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

Good morning, everybody, and welcome to Randoncorp Day 2025. My name is Caroline, I'm a specialist in Investor Relations in the company. And I'm very happy to be here for this event that we prepared for all and our Executive Board. It's very important to count with your presence again with a partnership with APIMEC. It happens hybrid, and we have people here presentially in Sao Paulo, and online. And all of you that are watching via the Randoncorp channel on YouTube. And for the excitability and the diversity, the event counts with simultaneous translation into English and liberal interpretation. Today is a day dedicated to transparency, connection and to listen people and help to foster richness before presenting today's agenda. I'd like to say that the information bring here in this event, they are related to future events and they depend on circumstances that may or may not occur. I'd like also to say that this event is being recorded and that will be made available in our Investor Relations website and the YouTube channel, Randoncorp. And today, in Sao Paulo here, we are very happy that we don't have everybody -- we are here not in the south of Brazil because it's really cold in our city in Caxias do Sul, it's minus 2 degrees today. So this is why we are doing this event here in Sao Paulo. We are very happy about it. Going through our agenda, we are going to start with the message of the President, Daniel Randon. And then afterwards, Sérgio Carvalho will present our core business, which is aftermarket. And then we are going to have Anderson Pontalti, the EVP, International and CEO, Motion Control; and Ricardo Escoboza, the EVP, International and CEO, Auto Parts. They will present Randoncorp in transformation. After that, we are going to have the Q&A session that will be moderated by the IR and Corporate Finance Director, Esteban Angeletti. After this block, we are going to have a little break. And afterwards, we are going to have Sérgio Carvalho and Ricardo to present preparing for a new cycle in the OEM. They will share with us how they are preparing this vertical to resume the market. And then finally, in the last panel of the day, we are going to have Paulo Prignolato, the EVP, CFO and IRO of Marcopolo that -- who will talk about how we will reduce our leverage within this scenario and in this context we are living now. Afterwards, we are going to have a Q&A session, this time moderated by Davi Bacichette, our IR and Corporate Finance Manager. And the final message to deliver the APIMEC CEO certificate, we are going to have Daniel Randon and Ricardo Tadeu Martins, the President of APIMEC. So now I'm going to explain the dynamics of the Q&A. All of you that are here, you have a QR code on your name tags and you're going to scan that and write your name to indicate that you want to ask a question. The people online will scan the same QR code that will show up on the screen. Let's see if I have anything else to say. Another thing is you must indicate your participation throughout the panel so we can organize the final moment better in a -- if we cannot answer all the questions, we have open channels with our IR team. And now for the official opening of our event, I'm going to call Daniel Randon to the floor. He is the VP of Randoncorp. Welcome, Daniel.

Thank you, Caroline. Good morning, everybody. I would like to thank your presence and everybody else that's online. [ David Randon ], the Counsel -- the President of the Board is also present, the COMEX, Sérgio Carvalho, our CEO; Anderson Pontalti, Paulo and Ricardo and all our IR colleagues from Randoncorp, especially investors, journalists and our fiscal counselors, advisers. So we are really proud of being here again to talk about Randoncorp inside APIMEC. I would like to thank Ricardo Martins, the President of APIMEC. Randoncorp, it's good to highlight, we have over 76 years of history, my father and my uncle, they had like a little workshop. They would repair semitrailers, auto parts, and that's the beginning of the story. And today, we have 5 main business verticals, and we are present in over 125 countries. And we have 19 employees, our protagonists. We are very proud of it. It's a company that has been working with governance since the '70s. We are public health company. This is why we are one of the multinationals in Brazil with global presence, one of the biggest players in the automotive market, a pioneer in the development of technologies for mobility. We are leaders in our businesses in America. We have strong brands that are recognized, and we work with synergies and opportunities for businesses. This is our map. This is where we are. In the past years, through greenfield and M&As, we increased our businesses with 34 industrial units, 9 commercial offices, 28 distribution centers, 9 solution companies to offer services and 3 areas of [ R&D ] where we have created innovations and disruptive technologies. As we mentioned before, the 5 verticals -- especially in the capital markets, it's important to reinforce these businesses that Randoncorp has got today, especially the auto parts, the semitrailers, the rail -- that's 30% of our revenue when we talk about Suspensys market, our auto parts, Castertech and the movement control of Frasle Mobility. This is our main business, almost 70% of our revenue. This shows a major change in our past years. And then Sergio is going to talk about it later. We can have less volatility in our revenue and grow more and more, bringing important areas, financial solutions and services in our -- we had a joint venture with Gerdau in the location of equipment and recently an investment in [ ADB ], which is a company for financial solutions and technologies for softwares. Only in this company, we have a squad with 25 people working in AI, and it's a company that works for Randon. And its revenue -- it's 80% of its revenue, it's other businesses. So Randoncorp through advanced technologies with opportunities of new businesses gives us a very important portfolio. We act on agribusiness, mobility, aftermarket, spare parts, retail, technology. So Randoncorp in the last decade, I can see it increased its business portfolio, always looking at the business view, which is focused on mobility solutions and connect people and generate prosperity and richness -- all of that is interconnected in transportation solutions. And I would like to talk about -- we had a small workshop with entrepreneurs in the '70s where we started with the first technologies. We tried to bring from abroad. In the '80s, we had the first joint ventures such as Master. We have 40 years of joint ventures, and we renewed the contract for over another 40 years. JOST is a leader in the Fifth Wheel Segment in the world. And we have 30 years of joint venture with them. So it's important to highlight the capacity of Randoncorp in governance and also to work with partners and players, and that has been helping in the past decades, our company to grow. And we have a diversification of products, partnerships and professionalism. And I also would like to highlight since the '70s, we started exporting with these joint ventures and partnerships, we only implemented -- we increased that, reinforcing our last cycle, showing our increased growth, advanced technology, disruptive technologies and our internationalizations and consolidation abroad as a global company. So here are our growth drivers and internationalization. Aftermarket, it's growing more and more. Sergio is going to talk a little bit more in detail about it. Innovation and services, when we talk about the ESG vision, we cannot only talk about governance, social and environment if we don't invest in disruptive technologies for our ambitions and also to increase our production capacity through the expansion of our portfolio and also to be present in strategic geographies for the growth of Randoncorp. When we look at our history in the past 10 years, we grew a lot. We had a BRL 3 billion revenue in 2015 and BRL 12 billion in 2024. We are trying to grow EBIT with important margins that will make our business more sustainable through M&As such as greenfield and investment in other businesses. And our major challenge is to always work together with our stakeholders for a more profitable business, paying more dividends and having a solid leverage, especially in a market that is so volatile related to exchange rates and interest rates. When we talk about revenue distribution and business transformation, as I mentioned in the beginning, in 2015, the auto parts was almost 50% and in 2024, almost 32%. And in the first quarter of '25, less than 30%. That highlights our growth, how auto parts are so important for the diversification of our business, a solid business. When we talk about ESG, I would like to highlight ESG is not new to Randon. Since the '70s, we are a public held company. We have joint ventures and partnerships with important companies. When we talk about the social side of our business, we have over 40 years the project social actions and environment in the example of Fras-le since the '90s, 1995 more specifically, with a 14,000 ISO certification, Randoncorp has been working in ESG, not only inside our own purpose, but also our leadership, they bring disruptive technologies in an innovative thinking. So we would like to reduce our greenhouse gases in 40% up to 2030. And we have done a lot of work, the biomass boiler, and we are doing footprints in our business chains to reinforce the opportunities to improve our businesses. And we have clients in the end, global clients that want net zero carbon up to 2040, and they want to work with suppliers such as Randoncorp that can actually give that to them. And that's our example. We have been doing that in the [ ECs ] Axle. It's been reducing fuel consumption in 25%. And this is an example of products where clients that have that in the end, they are global clients that want decarbonization. We have -- we are working on -- we have to wait for the approval of a law that is going to be really important, but Brazil related to environment has got an opportunity to grow on that side. And in 2025, this year, we are going to reach our goals to zero industrial landfill waste, reuse 100% of treated wastewater by 2025, double the number of women in leadership positions and also zero serious accidents in our operations. This shows the investments the company has done for our public commitments. When we look at our business environment, we have a more volatile world. We can see that scenario. But if we observe the Brazilian scenario, the agribusiness is showing semitrailers and heavy trucks. When compared to 2024, it's a little bit smaller, the net revenues, it's a challenge with interest rates at 15%, and that poses more pressure on cash generation for all the companies in Brazil. It has been present in the macroeconomic scenario. Consumption and services is -- the government has been incentivating Consumption. Aftermarket also has been increasing. And talking about Class 6 and 7 trucks, it's a constant. And it's important to highlight that in the USA, it's going through a volatile moment with fees, and we have many challenges when we observe that, but also opportunities as Randoncorp. We have observed that closely, the demands of clients in the U.S. and opportunities for Brazil. We have challenges and opportunities at this volatile moment of the macroeconomic environment. It's important to the diversification and internationalization. We just disclosed a relevant fact where Frasle Mobility has an increase in capital, primary and secondary at this moment, and that reinforces the leverage and the opportunity of Fras-le to improve its net revenue in the capital markets. There is an operational restitution work that we have been doing, reducing opportunities to look inside our company and spot opportunities, especially in medium and long term with capital return and equity. New acquisitions, Randoncorp has been showing to be efficient in the integration of new businesses, acquisitions and synergies. This reinforces our position, our brand, our development. So for business environment, even though we are in a volatile market, we are reinforcing our leadership, our positioning, our brand with the clients and stakeholders. This is why it's so important for us to be present at this Randoncorp Day talking about Randon, and making ourselves available for question and answers in the end. So I would like to thank you again for your presence, and I'll give the word to Sérgio Carvalho, the CEO of Randoncorp. Thank you, and good morning.

Thank you, Daniel, for your message. So now we're going to look at the first panel of our day, which is our main business replacement, along with our CEO, Sérgio Carvalho.

Good morning, everybody. Once again, thank you for being here. It's always a pleasure to be able to share a little bit of Randoncorp that I've been doing with you in the past years. Now I'm going to talk about a transformation that started many years ago that is really important for the future of our company. We're going to talk about our main business, which is the sector of replacement. There are sectors that are common ones and some that we want to focus more in our cycle, this current cycle. And the replacement of goods is one of them. At APIMEC, we talked to you about this, and we asked which was the sector that we have that represented a very important aspect. So replacement. So in the first term of this year, 46% of our net revenue of Randoncorp came from this segment. And globally speaking, not only the replacement of our products in Brazil, but globally speaking. As you can see, 37% comes from the motion control and 9%, which is growing comes from our auto parts and assembly also. Here's the idea of the progression. The round bar represents the absolute value of growth in this cycle from 2018 until this year, the first term, we can see all the figures of the growth. And in one term only, we grew BRL 1.5 million in replacement. On the curve at the top, you can see the growth in percentages, concluding at 45.7%. We saw some peaks in the markets that made the percentage drop, but the trend is really important, and this sector is really important to us. Here is our second cycle for our strategic planning. I would like to mention that we have already shared some of this in previous events, all of our plan with all of these items that we have here, but I'd like to highlight that we began this path to create a replacement powerhouse in 2017 back then. And at this point, we are experiencing this new phase, which is the expansion of our replacement powerhouse. So we're doing it on purpose. We're following a plan that we developed, which is really important for our group. We're talking about aftermath. So in the beginning, our goal, for example, we talked about electrification in the past and autonomous vehicles, a lot of changes in technology. And we were thinking of how we could grow in a more consistent way. What is our safe space. And at that time, we thought about aftermath as being our safe spot. On Monday, let's imagine that all the trucks had new technology. Aftermath would be focusing on the fleet of vehicles. So aftermath represented a safe spot. It's much more than that. At the time, we thought about investing something that would be a safe spot for us. That's why we did all of this work. And why aftermath? I mentioned it because it's a safe spot. It's a resilient aspect of the market. The markets are huge. We're talking about billions -- hundreds of billions of dollars are in this market. They are very big markets. Highly profitable. They generate a lot of cash. This is really important. It gives us an opportunity of being lighter in terms of assets to participate in aftermath. You don't need to manufacture all your goods in the company. If you have the brand as we're going to be talking about, you can do a differentiated kind of work. There's a lot of synergy with everything that we do, and it requires less investment for you to grow organic CapEx investment when you compare to an industrial unit. This is something we need to focus on. There are several advantages that helped us begin on this path. So talking about footprint and infrastructure, 28 centers of distribution. That's what we have, 11 different countries we are at. We are not used to talking about this, but I think it's important to talk about this, the metrics of the sector, thinking of a company that talks about aftermath language. So the positions of storage, the amount of structure that you have, this is a huge number, 127,000 storage positions, 128 square meters of total area. There are other important things to mention here. I'd like to share a little bit more, which are the dynamics, what's important in these sectors or segments. In the light line, there's something clear in its characteristic. It's predominantly -- it's not a rule of thumb, but most of the time, the aftermath of a singular final user, a person, not a fleet. There are fleets, of course, but it's not a rule of thumb. It's an exception. And this person doesn't know what brand to use. He thinks about maintenance, the brand. They go to mechanics to ask about the best brands in the market. So if you -- I ask you questions about your car, you won't know much about it. And the mechanics has a very important role in this process. He is the one that opens the box at the end of the whole chain. So all of the marketing and advertisement is connected to brands. It's what comes to your mind and what comes to the mind of the mechanics, it's important. So people have to have your brand in their mind. So the brand represents everything, brand in the aftermath for light line means a lot. In the past, you would have a car and you leave it at the mechanics for maintenance and come back 3 years -- 3 days later. Nowadays, people want it on the same day. So the availability is mandatory. I think Anderson is going to talk about that pizza analogy where the delivery is important because you want to eat something right away. So the same thing is happening with automobiles. You need to have the brand and availability. These are important points to be successful in this sector. And we also have the push-pull. I know all of you have presented and asked about this topic in previous meetings, what we do. We work with the brand, a lot focused on it, creating value for the mechanics. We have to be in their minds the whole time, and we work with all the major distributors with sales campaigns, supplying, understanding their needs where there is a synergy. That's the push-pull. This is really relevant for this sector. The heavy line, it's a different story. Normally here, the fleetists are multi-vehicles. It's not the same as what I mentioned. There are exceptions. There are singular final users too, but the rule of thumb in general are fleets that have many vehicles and the people that specify the product to use is the owner of the company, the maintenance manager, the operations manager in general. And the decision of which product to use depends on the cost per kilometer run. The brand is also very important here, maybe not as important here in the light line. But maintenance here usually is scheduled more, not by chance and durability is mandatory. Just to share with you the importance of the dynamics of this, and I'm going to explain more why I'm mentioning all of this. And within Randoncorp, we have the participation in the light line in the powertrain segment, suspension, brakes, steering wheel. Now we are focusing a little bit more in the powertrain for the engines area, which is important. In the heavy line, we act on suspensions and brakes, coupling electrical parts, ABS, EBS and the wheels and tires. The motion -- the vertical motion control is more predominant in the light line, on suspension and brakes and other products. In our vertical auto parts, focus is mainly in the heavy line, and we have an overlap of that the company participates in. And just to clear up some questions from previous events, what is the space of this company or this other group? This is how we see it. There is an overlap. It's going to continue to happen. But the priority space of each one of these companies are outlined here. We talked about the brand, the importance of the brand, look at this here. Our auto parts assembly, the names Randon, Master, EBS and all of the master techs, they are all extremely important. All of these other names here, Fritec and so on, these names are very experienced. The mechanical -- the mechanics around all know of these brands. The brand is really important. Why do we consolidate it all and call it Randoncorp? Because the brand is -- why don't we do that? Because the brand is important. People will remember the names. They'll remember aspects of these companies. There are -- you can consolidate a brand. So aftermath is important to keep the brand in the minds of the mechanics. This takes a long time for people to connect and create a relationship with their suppliers. This is also one of the reasons of our success, the way we work with these names. Anderson always says about the importance of having a connection of the final user. Anderson repeats that a lot where the brand is the key to it all. It's not only the brand, you have to create value for our users. And Auto Experts to us has been an excellent experience in the sense of us focusing on creating value for our clients. As you create value, you are feeding the importance of the brand in their minds. And at the same time, you are doing your partnership side of things, creating loyalty and increasing loyalty. So the Auto Experts began with an electronic parts catalog and they evolved to create value more and more and specified technical products. And to specify technical products is much more complex than buying clothing on the Internet. You have to find different parts for the same vehicle, and there are several different products available. Sometimes you can make a mistake and the Auto Experts helps you through the signs where to find the parts and there are several other attributes in the sense of creating value and facilitating the experience and the journey of the client. We believe in the aftermath so much. We're investing a lot on it, and I'd like to show you a video to show you a little bit of this path. In May, we had 1 million access in the Auto Experts portal. I don't know if it's the software or the package that is considered the best in this segment. I don't know of others. I can't compare, but I am sure it's one of the best that is out there in the market. So I'd like to show you a quick video so we can talk a little bit about Auto Experts, the services platform that speeds up your businesses. Welcome to Auto Experts, a platform created to make the distributors' life easier, auto centers, mechanics, workshops. Here, you find functionalities that transform your routine, type the license place of your vehicle and find the auto parts that are available. We have to find the products in the nearest sales points. Download these in PDF, all of these catalogs. And [ Club ] Experts is the best product in the aftermarket, training and technical visits, speed up your results, rebate, part of your purchases is turned into money for your business. The more you purchase, the more you get. Close to the factories have access to technical and commercial information directly with the manufacturers, financial services get credit to invest on parts and also the expansion of your store, Auto Experts, the platform that speeds up your business, access Auto Experts or download our app in App Store or Google Play. Excellent. And what are the differentials of Randoncorp and Aftermath? First of all, the culture of the aftermath segment focusing and with a lot of attention. What do I mean about culture? Let me tell you a little bit -- a small -- a short story about this. Fras-le has always been an aftermath company since its beginning. Why? Because for each product that sells to manufacturers, it sells aftermath products as well. It's always been an aftermath company. I don't know the percentage 50 years ago, but it was always this kind of company. But Fras-le did not have the culture of aftermath. It had the OI culture. What do I mean? All of the metrics to analyze its performance focused on OI, all of the discussions, everything they thought about the OI business where its major business was aftermath with better margins, but it didn't have that click, culturally speaking. And this click happened, and I think Anderson will remember this, where we started to change and we started saying, no, we are an aftermath company. That's when we transformed ourselves into an aftermath company after that click. That's when we started this journey that all of you know of. So we have that click taking place because before everything we were doing was connected to OI. Nowadays, many companies only think about OI. Most of the competition that work in both segments, but they don't follow this aftermath culture. The trucks or vehicle market is good. So they think that aftermath is not as important when businesses are good. We did that in some of our units in some of our companies. And now they are migrating more towards the aftermath. So I think Ricardo is going to be talking about that aftermarket, I'm sorry. So the culture is important. When the market is not good, you are working with aftermarket. One of our major advantages is that our competition in the market, the market of the trucks is not so good. So this going back and forth, changing the focus sometimes is not seen as something positive. We have brands, our own brands. The brand is really important, as I mentioned, as you have a brand consideration, if you add more products, they trust so much on the brand. In our case, as Fras-le, we work with brakes and you start putting a different product on the market, they all trust. The infrastructure is important, capillarity, footprint, sales point, the experience of the user, not only for you to keep your brand out there. But as you create value, as I mentioned about our app, when you create value for your clients, the trend is them being loyal to you, to your business, and you can grow along with them. If they are being successful, they will recognize your work. The scale, the size of the company, the volume are essential and the portfolio of products that we provide. Randoncorp has a different portfolio. It's not just 1, 2 or 3. There is a portfolio of differentials, which is huge in the aftermarket, 83,200 SKUs, different parts, 83,200. That's a huge figure, 3,800 distribution points that we have as a company. This gives us a capillarity that is envied that made us our major aftermarket player in Latin America. If you think about big names, big companies, you can think that Randoncorp [indiscernible] that we are the major player in Latin America. We act in the Brazilian market in Europe, in LatAm, in United Kingdom. But just to show you a little bit of the size of our business, we have a fleet of 42 million vehicles, South America, 17 million; Mexico, 32 million; Argentina, 12 million; United Kingdom, 44 million; Europe, 345 million; United States, 231. We want to continue -- the market is gigantic, and we would like to continue growing, focusing more in the North American market. You have seen that we have talked about it, but also in the European market, we continue our journey. We have a major potential for growth. We have -- sorry, it's breaking. In general, we have grown in every single line of product. All of them have had a lot of progress. So we have more space to expand our portfolio. As I mentioned once, in a specific geography, if you have a brand that's respected and well known, if you add more products to that brand, it's easy. It's not hard to sell. It's part of our plan. It's like [ Emerson ] says you buy the fast pass. He uses an expression like that. You cut the line and you enter the playground in a much faster way. We have iconic brands when we work, when we create those brands, we have fast access to the market, and we would like to expand. And it's much easier to expand our portfolio and act in other geographies with ABS, [indiscernible] and other companies, and we are going to have more movements and markets in the future. So I will leave you an invitation here to think about Randoncorp in a different way from now on. We give our results in 5 verticals. But behind it, we have aftermarket. We have the internationalization of the company in a very strong way, and Anderson is going to talk about it and Ricardo also. And I would like to invite you to look at our company as it is in this journey of the company we are sure that in the future, it's going to be even more robust because of its planning and design. Thank you, people, so much. Thank you, Sergio. Sergio has introduced to us that Anderson and Ricardo are going to give a bit of context of what he brought about the aftermarket, its importance, the numbers you saw that they are real, the 46% of revenue. But when we talk about EBIT, it's even bigger than that number. And for our second panel, which is Randoncorp in Transformation, this panel is going to be divided between Anderson and Ricardo. And to start, I will call Anderson Pontalti and please start participating of our Q&A through the QR code.

Good morning, everybody. It's very nice to see our friends here who is here and who is online. We have the third generation of the family also here, but I have a little complaint after -- to speak after Daniel and Sergio is not easy, but I'm going to use a little bit of their speech and to continue with mine. I'm going to talk about international advance. Sergio exploited really well the strengthening of the aftermarket, which helps us to generate cash with resilience, allowing us to make investments and strategic movements in other geographies. And maybe in the future, we can replicate this model of a powerhouse in other places. And it has already started to happen. Just to give you a bit of context, I'm bringing a graph that represents the relevance of the international market inside Randoncorp. This year, 33% of our revenue comes from abroad. It's been designed by the company. Above all, after 2015, we have acquisitions that were relevant in the Brazilian market. We have market share gains and businesses in the Brazilian market that are very positive, but brought a dependence of this market. And during the cycles of planning before, we wanted to advance in new geographies abroad via Fras-le Mobility and also via Randoncorp and all its business verticals we used to have in 2015 because of 2 reasons, we had an important international presence because of [indiscernible] were not incorporated in those numbers. And we have a recession in the market. It wasn't -- the market wasn't so good. So that was a nontypical situation. But the structure is shown here. It can be 30%, it can be 35% around here. It depends on the dynamics of market and it has been designed, created and we delivered that in 2025. So you can have an idea of the evolution of the countries and geographies that we are. We can see that the North America is very important now. You can see the size of the market and Europe also, these are markets where our foreign revenue is important. Central America and South America are a little bit smaller. They represent a little bit less now. And when we say that we want a more mature market, we are proving that. So 2025 is already a check in our strategy. Now talking about the cases of internationalization. First, we have Hercules. We acquired this company not long than 2 years ago or about 2 years ago. It's a company that has got many decades. It's focused in a segment of container chassis in the United States. All the sales is associated. This is -- these are not U.S. sales. These are not America sales. We have sales to Canada also. And the full semitrailer sales. Here is now a segment of container chassis of 380,000 semitrailer in a normal market position, which is not -- today, the market is suppressed, it's repressed because of uncertainties of that geography. When we acquired this company, our objective was to access the semitrailer market in North America with a small operation and to open a possibility to start shipping our aftermarket solutions. And also, it has to do with our long-term plan and stability of revenue with a strong currency. These are the main captured synergies. We have raw materials being consolidated [Audio Gap]. We expect to sell at least symbolically, at least in a trial, 10 products of that part. The next step is the forest market, which has a similar base of container chassis with access that go up and down. And we would like to invest in niche markets with high tickets in this log trailer market. With low investment, we can navigate other niches and reduce the dependence on cycles of segments, specific segments in some specific geography. That's what we have been working on. When I go to Flatbed, I go to [ AXN ]. It's a company from -- with 209 -- with 70 employees, 80% is OEM and the other part are parts for maintenance and repair, renovation of products. Here, we have a model of synergy that's more important. The model we have in Brazil of aftermarket helping us that Randon starts to be developing that geography. We focus in trailers market, not only container chassis, we start to navigate other potential products, for example, cargo and the volumes -- that are the biggest volumes of that geography. We have sold products for this manufacturer, and it's aligned to -- it's linked to the local content strategy because Randoncorp understood that AXN, it depends highly on components and suppliers from Asia. And we are doing exactly -- we acquired this company to do this transformation. We started to supply logs welded from Suspensys to this operation that happened. And we are working and planning a manufacturing line or finalization of the logs locally where we are going to get the log from Suspensys in Caxias do Sul , which is a pipe that's welded. We are going to sold welded components, brake components, the brake adjustments, the brake cameras we are going to weld and paint locally, increasing local content and reducing our need of work capital and being able to be close to the demands of the market and being able to answer this demand more quickly. So these are the synergies that reflect that. And from that onwards, we evolve drums, tubes, axles, support. We start to navigate the aftermarket for the heavy-duty line with the AXN. And we understand that's a very important platform. Up to now, if you remember, we acquired that with a combined amount of inventory. So we have a sales plan to renew that inventory. In this 90 days that Trump allowed imports with smaller rates, we know that, that's not certain, but that guarantee a supply until the end of the year. And we will have ready investments allocated up to January next year. So you have an idea of the products because it's all new to us. They are similar products, but they are specific for the American -- North American market with the sizes and specifications for that market. You can see axles, suspensions -- mechanical suspensions and bogie and slider. They are very characteristic of the American market. They are part of the portfolio and all the components associated to the repair of these products are also part and they represent 20% of this market. Talking a little bit about Dacomsa is the major acquisition of Randoncorp since the 14th of January. It's not an easy company, has the age of Randon, 1949, it was its foundation of Moresa Pistons, they are very solid companies. And I would like to remind you of what Sergio said, brand is everything. These brands have been built since 1949. This is why brands have intrinsic intangible value in the aftermarket. For CG's 3 factories headquarters in Mexico, 90% of the sales are linked to the Mexican market, 5% North American market and the rest connected to the Latin America, more concentrated in Peru and Central America, 90% is light line and 89% is heavy line passenger vehicles. We arrived in Mexico as a leader. We got there already leading the market, and that's really important for us to grow in that geography. I'm going to show you a little bit of the products. We have pistons that's really big there. We are learning about engines. They have been a surprise. These are the items that people -- mechanics buy the most. Nobody wants to have to reopen in vehicle engine when you have like a maintenance failure because the part represents only 30% of the repair cost. The other -- the rest of the cost is labor. This is why the brand brings reputation, quality, services offered reliability. This is why we like it so much. And as a consequence, our margins are very attractive. What are the opportunities in Mexico? Powerhouse, I mentioned before, the fleet is really big, similar to the one in Brazil, but older, 16 years average of the fleet and a great opportunity here, the friendly shoring and the nearshoring from Mexico, we can start navigating isolated markets the main synergies have been captured. We mentioned BRL 30 million in a horizon of 5 years today through the launching of product lines, efficiency outsourcing. These are all the roads we can -- we are working on, and we can say for sure that the BRL 300 million will be surpassed. And they will be -- they will happen before the 5 years plan because the sourcing opportunities are more evident. They are bigger than what we expected. They take time to be captured. They will reflect in our results from 2026 onwards. So we are really happy with this acquisition. We know the success of Fremax and Nakata. And now we are sure that we are going to show the success of Dacomsa. And I would like to wrap up looking at other geography. This company we acquired in 2023, Juratek has -- I'm going to show a little bit of the profile of the company, saying that it's an asset. We had -- it was a brand and a channel that was ready. And I want to show what we have already delivered with the synergies, we have started to sell the commercial line of Fras-le. Juratek has expanded its line to other territories through a team that has done all the supply team. And with Dacomsa, we are going to have an opportunity to improve performance. We said we are going to deliver GBP 5 million of synergies. And in 5 years, we have implemented GBP 9 million, and we are not in the fifth year yet. The EBITDA evolution was 15.3%, if we forget the results of the company, 37.5%. We paid -- basically in 2.4 years, we paid for the whole acquisition. So this is what we have been doing related to acquisitions. And I will stop my presentation. Ricardo is going to talk EBS now. So thank you so much, and we will be back for the Q&A.

[Audio Gap] synergy. So a combination of everything that we saw in terms of success. And to continue with this success story, I'm going to call Ricardo Escoboza, who is our Auto Parts CEO and our Vice President for Latin America. He's going to talk about this a little bit more. Welcome, Ricardo.

Good morning, everybody, for the people that are here in person and people online. So continuing, I'm going to bring some updates about the main projects of auto parts vertical that we have recently developed last year. The first one is the acquisition of EBS, European braking system, a company from U.K. founded in 2000, approximately 130 employees, 6 distribution centers since though we have mentioned that it's from U.K., there are operations in Ireland, Romania, Holland, Scotland, the U.S. and China has several distribution centers globally. It serves more than 100 countries, but 42% of its sales is in U.K. However, it communicates 100% with everything that we've mentioned here by my colleagues, all of these sales, we are transforming them in actions accomplished in the aftermarket and strong currency. 98%, almost all of its sales is connected to Europe and strong currencies. And it has more than 35 SKUs. It was acquired by Master, our joint venture and to have a comparison basis, Master in the local market has 1,000 SKUs. So a brakes company that more -- that has more than 35,000 SKUs has been acquired, and I'm going to explain more. It is the first M&A, an international no one on auto parts and another important point that's providing synergy with our other activities is related to e-commerce. They have a very strong e-commerce in U.K. where more than 35% of its sales happens there, and it provides more business possibilities for Latin America. The other -- the items that have been mentioned, a long-term wise relationship capability, strong brand in Europe that brings robustness of the European braking system by Master. Talking about the strategy of this acquisition, before this acquisition, the sales channels that auto parts vertical actuated, it was by Randon or others. Now the auto parts vertical is more international, has more resilience and diversified its sales channels with EBS now working in Europe. It will highlight its several distribution points, 1,000, and now it's going to be 5,000 distribution points adding up. From -- Master is a leader in the national market of brakes system, mainly wheel brakes that goes on the trucks, the bus, the semitrailers, the axle of the brake system. It has 70% of market share, the other 30% is in-house of the OEMs or else it would have even a larger market share. The introduction of EBS and Master's portfolio expands the geography of Masters, where it's acting -- where it's working and also expands the product portfolio for EBS' market in Europe as well as in Latin American market. The brake system has several parts, compressed air for pneumatic and several valves. And when you step on the brake, you actuate the commercial brakes, which Master possesses. So it expands this whole system. It works with clutch system, stability, electronic systems, all of that expands a lot our business. The main captured synergies here, access to a new geography through Masters line, an additional portfolio through Masterflex, which is a second line of Master focus on aftermarket. It increases the lines, the supply base. Last week, for example, I was in China with EBS guys and the Masters guys, and they have suppliers that work through Masters or EBS. When we got the adding both capacities, we understood that there were some suppliers in China that 50% of their production was destined for both of them. So now our volume is worth gold in the Chinese market. Everybody wants to supply, and they do a lot of robust activity so we can expand our businesses, have better commercial opportunities. All of this is connected to the ESG topic because you have -- you take the part that's in the field, you clean it, you do the repairs and then take it back out into the field. So you have less raw material and power consumption, and that communicates with the ESG topic. This is a new product that Masters is able to start working with here in Latin America. Experience in aftermarket and one of the activities I mentioned about last week is to increase 30% the warehouse that we have in China to serve the markets because everything goes through Manchester, then goes to Holland. Now we're able to provide and supply in China and also in Latin America. As I mentioned in the beginning, e-commerce is essential. And one of the main things of EBS is this acquisition that's providing synergies for Masters, which is the next-day delivery. In 24 hours, it delivers in all of Europe, the needs that our fleets need. And this learning opportunity is being brought here to our auto parts vertical. More than 30% of increase in revenue with e-commerce, more than 70% of the people that use e-commerce come back for a new purchase and the amount of number of orders is huge, more than 23,500 orders per day through the e-commerce. Let's talk about the Mogi Guaçu site, which is strategical for auto parts vertical. It's very close to our main clients, the OEMs and the aftermarket. We have the possibility of expansion. We only use 30,000 square meters of built area. We can save a lot of area in this area. So this provides an expansion possibility, climate changes, they are happening. A year ago, look at what happened in our state, this geographical diversification to be able to be there for our clients is essential. That's why we are investing in the Mogi Guaçu site. The climate change is a reality in our market. High automation level factories, I'm going to talk more about that and the capture of synergies with other units, optimizing fixed costs through a more integrated site within Mogi Guaçu. Talking about Castertech Mogi Guaçu, there is a growth of 20,000 tons per year in Castertech's capacity of molten iron. We did the SOP of this unit in June of last year. We started producing 1,000 drums per month, and we increased a lot. Now we're doing 300,000 per year. Our focus is 18,000, adding up to 200,000 tons -- 200,000 drums per year. Potential for exports to the U.S., as Anderson mentioned, several tariffs for exportation that opens an important window for us. A lot of people are seeking us and ESM to be able to supply for the North American market. These tariffs are barriers for the Chinese suppliers. And one of the major players in the American market went bankrupt, and that provided an opportunity for us to provide brake drums to the market. Talking about the state of art in the production of brake drums, the same brake drum that we produce in Caxias do Sul, we have 50,000 people working to produce that. In the Mogi Guaçu unit, per ship, we only use 13 people for that. It's an amazing automation that we have in this line and the ramp-up and this launching has been happening in a better way than we even expected. And no doubt, it's a major opportunity of using NIONE, one of our advanced technology companies with niobium. It provides more resistance, reduction of mass and a better competitiveness to reach the market spaces and to improve the line that we have within Mogi Guaçu. Talking about Castertech and Indaiatuba, we have a 10,000 ton per year capacity where it produces components for agricultural machines, Caterpillar, John Deere and also construction machine and also smaller machines where we do -- make the support. Fras-le companies buy from it and other companies. There are smaller companies to produce supports for the brake system and suspension system. We have Castertech and Mogi Guaçu starting with 22,000 tons per year and can double there in this location and the Castertech matrix with a higher capacity for producing 50,000 tons per year. The combination of all of these provide 105,000 tons per year of capacity for Randoncorp, and the components part is that we still buy molten iron from the market and Caster Mogi Guaçu coming in provides synergy and helps us reduce international purchase or external purchase and that provides a lot of opportunities. Talking about Suspensys, Mogi Guaçu is a new plant. It's ramping up. We launched it in the first term of this year. It is the largest order that has been acquired by Randoncorp. It's BRL 7 billion in 10 years. It's a diversification of products. We increased the size of our pie and Suspensys also increased the potential -- its potential market, working with front axles in commercial vehicles. So all of the commercial vehicles will be machined and assembled here, the production line, state-of-the-art are the lines that were of Mercedes-Benz. There are 2 older lines there, and we're doing a ramp-up coordinated with Mercedes-Benz. So there's no -- nothing missing. And we do the transfer of some lines, we buffer them, and then we work with the other more automated lines where you have all the AGV systems with the little robots bringing the parts, you feed the lines and connect to the needs of the demands and all of the torques, angles, transistors are all done through electronical systems that ensure stability with -- between the automation and production capacity and the ERP or SAP system, we have our EasyMES, which is a system developed in Randoncorp in our advanced technology center. It's a system that connects the production orders and the automation in the line. It's ongoing in the Suspensys Mogi Guaçu mill -- sorry, unit. It provides all of the visual information, reducing rework and rejects and provides the warranty of our products and our system and that is extended units. So just to bring some information I [ mentioned ] there, here, we'll have the new 2 lines. We have -- we are 50% above what we had expected with Mercedes-Benz from Brazil. We had foreseen for June around 70 front axles. We delivered 130 per day, and now we're going to move up to 180 in July. And next year, we're going to move to our total capacity of 280 axles per day in our Mogi Guaçu Suspensys unit. So we are delivering more than we had planned initially. All of these lines will be transferred until October and a higher potential of revenue within the auto parts vertical. Besides this, this unit enables us to assemble semitrailers. What's the intention here? We reduce the cargoes that left Caxias do Sul to meet the needs of Araraquara, reducing the cost. We're closer to the markets, the main ones there, the Central West and East markets and now the Northeast. And in the second term, we're going to start producing axles for semitrailers for the needs of Araraquara. And talking about the Mogi Guaçu site, we are about to conclude until the end of this year, the delivery of a new auto parts CD where Master is going to be located with all of the expansion of products portfolio with EBS and Suspensys. We're going to be closer to our main markets. We're going to have a lower cost of bringing imported parts through the Santos port and to be distributed here. And the synergy capture will be essential for us to expand our business and the penetration of aftermarket. There are more than 1,800 positions that we're going to be providing in this location that will be ready until December of this year. I'd like to conclude and mention that the trucks, buses and semitrailers markets when we compare the first 5 months of 2024 and this year's first 5 months, there was a drop of 5% in its production. And the auto parts vertical through these new businesses, EBS, Suspensys and Castertech, we grow 10%, way above the market, thanks to all of these business that we have conquered and that are providing a major opportunity in 2025. Thank you very much.

Thank you, Ricardo. So now we're going to set up our stage for a moment that I think is one of the most important one, which is our first session of Q&A. If you haven't participated yet, there's still time. Scan your QR code behind your badge. And if you are online, the QR code is on the screen. So to moderate the first session of Q&A for today, I invite up on stage our Director, Esteban Angeletti. I also invite Sérgio Carvalho, Anderson Pontalti, [indiscernible] Ricardo Escoboza to come back to the floor.

[indiscernible] that number, 46%, I was -- we are not here to talk about it in the house, and I'm happy we can bring that to the market. Geographies, internationalization, organic growth and nonorganic growth. It's a lot of topics we can approach. I'm sure there are many questions for us, and we'd like with the first question from Lucas Marquiori from BTG. Lucas, as you have the microphone, you can ask your question, please.

About the [indiscernible] I have a question. And this transformation for the group for Fras-le, I would like to exploit 2 major points. If you can explain how the distribution channel works in Mexico? We know that's a strength from Fras-le. Who are the main distributors? Can you bring a contract from USA to distribute in Mexico? What's the buildup of the Mexico channel? And secondly, it would be interesting for you to comment about the synergies potentially, if it's more than expected or a road map of what's fast, what are the verticals that are showing results before than expected. Of course, if you can let us know about that a little bit.

Thank you. Pontalti is certainly going to answer about this question. When we started to study Dacomsa, we recognized 2 major forces, the distribution channel and the brand. Pontalti talked about it before. And we mapped the synergies that come from 3 main pillars, all the cross-selling, we can leverage on this distribution channel, all the sourcing part, Pontalti mentioned also, but he will bring more details and the back office also, which is the third layer of synergies. We try not to interfere a lot in this layer in the beginning. But then afterwards, we do that to diminish fixed costs, especially, but talking about the synergies of sourcing is where we are collecting better benefits. Can you talk about it?

Thank you, Lucas. First question is about the distribution model. The distribution model is similar to the one in Brazil. It's not completely the identical. It has more experts in the market. My -- it's a very specific channel. It's a channel that buys -- depending on the volume, it buys directly from Dacomsa and the channel is similar, but our model is different in Brazil. We have factory operations, Victor, Moresa and Fritec, and we have [indiscernible] model with other brands, especially in transmission. And from that onwards, we feed our distribution center, which is Dacomsa. This distribution center in the middle of the country in Mexico supplies the whole of Mexico. From that, we send products to the Mayoristas, the specialists to engine repair, manufacturing companies, machining companies with big volumes and also we sell to other distributors, a classical example, Riley, AutoZone, [indiscernible] they are Dacomsa clients. So it's a hybrid model because of its characteristic of aftermarket. They are experts in brakes, they know drums, pads, cables. So it is a little bit similar to the North American Californian market. Talking about synergies now when we decided -- we designed BRL 300 million, we expected that coming from product expansion, sales expansions. And we -- now we see that the expectations change, not because of the cross-selling, but because of outsourcing and giving you a few numbers, we are working with three fast sources, powertrain, I've got this portfolio together with Nakata. I've done the [ RFKs ] with volumes, combined values. I am supposed to be capturing in the next month, the few -- the next shippings with a more favorable condition for the company until the inventory is renew. But a major surprise is friction materials. Ferotec has 35% of the market, is a market leader with together with another brand, but we have identified because the previous group was a manager portfolio. It didn't focus so much in the evolution of the company formulations that take friction materials and components that we don't use anymore because they are not commercially feasible formation costs of 30%, 40%. If we could use the same formula of -- here to Mexico and to use that in the local market conditions to make sure it works, but 30%, 40% potential, that's talking about formulation. When we talk about raw materials and start to combine them, there is a different potential. I'm going to bring another example. Steel fibers, we buy from a global player that produces in different geographies. Only in that raw material, we have a reduction of -- cost reduction of $1.2 billion annually. This amount of money represents 10% of the total synergy expected for the next 5 years. So we are very happy with the results. And -- but it's still early days. We can anticipate that we are going to overcome the BRL 300 million and the ramp, the acceleration ramp is going to happen faster than we expected.

Thank you. [indiscernible] So the acquisition of Dacomsa, it was a group that didn't focus so much on that sector. Now we can collect all the synergies focusing on that.

So next question is from Gabriel Tinem from Santander.

My first question relates to the aftermarket. As a whole, 46% is the revenue in the first quarter, very significant. I would like to understand what can you see -- and looking at the after auto parts segment, where can you see the main vehicles to permeate this growth in a conjoint action but of a protagonist in the segment? And the second question is related to the GPS and e-commerce. There is the idea of bringing this initiative for other segments inside the auto parts. And I would like to understand a little bit more about that.

Thank you, Gabriel. Thank you for your question. Sergio, the first two questions, I'm going to give them to you to answer. What's next after the 46%. If we have any objectives, I can do an analogy of international growth to reach 30%. This year, we have done that and what's next? And then Ricardo, you answer about the e-commerce channel.

Thank you for your question and for your participation. Our objective is to continue evolving. The fact that we have reached 46% has got to do with difficulties of market that we are going through at this moment. The important number is the absolute value. It's a growing number. And our objective is to continue, of course, in this growth journey, and we don't need to -- we want to go to where we want to focus as a company. Our model should be like we want to grow. We have opportunity because we want to grow so we can be stronger and guarantee the success. We have the means to invest. This is why it's so important in this world of technological changes and political changes, we believe that we must grow. And the moment now, it's a moment of more integration between the companies to be more cautious and careful. But we are going to continue on our journey. We're going to move forward. So the objectives, our growth objectives, they have to be linked to things that we are -- that will guarantee more results and are less subject to problems. So aftermarket, internationalization, they involves -- it involves aftermarket, but other business also, they offer a good platform to grow. There is a target to get aftermarket to up to 70%? No, we don't have defined numbers. The most honest person is we would like to continue growing in absolute values. And if it goes over 50% or 60%, it's all good, and to reduce more and more the percentage of business participation that are more subject to changes to suffer with the changes in the market. It's a quality growth. It's not growing for growing. It's just with quality.

So Ricardo, you mentioned that 24,000 orders come in the e-commerce platform of [ EBS ]. How can we potentialize that thinking about other companies of Randoncorp and product portfolio?

Thank you, Gabriel, for your question. To answer this question, we cannot just talk about the e-commerce platform because the vertical has got as a website, you can access and buy through there. But the way we -- it's not so -- this website is not so friendly. So obviously, the e-commerce must be easy to access, to see the products, the part numbers, and this is a learning curve. And the second part is connected to the fact that besides all of that, you have to be close to your distribution centers. This is why we talk about Mogi Guaçu network where we would like to fill up these positions and be able to meet the needs of our clients in a faster way. And I would say also that what mentioned -- Sergio mentioned before, we are used to sell to OEMs in the right time in the right quantities. And when we talk about aftermarket, it's [ ABS ] measures the way they measure their business. They measure it by lost orders. They manage that through the Power BI to guarantee that there are no loss of sales orders through the physical stores or other ways. So it's a sequence of activities, and we want to learn and become more professional to be able to meet the demands and increase our market share because we have a lot to grow and to improve in South America. The KPI changes, but the objective is the same, which is to meet the needs of clients and generate value for the chain, right?

The next question is from Andressa Varotto. She's an analyst from UBS.

I have a question about Hercules. You announced before the diversification for new products of Hercules. I just would like to understand what do you expect for this division in the long term? Maybe you expect to migrate to a more similar model that we've got in Brazil with a portfolio that's wider related to products. And another thing in Hercules, current products, you have 6% of share. What are the market expectations to increase market share?

Thank you, Andressa. I'm going to answer your question about Hercules portfolio to [indiscernible]. Why not going into the dry van market in the beginning, all the cold cameras and can talk about the possible expansion within the container market to increase market share. Thank you for the question. Looking specifically about Hercules, we want to expand our portfolio, maritime transportation, transported container cargo. We hope that it doesn't -- it depends on the segment. We had a very bad 2024. 2025 is being really good because we were very happy to capture the biggest sales order of the market that will guarantee sales revenue until the end of the year. This is why we want to diversify, but thinking in low investment and optimization of footprint installed in New Jersey, products that are proper for what we can do there and to go to other segments is not something we are not thinking about, but we have to be careful with this strategy. So it doesn't hinder or harm our expansion strategy of aftermarket. We understand that it's more profitable, has more synergy. We can win. We have more experience. We have good relationships with trailer manufacturers. We know all the truck manufacturing companies. So we have this relationship. So this is how we can -- maybe we have opportunities to potentialize Taiwan [indiscernible] Compass, not only having a commercial relationship, but also to create value for this market through our technology department. If we just acquire a major player of dry vans or we understand that our refrigerated trailers, we can understand that we sell that to ourselves and cannot have access to others, maybe that can weaken our strategy. So we have a specific niche in the United States for now. Our strategy is not to expand a lot related in trailers and expand more in auto parts. The growth of semitrailers and trailers, it's more am the objective in itself. And it complements Sergio, He explained really well we bought Hercules with a niche line with a 6% of market share considering our current volumes. So our market is in a low now considering penetration. So we want to continue growing with Hercules and operate under the radar, so we can grow the auto parts. When they are consolidated, et cetera, then we can go back to act and think about an expansion of this vertical with other products, semitrailers in the North American market.

Let's go to the next question, Marcelo Motta.

The first question is about the building up of the market, building strength. How can you see organic and nonorganic growth synergies? And if you wanted to do the breakdown of the cycle, how do you see that? And the second question is related to the OEM, domestic trailers has been suffered a lot. What do you think is necessary to change that scenario? Maybe the price of commodities, the volumes are here, but maybe we need to move this cargo somehow. Do you think if there is a request demand because of politics or how can you think about resuming that?

Thanks for your question. About this organic growth and organic growth of auto parts, Ricardo will give it to you to talk about the domestic market of OEM. And the second panel, we are going to talk about it in detail. So just let us know a little bit, so people would stay here for the second panel. As we mentioned, we have space to grow organically to expand our product portfolio, increasing our market share and also through acquisitions. At this point of the company and the markets we act and our vision, as we mentioned before, is to consolidate the integration of the companies we acquired to control our working capital. So it's a moment to be more cautious because of all the uncertainties of the market and the scenario -- current scenario. We are going to talk about it later in more detail. But after this phase, we are going to accelerate. We're going to speed up our growth again. On The light vehicles, the pad line friction, we are growing components in Nakata, components in market master, we are growing penetration. All these companies, they are growing organically. Ricardo mentioned in this presentation, the new website of distribution that will have more advantages, logistics and improvement for the service. Acquisitions, people have been working. We are analyzing. We want to be prepared, but this is not the moment. We just have to be cautious now. But we are going to continue growing in the two fronts. Organically is our priority now because of -- we want to be cautious. And maybe soon, we can go back to speeding up the growth. Ricardo, can you give us a spoiler related to the second part of our Randoncorp Day?

Thank you, Marcelo. There are two reasons for me to give a spoiler. My boss is going to talk about market. So we're going to be showing -- Sergio is going to be demonstrating a little bit about the market and the agri market went down a little bit. It's affecting us as OEM because we are always focused on that. And compared to siders and dry vans, they are growing because of the e-commerce and people are buying sider and dry vans on Black Friday already. So we have different situations in the market. Sergio is going to talk about it later, and then we will answer this question afterwards.

So the final question of this session, Gabriel from Itau.

Thank you, [ Steven ]. Only one question from our side. We would like to thank you the presence of all the executives here. So can you comment with us how internally Randon decides related to capital allocation, given the size of the company, the Fras-le business, aftermarket for light and heavy vehicles, the number of geographies the company acts in nowadays, productive basis, leverage of the group. How can -- we would like to understand the decision-making process for CapEx and capital of the company. Do you have any criteria? Do you have any segments in the company? Do you think you have -- we just wanted to understand the capital allocation and how that is discussed internally with organic and M&A opportunities.

Our challenge as executives are endless, and we have limitless resources. So capital allocation must be -- come from a very good decision. Daniel, please, can you answer that question?

Thank you for the question. Our objective, the allocation of capital, organic or nonorganic has got to do with our future vision. So we want to invest in segments that are more linked to aftermarket, internationalization because of all the reasons we mentioned before and also portfolio expansion. Our contract is with Mercedes is a major product line. When this automatized line is installed, we are going to release the other two lines, and we're going to use these two lines that we are using for Mercedes for other things. We -- portfolio expansion must happen as part of our plan. And obviously, we would like this revenue resilience and revenue. If you want to see that under the views of our vertical, we have a return on investment that's really high. We're going to continue investing in digital technologies, but the growth of our investment in our industrial activities, we would like to reinforce our participation as we brought the Patria fund to invest in the consortium. So we are reinforcing our investments. Movement control has got a very interesting story. We would like to continue supporting that. Are we going to invest in our OEM? Yes, but not with the same proportion. We are going to invest whatever is necessary for us to gain capacity for us when the market resumes. But we show that in the graph, auto parts, 60% of our revenue represents. So in a good way, we are going to continue -- we are going to continue investing. We want to continue growing, but when we are -- not now.

Thank you, Gabriel. Just reinforcing what Sergio mentioned, there are many strategic pillars long term. Paulo Prignolato is following up with the projects with main acquisitions and projects. And how is the payback going? This is important. We can always improve that. And we reinforce with the verticals that they avoid to invest without mentioning M&A under 30% of cash generation for the -- in the daily businesses. Historically, when we look at the return on investment, ROI above 18% some businesses are strategic and some don't have like initial payback. But when we look at long-term strategies and leadership positioning and brand positioning is important because it adds values. When we talk about the OEM, it's a business, as Sergio mentioned, that's profitable. It's less profitable, but it will involve all the auto parts system, which is important in the OEM and aftermarket, consolidating our positioning, our Randon curve and our five verticals that must be observed as a whole in the medium and long term, but it must bring return to our investors.

Thank you, everybody. Thank you so much for your time. Now people, Carol, we are going...

Thank you for your answers to our executive officers. We are going to have another session of Q&A session later. If you didn't have an opportunity, you can do it now. The online people, we are closing this moment. We are going to have a break now. So stay with us. We will come back soon. And the people that are here in Sao Paulo, we will have a 15 minutes break. [Break]

So I'm going to do as our manager does with our strategic planning. I'm going to call by the name. Lucas is here. Davi, as always, is chatting there. I asked him to help me, but he didn't obey. So we're back to our 2025 Randoncorp Day. We will continue to with our third panel. I know you are all very anxious because we already talked about our vertical OEM. This panel will be shared. And to begin the panel, how we are going to resume the new vertical OEM cycle when our market comes -- returns, I'm going to call our CCO, our CEO Sergio.

Sergio?

Can you hear me now? Let's try it this way. So you guys talking a bit about our OEM, Ricardo, besides being our Executive Vice President of our Auto Parts vertical. He's also the Vice President of our OEM vertical since September of last year. He's a veteran, right, Ricardo? But maybe the most adequate way of reflecting the thinking. Imagine Randoncorp as an engine. We're working with not all the cylinders of the engine that are recovering so that we have the strength of the company as a whole. Ricardo talked about the dropping of the trucks market that impacts on the auto parts and also the semi box, which also impacts on our OEM vertical or semi-trailers. I wanted to show you what we are doing, preparing our OEM vertical for this future, but also to show you how this business talks to all of the other units, the other verticals that we have. Daniel already mentioned this. So just to review. We're among the top 10 in the world. We are pioneers in exports for many, many years now. We have more than 600,000 products delivered six industrial plants in 2024. We had more than BRL 4 billion as our revenue. This is another company where it all began. We are very proud of that, and we will continue progressing and improving. We have 93 distribution points, a national presence, which is very strong of 745 areas for our services and products in the Brazilian market alone, our international presence our activities are in Africa, in different countries, final product assembly and Hercules itself, as Anderson mentioned, Hercules is also producing some products for Africa, different products aligned with their needs. When we look at Latin America, all of our distribution area and two years ago, we went to the U.S. through Hercules. Our product portfolio, our semitrailers is one of our main products. This is what helped us grow. This is the mother company where we acquire all of this leadership. We have a very complete line of products. We produce also trailers and wagons and also the chassis, and we have the aftermarket that represents a major figure of the revenue of the OEM as well. This is our net revenue trend, BRL 1.8 billion of the verticals. We grew BRL 1.8 billion in 2018, BRL 2.2 billion in 2019 and now BRL 4.2 billion in 2024. Our business, as I mentioned, we have a product portfolio that is complete. Our activity is within several products, but the products that we make are more connected to the agribusiness sector, the average of the last five years, agri business has reached 60% of industrial businesses -- industrial businesses, 30% and with fluids, 7%. That's what each one represented for Randoncorp. The moment that we are facing is very challenging, and I am sure that this is not only an issue that Randon is facing. I think this is happening with all of the market, a major drop of the market that I'll show in a while. And with this drop, the prices, the competition, the installed capacity is such that the prices really go down, and they did. So the main issue to us is the dropping of the market and pricing and the mix change, which also affects us a lot. This is the volume of the market in Brazil since 2004 and until the forecast of 2025, you're going to see some rent. So look at all of these figures, 2021, 90,000 units in 2024, 89,000. And this year, we dropped to 62,000 to 68,000 units. I think that yesterday, there was an interview with Anfir showing larger figures than these here. I hope that Alvear that the target continues to grow or starts growing again. But we haven't seen signs or indicators that lead us to the -- to be able to state that the market is getting stronger. So we concluded this first term or these two first terms with 36,000 units. normally in the third term of the year is stronger than the first two terms of the year. And looking at it like that, we suggest that the second half of the year is going to be better, reaching 77,000 units, maybe 68,000 units. If we look at the dynamics of the year, we started producing 6,000 units per month in January and February, then it dropped to 5,800 units in June, 5,200 units. Looking at it and seeing this volume dropping, we prefer to work with a more conservative volume rate. The main point here is the drop of volumes, 90,000 units last year dropping to these figures that I'm showing here, which is a major drop. And with this, the dropping of the prices. The competition is right out there. The second point is the mix. As we've mentioned, the agribusiness is the green line. The yellow line are the industrial cargoes and the blue fluids transportation. There are several other niches, but the major volume can be represented this way. You can see the variation. This graph considers the past three years from 2022 to 2025. So for three years, you can see the variation and the dropping of the agribusiness. So a substantial drop, the agribusiness sector dropped 25%, 30-something percent. And the industrial cargo increased to 30%. So this is something that is affecting us. I talked about the volume, the price, and this is the third point, which is the mix. So as Ricardo mentioned, there is a transformation that is very strong that is happening in our business, preparing the company for the future. Ricardo is going to talk about that. But we are making our structure adequate and our business adequate to the reality of the market, not only in terms of variable structure, but also the fixed structure, optimizing our footprint, a lot of investment on automation, the optimization of costs in a general sense, the capacity facing the market that we have already mentioned in other meetings that we were not able to follow up on the growth of the market. That is not a priority now. But when the market resumes, we have to continue expanding and the development of value for our clients through product technology. So I invite Ricardo up here now. Carol, please continue.

Thank you, guys. So just to remind you if you want to ask questions to the same format as before, your QR code and to explore the little boxes that Sergio has shown us, let's talk to Ricardo.

So coming back. Thank you, Sergio, for the introduction. Now I'll be representing the whole team of management, Ricardo, Dalla Nora and the OEM team. Within this adversity scenario, several actions are being taken in the OEM vertical, we want to bring some information on that as we can. First, we have the structure of the market being more adequate. We're using all of the tools that we have to be able to do this adequation to the reduction of productive shifts, reduction of indirect administrative structure, manpower. Also, we started last week with the flexibility of the shifts in the vertical OEM, which will take place for three months and can last longer. And for this time, we can retain all of our talents in management in some of our hierarchical levels, we reached 50% in the amount and values. We're not proud of that, but it's essential to be adequate to our fixed costs and facing the adversities and challenges of the market. This is one of the pillars that have been mentioned by Sergio, and that we have been working on our fixed cost adequacy and optimization of the footprint, the same way, we are also reducing to around 50% of our amount of industrial units. Just concluding the first slide, it's important here to highlight that all of these costs of this restructuring took place in the first semester and our results that you see in our reports are related to these one-timers that happened in the first semester of 2025. Going back to the optimization of footprint, we focus on some businesses that are profitable and leave behind some businesses that are not profitable. We have a reduction of almost 50% in the closing of some of the industrial plants or units. Our main plants, are at Araraquara and Caxias do Sul. This is obvious where our main installed capacities are. We have Chapecó [indiscernible] with our cold storage in Erechim. We have [ Correa ] with some special products, carry all silos and asset-light also in Argentina with some operations that are being done in Argentina. But also when we migrate and close some units and migrate some production lines and adequations to what the market is asking we have some issues that are involved, and that is impacting on the first semester of 2025 of the OEM vertical. Productivity and automation, this is one of our main items within the vertical. We're working more and more on automation and improvement of our productive processes, the increase of capacity and reduction of costs. There's robotization, welding -- new welding line in dolly, Caxias do Sul, the implementation of major robot lines in the robots in the preassembly in the line of auto parts that we distribute to our -- many of our plants reductions of specifications of costs and new processes within the OEM vertical. Here to have an idea of the size of the operational efficiencies this year only of everything that we had of robot team, we're going to increase the amount of robots this year compared to all of our cycle before. And in a cycle of two years, we expect to implement around 100 robots within the OEM vertical, optimizing our productive processes in the components area as well as in the chassis area as well as the carrier boxes, which is essential for productivity and operationally speaking. Here is the summary of all of the optimization of costs, everything that we are doing. We're doing on operational restructuring, the adequacy to the market situation and we intend to keep this adequacy in our management and administrative manpower, even if when the market becomes normal again, internal complexities in the intra verticals that we have, new sources of raw materials when we talk about sourcing, there are several activities that we are doing along with our procurement and sourcing area, optimization of costs, quotations, new sources, negotiations of prices, specification changes and also not necessarily everything that we do in Caxias to be distributed to our other plants. If there is a supplier in the countryside of Sao Paulo that can meet the needs of Araraquara, not necessarily all of the cost of the whole process, the shipping, receiving and so forth, we're not going to be using it from Caxias. We can be using it from a supplier that is closer, an external one. Everything that -- everything is being revisited, and we're looking at that more closely. And optimization of logistics of material adequacy of specifications and specifications of products. Technology with the creation of that here, the focus is on our client, the innovations. This is what -- where we do things and all of the opportunities that we have for the second semester. In the agribusiness portfolio, we have differentiated materials in stainless steel, grain trailers. We have launched our by train tank in the fair in the Fenatran. Here are some depiction of all these portfolios through these new products to be close to the client, we're doing several, not only big fares, but we're also participating in small regional fairs, [indiscernible] close to our clients, offering what our client really needs, not necessarily what we would like to sell to them or design to the market, but exactly what our client needs. This is one of our focus and that all other vertical OEM team is focusing and working on. For the second semester, we have a major order, 28,000 -- sorry, 280 wagons, railroad wagons. We're going to deliver them now in the following terms that will help out a lot. But to make the line adequate. We had some one-timers. We had the closing of the Arara 2 plant transferring everything to Arara 1, and we have our wagon production in Araraquara 1. We're working on two major important bids in the market, 1,500 wagons in Latin American that are being negotiated. So we are expecting a lot from that and expect to participate and have a share within these businesses that are about to happen. Summarizing adequate value proposal adequate to the market. We've been working on that, reducing our specifications, delivering exactly what the customer needs and what he wants, a technology as a differential Randon Smart our telemetry system. We need to move away from the price not remain there, Randon, the OEM, a high-value sales product is known by the rental companies. So we need to capitalize this and show more and more our TCO of our products and our auto parts that compose the lower part of the chassis is known as a product with a higher performance when compared to the competition that provides robustness within our OEM vertical system. I bring here directly when we look at the EBITDA of the sales of a semitrailer, a part of it is in the OEM vertical, but other parts are in the other verticals that are a part of Randoncorp. So every time we sell a semitrailer, know that it's not only the OEM vertical that's profiting from it and has it's EBITDA there. Other verticals have their participation and the results are for them as well. So it's essential to know that this situation where all the verticals are working and selling their products to the market. And indirect factors also are part of it, the purchases of raw material is thanks to the OEM vertical that we have an opportunity of having cheaper products, the purchase of steel, the components of the OEM vertical are essential, the replacement, the power purchase, all of that is essential within our ecosystem and OEM Randon has an important participation. I bring this EBITDA here comparing the last 4 years, which were very good market years. We preserve this EBITDA in years where the market volume is lower. We preserve the other verticals. because we have minority partners and that can cause issues to the OEM vertical. The main work that we have been doing to make our market value proposal adequate, our fixed cost, optimize our business in a way of focusing on our profitable business and to prepare to get closer to our clients. We have expansion activities within Araraquara. That's why I said previously about working with Araraquara and not the other units. So we are closer to the consuming markets, the Central West, the East to reduce some of the cost of shipping of the products that come from Caxias do Sul, we are focusing totally on our clients to do the transformation of the OEM vertical.

Many initiatives, no doubt, as the panel said to prepare a new cycle for this resumption. And now our last panel of the day, it's a very relevant topic that permeates 100% of our calls. Panel #4, Paulo Prignolato, our CFO, the EVP is going to talk about how we are going to reduce leverage. Good morning, Paulo. Can you hear me?

Good afternoon, everybody. It's a pleasure being here with you. Thank you for your participation in a remote way and potentially also. Let's talk about an important topic, how we are going to reduce leverage. I will start now showing a film. Our mandate is to work with leverage below twice EBITDA. really because of our strategy of overcome at least 30% of revenue abroad, we knew and we planned important investments that were made since last year. We have Dacomsa BRL 2.2 billion. We have EBS BRL 410 million and AXN that we add investment and inventory that were acquired added some of it. We also had a working capital of all these operations. That generated no doubt, a pressure that we understand it's a momentary pressure. The account number that was released was 3.75x debt to EBITDA. And if we include EBITDA of the past 12 months of this company, this leverage will go down to 3.19x, and we have some nonrecurring events, not important ones. Excluding that, we were below 3x EBITDA, always remembering that our rate through S&P is a AAA rate. And it's also important to highlight the profile of our -- what's our strategy in a financial point of view. As we grow revenues in other currencies that allow us to access other banks, other sources of funding in a way that we can always work within a natural red. We have 82% of our debt. This 82% is in national currency and in this quarter in international currency, it's important to highlight now that the acquisitions of abroad, we had the possibility to capture resources abroad in dollars or in Mexican pesos. In a way that our average cost has -- it's under the CDI, which is an important factor. And as we can access these other funding lines, it allows us to do. So the average term is four years. Yesterday, we had a relevant fact. We released it. We are paying attention to the market. We saw an important window for our liability management to increase this average term and to reduce a little bit our debt. Additionally, we work with a cash flow that allow us to have liquidity. So our cash flow covers the needs of the two next years. So what's our funding strategy? Just to summarize what I mentioned. First, to diversify sources of funding and with that, reduce average cost of our debt, lengthening our debt term and a very strong discipline in cost and investments, especially now in this challenging scenario, a continuous control of leverage and foreign exchange exposure that brings us more credibility with the financial markets and opportunities for synergy due to the strength of the group that were presented here by my colleagues. That's the beauty of Randoncorp and its vertical strategy. And also the optimization of working capital. And what's our leveraging strategy to capture cash generation because of the synergies of the companies that were recently acquired and the amounts reported before, they are very relevant. reduction of working capital, I'm going to talk about it later, discipline in costs and CapEx. We are doing a series of adequations in the organization so we can adjust to this demand moment, especially from the OEM allocation of capital that's judicious and selective. As Sergio mentioned before, our focus now is to reduce leverage through all these initiatives. That means we are going to get prepared to return to our leverage level under twice the EBITDA. And from that, when we reach that point, we will think about -- in the future, we will think about new cycles. And also capital markets and partnerships also, I'm going to talk a little about this later. This are the leverages and initiatives we are going to be working on simultaneously and continuously, and they are going to allow us to reduce -- it's going to be a deleveraging. Cash generation and synergies, the integration of the acquired companies, that's going really well. The capturing of synergies, Dacomsa, EBS and AXN, synergies in costs, but also in working capital that we saw we have opportunities on that also and especially cash generation, mainly from the aftermarket as it was presented before. It's a very resilient market and that allow us to foresee, to predict cash generation. Reduction of working capital. We have a series of initiatives, optimization of inventories, especially on the OEM vertical and Dacomsa. Ricardo has talked about it. he explained all the adjustments we are doing in labor and production. That's going to reduce working capital in the OEM. And Dacomsa, which is a recently acquired company and has got some specificities that are a little bit different than in Brazil. But in the same way, we are working on many fronts that are going to allow us to reduce its working capital, new initiatives with customers and suppliers to reduce deadlines. The teams are working actively with this objective and adequacy by the current level of activity as it was mentioned before by Ricardo. Discipline in costs and CapEx are always important to highlight the adequacy of structures we mentioned before, the reorganization of footprint. Ricardo also mentioned that everything we are doing in the OEM with the objective to be more efficient and to reduce logistics and costs and working capital, discipline in expenses and a strict evaluation and control of our investments, organic and inorganic based in this current moment of our leverage. Now I'm wrapping up my part. We also have initiatives that are ongoing in the capital markets. Yesterday, we disclosed our relevant fact with the follow-on of Fras-le. A part of this resources according, as mentioned before, coming from the controlling shareholders, this increase in private capital is linked to the follow-on of Fras-le. And also a partnership with increased private capital investments, financial investments demand a lot of capital, and we saw that as an opportunity of sharing risks and bringing capital so it can continue growing, considering that it's a very important business to Randoncorp and it's profitable, too. These are the initiatives that we have been working on. And if we can complete them, conclude the operation -- it's still being approved by the Central Bank, the partnership with Patria investments. And the other ones are operations that are still ongoing. These three operations, we're going to be updating them as soon as we have new facts about them. That was it from my side. I will give the floor back to Caroline.

Thank you, Paulo, for your brilliant explanation. I think it's really clear our strategy for the deleveraging. So let's go to our second moment of Q&A. And I will ask Davi to be our moderator, our Finance Director, and I will invite the Directors, Ricardo, Sergio and Daniel to come back to the floor so they can answer these questions.

Let's go to our second Q&A panel. As you could see in the presentation and as Carol mentioned, these are topics that we have addressed in every single conversation, the OEM, deleveraging. And we would like to reinforce that we are not afraid of doing the actions that are necessary. We are doing what's needed. And in our Q&A, we can exploit a little bit more your questions related to these two final panels, the OEM and the deleveraging of the OEM. We have Lucas from XP. If you can give the mic to him. Lucas, feel free to ask your question.

Thank you. Good afternoon, everybody. Thanks for -- it's good to see you here in Sao Paulo. Carol, you can call us to go to [indiscernible], but especially if it's in the summer. I would like to enjoy the presence of Paulo and ask the cash flow management. I think it's clear the leverage and all the initiatives and avenues to deleverage the company. But there is a difference when we look at the profiles of deleverage between companies. You have it more clear with the synergies. And I think the financial operations gives a more resilient context to the company and after markets are in a challenging environment. So when we look at the perspective of accessing cash, you have a more strict access because you have 53% over dividends. The company generates a lot of profit. You can restrict the access to this cash and to contain high interest rates with debt that are allocated as a holding that in the end will generate cash impacted by this context being impacted by high interest rates. In this context, how can you evaluate this availability of cash of the company in this scenario of high interest rate outside Fras-le, outside financial services, if this increasing private capital would be actually necessary to fix this cash need you have if you need to reprofile the debt or if you're comfortable with this cash management in this different profiles of leverage. It's a bit of a long question, but it's a topic we have been discussing a lot. The gap in value of Randon lies in this exactly.

Thank you, Lucas. The question is directly to you. So go on. Can you hear me well?

Lucas, thank you for your question. It's a very important topic. And we have our financial commitments, financial covenants, always looking at our consolidated debt that doesn't include the Randon Bank. And in fact, that's what's worth -- that's what's valid for our financial operations. Our discipline is focused in the fact that all the units, they have to pay dividends. And this -- this is for the DVs where we have minority shareholders because you are right, this is the needed flow. So Randoncorp can actually face its obligations. There was a specific time that we released this new to the market. Castertech is 100% Randoncorp, had a very low leverage, and we enjoy this opportunity. We had profits accumulated. We capture resources at Castertech to bring these resources to Randoncorp. So these companies that are our partners, the resources come in the shape of dividends agreed with partners. These companies that are 100% ours, they are flexible. Randoncorp, Randon implements. It's going through this moment of a market that's low. The EBITDA was harmed, which poses more pressure on the business. This is the reason why we have to focus in working capital in all the verticals, especially to bring more cash to our company and to remove this pressure. So in general, we look at to our financial commitments, they are based on the consolidated debt. And we just don't account the Addiante debt, which is a JV. We don't consolidate that one. It will come as equity. I hope I have answered your question.

If you just allow me to say something related to the operational aspect, the operational dynamics. Every time we see a downfall of the market, heavy trucks, semitrailers, the market decreased a lot. The agri is not buying it. First, we didn't feel the double effect. We felt the market decreasing and the pipeline that was being emptied because everybody wants to preserve their cash. So all the inventory that we have in our chain is reduced. When the market resumes, then is the double effect. At first, we are going to see an increase that is bigger of the market itself because the pipeline gets full again. So what do I want to say with all of that, when we are stable, when we reach stability in this market, it's reaching a stable plateau given three, four months, naturally, the working capital is going to decrease a lot. There is a -- there will be -- we have to consider accounts to pay, inventory. This is going to happen in the first three, four months. And then afterwards, it's going to improve because of this decrease. And we are going to release the working capital.

Next question comes from [indiscernible] Research.

Firstly, I would like to congratulate for the event. It's been really good. My question is for Daniel Randon related to capital allocation. I would like to understand a little bit more if you consider the actions of Randoncorp. Do you believe that repurchase of canceling of the shares can be important? Would there be any plans for repurchasing the shares?

I was going to say we are a bit limited because of the projects we have currently and the explanation of Paulo, the leverage of the company situation. And so that's the answer. It's implicit in what Paulo said. We have to restrict ourselves more specifically to the projects. But in the future, Daniel, we're going to share a little bit more about it. Daniel don't say anything about the follow-on or the Fras-le and Randon actions. The most important thing is to reinforce that the market, the domestic market, it has a time where it presents this issue of the value of the shares of the company. Randoncorp besides the OEM has got a good stability and it has got future projects. It's a company that maintains stability in the market and the value capacity. I'm very restricted now. I cannot talk about it because of its compliance issue. So thank you. In the next future interactions, if we can expand these topics, please, we will go to the next -- we will talk about it.

Marcelo Motta, next question.

How do you see this pace of recovery in the OEM market and implement? And how do you see the mix? Has it impacted margins? Do you think about doing just you did in Hercules study and introducing forestry in Brazil or to be more away from this traditional agri? How do you understand the mix of your structure from now on?

I'm going to direct this question to Ricardo, remembering that the agri business, not only in Brazil, but in the whole world is the generator of demand for semitrailer. We have a profile extremely connected with that. So can you exploit that a little bit more?

Thank you, Marcelo, for your question. First, talking about market. We are living a very nontypical situation. The highest peak of semitrailer was 2013, and then we had the crisis in '15, '16, and we have a resumption up to the COVID. After COVID and all -- we have been reaching record levels of semitrailers. Now we have high interest rates, the agri people are holding on to that. So it will resume. We have to be prepared for that. We have to be closer to this market that's been consuming greatly. We have to be prepared for bigger production. And this market, this pressure of the volume decrease and small players, the pressure on prices. So these are all the facts that created this nontypical situation, market conditions that are completely different. And talking about forestry, no doubt Randon OEM is a market leader, not in all the segments, but it's a market leader. And in most of its segments, we have 16 families and every single one of these families have many variants. So we have to reduce complexity and focus on the most profitable business. We have -- we must need automated chassis so we can deliver more value, the cargo box on top. We need to have better costs and delivery. And when you talk about forestry, two weeks ago, Daniel and I were in Chile. There are many paper industries and there are major bids happening in Brazil recently. We are participating of all of them, and we can see migration. Randon OEM is a market leader. It has got products, and we are focused on the forestry business. And we also must continue with all our 16 families, and we must be a market leader within all this complexity -- this is our homework. That's what we have been doing. Sergio, we want the portfolio of rail cars for mining, and we also have opportunities for hopper rail wagons. We have portfolios for -- to meet those demands. Ricardo can expand on that. I don't know if you understood. We want a very important business for this year that's going to help us. We have really important businesses. We believe that the rail business are going to start helping us in the vertical OEM, the railcars. We have this delivery in the second quarter -- the second term of iron ore, and we have a participation in this bid to deliver that. And I hope it all happened in the second quarter now -- second half, I'm sorry. We got to -- we delivered a few units. We had to transform Araraquara. We had to turn that because that it was created to produce railcars and we had to use this capacity for other vehicles. And now we must expand again to meet the demands of the market.

We are running out of time. So we don't have any time to expand our Q&A. I know we have many questions, and we have not, not answered them. So we are just going to answer this final one. And all the other questions, please, if we -- that we couldn't answer here. We are committed to answer all of them calmly as we always do in our International Relations department. So, Gabriel, please feel free to ask the final question.

I would like to go back to Escoboza just to understand the competition. How do you see competition of OEM companies, to reduce operations, et cetera. Can you comment on competition? That would be really interesting. And also looking at the restructuring of OEMs, the picture we see today, we have seen recurring expenses impacting results, but we would like to understand the recurring margins, how they impact in a normal scenario, clean operations and et cetera. Disclaimer that the margins is always a complex point as a reference and the market has to react. Our pursue that it's structurally better than we've had or structurally better than the trends? Can you talk about the competition?

Thank you for the question. Our occurrence is connected to what I explained. Four excellent years top of the market, 90,000 units, approximately of semitrailers being produced and suddenly, the market drops 25% to 30%. We see the prices melting in several families in a large amount. That doesn't affect Randon only. There's no doubt of that. It's not our privilege to face the situation. This is happening to all of the competition. We know the situation that somehow through the market, our network that provides the information. So we know it's tight for everybody during this decline. what they are doing, we don't know. We know our lessons learned, what we are doing to behave and to be ahead of things. All of the actions, Gabriel, that we are doing, how we're optimizing this line, how much we're optimizing the footprint or optimizing resourcing, all of that, there are measurements, time and a schedule for implementations, the adequations of the portfolios. And me and Dalla Nora, we follow up on weekly, all of the executions along with all of the team, it's a major activity, several families. Each family has several variants. The adequacy of all of their footprints, how you do all of that and implement the cost reductions that is demanding a lot of activity on our behalf. And it's essential. We have to be prepared and ready so we can get out of all of this stronger and be ready for the market when the market goes back to normal. But for now, that's the major question that we need to ask, and we also need to reduce the interest rate so that the agri will go back up again. And in the past, every time we face crisis like this, there's always a trend for a consolidation on behalf mainly of the small businesses that are not able to beat this storm. So in 2015 and 2016, the number of players dropped to 110, 120. And then after time went by, it went back up to 180, 190. And we have news of people that are coming asking for us to buy them off and asking us to carry along their debt, sometimes high debts. It's a complicated moment. And we expect the consolidation at some point. If it takes longer to happen, as you have seen our message, Paulo explained well, we are comfortable mainly with our plans in place when we added the acquired companies' EBITDA -- and we have our plans to reduce it. They have reduced, but we want to reduce even further. It's not the same for everybody in this sector. And it's part of the businesses and consolidation first segmentation is healthy.

So we will conclude here our Q&A. Thank you for all your questions. We will answer the ones we did not answer here. And Carol, please, the floor is yours.

Thank you, Davi. Thank you all of the executives. I ask you to take your seats once again, so we can continue our event is reaching its end. We have a small delay, but soon, we will conclude it. And now I will invite -- there's a little bit of suspense here. Now I invite to come back up here, Daniel Randon, who is our President; and Mr. Ricardo Tadeu Martins for the delivery of the APIMEC seal for this year.

I'm honored to be here in this meeting and in Randoncorp's event. And to us, it's always an example. We always consider that information for us, the analysts is essential. So this moment for APIMEC Brazil is a symbolic one because you record a moment that you see and you can perceive throughout time that the company has all of its dedication to informing us, and that's what matters. Information is not the stage. It's not the technology, but information and debate and the opportunity of being present. So this moment is for us to honor and celebrate this moment of a company that is a benchmark to us and remembering that there is assessment sheet so that you can provide the opportunity for the company to be a part of a competition of the best event of the year. So through this information there in the assessment, it will get its score, and this meeting can be a part of a competition of being the best meeting of the year, which I think is essential to all of us. And Daniel, you know how Randoncorp's communication channels are always open, right, Daniel, and we really have a lot of consideration for all of that. The RI guys that provide all of that, and we thank them always, and we know how relevant it is to the market, not only at this moment, but the example for many other companies that we know that carry out restricted meetings. And to us, analysts, and APIMEC, it's not a benchmark. We always make a point in celebrating this moment so that it is followed as an example. So Daniel, 25 years of our relationship. And besides that, all of the opportunity that we have, not only here, but with the visit that are also essential. Thank you so much.

Thank you, our President, Ricardo Martins. It's always wonderful, and we're proud to always to go back to APIMEC to be able to improve governance and the communication of analysts, investors, all of stakeholders. This is a role -- our role as Randoncorp and open and [indiscernible] company. Thank you so much for all your work.

I'd like to make use of this time if we're talking about a little bit more, [ Renata Fabri ], our adviser, third generation with [ Victor and Isabelle ], which are part of the third generation of shareholders, the [indiscernible] controller. And it's always important to talk about the succession of Randoncorp, always looking for the best governance and open capital. I'd like to honor a person that 43 years ago, I invited this person to work with him to work with us for some time -- I asked him to work for three years. And now we've been for many, many years working together, and he has had an important role in the growth that you have been following up on this rapid growth, more and more global and all of the leadership work he had with the teams and sustainability -- sustainable growth and all of the proposal that was mentioned here, Sergio will continue to support us as a senior adviser in the M&M's roles and globalization and supporting the development of our leadership which is what he did really wonderfully, and there will be a major legacy. He will not be part of the executive, but he will be an adviser to be able to help us to consolidate these figures according to our strategic plan. We're going to be working together. So once again, I'd like to thank you for all of the work and efforts and dedication that no doubt is an example of benchmarking to us. And I'd like to highlight that not only as a professional, but also as a person, Sergio really dedicated himself and left a legacy of a gentle person and that always placed human values above everything, above all things connected to our purpose and Sergio Carvalho. We've been -- we've known him since our joint ventures and where he was an adviser of matters. Besides being a professional, he is a partner, a friend of all of the colleagues of Randoncorp. The video now. [Presentation]

Congratulations, Sergio. You saw the whole theme. Really happy with all the work you've done. I feel really touch today. It was amazing. Thank you so much. It was wonderful to have known you all and to be able to work with you and share ideas. We all evolved and grew all together. So things like this help us to plan the next steps, acknowledgment and mission fulfilled 51 years in 12 days, I'll be 51. 51 years of work. Daniel mentioned that I came to work for two to three years and somebody has held me here, and now it's been eight years. It was a time where I was supposed to go back to the states where my family is. I'm healthy. I feel well. I can still contribute. But now I need to be closer to my family, and it's time for that. So I have this feeling that I'm really grateful of mission accomplished that being able to help with this new journey of Randoncorp, something that I always mention in a proud way of doing things correctly, being fair. So I'm very happy with that. Happy to have known all of you. It was a huge pleasure. I'm sure you all have a brilliant future ahead of you. Thank you so much and take care of my heart, stop paying tribute to me or else something can happen. Thank you so much.

You really deserved it. Thank you, Sergio, for your legacy. And in one of the meetings with him, it's not actually a meeting. It's a class and all of the learning that took place remains. So in this emotional moment, we will start saying goodbye, the people that are online. I'd like to thank you for remaining until the end. I'd like to highlight that experience like this, along with partners like you, investors, professionals from the capital markets really strengthens our proposal. We can together develop tomorrow with governance, transparency and responsibility. Thank you. We'll see you in the next event.