Good morning, welcome to EcoRodovias' fourth quarter of 2022 earnings conference call. With us here today are Marcello Guidotti, CEO, and Andrea Fernandes, Director of Corporate Finance. This presentation is being recorded and all participants will be in listen-only mode during the presentation. We will begin the question and answer session for analysts and investors only, when further instructions will be provided. Should you need assistance during the call, please press Star Zero to reach the operator. The audio and the slides of this conference call are being broadcast simultaneously at ri.ecorodovias.com.br, where you will find the presentation for download from the webcast platform in the investor information section.
Before proceeding, we would like to clarify that the forward-looking statements that may be made during this conference call relating to EcoRodovias' business prospects, projections, and operational and financial targets are based on management's beliefs and assumptions, as well as on currently available information. They involve risks, uncertainties, and assumptions as they refer to future events and hence depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operating factors may affect the future performance of EcoRodovias and lead to results that differ materially from those expressed in such forward-looking statements. I will now turn the floor over to Ms. Andrea Fernandes, who will discuss the fourth quarter of 2022's results. Ms. Andrea, you may proceed.
Good morning. Welcome to Grupo EcoRodovias' earning conference call to discuss the earnings of the fourth quarter of 2022.
We thank you all for your interest and participation. On slide three, we highlight EcoRodovias' main accomplishments in the fourth quarter. In October, Ecovias do Araguaia began collection at the three toll plazas. In November, tariff adjustment was implemented at Ecosul with an increase of 23.57%, and in December, toll tariff adjustments were implemented at Ecovias dos Imigrantes and Ecopistas, increasing 11.7%. In addition, I'd like to highlight the beginning of toll collection at Ecovias Minas at the Viúva Graça Plazas on Highway Presidente Dutra, which represent approximately 32% of the estimated toll revenue for the concessionaire. Considering these plazas and the others that began collection in September 2022, toll revenue already represents approximately 66% of the concession's estimated toll revenue.
On slide five, we show our operations performance with consolidated traffic up 8.9% in the fourth quarter of 2022, due mostly to the beginning of toll collection at Ecovias Minas and Ecovias do Araguaia. In 2022, consolidated traffic was down 2.1% due to the termination of concession contracts at Ecocataratas and Ecovia Caminho do Mar in November of 2021. Comparable traffic was up 1.3% in the quarter and 4.7% in the year of 2022 due to the performance of soy and corn exports, industrial recovery, and flexibilization of the social distancing rules to fight COVID and the progress in vaccination programs. On slide six, we see the evolution of revenue. Adjusted gross revenue reached BRL 1.3 billion in the fourth quarter of 2022, a 30% increase.
The highlight is the revenue from the beginning of toll collection at Ecovias Minas and Ecovias do Araguaia in September and October of 2022 respectively, amounting to BRL 181 million and 13.5% share in the quarter's adjusted gross revenue. Comparable gross revenue was up 27% in the fourth quarter due to traffic increase, toll tariff adjustments, and the increase of operations at Ecoporto and Ecopátio. On slide seven, we highlight the 17.1% increase on comparable gross revenue in 2022. On slide eight, we see our digital transformation initiatives. We highlight the partnership to expand 4G internet coverage throughout the 850 km of Ecovias do Araguaia.
Ecovias do Cerrado and Ecovias do Araguaia have innovated in charging for suspended axles on non-empty trucks via integration with MDF-e digital documentation in partnership with the Secretary of Finance and ANTT, an important initiative to increase revenue at the concessionaires. We also point to customer service provided on WhatsApp and the SOS Navegue Grátis website. Users may obtain information about traffic conditions, request mechanical and medical emergency services, among others. The website, SOS Navegue Grátis, available at Ecovias dos Imigrantes and Ecopistas, allows for emergency calls without consuming users' internet and data packages. On the right, we see toll collection through AVI, self-service and digital payment methods amounting to 73.4% of total revenue in the fourth quarter of 2022, an increase of 6.4 percentage points compared to the fourth quarter of 2021.
On slide nine, comparable net revenue was up 18.2% in the quarter due to traffic increase, toll tariff adjustments, and increase of operations at Ecoporto and Ecopátio. Adjusted cash costs grew 6.8% in the fourth quarter due to the increase in personnel costs with the collective bargaining agreement, provision for profit sharing, and provision for severance pay due to the termination of the Ecoporto lease agreement in June 2023. We note that adjusted cash costs at highway concessions were down 3.5% in the quarter. On slide 10, we see the evolution of EBITDA. Adjusted EBITDA reached BRL 809 million in the fourth quarter of 2022, and BRL 2.3 billion in the year of 2022.
The contributions of Ecovias Minas and Ecovias do Araguaia amounted to 118 million BRL, reaching a 14.5% share on the quarter's adjusted EBITDA. Comparable EBITDA was up 42.0% in the fourth quarter due to traffic increase, toll tariff adjustments, and increase of operations at Ecoporto and Ecopátio. On slide 11, comparable EBITDA reached 2.2 billion BRL in 2022, an increase of 19.6% vis-à-vis 2021. On slide 12, we highlight the increase on recurring net income, mostly due to the increase on adjusted EBITDA and the results of the new concessions.
On slide 13, a reduction on recurring net income in 2022 is mostly due to the decrease on adjusted EBITDA, due to the termination of concession agreements at Ecocataratas and Ecovia Caminho do Mar in November of 2021, as well as the increase on financial expenses. On slide 15, we highlight the investment of BRL 853 million made in the fourth quarter, and BRL 3.1 in the year 2022, demonstrating our capacity to perform the works of the company's growth cycle, as well as our commitment with the maintenance of our highways. In 2022, the investments earmarked for highway concessions amounted to BRL 2.9 million, and approximately 70% of funds were for the concessions won at auctions carried out over the last five years.
The highlights include the delivery of nine toll plazas, 19 operational bases, and pavement restoration works at Ecovias do Araguaia to meet the highway's required parameters, and the start of toll collection on October 3, 2022. On slide 16, we ended the quarter with a leverage of 4.3x, down 0.3x compared to the third quarter of 2022. This reduction is mostly due to the increase on adjusted EBITDA in the period with the start of operations at two new concessions. EcoRodovias Concessões e Serviços leverage ended the quarter at 3.9x, down 0.3x compared to the previous quarter.
On slide 17, we closed the quarter with cash balance of BRL 1.6 billion and maturities of BRL 937 million in the first half of 2023, and BRL 1.3 billion in the second half of 2023. The maturities in the first half are at the early stages of conclusion. The maturities that exceed the cash balance shall be equated through refinancing and the cash generation expected for the period. On slide 19, we present the main highlights of our ESG agenda. Ecovias was maintained at B3's Corporate Sustainability Index, ISE, and Carbon Efficient Index. Our federal concessions were included in the ANTT's Environmental Performance Index. State concessions, Ecovias dos Imigrantes and Ecopistas received an award in the sustainability category at the Concessionaire of the Year Award given by the São Paulo State Transportation Agency.
EcoRodovias ranked second at the GRI Infra Awards for the solar power project at Eco135, and Ecoponte achieved ISO 50001 certification. More details on our ESG agenda are available on our earnings release. We close this conference call stressing that the execution of EcoRodovias' growth strategy between 2018 and 2022 was a winner. We won five highway concessions through state and federal auctions, two of them in 2022. We acquired the concession in the secondary market, all of which have contributed to increase the duration of our portfolio to more than 20 years. We are now focused on the consolidation of the portfolio and on making the investments planned for the coming years, on improving corporate and operational efficiency, and on developing innovation to maximize the creation of value to our stakeholders.
The company will remain watchful, albeit more selective, of new growth opportunities, given that the agenda for new auctions is promising in the medium and long terms in Brazil. This concludes our presentation. We would like now to move to the questions and answers session. Operator, we are ready for the questions from our analysts and investors. Thank you.
Thank you. We will now begin the question and answer session for investors and analysts. If you have a question, please press Star One on your telephone. If your question is answered during the session, you may remove it from the line by pressing the Star Two key. Questions will be answered in the order they are received. We ask that you use the handset when asking your question in order to maintain excellent sound quality. Please stand by while we collect the questions. First question, Henrique Simões, Credit Suisse.
Good morning. Congratulations on the results, and thank you for taking my questions. First, if you can talk about this innovation for the collection of the suspended axle on non-empty trucks. I'd like to understand what it is and how what the effects it causes. Second, about margin at Araguaia. It's similar to what we had, but what's the margin we should expect for the future in this concession? The ceiling of 10% of volume that comes this year from the government, should it have any impact based on what was projected? Thank you.
Henrique, good morning. Thank you for your question. About the collection that we called MGF, it's an electronic system connected with the Federal Revenue Service that detects trucks that raise their axles, even if they are loaded. The legislation in place determines that they must pay for that suspended axle. With this mechanism, when the truck comes in, it is detected, and the collection is made. Even if they raise or suspended one axle or two, they will be charged in full. This represents almost 4% of the revenue. It's an innovation advanced on Eco050 and now on Araguaia. It's also going to be done in Rio-Minas and all concessions. The legislation is very clear. About Araguaia, this margin, you're correct. We need to make the adjustment. It's not on traffic, but it's on revenue. Revenue minus the concession fee of 10%, it's a smaller difference.
The estimated margin for Araguaia for 2026 or 2027, that's the first year without this mechanism, is estimated to be at 70%. Today we're at 77%, close to 78%. Of course, throughout 2023 we will make this accounting. We don't have the exact number, but it will affect the margin. This is expected as per the concession agreement. It's on revenue, not the axles. It's the calculation of the axles will give a higher amount, but the amount to be discounted throughout the year will be smaller. When we look at 2027, that will be the first year full. We are at a margin at 77% today. MDEF will also contribute to that. Thank you.
Great, Guidotti. Very clear. Thank you.
Our next question, Julia Orsi, J.P. Morgan.
Good morning. Congratulations on the results. We have two questions. Thinking about EBITDA margins, there was an impact of the burnouts that increased the EBITDA margins for this quarter. From now on, is this margin level sustainable? The second question is about the project pipeline. If you can talk about the projects that you're looking at and what would make sense for EcoRodovias to participate. Thank you.
Julia, good morning. Thank you. About the EBITDA margin, yes, I'd say it is sustainable. It's the margin. It was as, the quarter was in line, so I believe it is sustainable. We don't see reason for this margin not to be sustainable. As Andrea said, we're making progress in the digitalization efficiency, so it's very clear that the use of technology is being massive, and we're really moving with it. It is sustainable.
About the pipeline, as Andrea said, the agenda we look at is for the medium to the long term. We're mapping the opportunities. We know that there's a program in Paraná. The federal level is more advanced, although there have been some discussions now regarding the model for concession and discounts, concession fees. We don't have a clear visibility of when the government will be able to put it up for auction. We studied Paraná's program. In São Paulo, there's the Litoral Paulista, the coastline, that may be an interesting asset, that it makes right next to our Ecovias dos Imigrantes. Overall, we don't know whether there will be good opportunities. We know there will be good opportunities in 2024, 2025, 2026 in federal concessions that are to come. Ecovias will certainly be very cautious.
We're only going to enter on projects that guarantee an adequate return rate that is attractive and with a CapEx profile and a cash profile that are sustainable. We are in no hurry. We're not going to accelerate our pace. We already have our challenges. We're starting to deliver results, and we're in no hurry. We understand the window of opportunities will continue in 2023, 2024, 2025, 2026, and we know we'll be very rigorous in our choice. Thank you, Julia.
Thank you.
Next question, Alberto Valerio, UBS.
Thank you, Andrea, Guidotti, for taking my question. I'd like to look into more details about the new projects, if you can tell us. We saw the discussion in Paraná. It seems the state government wants to maintain the regulation as it was in the past.
If you want to give tariff discounts and deposit a guarantee ahead of time, as we had in the last four or five years. The Federal Government wants to go back to a methodology that is closer to the past to remove the concession fee and give all the discounts and the tariff. I'd like to know your opinion about the two methodologies, if you have any preference, and if you see the possibility of BNDES to come stronger again back to infrastructure in Brazil this year? Thank you, congratulations on the results.
Alberto, thank you. I'll start with your second question. We were recently at BNDES to begin the discussion of the funding for Ecovias Minas, Rio Valadares, and the OS and the total interest and willingness.
We're lucky to have a lot of time to structure these two very important financings, because they're both planned for 2025. BNDES is already active and ready to begin discussions. I'd say we left the meeting at BNDES happy and pleased that BNDES will certainly continue to support infrastructure. The Parana model, it's what you said. There are news, but for us, what makes sense is the return rate. I said, return rate needs to be adequate. Return rate is the profile of the project, of course. It doesn't make sense to have BRL billions of CapEx. We are going to look into the projects with these metrics in mind. The discussion may develop, may occur, but there's no problem.
We'll wait for the model to be chosen, then we'll assess whether or not it makes sense, if there will be proper return, if the risk to return is adequate, and the profile for the financial pressure and the investments, if it's also adequate. What we have to do is wait.
Thank you, Guidotti. If I may add a follow-up about the inflation of costs. We had a strong inflation process in 2021, 2022, now it seems to be giving us some relief. What can we expect for 2023, 2024, especially in the new projects, Rio Valadares and Noroeste Paulista?
We expect a return of prices, especially of asphalt and the inputs and diesel, to the second half of 2025. What we're looking at now, the prices of these inputs are quickly going back to the inflation level.
We believe that still in 2023 it will improve. In our forecasts, the news are positive. We're going to see a deflation. Our expectation for these years in these two assets. It took some time to come, there's the parametric formats of adjustment of construction contracts. There's other metrics, not only materials, we expect that these parameters will also be in line with inflation in 2023 very quickly. From this point of view, we have good news.
Great. Thank you, Guidotti.
Next question, Victor Mizusaki, Bradesco BBI.
Good morning. Congratulations on the results. I have two questions. The first, we saw an improvement or a reduction in the company's leverage now in the fourth quarter. My first question is, what we should expect for 2023, 2024 if the leverage may decrease a little further?
The second question related to Henrique's first question about the collection for the suspended axle. Does it make sense for us to consider for the concessions that don't have the system yet, that we could consider another 4% increase in traffic, and that would have a positive impact in revenue and directly on EBITDA? In the new concessions, if there are more plazas to enter operation in 2023, 2024. Thank you.
Victor, good morning. About leverage. It reached what we believed would be and will probably be our new level, practically regulated by cash generation. Maybe it's a little better than we forecast, but I'd say that this is the level of indebtedness for the next few years until 2027, 2028. We'll continue on the others at 4.5x because in addition to cash generation, we have to make the investments.
It's coming a little bit better. The operational performances are improving. We may even be surprised positively in this sense. I would say that this is a stable level and that it is being maintained. It is going according to our forecast. We're at a position of still high interest rates. The inflation hasn't given completely. I believe we're relatively comfortable. About the new toll plazas, the new concessions, we are still going to have toll plazas at Rio Minas. Rio Minas today has toll plazas representing 60% of its full revenue. Throughout 2023, we'll conclude all the toll plazas. In 2024, Rio Minas will be 100% collected, another 30% revenue in 2024. In 2023, actually, I forgot. In 2023, we will have the entry of toll plazas at Noroeste.
Noroeste comes in full, in 2024, the 30% more in Rio-Minas. We also have increase of plazas in 2023 and 2024. Araguaia, all of them have entered in 2022.
Guidotti, does it make sense with this new technology for the collection of suspended axle? I'm sorry, I forgot. Yes, there was an increase of 4%. Does it make sense to consider the same proportion for the others?
Those 4% was the number of a concession with a high traffic of heavy vehicles, okay? Araguaia has heavy vehicles. There's a certain type of cargo that is industrial. It's not always like that. Again, Noroeste as well, the levels at Noroeste may be between 3% and 4%, Cerrado and Zero Fifty as well.
Of course, a highway that has a higher flow of light vehicles or smaller trucks, for example, Ecopistas or Ecovias, maybe it won't be such a big difference. It is a very positive solution, not only for revenue, but also for the wear and tear of pavement and operational safety and so on.
Excellent. Thank you, Guidotti.
Next question, Felipe Nielsen, Citi. Good morning.
Thank you for taking my questions. Congratulations on the results. I have a doubt. First, about CapEx. I'd like to understand how you expect. I saw that you have more than BRL 19 billion of contractual CapEx. I'd like to understand how much of that would be for this year and how you see this distribution, whether you have a margin to delay some of this CapEx considering the scenario of high interest rates and so on.
The second question is about the Porto, the Port in Santos. I'd like to understand whether it's still a core asset in your business or if it Maybe make sense to make a type of partnership or sell part of this operation to be able to raise funds for other businesses or new concessions and so on. If you could give us some color.
Filipe, I'll start on the second question about Ecoporto. Ecoporto, the concession expires on June 23, so it's coming up soon. We close Ecoporto's operations. Of course, we have discussions in rebidding or the renewal. For now, we're considering not necessarily a concession scenario. We have credit recognized more than BRL 300 million that will have to be paid.
We also have to digitize a lawsuit about past unbalancing in different areas in deliveries at Ecoporto. For us, Ecoporto is not core. It's a concession that already has its regular path to follow. We also keep track of the discussions being made about the port and capacity, new auctions. Of course, we are keeping track of all that. About CapEx. This CapEx there, BRL 19 billion, are current assets. Of course, we still have to include Northwest and Rio Minas. Contractual CapEx, of course, is a CapEx that we can manage throughout the year. There's landmarks of deliveries. We've always been doing that. There's some flexibility. These are the contractual obligations that add capacity and end up increasing traffic. We always need to do this math so that it's as effective as possible and generate value to the business. Thank you, Filipe.
Excellent. Very clear.
Thank you. Next question, Gabriel Rezende, Itaú BBA.
Hello, Guidotti, Andrea. Congratulations on the performance this last quarter. I'd like a quick follow-up on this previous question about Ecoporto. It's clear, Gida, Guidotti, that there's still pending topics. You have more than BRL 300 million that have been confirmed. From what I understood, the funding for that would come from the STS10 auction and another BRL 700 million related to a dispute that's already being arbitrated relating to Ecoporto. If you can give us a little bit more color how we should think about Ecoporto, a contract exception for a few months, maybe a year, considering that the rebalancing of the BRL 300 million may be delayed. Maybe we should only remove this asset from the model or extend the asset for a longer period until the government does get the funding to rebalance EcoRodovias.
Talking about rebalancing, there's a discussion at Ecopistas that is relevant as well. BRL 1 billion at Ecoporto and another BRL 500 million at Ecopistas. I believe the market's not really watching this closely, if you can talk about the progress made in the discussions at Ecopistas, considering it would be very relevant for you, this NPV level.
Gabriel, about Ecoporto, the credit that we have to receive is solid and recognized and must be paid. SPI has the money to pay this liability. We expect to receive it, but it's precisely whether it's going to be through a new bidder paying for the concession fee or the payment of the concession authority, we need to find out. It doesn't make a difference for us. We must receive this money. This is agreed at all levels that this is recognized.
It has already been recognized, it must be paid. The timing of when, if in 2023 or 2024 at the time of rebidding, we are still discussing and waiting for definition, but it is recognized. About the other liabilities, we have not succeeded on arbitration, so we need to visualize that open lawsuits that are running. The values are very significant. We will wait for justice to run its course. We're optimistic that we'll be able to achieve a positive result. The values are important. This is already ongoing. It's no longer in the concession agreement level. It's not going to interfere on the rebidding. It's a judicial issue. About Ecopistas, we also have an important credit recognized and quantified, and we intend in 2023 to sign the contract amendments that definitively rebalances these unbalancing.
We are making progress in the discussion to finally achieve the balancing, put an end, because this credit has been running at a very high adjustment rate and inflation of 10%. It makes a lot of sense both for us and for the government to put an end to it. Otherwise, it's going to be a very high bill if we leave it and let it go. These are the three credits that we have. You're reminded as well in the Ecoporto, the final one to be received. Ecopistas will be paid this year. There's the judicialization of the areas that may be a little bit longer, but we're optimistic. Thank you.
Great, Guidotti. Thank you.
If there are no further questions, I will turn the floor to Ms. Andrea Fernandes for her final considerations.
I would like to thank you all for your participation. My team and I will remain available for any questions you may have. Thank you. Have a great weekend. EcoRodovias' conference call is closed. We thank you all for your participation. Have a great day.