Marfrig Glbl Foods S/Adr

Good morning and thank you for waiting. Welcome to Maher Frigg's Q1 2025 earnings call and the proposed merger announced yesterday via a joint material fact by Maher Frigg and BRF. We'll be presenting the company's results and this presentation is being recorded and interpreted simultaneously in both languages. To listen to the conference in Portuguese, please click the interpretation button and select Portuguese. For the best audio experience, please mute the original audio. Joining us today are Mr. Marcos Molina, founder and chairman of the board of Mr. Tim Klein, CEO of North America Operations, Mr. Rui Mendoza, CEO of South America Operations, Mr. Tang David, CFO and Head of Investors Relations, and Mr. Stefan Solimovski, our Investor Relations Officer. Please be advised that all participants will remain in listen-only mode during the presentation. We'll then have a specific presentation for the transaction. Before we begin, please note that any forward-looking statements made during this call are based on management's current expectations and assumptions, as well as information available to Marfrey Global Foods. They are based on current information available to the company. These statements are not guarantees of future performance as they involve risks, uncertainties, and assumptions as they relate to future events. which may or may not occur. Investors and analysts should be aware that broader economic conditions, industry trends, and other operating factors may impact Marfrig's performance and cause actual results to differ materially from those discussed. I'll now turn over to Mr. Tang David for his presentation. Good morning, everyone. Thank you for joining another Marfrey Global Foods earnings call. Let me walk you through our consolidated results for the first quarter 2025. These figures include North American Beef Management View, South American Beef Continuing Operations, and BRF, in line with CPC and IFRS standards. In slide two, we have the highlights of Q1. we had consolidated net revenue reached 38.6 billion, up 27% versus Q1 2024. Adjusted consolidated managed euro EBITDA came to 3.2 billion reais, with an EBITDA margin of 8.3%, up 20% year over year. Our strategy of diversifying proteins and geographies with a focus on high-value data portfolios, premium brands, and processed products continue to support sustainable growth in both revenue and EBITDA. As a result, we generated free cash flow of R182 million, an increase of R740 million year-over-year, and net income of 88 million, up from 62 million in Q1284. This was our seventh straight quarter of the leveraging, bringing the leverage down to 2.69 times from 2.82 times in 2024. I'll now turn it over to Tim Klein to discuss North America operations. Over to you, Tim.

Okay. Let's begin on slide four, where I will comment on the results for the first quarter. Starting on the first chart on the left, sales volume was 5.2% higher than the same period of the previous year. Net sales were 3.3 billion, an increase of 15.4% versus last year. EBITDA, adjusted for the non-recurring startup cost of our new liberal facility, was $6 million, 89.7% lower than last year, with an EBITDA margin of 0.2%. Beef demand in the quarter was strong, with wholesale demand and retail prices higher than last year. Boxed beef prices moved higher, but not enough to offset sharply higher cattle prices and lower drop credit values. Now I'll move to slide five, where I will talk about U.S. market data. Starting on the left, USDA reported Kansas live cattle prices averaged $202.32 per hundredweight, up 12.3%. The USDA comprehensive cutout averaged $324.68 per hundredweight, up 9.1%. while the drop credit declined 1.2% to an average of $11.56 per hundredweight. The cutout ratio was 1.60. Consumer demand for beef continues to be robust, especially given record carcass weights. As we move into the barbecue season, demand will continue strong seasonally. For the remainder of 2025, lower-fed cattle supplies will lead to reduced capacity utilization across the industry. We are seeing some encouraging signs with cow liquidation numbers declining and more heifers being held back during this phase of the cattle cycle. Now I'll pass to Rui.

Thank you, Tim.

On to slide six. I'll be talking about Q1 performance for continuing operations in South America. Starting on the left, We've had 205 million tons in the quarter, up 25% compared to year over year. That growth is a result for capacity expansion over the recent years. Onto the chart in the middle, net income. We are at 4.1 billion reals, up 35% of the net income year over year. On the right, the adjusted EBITDA, we are at 453 million reals, an increase of over 56% year over year. This excellent performance can be described as an increased capacity, more efficiency in our industry plant, and more participation of added value products. We are at 11.1% EBITDA, a 150 bps increase when we compare to Q1 of 2024. Onto the next slide. Let me address the dynamics of continuing operations. In Q1, exports accounted for 81% of the total income of the operation. Sales to China had a smaller participation when we compared to the same period of last year. They now account for 49% of exports. We have been focused on expanding our sales channels in our units for other markets. The goal is to capture the best commercial opportunities. With that in mind, we've detected several good opportunities in many markets. especially in north america and europe i'll turn it over to tang that he'll be continuing to talk about consolidated results thank you on slide eleven adjusted ebida results for continuing operations of the total of $38.86 billion. North America accounted for 49%, BRF 40%, and South America for 11%. In terms of adjusted manager EBITDA of $3.2 billion, the margin was 8.3%. BRF accounted for 85%, South America 14%, and North America 1% in Q1. By currency, 72% of our consolidated revenue is generated in U.S. dollars and 26% in Brazilian reals. On to slide 12, free cash flow generation. In Q1-25, consolidated operating cash flow was positive at 3.1 billion reals. Investments in capex and financial expenses totaled 2.9 billion reals. approximately 1.4 billion in each category. As a result, free cash flow for the quarter was positive at 182 million rials. Slide 13, net debt and managerial leverage. Consolidated net debt totaled 38.1 billion rials at the end of Q1, a 2% reduction. compared to Q4 of last year. The leverage ratio in BRO measured by net debt to LCM adjusted EBITDA dropped from 2.82 times to 2.69 times as a result of Marfrig's strategy enabling strong operating results in free cash flow generation. If we adjusted net debt for the receivables and contractual adjustments related to the sales assets in Uruguay, leverage would fall further to 2.63 times. Slide 14. We reduced consolidated leverage for the seventh consecutive quarter and ended the quarter at 2.69 times measured in reals. We continue to manage the reduction of gross debt, which results in lower financial expenses and lower leverage. In addition to our usual amortizations this quarter, we also made an early repayment of $120 million on the term loan held by our NBM subsidiary. These initiatives reflect Marfurex's disciplined approach to capital allocation and its ongoing commitment to creating value to shareholders. Slide 15. net results and value generation. In Q1, we generated consolidated net income of 88 million reals versus 63, 63 million in Q1, 24. Marfrig's profitability is always reflected in the generation and distribution of value to shareholders. In 2024, Marfrig distributed 2.5 billion reals in dividends and BRF distributed another 1.1 billion. in interest on equity to the respective shareholders. Our protein and geographic diversification, focusing on higher value-added portfolio premium brands and process products, results in high value creation for our shareholders. We remain focused on continuously improving operational efficiency, cost control, and leverage reduction, resulting in profitability maximization and increased returns for all our shareholders. As announced yesterday, Marfrig's board is proposing the business combination between Marfrig and BRF. This combination is expected to unlock significant synergies and drive meaningful value creation for all shareholders. I'll now hand it over to the operator to kick off the specific presentation on this proposed combination. Ladies and gentlemen, will now present the operations of a suggestion. As was announced in a material fact meeting yesterday, investors, analysts, and journalists should be aware that any facts related to the economy, economic situation, and industry trends may result in results that are different from those expressed in forward-looking statements. These proposed are pending approval from the boards of both companies. This webcast is being recorded. The presentation will be available for download. All participants are in a listen-only mode. We will then have a Q&A session. Further instructions will be given then. We have Mr. Marcos Molina, Chairman of Marfrig NBRF. Mr. Miguel Goulart, CEO of BRF. Mr. Rui Mendonca, CEO of South America Operations. Mr. Tim Klein, CEO of North America Operations. Mr. Fabio Mariano, CFO of BRF. Mr. Tang David, Marfarig CFO. And Mr. Ignacio Scorseria, Vice President of Administration and Controls at BRF. I'll turn it over to Mr. Marcus for the presentation. You may proceed now, sir.

Good morning, everyone. Thank you very much for joining us on this very important day to all of us. I'm very proud and pleased to announce the merger between Marfrig and BRF. We are creating MBRF Global Foods Company, a food company with iconic brands that are recognized based on a multi-protein platform that is 100% integrated already present in 117 countries across the globe. After three years when Marfrig was ahead of BRF, this is a natural step in this period where we experience a change. The company is now generating value to its shareholders and paying out dividends, performing above historical levels, breaking operating and financial records every quarter. Morfig evolved in its geographic diversification strategy, focusing on improved operational efficiency and value-added products. what was consolidated with the optimization of the South American portfolio. Both companies advanced together capturing all possible synergies and unaligned management as of now. The merger is a necessary step that will allow us to capture a new wave of relevant strategic synergies that are also operational and tax wise. With that operation, we will have scale and diversification gains. A company that starts as the seventh largest in Brazil with an annual revenue of 152 billion reals. We have a major competitive advantage, which is to have an experienced team and with a proven record of value creation. The operation also brings a major opportunity in North America. allowing us to consider the possibility of re-domiciliation, maintaining financial discipline, and our focus on value added. I'm sure we are beginning a new successful chapter at MBRF. We will continue generating even more value to our shareholders, partners, customers, consumers, employees, and the society at large. I now turn it over to Huimin Donson. Good morning, everyone. Let us begin our presentation with the strategic rationale of the transaction between Marfrig and BRF. That combination aims at consolidating our position as a leading global company in the food sector. The two companies together will create a multi protein platform, improving our reach. As for synergies, we identified several important opportunities. We will optimize operations and increase efficiency throughout the supply chain. The integration of the companies will allow us to capture synergies that are unique to that merger, generating additional value to our shareholders. Lastly, last but not least, we are committed in maintaining a high level of corporate governance. In continuation to our successful a history of our controller with vast experience in the sector, supported on a high performing team. On the next slide, we emphasize the successful trajectory that led to this merger. The combination of the two companies marks a new chapter in that trajectory, making us a leading global company in the food sector. Both companies have a long track record of leadership in the sector. In 2022, Marfrig took the leadership of BRF's board, consolidating a strategic partnership. The merger represents an important landmark. With that transaction, we are advancing to a new phase of synergy capture. All that movement paves the way to redomitialization of the company. we will allow us to unlock value to our shareholders. In slide number four, we emphasize the essential topics that guide that merger. They are strengthen global presence of the company today in 117 countries, the creation of a multi-protein platform that is truly integrated with strong brands and a supplementary portfolio. Gains of scale and diversification, reinforcing financial stability. Experienced teams and with a proven track record of value creation. Relevant operating and tax strategies, as we will see ahead. A path to re-domitialization, anchored by a strong presence in the North American market through national beef. Today, we are announcing the birth of a large global food company based on a footprint organized strategically, allowing us to plan, produce and deliver quickly more than 8 million tons of food to more than 427,000 customers in 117 countries. Our integrated approach to the processes in the supply chain will allow us to obtain maximum efficiency, exploring the best opportunities according to market movements and mitigating risk. Marfrig and BRF have a complete portfolio, as you can see on slide six, with value added products, superior quality and strong and preferred brands in the markets where we operate. merger will allow us to explore a multi protein portfolio, reaching better stable margins in the different sales channels. Our portfolio and brands are powerful assets that will leverage our presence in the points of sales across the globe, ensuring leadership in the markets, guaranteeing a competitive advantage by adding value to the business consistently. As of slide seven, we will approach the evolution of important indices of the operation in the past few years, confirming the strategic direction and our ability to execute. When we look at Marfrig's operation in South America, we can clearly see that the business unit has shown excellence in its operation. We advanced significantly, increasing processed and value-added products in our That focus, along with large industries, allowed us to double profitability. We observed substantial improvement in EBITDA margin, showing the efficacy of our strategy. In North America, National Beef stands out as a leader in the production of premium beef in the US, reflecting its commitment with quality. National Beef has operational competitive advantages that are significant, allowing it to maintain a superior performance in the market. Its excellent and consistent performance is translated by dividend payouts over the years. From the acquisition, there were $5.9 billion reinforcing National Beef's capacity to generate substantial value to shareholders. I now turn it over to Miguel Goulart, the CEO of BRF. Good morning, everyone. Speaking about BRF, the company has advanced consistently in the excellence of its processes and the continuous improvement of its operation focused on growth and profitability. Ever since Morphreak started its investments, we had 4 billion reals with the BRF Plus program 77 new approvals, and for the first time in eight years, we started paying out dividends to our shareholders. Besides, we had a significant improvement in the main indicators of the company. In the past three years, BRF started a growth trajectory that will be accelerated in the next few years with the combination of businesses. We will be focused on increased participation of process products that already grew 2.8 point since the new board. Our efficiency plans and activities allow us more than double our EBITDA, achieving a margin above historical levels. When we look at combined operations, Marfrig and BRF, $152 billion in revenue, 76% comes from international operations. Our portfolio is multi-protein, 38% of the sales volume coming from processed food with high added value. As for expected synergies, we divide that into two phases. The companies will extract as much synergy as possible in wave number one. With the current configuration for the next wave, the business combination will be essential. Deep knowledge of both companies will allow us to have a clear vision of existing opportunities, mitigating execution risks. The synergies mapped have been divided into three fronts with a total of 805 million reals a year between 400 and 500 million expected for the first 12 months and the rest for medium and long-term. Expenses and costs through cross-selling and synergies in the supply network we will achieve 485 million reals per year. We estimate an expense reduction of 320 million reals a year with initiatives like the unification of the commercial and logistic structure, consolidation of a single operation, and the optimization of the corporate structure. Last but not least, following the existing tax laws in line with the currently adopted strategies, the company will have tax optimization, the acceleration of tax credit at federal and state level. Based on the current estimates, their front will generate 3 billion reals in present value, net present value. Here, I emphasize the main items, the incorporation of BRF shares by Marfrig, 0.85, the exchange ratio, 0.85 with a maximum distribution, 2.5 billion reals by Marfrig and 3.5 billion by BRF. As usually happens in such a transaction, the exchange ratio may suffer some changes. Additionally, we follow the law of essays in Brazil. We now share the shareholding structure resulting from this operation. BRF will be an integral subsidiary of Marfrig that will become MBRF. BRF shareholders will be part of the shareholding structure of MBRF. The controller will have about 41.5% of MBRF. And to finalize our presentation, the schedule estimates the general extraordinary assembly for the approval of the transaction. Our high performance culture and common values are the basis for the news chapter in the history of Marfrig and BRF. We are confident that this merger will bring growth opportunities and an even more promising future because together we are stronger. Thank you very much.

Thank you. We'll now have the Q&A session. To ask a question, please press raise hand. I pop up to unmute your mic. will show up on your screen. For Portuguese, click on the interpretation button. If your question has been addressed, you can leave the queue clicking on the raise hand button once again.

Please hold. Isabella Simonato, Bank of America, asks the first question.

Good morning. Can you hear me? Yes, we can hear you. Good. Thank you. Congratulations on the transaction. My first question is to Tim. It's a very challenging start of the year. It was somewhat expected. What's your take, Tim, on the start of Q2, which theoretically has a favorable seasonality, but the tariffs may impact the margins for Q2? And my second question is about the transaction per se. I don't know whether Fabio can address that. Can you elaborate on any tax-related synergies? How you are planning to monetize? How are you going to happen? If you could give them some timing too. Tim.

Yes. Regarding your question, as you know, we've seen a rapid escalation in cattle prices as we start Q2 2021. In our business, it's typical to sell meat out front, and so there's always a lag between getting the boxed beef prices in line with cattle prices. That's starting to occur now as we see some settling back of cattle prices as we go through the rest of the quarter. improved demand on boxed beef should help that. So far, we're not seeing any dramatic impact or measurable impact on our margins because of the tariffs. But of course, we watch that all the time. But we're not seeing anything to be concerned with at this point.

Good morning, Isabella. This is Yanashu. As to tax synergies, they include tax from the creditor's side. There's a first wave to be captured right off the bat. Let me give you an example. We'll have more flexibility to optimize the company's capital structure. That's a consequence of having a larger corporation. And the possibility to work together, optimizing the company where either MaFrig or BRF has operations, especially in the state of Sao Paulo. a second wave that will require additional steps that may come on the second year after the merger is approved.

Thank you.

Mr. Ricardo Alves from Morgan Stanley asks the next question. Good morning, everyone. Thank you for the call. Thank you for taking my question. From Marfrig's comments both yesterday and earlier today about looking for listing in the US and the potential to look for redomiciliation of the company. I would like to hear your take on whether you are considering the main drivers to justify that transaction. Have you started studying it, or are you beginning to elaborate that possibility? What could happen after the merger? Listing in the U.S., is it something on your radar, short-term, mid-term? That's my first question. It's a different format for the call today, if you'll allow me. I know that the BRF team is attending too. It's a very important topic to us. And we had some questions asked to us. My question then is, have you... Well, let me address the operational side for a minute. Have you... The ministry... of agriculture detected a major avian flu spot in the state of Rio Grande do Sul. What's your take on that confirmation? Have you made any decisions in that sense?

Good morning. This is Miguel Goulart. It's important to understand that in this process of merger, we bring to the new company, which is MBRF, we bring national beef. So national beef will give materiality for the redomiciliation process to be doable. And this is a process we are working on. The advantages that this may bring are obvious. Tax, cost, et cetera, and the company has been working with that scenario in the past few years. We are prepared for that to happen in the medium term. We have these alternatives mapped out and we are working to make that come true for us to have that option. Now, on the avian flu decree 795 by the ministry published today, brings the statement of a sanitary emergency in the state of Montenegro, Rio Grande. That happened at a farm of a commercial company. Obviously, we are analyzing that situation, but I wanted to make it clear that this is not a new situation in the poultry production system last year. We had a Newcastle case in Rio Grande and the Ministry of Agriculture acted promptly as now, taking the necessary measures to restrict the area, to isolate the case and had transparent communication to the whole market. That makes us believe that this event should be controlled And as we had in the case of Newcastle, a company like ours that has strong brands in the local market, opening 187 new destinations in the past two years. In such a moment, we can navigate through the period quite unharmed. We are now confident that the whole biosafety process for production in Brazil will remain because our country has credibility. We have an excellent reputation. It will allow us once again to overcome that situation. It's also important to say that due to BRF's geographic diversification, we have product inventories located in different geographies. That allows us not to run into the mistake of leaving some customers unsupplied. We had and have contingency plans, as was the case of Newcastle. I'm sure they will also work in this isolated case in Rio Grande.

Thank you, Miguel. Very clear.

Enrique Bruce Collin asks the next question. Good morning. Thank you for taking my questions. Well, I'd like to address two issues. Going back to synergies. Miguel, you've mentioned 400 to 500 million for operational synergies. Could you break that down? as to revenues, product score are selling, and what would be costs and expenses out of that total. And the second question is about the right to move away from the deal. So the company, well, depending on the size, the company may reconsider that proposal. So my question is, Are there any hypothetical scenarios in which minority shareholders would not reap the benefits of that merger? Is there any limitation as to when you would be able to move away from the deal, especially from the minority holders from BRF? These are my two questions. Well, let me give you a concrete answer. When we talk about synergies, we have 485 million in year one. In terms of costs, we had an additional 320 million. We've mapped out all synergies in four areas, commercial, logistics, supply, and SG&A. In the commercial area, we've mapped out about 300 million. Logistics, between 50 and 100. Supply, it's a very relevant item, 230 million. S&A, 225 to 250. We've broken down all these fronts in commercial. We have selling beef, use distribution, capillarity. 400,000 customers BRF has in the world. premium price beef with Saadia brand, and also optimizing commercial and exports teams. In logistics will be decentralized operations and DCs. We have common sales cycles, international offices that will be working together and using the both companies logistics infrastructure. In supply, we can have more synergy with National Beef, We have good negotiations in Latin America and a value engine process that BRF does very well. We can implement at Marfrig. As far as costs are concerned, we can optimize the corporate structures. We can maximize the composition of the company, including the holding, operational and administrative synergies between $225,000 to $250,000. 805 altogether. That will be added to what Ignatius mentioned about the tax. Fabio will be fielding the second question. Good morning, Enrique. Let me provide a combined answer, but you're right. There's the right to withdrawal depending on the magnitude of the deal, but that's not what we expect. It's involving a controlled company. In the case of Marfrig, the controlling company, that right to withdrawal is based on equity according to accounting values. So that would make sense that right of withdrawal won't be exercised by Marfrig. In the case of BRF, that's somewhat different. There is the equity price at market value, an amount that was already announced, 1989. Oh, shareholders that are not accepting the combination or the merger, those shareholders would have the right to withdraw at this amount per share. When you not consider the dissenting shareholders, we have part of those shareholders that have stated their position. When you include passive funds, we believe we can have 20%, about 6 billion reals. When you reduce dividends, well, the income, that are expected. 3.5 billion at BRF, 2.5 billion at Marfrig. The total is about 4.1. If you subtract that from 6 billion, the effect would be about 2 billion. Additional leverage of 0.15. We would then be able to operate the company, a combined company, with a leverage of about three times, a very comfortable level, I'd say.

Just to add to what Fabio said, we have some signs from the main shareholders supporting the operation. And another very important topic you saw that more free in the past five years, the total dividends that we paid out to shareholders, which puts us at a very comfortable position for individuals with this dilution initially. As a controller, I will have 41.5 And I have many opportunities to replenish that percentage to reach a better control level of the company because the price is very attractive considering all the synergies and everything that the company can capture. Marcos, Fabio, Miguel, it was super clear. Thank you very much for your answers. Our next question comes from Guilherme Palhares from Santander. Guilherme, over to you. Good morning, Marcos, Rui, Miguel, Tim, and other members of the company. Along Enrique's question, looking at the restructure now that we have a consolidated company. How about the reporting structure of your directors? Do you have a design? Since there were different directors, will that structure be maintained? I just want to understand the organization chart. Marcus, could you give us your take on it? Good morning. Guilherme, for three years, Marfrig has been doing that work. We have a consolidated team delivering results. And that's one of the main assets that MBRF has, which is the sum between Marfrig and BRF. So we have different growth fronts We've mapped all that and all of that is very clear to us. As for the board, the board and the committees help us a lot. Independent committees, both at MARFRIC and BRF worked on that topic of the merger. And I chose not to participate in that process. We know what to do to capture those synergies, as Miguel said. And we're going to do it naturally. There will be no surprises. We will hold the assembly to get it approved. Thank you. Follow up. When you speak about a relevant fact that on the date of the publication, I would like to hear your opinion. The custody is considered or the liquidation of the transactions so that we understand the cutoff date of who has the right to withdraw. Let me just clarify two points. The date of the relevant fact will apply to shareholders that have the right to withdraw, although the cutoff dates for the payment of income and for those that will exchange their shares with the combined company will come later. So we conclude that those that exert the right to withdraw will not receive the additional dividends. So just to make it clear, you don't receive dividends and the cutoff date is the date the relevant fact was published. That's correct. Thank you. Have a good day.

Iago Bortolucci from Goldman Sachs asks the next question. Good morning. Good morning, Marcos, PRF, and Marfreak teams. Thank you for taking my question. It's always a pleasure to attend your calls. Let me go back to the beginning of our conversation. As to the avian flu outburst. just this morning. Two things I would like to address. First is on the operational front. And I would like to ask Miguel that question. Starting last year, what are the protocols like with your partners? Have they become more flexible? What is the slaughter timeframe whenever you detect a problem like this? And the second question is about the avian flu too. What is the likelihood of that impacting the deal you announced yesterday? In the protocol you've submitted under conditions that could change the merger, you mentioned sanitary calamities and other MAC clauses Do you believe that an outburst of avian flu that could expand in Brazil could be qualified as one of those conditions? Thiago, let me explain that to you. After that Newcastle case, we had a program organized by the ministry, including many countries. So that was a regionalization process. So the ministry of agriculture negotiated with several countries. So it's a 10 kilometer radius for that protocol. and the ministry decided to self-ban itself from these markets. And once that self-suspension took place, it was regionalized, that focus or that outburst was controlled, and then all countries resumed imports. For this case, announced today, the ministry adopted a different measure. That's the ordinance 795. So it's limited to the city of Montenegro with that 10 kilometer radius, possibly. So as of today, the ministry will communicate that to the World Health, Animal Health Organization, And then we'll be negotiating on a country-by-country basis. This is the information we've had so far. This is something that is happening as we speak. But we are positive, Tiago, is that sanitary authorities in Brazil are very stringent. So we believe that the problem will be addressed on a very short-term basis. This is our expectation. We've seen that happen before. We have a very positive track record in the country, in the Ministry of Agriculture. And I would like to also say that we at PRF, we have a very good track record. the company that has opened many new markets with 187 new certifications in the past two years. And we also can benefit from very strong brands we have domestically. We had the chance to navigate this period under somewhat normal circumstances. That's what we expect. This is no surprise. We have contingency plans available and we are already implementing it. Last time it happened, our contingency plan worked very successfully. Of course, every case is different, but we'll remain monitoring it closely. We are going to try to minimize the problem as much as we can Let me turn over to Fabio so that he can address your second question. Thank you. Thank you, Miguel. Well, Tiago, as to the prerogative of that MAC clause, I think it's too early to comment on it. We don't know what the implications may be. as of now. But just last year, Miguel mentioned it, there was that Newcastle case in the same state of Rio Grande do Sul. At the time, there were no material effects. Far from it. And let me state that the intention and the desire of the company is to conclude the deal in July. That's what we expect. Let me just add to that question, Tiago. The reason for the merger and the reason to have it now is to have a more efficient, more diversified company providing that synergies, 500 million for this year, 800 next year on top of the tax synergies. So the company will be way more efficient and competitive as a result. So that's why we decided to implement the merger now. This is only beneficial to everyone, shareholders from Marfrig and BRF and all our partners. That was very clear. Marcos, Miguel, Fabio, thank you.

Our next question from Guilherme from BTG. Guilherme? Good morning. A simple question on our side. Reading the document, the exchange ratio has some changes There are some questions that may change that exchange ratio. I would like to better understand if you could, what are the adjustments that can be made? What is the methodology in attachment 315, if possible? Guilherme, could you repeat the question, please? We couldn't hear the beginning of your question. Sure. In the document topic number four, you speak about the exchange ratio of the shares, which is 0.8521, the ratio between Marfrig's and BRF shares. But in the same topic, reading the document, apparently that can be adjusted depending on a few aspects of the deal. Could you explain what the possible adjustments might be that could be made in that exchange ratio? Good morning. Basically, as we explained in our presentation, the exchange ratio was set with the assumption of dividend payout of the maximum amount that was established, 3 billion, 524 billion, 2.5 to more figure. The adjustment to the exchange ratio is against what is allowed. Any dividend lower than that will have an impact in the exchange ratio. And that's the adjustment that needs to be made. So the exchange rate announced was based on that dividend payout, that maximum dividend payout defined. And any adjustment to any amount will have a direct impact on the exchange ratio. I would like to take this opportunity, speaking about the exchange ratio, we understand that There may be different interpretations about the subject, and it is important for us to clarify that. Now, before we speak about math, I would like to emphasize a bit of the process involving the absorption of shares, having a controller based on the Decision 35 by the Brazilian SEC, an independent committee is created. And this is what happened at BRF. That independent committee commissioned a first line bank. That was Citibank. This is public information to negotiate the exchange ratio. That also happened on the Marfrig side. That set an independent committee with independent members. and that committee also commissioned a first-line bank. From that on, the negotiation took place that led to the ratio of 0.8521, having as a condition the payment of dividends, as mentioned. So what's behind that ratio, and it's important to emphasize it, the companies were assessed, and BRF was assessed at a market premium equivalent between 15 and 20% of the amounts of the last latest auctions and Marfrig was assessed with a premium that was even higher in the valuation concept and their premium was about 35 and 40%. Another aspect that is important to understand is that although we see on this screen in the last auction, an exchange ratio that we could consider one-to-one when we analyze the potential dilution of this transaction. And I can mention an example that was described on page 14, which is the shareholding structure. In the case of BRF, we have the second largest shareholder of reference had 11.6%. and we'll have a 10.6% stake. So it's a dilution limited to a little over 8%. So there is a confusion about a possible discount that might be superior to 15% that doesn't exist. So if you had an exchange ratio of one to one, you would maintain your stake in the combined company and in the proposed structure with that exchange ratio, there will be a limited dilution limited to those 8%. That's what I wanted to clarify about that aspect. Thank you very much for taking my question. Thank you very much. Thank you very much for the question. Thank you. Our next question will come from Igor from Genial Investimentos. Igor. Igor, over to you. This concludes our conference call. In case of questions, send your questions to the RI email or assoins at brf.com. We thank you for your participation and I hope you have an excellent day.