Romi S.A. (ROMI3) Earnings Call Transcript & Summary

Good morning, and welcome to the Romi conference call, where the results of the fourth quarter of 2023 will be discussed. Before proceeding, I would like to clarify that this conference call is exclusively dedicated for investors and investment professionals. Any statements that may be made during this conference call regarding the company's business prospects, projections and operational and financial goals constitute mere predictions based on management's expectations regarding the company's future. These expectations are highly dependent on market conditions, the general economic performance of the country, the industry and international markets and are therefore subject to change. It shall be noticed that this conference call is being recorded and held in Portuguese with simultaneous translation into English, accompanied by slides available in the Results Center of our Investor Relations website at www.romi.com/investors. [Operator Instructions] With us today is Mr. Luiz Cassiano Rosolen, Chief Executive Officer; and Fabio Taiar, Investor Relations Manager. Initially, the executive will present the results of the fourth quarter of 2023 and will then be available to answer your questions. Now I yield the floor to Mr. Luiz Cassiano Rosolen.

Thank you. Good morning, and thank you for participating in Romi's Fourth Quarter 2023 Conference Call. We have concluded 2023 with success. I'd like to highlight the significant improvements made in our operations, in addition to continuous investments and technologies focused on helping our customers achieve success. The year was marked by the development of our human capital and constant search for excellence in occupational health and safety. Our team was resilient. We found alternatives with full commitment. I'd like to emphasize the consolidation of our new products, the machine rental, Romi [ plus ] and PRODZ, fintech specialized in machine financing. There are both absolute successes in the capital goods market, and they're highly aligned with our purpose of ensuring the success of our client's businesses. These new products made it possible to mitigate demand reductions, keeping the Romi Machines unit solid and profitable in terms of results. But our greatest satisfaction is seeing our rental customers thriving and growing their partnership with Romi reflecting our commitment to their success. I'd also like to highlight the operation in Germany, B+W, which demonstrated a significant recovery in comparison to throughout 2023, ending the year with operating profit. The adjustments to the unit strategy carried out in recent years and the dedication to working increasingly closer to customers resulted in a significant increase in parts and services throughout 2023. And more recently, in new orders that have been -- have increased our portfolio significantly for 2024 and 2025. In the Rough and Machined Parts Unit, many challenges were presented to us throughout 2023 due to the reduction in demand for rough parts throughout the year, we dedicated efforts to adjusting the structure to the new production volume, reviewing internal processes to be increasingly lean. We are starting 2024 more structured and lean, ready to recover profitability even in a challenging scenario when it comes to demands. For 2024, we are confident that our competitive advantages will allow us to continue evolving and adding more value to all stakeholders. We maintained solid investments in innovation covering technologies such as connectivity, big data, new generations of machines, process enhancement and especially human development. I would like to conclude, but not before highlighting a great achievement at the end of 2023 at Romi, the ISO 45001 certification. It has been a long way, but we feel rewarded as this certification strengthens our foundations and increasingly caring for people. Now I would like to yield the floor to Fabio will detail the results of the year and the fourth quarter of 2023. Thank you.

First of all, good morning, everyone. Thank you Luiz Cassiano. Now starting the presentation of the fourth quarter of 2023, the highlights are that 2023 was a year with sound results. In the fourth quarter, we've reached an adjusted EBITDA that means not counting the real estate investments of the company of about BRL 57.7 million, which represents a margin of 14.9%. We've also had a stable order entry or incoming orders summing up to BRL 273.2 million, with the highlight to B+W operations in Germany, which provided a significant growth of incoming orders in 2023. We've also had a strong quarter in terms of cash generation with almost BRL 30 million in cash generation, thus reducing the net indebtedness, which remains at a very healthy level, demonstrating the financial soundness of Romi. And Romi Machines, the highlight is for incoming orders for rental machines, which in comparison to 2022 featured a 34.1% growth. This is a solution we've created and launched about 3 years ago, and it's ever-increasing. It's been very successful amongst our customers where they reach success and make new deals with Romi. Along with machine rental, I'd like to highlight PRODZ operations. As Cassiano mentioned, it has been increasing with BRL 65 million portfolio already, and it has been proving to be a very agile digital uncomplicated solution for financing Romi Machines, especially semi-new machines. Moving to B+W, we've reached a revenue of BRL 225 million, and that's a significant increase in comparison to about 2022, about 25%. This growth results not only from the increasing order entry, but also the growth of replacement parts and services provided by Romi, which shows how closely B+W has been working and operating with customers. This revenue growth in combination with operational efficiency achieved in 2023 allowed us to obtain an increase of over 10% in gross margin, reaching 21.9% in 2023. This has also allowed us to resume positive results, whereas operational margin featured a growth of 13.1% in comparison to 2022, showing the capacity that B+W operations have to react to market demands. Ultimately, we've concluded the year with an order backlog of BRL 264.8 million, a 38.1% increase in comparison to the fourth quarter of 2022, showing a positive perspective at B+W for the next fiscal years. I'd also like to highlight that, once again, in the fourth quarter, we have made payments within the year of 2023 of interest on our own capital amounting BRL 17.1 million. And at last, I'm very pleased to announce that Romi has been certified with the ISO 45001 standard, which is a standard focused on occupational health and safety. This is commitment of Romi. It's one of its core value with its employees and associates and now it is officially part of our integrated management system, allowing us to obtain the certification. Of course, there are more challenges beyond this, and we are going to continue seeking improvements in this area, but obtaining the certification is a very important milestone for the company. And the macroeconomical indicators 2023, at least for the first 9 months show a transformation -- actually a capital formation that's basically stable in comparison to 2022. However, 2023 has been a year where the industry has been working sideways as we say it. Some areas of industry have been improving. Some industries have been cooling down, such as in agriculture. However, the key takeaway is that we are ready, both in terms of technology and solutions, new solutions to provide to our customers with the maximum opportunities. And we are also ready to seize every opportunity given to us by the market. In terms of installed capacity utilization, if we look at the blue line representing 2023, we can see that throughout the year, it has maintained a stable level similar to previous years, and this is something that we understand shows customers are working with a reasonable amount or -- of volume of businesses and we have been working closely with them, and this is reflected in the post-sales services as well that we have been providing to our customers. However, looking at the industrial entrepreneur confident syntax that shows our perspectives, we see the recovery is not exactly robust. Some months do feature a recovery, but it's still at a level in between optimism and a neutral perspective in terms of confidence to perform new investments. But I'd like to emphasize that in spite of this environment, and the challenging scenario for our customer's solutions such as machine rental may or has been demonstrating to be a very versatile solution for these more difficult times. In terms of business units, or industries that required our services throughout 2023, services are still at a high. Historically, it has been the key segment of Romi Machines, the job shops. 2023 was no different, and we been seeing this increase. I'd like to emphasize these service providers work in more than one industry. They make parts and equipment for the automotive industry for agricultural machinery business. So this is a sector that has been doing well. Machines and equipments varies a lot, but they are a great consumer of Romi Machines. Also in 2023, their activity was high. Agricultural decelerated, especially in the second semester. Its market share has been dropping, although it had been performing well in the previous years. And the other industries and segments remain basically the same. At B+W, in 2023, we've experienced a diversification of industry surge. Although the market environment is not exactly robust for investments, we have been managing to find alternatives to achieve higher volume of incoming orders and businesses at B+W. Industries such as defense, have had a significant representativeness in 2023 as well as construction and mining. We have also made great deals with the industry, both in Europe and also in the United States, industries such as energy, which in some continents is more critical. We've also been able to find alternatives working along with these clients. And this diversification has allowed us to attract more incoming orders at a significant volume, which we will see in the next slides. When it comes to Rough and Machined Cast Iron Parts, we've been making this very transparent to the market as a whole. The wind power energy has decelerated a lot throughout 2023, and that had had a repercussion in revenues and new orders in coming at the Rough and Machined Cast Iron Parts unit. However, automotive is still doing great as long as the construction yellow line, especially as of the beginning of 2023, they started to show a recovery and good perspectives for the future. And agricultural machinery had a great performance at a certain period of the year and decelerated. We still have a significant volume of businesses, in inventory, on the field, and this should be normalized in the next few months, allowing us to better understand what the dynamics will be for 2024. But it has had a significant role in Rough and Machined Cast Iron Parts in 2023. In terms of net sales per business unit, Romi Machines has featured a growth especially because Rough and Machined Cast Iron Parts have had an increase. Although the Romi Machines revenues have been reduced, its representativeness increased, and this actually comes a lot from B+W Machines with the increased revenues and margins, reaching almost 20% of our consolidated revenues for 2023. In terms of geographical region, Brazil, representing 74%, started representing 71% in 2023, mostly due to B+W's growth. B+W operates in Europe United States and Asia and because B+W has grown that reduced the domestic market share. Europe is stable, United States featured a growth that is a reflection of B+W's businesses in Europe. Latin America has featured a slight drop mostly due to the environment, especially found in Argentina, which is an important market for us. And Asia is resuming its activities, representing 2% of revenues and in B+W's operations increased its participation, and we've been having more business opportunities in Asia for B+W as well. In terms of new orders, there has been reduction over the year, mostly due to exports. If we look at the European continent, which is representative of our exports and imports of Romi Machines, it has decelerated due to inflation, higher interest rates, de-stimulating new investments. And that has caused a relevant decrease of new orders for Romi Machines, especially in Europe and in South America, much more due to political and bureaucratic aspects, however, there has been a reduction in comparison to the fourth quarter 2022. It shall be noticed that part of this decrease in the foreign market was somewhat compensated or partially compensated due to the increased consolidation of our machine rental business. B+W has featured a growth in the fourth quarter, but we should look at the full year. It's a significant increase in new businesses, and we will look at the portfolio. It's a very sound portfolio of clients and featuring a significant increase in new businesses, which will reflect more revenues for 2024 and even early 2025. Rough and Machined Cast Iron Parts are still at a low level the market is retracted. And over the year, especially due to wind power and agriculture decreases, we've seen a reduction in incoming orders that was quite significant. As a whole, new orders -- or incoming orders was somewhat stable in comparison to the fourth quarter of 2022 with a highlight of B+W. Over the year, there has been a reduction that's proportional to Rough and Machined Cast Iron Parts has covered before. But either way, as we've mentioned in the beginning of this conference call, Rough and Machined Cast Iron Parts has been readjusted with operational improvements now 2023, and we're looking at a positive perspective for margins in 2024. In terms of order backlog, Romi Machines ended the year with BRL 177 million, a 20% decrease in comparison to December 2022, However, the scenario is still somewhat positive. As mentioned, we have a product portfolio and solutions for rentals and financing that are very sound. And this helps us capturing or seizing new opportunities in 2024. B+W has had a 38.1% increase in order backlog. And this is mostly for 2024, but we also have orders for early 2025. We're looking at B+W with a lot of optimism for 2024, especially. And now it's a matter of delivering results with excellence and further improving their results. And Rough and Machined Cast Iron Parts due to the drop in new orders. The order backlog is relatively low. However, there are industries showing recovery such as automotive and commercial and civil construction where we have been adjusted, and we feel prepared to seize these opportunities in these industries. And even in a more challenging environment in terms of volume, we shall be able to recover our margins and participation. So if we look at the total order backlog, it has decreased by 11.8%. However, it is still a very sound order backlog portfolio at the end of 2023, with approximately BRL 493 million. As to the profitability and results, starting with growth margin, there has been a reduction in the fourth quarter of 2023 in comparison to the same quarter of 2022. And we should mention in this scenario that Romi Machines has sustained a very sound profitability margin and the same happened to other business units. However, on the other hand, the fourth quarter of 2023 is when we have concluded the adequation process of the Rough and Machined Cast Iron Parts Unit, increasing its efficiency. So we've had 12 million in the past year and now end of fourth quarter, we've observed this lower margin. But if we consider the Romi Machines and B+W machines, conjointly, the 2 units have actually presented an evolution, an increase in gross margin. However, due to expenses in reorganization, restructuring, the Rough and Machined Cast Iron Parts, we are now observing this decrease. And here, we have the gross profit. This is not only due to the gross margin, but also because there has been a decrease in revenues, especially in the Rough and Machined Cast Iron Parts. Over the year, the decrease is much smaller. If we compare year-to-year, Romi Machines has actually featured a slight increase in gross margin in spite of a significant reduction in volume which came mostly because of the reduction in the exports. And this is where we should ratify that the rental business and PRODZ business have been managing to provide us with more sustainability for margins at Romi Machines Unit. Also in this period of comparison, B+W has featured in a significant evolution in gross margin. However, Rough and Machined Cast Iron Parts ended up denting our margin in 2023. However, now we are much more adapted and prepared to face what 2024 brings in terms of businesses. Now for operating profit and operating margin, there is a decrease that caused a reduction in operating profit and of operating margin, the EBIT margin and once again, this is mostly due to the expenses with Rough and Machined Cast Iron Parts. Over the year, we observed a reduction especially due to the volume reduction. In EBITDA margin, we see a similar behavior to what happened in the EBIT margin. There is a reduction of EBITDA margin, however, both in the fourth quarter and over the year of 2023, we have been sustaining a sound margin of 14.9% end of quarter and over the year, 14.4% EBITDA margin. In terms of net income, as mentioned earlier, all of these factors have caused a reduction of net income. However, this is a stable level and the net income is still very solid for 2023, whereas the fourth quarter net margin dropped from 13.9% to 9.3%. Now it is very important for us to understand each business unit. As I've mentioned earlier, although that -- there has been a reduction in Romi Machines. And in this scenario, this is mostly explained due to reductions in exports, the domestic market with its sales, especially the rental business allowed us to maintain profitability of this business unit at very high levels, if you compare historically to other periods. And gross margin, there is a slight increase, and the same happened to the EBITDA margin, although the volume of revenues has decreased by a lot. B+W, as mentioned earlier, increased its revenues for 2023 and with more operational efficiency and more presence in parts and services. All of this allowed us to see a significant recovery of over 10% in gross margins, delivering a productive EBITDA. Again, this is a very robust backlog order portfolio and the perspectives are great for 2024. And then Rough and Machined Cast Iron Parts, it's a significant drop of over 50% in revenues. This is a unit with significant fixed costs in addition to all the expenses for readapting or restructuring the processes and -- so that we can go into 2024, seeking profitability recovery. However, this has impaired results by a lot. And in 2023, we've had negative margins. In terms of financial position, we're still in a very solid position with BRL 314 million in net cash and BRL 393 million in debt and loans. However, we have very robust cash -- net cash position for the short-term loan payments. We also have incoming revenues throughout the year. However, we are ending the year with BRL 79 million net cash debt, which shows our concern and care by the management for the net cash of the company. Now for capital market, this is more cyclical. We have observed that the macroeconomic scenario for the industry is relatively stable. So looking at the performance of our stocks and at Ibovespa, our performance has been below the index. Once again, I would like to thank you very much for participating, and I will be at your disposal if you should have any questions, but I really appreciate you taking the time to be here. Thank you, and have a great day.

[Operator Instructions] Cédrick, your microphone is enabled. I believe we're having technical difficulties to hear Cédrick's question. So the first question is from Lucas Xavier. Could you comment on what the restructuring process is like for Rough and Machined Cast Iron Parts due to the lowest volume of incoming orders?

Well, we've had over BRL 20 million in expenses for restructuring, especially for inventories and semi-mobile assets. We have done that throughout 2023. And unfortunately, we've had significant losses. However, they were deemed necessary for us to be -- to adjust and adapt this business unit. We have an increased order backlog or incoming orders in the fourth quarter. Agriculture is still an uncertain industry. However, heavy automotive and civil construction, we have these new customers and new orders for 2024, and we expect to resume profitability for this unit in 2024.

The second question also comes from Lucas Xavier. He asks, could you comment -- I'm sorry, I think you have deleted the question. It's the same question, my apologies. Now moving to Rubens Machado's question. What are the measures taken by the management and -- with regard to Rough and Machined Cast Iron Parts and what are the expectations for 2024 and 2025?

I believe we have answered most of this question in the previous answer. We have been readequating the unit and that required significant investments, especially for heavy casting and machined parts. We have an expectation for 2025 to increase, to some extent, our participation in wind power. We've been working maybe on -- with some clients and maybe for 2025, we will be able to achieve these results. We have been restructuring the unit internally. And hopefully, by 2024, we will obtain good results in terms of process improvements and enhancements and reduction of waste, so that 2024 offers better results. We've also made changes to the 2 units of casting iron parts. We've changed their product mix so that we become more competitive and productive.

The next question comes from João Paulo Reis.

Thank you, João. I think I believe we are going the right direction.

Next question. Congratulations on the work and results from José Otero. First, operational adjustments to Rough and Machined Cast Iron Parts will bring results of 2024 to breakeven or superior results than that.

Well, this is driven by capital goods. Even in automotive and commercial automotive, it's capital goods; construction, capital goods; energy is in capital goods; agriculture are also capital goods when it comes to machinery. So it depends a lot on the demand, which it has -- which has been very volatile and ever-changing throughout the quarters, but we at least expect commercial automotive and civil construction to perform better in 2024 than they have in 2023. And in agriculture, if agriculture maintains the same level of demand, this is already enough for us to become profitable again and Rough and Machined Cast Iron Parts in 2024.

The next question comes from Cédrick. I'm sorry for not being able to talk to you, but I'm glad it worked out via text. He says, congratulations on results. Could you illustrate the changes made in Rough and Machined Cast Iron Parts?

I believe that has been covered. We have been restructuring the processes and also labor and assets, and I believe we are prepared for -- in 2024 term business unit around. It's about BRL 20 million of nonrecurrent expenses in this unit.

Rodrigo Queiroz. Congratulation on results. I'd like to ask 2 questions. First, inventory value was reduced by almost BRL 100 million in comparison to the third quarter. Is it a trend to reduce inventories for 2024 and about Rough and Machined Cast Iron Parts? Is it expected to have a positive margin in 2024?

Yes, that is the expectation for 2024 to turn it around and obtain positive margins. As to the inventory that has been responsible for generating cash flow, we still have inventory turnover that is not ideal for us. It is a little bit above what we would like. So there is a trend to reduce inventory for 2024, trying to increase the efficiency of turnover. And of course, if we have an extremely increased volume on the short run, which has not been signaled by the market yet, we will increase our inventory and cash flow. But cash flow is near optimal considering the current demand level for Romi Machines, which has been responsible for reducing inventory in the fourth quarter of 2024 -- of 2023.

The next question comes from Antonio Rizzo. In Rough and Machined Cast Iron Parts, wind power, do you see any signs of improvement in new orders?

Not as of right now. We are working closely with our clients in wind power and perhaps by 2025 or 2026, we will be able to achieve some increase, but that will hardly go back to the same levels of 2021 and 2022. But we may be able to restore some volume in this industry if we're able to be competitive. And of course, if we can add margin to our stakeholders is important in these negotiations.

The next question is from José Otero. Future projects and partnerships in wind power, Petrobras and WAG, is Romi playing the game as a Rough and Machined Cast Iron Parts supplier.

Well, not specifically for this partnership, but wind power is one of our shares, and we have yet to achieve additional orders coming from these clients.

The next question is from Rubens Machado. Does the company intend to keep the same compensation for shareholders in spite of the reduction in revenues and margin?

This decision is a decision taken by the Board and stakeholders when participating in conferences can vote as to what they want to do with this. We have been able to distribute profits to stakeholders, and we've added benefits to investors, which is the bonus and that improves the cost of acquisition of shares and consequently, reduces capital gains and eventual sales. So this is important. We want to maintain it, and our policy is to distribute at least 35% of our net profit for each fiscal year. We've been distributing more than that in terms of profits, but of course, that will also depend on fiscal incentives and tax incentives. We have to use these benefits because they matter for shareholders. If we cannot rely on these benefits, we still maintain our commitment to distribute at least 33% of net profit unless we have projects that yield more than that, so we may have even better results for shareholders.

Next question comes from Matheus Klein. What can investors expect in terms of JCP and compensation distribution?

I believe I have just answered this question in the previous answer.

Next question comes from Conrado Carvalho. Could you provide us with more details on production and sales for the defense?

Sure. The defense industry is important for capital goods as a whole, and machine and tools is no different. And the defense industry has been growing globally and that generates an additional demand that's important to Romi Machines market and also B+W, actually more specifically B+W. In 2023, we have delivered machines for the defense industry, and we have orders for 2024 and ongoing negotiations for the future. So it is an important market, the defense industry, both for Romi Machines and B+W Machines.

The next question is from Marco Carregari. Considering the demand and adjustments made, will the operational performance of Rough and Machined Cast Iron Parts similar to the previous year?

We expect Rough and Machined Cast Iron Parts to perform better in 2024 than it has in 2023 due to the adaptations we have performed.

Next question. Could you provide us with some perspective on the continuity of growth in the rentals business? And what is the backlog order for this unit like? Is it registered under machine and tools unit?

Yes. Let me give you an overview of this business unit. We enter the contracts, the rental contracts. These contracts last 1 to 2 years. So of course, the amounts are significantly lower than selling a machine. Also because our rental prices are extremely aggressive for customers, we're talking about a monthly rental fee of less than 2% of what a machine costs for its acquisition. So the contract itself, when registered upon the incoming orders, it will only show 12 or 24 months for that amount, the 2% of the machine, which is half or less than half the machine cost. So this is how these amounts are entered because this is the contract we have with our clients. In terms of growth perspective, we have been working hard on it, and we want to keep on growing in 2024 with this new product for clients. And of course, it will depend on each client. Clients know their own businesses. They need to prosper, and thrive and they will make the choice to buy a machine or rent a machine, and that is completely up to our clients. Our sales teams have -- are closely aligned to that, the variables for Romi sales persons are great, because we don't want to cause a bias for customers and clients. They need to choose what's best for their business. I believe this business tends to grow over the next years, because I believe clients can allocate their capital even more efficiently, having an option to rent a machine for a relatively low monthly fee. And this money can be used for other projects of the clients so as to -- so that they can obtain significant return. This has been happening with some clients that have been working with us for a long time, and they've been renting more and more. So we have lots of success cases in the past few years, and this will further influence new clients and rental will grow its share in Romi's business overall. How far can this go? It's hard to estimate. But what's important is that clients have more alternatives to achieve success, and this is our purpose.

The next comes from Antonio Rizzo. In strategic terms, does the company have conditions to increase competitiveness seeking a strong increase in percentage of exports in the 2 units, Rough and Machined Cast Iron Parts?

Yes. 2022 is the year we broke the record in exported machines. 2023, also because Europe is important to us and lots of countries are facing a recession, we've had a decrease in exports in 2023 in comparison to 2022. And we've also had a significant drop in Argentina due to the economic environment last year. But we do believe that exports are for us an important market and they're important clients, and we are maintaining our efforts and machines for export. And Rough and Machined Cast Iron Parts, we have a team working in the United States to provide clients there with support, and we're very optimistic. We are already exporting to France, Finland and the United States. We are pretty sure that we can further expand this unit and export more machines, and we are being very competitive.

The next question comes from Marco Carregari. Looking at B+W's backlog order, what should be the revenues in 2024 and the profitability of this business unit?

Well, the backlog of orders at B+W is already closed, and we have orders even for 2025. B+W has improved its relationships with clients a lot, and we are looking at a very positive scenario, the defense industry is also very promising. So we have lots of orders with B+W in 2024 and '25. It is difficult to estimate the revenues because a significant part of revenues at B+W comes from retrofitting services, replacement parts, and this is something we see throughout the year. However, our expectation is to obtain sound results at B+W for the next few years, also due to backlog orders.

The next question comes from Antonio Rizzo. In Rough and Machined Cast Iron Parts, does the company have the conditions to seek new industries and becoming less dependent on wind power?

Yes. This is actually one of our strategies and changing the product mix. We are actually making other capital goods for machines and heavy machines, but not as heavy as wind power requires for casting. And it was almost -- and we were almost entirely dedicated to wind power, but now we've been making parts for capital goods, both at Romi and B+W. B+W wasn't doing this, but now they have. Now we are looking to improve the capacity of Rough passing and diversifying the product mix and offer these automatic lines of products.

The next question comes from Rubens Machado. Does the company intend? Is my connection off? No, this question has been asked already. Okay. All about compensating shareholders. This has been covered. The next question is from Lucas Xavier. Could you comment on the bonuses and payout expected for 2024?

I think I've covered the payout. It will depend on JCP and how the regulations will take place in 2024, but we do expect to be profitable and to keep our profit distribution policy. There has been a relevant fact about this. What we're doing is we're creating a proposal for shareholders in terms of bonuses. So the accrued profits of 2023 and increased capital, this is something we've done last year. We have been doing somewhat frequently. The profit that's not distributed is capitalized using our businesses and good projects such as rental, PRODZ, which require capital. And we have been using this capital in these projects and new products. And this is good for shareholders and also in capitalizing it, it increases the acquisition cost of shares and improves tax efficiency on capital gains.

Rubens Machado about research and development. What has the company been thinking about in terms of new products that can bring new perspectives for the company?

We have been investing heavily in research and development. We have hundreds of engineers working in research and development the whole time. And we have a road map that's been reviewed three years ago, and now we are much more focused on connectivity, big data analysis, improving customer experience, and we expect to be able to deliver over the next few years more data obtained by machines with much more assertiveness and for predictive decisions and method so that we can offer these solutions to customers and guaranteeing the success of their businesses. So in research and development, we have been thinking a lot of building in new technologies and having new products. But currently, we're much focused on connectivity, big data, and data analysis for customers to obtain more and more success. This is the focus of our research and development.

Another question from Matheus Klein. What are the perspectives as to the impacts of Villa Romi Residence and the future results of the company? Is it within expectations? Can you provide us with more details on this business?

I'm going to ask Fabio to cover this answer because he is more informed about this endeavor.

Well, sure. Villa Romi is an endeavor in Santa Bárbara d'Oeste, which is a high-standard gated community where Romi has established a partnership with a construction company, whereas each holds 50% of share. And this gated community and the plots have almost all been sold. And in these 2 years, 2022 and 2023, it started being incorporated and developed in 2022. And we have now about 82% concluded of the construction work. Looking ahead of us, we still have a share to be acknowledged by the results of the company in 2024, which is equivalent to about 19% of the -- of Romi's share and receivables will part of it -- part of the parts were paid in full. Some were financed with the construction company, and there is a 12% application a year plus IPCA and the revenues were a great success. And now we're at a phase where we're concluding the process and delivering the final plots. There is some impact to happen to the results. However, the key impact that is 80% of the endeavor has taken place in 2023 and 2024.

As there are no more questions, I would like to yield the floor to Mr. Luiz Cassiano for his final remarks. Please bear in mind that Romi's Investor Relations department is available to answer any other doubts and questions. Mr. Luiz Cassiano, the floor is yours.

Thank you, [ Resa ]. Thank you all for participating in our conference call. Our IR team is at your disposal. If you should have any questions throughout the quarter, we're at your disposal, and we see -- we'll see you again in April -- on April 16, where we will provide you with the results from the first quarter of 2024. Have an excellent day. Thank you very much.

The Romi conference call has now closed. We appreciate your participation. Have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]