Wilson Sons S.A. (PORT3) Earnings Call Transcript & Summary

[Interpreted] Good morning, everyone, and welcome to Wilson Sons' Fourth Quarter of 2024 Results Conference Call. Joining us today are Mr. Fernando Salek, the company's CEO; Mr. Arnaldo Calbucci, the COO; Mr. Michael Connell, Investor Relations Officer; and Mr. Marcello Torres, Controller. This call is being recorded. [Operator Instructions]. Financial information is presented in Brazilian reais and complies with international financing reporting standards, unless otherwise stated. Page 2 of the presentation contains the usual disclaimers regarding forward-looking statements. I would now like to hand the conference over to Mr. Fernando Salek. Go ahead, sir.

[Interpreted] Thank you. Good morning, everyone, and welcome to our results conference call. We're going to start the presentation on Slide 4 with an update on the change of control transaction. In October 2024, we announced that Wilson Sons' controlling shareholder had entered into an agreement to sell its entire stake in the company to SAS, a subsidiary of the MSC group. In early December, SAS acquired 12% of Wilson Sons' share capital through transactions on the Brazilian Stock Exchange. Later that month, regulatory approval requests were submitted to the Administrative Council for Economic Defense and the National Waterway Transportation Agency or ANTAQ. At the end of January, Banco do Brasil granted its consent to the transaction. On March 14, the Administrative Council for Economic Defense's General Superintendents approved the transaction without restrictions. This transaction is expected to be completed during the second or third quarters of 2025, subject to obtaining the remaining regulatory approvals and lender consents. Upon completion, the buyer will launch a mandatory public tender offer for the company's remaining shares. Turning to Slide 6, please. On this slide, we highlight our safety performance. In the 12 months of 2024, until December 31, our lost time injury frequency rate was 0.29 incidents per million hours worked, consistently outperforming the world-class benchmark. Our unwavering commitment to safety and employee well-being is the cornerstone of our operations for which we will consistently pursue the goal of 0 accidents. Turning to Slide 8. Here, we provide an overview of our consolidated results. In the fourth quarter, net revenue increased 28% to BRL 824 million, primarily driven by strong operational performance in the container terminal and towage segments. In 2024, revenue increased 21% in reais and 11% in dollars. EBITDA increased 41% to BRL 374 million in the quarter, driven by exceptional performance in our core businesses and a significant contribution from the offshore vessel operation through equity income. In 2024, EBITDA increased 29% in reais and 19% in dollars. Net profit for the quarter increased 7%, reaching BRL 122 million, driven by stronger operational results despite the significant impact of exchange rate variation. For the year, profit increased 21% in reais and 10% in dollars. We now move to Slide 9. On the slide, we highlight the financial performance of our main businesses. Container terminal revenue rose 31% in the quarter to BRL 325 million. This was driven by strong operational performance and gains from ancillary services. EBITDA increased 37%, reaching BRL 185 million, driven by higher volumes and economies of scale resulting in a margin expansion of 251 basis points. Container handling increased 34%, driven by robust gains in transshipment and gateway flows. In U.S. dollar terms, revenue was up 11% and EBITDA rose 17%. Towage revenue rose 27% in the quarter to BRL 398 million, driven by an improved volume mix and gains from ad hoc services. Revenues from special operations increased markedly, driven by increased services to LNG terminals and offshore energy assets as well as higher ocean towage activity. EBITDA increased 26% to BRL 178 million, broadly in line with sales growth. Harbour Manoeuvers performed by owned tugs remained consistent with the comparative period, despite increased client activity due to greater reliance on third-party chartering, driven by expanded special operations. In U.S. dollar terms, revenue and EBITDA rose 7%. In our nonconsolidated joint ventures,comprised mainly of the offshore support vessel operation, revenue rose 33% in the quarter to BRL 196 million, thanks to improved fleet utilization and higher daily rates. Operating days increased 14%, driven by new contracts and renewals. Net profit reflected in the company's results as equity income rose markedly to BRL 9 million, despite the significant impact of exchange rate variation. Moving to Slide 11. Here we present our liquidity and leverage ratios, which remain consistently solid. Bank debt increased 9% compared to the balance at September 30, driven by the sharp depreciation of the Brazilian currency during the period, which raised the value of U.S. dollar-denominated debt when reported in reais. However, in U.S. dollar terms, bank loans decreased 4% to $277 million. In the fourth quarter cash flow, key highlights include BRL 346 million from operating activities; BRL 70 million in investments, primarily allocated to container terminal and tugboat maintenance; and BRL 127 million in bank loan amortizations. As a result, we ended the period with BRL 492 million in cash and cash equivalents. Bank leverage in reais decreased to 1x EBITDA since September 30, driven by higher earnings. Regarding shareholder remuneration, interim distributions through October totaled BRL 335 million. Additionally, on March 18, our Board of Directors approved an interim dividend from the profit reserve, amounting to approximately BRL 0.28 per share, totaling BRL 126 million or thereabouts, payable by March 28. As a result, total remuneration for 2024 will reflect an increase of nearly 70% in reais compared to the previous fiscal year, underscoring the company's strong cash generation. We continue on Slide 13. Here, we would like to comment on our operating performance in the first 2 months of 2025, which we believe adequately reflects a positive trajectory in the efficiency and momentum of the operations, underscoring the resilience of our businesses. Our main segments, terminal and towage, delivered very solid results propelled by the continued expansion of trade flows. We exceeded our positive expectations for the beginning of this year. Aggregate terminal volumes increased 27%, driven by gains in the main trade flows benefiting from new service lines secured. In Rio Grande, container handling surged 34%, mainly driven by strong growth in transshipment. Similarly, Salvador witnessed a solid 16% increase with highlight to export, import and cabotage flows. In towage, Harbour Manoeuvers increased 3%, while the average size of ships attended remained in line with the same period of the prior year. In the offshore energy segment, our OSV fleet recorded a 5% decrease in operating days due to vessel downtime for modifications before commencing new contracts. At our support basis, on the other hand, vessel turnarounds increased 14% due to higher regular activity. This concludes this presentation, and I would like to invite you to the Q&A session. Thank you.

[Interpreted] [Operator Instructions] This concludes the question-and-answer session. I would like to invite Mr. Fernando Salek to proceed with his closing remarks. Please go ahead, sir.

[Interpreted] Thank you. Well, in conclusion, our exceptional performance in 2024 underscores the strong organic growth across our portfolio. The strength of our core businesses has been remarkable, showcasing both the vigor of our operating model and the effectiveness of our strategy. Looking ahead, we remain steadfast in our commitment to stringent safety standards, operational excellence, optimal asset utilization and disciplined capital allocation. We're very proud of the progress made last year and confident in our ability to navigate towards an even brighter future. I would like to reaffirm our commitment to delivering value to all Wilson Sons' stakeholders. Our values and commitment to customers, employees, shareholders, partners and the communities we serve remain unchanged. We will continue to operate with the same level of excellence, safety and efficiency that has always guided us. I would also like to extend my deepest gratitude to all our employees for their continued dedication and exemplary work, which has been the hallmark of our company throughout its journey. Thank you all for joining us today. I hope you are all well and safe, and have a good day.

[Interpreted] This concludes the Wilson Sons conference call. Thank you for participating, and have a good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]