Tupy S.A. (TUPY3) Earnings Call Transcript & Summary

[Interpreted] Good morning. Thank you for waiting. We welcome to the conference call for Q4 2019 results for Tupy. [Operator Instructions] This conference call is being recorded. The company would like to remind you that this event is being transmitted simultaneously through the Internet via webcast at www.tupy.com.br/ri where you will find the presentation. The slides will be controlled by you. The company clarifies that any declarations made during this conference call on business perspectives, projections, operational goals, financial goals concerning the company's business are based on company's expectations. These expectations are highly dependent on market conditions, both domestic and international, general economic performance of the country and, therefore, subject to change. With us, we have Mr. Fernando Cestari de Rizzo, Chairman of the Company; and Mr. Thiago Struminski, Vice President of Finance, Administration and Controls. Mr. Fernando, you may proceed.

[Interpreted] Good morning. Thank you for participating. 2019 was a year with a lot of work. At the same time, as we give important steps to build a new cycle for the company, we created a company that is more and more vibrant, globalized and centered on the client-end results. We summarize our strategy shown in the last Investor Day, which is made up of 4 pillars: strategic growth, operational excellence, return to shareholders, restructuring an organizational culture. Tupy is rebuilding itself with many fronts in progress. And in spite of the results delivered in 2019, naturally, we have not captured all the opportunities for value generation. We carried out an organizational restructuring. We were recruiting new talents, and we adopted new organizational processes, the basis of our strategy. In the last 18 months, we attracted 2 new vice presidents, 4 new directors for the business here in Europe, a new Country Manager for Mexico, a new Purchasing Manager and a new Human Resources Director. We also recruited 30 new managers in a universe of 72 submissions, including the substitution of submissions with low performance. This structure will be fundamental to capture existing opportunities in Tupy and synergies after the acquisition of Teksid, as announced in December. We will become a more solid, more competitive, more diversified and more resilient company to take advantage of the opportunities in global growth. We revamped the production system, strategic planning and we created advanced manufacturing teams, where we adopted the concept of open innovation with partnerships with technology company. Apart from academic inputs from U.S. and foreign universities, we are carrying out agile and the innovative processes with the use of data analytics and mathematical modeling in the development of processes, automation, quality improvement, productivity and also the management of materials and energy consumption. We accelerated the sale of nonstrategic assets, and we restructured purchasing with the consultancy companies. With their help, we brought in new team with experience in better global practices and developed the chain of suppliers to mitigate risk. In this period, we also consolidated our global position as a specialist in metallurgical technology and also specialized in cargo transportation in automotives, infrastructure, mining, agriculture and energy generation. Our clients are -- have great new growing needs to invest in new technologies, which will result in more opportunities for us in the value chain with more machining and assembly of components. The strong outsourcing activities also brought an increase in the participation of CGI in Tupy electronics with a growing demand for machining services and assembly services. This demand has brought results in 2019 when we renewed our portfolio of orders -- our portfolio in Mexico, and we expanded our machining operations. With this, we had an increase in participation in structural components in -- with complex geometries and CGI, represented 22% of our total portfolio versus 14% in 2018. And also machine products now 24% in comparison with 20% last year. We had natural difficulties in the ramp-up of the foundry and also machining in some operations. We haven't captured all the potential in terms of margin, but this should happen this year 2020. So this shows the trust of our clients in the solid model of the business at Tupy, which will give us expressive results in the long term. In 2019, we increased our operational efficiency with production management and better projects with better use of materials, less scraps, less consumption of energy and growing automation. In this way, after our first quarter with the impact of the ramp-up of new operations and other nonrecurring events that hurt our operation, we will have, in the next months of the year, a growth of 50 basis points in gross margin and adjusted EBITDA in spite of 6.3% drop in the volumes. On Slide #3, we see the first results of these initiatives. We reached, in 2019, record values in revenue, EBITDA and net profit in spite of lower volumes in Q1 '19, especially due to the launch of new programs. Operational cash, always the great focus of the company, reached BRL 567 million, second best result of the company and corresponding to a cash flow yield of 21% and an 81% of adjusted EBITDA in the period. We have a strong commitment with our investors and a favorable cash balance, BRL 840 million, and our index. Net debt EBITDA -- adjusted EBITDA is 0.91x, which shows that we have -- that we made the right strategy to buy Teksid and will allow us to pay our shareholders. So the company paid dividends in JCP worth BRL 162.5 million, a dividend yield of 5.95%. Now to talk about the main indicators, I invite our CFO, Mr. Thiago Struminski.

[Interpreted] On Slide #4 and with the numbers of Q4, we have 119,000 tons, 17% lower than Q4 '18, especially due to the reduction in indirect exports, adjustments in our clients' inventory and also off-road -- and also due to the performance of off-road abroad. And the volume trends in transportation, infrastructure and agriculture, 23% from total or partially machine products, 24%, CGI. The reduction of the participation of machine products in Q3 '19, which was 26%, is related to the applications that use this service, especially off-road. On Slide #5, revenue had a drop of 8%. And per kilogram, there was an increase of 11% due to a better mix. 64% of the revenue came from NAFTA. In this case, we must say that this is due to our clients in this region using plant and to export. 17% South American Central, 13% Europe, 5%, Asia, Africa. And in terms of application, 80% off-road, 13% passenger cars, 5% hydraulics. Slide #6. Revenue from transportation, infrastructure and agriculture in Brazil. The drop is due to a state out of some products that we had already in our plant. And commercial, we see here also commercial vehicles, and we see a drop in indirect exports and also the effect of inventory and our clients' revenue in the domestic market. On Slide #7, revenue from the foreign market had an impact, especially due to the reduction in volumes in off-road due to uncertainties and problems between U.S.A. and China. And the reduction in revenue in the applications for light vehicles is due to the performance of some market and also strong comparison base in the previous year. Slide #8, we see performance in hydraulics, 6% of the revenue. The reduction in volumes was compensated by a better mix and also better prices and exchange rates. Slide #9. Here, we see cost of products. CPV, we see here a drop of 8%. Gross margin, an increase of 20 basis points. In this period, CPV totaled BRL 964 million, drop of 8%; and a gross margin 15%, an increase of 20 basis points in 2018. Also in this period, a drop of 19% in the cost of raw materials due to the volumes and better prices of materials. A growth of 3% in the expenses with labor and also participation results and social benefits. We'd like to say that looking at the previous quarter, Q3 '19, we had a drop of 5% in this line due to many actions to make operational improvements and reduction in overtime, an increase of 7% in maintenance and third-party materials. This had an impact due to credits of PIS/COFINS taxes worth BRL 9 million in Q4 '18. If we exclude this effect -- if we include this effect, we would have had a reduction of 3% in relation to the previous year. Operational expenses, a drop of 4%, especially due to a drop in expenses with freight. Slide #10, adjusted EBITDA, BRL 152 million and increased with a margin of 13%, 120 basis points Increase in relation to the previous year, the drop in volumes was compensated by the itemization of projects with gains in efficiency -- operational efficiency. We're also implementing our strategies to defend ourselves. We use this to mitigate the impact of fluctuations in demand, including reallocation of products between plants, reallocation of work hours and other initiatives, reducing also fixed costs. At the bottom of the slide, we see net profit, BRL 73 million in comparison with BRL 78 million in Q3 '18, with an increase of 10 basis points in net margin, which reached 6%. Slide 11, we show the main accounts of working capital. So looking at the previous quarter, Q3, we see a reduction of 15 days in accounts receivable due to seasonality and receiving of tooling, an increase of 7 days in inventory, reflecting the transfer production from Mexico to Brazil, and also, thus, the preservation of margin. Slide #12, we see the investments of intangibles. Here, we see the investments intangible, BRL 92 million, a little above the depreciation of the period. The investments in 2019 totaled BRL 270 million, corresponding to 5% of net revenue during the year and also other initiatives related to CGI in Industry 4.1. And we're also revamping environmental projects and labor safety. On Slide #13, operational cash generation in Q4 '19, BRL 342 million. This is the highest value in the company's history. Among other factors, this had an impact due to credits that we received for PIS and COFINS taxes, BRL 65 million. And also, we received BRL 63 million in credits from Eletrobras, the electricity company. On Slide #14, we show net debt of BRL 639 million, corresponding to 0.91x adjusted EBITDA in the last 12 months. The obligations in foreign currency represented 98%. Most of our debt is in foreign currency, and it is a bond, and it will become mature in 2024, and 40% are in local currency. Now I will pass the floor to Fernando.

[Interpreted] In spite of the drop in volume in Q4, which doesn't represent a drop in market share, we're operating in a healthy economic scenarios. The GDP of Brazil and U.S. should grow around 2%, and in Europe, we will have a growth in GDP. I would like to share with you our perspective for the main markets that we evaluate all the time, and we are very cautious at this. I will begin with light commercial vehicles, 33% of our revenues, and especially in the U.S. This is a segment that continues to have a favorable demand, and we will have new products launched there. If -- with the U.S. economy growing higher wages and low unemployment, housing favorable, we had wonderful numbers in December and January for construction in the U.S and also pickup trucks, very healthy. So we should maintain the volumes in this sector. The off-road segment, which represents 23% of our revenue. I will talk about 4 sub-items. The first, agriculture. So we had uncertainties that brought a drop in the substitution of machines in 2018 and 2019. And also the problems between U.S. and China, we believe this should be solved this year. The feelings of American farmers is improving. And the age of the fleet is the highest in a decade. So this brings us a vision that many clients in the U.S. will have to substitute their machinery since they use them a lot. The second sector is construction. We're seeing the softer market in relation to 2019, and this depends a lot on the government. Housing starts have grown, which shows an improvement in construction of houses. We see new machines being sold and also usage of existing machinery. But there is excessive stock inventory, this should drop. The third, mining. We see commodity prices that still show investments being made, and there is optimism to recover CapEx after the second semester of 2020. The fourth, energy generation. Here, we talk about oil and gas and also diesel and gas generators. We believe this area of oil and gas should be solved in 2020 as in the second semester of 2019, and the generators will have moderate growth. Now medium and heavy commercial vehicles, 15% of our sales in 2019. We'll see a reduction of 1 digit with an expectation of recovery in Q4 2020, both in Europe and the U.S. Different from other cycles in the past that were unfavorable, we should bear in mind that the U.S. economy and the transportation of merchandise continue growing. There was -- there were higher sales, higher than cargo in 2019. And now there is an adjustment, but the market continues to grow using vehicles, growing usage of vehicles in vocational trucks, like concrete trucks and cranes or garbage trucks, dump trucks have a good market and very positive in the U.S. and Canada, these sales. Though reduction in the export market normally last 3 to 6 quarters, and we are already ahead. Now medium and heavy vehicles in Brazil in domestic market, 11% of our sales, we're expecting growth in heavy equipment. We have had another year with a very good harvest and improvement in the transportation of merchandise. Some volumes for indirect exports may be lower than last year and may depend on global growth and Eastern Europe. Also, passenger cars, 13%. We expect stability mainly, especially in the U.S. and U.S. markets and also in Europe, especially luxury vehicles. So we have this expectation of stability or a small drop. Well, in periods of possible reduction in demand, we should have cost control measures. Since Q3, as we noticed, the risk of a drop, we began many initiatives to lower costs, all of them already planned. We focused on rigorous strict execution of our strategy with activities to defend ourselves to adapt our company to a drop in demand. Apart from a more mature production system, we reduced nonessential services, trips, cost with special freight, and we continue to transfer volumes from higher-cost plants to those that are more efficient. These actions, together with other initiatives implemented in 2019, helped strongly to expand margins in the last semester and will continue in 2020. Apart from this, we have a significant pipeline of new actions, always increasing efficiency and productivity. Our automation projects in finishing also were carried out. We have good expectations for 2020. We began projects to apply data analytics to improve the consumption of materials, energy consumption and also better quality of our products. The acquisitions of the cast in business for structural components from Teksid announced in December was an important strategy to allocate efficiently our capital. And this after we closed the operations in Maua, with this transformation, we will increase our exposure to sectors that will continue for decades. We also expanded our portfolio of clients who will benefit from our know-how with special alloys and complex geometries, machining and assembly. In operational -- from an operational point of view, there are many synergies and gains in scale that will be implemented during the year. Now we'd like to begin our Q&A session.

[Interpreted] [Operator Instructions] This conference call is for investors and investment professionals. Our first question is from Mr. Marcelo Motta, JPMorgan.

[Interpreted] Two questions. Could you comment on Teksid, the acquisitions? The time for approval you will know that you depend on antitrust laws. Could you comment anything else? Also, volatility on a global coronavirus, could this change price negotiations. And when we look at coronavirus, is there any impact? Are you feeling any impact? Are you worried in Q1 China stopped for a long time? So please tell us how you see these issues? Teksid and the impact of the coronavirus.

[Interpreted] Thank you, Marcelo. Thiago, I will answer the first part. I'm Fernando. The acquisition of Teksid is we are waiting for the approval from the antitrust authorities. And it depends on U.S., Brazil, Poland and so forth. So now we're waiting. We should have this in the second semester, the closing of the deal. Now coronavirus. First point, Tupy doesn't depend on any raw material from that region, and there is no restriction on materials that could hurt our operations. In terms of demand, we haven't seen any change due to coronavirus. Although, a drop could affect us, we don't know, maybe some electronics components in the chain. There may be a delay in receiving some of these components in the future. For the time being, we haven't identified any effect until now.

[Interpreted] Just supplementing Fernando's answer, concerning Teksid, the acquisition. The position should come at the end of the second semester, and the volatility due to coronavirus should happen in the next quarters, if we have any effect. We may have a recovery, greater concentration of volumes at the end. So in practice, looking at the contracts, there is no adverse effect. And when we have a response from authorities about Teksid, we should have also a recovery.

[Interpreted] The next question is in English from [ Jorge Contreras, Tulip Asset Management ].

You mentioned on the beginning, the potential gains due to revalidation, I know it's still reflected in the numbers. So could you please give your guidance of the gains?

[Interpreted] Thank you for the question. There are 2 effects that we're mentioning. First, the company went through a great restructuring, and the new team is still adjusting itself with new -- and new processes are being implemented in the company. So we hope we will have a greater and greater efficiency as the quarters go, also an important renovation in the product portfolio of Tupy. Some applications, we increased 50%, for example, in the use of Irineu in it. And when we're beginning these projects and during the ramp-up, we have plants that -- we're not used to these products. So we are training the employees. This involves a lot of people, vendors, special materials during the ramp-up. So we see a favorable indicator in sales. Prices are better, and the participation of machine products has increased, but we haven't been able to convert this to margin. From now on -- these product cycles take 8 years, 10 years. So now we have a new range of products, we will capture the benefits from now on after we stabilize these plants. So this is the message. And this organizational restructuring aims not only to improve the current company, but to prepare the company and prepare the company to absorb the acquisition and to get synergies from this process.

[Interpreted] [Operator Instructions] The next question comes from Catherine Kiselar, Bank of Brazil.

[Interpreted] Congratulations for the results. My first question is on the price increase strategy, especially in hydraulics. How did this go? And how about prices for 2020, especially due to inventories at clients, price increases?

[Interpreted] Catherine, thank you. Well, in hydraulics, this a sector that is a commodity, and the favorable exchange rate helps us in exports. We were able -- we closed spot contracts with the good -- with the favorable exchange rate. We had a benefit in terms of prices. The other part in block -- engine blocks and heads. We observed an improvement in the mix. We had a good improvement in the mix with more special alloys, more machining. This has -- brings us better prices, but also higher costs. So we hope to lower the costs, maintain the prices just generating more efficiency, we should reduce these relative costs. So these 2 factors explain the better prices for the company.

[Interpreted] Could you give us a follow-up of the operations in Mexico? The synergies between Mexico, Brazil, better efficiency, better margins.

[Interpreted] So the operations in Mexico, we renewed the products in Mexico. We had a machining plant that was small. Last year, we inaugurated an important parts for machining and assembly for 2 important clients from the U.S., pickups and also engines for industrial applications. So the operation has improved. We have a new team. They have helped a lot for our results. And depending on the products, we carry out actions, and we send products to the plants that are more efficient. In Mexico, we have 4 production lines. Brazil, 3 production lines. And when we move products between these plants, it depends on the product and the kind of products. Mexico contributed a lot for the results between 2013 and 2016, more than Brazil in that period. And now we have new product, this is natural in industry. It's very good. We have a strong portfolio of products, long-term products. And now we're capturing and improving since -- at each quarter to capture more benefits.

[Interpreted] Our next question comes from Werner Roger, Trigono Capital.

[Interpreted] Congratulations for the results. Could you give us an idea if you can increase production or improve the mix in the current capacity? What are the investments apart from Teksid? So this year, what is the CapEx investment this year?

[Interpreted] Werner, thank you for the question. Well, Brazil, we are -- Brazil is working 3 shifts in all the lines, 3 shifts. We're working at full capacity in Brazil. We are developing products between Brazil and Mexico, and we're trying to obtain the lines that are in operation always with 3 shifts. In terms of internal investments, we decided to make an acquisition. We believe the acquisition is the best way to grow. This is the lowest -- it has the lowest cost because we did the acquisition, as I told you. Concerning investments in 2019, there are many investments in efficiency gains, new projects, a young team of engineers, working with also automation -- process automation, finish -- automation and finishing processes. All of this should have a good benefit. So we should begin to reap the benefits from now on. In 2020, we want to invest an amount equivalent to depreciation. So as we believe these projects -- as we see the projects that have a better return, we will continue investing.

[Interpreted] Can I ask another 2 questions? Concerning PIS/COFINS taxes, the credit -- the tax credits and the electricity credits, do you have more credit, especially electricity? Or do you have more credits coming? Also concerning heavy vehicles, do you see a good market in Brazil?

[Interpreted] An OEM launching trucks and buses, gas-powered, I will talk about the electricity company. In August 2019, the court determines to adjust the value according to inflation. After this initiative, they determined an amount of BRL 72 million. When we remove the costs, we got to BRL 63 million. We have also BRL 152 million to be received -- to be collected. This includes, for example, other calculations. We are discussing these points. We hope that during the year, we will solve this. It's difficult to say when we will a have result. We hope it will not take too long. Now concerning PIS/COFINS taxes, the recognition from the Supreme Court, saying that ICMS tax does not -- should not be included in calculating PIS/COFINS taxes. So we -- so they recognize our right to remove ICMS tax from the calculation of PIS/COFINS, but it's a credit that can be used to compensate federal taxes. And this makes it easier for us. Now concerning gas vehicles -- gas-powered vehicles, it's an interesting topic. There are things happening. Three OEMs are working on projects, some already announced new products in the market for this application, urban buses, especially urban buses and some types of trucks in restricted areas. There are great opportunities, especially in land growth. This is used a lot in the U.S., which should come to Brazil. And this will depend on the price of gas. We have changes happening in the country. And with the gas from the pre-sold oil wells, we should have a lower cost for gas in the future. The pipeline -- there is a pipeline near our company. The value is good. There should be an important change for many industrial applications, industrial engines, energy generation, where it will make sense to use this for generation. This should reduce also some things. There should be a benefit in demand. We have special products for this special engine blocks, special heads. This is used today in oil rigs. They use gas from the oil wells to generate electricity. But with a lower price of gas, this will bring many investments in companies using engine -- internal combustion engine with gas to generate energy and also mechanical energy in the plant. It should be cheaper than electricity using gas. So we believe this should grow.

[Interpreted] Fernando, within gas, we have a limit for emissions if these products can be used in ships, boats, in ships or supports ships and boats?

[Interpreted] Yes. We participate, Werner, in engines up to 90 liters. These are not that big. They can be used by -- for tugboats. Ships are changing, and they are no longer using heavy oil. Now they're going to diesel and gas. And when they come close to some cities, they will have to use new fuels. So this is bringing changes and generating demand for us, not for the main engines, although for caterpillar, we have some products that can be used in cruise ships. Cruise ships are going from diesel oil to gas now. Cruise ships, the passengers in cruise ships and the black smoke that came from diesel is very bad. So they're changing the fuel from diesel oil to gas in cruise ships. So these are very large engines, and there are many auxiliary systems that use our products because they use auxiliary systems, tugboat engines, which use these products. So all the -- it's important to stress this. All these changes to improve emissions have a positive effect on our company. That's where we have more CGI, our technologies. Because these are different engines, they have special demands, and that's when we grow our share. So we have projects in engineering for -- in these areas. But this is the natural path of industry that helps companies that have engineering, prepare to develop these new products.

[Interpreted] Air conditioning in cruise ships, do they use gas?

[Interpreted] Probably they -- central systems may use one machine for electricity in buildings and ships, or you have production with central chillers that can be activated by gas engines. These are large compressors with electrical engines. And you can use the gas system, yes, it can be done. Yes, with -- if we have cheap gas, we have a lot of gas in Brazil. We haven't been able to take advantage of the gas. Nowadays, it's being burned, but we will have many new applications with -- when gas becomes cheaper. It can be used in converted diesel engines or in turbines. This turbines offer a very high-volume operations and must have stability. Turbines cannot have fluctuation in the RPM. So most of the benefit comes to converted diesel engines, diesel engines converted to gas.

[Interpreted] [Operator Instructions] The next question comes Eduardo Nishio, Banco Plural.

[Interpreted] Two questions. First, the drop in volumes. Do you see a recovery in the first quarter of 2020? You mentioned in the release that you made some adjustments. Please give us more details concerning efficiency and the activities to defend the company. 2019, EBITDA margins dropped a little in relation to 2018. So did you have a recovery during 2019 with your actions? Do you see margins recovering during 2020, even with a drop in volumes? In 2019, you had a drop of 5%. 2020, do you believe you can protect margins?

[Interpreted] Thank you. First, about the actions. We said that if you look at the last 3 quarters, margins improved 50 basis points. So in the first quarter, the new plant, we have some maintenance problems at the end of 2018, 2019, but didn't have this year. So we began with the plants operating well. So margin improved in the period. We're operating better than we did a year ago. We are now more efficient than a year ago. Concerning volumes, I try to analyze each market because it's -- we have a mixture. Something that happened. If you look, there are some interesting indicators in the U.S. market for agricultural machines, construction machines. We see that our clients sold more than their dealerships sold. So during 2019, there was -- there were high inventories at the dealerships in the U.S. Now they are selling during the year. That's why there was a drop. The machinery manufacturers decreased their production, and now they're waiting to sell these products. So the U.S. economy is growing. The Brazilian economy is growing. This is important for us. Trucks, same thing. So they have to substitute the fleet because of the cost of maintenance. It so happens that since we had changes in technology, we see that the sales of trucks -- truck sales in the last 2 years, truck sales before October 2019 were higher than the growth of freight. So this segment is adjusting itself. But merchant-based transportation continues to grow. That's why we understand it. We are in an adjustment phase so we should use this to plan our resources, and we should have a recovery at the end of the year. So these are changes. The effects of coronavirus, we haven't seen any effects. What could happen, the Chinese plants stopped. They are already producing. We have monitored this. But essentially, this is what we see. Brazil is growing, but exports of engines and trucks is not growing. This should drop in Brazil. So we may have a small drop. Medium trucks, stable, this is what we see. If you look at the inventory indicators of the leaders in pickup trucks, heavy pickup trucks, the lowest inventory was in December, the inventory dealerships, which shows that the market is buying and should continue to buy, and this inventory has to be replenished during the year. So in construction and off-road, we see more variations, like the case of the sale of machinery, and now there is -- it has become stable. So it's hard to give you numbers. Which is -- Q4 had a more abrupt change to adjust this system. We produced more than what was sold, Q4. But Tupy's share did not drop, and the consumption of equipment is growing. In agriculture, it's interesting, the fleet is getting very old. We have the oldest fleet in the last 10 years. This drove higher maintenance costs, lack of reliability in these machineries, and they need these vehicles for harvesting and planting.

[Interpreted] [Operator Instructions] We'd like to close the Q&A session. I'd like to pass the floor to Mr. Fernando for his final comments.

[Interpreted] Well, I'd like to thank you all for participating, and we thank you for the questions. We're proud of the results we reached in 2019. But we know that we can do much more, and we are reorganizing the company and improving the capacity of Tupy. Resilience, flexibility and robustness are words that can summarize the year of 2019. After our first quarter, with the beginning of production of complex products, renewal in our portfolio and maintenance, now we have consistent growth in margins in the other quarters of the year in spite of the drop in volumes. This way, in 2019, we delivered the highest net revenue in history, which, for the first time, surpassed BRL 5 billion, apart from record results in EBITDA net profit, more than renewing and conquering new contracts. Both in foundry and in machining, we are building a company that will be prepared to absorb new opportunities in the market, making progress in engines and helping our clients to solve their challenges. For example, the assembly of components, a new lever for value in the next few years, which will have a positive impact on our results and also bring us better partnerships. We're preparing to be -- to integrate the foundry from Teksid. We will be a more global and strategic player with a fundamental role in the development of new generations of diesel and natural gas engines, the cleanest fraction using fossil fuels, which are essential for society's new demand. We're building a company that is global and diversified, prepared to capture opportunities based on technology and with focus on return to shareholders and a good impact on communities. Thank you for your attention, and we wish you a good day.

[Interpreted] The conference call is concluded. We thank you for participating, and we wish you a good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]