Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CCR SA (BSP:CCRO3, Financial) reported the best second quarter in the company's history, with record demands for key assets like AutoBAn and Belo Horizonte airport.
- The company achieved a 14% increase in adjusted EBITDA compared to the second quarter of 2023, with an EBITDA margin improvement of 0.9 percentage points.
- Adjusted consolidated net income grew by 102%, showcasing strong financial performance.
- Complementary revenue increased by 18.6% quarter over quarter, indicating potential growth in diversified revenue streams.
- The company successfully issued incentivized debentures worth BRL9.4 billion, securing long-term financing for major projects like Rio São Paulo.
Negative Points
- Light vehicle traffic saw a slight reduction of 0.3%, with a notable 4.5% decrease in RioSP due to construction work and natural disasters.
- Personnel costs increased due to contract cancellations and higher provisions for PLR, impacting overall cost management.
- Third-party service costs rose, particularly in MSVia, due to pavement recovery obligations under the concession contract.
- Nonrecurring costs amounted to BRL217 million, primarily due to investments in ViaOeste being accounted for as expenses rather than CapEx.
- The company faces ongoing challenges in regulatory rebalancing and contract negotiations, such as the MSVia concession and urban mobility projects.
Q & A Highlights
Q: Can you provide an update on the strategic use of your airport assets and the focus on CapEx execution?
A: Our strategy for 2024 is to focus on executing our CapEx, particularly for the 15 airports in the central and south blocks, with a completion target by November 2024. We are also optimizing costs and enhancing top-line revenue through new services and VIP lounges. Our agenda includes preparing these assets for potential combinations to extract more value.
Q: What is the status of the MSVia process and the company's margin improvement plans?
A: The MSVia process is on track, with the contract running until March 2025. Negotiations have concluded, and we are awaiting internal approvals. Regarding margins, our efficiency plan includes various initiatives such as outsourcing, supply chain improvements, and closer cost control by platform CFOs. We aim to achieve a 38% OpEx to revenue ratio by 2026.
Q: Can you elaborate on the mobilization for Serra das Araras and your preparation for new bid tenders in São Paulo?
A: We have started construction on Serra das Araras after receiving environmental licenses, with a significant investment of BRL5 billion and an expected completion by 2028. For new bid tenders like Nova Raposo and Sorocabana, we are evaluating the projects and preparing to participate, leveraging our existing knowledge and assets.
Q: How does CCR plan to approach the upcoming federal and state bid tenders, and what is your perspective on competition?
A: We will be selective in our strategy, focusing on assets where we have a historical presence or significant interest, like ViaOeste and the State of Paraná. We expect double-digit profitability for new tenders and welcome healthy competition from various types of competitors, including traditional, international, and financial companies.
Q: What are the main levers for supplementary revenue growth, and do you have any specific goals?
A: We aim to increase the contribution of complementary revenue to over 10%, potentially doubling it. Key areas include retail, real estate, advertising, and cargo. These segments offer higher EBITDA margins, and we expect double-digit growth in complementary revenue over the next few years.
Q: How has traffic been performing this year, and what are the main drivers?
A: Traffic has been strong, with record levels in June for AutoBAn. Export commodities like cotton, sugar, coffee, and paper have significantly contributed to this growth. Despite lower agricultural harvests, the positive impact from sugar and new ethanol plants in Mato Grosso do Sul has offset the demand for grains.
Q: What is the status of ongoing rebalancing negotiations, particularly in urban mobility?
A: We have several ongoing rebalancing discussions. For example, Renovias may see rebalancing by October, Barcas is discussing the fifth 5-year plan, and Metrô Bahia has relevant claims. In Quito, we expect to extend the concession contract soon. This proactive regulatory agenda aims to capture all potential value from our concessions.
Q: Will CCR meet its CapEx guidance for 2024, and what factors could impact this?
A: We are on track with our physical execution, having completed 48% of the planned CapEx. However, there may be a delay in financial disbursements, particularly for airports and Southern Brazil due to environmental conditions. We expect some disbursements to slip into next year but remain aligned with our overall forecast.
Q: How is the company managing its CapEx balance considering the devaluation of the Brazilian real?
A: Our investment balance is around BRL29 billion, with most of it contracted. We are managing CapEx assertively, and the devaluation of the Brazilian real has not led to excess costs. We are focused on executing within the company's budget.
Q: What are the company's goals for efficiency improvements by 2026 and beyond?
A: We aim to achieve an OpEx to revenue ratio below 38% by 2026 and under 25% by 2035. These goals are based on benchmarking with 800 companies, placing us in the first quartile and top 10th percentile, respectively. We are committed to surpassing these targets and delivering consistent results.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
