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

Good afternoon, and welcome to the conference call of Movida to discuss the earnings regarding the first quarter 2022. Today with us, we have Mr. Renato Franklin, CEO; and Edmar Neto, CFO and Investor Relations 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 Movida's management beliefs and assumptions 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, will 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 will lead to results that will materially differ from those set in such forward looking statements. We'll now turn the floor to Mr. Franklin. Mr. Franklin, you may go on.

Thanks, Camilla. Good afternoon, everyone, and most welcome to the conference call to disclose our earnings for the first quarter '22. I'd like to highlight that the results we're showing are indeed a consequence of effective execution of our strategic plans. Everything we've talked about since the IPO and we reinforced 3 years ago when we started the cycle is being delivered. The numbers show these deliveries and our true transformation of the company. We are going to show you at the end of the cycle that we started 3 years ago gives us the foundations to start a new cycle of development with growth, generating value and our company at a completely different level. Highlights. First, net revenue of BRL 2 billion. For the first time, we hit the record of BRL 2 billion. What I would like to show that really makes us very encouraged is that for the first time in the history of Movida even when we were growing a lot, we are seeing March larger than January. January was a very strong month. February a bit weaker with Omicron. But March went past January, building occupancy and total revenue and revenue by car. And better than that, we are seeing April even more stronger than March. April is generally the worst month of the year and this year it's been the best month this year so far. So again, we are reaping the fruit of our strategy, our stores with customer loyalty, getting new clients, which are the strengths for us to continue following our plans with confidence, investing in new cars and generating value at a fair price -- new cars, which are the cars that customers want to rent. EBITDA, BRL 863 million, 180% growth. Margin up 44%. This is an expansion of 6 percentage points. Here I want to reinforce: we don't have any nonrecurring effect in the results of this quarter. This is all recurrent. When we take a look at operating results, Movida is referencing efficiency and operating results by car at any business unit. And you take a look at our operating cash flow. And Edmar is going to talk about that. We are generating value in the operation. Finally, we are investing. When we talk about fleet renewal, we had very strong purchases in the fourth quarter '21 that we paid in the first quarter '22. In '22, we invested a little less, but we are still the largest buyer of Brazil. This is part of our investment, and we are generating value with a fair price for our contracts and daily rates. So EBITDA is very important highlight. And net income, BRL 258 million. We kept -- annualized about BRL 1 billion even with the increase in interest rates and financial expenses. This is our commitment. We are generating more and better operating results. We are selling more cars. And we add results to offset the increase of interest, and in short, the generation of value in the short, mid and long term. This is our priority. And the fourth highlight were the subsequent records that we are having in return on invested capital and return on equity, invested capital of 16.8% (sic) [ return on invested capital of 16.4% ] and ROI 34.6% LTM. Again, we are evolving a lot quarter-on-quarter, quite confident for future results with very good cost of capital and generation falling to our shareholders. Total fleet. Again, the growth of Movida's to highlight. We see 191.942 (sic) [ 191,942 ], 57% year-on-year. But if you take a look at our CapEx, we even have a higher growth, because when I get a car of 50 and I replace it with a car of 80, I am expanding. That's 80% growth in asset base that will generate revenue with the same yield on CapEx. As interest rates go up, yield goes up. So we are generating scaled gains that are quite material for the company. Again, we are very comfortable with our strategy with consistent execution and delivering company transformation. On the right of the slide, I draw your attention to 4 points. First, given the investments that we made and the renewal CapEx, we renewed 80% of our Rent-a-Car fleet. And so we are growing in all our businesses. Today, we have the newest fleets in the market, and that attracts new customers with loyalty. Customers throughout the competition that rent cars with Movida have a completely different car. Age of below 9 months, our NPS is record. And that starts to be seen -- in the corporate segment, we are gaining share. When [ ABRACOR ] releases their numbers of 5 rental companies, you're going to see the difference in share. So the number is still not public, but you're going to see that Movida is gaining share in the corporate segment with fair prices and delivering a completely different experience. Second point, demand continuous resilient. We evolved to the average daily rate of BRL 128 by car, 56% higher year-on-year. And remember, if you have a new fleet like us, you can charge a fair price. If you don't have a lot of new cars, you cannot charge the right price because you have lots of old cars. So the ROIC of a new car is much better at Movida, which gives us the foundation to continue to grow fleet as we have demand. Our commitment is to generate value. Growth is a consequence. It depends on the market. Generation of value depends on us to grow with discipline. Third, the transformation we had in the company reinforces the strategic alliances that we have with OEMs. We bought 21,000 cars. That's 94% over the same quarter last year. That shows the relevance of Movida amongst automakers in the last 12 months. So more than 1,000 cars -- plus 102,000 (sic) [ 21,202 ] in a new ticket in generating value. Edmar is going to talk about that. The cars we bought appreciated. So we had the right strategy. And then Movida closes a scale gap with OEMs as well. Finally, sales of 15,000 (sic) [ 15,225 ] cars in first Q '22. Remember, we can choose to sell more or less. Depends with the supply. Depends on the market. If you have a new fleet, you can do that. If you don't have a new fleet, you don't have as much flexibility. And we are opening new stores: 81 used car stores with a structure for higher volume and a new mix with an average ticket that is higher and higher, providing services to our customers online and in person. So we have the foundation built, and we are a leader in growth in the sector with the generation of value and profitability. Let's go to the next page now, and we are going to talk about our growth strategy with value generation in fleet. 69,000 cars. The largest growth in the market, 57% year-on-year. Most of the growth organic. Some inorganic with CS Frotas and Vox already consolidated, [indiscernible] further on in the second half of the year. But most of growth in Rent-a-Car and in fleet outsourcing and management. In Fleet Management, the strategy is to extend contracts. We have a 5-year contract. We are extending contracts with private companies, having longer and longer contracts with a very good average ticket -- we are going to talk about that -- with more than BRL 2,400 with growth of 82% of our fleet. And average rate here is not a problem. If clients are comfortable with the time, it's okay. With that, we decrease depreciation risks and the contract is very profitable long term, stable for the company's cash flow. In the Rent-a-Car, from 70,000 to 93,000 cars. Again, if we get the average ticket, growth even higher than 82%, and average 8, 9 months -- the newest fleet in the market, 9 months, even lower now. Lots of brand new cars. Really, bringing our customers to come with us with a record new customers month after month. Let's go to Slide #5 now. And here, just as a reminder, of the slides that we showed, the top important topic for us and to give you an update. First pillar, price transformation. We continue leading efficiency in pricing and pass-through of prices. And obviously, the newest fleet has enabled us to get corporate clients and an average ticket of BRL 128. We want to continue growth, respecting the year's seasonality, but thinking of high seasons always at higher prices that are suitable to the cars we have, much more modern, newer and well equipped and a very good car mix. Revenue by car, which is even more important because occupancy and prices can vary. In January, for instance, we have more ticket and less occupancy. And in low season, you have more monthly rentals. So we are evolving in the mix, and we are for 14 consecutive quarters with the highest revenue per car. In Fleet Management, we continue to expand fleet, an expansion of 26%. And here, what is most important: new contracts coming in with higher tickets with an average of BRL 2,400 per contract. So the average ticket continues to transform, growing quarter-on-quarter. And at the end of the year, it's going to be even higher. And the volume of implementation is accelerated and also accelerates more or less average tickets. Second pillar is strategic alliance with OEMs. We have the best relationship with all OEMs. I already talked about the 21,000 cars, the 102,000 purchase and 6.5% share. What's most important? We are renewer of fleeting with a better position. But in the beginning, at our IPO, we said the following: "Let's have a new benchmark in operational efficiency." And we are setting new benchmarks. Second, close the gap of margin for used cars; and third, scale and purchase of cars. We already have a scale, so the scale gap is closed. And then I expect now is cost of capital. And because we have the lowest cost per car and the highest revenue, we are the most competitive company in the market. Third pillar, demand trends. Our new mix: SUV, electric cars, new products like Movida Cargo that is doing well. The digital journey has been very good for clients, and the new fleet obviously helps us to have a company for the long run with new cars in the market. We have now a new -- [ tax pay on ] our numbers all the time because we have a new fleet. And we are really growing our customer base, which gives us the certainty that the market will continue to grow in the mid and long term. We are going to have 3 very positive years for the industry. And then you'll have to see who is growing with more generation of value, discipline and at fair prices for the assets that are being purchased. We are opening stores that enable us to go to new markets, 21 new points of sale. And new will come in, in this year in markets where Movida is still not present. That gives us demand and enables us to even have better prices at some stores. Used Cars, our fourth pillar. A younger fleet also helps us. We're always asked questions. So the used car market is going down. Well, but we don't have used cars. We have almost brand new cars, completely different. We have 15,000, 20,000 kilometers cars. So the liquidity is very different. We are much more similar to brand new cars. We offer a 1-year guarantee. So they are going to buy a car that is slightly used but cheaper than brand new cars. So customers come to us. 15,000 cars sold with an average ticket of BRL 64,000, EBITDA margin of 21%. EBITDA margin is going to go down. The average ticket will go up with the mix. If you get the first quarter '22 vis-a-vis the fourth quarter, we sold retail. And we can choose that. Now we sold a bit more wholesale. Compared to the third quarter '21, we have BRL 100,000 higher. So an expansion of ticket quarter-on-quarter based on our strategy. And sometimes, I go to one channel or to the other. This quarter, we're able to have a ticket that was very good. 11 new used car stores. We continue to open stores. You're going to see more in the second quarter, preparing the company for the future. And low mileage cars that really sets us apart. So all pillars bring us comfort that the company is very well structured. Page 6, we are going to talk about consolidated results, before I turn to Edmar to give you a color on numbers. Here, it shows the gain of profitability and how that enables us to grow with sustainability and generating value. Remember, consolidated results are looking in the rear mirror, LTM or in the quarter. If you look at the first quarter '22, BRL 1.9 billion, more than BRL 2 billion gross revenue, the average operating fleet is smaller than the end of the period, which was 20% higher. So you saw the Rent-a-Car expansion. You saw the expansion of the GTF fleet. We are growing. And if you analyze our numbers, our net revenue is almost BRL 8 billion, and much even higher than that and so in April. So the company is showing growth for revenues for the future. The same applies for EBITDA, the best margin. We still don't have the comparison of the first quarter. With very strong growth, BRL 863 million, annualized BRL 3.5 billion, which is completely different from the BRL 2.8 billion LTM because the leverage our current leverage, if you annualize the EBITDA, is 2.4x. That's not a small drop. And EBITDA is growing. The company is growing. What I invested in the past ensures growth. If I stop to invest, I would have even better EBITDA. So our commitment is not to generate growth, but rather to generate value. EBIT, the same, a record BRL 650.3 million annualized. And net income, BRL 1.32 billion (sic) [ BRL 1.032 billion ] annualized, BRL 258 million in the quarter. So transformational results that give us the comfort to carry on and continue executing our strategy, because what we have to do is a lot more than what we did so far. Edmar, up to you now for the numbers.

Good afternoon, everyone. Thanks, Renato. I'd like to invite you all to take a look on Slide #7, where we bring to you the company's results under the lens of net revenue and EBITDA. Rent-a-Car, very strong quarter, 73% (sic) [ 63% ] growth in revenue compared to the previous quarter. And EBITDA, we went to BRL 169 million to BRL 373 million, 121% growth in EBITDA. So more than double. And we reached a margin of 63%, very strong, and again, larger than the margin we delivered in the previous quarter and much larger than the margin of last year consolidated. Fleet Management, in yellow, in the middle of the page. We see a growth of revenue even higher than in the Rent-a-Car business. As Renato mentioned, we get to BRL 397 million, almost BRL 400 million in a single quarter. Annualized number, we see already BRL 1.6 billion in Fleet Management. EBITDA, in the bottom part of the slide, 72% margin. EBITDA of BRL 285 million, 187% higher than the same period last year. Finally, if you take a look at Used Car sales, we've reached almost BRL 1 billion in revenue for the quarter, growth of 255%, which is a consequence of the increase in price and the amount of prices sold. Annualized numbers, we are talking about BRL 3.9 billion in the sale of used cars. And EBITDA in the bottom. The margin reached 21%, an important evolution compared to the same period last year. And year-on-year growth of 463% (sic) [ 464% ]. That is a 5-fold increase, a huge advance. Looking into 2021, again, a consistent higher margin given the volume. In the footnote, we have an important point. We already were asked questions this morning about PIS/COFINS credit. So we recognized throughout the quarter PIS/COFINS credits coming from the accelerated depreciation that we adopted as of December last year. And roughly speaking, 75% goes to the Rent-a-Car business and 25% to Fleet Management. So to us, that is recurring and no longer considered an extraordinary effect. Let's go to Page 8 now, where we talk -- and we have brought the slides in previous quarters about the Rent-a-Car margin. We recognize that there is a benefit on the margin of used cars. We are capturing that to grow the company. But in the end of the day what happens and what is important is what's going on with the Rent-a-Car margin. And I have good news. In the first quarter, the margin was 51% in '21. Now it is 66%. Here, we are putting together Rent-a-Car and Fleet Management. EBITDA by car is also a record with BRL 1,369 for the monthly rental in the quarter. And another thing that really has reinforced our position is the dynamics of cost plus car expenses. So 1 year ago, the total of cost and expenses by car was close to BRL 800, and now we are close to BRL 700, an important improvement, almost 15% year-on-year. With that, the Rent-a-Car EBITDA alone without considering Used Cars reached almost BRL 2 billion looking back in the rear mirror, that is last 12 months, and annualized more than BRL 2.5 billion -- to be precise, BRL 2.6 billion in rental. So we are preserving the company car and further advancing in profitability. To your right, we show the backlog in Fleet Management with all product lines, which is a new level, almost -- more than BRL 2 billion. And here, talking about fleet management and private rentals, which is Movida -- how Movida is started. On the next page, we talk about our asset base. Year-on-year, our asset base increased more than BRL 6 billion if you think of book value. And that, again, is a result of fleet expansion and renewal. We increased our best efforts to have a renewed fleet in the first quarter '22. As Renato mentioned, we are 80% of the Rent-a-Car fleet but after '21, that is the average age is very low. So the dotted line is a year-on-year comparison for asset appreciation. So it shows that our assets have a cushion of 21%. And in the footnote, we say something that is very important. The efforts we made to keep a young fleet because it helps the company twofold: in customer experience and also in efficiency, because it helps the company to be very competitive in terms of costs and expenses. On the next page, Page 10, we bring to you a session that is always part of our presentation and it's always in our press release, and we are bringing it to you to show what we did in the last 18 months, and more specifically, in the last year. In terms of return, the company this quarter is delivering an all-time high in return on equity, 34.6% and return on invested capital, 16.4%, keeping the ROIC-cost of debt of about 10 percentage points. And on the right, we show our earnings per share. What happened in the period in our earnings per share, it almost doubled on an annual basis. We went from BRL 0.37 per share to BRL 0.71. Annualized numbers, it is BRL 2.85 with an appreciation that is even lower than the 95% growth. Let's talk a bit about our cash position. And here, I'll try to address some questions we got during the day. We closed the quarter with BRL 3.6 billion, and we settled a debenture on the 2nd (sic) [ April 2 ]. So pro forma, our position is 4.6%. And we have a coverage of approximately 4 years. It's important to remind you all the efforts that we had for issuing the bonds, and that has a benefit of substantially extending our average tenure. Today -- we have been always talking about 7 years plus of average term, which gives us the comfort for execution. We had approval of BRL 800 million in BIT credit lines -- IDB credit lines, which shows access to different sources of capital, and also the company maturity in governance and ESG because this credit line also has a green component. And on the right, we bring 2 important pieces of information. One, EBITDA for covenant. We are at BRL 2.8 billion. And we reconcile that on Page 19 of our press release, because our accounting number is BRL 2.6 billion, but our debts brings the possibility of including the EBITDA of acquired or merged companies as the case of CS. So the difference of BRL 200 million is shown on the press release, and it has to do with the 6 months of addition. In addition, net debt, BRL 8.5 billion, a growth of BRL 5.2 billion, has to do again with the increase of assets, because all our important assets are cars. The car base -- the asset base increased by almost BRL 6 billion. And therefore, it continues to be positive. And finally, in terms of leverage, we posted 3x following our covenants. And Renato already mentioned 2.4x if we were to stop to grow with the level that we have been delivering in a very consistent manner overall. In terms of cash dynamics, 2 more observations. The first, the suppliers line that is part of our working capital reduced by BRL 600 million. And this is fruit of the purchase dynamics, that is we grew CapEx more in the fleet more in the fourth quarter. And now, a bit less. And that shows a difference of BRL 600 million. And at the same time, because we increased the fleet, new cars were implemented, the asset increased by BRL 700 million. So here alone, we have a BRL 1.3 billion variation. And additionally, because the exchange rate is very relevant to us, we have BRL 900 million of exchange rate variation. So cash-wise, we continue with a very conservative policy considering that we are always going to be observing this covenant of 3x as we have been doing in recent times. And generally, in the first quarter, it goes up a bit because we grow in the fourth quarter. With that, I'm going to turn back to Renato to close the presentation. Renato?

Thanks, Edmar. Let's go to Slide #12 to talk about something that has been very dear to us, sustainability and ESG. Once again, the first company to report an integrated report, lots of information on our IR website and about this infographic that represents our ESG agenda. From inside out, you see our pillars: better company, better mobility, better planet and the actions that we have. So you see these numbers. These are the number of actions that we are addressing here. And we have our targets, that is our objective to each of those areas. And finally, the projects that are ongoing and how they are and what we are doing. So this is a summary mapping of our ESG strategy. Of course, there is a lot more than you see here. But our main initiatives are very clear with this nice infographic. So go and take a look at our integrated report. Well, so now I'm going to ask you to go to Page 13 for us to close and open for your questions. On Slide 13, we try to bring to you a summary of consistency in our execution. The first topic is growth. Movida has really stood out as the best-in-class in terms of expansion and fleet renewal with very strong investments that are generating value. In the second quarter 2020, we decided to keep a new fleet. People challenged our strategy. But the numbers show it was a bright strategy, because we bought, we're appreciated and clients said they prefer Movida. We are the fastest-growing rent-a-car company. And also sequential increases in all average tickets, better alliances with OEMs and the focus on individuals, those that choose to work with us. And we already see the difference in the level of service, and people are coming to Movida. So we see more and more customer loyalty. We are gaining share, and we have a lot of room to grow. Second pillar: profitability, higher EBITDA margin, efficient management of costs. And here, we already have more opportunities, but we are the lowest in the market. We still have investments in automation, efficiency and technology and the newest fleet in the sector, as Edmar mentioned, which is a benefit to us. We continue to focus on profitable segments at low cost. We are not going to have yield just for the sake of it. We have low mileage by car to ensure good resale amounts. Capital structure, Edmar said it well, leverage stable. Extension of the amortization schedule to take the average time really stands out when we talk about balance sheet. And more and more new funding sources that give access to capital to us. And EBITDA gains enable us to expand with a stable leverage. And returns, our main commitment for the long term. Record ROIC and ROI. Growing profit per share. And today, we have the best marginal return with selective growth. So our returns are better because we have less cost by car than other competition. In summary, we transformed the company. We are the company that most grows in the industry that evolved in profitability, BRL 8 billion in revenues, BRL 1 billion net income. And we still have a lot more to do. We are starting the new cycle with the same energy that we had 8 years ago, and we have been here since the beginning. We are at 2% ROIC. We are going to open for your questions, but we thank you very much for joining us today.

[Operator Instructions] Our first question comes from Gabriel Rezende from Itau.

I have 2 questions. First, about the Rent-a-Car prices. Renato mentioned that sometimes the service mix enables us to have higher ticket with lower occupancy. Given the positive surprise we had this quarter, was it due to the service mix? And further on, should we expect a daily ticket and a marginal increase in occupancy? Second question about Fleet Management prices, if you can talk about the dynamic? It's clear that new contracts have a different price, and I think that has to do with Movida brand new cars. But on the other hand, we would like to know what is going on quarter-on-quarter and why we don't see an increase even with the good numbers of the first quarter '22?

First, the Rent-a-Car business. As you mentioned, the ticket is going up and it will continue. So the main impact of occupancy is this: in January, it is more daily rate. There was a bit of the Omicron variant that impaired a bit of rentals. The demand was slightly lower. And it was back in March. Even without the Carnival in March, in March we went back to more normal levels of occupancy with a good ticket. In April, we are improving tickets and occupancy. So what we expect is what you said: high occupancy close to 80%, so marginal gains of occupancy and higher rental tickets. Remember, we have seasonality. June is a high season. April was good. May, it was a long month. Corporate is supporting us. June and July should be very strong. We have high hopes for July. So Rent-a-Car controls with a growing fleet. We held it for the Carnival in April, and we are preparing for the high season. April generally is a bad month and you decrease the fleet. But because this year it was a good fleet, we -- a good month, we have the fleet. Fleet Management. Our strategy was to focus on Rent-a-Car. And there were clients that were discussing their budget. We were renegotiating contracts with clients. And there is still some to be captured. So you're going to see the ticket per car in Fleet Management growing gradually due to the implementation of new contracts and also by adjusting prices at existing contracts, things that we have already agreed with clients, but we were a bit careful to keep a good experience, renegotiated renewals for the future. So we gain flexibility in implementation and in prices, which was a win-win with this. I could keep cars in the rental car business that was doing well, and ensuring the growth of Fleet Management for the future.

Our next question comes from Fernanda Recchia from BTG Pactual.

I have 2 questions. First, car prices, used car prices. For the first time, we see a small deceleration quarter-on-quarter on prices and margins. I would like if there is a mix effect or if you see prices going down? And what do you think is going to happen for the coming quarters? And profitability. I'd like to explore the Rent-a-Car margin. There was this effect of PIS/COFINS, but just for a month. So in my math, we should have an effect of BRL 6 million, BRL 7 million. Other than this effect, the margin would go down quarter-on-quarter. I would like to understand if my analysis is correct and why? Of course, you opened more stores, but is there anything else that motivated the drop?

Okay. Prices in used cars do not go down. Here, you have an issue of mix and sales channel. We only sold 12,000 and a bit more wholesale compared to the third quarter 6,000. You are going to see prices continue to go up. The trend is for the prices to go up based on the mix that we have to sell. We can have variations. But according to what we have to sell, that's it. Margins do go down. So the trend of margins is for them to go back to normal. So they are going to go down gradually, slower than what we had thought before because we are still having problems with the supply of new cars. So the margins are capped, but they are going down. As you start to sell more volume, we continue to generate value, contributing to the results, but with lower margins and prices going up. Rent-a-Car profitability is seasonal. The fourth quarter is higher than the first quarter. In the fourth quarter, you have December, a very strong month. And in the first quarter, you have holidays and vacation and that affects the first quarter. If you remove the stability, you have gains of margins in addition to PIS/COFINS credits. I don't know if Edmar would like to add.

Yes, seasonality explains that. And number two, we grew a lot in the fourth quarter, especially in the end of the quarter. And the cars were implemented in the first quarter and that also has an impact on margins. So you see the Rent-a-Car fleet increased substantially from the fourth to the first quarter. And for the next quarter, as Renato mentioned, we are seeing it even stronger than the first quarter.

Our next question comes from Bradesco BBI, Victor Mizusaki.

I have 2 questions: the first on Slide 9, and a bit of follow-up in the sale of assets. When you take a look at this table and the potential market value, does it make sense for us to consider that this could be a gross margin at the end of the asset? And in this way, you would have a gross margin slightly above 20%. So my first question is, if the rationale makes sense? And second, the integrated report. You said that your target for 2030 is about 20%. And I would like to know electric car. And that would be more in the Rent-a-Car business, more in Fleet Management. Where do you think that this would make more sense?

Okay. The first point: it is close to that, the gross margin, if we sold all assets today. As a reminder, remember that when you talk about inventory, if we decreased growth, we would have a completely different generation of value. We can deleverage the company very fast. But we depreciate assets considering when we are going to sell the car, how much they are going to be appreciated at the time of sale for us to deliver a good gross margin. The idea is not to keep the margin that we have now because it's not normal of the business. The point is, everything that we bought in '21 and people thought we were paying a lot is worth more than the price we paid for. So it was the right decision, other than investing our money elsewhere. And we believe that we still can buy and rent at fair prices and continue having a new fleet. That's the first point. The second point, it's not really a target. We have a target to reduce emissions, 30%. This is what we have in the issued bond. And then with this, we have to have clean energy in the stores, the use of ethanol and consider up to 20% between hybrid and electric cars, hybrid and electric cars for 2030. We should have even more than that in the regular fleet. It's like SUV that went up and the Turbo 1.0 engines. The new wave are hybrid engines. And you see that we are going to grow. You see Corolla, several cars that are launching hybrid cars. So these are cars that will have more demand than gas-only driven cars. And then there is a question that people always ask me. Back in the time we bought Hyundai. People said, "Oh, you're buying at a higher price." But we can buy because there are clients that are interested and we generate value. So we see a natural growth with some investment in structure to help clients to have a solution. And that will happen naturally. I think it's going to be an even higher number than this one. This one was a target we set way back in the past.

Our next question comes from Lucas Barbosa from Santander.

Congratulations on your results. My question about financial profits and losses. You talk about a negative result of BRL 368 million in subsidiaries. Could you give us a bit more color? It has to do with the head accounting and it's not in the financial profit or loss, and it's only going to be entered in book value when you have the end of the swap. Is that correct?

Yes, that's absolutely correct. The company adopted the practice of having a hedge for our cash flow. And that survives while the debt is in place. In the case of the bond, it goes up to 2031. And because you have the mark-to-market -- remember that exchange rate went down in the first quarter, and then you have to have the whole portfolio according to the market value. Because you're going to recognize the results a long time, for this line of encompassing results, it is included and it is connected to the existence of the debt. So that is a correct understanding. But remember...

This goes until the end of the debt?

Yes. Yes, you have to think of the concept, Lucas. The company does not have exposure to exchange variation, full stop. So you have the bond and then you hedge it. So that you have protection. Right now, the Brazilian real was appreciated, and we recognized that in the line that you mentioned.

Very clear, Ed and Renato. If you allow me a second question about your plans for the receiving of cars from OEMs. Is there a time that you're going to have more deliveries this year? Or is it more or less equally distributed along time? Just for me to understand your negotiations with the OEMs.

Well, what we agreed with OEMs is a growing volume. So the second half stronger than the first half of the year. Today, when we talk to OEMs, there is a bit of unpredictability. Some OEMs are having problems in April, others in May, others in June. That's it. Problems are present all the time. Sometimes you have problems with the import of parts. Sometimes you have problems with inventory. But we are well positioned. We are attracting more customers. And if we don't have cars to buy -- our cars are the newest. So we are going to be okay. So we are quite well prepared. Now are we going to meet the objective with each OEMs? We do not know. Some may deliver a bit less, others more. Sometimes we can have better discounts. I think the advantage is that we are working with more OEMs that gives us diversity and reduces the risk. But the volume grows month after month.

Our next question comes from [ Felipe Newton ] from Citibank.

I have 2 questions on my side. I'd like to understand the Uber share in your rental car results. I know Uber has lost share in recent times. So I would like to know what you see from here on and how important it is for your bottom line in the future? And second question, I'd like to understand the following. You said that results showed lots of organic growth and the merger of some acquisitions, although most of the growth was organic. For the future, what are your plans, continue with organic growth or do you intend to merge more companies or having other acquisitions? That is how much do you intend to grow inorganically for the future?

Well, Uber continues with a small share. It has never been our focus, less than 5%. This is a small business generating profitability, but controlled. Movida Cargo -- then that's delivery for e-commerce. So in terms of labor, those drivers that worked for Uber are working for the Movida Cargo. But we have exclusivity with vans. They are diesel-driven. So that has helped us a lot as a competitive advantage. As for growth, most of it organic. Generally, we're looking to acquisitions. Every day comes new offers. Things like [ Maoto ], they are niche operations that help us in sales channels, in footprint, in the different niches, and that enables me to focus on my margins and not focus on clients that have a low ticket. So the small acquisitions that really focus on niche markets with good cars, we always look into them. And if it makes sense, we will buy. But our growth is organically amongst individuals, Used Cars and Rent-a-Car. And remember, we have a digital footprint, new assets and motivation of our people. Customers are happy. The cars are new. So we are very much prepared to continue to grow among individuals.

Our next question comes from Isabella Lamas from UBS.

I have 2 questions. One is more specific for the price of new cars in Fleet Management. We saw a substantial increase. Is it because of electric cars? Is it because of SUVs? And also, I would like to know if we should expect the same level for the future? And the second also in Fleet Management, but in organic growth. You talked about the Movida brand new cars. So that's your focus. It's a highlight in growth. So how can you -- what can you share with us in terms of percentage of your fleet and how you are evolving for the future? What kind of demand you are having? Just a bit more color for us to understand the segment.

Well, the 2 things are very much connected. The price of Fleet Management car did not, but the volume was lower. We bought more cars in the fourth quarter. And this quarter, we implemented that. So what we bought now: higher tickets, smaller amounts. And why is that? You have a bit of CS and then you have brand new cards, which are presently respecting the retail mix. If you go to retail mix, you see SUV in the first line. These are the cars that we are selling. So these are the cars that our customers want. And these are the ones that we are going to sell in the retail. It is good to sell in the retail those cars that are sold in retail, that are wanted in retail. And when you ask the size of our fleet we have to sell, we do not disclose numbers. But we have ready to deliver cars. Go online, you're going to see there are lots of people that are closing deals online. And there are things for us to deliver today, tomorrow. So the level of service that we deliver is completely different from the whole of the market. And we can price that and it helps us with our ticket. Yes. And we don't give colors on size, but we say that this product has delivered better margins than the traditional Fleet Management number. So it is one of the levers that explain the growth of margin from 59% in the first quarter last year to 67%, 70% if you consider the credit in Fleet Management. So under all perspectives, we have an evolution of 10% in margins. And Fleet Management and brand new cars are very important for this increase.

[Operator Instructions] Our next question comes from Regis Cardoso from Credit Suisse.

I have 3 topics. One is your fleet distribution amongst the different segments. You had substantial growth of number of cars in the quarter. So I would like to know the breakdown between the segments, Fleet Management with a drop and a higher exposure in the Rent-a-Car. So I would like to understand this dynamic, because we thought that between the backlog of corporate clients and the brand new cars, you would have a very strong demand in Fleet Management, particularly if you think that brand new cars should be at a pace of more than 1,000 cars in the month. But you had just an addition of 300 cars. So one thing related to that is the evolution of the average age of your fleet for the rent car below 9 months. So it seems that you are back to normal. And I would like you to tell us if there is still any advance to be made. And in Fleet Management, what caught my attention was a reduction in the average fleet age -- I'm sorry, an increase in the average fleet age of more than 3 months. So I would like to understand what is behind that. Is it because new cars are not coming? Is it the contracts? I don't know exactly why this is happening. And finally, a final question. Sales prices going down, consolidated numbers of BRL 1,000 per car. I would like to know why? If this has to do with higher discount, demand, depreciation rates going back to normal?

Okay, Regis, let's go. First question, the breakdown between Rent-a-Car and Fleet Management is something that we have flexibility. So in beginning of November, I put everything in the Rent-a-Car for December. In the end of December, you go to Fleet Management. So for this quarter, because we had a holiday in March and Carnival and there was a demand in the Rent-a-Car, we decided to have the new cars in the Rent-a-Car. So the cars that were bought in December, we increased Fleet Management and we grew 6,000 cars. But as I mentioned before, we postponed some corporate clients and we negotiated things and we decided to have implementation in the second quarter because of Carnival that was April. April was very strong to us. And now, I'm going back to this possibility. In Fleet Management, we want to have longer contracts and we are trying to have even with individuals contracts of 4 years. So the idea is to increase the average age. But remember that I can always replace cars. If I have something that makes sense for me to renew the cars and I can do that and generate value for the company, I will. And that will have an impact of used car prices, because, see -- remember, you have to see -- you have a car. If I can sell it on Jose for 60,000. If I can't buy the same car for 60,000, it's a no-brainer. I change, I replace the car, and I make money. So the supply of OEMs together with my capacity to sell cars in retail or wholesale makes me choose to renew one make or another. This has been something that we have been doing since the beginning of Movida. And therefore, you have this variation in average prices. It went down 1,000. That is a variation for the quarter. But every month, you have ups and downs. But overall, you are increasing prices that are -- we don't see car prices going down. Just a natural fluctuation of the business.

Okay. And if you allow me, depreciation. Do you think it's back to normal? Or do you think it will continue to grow?

Regis, this is Edmar speaking. Let's split the things. In the Rent-a-Car, annualized numbers we are going to more than BRL 4,000. And we believe that this is going to be the minimum level from now on because prices are close to BRL 90,000 for new cars. As Renato mentioned, there is still part of the fleet to be renewed, so there are some increases to come, but at a lower speed. Now when you take a look at Fleet Management, then you have 3 things -- 3 business units, whereas we treat it internally: individuals, Fleet Management and brand new cars. For brand new cars, the depreciation is different from in Fleet Management. So it is going to continue to go up, but now at a slower pace than the Rent-a-Car, which is very close to the level it should be. So if you take a look at to analyze the figures, it is already past the 4,000, but it should go up still, particularly because of what Renato mentioned, which is the mix. If you take the mix -- look at the mix of Fleet Management and the fleet of brand new cars, you see that it is slightly more premium. So we should have also a consistent decrease, but at a lower speed. In the Rent-a-Car -- and you take a look on Page 10 of the press release -- it went down fast, and now it's coming up because of renewal. In Fleet Management, because the renewal takes more time, it went down less, and it will be kept up for a longer time.

Since there are no further questions, we are going to turn the call to the company management for their final considerations. Gentlemen?

Well, once again, we would like to thank you very much, especially Movida team that really has made a difference, our suppliers, creditors, investors, those that are supporting us. Lots of people doubted our strategy in the past. It's proven to be the brightest. We are delivering a transformation for the company, and we are always certain that the best is yet to come. Transformation is huge and very few people are really seeing it. So we believe that there is still a lot to be collected from the transformation that we had. Thanks again. Have a wonderful afternoon, and we keep on going.

Movida's conference call is now closed. We thank you very much for attending, and wish you a good afternoon.