Morning, welcome to the conference call of JSL to discuss the earnings regarding the fourth quarter 2023. Today with us we have Mr. Ramon Alcaraz, JSL CEO, Guilherme Sampaio, CFO and Investor Relations Officer for the company. Right now, all participants are connected in listen-only mode. Later on, we are going to start the Q&A session when further instructions will be provided. Should any of you need assistance during the conference call, please reach the operator by pressing star zero. We would like to inform you that this conference call is being recorded and simultaneously translated into English. Before moving on, we would like to let you know that any statements made during this conference call relative to JSL's business outlooks, projections, operating and financial goals are based on the company's management's beliefs and assumptions and rely on information currently available to the company.
Forward-looking statements are not a guarantee of performance. They involve risks, uncertainties and assumptions since they refer to future events and therefore depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operating factors may affect the company's future results and lead to results that will materially differ from those in the forward-looking statements. Now we are going to turn the call to Mr. Ramon Alcaraz. Please, Mr. Alcaraz, you may go on.
Good morning, ladies and gentlemen. It is a pleasure to be here with you once again to release our excellent results. We continuous growth and consistence. 20% increase in revenue compared to the first quarter 2022, and 40% EBIT. That is, we grew percentage-wise it double compared to revenues. Now we are going to go to our numbers.
Gross revenue in the first quarter 2023 of BRL 1.8 billion. As I mentioned, 20% above the first quarter 2022. Net revenue BRL 1.6 billion and EBITDA of BRL 306 million, 39% above that of first Q 2022. EBITDA margin 20.3%, a number that makes us very pleased. 3 percentage points over the first quarter 2022. Net income of BRL 31.2 million, and return on invested capital of 15.2%, confirming our capacity to grow with pro-profitability. Very material factor released in the quarter that still has not contributed to the results of the quarter, but that will certainly will in future results is the acquisition of IC Transportes, a company of BRL 1.7 billion gross revenue annually. Another important effect is the upgrade of our ratings by S&P.
Going to the next page, the consistent growth of our revenue and results quarter-on-quarter is due to our resilience based on diversification of segments and sectors. Growth of 23% in food and beverage, reaching BRL 535 million in the quarter, therefore contributing to the growth of all operational segments, dedicated operations, warehousing, urban distribution and cargo transportation. We have surfed the wave of the growth of pulp and paper in Brazil, growing our revenue by 21% in the quarter. Steel and mining, we grew 12%. Together, we reached BRL 400 million in revenue, therefore boosting the dedicated operations segment.
In automotive, we have expanded market share considerably, reaching 28% growth vis-a-vis Q1 2022, especially due to new contracts reaching BRL 287 million in revenue in the quarter, and therefore contributing to the growth of cargo transportation and dedicated operations. In the acquired companies, we increased our capacity of services, particularly at Marvel and TPC. In the 100 international operations, we grew by 38%, with highlights to South Africa that reached 83% implementation by March 2023 compared to what has been already contracted. Going to the next page. We have a unique position with combination of scale, know-how and capacity to invest.
Consistent growth not only at JSL, but also at the acquired companies that individually grew 26% compared to the first quarter 2022 when we compare these companies against themselves, as you can see on the chart to your right. On the next page, our competitive differentiators, supported by quality, capacity of execution and capacity to expand, have resulted in substantial increase of our services with a unique capacity of cross-selling. I'd like to mention new contract signed in the amount of BRL 605 million in the first quarter 2023 alone, with average term of 35 months in very diversified sectors. Food and beverage 28%, chemicals and gases 21%, pulp and paper 20%. A very important highlight is that all these contracts that we are releasing were signed within existing customers. That is 100% cross-selling.
Now I'm going to turn to my friend, Guilherme Sampaio, that will give a small comment on our financial results. Guilherme.
Thanks, Ramon. Good morning, everyone. That was yet another quarter that shows the result of the work being performed by all the companies that comprise JSL today. We kept the pace of organic growth with considerable expansion of our margins. The first quarter, which is seasonally lower, showed numbers very close to 4Q 2022, but with extension of margins. The numbers reflect the work of diligence in contracts, pricing of new contracts, and the efficient work of our back office. The impact of synergies of the acquired companies. We closed 1 Q 2023 with BRL 1.6 billion net revenue, 21% above the 1Q 2022.
As a reminder, these numbers still do not have the impact of IC Transportes that we announced in March, was approved by the Brazilian Anti-Trust Agency, but we are still in closing. IC would lead our net revenue to BRL 2 billion in the quarter. Our revenue mix is 54% in asset-light, 46% in asset-heavy, in line with previous quarters, which shows our capacity to grow in the two different operational models. We closed the quarter with FTE at BRL 210 million, in line with the fourth quarter of 2022, 13.9% margin. That shows growth of 34% of EBIT vis-à-vis the first quarter 2022, and a margin expansion of 1.6 percentage points compared to 1Q 2022.
EBITDA closed at BRL 306, in line with fourth quarter, even in a quarter that normally has lower revenues because of the natural seasonality of the business. Margin 20.3%, 1 percentage point above the fourth quarter 2022. It's important here to remember that our operational results is still impacted by the depreciation of assets that we bought in the fourth quarter last year for projects that have not yet been deployed. Return on invested capital, we closed at 23.3%. When we normalize the tax bracket and excludes the CapEx above the capital invested, we would get to a return on invested capital that we believe reflects the company of 15.2%.
Net income, also impacted by the depreciation, still using results of the quarter, closes at BRL 31 million, adjusted by the impact of acquisitions PPA that we do every quarter. On the next slide, CapEx. We closed the quarter with BRL 309 million, 5% of which dedicated to the expansion of new projects. Every member part of the CapEx is still not showing in JSL's revenues because of the time of project deployment. We closed the quarter with BRL 4 billion in assets. Trucks, tractors, machinery and equipment, net assets connected to long-term projects. You're talking about a group of assets. If you consider market value, we have net assets that are worth 1.3 x our net debt, BRL 5 billion. That confirms what we've been saying.
The capital structure is connected to the pace of organic growth. The capacity of cash generation enables us to grow through acquisitions without pressuring our capital structure. On the next slide, we closed the quarter with net debt of BRL 3.8 billion, BRL 736 million in cash and BRL 683 million in contracted revolving credit lines. Our leverage in the last 12 months was stable, 3.2x. If we analyze the first quarter, 3.09x. The EBITDA, we closed at 2.76x, which is our covenants reference. The highlight for the quarter is that we were upgraded by S&P to AA on a national scale and BB- in the global scale, which confirms the work by confirming growth, generating scale, and expanding margins, therefore supporting the company's capital structure.
With that, I'll turn the call back to Ramon. Ramon?
Thanks, Guilherme. Going to the next page, I'd like to give you the highlights of ESG for the first quarter 2023. We were awarded a Distinguished Global Logistic Operator by GM. Only four operators in the Brazilian operation were awarded, 2 being Brazilian companies, including JSL. JSL in logistics alone. In the world, GM has more than 25,000 suppliers, and only 107 received the award. Our CFO, Guilherme, that is here, and our Commercial VP, Eduardo Pereira, with, you know, a belt and a cowboy's hat, went to Texas to receive the award. Congratulations to the fantastic Q team that received the award. Thanks, GM. In Vale, we were recognized for having 1,000 days without accidents. Congratulations. At Whirlpool, we received two awards, completely independent.
JSL, Best Logistic Operator. TPC, acquired company, Best Carrier for 2022 for the performance of the whole of the year. For the second consecutive year, we were recognized for our responsible environmental performance by Bayer. Here you have the QR code for our integrated annual report released in April. I'd like to talk a bit about the IC Transportes' acquisition approved by CADE in April. This is a company of 40 years of performance in the logistic market. 2,400 operating assets, more than 1,700 employees, and revenues of BRL 1.7 billion year gross revenues. A very balanced profile between asset-light and asset-heavy, 60 to 40. More important than the numbers, this is a company that is recognized for its customers and the quality of execution of its services.
Very important for customers, as you can say, Kaizen, Mosaic, Cargill and others. Congratulations, IC Transportes, for its 40 years of fantastic history. I'm sure that together we are going to write an even better story. Ramon, if you allow me, just for you to have an idea of the numbers in the transaction. Already approved by CADE, but still in closing. The enterprise value was BRL 587 million. They have net debt of BRL 429 million, you're talking about equity value of BRL 338 million. That is the amount that was disclosed in the material fact. The exercise that we did, thinking of synergies of 2% of gross revenues, already gives us a multiple of 5.1x the EBITDA reported, going to 4.1x just considering the synergies alone.
Thanks, Guilherme. On the next page, I'd like to highlight some important points. We understand that we have a unique position in the market to grow. We have very strong operational performance, way above the average with deployment of new projects. Focus on corrective pricings based on parametric formula and also severe strict management and efficiency considering consistent profitability margins, gains of scale, leverage growth of the good acquired companies. I mentioned, exposure to key sectors in the real economy in our country and abroad brings resilience of growth and results. With IC, we are going to continue capturing synergies with the knowledge acquired with the companies, and we believe that gains can even be bigger. We continue with our internationalization agenda, be it organic or inorganic. Acquisitions in response to our clients' demand.
Finally, I would like to highlight that if we consider the combined gross revenue in the last 12 months of JSL and IC, we would have a company with gross revenue past BRL 9 billion. Gentlemen, ladies, with that, I'm going to close the presentation, and we are going to open for your questions. Guilherme and I ready to answer any of your questions. Thank you.
Ladies and gentlemen, we'll now start the Q&A session. If you have a question, please press star one. To withdraw your question from the list, press star two. Our first question comes from Guilherme Mendes from JP Morgan.
Hello, good morning, Ramon, Guilherme. Thanks for the opportunity. I have two questions that are somehow related. First, CapEx. You did mention in the presentation of the acceleration of the fourth quarter.
I would like to know what are you expecting in terms of capital allocation for the remainder of the year? Also leverage. I would like to know if you had a bit of an increase in the quarter. How are you considering liabilities and leverage for this year? Thank you.
This is Guilherme. How are you? Thanks for your question. Okay. Capital allocation. Just as a reminder, in the fourth quarter, last release, we announced that we're gradually dancing the purchase of some assets because we have a limit for EUR 5 for projects that would start as of the second quarter. They have not yet shown in the first quarter because deployment started in the end of March, beginning of April. This is one thing. Capital allocation.
We see a capital profile very similar to last year in terms of absolute numbers, considering the pace of growth that we have in our pipeline and also this BRL 5 billion that we sold this year. Talking about leverage, we continue with the reference of 3x the EBITDA. If you think of cash flow, we are talking about a disbursement of almost BRL 520 million in the quarter, part of which already paying the CapEx that was reported in the fourth quarter. You see leverage going slightly up compared to the fourth quarter. You're talking about 3.17-3.25. BRL 15 million, BRL 20 million, almost neutral, I would say.
Because of the growth of EBITDA, you see we going to a descent trend quarter-over-quarter, always getting to the three times, which has been our reference historically. Talking about liability management, we are starting the process. We are looking at our debt. In the short term, it's still not a huge amount, but obviously we are working with the banks and consultants to try and extend our debt profile. I think the fact that we had Fitch's upgrade and now S&P will help us in the negotiation. Obviously it is, you know, you have to consider market times, and we are going to work with that along the year.
Great, Guilherme. Thank you very much. Have a good day.
You too.
Our next question comes from Victor Mizusaki from Bradesco BBI.
Hello. Good morning. Congratulations on your results. I have two questions. The first on slide six. You mentioned new contract signed with a return of BRL 600 million, and now in the first quarter, I think that to close the contracts you had purchase of BRL 80 million of assets from Firmus. My first question is, first, on JSL side, if you could talk a bit about the rationale of the transaction, how the purchase of the assets was important for you to close one or more contracts. If you could talk a bit about that. The second question, if you could talk about how your internationalization process is set at.
Hi, Victor. Good morning. Thanks for your question.
Yes, we closed BRL 600 million in the quarter in several sectors, as we showed you, food, paper, pulp, et cetera. That's not necessarily related to the trucks we acquired from Firmus. This is very important to say. JSL, as the largest country's logistic operation, and Firmus as the largest seller of these assets, you know, at some point in time will have commercial relations, basically due to availability. One thing is not necessarily tied to the other. The BRL 600 million has a lot more to do with our CapEx policy and other things. The fact that Firmus is in the group is just a coincidence in the case. Guilherme later on can give you a bit more color on that. As for going international, we continue accelerating expansion.
We are looking into good opportunities in Africa as a whole. We started with South Africa. In South Africa, itself, we have already a forecasted growth with a client that we have contracts with and also in other countries in Africa. Parallel to that, we have had even perhaps, you know, with, you know, the information that was spread that we were going abroad that co-customers are contacting us for projects in Mexico, in Chile. We are very much confident that we are going to have large projects in several countries. This is a bet. We think it's a very interesting opportunity to diversify sectors, segments and currencies. Guilherme, would you like to add something?
Hi, Victor. I hope I have answered your question.
Yes, certainly. Thank you.
Our next question comes from Luiza Capristano from Itaú BBA.
Hi, Ramon, Guilherme. Thanks for taking my question. My question is about growth. You have a very strong comparison basis compared to last year because of a high volume of contracts closed. You announced CapEx that is similar for this year. My first question is first to try to understand what to expect in terms of new contracts. The first quarter this year was similar to first quarter last year, altogether the fourth quarter last year really raised the bar. Are you comfortable with a slightly lower growth that was announced for the year of 22 as a whole? I would like to understand a bit of this rationale. Second, also related to growth, is the fact that you're always growing with existing customers, which is absolutely positive. That really reinforces that the company has quality of services and customers want to increase comfort.
On the other hand, you start to wonder why not having new clients that are not through M&A. Is that a proactive decision of the company? Do you really believe that right now the effort is to have the same contracts? It's no use to expand more organically. You have a good position in your customers and for leverage purposes it makes more sense. Could you give us a bit more color on this growth mix, so to speak?
Hi, Luisa. Thanks for your question. Well, in terms of prospecting a new contract, of course, we have expectations of growing with new customers and new contracts just like last year, because we have lots of projects in our pipeline. We have high expectations, and we are really speeding up.
Quarter-on-quarter, we're going to be disclosing new contracts. That's our expectation. The fact that we have a high cross-selling rate, and your question is: on the one hand, this can be good, but why not new customers? Well, we want to basically enjoy all opportunities, be it with existing or new customers. Of course, new customers, with existing customers, you're already there, so our capacity to invest and execute in the customers where we already are is huge, and we enjoy the opportunity. We are not accommodating there. We are even restructuring our sales area and creating a new department for new contracts alone. Exactly because of that, what you're saying, open new fronts in segments where we do not operate, regardless of M&As.
Of course, M&As open new pathways, regardless of that, because companies work independently, as we always say, we want as JSL to have new fronts in segments and areas in which we do not operate. We are working strongly on that without losing sight, of course, of our current customers.
Thank you for your answers.
Our next question comes from Renata Cabral from Citi.
Hello, everyone. Good morning. Thanks for taking my question. I have two follow-ups. In fact, one with regards to cross-selling within existing customers. I'd like you to help me to understand what is the regular rationale of customers. Are you getting share from other companies? What is exactly the cross-selling like within existing customers? The second question is the purchase of trucks from Vemos. It's very clear that, well, you need trucks and Vemos sells trucks.
This is a natural operation. I'd like to understand how it works. how many times a year, if there's a specific operation was slightly bigger than others. We think so, because you had to have the material fact, because it was above BRL 50 million. How is the business as usual? Do you buy also from other companies? Just for me to try and understand prices at full sale. Thank you.
Hi, Renata. Good morning. Thanks for your question. I'm going to try to answer the first question on cross-selling. Just to correct you, we are not only in cargo transportation, we are also logistics operations. We have inbound operations, warehousing, everything.
We wouldn't say that we are stealing from other companies, we are more competitive because of our capacity to invest, which does make a difference in times like this, especially because banks are more restrictive in terms of credit. We compete with mid-sized companies that have more difficulty in accessing credit now. This is the first thing. The second is our capacity of execution, the awards that we have been disclosing show a bit of that. It's a mix of both things. We get market share from the competition. That happened, for instance, in mining, which is an industry that did not grow much, we increased market share in the last 20 months. We doubled market share in the sector, even if the sector itself has not grown much.
You have the natural growth of companies. Pulp and Paper, for instance, has been growing a lot, especially in the last three years, and we have surfed the wave. We are always watching out for opportunities not to miss anything, either by winning, gaining market share or new contracts with our customers' expansion. Connecting to Luisa Capristano's questions, and we want to use the opportunity of new customers as well. We want to have expressive organic growth this year. Your second question, I'm going to let Guilherme Sampaio answer.
Hi, Renata Cabral. About the purchase from Vemos. The first thing is the following. I think it's important to make it clear that when you're going to buy an asset, regardless of who it is, it is a specific asset for a specific project.
You may need an asset that Vemos has-Or not. The first thing to understand is that what determines the purchase is the type of assets that I'm going to deploy. As you talked about prices, how does it work? We have a market survey on market prices. We have most priced. We are a large buyer. We compare prices, submit to the audit committee and to the independent members, and if approved, according to market conditions, we move on with the transaction. It is as simple as that. Just to add, we try to do the best deal possible. We have a project, we have a specific need, we shop the market, and we see prices, be it with OEMs or, if it is used assets, you know, we go to the market.
It can be Vamos, we also, you know, negotiate with several dealers.
Very clear. Thank you very much.
Thank you.
Our next question comes from Heloísa Cruz from Stoxos.
Congratulations on your results. I have three questions. First, I would like to know your granularity, a bit more granularity with your backlog and also the renewal of contracts. When you're paying BRL 600 million, you're talking about new contracts. How about contract renewals? The sale of vehicles and purchase, is it also tied to renew? What is the rate of renew? Along of the slides, how does it work in terms of share per service per client? That is, what is your share in the existing customers?
Hi, Heloisa. This is Guilherme. I'm going to answer the first question, Ramon is going to add to contract renewal. Okay?
Also share within existing customers. TruckPad, just as a reminder, when we had the acquisition, we announced that we had two major pillars. One, to help the digitalization process and efficiency in JSL cargo transportation, and second, to be an independent company with a business model that would provide services to JSL, but to other companies as well. To give you a bit more granularity, today, we have already completed the first phase of the process inside JSL. We are already running a pilot to optimize cargo transportation within a same region. Of course, we have to run the pilot to make the necessary adjustments and have the rollout of the complete operation. Also in parallel, we are working in TruckPad as a business itself.
There are several services, several demands that today JSL contracts from third parties, operations and other activities that TruckPad could add within its service portfolio since it is focused on the cargo transportation sector. The first digitalization of JSL is on track. This is exactly where we want it to be. Of course, it takes time for us to have it in the whole of JSL's scale. The second pillar is still a bit more incipient, but at least in paper, we know what we have to do to really transform TruckPad to what we want. Now I'm going to turn to Ramon to talk about contract renewals.
Hi, Heloisa. Good morning.
We have huge diversification of services, I'm going to try to give you an average answer, but, you know, the answer is not an average because we have huge diversification. If I were to give you a general answer to the whole of Brazil, not necessarily JSL, I would say that customers try to have a maximum market share per logistics vendor of 30%. This is a rule of thumb. In JSL, this sometimes applies or not. We have some customers in the automotive industry, in forestry and beverage, that we do have up to 100% share of our service. It is not, you know, an absolute rule. Other clients try to keep the percentage. Our segment has huge granularity, that is you have many companies, it's very fragmented.
More and more large companies understand that if you think you're going to have more vendors because you're going to have more competitiveness, you are wrong. The fact is you are sharing the same pie in too many pieces and everybody's starving. More and more large companies are decreasing the number of vendors, and those who stay are gaining market share, and that's what we are really seeing. That happened in food and beverage. It is happening in automotive. For instance, one of our clients, we doubled the size of our business and have a 100% market share in the service with Marvel. It has been happening in the forestry industry that it had this habit of having many vendors. We closed the contract at 100% of the forest with us.
It's not, you know, a rule of thumb, but we see the trend of large companies willing to work with a lesser number of vendors. As for renewal percentage, well, you know that our contracts, on average last 40-50 months. This quarter is likely lower, 36 months, but basically you're talking about 45 months on average. Every year they expire, we have negotiations. We have a very high renewal rate, above 90%. 90%-95%, I would say. We always believe that it's a lot better to keep a client, to keep a contract than deploying a new one. We do our best. It's not always possible because we are not going to do away with prices, but we work very hard to have a high rate of renewals.
I hope I have answered your questions, Luisa.
Yes. Perfect. Thank you very much and congratulations.
Ladies and gentlemen, just as a reminder, if you want to ask a question, just press star one. There are no further questions. I would like to turn the call to Ramon Alcaraz for his final considerations. Please, Mr. Ramon.
Well, my friends, first of all, I'd like to thank you for joining us. Some questions always help us to explain our company better. As you can see, I would like to strengthen that we are at a new level of margins.
We have been strongly working in the past two years, and we are disclosing quarter on quarter a strict management of cost, prices, new contracts with parametric formulas and pricing that talk to the new macroeconomic environment for us to have linear and strong growth compared to our margin. This was yet another good quarter, and we believe in consistency and the whole team is working strongly on that, and results start to show. We have a very strong capital structure as we are also disclosing quarter on quarter, which positions us in a very differentiated position compared to the market.
We know that the market is unpredictable if you think of the macroeconomics, Brazil and the world, but we are still in a paper position in terms of capital structure, execution of services, and we want to enjoy the opportunities that come to us. There are many opportunities to come. We are very confident in the mergers that we have been making. We have FSJ that was acquired in the first quarter, but the closing is still to happen in the second quarter. We are very excited because we believe there are loads of opportunities there. We are ready for what the year has to bring to us. Very confident that we are going to deliver a year that gives continuity to the work we have been developing the last 2.5 years. Thank you very much.
I don't know, Guilherme, if you want to say something, but I'm very excited and thank you very much for joining us today.
That's it. Thank you very much. Guilherme is speaking here.
Our JSL's conference call is now closed. We thank you very much for joining and wish you a very good day.