Allpark Empreendimentos, Participações e Serviços S.A. (ALPK3) Earnings Call Transcript & Summary

[Interpreted] Good morning, everyone, and thank you for waiting. This is Estapar's First Quarter 2025 Results Conference Call. We would like to inform you that we do have a simultaneous translation feature available on the platform. [Operator Instructions] We would like to inform you that this conference call is being recorded, and it will be available on the company's IR website at ri.estapar.com.br, where the complete material for this earnings release will be available. You can download the presentation from the chat icon including in English. [Operator Instructions] We will then start the Q&A session. We would like to emphasize that the information contained in this presentation and any statements that may be made during the conference call regarding Estapar's business prospects, projections and operating and financial targets are based on beliefs and assumptions of the company's management as well as information currently available. Forward-looking statements are not a guarantee of performance because they involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand the general economic conditions market conditions and other operating factors may affect performance and lead to results that differ materially from those expressed in such forward-looking statements. Today, we are joined by Executives Emilio Sanches, CEO; and Daniel Soraggi, CFO and Investor Relations Officer. Now I will hand the floor over to Mr. Emilio Sanches to begin the presentation.

[Interpreted] Thank you, Thomas. First of all, I would like to thank you all for joining us in this quarter that we just concluded. We just finished in 2025. Now moving on to Page 5. Let's now refer to the highlights of the quarter. This was a very good quarter for the company and one more quarter where we are delivering very good results. The entire team delivered everything that was planned in terms of net revenue. Revenue stood at BRL 425 million up to March. That means a 15% growth vis-a-vis the first quarter of 2024. So this was a very strong quarter for the company, very strong same-store sales. And as a consequence, our EBITDA grew almost 20%, reaching BRL 77.2 million. We also grew margin. Not only we grew revenue and EBITDA, but margin grew 18.2% vis-a-vis the net revenue. As a consequence, adjusted EBIT was BRL 34.2 million. So we grew 8% in terms of all -- because of all of the investments we did. I mean the investments proved to be assertive and everything we did in 2023, '24 and '25 when we are reaping the benefits, meaning that the recovery of the operations are really paying off and bearing results. We had many new inaugurations, 26 inaugurations this quarter alone, and we will show you that these new inaugurations are spread throughout the country. And we were able to retain churn, meaning that internally, we were able to renew almost 100% of the contracts. So this is a very good result. We are showing the market that not only we are getting into new businesses, but the quality of our services are also excelling. Now digital is something that we've been telling you for quite some time. We reached BRL 11.5 million in revenue from our digital platform, up by 27.7% vis-a-vis last year. So our digital platforms account for 21.3% of our total revenue, meaning that 21% of our revenue comes from the apps. This is very important because it leverages other Estapar products. And here, we also show you the revenue from Zletric. We have 97.8% of revenue, meaning that it's quite robust. This is a very important number. And sales of electric vehicles are also boosting this market in Brazil. And as a consequence, this favors us even though revenue is not that substantial, but it keeps growing year-on-year and month after month. Here, we just have some pictures showing the new inaugurations. We only depicted six of them here. But again, this shows our penetration throughout the country. We have Sao Paulo together with Rio. We also have another operation in the region of Berrini, also in Bahia. We just won a bid for the Alliance Hospital in Salvador. Now we have another one at the airport of Maranhão. This is part of our strategy to penetrate in all the airports, also near Brasília, a teaching institute and Rio Grande do Norte and Paraná. This is another region where we are becoming stronger. These are just some examples of geographies where we are opening new businesses. Our capacity -- our commercial capacity is quite robust, and it is bearing good results. We are showing this quarter-on-quarter. So together with inaugurations, we are also growing the number of operations quarter-on-quarter. Slide 7, still talking about Zona Azul, which is a very important market for us. We are consistently growing. In Minas Gerais, particularly in Juiz de Fora, we were able to renew the concession of the city of Juiz de Fora for another 10 years. This is very important for this region. We -- and this is something that strengthened our digital platforms as well based on Zul+ in Belo Horizonte, we're also offering Zul+, [indiscernible]. We have more than 40 operations in that geography, and this boosts our entire operation, not only digital, but because we can offer a very distinguished and unique service to clients. And clients are increasingly using our services, and we are offering better services to them all the time. So I would like to congratulate the entire team of Zona Azul for this accomplishment. Slide 8 shows that we are promoting several different actions. I think you already realized in the past 1.5 years and more particularly in this last quarter, many of our marketing activities, and we want to boost our digital services even further. And this digital services is not only based on motor vehicle ownership tax, which is IPVA. But moreover, we are also offering parking lot services. Stop or pay that you can use Zul+ to make payments, to make parking lot reservation to pay for Zona Azul around the city, not only in Sao Paulo, but in many other municipalities. And all of that strengthens our strategy. And these products are becoming increasingly more common in the company. We are seeing a very strong growth in the use of the apps and all of these marketing campaigns are also helping people to be more aware of the many features of the app. And throughout Brazil, we are increasing in terms of penetration. And now we begin to show all the numbers in the next slide. In the first quarter of 2025 alone, we added more than 400,000 users that are using Zul+, paying for Zona Azul, reserving parking space in many different parking lots. We are increasing the number of reservations at airports and other parking lots, meaning that we are growing a lot. The revenue from digital products grew by 27% year-on-year. That means that we continue to grow. Our strategy has proven to be very assertive. The number of transactions that took place through the app, not only the app, but products related to the parking lot and then payment of parking space reservation, et cetera. So all in all, we totaled [ 13 million ] transactions in the first quarter of 2025 alone, growing more than 21%. The entire -- I mean, 21% of the revenue of the company already comes from the digital platform through parking space reservation, payment of Zona Azul and revenue, insurance, among other things, meaning that we continue to grow, boosted by new operations and new -- also new avenues of growth through traditional parking lots and others. And so we had very good returns, and we are very pleased with the new operations as well. Now we -- this next slide talks about electromobility. We continue to grow. We added more than 1,147 charging stations. And we are being very assertive in our investment, and we see an increased number of electric vehicles running in the streets, and this strengthens our strategy in terms of our charging station network. So we go back to Slide 12. And for the benefit of time, I'll try to expedite things a little bit. Here, I was saying that -- the motto of the first quarter of '25 is good resilience and consistency. We grew almost 10% in the number of operations. In terms of parking spaces, we reached almost 0.5 million parking spaces. We grew almost 7%, meaning that we grew quite strongly in leased and managed. We also grew long-term contracts and concessions. I mean we have to grow, but at the same time, keep the same base of contracts, so growing zero -- I mean, churn was 0.06%.

[Interpreted] And now moving to Slide 13, and now we refer to the financial results. We also noticed that consistently, we grew again 15% this quarter, and I would like to highlight all of the 26 new operations that were added to our portfolio, they will certainly contribute to the growth of the next coming quarters. That's why I'm saying that we are very consistent. The base is growing, new business is coming in. We are renewing contracts and digital revenues are really boosting our portfolio. This is the name of the game, consistency in Estapar's growth. Now moving to Slide 14. Now we talk about our cash gross profit, operating indirect and direct costs. We grew 15%. Here, I also show that we -- when we grow lease and manage, meaning that we have a lower operating leverage, and we are less exposed to demand risk. Gross margin is flat around 27%. Moving to Slide 15 now. Here, we show EBITDA numbers. I think this is cash generation that really shows that our business generates a lot of cash. We reached BRL 77.2 million in the first quarter of '25, growing 20%. And this really shows that our business and our admin expenses are well managed because we grew nominally and we grew the margin from 24% to 18.1% -- from 17.4% to 18.2% in the first quarter of '25. Now moving to Slide 16. Here, we show EBIT numbers. Here, we highlight our asset-light strategy and how important it has been. EBIT is the result after operating and admin expenses and investment in expenses. We reached [ BRL 84.2 million ] in the first quarter of '24. We grew 51% year-on-year. And this also shows a robust margin growth to [ 34.2% ] in the first quarter of '25. Now Slide 17. Here, we see our bottom line, meaning the total result of the quarter. There was a reduction in losses of over 82%. If you look at the entire trajectory, 2 years ago, our loss was about BRL 40 million to BRL 30 million. And now we are almost reaching profit. We had another quarter where we show that operating growth and the good management of operating and admin costs and financial and investments are now bearing good results. I would also like to highlight that we are obsessed to reach profit. And this obsession will continue because we are very confident that we will soon flip to a different position. This is a quarter where we have a lot of holidays. a reduced number of business days and a reduced number of vehicles in our operations. So typically, in the past 3 years, the first quarter of every year has a weight of 22%, 23%, whereas the other quarters supersede 25%. This is just to illustrate that we are very confident that Estapar is now going towards a very profitable pathway. And this year will be a very important and robust year for the company. Moving on to Slide 18. This shows our cash flow. So more than just growing the operation, the company is making very good use of its capital. It doesn't just mean that we are growing the number of operations and managing costs, but we are investing. We just invest BRL 37.6 million in CapEx in software development that supports our digital platform, but we are also growing on the operating side. We saw long-term contracts growing on a quarter-on-quarter comparison. In terms of interest paid and other, we grew 18.9%, meaning that Estapar it is very compliant with its obligations. We are doing liability management. So our cash ended with BRL 167 million -- BRL 169 million in terms of cash and cash equivalents in March '25. This is our outlook for the year. Going to Slide 19. Here, we have our net debt scenario. We have a very stable net debt. We only grew 8% in a year-on-year comparison going from BRL 778 million to BRL 841.1 million. Throughout the year of 2024, we said that our focus is to keep our debt stable, growing EBITDA. So this increase is very much related to disbursements in 2024 that were very beneficial for the company. We invested in working capital, and we also invested in paying out our liability. Therefore, we feel that we are very comfortable at this net debt level. In relative terms, this is improving. We are 2.8x our leverage, and this should improve going forward. Not only our net debt is stable, but we also managed to reduce our cost of debt going from 2.9%, 2.8% to 2.15% in the first quarter of '25. I mean this liability management effort started a few years back, but we still have more work to do because there is room to improve further. There is market. We have credit lines that are still available to us. So we should see an improvement in spreads. Even though interest rates are high, we are performing well in terms of our debt negotiation and the amortization curve, we always have to look at the size of the debt, the cost of the debt and how that debt is diluted in time in the next 12 months. There is a concentration of 28%, but we feel very comfortable because we will be able to do a very good liability management work. We are -- we have no concerns in terms of short-term debt. On the contrary, we are performing well-on-quarter, and the same thing will also happen throughout 2025. And with that, I conclude my part of the presentation. I would like to thank all of the investors, our employees. I would like to congratulate you all for another successful quarter. And in the second quarter, I am sure that we will also bring good news to us all. Thank you very much. Emilio, back to you.

[Interpreted] Well, thank you. I would like to apologize for that glitch we had. Unfortunately, we had a power outage in the middle of our conversation here. The entire district with out of power. But as Daniel was saying, we had a quarter according to plan. We are very disciplined in the company. The entire company is in pursuit of higher profitability, and we have been able to pay out our debt, reallocating capital, making investments and paying for more expensive liabilities and rearranging the debt at better costs, which help us out because at the end of the day, our financial expense is lower. And this, in turn, helps the bottom line of the company. Looking at the last 12 months, discarding the first quarter of last year and the last 4 quarters, the company is now working at a profit. We saw a major reduction in debt. So we are seeing the results of our efforts. And we hope that this will be the trend going forward because we are consistently generating good results, thanks to all of the renewals that I mentioned, the growth of new businesses, boosting our digital platforms, our cost discipline, and we are making a lot of assertive investments in new businesses, and we are also investing in technology. And these investments will give us good results throughout time. We are very pleased with everything that we've accomplished so far, and we really see a very good year ahead of us. I'm sure we will keep on bringing good news to all of you. Once again, I would like to thank you very much for joining us. And now we will proceed with the Q&A session, our famous Q&A. So in case you have questions, we are available to answer them. Thank you. So thank you for now. And now I'll turn the floor back to Thomas.

[Interpreted] Thank you, Emilio. [Operator Instructions] Our first question is from a private investor.

[Interpreted] The question is, despite the significant reduction in losses, the company is still posting negative results. What will be the realistic outlook? And what would be the highlights to help you post profit?

[Interpreted] To briefly answer your question, as I was saying, in the last 12 months, the company posted profits despite not yet this quarter. But we see this good recovery trend. I know that the Selic rate is not helping us. But with all the work we are doing with all of the deliveries, increase in margin, both EBITDA margin increase that we are just indicating that we are on the right track. And very shortly, in the short run, the trend is for the company to be profitable. And I know the risks exist not only because of the Selic rate, but maybe investments that may not bear fruits going forward. But we are very comfortable and confident that we will certainly bring better news, especially when compared to last year. We are on the right track, and we are very confident that the company is on the right track.

[Interpreted] The next question is from Ricardo Braga. He asks about the company's view on capital allocation.

[Interpreted] Thank you for the question. This is a very key question for our capital structure more than allocation of capital, capital structure, I would say. So how do we make capital allocation decisions? We are lucky enough to be in a business that has predictable revenue in a way. We can have visibility in terms of revenue for the coming quarters, the second and third quarter, all the way up to 2026. And we also have good management of our costs. Our management of systems and governance are such that the costs are predictable. We have some predictability in terms of operating cash generation. So I have visibility of how much I will generate in operating cash for the next 12 months. And then we -- based on that, we make our capital allocation decisions, how much I will allocate for investments, maintenance and debt. And then we look at KPIs like leverage, net debt, return on invested capital and profitability. So we look at all of these indicators because they are very important and certainly, financial commitments. Okay. So if we look to reduce leverage, the company has to improve profitability and have a better use of the invested capital. So out of all of the cash that is generated, we have to then first look at liability management to amortize the principal of the debt to roll out the debt and how much we will allocate to grow the company, long-term growth, asset-light. So we make decisions as things go on, and this happens every year in our budget cycle, and we visit that budget on a monthly basis based on the governance and management of the company. Estapar is known among creditors as a company of credibility and consistency. We are very disciplined in regards to our goals and our pursuit towards profitability. We have managed to improve all the KPIs. If you look back 10 quarters, we see that every KPI improves quarter-on-quarter, and we will continue to grow. And thank you for your question because this gives us the opportunity to explain our management a bit more and how we are making improvements in all KPIs of the company.

[Interpreted] Next question from another private investor.

[Interpreted] The company mentioned progress in liability management. Have these -- are these gains one-off or you have room for further improvement going forward?

[Interpreted] Thank you for the question. I mean this is what I was saying, the liability management effort. I mean, back in the past, strategically, we -- I just explained our planning for the past 18 to 12 months. We knew back then that the fundamentals of the company would improve continuously quarter-on-quarter. Therefore, every quarter where I improve my fundamentals, I also improve my credit line, and this improves my CDI and my cost of debt. And that's why that liability management effort is continuous. I could have done something in the past like a huge transaction. But then some way, I would have linked the company to the credit risk. But this liability management effort happens in different phases. I adjust the cost in such a way that all of the operations, I mean, we just issued debentures in December at CDI plus 1.5. and that was at a cost level that is quite attractive considering our size and the size of our balance sheet. And speaking about the future, we are very confident because there's still some credit lines, some financial instruments available to us. And we are very robust and very much tuned to all of the opportunities. Liability management is a constant effort, and it will continue to be so in 2025 and 2026. So that's it, but thank you for your question.

[Interpreted] Next question from Ricardo Braga.

[Interpreted] Well, clearly, lease and manage require less capital and generate very positive returns. Do you think about making a lien with concessions?

[Interpreted] No, this possibility does not exist with all our business lines leased and management and concessions. All of the concessions are well under control. So we do not have any -- no, there is no possibility of disposing of any of them. Well, with that, we conclude this conference call. We received many comments through the chat icon. But thank you so much for trusting us, for trusting on our management, and we are certainly confident that 2025 will be a very promising year with very good results. And we will soon talk again to disclose the results of the second quarter. Thank you. Thank you all very much for joining us this morning. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]