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

Good morning, and welcome to Movida's conference call to discuss the earnings regarding the first quarter 2023. Today, with us we have Gustavo Moscatelli, CEO; Pedro de Almeida, CFO; and Camila Silva, IR Manager. [Operator Instructions] Before moving on, we would like to let you note 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, depend on circumstances that may or may not occur. General economic conditions, industry conditions and other related factors may affect the company's future results and lead to results that will materially differ from those in the forward-looking statements. We'll now turn the call to Gustavo Moscatelli. Please, Mr. Moscatelli, you may go on.

Good morning, everyone. Welcome to Movida's conference call to discuss the earnings of the first quarter '23. As it is my first call as CEO of the company, I'd like to start thanking the Board of Directors, Movida employees that welcomed me to the company and the trust of all our stakeholders. Thank you very much. I'd like to use the time to welcome Pedro de Almeida that joined us as the company's CFO, and that will be together on this journey with us. Now I'm going to move on to the presentation. Starting on Slide 3. I'd like to highlight the evolution of all our business lines trying to extract the most value by means of excellence in operations of each sector. We are following the strategic plans to create value and to have results even before expected. Our net revenue was BRL 2.7 billion in the quarter, a growth of 40% against the last quarter with continuous evolution in all business segments and focus on operational efficiency. Our fleet increased by 11% year-on-year in a total of 313,000 cars. EBITDA, EUR 875 million and net income, BRL 21 million in the quarter. In the Rent-a-Car segment, we had a transformation in the first quarter with a reduction of more than 13,000 cars against the fourth quarter '22 with a total of 98,000 cars with an increased total occupancy rates by 7.1 percentage points, reaching 59.3%, which shows an extremely positive reflects our operational improvement and return on invested capital. In fleet management outsourcing, we continue our plan to grow, and we closed the first quarter of 2013 with 115,000 cars, an increase of 20% over the first quarter of '22, which represents 54% of the company's total fleet. Important to highlight that the marginal growth is being made with diligence to ensure the profitability of new businesses. In the used car sales, we reached a new level of sales with approximately 20,000 cars sold in the first quarter. We continue to sell cars with a higher average ticket, about BRL 75,000 per car, which led us to reach revenues of BRL 1.5 billion in the quarter, a growth of 50% against the last quarter -- the same quarter last year. Finally, I'd like to highlight the important recognition of our sustainability agenda. For the first time, we were within the group of the most sustainable companies in the S&P Yearbook and later in the transport ranking in Latin America, showing how the seriousness of our commitments and developments in environment, corporate governance and social. On Slide 4, we show our discipline in execution and the deliveries that we are able to make until today. Starting with financial management, which is an important point of this phase, we had an early settlement of BRL 2.2 billion in the quarter by means of repurchase of local debt and bonds that were used a brand, significantly reducing the cost of debt and cash carryover. We also had a reduction of BRL 1.2 billion in the supplier line compared to the last quarter because of the reduction of cost budget, making the company's balance sheet even more robust. It's important to mention we had a very strong cash position of BRL 3.9 billion, which puts us in a very comfortable position to continue to execute our strategic plans. Second, the core point of our strategy, we've had an increase in efficiency. We reduced more 13,000 cars in the Rent-a-Car segment compared to 4Q '22. And the net revenue continued stable and there was an expansion of EBITDA just because we are gaining operational efficiency due to an analysis of our company fees and releasing BRL 1 billion in invested capital. Third to highlight, efficiency and productivity. We had substantial gain of 5.3 percentage points in the total occupancy rate of the Rent-a-Car compared to 4Q '22 getting to 69.3%. And we had an increase of 1.8 percentage points in the operational occupancy rate reaching 78.4% in first Q '23. This is important to maximize the invested capital and create value. I think we still have room to improve our indicators in the coming quarters. The fourth highlight are the improvements in management. We are making relevant changes in company teams. Some include pricing and car purchase proprietary technologies that are now over by the CFO to guarantee the best investments. We also have 19 ongoing priority projects with intensive use of technology to strengthen controls processes, governance and productivity with deliveries for the next 180 days. Going to Slide #5, we give some granularity and sufficient gains in asset turnover this quarter. As you can see in the first chart, we had an important reduction in the volume of purchases. That is why we reduced 11,000 cars in the total fleet. This is 100% related to the resizing of the Rent-a-Car fleet. We only bought 419 cars in the quarter, the lowest volume in recent years. We also accelerated sales, generating a reduction of more than 13,000 cars in the total fleet. With that, we had a relevant evolution of 5.3 percentage points in the occupancy rate measured by rented fleet vis-a-vis total fleet compared to the fourth quarter. That is we are being more productive in the capital investment, which is very important for us to reach a new level of productivity. As fleet management and outsourcing, we continue to grow with diligence and discipline in closing long-term contracts to ensure the company's future profitability. Now I'm going to go on to Slide #6. As in the previous quarter, we bring an important analysis in value creation, which is changing part of the Rent-a-Car mix. In the first chart, you can see that we had a spread of BRL 11,000 per car between sales and purchase trusses, showing a favorable dynamics for cash flow and a new cycle of profitability. In fleet management outsourcing, the dynamic is completely different because the asset cycle is based on long-term contracts. This new level of purchase prices is beneficial because it will bring even more growth for revenues and EBITDA in the segment. The bottom chart shows the difference between purchase and sold costs in consolidated numbers. That was 13,800 in the quarter. And when we take a look at net CapEx for the first time in a quarter, we had a negative net CapEx of about BRL 700 million reps, reaffirming our commitment with the value agenda. On Slide 7, we have our consolidated results. The net revenue in the quarter was BRL 2.7 billion, yet another record for the first quarter of this year. The evolution was 42% over the first quarter last year and 33% against the fourth quarter '22. EBITDA reached BRL 875 million, growth of 1.5% compared to the first quarter '22 and 2% compared to the fourth quarter last year. I'd like to highlight the expansion of rental EBITDA that grew 33% and 21%, respectively, which was enough to offset the results of the used cars and that brings even more resilience and predictability for future results. EBIT, BRL 485 million in the quarter, an increase of 1.7% compared to the fourth quarter '22. Important to highlight is the extension of the rental bit vis-a-vis the fourth quarter, plus 7% due to efficiency, operational efficiency gains. Net income was BRL 21 million. It was impacted basically by the increase of interest rates and also the revisiting of depreciation rates of the costs that we had last year and that we kept for this quarter. Going to Slide #8. We bring you an analysis on depreciation. Here, we have the evolution of depreciation rates with the breakdown of Rent-a-Car and fleet management. As you can see, the depreciation rate of the Rent-a-Car has been stable at 10.3% compared to the first quarter. With that, we believe we got to the end of the increased cycle, which had to do with the transition of the fleet. And there so we are going to have a reduction to also, as a result of better purchase terms in the fleet. For fleet management, we had a slight increase because of new cars that will not have the gains that we had in the past. But I see no concerns about that, quite the opposite. We are growing our fleet with even better returns. Consolidated, it was 8.3% a year, a slight increase of 0.2 percentage points compared to the fourth quarter because of the higher share of fleet management in the total asset mix. I'd like to highlight that I believe we can have gains by reducing depreciation rates because we are expanding the supply of part of the fleet and also because of commercial terms that are being more favorable for the purchase of cars. Now I'm going to turn the call to Camila that is responsible for our Investor Relations department and just going to talk about the different business units. Camila?

Thanks, Moscatelli. Good morning, everyone. I'm going to start with Rent-a-Car. On Slide 10, we have the operational results. The priority of this business line for '23 is optimization of fleet to increase efficiency and therefore, profitability. The reduction in the number of costs in the first quarter, '23 already reflects that. As we mentioned before, we closed March with 98,300 in the total fleet. The average daily rental was stable compared to the fourth quarter and 126 with an increase of 6% compared to the first quarter last year. In the bottom, we have total occupancy rates and occupancy rates of our fleet. We can see an important gain of productivity in total occupancy rate of 7 percentage points compared to the first quarter '22, reaching 69.3%. Compared to the fourth quarter, the expansion was 5.3 percentage points. On Slide 11, we have the financial results for the Rent-a-Car segment. Net revenue, BRL 71 million in the first quarter, a growth of 27% compared to the first quarter '22. Compared to the fourth quarter '22, we had growth when it excludes the Portugal operation of 1% due to the tourist seasonality in that geography. I'd like to highlight that in the quarter, we had the reclassification of revenues of crushers and damage. And therefore, we also adjusted the history of our data presented. EBITDA was BRL 427 million per quarter, an increase of 15% year-on-year and 3% quarter-on-quarter. It's important to mention that despite the reduction of 13,000 cars in the operation, we continue to increase EBITDA and revenue that shows a transformation in the profitability in the period. On Slide 13, we have pre-management outsourcing with all our long-term contracts. We closed the quarter with 115,000 cars, growth up 20% over the first quarter '22. The daily volume grew by 15%, reaching BRL 8.8 billion of rentals in the quarter. Our total backlog revenue was BRL 2.6 million, also with growth of 24%, showing the real transformation of scale and the share of the segment in the company. Going to Slide 14, we have the financial indicators for fleet management and outsourcing. We meet scheduled level of revenue, 539 million in the first quarter, which shows growth of 42% compared to the first quarter '22. In addition to the increase of volume we explored, we also had an increase of 23% in the revenue per car year-on-year, reaching BRL 2.4 million. The EBITDA was BRL 362 million, an extension of 27% against the first quarter and 8 against 4Q '22. This segment is an important avenue of growth for the company's strategy, and we are extremely diligently in allocating capital for new contracts to ensure value creation to our shareholders. Now used car sales on Slide 16, we show the main highlights of the operation. We had a relevant expansion in the number of cars sold in the quarter, reaching 19,600 costs growth of 29% year-on-year and 5% quarter-on-quarter. The increase in the number of cars and prices, improved our structure, and we are now prepared for a new cycle of turnover. In the bottom part of the left, we had a higher dilution of SG&A over revenue in the first quarter of '23. We added 11 new service points that are ready to sell an even higher number of costs, especially in retail. On the next slide, 17, we show the financial performance of the used car signs. The change in scale and new level of the company is clear, if you take a look at our revenue lines, we closed the quarter with BRL 1.5 billion net revenue, an extension of 50% compared to the last quarter -- the first quarter last year. And we are in transition of our fleet, as you can see in EBITDA in the first quarter. So this, in fact, especially comes from Rent-a-Car as we are exchanging our fleet for cars of the lower ticket. With that, we have more than 75,000 in the average for the cars sold. And you can see the margin in the quarter closing at 5.9%. This indicator is very important because it shows that our margin is close to normal. And with that, we should have little impact in the results for the next quarters. With that, I'm going to turn the call back to Moscatelli.

Thanks, Camila. I'm going to move on to slide 19 in our presentation, when I'm going to talk about our capital structure. First, I'll highlight the reduction of BRL 2.4 billion in gross debt in 1 single quarter, going from BRL 17 billion to BRL 15.2 billion, basically due to the initiative of early settlement of local debt and bonds around. In addition, with the significant reduction of purchases of course, we reduced the supplier line by BRL 1.2 billion. Thus, I'd like to highlight the reduction of more than BRL 730 million, when we see net debt and supplier line compared to the fourth quarter last year. This effort was important to keep a stable leverage at also level of 2.9x net debt-to-EBITDA ratio. Now going to Slide #20. We have our cash and amortization schedule. We have a cash position that is very strong, BRL 3.9 billion in cash in March 23 and not to cover that until 2025. As you can see on this chart, the early settlement of debt that we have of BRL 2.2 billion this quarter was also taking into consideration the improvement of our maturity profile, practically eliminating maturities for the next 2 years and making the company extremely well positioned for the future. In addition, a lower cash level also brings a reduction in the carrying costs and the initiatives for the early settlement was to have access to new sources of funding with lower cost than the current cost of the company. And here, we show the new factor raising of the company in this phase with extremely favorable competitive conditions, which enable us to increase the spread between return on cost capital and therefore, it will create value to our shareholders. The new capital raising will be settled in the next 90 days in the amount of BRL 500 million. Average term of 5 years and CTI plus 1.65% as an average cost, the best of the company. Going to Slide 21, we have the evolution of the return on invested capital in recent years. As you can see, the scale of the company, we changed the level of return. We are in transition with important operational improvements that will bring some pressure on returns in the short term. I truly believe we are transforming the company with a much more plan on management to be able to influence the scales that we created and therefore, considerably increase the value creation to our shareholders. Finally, on Slide 22, we summarized some of our deliveries in the quarter and ongoing initiatives. As we mentioned, we had important evolutions in the first quarter. And the last, we bring the main items we talked about in the presentation. At the right of the slide, we list the serviceable ongoing initiatives to improve the company that will have a very positive effect on profitability, including the continuous evaluation of reducing average cost of debt, a more granular decision-making for buying and selling costs, selectivity in adding long-term contracts new tools for operational efficiency using technology, continuously adjusting the fleet mix and the launch of mover that will meet the needs of drivers to extend the useful life of course and maximize invested capital. To close, I'd like to reinforce that I am certain, we are on the right path and with discipline and agility in execution of our plans, we are going to be ready to start a new phase of growth and value creation. I'm now going to open for your questions, and then I will come back for my closing remarks. Thank you very much.

[Operator Instructions] Our first question comes from Lucas Marquiori from BTG Pactual.

I have 2 topics that I would like to hear from you first, Rent-a-Car daily events, we saw a bit of a difference quarter-on-quarter although you had seasonality. We had an increase, as you mentioned in the presentation. So I would like you to comment the new dynamics year-on-year and also a bit of the competition scenario. So what do you think is going to be the movement of the Rent-a-Car rates along there. And also the mover strategy. This is a segment that usually hit the risk metrics of fleet rental. So I would like to know if mover shows that you want to increase exposure in the app segment or you want to have more loyalty with drivers, reducing default rates, but keeping the same size fleet. And by the way, if you can talk about the size of mover, it will be very good. First, to have a bit more color and operation.

Lucas, Good morning. This is Moscatelli speaking. Thanks for your questions. I'll start with the daily car ticket. As you said, it was stable quarter-on-quarter, which I thought was good. And this year, we planned not to have increase in daily tickets because we are having a tougher economic scenario and very volatile. So our plan is very much based on the company's operational improvement and better occupancy rates. Of course, I think there are always opportunities for us to increase the average daily tickets because as you mentioned, the competitive scenario, we have a competitor reviewing fleet and increasing their tickets. And we realized in the last 60 days that the competitor has a daily rate that was very close to ours until last quarter, we were then 15% above that may generate an asset for our projections, but we are not counting on that so far. This is our initiative to optimize the capital invested in the company with the mindset of perhaps extending the useful life of part of our fleet. This is a market niche that we understand, has potential growth inside the company, is not going to be quite substantial as it is in the competition, but it's going to be very profitable in my view since we are not having new invested capital. We are just optimizing invested capital already depreciated in the company. So I think there is a new revenue of growth here and a creation materials, but perhaps we're not exploring because we were in a different time of growth. Now that we are going a lot more granular to opportunities. I do believe the business.

Moscatelli, if you allow me a follow-up. Can we say that not all cars that are rented today to the right railing are mover? Or is it everything a mover? Or is it going to be, I don't know, for specific drivers? Just for us to know if there's going to be a differentiation in the project.

Yes, Lucas, you're right, we are going to direct all app drivers with movers to the segment to move to the mover brand because the customer experience is very different. So we are opening specific stores separated from Rent-a-Car because indeed, the value perceived by movers customers, it's separate than the value perceived by Rent-a-Car customers. So that's the strategy. We started with 500 cars. We are checking acceptance so far, in 15 days, it has been very good, but the price is good. The use is excellence. So we are testing it little by little. We are not going to have a huge amount of cars at once, the it is to analyze and test this market niche that we believe can generate loans of value and test volumes as well, thus the quarters go by.

Thank you very much Moscatelli, congratulations on your results.

Our next question comes from Guilherme Mendes from JPMorgan.

I have 2 points on my side as well. The first is a about growth. You mentioned that the ideas optimize the fleet. We did see a reduction of the fleet that was quite relevant. If you quantify what's the idea for the year, not only for this quarter but for the coming quarters, what are you thinking about implementation and also about this new restructuring of the pricing area. If you could give us a bit more color on what has changed in terms of potential purchases because we still cannot see that in numbers.

Guilherme, thanks for your questions. I think we were able to accelerate the pace of the resizing of the Rent-a-Car fleet this quarter. I think that we were even faster than expected. We reduced the fleet by 34,000 cars. And I think that we can still go down 3,000 to 5,000 cars. Again, thinking of an occupancy close to 80% 12, 13 percentage points higher than what we reported now. So there's still work to be done. And I think that we can do that in the next 3 to 6 months. The second point is the pricing set for the purchase of cars, here, we have to improvements for our pricing tool for both fleet management and Rent-a-Car. There are things that have already been implemented, but there are improvements very much related to the technology embedded in the process for us to have more granularity and intelligence when pricing some fleet management contracts and when deciding when to buy cars. So you will see that we didn't buy much in the quarter, almost nothing in Rent-a-Car, basically concentrate on fleet management, but this is ongoing. And in the next 2, 3 quarters, we are going to have everything ready. But the idea is to bring more financial KPIs and granularity in analysis for us to make the best decisions focusing on creating value.

Question comes from Victor Mizusaki from Bradesco BBI.

Congratulations on results. I also have 2 questions on my side. The first, looking at the average ticket on fleet management. We see an improvement of 8% quarter-on-quarter. But when you get the whole fleet, you had an increase of 2% in the period. My first question is, does better ticket, did it have -- was it because of renegotiation, new contracts and new mix of contracts. So if you could talk about that? And second question about your debt. You talked about the reduction in the cost of debt. But when we get a reduction in cash excess and the drop in net debt. We took a look at thinking of the full year, you can consider a reduction of net financial expenses by BRL 100 million. Does it make sense? And looking into the future, is there an opportunity for you to refinance your debt at this marginal debt cost?

Victor, Moscatelli back here. Once again, thanks for your question. I'll start with the revenue per car in fleet management. When you compare the first quarter this year against the first quarter last year, you had the 2 effects that you mentioned. The first is strong work of renegotiating contracts, and we did that in the fourth quarter last year. And the second are marginal contracts coming was caused with a higher ticket and that increased revenue per car. And when you compare the first quarter to fourth quarter last year, our recent comparison, then you're talking basically about average ticket. In the first quarter, we did not have renegotiation of contracts with clients to increase revenue per car of existing contracts. So this is average ticket. We are going to continue seeing this movement because we are changing cars either renewing or signing new contracts with cost with a much higher average ticket when compared to our inventory. These are cars that were bought in the last 3 years. So all the appreciation we had in costs will reflect in the revenue per car as you are seeing already and that should continue. Second point about the debt. For the first time, we are raising capital with a cost that is more aligned to the company credit risk. This is an operation with incentives. So there is an additional benefit to the rates that we disclosed to you. But it's in a normal market venture or another operation that we can have. We are not going to have such differences from what we are announcing today. So the company's marginal debt is going to have a lower cost than our inventory. And we are using now the opportunities to raise capital and exchange more expensive debts. We prepaid this quarter, almost BRL 1.5 billion in local debts. And now we are having in the company backlog that with a lower cost. So the work of reducing the average cost of debt has to do with pre-settlement but also raising capital with debt and to better rates for the company. And I think this is going to be what you're going to see from now on.

Our next question comes from Pedro Bruno from XP Investments (sic) [ Investimentos ].

I have 3 questions. That's quite straightforward. One of them, I think, is a bit more strategic and follow-up on Guilherme's question that was more related to pricing. I'd like to understand a bit more of your initiative. You talked about 19 priority projects to be delivered in the next 180 days. But I would like to know a bit more about the pricing intelligence. So if you could give us a bit of a guideline in terms of what is changing since this department is now under the company's CFO. I mean there are changes that you already disclosed to the market. But I would like to see what is different compared to what was done and car press intelligence. I think I'm going to ask the other ones next after your answer first.

Pedro, thanks for your question. This is Moscatelli, again. We listed 19 priority projects in 8 different departments of the company. And they include an important project to improve our pricing tool in the Rent-a-Car and in the Fleet Management segment. As I mentioned, we are having more embedded technology to have more agility and granularity in our analysis for decision-making. So today, if you take a look at the company's pricing system, we have [indiscernible] type of car. So decision-making does not only take situation the price with a discount. But also the car, the kind of offers that you have in the market vis-a-vis retail prices. So it is much more granular than in the past. And with all the different stages of the people that are involved in the asset cycle. So we see the whole asset cycle, not only opportunities in purchase, but how can we make it, is it 15 days or 15 months, 24, what's the yield? What is the expectation of sales? And what's the sweet spot per se? So because we are having more granularity and the tools are still being developed, but there are things ready we believe we are going to be much more accurate in our investments. And therefore, we are going to create a lot more value than before. So it's a change in profile is how we analyze information in the purchase and sale of course.

Perfect. Very clear. The next 2 points, Used car sales, you talked about margins in the quarter. For us, it was a relatively low reduction. It wasn't that high in the fourth quarter compared to the third quarter. It wasn't as high again. It was a positive surprise. And you said that you're coming close to normal. We did see this performance in gross income and also an improved SG&A. So could you give us a bit more color for the remainder of the year? What are you calling close to normal? And I'm going to ask the final question that is very simple. You have other exclusions of BRL 14 million in terms of taxes, which is positive, which made the tax be positive in the quarter. Can you also give us a bit more color on the line? And if you can have any kind of recurrence for the future?

Pedro, thanks for both questions. In used cars, we had the fleet management contracts this quarter. And you know that fleet management costs had an appropriation, which helped with the margin of 5.9%. We said that we are close to normal because we believe that margins are going to be stable between 3% to 5% in the quarter. We don't have much adjustments in margin to make. So the results are quite close to recurrent rental results that we are going to have from now on. The second point that you asked about the credit of BRL 14 million, it comes from a tax loss that we have in Europe which we opened for the bonds operation. And because of the repurchase, we were able to deduct that task loss. And therefore, you saw this BRL 14 million. If you have any more questions, I'm here for you.

Our next question comes from Rogério Araújo from Bank of America.

I have 2 questions. One is the repurchase of bonds that you made? What was the effect of the NPV before and after taxes. The net present value and also the impact on accounts receivable, if it was a one-off and how much it was? And if you allow me, we see now a sale of costs of those costs that were put off a bit more than favorable conditions. So if you could tell us what percentage of your fleet was budgeted with less discounts and what percentage of your fleet used to sell with a likely worse spread up purchase and sale. And when you're going to have, what speed of depreciation you were expecting for the Rent-a-Car segment.

Rogério, thanks for your questions. I'll start with accounts receivable. We had a position of 25 million clients and BRL 530 million for specific fleet management customers that are in [indiscernible]. So we had this amount with them and we provisioned to be as conservative as possible. But it was one-off. Other than that, the default rate is quite healthy. We don't see any point of attention to isolate customers. As bond repurchase, we bought $100 million in the quarter, with an approximate gain of 25% for the 5 million that is $25 million. And as accounted to buy that, we sold investments that we have in sovereign and brand. So there is a small loss in the sovereign bonds and a much greater gain, which gives us BRL 50 million to BRL 6 million in the bottom line of the company this year. What you see the more important is that this is just a piece of the opportunity that we have in the operation. It's an operation of $800 million. We already repurchased $125 million, $25 million in the past and $100 million now. We still have $675 million to extract value, rebind the bonds in the market. So that's an important message. As for depreciation I believe that we are now at the end of the cycle in the first quarter. We decided to keep depreciation at the same level in a very conservative manner. In the short term, I see depreciation going down given the improvement in purchase conditions and the extension of the useful life of our fleet past 12 months, which helped us dilute the depreciation of these assets. You ask also about the amount of cars. In the fourth quarter, we said we had 54,000 cars with higher ticket and now we have 45,000 -- so we did have a good reduction this quarter, and we are going to continue that as fast as possible for the next 2, 3 quarters. I think that's enough for us to stabilize our feet.

This is Camila, adding 1 point on depreciation. In the case of fleet management, there is a continuation of rates in the balance sheet, especially because we are selling cost at some point in time were appreciated in our balance sheet. So in the case of GTF fleet management, it's still going up a bit. I think I covered all points. So Rogério, if you want more color?

No, you did answer but if I may with regards to the bond. If I'm not mistaken, of the 800 million, 425 are in Brazil with very active operations to CDI. So I think you would have to have an amount to close those operations. Are you thinking about doing that? Or are you going to stop until you have no hedge?

No, we have no logs. We are analyzing that in depth. I think we do have an opportunity, even when we already have the swap to in Brazil, because it's close to 150 7% CDI. I think we do have an opportunity, and we are going to work that for the last quarter. You'll probably see some actions taken in the next 30 days.

Our next question comes from Regis Cardoso from Credit Suisse.

I think there is a broader discussion and then 2 quick questions. The broader discussion is that you talked in the release about creating mover for a second cycle of life in cars. My question is, it makes sense in the context of the company, how you've been positioned in recent years. But if you think that for the future discounts in the purchase of course, we'll go back to levels in the past. I think it will make sense to have the least possible cycle in the life of cars, especially in the Rent-a-Car. So I'd like to understand the strategic rationale of this second leg movement? That's the first question. And the other 2 quicker questions are: first, net debt because you talked about gross debt, but net debt went up a bit. So if there was anything specific in the quarter for us to take into consideration and what you expect for the coming quarters if you think it's going to go down? And you talked about depreciation. Just one more thing I would like to talk about. Margins were slightly lower in the segment than in the first quarter of '22, I'd like to note there was a one-off, it bit a structure. It's related to provision. So if you can talk about that.

Regis, this is Moscatelli speaking. Thanks for your questions. I'll start with movers. I do believe that we are going to be able to generate value with the second car cycle. Of course, this is not for the whole of the fleet. But as I mentioned, with the granularity that we are having in the company as of now, with a much more thorough analysis on the profile of each car. I think there is an important part of our fleet that would make sense to be extended. And I think that mover can be the best channel for us not to have any problem terms of INPS for the Rent-a-Car fleet. So I think that making adaptations, adjustments along the company's life cycle to meet specific demands and being structured in a different way is part of management. And this is what we are doing. Net debt. You did said that net debt did go up. This is not what I see. That went from 10.8% to 11.2%. But you have to consider that the supplier line reduced by 1.2, so when you add net debt plus supplier line, we had a reduction of BRL 740 million. And I think that was an important effort that made the balance sheet much lighter and healthier for us to operate from no one. And the third margins. You mentioned that they went down. And that's just one thing to justify, which is the business in credit, and we are having now a much more conservative position than we had last year. If you exclude this [indiscernible] credits, you're going to see margins are up, and that's what we tried to show in our material. I don't know if there are more questions, but now that's it. Thank you very much.

Our next question comes from Alberto Valerio from UBS.

Congratulations on your work in the company. My question is about used car sales. What's the market length? We try to guess your strength of purchase and sale, how much you pay, how much you sold. But it's hard because we don't know exactly what cars you're selling. In our numbers, we saw a slight deterioration this grade was close to 0, and now it's minus 5%. But I don't know again what the pace of sales is. So if you could give us a bit more color on that on your used car sales, that would be very good.

Alberto, this is Moscatelli speaking. Thanks for your question. The used car sales market is tough. We saw the first quarter, the market accepted some profiles of cars, but as a whole, it is tough because of the microeconomic scenario. There is a restriction of credit, and that impacts our sales. We are seeing a lot more denials being credit being sought at banks. So it is a tough market. But we had a positive spread of BRL 12,000 per car, which is the transformation of the company's total mix. So the dynamic was favorable in the Rent-a-Car strength. And I think it's going to continue in the second quarter, perhaps not as high, but it will continue positive. And what we are doing is that we are working again with a lot more granularity in the retirement of the car. What car is going to be retired to which stores so that each store has the ideal mix and can strike the highest speed in sale at the best price. This is what we have been doing in the last 60 days. And that has been yielding the results. You see and as a consequence, the margin is slightly higher than it was expected by the market.

And in the spread of changing used cars for new cars. Should we expect this to continue? Or do you think you're going to see the prices of new cars going up. We have the new regulations of the cars at higher prices. What should we expect that? And are you going to keep your discounts?

Dynamics of negotiations with OEMs has been very favorable to us in the last 90 days. So I think we do have almost a turning point in our model to start having an additional generation of value in the Rent-a-Car business. We are going to continue retiring cars with an average higher ticket and buying cars with a lower ticket. This was the strategy that we decided in the past. And we believe it is the winning strategy for us to create value and adjust our mix. So this is something that you're going to continue to see throughout the year.

Our next question comes from Lucas Barbosa from Santander.

Moscatelli, congratulations to you and Pedro. I wish you both loads of success in our new position. I have 2 questions. First, CapEx other slide that shows the cash flow of your release. In this quarter, the number was BRL 206 million, in the fall of '22 million it was BRL 200 million. And in the note, the footnote, you talk about investments in IT, stores and other projects. I would like to know if there was any accounting practice that changed with this line or any specific investments. I'll ask you the second question later on.

Lucas, please go to the second question because I don't have the details. People are seeking the answer. If I cannot answer you during the call, I will call you back, no problems.

The second question is the change of mix of your Rent-a-Car fleet with more entry-level cars. Should we see a change in the market niche of your Rent-a-Car segment this year. And also, you think you're going to have stable prices this year. The question is for the average ticket or for products.

That's an excellent point. So Lucas from BCG had asked that as well. And I failed to answer. I've mentioned and I'm going to say it again. The average ticket was stable quarter-on-quarter, and we are not considering an increase in tickets along. But that does not mean we are not going to improve our profitability because of price because we are changing cars with a higher ticket for cars with lower ticket and keeping the same daily ticket. So the yield is higher and the creation of value is higher. So we do have the dynamics that is very favorable. Even when we cannot increase the average ticket, if you decrease the capital invested, you have the same effect than if you were to increase your daily ticket. So that's the rationale that we see this year. And I think that you could see that in the first quarter, but throughout the year, everyone is going to be able to see the value creation of that business because the invested capital is lighter and you keep revenue and the company's profitability indicators.

Next question comes from Rodrigo Faria from SulAmerica Investments.

Congratulations on your results. I have a simple question and then a more complex question, which is your exposure in fleet management. Now you're changing your mix going down with the Rent-a-Car and with the fleet management. Is it a strategy for the long term? Or is it a timely decision because of the Rent-a-Car adjustment? And what is the percentage that we should think for the future for each one of the segments.

Rodrigo, I don't know if it was for everyone, but we lost part of your question. Can you repeat it?

Can you hear me better now? Okay. So my question is that it's been now 2 quarters that you are a company that has a higher mix in fleet management than in Rent-a-Car. For the future, do you think you're going to keep the percentages that is fleet management, having a greater percentage than Rent-a-Car. And then I'll have my second vessel depending on your answer.

Okay. Very good. Rodrigo. The company's management is committed to creating value. So if we see that we can create more value in fleet management, we are going to accelerate the segment. But that fluctuates a long time. And we have to pay attention to market size and be as dynamic as possible to seize the opportunities. So right now, we are in this transition of our Rent-a-Car fleet with operational improvements in fleet management models a bit more consolidated with more predictable value. And that's why we are growing in the fleet management and readjusting the Rent-a-Car. But we can change the dynamics if we see opportunities in the future also to create value in the Rent-a-Car segment. Fleet management today accounts for 54% of the total fleet. At this space at the end of the year, it will represent close to 60%. So this is what I see until the end of the year and our strategy focusing on generating -- on creating value and not on one mix or the other.

Okay. So now I would like to understand the strategy because you did a very good work at Vamos with the advance of the sequence.

The more generate revenue in fleet management, the higher your receivables accounting, and you can use it as a pocket for funding in the future. We have BRL 2.6 billion in backlog of revenues. You have another EUR 1 billion in the balance of accounts receivable. If you have EUR 3.6 billion and you get it if you can advance 50% of that, it depends on your clients, of course, but you have 50% at least BRL 1.8 billion in pocket in cushion for funding in the advance of receivables. So it's huge. It is a fleet management strategy that you are considering for the future -- this is an average of value that we created, and we have the expertise in-house because it's something that we developed last quarter both in Vamos and here. We have BRL 1 billion in our receivables portfolio that could be used in the operation plus the marginal growth of the portfolio. So it is a new source of financing that the company created as an alternative together with what we announced today. So it is a very broad way. We're creating diverse source of funding to reduce the cost of capital as much as possible, which is an important alternative that we explore when the time will come. It's not the time now, but it is a channel that has been created, and it is an excellent source for the creation of value and reduce invested capital.

There are no further questions. So we are going to turn the call to Gustavo Moscatelli, the company's CEO, for his final remarks. You may go on.

Well, I'd like to close by thanking you all for your trust, for really, your commitment and trying to understand the company attending the call, and particularly to Movida's team, I've been with the company for 6 years, and I was very positively surprised by the energy of our team. I'm very confident with the company, we are supported 100% by the Board of Directors, and I'm confident we are taking the company to a new level that everybody is going to be able to enjoy. And this company is being developed now based on everything that has been done so far. So thanks for what has been that so far, but the best is yet to come. And we are working very hard to implement all the improvements we talk about as soon as possible. And remember, you can contact us at any time. Thank you very much, and have a good day.

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.]