WEG S.A. (WEGE3.SA) Earnings Call Transcript & Summary

[Audio Gap] WEG is growing its market share. And in the last few years, we're also increasing our presence and offering solution for motion drive for our clients. Taking this all in analysis for the 5 -- first 6 months, we have a very positive performance in the external market in spite of a slower investment rhythm in invest. We -- it's worth mentioning in regions such as Asia and North America have shown a very good performance for WEG, and also adding the acquisitions that we have made in 2024 with Marathon, Cemp, Rotor and Volt in Turkey. We have had in the external market, in the foreign market, a performance that was a little slower, 4%, but segments such as oil and gas and water and sanitation were positive in this period. Let's now talk about the generation, distribution and generation, which is a great -- where WEG is standing up and it's going to -- it's representing 22% of the consolidated revenue, and that growth is coming from the fact that WEG is exposed and offering solutions in this moment of energy transition, such as renewables and the growing demand for energy geared towards artificial intelligence. Here, we're talking about transformers, substations and complete solutions as for solar, hydro and wind energy. In the external market, we have had excellent performance, 28% growth, especially spurred by the demand on the T&D, demand in all regions in which we have productive units, but with a stress in the United States and North America. And another thing to stress is the very positive contribution of the alternators that was bought from the Marathon and WEG has been announcing it's growing in this and growing, and we are able to capture more market opportunities. In the domestic market, we're also growing the T&D. And in this first semester, we have had the contribution of the solar energy and because of the fact that we don't have wind generators, WEG was still able to grow 8% in this first semester. In speaking about Commercial and Appliance Motors, we have had a very positive performance in the market, in the foreign market, and that is because of our performance in the United States. And in Brazil, 11% growth, segments such as [ AV ], motor pumps and leisure has contributed to this growth. Paint and Varnishes, here, we are speaking about industrial paints, powder paints and industrial varnishes. And in the internal market, we had a 12% increase with a positive performance in several segments and with special stress in water and sanitation and in the agricultural implements. In the foreign market, our growth comes from the powder paints in Mexico, but we're working on the internationalization of this business. In the last year, we have announced the construction of a power plant for paints in Mexico, and that is going to be delivered next year. And recently, we have announced Heresite acquisition from the United States that is going to help us in this process. Let us now speak a little bit about the operating results. And here, the message is WEG is finding opportunities to increase its performance with growth in its revenues. I have said that in the first semester, we have grown 17.2%, we reached BRL 20 billion growth. And along the last years, we have had -- we are improving our EBITDA margin. We've had in the last quarters an oscillation of this margin that in some way were expected because as I said, in the first semester of this year, we've had a delivery that was very important in the solar, centralized solar energy that have lower margins than the consolidated margins of WEG. But still, we finished the first semester with a 21.9% margin that is fluctuating according to what has been delivered in the last 2 years, 22% in 2024, 21.8% in 2023, 20% increase in the EBITDA, thanks to the contribution of our business, most of our business, especially T&D, and constantly because of our programs of streamlining of costs and streamlining of our capacity of utilization of our assets. Speaking now about our investments. We've closed the first semester. We have invested BRL 1,205 million. It's worth mentioning that our budget is BRL 2.5 billion, and we are still a little bit lower than half. And we still see in this slide here that historically, we're investing about 3% to 5% of our operating revenue. And the focus of investment has not changed. We are focusing on the long term, searching the increase of capacity, internationalization and modernization and automation of our units, both in Brazil as in the foreign markets. In this first semester, we are still a little bit higher than this last year's reference, but that is a reflex of the volume of investment that we have announced in the last years, focused on growth, especially in the transmission and distribution area. Speaking a little bit about the ROIC, it's exceptional performance, the 32.9%, another year that we are operating over 30%, and that demonstrates that we are able to generate solid returns and maintain the discipline of capital allocation. Here, I think that the main takeaway message is that we are allocating capital in a very efficient way. As we can see, along this historical series, we were able to multiply threefold the invested capital. And thanks to investment, generate a good return. WEG has been able to generate a very healthy ROIC, and we're investing in very good projects that generate good returns. Now let's move on net income analysis that WEG is increasing the net income independent regardless of this economic cycle. And what is the message here? There are moments in which the company generates growth in revenue, growth in results, in certain times, it has a lower results. We can see this dotted line here with the variation of the net income, but still with these variations of growth in revenues and results, WEG has been able to increase its net income. And here, when we analyze the increase of the earnings per share, I think that the company will still work on to generate better earnings per share for the investors. Well, if you have increased net in work, and we generate cash, that will become dividends that will translate into dividends. The company has distributed above 50% of its net income in dividends to investors. We see here a fivefold increase, and that attest to the focus of the company on the improvement of the yield for investors in the future. And to wrap up my presentation, I'd like to focus on 3 points that we are going to still work on to deliver: margins and wealthy returns, above market average. And that, thanks to our differentiation, our competitive edge, such as the verticalization, scale, our industrial strategy, our productive gains in all our cost production programs. Independent -- regardless of economic cycles, we are focused on generating constant growth on our income and dividends to our shareholders, and the company is still going to generate cash in order to support the growth process in a continuous and healthy way. And also in the volume of investment that we have announced, which is going to be detailed further on in other presentations. Thank you very much. Let's move on to our next presentation.

Thank you very much, Andre. Next presentation will be given by Kuba, our CEO. But before he takes the floor, we have another video to share. [Presentation]

Good morning. How are you doing today? It's really a great pleasure to have you all here today. I'm really moved to be able to open my presentation by telling you that 20 years later, after the speech by Mr. Eggon, the dream he talked about and this legacy he left to the whole team we're still leading the company. We finally reached this position. We are now the largest industrial motor manufacturer in the world. I believe that everything WEG has been building is exactly based on this legacy that was left by the founders. Dream big with feet on the ground, taking one step at a time. And I would like to thank all the Board of Directors, this team, and it's been basically 2 years I was announced. And by the way, it was on a WEG Day yesterday when it was announced that the next CEO -- since my very first day as a CEO, the team who used to work to Harry is working with me now. So the way that WEG leads things, having the second CEO of WEG as the President of the Board, and having Harry with me in the Board in our Board meetings, it's something really unique, and it's a privilege to do that. I have been working for the company for 24 years. And I was part of this whole journey. When I joined the company, our revenue was not BRL 1 billion. Now very proudly, we've reached BRL 38 billion revenue last year. And I'm really happy that after many years, leading the motors operation, I could see WEG Motors in 2024 reaching this position, #1 in the world. This is something really unheard of. 64, 63 years ago, WEG went to Europe to look for technology. And last year, WEG became the first manufacturer in the world, not only in terms of market share, but with a lot of technology and manufacturing capacity. I think this is an example of how hard work, feet on the ground, but dreaming very big, how this can really take us to very high places. I would like to start by showing you our strategy to build the rationale. We have today a product company that is increasingly turning into Industrial solutions company. This slide shows how we work. I really love cars. And as we say, accelerating a car on a straight road, you don't have much risk there. But if you do that in a curve, you are taking risks, regardless of the car you're driving. Accelerating a motor business, which is something we understand a lot, it takes less risk than accelerating in new businesses, where we see opportunities but where we don't have command of the technology. So back in 2020, when we had 7.2% market share, we started to constantly announce new CapEx investments, BRL 66 million in manufacturing unit in Jaraguá do Sul because we needed to speed up in order to capture opportunities in the pandemic. We couldn't have BRL 600 million CapEx and capture opportunities that fast if we didn't do that here in Jaraguá do Sul, considering all the structure we had here. And we invested in a manufacturing unit in India, another one in Portugal, a site in Turkey, expansion in China, invested in expansion in Mexico, and this is the result. With the acquisition of Marathon, Cemp and Rotor and Volt, we invested almost BRL 5 billion in 5 years. We more than doubled our market share. And you -- with all this CapEx, you didn't see a drop in your earnings. Quite the opposite, actually, these investments were made with a very high return on investments, and we can see these consolidated figures what we built in WEG motors. We have manufacturing units all over the world. We have over 20 manufacturing units, updated with up-to-date products, products that are very efficient, competitive. So we are really ready to be the leaders and to go on advancing in our market share. I'm really happy. I would like to congratulate WEG Motors team. It's been an honor to lead you for a very long time, but now we are in a new journey. So the same journey we had for motors, traditional products, we started in 2023, doing something similar for transformers. And late last year, we announced a new journey for WEG Energy. If you recall, last year, we announced a CapEx of USD 62 million that would be invested in the China plant. So we have full capacity there. We grew a lot in China with low-voltage motors. And in the past 4, 5 years, with the passage of Eduardo de Nobrega, who was the Managing Director in China, together with Koshinski, Edson Koshinski, who, today, is Director of Industrial Motors and Energy, they transformed the energy business in China, and WEG grew a lot then. So we needed a new site. This is the view of our Rugao site. Here in the back a middle voltage motor manufacturing is being built. Our low-voltage motor manufacturing unit is a state-of-the-art site and now we are building the best manufacturing site in terms of process automation so that we can be competitive in China against the many Chinese competitors we have. So here, we can see that we have solar panels, we have a sustainability journey today, which I'm going to be talking about later. So this will start operations in 2026. And we took another very important step, which is the announcement we made this week with the state government to have BRL 1.1 billion CapEx invested here in the area of Jaraguá do Sul. Part of it will be in the manufacturing site we will be visiting later today, synchronous condensers, and part of it will be invested in another area here, close -- but it has to be here, close to this area. And why? Just as we did for Industrial Motors, we have to do it here in Jaraguá do Sul because here, we have the technical staff to support us. And here, we are talking about very big machines that will change everything here. So we are positioning ourselves in traditional products to have a whole portfolio of products. So WEG goes up to 130,000 kilowatts. Now with these investments, we will reach 300,000 kV -- 300,000 watts. So when we look at that, so our vision is the following: just for you to see the magnitude of our growth. I was having lunch with João Paulo this week, and he said something. In 1995, he used to work in the U.S., and he sold the biggest machine, a 3,000 machine. To date, we make machines of 100,000, meaning 30 years later, from 3,000 to 100,000. In 2 or 3 years, we'll be making machines of 300,000. This is the sheer size of our portfolio. And obviously, this investment -- behind this investment is a very clear vision. So WEG will continue growing and prepare to become leaders also in high-voltage electric motors. So we had this journey with low-voltage motors. So we need more capacity for high voltage motors. Fortunately, we were very successful when the turbo generators started to go down. We started selling more high voltage motors. And then we were able to keep the plant working full speed. Today, we no longer have capacity to go on growing with the facilities we have today for WEG Energy. So a big step is the manufacturing site in China, which I mentioned. Another strategic step is the manufacturing unit here in our area where we will be making machines or equipment that are very big, and we will start working with turbo generators with 2 poles that are extremely important so that we can really provide full solutions for the pulp and paper industry. Just a quick update on T&D. As I mentioned, T&D back in 2023, WEG started accelerating CapEx, and why? Well, we have few opportunities in this business actually to invest in manufacturing sites. When you have such a factory with the plot and the construction, it's a very high CapEx, longer returns. Now when you have opportunities to have this level of investment with a factory that is fully sold, that's outstanding. So we cannot miss that opportunity. Carlos and his team have been accelerating that. And we hear Mexico, Colombia, Betim, it's all being expanded right now. Mexico, we are accelerating everything we can. The factories started being built right now. So the facilities will be finished by last year, and we will start up our ramp-up, it will be 2027. The Colombia factory, '26, Betim factory, we will complete the first stage in the first half next year. So we still have a good opportunity to capture around half a year of revenue there. Expansion in Gravatai, late 2026. Expansion in Itajuba is going very well, too. There, we are going to be able to capture revenue in the second half of '25 level so that we can be competitive. So this wire factory in Mexico, and more recently, a new wire factory for Linhares. Okay. We made a very important announcement a few months ago. This announcement shows the vision we have. The vision we see, all the opportunities we see in renewable energy, data centers in the U.S.A., transformers, up to 10 MVA together, if you look at that considering renewable energy, data centers, the USD 77 million in investment is to transform this site we have today. So for many years, we have been telling you, this is a factory that was acquired. In the new factories, we had big challenges to hire labor and in this manufacturing unit here, we have an extremely high level of automation. This site here should be one of the factories with the highest level of automation in T&D, very competitive. We will have a small expansion here, but a lot of new machinery, and we will increase our capacity by 50%. Great returns because most of the CapEx is machinery and equipment to increase capacity. And in 2028, we will start capturing all these investments we have been making. I would like to close this session by talking about -- so now, I'd like to talk about our strategic vision for acquisitions. When we look Volt, Cemp, Rotor and Marathon. So Industrial Motors, WEG already had a good team, good structure in place, but we need access to the market. We acquired major companies. This was the largest acquisition we made. So these are extremely low-risk acquisitions, and they were very assertive. Volt gave us access to Turkey, Middle East. Cemp, Rotor, Marathon market niches, we have with that a bigger portfolio, 2 manufacturing sites in India, and WEG now is very big in India, too. And these were very important in the strategic acquisitions. And what is now part of our portfolio, we announced them last year, REIVAX. REIVAX, Carlos Grillo will be talking about REIVAX. REIVAX is a strategic company. We couldn't have invested large amounts in synchronous transformers as we did, we couldn't have done that if we didn't have REIVAX. And this is pretty straightforward. WEG last year was a product company. We used to sell only the compensators. Now WEG is a systems company. And as such, we also need controls. And in order to have controls, we needed a company like REIVAX. What if we hadn't acquired REIVAX? Well, we could just be a client, or if REIVAX was acquired by one of our competitors, we might have issues providing the whole system. So REIVAX brought us technology, which WEG didn't have. REIVAX, they sell to many manufacturers that are WEG competitors, but they helped us access markets we didn't have in the past. So many synchronous compensators that exist in the world, in Latin America use REIVAX systems. Carlos Grillo will talk about that later. And I would also like to highlight something related to Heresite, which is a new position, a new movement in the industry of special paints. Heresite is a very strategic company. It's over 9 years old. It's a very technical team. They have a very highly skilled technical staff, protective paints for oil and gas and other industries. And through this company that is part of the vendor list of many companies in the world, American companies, but 70% of revenue is outside the USA. So WEG will be able to be part of this portfolio for paint, and we will be able to enter segments or industry we never managed to do, particularly abroad. Talking a little bit about integration. Integration of Marathon was really great when we proposed to acquire it with the Board. And one of the concerns was how would we be able to take in all these manufacturing units. But I would say that integration is within schedule. With integrated supply chains, we had many improvements in our commercial structures and administrative and IT teams did a great job. We had [ WBS ] in most of our operations. So -- and we have already captured with all these actions around USD 5.5 million, USD 6 million, a year of savings in expenses we used to have here. That was a great step, indeed. So I'd like to congratulate the whole team. And now, we have those things that take a little longer. So vertical integration takes long. So these companies we acquired were operating in the final stages of assembly. And when you do vertical integration, we have to invest in many processes they didn't have. So it takes longer. Product portfolio integration, we are already working on that, particularly to integrate components. We are working on that. It takes time, but many things have already been addressed. And obviously, we will capture much more value when we integrate SAP. We started the blueprint process, it will take still 1 or 2 years or so that we start implementing it. So we are talking about late 2027 to have most operations with SAP. Now, I would like to talk a little bit about the international scenario. You all know about the volatilities we had because of the issue of tariffs and geopolitical conflicts. Today, we had a note, the Brazilian government is talking with the American government backstage for a meeting, maybe with Lula da Silva and Trump, and this means instability. So we have been working in order to try to mitigate those risks. But you know that the greatest challenge faced by every company is that if the world stops growing. Right now, the world hasn't stopped growing. We still see growth in most countries, but we start seeing some projects being postponed. People are waiting to see what is going to happen. And revenue from projects that were part of portfolios. People think, well, next week, tariffs will go down. So in the end, a few things were not done because of all this uncertainty we have in the world right now. But what have we been making in order to mitigate that? It is very important to see that our global footprint has always been a footprint aimed at mitigating risk. It hasn't been a footprint designed to have the lowest cost because if that were the case, we would have a manufacturing unit here and one abroad. Our operations are always local, to sell locally, and we have a very strategic process of reallocating production between Brazil and Mexico that is everything that is made by Mexico that is exported not to USA., we are bringing to Brazil. And everything that Brazil exports to the USA, we are trying to take this capacity that we have in Mexico and have it there. Nothing has changed in terms of expanding capacity in Mexico. But what is happening is that we are speeding up training in Mexico because of this uncertainty we have considering tariffs. And Brazil is preparing to export to other countries. So we tend to go on growing. And another very important point is this, we have been accelerating our investments in Mexico. In Mexico, investments that would take place in '26, '27 in motors, we are doing it earlier. For example, automation. We are rethinking automation in order to take this tariff scenario into account. But how is WEG being structured? We are talking about mature products. And now, I will start talking about the solutions strategy and structure strategy. We want to be a company that has placed energy transition at the very center of its strategy. Energy transition is at the very center of the strategy of all products and services we have in energy efficiency, operational efficiency, renewable energy and also electric mobility. Today, we are increasingly becoming a company that is no longer just making products where we used to sell brown box, and we are walking towards solutions. You cannot possibly sell a product like this one without having software, without having an application layer. You cannot sell a recharge system if we don't have a team that will be following everything that has been installed in the field. So we will see a whole transformation today from products to solutions, and we will be talking about our strategy, the strategy we are designing considering all the opportunities brought about by energy transition. So Grillo will talk about electric mobility. We will give you an update. We talked about that 2 years ago. And we -- well, in 2 years, what was the progress we made. Last year, I talked about BESS. Do you recall that? I touched on BESS. We're going to show you how BESS fits solar energy. And what about microgrids in Brazil? And this is a very important topic in Brazil. And considering the whole scenario, we see curtailment, blackouts in Spain, in Portugal, a blackout in Chile. So we will show you today all the new solutions WEG has in order to provide grid reliability. This is a different day. We're not going to be talking about products. We are going to be talking more about solutions and system strategies, and we will be very happy to be able to share that with you. So now I would like to invite Carlos Grillo, our Managing Director, Digital & Systems, to give you an update on electric mobility.

Thank you, Kuba. Good morning, everyone. As Kuba has mentioned 2 years ago, I was here and I presented something with the same title. And now the intention here is to align on which has changed. But several things remain the same as we have shown you back in 2023. Electric mobility, as we see it, there are 2 great focus. So it's mobile with vehicles and we call it powertrains, inverters, battery packs, generators. And basically, we work on buses, trucks, vehicles for agribusiness, vehicles for mining and vocational vehicles, and I'm going to delve into that later on. And we also saw mobility as an infrastructure depending on the infrastructure, and there are 5 channels that we have identified, B2C, manufacturers that we have always been very close to working with them, the operators of charging points, the CPO, which is a great business to be tapped as well, fleet operators and condominiums and buildings. Well, very briefly talking about mobility. Within mobility, we've made some announcements back in 2023. And I would like to delve a little bit on batteries now, battery packs. Batteries have increasingly become important for electric mobility and something that has positively impressed is the life of batteries, and they are lasting longer than expected. And basically because they have in electric components, the BMS, battery manager system, BMS, a system that we worked all the electronic parts and also the software layer. Another important things are the [indiscernible] the laboratory test, certifications and so on. For instance, this [ SA ] this is a very emblematic test that we submit our batteries is the fifth test in a resolution rule, which is the fire resistance of the batteries. This is a bus battery, and suppose that this bus comes to crash into a diesel bus and diesel will combust. And how does our battery behave? These are normalized regulated issues that have to be addressed. And WEG is ahead of this, the attempt of keeping its products up to date with the legislation. And this is a test that we conduct here at WEG for the certification. Buses in Brazil are still a great business to be tapped. In Brazil, there are about, this is some figures from September, 1,200 buses, and we are very proud that they have powertrains and systems by WEG, and buses are no longer as concentrated in Sao Paulo alone. Doubtless, Sao Paulo is the greatest locomotive of this business, but things are spreading out. We have now in Porto Alegre, Vitória, Belém and several other places and all these markets are accelerating in the same way that Sao Paulo did at the beginning. And following these directions, we are still focused on these 3 levels of applications, light applications having to do with the power, but that is a very technical issue. We don't need to delve into this. We have the light vehicles, the medium vehicles and the heavy-duty vehicles such as trucks, vocational vehicles and buses. Outside of Brazil, we have also made some strides. And what we have noticed is especially the vocational vehicles, we must have seen in airports and ports, they are going through an electrification process. These are vehicles that they don't have any license. That is because they have a vocational use, and they open up new opportunities for us. So we are tapping this market increasingly. Speaking about charging infrastructure, we are proud to have the most complete line for charging stations. They start from the small stations which we supply to manufacturers that can be packed in the trunk of a car. And naturally, they are also sold to the B2C charging station for residential use, semi residential condominiums and so on. And direct continuous -- direct current charging stations, different than those smaller ones that work on alternated current. And then we have the WEMOB 600 kilowatts, which is the biggest charging station produced in Brazil. All this line of chargers, especially the [ C-line ] that has started beforehand, they are certified by the INMETRO, the Brazilian certifying agency. So yesterday, in the reception, we have spoken a lot with several of you how -- in your condominiums, how you could place and install this. So there are a few difficulties that Brazil is facing as well, other places. But one of the first things that I would say, if the manager of the condominium is worried, they should then, as the first measure, use a certified charging station because there are regulations to be met. And so the 600-kilowatt charging station is not a ceiling. We're working to reaching 1 mega very soon. This is something that we don't need right away, but the infrastructure is modernizing itself. But soon enough, by the beginning of next year, we should have a 1 mega charging station to offer. And a second point that I've shown you that makes us also very proud is that we have approached several manufacturers that naturally started in Brazil, and these manufacturers, the automakers are taking us now to Latin America. And most of them have their LatAm headquarters based in Brazil. And for heavy vehicles, likewise, they are very well represented in Brazil, and we are very -- in close relation with all of them. And for the heavy ones, not only in charging issues, but also for the powertrains and battery packs. When we see charging issues, we can simplify this into 7 places. And that changes the game a little bit, the channel for sales and so on, even the service that we supply. And the light vehicles, obviously, we would like to charge our vehicles at home or condominiums. I'd also add the destination, supermarket, shopping malls and so on. On the other side, we have the fleets, the bus fleets, and we have several reference for that and a lot of experience on it, the distribution centers because the fleet, electric fleet, they are increasing in number and also terminal and stopping points charging, recharging. So the terminals will demand also a charging station to charge vehicles. But that also goes through the roads. And here is where we started the first movement, and WEG has had some 2 years ago, I have shown you a few of the initial movements we had in this area and others came along, and so there is an interest on automakers and fuel suppliers because they already have a network in place to create this infrastructure along the road. And I'm here talking about a higher power stations, not only talking about softwares there, we need transformer panels and shielded bus systems and so on, and also BESS to help delivering this energy in the charging stations. Here is another very interesting example that I have to give you. And that has to do a little bit with talk that we had last night because the manager of our condominium is afraid of putting a charging station in my condominium. What is happening? Let's take this example of the ALLOS Group, it's a giant group of managing shopping malls, and this group has created in a very professional way, a brand for their charging station. They created this brand called KARG and we are proud to having played a part in this because we've made something which was very impactful for people that use this power station. And they have shopping malls all over Brazil, and they have created a great charging station with several vacancies. So if you have your manager of your condominium not allowing to use this at your condominium, you can use the shopping malls. You can go to the gym and the shopping mall, and for 2 hours, you're able to fully charge your vehicle. So the shopping integrates with your KARG, with your shopping expenses. So we were able to contribute with all this integration in terms of software. So that is part of our software -- of our system of solutions. So there are several brands here that, again, we are proud to be working with. Following this direction, WEG has increasingly betted on a complete and vertical integration solutions. So we come from the project. As I have mentioned before, the road, we went to the field, see where there are transforms, where there is energy, where is the possible location for it, we do -- we promote the full turnkey solutions. So there is another very interesting solution that we have made, and we made a joke in our Instagram, which is the [ box ] team. So we have a relevant team that we call the WEMOB, which has charging station to WEMOB advanced service, which are the team do the conditioning and monitoring of these charging stations. They identify failures. They forecast possible failures and with a lot of automation and digitalization, allows us to give the support to clients. And today, if you look into the literature, one of the things that make people very unhappy in the charging vehicles is the unavailability of this equipment. They are placed in places without any support, and it should someone just break the cable or something like that, it will remain out of operation. So with this kind of service, we are able to make the equipment in charging stations work longer. And here, I'd like to show you a launch that we are promoting right now. Let me tell you what it is about. It is a charging that is set within the V to Home or the V2X, vehicle to the grid, vehicle to home or vehicle to everything, vehicle to connect to everything. So that's the V2X. WEMOB station V2X was launched at Intersolar Fair. And what this product does is this very interesting thing. It is a great managing system at your home. We had -- we dared to call this a home grid or perhaps not a microgrid that Neto is going to speak about. But under micro is nano, so nanogrid is a good name. We're still studying, working on this. But what does it do? It's the central controlling station of a grid. We can use this blue arrows or continuous current. It can get your solar energy convert into alternated current, and it may get this energy that came from a solar power and store at a little BESS, and both directions is by -- you can work it either way. And in alternated current, you can deliver it to all the grid on your home, your camera, WEG home systems, your swimming pool, motors, which can be WEG as well, to all the charging needs that you have. And it also receives the energy from the utility grid, which you buy. So it is a [ V4 ] vehicle. It is an equipment that was developed to connect everything to your vehicle. And also in that blue arrow, continuous and bidirectional current. So it charges your vehicle, but it can also discharge your vehicle in case you should manage your energy within this nanogrid of yours. And there is a controller, obviously. All grid is a complex system. And therefore, it needs a control, a management. And as it's an equipment that follows our strategy of WEG Home, you can speak through Alexa and other [ internet of things]. So it has this control. Following up our internationalization strategy, we are speaking in recharging structure. In Brazil, we are absolute leaders in this segment. We are very proud of this. We have worked hard for that. We've had a very wide portfolio in every channel that we consider important and we work very hard on each of them. In Latin America, this leadership has been built, supported by the very good work that we have had in Brazil. And obviously, it's natural that it will expand throughout Latin America. And we have made a very strategical decision that we have placed a very -- the most important executive of this business, we have sent to Europe a few months ago, and we have started an operation of an EV charge operation in Europe. So from next year onwards, we should have products in Europe manufactured in Europe following the standard of our WEMOB systems, but adhering to the European strict legislation. This is a strategy of market but also a technology by understanding what is going on. Obviously, in Europe, there isn't a problem of a condominium manager because it's a more major market, but there are very important and strict regulations. They may be even worried about a very little [ B ] that would enter the system. So there are several rules that you have to comply with that we have to incorporate into the software and also a little bit into the hardware. So we're going to have an engineering team in Europe to understand better the market and better navigate that market with better offers. And another solution that we have recreated. So it contemplates powertrains, EV chargers, and we created this in Sao Bernardo, where we have a very important team. We created the WEG eMobility Center, and that is a service center for electric mobility in Brazil, focuses services in repair part of our [ box ] team that I've shown you beforehand is going to be here as well. And our idea is to work on powertrains and recharging simultaneously. And why Sao Bernardo, because that is in the auto-making industry center that basically all the manufacturers based there and also serves as the support for our main clients that are historically there. This area that we intend to make available of 1,200 square meters, we started operating last month. And there, we have the teams working in Sao Bernardo plant. We have a 24/7 service. So that is very good for bus fleets, especially if they need to charge between 12:00 and 6:00 in the morning. If a charging cable breaks the contact, we need to replace that in very few hours. So that is very important. It's important to have this operation located in such a place. But this operation also has a midterm vision that is the following: Remember, the battery packs that I mentioned, they are increasingly lasting longer, but also are evolving a lot. So the idea of this center, you can see this little bus and the picture, the idea is to replace battery packs to increase capacities and to be able to collect this battery packs and to make a circular economy to work. And finally, my last slide here. We have the microgrid, which are going to speak a little bit more later. But I would like to speak about the nanogrid. In every grid, we should work and look at the -- from the energy standpoint and the optic -- and the standpoint of intelligence. So this is the project, the blueprint of the nanogrid. And at the center of this blueprint is the V2X, which receives solar energy that stores in the BESS that is consumed in the appliances and has the communication to all equipment in the network, and the management is carried out by the very person at home. But this is a [ spoiler ] that I'm going to give you now. So are the final messages, vocational vehicles increasingly are becoming interested in electrification of their fleets. And other issue is the infrastructure of charging stations, creates a new concept of nanogrid. And last but not least, WEG expands their business in South America, Europe, as I have mentioned, that we have sent a team of engineering and manufacturing for EV charging, and also in North America, especially with vocational vehicles. Okay. Thank you. Now, Salgueiro, back to you. Now is Neto.

Just a few comments here. Considering the comment that was made yesterday in the interactions I had with you, okay. I think we should think about the following: You got WEG's strategy where we have trucks and buses and also vocational vehicles, something we didn't have 2 years ago. But I was asked about buses. What is different? The buses in Brazil are used for around 10 years in Sao Paulo and then retrofitting and 10 years in the countryside and then 10 years working in circles. What about the batteries in the second cycle of use of buses? This is a concern for those who own buses. And this is a concern of those who will buy these buses. This is what happened to electric vehicles. Many people buy a secondhand electric vehicle, very low price because they are afraid of what is going to happen to the battery of these used electric vehicles. So the center of the strategy of WEG today is to develop this mobility center with the know how we have from our battery team, and our battery lab is constantly assessing cells. We have a team that is developing BMS, which is a battery management system, and we will have -- we will really be able to make this monitoring with the fleet and where these buses leave Sao Paulo from the capital cities going to smaller cities, we can have a retrofitting in line with this team, updating some battery modules so that they have additional 10 years of service life. This is something different. This is something which I think WEG will become the optimal partner for those who will be in this journey because those who manufacture a full bus and who are concerned with the equipment only, they don't worry a lot about the fact that these buses will be used for decades. And the mobility center, the first one is in Sao Bernardo for obvious reasons because our service center is there, but the idea is to spread this to all our network for technical support services. Well, many people ask me many questions like this. So now I'd like to call Harry Neto because another very important aspect we have been discussing, which is at the center of the discussion of WEG's strategy are solutions for microgrids. Neto, the floor is yours.

Good morning. So I'm the Business Director of Solar, BESS & Building. And now I'm going to be talking about the integration of these 3 areas, microgrid and nanogrid. So our focus on these solutions connected to these 3 business areas. So first off, I'd like to say that in solar energy, WEG, in addition to being a [ VB ] distributor with a whole range of equipment, we also became the biggest EPC contractors in solar energy. So we have midsized construction in tranche, for instance, 10 works of 5 mega for some companies, 4 constructions of 5 megas and also big construction, 200 mega, which is what we are delivering right now. So we became a big EPC contractor for solar energy EPC. I think you know what it stands for. EPC stands for engineering, procurement and construction, so engineering of the project, the part related to equipment procurement and the management of that and construction itself. So we provide a full EPC lump sum solution, full EPC lump sum means that I do not do EPC without the materials. I usually compete against some EPC contracts that do not work with Curve A. They -- so investors buy the Curve A equipment. The EPC contractor takes them and does it. But we will provide full EPC with all equipment. So we are one of the few players that work on Curve A and Curve B. Curve A, which are usually the most expensive equipment, Curve B is medium voltage. C Curve with CCTV, we have WEG cameras embedded in services with partners. But the project management bankability, responsibility of delivery, responsibility for efficiency, everything is with us. So we have delivered 1.2 gigawatts over 250 projects working as full EPC contractors. And this B, A and C Curves, WEG is doing very well with our portfolio. So solar and BESS and electric panels, transformers, everything, in-house control, monitoring systems, SCADA and commissioning and managing projects together with our partners. And now going into the topic of my presentation itself, microgrids. What does that mean, microgrids? This is a system made up of more than one power generation and/or transmission. So we have different sources. As Grillo mentioned before, managed by a smart control system. So all these sources when you have -- in one system, more than one source, you really need intelligence to control and dispatch these sources. So I'll mention many cases where we have already delivered microgrids for agribusiness and commerce and industry and together also with electric mobility, which is not only sources of generation, also transmission, dispatching is part of that and also solar energy integrating this whole process. So our first case in the scenario of microgrid and this was broken down into 2 phases. But this is a recurring project in our portfolio. We have already become a consolidated provider of microgrid solutions. So what do we have here? This is agribusiness. So they have grid instability. They are at the end of a transmission line. We have many agribusinesses where the guy in the farm is expanding. There is no grid there, but they have land. They have production. So they may buy or lease a diesel generator. So we see that a lot in high-yield, high-productivity farms working with many generators. They may have 20, 40 diesel generators. And how did we start providing this type of service? So we have a farm that is at the end of the line. They cannot increase their contracted demand because the grid is not there and they have grid instability, high consumption of diesel because when they are far from the grid, they're usually in more remote places, taking diesel to a very long distance, it's more expensive. So these more remote places become more expensive. So they had like 40 generators in this particular farm. We coupled the solar system to the generator sets and we did the scatter, all the sizing so that generators were always at the optimum level. So we had 20% solar energy that didn't get into the way of the generator or the use of generators. So we did the whole integration, and the savings were much better than a system connected to the grid because diesel was very far, they would have to pay a lot to get diesel. So the return was great. What did you do in the second phase? The farmer said, "No, I want to have more solar energy." The payback is great. Now if you have more, much more power, solar energy, you may have an issue with the diesel generator. At midday with the peak of solar energy, maybe they are not using the pivots, maybe at the time they're using them. But what may happen is that when you have too much solar power, diesel will fall down. So we cannot use too much solar power. So then you have solar energy, diesel generator and BESS. So much less BESS. This is just for power smoothing so that diesel generators operate at the optimal level. So we have more solar energy in. So if you have too much solar energy for these generators not to be at the optimal performance, we have added a battery there. So we see these microgrids, you have generator set, solar and BESS. So the 3 of them will make up a very promising microgrid. And this is the solution we have been offering with 2 power sources and the integration of these different power sources. This is an example for a farm, agribusiness, which is very strong in Brazil. Now in the industry, so we have a great penetration in industry. So we have very good sales channels for the industry. So here, we have a system that was installed in the industry. So this is a mining company. They used to have a contracted demand issue. So where there were -- there was no power to expend. So they would use a diesel generator for crushing equipment since they didn't have an additional grid for their consumption. So we offer them solar energy generation because they had no power from the grid and a BESS system. So this is an example of an industry that installed a BESS to expand their power consumption. And we see something that is widely used in BESS, which is revenue stacking. Now if the grid is down at the mining company, BESS will be a backup. So in addition to having more power available because they can store from solar energy using it when it's needed, they may also be used as a backup if the grid is down. Here, we have another situation. So we are providing the services with quick charging. So there are some places in the area of Sao Paulo, where they don't have a forecast when they will have a higher contracted demand in some places. So if in this case, I think these are 8. Now if you have 8 quick charging stations in place, and if the buses get there all together, you may have a peak of demand for power, and they are not prepared for that, maybe preparing the grid for the 8 buses, which is not all together, it's not as feasible as having one BESS system in place. So we are in the bus garage as we have been talking to all of them, particularly to those who have limit in terms of expanding their quick charging stations. We may provide full EPC solution for them. We also have photovoltaic. Of course, photovoltaic was not the largest one. It was connected to the grid. And since they have like a peak of power, they can charge these batteries late at night. So this is different from the mining company that they need to generate more power. Here, solar energy was like a complement. And the biggest role here is to supply energy, if all buses arrive there at the same time. So we have a BESS system there to provide power in this peak demand. Also commerce, we have been working with revenue stacking a lot using BESS for more than one thing. In the case of this hotel, we had already provided them a [ car port ] and also in EV charge, but they also wanted a backup for the diesel generator. Since this is EV-charging solar, a more sustainable footprint Instead of a diesel generator, they wanted to install a BESS system. And it's nice because solutions may have more than one function since they already had a battery, instead of paying BRL 0.60 for the flat power to the utility, they paid instead BRL 0.30 during the day and BRL 1.50 in peak demand time. They use the battery to have this. So they charge by BRL 0.20, use by BRL 1.5. It's great because they could reduce from BRL 0.60 to BRL 0.20 during the day and use in peak time the battery. They do that every day, charge out of peak, and they also have a microgrid with EV charger and solar energy. So we see a lot of adherence, particularly our solar power integrator who were used to selling more integrated solutions. And now they are offering the solution that will have more than one function. So this requires a more technical kind of sales, but we stack gains and our customers are really liking this type of solution. This is another very interesting niche. We did this project, social project with Natura, a small project off-grid BESS solution. So this is really far from the grid. This is in the middle of the Amazon with the system here. And why was the system really nice for us? Recently, there was an auction [ season ] in the Amazon. I don't know if you know how it works, how villages work there. They have bids there. People have a generator. They have a long-term contract. There are companies that work with power there in this area of the Amazon. And this auction is being encouraged by the government. They are telling people who own generators include 20% of renewable energy in your generators. There's a bid going on, and some important players in the world have participated. They are giving their bids to have hybrid power systems in these villages. So we are preparing for this movement. So taking existing diesel generators and also installing BESS solutions in these areas where they have more difficulties regarding transportation. That was a very interesting case for us in addition to the social side of it, helping people living there. We are getting prepared to face these challenges, which may be more difficult because of the location. In line with what Grillo mentioned earlier, in the middle, we have a WEG integrator. I think this is a model we designed, which I think is pretty interesting. We have today around 300 solar -- WEG solar integrators all over Brazil. These customers of ours who work only with WEG, that will sell only our brand, and now they are becoming energy integrators, energy transition integrators. So they offer microgrids when we talk about bigger things, as I showed you before. They offer that to the commerce, to the industry, the microgrid, all WEG equipment, BESS, photovoltaic systems, smart energy control management, EPC, EV charger. But we also have nanogrids, as Grillo mentioned. We talked about solar for residential, BESS for residential use, EV charger for residential and WEG Home that is being integrated to the solution. So this is a nanogrid in practice. So you see the number of progress we already have in your home. So WEG was more used for the DPS, protection or maybe motor inside the washing machine or gates. But now you can really use the WEG product you want in your home. So the WEG home line has touched switches. This is really cool, it's touch, but it's WiFi, working with your cell phone. So you can turn lights off -- on and off using your cell phone, UPS, security and also home automation. We have the smart home, which is a hub. You have everything on your hand, all WEG components and also your air conditioning and TV set because they take the remote control frequency and you can use your cell phone. So this is nanogrid for solar generation, EV charger and also household appliances, everything connected because you have also the energy that has not been consumed be able to turn off the lights. And this is also related to comfort. So getting home, saying, "Alexa, turn on the lights, charge my car." This is a trend we are preparing for. So that's what I had to present. The key messages are: WEG continues as a full EPC supplier. So we want now to add more products providing microgrids, strengthening our presence in residential, commercial industry with more products, a more engineered solution, not just solar, and provide nanogrid solutions for the residential market. We are working more strongly to be in your home, so that you choose WEG, so that you choose a company that has technology and quality products because these products such as solar and BESS, they are more expensive with more value added, and they really choose a premium company that is here, that will really deliver what they promise. This is what I had to present. Thank you very much.

Thank you, Neto. We would end up the first session of our presentation, and now let's start our first Q&A session. So I'd like to invite to the stage, Alberto Kuba; Carlos Grillo; Harry Neto, Director of Solar, BESS & Building, for this first Q&A session. And I'd like to ask you a favor, whoever would like to bring a question -- make a question, please introduce yourself, stand up, and we will bring the microphone to yourself so that we can also capture you on our transmission so that the people here on the stage know who is asking so that we can follow this. So I see that there are several hands. And I'm not sure whether we will be able to entertain all the questions. We'll try to address all the questions. But should that not be possible, we're going to have another Q&A session after the second session of presentations. I think that -- well, let's try to follow the order who raised the hand first. [Eugenio...]. We cannot hear the question here. But I believe that he is asking something that we are going through a deceleration moment in investment. I am sorry, but we are not able to listen to the questions. It's not working. [Technical Difficulty]

We have a cycle of investment that was started 2 years ago. The first WEG Day was announced. Last year, we have reinforced the cycle. In this WEG Day, we reinforce one more investment in the United States with modernization of a plant with USD 77 million investment. And when we talk about that, we have a part that addresses Brazil along the next year, 2026. And another part that is very important that will be investments in Mexico to supply the North America and investments in Colombia as well that will start capacitating the T&D to deliver new products in -- along 2027. And with the investment that was announced by Kuba, we will, with this new plant, more focus for special transformers in the United States that will address BESS and data centers around [ 2028. ] When we talk about investments, WEG Energy that was announced this week, that's an investment that is going to be ready in place for -- in 2 years' time. And we are -- whenever possible, we are having an investment -- increase in investment in all capacities. And that's -- one example that is working in the United States where it's the alternators that was acquired from Marathon. Last year, it was -- we announced a new capacity will be ready in the beginning of next year. Is that right? By the end of this year. So the main message here is there are certain moments when we're working with T&D when we have a full capacity. When you have the capacity taken, so all other businesses find solutions and opportunities to keep on growing. And in certain moments, you add a capacity that's more important that you reinforce that. And in other moments, you make little increases in the capacity, so you can take this growth further. Another thing, the paint factory in Mexico. When a part of the investments, at least what we have announced in the last few WEG Days, when they start generating revenues in the second semester in '26, and another part from 2027 onwards. [Technical Difficulty]

Yes, it's working now. Alberto Valerio from UBS. I would like to go on the other end of the question, talking about margins and revenue. I think that is the most concern of investors. And if you were -- could just let us know what we can expect in terms of margins in this transition from the transition to Mexico -- Brazil to Mexico to the United States, how much we should have that normalize? How should that impact on tariffs? How should that impact on CapEx with the change of machinery and so on? That is my question.

Well, Valerio, thank you for the question. When we started the year and we had the first interactions with you, we said the expectations of WEG were to deliver -- to give margins very close to the interval that I've shown to 23% and 22.4% in the last year. And I think that we're going to remain in this line, but we could have a different composition in the margin in the first half of the year and in the second half. We already had in our order book when I showed you the evolution of margin that could bring margins a little lower than we were performing in the last years, and that happened and the expectation was for the second half of the year to have an improvement in order to reach this value that I've mentioned. We have delivered the first half 21.9%, which is in the range, in the lower range of this. And everything is following this expectation to reach that. But something new came up which is the tariff issue from the United States, and that is something that we had not forecasted. Our industrial presence, as Kuba has mentioned, helps in this process, but we didn't have temporary impacts until we are able to implement all actions, and this temporary impact will take place mainly in the fourth quarter of the year. And I think that we are speeding up with this. We are doing the fast as we can -- trying to implement this as fast as we can in order to minimize this. And we have to follow up on these implementations. And on our side, we are expecting to deliver the expectations that we have announced.

Just let me add something here. What is worth looking at is when you look WEG along the years, and Andre has shown the margins delivered by WEG, there is a very clear indication that for -- before 2010, the margins to be higher from 2010 to 2019, margins were a little lower at around 15%, 17%, and more recently at higher ranges. But from 2010 to 2020, there was an acceleration of new products, new businesses in the pipeline. See, the great quantity of new businesses that we have presented. And every time you do that, you develop a scale. You do not bring great margins when you have major business in place. So that is why our strategy is always the strategy that is focused on the present with the major business as well as in the future business. We have to invest in those 2 fronts. The major business that we are putting CapEx are good margin business in which we have scale, in which we have a domain of the technology. So we are trying to accelerate this major business, but these are more difficult in order to grow on them because these markets, the volume of opportunities that grow along with the GDP of the world. So there is no point in investing. For instance, we are investing in medium-tension machinery. But the [indiscernible] is not increased, but in the compensator, a synchronous compensator will grow further. So we have to do this mix. So talking about margin in the short term is what Andre is saying, and when you talk in the long term, we are trying to keep margins the highest possible. But when new business gain more scale, these margins are going to be adjusted downwards. But downward adjusted margin does not imply lower net income because our income is growing and our revenue is growing and our EBITDA is keeping at the same range.

[ Osmar Prado ] BTG. I have a curiosity in order to how it's going to be this ramp for the highest product. WEG is a world company for lower potency -- lower power motors, leading in Brazil, but the higher motor has a different channel for distribution. What are you thinking about the next 5 years? And I know that a lot of this investment in the United States is focusing on this market so that in about 10 -- 5, 10 years, but it's another specification, it's another client, it's another kind of application possibly for different industries. I would like to know what is the way that you are trying to go down in order to replicate your performance in the lower motors?

Well, you are 100% right, on spot because of selling different machinery, mid power, WEG made HVS, high-voltage sales movement. And this team is a team that started the pilot project in the past and we started concentrated sales team that will sell concentrated, associated higher to mid-voltage products, and this has consolidated now. And we understand that the team that sells medium voltage sell projects. And we have now in a very structured way a very strong team in place that sells brown box products, which have motors, gearboxes and motion drive solutions. And for that, we have over 40 commercial units spread all around the world, and we have centers that we call HVS, in which we have -- in Europe, we have, we're establishing a center in China, in India, and now in North America. These are dedicated teams that coordinate sales of medium voltage products. And why is that important? Because when we talk about medium-voltage products, several times, the location in which the project is to be based is different from the engineering company that is offering the thing. And it's also different, the product where the manufacturing are located, the ones that are going to buy the products. So I think we have -- we're very successful with that. WEG is growing in a very accelerated way in low voltage motors. As we have mentioned, we have an HVS team in China that had made an outstanding job. And from 2020 onwards, we had our -- well, Fumo, our Head of Motors now, was the Head of WEG Energy, and coordinated with João Paulo's team a restructuring of the portfolio. So now WEG Energy has one of the most complete and optimized portfolios of the segment and what has been made for motors was also made for medium- and high-voltage motors, and that has brought a lot of competitivity to us. We grew healthy, we grew in a very good way outside of Brazil, in China as well. And in my opinion, the last thing that needed was this investment as the engineering part as well as the sales structure. As I mentioned, it is different. It was already in place, and the sales structure, in my opinion, for the HVS is a key moment that allowed us to grow and drive. So we have a very successful history in the sale of drives. And correct me if I am wrong, but the participation for high is very similar to medium. So it grew very rapidly because who buys medium motors and drives, they want to buy the set. And WEG is one of the only companies that is able to offer this set, and HVS is offering medium drives for medium voltage, but the whole package that involves lower voltage solutions to complete this plan. As several of that we were able to deal with in the Middle East.

Marcelo Motta with JPMorgan. And is still related to the BRL 1.2 billion investment that you're going to carry out in Brazil and thinking about synchronous? I think that the transformer is good capacity to sell when it's short. And when you talk about synchronous in this scenario that is short, do you need to get market share from other is more LatAm at the beginning? So can you give us a little more details on the dynamics of this?

Well, in the second part of our presentation, we're going to have João Paulo. And I, along with him, I would like to, with him, to build this vision because what we have to understand is that this CapEx is geared towards to higher, to bigger machinery to compensators, that's the first part, and turbo generators. And we are working with turbo generators at TGM to work steam turbines to couple to these generators and the synchronous condensers, which is the synchronous motors is a plus that is coming. But João Paulo is going to dwell on to this later on, and then we are able to build this rationale. Well, João Paulo will be -- let's leave this job for him.

André Mazini from Citibank. My question is on this topic that you have mentioned of the service solution. Looking at the global players, they speak a little bit -- a lot about services and they have a percentage of their revenue. I'm not sure whether you do this. But I think that you're going into this direction to open up to the service solutions. And what is the percentage of the revenue that you think that you can generate with that because I think that is very sticky kind of revenue because it's very hard to lose that? So what is the kind of revenue that you're expecting with that? And what kind of contracts and solution/services in the longer term that is more predictable and less likely to suffer this volatility of the markets?

Well, I can answer to these questions after we make the presentation because we're going to speak about services when we talk about reliability of the system. And I think that is going to be better aligned when we have the presentation made. And we are going to have the presentation by Paulo Sinoti, which is our Services Director, showing a repositioning, a strategical repositioning. And he will dwell on that, and he will talk about it. So I will complement in the second Q&A. Okay?

Well, can I make another question then?

Yes, go ahead.

Another one is about the synergy and productivity gains after a year and 3 months, after you have integrated with Marathon. So there was a slide about that. And I remember that last year, there was an even more detailed slide on it. So my question is how far have you gone into the verticalization. How much is still to be done? But I remember that, last year, you still had the stamping foundry and several things were not in place and I don't think that are still in place. So what is the current status both in Jaraguá and in Mexico, which is the second most verticalized place?

Well, the good thing is that when there is a Marathon plant, there is also a WEG plant nearby. So we are already making -- and João Paulo is -- this is what João Paulo is developing with the team. The 0 priority of WEG is to increase the capacity of alternators. Fumo's team, WEG Motors team is working so that WEG Mexico is able to increase the component capacity so that we can increase our capacity for -- Marathon's capacity to provide alternators. So the alternators market is flying, is as hot as the transformer market. So this is additional. We are putting in place capacity, higher capacity to meet this demand. And when are we going to transform Marathon into a vertical using WEG's components? Well, that is taking -- it's going to take a little longer because we have to integrate portfolio, so that may take another 2 to 3 years. And why is that? Because that is not a 0 priority. Our 0 priority right now is to accelerate the capacity to -- Marathon's capacity to Indian alternators business. So that is 0 priority. Everything that was possible to be made without having to require too much CapEx, all the purchase sales synergy and mainly the IT and administrative services was carried out successfully. And now we are prioritizing so that we can, with the CapEx, to have the highest return. And this CapEx is all geared towards alternators, and we are having a tremendous success. And China alternators is doing very well in Asia with our Marathon [ Duxing ] and is doing very well in the United States as well but really very well. And our challenge now is to increase our capacity in order to meet what we are forecasting with the contracts with clients. So this is the issue here. Vertical integration with Marathon is going to take another 2 to 3 years. And why is that? Because, first, we need to solve this capacity in alternators issue. That is the main focus. And all new lines of Marathon, well, those, the ones that we are updating, engineering is working on the update so that it can gain efficiency, more streamlined products. And all those products that are to be launched in the next 2 to 3 years are going to have all shared components. And from there, we can see scale -- gains in scale because we see many different automakers sharing powertrains and chassis and so on. So that is what we're going to do with Marathon. We may have different products, but they will share sheets or another component that can be supplied by other component manufacturers. And when we invest in foundry, in wire drawing plants, our foundry, all is being carried out as expected and forecasted, this wire plant forecasted for the Mexican and the United States and the U.S. market and to supply WEG motors in Mexico and in the United States, which is Marathon in this case.

Lucas Laghi from XP. I think this is a subject we will be touching on later today. But along this line of revenue growth, I think that WEG is one of the few companies we see that the market pays in advance for a marginal return above capital when you announce new investments. I think this is very much related to the company's rationale to follow a verticalization strategy, focus on return and so on and so forth. But thinking about the marginal growth going forward, not only focusing on revenue growth, but how do you see a marginal return for these new investments compared to what we see in your past history, thinking about synchronous condenser, electric mobility, BESS. If we look at this marginal return, looking forward, how does that compare to past investments? And how can we think going forward maybe considering the economic value added that it would generate with this marginal investment vis-a-vis this past investment? So more focusing on marginal return and not only revenue with this new business lines you are accelerating right now.

Thank you for your question, Lucas. I think we have to say a few things here. I think that WEG's success of being -- always being able to generate attractive returns above the market is related to our ability to have -- make modular investments when that's possible. We increased capacity according to market demand. This really helps us keep this level. But at times, we have to take one step ahead like building a new plant like this one that has been announced for WEG Energy. It's not about increasing capacity. It's something totally new, as Kuba mentioned, will lead to the capacity of producing synchronous condensers from 100 to 300, and these involve sizes. These are 600-ton machines and we have to have the facilities to manufacture them. And such level of investments, of course, will lead to some settlement in ROIC because, first, we have to have the infrastructure in place so that then -- well, we start with the plant and then you fill the plant. Something I always tell, operating at a level above 30, 32, which is what we have, that's great. That's outstanding, but then we have to settle down so that we can allow the company to grow. So I think we modulate some components, which is growth. The company needs to grow. We have to have differentiated growth. We have to have a different outstanding margin and return on invested capital. It has to be -- it has to stand out, but sometimes it's hard to have everything at the very high level. But the message is even if we settle down, our mission here is to deliver returns or earnings above the market average. Investment in T&D today helps a lot. These are new plants. But this is a business that is operating today with never before seen margins because we have -- everybody wants transformers, and people will still want transformers for the next years. Can we have a transformation? Yes, that's possible. But we still will be working so that if they settle down, if it happens, it will be at a different level. Yes, please?

Well, regarding microgrid inside and outside Brazil, we are starting our journey towards expansion for solar outside Brazil. BESS, we already had an operation in the U.S.A. from the BESS EPC. Microgrid outside Brazil, no doubt that's a movement we are preparing to, but of course, we have to first have the learning curve in-house. But for example, in the U.S.A., which you've asked about, I've just returned from the, U.S.A., and microgrids may be different depending on the place in the world. For example, in the U.S.A., we saw, well, microgrids, gas generators, BESS for data centers. WEG, since we have penetration, the alternators and transformers with BESS, we can -- of course, this is just beginning. But in the U.S.A., we could, for example, offer an EPC solution for microgrids with a gas generator, BESS and solar energy for data centers because their data centers now with AI, these are not 3 mega data centers as we have in the cloud, but 300, 400 mega data centers, and they don't even have grids enough for all of this power that is required. So in the U.S.A., they have data centers close to gas pipelines in Texas having independent microgrids with gas generators, BESS and solar. Solar, not so much now. They have actually more gas generators together with BESS and they have 10 mega gas generator and 1 mega BESS. And why? Because gas generator is for regular, and BESS for them is a slightly different BESS that we showed here, which is for peak shaving. They have 5 mega they -- delivering 4 hours. There, it's the opposite. For example, you see, equals to 10, meaning that at 1 mega BESS, we'll deliver 10 mega in a very short period of time. For a data center, if you have the fixed load from the gas generator and we have 1 mega, if something happens, if everybody is looking for a piece of information in AI, then you have a peak. Then you use BESS for the peak demand. We see many promising things around the world for microgrid, not only solar and BESS. Maybe if you charge in BESS, gas generator and BESS, so we are looking at many opportunities outside Brazil as well.

Yes, talking a little bit about margins. I think that the first message I'd like to convey to you is the following. This evolution of progress of margins in the past few years, part of that was the result of improving margins from our operations abroad. And why do I say that? Because we are always investing in continuous improvements that may ultimately improve margins. But what happens? Let's take the electric motors business, and then I'll mention transformers, and I may mention other examples. The combination is scale plus verticalization is key to improve margins. So let's look at the 3 examples of the 3 main motor manufacturing units in Brazil -- in the world, Brazil, Mexico and China. Brazil, considering that we have the largest motor plant in Brazil and the most verticalized motor plant in the world, it has the best margins over the past few years. What WEG has been doing in all these modular expansion movements, having more and more verticalization steps, with that, we have been improving margins elsewhere. Outside Brazil, the plant with the highest level of verticalization, that will reach virtually the same level of [indiscernible], so will be the Mexico plant when Fumo ends the investment there in the wire plant. The Mexico plant has, today, a very competitive margin because, over time, it expanded, providing more scale. We invested in a foundry. We invested in new equipment there, and this is leading to better margins in China. It's probable that we will not reach the same verticalization level due to decisions made by us. But in China, what we have been investing is a modernization. The Rugao plant Kuba showed, where energy will also be, is the most modern WEG plant and the one with the highest level of automation. So we can really -- we really know where we can have verticalization, where we have competitive labor, for example, Mexico and thus, generate good margins. But we also know where we will not be able to reach this level of verticalization, and there, we find other ways to improve margins. The message is nobody -- in terms of margins, we will not just be based on the margins for WEG Brazil for electric motors. Different plants, Turkey, people from other sites recently acquired, they have to do this continuous improvement work. I'll mention with you an example. I went to visit the Marathon plant in China. The Chief Executive at that time presented very proudly the margin they had there for motors, and these were decent margins for the Chinese market by Marathon, pretty good margins. And at the end of the presentation, I told him, I'd like to congratulate you, but WEG's margin in China is double the margin you have here at Marathon. So when we are able to reach the level of verticalization, bring our process, the WEG way of working, if we do that, I think we can really improve the margins there. When you talk about transformers now, the margin that we say, the margin in Mexico, the margin in Brazil, well, the work is done. The job has been done. Okay. But the U.S.A. has labor cost that is higher than labor costs in Brazil. But Carlos' team knows that they have to improve in all plants. So what they are doing right now in the U.S.A., automation, where you have a very attractive return on investment. I really recall when we bought the -- some other companies, the margins we used to have, these were breakeven margins with other acquisitions. And what we announced to the market was we know how to do that. It takes some time, as we talked about with Marathon. We know how to do that. We just need some time to make it happen. And when we reached the level and we had -- which we had in the business plan to justify our investment, we're really happy, but we continue to work. The market helped us. And today, we can operate with margins in the U.S.A. very similar to the margins we have in Mexico and in Brazil. And this is one, we want to go on replicating regardless of the geography, regardless of the country. But definitely scale and verticalization play key roles in this whole process. Just something for a reflection, more important than comparing margins in different countries -- of these countries with margins in Brazil is to make sure that for every region, for every geography we are selling to, we have the plant with the best place to deliver the best margins. I think that's the main point. WEG, considering the very characteristic of our strategy, we will produce locally. If you look at North America, our main plant will be in Mexico for North America. This has been decided many years ago. When you look at Europe, our main manufacturing units there will become China and Turkey hubs. So when we look at Europe as a whole, well, we will be more competitive. Portugal was the first step, and now we took this step in Turkey. When we look at Asia, well, where would it be more competitive to manufacture? In China. So our benchmark will always be WEG versus local players. What is our margin vis-a-vis local players? And obviously, we also compare to Brazil. So then we try to be even more competitive, but our main focus will always be to install our plants at the place where we have labor competitiveness and a good local market so that, in the long term, we can have a better performance because we don't see a footprint where WEG Brazil will always be the largest exporter for the whole world. This will not be the case. Local hubs will become increasingly stronger and these local hubs have to deliver a bigger local average margin compared to other competitors in the same industry as WEG. This is how we see it.

We will now close the first Q&A session. We will have a coffee break now. For those who are following us online, we will be back at 11 a.m. Brazil Time. Thank you all very much. [Break]

Welcome to our second part of our presentation. As I mentioned before, EEC Day is a bit different. It's because we are working on certain topics that we deem very important so that you can understand our strategy. So there is one more topic here that is very, very important so that you can understand how it is connected to our strategy as a whole. We started talking about products, nano, microgrids and now we get to the grid itself. And grid, as you know, is suffering with the increasingly use of renewables. We have increasingly more instability on the grid. And these instabilities have caused in a general way, we have seen the power outages in Spain, Portugal. We've seen outages in Chile. We saw situations in Brazil last year. And this all brings challenges and opportunities as well. And I'd like to show you how WEG, this company that is providing solutions for energy transition, how it is seeing this problem and how we are responding and with which solutions we are proposing. And something very important for you to understand is that we didn't have much time to explain because REIVAX acquisition was after that day last year. And I'd like Carlos Grillo so that he can explain to every one of you what is the vision of REIVAX within this context of strategy as a whole. So the floor is yours, Carlos.

Good morning. It's a pleasure to have you with here. Good morning, everyone. Once again, I will try to start this topic of the modernization of the Grid business. More importantly, the reliability of the grid. We made a purchase last year. We acquired REIVAX. We announced it. And REIVAX, just to shed a little light on it, is a company that was not a start-up. It was founded in 1987. It has -- had a very good reference in control systems. Energy is increasingly more complex. The grid is more complex and the control has to be increasingly more intelligent so that it can deal with all those different sources, solar, be diesel, different loads. So REIVAX brings this in its DNA, and it has operations in Brazil. It's based in Florianopolis. It also has operations in Canada and in Portugal. About 60% of REIVAX revenue comes from foreign markets. And then I brought back that graph that I've shown you earlier on when I talked about the V2X. We explained briefly nanogrid, microgrid. But now going a little deeper. When I look at this different resources, distributed resources, I have to see always with the point of view of energy and intelligence. And when I see the microgrid, as Neto has explained, the generation is multiple. It's biomass, solar, wind and storage is BESS made. Or maybe the storage component is not. And the consumption, unlike our homes, it's a more complex one is an [indiscernible] is a hotel with vehicle charging is industry with its machinery that has to keep production at peak hours. And when we look at the intelligence standpoint, the intelligence of the microgrid demands a little bit more than the V2X of ours that has all the intelligence that we talk through Alexa. And here is much more complex. It has the PPCs for those of you who is going to visit the plant, we will see the power plant control, which is responsible for connecting the external grid and dispatching that energy, the SCADA, the software, the EMS. That's a very complex system that makes this control layer. And the communications, obviously, it's a complex system of microgrid has the intelligence to it somewhere. It makes a decision. It has to send a signal to the solar panel to tilt a little longer, send a signal to a biomass generators to increase the voltage, whether the voltage has increased. So it controls everything. The hydraulic control may also control the electrical part of general, but also the tilt of the fins of the turbine. So you have to control from a decision from the intelligence. So that takes place in the microgrid on the machines that are involved and the orchestration in this case, we are talking through [ Alexa ] and that I do it myself, but in the microgrid, no. You have -- you can connect the utilities. And one new thing is the grid code. Every country has their own grid code I have to collect. One thing is Brazil with the OMS, the national operator. Something else is Norway system. So the grid code, the understanding of the grid code is very important. In the traditional grid, which is the topic of this presentation is a similar thing. The difference is that the energy and generation may have other components. There could be nuclear. Brazil has a nuclear power plant. There may be gas. So BESS is best option for storage. And in consumption, Brazil has a privilege. The consumption is integrated. The system in Brazil is integrated. So this energy may be generated at the Madeira River up north and may be delivered here. So it's an integrated system. And when I get at the intelligence layer, I fuse things to control and communication. It's one thing because it's much more intelligent. The PPCs is there, the SCADA, EMS, everything. But here, apart from respecting the grid code, I have to model. I cannot make a new solar power plant connected to the national grid without a modeling, take this information to the national operator, the OMS. And that is an intelligence that is preorder. I have to convince the operator of the agency that, that is a good thing. So all this modeling of the grid code is a very important step to make it taken. And here, the orchestration and different than my home that I speak through Alexa, different than the microgrid that I talk to my client to see what is the components here. With the grid is the OMS. I have to comply with their rules and regulations. So all this complexity, I can see the different grids, the nano, the micro and the grid itself. And REIVAX comes because of their expertise on this area because they have the expertise in the control of the machinery, be the micro or be the grid machinery, but they have a lot of experience in modeling to have the connections with the regulators with the grid codes. So this is the rationale behind this strategy of acquiring REIVAX. And only to wrap it up, here is a map. There is not very glamorous, but it's a diagram of the national integrated system. Every line of this is the river in Brazil and watersheds and this here is a power plant in Brazil. And 20 years ago, about 90% of Brazil's energy came from hydroelectric from water power plants. And 20 years on, where is this difference? What's the difference with the renewable, solar and wind. And solar and wind has an inverter, voltage that switches. And every problem instability, a short circuit, it will break. There is a little inertia. So -- that's why the equipment for higher inertia to give this protection. And coming back here, the rivers of Brazil, the border of Brazil in French Guyana, here with Uruguay, there go the Amazon River, you can understand here, the San Francisco River, here, the Jacui River that flows into the Patos lagoon. So 60% of our energy comes from here and REIVAX is only on those ones. So all the control system of REIVAX and all those hydropower plants. And here, we have Itaipu, which I forgot to mention. So the importance of the intelligence of REIVAX to support us in this journey into a more reliable grid into a more integrated -- horizontally integrated grid since the transform and intelligence up to the service. Here, also what I have said all the possible sources they have to have a control. You control the BESS, the wind, the solar, the inclination of the tracking, the hydro turbines, thermal substations and I dispatch this about power plant controls organized by SCADAs, and I still have the synchronous condensers to give this inertia and consistency. And REIVAX operates in all these junctions in all these machineries. Did you understand? Did you understand the importance of REIVAX for WEG's strategies to supply all the solutions?

Can you also get it that without REIVAX, we would run a risk in our strategy for synchronous condenser. I think it's clear. We have already mentioned that in the past. And last year, Jo o Paulo said that when we talked for the first time about synchronous condenser, we gave you an idea that we thought that would be a trend. And we also sold the condenser function. Now I'll invite Jo o Paulo, who will show you what WEG has built, what is the solution we built in order to help grid reliability because the issues we had recently around the world, this solution would help solve the issues we've had recently in different parts of the world.

Earlier today, I was sitting here listening to the presentations, and I got a report saying that the event in Portugal and in Spain, these were different events, a problem, a disturbance in the grid, but not caused by under voltage, but by overvoltage. Data show that the problem was due to a consistent overvoltage on the system, on the grid, meaning basically the following: excess power generation with a drop in demand, thus leading to over voltage. The voltage goes up. And the system -- to protect the system started putting the systems down. So there was a lack of control. That happened in Chile for a different reason, and that happened in Brazil in August 2023 when a transmission line in the state of Serra was down. And then 10 different states had power outages and the state of Sao Paulo was affected, by the way, that happened. Well, this has been happening more frequently. And why is that the case? Because the grid has become increasingly less resilient. Let's take as an example, a country like the U.S.A. power supply was by thermal power plants, coal power plants, 300 mega generators operating full load with fixed rotation to generate 60 hertz, which is the frequency in the U.S.A., in Brazil, in Europe, it's 50 hertz. As they migrate to different technologies. And here, I don't think everybody thinks that coal is a power source that has to be avoided in the world. As we migrate, you have increasingly unstable systems. It's still valuable, but unstable. So synchronous condenses. Well, in Brazil, we have many synchronous condensers. But in the past, synchronous condensers were there to regulate as a function in load variation and not generation. A synchronous condensers have to be added or installed because of variations and generation, particularly as we progress towards the use of wind and solar energy. But what is a synchronous condenser? Well, let's look at Itaipu. There are 18 turbines, 700, 800 mega each. It's a big rotating electric machine with a lot of inertia that operates at a constant rotation. So it produces constant energy. what the synchronous condenser does, well, it's a very similar machine in Itaipu. It's a generator, a 700 mega generator. Now if you take this generator, but it's not moved by the turbine, you put it beside a substation and you accelerate this inertia with power coming from the grid. Once it's accelerated, it will not consume a lot of power and then it rotates 24/7. But there is no turbine. It is moved. It's driven by the power grid, grid power. When there is a disturbance a problem in the grid, for example, under voltage, the machine will deliver reactive voltage to the grid to reestablish voltage. Likewise, when the voltage goes up, this machine works as a break to hold voltage down. With that, it helps reestablish voltage drops or dampen overvoltage and help reestablish frequency. Is that clear? It's very similar. So it's a machine that just rotates and rotates. And in many cases, it doesn't even have an access point or tip. Here, we have a representation of a system that we have already supplied to the U.S.A. This is a synchronous condenser. And in the edges, we have heat exchangers. And it has here a machine to accelerate because since this is a very large machine, if you try to connect it to the grid, it will cause a very big disturbance on the grid. So you have a very smooth acceleration with this machine here when it reaches synchronicity or the rotation that will produce 60 hertz, only then you connect it to the grid. So here, basically, it provides reactive power. It also provides inertia in megawatts per second and the power contribution to the short circuit. So these are the features that the synchronous condenser delivers to the grid. But WEG has been making the synchronous condensers for years. We delivered 100 mega for Electro utility like 20 years ago. And why were we not successful, not very successful because we thought about supplying only the machine. This is the synchronous condenser, and we would supply that to customers who were actually our competitors. I won't tell you who they are. You probably know these are 5 major world companies that, by the way, operate in Brazil, but they make their own synchronous condensers. And they would come to WEG only looking for those frequencies that were not very competitive for them. And then we had a contract with one of our competitors, and they were going to buy a 50-mega machine from us. 3 months later, they said, you know what, we decided that we will make the machine ourselves. And then they canceled their order. This made us think why don't we do the compensation function instead of the condensation function, instead of just making the condenser. No, that has a start system, has a transformer, has exeditious system, has the circuit breakers. We have it all. Then we decided to change our strategy. And then we started selling to Canada, U.S.A., Chile, in Brazil. So it became a very attractive business for us, but we had an issue. Basic grid condensers, I'm going to show you, they have a power which WEG doesn't manufacture today. These are higher powers. And these are very heavy machines. Our plant is not able to manufacture them to handle them in our plants. We have a project that's been announced 5 condensers to Chile. And we are having a hard time. You will see this later today. It's quite complicated to handle with that size and that weight in the plant as we have it today. And there are many opportunities out there for bigger condensers. This is when we decided with the new portfolio together with other projects we needed to make to announce this new investment, a manufacturing unit that will make turbo generator for our steam turbines up to 200 mega and also condensers up to 300 mega. So here, we have a depiction of a power system. It can be the Brazilian system, the U.S.A. system. They're all very similar. This is what we call basic grid, which are 200 kV systems up, particularly the one on top, which is 500 kV. This range of voltage here, we are talking here about transmission lines from 5 to 20 giga. And when we talk about this level of power and voltage, talking about batteries is not really economical. And why is that so? Because in order to have -- to make a difference in a 20 giga grid or line, adding 100 mega, that's just like a drop of water. So you have to have here 5, 6, 300 mega condensers. Then you will really make a difference in terms of dampening. And this is what Enel is doing now in the auction that will take place on the 3. So 5 synchronous condensers of 300 mega each. And here, 230 kV is still synchronous condensers. And we have various applications for distribution or for the industry. For example, we sold one synchronous condenser of 25 mega for ExxonMobil in Texas because they have a refinery there, which is end of line, and they have a lot of voltage things, which were causing problems to their process. So I don't know if it's already on the way. Yes, it is. So we will deliver the system to ExxonMobil. And here, when we talk about distribution lines, we still can have synchronous condensers, but these are 15, 20 mega condensers or batteries. Just for you to understand the difference where we use batteries and where we use condensers. Projects and opportunities. Today, we have 1,200 mega MVAr. This is not megawatts. This is reactive power or 1.2 gigawatts of power, MVAr in execution or in the pipeline. So we have changed our strategy, and we have a very good portfolio. In Brazil alone, we have 2 gigawatt of opportunity with this auction. We have sold other condensers outside this auction. We sold that to the different utilities. And in Latin America alone, we have mapped almost 5 mega of opportunity until the end of this year. 5 giga. So this opened up a new path for us. This is a system we installed turnkey, whole execution beside an already existing substation. The customer, [indiscernible] Power asked us to make a machine house. Usually, it is installed beside a substation or a wind farm. This is for Canada. This one went to Maine. So we have been making progress in this market. This is a very important point there, something we didn't mention when we talk about REIVAX. We are talking here about grid reliability. You see all this challenge faced by the whole world. So REIVAX comes from a control system retrofit. So control, correct me if I'm wrong, João Paulo, Control is updated much more often than a machine repowering. So acquisition of REIVAX gave us the know-how of the control for the Brazilian system and REIVAX also operates very strongly on the retrofitting part of the system. Later, we will connect that to the service area. Well, João Paulo talked about the synchronous condenser solution to provide stability to the grid and another tool, another way of providing greater reliability to the grid is BESS. So REIVAX with modernization and retrofitting synchronous condensers and now we will see the third solution provided by WEG. Let's talk about BESS.

Okay, folks. I've shown you the portfolio of BESS just to locate you what we have spoken before. And let's get the micro, nanogrid to exemplify, we're speaking our business unit that we are the big BES or small BESS because we have small to big solutions. And you can see that in the nanogrid, we have batteries up to 5 kilowatt hour, and these are batteries that we have been selling for quite a while along with solar systems. So people already opt for a solar system with a hybrid inverter that has solar and battery. And of course, that for residencies, the only function would be for backup because in the home, you have a single tail, you don't have a big shave or other functions that would work with the BESS. So we spoke about this mid of the way, various microgrids that we mentioned the cases. And in this amid here, I would like to say that 20 kilowatts, we are at the moment that generating 20-kilowatt generators that we use in Brazil to place in the home costs around BRL 50,000 million. If you get our battery with a hybrid inverter semi-solar, we are offering something much smaller than this without noise, without diesel use and without space. So we are getting -- gaining in space and scale with this smaller storage systems and backup system. But what we are going to talk about are bigger systems. And João Paulo mentioned synchronous condensers, but these batteries also have more utility in Brazil. So it would be for a big shaving applications, which I'm going to discuss here, the solution different than the microgrid solutions, which is only one panel. When you go higher up in the scale, the product here is composed by 2 parts. We call it the DC block, which is this part here, which is a continuous current part. And in this DC block is the cell connected through battery packs, all interconnected to a heat exchanger, a chiller here, which is a very important component with a DMS in panels integrating all of this in this container. This Skid here. And then we have the AC part, which is also a skid in which we place the transformer in the PCS. The PCS is very similar to a solar inverter. It's called power control system, which is a very similar to a solar inverter, but it's bidirectional. It transform alternating current into -- AC into DC, DC into AC. So it's bidirectional. So I see a lot of similarities with the solar, the cell as if it were the solar cell. But the rest of the electronics, we are -- we know a lot about it. So we have a lot of footprint on this, and we know a lot about this technology. So we consider ourselves very well prepared for this challenge of higher voltage for bigger power plants. As João Paulo mentioned, Brazil is going through in the curtailment. And what is that? There are several solar power plants that about 20% to 30% are unable to connect to the grid. They are being prevented from doing that specifically because the grid gets down when there is an over demand, not only when there is an undersupply. So with the government plans, we don't have subsidized or supported auction to incentivize, put more solar energy into bigger grid because there is an over offer at around midday. And that has also caused -- was caused by the distributed generation in the system that cannot be controlled. Now we have facing an instability phase and now we can tell the person in their home to put 10 mega in Durham. It costs around 10,000, so they're doing it. So that is going to -- that's going to be an instability of the grid. And it's already in the government plan to make an auction for the BESS, only for BESS. And that is going to -- it's meant for stabilizing the grid, and that should take place around June next year. That is our forecast. And we are very well prepared with a complete solution. And we are already showing seeing all the micro grid cases. And we see that the battery can have many more than only one function. We have a voltage control, arbitration of energy, frequency regulation. But at this first moment, and that's why the rules of the auctions are being discussed, the highest, it's likely that a big shave to load on other times. So there are some GD1 generators that are much better to distribute. They can put 5 mega of small power plants and this mega is being discussed. 5 mega is at midday. But if I put battery, if I increase my part, may I put...

Thank you, Neto. Well, people, so just to bring all these topics together, grid reliability, we are speaking about control system, which WEG has this control, this expertise with REIVAX in the auctions and the opportunities that are coming up, Brazil and foreign markets. Brazil, we have the synchronous condensers, the systems of synchronous condensers, and this is the strategy that we are working in Brazil and in foreign markets. It started in the United States, Canada and South America. Last year, when I mentioned that BESS would be a great opportunity, you can now see several applications in C&I that Neto has shown and what we have been using in the agribusiness, building several examples, several microgrid cases. And there is a very important case here that many of you ask me, which has to do with the digitalization. And I'd like now to show you how WEG is preparing itself to increasingly bring more digitized solution to our clients. And it's worth mentioning that this journey started a few years back before the WES acquisition, WEG bought 4 start-ups. We bought a company V2COM. We bought a [indiscernible] artificial intelligence company. We bought the PPI-Multitask, which was a company of MES and MVISIA division. So that was the journey that allowed us to bring and gather the know-how to build WEG Digital. And along with that, WEG Digital is an umbrella business that constructed the whole system that we took to our business unit. WEG build the strategy, build the platforms and then each business unit was formed their own digitalization team. And I am proud now to invite Allan, who is our Head of WEG TD, and he is one of the person responsible for this development. And what is he going to show you? The grid is there, 40, 50 years. Are we able to modernize this system? That's a good question. Can we digitize this grid in order to bring more reliability, and that is what Allan is going to share with us now. Thank you, Allan.

Good morning, you all. I am Allan Vicente. I am the Global Industrial Director for Transmission and Distribution. And it's a pleasure for me to be here with you at WEG. I am responsible for the WTD process in Brazil. We're talking about 15 plants, also responsible for the investment -- the cycle of investments that is geared toward doubling our capacity by 2027. And here, we are going to explore a little initiative for digitalization in order to modernize the grid. I'd like to start my presentation talking on 2 very sensible topics. One is the demands of the grid, and that is a reality and is getting even stronger. And the other one is the aging of the system, not only in our markets of where we operate, but we can see that the fleet of a transformer are near the limit or over the age limit. And these 2 issues bring a risk and an operational complexity that is very great to the grid. So we need -- we need solutions with intelligence and digitalization. For you to have an idea of the smart transformer market and the digital substations, the growth projections for the next year are bigger than the transformer market itself that is already experiencing very -- a lot of growth. So -- there will be a lot of opportunities, and the idea is to explore and capture these opportunities because we are very well prepared for that. And I'd like to start by speaking of our portfolio. Kuba has spoken on the journey of the journey of WEG and for our unit was not different. Along the years, we built a very interesting portfolio and ecosystem of digital products. And in our strategy, we focus on 2 fronts: one front of asset management and another one of substation digitalization. In the active asset management, we developed a platform, which is the WEG transformer sensorial, intuitive. And this information goes to the cloud, and we furnish a control layer and a more sophisticated one with AI to help decision-making and the asset management. And we created this platform to be embedded in any manufacturer's machinery with many manufacturers with transformers suite with several different manufacturers. They have a need to have a single control system. And this system can also be integrated in all our line of products, the pole transformer all the way up to the substation. So we have a -- we encompass the whole market with a very robust portfolio that is innovative and very competitive. In the digitalization of substation, we have evolved a great deal in the last few years. And let me speak about the concept of a digital substation. It is an asset, but we substitute an analog station with new forms of control. So we're going to have optic fiber, you're going to have intelligent electronic components, standardized communication protocols because several stations have different manufacturer equipment, and you need efficient communications and you need to bring intelligence to this substation, connecting all the components. That has -- can offer new digital substation, be it conventional or mobile or it can offer a digital retrofitting that can have a partial or a complete scope depending on the strategy of each client. This portfolio, in our understanding, we are very well prepared to face this digital demands and WEG will advance in a speedy way. And because of this portfolio that was built in the last few years, WTD has a complete coverage of the grid, generation, transmission up to the distribution, we are able to embark technology and to give a differentiated solution, be it an industry or the transmission lines where with big equipment that demands differentiated control or equipment of critical equipment such as data centers up to the technical complexity. So as photovoltaic with their variations, and we have to maximize the use of these assets. and operational capacity. A next step that is very important in our strategy, digital strategy and motivated by the importance that we give to the digitalization topic, we have implemented in Blumenau very near our fab plant here, an innovation center. And at this innovation center, we are going to address all initiatives geared towards initiatives for the digitalization of process. We're going to have an assembly line for substation protection, control and supervision system, which is the brains of the substation. We're going to allocate over 400 employees. So this is going to be a multidisciplinary team, engineers, data so that we can have more competitiveness and velocity. And we know that the digital world is moves very fast, and we have always to be a step ahead. And I will show you a few cases. The first one is digitalization of substations, Cargill. This is a pretty interesting case. The customer was doing a refill in their new plant, and they -- when they came to us, they said that they were having some difficulties in conventional substations and other operations. Operational maintenance problems, some maintenance work they needed to perform, they thought that they could be avoided. So shutdown in production that could be avoided. So we looked at their needs in partnership with Cargill that was a pioneer and launched the first a digital substation with a digital transformer. This substation is operating in Três Lagoas, Mato Grosso do Sul state and their operational conditions are much better than a conventional substation. And what was the impact on the customer? First, lower CapEx and OpEx because of their maintenance expenses were reduced, reduction in physical footprint, command house is tested, comes out of that tested, reducing installation costs and time. Copper cables were replaced by optic fiber. In this type of solution, we can get 40% to 80% savings. a lot of reduction, not only in material costs, also reduction in the carbon footprint. And also, it is simpler to build this. So it provides more agility in future expansions. And finally, it's more resilient. It's more robust. There are communication protocols, redundant protection -- communication controls, and therefore, they can have early fault detection. Summing up, it is much more resilient for the grid. Another very interesting case, this for Gerdau. This is an asset management case. This is a full solution, asset management and digital solutions. So they were having a hard time. This was a plant in Ouro Preto in the state of Minas Gerais. They had a 2 MVA transformer, and they were having many issues of production shutdown because of grid instability. And they were spending a lot of time with their maintenance crew and they had to go to the field. The maintenance team was being exposed to risk because the equipment was energized, and they didn't know what the problem was. So they came to us, and we indicated a WEG industrial transformer specialist. And operationally, they are in much better condition. So they have now real-time monitoring in the cloud, whatever they are and the real-time monitoring, AI helps them in making maintenance decisions. Now they have more prescriptive and predictive maintenance this platform has a very interesting feature, which is the health index of the transformers, which is very useful for those who have transformer fleet with data collected in sensing, they rank assets in criticality to scheduled maintenance. And today, they have greater availability and reliability in their production. And to close, wrap up my presentation, this is a very special case. I don't know if you recognize this picture. This is the largest industrial motor plant in the world. It's our plant here in Jaraguá do Sul. And here, we have a lot of digital solutions. We have a digital substation and asset management system for the plant and for the transformers. So we did all that to have more reliability, more efficiency and more simplicity. So this is the things we do, and this is the things we believe in. And we also think that the future of the grid will be digital. Thank you very much.

Thank you, Allan. Here, we have some interesting messages for you to see how we scale our businesses. So a few years ago, we were talking about digital WEG, and we would show our wire factory. And we do that through a dual strategy, first, use it in-house, improve and then you take it to the market. WEG Digital was really outstanding in consolidating the technology in each business unit is scaling it up. What Allan has just shown you today is a new growth vertical because this will open up new opportunities for us to work on the grid, on what is already installed, right, Carlos, where we can provide a service layer, where we can provide a layer for control retrofit, where we can digitalize to provide greater reliability to the grid. and this doesn't compete against our transformer plants. And that's great news. We have a center today for the development of digital solutions with WEG TD, which is another location in Blumenau. We have 400 employees working on this team to show you that we work so we want to get speed, mass and deliver new transformers. That's one thing. But we also believe that delivering only transformers is not the future. We will deliver transformers and also the controlled for the asset, which is what WEG Digital is doing together with the TD. TD is digitalizing the process and the assets that have been installed 45, 50 years ago in order to prioritize knowing where the service team has to do repair work or replace products. We are coming to the end. Now I would like to talk about the last step in this idea we had in terms of providing grid reliability. Now when the whole Board started discussing opportunities for the future, we see the service area as a big opportunity to be tapped in. So we talked about different service layers, service layers that will be part of electric mobility and service layers where we will be increasingly delivering integrated solutions to our clients so that they can be really reassured. For example, when you talk about charging stations, 1 out of 10 vehicles in the world cannot charge when they want to be to charge. It is important that, that team, the box team knows what has to be done, what has to be updated so that these charging stations can work are operational for any vehicle, either a brand-new EV or one that has been used for some years. And when we work on services, services in products where WEG is already a leader, I'm talking here about large machines. We shouldn't think that we will sell 100, 200, 300 mega and have no services for that. So services is starting becoming part -- increasingly part of our DNA. Over a decade ago, when we bought TGM14, TGM, when we acquired TGM in 2018, we entered the services world, and we were not used to that. And we made a lot of progress. Sinoti led that operation for some time with their team, and we learned how to operate assets. And the service bit, for instance, TGM, Sinoti, became a major part of our business and what we are doing here. And this is a new vision. It's almost a new vertical component. This is an opportunity that starts to be deployed, meaning also making retrofitting and maintenance and big equipment, large equipment. I'm talking about the equipment Sinoti is going to be talking about, but particularly we are finding many opportunities to scale up services for traditional products and doing that globally. And what he's going to be talking about now is not really based on traditional products where we are in the whole world, but this has to do with the new vision we have for the services area for this particular business, which is grid reliability. I'd like to invite Sinoti. He is today Director for Energy Solutions and Services. And more recently, starting this year, he's also responsible for building this business. So Sinoti, the floor is yours.

Thank you, Kuba. Good morning. It's a pleasure to be here talking a bit about services. As Kuba said, this complements the whole package of solutions WEG provides to the market. WEG mission in services is to support our customers in their journey to guarantee the availability of their assets so that they have safe and reliable operation of their equipment. This is a representation of the grid. We've seen other representations of the grid today. But anyway, we see everything that is connected to the grid. We have the plants, the generation plants, hydroelectric power plants, large ones, medium-sized power plants and small power plants, thermal power plants, wind energy farms, solar energy power plants, green hydrogen, synchronous condensers, biomass thermal power plants and the cities, the consumers where they are the cities, where they are shopping malls, everything, condominiums, industry, all that is connected to the grid. This is the reality of the grid. When I look at this picture, considering now the services, what can we see here? We see here a huge industrial complex, which is operating, which becomes bigger and bigger every year because every year, we have more developments that are connected to the grid. And we have plants here that are older than 40 or 50 years. We have brand-new plants, and they enter into different maintenance cycles and these maintenance cycles be it for repair or retrofitting or to have plants in conditions to properly operate, but we also have modernization of the plants. Kuba has already touched on that, but they enter into modernization cycles where they will update their technology, thus enabling to have better efficiency and also enabling them to reduce their operating costs. So when we look at that, this is a world of opportunities, thinking about services. This is all available for us to work on. And this is something that applies to the whole world, not only to Brazil. The whole world has the same situation. What is installed has to be available and has to operate properly. This is the service baseline. This is the scope. This is the WEG product portfolio. We're talking about transformer substations, generators, turbines and gearboxes, they wear out doing operation because of friction. So we have to schedule shutdowns. It's normal to -- so that they can operate normally, REIVAX, voltage control system, mid-voltage drivers and so on. And this is all part of the WEG product portfolio and services will be based on this product portfolio. But the important thing is the mission. The mission is to support our customers in their journey to guarantee availability. Then the brand doesn't matter. So we will support our clients on their needs no matter what the brand of the equipment they have is. Looking at the scope of services from retrofits, repairs and wear correction, this is the basic, which can be done either in the field or in our workshops and plants, modernization and repowering of plants. This is a very special opportunity for us in services. I will give you an example of the hydropower plants. Most of them are older than 30 years, and they enter into a very important phase of modernization, retrofitting where control systems, particularly control systems will bring efficiency and operational gains for these assets and also equipment repair and WEG will go beyond WEG product portfolio because we are full EPC contractors. We provide the whole offer to modernize these plants. And we are then responsible for a full package. A lot of opportunities here in terms of plant modernization. Of course, this is not limited to hydropower plants, also thermal power plants. Talking now about monitoring, WEG RM Guardian for rotating machine guardian, RM Guardian, the we work on diagnostics, evaluation of insulation systems and risk mapping where we can follow how -- what is the performance of the machine and the service life of the machine. We can monitor and follow all that, analyze trends and then schedule a shutdown for repair, for maintenance at the best time for the customer, avoiding or preventing an unscheduled shutdown, which is what they do not want. To wrap up this part related to services, we have O&M. WEG works on operation and maintenance, particularly within these 4 initiatives, wind farms, all wind farms. We have delivered. We provide O&M. So this is a full solution provider. We design, we manufacture, we transport, we install the system. We commission it, we connect it to the grid and then we -- it operates and then we are in charge of maintenance, providing high availability, field engineering, remote monitoring, predictive, preventive and corrective maintenance. This is all part of the OEM in a contract that may vary in time depending on our customers' needs. This is what I had to present. Thank you very much for your attention.

We are getting near the end. I'd just like to give you the final announcement here for everyone so that we can wrap it up our vision. We worked a lot this vision today that energy transition is at the center of the strategy of our company. The energy transition, I would say that we mentioned 3 very important topics, our e-mobility solutions in which we were -- as well as what is embarked vocational vehicles as we've shown today as well as in the recharging station in which WEG has a very wide array of solutions to be a global player, including sending a director to Europe to -- and what is going to happen increasingly in the world is what our director in Europe is coordinating, and we talked about microgrids and several solutions that we have for the day-to-day implementation. We're not talking about the future. We're talking about things that we are selling today because it's reality because the cost of battery packs have reduced a lot. And we spoke about how we are preparing to work with the grid that is having an acceleration because of the use of the increase of use of electric energy, but also by the generation of renewables that is entering the grid. So there are several opportunities that we have shown you today, and it's worth mentioning that these are high-technology equipment, equipment that need a high level of reliability. And it goes without saying that we have -- there's a topic that we haven't mentioned today, which is data center, but a lot of what we're doing today has as a final destination, data center and that has -- and all of this, we are wrapping around a service layer. We are putting it together with Services. So the layer that we are doing for wind generation, I think we need to have an OEM for BESS in order to guarantee that the BES works in the future for all adjustment of battery is carried out by a team that knows what we're doing. And in the same line, as we are mentioning, talking about batteries, we're talking on e-mobility, which has a dedicated team. So you can see that we are trying to bring it all together and connect everything in the strategy of WEG that is product, system and solutions with a service along all the life cycle of the assets. So every one of these business units, all of this business generate an opportunity pipeline for growth in the revenue with verticals that we believe are very good margins. And I'm speaking about business that WEG has already a great expertise, major business. We are accelerating everything that we brought to you today are businesses that WEG has already been operating for a lot of years, and we have a lot of expertise in order to create new opportunities. I'd also like to say about the energy transition inwards, because it's very nice to speak outward, but not look inside your own home. And WEG has taken a very challenging last year when we had a Sustainability Director nominated last year, and we constructed our vision to reduce Scope 1 and 2 up to 2030 and neutrality up to 2050. And we have managed to reach until last year, 28.2% reduction in that target that we have for 2030 for 52%. We are fully convinced that we are going to follow and meet these targets. And we are doing a mapping of all our -- the possibilities for reduction in Scope 1 and 2. Our operations are an example of how this is evolving. Little time, not long ago, we had limited generation and transmission. And then apart from 2 SPS for solar energy generation for our own use, we have several plants with solar energy supplying. So we are talking about Austria. We have an example of Mexico, China, but also we have in Portugal, we also have in Turkey with a new condenser plant in all places that we can work with renewable, we are doing so. And we -- in 2024, we reached 70% of all the used energy coming from renewables, and we are going very well along this new journey that we set ourselves. And I'd like to announce something that is new. We have approved our reduction targets with the OSBT. So there is a scientific methodology behind this to validate our calculations. And we have also included the Scope 3 reduction. So we are following global trends in emission reduction. And WEG for all these steps that we have taken in the last 3, 4 years, we are recognized by several international organizations such as EcoVadis that attest for all the efforts of the company in order to look for sustainable solutions. And WEG wants to be a reference, not only in terms of what we sell, but also on what we do in home. So to wrap it up, I would like to end by a very brief message on all that we have discussed because many of you have asked yesterday about all that is going on in the tariff conflicts and geopolitical conflicts that are going on. And first very important topic is all strategy for long term is -- remains intact as it was when we made our strategic -- we mitigated. We had already example to mitigate, and we are an example for the world industry of a global footprint, differentiated and diversified portfolio. And we have always had the focus on opportunities with an eye for the mitigation of risk. We were never only for the low cost. And along the time, I think we have made it to translate into consistent growth. An important point that we comment here today was there is a big pipeline of CapEx of major business, BRL 2.5 billion in T&D ongoing. That part is going to be finished next year. And in 2027, the great volume of new plants coming into operation. And now we have started a new phase, which is the phase of WEG Energy in which we are looking increasingly to operate energy preparation to increase in the motor production in which WEG wants to have a bigger and more relevant share, given all the growth that we've had in industrial motors so far. And this new investment opens up a space in the plant of Jaraguá do Sul, in which you're going to visit today, how full it is to increase the scale for higher -- medium and higher voltage motors. And with that, we are taking -- we opened up a new plant and it is going to allow us to wrap all the portfolio of electric machinery. WEG is becoming a complete player in this area. And with this CapEx, we are going to form the greatest center for great machinery -- electric machinery. So I think WEG has constructed, thanks to the vision of the founders, they always had this vision of innovation. They always had this long-term vision. And thanks to that, we have over 4,700 engineers in the company. We managed in Brazil given the context of the company taken in Brazil. We were able to attract even more engineers. We are making a new center of engineering to specialize in this kind of technology, which is kind of an old-fashioned technology when we look at Europe, for instance, for this synchronous condenses. Global footprint and verticalization of the process are part of our culture. So see that everything that we are placing as CapEx, we are trying to make it the more vertical possible way that allows us for controlling quality and chain and everything, but increasing our competitiveness, and we are looking now at a scenario of high demand cycle, but all demand is cycled. So I hope that it comes in coming decades, and I hope I'm not the CEO anymore, but the world cycles itself. And in one given moment, there will be more demand and offer more offer, and we are preparing ourselves with verticalization competitiveness to be ready to compete in the future as well in which we are going to have a bigger challenge to bring new entry sales indoors. When we have several things working as -- such as we have today, it is more difficult. As you see, it's a lot of the future that we're bringing to is digital solutions, electric mobility solutions, all micro and nano grid. These are all things that we believe that can translate into great verticals for growth along with Services because with this magnifying glass that we placed on this, this is going to bring a lot more sustainability in terms of margins when we grow these revenues. Services obviously have greater margins, and that will help effect to grow with quality. Thank you very much. I think we have a Q&A session now. Thank you very much.

We will start the second Q&A session. I'll call Kuba, and I'll bring also the Managing Directors, Grillo from WEG Digital Systems; João Paulo from WEG Energy; and Carlos Prinz from WEG TD. Please come to the floor. [Operator Instructions].

Going back to the synchronous condense question, if you could talk more about this market. Is it easy to sell to this market? Or do you have to work a little bit?

Thank you for your question. For the new plant, we have some products we will take or remove from the current manufacturing plant with production of turbines for water power, maybe some of the wind turbines, too, they will be taken to this new plant. This is part of the plant. Now bigger machines from this plant here, they are at the limit. You will see today synchronous condenser for Chile, which is a very big machine to be made here. It caused a lot of disruption, flow disruption in the plant. This will be manufactured in the new plant. But the main goal of this new plant is what we call new portfolio. Products WEG doesn't make today and that will start making. I'm talking about synchronous condensers, 150, 200, 250, 300 MVR, synchronous condensers, which is a product we don't have today and also turbo generators up to 200 mega, which we make today up to 100 mega. So this is a very significant progress also to work with steam turbines. But the important thing to say is we have some opportunities to start this plant with big synchronous condensers. This is going to be an auction. I don't know if we will win, if we get it. We will know that in a few months, maybe the plant where we start with good load. But anyway, we are not counting on that. The important thing is to have the infrastructure in place in order to be able to start production when we start having the sales. I showed you before that there are many opportunities, 5 giga just outside Brazil in South America, 2 giga in Brazil. And there's a big opportunity in the world. This plant will supply to the world because we have no other plant that can manufacture this type of equipment. This is going to be the first plant that we'll supply to different markets around the world. So this is a journey with this new product portfolio that may take some time for us to fully use our capacity. We're going to focus first on the kind of products that have a higher demand because synchronous condensers, motors in the market doesn't grow, the GDP does. But there is an entry barrier that is bigger. So it's much easier and more intelligent to work on what the growing demand or you're going to have a ready plant that is much more aligned with what is going on because if you go to a major market, WEG has to open up new ways. So we have to put more revenues in order to grow more rapidly. And then we evaluated opportunities in which we can grow with less efforts, but with good margins. So that is the vision. Synchronous machinery are going to produce, but that is not the main object. At the beginning, we want to create capacity in order to be ready to supply, the auctions that are going to happen are the opportunities, sales opportunities that are coming up all around the world. And to add one point, the products that we are -- that we have today, the entry of orders this year is very good, and our plants are at full capacity. So this capacity addition, the increase of the capacity is going to -- will allow us to open -- to enter into more agreements to make more sales.

Two questions. Thanks for the participation. First, in this increase of capacity, we commented that this capacity is sold in 2027. Just to understand a little bit how do you see this dynamic of the price dynamics of '27 is similar to what is going on, you see oscillations. And the second question is, how do you see the prices looking a little bit forward because I think the other competitors are increasing their capacity. So other players are also increasing their capacity. How the dynamic of prices is going to behave when the whole capacity of the market is also increasing their production?

First of all, in terms of adding capacities, we started adding capacity, starting in the second half of 2026 with Baltor operations and instrument transformers and also with the first phase of the Betim plant expansion. Here, we are talking about large transformers. As we have the main equipment from the plants guaranteed, as we guarantee that the main equipment, we will make sure that we have the proper filling of these plants, meeting the schedule. So the price level, well, it's the price we have in the market today. So this is a price stability. Now for 2027, most plants are operational, well start operations in the second half. So we are now planning the occupation of these plants provided that we have reliable deadlines. And what we see today is price stabilization, both in Brazil and in the foreign market. So talking about a forward vision, future vision, it's kind of uncertain because we see many unexpected movements, tariffs in the U.S.A., the things we see today on the international scenario. But I would say that we have stable prices today.

I have a question on Services and the expansion of staff, are you hiring more people? What we should expect? So I imagine that you already provide a little bit of Services today. So what are you thinking going forward? And also in terms of product differential, if your transformers have some differential, well, sorry, I'm learning how to use a microphone. Now the second question is related to transformers. Do transformers have anything different regarding your competitors' transformers, particularly in the U.S.A.

So I'll talk about our progress in Services. From the acquisition of TGM back in 2018, we started to understand a little bit better the Services business and the good opportunity of revenue with good margins that was brought by TGM. And gradually, we migrated that to the Services in rotating electric machines, changing our -- transforming or turning our Bernado Campo plant into our hub for Services. And then more recently, around 1 year ago, we decided to speed up this business. First, with the transfer of our Industrial Director from India to Portugal, creating a service center for management for Europe and also a service unit for -- in Minneapolis to work with steam turbine and rotating electric machines working in U.S.A. and to coordinate that at a global level and to accelerate growth, we decided to have this global service management through Paulo Sinoti, who has just given you a presentation. So the Services business is accelerating. It's becoming a good source of revenue and results. But we are still structuring it. We now have a more robust, more solid structure for Services, and we will speed it up for the whole world. Regarding your second question, I'll highlight 2 points in terms of our -- what is the difference in our transformers. So first, our response time back since 2023 announced investments in new plants, both in Brazil and abroad. So we know that WEG is important in the transformer market for the Brazilian market and also abroad with investments made in African countries, Colombia, Mexico, U.S.A. So our response time to the market, a response to this growth in the transformer market was very fast. And the second point regarding our competitiveness. Well, we have this location for verticalization in this investment package, both in Brazil and abroad. A good part of it is dedicated to verticalization, which makes us more competitive. Summing up, response time and competitiveness are things that really make WEG stand out.

[indiscernible] again. My question is about a specific product that you don't make, gas turbines. A American competitor makes that. They have a huge demand for that. Maybe it's something hybrid between 100% renewable energy and something that uses fossil fuel. Fossil fuel is in the middle of the way. There's part of it that uses internal combustion, but there's an amazing demand in the U.S.A. What is your take on this product?

A few years ago, like 5 years ago, we thought about it. We talked about it. We mapped and looked at some manufacturers around the world, and we didn't really find anything that was really interesting. Either it was a very big, well-established manufacturer that very probably we couldn't afford or it was something that was very rudimentary. We didn't go on with this plan. We have no plans of entering into this business. And maybe a good driver for that is the following. WEG today provides many solutions for power generation and all of them are renewable. Gas turbine market is a necessary and very interesting market for energy security, but it's not part of our scope and it's not part of our plans either. Well, if we have no further questions, we will close the second Q&A session in this meeting. I would like to take this opportunity to thank Dr. Des de Silva, the President of our Board. I would also like to thank Kuba and all the directors for their presentations today. I would like to thank all our directors who were here attending this meeting, the Investor Relations team for the organization, the support we got from our IT and marketing team, who helped us hold this meeting and also our suppliers or providers. So for those who are following us online, we have a link to a satisfaction survey. And for those who are here, later, we'll send you a survey form by e-mail. Please answer this satisfaction survey. It's very valuable so that we can further improve our meeting for next year. So thank you all very much for attending this meeting, and see you in the next WEG Day. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]