Vamos Locação de Caminhões, Máquinas e Equipamentos S.A. ($VAMO3)

Ladies and gentlemen, welcome to the Vamos conference call to discuss the results for the first quarter of 2026. Today with us are Mr. Gustavo Couto, CEO of Vamos; and Jose Cezario [ Chief Financial and ] Investor Relations Officer of Vamos. The conference call is being recorded. [Operator Instructions] Before moving on, we would like to let you know that any statements made during this conference call regarding the company's business outlook projections and operational and financial goals represent the beliefs and assumptions of Vamos' management and are based on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they relate to future events and therefore, depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operating factors may affect the company's future results and leads to results that will be different from those in the forward-looking statements. Now I will hand over to Mr. Couto, who will begin the presentation. Sir, you may go ahead.

Good morning, everyone. Thanks for joining us in one more video conference for Vamos. I'm going to start with the highlights of Page 3 that summarize our execution in the quarter and the important indicators of [indiscernible] consolidated basis, we delivered net revenue of BRL 1.6 billion, up 22% compared to the first quarter '25 with important contributions from rent lease revenue, used asset sales revenue and the positive performance of the industry segment, driven by the delivery of biomethane power trucks project. Consolidated EBITDA totaled BRL 951 million, up 7% over the last 12 months. Excluding the seasonal effects of the first quarter off season, we would have resulted in record consolidated EBITDA. Net income totaled [ BRL 87 million ]. If we take a look at the evolution since the third quarter '25, we posted a growth of 74% in net income during the period which was only possible due to the operational improvements we have been delivering and even before considering any benefit from a likely decline in interest rates over the coming months. Regarding available inventory, there was a 17% reduction over the last 12 months and 7% over the last 3 months. This result was achieved through the allocation of both new and used assets as well as asset sales, demonstrating the high liquidity and quality of the assets. Operating cash generation supported by the efficiency gains that we'll discuss later on was positive at BRL 58 million. We ended the quarter with leverage of 3.15x, the lowest level since '22, considering the partial balance of the private capital increase in the amount of BRL 529 million as disclosed in the notice to shareholders on the 4th of May, pro forma leverage would have been 3x in March. In the Leasing segment, net revenue from services was BRL 1.1 billion, up 10% compared to the first quarter last year virtually stable compared to the revenue delivered even considering the seasonal effect of the shipping and ethanol sector. Leasing EBITDA totaled BRL 926 million, 8% higher than the first quarter with a margin of 88%. Contracted CapEx in the quarter reached a solid amount of BRL 1.2 billion even with the reduction in the level of contract signings in the sugar and energy sector as already anticipated in the guidance for the year. More importantly, I would like to highlight the share of used asset leases through contract extensions and the [indiscernible] product, which together account for nearly half of all contracted CapEx in the quarter. Our utilization rate increased for the third consecutive quarter rising by another percentage point to 88% in March '26, the highest level since 2020, bringing us even closer to our target of 90% by year-end. In used assets during the first quarter, we highlight the 12% growth in sales compared to last year while the number of assets sold increased 60% over the same period, particularly the strong sales of road equipment. In addition to the sale of used assets, particularly this quarter, the company entered into 4 leasing contracts that due to their nature, and pursuant to accounting the CTCO6 are accounted for as asset sales although they are leasing contracts in the amount of BRL 132 million. Lastly, I would highlight that we continue to deliver the best inventory turnover in sales and are benefiting from initiatives and long-term lease channel, digital sales platform and access to third-party bank financing. On the next slide, #5, we also again showed the variation in contracted CapEx, which reflects current macro conditions, as mentioned before. However, it's very important to note the IRR of 20.56% which reflects shorter contracts, higher volume of used assets and higher yields, reaching 2.91%. Excluding the lower volume of business in the sugar alcohol sector. The current pace of contract signings reflect longer, more complex commercial negotiations with price adjustment and stricter credit approval by the company as well as the current environment of high interest rates and economic slowdown. We expect the signing and employment of new leasing contracts this year to show more linear trends throughout the coming quarters. And therefore, we reiterate the guidance announced at the beginning of this year. I'd like to place special emphasis on our opportunity to generate efficiency gains through our strategy to promote a second lead cycle for our assets. Note that just 2 years ago, only 3% of contracts were signed using used assets, which require substantial investments to support our growth base. On the first quarter of the year, 44% of signed contracts were based on used assets, meaning the investments that we had already made, 28% through contract extensions using the same assets and another 16% through [indiscernible] assets that were already available in our investor. This strategy allows us to meet customer demand with lower leasing costs. On the other hand, it enables us to reduce net CapEx while maintaining a strong pace of growth, efficiency and profitability. I will now turn to Cezario to continue with the presentation.

Thank you, Couto. So good morning, everyone. I will begin by presenting the quarter-over-quarter evolution and the early contract terminations totaled BRL 282 million per quarter. As already highlighted in the earnings release of the last quarter, the amount of BRL 148 million in returned assets in last quarter had been substantially lower than normal because it's reflected in the postponement approximately BRL 53 million in returns that were only completed in January this year. And when we adjust this information across both quarters to normalize and properly compare this metric in period, we get two asset returns of BRL 211 million in 4Q '25 and BRL 219 million in first quarter '26, as shown in the chart in the upper right corner of the slide representing 4.6% and 4.8% of our fleet, respectively, in line with our reference level of 5% of the fleet subject to this type of early termination. Also, the asset returns that occurred in 1Q '26 were diversified in terms of types of assets and did not show any relevant concentration in specific sectors as we can see in the chart in the lower left corner of the slide. As for allowance for doubtful accounts of the [ net revenue ], there was a substantial reduction compared to 1Q '25, both due to the improved management of the credit and collection process and continue presenting recognizing default situation. The digitalization rates increased from 87% at December '25 to 88%, the highest level since 2020. As a reminder, our guidance projects utilization above 90% by December '26. Gross lease assets increased 6% compared to 1Q '25 and 1% versus 4Q '25. Total gross assets, which includes the inventory of used assets available for sale, [indiscernible] increased 2.1% compared to 1Q '25, supporting the decrease observed in our utilization. In units, the total fleet ended the quarter with 50,980 units, down 3.1% compared to 1Q '25 reflecting the company's focus on reducing its available nonleased inventory and the significant reduction in the inventory of used road equipment in the period. On the next slide, we show the inventory available for lease or sale over time. including not only entry of new assets and the fleet available for [indiscernible] fixed assets but also decommissioned assets available for sale, which are current assets. We closed March '26 with a total balance of BRL 3.3 billion in this assets combined, the lowest since 2023, representing significant reduction of 17% compared to March '25 and 7% compared to December 31, '25 driven by the expansion of [indiscernible] contracts and used sales. The lower level of these assets, we do not generate lease revenue benefits from leasing activities, net reduction of BRL 255 million through the implementation of new lease contracts and also the purchase of new assets. BRL 336 million net of assets received from clients at the end of contracts. Combined with these two effects resulted in the net reduction of BRL 551 million equivalent to 24% of the balance of inventory we had in December '25 in just three months, which on an annualized basis, was roughly -- represents 5 quarters if it were not for the returns that will continue to occur, and we believe in the level of 5% a year as a reference. Looking specifically at inventories of new assets in the upper right corner on the slide, we remain virtually stable compared to 4Q '25. Inventory turnover continues at optimized levels. Considering idle used assets are available without generating leasing revenue. We had an important reduction during the quarter from BRL 2 billion to BRL 725 billion to BRL 1.8 billion in the first quarter, the lowest levels since the third quarter '25, contributing to improved inventory turnover. Now moving to the next slide. We reinforce the diversification of our rental lease revenue and its lower concentration. So among our largest clients and in sectors that we just had greater representation such as sugar and [indiscernible]. I also highlight the lower concentration of our top pipeline in the past 90.5% of revenue and now this 17%. Dilution across revenue and reduction concentration can be observed across all segments on the right side of the slide, top 10, top 20, top 50, top 100, all of them show low representation compared to the same quarter of the previous year as we add the new clients across a wide range of sectors in the economy. On the next slide, I talk about leasing financial results. In 1Q '26, net revenue from services was BRL 1.1 billion, 9.8% higher than 1Q '25 supported by higher utilization [indiscernible] increased marginal yield and contract price adjustments. Also, throughout the first quarter, we continued the experience of the seasonal off seasonal effect during which we suspending billing for certain clients, representing approximately BRL 30 million this year excluding this effect, 1Q '26 lease revenue would have reached a bigger record amount reinforcing that the reduction versus 4Q '25 is purely seasonal. Leasing service EBITDA totaled BRL 926 million, up 8.2% compared to 1Q '25, explained by the higher revenue while the reduction compared to the 4Q was also due to the off-seasonal effect. Looking at leasing services EBITDA margins, we reported an 88% margin this quarter, in line with the average margin delivered in '25 and slightly below the 89% reported in 1Q '25. Fleet depreciation shown in the lower left chart, we continue a trend of slight increases in average depreciation levels through the quarter, we saw a somewhat steeper increase in truck depreciation rate mainly driven by the accelerated depreciation on a specific group of assets. We do not foresee any substantial change in depreciation levels beyond those already contemplated in our projections and guidance disclosed to the market for '26 [indiscernible] service EBIT totaled BRL 637 million in 1Q '26 up 3% compared to the same period last year. The 60.5% margin reflects the combination of seasonal EBITDA effect and the impact of higher depreciation, which I mentioned earlier. The next slide, the company's used asset sales increased 12% compared to the same quarter last year, with gross margin close to 0. This quarter, we also recognized BRL 132 billion accounted sales pursuant to CPCO6 primarily related to a leasing contract with [ a client ] who negotiated a purchase option for these vehicles at the end of the contract which required the transaction to be treated as a sale under the accounting standard and CPC rules. These transactions accounted for under CPCPO6, generated gross profit of approximately BRL 8 million. And therefore, it does not represent any significant change in our profitability metrics for the quarter that would require further discussion. Another point regarding used asset sales this quarter was the significant increase in sales volume driven by the strong margins of road equipment sales. This equipment carry a low average [indiscernible] price compared to other aspects of the company, which explains the mismanage between growth in volumes sold and growth in sales value. It's important to highlight the performance in asset sales against the backdrop of a 18% decline in new truck and bus sales and a 15% decline in equipment and attachment sales despite the subsidized financing in the Brazilian government, which reinforces in the company's ability to sell its assets. Another point is that despite the decline in volumes of new assets, especially trucks, we continue to observe price increases being implemented by the major OEMs often above inflation for the future, which keeps the competitive of our used assets and also contributes to relative stability in depreciation rates since used assets tends to follow and remain strongly correct that with prices of new assets. This is a point that we consistent highlight as positive because it protects the residual value of our used assets from greater volatility that could generate fluctuations in depreciation levels. Now I'll move to Slide 13, where I talk about the company's consolidated results. Consolidated net revenue was up 21.6% compared to 1Q '25 with important contributions from leasing revenue, used asset sales, positive performance of the industry with delivery of biomethane power trucks and the sale of assets accounted for pursuant to CBCO6. Excluding the latter effect, net revenue growth would have been 11.7% compared to the same quarter last year. Consolidated EBITDA for the quarter was BRL 951 million, up 7% compared to same quarter last year. Adjusting the off season effect, we would have had a record EBITDA for the company. 1Q '26 also a reduction in net financial expenses resulting from the combination of a stronger operating cash lower net CapEx requirement, a reduction in our receivables assignment [indiscernible] and lower leverage for covenant purposes, which excludes receivables [indiscernible] this allows net income in 1Q '26 to post sequential growth for the second consecutive quarter. In this quarter. The reduction compared to the same quarter of last year reflect the effect of higher interest rates, lower used assets EBITDA compared to 1Q '25 and higher depreciation between the two periods, which I also talked about during the presentation. Now let's move to the slide covering ROI and ROIC. Reported ROIC in the last month, March was 14% after tax cost of debt, 10.6% ROIC spread of 3.4 percentage points returning sequential expansion. As usual on the right side, we have a normalized ROIC potential, which does not constitute guidance, but we are still in a scenario with a 91% fleet utilization, 70% EBIT margin and 25% negative tax rate. That would lead to a ROIC of 17% and ROIC spread of 6.5 percentage points. As for ROI, which stood at 11.7% when we do... On the next slide. Here, we show cash generation and movements in net debt. As you can see, the company generated BRL 58 million in operating cash as its increased reutilization, controlled cost expenses, delivered asset base volumes, optimize the need of purchase new assets by increasing the share of use asset leasing contracts and reduced leverage organically since receivables assignment by BRL 224 million and the partial digital payout of BRL 24.8 million is included in the BRL 150 million approved in December 25, equivalent to a payout of 47% of last year's net income. Slide 16, starting with the first chart. We continue to execute new funding transactions and debt prepayments to optimize our capital structure and improve our debt amortization schedule. We pay attention to market opportunities that allow us to improve that maturity profile, especially maturities due in '27, '28. In leverage, we continue to reduce the consistently as net debt remains stable in nominal terms and the company's EBITDA continues to grow as demonstrated in the last quarter. Leverage for covenant purposes was 3.15x in March '26, the lowest level since '22, in line with the strategy of gradually and organically deleverage combined with sustainable business growth. The reduction leverage was achieved in parallel with the reduction in receivables assignment guidance meaning that leverage on a broader basis was also declined. Lastly, already known to the markets, last Monday, we filed notice to shareholders regarding the partial balance of the private capital increase in the amount of BRL 529 million before remaining shares and the funds have already been received in April. The capital increase will have a positive effect on our deleasing process as shown in the chart in the lower right corner, bringing covenant leverage on a pro forma basis as of March 31 to 3x, which corresponds to the midpoint of our guidance for December '26. We also performed an additional exercise, which does not constitute guidance considering the simulation of sale and cash receipt of excess inventories of used assets available for sale or leasing considering on their estimated value of BRL 969 million. Together with the capital increase, if you were to do that and have the effects reflected as of March 31, '26 where the same adjusted leverage would be 2.8x. With that, that concludes my presentation and turn it back to Couto for his final remarks.

Thanks, Cezario. Moving on to the final slide. I'd like to reinforce a few important lessons. The company remains committed to increasing shareholder returns through continuous efficiency gains delivered sustainably and with value creation. With clearly see opportunities to improve our inventory levels and free utilization, expand margins through cost reduction in addition to develop the heavy used asset market and continue leveraging the initiatives that allow us to grow with lower dependence on the purchase of new assets. The results here demonstrates that it is possible to increase our net income exclusively based on execution and the evolution of our operation indicators even in a highly challenging macroeconomic scenario. Over the past two quarters, net income increased 74% even without any contribution from lower interest sales. Used asset revenues grew 12% year-over-year. and our sales channels continue to mature with new stores, digital tools, and new reps. The lower needs for net CapEx allows us to deleverage the company grow sustainably and achieve gains in productivity. Leasing revenue increased 9.8% year-over-year, nearly 5x higher than the increase in gross fixed assets which was only 2.1% in the period. We remain highly confident in delivering our 2026 guidance and are very grateful to our people, clients and investors. Now we are going to open for your questions. We may start now.

[Operator Instructions] Our first question comes from [indiscernible] from JPMorgan.

I have two questions. The first is about demand. In the release, you talk about heated demand in the second quarter, can you talk a bit about the drivers and also about the demand. I see that the guide has been the same. But given the macro uncertainty, can you have any changes in the scenarios for '26 and after returns, we did understand the impact in the first quarter that was impacted by the delays of last year, what do you expect in terms of returns for the remainder of the year?

[indiscernible], this is Couto speaking. Thanks for your questions. Thanks for attending our call. Using demand has been quite solid a long time. And we do see that along the year, we should have a more linear demand. I did say that during the presentation. And we expect that because there was lower demand in the first quarter for a specific sector, which is sugar energy. The volume was smaller as we mentioned, but we do see a more linear demand for the remainder of the year. In the second quarter, we see volumes in April for new contracts generated that was quite high, and we see that from different sectors, retail, e-commerce services. So we see a strong demand. And Julia, what's important is that the leasing segment is an alternative to fleet renewal, that is more economical. So an adverse scenario in some sectors in a way contributes to the opportunity of growing fast, improving balance sheet, reducing capital allocation in low car assets. And this is something that we work with. So we see that as something that keeps our demand healthy and consistent for the year of '26, and we are keeping our projections for the year. As for returns, your second question. We see return, you see that our provision for [indiscernible] accounts continues to be quite controlled and that is translated in a volume of returns and about 5%, perhaps slightly lower than that Cezario showed us. And this is the scenario that we are considering for the future. In our projections and for us to meet our guidance, we are quite conservative in terms of returns basically because we know that default rates are still high at the central bank. So even in a deteriorated scenario, we are already considering that in our projections. Still with discipline, we are being able to control numbers in terms of allowance for doubtful accounts and returns. So we do expect the numbers to be, at the most, 5% a year. I hope I have answered your question, [indiscernible] if not, just let me know.

Our next question comes from Andre Ferreira from Bradesco BBI.

Congratulations on your results and the operational improvements. My first question -- congratulations also on the reduction of inventory in the first quarter, a lot higher than the fourth quarter even with the returns of last quarter. Thinking of the 3 levers to reduce inventory levels and going back to the first question. We see used asset expansion and [indiscernible] so what are the metrics in the second quarter now? And as a whole, do you see a change in the mindset of clients because of higher diesel prices, speculation with elections, interest rates that may affect the numbers that you're expecting for each one of these levers. That is customers postponing the sale of used assets or perhaps more willing to hire [indiscernible] assets? And second question, I would like to talk about contract extensions. If it is at [ about ] 40%, which is close to 25%. So my question is to try and understand what are negotiations like and the expectations in your guidance for expansion, does it include contracts that have not been negotiated? Or is it anchored on formal, informal negotiations with clients and giving opportunity to new negotiations. Perhaps it's too much, but that's all I have.

Andre, thank you very much for joining us. We do have 3 levers, as you said, that we are working on. All of them presenting increasingly better results. I'm going to start with the [indiscernible] assets. We have record leases and deployments in the month of March which translates to us some changes that were made internally. I always said that [indiscernible] leases, although it is a very net liquid young assets, it has complexity of time. Clients want to see the assets. So the process between signing the contract and deploying the assets is a bit longer. And along the recent quarters, we're able to adjust that, and we see improvement contract extensions with the same characteristics, but it [indiscernible] because the client already has the asset. It is the same asset so the clients already know the assets, they are already operating in. So it's much simpler. So these negotiations are doing very well. We have been able to keep even some advanced negotiations, which is something that you asked about. So we are also being able to extend important volumes and we showed. So the sum of new contracts signed this quarter was a record 44% including expansion and [indiscernible] contracts for used assets, which was very important. The sale of used assets which is something that we are more used to monitor them. Well, we have been able to improve quarter after quarter. See that we improved quarter-on-quarter 12%. This is the fruit of a better commercial team in the number of stores. We did open some stores as we have announced, we are having a lot more volume in terms of proposals which means that we have a reach with our digital tools and even in an environment with lower credit availability, we have been able to grow in used vehicle sales. So we are very confident that we are going to continue developing this area. And new sales, new sales rep, they are still not mature, a new store compared to an older store or younger sales reps compared to our senior ones make a difference. So there is a maturity process to happen. And that will certainly increase the number of sales store per sales rep. As for higher diesel prices as well, any inflation movement is bad for the country, for our clients and for our staff. However, it does pose opportunities to us because companies when they have to reduce costs, as I mentioned before, they see conservatives and leasing is more than proving that it is a good economical alternative. So at first, it takes a bit longer in the negotiation process. This is normal whenever there is something new or an important inflation event, clients stop to analyze things. But I think that also it opens doors to several opportunities. So several effects connected to the increased cost in transportation give us opportunities to sit down and negotiate with our clients to show the benefit of leasing. So again, we don't like high interest rates. We don't like high inflation rates, but that also contributes to what we can provide to our clients. I hope I have answered all your questions.

Our next question comes from Filipe Nielsen from Citi.

I would like explore used assets considering the margin that you have here without the CPC effects, margins very close to 0. But again as you mentioned, with the mix of more road equipment with the lower selling price. I'd like to know how the trend of this margin is evolving just for us to try and normalize the mix to other assets. So how -- what is the trend long term? Should we expect better margins than now in terms of return, which is my next question. I would like to understand a bit more of the sugar ethanol sector. It has a seasonal effect, but it's also relevant in return CapEx. So can you elaborate a bit on the weakness of the sector for the whole of the year.

Well, with used asset, margins was 0.1% this quarter and indeed there is a certain dispersion here. Those assets, especially trucks with high liquidity, they are performing with very healthy margins. However, we have some equipment for trucks with lower liquidity. We forced sale of it to give discounts to reinforce our cash. This is something that I've said that we would do without destroying value. but accelerating sales of some assets even if we have more inventory or those that we see less demand in the secondary market. So this is what we did, and this is why you see the margins at 0.1%. Had we not accelerated the sale of low turnover assets, we would have seen higher margins. Now if you consider the long term, you have to remember that we always project new contracts when we are signing a new contract with the client, I project for the future, a 0 margin when I sell the asset, so the result comes from the contract, the cash flow a long time, and then we project depreciation so that in the future, we can sell the assets as the residual value I had in my book without, again, necessarily from sales. So in the long term, we project it to 0 in the short term because we are accelerating the sale of low turnover assets. We believe 0 is a healthy number, again, because you have [indiscernible] that have higher margins and other assets that have lower margins. So in the mix, 0 is what we expect in the short term. As for return in the sugar ethanol segment, it was a specific return of one client. Nothing really substantial, but it was a specific return when we follow the sector, we did see lower demand this year. So this sector is delaying feet renewals or expansions. So in the contracted value in the first quarter, we saw lower volume in the sector. But with regards to returns, it was one specific client that was going through difficult. So we got the assets in the beginning of the year. But this is not that we see something recurring in the sector, quite the opposite, the number the sugar ethanol sector really supplies to the whole of the country it's cyclic as any agribusiness sector that needs our assets to operate and continue producing. So that gives us predictability in terms of maintaining these assets within the operations of our clients is different from a truck for instance that is the client to lose the cargo, they don't have transportation and they return the truck. In the case of the sugar industry, it stops, and we are not seeing the industry stopping. That's why our asset continue to perform quite regularly in the sugar ethanol sector. I hope I have answered your question.

Our next question comes from Joao Ramiro from XP.

I would like to have a bit more color in terms of government transit programs. They recent announced the renewal of the [indiscernible] program increased in the program in BRL 21 billion for the subsidized purchase of trucks, buses and related-equipment. And now they possibly will launch one for farming equipment. What is the company's stake of the potential impact of these programs for the sale of used assets and do you see that this can cause an impact in terms of demand for [indiscernible] contracts or new contracts in general?

This is Gustavo speaking. Well, the [indiscernible] program, we saw the first quarter when the programs were launched, that it did not have an impact on used asset sales, quite the opposite. The product met the demand of fleet owners and fleet owners have access to buy assets. So it was not something that was available from banks for used assets. So that did not affect our business. The vehicle market is going through difficulties in terms of credit, but this is for everyone in all the sectors. But indeed, we performed well, and we grew as we showed to you. An important point is that Brazil needs to renew its fleet so when you have a program that incentivize to fleet renewal, I believe this is healthy for the sector as a whole. So I do not see [indiscernible] as a thereat to the used vehicle business, quite the opposite. It's an alternative for clients to modernize, renew their fleet which is beneficial for the sector as a whole. So we do see the benefits of the program that was launched. As far [indiscernible] contracts, [indiscernible] contracts I would say are unbeatable, I would say, in terms of opportunities to customers because we are talking about used assets. So prices are not compared to the U.S. And if they fit the client, the product is very appealing for customers that want to reduce costs and the contracts are shorter, 2, 3 years time when you're going to buy an asset, you're talking about long term [indiscernible] was 5 years. So we do not see it as a competition. So much so that I mentioned to you that in line in the peak of the [indiscernible] program we had a record in [indiscernible] and deployment. I think the program itself, the [indiscernible] leasing, it's a matter of having the right assets for the right clients and this is what we have been improving month after month. And that's why we have better numbers and I think we are going to get to the results of our guidance along the year.

Our next question comes from Alberto Valerio from UBS.

If you could give us a bit more color on [ CPC ]? Was it a new contract? I thought it was just the sale of assets. But as you mentioned in the call, it's a contract that goes into revenues as used assets with a given sale. Another point that I would like to explore is intercompany operations that increased a bit quarter-on-quarter. If you could also give us some color on what to expect for the future. And finally, truck depreciation that's increased in the quarter. Do you think we should see depreciation rates increasing a long time?

This is Cezario speaking. Thanks for attending the call. I'm going to start addressing [ CPC06 ]. Indeed, we had to address some rental contracts as if they were sales, it's important to highlight that they are not actual sales, they are leasing contracts signed by the company as we have in any other relationship with customers. The difference is that given the time and conditions and the possibilities that at the end of the contract, the client may buy the assets under some positions, this has to be addressed as if it were a sale. So again, it is something different that we usually do, and we'll continue to do and that did bring an impact that instead of having the fixed assets of this asset being depreciated, what we have is accounts receivable that were recognized at present value, and the accounts received along the time of the contract will be recognized in terms of financial revenue, coming from the advanced amount that was accounted for at the time 0 as we receive the installment. So we are going in this case to change leasing revenue to finance revenue along the contracts. So in a nutshell, this is what it is. It's not really more complex than what [ CPC06 ] determines or IFRS 16.

So it's almost close to financial leasing, another operational leasing?

Yes, [ CPCO6 ] it talks about operational leasing, which is most of our operation and financial, which is addressing those products and the segments. So instead of having the depreciation of the asset and recognizing the leasing revenue along the contract, you recognize it as if it were a sale at time 0.

So for these assets, you're not going to have leasing revenue along the period. You have financial revenue that is going to be incorporated along the contract?

Yes, very clear.

And is it one-off? Or could we see more of that?

I'm going to let Couto answer that. He's going to talk a bit about that. We are considering this as a possible avenue for growth. So I don't think it's going to be a major part of the business that's not it. but I think it's going to be more and more common to have situations like this that fit this accounting situation. Again, we continue to be a leasing company. We have leasing contracts for assets that has renegotiated conditions that make us adjust the contract as a sale and not leasing for strictly accounting purposes, we are going to do so. If we see the interest from our clients and ourselves of contracting a possible purchase of these assets with a condition that fits the standard, we are going to have other situations like that in the future. Couto?

Alberto, this is a leasing contract very close to basic. But there are specific completions negotiated where the clients have this interest in buying. And we saw the opportunity of a new contract model. It has to be accounted for as an asset sale. But as Cezario explained, I won't go over that again. We see it as a possible avenue of negotiation when clients want to buy the asset at the end of the contact. So if the nature of the operation is a leasing contract but there are specific conditions that go under [ CPC06 ] to be recognized as that. We don't like to compare that with asset sales. We highlight the 12% without considering those assets because we are not really selling the assets at the time. I hope it's been clear of that. Otherwise, Cezario and [ Rodrigo ] can talk to you more about that.

Very clear.

And your second question about intercompany negotiation that increased a bit that has to do with the previous subject. These assets were bought [indiscernible] which is one of the companies that we control. And for the very recent, the revenue of has to be eliminated in the consolidated numbers. And that's why you see this increase in those lines. When you [indiscernible] our consolidated numbers. And here, this is close to [indiscernible]. These are assets that we showed to you in the last earnings release. They are biomethane drugs that were prepared by D&D. So they bought the assets prepare that and we bought it then from [indiscernible]. That's the operational [ best ].

And the last part of depreciation?

Last question is about depreciation. Indeed, this quarter -- if you relatively consider things, we had a higher depreciation, especially in the trucks. In the previous quarter, we had a slow reduction. So it is gross, but almost going back to what we had in the previous quarter. And we had mentioned that the reduction was not something that was permanent or that we should expect for the coming quarters. And we continue to say that the trend in depreciation of trucks, machine equipment is growing. So we are going to more and more a growing curve in depreciation considering the reference rate that we share with you in the case of trucks, something like 7%, machinery and equipment closer to 12%. This is not going to happen from 1 quarter to the other. We have a long time to adjust our depreciation rate to get to the end of the contract with the residual value that is very close to [ Markets day ]. In some situations, we can have some batches of asset in which we accelerate the depreciation rate and then sometimes from one quarter to the other, you do see some kind of fluctuation that may mean that things are changing, but they are not. And this is what we thought this quarter. It was a batch of asset that we accelerated the depreciation but that will not change the rationale or the guidance that we gave to the market in terms of depreciation. The guidance was that depreciation should be between 150 to 200, and this is what we believe in and our projections to what we can see just reiterates the guidance with regards to depreciation.

Our next question comes from Rogerio Araujo from Bank of America.

The first about costs, excluding [indiscernible] the cost in leasing dropped 50% year-over-year. You mentioned in your release, there was a return of ICVA provisioning, fines from clients and provision of payments of acquisitions. Could you give us a bit more details and quantify the effect and talk a bit about the recurring costs? I think that helps us. Also, you are reinforcing your sales structure, sales reps, employees and et cetera that should effect the margin. What can we expect in terms of impact for the coming quarters? That's my first. And second, when we have normalization exercise, you are using an EBIT margin of 70%. Can you talk about the drivers that you used to get there?

This is Couto speaking. I'm going to answer part of your questions and Cezario will help me with the other part. We are doing important homework in terms of operating efficiency, reducing inventory levels increasing utilization rates and [indiscernible] costs. So naturally, last year, the effects that you mentioned [indiscernible], they are all related to last year. This year, our cost base is lower and the main effect of that is that we are looking very much into maintenance costs we are reducing the number of maintenance cost at the [indiscernible] with the lower inventory levels. So we are working to reduce the cost. This is the positive side, and this is what you see in terms of some cost reduction in the year-over-year comparison. Now when you see increase in costs we have new stores for used vehicles, new sales reps, our people is very much compensated based on sales volumes. For used vehicle, they have a variable compensation. So you're going to see an increase in the cost of used vehicles because of more commissions than gas because people are selling more. And that's what we want to see volumes going up and paying more commissions to sales reps. So in summary, our stores, we opened 4 stores last year so you're talking about [indiscernible] amounts, a few people in stores usually in the areas where the square meter is relatively cheap because we are not locating over centers. We are on roads or the outskirts of towns where square meter is lower. But the increase is based on commissions, but commissions are based on new sales. So we are happy to pay. That's it. Cezario anything? And EBIT as well.

Well in terms of costs and expenses, it's also important to say, Rogerio that we are intensifying a series of measures to optimize costs and expenses. Every company in [indiscernible], I think given the time and the scenarios requires efforts in terms of optimizing costs. We are not different. That does not mean that within the year, you are not going to have accommodations from quarter-to-quarter. Sometimes you have a drop in one quarter, a recover the other. Just one example about fine, traffic fines. We just mentioned that in the first quarter of last year, we had more fines than we had this year, tickets. Basically, most of our fees are leased to third parties and traffic tickets are the responsibility of our clients. But sometimes there is a mismatch so you have to recognize the traffic again the car, vehicle is under your name, and it takes me some time until I can collect that from clients. So this mismatch may generate from quarter to quarter some difference benefiting one quarter over the other. And that's the reason when you compare this quarter to last quarter. But these are natural movements. And we are working very hard. We did not mention that but even maintenance costs. We are working very hard to reduce maintenance costs, trying to optimize our expenses. So you should expect due diligence on our part with regard to that. And finally, you're talking about the EBIT margin, how we got to this number. I would say that the main driver for us to get to the 70% is optimization of our area, reducing inventory that is not generating revenue and that will bring us returns in terms of cost and also reductions of costs that are related to the inventory as the money that today is applied in an asset that is not generating revenue. And then it starts to be applied to something that generates revenue you are going to see it better. So we believe that we can get to an EBIT of 70%, not necessarily this year.

Our next question comes from Daniel Gasparete from Itau [indiscernible].

I have two, in fact. One, I think that we didn't talk in the Q&A about the potential government incentive program in the decrease of the [indiscernible] for light and heavy vehicles. So I would like to hear a bit from you what direction do you think this is going? And second, I would like to go back to what Couto mentioned. I understand the 5% in terms of expected returns and you are considering an adverse scenario. But I'd like to compare the number to what you mentioned in terms of depreciation and not seeing this depreciation going up. So what do you think depreciation is going to be like in terms of behavior used vehicle margins? Do you think it's 0%, but that then wouldn't depreciation increase?

The first question is clear. The second one I could not hear very well. I think there was a bit of a problem. We could not hear your second question. But the first is very good. What we see is that any tax reduction is beneficial for the sector and for everyone any reduction in IPI taxes, we are talking about 1%, 0.5%. It's not really high. [indiscernible] helped by the burden of the [indiscernible]. But I do not see that impacting depreciation, if that's what you said [indiscernible] in 2025. OEMs even with a higher volume sales has a pass-through of 6% this year. They already had a pass-through when they are considering price increases for the next half of the year. They have to pass-through costs. So as we've seen along the year through [ follow ] and sometimes are even higher than inflation. So any reduction in IPI tax is welcomed because again, it makes the whole thing lighter, but it does not bring any impact in our dynamics for used vehicles, for instance, with these prices being appreciated and therefore, used assets follow the appreciation of new vehicles. Cezario did mention that during his presentation. So that's basically it. It's welcome but does not impact on the price of used vehicles. Your second question, could you please say that again?

No problem, Couto. Thanks for your first answer. The second is about depreciation and margin of the used vehicles. You were expecting a margin for used vehicles closer to 0. And at the same time, you [indiscernible] depreciation of your guidance. So 0% is a margin that you are comfortable to work with in the period. You don't see a need to increase is that the number you're working with -- and this is what you're considering, just to understand depreciation rates.

[indiscernible] used vehicle margins results from two things. First, obviously, market prices that we cannot control. And the second event is the sales mix. For example, we did something like 0% this year focusing to decrease inventory levels of some assets with lower turnover, and that took the margin down. So given that this is a -- something stable for the year, so if we have margin that for the year that is going to be higher margin for trucks and lower margin for those assets that have higher depreciation along the year. I'm not talking again about trucks, tractors, trailers, I'm talking about equipment attachments. So I think the volume is going to be 0, but again, we can have fluctuations quarter-on-quarter, considering the mix when I sell more in a period or the other and what I cannot control are market prices. Again, because new asset prices are going up, there is no reason for us to believe that the price of used trucks is going to be different than the margins that we see today. So in terms of used vehicle sales, that's it. And as for depreciation being quite straightforward, Gasparete, you can trust the guidance, you can trust what you see the guidance. This is our number. Right now, we don't see any indication of change so you can consider the guidance. This is a number that is very predictable. We believe we are very accurate, and I do not see anything that can change the number for now.

Our next question comes from Luan Calimerio from Banco de [ Brazil ].

I would like you to help me understand the dynamics considering the deep commissioning time line. Coming years, we have a growing curve. It seems relevant compared to this year for next year in terms of decommissioning. So I would like to know what are the implications of that? Is that really relevant? Is it part of the natural dynamics of the business? How are you going to address the decommissioning to come in the coming years?

This is Cezario. Well, we always disclose the decommissioning time line for the market to understand our released fleets today. The expectation of a possible reduction of leased assets that will come to resell or that will be extended with contracts that we have been talking about. And we have been very successful in this and we do believe that this kind of product is very attractive to our clients. So contract extensions seem to be a good fit. So this alternative contract expansion objectively speaking, delay the time line that you see. So the time line does not happen in its full. And the second thing that you have to consider is that this amount for you to have a common [indiscernible] these are growth about, not net depreciation amount. So the net depreciation amount should be closed to the sales price of the asset because depreciation is targeted at price, we are going to sell the decommissioned asset. So assume this is true, you have two effects that you have to have a number of sales to be done. That is not what you see, first, because we are going to extend contracts that are going to expire. And also part of the amount that you see here are represented by depreciation that is already included in our accounting. And therefore, sales prices are going to be different from what you see here, considering our capacity of resales that we have built [ a long years ] and that we believe that is at the right sites to meet demand.

This is Couto. I would like to talk about two things. First, the fact that in recent years, we returned more assets, therefore, decommission more assets because of the default rate that we had a peak in '23. We had to anticipate a response. So today, we should be selling a lot less assets, but some stores responded very fast and last year we grew 100% in the sale of used assets. So we responded very fast in terms of our capacity to actually make the sale for two reasons. First, because the assets are very liquid and fairly new compared to the average [ fleet ] in Brazil. So they are assets that clients want again, very new assets compared to the national average. And the second aspect is that these assets are funded by bank because it's the new assets and banks provide credit to that. Banks do not provide credit for older assets. So our assets that are very new are highly liquid. They have high quality. And with that, we can respond faster. I do not see that far for the future a challenge. The challenge that we have ahead is much lower than what we had in the past when we grew 100%. Looking forward, of course, we have to continue growing but the challenge is lower. And I think that we have already demonstrated our capacity to respond fast and increase sales when needed, even if in the future, I see less challenges than what we have been [indiscernible].

The Q&A session is now closed. We would like to hand over to Mr. Couto for the company's closing remarks.

Well, thank you very much. With this question -- have questions in writing, the IR team will be able to answer each one of you but to close, I would like first to thank you all for your patience for being here with us till now for your questions and also our team, clients and investors. Our focus will continue to be operational efficiency. We will pursue and reach the 90% in the midpoint of our guidance in utilization rates. With that, we are going to have more revenue with less need for new capital. We improved EBIT as Cezario mentioned, and we are going to see net income evolving as results depend exclusively on the opportunities that we have and make our inventory profitable, and this will continue to happen. Used vehicle sales has proven to be one of our greatest capacities, and this will continue to evolve as our sales channels mature quarter after quarter. And as we are being able to extend and lease more used assets with [indiscernible] you are going to see a lower need for net CapEx and lower dependence of growth on new assets. This is beneficial for our clients. As I mentioned, it's good for our profitability and to reduce our costs. And we certainly see that as a tool to promote a natural deleveraging of the company, although we will continue to grow at double digits. The new contracts that we mentioned, I think it is an opportunity for us to meet the demands of our customers. And if that happens, I think it's an avenue for new contracts this kind with the specific demands that you're going to be able to see that in the coming quarters. So to close, I would like to say that we are very confident. We reiterate the guidance for '26. We started the year in our opinion, accelerating utilization rate, and this is what we are going to be continuing to work on and the team is very much engaged to reach those objectives. Once again, thank you very much to your attendance and to our team that has developed [indiscernible]. Thank you.

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