Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JSL SA (BSP:JSLG3, Financial) reported an 18% organic growth compared to the third quarter of 2023, demonstrating strong business expansion.
- The company achieved a net profit of $73 million, marking a 25% increase from the previous year.
- EBITDA margin improved by 1.2 percentage points compared to the previous quarter, indicating enhanced operational efficiency.
- JSL SA secured $4.5 billion in new contracts within the year, showcasing its ability to attract significant business.
- The company was awarded Best Company of the Year in the logistics sector by Xami Magazine, highlighting its industry leadership.
Negative Points
- Despite growth, JSL SA's margins have decreased, which could indicate rising costs or pricing pressures.
- The restructuring of IC is still negatively impacting the top line, with no immediate turnaround expected.
- Asset sales have been slower than anticipated, potentially affecting liquidity and financial flexibility.
- The company faces challenges in the grain transportation sector due to tight margins and reduced volumes.
- Higher interest rates in Brazil could impact JSL SA's leverage and future M&A activities, posing financial risks.
Q & A Highlights
Q: Can you provide more details on the contracts implemented in the second quarter and their impact on profitability? Also, what is the status of the IC restructuring?
A: The largest project is the Cerrado project, which involved hiring and training 1,200 people, impacting operational costs negatively in Q2. However, it started performing better in Q3, with full benefits expected in Q4. The IC restructuring is ongoing, with positive results anticipated from Q4 onwards. The grain transportation segment was reduced due to tight margins, focusing instead on more profitable operations.
Q: Regarding new projects, do these contracts help JSL expand its return on invested capital? Also, what should we expect for CapEx in 2025?
A: Each project has different characteristics affecting EBITDA margins. Recent projects have higher margins due to improved efficiency. CapEx was concentrated in the first half of the year, and we expect a similar level in Q4 as in Q3. For 2025, CapEx should remain close to 2024 levels, with no major changes anticipated.
Q: How do you view asset sales and international expansion, particularly in Ghana?
A: Asset sales have been slower than expected, but we are working to improve the pace. Ghana operations are performing well, with potential for growth. We are exploring opportunities in neighboring countries and have been approached for projects in Mexico, aligning with our strategy to grow internationally.
Q: With the current interest rate scenario in Brazil, what is your outlook for the market, leverage, and potential M&As?
A: Higher interest rates present both challenges and opportunities. We adjust project pricing to align with interest rates and focus on operational efficiency. As a sector leader, we see this as an opportunity to differentiate from competitors. We aim to reduce leverage through strong cash flow and continue exploring M&A opportunities that align with our growth strategy.
Q: What are JSL's plans for growth in the transportation of new vehicles, and is there potential for market disruption?
A: We aim to grow in profitable markets, including new vehicle transportation, primarily through Transmoreno and JSL's operations. The market is expanding with new entrants like Chinese companies. We are well-positioned across the automotive supply chain, benefiting from increased vehicle sales and supply chain activities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
