Hello. Welcome to the conference of results of Randoncorp, the earnings release related to the second quarter of 2026. It is such a pleasure to count with your participation in this event today. Now I am going to give you some guidance of the event. Our conferences are recorded, so you can watch the recording later at any given time by accessing our website, which is ri.randoncorp.com, or the company's channel on YouTube. The presentation PDF is already available for download here in the platform or in our RI website. This transmission has simultaneous interpreting to English and also Brazilian Sign Language. Also, in order to listen to the English interpretation, you click on the interpretation button on the bottom bar and choose the selection mute original audio, so you can follow the translation only.
Also, we did a little change in the format of participation in our question and answer session. From this event on, in order to participate by audio, you have to click on the raise your hand button. Also, you can click on the Q&A button to send your question in written form. I advise you that the presentation today may contain estimates and numbers of the company and the business environment. They might be considered related to the premises that we have now. So there are risks and uncertainties, and results may change. That is why we recommend that everyone should consult the legal disclaimer available in the presentation and also the other documents provided by the company. Now on today's programming, we are going to start with the participation of our CEO, Daniel Randon.
We are going to talk about the environment now, the main things that happened in the quarter and the vision for the future. Then corporate Director, RI, finances, strategy, they are going to conduct a presentation of our operational results. After that, Paulo Prignolato, Vice President, CFO, and DRI of the company, is going to lay his comment on the finance management of the company. Before wrapping up, David Coin Bacichette, our Manager for RI and finances, is going to be dealing with the question and answers. Now I invite Daniel Randon to start the presentations today.
Hello, thank you for participating in our conference today for the earnings release of the second quarter of 2026.
Before getting deep into the operational results and financial results, I would like to share with you a brief view of the business environment, the main movements done by the company along this time, and our priorities for the second semester. Getting started by the business environment. The second quarter presented a sequential evolution of the volumes in the Brazilian market, even though the scenario is still below of the observed levels last year. Both in trucks and trailers, we observe advancements in the production and sales in the second quarter when we compare the first months this year. This behavior highlights a resumption, especially after July, boosted by the Move Brasil, but still in an environment in which the demand is more selective, impacted by the level of the interest rates and the higher care in the investments by our clients.
The external market exported trucks from Brazil are still below the levels observed in 2025, pressured especially by the weakening of the international demand. In relation to the first quarter in 2026, there has been an expressive advancement in the delivery with a more steady rhythm and more elevated one. In semi-trailers, we had a growth in both corporate sides, boosted especially by the greater demand in countries in South America. In the North American market, we are observing an environment of higher instability influenced by the political uncertainties and economic uncertainties, with a reflex over the decisions of the clients and the rhythm of some markets addressed by our operations. As a countermeasure to this scenario, the aftermarket is still resilient in this quarter.
The growth and the aging of the operating fleet is sustaining the demand in terms of components, and it is contributing to the development of the markets with greater exposition to this market. Therefore, our reading of the second quarter of 2026 over there is improvement, yes, but it's still not as a full resumption of the market. The environment is still requiring attention and flexibility while managing the operations. Besides the evolution of the business environment that I mentioned, the second quarter was marked by decisions and deliveries that were important for Randoncorp. During this period, we did Randoncorp Day, amplifying the dialogue with the market on the main topics for the company. This was the moment which was relevant to present a more integrated view on our businesses, our priorities, our strategy, and the main guidelines for value generation.
There we also mentioned the stoppage of Delta Global operation. This decision is part of the continuous process of evaluation in our portfolio, and it is aligned to concentrating resources and efforts in the businesses with more adherence and related to our strategy and sustainability agenda. We shared our report by the end of May, bringing you the details of achieving our ESG goals. With a full delivery of our ambitions and reflection of incorporation of our commitments, the management, and priorities of our businesses. Something else that happened in the quarter was the update of the Randoncorp brAAA. We kept the brAAA corporate rating, with the change of the perspective to negative.
The maintenance of this rating reinforces the importance of keep making advancements in these measures that are undergoing, especially in the generation of cash flow, reduction of leverage, and greater selectiveness of capital allocation. Now looking into the second semester, we have some operational direction guidelines and very clear financial priorities. In the auto parts and semi-trailer, we started this third quarter with our portfolios full. In this market of aftermarket, this condition brings more visibility to this operational development in the next few months. We are going to keep making advancements in capturing synergies in these acquired businesses, especially Dacomsa. This front will keep being relevant to amplify our efficiency and the contribution to these businesses to the results of the company. In the OEM vertical, we expect a gradual advancement in the production and in delivery of train cars in the second semester.
This growth is going to happen in a progressive way, following up the predicted schedule to the hired projects, which is also good for our results. At the same time, our work will be closely directed to the improvement of cash flow generation. This involves the optimization of cash flow, rationalization of structures, and a management which is even closer to the stocks and receivables in the company. We're going to keep the discipline in allocating capital, giving priority to essential investments and initiatives with better adherence to our strategic priorities, greater potential for cash flow generation, and the proper return on the invested capital. We get into the second half of the year with well-defined priorities, discipline in execution, and focus on delivering a Randoncorp which is more efficient, integrated, and prepared for the next growth cycles.
This way, I wrap up my presentation and I give the floor to Esteban. Thank you.
Thank you, Daniel. Good morning, everyone. Now, moving on with the presentation, I'm going to give you details on the main operational results by Randoncorp in the second quarter of 2026. As Daniel mentioned, this period combined a recovery of the volumes in some of the markets, especially in Brazil, with the continuity of a scenario that is more challenging in some regions and segments. In this context, the company present the stability of the revenue, consolidated revenue, and important evolution of operational profitability, reflecting the growth of adjusted EBITDA and the expansion of the brand. On the other side, the net result does not reflect the operations, especially those related to the discontinuity of Delta Global and the property equivalents in this financial and services and solutions vertical.
We're going to start by the detailed analysis of the revenue. The develop of this indicator in the second quarter in 2026 demonstrates the capacity of the company of sustaining the level of revenue, even given this market that is still marked by several challenges. The composition of the revenue of the quarter is diverse between the business verticals, which contributed to balance the consolidated performance. While some markets are still operating in a more challenging environment, the business in more exposition to reposition are still finding a more resilient position. There's increase of revenue for the agribusiness, growth of sales for urban mobility, explained by their revenues by Mogi Guaçu, which is providing parts for buses and trucks. And better conversion for the international revenues, given the low value of real facing dollar. On screen, you can see the revenues obtained in the second quarter and divided by region.
You see that in dollar, there's a slight advancement. In the geographic distribution, the region USMCA is the main market still of Randoncorp, with superior participation, rather, in comparison to 2025. Because of the control of movement, both in Mexico and the United States, with the contribution of the console and the advancement of revenues of the friction materials in the region. In auto parts and OEM, the demand for trailers in the American market is still steady, reflecting lower numbers by Hercules [ideations] and suspensions by AXN. The Mercosur region, including Chile, represents 18% of the external revenue, and it showed some reduction in the yearly comparison, especially given the low amounts in Argentina, given the adaptation of client stocks and greater competition and pressure.
Something that I would like to highlight in this quarter, we had the first exportation of trailers to Indonesia, amplifying the presence of the company in new markets. Moving on to operational profitability, the EBITDA and the adjusted EBITDA presented relevant growth in comparison to the second quarter in 2025, and also evoluted in comparison to the first quarter in 2026. This is important because it shows an effective improvement of our operation effectiveness internationally and the profitability of our businesses. You can see in the graph that CPV was the indicator with greatest improvement in this quarter comparison.
Between the factors that contributed, I highlight a great mix of sold products, the gains of productivity and better management of fixed costs, given the increase of volume, the evolution of mobility, which was important for the growth in this quarter, and the positive effect of exchange on imported inputs and manufactured products, and the contribution of credit tax contribution. It is important to mention as well that it was impacted by the property values given the recovery process of this important client. If that had not happened, that would be just 1% greater in this period of comparison. Even though the net result of the second quarter is still negative, as Daniel mentioned, in this quarter, we announced the termination of Delta Global, and with that, we had a greater part of the registration being released in June.
Even though we had this negative event in this quarter, this initiative integrates the process of optimization of the portfolio and the capital allocation of the company. Besides this fact, our net result was also impacted by the taxes, given that some taxes were not recognized, and also the minority tax, given the expansion of the units that were controlled by the partners. This effect was partially controlled by the improvement of the greater financial result in this second quarter by the diminution of the debt and the leverage of the company, and also the increase of the financial investments, given the better cash flow. Therefore, even though the net result consolidated one is negative, it is important to highlight that it does not happen because of the deterioration of the operation, but mainly because of some specific and momentary occasions.
Return on investment is still below last year, but already in recovery in comparison to the first quarter. It represents the numbers in the year round and the still limited contribution on the businesses in integration phase. By saying this, I wrap up my presentation and give the floor to Paulo.
Thank you, Esteban. Good morning, everyone. Moving on with the presentation, I will comment the main indicators of the financial management of Randoncorp in the second trimester. Our debt without Randon Bank, we wrap up June with the debt in reduction. You can see in the graph that our leverage reduced by the fifth quarter in a row, and we reached the standard of 2.53 EBITDA in the last 12 months. The continuity of this deleverage trajectory was sustained by the positive cash situation, reduction of total debt, and the control of capital in our investments.
Something else that I would like to highlight is that with this current cash position, we have proper coverage of the obligations in short term, and we preserve financial flexibility to conduct our businesses. Besides that, the average cost of the debt reduced both in the year round and the quarter scenario, reflecting the evolution of our capital structure, and it tends to reduce even more with the drop of Selic rate. In regards of capital, we had over BRL 40 million in the second quarter, giving continuity to the strategy of resource optimization. Between the main movements, we had the amplification of balance by the suppliers reflecting better delivery dates with the supply chain, and it get better level of stocks in comparison to this beginning of the manufacturing of the train carts and some of the strategic inputs.
We had some development in the receivables accounts, given the activity in the verticals in the quarter. In the past 12 months, we reduced from 86 days in the first quarter to 77 days in the second quarter. Most importantly, the variation in a single quarter is the reduction of the absolute balance of capital used in the operation. We are going to move on working on stocks, receivables, suppliers, and other accounts in our capital for work, preserving the balance between financial balance and other operations. Now to finish this investment, the financial part, I bring you the investments in the second quarter. You see, those are in lower level in comparison to the same part of the year, last year, aligned with our financial strategy, being careful and giving priority to the more essential projects and the ones with more return.
The scenario is still challenging. With the highlights in the spirit, we have the invested money in Mogi Guaçu, infrastructure, machinery, and equipment, AXN, finishing the factory refurbishment that we did, that was predicted in the acquisition of the factory, and the Fras-le Mobility, developing the products. We are going to move on evaluating the investments strict and preserving these important things and the positivity of our business, but setting as a priority the generation of cash flow and reducing leverage. Before finishing here, I would like to invite you to our site visit that is going to happen in our units of Mogi Guaçu, São Paulo. The information for any registration is in the screen, and also our RI website. I am counting on your participation. With this, we finish the presentations and give the microphone to the question and answer session.
I give the floor back to Carol so we can move on with the event.
Once again, good morning, everyone. Thank you for participating. We are going to start our question and answer session, and I would like to say thank you for Mariana for participating here, Manager of Fras-le Mobility. She is with us for our Q&A. Our first question today comes from Gabriel Chini, Analyst at Sell Side in Santander. Good morning, Chini. We are going to open your microphone. Feel free to ask your question.
Good morning, everyone. Thanks for the opportunity. First, my question is related to the evolution in auto parts and relating to the margin. Still on this topic, I would like to understand a little better the impacts of Move Brasil in terms of volume, how this development happened in the second quarter, and what is coming next in the third quarter.
And still in this topic of profitability, if you can share some light on the contemporary credits. You mentioned the release, the BRL 21 million number. I would like to understand better the nature and how it happens. Lastly, as Delta was stopped, if there is some movement within the business that you are always also evaluating this type of movement. So those are my questions. Thank you, guys.
Thank you, Chini, for your questions. Now talking about Move Brasil and the margins, then I would like to ask Esteban to give you a better context. On the contemporary credits, Paulo, feel free to share this answer.
In regards to shutting down Delta and all the work that they have been doing for the portfolio, I also ask you if you can share some light on this, both this initiative and some others within the squad, so we could improve our results and simplify our structure. So Esteban, please, feel free to get started, and Paulo, you can lay some comments.
Thank you, David. Thank you, Chini, for being with us here in our conference. Thank you for the questions. I would like to say first, it is very clear the improvement of margins in our industrial verticals, movement control, auto parts, OEM. It may be the third or fourth quarter that I have been talking about all of the structural initiatives that we have been implementing in the company since 2025 to have a better efficiency in production.
As a reminder, in 2025, we had initially the penalty of the cost of these adjustments, and now in 2026, we have a lighter structure that allows us to show these better margins, even with a volume that is still below what it would be the market average. Now, talking specifically about OEMs, on the second quarter, we had indeed the effect of Move Brasil. We still are unable to evaluate how much this additional demand in comparison to what we expected purchase anticipation or how much is going to be maintained to the third and fourth quarters. But the fact is the adjustments of the structure, combined with a slight increase of volume, it decreased our fixed cost, and that translates into the margins that we delivered in the second quarter. Same thing is true for auto parts.
We also saw some important recovery that comes together with these additional volumes, followed by the ramp-up of our site in Mogi Guaçu. Suspensys and Castertech, they are already fully operational, and that contributes to this fixed cost, which contributes to building the margin. So those are the two main factors. Especially, I am going to highlight and, again, giving recognition to the entire team working on this reduction of fixed cost. Even with this slight increase of volume, this generates a great impact in the operational margin.
Now, the credits, Chini. Every month, we have a routine in our tax planning. We are reviewing the opportunities of recovering the taxes. Specifically, in this quarter, we could recover some important taxes, PIS/COFINS. In the exportation processes, they impacted positively this quarter.
We cannot give you precise information if there are other taxes or some recurring movements, but we can guarantee that whenever there is a possibility of recovering these taxes, we are going to do it. At the given time, we do not have anything relevant that we could share. In case something relevant comes up, we are going to inform the market, of course. Finally, in relation to the determinations that we have done. It happened, yeah. Delta, we discontinued given the results, and we identified that it was not strategically fit for the company onwards. At the same time, we are going to keep reviewing our portfolio. We always have the intention of having a better value generation for the investor and for the society as a whole. At this given time, we do not have anything mapped that we could bring to the market.
When the time comes, if something happens, we are going to share with everyone via the official channels of the company.
Perfect, Esteban. Very clear. Thank you.
Now we are going to move on to the next question coming from Lucas Laghi, analyst, XP. Good morning, Lag. Feel free to ask your question.
Thank you, Carol. Good morning, everyone. This matter of operational evolution is clear to me now, and I think that it is a little uncertain thinking on a macro sphere, but thinking of the effects below EBITDA, you mentioned the Delta situation. Now, if you could talk a little bit more of Addiante and how the initiatives are evolving, both by Randon and Gerdau Next, in terms of asset. How can we expect this contribution, this greater contribution, how it is going to evolve along the next few quarters?
You mentioned there is nothing defined in regards to another movement like Delta, but thinking about the possible other impacts that we can have onwards in this accountability effect, some other companies, if there is something mapped in this sense, and if we should, along the second semester, see a clearer result below EBITDA, thinking on the impacts that have been happening and this negative effect thinking online. Yeah. It is basically that to understand these other impacts in the operations. Thank you.
Laghi, thank you for the questions. About Addiante, I am going to ask Paulo to give a better context on that, and soon after. Esteban, you slightly addressed this question before here, and the other question. I would like to ask you to elaborate a little further for Lag as well.
Good morning. Lucas, thank you for your question. We move on with the negotiations with the client in Addiante.
In this case, it is Ambipar, looking for alternatives that could address this situation in operations and finances. At this moment, we cannot estimate a specific deadline for wrapping up these conversations, given the legal complications that are related to this law recovery process. As long as this is not finished, we are going to continue seeing some negative impacts in the property. The level of this impact depends on the evolution of these negotiations that I mentioned. Besides that, Addiante moves on with the contracts that are performing very well, and we are going to maintain all of you updated on the negotiations.
Perfect. Thank you, Paulo. Lucas, thank you for your question as well. I am going to address the second part related to other possible accounting impacts for the remainder of the year.
Here, I think it is worth to remember that we have some audit procedures here, and usually in the fourth quarter is when we have possible terminations. Usually, we do not have visibility right now of new values that should be registered, but it is worth to remember, if you take the results from the second quarter, these effects that are below the operational, whether Addiante or Delta, and the income tax that we, and the controller, they might have some impacts in the second half of the year. The income tax, it should remain a little higher. And for Delta, we have some extra expenses, not at the same level, but there might be some in regards to their termination.
And Addiante, like Paulo said, we still do not have a visibility of negotiation, so we still are unable to revert anything of the results that have been presented already.
I am just going to highlight once again that having any relevant information, we are going to use the official channels of the company to inform the market. Thank you.
Thank you, and good morning to you guys.
Good morning to you, too. Let us go to our third question for today. It comes from the analyst sell-side, Kiepher Kennedy from Citi. Good morning, Kiepher. Feel free to ask your question.
Good morning, Carol. Good morning, team. Thanks for receiving my question. Real quick here, in the OEM, I would like to have an update, if you could give me, on the Hercules operations. How is the backlog with the United States, given that the volumes of this operation are still in a low scenario? We have been seeing market results showing an improvement for this geography as a whole, but it still has not happened here in Hercules in the remainder of the operation.
I would like to receive an update of this backlog, if we should wait for an improvement over there. And the second question, maybe stressing a little more the aspect of portfolio improvement. You spoke about it already a lot, but I would like to understand the strategy of the company. This company, Randoncorp, we have 83 companies within the structure. I suppose that there might be one or other investments about to be done, but I would like to understand how we should be thinking the structure of Randoncorp for the next three years. We see with good eyes the investments that have been announced. I think it makes sense given the challenges that the company have been facing lately. But what is in the mindset of the company for the structure strategy that we should be seeing for the next cycle?
Those are the two things, the portfolio strategy and Hercules in the United States. Thank you.
Thank you, Kiepher, for your questions. United States strategy, we can mention in a wide way only Hercules, because we also have other operations there, AXN and Fras-le. Giving sequence to your questions, if you can address a little more of this portfolio aspect. It is the first topic that echoed in the first two questions, and now we are on the third question.
Perfect. Thank you, David. Kiepher, thank you very much for attending our video conference. Now, starting with the United States. The market over there is having the worst situation in the past 20 years. This is the second year in a row with values much below the average.
For you to have an idea, when we got into the trailer market in United States, the market volume in 2023, 2024 was around 50,000, 60,000 trailers in a year. In the past two years, this number dropped to 3,000 to 6,000 trailers. Hercules managed to get an order in the port of South Carolina in 3,000 units. This represents over 50% of market share. For this year, it is being concentrated in this order that have been placed. We have some additional units that have been delivered, and this should be happening until the quarter. Okay, audio is back now. All right. As I was saying, the volumes, they should remain still below the market average during 2026, and we do not have a prediction that would make us change our opinion for 2027, at least for now.
I think two factors that could bring us some inputs and some new elements are trucks. The Class 8 in the United States, they have a greater demand now. They are showing better numbers. It is still too early if we are going to have a pre-buy, which they are going to be pre-ordering the demand for 2027, and it is not impacting trailers, but the expectation that we have is that once the operator buys a new truck, they might be buying a trailer, and we are going to start seeing an improvement in the market as a whole from 2027 on. Second thing worth mentioning, we have done investments that are important, not in terms of value, but in terms of role that they play, generating efficiency in the unit of Hercules, especially towards automation.
In a way that our unit can be efficient even with lower volumes, and the structure there is very concise. In the current situation, it can contribute positively for the company results. I think it is worth mentioning when we look into the second part of the question, which is the portfolio management of the company as a whole. We have been looking to confirm two mantras that we have inside here. The first one is we should need to be a simpler company. I do not mean too simple, but I mean a company that is able to add value. This expression we have been using pretty much in all of our internal meetings. I mean to add value to the investor or to the client or the society as a whole, and the second one is to optimize the current assets.
I think the company in the next few years, we are going to be going, like if we mention the next three years, we might be going through a vision of improving the profitability of the current asset. You get better margin of the assets that we already have. Again, review the portfolio and see the ones that are not performing as expected, and the other front is looking into partnerships. The assets need to have condition of generating value, but perhaps not all of the capital injection from Randoncorp, but from other partners as well. This is the work that we continue to do in a very strict way, dedicated way, and not in a hurry. I think the main thing here is that we are able to generate more and more value.
And Daniel, Paulo, not sure if you have something to add in regards to that.
Well, Kiepher Kennedy, thank you for participating and for sharing your question. You mentioned a number of companies, 83 company IDs, let's put it this way. And from the partner point of view and given the tax refurbishment, there's a new regime, and we're going to keep these two regimes in this transition period. For us, unfortunately, we are unable to predict big changes until we have a good reading of all of these impacts given this tax reformulation.
Thank you for your question, and I reinforce what Esteban and Paulo said, the importance of capital allocation. At this time, we see the market in North America and also especially in Brazil. The market, there's not so much potential for growth at this moment.
It's a moment for us to look inside and revisit our strategy, our portfolio in the long term, and especially looking for more productivity and efficiency of our assets, operational assets and the assets as a whole. So what we have been talking about and things like Randoncorp Day, a reservation of the minimum return investment of 15% and 18%, I think that's the work we've been doing, revisiting our assets and continue to invest on the things that makes Randoncorp more and more resilient in its revenues, and also with a lower exposition to volatility and also not only dependence on the internal market. So that's how Randoncorp have been growing in the external market and after market in the past few years.
Thank you, guys.
We thank you, Kiepher Kennedy, and now we're going to move on to the next question coming from Gabriel Frazao, software analyst in the Bank of America. Feel free to ask.
Good morning, everyone. Thanks for the opportunity to ask. Something about the tax part. Something had happened because of the controller, the loss that they have. I'd like to understand the effective tax rate. If you could explain the initiatives that you have in order to improve the tax effectiveness of the company, and also a reduction of this rate, which depends exclusively of a better result, or if you have any initiative to reduce this effective tax rate going back to the normal value. That would be my question.
Thank you, Gabriel, for your question. It has been a recurring topic, and I'd like to ask Paulo to explain a little better these initiatives and impacts. Thank you.
Gabriel, good morning. Thank you for your question. This topic is really recurring here in our discussions. I think the main villain here is indeed this elevated interest rate, which highly impacts the financial result of the company. A few years ago, we made some restructuring movements in the partners of the company, and we also had some other initiatives thinking ahead. But the main topic here is indeed having this ongoing work, reducing our leverage by means of positive generation of cash flow, reducing our debt, and reducing our expenses. Besides that, operational improvement of the businesses, which end up giving this good effect. At this time, we cannot predict with this measurement of these initiatives, but we move on working hard in all of these fronts to have, again, an effective tax rate closer to our historic average. Thank you.
Thank you.
Thank you Frazao.
Now on to the next question from Luiza Mussi, sell-side analyst from Banco Safra. Feel free to ask your questions.
Good morning, guys. Thank you for giving me the floor. Well, first one, working capital. This year, it came a lot from suppliers, and I'd like to understand if there's still room for improvement in all the other lines. What could be the leverages, and how can we think of this ahead, thinking of accelerating the train carts? We already discussed this here in this call, but on the OEMs, we saw the margin, the positive effect that apparently came from this acceleration because of Move, the initial train cart deliveries, and we see that they might be accelerating still more and more, but there's still a doubt in regards to Move.
I'd like to understand what was stronger in this part, what you see in this portfolio for now, and to understand the price positioning for the competitors, if the market is rationalizing the price or if there is a pressure. Thank you, guys.
Thank you, Luiza, for your question. On capital, I'd like to give the word to understand what we have been doing now on the working capital, and we have been good results. Soon after, Esteban, if you can elaborate a little better on the OEMs, given what we've been seeing now post-Move in the times of portfolio, and then we have Fenatran at the end of the year in terms of price and positioning. Thank you.
Luiza, good morning. Thank you for your question.
Working capital is indeed a topic that we discuss often internally with many action plans encompassing all of the accounts in working capital. Taxes, suppliers, partners. Taxes is a hot topic given the law reformulation, so we're always trying to recover. We reduced our cycle of cash compression in about 30 days. We were closer to 90, 95 days. We are now in this level of 60, 65 days. The reality now, our challenge is to maintain the working capital in these levels. Of course, along the year, we can count on market oscillations, the effect of the train carts, too. It causes at our first moment a positive impact in working capital given the payment upfront of our clients, and then it goes to normal levels.
Our commitment is not having too many fluctuations in these numbers, but to always be controlling the working capital close to these levels of 60- 65 days. Now giving the floor to Esteban.
Thank you, Paulo. Thank you, Luiza, for your question. In regards to OEMs, I reinforce again, we have the structural improvements that translates into the margins. Now I'm talking about our businesses. The OEMs are the ones that depend on the leverage, they depend on the volumes for getting a better margin. It's hard to say how much we can still have of additional demand in the third quarter. We have conflicting expectations. On one side, we have Fenatran, that traditionally is the best trade show in this sector and translates into many sales.
On the other side, we have Move Brasil, that is hard for us to predict how much the demand is coming already to the second trimester, and how much we are going to have to the third trimester. These projections by sector, they indicate a year with a lower amount of volume from 5%-10%, depends on the institution doing the math. This indicates that the environment for trailers is going to continue under repression. As a consequence, talking about competition, it translates into some fighting for the price. In an environment in which we have lower numbers, all of the competitors, they make an effort trying to get volume inside their companies. Given this effort, we also have the effort into pricing.
We mentioned that Randoncorp Day last year, and this year, too, we did a review of our product portfolio, so we have the reduction of price, reduction of cost. Now talking about the train cart, and they bring us two benefits. Usually they have a better margin than trailers, and the second benefit is that it is a more standardized product, and that gives us a better cost dilution. A fixed cost dilution. We had this indeed in the second quarter, initial penalty for line set up. There is a moment in which the line, it stays for two to three weeks with no production, so you can adapt to the manufacturing of the carts, the train carts. So we have the escalation of delivery of these projects with a margin for trailers. The expectancy is an improvement for these margins in this vertical. Thank you, Luiza.
Great. Thank you, guys.
Moving on to the next question coming from Gabriel Rezende, analyst from Itaú. Good morning, Gabriel. Opening your microphone now. Feel free to ask your question.
Thank you, Carol. Good morning. Just to do a follow-up on this discussion that Luiza raised, so I will use this space here for working capital and think how the company sees the debt and the leverage at the end of the year. If we can expect a dynamic of cash generation and decrease of the debt, and what we can expect, the EBITDA, what is the drive that the company sees for the deleverage along the next few quarters, what is the math that we are doing, how the company sees it?
Also something that Daniel Randon mentioned, considering that the company has this focus of looking inside at this moment of challenge in the market, if we can discard the possibility of M&As, maybe in the subsidiary of the companies. If it makes sense for the company to continue to monitor these opportunities, but given the opportunity of the leverage, if we have some announcement. Well, thank you.
Thank you, Gabriel, for your question. Well, I guess we can continue with your previous reply on working capital, and now talking about working capital allocation as a whole. I think it is important. Esteban, Daniel, feel free to leave your comments, too.
Gabriel, good morning. Thank you for your question. Gabriel, in fact, our commitment is to reduce leverage by means of cash flow generation and increasing EBITDA.
That's what have been happening, not only in the working capital leverage, but also in the very strict management of CapEx, of costs, that allows us to reach better levels from now on. For the fifth quarter in a row, we've been reducing our leverage index, and the expectancy for the end of the year is to get there with a leverage between 2 to 2.5 times the EBITDA. Now I give the floor to Daniel. He's going to add some thoughts to the answer.
Thank you for your question, Gabriel. The M&As, that's where the company that has been working the most with pipeline in the past few years. The M&A targets and the mobility, the results shared on Tuesday show that we have been able to do it with the acquiring of Dacomsa as an important leverage.
Fras-le today is a company that has its pipeline looking into the projects. There are lots of projects in the long term, and in a given time, it's going, of course, the market itself, it's more volatile. The M&As, they are, yeah, left for later until we have clarity, not only considering Fras-le Mobility, but as a Randoncorp, we are a bit careful. But the prediction is that in the medium to long term, yeah, mobility, well, company, being able to deleverage the company gives us the capacity of resumption at the right time, right moment for the market. That's why we can say it's an open capital company, and that gives us better space, so it can deleverage itself even quicker.
Of course. Thank you, Daniel. Thank you, Paulo and team.
We thank you, Rezende.
Now we move on to the next question of today coming from Andressa Varotto, sell-side analyst for UBS. Good morning, Andressa. Feel free to ask your question.
Hello, good morning, everyone. Thank you for sharing the space here. I think we addressed many things already, so I'm just going to do something real quick. Still on this topic of deleveraging cash generation got our attention in the quarter, CapEx being very under control. I think first quarter versus guidance, I think we are a little well behind, I'd say. So I'd like to understand what we should expect for the next ones, and if there should be an acceleration or in this line of giving priority to cash generation and leverage, if we can expect a more controlled CapEx onwards too.
If you could talk a little bit about the main leverages in regards to CapEx, what are you looking as a priority for investments?
Thank you, Andressa. Paulo, let's continue. We do the CapEx expected for the Is it BRL 380 million? Until this moment, we are below this. So Paulo, please give us some context on what we've been doing so far and the prediction for the next few quarters.
Good morning, Andressa. Thank you for your question. With the organic CapEx at this moment, we are ensuring the rating that is predicted to the guidance in the year. In fact, we are going to continue being very selective in CapEx, including the organic CapEx, because of the extremely high interest rate and all of the uncertainties that come with it.
And all in all, we move on with this journey, especially in automation and initiatives that could bring productivity gains, just like Daniel mentioned. As long as this interest rate stays in this level, we have a lot of uncertainties. We can consider that along the next year, we're going to continue being very selective in this account, aiming, as we said, the generation of free cash flow that allows us to reduce our leverage.
Thank you, Paulo. It's clear to me.
Thank you, Andressa .
Now we're going to move on to our last question that comes from Jonathan Koutras , sell-side analyst from JP Morgan. Good morning, Jonathan. Feel free to ask.
Thank you, Carol. Good morning. Guys, my question, I have two of them. First one, about the auto parts. There's a good margin and a growth in the revenue.
It looks like we have the benefits from the suspension and the account in Mogi, like Esteban mentioned. I'd like to hear from you and the other brands in the auto part segment, how are they? The second, in the train cart, I think it's clear, the margins, and the volumes for 2027, 2028, if we have the 400 units delivered in 2021, 2022. I'd like to ask, how much you see the demand of train car reposition so the fleet doesn't go too old?
Those two questions, I'm going to forward to Esteban so he can give the context.
Thank you, Jonathan, for your question. Auto parts, I think it's clear, the double benefit of structural improvements. Again, OEMs and the movement control since last year, auto parts have been working with improvement of product operation efficiency combined with the better volume.
The OEMs, they have been raising this number for auto parts for bus and trucks. Urban mobility helped us as well in the volume of auto parts, and that combines with the ramp-up of Suspensys and Castertech, in Mogi Guaçu. Castertech, they had one of the best quarters in its history, again, showing that the investments and increasing capacity in the past few years, they're generating this effect. We have confidence that in Suspensys, in Castertech, we're going to see an improvement in this scenario with better volumes. The other auto parts, when we look, Elios in Mazen. Those companies, they have greater profitability already, and then consolidating this scenario in which we see the numbers improving partially because of Move Brasil itself. Here the challenge is always to improve this profitability.
We have been looking into recovering the levels in auto parts with the EBITDA around 14%-16% on our vision here. There's always something to be done internally, but in our vision, great part of the internal movement has been done, and now we should be able to capture a little more market volume. When we look into the train carts, we have in the contract now the prediction of delivery until November next year. There are other orders in the market that are under negotiation, but we still don't have a specific horizon of closing these deals yet. We can see that, yeah, there is an increasing investment in the structure, and we've been saying that in a few years that this investment has been concentration in the railways, and now we see this reflecting in the moving trains.
Now, we do not have explicitly an order that we can share with you, but if something relevant comes up, it is going to be shared in the official channels of the company.
Perfect. Thank you, Esteban.
With this, we wrap up our question and answer session. We say thank you very much for everyone who participated at this moment. I give the floor to our CEO and President, Daniel Randon, for his final words.
Well, first, I would like to say thank you for the presentation by Paulo and Esteban and all of the colleagues we have here who work with relations on investors. All of you and your interest in us in Randoncorp. We closed the second quarter with many challenges, but also with important achievements and decisions for the company.
With every quarter, we have been showing consistent operational effectiveness. This is clear by the numbers that we showed you today. Our team is totally focused on the mission of recovering our profitability. We move on with many initiatives ongoing with this goal. Team of relation with investors, we prepared something special for you in the second semester. I invite you to the site visit in Mogi Guaçu and Investor Day in Fenatran, if you have the opportunity to visit our main trade show in the automotive sector for commercial vehicles. It is an opportunity for us to detail even further our operations in short and long term in the next few months. We are counting on your presence already. Before finishing here, I would like to say special thanks.
This week, we were recognized again in the Exame Award , one of the most relevant ranking on the working capital built by the evaluation of investors and analysts. This recognition, above all, is a reflection of your trust. On behalf of Randoncorp, I am going to say here thank you to every investor and analyst in the market as a whole that gave us this prestige. Thank you once again for your presence here. We move on together building the tomorrow. I wish you all an excellent day. Thank you.
Bye, guys. See you next time.