Iochpe-Maxion Sa S/Adr

Good morning, everyone. Welcome to the video conference regarding Yosbe Maximum's fourth quarter 2025 results. I'm Rodrigo Carraza, Senior Investor Relations Manager at the company, and I will be leading this video conference. Today, we are going to have Mr. Peter Klinker, CEO, and Mr. Renato Salon available for the question and answer session. Please be advised that this video conference is being recorded and will be made available at the Company Investors Relations website along with the presentation. We will be having Mr. Peter Klinkas presenting in English. For your convenience, simultaneous interpreting into Portuguese and English will be available. They can be accessed via the globe-shaped icon labeled Interpretation located in the lower center of the screen. Clicking on this icon, you will be presented three options. original audio portuguese and english so you can select the option that suits your need for the q a session we recommend that you take part using the q a icon at the bottom part of your screen by default your name will be announced so that you can ask your questions live and right now a request to activate your microphone will appear on the screen once you ask your question it's worth noting that some questions will be answered in english so once again Please make the most of the translation feature in Zoom. Before proceeding, we would like to clarify that any statements made during this video conference regarding the company's business prospects, projections, and operational and financial targets constitute the beliefs and assumptions of Yoshby Moxon's management, as well as information currently available by the company. Future projections is not a guarantee of performance. It involves risks, uncertainties that may or may not occur. Now, I would like to give the floor to Mr. Peter Klinkers, CEO for Jospe Maxions. Please proceed.

Good morning to everybody from rainy Sao Paulo, but I hope it's still a good morning for everybody. Let's jump into this presentation. As usual, we start with having a look on the global markets. if we look at the light vehicles it's different than commercial vehicles that you see on the right side light vehicles kind of flattish in 2025 versus 2024 whether you look on including china or excluding china doesn't matter too much we used to look at global production ex-china because that's the more relevant market for us but kind of flattish and we expect the same to happen in 2026. that doesn't mean that Everything's flat. I want to remark here that, for instance, two markets, Brazil and India, that are important markets for our company. Those markets show more meaningful growth, we believe, in 2026, and that would be good for our company. If we look on the out years there, there's a little bit more growth, like 2 or 1 to 2% per year, and that would bring the light vehicle market back to a volume of about 95 to 100 million vehicles in the year 2030. If we look on the commercial vehicle side, it's more dynamic there. And unfortunately in 2025, as everybody knows, it was negative dynamics primarily, but not only. Initially in North America, then also South America, but also the European market, especially at the end of the year, was not great. And so overall, minus 7% in 2025 versus 2024, that's a meaningful downturn. 2026 looks better, and we take that. And I think it's more or less in all the regions that people foresee, and we concur with that view, markets should be better. Just the year 2026, You look at North America and we will talk a little bit more about North America during this presentation. Like we did in the last presentation, that market is still down 4% to 5% people say, but we take it because the market was down so much in the second half of 2025. 30, 40%, especially in the heavy vehicle market. Some of you may remember, I talked about it in the last call, that is the most important market for us, is the heavy vehicles, Class 7, Class 8, that we supply from our structural components unit that was hit the most. And if that market comes back to only being minus 5% compared to 2025, taking into consideration that the first half of 2025 is pretty good, that means you need to have a good increase during the year 2026 to get back to more or less the volumes that we had as a whole year 2025. So, North America, we take that number and what we see so far this year, it is confirming that. We don't have an outlook for the second half of the year yet, the first few months of the year are in line with the assumptions that we took for the North American market. We believe Brazil will be better, especially in the first half of 2026, and we also believe Europe will be better. That's what we see happening as well, and Asia. For us, most importantly, India should show solid growth as well. So, more optimism from a point of view of the track market for 2026. And then if you look at 27, 28, a little bit more out, that's pretty significant growth. That's good growth. And so even if that materializes to a good extent, not completely, maybe even more, but if these numbers are more or less true, then our companies were very well positioned to benefit from those market trends. Because we all know that even in the year 2025, and we see that later on, even in the year 2025, there where it was possible, like in Europe or like in Asia, we outperformed the market. And so if the market comes back and we keep our performance, which definitely is the aim, and I think it's going to happen, then we should be very well positioned for those numbers, to capitalize on those numbers. All right, enough on the market. Let's look at the numbers on the next slide. On net revenue in 2025, really a mixed number, because the first half was pretty strong, and then the second half, initially only because of North America truck, and then, let's say, during the third quarter, especially the fourth quarter, or the Brazil truck production went down, and that hits us not only in our components division in Brazil, but also in Wales. And so that... trended our numbers down in the second half of the year but overall in the year 2025 we still came up with a 15.3 billion turnover which is slightly up versus 2024 our gross profit in the fourth quarter of 2025 despite All that drama in North America and also in Brazil from a commercial vehicle point of view, still at 11.7%, which took us to 12% gross profit margin for the whole year, which we believe is a pretty solid number given the circumstances. Our recurring EBITDA pretty much the same as on the same story as on the gross profit, 9.6% in the fourth quarter and still a double-digit margin in 2025. Again, despite that situation in commercial vehicles in the Americas, which is a very important market for our company. We were able to realize a double-digit margin over the year 2025. Leverage, 265 in the fourth quarter of 2025. That compares to 255 in the third quarter of 2025. But we need to keep in mind here that we lowered our forfeiting of factoring by about 100 million And so if you neutralize that effect, our leverage would actually be pretty much the same in the fourth quarter 2025 than what it was when we talked to you guys about the third quarter 2025. Okay. Now, if we look on the revenue by product, it's obvious that our components unit is hit in North America and South America because of commercial vehicles. Our wheels unit is hit in Brazil, was hit in Brazil because of that. Not in North America, because from a wheels point of view we supply also truck wheels to the North American market from Mexico, but we supply the medium truck segment and that was a very different picture. Also slowing down, but much less than what we saw on the heavy truck segment. And therefore, you know, instead of having a split of roughly 75% wheels and 25% components, In 2025, that number looks more like 80% wheels and 20% components. We go. to the revenue by customer pretty much the same uh effect that you see there are just two examples there you see tretton and daimler which are big customers uh uh for our company uh for components in in north america uh you know their revenue uh as a percentage of our total revenue goes down uh meaningfully but it's being made up by uh other customers like toyota like stallantis like like ford and those are typical wheel customers of course light vehicle customers that we serve through our wheels unit and we were able to not make up completely but but mitigate to a large extent those impacts that we saw for components in in north america in the second half of 2025. we go to the next slide If you look a little bit more on the regions, starting with South America, I think this number shows that we have been outperforming the market. Both light vehicle production and commercial vehicle production ultimately was down in 2025 in Brazil, but our revenue is up. Of course, it was more up in the first half when truck was still okay. than it was in the second half but overall the revenue is up and of course that has to do with us outperforming on the light vehicle side which is the wheel segment uh where primarily uh we did very well uh from an aluminum wheel uh point of view that uh you know didn't make up everything in the second half you see second half fourth quarter was still down but less than the market and so again a mitigating factor of uh the headwind that we had in the in the brazilian market so market not so good in the second half but maxion at least mitigating partially uh that market effect if we look on north america on the next slide um This is the drama that we have been talking about that you can read about everywhere, and it has been hitting us hard in the second half of the year. If you want to hear good news about that market, I can tell you that the fourth quarter was not good, but it was a little bit better than the third quarter. So let's see if that's a trend that will continue into 2020. 26 what we saw in the first two months is in line with the targets that we put ourselves and those targets are mostly based on the data that we showed on the first slide that comes from global data from ihs and so we don't have the visibility yet for the whole year But at least the start of the year is in line with the assumptions that we took for this year. And so, you know, big impact in North America, but the fourth quarter at least being a little bit better ultimately than the third quarter. We go to EMEA, which is Europe, in our case, Europe, Turkey, and our plant in South Africa. You know, we clearly outperformed the market. I think you see light vehicles was slightly down over the year. Truck was more or less stable over the whole year in Europe. It was down in the fourth quarter, was a little bit up in the beginning of the year, but more or less stable over the whole year. And so us having 18% more revenue on truck is a pretty strong number. And us having, Maxion having 13% more revenue in 2025 than what we had in 2024 shows that we are performing solidly. or strong, I would say, in this important market for the company. And that's largely based, not only, but largely based on our position that we have in the truck market there. And so that's not only good for the region, it also has been supporting our global results, which, you know, if we would have only been acting in North or South America, those would have been impacted more, impacting more than what we now see in our overall consolidated results for the company. We go to Asia. I've been saying the last few presentations that my expectation would be for Asia to start playing a bigger role in our overall revenue and margin situation. And we see that happening. It starts happening in the fourth quarter of 2025, this time in PASCAR, where the market is good and I think Maxion is outperforming the market there and our aim certainly will be to continue that trend and also to complete it with truck. My expectation for truck also both for India and for China next year is this year. is positive and so we saw the start of this region outperforming or supporting our results more significantly happening at the end of last year and our wishes for that to continue not only in 26, but going forward. India, which is the most important location for us in Asia, I would say it's a very good place to be nowadays. And we're well positioned there. And as we talked about in other presentations, we have a couple of plans in the drawer to do even a little bit more in India going forward. With that, go back on the next slide. uh to some numbers and so as we talked uh before uh our our margin i think both in the fourth quarter of 2025 our gross profit margin as well as for the total year 2025 very much in line with 2024 which i believe you know based on the sudden reduction uh that we saw in uh in uh The North American track market and then also in the Brazilian track market, that's a pretty solid result. A result that we would have signed up for when we would have known what happened in the second half of the year in primarily North America. If you go to the next slide, it's pretty much the same story on our EBITDA margin, 9.6% recurring EBITDA margin in the first quarter of 2025. You know, with that market situation in the Americas from a truck point of view is, we believe, a solid result. And then the 10.1% margin that we delivered over the whole year, double-digit margin, with those sudden drops in the truck market in the Americas is also something that we believe is a good outcome for the company. We'll look on the next slide. The net income, it's a little bit more depressing story, both for the first quarter of the year as well as for the total year. And, you know, here you see the reduced income in CEV, of course, which you also see in EBITDA, especially when it's not recurring EBITDA, but you see the higher restructuring costs here as well. And also financial expenses, we were not assuming the CELIC to be at the level where it was during most of last year and where it is today. And so that has been hurting many companies, including our company. And also we had higher taxes in this quarter, particularly in the quarter four of 2025 that hurt our net income. And actually, instead of being slightly positive, now it was a negative net income for the quarter. We go to the next slide. Look at our investments. We said we have good discipline in place regarding investments, and I think we delivered on our targets, which was to have a meaningful reduction in 2025 versus what we invested in 2019. A little bit more in the fourth quarter, but that was a managed action. We were pushing out some capex from more in the beginning of the year to more towards the end of the year. But the final number for the year, the 554 that you see on the slide, is a meaningful reduction versus what we showed, what we invested in 2024. Go to the next slide. You look at our leverage, I talked about it went slightly up quarter over quarter. But then again, the 100 million less factoring that is included in that number basically brings back the leverage to kind of the same level than what we had in the third quarter of 2025. We go to the next slide. look at the gross app there's not a lot of change uh here uh i think there's still uh uh you know very manageable amounts of debt uh what 2010 to 26 and 27 and then of course we had a little bit more work to do uh to prepare ourselves for uh refinancing uh our bonds in in uh 2028 which we will do. And at the same time, you know, we have a lot of cash liquidity available, 1.6 billion in cash. And then on top of that, 760 million of undrawn credit lines. So I would say a healthy situation from a debt point of view on this slide, like we explained in prior presentations. We go to the next slide. Usually here, what you see, if you remember, we show a few new business wins regarding wheels. We decided to do different this time. This is a picture of the guy in the middle is Giorgio Mariani, and he was in China a couple of weeks ago picking up an award. from Cherry for the good work that we do together with Cherry. We don't talk a lot about all the new business wins that we have with our customers, primarily because we're not allowed to, unfortunately. But I can tell you here that we are growing rapidly with the Chinese OEMs outside of China. primarily. And so just to give you a glance, you know, we now have in place purchase orders or we are already supplying not less than 16 Chinese brands all over the world. This is happening in all the regions that we talked about before, Asia, Europe, North America, South America. And so some of you may remember that we talked about believing we're well positioned to have higher market shares with the Chinese OEMs when they go outside of China than what we have currently as market shares for our products in the regions where we operate. And that it seems to be materializing. And so we're very happy about that. We are very proud to be able to work with the Chinese OEMs that will continue to grow in Brazil, in Europe, in the Americas, we believe. of course also in asia and you know we like to work together they recognize our product portfolio our innovative products the gem bonnet and they also recognize our global footprint when we work with them in china or when we work with them in asia or we work with them in europe of course it's a much smaller step to also work together for instance in the americas and so a good story here for a company that we were hoping for and that seems to be materializing um We go to the next slide. Last slide, the business summary. I think the year 2025, of course, it was highlighted, if you want to call it a highlight, by all the dynamics that were going on with markets, truck markets under pressure, first in North America, then in South America. But we did a good job, I think, as a company in optimizing our structures. We did a good job in not spending more capex than we committed to and lowering our capex versus 2024. And we did a good job in adapting pretty quickly. We would have not done that. We would certainly not have been able to do a double digit margin in this kind of market environment for us. So from a cost and from a flexibility point of view, I think the company did a good job. From a growth point of view, uh as we talked about uh in prior presentations uh you know we're not planning to do another big uh you know investment build a new plant on the very short term but we are planning to grow and so you can grow through increasing shares we've been doing some of that in 2025 of course we will target to do the same in 2026 as well. We are commercializing innovative products, not only with the Chinese OEMs, but also with the Chinese OEMs that are jumping on it. We like it. We both like it, the customers and we. And that's also creating some growth. And then we will execute some selective pros initiatives. We did it already in Mercosur with our acquisition of Polymetal in Argentina. We are doing some more in Turkey. may be doing a little bit more and then in india we have a series of good smaller projects in the drawer that we will take out of the drawer uh piece by piece and so that will create some some some growth in a little bit different shape and form than just building a new plant uh left and and and right and so in a nutshell uh you know if people ask me how's the company doing uh i would say you know when i open the When I open the newspaper every morning, and I'm sure you do as well, then you see a lot of dynamics. You read a lot about geopolitics. And then when you read about automotive news, it's a tough world, right? There's a lot of write-offs. There's a lot of pressure on profits. I look at our company and say, you know, maybe we didn't reach all the targets that we put ourselves, which was not possible because of some of the negative, some of the headwinds that we had. important markets for us. But overall, our company is in a very stable position. And even more important, our company is well positioned to deliver on more solid markets and in the track environment and some growth in regions that is predicted by IHS, by global data that are important for us, like Brazil, like India, or in Europe, the truck market coming back on top of market share gains. And so, you know, I read the news, I read the automotive news, I look at my own, at our own company, and I think, you know, we're not so bad positioned. With that, I open it for questions and answers.

We are now going to start our Q&A session. Please ask all of your questions at once. Remember that if you ask your questions, please send it through the Q&A icon on the lower portion of the screen. Your names will be announced so that you can ask your questions live. You will receive a request for your mic to be unmuted. First question is from Fernanda Urbano from XP. You may proceed. Good morning, everyone. Thank you for the opportunity. I have two questions. First, in regard to the United States, I know it's a little bit early to say, but I would like to know your projections for 2026, considering your scenario and considering the tariffs. You've released that in the fourth quarter you were seeing some signs of stability for the market, especially for the end of 2025. But I would like now if you can share what is going to happen for 2026. What do you expect as far as timeline is concerned so that these tariff effects are going to actually affect the company's sales in the market? And my second question is in regard to Brazil. I would like to explore a little bit the demands for heavy vehicles in Brazil. We see some news today in regard to the beginning of the Movi Brazil program and the release for possibilities within the program, posing for more production, especially starting in February. I would like to know from you if you know about this project for Brazil, and I would like to hear about the U.S. as well. Thank you.

Thank you very much. Very important questions. Let me start with the first one on the U.S., or let's call it North America. As I said, it's too early to give a prediction for the total year 2026. When we ask our customers, they give us more information, let's say, for the For the next coming months, they're not yet able to talk about the whole year 2026. But what I can tell you is that, you know, our assumptions are in line with IHS, with global data, that during the year 2026, there will be a ramp up. volumes which you know needs to be the case if you want to end the year 2026 slightly below 2025 you start at 2025 very high you ended it at a low it means you know the curve needs to go needs to swing the other way and I can what I can tell you is that at least in the first months of this year that's what we see happening now a lot more needs to happen for that market to come back to the levels that we saw at the beginning of 2025. And I can't give you any better input right now already. But at least the start of the year is in line with our assumptions. From a tariff point of view, this is changing so much, as we know, that it's sometimes hard to keep track of what's happening and what are the impacts directly or indirectly on your company. But purely from a North American standpoint, I would say right now we believe there is little impact for our company because we were handling or commercializing our products under Section 232 where there is no change. And, of course, there's tariffs under Section 232. we are supplying for Mexico, which is getting USMCA exemption. That was the case and that is still the case. And so from that point of view for our company right now, based on what we understand and based on where we are today, we believe that there is no meaningful impact from the latest changes regarding the tariffs. When we look on Brazil, We're positive on Brazil. PASCAR, we believe, will be positive this year. and we're well-positioned to profit from that. Our plans are doing well. Our aluminum plants, we moved some equipment from around the world to Brazil to have a little bit more capacity in Brazil. We acquired a majority stake in polymetal that will help us to generate more capacity for Mercosur, not just for Argentina, but for Mercosur. And so from a pass-car point of view, we're well-positioned. And then truck. we do have the capacity both for components and for wheels. And we believe that at least in the first half of the year, yes, the program you're talking about will be helpful. And so we're looking forward for those projections to materialize. I hope that answers your questions, gives you a little bit more insight.

Yes, it does. Thank you, Peter. You're welcome. Our next question is from Gabriel, presenting Itaú VBA. You have the floor, Gabriel.

Hi, thank you, Rodrigo. I think I'm going to ask in English. I will ask the question in English so Peter can understand. So, hi, Peter and team. Just following up on the answer you gave regarding heavy vehicles here in Brazil, if you could comment how you're perceiving the inventory levels for your customers here in Brazil, it could be great. Just to get a sense because we have seen a steep decline. deterioration on production levels in the fourth quarter along the latest months into 2025. So just trying to understand whether there's a catch-up in production to happen in the beginning of 2026 here in the Brazilian market. And also, if you could come and provide further details on what we could expect for market share gains throughout 2026. As I understand, because you gained market share along 2025, you start 2026 with an already high market share. Just trying to understand whether we should see only a carryover effect or if there's additional projects for you to get, additional room for you to get in our customers at this point. Thank you.

Thank you very much. For Brazil, we do not foresee any special effect of too high inventories or too low inventories and so what we see happening is the market coming back to a certain extent in the beginning of this year and so we do not see any special effect of having too low inventories and the catch up of production or having too high inventories and still cooling down even though sales of trucks go up. So, you know, it's in line with our assumptions and those assumptions are better in the first half of 2026 than what we saw in the second half of 2025. when you talk about market share increase of course you talk more about europe and and asia where that story is happening especially on the commercial repo side and you're right some of those market shares you know they cannot continue to increase but i would say some already happened beginning 25 some happened more towards the end of 25 and so my expectation is still to see a positive effect with that how big that effect will really be. It depends a little bit on how the market develops and how quickly we can materialize all of our potential. But I agree with you, the story is not endless. But at the same time, I'm hopeful that we will still see some positive effect from that also in 2026 and not only in 2025. I hope that answers. De nada.

Wonderful. Thank you. Our next question is from Luisa Mussi from Safra. Luisa, you have the floor. Hello, everyone. I have two questions. First, could you please give some more details in regard to what happened to Capex in this quarter? And considering your scenario you described, what could we expect in regard to leveraging of the company for 2026? These are Mike's two questions. Louisa, can you hear me? Yes, now I can. I apologize. Well, thank you for your question. Let me explain to you in regard to what happens to the effective taxing for 2024 and 2025. It is explained by some recurring points that benefit 2024 and they have not been repeated for 2025. Some of the movements are in the fourth quarter of 2024, we had a positive impact of around 30 million reais, and this is due to a plant in India. It took us four years for the ramp up, and when we can prove that the plant is in a good situation and profitable, we have the trigger for this acknowledgement of the tax-related losses in the company. So we did have this positive impact, and we are not being impacted by the same in 2025. Another important point is what we call inflation account. Considering Turkey is a hyperinflation country, we have the updates of all those numbers with the inflation accounts and this update happens with equity when we have this equity update we generate a credit in equity and and we generate a debt in the operational expenses, because it is included as an expense. With this, the PBT was reduced, and when you apply the nominal tax, you have less tax to pay. The inflation account was being applied in the previous years, On December 25th, the Turkish Parliament approves a measure in which the monetary correction is suspended for 2025 and it leaves 2026 as suspended. so this inflation account also has a negative impact of around 40 million so these are these two impacts that we suffer of course we have other positive impacts that lead us to 32 billion and this is the difference between quarters another important thing to highlight is timing when we look at 2025 against 24 we do see an improvement of around 40 million reais. So, our effective tax is not the accounting tax, it's the actual tax that is paid. it was in around 27%. So this is the explanation of what we saw in the fourth quarter. And unfortunately, this inflation account impact affects our net profit. And this is what happened for 24 December. In regard to the leveraging, As Peter mentioned, we wrap this year at 2.65 fold. Of course, there is a reduction of around 100 million reais in our factoring operations, and at the end of the day, we would be close to the same leverage we had in Q3. Obviously, there is some deterioration of this leverage from 2.4 last year to 2.56 adjusted, but we also see cash generation that is strong in the company, even with the scenario that we've explained. We see R$328 million of cash generation with cash flow, we say indirectly, and a series of investment that was in line with what we had appointed, which was around 500 million reais, so we close with 508 million. Of course, there is a reduction in cash because there is some liquidity, but in general context, we do generate cash 328 million reais and obviously worsening the working capital in 100 billion because we don't follow with factoring but in view of this scenario we have managed to control even with the impact we had around 50 million in expenditures with extract restructuring and it impacts a bit and leveraging but we do not have significant deterioration with this scenario. And looking forward, as Peter said, we are in line with what the agencies have been forecasting in regard to vehicle light or heavy vehicles production. And we are very close to the situation that we are envisioning today. You are very clear, as usual. Thank you very much. Next question is from João Andrade from Bank of America. João, you may proceed. Good morning. Can you hear me?

Thank you, Peter.

Thank you, Renato. My question is in regard to the antitrust investigation occurring in Germany. If you could share a little bit, if you have any estimates so that this investigation is concluded. The fact that you are collaborating with authorities is good, but I would like to hear from you in this regard, and thank you for the opportunity.

Johan, thank you for the question. Of course, we cannot speculate about this matter. As you say, we are fully cooperating with the authorities and there was a next step through this formal notification and together with the authorities we are studying what that means. We're looking, you know, how we can best manage the next steps in this procedure. But at this moment, it's really unclear, you know, what it means, if it means something from a financial point of view. And so we're not in a position at this stage of the investigation to give any further comments regarding amounts of money that could be involved or would be involved if they are involved. Perfect, Peter, that's clear. Thanks so much.

You're welcome. Our next question is from Kiefer Kennedy from Citibank. You have the floor. Thank you. Kiefer, can you hear us? With no further questions, we are now closing the Q&A session. I would now like to give the floor to Peter Klinkas for his final statements.

Thank you very much for your participation. I can inform you that the rain has stopped in Sao Paulo. I hope the rest of your morning, whatever time zone you're in, will be okay. We will work hard this year to deliver the results that we've put ourselves. During this year, it's still a long year, we're in February, there will be positives, there will be negatives, but I think we're well positioned to hopefully capitalize on a market that especially from a truck point of view is looking to be in better shape in 2026 than it was in 2025. And so I'm looking forward to come back to all of you with our first quarter earnings call in a few months from now. Thank you for listening to us. Bye-bye.