Welcome to Intelbras' 1Q 2022 earnings call. My name is Bruno Teixeira. I am now going to share my screen for now. Just a second, please. My name is Bruno Teixeira. I am the Head of IR in the company, and it is a great honor to be here with you today. Today with us are Mr. Altair Silvestri, our CEO, honoring us with his presence during his vacations. He is on vacations right now, but he is here with us in our conference today. Also Mr. Rafael Boeing, our CFO, and Mr. Fernandez, and Marcio Ferreira, our market Head, so that we can start our conference. We would like to inform you that this conference is being recorded, and the playback will be available on the company's website together with the presentation. You can download the slide deck, and you can also see the playback.
In the Q&A session, please send your questions by clicking on the Q&A icon at the bottom of your screen. Please type in your name, your organization, and the language in which you would like to ask your question. We are going to answer the questions in order. When your name is called, please unmute your microphone. 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, they 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 affect the future performance of Intelbras and lead to results that differ materially from those expressed in such forward-looking statements.
With that, I would like to start the presentation itself. I am going to try and be brief as usual, and at the end, we are going to allow some time for Q&A. We have been fulfilling our plans. I believe that this is a very important message that we would like to convey to you. Our revenue grew by 24%, reaching BRL 866 million. Our EBITDA was BRL 105 million, approximately, with a slight increase year-on-year. We should remember that in the first quarter 2021, the company was still operating with an expense level that was restricted due to the pandemic.
Our expenses went back to their normal levels throughout the second half of 2021, and this year, we have already reached the expected levels for the year. Our net profits grew by almost 10%, reaching BRL 98 million, and our ROIC was about 20.6%, which is a more appropriate level in comparison with the investments that we have been making in the company. Here we can see our revenue track record with a CAGR of 24.5% considering the past years, and 24.4% year-on-year when we compare this quarter's numbers with 1 Q 2021. Our EBITDA grew a little bit less, but the track record has been around 20%. Now, if we look at the progress that we have been making since 1Q 2021, we can see that our EBITDA margin went down from 14.7% to 12.1%.
As I usually say, and those who have been in contact with us know, we plan our budget and investments considering an EBITDA margin of 12%-13%, and that is the results that we have been posting. We should remember that the commercial structures are prepared for higher sales levels. So over the year, we are going to see a gain in productivity being reflected on our results. Now, let's talk about the main segments in our company, starting with security, with 54% of our revenues in the first quarter 2022. It is still our most significant segment, with very strong growth in all categories. We can see a robust growth in the access control line, and we have very significant plans in that line, and we are going to continue to build this market here in Brazil.
The supply chain scenario has been improving, but we are still paying extra attention on all movements that happen around the world, including lockdown in China and chipset supply chain. In general, the supply chain scenario for electronic security has come to a more appropriate level in comparison with last year. After an early 2022 that was a little bit slower, we can see now that our sell-out has been improving with a growth of 26% year-on-year in our operating revenue, and almost in line with the fourth quarter of 2021. We know that this is a very strong quarter, and when we can see the security is posting results in the first quarter of the year that is almost on a par with the fourth quarter of the previous year, that is a great sign for us.
Now, when it comes to communication, it accounts for 23% of our revenues. In the 4Q presentation, we told you that we thought that the market was coming closer to the pre-pandemic levels, and that is actually happening right now as well in the first quarter of 2022. The supply chain in communication is still challenging. We can still see some difficulties in the chipset market, and that should last until the second quarter of the year. It happened in the first one, and it is going to last until the second one. Starting in the third quarter, we should start seeing some improvement. It is a challenge that we highlighted last year in the second half of the year, and we can see a drop in our revenues of about 17% year-on-year.
We should remember that in the first quarter of 2021, we were seeing an explosion in the demand for communication. So the results were very good because of all of the market movements that happened because of the pandemic. Also, the business units, including networks and communication, have their expense structures on an appropriate level for a growth. Although the growth was not so significant in this segment throughout the year, it is very important to keep our results and to keep our structures robust so that we can deliver our expected results. Also, I would like to highlight that although the growth of our revenues didn't happen, we can see important movement in the market.
Since there is a restriction in the supply chain, we have to improve the quality of our sales, and we can see that in the one percentage point growth that you can see on the chart. When it comes to the energy segment, it accounts for 24% of our revenues, and we are growing organically according to our expectations. Our perspectives for this year remain very strong. We have a more loyal channel of resellers, and we can see the results of that on our sales. We can talk more about that in the Q&A session if you wish. With deliveries becoming more stable, we can see an increase in the gross margin. We increased our gross margin by almost 2 percentage points.
We have a more competitive inventory, and you should remember that in the fourth quarter, we had to resort to air freight in some lines, and that compromised our margins in the fourth quarter. However, in this quarter, we are resuming maritime freight, and that is contributing to an increase in our margins. We are now starting the integration with Renovigi. We have been talking to them throughout the first quarter, and after the conclusion of the deal, which happened on April 29th, we started interacting with them with more proximity. Now we are starting that process so that we can start reporting their results starting on May 1st. We are going to see an inorganic growth in the energy segment as of May 1st.
Another point that I would like to address here in our presentation is that considering the challenging logistics scenario, we have an inventory level that is very stable for the next quarter. We can see that throughout the year, the inventory levels will go back to the 120-day level, as we had reported in the fourth quarter. Usually, in the beginning of the year, we have higher inventory levels because of the Chinese New Year, and of course, that cannot create any supply chain disruptions. In the first quarter, we always have higher inventory levels, and we get back to the normal levels as the supply chain scenario becomes less challenging, and that level should be 120 days.
We are still paying close attention to everything that happens in the supply chain processes, but we believe that the inventory levels will go back to the normal levels in terms of the use of our resources. Let's take a look at our cash consumption. As a consequence of higher inventory levels, we can see a negative operating cash of BRL 133 million because of the payments and the inventory level that we decided to have in the beginning of the year. We also have investments and funding activities according to plan. It is important to highlight here that as the inventory goes back to 120 days, we are going to see an increase in operating cash generation. That is very clear to us. Over the next quarters, we are going to see operating cash on the positive as usual.
Lastly, I would like to talk about CapEx. We are at the closing phases of some investments. We are now building a solar energy warehouse, and since the business has been growing, we brought that investment forward to the beginning of 2022, and our expansion CapEx is fully in line with the company's track record and our plans. These investments allow us to have the ability to continue to grow, and it is the investment base that has been defined in our strategic plan so that the company can continue to grow in line with our track record. When it comes to the perspective, I would like to highlight the integration with Renovigi. We now have three major fronts for integration. We have the operating front, headed by Henrique, looking at the suppliers base and international freight and international logistics.
We believe that there's a lot of room to gain in terms of costs and also our integration with resellers. The second front is sales and marketing, looking at the commercial policies, the marketing policies. We want to structure a sales structure that can tap on the good relationships that Renovigi has, and we believe that this is one of the major values in this deal. Marcio is at the forefront of this team, contributing with his expertise. Lastly, we have the finance front with Rafael Boeing, and this team is looking at assessing debts and working capital and all financial processes so that we can see the results in our bottom line. With that, throughout the year, we are going to see good results being added to Intelbras results. In the communication segment, our focus is on improving margins and productivity.
We have been working on that very clearly here at the company, and we are going to continue to do exactly that over the next quarters. We know that communication contributes a great deal to our business, and it is going to have a slower growth, but it is going to contribute to the final result. Also, as a highlight, we have the 5G projects that are fully in line with the market's needs. Here at our headquarters, we have been receiving customers that are interested in the 5G projects, and we are proposing business structuring and also product lines that are in line with these market's needs. Our projects have been moving forward according to the schedules, and we are going to start seeing the revenues coming in, of course, at a lower sales level in the beginning.
But we are going to see that 5G will become a very significant part of our business, and Intelbras is going to be one of the main companies in this business. Lastly, I would like to highlight that although we are working on Renovigi's integration, and of course, it was a major acquisition, it was the largest in our history, but we are still looking very carefully at new acquisitions. Each business unit needs more portfolio, more products to complement their portfolio. But we are being very careful in the analysis of potential new acquisitions. We are going to bring to Intelbras companies that add new technologies to our portfolio or channel. So we are being very careful, very cautious. We are not rushing.
We want rather to take safe decisions, and we are going to go to smaller deals, smaller than Renovigi, in line with our track record. We are still considering new acquisitions, but we are being very cautious as the environment requires at the moment. With that, I would like to finish the presentation and thank you all for your presence and start the Q&A session.
I am going to give you a few seconds to post your questions. I can see that some people have already sent out questions. I am going to start with Cristian from Itaú BBA. He is congratulating us for the results, and he has two questions, Mr. Altair. Can you give us any color about the Renovigi performance in the 1 Q 2021? Henrique, who is taking care of the business, I believe that you should bring some details about that as well. When it comes to the solar business, there was a reduction in volumes quarter-on-quarter. Do you think that that is related to seasonality issues, and what can we expect for the short and medium terms?
Okay. Good morning, everybody. Or good afternoon. Starting with the solar business, I do not really understand the question about a reduction in volumes, because there was not really a drop in the volumes in the market. Renovigi, in the first quarter of 2022, posted good results, considering the limitations in terms of capital. Renovigi struggled with working capital, and we believe that we are going to be able to solve that problem and accelerate the results. We considered first quarter 2022 to be very good for Renovigi.
In the solar business, we have been very careful, because we know how complex this market is in terms of having more productivity. Now Intelbras is in a very good position in terms of structure, and Renovigi too, so every growth that we are going to see for Intelbras and Renovigi as a group is going to help us in gaining productivity and capturing synergies between the two companies. We are being very cautious with our sales. We do not want to sell at any price. We are being very careful, really, with the productivity gain, and we want, of course, to improve margins as well with the scale that we have been achieving, considering our negotiations as well. We are very confident about the solar business. Maybe Henrique could complement my answer.
I fully agree with what you said, Mr. Altair. Just to add some information about our inventory, the FX rate was higher towards the end of 2021, and then it went down, and now we are receiving new inventory with new shipment coming in.
Cristian asked us to unmute his microphone, and I believe that he wants to ask more questions. Go ahead, Cristian.
Good morning, everybody. Actually, I wanted to ask the questions by unmuting my microphone, but I have a follow-up question. I wanted to know more about the sales volumes quarter-on-quarter, comparing 1 Q 2021 with 4 Q 2021. Well, 1 Q 2022 and 4 Q 2021. I wanted to know if there was any decrease in any way. We know that the average ticket is very high and interest rates are higher, so was there any problem in relation to that? We know that customers usually get financing to purchase those products.
We don't see any market reduction. What happened in the beginning of the year was that all companies working in this sector had a low inventory level, but now they decided to stock up. We had also a new COVID variant, which decelerated the market over the past 20 days, and some companies were desperate because of that. The market is still very hot despite the higher interest rates. Energy is still very expensive, and I believe that the cost of energy is still going to grow. The returns for investors are still very good. The market is still very good and as hot as it was in the beginning.
Okay, thank you very much.
I believe, Cristian, that you asked that question because of the volumes, the number of units, but we are including Nobreaks and other products in that number. The solar business was very much in line with the fourth quarter. If you look at the data from the regulating authority here in Brazil, you are going to see that the first quarter 2022 was better than 4Q 2021. We actually gained share in the market. Our performance was very good.
Okay, thank you very much.
Also, it is important to note that we are consolidating our strategy in the solar business. The strategy of being the best player, the player that works with smaller projects, and that is our absolute focus. We are consolidating our network. Our network is growing, achieving their targets, and our network is very excited about this strategy.
Okay, now the next question comes from Corina Martins with Citibank. Go ahead, Corina.
Hello, everybody. How are you? Thank you for taking my questions. I have two questions. The first one is about your sales performance in April per segment. If you could give us more color about that would be great. If you could know if there was any issues in relation to seasonality, for example. Also considering the energy and the security segments, I would like to know more information about that. Also, if you could touch on the margins for the year. We saw a decrease in the quarter, and integration with Renovigi will probably put pressure on your margins over the year. So I'd like to have more color about what we should expect, and if the levels should go down a little bit, and then recover after the full integration of Renovigi, and after Renovigi starts operating at the same efficiency level as Intelbras.
Okay, I'll start. Well, April was a very good month. We were talking about that actually before our conference call. We are keeping the same historical growth. Of course, we always want to achieve more than we did in the past, right? We are continuing with our growth level above 20%, even in April. Now, when it comes to margins, as I said earlier, all companies worry about margins, of course. When we grow, we make investments. Investments in plans and machinery, and we also invest in structure.
We have to train the new people, usually eight months or one year before the revenues generated by that team start coming in. We put together our structure over the past 12- 18 months, bringing in new people, and that, of course, puts pressure on expenses. Now we have a full structure that is capable of sustaining our growth for a while without many major fluctuations.
The trend for our margins is going to remain the same with a slight improvement, actually. We should remember, as we said earlier, our margins did not drop. If we look at our results, our pre-pandemic results, you are going to see that they remain the same. We want to improve in comparison with what we had before the pandemic, of course.
I believe that Corina is also asking about the margins from Renovigi when it is fully integrated. It is probably going to be lower in the beginning, right?
Yes, we have already modeled all of those issues. Of course, the solar business has a smaller contribution margin, but it also has a smaller expense structure. With the synergies that we expect to gain and capture, and we are going to capture those synergies between the two companies. After that happens, we are going to be able to keep the same EBITDA level that we had before the acquisition and integration of Renovigi. We're going to keep the same EBITDA margin. Of course, revenues level will increase as well. Of course, it is absolutely important.
Okay. Thank you very much.
We have a question now from [Augusto]. He's congratulating us on the results, and he's asking about communication. The drop in the communication business, is it more related to the shortage of chipsets, or is it more related to a drop in demand after the pandemic? Well, I believe that there are two factors here. The first one is related to components. We're still struggling with the shortage of components, especially for corporate products. The second factor is the resumption of the pre-pandemic levels in the market.
There was a boom in the demand, and we had much more demand than supply at the time. I believe that there is a factor related to commoditized products. I believe that there was an excessive supply towards the end of last year and early this year. Intelbras, according to our strategy, Intelbras didn't really want to start a price war in the retail products. So we actually decided to go a little bit slower on those products that don't really add much value to us. Our main business is the corporate sector, the smaller businesses, and we still have a very good demand in those sectors. We have some component shortage, of course, but we are growing.
If you put together the resumption of the pre-pandemic levels and also the excessive supply of the simpler retail products, all of those factors led to the lack of growth in this segment. Also, there is a complementary factor. In this environment, the market is very heated, and we have a shortage of component, and sometimes we can replace one with the other, and you keep the same revenue level. When the market is not buying so much, that replacement is not so simple to do. So I believe that these are the factors that play out here.
We have another question from [Augusto Crapa from Jewel Asset]. He's asking us about the competitive market, the competitive environment in the solar business. Is there any price war going on right now? Do you think that competitors are more aggressive now, or are things the same?
Well, in the beginning of 2022, due to the shortage of products in late 2021, there was an excessive acquisition of components. Of course, when there is pressure on cash, some players do anything to put their products out there in the market. When we started out in the solar business, when we negotiated with Renovigi, we knew that the market was going to undergo a natural selection and only a few companies would survive. Many wouldn't be able to weather the difficulties and the competitiveness pressure, and that is already going on right now in the solar business. We can see that happening right now. I'm certain that we are prepared for that scenario since we already knew that those challenges were going to come. As I said, this business is very sensitive.
It really requires very good management, and it really requires conscious commercial strategies and a strategy like ours for smaller enterprises and medium-sized enterprises, and not going for the large projects because those are the ones that really kill margins. With our strategy, we didn't have any surprises. Now that we have put together a very strong structure, we just have to manage productivity so that we can grow and gain market share and steal market share from those companies that are not going to survive.
Okay, now let's shift gears a little bit and talk about 5G. Felipe Cheng from Santander is asking us to comment a little bit more on the short-term opportunities for 5G and FWA equipment. Should we expect a significant incremental revenue in 2022 coming from the 5G business?
Well, Marcio and yourself, Bruno, I believe that you are the best people to address that question. I've been away from the company a few days, and I believe that I'm not the best person to address those questions. Okay, so go ahead, Marcio.
Well, as you had already mentioned, Bruno, we are moving forward with the 5G projects. We are going to start the tests with the market shortly. Felipe asked about a significant incremental revenue. It is not going to be significant in 2022. It is not going to be significant, but it is going to exist. It is going to become more significant throughout 2023, but the projects are moving forward very well. We are running tests with our partners, and over the next months, we are going to start tests here in Brazil in a more intense way. Henrique, I believe that you were going to comment on that question.
Yes, we are very confident. We are starting some pilot tests in our plans, and I believe that we are going to see a shortage of chips because demand is high right now. We have many proposals coming in, and there's so much opportunity for us to expand here in Brazil with our partnership with Qualcomm, but in other Latin American countries as well. I believe that this is going to be a thriving business for us, and we are ahead of the competition, especially when it comes to technology. As you know, we are working together with the telcos, and we believe that in a matter of three or four years, this business should account for 20% of broadband subscriptions in Brazil.
T-Mobile offers FWA in the U.S. in regions where fiber is very present, and they added over 500,000 new subscriptions through FWA last year. That is really catching the attention of telcos here in Brazil. We have that strategy of complementing the presence of fiber with FWA. We are confident that this strategy is going to work out, and we can already see good responses from the telcos.
Let me take a look at the other questions. We have two questions from Carlos, from Condor Insider. What do you think about demand for the rest of the year? The second question is about consumers, the consumers' behaviors in terms of pricing, and he's asking if we're struggling with passing on costs to consumers.
Well, passing on costs to consumers, when it comes to that, I believe that we should think about the FX rate. It came as low as BRL 4.6 this year, but since we have an inventory level that is very high and it is hedged at over BRL 5, we didn't really have to change our prices. Now the FX rate is going back to higher levels, and since the scenario is so unstable, we can't really change prices right now, so we didn't have to change our prices.
In the solar business, our strategy is a little bit different. We decided to change prices faster according to FX variations. Every 15 days, we update our price listing according to these costs, the costs that were incurred in the past 15 days. But we believe that this is a challenging year since last year, since we created our budget for this year. But we are confident.
We are confident that despite all of these challenges presenting themselves in the country, considering the inflation rates and presidential elections and war and component shortages, we are still confident that we are going to grow at the same levels that we grew over the past year. Just as a complement, when it comes to consumer behavior and passing on costs to consumers, since we are negotiating and we are selling to small and medium enterprises, it doesn't work like that since we are dealing with security equipment. These smaller and medium enterprises usually have projects of about BRL 10,000. If that goes up to BRL 10,500, that doesn't really make such a great difference for them. I believe that our price list is very stable. I believe that we did not have to adjust prices upwards or downwards.
Maybe we had some one-off adjustments, but the price list has been very stable since the beginning of the year. For this challenging year, we are very confident that things are going to improve in the supply chain as we have seen improvements in the first quarter. Well, I believe that you touched on a point that is very important, Bruno, the corporate sales. Roughly 75% of our sales come from distributors, and we have an automatic price adjustment process. Of course, we always have the challenge of bringing the best products with the best features and the best market positions, and we have been able to excel at that.
Price pressure is not really a problem for us in the first quarter, and we don't believe that that is going to be a problem in the future. We are going to continue managing our prices in a very organized way. There was no pressure coming from the drop in the FX rate. We were able to manage those changes very well.
For those of you who have been with us for a while, you should know that in the most challenging moments, we were still able to keep our historical growth levels. It is also important to highlight that when the market becomes tougher and the cost of capital is higher in the market, smaller players and new entrants give up on the market, and that leads to more room for us. In the moments of crisis, some business lines tend to grow more than when we have tailwinds. For example, electronic security works like that.
That is a very good point, Henrique. That happened in other moments when we had tougher years, and that situation repeats itself. Just as a complement, I think that this is going to address Thomas' question. One of the things that we proposed in the IPO was the growth in the large projects, the high-end project sector.
In the first quarter of 2022, we grew more than 24% in the large project sector, and that brought good margins to the company, an improvement in the average ticket, and it led to exactly what Altair said in relation to the structure. It really shows that our management is appropriate. We have been growing significantly in the high-end project sector with good margins and an average ticket that is very interesting to us.
Exactly, Marcio. This is a very important portion of the market, and we were not present in the market at all. We invested a great deal over the past two years to put together a good team, a good structure, so that we could address those projects. Now we are really reaping the benefits of all of those investments.
Marcio, I believe that you could address Thomas' questions then. Thomas is from Itaú Asset. He is asking about seasonality and how seasonality dynamics work. I believe it would be a good idea for you to finish that point now.
Okay. In the security business, our results were in line with the fourth quarter 2021. Just a little bit lower than 4Q, and over the year, the levels go up. In the first half of the year, it should be 47%-48%. Seasonality, according to our track record, shows that the first quarter is a little bit lower than the fourth quarter. In January and February, Brazilians usually have to incur a lot of costs, and Carnival also has an impact on consumer behavior and decision-making by corporations. Results are usually a little bit below the fourth quarter in the first quarter of the year.
Our budget always considers that context. Yes, since our focus is on medium and small enterprises, usually those guys go on vacations in the beginning of the year, and they take a little longer to make investment decisions and improvement decisions in their businesses. That is very common. During the pandemic, seasonality was a little bit different, but if you look at the historical levels before the pandemic, the environment was like this, 45% in the first half of the year and 55% in the second half of the year.
Okay. We have another question from Rodrigo with SulAmérica Investimentos. He was a little bit late, and he is apologizing for that, and he is asking about two interesting points. The first one is about our expectations in relation to our ROIC for the coming quarters. He is also asking if we still see a need of consuming working capital to strengthen our inventories.
There was a drop in the ROIC because of the investments that were made in the inventory. Now, looking forward to the next quarters, our ROIC is going to grow and be between 25%-30%. We are maintaining that projection that it is going to go back to previous levels. Now, when it comes to working capital, in the first quarter 2022, we finished all the investments in inventory and the use of working capital for inventory, for bringing inventory levels a little bit higher.
In the second and third and fourth quarters 2022, we are going to see a very robust cash generation in line with our track record of strong cash generation. One of the main businesses that is really driving growth here is the solar business, and it brings a very appropriate ROIC level. Yes, actually, it contributes to our ROIC because most sales in the solar business happen through financing activities. So the solar business really doesn't consume working capital. It actually helps us recompose our working capital.
We have two questions from Daniela, a journalist at Valor Econômico. The first one is about exports. Henrique, if you could please talk about our plans for exports and our expectations for the international market. Also, Henrique, if you could talk about M&A movements. If you have any information about new acquisitions, that would be great.
Well, Daniela, we are already exporting to Uruguay, Colombia, Ecuador, and Argentina. We are exporting almost all product lines to those countries, with the exception of solar, but we are still seeing some possibilities for the solar business. We believe that it is very important to make business outside Brazil in terms of expanding our businesses and bringing benefits to Brazil, and also stall the growth of competitors in Latin America. Now, when it comes to M&A, we continue to analyze potential deals in each business unit. Now we are working on integrating Renovigi. We just finished the deal last Friday, and we are now in that process of integrating the company and gaining efficiency as Mr. Altair said in our conference today. We believe that new acquisitions will come. We are analyzing the possibilities here in Brazil and outside Brazil as well. Bruno, feel free to jump in.
Well, about acquisition, we have a list of targets, especially smaller companies. But we now have to be very cautious in terms of managing these companies. Renovigi will be a considerable challenge in terms of integration. Of course, we have to pay attention to our cash. We have to preserve our cash considering the cost of capital. So it is also our strategy to keep robust cash so that we are able to face any surprises that may happen in the market. But yes, we are still paying attention to acquisitions, but with not so much appetite, if you will, because now we have some challenges to tackle. We have to materialize the acquisitions that we have already made over the years.
Yes, exactly.
I was going to say that we don't have any more questions, but a new question popped up here right now. The next question comes from Marcello Ferrari, and he wants to know more detail about the C-level and board compensation. He wants to know more details about the long-term and short-term compensation, and he is thanking us for the great execution and our confidence in our business strategies.
The C-level compensation policy includes a fixed factor, a fixed compensation that is based on the market level. We usually keep our compensation in the third quartile. We also have a short-term variable compensation that is linked to the targets, revenue targets, and income targets, and many other indicators that comprise the target package, if you will. These targets are quite aggressive.
Even if the company achieves its targets in terms of income, for example, and if one sector, one business unit does not, the executives might have only 20% of that year's bonus. While other executives are going to have 100%. So we have a bonus, the annual bonus variable compensation, which is very aggressive, and it accounts for very significant wage multiples. We also have the long-term incentive, which is also linked to our ROIC targets. If those targets are met, the executive will receive a certain portion of the wages, and they can withdraw that amount over the period of four or five years, and a portion of that will only be withdrawn at the end of the person's career here at the company. The long-term incentive works like this.
The executive, the employee, has to contribute with a portion of that amount, and the portion provided by the company and the portion provided by the executive himself or herself is linked to the price of our shares. As the share price goes up, of course, the amount is going to grow, and the opposite also happens. Of course, that is in line with investors' perspectives.
We still have three minutes left in our conference, and I don't see any more questions here in the Q&A box. I'm going to give you a minute to ask more questions. Feel free to post them here. If you don't have any more questions, we are going to finish our conference call for today. I'm going to give you a few moments. Okay, so I think that brings us to the end of our conference call. On behalf of Intelbras, I would like to thank you all for your presence. With that, we are closing the first quarter of 2022, and now I would like to turn it over to Mr. Altair for his closing remarks.
Thank you very much for your presence in another conference call. These meetings with you are always extremely important commitments for us. This is a great opportunity for us to answer your questions. This is a very good accountability moment for us as well. I would like to tell you that this year is going to be challenging for Brazil, but we are confident. Of course, we would've liked to do more than we were able to do, but we have projects, we have plans to address that situation.
As I always tell you, we work with a little bit of buffer so that we can achieve our budget at the very least. We actually want to improve our profitability. We also want to improve our cash generation. We had very large investments now because of the inventory levels that had to be a little bit higher. We are confident that 2022 is going to be a good year, and our performance is going to be very good as it has been over the past year. Thank you very much.
Thank you, Mr. Altair. Thank you, Mr. Boeing and Fernandez. Thank you to all the investors that were here with us. Have a great day. Thank you, everybody. See you next time.