SIMPAR S.A. (SIMH3) Earnings Call Transcript & Summary

Good morning, and welcome to the conference call of SIMPAR to discuss the earnings regarding the Fourth Quarter 2021. Today with us, we have Mr. Fernando Simoes, CEO; and Denys Ferrez, Executive VP of Corporate Finance and Investor Relations Officer. [Operator Instructions] We would like to inform you that this conference call is being recorded and simultaneously translated into English. Before going on, we would like to let you know that any statements made during this conference call relative to the company's business outlook, projections, operating and financial goals are based on the beliefs and assumptions of SIMPAR's management and rely on information that is currently available to the company. Forward-looking statements are not a guarantee of performance. They involve risks, uncertainties and assumptions since they refer to future events and therefore, depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operating factors may affect the company's future results and lead to results that will materially differ from those stated in the forward-looking statements. We'll now turn the call to Mr. Fernando Simoes. Please, Mr. Simoes, you may go on.

Good morning, everyone. We are starting the earnings release for SIMPAR in the fourth quarter '21 and the year of '21. I'd like to thank you all for attending our call and thank our clients for the opportunity of providing services to them, which is the reason of being above all companies and also special thanks to our more than 35,000 employees that work hard every day to perform the activities that will result in the numbers that we are going to show you today. Thank you very much. Before I start and give you details on numbers on Page 2, I would like to remind you of 2 factors. This is the first full year of SIMPAR. It's important to highlight as well and thank for your attention, patience and credibility. We've been talking for some years now that the CapEx that is being invested is part of our plan and results will come, as if we were building a factory and then we start enjoying the results of its manufacturing. '21 shows results of what we did in previous years. Everything that was executed in the year of '21 is still not represented in number. An example, we invested more than BRL 8 billion net CapEx, part you're going to see in '21 but most of it will be seen in coming years. We had acquisitions of BRL 3.9 billion. You only have BRL 700 million that is represented here, that is BRL 3.2 billion, will be shown in the full year of '22. So now showing you numbers of '21 that reflect part of what was executed in '21, but mostly of what we did in years before. In our new business model, we had net income in the first quarter '21 of BRL 367 million, 70% above the same period 2020. If we take a look at the full year of '21, we had BRL 1.3 billion of net income. That shows 154% over last year. So it was not just a hiccup of the fourth quarter. They are consistent results that improved continuously. EBITDA in the fourth quarter went up BRL 1.3 billion, 89% above the previous year. For the whole of the year '21, we had BRL 4.2 billion EBITDA for the year '21, which means growth of 80% year-on-year. And when we talk about net revenues, we had net revenues in the fourth quarter of BRL 3.3 billion, which also means growth of 58% year-on-year. When we take a look at the whole of the year of '21, we had BRL 11 billion net revenue from services. I'm being quite humble, BRL 11 billion providing services. It is really a significant number, 58% higher the year of '21. Once again, it is not a hiccup for a quarter, but consistent results of everything that we have performed in recent years. Even with BRL 8.8 billion of net CapEx, our leverage has remained at 3.4x, slightly lower than the fourth quarter '20. We had a return on invested capital of 13.2% and a return on equity of 29.4%. As mentioned before, this shows that 2021 started to capture some of the revenues of acquired company, but only BRL 700 million. In '22, we are going to have a full year to captured BRL 3.2 billion of net revenues from our acquired companies. That will show in the coming years and that have not yet been captured in '21. In net revenue from services alone, it's important to mention that we had growth of 58.4%, but we have a significant portion, 48% of organic growth, which shows our capacity to consolidate and gain market share by means of the development of new clients, new services provided sometimes to the same client to existing clients. Now we are going to go to Page 3, where I will give you a bit more color and show generation of value with growth and profitability. We had indeed transformational results built in recent years, in line with the execution of our strategic planning. If you take a look at the year of 2021, we had BRL 1,329 million of net income. That means a growth of 155% over 2020. And even before the pandemic, the growth is even higher, which shows the consolidation of our company results, vis-a-vis, the new business model that we grew in the past 5 years, 6 years. On the right part of the same slide, Number 3, we show return on invested capital with huge evolution. The company is starting to enjoy gains of scale and from the business model we've built, return on equity, ROE is also growing in line with gains of scale, business management. And net income in the bottom of Slide 3, when we take a look at JSL with growth of 565% over 2020. And remember, JSL has completed also its full year as an independent company, exclusively focusing on logistics, no longer in the role of a holding company with [indiscernible] as our CEO. Movida, with wonderful growth of 250%, BRL 819 million for 2021. I would say, if you compare Movida from '19 and '20 to '21 and you compare, it is completely transformed. If you take a look at our fleet, we grew by 50%. This is huge growth, not only because of the merger with CS Brasil, but also -- and mainly because of this execution and business model that is really focused on the change of habits of our clients, individuals and corporate. Vamos with growth of 124%, BRL 400 million. And CS Brasil, Original, BBC with Caffarelli, Head of the Company, remember BBC was just authorized to operate as a bank and it is being prepared for that probably in the second half of the year. And now we are going to go to Page 4, where we give the highlights of the main strategic moves in creating value. Once again, I would like to enjoy this opportunity to thank all our employees, more than 35,000, as I mentioned before. And our operations, as you know, just a clockwork, you will have operations, you'll have controls. On Page 4, we show the sequence of moves that we performed along the year of '21. Vamos IPO, the issuing of bonds, the first rental company and SIMPAR as a holding company to issue sustainability-linked bond, the acquisition of CS Brasil by Movida. We, as the controlling shareholders did, for the first time, the voice of the shareholders and said that we would vote with the minority shareholders and it was voted unanimously. We had the split of SIMPAR's shares, then the follow-on of Vamos and other transformational movements, the arrival of Caffarelli, heading BBC, SIMPAR joining the ISE B3 index, is starting to reflect all the movements that we have been engaging in sustainability. I'd like to enjoy the opportunity to say something. Inside our company, we have a program that is translating to English, if you want it, you can do it. We visit our memory centers and we show teenagers from 16 to 16 years old, how they can transform their lives and have job opportunities, showing them the history of our executives and my father and the family. Now, we've created a digital program. And throughout 2022, we are going to train more than 1,000 youngsters in the If You Want It, You Can program, basically trying to call the attention to work and development. These are youngsters that live in foster homes in Brazil. We are going to absorb part of this labor and we believe that we are going to train them also to work for other companies. And we also have CS Infra establishment where we are going to consolidate all our concessions, focus on long-term contracts and services. Remember that CS Infra, that was our first movement. As controlling shareholders said that we will vote with all the other shareholders, we had all the process with independent members and again, unanimously approved the acquisition of Ciclus, the largest company of waste treatment. And CS Infra is going to start focusing on that to be consolidated at SIMPAR. So, these were our main moves for '21. On Page 5, we talk a bit about the acquisitions made in '21. And once again, it's very important to mention that they will still add BRL 3.2 billion to SIMPAR's annual net revenues. There were several acquisitions in the first, second and even fourth quarter of '21, bringing more people to us. And I would like to highlight that our acquisitions have been very surgical in complementary sectors with huge potential to grow and with management that is a reference and with people that make a difference in our development. We've had companies that had a corporate business model, values and cultures that are similar to ours. With gains of scale for companies and with their expertise in their sectors, you're going to see the companies we acquire, transforming insights. So it's important for them as a new opportunity, but it's also important for us to consolidate our results. Once again, only BRL 700 million impacting on SIMPAR's revenue in the year of '21. And in the coming years, we are going to see another BRL 3.2 billion. On Page 6, we give you a bit more color on each of our company's net income, gross revenue and EBITDA. We start with JSL. 4Q '21 with BRL 54 million net income, 78% almost increase, BRL 1.6 billion of gross revenue in 4Q and BRL 220 million EBITDA. If you annualize these numbers -- and again, it's very important to highlight, if you're going to see JSL as a company, when it went public, it had BRL 3.3 billion in revenue less than BRL 80 million in net income. You closed '21 when you analyze, you have BRL 5.5 billion of gross revenues and net income of more than BRL 270 million for '21. On the same page, we talk about Movida. The net income in 4Q of BRL 276 million. In the year, BRL 819 million, was up 250% year-on-year. EBITDA of BRL 2.1 billion in '21, growth of 132% and a ROIC, return on invested capital of 15.3%. It's important to highlight that Movida numbers that had an average fleet in the fourth quarter of 150,000 cars, but it closed the year with almost 190,000, which shows the organic growth that is still to be enjoyed during the year of '22 based on the CapEx invested, company position and Movida's team capacity of execution as the teams of all other companies. On Page 7, we talk about Vamos. Net income year-on-year with more than 120%, reaching BRL 400 million. EBITDA of BRL 1 billion, growth of 64% and a ROIC, return on invested capital of 14.2%. Vamos is a corporate group with a unique ecosystem, truck dealerships, a major stake at farming machines dealerships, a used vehicles network and the rentals of trucks, machines and equipment, which gives the company the possibility of growth with sustainability, providing services to customers at several parts and bringing resilience of its revenues as you probably saw in its earnings release. Still on Page 7, we have our numbers for Original vehicles dealership. That is a network of dealerships of light and used vehicles, new and used, I'm sorry. And these numbers still do not reflect the significant acquisitions that were made in the coming -- in the recent months. These are numbers of Original vehicles alone, which show growth in net income, average ticket and retail sales volume for '21. The company acquired UAB Group. That is very important because of its business model and positioning. Sagamar, with a very good positioning in Maranhao, with a dealership network that is extremely important and a management model of excellence with excellent teams and business. And as we always say, more important than the business we acquire are the people that come along. That will certainly contribute significantly for our development. In this case, 2 business groups, UAB and Sagamar, who are still pending approval of the anti-trust agency, but everything is moving well, but with management and people that will certainly contribute for a significant transformation of this company. In this case, the main shareholder of Maranhao will become the shareholder and executive at Original. Once again, more important, the business is to have people that make a difference. We are very happy with this move with Original, starting a new cycle of development and transformation in the dealership business. On Page 8, we have BBC, a leasing company and digital account. We paid more than BRL 1 billion in freight costs to truck drivers. As you can see, numbers are still incipient, but with Caffarelli, Head of the company, now authorized by the Central Bank to become a bank, we are going to be at full pace in the second half of the year with major opportunities inside our ecosystem. And then CS Brasil. CS Brasil no longer has CS Frotas. CS Frotas was acquired by Movida. At the highest governance standards, we as controlling shareholders voted with the minority shareholders and approved it unanimously. And CS Brasil is now a company for -- CS Frotas is going to be a company for -- I'm sorry, CS Brasil is going to be a company with GTF services with driver. And then on Page 9, we have finally, CS Infra. This is a company that we are going to focus for concessions. We have BRT and Transcerrados Highways that are still building and the revenues will come, with stake in BRT Sorocaba and the acquisition of Ciclus, the largest waste treatment company in Brazil. One of the largest waste treatment plants in the world that was acquired by SIMPAR, also following the highest levels of confidence with independent valuations, approval of independent board members, put to vote to the approval of all shareholders. It was again seen that we would vote with the minority and again, unanimously approved. And now this is part of CS Infra, that will then consolidate its impact. Remember, that the main revenues will come, Transcerrados [indiscernible], that has not contributed to the numbers of CS Infra yet. On Page 10, we'll give you more details on our consolidated financial results. For that, I am going to turn to Denys, that is SIMPAR's VP and CFO.

Thank you, Fernando. On Page 10, we talk about our consolidated financial highlights. Net revenue in '21 totaled BRL 13.8 million, growth of 41% over 2020 of which BRL 2.8 billion were for asset sales and BRL 11 billion in services, growth of 58% year-on-year. If you take a look at the fourth quarter and we analyze that, the total revenue would be approximately BRL 16.5 billion, showing that we start the year at an even stronger pace as the year of '21, where we already had huge growth. Specifically talking about the fourth quarter, net revenues was BRL 4.1 billion with growth of 56% compared to the same period last year. If we break down the BRL 4.1 billion, you're going to have BRL 800 million for asset sales and BRL 3.3 billion in services, growth of 58%. Now to the top right, talking about EBITDA. EBITDA in the year of '21 reached BRL 4.2 billion. And here we are not including the benefits of EBITDA that the group will add with the merger of Ciclus that took place in the end of December. So, this number of BRL 4,190 million is 81% higher than that of the year of 2020 with margin of 38.1%, 4.7 percentage points above the previous year. Specifically, with regards to the fourth quarter, when we annualize numbers, we would be reaching EBITDA of BRL 5.3 billion with margin of 40%. The number of the 4Q specifically was BRL 1.3 billion, which is almost 90% higher than 4Q '20, with margin in the fourth quarter '21 of 40%, 6.6 percentage points above the same period last year. If we go to the bottom left corner, EBIT in '21, we delivered BRL 3,131 million, growth of 159% compared to 2020. That is more than 2.5x higher with margin of 28.4%, which means an expansion of 11 percentage points when compared to the margin of the year of 2020. If we again annualize the numbers in an exercise based on the fourth quarter, we would have an EBITDA of BRL 4 billion, showing that we start the year of '22 already at stronger pace than the whole of '21. And then specifically talking about our operating income measured by EBIT in the fourth quarter, we reached BRL 1 billion, which is 135% higher than that of the first quarter '21. That is more than 2x higher the whole of the period last year. And then the margin was 30.3%, an expansion of 9.9 percentage points when compared to the same period last year. As a result of what we've described until now in the bottom right part of the slide, we talk about the net income. Net income of 2021 was BRL 1,329 million, an all-time high record in our history with growth of 155% year-on-year, more than double and more than a fourfold increase of the results delivered in 2019, margin of 9.6%, an expansion of 4.3 percentage points compared to the year of 2020. And again, the exercise of annualizing the levers of the fourth quarter, we would get to BRL 1,466 million, an expansion compared to the total year of '21 with margin of 8.9%. Talking specifically about the quarter, the fourth quarter '21 reached net income of BRL 367 million with expansion of 71% year-on-year and margin of 8.9%, with growth of 0.8 percentage points for [ Q '20 ] [sic] ['21]. On Page 11, we talk about the transformation in our debt profile, which much contributes to the new growth cycle, the [ growth ] prepared for. Here, we have the debt amortization schedule in 2020 and our debt amortization schedule we entered December 2021. In the end of '21, we reached 8 years. And at the end of last year, it was almost half of that. So that gives breadth for the group to develop and to continue its growth with comfort. As for liquidity, we closed '21 with 9x coverage of our short-term debt. And in the end of the previous year, we had less than half of that. So again, a significant transformation and the group closes the year with BRL 15.5 billion, with gross debt of BRL 29 million. Cash of BRL 13.6 billion. And still has undrawn committed lines of BRL 1.3 billion. Specifically talking about the Holding SIMPAR, the balance of the net debt in the end of the year was BRL 2.6 billion, including gross debt of BRL 5.6 billion with maturity for 2031, almost in its totality and a cash position of BRL 3 billion. So a very strong liquidity position to support any development of the group or any opportunity that may happen in a volatile year, as we think '22 is going to be. And the average net maturity, even higher than the whole of the Group, 9.2 years. So, we can break the money and really develop the group quite well until the date of maturity or rollout of the debt. Going to the next slide. We show you our discipline and commitment with leverage. We have been showing accelerated growth with profitability, but also a discipline in our capital structure. In the bottom part of the page, we show that we closed the year with leverage of 3.4x. That is lower than the end of 2020 that was at 3.5x, keeping our commitment of gradually de-leveraging and get to a level that is lower than 3x. So once again, we stuck to our commitments. We counted on the support and had the credibility of those that fund our growth of this group in the years of '18, '19, '20, raised funds of about BRL 5 billion in '21. We raised BRL 21 billion. BRL 8 billion in the external bond market. We issued the first bonds linked to sustainability in the sector. BRL 11 billion in the local fixed income market and BRL 2 billion in the equity markets. That shows our consistency in deliveries and the credibility that the several sources of capital have granted us. It's important to highlight that S&P upgraded our rating from stable to a positive. And we are at BB minus at global level and brAA plus at the local level. Should the positive perspective and rating upgrade materialize, SIMPAR will become one of the few companies with rating above the sovereign level of Brazil. That just confirms our resilience delivered in more than 65 years of history, overcoming several crisis and never failing to grow in any of these years. With that, I'm going to talk about capital allocation on Slide 13. And this was also a year of transformation in the size of investments. If you go to the center left part of the slide, we show the annual performance of net CapEx. And remember, net CapEx is gross purchase less the sale of assets. In the year of '21, we invested -- and this is basically for growth, BRL 8.8 billion. This is 3x higher our investments of 2020. And it is even more so when you add everything that we invested in the last 4 years. And out of this total, thinking that most of it is for growth, you can be sure that we already contracted an expansion of revenue and cash generation for '22, because I am very thrilled to say that this investment contributed for the year of '21 with about 25% of the year. So only in '22, we will see 100% of the benefits of these investments. And remember, in addition to record investment, we continued with our discipline and reduced leverage, as I mentioned in the previous slide. As for investments, I would like to highlight that 91% of the total of BRL 8.8 million were allocated to rental activities with long-term contracts and contracts connected to inflation adjustments, especially Movida, Vamos and CIS with BRL 7.8 billion out of the total. But logistics also had significant amount of percentage, whilst not much, 9%. We invested BRL 649 million in -- BRL 749 million in logistics, but that's connected to new contracts signed by JSL and the acquired companies. And a relevant portion has yet not shown in the results of '21 as the whole of the CapEx. With that, I'm going to turn back to Fernando for his final comments.

Thank you. Denys. Now on Page 14, just for us to close and to open for your questions. There are some points that I would like to draw. We completed the execution of an important part of our strategic planning. That results in the years that we presented to you, which are the best ever in our history. More important than that is that we built in the last 5 years, 6 years strong foundations, values, respecting the 65 years that the company turned last year to start a new cycle of development. We, every day, believe that we can do better, that we have excellence in strategy execution and operations, that we cannot fail to recognize. That ensure our growth with robustness, our evolution of CapEx, with focus on disciplined results and capital structure that promoted diversification in several sectors and business growth with responsibility. The company is positioned in sectors and segments that are crucial for our lives. I am talking about food, health, mobility in all of our business, which gives us the certainty of resilience in revenues. Our growth pillars are to build long-term relationships with our clients, offering services that are needed and that will contribute to the relationship of our clients with their customers. The more we can bring the customers of our clients close to us, the more loyal our clients will be. Our people, people that have been with the company for a long time that come from acquired companies. And this combination [ in organization ] has really benefited our companies and business model. We have governance and capital structure. These are the foundations of our companies that are solid, and that really make us be certain that we are starting a new cycle of development that will be sustainable and that will contribute to the long-term survival of SIMPAR and all its subsidiaries. Remember, most of the CapEx of the acquisitions made by our companies in logistics, in Original, has not yet reflected in the numbers of '21. They will be shown in the numbers of the years to come. Once again, thank you very much. And now we are going to open for your questions. And both, Denys and I are here to answer any questions you may have. Thank you very much.

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

Fernando, Denys, in the presentation, you did comment about the company's cash position and debt profile. When we take a look at the cash position of the holding in the fourth quarter, you're talking about approximately BRL 3 billion and as you mentioned, the holding that is very long term. However, you take a look at 2022 and we believe that this is going to be a more volatile year. So I would like you to talk about -- or what are you considering in terms of the holding cash allocation, if you're going to hold your M&A strategy as little -- a little, what are you considering for that? And the second question, Denys mentioned the improvement in the group's credit rating. Can you already think of any expectation in terms of your debt spread given the improved rating?

Victor, this is Denys speaking. I got your 2 questions financially speaking. I don't know if you asked any question before because it was silent for some time. But anyway, let me talk about the SIMPAR cash position as a holding. In the BRL 3 billion, we already had expectations of considering the expansion in our presence in the car retail business. This already happened. We're just in the formalities for the closing. So that is already something that we are going to work with. So we are not holding anything in the strategy. Now we also have the initiative of eventually have the specific fundings for the amounts involved in some acquisitions which will give us a survival in the total amount of liquidity that we have here. So if we have opportunities and if it makes sense, this is what we are going to do to keep the liquidity longer. So I would say most of this cash already have an expectation should we be successful in our strategic planning. And as I said, we have some exceeding cash that can be used timely. I think this was the first part of your question. The second part with regards to the credit rating. I do not have the metric, but there is a scale in S&P. And it is in the end of the day breaking a paradigm. This is a company that basically operates in Brazil, but with huge diversification. And we're the connection to the foreign market by means of its clients, commodities, not necessarily connected to the local economy. So even in a scenario of a volatile local economy, we are able to continue growth as it's happened in previous quarter. I don't hope we have any more stress tests. I cannot take it any longer. The company will, but I can't. So I think this is very important. This is a good visibility because after all questions people asked about the liquidity of our assets, we were able to sell assets in recession, during the pandemic, and that shows the quality of assets. So I think we should start really reaping the fruit of that with more quality. But I cannot quantify that to answer your question.

And this is Fernando, Victor. Within our strategic plan, we want to continue to observe and execute opportunities. Of course, we want to respect our capital structure and the leverage year after year, but we are prepared to have our positions in the dealership, car retail, if it makes sense and if it is good for our companies. In logistics we also see opportunities. And so there are several avenues of growth the way we are positioned today. Victor, these are now holding with JSL. So when you take a look at the holding, just to answer and add to Denys, we almost have a technical reserve to support any company in the future, but the companies are prepared with good capital structure, responsibility, in line with the returns that we expect, and a lower leverage year after year.

Our next question comes from [ Guilherme Mendes ].

Can you hear me? Denys, Fernando, can you hear me?

Yes.

First with regards to Ciclus. At the acquisition you talked about the rebalance. I would like to know if you have any timeline on that. And second CS Infra thinking of federal and state auctions. What do you think the focus of the company will be in terms of segment? Is it railway? is it ports?

Okay. Thanks for your question. Thanks for being here with us today. Let's start with Ciclus. Just to remind you, Ciclus had been approved -- had approved and signed this amendment after 20 months of negotiation and that took place in the end of 2020. In the beginning of 2021, the contract was revisited, it was challenged. The Audit Court of the City of Rio de Janeiro [ held their stand ]. And then after months of going back and forth, the rebalance was again approved unanimously by the Audit Court. I think it was 60 days ago or close to that. Then it went back to [indiscernible], that is the granting power. They asked some questions to the Audit Court, and yesterday once again it was approved. So that the financial rebalance is going to be kept. So we believe that red tape aside, in the next 2 months we are going to have it official and the balance is recognized. And remember, even with the rebalance it continues to be the lowest price in Brazil, lower than any of the other capitals which really makes our company healthy. This is Ciclus. Now when you talk about the focus of CS Infra, I thank here for your question and I think that I would like to reinforce this point. We are not a company that is an infrastructure company. We are not going to build a very CapEx-intensive business. We are paying attention to opportunities and concessions that are long-term, that are focused on services, and more than that, that can contribute to our ecosystem. I'll give you an example. Ciclus, in addition to the waste treatment station, is a company that has logistics. It moves waste to the treatment stations. We have a plant that has gas and energy, and in the second half of the year we're going to be able to have even more energy. That can be connected in the future to electric cars that we are going to rent to our clients. So these are things that we can do when we talk about the ports of Aratu, for instance, they can be ports that will contribute to logistics from company to the port, from the ports to companies. So these type of concessions that will not hurt our capital structure, that will not hurt our plans, and that will bring more opportunities to the companies are the ones that interest us when we believe that more and more individuals want services and governors want to have more concessions to provide better services in health, education, and any other segments. And that is how we want to develop this business.

Our next question comes from [ Gabriel Rezende ].

Fernando, Denys, congratulations on your results. I'd like to talk about the group strategy in the mid and long term. Today SIMPAR has many businesses and how does the company sees its non-listed subsidiaries, thinking of the growth you were expecting for this area. So I'm talking about CS, I'm talking about the dealerships, and even BBC.

Gabriel, this is Fernando speaking. What I would like to share with you, how do we see our business. Quite humbly, we wake up every day as if it were the first, as if we were starting 65 years ago. But today we have the pillars, the foundations, the capital structure, and the people that are positioned right. And more important than that, in segments that have a huge potential of transformation, the listed one that you mentioned, but the non-listed one, CS Infra in concessions we haven't even started. Everybody talks about airports, railways, subways, but we have so many things in health, in public security, in education. We have myriad of opportunities. Dealerships in Brazil, if you take a look at the world, they are consolidating more and more, scales, business, management, and they become a source of services, not only sales, if they are a solution for mobility. So our move is in line with plans. Sometimes we have to postpone movements because we were executing Movida and then Vamos, but we know we have a huge potential of growth for dealerships in car retail and also in CS Infra. BBC, although it looks like a startup, now it's been authorized to become a bank. In the second half, we have [indiscernible] Caffarelli, Head of BBC, we are not going to be a retail bank, but inside our ecosystem it is going to be a completely independent business with a healthy capital structure. And we are going to bring huge opportunities for our companies to have even more loyal clients and bringing returns to BBC. So we have a huge potential. When we talk about dealerships where when we have movements, we think of people. [indiscernible] that was one of the main shareholders of [ Maranhao ] became a partner of Original Holdings, the CEO and shareholder of the company. This is also part of our cycle of development to really have a differentiated capital management. We don't know if we are going to go public in the future or not. But we are open to anything that can contribute to the development of our company. But we do not acquire companies to go public. Going public is a consequence if it will contribute to the company as a whole, if we are going to continue with development and growth, then we can go public with any business, even with the listed companies by means of follow-up or going public with unlisted companies. But we are not going to make a movement just for the sake of it. It has to make sense for our business, for our people, and for generation of value. This is how we see our business that are not listed in our ecosystem. And thank you very much for your question, Gabriel.

Our next question comes from Victor Mizusaki from Bradesco BBI.

Just one more question here. You talked about BBC Leasing, the company getting the license to become a multiple bank in December. And you also talked about BBC being focused on the payment of truck drivers. With the multiple bank license, what are the opportunities that appear to BBC because we always have this discussion of Fintechs versus banks versus payment companies, but perhaps with a payment company of Visa Payment you would have more flexibility legally-wise. So how can that accelerate BBC's growth and be beneficial to the group?

Well, I'm going to try to answer your questions, but I would like to talk a bit more about that. BBC was a financial leasing company. We have trucks that we sell used or in our dealerships, cars. But we did only have leasing services. Clients when they want to buy, they want to see their names as proprietors. Leasing companies were a problem in Brazil in the past. So people like to buy cars and leasing was not something that people wanted. And we pay BRL 1.100 billion in freight costs. We have a huge opportunity of doing that to the market as well. Until today, we already made these payments from our companies. BPC couldn't do that because it wasn't a bank. With a bank, you have a completely different portfolio and offers to clients. So we have a potential of growth for BBC. So we have our used dealerships with Movida selling their assets. You have our dealership networks, and we have things that are still pending approval from [indiscernible] but we have a dealership network with BRL 800 million and now it's already at BRL 3.2 million. This is not here, but these were the acquisitions that we made. And most of this is financed. So another opportunity there to provide credit. Then you have Vamos where they use stores for all the truck dealership farming machines and equipment. So it is an endless line of opportunities in our businesses but also to other companies in our segment. So a huge potential of transformation, Victor. So, once again, what is our difference when compared to a bank? One, we are not concerned about the unit value of assets, the guarantees that we are going to have because this is our business. This is what we do. Price residual values. This is our expertise. And that will bring the comfort to BBC. I'm not saying that BBC is going to become a mega bank the day after. But it certainly can grow sustainably in our ecosystem and also outside. And most important than that, it's going to be a modern company with systems, with apps. We have had a digital account for almost 3 years now in perfect operation within the real economy with a huge potential of results and with margins that we are just going to be able to enjoy. Of course, we'll have to be competitive to offer an advantage to clients, but it's going to be an independent company as any of our subsidiaries. I don't know if I answered your question. Perhaps I missed something.

No, it was great.

Okay. I'm going to read the questions that we have taken on the web. And there is a bit of a coincidence in the topic, and I will make sure that we cover them all. We have a question from [ Claudiu ] saying, in 2022, is SIMPAR going to continue with M&As? Is JSL going to be a priority? Before answering, I'm going to include [ Guilherme Fonseca's ] question that asks if we are going to continue our M&A pipeline, if we have to raise more capital. And the question is if the focus is going to be Original and Ciclus. So the first quarter, if the focus was JSL. The second question, if the focus was Original and Ciclus [indiscernible]. And then a question from [ Rafael ], if we have mapped new opportunities in infrastructure, which I think we have answered already. And the final question that we have on the web asks about the -- question from [ Lucas Barboza ] asking if with the dealerships, if we are going to continue with inorganic growth, so is there any risk of this business to accommodate margins when the manufacturing of cars resumes its production. Still questions? M&A, what focus of our M&As and mapping of new opportunities. Okay. Thanks, Denys, for putting together the questions. Well, [ Claudiu, Guilherme, Rafael, Lucas ], I tried to put together all your questions. First, focus, well, you can see that we had acquisitions in Movida, we had acquisition in Vamos. Vamos had acquisitions that really contributed to the transformation of the size of its dealership network. It already had the largest dealership network of Volkswagen/MAN. But today, it is the second largest dealership of farming equipment and machines in Midwest Brazil. And that is due to also acquisitions both in Movida and Vamos. Now for the future M&A is most of it going to be JSL because the market is so fragmented? Well, you know that fortunately or unfortunately, in terms of difficulties on higher costs because those companies are very small, they start to suffer in margins. So you may have opportunities of acquisitions in logistics. And this is part of our strategic plan. Dealerships, also, you have a huge potential and opportunities for consolidation. Again, we have to be surgical. We have to think of good products with good OEMs, in good regions, there has to be a win-win movement. But you can see it happen with dealerships. 2 points that are important. When you gain scale in dealerships, you can increase sales by 20%, 30%. In JSL, you're going to see the results of JSL this quarter. It grew organically by 17%, 17% on BRL 3.5 billion is almost a company of BRL 600 million. So it is a huge potential of growth organically, inorganically. Ciclus we may have something, but we think we also have new concessions, major opportunities that we are watching for in sanitation segments as well. So these are the points. And in terms of capital, we are prepared with responsibility to decrease our leverage year-on-year. We are always talking about that, and we are also prepared without a need to accessing the market following-on on anything, just with the movements of negotiation of debt that Denys has been engaging in, in a fantastic manner. Margin accommodation in the dealership segment. 2 comments I would like to mention. Of course, you have businesses with more or less margin. That is the law of supply and demand. And we are used to managing businesses with low margins. Now what I would like to say is that in the last 24 months, the average ticket in the sale of cars increased more than 50%. And that helps us dilute our SG&A costs. So no matter how bad margins are going to be, and I'm not talking about a margin war, but it's very difficult for us to see anything much different of what you're seeing today. And one more thing. When we talk about Soldi's team and BBC team, bank and the brands of our dealership network, we are not here to do more of the same. The group as a whole has contributed for the rental of cars in Brazil. 8 years ago, we just had economic cars, just white, mainly without even air conditioning in 2014 when we entered the business. When you talk about the dealership network, OEMs want more and more services. You can have a shop at the nights, on weekends, you can offer another kind of products. So we are going to seek optimizing revenues by means of mobility services in line with OEMs and meeting the needs of our main clients in the segment. So this is what we see the development for the future scenario. I don't know if I answered all your questions, but that's it.

Okay. Fernando, while you were putting together those questions, we have some more. We have a question from [ John Wein ], and he asks about the avenues of growth for Ciclus. I think you mentioned that. And also, opportunities of M&A, financial support via equity or credit. We have a new shareholder for Original Holding. This is part of our discipline when we talk about capital structure. And then there is one question that is slightly different, looking a bit further in the future. The question is looking at long-term projects that the group has on opportunities of growth, can we see the group focusing on growth for the next 10, 15, 20 years? Certainly, John. We are confident that all our businesses give us signs because of the need of clients, competitiveness of industry segments, social responsibility. We believe that companies more and more will want to do businesses with companies that have sustainability and governance, in that respect the ESG ecosystem. So we are prepared with people, teams, management in segments with huge potential to grow in the future. Remember, we have the foundations, the pillars, capital structure, capital generation, people, independent companies, as no one ever had before. So that gives us the confidence that we are going to continue in the cycle of growth, improving profitability, capital structure, and generating more and more value. And certainly, for the next 5, 10 years, 15, 20, it's just too long time that would be irresponsible to say, yes. But I can tell you that we have a corporate structure and governance that gives us agility and focus to make adjustments along the way and ensure sustainable development in a simple way, in a fast way, and with focus. This is what we did in the past, and this is something that gives us the confidence that we are going to continue to do in the future. That's it, Fernando. I don't know if the operator has more questions online. Let's just wait, and then we'll move on.

[Operator Instructions] We have one more question from [ Igor ]. Igor asks about the acquisition of Ciclus that was by means of a stock swap. Do you have any type of adjustment or compensation in the transaction multiples?

I don't think I understood your question. Sorry. The process have an independent committee, and it was submitted for the decision of the minority shareholders. And for the first time, 100% it happened the controlling shareholders said that it would vote with the minority shareholders. The minority shareholders approved the transaction unanimously and then in the process there was the issue of an amount of shares that have already been issued and also the issue of a subscription bonus. The subscription bonus represents a potential additional batch of 2%, and it was subject to confirmation of the financial rebalance, as we mentioned before, that was with the Audit Court of Rio de Janeiro. So upon resolution of this point, the issue or realization of the bonus was going to be proportional to the financial amount added by the balance, okay?

And therefore, contributing – [ Igor ], this is Fernando speaking. Just to make it clear, how do we see that, not only as an executive but under the hat of shareholders. This is the fourth time in related parties movements that we followed our highest standard of governance with independent advisers. And the controller shareholders said, we were going to vote with the minority shareholders. This was done now and before in all the other occasions. In the case of Ciclus, the balance had already been applied. But because there was the discussion, we as shareholders could have asked for more shares. But we decided, no. We decided to do what Denys mentioned. If it is confirmed, we are going to get proportional to the confirmation. So the contract was already signed. But because it was challenged, we believed that we were entitled to that. And then we decided to have the bonus later on when it was announced to the market in a transparent manner. So this is what we believe in and we believe the balance is going to be confirmed very soon. And this is very clear in the material of the meeting.

Since there are no further questions, I'd like to turn the call to Mr. Simoes for his final remarks. Mr. Simoes?

Well, before closing, I'd like to once again thank on behalf of our team that has been working very hard. And I would like to thank you all for attending this call. And I would like to say something. In addition to thanking you, I'd like to say, we have been saying for many years that we are investing, the CapEx was high. We are going to have returns and profitability and return on invested capital and return on equity. This is our commitment with the market. We thank you all for trusting us for a long time, for a short time, and we are very happy today to deliver the results with the size of the company and with the structure that we have. But more than that, I would like you to give it some thought. What we are delivering in '21 refers yesterday. Our tomorrow is already built. We cannot fail to see that last year our capital structure decreased leverage, and we had BRL 8.8 billion of net CapEx, net CapEx that was invested in the second half of the year. So they are not reflected in the numbers of today. They are reflected in the numbers that are going to show in '22, '23. So the numbers of EBITDA of Ciclus are not here. Sagamar, UAB, they have been announced, and you can see the transformation that will come when you add those numbers. So these are the results that we are going to enjoy in '22 and '23. So for us, we are very happy and we are very grateful to you all that have contributed for our growth even when you challenge us. And talking about the future, we are quite confident we have the basis, the foundation, and governance to start a new cycle of growth, even higher than previous years and with sustainability. And what gives us this confidence? It is you. And we thank you once again. But those of you that have been with us for longer, for shorter that have granted us credit, that have given us the basis of growth, our Board members that have been crucial for us to set our plans in the short, mid and long term, and on behalf of all of us, we would like to give special thanks to our more than 35,000 employees and family members because we are no one without our families. And the adversities of the recent years, volatility, and the pandemic that brought so much pain to us, but our team was always willing to be ahead of our operations, meeting the needs of our clients, and producing the numbers you see here. So thank you so much to our team that works hard, that makes the difference, and that makes me say, we are together with our team, we are happy with what we accomplished, but we are going to go even further in the future. So that's how I would like to close. Thank you once again for your time and attention, questions, and for us to always learn from you. So let's hope and think positive for us to have peace in the world. I wish you all health and peace. Thank you very much.

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