Ladies and gentlemen, thank you for standing by. Welcome to Armac's video conference to discuss results regarding the first quarter of 2024. For those who need simultaneous translation, we have this tool available on the platform. To access, just click on the interpretation button through the globe icon at the bottom of the screen and choose your preferred language, Portuguese or English. For those listening to the video conference in English, there is an option to mute the original audio in Portuguese by clicking on Mute Original Audio. We would like to inform you that this video conference is being recorded and will be made available on the company's IR website, ri.armac.com.br, where the complete material of our earnings release is available. We would like to inform you that the participants attending the conference will be in listen-only mode during the company's presentation.
We will then open the question and answer session, when further instructions will then be provided. Before proceeding, we would like to clarify that any statements that may be made during this video conference regarding the company's business prospects, projections, operating and financial goals, constitute beliefs and premises of Armac's management, as well as information currently available to the company. Forward-looking statements are no guarantee of performance as they involve risks, uncertainties, and assumptions, and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operating factors could affect the company's future results and could lead to results that differ materially from those expressed in such forward-looking statements. Here with us, we have Mr. Fernando Aragão, Armac's CEO, Mr. Cássio Castardelli, Armac's CFO. Now, I would like to give the floor to Mr. Fernando Aragão, Armac's CEO.
You may proceed, sir.
Good morning. Thank you for taking part in the video conference of Armac. We are very proud to disclose the results of the first quarter of 2024, a period of hard work, where we managed to maintain a robust pace of work around 45% year-on-year in the rental EBITDA. With a strong cash generation in the period, the growth of 45% in EBITDA was accompanied by an increase of only 50% of our net debt. That contributed to our income for the quarter to double to a record of BRL 53 million for the quarter, and our leverage dropped to 2.13x the EBITDA of the last twelve months, against the 2.50x of the previous year.
This result is a result of the hard work of our team in several efficiency initiatives that were implemented in 2023, making us a more agile, more united, with a stronger culture focused on our clients. Our market continues to be heated with business opportunities in different sectors and a funnel, which is very robust. And trusting in the operational capacity of the company, we hired an investment of BRL 402 million in new machines and trucks, of which BRL 98 million have been delivered in the first quarter of the year, and the remaining will be received in the second quarter, and a small portion in the third quarter of 2024.
This investment was made in categories of assets where our competitive advantages are very strong, and through maintenance, we managed to balance a high return on capital to the company and lower rental price to the clients. This win-win situation with our clients has been, and will continue to be, the main driver of our growth in our business model. Another highlight for the quarter was the continuous maturity of our safety culture, and only three accidents of MTI occurred in the company at the Brazilian level, and it is a result that makes us very optimistic in the search for zero LTI. Lastly, I would like to thank you for the commitment, for the deliveries that our team has made and our partners of Armac. I would like to turn the floor to our financial president and our IRO, Mr.
Cássio Castardelli, for him to present the results for the quarter. Thank you very much. Good morning, everyone. We completed the first quarter of 2024 with important achievements and deliverables. Our fleet was... We exceeded 10,000 machines. CapEx of the first quarter was BRL 98 million. That have already been implemented and has been implemented by the clients. We hired other 304 additional CapEx, especially in Yellow Line. Gross revenue amounted to BRL 404 million, 42.9% higher than that of the first quarter of 2023, and the gross total revenue was BRL 430 million, 35% higher than to the first quarter of 2023.
EBITDA margin reached 43.46%, higher than the first quarter of 2023, and total EBITDA was BRL 178 million, 31.5% higher than 2023. Lastly, 102% higher than the income of the first quarter of 2023. Moving on to page 4, we present the evolution of the total fleet and numbers of units. 10,226 equipment, net of sales of machines, is usually small-sized equipment, and the CapEx was BRL 98 million. It's important to say that BRL 304 million that have already been committed refer to acquisitions for future deliveries, and we continue to grow our investments in the Yellow Line for several types of rentals, especially spot rentals. On page 5, we show the evolution of revenues.
Practically in line with the previous quarter, as well as in 2023, the first quarter was practically in line with the previous quarter in terms of revenue, but with a growth year against year, showing that we are on the right track in the execution of our business. On page 6, we show the EBITDA. We maintain the robust margins, reaching 46% in the quarter, and 48% in terms of rental EBITDA. This shows the allocation of different types of businesses, and we continue—we are going to continue with our efficiency. Some fluctuation may happen in terms of the current levels. On page 7, we show the net income that accompanied the positive variation of margin, and from the cash position, we continue with a strong conversion of EBITDA.
On page eight, we show the ROIC of 21.7, and the ROE of 17%, an improvement in relation to the previous quarter. Lastly, on page nine, we are going to discuss the debt profile. We ended the quarter at BRL 1,455, which accounts for 2.13% of net debt over EBITDA. We have a very comfortable cash position, and below, we show the amortization schedule, that after the fourth debenture issue, that... We had 1.9 in CDI rate and amortizations for 2030, 2031, and 2032. With this, I would like to end the quick presentation. I turn the call back to the operator. Thank you.
Now we're going to start the Q&A session.
We'd like to remind you that if you wish to ask a question, click on the Q&A in the lower part of your screen. Write your question so that you can be in the queue. After being announced, a request to activate your microphone will be shown on your screen, and then you can activate your microphone to ask a question. We ask all the questions to be made at once. Let's move on to our first question. It comes from Lucas Telles, Santander. Lucas, your line is open, so that you can ask your question. You may proceed, sir.
Good morning, Fernando, Cássio, Gabriel. Thank you for the opportunity of asking question. I have two questions on my side.
First, in the administration message, you said a volume of BRL 304 CapEx that has already been committed with the assemblers and other contracts already executed with the clients. I would like to understand the deadline for the implementation of those contracts, because the message was a bit ambiguous, because you mentioned this amount of CapEx, and you also say that one of the objectives is to have more CapEx than last year. So I understand that BRL 304 million for the CapEx do not refer only for the year, but only for the next quarters. So could you clarify on this? And also, in relation to my second question, related to the strategic objectives for the allocation of capital, I... you said you are going to take advantage of other opportunities. So what is the focus in terms of growth of the company?
What kind of a contract you want to execute? You mentioned about contract with more services that would increase the ROIC of the company. Are there opportunities of M&A that are being considered? Thank you.
Lucas, thank you very much for the questions you asked. In terms of CapEx, the BRL 304 million are related to purchases that have already been made, committed amounts with expectations of deliverables for the next two quarters. So this is not related to the remaining CapEx. So this relates to the committed CapEx. So we wanted to give you this visibility to reinforce the information that we continue growing. So this is not the guidance for the rest of the year. So it's for the next quarter and the other.
In the viewpoint of objectives, of growth, and other opportunities, just like last year, where we wanted to decrease the leverage and to be maintained at a very comfortable level, and this level would allow us for an acceleration of the CapEx and also other opportunities, but they are always focused on the core competencies of the company, which are deeply linked to Yellow Line. In terms of types of contracts, 2023 had a lot of growth in agreements that included the component of services, and those contracts demanded a lot of a CapEx. And with this first quarter, and also this committed CapEx, we now have a CapEx for those types of contracts, and part of those BRL 304 million have already been committed.
But we also realize the CapEx for spot machines, so we are also growing in this kind of contract, spot rentals.
Okay, perfect, Cássio. "Do you see any M&A opportunities, and which would be? What kind of companies would you consider, should you be interested in M&A?
" We always look for opportunities. Last year, when we were allocating capital and considering returns, we were focused on those opportunities that offered higher returns, and these were those were related to organic CapEx. So we may have some movements related to M&As, of course, but they will always be connected with the Yellow Line.
Thank you, Cássio. Perfect. Have a good day.
Our next question comes from Gabriel Rezende, sell-si de with Itaú BBA. Gabriel, we are going to open your mic. You may proceed, sir. Thank you. Good morning, Fernando, Cássio, Gabriel.
Two questions on our side.
The first question is about details about those agreements. When you include the equipment operator, we would like to understand what's the difference of those agreements, when we compare to the other contracts, well, where only maintenance is included. Are these segments that demand the contract with the operator of the machine? And do you take the risk of the productivity of the machine when you also hire the personnel? I mean, the output of the machine when the operator is also provided, is it an agreement of... Is it a responsibility of Armac or of the contracting company? You also mentioned the drop in the maintenance cost as a result of the company being able to explore the best alternatives to make the management of assets and components.
I would like to understand how perennial this can be, and do you see any possibility of lower levels in comparison to what you delivered in the quarter?
Hello, Gabriel. Good morning. Thank you very much for the questions. In relation to the agreements where we include services, I'm not going to provide details, operating details of our relationship with the client and what has been agreed, because these are contracts that are executed between the parts and with confidentiality. They are consistent, and the risk is very low, mostly speaking, and we provide a solution to the client and not only the piece of equipment. And oftentimes, the solution is not limited to offering operators. There is usually a chain of work and services that are required so that we can maintain a large number of equipment running at a site.
So this is, this is what I can disclose in terms of this type of contracting type. We also mentioned the scale related to the company. So we are the largest fleet company of Yellow lines in São Paulo. We have a 30-year know-how in the making, the maintenance of the company. This is the DNA of the company, and we have a team that has been built internally for years, and we are in a search for the best models, for purchasing models and, and parts. I'm not going to provide details about this, but we understand that the company is going to grow ever more competent in this kind of input. There are many opportunities that are still to be explored, and we continue in our journey to grow. I hope I answered your question.
Yes, you did, Fernando.
Thank you. Good morning, everyone. Yes, moving on. Our next question comes from André Ferreira, sell-si de , Bradesco BBI. We are going to open your audio so that you can proceed. André, your line is open.
Yes, thank you very much for this space. I would like to cover two topics. First, I would like to go back to the objectives of capital allocation that you mentioned in the release. You mentioned that you're going to increase investments, you're going to increase the distribution of dividends, and you also mentioned the leverage. I would like to clarify, when you say that you're going to increase the dividend payment? Are you going to increase the payout? And in terms of growth opportunities, what is the trade-off between dividends and acceleration of CapEx?
And the second point, if you could comment on the exposure, geographic exposure that you have, especially thinking about Rio Grande do Sul and the tragedy that has just occurred. Thank you.
Thank you for the questions. Yes, starting from the end, in relation to the south of Brazil and our operations, we have some operations in forest areas and also around some ports, and these sites have not been impacted from the material points. In terms of personnel, seven of our employees had physical damage, and the company is providing support for them to reconstruct their properties. In terms of the positioning of the company, for sure, there will be room and there need for us to contribute in terms of machines when the areas need to be recovered and cleaned. You know, all the cities impacted.
Could you repeat the first question, please?
I'm sorry. Yes, of course. Thinking about dividends.
Okay, okay, perfect. And from the viewpoint of the dividend payment. So we, we plan to have a gradual increases in dividends. It's not necessarily a trade-off when we should turn into a more dividend to a growth company. But what we meant was that the dividend is going to increase in terms of minimal nominal value associated with the cash cost.
Okay, thank you.
Thank you. Continuing, we received another question from Lucas Esteves, Santander, with Santander. You may proceed, sir. Lucas, you may proceed.
Once again, your main competitor acquired a forklift company, which is a similar movement you made some years ago. I would like to understand how you see this movement and how you can differentiate from the other competitors in terms of forklift segments.
How have you seen the competition? Have you been crossing those companies in terms of competition? If you could approach the competition topic, please.
Hi, Lucas. Thank you very much for the question. I think you made a statement. You mentioned who is the main competitor. I do not think that company is the main competitor. Our main segment of operation is Yellow Line. Aerial platform is an area where we have been divesting so that we are going to focus on the maintenance of yellow lines. As for forklifts, it's a very important, it's interesting segment for Armac, considering that some of our clients have cross demands for forklift and also yellow line. The profitability is very interesting as well.
How have we stood out in the last few months in this return, in this area, is by making partnerships with Chinese manufacturers. It's a category where Chinese has been, has been standing out because they have been very good at premium product, and the CapEx cost is much lower for a Chinese forklift. So this has been a growing demand by our clients, and this is something that the company has been looking at in terms of approach, not at the same speed as the Yellow Line, but at very interesting speed, where we are going to continue growing the segment and occupying the necessary space.
In terms of Yellow Line, we see that there has been an allocation of capital by other companies that are interested, also interested in the segment, and the entry barrier is not in the capital, because it's very easy to buy machine, provided you have the capital, and the manufacturers are interested in selling machines. So the barrier is where, the way we generate cash, how you operate so that you can retrofit the growth, especially in the world where we live, we live today with high interest rates. We know that if you need continuous equity in order to grow, this can be a difficulty for the company.
And since the entry barrier is not in the start of the cycle, but, rather in the sequence of the cycle, which is the capacity of generating cash with those assets, and that demands a structure for the maintenance and know-how, which is very high. So we understand that competition has not been affecting negatively our capacity to gain new businesses, and a long time, it's likely to reduce its operation, since some of the competitors do not have cash generation to serve the shareholders, share the asset, or serve the assets, and this is what Armac has been doing for a long time now. I hope I answered your question.
Thank you very much. I would also like to ask another question...
So great gain efficiency that you had in this quarter that also affected the margin of the company, was the 8% reduction related to maintenance input. I would like to understand if this reduction is like to last for the next quarters, and if you could provide more information about, how you managed to reach this efficiency in such a short time, or if it-- this is something that has been, has been done for a long time. How did you manage to gain efficiency in such a short time?
Lucas, part of this gain is likely to be recurrent. Of course, I'm not going to provide operating details when we manage, the manage and maintenance of our machines. And part of it is associated with the seasonality of, the cost.
Part of the equipment that is not used during this rainy season of the year. So this is something that is likely to drop, because the equipment is not being used. So there is a recurring share, seasonal share. However, the company has been growing a lot in its capacity to acquire the maintenance inputs at the lowest possible price and the smartest way possible, using all the data that it has accumulated in the past 10 years of growth, using all this to our favor.
Excellent. Thank you very much for the answers, and have a good day.
Thank you. Continuing, our next question comes from Felipe Nielsen, sell-side with Citi. You may proceed, sir. Your line is open. Good morning, Fernando, Cássio, Gabriel. I have a very quick question related to tax reform.
So if you could make some comments about the dynamics of the tax reform and how it affects the company?
Filipe, thank you for your question. We have an estimated effect, which is passed on along the chain, because our company has a B2B focus. From the viewpoint of absolute rate, of course, there is an increase, but there's also an increase in credit, which is proportional. We do not depend on, on any tax regime or any exclusive condition that would benefit the sector, that would not repeat. So the fiscal structure is very simple. And according to the information available about the tax reform so far, this is something which is going to be absorbed naturally by the credits and, by the tax dynamics that will remain.
We do not see any material change in the returns of the company as a result of the tax reform.
Thank you. Perfect.
Thank you. The video conference related to the first quarter of 2024 has come to an end. The IR team is available to answer any questions you might have. Thank you very much, and have a very good day.