Fras le S A : 1Q24 Earnings Reports

K E E P L I F E

I N M O T I O N

EARNINGS

RELEASE

1T24

K E E P L I F E I N M O T I O N

Caxias do Sul, May 07, 2024. Frasle Mobility (Fras-le S.A. - B3: FRAS3) discloses its results for the first quarter of 2024 (1Q24). The Company`s Financial Information is consolidated in accordance with international standards IFRS - International Financial Reporting Standards and monetary vales are expressed in Reais, unless otherwise indicated. Comparisons are made with the frist quarter of 2023 (1Q23).

H I G H L I G H T S

NET REVENUE

841.3 mm

+0.3% vs. 1Q23

GUIDANCE R$ 3.7 - 4.0 bi

INTERNATIONAL MARKET US$1

69.0 mm

+11.6% vs. 1Q23

GUIDANCE US$ 250 - 290 mm

EBITDA

154.0 mm

EBITDA MARGIN 18.3%

GUIDANCE 17 - 21 %

INVESTMENTS2

21.6 mm

-30.6% vs. 1Q23

GUIDANCE R$ 130 - 170 mm

MARKET CAP (03/28/2024) R$ 4.8 bi

CLOSING QUOTE "FRAS3" R$ 17.90

FREE FLOAT 33.2%

Videoconference of Results 1Q24

May, 08, 2024 (Wednesday)

11 am Brasília

10 am New York

03 pm London

WEBCAST (Portuguese/English): Click here

Hemerson Fernando de Souza - IRO

Jéssica Cristina Cantele

Mônica Rech

Renata Schwaizer

Investor Relations ri.fraslemobility.com [e-mail]

FORWARD-LOOKINGSTATEMENTS. The statements contained in this report regarding FRASLE MOBILITY's (FRAS-LE S.A.) business prospects, projections and results and the company's growth potential are merely forecasts and were based on management's expectations regarding the Company's future. These expectations are highly dependent on changes in the market, the general economic performance of the country, the sector, and international markets, and may undergo changes.

1. Value referring to the sum of exports out of Brazil and revenues from operations abroad, net of intercompany operations;
2. Value referring to organic investments.

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FRASLE MOBILITY UNIVERSE

On February 22, the pioneering brand Fras-le celebrated its 70th anniversary. Over seven decades, Fras-le has become a reference in friction materials, positioning itself as one of the global leaders, always attentive to innovation, trends, and the needs of demanding markets. The Company operates in more than 125 countries and began its internationalization in 1969 with exports to Latin America, subsequently establishing itself in North America, Europe, and Asia. Learn about Fras-le's history.

C E R T I F I C A T I O N A E O

In March, Frasle Mobility in Caxias do Sul, Fremax, and

Controil received the OEA certification - Authorized Economic Operator at the compliance level. This certification aims to provide benefits by the Brazilian Customs related to greater agility and predictability of their cargo in international trade flows.

S U B S E Q U E N T E V E N T S

E N D O F A C T I V I T I E S O F T H E

F A N A C I F S . A .

A N N U A L

S H A R E H O L D E R S ' M E E T I N G ( A S M )

P U B L I C C A L A M I T Y I N R I O G R A N D E

D O S U L ( R S )

By means of a Notice to the Market disclosed on April 16, the Company announced the end of activities of the subsidiary Fanacif S.A., an industrial plant manufacturing friction material located in Montevideo, Uruguay. The decision to end the operation results from a strategic analysis of footprint optimization in response to the commercial challenges faced over the last few years.

The ASM, held on April 17, resolved on dividends, totaling R$35.27 million (R$0.13207637 per share). The meeting also elected the Board of Directors

for the next term of office, which now includes Antonio Sergio Riede and

Renata Faber Rocha Ribeiro, and reelected the Fiscal Council members

with a one-year term of office. Click here to access the CV of board and

directors members.

Through a Notice to the Market disclosed on May 2, the Company temporarily suspended in-person operations at some of its manufacturing units in Rio Grande do Sul due to public calamity decrees resulting from heavy rains in the State, with partial resumption of activities on May 6. Frasle Mobility expresses solidarity with all those affected by this tragedy, which is the largest in the history of that State.

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MESSAGE FROM MANAGEMENT

As the year begins, our responsibility is renewed towards a consistent and resilient development of our business strategy, combined with the delivery of results, thus allowing us to have a future with sustainable growth.

In this first quarter of the year, we recorded stable results compared to the same period in 2023, with consolidated net revenue of R$ 841 million. This is indeed a positive scenario amid a time of global logistical instability and adjustments in domestic markets.

Q1 marks the celebration of the 70th anniversary of Fras-le, our pioneering brand. It has been present in the automotive market for seven decades, with firm and effective leadership in friction materials. From our strong presence in the original parts market, we have advanced to become a benchmark for replacement.

Just over a year ago, we created the new institutional identity Frasle Mobility, which

EARNINGS RELEASE 1Q24

leads us to an increasingly diverse and global future, honouring a legacy of pioneering, dynamism, sustainability and safety of our iconic brand Fras-le, which develops safe and sustainable solutions.

We expanded our portfolio of products, services and brands, a path that proves to be assertive and safe, especially at times when various macroeconomic challenges put pressure on results.

"... delivery of results,

thus allowing us to have a

future with steady and sustainable growth..."

We trust in our business model and the capacity of our teams in the most diverse parts of the world, to continue carrying out our projects and actions, and delivering assertive solutions to the world of mobility.

1

MAIN FIGURES

		1Q24	1Q23
Net Revenue		841.3	838.8
Domestic Market		499.4	517.6
Foreign Market		341.9	321.2
Foreign Market US$		69.0	61.8
Exports - Brazil US$	*	24.2	25.6
Gross Profit		289.7	296.2
Gross Margin		34.4%	35.3%
Operating Profit		116.9	147.2
Operating Margin		13.9%	17.5%
EBITDA		154.0	177.1
EBITDA Margin		18.3%	21.1%
Net Profit		109.1	90.4
Net Margin		13.0%	10.8%
Adjusted EBITDA		154.0	177.1
Adjusted EBITDA Margin	18.3%	21.1%
Investments		21.6	31.2
ROIC		15.7%	13.3%
Values in R$ million (except for exports, profit per share and percentage)
(*) Includes intercompany sales
		1Q24	1Q23
Average price of the US dollar	4.95	5.19

• % 4Q23 Δ %

0.3%	741.3	13.5%
-3.5%	555.5	-10.1%
6.4%	185.8	84.0%
11.6%	37.0	86.7%
-5.4%	26.7	-9.3%
-2.2%	202.6	43.0%
-0.9 pp	27.3%	7.1 pp
-20.6%	81.4	43.5%
-3.6 pp	11.0%	2.9 pp
-13.0%	113.1	36.1%
-2.8 pp	15.3%	3.0 pp
20.7%	93.9	16.2%
2.2 pp	12.7%	0.3 pp
-13.0%	98.0	57.2%
-2.8 pp	13.2%	5.1 pp
-30.6%	59.6	-63.7%
2.4 pp	19.3%	-3.7 pp

• % 4Q23 Δ %
  -4.7% 4.95 0.0%

BUSINESS OVERVIEW IN THE QUARTER

Despite the shutdown during the first week of the year due to the ERP update, in addition to the holidays that reduced working days, the Company delivered, at the end of first quarter, 2024, stable net revenue when compared to 1Q23. Factors such as operational management, supply purchasing strategies, consolidation of the replacement sales team in Brazil and gains in productivity contributed to this performance.

The domestic replacement market remained buoyant, despite the number of visits to workshops remaining stable in relation to the previous year, due to the seasonality of the holiday period. In the automaker market, attractive financing conditions stimulated consumption resulting in an important increase in volumes. In the international market, the Company`s entry in new markets, especially in the original automotive sector, boosted revenue abroad. Furthermore, AML Juratek Limited completed a year of acquisition, reaping synergies that reflect the grow of this item, which is strategic for the Company's long-term growth.

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2

SALES PERFORMANCE

VOLUMES AND NET REVENUE BY PRODUCT FAMILY

	Sales Volumes by Product Line in millions of pieces or liters
VOLUMES			1Q24		1Q23		Δ %	4Q23
Friction Material		24,7				24,9				-0,6%		27,3
	Components for the Brake System		2,2				2,2				3,7%		2,5
	Components for the		4,5				4,7				-4,6%		4,7
	Suspension, Steering and Powertrain
	Sales Revenue by Material in R$ million
REVENUE			1Q24		1Q23		Δ %	4Q23
Friction Material		419,7		49,9%	399,0		47,6%	5,2%		361,9		48,8%
		152,8		150,7				153,4
	Components for the Brake System			18,2%		18,0%	1,4%			20,7%
NET	Components for the		233,0		27,7%	235,4		28,1%	-1,0%		213,0		28,7%
Suspension, Steering and Powertrain
	Other products *		35,8		4,3%	53,6		6,4%	-33,2%		13,0		1,8%
	Net Revenue		841,3		100,0%	838,8		100,0%	0,3%		741,3		100,0%
	The components are detailed at the end of this report.
	Friction volume has changed in total for 2023 due to intercompany adjustments and accounting for sets for parts.

Δ % -9,3% -10,5%

-4,1%

• %
  16,0%

-0,4%

9,4%

175,8% 13,5%

Sales performance in Q1 showed a linear result compared to the same period last year. It is important to highlight that the SAP S/4HANA ERP1 update resulted in fewer working days in this cycle. Concerning product families, the highlights are:

Friction Materials

Heated domestic market for brake pads, with record production and sales.

Strong demand for the export of brake linings for commercial vehicles to the North American market. New business deals in brake linings for commercial vehicles at Frasle Mobility (Alabama) and Frasle Mobility (ASK Fras-le).

Components for the Brake System

Linear result in volumes reflects the stabilization of stock levels at distributors and great competition in the brake disc line.

Revenue variation linked to the product mix.

Suspension, Steering and Powertrain Components

Stable demand and resilient and growing shock absorber business. There has been a significant improvement in the level of delivery in the aftermarket, and, as a result, distributors are not replenishing stocks at the same speed.

Frasle Mobility´s Warehouse in Cartagena stood up when it comes to portfolio development, work of the commercial and logistics team aimed at making new businesses.

1 The SAP S/4HANA update took place between December 26, 2023, and January 8, 2024.

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3

Other Products

Composs gradually resumed production after being stopped due to the restructuring of its main client's lines at the end of last year.

NOTE: It is necessary to highlight that the performance of sales revenue by family of material does not necessarily reflect the same behaviour in volumes, as there are the effects from changes in exchange rates, product mix and prices charged. For more details about the families, see Appendix IV.

Below is the graph in causal format showing the effects responsible for changing the performance of consolidated net revenue in 1Q24 as compared to 1Q23.

Net Revenue
838,8	29,8	833,7	8,9	841,3
	-18,2	-16,7		- 1,3

1 Q 2 3	D o m e s t i c	F o r e i gn	E x c h a n ge	4 Q 2 3	I n f l a t i on ¹	E x c h a n ge r at e	1 Q 2 4
	M a r k e t	M a r k e t	R a t e			d e v a l u at io n ¹
					Argentina
Amounts in BRL Millions. ¹ Economic update in highly inflationary economy as provided for in CPC 42/IAS 29.

REVENUE BY MARKET

		Net Revenue by Markets
	Markets	1Q24		1Q23	Δ %	4Q23	Δ %
	DM Aftermarket	445.2		52.9%	463.0	55.2%	-3.8%	501.7	67.7%	-11.2%
	DM OEM	54.2		6.4%	54.6	6.5%	-0.8%	53.8	7.3%	0.6%
	Domestic Market	499.4		59.4%	517.6	61.7%	-3.5%	555.5	74.9%	-10.1%
	FM Aftermarket	288.0		34.2%	279.7	33.3%	3.0%	143.0	19.3%	101.4%
	FM OEM	53.9		6.4%	41.5	4.9%	30.0%	42.8	5.8%	25.8%
	Foreign Market	341.9		40.6%	321.2	38.3%	6.4%	185.8	25.1%	84.0%
	Total Aftermarket Net Revenue	733.2		87.2%	742.7	88.5%	-1.3%	644.6	87.0%	13.7%
	Total OEM Net Revenue	108.0		12.8%	96.1	11.5%	12.4%	96.6	13.0%	11.8%
	Total Net Revenue	841.3		100%	838.8	100%	0.3%	741.3	100%	13.5%

Values in R$ million

Note: The reclassification of intercompany revenue eliminations has changed the result of the 2023 Domestic and International Market Revenue lines. Said changes are highlighted in the Company's Modelling Guide.

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4

Domestic Market (DM)

Replacement

Significant improvement in deliveries, leading distributors to not replenish their stocks as quickly.

Greater competition in the brake disc line.

Family of brake pads for light vehicles heated up due to one-off necessary product replacement and brand positioning in the market.

Brake pads for buses gained relevance, as they have increased in market share and easy availability.

Nakata`s line of shock absorbers continues to stand out, increasing in market share. Trailers Division

Gradual resumption of sales driven by financing for new vehicles.

Acceleration of sales of commercial vehicles after update of pollutant emission standards (Euro6).

International Market (IM)

Replacement

Designs involving brake pads for the air brake system (ADB -Air Disc Brakes) for heavy vehicles, which were underway in 4Q23, gain sales traction on the Frasle Mobility website Alabama.

AML Juratek contributes to advancements in brake pad and disc lines.

Revenue variation between IQ24 vs. IQ23 due to exchange rate devaluation in Argentina. Trailers Division

In the Trailer Division, Frasle Mobility (Alabama) showed growth linked to changes in particulate emission legislation for commercial vehicles. Regulation encouraged the sale of new heavy vehicles on the market.

New business throughout 2023 by Frasle Mobility (ASK Fras-le) began to reflect in results.

Exports to the United States, linked to automakers, gain strength this quarter due to the growth of our main customer in this market.

Frasle Mobility (Fremax) stands out due to the resumption of exports of brake discs to Argentina.

Exports - Brazil US$
31.0		26.7
25.6	25.3	24.2

Foreign Market US$

78.8

61.868.569.0

37.0

1Q23	2Q23	3Q23		4Q23	1Q24
CAGR 1Q23/1Q24	-1.4%	|	1Q23/1Q24	-5.4%

1Q23	2Q23	3Q23		4Q23	1Q24
CAGR 1Q23/1Q24	2.8%	|	1Q23/1Q24	11.6%

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5

REVENUE BREAKDOWN ACROSS THE GLOBE

NORTH AMERICA
1Q24	14.1%
1Q23	12.5%

EUROPE AND EURASIA
1Q24	8.2%
1Q23	4.4%

CENTRAL AMERICA

AND THE CARIBBEAN

	1Q24	1.7%
	1Q23	1.7%
		BRAZIL			AFRICA
			AND MIDDLE EAST
		1Q24	59.4%
SOUTH AMERICA W/ BRAZIL	1Q24	1.1%
1Q24	12.3%	1Q23	61.7%	1Q23	1.1%
1Q23	15.4%

ASIA-PACIFIC
1Q24	3.3%
1Q23	3.1%

North America: resilient economy, even with the continued high rate of inflation, allows growth through the acquisition of new business in both replacement and assembly.

South America: more competitive market, especially in Argentina after the normalization of imports in the country. Even with the inflation rate slowing down, consumption is increasingly cautious.

Europe and Eurasia: AML Juratek Limited completes one year of acquisition! With an increase of more than 20% in net revenue and more than 6 p.p. in EBITDA margin (2022 vs. 2023), the operation reaps synergies in sourcing and reduction in freight costs, in addition to adding to the portfolio the sale of commercial brake discs and drums under the Fras-le brand. It should be noted that integration projects for the Company's brands will continue throughout 2024.

Asia: The operation in Pinghu in China maintains its level of market share, focusing attention on the availability of containers. In India, the Operation has advanced in revenue and volume due to gains in new business in both the domestic and export markets.

OPERATIONAL PERFORMANCE

COST OF GOODS SOLD (COGS) AND GROSS PROFIT

In 1Q24, the cost of products sold amounted to R$ 551.6 million, accounting for 65.6% of net revenue, resulting in a goss profit of R$ 289.7 million and gross margin of 34.4%, which is 0.9 percentage points lower than in the same period of the previous year. The graph below shows the composition of COGS and main highlights:

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6

	12%				14%		Raw Materials
6%				5%			Labor
			3%
4%				1Q23
1Q24				Depreciation
13%		14%
			Other fixed Costs
						64%
		65%			Other Variable Costs
						*General Manufacturing Expenses
Deflation of chemical	inputs	and petroleum	derivatives,	Gross Profit
combined with steel price negotiation strategies.
Synergy between operations in the negotiation and purchase of	296.2	320.5	319.3			289.7
co-manufactured products.
							202.6
Changing from water-based painting line to electrostatic
powder at the Nakata	shock	absorber	plant,	enhancing	35.3%	34.9%	35.9%		27.3%	34.4%
efficiency.
One-off related to the review of the depreciation calculation	1Q23	2Q23	3Q23		4Q23	1Q24
impacted gross profit in the amount of R$ 3.3 million.
CAGR 1Q23/1Q24	-0.6%	|	1Q23/1Q24	-2.2%
Increased idleness due to the shutdown of plants for systemic

ERP updates, impacting the dilution of fixed costs due to the reduced number of working days, which affected the margin increase (1Q24 x 1Q23).).

OPERATING EXPENSES AND REVENUES

0 Selling Expenses Variable Expenses w/ Sales Other Expenses w/ Sales Administrative Expenses Other Net Expenses/Income Other Operating Expenses Other Operating Income Equity Equivalence Total Operating Exp/Income

Values in R$ millions and % over Net Revenue

1Q24

• 79.2 -9.4%

-29.2	-3.5%
-50.0	-5.9%
-71.4	-8.5%

• 22.1 -2.6%
  -32.3-3.8%
  10.2 1.2%

-0.1	0.0%
-172.8	-20.5%

1Q23

• 79.2 -9.4%

-26.5	-3.2%
-52.7	-6.3%
-55.5	-6.6%

• • 14.5 -1.7%
    -17.9-2.1%
    3.5 0.4%
    0.1 0.0%
• 149.0 -17.8%

• %
  0.1%

10.1% -5.0%28.6% 52.5% 80.0% 195.2%

• 216.6%
  15.9%

4Q23

• 72.0 -9.7%

-28.8	-3.9%
-43.2	-5.8%

• 66.7 -9.0%
  17.7 2.4%
  -15.0-2.0%

32.8 4.4%

-0.3	0.0%
-121.2	-16.3%

• %
  10.1%
  1.4%
  15.9%
  7.1%
• 224.5%
  115.0%

-68.8%

• 63.0%
  42.6%

1Q24 saw an increase of 15.9% in operating expenses compared to the same period last year, in total operating expenses and revenues. Regarding growth, the following stand out:

Selling expenses remained in line, accounting for 9.4% of net revenue for the quarter. In February, the replacement sales teams in Brazil were unified. This integration of teams is part of the last cycle of operational synergies of the business case for the acquisition of the subsidiary Nakata.

In administrative expenses, the highlight was in the M&A expenses, which reached the amount of R$ 2.4 million. Considering the connection with the Company's M&A strategy, which is increasing in recurrence, these expenses will not be considered for adjusted EBITDA purposes.

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