Log-In Logística Intermodal S.A. (LOGN3) Earnings Call Transcript & Summary

Good day, everyone, and welcome to Log-In LogÃstica Intermodal Conference Call to discuss third quarter 2020 results. My name is Sandra Calcado , I'm the Investor Relations and Strategy Manager of Log-In, and I will be the hostess in this conference call. The presentation and comments on the company's results will be presented by Marcio Arany, CEO; Pascoal Gomes, CFO and IRO; Mauricio Alvarenga, Commercial Officer; and Ilson Hulle, Terminals Officer. They will comment on the company's performance and main highlights of the quarter. Later, they will be available to answer your questions. The third quarter presentation and earnings release are already available in the results center of the company's IR website, loginlogistica.com.br/ri, but you can also follow the presentation here on Zoom. [Operator Instructions] This webinar is being recorded and will be available in the company's website. Before proceeding, as usual, let me mention that forward-looking statements that might be made during this conference call relative to Log-In's business perspectives, projections and operating and financial goals are based on the beliefs and assumptions of the company's management and on information currently available to the company. Forward-looking statements are not a guarantee of performance and involve risks, uncertainties and assumptions and, therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the company's performance and could cause results to differ materially from the company's expectations. Now with the legal advice, I'll turn the conference over to Marcio Arany, CEO, who will start the presentation. Go ahead, sir.

Thank you, Sandra. Good afternoon, everyone. I am Marcio Arany, CEO of Log-In. I want to thank all of you for joining us in this conference call to discuss third quarter earnings results of Log-In LogÃstica Intermodal. In the third quarter of 2020, Log-In posted some relevant results. After ending the second quarter, resuming the pace of our operations, we ended this quarter with all of our operations running at the expected pace for the year. In other words, we returned fully to the pre-pandemic growth rate. And since safety is our primary value, we continued to perform our activities, ensuring the health and safety of our workforce, either working from home or in our operations. Moving to Slide 3, I would like to highlight Q3 results. We had a record adjusted EBITDA of BRL 83.9 million in Q3, up 19.9% year-over-year, and BRL 204.8 million in the 9 months of 2020, up 9.3% in the annual comparison, thus confirming our resilience during the most critical phase of the pandemic and our extreme ability to resume growth. Adjusted EBITDA margin was 28.1% in Q3, representing a 2.9 percentage point increase over 2019. This significant result stemmed from our revenue growth, high availability and efficiency of our vessels, and the optimization of costs and expenses in view of the pandemic scenario. Coastal shipping adjusted EBITDA totaled a record BRL 76.9 million in Q3, up 37.6% over the third quarter of 2019, and totaled BRL 179.3 million in the 9 months of 2020, 14.9% higher in the annual comparison. And we achieved a record ROL in the third quarter, 10% higher than the same period of 2019. Later on, our CFO will comment on these results in -- on these results in more detail. As regards TVV, the Vila Velha Terminal, EBITDA totaled a BRL 67.2 million, up 7.3% over the 9 months of 2019. Thus, we reached a net income of BRL 9.1 million in Q3, BRL 26.3 million greater than the results of the third quarter 2019. I also highlight that in July 2020, Fitch Ratings assigned Log-In, for the first time, the national long-term rating BBB+ (bra) with a stable perspective. And we also signed the amendment to the port leasing agreement at TVV, extending its duration for another 25 years, until September of 2048. I now turn the floor to our CFO, Pascoal Gomes, who will present the company's Q3 '20 results in more detail.

Thank you, Marcio. Good day, everyone, and thank you for joining us today. On Slide 4, I highlight a strong 7.3% increase in the company's net operating revenue, NOR, in Q3 2020, which totaled BRL 298.5 million over BRL 278.3 million in the same period of last year, showing the strong recovery of volumes of coastal shipping, mainly transported by vessels in Cabotage mode. This result reversed the NOR loss accumulated in the first 6 months of the year, contributing to a 2.2% growth in the 9 months of 2020 compared with the 9 months of the prior year. This NOR increase is explained basically by the resumption of volumes in the sectors which were affected the most by the pandemic during the second quarter, and by the positive impact of dollar-denominated revenues in the feeder and Mercosur services due to depreciation of the Brazilian currency during the quarter. On Slide 5, we present the evolution of consolidated costs of services provided, CSP. In Q3 '20, this cost amounted to BRL 211.2 million, up 8.4% over Q3 '19. And in the 9 months of 2020, it totaled BRL 587 million, 5.5% up over the same period of last year. This growth is explained by the following factors: increase in running costs due to the addition of 2 vessels to our own fleet, Log-In Polaris and Log-In Endurance, which started operating in December 2019 and in May 2020, respectively, replacing 2 chartered vessels, which were returned to the shipowners in March and in May of this year, when there is a reduction in the chartering cost as the counterpart. Another factor, our port costs pegged to the dollar, mainly towboats and calls in the Mercosur. In addition, additional costs related to specific measures for prevention of COVID-19, protecting the health of our maritime crews and avoiding interruptions in our services. And lastly, the average bunker fuel price in Brazilian reals, which increased 11.8% over first half 2019. Well, let's go to Slide 6. Here, we present our consolidated operating expenses, which in Q3 '20 totaled BRL 17.6 million, a significant almost 14% drop in the yearly comparison, reflecting our ongoing effort to reduce discretionary costs such as travel, consulting, et cetera, in addition to lower expenses given the home office regime adopted by the company. In the 9 months of the year, this reduction was 8.1% in the annual comparison, and it would have been a greater reduction if it weren't for a negative nonrecurring impact of BRL 10.2 million due to the early recognition of costs incurred with the company's stock options plan. No relevant impact on the cash. Excluding this nonrecurring event, expenses would have dropped almost 25% in the first 9 months of 2020 when compared to the same period of the prior year. Moving to Slide 7, we present the excellent performance of our AFRMM revenues, which in Q3 totaled BRL 14.2 million, more than double the amount posted in the same period of last year. In the 9 months of 2020, AFRMM totaled BRL 35.3 million, up 77.4%. If we considered nonrecurring AFRMM, due to a successful judicial AFRMM, amounting to BRL 15.9 million and an extemporaneous AFRMM of approximately BRL 7 million, both accounted for in the first half of 2019, the variation is minus 17.7% between the periods. I'd like to highlight that the company's current fleet is composed of 6 owned ships, all able to generate AFRMM. Moving to Slide 8, we present the company's EBITDA and adjusted EBITDA. In Q3 '20, adjusted EBITDA totaled BRL 83.9 million, up almost 20% in the annual comparison. And adjusted EBITDA margin reached 28.1%, a 2.9 percentage point increase. In the first 9 months of 2020, consolidated adjusted EBITDA, and the -- and we have the IOP program of the company, and extraordinary AFRMM, those have been mentioned before, so consolidated adjusted EBITDA reached BRL 204.8 million, up 9.3%. If we were to exclude nonrecurring events, Log-In would have posted a record adjusted EBITDA of BRL 204.8 million, an increase of 9.3% over the 9 months of 2019 and an adjusted EBITDA margin increment of 1.7 percentage points, reaching 25.5% on the back of some factors, such as increased container handling volume and Cabotage; positive impact of the depreciation of the Brazilian currency on revenues fixed in dollars; a focus on reducing costs and general and administrative expenses, given the uncertainties in the pandemic scenario; increase in AFRMM revenues due to the expansion of our own fleet; and TVV's operational optimization measures, which led to a margin increase. Now moving to Slide 9, we present the composition of our financial results. In Q3 '20, the financial result was a negative BRL 44.1 million versus a negative result of BRL 67.5 million in Q3 '19, mainly due to a lower impact of a negative foreign exchange variation in the period, which was 2.9%. Year-to-date, the impact of exchange variation was a lot greater in view of the strong real devaluation of 40%, which offset -- which was offset by lower payment of interest and debt service due to the standstill COVID-19 line with BNDES, and higher financial revenues linked to full investment of proceeds from the follow-on in cash. This relevant exchange variation in the year-to-date results, totaling more than BRL 160 million, is primarily due to adjustment to present value of future payments after long-term debt extending until 2034 with BNDES, with a current balance pegged to the dollar of BRL 469.7 million. So this is an accounting effect and does not have a significant impact on the company's short-term cash. To give you an idea, the cash effect from debt amortized in the third quarter was only BRL 0.2 million in Q3 and BRL 1 million in the 9 months of 2020. On the other hand, the company has a positive operating leverage with the real exchange depreciation considering its revenues and expenses denominated in dollars, resulting in gains year-to-date, showing that there is a natural operational hedge in the company. Please go to Slide 10. Here, we present our income statement comparison with consolidated results for Q3 and year-to-date. And the main highlight here is that the company reported a profit of more than BRL 9 million versus a loss of BRL 17.2 million in Q3 '19, thus reducing the year-to-date loss, which, in turn, is explained essentially by the accounting impact of foreign exchange variation, as explained, with an immaterial effect on the cash. I now turn the floor to Mauricio Alvarenga, our Commercial Officer.

Thank you, Pascoal. Good afternoon, everyone. I am Mauricio Alvarenga, Commercial Officer. I will comment on the coastal shipping business in more detail. So to continue with the presentation, please go to Slide 11. Here, we are going to talk about volume of containers in coastal shipping. On the left-hand corner graph, we see a 1.3% increase in volumes handled in Q3 '20 compared with Q3 '19. Here, it is important to highlight the commercial effort to capture cargoes during Q2 when we faced the most critical impacts of the pandemic. This allowed us to enter Q3 with a more robust client base. We posted 13% growth in the quarterly comparison. In the third quarter, we see the rebound of some economic factors, which have been strongly impacted in the beginning of the pandemic by social distancing measures, electronics and white line products, for example. An as Marcio Arany said, we are once again operating with pre-pandemic volumes, as we had projected for this quarter of the year. In the 9 months of 2020, variation was negative by 1.4% due to reduced feeder volumes, especially imports. But this was almost totally offset by an increment in Cabotage and Mercosur volumes. Going to Slide 12, please. Operating revenue. In the graph on the left, we can see the variation in containers NOR, up 14.5% in Q3 '20 over Q3 '19. Year-to-date, variation was 8.5%, growing from BRL 522.2 million in 2019 to BRL 566.4 million in 2020. Better cargo mix, coupled with a real devaluation compared to the dollar, contributed to a better NOR per TEU, an increase of 13% in the quarter and 10% year-to-date versus 2019. On the right, we show the performance of coastal shipping total NOR. Here, we had the revenues coming from the transportation of vehicles, which resumed activities gradually along the third quarter after the strong impact caused by the coronavirus pandemic in the second quarter of 2020. Moving to Slide 13. This graph shows the evolution of the contribution margin of coastal shipping since the first quarter 2019. This means NOR minus the variable costs of the business, the Brazilian real depreciation vis-a-vis the dollar, together with the ongoing work to improve the mix of cargoes handled, had a very positive effect on the profitability of the coastal shipping business, raising the percentage margin to 63.4% in Q3 '20. Thus Q2 and Q3 2020 recorded the best contribution margins obtained so far. Moving to Slide 14. This graph presents the evolution of bunker fuel in the last 2 years. We can observe that after a significant reduction in the fuel price with the intensification of the pandemic worldwide in the middle of the first quarter, bunker fuel price started a gradual ascending curve that stretched until August of this year. We maintain our commitment to our clients to adjust the bunker rate every 90 days. Moving to Slide 15. Coastal shipping EBITDA totaled BRL 76.9 million in Q3 '20, as mentioned, a 37.3% increase versus the same period of 2019. In the 9 months of 2020, EBITDA totaled BRL 179.3 million, in line with 2019. And here, if we disregard a nonrecurring effect of AFRMM and IFRS 16 on the leasing of containers, which positively affected 2019 EBITDA, our adjusted EBITDA grew 14.9% in the 9 months of 2020. Moving to Slide 16. On this graph, we detail EBITDA evolution, comparing third quarter '20 with third quarter '19. From left to right, I highlighted the positive NOR effect of BRL 21.9 million resulting from a better mix of Cabotage and Mercosur cargoes, as well as AFRMM revenue, now with all vessels of our fleet generating AFRMM. Moving to Slide 17. We have our EBITDA evolution in the 9 months of 2020. From left to right, please note that NOR was BRL 28.3 million, positively impacting the result. However, fixed costs were BRL 20.5 million higher, affected by the vessel replacement period, port costs in U.S. dollars, as mentioned, and additional costs with the necessary actions to maintain our operations during the pandemic, as previously mentioned. Now making a final comparison regarding the coastal shipping business, I'd like to emphasize the strength of our business and our people. Even with all of the effects of the pandemic, which unfortunately is still present in our day to day, we had a third quarter with significant growth compared with 2019. Our operations reached a level of excellence, both in availability and operation of our own vessels and in our door-to-door intermodal service, which achieved a 94 rate of on-time pickup and delivery. Sure, our clients' focus allowed us to perform better than the sector in Q3, according to ABAC data. ABAC, the Brazilian Coastal Shipping Association. We will continue to work towards this goal. Our purpose is to deliver more and more value to the logistics chain of our clients, with a high level of service in coastal shipping, as well as through our logistics network, and to promote logistics management integrated with our port and intermodal terminals. Thank you very much. I now turn the floor to Ilson Hulle, our Terminals Officer.

Thank you, Mauricio. Good day, everyone. It is a huge pleasure to be here once again participating in this conference call to share with you the results of the Vila Velha terminal, TVV. Q3 '20 was historical for us. On September 22, we signed the amendment to our leasing agreement, extending its duration for another 25 years, in other words until September of 2048. This agreement renewal represents a lot to our business as we're talking about another 25 years of this asset contributing to the economic and social development of the region. Moreover, this agreement extension stipulates relevant investments in our infrastructure in the short and long term, which will transform TVV into a much more modern and efficient world-class terminal. I would also like to point out that we had a historical year-to-date financial performance, the best since the start of this operation. This attests to our business power of resilience when facing a challenging moment and the competence of our associates to innovate when facing the turbulent moments that we faced and are facing in 2020, particularly in the port business. We are very excited about the future and the potential growth of TVV. On Slide 18, I show you our volume performance. In Q3 '20, we handled an impressive volume of 51,500 containers, which represents a robust 10% growth over third quarter 2019. Also to be highlighted in this third quarter is the strong reaction of our shipments to the main export markets, United States and Europe, mainly exporting granite slabs and coffee. The U.S. civil construction market reacted well after the economic reopening, which favored exports of granite, and these are the products via TVV. So they favored the exports of granite and coffee. In addition, the current exchange rate has favored the export business as a whole, benefiting the national producers. I also highlight the strong volume of imported empty containers through TVV to supply many production sectors of the region. This container handling is important because it signals how subsequent months will be like. As regards the imports of full containers, we're still seeing a very -- a somewhat volatile scenario, primarily on account of the exchange rate and the economic situation in Brazil. In the graph on the right, referring to general cargo handling, I'd like to highlight that the third quarter 2020 also showed a robust evolution of 60% compared to Q3 '19. This growth is associated with 2 factors. Number one, our granite in blocks shipped to China is showing a growing trend along the year. And mainly in Q3 '20, these shipments were very robust, pointing to a good business moment and a positive outlook for the short and midterm, based on the recovery of the Chinese economy. Secondly, we are growing our Jumbo Cargo business handled through TVV by selling new products and making this asset more profitable. Regarding this, I highlight the growth of bulk operations: Fertilizers, pig iron and malt, and also of steel products, tracks and tubes. We engaged in turning TVV into a high-performing multipurpose terminal, capturing cargoes and projects with good contribution margins. And we want to be the primary logistics operator in our region. Moving to Slide 19, we detail our net operating revenue for TVV, which in Q3 '20 totaled BRL 50.2 million, a reduction compared to Q3 2019. Now this drop is directly related to lower volumes of container imports specifically. Historically, these represent a good revenue stream, given the characteristics of the import cargoes and the possibility to sell ancillary services linked to our warehousing operation. On the other hand, we were able to offset this revenue decline with strong cost and expense reduction initiatives. And with that, we posted a quarter EBITDA in line with the prior year, and I will detail this more in the next slide. Please go to Slide 20. On Slide 20, I show you a table with the TVV EBITDA, which in Q3 '20 totaled BRL 21.8 million, a slight 1% drop compared to Q3 '19. Here, I highlight once more the enormous effort put forth by our team to develop new businesses with better margins during the pandemic, and to search for opportunities for cost reduction across our operations. Thus, I highlight our EBITDA margin of 43.4% compared with 42.4% in Q3 '19. Year-to-date, the margin is 48% versus 41.5% year-over-year. These are very attractive margins. I also want to point out that when it comes to the financial performance of TVV in 2020, we had the very best EBITDA in our history, BRL 67.2 million, a significant 7% increase when compared to the 9 months of 2019. On Slide 21, I detail a little further what I've just said. I present the composition of the TVV EBITDA, where I compare year-to-date 2020 for the first 9 months of 2019 on the graph on the right. I highlight the gains obtained with CSP, cost of services provided, a reduction of around BRL 7.2 million, which contributed significantly to our EBITDA in 2020. 2020 is one of the most challenging years in our history. With that, I end my part, and I turn the floor back to our CFO, Pascoal.

Thank you, Ilson. On Slide 22, please. We see our net debt, which on September -- in September 2020 amounted to BRL 744.6 million. And our gross debt, more than BRL 1.4 billion with an average cost of 5.5% per annum, and 91% of the debt is amortized over the long term. Debts of discontinued shipbuilding and of the vessels in operation correspond to BNDES loans with funds from the Merchant Marine Fund, FMM, for the construction of vessels in Brazil. Part of these loans is denominated in U.S. dollars with monthly maturities until 2034. Thus, as mentioned, despite the relevant accounting effect, the exchange variation has a cash impact of only BRL 1 million in the installments paid over the 9 months of 2020. Additionally, in the prior quarter, the company's leverage was 3.2x the last 12 months EBITDA. And this ratio improved significantly on September 30. It is now at 2.9x on the back of a better position of our net debt and better EBITDA. I turn the floor back to Marcio Arany.

Thank you, Pascoal, Mauricio, Ilson. We will now begin the Q&A session. We are all here for you. Thank you.

Thank you, Marcio. We will now begin the question-and-answer session. [Operator Instructions] Let's have our first question. It's coming from the Q&A by Joao Frizo. He asked 3 questions. Joao Frizo from Goldman Sachs.

I have 3 questions. Any update on the fleet expansion plan for the coming years? That's the question number one. Second question. Do we see -- well, we see volumes in third -- in the third quarter '20 above third quarter '19. So what is the expectation of the company for the fourth quarter and for 2021? What about the Ro-Ro volumes? How do you see recovery in the fourth quarter? Do you think they will normalize in 2021? Thank you.

Thank you, Joao Frizo, for the questions. I will be answering this question. Well, regarding the expansion, we are at a final phase to define and design our expansion plan, defining what matters the most, what is the best timing for us to execute the plan. For now, I cannot give you more on that. Regarding volumes looking forward, well, that's a little sensitive information. I cannot give it to you right now. But looking in our performance in the second quarter, our month after month improvement in the third quarter, as you could see in our results, I can tell you that Log-In is very optimistic about our future. And as for Ro-Ro, what I can tell you is that it improved well. Or during the pandemic -- beginning of the pandemic, it was critical, but it has been stabilizing at an expected level planned in our goals. But we still don't have clear visibility for the future. I believe that in the fourth quarter, we'll be able to get a better feel of the stabilization or improvement level of this market.

Thank you, Marcio. We have another question in the Q&A by [ Ricardo Peixinho ]. What are your investment plans geared to increase capacity, new vessels, new lines or partnerships?

I will be answering this question. Thank you, [ Ricardo ], for the question. With regards to our investment plans in the past, we got some funding to invest in our fleet. We are now studying which ports and which service design we will be implementing and when we should trigger expansion. I mean it's not a trivial thing to bring in a vessel and start operating it. So we will bring another vessel at the right timing. We are working on it. And you asked about new lines. Well, vessels and lines are interrelated. In partnerships, we recently started an experimental partnership in Paraguay, so that we can open this market of imports to and exports from Paraguay. We have a partnership with ISL, which is a specialized shipping company. They are specialized in navigation between Buenos Aires and Asuncion. And we expect that we are going to be able to take this partnership forward. And regarding investments, we always believe in the fractionated cargo market. It is a market that interests us. We want to be more present in this market.

Thank you, Marcio. We have another question using the raised hand by [ Felipe Bravo ]. [ Felipe ], I will enable your microphone so that you can ask your question live. Go ahead. You may speak.

Good afternoon, everyone, and thank you for the information in this call. I just want to have a clarification. Well, I thought your results were really surprising because in the past quarter, it had become clear that the contribution margin was expanding because you were able to capture volume in other segments, which were less affected. But it was not enough to offset the reduction in volume that we saw. But now the dynamic has changed somewhat. The margin continues very high, but you were able to recover volume. So what should be the margin dynamic? Or putting it differently, I don't want to be quantitative, but how much can you grow in segments with higher margins? Thank you.

Thank you, [ Felipe ], for the question. I will be answering; if necessary, Alvarenga can contribute. Well, to me, in terms of margin and mix improvement, that's a complex issue because we operate from Buenos Aires to Manaus with 2 services, and the final profitability of the vessel is the result of loading and unloading cargoes along our coast. It's not that I work in a specific market and I can choose a more profitable segment, and then I would start prospecting that segment more vigorously. We actually do a little bit of that. But oftentimes, cities and different locations react differently. Sometimes Rio Grande has more volume, is more profitable. Sometimes santos is, sometimes it is Itajai, Suape, Itaguai. So it's a complex equation. Our commercial team has clearly worked hard on the main commercial actions. And one of them is to prospect profitable segments. Another is prospecting cargoes that have been handled in highways -- or on highways. So that requires more than space in a vessel to be transported. It requires information technology. It requires systems integration. It requires punctuality that Log-In now can offer regularly. So in our view, the highest profitability lies in the migration of cargoes that have not come to our model yet, bringing new know-how technology and developing new products, which is the case of what I mentioned before, fractionated cargo. Sometimes if we see profitability increasing, it's not because I'm doing more of the same, but perhaps because I increased the percentage of fractionated cargo in my ship.

We have another question in the Q&A from [ Gustavo Engellender ] with [ Itau Asset ].

Congratulations on the results. First question, could you explain if the level of AFRMM, which we saw in this quarter, would be a recurring level, considering 100% of the vessels operating in the quarter? Second question, could you give us any color on the door-to-door service strategy?

Excellent. Thank you, [ Gustavo ], for the questions. I will be answering the questions. In our opinion, this is the level of AFRMM with all 6 vessels in our own fleet. In the past, we didn't have all of the vessels generating AFRMM, but now we have all 6. So -- and the expectation is that it will continue to grow just like we grow the profitability of our cargoes. This is relating to the AFRMM question. If we can give you color on the door-to-door service strategy, I think that this is a little delicate, but we have 2 pillars. One is to ensure a very, very high quality operation. And I think Alvarenga mentioned that, 94% on-time delivery. And we are maintaining this level of service, could be even higher. So the first action is let's have the best operation possible. And the second pillar involves more information technology, and we are working on that pillar as well, and we expect to have more news for you in the fourth quarter.

Marcio, this is Mauricio. Let me add to this -- to your comments. Our sales team remains strong in this purpose of always offering an integrated logistics chain. It is a lot easier for the client to have a single point of contact. And this is what we are pursuing. The more that we can offer a better level of service, which is what has been happening in recent years, the more successful we are. That makes our percentage of door-to-door operations increase. And this is an operation that requires a higher level of service and a higher level of information. But in most of the cases, it also brings home a higher profitability. So this helps understand the prior question that was about the mix.

Thank you, Mauricio. We have another question in the Q&A. [Operator Instructions] A question by [ Gustavo Polentian ]. To what extent it is possible to increase the volume for the same fleet? Is there room to grow some more without adding new vessels to the fleet?

Thank you, [ Gustavo ], for the question. I will be handling it myself. This is a very interesting question, because a vessel has the beauty that it goes along the coast, and you can load and unload the ship several times. So yes, we still have a lot of capacity to -- a lot of opportunities to grow capacity in the current fleet. We do believe that we have room for growth and to accommodate future cargoes. Our expansion plan aims to increase our market position. We can do more with what we already have, but we do need to have a more regular positioning in the coast ports and cities. We tend to be stronger in some than in others.

Thank you, Marcio. I have another question in the Q&A by [ Guilherme Morais ]. What is the expected impact of the approval of PL 4199/2020?

Thank you, [ Guilherme ], for the question. PL is the bill of law 4199. We are following this bill of law up close and very optimistically. We believe that this program will come to facilitate the arrival of vessels in the Brazilian coast, and this is very good for us. Today, we compete with very large shipowners. So any program that will facilitate the arrival of ships to the Brazilian coast will be good for Log-In. Now we don't have a lot of information. The bill of law is analyzing some amendments, which will later be voted. We heard that there are more than 90 amendments. So a program that was very much focused on capacity, now it is including other aspects as well. So we still don't have a lot of detailed information of the final draft that will be voted and eventually approved. But we are optimistic about this. We expect that this will facilitate the launching of new high-quality services along the Brazilian coast. And this is a clear target for our expansion program.

[Operator Instructions] We have another question by Luiz Peçanha with Safra. There was a great foreign exchange variation impacting Log-In's result in this quarter, this time positively. Can the company hedge its operations to prevent the impact of these oscillations, at least in the mismatch between dollar-denominated revenues and expenses?

Thank you, Peçanha, for your question. This question will be answered by Pascoal, our CFO.

Let me try to give you some color on this. In the quarter, the impact of the exchange variation on our financial expenses was actually smaller than what we posted before. In other words, we reversed a part of what had happened in the past. Now in the 9 months of the year, the result is still significant. I showed a slide on that, more than BRL 160 million. And this is an accounting effect. I think I stressed a couple of times during my presentation that the cash impact of this is immaterial. In the 9 months of the year, the impact is just BRL 1 million. So hedging this kind of thing, considering that our own operation is leveraged in terms of foreign exchange protection because we have dollar-denominated revenues and expenses. And the revenues and expenses have similar amounts. So with a little surplus, when the dollar depreciates as it happened this year, we had a result surplus, which completely canceled the cash impact of the debt on our cash in the short term. So why am I telling you this? Because this is always a difficult topic to understand and to grasp, and it can be scary when you see a large negative result. But this large negative result is the present value of the future flow of service of this debt, of this dollar-denominated portion. So the effect on the cash tends to be lower than the effect on the result itself. So we are operationally hedged. Now of course, if there is an opportunity for additional hedging, that will bring us even more safety. Yes, we can think about structuring a hedging operation.

Thank you, Pascoal. If there are no more questions, I would like to thank the participation of all of you. And I'd like to turn the floor back to Marcio Arany for his final statements.

Thank you, Sandra. As my final messages, we continue with our strong positive results, with our solid business moving at a strong pace and delivering extremely positive results. Our team remains motivated and safe, innovating and contributing sizably to the achievement of our results. Lastly, I would like to thank all of you for your attention in this conference call. And I hope you will all remain safe and collaborating with social distancing so that we can fully recover from this as fast as possible. Thank you very much, and have a good afternoon.

Thank you. This concludes the Log-In LogÃstica Intermodal third quarter conference call. Please disconnect your lines, and have an excellent afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]