Weg Sa S/Adr

Good morning.

Welcome to WEG's Earnings Conference Call for the first quarter of 2025. I would like to highlight that Samy Cheney's translation is available on the platform on the Interpretation button via the globe item at the bottom of the screen. Please be advised that we are streaming this conference call, and upon its conclusion, the audio will be available at our IR website. During the company's presentation, all participants will have their microphones disabled. After that, we'll start the Q&A session. To ask questions, click the Raise Hand icon at the bottom of your screen to join the queue. When you are announced, the prompt to activate your microphone will appear on the screen, and you activate your microphone to ask questions. If you have more than one question, we recommend that you ask them all at once. If we do not have time to answer all questions live, feel free to send your question to our email, ri at bag.net, which will be answered after the end of the conference. We emphasize that any forecasts contained in this document or any statements that may be made during this conference call regarding future events The business outlook, operational and financial projections and targets and WEG's future growth potential are merely beliefs and expectations of WEG's management, based on currently available information. This statement involves risks and uncertainties and therefore dependent circumstances That may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operating factors may affect WEG's future performance and lead to results that differ significantly from those expressed in such forward-looking statements. With us in Jaraguá do Sul are André Luiz Rodrigues, Administrative and Financial Superintendent, André Menegheti Salgueiro, Finance and Investor Relations Officer, and Fidi Roffman, Investor Relations Manager. Mr. Rodrigues, you may proceed. Good morning, everyone. It's a pleasure to be once again for WEG's Earnings Conference Call. We start with the highlights of the quarter on slide 3, in which the net operating revenue grew 25 by 5 percent compared to the first quarter of 2024. In Brazil, the energy generation, transmission and distribution area was the highlight of growth, with the concentration of centralized solar generation businesses and the continuity of delivery of transmission and distribution projects. In the foreign market, we also highlight the GTD business. We presented another quarter with good performance especially the T&D business in North America. In the industrial segment, we observed continued demand for our products and services in important segments, such as oil and gas and mining, in addition to the positive contribution of business acquired in 2024 from brands Marathon, Rotor, and SEMP, and Volt Electric Motors. The EBITDA was R2.2 billion, a growth of 22.8% compared to the first quarter of 2024. The EBITDA margin ended the quarter at 21.6%, a reduction of 0.4 percentage points compared to the same period of last year. Throughout the presentation, Aldrez Salgueiro will give more details about these points. ROIC, one of our main financial indicators, remained at a high level of 33.2%, as we can see in more detail on the next slide. Even at a high level due to revenue and maintenance of operating margins healthy during the period, we presented a reduction in the quarter mainly due to the fact that the ROIC in the first quarter of 24 was positively impacted by the recognition of non-recurring tax incentives related to the establishment of a new subsidiary in Switzerland. and by the growth of invested capital due to the investments in fixed and intangible assets, in addition to the acquisition of marathons businesses. I'll now give the floor to André Salgueiro to continue. Thank you, André. Good morning, everyone. On slide five, we present the evolution of revenue from business areas. In Brazil, we observed healthy industry activity with maintenance in demand for short cycle equipment. such as low-voltage electric motors and serial automation products, despite the fluctuation in deliveries of long-cycle equipment projects, such as medium-voltage electric motors and automation panels. In GTD, the highlight was the delivery of centralized solar generation projects in a movement that more than offset the decrease in revenue from new wind turbines. Good performance also in the T&D business, driven mainly by deliveries of large transformers and substations linked to transmission projects and distribution networks. In commercial motors and appliances, sales volume showed growth compared to the same period of the previous year, with good performance from relevant segments such as air conditioning, civil construction, and compressor manufacturers. In paints and varnishes, demand was positive, with emphasis on the water and sanitation and agricultural implement segments. In the foreign market, highlighting the oil and gas and mining industrial segments, in addition to the positive contribution of Marathon, SEMP, and rotor and volt electric motor businesses to revenue growth in the quarter. For long cycle equipment, such as high voltage motors and automation systems, we observe the construction of a healthy order book for the coming quarters, despite fluctuations in the volume of project deliveries in the quarter. In the GTD area, which continues to perform well, we continue to take advantage of the opportunities present in the T&D market in North America, together with good demand in marathons generator business. In commercial and appliances motors, we observed growth in demand with emphasis on upraises in China and North America. In addition, to the contribution of Volt Electric Motors business. In paints and varnishes, despite the drop in sales in South America, you observe revenue growth in other regions, with emphasis on the good result of the operation in Mexico. Slide 6 shows the evolution of EBITDA, which showed growth of 22.8%, while the EBITDA margin ended the quarter at 21.6%, showing a slight adjustment when compared to the same period of the previous year, mainly reflecting the change in the product mix, especially greater relevance of centralized solar generation business. It's important to highlight that the solar generation business, due to the deliveries of centralized generation projects, more than doubled compared to the first quarter of 2024. This movement was important for revenue growth, but had a negative impact on the consolidated margin for the quarter. The other businesses together continue to have healthy margins and are above the company's historical averages. Finally, on slide 7, we showed the evolution of our investments, which totaled 621 million, 56% in Brazil and 44% abroad. In Brazil, we continue to modernize and expand the production capacity of transformers at Betim and Blumenau units, in addition to increasing the production capacity of industrial motors in Jaraguá do Sul. Abroad, we continue to invest in Mexico and Colombia, with emphasis on progress in the construction of new transformer factories. With that, I finish my part and give the floor back to André. Thank you, Salgueiro. On slide 8, and before we move on to the Q&A session, I would like to highlight that in February, we announced the completion of the acquisition of Rayvax, a Brazilian company with global operations already consolidated in the power generation control systems market. Finally, I would like to talk about the outlook for the rest of the year. We are confident in our strategy of diversifying products and solutions and global presence, which allows us to take advantage of opportunities in the various markets where we operate and mitigate risks in times of market fluctuation. We continue with healthy operation dynamics, our industrial strategy and constant search for operation efficiency should continue to support good operating margins and return on invested capital. We continue to benefit from structurally favorable conditions, especially those linked to the energy transition, which should continue to support revenue growth throughout the year. but it's always important to remain attentive to the global macroeconomic scenario and possible volatility in the markets where we operate. This ends our presentation, and we can proceed to the Q&A session. Thank you. We'll now start the Q&A session. If you want to ask questions, click raise hand icon on the bottom of your screen to join the queue. When you are announced, the prompt to activate your microphone will appear on the screen and you must activate your microphone to ask questions. We kindly request that questions be asked at once. Our first question comes from Milton from BTG Pactual.

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