Randoncorp S.A. (RAPT4) Earnings Call Transcript & Summary

Good morning, and thank you for waiting. Welcome to the conference call of Randon S.A. Implementos e Participações to discuss the earnings concerning Q2 and the first half of 2020. We have with us here, Mr. Daniel Raul Randon, President, Director; Mr. Paulo Prignolato, CFO and Investor Relations Director; and Mr. Hemerson Fernando De Souza, Director of Investor Relations of Fras-le; and Mr. Esteban Angeletti, Financial and Investor Relations Manager; and our IR team. We inform that this event is being recorded. [Operator Instructions] This event is also being broadcast simultaneously via the Internet via webcast. It can be accessed at ri.randon.com.br where you will find the slide presentations. Participants may view the slides in any order they wish. The replay of this event will be available right after it is concluded. We remind you that participants in the webcast may send questions. They will be answered by the IR team after the conference is finished. Before proceeding, we would like to clarify that any declarations made during this conference call concerning the business perspectives, projections, operational goals and financial goals are based on beliefs of the company's management as well as information currently available to Randon. Considerations about the future are not guarantees of performance. They involve uncertainties. They refer to future events and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that general market conditions, sector conditions and other operational factors may affect the future results of Randon, and may lead to results that may differ materially from those expressed in these considerations. Now I'd like to pass the floor to Mr. Daniel Raul Randon, Chairman, who will begin the presentation. Sir, you have the floor.

Good morning to all who are following us in this conference call of Randon for the earnings of Q2 who have been welcomed. I will share the presentation with our CFO and Investor Relations Director, Mr. Paulo Prignolato, and with Mr. Esteban Angeletti, CFO and Investor Relations Manager. We have with us also Mr. Hemerson Souza, Investor Relations Director of Fras-le and the IR Team of Randon. David, Carolyn and Gustavo. We will -- on our agenda, we will talk about the highlights of the quarter and the general view of the market for each market division. We will also comment on capital markets and also economic results -- economic financial results of the company. We will end the presentation talking about ESG and innovation. Although the COVID-19 is a well-known topic, and those who follow Randon closely have seen our actions on this topic, I would like to say at the beginning of the presentation, some of the initiatives that we carried out and the pillars they are based on. Health and safety are a priority at Randon. We made all efforts to guarantee to our employees, all the safety that they need to work, knowing that our facilities are really being constantly passing by hygiene processes. And we have given transportation. And when in the transportation or in the cafeteria, we have mitigated the risks of contamination. We are controlling access to the company with a strict health protocol. Apart from this, we created an 800 number where we give clarifications, give medical support. After all, we're doing our best to give a good and healthy and safe environment to our employees. Another front is the awareness of our employees concerning the prevention measures and hygiene measures, not only in our facilities but also in their personal lives. Many channels are being used to reinforce constantly the good practices for health. On Slide #5, I mentioned other important pillars: cash preservation and results. I would like to highlight our speed in the actions to maintain the operation active and sustainable. We had -- we also -- we are following Decree 936, which allowed us to reduce work hours for part of our employees. We controlled the expenses in an even more cautious way. And we made -- gave priority to investments and we also took out loans to ensure our operation, maintaining our expansion and innovation plans. On Slide #6, we highlight some of the initiatives of another pillar, work with the community, support to the community. Apart from our employees, we work very closely with the community, clients and suppliers helping them as possible, so we can all go through these difficult times and come out of them even stronger. Not only have we made donations of equipments, masks and alcohol hand sanitizer, but also we cooperated through the production of items in our plants. For example, we produced at Controil parts for face protection, and at Ferrari, we manufactured parts for breathing equipment. We also made some actions in partnership with other companies. These are times of collaboration. Independent of the size of the company, we all have an important role to fight against COVID-19. And to end this introduction, let us go to Slide #7, where I want to highlight the importance of this time in accelerating innovation, transforming the culture with a digital mindset. As an example, I mentioned the work of work-at-home. In the beginning of the pandemic, in only 2 days, we placed 900 employees to work at home, and the results and productivity observed until now have been very satisfactory. Apart from this, the communication was expanded with our employees through new channels, like WhatsApp, lives with our employees, online training, and also with our clients launching products in a more connected way using online platforms. The training given to our distributors was also given in this format, and we had a positive feedback. Our actions continue, but we need to reinvest -- reinvent ourselves constantly. We must see these times of difficulty as a great opportunity for growth, revisiting concepts and seeing new opportunities in new businesses. After all, there are no references in the recent history of similar moments. This health crisis has involved the whole world. So we don't have a manual to be followed to solve this problem. It is something new. But that is the world today. It is like this, much faster, both in terms of technology and also fast access to information. We are in constant evolution and transformation, and we must be open to change. Let us go now to Slide #8 where we will begin the presentation of the results of Q2. This quarter, without doubt, was one of the most difficult ones for the company in recent history. In April, we began with great difficulties. We had to stop the plant and also our main clients paralyzed their activities for a period that concentrated and had many uncertainties. But the strength of road transportation in our country showed once again that it is with road transportation that we transport our main riches. After the initial problems, the sector reacted strongly with products for agro business and consumer goods. The aftermarket parts also was fundamental with the recovery that began in May and intensified in June, getting to the numbers that we had before the pandemic. Having a group of companies in various segments and which go beyond the borders of Brazil, gives us an important resilience to our business. The exchange rate also helped exports and helped attenuate the effects of the drop in volumes, but not enough yet to compensate the restrictions imposed by the pandemic to different markets and abroad. Apart from operational aspects, we also had in the quarter, significant revenues and expenses that are nonrecurring. These will be explained during the presentation and they made the difference in the results presented. Now I'd like to pass the floor to Paulo, and he will continue with the presentation and gives us details about the quarter.

Thank you, Daniel. Good morning to all. I would like to begin my presentation on Slide #9 with our business model. On the first graph, we observed the composition of net revenue per business division. In the last quarters, the greatest percentage of revenue came from auto parts division with a more intense recovery of semitrailers during this period. And the paralyzations of OEMs -- truck OEMs, there was an impact on Suspensys, Master and JOST, and the change in the share of each division in the revenue, the OEM being the strongest in the quarter. When we observe the revenue per product, semitrailers and friction materials have been more relevant with 41.1% and 22.1%, respectively, strengthened by the recovery of sales in their markets. In the geographies, the exports have been concentrated especially in United States, Mexico and Canada with 39.2%, followed by Mercosur in Chile with 32.8%, the first, especially auto parts with Fras-le and the second OEMs because of the sale of semitrailers. Finally, when we analyze the revenues per segment, we know that they come 56% from OEMs and manufacturers of implements. In this quarter, the relevance of semitrailers was greater than usual, for the same reasons that we mentioned in the -- previously. 20% of the sales come from abroad, 18% from aftermarket parts and 5% from services. We work actively to balance these segments decreasing the exposure to a single sector. Our expansion plans are aimed at this. Now we'd like to go to Slide #10 to talk about the numbers of the market. Observing the volume here, as expected, all the segments had a drop in comparison with previous quarters and semesters. Trucks and buses were the most affected by the effects of the pandemic. Semitrailers, although with a drop, dropped less due to the versatility of the product. Therefore, these are used for trucks, depending on the product and the demand for transportation. In Q2 '20, we noticed this trend in the market. Transportation companies purchased semitrailers to work in segments that were booming, such as agro business, and less sales to other sectors like the transportation of fuel and civil construction, evaluating macroeconomic data in spite of a record harvest, and a favorable exchange rate for exports. And agro business, other indicators show that we have a long way to go to have a good consistent recovery. For example, we can see the GDP expected for 2020 with the largest drop in recent history. Apart from this, the government has an agenda for the tax reform. The changes in tax rates in PIS and COFINS and the creation of CBS are recent topics. Some of you have already asked about the impact of the taxes and the tax simplification. So there are studies that are being made. As soon as we have more concrete numbers of the impact on our business, we will present this in our materials. On Slide #11, we have an analysis of net revenue. There was a drop, both in the comparison between quarters and also semesters. This was expected due to shutdowns and the uncertainty in the month of April. May had a small recovery. And June, as you can see, also had a drop of 3% in comparison with the same month in 2019 June. In other words, very close to a normal month. In the OEM division, the drop in the quarterly comparison was 20%. And it was attenuated by products who did well for agro business and the sale of 13 railway cars. Something that didn't happen in previous quarters. In auto parts, the drop was 36.9%, especially due to the exposure to OEMs, and was not deeper because the aftermarket reacted and helped recover part of the drop, especially as of the month of June. In services, the reduction was 6% and is related to a lower volume of sales in pool sales and the decrease of activities in Randon Bank in April and May. And this is linked to operate -- to OEMs in auto parts. On Slide #12, we have data about exports. 52% drop in exports in the quarterly comparison, 38% in the semester, when you look at the values in dollar. When we look at exports in local currency, reals, the drops were 33% in the quarter and 20% in the semester. This was benefited by the devaluation of the local currency. The main factors for demand in exports do not have a favorable scenario. The world is suffering a drop. There are political and economic crisis in countries that are strong, such as Argentina, where we have a lot of sales. The price of commodities and for some ores is very low. And with COVID-19, the sales have dropped even more in some geographies. We have taken many actions to increase sales, which have had a limited impact and are fundamental -- fundamentally, we know that the markets are weak. Some regions have begun to recover, such as Paraguay, U.S.A. and Europe. Chile also has made progress. But with a very strict winter, in the mountains, logistics have suffered. So the scenario for the next few months may become positive. And -- but it still remains complex. Now going on to Slide #13, we have information about EBITDA. The drop in consolidated EBITDA is due to everything I have explained until now, reduction in volumes, difficulties for new exports and the impacts of the pandemic. The additional facts I would like to add are nonrecurring events. We had expenses and revenues. But in this quarter, we had -- the revenues were higher, having a good impact, a positive impact on EBITDA in Q2 '20, BRL 69 million. We have many companies in the group in actions. For example, we have the exclusion of ICMS tax from PIS and COFINS. These 2 were already approved and Controil and Jurid had revenues in this process worth BRL 19 million. In Randon Companies, Master, Castertech and JOST, the company opted to look at credits, make -- due to favorable decisions in the Supreme Court since 2017 ensures prudence. So in second semester, BRL 68 million, apart from gains in financial gains, BRL 11 million. This had an impact on net revenue. Also, we had other revenues and expenses that are nonrecurring. They represented BRL 18 million, and you can see the details on the slide in the release. Thus, the EBITDA of Q2 '20 was BRL 153 million, would become BRL 84 million when we make these adjustments and the consolidated EBITDA of 16.5%, adjusted because of nonrecurring effects would be 9.1%. On Slide 14, we will talk about the net result. The reduction of demand -- the drop in demand in Brazil and also abroad, revenues, nonrecurring expenses and a strong dollar with the devaluation of the real were factors that had an impact on the company's profitability. Although lower than in 2019, the company presented a positive result with BRL 55.3 million profit in Q2 '20, even with the scenario affected by the pandemic. This is our daily objective to mitigate the negative effects and to take advantage of the opportunities to continue generating value for our shareholders. On Slide 15, we have some data about debt, gross debt, cost of debt, average terms and also the behavior of NCG, which have a direct effect on net debt. At the end of June, our total gross debt was BRL 3.3 billion, local currency. Most of it in local currency, 84%; and the rest in foreign currency, 16%. During Q2, we took out loans, BRL 495 million; BRL 210 million for the -- with the third emission of debentures of Fras-le, a resource that will be used for the payment of the acquisition of Nakata Automotiva. BRL 190 million also, loans by Randon will be used to reinforce working capital and also to defer payments of loans. The average cost of the debt is 3.9% a year. With the reduction of the SELIC interest rates, it will be even lower, these interest rates will be lower in the next quarter. And for the foreign debt, the cost is 3.7% a year. In the consolidated net debt analysis without Randon Bank, which is used for the calculation of the covenants, in relation to -- we have an increase in relation to the end of last year of BRL 300 million, very close to the NCG of the same period. So even this -- even with a challenging quarter, the company has a leverage within its expectations, 1 and 2x the EBITDA. In June, the indicator was 1.36x. Now going on to investments on Slide 16, we have BRL 31 million divided between organic and nonorganic. In organics, it was BRL 29 million. And I would like to highlight the capacity of our controlled company Fremax with BRL 4 million, and a project for modernization at Randon Implementos, which represented BRL 6.4 million. In nonorganics, we have the payment of BRL 2 million concerning the part for the acquisition of Ferrari. The rest of the value was paid in 2019. I'd like to reinforce that we continue working to give priority to investments, evaluating cautiously each one of the projects for acquisition in our planning. Now we would like to go to Slide #17 to talk about capital markets and our share, RAPT4. The price of share RAPT4 at the end of Q2 was BRL 9.61, showing a recovery in relation to previous months. Randon continues as one of the shares that is most recommended in capital goods based on aspects of diversification, exposure to agro business and recovery of the auto market, especially related to cargo transportation. So there is no expressive change -- there is no change in the shareholders of the company, but the number of shareholders has grown with individuals. At the end of June, we had 35,026 shareholders. This week, we paid the interest on own capital, which will happen in August. The details may be checked in our -- on our site for Investor Relations. Now I would like to pass the floor to Mr. Esteban, who will talk about divisions and their performance.

Thank you, Paulo. Good morning. I'd like to begin the presentation of OEMs, and I'd like to highlight the following positive points: recovery of market share, increase in demand for products linked to agro business, growth in revenues coming from aftermarket parts and road implements and strong entry of new orders in the last 2 months. With the exception of April, which was very complex for sales, the clients of road implements really began to buy again as of May, especially due to the good performance of agro business in Brazil. The demand for Brazilian grains and also a favorable exchange rate had a good benefit, so they bought many semitrailers. The market share of Randon in the quarter was 36%. Even with vacation in April, and restrictions for total production during the following months, the company had a gain of 2 percentage points in terms of market share in comparison with Q1 '20, showing a great effort on the part of sales department. The aftermarket -- market also made progress. And in comparison with the same period last year, the revenue grew 19.7% for aftermarket parts. Road implement market had a significant recovery during the last months with orders similar to the period before the pandemic and we have a portfolio for 3 months. Also, a lot of work was done by the commercial department with Banco Randon to raise the amount of sales. In this quarter, we also launched a new sider and the new van with a different format. With a live, we transmitted and we have a virtual negotiation room. The feedback was positive from clients, and we sold very well during the event. Some of the edges and advantages of the product were the clinch process, for example, we don't use rivets in the panels and the van was 600 kilograms lighter, perfect for use in docks because it has a high resistance floor and embedded technology. The sider has a new system, moving columns and also new opening. Also, we have exports in this division. In Q2 '20, we had one of the worst quarters in the last 10 years for exports. This is due to the markets that were paralyzed during April and also due to the difficulties like problems in Argentina and a reduction of demand in Africa, aggravated now by the pandemic. We had positive signs, especially from countries in South America. But we know that the recovery will not be fast. Going on to railway cars, we have an expectation of a weak market in 2020. In the quarter, we sold railway cars but only 13 units. The business perspectives for 2021 are of recovery with renovation of some railway concessions already announced and some that may happen until the end of the year. We are prepared for the growth of railway car markets with our unit in Araraquara. Now we'd like to go to the auto parts division on Slide 19. We have different scenarios between the companies. Beginning with Fras-le, we have the impact of COVID-19 in all the units. The China unit, the first to be impacted by the pandemic, is already operating with total capacity. The others are recovering slowly. Fremax also has a very good production and also has benefited from the synergies with the group, increasing its production capacity. The sales of friction materials had a drop in comparison with the same quarter in 2019. You can observe that is lower than the segment of trucks and semitrailers. The exchange rate also helped the revenues and the dollar at this level is a benefit for Fras-le's exports. The products linked to aftermarket and agro business also did very well and are growing. Apart from this, we have the approval from the authorities for -- and shareholders for the acquisition of Nakata Automotiva in July. This acquisition will expand the portfolio of products of Fras-le, and will help the aftermarket to be the strongest of this controlled -- of this company that is controlled. They have annual revenue of BRL 500 million and 450 employees and 97% of the revenue comes from aftermarket. The closing of this operation of this deal will happen soon. We invite you to really hear from -- you will hear from us, and please see the news in -- at our website, ri.frasle.com.br. Now speaking about suspension, represented by Suspensys and Castertech. We have drops in volumes as we will see. Suspensys, due to its greater exposure to OEMs, had a drop of 39.8% in volumes. Although they had a weak performance in the quarter, the company gave an important strategic step when announcing a select group of companies that are part of Volkswagen's pool sales effort for trucks and buses. This operation will happen within the plant. They will now begin to have pneumatic suspensions for commercial vehicles of Volkswagen. Suspensys will be responsible for the preassembly of these suspensions at Volkswagen and pneumatic suspensions will be supplied by Full-Air. Until now, the forecast is that it will begin in 2021. Castertech with solutions for wheels, hubs and drums had 10% drop in volumes. The reduction was not only -- was not greater due to the efforts to redirect their products to aftermarket and export markets apart from increasing their exposure to the agriculture market. JVs, Master and JOST were the hardest hit by the OEMs paralyzation and had an excessive -- expressive drops in volume. Master, 60% reduction in brake systems; and JOST, almost 50% in coupling systems. The OEMs are recovering and this has had a positive effect on these controlled companies and will increase in the next months. Finally, the services division on Slide 20, which had a net revenue of BRL 46.5 million in the quarter with an EBITDA margin of 24%. In Randon Consórcios pool sales, there was a drop in revenue of 4% and quota sold, a drop of 15%. All this scenario, until now, really involves the sale of pool sales quotas and is related especially to transportation with a lower interest rate in the country, and also lower administration fees we have -- in our controlled company. Our focus is on the purchase of pool sales in a digital way, and it is an attractive source to get resources. Now Randon Bank, we had a drop in net revenue, 14%. One of the factors is the reduction of volumes sold by Randon Companies, only 10% of the revenue of the bank is independent of the sales of the group. April and May were months of less credit being sold. June already is -- has had a normal performance. Another factor is the reduction of the interest rates, and this affects our numbers. At Randon Ventures, we announced investments in truck help. We have other initiatives happening. And as soon as possible, we will announce them. Now I'd like to pass the floor to Mr. Daniel to continue the presentation, talking about sustainability and innovation. Sir, you have the floor.

Thank you, Esteban. We have reinforced our commitment with all the aspects of ESG. They are extremely important for the company, and we are making more and more progress every day. On Slide 21, we have some examples of actions under each topic. But I would like to highlight governance. First, inviting you to access at our website, the governance information from July 31 with all our practices. During July, the management council approved 3 new policies: policy for destination of results, hiring of services, extra audits and also political and also donations and sponsorships. So they are important for -- to manage risks and guarantee better market practices. We will continue working on this. We are analyzing many topics of governance for implementation in the short and long term. Apart from ESG aspects, innovation is another topic that is discussed in the company. We believe that there are no barriers for those who are willing to innovate and make a difference. And it is not only technology but culture, reinventing and also change management. Innovating is changing the way we communicate, being faster, looking at the market and finding new business opportunities, like the online events that we had with clients and our employees. Innovation is connecting yourself with 43 start-ups and accelerating, implementing concepts of Industry 4.0, reinforcing our initiatives in operational excellence and increasing productivity. Finally, doing more with less. Working not only to guarantee today, but to build the future of Randon Companies. This is something that is in constant evolution in the company, and we will have many new things to share with you in the next months. Please follow us on our channels of communication and social network. Talking about innovation, we also had to innovate our APIMEC meeting. This year, it will be totally online and will happen on August 27 at 2:00 p.m. I would like to invite you to participate and register yourselves using the e-mail, [email protected]. I and all the executive committee, together with the Investor Relations team and investors are preparing a very good agenda, very complete agenda, giving you information beyond results and more focused on our strategy, so be there. To close our presentation, I would like to say that we trust in relation to the next months. We have great trust, but we continue alert, looking at the evolution of the pandemic and its consequences. We continue to believe in our country which is strong in agriculture, yes, but also in solidarity, cooperation and innovation. The recovery of business is very close to us. We are prepared to take care of the demand. I thank our management, which made all the efforts to mitigate the impacts of COVID-19 in our companies. I would like to thank the employees that leave their homes every day and have an important role, so Randon will continue generating results with sustainability. I thank you, investor, market analysts, banks who are our partners and are with us following us and trusting in our strategy and in our purpose of connecting people and riches, generating prosperity. Thank you very much. And now operator, we can begin the Q&A session.

[Operator Instructions] Our first question comes from Mr. Victor from Bradesco.

I have 2 questions. The first, in terms of road implements. When we look at the recent comments, expecting a drop in sales of 8% to 10% in 2020. With this scenario, I don't know if you can tell us about your backlog orders, and if we should expect to have the same market share in the second semester. Another question related to implements -- road implements. When we look at containers and also trailers for sugarcane, Randon is among the 3 largest in this segment. So please talk about these products. Can we expect that Randon will expand its leadership?

Well, Victor, thank you for participating. Thank you for the question. Talking about the market for implements, so until June, the market had 20,700 units. In July, we sold 7,000 units. So in 7 months, we have 24,000 units. Talking to the market, we know that other manufacturers already have also orders for 90 days. We believe the market can get to this number, 50,000, 51,000 units, a 10% drop in the year. So we're very positive. Probably the market will close, close to 60,000 units, but we have to monitor these orders constantly. For the time being, we don't see any signs of drop in volumes and sales. But as I said, we're always alert, and we know that most of these orders depend on agriculture. For 2021, I believe it's a little early to make any projections. But with the country recovering, we believe that we may have a year which may be closer to 2019. Our market share, our objective is to be around 36% to 40% market share. Of course, we have to balance this with price and margin. But the objective of sales is to reach at least 40% market share. Our production is well adjusted for this with investments in productivity that we made last year and this year, too. So now we are more dependent on the market. Talking about Randon, we have a greater share in dump trucks and also grain trucks. Now we are working also with sider trucks, and our objective is to fight for greater market share. We -- there is an interesting volume in the market. We made a choice during 2016-'17 to deactivate the plant in Guarulhos where we had most of the manufacturing of these implements. But we took -- we made that decision, and now we have, once again, a focus on this family of products.

Just a follow-up question in terms of orders. Can you give us more details or comments, the new orders coming in, in relation to the months before the pandemic?

Okay. I forgot to comment, sorry. We've seen the portfolio of new orders with an interesting rhythm with levels similar to those before the pandemic. In July, the last month, we had -- we received 120 orders per day, similar to the period before the pandemic.

Our next question comes from Mrs. Catherine from Bank of Brazil.

Two questions. The first, could you comment on the plants if, for example, comparing with clients. Please talk about investments and investments in the future. My second question, could you give us an idea of margin recovery? What can we expect recovery of margin for the next quarters?

Catherine, thank you for participating. Esteban?

Well, concerning the usage of the plants like the rest in Brazil, we are operating, but under restrictions. Each city has different restrictions. Here in Caxias do Sul, where we have most of our production, since we are in the south of the country, we are following the banner system of the federal government. The government every week evaluates the situation with a banner, with a color, and this is what allows us to use the plants. Now we're in color orange, we're operating with 50% workforce. This is totally used for production. It is our workforce for production. The back office people, most of the back office people are working at home. And thus, we're using our quota, 50% for production. 50% of the workforce represents 65% of our production capacity. We'd like to reinforce, we have good news. Even working with these restrictions, we are being able to supply the market even with restrictions. And this is proved that the investments made last year and this year in technology and productivity and automation have had a great effect. In terms of the future, it's difficult to target, will depend on the pandemic. As soon as we leave this situation, we would like to go back to full capacity in our plants. Concerning margin, we remind you that implements, road implements depends on operational leverage, depends on volume. So when you have a reduction in volume, you affect margin. Auto parts, although there was a large drop, has a cost structure that is more lean so they can react faster to recover margins. So considering that the next few months shows that we will have a good volume in implements and also aftermarket and better volumes in auto parts on the part of OEMs, we believe, yes, that we may have a slow recovery of margins, reminding you that it all depends on volume. Did I answer your question?

Yes. A follow-up. What can we expect in terms of nonrecurring expenses and revenues? What can we expect in the future?

Could you please repeat?

Nonrecurring facts, what can we expect in the next quarters?

Nonrecurring. Well, concerning nonrecurring, it's difficult to say. It will depend on each quarter. I would say that what we had in terms of visibility, we had in Q1 and 2, so we don't have any visibility of nonrecurring revenues or expenses in the rest of the year.

[Operator Instructions] Now we will begin the questions that we received via webcast.

Thank you, operator. We have a question in the webcast related to the market situation for electrical products. We launched this technology last year as a prelaunch in semitrailers. We're in -- we're running the final tests. We will launch -- we will -- we have some semitrailers to conclude field tests, and we should begin to produce electrical assistance in the beginning of next year. It's 100% Brazilian technology developed in our facilities. All the technology and know-how used, the manpower is Brazilian. It is patented. So this shows our strength together with partners to develop new products, electrical products and the launching of new products. So this extra axle can help decrease the fuel consumption and also help durability with less fuel consumption and less wear on components as well as the environment.

We would like to conclude the Q&A session. Now I would like to pass the floor to Mr. Daniel Raul Randon for his final comments. Sir, you have the floor.

You can send questions to our Investor Relations department. We thank you all for your participation. We wish you a good weekend. We will meet again on August 27 with the APIMEC meeting. Thank you very much.

The conference call of Randon is concluded. We thank you all for your participation. We wish you a good day, and thank you for using Chorus Call. [Statements in English on this transcript were spoken by an interpreter present on the live call.]