WEG SA

BOVESPA:WEGE3

Q1-2025 Earnings Call

[Operator]

[interpreted] Good morning. Welcome to WEG's earning conference call for the first quarter 2025. I would like to highlight that simultaneous translation is available on the platform on the interpretation button via the globe icon at the bottom of the screen. Please be advised that we are streaming this conference call and upon its conclusion, the audio will be available at our IR website.

[Operator Instructions] We emphasize that any forecasts contained in this document or any statements that may be made during this conference call regarding future events, the business outlook, operational and financial projections and targets and WEG's future growth potential are merely beliefs and expectations of WEG's management based on currently available information. These statements involves risks and uncertainties and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors may affect WEG's future performance and lead to results that differ significantly from those expressed in such forward-looking statements.

With us are Jaraguá do Sul are André Luís Rodrigues, Administrative and Financial Superintendent; André Menegueti Salgueiro, Finance and Investor Relations Officer; and Felipe Hoffmann, Investor Relations Manager. Mr. Rodrigues, you may proceed.

[André Rodrigues, executive]

[Interpreted] Good morning, everyone. It's a pleasure to be once again for WEG's earning conference call. We'll start with the highlights of the quarter on Slide 3, in which the net operating revenue grew 25.5% compared to the first quarter of 2024. In Brazil, the energy generation, transmission and distribution area was the highlight of growth with the concentration of centralized solar generation businesses and the continuity of deliveries of transmission and distribution projects.

In the foreign market, we also highlight the GTD business represented another quarter with good performance, especially the T&D business in North America. In the Industrial segment, we observed continued demand for our products and services in important segments such as oil and gas and mining, in addition to the positive contribution of business acquired in 2024 from brands Marathon, Rotor and Cemp and Volt Electric Motor.

The EBITDA was BRL 2.2 billion, a growth of 22.8% compared to the first quarter of '24. The EBITDA margin ended the quarter at 21.6%, a reduction of 0.4 percentage points compared to the same period of last year. Throughout the presentation, André Salgueiro, will give more details about these points.

ROIC, one of our main financial indicators remained at a high level of 33.2% as we can see in more detail on the next slide. Even at a high level due to revenue and maintenance of operating margins healthy during the period, we presented a reduction in the quarter, mainly due to the fact that the ROIC in the first quarter of '24 was positively impacted by the recognition of nonrecurring tax incentives related to the establishment of a new subsidiary in Switzerland and by the growth of invested capital due to the investments in fixed and intangible assets in addition to the acquisition of Marathon's businesses.

I'll now give the floor to Andre Salgueiro to continue.

[André Salgueiro, executive]

[Interpreted] Thank you, Andre. Good morning, everyone. On Slide 5, we present the evolution of revenue from business areas. In Brazil, we observed healthy industrial activity with maintenance and demand for short-cycle equipment, such as low-voltage electric motors and serial automation products. Despite the fluctuation in deliveries of long-cycle equipment projects, such as medium voltage electric motors and automation panels.

In GTD, the highlight was the delivery of centralized solar generation projects in a movement that more than offset the decrease in revenue from new wind turbines. Good performance also in the T&D business, driven mainly by deliveries of large transformers and substations linked to transmission projects and distribution networks.

In Commercial Motors & Appliances, sales volume showed growth compared to the same period of the previous year, with good performance from relevant segments such as air conditioning, civil construction and compressor manufacturers. In paints and varnishes, demand was positive with emphasis on the water and sanitation and agricultural implement segments.

In the foreign market, highlighting the oil and gas and mining industrial segments, in addition to the positive contribution of Marathon, Cemp and Rotor and Volt Electric Motor businesses to revenue growth in the quarter. For long cycle equipment, such as high-voltage motors and automation systems, we observed the construction of a healthy order book for the coming quarters despite fluctuations in the volume of project deliveries in the quarter.

In the GTD area, which continues to perform well, we continue to take advantage of the opportunities present in the T&D market in North America, together with good demand in Marathon's generator business. In Commercial and Appliances, motors, we observed growth in demand with emphasis on operations in China and North America in addition to the contribution of Volt Electric Motors business. In Paints and Varnishes, despite the drop in sales in South America, we observed revenue growth in other regions with emphasis on the good result of the operation in Mexico.

Slide 6 shows the evolution of EBITDA, which showed growth of 22.8%, while the EBITDA margin ended the quarter at 21.6% and showing a slight adjustment when compared to the same period of the previous year, mainly reflecting the change in the product mix, especially greater relevance of centralized solar generation business. It's important to highlight that the solar generation business, due to the deliveries of centralized generation projects, more than doubled compared to the first quarter of 2024. This movement was important for revenue growth but had a negative impact on the consolidated margin for the quarter.

The other businesses together continue to have healthy margins and are above the company's historical averages.

Finally, on Slide 7, we show the evolution of our investments, which totaled BRL 621 million, 56% in Brazil and 44% abroad. In Brazil, we continue to modernize and expand the production capacity of transformers at Betim and Blumenau units, in addition to increasing the production capacity of industrial motors in Jaraguá do Sul. Abroad, we continue to invest in Mexico and Colombia with emphasis on progress in the construction of new transformer factories.

With that, I finish my part and give the floor back to Andre.

[André Rodrigues, executive]

[Interpreted] Thank you, Salgueiro. On Slide 8, and before we move on to the Q&A session, I would like to highlight that in February, we announced the completion of the acquisition of REIVAX, a Brazilian company with global operations already consolidated in the power generation control systems market.

Finally, I would like to talk about the outlook for the rest of the year. We are confident in our strategy of diversifying products and solutions and global presence, which allows us to take advantage of opportunities in the various markets where we operate and mitigate risks in times of market fluctuation. We continue with healthy operation dynamics, our industrial strategy and constant search for operational efficiency should continue to support good operating margins and return on invested capital.

We continue to benefit from structurally favorable conditions, especially those linked to the energy transition, which should continue to support revenue growth throughout the year. But it's always important to remain attentive to the global macroeconomic scenario and possible volatility in the markets where we operate.

This ends our presentation, and we can proceed to the Q&A session.

[Operator]

[Interpreted] [Operator Instructions] Our first question comes from [indiscernible] from BTG Pactual.

[Unknown Analyst]

[Interpreted] Two topics that I'd like to hear to clarify our questions. If you could give us -- Andre, if you could give us a map on your geography distribution in the world now with tariffs that may force you to relocate capacities? I'm talking mainly about Brazil, Mexico and the U.S. given these 3 sources of supply within WEG.

And the second question is more specific about SG&A, has strong growth in this quarter based on Marathon. But just to shed some light, what would be the reason -- structural reason, let's say, normalized for SG&A, the ratio for SG&A to revenues? Just for us to have an idea.

[André Rodrigues, executive]

[Interpreted] This is Andre Rodrigues speaking. Thank you for the question. Well, first about geography. As you put very well our 3 main industrial sites, Brazil, Mexico and China to meet specific regions. And after all this geopolitical discussions on tariffs, right now, WEG has not changed anything in its strategic plan that involves investments in Mexico, more capacity in transformers, motors, new businesses such as industrial paints. We haven't changed a thing, because we consider that we have a very well distributed industrial footprint ready to meet the needs of our customers in several geographies.

So there are still many uncertainties regarding tariffs and volatility of industrial capacities, but we didn't have the -- we didn't need to make any changes so far. Brazil, South America and Europe, and of course, Brazil also supplies to North America. We also have our assets in China, India, in Asia focused on domestic markets and in the region. So we consider ourselves to be very well positioned in this moment of uncertainty. And so far, WEG has not changed anything in the strategic plan because we always think about the long term.

As for SG&A, the main reason we had was increase in expenses to consolidate the business of Marathon, Rotor, Cemp and that was not present in Volt that was not present in the last quarter as well as actual costs. There was an increase in international freight costs as Salgueiro mentioned about the dynamic of the business, there was an important moment of sale of solar complexes in this first quarter. And the distribution of solar panel requires freight costs, and that adds to that. And it's also important when we compare the values of the first quarter of this year with last year, we have the depreciation of real that plays a role in that as well.

[Operator]

[Interpreted] The next question comes from Lucas Laghi from XP.

[Lucas Laghi, analyst]

[Interpreted] I have 2 questions. One is about profitability and trying to explore a bit better the margin issue in this first quarter, especially when we look at the breakdown of cost between labor and raw material. If we compare the fourth quarter 2024, there was a significant effect of a worsening of EBITDA margin quarter-on-quarter due to labor costs and an improvement due to raw material. So I would like to understand the increased importance in labor line that had an effect in profitability as well as raw material in the context of product mix may be related to that, but if you could give more details about labor, that would be nice.

And the second question is also related to uncertainties worldwide. We noticed a concern of investors regarding the risks of macroeconomic deceleration and the geopolitical risks. But it seems that your global partners have not felt the impacts of that yet. How do you see at the end, the perception of customers regarding appetite for new investments? During the month of April, have you noticed a slowdown in terms of new orders coming? Have you talked to customers? Do they have a concern regarding appetite for CapEx and new investments forward that could impact your orders, especially on a short cycle? Trying to understand this scenario of uncertainty that makes it hard to understand the demand for the future demand. So major things are raw material and orders.

[André Salgueiro, executive]

[Interpreted] Well, this is Salgueiro speaking. Thank you for the question. Something a bit more specific about profitability. As we said during the presentation, we -- there was a mix effect that was the main effect during the quarter. Just for you to understand, solar, when compared to the first quarter of last year, it's more than doubled in terms of revenue and it also had an important growth when compared to the fourth quarter of last year. So this is the main effect.

And there's a different breakdown in every business, in terms of labor, materials, it depends on the composition and the breakdown of each product. As for labor specifically, comparing the first quarter to the fourth quarter of last year is that usually, in Brazil, we have wage increases that happens every year in the first quarter. So if you're comparing to the fourth quarter, that is the effect. But this is something that happens regularly.

So when we look at the consolidated profitability, it is, in fact, a bit lower than we delivered last year and when compared to the fourth quarter as well, mainly due to the effect in the mix, especially due to solar business. And there's also an impact in the effect of the price of copper in dollars year-on-year and then the exchange rate effect and other SG&A issues and other impacts due to the consolidation of Marathon, as Andre explained in the first question.

Lucas, Speaking about the second question, a possible slowdown of the macroeconomic -- economy all over the world, it's a bit too early to say something to be certain about that. Let's start with the things that continued positive, which is the demand for long-cycle equipment, especially T&D in Brazil and abroad. And also in construction, we're trying to build a healthy portfolio of generators. We had a chance to discuss that Marathon is in a business area that has a very high demand. If we look at what GTD accounted for in the quarter, 44% of revenue as a whole, even though we don't have a portfolio for wind, because it was a centralized energy was more concentrated as we already mentioned in the last quarter.

In this first half, there is an important volume of our revenues with a portfolio that is pretty much guaranteed for the year. Another business of short cycle in which we have a visibility that is two or three quarters into the future. There was a certain accommodation in the first quarter, but the new orders during this first quarter was -- came in, in a positive way despite all the uncertainties. So we still expect to have another year of 2-digit growth. Our expectation hasn't changed. As of May this year, we'll no longer have the comparative effect of the consolidation of Marathon, Cemp and Rotor because as of May next year, this growth will be lower, but we still expect a 2-digit growth rate for this year. That has not changed.

[Operator]

[Interpreted] Our next question comes from Rogério Araújo from Bank of America.

[Rogério Araújo, analyst]

[Interpreted] I have two questions. First, regarding the organic revenue in the segment of electronic -- electric and electronic segment abroad. We saw a drop and a drop in the last quarter. What do you attribute this fluctuation to? In the last quarter, elections played a role? And what should we expect for the next quarters in this segment? You mentioned long cycle with less deliveries, but an increase in the backlog. Should we see an improvement in organic revenue as of the second quarter? Could you shed some light on that, please?

And the second question is about current bottleneck in capacity. Where are you operating at full capacity? And what are the next steps or the next openings of growth, an expansion in which segments? And what's the timing? I know you're investing, but what's the timing so that we can understand where we may have production leaps for 2025, '26 and '27.

[André Salgueiro, executive]

[Interpreted] This is Salgueiro speaking. Thank you for your questions. Regarding the foreign market, industrial electric and electronic equipment with the acquisitions of Marathon, excluding Marathon and exchange rate, revenue was slightly below the first quarter of last year. The effect was explained in the release, which was the lower concentration of deliveries of long-cycle projects, although the dynamics is positive for the quarter, the deliveries were lower than last year. And in the short cycle, the demand is not very high.

So in the United States, there was a continuity of this effect that you said last year, demand was down due to elections and that continued. So although orders started coming better in this first quarter, the performance of revenue in the first quarter was still not positive. And also, there is a situation of Europe mainly. The short-cycle demand in Europe, as we have said for some time, is not positive. And there are some fluctuations in important markets, mainly Germany, that has suffered with the macroeconomic conditions, and we saw revenue lower in this quarter.

Looking forward, we may say that in North America, we've seen better dynamics of entry -- new orders coming that should improve from now on. Of course, there are the impacts of tariffs. As Andre said, it's very hard to see what will happen now. So we have to monitor that on a monthly basis to see how that would impact the demand in the future. And there's another region that's showing positive demand signs which is Asia Pacific. It's had a positive performance in the recent months and shows growth potential for the future. In Europe, we see more orders, but that's one of the regions that will probably take longer to grow. So let's wait and see how this will unfold.

As for the second question, we have a capital budget approved for the year of BRL 2.6 billion, which is an important CapEx for this year. It's right to say that a large amount of that is related to T&D investments that we have announced. And we highlighted that in WEG Day last year to grow the plants of Betim and Gravatai mainly here in Brazil, building a greenfield plant in Colombia, building a new plant in Mexico and some investments to increase capacity in the United States.

So I'd say that this is where we are running with full capacity here, and we depend on new investments to expand capacity given that the market is high. We've been running at good capacity, but we don't have pressure as in T&D, so there's a lot of investments being announced in Brazil and verticalization for motors and transformers, investments in foundry in Guaramirim in the wire factory in Itajaí. And there are some important investments in automation in Brazil in Itajai. That's basically that.

As for capacity, like I said, T&D is running at full capacity. And we depend on investments to add more capacity. The other businesses are running at high capacity rates. And Marathon has the capacity as announced at the acquisition moment.

[Rogério Araújo, analyst]

[Interpreted] Okay. Could you give us an estimates of -- estimate for this increase in capacity in Betim, Gravatai, Colombia and Mexico?

[André Salgueiro, executive]

[Interpreted] Well, most of it will be operational at the end of next year. It's gradual because of investments we announced in the WEG. Something becoming -- is becoming operational now, but it's not relevant. The most important greenfield in Mexico, the new plant in Colombia and increased capacity in Betim will be more concentrated in the end of next year and beginning of 2027.

[Operator]

[Interpreted] Our next question comes from João Frizo from Goldman Sachs.

[João Francisco Frizo, analyst]

[Interpreted] I have 2 questions. One is a follow-up regarding solar generation. You mentioned that there was an acceleration when comparing the quarters. I would like to understand what would be the rhythm of deliveries until the end of the year? Should it remain stable or accelerate until the end of the year?

And the second question is about your suppliers. We hear that the supply chain as a whole is very tight. How has that affected you? Have you had any limitations on orders? What about prices? Because you mentioned that copper was a margin detractor in the first quarter. Is there any reason related to suppliers that may play -- have played a role in that?

[André Salgueiro, executive]

[Interpreted] This is Salgueiro speaking. I'll answer the solar question, and then Andre will talk about suppliers. As for solar, this has been an important and strong quarter. It more than doubled when compared to the first quarter of last year. There is a component of deliveries of centralized generation projects that we have mentioned already. And with the concentration of deliveries of such projects in the first quarter and something to be delivered in the second quarter of this year.

It's important to comment that with the current portfolio, we have some time for new projects to come for the second half of the year. We expect a deceleration of revenue for solar in the second half of the year. It's running at a high level now. The GT is growing. GC has grown. But with the visibility of the portfolio we have today, that should go down for the second half of the year, implying in a lower -- slightly lower revenue from solar in the second half of 2025 as compared to the first half.

[André Rodrigues, executive]

[Interpreted] João Frizo, as for supply chain, the fact that we have a global distribution of suppliers, that's very helpful because we can look for diversified suppliers in every geography we operate in. We had a chance to comment on the last quarter that our main concern back then was anything related to the supply chain of transformers. All the companies are investing in new capacity, as we already detailed, and it's important that suppliers of components follow the same trend. Back then, we've mentioned that, that might be the highest risk for WEG in terms of supply chain. So far, we have tried to develop long-term contracts and we have not felt any downturns regarding that. Our supply chain continues to work regularly as usual, meeting our demand. But this is something we need to monitor in order to prevent any problems in the future.

[Operator]

[Interpreted] The next question comes from Alberto Valerio from UBS.

[Alberto Valerio, analyst]

[Interpreted] I have 2 quick questions. I would like to know about demand elasticity in the United States. Probably a price transfers has already started there. How much it stays with the companies, how much is transferred to customers? And the second question, although these are less core regions for you, we noticed a lower or weaker results for Africa, South America and Asia. In South America, you have a plant in Colombia, Argentina. Is that only applies to Colombia, it's more about panels or transformers too?

[André Salgueiro, executive]

[Interpreted] Alberto, this is Salgueiro speaking. Well, commenting on demand elasticity in the United States, especially due to tariffs and pricing issues in the market, it's a bit too early for that. What we can see and Andre commented in his previous answers is that we did have a quarter, if we separate short cycle, there was some oscillation or fluctuation in demand, but new orders coming that signal an improvement looking forward. And the long cycle part, especially T&D market that performed very well in which we have a very robust portfolio and will continue to perform well in coming quarters with no concerns about slowdown. New capacities can be added in Mexico and also in the U.S. We should continue to grow this business. In order to make some more real comment about tariffs, we need to wait what -- how the market will accommodate in coming quarters.

And as for the geographies, there were some impacts in South America, especially due to Argentina. The dynamic in Argentina is slightly below what it was last year. And they are in a macroeconomic recovery process, but the market still is not responding. In the industrial sector, we see fluctuations in revenue. And there was a fluctuation of deliveries of projects in Colombia. So because of these two things, the dynamics of South America was slightly below. And deliveries of projects also happened were a bit down in Africa, which impacted the performance in Africa, especially South Africa.

[Operator]

[Interpreted] We have a question from Marcelo Motta from JPMorgan.

[Marcelo Motta, analyst]

[Interpreted] Two questions. The first one, could you comment on how much lower this margin of solar is compared to the average for the company? We're trying to make these calculations, but it would be nice to have some more detail to understand the normalized margin when solar is closer to the average.

And the second question, I would like to understand if there's any deficit between the sales price and raw material price? You commented on copper there is a pass-through. Sometimes, it's a time issue. But I would like to understand if this gap is much higher than historical levels or close to that and then wouldn't have an impact on margin. Just to understand these 2 points so that we can have an idea of margin to the rest of the year -- for the rest of the year.

[André Rodrigues, executive]

[Interpreted] Thank you for the question. Solar business has lower margins compared to the rest of the company. In solar, we have distributed generation and centralized distribution. Centralized distribution tends to be lower than distributed generation. As it happened in the last quarter of last year, there was the same impact with a significant volume in centralized generation, which impacted the margin in the fourth quarter.

As we have said in the quarter, last quarter call, Salgueiro mentioned in this presentation that the margin of solar, rather not the margin, but the strong concentration of the business in solar caused the revenues to more than double in this quarter when compared to the same period of last year. But we may say that if we have had a volume in solar close to the first quarter of last year, margins would have been higher than in the last quarter of 2024 and first quarter of 2024 as well. That is, we always reinforce that among quarters, there may be variations in margin depending on the mix of products sold.

And once again, this is what happened in this quarter. The other businesses of WEG remain with margins according to the expected trends and Marathon businesses are still to be -- we have to work on them. Integration is going according to our expectations. We're not delayed at all as compared to our plans, but there may be fluctuations on a quarterly basis.

I think that the second part of the question, Motta, regarding the gap of raw material, if I understand it correctly, actually, we try to have some hedge, especially for copper. So -- and the rest, we -- when it's a long cycle, we update project by project. In the short cycle as there is a need, we recalculate the prices. It's important to mention regarding the first quarter of the year, we included the foreign exchange effect in the margin. Because in Brazil, in the fourth quarter of last year, exchange rate fluctuated a lot. So a lot was internalized in terms of raw material at a very high exchange rate and that was used during the quarter.

So in the middle to long term, exchange rates tend to be normalized in terms of profitability and the margin, but we have some fluctuations in the short run and that happened in the first quarter. A strong depreciation of real in the end of last year that impacted our costs in Brazil in this first quarter of 2025.

[Operator]

[Interpreted] Our next question will be in English from Jens Spiess from Morgan Stanley.

[Jens Spiess, analyst]

Yes. We're doing like a back of the envelope calculation to see how much your external revenues grew, excluding Marathon. We were getting to a number of around 2% year-over-year, which I think is more or less in line with the number you disclosed of external revenues increasing excluding the FX impact and consolidation impact of 3.6%. So looking at that number, how much do you expect to grow for the full year?

And secondly, just a follow-up on your like production base in North America and the materials that you -- the equipment that you produce in Mexico and export to the U.S. Just wondering, is all of that equipment USMCA compliant? In other words, do you pay tariffs on those products or not?

[André Salgueiro, executive]

[Interpreted] This is Andre Salgueiro. I'll answer in Portuguese, but thank you for the questions. As for the revenue, the number that you mentioned is pretty much aligned. As for the expected growth forward, we don't give guidance for growth for the year. So we'll limit our comments here a bit which will be limited to the comments made by Andre in previous answers, that we continue with the expectation of growing at a 2-digit rate, and that includes everything, including ForEx, debts, acquisitions that are part of the historical growth process of the company.

And there is a more relevant effect of consolidation of acquisitions until April because as of May, we'll have the same base, especially Marathon that we started consolidating May last year. So this benefit that we see now from consolidation will decrease. There will still be something due to the bridge that of REIVAX that came into Brazil more recently, but the largest effect, which is the consolidation of Marathon, would only be until April.

As for what we produce here to meet -- to be exported to the U.S. As we mentioned in the last conference call, everything we sell in the U.S., we produce 1/3 in the U.S., 1/3 in Mexico and 1/3 outside the region, especially in Brazil. Everything we produce in Mexico and sell to the U.S. is compliant with USMCA. So we comply with our requirements and there is no tariff on those products.

[Operator]

[Interpreted] Our next question comes from André Mazini from Citi.

[André Mazini, analyst]

[Interpreted] I have 2 questions. It's about the capacity reserve for battery systems. Today, there was conference call from an energy transmission company, they say that the auction will only be in 2026. So what's your opinion about that? Will the auctions be this year? And maybe in the size of the auction, we've seen some news and consulting companies saying that it would be around 300 mega and the total amount of BRL 3.5 billion. Does this ballpark figure makes sense in terms of size?

And the second question is about transformers market in the U.S. and competition. We've seen news about Hyundai Electric investing to increase its capacity in the plant in Alabama. So the question is, all this news about increasing investments of Hyundai, Siemens, Hitachi, has that -- is that already in operation? Or are they more for 2026 and '27?

[André Salgueiro, executive]

[Interpreted] Thank you for the question. This is Salgueiro speaking. As for the auction, we've been keeping track of all discussions. There is an expectation that the auction will happen. We see that the government is willing to try to have the auction still this year, but we've also seen more recent news that it may be postponed to next year. So we have to keep track of that to see when the date will be defined.

We've seen that -- we've said that the market of energy storage is developing in Brazil, but although slowly. We started with some PND project, research and development projects by utility companies. Now we're starting to have demand from industrial clients and other types of clients, but we do believe that auctions could be a determining factor to unlock high volumes to help this market develop in Brazil in coming years. So we have to keep a close eye on that to see when that will happen. And since we don't have the exact date, commenting on size and prices, it's a bit premature. So let's wait for the auction to be defined, and then we'll talk to you about that later.

Mazini, regarding T&D capacity shortly after WEG started to increase its capacity, our competitors followed the same trend because demand is very high. And everybody that's operating in the U.S. market or even in Brazil, in Latin America, all companies are announcing increase in capacity. So there is no competitor that will launch a capacity differently from ours in the same time period that will -- everybody will do that in 2027 or later on. We are not aware of any other company starting increased capacity shorter than that or earlier than that. There's an important phase of labor training. That's why the increase in capacity has to come a bit later. That's why all the companies are announcing that for 2027 or later on.

[Operator]

[Interpreted] The next question comes from Pedro from Itau BBA.

[Pedro Tineo, analyst]

[Interpreted] First, I would like to explore. When we compare quarter-on-quarter revenues, there's been an improvement, especially in dollars. How is the repositioning going on in terms of sales and prices? You've had 2 price adjustments, and that has been done. And the second, I would like you to talk more about copper. We've seen many news about advance purchases. And does that change anything in terms of working capital? Does it make sense for you to build stocks in copper and also due to timing to -- for price adjustments?

[Technical Difficulty]

[Operator]

[Interpreted] I don't know if you hear us, but let's give us a few seconds so we can figure out what happened. Please hold while we solve the technical problem.

Our next question comes from [ Antonio Sechi ] from [indiscernible].

The Q&A session has now ended. I remind you that if you have any further questions, please feel free to send questions to our e-mail [e-mail]. I would like to turn the floor over to Andre Rodrigues for his final remarks.

[André Rodrigues, executive]

[Interpreted] Hello. I would like to thank you once more for being here and have an excellent day.

[Operator]

[Interpreted] The conference call of WEG has ended. We thank you all for attending, and have an excellent day.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]