Earnings Call: Q1 2021

May 18, 2021

Good morning, ladies and gentlemen. Thank you for waiting. Welcome to Yoshpimaxion First Quarter 2021 Earnings Conference Call. Present at the conference today and available for the Q and A sessions are Mr. Marcos Oliveira, Chief Executive Officer Mr. El Cio Ito, Chief Financial and Investor Relations Officer and Luis Abreu, Strategy, M and A and Investor Relations Director. We would like to inform that this conference call is being broadcast in the Internet at the company's website, www.eoshpi.com.br, and the presentation is available to download at the Investor Information section. We also inform that all participants will be in listen only mode during the company's presentation, and then we will start the Q and A session. During this call, in case any participants should need assistance, Before proceeding, we would like to mention that forward looking statements are based on the beliefs and assumptions of Yoshipi Maxion's management as well as information currently available for the company. Forward looking statements are not guarantees of performance, involve risks, uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur. Now I will turn the conference to Marcos Oliveira, Iospe Maxion's CEO. Mr. Oliveira, you may begin your conference. Good morning. Welcome to the Q1 of 2021. I will follow the presentation available at our website. The Q1 2021 is marked, but we still are focused on the health of our collaborators, their families and communities through protocols aligned with the orientations with the competent bodies of each location. In this period, we observe a scenario of recovery in a challenging environment for the automotive industry because of the uneven as the lack of power related to low temperatures in North America observed in February. The global market, excluding China, presented a 0.8% growth compared to the previous one and although it's relevant, more than 20% compared to 2020. The demand for trucks contributed in a positive way for the results in Asia and America. On Slide 2, we can observe the recovery of the global market in the automotive sector. After a fall of 21% of light vehicles in 2020 compared to 2019. Although the challenges observed with the supply chain including and the gradual opening in different markets related to the pandemic in the 1st semester, we can see a preview of a growth, excluding China, in 2021 and 9% growth in 2022, bringing the industry to the levels of 2019 in the next year. Yashpi Maximo maintains its agility and flexibility in adapting to changes in demand in all markets. On Slide number 3, we can observe some of the highlights of the Q1, increase of 40.8% and net income when compared to Q1 of last year. Adjusted EBITDA of BRL374.7 million with 78.5 percent with a 12.0 margin. We have a cash position of BRL1.5 billion in the Q1 of 2021. That's an increase of 33.1% compared to the Q1 of last year. Our leverage net debt and adjusted EBITDA is 5.73x. That's a reduction compared to the Q4 of 2020, which was 6.46x. We have important financial operations as a waiver of covenants for 2021, funding through Biena da Es and BDMG around BRL940,000,000 and a sustainability linked bond of BRL400 1,000,000, which we'll talk later. On Slide number 4, we can see the increase in revenue consolidated revenue of 40.8% in the Q1 of 2021, reaching BRL3.1 million in this period. This increase of around 18% when compared to the Q1 of 2020 when we excluded the impact of the tax variation, the increase of income in the 1st semester was impacted positively, especially in the greater sales in Brazil, North America, Asia and also the increase in sales in the aftermarket and trailer segments in Europe. It's interesting to observe that the income the company's income in the Q1 of 2021 increased in different segments, but also in Asia, representing 11.4% of the total revenue, already showing the impact of the revenue coming from our new aluminum plant in Asia. Our revenue also had a positive impact in our stamped plant in Mexico where we started last year. In the Q1 of 2021, South America revenue represented, especially Brazil, represented 25% of our consolidated global revenue and the rest around 65%. On Slide number 5, we can see the revenue by product. We can see an increase in the steel wheels participation. In 2020, the Q1, it represented 29%. In the Q1 of 2021, it represented 23%, especially showing the increase in the market of trucks in Brazil, North America and Asia. Slide number 6, we can see the revenue the revenue by client. We can see the variation of clients that were impacted, especially because of the variation of growth and participation in different segments of the company. We can see growth in some of our clients, in our Asian clients and also in the replenishing sector that represented in the Q1 of this year. On Slide 7, we can see the operational performance in the main regions, starting with South America. The growth was 52.4%, reaching BRL785 1,000,000 in the Q1 of 2021. It's interesting to observe that the growth in the production of vehicles for the Brazilian market, it was around 0.8% for light vehicles and 24.7% for commercial vehicles between the first quarter of 'twenty and Q1 of 2021. On Slide 8, looking at North America, we have a growth of operation revenue of 30.2 percent, reaching BRL869 1,000,000 in the Q1 of 'twenty one. As I previously mentioned, impacted positively by commercial vehicles sector and affected by the which affected the production of some plants in North America. We can see that in the performance of the market, the light vehicles production fell 4.6% as commercial vehicles grew 3.4% when compared to the Q1 of 2020. Participation in consolidated net operation revenue represented 27.8% in the Q1 of 2021. On Slide number 9, looking at Europe now, we have a 31 point 7% growth in the net operating revenue, reaching BRL1.1 billion in the Q1 of 2021. The growth in the net operating revenue in Europe was impacted by the exchange, but also increasing sales for wheels, especially for trailers. And when we look at the production of vehicles, vehicle production in 2021 Q1, we can observe a stable market between the Q1 of last year and the Q1 of this year for light vehicles and a decrease in 7.4% in the commercial vehicle production for the first quarter of 2021. On Slide number 10, we can observe the Asian market and others, especially Asian. We can see a growth of 87.7% in net operating revenue, reaching BRL357 1,000,000 in the Q1 of 2021. We can see the recovery in the Indian market, increase in sales in for commercial vehicles in China, the ramp up of aluminum part plant of a Maxium's plant in India and a slow market recovery in Thailand. When we look at specifically the markets in India and Thailand, we can see an increase in production of 21.9% in light vehicles in the Q1 for 2021 and an increase in 10.2% for commercial vehicles. Thailand, with a more modest growth, presented 4.6% for light vehicle sectors in the Q1 of 2021 when compared to the Q1 of 2020. We can observe a more participative in the consolidated net operating revenue, presenting a growth of 8.6% for compared to the Q1 of 2021, which is 11.4%. On Slide number 11, we can see a gross profit of BRL410 1,000,000 and that's a growth of 122.2 percent when compared to the Q1 of last year. That's an 8.3% growth for compared to 13.1% in the Q1 of 2021. This increase is due to the revenue growth and greater operating leverage. There's a positive impact in the restructuring implemented action through the year of 2020 already reflecting in the Q1 of 2021. Slide 12, we can see the adjusted EBITDA of the Q1 of 2021, that's a growth of 5%. And the growth in the EBITDA margin from 9.4% to 12%. We had expenses of internal restructuring of BRL4.9 million in the Q1 and BRL6.9 million. The first matter was benefited from the devaluing of the purchase the put option to purchase a shareholder interest in subsidiary of Pisco Fins represented $5,100,000 The Q1 of 2021 benefited the gain generated by the sale of land not used by the company, BRL 2,500,000. Slide 13, we can see the net income of the company of about BRL52 1,000,000 in the Q1 of 2021 in comparison to BRL9 1,000,000 in the Q1 of 2020. On Slide 14, we're able to see the reduction in the level of investments at the company, and that was a reduction of 46% between the Q1 of 2020 and the Q1 of 2021 when we have invested BRL 59,000,000. Excluding the effect of the exchange rate, the reduction of investments in 2021 would be at about 54 percent in comparison to the Q1 of 2020. The main investments of the company have been related to health and safety, maintenance, improvement in productivity and the launches of new products. On Slide 15, one is able to see the leveraging of the company or liquid ratio over adjusted EBITDA of 5.73x over the Q1 of 2020 and a subsequent reduction of 7.3 percent to 6.46x in the last quarter of 2020 and then BRL 5.73x in the Q1 of 2021. Our liquid ratio was BRL 4.57 billion and our adjusted EBITDA for the last 12 months was BRL709 million. I'd like to remind you all that we still have the impact the negative impact of the Q2 of 2020 when we had an EBITDA that was impacted by the significant reduction of 70% to 80% in the production of vehicles during the Q2 of last year. We can also see the level of liquidity of the company of 0.46x in the Q1 of 2021. By the end of the Q1 of 2021, we have a long term funding contract in place of BRL940,000,000. That amount was not disbursed during the Q1 of 2021. In case the value of lines had been disbursed, the liquidity ratio would be 0.64 times. The indicator for the Q1 of 2021 does not include the operation of bonds at the level of $400,000,000 with a deadline of 7 years, and we're going to be covering this in the next slides. On Slide 16, we're able to see the makeup of the gross debt of the company at the end of the Q1 of 2021, with 46% in reais, 38% in euro, 10% in dollar and 6% in other currencies, with a total level of indebtedness of BRL 5,000,000,000 million in the Q1 of 2021 and a cash of BRL 1,509,000,000 in the Q1 of 2021. It's interesting to observe the development of the company net debt, which was basically at 4.2% per annum in the Q1 of 2020 and an average cost of 4% in the Q1 of 2021. By the end of the Q1, our debt make up for the long term represented 41% and in the short term, 59%. When we assess the pro form a considering the funding lines that have been secured in 2021 with Brazilian banks and the issuance of bonds, the company's pro form a would show a long term debt of 82% and a short term one at 18%. The average term for the net indebtedness goes up to 5.8 years in the pro form a scenario that we show here on this page. On Slide 17, we talk a little bit about the issuance of sustainability linked bonds conducted by the company. And that is when we first went out for international capital at the level of BRL 400,000,000 and a 7 year term at a BRL 5.25 interest rate. For these sustainability linked bonds, we have established a target for the reduction of 30% of greenhouse gas by 2025 and 2019 was the baseline for that, which would represent an increase in 0.25% in interest rates if the target is not met. We also have announced a long term target for the reduction of 70% of greenhouse gas by 2,030. The main projects that shall contribute to achieving our objectives are the increase in use of renewable energy, the reduction in energy consumption, infrastructure updates, the use of green gas and other types of fuels, increase of number of sensors and monitoring of the production process and the continuance in innovation and evolution in the offer of solutions that are more and more sustainable in the automotive market. By doing that, we will continuously increase our efforts when it comes to ESG, which is basically our main strategies for Yashpimaxim in the forthcoming years. In Slide 18, we consider just some of our new products and some of the recognitions during the Q1 of 2021. We have successfully launched 5 new high performance wheels in Europe. These are wheels that are geared towards premium manufacturers, premium OEMs and the reduction of weight through the RT. This is innovation that has been brought about by Maxim as a lighter alternative and more competitive one as well in comparison to the flow forming process for aluminum wheels. We've had new contracts for the VersaStyle wheel, which is a steel wheel for light vehicles with high visual appeal and weight reduction. And we also maintain our negotiations with other automakers. Some of the main awards secured in the Q1 of 2021 were the diamond supplier award by NAVSCR for our structural unit components in Mexico, the quarter achievement by Paccard for our wheel plant in Coseiro Sao Paulo and 2 digitization process within Yaxby Maxian by the the U. S. Manufacturing Leadership Association for projects and innovation for digitization in Thailand and Germany. As we said earlier, goals for sustainability within the company, secure our commitment to this agenda and with our view of an automotive sector with lower level of emissions, which shall require more electrification of vehicles. We are confident we will reach these targets with a continuous increase in our efforts by means of all the work we're doing, not only in products, but also in processes throughout the EOCCI, MAXIM operations all over the world. With that, we now open the floor for questions and answers. We shall now start the Q and A session. In order to place your question, please Our first question comes from Vitor Miossasak, Bradesco BBE. You can move ahead with your question. Good morning. Congratulations on the results. I have two questions for you. The first one has to do with the working capital dynamics on the Q1. We have seen an increase in consumption. If you could talk a little bit about what we can expect for 2021, particularly when it comes to storage and ESD accounts? And if you could also talk a little bit about the increase in the tax rate for the Q1? Well, good morning. This is Elsio. Let me start by the working capital. I just would like to highlight that there have not been any kind of structural changes in the deadlines for payment and none for the receivables per client. So this is something that we want to make quite clear. And in our changes in storage levels or inventory levels, we have not suffered any kind of an impact. Seasonally, the Q1 requires more cash consumption with working capital. When we finished the last quarter of the year, which has lower level of sales, you increased the cash consumption and the working capital of the company in the Q1 of the year. This year in comparison to December shows an increase of 25 I mean, 35% in comparison to last year. But if you go back to 2020, this increase has also taken place and it was at the rate of almost 30%. In the previous years, this also took place. So I just wanted to make sure that when we look into this seasonability, this is quite feasible when we look into the past, and it was at around 20%, 20 something percent in previous years. In 2021, this increase has been a bit higher. And fundamentally speaking, in the inventory we have, particularly for some reasons, the price of commodities, as you have seen, has been on the rise significantly in the period, as you may have noticed. And I wanted to highlight that we are going to keep pursuing our targets of passing over these cost hikes in prices as we have seen historically in the company and in this quarter as well. So we had a very low level of inventory in the last quarter of 2020. And in the last quarter call, we know that we've been through operational inefficiencies given the level of inventory and the level of supply that was not that consistent by the end of last year. So in this quarter, we tried to increase inventory in general to avoid disruption or operational inefficacy, so we can service our customers as best as we can. Once the market is more normalized and more stabilized, we are back to a more optimized level of operation. And this has been more of a seasonal aspect and this has been something that we have been aiming at so as to not have any disruptions as we have perceived in the last quarter of 2020. When it comes to taxes, we had an ETR of 52%, as you mentioned. And this is a lot higher than the Q1 of 2020, which was a nonrecurring factor that caused this rate to go down quite strongly. But what I think it's important to highlight and thank you for your question on the matter because this is really important for you to understand these tax issues. Our cash tax rate, which we have effectively paid even though the accounting level was at 52%, our cash tax rate was at 22%. Our income statement was at the level of €36,000,000 but the effect of disbursement was, in fact, €37,000,000 So there is a difference between accounting and cash expenditures, which may continue happening in the short term. And when we look into the details and everything, we have a bit more than BRL 310,000,000 fiscal losses in different jurisdictions, which will make up for the payment of income tax. And in Turkey, this is another example that we have in a recurring manner. We use the VAT credits in the operation to fund income tax. So throughout the year, there is a seasonability involved here in the Q1. And as we still generate results in certain regions and countries, one will be able to change that effective rate. But our cash tax rate is also going to remain at a lower level given the level of tax credits we have in place. And then throughout the course of next year, we hope to have an accounting rate that is closer to 34%, which is the level here in Brazil. It's important to highlight also that over the course of the last years, the company has been working in addressing this tax issue for the reorganization of the company, always assessing each project through the cash flow And we have impacts in the tax credits that we assess on a case by case basis to address that as best as we can. Thank you. Okay. Thank you. Our next question from Catherine Exelar, Banco DO Brasil. Good morning. Congratulations for the results. I would like to capture YOSPI's visions on the impact of interim growth. As for EOSPI and for the customers, if you can share with us this view and this vision of a customer view. And for the next semester, when what are the expectations? Good morning. Thank you for the question. First, also reference to that as for interim in a general way, talking about the Q4 of last year was impacted by the unevenity of supply, and it forced us to work with an amount of extra time and change in our production lines that were very high. What we did in our planning was, through the turn of the year, to have a little more stock so we could absorb these eventual unevenities that continued to occur throughout the Q1 of this year. This supply unevenness, it wasn't so high as it was in the Q4 of last year, but we can still observe some difficulties in the delivery of some inputs according to the products that needed to be produced at that time that were absorbed by our little higher stock that allowed us to absorb without too much extra time. The improvement was observed around the Q1, and we expect it to continue to improve in our Q2. It's not 100% regular. We still see some hiccups in different markets, including Brazil, but it has a tendency to get normalized in the second quarter. About semiconductors and the logistic chain of the plants, we have observed performances of impacts that are varied for different segments and for different factors in the world. For the commercial vehicles sector, it has been less impacted than the light vehicles Due to the amount of the semiconductors used in trucks, it is relatively inferior to the amount of semiconductors used in light vehicles that could go over 1,000 semiconductors in 1 vehicle and the matter of the technology used in trucks and in light vehicles. Usually, light vehicles use semiconductors and they're shorter platforms. They use semiconductors of cutting edge, and it has been a great challenge in the supply of semiconductors coming from Asia. The truck sector uses because they have longer platforms, they usually use with a differentiated life shelf what allows this impact to be lower for the truck sector. We have seen in our mix of customers and products and our business mix as well, approximately 40% of our revenue, a little more, comes from the commercial vehicles, the global sector. Also from wheels, the combined is more than 40% of our revenue inside the commercial vehicle sector. This geographical diversity and of segments and of customers has made the impact of semiconductors to be less for us. We have seen some decrease in production for our customers in the Q1, some in the second quarter, but it hasn't been so great of impact in our consolidated revenue when we look at the light vehicle sectors and commercial vehicle sectors and wheels and steel and aluminum wheels with these structural issues for commercial vehicles. We believe this situation for the industry in the general look has not been so significant. We believe the greater impact for the industry will be during the Q2 this year, having a tendency to get closer to normality throughout the 2nd semester. We have heard from our customers and from the factories and I'm talking here about the commercial vehicle sector and also for the light vehicle sectors globally. The demand is there. There are requests for trucks in North America and South America. There is decreased inventory of light vehicles in different continents where we work. But consistently, in both the commercial and light vehicles in all the world, in Europe, in North America, in South America, Asia, it has they have the intention to produce what they are what they can't eventually produce in the 2nd semester for eventual flaws. They have the intention to do that on the 2nd semester. So we have our production capacity allocated to the products that is prepared to respond in the 2nd semester when they believe that this matter of the logistic chain in a global way, if it's not completely normal, it's much closer to normal and with fewer impacts than what we have observed in the Q2 of this year. Excellent. Thanks a lot for the explanation. My second question is about the movement of breathing in the last quarters if we can still wait for some more movement and our capacity to meet this demand or if you expect to meet some level of historic investment and how will that be done? Our great actions of restructuring occurred last year. We spent more than $170,000,000 in restructuring, internal and external, including our Steel Wheels factory in Ohio. This transition of the closing of the factory occurred in through the 2nd semester of last year and the beginning of 2021 when we still had some production in the Ohio plant before we transferred all the production to our San Luis de Potosi in Mexico plant. There was still a little production in the Q1 this year, but our great expense of restructuring expense happened last year. This year, we don't foresee big adjustments in some global unit due to the oscillations of the markets, but there is a significantly smaller amount than it was last year, around BRL170 1,000,000 last year. In internal restructuring, we believe in the current situation of market situation, the numbers this year will be fewer than 10% of what it was last year. About investment, we reduced our investment as it was observed in the 2nd semester last year and the 1st semester in our investments in security and health, the basic maintenance of our factories and launching of new products, we had an important decrease in the Q1, and we will continue to manage our investments with great focus in the return of the investments that will be made and will be very focused on the same priorities of the Q1 that have been the matter of safety and health and the launching of new products. We have new programs from last year that are being launched the 2nd semester this year and throughout 2022, and we have to make the investments for the launching. We are building the factory of the steel wheel factory in China in partnership with a local factory and its conclusion is foreseen for the Q1 next year. So we still have this project that is related to the increase of our footprints in steel wheels in Asia. That's where we want to grow more throughout the next years. And we also have the ramp up of the steel wheels factory in India. The greater investment has already been done, but there are still some processes in low pressure welding area that has been done, but we still have a little more capacity that has been gradually increased as the volumes grow in India. And we have seen in the Q1 this year a positive effect of ramp up in India as for the stamped products in Mexico. So we are focused on these priorities And of course, along the basic maintenance, they generate business opportunities and for the increase of productivity in our processes. Thank you for the answers. Have a good week, everyone. Our next question, Marcelo Morte, Giotto Pemorgan Bank. Go ahead. Marcelo, your microphone is open. You can make your questions. Good morning. Can you hear me? Yes, go ahead. About the margin, if you can comment due to the raw materials that were bought with a lower price? And for the sales price, what's the tendency that you see for the gross margin with this continuous increase in the main raw materials? And if you can comment of the competition in the sector, market share is very difficult to understand, but if you believe we have won some market share during the pandemic and talk about the capacity to reorganize in this period. Thank you. About gross margin, we had some benefits. First, for the restructuring process, it still shows some of its effect in the Q1. This restructuring happens for the gross margin and also for the rest of the company. These stops and goals that we had on the Q4 showed a cleaner process and it was good to see some of this additional stock that made possible for this to happen. In the end, we had a positive mix for us, and this evolution will lead this gross margin through the year. The segments that have a little better margins, improving this margin according to their level. As we expose the market or the prices according to the costs, it's a process that still happens, it's very dynamic. We see day by day the oscillations in raw materials. It's a continuous process that we do. Yes. To add a little bit to that regarding your second question, I think that clearly, the issue of operational leveraging in the company is extremely important. When we look into the growth in volumes and the growth in revenue for the company, which through which is achieved through the volume and the mix that Elsio said. This is really important in our network in general terms. The mix of commercial vehicles and the growth in commercial vehicles has been quite positive, and this has helped this scenario. And we hope that this continues pushing this forward throughout the year. And as you have been monitoring the issue of raw materials, prices have been going up globally. They have gone through an important spike to the turn of the year and they are still going up and we're going to be working on passing these hikes over because we cannot operate without considering that possibility. These hikes happen somehow automatically and sometimes this is a bit lagged given the contracts that are established based on the indicators for each market and each commodity, such as CRU and LME. So there is a timing issue at hand and other things that are negotiated on a case by case basis or product by product depending on the region. Our effort is to continue passing this over and keeping at par with the scenario in raw materials. As Elsje mentioned, one has to consider the benefits of initiatives in restructuring that have been enforced last year and the operational leveraging, which is really important and that goes hand in hand with the mix. We're going to be monitoring that every quarter in the markets we operate in when it comes to market share gains. As a matter of fact, with our increase in capacity over the course of the previous years, particularly when it comes to aluminum wheels, when we started building our plant for aluminum wheels in India and we increased the capacity in the Czech Republic and in Thailand, the construction of the wheel plant, the aluminum wheel plant in China gives us the opportunity to keep growing our participation in this segment, a segment in which the company did not operate in since 2011. And we have started working in this area then and we have increased our capacity production in aluminum wheels, which has given us a growth in market share in this segment. For steel wheels, we have found some opportunities and we have seen that reflected a bit more in the Q1 with a larger penetration margin in the aftermarket and in the trailer sector in the European market and in the American market as well. Last year, we announced new business with TechMaster, which has signified a growth in steel wheels for trailers for the aftermarket sector in the American market and that has been really important. This is a product that was launched in the Q2 of last year and this has been growing in the Q1 and the first half of this year and this has been giving us some market share gains in strategic ways. And we are looking for market penetration where it makes sense given revenue gains and for margin gains in our business. So we are placing a lot of effort in that and in working along those lines in the next quarters. Very good. Thank you very much. That was quite clear. Thank you, Motta. Our next question comes in through the web by Flageo Colvalor Futuro. Congratulations on your operational improvements. Two questions that are interconnected. Could you expect, as investors, a focus on the reduction of the net debt in nominal terms from now on? And within this scenario of concern with the level of indebtedness, could you talk about capturing sustainability bonus at 5% interest rate in dollars when the average indebtedness of the company is at about 3% in dollars? Thank you. Well, good morning, Flavia. When it comes to the net indebtedness, I would like to highlight one of the items here and highlight the unleveraging process for the company, which went over to 5.63 instead of 6 times. And as Max mentioned in presentation, this EBITDA of the last 12 months still sees a negative figure of €144,000,000 that we accrued last year. As we move into 45 days of the second quarter, we're going to replace this minus €144,000,000 for a more normalized number, causing this trend to continue in the next quarters when it comes to the leveraging of the company. This driver has been much more in line with the denominator. And when it comes to the net debt, we expect that nominally, this net debt will go down, particularly in the Q2, because in the Q1, we have a seasonability when it comes to working capital consumption. So seasonably speaking, when we look into the 3rd or 4th quarter, that's where the company starts generating cash flow with more intensity. One hopes that well, since the results are too early in the year and there's a lot to happen, we expect that in a normal manner, we're going to have a good year as per the predictions for volume with IHF. And we expect a great volume moving into the Q2 and the cash flow generation in the process. When it comes to the cost of the debt, we have issued bonds with a yield of 5.25%. And within the BNDES operation, this redefines the pre profiling of the company to go from the level where we are to 5.8 years. That's where we want to be when it comes to the term of the debt magnitude. Sometimes, this comes with a cost that is natural. And when we look into the $400,000,000 3 40,000,000 dollars we have swapped to euro, which is our natural currency, and that's where we're going to stretch the euro debt levels and this comes at 3.5% euro cost. This has an increase in the margin as well. If you consider waiver fees that are built in the operation that we've had recently and at the level of total cost effective total cost, this is beneficial for the company with the stretching of the term. Of course, we're paying attention and we're looking into our financial expenditures and at the same time, we look at the level of our expenditure and the term of the debt, which is really important. So we have a cash flow of BRL 1,500,000,000 at the end of the quarter and we usually say that BRL 1,600,000,000 in the last quarter and BRL 1,500,000,000 this quarter is quite high. This is not a normal level. And as we move forward in the next period with a normalization of the market, there will be a cash reduction with the amortization of the gross debt. Thus reducing the cost of uploading or working with this kind of working capital? Thank you. We now bring the Q and A session to an end, and I'd like to move over to Mr. Marcus for the final observations. Thank you very much for being here with us today. As we mentioned in the last quarter call for last year, we had a positive view and a positive spin for 2021. For the growth of the market and the positive effect of initiatives put in place by the company. And we maintain those visions for the year. The results of the Q1 of 2021 shows the benefits of the diversification of the company in different geographies, customer base, product portfolio and different segments of action, commercial vehicles and light vehicles. We see the capacity for flexibility and adaptation that the company shows given the circumstances and adversities. There are uncertainties out there, as we mentioned, with regards to the pandemics and the instability in the supply chain. Our view is quite positive, and we remain attentive to market shifts and we are ready to work in a timely manner. We maintain our focus in a long term strategy with a focus on innovation, consistently advancing in the efficient use of our productive capacity, the launch of new products and the alignment with the priority ESG. Thank you very much, and I wish you all a great day. The Ashby teleconference is hereby concluded. We thank you all very much for being with us. We wish you a great day, and thank you for using Chorus Call.