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

[Presentation] Hello. Good afternoon, everyone. Welcome to Randon Day 2020. This year will be marked in history as the year of reinvention. This event, which traditionally happens in person is now online. After all, the health and safety are priorities for Randon Companies. For Randon to maintain connected to its investors and other stakeholders, it is fundamental for it to continue to grow and innovate for a better future. So not only will we transmit in Portuguese, but we also have simultaneous translation into English. This is Randon Day 2020. So get a cup of coffee, find a comfortable spot and enjoy, because the event is just beginning. [Presentation]

We'd like to thank you for your presence and invite all of you to stay connected with us until the end of this afternoon. During the event, the executive committee and guests will present the challenges, perspectives and strategies for Randon Companies to continue with their purpose of connecting people and wealth, generating prosperity. The presentations will happen in 4 panels: 2020 challenges, perspectives for 2021, operations, innovation culture, ESG. And then we'll have a question-and-answer session. [Operator Instructions] Some questions will be answered live. But if your question isn't answered today during our broadcast, don't worry. You'll be contacted by the Investor Relations team at a later moment. We'd like you to share your participation with Randon Day through the social networks. You need to access the Stories button on the Access page. When you click on the Stories button, you will download the event sticker and just apply that onto your photo with your own photo editing software and then post it on to the social networks. Please always mark [indiscernible] and #RandonDay, #RevDay2020. That way, we'll all be connected. We'd also like to let you know that this event will be recorded and will be available on YouTube and the Investor Relations site, ri.randon.com.br. So we began this moment with the presentation of the first panel. To greet all the participants that are connected with us and present the challenges of 2020 and the perspectives for 2021, I'd like to invite Daniel Randon, the CEO of Randon Companies. [Presentation]

Good afternoon, Daniel. Welcome to Randon Day.

Thank you, Flavia. Thank you to all our investors, market analysts. Ladies and gentlemen, for us, it's an honor to have this -- hold this event every year, Randon Day, this year a bit differently. Not only is it online, we're going to take advantage of this opportunity to bring our executive managers, our operation directors to talk a little bit more about our day-to-day, our operations, our strategies. So we're going to take advantage of this event as much as possible. As Cláudia already mentioned, our purpose guides us, which is to connect people and wealth, generating prosperity. And this year was even more challenging due to COVID and the pandemic. We reinforced this -- these values with over 70 years of history. My father, Hercilio, who always wanted to maintain the principles of the company. And this year, the principles that we must reinforce is our principle of people who are valued and respected. In the beginning of the pandemic in March, we had several protocols in place through our experience in China. In March when the first cases came to our city, we basically stopped the factory for collective vacation so we can adapt our processes. So our employees would be able to feel safe to return to work. At that time, we had a home office pilot. And in 2 days, we were able to put over 1,000 people into home office, especially in the administrative areas. So certainly, it's been a very challenging year, but companies always look at this for a long-term vision, seeking sustainable growth and concerned for people to feel part of the day-to-day process. Without a question, without a doubt, the changes in March and April were great. We made changes where Sergio Carvalho became the COO of all operations, auto parts as well. And we also created a new position, called CTO, which is the Chief Transformation Officer. And Daniel Ely comes from HR, and the whole aspect of digital transformation and cultural transformation, which is a challenge. And the company, as you know, our Board of Directors saw a significant increase in shareholders. We doubled the number of shareholders, improving our liquidity and the value of the share. At the beginning of the pandemic, we were very worried. We made -- we took actions to calm down the market and all our stakeholders. In this cultural transformation, this is not something from one day to the next. And we've been working on this concern where the company needs to adapt to the novelties. And we visited some of the concepts that the company needed to do to make this cultural change. This has been something we're working on as we changed the mindset of our leadership to overcome new challenges, to break barriers and overcome challenges. We should act as a network, and this strengthens us. This is a growing challenge, to work in a globalized world, and we need to always be seeking out new partners. Randon, throughout history, has had stages and landmarks that are very important. We want to seek out the leadership, whether it be in transportation or the day-to-day activities. But most of all, we say we have over 11,000 protagonists in our employees. When it comes to adding value, I'd like to show this graph. Randon has always invested in innovation, in its products, process and quality. And we've seen that these actions are increasingly stronger, especially on the points -- the ends of this graph. So today, you're going to hear a lot about innovation. Starting with our Randon Technology Center, where we want to bring in new investments and adding value to our customers and shareholders. When it comes to marketing innovation, we have digital transformation, which will bring lots of opportunities where you can be closer to our customer, serve our customer better and have more information about our customer. In that way, we can have more value-added in the products which you're developing. When we look at our global presence, we're in over 100 countries with our products. And the company continues to invest, whether in industrial parks or distribution centers. And we believe that we are more and more a global supplier. We have a demand, not just by the customer, but also all partners. Certainly, the auto parts has been able to get greater exposure and global positioning over the last years, but even Randon tools and semitrailers has found new partners and joint ventures to be in other markets outside of Brazil. So to talk about our retrospective of 2020, I want to say that it was a very unusual year, almost 3 years in one because we started 2020 with expectations of good and stable growth. And then the pandemic arrived in March, there was an expectation for a GDP of minus 10, thank goodness, that's not where we're going. But we're talking about a huge crisis. And we reached the end of the year talking about a lack of raw materials and inflation. So certainly, it was a very challenging year. So that's why I say we'd have this in 3 to 5 years, what happened in 2020. Companies didn't ignore what they needed to do. We even worked on parts for respirators in our partnership with Embraer, so a new challenge is to develop products that are not our specialty within a 3-month project, which for us, with our old mindset, would take 12 months. So this showed us that the pandemic taught us to reinvent and transform processes more quickly. We're also very happy this year with some recognition, it's an important recognition we received, like our new trophy for transparency. This is very connected to our governance effort that the company has been doing over the last several years. And we had this recognition amongst the most innovative in the country. And this has told me a lot about the importance of having partners or even start-ups, bringing opportunities within Randon Companies. And recently, we had the biggest invest of the Exame Magazine and the heavy industry sector. So this is important, and it reinforces the efforts that people make of our leadership and our company. When we talk about our forecasts or perspectives for 2020 to 2021, they have been positive so far, starting with the vaccine, which people are talking about, making available in January. So this provides some comfort that we'll be able to deal with this pandemic. The production of commercial vehicles providing 5% growth, 2021. And for us, certainly, the agricultural harvest shows record potential with almost 270 million tons forecasted according to market information. All this information leads us to have a positive forecast. The great challenge for us is inflation, which we are monitoring. The company has been working, and we will present this. We're working with ways to greater productivity and even to pass on the prices at the endpoint. So the forecast for 2021 is that Randon Companies continue with a vision for sustainable growth, searching operational excellence. This helped our results over the last quarter, showing that the company has sought this out, not just the results, but the products and innovations. The digital transformation is an opportunity to add more value. And the evolution of environmental, social and governance issues. So I'd like to thank you all once again for participating in Randon Day, and I'll give the floor back to Cláudia.

Thank you, Daniel. These are the words of our CEO, Randon, Daniel Randon. Thank you very much. Let us continue our event with the panel operations. This panel will talk about the main initiatives, strategic initiatives and productive initiatives for Randon. This will be conducted by the Vice Executive President and COO of Randon Companies, Sergio Carvalho, who is participating from a remote location, and also the participation of operational director. [Presentation]

With the replacement parts market. Sandro Trentin will talk about the aggressive growth of our assembly line, and Eduardo Dalla Nora and Mr. [indiscernible] will talk about important initiatives in the rest of our auto parts. So that's what we programmed in this portion of our presentation. Just to give you some context and remind you that our leadership position in the main areas in which we operate in the main business segments that we have. We're #1 in Brazil, in our assembly division in the semitrailer industry. Master is #1 Fras-le, Suspensys, Jost and Castertech, but these positions are not positions that were achieved now. We've had these leadership positions for several years. It's important to remember that some companies like Jost has 93%, 95% penetration for over 10 years. So imagine the challenge of maintaining a position. It's so significant in the market for such a long period of time. All of our companies can not only maintain but grow in their positions in the market. And this is something we're very proud of. We also have very strong brands, the size of the Randon brand. We have Suspensys, Jost, Master, Castertech, all within the Fras-le World Companies. You have Nakata and Fremax, Armetal. And now we have Randon Ventures as well. We've had, at certain opportunities presented and shared with you what we've done at our companies, some of the greenfields, some of the acquisitions -- [Audio Gap] But we also went to the north of South America with Pan American Fras-le in a greenfield at the end of 2017. And finally, Suspensys was taken to Mexico at the end of 2019. So as you can see, it's a fairly significant amount of insertion into a global context. We also did several transactions associated with capacity expansion. We have Fras-le with its expansion in China. We finished 2017 moving into a larger operation with double the capacity. We acquired 80.1% of JURID do Brasil in Sorocaba. Our assembly company is making a major investment to expand its capacity in Araraquara. [indiscernible] will talk more about this topic in a bit. We have the transaction of Fundituba in Uruguay. They have capacity in the friction material line. And much more recently, in September, we announced the purchase of [indiscernible]. It's not a completed transaction. Our expectation is that we'll complete this transaction in December of this year. But this is already public knowledge. That's why we're sharing it with you. This transaction of [indiscernible] is being done by [indiscernible] It's important for us to gain more production capacity. And when it comes to portfolio, product portfolio, we have Farloc. We added brake fluid and refrigeration fluid to our portfolio. Armetal is with a, is a major replacement part distributor. We created Randon Triel, which is a cooperation or a joint venture with the company, Triel, first to look at semitrailers, specialized semitrailers, with products that have lower volumes but a higher level of specialization, thus we can maximize our operations here in Caxias, since all this complexity, all this diversity, our product portfolio will be managed specifically by Randon Triel. We purchased Fremax at the end of 2018. We added disc brakes and disc drums for the light line to our product portfolio. We purchased Ferrari Industrial Metal in 2020. This is a foundry of injected [indiscernible] -- [Audio Gap] We have a compound annual growth rate of 25%, this number is very good. We left 2016 with BRL 2.6 billion net revenue. And in 2019, we had BRL 5.1 billion in net income. Obviously, there was a recovery of the markets. We also did acquisitions, but we also had a lot of organic growth because a lot of companies expanded their portfolios for their market penetration in such a way that this growth is not -- or actually, it is much greater than the recovery rates in the market. And is also done through acquisitions as well. It's an important rate. It's very significant, I would say. And we have every intention of continuing in this trajectory for the future. We basically doubled the size of the company, and our intention for 2020 is to double the size of the company. Obviously, with the pandemic, there was a certain challenge related to this, but we're almost there. And as I just mentioned, our intention is to continue this growth rate, this accelerated growth rate. When we look at 2020, as I mentioned, it was a special year. You can see on the screen that January and February, we were going according to plan. We had a performance superior to the equivalent period in 2019. In mid-March, you can see we had the beginning of the lockdown in different regions, the lockdown helping to different times. But you can already see a drop in the revenue. We had an April, the worst month of the year, the most intense period of the lockdown. And in May, we had slight recovery. And the first elements of this recovery had to do with our replacement areas. All our companies that acted most strongly in the replacement segment. And our assembly company [indiscernible] will cover this with you, and the participation in this initial recovery. The rest of our auto parts still suffered during these months as the lockdown period for the major truck manufacturers continued for a longer period of time, both in São Paulo and Rio de Janeiro regions. And more recently, in the last quarter, as you can see, we've had more significant growth in our revenue, much greater than the revenue in equivalent periods in 2019. Now already counting on the growth or recovery of the trucking business as well, brakes, suspension, fifth wheels, all the products that go to the truck segment. Replacement continues operating at a high level. Our semitrailers are also doing well. And the rest of auto parts are connected to the trucking and bus segments. But especially trucks, I would say that we began a stronger level over the last several months. And so this red line is way ahead of the revenue which we had in 2019. I also wanted to comment that in September was the first month that we included the results from Nakata. But even if we excluded Nakata, the red line results would still be significantly higher than the equivalent results in 2019. Here, we have BRL 3.6 billion revenue -- net revenue versus BRL 3.8 billion in 2019. In other words, we're only 5% below the revenue of 2019. But as I mentioned, as you can see on the screen, the last quarter, there was significant recovery. And our expectation is that this positive trend will continue. Now to talk a little bit about innovation. We have several important elements in our innovation process. For us, innovation and technology are keys to the future. So despite the difficulties of the pandemic at this difficult time, we maintained our investments for the future. Cesar will elaborate a bit more about what we're doing in our CTR and the expansion of new products that are being developed. We also created the Randon Tech Solutions, RTS industry. We made this initiative public a few weeks ago, and our idea is to make -- to have the CTR, creating new technologies that are advanced and disruptive for products. And we created RTS to create solutions in our factory areas, in our manufacturing areas. So what we want is for all the process, core processes, all the most important processes that we have, we want to develop solutions, which will increase our productivity, and our safety for all our employees, which -- so we can protect this technology and keep these competitive advantages for us. And the only way is to develop these solutions in-house, and we have a very highly trained body to do this. We also want to automate more our operations. You know that we had a transaction. We bought 254 robots from the Ford motor company and somewhere in our [indiscernible]. And we're going to automate and transform these robots into work cells over the next 3 years. We're going to do what we did in the group in the last 20 years. We're going to take our level of automation, and we'll elevate the level of automation in our companies to levels that are similar to what can be seen in countries like Germany or Japan. So we're going to make a giant effort during an important period, therefore, RTS industry is so important for us. No less important is that the logistics throughout the world has been a way to be more competitive. And so to -- we've decided to centralize our logistic operations in such a way so that we can begin this journey to have competitive advantages and make logistics a core competence for our company. So all this is being developed during the pandemic, during these challenging moments, and we are here reinventing ourselves as a company. What can we expect for the future, but more focused in the short term? We've seen a market recovery, as I mentioned, in the semitrailer segment, this has already recovered significantly. The truck areas in the last months has shown some recovery as well, but other sectors such as buses, still have challenges. Automobiles, just last month, was the first time that it has showed more positive results regarding sales and production, so this recovery, with domestic and international markets should continue. We're going to continue investing in innovation, technology, not just for the products, but for our manufacturing environments and our processes and also in our service areas with management processes, which is part of the transformation process that we are executing. We need to pay a lot of attention to the supply chain. The scarcity of raw materials has impacted us. It is a concern for the future and inflation of raw material is another concern as we go into the end of 2020, and we plan 2021. We also are concerned with the second wave of COVID. Everyone is aware that this is already happening in Europe. And we also, trying to understand whether this second wave of this lockdown can affect the supply chain here in Brazil, just like it affected in April and May of this year. Up until now, we don't have this information. But the second wave is happening in Europe and in Brazil. We need to be vigilant and keep our guard up so that we won't have a second wave of COVID at the beginning of next year. Obviously, we hope that the vaccine is approved and in initial processes to vaccinate all our population. And finally, we look at 2021 as being a more stable year, a much better year than what we've experienced this year. And as I already mentioned, we have the intention to invest in the future of our company. All right. Folks, that's what I had programmed for this part of our presentation. Now Cesar Augusto Ferreira will talk about the CTR and our innovation areas and our more disruptive technologies. Enjoy the rest of the event, and thank you once again for your participation.

We would like to thank Mr. Carvalho of Randon Companies. He has been -- participated in remote fashion. Now we're going to talk about technology in the technological center. So now I'd like to invite the Director of Technology and Innovation, Cesar Ferreira [indiscernible]. Now I got lost because he said [indiscernible] and I have Ferreira.

My name is long. I have 6 names.

So I didn't get it wrong. Okay. Which is wrong?

None of them.

You've got the floor.

Talk to you a little bit about the Randon vision. We obviously are paying attention to the megatrends in the automotive sector. It seems that -- and I'm not the only one who thinks this, that the automotive sector will undergo its largest transformation since the end of the 19th century when the car was invented. Perhaps there's never been a bigger change in the product in the format of the solution and the way, this creates and you use a means of transportation. So when we talk about innovation and product in Randon, something that Randon has done for over 70 years. Randon isn't just innovating now. Randon has been innovating since it was founded in 1949. We have to talk about CTR. CTR is our technology center, the Randon Technological Center. It's an area dedicated to the development of product. Obviously, we work to develop our in-person solutions, incremental solutions. We focused a lot on what's in the future. In this image, you can see that we expanded this with new tracks for the development of new electronic technologies that will guide the future of the vehicle and transportation. And of course, this year, we also inaugurated an area dedicated to disruptive innovation. So within this space, we have employees. We have members of the university, startups and other partners to find the methods and processes that are innovative and agile and develop new solutions with what Randon believes is the future of transportation. To give you an idea, this year in the CTR and the improvement of the physical structure and investments in new projects, we invested around BRL 30 million. It's not a small sum for a size -- a company of this size to put it into product, focused on innovation. So we've really dedicated a lot of energy to believe in this transformation, which is a great marker in -- a landmark in our history. So what are we doing here in the CTR? This is very important. We've looked at the mega trends, mobility, electrification, connectivity. So we analyze these. We set up working groups. And we have mobility and electrification focused on embedded electronics and smart materials. To give you an idea, this year, we have 17 projects that are being done by these. And next year, it's about growing. We have more things in the pipeline, things that we believe will be part of our future. We have 23 projects. But nothing is better than bringing a real example. This is an example of one of the first proposals for solutions that CTR brought. We're talking about the Xs. Many of you saw this at FENATRAN, and it's an energy recovery system where as you go down, it charged the battery and then it delivers this energy back to reduce energy use and reduce pollutants. So we developed several components. We're talking about a battery, electric axle and this entire system is managed with an algorithm, which is what I consider the most important and complex part of the system, which does all the management, it understands what the demand is, and it acts with these components. When we embed this in a Randon product, as you can see in the image entering, we have the line of Randon products of our hybrid line. This is an example of what's being done at CTR. I invited a part of the team to record short videos, sharing with you what it's like to work and execute these projects at CTR. Please put on the video, play the video. [Presentation]

Every time there's the challenge, there's the possibility for changing the paradigm. Our proposal is to increase technology in our company, in our country. Different people working together and exchanging information, allowing us to find the necessary answers for the project. We had to make the control system, which is for torque control and energy management, along with a strategy for safety. Today, I feel very happy and honored to be part of this innovative project. But what's coolest is to be able to work with people who are committed and excited to learn more, to see pilot test. So we're leaving a legacy for future generations. I'm not sure if everyone was able to notice, but the purpose of the video was to share a little bit about the engagement and the passion that the team has for this project. But when I see this video after it's ready, what caught my attention was that we have a very diverse team: We have different ages, different levels of experience, different genders, different races. All of this was part of this project. It was a positive surprise. But even that, we can say, is embedded. And we also have ABS, which was developed with [indiscernible] Master. And today I can say that it's the best ABS system for trailers and semitrailers in Brazil. And of course, I can't tell you everything, but there's a lot of other things we're working on, always focusing on maintaining the connection with the megatrends, CTR will always bring you more. New things will come up. And so now I want to leave you with a quick video about CTR, and I thank you again for your attention and the opportunity to talk with you. Thank you very much. [Presentation]

Thank you. Cesar, our Director of Technology and Innovation. Very well. Now we want to learn a bit more about the Fras-le universe. So Hemerson De Souza is on stage with me. He's head of several of the divisions of Fras-le.

Thank you, Cláudia. For me, it's an honor to talk a little bit about Fras-le, which is another listed company which is part of Randon since '96, so almost 25 years. Almost half the life of the company, it's been part of Randon. Very well. Good afternoon, everyone, who's here at Randon Day 2020. As I already mentioned, it's a privilege to talk about Fras-le. I think of Randon Companies, it's perhaps the most international. We have sales and business in over 125 countries. We're distributed in 5 continents with factories. We have 9 manufacturing units, 13 international operations and 5 distribution centers. We've been around for 66 years. The listed companies, I already mentioned, with the ticket FRAS3. And the IPO was the same year as Randon in 1971. Today, we have a market cap of BRL 1.2 billion, more or less. That was the quarter close today. The amount's a little bit higher. We're also -- we also finished these 9 months with BRL 1.1 billion in revenue. That's almost 10% higher than the same period last year, which is excellent considering [indiscernible] as you already mentioned. This year was very hard with the COVID 2019 pandemic. Very well. We've had the privilege of being able to evolve our company. And basically, we entered into 3 major realms to seek out growth. These are the 3 main ones on the screen. We wanted a replacement part powerhouse or aftermarket powerhouse. We have innovation and technology. And also, we began to implement our global footprint. So in the next several slides, we'll be able to talk about this a little bit more. When we talk about aftermarket powerhouse, we're talking about creating important resilience in the revenue. This is a market which doesn't vary so much when it's compared to other markets that are more connected to direct sales to automakers. It's also important in terms of cash formation. This allows us to advance in other areas as we'll be able to show you. If we go back to 2016, this chart shows very well what was the profile of Fras-le products and what we did in the creation of this aftermarket powerhouse. We were concentrated on the -- on offering chassis products and brakes. We had a very complete portfolio, and we maintain these complete portfolios, but we didn't have anything that could transcend wheel and suspension or wheels. And with the acquisitions we have made, as you can see in this chart, we've started to add a new realm of products, increasing our portfolio, which certainly is one of the most robust in offering products and services to the aftermarket. In 2012 -- it wasn't now, but in 2012, when we bought Controil, which is a company with BRL 120 million in revenue and 95% of its revenue is for the aftermarket. That's how this process began. Sergio had the opportunity to clearly show how we do this. But now I want to say how this impacted Fras-le. In 2017, we also brought Armetal and Fanacif and Farloc. This brought us $25 million in additional revenue and 100% from aftermarket. So in 2018, we got Fremax. And Fremax, brought not only their disc brakes, but 90% was related to aftermarket and more than 40% for export aftermarkets going to competitive and important markets like Europe and the United States. And recently, on September 1, we finished the operation of purchasing Nakata with BRL 500 million in revenue, 95% of this from the aftermarket and a small percentage with exports. This brings us 850 million in additional revenue from the aftermarket. About 25% of this is for the export market. In this expansion cycle 1, we used the resources from the capital that we raised in 2016. We reinforced this power -- this powerhouse in business in Argentina and Uruguay. And now we're in cycle 2, which we don't have details on. But as soon as we do, it will be a pleasure to share with our shareholders, both from Randon and Fras-le. If we look at the pictures from Fras-le today, look at how we changed the profile. We filled in everything we didn't have in brakes. We don't have sensors, but it's a more limited market in the aftermarket. We got the wheel end, with the exception of wheels. We filled in suspension and the wheel and interesting powertrain aspects. This expansion movement, especially through acquisitions gave us a distinct level of robustness. And we're among the largest suppliers of aftermarket parts in Brazil, and that's very important. Sergio already mentioned it, but this chart is a little bit different than what he showed. I just want to show you what's circled in red, showing that what we did over the last 3 years and related to international expansion. We not only evaluated and grew in aftermarket powerhouse, but we brought several initiatives that expose us more to the international market. A major highlight is increasing operation in China and our joint venture with SK in India. All of this brought to us a level of growth, of compound annual growth over 30. If you look at the impact of Nakata, we would have in a regular year, considering what we already reported over the 9 months, a company that reaches BRL 1.8 billion in net revenue. With historical records in this last quarter, we had over 20% of EBITDA margin. And if you're interested, I'd like to invite you to go to our Investor Relations site because you can access the documents and the reports that we make quarterly to be able to accompany this trajectory. This, along with our presence is very distinct. Basically half of our business is outside of Brazil. And almost 90% is for the aftermarket and reducing significantly our exposure to the friction area. With the regular year, friction will be about 50% of Fras-le. This with a footprint that's quite global, as I already said. We have our main production plants here in Brazil. We have a photo of each one of them. But there on the bottom, you can see they were in several locations in the globe. Fras-le is a very global company, and our expansion focus is to try to rebalance our position in foreign markets, whether through exports,or what we add in our operations outside the country. We also have something, which is very nice to share. We're able to gather in this portfolio iconic brands, which together add up to over 280 years. Fras-le, who's the absolute leader in friction in Brazil and outside, along with the brand [indiscernible] which we bought in the '80s; Fremax, which is a leader in disc -- brake discs and drums; Controil, 63 years; and Nakata, 68 years in various segments. This is very relevant because we created a product, we created a powerhouse for our customers. This didn't come by itself. This came with a profile and a supply of products, which is a one-stop shop for aftermarket with almost 12,000 SKUs. This is Fras-le, and we're very proud of this, to be able to present this. And we're available to expand through our Investor Relations channel and the opportunities we have in the market. Thank you very much.

Thank you, Hemerson. We had a general panorama of the Fras-le universe. So continuing our event, our digital event, I'd like to remind you that all of your questions can be sent to the platform of the event. We like you to interact. Don't forget, the social networks. So now continuing the operations panel. We have Sandro Trentin, who is the General Director of the assembly division, and he will talk about the operations.

Thank you, Cláudia. Thank you for the opportunity to talk about Randon assembly and answer questions at this event. Thank you very much. Hello. Good afternoon, everyone. It's nice to be able to speak to all of you who are watching us. A little bit more about Randon and its divisions and everything in the trailers division and the world on chassis. Just a minute. Okay. First of all, we want to talk about something related to overcoming adversity. We plan the trailer market for 2020. It is reasonably constant. We planned the Randon market very similar to the market and its seasonalities. And then we had the so-called control ALT delete. Here we had a market reset. It was very impactful, and we were actually ahead of the market expectations. But the most important is that the market had its drop, had its recovery. And as Randon, we were able to flatten out some of this market drop. Yes, we suffered, but much less than the market as a whole. So I think that's the first aspect. We are ready to overcome adversity. Randon was able to do this during the period and is going -- is doing very well now. One of the great issues that helped us with this is related to investments. Investments were maintained, investments that have been planned for a long period of time. Randon has a tradition of keeping its investments. This is Randon [indiscernible], the modernization of the logistics center and the plants in [indiscernible] Caxias do Sul, the expansion of the Araraquara plant. We can see this expansion on the images to our -- to the side, the beginning of Randon Triel-HT joint venture, which has helped us a lot in terms of customized products and diversified products. And we can't forget to maintain the scenario of investments for automation, which culminates in the creation, as Sergio mentioned, of RTS industry. Very well. It's important to mention that we expanded the installed capacity. We've been growing in this aspect of installed capacity. We have some restrictions of growing our market share, limited by our production capacity. This year's investments looked at our capacity 230 products a day, with the occupation, 85% on average due to COVID. And we're ready, and we should enter 2021 with a capacity of 150 products per day and be able to occupy it at a high level for this capacity, transforming this into greater volumes of products, et cetera. Randon needs to talk about innovation. As Cesar mentioned that everyone who came here talked about innovation. Innovation is fundamental for our growth, for our delivery of value, for the renewal of our portfolio. And Randon was able to accelerate innovations and reach 80% of our net revenue related to products launched over the last 5 years. So we innovated new designs, new technologies, new materials. We reduced the weight of the product, trying to have less of our own weight, allowing greater loading of the product, proving the total cost of operation for the products, generating more productivity for the customer, for the market as a whole. What does this allow? This allows the strengthening of our market leadership. Today, we're in first place. And 75% of the market segment, Randon is in first place. They're #1 in grain trailer, dump trailer, tanker trailer, reefer, sugar cane, log trailer. And we're a second place and growing in market share in 23% of the market, dry van, curtain sider, container trailers, silo and other special vehicles. Very well. We consolidated our market share. Here we can see in this slide the number of manufacturers, around 150 semitrailer manufacturers. Randon has been increasing and consolidating its market share even with the market variations. We can see that the market from 2019 to 2020 should be in line. And we're able to grow the market share, hold the market share. And we only didn't grow more because we are still maturing these investments in capacity, which I mentioned previously. This should continue with firmness in the next year, 2021. It's also important that we had investments that generate productivity and value, efficiency and value. If you look at the last 10 years, Randon increased its efficiency by 44% when we talk about units produced per employee. And we increased its revenue per employee. So we are able to not only increase our efficiency. We increased even more the value generated by these investments and innovations. We made difficult decisions. We made a decision to sell the assets and projects for Randon vehicles to the Miller Group, a company, which represented less than 1% of the revenue. This allows us to focus on the other company business lines. So we maintained the business through another manufacturer we're able to make a sale, which was attractive to both parties. And we no longer continued in a business line that didn't have a lot of synergy with the Randon Group and would take away our focus that should have gone to other products. We also got a relevant position in this particular segment of railcars. We entered this segment in 2004. Over this 15-year period, Randon has already produced 11,000 railcars. We have over 20% market participation, and we're growing in this market. And we are prepared to continue what we call constant purpose in this segment. Randon did the first test with the trans trailer in '96. At the end of the first concessions, we got prepared. We entered the market in 2004. We could see the behavior of the railway market. And now we have a new cycle of investment already announced by the government and by the main players in the market. And Randon is ready to continue the trajectory, which we believe is of great success. It is a segment that attends the transportation business, which is suggested for the future of Brazil. No less important is that we are ready for the future. We are innovators. We are more productive. We have capacity. We generate more efficiency, and we plan to increasingly add value to everyone. Thank you very much. I thank you for the opportunity. Thank you.

Sandro, General Director for the Trailer division. Now I will receive 2 directors. We're closing out the presentations for this panel, and then we will talk about the Castertech and Master, Suspensys. So now I receive Eduardo and Ricardo, both directors of their units. Thank you. Welcome.

Good afternoon. I'm Ricardo, along with Dalla Nora, we're going to talk about the other auto parts of Randon. This sides, Fras-le, which Hemerson already mentioned, we're going to talk about the other units. Initially talking about the auto parts of Randon, it's worth highlighting that we're -- we have the leading position. All our auto parts companies are the #1 in all the segments in which they operate. We have 8 plants. It's worth noting Suspensys in Mexico, where we have supplied throughout Latin America with service for more than 30 countries and 2 joint ventures, Master, which is a joint venture in U.S. Brazil, which is a joint venture with Jost [indiscernible]. These are our main customers, where we operate both in commercial vehicle assemblers. We were with Randon and the other companies in the export market. These are our main pillars for our auto parts, first of all, to protect and defend our market, growth diversification and internationalization of our companies.

Good afternoon. I'm Eduard Dalla Nora. Ricardo and I are going to present our auto parts. The first slide that we have here is the market slide. This is a very challenging year for all of us. And obviously, what we're going through is very different from what we expected. The second quarter was impacted by the pandemic, and the third trimester obviously had a rebound. So we believe that the truck market will end at around 89,000 units; and trailers, 66,000. And we have a forecast for growth next year. When it comes to revenue growth, a large port is dedicated to the truck and bus segment. So Caster, Master, Jost and Suspensys have a large percentage of their sales to trucks and buses. 31% is for semitrailers; 10.9%, around 11% is for aftermarket; and 4% for export. We'd also like to highlight the strength of the truck sector. And the data is interesting because our daily production volumes are practically the same amounts which we had in COVID. In our segment, the agro sector impacts us where the expansion of this business with trailer and trucks has helped us. And in order to advance, we thought about diversifying our revenue for aftermarket and export. The modular consortium was started in '96. It was a dream of ours to be able to participate in this select group of suppliers. So we are able to place Suspensys as part of the modular consortium, integrating suspensions. The idea is to start this in 2021. And what does this do? It paves the strategic objective with Volkswagen and has energy to advance and have opportunities in other future businesses. We're also supplying the new suspension for the Meteor truck launched by Volkswagen. When it comes to Suspensys, electro mobility, we want to present to you what Cesar already mentioned originally, which are the projects of our Randon Technology Center. Here at Suspensys, we are effectively expanding our scope for electromobility. And this is the year we'll implement this technology. It goes much beyond an electrical engineer. Here, we have software intelligence, algorithm intelligence, developing batteries. So our role is to make the plan to execute the project. We also brought here, as Sergio mentioned, the first acquisition of -- by CasterTech. So we're buying Fundituba, which is a foundry with almost 50 years of tradition. This operation has not been completed. We expect to sign the contract in December, December, and we should start this operation in 2021. Not only does it expand our capacity, which is the main objective, but Fundituba is also well positioned in the logistics of the Southeast, which will give us an advantage. Ricardo, please?

Thank you, Eduardo. Talking about the division of the joint ventures. First of all, talking about Master. This year had, it had its first M&A. Ferrari was integrated since March of this year. It's an aluminum foundry. And the main purpose is to increase return competitiveness, offering products which used to be imported, an increase in these products in their segments and also an expansion of the portfolio. The idea is to expand the portfolio, offering other components for commercial vehicles. We'd also like to highlight another launch by Master. Since May, we've been offering the market of implements in commercial vehicles, the Master ABS. This has been integrating the trucks in the Brazilian market. And the idea is, that it's the first step for us to be able to expand into the megatrends of the commercial vehicles, very connected with electronics, embeddedness and connectivity. I'd also like to highlight the expansion of our portfolio where we can illustrate other products that Master has began to participate in the full system of the pneumatic brakes for the truck or the trailer. Here, this talks about the other joint venture with Jost Brazil. We have a product which we're beginning to manufacture to supply next year. This is the first time that a company will make a bus articulation system. It's a pioneer in this market and has a unique technology, reducing weight for the bus manufacturers and bus chassis manufacturers in the Brazilian market. We'd also like to highlight the fifth wheel with polymetric plates and LubeTronic. The idea is to give the freights a polymetric plate which increased the useful life of the fifth wheel; and the LubeTronic, with this device the size of a Coke can, it doses the grease necessary in the fifth wheel. This improves the useful life and also has a sustainability appeal in various applications of food, perishables and fuel, which shippers need for this solution. And also highlight the connections, the digital transformation of auto part companies from Randon. Here is the example of a cyclical inventory in connection with one of the start-ups, which has drones, which does the inventory. It has a reduction in 40% in the accounting period. We also have another startup, which connected us, which is preventative maintenance. So through this band they connected to a router on WiFi, the maintenance coordinators can then see on their cell phones what the connectivity and monitoring is in real time, for the main equipment in our companies. Beyond that, we also have new RPAs. [ Robbie Cast ] is one. We also have Master Tech, 2 other RPAS, which do the routine activities. Today, we have over 30 connected start-ups. I'd like to thank you for the opportunity, and I'm available in the future to answer any questions. Thank you.

We'd like to thank you for your presence, Ricardo, Eduardo.

Cláudia, I wanted to take advantage of this moment to thank you for the opportunity and say, Ricardo, that all this development, which we did, is with our engineering, national engineering. So starting with the project that we're developing with the engineering here in the south, it's a Brazilian company here in the south. Thank you very much.

Thank you. Thank you, and have a great afternoon.

Very well, everyone. Before we finalize the panel operations -- actually, we are finalizing the operations panel. But before we go on break, we want to gimmick a special invitation for all of you who are connected. Today, Randon is launching its new Investor Relations website. The website is more intuitive, and following trends in Investor Relations sites, to make contact with Randon easier and making information even more transparent. To check this out, please access the site, ri.randon.com.br. You were able to see some of the images in our site. Very well, we're going to have our quick coffee break. In these 5 minutes, we'll be back with Randon Day. Thank you. [Break]

Very well, everyone. We're back with Randon Day. Today, now we're going to start the culture panel, innovation culture and ESG panel. In this block, we will like to invite Daniel Ely, the CTO for Randon Companies and his guests, the Director of Financial Services, and also Mateus de Abreu, the direct manager for Strategy and Digital Activities; and Veridiana Sonego, who's the manager of Strategic Planning and Corporate Communication. [Presentation]

Very well. Daniel is with me. He'll be the mediator for this block.

Thank you, Cláudia. Good afternoon, everyone. We're going to talk about the culture of innovation. You saw from the previous presentations that we talked a lot about innovation. We talked about taking care of the business as it is today, allowing them to grow, but always paying attention to the future that's coming and how we can take advantage of new opportunities. To talk a little bit about this, I need to share with you about what is the base that sustains this process, and that's our people. In 2014, we began a very robust process for understanding what were the cultural traits of Randon Companies, which already spoke to this future, this complexity and that we needed to reinforce and also what were the character traits that we needed to improve on and advance? This construction over the last 6 years is what gives us today the confidence to be advancing both in our current business and new business. We're going to talk about the services in this panel. We have an ambition to make these services have greater representation in the business as a whole. All this, as you've seen in several examples, is based on people. I'd like to draw your attention on this slide to what we've been calling the open innovation process. We began to understand that innovation was already in our DNA. Transformation was in our DNA. And we asked the following question: What's the difference? What do we have that's different? And we realized that the way that we could increasingly innovate or using or finding new business, this went through an environment of greater collaboration in connection with other actors as well. In 2017, we had an important year because for the first time, we began to understand what were the start-ups through Randon Exo. We start looking at innovation centers in Brazil and outside of Brazil through a small initiative. We reformulated our institute for technology and innovation. And we began this movement. Then the following year, we joined with other companies like Marcopolo, [indiscernible] and we begin to work together to resolve common problems. This was something that was very new to us. That arose here in Caxias through [ LSE, ] which is an institute for collaborative innovation, to now it's 17 companies that are part of LSE. And we achieve a level of maturity. And so instead of seeing start-ups, it's just a service provider or a technology provider, it can be a partner for future solutions that are developed within the company or even business. Cesar presented to us in the operations panel and our CTR, which in 2019, end of 2018. Around there, we opened the CTR structure, and we also shared with other companies. So today, we have almost 30 companies working with the same structure, the engineers in some ways have projects all with their levels of confidentiality, but they exchange ideas. It's an opening of Randon Companies, which has happened over time. The [ ESIS ] project today gathers, as you saw in that video, several companies working together with Randon Companies and with start ups. So these are various examples, as said, we can advance more quickly. We can develop more solutions and services, as Daniel Randon showed at the beginning, we have a great opportunity to advance. So in 2020, we developed Randon Ventures in Conexo. We have over 46 start-ups connected. But I'm not going to tell the story. I'm going to call Mateus de Abreu. Mateus is our Digital Business Manager, and he's also the Head of Randon Ventures. So he's going to explain what are digital businesses, and what is Randon Ventures.

Thank you, Daniel. Good afternoon, everyone. We're going to talk a little bit about 2 movements. The first is the movement which began in the end of 2019, which goes to meet this journey which would have been undergoing, the creation of a team called digital businesses. What was the objective of this team? We mapped and understood that it would make sense to go deeper into some technologies that enable and drive some of the business which we've seen throughout this presentation. We decided to focus on a few of them such as process robotics. Over the last several months, we implemented 146 robots and administrative processes, registrations and operational tasks which released our teams to become more analytical and develop their potential on a daily basis. Another technology which seemed to make sense to go deeper into was artificial intelligence. So we moved deeper into this topic. We've developed internal spreads so we could see the potential of various projects, logistics, commercial and financial. And this team, through internal spreads and technology and internal resources, also impulse -- drives new business which we'll talk about in this panel. The second initiative we wanted to talk about is about the relationship with startups. As was mentioned throughout this presentation, we have about 46 startups which have a relationship with Randon Companies. This movement, despite various benefits, also brought learning to Randon Companies. Constant feedback from the startups showing that they found a lot of value in this 2-way relationship, value from Randon into the start-ups with mentorships with management support and acceleration. Based on this feedback, we decided to launch in February of this year what we called Randon Ventures, a vehicle for investment and acceleration of start-ups. We share this with you, our investment thesis, start-ups, which we've been seeking for the last months, we invited everyone to visit at the end of the event, our website, randon.ventures. We will give you more details on certain aspects. In relation to the strategy launched in February, it's important to highlight that we have 2 startups invested in our portfolio currently. TruckHelp, TruckHelp, which is to help truckers and transportation companies. And their main job, which is to take a merchandise from 1 point to another. TruckHelp is there to support this process. And Reboque.Me, which is an on-demand assistance platform, which is now -- has a new brand called [ Zoom ]. These 2 startups are what we currently have in our portfolio. We have some other ongoing business. And as soon as we can share it, we'll share it with you. This strategy for investments in startups is part of something greater, which we've been calling the creation of a digital hub. We can make startups that have a synergy between them, and startups, they have a synergy with Randon Companies to realize their potential they have and offer value to our clients or potential clients. So we have a strategy to advance these investments with partnerships and startups. This strategy is about why create a vehicle like a corporate venture capital. We've been advancing, as we've seen throughout this panel, in our organic growth, M&As, acquisitions, but also important, to act in what's adjacent to our business where we can make startups or new partners reach their potential in this new economy. That's why it makes sense to have a vehicle like Randon Ventures. We can reach the potential of these -- with this ecosystem. That's a bit of the rationale that we wanted to share with you. I now give the floor back to Daniel. Thank you, everyone.

Thank you, Mateus. This makes it clear to everyone that there's a strategy that's thought out, and we have a road map to how to make this growth happen. But reinforcing what I said previously, we're going to do this in a way that's a little bit different, adding to this journey to this pathway with startups and other entrepreneurs. But it couldn't be different than that. If we're talking about financial and digital services, nothing better than have our Randon Bank and Randon consortiums, what I call is where the [indiscernible] are super tender of the bank and our consortiums. We have novelties, right, because not only do we have a strategy of advancing digital financial services, today, we're announcing a project called the R4. Tell us what that's about.

Good afternoon, everyone. It's a pleasure to speak with you. R4 is an initiative with a partner. And it's important to know how the idea started and how this project developed. When we started to discuss the exploration of digital transformation making Randon Bank digital and the Randon ecosystem, we mentioned in the previous Randon Day about this ecosystem. When we started talking with market players with capacity to help us into the digital transformation, we found various partners, and we found [ For All ]. [ For All ] was a partner who could help us make this transformation and [ For All ] saw Randon an ecosystem where this digital transformation can be done, not just in Randon Companies, but to explore a white label concept. This bank-as-a-service concepts could serve us in the market as a whole. So when it comes to R4, it is a structure that will involve all the digital solutions with a focus on transportation and logistics segment, where we have synergies and potential to explore. In relation to the bank, when we talk to our customers and try to understand their pain, the arguments come where the main pain of the customer's credit is credit. So how can we deliver our credit solution with assertiveness and quickness using digital transformation? So therefore, we created beyond the partnership with [ For All ], we created our digital transformation division which Mateus conducts. We have a group of data scientists that help us exactly to have the credit assessment. The customer is in the center, but here, we have the credit assessment. Their main pain is credit, so we need to have solutions. For onboarding, that's 100% digital. Analysis -- credit analysis done with all the technology using artificial intelligence and machine learning. That way we can speed up the decision making and the assertiveness and the decisions, giving us some more profitable business offering customers, proposals and solutions for credit that are more competitive. So the use of algorithms to develop the credit engine, as I've said, is a continuous process. Innovation is every day at all times, and so we're in this process.

Joarez, it's important to comment here and reinforce how much we have these competencies in-house. Along with these partners, we're developing this because this is something new. These are very bold projects where we don't want to lose connection with what's most important for us: the transportation sector and the logistics sector.

Without a doubt, and Mateus mentioned TruckHelp. TruckHelp has a large client base. Our distributor network, the stakeholders of Randon are potentially clients where we can take a solution and develop our business. So in a short amount of time, that's what we had to say. It's a pleasure to be here. Thank you for the support. Thank you.

Let's continue this to wrap up our innovation panel. You saw that this advance -- this let people advance and have a culture transformation and allow our service sector to have a greater share of the results. This requires of us to understand better this process of open innovation. And now in October, we launched Randon Conexo. So I wanted to call up our planning manager and also the Head of Connect, explain to us on the agenda, what is, and how does Randon Connect work.

Thank you, Daniel. It's a pleasure to talk a little bit about Conexo. As we already mentioned earlier, Randon was undergoing a moment of cultural transformation when it awoke to the need for connection and to understand better this innovation environment and startups and understand how we could open our problems, our opportunities for entrepreneurs, for startups, from the gates outward. So Conexo was launched on October 20, but it was born -- the embryo was born in 2017 with Randon Conexo, as you mentioned. And once we identified a trio of entrepreneurs who were asking questions and we gave them the opportunity to get to know the ecosystem and take it outside of Randon with these challenges and trying to connect with startups, we identified a great potential. Randon Exo was born in 2017. Now we're already in the fourth generation of Conexo with almost 30 people, not just in the administrative areas, but also from engineering, logistics, production, sales, various departments from all our units, exploring and trying to learn about this ecosystem, not just implementing technology, but also changing our mindset, provoking this sharing of information and new behavior within Randon Companies. So starting with Randon Exo, we -- there was the opportunity and the need to launch and take a greater step, which was Conexo. Conexo is a physical space and digital space, which creates this open innovation network. When Exo was born with the purpose to connect Randon Companies, our people and our customers to the community in entrepreneurs of startups, and within this environment, promote co-creation for productivity solutions and new business.

Does this mean that any person who identifies with the challenges on the platform, the challenges of Randon with our segment can add to us and be part of Randon Group?

For sure. So here is an invitation for you to see this. We'll talk about our challenges here shortly and we want to co-create solutions. So continuing, I want to share about of our open innovation funnel. The idea is to promote cultural and digital transformation of Randon Companies and our partners. We have, within Conexo, events. And here, I can mention the first event which was the launch on the October 20 when we had Lecture by [ Tiago Mattos ], and we had the presence online of the Governor Eduardo Leite, the President of our State Legislature, the Secretary of Innovation and other public authorities. We talked about our challenges, and these challenges are opportunities for co-creation of solutions with the community. We also have start-up creator programs. And these 2 programs, which are offered both to Randon Companies as well as to Conexo customers, we have an opportunity to give a voice to the entrepreneurs. And here, the issue is to -- within our cultural transformation, give an opportunity for those who have a solution. We have this entrepreneurial profile to develop these solutions. So here, we have an environment for this.

I'm seeing a shark there. What's that?

This is our committee, our shark tank. So these ideas, they go through this innovation funnel, have the opportunity to participate in this evaluation committee. And these ideas, if they have market potential, they can be invested in by Randon Ventures. They can be a new service for Randon Companies, or they can be a partnership with our customers. So to continue, we're an innovation hub. We are digital. We're physical and digital. And here, you can see some of images of our physical space. It's here in Caxias Do Sul with -- inside the Randon campus. It was launched on October 20. And we have our digital platform, and you're invited to connect and learn more about Conexo. We have our social network. And here, you have an opportunity to make connections with entrepreneurs, professionals who have a connection with our challenges who want to learn about our projects, and we have talks about events and content because we believe in the logic of abundance. And finally, I want to share with you our challenges that we launched when we inaugurated Conexo, which are opportunities to co-create solutions with the community geared towards Randon Companies. So IoT connection, which here is digital learning and accessibility, advanced analytics and generating value through data and sustainability, reuse of materials with a focus on decreasing environmental impact. So here's an invitation and Conexo is one of the innovation structures that Randon has. Is that right, Daniel?

That's right. Thank you, Veridiana. You're all invited to learn about Randon Conexo. So we'd like to wrap up this panel. We already had a panel of operations and now in culture and innovation, we'll have others. But when you look at this, we want to give you a general view because we have several initiatives in the Randon group that seek incremental innovation and more transformational innovation. So you've seen CTR presented by Cesar. We have RTS, which we'll talk about more. We have our P&D departments. We're connected with open innovation through Helice, Randon Ventures, which Mateus presented, Conexo now within [indiscernible]. We have -- you can see that our great purposes is in the middle, connecting people and wealth generating prosperity. All these initiatives are a big umbrella, but they only happen and they're only possible, Veridiana, and this is why we started the panel this way. They're only possible if we have people in our culture, they want to apply these technologies, learn these new ways of working. And to get connected to the outside, we have a tendency within companies to try to resolve things on our own. Now we're learning increasingly to do things in partnership. And then the orange part, where we see where there's a cultural transformation and digital transformation. I'm very confident that all of you who are watching us can tell that this is a well thought-out process. It's a 6-year journey. Everything that we've seen here, we'll see in the next panel. These are connected. And we're very well prepared for this future, which awaits. So we will use that to wrap up this panel. Thank you.

Thank you, Daniel, Joarez, Mateus, all those who participated in the panel. This is the panel on culture. Now we will begin the panel ESG, and I'd like to take this opportunity to remind those of you who are connected that you can ask questions during the entire event through the box that is just below the video on the streaming website. Soon, we'll have our Q&A. But right now, it's time to talk about ESG. To present the initiatives in the environmental and governance -- corporate, governance areas, I'd like to invite our CFO and Director of Investor Relations, Paulo Prignolato, along with some of his... [Presentation]

Paulo is here with me already. Welcome to Randon Day.

Thank you, Claudia. Good afternoon, everyone. It's a pleasure to be here with you and share this relevant topic with you. First of all, I'd like to thank all of you who are participating in this event, which is so important for Randon Companies. The discussion in this panel, the presentation of these topics will be divided with my colleagues, Bernardo, Veridiana and Jaime. So I have a brief introduction here, and then I will pass the baton to them. I think it's important to highlight that the ESG topic is a journey. It's a journey. We're -- the company started 71 years ago since they were founded. In this slide, we selected a period, almost 20 years, and you can see that we separated various initiatives. The green related to the environment, the orange related to social topics, and the gray ones related to governance, which my colleagues will share in greater detail shortly. It's important to highlight that it is a journey. Year after year, Randon Companies have been evolving in these aspects. It's a genuine topic. It's part of our agenda. It's part of everyone's agenda, especially our leadership. So to continue this panel, we want to start listening to a video of the institute. [Presentation]

Very well, folks. We talked a bit about the social initiatives. It's also important for us to highlight everything that we've been doing. We selected a period since 2018. It's showing the evolution of our vision to corporate governance in relation to the ICVM 586, practice or explain. You can see that from 2018, 2019, we grew from 51% to above 65%. On the right-hand side, you can see the details of the main items and advances throughout the year 2020. It's also important to highlight that in 2019, we elaborated our first sustainability report within the GRE standards. This is a very broad effort where we had dialogue with all of our stakeholders, and we listed our 8 priority topics. Now we're updating this report, which, at the beginning of next year, will be placed along with the data from 2020. It's important, and this was highlighted by Daniel at the beginning of the presentation, but there are several actions here that were made with health and safety for all our employees, especially so they can come back to work in a very safe manner and responsible manner. Here, we listed several actions that are part of our daily activities. We also launched several actions with the community that are also highlighted in these slides, such as donations, the purchase of fans, manufacturing of components and important activities in terms of employee safety and the community around us. So now I'd like to give the floor to Claudia to continue our panel.

Let's continue with Randon Day. Now to speak on the environmental strategy, Director of Operational Excellence, Bernardo Soares. Hello, Bernardo. Welcome.

Thank you, Claudia. Thank you. Thank you, Paulo. Thanks to all those who went before me. It's a pleasure to be able to speak a bit about the environmental strategy for Randon Companies, especially after hearing operations and strategy in general because the environmental aspect is in the center of all our operations. It's always been considered, and it's very fluid in our processes and activities. So I brought some numbers related to the environment, to show you the basis of this interface of the environment of all operations and strategies. So for me and the organization, it's an indicator which we consider fundamental. It's called the conversion rate of raw material into product. What good does it do to talk about strategies of exposure or recycling if we don't first talk about maximum usage of the resources? So ideally, if we purchased and were able to convert 100% of our raw material in the product, this would be the ideal scenario. This is how we treat specifically in the environment and operational efficiency and conversion rate, making an important connection, something that Sergio mentioned, that Daniel Ely mentioned, associated with Randon Tech solutions industry, which was one of our final structuring as a business that works with maximizing the conversion of materials, the maximum operational efficiency. So today, 83% of the raw materials which we purchase, we convert into product. Continuing with that remaining percentage, what happens to the waste? First, it goes through recycling or reprocessing. We all know that we have the foundry which benefits our use of metal raw materials. But today, 77% of our waste has a sustainable destination. We'd like this indicator to reach 100%. If we can close the cycle completely, either reusing or recycling all our raw materials. So today, 23% of our waste is wasted, and we want to -- and all this and we'll reuse this in our processes. Remember that our priority is to convert them directly into product. Here, in relation to water, our intention is to reuse 100% of the water. And we have invested and will continue to invest strongly in technology related to this. Today, 55% of our effluents are treated and returned for reuse. We have some initiatives to use some of this water in the discharge of our -- in the flushing toilets of our offices. So we've already saved 2.5 million liters of water, but there's other technological initiatives that will take us to 100% reuse of the water which we generate in production processes. Here is that association in recycling, where we have a foundry, one of the most modern in the world, test their deck. Because of this, strategic [ benes ], in a global fashion, we're able to use metallic way in -- from the products -- from the processes of our companies. 77% of all the scrap, which our functions use, comes from our internal processes. That's a very positive number as well as the subprocess will be treated for exhaust. It also returns this exhaust powder is used as the raw material in products, closing the cycle for the complete and full use of raw material. And here to wrap up, we have a structured plan for sustainable construction. The expansion of Araraquara, as [indiscernible] mentioned, has already been done, capturing rainwater. We have the parking lot for the products using light poles with solar energy. And we've used natural light historically very well, always with the concept of primarily using what's available without using any secondary energy. Very well. Thank you for the opportunity, and we'll continue.

Thank you, Bernardo, for your presentation. Now who's going to return to the stage is Veridiana to speak about the social pillar of diversity. Hello, welcome.

So it's my pleasure also to bring the social agenda with a focus on diversity. Let's wait for the presentation. Very well. As we already mentioned, throughout Randon Day, our purpose of connecting people and wealth-generating prosperity was real in 2019. We worked internally in our way of being and doing. So here, I want to share with you our principles and our competencies, which are part of our way of being and doing. Throughout this process, I highlight that within our principles that have been with us for several years, they were sort of restated -- and I'm sorry, I want to highlight people valued and respected, which was mentioned throughout this afternoon. Beyond our principles, I want to highlight 2 of our competencies, positive influence and expression of trust. These principles and competencies are the basis of our diversity journey. Our diversity journey began in 2019. We are now in 2020, undergoing a trajectory that began with the diagnosis, began with an education process, and we believe very strongly that this journey needs to be genuine and needs to be from the inside out. I'm going to ask for help to go through the slides. So this journey started with the development of the team with focus groups, surveys, executive interviews. We did the diagnosis of this organization based on diversity, and we established a strategy, which I'd like to share with you today. We did ground zero with all of our leadership in Brazil and in the other continents. We did a leadership meeting, sharing our strategies for diversity. And here, I'd like to highlight always based on our purpose and our way of being and doing are pillars for our diversity journey. We're focusing on the individual, our self-knowledge, relationship and learning about the topic. We believe very strongly in this idea of being constant learners, and inclusion, which is about respect and the relationship between people and organization, with systems, procedures to ensure equity. Next, I'd like to show our strategic guidelines related to the diversity journal. So in 2020 and 2021, our focus will be, and is, education and communication, the review of politics and processes, committee and affinity groups and goals related to diversity within Randon Companies. We believe strongly that to build a psychologically safe environment promotes not only inclusion, but positive effects such as innovation which we mentioned already this afternoon. And here, we established some premises which are to use the best practices, management practices. And based on the inclusion processes and a genuine diversity journey, have more effective leadership. Happier employees, as our founder said, happy people innovating together, go further. That's our vision for the future. And finally, we believe that the best financial performance is the conclusion. It's the result of a genuine inclusion effort geared towards having diversity and a safe and healthy environment. Thank you very much for your space.

We thank you, Veridiana, for your presentation. So to wrap up the panel, ESG, we'll have Mr. Jaime Marchet to talk about corporate governance. Jaime is the Director of Controllership. Thank you, Jaime.

Thank you. Good evening. Good afternoon, everyone. In this short amount of time, I'm going to share with you a bit about what governance is and risks and compliance, which are almost, at the end of the event, nothing better than talking about governance. After everything we saw in terms of operations and complexity, how to ensure effectively that everything will be delivered in a positive manner and ensuring our sustainability? With an effective governance process that goes through aspects of ethics compliance, internal audit with risk management and privacy. Paulo already shared with us that governance is a journey. It's not a topic which started over the last 5 years. I'm sharing a specific focus because in 2016, the company creates its integrity program. It's the maturation of a process which started in 2016 with the ethics manual, and then increase the code of conduct, which is the basis of our integrity program. In 2017, with the advance of our integrity program, we created a list of corporate policies. We established a due diligence process with our partners. In 2018, we advanced and created a map of corporate risk. We -- we'll show you this in a little more detail. In 2019, we start doing the effective treatment of these risks. We became a signer of the pact against corruption. And we started online training, which helps us during this pandemic to implement the home office process. In 2020, we have the adaptation of the LGPD aspects, our risk matrix. And we ended up getting an award for our best practices. Quickly, regarding the integrity program, I'm not going to go into all the details, but it's important to highlight the participation of the ethics committee, which is made up of the senior management of the company in which accompanies all the reports related to good practices and any deviations that may occur and also the implementation of due diligence in our partners, which effectively ensure the integrity of our business and healthy relationships, which we need in our operations. Quickly here, a time line for our risk management area. 2017 defines all the directives, establishing a policy for the management of these risks. In 2018, we list the main risks to the company. We define a portfolio and we prioritize these risks through the risk map. In 2019, we started a process to work on the main risks and seeking answers. And in 2020, facing this whole scenario, we understood that it is important to review our risk map and reprioritize that to make sure it adheres to the current situation of the company. And to wrap up, I'll talk a little bit LGPD. The issue of privacy, a new demand of the market, which is totally regulated. The company has already prepared for this, meeting the regulations and the legislation so that we can have the data security of all our employees and other people who relate to our company. So I wrap up here. Claudia, you have the word.

There you go. Thank you, Jaime, for your participation. Jaime was here talking about corporate governance. Now we're going into the Q&A session. It's already full of questions. So this portion will be mediated by the Finance Manager and Investment Relations, Esteban Angeletti. I ask him to come to stage, also Daniel Randon, Daniel Ely and Paulo Prignolato. We'll also have the remote participation of Sergio de Carvalho. I'd also like to register that throughout our event, we maintain special care for our prevention measures for COVID 2019. And therefore, for this session, we will use our masks. And we will not have all the presenters on the stage at the same time. So please share this on social media and mark @EmpresasRandon or the #RandonDay2020. Remembering that this event will be recorded, and you can see it again on YouTube or on website, ri.randon.com.br. So immediately, I invite Esteban to come to the stage.

We've got the floor. Good afternoon, everyone. Good afternoon to all those who are accompanying us on the broadcast. The questions that were requested. I'd like to thank [ Comex ], who is on the stage here for the questions. Our first question is from Lucas Marquiori. Lucas, thank you for the question. He's from BTG Pactual Bank. I want to direct this question to you, Paulo. He says, that we went through a period of investments in 2018 to 2020, focused on hardware and the capacity of Caxias and the Araraquara factory, expansion of parts. So with these projects more mature, as we saw in the innovation and culture panel is focused on services, which consumes less capital, can we expect that the level of investments for the following years will be lower, closer to the depreciation?

Thank you, Esteban and Lucas. Thank you for your question. In fact, we have a very disciplined management in terms of investments, very related to our cash generation. This was a year we invested in organic investments and also in M&A investments, which was significant, which is the purchase of Nakata. And in fact, we've always tried to within a financial leverage between 1 and 2. This year, we were closer to 2. So we can say that over the medium term, our idea is to focus on investments that cover the useful life of our assets, more or less in relation to depreciation, and we could estimate our depreciation around BRL 150 million, BRL 180 million. And in addition to that, the innovation projects and the projects bring additional productivity gains. For next year, specifically, we have the completion of the expansion of our unit in Araraquara. So basically, this would be the level of depreciation, but always remembering our financial discipline to be at any time, between 1 and 2x EBITDA without considering the debt of [ Macondo ].

Very well, Paulo. Our next question comes from Victor Mizusaki of Bradesco BBI. As we mentioned, Randon has invested in digitalization and automation, so I'm going to divide the answer with Sergio and Daniel Ely. How can these investments transform Randon? From the operational point of view for Sergio. And for Daniel Ely, can we expect a time we'll have revenue and service and expansion, profitability related to the expansion of revenues and services. Sergio, please?

Can you hear me well? I assume so. Victor, thank you for your question. Our expectation, Victor, is that the investments will translate into significant benefits for our companies. Since we're a publicly traded company, we don't have latitude to quantify this benefit, although we have clarity about this benefit. On the other hand, trying to be a little more specific, you know that we announced 254 robots from Ford Motor Company. Just to give you an idea, in addition to other initiatives and investments in automation, which we already had, all this will be translated into an improvement in productivity that is substantial for all our companies. We intend to transform all these robots into operational sales over the next 3 years and complete this journey in the next 3 years. However, this will take us to a level of automation in Randon Companies that is similar to what you find in countries like Germany or even Japan. So we plan to make an effort, which took us 20 years to get there when we plan to do it all in 3 years. So our expectation is once again to have gains that are quite significant and quite substantial in the transformation of our industrial partner.

Thank you, Sergio. Daniel, please.

Victor, thank you for your question. We mentioned throughout the presentation about our ambition. It is Randon Companies to have greater participation in services as part of the total revenue. Today, it's around 4%, if you look at the bank and the consortiums, but this is a journey that we have a lot to learn along the path. These initiatives in the R4 project, the financial services platform, can serve the logistics market, our customer, the shipper and the public involved. This is a mission that is ours. We're learning a lot. This is a very accelerated movement, but it's hard to predict the percentages. So when it comes to profitability, there's similar profitability even above what we're used to in terms of services.

Thank you, Daniel. Our next question Lucas Barbosa, Santander. Lucas, thank you for accompanying our event. Lucas, there's a question here, and I'm going to ask Sergio to answer. In relation to the megatrends, Sergio mentioned, automatic cars, connectivity, and the market, several manufacturers and companies have joined together as a way to optimize investments and reduce risks in relation to these new trends. What is our loan strategy in this regard? Can we do similar actions in the future? Are we sympathetic to this strategy? Or do we think of a different path?

Lucas, thank you for your question. It's very pertinent. Your question is 100% aligned with what we talk about internally and our participations in lectures outside the company. We say that in this business environment, where these formations are happening in a significant way that's increasingly faster, companies need to invest in platforms. And this requires a much greater investment than you would have in normal periods. The way you can make these investments is through more collaboration, dividing the investments, reducing the need for investments and even risk. Lucas, despite it's not being so clear, it's exactly what we've done. And if we hadn't been doing this, we would not be able to deliver so much in our more advanced technology areas associated with products, services or our industrial transformation. So if you look at our project, our electric car, we work with WEG regarding our electric motor and a cooperation. If not a formal cooperation, a joint venture. But collaboration with technology, we work on the startups for the development of all our algorithms, all our software for the management of the vehicle. We work with consulting with various spreads. You saw the video that says we showed regarding the diversity. We have included it in this project. In the area of intelligent materials, [ Sergio ] showed that we have 10 important projects. And one of these projects, we're collaborating with universities. We have collaborations with European companies, domestic companies that are associated with basic technology of the raw material itself. All this is happening and in such a way that if we weren't doing this, we wouldn't be evolving as fast as we are. We have a few projects where we're considering more formal collaboration. But these projects are still being developed and we don't have the latitude here to speak of this. But your question is 100% pertinent. It's exactly what we've done. And thanks to that, we've achieved volume. Within our operations, we have over 30 projects. Ricardo Escoboza mentioned some of these projects or transformation of the business or industrial transformation, where we've worked with startups. He showed predictive maintenance project so that there's a large quantity of collaborations occurring within our company. I hope I answered your question. Thank you.

Thank you, Sergio. Unfortunately, due to the time, we only have time for 1 more question. But all those questions which weren't answered, our team will contact you, and we will send you the answer. Our final question is from is Mauricio as well. Mauricio Rahmani of Reach Capital. Thank you, Mauricio, for your participation. Mauricio was asking, and I want to address this question to you, Sergio. We saw in 2011 a movement in which we call -- when the Euro V was entering in 2012 and 2011 in a rush for trucks to try to get the prior model and avoid a significant cost. Mauricio asks us, with the beginning of Euro VI in 2023, will it have a similar impact in Randon business and the market as a whole? Can we expect anticipated purchases of our trucks?

Mauricio, thank you for the question. There's no question. This is an expectation in our forecast volumes for 2022. We already believe them to be higher because we believe that we will see increased pre-buy movement with the introduction of Euro VI in 2023. The relevance or the significance of the size of this will be depending on the nature of the technological change, especially as to how much it will add to the costs. So what we know is that Euro VI is an introduction of a chemical plant with catalytical converters that will have a substantial cost increase. So I understand this cost increase where the pre-buy will be substantial in the year prior to 2023, which will certainly bring increased volume to our operations. Regarding [ single ] box in the same year, if there is a scarcity of resources for financing, we can experience an increase in business related to trucks, buses or with an impact with more moderate repercussions, but this will only happen if there's a scarcity of resources from financing vehicles in the market as a whole. Otherwise, we don't expect reductions. Also, if you buy new vehicles, obviously, you want to use them. We end up compensating this. So our view as a whole is that 2022, there will be a significant positive impact for the market and for Randon Companies.

Very well, Sergio, thank you very much. Thank you, everyone, who participated. Those who couldn't be answered, we'll get in touch with you to send you the answer. Daniel, I'll give you the word to make the closing statements.

I'd like to thank everyone who participated. I hope you enjoyed it. We wish you could be here present with us. We hope that the next Randon Day can be in person. We want to thank the team that put this together, the event together with a lot of effort. And all the senior managers that participated about Randon and what we're doing, and how much our leaders are engaged to get sustainable growth, connecting people in wealth, generating prosperity. And once again, please feel free to get in touch with us on our Investor Relations site. We're available to inform our shareholders and stakeholders. Thank you very much. And now I give the floor to Claudia.

Thank you. Thank you, Daniel Randon, Daniel Ely, Sergio, who is with us remotely, Paulo, Esteban for the mediation of this panel. In the name of Randon Companies, we'd like to thank everyone who is with us throughout the afternoon today at Randon Day. We apologize for the slight delay, but we're sure that you enjoy this event, the first Randon Day in a digital format, full of content and presentations. Let us, therefore, go on towards the end saying that due to the high volume of questions that were sent, we weren't able to answer all of them in this session, but the Investor Relations team will answer all the questions at the end of the event. One more announcement is for you to access the QR code on your screen briefly, we'd like to request that you answer a quick satisfaction survey, evaluation survey. We'd love to hear your opinion. This is very important. We're going to hear about your experience participating in a digital event. Thank you very much for your participation. And have a great day. Bye-bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]