YDUQS Participacoes SA

BOVESPA:YDUQ3

Q4-2025 Earnings Call

[Operator]

Good morning, ladies and gentlemen [indiscernible] Video conference to discuss the results [indiscernible] Conference is recorded and the replay can be accessed on the Community's website [indiscernible] Download presentation is available for download. On the company's or shipments that advise that our participants only be watching the video conference during the presentation. And then we will start the Q&A session when further instructions will be provided. Before proceeding to sensify that any statements that may be made during this free regarding the company's business prospects, projections and operational and financial costs.

We believe and assumptions of Indulirectors based on the current information available to the company. Those statements may involve risks and uncertainties as they relate treatments and therefore, depend on circumstances that may or may not analyst investors, analysts and journalists should take in sand events related to the macroeconomic environment. the education segment and out of fact could cause results to differ materially from those in the respective forward-looking statements. It's important to stress that for a better viewing of the presentation we recommend enable.

Present at the sedoconference, we have Mr. Can Malices, CEO of do Mr. Alexander Aquino, CFO; and Mr. Mark Sales. -- vice relative sales and marketing.

I would now like to give the floor to Mr. Jose Marcelo will begin the presentation. Please Mr. Marcus, you may proceed.

[Rossano Marques, executive]

Everyone, welcome to the Yduqs earnings results -- on the whole year of 2025 you're taking your time to take part with us. myself and our CFO, we're going to have the guests Presentation.

Highlights of the year Very strong cash generation, reaching over billion result interest to the market levels considering the basis rate of the economy currently 500 million for results of shareholders, is our guidance -- we keep a company that is increasingly more consistent with very sound cash generation. .

We're rating our shareholders our last stage, we are reducing our debt. This is our main goal capital allocation. This is priority number one. net debt-to-EBITDA were below 1.5x this will drop even further and we'll get to our target by 2027. -- had made shareholders to buyback, BRL 300 million buyback in we would do it on Imagine even with this program, I assume that we're going to reach #1 of our rapid application framework. -- that we will take opportunities for acquisitions on my Metro is a classical example that high-quality institution in a city where we have joining us in widened ecos that are 100% still strength in the power of this business also said that we will keep paying dividends every year, close to the minimum.

We have been aiming minimal considering adjusted net income of BRL 25 million and BRL 26 million, BRL 150 million in dividends -- since the IPO, we have been paying dividends every to shareholders cash generation is followed by the improvement in quality of revenue and results in general. -- have been the quality of our revenue, we have a provision in ore had a drop actually reduces our debt starting the 2025 1 in provision to engage tools and the movement we made of premium even during the semester a drop in year-over-year is moving to considering some minority of results or started moves that are continuous Same time Happening over 2026.

Business highlight segment growing by 2 red 22% year-over-year [indiscernible] Margin growth response with the expansion that we've had in don't match challenge just keeps growing with very high margin -- so let's talk about net revenue. The quality of the revenue is being supported by production decline or students or traditional funding so reducing the debt results of this you compare the revenues when you consider should take levels 24, 25, we would have actually growth of NOR market that has been the distance learning -- that was important for the industry as a whole in this environment. It's able 6% year-over-year a strong year again with the adjustments we've made the reduction of this stronger of growth for the company on campus has been very strong before growth on campus supported by action proposed by the using school, we had an adjustment for that. quite a very strong growth with Semi on campus. -- new regulation mechanizing semi on us as a reality in the market. And this tends to keep the menswear going to see intake as it shows a very strong year for semi on campus.

This is actually accelerate the second half, making the margin to growth for a margin that was very good. management move from third to fourth quarter adjusted margin on approval margin year-over-year so strength of the market starting very strong in 2026. It will be benefited by this revenue that is negative with bad debt, we should have prepared to face challenges that we should have a margin in a is very strong, but we keep campus is very well equipped to ticket recovered after years of drop it after we stabilized growing at least following the inflation. we envisage for the forthcoming years.

We have 3 many years to reach reached this level of renewal investments have been made in the quality of the project, especially sees million providing much better student experience. helping our retention level year considering great the demand moved to seminars a drop in the basin the graduate studies. From the beginning, it was a product of great growth 2025, it inverts this resin in a positive way, the great star migrating to Semi on Camber. It was a stable margin year-over-year, a slight recovery in the short of it coming from efficiency actions we took over the year digital learning ration for 2026. -- graduate average ticket is stable modality that is more difficult to increase ticket ratio, et cetera.

We have smaller student base, it's more challenging to increase ticket. Good news is that we average ticket for but different in the technology has not been able to aspects has been standpoint year-over-year that generates a lot of value to the company digital student we level below on-campus the closest that it is more value generated to the company as a whole. -- go out and want to main -- very strong is the new number of seats from 24 to 25 has grown mainly to the market makers items proving that it's a premium brand to protect our business. This has been very positive for another year of the growth growing the student base is, we are small in But the ASH was Studies, where we have strategy for investments is in the growth of our in the number of doctors, this should generate a stronger volume for -- we have a fair share of the our fair share when we have room for strategy for the company. on the ticket side the growth of seeds in mature where we have lower ticket, the average ticket is still growing. -- despite the petitiveness.

We exceed inflation both to in very high levels reaching students that show in me. They are delighted. We have -- we're close to 1 of the campuses that we have with reference in Brazil of quality infrastructure ecology the protein makes control with a stable year-over-year operating at very year-over-year one-off segment sticking for the next moving from the city center to the focus, perhaps the most dynamic neighborhood real very well located in the area from a concentration of good schools in Rio when we made important investment in the growth of Ibmec in rebar campuses doing quite well, and we have strength of this migration from Sao Paulo to before ear duration of subcapitate insurance is we have acceleration that is below fair share. Great opportunity for growth for Incredible margins, 5 percentage points, reaching a margin of 45% mature restrictions for operations or even so able to work with very strong margins, ticket growth as the mix impacts operating amongst the highest ticket compared to pets -- we try to be the brand #1 in marketplace, we at we are marketplaces and aim to be the main percent operating at high levels.

So a facility product being recognized by students very high renewal rates. -- scores as well. I'm going to turn over who is going to talk about cost and expense -- let's talk about our operating now the fourth quarter has been very strong. gains in cost and G&A and we'll close with a gain of almost 4% point reduction portfolio difference of the between the third fourth quarter between 24 and 25 and 35%. Super important to maintain first half profit margins were below 2024, we were able to recover as we have been telling in the full year, we closed the year with a margin split above July this increased margin 1% point does not reflect the reality of the game we had over the year. because results is contaminant revenues contaminated by the provision of came student and implied in distance we have an increase in have 1% point of our bits and the production will increase we had no effect that margin more than 1 point regarding 2 -- looking at our revenue but if we adjust the provision for nonengaged students.

There was a decent company percent of our revenue 7% of our -- and we have the beauty of having a diversified portfolio in education, allowing us to grow according to the most wanted brands in the past year, 12 since '21 to now, we have the growth pushed by the premium on of the negative match 2025. We had a very strong growth you did 25% to 34% on prices is the growth of 9% in this to have an important slap on nonrecurring effect, unlike what had been happening previously. -- we have our M&A well footprint of our properties, that was important before growth that we felt it was important to share with you because we have a series of extraordinary things -- and we will keep our nonrecurring effects. It's important to clarify what happened in 2025 we had operation we acquired before the 2019 with great impact.

It was very much impacted by pandemic and education impairment, there's no cash impact Additionally, we some actions that are important for us to improve our profitability restructured our corporate announced over the result of for fourth quarter, we had a higher layoff of our to minimize the -- in fact, our legal framework to us Lastly, we have an important effect, which was carried out over the 2025 of those extraordinary effects led us to have for the first 1 in the many years of growth of nonrecovery effect -- and we will have another reduction moving to levels below what we had in 2024 in the forthcoming years.

Market -- When we look at our adjusted net income, we had drop of BRL 80 million basically because of the increase of our interest rate area. We had this negative impact of the increase of the interest rate impacting several companies in Brazil. the very important point here when we look at the actions from the standpoint of cash impact for our cash in the year, we would reach earnings per share of 13 of 17 million 2024 with a negative impact increase of interest not to get the number of earnings per share that was reached in 2025, we reached 151 million that is missed regarding our of our guidance is 1.7. share that was actually backed by -- we have very high leverage in a NOR impacted net income by a reduction in the second half that we're not expecting generating this beginning it's important to show that this actually especially the restriction on Engage migration has no impact for 2026 was positive for the evolution of question 25.

The Growth in net income for 2026 will be very high. We'll have favorable wins in reduction of the interest rates or send cash flow for shareholders, measures what is the profit of the company. So we have payment of interest. We had a result that was very important this year with a growth of 38% compared to the previous year, reaching BRL 500 million, the base of our guidance. Even considering a year with very high interest rates, like reaching 15% we still charge it cash generation to -- we generate cash to our shareholders. Our performance in receivables is important.

Also, we have better operational performance, renewal of students, more engagement before renewal better procedures of collection of our team also due to actions despite having a negative effect on our revenue and our EBITDA and our net income if they have no negative impact to the cash, we have a presence in the day sales outstanding. The students reduced tragic. We have provision for low-engaged freshmen and we have payment that were different from a private actually. They had a private bank source. We have a clear trend of growth that should remain 2026, certainly. We will communicate at the end of the first quarter, better outlook as to where we see cash generation. for 2026. But what we can say now is that we're going to have a very good year, at least equal to 2025.

Let's talk about indebtedness or debt, very important in an election year. The market may turn overnight. As you know, regarding our market, we were able to reduce our leverage. We got to the end of 2025, a leverage of 1.6x. It would be lower if it hadn't been the initiative of the buyback and dividends paying out. We closed the year with a cash position that was very strong, almost [indiscernible] after an issuance of BRL 500 million, our second debenture that was very soft very much sought by the market, we were able to have an issuance with the lowest rate spread at 0.7% loss spread in the education segment. We had [indiscernible] and the payment of BRL 130 million that you'll see our schedule of amortization for 2026.

In January this year, we paid BRL 430 million and with this payment of the 2 debts that we had a higher spread, 125, 150, we dropped to a spread below 1%. Again, the new reference to educational sector in Brazil, where we have a very strong cash position. We have no need to make new issuances to cover the amortization that we have over the year. Another highlight with the quarter that naturally is a quarter that burns cash, we kept net debt is stable during the period. Very comfortable position, the debt -- the payments over the year, under control, we have only BRL 200 million in 2026. With this very comfortable cash position. It will be a very easy year. Looking ahead to '28, '29 we feel sure to have this time line to benefit from the best opportunities that come up, and this is reflecting low cost of debt that we have, being able to make the issuances at the best market timing.

Okay. We're good. To have Marcelo -- have a good day, and see you next time whilst Marcelo sits down. We're going to go over the slide that we like this quarterly routine or showing the market actually keeps away from long term. We have education that is long term, long cycles. We should at this long-term view, the company since 2019, with a CAGR of 8%. Considering the pendemic. In 2019 we have some remains of traces of ES, which felt the year would stabilize. We have very harsh pandemic 2 years with this debate of regulation this is learning, battening the industry, consistency is impressive the growth of the company. 8% CAGR year-over-year, keeping stable, healthy margins since 2021.

Every year, we have margin growth at very high levels, 34% now. Again, a business that grows even in hard years in a consistent way with very high margins and stable ones, paying dividends every year since our IPO, we kept the payment of finance even having declared very strongly our duty, we keep this model of capital allocation with focus, number one, reducing leverage. We said we would pay dividends. lease close to the minimum every year. And we have been doing that even above the minimum in a very consistent way, paying BRL 150 million last year, BRL 150 million now in February. We've just paid that our commitment of constant return, the stability of return to shareholders. This is all enabled through the great cash flow growth.

This was the new model in the industry as a whole, it's becoming that is a strong cash generator with growth that is a bit smaller, but strong cash generation, we have been growing. We're burning cash in 2022, reaching incredible levels, BRL 500 million cash generation for shareholders, incredible margin that we have been mentioning to the market that was our main business focus moving to the next. Great. We have Mansell next to me. He's going to talk about technology. One of the most important strategic pillars for the Grid Marcelo is going to talk about what we delivered in 2025.

[Marcel Desco, executive]

It's a great pleasure to talk about technology at this meeting. I'm going to talk about AI with the strategic pillar of the company of development. We've been talking about for a long time on all our initiatives. The company today follows speaking the throughput, better quality of teaching to our students more operational efficiency and preparing students to a world that is totally different from what we have in Boes, including AI and grids and our content, providing them opportunity to be in touch with this technology as early as possible in their learning journey. We have over 100 initiatives that have been implemented, capturing results in the company. We have from efficiencies in CSC with document processing time reducing by 90% average document processing time and documents that are for the intake process and content production, a drastic reduction in the value that we have for the creation for each the intensive use of AI in flow control and the content production and also in sales. We have been using AI. We have been mentioning in other quarters, AI in student support. We have enrollments that are much more so based self-checkout. We have a bot and WhatsApp.

We have a journey end-to-end. When they are interested in the past, they clarify doubts on that. And at the end, when they make the payment and deliver documents, and we use it for assisted acquisition. We have a growth or that is affiliates using AI to clarify doubts or understand pricing offers and students to have a bit more confidence to follow on and affiliates use that to have intake faster and a much greater response time. Apart from that, we have been working hard to transform the company and take this logic of AI first to everyone.

We started this process of culture and AI literacy in all areas. This involves capacity building, having people from all management areas of the company having AI agents for actional deity. Over 90% of the company bought with at least 1 AI agent and more than 40 practical use cases developed for real business impact coming from pains that come up on the day-to-day of the company. Great Melco's great to say our approach that is top-down and bottom-up. We have things that came with efficiency with better results for the company as a whole. We are concerned in training people that are going to generate those initiatives in building the company. We know the power of AI and transforming people and how much people must be to be empowered to transform these things.

These use cases are coming from the people themselves, the pains that everyone has in their day-to-day processes and how they are seeking solutions using AI to improve the work and things on their day-to-day. [indiscernible] will stay with us in a position to technology is responsible for the market, great. intake leader. It's important to have technology positioning in this market start to getting technology gross of the business. Technology in docs very strategic. We want to be busily more connected to the market and to business. sell whilst he breathes a little bit less talk about ESG. Another fundamental pillar joke. We see several accomplishments we had in 2025.

On the slide, we start with a very cool photo of our students of Imperatriz Maranta an environment project we have. We understand it took us an education company. Our fundamental role in ESG is transforming our students. We increase our outreach to more than 1 million people that will spread this ESG knowledge and concept to the whole world. This is our commitment to ESG. Speaking of commitment is here, I highlight one of the developments [indiscernible] the commented net 0 connected to the global compact with the UN. We've been working very close to the ad in our program. We developed in 2025, our planning of ESG. This is one of the most important verticals in this block moving to the canal since we talked about the global contract.

We have Rebecca and radio Nest. We have been counting on Rebecca and our communications with Cloud President of the DC President, in the global compact actually at the Education and sport panel at UN headquarters in 2025, our position program of carriers. So as we have over thousand athletes that have been benefited from the Korea transition program. They're a little visible in the city, but very relevant contribution of the Idox Institute in this carrier transition program. Let's talk about 2026 intake. We bring a snapshot for you for an idea of the intake pacing. We are almost 80% of intake cycle completed.

We have about 18, 20 days ahead, which is an important part that I would call academic conversion students are about to complete the documentation stage. That's what we are following. But we wanted to share with you a snapshot of the modalities and how the volumes are behaving. As expected, we have very strong expansion on semi on campus from the publishing of the Zibramework, We made great efforts to create those semi on campus office to start all operational adjustments so that we could comply with the new legal framework.

We have some results on campus semi on-campus growth by 74% compared to last year. Digital were dropping 37%. It was expected. Most of them happens in the case that cannot be offered on a digital basis as this is learning. So we see a positive view on the difference and migration from digital to Semi on Campus. This will convert into an increase in price, which is [indiscernible] with the offer of semi on-campus for Ontop, we see a 5% drop, traction that we are assessing and following from the beginning of the intake cycle of the first quarter, and we have a drop of 7% compared to the previous year. It's important to highlight that we have been following that, and we have been following reports of the market that bring the snapshot month after month.

And we have a similar performance in some modalities even better. than the market. And we followed that following the helper in the cap that is published once a month. Thanks, Marcel for the presentation. Important to highlight that despite a small drop in total intact, of the station, you have a mix, a reduction in digital. Great increase in semilocomas brings a positive effect for the total NOR. Even you have a reduction in the total intake, you have stable positioning of revenue year-over-year. Moving to our final slide, our final remarks or presentation, very important. The takeaway message is to see very positive year in 2025 with even better outlook for 2026 is a structural turn in the industry, very strong in cash generally Xispositioning and model for some years with the result of 25 consolidated decision.

We've done this, making our results even more transparent, consistent and predictable. This is something we always said all analysts, buy side, sell side in the industry being showing that this has been increasingly more the brand of our results transparency, consistency, predictability considering the adjustments we've made in the company over the years. We keep the commitment that we'll have strong cash generation results increasingly more transparent, consistent predictable. I want to reinstate this try it. Highlights of the year adjusted EBITDA growing, growing growth in margins in the business very positive results in premium. The recovery of margin we had over the second half in Stars out widen. -- bad debt dropping structured consistent. It will be even better in 2026, considering the benefits we mentioned were 2025, premium reaching 44% of our EBITDA many times more of the aside we get into a brand that is close to the result coming through the 2 premium verticals.

Very prepared for the legal or regulatory framework -- we are very well prepared for this new framework. It brings challenges. It actually impact the industry. We have opportunities considering the challenges we are prepared to be wins in the is scenario, the new scenario in discipline. We have good news in 2025, consolidating 2026 [indiscernible] made acquisition. We of the closing, very strong brand based in footlet with 8,000 students in the State widen over 6 annual medical seats build. We're very comfortable that we're going to reach great results for this umbrella that is widened. Marcel mentioned quite well. On our focus on AI, we are teaching institution. We'll focus on AI with best time and money to ensure Docsis very well positioned to capture the AI benefits the trimer focus on very large with the students that were preparing for the new AI world to education is even better with AI and the company is more efficient in new technologies.

On cash, we have our main focus of capital allocation, reducing leverage, dropping 1 below 1.5 at the end of the year, this will drop in 2026, reaching our role that we actually disclosed in our [indiscernible] onetime net debt over EBITDA. We had an increase of 38% RF reaching our yearly guidance of BRL 500 million in 2025. We close our presentation. Once again, I'd like to thank you for all of you to all of you that have been present with us. We have an opportunity of a year that we could close in a very positive way. And we have 2026 with very strong results outlook. Let's move on to the Q&A session. Thank you all for staying with us until now.

[Operator]

[Operator Instructions] Our first question comes from Flavio Yoshida from Bank of America.

[Flavio Yoshida, analyst]

Hello. Good morning, Jose Morning, everyone. Thanks for the time to ask questions. I have 2 on our side. The first is regarding intake that you've shown so far of the 2026 cycle. -- what drew the attention is dropping in on campus that you showed 5%. And when we talk to your competitors, we understand that you were underperforming matters. I'd like to understand what is your reading or your take on that? Because why do you think you're underperforming competitors on the on-campus side. first question. The second is regarding cash generation for 2026, you closed 2025 within the guidance. But I'd like to understand the main levers when we think about margin specialists to keep robust cash generation for 2026. Thank you.

[Unknown Executive]

Thanks for your question. Let me start with the last, and then I'll ask in to add and then Moscow address the first 1 on campus of cash. We reinstate I did this during the call, trust on cash generation for 2026. This has been a year, as you've seen on lighting in the presentation. Strong cash generation for shareholders over 2025, 2026, we're going to have some waves that will help this grow even further. We are very confident on the growth in the growth of shareholder cash growth regardless of having a drop in interest rates, we cannot count on this macroeconomic evolution. We should have a drop in spending in interest payment because we're reducing leverage, reduction in leverage should benefit directly.

This cash generation, in addition to natural EBITDA growth. So our cash generation to keep high levels, and this should actually be directly in, would you like to add?

[Alexandre Aquino, executive]

You cover the main points our company is strong for having constant growth of operating cash generation and our record, we had growth. That was record in considering our leverage, the probable not assure reduction of the interest rates, we are able to reduce interest rate payment, improve our financial result convert more our FCF to FCF. And the operating results, we're going to have a better conversion of and FCF. So we had a level of nonrecurring 2025 that is quite high 120 million with cash effect with the outlook of having an important reduction of this level in 2026. This will also convert into more cash reduction of FCF and FCFE. We don't yet have the numbers to share with you of guidance for 2026, but when we see the closing of first quarter in the disclosure of our results.

We're very confident that we're going to have a level equal if not higher, 2025, we see in the first quarter is very positive. Just the cash generation for shareholders from January plus February 2026 has exceeded the number that we had in the first quarter of -- the whole first quarter of last year, before moving on to Marcel, there's good point of nonrecurring that we had in the fourth quarter, we had a level that was above what we had and had a level route or journey of nonrecurring deters grow, we felt we could start a cost structure that was -- we decided to follow this path. We understand that the market view analysts, the analysis more difficult recommendations that goes to cash. ultimately, cashes are ultimate goal and a reduction of BRL 500 million.

There is no effect effective cash generate regardless the result as having been with recurrent or nonrecurring. They are specific -- so that have an impact to cash in the fourth quarter will not happen in 2026. Very positive fact to increase the trust or confidence in cash generation, 2026 mine. Can you address the drop in on-campus intake.

[Rossano Marques, executive]

I think the first point is that we have no expectation, a very strong market this year in the on-campus modality. We have been following several variables -- we are in a year of the season that may take longer election indebtness of families. We've been going carefully. As I mentioned, -- on the intake page, we have been looking into this market indicator that Hope publishes. We don't see a growing market. This report is open. We see in January a market that is dropping, but we're looking in depth so that we can resume growth as soon as we have a clear opportunity worth remembering, we haven't made any strong promotional action. It's important this intake cycle. We have kept the strategy of keeping the ticket that we call M7 ticket after the first semester of the student.

And this naturally to us, we understand it's an important lever for the long term, and we don't -- we didn't want to touch that even with more is competition in some market basis.

[Operator]

Okay. Very good. Thank you -- our next question is from Samuel Alves from BTG.

[Samuel Alves, analyst]

Good morning, Rosanna -- we have 2 questions on our side. The first is on restructuring of faculty in the fourth quarter, anticipating the new framework. The question is whether you've reached the recurrent the faculty, if we can read this level of fourth quarter normalized quarterly or if you have something to be made -- more details on the guidance of midterm income. You mentioned on the release considering the challenges related to nonrecurring company was below the 2025 number. Do you intend to reanchor the expectations of 2026 to 2030 as you did in that material fact in May last year, or not or if the ideas just provide a guidance of cash generation as you were commenting a while ago, this is it.

[Unknown Executive]

Well, Samuel, I'm going to start with the last I think I can address both. As to guidance, the market had the consent below the guidance of net income more challenging topic for us to reach. We were more confident with the cash even with the additional spending. We reached the guidance of cash. We talked about our look of guidance of cash for 2026, we have the guidance for the first quarter. We wait for the closing of the first quarter, we know for higher education. It's very relevant, especially in terms of intake and renewal over the first quarter, very determining for the results as a whole. We wait for the first quarter to be close to revise the guidance. That's what we are doing disclosing first quarter. We're going to do that and to revise our net income.

For the guidance in terms of earnings per share, well, since it's much lower than OR. You have a lot of things involved in the trust. 1% of the variation of revenue impacts BRL 50 million in the net income. This is practically [indiscernible] in the earnings per share. Very small revenue variation. It brings great relevance to the net income and earnings per share. So we have volatile number small volatility in the revenue actually impacts highly net income. But we are very positive regarding the growth scenario of net income. As has been mentioned, very important we had a negative impact of trust. And we imagine this curve will drop as of next year, CLEC and are deleveraging coverage, which have a cost that is relevant between net income and EBITDA were very positive, considering the gross income. The guidance for 2026, we're going to impact where we see things was not what we saw in the beginning of the year.

So we had underestimated that with a small variability in top line, may impact net income. We will be more aware in the growth for the next years. It doesn't change our outlook of strong growth of net income for the company, not only for '26, but both coming yes. Back to faculty. Excellent question has been a market question. Let's clarify. -- this move. It's not made to adapt to the legal framework, not that legal framework will demand more on campus and more moderate. This was actually identifying opportunity with the challenge that we have with the framework. It increases cost to the company. We've been talking about that.

Our expectations in 2027, when it will be finally -- in effect, it should actually have 27%. Impact for '26, we must adopt. We have an impact 3%. So understanding this cost challenge that we're going to have over 26 in 2025, although the team is doing very focused work in the adaptation process for the framework. We as a whole try to mobilize and to find levels of cost reduction that could be applied. One of them was to actually speed up the faculty cost reduction process, you usually make a great adjustment in the fourth quarter for the faculty to adjust for the future year. So we had challenges considering the framework, we had opportunity to make a reduction that was more relevant, stronger than we had performed in the previous years. And the fact that this will be lower cost bases for 2026.

The turn is that we start 2026 lighter considering this increase in cost in 2025. So this benefits 2026, we should have lower cost structure in nonrecurring. We're reducing space for this reduction space, the constant way that we had in reducing faculty has been dropping every year. Q4 was an outlier in this process. We should resume this faster drop rate, of course, for dismissal of faculties to operate that will be lower than previous years. This was the reason of this stronger restructuring process. -- have I answered your question? If not, I'll complement.

[Samuel Alves, analyst]

No. no. Just a brief follow-up. The line of personnel in service provided 9.4% -- you mentioned on the release because of the restructuring process. If I understood correctly, you're actually adjusting the staff and this actually adjusted the line because of one-offs, but you may have other increases ahead.

[Unknown Executive]

Yes, precise. Actually, this increase we had of nonrecurring was increase in reduction when you have a reduction. You have layoffs in disposal. And benefits will only arise in 26 you're adjusting your structure in December to reap the benefits in 2026, you should not see the benefits yet in 25 with the benefit to be actually ripped in 26. Now we still have the estimate of increase, especially in our partnering operation deriving from the new framework, 0.3% of 2026. This should help the cost structure. So not directly related to the framework with cost router for faculty, especially in our own operations.

[Operator]

Thank you, Joanna. Thank you for your question. Next question is from Melisa from Jake.

[Marcelo Santos, analyst]

Good morning, everyone, Jose akin Marcell. Thanks for the opportunity of asking questions. First, considering cost adjustments and incremental costs that you're having this year with the reform of Distance Learning, should it behave the margin evolution purposes for the business as a whole, at least the great levers that you're going to have this year? Second question is now that you have tidy up the house, you have estimate revenue decline in this. What's the appetite for M&A? What are the main types of assets that have interested if anything has been interested in you.

[Unknown Executive]

Marcelo, for your question. I'll answer the second, and then I'll go back to Akin to help me on the first AxleTech, we are all this actually housekeeping tack. We have the goal of getting leverage a onetime net debt to EBITDA. This leverage has is the main focus of the company. So going to sit down, replan, it should become a company that is paying dividends higher levels than currently. This is the main focus we declared when we talked about the framework of capital allocation that we would have opportunities that may arise in M&A that add value to us. That was the case of Unipetrol that we've just approved Kadi and the closing in February. That is a very positive deal for the company, a regional brand that is very strong that comes into our widening umbrella, regional brands, rating 60 seats of medical seats that are already filled a strong traditional brand in the city bringing medical school, very much in line with our courses that we have at demand.

Those will be our target correct value that or things that add to our business. Other things may arise in the levels you see during the presentation that data in the premium long life learning, the premium segment, a segment we see as relevant to us. It is our fair share if we look at undergraduate lifelong is quite small. And they are growing markets, especially in medicine, we talk about the challenges of undergraduate. In medicine, we have more seats in the undergraduate market is more competitive. You train people, you have the need for more specialization. It's a market that is going to grow in the forthcoming years. So we are underpenetrated.

So we have room for growth. So this growth path of strategic if there are obvious opportunities of M&A that may help us speed up the path being accretive that generate value to our shareholders, this will be something for us to pursue. You know, overall, our business strategies, -- if we have opportunities, we're very selective the number of acquisitions we made. It's quite small year after year. We don't see that speeding up an intensive use of cash to follow this path. Our main path is to leverage drop, we'll keep filing to get onetime net debt over EBITDA.

[Unknown Executive]

Thank you for your question. Very disciplined company considering our debt. We have margins that are very healthy. We made some harsh measures in the second half to start 2020 with the level of cost to continue on this healthy cost level. The point is that when we get to a level of margins that is close to ours, we have to be careful to not exaggerate for growing margin recurrently impacting the quality we provide to the students. We try to balance continuous enhancement of the service we provide to students with maintenance of healthy margins.

We noticed in '26, what we project is the level of margins very similar to what we had in the past 2 years, 34%. I hope I've answered your question.

[Marcelo Santos, analyst]

Yes. Very clear. Thank you for the 2 answers.

[Operator]

For the next question, we have Kai Moscardini Santander.

[Caio Moscardini, analyst]

We have a question on our side on margins. When we look at the makeup of preliminary intake seems to be positive for ticket mix effect. You mentioned that revenue should be flat. Looking at the 2 metallurgies together, but this makeup at positioning margin for mix, considering distance learning is much higher margin. You have premium that grows more a margin that is higher. My question is trying to understand those effect on the margin, especially considering the fact that you have some levels that may help you on the margin, but debt, G&A, how do you see those effects, especially mix Ken mentioned that he sees margins in a more flat way, but there are still some makeup that can help you expand margin in 2026.

[Unknown Executive]

Thank you for your question. I'll answer the first part regarding ticket. And I'll turn it over to Akin since you talked a lot about Mario talk about the levels that you're certainly correct. We have important levels to mention. As to the mix, as we mentioned, despite having this drop in intake, we benefited in the NOR because there is a turn in the NOW should not have -- we should not expect a drop in a -- on the margin point, I'll let akin talk about that overall. But you're correct. On an isolated point digital has more margin. It impacts in isolation. but think that you're bringing additional revenue to a cost structure. As most part is already set up. are built. What is not built that comes from the structure adjustment that we have to make to adapt to the framework, Rudolf and I have been talking about that. So we received a 0.3% of NOR, 0.7% and that should happen to a teen should be the negative effect of adapting portfolio.

When you see the company consolidated as a whole, we have growth and the structure of cost that is there. Great part that is happening in semi youngs is happening in our own. Our first growth lever of on-campus was to expand that to partnering units -- that was a first a great lever when we start offering that. Now those levers of SamonCambos are present in our own operations migration of nursing school. We have volume migrating to our own units -- so we have variable costs for sure that is small. We have everything implemented agreements signed variable cost is small. So we gain revenue that is additional. Of course, you're losing in the distance or digital structure, but you have an increase in the on-campus. Same comes from the dose coming from digital to SemionCampos. When we have it on Campus, it's already there. on the consolidated may have a neutral to positive effect on the margin, even if you're growing the business on a margin that is below digital in terms of value.

You're right regarding mix when you look at premium, you have businesses that have high margins that is growing strongly. Domed was 50%, main both with 2-digit growth, and we should benefit from that. Turn it over to Acino to talk about the consolidated view and the levels we have for margins.

[Alexandre Aquino, executive]

Sono covered it quite well when we look at businesses in an individualized way the relative growth we have in premium well push margin up. So Mion Campus has a smaller margin and digital and Semyon Campus also has higher margin than on-campus. There's a relevant point as Ossano mentioned. -- we have a fixed cost structure, margin per student of SemionCompas is higher than digital. Well, the since ticket is higher, we have a margin pursuant that is higher. So it's hard to put everything together another positive effect that we expect for 2026, very important, which is continuity of the drop in the debt with the mix in lower its adherence, we have a percent drop of 25 to 26 and we keep seeing a new reduction we had from 24 to 25. And then with 26, we expect a drop in our bad debt. we may have better results than we imagined.

But overall, we expect a margin that is quite similar to the 2025 or 2026.

[Operator]

Our next question comes from Andre sales from UBS.

[Andre Salles, analyst]

Good morning, everyone. Thanks for your presentation and time for my question. I have 2 on our side. One is on its mix topic, the new intake structure of the company. If you can to us possible cannibalization between on-campus and semi. If you can add some color also that lost it on Semyon campus on campus. If you have a relationship between the tumors EPM, you mentioned the Mac has been evolving very well over the past years. I'd like to understand what is the mature ramp of the BotaFogo campus, how does it communicate with this margin journey of Ibemec, -- is it reasonable that we may have a continuity in this expansion rate for 2026 as well. Thank you.

[Unknown Executive]

We talk about AMEC, Botafogo Campus, and we go back to the first. The can you hear me all right? -- the Mac Botafogo Campus is important to remember that it's the migration from the city center to Botafogo, we not -- it's not greenfield. So we noticed deterioration in the downtown area. It was very isolated and people feel it reassured regarding security. So we decided to migrate. Now we took the opportunity to move into the southern part of Carnero Botafogo is in the south of on at most dynamic neighborhoods in the city that grows the most with greatest expansion in residential building and also commercial buildings, we have a very important area in Rio Janeiro.

What we expect with the campus. We expect to have an increase in ticket and volume. -- no had already high volumes very reasonable intake in the downtown area, the new market, we have opportunity for growth of intake won't be relevant volume out, we should be able to position ticket in a stronger way than before. Migration also despite migrating from a neighborhood that was deteriorated to a more Oboarea, the contract previously was very high value, 1 of the most expensive contracts we had in the strike to bring some savings in the line of property that is quite relevant. -- movement that is quite accretive to the margin, both for the base and ticket growth and reduction in the cost structure, that should help us in 2026 and keep on helping you over the next years.

Remind me of what was the topic of the first question, sorry.

[Andre Salles, analyst]

Potential cannibalization between semi on campus and Onca.

[Unknown Executive]

And this is a good question. When we look at the consolidated demand dropping by 7%. And on campus 5, I don't think that I know data shows us that the main factor of this drop is migrate. -- we should follow -- it's following more or less a market drop overall. We see this connected to some macroeconomic factors. Well, I don't have such long statistics in election years usually are not strong years for intake and higher education. The gives that bring certain uncertainties in -- well, and when you talk about higher education, it's long term, you must actually be committed to long term when you are enrolling in higher education. It's not for Class A, but when you go to classes B or C your decisions depend on your availability, financial availability in the future, 2026 seems to be a year of low trust in the future, you see high level of indebtedness of families.

So this is related to our intake levels. This on campus is related to this consolidated view. -- better than the consolidated move. So we keep on not seeing a migration movement to -- that is relevant from on-campus to semi on campus. We don't see a relevant concentration in 1 specific cost of growth is growth. And MonCampus is very in all cases the movement that the government had been making, putting in a more negative way, 100% distance learning courses and actually strengthening the cable semicon, has strengthened the SemiCapos, and we can perhaps a bit our own campuses. We know the semi on-campus that complies with the framework, it's pretty much what we've had, and it's very well positioned for us to keep on growing. And I hope I've answered your question, perhaps not on the details expected cost by gross on statistics.

We see we see a migration from on-campus to semi and something relevant in the result of our intake of on-campus.

[Operator]

Our next question is from Vinicius Figueredo from Itau BBA.

[Vinicius Figueiredo, analyst]

Good morning. Thanks for the question. just a very brief bide regarding intake costs. I'd like to ask whether there is any kind of calendar effect that we should take into consideration. When we compare last year, -- this year, you had Carnival that was earlier. So I'd like to understand if those 20% that is not yet considered in your guidance regarding intake, could have some kind of rebound perhaps some acceleration and reducing this drop that we have been observing, especially on the on-campus. I'd like to address a point in medicine. There is an intake cycle more difficult considering the competition. I'd like to understand how we've same intake in marketplace further away from capital cities, you have to add the offerings of yes, to have more students or more intake in the specific point of PS. If there is any kind of impact on your medicine margin.

If -- lastly, if I could ask a bit on more technical aspects on the remuneration model of you have PraValer. So you have differences between year -- Yes. So there should be a difference in 2036. So you have an effect that is a bit less positive regarding cash. Your financial results should also have some kind of impact. If you could comment on the expectation as to how this flows of 2026. That would be great help.

[Unknown Executive]

Thanks, this is for your questions. This Carnival on. It's been a tenth month for us. February this detachment of Conor date, credible how Carnival is very impactful element to Brazilian society. Yes, it was a CSO since Carnival this year was much earlier than last year, you impact the comparison basis makes it difficult for us to know the volume regarding previous year. So post-Carnival of last year, so we had strong cover of intake, that's something we see a trend that is happening. It should improve our bottom line. I don't know you know how much is lag post carnival effect last? How much maybe you're right. We still have a positive effect on intake. We're more conservative. We prefer to assume that the number we are disclosing now will reflect the end of intake. Since the trend is positive, we may have positive surprises towards the end.

I'll start talking about medicine and not turn over to Sue. As we've mentioned, the medicine scenario very much impacted by the new seeds approved legally over the past 2, 3 years, they naturally, as we've been saying over 2025 impacts competitiveness locally depending on the number of seats approved and deinstitutiona at the seats. This may impact the petite environment in some regions. Naturally, the regionals than smaller marketplaces. -- with demand that is not 100% local is impacted because you're threatened by different cities that had programs filling seats there, an interesting phenomenon.

Now we mentioned Reis impacted last year because a lot of seats being authorized over 25. One of them, we went back and then we managed to get some injunction from the Ministry of Education, our premium brand, our positioning of high-quality would prevail. And we start seeing that this year, 26 Rio has been 1 of the great highlights in terms of intake. We may have new institutions, new brands will come up. This may happen anywhere. But again, we go back to a brand that is very traditional in places where we operate, especially here in a positioning of very high quality with the brand that is very consolidated with our target audience. That's where we're going to land. -- in some country side to. This takes longer to happen, you have to position yourselves considering challenges in those places in this transition time in a more competitive landscape, we need time to prove our premium positioning as Winter CS is an important lever for billing those seats. -- which would have more penetration of yes and intake of medicine.

It's always a bit delayed regarding initial intake. We are in the middle of the cycle, we should base more our intake on the FIS model indeed. This may bring a bit more pressure for margin in the first year of intake with the Fiat student, you suffer retention issue. So you have profile that is still low. So you're not going to have maximum retention with Fast -- it happens, but at lower percentages. -- cases that do not have a delinquency level, but we have some impact. It's important to remember the students bring 0 delinquency will have revenue related to FIS. So the retention is higher than normal students.

So helps us keep retention. The lifetime value of students is not different from those paying tuition, but you may have an impact of margin in the short term, depending on the FIS penetration level. The scenario is proving our thesis that medicine with high delivery for students with very high quality that delivers perception of the logo has its competitive positioning overall protective. We have to tackle things mapping competitive levels, market by market and be more efficient.

Let me turn over to SureTeda. He is the expert on this topic.

[Silvio Pessanha Neto, executive]

Go ahead. Minis thank you for the question. I think Jason has gone over the main points here. Let me add some color that we actually see this move happening in the marketplaces where we've seen 23, 24, 24 to 25 markets like Rio Janeiro Teresipresenting some impact in the arrival of the judicialize. And after that, we have the reputation, the lack of agreements in consolidated practices, the aspect of the ministry being to revert some cancers actually dropping our actually suspending the examination. So some students had to be transferred because there silvers and their transcripts are not recognized. So we see great moves increasing the rates of candidates per seat, especially in Rio Gennaro.

Let me give you an example regarding Fies. -- ride in more distant marketplaces where costs are consolidated where the capital had an increase in seed Naturally, you have greater difficulty of taking students to state -- and no doubt the Feshashelped a lot and a deep analysis was carried out. I don't know if he has private funding in addition to public ones. As we analyze the permanence of students the groups and the seasons of students, we see that the renewal rates of CS is much higher than tuition paid. In the private fund exceeds some marketplace actually the renewal rates of that. And if we look at what we have in terms of long-term students, we have to bet and be more active on FSCsince 100% calendar run by the government, we were very passive, yes, we drive students would choose us, and we simply would go through the documentation process and enroll the tone today we're more active, more structured regarding bring students that adapting we want to study.

And so we've been working more surgically for FS as we needed to fill the seats. It's worth in stating the real, for example, has reached all seats have been filled by tuition-paying students without the need of yes. So we have 10% of seats of authorized -- according to the region, we use of funding to our favor, always trying to get to the end result. We have no concern regarding that. It's proven the thesis we had the reputation, history and background, certainly prevail regarding ticket. -- bites or new courses that come into new marketplaces. Basically, this is the point. I hope I've answered your question.

[Vinicius Figueiredo, analyst]

Do you have anything on private funding?

[Unknown Executive]

Well, thank you for your question. Super important now to take the opportunity to explain the context for those that are listening to us. Over the year of 2025, we made a change in the way of receivables of private financing. We received a student paid. We started receiving the finance part in the same semester. The students are in road. So the reduction of rural future receivables. So we have several positive effects and it was very positive. It actually had a positive. So we had that the future for that, even if discounted for receivable in the current matter at a lower rate than our debt financing was positive. We had a negative in our net income impacted accounting the comparable year-over-year. But I think the whole market understood. What is the positive effect. It reduces over time this year. We received the new finances with the new model, but we still have an account receivable the low financing of previous years that they drop over time. In the first year, and we received BRL 90 million of those financings of the previous semesters, about BRL 92 million, if I'm not mistaken.

In 2026, we will receive BRL 30 million. So we have a reduction year-over-year of BRL 60 million in the conversion of collection and cash policies in revenue in cola reduction of BRL 6 million year-over-year, but we still have BRL 30 million that will be received this year from 2027 million. This value is negligible. -- the curve. I don't know if it's a go, is clear, BRL 90 million last year, about BRL 30 million this year, almost 0 of 2027.

[Vinicius Figueiredo, analyst]

Thank you for the very complete answer.

[Operator]

Our next question is from Gustavo Miele from Goldman Sachs.

[Gustavo Miele, analyst]

Thanks for your presentation. I'd just like to have a to click on bad debt or 9 months of 25%. We had an improvement of bad debt year-over-year performance is a bit more flat. When we look at fourth quarter, you mentioned an effect of I don't know if calendars rest word displacement of actually maturing of the renewal tuitions. I'd like to understand if you have any other point in this slide that draws your attention. Over the fourth quarter, more than that, what are the main drivers for more improvements of bad debt, as you mentioned, close to [indiscernible]vis-a-vis 5 closed years. if there is a thing that is more micro in this front of renewal recovery, if you have anything that is more macroeconomic that you think can help.

Second point related to the first to understand how the macro date may affect your DSO. You had important if you envisage more efficiency, especially in this context of very low dues for 2026. Those are the points.

[Unknown Executive]

Thank you, Gustavo. Good questions. I'll briefly talk about 2 points and then I'll turn to a key to compliant -- you've explained what happened in the fourth quarter. Yes, it would be more or less compared to fourth quarter. We direct you to have in year-over-year drop in PD bad debt. So you see the main levels. The most things that we've done that happened for Suchoi this benefit, great part is actually taken in -- or reaped in 2006, nonengaged tools that we had worked on early part of it is real and then mostly in 2026, which is renewals to first 26, you reap that fully. Over 25, the drop to or decline in adherence to this impacts the impact on bad debt, especially in the drop of rates -- so it reduces volatility, it makes quarters more Images benefit you see more directly, 26. Those are the main levers. As to macro, you will have macro for bad debt and delinquency. So you'll see that engagement of families that is growing.

As a contract, we see a profile of default that is better at IDOX26. You don't see growth in default levels you see result of the work that we've been carried out in our operations, getting -- being closer to students in relationships, negotiating debt that is very well structured, et cetera, increasing student satisfaction, keeping retention and improves to the profile of the delinquency. So this not reflect the day-to-day of our operations, 2 points on our DSO, we should have an improve in DSO. First, reaping benefits of this Year-over-year, it's a student decision. This will vary up and down, Stenaldepending on campaign that are -- is being offered competitors offering so they may decide to use more or less this is in addition to Matakina.

We have private funding. So things are maturing 26 million. We have BRL 30 million to mature that reduces your accounts receivable and improving DSO. GSOs to positive market would you like to add?

[Unknown Executive]

No, excellent. I think your explanation -- just to restate some point, basically, our -- the thought levels, what happens in regulation, students, once they enroll even if they don't pay more than 1 to over the semester continue study that we recognize their revenue as they do not renew, this ends up becoming bad debt, the following semester. -- when we have higher engagement students as we've been having a better collection practices, we end up reducing our bad debt. Despite the macro scenario not being favorable, as Sunomentioned, we have delinquency and allocation of family funds to pay debt at the highest level in the history of Brazil. We haven't seen that now short-term default levels. When we look unit by unit, brand by brand, and we take the extraordinary effect that I'll mention in the weather helped us reduce the bad debt over the year, we don't see a drop in delinquency.

Much on the contrary, we see an improvement in bad debt compared to 25 to 24. What are the fact that reduced bad debt over 25 effect was provisioned to nonengaged turns, more important, in fact, for 2026. That's why we see 1 of the effects that we see both reduction in 26. Second, port effect is a decline in titers. -- of last year, we see the adherence reduced in the first quarter 2026, we see lower levels than we've seen that we saw in faster is super important. There was an increase in the participation or the -- of our premium brands, they are structurally lower in terms of better than the sell and widen -- those 3 factors we see results in 26 that lead us to believe that despite economic conditions that are not favorable, we see a reduction of bad debt in 26 compared to 25.

[Operator]

Our next question is from Marcio Spero from Morgan Stanley.

[Mauricio Cepeda, analyst]

On an another manager directors. Thanks for the questions to adding to the medicine discussion, talk about named -- if you could update us on sectorial discussions on inlet and sanctions, discussion, if this anyhow impact you if you have expectation of traditionalizing the topic and the profit at discussions, how you see that? And on this topic, considering that named was published, not all schools that you have did well in the test? And if you see ticket and actually intake in your schools? And the second question is regarding premium segment, the focus that you have on premium. We discussed this in the past that despite this excellent performance you have on premium very significant contribution to your bottom line, you prefer to remain focused on this possible expansion of C class.

My question now is, so we're almost getting to the half of your bottom line somehow has changed of the opportunity of acquiring other premium brands as was the case of IB in the past. And of advancing nonregulated etching even graduate stated Logicenters using recognized brands that perhaps you don't have today that you may actually advance on them.

[Unknown Executive]

So Peter, thank you for your questions. Your first block regarding NH and premium over named is something good. We have -- we just agreed some point with the Ministry of the valuation. We are directly by association, having this discussion with Ministry well, we make decisions regarding judicializing that we have a collaboration path of the ministry, it's ongoing debate. We don't know how much this will impact we're taking all the necessary measures to mitigate the impact of the some institutions of ours would be impacted. Obviously, -- if there is impact, it will be on the intake of the second half that is smaller. Well, we reduce this impact. So we're taking all the measures to mitigate the impact.

We don't yet see any impact in ticket direct to units or regarding Element results. We don't see that. happening the ticket moves will be more based on regional competitiveness now sees happening because we don't see any direct impact of net on your premium point, actually, we never said that our focus of growth, just see not premium, great strengths at Edoxto have this broad portfolio and head of business units focused on each 1 to ensure that we have focused on every 1 of them. tapping into the great opportunity. The beauty of this diversified by that gives us some question or some projection to changes that may happen in any areas. We talked about challenges of medicine, on-campus, distance things happen -- this is the beauty of dux. -- people investing in dogs. They know they are investing in higher education in Brazil, not isolated risk in this industry. This will keep on being our strategy.

So when we talk about growth, we think that structurally in Brazil, the great growth opportunity as industry comes from the C class that is underpenetrated, everybody from A and B classes go to higher education. So Obviously, we, as a super competitive brand, taking up more space, trying to bring students to the premium product. And we are very successful with that. So to answer your question, yes, there may be opportunities that are more related to premium that are interesting to us on your lifelong think it's a great focus for the company. And if we have opportunities that are accretive to the business that are actually things that add value to our shareholders will certainly pursue that. This is 1 of the levers that we may use. I hope I answered your questions.

[Operator]

Next question from Leandro Bass from Citi.

[Leandro Bastos, analyst]

2 quick question. A number of centers we've seen 2025, the number of units actually an increase. As we get closer to the change to the legal framework -- do you have any updates on rationalization and the number of units, some updates as to the economics of partners and adding to the second point on regulatory topic. Last year, we had the regulation on nothing. Well, you need to have classes on campus. So the question would be, if you see some demand -- potential demand to speed up intake on -- once can have as -- this measure is effective. These are the 2 points I wanted to address.

[Unknown Executive]

Thank you, Leandro, for your 2 questions. I'll turn over to do PP to our partnering operations. He can address the 2 points.

[Rodolfo Guimaraes Silva, executive]

Thanks, Andres. Thank you for your questions. On the first number of centers overall, we are very careful to from warehouse being practically 1.5 years on the discussions on the legal framework have been taking place in the last quarter, we have a very robust plan of going to through a smooth process for the transition. A number of centers, we see a potential slight drop of 2026, nothing significant, mostly talking about centers in small towns that may have this move something we were talking about 1 of the great concerns on legal framework limitation of access. So this tends to happen in small towns, but we don't understand that this is a relevant or a significant number for effective. The bottom line, the business unit, VDX, they are so that they have low productivity. The impact is more social, so to speak, limiting access then from the quantitive standpoint of result on economics of partners.

This has been a great focus of us over the past years. We had been talking about it to stay that this was on the great strength we had, how much we followed not only our own economic said, how this reflected in the profitability of partners. This is no news to us. we've had practically 4 years that we've been following those trade-offs and supporting partners over this journey, this will not be different. The whole plan when we talk about bigger framework, we also have great focus on the impact of partners, how much this will bring benefits much on the contrary. This is not a concern to us. It's 1 of our strengths. This relationship that we have with very high levels that we have this partnership of NPS that we have. So we could go into details. As fast track on your question, we understand that this understanding, well, we have a positive balance.

This actually limit access to the nursing clauses, but this reflects lack of predictability in the regulatory environment. It's very unstable. -- increasing the risk of this fast acceleration on the coal side. Since we have stabilized footprint of our units, we cover in the car most part, we understand that this level will be covered through our units. As Gossano mentioned, we see this move happening over the quarter, and we are focused on making this adaptation to the legal framework in a smooth way and focusing on potential accreditation in a regular way, bringing predictability both from the financial standpoint of the company as well to the partner having some adjustments to be made in terms of adapting and sampling. I hope I've answered your question. I don't know if Wasono would like to add.

[Unknown Executive]

No, no, that was very good.

[Operator]

The Q&A session is closed. We'd like to give the floor to Mr. Rosano Marcus for the final remarks of the company.

[Unknown Executive]

Thank you, everyone. We close our session. Thanking you all for your presence, reinforcing that the main message that we believe we've delivered a very strong actually having the solid basis for sustainable growth of the company. The important focus is cash generation, having and results, we took several initiatives to increase transparency, consistency, predictability, that's supported by a move of cash generation that is continued for the next years. We once again thank the trust of all investors, those following us, and our team is always available for any additional questions that may arise. Thank you, and have a good day.

[Operator]

The iii video conference is closed. We thank everyone for their participation, and wish you all a very good day.