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

Good morning, and welcome to SIMPAR conference call to discuss the earnings of the fourth quarter 2022. Today, with us we have Mr. Fernando Simoes, CEO; 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 call to Mr. Fernando Simoes. Please, Mr. Simoes, you may go on.

Good morning, everyone. We are starting the release the SIMPAR's earnings for the first quarter '22 and the year of 22 consolidated figures. On behalf of all our employees, I'd like to thank you all for joining us today. We would like to thank our customers for the opportunity of work fracturing the services of our companies, through which we have been developing and opening our results. Once again, thank you very much. I'm going to start with Page 2. We had a record EBITDA of BRL 7 billion in '22. That is growth of 67% year-on-year. We had gross revenue in the fourth quarter '22 of BRL 8.2 billion. annualized numbers would be more than BRL 32 billion. This is growth of 7% year-on-year. If we compare the first quarter '22 and fourth quarter '21. EBITDA on ‘22 of BRL 7.3 billion in the fourth quarter alone, EBITDA reached BRL 1.8 billion. This is growth of more than 40% year-on-year, already showing significant growth as compared to the last year and previous quarters. Net income in the fourth quarter reached BRL 288 million. This is a drop of 21% year-on-year. We closed the year with a leverage structure of 3.5x. And remember, there's a lot of the CapEx that has been realized, but it's still not showing results. So when you see 3.5x, if you see the annualized numbers, we have a lower leverage. Net CapEx, by the way, it was BRL 13.5 billion in 2022, more than 99% invested in assets cost, trucks and et cetera, BRL 4.1 billion in the fourth quarter, the BRL 4 billion of the fourth quarter has not started operations yet. So we are not enjoying revenues, EBITDA or cost reductions. This is what I always say. You see the EBITDA today, but CapEx has already been executed for future results. And we had a return on invested capital of 17.7%, up by 4.5 percentage points. These are the main numbers for in par consolidated for the fourth quarter and the year of '22. Now we're going to go to Page 3. Here, I would like to highlight some of the talent and the sustainability of our growth and development with profitability and sustainability to cope with adverse that sometimes we can't control. On Page 3, we have the context for 2022, macroeconomic political volatility in Brazil and in the world, you know that inflation that dropped a higher interest rates. And interest rates, something that we cannot control. But we have the obligation and responsibility of trying to be more efficient operation to cope with the rising of costs and seize opportunities that the moment poses but seizing opportunities with responsibility. And that's what we have done over the last 6 years. If you remember what Brazil has gone through in the last 10 years, 15 years, it's no different. But it is a wonderful country with proportional opportunities to volatility. And that we can navigate and we have been able to do that. We have been listening for 12 years, and you know that with pillars that allow us to grow with responsibility. Culture and covenants, people aligned by our values of culture independent companies with focus, but with the unique ecosystem, a diversification of sectors, and services, long-term contracts and most of our growth come current services and current customers, 70% of our EBITDA is in long-term contracts that gives us cash flow visibility. We really do not do away with correct pricing of new contracts that will ensure results for the future. So we want to have not only services but services that huge results and that brings sustainability to the business. A solid capital structure, a stable leverage, long-term debt profile and the responsibility of investing businesses with resilience in assets that are high in liquid and quite modestly, we can buy as a differentiated manner. And we have scale and capacity to assess new investments, focus on customer needs, which contributes to resiliency in the long-term cash generation regardless of the volatility in Keneconomics scenario. It's important to say that if you know why is our development, so resilient with such good margins that gets us the comfort for the future. That's it. So on Page 4, we show our companies. These are all companies of SIMPAR with combined growth of 32%. Acquired companies grew by 25%. In logistics alone, 35%. So you're talking about 11x GDP growth. We have, again, long-term contracts that account for 70% of our EBITDA in the year of 2022 alone, we signed contracts were BRL 16 billion with an average term of 4.7 years. And here, you have the breakdown with being net revenues in services in each one of our companies. On Page 5, we bring you a bit more color for JSL with robust growth, pricing discipline and good pricing and continuous operational improvement. And you see that we have transformed results. EBITDA year-on-year grew by 62%. In the fourth quarter alone, 45% compared to 4Q '21. Net income of BRL 224 billion. Now what is important to highlight here, the acquired companies have really transforming size. They grew approximately 35% organically in 2022. Our EBITDA margin increased 2.8 percentage points. And we have new contracted revenues in the fourth quarter alone of BRL 3.3 billion, with a return on invested capital of 15.1%. This is organic growth of the logistics. That shows the opportunity of the segment in which we are incentive diversification of sectors and services. JSL is the largest road logistics company in Brazil with the largest service portfolio, which enables us to grow, increase partnerships, thanks to the trust that our customers have on us because of the work that our team performs. On Page 6, we have Movida. Movida is a company that reaches a new level of scale. Transformed its strike prices in a fair way with the agility that is to monetize its asset base. It's is closing the cycle in addition that it took 24 months ago for transformational growth, capture customers. We have more than 1 million new customers, and it really met its challenge with excellence. With that, we grew our revenue EBITDA. We had a drop of 32% in our net come, but that was part of our strategy for us to transform and exit teams. Today, we have a company with scale, capillarity and more important with infrastructure in terms of structure systems use costs ready for a new cycle. And what's this new cycle, a cycle of operational efficiency, excellence in services, we have all processes digital, the newest fleet in Brazil, which gets us flexibility, not only renewing at lower tickets for the average cost in the purchase of new cars, but also to delay renewal if we went, which contributes to cash generation. And with that, the need of building infrastructure because we already have the foundation ready. So we are extremely excited and happy with the execution of the last 2 years of our strategic plans and get ready for a new side of better return, more value to shareholders and after the cycle starts a new cycle of growth that is no longer mandatory for us to have clarity, but it is optional. Remember, we have 10,015 costs in the end of last year, additional to its need because we are changing the average ad and ticket mix. Now on Page 7, we have some forms main numbers with robust growth with games addressability and ensuring a new cycle of transformation with new customers, services and sectors. Thanks to the execution of its strategic plans. Today, we have capillarity, inventory and the largest base of assets by car and customers, which enable us to have advanced purchases for the new and customer loyalty. With that, we had growth of core 70%, both in the fourth quarter '22 compared to 4Q '21 and in the whole of the year of '22 with growth of 80% year-on-year and the fourth quarter, 89% above fourth quarter '21. So that shows we are increasing margins due to scale with net income of more than 66% growth year-on-year, closing '22 with BRL 669 million in the fourth quarter alone BRL 254 million, 18% margin and 116% growth compared to the fourth quarter '21. And here on this chart, you see the growth and the rental backlog for the company from 2019 to 2022, BRL 13.7 billion backlog future revenue for the company. And as I might do, you probably saw the numbers in press release. Dealerships margins have really transformed in -- especially in the Midwest with for machinery that substantially contributed to Vamos' results. On Page 8, we have Automob holdings that consolidates all our light vehicle dealerships. It comes from original but with all the mergers and partnerships that we have today, we have 73 stores, 16 cities and 25 brands. The net revenue was BRL 5.3 billion in 22, EBITDA of BRL 385 million in the year '22 in the fourth quarter alone, BRL 84 million. That shows in annualized others, our potential of growth. Net income, BRL 22 million and BRL 165 million against the fourth quarter '22 million of BRL 53 million in annualized numbers also showing significant growth. This is a company with the mergers and acquisitions made -- we are integrating companies a huge potential for synergies, many to improve used car sales per point of sale. This is something that we have had know-how for many years. So this is a company with huge potential for organic growth in the current parts of sales but also further acquisitions and consolidation in the segment, which is a huge opportunity in Brazil. On Page 9, we have BBC Bank. This is a multiple bank with new products and offering new financial services in the SIMPAR ecosystem. You see our credit portfolio grew 95% year-on-year, and credit origination, up 135%. This is a company -- 123%, I'm sorry. Completely independent and in the ecosystem. It has its own results. It is building a scale but more finance costs by machinery, trucks, agribusiness studies in SIMPAR ecosystem and it will hugely contribute to our customer loyalty and to the sale of our assets, again, helping us offering differentiated services within our ecosystem. And then on the next page, CS Brasil. Remember, CS Frotas belong to CS Brasil and was merged into Movida today belongs to Movida. CS Brazil focused on mobility and fleet outsourcing services with driver for public sector and mixed ownership companies. The public sector wants better management and for that, they have to outsource services. CS Brasil has also shown growth in the fourth quarter net income of total net revenue of BRL 145 million in 2020 to BRL 550 million and net income of BRL 0.4 billion. Now on the next page, we have CS Infra that has been developing a portfolio of concessions. So cost location is in services with synergies for the growth. I believe this is almost have 3 operational companies. Ciclus alone. They are just waste treatment center of the broad receives more than 280,000 tons of waste per month. Then we have CS Portos, 2 ports Aratu [indiscernible] that we won the concession preoperational yet, but we are already generating revenue, and we are going to transform the port. I have to [indiscernible] that the demand that we have, companies that have been compacting us is much higher than expected. [indiscernible] highway that is starting its first toll plaza until April. Then we have the BRT in Sorocaba. [indiscernible] Cuiabá we won a concession to refurbish the downtown Cuiabá, with the building of shopping mall parking lot and we are going to have the right to explore the parking space of the city of Cuiabá. So CS Infra has been specializing surgically in concessions that are turned to services. This is our specialty. And once again, this is a company with all those businesses is still preoperational, but is it is still under development and the return will come into years' time. On Page 12, we show some of our financial highlights. So I'm going to turn to Denys our Financial VP for SIMPAR. Denys?

Thanks, Fernando. Good morning, everyone. So talking about the consolidated financial highlights on Page 12, I'm going to be quick because Fernando already mentioned them in the introduction. But what you see is a strong growth of revenue, EBITDA and EBIT. In the fourth quarter, we be BRL 7.4 billion net revenue growth of almost 80% year-on-year. In the year, BRL 24 billion 382 million of net revenue growth of 76% year-on-year EBITDA with a total for the year of BRL 20 million to BRL 7 billion, margin 36.6%. But just as a remind for the purposes of covenants we bring EBITDA of acquired company, not consolidated in our accounting. But anyway, it is a significant increase year-on-year of almost 70%. And in the fourth quarter, specifically, we delivered BRL 1.8 billion, 40% growth compared to 4Q '21. EBIT for the year reached BRL 5.1 billion, growth of more than 60% year-on-year. And in the quarter, BRL 1.3 billion, 27% higher than the fourth quarter '21. And when we get to net income because of the strong increase on interest rates, remember that interest rates in Brazil and company in the year '21 was on average 4.5% and in the year of '22 was an average of 12.1%. That led to the income for the year totaling BRL 941 million. The 29% below the previous year. and the controllers that net profit, net income reached BRL 482 million in the quarter, BRL 288 billion, down 21% year-on-year for the same reason. And the net income of shareholders capture the central portion totaling in the quarter, BRL 117 billion. Now going to the next slide, Slide 13. We show to you, again, consolidating the figures for our debt maturity schedule and liquidity. The Brazilian economic scenario and that historically, we have been able to and it was a little different in the period to keep a high level of liquidity at the close of the year, we have almost BRL 15 billion in liquidity that were reinforced with some transactions that were performed in the first project. For instance, we raised about BRL 1.5 billion, BRL 850 million at SIMPAR level and BRL 650 million with a very extended period up to 2030 is still with the first quarter. We had some early settlements of that, reaching BRL 1.3 billion, BRL 238 million as early [indiscernible] and BRL 1.1 billion at MOVI and -- the interactions with you. You haven't seen that. These were settlements that were expected for the years of '23 and '24. And we also repurchased our own bonds in this quarter in a total amount of BRL 350 million, 2/3 of bond for SIMPAR and 1/3 for Movida. When you take a look at this section and you see the debt amortization schedule, we see that we have a very comfortable position with no pressure for any rollover in the mid or short term. So in a very conservative way due to our group. We have always [indiscernible] the cash position before our need. So this is a takeaway message to give you the comfort for those that have been [indiscernible]. Now on the next slide, Slide 14, and still along the same lines. I'd like to give you a few or the voting. You see that our liquidity position is also very healthy, about BRL 3 billion in the end of December, reinforced by the funds raised in the previous slide, so almost BRL 4 billion or BRL 3.8 billion. Once again, with this, we also here have a very long amortization schedule, more concentrated for 2031, and we removed everything that was in the short term that we settled before ahead. So that voting is also in a very healthy position. Preventatively keeping a high level of liquidity. And what I wanted to show you is that our indebtedness of BRL 3.6 billion originate in the creation of value for the different companies and the development and the valuation of these companies, the most relevant being listed cutting is BRL 12.6 billion, which is more than threefold the indebtedness of the [indiscernible]. So in cash flow or valuations that value-created by SIMPAR, we are in a very comfortable position. Going to the next slide and still talking about indebtedness, you bring to you picture of what we have in our subsidy -- that funds are raised for the purchase of assets light or heavy. Basically 90% are cost and treat with an average age of 1.3 years for cars and 3 years for trucks. So a very new asset base. These cars and drugs total together with some other items at market value of BRL 14 billion. So when you get the liabilities associated to those assets because it's not only the net debt of our operating companies, but also suppliers vehicles and equipment. It shows a coverage of 1.5x. So again, a very solid position point of view of the creditors. So the money is being allocated in assets that are highly liquid with coverage of 1.5x. With that, I go to the next page, Page 16. And here, I brought to you some reflection on what the group has delivered since 2007. I went back to 2007 to bring you the sub-plant recession in 2008 and '09, then Brazil's recession mid-14 to 16 and then COVID in 2020. The chart shows that because we are inserted in the real economy with huge diversification of customer sectors and services -- we are a company that is based on contracts that give us visibility of cash flows in a model that has survived and developed in a country that is inflationary. And that shows our resilience. So we delivered EBITDA of BRL 7.3 billion and a long year since 2007, it has continuously grown in the most adverse scenarios in Brazil because of local or global issues. This is a proof of on resilience and of our business model. And now I'm going to go to investments on Slide 17, we invested approx. BRL 13.5 billion in the year, 53% above everything that was invested last year. But as a counterpart, we had a strong evolution of cash generation, reaching BRL 7 billion, an increase of 67% year-on-year. That is an increase even higher than the increase of amount invested. In terms of amounts invested, it's important to show that the BRL 4 billion invested in the fourth quarter because of the deployment of our assets stake in 19 days has not yet converted into the cash generation for the fourth quarter. And even in the third quarter, just of last year, has fully converted into results for the fourth quarter. On the right, we see that levels was the one that had the most CapEx, which was a change in position. Remember that Movida has been the company that demanded the most CapEx, but it's now in a new phase as it mentioned in its own conference call and of [indiscernible] for 54% of all the investments of 2022. Now going to the next slide, we talk about the leverage. So you see our leverage to a left. We closed the year at 3.5x. We still were to gradually see leverage below 3x. Also important to highlight is that the average leverage of the subsidiaries is 3.2x. And in terms of content, the 3.5x ended up to be a good name. If you consider that the interest rate almost tripled in the year that we had strong investments, as you can see on the slide, BRL 13.5 billion, and that are still to be enjoyed. So BRL 13.5 billion investment. Just if you think of relative tens is 50% of the group's net debt. So in a year that invest of your net debt, we can cap our leverage stable, which is interesting. So the average CDI was 12.6% compared to 4.8% in the previous year. With that, I'm going to go to the next slide, where we show our profitability. This was an important item here on Slide 20, which is the return on invested capital. We continue to expand the return on invested capital in the year of 22%. We reached 17.7% in the year Here, you have the effects of the effective rate. But even before the number of invested capitals would have been better than 2012 and would still be a record in the year. So that shows our constant search for efficiency and monetization of the capital invested. With that, I'm going to turn the call back to Fernando. Fernando, please.

Thank you, Denys. So here, we are on Page 20. Just moving to the end of our call, and I would like to highlight some points for you to have with you. We have companies that are solid pend for sustainable growth with operational efficiency and disciplining capital allocation to cope with the economic financial plans, we are going to more than that and as important as that, we are dealing an ecosystem where we have the resilience of revenues with the portfolio of services in the main industries and sectors, food, health, agribusiness and commodities. We have people that are prepared. You on the most important things in any company, and they are crucial in-service companies, independent companies with their own CEOs and CFOs, a management model with strong culture that focus on agility, focus on the customer and owners' attitude. And with that, we can adapt to any scenarios that may come without doing away with excellence in services. That much contributes to customer loyalty. We have in our DNA the constant search for new opportunities that can contribute to the development of our customers, generating new services and strengthening our partnerships with our customers. We always have, but in times like there's even more focus on reducing costs, expenses, increasing efficiency and discipline in the capital employed to enhance our profitability and really cope with difficult economic taxes. We have capacity to invest as our competitive differential, not only because of our scale, but mostly because of our people, regardless of a challenging macroeconomic scenario, we don't do away fair pricing to really bring value to our shareholders to have firm pricing, it's close for us to have partnerships and to develop any moments like this, even more so for our development. We have made extremely strategic acquisitions with important customers, segments, geographic regions and more than that with value and cultures that are aligned to us and with people committed to the services. With that, we can bring more scale and create more value. We have a solid capital strong cash and long-term debt profile for us to have the comfort with responsibility to continue our development in a sustainable manner and continue to seize the opportunities that close to us. we have spared no measures to continue to evolve in social, environmental and governance practices, enhancing our internal controls so that we can have a consistent base to support our growth and development. Once again, on the half of our more than 44,000 employees, I would like to thank you for your time and attention. And thanks for your trust.

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

Congratulations on the results on the term on invested capital. I have 2 questions. First, if you could please talk a bit more about opportunities for the Automob business, especially now for 2023 with regards to the purchase and sale of new and used cars. The second question talking a bit about the M&A scenario in 2022 in the second half of the year, midyear, there was a lot of uncertainty above the market. So that probably made it more harder for the M&A market. But in the beginning of the year, you already announced an acquisition. So what's your view on the similar for the year.

This is Fernando. Thanks for the question. Okay. Well, the opportunity of the Automob business in our group. We believe that in 2020, you're going to have more availability of course. We had [indiscernible] luxury brands that have a very low volume last year. That is cars were not available. So this year, things should be been. When you talk about used cars, we ovals that in our DNA in our company, significant sites, almost 1 to 1, new and used cars and acquired companies have excellent management because we buy good cost, but they didn't have the volume of used cost saves, only 0.23 per new car -- so we want to balance that more used cars inventories focus on each region. And that's very interesting. Renault to use car sells very well in the south of Brazil, but not as much as Midwest. So we believe that with our expertise, we are going to have a better volume for new and used cuts. And another important thing is the synergy of the businesses as GA administrative synergies are starting to be collected. -- talking about Automob [indiscernible]. Now talking about M&A without giving any guidance to the market, but you talked about last quarter. But in the last 12 months, we had some important movements. And without creating and expectations, we see that as an ongoing movement. I think Brazil has the opportunity. In terms of time, we are not in a hurry. We have to be willing, those that sell have to be willing. People think that we have lots of M&As, but we are very surgical and we focus on quality. And from now on, with the cost of money and everything that is going on, the discipline is going to be even higher. So negotiations are going to take longer on tape, they don't happen, but we are not in Adobe. We are ready, we have scale to grow with or without M&A. So we are very happy at the beginning of the year. We acquired one of the largest logistics company. We are still waiting for the antitrust agency approval. But it is a company that is extremely complementary to tease. But I always talk around M&A depends on 2 parties. So we are always looking into new opportunities. Thank you, Victor.

Our next question comes from Luiz Capistrano from Itaú.

Congratulations on your results. I would like to explore something that you focused on, which is the company's management of liabilities. You have an important drop of almost 3% in the holding cost of debt. You mentioned some measures repurchase of bonds, earning settlements of about BRL 1 billion. I would like to understand, I would like first to confirm. If these were the most important initiatives for the cost of vents to have dropped that much compared to the previous quarter. And what more you see to try and make that cheaper at a lower profile. Should we expect more repurchase of bonds at the quarter or in the coming quarters. So I'm just trying to explore the initiatives that you are taking that have been very interesting and broad results. And along the same line, you announced a new debt at the holding level. That's quite too long with amortizations from 2030 to 2032. I would like to know the cost of this debt and if it's really in the retesting trend in terms of costs.

This is Denys, Luiz. Okay. Indeed, what justifies the drop is the management of liabilities -- and it's only possible to manage liabilities when you have the comfort, as I mentioned, of liquidity available. And when you don't have any pressure for rolling your debt. So I think that's very important to highlight that the whole team amortization schedule is focused in 2023. That gives the comfort of the cash. And as you mentioned, we closed a BRL 3 billion, but we already reinforced it in January with BRL 850 million.

Can you hear me?

Ladies and gentlemen, please wait for the speaker to be reconnected.

So I am back. Are we back operator? I'm going to restart the answer because our line drop. I don't know if Luiz, is her mic is on. Can you hear me? Yes, I can hear you. Loud and clear. Okay. Great. So Luiz, one second. So the liability management models were the reason for us to decrease our indebtedness. And that was possible because we have been keeping high liquidity because of optionality of the group thinking of our commitment as a whole. And remember, the group has developed even in times that were even more adverse than now. So that has been the guidance of our financial committee that supports the Board of Directors so that we are prudent in our results. And that's why we were able to have the liability management. Cash was reinforced. Our schedule is very long. There is no pressure for term rollovers. So we are in a position that we can make discretionary decisions about what to do. We don't know if we are going to have other moves like that. You understand that if we say that, it can even affect the strategy of execution. But it's important for you to know that we do have a cash position that enables us to look into different options. And you asked about cost. The cost of the BRL 850 million, again, extending the maturity of the bond. Were at CTI plus 3%, about 127% of the CTI. So it is a huge change in cost profile. And we are going to continue working on that. We have excellent relations with banks in the group because of the profile of our businesses, as we showed in the beginning, with constant evolution of cash generation even in adverse scenarios as the real estate crisis in the U.S., the economic crisis in Brazil and the coffee dynamic because we provide real services within the real economy. So I believe that we are going to continue having excellent relationship with them. We see lines of credit available to the group. I can advance to you that those companies that have the possibility and focus on growth, have most of their plans already designed and covered by lines that are either close to be completed or other lines that we have been negotiating. So not only status quo that future development seem to be very comfortable because we are supportive by all these initiatives. I know I'm not hanging numbers, but as they are completed, we are going to release them to you. Okay?

Our next question comes from Lucas Marquiori from BTG Pactual.

I would like to ask 2 strategic questions. One to Fernando and one to Denys. Denys I'll start with you. We see the allocation of capital, the pace of CapEx at the company accelerating, I would like to understand because you want to go with the leverage of less than 3. What should we expect in terms of CapEx for '23? And if possible, the breakdown for this CapEx, if it's going to be similar to '22 or close to that. So if you could give us a bit more color in terms of capital allocation for 20, it would be very good. And the second question, Fernando, is for you. I think that in the beginning of the year, it really drew our attention. It was the first time that you changed CFOs of your subsidiaries, Vamos and Movida. This is practicing other holdings even in Brazil. But I would like to understand how you thought of this movement? How do you see the allocation of executive competencies for more immediate needs of the subsidiary? What was your rationale of your strategy in Movida and Vamos for the change in your executive team. If you could give us some color, that would be interesting for the market as a whole.

Can I start? Okay. Lucas, thanks for your question. This is Denys. I'm going to start by answering the question on CapEx and leverage. We continue to wish to operate below 3x. As we said many times, that has to be gradual because of the profile in the segments in which we are suited that enable us to grow consistently. So we continue to wish that, but again, it's going to be gradual. I made is not going to happen in the short term may be due to external factors, it can be faster, but we believe it's going to be very gradually. CapEx for the end of the year, we did have some opportunity to advance volumes that were thought for the year of 23, and we did that in the end of '22. We have some of the group companies starting at levels that were very different than in the past. In the past, Movida land they need for CapEx and the highest percentage was always with Movida. But in the year that ended with soft positions of Moses now the company that needs the most investments. And based on what you had from Movida and Fernando here, and obviously, he can I add to that. Movida after it doubled size in a short period of time is going to focus on improving efficiencies, returns and adjusting its portfolio, as it's been mentioned before. Consequently, that is going to demand a lot less capital. So I think in my mind, this is going to be a year again, without giving you any guidance, I think it's going to be a volume of investments less steep than what we had in 2022. JSL continues at a very good pace with possibilities of organic growth and the acquisitions made are not pressuring leverage. So that is a bit of the overall context on the questions that you asked, and I hope I have answered to that.

This is Fernando. Thanks for your question, Lucas. Just to add to what Denys said, our target is getting to less than below 3. This is something that we want. We don't want to do away with that, but we are going to get there with time. And quite transparently, you see our leverage. You see our capital structure [indiscernible] is to be responsible before going down, it can even go up 2.3 because we are very candid to the market. And why is that? This is something that we have always done. And we have quality in capital allocation. We can make capital yield more than it cost us. And that is something that we have done historically. So in the end of last year, we had the opportunity of developing and growing the business. Movida is a company that made its release. It has the infrastructure and scale. It may decide not to grow in fleet and even decrease fleet and will still increase its revenue. And why is that? Because of the advanced purchases in the end of last year, enjoying the mix that they had. So we want to deleverage. We have several alternatives to deleverage, but it's going to be at the right time. And if there is the opportunity, we might increase it if we are generating value to our business and focusing on company perpetuity. When you talk about people. That's always saying, this is the major difference that we have in the company. It is our people. People that are being pet, they are true warriors. And the move that you saw between CFOs, this is recurrent within the company in other positions that you don't see. I'll give you an example. The person that solved the problem with that in Movida was the person that tracked cargo in JSL. The commercial director that is leader at Vamos is the commercial director that started renting cars for us 12, 13 years ago and then move to bubbles. The Sales Director of the logistics business came from the rental car business in the competition. So these are moves that happen all the time. This one was precisely for us to watch the companies. Moscatelli, has a new vision and focus within Movida. We [ fighted ] SIMPAR, we are very happy that he is in SIMPAR help us with his experience and perhaps we have another vision very soon, and we are very happy with that. And Adrian has best experience in the financial markets. And we don't want to lose the excellent work that [indiscernible] made. But it's nice to bring also new experiences to the group. And we have this mix, people that have here for longer for less, but this is something that is natural. And you can see that's happening at our Board of Directors. This is part of our strategy, and it is recurring. Sometimes you don't see that, that well you sought because you're talking about CFOs. I didn't even know that was practicing other holdings because we do think thinking of what is best for us, for our people and for our company. And we are very happy with this movement. Thanks, Lucas. I hope I have answered all your questions, if you have any, just let me help.

Our next question comes from [ Eloisa Cruz from Stacksons ].

I have 2 questions. The first, I would like to understand in terms of contracted CapEx, not only the fourth quarter, but you also have things in the third quarter that has still not converted into results. How much of CapEx you have still not yielding results? And how much you have a preoperational expense that is already entered in results, but it still has not converted into revenue. And the other question, more or less along the same line, how much contracted CapEx you have for the future? If you decided now to stop contracting CapEx, -- how much do you have already for the next quarters?

This is Denys. Thanks for your question. This is a very important question to talk about our business model. The amounting tested in the fourth quarter that was BRL 4 billion. Out of this BRL 4 billion, but a single real has converted into results. But even in the third quarter, about BRL 3 billion, what you invest in the first month of the third quarter already shows fully in the fourth quarter, but not what to invest in the second or the third month. So I would say making a rough estimate of third and fourth quarter, I would say BRL 5.5 billion in CapEx already invested without yielding their full effect in a quarter and not year-to-date. And to be very objectively in terms of preoperational expenses, you're right. But I don't have that by heart now the operational expenses for the beginning of these investments. But it's important to mention the good performance of JSL. JSL had organic growth rate, and that has to do with preoperational expenses that was huge. And so the live a very high return on invested capital. Even if you normalize taxes, its return on invested capital is 15%, with a gross rate of 30% organic or more. More than 31% and JSL 30%. So on average, 32%. So this is something because when companies in the past were all mix, people could not see this. So today, you have a company that is dedicated to logistics, delivering a return on invested capital that is higher than many companies that you follow with organic growth. So just for you to have an idea of the performance and what is embedded in JSL, sometimes people just do not pay attention to.

Let me just add to what Denys said. I thank you to your question. And I had -- I was going to talk about CapEx in Lucas questions I forgot to mention that it has to do with that, Lucas. Just for you to know, strategically, there is an important part of the CapEx of '23 that was advanced in the fourth quarter of 2022 even. In Vamos with [indiscernible] commercial department did it well, and we did much for the fourth quarter '22 for us to have high inventory levels for '23. So part of it was [indiscernible]. The second thing is that Movida also advanced purchases in a strategic movement and you are going to see that this quarter has lower purchases. So we had this move of advancing CapEx and without giving our guidance or anything, it makes us more comfortable to negotiate with the OEMs and buy more or less according to conditions because we have already ensured thing. Now your question, [ Elo ], was very interesting. In our business, when we do things, it's like an industry. You have part of your revenue, but not the full thing. If you think it takes about 90 days to deploy assets. So when you talk about Vamos, when you talk about Movida, the preoperational cost is the carrying of the debt for things to happen and depreciation and to deployment. And that takes about 90 days in bonds even a bit more than that, depending on what assets you're talking about, Movida, but on average, 90 days. So when you see BRL 13 billion in the year, if you think the average would be BRL 3 billion for June, but that does not happen. So you would only have visibility of 6.5%, which is what then is the same, BRL 5.5 billion that has not converted to any revenue, you only will see it in full in 12 months. I always think you see the depth of after tomorrow, and you see the CapEx of before yesterday. So that is what we see. And these are contracts of long term, 70% of EBITDA comes fund services. And you have a conference for 2022 that have not yielded results, but they have a term in this average of 4.7 years. there started at JSL Logistics. The company is growing organically with important contracts that are still to be deployed. So we carry a bit of operational costs. You're right. I'm sorry, I took long to answer your question, but I think this is a very important question. Yes, arise may, we talk about new contracts, but we don't talk much about the quality of contracts. That is how much is renewal and what percentage are at same customers and how you extend contracts and et cetera. So if you could give us a bit, call a bit more color on this. Okay. I'm going to talk about when and then we can talk about on that. Movida has a very important strategic move. And in the last 12 months, it bought more than 1 million new customers. So we knew it that demand would come. It advanced the demand. It has a mix of costs that enable us to have a new customer experience and draft loyalty. This is an example of Movida. In JSL, that's also extremely important. I think the most difference of JSL is that we work very hard, but we do not do away with their pricing. This is what JSL think. They charge for fair prices. And how does it work that at times in which companies are seeking operational efficiency. They need to outsource trucks grew more than 35% in 12 months. In 30 months, they are in double prices. With that, you have less logistics operators, carriers that can fund themselves based on the level of CapEx they need. And quite modestly, JSL has excellence in operational delivery and in part the capacity to add rate, but charging per prices tending there's many logistic companies, they're not to increase their prices, but they did not have the courage. With that, they stayed in a more difficult position and JSL is now being able to close more contracts with customer loyalty for long term because customers know that we are going to provide the services. That has happened in agribusiness, pharmacy, but on paper, food companies, on suppliers that are more solid. And with that, you have customer loyalty for the long term. Vamos, for instance, if you do your math, you don't want to invest your own CapEx. It's much cheaper to rent, and that's what Vamos all about. And that has strengthened the company. And that's what we talked about capital structure. If you know of the quality of the asset and you know you have a customer for that, it's better to increase your leverage if you're going to have a good return on capital and of every term, and then you're going to have a bigger company for the future.

Our next question comes from [ Jose Eduardo Aramco from Sono Research ].

Can you hear me?

Yes, we can hear you.

Well, first of all, congratulations on your results. I have a question. And I would like just a follow-up when you talked about the agribusiness. Where we have a micro analysis of the growth of JSL and Vamos, they were able to enjoy the growth of the agribusiness segment. I would like to know what do you think are the prospects for this year for this segment? And if the company is still going to serve the boom that we saw in recent years.

Okay. This is Fernando speaking. We are not enjoying this moment. Our strategic plan is literally to be diversified in sectors and services. That's how our units transformed into independent businesses. Agribusiness gives us what we see, which is resilient revenues, solid customers, a market that is under development. And we know our assets, we know how to sell them, and we know that they are going to be useful to our customers. And on the 4 pillars, agribusiness is a very important business. So we are not going to argue a business with [ Rentoalone ]. And we have tiller ships. We have reduced asset sales -- we have Transcerrados highway. Our concession where agribusiness is developing. We have used asset sales and in logistics business as a whole. So this is part of our plan, resilient customers, stable businesses. And this year, we see that agribusiness is really strong. Bancard Brazil is a great country or that people are optimistic and more and more, we want to provide sense. Unfortunately, or unfortunately, you have people in agribusiness that cannot offer stability and reliability to our customers. And just to mention, and I think this is very important. We had a business with concessions. We won the concession for 2 ports in Bahia. We knew that we had resilience, but we didn't know the demand was as high as we have. Quite honestly, we have a preoperational port. We have more than BRL 100 million revenues in the preoperational phase the ports are still under construction, and we have a giant customer demand. I think that we can more than triple -- people that want to be partners to guarantee a window of exports. So that shows how strong the segment is, but that's how we take care of our business. Thanks very much for your questions.

Our next question comes from [ Marcel Santaro ] from XP.

I have just one question. You've had plan for SIMPAR of 35% of revenue in 5 years. I would like to know the main measures that you are taking towards that. What are the main plans that you have to develop this plan?

Okay. This is Fernando. Thanks for your question. When you mentioned that we had this plan, the plan when we announced, we also announced revenue for the group of SIMPAR for 2025 that annualized was what we had for the fourth quarter '22. So we announced revenues in 2020, 2025, that was lower than the annualized number for the fourth quarter. So the 30% that we thought that could be international can be here or elsewhere. So what is important is that we value our customers with resilience. Why am I saying that? We have the obligation and we'll never do await that relating to the market as we relate to the customers in a very candid way. That means we want to go international. And when it happens, we are going to announce to the market, but that's not the priority. The priority is to do more and better each day. [indiscernible] has BRL 500 million in revenue that comes from operations with a mapping Paraguay and Africa. So they are developing. We had that investment in Portugal that is complementary Movida customer can use that for us to have experience and understand how things like buyback work in Portugal, but also bringing Movida's conference to Europe. So it was an exchange of experience looking into returns and that will develop naturally. But our focus is here. And as you can see, the group had a transformation of revenue. So go international can be a bit further on. It may happen or not, but we have to be very responsible. Any movement to go international has to be very responsible.

Our next question is on the webcast and is going to be read by SIMPAR’s CFO.

Okay. I'm going to start to beat the questions that we got on the web. Okay. We have one questions from [indiscernible] asking CapEx ‘23. We already answered the question. When [indiscernible], just for you to know, there are 2 questions, one from [ Antonio Gabriel ], [indiscernible] asking about dividends. So what is the dividend proposal for the year it depends on the scenario, and I'm having a mix sample befall have the second question I'm going to address later on. What the management post in the general meeting was the minimum dividend payout that was mostly covered by the declaration of interest on equity that was made in last year. So the additional amount to be paid out is residual. So that the general shareholders' meeting is suffering in the decision, but because we are -- the controllers I don't think they're going to change that. Another question by [ Rafael ]. If we plan any IPO for our subsidiaries in '23 or only for '24.

This is Denys speaking. Well, the basic direction is always to have companies ready for strategic movements that make sense, but never to be in a position that the company needs an IPO to survive. So we have some private companies that are developing CS Infra, Automob, other private companies, but I believe that these 2 are companies that could enjoy more fully an opportunity if the opportunity comes. So we are consolidating initiatives. In the case of Automob, for instance, Automob is in the cases of becoming a listed company. We want to make portal releases so you need to have visibility on that. CVM's new rules brought an evolution, you can have an IPO in up to 30 days. since the global environment and the Brazilian environment is very volatile. It's always important to be ready to have the option. We like to have the option of doing what we think is best. So we do not have an established plan for '23 or '24. We are developing. Automob is under consolidation. The companies that is acquired were paid partially with cash partially with stake, but we keep the capital structure with low leverage and comfortable to move on in our consolidation. Fernando, would you like to add anything?

No, I think that was very well answered.

And I have another question on that was from Automob. Question is from Leonardo. Could you give us more color on how the no operating expenses that are recorded in EBITDA comparing fourth quarter '21 and '22?

Percentage was there was an increase of in operating expenses. But if you see the evolution of their financial expense. And remember that you also have sales commissions. I would say half the increase is because of the increasing revenue. As for the balance in Brazilian event is about BRL 20 million. We have some one-off benefits that we had in the first quarter that reduced operating expenses in the fourth quarter by BRL 12 million of transaction. And then when you organize the company thinking of this consolidation process that is just starting. In the beginning, you have a bit of higher cost, but you're still not enjoying the synergies that have already been mapped in the process to be captured.

And Fernando can perhaps talk a bit about them. It would be interesting to take a look at our view in terms of value creation. Well, I'm going to be quick because I know the call is being a bit longer than expected. Automob, just for you to understand how careful we are with acquisitions and mergers. We have the money always located, but we have a cell that synergies, basically, in terms of costs, the purchase of tires and others feel -- but in Automob, you have different dealerships. You have luxury, you have on, you have different geographic regions. So it's important to keep the independence of each store. But we are centralizing back office and this is already completed. And then we can enjoy much better the synergies. So it is what Denys said. You invest more, you have to retire some operations, but then you enjoy people, and you can use those people in other areas because we continue growing, and we start to enjoy synergies along the. This is a bit of what we think. Of course, we have higher costs in the beginning, but then you adjust things.

So moving on -- we have a question from [indiscernible]. The net financial expenses of non-listed companies. Can you consider interest rates for this company?

Non-listed companies. You have Automob, for instance, that is an operation that is a retail operation. But even there, I wouldn't think so because one of the levers of value in consolidation is have our practice extending to companies that join us. We've always valued the point of sale. So we not only focus on the sale of new cars, but also on maximization of the sale of used cars. So a recent analysis for each new card, we would sell 1.3 used cars. The companies that are joining us have a used car base that is much lower. For each one new car, they will sell 0.2, 0.3 use costs. So same-store sales bring huge opportunities to us with the potential of expansion that is very important. So I would say that the has preoperational port investment for expansion. The highway has not started with the tolls yet. But I would say that the trend is to extend.

Our next question comes from Eloisa Cruz from Stockton another question.

I would like to understand and we did not have the opportunity to talk about that. I was surprised by the price and quality of assets and market operations that were a lot higher than what I thought would be available for acquisition. In the case of JSL, do we still have other opportunities. What should we expect in terms of pipeline along the year?

Eloisa, did you think it was above your expectations in a good or bad way.

The quality of the operation, a very new fleet, very well maintained, very good operations, very satisfied customers, and you pay the low price. So I would like to know if you have other gems in your pipeline? Or was it a one-off opportunity.

I'm going to tell you something along. That's interesting. We always think we pay too much for the one that stays always to match for the one that's receiving is always too little. But I would like to tell you the policy of asset indeed is excellent. This is a company with excellent operational level. If it's not the best in Brazil, it's one of the best recognized for the quality of its operations with the right people, that is a real differential. So our acquisitions, quite modestly, have been like the surgical complementary and high quality. Fadel, just as a reminder, we bought Fadel with BRL 450 million in 2020 is at its BRL 1 billion down from BRL 200 million to BRL 700 million. So we have been buying good companies that we, as JSL, can support for a new cycle. So this is one thing. Now acquisitions, that was a quality acquisition that was in time. But people have different times in life. They have a very new fleet, quite well maintained. But for you to review a free like this, you had to invest BRL 300,000 per truck. If you have 200 tax, you are talking about BRL 80 million. You have to have the right price. You have to have working capital. And they sold without the need to sell. But some executives. It comes to a time that they might have the option. So there are many executives in Brazil, we're thinking their succession, their model, their timing life and JSL has the opportunity of monitoring these reflections, and there are other very high-quality companies. And I think it was a fair price to tell you the truth. And another thing that I think makes a difference. If you create a business like this and you know the opportunities based on people and things. You know -- it's a pleasure to sell to someone that the company is going to continue and that they are not going to have any headache. And their people are going to be treated, right? And we have been doing that surgically in a good way. So without creating expectations, I see other businesses going on, perhaps not the same size, but in different sectors and services. Well, we passed 1.5 hours in call, and it is coming to our time. I'm not going to be able to answer all questions. We have lots of questions on the web, but we are going to contact you with our IR department. That's it. So just quickly, the bag, if the net margin of Automob is low. And if this is pick up the retail business, yes, and we believe that with synergies, we can improve that. Our market share is only 10.2% in used cars. There is another question that I would like to mention. If we expect a drop in interest rates to deleverage Simba and the subsidies [indiscernible] asking this question as well. We only work with the scenario with the interest rate that it has. And as I showed you, since 2007, we have the capacity to adapt. Of course, things do not happen overnight. -- but we are not expecting to those rates to go down. Leverage has been a discretionary decision to continue developing the company at the right prices according to the right time. So that's not a concern. We have questions on the tax reform. Overall, we are monitoring what can be the potential consequence of the tax reform. But at the end of the day, is something that applies to everyone, and we have to adjust to the new reality.

Yes. In terms of tax reform, we say in Brazil, and everywhere in the world. So taxes are not optional. And we know if you have tax, you have to pass on prices. We are not tax tons. We are tax passes on. And I don't believe that we are going to have more taxes than what we already paying. I think we are going to have a simplification in the payment of fees. This is what we want. And I think this is what the new administration was to have simpler taxes for those who don't pay can even be more identified. We are payers. We don't have a problem with that.

There is another question -- that is important. [ Bruno ] asked about tax credit for the fourth quarter.

In the fourth quarter, we had an accumulated effect of the substantial subsidy for investments. But anyway, it is a fact that we are not going to have a creditor line a long time, but it's not going to be at the same level, about 30%. That benefit remains. It will continue and perhaps we are going to have an effective tax bracket of 15%. So for [indiscernible] asked the question about expectations of investment in SG and solar energy. We have a project to company's facilities aiming to have the use of solar energy. This is ongoing. And socially speaking, we have programs that aim at changing the lives of people that are more vulnerable. And the numbers have increased. I don't know if I have the right number, but I think it was 1,000 teammates because it's not only in climate. We also have the social part of it. And environment, we have been partnering with our customers. Movida not only has the largest electric car fleet in Brazil, but also Vamos has the largest fleet of electric forklifts. So that has been something we have been focusing on. And also we have all the contact -- the carbon credits in Ciclus. And this is [indiscernible]. We have been doing that for many, many years to contribute to the society -- and we went to redwood safety, training, labor and contribute to less emissions. For example, our independent truck drivers. You know that in Brazil, the average meat is 20 years old. At versus even the oldest drug drives have an average fleet of 9 years. So our movements also contributed to less emissions. Now I have a question for the repurchase of bonds. We are not going to talk about that in terms of guidance. And with that Fernando, we are going to close. And if we have any more questions, the IR team is going to contact them. So let's have your closing remarks.

So once again, thank you very much. I would just ask you to than with me, why do we have comfort and fees with our business because we have people with the capacity of management warriors, myself included. We have a management model with value and culture that is second to none regardless of the size of the company. We are working hard to have our value culture owners attitude simplicity before everything, working literally with people that make a difference. And the quality of our assets quite modestly and their liquidity are crucial. This is where 99% of our CapEx is. When we talk about the business, all operations that we have are in businesses that are central to the lives of our customers. We are not unique, but we are essential for our customers. And the better the services we offer, the more loyal our customers are. And we have diversification, all of our companies in sectors and services. And remember, we are in the main industries of Brazil that are -- that show great resilience. So these are some of the factors that give us the comfort, the responsibility to continue investing, developing, growing and working to improve our results. And we have said no efforts for that. I would like to reaffirm our commitment in the discipline of investments and focus on operational efficiency with our managers that have been working hard to reduce costs and improve operational efficiency. This is our mission this year to cope with the increase of interest rates that we don't control. And how may got help us at the right time, Brazil is going to reduce or adjust in interest rates. But regardless of that, we have to wear hard and continue to develop. Once again, to close on behalf of our 44,000 direct employees, I'd like to thank you all. Today, we have more than 230 people. I apologize for the long call, but it was a record of participants. On behalf of us all, thanks very much for your time and attention. You may be with you and all the best. Thank you.

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