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

Representative our Board who are joining us today. I would like to say that for us, WEG is a great pleasure to have you all here with us today to share a little bit of our history the development of our businesses and the opportunities looking forward this addition is a very special addition on the WEG Day because in the past September 16, we celebrated our sixth -- fifth anniversary. And thus, we have put together a very special agenda. The first presentation will be delivered by Mr. Silva and will be on the history and culture of WEG, 2 key pillars for our journey so far. After these presentation, we will have a financial update delivered by Rodrigues, our administrative and financial Vice President. And after Andre's presentation, we will have a coffee break. And when we return, we will have a presentation on WEG portfolio for data centers that will be delivered by Manfred; Automation VP, Carlos Prinz, Distribution and Transmission VP, Power, VP; and Formo, Vice President for Industrial Motors. After this presentation, Kuba will give you an update on WEG strategy. After Kuba's presentation, we will have a Q&A session where you will have the opportunity to ask all the questions you have regarding the subjects discussed this morning, 2 important announcements before we start. Presentations that will be delivered here are already available in our website, including the English version. And for those who are here, access the WiFi network is available on the tables, you can see there. I wish you all a great meeting. And now I would like to call Kuba to announce the first presentation. Thank you all very much.

Good morning, everyone. Welcome to WEG Day 2026. It's always a big event. This is undoubtedly one of the most important events WEG has. And in this addition, where we are celebrating our 65th anniversary we thought what we could possibly bring to you to show what has brought us so far. And what will be the things that will make us go on growing continuously understandably in the future. So this year. Well, I have been working here for 25 years since I stepped here in the city as an intern. In the first year, I joined this company as an intern, it reached the first BRL 1 billion. And last year, we reached BRL 40.8 billion in 25 years, I could see over 40x growth. And during this period, right in the beginning of my career, I used to be sales supervisor back then. The big pleasure when we had managerial meetings where [ DAS ] would on a quarterly basis present the results of the company. As a way of bringing you a little bit of the history, the culture that was forged starting 6, 5 years ago by 3 people, the friends from the city of Dr. [indiscernible] with the decision of starting a company in this city, they changed the city. They changed the state. They changed the country as technology country. And today, it's impacting over 50,000 employees all over the world, and it's really great to have [indiscernible] here to tell us a little bit about this history. Talking about everything that has been forging the culture of our company throughout the years, it's been 3 years since I was announced here as [indiscernible] successor. And over this 3 years, I have had a chance of visiting many companies that belong to WEG in different parts of the world, different business units that I didn't know that hadn't been to before. And what impresses the most, it's not how big the building -- the facilities are all the automation work we have been doing in several sites. What really impressed the most over the past 3 years was to say that the culture that [indiscernible] created back then when they first started -- and this culture, which I think will -- WEG forward in the next few years. So I'd like to invite [indiscernible] now to give us his talk. So [indiscernible], the Chairman of the Board. Thank you, [indiscernible].

Good morning, everyone. I'd like to thank and great Kuba and thank you for being so kind for his kind introduction. So I will be talking a little bit about the history and culture of WEG because behind the WEG, you will see the principles and the values that have brought us to here. Just as Kuba has said, and I'm convinced, and I'm absolutely sure that this is so well structured that this will take wag further in the future. This is [indiscernible] 1961. Well, they have a picture from the 1930s. It was basically farming colony or settlement. But in '61 when the 3 decided to start WEG, and this is the building where we have a museum now, it was a least building at that time. And that WEG bought it when I was the CEO, and we decided to buy that building to installed the company's museum there. [indiscernible] was the son of a teacher who didn't have formal education, he was arrested because he used to teach German during the second world war. And my grandmother was Magdalena and she was a second generation of Hungarian. She spoke German and my grandfather was a loco and who is part of not having education, learn how to speak German and taught to German later. [indiscernible] was born in Jaragua do Sul, my father. [indiscernible] was also a local. So with all of them from descendants from German settlers. And he was an enterprise. He was the city's electrician who would repair small motors and pumps and [ Geraldo ], his father was German. So he was the first generation, so a son of Germans and he had a tooling shop in the city of [indiscernible]. The 3 -- well, my father started working very young in a notary, and then he started working in a financial institution. Nobody here will know that. He went to work at [indiscernible]. It was a state bank, which in 1968, well, around 10 years later was acquired by Bradesco, which is a major Brazilian bank. So he was working in this bank for around 7 years, and then he was invited by a small business. Generally, I had no industrial tradition back them. There were very few businesses here back then and was invited to work in a family metalworking company. So as a family business that had like 25 employees, and he worked there for 5 years. And when he left, they had already 150 employees. But that was really key to establish WEG culture, having worked in a family business. He would take a buzz, go to Sao Paulo, to buy steel or maybe find a customer there and then he would return. And then the cash was not enough and then the body care for his son and he had a 5% interest in the business, which they gave him. And maybe that was very relevant for him, which is a family business using the strength of a family business, and this is what he learned back then, but trying to avoid its weaknesses and its pitfalls. And my father was kind of unmotivated and discouraged then in a Friday, he went to a bar to a pub to have [indiscernible] at the end of the day with his friends and then the owner of the pub said, there's no cold beer today, the refrigerator, the motor, broke, we need a part from Sao Paulo. So -- and Dr. [ Egan ] said, well, I know the mechanics who work this metal company that provided services to his business, Mr. Geraldo, and I know also Werner, who was the city electrician. I know a mechanic, I know the electrician. I can repair this motor and all other motors as well if you need to. Okay, let's start a motor business, $11,000, that was the capital. Dr. [indiscernible] had some money and the other 2 joined with equipment and machinery, and this is how WEG started. They had -- they want people with different profiles. When there was an introvert very quiet. He was very curious, well, all of -- well, none of them had formal education, very little education actually. They were all self-taught, Werner would assemble radios and the Brazilian universal studio. So it's like he would assemble radius himself, self-taught, Geraldo learn mechanics from his father great mechanic Geraldo spoke a lot. It was very talkative. It was an action guy. And [indiscernible] person who had would strike a balance. So they were all different and would complement each other. Werner was the engineering leader was the leader of product development. Gerald was the shop floor guy. He was the shop floor leader, and this one was the engineering leader. And my father was the administrator, the sales strategist. And this is how we've always started. And I didn't notice something. It was a company of owners, but of partners, and they decided something very important. They made 1/3 for 33.33% for each. And he will really have a great impact on WEG culture later on and how they managed this company later on. This quotation by [indiscernible] more than having like on the walls and manuals being the full statement is if you have no machines, we can buy. If you have no money, we can take a loan, we just need credit. Well, [indiscernible] back then didn't know that interest rates would be so high later on in this country. But anyway, motivated people. People motivated by an idea are the foundation of success. That's something you cannot buy. You cannot loan people, motivated people. You have to build that motivation. They were all visionaries and they were really ahead of their time. strategic planning, we strategic planning, I did some math. We have been doing this for 40 years. Back then, I wasn't a director when they had the first strategic planning meeting WEG used to be small here and some major companies in Sao Paulo probably did that already, strategic planning, but in Jaragua, there was a very small company that was also trying to do things in the long term. So strategic planning, mission, vision and so on and so forth, this is WEG's mission we have headed for around 10 years. Things change. But the main thing always stays and the mission says that we want to have continuous and sustainable growth while maintaining simplicity. Every single word has something really relevant that is really key to our culture. And why do we want to grow continuously. Do you recall what Aegon said, motivated people are the foundation of success. Can we really have a company that is highly motivated when people who are below have to wait for their bus or have maybe to leave the company or be dismissed or retired. We started to understand what he said about motivated people. Of course, in order to have a highly motivated company, you naturally have to have fair compensation of fair wages and variable compensation. You have to have a good working atmosphere. But the most relevant thing are actually the opportunities, young people who come here who apply for job here. They know that if they are competent if they study hard work hard in 3 or 5 years, they may be in Colombia, India, Germany, U.S.A. or maybe in China, trying to have an international career. So we want to continuously grow. And this is a strong motivating factor. People want to have opportunities. And we want to grow and why do we want to grow? This has to do with the economics to grow to dilute fixed costs overhead to have a more robust company to have financial and political capacity. But sometimes, we have to ask ourselves, is it really worth to grow to have all the advantages based companies have, if this will lead you to lose the advantage of small companies. I don't know if it's worth it, what small companies have. They have agility speed, they are faster. The smaller companies have more simplicity and more flexibility. So why does the word -- what is behind the word simplicity? What is behind simplicity? Well, to begin with, the market is very complex. So you have to try to look at things in a clear more objective matter, looking at the key points, and you can only do that with simplicity. And of course, we want to grow we wanted to grow, and we are kind of back today. The big ones run a great risk, namely being arrogant. [indiscernible]. Well, no thinking that they know at all that they don't have to learn anymore. And if they are arrogant, they will -- that will not be good for employees and customers. So growing continuously and being simple, having simplicity is to precisely that if you look at different companies, you can separate them in 2 different types, roughly speaking. Those companies that grow that provide opportunities, motivating their people becoming more competitive, growing more motive anymore is the virtual cycle. And here at WEG, we struggle all the time so that our company is closer to this type of company. At the other end of the spectrum, we have those companies that will not grow. And then what do they have to do? They have to start to cut things, maybe cut costs in technology, in branding, they have to cut costs for training their people, which in the end are the most important things in an organization. These are the things that actually are the foundation. And then they cut costs invest less, become less competitive, grow less, become smaller and then we have this process going on. Well, most of them are in the middle of the spectrum. But they want -- most want to be the dynamic company being part of the cycle of growth and how to organize -- did we organize our growth? Started with electric motors. And then we included other equipment, rotating equipment, which is the generator, the transformer, which is an electric equipment, which is static. And then it built -- started building around that products to control these machines that started putting together systems with these components with inverters, contactors and then power systems, hydraulic systems, biomass wind, solar power systems and so on. And now we are working in the digital world, and we will have to connect that all. This is our portfolio strategy. So our growth strategy is the following: more product for the same market, which is the portfolio strategy and the other one, more markets for the same products. And then the same market back then was Brazil. We started here. Now we, we thought back then maybe we will be different. Maybe we will start with global products from day 1. But in the beginning, this is how things worked. This strategy of more market with the same product. This was our first internationalization strategy. They started early in 1970, they started exporting. And that was really relevant. They exported in the first year, of course, to neighboring countries to Paraguay, Uruguay. But in the same year, they already started exporting to Germany and the U.S.A. And it was really -- and that was really key so that we could become competitive. We started working abroad, providing products or supplying products to customers who are more demanding. We had to face certification agencies, product certification agencies, per [indiscernible], Lloyd in Germany, CSA and Canada because in order to protect their markets to have quality products and so on. And also, they did that to protect they are domestic manufacturers. But we use that as a leverage to further develop technology. Whenever they send a motor to CSA in Canada and when it returned saying that we have to do something about this insulation. That was a lesson we learned and then we started further developing our product lines. When I started working at WEG in this first phase I started working in 1989. At that time, WEG was already selling products to 50 different countries. And 2% of our sales were export sales. And then we started the second phase. I started working in the company at that time. The founders started then working on the Board. And together with the Board members, we started discussing what would be the next steps. We started understanding that the representation model was very good. It was important. It is still important in smaller markets, but these guys thought that they were the owners of the market. Well, those who sell are the owners, those who manufacture Well, and what will the result be? And this is important. Then we thought, okay, let's then start be there in the market with distribution companies and sales companies of our products, which our teams have our own teams there to have our inventory there and our presales and aftersales services went to U.S.A. first to Florida, which was easy for us, Florida first. And then we took 2 people there. We rented 2 desks. It was on the room. We rent 2 desks in an office that was step #2. Europe, let's decide what we're going to do in Europe. The common European market was just starting. There were many countries there. Belgium, the headquarters of the European common -- European market, very soon we found that the biggest markets were France, England and Germany. And as you can see in the first few years, we opened many branches there. So this was the phase where we started our sales offices. And the next step in the years 2000. This is like a curve then it flattens the growth curve flattens as it usually happens, then we thought, well, maybe it's time to have our own manufacturing sites there. And then 2000, we had an opportunity of acquiring or purchasing a factory in Argentina, they had more manufacturers of electric motors there. Argentina had always been more fragmented. They had more companies making that type of products. We had 6 border manufacturers here and Argentina had 10 motor manufacturers, then we purchased the last 1 in 2000 plant -- the last plant. And then we acquired that Argentinian plant in the same an international competitor put 1 plant for sales in Mexico, we purchased it because this was the logic of geopolitics. So [indiscernible] started. So we were in Argentina. If [indiscernible] come market didn't work anyway, we would have a position in Argentina and Mexico was close to the U.S.A., that thing of NAFTA. And then 2012, we thought we have to go to Europe as well. And then we acquired a company in Portugal. And I think that the big decision, an important decision made by WEG at that time was in 2004, starting in China. Someone asked me yesterday, what would you do new if you start -- would you have started earlier, I would acquire a plant in China a little earlier than that. But do you have any regrets of heavy acquired such as mall plant in China that year. This is my regret. We went to Asia anyway. We went to Asia relatively early. And that was really important. These were the 3 phases. We started exporting early and developing products. then slowly, we learned how to work with our customers abroad. With the branches, then we started manufacturing our products in these different countries. People would joke I would buy a plant for $10 million, just the minimum and then we were concerned. Well, we have to be concerned not only with the price paid, but with the risk, you have to take the rigs. You have only to take the risk, you can do something about. And this was something that has always been key in our history. And then I stopped working as an executive you know very well our merger and acquisition strategy abroad always with a very clear focus, either having market access or access to technology. Having a balance between both, sometimes you can do both together market and technology. And we made all those mergers and acquisitions, and then I joined the Board. Harry comes and replaces me and he worked -- had a bright career and he's set up M&As in our company, and he went on acquiring these new plans and so on. And this is the wag,as you know today, [ 60 ] manufacturing sites in 18 different countries and sales, operations and technical support in 44 different countries to provide services to our customers in these different countries. So this is our strategy, expand our product portfolio and expand the markets. And we do that continuously. So now I'll talk about management. Our WEG's management culture. So this is our strategy. Yesterday, someone asked me Well, soon transformer this big growth in transformer will soon be over. Well, we've been through many ups when we had a blackout with simple generators then sugar in cogeneration. And we had even shipping industry when Petrobras started with the supply boats. We have been through different growth cycles. What we need to pay attention to and always be looking at is where the market is heading and where you have ability, knowledge and know-how to look for the markets and target the markets that are more dynamic. So I don't do all that to tell you that WEG management culture has some aspects, and I'll make some comments, long-term vision customer focus, people development, byteporatory management, operational efficiency, productivity efficient capital allocation, ESG, health and safety, principles and ethics. Long-term vision founders were always ahead of their times, we started doing strategic planning by 40 years ago. And the long-term vision you have to look at a set of different things. We talk a lot about markets. We had a long-term vision for that. And then we have execution. And then there is something really important, who contributes the most to results? Is it the strategy or the execution? In the past, maybe the strategy that information before the Internet were really hard to get. So we used to say something when I started working here. Those who hold information, hold the power. This is what people used to say back then. Have you ever heard that. Those who doesn't have information today. Those who do it earlier with lower costs, those who better meet their customers' needs, execution those surely have a greater chance of winning. This is every day's struggle to do it earlier at a lower cost and really try to meet customer needs, having a global vision. I talked a little about markets, how we build our markets operations technology. We talked a lot about building our portfolio. When I started when Harry became the CEO, 18 years after me, he became the leader. Did we know data centers would exist if someone told us back then, the biggest power users will be computers, I would say, what do I mean computer? I have one at home. I don't even have a transformer there and it works. Back then, nobody was aware of that. Technology is developing very, very fast. And we have to be fast in order to be able to adapt to these changing needs. So that was operation. This is the plant in China. We bought the first little plant there and then this plot of land, and we started this long-term project. each empty plot now has a building and now what are the probable facilities that are going to be found there. So the large plants, we plants in Caragua, were the very, very foundation of at all like in the nares as well. But we know -- and we had a vision to build it all in every little place. Every little facility has its own place. We have to build 3 things we have to build product and technology and to train people. And this is a process. Today, we have 2,600 leaders and by the 500 more dealers will be needed in the near future. by 2030. This has to be planned, developed, upskilled. So this is what we're all about. Client focus. So this is the organizational chart of WEG, the CEO and it's VPs. So 2 things I'd like to say, why have I shown you this organizational chart? And how does it connect with client focus. Everyone has the client, the customer at the heart of it. The CEO has to be the most important seller of the team. I myself was one, Harry and Kuba is now because everything starts in the market. And we start building everything else. So you can see 12 people here. It's [ 9:3]. So it's product, technology, operations and market is the person who's in charge. And the other 3 guys who usually would be staff are also gearing towards the market. Rodrigo put deals with industrial motors, Vice President and Sustainability has to travel often to Brazilia and sell one generated to the Navy and so on and so forth. We are salespeople after all. Juliano from HR, VP has to be in touch with universities sell equipment to the technical schools, the vocational education institutions and WEG has to be in their top mind. That helps in coatings of vanishing Rafael also helps that in coatings and varnishes and as the warning charge of that, I skipped coatings and water share. Why are we showing coatings of ownerships because it's a supplier of WEG and 50%, 40% of the coatings and vouching revenues, Michigan that was the company's name there was in a bad phase. It was -- it provided a the varnishes were insulators as well. So that's how things played out with coatings and furnishing. The other thing about having client focus is that the company has to think with the customers' mind, we have to manufacture things that the clients want, that the customer wants. I've recently read a book or Amazon. And it's about the Amazon culture. Number one item is obsession for customer and to have the outwards inwards vision. And this is what WEG does very well. people development. Sometimes, the strategies derived from needs. [indiscernible] didn't have occasional education institution nor universities travel in 1970 to Germany to seek technology and they develop strategy. They were ahead of their time. They went after technology, the standards in 1970s where the eaches fee and stuff and the standards were all U.S.-based. And in Germany they bought the technology for the motors, IEC motors moving away from the metric system, I mean from the inch system and adopting the metric system. So we have to influence right? So they did it, and this was crucial, very crucial in our development. So the vocational institution started in 1980. I was just playing in software. I never thought about becoming an engineer. My father went to Jaragua schools, and they keep promised, I mean, to support some schools financially. And I had to enter this group wet school. We have already trained 2,651 students. This is our number of alumni. So 26 country of them are in WEG working at a company. I was a student there. So you'll find there are many managers and the vision managers. It's a deep factory of people the trip to Germany to seek technology, they visited schools, vocational schools there. That's why they returned and put together this vocational institutions here in town. And again, in those days, it was for teaching boiling and machining for people basically, but little by little over time, the backbone of culture or wet culture was there. In this call, they stayed 3 years study about wet culture and products and hands-on exercises, more than just learning about technology, they know it they know where culture. And there's a very strong relationship with this company. So the leaders that you see on all of them have different and similar -- different characteristics and similarities like the founding fathers, which is good. It's diverse. Three of them are engineers, 3 of them, the first job they got was attack. They now 72 hours before office that they will become CEO and they had to decide if there was -- they were going to accept the challenge. So the 3 of them are engineers, as I said, differently from the founders they don't speak German. That's the only difference from the founders, okay? So -- and then incumbent, what share -- so -- and the VP, what do they have in common? Two of them came from the market, from other companies, [indiscernible], Godino and other directors, 80% of them came from the market, which is also good. But it's a people management that lies the secret. We make mistakes, of course, but to make the most relevant thing for the organization, meritocracy, to make an effort to pick the person was the best for the company for that particular moment and job, that particular moment the company is going through. Others are also good, but maybe at a precise that person is ready for this. So when I was back to become the CEO, my father kind of did like the idea. Mr. Aegon had a quote would go, "the person who's prepared to be promoted if there is someone better than you in the team, this was the challenge." And the other one, I work with people who are more competent than myself. So this -- do you know how much it costs for a company to pick a manager, director, the rank 1, I mean. So considering the internal team, do you know what it means in terms of demotivation if the choice is wrong, participative management. This is extremely important. Having started with the [indiscernible] strategy or collective decision-making and people who work with many committees represents an advantage to develop people to have a holistic team, a team which has a holistic vision of the company. company as a whole is crucial because a group discussion, teamwork cannot have winners or losers. So at the end of the day, the best decision has to be made but people involved have to have the opportunity to voice their ideas, which is really helpful, and we develop people, operational and efficiency and productivity. I'll get back to the thing. It's no use making sophisticated execution plan if there is no competitively. And competence. So we have been working since the very beginning with AI and robotics but training people to make more and better every day efficient capital less allotment or allocation. So I'll tell you 2 brief stories, okay? So investment allied to the strategy. So where are we going to place our capital financial discipline is something really relevant as well. And in terms of financial discipline throughout my career before becoming a CEO, I work with product and the shop floor developed technology for contactors and so on and so forth and relays and so on and so forth. That was challenge technical channel I had, then I move to the commercial department. And in my career, I had not had financial and administrative experience. as a director. So there was the market guys they would ask me, what about this cash flow here. But I developed something like let's hold a financial conversation here will I can learn the scissors effect and so on and so forth, but we are in Brazil. We have to fund ourselves. If we don't have a good debt, your cash flow has to be -- the one that is most opportune return on invested capital. I started out in WEG working with quality as well. In quality, my boss said, he was an engineer and he handed me a questioner arm. Remember, 3 copies. Well, this is the most important thing is return on investment. If you need a [indiscernible] that would cost $700 or a clock or meter, you have to fill out this return on investment, $1,000 investment. The founders left this as a heritage as a legacy as a culture. Return on invested capital is the most important metrics for short and long-term investment -- so more than there's just 3 such indicators, but return on invested capital is the most important one, but it has to do with growth. return on invested capital does not deliver what we expect. So everything goes down the drain. Everything goes down the drain in the company. There are so metrics other than this is return on invested capital. That's it. So ESG, I won't refer to the environment, we take good care of our community. We are in the manufacturing business and it goes without saying, but as I will refer 2 things about the social element here. One of the things that makes us proud at WEG had 23,000 inhabitants when we started. Today, we have 200,000 inhabitants. And their standard of living is among the best in the country. safety as well. [indiscernible], when I visited the purchase of the plot of land, I thought, gosh, today, we visit Linhares and it's a town, a very well-developed town. It has like 3,000 employees in Linhares, in China, and I told last night. We didn't transform China, China has helped transform ourselves, but it was a small business back then. We don't have islands of excellence here. The whole ecosystem here has to have the same standard. But this is the main thing. What was going to be talking about, gee, for governance. And what do you consider to be governance? Well, there are all those rules which we try to understand, we are now mark, do we work and -- but governance is really important. There are 3 main powers. We have the assembly and the shareholders meeting the controller will decide, and we will talk during this meeting, and they will choose the Board members. And the Board will then take on all their responsibilities, all responsibilities, not less or more because someone do more than the had to. The Board has to do everything. They must do, but not less or more. It is common WPA is an investor to and I'm there as well. We have to look at all that. There are many companies who have the Board takes the CEOs take the place on the board and take them together. And in other companies, the Board will take responsibilities of the directors. This is the most important thing in governance, not doing less or more. You have to take care of our employees' health and safety. Two quick things. At the time of the founders and when I joined, we back then had 6,000 employees, 40 physicians, and I don't know, 30 dentists because at that time, it was about improving the quality of people's health. This is what it was all about. Today, things are different. And when I started working in our directors, they are invited for a regular medical checkups. We do that every single year. They in line to have their annual medical checkup safety. Of course, we have to take care of people's safety. Our principles and ethics are not only values, but they are a nonnegotiable commitment. And this is something we take very seriously. It's just a little about that. That was a little bit of WEG, history and culture, and I close by quoting Kuba's words. And as he is I am very confident to the principles and values. And this backbone that has brought us so far will take us forward, okay? Thank you all very much. Thank you very much for your presentation. Always very inspiring words. Now I'd like to invite Andre Rodrigues, our administrative, financial our CFO, who will give us a financial update. Andre, the floor is yours.

That's a very big challenge coming up the stage after an inspiring presentation. I think this is a differential of WEG. We drink out of this culture every single day. And this further motivates to make this company always a better and better company. I will be talking a little bit about our performance. My presentation is broken down into 3 parts. First, we talk about first, have performance and then an update of our main investments. And in the end, capital allocation showing that the financial discipline that has brought us so far is still intact. First, half revenue performance. We had a drop in our revenue, 3.3%. Revenue was distributed in 61% of the international market, mostly in 6 months, 39% domestic market. Anything that an important highlight was revenue in the foreign market, we had a 50.4% growth in the foreign market. So that industrial investment in our internationalization strategy is working very well. When we look at this performance for a company that is trying to continuously and sustainably grow, this is not a very usual performance, but in a way, we were already waiting that for 2 different things that have impacted our performance in the first half. First, exchange rate, conversion of our revenues abroad. And secondly, the performance of the centralized solar power generation, very strong in the first half 2025 compared to the first half of this year. When we compare our 4 business units, again, we can see the diversity of our products and participation in different segments, different markets, in a way, helps us offset this impact, starting with industrial equipment, which account for half of our revenue. Here, we have investments related to industry, industrial automation with a portfolio of electric motors, gearboxes, automation and electromobility. Growth both in the foreign and domestic market, domestic market was the highlight, as I mentioned, in the company as a whole, but it shows that industrial performance outside Brazil, all our internationalization strategy is going very well. If we consider a growth in U.S. dollars in the foreign market in the first half, we would have a 15.9% growth driven by performance in many different areas where we operate, particularly in the U.S.A. and Europe, segments such as oil and gas and data centers, ventilation and air conditioning for data centers. And then performance in electric motors and gearboxes scattered in many different segments, positive highlights for electric mobility and also thus for Automation business. Now for GDT, generation, transmission and distribution, which used to be highlighted due to our exposure of products and energy transition driven now by AI solutions that is demanding a lot from our products. Here, we are talking about transformers, substations wind power generation, solar power ration, hydropower and thermal power in addition to our generators. The domestic market, as I said, was impacted by the centralized solar power generation. Actually, in the first half -- last year, we had the best historical performance of this business in our company. But on the other hand, so we have substations and ex foreign market, nothing new. And T&D, good portfolio. And together with that, business performance in generators in North America, still very positive and we will have the opportunity to talk about that during this presentation. Commercial and Appliance Motors, MCA, this is the -- in Brazil, we had an impact of the interest rate cycle and drop in demand for durable goods in the foreign market, positive performance, particularly in the U.S.A. If you consider the effect of exchange rate in U.S. dollars, we would have grown 5. 4% over this period. Coatings and varnishes growth, both in the domestic and foreign market in the 6 months, consistent performance in both markets. Talking a little bit about revenue in our results, in spite of a drop in our first quarter, when we look at the big picture, the revenue in the historical series has multiplied like [indiscernible]. We ended 2025 with a revenue of BRL 40.8 billion. A highlight here is in the lighter blue here 2016, we had roughly BRL 2.7 billion produced and sold abroad. In 10 years, we multiply that by virtually six-fold going to BRL 54 billion, accounting for 38% of our revenue. And that was the result of a strategy to expand our credit portfolio internationally and the last WEG day, Kuba talked a lot about that. And this is very positive because it makes us be closer to our customers, mitigating risk related to tariffs, exchange rate volatility and supply chain. And it also helps us to take market opportunities where these markets are being established. During this period, we had a growth of 17.8% on average, thanks to the way we manage our main 3 ways of growing. First, which we call more and better, which is to continue creating and finding solutions or alternatives to grow with our mature products. And the second is internationalization. And finally, capacity WEG has to be constantly developing new businesses. I think that the other important message here is to show you the progression of our operating results when we start expanding internationally, facing crisis, geopolitical conflicts. If we do that, if we're able to look at in the past 3.5 years, we maintained operating margins at a level above our historical averages. Now investing to grow. The company is going through its largest investment cycle in history cycle that is providing -- bringing growth to our company. When we look at what we invested in the first 6 months of this year, BRL 1.4 billion, [ 6% ] above of what we invested in the previous year for a budget of CapEx of BRL 3.6 billion we are below the half of the 6 months. Historically, we would invest between 3% to 5% of our company's revenue last year. This year, we are beyond that. We are above that to take the market opportunities that are there, for instance, in transformers. And I'll give you more details regarding the investments in the next few slides and to continue with our international expansion. Our investment focus is still internationalization expanding capacity and modernization and automation of our manufacturing units. Let's talk about the main investments of our company. First, an update of an investment, and we showed this last year, we have been advancing faster now in the internalization of coatings and varnishes. In the middle of this year, we finished this investment of 100 million in our new plot of land, which we bought around 3 years ago. [indiscernible] in Mexico built area 5,300 square meters. We finished that this year. And in Mexico, we already had a powder paint now we have liquid paints and complementing the acquisition we did in the USA Riverside, which is specialty business in terms of coatings, low layer high resistance, high strength in the market HVAC and have another vendor for data centers. Now transformers that go through a greater investment cycle in our history, investments of sites at the same time simultaneously. This is a new plot of land. On the right side, where the paints, the one I showed you before, a built area of 33,000 square meters, 765 million investments to be completed in the first quarter, '27. Here, we will make large transformers for the U.S. demand, where there is the greatest on balance between supply and demand. Also in Transformer outside Brazil, the new plant outside in Colombia, 23,000 square meters, BRL 109 million, first quarter '27. Another site in Brazil and a strategic area of Colombia. And the focus here is to have middle-sized transformers also for the Mexico market and the Central American market. And last year, we announced a new expansion in one of our sites in the U.S.A. This is the special transformers plant, which makes equipment for Bass and renewable energy. In addition to an increase of 50% in capacity, this investment will also bring modernization and automation for this site for this plant for [indiscernible] first quarter, '28. This is when this will probably be completed. Now Brazil, strategic investments in Brazil as well. When we look at the different colors in the roofs, this is expansion of the [indiscernible] site in 2026, total built areas 75,000 square meters. This unit will become the largest T&D site wag in the world to produce equipment, the size of the ones we have in Mexico very big transformers to -- for the Brazilian market, South America market and Africa market. [indiscernible] plant doubling this plant, current transformers and other transformers. And this is a strategic investment because of this expansion, as a result of this expansion, we will have greater capacity to internationalize the equipment that are made. This transformer made in [indiscernible]. Last one in Transformer investment in Gravatai, completion for quarter '27, built areas, 7,300 square meters, 128 million invested. Here, we're going to be making transformers the same size as the ones made in Bremen now, medium power for big utility companies in Brazil and Africa. These talks about Linhares, this is just part of the Linhares plant investment is more related to verticalization that will bring WEX more competitiveness, reducing risks of the logistics chain, the new wire site second quarter '27, 160 million investment and a build area of 14,000 square meters. Well, I don't have to say how strategic this investment is. Last Friday, we announced increase in capacity and investments originally we wanted to produce 2 gigawatt hour. We have increased expanded to 4 gigawatt hours investment, BRL 330 million and completion third quarter '27. We already feel an increase of order intakes for microgrid projects, utility scales and industrial applications. We're getting more and more orders. We are expanding is we have a significant expansion in our capacity dedicated, automated that will have Brazilian-made products. decreasing risks connected to imports and also very important, bring competitiveness for the Brazilian industry in this particular segment. An investment that has been recently announced, we acquired an area of 734,000 square meters to build a manufacturing site dedicated to big rotating electrical equipment. The first phase of this investment is a build area of 58,500 square meters, BRL 900 million invested. And third quarter 2018 is the planned completion and this investment will allow WEG to expand the supply of big equipment will also provide more technology. Here, we are talking about added value -- more added value. This is what we are talking about here. We are talking about synchronous motors and high-voltage equipment, et cetera, in addition to services related to wind turbines. So this will bring us scale gains in operational efficiency and as a consequence, greater productivity. The other strategic investment in China, we're moving towards the high-voltage business in the upper part of the picture, you can see our low voltage unit, and this under construction is a new medium voltage, 30,000 square meter, BRL 360 million investment. And on the second quarter, we are about to finish it. Generators. So on Monday, we have announced a very important investment in North America to BRL 840 million in 2 steps for generators. A lot more information will be provided about this. So I don't -- I won't dwell on it. The allocation of efficient capital. We have 2 pieces of information. How much we're going to invest and where. And now are we investing well, I'll try and answer this to you. So first off, our managerial model allows us to generate cash to invest our own business. 78% of our EBITDA was converted into operational cash. Of course, in some moments, we faced the situation where we had to be resilient like in the end of '21, early 2022 with the pandemic. So we had to beef up our stocks to continue developing the market. But very fast, we got back to this average again. So this is an example that shows that the company's management is very close to its financial performance. And the most important thing is highlighted here. In July -- June 2026, we had our net cash of BRL 3.7 billion. So the company is able to finance its own investment by preserving its balance sheet and dividends to the stakeholders, the shareholders, of course. The most important performance indicator return on invested capital. We continue to invest with discipline. Over the last 10 years, we are generating return on invested capital and increasing the capital, which is proof that the company is making good decisions and investing on the right sector. We are having an exceptional ROIC performance, and our goal is to continue delivering healthy return on investment above the market averages. So 2 take-home messages here, the continuity of the investment, as I said, we are having the best cycle in our history here. WEG has been able to anticipate its own investment cycles. The example of transformers, for example, we started investing a little earlier then this cycle picked up, but also the generators business, Joao Paulo will talk some more about it. And this holds true for BES as well, new businesses. And this increase in investment will allow us to meet our customers' demand. And thanks to this investment, also, we're going to unlock what is preventing us to grow, which is productive capacity from 2026 onwards, but generators being manufacturing more units, new facilities, and we're going to get back to our growth by the second semester this year. To conclude, we are doing it all with very healthy operating margins and return on investment. The company has been able to do that, making good choices. And this is thanks to our competitive edges, verticalization, scaling up very solid industrial strategy and our ability to develop programs that grow our productivity by reducing costs and expenditure. Our goal is to deliver ever more return on investment capital and to have a performance that is high above the market average. Thank you so much.

Thank you, Andre. So now we're breaking for coffee. Those of you who are following us online will resume our activity at 10:30 on the dot. Thank you so much. [Break]

Welcome back. I now invite to come up stage our VP for WEG Automation and System to talk to us about the portfolio for data centers.

Hello, good morning. Good morning for those I haven't greeted yet. As this introductory video showed, I will talk about WEG data center portfolio. Okay. So why is this market booming. We live in a totally connected world, new 5G efforts bring more speed and expand the volume of data, IoT devices and sensors continuously generate information processes and services rapidly migrate to the digital world, modern applications require stable infrastructure and AI increases demand for capacity and performance and the very heart of it all is the data center. One, we look at the typical structure of a data center, where do we start? We start with the infrastructure proper, the substation. The data center is a large consumer of power, therefore, needs a substation. Then we come to the electrical room, the e-house where we have the medium voltage transformers and the switchboards and the bars, we use shielded bars and buses, excuse me, shielded buses. And then we have the technical corridor, the generator room and [ Tony ] will explore some more about the generators, groups and care, there must be always be redundancy. Therefore, many, many generators involved and then the monitoring room and the data hall where the servers are. And also, we have shielded buses there. We have the chill water plant and the firefighting house. So this is the very basic elements of a data center. Types of data center. So there are numerous types of data center depending on the type. It will depend on the power density required per rec starting by the edge computing one. These are the ones installed close to users to reduce latency. A good example of this type of data center is [indiscernible], which must be close to users to reduce latencies, then we have on-premise enterprise data centers, which are installed within the company premises on the -- its full control, like WEG's and also colocation, so that information is contained there. Then we have the commentation retail data centers for our wholesale and retail colocation. These are companies that construct data centers and rent out a full data center or part of it to a certain company. So these are examples of companies that build this type of data centers all of them mentioned here are customers of ours. And then we have the hyperscale AI inference data centers and training, data center. So the difference is that the influence are those who execute AI-trained bolder, already AI train models, AI models that is. And they have huge consumption of energy. This is just power density, the average power per rec in each one of the different types of data centers. As you can see on screen, power varies per reg from 10 kilowatts per rec to above 200 today hyper-scale AI training will be a lot more than that, and this has been increasing a lot more than 500. And the trend of this higher power per rec will require new technologies, for example, 800 VDC [indiscernible] current power supply that has been mentioned in some publications. So this application is nonexistence as of yet, but it's a trend that may be -- may occur in the near future. Just for you to have a comparison. In Brazil, we have 215 data centers, whereas in the U.S., almost 4,800 data centers, which shows there is a huge potential in Brazil for building data centers, especially because around 64 million approximately of information in our country are processed overseas because of lack of processing capacity. And then the good piece of news, the red data has been approved in September this year, which undoubtedly will encourage new investment in digital infrastructure in Brazil. Therefore, it will bring tax benefits on the purchase of equipment, components and services for data centers. So these components servers, which are mostly all imported will pay no tax, import tax energy, 100% of electricity demand from renewable or low-emission sources. So this is a major opportunity that will speed up data center business in Brazil and data. Many projects that were awaiting this context will now start being implemented. Who are the market players involved in the data center business, the construction of data center stack with EPC, engineering, procurement and firms -- the design firms and then the EPCs, those who build the data center , some of them also operated data centers or part of it as I showed you on the previous slide. And then we have the vendors or OEM original manufacturers, which are around the data center ecosystem like the chilled water providers, the generators, also the data center operators and the end customers. So this is basically all the ecosystem that revolves around the construction and operation of a data center, and we are operating in all these brands to provide our products and solutions. Well, the screen has checked but not over there. What happened? Yes. Let you know. Okay. This is another important piece of information. The first -- the Phase 1 in the construction of a data center that involves us is electrification of high voltage. The first contact we have is with those who buy or construct the substation. This is Phase 1. And we are negotiating with the end customer and that we provide the substations, the transformers, the electric switches and rectifiers and all the other components and protective equipment. This allows us to participate in Phase 2. By working on Phase 1, we know who the players are who will be acquiring the pieces of equipment for Phase 2. In Phase 2, we have medium and low voltage. And here, we have also electrification and critical power the sheltered buses, e-houses or critical power which are the UPS, modular UPSs, PDUs, RPPs, which are the remote ones. And then we have shielded bus. The first phase of Phase II electrification and critical power, we also direct sell it directly to our end customer. And the cooling part, which is the chilled water, all the calling processes, our contact with the vendors of machinery. RECONNECT So our supply is of motors, drives and controls and paints and all the ancillary services like generators, motors, drives, controls, paints, furnitures and so on and so forth. And we'll -- this will be tackled by FUM and [indiscernible]. This is the road map of WAC products and automation -- further details will be provided by my colleagues. But the important thing to mention here is that we have products and solutions in components, LV panels and medium-voltage panels, busways, rectifiers, UPS. We have a portfolio to meet the demand of this data center segment, and we have a very consistent portfolio and road map. Do we have it all today? No. But we are getting ready to have an extremely robust portfolio by 2030. And some technologies that are not available in the market as yet. Like SST, solid-state transformers, which is in our radar. This is just a breakdown of what I've just told you what we have today in this automation portfolio. And it doesn't mean that this is all going to be available by 2030. We have products and services available already to meet and supply all the demands in the data center of a data center. Now I'm going to call Carlos Prinz, who will talk to us about Transformers and then I'll get back at the end.

Okay. Good morning. Well, I will talk something about the portfolio of transformers and substations for data centers. But before that, I'd like to tell you that all electric circuitry, complex ones necessarily needs substations and transformers. It can be simpler electrical system, low-voltage one or medium voltage or even high voltage, 69 kilowatts and 139 kilovolts or extra high voltage. 230 kV, 345, 440 kV up to 550 kV. The easier example for us to understand the need for transformer is that any energy grid from generation and distribution transformers are required necessary to deliver the power to the end consumer. And WEG, as you know, has a full solutions and products portfolio for the energy grid and in data centers is not different. We also have full portfolio of products for data centers in all sizes and for all types of data centers. I will briefly show you this product line and also share with you how we are prepared for this new investment wave to meet the demands of this market. Basically, these are the products that we have to offer data centers. Pet mounted transformers dry-type transformers that are in the e-house and the investment we've been making over the last years meet perfectly these needs, not only in our utilities business which is important in the transformer business, but also for data centers like pad-mounted transformers. They are in the scope of our special transformers plant in the U.S. that we are starting investing to enhance in 50% the production capacity over there in the U.S. in addition to automating this production line. This is the most automated transformer line production line will have in the world and getting ready for data centers. We have dry-type transformers which are also used in e-houses. These transformers are produced for South American market, Brazil, especially, but the investment on a new transformer plant in Colombia also has a full range of dry-type transformers to be manufactured in South American market, but also aiming at data centers in the U.S. Then we have bigger transformers up to [ 500 MVA ] and substations with power coming from any grid and expansion in betting and also the new plant in Mexico, Tula de Allende, the are being prepared to -- in addition to presenting solutions for the grid also to provide equipment to major substations supply into data center. Substations in Brazil, we have our business center for that, where we have full solutions for the grid and also for our data centers up to 550 kilowatts in Mexico, we also have our substation business center considering this data center business. So as you can see, there's wave -- this data center wave that is coming, and it's already a reality for us. I'm going to show you that in the next slide. It is being followed by all required investments so that we can really meet this growing demand. Just to give you an idea of how we are advancing in this transformer business. Going to the U.S.A., our order intake in general, in the transformer business in North America, 18.5% of this orders first half of this year will be used in data centers. So this is for us already an important and key business. And now with increasing the capacity we're delivering, as Andre has showed with the new investments and most of them now in the end of 2026, and they are a part of the investments during 2027, they will be made so that we can really face this growing demand. But next, I will show you that we're not strong only in the U.S.A. in data centers. We have important businesses in South America, Uruguay, for example, in Mexico, in Colombia as well. So for us, data centers within WTB business scope is extremely important, and it's been growing. Now I'm going to show you a few cases. We have already supplied. So transformers and data center solutions, the first one in the state of Sierra in Brazil. This is in the Brazilian Northeast, this is a data center where we had an opportunity to deliver all transformers and supply, all transformers for the control rooms and power and so far, the dry-type transformer. We are talking about machines of 3.75 MVA, a robust transformer. It's a lot of accumulated power. And we also provide the 124 transformers for the electrical room. I can't give you more details because we have a known disclosure agreements with them. But a second example of transformers for power rooms. This is a data center located in Sao Paulo. So dry-type transformers as well, 26 of them, if you look at WTFM, you have on both cases, WTFM means that this transform us or smart transformers already. They have all digital solutions embedded. So they are monitored online by the customers of the health and the service life of this transformer, this is all being monitored and followed 24/7. Going to other countries. We brought you 2 examples here, important projects for -- in the U.S.A. This is for very big data centers in the U.S.A. The first project, I cannot give you more details. But anyway, the Project 1, this is a data center and now 138 kilowatts. So entry of power supply. So 23 transformers of 70 MVA each. And the second example, even larger transformers of 250 MVA each complex type of machines for really big data centers. Two additional examples this time in Mexico, we supplied to this data center, all transformers for the electro rooms, 14 in total, big 3.3 dry type supplied from Colombia to Mexico using our Colombia hub to supply to North America. The last example, project #3, high voltage transformers, 75 MVA, 250 kVAs. This is pad-mounted transformers. So the full range of transformers for this data center in Uruguay. Well, this is basically what I had to show you. Now I'd like to call Joao Paulo Gualberto da Silva, who will be talking about power generation for data centers.

Good morning. I'll be talking a little bit about power generation for data centers. So historically, servers need emergency generation, backup power. Imagine, this data center here with this whole infrastructure, but the only thing it doesn't have is this here, transmission line. Usually, data center is supplied by the grid -- by the power grid. But the problem we have today is that there is not enough grid. There is no power coming to the data centers to supply the data center. That's a serious problem. I'm talking about U.S.A. They have over 4,700 data centers and many have been announced and 1 of 4 giga, another one 5 giga of power. So without the possibility of connecting to the grid because the grid is not able to supply all this load, hyperscalers and developers are trying to find -- they are using our on-premise power generation, either buy the data center close to it or in the data center. This is where we have the important opportunities for the power generation business. So today, we have -- or so far, we had the primary power being supplied by the power grid and now we will have to have power generation, mainly through two different types. And that's why taxes today has been attracting many data centers because they have the natural gas there. So today, we set alternators or generators for backup power, which -- and these are usually diesel, but they are not good for the main pulp because they would have to operate 24/7, then there is an environmental issue. We have the generators that are the same, but instead of being supplied by diesel, they use natural gas and then they can run 24/7. And there is another solution, which is through airplane turbines. So this is engines actually. So this is a traditional one, diesel or gas, and we have two main family of products. WEG products, we -- and we have been developing a new line starting in 2022 with lower power, then we would migrate to bigger powers. And then we had the opportunity to acquire Marathon, and some of you might ask, well, you have acquired Marathon because you knew we would have a huge need of data centers coming. And the answer is, of course, we did not know that. So when we acquired Marathon, and we visit them back in 2023, myself, Kuba, and who else was their Andre Rodrigues to visit the U.S. plants. They were old fashioned with old equipment because the previous owner -- well, that was not their business actually. And then they decided to disinvest and the plans were in poor shape, and when we could have access after the closing, which was in May 2024, we started having contact with the salespeople there. And then we realized there were some needs. And then we said, "Okay, let's make an investment of USD 4 million." We purchased some machines and the customer said, you don't get it, we need much more than that. And then we better understood what the demands were and then we made many investments. We have many investments since then. And we made a very important announcement recently, which I'm going to be talking about later on. And if you have an engine -- airplane engine, it is for airplanes. And then it is derived for power generation using 30, 36 megawatts. It's like 321 Airbus, the GE, Pratt & Whitney and other types of engines. So this is a business that has been -- have been growing in the past 12 months with important orders coming to WEG and some indications of volumes that may be WEG even is going to be able to deliver because it would require even more major investments. But anyway, during the break, someone asked me, well, by the way, whenever we have a WEG Day, what comes to my mind is the following: Hunger. Because we cannot eat -- everybody is just tasting, but that's what we are here for, not to eat. We can eat later. Well, anyway, I need to lose some weight. But anyway, important businesses then early this week, we announced an important investment in Mexico. Phase 1, as we call it, BRL 122 million. This is a building, if you look at it, this is the current campus of [indiscernible]. And this building that doesn't belong to WEG. It is for sale for sale, and we want to -- well, by the way, we were even thinking about renting it, leasing it. But then when we checked if it was for sale and we had a quick negotiation with them because we wanted speed. We want to produce 10 a day already next year. So production will start in April next year, and we'll ramp up until the end of 2027 to 10 generator of 3, 3.5 mega depending on the customer, by the end of 2027. Big implementation speed, but it will be an assembly site. We will buy internal and external components from other suppliers, other vendors and just assemble them. So we'll be assembling, testing, painting, coating and shipment. This is what we are going to be doing that, and we announced the second investment, BRL 718 million, to produce or manufacture 20 per day with starting of production in the third quarter 2028. But why 10 a day, 120 and 20 bigger investments, BRL 700 million, because the second investment will be a verticalized plant. WEG will produce the core. So blades or plates and low- and medium-voltage coils and some other parts. But the core products, we want to manufacture ourselves, and then we're going to be making 20 a day. In total, by 2029, or until the end of end 2029, we will probably be reaching 50 generators per day total. And that's a very significant amount, but that's important. When we reach 50 per day for the biggest customer of the world, we would represent 30% of their demands. Today is 5%, we will reach 30%. So it could be much more investment. But I think that that's enough for now. A few examples. Here, we have a contract for a project in an American state, 4 gigawatts. This will require 2,200 generators of 2.5 megawatts each, 13.8 kV, maybe one of the largest data center projects in the U.S. Well, my 10 minutes are up, almost done. And then this one is an example. This is a WEG generator coupled to a gearbox in a Boeing [ 737 ] turbine. What happens with the plane turbine after 46,000 hours, it can be recovered many time, but after 46,000 hours, the agencies say that it can no longer be used in an airplane and this overhaul turbine can be used in this application. This is nothing new. For over two decades, we have been selling generators for this type of application offshore applications where you take the gas from well and passes through this to generate energy. So each oil rig [indiscernible] has offshore. The uses for engines. So this is the power they have there. So this is nothing new actually. What is new is that is now being used for stationary systems to generate powerful data centers that are placed in a trailer through trailers, one with electrical part and the other trailer. And then you drive this to the data center, you park it there, connect both, then you have gas supply and so on and so forth. That's how it works.

Thank you. Good morning, everyone. Well, I'll try and stick to the time that was assign to me. I'll try to share with you here what electric motor solutions WEG has. Manfred in the beginning of his presentation mentioned how data centers are organized, where the equipment is located, the areas, and this is an example of the application of electric models in a data center, in the technical aisle through ventilation system and air conditioning. We have in the firefighting house. We have a specific motors, which are fire pump, chilled water, central, a data hall where the pieces of equipment that are processing are. And within the data hall, for instance, today during the coffee break, we asked what sort of equipment do we have in data hall. We have the equipment that is conveying chilled water for cooling. We have CRAH and CRAC. So being computer room air handler for cooling the equipment and cooling distribution units, which in the hypers type data centers and high-density power need to chill the chip of the processes directly. What I want to show you here is that regardless of the type of equipment within the data center, WEG has a solution for each one of them, a very wide range portfolio. In addition, this slide shows where stand today in the world, especially where the largest data center markets are, how we are positioned to supply dedicated products that I've just shown you in the first slide as well as traditional conventional pieces of equipment that are also applied. We have four hubs. Brazil is one of them. Manfred showed you the number of data centers we have in Brazil that we can supply in our manufacturing plant, Mexican hub and in Portugal and China, likewise, to meet the needs of neighboring markets. Basically, within this universe, we have many plants, 6 plants in 14 different countries, which allows us to cover the growth more effectively. So working with technology, global presence and with a wide range portfolio of products and portfolios and solution, excuse me. This is the first example. This is an extremely disruptive product for application in data centers. It's a lot more compact because it has the solution of having motor or electronic and control single solution. What is a data center at the end of the temperature control and energy efficient that is being generated for the data centers. So the more efficient solutions, we embed in the data center, the better the financial performance of the business as a whole. So it has permanent magnet motor with integrated electronics, drive built into the motor, I refer to CRAH, which is a computer room air handler and chilled water funded center or within the air conditioning system, okay, in the cooling walls, and it's extremely compact. So none of them of our competitors have these products in their portfolio. So this is a competitive edge we have over them. Second example, W23 Sync Plus is a WEG solution that we are providing, not only with the electric motor, but the drive as well. We bring the motion solution geared towards saving energy. So this is the most efficient electric motor in the world in terms of efficiency, IE 5 and IE 6. So number 4 is the most efficient one in Europe today. And WEG has this offer of 0.75 to 1,250 kilowatts, wide power range, therefore, so high technology to solve issues data center, compaction and energy consumption. So these are some examples of what I've just told you. So they are circulating the cooling fluid within the premises. Losses are much fewer or smaller. And this allows us to adjust energy consumption in the data center. The third example is even more disruptive. This is the picture of a conventional electric motor, W22 x W80. This is the conventional WEG electric motor. And this is the W81. So both delivered the same thing. The difference is that this is extremely compact. Now we are both building the drive and the motor as an integrated or single solution geared towards data centers, and it's a lot more compact. Also here, cooling by any cooling fluid or water. So the advantage is the compaction level or compactness, reduced noise of this piece of equipment. So otherwise, we did a lot of mufflers and other equipment and energy efficiency. So it consumes much less energy relative to conventional electric models. So for hyperscale, it's an excellent solution. It's a market solution. Our conventional competitors don't have this competitive edge we have. So these are some solutions. So we are cutting edge in the market, more conventional type markets. Conventional technology continues working and the high-technology market. So how can we help data center use and maximize their physical space, through the compactness and control that we provide. We have electronic electronics embedded in the motor and so on and so forth for the U.S. market, and low voltage and medium voltage with W50 and W60 power. So how our -- how do we compare to our competitors? Technology, global presence and positioning. So I am, IE 5 highly efficient motors, two ranges of power or up to 4.5 kilowatts and 75 kilowatts, which meet the demands of a data center. Co-location data center or high-scale data centers require that. If we observe what -- who are the conventional players in the markets are, we are in the lead, we are ahead of a mall. And by 2030, we hope to provide a supply the market in addition to this induction motors, not as efficient as the PM, permanent magnet, ones, but much higher performance. Permanent magnet motors, we have two ranges, and we are ahead of our competitors, and ECM which is electronically commutated motors, which also complement the strategy that we have for data centers and solutions for data center. Some examples, contract with pump manufacturer. We have W21, W22 motors, 15 to 20 HP 2,000 units in the U.S. Similarly, W30, slim, smart, easy, 5 horsepower, 9,000 units. We are manufacturing them in the U.S. Also in the U.S. a ventilation system manufacturer contract for the thermal exchange of the cooling system. So 1,279 units, one single customer and finally, 1,300 horsepower, 128 units. So 60 motors. So we have the most complete portfolio of products for data centers. So I'll return the floor to Manfred for him to resume the presentation. Thank you.

Thank you. Very well. So resuming the product portfolio for data centers. This is the first illustration I showed you in the beginning of my presentation. Now I get back to this image show you the range of products that WEG has available to each one of the data center areas, starting by the substation HV disconnectors, TC and TPs and the electrical room, the house, the secondary panels medium-term dry transformers, bus bars, low-voltage switchgear, modular UPS battery bank and so on and so forth. Also using data centers. This is nothing new and -- so on and so forth. So we listed here all products that may be applied in each one of the areas comprising the data sectors. Last night, I was asked, yes, but what's the market that is interested for WEG, addressable market. It's not easy to answer that because it varies greatly depending on the type of data center. If it's a co-location data center, a hyperscale and so on and so forth. But in general terms, the exercises we carried out allow us to estimate the addressable market is currently an approximately 15% of the cost of data center facility, which means that overall cost, excluding servers. Servers is not WEG business, but everything revolving around the data center, electrification to make it run is WEG's business. So this is an estimate. And then the key messages to conclude this presentation is that, as said here, we have the development of new products and solutions dedicated to data centers in constant evolution, a very consistent road map, a broad portfolio to serve the market. And this undoubtedly is an opportunity for accelerated growth. Okay. Thank you so much. Thank you, Manfred, Carlos and Paulo for the excellent presentation. Now I pass the floor back to Alberto Kuba, our CEO.

Okay. What did you think? Okay? We try to make it as simple as possible, sharing to you what WEG has to offer the data center portfolio. So my mission here now is to be able to structure WEG's mission, and how we are packaging and envisioning our business strategy, not only considering data centers, but WEG as a whole. I'd like to start by the question that I'm asked the most during the meetings. What geopolitical uncertainties exchange rate volatility, supply chain uncertainty will impact how will they impact the quarter bottom line. And what I'd say is that these issues that are occurring here that were even more impacting last year when there were more uncertainties. Now on the second semester, we're going to have another material fact, which is the elections in Brazil. But I'd like to show you how we think about our strategy. When we take a look at the strategy, we never consider it short term. Decio showed us in the beginning of his presentation, the long-term vision we have. Every time we are going to elaborate the business plan, we look into the future 3, 5 years' time from now. A plant like the one presented by Andre took 3 years to be built. So it's no use shifting the direction of the company all the time. When we see the three macro trends, sustainability becomes an ever more access. You who monitor many, many companies, there is a push towards sustainability, right? Secondly, is energy transition. Yesterday, we were reading a report, and Brazil has a fleet of more than 1 million EVs, more than 700,000 to [indiscernible] active users, company, we built a partnership with last year. Energy transition is -- nobody is taking for granted. We have to find alternative to reduce greenhouse gas effects in their operations. So energy transition is part of the crucial strategy of WEG and the last one, I would say that from 2022 onwards until 2023, when investment became ever more clearer, after the acquisition of Marathon, our business was greatly transformed so much so that Marathon became one of the most important growth drivers for us. WEG strategies are based or macroeconomic long-term visions, trends that do not change in the short run. And that will also, on the contrary, become growth avenues, and this is brought into the company. One point that was clear to you here I imagine is how was the handover from Harry to me. What points we discussed that would be one of the missions that would have was internationalization. I spent 10 years overseas in China, in the U.S., all the VP team had and acquired international experience. So the foreign market is part and part of our growth strategy because Brazil accounts for just 3% of what we envision. If we take into account what are the factors that may promote a major growth or transformation we get to the point that Decio also underscored people. A company today with more than 50,000 workers -- 52,000 employees, in fact, we are talking here about 30,000 in Brazil, 20,000 -- around 20,000 in other countries. And in a few years, WEG outside Brazil will be much bigger than here in Brazil. And then it may be more sharp with a leader branch or a big company that will have branches all over the world. And the most important thing is to have people we can trust. The big difference WEG today has compared to WEG 20 years ago when we started going international is that today, we have big leaders, people who trust everywhere in the world where we have operations. We are working very strongly with the human resources department to take care of that and that technology, which is key. Mr. Werner used to say that technology is the foundation of what we deliver. If we are going to manufacture any product here or sell any product, WEG has to have has to know the technology. And in the studies, you could see a number of products we showed you today. WEG today has 43 business initiatives today. 43 initiatives for different products that require different skill sets that require diversified backgrounds, and that's why we have built in technology, by the way, now we have a strategic position at WEG, which is Vice President of Technology. We have this position now. So these technologies we presented to you, some of them were part or were not part of our portfolios, or they accounted for a very small revenue. And soon, they will lead to significant growth. So we have to be faster in order to bridge technology gaps. And I'm going to show you how we are going to do it, something else Decio you mentioned. And we talk a lot about that in our company, particularly after we had this experience in China is speed of execution. You may say that you're going to invest BRL 1 billion, BRL 2 billion. But will you really be able to deliver. And if you look at what we did this year, we focused much more on delivering what we promised in terms of plans than acquisitions. This is a strategic focus because there are many operations coming on board at the same time. Many new plants starting operations at the same time, and we have to make sure that they can start up operationally sound. Another important aspect is competitiveness. WEG is one of the best Brazilian world cases, we have been attending many international meetings, and we present our case, a case of a company that did internationalization in a different way. Many companies became global or sell globally with plans in 2 or 3 countries. WEG has 69 plants, and out of the 69, 50 are in other countries. And we have plants, manufacturing site very close to our customers because we always try to place our customers at the center of our strategy. It's easy to sell bringing from lower cost countries. We have inventory, very low commitment to local customers, just taking opportunities. But when there's a change in the market, you may end up losing the business. Someone asked me yesterday, Why? In a market that is so heated up right now in Brazil, for example, why didn't WEG exported from Brazil, the TD capacity to the U.S.A., considering that the average export ticket is much bigger than the price of sale here in Brazil as many WEG competitors did. Well, precisely, because we always place our customers at the center of our strategies. We have a number of customers. We sell to all main utility players in Brazil. And imagine if one day write Carlos, all of a sudden, we just told them that we can no longer deliver because we no longer have capacity. And if they realize that we don't because we exported 80% of our products to other countries. Well, maybe this is not the best situation to make money. We could make more money right now. But I'm sure that when things settle down, and when we go back to normal in the market, WEG, then definitely it will be the company. They will recall and know that they were there by their side in good and bad times. We went to sell to a customer today, but we want to have repeat sales in the future and to close a global presence and brand. WEG is already a global company. We have manufacturing sites outside Brazil. We purchased materials outside Brazil. We manufacture, we make, we sell to local customers, and we have profit outside Brazil. Our journey now and our marketing team is very much engaged to build a relevant brand outside Brazil. So during this journey, we have been building an increasingly stronger brand. We are in the B2C market increasingly stronger, and we have a greater exposure of our brand, but we still have a long way to go outside Brazil, which is the mission of my team. And I'd like to show you this map here showing commitment and sustainability. The first thing, I think that when we look at the portfolio, when you look at our portfolio and to know if the company in the future, we have to look at the risks. When you look at this map here, I think this shows the top commitment of any company to local success. As I told you, WEG in the 1990s, which Decio showed you was a company where we started with first distributors, then we got to know the customers better with the distribution here, but then we had to install plants. And this is a very high commitment level for any company, for every plant to give profits, we had to invest many years in processes and people to learn and teams to learn the different markets and the different countries. And out of the 5 strategic hubs, namely Brazil, Mexico, China, India and now Turkey, these are 5 different hubs where the domestic market is very big. 5 hubs in different economic blocks. 5 hubs where WEG has been investing, not only in manufacturing but also R&D, advanced application engineering. These hubs will help WEG further grow to meet the needs in different areas of the world. And locally, many of these other plants we have make niche products. For instance, our Italy plant provides the highest technology drives we have. Our Germany plant produces motors with the highest high-speed technology there is in the world. So we have niches of knowledge of specialty production scattered throughout the world, but the main power our company has is this footprint. 5 strategic hubs with strong domestic markets, but the domestic a block where these companies operate make a lot of sense. I think they show the whole commitment we have to the present, but above all, is preparing for the future we're going to build, and we can become increasingly more relevant at the local level. This is a view of the foreign market. As I told you, our main growth driver so that we continue with this continuous and sustainable journey is the farm market. So WEG in the past 10 years, managed to reach a CAGR in U.S. dollars of 12.3%. How many companies grew 12.3% in Brazil every year? I'm showing you a company, a global company based in Brazil that grows at a rate of 12.3% in the past 10 years, which above the COVID-19 pandemic took a big internationalization lead, growing in U.S. dollars and this growth is of mature businesses. This shows that products are very well positioned in terms of pricing, technology that our sales teams can increasingly expand the range of operations, reaching new customers and that WEG is gaining market share because you can look at any market survey of the mature products we sell, [ we ] never see that 12.3%. Mature markets for some products we have will grow like 3% or 4%. In the past years, we grew 5%, and we have been growing really fast. This year, we are having some issues in top line because of the exchange rate. Anyway, we are growing in U.S. dollars, but more than we grew in past years, 15.4% growth in U.S. dollars. First half was great. Growth as we announced in workdays, in all areas of the world, very consistent growth in mature businesses, and that's why we managed not only to grow in terms of revenues in the foreign market, but then we have something that is really key we grew all these years, and we kept a very healthy EBITDA. I think that growing in sales is pretty easy, you just have to lower prices and having results or earnings may be for short term, but now heavy. Growth in sales year after year keep held margins and manufacturing outside Brazil, I think this has to do with the strategic effort. And this is something we have been building over all these years. I'm really happy with this performance. This is a great graph. I would say that this shows what I said right in the beginning, the culture we managed to take with it outside Brazil because we travel, we know the executives, they are locals with the same level of knowledge and commitment we have always had here in our headquarters. Now I would like to show you our strategy immature businesses. It's pretty straightforward, but it's important to stress it, the first three products here, motor, gearbox and drive the -- our motion drive strategy. You've heard about it many times. We are doing really well in this strategy. I think that motion drives, which is -- the main growth focus were small gearboxes and drives, we have been growing consistently. This is where we can take advantage of the synergy of we already have namely selling motors. And here, we have a picture of a medium voltage motor and drive. And this is really important. We already had a share in medium voltage motor, a very relevant participation of share. We still have a long way to go to reach a medium voltage motor market share, but we have been growing every. And we didn't have a very relevant share in medium voltage drives. We had a type of product that would be for a specific market niche. And in the past years, well, automation has a new line, which is much more competitive and broader in its portfolio, they scaled up our businesses right metric. Today, we sell with the same team, take advantage of the sales synergy we have in the main markets of the world. And I can tell you that our market share in medium voltage drives today is the same as low-voltage drives or even bigger consider all the synergy we got with motors. The medium voltage motor -- well, it's easy to sell when you also have a drive. I think this is a great company. And then we have transformers and coatings. We have been through many investment cycles. CapEx, first cycle was in WEG motors back in 2020, 2023 when [indiscernible] happening -- many, many. 2023, our CapEx had an increasing focus on transformers. As we said, we started with increase, and we had significant investments to double capacity until 2028. And in the meantime, we are finishing CapEx from TD. We have a very strong -- capital paint. We also changed the level. Coatings or paints used to be very focused on domestic market. Now we see vertical growth which is great. Starting in North America, we had a powder plant that was very successful, powder paints, then we decided to make an acquisition. Last year, [indiscernible] in order to strengthen our participation in coatings, protection paint. This is a company with a tradition and a very strong international penetration and then a very strategic step which is building the liquid paint plant in Mexico. This plant will totally change our vision, our focus to supply to the North America market where we started having warehouses now to store this paints in the U.S. And now our strategy is to internalize paintings, and we will drive that first. So we went through all of these journey paints and cases, we finished a CapEx cycle, increasing capacity in Brazil, a new plant of liquid paint in Mexico and this new real site plant in the U.S. And then we have the question. I've heard that a lot, Kuba, well, will the next growth avenues coming from because if we grow in historical levels, the 2025 revenue was BRL 40.8 billion. If you want to keep two digits, we are talking BRL 4 billion, BRL 5 billion a year. Where will all this come from? It's always a big challenge. And here, we -- is -- electrification and transition, which I mentioned in the beginning, best -- we have the best auction in the end of this year. WEG has a good CapEx on that. This past plant, we started with BRL 280 million CapEx. Now we decided to expand to BRL 330 million. And that's not only because of the Brazilian market, we are looking at many other opportunities also in foreign markets. The auction is about to happen next December. Many ask me whether it's going to happen, will it happen? We think that regardless of an action not best is something that is really key to our grid in Brazil and in other places in the world. And it's important that we go on with that. And when you look at it, there are some areas we have been growing a lot, for instance, services, grid stability with synchronous stabilizes, that will be big growth drivers with interesting margins for our future. Another very interesting point and we are going really well this year. Electric mobility, what is embedded in buses and also charging infrastructure WEG literally became the main player today in the charging infrastructure in the corner. We have the product, which I would say is the segment that is really driving the growth of our company as a whole. You could -- as you could see today, data center, all the opportunities we have in all different business areas. And what is interesting about the data center business. When we look here, transformer, motor and drive they will really benefit a lot from the data center business and generator and Rupalo talked about generators for data centers. This will really boost our potential revenue. So WEG will go on growing as it has historically because our whole strategic planning is properly designed for that, a company such as WEGs. We never have -- we will never grow 50% or 60% a year. And why is that so, capacity, I agree. You cannot make a plant with 60% availability every year. The startup, we have CapEx, then we have capacity. We open a new line, we expand. And this is how we think is the right way of doing it, doing so responsibly to keep high return levels. Someone asked me as today, well, if you have more market, why don't you go on investing in TD? We could do that, but as we all hear capital allocators, as you also suggest we rather allocate capital to things where we also have opportunities, and we haven't invested a lot. As for example, in the Generator business. Now I'd like to give you a view of how important technology is for a company such as WEG, a company that innovates every year. We have situations today that has led us to create the technology VP, number one, integrating products and technologies, technology convergence so [indiscernible] presented W30 motor that has an embedded drive, okay? Motors -- well, WEG automation makes tracks, okay? Wag Motors doesn't have that, but this is the only product that has both motor and Drive. Carlos talked about the transformer. All transformers for data centers were sold already with a control or monitoring system digital monitoring system, where transformer would make digital products. So it's really important. We'll talk about technology convergence. It is important to have someone orchestrating this whole thing. We have another very important point, Decio touched on that. We now are in a phase -- well, in the past, we would launch in Brazil, and we scale up in the world. Now it is different because there are some markets that haven't reached Brazil yet. So we make -- manufacture for a market that bring to present W30 motors is a great example of that. Many things we're launching for data centers are launched first overseas. And then it's important to have someone like Carlos to do that. So our technology centers are present around the world, and we have this global management. The other point I told you, digital platform have to be ever more structured to converse with the same system a transformer that is hung on the system, a panel and so on and so forth, everything has to converge. So we've launched this program that digital insight to monitor the grid. And finally, one of the most important points, which is accelerating AI in products, but technical information more than 420 NBA course hours. We trained more than 50 students per year. There's a large group of alumni, more than 300 AI projects are underway, focusing on operational or operating gains. And over the last years, we've been deploying this under the coordination of [ grid. ] So we're talking about some machines we're selling, where the worker can interact directly with the machine, which is the trend that we manufacture and create to be able to collect data for diagnosis and to ease interaction with the workers, the operator. Just to show you our footprint, WEG. We have more than 1,000 workers in partnership more than 30 global universities. Our teams in each one of the countries are part of this initiative. This is a very nice work. It's no use imagining that a company that WEG in Brazil will develop technology. We are developing we are creating research and development in each of the countries that sets a country apart. So when we're talking about blades for wind turbines in Germany or in India. When we talk about drives in Singapore and so on and so forth. So we have research and development going on worldwide. Just to conclude my presentation, I'd like to show you our leadership, as I told you, the first challenge is to go global and to take WEG further in the world. Now we are -- last year, 90 executive of ours were set overseas. This was the team of foreigners also who came with us during 3 days, we spent whole day discussing about culture. We have to have all these people to understand our culture and to take the WEG way of being overseas. So that was an excellent activity, really rewarding activity. And still talking about people. Recently, we announced a succession plan. I would like Carlos to come up stage for me to express my appreciation to him. Our WEG Transformer business started in 1981 by acquiring this company in 1981. Carlos has been with us for 41 years, since 2081 (sic) [ 1981. ] Carlos was the first engineer hired. There was a transfer from other operations, okay? So 41 years at WEG, Carlos built transmission and distribution to become one of the largest powerhouses in the Americas. A big hand to my friend Carlos. Thank you. And for you to see how a succession plan is taken seriously in the first visit to transmission and distribution in 2024 I took my briefcase and Carlos told me, Kuba, I will retire. I will show you my succession plan, Sergio, Alessandro, Rotar explained his vision. And over the two years, I've been acting as a CEO. We held this meeting at the Board in Mexico last year in Mexico. The whole Board had the opportunity to see what the Mexican team has built. I spent a few more days to stay there with Sergio to understand what his vision is, what we're building in Mexico and WEG always picks the best executive in a given time. So Sergio has 22 years of company. He entered WEG 22 years ago. He worked in Blumenau. He was essential, crucial after the Gravatai acquisition for more than 10 years. He runs the show in Mexico, performing this spectacular work. Now that we have the challenge to operate. Undoubtedly, this is the best prepared person, and WEG take a strategic rig. VP will no longer be in Brazil. This has been moved to Mexico because North America will be our most important market for transmission and distribution there. So now we appointed Alessandro, if you are so kind to stand up. Alessandro is another person developed at WEG. He's been with us for 26 years, our sales director for a long time. And now he will take the job of general TD manager. Alessandro has a wonderful experience acquired in Brazil South America and Africa and now the challenge of operating will be run by [ Alicia. ] I think this organization is now operating differently. Thank you, Alessandro. Well, just very quickly to explain. So Decio talked about sustainability, and we have a responsibility to show what we do already. We last year approved our decarbonization targets with SBTi. We had officialized Scope 1 and Scope 2. And we took this opportunity together with OSBT to approve Scope 3 and also the Scope 1 and 2 targets or goals. We are doing pretty well until 2025. From the 52% target, we reached 32% -- virtually 32%. We will definitely reach 52%, and we had 53.9% reduction in value-added emissions, and we have been making comparison. So that's based on sustainability WEG has been doing it with a lot of responsibility. Well, some people just talk about it. We don't walk the talk, but we are very careful. I think that every year, we are taking consistent steps and we managed to achieve very nice international recognition, as you can see, to close. My key message is, I think that WEG has always had customers at the center of our strategy. This is key. D talked about Amazon. I think that when we have -- when we put our customers at the center of our strategy, we can never be wrong. I think this is a key part of our culture. expansion in the international market is our main growth driver and major capacity increase projects in the second, third, fourth quarter next year that will also help us with revenues. And finally, I think Andre mentioned that in his presentation. Portfolio and geography diversification is key and is a strength we have in order to mitigate risks. And I'd like to close with the quotation mentioned by D and tell you all a very quick experience I had in India. I have been traveling to many different markets after I became a CEO. Marathon was the last company. When I used to work at the Motors division, Paul and I had a chance of negotiated marathon today, the biggest challenge in the acquisition of Marathon was Kolkata. Marathon operations in India, which existed since 1938. Kolkata, if you know India, this is a very hard place to operate, Kolkata, many more units, 4 different unions and that operation very old planned over 80 years older people, some people retiring, and that was the main concern. I was there 1 month ago, Kolkata. It's impressive what I saw there. Over these almost 80, 90 years, they were acquired by 4 different companies. We are the fifth company and the whole WEG is their panels. I saw pictures of the founders, our culture, our code of ethics. Everything is there, and they're passionate about the company. Marathons in Kolkata were higher. It didn't hire new engineers for over 15 years as soon as we acquired them, they started a trainee program or internal program. They hired 8 last year an additional 7 this year. So 15 total new engineers and trainees or interns are very motivated. We have appointed many managers and [ trainees ] because people retired, we picked the best in operations and then now they are managed. So the level of passion is already there. So a company in order to succeed, it has to have people who are passionate, people who are motivated and people who are committed. Regardless of the culture, and this doesn't [indiscernible] the nationality. That's why we think we have reached a global pattern or standard of culture that will make us go on growing sustainably over the years. This is the key message we want to convey to you. We are really comfortable with what we have been building, and we are very confident that we have the right teams and the right place to build the WEG we want for the future. Thank you.

[Interpreted] Thank you, Kubo, for the great presentation. We will need a few minutes to prepare for the Q&A session. Our call now Oberto Cuba, [indiscernible], Rodrigo fomo Manfred, Ron Paulo and Carlos [indiscernible] for our Q&A session. I'll make you a special request. If you want to ask a question, please [indiscernible] your hand, say your name. We have 2 mics in this room. And when you ask a question, please stand up, say your name and where you work. We try to answer as many questions as possible, but we have to follow our schedule regarding the time because we will have other activities after lunch.