Maha Capital AB (publ) (MAHAA) Q4 FY2025 Earnings Call Transcript & Summary

[Foreign Language] Roberto, nice to see you again and I trust the weather in Sao Paulo is more pleasant than that it is here in Sweden, so please take it away.

Kaarlo, nice to see you again, my friend. Hopefully, I saw it is already snowing very much in Sweden. So stay warm. so welcome, everybody, for our Q4 2025 earnings presentation. I will walk through some slides, so we can update everyone related to KEO transaction, also about Venezuela and also our key financial highlights. So we're starting with KEO updates. Here we bring the KEO transaction timeline. So as of first quarter of 2026, remember, we concluded the relisting process with NASDAQ and also we approved the transaction through our EGM in Stockholm and now we are just waiting some final condition presence to be met, so we can close the transaction and also make the capital raise of $27 million at SEK 16 per share. We expect to conclude this during the quarter, but hopefully in the next weeks. And of course, as we already mentioned before, we have the target to work towards the dual listing on NASDAQ USA until the end of the year, so we can enhance our capital structure and bring more liquidity. So this transaction actually transforms Maha now into a B2B credit and payments platform, so having access to the fintech platform technology provided by KEO and also operating under the American Express issuing licenses. Summing, with this capital base of Maha, a strong balance sheet, we will be well positioned to capture growth in these attractive high-yield B2B markets across all Latin America by leveraging American Express established global card's network. I'm showing a little bit what we have, what's KEO technology. Basically, we have a one-stop platform for local and cross-border B2B payment and financing solutions. Looking to the WorKEO, I think we already covered this in the previous presentations, but just remember, it's a B2B revolving credit platform, where basically suppliers can defend their receivables and clients postpone the terms of payment and it's created for domestic transactions. When you look at the Global Trade Card, it's a cross-border credit card program, focused mainly on travel, entertainment and also B2B cross-border payments. And of course, this is a global transaction solution. And now presenting, we are going to say a little bit more in a couple of slides going forward, but KEO Rails is our B2B blockchain-based infrastructure, where we can set real-time transactions for clients by using stablecoin technology and also it's created for domestic and also cross-border payment solution through stablecoins, that I already mentioned. Starting out with 4Q snapshot, basically, just remember, KEO is a proprietary, WorKEO is a proprietary digital B2B revolving credit platform. So clients can use revolving credits with a very simple setup and workflows and at the same time, it's everything online, and you can approve it by this infrastructure. So if you look to the chart, basically, every single transaction is based where a buyer sends an invoice through our systems through the buyer's approval. And basically, if considering a hypothetical example here, if the buyer wants to extend 30 days their payments date, which they can do that in exchange of interest rate. Then the other hand, on the other side of the table, if the supplier wants to receive upfront instead of the due date of the invoice, they can also receive upfront, in exchange of discount rate. So in this hypothetical example here, considering 30 days to collect the upfront for the supplier, an additional 30 days reaching 60 days for the buyer, asking the same discount rates for both sides, we will end up, with hypothetical example, here of 1.5%, we will have $1.5 income for each side of the table. So this is how we monetize through WorKEO some issue. Going to GTC, our USD-denominated solution designed basically to support T&E and B2B cross-border payments, remembering it's a U.S. dollar-denominated credit card program, where clients can benefit from centralized accounts which mainly will help them to make spending control for not only T&E but also for B2B. And this can also provide additional tools for travel insurance not only for death but also for baggage delays. And basically, here is about the same, but the only difference, this is actually a virtual card. So instead of a discount, we have the interchange fee to have access to the network, right, where the PSO machines or Virtual PSOs are established. And of course, these are flexibility we have, we can extend additional terms of the cut-off dates of the credit card. So if the buyer -- the credit card user wants to extend their payment dates, they can ask using exchange of additional interest rate. So the economics is almost the same but is a different tool for a different profile of usage. And here, we are presenting now KEO Rails, our proprietary blockchain-based payments rails for instant payments. So this is a proprietary technology created by KEO. So clients can have access to tokens and stablecoins so they can make instant payments in terms of seconds or minutes. And this also creates a more secure environment so they can transact worldwide, making transaction settlement in seconds instead of needing to waste time and wait like 2, 3 days. And also, this is also important because sometimes weekends are not allowed to transact. This feature is to enables transactions even during the course of the weekends. So this brings more agile transactions for our customers and clients. And going to an update here as we go through the portfolio, basically, we grew the approved credit lines to $64 million as of end of January this year, where we have a combined average annual yield of 20% with potential transaction volumes around $330 million. If you break down this, we have around $46 million through WorKEO with a higher yield of 32% and we have also the Global Trade Card where started through the loan agreement of around $80 million with an average annual yield of 30% and again, after closing, we expect to have a faster pace here on building the portfolio and making this growth happening very strongly. Going to Venezuela update. So basically now, we are assessing strategic alternatives so we can understand the best way to unlock value from this call option and create shareholder value to our shareholders. Remember, we have until end of May this year to exercise this call. So just highlighting the latest news on Venezuela, basically, we have as of one of the main points, the Venezuela Law Reform shifting from state control for the JV assets and allowing private execution and operational control, which is something very attractive for private investing and also existing JVs will have up to 180 days to negotiate these new contracts under the new law. So basically, we will have the same due date here up to 180 days to negotiate with PDVSA or new framework agreement. On the U.S. policy topic, basically, OFAC has issued the General License 49 and 50 over the OFAC General License 49, sorry, it will allow us -- allow in broader terms, current negotiation of contingent contracts for investments on the oil and gas industry operations in Venezuela. So of course, and then after you negotiate and have the agreement settled, you are subject to a separate authorization from OFAC through the General License #50. So as next steps to us, basically, after we already concluded remembering the business plan development plan from PetroUrdaneta, now the plan is to go and start negotiating the contracts under this new law firm implemented in the country, targeting operational control like many other huge partner oil and gas companies are doing nowadays and also in parallel, looking for alternatives to unlock value from our call option. So basically, these are the main updates that I want to bring covering Venezuela call option. On the financial highlights, I will just make a quick disclaimer because as you already know, after we sold all our previous operations on the U.S. basically now we don't have recognition of revenues. Our financial statements is a little bit different for comparative purposes. So I just want to highlight this before we enter here in this new section. So walking through the financial highlights and starting with the G&A and the financial income. As you can see in the chart, basically, our G&A has a nonrecurring increase over the quarter, mainly explained by these activities related to this M&A and the financial structure previously announced related to Keo World transactions. And as you can see here, we also are -- we are showing the total financial income, which, as you can see, we have an increase on the financial income after we basically divested from Brava shares. But of course, we expect to start deploying this cash instead of [ the deals ] the sort of low-digit investments into KEO business and start increasing our financial -- actually starting to generate revenues and income from these credit operations. Going to the cash flow overview. So basically, we started the quarter with a net cash of $93.8 million, and we end up the quarter with basically $93.1 million in net cash plus credits. Basically, the main considerations during the quarter was that we received our payments from the sale of Illinois Basin and that we prepaid our past debt of $12.5 million. Nevertheless, we remain at the same net cash position basically. And going here, we just want to bring this slide where we are going to make some comments on the pro forma that we released in the last couple of weeks. So remember, we published the pro forma consolidation of 2025, combining Keo World's figures and also Maha. But basically, we thought it was important to understand what was some noncash events and also some nonrecurring events, which could bring more color on what could be the basis of net result going forward, considering the previous numbers and the previous last year outstanding credit volume of KEO. So basically making the all noncash -- taking out all the noncash adjustment, also excluding the discontinued operations and nonrecurring G&A and also one-off expenses, we end up the quarter -- actually the year of 2025 of adjusted pro forma net result of 2025 of $4 million. So this is a little bit how we are considering for the future for this year, right? So we believe we are entering this new phase with a profitable base, supporting the scalable expansion through this acquisition of a new portfolio of credits. So as we go through the year and start growing the credits, we expect to have even better figures out of the year. And as closing remarks, so we expect to conclude the business combination in the next couple of weeks, where we are going to position Maha as a tech-enabled credit platform with a very scalable business model and a robust balance sheet provided not only by Maha, but also the capital raise. Remember, we are raising $27 million. And by doing that, Maha will be well positioned to capture disciplined growth in the attractive markets of B2B clients in Latin America. We will keep our strong focus on efficient capital allocation and operational excellence in execution and also leveraging this unique opportunity by having access to American Express network. And looking forward, of course, we'll be working hard to setting the foundation to support this story and substantial growth in KEO side business. And at the same time, we will not -- we will keep on our radar the dual listing, which will remain a priority to us targeting in the second half of the year, so we can optimize the capital structure by having this access to the U.S. and Eastern Avenue. And in the end, on PetroUrdaneta, as I mentioned before, there will be ongoing evaluation on the alternatives we will have so we can maximize shareholder value by having access to this call option in Venezuela. So this is how I want to close my presentation, Kaarlo. Thank you very much, and let's move to the Q&A session.

Thank you for that, Roberto. And I think you finishing off with PetroUrdaneta could be a good segue to the first line of questions. And I'm going to structure this as starting with Venezuela and then ending with KEO. And for you, for any listeners and viewers who would like to ask questions later on, I forward them to the company. But you mentioned the OFAC licenses, and we have a couple of questions here on the strategic options for PetroUrdaneta and what are your plans for the assets? And just let me read it here. Would you sell the Venezuela assets, initiate a joint venture, or will you start the production if the regulatory, let's say, obstacles will evaporate?

Thank you very much, -- so like I mentioned in the previous slides, first, we need to complete our negotiations considering this large firm on Venezuela. And of course, to have this operational execution control, this is mainly important and in parallel, we will see considering what will be our new contracts, what will be the best alternative. I think you mentioned some of them. But as of now, we don't have any conclusion. We will still analyze what will be the best solution and invest in the most efficient way so we can monetize and bring and unlock more shareholder value to us.

And I'll have to expose my ignorance here because when it comes to time frame here, you mentioned expiring in May, but also 180 days here. So could you give us a feel for a time frame for Venezuela in the near term and in the longer term?

I expect that we don't need to have 180 days to make all of these changes. These contracts basically, we already knew from the past. So we are a little bit one step ahead. So I'm very sure that we are going to have everything ready before the maturity date of our call option.

And just a final question here to round off Venezuela. Could you elaborate on any permits needed going forward? And are you happy with what you have or what you're trying to get?

Sure. Like what I mentioned before, so by having the General License #49, we have access to negotiate with PDVSA and potentially sign the contracts. Once we conclude this process, then we are going to request access to the General License #50. So then we will be able to start operating, investing and making the offtakes out of the country. So this is the step. So first, we need to negotiate the contracts by under the General License #49. And once we are ready, have the sign -- the contract signed, we have the General License #50 to start looking for the best alternative and potentially operating there.

So more to come is the simple conclusion there. If we look at the company on a concern level here, when would you expect the combined Maha-KEO to be cash flow positive on the concern level?

Remember the slide that I showed about the adjusted pro forma, excluding noncash effects, excluding also nonrecurring expenses, basically -- and having the previous year line of credit of KEO was without this source of capital base, without a strong balance sheet. Potentially, we would be already profitable. So as long as we start growing the portfolio, hopefully, we will be starting to generate better figures and be on the profitable base position.

And if we look at KPIs here, which KPIs should investors track during the first 12 months or even in shorter term to assess whether you're -- well, moving ahead with the integration in the way you would like?

We brought here today some KPIs. I think this is the main one to start keeping the track. But of course, once we make the closing in the next couple of weeks and become the fintech business, we will provide more and more KPIs in a recurring basis. So shareholders have access to this new information and start tracking the evolution of the portfolio and the business. So hopefully, we will bring more KPIs very, very soon.

And how would you prioritize capital going forward between, well, growth or FSM growth, lowering the debt and possible share buyback?

First, nowadays, we don't have any debt inside either Maha [indiscernible] So we don't have this issue. Secondly, I think the plan is to start deploying our balance sheet by growing the portfolio, I mean, increasing the credit lines over time, so we can start benefiting from these revenues, these incomes and starting to generate positive cash flow. That's the idea. But remember that part of the plan is once we start growing, of course, the idea is to start also looking for additional sources of capital by issuing senior lenders at attractive terms and conditions, right? So we can leverage the facility and grow even more and benefit even for higher needs. That's the main rationale.

So one could expect that you will build up some sort of cash surplus here in order to attract cheaper loans in a way. For growing here, would you need further capital injections to accelerate the business? And you mentioned here, I mean, the accelerated business could be either growing the lending facilities and/or credit-related acquisitions?

No. Nowadays, remember, we still have the strong balance sheet of Maha. And at the same time, by closing, we will have raised $27 additional million, right? So we have a very strong liquidity to start deploying this capital over time. Of course, if there's huge opportunities, we can think to anticipate this movement. But by having this track record, deploying first the equity cushion of Maha inside this portfolio, we will create an environment and statistics, credit statistics, so senior lenders have more comfort and we can raise more cheap capital than running things and start doing right now. So that's how we think; start with the equity, and then in parallel, once we reach this portfolio size, we start looking for the debt alternatives. But of course, if there's any huge and good opportunity that makes sense, we will evaluate.

Yes. So basically, one question here. Are you looking to expand within fintech or lending or with both areas? And the answer would be yes, if there is an opportunity.

Our focus is 100% on the fintech business, Kaarlo. We want to start, like I said, growing our portfolio, growing our base with our balance sheet. But of course, if there is a fintech potential M&A with solid opportunity, we will evaluate. But for now, our focus is 100% on setting here the foundations and starting growing the portfolio.

And at what interest level do you think you could attract senior debt? And if you could elaborate a little bit about the environment.

I think we talked about this in one of our latest webcast, but I think this will depend a lot on the market we are talking about, right? So if we are talking about Mexico, Canada, they are totally different levels, right? But again, I think once we have deployed our equity and growth and show this profitability on the portfolio, then we will be in a solid position to start raising this additional capital and starting to increase on the leverage facilities with very attractive terms and potentially around one single range.

And I have a viewer question here, and I believe you showed the slide about -- well, the different divisions, so to speak, on the yield here. But could you explain the concept of the yield on KEO's credit lines, and how should I put that into -- well, in combination with the revenues? But if we start first, the yield of the credit lines?

Sure, sure. So perfect. The yield, like I was trying to show in a more visual way, basically is a combination of the interchange or discount rate plus the interest rates that you can ask from the other side. Basically, this is for a short period of term. So if you take this amount, this percentage and analyze this for the full year and multiply this by your outstanding credit volumes, then you get your revenue stream in an annual basis. So for having this sort of explanations, we created an appendix for this presentation, so shareholders that are trying to understand how they can estimate revenues, how they should interpret yields and credit lines? We have attached this in this presentation. So we will have this glossary now going forward, so everyone can understand what's the main KPIs, how they should be looking at it.

That's thorough enough, I think. I have an e-mail question here also. Can you give a rough estimate regarding the KEO's EBIT results for this calendar year? Well, please go ahead.

No. I think in terms at least of revenue, so if you make a back of the envelope math here, so imagine that we reach our $140 million after closing balance sheet into credits, right, and multiply this by an average yield of 20% as of now, then you get a revenue income in the year, right of around $28 million. So I mean, this is sort of the size by only having access to our own capital. But again, the idea is to start increasing this over time, leveraging the facility so we can have even higher incomes across the year and the future.

And also, I believe you mentioned on the slide, dual listings here on NASDAQ. So that will be a milestone to be looking at. Could you just mention the genius behind that?

Yes, sure. No, I think this will be an important moment towards the capital base of Maha, right, because by having access to this additional avenue, we will increase and bring more liquidity, institutional investors. So I think it will be an important milestone, important moment for the company, and we expect to conclude that during the course of the year.

And also by the listing there, you will be able to attract capital. And I think that we have a question here, are banking partners required? Well, I think capital would be required. Or are you looking at any particular banking actors?

No, I think we are not in this stage to mention this. I think we will need to wait a little bit more so we can clarify on this. But for sure, we are still in a moment of focusing the closing of the transaction first, then we will start looking for the dual listing with more focus.

Okay. All right. Roberto, thank you for that. We had questions left, right and center. And as I said in the beginning, if there are questions here that people feel that they need a more granular or in-depth answer, they would be -- we would forward them with a warm hand to the homepage. So Roberto, thank you very much.

Thank you very much, Kaarlo. Thank you everyone that has been listening to us.

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