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

Ladies and gentlemen, welcome to JSL's video conference to discuss the results regarding the second quarter 2024. This video conference is being recorded, and the replay will be available on the company's website, ri.jsl.com.br. The presentation also be available for download. [Operator Instructions] Before moving on, I'd like to emphasize that the forward-looking statements are based on the beliefs and assumptions of JSL's management and the current information available to the company. These statements may involve risks and uncertainties since they relate to future events and therefore, depend on circumstances that may or may not occur. Investors, analysts and journalists should bear in mind that events related to the macroeconomic environment, the segment and other factors could cause results to differ materially from those in the forward-looking statements. Today in our video conference, we have Mr. Ramon Alcaraz, JSL's CEO; and Guilherme Sampaio, the company's Chief Financial and Investor Relations Officer. Now I'll turn the call to Mr. Alcaraz, that will begin the presentation. Mr. Alcaraz, you have the floor.

Ladies and gentlemen, good morning. It's a pleasure to be here representing the entire JSL team to announce the results of our work in the second quarter '24. We had gross revenue of BRL 2.5 billion, with net revenue of BRL 2.1 billion, 16.5% higher than the same period last year. Adjusted EBITDA of BRL 398 million. Remember that reported EBITDA was BRL 544 million, 11% higher than the second quarter '23, with a margin of 19.2%. Reported profit of BRL 107 million. Here it's important to make an important note. Although we had lower adjusted profit in the second quarter, if we exclude the onetime effects of both periods, we have a growth of 21% on a comparable basis, therefore, an increase in margin and to close return on invested capital was 15.4%. My friends, management and scale guarantee continues t develop. On Slide 3, we have several highlights to share with you. In growth and scale, we have 13% organic growth without the effect of FSG and IC since they were not yet consolidated in 2Q '23. Historically, the second quarter is the weakest of the year for seasonal reasons. Even so, we grew by double digits with healthy margins. FSJ, Our latest acquisition, continues to grow at an accelerated pace of 40% year-on-year, benefiting from the JSL ecosystem, mainly in scale. In terms of margins, we maintained the company's average margins at a level appropriate to the capital invested. Marvel, Transmoreno and FSJ with important margin evolution due to continued gains in scale and no process of adapting the internal structure to commensurate financial management, reduction of the average cost of debt by 2.5 percentage points compared to the second quarter '23. Guilherme will give you more details later on. Contract management, discipline and agility and operational and contractual adjustments, focus on customized pricing of each contract. Organic growth rate above 2 digits in the quarter proves our potential significantly to growth and increase market share through cross-selling and new customers. On Page 4, we make a representation new for you, including cash flow during the cycle of our project. We can see that in the first month, we have a negative flow due to the deployment then the ramp-up of the project, throughout its useful life with positive cash generation, and in the end, the retirement and sale of assets with a positive flow. It's worth noting that in the second quarter '24, we had an atypical concentration of large projects, exactly underdeployment, which put some pressure on this quarter's results, but will contribute to results of the next ones. On Page 5, we show, as we have done on several other occasions, our management model, which ensures quality in deliveries and cross-selling, individualized contract management, customized projects developed with customers, accurate pricing, cost control and operational efficiency with several opportunities for shared savings, including with customers during the contract. A structure of people with autonomy and agility in decision-making. We believe excellence in delivery, generating loyal customers, which generates cross-selling and through referrals or comparisons opens us opportunities as far as prospecting new customers and increasing share. I'd like to mention something we are very proud of. We have been recognized and awarded by several customers, but there are 2 highlights. Ambev, we won the worldwide for Best Logistics operator in urban distribution, an award that was very competitive and based on very complex audits carried out by the customer. And general matters, we won best supplier in a global award ceremony in Miami, U.S.A. JSL was the only Brazilian supplier out of more than 2,000 GM suppliers in the country to win the award. I'm very happy and proud of the entire team that made it possible. Congratulations to everyone. I would also like to reinforce our strategy of independence for our acquired companies, a managed model with independence for agility and growth, capture of synergy in the purchase of inputs, financial support and improvement in the credit profile by the scale of JSL, governance and discipline of capital allocation, driving results. On Page 6, we can see how our competitive advantages underpin the organic expansions of our business. Once again, I'm pleased to announce the signing of new contracts, BRL 1.3 billion in the second quarter '24. Average maturity of 70 months. In addition to excellent cross-selling, we have new contracts with new customers such as Vibra, Boticario, Leryo Merlin, Dexco, Shopee and others. Added to the first quarter, we have already BRL 2.3 billion in the first half of the year alone. On Page 7, we bring as we did last quarter, how our business is broken down throughout the logistics, including warehousing, dedicated operations, urban distribution and cargo transportation. 30% of our business does not improve trucks, but rather specialized people and technology, be it internal handling at pulp and paper plants, management of intermodal terminals, internal handling at OEM plants, management of dedicated multi-customer warehouses and several intralogistics services as well as chartering services. More than 60% of our business is based on specialized dedicated operations. In the international transportation of chilled refrigerated foods, urban distribution of food, beverages and consumer goods, transportation of pulp and paper, transportation of new used vehicles, supply our parts for most OEMs in the country in the [indiscernible] system in Brazil and Argentina, transportation of liquid and gas chemicals, fuel transportation and others. 92% of our revenue is in services with a high degree of specialization and that are key throughout the supply chain and inserted directly in our customer sales cycle. And we still have 8% of our business in what we call general cargo, a dynamic business with great growth opportunities, 100% as supplied. On Page 8, we can see how we have managed to transform our acquired companies. With JSL scale, we're able to boost their operations, taking advantage of their own expertise and figures speak for themselves. All have grown significantly since their acquisition, Rodomeu and Marvel more than doubled. Fadel, TPC were midsized companies grew by 80% and 70% respectively. FSJ, the youngest, has an average growth of 40% since [indiscernible]. The only exception is IC, but it's part of our strategic plan to focus on contracts for profitable operations. Now for a better call on the financial results, I call my friend and CFO, Guilherme Sampaio.

Thanks, Ramon. Good morning, everyone. Well, I think Ramon has already given a good idea of what the quarter was like and what we are building for the second half of the year, which is seasonally higher than the first half. Numbers. We closed the second quarter with BRL 2.1 billion net revenue, a 16% increase compared to the second quarter '23. This already takes into account the 30% reduction in IC revenues and the consolidation of FSG. 40% of this revenue in cargo transportation which is point-to-point road transportation, mainly in contracts dedicated to customers, as Ramon mentioned. 33% in dedicated operations within our customers' production process, 13% warehousing where the biggest chunk of deployments we are making in the second quarter, and 7% in urban distribution. In addition to the diversification of services, we also are present in more than 20 sectors of the economy. Specifically in the quarter, 25% of our revenue in food and beverage, 15% pulp and paper and 13% in automotive. We actively pursue diversification of services and sectors, which organically broadens our avenue for growth and the ties with our customers. The operating result, as Ramon mentioned, is impacted by the concentration of deployments in the quarter, which will start to contribute to results in the coming quarters. Already excluding the positive effect of the release of the system provision, we delivered BRL 270 million EBIT margin of 13%, and EBITDA of BRL 398 million, 19.2% margin. Net profit, also excluding the systems effects and the cost of prematures that we made as part of our debt management closed the quarter at BRL 33 million. It's interesting to note that if we compare the profit of this quarter on a comparable basis, we grew 21% versus the second quarter '23, higher than net revenue that was 16%. Return remains healthy with a revenue rate of 15.4% in the last 12 months. And here, we have the effect of upfront excesses and costs from deployment and also invested capital, the impact of the 2 acquired companies that not have yet generated 12 months of results. On the next page, breaking down numbers by asset light and asset light. Asset light accounted for 52% of metric with EBITDA of BRL 177 million, margin of 16.3%. Asset heavy, BRL 1 billion revenue, 48% consolidated, margin 22.1%, reaching BRL 219 million EBITDA. As Ramon and myself said, these are margins that remain healthy and still have the impact of the deployments and the recovery process of IC, which is still underway. CapEx, we closed the quarter with BRL 224 million gross CapEx, BRL 151 million net, which totaled BRL 600 million for the year. As we said in the previous call, because of the profile of projects contracted, CapEx represented the largest volume of the year. And we hope this model volume to come in the second half of the year. The CapEx already contracted ensures the deployment of the main projects that will contribute to JSL's second half of the year. Updating our comparison on fixed assets. Trucks, machinery, equipment and tractors, we have a value of BRL 5.6 billion residual value to BRL 5.3 billion at net. Updating the asset base to market value, we have assets that are 1.2x greater than our net debt. Remember, we have made 8 acquisitions in the last 3 years and paid more than BRL 1.2 billion for these. Moving on to the capital structure, we ended the quarter with BRL 2.4 billion in cash, have already paid BRL 1 billion in more expensive debts and the funds from the issue of our CRA, which came at a cost of CDI plus 0.97%. The payment reduced [indiscernible] by 5 percentage points, and lengthened our debt by 1 year, leverage stood at 3.04x and 3.3 if we exclude the effects of their system. This leverage is what we consider the peak for '24, as we said in the first quarter, and expect deleveraging for the growth of our EBITDA. Leverage closed the quarter at 2.6x. In short, a strong cash position in the process of deleveraging and a reduction of debt spreads. These are components that give us the comfort to continue the rate of growth and transform the operational work we've been doing into bottom line results. With that, I will return the call to Ramon for his final remarks before your questions.

Thanks, Guilherme. To finish, I'd like to highlight the pillars and foundations for our new cycle. We have solid foundations, unique positioning. JSL stands out for its ability to meet demands with customized solutions. We have a proven track record, huge scale and the most comprehensive portfolio of logistics services in the countries, with diversification in sectors and services. Our managed model is based on accurate pricing and excellence in delivery, thus customer loyalty. We have a high level of cross-selling and huge opportunities to win new customers and expand our business. We have the know-how to identify strategic acquisitions with expansion potential by taking advantage of JSL's scale and support, while maintaining the independence of our qualified management of our businesses. Our consistency in results comes from discipline and execution, operational efficiency and cost control, ensuring a strong balance sheet and the right profitability. We ended the half year with results within plan and the foundations laid for the coming years. Our strategic plans are based on the diversification of services and sectors, opening up multiple avenues for organic growth, which, together with the acquisition of the good companies, complete our portfolio. The consolidation of operational margins, combining with adequate capital allocation, provide consistency in margins and profitability. Our contracted growth has been consistent and deployments already completed will ensure growth for '24 with great potential for deleveraging as well as contributing to the results of the coming years. But our greatest differentiator is our people, dedicated and prepared to ensure quality and efficiency with individualized management of each contract, focus on execution and on delivering results. This is what guarantees a continuous cycle of growth and development. That completes our first part of the presentation and I'm here together with Guilherme to answer your questions. Thank you very much.

[Operator Instructions] Our first question comes from [ Matthew Santana ] from XP.

I have a question. I'd like to understand the dynamic of new contracts deployment, thinking of the second half of the year. First, I would like, could you give us a bit of more color in terms of what the running rate would be for the second half of the year? Excluding the half year deployments, just thinking of full service contracts. And also for the future, what do you expect for this growth in the coming quarters? And as for CapEx from now on, I suppose that most of your CapEx has already been used. I would like to know if you have anything expected that is a bit heavier for the coming quarters?

Thanks for your question. Well, deployments always follow the flow that we mentioned on the first slide, which is very easy to understand. We get a project. I'm going to give you an example with CapEx, but it's not very difficult from asset light because in asset light, you still have to hire people, rent property, et cetera. But let me talk about asset heavy that perhaps it's easier to understand. You buy equipment beforehand, trucks, machinery, you hire people, you rent property, you make refurbishments. And we have a cost that is what we call preoperational upfront costs. And that takes a little for you to start to perform. These 2, 3 months that generated upfront costs hurt our results for the period. But then this is offset at the normal ramp-up of the contract and when the contract ends because then you have the sale of assets that will generate the opposite effect than the deployment phase, which is a positive effect. This is normal, and this is what happens every quarter. What was different about this quarter is that there was a bit of a higher concentration of larger projects closed by the end of last year. And that is why we said that in a way, it was an offender of results and "offender" because it will be a promoter of returns after the end of the contract, which is about 24 months on average. So it's very simple.

This is Guilherme. As for the impact of these implementations, we have about BRL 20 million between operational costs and expansions and depreciation and financial expenses of the allocated CapEx that is not generated earnings. So just for you to have an idea of the magnitude of these deployments of this quarter, you're talking about an adjusted net profit of BRL 33 million. As for CapEx, your second question, yes, we already invested most of our CapEx for the first half of the year. And according to the profile of projects in several industry, food and beverage, chemics, and et cetera, we see lots of asset light projects to be implemented. And as Ramon mentioned, you have the hiring of people. rentals, pellets for warehousing. So you have upfront costs as well and that they will generate returns for the future. But no major investment that is necessary to meet the profile of customers and profiles that we have in the short term in our pipeline. So I think the -- most CapEx has already been invested. We have some in the second half of the year, but now it's to benefit from CapEx made and deleverage the company, as we mentioned last quarter, and that continues to be a priority.

Our next question comes from Victor Mizusaki from Bradesco BBI.

Congratulations on your results. We have some questions here. The first is the follow-up of CapEx and concentration on the second quarter. What should we expect in terms of additional revenues from the CapEx made for the third quarter? So if you could give us a bit more color. And then 2 more questions. One about IC. You showed the adjustment of contracts, seeking for better margins. If you could talk a bit of the actions taken, any specific segment of IC that you thought were a bit more complex, that didn't make sense to allocate capital in the segment? And also what is the evolution of margins of IC like? And in the press release, you talked about the CRA operation. Now that you had the prepayment, do you have a number of how much we should expect in terms of reduction of financial expenses for the third quarter.

Thanks for your question. Additional revenues come from the pile up of new contracts that we disclose every quarter. This year, we talked about BRL 1 billion in the first quarter, BRL 1.3 billion in the second quarter. But if you go back to '23, we also had about BRL 1 billion per quarter. And this is -- it is one thing on top of the other. Generally, you're talking about contracts of around 50 months. In this quarter, exceptionally, the average was 70, but generally, it's 45 to 55 months. And that adds to our revenues. Of course, in addition to that, you have additional volume of existing contracts. So what we can say is that we had a second quarter, particularly in April and May that was very much impacted by very specific issues, and I'll give you an example. The floods of Rio Grande do Sul, they did not have a direct impact on us, not really significant because we don't have a major concentration in the state, but there was an indirect effect, especially in automotive. You saw new stories, OEMs stopping 3, 4 weeks during April and May, because of the lack of inputs from products manufactured in Rio Grande do Sul. So that was an impact. Also the impact of lots of OEMs reducing production in Argentina. So there was an impact in our international segment that affected a bit our prospects for revenues, especially in March and April. June was much better, both in revenues and results, and July, I can already tell you that was very good in terms of revenues. So we have 2 effects, revenues coming from new contracts that are deployed, and on the other hand, revenue comes from existing contracts. That was your first question. Second question IC. IC, we have been mentioning that in calls was an acquisition slightly different from others. The others, we just grow. We used the potential with JSL's economies of scale and we grow. So we talked about Marvel, Rodomeu doubling size, Fadel and TPC companies that grew by 80%. So here, it's important to mention that Fadel, TPC, Marvel, these were companies that, when acquired, were companies from BRL 300 million to BRL 500 million. The 3 of them are already at the BRL 1 billion mark. Marvel and TPC very close to that and Rodomeu past that. IC was a bit different. You had the benefit of the bargain purchase, so financially speaking, was a good deal. But in terms of the business, it's more challenging. IC and JSL are engaging into long-term contracts, some were renegotiated and you have asset light contracts, especially in agri business, where we see the highest challenge in terms of margin. So the decrease in revenues in IC were for mostly asset light contracts. I'm going to turn to Guilherme to add to my 2 answers, if needed.

IC, I think there were 2 different types. First, we went in, we understood the contracts. We understood their market dynamics and that led to a reduction of revenues, basically agri business which definitely did not have a correlation between returns and capital invested that was needed for the operation. So the first phase was past, and then we had to readapt the company structure for its new size. And then really organizing everything, reducing the number of branches, especially for agri business that was very scattered. Now it's time to reap the fruit of the work then on IC and see margin evolves month after month. So our prospect is that the worst has gone, and now is to have margin evolutions on a monthly basis. Of course, we are monitoring that from close. As for the CRA, which I believe was the last part of your question, we issued the CRA at the end of February. And then we had a prepayment of some debentures that were to mature in '26, '27 at a cost of CDI 2.7 compared to the CRR that had the cost of CDI of plus 0.97. So if you consider the 50 bps of the average cost of debt on the top of my gross debt of BRL 7.5 billion, we are talking about an impact of BRL 10 million for the quarter alone because of this readjustment of our debt. And perhaps this is the number that is the simplest for us to disclose.

Our next question comes from Andre Mazini from Citi.

Looking at the second quarter, it seems that you had slightly lower results, especially because the company is preparing for growth, the deployments you mentioned, you had upfront costs, financial costs. And also, I like the chart that you had in the presentation to explain all that. My question is, do you have bargaining power to change the characteristics of some contract to have upfront payment? Because if the company continues to grow and current contracts don't change in terms of flows, we are always going to see the mismatch we see on this quarter. Does it make sense? If the company continues growing, we are always going to have a mismatch unless we change contracts. And I don't know how easy it is to do that. Second question, other economic sectors. You are almost in all sectors, but you're not in pharmaceuticals and you're still small in fuel distribution. Are they interesting sectors? Are you looking into "covering" all sectors or all the major sectors of the economy?

Thanks for your question. See, the results of the second quarter were indeed slightly below expected. But we have the effect of the deployment, and I'm going to talk about upfront cost, but it was not only that. As I mentioned in the previous question, we had some effects that are normal of the business, but sometimes are concentrated in 1 quarter or another. We had a lower volume with OEMs, and that impacts our results. Even being asset light, you have a structure. And when things do not happen, you bleed a bit in terms of results. As a counterpart, in July, we had record revenues with OEMs, the highest revenue since we started operating with OEMs decades ago. So it is the opposite of April and March. You had the international effect I mentioned. So there are many things. Whenever billing goes down, it affects results. But they are not structural things. They are day-to-day things. Your question seems to be if we can negotiate preoperational revenues in contracts for us not to have the effects in the quarters. It depends a lot. It varies from contract to contract. Asset heavy contracts are with long term, we do negotiate preoperational revenues. Others, especially as satellite, no, you can't negotiate that because it is incompatible to the business model. And again, you have to hire people, train people, rent property, some kind of adaptation. So it depends a lot on the profile of the contract. As for sectors, I think that are even more than the 2 you mentioned. It's a huge market. We are in 16, 17 sectors, which is a good number. I think we are -- I don't think, I'm sure we are the only company in Brazil that operates with so many different services in the logistics chain, in so many economic sectors. That gives us a natural hedge seizing market opportunities, and we want more. You talked about pharmaceuticals, which is certainly a huge opportunity, a very, very strong sector. Fuels, we started from IC, very appealing business. But just to give you another example. FSJ brought e-commerce to us. And as we mentioned before, we did not see a way of going into e-commerce with profitability. FSJ showed us the way, which is the middle mile. So in addition to the growth of FSJ, JSL is operating middle mile, enjoying the growth of this business. And certainly, there are other segments that we can explore. This is the good thing. Remember that we are very good, very big compared to our competition. If you put together of the 10 largest, the other 9 together are not the size of JSL. But we are still very small compared to the market. We have 2%, 2.5% market share. So there is a notion of opportunities in terms of volume segment, and we are always looking to them, eager to enjoy those opportunities.

This is Guilherme. I would just like to add something to that. What's interesting is that even in the industries in which we have a more relevant presence or the industry has a more relevant share in our business, food and beverage, pulp and paper. Because of the diversification of services that we offer, the size of our portfolio, and organic development and acquisitions, we still have huge space to grow in sectors in which we are already very strong. And thinking of avenues for growth, you have one of growing with existing customers, bringing new customers. We brought 20 new customers in the first half of this year. 20 does not seem much, but you're talking about market leaders. You're talking about blue chips, which is our customer profile. So new avenues of growth. So existing customers and new customers in existing sectors and new sectors.

[Operator Instructions] Our next question comes from Eduardo [indiscernible].

In the release, you mentioned that this quarter was marked by the deployment of assets that are not in operation. [indiscernible] are going to snatch yielding revenue. What is the impact of those revenues that did not have revenues this quarter? And as for liability management and the doubled cost of the debt in the quarter, what's the impact of that on your products?

Well, the first questions I answered to [indiscernible] about BRL 20 million of this group of projects that is in a ramp-up project and implementation. And the second question was the cost of carrying cash since we had the prepayment on the end of June. Having the spread between cash and my cost of debt, we are talking about BRL 3 million on profit. This is more or less the number of the carrying cost for us to have the prepayment. I hope I have answered your question. If not, just let me know.

Our next question comes from Luiz Capistrano from Itau BBA. Next question comes from Petro [indiscernible], an individual.

What's the average age of your fleet?

The single answer is 3.6 years. Breaking that down, I would say, tractors about 3 years, trailers that have a longer life, about 6 years. Here, I'm talking about our own fleet. And independent drivers, we are not at the average of 3.6. We work with an average of 10 years on average. And what is important for us to remember is that the average rate of own fleets in Brazil is about 12 years depending on the source, and for independent truckers, about 20 years. So when you get the average of own fleets and independent truckers, about 18 years, just for you to have a ballpark.

[Operator Instructions] Our next question comes from Pedro [indiscernible].

About the growth of 21%, excluding ISMS subsidies and interest on equity of 23%. Did you have the same events in '24, were they excluded for the calculation of growth of 21% on a comparable basis?

Pedro, this is Guilherme speaking. Thanks for your question. Yes. for the 21% calculation, we did the following. Last year, until December '23, we had a benefit the subsidy of investments of ISMS that gave me benefit in income tax and net profit. When you exclude the effect of last year and include it this year, we don't have it anymore, you would be talking about growth of 21%. Just to add to the information, in '24, we no longer have this benefit. So that is just the comparable basis. We had it in '23, we do not have it in '24, okay?

Our next question comes from Luiz Capistrano from Itau ABB.

The question is about the new contract in Ghana. If you can give us more color about the size of contract level of return. And if you have expectations for more international operations contracts in the short term?

Luiz, thanks for your question. Well, it has to do with our strategy, and we mentioned that before, to have accelerated growth possibly with other currencies in other countries. We started with an experience in Paraguay, then South Africa, a large project with the customer, but we don't want to be adventurous. We are not just going to go abroad waiting for customers. We're always going to go with long-term contracts that are guaranteed. That's what happened in Paraguay, South Africa and now in Ghana. What's nice about this is the following. Africa is a giant continent, huge population, major opportunities of growth. As you know, the population starts to consume, we are already in the south of the continent and now with Ghana in the north of the continental, northwest to be more exact, close to top countries with large populations. So strategically, it's very interesting, and it's a long-term contract with guarantees and likelihood of growth. So in addition to the business itself, strategically it's very well positioned. I hope I have answered your question. Otherwise, just let me know.

Our next question comes from [indiscernible].

I'd like to understand just to calibrate our projections, the expectation in terms of asset sales. In the beginning of the year, you are talking about selling BRL 600 million. And we are seeing a turnover that's slightly slower than expected. What is your expectation for the second half year because the level of deployments is probably going to go down, and you will probably have the expectations of repossessing some assets that are in operation?

This is Guilherme. Thanks for your question. Asset sales, this is perhaps an important piece of information. We increased the asset base available for sale. So we are creating an internal JSL sales efforts to increase volumes and keep sales in retail because this is where we have the better margins when we negotiate directly with end customers. So we are organizing ourselves, still below our expectation in terms of volumes just because of our structure of putting together the structure for the year. And consequently, you are seeing particularly a slower pace and an increasing inventories for the period. But when the structure is up and running as we wanted, the volume is mostly going to be higher. And our objective is to reduce the number as soon as possible because this is locked capital on our side. It improves returns, cash flow and everything. So our expectation is to have an improvement from now on.

Our next question comes from Luis Peçanha, Banco Safra.

Can you hear me?

Yes, you can go ahead.

My question is a bit more specific about the economic environment in the Midwest region for transportation of grains. I suppose that you monitor that from close. The results of [indiscernible]. It was one of the downsides of [indiscernible] results is the return of trucks rented by companies that transport grains in the Midwest. And I'd like to understand on your side if you're monitoring this from close and if it has had any negative impact or worse performance financially speaking, of customers in the agricultural sector, delinquency rates, delays in payments. So if you could talk a bit about that, it would be really helpful.

Luiz, thanks for your question. Well, for different reasons than you mentioned, Mato Grosso has been a state where we are growing the most, especially because of pulp and paper. So if you get the contracts that we signed in the state in the 2 states, Mato Grosso do Sul, and Mato Grosso, it has been huge, especially because of pulp and paper. With grains, we have 2 effects at JSL, one that we just mentioned of IC, but we are decreasing this business much more because we wanted because margins are not compatible to our strategic plans than because of volume. And the other effect is an effect in the transportation of heavy machinery that indeed decreased because of what you're saying, but it's not such a large segment to us. So there is an effect, it was better in the past, but it is a very small effect in our business. So objectively answering your question is that, no, for us, the effect is basically no with regards to what you're asking.

And this is Guilherme. JSL's customer profile when we are working with contracts in Mato Grosso and Mato Grosso do Sul are blue chip customers, multinational, international companies. Regional grain transportation, local grain transportation smaller producers are not part of our portfolio. And they were the ones that we mostly reduced from IC, as we mentioned in the beginning of our call. And even for IC, the reduction was much more related to margins than nonpayments or delays.

Our next question comes from Felix Barbosa from [indiscernible]. Our next question comes from Victor [indiscernible] from Small Caps.

Two questions on my side. So the new deployments that hurt the results of the quarter, when are they going to be with normal margins? And what is the plan of JSL, interest on capital or dividends for this year?

Victor, this is Guilherme. I'm going to answer the second question about dividends and interest on equity, and then Ramon is going to talk about deployment. The dividend payout policy is -- of the company is the 25% minimum mandatory. Historically speaking, we're talking about something close to 40%. But we do not have a guidance on the amount that is going to be. That is a discussion of the Board of directions for us to propose that, but the policy is minimum dividends of 25% as it is mandatory. And Ramon is going to talk about deployment.

Thanks for your questions. We have deployments every quarter because we are closing contracts every quarters. And so you're always having the effect of deployment on the next quarter or 2 quarters beyond. The difference specifically for this quarter was an atypical concentration. You have a large operation in Cerrado. You have Ghana and others, that will probably not is going to happen in the next 2 quarters. For the next 2 quarters, this is not going to be an offender. I think this is what you're asking. And just to give you more color how close we are from these operations to start generating revenues. 3 major revenues we are implementing at the same time. One, Mato Grosso, one in the Northeast, one in Ghana. They are all generating revenues. They started generating revenues in June. So not all of them, you have a ramp-up process, not all of them start at 100%. But as of July, all of them are generating revenue. I hope I have answered your question.

Our next question comes from [indiscernible].

What is the size of your fleet today?

The simple answer is 24,000 assets, including tractors, trucks, trailers and other equipments, forklifts, tractors, et cetera. depending on the operation.

Our next question comes from Danilo [indiscernible].

I'd like to know if you have negotiations on going to expand to other Latin American countries, Mexico or Africa?

We want to expand to several countries. And there are -- we are contacted and we mentioned that before, by multinational companies that operate in Brazil and going to operate in other countries, Mexico, Argentina, other countries. But that depends a lot of what we see in terms of consistency. So today, what we have closed is what we have already disclosed, it's Ghana. But undoubtedly, whenever we go to a new country, people invite us to go to it in other countries. So we hope in the short future, to celebrate new contracts in other countries. We have the willingness and the energy. And I'd like to make a comment here because willingness is not enough. You have to take action. But when we say that we have a global award from GM, and it was not a simple award, you're talking about 2,000 suppliers, not only of logistics, but of many things. So it is a global award, more than 2,000 suppliers in Brazil and only JSL was awarded, the only Brazilian company representing more 100 suppliers in the world. So that is something that draws people's attention. So General Motors and other companies that work with GM Motors saw that we have the potential and that is a driver for us to negotiate other businesses. So that's how it works.

Our next question comes from Eduardo Lasarte from GTI.

I have a question about the pulp project in the Cerrado. What's your expectation for ramp up? When is going to be running at 100%?

Okay. The Cerrado project, and I'm going to say what was already released in the media by the customer. The ramp-up was slightly delayed because of some plant issues. So it was slightly delayed. It should be at a higher volume, but it is on now. So we should have a faster ramp-up. So it should be a bit more concentrated. I cannot tell you because it depends on the customer, it would be daring on my side of giving you the information. But I think in the coming months, we should have a concentration of a ramp-up that is going to be close to the 100%.

JSL's Q&A session is now closed. We are going to turn the floor back to Mr. Alcaraz for his final remarks.

Well, gentlemen, ladies, first, I thank you for your attendance, your questions that always help us talk a bit more about our company. I'd like to draw your attention to some points mentioned before. I don't want to be repetitive, but these are things that we are truly proud of. And I'd like to draw your attention to this. Resilience of our revenues. That has been proving, not only by the numbers disclosed, but mainly for the consistency in the signing of new contracts. If you take a look at all quarters since we went public, you're always talking about new contracts of around BRL 1 billion, a bit more, a bit less. We talk about BRL 1 billion here, BRL 1 billion there. And you that are used to covering other companies, that's not that appealing. But BRL 1 billion for a logistics company, it's the size of the fifth largest -- sixth largest. So what I'm saying is that what I close every month is enough for me to be one of top 10 companies in the country. The other thing is our positioning. What's so beautiful talking about unique positioning? It sounds like a catch statements, but it's the reality. Logistics companies in Brazil are mostly specialized companies for the transportation of new vehicles, for urban distribution, for bulk transportation, but JSL is the only company in the entire logistics chains. This is very important and Guilherme said that in one of the answers. When you have a customer because you have a large portfolio, the capacity to grow is huge because you cover all logistics services in the logistics chain. This is a business that is irreplicable because it has been built along 68 years. So even companies that are large in the world would have difficulties to come to Brazil and do what we do. And why is that? Because services, differently from production, depend on people, depend on expertise. So -- which is indeed something irreplicable. In addition, we have the know-how of the acquisition of companies that is very specific because what is our business, to buy companies, not because we are having a good deal. We are not a fund. We want to pay the fair price for the acquisition for a company that has a huge potential to grow. And then with our scale, capacity of investments, make companies take off. This is what happened. All companies with the exception of IC, as we mentioned, but Fadel, Marvel, Rodomeu, TSP -- TPC, FSJ in very little time doubled size. At the end of 2020, we were a company of BRL 3.5 billion. If we only make this quarter times 4, we are a company of BRL 10 billion in 3.5 years with consistent results. Of course, you're always going to have effects up and down quarter-on-quarter, but results are consistent. So we are very happy with the recognition of our customers. We mentioned 2, ambev and General Motors because they are large awards, large customers, 1 of our top 5, but several others that make us very proud. And we are certain that our business is supported by 2 pillars: customers, excellence in what we do. We provide services, and we only grow if we provide good work. People, more than 30,000 employees that have to be motivated and dedicated for the same purpose and results. So in these 3 pillars, and those that follow us since the IPO have heard me before. This is our mantra in the company. I truly believe that, and so do the people that work with me, and we think we are on the right path. Thank you. And let's keep talking in whatever opportunity we have. Thank you very much.

JSL's video conference is now closed. We thank you for your attendance and wish you a good day.