Santos Brasil Participações S.A. (STBP3) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for holding. Welcome to Santos Brasil Fourth Quarter 2024 Conference Call. With us today, we have Antonio Carlos Sepulveda, the Chief Executive Officer; Daniel Pedreira Dorea, Chief Financial and Investor Relations Officer; and Ricardo dos Santos Buteri, Chief Commercial Officer. [Operator Instructions] I would like to remind you that the earnings release and presentation are available on the company's Investor Relations website where the replay of this event will be available. In addition to the rooms in Portuguese and English, we have simultaneous translation into Brazilian sign language. Please bear in mind that forward-looking statements made herein as well as operational and financial goals are based on the beliefs and assumptions of Santos Brasil management and on information currently available. These forward-looking statements involve risks and uncertainties as they relate to future events and may or may not materialize. Investors and analysts should understand that conditions related to macroeconomics, industry and other factors could also cause results to differ materially from those expressed in such forward-looking statements. I will now turn the conference over to Mr. Daniel Pedreira Dorea, who will begin the presentation. You have the floor, Mr. Dorea.

Well, good morning, everyone, and thank you for your attendance, and I hope you are all well. Beside me, Antonio Carlos Sepulveda, the company's CEO; and Ricardo Buteri, our Chief Commercial Director. The year 2024 was historic for Santos Brasil from several angles. Firstly, due to the consolidation as one of the main and most profitable port infrastructure and logistics company in Brazil, a leader in container terminal operations. Secondly, for its record performance operationally and financially, having handled almost 1.5 million containers in 2024, plus 23% year-on-year and a net revenue of BRL 2.9 billion, EBITDA of around BRL 1.5 billion and net profit of BRL 742 million, representing annual increases of more than 45%. And finally, with the prospect of the end of a virtuous cycle -- circle under the opportunity leadership and the start of a new chapter with the company's acquisition by the French group, CMA CGM, a global giant in the container industry. In our view, the results achieved in 2024 derived greatly from the successful execution that we set out to do 5 or 6 years ago by investing in capacity expansion in our markets, especially in the Port of Santos vis-a-vis the demand curve we demanded and ahead of the competition. This allowed us to gain market share, while at the same time, it allowed us to reposition our prices. For example, last year, Tecon Santos grew 11 percentage points above the aggregate of the Port of Santos, reaching 42% market share. This conversion of high volume, balanced cargo mix and fair prices has enormous leverage potential. Just look at the annual volume growth of 2024 of 23% while net revenue grew 36% and EBITDA net profit expanded 47% with consolidated margins reaching 51% and 26%, respectively. And this is precisely the point at which Santos Brasil finds itself, where we will continue to experience reasonably large annual increases. On the subject of capital allocation, if we look in the rear-view mirror, we also successfully carried out the strategy. In 2024, CapEx reached BRL 731 million and the proceeds to be distributed based on the results of the year totaled BRL 742 million. Additionally, we paid out return of capital to shareholders of BRL 1.6 billion which together represent BRL 2.3 billion paid to shareholders, the equivalent of BRL 2.70 per share. In terms of CapEx, our focus now is to offer 3 million TEUs of annual capacity at Tecon Santos by 2026, representing an increase of 400,000 TEUs over current handling capacity. This will allow Santos Brasil to consolidate its leadership in the Port of Santos and capture the gains derived from market growth where we see a potential in import and export flows as well as Cabotage. Another priority is to finalize the planned investments in the liquid bulk terminals and reach 190,000 cubic meters of tanking, positioning the company as one of the main capacity providers in the Port of Itaqui. We are pleased with the process of this unit, which grew by 37% year-on-year despite the still restricted supply of storage throughout 2024. But despite the small scale, the EBITDA margin reached 54% for the year. In 2025, with 110,000 cubic meters of capacity, we should see a new leap in results. And from 2026 onwards, with the full implementation of the investment cycle, we should reach the full potential of the liquid terminal units. Regarding cash management, the company ended 2024 with gross debt of BRL 2.7 billion and a cash balance of BRL 730 million, resulting in net debt of just under BRL 2.0 billion and a leverage ratio of 1.5x net debt pro EBITDA pro forma. This is a level that I deem to be controlled and sustainable, especially in view of the prospect of increasing future cash generation. In my final remarks, I would like to give you an update on the acquisition by CMA CGM of the stake held by Opportunity's vehicles. With regard to the regulatory approval, ANTAQ has already given its favorable opinion, while CADE's approval is still being awaited. Once this stage has been overcome and the transaction with opportunity has been concluded, CMA CGM will have a period of up to 30 days to register a takeover bid with the Brazilian [ CGM ]. The company will keep the market duly informed on any material events related to this procedure. Very well, we are now at your disposal for questions and answers. We will count with Antonio Carlos and Ricardo dos Buteri. And before that, I would already like to thank you very much.

[Operator Instructions] Our first question comes from [ Matthew Santana ] from XP.

Congratulations for the results. You mentioned this at the end, but I would like to know if you could give us more details on your expectation regarding CADE, the date to end the process of analysis. And if you could explain more details on the process per se.

The process have followed the expected pace. It is within the regulatory term. The market tests have already been concluded, and we are now awaiting the opinion of the general superintendents of CADE. It's always very difficult to mention a deadline for this. As I mentioned, it is within the regulatory period, but the outlooks are positive for a favorable conclusion of this transaction.

Our next question comes from Leandro Neto from Bradesco BBI.

Congratulations for your results. A question at our end follows the same line as the end of your conversation. If you have a decision on [indiscernible], if you will have a stake in capital or otherwise.

Well, thank you. This is Daniel once again. No, we do not have that information. This is an issue that is being analyzed between the acquirer and the sellers. Therefore, so far, we do not have any information to disclose to the market.

[Operator Instructions] As we have no further questions, I will return the floor to Mr. Dorea for his closing remarks.

Very well, I would like to thank you all once again for your attendance. I wish you a very good day and good work. Thank you once again.

The Santos Brasil conference call ends here. We would like to thank all of you for your participation. Have a very good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]