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

Good morning, and welcome to Movida's conference call to discuss the earnings regarding the second quarter 2021. Today with us are Renato Franklin, CEO; and Edmar Neto, CFO and IR Officer. [Operator Instructions] Before moving on, we would like to let you know that any statements made during this conference call about the company's business prospects, projections, operating and financial goals are based on the beliefs and assumptions of Movida's management and rely on information currently available for 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 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 are going to turn the call to Mr. Renato Franklin. Please, Mr. Franklin, you may start.

Thanks, Priscilla. Good morning, everyone. Welcome to the conference call of Movida to talk about the second quarter 2021. Thanks all for attending. I will invite you to go to our presentation to talk about the highlights of the second quarter. Here, we are bringing a presentation that's slightly different in format because our main highlights are our results, record in all indicators that we are going to be showing you. And we are going to how Movida really changed levels, and it is now starting a new cycle. So we are going to start on Page 3 to talk about results. First, the second quarter is a quarter of lower demand in terms of seasonality for Movida when you talk about daily Rent-a-Car. And we also had the lockdown for the second wave in April, May and June. Even with this effect that we are not highlighting here, the results are very good and make us very excited about what is to come. We improved efficiency margins. We're able to deliver lots of growth. And growth, when we're talking about doing away with margin, you are focusing on a much bigger company than it is today with a much greater return. And we are going to deliver a second half much better than the first half of the year. Our objective is continuous evolution quarter-on-quarter. So indicators, total fleet, 134,000 cars, 12,000 cars plus, that is 10% growth in 1 quarter, organic, relevant, important growth for the company. Total net revenue is BRL 1.2 billion. EBITDA, BRL 388 million, much higher than the second quarter '20. That was much affected by the pandemic. But even compared to the pre-pandemic times, very important growth for the company. Net income of BRL 174 million, a very strong growth and completely different level of net income. We're talking about a fourfold increase of the second quarter '20. The whole of 2019, so we're going to talk more about that later on, especially with the combination of CS. Return on equity in invested company, 19.4%. And if you annualized the second quarter, and because of this important evolution, we are talking about a ROIC of 14%. Of course, there is an effect of the Seminovos, which is [ passenger ], but we still have lots to do to offset the Seminovos market. Cash, BRL 3.4 billion. And we're talking about the maturity of the company, evolution, better teams, people, the outlook of the combination of CS also make a difference. And yesterday, a new rating for the company was approved to AA plus, which is true of the work of Movida's team. And I thank a lot your trust, your belief, the support of our shareholders that approved the combined business with CS, 100% approval. We're very happy that everybody understood, just like us, the potential of this combined business. The new rating will certainly bring an opportunity for us to decrease the cost of capital for the future and continue to generate value. On the right, we sow pro forma numbers with CS. As of the next quarter, CS numbers are going to be in our Fleet Management business. And you are going to see the combined business as is. We're showing here pro forma. Again, a completely different level, 160,000 cars. Total net revenue, BRL 1.4 billion. EBITDA, almost BRL 500 million. The Rent-a-Car business was affected by the pandemic in the second quarter, but the third quarter is going to be very strong. July is much better, 200% growth year-on-year. Annualized numbers of net income of BRL 198 million. That brand makes the company improve its margin, reduce gains in scale -- reduce costs because of gains of scale. And again, ROE/ROIC, really, it is a huge increase. And then you say, "Well, Renato, but Seminovos are going to take a little longer to recover and interest rates are going up." Yes, but we have contracted growth in all of our levels. And the Seminovos crisis has a different mix with the digital growing and more retail. So I can assure we are in a new level, where we -- with much higher ROE/ROIC and cash of BRL 3.6 billion. So strong values, liquidity and prepared for a new cycle of growth. It is, as I talked about, as if we had just closed a new IPO. And we are prepared for a new cycle of profitability. Slide 4, also consolidated results just to show this new level. You see the second quarter '21, then you have the levels that we compare with year-to-date and annualized. See, the second quarter '21, we have BRL 1.4 billion in revenues, BRL 5.4 billion annualized. EBITDA, BRL 1.8 billion. In BRL 1.8 billion, you're talking about half EBITDA already is coming from Fleet Management, which is where the company is growing the most, with more predictability. So EBITDA, that is contracted with loads of predictability, which helps us to plan, to grow and in our business plan. EBIT, even larger growth. If you get year-to-date with annualized numbers, you're talking about 70% growth. And then because -- that's why we are getting to this new level of company. We are going to have very important growth for Seminovos. And remember, all the assets were bought at the prices before the inflation. And for new cars, we are making very conservative estimates, but we believe that the market is going to stabilize for the next year or more. And Fleet Management will generate positive margins until we can stabilize the whole fleet, which is very important. Now we go to Slide 5. This is the same slide that we used on the roadshow with shareholders that we're interested. We talked about the combination of CS. We held lots of meetings to try and explain the CS business. CS is a Fleet Management for light vehicles in companies that have public or private ownership. So we tried to explain what it was just to reinforce the transparency of our company that has good governance and really follow the good practices of Simpar that led the minority shareholders to choose. So what is CS? First, it's one of the -- sixth largest fleet management companies in Brazil. If you think of contracted growth, the pace of growth is 42% growth, much higher than the market average. So it is a company that is already big. Grows very fast. Is a leader in the market in which it operates, where know-how and experience helps the company price well, that's why it has a very high success rate. When you don't know the business and you're going to price this service, you don't have competitive prices. CS has the know-how, the structure to provide services according to all the bid requirements and a highest level of governance. It is known for its good practices. This is a benchmark, 1 of the 4 chosen by the United Nations with good governance practice. And we want to replicate that to every one of our company to use. And then operation of fleet, 18,000 cars. You see 24,000 in total fleet because they had a backlog of 9,000 cars. Now we already have 5,000 ready to be implemented. So we are really seeing an operational fleet that is going to be very important for us to continue to grow. BRL 452 million in revenues. Lots of contracts at the different levels of cities, states, federal government, different sectors, with an EBIT of 43%, 14% of ROIC and 91% tax renewal rate. In terms of EBIT and ROIC, the highest in the market. So in terms of risk, depreciation and residual amount, it is much more similar to Vamos than Movida. So again, very high predictability that will contribute to Movida's new cycle of growth. Now we are going to Slide #6 to show the fleet evolution. So if you take a snapshot, instead of looking at all the cars, take a look, before the pandemic, 109,000 cars. Then 22% growth since 2019. Even with a challenging scenario, our strategy was different from the competitors. We sold cars fast and purchased them faster. With that, we were able to receive cars. In the second quarter, we even bought more than the first quarter. And you see organic growth of 22%. And remember that now, we have CS Frotas. When you put organic and CS Frotas, you were talking about 36,000 cars over the next quarter. 45% over the pre-pandemic time, very relevant. Take a look at Fleet Management. Take a look at the amount of cars. And people question the potential of growth. But we doubled our GTF. Today, you're talking about 80,000 cars in our total Fleet Management that are still cars to be implemented. That will bring revenues for the coming months, again, contributing to the company's predictability. So 160,000 cars, BRL 1.8 billion in EBITDA, that's really very strong growth guaranteed for the future. Now Edmar is going to talk about our different business units.

Hello, everyone. Thanks, Renato, This is Edmar speaking. I'm going to start with Slide #7 to talk about the Rent-a-Car business. As Renato mentioned, we started the Rent-a-Car business in April weaker than expected. We had some preventive measures to prepare second wave. We started that in February. And the good news is that along the quarter, we saw recovery really showing very strong. And in June, we got to occupancy levels above 80%. And that reflects on the Rent-a-Car revenues and EBITDA. So it grows well year-on-year because the 2020 was the worst quarter in the pandemic. And intra-quarter, also it shows very important growth. If you take a look at all indicators in the last 12 months, revenue BRL 1.3 billion, EBITDA about BRL 600 million and EBIT BRL 380 million, all records with a very important recovery of margin. When you take a look at the quarter in EBIT, we got to 30%. So preparing the third quarter to be a stellar quarter in terms of Rent-a-Car business. Net income growing. We are seeing a favorable market now. Daily rates, almost BRL 19 million. And the ex depreciation costs, in line with other years. Remember, maintenance costs consolidated for the company have been stable in recent quarters. When you do the math per car, which is a fruit of all the efforts that we have taken to face with inflation, which is true when you talk about the car market. But we really tightened our controls. We have a whole plan that our -- Flavio is leading and indicators are very positive in terms of controls. On the next page, I'll talk about the Fleet Management business and the combination that led to the company to 80,000 cars. So net revenue, BRL 283 million, growth of 127% and considering CS here as well. EBITDA, BRL 200 million, again, considering CS. It would be a record without CS, but with CS, it is a double record, so to speak. And as Renato mentioned, this is the turnaround for the company's EBITDA was Fleet Management being greater than Rent-a-Car business, which will give us more predictability and will make our decisions for growth a bit easier. EBIT, 52% margin. And again, we go back to the first quarter and the majority of brand new cars. We recovered margin in the quarter, showing that the product is maturing and growing strongly. Gross revenue, very strong at BRL 1,300 in the monthly revenues, we can even continue to grow the number of daily rents of 4.6 million of record in the quarter. Now I'm going to talk about the Seminovos business, the used car. Here, you see we have a drop in revenues, which is substantially smaller than the drop in volume because average prices went up. More important than that, gross margin, with growth of 24%. So in the race that started 2 years ago or even before to bring Seminovos to the level of the competition, we got there. 24% of gross margin with an average ticket of BRL 54,500. We sold 12,000-plus cars. EBITDA, BRL 120 million, an important increase compared to last year. Margin of 18%, very much in line again with the market. And EBIT, 16%, a new record. And here, we show on the slide, the impact of CS that is more relevant in the Rent-a-Car business, but they're also contributors here. Renato is going to talk about synergies further. I'm going to the next slide, on Slide #10 now, to talk about cash and our debt schedule. Last quarter, we mentioned that the issuance of bonds would be transformational in terms of the company capital structure, and results [ is shown ]. We closed the quarter with BRL 3.2 billion, BRL 3.6 billion, if we include CS. And we don't have any pressure in terms of refinancing, our cash covers in the next 4 years. And that again makes the company change levels. In the first 6 months of the year, we already paid almost BRL 2 billion, BRL 1.6 billion prepaid. And we see a high likelihood of improving all credit metrics, especially when we work with the amortization profile. Here on the slide, we also show the annualized EBITDA of BRL 1.8 billion, which is twofold the EBITDA we showed 6 months ago. Of course, we have CS here. But once again, we are showing that we doubled the company in a very short period of time. And again, that helps us make decisions in terms of growth in a very disciplined manner. We are really transforming this timely benefit of Seminovos into cars. The company is growing, and it's a company that most grows in the industry. On the next slide, here, we have a highlight on our credit profile. The combination with CS, as I mentioned, brings more EBITDA in Fleet Management, more predictability of revenues, more predictability of EBITDA and higher resilience for the company, that already showed to be very resilient. Also, the combined leverage goes down because part of the portfolio of the transaction is that CS is going to have leverage of 2.5x, which is going to improve our combined leverage by 0.1 or 0.2. And we already see a benefit that was an important network movement based on everything that we did, combining the business with CS. CS has BRL 600 million in debt. One of the synergies is to bring the cost of debt of CS to Movida's cost of debt. We are talking about [ 155 ] annual bps of benefit were not in the valuation, but that we are going to go after as of now. With that, now I'm going to turn to Renato to talk about the synergies between Movida and CS.

Okay. Thanks, Edmar. I'm going to Page 12 to talk about synergies that were mapped when we started discussing the transaction. The main synergies is the used car platform. CS today does not have a structure to sell its used cars. It sells cars in batches, wholesale. So it is the middleman that will make the sale. The Movida sales structure poses 2 opportunities. One, it's already mapped to BRL 20 million, which is to sell part of the cars in retail. 30% of the cars have the profile of retail, so they can be sold in this business. And we are talking about 10% gains, but they can be even higher because they were in a wholesale batch. With the 10%, we have BRL 20 million just with the sale in retail of CS car sales. In addition, we have our wholesale structure that will probably some gains. We don't know if it's 5% or 10%, but there is additional gain. So we are including BRL 20 million, but we believe we can get to BRL 40 million, BRL 50 million a year if we perform well. Implementation and maintenance, as Edmar mentioned, we have lots of maintenance work. When we put together the 2 business units, we should capture synergies, of course, better contracts and there are several opportunities here. We were able to map about BRL 15 million with reductions in maintenance costs a year. Flexibility in fleet allocation. Being the same company, we are more flexible to have the right car in the right area. And in SG&A not really high volume of savings because we are going to keep the companies independent in terms of teams. We believe it's very important to have dedicated teams following governance, compliance and teams that understand the complexity of each business. fleet management in the CS world is different than fleet management in the Movida world. So it's very important to keep that altogether. So putting all this together, we have a minimum of BRL 40 million in synergies to be added to that BRL 800 million that we mentioned before. Now Slide 13. What is to come? In addition to CS and the company going to a next level, we try to bring you some opportunities that we have in the different business lines. So to give you a bit of color. Rent-a-Car, what are the 3 main leverages of Rent-a-Car: new stores, physical expansion and also expansion of existing stores. You see that we had 34 refurbishments and expansions in addition to new stores, so 28 altogether, to be added to the Rent-a-Car structure, 27,000 square meters. We are talking about 2,700 cars that will fit in this expanded space. Occupancy, 80%. We are above that. But 80%, you're talking about 13,500 cars with the installed capacity. So 20% growth. And we are going to have our plan of 100 stores and we are going to add loads of capacity. Just remember that in the Rent-a-Car, we want to double the business. And 2 other important levers. The new fleet mix that Movida has always been very strong on, individuals and digital. These are the ones that rent SUVs. It's different from what it was in the past for business trips. You go to the airport, you get a small car to go have a meeting and come back. Now people rent cars for their families, they rent cars for a longer period of time, no longer only in -- on the weekend. Home office brought more flexibility. And large cars, the SUV has demands. OEMs want to sell, we want to buy. And they have ticket changes, more average ticket equals more dilution, equals better margins. So for you to sell a car to BRL 150,000 or BRL 50,000, the cost of sales is the same. But obviously, a car that costs BRL 150,000 brings you better margins. And prices, we are increasing prices. We already saw an increase of prices of 15% to 20%, and you are going to see prices going up. And the competition, well, competition is really focusing each one of the segments. So we don't see much of a price war. And we are using the tools that we use for individuals for other segments, and we have new possibility of dynamic pricing for the whole Rent-a-Car business and not only for individuals, which will bring gains for this business. So you will see margins that will be better in the third quarter and even better in the short term. Fleet Management, 3 avenues of growth. Of course, quarters continues to grow. But with the 3: the brand new cars, this is growing I told you before; digital channels, especially small and medium businesses; and the public sector, a new avenue because of CS Brazil. All these 3 avenues delivered better margins, better ROIC than our portfolio. Fleet Management margins, we grow and we have gained scale, but it's also growth because we are growing in market niches that give us better return. And I'll show you our plan, our plan is to triple our Fleet Management business. Seminovos or used car, also 3 avenues of growth. Store expansion, more than 53 stores that we are to open in the used car business. We are also changing showrooms, refurbishing them. And here, there's an important point. In addition to the growth of stores and the growth of the digital channel, our online stores are even more relevant. We are growing revenues more than we are growing in the sale of cars. So we have a better ticket. We have a better mix. The average if ticket is higher. Revenue is growing almost 1.5x the volume of sales. So that is dilution, better margin, together with opportunities of distribution and pricing in used car business, which will offset the gross margin because of the brand new cars and the inflation. So the gross margin we are going to deliver is not we delivered before the pandemic, lots of expansion. And EBITDA margin is going to be significantly positive because of the evolution that we are delivering. In the bottom, I show a huge opportunity that really optimizes our business. Asset turnover, we are going to be faster in having incoming and outgoing cars. And with that, we have better indicators. So this will help us to have better return on invested capital and better return on equities. And dilution is going to be a must. It must [ be said ] that all the time, it took some time to calculate that in our depreciation. But now when we look forward, this is an important component. Remember, in the IPO, Fleet Management was 10% of market. We said that was going to be 6%. The market thought it was huge, too much, it was great. Now we are at 6%. So the scenario is very positive. And I close now with Slide 14, that we showed on Simpar Day. We showed a fleet of 118,000 cars. And our goal is to get to 260,000 to 340,000 until 2025. Because execution is being better than expected and because we had the combined -- combination with CS, we are already with 160,000 cars. So we are really anticipating stages of growth and productivity. When we talked about our target for 2025, today we see it closer. We are advancing our business plan because we are very optimistic with what we see. Again, the foundations continue very positive of our business, in the Rent-a-Car, in Fleet Management, have much contributed to our company's results and we think that they are going to continue to be so. And in the third quarter, you're going to already see an evolution, the Rent-a-Car even better than the second quarter and Fleet Management delivering better results. So basically, this is what we had to show you, and we are now opening for any questions that you might have. Thank you very much once again.

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

Congratulations on your results. I have 2 questions. The first is synergies for CS Frotas, the BRL 40 million. Could you give us a guidance in terms of speed to capture the synergies? And the second question, with regards to the Rent-a-Car EBITDA, you talked about better numbers for the third quarter, especially the month of July. Could you give us some granularity in the monthly results of what your EBITDA margin was in July?

Thanks for your questions. Well, first, synergies. We talked about up to 12 months. So some will take a bit longer, especially because we are opening CS units to sell cars in retail, et cetera, maintenance is going to be a bit faster. I think every quarter, you're already going to start seeing something. So it's going to be gradual up to 12 months to be fully enjoyed in our results. Rent-a-Car, we've talked about disclosing or not disclosing the information. We thought it was too much of a [ specific ] information to really disclose. But I can say that it was quite important compared the previous months. And again, because we changed the mix and the impact of the change of monthly rates to daily rates was started in June. So July is better than June, that was better than May and better than April. So we are really expecting a very good level of the Rent-a-Car business margins that will contribute for the company's consolidated results. And again, prices going up, and that will continue along the third and fourth quarters. We believe there is huge demand in the market. The competition's a bit lighter. We see competitors are more focused on their own market niches. So we are considering depreciation, interest rates, average ticket, and we are trying to improve the company's profitability.

Victor, this is Edmar speaking. In terms of margin, just to understand seasonality, the third quarter is going to be much closer to the first quarter than the second quarter because of everything that Renato mentioned. So there is an increase of margins from 1 quarter to the other.

Okay. And one more question about CS Frotas. You mentioned the difference between operational fleet. At the end of the period, you talked about 6,000 cars. The 6,000 cars, are they already included in CS' balance sheet? And if so, the BRL 24 million of net income in the second quarter, we would roughly be talking about growth of more than 30% already contracted.

Victor, this is Edmar speaking. It is already included in the balance sheet. We have 4,000 cars that are to be implemented in the coming weeks. So yes, we have an increased contracted amount, but that will depend on the speed of implementation, yes. Remember that, little by little, we're going to start to show in the net income. Again, growth has a cost in our business, but we are not working for the quarter, we are growing for the long term. So the company next year is going to have -- to be much better than it is this year. This is what we are building.

Our next question comes from Regis Cardoso from Credit Suisse.

Congratulations on your results. I have some specific questions on results, but I'm going to change my objective. Your presentation is clearly very excited about this new level of the company. I'll try to provoke you a little and I would like to hear from you. I think these changes in levels, margins, returns tell the market that the sector has some inventory of profit because of these new prices. Movida capped depreciation for a long time, so it has an even higher inventory of this profit to come. On the other hand, there is a concern for the profitability for the next cycle because we are still in a context where there is a restriction of cars. And therefore, you would probably have lower discounts and, therefore, you would reduce your advantage, so to speak, vis-a-vis the market. And then there is also a market that is very strong, but Fleet Management even surprise me. And it raises a suspicion in the market, if this is not already the positive effect of the brand new car in the market. So it's a more generic question, but I would like to hear your response to that. That this is a short-term effect that can last '21, '22 and maybe the beginning of '23, but not more than that.

Well, Regis, thanks for your questions, plural. it is good for us to give you more color about the whole outlook. First, when we talk about prices, the discounts are not changing. We are buying at the same commercial terms. And therefore, in the long term, we are not going to have a change in margin. And I'm talking about the structure of the business. So we are confident we are almost closed with all OEMs for next year. We are growing well with very good terms for next year. The Seminovos, yes, there is the inflation of Seminovos and you get about 10 percentage points in Seminovos. That is true, and we are getting. Now it will take some and you have an -- it will take some time and you have an inventory of time. And yes, and when I have a depreciation that is higher, I'm delivering now less results today that I'm going to deliver in the future. So what market analysts say today and even OEMs, they say that it will take some time for the business to stabilize. So [ PB ] is going up to 1% to 1.5%, even 2%, which does not make sense. Cars are gaining prices every month, so this is going to stop. So what's the point? We are involving margins, enhancing retail and gaining scale and dilution that will offset those effects. Because if you say, "But in the future, you're going to lose those 10 basis points." Well, it's true, but we are going to improve other things. I thought that it would be next year that we are going to be back to normal. Now they're saying second half of '22, it can be normal even in '23. But if and when it is normalized until we consume all the inventory that is in balance sheet, it can take up to 3 years, especially when you're talking about Fleet Management. And that gives us time to grow. We are converting this interim gains into growth. Otherwise, it could be a much higher growth now. So what are we doing? We are building the company for the future based on those things. Because growing is expensive, you buy cars, you have the cash, you have the idleness of the rental car business. And with about 12,000 cars this quarter organic growth, you're talking about a very heavy business in terms of investments and margins. And so you are going to see a very similar margin and return on invested capital because of these initiatives. And when we talk about Fleet Management, Fleet Management is growing in all business lines. Corporate, the same level than before. And Seminovos is important, so we could grow more because we don't have enough cars. If we have more cars, we would be selling more, because of our digital efforts, because of our structure. So the normalization of OEMs will bring us more growth that will help in the dilution of our costs and the businesses are improving better margins. And lots of things. We have already the installed base, you have the systems. And the system, if you sell 15,000 cars or 100,000 cars, it is basically the same. So you are going to see a huge dilution for the future.

And Regis, this is Edmar. I would just like to add to what Renato said which is new cars coming to Movida. We are increasing the number. Every month is better than the previous month. In July, we are also doing very well. And that shows, as Renato mentioned, that despite all difficulties, despite all volatility, we are going to have a second quarter with more cars and, therefore, more growth and more opportunities. So we are very encouraged and excited as you mentioned.

Excellent. Congratulations on your results.

Thanks, Regis.

Our next question comes from Pedro Bruno from XP Investments.

I'd like to try and explore with you the demand in the Rent-a-Car business, a broader view. I think Renato already mentioned in the first answer about good demand, and also he talked a bit about the competitiveness of the market. It's very hard to compare results year-on-year because of the pandemic. But even quarter-on-quarter, we do see a drop in volume in the Rent-a-Car business. And then you were able to add a number of cars and the priority to the GTF. So what are you thinking in terms of strategy? Of course, I would like to hear about Fleet Management, but what I would like to more specifically try to understand is the demand of the Rent-a-Car business. Is it a matter of time? And it seems to be in the Seminovos markets and demand is not going to be a problem. How do you see demand for the future? Is there a repressed demand for the Rent-a-Car business that you are -- you think is going to show?

Thanks, Pedro. Okay. This is something that we have been saying. Our plan is to double the Rent-a-Car business. Why? Because demand is much higher than supply. Brazilian penetration is smaller than abroad. If you get by user or by recurrence, we are below in developed countries. And this is changing everywhere. There is a changing culture, a changing habit. So the Rent-a-Car and the shared car business is increasing. And this is true for us and for other services because the pay-per-use is growing in the world. I'll give you some examples, just to show how this is true. We always prioritize return. That is prices. We have cars with Uber drivers that generate more depreciation. So it's just not in our vocation. It is easier to grow in the Uber segment. It is easier to recover. You can change the sizes whenever you want, but we've decided to reduce our share in Uber. There is a huge demand that we do not provide services to. We dropped to less than half, almost 30% of what it was prepandemic. Why? Because we want to grow with individuals that, as I mentioned, are renting more cars, and we are also growing the corporate segment. When you get the [ direct ] car numbers, that's why I talk about the competition. [ We never thought ] we grew 36% and our competitor decreased. And we increased ticket. Today, I have more cars, a lot more cars in the corporate segment that I had in the prepandemic. Even without much corporate traveling. And individuals also growing. People would, I don't know, travel by plane. And now they are traveling by car, and they like it because when you travel by plane, you go straight to one destination. In cars, you can stop at smaller cities. And sometimes, the cost is better. You have more capillarity. So we are able to grow in a very important way in niches that have better return and holding for those segments -- holding growth for those segments that are not our vocation. So the demand is there. We are prioritizing our growth in different areas, but the Rent-a-Car is very important for us. And I always say, we have different managers for each business. If you want to grow, give me the best return. Edmar and I are just the conductors of these [ deliveries ] that we ask for each segment. It's healthy competition inside the company, better growth, we grow -- better return, better growth. And we believe that in the next years, we are going to have a growth in the industry as a whole with better margins. This is what I believe in.

Our next question comes from Rogério Araújo from UBS.

I have 2 questions on my side. The first is the up-cycle of Seminovos. I would like to know how you see the limitation of growth. You said that car supply is a restriction. Is there are any other restriction? When we normalize margins and EBITDA because they are higher, the normalized number in Seminovos, we see a leverage level instead of 2.9 closer to 3.6. Are you adjusting your leverage in the company? Is there a limit? Just for us to try and understand where you're going to in this up-cycle scenario. So this is the first question.

Thanks, Rogério. I like your question. Historically speaking, you have 4 major bottlenecks that may happen in growth: the balance sheet; the operational capacity, how am I going to deliver half these cars in the fleet, what kind of store structure; demand, that is the client; and the fourth, which is the OEM. We never had a bottleneck before, but now we do. If you look at Movida, our greatest bottleneck is the OEM. So the others are no longer a bottleneck. I don't see a bottleneck in demand. We have the possibility of adding cars, as I said, the 13,500. And if you have to add 30,000 car in a single month as well, then it's going to be a problem. But that's it. And balance sheet, we already have it. Remember, if you're talking about the leverage of 2.9, we are using the EBITDA of months ago. So EBITDA grows and we grow more, so there is room to growth. And remember, we see an improvement of margins for the future. So when we say that we are talking about BRL 800 million, we consider that even with higher interest and higher depreciation. So EBITDA is growing a lot. So the company's capacity of growing increases substantially in the coming quarters. And with that, we go to our next level. OEMs, I think they are not normal, but they are improving every month. Again, the third quarter was better than the second quarter. We can have a hiccup here and there, but structurally, it is getting better. OEMs, some say that the fourth quarter is going to be very good. So are we going to buy everything we want? Probably, the second half of next year. But we are growing. We are buying. We grew 10% in the second quarter. This is a very good pace of growth. If we can grow more, we can renew our fleet and build what we want for the future.

Okay. Perfect. And my second question is on CapEx not relating to cars. You have an increase of about 10%, and you were above 6%, especially with property rentals. So what should we expect for the future? Is it a new level? Or was it a one-off expense?

Well, thanks for your question. Okay, we talked about physical expansion because we are opening and renovating stores have an impact on our CapEx. And we also have a digital transformation. We are increasing digital information, growing more and more. There's lots to be delivered, new product, new sales channels. So there is lots that will give us more capacity to grow with better profitability. Again, expanding direct sales, selling direct to end consumers. So we are leaving a cycle of expansion. As I always say, growing has a cost, that has an impact even when you take a look at the net income, because you have depreciation and amortization of those investments.

Again, congratulations on your results.

Thank you.

Well, this is Edmar. I'm going to read some questions that we got on the web. We have a question from Bruno. If there are changes in the pace of deliveries or the reviews. No other reviews. We are growing delivery month after month, and we believe the second half is going to be better than the first half, which is important for our strategy. Bruno asked about the SUV mix. We are increasing our mix, it has to do with the preference of our clients. [ Matthew ] asked about replacement of cars. We believe that this is already incorporated in the business. Renato mentioned that new cars are of course more expensive, but we are also delivering better results which will improve or help the company in the mid to long term. Lucas from Santander, it was already answered. He talked about the new CapEx in automotive. And [ Kai's ] question, if we are going to increase the purchase of cars. Yes, further on, we will. As Renato mentioned, we are already negotiating with new levels of volumes for next year, reflecting all the improvements and progress that the company achieved in recent years. So yes, we are going to increase volume from now on. We have one more question, and we are going to open for them.

Our next question comes from Guilherme Mendes from JPMorgan.

It's really a follow-up. You're talking about doubling the Rent-a-Car business, the Fleet Management business. I would like just to have a bit more color on that. And you even said can advance the volumes that you expected up to 2025. So how much in terms of advance? And the second question, I know that you decided not to disclose numbers of brand new cars. But if you could just give us some color for the next second half of the year.

No, we are not disclosing that in terms of deliveries. But I can say that the transformation is being faster than expected for the whole of the holding. 1 year ago, if you made an estimate of the size of the group, you wouldn't reach the number. And the same applies for the next year. 1 year from today, when you look at all both Simpar's companies -- Movida, Vamos, JSL growing organically and inorganically, bringing new opportunities. So what we see are lots of opportunities for each of the companies of the holding. And our job will be to capture these opportunities and convert them into results as much as possible. But we still are not disclosing how much growth we are going to deliver every month. But our commitment is profitability, return on invested capital. And we do believe that we have very strong business plan. We want to have the better return on the invested capital in the market. And about brand new cars, we're not going to give you much more color. But what we can see is that this is taking speed. We are the only company that have ready-to-deliver cars. The environment is good. There is an increase of price. And additionally, we see that this product should operate with margins above 70% EBITDA, again, contributing for the consolidated profitability. And again, anticipating stages.

There are no further questions. So we are going to turn the call to the company's management for their final considerations. You may go on.

Sorry, we had a slight problem with the main line, but we are using the backup line now. Well, once again, I would like to thank you very much for attending our call. And really, I would like to thank the support of our shareholders, 100% approval of the combined business with CS, really opening room for a new cycle of growth. If we see what is to come for the future, we have a very relevant contracted backlog, 9,000 cars in Fleet Management, 4,000 cars in our total fleet of cars to be implemented. So we are talking about altogether almost 19,000 cars in the Rent-a-Car business, very strong in the second quarter. Seminovos, really doing well and the increase of prices is going to help the segment, as we mentioned before. We have prices to go up, both in Fleet Management and the Rent-a-Car business, so a very positive scenario for the Rent-a-Car business as a whole and the Fleet Management business as a whole. And we are going to deliver gradual and better results. Thank you very much for attending. It's very good to be here, ready for a new cycle. Thank you very much.

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