JSL S.A. (JSLG3) Earnings Call Transcript & Summary

Good morning, and welcome to the conference call of JSL to discuss the earnings regarding the fourth quarter 2021. Today with us are Ramon Alcaraz, JSL's CEO; Guilherme Sampaio, CFO and Investor Relations Officer. [Operator Instructions] Before moving on, we would like to let you know that any statements made during this conference call relative to the company's business outlooks, projections and operation and financial goals are based on the beliefs and assumptions of JSL management and rely on information currently available to the company. Forward-looking statements are not a guarantee of performance. They involve risks, uncertainties and assumptions since they refer to future events and therefore, depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operating factors may affect the company's future results and lead to results that will materially differ from those in the forward-looking statements. Now I'm going to turn the call to Mr. Ramon Alcaraz, that will start the presentation. Please, Mr. Ramon, you may go on.

Good morning, ladies and gentlemen. I'm here, and it's a pleasure to release the earnings of the fourth quarter JSL and consequently, the results of the whole year of '21. 2021 was a transformational year for us at JSL. A very good year despite all the difficulties that we met. We grew 66% in revenues in the fourth quarter compared to the fourth quarter 2020, 60% when we compare the revenue year-over-year, closing with net revenues of BRL 4.2 billion. Talking about the results despite all the adversities as the increase in the prices of inputs, we closed the fourth quarter, 82% higher than the fourth quarter 2020. In the year, we closed at almost 80% over 2020 at BRL 758 million. Net income, we closed the fourth quarter, 78% year-on-year with BRL 54 million in the year '21, 5x higher than 2020 with BRL 273 million. Our ROIC was 13.5% and return on equity of 20.5%. We also completed the 3 acquisitions of 2021, increasing our service portfolios and footprint. I'm talking about TPC, Rodomeu and Marvel companies. We also had an organic growth of 20% in the quarter and 17% in 2021 and closed BRL 4.1 billion of new revenue contracts that ensures our organic growth for the coming months. We started operations in South Africa, thereby completing 7 countries with international operations and this time, crossing the Atlantic Ocean with the results and with all the adversities in the increase of inputs of the year. Our capacity to execute and keep our margins even with a strong inflationary pressure. We had relentless work on renegotiating contracts with clients, most of them, more than once a year. Now a highlight in our organic growth. We had growth of 23% of the acquired companies when comparing quarter-on-quarter, that is the fourth quarter 2020 and the fourth quarter '21 at JSL, 18%. In the year, we had 20% of the acquired companies and 16% for JSL performing an average growth of 17%. Of this growth, 47% came from adjustments in prices and expansion of current contracts and 53% came from the revenue of new businesses. And talking about that, we closed in 2021, BRL 4.1 billion in new contracts with an average term of 42 months. That ensures already organic growth for the coming years. And as important as that is the diversity of sectors of these new businesses, such as pulp and paper, food and beverage, steel and mining, consumer goods, e-commerce and others. That 60% come from dedicated operations, which reinforces our relationship with our clients. And out of the BRL 4.1 billion, 75% were cross-selling. That is contracts with existing clients, seizing the opportunities of our relations with our clients. Another point I would like to highlight is the transformation of the acquisition of 5 companies in the last 12, 14 months. Again, Fadel, TransMoreno, TPC, Rodomeu and Marvel. In addition to the diversity of sectors which each company is inserted, we had growth of the acquired companies of 26% compared to 2019 to 2021, in results, a growth of 40% comparing 2019 and 2021. In terms of synergies, we identified BRL 45 million that represents an increase of 27% in this company's net income. Out of this, we already captured BRL 13.5 million in 2021. But the year was not easy, as you know. We had an inflation of inputs that we haven't seen for the last 20 years. Fuel was with an increase of more than 70%, truck parts, more than 30%, tires, almost 30%. And an IPCA interest rate of 10%, which is a very high inflation, but our direct inputs went up much higher than the IPCA. So what actions did we take to try to minimize impact, renegotiations of contracts with clients and 3 rounds in the year, advancing annual adjustments and automatic pass-through, basically operational centralization that is we can do more with less acceleration of the process of capturing synergies from purchases of inputs between JSL and acquired companies, new price models, strategies for granting benefits to third-party and independent truck drivers and a very severe of cost management and efficiency gains. With that, I'm going to turn the call to Guilherme Sampaio, our CFO, to give you further details on numbers.

Thanks, Ramon. Good morning, everyone. I'm going to start with Slide #6, giving you a bit more color on the numbers of the year. I'll start with net revenue. We closed the quarter with BRL 1.3 billion, BRL 21 million, of which showing growth of 66% compared to the fourth quarter '20. In the year, we closed at BRL 4.3 billion. The sale of assets accounted for BRL 83 million of the amount lower than 2020 because we decided to hold some assets and [ meet the ] demands of our clients at the end of the year. That was an strategy that contributes for us to reach growth of 17% organically year-on-year. Consolidated, we grew at 59%, talking about all acquired companies consolidated in the numbers as from the date of acquisition. The operating result is something that must be highlighted, which even with a strong pressure on costs that Ramon mentioned, our capacity of execution in all companies made our results to grow 174% going from BRL 56 million to BRL 148 million with an EBIT margin of 7.1% to 11.3%, 4 percentage points higher quarter-on-quarter. In the year, there was an increase of 137% getting to BRL 462 million in 2021 with a [ 14 ] percentage points increase in margin. And here, I'm already excluding nonrecurring effects of [ visco feeing ] credits that had a positive impact in the consolidated results of JSL as we released in the third quarter 2021. EBITDA got to BRL 670 million and consolidated numbers altogether, BRL 758 million with margin of 18%. Net income in the quarter was BRL 54 million, growth of 80% compared to the previous quarter last year. But if we do not consider the amortization of the 5 acquisition, the net income goes up to BRL 63 million in the quarter. In the year, we got to BRL 273 million consolidated net income and BRL 224 million with the adjustments that I mentioned in a bit and the effects of the PPAs of the 5 acquisitions made. That leads us to a recurring net margin of 5.2%, 3.8 percentage points higher than 2020 and 4.3% over 2019, which is the reference without the influence of COVID and the inflation of inputs that we experienced in the last year. On Slide 7, I talk a bit more about CapEx that closed the year at a net number of BRL 674 million. That is, again, a part of our [ fleet ] to meet the needs of our clients in the fourth quarter '21, which reflect on the sale of assets and also the need for fleet renewal and expansion for Fadel, Rodomeu, and Marvel. That had a shortage of assets because of the lack of products in the market. Our CapEx accelerated in the third and fourth quarters to meet the implementation of 4.1 billion contracts that were closed, some of which were implemented in the last quarter of the year and still under implementation in the first quarter 2022. The sale of assets also another important result. As Ramon mentioned, inflation figure had an impact, but in this case to increase our asset base with a profit over 25%, a trend that we have been seeing quarter-over-quarter in 2021. With a simple exercise in our base of machinery trucks and equipment, we get to a potential asset depreciation of BRL 623 million, sufficient to cover the financial expenses of 2021 at 3.1x and 7x the last quarter of '21. On the next slide, we talk about our capital structure. We closed at BRL 1 billion not considering the committed credit line of BRL 365 million, enough to close our debt until 2025 and by 9x our short-term debt. Net debt closed at BRL 2.7 billion and leverage 3.2x net debt-to-EBITDA ratio and 3 net debt-to-EBITDA added ratio, which is in our financial covenants. The average tenor is 5.9 years and cost after taxes of 6.9%. An important point that I would like to highlight is with our strategy and capital structure, including our compliance with leverage makes standard and cost increase our corporate credit rating outlook from neutral to positive. On the next slide, we bring you a comparison of our deliveries in 2021. This and -- this is what we have promised in the IPO process of 2020. Organic growth, 17%, GDP, plus 12%. Our commitment was GDP plus 7%, BRL 2 billion in new revenues through mergers and acquisitions. Our commitment, BRL 700 million without nonrecurring effect, we had a higher EBITDA and net income by more than 30% return on invested capital at 13.5%, and ROIC 20.5%, which shows our diversity in business models and execution with discipline. We left our leverage close to 3x as our commitment. It's important to go back to the point made by Ramon on Slide 4, talking about the assertiveness of our acquisitions. We had an average multiple of 4.9x EBITDA. And if we consider the EBITDA of '21, that has not yet absorbed 100% [ test just ] calculated. We get to a multiple after growth of 3.6x. So we are talking about a company that is 40% higher than what we had expected in the IPO project. Now I'm going to turn the call back to Ramon, that is going to talk a bit more about our ESG actions. Ramon?

Thanks, Guilherme. Now I'm going to highlight that even at a very difficult year, we haven't forgotten our commitment with ESG and our sustainability plan. Here, I highlight some of our actions. Tests with cars using alternative fuels such as electric cars, trucks, buses that are driven by energy, in addition, also trucks powered by gas, which is a trend that I truly believe, especially when you're talking about long-distance vehicles. Both CNG and Bio emission. We have an own fleet of trucks with a nature track below 4 years. That is with the technology that is very advanced in the emission of pollutants like Euro 3, Euro 5. This year, we met advanced in our safety culture with a target with zero accidents. Petrobras is a very severe company in the assessment of the security and safety in its facilities. We also started a project called Women behind the Wheel Program: training and hiring several women as drivers in a segment that is mostly male. And you have a link on our release to take a look at this material. There is a video that is introducing the program, which is very nice. And to close, we are already a company of BRL 5.6 billion in net revenues when we combine the numbers of JSL and acquired companies. EBITDA of BRL 837 million and net income of almost BRL 300 million. And we are going to continue growing. Our size, structure and reputation positions us to seize great opportunities for new acquisitions, given the current scenario with credit restrictions in the market, higher inflation and input inflation. We also accelerated our technology agenda because we believe this is the pathway for efficiency. I highlight our capacity to purchase assets because of the scale of the group with a robust capital structure to support large contracts and new acquisitions. My Moto. -- since I joined JSL as CEO is in addition to being the largest logistics company in Brazil, we want to be the best company in the sector. And what do I mean is based on 3 pillars. The quality of the services we provide perceived by our clients in a work environment with care of our people, our greatest assets and with return to our shareholders. With that, my friends, I close our presentation. And together with Guilherme, we are here for your questions and any clarifications you may need. Thank you very much for your attention.

[Operator Instructions] The first question comes from Gabriel Rezende of Itau BBA.

Great results. And I have 2 points to ask. First, about EBITDA margin, and you talked extensively about the cost pressure you experienced in the quarter and all the pressure over the industry during the year. But the consolidated EBITDA margin is quite resilient, but there was a decrease quarter-over-quarter in the asset-heavy segment. So what can we expect? What kind of availability do you think clients have to accommodate higher price? Is there room for it? And why is the cost trend showing. So just to understand what we can expect from margins for the next quarters? Secondly, contracted revenue, there has been a acceleration. We want to understand what explains that? Is it a problem of seasonality? What are the sectors that are impacting and leading to this decrease of the fourth quarter over the third quarter?

Concerning the first question, the EBITDA margin being somewhat smaller on the fourth and on the third quarter, I would say it's seasonality, really. There is no unexpected factor leading to it in the third quarter. We closed some contracts which were quite useful, especially during the year in which there was very heavy pressure on costs. And we had to have different negotiation terms with clients. So there was some mismatching right on 1 month better results than it impact the upcoming month and the other way around. So in addition to seasonality because the third quarter tends to be the best of the year, there is still this mismatch between the impact on cost and the negotiation with clients. But -- it was a very small difference, nothing that really concerns us. We are still very satisfied with the results that we have achieved. Concerning your second question, let me get here the numbers because I don't know them by heart. Gabriel was asking about some specific points that would explain the deceleration of new revenues because we had BRL 1.2 billion the far third quarter and then a reduction in the fourth quarter. Well, I would say that this is all about time for negotiation. In the fourth quarter, companies are not closing major deals any longer because they are still waiting for trends for the upcoming year. On the third quarter, there were high expectations for the volumes of October, November and December, especially for retail companies. As a consequence, we negotiated great dedicated operating contracts. So I think it's really seasonality. The third quarter tends to be a quarter where we close more deals, whereas in the fourth quarter because December, well, nobody barely works. So there are fewer amounts I would say it's a natural trend of the market. I wouldn't point any specific fact that would justify the reason for it. Okay. I hope I have answered your 2 questions.

Yes. Absolutely.

The next question comes from Victor Mizusaki of Bradesco BBI.

Great results. Congrats. And I have 2 questions. First, in your earnings release, you made reference to the revenues of operations from abroad, BRL 145 million. And you also mentioned the beginning of your operations in South Africa. Can you please tell us more about your strategy of international expansion. And once you've started the operation in South Africa, how much has it impacted your EBITDA margin of asset-heavy operations? And Ramon, you've talked about your technology agenda. What can we expect for 2022?

Thank you, Victor, for your question. And thank you for congratulating us on our results. So first question first about our international strategy. Well, we are highly interested in expanding our international operations. Our dream is to have significant percentage of our operations coming from other currencies than real. And that is a midterm perspective. But we have 2 types of operations here, international transportation operations for our neighboring countries, Brazil, Argentina, Brazil Chile, Brazil, Uruguay, Brazil, Paraguay, very strong with JSL and Marvel, which has a very strong flow of transportation of cold trucks of those, which are frozen operations. In Paraguay, for example, we have a distribution of beverage over 500 employees. It's an operation -- it's an independent operation in Paraguay. And now we are going to have a similar operation in South Africa. It's also an independent operation from the one we have in Brazil. In South Africa, our expectations are high once again because it's an experience in a country of a different kind of culture because in our neighboring countries here, even though they have different cultures, of course, but they are closer. We could call them our cousins. South Africa is completely different, different culture, and we are going to learn more on it, and we are very satisfied with the beginning of the activities. It has had no impact in 2021 so far because we started the operation in December. Maybe it has even contributed negatively because of implementation costs, but negligible really. What really matters is 2022. Our operation has had significant sales as of February, March, and we are negotiating with clients to have a fourfold increase of operation throughout the year of 2022. In addition, if successful, we are going to extend that into other countries of Africa because the African continent is so large, so many opportunities for specialized companies such as ours. So it means we can go into the countries there and other continents later. So I think South Africa makes sense for our internationalization strategy. Now concerning technology. This is something that we constantly debate internally because there are 2 main fronts of activities. First, digitalization of all our processes make use of more technology and less manpower. And by doing that, we can do more with less or in other words, used technology for our own benefit. There are just so many opportunities. And another issue which we can address in the midterm, which is to transform JSL into a technological company, start selling technological solutions to our clients and bring together the needs, meet their demands. There are a number of ongoing studies concerning that. And we can see that happening in some specific industries, such as, for example, retail. So having products closer to consumers, be it B2B or B2C, e-commerce, for example, has been setting this momentum, and we really think this is something which is going to go into all segments. And we want to be ready to take the first opportunities to really offer solutions to everyone, and we have hired a Director of Technology, someone who is highly experienced in other companies. And we are positive that this is going to be instrumental to help us into that.

Now going back to the first question about South Africa, if I may Ramon, you started the operation. You -- have you prospect local clients? Or are you going to rely on relevant clients here in Brazil that has asked you to go into the expansion into South Africa?

Well, South Africa, we are working with a large company in South Africa, which is part of a group of companies here in Brazil. So the prospect resulted from, yes, the operation here in Brazil, the person was transferred to South Africa knew about our company and helped us with the transition. So we just got into South Africa, not just trying to see the market or go into an adventure, but rather something a closed deal. But at the same time, it's going to serve for our purpose of identifying for the clients there, which are not related to Brazil.

The next question comes from Guilherme Mendes of JPMorgan.

I have 2 questions. First, a follow-up concerning what Gabriel asked about the new contracts and the contracted amount. Can you please shed some light on new contracts, conditions, price adjustments? Or have you been concentrated on some specific sectors? And something about the M&A. Are you still adopting the same M&A strategy? What do you plan? And how have you been integrating the acquired companies? Because Ramon talked about the potential synergies that you have identified by the few companies. Are you still going to get more synergies, where will they come from?

Now speaking of contracts first. In 2021, which was not a very typical year, and we've talked about that cost and all that. But it was also a difficult from it in terms of demand. Many clients realize that not having a contract -- a guaranteed contract would probably damage demand. So there was sales volume, but no availability of freight. So as such, we've closed some deals of dedicated services. So we had drugs available and the clients would, in turn, guarantee volumes or number of operations. So 61% of those BRL 4.1 billion in contracts we announced are from dedicated operations. In terms of segments and industries, they vary a lot. 30% of the contracts are paper and pulp, which is a segment that has increased significantly in recent years, especially because of the export of pulp. Brazil is the country that is the main exporter of pulp. We are very experienced in the area. And as such, we've been able to be present in the plans, and we have recently announced the contract with a new pulp company, LD. It's in the miniaturized states, specifically kind of pulp, and we are going to use [ painted train ] which is a kind of vehicle that provides greater productivity. So I believe JSL's capacity and the segmentation of our different markets favors contracts or favor closing contracts with customers such as paper and pulp as well as food and retail. So we've closed nearly 30% of contracts with them. So same reasons, a guarantee of availability in different kind of industries. The main advantage of having a company of our size operating in segments can really give us the opportunity of capturing all potential initiatives. So you can benefit from the combination of different activities. So we are present in the truck industry in machine have machinery not only through JSL, but also because of the whole strength of our group [ JSL ] and then other 2 companies that purchased the most trucks and machines in Brazil. So it really takes us into the first positions of being able to provide vehicles during a time in which there was a shortage of available vehicles. So know-how, investments and the facility of having access to vehicles and trucks and machines has really favored our position and closure of contracts. The second question concerns our M&A policy. We still maintain the same policy that was announced during the IPO. We want to grow and grow significantly and quickly from organic growth and there has been significant organic growth in the year. We've really used the opportunities of the market and we showed numbers to confirm that. And nonorganic growth from acquisitions, for example, all of them proved to be very to the point, improving our growth. Inorganic growth can also leads to greater internal growth and the companies that were acquired grew significantly, and that has impacted our results positively. But we've maintained our strategy. We buy know-how. We don't buy machinery or we don't buy vehicles. This is not our main point. What matters is what the company offers as its best. So we want to be close enough to capture synergies from the fact that we are a large group, but not harming or impacting the business that the company still has. And you see -- we believe that in 2022, considering all the difficulties, cost increase and the difficulty of readjusting prices with clients. We strongly believe that we can get with our clients and negotiate with them openly, even though it's not easy, but we believe we have this opportunity because we are closer to our clients. I think that despite market diversities, we can get together and we can really conclude some of our acquisitions. You've also asked about synergies. Yes, we want to get synergies, but we are not more interested in synergies than we are in impacting or jeopardizing our -- the success of the business. So of the BRL 44 million that we've served -- so changing the indebtedness level of the companies by bringing down the interest rate, considering the size of our holding, purchased vehicles at lower prices than what they used to buy independently and some inputs such as tire, fuel, et cetera. In '20 and '21, we had BRL 13.5 million. So this is how long it takes to organize contract with suppliers and all of that. Some of the companies out of the 5 TPC, Rodomeu and Marvel joined us in midyear, really, so we had less time to capture that. But in 2022, we expect to capture most of the value, which will definitely help our results. And then we are going to search for new synergies within the policy that I have just shared with you.

Our next question comes from Pedro Bruno from XP Investments.

Part of my question has already been answered. It was with regards to your international movement. I would like to understand the rationale going beyond South America. I think that you already answered this question. And I just would like to add some questions here. You talked about your exposure to currency. So I would like to confirm if this is the strategy that those contracts are priced in [ ex real ] currency? And then I would like to understand what this currency is, if you have some standards for the countries that you are moving towards? And also, I would like to understand what sectors you talked about the distribution of beverages in Paraguay. I don't know if it is the same sector of exposure in other countries. So I would like to understand that. And the third question with regards to the strategic rationale in terms of scale. Yes, I think that you mentioned that in final questions, JSL's strategy in terms of size. And I would like to know how this applies outside Brazil, especially in more distance countries? And these are my questions.

Okay. Let me move on. Okay. And let me go on. So yes, part of our internationalization strategy is to be less dependent on a single currency like real. But in the countries that we mentioned, we work with local currency. So we don't have a specific preference, but we want to work with different currencies other than real. You also asked about the segments that we operate in South Africa, also the beverage segment. And not because we have a preference for the segment. But because of our know-how in Brazil, we have eventually take this expertise to other countries. An important thing when you go into other countries, it's to work in segments in which you were less vulnerable to a specific crisis. So the retail segment is always very interesting. You also asked about how we can enjoy our size in countries that are distance in South Africa. There was an important point here. The main manufacturers of cars or vehicles are international like emission, for instance, the plants that we use in South Africa was Scania for the purchase of vehicles. And we have a huge relationship with Scania in Brazil. And that undoubtedly has helped us even in acquisitions in South Africa with trucks manufactured it because it's the company, the OEM is the same. So likewise, we use our size and capacity of relationship, not only with the OEM, but also with financial institutions, reduce the net contacts nationally and internationally to have a smoother entry in countries as distance as South Africa.

This is Guilherme. I'm going to use the opportunity to read you some questions that we got from the webcast. The first, I'm going to read and answer, which is the following. It comes from [indiscernible]. And he asks the following. Congratulations on your results. And I think the accounts of taxes to be recovered. PIS/COFINS they amount to 450 million. Without income tax, can you use this practice to pay all taxes and federal contributions? What is the expectation to monetize these credits for '22 and '23? And what is the expectation of new acquisitions for '22? I'm going to start answering your questions. Yes. This is an important asset of the company and generates suppress in our cash flow. I would say we expect to realize PIS/COFINS in 18 months. So we would bring everything to 0, what the payment of PIS/COFINS for the coming year. And we would also have an important volume for '23. And now I'm going to turn to Ramon to talk about the expectation of new acquisitions for '22.

Well, just to add to your first question, federal taxes can be offset with other federal taxes. That's not the case because we have a high volume of PIS/COFINS which is sufficient for these credits. But if it were not, it could be used for other federal taxes. But to answer your second question about M&A. And I'm going just to add to what I answered to Pedro. Our policy continues to be quite aggressive. We want to use all opportunities but even difficulties can costs we have in our pipeline, several opportunities. And we have high hopes for the year of '22.

Let's carry on for our second question that we got from Carlos Herrera from Condor Insider. How do you see the trend of asset prices for this year? The drop in the revenue from the sale of assets can be assigned that the price is going to go down due to a healthy rotation of assets? Or is it something that was a one-off event for the fourth quarter '21?

Okay. The drop in the revenue of the sale of assets does not have to do with a drop in prices. It went down because our volume was up, and we decided to keep this and some up to sell them. After all, our business is logistics. The sale of assets is important, but we prefer to get revenues from services. So that was our strategy. The price of assets had an appreciation in '20 and '21, which was huge. And I don't believe this is going to come back, not today and not ever. I never saw prices to take a step back. They may not increase at the pace they did in 2021. That has to do with the appreciation of new vehicles and the supply of demand of machinery and trucks. But I don't think that prices are going to take a step back. In 35 years I have in the segment, I never saw that. So I do not see this possibility.

But just to add to that, and this is Guilherme. If you get the last releases, you're going to see that what Ramon said is true because of the price of new assets, there was an appreciation of our asset base. Today, we can get to a margin the sale of assets of 25% and even plus that, which is what we released in the latest quarters, which is something that is very positive. We did an exercise in the presentation, showing that if we get the same margin and we apply on our base of net assets, and I'm not talking about only machines, I'm talking about trucks, equipment. We're talking about the potential appreciation of assets of more than BRL 600 million. So this is just an additional comment to what Ramon mentioned. The next question comes from [ Rodrigo ], he is an individual investor. Can you talk a bit more about your expansion strategy in e-commerce? And does this type of business have tighter margins than other business lines such as the industry -- manufacturing industry. Thank you, [ Rodrigo ], for your question. E-commerce is part of our services provided today. It's important to mention that in the year of '21, so of Fadel, that is specialized in orbit distribution or through JSL, just for you to have an idea, we have cases of more than 150,000 deliveries a day, which is a very high volume. And that shows our ability to perform in e-commerce. This is one point. Now the next question, are we interested in e-commerce? Well, we are interested in businesses that yield good results. And e-commerce is a challenge because it is based on the principle that consumers want products fast at a price that is just like the price they would pay in a physical store, which is complicated for you to deliver our product to the final consumer, it is more expensive than to deliver to the retail. So it's a challenge to have a higher logistic cost with the same price. So the question is, who is going to pay for that. Now we had some experience in operations that were good for us in terms of results but not necessarily for those that were paying for that, which is not sustainable. And there is the opposite. There were operations in which we have more experiences that did not bring good results to us, perhaps good results for those that we hire us, which is not sustainable either. So the market has to find a balance point. Undoubtedly, the logistic costs in e-commerce situations make a difference, and it will define whether the operation is going to be profitable or not. And we are seeking the balance. We know how to do it. We had several successful experiences, but we have to find the right profitability there. Now it's important to mention that e-commerce is a sales channel, just like anything else, like retail, wholesale and others. So whenever e-commerce grows, we benefit from it and why because we are from inside primary industries warehousing, transfers, shipment, urban distribution for a product to get to our warehouse close to your home where it's going to be delivered. It goes through the whole process. It was manufactured, stored than from a smaller, larger warehouse to a smaller grow house, and we are part of the chain. So the more e-commerce grows, the more we benefit from it, regardless of us being in the last mile or not.

Our next question comes from [ Pedro Cardoso from Eleven ].

Congratulations on your results. I would like to understand the main factors that we placed your financial leverage quarter-on-quarter on your target for '22 in leverage. Second question, with Euro 6 in '23, how will cost increases impact JSL since you are going to redemand more technological modern assets in asset heavy, should you advance investments in '22?

Okay, [ Pedro ]. I'm going to start answering your question on leverage, and then Ramon is going to talk about Euro 6. Okay. The leverage is going to be kept at about 3x. This is the commitment that we made since the IPO. We are seeing 3.2% as a reflex of the need to maintain CapEx at all and the bottom of CapEx. We moved it for the 4.1 billion of contracts and also the international expansion and the CapEx of acquired companies. We are talking about the CapEx of 6 companies now. So we're talking about a one-off time of 3.2%, but our target continues to grow 3x. Ramon, could you talk about Euro 6?

It's hard to talk about Euro 6 because we still do not get the information. We don't know prices. We know what the market knows that in theory, this is going to be demanded from manufacturers as of '23. Now I'm going to use the experience of Euro 5 to answer your question because then we know what happened, and we should consider that it's going to be something very similar in our assets. An even fact, the year of transition was an opportunity. We're able to acquire Euro 3 trucks at the time at very competitive amount. And I think this should happen in '22, but that's just an assumption. When Euro 5 became a reality that there was an addition in price not that expressive, which reflected the price composition of new contracts, which is also going to happen in '20 -- Euro 6 eventually. I think the difference that we have now is that because of the pandemic and everything, vehicles already had substantial appreciation and increase of prices. So we do not have the information but just an assumption. And I think that perhaps the difference of press between Euro 6 and Euro 5 is not going to be that substantial. We hear OEMs say that because Euro 6 use more electronic equipment, it's going to be even more difficult to manufacture these vehicles in '22. So these are challenges of the OEMs throughout the world. So we have just to wait and see.

And the last question that we got, Ramon, comes from [ Pedro Herre ] has his own investment club. Congratulations on your results. Could you talk a bit about your technology agenda?

Well, we have lots of Pedros today. That's well news. Okay, [ Pedro ]. This is, in my opinion, an agenda that is very much very important. I think in the next 5 years, the world is going to go through a technological revolution for several reasons. Of course, because of the coronavirus pandemic, which had a reflect of the economy that would be lesser than it would be in previous times because of technology. Technology enables us to go work on home office to buy things through e-commerce, this is the technology. And that's not only because of the pandemic, the pandemic just accelerated the process. But it's really crossing companies that were with logistics to review their processes. It's just what I said for you to be able to buy a product from your computer and the product gets to you in a few hours. It's not just a more of courier service. The product had to be manufactured, then take into a warehouse, then chose smaller warehouse for the courier service to get to you. And now that involves technology. So I understand that companies, especially logistics companies have to go through a technological revolution. And we are doing our homework. We have already mentioned before, an announced product set as the JSL app that wants to be closer to our partners, independent truck drivers, we want to be closer to our clients. I want to know where the cargo is, where the independent tracker is so that I can put together the 2 things and offer a faster and more economic alternative to our clients. Our dream is to have transportation in Brazil, where you always have cargo taking being taken to a client that is closed according to their needs. This is technology, and it's not simple to perform. JS invests a lot in a year, and we want to expand that. As I mentioned, we hired an IT officer. And very soon, we are going to give you more detail on that. This person comes from companies where technology started for other reasons years ago. So he brings nearly a knowledge to our segment that is really going to drive growth. In addition to rising startups and others, we want to seize all opportunities and really make a significant move. What I can ensure you is that in the coming years, we are going to grow a lot in technology. Once again, I think it is the pathway for us to be a competitive company in the near future.

[Operator Instructions] Since there are no questions, I'm going to turn the call to Mr. Ramon Alcaraz his final comments. Mr. Alcaraz?

Well, my friends, first of all, I thank you so much for your questions and patience for sticking up with us. And I would like to close by saying the following. This is the first complete year of JSL as an independent public company. We had the IPO at the end of 2020. As a coincidence itself, so my first CEO of JSL. So I'm very proud of closing the year with you reporting very substantial results, not only JSL but also of the companies we acquired. The whole set of companies was very good in the very first year. I hear that we thought that the pandemic was over in the beginning. No one expected it to even get worse health-wise, we did not accept this crazy increase in inputs either, and we had to live with our doubt. So I'd like to say that we cannot control the round, but we do control the will and the sales, and that's what we try to do. In adversity, those that are faster in transformation, do better. And this is what I think we did write even as a large companies. in general, large companies tend to be slower, but we try to do it quick. And that envied us to grow 60% in bottom line results in a very typical year, 6% revenue, 7% bottom line. And that made us to learn how to do things, we were no longer used to, once again, like negotiating with clients more than once a year. That's not always present and generals attrition. But we were able to do that in a very balanced manner. And proof of that is not only the success in readjusting prices, but also cross-selling 75% of contracts closed at a very substantial amount as announced of BRL 4.1 billion. We start 2022, more prepared for adversities. We are no longer going to be surprised with an increase in costs or anything different with regards to the pandemic. About the latest news are very positive with regards to that. But we have challenges of election Brazil, Zara country that brings certain news, not only Brazil, but the whole of the world, but we are prepared. We are prepared in terms of capital structure. We are prepared with a team that is reinforced with people that came from the market, adding to the experience of those that we are already here to seize opportunities to reduce costs and in new projects. We are going to invest a lot in technology to be able in the end of '22, report results that are even better than those of '21 This is our objective as a company. So I thank you once more, and we are here for you. conference call is now closed. We thank you very much for attending, and wish you a good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]