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

[Foreign Language] call will be available on ri.randoncorp.com. I like to remind you that the information provided in the video conference is not a guarantee of performance, involve risks, uncertainties that refers to future events, therefore, depends on circumstances that may or not occur. Our agenda for the day will include a message from our CEO, Sergio Carvalho, the main highlights of the business environment and economic results presented by CFO and IRO, Paulo Prignolato; and the details of financial results discussed by the Director of Finance, Investor Relations, Esteban Angeletti. At the end, we will have a session -- a Q&A session led by IR Finance Manager, Davi Bacichette.. We'll also feature the participation by IR Director of Frasle Mobility, Hemerson Souza. You can indicate your participation in the Q&A at any time during the event through the platform. And now I'll hand over to Sergio to start the presentation.

Thank you. Hello, everyone. I would like to begin highlighting how important the 2024 year is for the history of Randon Corp. We delivered positive results despite the various challenges that arose through the year. Our business model was put to the test once again. And I can say with great satisfaction that the decision of expanding exposure to different segments and resilient segments was mandatory to face this favorable that we had foreseen initially in all the quarters of the year that went by, adversity was present in our business. We were impacted by the update of the ERP system, the loss of tax incentives expenses with contingency provisions, the closure of our factory in Uruguay, the floods in the state of Rio Grande do Sul and the slowdown in demand from agribusiness. In the foreign market, the reduction in sales in trailers in the U.S. and the global logistic crisis with increased cost and low availability of sea freight also negatively impacted our operations. However, we went through all of this with great serenity and our company continued to grow in a sustainable manner. The fact that we were well-defined strategy and are executing our plans assertively has even allowed us to intensify some movements in projects in the last months of the year. We've made important acquisitions, restructured some businesses, seeking greater efficiency and presented several innovative and disruptive solutions. The details of our strategy were shared with you in our Randon Corp Day, an event where we had the opportunity to highlight the transformation of our company with data and information. We also presented some of the great market potentials that we have in our different areas of activity. I can say with conviction that there are many good things to come, and we are very excited with what we are seeing in our company. The best part of all of this is we are achieving these achievements and movements without giving up our principles, delivering quality products, always paying attention to the safety of our employees, their development, carrying out appropriate environmental management and supporting society, the later with greater emphasis in '24, given the significant impacts caused by the floods I mentioned earlier. We have not stopped doing anything we believe to be essential for our business and for our people. Since it is through them that we are able to deliver the results we expected for the year, according to our guidance released in the first quarter '24, including record revenue and record EBITDA. For '25, our goal is to continue this work, accelerating the integration of the acquired companies, the collection of map synergies, improving our results and allowing us to reduce our leverage. We know that some of our markets may face a slowdown in volumes, especially trailers and heavy trucks due to the recent increases in interest rate. However, I would like to emphasize once again how the resilience of our results will mitigate this impact, especially now that replacement in foreign market will account for an even greater proportion of our revenues. Challenges always are present in the business environment. This is inevitable, but we are always doing our part to face them increasingly stronger. Being one of the largest global players in the automotive market with strong brands, committed partners to deliver increasingly sustainable mobility. And there are a lot of good things to happen this year, guys. We have the start of operations at Mogi Guaçu. We have the addition of revenues of new businesses driven by the group's synergy. We have the delivery of more than 2,000 trailers by Hercules in the United States after a complex period in this market. And we have a very buoyant replacement market with a smaller impact in short term, but relevant for the long term. We also have the acquisition of new customers and approval of new products for agricultural machinery segment by Castertech, the growth of rents and the continuous development of innovative products. Thus, we say goodbye to '24, satisfied with the deliveries made and eager to grow even more. We welcome 2025 excited with everything that we will do and achieve. Now I pass the floor to Paulo for his presentation.

Thank you, Sergio. Good morning, everyone. As Sergio already mentioned, the business environment is quite challenging. We have a high level of uncertainty, especially in the domestic market due to the exchange rate fluctuations and the rising interest rate. We know that this also ends up having an impact on inflation. Although we expect a record harvest for the next cycle, the market is quite cautious about making new investments. On the global stage, we are seeing a tendency for interest rate and inflation to settle, however, with possible impacts related to tariff barriers between different countries. As you can see on the screen, in the fourth quarter of '24, the truck market showed growth compared to the same period of the previous year, both in production and sales as well as in exports. This occurred because the segment maintained the pace of recent months, consolidating the market recovery, overcoming the effects of the change in engine to Euro 6 technology. Another sector that is quite buoyant is the replacement sector, spare parts, which maintains demand at a high level, especially due to the increase in circulating fleet of commercial vehicles, light vehicles and motorcycles in '24. On the other hand, the trailer market saw declines in the quarterly comparison. This reduction is mainly a reflection of the slowdown in demand from agribusiness. The tipper production lines accumulated a 40% drop in the volumes fourth quarter '24 compared to the same period in the previous year, partially offset by the industrialized cargo segment, which remains heated. It's worth noting that although with a decline compared to '23, exports showed growth compared to the demand in the third quarter. This is due to the resumption of sales mainly to Chile, Angola and Argentina. Even in this complex context, we achieved a new record for quarterly net revenue in which the sales of auto parts represented 60% of the consolidated total. The highlights of these indicators I bring the recovery of sales to the foreign market, the addition of revenue of new businesses and the expansion of the industrial sector, both for parts and trailers. Our adjusted EBITDA margin recovered compared to the fourth quarter of '23. And here, the main highlights were the better conversion of margins to the sales of products with a higher level of profitability, the increase of gross margin due to stability of prices, the main inputs for the company and the reduction in the inflation and exchange rate impacts in operations located in Argentina, which were quite high in the fourth quarter of '23. The net income also increased in the quarterly comparison. This is mainly due to the improvement in operating results and the resumption of deferred income tax on tax losses after completing of a recoverability study. As a result, ROIC maintained the pace of recovery in the end of the third quarter of '24. Moving on to our debt, I would like to highlight the growth in bank debt, mainly due to the raising of funds for the acquisition of EBS, the increase of net debt compared to the third quarter of '24 due to the level of investment in the semester and the higher average cost of debt in the domestic market due to the increase of selic rate. As we have shared with you in conferences and calls we have held, our expansion movements should reflect an increase in leverage in the first quarter of '25. However, throughout the year, the indicator should reduce gradually with the capture of synergies and integration of newly acquired units. Beyond other actions that we are carrying with this focus. Going to the figures of our shareholder base, we closed the quarter with approximately 3,000 shareholders, a significant reduction compared to the closing of the third quarter of '24. This was due to the migration of the position of individual shareholders to foreign investors. Our average daily liquidity increased by 10% compared to the same period last year. Regarding the remuneration of our shareholders, I recall that December, we released material fact announcing the payment of interest on equity, which was made on 24 January, in the amount of BRL 6 million, which corresponds to BRL 0.18 per share, common and preferred net of tax. Here, I conclude my presentation and hand over to Esteban.

Good morning, everyone. It's great to have you with us in another earnings video conference. To detail more what Paulo told us about the fourth quarter results, we bring to you the breakdown of our revenues. In the graph at the bottom of the screen, you can see that with the exception of urban mobility, all other segments grew in the quarterly comparison. The main sectors responsible for revenue growth were the foreign market, industry and spare parts. In the graph at the top of the screen on the right, you can also see that the largest share of revenue comes from spare parts, followed by foreign market and the industry, both represented between 21% and 23% of the total. Remembering that this number does not yet include Dacomsa's revenue since the transaction was only concluded in January 2025. With it, revenue from the foreign market will become even more representative. Although revenues for agribusiness is always one of the most relevant, the slowdown in this segment in the quarter is the fourth most representative. When we analyze the distribution of revenues by vertical, we have almost 60% coming from spare parts -- OEM and spare parts, around 30% trailer and the remainder from services and technology. In the foreign market, the major highlights were the beginning of deliveries of batch of Hercules container base, greater demand for friction material and brake systems in the United States. The improvement on the economic environment in Argentina, driving the expansion of sales in the country, the addition of EBS revenues and the increase in exports of trailers to Angola in EMEA. Moving on to EBITDA, an indicator that showed growth in the quarterly comparison. We'd like to highlight higher level of profitability due to the international expansion and the increased sales in the replacement or spare parts market, contribution of gross margin due to the stability of prices in the company's main inputs, reduction of inflationary and exchange rate impacts related to operations located in Argentina and pressure of the margins of the auto part vertical due to the mix of products sold in the domestic market and due to expenses with restructuring of this unit. To finish my part, I bring on the screen information related to organic investments. In the fourth quarter '24, we continued with several projects of which I highlight. The construction and installation of Castertech and Suspensys, Mogi Guaçu, Castertech already opened '24 in a ramp-up phase and Suspensys in an earlier stage, but with the opening scheduled for the first half of 2025. The construction of the Frasle Mobility electrical substation at the Fremax site, which in addition to allowing the production expansion made it possible to turn off the diesel generators, reducing CO2 emissions from this unit during the project, which is scheduled to completion in '25 and investment in productivity investment at Randon Araraquara already announced through notice to the market in November '24. In addition to these, we started the project to automate the distribution center of Frasle Mobility at Fremax site, which is very important for the operation due to the benefits it has with its implementation. Before I hand over to Carol, I would like to invite you to participate in the XL Survey, also known as the institutional investor ranking through the QR code on the screen. For us, this is an important feedback tool for the capital market in your opinion, is very relevant. Now Carol, the floor is yours.

Thank you, Esteban. We will start now the Q&A session. The format to participate guidance is in the screen. I would like to thank the participation of Daniel Randon and Anderson Pontalti that are present in the video conference and the other members of the Executive Committee that are online with us. The first question of the day is from Victor Mizusaki, analyst of Bradesco BBI.

First, congratulations, Daniel, Pontalti with success, Sergio, your role last year at Randon is extremely important for the company's transformation. I have 1 or 2 questions regarding implements. If you can comment first the export to Africa and South America. How have you seen this market looking specifically at the result, we saw a positive surprise regarding price and volume. If you can mention a bit about margin? And how do you see the competitive scenario in Brazil if we see an improvement?

Thank you, Victor, for your question. Regarding trailers, I'm going to ask Esteban and Anderson Pontalti since they're with us to answer. Esteban, so you can approach the question about Brazil, not only '24, but we can anticipate a question about the beginning of '25, Brazil and Latin America. Pontalti, if you can explore not only Africa, there's a lot of strategy to grow there, but also the other geographies that you are conducing, especially U.S. with Hercules. I start with Esteban, then Pontalti will add.

Confirm to me that you can hear me.

Yes.

Victor, thank you for your question and for being in our call as usual, the competitive scenario. The whole market in Brazil continues very much disputed. The main dynamics that we saw for the first semester -- last semester continues with this. The mix of product geared towards industrial products where we have a smaller margin. Competitiveness, price is a bit more difficult. We are waiting, of course, the restart of agro. The expectation is a record crop. I read a news about the increase in freight price, especially for grain transportation that should bring a higher demand in agribusiness where we have our strength regarding the products with the margins. But on the short term, the current snapshot is a competitive scenario will keep -- hold up in the first quarter. Now I pass the floor to talk about exports, be it the African market, South America and U.S. also.

Thank you. Thank you for the question. More specifically about the exports, the part of Brazil, we had a good beginning of the year, the exports above all to Africa. I remind you that Africa, the regular -- how regular the demand is according to what the buying countries have. We also have protected business. We have cash in advance or some type of guarantee that will guarantee the receivement of funds. We continue to have a good quotation and a good beginning of the year. January good volumes above what we planned. We want to continue to have good volumes in that region. Relevant market to us. The exports from Brazil are intensifying. The market is more open, allowing us -- we fulfill the market from Brazil. It's a good geography. It's almost a cross-stocking operation. What we are producing in Brazil is received well in the current geography. We're gaining position. These are the more relevant markets. When we look at North America, Hercules starts in a positive manner. We know that '24 was a year in recession with the container chassis, which is the niche of that operation this year -- last year and the end of October, we had a big order and revenue adequate for the moment of the economy big players for this segment. who has the best portfolio, the most significant accounts. In this moment, we observed in the market, a greater entrance of quotation orders. This is due to the new government between tariffs, dynamics and economic incentives. It's not all 100% clear. But what we noticed is an increase for quotations. We have to see how it will be, but they're already looking for the deadlines, prices. This should be converted in sales in the near future. First month of operation, we obviously in this new company transfer qualification. This is what we're going through currently. We're requalifying the company to beating the sale campus for the year. It's not addressed from stock. We're trying to qualify the stock, be it producing and importing from Brazil or friends abroad. So the sales happen in a more meaningful way. Market still is not back to historic levels. It's still retracted. We have a strong team. We're restructuring sales, reinforcing the sales for Hercules and AXN to have a better market share because we will deliver more competitiveness in these 2 units. I hope that I answered your question.

Let's go to the next question from analyst of BTG, Fernanda Recchia.

Two points from our side. First, about net effective. One of the main surprises, I believe you explained is the restart of deferred. You can give more details of what we can expect of the alíquota in terms of modeling, if this has a premise that after next year, the OEM should show the results. I want to explore a bit your mind M&A scenario of '25. If you can mention how you are seeing this and eventually the opportunity for payment to the shareholders, be it dividends or others? How do you analyze this equation inorganic growth and payment to the shareholders?

Thank you for your question. These are 2 relevant topics to mention. Paulo, please answer both questions, the M&As and what's in radar in our minds for this year, for the next quarters, please?

Thank you, Recchia. Thank you for being with us. Thank you for the questions. First, regarding effective income tax alíquota, in December, as we had anticipated, we went back to constituting the deferido. Basically, what happened was the following. We did a reevaluation of our partnership structure, the companies that are 100% under Randon Corp. and basically, we're talking about 2 auto parts companies. The objective was to reduce the holding debt. This was done through an anticipation of dividends of the subsidiary with this, we bring the resources to the holding, lowering the cost of the debt. Due to this plan, we recognize the deferred, deferido and this should be maintained during this exercise. It's important to highlight when we compare the effect of aliquota with the year of '23, we had a change, an important change basically has to do Nakata due to new tax law of [indiscernible] that was approved in '23 and is valid in '24. This is the impact -- definitive impact summarizing we are recognizing the deferred, and this will continue in '25, but we need to make the adjustment that is valid in '24 due to this adjustment Nakata due to the new legislation. Regarding the M&A schedule, what we can tell you is that we are going to focus in 2025 to capture and absorb all the new companies that we acquired in such a way that we can anticipate synergies, reducing the size of our debt. Of course, Randon Corp will always look at good opportunities, but we don't have under our radar meaningful additional M&A movements currently.

Great. Paulo, maybe just a small follow-up. How do you think about eventual buyback?

Stock buyback?

Yes.

Okay. That's a movement that we always look into, last few years, we've done buyback programs, but currently, it's not in our radar. Last year, when we talked about capital allocation with the Board, we prioritized the M&A operations. So due to this, with the increase of our leveraging in this moment, it's not under our radar, a new buyback program.

Next question from Lucas Laghi, a XP analyst.

I have 2 questions from our side. First, regarding the auto parts business. I understand the profitability dynamics. It's a segment that has less margin oscillation. The OEM is more -- feels more due to the contracts you have with the car manufacturers, but the reduction in profitability in the fourth quarter, what has impacted the profitability dynamics, SG&A has its impact, the freight cost also. To understand what is the recurrent level of this division during '25, given we have volatility and what impacted the fourth quarter? Paulo, the previous question about tax to understand better ITR, we see that the big effect that reduced the tax in the fourth quarter is JCP, BRL 72 million fourth quarter in terms of reduction of tax compared to the fiscal liquid of 34%. The 72% is almost 34% of the taxable profit. And this JCP line is included the deferred tax that you mentioned with the partnership structure, not just JCP or it's another line to understand this issue of deferred tax versus the line JCP TR for tax. These 2 topics.

Thank you, Laghi. I start with you, Esteban, to answer about the auto parts and Paulo to add to answer Lucas' question.

Perfect, Lucas. Thank you for being with us and for your question also. Well, the fourth quarter auto parts, it concentrated some additional expenses that committed partially the EBITDA margin of this vertical. We can summarize in basically 3 main factors: internal freight that raised the pressure from freight and that compresses our margin. We had also the M&A expenses we don't treat them as nonrecurring because the last years, the nonorganic growth becomes important and present in our strategy. That's why we don't exclude these expenses, the adjusted EBITDA. In the fourth quarter, we must remember, we had expenses of EBS acquisition that entered this line. Finally, the administrative expenses EBS that we had started to consider in November, it was not -- the EBS was not foreseen. In the first moment, we're understanding the efficiency of the company seeking synergy, we always have 4 sources of synergy, 2 are low-hanging fruits, the cross-selling part. We're starting to do this now, bringing products from EBS to Brazil. In the second moment, we are bringing products to Europe also. The second front of synergies is the sourcing part for raw material purchasing components where we do the price of the synergy we have currently due to the scale of EBITDA of both operations. And the third wave, which is later once you have a better understanding of the unit, which is the back office where we can have a higher efficiency impacting administrative expenses. With this, I pass the floor to Paulo, who's going to talk about income tax.

Lucas, thank you for your question. In fact, the 2 themes are directly connected because up to the period November last year, where we weren't recognizing the deferred, the gain regarding the impact of JCB, we also didn't have the benefit of it. Once we started to recognize deferido deferred, this allowed us with the recovery -- recoverability plan, we could record this of the -- a little bit on our own capital.

Let's go to our next question from Gabriel Tinem, analyst of Santander.

Two questions on my side. First, focused on trailers. You can give us details how it has evolved the restructuring started at the end of last year, especially Araraquara factory and the mix. The second question about auto parts. I want to understand better how has been the integration with the new acquisitions, AXN, EBS and what is the mindset going forward? Next last question, leveraging. What we can expect '25, '26?

Thank you for the questions. First, I will answer about the OEM and Anderson is going to talk about the integration, synergies. Third question, Paulo can talk about leveraging. Second question about integration, Hemerson is here. You can share with Pontalti. You can tell us about the first experience that we have with them. Talking about OEM, we're going through a restructuring of business process. Our factories are going through the restructuring in the Araraquara factory, it needs from the business as a whole, it's a factory we know has huge potential because it's in the Southeast. It's a region that we had last few years with the changes when Randon Sao Paulo left, we have less presence in this region with return of Araraquara and the importance of the Southeast. We understand it's a strategic site. That's why we're working on it to be once again a strong hub in trailer production. For this to happen, we really need to restructure the company because it should be more independent from the other companies from Randon. That factory is receiving, especially automation items, automated cells so we can produce not only the products that we already have like the dump and insider, we produce chassis also, so we can give volume and speed to that unit. This movement that's being done will be during the entire year of '25. We expect that after this, that factory can enter the line of what we've seen in the other OEM operations, efficient factory independent that can service faster the market around it. Now I'm going to pass to Pontalti that's going to [Technical Difficulty]

I'm going to talk a bit about AXN. AXN our first month, our main objective is to qualify the stock to increase revenue. We understand that we acquired the company where the market was very low. We are reinforcing the sales team so that the moment when sales start, it has more economic safety for that geography, so we can serve the growth wave. Obviously, we're checking component, every component produced there, looking at the productive cost at Suspensys and Castertech where we have efficiency comparison to decide what are the best models to verticalize apart in the United States, bring something to Caxias, consolidating 1 month of work. There's still a lot to be done, very optimistic with the future of this company that has a market penetration that's relevant. It's competitive compared with local players. And we understand we can gain more competitiveness in the middle short term. Very promising in the first quarter, we're going to improve. Hemerson can tell us more about this.

Thank you, Davi and Anderson. First, good morning, everyone. It's a pleasure to be able to talk a bit of how we're connected to the synergies that we met Dacomsa and how we've done this in the first 3 months. We had an awareness of the quality of the business in the company, Dacomsa in Mexico, when we purchased Kuo Refacciones had a strong market position with high reputation brands, relevant market participation for motor parts as well as brake parts, Melissa, Victor, [indiscernible]. We know and mapped in the video conference that we had for this acquisition. We mapped BRL 300 million in synergies to be explored added to the next 5 years. We had a regular break that 60% of the synergy could come from the addition of revenue, launching new products from Frasle Mobility that are not available in the Mexico market, expanding to the North American market, especially United States and also with this start of Kuo Refacciones lines to other countries, especially Central America, 40% reduction in cost and expenses. We don't have such a strong granularity yet, but we're very confident that we are being more conservative in the synergy in terms of cost and expenses. It's very likely that we have more space in these lines, which is great. This anticipates the materialization of the synergies that we have and will be captured faster. I understand that today, we are more than 60% in terms of cost and expenses, 40% in revenue. Not that the revenues have lowered, but the opportunity pack that we found in there is higher their unit optimization. First, Dacomsa team that comes to Brazil will get to know the Frasle structure, are connected to the friction materials. They will be here next week. It's very -- we're very happy because the findings that we can notice in these lines are very material and will accelerate very quickly the use and gain of synergies that we have mapped out. It was a good company that performs with very strong margins and indicators like we saw in a video conference. We keep that same level, even higher those last few months closure in '24. And the future design of the company is very promising. It will be directly benefited with the synergies that we mentioned here. It's a singular moment, special moment for Frasle Mobility with this acquisition. Obviously, the reflex it brings as a company, Randon Corp controls Frasle Mobility and benefits from these results. When we talk about synergy, we don't think about the companies that compose Frasle Mobility, but also the Randon Corp's companies. It's a moment to think about the whole when we connect the synergies that without a doubt will be linked to other companies from the Randon Corp also.

Thank you for your answer. Now we go to one last leverage to Paulo. sorry. Paulo, if you can comment about our leverage expectation this year, I think you...

Thank you for your question. We cannot clearly forecast a number, but we can tell you is the following. In the first quarter, we're going to report a leverage a bit higher leverage, especially due to the investments we did that were forecasted. And in the end of the year, we have the expectation to finish the year in a limit of leverage that we always are used to work with, which is 1 to 2x the EBITDA. By the end of the year, we will capture all the synergies as foreseen in the first quarter, we have 12 months of EBITDA of the acquired companies. So we are probably going to be in this range as foreseen. Linked to this question, we also didn't publish our guidance for '25. We probably will do it in the next weeks, not only the guidance seen especially the projections of the new companies we acquired and also this context of high interest rate expectation of what to expect from the market. But we're finishing the projections, during the next weeks, we will publish and this will allow you to look at all the forecast, including leverage.

Now let's go to the next question from André Mazini, Citi analyst.

Two questions. First is a follow-up of the acquisitions. You have done many acquisitions, which is notable. Congratulations. We know that the majority of the time, you maintain the brands, and it seems you also do integration. Can you tell us more about the integration process since you're doing it repeatedly, what have you learned? And how fast is it speed up or you cannot speed up because there are details that you cannot speed? I'm thinking about RP that's super sensitive for the entire company if you bring the RPs from the acquired company to one RP, software like Oracle? And how long does it take the integration if they are faster or not? Second is more about the OEM and the rightsizing process, if it's correct, the term, if you are reducing the headcount and costs linked to headcount reduction in the OEM. And if it's the case, if it has an impact in the fourth quarter margin, what is recurrent and not regarding from OEM margin fourth quarter and what we can expect for '25?

Perfect, Mazini. Thank you for your question. I'm going to check if Sergio is connected, is online. I'm going to see if he can comment these 2 points. Let me check or else I have a plan B. Sergio is here. I'm going to let you comment these 2 fronts, integration during all the companies that we did with and the OEM issue going to restructuring last month, the impacts this has caused in the business.

Thank you, André, for your question. Talking about the integrations, I believe that, yes, our company did a lot of movements last few years, and it's safe to say that acquisitions has become a competence for the company. So acquisition involves many aspects, the negotiation, the identification of the company we want to acquire, the fit of this company in our strategic plan, which is the starting point. We do the plan, then we identify the companies that would solve or address the expectations that would fit in the strategic plan. We search, initiate the contacts and then we do the acquisition. During this process, the preliminary identification of possible synergy is extremely important. Afterwards, the integration process approximating myself to your question, our process of integration is never a process of saying we acquired this, who's the boss now is me. It's going to be my way. No, none of that. When we acquire a company, we prefer to buy a good company that have values, competencies in several areas. We want to stimulate the continuity of the performance and the characteristics of the processes they have that should be very good, learn with them. And if they're really good, we bring it to our other companies so we can incorporate the good things they do, having better processes that we will incorporate from the companies. But there isn't a ready recipe or cookbook. There are companies that we acquired where we needed to keep the Board, the management body as it was and deliver little by little our financial standards or ethics standards, policies for employees, ERP incorporated in the correct time. There are companies where we did this faster, if there's a bad system and we need to fix it faster and other companies like Kuo Refacciones, we are keeping their system during 1 or 2 years. We could introduce our SAP. They have SAP Hana 4, which is similar to ours. We could do this transition faster. We chose not to do it to buy the services of the old owner for 2 years. We saw there were benefits, low-hanging fruits more synergies to be captured in other areas. If we would introduce SAP, our SAP at the beginning, we would put in a lower priority initiatives in other areas, and we consider that the best for us would be the contrary. Each case is a different case and the stories developed in a different way. All these acquisitions, our vision is of partnership with the acquired company, so we can motivate all employees of this new company, the management of the new company extracting the most of this integration. And the integration process is becoming one of our core competencies. It's not just a matter of acceleration. We don't have a pattern or a standard because each case has its own perspectives and business dynamics that are different. These are my comments regarding integration of acquired companies. Our OEM continues in its restructuring market. Paulo and Esteban mentioned, we continue with this high Selic rate. The market feels it very much. You probably saw with the truck manufacturers reduction, less vacation days, less production day for heavy trucks, we feel the same in our semitrailers or trailers, sorry, the agri didn't take off yet. Sales of new trailers this year is 15% in the first quarter, 15% lower than the equivalent period in '24. The volumes are lower due to the reasons presented by Paul. The mix continues, this favorable mix where agri business, which is our strength continues low and the industrial load, this actually presented an increase. So less favorable the first 2 months of this year compared to '24. We continue with our process, expanding our productive capacity close to the Southeast market, the big market in Brazil, we continue with our investments in this sense, we continue with the restructuring to close auxiliary sites, for example, Araraquara, we had 3 operations in Araraquara. We closed one. We are in the process of consolidating the second one also. In the original plan for Araraquara, also rightsizing of people. We continue our activities in the sense of making adequate to the specification of the products where we offer premium characteristics or features. But in some segments, the market doesn't pay extra for the premiums. In these situations, we are in a process of putting products all with quality, but products more aligned with what the market is paying. So this type of initiative continues from our side. We continue with our investment plan in automation and productivity gain, greater efficiency for manufacturing, everything that I said in the previous meetings, will they continue to be executed fully. I hope I answered your question.

We have more questions in the queue, but due to the time, we have to finish the Q&A session. We're going to the last question of the day from the analyst, Luiza Mussi of Safra.

Can you hear me?

Yes.

I want to talk about the Addiante operations. Can you talk about this result looking to the future, what is the vision of the company? How relevant do you believe it will be in your results?

Thank you, Luiza. I'll pass the floor to Paulo, who's going to talk about Addiante. Go ahead, Paulo.

Thank you for the question Well, in the last quarter last year, we had a relevant impact at Addiante, especially due to the contract we had with Ambipar. This was over 1,600 assets this formalization ended up bringing higher volume. This impacted in a positive manner our line in patrimonial. We're very satisfied with this JV. It's an intensive capital business with higher interest rate, this generates more opportunities for rental implements in trucks. So we have bold plans for the future in a certain moment, thinking about listing in the higher equity market. Our drive at Addiante is the growth drive. It's what we will continue to see for the next years. We're very happy with this operation.

Thank you. We want to thank everyone that participated in our video conference. Everybody that asked questions, our IR team will get in contact with those that didn't have the opportunity to have their questions answered. We will pass the floor to Daniel for the closing remarks.

Good morning. I want to thank everyone, analysts, investors present, reinforcing since not everyone could participate, we had the comments of the relevant changes in management will be effective September 1. I was CEO until '21. I would say that this is an important moment that Randon Corp is going through as Executive Committee. I return in a phase of more maturity in governance. I want to thank Sergio Carvalho for the work in the last years that put Randon Corp in a new level. We're happy to be able to count on Sergio from September on as Senior Executive Adviser will continue to help us as Randon Corp and the most strategic sensitive points of the company, internationalization and support to our colleagues in the Executive Committee, especially due to the moment that we see a change of management as a transition moment that reinforces Pontalti coming as CEO of Frasle, a new moment of Frasle Mobility. That's important. We say that Randon Corp continues to work looking '25 as a challenging year, but with important projects continue to grow with sustainability, generating value to the shareholders and stakeholders. I want to thank once again the presence of everyone on this call, and we are available for any questions to clarify anything or changes in the management, we are available. Thank you.

Thank you, everyone. See you next time. Bye-bye.