Ladies and gentlemen, thank you for standing by. Welcome to Armac Locação conference call to discuss the results for the first quarter of 2022. We would like to inform that the participants attending the conference call will be in listen-only mode during the company's presentation. We will then open the Q&A session when further instructions will then be provided. Should you need any support during the conference call, please request assistance from an operator by typing star zero. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, projections, and operational 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 forward-looking statements. Now I would like to turn the floor over to Mr. Fernando Aragão, CEO of Armac. Please. You may proceed, sir.
Good morning, everyone. I would like to thank everyone who does business with us, suppliers, clients, investors, creditors, but especially the members of the team. In one year, we have multiplied size by five times, which is an extreme transformation of our level, and this is only possible from a strong culture and a group of people who take their responsibilities very seriously and have the humility to reinvent themselves constantly. A fivefold growth demands all this from all our team.
Our team, the culture that was created makes us confident that we're just in the beginning, and we are on a journey that will last a long time. In relation to the financial results of the first quarter, I'm very happy with what we achieved. Our EBITDA and income multiplied to three times in a year, which is quite incredible. Quarter-on-quarter, our growth pace was 82% a year. We ended the quarter with a very robust pipeline with projects that will be implemented in the months to come. That provides us confident for the business we are going to have this year. As to demand, even a very turbulent scenario, we are very sure of the resilience and the attraction of our services.
The sectors where we operate, still very heated considering the positioning of the commodities in the production chains in Brazil. The projects of the infrastructure contracted in the past two years are moving from paper to become works that will be projects. As a company, we are very proud of the role we play by supporting those types of projects. Lastly, I would like to reinforce that our horizon as shareholders and manager of Armac is in the long term. We are operating a market that only in the first quarter sold more than 10,000 machines, and we purchased only 673 machines and equipment. There is a lot of room to grow. This growth is not going to happen in a linear way, as if we were building a spreadsheet. This is not how we work in the industry.
We will accelerate growth multiple times, and this is why we have this objective that will not be of short term. The goals that we are going to maintain are client satisfaction and cash generation in the long term. I think these are the drivers for growth. With that, I turn the call to our Gabriel Lopes Ferreira, our IRO, to conduct the presentation.
Thank you, Fernando Aragão. Good morning, everyone. I'm going to talk about the main financial metrics of our results. We are going to start on page four. We ended the quarter with a fleet of 6,898 machines and equipment for rent, an addition of 673 assets since the beginning of the year.
For this acquisition, an investment of BRL 228 million for the quarter with an organic CapEx of BRL 76 million. This CapEx compares to the BRL 70 million that we made in the fourth quarter of 2021. Moving on to page four. Armac's gross revenue in the quarter was BRL 216 million, a growth of 16% when compared to the fourth quarter of 2021, and 278% when compared to the same quarter of last year. If we annualize this revenue, we would have an annual revenue of BRL 863 million.
When we analyze the composition of this revenue, we maintained a similar division to the previous quarter and in line with the company's long-term strategy, with 65% of revenues coming from sectors with long-standing activities such as food and beverage, fertilizers, mining, forestry. The remaining 35% from rentals for infrastructure. Now moving on to page six, where we analyze the company's gross profit and EBIT. In the upper left graph, you can see the gross profit reached BRL 85 million in the quarter, a growth of 10% against the previous quarter and 264% compared to the first quarter of 2021. As for EBIT, we reached BRL 60 million in the first quarter of 2022, an increase of 13% compared to the previous quarter. Both margins remained relatively constant, the gross margin around 46% and the EBIT margin around 32%.
Moving to page seven, we analyze the EBITDA and the operating cash flow for the quarter. Starting with the adjusted EBITDA, which excludes the results of the sales of assets, we reached BRL 88 million, a growth of 14% compared to the previous quarter and 223% compared to the same quarter of last year. If we analyze this result, we would have an annual EBITDA of BRL 351 million. Looking at the EBITDA margin after having experienced a reduction in Q4 2021 with the acquisition of Bauko, we started to show a small gain in the first quarter of 2022 of half percentage point, reaching 47.2%. The company's managerial operating cash flow was BRL 93 million in the quarter, representing 106% of the EBITDA in the same period.
Moving to page eight now, we have the net income and cash net income. In the first quarter, net income reached BRL 28 million, an increase of 8% when compared to the previous period and almost four times when compared to the BRL 7.7 million we realized in the first quarter of 2021. The net margin stood at 14.3%, showing a drop of 1.2% in the quarter, reflecting the increase in interest rate and the company's leverage. Cash net income reached BRL 53 million in the period, with a margin of 27% and a drop of 4.2% compared to the previous quarter for the same reasons as net income. On page nine, we discuss the company indebtedness.
We ended the quarter with a gross debt of BRL 1.807 billion, and a cash position of BRL 1.353 billion, resulting in a net debt of BRL 454 million. Considering this indebtedness and the EBITDA of the last twelve months, we reached a leverage of 1.77x. Moving on to the amortization schedule. The company's current cash is sufficient to meet its amortization commitments until 2026, which gives us peace of mind in executing the investments planned for the coming quarters without the need for additional funding. Concluding the indebtedness analysis. Despite the sequential increases in the Selic rate, we continue to show reductions in the average spread of our debt, having reached an average cost of CDI + 3.06% in the last quarter.
Moving on to the tenth and last slide of the presentation, we analyze the company's profitability metrics. Starting with ROIC, the result for the quarter was 27.5%, a reduction of 2.4 points in relation to the 29.8% of the previous quarter. This reduction is mainly the result of an increase in the stock of machines, which is natural considering the acceleration in the pace of investments and the expressiveness of CapEx in the last two quarters on the company's total asset base. Now ROE, we see a result of 17.8% in the quarter, practically with the fourth quarter of 2021. It's important to note that this metric is affected by two main factors.
First is the capital structure, which is still unleveraged due to the IPO that took place less than a year where we captured BRL 1 million. Second, by the excess of cash that we are carrying to carry to cover the investments to be made in the coming quarters. With that, we end the presentation of the results of the first quarter 2022. I would like to thank everyone for participating, and we will now start the Q&A session.
Thank you. We are now going to start the Q&A session. To ask a question, please press star one. To remove your question from the list, please press star two. Our first question comes from Lucas Marquiori with BTG Pactual.
Hello, Fernando. Hello, Gabriel. Good morning, everyone. Thank you very much for the call. There are two questions on my side.
I thought it was very interesting, the comment I saw in the release in relation to the conversion of the capital invested since the IPO and annualized revenues. We see the 6% as the dollar utilization of the company or even according to the machine. I would like to talk about the dollar utilization and how you see it. I know you are going to focus on return on capital employed and not so much on CapEx. In this return of capital in the value utilization, where does it stand today, let's say? Where is your main concern? At the use of the fleet? Is the mix that you have to make adjustment to the fleet or maybe the rental rate? I would like to know where your biggest concern lies. Where is your focus now?
The second question is, when I think about the cost inflation and everything that goes with it, and thinking of the price of the replacement parts, whose price has gone up probably. For new machines, we understand this cost has been adjusted. When we think about the legacy fleet, whose price was much lower than before, you have to have a higher maintenance cost for each piece of machine. How do you maintain this conversion of revenue per machine, considering that the prices of the parts have increased so much? Thank you.
Thank you, Lucas, for the questions.
In relation to your first question about our focus in terms of asset conversion into revenue, the biggest challenge we face now comes from something which is a differentiator of the company, which is the innovative strategy that we brought to the market, that we purchase machines without a stamp. We sit down with the manufacturers, and we use the capillarity and the power of our sales area. We make estimates for the long term with manufacturers so that they will deliver the equipment. I understand this is a very important comparative advantage. When you do that, all the machines that we are receiving, such as those we received in the first quarter, they were ordered in the middle of last year. You make a schedule according to the SKU.
We have about 150 different SKUs when you consider the category and the size of the machine. 150 SKUs make a demand projection considering the sale capacity of your team, and you receive the equipment from the manufacturers in a constant manner. Because we have this capacity to do this without sacrificing the return, and this is where the discounts lie. Companies want to have the same level of discounts that Armac has. They have to do this. We know this very well. We have some predictability of the SKUs that we are going to need along the year. There are some things that go unnoticed every quarter. When you look to long-term horizon, you see that the adjustments are made.
I understand that it's very important to have this discount. This first quarter we can see this effect where you received SKUs that are the ones that are more needed for the moment. Or maybe not, but these are the ones that you received. There's also a point of reserve where you have a long-term agreement to be implemented along the year, and you have important agreements to be implemented along the year. Sometimes you receive the items that you are going to need in February, but the contract is going to be implemented in August, for example. When you see the delivery schedule, you do not have the machine of that category until August. You will wait until the contract comes into effect.
I know we are going into detail, but there are many factors that are involved in our annual planning and that will bring impacts in a quarter, for example, on a quarterly basis. In the long run, it will make a lot of sense. This is where our focus lies. Of course, we want to maximize return. We do not want to make capital idle. We want to nail all our choices. Sometimes the predictability has to last eight years. This eight months, sorry, it's not how it works. We have some mismatch from one quarter to the other. This is just natural. This may impact the quarterly results considering the CapEx amount and our PP&E. If we had planned to grow 20% a year, we wouldn't have that.
We are investing to double the company. It's just natural that every quarter we are going to have those variations that are not of concern for us, even though we try to minimize them. In relation to your second question in terms of replacement parts, what is in our minds, we want to keep a good positioning, a good strategic way of looking at things. There was an important increase in prices, and we were not able to hold back because of the inflation and the prices of raw materials and the prices of the machines. We maintain the margins in two fronts. We do as much as we can in company, and we are very proud we do that. Because we are always trying to work on the margins.
We always try to recycle the components, to repair all the parts we have to pass on through in the prices. It's important when we see our comparative advantage in relation to the competitors. We have been able to maintain the margins and from our hard work. As I see it, we have a very important discount when we are compared to the competition in considering the prices that we see out there in the market. There's room for adjustment if necessary. I hope I answered your question, Lucas.
Yes. It was very clear, Fernando. Thank you very much.
Okay.
Our next question comes from Gabriel Rezende with Itaú.
Hello, everyone. Good morning. Thank you very much for the opportunity. I have two questions also. The first one is in relation to the changes in the board of the company.
I think you have already disclosed part of it in the results of the fourth quarter. You mentioned that making the team more robust was one of the intention of the company. Can we think of the structure of two co-CEOs as a definite way, or could we wait for new changes, other changes? The other, considering the recent history of two M&As, I would thank you if you could share if you have anything in mind, if you have anything specific for the future.
Thank you, Gabriel, for your questions. In relation to the changes, I would like to point out that these are part of a much broader context that we want to make the management more robust and more mature. We were a company whose invoice was BRL 100 million in 2021.
We multiplied by four. If we analyze the first quarter, we can see that it has already multiplied by two. These are accelerated growth that not many companies in complex operations such as ours have in terms of result. We see there's a lot of complexity with machines connected to clients. We see that in different areas of the company, we want to become more robust, to have an organization chart which is more mature, more robust, to get prepared for the next phase. We announced changes in the finance area, but there are other experienced professionals joining our team, other initiatives of corporate governance that we are seeking to implement, and this is one of the focus for this year. My brother and I are managing the company. José has the vision.
I bought into his vision. This is the vision Brazil needs. Brazil needs somebody who will break into those sectors, bringing in efficiency. He is with me 100%. We've been together forever, so we understood that it would make sense to materialize something that already happened in practice. Let's work together. We complement one another. We have been together for a long time. I see this as a big advantage for the company. We hadn't materialized this before in terms of organization chart, but as part of the structure getting mature, we felt the need of giving names to the positions.
I wouldn't expect any changes because 100% of us are working and focused on the objectives. I devote to the capital allocation decisions, and José is devoted to the building of teams and people and operational processes, and one would complement the other. This is a differentiator for the company advantage.
Okay, Fernando, thank you. The second question would be in relation to M&A, if you have any future M&A insight.
Sorry, I got lost in the first question. In relation to M&A, we keep on mapping out the possibilities that are potential out there. As I said, it's we are in a moment when we want to make the processes, the management more robust and more mature. We learned a lot from the M&As we made.
We have already managed to write a manual of integration and practices of what would be our purposes, our objectives, so that in the medium and long term, we would understand that the opportunities will come naturally. In the short term, we're if we consider an M&A, we would have some conflicts, which, because the company is focused on robustness.
Okay. It's very clear, Fernando. Thank you very much.
Our next question comes from Lucas Barbosa with Santander.
Hello, Fernando, Gabriel. Thank you for the opportunity. I have two questions. The first in relation to the fleet productivity. We estimate the productivity dropped from 76 to 63 in this quarter. I would like you to explain this drop.
Maybe you started using new machines or because this is a regular trend because of the period of the year, and then I'll ask the second question. Thank you.
Okay, Lucas. Good morning. The productivity has to do with the first answer I gave, which was related to annual agreements with the manufacturers, where you project, considering the 150 SKUs, which are the ones you're going to need every month. Of course, every quarter you may have some mismatch that would suggest a smaller occupation. Some machines, it may even be reserved. But if you consider the size of the CapEx and the PPE that we have today on a quarterly basis, you are going to see that in the short term, we are going to have impacts. That's why we increased the prices, and we saw the occupation reacted well.
It's not related to market, but the occupancy. We are talking machines that generated important revenues, and all those factors would generate an impact. As far as I understand, 63% is very relevant. I'm not very concerned about this topic because the levels we are being able to maintain are very significant considering the market performance. In spite of those specific difficulties that we may face, it's not something that would concern us today.
Okay. It's very clear. Will you allow me the second question? Could you tell us about the developments that you expect to have until the end of the year in terms of machine repairs? I think that considering the other players, this is going to be even larger in a comparison basis.
Could you tell us about the scale that you intend to reach up to the end of the year, considering processes and new parts?
Yeah, I believe you can verticalize this quite a lot. Considering that this is a very strategic question and has a lot to do with our operations, we see that you have a lot of interest. So it involves a lot of the competition. What I can say is that we have the expansion CapEx. We have a repair shop which is very large, and there is an agenda of standardization, implementation of processes and management methods that did not exist before. I believe that the productivity is going to increase along with these management methods and also the growth of structure, the implementation of best practices as well.
In general terms, we are improving overall. We are gaining productivity, and I believe that this is already a comparative advantage which is very important, and it will become even bigger. This is why we see that the competitive environment is still favorable because purchasing yellow equipment and rent it to Brazil is not a matter of capital, but rather of intelligence, the intelligence that we developed in our company. I think this is it.
Perfect, Fernando. Thank you. Have a good day, everyone.
Our next question comes from the webcast platform from Pedro of Eleven.
Congratulations on the results. I would like to understand the main objective of the share buyback. It's going because of the stock option or because of the drop in the quotes.
Hi, Pedro. Thank you very much for the question.
The purpose of the program is to handle or to address the grants of stock options that the company will have during the execution of the medium and long-term business plan. We know that there will be important grants along the timeline and for the company, the current price levels. To ensure those shares to assign them to the officers makes a lot of sense for us. If there are no further questions, we now close the Q&A session and the Armac conference call. We would like to thank everyone's participation and have a good day.