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

Good morning, and welcome to the conference call of SIMPAR to discuss the earnings regarding the third quarter 2022. 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 moving on, we would like to let you know that any statements made during this conference call relative to the company's business outlooks, operating, financial goals and projections are based on the assumptions and beliefs of SIMPAR's management and rely on information currently available to the company. Forward-looking statements are not a guarantee of performance. They involve risks, uncertainties and assumptions since they refer to future events, and therefore, will depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operating factors may affect the company's future results and lead to results that will materially differ from those in the forward-looking statements. We'll now turn the floor to Mr. Fernando Simoes. Please, Mr. Simoes, you may go on.

Good morning, everyone. We're starting the release of results earnings of SIMPAR for the third quarter 2022. We'd like to thank you all for attending, and use the opportunity to thank our clients that choose our services and give us opportunity to work, and it is with them that we improve every day, and thank our more than 40,000 employees for their work and dedication. After all, some of the results we will present is fruit bank out of the work of our people and our clients that give us work. We'll start with Page 2, the main financial highlights 3Q 2022 consolidated. Record EBITDA of BRL 1.9 billion, that means growth of 66% year-on-year. Gross revenue in the third quarter '22 of BRL 7.6 billion. It is growth of 73% in revenue. If we analyzed this number, we would have today more than BRL 30 billion of gross revenue. Net revenue of BRL 5.4 billion, growth of 78%, annualized also at BRL 21.6 billion. EBITDA, as I mentioned, BRL 1.9 billion, margin of 35.9%. Annualized, we would be reaching BRL 7.8 billion. Net income of BRL 111 million, a drop mostly because of the increase in interest rates, but annualized at BRL 444 million, leverage based on a debt-to-EBITDA ratio of 3.5x. And with annualized EBITDA compared to that, we would have 3.1x over the third quarter '22. Net CapEx in the last 12 months of BRL 13 billion, that is 93% above that of the previous year. And remember, the vast majority within leverage rates. And a good part is still not yet deployed, therefore, not generating revenues. And it is something I always say, our companies with the growth we are having and with our execution, we see that before we see revenue, because most of the assets have not been deployed. This BRL 13 billion of net CapEx, more than 98% are for assets, trucks, machinery, cars and equipment. This is not including M&As and acquisitions. And our return on invested capital of 13.9%, also growth year-on-year. Now I'm going to go to Page 3. It's important to remember that SIMPAR has a unique positioning and a differentiated business model. It is a holding that develops its company in an independent manner, well-defined controls, assuring the performance of goals and the execution of strategies defined by the Board of Directors, and carried out by the executives of each business. It's important to say that all our subsidiaries have huge opportunities to grow and develop. They are part of the real economy, and they are within the main sectors in Brazil, and in the largest industries of each segment. So let's start with JSL. This is our logistics company, growth logistics, with the largest portfolio of logistics services and in several sectors of the economy with huge possibility of growth. It has used its positioning and generated huge capacities to grow organically and inorganically. And growth itself brings many more opportunities, more than we have had. We have been improving margins, profitability, not only through the pass-through of costs but also having more productivity and building alliances and new projects together with the clients. Then Movida. It carried out its strategic plans at extended level. It bought cars at the right time, good decisions that are agile. It brought more than 1.1 billion customers in the last 12 months. And if we consider the third quarter of '20, more than 2 million new customers in the rent-a-car. It increased its fleet if we compare 3Q '22 to 3Q '20, more than 100,000 cars, and opened 58 new stores in the rent-a-car and used car sales business. We are the company that most grew organically in the last 18 months, with a new fleet and more and more bringing new customers. This is a company that has a new level of scale and pricing, and an even stronger alliance with the main OEMs in Brazil and the newest fleet in the market. It's still -- on Page 3 in the upper right corner, we talk about Vamos, with strong growth and profitability in all segments of operations, machine dealers, truck dealers and the highest share in the rental of trucks, machinery and equipment. This is the result of the external work that the team is performing. We are buying trucks at the right time, quality assets, diversification of mix and brands that meet the needs of our customers. Today, we have more than BRL 2.4 billion in inventory. We brought at the right time at competitive prices, and that enables us -- just for you to have an idea, in the third quarter '22, we have more than BRL 12 billion in contract backlogs. Vamos has created -- Vamos Group as a whole, a unique ecosystem that enables us to buy assets at competitive -- extremely competitive prices, provide services faster to customers, and most important, to the sale of our used assets. And not only sales of assets, so they would buy assets from customers and also sell in our dealer networks. And this is too incipient market in Brazil. We have opportunities to continue to grow with better profitability margins and more and more developing more businesses together with our customers. And on Page 3, in the bottom part, we have CS Brasil that has developed the fleet management and outsourcing with drivers in government-owned or mixed economy companies, with growth of more than 30%, 3Q 22 over 3Q '21. We had Automob that has been consolidating significantly in the light vehicle segment, but also has huge potential to continue consolidating its network and growing more and more by means of mergers and acquisitions in car dealerships. With that, the company has strengthened its alliances with OEMs. And still in a very insipient manner, it is gaining scale and synergies. And we have a huge opportunity to grow in number of sales, add revenue for used assets in different points of sales. Today, we have more than 76 stores, and we represent more than 22 car brands in our car dealerships. We are very happy about what we have done. But our greatest joy is the certainty that we can grow even more. We have our bank BBC. As we always say, we have been fostering the SIMPAR ecosystem, contributing with the development of our companies in terms of funding Movida's used car buyers, Vamos, CS Brasil, selling trucks to truckers that provide services to JSL. So again, huge opportunities. And the numbers that you're going to see further on are higher, but the opportunity within our ecosystem is still much bigger. As you know, we became a bank less than a year ago. So we are just starting seeking synergies within the SIMPAR ecosystem. And CS Infra in the developing our concessions. We have Ciclus, the largest waste treatment center in Brazil. 2 ports is still being developed, Aratu 14 and 18, Transcerrados, where we have a stake of 50%. That is our executives and managers have been developing each company in an independent manner, organic or inorganically, but always transformational in the group, without losing sight of our DNA, culture and values. And for that, we have created 2 committees, one of people in SIMPAR and one of strategic planning. So that we can assess not only people, but also the organization structure, looking into what we have done and what we are going to do in the future, even more importantly. On Page 4, we have JSL with more detailed numbers. It's important to remember that JSL has had continuous growth with discipline at pricing and pass-through of costs but also with operational improvement, which has contributed to improve revenue, margins, EBITDA and results in general. And also the quality of the companies that were acquired by JSL. With the synergies of the main -- [indiscernible] of the main costs, these companies are growing at more than 30% organically and improving their results. You see on Page 4, our main numbers. Now we go to Page 5, talking about Movida. Today, Movida, we have a new level of size of fleet, revenues, prices, and that gives us huge opportunity to monetize our asset base. Movida, I believe, has been the rent-a-car company that must seize the opportunities in the execution of its strategic plan, really contributing for its summation in size, fleet, daily rentals. Today, we have more than 210,000 cars with scale, and really contributing to the rent-a-car market in Brazil. Now we are going to Page 6. Here, we have the main numbers of Vamos, giving a bit more color with strong acceleration in growth in all the business segments and profitability gains. Grupo Vamos created a unique ecosystem, as you can see on Page 6. Its growth has been strong. Returns have been better and scale is transformational. In truck and machinery dealerships and the used asset stores and very strong in the rental of trucks and machinery, its main activity. Very happy we are with what we have done. But we are sure that Vamos has much more to grow, develop and improve returns. Now we are going to go to Page 7, And here we have the main numbers of Automob. Automob is our holding that has been making merger and acquisitions in light vehicle dealers. It is today one of the largest dealership groups in Brazil. It represents 22 brands, more than 76 stores. It moved from original 18 months ago -- That was a dealership network that belongs to SIMPAR since '95. It had BRL 900 million. And today, it is a company of BRL 5.3 billion. We are very happy again with what we did in the past, but we believe we have huge opportunity to continue consolidating in the segment. We are starting to capture the main synergies, but still -- just starting, but it gives us a snapshot of the potential we have to improve our results and reduce our main costs, brokers, security, washing, but also an increase of revenue per point of sale, which may be significant. And we have had a share in brand new cars, luxury, economic, all of them, that is quite significant in all the regions in which it operates. Then BBC. As I mentioned, a bank that has been developing, but it's just starting. It turned into a bank 6 months ago. And the more our companies grow, the more the SIMPAR ecosystem for BBC's operation grows, contributing to the development of our company, but also transforming its own numbers. On Page 9, we have CS Brasil, which is fleet management and outsourcing with driver services for companies that are government owned or that are mixed ownership companies, more than 30% growth year-on-year. And now Page 10, we talk about CS Infra that has developed in concessions. It has a vocation on services. We have the 2 ports, Aratu, 12 and 18, the Transcerrados highway, the largest waste treatment center in Brazil. So these are some of the main details of the companies that are controlled by SIMPAR. Once again, I would like to highlight that we are inside the main industries and sectors in Brazil, providing services with some major commercial alliances with the main industries in Brazil. Now I'm going to turn to Denys to give you a bit of color on the main financial highlights for the third quarter '22. Denys?

Thanks, Fernando. Good morning, everyone. Moving on, as Fernando mentioned, let's go to the financial highlights. We again had all-time highs this quarter. Net revenue reached BRL 6.9 billion, 74% growth year-on-year. In fact, the magnitude of growth is repeated, both in the year-to-date 9 months of '22 and '21 or in the last 12 months when we compare the 2 years, also at 70%. And if we annualize the net revenue, we have material difference compared to the numbers we closed last year. We would talk about BRL 27.6 billion, which is the new level that the company is at now. Fernando talked about gross revenue of BRL 30 billion. Now EBITDA. EBITDA in the quarter was also a record, BRL 1.9 billion, growth of 66% in the year-on-year comparison. And again, 9 months, we grew 86%. And in the last 12 months as of the first -- the third quarter '21, growth of 86%. And again, annualized numbers at 3Q '22, we reached BRL 7.8 billion. This is a lot more of what the company represents from now onwards. Then looking into the last 12 months. You see a material difference. The last 12 months indicates BRL 6.5 billion, but annualized 3Q, BRL 7.8 billion. And this is the trend that should continue in the following quarters. Operating income EBIT also followed with a record number, BRL 1.4 billion, growth of 61% against the same quarter last year. Growth also strong in the 9 months analysis or in the last 12 months comparison with about 90% growth in annualized numbers for EBIT, BRL 5.7 billion. Net income. At -- the impact of higher interest rates in the economy quarter-on-quarter, they almost tripled, and therefore, we had recorded BRL 111 million compared to the BRL 381 million of the previous year. And the same happens in the comparison of 9 months and the last 12 months. This quarter, once again, we had an addition in the selling rate when you think of a beverage in the quarter. If I'm not mistaken, last quarter was 12.4%, average CDI rate a year, and this year, 13.7%. And if you think at the curve of futures, it seems we have reached the cap to curb inflation. Now we are going to go to the next slide, Slide #12. Here, we talk a bit about our indebtedness, consolidated basis, but also individualized for the holdings in parallel. In dark blue, we have consolidated numbers. So we continue to have strong liquidity. This is a characteristic of the group for more than 15 years now. So we closed the quarter with BRL 13 billion in cash consolidated numbers, and that does not include BRL 1.2 billion of undrawn revolving credit lines to the group. And we have our schedule very organized, which gives us an average time of 7 years. Coverage of short-term debt of 5x or maturities up to the year of '26. In light blue, we have the numbers for the holding alone. We also reinforced company cash in view of a more uncertain scenario and closed at BRL 3.2 billion at SIMPAR. And also, we have an amortization schedule that is very comfortable, most concentrated for 2031. So just for your reference, the consolidated net debt of the group was BRL 24.5 billion, and SIMPAR individually as holding is at BRL 3.4 billion. Going on to the next slide, 13. We talk about investments and what we believe is our trend in terms of leverage. Starting on the left. We had investments in the third quarter of BRL 3.2 billion, and even faster pace than what we had in the same period last year, 1.4x higher than what we had in '21. As for allocation, about 90% was for the rental business in trucks with 66% or cars that accounted for 28%. JSL, the logistics business accounted for 10%. With the profile of the acquired assets, more than 80% is trucks and cars and the rest, machinery equipment. So high-quality asset base and with a strong secondary market. If you take a look in the year '22 up to September, we already invested BRL 9.4 billion. Our guidance for '22 is between BRL 10 billion to BRL 12 billion. And the highlight here is that according to our business model, we keep assertiveness in our EBITDA. You see in the yellow line that our EBITDA has evolved consistently along the years following our investments. Remember that most of our investments are connected to long-term contracts based on assets that have a good secondary market. And therefore, we show an evolution from the whole of '21 to the 9 months of '22 going from BRL 4.2 million to BRL 6.5 billion. And as I mentioned in the previous page, if we annualize the third quarter, we go to BRL 7.8 billion in EBITDA. What is important for us to have in mind -- Because in the companies, we allocate to the capital, and then you have an average deployment time of 90 days. We can understand that in the third quarter, what was invested in the quarter before, about BRL 3 billion, plus the investment of this quarter alone, another BRL 3 billion, that is altogether, BRL 6 billion. We could say that BRL 4 billion has not yet generated revenues and results that can contribute to the period that we are analyzing now. So on the right, we show the behavior of our leverage. Our target at the end of each year is to close at a leverage rate lower than the previous year, always based on net debt-to-EBITDA ratio. We closed '21 at 3.4x. We closed the third quarter '22 at 3.5x. The second quarter was a bit higher than that. And our target is to go below the 3.4x of last year. When you analyze what the company is like today with EBITDA annualized, that is the running rate, we see that the implicit leverage would be 3.1x, much closer to the level that we want to operate in the long term, which is below 3x. But as we mentioned, we are going to do that gradually year after year. Now we are going to go to Slide #14. And here, we show our returns and how focused we are on profitability. We have been growing with profitability. Return on invested capital in the last 12 months, 14%, 13.9% above the same period last year and even the close of '21. So all our managers, all our executives have return on vested capital as their targets. This is part of the company's culture. And on your right, return on equity that was at 27.9% in the third quarter '21 is at 18%, impacted by the follow-on that Vamos had from then to today. With that, I'm going to turn the call back to Fernando.

Thanks, Denys. We are going to Page 15, our last slide before we open to your questions. We are very happy with what we have accomplished. Quite humbly, we have a unique position in SIMPAR with differentiated people and managed model that allows for quick adaptation to new scenarios with growth, with -- and profitability. We know that sometimes we grow and we don't have the profitability we want. But we build solid foundations in all companies, for -- our growth is sustainable and comes with profitability even if it takes a little while, but that's the idea of having sustainability and continuous development. And although very happy with what we did, we always seek room for improvement. That's why we now have a people and strategic plan committee in SIMPAR that will help with our people and organizational structure for us to have the foundation to have huge growth, solid and profitable. We have people, culture, management model that ensures independence of each company. We are a company of more than BRL 30 billion gross revenue annualized with highly liquid operating assets, developing acquired companies, and we are having more and more scale, which help in the return of our investments. We have a unique diversified position, not only in terms of service portfolio, but also in sectors and industries. Companies continue to pass through costs and consolidate relationship with customers through better operational activity and the development of business. We are either leaders or among the top players in all segments, which gives us scale to continue developing. Our contracts have very clear price adjustment clauses that gives us confidence and comfort for a profitable future. We have consolidated our cash position and balance sheet to face the volatility of the market. And we have the guarantee of the necessary resources that will contribute for the transformation of our subsidiaries acquired company, always making decisions fast when needed and very much focused on our customers, so that we can have their loyalty and continue our development. We want sustainable development. It has to be good for our shareholders, important for our customers, contribute to society and to development of our people. I would like to use this opportunity to thank our customers, financial institutions that support our continuous development, shareholders, our Board that has been essential in their guidance towards the goals and objectives and really helping our agility. And thank you very much. And now I'm going to open to your questions, just to clarify any information that you need or any questions that you may have. Thank you very much.

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

Congratulations on your results. I have 2 questions. The first is about Movida. In the results of the third quarter, we see a net debt-to-EBITDA ratio of 3.1x. And in the conference call, Movida talked about a faster movement of prices going back to normal, used car prices. I would like to know on the size of SIMPAR -- on the side of SIMPAR. With the drop in margins of used cars, do you have any specific concern? And could the holding use part of its cash of about BRL 3.2 billion to capitalize Movida? Or do you see a need of a follow-on for the company? And my second question, a bit related to Movida. But looking from the point of view of SIMPAR, that really has a very broad view of the automotive sector as a whole. We saw Movida increasing its depreciation rates on the third quarter for the rent-a-car business. How can we understand this move of Movida with increasing depreciation rates with the results of Automob, thinking of the volume of sales, both for used cars and brand new cars and also prices of brand new and used cars?

I will try to answer your questions as that's many questions about Movida. First of all, I'd like to see the movements of the strategic execution of Movida. That was really stellar. We can talk about the last 12 months, talk about the quarter, but let's talk about the last 20 months, which is at the peak of the COVID today. Movida decided and it had approved at the Board and with its managers to establish an alliance with OEMs. We bought cars when others decided not to or could not. It was not the best mix that we wanted, but it is a mix that we know we can sell. That mentioned, together with the acquisition of CS Frotas, we had 120,000 cars, with CS Frotas we went to 140,000. And you saw this quarter closing at 212,000. So Movida grew about 60,000 cars in a very short period of time. With this mix, we got more than 2 million new customers, and we measure that by individual taxpayer numbers. In the last 12 months, 1.1 million new customers. So it was the right decision to make buying these cars, again, not the ideal mix with an average ticket. But cars that have a market in the used car market. With that Movida changed the level, size and scale at an extremely strategic moment, which was the last 2 years. About depreciation, what was the option made? Now we know that cars are coming with a lower average ticket. So we are going to sell more expensive cars in a shorter period of time. And we want to know if we are going to do that, or perhaps we should change the mix faster or you're going to sell more luxury cars faster. But remember, Movida is a conservative company. And it wants to be transparent to the market. We were more conservative in depreciation, and perhaps it is an option to change our mix faster, and that can generate cash of BRL 1.5 billion. You sell a car that is BRL 10,000, BRL 15,000, it's more expensive than what you're buying. So that is what Movida decided to do in the third quarter, be conservative in depreciation and start selling. And how do we see it in the future? It depends on what is going to happen. COVID is coming back, I heard that there are OEMs that can shut down. And if it does, Movida has a newer fleet and it's going to continue with the depreciation rates that make sense. So this is what we are doing. We want our balance to reflect our reality. I don't know if I was clear about Movida. I don't know if there is someone asking a question. The line dropped.

No. You may go on., We can hear you perfectly.

Okay. So this is depreciation. And again, the options Movida have -- Remember, when we have a new customer, customers stay because their experience -- and so we have been growing in a market that is more resilient individuals that go to the stores because it's another option to grow with Uber, to grow with fleet management. It is a different business, but it is an option. Now in terms of leverage, we did all that with comfort knowing what we were doing. We simulated scenarios, what would happen if we move this or that way. And we're very comfortable with Movida's leverage. And this is not just changing cars. Movida grew 70,000 cars. If it decides to have 15,000 cars less -- it has cash of BRL 1.5 billion. If it sells cars at BRL 10,000 higher than what it buys, it's another BRL 1.5 billion. The capacity to generate cash, if that's the option -- and we did the option when we decided to change our mix is huge. So if it is needed, SIMPAR can capitalize the company, we are ready for that. We did it in the past. Am I ready as a shareholder to have a different structure and support Movida and SIMPAR? Yes. What market, won't see, I cannot say ever, but we are not going to have a follow-on at this price base. We can increase capital but not follow-on. I will not say never, but I don't want it. And to be totally transparent with market. As executive, as an entrepreneur, people make the difference. But today, we have the obligation at SIMPAR to manage our portfolio. And that can mean that we can buy and sell shares of one company or the other. We are not those that started yesterday that are going to be obliged to have a follow-on. I think it's very important to have this in mind. We have good governance. We are contributing to the generation of value, working with shareholders, but without missing opportunities to grow and expand our market share in the market. I'm sorry if I took too much, but I thought it was a question with many points, and I thought that we should give you a more broad view on Movida.

Yes. And Automob, the behavior in terms of volume of sale and Movida depreciation, if it makes sense. Because Victor was looking at the volumes and the decision of depreciation. Do you see -- or what is the behavior of the markets that you see? In Automob, I would just like to say something. You see numbers year-on-year, and you have a drop in the volume of cars sold in the market. Used cars, I think the statistic shows it dropped by 12%, but we had a change of 2%. But you have to consider seasonality too. If you go year-to-date, we are growing 22%. And here, we have some of the value levers that we see. And Fernando has been talking about that. The opportunity of exploring higher sales per point at Automob because the group historically tried to negotiate for each new car, a higher volume of used cars. And so this is already being implemented in the acquired companies, and that made our number in the quarter to be minus 2% against the minus 12% of the market and already an evolution of the second quarter. And remember that in the 9 months, we grew approximately 22%.

Yes. Just to add to what Denys mentioned. Of the acquisitions we are making, dealers that are the top quality, luxury premium brand, but they only sold [ 0.4% ] per each one new cars. We always like to used cars. Regardless of Movida, we already had dealerships before Movida. And we would sell [ 0.8% ], [ 0.9% ] for each one new car because that's where you dilute margins of your dealerships. So what we are thinking, we don't want to raise expectations, but we want to increase revenue through the sales of used cars. That is already happening, but it takes a little time for you to capture the synergy, train people, put the structuring in place. But sellers get more -- you say more by point. So it really oxygenates the company as a whole, and you're going to see that in the coming quarters.

Our next question comes from Fernanda Recchia from BTG Pactual.

I have 2 points on my side. First, I'd like to explore Automob, when we take a look at the EBITDA margin. You're talking about an average digit, a bit because of the accommodation of the automotive market going back to historical levels. What kind of profitability we should expect for Automob? Is it 6% that we should expect for the next quarters? Do you have room to drop a bit more because of the normalization of the market? And also CapEx in the last 12 months. You already surpassed the guidance of this year. So what kind of CapEx should we expect for the fourth quarter? We see JSL increasing CapEx. So what do you think is going to happen at the level of SIMPAR and also for next year with the implementation of [ Euro 6 ], what kind of investment environment do you feel is going on?

Thanks for your question. So I'm going to start answering and if I forget anything, just let me know. Automob. In 2022 people are not making investments more than 85% as we saw in '21. Today, Automob, it's not the automotive market is changing and it thing. What happens is that you still have new cars. We have brands just as an example, a luxury brands that we don't have one car to sell because we have no new cars. So quite the opposite. We still need more new cars. And as I told you, we are training people, and we are having really excellent results to sell used cars in the same dealerships. So without creating expectations, this is not guidance for the future. It may be that you will not see the 8.5% that you saw in '21. But it's not going to be the 6% you're seeing now. Why? Because we are still lacking brand new cars. We are going to sell more used cars and you have something that you didn't have in '21. There was a difference in the average ticket for OEMs. And then that dilutes our SG&A in the business, which is very important and we haven't enjoyed that because normal volumes have not gone back to normal. They say in Brazil, we have 2.5 million cars in terms of market in Brazil. We are at 2 million, 2.5 million. We are lacking cars. So there is room to grow and dilute costs. And Automob -- I'll give you an interesting data. When you get best practice, what do you spend with F&I and others. We have mapped, and it seems that it is 0.5 in revenue, what we have in -- so if you are going to license your car, you can pay BRL 150 million to BRL 180 million. If you charge 100 and you have 1,000 cars or 4,000 cars, you're going to have a much higher level. So this shows the potential of the car business. And when you talk about CapEx that Denys talked about F&I, that's it. We are talking about costs, revenue, how much you sell in this cost, the negotiations of F&I. if you have scale, the return is being much higher than what it was before. So gains in synergy, reducing costs, and it's a huge potential. And once again, we are going to do with Automob exactly what we did in Movida with the quality of service and innovation. Our dealers are going to be a point of service and to bring customer loyalty to provide services for their cars at 9 to have rental new -- brand new car sales, used car sales and even funding credit. So this is what we want for Automob. Now when you go to CapEx, we are very happy that we executed this CapEx, not at the cost of money that we wanted, but our prices were based on those costs. And more important than that, the cost of money, although high also, made a huge transformation of our assets, and this is almost a hedge. I never saw interest rates going up and car prices staying down. So the CapEx made in Vamos -- remember, we have 5-year contracts, excellent margin, and we bought the assets at exceptional prices, and again, the execution has been brilliant. There were purchases made at the right time this year, better alliance with OEMs, and we created really differentiated scale. In Movida, more than 1.1 million clients that come with these assets. So we are very happy with CapEx. What has brought to our business with comfort. We understand our capital structure. We are working on that. When you annualize numbers, you do see a drop in our levels. And we are not giving you guidance, but we have very -- opportunity with the -- we're very pleased with the business opportunities that are coming to us. And the idea is to have a backlog of revenues with compatible return on investable capital. So value generation, maybe not now, but in the mid- and long term, bringing value to our shareholders and supporting our companies with sustainability.

And just to add, this is the CapEx, we released an update of our guidance. JSL revised their guidance and we followed. So it is 12,500. So far, we have 9,300 LTM, the quarter that is going to leave when we started the fourth quarter '22, is the fourth quarter '21, where we had 3.5. So we believe we are okay for the close of the year. I think you have one more question.

Yes, about Euro 6. If you see a deceleration of CapEx investments because of the Euro 6, and how do you see that impacting SIMPAR?

Okay. Euro 6 should have significant increases. Some people say 15, others say 20. That will also increase the prices of our trucks because Euro 5 is just as good as Euro 6. Euro 6 probably are going to be adjusted after launch. And Vamos and SIMPAR really negotiated the trucks and has a huge inventory of Euro 5, which gives us the possibility of buying Euro 6 at the right time. And I think this is important. And you talked about CapEx. JSL also worked with its CapEx, you have more difficulty of credit for smaller and midsized companies. Companies want to have their production line working. They do know -- are afraid of being in the hands of the smaller companies. If you're not structured, if you don't have the diversification of JSL in terms of sectors of the economy, it's very difficult for you to price your customers well. And with that, some companies have really jeopardized their capital structures. And JSL can grow organically and inorganically, part asset-light, part asset-heavy. And when we are asset-heavy, we have a 5, 6-year contract. So our growth is very solid, and JSL is a new company today.

Our next question comes from Guilherme Mendes from JPMorgan.

I have 2 questions. M&A, I see you're very active in the last 2 years, more particularly. So looking into the future, how do you see this balance, capital structure M&A? Is there a lot more to come? Is it time to manage what you acquired more recently? So what is your strategy from now on? And also in terms of going international, probably via JSL and Movida, we are seeing moves. So what are you considering in terms of international operations? Any metrics, any indicators of percentage revenue? I just want me to have an idea.

Okay. It's important to remember that JSL did make some acquisitions that were extremely strategic, as the acquired companies, some already doubled size. So we are making acquisitions that make sense strategically, that complement our business, but that have to be independent and to support JSL in terms of inputs, in terms of cost of capital, but we cannot lose sight of what is good about these companies. And I'm talking about [indiscernible]. So we can have other M&As in the future. You see that the company was we said at BRL 3.2 billion. Now it's at BRL 7 billion. If you analyze, you see the size of the company today. And with margins returns much better now. Now what is important, we really focus on -- really have an integrated management with our M&As. That's why we try to have a quality move and keep the independence of these companies because we don't want to run the risk in terms of culture and implementation, et cetera, because we have -- Movida is growing, for instance, at the price of its fleet without having risks of integration. And JSL can separate the businesses. So it may happen, but the company has been focused on the last 12 months. We don't have the acquisitions there. And you see that all companies doing very well and organic growth of more than 40%. So M&As can come, but exactly following the same steps. Better synergy and the purchase of inputs, separated management going international. We see JSL movement, but this is in an alliance with the customer. You don't have a risk of execution. You know the client, you know their needs and you go there to provide services to the clients. And the client does not want to be in the hands of a company in the country. They want to have someone that they already know. We don't see a huge internalization of JSL through M&As. And in the rental business, this is a small structure that will not jeopardize our capital structure. And I think there are things we can learn by [ that ] how it works in Europe, but we are sure by the quality of our services, we can offer a broad differentiated services. And here, I'm talking about Portugal or even any other country that pulls us as an opportunity. Without the need for internalization, Brazil is huge, great opportunities in all our lines of business. But it's a diversification of revenue currency, but in a way that does not jeopardize our business here, and that brings knowledge to both parties. And Dan is here to complement at Automob. We also had a very accelerated movement but with lots of responsibility. And many of the companies we are buying are becoming our partners. The owners are becoming our partners with a really suitable structure that has enabled us in this movement.

Ladies and gentlemen, right now, we are going to read the webcast questions.

Okay. I'm going to read the questions that we had on the webcast. We have one from Jean Pedro, because it was basically approached already. With the internalization of group companies, how does SIMPAR project results in the market outside as tensions escalate worldwide? This is one. Would Movida go international in Portugal? Would it be just the starting point to internationalize the brand? And do you think that with the internalization, the risk of investments will grow? I think Fernando answered most of the question. But I would like to remind you that the group grew by diversifying services, factors and clients in Brazil. It's always great -- huge volatility. That gave the group more resilience in its cash because we have diversification and opportunities to grow. So these are 2 values that are always with us in our reasoning and that is important for geographic, also diversification, but with responsibility, as Fernando mentioned. Yes, you are right, Peter. We are not going to have any movement abroad that can hurt our structure here. So small movements complementary. We are not growing outside logistics that involves a lot of labor in rental, we can really contribute with services in Europe. So there can't be movements, but never, never risking our structure. And when you talk about tensions was abroad, it's true. In Brazil, we have no wars, but if you go with an interest rate that was 2%, goes to 12%, then back to 8%, then 16%. So we do not have work, but we have huge volatility, we are used to that, and perhaps that is our greatest difference. Our agility in our team and the capacity to change gears fast whenever needed. And really working with credit even when interest rates go up. I'm going to continue. I'm going to read the second question from Thiago. The question is, considering that CS Brasil CapEx was low after the transformation, do you have plans to grow and invest more in the company? Okay, just retrospectively before turning to Fernando. CS Brasil is a company that in July 21 contributed -- emerged its rental operations into Movida. This was a move that the minority shareholders decided and the controller followed. And then when we merged the assets, CS Infra to have sequels. We transferred concessions that we had and the recently acquired to CS Infra. That's how we are presenting to you. So the operation that state -- that remained CS Brasil is much smaller. And what we are developing are the ones that involves assets and services with drivers, which is not a purely rental company. This activity has been growing. It grew 30%, but it depends a lot on public bids, as is the focus of CS Brasil, our companies that are controlled by the government. So it's difficult to project, but the company is developing in the segment.

Just to add, CS Brasil is where we provided all logistic services to government own or mix ownership companies. In the structure that was decided by the minority shareholders -- and we followed CS Infra, the cars were transferred to Movida. So CS Brasil focused only on the rental of assets with drivers with operations. And Ciclus was transferred to CS Infra. So today, it is a company that focus on rental and fleet management with driver, which limits its growth. But with the change in government, the trend is to more and more increasing rental, but it depends on the competition in the market to see what opportunities CS Brasil will have.

Our next question comes from [ Kaio ]. Can you comment on SIMPAR's reduction in margin? Is there any subsidiary that was responsible for the drop? I think there are different things here. Our portfolio developed and grew with Automob, which is a retail business and with retail margins. So this is a mix. Another point that was also approached in this call, regards Movida with the used car market going back to normal. So I think it is what it is, but we also had improvement. So Vamos is better. CS is better. It's a combination. There is nothing that actually concerns us quite the opposite. The return on investment capital is better for the whole of the group. Moving on. I have another question from [ Matteus ]. Do you think it's feasible to replicate to Vamos receivables operation to other subsidiaries? I think so. The group operates mostly based on long-term contracts. Today, when you have long-term contracts, this is a good option. And we have a last question on the web by Nicolas. 2 questions, really. Could you talk a bit about CS Infra, particularly the ports that started operations and any forecast for the Transcerrados highway? And second question, any news on the price adjustment for Ciclus with the fair rebalance? Okay, we have a concession period for the port to do the work that we have to do, but it is pre-operational. It's already generating revenues. We're still in a varying spent base, but it has a huge potential. It's crazy. It is in the first quarter next year, we are going to start work that would take about 24 months for completion. Then you're going to have a completely different port, another size. The highway also -- now we are doing work on it, perhaps the first quarter of next year, we are going to have the first toll plaza. If I'm not mistaken, it should be completed by the end of '23, beginning of '24. As for the adjustment of Ciclus, it was passed the granting power, made -- questions came back and the rebalance part of it was released. I think 1/3. And now we are negotiating the rest, and we think it should happen in the next 2, 3 months. This is what we want. And most importantly, all opinions have been favorable to us. So we truly believe we are going to have that very soon. There is one more question, but I think it was answered. Just for [indiscernible], if we had any expectations with regards to the drop of prices of used cars. I think that we already talked about that. I never saw prices going down aggressively. Sometimes you cannot have a higher discount timely. But if you're having a good purchase opportunity. You sell at the price of the market, but you are buying better than the market. So if it is a very good purchase. Why not do away with the discount. People talk about the drop in prices for used cars. I am 55 years old. I never saw prices come up. Sometimes you have more or less discounts. I have -- I don't know, I'm going to sell my car cheaper because I'm going to have the money faster. I'm going to buy a better cars. Now prices collapsing, I never saw. You can have fluctuations, but not steep drops. And it depends on our strategic events. Sometimes it makes sense to sell with a lower discount to make a better purchase. And again, Movida gained new clients, made a strategic decision. It may be that we are increasing depreciation, but it was the right move because it put the company in the right place, just for you to know. And we are going to close here, but there is another question that is good to mention, and we said it in the beginning, asking us to explain the dynamic of the group's growth revenue versus CapEx. As this is always an important topic. I would like to say we have an average deployment time of 90 days. We invested more than BRL 6 billion in the last 6 months. When you see this amount, you see that BRL 4 billion have fee debt not contributed with revenue, although they are already in our indebtedness. So we are talking about a deployment gap. But only financially speaking, you have financial expense of BRL 200 million in the quarter that still have not contributed. So as we have this as an option you do it if you want it, if you decide not to grow our results is going to be better. Revenue is going to be better, EBITDA's going to be better and bottom line is going to be better because you're going to be seizing 100% of the invested capital base. This is the dynamics of our growth, and this is what we have been doing along the years. And I think that with this, we close the webcast questions.

If there are no further questions, we would like to turn the call to Mr. Simoes for his final considerations. Please, Mr. Simoes, you may go on.

Well, thank you very much. Once again, I would like to thank you all for joining. And just you know, we did not have the question, but as an executive of SIMPAR but also as a shareholder and Board member, we have a financial expense amount. That is very important. We understand it. We're prepaying attention to this. This is 24 hours of our thoughts. But this is in line with our strategic plans. We want to have new customers with long-term contracts like the Vamos, like JSL, buying acquisitions, M&As that will have a fantastic return on capital. So this is a movement that is part of our strategic plan with responsibility. You are generating new customers, new contracts because you never know when you're going to have this opportunity once again and with quality in execution. So you have the carrying costs, but we have a cash volume that gives us the comfort to support growth or even in Movida movements in the future or any other company. So we have the comfort and that is okay to carry this cost. Okay, but interest rates went up. Okay. But we showed in the past, in the last 12, 10 years, you're following us, how quick we are also to pass through costs. So this is what we have been doing in line with our strategic plan that gives us comfort. We have a management model. This is something that we are always considering. Brazil has been through several volatility phases before when we were a private company after as a public company. And we always focus on our management model on the alliance of our clients. So we are very comfortable with what we are executing. We are confident in our option of growing with flexibility, and we can make adjustments whenever needed to have sustainability and development. Our CapEx is invested in highly liquid assets. with customers of excellence, and that has enabled us to increase our market share. And we are not in anything that is outside the real economy of Brazil. So we are very confident in the continuous resilience of our results, our revenues, improvement of our operating margins and indicators. And if at some point, we are affected with less profit, we are still growing a much better and bigger company with better returns ahead of us. And again, I'd like to use the opportunities to say to our 40,000 employees and more than 106 people that are with us thank to shareholders. The market sometimes is not investing, but is asking questions that make us better, and particularly our people, our clients that give us opportunity to work and quite humbly and without expectations. We are very happy with what we accomplished when we have 6 billion assets that have not even started operations, but I believe -- and I don't want to create any expectations, but I can say we are just starting a new cycle with growth, responsibility and improved margins and operating indicators. Thank you on behalf of our people, for your trust and your attention. May you be with God, and thank you very much.

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