Good morning, and welcome to the conference call to discuss the earnings of WEG in the first 1/4 of 2022. This call is being webcast with the accompanying slides at our investor relations website, ri.weg.net. After it's finished, the audio file will be available at our investor relations website. Should you need assistance during this call, please request the help of an operator by typing star zero.
Any forecasts included in this document or in forward-looking statements that may be made during the conference call about future events, business prospects, operating and financial forecasts and goals, as well as to WEG's potential future growth, are simply beliefs and expectations of WEG's management based on information currently available. Such statements involve risks and uncertainties and therefore depend on circumstances that may or may not occur.
Investors should understand that general economic conditions, industry conditions, and other operating factors may influence the future performance of WEG and lead to results that differ materially from those included in such forward-looking statements. We kindly remind you that this conference call is being held in Portuguese with simultaneous translation into English.
Here with us at Jaraguá do Sul are André Luiz Rodrigues, Financial and Administrative General Manager, Wilson Watzko, controller, André Menegueti Salgueiro, CFO and Investor Relations Officer, and Felipe Scopel Hoffmann, Investor Relations Manager. Please, Mr. Rodrigues, you may start. Good morning, everyone. It's a pleasure to be with you once again for the WEG's earnings conference call. We start with the highlights of the 1/4 in which the net operating revenue grew 34.5% compared to the first Q of 2021.
We continue to benefit from structurally favorable conditions in the main markets where we operate, reinforcing our strategic direction of developing products and systems with greater added value for our customers. The strong performance in the domestic market is a consequence of this strategy, where we supplied important products linked to the generation of renewable energy, such as solar and wind generation.
In the foreign market, we still observe the strong industrial activity supporting revenue growth in our main markets as a result of our good availability of products and ability to meet the needs of our customers. Another highlight in the 1/4 was EBITDA, which increased by 21.3%, reaching BRL 1.2 billion.
The EBITDA margin ended the 1/4 at 18.1%, down 1.9 percentage points from last year, a movement that was already expected due to the increase in material costs and also due to the mix of products sold. During the presentation, André Salgueiro will give more details about this performance.
Finally, we had another 1/4 of ROIC evolution compared to the same period of the previous year, as we'll see better on the next slide, which presented a growth of 1.5 percentage points in relation to the first 1/4 of 2021, reaching 29.7%. The improvement in our operating performance, supported mainly by revenue growth, more than offset the greater need for working capital and the increase in investments in fixed assets in the period. I will now give the floor to Salgueiro to continue.
Thank you, André. Good morning, everyone. On slide 5, I present the development of our business areas in the markets where we operate. Starting with Brazil, where activity in the area of industrial, electrical, and electronic equipment continued to be positive in this 1/4. We had good demand for short cycle products such as low voltage electric motors, gearboxes, and serial automation equipment, especially in the agricultural machinery and equipment, pulp and paper, and mining segments.
Sales of long cycle equipment, such as medium voltage electric motors and automation panels, were in line with recent quarters with good performance in the mining, pulp and paper, and water and sanitation segments. The GTD area was the highlight of this 1/4. We had growth in all our businesses, mainly due to the return of sales of wind turbines, the acceleration of sales of distributed solar generation kits, and electric generators for other energy sources.
The T&D business boasted another 1/4 of revenue growth driven by large transformers and substations for projects linked to transmission auctions, together with sales of transformers for distribution and industrial networks. In commercial and appliance motors, the drop in demand, especially in motors intended for the appliance segment, such as washing machines and air conditioning, impacted this quarters performance, despite the good sales volume in other segments, such as food and beverage and agribusiness. As we had already anticipated, this movement was expected after the strong recovery between late 2020 and early 2021.
In paints and varnishes, demand continued to be strong, with emphasis on the segments of agricultural implements, road implements, and sanitation. At the external market, the continued industrial investment observed in recent quarters was an important factor for the performance of the industrial electric and electronic equipment area, despite the uncertainties present in the macroeconomic scenario.
Revenue growth was spread across different industrial segments, with emphasis on the performance of China and the United States. Long cycle equipment also showed sales growth as a result of the previously reported good order backlog, with an increase in sales in the oil and gas and mining segments. In GTD, revenues showed fluctuations typical of long cycle businesses, mainly after deliveries of important T&D projects in Colombia and South Africa, and steam turbines in Germany throughout 2021.
In the commercial and appliance motors area, we observed the continued growth in demand for our products, explained by the acceleration of the economic recovery and market share gains in the United States and Mexico. Applications such as pumps and compressors were the highlights of this 1/4.
Finally, in the paints and varnishes, we showed sales growth in Latin American countries. The lower growth in the 1/4 is mainly explained by the drop in sales performance in Argentina, where we have an important operation for this business area. On slide 6, we see the evolution of EBITDA in the first Q of 2022, where we presented a growth of 21.3% in relation to the same period of the previous year.
The EBITDA margin ended the 1/4 at 18.1%, showing a reduction of 1.9 percentage points in relation to the first 1/4 of 2021. It is worth noting that EBITDA was positively impacted by this 1/4 by the additional recognition of credits referring to the exclusion of ICMS from the PIS and COFINS calculation basis. Excluding this Non-recurring effect, EBITDA would have been BRL 1.207 billion with an EBITDA margin of 17.7%.
This result was within our expectations. The challenges in the global supply chain and the consequent increase in raw material costs, together with the change in the product mix, mainly due to higher revenue from wind generation projects, continue to put pressure on margins, but we continue to work on several fronts to preserve the company's level of profitability.
Finally, on slide 7, we show the evolution of our investments. In the first 1/4 of 2022, investments reached BRL 209.6 million, 52% of which went to Brazil, with a greater concentration on projects to increase capacity, process improvements, and productivity gains at the Jaraguá do Sul plant, and 48% to the units located abroad, continuing the investments in our factories in India, Mexico, China, and the United States. With that, I finish my part and give the floor back to André.
Thank you. Before we move on to the Q&A session, I would like to talk about some of our latest accomplishments and comment on our outlook for the remainder of the year. Regarding the achievements, I would like to highlight the following events.
We received from the National Confederation of Industry the title of the most innovative company in Brazil, an achievement that reinforces how important innovation is for the company, always looking for increasingly efficient and sustainable solutions. We also announced some news related to electric mobility, such as the new partnership for the supply of charging stations for Jeep in Brazil, and the beginning of the supply of battery packs for electric vehicles.
Finally, on the outlook for the rest of the year, we'll continue to follow our strategic plan, investing in the company's solutions, continuous and sustainable growth, such as in the key areas of motion drives with motors, gearboxes and inverters, renewable energy, whether solar, wind, hydro or thermal through biomass, transmission distribution with our transformers and substations connecting power generation to consumers.
At the same time, we're managing to deliver healthy margins within the company's expectations, always focusing on the long term. For 2022, it is necessary to be aware of possible increases in costs that could put pressure on the results for the year. In addition to the change in the mix of products sold, as the wind and solar generation businesses should gain more relevance. In any case, we'll continue to work to deliver margins above the market average.
We understand that our competitive advantages help a lot in this regard. We believe that our business model based on verticalization, long-term vision, and diversification of products and solutions, combined with our global presence, helps us not only to expand our range of opportunities, but also to mitigate risks and uncertainties in times of political and economic turmoil like the one we are experiencing now.
This concludes my presentation. Operator, we can proceed to the Q&A session, please.
Ladies and gentlemen, we'll now start the Q&A session. In order to ask a question, please press star one. To remove your question from the queue, press star 2. The first question comes from Lucas Laghi from XP Investments.
Good morning, André Salgueiro, Felipe Scopel Hoffmann, André Rodrigues. I have 2 subjects that I would like to explore. First, the impact of exchange rates. There has been a lot of volatility. The exchange rate has appreciated throughout April. I would like to understand from you how you deal with the impact of exchange rate on 2 fronts. First, if you see any negative impact on profitability, given the expected lower revenue on exports that decreases the costs in Brazil.
Also if you feel any pressure to reduce prices in some short cycle products in Brazil, such as solar and distributed generation project-products. We understand, but, any color you could give on the exchange impact would be helpful. Regarding T&D, we saw strong demand in the domestic markets, mainly driven by solar and wind energies.
We saw a drop in revenues in the external market in GTD. We understand that it's much longer, the cycle here than in the external markets. I would like to understand from you what has led to this drop, and if it will be stabilized at this level of revenue for this year, or if you believe it will continue to grow during 2022. These are my 2 questions. Thank you.
Hello, Lucas, good morning. Thank you for the question. This is André Salgueiro speaking. I'll answer the first question regarding exchange rate, and then André Rodrigues will answer the other about international GTD. As for exchange rate, you mentioned in your question that we are in a volatile environment. It was at 5.30, now 4.60, now it's back to 5.
If we compare to what it used to be and now, there had not been such a high fluctuation, although it did went back to 4.60 and is now back to 5. In a scenario such as this, there are no major differences. Of course, we should see where exchange rate will stabilize. If we're talking about a variation of some decimal points, that doesn't change for us too much.
When we see the actual exchange rate appreciating, there is an impact on conversion from the external market, especially when you look at revenue in reais. We always try to make the analysis in local currencies, but the fact is that the revenue in reais has a negative impact in this scenario. There's also the cost issue.
The cost is adjusted, but it's never adjusted at the same speed that we adjust revenue. There is always some lag, some difference. We don't like to look at volatility in a short period because revenue is quickly adjusted, but the cost structure takes a bit longer to be adjusted or updated.
As for the second point of your question, if I understood it correctly about prices in Brazil, obviously, the cost structure of products that are in dollars, especially for short cycle, are, will be priced according to market dynamics. This is why it's important, going back to the beginning, to keep track of where exchange rates will stabilize and then adopt a commercial policy that makes sense.
Lucas, this is André Rodrigues speaking now. As for the performance of GTD abroad, as you said, we made a calculation in reais, a small reduction, in dollars a small growth. But something important that we always like to convey is that revenues may fluctuate 1/4-on-quarter, and this is very typical on long cycle businesses.
What happened, especially last year, is that we had important deliveries of T&D in Colombia and South Africa, as well as of steam turbines in Germany during this period. It's worth highlighting that in North America, we are in the process of increasing the capacity of the new plant in the United States for transformers.
We are at the initial stage after the opening that happened at the end of last year. Basically, I would like to enforce something we've been saying for some time now. The long cycle portfolio is very positive, both in Brazil and abroad. These fluctuations, 1/4-on-quarter may happen during the period.
Perfect. Thank you. This is very clear. Congratulations on your results again.
The next question comes from Marcelo Motta from J.P. Morgan.
Good morning. I would like to ask about the margins dynamic. We do understand that depends on the mix. Solar and wind puts pressure on the margins. I would like to understand whether recent political events, such as lockdown in China, a conflict in Europe that's taking longer than expected could put pressure, more pressure on the margin that may be something that would influence also the cost of raw materials in addition to the mix of products.
Also about the working capital, if you could comment on. I mean, the idea is to work with enough inventory to prevent any type of disruption in the future. I would like to understand from you whether inventory levels should be higher this year, or should we expect working capital to be reduced when we think about medium-term inventory levels. Thank you.
Hi, Marcelo. Thank you for the questions. Well, when we speak about the 1/4 margin, what we can state is that the recurring margin stayed according to our expectations. Also, it's no news that the margins continue to be impacted by costs, higher costs of raw materials, as well as the mix of products, which was more significant this 1/4 due to the growth of GTD in the domestic market, especially solar and wind.
What helped to offset these costs, cost increases in the 1/4 was the improved margins in our external operations or operations in other countries, something we've been working a lot to improve, as well as price adjustments both in the domestic and external market that usually happen in the first 1/4.
As for the question about all the external conflicts that are happening, not only the war between Ukraine and Russia, as well as the lockdown in China, it's a bit too early to assess how much additional risk this could pose. Given the exposure of WEG, we're much more exposed to China than to the war issue.
While there is a zero COVID policy in China, the supply chain will always be influenced, and there may be complications in times that could lead to scarcity of raw materials and increase in prices. So far, we have not felt that those consequences, but it doesn't mean that they could not come later. We have to keep a close eye on that. As for working capital, the increase in our working capital for operation is concentrated on the increase of inventory levels.
This is due to inflation on inventory, all the price increases that happened in raw material along the quarters, as well as the increase in inventories of strategic raw materials, given the uncertainties in the global supply chain. This was a strategic decision we made to guarantee the continuity of our operations, which was a right decision.
Some raw materials supplies are atypical, or rather we have atypical inventory levels for some raw materials, but they are necessary. The decisions we made in the first quarters were necessary and proved to be right, because with the China lockdown again, we have enough raw materials to guarantee our operations. The consequence is the worsening in the indicators and cash flow. The trend for this year is when things go back to normal, the inventory levels tend to be reduced.
Our indicators in 2022 will reach the same situation we had Pre-pandemic. That's not very likely, but the trend is to be better than the end of 2021. It's worth remembering that this is concentrated on inventories. Our indicators of average payment terms and receiving terms have improvements or at the good levels.
Okay, thank you very much for your answers.
The next question comes from Regis Cardoso from Credit Suisse.
Good morning, André Rodrigues, Salgueiro, Felipe. Thank you for the questions. I would like to quickly go over to the main segments and focusing on 2 of them. In solar, we saw there has been a significant increase in renewables activities, especially solar for GD and solar in general. This business can be seen this leap in the amount of imported solar panels.
How can we interpret this from the point of view of WEG? Is this only cost inflation, or it means really it's just the COGS increase, or can WEG also increase its unit margins or volume? Maybe the increase in imports also means an increase in the EBITDA generated and as well as increase in market share. Have you captured this increase?
This is on solar. From the guide, some aspects I would like to address is that the operators are oil and gas, I'm sorry, operators are receiving from Petrobras onshore. Is this segment relevant for WEG? I know they use WEG's pumps and motors on the onshore fields as well. I would like to understand whether the onshore projects have the same significance of large offshore projects. Could this mean a favorable trend for you?
Within oil and gas, now more of an international focus is to meet the needs of Europe with gas. Do you have, do you plan to invest on gas plants in the United States and Europe, and liquefied gas? Also if you could comment on the consequences of the investments in sanitation markets.
Thank you. Hello, Regis. Good morning. Thank you for the questions. I'll cover the solar part, renewables, and then we speak of oil and gas. What's happening in solar area is that there is an expectation that after the change in the regulation, it became clear that starting next year, part of the existing benefit to use the field infrastructure will be gradually removed.
The projects that are implemented during this year will continue with 100% benefit until 2045. The market is really hot in terms of volume, number of projects and megawatts installed. Obviously, there is a price issue. The cost of panels and inverters ended up increasing, especially during last year, given the impact on the commodities prices.
That is obviously reflected on costs and our revenue as well. I would tell you that most of the increased performance is related to increased demand and increase in volume coming from such projects. We expect 2022 to be a very positive year in the solar generation business in Brazil. This is the main factor for this good performance.
I know you can, you keep track of number of panels imports, solar panels imported, and that reflects the GTD performance in Brazil. GTD more than double its revenue when compared to the first 1/4 of 2021, this 1/4, 2022. As for wind generation, just to complete the renewables area, we now have wind generation projects start again in last 1/4 of last year generating revenue, and we are in a ramp up.
The 1/3, 4th, and the first 1/4 this year is better. It's a growing trend. Now we have a backlog of wind generation that will be in 2024. The backlog of wind projects is healthy and positive. We do expect that this year, next year, will be positive years in terms of demand for wind generation.
Of course, as we move closer to the second half of the year, and last year in the second half there was some revenue growth decreases in terms of comparison, on a comparison basis, but the prospects are, the outlook is very good. As for oil and gas, it is the main business or market for our products in industrial electric and electronic equipment.
If I remember correctly, in 2019, when we made a presentation about business segments, we said that oil and gas for the industry as a whole accounted for 18%-20% of the total demand of the segment. Here, we're speaking about exposure to offshore, onshore projects, refineries. There's also an exposure to LNG terminals, so for liquefaction or gasification. These investments are increasing in the United States and Europe.
This is a market that could be addressed by WEG. There may be opportunities for us in that market. This is a market that in the end of last year, we already said it showed a positive trend. Now with the conflict in Europe, it could unlock some new projects. The trend is for the oil and gas market to continue in a heated manner with growing for the next quarters.
Understood. Thank you. If you could give us a follow-up, just to conclude. I understand that there is a trend for growing revenues with maybe decreasing margins given the ramp up of wind and GTD.
The ROIC, I believe, in the second 1/4, should have a substantial drop. Because last year was 2 months comparison, should we expect a higher drop for the next 1/4 and maintenance at a more intermediary level at 20-something% ROIC? How can that dynamic be translated in financial metrics? Well, it's hard to give a target or guidance for ROIC.
Yes, considering that the second 1/4 of last year was a very positive one when we had that high increase, and now it will be the basis for calculating the second 1/4 2022, we do expect some accommodation. The ROIC started a trend of settlement since the 1/3 1/4 of last year. That happens 1/4-over-quarter, so it will continue. The level at which it will stabilize or reach is hard to tell you right now.
Okay, understood. Thank you.
Next question comes from André Mazini from Citibank.
Hello, everyone. Thank you for the question. My question is about competition in the external market. When we look at Siemens and ABB results, their backlog has increased, but revenues are not increasing so much. We wondered whether your peers could have any reduction in capacity since the global supply chains are quite broken and there is a lockdown in China. This added to the fact that you have a small market share abroad.
Could this be good wins and a good sign for you, given that your peers could be at their full capacity, and you are more vertically integrated than them, and you have plants all over the world, so you would be able to serve during 2022 with fewer supplies and capacity problems when compared to these peers that I mentioned.
Thank you. This is André Rodrigues speaking, André. About the competitors, everybody's keeping track of that and seeing that the demand is positive in several areas of the world. This is positive for WEG as well as for WEG's competitors. The main issue here is the capacity that a company must have to differentiate itself and seize the opportunities generated by the world. WEG is doing that very well. It started to benefit from those opportunities in the beginning of the pandemic.
During the lockdown in areas, I'm talking about North America, Mexico and Europe. WEG's, thanks to its verticalized production model, which is an advantage we have, and the situation of a good inventory levels in some branches, we benefit from that. Given the growth rate of in the external market that you have seen every 1/4, and we know how much markets are growing, WEG is really being successful to capture market share during these last quarters.
This is a result of the constant development of the company in the technology area. We're not able to compete with our competitors if we don't keep up to date in technology terms, as well as a result of investments to increase capacity we're making in several regions, as well as to our capacity to enter new segments and markets.
For example, in the past, WEG was very highly exposed to oil and gas and mining in the external market, and we made several efforts in the company to also operate in water and sanitation segments abroad. We opened a new opportunity for the company. In the speech of André Salgueiro, one of the highlights of this 1/4 in the industrial electro-electronic equipment is also pulp and paper segments.
This is another segment in which we're working to create new opportunities for the company, as well as new geographies. As reported earlier, Kazakhstan, Poland, Turkey, investment in low voltage in India, that unit will be finished soon. The world has the demand for our products. It's creating opportunities for all companies, but WEG, in my opinion, is making the most of its opportunities.
As for the global supply chain, if I understood your second question correctly, I don't believe there has been a lot of change in terms of what has happened lately. Yes, there is a verticalization of our process, and production is a competitive advantage that makes our life a bit easier. We have things solved regarding global supply chain.
The world depends on Asia for electronic equipment. We cannot reach that level of verticalization, but in other products, we have that advantage. Okay, perfect, Rodrigues, very clear. Just one follow-up on the question you answered before. Europe, soon after the war, there was a REPowerEU plan, and the idea of that plan was to be zero dependent on Russia for energy source. Germany is too highly dependent on Russia. Do you believe that this plan with this new branding will make a difference?
I mean, you are already important in Europe. Could we expect a higher growth? This plan will result in more investments from Europe in order to become independent from Russia in terms of energy.
This is André Salgueiro speaking, André Mazini. Well, we have to separate the opportunities a bit. If we are speaking purely of investment in renewable energies, wind and solar, we're not exposed to the European market, so there are no clear opportunities in this area.
We do have a business in Europe, which is a joint venture of TGM that's focused on steam turbines. So for thermal generation, yes. If there is investment in that area, it could bring an opportunity for us, and we could also address some projects with the production from Brazil.
In addition to that, there are opportunities from demand for other products, such as industrial motors, either medium or low voltage, and automation equipment for projects such as LNG terminals and oil and gas investments in Europe, Middle East, North Africa. That is a market which we're highly exposed to.
D epending on the investment and where it's concentrated, I believe yes, it could become an opportunity, but not for 100%, given that we are not exposed to the renewable market, or rather solar and wind in Europe.
The next question comes from Luiz Capistrano from Itaú BBA.
Good morning, everyone. Thank you for taking my questions. I would like to go a bit more into detail when we talk about domestic GTD. Naturally, the demand is very strong in the first 1/4 and will continue to be favored in the next quarters.
The question is about how much this is structural with some longevity and more predictable, and how much it derives from this context of changes in the legislation that is boosting the solar industry. The second part of this question would be, for how long this positive impact on solar energy will continue for you? One year, 2 years?
This movement of Pre-buy will favor you for how long? The second question is a bit more open to all segments of the company. We know that the long cycle portfolio or backlog is good and ensures a good performance for 2022. But thinking about new orders, how has this development or been in 2022, I mean, the new orders flow?
Okay, this is André Salgueiro speaking. Thank you for the question. GTD, domestic GTD, especially focused on solar, but also giving you a broad overview. In the release, and also in my presentation, we mentioned that the strong performance of GTD in Brazil happened because all the businesses in the area had a significant performance, and that is true for all the areas.
Obviously, some businesses grew more, such as wind generation, because there was no comparison basis from last year, then came solar with a strong growth. If we look at other business, even water or hydro or thermal generation also performed well, as well as T&D in Brazil. Looking forward, trying to answer your question about what is short term and long term, we have the wind energy coming back strong since the second 1/4 of last year.
We are making the plan full, and there will be a time when there won't be much more growth, but our backlog goes to the beginning of 2024. In terms of recurring revenues, this is the GTD business with the highest longevity, almost 2 years in backlog. When we move to solar is highly concentrated in solar distribution, a distributed generation.
In GD, there is a backlog visibility of one to 3 months at the most. Solar is expected to have a very positive year in 2022, and there is expected changes in regulations. How will the business be for 2023? We believe that since the benefit will be given, solar business continues to make sense in the medium and long term.
Obviously, keeping the level of revenue and growth, level will increasingly be increasingly difficult. We expect growth to become more stable as of next year and to be more of a recurring growth level. The other businesses, such as T&D and generation, we can see a backlog that goes up to the end of this year, beginning of next year.
For the visibility we have, and Rodrigo explained in the last questions, we have a good positive backlog. Given the prospects of generation auctions and transmission lines auctions, we see good news for projects for next year. The trend is for these projects to continue to happen. Summarizing, the first message is that the year will be positive, but as the revenue grows, the comparison basis becomes higher, so the growth pace decreases.
We have a good positive trends for long cycle projects. We expect positive year for short cycle, and we don't know how solar will develop next year. So far, we believe it will maintain a revenue level close to what it was in 2022, but let's see how it will develop.
Thank you for your answer. It was a very thorough one. For GTD, the most part of the demand derives from long cycle, right? If we think about 100% of revenue, we're speaking of more than half of long cycle GTD. Is that right?
Well, solar distributed generation, we consider to be a short cycle. Within GTD, short cycle is DG, distributed generation, and transformers, small transformers for distribution and poles, which are short cycle. The rest within GTD is classified as long cycle.
Perfect. The rest and the remainder adds up to more than 50%?
Yeah. We don't break down by business. If I tell you the percentage, you would have the breakdown of solar, so I cannot disclose that information, unfortunately. Okay. Thank you, André. Thank you for the answer. The next question comes from Pedro Fontana from Bradesco BBI. Good morning, everyone. Thank you for taking my question.
Congratulations on the results. If you could please comment on WEG's, how WEG is doing to benefit from the trend, and how do you expect this to gain relevance in results? And what are the avenues for growth that you are studying? Hello, Pedro. If I understood correctly, you talk about electrification for the electric mobility business. Yes, that's it. Okay. I think WEG is very well-positioned. We already had the powertrain technology.
We developed it and had the partnership that's going very well with MAN and other projects that we're developing with other potential customers. We didn't stop at powertrain. There's a WEMOB, the recharge, the charging stations. With these opportunities, we are developing partnerships with some OEM manufacturers. We're giving you an update as they happen. The most recent one was with Jeep in Brazil. Then the battery segment, which would be a complementary alternative for this segment. This is an area that's growing in the company.
When we talk about electric mobility, of course, there are specific opportunities that I mentioned, but the infrastructure complex to make this business happen in the world as well as in Brazil is very important because we'll need more energy in generation, and the trend is for this to come through renewable energy. We're very well-positioned because we produce solutions for the source, 4 sources of renewable energy in Brazil: hydro, solar, wind, and thermal through biomass.
If there is more generation, more transmission lines will be required, so the T&D business, transformers and substations, more panels, automation equipment, so then we have the automation business at WEG. When we look at the mobility industry, the company's well-positioned, it's growing, it's developing new solutions, adjoining solutions. When we look at the macro level, it's also a very good opportunity for the company in the future.
Perfect. Very clear. Thank you. This ends the Q&A session. I would like to turn the floor over to Mr. André Rodrigues for his final remarks.
Hello once again. Thank you very much for attending this call, and we will see you all in the next call for the earnings of the second 1/4 very soon. The conference call of WEG has now ended. We thank you all for attending, and have a good day.