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

Hello. Good morning, everyone. Welcome to Randon Day 2022. This event occurs in a hybrid manner with participants here at the headquarters of the company but also being transmitted on our YouTube channel of the Randon Companies. And to maintain connected with our investors and other stakeholders, it's fundamental to continue to grow and innovate for a better future. That's why besides the transmission in Portuguese, Randon Day 2022 has English and sign language interpretation. During the event, our executives will present their challenges, perspectives and strategies for Randon Companies to be able to continue with their purpose of connecting with wealth, generating prosperity. These presentations will occur in 3 panels. Building the future, today, the future of mobility and innovation and also strategy in action. This morning, we'll also have 2 question-and-answer sessions, which will happen between the panels. So the participants who are here in person can raise their hand, and our team will give them the microphone for this moment of questioning. [Operator Instructions]. We'd also like to notify you that this event is being recorded and will be made available in the Randon Companies YouTube site and also the investor relations site ri.randon.com.br. Now I'd like to invite Daniel Randon, the CEO of Randon Companies to have the floor. Good morning, Daniel.

Thank you, Patricio. Good morning, everyone. I'd like to thank our Board members for their presence Mr. Schmidt, the adviser of Fras-le and of the Randon Companies that are online. All the colleagues and the Executive Committee, Sergio Carvalho, CEO and to our investors and partners and also to the colleagues online. For us it's a source of pride to be able to -- sometimes it works and sometimes it doesn't. I always have bad luck with microphones. It's not the first time, and I'm sure it won't be the last. So I'd like to thank once again everyone for their presence. And for us, we spent almost 2 years without being able to have this meeting in person. And nevertheless, our companies didn't stop. Those who are here today will have an opportunity to visit our units and see what we were able to do with everyone's effort over the last 2 years. It is -- that has been a huge challenge for us, but Randon Companies have worked a lot with the strength of our leaders seeking disruptive projects with a vision from leaders who are seeking innovation on a daily basis and seeking important -- the importance of cooperating. Various partners have contributed for Randon over the last several years with sustainability. When we talk about our 16,000 employees, I call them 16,000 protagonists. Our leaders have worked with these protagonists, giving them all the support and especially delegating so that these projects can be achieved. And over a year ago, we launched our ESG project. Our founders always left at legacy both socially and environmentally and continuous development of governance, but we created more specific goals because we believe that our employees, our protagonists, our leaders are engaged in getting these projects to be sustainable and with a lot of disruptive vision so that we can contribute to our purpose to connect people and wealth, generating prosperity. When we talk about governance, starting in the '70s where we went public, this is something that Randon has worked on continuously. In January, we ended up dividing. I was CEO and Sergio Carvalho now took on the role of CEO. He's responsible for all the operations of Randon Companies, and I took on a position to focus on our ESG ambition to be closer to our customers and our investors, the more institutional side. This is a challenge for the company to grow. So Randon Companies have been able to seek evolution in their governance, greater professionalization of the executive committee and the management. And this pleases us. There's an evolution in this governance, retaining the values and the principles which the company established along with the founders, the colleagues who worked in Randon Companies. Looking at the future, a future which we believe can provide sustainable growth with a true differential. Paulo worked almost to midnight yesterday, a relevant fact. And Sergio will have an opportunity to explain in detail this important step. It's an important mark for Randon Companies to be present in the United States. We are there already with our auto parts, but we believe that it's an important step in the growth and the internationalization of Randon Companies. So as President of Randon and the President of our Board, I'd like to welcome everyone. I hope you have a productive day, and I'm now available for us to talk to exchange ideas to show that Randon Companies have worked hard and what we believe is our daily challenge to add value with sustainable growth. Have a great day.

Thank you, Daniel. We'd like to now start with the presentation of the first panel. To speak about the topic, building a future today. I'd like to invite Sergio Carvalho, CEO of Randon Companies.

Good morning, everyone. It's a pleasure to be here with you once again. Welcome all those who are with us remotely. Welcome as well to our event. There's nothing like being together to talk about our companies. The presentation, which I'm going to make, I'd like to start by talking about what we are as a company. And I'd just like to provide some ideas about the size of our company. We have a net revenue about BRL 9.5 billion in revenue. Remembering that we closed 2021 with BRL 9.1 billion in net revenue, 30 operations, 30 factories, 700 distribution centers. Our products are present in more than 120 countries. We're a company that's very traditional, 73 years of history, a rich history. But even though we've been around for 73 years, we have the energy of a start-up. And as you talk to all our employees, you'll feel this energy of a young person of 73 years with a different mentality. We're a publicly traded company, as you well know. Our global presence is increasing. We have a concentration, obviously, in South America, specifically in Brazil, but we have operations in India and China, in the United States, in Uruguay and Argentina. We have a distribution center in Europe, Africa, and we are increasingly expanding our presence globally. We're also very proud to see a Brazilian company doing the reverse path. We're used to large multinationals coming into Brazil to take over these markets. We're in reverse in a Brazilian company, winning over markets abroad. We have several strong brands. I'm not going to read them all. I'm sure you're familiar with all of them, Randon Bank, Suspensys, Master, Fras-le, Jost and so many others. We have a leading position in our main product lines, whether it's semitrailers, air brakes, fifth wheels, axle suspensions, [indiscernible] or drums. I wanted to go on to a second part of the presentation where we talk about our transformation journey. Daniel mentioned about the team, all 16,000 employees that have made this transformation, I wanted to mention these 3 points. These 4 points, which I think are very relevant, regarding what we have done in the last several years. We have a strategic plan. We have accelerated and sustainable plan with lots of innovation in technology, but the cultural change, which sustains all the previous items. I want to talk about our strategic plan. We have our purpose to connect people and resources to create prosperity, and we do this in all of our units, all of our vertices, spare parts, movement control, financial services, advanced technology, all these things are united by our purpose. We have strategic planning with 3 categories. We have a 1-year plan, which is our operational plan. It's tactical by nature. We have our 5-year plan. We'd like to expand this a bit more. And we also have a long-term view of 10 to 15 years out, which is more a positioning strategy, all aligned with our ambition. And we established our strategic guidelines. We already had a lot of these within our company, but we label them in the way that you can see them with the differential in innovation and technology, full focus on the customer, diversification of the business for more resilience but focused financial strength, sustainability with a priority for ESG, a company where people want to work and we want to have an ability to leverage synergies. This strategic planning is not about -- it's about strategies for us to be able to reach our goals. We obviously don't have the freedom to look at our strategic plan and share it with you. I think you understand that this is confidential information. But this is the process that we follow. We look at the business environment, what we expect to happen, the trends, whether in regulations, disruptive changes, global economies. We define our strategic imperatives, the things that have to happen. That's why it's called imperative. And then an execution plan. So what we've created here is a process where we have giant details -- giant detailing of how we want to execute so that we can reach our innovation. This increases our chances of success. 100% of what we plan won't happen, but this increases our chances of success. We have a detailed plan, a comprehensive plan, and this plan has been followed and executed. Obviously, we don't have the freedom to elaborate on this, but there is a process and this process is a fundamental part in what we've seen in terms of the transformation of our companies. We changed our structure more recently. We have instead of the 3 traditional divisions, which you were aware of the -- we now have gone from 3 to 5. We now have the assembly; auto parts; now new control and movement. Before, these 2 were together, now they're separate; financial and digital services; and the final vertical is advanced technology and headquarters. All this has been shared previously. And you've seen how this aligns to our reality. These are the main vertices are our manufacturing of semi-trailers and replacement parts, auto parts of the heavy line for commercial vehicles, wheel suspensions for trucks, buses, semi-trailers, brakes in general, also replacement parts, the control and movements, which is Fras-le with friction materials, disc brake, suspensions and some powertrain components. Financial and digital services, our digital bank, our insurance company and other services and technology, the headquarters, the CTR, the institute and other companies, which we have created recently. And we're also a member of this group here, NIONE in Advanced Technology. The capture of synergies and all that we do. One of our guides is to leverage synergies and everything that we do. If we don't have a lot of synergy, we don't do. This is part of our DNA to seek this energy to maximize our results. It's not just an agglomerate of companies but this synergy allows us to leverage results, improving our performance. We have several success cases. This two I'd like to mention. The purchase of Nakata by Fras-le, which happened at the end of 2021, where we had purchase of BRL 70 million. And then we delivered BRL 150 million. We have several big projects and synergies to deliver. Our shock absorber operation, we took it out of Diadema. You can imagine how hard it is to close the company in that environment? But we took it [indiscernible]. The new operation is a model operation, with the records in production and productivity. This is just one project bringing BRL 16 million in EBITDA to Fras-le. And a second project with a distribution center which we've already announced, bringing BRL 18 million to BRL 20 million in additional synergies by the end of this year. This is being implemented. Castertech is another success story. 37 tons of capacity of foundry components. We're now over 90,000 -- it should reach 140,000, 150,000. Castertech had an operation here in Caxias do Sul. We worked with Fundituba. This investment has already been paid for. This investment paid for itself in 1.5 years. Just to give you an idea of the significance of this. So, we did a transition to be able to do the machining and we had more access to the agricultural field. It's something that we think is very interesting. And more recently, we also got [indiscernible] increasing capacity. All these companies are performing well. Our revenue resilience is fundamental. Any movement which we do in terms of growth, we need to respect this model in the Mobility segment, with transporters, distributors, assembly, manufacturing, the building of infrastructures and a global presence with a greater focus on the Americas, but also Europe, Asia and Africa. We have a solid cash position, a very conservative amount of leverage. You can see that in 2021, it's just a bit of more than 1x our EBITDA. If you look at 2015, with the crisis, we got to almost 7x at that period. But now our position is much more conservative. One of our imperatives or guiding principles was financial robustness. And you can see on this graph that we're very conservative when we make a transaction. We allow this to go over one time, but we very quickly want to return to a leverage near to 1. We have our ESG ambitions that Daniel already spoke of. A lot of what we have here as an ambition was already part of our DNA. We already were working in the social realm. We already took care of the environment. But we bought some of these -- we made some of these public. Also we want to increase the women in leadership roles and have zero accidents -- serious accidents. Increased net revenue generated from new projects. Reduce 40% of emissions of greenhouse gases and zero out the residue in industrial landfills. And so what's the newest thing for us, one of the elements most critical for this process or most bold is this 40% reduction of greenhouse gases. This is a major challenge for us to reach by 2030. 10 days ago, we invested -- we announced that we will invest BRL 100 million during this period, generating renewable energy. Part of our energy consumption will be generated internally. This doesn't represent 100% of what we need to do to reach our goal of 40%. But it's significantly relevant for this process. We have 2 projects for 2022. In July, we began our operation in China with generating 20% of what we consume. And at the end of this year, we will begin our operation here in Caxias do Sul, where we will generate sufficient energy to feed that entire unit and 30% of the energy for another unit here in Caxias do Sul. These 2 investments are about BRL 7.2 million and the investment in China was done in partnership with the Chinese government of BRL 3 million, a total of BRL 10 million in 2022. The second point is this accelerated growth, but which is sustainable. To share some numbers comparing 2016 to 2021. Our net revenue went from BRL 2.6 billion to BRL 9.1 billion. That's a 3.5x growth. We know that this number from 2016, the market was down and this number should have normally a higher basis, and we know that 2021, we had some of the benefits from inflation. The multiples seem to be a bit larger. But even if you discount these 2 factors, our growth rate is quite accelerated. I remember and some of those more experienced in this room will remember. In the past when we talked about doubling company in 5 years, that seemed impossible. It was a super aggressive goal. But I'm not talking about startups. I'm talking about large industrial complexes that can grow profitably. You can grow a lot more than that without profit, but we're talking about accelerated growth, still hitting income records -- net income records. And so we're very happy with these achievements. Our employees doubled during this period from 7,800 to 15,500. We like the idea of being able to generate so many jobs that's important in a country like ours. We also grew just twice. So you can see our productivity gains. If you have revenue growing 3.5x, but employees doubling. That really shows a lot of productivity increase. Factories, we now have 29 or actually 30 by now, and we'll soon have 31. EBITDA went up 9.3x. Our net income, 12.4x during this period, our CapEx 8.3x. I hope you agree with us that these numbers represent a significant change because of the great work of our 16,000 employees. Business resilience is something we already had, and we want to continue more and more. When we look at 2016, this was our distribution of revenue. We had 15% with domestic replacement, 28% in the foreign market. And here, we wanted to separate our assembly for OEMs of buses and trucks. And what's more connected to agro and what's not connected to agro. These combined are about 52% of revenue. And in 2016, we only had 5% from services. And we didn't even have a technology department. Why are we emphasizing this? When the market is going well, these percentages tend to grow. But during crisis and economic difficulty times, new vehicles and trucks usually drops as a percentage of the revenue drops but there needs to be more maintenance of vehicles, and this makes the replacement parts take on a greater role. [indiscernible], if the economy is not going well, there's usually a devaluation in the exchange rate. And so this helps your foreign sales. So if you're exporting, you're able to export. You're able to increase exports. This is something that's already existed, but we want to increase this resilience. When we look at 2021, you see that our revenue domestically went up to 22% and a year when the revenue of the assembly and OEMs, auto parts offered to trucks and buses in this segment grew a bit more. So our replacement grew despite the domestic growth in the assembly side. This was part of our previous plan to create a replacement powerhouse. This applied to Fras-le and other companies as well. So, despite these 2 bars having grown, replacement parts grew substantially more. This was not by accident. This was planned. It was part of our strategic plan in the previous cycle. Why do we do this? Why was it part of our plan? Question that we started in 2017, 2018. First of all, because at that time, we wanted to understand what would happen with the new technologies, the new trends for automated vehicles. And so by investing in replacement, this was a safe port even if technology switched from one day to the next, we knew the replacement would continue this because it depends on the population of vehicles in the field. We would have a confidence of 15 years of a strong position in the field. It's also a good source of revenue. So the production of trucks in the peak and the valley had about 370% variation, semitrailers 270%. So it's much more resilient. It's profitable and resilient. That's why we moved in this direction. You'll notice that in the foreign market, the percentage dropped. Obviously, here, the percentage revenues grew. But here, we have difficulties associated to capacity. We had to make a choice since we didn't have the capacity to feed the markets, so we decided to favor the domestic market. It's also one of the reasons why our current goals is to invest more in foreign markets so that this percentage, even with all the growth in all the groups, we want it to be a larger percentage. Why do we divide agriculture and non-agricultural. So you can have a better idea of the robustness of our business. So we have the replacement sector. It's very resilient. International revenues as well gives us resilience. But agro, despite suffering oscillations, is a segment with strong possibilities in the next several years. So if we add 22 in '19, that's 41 plus 28, we have a very large percentage of our revenue, which is robust, where there's less risk. And where the greatest risk is in the oscillations in the domestic market related to this non-agricultural sector. We also intend to increase our financial services and digital services and technology. And in the future, that will also contribute significantly to our revenue. So a lot of expectations at these 2 areas will add significantly to our revenue. Now we look at the mix by divisions. In 2016, we had 44% of in assembly; 50% of auto parts and financial services, 6%. In 2021, the assembly was 39%. This helps us through our resilience model. Auto Parts, 32%; movement control, we now have 57%. If we look at the first quarter, the numbers would be 60% here and 35% here. Our financial services, it's 3%; and technology, 1%. Excuse my long speech, but we're becoming more and more resilient. We've made lots of acquisitions, 14 transactions in the last several years or acquisitions. We've been to internationalize our company and to bring new technology -- I'm not going to read each of these transactions. I'm not sure if it's BRL 1.1 billion, generating BRL 2.6 billion in revenue. At the same time, we did 6 greenfields during this period. We're not just growing, we've expanded our production capacity. We had major investments in capacity increase. Our production of semi-trailers went from 16,000 a year to 38,000 a year, 46% increase. This depends on the mix of products. But our ability to do product foundry went from 28,000 through the purchase of some companies, we had 270% growth And this will continue to grow quickly in the near future. Brake Linings went from 61 million to 83 million. Access and suspensions went from 355,000 to 635,000, 79% growth. Just to give you an idea. In terms of new products, all the units have wonderful products. We want to mention a few. We have our concept dump truck, removing 1,000 kilos from the weight of the product. This for the transportation industry is incredible, with very advanced technology. This concept truck has aluminum sides and it's got cutting-edge technology. The grain also take -- truck also -- the grain trailer also took out 1,000 kilos. We have our modular platform that will expand significantly where there's been a reduction of 70% to 80% of the welding, almost eliminated the welding or significantly decreased the welding of this platform. This will provide huge benefits not just for the environment, but for a reduction in fixed costs. Perhaps at a later date, we can explain this better. We have our own ABS systems, our own pneumatic systems, piston-type chambers, this bus link. We have the railroad shoe. It's innovative and air suspensions. So over 100 new projects with 47 new patents. Record production in all the units. 32,000 semi-trailers, 65 million brake linings, 520,000 cubes and drums. These numbers represent huge advances in terms of capacity. 1,000 breaks -- I'm sorry, 1 million brakes. 33.5 million break pads. All these numbers are fantastic. Our next growth cycle shows innovation, acquisitions, diversification and internationalization of our business. When it comes to innovation and technology, Cesar will address this in more detail. But when it comes to products, we've launched our e-Sys system. We announced this 2.5 years ago. This year, we'll start selling it. We should save 20% of diesel and 100% of the technology is created in Brazil. We have the smart materials with NIONE and smart composites, embedded electronics. We have the Randon Concept trailer. It's very rich and embedded electronics and Cesar will talk more about this. We have the Instituto Hercílio Randon, but I'll leave that for him. We don't just invest in products. We also invest in the industrial realm. We made acquisitions of robots. We've purchased 321 robots in the last 5 years. 294 were purchased in the last 2 years. Just to give you an idea of the size of what we've done. We made so much progress that we decided to make a purchase to accelerate this process. We also created a digital transformation group in 2020 to promote digital transformation. We're promoting digital transformation in all of our business lines. We have Randon Ventures, which was created recently, working in this segment, insurance, AutoTech, Industry 4.0. There's a lot of companies here that we've invested in with a lot of synergy, transforming our financial digital services. Ely will certainly address all this in his speech. And finally, a cultural change. This is perhaps something which on the surface may seem secondary, but it provides support for all the others. If our people, of our culture is strong, we won't be able to deliver. We won't be able to do what we want. This is a very broad aspect. This cultural change involves various aspects and the leadership and purpose, encourage to be able to change. We've faced chronic problems with less tolerance for units that don't have good performance. We had several units which weren't contributing to the success and the results. But today, we don't have this anymore. We've transformed all the units into positive contributors. All the cylinders of the motor are functioning. All of them are helping to add to the power of the machine. We have correct organizational structures and leadership structures. We worked hard to achieve these goals, all their own way, but we made a lot of changes over this period. We also made changes not just to the leadership, but alterations to our models of organization. And so we're going to continue to make the alterations, which we believe are important for the company to be able to accompany this. We also brought paradigms. We had products which we tried to develop in the past unsuccessfully. We started to talk about this. We launched these products. They are our success stories. We made acquisitions but we're breaking paradigms. This became a success story as well. We sold Randon Vehicle. It was close to our heart, but very little synergy with the rest of our plans for the future. I'm going to go back to this topic later. We also have a traction and retention of talent. We are becoming -- we want to be guided by -- we have people from outside that accept roles as managers. They want to come work here. We're also being targeted. There's lots of companies studying us, trying to figure out what we're doing and trying to poach our talent. So retention is also very important. Agility. We always say if you arrive first to a given position, you can have better margins. Everything that an American does in 1 year, the Chinese do in 6 months, and we want to learn how to do it in 6 or 5 months. And so we're increasing our agility, but also opening to cooperate more and to get out of a mindset that we have to do everything in-house and that we know everything. We need to be able to reach our objectives at a faster speed. So we've invested a lot here in training management, lots of training, lots of investment. We don't want a superman. We don't want just 1 or 5 executives that are superman, that know everything and make a decision, no. We want 300, 400 managers who are very well trained. The result of having 350 to 400 well-trained managers is much better than to have just a couple of supermen. That's why we've invested in this management. And so valuing people, maintaining this respect for people. This isn't easy. We all have to maintain this culture to value and motivate, taking care of the environment, security. It's perhaps easier here in Caxias do Sul because our headquarters are here, but we have operations in other states as well and throughout the world. So maintaining this culture is a challenge. But we've worked on that, and we've had a lot of success. Yesterday, we announced the intention to buy Hercules Enterprises. Our expectation is that we'll close this in 3 to 4 months. And as Daniel already mentioned, this for us is a true mark. I want to explain why we do this. This will provide more revenue resilience and a strong currency. It's a huge market. Here in Brazil, our market peak was 70,000 semi-trailers. Last year was a record was 90,000, but we don't believe that, that's a sustainable number. The American market is 420,000 semi-trailers, 270,000 plus 170,000 container carriers. So 420,000 semi-trailers. It's a giant market. This increases synergies between our manufacturing in Brazil and our operation in the U.S. All these products use axles, suspensions, ABS, wheels, drums, our entire portfolio of products. So it's very important for these synergies aligned with our strategic plan, they didn't start now. We've been planning it for some time and it will open up a huge North American market more quickly for our auto parts. This company produces -- in 5 years, we're going to have a market with our own parts and a name being created in that market, much more accelerated in manner. This is why we made this operation. This is the first step. Daniel said that this is a mark where we're going into a mature market to compete. It's not a final movement. It's a first step. This will accelerate other companies going there. And we're sure that in 5 years, in 10 years, we're going to look back and see Randon in the United States as much larger, participating in the business percentage of these companies, a stronger and larger group. This is really a landmark for us. It's not completed yet. We should complete it over the next 3 to 4 months. This is something that was signed last night during dinner. That's perhaps why we have a few absences here today but we're very happy, the managers of Randon Companies. But that's not all folks. [indiscernible] will mention this as well. This year, we're going to export products made here in Caxias do Sul to the American market, North American market, perhaps 1,000 -- 800 to 1,000 units will leave here to the U.S. with products such as container carriers. This segment is super overheated in the U.S. or super hot. There's a learning phase in the American phase. It was a segment dominated by Chinese companies that can't feed the American market any further, any longer. So the market was undersupplied. So it opened up a very safe entry way for us because the market has a demand that's much greater than the supply. So we are taking advantage of this. We will expand to lots of other product lines. This is the entry way. Not this operation itself, but all it represented to us. We're very happy. It just happened. I wanted a chance to talk about this. We'd like to continue to invest in technology and innovation in all aspects. We'd like to continue investing in the training of our managers. So thank you, everyone.

[Operator Instructions] We'd like to continue with the panel of the future of mobility and innovation, which will address the main strategic initiatives for innovation of the company. The presentation will be conducted by the Director of Technology and Innovation of Randon Companies Cesar Augusto Ferreira.

Thank you. I'm going to go slowly because I don't want to have another problem. Excuse me for my clumsiness. I had a little accident recently. It's nice to break protocol sometimes. It's nice to see what Sergio says. We have a company that's been around for 70 years. It's a giant company. It's a monster, a solid company. Nevertheless, we can design an even more promising future. So this robust strategy already is bringing results. And so what we bet on, what we believe in is consolidating. So I wanted to set up a challenge to talk about what we're doing in advanced technology. Sergio explained some details of how we're structured and the area of advanced technology and tech companies are more and more robust. And we want to maintain the focus. The companies that we're talking about is what you see here on the screen. I want to talk about what's being done in [indiscernible]. It's not exactly a company. It's an institute, for science and technology. And we have a robust group of researchers and highly qualified people with great technical capacity and good skills to make great deliveries. One of the groups is NIONE. We're going to talk a bit about them. Sergio already mentioned some of the purposes. I'd also like to tell you about CTR, which is my favorite. CTR has a great structure to support the innovation process. I received some background information that we have over 400 people watching online that perhaps you can't visit the structure. But if you look at our website, you can see how important this is. And all these companies have their own web page, and you can see more about what we're talking about. When it comes to advanced technology with a focus on processes, an industrial part with 31, we were at 29, but we're growing so quickly. It's already 31 companies. We have to invest and dedicate in automation and improving the processes to become more competitive. And it's a real need that we have. So what it's designed in the strategy, what are the main pillars of our strategy? For innovation and processes. We have very clear directives. We want to build solutions that are unique and which allow us to ensure this competitiveness to our company. In other words, we're buying standard market machines perhaps will give us a certain efficiency gain. But it won't be so unique in a way that we can keep a competitor from also buying the same equipment. For us to buy equipment, it won't provide a competitive difference. We run a risk of commoditizing our production process. We want to invest in new creative solutions, proprietary solutions for some core processes. This is one of the main vertices of this process. As you Sergio mentioned, robotization, automation is a big part of this. We're working strongly on this. Another important value of our companies is to improve the safety of our industrial parts. So we think that things that involve transportation and handling of parts or products, it's a gray area for risk. So we have clear objectives to remove this type of risk from our companies. This will be one of the focuses of this group, and we can't ignore smart manufacturing concepts which involve smarter production, improving data, answering more quickly with greater visibility of what's happening in real time, with live information, fast information in hand to make decisions. And perhaps in the future, we might have AI used to accelerate this decision-making and once again, add efficiency to what we say. Talking about smart manufacturing, it's a concept which is explored. I prefer calling smart manufacturing instead of Industry 4.0. I think 4.0 is a package that fits into our box. It's somewhat prefixed. And I think we need to have flexibility. We have different complexities. We have [ fax ] that handle products differently, and we have to use the concept and not the product. So we're following this route on the screen. We're trying to increase visibility with each equipment line through data treatment, thus seeking this evolution to reach a level where we're totally adapted and the factory can make certain decisions to optimize our assets and to achieve an even higher level of competitiveness. It's also been said that we can't skip this step without a high level of automation. As Sergio mentioned, we have 320 robots over the last 5 years. Over 70 cells are automated lines in the last 2 years. We also mentioned bus link, which is an articulation system, an unheralded concept of construction. This factory was completely designed by us, and it's state-of-the-art globally to build this type of component. This is what we're seeking and already delivering. We're increasingly delivering more automation to our companies. Over 70 cells which receive some type of industrial automation. And between auto and RTS, we have over 110 dedicated people. We have a team that's very well trained, working on building mechanical devices and also adding -- understanding of automation and robotics, which will provide this delivery, which we've been able to make. Now talking about products, perhaps some of you may have seen slides like this because when we talk about megatrends. This is something that we believe in, in the medium and the long term. I'd like to say that this slide here, based in 2017, 2018, where we, as a group, mapped that our industry would move towards automation, reduction of emissions, data, electrification, connectivity with a vital need for you to get the most out of your product, most out of your transportation solution, both for people and cargo. We're talking about technologies like electrification, which add weight to our product. So we need to find efficiency. Non-transported weight is inefficient. So we have designed all this and we looked at this 5 years ago, and we continue to build our pathway. One of the ways which we decided to do this was to design vertices for work, clarity of where we want to go is with dedicated groups in these 3 fronts. We have groups working in mobility and electrification solutions. We're looking at a longer-term horizon. We're looking at 5 to 10, 15 years out. Our innovation group wants to look way ahead. That's why a lot of the things I'll show you are very much in the vanguard. Embedded electronics, connectivity and other electronic devices, they tend to grow. We need to work more strongly with this technology and also smart materials, new materials, which will be increasingly present in the industry in which we are inserted. So we're putting a lot of effort to understand and create solutions in these materials. So for you to understand how things are solid, and they've been growing. We started working in 2018, 2019 and designing some projects. In 2020, we already had 16 projects. I want you to understand that these are innovation projects always looking way ahead. We continued growing and we're close to what we think is our stabilization point with 42 projects. These are projects that are like this. Sergio showed some of this e-Sys. This is a concept in 2019. From 2019 this concept evolved. Everything that you see here was developed by our team, starting with the construction of the design, the access concepts, which are specific and we see the electronic motor. The structuring of the battery, all of this was 100% developed internally by our teams. Not only does it bring the solution, but we grow in knowledge. And we add to our group, things that we didn't know 3 years ago. We're trying to grow and add value and knowledge to our teams. As Sergio mentioned, this solution is totally connected to the ESG policies and needs. We found some routes of customers, 20%, 21% of reduction in fuel consumption. The impact in the entire chain is very obvious. It's a disruptive solution, which provides a lot of value to our companies. With everything, there are challenges. You showed a concept in '19, how are things in 2022? Why aren't we seeing a lot of these parts? We have a barrier which the Brazilian legislation didn't -- wasn't predictable. They weren't thinking about considering electrification of highway implements. We had to work with the government agencies. My colleague here help me a lot for us to suggest regulations for this product that could go through all the different administrative structures, all the ministries, government ministries so that there could be a directive approving this regulation. I think it was May 17 that was approved just a few days ago. So not only do we have to work with the technology solution, we have to teach or find partners. So the government can be prepared and can respond to these technological changes. This was part of our challenges. When it comes to e-Sys, it's quite clear and consolidated within suspenses. With all innovation projects, there will be a curve, you'll see the early adopters then people see economic feasibility. This then scales up because you have massification. It's very clear to us that these early adopters which aren't as -- few as we first imagined. But their great motto is to reinforce the policy of ESG. This is very -- we are very connected to this. And we're trying to learn about the next market niche. So reducing diesel doesn't just reduce CO2 but it also reduces the expense of the operation. So it's an expensive technology. It's hard to get microprocessors, the batteries. All this is a challenge. But there is a challenge to find this competitive balance, but people start looking at the operational cost, total cost of ownership. And so as we improve this initial cost, bringing new technologies and more scalability, we'll be able to massify the solution, impacting the market. There are countries where we see evident signs that this type of idea work for them as well. Canada, for example, is already created in some states, incentive lines for this type of thing. As I mentioned earlier, we're not just electricity and mobilization. We are spending a lot of energy and deepening our knowledge in Embedded electronics. One of the first examples, which was mentioned by Sergio, is an ABS solution, which we made with a partner. We customize this and we have the best ABS solution for trailers and semitrailers. This brought not just a way of learning or another step in embedded electronics. This is a solution which is sold by [ Master ], one of our groups, one of the companies of our group and has generated around BRL 60 million. So we have to look forward. We have to take risks. We have to allow mistakes but we seek to generate financial results. Recently, we've announced a solution. It's more complex, embedded electronics. The Randon Smart solution. We will get together several things, combining thematics. This is a very interesting package. Randon Implementos will share this briefly with you. And as Sergio said, we can't tell you everything but there's a lot more on this road map. If you remember the numbers from earlier, you can see that more things are coming. We also have to remember our smart composite initiative. It's aligned with market demands. That's why we believe that smart composites is a front for transformation skills, already losing space in the automotive industry because we want to reduce weight, have some level of recyclability. We want to have mechanical results with performance and it provides flexibility in design. We'll allow you to evolve your product to meet market needs. And so not just stay in theory, you have our first solution, we switched out a component, which is used in our highway equipment. We cut the weight by 65%. And there's already 40,000 parts circulating in the market. It's another solution which became a product and not just there, but we already have other components are famous OEMs. But perhaps at the end of the year, the beginning of next year, one of the companies will take on this smart composite, will start using this. So once again, our steps are solid and consistent and we're very happy about the direction in which we're moving for innovative solutions. But this is just the start. We have a well-designed project seeking the solutions. And the secret is in these 3 words. Biomimetics, this is the key to understanding these mixtures of resin and fibers. Here is where we leverage the reconcept of a product than redesign and not make the classic error with lots of error that lots of people made, which is just substituting the metal for the composite and not rethinking it. It doesn't lose its purpose, but it's rethought. That's what needs to happen. So we have several projects that have been emphasized in this regard. I know that there's a lot of expectation when we talk about nano niobium? This solution NIONE sought and found and patented and is increasingly present in some projects, both internal and external. I joked with you about my accident in a -- when I was in Europe, visiting partners where we have already started projects using this technology. So the technology which we developed thinking about a nanoparticle which we can produce at a large scale. And we sought to patent all this. So we have protection both in the form, the particle, the maintenance, the method to be an ability to have exclusivity globally with this technology. Just to share you some more numbers, you perhaps have better access than I do. CBMM in Brazil is the largest producer of niobium and the niobium oxide. I think they have more than 80% of the global market. And these are the numbers. In 2021, here. This is 1,000 tons, 110,000 tons of niobium in the world or niobium oxide and the Brazilian company has around 80% of this number. This begins the design where if you do a quick calculation -- for your initial calculation, we believe that if NIONE can absorb 1% of this market in quantity, using its nanoparticle technology, we can be talking about a market or revenue of over BRL 1 billion. So some of this is what provides motivation and very connected to the technical responses of the solutions which we found. It's interesting to share with you that the market is divided in terms of niobium consumption in Asia, specifically China. But today, the great consumers are basically those who use it in some type of ligament. Here is other, which according to CBMM is where we have the most room to explore. The exploration of metals is important, but this is well consolidated. I think there are significant chances. But these others, which involve several other products where NIONE have been investing energy is where there should be greatest growth. I'm talking about automotive batteries, where we have clear signs that niobium might be transformational in terms of battery lifetime. There's a Japanese battery manufacturer, who I think quadruple the useful life of the battery. We want -- the battery won't run out before the car. We want them to last the same amount of time. So this can be very impactful. This is some of what we've researched. We've opened projects. Some are more mature, some are less mature. But we have fronts opened in electronics, pharmacy, agro, especially defensive agents, civil construction, chemical agents. We have our first NIONE case for a type of paint with or coating with an anticorrosive property. I'd like to share with you, but I can't. But in metalworking, we have a foundry, and we've been able to achieve impressive results in the foundry. But all of this, all these fronts have projects ongoing and many of them are quite promising. Of course, here, I tried to bring to you some applications, some benefits, which we've already identified. Protection against UV. We found some interesting properties that might be revolutionary. And so you can start making connection to what I showed in the previous slide. Increased mechanical properties. I can tell you without a doubt, I'd like to be able to share everything with you but here we have at least 17 fronts open the different levels of maturity, others products entering the market. I had placed this more openly, but NIONE has a promising future. I was with great companies in Europe. I went to Germany, Sweden, and several other -- it was an intense journey. We have a lot of things going on with NIONE. So I'm going to wrap up my conversation. I hope I've transmitted the proper information as to how much Randon values innovation. Technology is what will take Randon the next several years. The automotive market is seeing this increasingly. I went to an event. I've driven cars with the joystick. Things that are a dream, the speed, the evolution is significant. And we're prepared for this. If it's not the main purpose of this investment, it's a strategy for Randon. I'd like to thank you for your patience. I'm sorry for being seated, but I have some mobility issues. We can talk more during the breaks and feel free to use the QR code on your screen, and we'll try to share some of what we're building for the innovation team. Thank you, folks.

Thank you, Cesar. stay here, please.

I stay, Oh, great.

Well, save your energy. Let's invite Cesar to come to the stage.

I'd like it now have our first question-and-answer session. This will be mediated by the finance and Investor Relations Head, Cesar Ferreira. I hope you're enjoying the event. If you like to raise your hand. Lucas.

I wanted to explore a point that was discussed in Sergio's panel. I think the strategy of the company became very clear to bring resilience to the business, both in terms of revenue and profitability. We saw some of these more vocal movements. We look at auto parts Fras-le. But I wanted to explore the manufacturing divisions. When we look at their history of revenue we can see the profitability. This cyclical nature becomes more outstanding. We had a strong cycle where we had a good level of profitability. But when we have a negative cycle, this profitability reduces, but this difference is very -- is a lot larger when you compare it to the history of Fras-le or the other auto parts division. So I wanted to explore with you. I think a lot has been done in terms of revenue or costs. But I'd like to understand what can be done on these 2 fronts, both downline and cost-wise to reduce this sensibility to the Brazil risk that we have in the manufacturing of semitrailers and trailers. How can you increase your exposure to replacement parts when it comes to cost. How much more automation can be done? How much more robotization can be done? How much of that was left for other divisions? What do you think regarding the reduction of sensitivity of revenue for the manufacturing divisions of the -- the assembly manufacturing of trailers and semitrailers? How can we have a better sensibility regarding what we see in the crisis of 2015, 2016. That's what I wanted to explore with you.

Thank you for your question. I think it's relevant for you to mention this. It's one of the items which we've been working on as a company, increasing our resilience regardless of its [indiscernible] of the assembly has greater volatility, but we have invested in increasing replacement to reduce this as well as highway. I mean, railway products. But maybe it's worth talking about other initiatives so that our structure can have a lower operational leverage.

Thank you for the question and for the answers because everything you questioned is exactly what we're doing. The responses are correct. In 2016, our replacement within the manufacturing assembly is about 60% of the revenue. And last year, it was 10%. And we'd like to grow even further. This will help this resilience. We've worked a lot with the reducing our fixed cost, the fixed cost of our implements today is in a percentage basis much lower than it was in 2016. We've launched products, which will allow us to have growth without adding fixed cost. So for example, the modular platform, one of the great advantages of that platform beyond what I mentioned is that you're able to assemble the base very easily. You don't need giant equipment to paint it, for example. You can paint the components individually, then you assemble the base, which allows you to have a much simpler production model which -- with a lower fixed cost. We are reinventing ourselves when it comes to the bodies. It's part of that comment, which I made earlier. And we adopted a new model using tax incentives. But we bought the raw material and we make the transformation. And so now it's a profitable business, and we're growing quickly. All this to reduce fixed costs. The international portion is adding capacity. For the International segment, we're adding capacity. So we'll be able to export. We also mentioned the Hercules project, exports that I mentioned, all this is useful [indiscernible] mentioned the highway -- excuse me, the railway segment. All the efforts that our Minister Tarcísio did will start paying dividends in 2023. And this will require an increase -- with an expectation for 2023, which should be much greater than what we've seen in the past. So there are other business segments that will help us dilute this. And the investments in automation and the modernization of our factory part, perhaps because of the same difficulty which you mentioned. It didn't receive the same level of investments that other divisions did. But in the last several years, we've invested in similar levels. And some of you will visit this with some modern cells with other levels of productivity. We look at the amount of man hours. And I'm sure [ Trentin ] will mention this. It's substantially less than what we had years back. So we took a lot of actions in automation and others. And you'll see it in the visits this afternoon. Our other factories are receiving a lot of investment [indiscernible]. A lot's been done. We're sure that when the next crisis comes, I hope it's way in the future, we are very well prepared.

Another question I wanted to explore expansion first in a bit more detail, geographically. Looking at the acquisition from yesterday, considering the macro situation related to the expansion of the portfolio, I wanted to understand the strategy is very attractive with a good entry, the idea. What are the main challenges to be able to position yourselves? And what's reasonable in terms of market share. What do you see in your plan. And the second is derivative of that, regarding the steps this opens for the auto parts. Can you explore a little more about this topic? And how these implements will give you leverage? That would be really, really rich.

So internally, we talk about the challenges of internationalization. It's not just changing the product, but the culture and the way of doing business this is one of the challenges in the North American market. Sergio, if you'd like to expand.

Thank you for the question. The American market is very specialized. It's not like the Brazilian market. There, the most of you see is the company making 2 or 3 types of products. What's our intention bring these -- the common expression, which is crawl before you walk, walk before you run. So we're in this first phase. And we'd like to participate in market niches. So we can Americanize and learn how to deal with that market. During this first phase, this container carrier became very -- segment became very attractive. It's a simple product. It's a segment where the demand is super high, the demand -- the supply low, the demand is high, supply is low. You can sell directly. It's the easiest way to get started an operation. And our intention is to continue to expand through niche markets. We have other projects, but that are also niches that are profitable. We don't want anything just to say that we're big, look at us. We'll let other people do that. We want to follow the pathway of money in a very intelligent manner. The manufacturing technologies in the American market are not at the same level as the Europeans, and that they were not at the levels that we are when it comes to manufacturers of semi-trailers, their operations or our operations 20 years ago. I'm not sure if you are aware of that. In the industrial realm, everything is very similar, except for the fact that they are outdated. But all the KPIs have production concerns with safety, technologies is all very similar. So dealing with American labor is a bit different. The way you manage them and their pay structures are different. Their purchasing is very similar to what we're used with. Sales is a little bit different. But especially in the large markets, not in the niches, it's very similar. But our approach is very valid because it will allow us to meet all these needs. This is the crawling stage. But from the crawling -- from the crawling to the walking, things will happen quickly. And then later on, when it's time to run, we'll expand in other niches. And at some time, we'll go into the mainstream, with products where the volumes are substantially larger. But then we'll take off with technology. The American companies are just assemblers. They buy one part from one, one part from another, but we have all the components that we produce in-house. Everything that Cesar mentioned. We have springs, we have composite material. We have a full set of technologies, which they don't have. They just buy it. We have synergies from integrated model throughout the Americas. I'm not going to produce everything there. But not only do we have synergies, we have technologies which we can take there. Everything that we're trying to develop here, we want to take there as well. In the North of the United States, it's cold in the winter. For you to take out the snow, you put salt. The salts are very aggressive to steal. They're so aggressive. But NIONE paint has a perfect solution. There, people are galvanizing the steel to resist this. But we already have a solution with our coating, with our nanoparticles, which will be ideal for the salted roads in the North United States. So we want to reach the run phase with product technology. And we're going to take other auto part companies. We have this huge portfolio, joint ventures, they have territory limits, we can't do that. We have to meet all our obligations, but not with other companies. We have space where we don't have to wait, for example, mechanical suspensions for semitrailers. The American market is undersupplied. There is not a current supplier that can meet the demand. [indiscernible] and his team is going to develop a suspension that is for the American market. Why not sell the suspension since there's an opportunity. We're thinking about manufacturing this there, but we're thinking about selling it there. This symbiosis, which occurs, the synergy between the companies. We feed our own semitrailers, but we sell to our competitors. Our financial services help us sell and finance the sectors. All of this is part of the strength of our business model. We don't want to play the game there the way they play it here. We have a tactic or a strategy, which I think is a lot superior. And it will be awesome in several years forward.

You commented in your response that we have a remote question.

Fernando, thank you for your participation. Fernando, wants to know what we can say about the application of niobium in our products at Randon. Is there anywhere where we're using this already in our semi-trailers. Is there anything that you can comment on that? We're working not just in semi-trailers but in auto parts. The first solution with the covering -- using NIONE technology we [ fremont ] implements will be next. We have a strategy and we'll bring another big announcement soon on that as well. This solution will be embedded in our semi-trailer.

Victor from Bradesco. Also in relation to NIONE. Could you share what's the potential revenue thinking about the sale. Niobium is used in steel, 7% of others. To use Niobium in other industries. We need a research period to -- Will you focus in the beginning with customers that already use. Perhaps this wrap-up of revenue can be faster. My second question related to innovation that this will open an opportunity for product commercialization. I think Cesar can feel free to answer the first question.

When it comes to NIONE, we had a fact that some things were more medium term but we were able to build a NIONE strategy to implement solutions that we've already validated such as the coating. We have something to introduce shortly regarding the use of our ligaments in the foundry and we're also talking to people in steel. We're looking at the potential do with the alloys. When it comes to installations, we're still trying to rebuild our curve. And in the next several months, we should provide more capillarity regarding these results and what we expect financially in the next 3 to 5 years. We're building that. But your perception is correct. We have an expectation to have a growth moment. One of the things that we saw in Europe when we looked at the suppliers, this idea of buying equipment throughout the world is a bit chaotic. And perhaps we have a gap in our growth rate because perhaps we can't receive the equipment as quickly as we'd like because of the global confusion. Things are happening very quickly. The correct answer for this growth is something that we'll have by the end of this year and into these forecasts, which we'll provide. But the expectations are high. This next question was about the model of commercialization, if we're going to change that regarding its price or benefit.

We spent this entire period, trying to improve the product develop product problems or fix problems? We couldn't sell something that wasn't legal. On May 17, it became a legal product. We have several units being evaluated. And so our idea with e-Sys is to cover a few fronts. it's the front in semitrailer itself. The [ hybrid R ], and we want to do direct sales. You saw the sequence curves, which we expect with the early adopters, which are the companies that have their environmental commitments where the financial results won't be there yet. The fuel savings is large, but the costs, especially because of the batteries are still quite high. In the second phase, the costs are more balanced, and it will start to make sense economically, the total cost of ownership makes sense and then a third phase with mass evolution because it's a platform. That's much more interesting. This is semitrailer line. We also have a solution for trucks, not just new vehicles, but we have also the possibility for retrofitting. So there's a set of options for Brazil, but other countries such as Canada, Chile, Australia, Europe and other areas where the acceptance of products such as this will be much greater. So we discussed yesterday that we discussed that we're going to go after other countries that already have a more advanced point of view and that accept this type of product since we have a lot of imported components in the battery. The penalty that we pay is fairly significant. But outside of Brazil, this penalty isn't so high. So a business case outside of Brazil can accelerate our commercialization process for the technology. We have to accelerate this internationally.

Sergio, you mentioned something.

Sometimes investors think just about new vehicles. But if we look at retrofitting, we're talking about 800,000 to 100,000 vehicles that could be electrified as well. It has applications to buses in cities where we have severe pollution problems. So there are several cities throughout the world, which have developed funds to switch out there -- we don't have the funds to switch out their fleets, but might retrofit them. We can sell both to new vehicles and for retrofitting.

And just to add another interesting thing about this last comment was that there's still the infrastructure aspect when we create a solution which allows a hybridization of a vehicle of these older vehicles where we can make the electronic parameters [ converse ] them, you can get a standard urban bus today and add this solution and it has a hybrid solution. It can decrease the emission levels and it's not completely dependent on the electrical infrastructure. So it's also very appropriate for this transition period of the policies. We have time for 1 last question. I think Lucas Barbosa.

Thank you for the event. I'm Lucas Barbosa of Santander. And I have 2 questions. The first is regarding automation. You've evolved a lot. If you could tell me a little bit about the importance of the evolution of the design and how much we can evolve the product. And secondly, regarding the American market, can you talk about the niche market of agricultural implements which is a segment which you're very strong and in Brazil. Have you ever studied that in the U.S. Could that be a market niche that you can take the next step in.

Thank you, Lucas. As to the first question, your colleague, Lucas -- your -- Sergio mentioned that we have to change products. So more manual factors can use more automation. Our engineering was always very competent in this regard. But nothing like the 2016 crisis to accelerate some changes in projects. And we started to use a bit more automation. Do you want to share this with, Cesar?

I think, Lucas, you'll have an opportunity to visit a solution which is installed right over there, where it's an automation solution with a redesign of a product the side of the grain trailer, which is designed differently with different materials, different construction. And we have a cell for the production of this component that's 100% automated. So I think your answer -- that's your answer, but you have a real chance to see it when you walk across the hall and take a look at it. It's not just putting robots in the factory. There's another important point which is the concept of lean manufacturing. I think a basic error that a company can commit is automating certain processes, we're very clear about this. We want to work lean and allow us to automate an adaptation process to make it more efficient. Then we'll automate and then we'll put in artificial intelligence where you can use the concept of smart manufacturing. That's sort of our chain of events. I think it's it. And regarding the second question, the American market and the potential of the agricultural niche.

You've answered it as well, Lucas. We're going to want to work there. This idea of revenue resilience is not just us having revenue in the U.S. in that market, but having resilience within that market. So we want to expand to the agricultural field. One of the largest producers of grain is the United States. When we talk about niches, we want to, yes, look into the agricultural field as well, That's on our radar. That's. Right. We'll develop other products in the basis where we think we can acquire them. So with that question, we're going to close out this first Q&A panel. I'm going to give the floor to Patricia. Can you call us into our break. Thank you, Steven. Thank you, Sergio. Thank you, Cesar for sharing some of these points here with our participants. Thank you.

At this point in time, we'll take a break in our program, reinforcing to you. You should remain with us. We'll be back in 15 minutes. See you then. [Break]

We are starting back our program for Randon Day 2022 to talk about strategies in action. We have the VP of CEO [indiscernible]. Remotely, we have Sandro Trentin. So welcome to our panel. Good morning, Sandro, can you hear us well.

Yes, good morning. I hear you all well.

Let's get started with you, Sandro, our Superintendent Director of the Manufacturing Assembly. You have the floor.

Good morning, everyone. It's nice to speak to all of you, even though remotely. As mentioned previously, we just closed an important deal related to the transformation of the business, diversification of the business here in the United States. Please move on. I'm not going to exaggerate with the numbers, but I can share some of the numbers. We have net revenue of around [ BRL 4 billion ] in 2021, accelerated growth, compound annual growth rate of 28.8%. We've been growing in an accelerated and constant manner. We have 35% of the revenue of [indiscernible]. 68% of our business is related to agro. It's a strength, which drives our country and our company. We have 8 operations in Brazil and throughout the world. And one CD, 1 distribution center, over 4,500 employees. We have around 2,000, 2,500 people who also operate in our distribution networks which wear the Randon label. And every year, we produced almost 31,000 semitrailers. You have to remember that Randon is the first company, the most mature company. It's an old lady, but needs to renew every day, every month, every hour. We have operations more focused in Brazil and Argentina, certain partners in Africa. And we just started placing our foot above the equator going to the United States. Distribution network. It's very important and powerful and over 90 points throughout Brazil, covering all of the Brazilian territory and 85 points abroad, reaching all the countries where we have relations. The growth is accelerated in net revenue. We can see how in the last several years, it has been growing. There's obviously some inflation effects. But in the next slide, we will see that it's a growth that's done through production. In 2011, in 2008, 2009, we came from around 25 in product. 2019, 2020. So we broke this barrier due to the reorganization and the new means of production. Using automation concepts, we're able to break this 25,000 product barrier, and we started to reach around 30,000, 32,000. And we should continue to grow evolving our production capacity. We have to continue to improve the resilience of our business. Randon needs to have more diverse revenue, more balanced revenue that depends less on the Brazilian market and the variations of the policies both economically and things related to interest rates. We want to balance our business, strengthening replacement parts or railway or bodies. Not to mention to have an international presence in strong, robust markets. That will support us with the maintenance of this diversified and balanced revenue. Let's talk about technology and growth. I'm going to avoid repeating things, which Cesar already mentioned or Sergio already mentioned. But we're launching now in July, a new line called New R, which is adapted to the concepts of electromobility, modularity and embedded intelligence, a line that is much more appealing to ESG concepts, ready for the demand not just of today but of the future. Let's talk a bit about it. Here is a quick movie I can show or a film clip I can show. [Presentation]

Based on the concepts we saw previously, renewable products that provide the synergy with Randon Companies, which are connected and allied are principles and our strategic plan. We have a new concept truck and trailer, a very important project made between Randon and another mobile company where we saw it over the last 2 years to study in a way to bring the future to the present. It's important to test new technologies and to try to get a balance, not just for the semi-trailer but between the vehicle, the tractor and the semi-trailer. This is 1 of the main projects over the last several years, and we're trying to balance or equalize the aerodynamic systems between the vehicle tractor and the semi-trailer. We use various technologies, new technologies and we try to bring all the technologies that were trends and which we're in a mature stage, which can be applied tested, not just in our testing field or with our engineers, but which could be experimented by the customers compared to the current technologies. So we're in a testing phase and evaluation phase with the Randon Concept Trailer. It's 1,000 kilos lighter. It improves all the dimensions of total cost of ownership. So it provides better operational results or yield, has embedded electronics and other safety features, where you no longer need the support of the driver to be able to cover or uncover. It's highly aerodynamic. And in operations, we were able to achieve up to 16% fuel savings, partly by the truck and part by the semi-trailers. Our participation was around 6% in this game. So we did a clinic with customers where they can evaluate and point out the technologies that are closest to our presence. We also have to mention our hybrid [ airline ], a product -- this shows once again what was commented previously by Sergio, Cesar and which will probably be commented by Ricardo later on. This e-Sys system, the new semi-trailer makes the hybrid [ airline ], where we can continue with the diversification through innovation. Here, we have extra strength in the semi-trailer is no longer just a product that is pulled to contribute but now contributes to the movement. This is aligned with our strategy. I don't -- doesn't want to just be pulled. We want to be a leader in our protagonists in our future. This product is being tested increasingly by customers. We're constantly improving it. And as commented, we now have the specific regulations, and we will start to sell in various formats until we find the appropriate formats to meet the needs of our customer in the market. And Randon needs to be more productive, be able to customize more and deliver better products for the future. And one of the ways that we can be more productive in automated signals and depend less on the imbalances of the market is through new products, depend less on fixed costs and which can better control manufacturing costs. We're launching a modular program where we completely changed the way we manufacture the product from the conception of the product and focusing on delivering a better and more customized product, and we're building a new Randon, a more sustainable Randon that's closer to the customer needs. This product works with new materials and it eliminates 80% of welding. So it eliminates energy costs, the use of safety equipment. It eliminates other hazards and provide more safety, facilitating automation, a lower-cost automation, allowing these of new materials that are more resistant, customizing better the product with better maintenance, making us more productive. And so we can get cleaner production. We also can be connected to products and customers. And so therefore, we want to increasingly produce in the sales cycle of the product, connecting it to the customer with greater proximity. Therefore, we developed in partnership with CTR and other partner companies. Some of the start-ups already invested in by Randon Ventures and our concept of Randon Smart, which is our connectivity system, which is being launched now in July. And as of next Monday, will be launched in the line. And we will continue increasing the capacity. It's within our strategy of Randon. We are keeping it up as planned, and we can meet the needs of the market. Randon as a company, which is the preference for the purchase of a semi-trailers. This is a capital good. It has a certain capacity available because of the level of structure and the amount of time spent and we can accelerate our production lines. This is our plan. This is how we operate. And here, I share something that might answer the question of Lucas from [ XP ]. I think he asked previously, this graph shows clearly by the orange line how Randon has added value. This was removed inflation for its primary effects. We showed how we could add value -- or people of added value. And if we return here, we're going to go back to 2003, we can see that the crisis that we went through in the past, when we increase production, we would lose efficiency. This doesn't happen any longer. We have greater efficiency that's more balanced in relation to the past, showing that we are better prepared to support the market variations that affect the company's capital goods. This is achieved with technology, with focus on productivity, quality, safety and better delivery. We're investing in technology, which if you visit the plants, with a system focused on Industry 4.0. This is one of the largest and most updated in the world where our coding for our chassis has been around for 10 years, but no one's been able to copy it. We have exclusive use to this level of product for the chassis, our coding for parts separating and expanding our production capacity with the parts, helping us supply better, preparing the company in the future when it comes to the modular program. And so we continue to invest more and more in automation and robotization. We also need to say one more, please. here in our new center of logistic excellence where we centralized all our operations and controls for logistics in Randon, where all our operations are controlled in a single logistical center with fleet management, traceability, packaging, automation of processes, centralization control. And look what's happened. Every year, we have reduced our logistical costs regarding revenue -- so we're growing and reducing our participation in our logistical cost in our revenue over the last 5 years, producing more than 30%. We need to increase our globalization. This was mentioned earlier by Sergio. We're able to make it more global, Randon and we're ready. We have our product, a product that's already certified for the American market. It's ready. It's ready for export. I already commented previously, Randon will start loading these on to the ship in August. Let's look at this template. [Presentation]

This is the way I'd like from the United States to tell you that we spent the week visiting customers. We're doing well with this product, with this approach. Obviously, this announcement with Hercules will strengthen our proposal for value entry, but we already have contacts with the main customers in this segment. That's a segment which Sergio mentioned, his niche, but with over 40,000 products throughout a year, which is over half of the Brazilian market. So we're going to enter. We're going to enter in a big way, maintaining what Randon has; quality, safety, productivity and relationships. This has taken Randon over 70 years. And based on this company created several other operations with more success in Randon companies. Thank you. I'm available if you need anything. Now I just wanted to reinforce that participants can participate via WhatsApp. We'll have a new question session. I'd like to give the floor now to Ricardo Escoboza, Superintendent Director, who will bring us information about the auto parts market.

Good morning, everyone. My name is Ricardo Escoboza. I'm the Superintending Director of Auto Parts, where we have suspenses, Master tech and the joint venture's Master and JOST. In all the segments we were inserted and the main product lines for all these companies we're #1, we're the leaders, and we defend this position. We have over 4.5 thousand employees, 12 industrial units. And when we look at the revenue from 2020 to 2021, we doubled our revenue. We want to increase this even further in 2022 with an amount above we already had. There's obviously the market size, but it didn't grow in the same proportion. There's inflation as well, but a lot of it is due to acquisitions and the new products which I'll mention. This expansion of market share we had is where we added revenue were -- more than double our revenue for 2022. Here are industrial units, suspenses. We have basically 3 industrial units Caxias do Sul, [indiscernible] and our geographical expansion in Mexico, Monterrey; Castertech. We had several acquisitions over 9 months. Over 9 months, we did 3 acquisitions in 2021, where we now have Castertech foundry in Caxias do Sul in machining, Indaiatuba in São Paulo. Master, we have 3 units; our painting unit, which serves all the auto part units here and Flores da Cunha, which is our aluminum foundry. JOST, which is in Caxias do Sul, our joint venture with Germany. And in June, we launched JOST [ Campinas ], an innovative product, which I will talk about later. So the presentation will provide information regarding adding value through new products and expanding business related to the ESG concepts, how are we contributing to commercial vehicles as well as to society with these launches. This is one of the major drivers that our customers are seeking, the society is seeking. So how can we, in auto parts defend our leading position, expand our capacity and continue to expand this market share? We expanded the e-Sys system in the routes of these customers. We're obtaining reduction in carbon emissions by 20%. This is data that's being confirmed, and we've been working with our customers along with implements. We also launched a new mechanical suspension for trailers, reducing weight by 15% The suspension is the basis for us to have a small alteration in the products and be able to apply it to our project in the United States and suspenses will be able to expand their business with the adequate suspension, both for the domestic market and international expansion. And then Axle automation was one of our major bottlenecks, we doubled our production capacity. So we produced 350 axles per day. Now we're at 700 axles per day. At Castertech, it's worth noting that we expanded our capacity by 40,000 to 80,000 tons. We tripled our revenue in the last 24 months. going for revenue BRL 400 million, tripling that. An increase in capacity for new products aligned both commercial vehicles as well as the agricultural market. We are specializing in the assembly of the system on the cube of the vehicle, the drums and the bearings with an automated solution, offering this solution to our customers. Also when it comes to offering innovation and sustainability solutions, we have these safety parts with blockchain technology with traceability saved in the blockchain and not just SAP. This brings security and robustness that when you seek out our parts, you know the amount of chemical elements included in our formula, also our project, where we distance -- the eco sand where we use all our foundry sand within these concepts, and we recycle 100% of it through this project. NIONE technology is as already mentioned, we have various initiatives related to this. And shortly, we'll present some solutions geared towards the reduction of weight and using niobium nanoparticles. When it comes to Master, it's worth noting in this journey of innovation and technology ESG, products which we were able to develop and supply, products as well as ABS, which is sold by this joint venture, over 60,000 units in the market and our disc brakes, along with our partner technology of increased weight. We also have the piston, chamber and as we increase the offering our products, we were able to increase our revenue by 15% through this joint venture with products related to the core so we sustained and expanded our market leadership with ideas and products adjacent to our business. JOST is the other joint venture. The articulation system for buses, one of the largest manufacturers here in Brazil is the great development. It's a technology that's different than the imported technology. And through this local development, we're able to take away the duty aspect and now we have a local production that meets all the needs. We also have fifth wheels with lubrication with a Grease Doser, where you do the coupling between the different parts, you usually have a lot of grease. We have a doser and now polymetric plates increasing the useful life and it reduces the amount of fifth wheels in the market and we can offer a solution related to ESG principles. We also -- weight reduction. Customers want it. [indiscernible] all this technology related to ESG, we have a journey in the last 24 months. And so as part of our internationalization, we launched Seas Mexico. We have Master Flores da Cunha, Caster Indaiatuba, Caster machining, Caster Schroeder and the expansion JOST [ Compinas ] through all this portfolio of activities that we've had, we've been able to align technology and expanded our business and our operations. Within auto parts, we have begun our strategies within the next cycle to be able to expand [indiscernible] New Mexico, and we'd like to install an advance internationalization. Obviously, to do all this that I mentioned, we need to have the collaboration of our production processes along with RTS and have processes which guarantee market leadership, guarantee the quality of our products and which will create value for our final customers. Since we're entering new geographies, we need the right products with the insured quality. And to do this, we did several investments and here, I'll share a short video showing you everything that we're doing in auto parts. [Presentation]

So I'd like to wrap up my presentation. So with all these products and processes, we have an intention of expanding aligned with products that add value to our customers. I'll return later with more information.

Thank you, Ricardo. And immediately, I'd like to give the floor to Anderson Pontalti, Superintendent Director of Movement Control. You have the floor.

Thank you, Patricia. Thank you all those who are present. It's a privilege to have you all with us. I want to talk a little bit about Fras-le. We're going to continue our line of Movement Control. Let's go directly into it. I'm going to talk about 4 topics that are relevant and how we transform the Fras-le business in the first expansion cycle. Then I'm going to talk about synergies and operational efficiency, including new products connected with what Cesar said, and what we're looking at for in the future? And how we want to proceed in the future? So let's go. First, I need to tell you where we are. We have strong market leadership in all the main product lines especially for friction material in the Americas, not just Brazil or Latin America, but in the Americas. We're the leading market in its main product. We have 5,300 employees. We have 11 industrial plants, 6 distribution centers, 4 sales offices and 2 research and development centers. One, specifically for Fras-le and one along with Randon. And we already serve 125 countries through our plants and distribution centers. We're not just a capital goods company. But a company with an ecosystem to access the replacement parts. And I want to build this idea with you here with the next slides. Last year, we had a delivery, BRL 413 million of EBITDA, adjusted EBITDA, and we closed the year with BRL 2.6 billion, 88% of our replacement business. That doesn't mean we don't like the OEM market, but the nature of our product is a replacement - constant replacement product. It's not optional. So we have a replacement market that it's larger than the OEM market by the very nature of the products which we offer. 38% of the foreign market until recently, this was around 60%, 65%, but recent movements in Brazil, we advanced, Brazil became more robust and our next expansion cycle will tend to balance that percentage. -- friction in 2011, it was 100% of the business. Once we bought Controil, in all the structuring movements, which came after that, we started to depend less on a single product. And 64% of our business is for light vehicles. In 2011, 75% was heavy. So this is a transformation in all aspects, geographic, product positioning, replacement versus original, and what's most important, making money. We seek after the money. We don't look for glamor. Fras-le is more than a capital goods company. Why do we say this? We're an automotive company. But we're very close to commerce and services. Fras-le has desired brands, brands that are established in the market. So much more than the B2B relationship with the automakers we very close to the market or those who recommend things in the market. We were just one brand. Now we're Controil, Fremax, Nakata We have several brands, both in the Brazilian market and the Latin American market. Industry is where our revenue is from. But about 35% of our revenue are from products manufactured by other sources, by outsources. This gives us speed, risk mitigation and flexibility in different economic cycles. So how do we position ourselves? The recurrence of revenue doesn't come from the capital good, but from the installed fleet, trucks keep moving and consume the parts, which Fras-le produces. We position ourselves as a one-stop shop. Everything from the wheel to the steering wheel has -- interests us. Everything either involved in the vehicle is interesting, anything with where that's not elective, that's not optional. We have a strong distribution platform with capillarity and over 700 distributors to our Brazil our coverage and the difficulty of someone entering the market to win over this space would be very difficult. Some of the journey here in numbers. Before, in 2016 we are a top 10 in Latin America in companies positioning themselves in the aftermarket. Now we're top 3 in Latin America. In 2016, we had 80 countries that we serve. Now it's 125. So geographic expansion; 90% was friction in 2016 and 100% in 2012. Now it's 49% in 2021, and we're moving towards 46%. The net revenue from 2016, evolved from 800,000 to 3.2x larger as well as the EBITDA margin which also went up 3.3x, maintaining our reputation, maintaining the profitability from 3 brands to 5 brands, very strong in Brazil. We had other important moments, positioning in the south of South America. We're leaders in Argentina, head and shoulders above our competitors. Milwaukee is another company in the region, Fanacif, we have the doubling of our factory in China. Growing from that market and an exporting from that market, we have a distribution center in Colombia. And we have a joint venture in India with ASK, Jurid do, [indiscernible], Fremax and Araraquara in other locations. Some of the synergies. There's a great relationship between 2 publicly traded companies, Fras-le and Randon. We mutually benefit in various aspects. But some extra relevant points or the reputation of both companies was very visible. The track record of results, growth and value creation is very positive. The supply chain is shared, commercial synergies, optimization of financing and others. So moving into the next slide, we mentioned a few of them. Technology -- these are some projects that Fras-le benefits by participating in Randon ecosystem. When we look at CTR, that was our incubator for Smart Materials. Fras-le is the company with the greatest technical capacity installed by the nature of the product to explore this business line. NIONE, not only does Fras-le have 46% of the company because it's within CTR, it holds the patents generated by NIONE. So it benefits in this regard as well. And Fras-le has a huge chance due to its knowledge to explore this in various product lines. A bit about our production journey through M&As. Just bringing in the Fremax example. We captured BRL 60 million in synergies and we want to have a double revenue of what it is today, but the short time. In 2021, we're developing a very important benefit and we're constructing a suspension unit in 8 months, which is a record time. We want to take this company to 400,000 shock-absorber in a single month just in that unit. Today, we're producing 230, 240 on average, a level much higher than where we were and we have modernization to collect. Moving towards products and technologies, very specifically. Cesar mentioned this in numbers. We have reduced significantly the structures of the vehicles, everyone's seeking a reduction in weight to have this autonomy. Everyone is reducing the weight. And if we look at 2010, the content of Smart Composites or plastic in general was 14%. In '24, the expectation for 2023 when steel was 58%, is now 42%. This transformation is clear. It's not from today. And the technologies are increasingly feasible because of the scale of the global exploration. This is our first project that's been running for a while at Randon. We have an important deal, if I am, but the best is still to come. Automakers in Brazil and outside of Brazil, has been well accepted. This approval in Brazil has a large chance of embarking into Europe as well. If we look specifically at this technology, it has various drivers of ESG, which are fundamental I want to share an exercise here. If last year, all the volume of -- have these [indiscernible] with this technology, we would have reduced 140,000 tons of carbon in the useful mileage of these vehicles throughout their life. It's considerable. I'm talking about a single year -- with the average useful life of 10 years for this equipment Yes, that's a lot. Cesar also said that many things are still on the way. We have concrete projects. We have others in the pipeline. And we have others that are being developed. Some will still be explored. In the core products, we saw this technology what's to make friction. I want to just say this process is much more efficient when it comes to energy consumption. It's already used in the railway shoes, and we're going to start using it with other friction lines in the future. Shortly -- we are preparing for the digital world, Auto Experts is a Fras-le brand where we are embedding several companies. We started with an electronic catalog. It will shortly be a parts localizer in the Brazilian market, using our knowledge, and we're starting to look at a consumption profile that's more critical. So this will be very important for brand loyalty. So to wrap up my last slide, this is what we built. I'm not going to go into detail, but the first cycle was delivered. That's the message is clear. What Fras-le said, we would do, we did. We went to the market. The market trusted in us, and we captured $630 million in funding. What are we going to do -- our second expansion cycle is going to focus more in mature markets, we will increase our international exposure. We want to increase our capacity in strategic lines for products related to high representation and a lot of growth potential for the increase in demand. We are consolidating in Brazil. There are still synergies to be captured. We're going to invest strongly in mobility in the future. Our counterpoint is to remove weight from vehicles contributing TSG and autonomy. We want to replicate the Powerhouse model in Europe, America and Asia. The idea is Europe more regionally speaking, in East Europe, Americas, Asia, is where we want to navigate. Thank you very much. And now I'll give the floor to Patricia who will introduce our next guest. Thank you, everyone.

Thank you, Pontalti. And for us to wrap up this panel, I'd like to invite Executive VP -- CTO to talk about digital and financial services.

Thank you, Patricia. Good morning, everyone. This is the last talk today in this panel. Thank you for your presence. Those of you who are watching online, I'm going to speak less about numbers and more about something that's about 4% of the group's revenue. This is our services area -- and it can be a vertice, which puts us in a more relevant position within that strategy of diversification. And this is done using the existing verticals with lots of synergies. First, I want to tell you a bit about the story, the history of how we got here in the services. We had our consortium that our bank, consortium has been around for 35 years. Randon Bank 12 years. -- and the insurance company which has been with us for a year. So we have a solid base of financial services. So what are we looking at in the future? If you look at the last 2, 3 years, we added Randon Ventures. Randon Ventures doesn't attend to just the services vertice, it attends all of them. The startups participating in these projects, that's part of our larger strategy as a group. Conexo is a platform where we start to measure our challenges with local businessmen where we are. And look, we created with over 70 people, we call digital businesses, with a company -- we are a company of engineers. So we had to add software engineers because many of these developments that are being developed today in Randon, some in partnership or some outside or some inside. If we look at the evolution of services over the last 4 or 5 years, we had an average growth of 11%. Our services were always focused on meeting the needs of the auto parts stores, the consortium. And what we're starting to see in the last 2 years, where we have a growth of around 33%. This accompanies the growth of the group, but it maintains that participation of 4% where the service area will need to grow much faster than the other vertices. And this has been demanded of us as a group. It's a trend, all industries end up becoming technology companies. but also software technology and finally, services. Because our consumer is changing their behavior. They're changing the way of doing business and changing the way they make transactions. This shows this vertice. We don't distance ourselves from transportation and logistics. That's our strength. But where is the service of vertice going? Transportation logistics. We're not going to leave that focus, but we also have agro-retail. We have consortium and insurance, but we start to have new business. We start having start-ups and I'll explain that to you. This future, which we believe in, focused on transportation and logistics, making a parallel with finances and fintechs, logistics and transportation is still developing their growth. So we have a market reputation and that's well recognized -- we have all the players. So we're going to focus on where we are. How are we going to do this? I want to reinforce 5 points. These are the levers which we have. open innovation, I'm going to skip a bit, but it's been used by all the vertices. It's not just technology and services. But we're always focusing with the customer in the center. The customer is what I mentioned. There's a change in customer behavior, even our customer, a traditional industry for auto parts and highway equipment. We see another way of making decisions. things that are different than in the past. We want to understand that better and integrate more products and processes, which will add to the loyalty of these customers through a package of services. So the more we have of the ecosystem, Randon ecosystem, the more loyalty will develop and all the other vertices. This generates new business. This is the road map of the services. We're -- there are structures that are consolidated and others that are developing. So there are other business areas that we can enter. But the end of it all, if you look at the key here at the bottom, trucker, logistics, auto parts, implements, suppliers and other, and we're dividing this in this first wave where almost everything is green. We're talking about logistics. We have won with suppliers, anticipation of receivables and credit for corporations with auto parts. The first wave of growth of services happens within the ecosystem where we're well known and strong. Strategic alliances are important, since the Randon Group can't be alone, and we've realized that and we need partnerships. Strategic alliances are important, since the Randon Group can't be alone, and we've realized that and we need partnerships. We've advanced with startups. If you look at Randon Ventures, it has the start-up culture, 4, 5 years ago, we didn't have any start-ups connected with our stronger businesses unlike today, we grew a lot in this maturity, but we have very traditional strong partners in the market, like John Deere. We've been a partner with the National Consortium of John Deere for 25 years. So we have other partners that are relevant. If you look at the traditional partners, and join with this ecosystem plus the startups, Randon's used in a unique manner for industry. And we look at our 4 vertices -- you can see that we have ability to build something different -- we had over 3,000 startups accessed directly and indirectly by our banks and partner banks. Some are in the databases and over 50 were contracted, not just the service providers. Over 50 year of these startups invested there with Randon Companies in strategic projects, products, technologies but also in software and services. We learned to do something very different in the last several years, and we're sure this will help us grow more quickly. Engineering, which I mentioned, which is not traditional engineering for products and technology. Today, we have a dedicated cell, which is growing very quickly. we talk about robotics, and we have over 290 robots. They're not physical robots, but some of these are already being made by these robots. We have artificial intelligence and employees that are competent in this regard, creating strategic projects with partners. And we're talking about an academy we're having to develop. This is a new language. This market for services and technology, not for products; this is the one where we have to move quickly, and this is good for us as a group because everything that we practice here gives us the ability to accelerate all of our other vertices. And finally, I'd like to share some interesting data. Talking about the people who work in this vertical over 300 people, 71 are outside of engineering and of these 71, 1/3 is distance, they work remotely. So this new way of working is already present, not just in this vertical, but this is happening in the industrial vertical as well, and Randon is moving very quickly to understand this new generation, these new behaviors to be able to be a company that can capture the best of these generations. We're already talking about other ideas. And these are some examples. And so to finalize, this shows what we want through the services line. If the group is going to grow x percent, the rate of services has to be larger than that. We have all this leveraged in partnerships and alliances, perhaps more than traditionally in the past. We're not going to move away from transportation and logistics. I really want to emphasize that. And we start to see how we can develop a platform of services with the customer in the center perhaps reaching several verticals. Always, it has been said looking at the synergy of our verticals, those with an ecosystem, with this diversification, we have wisdom and quickness, we can become a relevant player in this process. So to finalize, I'd like to talk about this journey of transformation. I usually say that one of the ways we respect the legacy which we received from the founders and the executives who came before is for us to build the next 75 years. To build the next 75, 80 years, we need to sometimes make changes. We need to have the courage to make changes and understand that we have to advance in services, and have a greater impact. So we have this possibility to do this. I think I speak for the executives when I say that we want to respect the legacy, which we received, and we want to leave Randon increasingly stronger and connected. Thank you, everyone.

Thank you, Daniela. We now go to questions and answers. And also with Sandro, who's with us remotely to mediate the session, I will invite the Director, Esteban.

Thank you, Patricia. [indiscernible] Thank you. These panels really gave us an overhead view. Let us look at the future. It was really cool. There's a lot of things, which we're doing now. So I want to open up the space for questions. I think we have a first question in person.

I'm from Citibank. The acquisition of Hercules. And I was surprised to learn that the U.S. has less advanced technologies than we do for production. They have super expensive labor, $15 an hour minimum wage. What would you change in the production process of Hercules to make such an acquisition? Perhaps technology there isn't the main selling point? And -- do you think that the Chinese will be less important in the American market. We've seen in the last 5 years, a lot of litigation between China and the United States and someone on the supply chain closer to the United States thinking about production in the Americas might supplement what came from China, perhaps not totally but on the margin. Will there be more interaction between Brazil and the U.S., which is this huge market?

The question was addressed to you. And perhaps, Ricardo, if you want to add how that fits into our strategy, that would be cool.

Thank you. We were here. We visited several customers, and we need to know if the customers know the Randon despite Randon doesn't operate in these markets. Randon is very significant. Fras-le is already active in the U.S. And now it's our turn. What stands out to us is the synergies. The companies there are very dependent on the supply chain. The supply chain is dispersed. It's very dependent on the Chinese supply chain and these companies invested very little in terms of modernization and automation on automation. Even with high salaries, there is a concept of functionality that we're going to seek to meet not only the functionality, all the best relationship and delivery of our technologies. Clients are open to discuss new technologies and we talk to some, that they're very satisfied with our presence, the speed of our delivery and what we could offer in the American market. We've been working on the strategy. I think they have a good perspective of the technology, which they saw in Randon, all the things which we have capacity for. This is significant due to the volume that we buy so that they can have competitive costs so it's a package. Randon is a channel to enter, Fras-le took in the first step. Now Randon is taking a step. We have a way for these auto parts to be sold. [indiscernible] all the auto parts on board in this project. So it's a project they we're going to get together. I'm going to try to segment this off. We want to have the correct products for that market. That's why we're developing this type of truck body. So we have to have the right products. But segmenting the other 2 points; mechanical suspension is not so significant for this market. There's a shortage of this product and so we're going to act in this way. And the other part, the answer is we already began this journey before. Once we started with Suspensys in Mexico, developing pneumatic suspensions for the Mexican market and serving some of their trailer manufacturers, we already started to understand this environment. There was the lockdown in Mexico, but we retook the operations later on. But this year, we consolidated this in that region.

For the next question, I want to talk about the Chinese competitors. We have a plant in China. Can you talk about that business environment?

Just to go back. Fras-le has been in the U.S. for a long time. Our products are approved. And they'll go with Randon Hercules. Everyone has been looking at this market, but ever since the duties were imposed in the U.S., it opens up a relevant window. So their products from here that are competitive, these competitive products can enter the U.S. We have the Chinese plant as an example. It can't supply the American market competitively today because of the tariffs. And also because of our local competency, to have FOB costs equivalent to the Chinese. I think this journey of automation and preparation of scale in Brazil will be key to ensure the competitiveness of Randon Hercules taking products from here instead of purchased in China.

Before I go on to other questions, I wanted to share this question by Whatsapp. Lucas of XP. I want to ask Daniel about capital allocation, not as an auto part company, but as an incubator in Randon Ventures and CTR. You showed a slide of the start-ups. Looking at capital allocation. When you develop these new solutions, I think my ones had an interesting graph about the potential of the market, the speed of the monetization. So I wanted to understand your head when you define the projects that you'll focus on and have more accelerated development or if it is the opposite, if it is more synergistic with higher levels of complexity? I would understand your way of thinking, your decision metrics for the main projects to develop with this profile of the incubator.

We know how hard this is to look at these start-ups. On one hand, we have several opportunities. But you know that capital is scarce, resources are scarce. So we try to allocate our capital as well as we can. I think I can answer in 2 ways. Thank you for the question, but we're still learning. First of all, all of us, we all participate in our committee of Randon Ventures. We created a decision process where all the vertices are present. And what's most important is that we created an investment thesis where we have 6 vertices, and these 6 vertices talk with -- all of our 5 vertices, what we matured in over the last year, we started having more investments because we were learning. But our most recent investments -- we have over BRL 24 million invested in 8 startups. And one of them, I can mention, Delta. Delta today closely connected to [ smart ] Randon project within the platform of Financial Services, it's already related to 2 new products that are going to be launched. So when it came time for decisions, we look at synergies, then we have to also bring something new. We have to bring a better technology that we can't develop inside the company. It's the short pathway. It's a synergy with our businesses. On the start-up side, everything is fine because we're able to scale the solution quickly. But we also accelerate our time-to-market process with innovative solutions. This is what permeates the process. But there's a committee that can look at this whole view of the future that we presented this morning. Ricardo, you may have something to add, feel free?

I think that there's still small checks within the size of our investment power and cash generation potential. This is the learning curve. -- nothing that's there will hurt us. Even if we make mistakes, it can't really hurt us. but that's not what it's there for. We're serious. It's structured as committee. Synergy is the word. We find synergies with something new that adds value. That's where we're going after it. Let's someone here ask a question?

I'm Fernanda from BTG Pactual. It's great to see how Randon has transformed over the years. But I'd like to explore implements in terms of competitiveness. You adopted a strategy to not transfer pricing and this affected your market share. I think on our previous interactions, you signaled that you would focus on trying to balance volume and price. Could you update us on how you've seen this? What's the market share like? You are getting closer to 30% ?

It's important to understand the decisions made that affected the share. What affects shares, these decisions are made 3 to 6 months earlier. We had a stop in 2021 for the maintenance of our operations, these complex operations like the painting, we did this. We removed products. We had the question about inflation, which grew in the last 2 years, especially for commodities, which opened in 2022. We had a portfolio more than 6 months, and it was complex. We made pricing decisions based on this. We had interest in doing this. This affected our market share, but this has been retaken. We passed the first quarter 1 or 2 points behind the competition because the competition didn't grow. But we're now operating in the second quarter around 30%, 32%. And our share now should increase in the next several months. And so [ as said ] we are starting with lots of new launches and lots of conditions, not just to the supply, but the entire process of retaking, so we have better conditions for supply and all the work done with financial services, credit analysis and availability. This helps us to get a better delivery of products with product size, we have credit and other availabilities with a full portfolio. This is why Randon can retake their leading position naturally.

There's another question that came in online by Rodrigues from SulAmerica investments, -- but I think you already addressed the answer. Because of the time , I'm going to open up for 1 last question. You talked about Fras-le, the company has tripled in size. You're up to 1/4 of the top line of the company. What do you expect the growth to be in comparison to the other divisions of the company?

Thank you for the question. Our first cycle completed with those numbers that I mentioned. I would say that our objective is to have a big dream. When I say that our dream is big, we have BRL 630 million in funding, but with the possibility of a leverage that could bring us 3, 4, 5 years of BRL billion, BRL 1.5 billion in additional revenue. But a good portion of the revenue will probably be sent to increasing capacity for our product lines where we are at our limit, but where we could because of the window in the export market, we can leverage this with markets which purchase a lot. So a lot of this will be geared towards capacity increase, NiOne and Smart Composites. As we develop traction and maturity, we will also require important investments, since as the projects run over, as the benefits of the technology are perceived in the various markets, we should allocate synergies. But our desire is at a growth level between 11% and 14% within the scenario they were already used to. We shouldn't go past that for the next several years. Since we have revenue resilience and cash generation, perhaps regardless of the economic cycle, it can maintain this growth, expected growth which we saw in the previous cycle. I think it's important to also note that the replacement market isn't a growth market. Yes. We have to incorporate products. We have to go after new markets, technologies. We have to try to increase the average ticket size. There's various fronts, which allow us to add value. In Brazil, we have some space and then geographic expansion. Thank you. Folks, unfortunately, we have to wrap up. I want to thank you all for your time for questions and answers. We had over 1,200 visualizations. It's nice to have this hybrid option. It allows this message to be spread more broadly. I want to give the floor to Patricia, thanking Daniel [indiscernible] Ricardo.

We'd like to thank the panelists for their availability and also our mediator, Esteban. We want to call Paulo Prignolato for the final message.

Good morning, good afternoon now already. I'd like to thank everyone for your presence. Those are here personally, those who are participating remotely, I want to thank the presence of my colleagues, both those who are here in person and remotely, members of the Board of Directors, partners, shareholders, friends. I know that several of you will leave here and you'll write your reports. So we couldn't close the event without a few key words. Can you give me the controller? Small accident here. It's important for you to be aware of everything that was stated here. We're a solid recognized company with a growing global presence. I think we had the announcement of another acquisition yesterday. We're on the right path and will continue gravely in these achievements, a culture of synergy. You saw the opportunities that we have in all our vertices that were presented very well by our colleagues, sustainability in our strategy. ESG, is a journey, something legitimate. That's part of the culture of Randon Companies for over 70 years, respect for society, respect for people, respect for the environment and governance and continual involvement. It's in our blood and it will continue. Diversified business model, see I just showed this at the beginning, a business model that will bring resilience to our revenue and to our results. Financial discipline, we have never given that up. Our cash management, our investments, both organic and inorganic, and our concern with growth, but to grow with financial responsibility. This is something that we maintain as part of our management as a whole. Innovation DNA, projects which are done that are in our pipeline shown by Cesar. And with that resilient results. So folks, so we're going to close this first step of the event, first stage of the event. I'd like to thank you all once again. I also want to thank Esteban, [indiscernible] [ Fabiana Gustavo, Emerson Jessica ] were part of this team, of Investor Relations, for the communications team, the support team, they worked hard and ensured this event with quality. We hope that you enjoyed it. I want to give the floor to Patricia because we're not done yet, especially those of you who are here in person, there's still a lot of good things to come. But I want to wrap up my participation. Thank you all.

Thank you, Paulo. This event is supported by APIMEC, which is also the President of the entity, sent a video that I invite you all to watch. Good morning, everyone. This was members of APIMEC, Brazil. I'd like to thank you, thank the Executive Committee of Randon Companies, especially these Chairman, Daniel Randon, and the CEO, Sergio Carvalho for their excellent meeting and for the partnership between Randon and APIMEC, 22 years of consecutive meetings and we're thankful and we want to give you the platinum seal for 22 years. Thank you. In name of Randon companies, I want to thank everyone who is with us online in this Randon Day. We're sure that moments such as these reinforce the purpose of Randon companies to connect people and wealth, generating prosperity. We close our transmission now. Thank you all for your participation and see you next time. [Statements in English on this transcript were Spoken by an interpreter present on the live call]