Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Simpar SA (BSP:SIMH3, Financial) reported a 29% growth in total gross revenue, reaching BRL 11,900 million, and a 26% increase in net revenue from services.
- The company's EBITDA margin improved by 0.9 percentage points to 32.1%, demonstrating enhanced operational efficiency.
- Record asset sales revenue of BRL 2.3 billion was achieved, marking a 44% increase from the previous year.
- Leverage decreased from 3.8 in Q2 to 3.7 in Q3, with a projected future leverage of 3.4, indicating financial stability.
- The strategic reorganization proposal for VAMOS Locacao aims to create a NewCo focused on dealerships, potentially enhancing value creation.
Negative Points
- Despite improvements, the company's net income was BRL 125 million, which may not meet investor expectations for profitability.
- Leverage remains relatively high at 3.7, which could pose risks if economic conditions worsen.
- The proposed reorganization of VAMOS Locacao and AUTOMOB is still pending approval, creating uncertainty about future business structure.
- The company faces challenges in the automotive market, with pressure on prices for both new and used cars.
- Simpar SA's focus on reducing leverage may limit its ability to pay higher dividends in the near term.
Q & A Highlights
Q: Can you provide insights into the price dynamics for AUTOMOB, particularly regarding new and used cars?
A: Prices depend heavily on the mix, including luxury and economic cars. There was no significant pressure on prices affecting margins. The market remains strong, with credit being granted and retail moving forward. AUTOMOB aims to optimize sales per store, with a historical ratio of 0.8 used cars for each new car, and potential to increase this ratio.
Q: Regarding the reorganization of VAMOS and AUTOMOB, will SIMPAR participate in the voting? Also, how do you see the EBITDA to net CapEx ratio evolving?
A: The decision on voting is still pending. SIMPAR is committed to high governance standards, involving independent committees and banks for fair assessments. As for EBITDA and CapEx, the focus is on profitability, potentially leading to no need for financial capital next year, indicating a better EBITDA to investment ratio.
Q: What is driving the strong growth in BBC's new transactions, and what are the future expectations?
A: BBC's growth aligns with strategic plans, focusing on financing new and used vehicles with significant down payments and spreads. The company is digitalized and light, with a focus on responsible growth. The financing business remains solid, with a good pace of growth.
Q: With the completion of initial CapEx for ports, is there an opportunity for SIMPAR to sell the asset? Also, are there plans to explore more highway opportunities?
A: The port project is on schedule, with high demand and potential take-and-pay contracts. SIMPAR is open to partnerships or asset sales if they add value. For highways, SIMPAR is cautious about investments, focusing on opportunities with low CapEx and high returns.
Q: What are the expectations for dividends in 2025 as leverage decreases?
A: The focus is on reducing net debt at the SIMPAR level, with expectations for the minimum mandatory dividend of 25%. The priority is deleveraging rather than increasing dividends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
