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

Good morning, ladies and gentlemen. Welcome to SIMPAR's video conference to discuss the results regarding the fourth quarter of 2023. This video conference is being recorded and the replay can be accessed at the company's website, ri.simpar.com.br. The presentation will also be available for download. [Operator Instructions]. Before moving on, I'd like to emphasize that forward-looking statements are based on the beliefs and assumptions of SIMPAR's management and on the current information available to the company. These statements may involve risks and uncertainties since they relate to future events and therefore depend on circumstances that may or may not occur. Investors, analysts, and journalists should bear in mind that events related to the macroeconomic environment, the segment, and other factors could cause results to differ materially from those in the forward-looking statements. With us today, we have Mr. Fernando Simoes, Chief Executive Officer; and Denys Ferrez, Executive VP of Corporate Finance and Investor Relations Officer of the company. Now, I will turn the call to Mr. Simoes, who will begin the presentation. Please, Mr. Simoes, you may go on.

Good morning, everyone. We are starting to announce SIMPAR's results for the year '23 and the fourth quarter of '23. On behalf of our more than 49,000 employees, I would like to thank you for joining us, especially our customers for the work opportunities, for choosing our services, our companies. Thank you all very much. Let's start on Page 3, where we talk about some of our main financial highlights for 2023 and 4Q '23. We had a record adjusted EBITDA of BRL 8.2 billion which means an increase of more than 20% compared to 2022. We had gross revenue in '23 of BRL 35.5 billion, a 34% increase on the previous year. In the fourth quarter, we had revenue of BRL 9.6 billion, growth of 20% compared to the fourth quarter of '22. In net revenue from services alone, we had more than BRL 25 billion, which is growth of 36%. Adjusted EBITDA was a record, as we said, at BRL 8.2 billion. And in the fourth quarter of '23, we had BRL 2.1 billion which is an increase of more than 14% over the previous year. We had a negative result for '23 of BRL 279 million. I believe that we have ended the cycle here, where we had some variables that will not occur in the future, such as a very large inventory, low pre-operational sets carrying the costs of dealerships, what happened in the agricultural sector, and some other variables that I believe will not occur again. Net CapEx BRL 7 billion in '23, 48% below that of '22. Of that BRL 7 billion, BRL 4.3 billion was net CapEx in the fourth quarter. It's important to note that even 48% lower in executed net CapEx in '23 compared to '22. Our net revenue from service grew more than 36%. Our EBITDA grew by more than 20%, even with a much lower CapEx. That shows the consequence of the CapEx executed in '22 that generated revenue in '23. It's important to say that BRL 4.3 billion of CapEx were in the fourth quarter '23, which also will bring results for the year of '24. We closed the year with a leverage of 3.7x, considering a net debt to EBITDA ratio. It's important to note that the leverage already includes the CapEx executed in the fourth quarter, and which does not yet include the revenue that will come from new projects, the cost reduction from fleet renew, all to be seen in the next cycle. The numbers are very important. Now, the fundamentals and the foundations on which we build the numbers are extremely important. We have a holding company with a unique positioning. It is an active holding. We try and work together with our resources, our people. We develop and suggest the necessary structures. We contribute to monitoring, representing the Board with our companies. We have well-defined cultures and values with people whose DNA is to serve our customers. And more important than that, we strive to ensure our services adding value to our customers, industries or the distribution of the products or those who use our services in the case of car rental, for example. We have a diversified business with high growth potential, either through acquisitions or organically. And even in cross selling, and we have shown this along the years. We are leaders in the main sectors in which we operate. We have scale and reach, but more important than that, in sectors in which we have great diversification, in the industries in Brazilian economy, all of them with great resilience. We have the expertise in asset management and marketing. So we have highly liquid assets, high-quality assets, all of which together build a managed model that contributes to the development of each of our companies without interfering in them. We have independent companies, each one with their own CEO, CFO, teams focused on development and on this new cycle bringing operational efficiency and discipline in execution. And just as important, is the segment of the companies, the way we are positioned in the market. JSL has been grown organically and through acquisitions, but acquisitions made that are complementary to the company by sector, operations, or region, all of them with a huge growth potential, as we can see in JSL's figures. The companies acquire, transform size and development after acquisition. And JSL has been growing in size. We are the segment with the largest logistic company in the market, which is still less than 2.5% in market share, which shows the potential for growth in Brazil in the segment. Movida, I believe we are the rental company that has grown the most organically in Brazil in recent years. We ended the cycle of building, creating stores, training people, buying assets, putting together our used car network. And now we're starting a new cycle in which we're beginning to see the first results of the first two months of '24 with better occupancy rates, cheaper costs, changing fleet mix, improved prices. And I believe this is just a small sign of what lies ahead for most of the market results in a market with huge opportunity to growth. Vamos grows strongly, consistently in the truck machinery rental business, the market which is extremely incipient, and we have the leadership and expertise that is unique, with great potential to grow and continuously transform. CS Brasil, the more the public sector modernized, the more efficient, the more quality services at lower cost it seeks. And CS Brasil is positioned in a unique way to offer services to the public mixed capital segment. Automob in line with our planning. We have had car dealership since '95. Automob started the process of consolidating the sector. Today, we have the largest portfolio of dealer brands in Brazil and a position of diversification and scale by region or brands. BBC reached its break-even point with the first positive result in '23, with great potential to develop, as you can see. In evolution of credit quarter-on-quarter, which will contribute to scale and dilution of costs as you can see in the fourth quarter '23. CS Infra is advancing in the development of concessions, although practically all of its operations are still pre-operational but in assets with low CapEx and huge opportunities in terms of services. Within our strategy, within CS Infra, we have the largest waste treatment center in Brazil, which we spin off and created Ciclus Ambiental in the fourth quarter of '23, concentrating all environmental concessions there, Ciclus Rio de Janeiro, Ciclus Rio, and Ciclus Amazônia, which is the Belém concession now. On Page 4, we have JSL. This is a unique combination of inorganic and organic growth, with a proven management model which ensures the efficiency of our quality, of our services provided by our companies and our ability to contribute to the acquired companies so that they grow consistently, generating value for our customers and shareholders. Here I'll briefly mention, because it has already released its results, but we had an average gross revenue growth of more than 38% from 2023. We closed '23 with approximately BRL 9 billion in revenue with EBITDA margin of 20%, BRL 1,469 million in EBITDA with returns improving consistently. Companies being acquired from '20 to '23, but just as important as the developed management model, is the management model that we have after M&A, contributing to the development of companies, taking care of people, contributing to the strengthening of the companies we acquire, while maintaining their individuality, agility, and focus on sustainable development. Here are some of the main highlights. The growth of new contracts, we had more than BRL 3.5 billion in '23 with an average term of 42 months. Most of these contracts have not yet been implemented. Margins, you know that we have a readjustment mechanism that ensures the quality of the service, but also the sustainability of each contract. And detailed management, not only in price but in execution, that contributes in a crucial way to the development and consolidation of a commercial alliance with customers. Why am I saying that? Because JSL is the sum of parts, and the parts well-founded with customers contribute to the development and perpetuation of the company business and gives it great opportunity to grow and acquire new services organically. On Page 5, we have Movida. Yesterday, it released its results. Movida, after in the last years' executed strategic plans in an excellent way, as we told you, bringing more than 1.2 million new customers in the last 18 months. We bought fleets, modernized stores. I would say that we really made significant contribution to the transformation of the cars rental sector in Brazil. The company is now in a new cycle, a cycle focused on operational efficiency, improved results, and it's already showing that, throughout '23, especially in the first two months of '24, because when we think back to '23, it ended the year with more than BRL 10 billion in revenue, EBITDA margin of 34%, more than BRL 3,522 million in EBITDA in the year of 2023. But more important than that is the foundations and transformation, not only in terms, in size, as you can look on the left side, but in terms of share and transformation of its mix and areas of activity. For example, in 2016, we had a 23% share of the rental car, 23% of GTF. In '23, we closed at 54% GTF and 46% rental car. That shows the transformation of our fleet mix of our fleet together with strategic plans. The work that has been carried out, starts a new cycle with figures that clearly demonstrate how well it has improved its operational efficiency, both in terms of the rental car fleet occupancy, deployment times. All the signs are already beginning to show in the first two months of '24. And I really believe that this is just the beginning of this transformation. Movida is starting this new cycle without the need for more, whether it is vehicles, rental car. It has to train people. It's organizational structure ready for this. I would like to take this opportunity to thank Movida teams for their work. On Page 6, we have Vamos, which has had constant growth in rental results, a continuous increase in scale, resilience that shows the consistency of its rental results, whether through the growth of net revenue with more than 59% growth in net revenue from '20 to '23, closing with BRL 6,085 million. EBITDA of more than BRL 2,660 million in '23, margin of 43.8%. Net profit of 9.6%, BRL 587 million, and it's right consistent year-on-year. In short, it's a market that I would say is still under-penetrated with huge opportunities for growth, incomparable scale, and starts '24 after being affected by the agribusiness dealership sector. It was a difficult time for the sector, but the dealer business, as it was impacted, will now have very quick adjustments. And the company did its homework and is still doing so. Inventory, turnover of assets, and dealerships, we always say they are complementary to the business, but they are not crucial for the development of rental. It's a business whose results are consistent, resilient. And when you have difficulties in the market, you have the impact on dealerships for good or bad, but you will never transform the rental segment. It is complementary. And anyway, we understand we are starting to improve agribusiness dealerships as well. Vamos is making adjustments to its structure because with dealerships, you either have to adjust your structure to reduce costs or increase volumes. And this is what we are doing in the first half of the year. Page 7, we show Automob. Automob is SIMPAR's holding company, which has been consolidating light vehicle dealerships in Brazil. We have been operating as a dealer since '95. We knew of this opportunity. In our plans, we had other priorities at the time, the development of Movida, Vamos, transformation of JSL, creation of SIMPAR, and now in the last 20 months, in line with our plan, and as defined by our Board of Directors, through Automob, we started the process of consolidating car leaderships in Brazil. As you can see, in 2020, we had a company of BRL 7 million in revenue, '21 BRL 8 million. We closed '23 with BRL 10.4 billion. Pro forma figures considering the new acquisitions. EBITDA of 5.4% in '23, also pro forma, BRL 432 million. Our expansion of vehicle sales from '22 to '23 pro forma considering the same number of stores, increased 24% in the number of vehicles sold. Here, still on Page 7, we have the used vehicle ratio, which was 1.3, 1.1 in 2021, and now at 0.7. This 0.7 shows the huge opportunities that we have to grow, to go back to the 1.1. And why is that? Because acquired company had less history of selling used vehicles. And our company has always worked very strongly with used vehicles, which has given us the opportunity of growth pro forma of 24%. That means we grew at the same point of sale, '22, '23 more than 24% in one year, from '22 to '23. What does that mean? We are very happy with the consolidation movement, but we are only at the very beginning of taking advantage of synergies between the businesses. But we are growing the number of sales per location, both for used and new vehicles, F&I, maintenance, and also the optimization of revenue, but still just starting. I believe that the improvements in results that is to come is much greater than what you're beginning to see. And remember that we already have 120 stores, we are in 22 cities, 5 states, 28 brands in extremely strategic locations because of the volume we have of the same brand or brand diversification in some regions. All this gives us the opportunity to grow and capture greater synergies. We always have very specific strategic acquisitions that complement the regions we are in, in a safe way that will give us opportunities for growth and dilution of costs. We are very happy with what we have already done in Automob, but the opportunity to do much more is still to come. And to give you more details, more information, very soon we are going to have an online meeting to give a specific presentation on the development of Automob. On Page 8, as we have been saying, we have been looking at opportunities through CS Infra, in social and logistics infrastructure services. And with this, we have developed a portfolio, as you can see, of the smaller businesses in terms of CapEx, but with a great location of services, whether in the environmental area, transforming the size and now creating Ciclus Ambiental, as you can see on Page 8 on the right, and some moves in terms of ports, roads, most of them still pre-operational, but businesses with great potential for adding value and contributing to our figures and creating value for our shareholders, either by developing themselves or by associations that you can see very soon happening in any of our businesses, especially CS Infra. On Page 9, we have CS Brasil. This is a fleet outsourcing company with driver services in public or mixed capital companies. It had some improvements in figures due to retroactive adjustments, negotiations, imbalances. Everything that was impacted by COVID, like urban transportation, which is a smaller business today, but that has been developing because more states are looking for efficiency and will look services through fleet and logistics operations with assets, drivers, and operational work. And this is how CS Brasil is positioning, with more than BRL 316 million in revenue in 2023. On Page 10, we talk a bit about BBC, which is our bank, with profit in '23. But more important than profit, which is still just starting, is the way it is growing in credit origination. You can see it in the third, fourth quarter of '23, the consistent way in which it has been developing, growing portfolio, and now finding its break-even, a result that can still improve a lot the more the ecosystem grows. It is a bank complementary to our business, independent, and it has an important participation, but it is a participation like any other bank, within our system of selling used vehicles, trucks or cars, contributing to our ecosystem and developing, with a great potential for transformation and the improvement of its results, returns and equity will be constant from now on. On Page 11, we have our main financial highlights and then I'll hand over to Denys Ferrez.

Thanks, Fernando. Good morning, everyone. Starting consolidated numbers with financial highlights on Page 11. Net revenue, top left. In the quarter, we had total net revenue of BRL 8.5 billion, 16% higher than the same period last year, mainly driven by net revenue from services, which increased by 21%. On an annualized basis, when we look at the year '23, we had record net revenue of approximately BRL 32 billion. This is 30% more than the total of '22, and again, driven by net revenue from services, which individually grew by 36%. On the chart on the right, we talk about adjusted EBITDA for non-recurring effects. Fourth quarter, the total was BRL 2 billion, EBITDA margin of 29.3%, which is 20% more than the total for the same period last year. On an annual basis, when you look to the right, total EBITDA in '23 was BRL 8.1 billion, up 19% over that of 2022. It's worth noting that this EBITDA is mainly made up from the service EBITDA, which individually grew by almost 30% in the year-year comparison between '23 and '22, and therefore being the main driver of this evolution, since EBITDA on asset sales is starting to show more normalized results, especially in automobiles, although the effects on our heavy asset base will still last a few more years. The lower chart on the left shows our operating profit. In the fourth quarter '23, we had a total of BRL 1.1 billion, down the same period last year by around 10%. In the year-on-year comparison, it amounted in '23 to BRL 5.2 billion, an increase of 5% compared to the previous year. The two numbers are impacted by a considerably higher volume of depreciation and amortization that went throughout '23. But as some of our companies have already released their results, this should slow down towards '24, as was said at Movida's conference call. At the bottom right, we have our adjusted net profit. Net profit in the quarter was a negative BRL 200 million compared to the same period last year, in which we had a positive result of BRL 304 million. It's a known fact that the previous year had the strong benefit of asset sales, the margin from asset sales, which had driven the previous year's results. This year was a year in which we not only had a period in which we restructured some of our main businesses, such as Movida, but also went through some other adjustments, such as the impact of the slowdown in agribusiness, and our agricultural machinery and equipment sales activities. But both factors, both the restructuring and other events tend to normalize. That gives us the confidence in our continued improvement of results looking ahead to '24. Now I'm going to go to the next Slide 12, where we show on an individual cash position and our amortization schedule on a consolidated basis. The group, as it has done over the years, has a strong liquidity position, around BRL 15 billion, which does not include approximately BRL 4 billion already raised in 2024, with a debt schedule that is quite appropriate for the group's pace of development, an average net debt term of 5.1 years. And this cash covers the equivalent of amortizing the debt until the year 2025, or 3.2x everything that we have in terms of short-term maturity. Remember that the group and its listed company have the highest rating in Brazil, granted by Fitch Ratings, which is AAA. On the next slide, we'll talk about SIMPAR as a holding company, no longer a consolidated basis, individual. And here, we not only continue to show an extremely long-term debt, indebtedness of around 7.8 years. But now we also show an even stronger cash position, BRL 3.7 billion, with net debt of BRL 3 billion, which, if we compare to the end of the '22, represents a reduction in net debt of about 17% or BRL 600 million. If we compare to the end of September 30, 2023, the drop is even greater at around 23% or almost BRL 900 million. This combination of liquidity and longer debt maturities give us maturity and the peace of mind for us to conduct our strategic planning in a timely manner. It's also important to stress that regardless of the value embedded within companies that are not listed, our direct stake in listed company is worth around 3x the whole company's net debt at the end of '23. Well, with that, I will now move on to the next page and talk a little about resource allocation. Here we have a snapshot of where all the funds that we raise in the market are allocated. Basically, in extremely liquid assets, that is, with a strong secondary market and extremely high-quality assets. So we basically have 96% of our assets in light vehicles, which are on average 1.4 years old, and heavy vehicles, which are on average 3.7 years old. And along the 15 years I've been with the group, through the most different crisis and volatilities experienced, it has always shown to have residual -- resilient residual value. In our estimation, our total at-market value represents about BRL 41 billion, just for your reference. On the next slide, Slide 15, we show you that our revenue from services, just services alone, continues to evolve, bringing the benefit of the investment made in previous periods, which repeats in our business model. Whenever you see an investment being made today, you have to think that all the liabilities have already been recorded with relation to the acquisition, but we still do not have the benefit of that. On the left, you can see that on a quarterly basis, you see that in 4Q '23, we invested BRL 4.3 billion, which is similar to the same amount of the fourth quarter '22. However, revenue from services grew by 21%, reaching BRL 7 billion in the quarter. On the right, we have an analysis on an annual basis, where we showed the amount invested in '21, '22, and '23. Sequentially, BRL 9 billion, then a peak of BRL 13 billion, and in '23, BRL 7 billion. And we connect this to the continued development of our revenue from services. In '21, it was BRL 11 billion, then in '23, reached BRL 26 billion almost, more than double growth between '21 and '23, or if compared to '22, 36% increase. It's important to highlight that within our business model, whenever we make an investment, you see the liability, the commitment to acquire the assets recorded on the balance sheet, but you don't see the full enjoyment of our asset base. That takes about 13 months to 15 months to be enjoyed. And this is a recurring part of the business. On the right, you can see which companies of the group had the highest net CapEx in '23. Movida led, and on the other end, we had some divestments from CS Brasil within our portfolio management discipline, as we made a commitment to divest from certain business lines, and this has been happening. I'd like just to draw your attention to the following. Vamos, although it has allocated a lot of capital, this is capital that has already been acquired in the previous year. So it had a reduction in net CapEx in '23 of 79% compared to '22. This is nothing more than the use of those strategic purchases that have been implemented in the Vamos rental business. So the net CapEx here was reduced, but the amount implemented that will generate revenue was no less than the previous year. On the next, Slide 16, we show a chart showing the evolution of our leverage. Since '16, when we said we would be consistently reducing our leverage, we followed the plans until '21, and then after '21, we had a small inflection point, largely caused by the accelerated increase in interest rates in the countries until our business began to reflect the new economic environment. As a result, we ended '23 with leverage of 3.7x, and here we reaffirm our commitment made at the end of the year to focus on reducing our leverage. Starting this process with SIMPAR's net debt, since the weighted average leverage of our subsidiaries is lower than this at around 3.3x. Now, I'm going to move to the next slide, Slide 17, when we talk a bit about return on invested capital. So after an excellent year in terms of returning '22, the year of '23, because of all the events and factors already mentioned during the presentation, showed a pressure on returns with reach on a normalized base 10.3%. However, looking ahead to '24 and considering a depreciation scenario of a more moderate magnitude and the effects already overcome in our agricultural machinery sales business, together with all the benefits of the capital invested across all our business lines, we have a strong expectation that this return on invested capital will expand at the end of 2024. Well, with that, I'm going to turn the call back to Fernando.

Thank you, Denys. Now to finish, on Page 18, I want to share with you that we are very happy with everything we have built, but we are starting a new cycle from 2024. Our cycle is focused on sustainable development, which will not give up in any way. Sustainable development, values, culture, people, a management model, and a focus in this management model is going to be in our operational efficiency for the next period. Extracting the greatest results from everything that was built with discipline in capital allocation that we have had over the years and enabled us to build the whole SIMPAR business group ecosystem. Now, we want to extract maximum value in a responsible, sustainable way, everything that was built in each company. We have a business group made up of independent companies built on a solid foundation with potential to grow and develop. We direct contribute to those who hire us and are sure that our services and operating efficiency will bring growth and development of returns with the continuous creation of value. We have focusing on reducing costs, expenses, improving asset turnover, reducing and optimizing inventories in dealerships and operations, and with this we will further increase the efficiency of the capital employed and returns of each business. Efficient evolution of CapEx implemented throughout '23, whose large part has yet not been seen, and you see the revenues to be kept during the business as of '24 onwards. And yet the businesses, when you have CapEx, you have the pre-operational cost, and revenues just come afterwards. We have a solid capital structure, strong cash, elongated debt profile, in a way that gives us a balance to reduce leverage and control our holding debt. And our objective is to reduce the holding debt and consequently leverage. This may come from strategic moves, but certainly, regardless from any strategic move, will come from improvement in our results and more efficiency in capital employed. We always say, and I'll say it again, some of our greatest assets are our people, culture, management model, strategic differentiator. Our plan, defined by the Boards of Directors, is to be in a highly resilient segment, contributing to industry, consumption, and more than that, through our people and our assets, we connect our customers with our customers' customers. This is how we consolidate and strengthen our commercial alliances. That undoubtedly contributes to improving results and for the sustainable development of our companies. On behalf of our more than 49,000 employees, I would like to thank you all once again and open for the Q&A. Thank you very much.

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

I have two questions. The first then is, you mentioned leverage on a slide, you talked about EBITDA of the fourth quarter that did not capture the cash generation from new investments. It takes about 1.5 year for this to happen. So my first question is whether you can give us some color about what the normalized EBITDA should be like? Because your balance sheet shows the debt, but not the EBITDA. So if you could give us a ballpark about how much it would be? Second question to Fernando, and thinking of the OEMs, when we do our math, considering light and heavy vehicles, but light vehicles alone, that are bought by Movida and Automob. And if we consider the amount considering of direct sales from OEMs, probably SIMPAR already has a share in the purchase of cars of about 10% of the whole manufacturing industry. So I would like to understand what kind of conditions are you negotiating at in terms of terms and discounts?

Victor, this is Denys speaking. Thank you for your questions. Well, just -- more relevant to answer your question, just one comment about the fourth quarter before I answer your questions. We have the whole of investments of '23, as you mentioned. It takes us 1.5 year to show, to be enjoyed on the next year. And what we are saying is that although CapEx of the year was about BRL 7 billion, 70% of which is in the fourth quarter, we have Vamos that implemented and brought its working capital to normal levels after a strategic buy. And why am I saying that? Because EBITDA expansion that we see in '24, based on what was built on '23, that is not only the fourth quarter, it's the whole of the year. I don't want to give you guidance, but I would say it generates a material expansion of the BRL 8.2 billion that you saw in our results. Thinking retrospectively, we are having about 30% expansion EBITDA when you look back. So I'm not giving you guidance, but I'm talking about the pace of expansion of our EBITDA in the past. So the BRL 8.2 billion that we delivered should have a material expansion that goes beyond the BRL 4 billion invested in the fourth quarter.

This is Fernando, Victor. Just to add to what Denys said, that is very important. Again, we don't want to create expectations, but just thinking about that, the whole CapEx of '22, if you think just a part of it yielded the full revenue for '23. So not everything that was invested in '22 showed in '23. And when it showed in '23, it did not show during the 12 months. It was not full year. And when we do that, when you calculate the CapEx invested in '23 from the fourth quarter, it's probably 0. And part of this CapEx, as JSL already mentioned, are new contracts that are important contracts in JSL. So we haven't had the revenues and we have the preoperational costs. So if you take a look at JSL's release, again, we don't want to give you any guidance, but you are talking more or less about the 12% of CapEx that generates monthly revenues in JSL. Each CapEx generates [ 1.2 ]. Just food for thought for your questions. If I haven't helped, I hope I haven't made it worse. Talking about OEMs, we have to separate things because companies are completely different at different momentum. Movida, it's very true that we have a base that is much larger than the potential of recurrent sales in Brazil. We are having the fact that new cars increased in price. We all know that. So new cars are selling, but you have new entrants. So OEMs, I would say, are negotiating as before the pandemics with Movida and even with even better negotiations, not only in terms of prices, but also terms. As a counterpart, Movida used cars are a different story because I think Movida is the player in the market that has the most cars between 1.5 years and 2 years old because the competitor has older cars. And then when you have cars between 1.5 years and 2 years, the supply is lower. And this is Movida's supply. And Movida then is selling well. So the market is very good for used cars, which is not really happening with new cars. And credit is more accessible and there is more credit supply, which also helps in the sale of used cars. So Movida is really serving a good way. Better conditions to buy new cars and better conditions to sell cars. And this is Movida's snapshot. Automob. Automob has been growing, developing in an organic way. But also through M&As at least in the first and second years, we grew acquired companies' revenue by more than 30%. And why is that? Because in SIMPAR's ecosystem, we have the DNA to serve. And we say that, and we haven't been able to explore all synergies altogether because we cannot do things overnight. But even sale of used cars, carrying more inventory, has made sales at stores increase significantly. And it is. The sale of new cars, used cars, everything is part of the business of dealerships, and that has been favoring us regardless of the market. New cars are a bit harder with Automob, although Automob has the advantage of diversification several brands, luxury, mid-market, economical, several regions. And so this complementarity makes us be less affected. And we are using our knowledge for the sale of used cars. So extremely favorable scenario, as you can see in the numbers, and a huge transformation of the sector with our DNA of making it different in dealerships. And trucks, just to close, the new truck market is resuming. Remember, last year, lots of people delayed purchases, and now people are having new purchases because they have new contracts or they are renewing their fleet. So we think things are going to get better. What's interesting in heavy vehicles is that the price of trucks completely transformed. They increased by 60%, 70%, 80% in the last three years. And that makes people think better about buying. But in the end of the day, they have to buy. They have to renew the fleet. And it's happening. And I think the trend is just to get better. And OEMs are manufacturing trucks. And on the other side, just to close, Vamos is having regular negotiations. People were having questions about that. But Vamos was able to have favorable negotiations, even with a change from Euro V and Euro VI, and with used assets. The company is doing very well in this first quarter. This is the snapshot. I'm sorry for the long answer.

Our next question comes from Pedro [ Bruno ] from XP Investments.

I have a question about CS Infra and thinking of capital allocation. I'd like to understand first, if you could tell us, how you see the different models of infrastructure in terms of marginal investment, in addition to your investments, thinking of highways, ports, waste management, where you concentrate your portfolio and other opportunities, be it in these very segments, but also the railways connecting to ports of CS Infra, for example? So just to try and understand your rationale in terms of allocation in transportation models and how you see the pipeline for the future? Also, in terms of expected returns, and how expected returns on infrastructure assets compare to the different businesses of the group and compete for capital?

Pedro, this is Fernando. I'm going to talk a bit about the business and then Denys is going to talk about returns and capital allocation. About the business, Pedro, what we have always stressed is that we want businesses in which we have the confidence that we are going to get paid. Our preference is the resilience of the business, and the take or pay, that is, guarantee of revenues. If the business is going to contribute to the lives of people, because today, public administrators are more modern. They want efficiency. They want to make the lives of people better. Or logistics can bring more manufacturers and really bring more taxes to the state. And this is what we want, and we want to know if it is according to our vocation. And with that, we had the highway, we had the port, and we had waste management. There are other areas in terms of concessions that can be interesting to us. The demand, less capital and more services. In our business, for instance, if you think of Ciclus Rio and the size of the waste management, now we won the concession of Belém. And now we have Ciclus Ambiental, which is a company that is focused on this area. So this is what we have been doing. And we think opportunities for this type of business are just starting. The ports, for instance, there is a railroad that gets to the port. This was a railroad that was almost abandoned in the last years. And we know that it's operated by a company. And it seems that to renew the concession, they are going to pay BRL 5 billion. So this is the information that we have. It's not the project of a railroad. It is a railroad that is already in place. It's still in production, but it is a great opportunity. We did not have the concession because of this and counting all that, but this is an opportunity for us to sell logistics services. But remember, this is a port that is still pre-operational and that is going to be at full operation after CapEx as of March '25. So those kinds of assets are always interesting to us. Denys is going to talk about returns. And then, in terms of competition for capital allocation, we joke around if we can guarantee returns, we are going to try and do it. We are going to think of strategic movement, not to miss opportunities because we believe that they are interesting for our system. And we are always looking into businesses. We just want the confidence we are doing the right thing. Denys, capital allocation.

Pedro, we have the benefit of having already disclosed the results of our listed companies. And you monitor our level of return. Some of them talk about the ITR spread, ROIC spread, funding from 9% to 11% in terms of spread. So when you take a look at this kind of metrics in Fernando's scenarios, we see something very powerful in terms of building our future. We are talking here about long-term contracts. Remember that SIMPAR is a group that is built on contracts, which give us the resilience and the capacity to go through the most difficult periods in terms of crisis, volatility in Brazil and the world. To answer your question more objectively, the return is compared to the highest returns that we see published in the company's portfolio. So I would just add a positive note saying that these contracts have a very long term. I'm not talking about numbers, but we have a return on invested capital of around 18% deleveraged, so like it's just the return of the business. And when you use leverage, it is even past that. So it is very passive with the best returns that we present in all our companies.

Our next question comes from Luiz Capistrano from Itaú BBA.

I would like to hear from you, cash flow management at the holding for this year. We saw an incoming of cash at the end of last year. And the cash remains at the company's cash. I would like to know if you have an immediate use for this cash, if it was already used or not, and eventually other events that you can use for the holdings cash flow. We always talk about your ambition to deleverage and how you want to do that, strategic movements and et cetera. But it would be nice to hear from you what you'’re considering for your cash flow this year?

Capistrano, thanks for your question. This is Denys. We already have some movements in liability management that will always respect times and always think of other movements to reduce costs. The plans are completed and the process is starting. Now, you asked the second question about other plans in terms of the holdings' cash flow's strategic movements. We continue with our commitment. Fernando is going to talk about that. But we continue with the same purpose that we disclosed on SIMPAR Day last year.

Luiz, thanks for your time. Okay, within our strategy as a listed company, it's very important for us to talk about. We have ambitions to do different things through joint ventures or others. But what you see is our option. If you think of the CapEx made businesses already implemented but not yet yielding results. In Movida, for instance, you have the CapEx of CS Portos that is not yielding revenue yet. And why is that? Because these are contracts we have to customize fleet, and until it enters operation, we are talking about BRL 700 million, BRL 800 million to start operations at CS Portos, for example, and other operations in logistics, several contracts to be started. So deleveraging, keeping leverage, cash generation of the businesses that will yield returns and focus on operational efficiency are second to none. I think it's the first time since we went public that all companies of ours have all their foundations built. We don't need to hire, open stores, closed stores. The focus now and the opportunity to extract better from the ecosystem built is huge. That, of course, is going to take a bit more time, but will certainly contribute to the company's leverage. And any strategic movements may or may not happen. We work, not counting on them, but always taking a look at them and with an open mind for movements. That can help us deleverage, but also to create value to shareholders in a way that our shareholders can see a value that is in SIMPAR and people are not seeing. So that you can see, and this is part of our strategy, not only to deleverage, but also to create value.

Just a follow-up. As for the cash that you had with the sale of stake of BRL 900 million, do you have already a mark to use for this cash? Is it part of the reinforcement? Just for us to know if we're going to have a reduction in gross debt.

Well, it's just part of the strategy as a whole. You don't have any markings on it. But we also have to remember that given our growth dynamics, we always keep a very strong cash position. That gives us the comfort and confidence of going through everything we went through in terms of volatility. And not only the holding, the whole of the group. We have BRL 15 billion liquidity, you saw it in the presentation. And I don't know if I mentioned, but in '24, we already raised BRL 4 billion. Most of it in JSL, then BRL 1 billion in Movida, BRL 800 million at Vamos. So it is a matter of policy for us to continue the normal course of business, our plans, without any kind of pressure or stress, okay?

[Operator Instructions] Our next question comes from Ygor Araujo from Genial Investments.

I would like to explore the point you just mentioned with regards to your structure in selling share in subsidiaries. I would like to understand the terms, what are the possibilities for '26? You didn't open -- you didn't waive your economic rights, but just for us to understand the move better. And second question about CS Brasil. I know it's a smaller operation, a bit peripheral to your core business, but we saw two very important movements along the quarter. And I would like to understand in terms of the strategic moves if that would be the less strategic asset for the company, and you could have similar moves in the rental with driver services.

Well, thanks for your question. Well, we have the rights in up to three years of having the physical repurchase of those assets at that cost of about CDI plus 1. These are the terms.

And Ygor, this is Fernando speaking. CS Brasil, could you please ask the question again? I'm sorry, I missed it.

Denys, thank you, you answered my question. As for CS Brasil, we saw two important divestment moves in the fourth quarter. I would like to understand if that is going to be conducted in the next quarters. Or do you consider the asset is still strategic?

We do consider it strategic. It's a huge opportunity. As, again, the public administration modernizes, governments are asking services with drivers, fleets with cars and trucks, and we provide this operation. CS Brasil is our arm for this kind of operations with the services involved. So we do see opportunities. What we divested, and not only in the fourth quarter in recent years, was urban transportation, either between cities or interstate. But we have a significant stake in BRT Sorocaba, but it is more structured. It is longer term, really based on services. And we are leaving from less strategic, less important operations such as urban transportation. That can happen. We just have one business in it now. We are not working for that, but we can have the investment in the future. Just another piece of information for you not to forget. CS Brasil that developed CS Portos and was then merged into Movida in 2022, if I'm not mistaken. And that was something that the controller shareholder asked minority shareholders if that was going to happen. And they said, well, so in terms of governance. So what I'm saying is that there were contracts that stayed in CS Brasil and could not be transferred. And they are moving towards expiry. And you know that Movida now is with the rental, the car rental business. And you know that as all these contracts are terminated, we are always going to see this slowdown until they can move to the other companies.

The Q&A session on audio is now closed. If you want to ask your questions in writing, it's now the time.

Well, I'm going to read the questions that we are getting on the chat just for you to follow. The first question comes from an individual and is the following. I see that Movida's supplier line grew a lot in the fourth quarter. What's your level of comfort to meet this commitment given Movida's and the group's leverage level?

This is Fernando speaking. Well, to be quite transparent, and we have more than 350 people in this call, and I thank you all, I'm going to make a comment on Movida, but also about the group as a whole. First, we have total comfort about the supplier line you see. Second, that I think it's very important, the supplier line, is a line that talks to suppliers alone. We have the opportunity that we did not have before the pandemic which are good payment terms. And you see the terms with OEMs today and you see the discounts that we have from OEMs. If you see the size of Movida today compared to '19, '20, when we also had an important supplier line, Movida grew its capacity to provide cash much more than the line of supply. And it's not only cash. It is an amount of assets available and a capacity to sell. You are seeing an increase in sales and in turnover. So quite modestly, you are not before a holding that is passive, that is waiting to see what happens in the market. We have financial committees with independent Board members that are very important. We follow the directions of our Boards. And I'm saying all that because today I heard that the market is concerned about the supplier line. Quite modestly, I thank you for following us, but I'm a head of the business. We follow the guidelines of our Board. We don't go inside operations, but we monitor results to have the comfort that I am conveying to you. We've never had a company so well built, so in place as before. And talking about an active holding, I'd like to say that we went public with the logistics company and people said, oh, this is a confusing business we developed, and not only that, in 2020, when we listed the company, we said that it would be possible to get to BRL 10 billion in '25. In '23, pro forma, we got to BRL 9.5 billion without any follow-on. The company grew by threefold. And there are other logistic companies with funds and everything that cannot survive. So it is a business model in SIMPAR in the companies that is quite differentiated. When Movida was created, people would say it was wrong, it was not going to have an IPO, it did not have the right cost. And you see today, Movida, the only rental car company that was created in the last 10 years, and that is structured in a completely differentiated manner. And it is the right leader. It has a unique DNA and management model. So all of this combo, and I thank you for your question, Andre, gives us the comfort. And I would like to tell you that our holding group and Movida and the other companies are starting a new cycle that gives us the confidence we will create value, generate cash, and really make a difference in each one of the companies. I'm sorry for a long answer, but I think it's very important to understand how we work at the holding, and it's no different for our companies.

Well, moving on, our next question comes from Gabriel, an individual investor, and he asks about Automob. Are you thinking of going public with Automob? And the second question, do you see a problem in the lack of liquidity in JSL shares?

This is Fernando, Gabriel. Thank you. Automob, well, all our businesses we always consider opportunities to grow, to check, to create value, and we always look at the market, and I'll say that once again. We are not going to have any movement that will just make us forced to a movement. The IPO can be an opportunity at a certain point in time, creating value to shareholders, to the business, and really enabling us to continue consolidating. This is part of our strategy. And we learned the more we share with the market what is to come, the more value we create for us and for the business. So we are very happy with what we have accomplished with Automob. I'm not giving you guidance, but we can continue growing and consolidating the market. There are lots of opportunities. And we are very happy to see each acquisition growing 25%, 30% a year. Synergies are still very incipient. It's unbelievable. I'll give you an example. Agents, we paid, I don't know, in the past, BRL 150. The market pays BRL 100, and now we are paying BRL 50. So costs, efficiency. If it makes sense for us to go to market, and we have the right buyers, yes, we can go public. And we believe the opportunities are amazing for anyone that joins us. This is for Automob. Liquidity of JSL. And again, I'm very transparent. We never had a follow-on on SIMPAR. And liquidity went from BRL 1 million to BRL 30 million a day. So what we think is that we are not going to have any follow-on movement with JSL to generate liquidity. We believe the market has not even realized the size of JSL today, the company and the results. We believe liquidity will come as the market understands the size of the company we have today, the resilience of revenues, constant delivery of results, quarter-after-quarter, year-after-year. So I think liquidity will come for this reason. If in the future we have even more opportunities to grow and a follow-on movement makes sense, we can do that, but not too force liquidity.

Just to add to what Fernando mentioned, this is Denys speaking. The focus is to create value to our shareholders. And interesting to say is that in this expansion of the companies, JSL is having a trend of deleveraging that is quite interesting. You remember that half revenue of JSL is asset-light, and everything that we have in the group started with JSL under these characteristics. So even if you think of all commitments to be paid, any line of debt, we do see a material improvement in the short term, which is fruit of its business model. So indeed, if the market still does not see that, it doesn't make sense for us to transfer the value of the shareholders of the group to other shareholders. Well, carrying on with our questions, the next question comes from Ronaldo, also an individual shareholder. I'd like to know why variations in costs were higher than variations of revenue.

Is Ronaldo talking about the holding company?

I think this is a mixed effect. If Fernando allows, I'm going to try and answer your question. As you're talking in general, I'm going to use the group's EBITDA margin. The group's EBITDA margin was approximately 36% in '22 and 31% in '23. But here you have a substantial growth of Automob, as we mentioned in a previous question. So if you extract the growth of Automob from within the numbers of '22, then you're going to see a stable EBITDA margin at 36%. So what you're asking makes me conclude that this has to do with the business mix. So you have a different profile, and strong expansion in 2023. I don't know if Fernando has a comment.

No, I think you answered it.

Okay, moving on. We have a question from Gabriel, also an individual investor. Thank you. Do you have prospects for a follow-on in any group company? No, in any. We don't have the expectation. We don't have the need in our strategic plans, thinking of capital structure and thinking of our plan to deleverage at the holding level. So no follow-on in any of the companies. We don't have the need. And at this price, we wouldn't be generating value to shareholders. That's it. So I'm not talking about the future. I'm talking about the present based on the valuation today. Well, we are now closing our time. Fernando, I'm going to turn the call back to you for your final remarks.

Okay. Once again, I'd like to thank you all for joining us. And very quickly, I don't want to take long. But I would like to give you my point of view about the company, what we are doing, why our belief, our alignment, determination, our people, what moves us in doing what we do. More than everything built, we have the foundation solid for a new cycle, very much focused on operational efficiency. We believe that the best results ever of all companies are yet to come. In line with the holdings strategic plan and that of all of our companies, we have the comfort of a capital structure for all companies in an independent manner with their own business plans. Some will grow more organically, some will have more acquisitions. So companies are not only independent, they have their own strategic plans to meet their own needs. As Denys mentioned, JSL grows organic and inorganically with asset-heavy or asset-light operations. So these are the things that give us the comfort for our capital structure. Once again, I always ask you to think about that. Our companies overall, Movida, that I just mentioned, that is starting a new cycle with all the infrastructure ready to grow. The best time ever, a different fleet mix, purchase conditions that are really differentiated and growing number of customers that are using the service for the first time. It's quite impressive. Movida is adjusting prices and growing in the number of customers. Vamos, the rental business that is just starting, extremely incipient, huge opportunities, uncomparable scale, just starting. Dealerships, they were affected in the agricultural sector almost in the last two years, but that is transient. Returns at dealerships are always tight, but you don't have losses unless they are temporary. And this is what we see when we think of agriculture dealerships at Vamos. Recovery is safe and soon. JSL, Denys talked about that, a fragmented market with huge opportunities to grow. And remember, the assets are expensive. Credits for companies is still tight. So JSL has a lot of opportunities. It is a cycle that is completely different. JSL, Vamos, Movida, all of them with very sustainable growth for the future. And we don't really think there is nothing different from what happened in the past. Quite the opposite. Today we have a much better structure to grow and enjoy what is to come. As for non-listed companies, we talked about Automob. We have opportunities of synergy, of organic growth, same-store sales, more than 120 dealerships, more than 28 brands. In Brazil, the potential in new cars is huge, but in used cars, even more so. And we have to have a service network in the company differently from anything you've seen in Brazil, which is yet to come, but Automob is already built. In infrastructure, extremely quality assets, Ciclus Ambiental, Ciclus Rio, the largest waste treatment centers in Brazil and in the world. The new concession for Belém. The ports, which are still pre-operational. Fantastic results to come. Well, with everything that was built, all the CapEx invested in '23 that we still haven't seen revenues, but all these, and I'm trying to put it all together to tell you that we have the comfort and certainty that there is much more to come in terms of improved results for the future than what you saw in the past. You'll see better results, better indicators. This is yet to come. These were the points that I would like to go through. And these are the points that make us believe that we are starting a new cycle for better results, quarter-after-quarter from now on. Once again, thank you for the more than 350 attendants. And on behalf of our people, our teams, and the IR people, these are the people that make it happen on the day-to-day. So thank you so much for joining us today. And thanks for your trust. And happy Easter.

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.]