TECN3 Technos

Technos S.A. is a Brazilian publicly traded company, with common shares listed on B3 under the ticker TECN3, headquartered in the city of Rio de Janeiro. Although the current holding company was incorporated in 2007 and began operations in 2008 with the corporate purpose of holding equity interests in other companies, the origin of the business dates back to 1956, with the founding of the importer Centauro to act as the exclusive distributor of the then Swiss brand Technos in Brazil. The brand’s trajectory begins even earlier, abroad, with the Gunzinger family opening its first watch workshop in 1900 and registering the Technos brand in 1924. Over the decades of the 1950s, 1960s and 1970s, the Brazilian operation grew significantly, culminating in leadership of the Brazilian watch market in terms of revenue by the end of the 1980s. The company went public in 2011 and has established itself as one of the main watchmaking groups in Latin America, operating in an integrated way across development, assembly, distribution and retail of wristwatches.

Technos’s main activity is the development, assembly and sale of watches, directly or through its subsidiaries, with a predominant focus on the Brazilian market. Since 1956, the company has expanded its portfolio beyond the original Technos brand, going on to manage a set of owned and licensed brands that cover different price ranges, styles and audiences. As of December 31, 2024, the company developed and distributed products from ten nationally known brands: seven proprietary brands (Technos, Touch, Euro, Allora, Condor, Mariner and Dumont) and three third-party brands licensed or distributed on an exclusive basis (Mormaii, Fossil and Michael Kors. The business model is essentially focused on discretionary consumer goods, with revenue concentrated in the sale of analog, digital, multifunction and chronograph watches, complemented by technical assistance services and the sale of spare parts after the end of the warranty period.

Technos’s brand portfolio is structured to cover several segments of the watch market, combining fashion, sports and classic niches and economic, mid-range and more aspirational price brackets. The Technos brand, of Swiss origin and the group’s most established name, is positioned in the classic segment, focusing on analog, multifunction and steel chronograph watches for adults, associated with a perception of quality and tradition. Condor operates as a democratic fashion brand, with strong appeal in terms of affordable pricing and gift sets for both women and men. Euro, Allora and Touch reinforce the company’s presence in the fashion segment, with an emphasis on young and adult female consumers interested in style trends at competitive prices. The Mormaii brand, licensed until 2026, taps into the sports segment linked to the surf and wellness universe, with analog and digital watches. Fossil Group brands, including Fossil and Michael Kors, are operated under brand distribution and use agreements until 2025, adding products aligned with international fashion trends to the portfolio.

On the operational front, Technos combines in-house design and product development with a global supply chain for components and final assembly in Brazil. The company maintains its own industrial plant in the Manaus Free Trade Zone, with about 8,570 m² and hundreds of employees, dedicated to assembling and distributing watches. The main components — such as straps, cases, crystals and movements — are purchased from a diversified base of suppliers in China and Japan, with which the group maintains long-term relationships, without long-term supply contracts, operating through individual purchase orders. The company maintains an office in Shenzhen to strengthen relationships with manufacturers and reinforce quality control at the source. The product development process generally takes 6 to 12 months and involves in-house teams dedicated to planning, trends and design, as well as procurement, with frequent trips to Europe, Asia and North America to attend trade shows and identify global trends in watchmaking.

Technos’s products are distributed through a broad, highly fragmented network of retailers and proprietary channels. As of December 31, 2024, the company served more than 9,000 active points of sale throughout Brazil, including watch stores, jewelry stores, optical retailers and department stores, without any material concentration in a single client or chain. The company also invests in digital channels, operating five e-commerce websites, four of which dedicated to its main brands (Technos, Fossil, Euro and Condor) and a proprietary marketplace, Timecenter, focused on the online offering of all brands in the portfolio. In addition, it maintains a network of 16 own stores in major capitals, combining full-price units, designed to strengthen the brand and test products, and outlet units, used as a tool for inventory management and to clear slower-moving items with less impact on traditional channels.

Technos operates predominantly in the domestic market. All relevant net revenue comes from Brazilian customers, with exports considered immaterial and foreign operations generating no significant revenue. Within Brazil, the company has a presence in all states, with a significant share of revenue in the North and Northeast regions, which have historically shown GDP growth above the national average. In 2024, the group reported gross revenue of R$ 464.3 million, adjusted EBITDA of R$ 93.2 million and net income of R$ 64.8 million, in a context of the gradual recovery of the watch segment after the pandemic, but still marked by high interest rates and a strong US dollar. The company is not dependent on individual customers; in 2024, there was no buyer responsible for more than 10% of total net revenue.

Technos’s industrial operation is subject to specific environmental regulation, as watch assembly is classified as a potentially polluting activity and depends on licensing. The Manaus unit operates under a license issued by the state environmental agency, IPAAM, valid until March 2027, subject to periodic renewals and compliance with technical conditions. The company highlights the need to comply with regulations on effluents, waste handling and disposal, atmospheric emissions and noise, noting that violations may result in administrative, civil and criminal sanctions. To mitigate risks, the company implements practices such as sewage treatment, cardboard recycling and the sale of metal waste for reuse, but it does not formally adopt international environmental certification standards. In addition, assembly in Manaus benefits from tax incentives, such as the ICMS tax benefit granted by the State of Amazonas to the sector, renewed until December 2026, which contributes to the competitiveness of production.

In terms of brands and contracts, Technos is highly dependent on its intangible assets, especially its proprietary Technos and Condor brands and the licensed or exclusively distributed brands such as Mormaii, Fossil and Michael Kors. The Mormaii licensing agreement, registered with the INPI in the name of Mormaii Indústria, Comércio, Importação e Exportação de Artigos Esportivos Ltda., is valid until September 2026 and provides for royalty payments on gross revenue and minimum commitments to marketing investment. Fossil Group brands are exploited under a distribution and brand use agreement with Fossil Partners, L.P., renewed until December 2025, which ensures the exclusive right to assemble, distribute and sell Fossil and Michael Kors watches in Brazil, with no upfront royalty payments. The company states that it does not make financial contributions to political parties, candidates or initiatives aimed at influencing public policy.

Regarding environmental, social and governance (ESG) practices, Technos does not currently publish a formal sustainability report audited by third parties, but maintains a section on the subject on its corporate website, where it outlines commitments and progress. The company states that it complies with current environmental legislation and declares its commitment to sustainable development, supported by an internal materiality matrix that guides priorities such as business model resilience, ethics and reputation, health and well-being, product quality and safety, socio-environmental management of the supply chain, waste management, greenhouse gas emissions, water use and effluents, gender equity, people training and development, energy management, data security, diversity and inclusion, and prevention of critical incidents. Even without a specific report, the company considers certain UN Sustainable Development Goals as guidelines, including good health and well-being, quality education, gender equality, affordable and clean energy, decent work and economic growth, responsible consumption and production, climate action and strong institutions, incorporating these themes into its corporate strategy and the evolution of its internal indicators.

As an issuer listed on B3, with TECN3 shares, Technos follows corporate governance practices typical of Brazilian publicly held companies, with professional management and a board of directors that underwent significant changes in 2019, when an operational turnaround process began. This initiative focused on restoring efficiency and profitability, digitizing channels, strengthening the connected watch category and restructuring after-sales, with technical assistance outsourced to an accredited network. The management structure combines executives with long experience in the watch segment and in the consumer market with new talent, seeking to align product development, the manufacturing operation in Manaus and the multichannel presence in physical and digital retail in Brazil.