Mills Locação, Serviços e Logística S.A. (MILS3) Earnings Call Transcript & Summary

Thank you very much, and thank you for waiting. Thank you for being here. This is a material effect in July 22, 2022. For those that need simultaneous translation we have this tool available in the platform. Please click on interpretation on the bottom side of our screen and click on globe, where you can choose English or Portuguese. For those that are listening in English, the option of muting the original audio is on the bottom part. Now this video conference call is being recorded and will be made available in our RI site where you can see our presentation. Throughout the company's presentation, all participants will have their microphones muted. And subsequently, we will have a Q&A session. Now the information within this presentation and forward-looking statements during the conference call regarding the prospects and business of the company as projections or projections based on our management regarding the future of Mills. Forward-looking statements are no guarantee of performance here. We have to include market with macroeconomic factors and other factors. Here, we have Sergio Kariya, CEO, [indiscernible], CFO; and Eduardo Wurzmann, Executive Director.

[Interpreted] Good morning to everyone, and thank you for taking part in our live -- today is a very important day. We're very proud and happy with an additional step in our new strategic position. Our company -- on the next slide. Here, we are materializing a new mark of the company's positioning that started in November with the new positioning of our brand. This is a more technological company geared toward our customers, and we pursue the diversification of equipment within our equipment portfolio. We want to be a one-stop shop in the long term and the first step of diversification, going into earth-moving equipment. This is an important step in order to put our company in a more relevant market. These are markets that provide revenue predictability, and we also want to broaden our customer verticals. Now the aerial platform allows us to have strong access to customers, nonetheless, our contract terms in the mid-run last around 8 months. So as a company, we are looking for products that could bring more relevant markets to our and with a more predictable cash flow -- in terms of cash flow and revenue. Aerial platform presents a great diversity in terms of customer verticals. We have over 8,000 customers in our customer base and earthmoving equipment will bring more density in verticals where we're not process, like agri business. Now the agri business, we have less than 1% of this business, and we will pursue a higher share in this market. Now on the next slide, you can see the rationale behind why the earthmoving market. As I said, aerial platform is a strong addressable market. Nonetheless, in 2020, generated BRL 2.5 billion turnover and Mills has a strong share of 30%. Now aerial platform has 32,000 machines in Brazil, and there's a long path to -- long path to pay in terms of aerial platforms. We would like to remind you now in the American market, they have almost 1 million markets and in Brazil only 32,000 equipments. Now earth-moving equipment generates important opportunities so that we can address a greater market. As you can see on the slide, this is a market of the size of almost 10x of the aerial platform market in 2021. In earthmoving equipment, we have 250,000 equipments in Brazil and low penetration. When we think about rentals. Therefore, in our calculations, we have around 60,000 equipments in the hand of the rentals, the great growth driver is the conversion to convert customers that are end users that apply and buy these equipments, but now they will start renting this equipment another important factor to embark in this market that this is a highly scattered market. So here, there is an important consolidation not only to address 60,000 pieces to equipment, but to grow the concept of rental vis-a-vis buying. As you can see on the lower chart, here, we calculate that 10% of the market is in the hands of major players. And there is no rental that has more than 3% of market share. So yes, this is a significant opportunity for the company. Now our next slide. Here, we can see that the earth moving equipment market had a significant growth. Here, you can see that there is interesting CAGR since 2017 up to 2021. And in 2022, we believe that we will have 33%. We believe that this year, we will have 35,000 new machines during the 4 first months, we had 8,000 new earthmoving equipment in the market, BRL 6 billion have been invested in these type of equipment. Another factor would be the penetration of rentals. We've been observing this year after year in 2017, we had approximately 18% of the years moving equipment in the hands of rentals. Now this has gone to 25%. And when you see the new equipment. The equipment -- the new equipment, we see around 30% of the machines that are bought, going to the hands of rentals. This is an important pathway in Brazil to penetrate this rental concept, to penetrate the rental concept when you see Brazil. Currently, we have a very low volume. It's only 25%, if we compare ourselves to developed countries like the United States, which has also -- already has 40% of their equipment with rentals from earthmoving equipment. Now in England, we see 50%. Now when you analyze the total number of equipment, United States is almost 50%, and England, 80%. So there is a changing trend here. Now on our next slide, we can see competitive differentials. Why does Mills -- why is Mills importantly positioned that will allow us to be a winner here we have a [ capillarity ] of branch offices and a strong commercial structure. We are going to talk about operational excellence and know how our cross-selling synergies with our customers, we, in addition to a sound financial profile and a solid execution, integration of [indiscernible]. This is the 6 M&A in the last 12 months. When we talk about [ capillarity ] and commercial structure, today, we have 44 branches of aerial platforms and this gives us -- we are close to -- no company has the [ capillarity ] that we have. We are opening branch offices. We are expanding ourselves within the country. We want to have more than 50 branches by the end of 2022. The purchase of Triengel gives us 2 branches. We will continue expanding and penetrating the rental concept and expand and penetrate our branches in Brazil. Another relevant point due to our footprint. Well, we have spare parts. All of our spare parts are in our branches. We have technicians that are trained in our branches. We have commercial people in each one of our branches. This is why we are differentiated in terms of position when we compare ourselves to the competition. Now when we talk about operational excellence and know-how we can see that we -- we have a differentiated concept. We're a global benchmark to understand what the lean methodology is. And this was developed by Toyota and this has been applied to our business that is applied to maintenance equipment for rental. We provide differentiated service to our customers. All the strength and the differentiation with our aerial platform of the logistic volume and they have a robust logistical need. We will use this differential to add value to our earth-moving equipment customers for you to see how different we are. We are the first company that -- in Brazil that is part of the PPA, we are part of the Board of PPA Brazil. We were [indiscernible] during 2021 in [ Yapp ] in 4 categories as the best training center, best in structures as an innovated -- as a technology innovation company and best company in the world. We will use all of these points to be winners in the earthmoving equipment market. Now we will talk about synergies and cross-selling. I would like to show you what -- how the aerial platform rental can allow us to grow with earthmoving equipment. Today, we have 8,000 customers. We've seen 318 customers, and we carried out a survey to see if they had earthmoving equipment, 40% of them had earthmoving equipment. And when we add up the number of equipment, this is 1,600 customers in wheel drivers and now this generates the second biggest rental of equipment if we can convert 1,600 equipment in our fleet. Here, we have an opportunity to continue growing with our customers, increasing our share of wallet with our earthmoving equipment. Now our next slide, I wanted to show you our inorganic strategy, the company decided to carry out a hybrid bond, but not only organic, but to work inorganically and why Triengel why would they bring this competitive difference because the company is a reference in quality and service in the agri business. And this is a company recognized by the customers and even the manufacturer of earthmoving company. It's a company with over 20 years of experience. Their business model is based and aligned with our strategy. Because it joined quality services with highly defined working stations with efficient maintenance, here you can see the images. The quality of maintenance, the awareness together with our sustainability journey, here at [indiscernible] environmental control in terms of maintenance. This also gives value to the company. This know-how and the maintenance system together with all of Mills knowledge will allow us to escalate this concept in our company. This is a new fleet with 255 new equipment, average use 2.5 years only with premium brands. So this means that the cultural operational fit exists, and we have an operation that is running. We are going to contribute with good know-how in order to accelerate the earthmoving equipment market. We have experienced, executives as part of their management will continue with that. And they have like 20 years of experience. Now Triengel has its gross revenue of BRL 56 million. The value of the fleet, if we were to sell these equipment to the market, it would be BRL 156 million, the contract profile. We want to have more predictability of cash flow and revenue. These are 4-year contracts. An EV of transaction that is fair of BRL 134 million. The EV EBITDA is 4x -- 4.8x. Now the tridimensional fit. I've mentioned some points, but when we allocate our capital efficiently with good internal return, we also have a relevant market exposing the customer to the agri business. And in aerial platforms, we have 1% we will have more exposure, reducing cyclicity. I'd mention long-term contracts providing [ flexed ] predictability to our cash flow and increasing the share of [indiscernible]. We have an important and strategic profile. We accelerate ourselves in the market of earthmoving equipment. This acquisition contributes with knowledge, and we are running. If we were to start organically, the lead time of delivery would be too long and it would take us longer to embark with these equipment. We do have a replicable model and we can stagger this quickly. And the ESG factor, a highly defined process focus and continuous improvement and our customers. We are focused on the environment. And this also provides us a cultural fit. This means that our strategy is highly aligned. Now on our next slide, Here, we have also joined our inorganic strategy to the organic strategy. Yesterday, we announced a CapEx of BRL 225 million in new equipment. Here, the idea is to show you how we use this rationale. What is the strategic rationale to choose equipment? Number one, we are focusing on equipment that bring productivity and fuel efficiency. There are a number of OEMs. There are almost 9 manufacturers in Brazil, and each equipment model has its own features, the customer, many time prefers 1 type of equipment. So we're choosing more efficient equipment. It could be the fuel consumption is important. Sometimes, these machines work 24 hours. So how do -- how can we enable this for our customers, the option of the equipment has to be geared toward the business. What we pursue to be segments and regions. We will choose equipment that are better applied to the segment where we're focused on the proper mix in order to see the TCO. This is total cost of ownership. So when you see the unit economics of an earth-moving equipment, it has a CTV that is slightly higher than aerial platforms. TCO is more important. So the right equipment with the right brand allows us to maximize our return. Best acquisition prices, we understand that we have a negotiation pack power. With this CapEx, we will focus on 3 OMMs and we won't disseminate ourselves in other brands, bringing more logistic efficiency, but this will be better for our mechanics for our technician, the strategic partnerships. We've always done this with our manufacturer. We have a 20-year partner there with [indiscernible], our partnership will be applied also to our earthmoving equipment to come an end. Here, you can see -- we have an organizational chart that is differentiated. We have to focus on what we have today. Our core today would be our aerial platforms. This is 80% of the company's revenue. Daniel will continue as Executive Director, managing aerial platforms and [indiscernible] will take over as of today. He is the head of the earthmoving equipment. We will use all the synergies of our branches, all the commercial synergies, but our focus will be separated. So that we don't damage the rental business. So that we can accelerate and concentrate on the earthmoving equipment market. Now this new company, if we add our net revenues with the revenues of Triengel. In 2022, we expect around BRL 1 billion in revenue, now the gross result of almost BRL 700 million, 72% of margin, which is important. As I mentioned in the unit economics, the margin of aerial platform is high. We're delivering 76% of margin. We will have better margins but we will have overhead dilution. This will improve our EBITDA margin and we will have a combined EBITDA margin of 43%. We have partnerships with manufacturers. We have expertise in the rental market. We have the Solaris history. Solaris already worked with earthmoving machines, [indiscernible] Argentina have 9% of the company. We've carried out benchmarks with them to contribute in terms of knowledge and accelerate our actions in this market. What do we want? We want to have efficient capital allocation. We must end after investing. This will be a leverage company. We are leveraging the company. Therefore, this means efficiency in the company's capital. And we will embark in a segment, not only going after predictability of revenue and the drop of cyclicity. And we guess we will continue focusing in organic movements, but also inorganic movements. So I believe that this is the challenge for the company. This is the new Mills that we are presenting to you. Thank. Thank you very much.

Now we will initiate the Q&A session. [Operator Instructions] First our first question Fernanda Recchi, analyst of BTG Pactual. [Operator Instructions]

Good morning to all the team. First, congratulations for embarking in the earthmoving equipment market. You have been talking about this. And this is a very important landmark. I have 2 questions. I would like to know about the life cycle of earthmoving machines. As you mentioned that the Triengel contracts are long-term contracts, but I would like to know about the rationale. After these contracts mature, will there be an overhaul? Or is the idea after the first life will you sell your assets? And my second question, I would like you to elaborate on the type of contract you were saying that Triengel, that they focus on the agro market, I would like to elaborate about the yield, the contracts, the type of machinery of Triengel. If you could give us more color regarding these points of Triengel.

Thank you, Fernanda for your question. Number one, I would like to mention how Mills operates its assets. We do have -- we have platforms above 10 years, and we carry out excellent maintenance quality of our machines. This is what guarantees the life span, we have extended the lifespan of our machines, and we have capacity of doing an overhaul in our branches. And regarding the earthmoving equipment, this depends on the type of contracts. We are going to adapt the machines to the needs of the customers. There are contracts that run 24 hours, and this means that you will use the machine for less years. And there are other machines where you can extend the life span. Now Triengel contracts are strongly dedicated to the agro sector and highly connected to the sugarcane [ by gas ], although they represent a high amount of hours. Although they're used a long time. The quality of the machine is excellent. So we can overhaul them and they can still being used. And we do have good knowledge in how to expand the lifespan of the machines through a good overhaul. So sometimes we can work with first life and second life regarding the lifespan. When we see the sales value, we try to maximize our return of investment depending on the case, we will see what is the best time to sell according to the different family because the machines have different characteristics. Now all the history know-how -- to know how to buy, how to sell and how to extend the large span of the machine. We will do this with compressors, generators, aerial platforms. We will do this also with our other equipment. Just to add something here. I believe one of the strengths of the company is due to our [ capillarity ]. Now the first life cycle of the machine in long-term contracts, our branches will be able to provide more uptime to our customer now during the second life of the machine. It's extremely important to be closed to the customer because in the long term, it's 90%, 100% of the machines are used. When you go to the second life, you diminish a little bit the average of contracts you continue generating value and revenue with the product, this equipment has a greater turnover. This is why we have to be close to the customer. And we are positioned this of -- this is why we will be able to capture the second cycle in a very profitable way. And we will be able to service our customers in a differentiated fashion. Now your second question. Triengel performs in the agro sector and the port sector. And especially the agri business is strongly growing. It's becoming more professional and they're migrating to new technologies. So they use more earthmoving machines to manage their properties that are all very important dimensions. Therefore, we do believe that there is a lot of leverage because today, Triengel is focused on the radius where they have their base. But if they have access to Mills capital, we can leverage the growth and we can service other regions. So today, they're focused on a certain region, but we do believe that we will be able to leverage our positioning and our footprint and we will be able to leverage our investment capacity.

And just a follow-up. I would like to better understand in terms of customers. Are you concentrated in a certain type of customers or -- or is there a diversification in terms of revenue in Triengel. Can you talk about the yield of Triengel's contracts, how is this compared to the contracts that you have with your aerial platforms?

It is relevant to mention what was the growth driver of Triengel throughout the years. Their differential is there service quality, the value that they add to their customers and maximizing uptime and lowing the maximum productivity of the customers now. So now customers want more Triengel machines, and they don't demand many, but they don't demand a lot from the competition. So today, there is a certain concentration in a number of customers but mainly because the financial capacity of the company allowed them to buy the machines that were demanded by their customers. But we believe that with Mills capitalization capacity, providing the same quality of service, and using Triengel's approach, we can leverage this in our customer base. So today, they are concentrated in some customers, but because of the limitation of capital access. Now yield, and it's very -- the rates of earthmoving equipment are similar. Well, in the unit economics, we will give you more details, but what we do have is a higher cost regarding the revenue when we compare it to platform, but it has a lower G&A. So we believe that the EBITDA margin that earthmoving equipment will provide us is -- that it is very similar to what we have with our aerial platforms. So we do know we have a concentration, and we will no longer be concentrated. If -- in Mills, if you see our [indiscernible] customers, they don't account for even 10% of our customers. So we are high -- we're not going to concentrate on one customer or in a sector. No, we're going to diversify. Now in terms of yields, they're very similar and aerial platform is less used. And when we have long-term contracts, these machines are used more in terms of who is lower and G&A is higher. Now we will give you details of the unit economics, So you can better understand how we see this business.

Our next question from [indiscernible] Investor of Eleva Brasil.

I would like to know if the company is analyzing M&As for the mining industry and what about the organic investments?

[indiscernible], well, we are going to work organically and inorganically, I believe that our strategy for M&A is looking for opportunities and looking for companies that will add value. We are not going to disclose what industry we're focusing on. But we want to diversify the industries that will contribute with synergies. And this is how we see acquisitions from here on. We do have a dedicated M&A team that is analyzing the pipeline, observing opportunities, and we are going to see organic and inorganic movements in order to fulfill the growth that we expect in the upcoming years. Now what maximize the return of investment is the mix of 2. Sometimes, you have equipment that could be better for organic and other for inorganic. So the combination of both side has provided the best results.

Now regarding long-term contract, is there a culture of buying equipment from a specific client. So you buy the equipment to rent it to a customer, I believe the Mills [ capillarity ] with the 40 branches. Well, what you could do is map all the companies that have contracts between 1 and 5 years with earthmoving equipment. And now they could rent equipment in Brazil through a long-term contract. I don't know. Could you explain this better?

This mapping process, well, we have been doing this for some time. In normal times, it is common for long-term contracts to buy equipment that are dedicated to a certain contract according to the specific needs of our customers. Now currently, well, it is taking some time to receive the machines because of the market conditions, and this is why we advanced our equipment CapEx. This is what our customers are showing us that they want and we're going after these contracts. So we do believe in this model, and we are growing due to our [ capillarity ]. We will focus on other type of contracts that are not so specific. These are more common machines. So yes, this will be one of the main sources of growth of the company, yes, investments to meet certain demands of customers. And [indiscernible], from our 8,000 customers, over 130 have earthmoving machines or long-term contracts or they have their own machines. So this shows us what our target is. And this is part of our strategy when we think about long-term contracts.

Next question from Pedro Gonzaga, an analyst.

Congratulations for your transaction. Could you elaborate on your organic expansion? I believe that you've answered part of this question. I believe that you are mapping your customers, do you believe that you will deliver all your machines by the end of Q1? How many branches are going to receive the machines? And in maintenance, do you have enough mechanics to deal with this growth?

Regarding the machines that we bought, we're going to receive them during Q4 this year and part on Q1 of next year. Now we started mapping this over a year ago, we hired a consulting company in order to work with our strategic planning. Therefore, we have a detailed mapping process with the models, machines segments whether we did this with our 318 customers. Now for an M&A, we mapped a number of companies. In these discussions, we identify the best type of machines, and we are also analyzing the different segments within our customers where we can see the combination of everything because we only map 318 to have a deep sample. We have over 8,000 customers. Well, with all of this, we define the machines that we had to buy. Although there is a certain delay in the arrival of these machines, but this matches the terms of [indiscernible] to start working with people from Triengel and we have market professionals. We've hired, for example, the main technical reference of earthmoving machines with 40-year experience that worked in the main construction companies in the country. So we will receive support from the season [ Santos ] operations of Triengel maintenance. But we also have other basis. As Kariya said, we don't want to distract ourselves from the main business. So we will evolve very cautiously. And as we're focused on long-term contracts, the ideas as machines arrive, we'll send them to our customers. We will use our base to support maintenance base, but mainly, we will work together with our customers. Today, the company has over 400 technicians. We have a training program of 100 people. So this volume and the ability of training people, we will use this to develop and to contract the technicians that are needed for each one of the contracts that we close. I think I've covered all points that were asked in the question.

[ Carlos Alberto Suji ], PC Investors.

My question is regarding the federal government in from week during 2022. And what is your take on this because we have contracted a lot of infrastructure in the upcoming months, and I want to know what Mills position is regarding this way?

Thank you, Carlos, we are highly optimistic there are BRL 900 billion that have been granted/in the tender by the Ministry of infrastructure, and this is important for our equipment. The BRL 800 billion of investment is important, not only for our equipment, but also for earthmoving equipment. Therefore, all the infrastructure work. All these projects will demand earthmoving machines. So here, we have an opportunity, and this is why the company is optimistic. When we think about the market and within for a week and all the options that were carried out throughout the past years.

The next question from [ Fabiano Vaz ] [indiscernible] research analysts.

Well, number one, congratulations for the acquisition. I do have a question regarding to your capital structure. In addition to this acquisition, you will have a sound CapEx and you will continue analyzing other opportunities or in terms of M&A. And when we analyze the major players, that are part of the earthmoving equipment. Well, you're starting with a low number. What do you have in mind in terms of future capital structure in order to come close to these major players?

[ Fabiano ], thank you for the question. Regarding our capital structure. We have a sound and predictable CapEx. This is a company that generates cash. This is a net cash company, and we want to leverage the company. Of course, carefully, and we believe that we will continue paying attention to movements with an average of 1.5x maximum 2x in the upcoming months. So we believe that the company's cash generation and the possibility of better working with our capital structure will allow us to carry out organic or inorganic transactions.

We have [ Rodrigo ] [indiscernible]

Congratulations, Kariya [indiscernible]. My first question is to better understand how you encourage sales people. You are buying a company, buying machines below their price. What will -- why is this company carrying out this transaction with you? How will they transact? What is the transaction like? I know that -- I don't know if [indiscernible] is going to lead the earthmoving equipment. How will you be aligned to create value here?

Thank you, [ Rodrigo ]. Now regarding our structure Triengel, the [indiscernible] branch that is higher in terms of volume, the head of the company is the father of the operational head. This person will continue in the company as an operational head, especially in the agro business. Now the commercial head will also continue managing this business. So the operation and the commercial side of the agro business will continue being serviced by the people from Triengel. And with ports the same, all the structures, technicians, they will continue in the company. We also believe that as we have a Triengel structure, as this is a strong pillar for the agro sector, and there are other sectors that can have similar structures like mining industry. So each one of these segments, although they are earthmoving equipment, they have different applications, different types of contracts and conditions and characteristics that have to be adapted to these segments. Therefore, we believe that each one of these segments need different type of structures. So regarding the structure, we're maintaining everything well. Motivation is connected to the capacity of investment to continue growing. This market is capital demanding market and the participation of big players in the market. As Kariya said, this is a market that is not consolidated. It is very diversified. And with Mills, we can have a better negotiation power and not only they will -- they can lose competitiveness in the future. So this is what happens with other players that will face difficulties to maintain and grow because of capital limitations, and they will become less competitive. We -- like in platforms, there are strong rental players. These players buy cheaper machines and the manufacturers to offset sell more expensive machines to smaller customers. This combination of factors were the main drivers for this decision. And as you were able to see part of the value is in shares, so they can participate with our shares and they can grow together with us through shares.

Our next question from Lucas Marquiori, BTG Pactual analyst.

Can you hear me?

Yes. Yes, Lucas, we can hear you.

There are 2 questions. Now in addition to the acquisition of Triengel, what are the trends that you see, the average price of equipment. So here, you're buying a product, a machine that is 40%, 50% more expensive than what the competition bought 3 years ago. And now my question would be if the purchase of machine will be 100% geared toward new vehicles? Or will you buy semi-new vehicles if you see the price of the machines increasing? And number two, what is your brand strategy? We know that Triengel has a fleet concentrated on manufacturer. Are you going to continue focus on manufacturer to have a spare part expertise and this will provide you an advantage in maintenance or will you look for other brands and other manufacturers? These would be our main questions.

So thank you, Lucas. Okay. Let's take one step back when we see price. When you see our aerial platform business, the positive side of having a smaller cycle, a greater turnover when you see high inflation and increase of prices of new equipment that we've seen in Brazil and the world, the rental rates will reach this point so that we have an internal rate and a proper return over capital invested. And when you see aerial platforms, we were able to reach this curve, but you reach faster. Now the negative side because there is less predictability of revenue and flow. This is why we want to have greater or higher long-term contract. Now our customers that don't have a long-term contract. We don't see the past. If you analyze for instance, 9 years of assets, they depreciate in 10 years, all of my equipment have been depreciated. I'm not going to see it through. I always see the price of replacement. When you see the competition or someone that has long-term contracts, they will have difficulties to transfer the increase of prices, although there are price readjustments every year, the price is coming, the price is following this recovery of this uptick in price or inflation. So I see this as something positive. We are going to embark on this new cycle. Now regarding our CapEx, here through the acquisition, we have a new fleet that was acquired with past prices and this CapEx of BRL 225 million will be focused on new equipment. Now the OEMs, now the manufacturers, we are going to diversify nonetheless, this will not be a broad diversification. We will continue working with premium brands. We will continue buying but our strategy is if you see, for example, a backhaul, we want to see the best brand that provides the best benefit to our customer. We want to concentrate here. I am going to have a number of OEMs but I don't want to concentrate. We don't want to just scatter it in line. So you have efficiency of now how spare parts technicians. So this is the path that we're following. It is a diversification of brands of OEMs, but we will try to focus on the product lines. Let's see the most efficient OEM products, now its [ fun].

Our next question from [indiscernible] buy side analysts from [indiscernible].

Congratulations for your operation. My question is regarding capital allocation. You increased the possibilities of capital allocation with this new business line. You have a buyback program. Also, the purchase of aerial platform, what are your expectations? Where is Mills cash generation going to? What is the leverage expectation for the upcoming year? What will be your pathway regarding capital allocation?

Thank you, [indiscernible]. Regarding capital allocation, this is a blend of everything. We have capital allocation via M&As in our pipeline from earthmoving equipment and platforms. So we will continue working inorganically with these 2 fronts, our buyback program. We have cash generation that exists, and we believe that it will be driven by growth and organic movements of equipment growth in aerial platforms and when we think about earthmoving equipment. This is a combination of both businesses, organic and inorganic, and we believe that we will have a leverage of maximum 2x. So our target is 1.5x and perhaps there can be an increase because of an opportunity.

As we have no further questions, we will bring our Q&A session to an end, and I would like to hand it over to the company for their final remarks.

Thank you to everyone for your participation. We are at your disposal should you need more information by our Investor Relations department. Thank you very much to everyone. [Statements in English on this transcript were spoken by an interpreter present on the live call.]