Movida Participações S.A. (MOVI3) Earnings Call Transcript & Summary

Good morning, and welcome to the conference call of Movida to discuss the earnings regarding the third quarter 2020. Today, with us, we have Mr. Renato Franklin, CEO; and Edmar Neto, CFO and IR Officer. [Operator Instructions] Before going on, we would like to let you know that any statements made during this conference call relative to the company's business outlooks, projections, operating and financial goals are based on the beliefs and assumptions of Movida's management and rely on information currently available to the company. Forward-looking statements are not a guarantee of performance. They involve risks, uncertainties and assumptions since they refer to future events and therefore, depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operating factors may affect the company's future results. And lead to results that will materially differ from those in such forward-looking statements. Now we'll turn the call to Mr. Renato Franklin. Please, Mr. Franklin, you may go on.

Good morning, everyone. It's a pleasure to continue to our earnings release about the third quarter 2020. We're going to start on Slide #3 to talk about the highlights of the third quarter. The results of the third quarter of 2020 reflects the speed in which we suited our strategy, which led us to add 3,000 cars in the quarter already showing a recovery of growth. If you take a look at net income, we had growth of 3.6% year-on-year. And we are growing and well positioned for a new cycle of expansion also in our profitability. EBITDA margin showed an expansion of 8.8 percentage points. With that, our total EBITDA reached BRL 213 million in the period. Net income, in turn, showed positive significant evolution month after month, totaling BRL 37 million, which is net margin of 9.4%. More important than the number being 14x larger than the second quarter is the trend that we are seeing and delivering month after month. That is reinforced with the numbers of October that we are going to show you further on. On the right of the slide, we bring you the main highlights by business lines. So Rent-a-Car, record occupancy 82.2% showing a heated market and cost per car of BRL 145, which is a reduction of 22%. Again, reinforcing our comfort with the cycle of expansion in growth and profitability. Fleet management record EBITDA by car due to the reduction of monthly costs with cars and the business line picking up growth with already contracted growth, quite robust, and we are going to see that fine -- further on. As important as it all, the Seminovos with a record in after average ticket BRL 41,000, an evolution of 13% in the average ticket of Seminovos. So now let's go to the next slide to talk a bit more about the numbers. But before, on Slide 4, we have another highlight for the company. What's that? We have a very strong alliance with Nissan, important OEM in Brazil, a partnership of more than 5 years and reinforced the partnership with a very important fact. The launch of Nissan Leaf, 100% electric car, 0 emission, very much in line with our value. I would like to reinforce that, first, we are starting with 50 units for us to demystify the use of the electric car, but more important than that. It's the same movement of the launch of premium cars back in 2014. Remember, we started buying Audi cars in 2014. The market target wasn't relevant. In 2015, we closed Mercedes. And to date, the whole industry works with an extra demand in Nissan market. So again, we are opening a new market, bringing a completely sustainable car, Leaf is a global leader in sales, being sold in more than 50 countries with more than 500,000 units reduced. So we picked and choose a car that has the values and quality in line with our objective of offering differentiated services to our clients. Very much in line with our service DNA, reinforcing our strategic alliance with Nissan. Now let's move on to Slide #5, let's talk a bit about our fleet. What's the main message here on the slide? First, the company's difficulty in suiting our size to the market scenario. In the second quarter, we were very agile transforming the size of the company and adapting to the current scenario very conservatively. Remember that in the beginning of the pandemic, the scenario was uncertain. We went past this stage, we were the first to go and resume purchases, adding more than 3,000 cars. So also providing further growth of revenues in October. And we showed you that of October, again, growing our fleet, showing that we are in the recovery of growth for our company. Today, we have an average age of 9 months in the Rent-a-Car, 16 in fleet management, the youngest fleet in the market, again reinforcing our position of delivering the best services and contributing to lower maintenance costs that with a new fleet we can have record occupancy. Now we are at the point in which we are going to accelerate growth to basically capture the growth of local tourists in the high season and continue to create new products along 2021 with a growth of increasing our fleet. Going to Slide #6, we start talking about business line. I'm going to talk about the Rent-a-Car [Technical Difficulty]. Remember that we have several actions on discounts and et cetera to keep occupancy. That was cleaned up month after month, but we see robust revenue, significant evolution against the second quarter 2020, the combination of an 83% occupancy rate and an average rate close to BRL 70 already gives us revenues of around 1,800 per car, which is what we have pre-pandemic in '19. And we see possibilities of evolving these numbers. When we take a look at the daily rate, we have an increase of 4% and we see a larger volume, which contributes to a better occupancy rate and reduction of costs. And on the right of this slide, we see the reduction of costs with gains of operational efficiency. We've always said that since our IPO, we are here to rewrite benchmarking operational efficiency in the sector. And we are going to start going to a new phase when we are going to revisit the benchmark for the generation of value in the industry. Now we are going to Slide #7 to talk about fleet management. Net revenues of BRL 125 million, growth of 7% year-on-year. And as expected, a very stable development. In the third quarter, an addition of 2,000 cars in our operating fleet and growth that is contracted further on, an increase of 4% in the number of daily rates and the net revenues of about 1,200, even with the drop of interest rates. Cost, also with a reduction we are gaining efficiency even with the increase in the third quarter going back to maintenance costs and really having more drivings of the cars because in the second quarter the mileage was very low. So again, this is a financial operation with resilience, and we have a very robust commercial pipeline. We are closing contracts in the third quarter to be implemented in the coming months showing already contracted growth for this business line and a very positive trend. We are going to talk a bit more about that, talking about the avenues of growth for Movida. The Seminovos, the used car lines, well, net revenues grew 10% year-on-year, reaching BRL 640 million, we went back to the natural turnover of the fleet with record sales and now we are back to the usual turnover. Average ticket, a record of BRL 45,000, the mix already has an influence in that, but also record gross margin with 7%. So after seeing the consolidation of this industry that has a very positive trend, well-structured teams, well-structured products, diluting admin expenses that reached 6% in the third quarter. In the short term, we see a very positive scenario. The numbers are quite encouraging. We always have a conservative view when we look into the future. We don't know what's going to happen. We know that there is a second wave in Brazil. We don't know if this is going to impact us or not, but the numbers are quite encouraging. We are going to talk about October, and we are going to see a very positive evolution. So we see room for greater margin because we have a very comfortable balance sheet. Edmar is going to talk about that. And we might have even reduction of depreciation because the numbers are quite positive, and we are going to revisit that a month after month. Now I'm going to turn to Edmar, our CFO, to approach those topics and also continue the presentation.

Hello Renato and everyone. Let's go then to Slide #9, which is the traditional slide that we show in terms of depreciation. So the last 12 months, depreciation of the rental car business was BRL 3,400 as our fleet managed BRL 4,200. The new piece of information is in the bottom of the slide, which is year-to-date depreciation according to our balance sheet. And here, we see what we did indeed did in the last month to increase depreciation, which was our scenario in the pandemic. So we are just delivering what we thought was important at that time. So we have an advance of 3.5 to 5.6. That means that we are building additional muscles in our balance sheet of BRL 100 million, which will help us with sales for '21 and '22. So for us, this is a very important point. Because it will show us that during the pandemic, the Seminovos will have a positive trend and a stable trend. So this is a new view, a new piece of information that is important for us to disclose. Now to talk about results, I'm going to start with the operational area and EBITDA. In the Rent-a-car business, we saw a recovery of demand and the cutting of costs that helped us dilute our structure, leading to a margin of 44%, evolution of 20 percentage points compared to the second quarter. The pandemic brought news to us. So we had to do a lot in a short period of time. When we talk about the rental car business, we have a reduction first of the EBIT margin and then a more careful depreciation, and now we see a huge evolution for the third quarter. In fleet management and outsourcing, if you see an annual comparison, 66% margin is gross if you compare year-on-year. Now we have a lower margin because of the depreciation, earning a bit, again, better year-on-year and certain stability quarter-on-quarter. And again, fleet management. Depreciation is more stable than Rent-a-Car. Seminovos, our used car business, again showing all the improvements that we had in the last 12 months. Positive EBITDA margins and also positive EBIT margins. And we believe that this is the trends that we are going to see further on. So if we were to summarize the highlights here, a good recovery in the rental car, stability in fleet management, and consolidation in the Seminovos. On the next slide, I'm going to talk about our consolidated results. Revenue once again went -- passed BRL 4 million. Now year-on-year, we had the highest share of the Seminovos quarter-on-quarter, a bit more on the Rent-a-Car. EBITDA that was increase of 14% compared to last year, BRL 213 million, and that shows the efforts of the company during the pandemic and the things that we are bringing to the insight. EBIT with a reduction of 4 percentage points year-on-year, again because of the timely depreciation and net income as an automation goes down year-on-year, but shows a 14% increase when we talk about the pandemic period alone. Now I'm going to go to Slide #12, in which we talk about our cash position and [indiscernible] and what we have been doing. That's just -- I mean, there is phones ringing. Okay. So here, we show quite robust liquidity and balance sheet, basically BRL 117 million that you can see -- I'm sorry, along with what we had in terms of net debt asset ratio, 0.4, very much in line with the third quarter. And here, we show that our leverage is completely under control. Showing that we have huge room to grow in our balance sheet. Just to reinforce here, we have been contacted the credit market. Recently, we had the issuance of BRL 600 million in debentures with a 5-year term, again showing that we are going to carry our cash. We are going to be conservative because we believe that this is a scenario that requires our attention. To you're right, we have a very simple exercise just for you to know our capacity to grow without expanding margin without doing anything. And we'll get to a number of 20,000 cars. And why is that important? Because everything we did as of the pandemic, we had 2 quarters to make readjustments, resume growth and then everything is ready now with a positive scenario, we are going to resume growth. And that balance sheet shows that we have room for that. Now we're going to go to Slide #13 where we have a quick update about ESG. I just would like to make a point that reflects the way we think in Movida. For us, ESG is connected to generation of value for the company in the long term. This area, because of that, is under Edmar, the CFO, myself, because we believe it is strategic. And here are some of the initiatives that we are taking into effect. We have trained more than 8,000 suppliers. Renato talked about Nissan Leaf. We are mapping climate risks according to the test for some climate-related financial disclosures. We have the Araguaia SOS project to really not only talk about actions, but actually engaging into actions. We have several initiatives in human capital, we expanded already our operation with the presence in the plus 50 years in terms of balancing our presence. So with -- in terms of human capital and I would like to go to Slide #14, which is an investment in social responsibility because we, in Movida, believes that besides everything that we do, we have to have an active role in society, together with companies that share our mindset. And here, we have the system, [Foreign Language]. This is a product that wants to revitalize the downtown São Paulo giving access to housing and urban mobility. And once again, we are contributing to them. Well, not to forget anyone, it's [indiscernible], want to thank everyone working on behalf of this project. Again, to really make a difference in society. Well, all that said, I'm going to turn back to Renato once again, and he's going to talk about our October numbers.

Thank you, Edmar. Well, as Edmar mentioned, just to talk about ESG projects. They are the ones that add value to us. So we are going to have you also the car rental too, the audiences that we are focusing on. All that to generate value. To talk about October, I think this is an important landmark. We have various structural plans that we started back there in '18, '19 and for '20 as well. So we have been following the plans in 2020, but we are also taking into consideration the impact of the pandemic. With that, we are going into the fourth quarter, now with less pandemic effect resuming growth. So going back to our market with a strong demand and as well prepared or even better than planned. So everything that Edmar mentioned in terms of a robust cash flow, we have no more bottlenecks in terms of performance, you see our room for leverage EBITDA, we are stronger than last year. So the gain of EBITDA margin also enables us to grow faster the company's cash generation that always enabled us to grow close to 20%. So we see a very positive scenario. And on Slide 15, you have a preview of October, not audited numbers so far just to show you clearly how we see the market today. So in the Rent-a-Car, you see the month-by-month trend. You see growth 20% in October higher than the average third quarter. So we see -- we show an acceleration of demand with growth without discounts with new sales. And when we get in fleet management, the revenue growing by 5%, new contracts, as we mentioned before, and we have the Movida brand-new car, the Zero Kilometer that is accounted for as of October in this business line. We are going to talk about this project further on, but it will affect the fleet management line so far. And Seminovos, as we said, record numbers. The average ticket has an impact on our revenues and gross margins increasingly better. And we give you an overview of depreciation as Edmar mentioned, our numbers are better-than-expected in the pandemic. To date, we do not see signs of a second wave although we are prepared for that. And we are reevaluating our depreciation with significant drop in October, but we are going to continue to monitor that as we move along. You see that we already have BRL 7 million of depreciation as of October. So now let's go to the next slide, Slide 16, talking about the operational highlights for October. As we had record revenues in the rental car business, we had record occupancy, 86%. Number of daily rates going up, fleets going up. Average daily rate growing by 10% already without the pandemic discounts and pre pandemic discounts. Still, we have some to capture retroactively and we have high season in front of us. Fleet management, growth of fleet number, number of daily rates also growing proportionally. So this is a business that continues to grow. And in the Seminovos, again a record in average ticket, the evolution continues to start. So just as a reminder, we have new digital channels for Seminovos, e-commerce delivery, wholesale apps, to really encourage people to go to these channels, we have financial incentives. Now we are gaining scale and we no longer need financial incentives, so the prices are going back to normal which enables us to recover our gross margin. Ladies and gentlemen, please stay on hold. Sorry going on, the line dropped, but I'm in another one. So Seminovos evolving after a ticket. And now the overview is completely different of what it was like 3 months ago. We are back to plan, we're very much encouraged and very much prepared for higher growth and margin expansion. So this is our scenario for further on. Why are we so confident? So let's go to Slide #17. Talking about the avenues of growth that we have for our industry. And here in Movida, we are very well positioned for that. So during the pandemic, we invested to build more platforms. And now what is the scenario like? We see our capacity of penetration of timely rentals for local tourism because people cannot go abroad, but also urban movements. In addition, a monthly product like Mensal Flex continue very high and also because of an increase of unemployment, we have more demand for [indiscernible] transportation. We continue with our focus not only on individuals, that is our highest vocation since the beginning, individuals, digital presence. This is where we gain market share, but also the corporate segment that starts to show recovery with more car trips every month. We continue focus to expand our product line with several recent launches. The most recent launch was Movida Cargo. With this product, we are occupying a promising space in e-commerce. E-commerce is growing more than 20% a year. It's a huge market, lots of unemployed people are now working as delivery drivers. We have a partnership with magazine luiza that broaden our possibilities and gave more possibilities with small deliveries owners. We have already partnerships with most of the retailers. And very soon, we are going to have news in this business line, another market for the rental car business with huge potential for growth. Also the Movida Zero Kilometer, the brand-new cars, we launched that last year, but that became an e-commerce platform. It gained maturity, of course commercially because it has more scale, but also operationally. Today, we are the only player in the market in which you can do everything on e-commerce with ready to deliver. And that really improves our capacity to grow in this business. And we continue to focus on small and medium groups. We have a digital sale to enhance our services in fleet management and outsourcing. This was launched for the Rent-a-Car business a few months ago and now for fleet management, and it's already performing very well. In the short term, it's showing maturity and enjoying everything that we learned from the Rent-a-Car area. We are going to grow more and more on this business line with above-average margins and huge potential to grow. In Seminovos, as I said, we have e-commerce delivery and that mix of the wholesale retail sales, which is a very good channel to us. So today, our Seminovos operation is consolidated, mature, proved resilient in the toughest time of the pandemic, showing that our team is ready to cope with new moments and we are ready. The maturation of initiatives came to an end. Now it's time to expansion to grow prices, to grow profitability and to be at a new pace of growth. Now I will invite you to turn to Slide #18, just for us to close this presentation. So the foundation of everything, we have the market with all foundations conserved, heated demand, healthy competition. We see huge space for growth as I mentioned on the previous slide. Going to the towers to support growth, we have operations focused on our customers and constant evolution of our indicators. As you can see on this slide, in the Rent-a-Car, we have occupancy rate second to none in the market, never tested before. Why? Because of the web checking that we launched, everybody knows to web checking with flights. You don't have to go to the counter, it's easier for you to board. In the Rent-a-Car store of Movida today, you can do that and you optimize process, you reduce costs. And you improve by far the customer experience. And this is going to be even driven in terms of gains of margin and scale as we pick up growth. We are connecting the backup line. You may go on. I'm sorry. Now we had a power off in our building. But anyway, fleet management, we can see more and more clients trying to work with us. And here, we want to gain scale, especially with the new products that we talked about. And in the Seminovos, retail has been our focus and the wholesale retail mix with very good margin. We see a positive evolution in our stores, and we want to grow this operation because we believe that today, we have a much greater capacity to sell than before. In a nutshell, we are ready operationally in terms of balance sheet to enjoy solid growth. In October, from July to October, we already added thousands of cars, and the idea is to be prepared to enjoy even more gains of scale. Putting together all the fillers, we are going to generate further value for our company. And we are also according to the Mirage Business magazine, one of the best companies in Brazil. And in terms of innovation, the best Rent-a-Car company. And I have the honor of being elected executive of the -- by Fabio's Magazine. But it is our team that has driven our success bringing recognition from the market. Again, the idea is every day to do more and better. I thank you for your support. Thank you, investors, employees, clients, and creditors. Without you, we wouldn't be able to go through difficult times as fast as we managed to do. Today, we are even more confident that we are ready to grow with profitability. We are very well positioned with the OEMs, long-term relationship, we are going back to buy. We were on the first. We have almost all cars for next year's guarantees with good terms. So together, we are going to rewrite benchmarks of efficiency and value generation in the sector. Life is to be -- Movida is to be moved with confidence and certainty. And we are ready for this new cycle of growth. Okay. Now we are open for your questions. Let's start the Q&A session.

[Operator Instructions] Our first question comes from Victor Mizusaki, Bradesco BBI.

Hello. Congratulations on your results. I have 2 questions. The first, Edmar, about the slide that you talked about depreciation. And you talked about the cushion that you have in your balance sheet. And at the same time, some of your expectations to drop depreciation levels. So I would like to understand if it makes sense as to expect for 2021 depreciation to turn into Seminovos margin? And with regard to that in the results of the first quarter, you had some of the money that was used as a cushion that has not been used yet. And my second question, was -- is that true? And my second question is about the contracts. Renato did talk a bit more about an improve in your average ticket. In October, could you give us a breakdown what is better admin expenses and what is a better contract?

Well, let me start, Victor. This is Edmar speaking. I'll first talk about depreciation. Well, just going back in time, remember, we had a very cautious view about what could happen with the pandemic. And then we decided to take that move in the first quarter. And then a simultaneous decision of increasing depreciation for that time. Yes, you are right in terms of depreciation. Now in the fourth quarter, we are confident that the scenario has improved, which gives us the comfort as October numbers show to reduce depreciation on a monthly basis because the scenario is better. Second, also regarding the impairment, you were right. That was the use -- we used part of the impairment. So in our discussions with the auditors in the end of the year, we are going to see how we are going to address that. But all that added, we have a very positive visibility to the costs that are in our fleet and that will be sold in '21 and '22. They already have prices with very appealing numbers, thinking of the margins that we are having in the Seminovos markets. Again, this is a snapshot of today. Things can change tomorrow. But in the short term, we are comforted to first say that depreciation is going to go down. And yes, you're right. For '21 and '22, there is a positive sign in terms of margins for the Seminovos. Now I turn over to Renato.

Thanks for your question, Victor. Talking about the depreciation, increase of prices for October. The impact here is reduction of discounts and back to normal. It's not an impact of mix for October. This is very small because monthly contracts grew a lot and they continue to grow. So the mix, if you think of daily rate, is even worse than last year. So it's much more an improve in our prices enabling us to grow our margins. That's it.

Our next question comes from Rogério Araújo from UBS.

Renato, Edmar, Camila. I have 2 questions. One costs. We saw a strong reduction this quarter, headcount, advertising, real estate, admin expenses as a whole. And even with the drop of revenues, we see an increase in margins. I would like to know what you consider is recurrent, what we should expect from now on and what's not? And for October, it seems that revenue by cars are back to normal. Is that -- does that mean that the margin is going to be even greater given the fact that if you carry the cost reduction with a better revenue, then you are going to see much better margins? So this is my first question.

Rogério, Edmar here. First, with regard to cost reductions, yes, you talked about headcount, for instance. We did have a decrease in March and April, and this is going to be fully captured a long time. Other discretionary expenses, we also had reduction, advertising, marketing, that were transferred and taken over by information technology. Of course, as the company grows, this is going to increase, but not to past levels. Real estate, we have an important decrease in the second, third quarter. We are talking about that. We are renegotiating our property rental fees and we are going to have long term gains. So cost reduction is real to say. A part of it is going to be captured by margin. So you are right. Revenues are back. Margins are going to expand in the fourth quarter. We have no questions about that. We do see these things happen. And you just have to look at the third quarter. Even without the full revenue back compared to last year, we already had an extension of margin. That was quite substantial. So that's why we are confident and the idea is that to pick up growth and -- because the company is operating over new bases.

Great Edmar. And my second question is a follow-on Victor's question about Seminovos. We would have seen extremely strong result if Seminovos had followed their other segments. You performed very well with EBIT margin, huge expansion. I would like to understand your expectation and also a bit more color on the past quarters, particularly this one. Without the impairment effect, you have a negative margin for Seminovos of 1.6%. We understand that there was lower gains of scale because you sold more cars in the second quarter and less in the third quarter compared to the competition. But still the difference of margin was here. And now with that increased depreciation, we are a bit confused. So if you could give us a bit more color about what happened especially compared to the other players, why you are selling cars with a lower margin and the increase in depreciation, while the others are decreasing it? So I would like to know your rationale, what you're taking into consideration? What is your mindset, just to explain what it is like for us to have some comfort about margins and depreciation from now on?

Thanks for your question, Rogério. Just giving you an overview of Seminovos. Indeed, the prices are going up. And if we had the same volumes, we would have 0 margins even without the impairment. In the second quarter, the market was not what it is today, the prices were very different. If you take of our average price of October and you compare to the second quarter, you're going to see a 20% difference. So the scenario is very different in terms of prices today and the second quarter. Our strategy was to continue selling even with additional discounts on the wholesale and digital channels. When we had the retail digital channel, we have incentives because it was a new channel, people didn't have the habit of buying a car completely online. So with provided discounts, and we prepared the company for the future. An increase in depreciation now in the third quarter is very much in line with the vision that we had in the past. Looking at the world and thinking, are we going to have a second wave or not. It's hard to tell if we are going to have a second wave, if it's going to be in the first quarter of '21, second quarter of '21. That's why we've increased depreciation. The numbers we see, sales prices are quite comfortable and show us opportunities to calibrate depression and covered sales. Depreciation, you know, if the market's better than expected, we are going to have better margin. So if you look back, we have discounts to ensure execution. Now we are mature, back to normal, and we are going to adjust things as we see things happening with a more conservative balance sheet to support our growth in Seminovos as well. Was it clear?

Our next question comes from [indiscernible] from Crédit Suisse.

Renato, Edmar. I have 2 questions. First, if you could give a bit more color on Movida Zero Kilometers program? And the second, about your fleet because we see a good market for the sale of used cars, but OEMs are taking a bit more time to deliver cars? So in the first quarter of 2021, I suppose that you might have some difficulties to receive the cars. Are you planning to hold sales until you receive the new cars? Or are you thinking of seizing -- enjoying the demand?

Well, thank you. First, Zero Kilometer, the brand-new cars, performing very well, I think this is something that is showing very strong growth. Our platform is very well put together. We have very high NPS and growth is based on us buying more cars and making them available to sell. So supply is proportional to -- demand is going to be proportional to supply. The second question about fleet. Our strategy is going to be basically the same as every year. In the fourth quarter, we stopped selling a bit more. In October, we already have a slightly lower volume, and this is to be kept because, again, we want to provide services to those clients that will need their cars during the high season. It's a huge demand. We have many loyal clients. We want to expand our customer base. So the core now is to grow fleet. We already have our plans until the end of the year. We want perhaps to go further than what we expected, but we already have a guarantee in terms of volumes to meet our plans. Because we moved faster, we had an additional discount and a very strong alliance to guarantee that we are going to have the cost for the growth that we need. The market is competitive and we are negotiating. We are prepared for strong growth inside in the market, and we have a purchase plan that ensures us a strong growth. Could it be even greater? Oh yes, and that's why we are negotiating and taking up opportunities.

[Operator Instructions] Our next question comes from the webcast, [indiscernible] Capital.

What is the company's position with regard to the merger, Localiza, Unidas? Are you challenging Kaji? Do you see opportunities with this merger?

Thanks for your question. Well, margins are things that happen in any economy or industry. It does not change our plans. They continue the same, focus on an execution, differentiated positioning, focus on individuals and digital. So our business plan continues to be the same. There are some positive factors. The industry starts to have 2 players, which is important for everyone. But we gained, I think, strength in the market. And for them, they gain scale. So I think it's just life as usual. Nothing changes to us.

Our next question comes from [indiscernible] from Citibank.

It's [indiscernible]. I would just like to ask a quick question. I would like to know how you see Movida's change of mix if we are to have a mass vaccination or going to use more public transportation, they are going to travel less. What would happen if we had a COVID vaccine, a mass vaccination and how would that affect your business?

Well, mass vaccination, we have 3 alternatives. We can have the herd immunization or we have final treatment, it is a very positive scenario for our company. Remember, what we have the most margins are leisure trips that are still very low. Air companies are not operating as they were in the past, and corporate traveling. And when you talk about urban mobility, people going back to public transportation, this is penetration that we have very little. So people are thinking of the alternative of car transportation. Sometimes it's cheaper than bus. If you have 4 people sharing a car, it is less expensive than taking the bus. And you are more efficient, you have more time to work and et cetera. So our market is even better in the case of recovery of the economy and mass vaccination. Remember in fleet management, many companies reduce their travels. So corporate, if it grows, the economy is going to grow, we are going to resume growth, that helps us with demand, pressuring prices up and consequently generating more profitability. So a growth, we already have the demand, but we can have more demand and then we have better prices. That's what we see.

Okay. Great. Just out of curiosity. Uber. Do you see any change in that segment?

Uber continues to be very strong. It was strong before the pandemic, it continues to be strong. The price now is much better because of the total demand that we have. So the price is higher than the pre-pandemic, but it continues to be a strong segment. The app market, as a whole, does not grow as much, but the penetration of rental in the up market grows. So for our industry because we are underpenetrated, we'll continue to see growth in this market niche throughout the year. Again, remember, we have more focus on digital and individuals.

Our next question comes from [indiscernible] Web Server.

What is your strategy to order new cars with the OEMs?

Thanks for the question, [Danielle]. We really started very early. We already closed all our agreements for 2020. And with many OEMs for 2021, ensuring growth, we still have some discussions, especially with additional opportunities if the market continues to respond above our expectations. So a very positive bias, and no, I would say, important risks to Movida right now.

Our next question comes from Alejandro.

Thanks for the presentation. About depreciation by car. Prospects seem to be better. So why are you changing? How about the competition? Did they keep this depreciation the same?

This is Edmar answering your question, Alejandro. Alejandro, thanks for your question. We are going to reinforce what we believe in. We brought higher depreciation so far because we are being cautious vis-à-vis the scenario. As the scenario shows to be more positive as it show in the fourth quarter, we are reducing depreciation. And this is what we believe in. If month after month that things are better, the trend is going to continue. When you look further on, '21, '22, everything that we did gives us the comfort to face any scenario, be it negative or positive.

[Operator Instructions] There are no further questions. So therefore, we are going to turn the call to the company management for the final remarks. You may go on.

Once again, I would like to thank you very much for attending the call and my final takeaway message, we are according to plans. Movida has proven to be very strong in execution, in line with our plans. We had the impact of the pandemic in 2 quarters, but now we are back to normal. Fourth quarter is going to be very strong, '21, very strong. We are very optimistic and encouraged with what we have to deliver in the coming months and years. We have a long-term commitment here to generate value in line with our Board and shareholders always seeking for opportunities to grow. We have space in our balance sheet. We are able to provide for growth for next year, gaining margins, improving leverage, generating our own cash and having the support for additional opportunities. We are going through our best times. Thank you again for your trust, support. We've been through the worst and now it is go back to growth, taking care of our clients and our people which makes us really encouraged for what is to come. Thank you very much. Have an excellent day, an excellent week. And remember, life is to be Movida with housing.

Movida's conference call is now closed. We thank you very much for your attendance and wish you a very good afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]