Good morning, everyone. Welcome to another video conference by results of Frasle Mobility.

It's a pleasure to be with you. I'm speaking from Mexico.

We have good news in this presentation regarding the results of the second quarter. This is the best quarter in the history of Frasle Mobility when we talk about margin conversion.

It could be the best quarter in revenue if we considered a exchange rate that would be neutral in this period. I say this reinforcing this point cuz the fundamentals of the company, as we spoke for the past quarters, did not have any changes.

Obviously, as a business, we have to perform and seek paths in the macroeconomic scenarios that we do not control. One is exchange rate, exchange rate.

In macro, we had a difficult beginning of the year due to system integration, the new design of the logistics operation and logistic automation in Nakata that removed some traction in revenue and a bit of the result. Obviously, these are things that we acted fast on and are stable in this quarter.

Still, a small impact, especially in April. We were not 100% operational where we had space to improve.

Anyways, as we said, the synergies of Daconcsa as a whole are starting in a slow pace, I can say, very small, start to flow and appear constantly in the result of the operation, and afterwards, in the consolidation as Frasle Mobility. We still have some challenges, especially when we talk about heavy vehicles, but the scenario of improvement, especially in the North American market, where the volumes of production and the production forecast are pointing to some advances.

Equals the revenue at this point, represented $138 million in growth of 7.5% compared to the second quarter of 2025. As I mentioned, we closed here a margin, EBITDA margin of 20.4%, which is R$282 million, as I mentioned, the best quarter of the company in the history of the company.

Investments are around R$22.5 million, below last year due to the schedule of investments of these amounts, a relevant point that I'd like to reference the fundamentals of Frasle. I started talking about this.

They continue to be very much solid. I believe this quarter, in fact, can express this in a consistent way.

The next chart, I'd like to update you a bit how we are mapping the synergies of Daconcsa updated till June 2026. Remind you, we had an estimate, initial estimate in the year of 2029, having something around $15 million in synergies, recurring synergies.

One of We have approximately $24 million close currently close to the business case, being that these $24 million, approximately 100% of the business case, around $15 million, $14 million and some, are already implemented, are not any longer in the mapping out phase or discussion. When I say implemented, it means they are adding in the DRE of Daconcsa.

Obviously, I'm not saying we have $15 million more now there. It depends on each project.

You have a fraction of this till the ramp is complete. We use all of this as things happen.

We implemented, for example, we have a synergy which is a change of supplier. Till I approve, it takes 2, 3, 5 months, then you put in the orders, it takes 2, 3 months, and then it arrives, and then you have the average cost in the stock.

It should show up in our DRE between 12 and 13 months, being positive and showing up. There, in the Frasle universe, we will start to show with method how much this is part of this operation inside the results accounts.

I can bring to you, this is not public data yet, the margin in June, it's not part of what we have in this quarter, is 20% above the level that we had when we acquired, showing clearly the impact and the potential synergies that we have with this operation, a bit more spaced than an acquisition done in Brazil due to the several complexities that it brings, but very robust, above what we had forecast. Going to the next chart, I would like to continue speaking of Daconcsa.

One of the important lines we have is the addition of new revenues. In the initial business case, these were the biggest synergies, and during the process, they became smaller due to the fact that we had a large amount in synergies of sourcing and reductions of expenses more than adding new products that takes a bit more time, highlighting that we had success in the launch of blocks.

We are close to 30% market share in the two with the two that we had last year, heavy blocks. This brings a revenue of around $5 million, and the impact of this in the synergies in aggregated margins, we launched now in the beginning of July the line of hydraulics with Fremax brand.

Important part of this will be done in Brazil by Controil in São Leopoldo, and part of it we will search for suppliers and co-manufacturers according to our strategy. I can say that our business case had a low sales forecast because it's a new line, but the results that we have received in terms of initial orders from the customers that will receive only in November is a lot higher than what we designed for the full year of 2027.

Also, it will be a successful line in the Mexican market due to the characteristics and what we can push as Frasle Mobility. For the next years, we have designed a series of other products, launching them as well.

This will leverage the synergies even more that we have mapped out already. Obviously, in its time, we can speak more of this.

In the next chart, I invite you. Today is the last day to sign up for Universo Frasle Mobility, the Investor Day, that this year will be in person in Extrema, Minas Gerais, and will be broadcast live through YouTube in our networks.

It will be in in two weeks, and you can sign up. You have a transportation from Faria Lima, those that are in São Paulo, and all the details when you sign up.

You have the schedule in detail. It's a great opportunity to go to Extrema, Minas Gerais, and see the advances we have in logistics with mobility, the advances in the plant, shock absorber plant also, and we can talk more about the strategy that we have designed for Frasle in the next cycles.

Looking at the next chart, we are detailing the revenue this year, this quarter, as I mentioned, a growth of 2.2% compared to last year. What impacted the most internal market?

The repair in the workshops are stable. There was an increase in the availability of products.

We're working in competitiveness. We have an impact in volumes.

We continue to maintain in some lines even gaining market share, the only exception here. We didn't lose a position, but the beginning of the year is a bit harder with Nakata that was that had an impact this quarter.

We had an advance compared to last year in the commercial line in the United States, as I said, showing recovery, clear recovery for the next quarter, and a meaningful reduction when we talk about exchange rate that impacts almost all of our currencies that are used in the different geographies in conversion where we bring our exchange to real. Argentina had some impact due to the effects of IAS 29, removing a bit.

If we eliminated the FX, we would have a revenue growing 6.5%, as I said, it would be the best quarter in the history of Frasle also. Next chart, I'm talking about the effects of the heavies line.

The heavy line compared to last year, we have here in the internal market growth, as I mentioned, but a decrease when we talk about external market, a decrease of approximately 18% specifically for this market. If we look at production of vehicles overall, we see there's a variation that's still a bit more complex.

When we look the first quarter compared to past quarters, but in the case of Brazil, we produced trucks 20% higher production when we talk about the second quarter of '25, sorry, 10% lower when we look at quarter after quarter, but better when we compare to the first quarter of this year. We see a bias of improvement.

When we look at the North American market, there's a decrease when we compare quarters, but a reaction when we compare to the first quarter of '26. As I mentioned, the signs are more promising for the second semester when we talk about the commercial line.

I will pass the floor to Mariana, that's going to talk about the operational results, and I come back for the Q&A at the end of the session.

Thank you, Hemerson. Good morning, everyone.

It's a pleasure to have you with us in the call for results at Frasle. On slide 10, we provide an update on the tariff scenario applied by United States to Brazil.

First, it is important to emphasize that only 5% of Frasle total sales are exported to United States, specifically in the following product categories: heavy-duty brake linings, and brake discs and pads for both light and heavy lines. The most recent update, July this year, changed the tariffs applicable to the heavy-duty brake lines.

As you can see in the bottom-left section of the slide, the rate in effect from February to July '26 of 10% under Section 122 was raised to 37.5% under Section 301 since late July. It is important to note that only 3.5% of sales correspond to exports to United States in this product category.

The brake lines for heavies and lights didn't change tariff, remains at 27.5%. We remind that exports from Brazil to US are on FOB basis, meaning the importer is responsible for paying the tariff.

With the increase in tariff for brake lining for heavies, the company continues to monitor and continues competitive to the North American market. We continue to monitor this and the impact in competitiveness and the commercial flow.

Currently, we reinforce there is no impact in the business. Going to slide 11, we see the performance of net revenue by product family.

The key highlights here are in braking line. Domestic market growth was driven primarily by the workshop activity and the consistent demand from Frasle, Fremax brands with the distributors.

The external market was affected by the exchange rate fluctuation that impacted the revenues for this product line. In the ride and comfort line, growth in domestic market reflects stabilization of the distribution center automation and the consolidation of the ERP system that was mentioned, factors that had impacted the first quarter.

The decline in international market was driven by Argentina due to challenges regarding pricing and shelf space. The powertrain line, the domestic market decline was driven by operation in Extrema, although the volumes in this line is small, and growth in foreign market is linked to Daconcsa's operations that ended the quarter with gains driven by the gradual resumption of repairs on existing vehicle fleet.

Going to slide 12, we see the EBITDA performance. Hemerson said that the quarter closed with the biggest margin in the history, 20.4%, showing an increase compared year after year.

This was driven by the combination of favorable exchange rate for some lines, sales mix, Daconcsa synergies capture, and operational efficiency initiatives implemented in recent quarters. We had an important impact in the exchange rate in the period that reduced the cost in co-manufactured and imported inputs.

We highlight the impact of R$6 million due to tax credits that were not recognized in their correct period and are recurring in the business, and the total was recognized this year is more than normal. The expenses with sales and administrative are stable compared to the net.

In the line of other revenues and expenses, there's a variation due to the reduction of expenses in innovation program Innova. Going to slide 13, we see cash generation.

Through this plot, we have an important increase with positive cash flow of R$308 million and free cash flow positive of R$170.3 million. Investments were focused on layout changes and the acquisition of machinery and equipment, maintenance of manufacturing facilities, and initiatives aimed at increasing productivity and automating processes.

The final results showed a reduction in financial expenses, driven especially by lower foreign exchange exposure and optimization of receivables-based financing operations. Besides this, working capital requirements decreased significantly by 33 days compared to '25, reflecting inventory optimization, efficient receivables management, and the strengthening of operational financing sources.

Moving to slide 14, we talk about the fiscal management of the company. The company continues with a balanced capital structure, the first quarter leverage of 1.3 net EBITDA, cash position of R$1.4 billion.

Furthermore, the amortization profile remains comfortable, with maturities concentrated in the long term, reinforcing the company financial flexibility to sustain operations and advance its growth strategy with responsibility. I will now hand over to Anderson, that will discuss the guidance and outlooks moving forward.

Anderson?

Thank you, Mariana, Hemerson, Mônica. Thank you, everyone that are with us.

It's a privilege once again to talk a bit about our quarter. It's obvious we have an additional challenge regarding the guidance of net revenue.

We don't have challenges in EBITDA margin, exposure to foreign market. The first quarter recovers in the second.

Looking at guidance, we understand the activity elections, geopolitical stability can bring the dollar to a higher level, getting closer to the floor of the guidance. We have acceleration of Nakata due to the first quarter.

We have achievements in new product lines in Mexico, synergies in Mexico, generate local competitiveness, that can bring new revenues. A proper moment, we believe there is a possibility to be according to guidance in our revenue.

The other indicators are very comfortable. We have a spectacular margin this quarter due to the thesis is smart.

As Hemerson said, we had a first quarter with intentional adjustments, preparing the structure and the company for a promising future. We have to follow the market trends.

That's why we have the need to modernize our park distribution in Extrema. The invitation has been made to you.

You can visit us at the end of the month. It will be a privilege to have you.

The update of ERP system, where we have captured more integrations of our operations. What I can tell you is we're very firm with our all synergies occupying spaces in different markets and all lines and geographies.

Obviously, I have to highlight and mention Daconcsa is still in a shy manner starting to capturing the results and showing results captured as a project. For this to become reality takes some time, but the trust in what we told you many quarters ago that in '26 we would start to see We're very optimistic with operational results, synergies, and return on investment in this project, which is a transformation for the company.

Very happy with our capacity, once again, to deliver results with these growth projects. How do we see '26 and a bit of '27?

Macro environment, we don't need to repeat ourselves on the tariff policies, tariff wars, China, US, iron Russia conflict, Ukraine. All of this has complex impacts for a global company like ours.

We need to change at speed facing the difficulties of currents that we see. The model of the company and diversity and the size it has allows us to navigate with some tranquility.

This has its unfoldings, which is natural in an election process. All intentions of the governments for next years, this can bring some impact in the middle and long term.

Hemerson has said, well, there's a lot to come with Daconcsa. What I can say is the purchasing fronts are well established, but the issue of new revenues is only starting.

This journey, it takes some time due to portfolio, go-to-market strategy, brand positioning, price. This little by little will start to bring great perspectives of growth.

Brazil is mentioned by Mariana, very resilient. I would say there's a time challenge that has to do with pricing due to the natural dynamics of the market, but especially a tax reform that will generate an opportunity of better performance of our distributors, better use of the cash working capital after '27.

In '26, the majority of them will bet to work with a lower level of stock leverage to have better performance in '27. It's beneficial to our customers.

As a consequence, they will maintain the level of service in the lowest level possible as long as it doesn't impacts their business. A reduced stock size.

This is natural to happen, but also there's a risk. If they have a higher stock in December, can be a benefit in January.

Many of them might have a hard time with supply. Overall, we see that on the long term, we understand it's a big factor in terms of possibilities when we have more availability of working capital for our customers.

In the premium lines, usually have the best space in the shelf. They will reduce stock in the lower margin and lower representation lines that we are not a part of.

Our portfolio is paramount for the Brazilian production, and we end up becoming stronger in this moment. In commercial line, we explore there is a recovery, gradual, not structural yet.

The market cannot say that the environment in '27 has to do with the motor legislation next year. We have record levels.

It will supply the market. There's an improvement also regarding movement of cargo in the American market.

This can benefit us. The volumes are pointing up.

It's hard to say that '27 will maintain. It's early to say.

We will enjoy the moment, and the second semester is probably favorable in this direction. Regarding growth, we have a combination of organic expansion that we mentioned a lot in this presentation, and we will explore even more in the Investor Day at the end of the month.

We have an active management M&A agenda. We did exceptional work in terms of company leverage in the last 14 to 15 months, allows us to have more appetite in this direction.

Respecting the controller's appetite, we will be more active looking at growth for the next fiscal cycles. We remind you, when we acquired Daconcsa, we said we needed two years to digest.

We are just doing what we promised, but we are quite active again. With this, very happy with the quarter, exceptional work in terms of cost austerity.

We adjusted what was needed in terms of operations. We still are on an operational improvement cycle in the next quarters.

The company is delivering in a sustainable way results, reinforcing that we can have a quarter that's a bit lower, a bit higher, but in the long term, the vision continues solid, strong, and we want to increase it organically and inorganically in the next quarters. Now, I return the floor to Jessica, that will do the Q&A session with us.

Thank you.

Thank you, Anderson. We will start the Q&A session now.

The first question from sell-side analyst Gabriel Rezende of Itaú BBA. Gabriel, we will open your mic and you can ask.

Thank you, Jessica. Good morning, Hemerson, Pontalti, Mariana, Mônica also.

I would like to make a follow-up to Pontalti's comment when we look at the horizon for the next quarters, understanding the time challenge with Pontalti, the market dynamics, and last, the tariff tax reform. Understanding how do you see the drivers, pricing drivers, we see in the results Daconcsa has taken off, but understanding ex-Daconcsa, how that pricing challenge should impact together with is this exploring the dynamics of competitiveness, what has changed, if it's a continuity of factors that we saw in the last quarters?

How is this evolving? Thank you.

Thank you, Gabriel. The questions are already directed to Anderson.

If you can talk about the pricing horizon, main drivers, and competitiveness overall. Hemerson can talk about the market in North American market and the dynamics of competition at that geography.

Perfect.

Thank you, Gabriel, great to hear from you. Thank you for your question.

I can say that pricing is a challenge. When we have a retraction, which is natural, and we need to look at the tariff reform.

Everybody wants space in the shelf, some can have more. We see some players with not orthodox measures, and we need to fight this.

When demand retracted, we have some people that wants more space. It's not different in our market, but I think that the dollar, when it's below or low, it will make us look for repricing in different geographies, especially in exports from Brazil.

We have long-term contracts, we need in 20 2027, thinking about repricing of some contracts. We have metrics and rules.

This should impact more in '27 than '26. It's a bit of a challenge also if we cannot pass the decreasing dollar issue that retracts some margins in some products, and we cannot pass on.

The competition doesn't have a new factors in the market. Everybody's looking for competitiveness through investments or investing in other geographies.

It's more of the same. We don't see a big difference from what we already have.

We have how to compete in this market because we have multi-exposure of plants. We produce worldwide: India, China, Brazil, Argentina, Mexico.

This gives us a geopolitical protection that is considerable besides what we already mentioned, the capacity to procure, to purchase is like no other, which allows us in this line of product to have With this purchasing power, the demand in the workshops is high. The workshop guys prefer the premium products, the premium brands.

There's a survey that we follow closely. The market is gaining space with OEM, gaining space over the lower reputation brands, given that the labor and the difficulty to repair due to higher frequency to repair, lower availability of labor, nobody wants to make a mistake, the premium is being captured in our product lines.

I hope that I answered your question, and Anderson could talk about the US. Perfect.

Gabriel, thank you for your question. Thank you for participating.

Speaking of Mexico, Mexico is a very competitive market, a lot more open than Brazil in several fronts. The import tax are a lot lower than what we have in Brazil.

It's a geography where it's more simple to act. It doesn't mean that it's simple to manage.

We have a fleet complexity that is very diverse. We have used vehicles coming in from the United States.

You have vehicles, autos chocolates that come with no record from the United States, with no continuity. We don't know if it was purchased, stolen.

A lot of complexity in the fleet. This brings a complexity to manage.

Also, when we purchased Daconcsa, we knew about this, and the competition here is harder. We had modest growth, I would say, this semester.

We were impacted due to the customer dynamics, not due to our capacity to advance and search for space. Big customers had changes in their ERPs.

Also, one was acquired 2, 3 years ago, has integration issues. This creates some difficulty when you want to maintain the volumes, but the production of new lines has shown very assertive due to the market adhesion as a whole.

When we have a premium brand that shows the capacity to service, that gives support that the market needs, the chance of advancing is huge. The hydraulics shows this very well.

We advanced a lot more. We don't have the product in the shelf to offer yet.

It's a pre-launch. We will deliver only October, November, but the market is acquiring in an expressive way.

It is very good. Looking at price dynamics in Mexico is quite stable, aftermarket sales, aftermarket market.

With the gains we have, we have tried to bring competitiveness to search shelf space. I think some things are only starting.

We have good news to share in Frasle Universe about the Daconcsa's advances we will have that will paramount for future growth. We have to do some investments to increase productivity and focus on the North American market, expanding to the US also.

We have advanced in motors in the Divo project from Daconcsa. For traditional customers also, we are able to maintain a good level of space.

There's not high competitiveness with the items that we were selling for many years already. It's very competitive in Mexico in motors.

There's work to be done expanding the team. We're installing structure to search for a relevant motor market in United States.

When I say relevant, it's not market share, it's a huge market. 1, 3, 5% is a huge volume.

We want to look at these volumes to make twice as much or three times as much sales.

Thank you, Hemerson, Anderson.

I hope we answered your question, Rezende.

Very clear. Thank you, guys.

Thank you, have a great day.

Our next question from Gabriel Tinem, sell-side analyst of Santander. Gabriel, your microphone is open, you can ask.

Good morning. Thank you for the space.

First question, curious towards external market. Something that drew my attention, the in dollar increase year after year.

If you can mention how this improvement has been in heavy vehicles here in aftermarket and OEM, the pre-buy effect, Anderson talks about '27. If you can talk about the second semester of '26 would be great.

A second point here, looking at cost, if you can share with us a bit more the approach regarding the revenue. You had a plan to expand in co-manufacturing in some units, Controil, Daconcsa.

I want to hear more of how is this adoption and understand more about the recurring profitability, looking at the future. This quarter, what had the impact of exchange rate, it's more so the two questions I had.

Thank you.

Thank you, Gabriel, for your questions. Hemerson, I believe you can talk about external market, growth in dollars, talking about the heavy segment, the first question from Gabriel.

Anderson regarding profitability, the recurring profitability, you can mention and together with this co-manufacturing strategy, the evolution of the process. Thank you.

Very well, starting here. Thank you for your question, for your participation, always participating in the calls.

We have many good things happening when we talk about new revenues, and Daconcsa is relevant due to the fact that they can occupy an important space in blocks in Mexico. We have other blocks customers in Mexico like Medita that also used a bit of this space left by first brands leaving the North American market and the Mexican market.

We left approximately 2% share Daconcsa in blocks, and we went to 27, 30% market share in the six first months. We cannot say that this is a normal position yet because we're still understanding, researching, searching for this information.

We know also that our Medita, our dear customer, had 16% share, advanced a lot also. In fact today we can say that we are a leader in brake linings in Mexico.

If I'm thinking about the revenue of Daconcsa, estimate for this year is $5 million realized. Half of this has been realized already, we're in half of the year.

I can think about the same dynamics in our customer that also grew, is doing excellent work with our products. We're very happy to advance there.

The introduction of new lines, like the brake discs of Fremax that were sold in a different manner before, are still in a increase or growing ramp. There's still work to be done, but the competitiveness that we imposed combining Daconcsa with Frasle Mobility gave us a sprint, a possibility to grow in volumes in a few lines.

We have seen this as very reasonable regarding what we have in regarding sales, American market in motors were growing year after year, a little bit more shy, around $13, $14 million a year dollars, were growing around 20-something percent in the first quarter due to the strategy change as we mentioned, the eagle project that we have mentioned. We have seen South American countries increasing volumes.

North American market is buying at levels that are similar, a bit more than last year. Pontalti mentioned we have a bias of being better as the volume of trucks is realized.

In Europe, we have new customers, OE that buy more. We have the introduction of new product lines.

Gemtec is suspension, steering, that are impacting. When we add everything up, sometimes a growth strategy is not robust in one project, several small seeds that were planted during decades that start to show up as the horizon of sales increase.

This summarize a bit, and we cannot say for sure, but we are moderate optimistic that we can continue in this bias of growth when we think about North American heavies. Brazil has difficulty regarding credit, trust.

This moment of instability due to the elections, it's not so clear to us if it will consolidate in a robust way. We have Esteban here, if he wants to add, you're a lot more connected to the domestic market here of how the trailer production is and trucks.

You can add if you like, please.

Thank you, Hemerson. Congratulations for the results.

The truck market and trailer market is still compromised due to the current interest rate. We don't see a meaningful change while the interest rate levels are at this level.

We don't see improvements.

Thank you, Esteban.

Looking at the second part of your question, it's great to hear from you. Regarding profitability, resilience in the next quarters, I would say that we depend on factors, obviously, macro factors, like we had micro factors in the first quarter.

We understand that the guidance, we are comfortable. With the guidance margin, the first quarter was a little bit below, second quarter at the top of the guidance, an average in the guidance we have the recovery of additional volumes, Nakata second semester.

If there isn't a big exchange rate unbalance, and the stability will be maintained like today, we're always paying attention, anticipating the volumes mentioned, especially looking at the tax reform. This can bring some issues in the short term in terms of revenue, regarding cost can be impacted.

I don't see anything that's compromising, that doesn't allow us to navigate in the margins in this semester. Still very cautious due to the macro environment that we're undergoing.

Some moments of instability that are strong. We continue firm and optimistic regarding the second semester in terms of conversion, despite that revenue is a big challenge.

Thank you, Anderson. Connected to this question, Gabriel had requested information about co-manufacturing, how was our planning, if you can mention this.

Thank you for reminding us. Hemerson mentioned a specific project where we will have a mix of co-manufacturing, hydraulics to Mexico.

What I can say, some small production lines in Mexico make more sense currently co-manufacturing, and as in Mexico make us want to invest more locally, and we like this mix 40/60 for many reasons. First, to own your manufacturing, avoid the pure white labels.

We need to have the technical know-how regarding the product that we bring to the market, to develop competitive sources beyond the traditional. 60% of our parts is being made in China currently.

We want to have this differential. We also want efficiency in cost in our operations that are not India or country of origin.

We are paying attention. We look into this daily, challenge ourselves to have the lowest cost possible where we operate.

We don't have any guidance that's purely co-manufacturing or purely our own manufacturing. We're very flexible regarding this.

In a first moment, when we want to occupy space in a market, sometimes it's easier to do the investment as the volumes consolidate. High volumes also make investment for CapEx more safer.

This is the day-to-day dynamics. We don't have a preference for an agreement.

We want the best results.

Thank you. Thank you, have a great day.

Thank you, Gabriel. Next question from sell-side XP analyst Lucas.

We have opened your mic and you may ask your question.

Thank you, Jessica. Good morning, congratulations on the results.

I have a follow-up with the margin question. I don't want to exhaust this, but trying to understanding the timing of things, talking about the exchange rate, if you have the favorable impact in the stock, in raw material that you end up putting in COGS, but the natural effect that we would expect in a pricing challenge scenario that you mentioned during the call, we imagined this domestic revenue would reflect the appreciated exchange rate and the margin would normalize due to the accounting issue, the marriage between unitary cost Just understand the timing.

Do you see at the end a normalization in the shelf product in the shorter cycle of production where you have a quick marriage of price and market dynamics? It's not so clear.

Pontalti mentioned the renegotiation of contracts more for '27. I don't know when we would see the marriage between unitary cost and revenue impacting the results, especially in the short cycle products, looking at the exchange rate dynamics.

Another, more to clarify this profitability issue and the exchange rate issue with the domestic market. Second point, we see the leverage continuing to happen.

It shouldn't be very far from 1x by the end of the year. Yet, at the same time, you have an important year, '27, capturing synergies and conclusion or continuity in the integration of Daconcsa process.

Thinking about what we can see in terms of allocation of capital, when we have the Daconcsa integration scenario, M&A, should be left for later and you have an out, or should expect the company is comfortable running unleveraged levels? Thinking about how you can look at leverage without M&A and capital allocation.

These two points: the exchange rate accounting issue that you will see it in, and capital allocation leverage.

Thank you, Lucas, for your questions. Anderson, since you were already answering, you can clarify profitability, especially connected to the domestic market.

Hemerson can comment regarding the unleverage payout.

Thank you, Lucas, for your question. When we don't have exchange rate oscillation, this will stabilize margin.

Inflation is under control currently. We should have stable margins, in Brazil specifically, more stable.

What happens in the first quarter, we have an important decrease in the exchange rate. First things that you have, you have a margin reduction because the cost, I'm looking at the previous cost, and the second quarter, we have a normalization.

It's important to mention a few words. We are serving with a price that's leveled the second semester, especially in the Brazilian market.

Navigating margin, that's very important, notorious at Daconcsa due to the synergy. This is very important.

In the Brazilian market, when you open the gap a lot, you have the competition working, you have space to gain market share. You need to defend with price.

It's not the moment, it's not a fact, we're not doing this. We saw in previous cycle, when you have higher profitability above all with a dollar base, you have to make some movement.

It's not just imports. A lot of our commodities have a market dollar.

In oil, rubber, packaging, all of this is associated to the dollar, and oil that goes against this. We have inflation pressure in the second semester also.

We need to pass on this inflation pressure with oil and look at the exchange rate oscillations. Second quarter brings a normalization of margins and prices.

Let's see the inflation dynamics and competition movement that will demand movements on our side. I would like to stay with quarters like this one.

The world is not like this. We have a lot of companies in the market, macro and micro that can affect.

We're very comfortable that we will be with a consolidated margin in the year inside the guidance, far from the lower levels or threshold. Thank you for the participation.

Thank you for your questions.

Just to add regarding Anderson's comment, we have talked about the synergies a lot. There are things that are in a result composition context that we can have opportunistic concepts and others are legacy.

The fact that we are performing in a better competitiveness in Mexico with products that we sell, the fact that we're introducing new lines, these are cycles that create synergy not only in Mexico, but in the Frasle Mobility ecosystem. When you import more from Mexico to Brazil brake pads, you leave margin in Brazil, Mexico, you buy master cylinders from Controil, and you prove Mexico and Brazil.

When you combine the purchasing volume, Daconcsa, Frasle, Controil, you have a price that permeates all units. This is legacy.

We don't lose this due to exchange rate and others. We're very happy that this is happening.

We had the security of this, but the market looks at the short term and wants to see every day, but it takes some time. You start negotiating, new item validations, thousands of items, it takes time.

You put in an order, it takes time. You have stock, has to consume the stock, and you look at the average price, it takes time to see this, but it's happening.

On the positive side, and it doesn't have to do with exchange rate and opportunity, fundamentally, we're working the same way we worked. This will become legacy.

We had good quarters that stayed and changed the level of the company. We're living this moment again.

I'm saying this since the Daconcsa acquisition is structuring acquisition that will help us to grow and keep profitability levels. Going back to your leverage question, we maintain an active agenda, Pontalti mentioned this, regarding M&A.

We are not 100% very much connected to Daconcsa performance, but we do have space. We're working on projects that will bring to us possibilities to maintain our growth rate, reinforcing we have the choice to be a company that grows.

We're a compounding company, many aspects. This was a challenging year in many ways, operational issues like Nakata, exchange rate is something that we didn't forecast, have low levels like we had in the first semester as a whole.

We are a company that seeks to have a growth level

We don't hear you. Are you back?

Is it back?

It's an issue with the connection. Back.

We are a company that wants to maintain a good growth level, and this goes through having an acquisition agenda. We have a lot of space to occupy in product lines that currently we don't know how to occupy.

I can tell you we're working on things. I don't know if in '26 or in '27.

No closing will happen this year because you don't have the time to make the normal cycle, but I can guarantee that we will bring a growth base, better revenues, more synergies, and this will impact the circuit more possibilities to improve the net profit and the P&L of the company. The fact that we leverage has to do with the growth rate maintenance.

There's still a lot of opportunity. This is the flow that we want to guide the company and the impacts that it has on the margin.

Great. Very clear answers, have a great day.

Thank you, Lucas. Thank you for your participation.

Our last question comes from Gabriel Frazão from Bank of America. Gabriel, your mic is open, you can ask your question.

Good morning. Thank you for the opportunity.

One last question about Daconcsa, specifically the increasing synergy going to $15 to $24 million that you mentioned at the beginning of the call. If you can hear from you, what surprised you in a positive way since you acquired the company?

The main leverage synergy was higher savings in cost, or you identified more opportunities to launch more products in Mexico with a competitive market with the leaving of first brands? This one is for you, Hemerson.

When we talk about Daconcsa, I'm excited. I'm in Mexico, I'll get some tequila and tacos.

We're very surprised in many aspects. Thank you for your question, your participation.

One thing especially: Daconcsa, we knew it was a jewel. It had a very high reputation in Mexico, space to grow, to advance.

We had this very clear since the beginning. Ku did the best they could with the company.

It was not their core, talking about auto parts, selling auto parts, making this grow. It was a side business for them.

For Frasle, Daconcsa is 25 to 30% of our revenue. It changes completely the focus that we give, the focus to the operation.

What surprised us? To find several opportunities in terms of process, plants, quick improvements where we can implement quickly the change, leaving an importing company to a company, a co-manufacturing company like we did, brought a lot of synergy.

It shows, obviously, if we look at the results that we already have, it talks about our business case in the sense that the cost area, at cost adjust and expenses, is a lot better than we expected due to the opportunity we explore together with Frasle Mobility. The focus on new revenues in the North American market, we forecast to have twice as much the motor parts by 2030.

Why? Because we focus in the structure, we're investing in this.

The other areas, yes, we had benefits, especially in brakes, in heavies, due to first brands leaving, but first brand didn't act in motors and other segments. There are several good things that we are doing that are leveraging.

From the point of view of what we found, we have an executive team that's very senior, very committed. With this change, they were energized and they saw how good it is to be a part of the group Frasle Mobility, Randoncorp.

Their analysis changed regarding growth. We just promoted a director from Daconcsa that will be a global director of supply chain for Frasle Mobility.

We have a structure in China with Daconcsa people in China. Very positive things for the team there to grow.

That's it. I invite Gabriel and everybody here.

We're going to bring new things, this Daconcsa synergies in our Universo Frasle. We're preparing this material so you can understand how we integrate a company.

Thank you so much.

Thank you, Hemerson, super clear. Congratulations on the results once again.

Thank you. Answer one last question.

Jonathan will have the space, he's from J.P. Morgan.

One last question, Jonathan, your mic is open.

Thank you, Jessica. Good morning, Hemerson.

Looking at the P&L, a tax alíquota is a bit higher than expected, around 33%. Can you say that there's something specific that impacts?

How do you see this line by the end of the year?

Thank you, Jonathan, for your question. We had one non-recurring, one-off event in the alíquota for the tax.

There was a change in the Daconcsa unit. There was an office change that's doing the tax calculation.

There was a deferred that generated a higher alíquota in this quarter. Our expectation during the year, it should be around 22% and most 25%, the alíquota that the company has been working with the last few years.

There was one-off, but nothing that will change the structure going forward. This one-off should be diluted previous month.

The change in office, there was issues that were corrected. Service center that's shared at Daconcsa since March, we're doing this from a dedicated center.

We found some adjustments that were done. This will be part of the synergies in Daconcsa.

We have better structured processes going forward.

Now it's very clear. Congratulations for the quarter.

Thank you, Jonathan. Now we finished the Q&A session.

I'll pass the floor to Anderson for the closing of the video conference.

I will be brief. This is almost lunchtime.

First, I'd like to thank you. We were me, the board, and the team.

We received the Exame awards. Thank you, the analysts that recognize our work.

We try to do our best to make you informed, as transparent as possible for your analysis. It's great to see you close to us.

This recognition, be sure we're very happy to receive this recognition. We've closed the quarter very positive way.

Our commitment is with the long term, that thesis is solid. The unleveraging happened constant way, generation of working capital, operating cash flow, dynamics of business continues stable.

The company is very stable, the thesis is stable. Now, with financial muscle that is more important, allows us to dream, once again, begin about new flights that are very important going forward.

Daconcsa didn't close the synergy. Nakata didn't finish the synergy.

We have resource structure to bring and incorporate new businesses to the thesis. We have a bigger dynamics, more comfortable for new investments without overlooking the macro.

We do have business challenges going forward, looking at competitiveness. What is ours is well-defended by the team.

Thank you for one more conference. I hope to see you in Extrema.

A warm hug to you all.