Good morning, and welcome to EcoRodovias' Q1 of 2023's earnings conference call. With us here today are Marcelo 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. After that, we will begin the question and answer session for analysts and investors only. 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 investors 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 the 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 Q1 of 2023's earnings results. Ms. Andrea, you may proceed.
Good morning. Welcome to Grupo EcoRodovias' earnings conference call to discuss the earnings of the Q1 of 2023.
We thank you all for your interest and participation. On slide three, we would like to highlight that in March of 2023, EcoRioMinas started toll collection at the Via da Graça plazas, which represent approximately 32% of the estimated toll revenue for the concessionaire, and combined with the plazas that began collection in September of 2022, represent around 66%. In May 2023, we started operation and toll collection at EcoNoroeste at the stretch previously operated by AB Triângulo do Sol, and toll revenue accounts for approximately 80% of the total toll revenue estimated for the concessionaire. The start of operation and toll collection at the stretch currently operated by TEBE is slated for March 2025.
We also point that we successfully concluded funding at Ecovias dos Imigrantes, Ecopistas, and EcoNoroeste in the total amount of BRL 3.5 billion. On slide five, we see our operational performance. Consolidated traffic grew 21.6% in the Q1 of 2023, due mostly to the start of toll collection at EcoRioMinas and Ecovias do Araguaia. Comparable traffic posted a 4% increase in the quarter due to the performance of soy and corn exports, increase in industrial production, easing of social distancing rules, and favorable weather conditions. We highlight the increase of 8.2% in light vehicle traffic. On slide six, we see the evolution of revenue. Adjusted gross revenue reached BRL 1.3 billion in the Q1 of 2023, a 42.4% increase.
Comparable gross revenue was up 20.1% due to the increase in traffic mentioned on the previous slide. Toll tariff adjustments of 14.1%. On slide seven, we see our digital transformation initiatives. Note that the company will soon start toll collection through self-service and digital payment methods for heavy vehicles. This initiative reduces operating and financial costs and increases the company's efficiency. In addition, after two years of robust study and testing, we implemented a new CapEx and OpEx contract management system, driving data management and increasing the efficiency of internal processes. This system enables a more accurate management of the company's investments. On the right, we see toll collection through AVI, self-service and digital payment methods amounting to 74.8% of toll revenue in the Q1 of 2023.
Up 5.1 percentage points compared to the Q1 of 2022. On slide eight, adjusted net revenue was up 46.8% in the quarter, driven by the revenue from the start of toll collection at EcoRioMinas and Ecovias do Araguaia, amounting to BRL 188 million and a 17% share of adjusted net revenue in the quarter. The variable net revenue increased 22.3%.
Adjusted cash costs, excluding the start of toll collection at EcoRioMinas and Ecovias do Araguaia, increased 9.5% in the Q1, mainly due to the increase in personnel expenses with the wage adjustments driven by the collective bargaining agreement, insurance, concession fees, and leasing costs due to the increase in variable concessions at Ecovias dos Imigrantes, Ecopistas and Ecosul, caused by the growth in toll revenue and others resulting from the provision for administrative fines at Eco101. Net of this provision, the increase was of 6.3%. Note that adjusted cash costs of highway concessions increased 3.4% in the quarter, below the inflation rate of 4.7% in the period. On slide nine, we see the evolution of EBITDA.
Adjusted EBITDA reached BRL 804.6 million in the Q1 of 2023, up 69.1% and margin of 71.2%. The contributions of EcoRio Minas and Ecovias do Araguaia amounted to BRL 131.7 million, reaching a 16% share of the quarter's adjusted EBITDA. Comparable EBITDA increased 36.3% in the Q1 of 2023, with margin at 71.5% due to traffic increase and toll tariff adjustments. On slide 10, we highlight the increase of net income, mostly due to the increase in adjusted EBITDA and earnings of the new concessions. We ended the quarter with net income of BRL 113 million compared to BRL 11.8 million in the Q1 of 2022.
On slide 12, we highlight the investment of BRL 611 million made in the Q1 , demonstrating our capacity to execute and deliver the company's growth cycle works, as well as our commitment with the maintenance of our highways. Investments were mainly for the implementation of toll plazas, operational phases, and for special pavement conservation works at EcoRioMinas, road widening and pavement conservation at Eco135 and Eco101, and frontage roads, improvements at intersections and access roads, and special pavement conservation works at Ecovias do Cerrado. On slide 13, we ended the quarter with consolidated leverage of 3.9x , down 0.4x compared to the Q4 of 2022. This reduction is mostly due to the increase in adjusted EBITDA with the start of operations at the two new concessions.
Leverage at EcoRodovias Concessões e Serviços ended the quarter at 3.6x, down 0.3 compared to the previous quarter. On slide 14, we closed the quarter with cash balance of BRL 2.2 billion and maturities of BRL 881 million in 2Q 2023, and BRL 1.2 billion in 3Q 2023. The maturities that exceed cash balance shall be equated through the debentures already issued, additional funding, and the cash generation expected for the period. On slide 16, we present the main highlights of our ESG agenda. Yesterday, we published the 2022 integrated report disclosing environmental, social, and governance indicators, as well as the main events and achievements for the year.
For the report's content, we reviewed the group's materiality matrix using the dual materiality methodology for the first time, which considers the impact of sustainability on the long-term financial performance of the company, as well as on its external stakeholders. More details on our ESG agenda are available in our earnings release and on the integrated report. We close this conference call stressing that the execution of EcoRodovias' growth strategy has been successful, and the new assets have increased the duration of the portfolio for more than 20 years. Ecovias do Araguaia and EcoRioMinas are already delivering sound results and have contributed to reduced leverage. 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 to move on to the question and answer 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 keys. The questions will be answered in the order they are received. We ask that you use the handset when asking the question in order to maintain excellent sound quality. Please stand by while we collect the questions. First question, Alberto Valerio with UBS.
Good morning, Andrea and EcoRodovias team. Thank you for taking my question, and congratulations on the earnings. I have three here on our side. First, about the cash gap that we see for 2023. We saw that you had dismissals at Ecopistas, EcoNoroeste, and Imigrantes as noted in the Q3 now for March and April. In our math, there's still a little bit left. How comfortable are you towards the end of the year? It seems much more comfortable than two months ago. If you have an estimate of what this cash gap would be? The second about the margin at Araguaia. We see a high margin at this concession. We wanted to understand if there's anything different and if this margin will remain looking forward. Finally, about revenue at Ecosul, if you can give us more details about this. Thank you.
Good morning, Alberto. This is Marcelo. About the cash gap for 2023, I think it is addressed pretty much. We're working on an issue that is expected at Eco135. That's still part of the project's finance, the long-term CapEx. It's going well. Ecosul there's a small rollout. We have deals, we're already closing operations and we're also working at the issue that will not be very high for EcoRodovias Concessões e Serviços that will conclude the year's operations. It's not high. I think everything is addressed. I hope that the worst is also behind us. For us in the market, it's being concluded. About the margin at Araguaia, yes, that's it. Araguaia's contract for the first five years has a measurement of a traffic level and of revenue that is limited by ranges.
We're monitoring them, probably this year we won't have to do any adjustments. We monitor it for the coming years. If there must be some revenue adjustment, in this case, the margin will be corrected. We don't expect events, if it does come to be, it won't be expressive. About Ecosul, it's a recognized revenue to be applied. The application's been suspended. We're recognizing this difference of the tariff. This brings this additional revenue at Ecosul, will be equated in the tariff throughout this year, it will come back as a revenue. It's a non-cash revenue for this time, completely accepted, recognized, that's why it's being accounted.
Thank you very much, Guidotti.
Next question, Rogerio Araujo, Bank of America.
Guidotti, Andrea, thank you for this opportunity. I have two questions.
One is the follow-up from what Alberto asked about the new issues. I'd like to understand the cost of this most recent issue and whether the fact that the holding is more leveraged, if this somehow influences the negotiation of the cost of debt. The second question, if you could give us some color about the main assumptions for the new assets, EcoRioMinas and Ecovias do Araguaia, compared to what you had at the time of the auction in terms of traffic, OpEx, CapEx. For us to understand the upside and downside compared to what you expected, what you anticipated. Thank you.
Rogerio, good morning. About the costs, we released a notice to the market on April 13, and all the details of the costs are there. It's CDI plus 2 at Ecovias dos Imigrantes, CDI plus 2.5 at Noroeste.
Ecopistas is IPCA plus 7.75. The communicate from April has all the details, the notice to the market. We're at these levels for the coming issues as well. Of course, our challenge, and we're meeting with the operation at Ecopistas on that, we're trying to move the debts of these projects, increase them at the projects through operations at EcoSul. For example, we're issuing and distributing dividends now so that the debt at the holding EcoConcessões grows less. We're achieving that slowly. We're getting there, and this starts creating more efficiency in coming years. We've raised funds of the projects at the units and reduced the allocation at EcoConcessões from EcoConcessões. It's not immediate results overnight, but we are doing that and tax efficiency itself will also be captured. About the operational performance at Araguaia, traffic is slightly higher with MDF.
We were able to exceed the business plan. It's doing very well, but I'd say that in Araguaia we can consider that it's a little bit higher. Very well in terms of OpEx. We had immediate upside in OpEx. There's sustainable improvements compared to the initial plan. In terms of CapEx, we had an additional that was higher in the first year, the year of the initial works, 2021 and all of 2022, where inflation and the cost of materials was a lot higher than expected. The inflation curve is coming down. It's getting to becoming in line with what we have in the business plan, and we're getting to the works already with the projects for expansion. I believe Araguaia is doing well, and traffic was very well in OpEx.
A little bit not so much in CapEx this year, but we're getting back to normal aligned with the business plan. EcoRioMinas, it's early to talk about traffic, but the first numbers indicates it's slightly above our plan, but it's early. OpEx as well, I think it's still too early to see, but there's no surprises so far. We have good news in terms of CapEx. CapEx, we've been able to find alternative solutions that are better. Negotiating with providers and with more efficient solutions. We're also making the most with this downturn on inflation and cost of materials. EcoRioMinas is going well. Thank you. Very clear. We started EcoNoroeste. Of course, it's still too early, but the traffic to start at EcoNoroeste is much higher than what we had expected.
The traffic performed greatly in the last few months in that region. We already start off with a higher traffic level than we anticipated at EcoNoroeste.
Thank you, Guidotti. Next question, Victor Mizusaki, Bradesco BBI.
Good morning. Congratulations on the results. I have two questions. Guidotti, the first, you just talked about the CapEx efficiency. First question is looking at the new systems for OpEx and CapEx management. If you can share numbers maybe that help us understand a little bit more or where this efficiency is. When you close the contract, maybe you got what you got compared to budget to bring it down in 3% or 5%. If you can give us numbers in that sense. The second question. We've been seeing in the government about the reequilibration assistance for some contracts and concessions where there was a request for re-auction.
In the case of Eco101, is there any discussion going on with the government in that sense, or EcoRodovias will prefer to return it ahead of time as scheduled? Thank you.
Victor, good morning. Thank you for your question. About the systems, we prepared for this important CapEx execution phase. We developed and implemented the control system. On CapEx, this control system that's actually a very complex system that carries all the projects and follow the physical side and financial in detail throughout the development of the works, but it's more to guarantee assertiveness and control of deviation. The captures in terms of CapEx are more in terms of engineering, the application of value engineering, project review. As you get into basic projects and you go down to providing better solutions, making the most of the price change.
About the CapEx, the implementation of such a robust control system is more to guarantee assertiveness and avoid deviations on what was planned in physical terms and financial terms. For OpEx, we have a digital transformation plan for the company that is quite advanced. At the time, we estimated reductions in terms of comparable basis of up to 10-15% of our entire OpEx base to be met in 2024. There's a number of digitalization initiatives. Some of them we are releasing, like MDF and the increase of electronic collection, the digital systems for CapEx and OpEx that will allow us to see reductions because of people, because controls will be automated. This entire journey that we estimate to be concluded and having occurred in 2024 with a target to get up to 10% reduction in the total OpEx base and comparable basis.
About the reequilibration of Eco101, yes. We're also included in that with the ministry to open a discussion panel that can be alternatives to the return, that can go through a renegotiation of the agreement. It doesn't mean that the return process will be interrupted. Quite the contrary, it's moving along great. At the same time, we're looking with the government. We opened a negotiation table to see if there's alternatives for the return. It's part of the return of the contract. It's difficult and of course, it's necessary to have all types of discussions with the government. I'm an optimist with both processes and we'll see. Again, the return process continues and its timeline is well-defined. Excellent. Thank you.
Next question, Matheus Sant'Anna, XP.
Good morning, Marcelo, Andrea. I have two questions.
First, you listed some concessions with the toll tariff adjustments that are being analyzed by the grantor, Eco101, Eco050. Can you tell us more about this process? The second question is about thinking about the North Paraná concession. I'd like to understand how you see the government's direction and the competitive scenario regarding the other players. Thank you.
About the toll tariff adjustments at Ecosul 050 and Eco101 are ongoing. The analysis of the technical notes have arrived. There's some discussions. Maybe there will be a delay, but it's part of the dynamics. We already received the technical reports. There's some corrections at 050, some discussions at 101 and Ecosul. The processes are already unfolding and will be resolved. About the Paraná, about the level of competitiveness, I'd say we'll see.
I have some information of some new players, local players, others that are studying and looking into it. They're important lots that for many years were confessed and performed well. We'll definitely have a competitive environment that will be greater than what we probably saw in the past recent federal auctions. I don't have full visibility about who the players could be. I think within a few days, the call for the bid will be published, and we'll have more information about the numbers, the CapEx, the investment programs. Depending on those information, then maybe we can have a more clear view of who the players can be, the competitors, what type of competition they'll have and so on. Thank you.
Thank you. That was helpful.
Next question, Filipe Nielsen .
Good afternoon, Guidotti, Andrea. Congratulations on the earnings.
I have one question and one follow-up. About digitalization, what's been done. My question is still about new projects. Thinking about the pipeline, thinking that now you have a more selective view towards new opportunities, considering that the main competitor is also more selective. Considering this comment that you made about new local players, I'd like to understand in your discussions with the government about the upcoming bids, not on the short term, but looking at the discussions that are happening, do you see the government as more open to improving the conditions of the contracts or more prone to grant those concessions? Do you see the government being more closed and giving less opening for these new future projects? That's my first question. The second is to understand. It's interesting with this digital efficiency project.
I'd like to understand whether you see room for artificial intelligence or maybe another type of improvement of digitalization. How do you see that?
Filipe, thank you for your question. I'll start with the second, then I'll go back to the auctions and the government's approach. About the digitalization project, to give you an idea, we have more than 400 actions and ideas being tested, developed. We created squad internally, more than hundreds of people working. Everything is being tested here. If it goes well, if it works, it goes back to the table to maybe be implemented. Of course, artificial intelligence is one of the pillars of this type of approach for the control of collection, control of revenue, verification of dangerous regions in the highways through artificial intelligence and studies of demand traffic. Artificial intelligence is definitely part of it.
There's a series of initiatives, all of them in our digitalization journey have a very clear purpose of making the company more agile, giving a leading role to people through the intelligent use of data, through artificial intelligence and applied technologies. That's the proposal of the digitalization journey. We are already seeing results. Our costs in real terms at the highway concessions are very well controlled. We still have the whole year 2023 and 2024 to improve this even more. Once everything's tested in the operating environment, it's also a base for new studies of new projects to be competitive when we participate in an auction, for example. About the approach with the government, I'd say it's completely open following what we had in the previous government and others in the past.
I believe there's a willingness to hearing the projects that are being in auction now are prepared to be auctioned, L40 and the licitations in Paraná. There's already a large period of study, so they're sound projects. This government is not changing the rules of the game. Everything is in line with a good willingness to hear us and hear suggestions and discuss. Excellent. Very clear. Thank you.
This closes our questions and answer session. I'd like to turn the floor back to Ms. Andrea Fernandes for her final remarks. Please, you may proceed.
We thank you all for your participation. My team and I remain available for any questions you may have. Thank you very much. Have a great day.