Good morning, everyone, and welcome to our conference call to discuss the third quarter results in 2023. My name is Bruno Teixeira. I am the Head of IR, and it's a privilege to be here with you. With us, we have our CEO, Altair Silvestri, our CFO, Rafael Boeing, as well as our Heads for Security, Communications, and Energy. This call is being recorded and it's going to be made available on our IR website. You can also find our slides on our website. You can download the slides already, and you can all download the audio and video at the end of the call. For the Q&A session, we recommend you send your questions using the Q&A icon at the bottom of the screen.
Please inform us your name, your company, and the language you're going to be asking the question in, and then a pop-up will show for you to unmute. The information contained in this presentation and any statements that may be made during the conference call about the business perspectives, projections, as well as operating and financial targets for Intelbras, are based on the beliefs and assumptions of the company's management and on currently available information. Forward-looking statements do not guarantee performance. They involve risks, uncertainties, and assumptions as they refer to future events, and therefore depend on circumstances that may or may not occur. Investors should understand that general economic and market conditions, as well as other operating factors, may well affect the future performance of Intelbras and lead to results that differ materially from those expressed in such forward-looking statements.
Now that we have clarified these items, I'd like to start the presentation. I'll try and be concise, and then we'll have the Q&A session after the slides have been presented. Let's take a look at our first financial indicators. We see a dip in our revenue in the third quarter. Total net revenue was over BRL 900 million. We're still impacted by the new solar energy setting. This is an EBITDA and there is a lower revenue. The EBITDA is 13.7% lower than last year. That's BRL 128 million. When we have a year-on-year comparison, we have an increase in the EBITDA margin as well as in the net margin for the quarter. Speaking about the net income, we have almost BRL 110 million in the quarter, and our ROIC is just above 20%. As usual, we bring you our track record.
There is a dip of 15% in the quarter-on-quarter revenue. But even with the solar energy context, we have about nine months that are rather stable with a minor dip. From an EBITDA perspective, there is a dip in the third quarter when I do a year-on-year comparison. It's also worth mentioning that we have the EBITDA growing 10% in the past nine months, and the net profit grew about 14%. Now, some more detail on our EBITDA breakdown, and this has to do with what I mentioned already. There is this increase in our margin, and it goes from 13.1% to 13.7%, and this has to do with this operational work that we have been doing from an operating expenses perspective as well as in other aspects, but also the gross income had an impact.
Even in a more challenging scenario, we see that we are delivering good results. From a business perspective, talking about our main segment, which is security, we see that it accounted for 57% of our income with a year-on-year growth of 5%, and a very good gross margin, 39%, almost 4 percentage points higher year-on-year. Even though this increase is smaller than what we had in the first half of the year, there is a sell-out increase year-on-year as well as quarter-on-quarter. We can see that our field activities continue to be executed as per our plan. In this quarter, there was a bit of a mismatch between sell-in and sell-out.
That leads to a decrease in the distribution channel inventory. We normally say that we have about 45 to 60 days for our inventory, and we see that as the replenishment scenario improves, the distributors start working close to the lower- end, and that is what we see in these past six months. The gross margin is more stable at a higher level, and that has to do with our ability to absorb the price adjustments that have been taking place this year. Here we have some more color on how we see our sell-in and sell-out. We have these charts showing the yearly growth for sell-in and sell-out. This is sell-out from the first quarter 2022, and we compare it to sell-out in 2022. There is some stability that is around 15% of growth in sell-out.
Whenever we compare it on a year-on-year basis, we see a growth in sell-out. We see some stability here in our sell-out growth rate. This is quite positive because we can see that it is increasing. Now when we take a look at the sell-in, we see there is more sell-in in 2022. Again, our reference base is 2021, and investors who have been with us for longer, you probably remember that in 2021, that was still during the pandemic. We had some challenges in logistics and in the resources being delivered. We have overcome the challenges in the logistics setting, and it is natural for distributors to build their inventory. When we merge these two curves, we can see this time when inventory was being replenished and reorganized.
This year, we see distributors are working with a more suitable and stable logistics approach. We see a decrease in inventory. In the second, pardon me, in the third quarter, there is a good match here. Pardon me. In the second quarter, we have a good match here between sell-in and sell-out. In the third quarter, then we see that there is a bit of a mismatch because the distributors are working close to the bare minimum of their inventory. We are talking about growth, right? There is a sell-out growth, there is a growth in sell-in, and at no point, not in the past and not now, do we see a surplus in inventory. We see a healthy performance here, which is very important to our operations. Now, communication. That accounted for 22% of our business in the third quarter.
We see a substantial dip in comparison to last year. We have about a BRL 30 million report in comparison to the second quarter. That was the sales of the Ku- band sales, the converters. We also saw some lower revenues when it comes to the expectations for the quarter, especially in the providers and the ISP, internet service providers. We see here a 3 percentage points in our gross margin, and it's fluctuating at a good level due to the reasons that we have mentioned in the past calls in 2023. From an energy perspective, just to cover the three main segments of the company, we had energy accounting for 21% of our revenue. There's also a significant drop year-on-year, but there is a good quarter-on-quarter performance with a 10% growth quarter-on-quarter. Revenue growth isn't representative when you think about volume.
We see the volume rising in the course of the quarter. September was greater than August, which was greater than July, so there is an increase. We're getting to a sales average that is close to what we saw for January at the start of last year. We see that business is picking up. Why is revenue different from growth? That is pricing. That is because of pricing. There is lower pricing now to reflect the cost that we see in the sources and the origins and that the market is practicing. That reduces the gross margin. We see a 9% decrease here, getting to 15% in the third quarter.
That has to do with pricing adjustments and our efforts that will allow us to reduce the inventory at a slightly higher level at the end of the quarter and get into a solar business in a very good perspective for 2024. It's always good to mention that we have our power unit, with UPSs and chargers and so on, and that all of that is happening as per our plans. When we look at cash generation, we can see that it's quite good. Even though we see a drop from BRL 1.3 billion to BRL 1.2 billion, we've got our investments, we have the payment of the loans, and everything is as expected. We're in a very robust cash position, and we'll continue to be in that position. From a CapEx perspective, we continue with the construction works for the new warehouse in São José, close to the plant.
This should still take place in the first half of next year, so we'll probably see another three quarters with investment in the warehouse. Maintenance levels are quite stable, slightly lower than our historical figures. To conclude, and so that we can start our Q&A session, I just wanted to say that the fourth quarter is the best quarter of the year from a seasonal perspective. Those who have been with us for longer, you know that we always expect the first quarter to be lower, the fourth quarter to be higher, and the third and fourth quarter to be closer. This year, third quarter was slightly lower than the second quarter, but they're normally in line with each other. The fourth quarter is our best quarter in the year. That's what we expect to see this year, too. I would like to highlight something.
We announced a partnership with Optic Fiber Asset and Liability partner, and we are working with professional networks and larger size networks, allowing us to tap into a market that we were not able to address so efficiently until now. We are going to be renewing our portfolio in the fourth quarter, and that is going to give us more opportunities in 2024. The company as a whole continues, of course, to try and become ever more efficient. We want to have more operating efficiency, and we are getting to the end of our plan for 2024, and it is clear to us that there is room for improvement in process efficiency. This is how we continue to do it. Some of these improvements can be seen when we look at our SG&A of the third quarter and we compare it to the previous quarter.
A quarter-on-quarter comparison shows improvements, and we have better operations yet expected for 2024. This is what I had for you. Thank you very much for joining, and let us start our Q&A session. We see there are some questions that have been sent already, so let us follow the queue. André Salles, UBS sell-side analyst has a question. Good morning, André.
Morning, everyone. Morning, Bruno. Morning, Mr. Altair Silvestri. Morning, everyone. Thank you for taking my question, and thank you for your presentation. I actually have two questions. The first one has to do with the sell-out chart for security. We do see there is an increase in sell-out that is greater than in sell-in. When you look at the average, if you look at the past quarters, there seems to be a low or slower growth trend.
What are the main causes for the slower growth, and what would your expectations be around a factor that could boost it so that we could have growth close to what Intelbras delivered in the first half of the year? My second question, if I may, has to do with the partnership with FiberHome. This is a market that Intelbras already operates in, and FiberHome stands out in that market. I would like to try and understand what your strategy is to tap into this market, and do you think there is any risk for income to be cannibalized because Intelbras already operates in this market, right? Thank you.
You are on mute, Mr. Altair Silvestri.
It mutes automatically here.
Good morning, everyone. It is a pleasure to be with you again. Thank you for your question, André.
What we have noticed in these past six months is there has been a postponement of projects in the verticals. Some projects that had been closed, some contracts that were signed already, and important clients asked us to put them off a bit because there were some turbulent times recently, right? We noticed that. Now we see that they are a bit more confident, and these projects are being unlocked. This is the only difference that may have had an impact on sell-out. Economy as a whole has its influences, but we have not yet seen such a great impact on projects in general. Now, the FiberHome partnership, and Henrique is going to clarify that further. That partnership will not cannibalize our product line. It is going to add value with new technologies and products that we did not have, address issues that we had.
It is a partner that is going to transform our communication department with other partnerships that we have. It's a new communication department with market share and products that we didn't have. FiberHome and some products that we had together will have better costs at more competitive prices, and that is going to automatically increase our market share. Henrique, can you please make your comments?
Of course. Thank you, André, for your question. As Mr. Altair also mentioned, in this market, we lacked some technology so that we could deliver an integrated solution to clients. I mean to internet service providers as well as operators and carriers. We delivered simpler products to clients, but we didn't have the core products, what is in the provider's structure.
As they are growing, they are looking for world-class technology that is integrated and interfaces end to end, from the start of the process to the customer's home. This is what we'll get with this partnership. Not only electronic items, but also all of the fiber cables. FiberHome is an important player in optic fibers and assets and liabilities. So for the cables as well as all of the equipment necessary for the internet to get to the customer's home, be it an ISP or a carrier.
Just one more comment here, Henrique. FiberHome was already in Brazil with other partners, and now we're an exclusive partner of theirs. We are adding a very important point to this partnership, which is our competence in services, in customer service, in sales, in customer support to all of the providers. This is a very important item.
That was not their forte, right? It was not one of their strengths. So with that, they're more comfortable, right? That wasn't one of their strengths. So this is a very good match, combining their technology and our competence with our channel network and services. So we are combining the best of both worlds.
All right. That makes perfect sense. The answers are very clear. Thank you, Mr. Altair and Henrique.
Thank you, André. Bernardo Guttmann, XP Sell-side Analyst.
Hello, everyone. Thank you for taking my question. I've also got two questions. The first one has to do with security gross margin. It's 40%, right? It's quite important still. It's always great to try and understand the details.
Is there something structural, something in the value-added mix, some special projects, or is it more related to the context, and it should continue to grow as you start or rather, continue to grow? In the solar segment, we see that you're bouncing back. There is substantial growth. We see that systems sales rose 85% quarter- on- quarter. When we look at the indicators, we also feel confident about this recovery with a sales funnel that is now more normalized. I'd just like to try and understand the revenue dynamics and also the margin as you see this higher or priced inventory. Do you expect margins to recover in the fourth quarter already? Thank you for taking my questions.
Thank you, Bernardo, for your question. So first question was about security, right?
That's right. Correct.
It really depends on the product mix, so it may not continue like that. We continue to improve costs, logistics cost, and procurement issues. There may be a dip in maintenance. What we are confident about, and we did not have that much growth this year, so we had time to plan and reorganize ourselves, and we now have much lower expenses than we used to have. We are very excited to forecast a growth in results and in revenue as a consequence of all of the work we have been doing and talking about for a while now. Paulo, would you like to say anything?
Good morning, Bernardo. Mr. Altair already said it well. We had some good improvement in logistics and in costs. We have improved efficiency in our plant.
When you have resources being provided at a stable pace, we can have more stability in production as well, which leads to improvements in productivity. We are a bit lower than the average that we have in the nine-month average, but we are doing really well.
For the solar market, I think Márcio could also say something about it after, but we see the market bouncing back, which is exciting. The only thorn in the side is finishing the inventory at older costs, which is certainly going to take place before the year is out. We go back to the strategy of having loyalty in our channel network, that they do not only think about price and keep on changing suppliers because of price, but they should value the service, the trust. This is our strategy. We want to grow with confidence without rushing as we did in the past.
We are willing to not grow our share, but to have more solid growth. Márcio.
Mr. Altair summarized it well. We focus on consistency, especially in the bottom line. We had tough work this year to reduce expenses and costs so that we could have more consistency in our business and be very result-oriented and to have a team that can deliver. Solar energy needs us to keep our finger on the pulse around what is going on in the market. We know there is natural fluctuation in the market, but we have good omens for the future. Payback is good. Generator average price dropped about 30%, so that is an impact on the revenue in the market. We already have our plan devised for 2024. We want to continue to increase our positive results. We are working hard on loyalty.
We want our resellers to really be loyal to Intelbras and believe in our brand and Renovigi, and the signs that we have been having from July are very positive.
Thank you, Mr. Altair, Paulo, Márcio.
Now, we are going to have Karina from Citibank. Karina, good morning.
Morning. Can you hear me?
Yeah. Perfect.
Hi, everyone. I would like to go deeper into the solar energy discussion. These changes in volumes, are they really showing that the market is bouncing back, or is that a result of the decrease in prices you had? Because you are a bit more reluctant to have a more aggressive pricing position, but you were this quarter. Do you really see that the market is bouncing back, or was it a result of your strategy in pricing? Another question, can you talk a little bit about the communication products, 5G, cables, how it all stands?
Thank you. Márcio, please.
Good question, Karina. What we are perceiving is that the market is improving. We see the banks having more people coming to them for loans. We see from our resellers there have been changes, and we also see the number of quotes that are asked, and the sales funnel is improving. Once the impact of the first half was over, because there was some discussion around taxes and fees last year, but now we see that the payback is better than it was before. Clients who have high conception levels, they will generate and consume on-site. This is very good business, very good payback. We have also seen that the plants are going through a good period that should go up to the first or second quarter of next year.
Digital One is also there, and we see an acceleration in the quotes, and that is a very positive market indicator.
Henrique. Henrique. Can you piggyback on the comment, right? Also answer the question around 5G and cables. We have another partnership, right? That is going to be an important factor for Intelbras to tap into another market that it was not exploring yet.
Thank you, Karina, for your question. Speaking about 5G. We had good expectations that have not yet come true. We have 100% of market share in the CPEs, the little product where you will fit the 5G SIM card. So we have 100% of the market share of that type of product that is sold to the market through the operators, to the carriers. Everything that carriers are selling on that front is Intelbras brand.
We have new products that are going to be launched for the new SIM cards, and they are very good costs. They will be close to the cost of the fiber point delivery. As for the Tubarão plant, the Tubarão plant is going to be more productive. That is where we produce our fiber cables and our copper cables for networks. Till the end of the year, the Tubarão plant is going to be producing more and with raw materials, more adjusted to our current scenario. This is definitely going to be helping the company positively. As for the other partnerships that Mr. Altair mentioned, we have a partnership with a Chinese company. I cannot yet tell you the name of that company. They are a market leader in switches in Asia, and now we are going to also be tapping into a market that we were not in.
Switches for companies and data centers. One example is that in Intelbras, we did not have in our network department the devices that would meet our own network needs. Now with this partnership, we can support companies like Intelbras end-to-end. By the end of this year, we will have new products launched. We have over 100 products that are going to be launched in total, and we have access to a new market that we did not have access to. That is why we are very excited about what is to come in communications next year.
All right. Thank you very much.
Thank you, Karina. Now, Christian. Itaú BBA, Sell-side Analyst, please. Good morning, Christian.
Thank you, Bruno and Altair, and everyone. I have a question around security and sell-out. The sales cycles, the terms, the dates. That is one question I have.
How that works, and should we expect the sell-in levels to be normalized soon? The results that we see now, does that suggest that the inventory levels are as they should be? Are we matching the cycle to the sell-out? These are my questions. Thank you,
Christian. I have been keeping my eye on our inventories or rather the distributors' inventories for a long, long time. Their inventory, them having it or not, will really amount to 15% of our yearly revenue. Whatever changes they make, having 40 to 60 days, that will lead to an important difference, substantial difference. Our perception is that their inventory is at a level that whatever there is in sell-out, there has to be replenished. They did that with this increase in interest rates and so on. They learned the lesson. We train them.
We teach them how to look after their cash flow. Then we have, or they have their inventory levels as low as they can to meet customer needs. Now they have reached the minimum levels, and now it has to be at the same level as sell-out. Paulo, could you please complement and answer the second part of the question?
I think Mr. Altair answered that well. We understand that. There was another question, it escapes me now. I think it was around the same question, understanding the distribution cycle, if it is shorter.
I think you can talk about it, Paulo.
I think Mr. Altair said it well. Sell-in and sell-out, they were well matched. We have a short cycle. That is the turnover. That is why we have the 45- to 60-day turnover in the inventory.
As we understand, we got to the lowest healthy level, then sell-in should start being in line with sell-out so that you do not have the mismatch that Bruno showed in the chart in the past quarter.
I have another question around a different subject, if I may. Looking at communication and the partnership with FiberHome, do you have any CapEx investment that will be necessary for the new products? How is that going to come into your production line?
Our greatest investment, Christian, has already been made. It has to be operating as of the end of the year. This is basically personnel. It is in engineers, people in Asia working with product adjustments. The main investment is already part of our expenses, even though our expenses are going down. This is something that really makes us very comfortable.
We are really ready to take this next step with very little investment in infrastructure or expenses. Is not that so, Henrique?
Yes, absolutely. Having reached what we expect to in sales, CapEx might be necessary for us to expand our plans. We have our plans built. There is room for expansion in the existing plans already. This would not be major investments.
All right. Thank you very much.
Thank you, Christian. Now, Marcelo Santos, JPMorgan, Sell-side Analyst. Good morning, Marcelo.
Morning, Bruno, Altair, and everyone. Thank you for having me. I have got two questions. The first one has to do with the security inventory. Just to try and understand the historical aspect. Sell-in in 2022 was really strong comparison to the sell-out. You mentioned that in 2021, there were some supply issues.
Were the suppliers running at the maximum level, and then in 2022, they went up to very high figures, and then they are getting back to lower figures now? That is my first question. You had a BRL 45 million revenue going from the third to the fourth quarter in the release. Does that have to do with the inventory? I had understood it would not have to do with that. So where is it?
Bruno, can you answer that question, please? Bruno, please.
Yes. The inventory in 2021, they were not at minimum levels. We had some supply issues, so they were below minimum levels in some business lines. It was rather chaotic from a raw material import perspective. So it is a complicated base. As the supply issues were resolved, then distributors were able to reestablish their inventory levels.
2021, there was still the pandemic, so it was still challenging. I think the main message now is that there are moments where distributors will have higher inventory levels, sometimes lower. I think that is the message, and we see that sell-out continues to grow. It is quite stable. I think that is the main point. What was your second question again? I forget, sorry. Oh, the cutoff, right? The transfer of sales. To try and simplify, the cutoff exists in every quarter. In every quarter, you have sales that were performed in the previous quarter but were not written as sales for that quarter because they have not been delivered yet. What happened in the third quarter is that this amount, which is normally that much, it was more substantial this year, BRL 45 million, as we mentioned in the release.
We can look at these BRL 45 million in the same level as the revenue reported in the third quarter. About 50% is security and 50% is communication and energy and power.
All right. Thank you very much for your answer.
Let us continue with the sell-side analysts, and then we go to buy side. Fred from BofA. Can we unmute Fred, please?
Hi, Bruno. Thank you. Hello, everyone. I have two questions, and I apologize for stressing this subject around the distributors. I would understand that you have several distributors, and the impact seems to have been substantial in this quarter. All distributors are moving in the same direction with inventory, right? There is not one major distributor that is going to lead to a major disruption. The whole of the distribution chain reduced their inventory. Is that something that is happening across the board?
That is my first question. The second point has to do with communication. Our understanding here is that you had been doing well in the quarter, but there was a substantial worsening in the last month of the quarter. Was that correct? Are we reading the data right? You have an expectation that the fourth quarter is going to be better? Still, within the same point, how long does it take for you to have the sell-out information? Is it 15-, 30-, 60- days? What caught our attention here was the expectation. Assumingly, there had been changes in the course of the quarter. Thank you.
Bruno, would you like to take that one?
Yes, sure. Fred, sell-out is informed to us on a daily basis, and there is a two-day delay in how updated the data is, right?
When we look at our sell-out information, well, with the sell-out taking place, it is expected there will be a sell-in. I think this is the natural way for the operations to run. We see a growth in revenue, and we get to the end of the quarter, and we see that the distributors have their sell-in figures. In the third quarter, this year, it was a bit different to our history. We do not really see a generalized move for everyone agreeing to reduce inventory levels. Not really. When we look at the sell-in and the sell-out charts that we showed in the presentation, we can see that since the first quarter that has been happening. That was voiced more clearly in the second quarter that there should be an interest in reducing inventory levels. We can see that in the chart, the trends are similar.
It is really in line with sell-out. Now we see that the sell-in levels are different to growth in comparison to what we had seen in the past. That may be where the expectation is different, right? I think this is the main point worth mentioning when it comes to the way each period behaved.
All right. Thank you, Bruno.
About communication.
Yes. You mentioned the providers, right? The suppliers. The general scenario for communication in the whole market is that a year has been very difficult. In broadband and the backbone reconstruction for carriers and for providers. This really is an effect caused by what is happening in the market.
When we look forward, though, this business, especially the communication business, considering the new technologies that we are bringing in and the new partnerships that have forged, there is a trend for improvement, or we expect improvement. We are tapping into markets that we were not a part of before, so we expect growth. Just let me see if I understand correctly. There has not been any changes in the quarter. It is a difficult year and there was no specific thing that led to a worse month. Correct. There is nothing specific that led to a worse month.
All right. Perfect. Thank you.
All right. Now, Cesar, the Santander analyst, please.
Can you hear me?
Yes, we can hear you.
Good morning. Still talking about the sell-in, sell-out mismatch.
Considering distributors are running close to the lowest level possible, and the fourth quarter is a stronger, better sales month, is there a chance for a positive mismatch, so to speak?
Cesar. Distributors are unlikely to increase their inventory levels in this last quarter. Considering the cash need they have. They have to pay Christmas bonuses, they have to pay vacations. There should be a balance, but not a reduction. There is a logical trend, and we see it this month already expecting to have a better quarter. As I said, the only thorn in the side for our results is getting to sell everything in the solar items that we had with the old pricing.
Now, another question I have about communication. How much was the performance impacted because of sell-in, sell-out, and how much was actually just a lower sell-out?
Communication is very much focused on the providers. Our team is working close with the providers there. It is basically sales to the business specifically. You do not have high inventory levels at the end of the process, right? We see the exact same movement as we see in security. There is a minor reduction because of a lower sell-out. We understand that they got to the right levels in their inventories.
All right, perfect. Just to make sure that I understand, sorry. I would expect the dynamics to be slightly different than security and sell-out, but this is because of this mismatch, yeah?
Yeah, that is right.
Sorry, one last comment. The LNB devices, they were expected to be sold this quarter. That is the Ku- band. EAF is going to have good revenues in the fourth quarter and some of it next year.
All right, thank you.
All right, Julia Monteiro. Morning, Julia. Julia, we cannot hear you. You are still on mute. All right, so let us move on to another question. We can try to go back to Julia after. Victor Vasconcelos. It is an Alpha Key Buy-side Analyst. Morning, Victor. Are people unable to unmute? Victor actually sent us this question in writing, so let me read it. It is asking about the reduction in the distributors and inventory levels and the impact that has on our inventory levels. We understand that we should keep the current levels or if we should reduce our inventory levels in days for the coming quarters, too. We are not changing our inventory policies. We have some fluctuation. Sometimes there is more today and less tomorrow. They may increase their inventory levels beyond sell-out. So our inventory policies stay the same.
We continue to aim to reduce our inventory in the number of days.
Correct. Yes. We stick to our policy, which is the ideal level that we deem to be ideal.
The next question is from Julia, it is also in writing. There are signs that the imported pieces are going to increase in pricing, right, because of the fees and taxes imposed by the government. Does that impact us? What benefits are there? Probably talking about something done last year where the percentages, the fees to be paid in IT and telecommunication taxes were nulled, but that did not have an impact on our product lines. The $50 point does not really make a difference, right? Most of our channels are through distribution and professional channels. It is not a concern, right?
Renato has two questions that are different to what we had, and we can continue with Rafael then for that. What is our hedge strategy? They ask here around the uncertainty around the currencies, right? The currency exchange, reals and dollar.
Hi, Renato. Our policy is the items that have gotten to our inventory physically, they have arrived physically in the company, we do a 70% hedge, which means that the next 60 days they are always locked and protected. This lock aims to have a position that is close to the average cost that we have in our inventory. So we always try to match what we have in inventory with the liability for the coming 60 days to be protected.
On a daily basis, we will look what we have in the coming 60 days, and we will make the adjustments as per the foreign exchange and take into account what is already in our inventory so that there is no mismatch in cash levels in the coming 60 days, really.
The very last question is from Vitor. Can we talk a little bit more about the acquisition of the Colombian company called Allume? Vitor is his name.
Vitor. Henrique can talk a little bit about that after, and Henrique is the coordinator of this project. We are always thinking about this strategy to acquire a company that has similar products in the country so that we can be fanning out in our international approach. Intelbras started operations from scratch in other countries in the past, and that is more difficult.
In Colombia, we have a very similar market to Brazil. It is also an important market. It is 20% of the Brazilian economy. It has got good standards, Intelbras is well-recognized in the market, and we are going to operate with our partners there. They are going to continue with us for some time. We are going to expand the market. We are going to garner experience and consolidate the model so that we can take other steps in other countries. This is our strategy. Henrique, you can comment on it, please.
The company is at the same level of competitiveness as Intelbras, and they have over 120 distributors. They are in Cali, Bogotá, Medellín , and Barranquilla. That is very important for our international development. The current business partners will continue to be in the business.
We have some expats already, one focusing on logistics and one focusing more on finance. Everything that we can do there, that we do in Brazil and works, we want to replicate there. It is a very open market, and we are also prepared to adapt our model should we have to operate differently there than we do here.
All right. We have no more questions, and I would like to give Mr. Altair the floor for him to make his final remarks for our third quarter 2023 conference call.
All right, everyone. Myself and the team, we see a much clearer future for Intelbras now than we did in March this year. There was the impact in the solar industry, the partnerships, there were adjustments in the infrastructure and expenses. Now we see clearly what is to come.
Of course, whether the economy is going to be different or not, if it is going to be better or worse, we are not too concerned about that because Intelbras is going to be different. We have a new communications department with more competitive products. It was a market that we did not operate in because of technological issues. Our expenses and costs are better adjusted so that we can be more competitive. The solar segment, is now doing better when it comes to all of that pressure around share and so on. We are going to address the old costs by the end of this year because they still have an impact on our profitability and our income. In access control, we are very well in line with what the market needs. In security, even though we already have a very good market share, we can still grow.
There is still room for growth with new technologies, with new services. Verticals, projects, partnerships. With Dahua , we are investing in new verticals, and that is leading to an even better market. We are quite confident that we weathered the storm, and everything points towards a better year in 2024, where we are going to go up. We were not making much progress this year, or we were not growing much rather this year, but now we are going to go back to growing next year, completing many processes that we had been working on, adjusting strategies for the solar business, and we are very confident. That is it. Thank you, everyone, and we will see you in the next quarter.
Thank you, Mr. Altair. This is the end of our third quarter 2023 conference call. Thank you, everyone. Have a good afternoon. Thank you, everyone. Bye-bye.