of their exports coming from here, which is not possible to compensate as I think with other markets such as Peru and Bolivia. First we can see that these numbers have added positively to us especially during the consolidations, when we take a look at a long-term path, when we had lower interest when we talk about average considering the standards over the years and also considering the aging of the fleet from 2025 on, we see that the scenario of the aging of the fleet started growing. Even though we have been selling more than 25,000 units internally in Brazil, it's not possible to keep this age of this fleet. We have been repressing some of the sales and we believe that we're going to have recoveries from these old fleets as well. Talking about the government, these sales from the [indiscernible] program started in 2007 in the beginning of this year, we concluded the previous stage and the stage 13. Have been started and by the brand and now moving partnership with both [indiscernible]. And that means that we're going to sell margins that are possible direct. There has been a break between the first half and now since last month we have [indiscernible] being able to move forward considering this small trick and now we're going to start producing from the third quarter on, gain mostly from 2027 onwards. Considering the tender that took longer than expected and previous one. We also have now the election period, which also delayed a little bit with these program. So phase 2 has been started now and the productions are going to start from third half, third quarter on and will continue in the following year. And therefore we move on constantly, the other program we have to talk about is the pathway. Many traders health has mainly scripted Marcopolo together with VolksWagon also won the tender of these 3,005. We have delivered these blue buses on the right 1,500 units these tender is actually is still underway and during the election period we have to spend out, to stand by and wait. And we expect to have even higher volumes. This first phase was very successfully. Lastly, the school you know well, but past week has feel and it's a new program maybe some other to know about, through the ministry of how they buy this [indiscernible] and register through municipalities to chartering it's patients. Patients that are under treatment between [indiscernible] considering their journey from their home to the referenced hospital. Has been attributed to the fees which need [indiscernible]. In those program Marcopolo participate little high and the nobles [indiscernible] and only now to pass these throughout. Here, we're talking about a long-term partnership, not only about being part of the tender, but also going beyond bringing benefits the development of product considering that we have technical details that make us even highly -- more highly competitive considering price volumes and results to our goals. So adding these sales government to burn our goal to recover our volumes in periods like where we are now. This is not from our present, I not only bring the factory, but also our point of service, our sales strength. As I said, more than 50% of our exports are from Marcopolo brands and most of them more than 70% of these exports are from products from [indiscernible]. So highly added value products. So as you can see we have a [indiscernible] in Latin America and in Brazil and make us strong to the presence in all Latin America and it brings relevant participation in terms of market share locally. And this is our presence Brazil considering the three brand in three different colors as you can see on the left. These make Marcopolo network -- network, since 1998 has been shown as an in tribute vehicle chassis and body and the network we knew these brand for these government [indiscernible] each one of our brand has these own independent network of Marcopolo, because we have our own representatives our own subsidiaries and service point. And [indiscernible] Marcopolo has the previous point in Volare and we have 26. We make up their sales more similarly to what happens to the alternative segment. The sales they are separate. Actually, at Marcopolo, we have the purchase of chassis and body separately, while for Volare it is a single sale. We service 26 economic groups. We have our own dealership in Sao Paulo and it has been guaranteed a very expressive market share 54% and as a book [indiscernible] it is specialized in the after sales of govern sales. Another important point to share for a while, Marcopolo has been not only making the bodies, but also chassis considering the integral RTV and Volare with our own chassis. And for that, we have been structuring our part, our spare parts network so we can capture this opportunity. And we can sell items for our chassis that are -- things that are largely sold. So we can sell not only chassis, but also chassis part. We have restructured our strength and of that under the umbrella of part and one segment focus on the adjustment parts, another vertical for services. Service export all our product, the ones that we postponed other chapters or our people. Real parts that has been rewarded and reviewed, it's a new segment. That happens a lot in and the commercial vehicle -- sorry, automotive segment, they get -- they come back from the market. They are renewed and they are withheld with a special price. And the fourth vertical here that is the exclusive line of alternative parts. This is a very common practice from the automotive and truck segment. Parts that are parallel from actually we know that there are parts that they are not genuine, and we have to also develop some solutions to fight the ones. So considering spare parts, this is an internal project, a special project mainly because of chassis because it's a new world of opportunity with parts that are from high demand and high wear and volume. And to wrap up, I'm going to talk a little bit about our positioning into more and more protagonist in our sector, not only about the market share and product but by the initiative and the way we make all the distribution, and we [indiscernible] up to move one step ahead and we have consolidated since last month, this is the biggest exhibition trade show in Latin America. There were more than 200 exhibitors, more than 3,000 visitors, 30,000 visitors. And our participation has been structured though we could continue being seen as the segment. We decided some strategic pillars to our participations besides these clinician with clients and showing new products and launching products. So we launched 2 significant the arena 2027 and the G8. So we could see as a participation in a global level. Our presence there we had more mischievous and in this exhibition, more than 10 vehicles in our main stand. We also had main units that were there available to be sold on the spot -- we provided cultures and also some vehicles that could be sold there. And I'm going to talk about that next. And the other point that Andre brought before was the creation of content considering agendas that were relevant to our ecosystem. So through the participation of relevant entities, we also brought communication channels that were not so -- that were different from the regular ones. So we could really have a large participation and coverage. We brought the firm that new among others to have this exposition of all these agendas to the public in general. As a result, we sold more than 300 vehicles on the spot sales program that we created that, we sold all the 28 vehicles. We had 5 orders that were not inside the stand, differently from what we normally have, wait for the exhibition. These were businesses generated and the deals closed there. Just one example, the first vehicle sold was for a client that hadn't started a negotiation before. Here right at the exhibition and in the opening, as we had previously mentioned, we would have these vehicles on the spot he negotiated price. And when they closed, this is my vehicle, this is my bus. Closed, open, then he opened quite a bad and he got a sticker and he put the sticker on his bus over there. So she was -- she wanted to make that to close that deal. He was ready for it. So it was something surprising. As you can see, the stickers, they are being shown in the picture next to the girl with the brown shirt. Talking about the foreign market, we wanted these attribution not to be only for Brazilian clients. So we brought all the representatives from the foreign market. They brought some clients as well. From Latin America, there were more than 40 countries present. We had some clients from South Africa, from Australia to show how wide this participation can be. So we could show all the launches, not only to the Brazilian customer clients, but to the global ones. There was more than 40 hours of content provided and discussions -- relevant discussions brought not only relevant for Marcopolo industrially speaking, but also for mobility as a whole. And over the next few months, it will -- we will be gaining repetition, not only in specialized media, but also in open channels and broadcast. So it was a huge success considering a trade show for Marcopolo was really positive considering these identity protagonist that we had in mind 2 years ago and that we made come true over the very intense trade days during -- that's it from my end. I am going to be available for you to answer any questions. And now I am going to pass the floor to Joao Paulo.

[Interpreted] Good morning, everyone. Welcome to the day that started a bit colder. And apparently, the weather is hotter than Sao Paulo. It's nice to see some familiar faces and also the opportunity to know new people. And I come here to talk about our strategic planning and you will see a very aligned communication. You will also see, I bring a lot of reinforcement of what has been already said during the previous presentation. What do we have here? So our growth the cronograma of our growth -- our agenda Marcopolo 2030 is what sustains our vision, our ambition for the next years. I'll bring 2 perspectives here and most important, how Marcopolo is constantly working to prepare itself internally and strengthen this growth journey, also highs and lows because of the market, how we face that in a competitive way. And second, naturally, how can we translate this capital allocation, all the investments, our strategies and the growth vectors. We have here 5 big drivers, 5 big pillars on strategic planning of our organization. People and organization, processes and technology products, markets and customers and diversification. I will cover 4 of our main initiatives and execution of ideas here. So industrial competitiveness, which has been constantly repeated during the other presentations. I don't like to use digital transformation, but I'd like to use digital acceleration and especially now with artificial intelligence, also translating into opportunities for Marcopolo. Also, I'll be talking about products and proportions as was brought before and highlighting specifically a geographic expansion project for Marcopolo Europe. What is the big message I'd like to share here. At the center of Marcopolo's strategy, we have competitiveness. When we look at the 2 fronts of execution here, industrial competitiveness process and digital acceleration, we are looking from the door inside preparing the company to sustain the company and the margin. And when we talk about products, propulsion, geography, diversification, this is where we are driving the growth towards. Now about industrial competitiveness because many of you know, many of you don't, but what is the model, the business model and the reality of operation at Marcopolo, strength that we have scale model with hyper customization. This is a big challenge that we have. And when we look at the road map with new solutions for the future, we have to work on the automation of our industrial products. And that is the big challenge because we need to find a balance on how much we make this automatized to the point where we have a balance of flexibility. And this is a very strong characteristic of a feature of the company. I'll bring you here some examples from 2020 to 2025, '26 projected with the delivery of projects ongoing. We had here a big difference of nearly 70% at the automatized manufacturing, and we must reach the end of this year with almost 16% of automated hours of production. We grow almost 200% our robot university with installed capacity and a number of 50 units of robots connecting with the product strategy that was mentioned before. Torino 2027, it's getting now into operation with almost 22% of automation -- automated hours. Just to understand how big that is. It Means almost 60% of the welding during the manufacturing process. This is how big it is transforming to something you will see later when we visit the shop. Also and additionally, we are investing strongly on industrial automation. Obviously, we are looking at the intelligence -- artificial intelligence initiatives. And here, I'm talking about new technologies, augmented reality. So we can bring the benefits of such things within our industrial process. And this has naturally been changing very fast, very quickly. And we have to look the best practices, technologies that are -- have been validated in the market so we can start bringing to our business. We will start making a number of productive processes that will be followed by devices, by tools of AI both from the competitiveness point of view of costs and quality. You know our business model. We depend a lot on specialized labor. And one of the benefits of using this technological revolution on our advantage is to have less work to have a very fast setup of our shop floor and depending less on specialized labor, which is getting less and less available on the market. And of course, still prioritizing one of our pillars, which is having a flexible business model with a wide portfolio, like Andre mentioned before, I think this is a big message. Automation, we will keep growing. We will bring the level of a bigger level of automation at a higher level, but that makes sense. This cost equation, flexibility equation, bringing more quality control without losing our flexibility. Talking about digital acceleration, transformation, we have to cover that. Since everything is about AI today, not just professionally, but also personally how we are dealing with AI inside Marcopolo. It's not an IT project. It's not a project that is closing in a department, but it's a big vector of competitiveness. And here, I'll bring the 3 big pillars that will go through people, qualification, how we are applying that on our daily business and how we can have this digital basis well applied and safe. First, we expect we have chosen here is qualified to train people, starting by the executives levels. What is the AI itself, how can we bring return to our business and also where we shouldn't apply AI. We will see how fast AI develops, updates its service super fast. What we are doing with AI today didn't even exist 6 months ago. So what is to come in the next months and years is something we cannot forecast. That's why people must be prepared and we are worried about that. We want to create a governance model so we can bring the distribution, always focusing where to prioritize the results brought inside the organization. And here, we have a number of opportunities that have been mapped so we can put this into practice. It will bring us speed of decision. We will have agile fast decisions we will be able to prioritize investments because we understand AI also costs. If you use AI in a wrong way, can be a problem for your business. that on our daily routine, we understand that. Today, we have around 130 agents in production in different areas of the company. These are not autonomous agent we're talking about the employee that the person looking the results and then we validate and make sure it makes sense to our business. In the industrial area with our complexity of projects that are benefits, the model of planning Marcopolo's portfolio, the variability of markets we have. So we will have a big advantage to Marcopolo in the future and also to have a better use of materials. It's a complex product in its core, in its nature and where that will be shown obviously optimizing and also material consumption and to finish scalable and secure foundation. So our modernized ERP, we have a complex ERP. We had a migration in the first quarter of this year after almost 12 months, which was successful. The migration was very successful. We have a more modern system hosted in the cloud. We didn't have any impact in our operation, very small downtime within what was during the vacation. And when we talk about sale, we have a lot of data and without data, there is no AI. We have to be very careful getting close to important people in this area when we talk about structure, about data foundation, about data and integration, not just with our ERP, but all of our systems. Last but not least, safety security. When we talk about digital surface -- we have higher risk of cyber attacks, and we take this very seriously given the important investments we have been trying always to set the bar very high with the best practices in the market when we are talking about security to make sure we have a continuous business. The message here is that technology comes inside this strategy and the competitiveness of the company. It brings productivity, agility, faster decisions and a resilient foundation when we have a positive cycle and costs in the same proportion. Now product and propulsion, we have in the ecosystem were stocking and the decarbonization as we speak for a long time is organized into these 5 interdependent fronts. I'm not going into detail on them, but the 3 first items are controlled by Marcopolo by the multi-technological strategies, whether by products or solutions we develop with the other OEMs of the other bus companies. Regardless of the problem, Marcopolo has a solution about sales and after sales the biggest sales network globally. I'm not afraid to say that. This is a very big, very important strength when we talk about energy transition because we have -- since you have a modern product, you also require a better network. And looking at technology, Marcopolo has also getting closer to other players so we can transform the new projects, onboard technologies to technologies that will bring a better TCO, a better result to our customers. Talking about AI, we're here talking about things that are different in Marcopolo and during this journey, talking to our executive colleagues here, we have gotten closer to very big tech companies globally speaking. And when they learned about the mobility segment about the Marcopolo, we attracted attention. We caught attention. It's been very interesting to see how interested big techs are interested to get close to Marcopolo seeing the opportunities and how much we have been building. And to finish, we're talking about buses and Marcopolo was important on the Latin American fare and the Latin American market and also in the world, and that's how it has to be about here infrastructure, about funding among many others at the fair, we presented the hybrid and Volare tech ethanol hybrid at the level of 2026 in a different proposal in a different -- about decarbonization. It's a vehicle that is generated by ethanol and doesn't demand a heavy infrastructure as the usual electric bus would require. We want to strengthen and accelerate the transition -- electric transition in Brazil to sustain -- and this is a way to sustain Marcopolo's growth. And to finish, let's talk about Europe because last year, we mentioned a project that started last year and now it's reality. We are officially launching G8 in Europe in 2 weeks, in 16 days, we'll be in premiering Marcopolo returning to Europe. We have already sold 21 units even before the production, serial production and the deliveries, they will start in January 2027. Under 30 units under negotiation, and we start negotiations in November, deliveries in January. And we are -- the European market has grown 10% related to the first semester of last year. But when we look at this longer basis in Europe, we see a segment that has been recovering and will bring a very interesting opportunity for Marcopolo's growth. We will launch the product in Spain, followed by fares in France and in Italy and after our target countries Spain, France, Italy and Portugal. But of course, we're tracking other opportunities with other OEM companies that to create opportunities and market share for Marcopolo in the European market a strong -- one of the strengths of Marcopolo is this geographic presence. So that's it. We are in the final stage of a number of homologations so we can actually sell in the European market. First homologations have been done, and we must finish this project by the end of the year, that's it. These are some information of Marcopolo 2030 and talking a little about strategy execution, what we are doing. I'm here. I'm open to talk and have further conversations. Thank you very much.

[Interpreted] We will be organizing the question-answer section. So we'll be back in a few minutes. [Break]

So let's start the Q&A.

[Interpreted] I'm from Santander. My first question is the international market. I'd like to know more about 2027 first half what's the expectation of the 2027? Second question, more specifically about the second half of the presentation about the European market. I'd like to understand your view to this market, what potential you see there, how the dynamics is going to be about exports into different geographies?

[Interpreted] Gabriel, thank you for your question. About global market. Australia is a market that is consolidated. In 2025, it was very positive and on it's more and more positive they have -- they are also aiming at electrification, it is a stable market, and we believe it's going to continue like that for next year. There is a huge opportunity. Last year it was great. This year, we saw low sales volume, but we are very close to clients. We are very active in. So with Argentina, we see that as soon as they get a little bit more stable, it's going to grow again. Considering this bus market, you mentioned this is something that we haven't been exploring much, but we believe that by the changes we move to gas, natural gas, we're going to see an interesting move. Among the markets that we see carefully is Mexico. It's the market that suffered the most with the relationship with the American market. I mentioned in previous meetings you visit operators in different places around the the Mexican market was very uncertain about the future there is renovation coming up need to the market is going to Mexico and Argentinian market has potential to grow. We don't know the timing yet. And Colombia, as I have mentioned, they have some peaks mainly with the uranium. We made an interesting sale that will be started the production this year and continue next year and this is another point about Australia. We are overseeing the second half sale of production. So for 2027, we foresee it's going to be in the same level from this year. Speaking a little bit about the strategy for Europe. The European market is very interesting. It brings high volumes. The volumes have been changing their model has been changing considering compact business in the past, it was a small -- integral vehicles are body builders, and some European mainly German and Swiss builders that are well known there. Since the pandemic things changed, there has been a lack of demand that couldn't be met in the market. And on the other hand, the competitiveness of the change huge and considering some of these they decided to close their body building manufacturing plant, because of the competition in China and therefore the offer started to be like lower and since they started to grow for us, the market partners has already been inviting and asking us to get into that market year-over-year we see that in coach, there is a key in considering volumes. So there's huge ask about future plans. We cannot anticipate telling much about our future strategy, but we can say that we are going to be more consecutive as possible in each one of the deal. So the evolution dispatch are going to depend on the environment that we are going to have considering, also considering the production models that speaking about profitability, considering the margins, these are not the levels you have been aiming at. But considering we have a risk macroeconomic scenario -- considering even and [indiscernible] the domestic market. Talking about the future, what are the main leverages. And what can you do internally a cost of the show or the present volume about next year. What do you expect that are going to -- what do you expect can make profitability grow?

Thank you for your question. What you have been working on is considering the market, MicroPower has been preparing itself to improve its portfolio, to improve the election to have the best field for our clients. So being looking highly on that [indiscernible] have been trying to export in [indiscernible] to the domestic market in these possible and also to Mexico and in this context of consuming products, we have been working on the product strongly about cost reduction. This is our homework showing high discipline levels because in order to invest and develop solution and also in moments where things are not really when things are rough to foresee the opportunity to optimize not only about making cuts, but also expenses, but how we can add more income. That is the challenge. When the scenario get more difficult than we can pursue we have [indiscernible] processes that we have been experimenting over the year trying to work in the optimization of what is variable cost [indiscernible] some example of technology changes, improvements in the plant, in the manufacturing to [indiscernible] on the operator and optimize machine. And at the same time, inside our [indiscernible] structure, so recognize tests can be done more -- in a more automated way without any losses for the company. So we have to work in the market, and we have to work inside mainly talking about the manufacturing [indiscernible] in Argentina, we have considered some improvements in Mexico. We have also reduced and improved our efficiency to have healthy operations and when these margin can grow again, it can effectively leverage our results and recover the profitability that we have been having [indiscernible] That our [indiscernible] seeking these exemption because we have lots of opportunities to work on. Some points I'd like to highlight. Talking about products, we need to have products that add value to our clients. So they can find in decision that [indiscernible] and possibility for them. And when we talk about aerodynamic kit. So [indiscernible] more, we can bring solutions that add value to our clients so they can see value in the solution. Secondly, to speak about projection capacity versus the market resumption. We need to have the adequate capacity for these scenarios that we are facing so we can be more precise to see how the market has driven to be [indiscernible] considering lower volumes and also [indiscernible] attested we mentioned before. Regarding the repressed demand, what you can see in terms of indicators to follow up credit line and the market in the situation. We talk a lot about interest rates in the market. That would be enough. And other indicators you consider important. I think we can all talk about that, over some point looking at the preview scenario, the legal public transportation, we do more per public and private taxes that are so important points. All of them need renewal, the urban plus the speaker understanding to utility long-term sustainability safely and consequently, more investments, I believe is a positive way that are associated that renew proportion. We can see a big movement -- transition movement from diesel to electric and we have been doing [indiscernible] but we are doing, but when you bring alternatives of new proportion connected linkage to a more predictable environment. This is positive on urban. About micro versus [indiscernible] mentioned, the big moment will come from the government programs, the [indiscernible] to school and we got basically all the volume in the last negotiation we had with the government and the health ministry in the program also got gotten a very relevant way when we bring [indiscernible] solutions, and we have positive visibility. It also comes in an interesting where I would say that more than indicators, look at the government programs on the microbus segment [indiscernible] and for our coach buses to have access, we have an easy access to credit, but also like high interest rate have always impacted the market, not just in Brazil, international markets as well. We have some clients that the renewal process happened the credits, for example, in Argentina, in other places that affect. Now we can have this resume in the market. The market is returning and we have a balance in a macro scenario where we have a better safety and more -- people are more interested in investing both in passport urban also has an impact and micro versus governmental programs are important leverage for this business. Some indicators you can be following up on this microbus, but the [indiscernible] announcement. So this year was a market that could have a bigger demand. We saw some cities and municipalities anticipating. And we saw it didn't happen in a more effective way since the time it happened between '13 and '16. So we saw some of these readjustments and what happened in the year of the diesel -- impact on diesel which ends up in this readjustment to generate the new business as before we can feel as we have the readjustment now with the base of public tariffs, public taxes and we were effectively the operator has the condition of doing things in the renovation for coach buses what we see is the investment. It's another indicator. The effect is today where we see the demand of passengers reduced within the familiar budget, select of resources on the family. The tourism and the impact of tourism operators and we believe that is for both urban and the coach vessels and also complementing because we can separate very well the coach in the urban buses. For urgent necessity of what belongs for those better, deeper volume of purchases. The urban transportation passengers going more and more in individual transportation. We are reaching moment to the game solution that they are an issue in a city like Goiania, for example, where there was a bigger investment in buses. They had a prioritized debt and generate a positive effect and to return to the passenger to the public transportation since it's adequate, safe public transportation. So that's a restructuring moment in a more practical way when we look then also the average age of the fleet maintenance. The average number was 4.5 years and now it's over 6. So that focus carries a bit the increase on maintenance costs or the no reduction of solution consumption or of the -- are the proportions that divides, if you see some [indiscernible] to 6 where there's an improvement in consumption, different emissions that is a point that leads should be need to renew the urban fleet. And coach buses is more direct decision, we see the strong movement where the business people renewing only what's necessary because of the high interest rate. So only what is what is necessary. It's in the limit of the renewal time of the process the accurate time in a general way, and we limit of this average age or after a certain but will generate the maintenance cost. Also, the performance will be do [indiscernible] generates the need -- it gets better to have a new cost and that in fact the high interest rate at the moment. And also about the segment? perhaps from the important places that we'll be discussing a new concession cycle, for e.g. [indiscernible] Rio de Janeiro, big Brazilian cities that they -- of course, we are looking at and following up all these movements that are more structural in the country that they will end up changing the scenario in 2025 in Marcopolo. What we see the mobility manager, the mobility responsible in the municipalities that one will be -- I know this is an important [indiscernible] of the government. I have no doubt we are crossing a turbulent moment in the country, but opportunities will come for Marcopolo.