Tegma Gestão Logística S.A. ($TGMA3)

Good afternoon to all. This is Ian Nunes speaking, IR Manager of Tegma. Welcome to the conference call to discuss the earnings concerning the fourth quarter of 2025. This conference call is being recorded, and the replay may be accessed in the company's website. [Operator Instructions] After which, we will have the Q&A session when further instructions to participate will be provided. For those listening to the call in English, we have in the chat, the link to the presentation in English. Here on, Zoom we will be showing only the version in Portuguese. I'd like now to give the floor to Nivaldo Tuba, CEO of Tegma, who will begin the presentation. Nivaldo you may proceed.

Let's start. Good afternoon, everyone. This is Nivaldo Tuba speaking, CEO of Tegma. And on behalf of the entire company, I thank you once again for participating in our earnings conference call. With me here are Ramon Perez, our CFO and IRO; as well as Ian Nunes, our Investor Relations Executive Manager. As usual, we'll start our presentation on Slide 2. For you, ladies and gentlemen, you can find our disclaimer regarding our forward-looking statements. Moving on to Slide 3. Here, we have the market outlook. Firstly, domestic vehicle sales, which after 2 years of double-digit growth in 2023 and 2024, slowed down at the end of 2025, ending the year with growth of 2.6%. Although the outlook remains cautious, with the main associations forecasting growth of around 3% for 2026 daily sales in the first 2 months of the year were encouraging, growing by around 9%. It is worth noting that for 2026, the market will have around 70 new models, 7-0. In other words, another important stimulus for fleet renewal. Another important issue at the end of 2025 was the incident at Toyota's engine factory, which caused the automakers sales to [ fall ] 40% in the fourth quarter of '25 vis-a-vis the previous year. The automaker has adapted its production in various ways and its sales in the first 2 months of '26 are already showing a rebound. They're regaining 6th place in the sales ranking. I would also like to point out that there are already 14 Chinese automakers operating in the country, whose sales growth has been exponential in just a few months, rising 45% between July and December. Chinese brands already account for 13% of licensing of vehicles in Brazil, and some of them have already started local production. All this movement has required many adjustments to our operation as well as investments to deal with unusual complexities in this business. Now on Slide 4, let's look at the main indicators for the automotive market in Q4 '25 such as domestic sales, which as I mentioned, were affected by high interest rates and slowed growth to just 1%. Below on the left, local production remained fairly stable at 662,000 units, down 1% year-on-year. As for exports, our exports are still very dependent on purchases from Argentina. So they suffered from reduced demand from that country and declined by 17%. Slide 5 addresses the operating indicators for the Automotive Logistics division. It is worth noting that the number of vehicles transported, both domestically and exported fell by 6.6% in the quarter, reflecting a market share of 22.7%, i.e., 1.3 percentage points lower. This performance is a consequence of the sharp drop in Toyota sales and the decline of other key customers. Fortunately, average distance traveled was 1,154 kilometers, 6% higher due to sales growth in regions outside the South and Southeast regions. After these highlights, I will now give the floor to our CFO, Ramon Perez, who will talk about our results, cash flow and other indicators. Ramon?

Good afternoon, everyone. As can be seen in the top chart, net revenue for the fourth quarter of 2025 was BRL 572 million, a 2% decrease compared to the same quarter of the previous year due to the reduction in number of vehicles transported, reduction in vehicle transfer services between yards and less logistics services. In the bottom chart, the division's EBITDA margin in Q4 was 13.6%, down 7 percentage points. It was atypically affected by a number of factors, which we attempted to detail in our earnings release, including a drop in Toyota sales, an increase in ICMS tax collection and 1 month long hold in transportation at 2 branches, which led to idleness in 1 month and extra costs in the following month. The Integrated Logistics division posted net revenue of BRL 38 million, down 6% year-on-year due to the partial loss of a major chemical transportation contract as announced in Q2 '25. But this has been partially offset by new contracts signed and the expansion of services to existing customers. Similarly, due to the reduction in revenue and lower dilution of fixed costs, EBITDA margin declined 5. 2 percentage points to 8.8%. The division is collecting more ICMS, which is the state value-added tax due to a change in the collection framework. And there were additional maintenance costs at the division's main chemicals warehouse. With regard to GDL, net revenue for the quarter was BRL 61 million, lower than in Q4 '24. On account of the decline in the volume of bonded warehousing statuses. This reason, coupled with higher rental costs for new leased areas, explains the 30% drop in net income and net margin, which was reduced to 14.3% in the quarter, as shown in the bottom left chart. GDL maintained its dividend payout history, distributing almost 75% of its net income for 2025 or BRL 49 million. Now talking about Tegma's consolidated results. We recorded net revenue of BRL 610 million in the fourth quarter '25, down 2% year-on-year. Despite this, in 2025, this indicator closed at BRL 2.2 billion, up 6% compared to 2024 by virtue of a positive dynamics observed in the first half of the year. Regarding consolidated EBITDA, Tegma showed a decline, both in nominal terms and in terms of margin in the quarter and in the full year due to the worse operating result that I previously described. Considering also the reduction in equity income, we posted 39% decline in net income, which closed at EUR 52 million. Net income for the full year reached BRL 243 million. And despite the reduction compared to 2024, still represented a double-digit net margin of 11%. Moving on to Slide 10. The chart on the left shows the cash-to-cash cycle at the end of Q4, which was 41 days, remaining flat with Q4 2024. CapEx for the quarter was EUR 73 million [Foreign Language] the amount of BRL 40 million; improvements to land, totaling BRL 17 million and the acquisition of semi-trucks for the logistics operation of newly registered vehicles in the amount of BRL 7 million. CapEx for full year 2025 totaled BRL 112 million mainly due to the acquisition of a plot of land and improvements to yards to handle the increase in imports of vehicles from China. Due to the reduction in the company's operating income and the significant CapEx mentioned just now, free cash flow for the fourth quarter of 2025 was a negative BRL 21 million. In the full year '25, however, free cash flow was positive of BRL 128 million, down from BRL 170 million in 2024. With regard to capital structure, Tegma distributed a record amount of dividends and interest on equity in 2025, totaling [ BRL 292 million ]. As a reminder, this was in atypical distribution, and we cannot promise the same level of distribution in the coming years, even after dividends paid in the significant CapEx invested, the company continues to have a virtually deleveraged capital structure with net debt standing at only BRL 12 million in December '25. As for gross debt, the company's gross debt reached BRL 126 million at an average cost of CDI plus 1.34%. 70% of the debt will be maturing by 2027. As for profitability indicators, on the back of all the effects mentioned before, both the company's ROIC and ROE were lower in the fourth quarter of 2025 with return on invested capital for Q4 at 31.2% and return on equity of 25.5%. On the right, we show the history of dividends and interest on equity paid. As we mentioned, 2025 was a record year resulting in a payout of 110% on an accrual basis. Dividend yield on distributions for the last 12 months was 12.5%. On the last slide, as shown in the top chart, we see our share performance compared to the Ibovespa index into the Small Cap index, taking last year's closing prices by 0. We believe that we can explain this underperformance because these 2 indexes include stocks linked to sectors and industries that are more attractive to foreign investors. And these have recorded above-average performance at the beginning of this year. With this, I would like to thank everyone once again for your participation and interest in the company, and I will now begin the Q&A session.

Thank you, Ramon. We will now start the Q&A session for investors and analysts. [Operator Instructions] We have a question from Victor [indiscernible] with [indiscernible] Capital. I think that Victor sent a written question, which I will read. If you can comment on how you assess the performance of vehicles sale in the first 2 months of 2026? Nivaldo, please.

Thank you, Victor. Let me try to explain. Speaking about the first 2 months of 2026, sales performed better, up 9% in daily sales which is the expectation we had for 2026, which was 3%. So higher than what we expected for 2026. This is an expectation by all regulatory bodies of the automotive industry. We can see that the biggest losers of market share in the yearly comparison were GM, Nissan and Toyota. To explain Toyota, well, it was because that problem that they had in their engine factory due to a storm. And the groups they gained more market share were BYD, Volkswagen and Great Wall. BYD and Great Wall to Chinese automakers, the 2 biggest operating in Brazil. Another highlight with the other Chinese entrants, Geely, Omoda, Leapmotor and [ BYD ]. And they account for 2% to 2.3% market share. One important point is that exports posted a decline. In this period, they dropped 28%, a substantial number, primarily because of Argentina with this reduction in exports, consolidated production in the first 2 months also posted a drop of approximately 8%.

There's a second written question from Victor Demier with Vinci Compass. Congratulations on the results. The company acquired another plot of land in Camaçari, Bahia in this quarter. Can we expect more CapEx for this operation? In addition, could you give us more color on the impact of these yards on results. Ramon?

Thank you for the question. Indeed, we acquired this plot of land for BRL 40 million last year, and there was a new plot of land of approximately BRL 4 million. So we made this investment following a demand from an important customer. It was important for us to position ourselves for their new plant. We don't expect any extra CapEx, at least not of this magnitude. Not in the short to medium term unless an opportunity arises, a new opportunity arises. And the rationale for this acquisition was to be close to that automaker. Like I said, and this automaker is gaining more relevance in domestic sales. They informed us that they intend to produce 150,000 vehicles this year, and they intend to produce up to 600,000 vehicles by 2030. As regards the impact of these yards on the results. Well, what I can tell you, we don't normally communicate and disclose the profitability of every project and every customer. But this is within the parameters of the company, ensuring return on the capital invested and the capital that we are investing. We expect healthy returns as is the case of all projects that we approved.

Next question from [ Guilherme Ávila ] from [indiscernible]. What is the size of the factors that led to an increase in expenses in LA. And I think Ramon is going to speak a little bit about the consolidated expenses of the company, which would be nonrecurring and impacting EBITDA. Ramon, over to you.

I think you're referring to administrative expenses, consolidated number. I can comment on those. Well, they are apportioned for each one of the divisions, but the impact -- there is an impact for automotive division, the same that we have consolidated. In our earnings release, we informed about this. But if I can explain in more detail what we mentioned that. We had an increase in consolidated expenses, an increase of around 52% to BRL 6.5 million approximately in the quarter. So what could be highlighted here. We had higher expenses with law firm fees linked to anticompetition lawsuits amounted to approximately BRL 1.6 million quarter-on-quarter. And it's quite interesting because in the full year, we were within the standard. But in Q4, specifically, this explains part of the difference. And what I'm going to tell you about the quarter was repeated throughout the year i.e. higher expenses with the ERP. We had the deployment of our ERP system. And these expenses, while, most of them come from the amortization of this investment. And this also falls into administrative expenses and also adjustments in the infrastructure, which were necessary to readapt our processes so that they would be in line with the ERP employment. So that added about BRL 1.5 million. And like I said, the main part, the major part was amortization. So law firm expenses, BRL 1.3 million, BRL 1.6 million, BRL 1.5 million ERP. In this quarter, we also had more labor claims and expenses with employee terminations, about BRL 1.4 million, 1.5 million. What else to be highlighted? Well, then we start having smaller expenses, we had some spending with technology, IT, about BRL 700,000. And this is linked to investments in data processing center, information security so that we would be compliant with our needs. And lastly, in that order of magnitude worth highlighting because I think that these account for about 80% and 90% of the BRL 6.5 million. We had some increased administrative expenses themselves linked to the fact that we acquired a company called Buskar.Me, which is linked to first-line activities. Transportation of used vehicles and motorcycles, we didn't have that in Q4 2024, we didn't have it. Now we do. It's about BRL 500,000, BRL 600,000, and that drives up administrative expenses. So that would explain close to 90% of this variation. And this is how we would break it down and thinking about what is recurring, what's nonrecurring? Well, labor claims expenses with employee terminations. These are nonrecurring events, but of course, in a day-to-day of any company that happens eventually. So basically, that's it.

Thank you, Ramon. Please hold as we collect more questions. Well, as we have no more questions, we will end the Q&A session. I'll turn the floor to Nivaldo for his final statements.

Very well. Before we end, I would like to highlight that despite the low growth of the automotive industry expected for 2026, and this is the forecasting of sectoral agencies. The market in the first 2 months, well, the numbers are public knowledge, and they have shown to be very positive with an effective recovery of daily sales. As we mentioned, there was a growth of 9% vis-a-vis 3% of what was -- which is the number that was expected. So this brings a slight optimism to the market. Well, with that, I would like to thank all of you who joined us today. Thank you to those who participated and rest assured that we're working hard to have a Q1 2026 that will be very good. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]