FRAS3 Fras-le

Fras-le S.A., which currently adopts the global institutional brand Frasle Mobility and has its common shares traded on B3 under the ticker FRAS3, is a company founded on February 22, 1954, in Caxias do Sul (RS). Originally incorporated as Indústria Francisco Stedile & Cia., it began operations producing automotive parts under the Fras-le brand. Over more than seven decades, it has gone through important milestones, such as its IPO in 1971—making it one of the first companies in the automotive sector on the Brazilian stock exchange—the establishment of a research and development center in the 1970s, and a continuous process of national and international expansion. In 1996, its controlling interest was acquired by Randoncorp S.A., at which point the company became part of a conglomerate focused on cargo transportation solutions, strengthening its presence in the automotive supply chain.

Fras-le’s business model is centered on the development, production, commercialization, and import of automotive components, with a focus on brake, suspension, steering, and powertrain systems. The company presents itself as a house of brands, that is, an ecosystem in which several independent brands belong to the same organization and are managed in an integrated way to offer complete “under car” solutions (for the underside of vehicles). Its main activities involve friction materials for braking systems, such as brake linings and pads, in addition to a range of other components, including brake cylinders, constant velocity joints, wheel hubs, crown gears and pinions, driveshaft components, universal joints, motorcycle parts, and products based on automotive resins and polymers.

Fras-le’s operations are organized into two main operating segments: aftermarket (replacement) and OEM (Original Equipment Manufacturing). The aftermarket segment is predominant and accounted for approximately 91% of net operating revenue in the quarter ended March 31, 2025, as well as more than 88% of revenue in 2022, 2023, and 2024. This segment covers friction materials, brake, suspension, and powertrain components intended for the maintenance of the active vehicle fleet, serving large national distributors, regional customers, insurers, and auto parts retailers. The OEM segment accounts for around 9% of revenue and concentrates the supply of friction materials and brake and suspension components directly to vehicle manufacturers, playing a key role in placing the company’s products on vehicles’ original assembly lines.

The company has built a diversified portfolio through organic growth and acquisitions. Among the relevant moves are the acquisition of Lonaflex; international expansion with Fras-le North America Inc., Fras-le Argentina, and Fras-le Andina in the 1980s and 1990s; the creation of bases in Europe, Mexico, and China in 2008; and the acquisition of Haldex’s brake pad business in Alabama (USA). In Brazil, companies such as Freios Controil Ltda. and Jurid do Brasil Sistemas Automotivos Ltda. were incorporated. In 2018, Jofund S.A., active in auto parts under the Fremax brand, joined the group, followed by the acquisition of Nakata Automotiva S.A. in 2020, strengthening the company’s position in suspension, steering, and driveline components. In 2025, the purchase of the replacement parts division of the KUO group in Mexico, rebranded as Dacomsa, added manufacturing units of friction materials, engine components, transmission and powertrain parts, consolidating Frasle Mobility’s presence in the aftermarket in Brazil, Mexico, and Argentina.

Fras-le has a broadly international geographic footprint, with subsidiaries and operations in several countries. In addition to its headquarters in Caxias do Sul, the company operates in Argentina (Fras-le Argentina, Farloc, Armetal, and the Garín Operational Center, which centralizes logistics, distribution, and administrative areas); Uruguay (Fanacif, now as a commercial office after the closure of manufacturing activities in 2024); the United States (Fras-le North America, with a brake pad plant and a sales office in Michigan); Chile (Fras-le Andina); Mexico (Fras-le México and, more recently, Dacomsa); China (Fras-le Friction Material in Pinghu and the Jiaxing Bafu trading company); Germany and the Netherlands (Fras-le Europe and distribution centers); and an office and distribution center in Colombia, with extended coverage to Peru, Ecuador, and Central America. In Europe, after acquiring AML Juratek Limited, the company began operating with five units, including an office in Germany and distribution centers in the Netherlands, England, and Northern Ireland. In 2024, 60.6% of net operating revenue was generated in the Brazilian domestic market, highlighting the significant contribution of exports and foreign operations as well.

From a technological and industrial standpoint, Fras-le places strong emphasis on research and development of friction and non-friction materials. The R&D center in Caxias do Sul brings together more than 100 professionals, including chemists, engineers, and technicians, and features chemical, physical, and pilot laboratories responsible for formulating friction materials with different combinations of fibers, binders, friction modifiers, lubricants, and mineral fillers. The company also uses the Randon Technology Center (CTR), which operates 20 test tracks of various terrain types totaling about 15 km, where 840 tests were carried out in 2024, with 22,000 hours recorded. These resources support product development in partnership with OEMs and help position the company as the leading supplier of friction materials for drum brakes in Brazil.

Fras-le’s diversification goes beyond friction materials, with particular emphasis on Nakata, its subsidiary focused on suspension, steering, driveline, metal-rubber, and motorcycle parts. Nakata combines in-house production of shock absorbers, using proprietary technology and co-manufacturing partners, as well as its own laboratories for durability, corrosion, tensile, and strength tests. It adopts a structured product development methodology oriented to the active vehicle fleet and aftermarket needs, covering everything from feasibility analysis to post-launch monitoring. Historically, it was a pioneer in Brazil in the use of gas-pressurized shock absorbers with nitrogen (Nakata HG), a technology aimed at improving drivability and the service life of the suspension system. This set of capabilities reinforces Frasle Mobility’s value proposition as an integrated solutions platform for brake, steering, suspension, and powertrain systems, with a robust distribution model designed to be a “one-stop shop” for different customer profiles.

In commercial relations, the company serves both OEMs and the global aftermarket. Fras-le believes it has established relationships with important manufacturers of commercial and passenger vehicles in Brazil and abroad, such as MAN, Ford, Volkswagen, DAF, Iveco, Renault, Honda, Mitsubishi, General Motors, Mercedes-Benz, Scania, and Volvo, directly or through system suppliers. These ties contribute to product acceptance in the aftermarket, where the company works with major distributors and auto parts retailers. In 2024, the Comolatti Group (Companhia Brasileira de Distribuição Automotiva S.A.) accounted for 10.3% of total revenue, entirely in the aftermarket segment, underscoring the relevance of large distributors in revenue generation. In the quarter ended March 2025, no single customer accounted for more than 10% of sales, indicating some level of customer base diversification.

From a regulatory and ESG standpoint, Fras-le states that its activities in Brazil do not require special permits beyond those normally required for potentially polluting activities, and it claims to keep all necessary licenses in force as of the reference date of the form. The document extensively highlights the legal framework for environmental liability in Brazil, addressing the so-called triple liability (civil, administrative, and criminal) for environmental damage, joint and several liability among responsible parties, the possibility of piercing the corporate veil, and the non-applicability of statutes of limitations to civil obligations to repair environmental damage. By setting out this context, the company signals the importance of environmental compliance in its industrial operations and in the engagement of third parties, even though it does not detail specific sustainability targets. In parallel, technological initiatives such as the line of structural components in composite materials, launched in 2021 as Fras-le Smart Composites and evolved in 2023 into the Composs brand, are described as aimed at reducing the weight of vehicle components and consequently reducing pollutant gas emissions, tying into the group’s narrative of innovation and efficiency.

Fras-le’s recent trajectory also includes moves in the capital markets that are relevant for those following FRAS3 on B3. After the re-IPO in 2016, which marked its return to the capital markets, the company carried out a follow-on public share offering in 2022 totaling R$ 629.4 million. The proceeds were allocated to business expansion, investments in products and technologies, expansion of production units, and working capital reinforcement. With annual net operating revenue above R$ 5 billion in 2024 and historical gross and EBITDA margins around 30% and high teens, respectively, according to data presented in the form, Fras-le has established itself as one of the leading auto parts companies focused on friction materials and “under car” systems in Latin America, combining a production base in Brazil with international presence and strong exposure to the automotive aftermarket.

For individual investors analyzing FRAS3, Fras-le presents the profile of an industrial company focused on the automotive supply chain, with predominant aftermarket exposure, a relevant export base, and presence in multiple geographies. Its inclusion in the larger Randoncorp conglomerate increases access to technological resources, such as the CTR, and strengthens its positioning with OEMs and global distributors. At the same time, the company operates in an environment subject to the environmental responsibilities typical of industrial processes that are intensive in chemical and metallurgical transformation, requiring continuous management of regulatory and operational risks. The recent evolution of the brand to Frasle Mobility and the role as a house of brands reinforce the strategy of consolidating an ecosystem of solutions under multiple brands, especially in the main automotive aftermarket markets in Latin America.