Good morning, ladies and gentlemen, and welcome to Dexco's Earnings Call for the Second Quarter of 2025. This conference is being recorded, and this recording may be seen on the company's website, ri.dexco.com. The presentation is also available for download there. This call is being translated into English. To listen to the translation, click on the globe icon and select English. You may also mute the original audio. We'd like to inform you that during the company's presentation, all participants will be in listen-only mode. After that, we will begin the questions and answer session when further instructions will be given. Before we continue, we would like to underscore that any statements made about the future are simply beliefs and assumptions from the company's management. This is based on currently available information. These statements may involve risks and uncertainties as they refer to future events, which therefore depend on circumstances that may or may not occur. Investors, analysts, and journalists should take into account that events related to the future, the macroeconomic environment, the industry, and other factors may lead to results that materially differ from those expressed in these forward-looking statements. We have with us in this conference call Dexco's Executive Board and Investor Relations team. I would now like to give the floor to Francisco Semeraro, Dexco's CFO, who will begin the presentation. Please go ahead, sir. I'd like to say good morning to everyone, and thank you for joining us for another Dexco Earnings Release. We begin the presentation on slide three with the main highlights for the quarter. The second quarter results reinforce the consistency of our operations with pro forma adjusted and recurring EBITDA of BRL 702 million in the second quarter, considering the 49% of LD Celulose and BRL 1.3 billion in the first half of the year. Excluding these results, Dexco's EBITDA totaled BRL 443 million in Q2 with a margin of 20.9%. This performance was sustained mainly by the strong generation of the wood division, in addition to the realization of forestry business in this quarter, which boosted our results. LD Celulose operated at full capacity, delivering one more quarter with high productivity and robust margins. We also saw positive evolution in finishings, even in the face of a challenging scenario. The metal products and sanitary ware division has delivered a nobler mix of products that have had a positive impact on the company's revenue, which reflects our exit from the electric showers and taps segment announced last year. In floor and wall tiles, we face a challenging scenario, but we managed to deliver positive results. In addition, we'd like to shed a little more light on the relevant piece of data this quarter, which was a variation in gross margin versus the second quarter of last year. In 2024, we had a considerable amount in the variation in the fair value of biological assets line. As you have been following, the demand for wood has remained strong in recent years, which has raised the price to the high levels that we currently see. Naturally, this creates changes in the amortization lines for the following periods with no cash effect. Here we see an increase of 4% with gains in price and product mix, which reinforces our ability to maintain profitability in a challenging scenario. Now, on slide five, we'll look at cash flow. The first half of the year was marked by a greater need for working capital due to the increase in inventory levels, which we saw especially in the first quarter and that ended up impacting the year-to-date figures. In addition, this movement is linked to improvements in service levels in the metal products and sanitary ware division and the reorganization of the tiles division. With these movements, working capital to net revenue ended the period at 16%, aligned with the first quarter of 2025 and slightly above the second quarter. We also saw an increase in the financial flow line as a result of an increase in interest rates compared to the same period last year. With investments, we saw a drop of around 42% in the projects line, especially considering the approach of the investment cycle starting in 2021. With regards to sustaining CapEx, which refers to the amount earmarked for maintaining our manufacturing operations in forestry, we ended the first half of the year with BRL 367 million, of which BRL 205 million was in this quarter, which is around 14% less than the same period last year. Highlighting our diligence in costs and focusing on returns. Moving on to indebtedness, our leverage level fell to 3.39x net debt to EBITDA, reflecting the increase in operating generation this quarter despite higher cash consumption. We remain attentive to the macroeconomic scenario, which continues to be challenging, and the impacts of our cost of debt, which is currently at 107.1% of the CDI. Our debt structure continues to be concentrated in long-term commitments, with the maturity distributed evenly over the years. The average debt maturity this quarter was 4.3 years, reflecting our focus on efficient liability management and maintaining the company's financial health. Moving on to the business divisions, we now continue with slide eight. According to EBA data, this was a very solid quarter with a strong demand for MDP, and the foreign market has reduced versus last year, especially due to foreign exchange variations and macroeconomic instability. We now see the wood division's results on slide nine. The division delivered another very solid quarter with volumes sustained by a strong demand for MDP, especially for the furniture industry. On the profitability side, price pass-throughs help improve the margin of this business. In addition, this quarter we carried out forestry transactions that boosted both net revenue and EBITDA. It's important to note that this did not occur in the same period last year, which widens the positive difference in the annual comparison. On the other hand, we concentrated the division's maintenance stoppages in the first half of the year, which put pressure on costs and ended up offsetting part of the operational growth in the period. It's worth returning to the point we mentioned at the beginning of the presentation about the change in the fair value of biological assets. This effect impacted the consolidated gross margin, but is even more visible here in the wood division's results. When compared to Q1, we see an increase in gross margin in the quarter. As a result, the division's adjusted and recurring EBITDA totaled BRL 428 million in the quarter with a margin of 29.9%, an increase of 34% year on year. In the first half of the year, EBITDA reached BRL 778 million with a margin of 28.6%. Now to LD Celulose's results. The operation maintained a strong pace in Q2 with efficiency gains and progress in the main operating indicators. It's important to remember that in 2024, the plant's maintenance stoppage took place in the first quarter, and this year's was in July. LD revenue grew 30% compared to Q2, and EBITDA for the quarter totaled BRL 529 million with a robust margin of 60.5%. In the first half of the year, EBITDA was BRL 1.07 billion with a margin of 62.3%. Net income reached BRL 191 million in the quarter and BRL 443 million in the half, benefiting from a comparative basis that has already been, as has already been communicated. With this, we continue to deliver good performance, combining efficient operations with solid fundamentals. Moving on to slide 12, we now look at the metal products and sanitary ware market. This quarter, we began to follow data from ASFAMAS, the Brazilian Association of Sanitary Material Manufacturers, and it has a closer correlation with the products of the Deca and Hydra brands which we operate. This quarter's data indicates that the metal products market is still going through a process of settling into new levels after the reorganizations in 2024. This movement explains a downturn in the annual comparison, although we already see a recovery compared to the previous quarter. The sanitary ware segment is more positive, with growth both year on year and quarter on quarter. It's worth remembering that in the second quarter of last year, we're still incorporating information from electric showers and taps, and they are no longer part of the company's portfolio. We have excluded this from the results related to this business. We continue our leadership in higher added value segments, especially metal products, which had a positive impact on net revenue. Volume was stable and grew 14% compared to Q1. Adjusted and recurring EBITDA totaled BRL 9 million, impacted by input costs, especially copper, which is a dollarized input, and by operating adjustments in the sanitary ware segment. Even so, we're on the road to operational recovery. In early July, we closed our unit in Paraíba. This is a part of our continuous improvement plan because this plant was dedicated to producing the most competitive items. With that, the most relevant items in the portfolio were transferred to Cabo de Santo Agostinho, ensuring an efficient transition and our competitiveness in this industry. The division is still focusing on operational improvement, profitability, and service levels. Continuing with slide 14, we present the environment in the ceramic tiles sector. The competitive environment remains challenging. Over the last two years, we've seen falling demand in the industry, and on the other hand, we have seen increases in capacity that kept idleness levels at around 30%. This has an impact on inventory levels and has decreased prices in the sector. In our tiles division, we've been feeling the effects of a sector that is still under pressure, with volumes moving sideways in relation to the 2024 results. We're continuing with our strategic agenda, seeking the best profitability and management of our product portfolio. To this end, as we announced, we've temporarily suspended lines at our plants in the south of the country. With this, we've ensured a more efficient operation, and we can already see advances in the division's capacity utilization levels, which have surpassed 80%. EBITDA was positive by $6 million this quarter, reversing the negative result of the previous quarter. On slide 17, as you all know, there have been discussions into the application of tariffs to Brazilian products by the U.S., and we've been closely monitoring the possible consequences of this for our business. Against this backdrop and in anticipation of possible questions, we'd like to bring up a few points that help put Dexco's exposure into context. In recent years, less than 1% of the company's net revenue has come from exports to the U.S. In other words, even though there are taxes for the products in our portfolio, Dexco's direct exposure is very small. Looking at the entire industry, we estimate that 3% of the Brazilian production goes to the American market. It's a relatively small volume with a good chance of being redirected to other markets, which leads us to assess that this is not a significant impact in the short term. When we consider indirect impacts, it's possible that producers and clients who are more exposed to tariffs will reduce their production, generating more supply in the local market and putting pressure on prices. There could also be a drop in demand from customers who buy panels to make furniture for export to the U.S. Even if they might be relevant for certain products or clients, for the entire industry, these effects would be limited, and as a consequence, this would also be limited for Dexco. In any case, we are still attentive to movements, analyzing scenarios, but at the moment, we don't see this issue as a critical factor for the company. We come to the last slide of our presentation with an outlook for the second half of the year. Starting with the wood division, we expect continued strong demand for panels, and we expect upward movements in market prices. This scenario should continue to sustain the division's good performance. In tiles, the ramp-up of the new Botucatu plant has been progressing consistently, and we're already beginning to see positive effects in the dilution of costs and factory occupancy. Also, considering the optimizations that we've carried out at our plants in the south, we believe that the new plant will continue to be an important driver of efficiency over the coming quarters. In metal products and sanitary ware, the effects of the factory reorganization should begin to be reflected in the operation with gradual gains in efficiency and better cost control. We continue to monitor the macroeconomic scenario, which remains under pressure, especially with dissolving pulp. Our maintenance stoppage is scheduled for the second half of 2025 for LD Celulose, but our perspective remains positive. Finally, we emphasize that we are focused on executing our structuring projects, disciplined cash management, and on maintaining a healthy capital structure. Financial sustainability remains a priority, and we're prepared to continue delivering consistency even in more challenging scenarios. This concludes my presentation, and we will now continue with the Q&A. We will now begin the question and answer session for investors and analysts. If you would like to ask a question, please click on the raise hand button. If your question has been answered, you may remove yourself from the queue by clicking on lower hand. The first question will be asked by Mr. [Ricardo Monegaga] from Safra. Go ahead, sir. Good morning, everyone. Can you hear me? I think so. Congratulations on these results. They were very good, as always. I have a couple of questions. First, on structuring de-leveraging initiatives. If you can give me an idea of the timeline and what is your goal in billions or millions of reais, what do you expect from these structuring proposals to reduce leverage? My second question is about your outlook. We see some expenses with consultancies this quarter, so I'd like to understand a bit better what has happened, what benefits you expect from these expenses in the next quarters. Is this more focused on product costs, asset optimization? Thank you. Thank you for your questions. I'll start by answering on structuring and leverage. We've been talking about some actions. What we've been paying attention to right now are initiatives in two groups. First, one-off operations selling and monetizing non-operational assets. That goes from acquisitions from the past. We've maintained some buildings that are no longer operational, things that do not affect our operation directly. There's a second group that we are monitoring continuously and that has not had any effect, but that might be important for us, which are businesses in the forestry area. Here, we're referring to lands and forests, especially in these tradings. These are usual businesses that we do assessing opportunities, but we have to continue to look at higher opportunities, opportunities that will have a higher amount so that we can relieve short-term pressures, especially due to interest rates. We have to know what are the values of each asset and what we can do. There's really no guidance that I can give you right now in terms of absolute values, but what we can say is that our expectation for the company, given that interest rates are so high, is that we should be at an indebtedness level of around one time for the long term. This is a combination of structuring factors, as we've been saying, and also a positive evolution of the company's results. Of course, if there's any relevant business, if there's anything, if there's any deal, we will disclose it to the market, as we have had in the last historical moments for the company. With that context, I just want to mention these relevant things. Regarding the consultancy costs, and I'll let Raul talk about this, there's a number of transformations happening in the company, and they have been happening for a long time. We are preparing for 2021-2025. This involves RP, digital platforms, excuse me, PR and digital platforms, and we're trying to reinforce our position in the market. This is related to Casa Dexco, which is a very relevant platform to go into retail, but we're also improving our performance and the attractiveness of our products for our clients. We have some one-off expenses like we had this quarter, but this is a larger trend to formulate our business here at Dexco. Yes, Ricardo, adding to what Francisco said, first, referring back to de-leveraging, I'd just like to underscore what was said before. Three times EBITDA in regular interest rates should not be such a hot topic, but everyone knows that with current interest rates and the weight that this has on our yearly results, it makes this into one of the top three topics right now. All opportunities are on the table. As you know, we've been talking about some initiatives, but of course, this requires analysis, a discussion. It's very elaborate. We cannot disclose this right now except for the fact that all of the lines that Francisco has mentioned have initiatives being assessed. Some of them will have no trade-offs, such as non-operational assets being sold. I think there are five under discussion right now. Some are already undergoing negotiations. In Colombia, we sold a plant that was stopped and so on. I have to underscore that this is a key part of our initiatives for the short and medium terms, and this will continue in 2025. Consultancies, I think, are related to the sense of urgency. We truly believe in our plan. We know that there are initiatives that we need to have to take the company to a new level. The one-off use of consultancy companies, as you've seen here, is happening so that we can accelerate our execution speed. This does not change our strategic plan in any relevant way, but it accelerates how we capture our results. You saw two initiatives this year, which were very fast: the plant in Paraíba, and we're seeing results being captured in the next quarter. This is something that we're going to use very carefully throughout this time, but we're trying to accelerate and capture all of this. Thank you. The next question will be asked by Emerson Vieira from Goldman Sachs. Go ahead, sir. Hi, everyone. Can you hear me? Yes, good morning. Good morning, everyone. First of all, this question is for Francisco. I'd like to ask about price pass-throughs that happened in the second quarter. I understand that the actual price on the second quarter was impacted by the forestry business. What do you expect for the future since you have a positive outlook? That's my first question for wood. Also, I'd like to ask on tiles if this change in EBITDA will be recurring. I understand that there are some operational changes. Looking towards the future, how much do you think the utilization rate will change? You mentioned 80%, but there's a possible ramp-up for Botucatu. I'd just like to understand if this is recurring EBITDA for the second quarter and if we should expect sequential improvements. Finally, I have a question about LD Celulose. When do you expect dividends to be paid out? That might be helpful in de-leveraging the company. Thank you. Thank you. I will redirect this first question to [Enrique Adagi], who will tell us about how prices are behaving in the market. Hi, Emerson. Thank you for that question. We've had a 5% increase, and most of this will be captured in the third quarter. We've seen an important movement in the second quarter, but most of the effect will appear as we have new orders coming in, which will happen in July, August, and September. One piece of good news is that, as we've said in the latest conversations, there seems to be a more rational reaction from our competitors. Costs are definitely impacting everyone at the same proportion. We don't see many irrational movements. We see a lot more logic in managing profitability in the entire market. I'm not saying it's easy, but we're starting to see a better performance. This wasn't the question you asked directly, but I'll take this opportunity to say that at the end of the second quarter, we also announced price readjustments in our finishings line, especially metals. We felt an impact from inflation. It started at the end of the first quarter and then consolidated in the second quarter. Even with adverse macroeconomic conditions, we've understood that this was necessary to implement a higher price. We're going to see some of it being captured in the second quarter with a margin recovery in some areas. I think this will be very important. We've been seeing that we're starting to recapture prices, and although the demand is slower, at least in metals, you saw that this recovered. We think that we're going to bring it back to a higher profitability level, especially in metals. Now, to talk about tiles, we see that the market is still quite unstable. The tiles segment for Dexco, in terms of exports to the U.S., is irrelevant. It's inexistent, but this is not an absolute truth for all of our competitors. We see 300 to 400 square meters being exported to the U.S. every month. The products that are not specific for the U.S. can be used in the Brazilian market. In the third quarter, we might see some pressure in ceramic tiles. On our side, these structuring initiatives are recurring. We're trying to reduce costs, and we're working on our working capital. We're very close to the demand right now with our production in line, and we're capturing costs, which is good news. We have less in our plants, but the cost efficiency is improving significantly. From the results perspective, there is definitely an impact from the market that we have to observe. The third and fourth quarters are traditionally stronger for us. If we don't see, if there are no unforeseen circumstances, then we believe that this will be a constructive scenario for investments in the third quarter. To add to that last question on LD, LD has a funding structure that foresees a level of commitment to deleveraging. Its perspective is still small, but considering it is moving forward quickly and capturing these margins, it's possible that it will be faster than we had planned and that we may distribute more dividends. This is still uncertain since we are foreseeing some price instabilities for the commodity. This is a very low level versus a common pulp, but this might be a one-off effect. In the short term, dividends are only foreseen for 2026, still at a very small level for Dexco, but as we advance with de-leveraging, these items may become more relevant for us. In this case specifically, this kind of capture will be easier to understand and to communicate to you. As we confirm its performance and as it advances in de-leveraging, this may unlock more value, and then we'll communicate this to you. I want to highlight the foundation of the business. The big news for 2026 and 2027 is positive. This was due to the renegotiation of our financing, but on the other hand, we see that all operational and market foundations are solid. The company can already produce 10% more than originally planned for at a higher speed from now on. New investments will not be needed to a wider extent. This is a market that is very different from the traditional pulp market. Prices have reached a minimum level in the second quarter, but this is absolutely different from what we saw in the pulp market. The long and medium-term perspectives for this business are very good. As we see this operating at healthy price levels with good costs, our five-year perspective shows how relevant this business is for the company's results. I understand that it's important to see these dividends in 2026 and 2027. I just wanted to bring this to the table so that we can consider it. Perfect. Thank you, Raul, Francisco, and Enrique. Have a good day. Thank you. The next question will be asked by Mr. Guilherme Rosito from Bank of America. Go ahead, sir. Hi, good morning, everyone. Can you hear me? Yes, we can hear you. I have a question about cash generation. This quarter's results were better than last quarter's, but there was still some cash use when we look at project CapEx and cash generation. When you look at Dexco's plans, what is your plan to reduce this and how much do you think your structuring CapEx will be, what will your sustaining CapEx, that is? My second question is about Deca and tiles. If you can give us some color on the market for the second half of the year and if we can consider price increases or are you focused on increasing volumes and postponing these price increases? Thank you, Guilherme. It's important to highlight that we have something happening this year, which is the cash generation profile related to working capital. Traditionally, what we've done is every year in the last few years, we wrap up with the level of working capital to revenue that is very low. In 2024, this was not different. We finished very well across all divisions. In fact, we prepared working capital throughout the year so that we could have collective downtime and sustain sales levels without compromising on costs, on prices, excuse me. This led to a high cash generation at the end of the year. As we continue production earlier in the year, we have the opposite effect. We start using working capital for that year. I think you captured this well in your question. This usually happens in the first quarter. It's flat in the second quarter, and the adjustments required take place throughout the year. We saw that our strategy was doing very well in sanitary wood specifically. We had some scheduled downtime, but we've captured all of these benefits, which lead to a higher inventory as a one-off. For ceramic tiles, we need to adjust. It was a limited scale, so this was a one-off adjustment, and it will reflect into a working capital level that will be sustained throughout the rest of the year. There's one point that is not so relevant but exists when we talk about working capital variations. There was some instability due to the risk profile and the IOF regulations specifically for the second quarter. Usually, we have a risk of $300 million, and this is in line with what we practice. In the second quarter, this was slightly below. We had some pressure from suppliers due to this level of instability. Since we couldn't count on this tool because there was a lot of uncertainty around it, this was also a contributing factor. These are sensitive variations when we talk about, you know, gauging the business. These are not huge amounts, but they are important for us to manage on a daily basis. Working capital is an important factor for the year, and it affects our production levels to correct our inventory. It needs to be done at a very fine level to ensure that at the end of the year, we'll be at the previous working capital levels. Regarding CapEx, you asked about the sustained CapEx. We've been signaling to you that we have had very positive results in the wood division and the production cycle of performing sales and then planting and so on. Most of our capital is sustaining, is about BRL 800 million, BRL 850 million in sustaining CapEx. When we exclude this, normalize working capital, and bring sustaining to the recurring levels for the short term, that will generate cash. We're counting on the returns from the projects that we saw recently. This is a combination of factors, and I hope that has explained what you've seen. Just two things to add. First, working capital, especially in the finishes division, was a very important tool in rebuilding or recreating our business. We reviewed our portfolio, we looked at our deliveries, and this led to an increase in working capital, or it led to suboptimal working capital, which we considered in our processes. As Francisco said, as we start having higher delivery levels and a healthier inventory level, we will begin a very important round to reduce working capital in the tiles and metals divisions, especially. In sanitary ware and wood, this is also adjusted throughout the year, but especially because of the downtime and because of replacing production from one plant to the other. There's also a top line effect. This is the main thing right now. We've been strong at controlling what we can control from the cost perspective, but without a doubt, improving the mix in metals, in sanitary ware and wood, and Botucatu, with the premium ramp-up concluded by the end of the year, will give us a cash generation via the top line, which at the end of the day is what we need to look at from now on. Great. Thank you. Thank you, Guilherme. This concludes the questions and answer session. We'll hand it over now to Mr. Raul Guaragna, CEO, for his closing remarks. Thank you. We've been making a consistent effort, and I think the results we see in wood are from a consistent effort of over five years in which we managed to lay the foundation right and really find the positive and efficient working level for us. I see that you understand what we've been doing in wood very well. This is also true for the finishes division. With all the moving parts that we faced in the last few years, it's hard to really write a clear story, but consistency is key here. When we get close to concluding structuring advances and as we start having a new plant like in Botucatu, reaching what we need to reach, when we look at our service level in metals, we really believe that we are ready and resilient to navigate whatever comes in the market. Our management is to have responsible capital allocation, control our indebtedness level, and you'll hear more about this from now on. I have to underscore this long-term vision that we really need to keep our eyes on the ball right now. Of course, without letting go of our consistency and long-term vision, which are some of our main qualities. We will remain available whenever you need, and have a good day. This concludes Dexco's earnings call. Thank you, and have a good day.