Motiva Infraestrutura de Mobilidade S.A. (MOTV3) Earnings Call Transcript & Summary

Good morning, and thank you for holding. Welcome, ladies and gentlemen, to Motiva's conference call, where we will discuss the earnings for the second quarter of 2026. This presentation is being recorded and simultaneously translated. [Operator Instructions] Before we begin, we would like to highlight that any statements made about the company's business perspectives, projections and operational goals reflect their current expectations. These statements involve risks and uncertainties and therefore, are not a guarantee of performance. They are subject to factors that may lead them to differ materially between what was expected and the actual results. We will now continue with Mr. Miguel Setas, the company's CEO. Go ahead, sir.

Good morning, ladies and gentlemen. I'd like to welcome you to our conference call for the second quarter of 2026. I'm here as per usual with our CFO, Rodrigo Araujo; and our Investor Relations Director, Flavia Godoy. For the next minutes, we hope to give you a brief overview of our results this quarter, and then we will be available for your questions. This quarter has been very solid from the perspective of our operational results and the company's performance. We executed our strategy. It was in line with what we had communicated to the market and this shows, as you will see in our results, how we have rigorously executed our strategy. We have a few highlights, and then I'll hand it over to Rodrigo so that we can go into details on each of these topics. But maybe the first main point to start us off is to say that we began the operation of that -- the road connecting Belo Horizonte to Sao Paulo. If you don't know this part of the country very well, these are 2 of the main cities in Brazil. This is the [ Renovias ] concession. We started operating it this quarter. And naturally, of course, we also concluded the acquisition of the [indiscernible] associated to this concession. So you will be able to see that in our results. It was recorded as a very advantageous purchase, which Rodrigo will describe later on. We announced the first figures of this concession. We'll go into details later on, but this is in line with what has been communicated to the market. You might remember that the demand was 7% above the government study. This is an EBITDA that in the fifth year of the concession will be around BRL 900 million. So this is a structuring asset to our portfolio, and it will start to impact this quarter and the next quarters. When we look at the -- our cost efficiency, you can see that the ratio that we treat -- that we track, OpEx cash to net revenue was at 34%, which is 3.7 percentage points below the same quarter last year. So our efficiency is in line with what was expected. In fact, it's a bit below our own internal budget. We hope that by the end of the year, we will see some correction to the costs that were postponed, but it will be around this ballpark figure. Then on the EBITDA side, we saw a growth of 30% to BRL 2.4 billion, which has been driven by the new concessions. We have 4 new concessions, which are already driving these results. This quarter, they represented BRL 370 million from the new contracts. And also due to our portfolio repositioning, this means that we had a margin -- an EBITDA margin expansion of 4.7 percentage points. So as you may imagine, this comes as a result of using our portfolio, and this is in line with our efficiency goals. When we see our P&L, looking at our income, the consolidated net income grew 57.5% versus the same period last year. And our adjusted net income grew by 67%. Rodrigo will describe this in details later on. And again, this excludes the effect of the purchase gain, which was BRL 750 million for this quarter. Our CapEx increased by 13% versus last year. Again, this is aligned to our execution -- our physical execution of our CapEx, which is very close to what we expected to have for this year. And therefore, we believe that this is being translated into a very linear and predictable execution capacity, and we see this as a positive thing. The final highlight before we continue with Rodrigo is on sustainability. We were first place in the Best ESG Awards of Exame, which is one of the main communication outlets in Brazil. So we're also very proud of that. As you know, sustainability is an essential part of our strategy. So this quarter was very positive. It was a quarter where we consolidated our results and made our strategic points more relevant. So at the halfway point of the year, this is a good indicator for what we expect for the rest of the year. Let's continue with Rodrigo.

Thank you. Thank you, Miguel. Good morning, ladies and gentlemen, and thank you for being here for our earnings call for the second quarter of 2026. This quarter sums up the quality of our portfolio and our strategy execution and also how we have been able to deliver on our promises. You can see that many of our assets in the portfolio have been performing well, according to the strategic plan that was approved in our bid. We'll also discuss what we see in Minas_SP. And in practice, we've been seeing this asset performing in a similar way to what we had in our business plan. Of course, the operation hasn't been going for very long, but this is aligned with our business plan. And let's go into some details about our results. We can start by looking at how our EBITDA expanded to BRL 2.4 billion this quarter. In toll roads, this is an increase of 3.8% in equivalent vehicles. But when we eliminate that free flow effect of RioSP, it's 2.3% growth. So it's still sustained. One highlight was RioSP, which had a growth of 5.7%, but also roads in Sao Paulo continue growing. So this is an important milestone for us. Looking at a breakdown between light vehicles and commercial vehicles, we had an increase of 2.8% in commercial vehicles and 5.2% in passenger vehicles. So we know that ViaLagos and ViaSul are a bit more touristic. So we had mentioned this before that their performance was slightly below what was expected. In this quarter, it seems to have recovered. When we look at the deliveries, we had step-up adjustments throughout the quarter. So we've seen the first one in Minas SP being applied 2 in [indiscernible] Parana. At Pantanal, we also had a process approved where we can do a step-up adjustment in August. There are 3 important steps for Motiva Pantanal in its first 3 years. So we've done the first one, and we're advancing with the next one. So this is significant. We've been able to deliver on our commitments very successfully because this involves step-up adjustments associated to CapEx deliveries in the beginning of the contract. Looking at our margins, you can see that we had an increase of 1.6 percentage points in the adjusted EBITDA margin in toll roads, which totaled BRL 2 billion. Looking at rails, we saw an increase in the number of passengers transported of 1.8%. The Santo Amaro integration improved integration between lines 5 and 9. We also saw that the Varginha station started its operations. So that represented this growth, and we can see that our portfolio is performing as expected. There's a highlight because we had a small offset of VLT. There were bus strikes and the World Cup affected our performance, but assets performed as was expected for this part of the year. In the Rails platform, another highlight is the significant double-digit growth of our complementary revenue. We had some contract renegotiations. We reduced vacancy, naming rights effects. If you use our services, you probably saw those. So we see some expressive growth in this. And we've been very intentional and active about this agenda. It's an additional source of income or revenue for our portfolio. So we still see many available opportunities to explore this and continue growing. On the rail platforms, we also saw 5.4 percentage point increases in adjusted EBITDA margins, coming to a total of 64% at the end of the quarter and an adjusted EBITDA of BRL 696 million. Looking at our [ cash ] and OpEx results. Here, we have a few important messages. Like Miguel said, portfolio utilization has been providing important results. We have 3.7 percentage points reduction in our OpEx cash to adjusted net revenue ratio. At the end of the year, we had delivered on this goal in advance, and we continue to find new opportunities in our efficiency agenda. For this quarter, when we look at cost variations, it's important to highlight that many of them come from new concessions. So naturally, as we take new assets, we have costs associated to them. We're also adapting our engineering structure. So we have had increased personnel costs so that we can have an engineering team that can run this important pipeline increase. So we will see CapEx execution increasing for the next years. We've been very diligent in governance and structure so that we can deliver our CapEx on time and on budget. So this is an increase that is justified considering the value that will be executed by the CapEx. These are a few of the main things we saw this quarter. Another highlight is that in the rails platform, not only did we see some service outsourcing, but we also had new technologies being implemented in processes like station cleaning. So we've been finding efficiency opportunities in OpEx, but also maintenance, imaging technology, sensoring. So there's important work that will translate in reaching our ambitious goals of reducing this OpEx cash to adjusted net revenue ratio. Another point worth highlighting in our EBITDA, and we show that this was a nonrecurring impact, which was the purchase of Minas_SP. This is actually the comparison between the assets of a previous contract. This purchase led to several accounting movements. So the new asset has a different campaign. Deferred taxes are now being partly recognized. In the future, we also expect to receive some refunds through Arteris. So this combination of a new net asset with a new asset that has different values created this noncash statement. And this also reflects the quality of the assets that we added to our portfolio. Looking at our net income breakdown. So I've mentioned that purchase, we saw an increase in gross debt, and this is associated to the new businesses that was brought into our portfolio. This brought in some new debt as well. We've also captured some credit for the initial CapEx of our projects. We also had new investments. We'll discuss this payment to Minas_SP. So what we're seeing is that interest rates are still high, and this affects our financial results. When we look at our effective quota, for this quarter, it was very low. So it's important to highlight that we had a bargain purchase that generated an effect, but our recurring effective quota is lower. So we're getting closer to 40%, and we are reducing this gap to reduce some tax in efficiency and have a better bracket than the one that is in our bylaws. Continuing -- you can see that our leverage was under control, and this was supported by our portfolio expansion. You can see this too in our net debt to adjusted EBITDA ratio. Some of our assets are still ramping up. So some of them are not being 100% captured in this EBITDA, especially the new concessions. We have a variation in the holding, which is also associated to this new business. We had some initial equity in Minas_SP. So that also required some debt from the holding. Looking at this profile, First, you can see that the amortization towers, the highest one will happen in 2030. So we're doing some liability management to have a more comfortable debt profile that doesn't pressure us to roll out the debt at any single moment. As you can see now, we have an uncertain year with the macroeconomic, geopolitical effects and also the election in Brazil. So we have to be sure that we can renegotiate this debt over time. But the cost is still very effective. We're at CDI minus 0.53%. So our debt is under control. And our exposure is about 50-50 between prefixed and CDI. So a part of our debt allows us to capture an opportunity if there is a reduction in interest rates in Brazil. We hope that this will happen soon as it would help to develop our portfolio. Looking at our CapEx execution. I mentioned some of the highlights, step-up increases. We have some expansion works in RioSP. We expect to conclude this by the first quarter of 2027. This will be 1 to 2 years before the contract deadline. This will be delivered on time and on budget, and we will capture some tariff effect from this concession. In Parana, we're seeing some pavement restoration and duplication works. And in ViaSul, we have also been seeing that duplication works are being delivered, especially in segment B and C. We hope to conclude this by this year. In rails, Lines 8 and 9, we're seeing power distribution networks being implemented, new substations. We're also adapting the commercial areas. This has been taking place on Lines 8 and 9, but also Line 4. So we are not only expanding commercial operations, but we're also making new brands and new players join us and maximize our commercial revenue. When it comes to CapEx, you can see the performance for the year and how it is going according to the guidance. It's very close to our execution guidance. So we're still on track to execute something close to what we committed to for the guidance. Continuing with Minas_SP. This was a commitment that we had of providing more details on this asset after the bid cycle in the primary market. So we had 2 recent bids, and now we have a few more details about this asset. Like Miguel said, this asset connects 2 very important regions in the country, 569 kilometers in an area that doesn't have many specific commodities. So 70% of this is commercial and 30% of our traffic is light vehicle. So not only does this follow the commercial diversity of Brazil, but it also has some potential growth. The demand was 7% above the MEF, and this has been running according to what we saw in our business plan. So this is an important milestone. Of course, there's also a very low demand mitigation mechanism, which means that there is a slight risk. We're sharing 90% of the risk with the granting authority. And there will be some tariff step-ups, one of which has already taken place, but we will have 2 more for the next 2 years. And this is associated to the CapEx delivery at the start of the concession. Looking at OpEx, it is 5% lower than the MEF. And this considers a recognition of liabilities along with the legal entity that was acquired. So this is similar to other initiatives that we had in other parts of the portfolio. For example, reducing the collection costs with cash collection. We -- our entire portfolio is about 5% below in cash collection. So this increases efficiency, reduces accidents and, of course, increases our efficiency at collecting, packages related to conservation and so on. Add to this, we also have a make or buy strategy with several packages in the concession to see what makes sense to outsource or internalize. After the tax reforms, we've also been working on these impacts of what will make sense in the future and how we can maintain efficiency in a scenario where credit will be different from what we're seeing now. So we spent some time doing that. And of course, process automation. Our automation agenda connects fully to this increased efficiency over time. And of course, we expect to capture this from our innovation and technology investments. Looking at the asset, we're starting with an EBITDA margin of 45% with a revenue of BRL 500 million. By year 5, this will be expanded to BRL 1.2 billion and a 75% margin, most of it coming from the tariff step-ups in the first 2 years of the concession. So it's important to comply with CapEx, execute what is promised so that we can capture these tariff step-ups. We also saw a recognition of tax losses that haven't been accounted for. We're sharing 80% of this, but considering the profitability of this new concession, this was important to recognize. The equity recognized was 50% of the minimum required. And we also saw a compensation to Arteris of BRL 381 million. This is an asset with a leverage of 80% with a real IRR of 20%. So healthy and very aligned to our portfolio. Finally, on CapEx, we have a CapEx that is 20% lower than our MEF. This CapEx is less complex. So this has helped us to work with alternative solutions. We have a pavement rehabilitation solution that is superior to the MEF. And 2/3 of the works up until the fifth year have been contracted and complied to the business plan. So this confirms that what we imagined has been true. That's quite important. And as I mentioned, the expansion works for the first 2 years have already been planned, and this helps us with the tariff step-ups. Not only do we see that costs will be lower, but they will also be safer and will have lower intervention time on the road. That reduces the risk of accidents and our carbon footprint. We're also interrupting traffic for less time. So we mapped a very comprehensive solution, both financially and environmentally and safety-wise as well. So our CapEx profile will be concentrated in the first 3 years. And you can see that there will be an expansion cycle between years 4 and 6. But after that, in the first 7 years, we expect that CapEx to be reasonably well distributed. Of course, we're working to optimize this and make it more efficient. But this distribution will also help us to provide more predictability and assertiveness to our contracts. So that concludes our presentation on this quarter's results, and we can continue with the question-and-answer session. Thank you.

[Operator Instructions]

The first question will be asked by Guilherme from JPMorgan.

I have a couple of questions on your portfolio. First, I'd like to get an update on your divestments in the mobility portfolio. If you have any questions about timing -- or excuse me, if you have any details about the timing. Also, I'd like to ask about Morro dos Cavalos. Any figures that you can give us on timing and the magnitude of these investments?

Thank you, Guilherme. Let me talk about the mobility platform. We've been hearing this and every quarter, we've been communicating this to the market. We have been advancing well in our airports calendar, and we understand that there's a derisking agenda in the urban mobility assets. We're working on this here in Sao Paulo, Bahia and Rio de Janeiro on the regulatory assets and liabilities that can become a significant value. Our calendar will be executed according to the market and to how ready these assets are. There's no urgency in this transaction. So it will be done when the value can be maximized. Of course, right now, with the current rates, it's not a very good scenario for this transaction. So we still haven't set the timing for it. But Rodrigo and I have been monitoring this process and the rest of the market. So this has been advancing. When it comes to additives, especially Morro dos Cavalos in ViaCosteira, as you know, there's also a regulatory aspect to this. So we have to interact with ANTT, the Ministry of Transport to try to conclude this negotiation. The process is advancing. We still don't have a definitive timing, but we expect to conclude this, this is still valid, and we consider that it can be positive for this concession profile. So this is still ongoing. We don't have a definitive time to finish it. I don't know if Rodrigo has anything to add.

Well, about the mobility platform. Beyond derisking, as Miguel said, we have always been actively speaking to strategic players. Of course, our agenda includes many partnerships. So this agenda continues. It's a living process. This adds value to the company, and it also creates an environment in which when we decide this with the market, we will be very clear about what players have the best fit and what's the best way of maximizing and creating value in this process. That's all.

The next question will be asked by Filipe Nielsen from Citibank.

I'd like to ask about 2 things. First, still on additives. If you can tell us a little bit more about the additives that will be executed in Minas_SP and AutoBAn as well. If you can give us some rough figures about how much you expect this discussion to advance and the timing. Secondly, I'd like to understand your understanding of [ Regis' ] auction. This was won by a different player, but I'd like to understand your expectations and your considerations for that bid.

Rodrigo will answer the first question, and I'll answer the second one.

Thank you for the question. So regarding these additives, I think you've been seeing this. You've been very diligent and proactive in this agenda. These are contracts and additives that add a lot of value to our portfolio. So this is a part of our priorities. Throughout the second half of the year, we will see some advances. And we won't give you specific timing. As you know, these negotiations also depend on the granting authority, but it's important to highlight that this is a priority. And throughout the second half of the year, we expect to see some advances to the 3 that you mentioned. You mentioned SP [indiscernible] and AutoBAn. But we've also been having other regulatory discussions and other assets. We recently announced ViaRio, an expansion with derisking the tariff part. So these are the ones that have the most relevant value. But parallel to that, we are also working with other assets in our portfolio as well to a higher and lesser degree. But we expect to advance in the second half of the year for these 3 specific cases that you mentioned.

We also have an additive for Line 4. So the extension works for Line 4 here in Sao Paulo will have 4 kilometers and 2 associated stations. So there was a complement to this, the so-called [ ETS ], a signaling system, and these are very relevant. Considering Regis Bittencourt highway, as you know, we have a lot of capital discipline as we have had in the last few bids. We're defending the company's value and we had an informed vision of the assets. The company studied it in depth. So we have a lot of information on the CapEx execution for these concessions, just as we had for Fernao. And we have people who understand the details of these 2 assets. So we participated in this bid, understanding that we had to adapt to its characteristics. We expected that the discounts for Regis would be below Fernao Dias. So we expected to have a better risk return control. So our initial bid reflected that perception of its attractiveness. You might remember that our initial bid for Fernao was 17% and in Regis, it was 12% and this reflects how attractive we perceive these assets to be. We had 2 competitors, one, which is the current one, and they continued with the same strategy that they had in Fernao bid. And we had another competitor that found this asset to have a different profitability potential than we thought. So that led to the results, and this confirms to Motiva that we allocated our capital very rigorously, that we preserve value. We've always said that our focus right now is to develop additives for our current assets. Like Rodrigo said, we will see advances in [indiscernible]. Line 5 is also in negotiation. And so the income conditions there are better than in a competitive process. So we're very confident with the results that we got from that bid.

We will now continue with a question from Rogerio Araujo from Bank of America.