Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Kepler Weber's teleconference call to discuss the results of the fourth quarter of 2021. Today, we have with us Mr. Piero Abbondi, CEO of the company, Mr. Paulo Polezi, CFO, Investor Relations Director, and Mr. Edirlei Lohrentz da Silva, Controller, that will be helping you during the Q&A. This event is being recorded. Participants will only hear the company's presentation, and then we will open the Q&A session to all participants when further instructions will be provided. If you need assistance during the call, please ask help from the operator pressing star one. This event is also being broadcast simultaneously via webcast and can be accessed at www.kepler.com.br/ri. The presentation is available for download. This slide's presentation will be controlled by you.
The recording of this event will be available on the company's website shortly after the ending of this conference call. Before proceeding, we would like to remind you that the forward-looking statements made during this call are based on Kepler Weber's business assumptions, operation, and financial projections, and based exclusively on the company's expectations. A forward-looking statement should not be taken as a guarantee of performance. These considerations involve market conditions, the performance of the Brazilian economy, the industry international market, and therefore, are subject to change because they relate to future events and depend on circumstances that may or may not occur. Investors should understand that the general economic conditions, the industry conditions, and other operating factors could also affect the future of Kepler Weber and may cause results that materially differ from those expressed in such forward-looking statements.
Now, I would like to give the floor to Mr. Piero, CEO, who will conduct the first part of the presentation.
Good morning. It is a great pleasure to be here with you once again for the conference call of Kepler's earnings. We will start with the quarter's highlights, where the net revenue grew 68% compared to the 4Q 2020, and 83% compared to 2020. The positive performance was a consequence of the relevance of the Kepler brand in the segments we operate, plus the favorable environment of the agribusiness, and the efforts of the company for a higher commercial activity that operated in 2021 with the full capacity of the plants. I highlight some important factors. Our order portfolio that is being renewed every quarter. The success in raw material cost management, together with the stabilization of the supply chain.
The availability of the lines of financing in agribusiness, such as PCA, and the profitability of the producer in excellent levels due to the price of commodities and favorable exchange rate. Likewise, in this quarter, the adjusted EBITDA reached BRL 118 million, 28.4% of EBITDA adjusted margin. Expansion of 210% in relation to the 4 Q 2020. Here, I highlight the increase of our operational leveraging that contribute to a higher cost evolution and excellent logistic and commercial management. Now, I invite Paulo to the business.
Thank you, Piero. Good morning, everybody. Slide 4 shows the performance of our business segments. Starting with Storage segment, the most representative segment where the demand for post-harvest projects continued generating 88% growth in relation to the fourth Q 2020 and 113% to 2020. This is a reflex of the assertive commercial strategy generating several renewals in our portfolio, influencing the good results of 2021. Exports grew 70% in relation to the fourth Q, and 20% in 2020. In the quarter, the good performance is a result of the entry of orders in the last quarters that contribute to this robust growth. In the accumulated over the year, we highlight an improvement in the business situation in Latin America and expansion in markets like Africa and Eurasia.
The general movement of grains, we had a In bulk handling, we had a one-off reduction of 43% in the quarter because of the prolonged period of new sales, and these projects started before the pandemic. With the increase of prices, the modules were revealed, and we had this postponement. It is important to highlight that we had a better billing in 2022. In the Ports and Services, we increased 69% in relation to 2020. This is due to an increased demand for renovations and upgrades of existing units. In this quarter, we had the largest unit sales of the segment in the amount of BRL 10 million for the upgrade of a storage unit in a cooperative in Paraná. The growth in 69% crowns the excellent performance of the five distribution centers, allowing Kepler to be closer to the rural producer.
In slide 5, I share with you some important projects delivered in the 4Q21. Porto Nacional in Tocantins, delivered in October, with a capacity of 100,000 tons. It is a typical post-harvest project with a transshipment terminal linked to a railroad. In Nova Laranjeiras in Paraná, delivered in November, it is an expansion of a cooperative. It was an innovative project because the work is 100% above zero level with no excavation and an area with controlled access. In Monte Verde, Mato Grosso, the client required delivery in a very short time, and Kepler met this time frame, also with activities of assembly, operation, and training. In the external market, the Loma Plata Paraguay project is the supply of a silo of high static capacity.
Kepler met the delivery time with quality. And finally, the supply of a new grain dryer in Lambayeque, Peru, shows the strong presence of Kepler in the region and a reference in the quality of grains drying. To show the renewal in our order portfolios, I show you four different supplies that together sum BRL 120 million in new sales. The Storage segment, we had the sales to an important cooperative in Paraná and in Mato Grosso do Sul. That summed account for BRL 63 million. The Bulking Handling segment, I highlight the sales of a second phase in a storage unit of ethanol in Mato Grosso do Sul.
In the exports, we had relevant sales in this period for Paraguay. In slide 8, I show the EBITDA of the 4Q21. As Piero mentioned, Kepler reached BRL 118 million in adjusted EBITDA, a record in the company, with adjusted margin of 28.4% and growth of 210% in relation to 4 Q20. The increase in the level of the productive activity in our plants, combined with the good operational management, expansion of margins in the main business segments, and stabilization of the steel price, explain such a good performance. In slide 9, we show the CapEx evolution in 4Q21. Investments reached BRL 14.2 million, and 86% dedicated to the increase of our manufacturing capacity in our [audio distortion] We invested BRL 39 million, the highest CapEx value since 2020.
In slide 10, we have the cash availability that closed the fourth Q 2021 with BRL 131 million, a reduction of BRL 150 million compared to 4 Q 2020. Compared with 2020, we paid BRL 278 million to the shareholders, optimizing the capital structure. Our net cash has a good level, and we have space for growth. In slide 11, we show the evolution of earnings paid to our shareholders, incorporating the last payment in capital reduction, generating an important mark of 228%. BRL 537 million in compulsory additional dividends highlighted in the graph are for the fiscal year of 2021 and will be paid after our assembly is scheduled for March 23. In slide 11, we show the liquidity of our share, showing which jumped to 66% in the average monthly financial volume compared to December 2020.
Also, we had our share entering a new index, Great Place to Work, of B3 since January 2022. Slide 13 shows the accumulated ROIC with an evolution of 52 BPs, reaching 79.4%. The consistence of this index is a reflex of the operational performance, showing the combination of the revenue and margin. The ROIC in this level shows the Kepler Weber strength since we were able to deliver increase with modular investments. With this, I close my part and give the floor back to Piero.
Thank you, Paulo. In this slide, I bring at first hand our investment plans for 2022, approved at the end of last year by the board. We finished 2021 investing BRL 39.9 million, and now we intend to execute BRL 64.8 million, an increase of 62%. As we can see, the largest part, BRL 46 million, will be used in projects to optimize processes and increase of capacity. Within this value, we will have an important project, which is the new paint line, evolution of a technology that used to be liquid and now in powder. There will be a total of BRL 28 million, of which BRL 18 million should be disbursed in 2022. This new paint line is important to Kepler Weber.
In addition to improve the quality of the product, will represent an important reduction in manufacturing costs and will put us in a superior level for in the environmental and social criteria. In slide 15, I show you the evolution of new business. The picture shows a prototype of our new grain dryers, KW MAX, and the Kepler Lab building located in our plant in Panambi. This new KW MAX dryer, launched in 2021, allows a better performance of post-harvest and can be automated and connected to the Sync platform, offering the producer real-time performance data and the management through the smartphone, tablet, or computer.
The Kepler Lab that we opened in this quarter is a space dedicated to research, development, automation, and digital services, aiming at improving and expanding the offering of products and services of our Sync platform. This space has multidisciplinary teams in our operation center that will help very actively our clients in their operation and improvement of their business. It also has a digital sale and product innovation with the purpose of developing future Kepler Weber's technology. The new equipment leaves the plant connected to the Sync platform, what allows a better accuracy and quality in the decision-making process of our clients.
The Sync platform is increasing robustly, doubling the number of clients and equipment connected in the last three quarters. Before going to the Q&A session, I would like to talk about our achievements and comment on the outlook for 2022. Concerning the achievements, I would like to highlight three situations. In this quarter, again, we were able to deliver consistent results above expectations, even in an instability scenario of the supply chain. I would like to highlight also the efforts of the Kepler Weber team that promoted effective operational management based on lean manufacturing that made it possible to capture a greater demand. We also structured the digital business area now with a dedicated team and new installations to provide a better focus on clients.
Finally, we paid the shareholders a record amount of BRL 300 million, including dividends and capital reduction, a historic record in Kepler Weber. As perspectives, three important aspects. The continuity of growth in all segments with expectations to maintain the margins in healthy levels. The renewal of order portfolio, maintaining the current backlog, bringing more stability and predictability to capital operations with good perspectives for 2022. COVID-19 and its variants continue to be a point of attention in the company, and we will keep a focus and actions to preserve the health and well-being of our collaborators. I close here my presentation, and I thank you for your presence. Now we can continue with the Q&A session.
We now open the Q&A session. If you want to ask a question, please press star one. Please hold on while we wait for the questions. Our first question is from Werner Roger for Trígono Capital.
Good morning, Piero. Good morning, Paulo. Congratulations for the results. We are very happy with these results, also for the shareholders' payment. What surprised me is, is there any relation between the prices of the steel? We saw that Usiminas announced a price increase in the first quarter. Is there any perspective to increase prices, and is this a factor? When we compare with international prices, there is the possibility of the company importing steel from abroad because of the increase in price in the national scenario. Finally, in relation to the capacity, can we expect that the volume of sales will follow the capacity increase this year? Thank you.
Werner, good morning. Thank you for your presence in our call. You asked two questions. I will answer the first part, and then Piero will add and comment on the price of steel, and he will also ask about sales and manufacturing capacity. Werner, yes, you are right about the price. We see signs of a price increase, not only by Usiminas, but other suppliers also did the same. The first point I would like to address is, how do we deal with this? First, we do not purchase the steel from one single source. We have several suppliers, and we have a long-term partnership with a good player that give us consistency, and we complement the steel with other national suppliers and foreign suppliers. This is the first aspect.
Secondly, we work with the order portfolio, and the sales we have are based on the steel we have already stored. The increase in price will reflect on the new sales in the new portfolios. Yes, we have this news of price increase, but it is not materialized yet. We will have to follow it and balance the price in relation to cost for the next sales.
Last year, at this time, the year started with several price increases. The company was able to manage this very well. We, over the year, we worked well with this issue. Well, it does not seem to be the same situation as last year. This is much more punctual. In February, January, we did not have any increase. We have to work. The source of import is always on our radar to balance the prices of steel. The second part, if you want to repeat your question just to check if we understood it well, please. Yeah.
Piero, a comment on investments in painting in this new paint line and the increase in capacity of 6.5%, I think, in the productive capacity. My question is, because you said you are at full capacity, does this imply an increase in sales volume based on this increase in the productive capacity? I imagine that the price today, we have an average price above the average of last year. So we start with a high level. This will impact the revenue and maybe the volume of this added value. This is more robust revenue, not only because of the price, but the added value of the increase in the production line. We can elaborate what would be the revenue for the year.
Okay. Thank you, Werner, for the question. Very interesting. Concerning price and margins, the only point I would add is you said that for quarter surprise deal, but we had an increase of steel over the first semester. In the fourth quarter, we have this balance between price and costs. It is clear that the use of the capacity of the entire industry, not only us, it is very high. With delivery time expanded, we have 90 days to deliver a product. Now we used to work with 180 days. So this allowed us to work with healthier margins to capture this benefit.
Now, concerning the price increase, we have important partnerships with local steel suppliers, but also suppliers from abroad. So we are always looking to the price and the international quality of the steel. We work with the international price and the exchange rate. So we do this ad hoc in case we need to improve. As for the increase of the assembly companies, they have an important price with the steel companies. They are now negotiating an expanded term. Well, let us see how it will go. It is not very clear that this increase will come. We have the exchange rate. The price of the steel and iron ore is almost stable. Last year, we worked in significant increase monthly in 2020 and 2021. This would not be easy, but it is a manageable challenge.
Okay. Concerning the capacity and investments. Well, first, we are making significant investments for some time. We had last year that increased 10% and now more 7%. We have two robust plant in Panambi and Campo Grande that require investments to follow the increase in demand. We are always following this demand evolution. We are investing ad hoc, as you see. These are important investments, but not so significant. They account for about 3% of our net revenue and 25% of our net profit, so it fits our expenses. I consider this normal in the company's management.
Well, the painting. We are making investments not only in equipment and several other fronts concerning digital and post-sale, after sales that we are investing, but a significant investment in our plant and also process optimization. Painting is important because it put us in a different level for the quality of the product corresponding to our premium status. We had this already in our plant in Campo Grande, and now we are doing the same in Panambi. This will put Panambi in another efficiency level because it improves the flow in the plant. So in addition to quality, it is also improvement in efficiency flow and gain of productivity. I think that with this, I answered your question.
Well, Piero, can we count on the physical growth? Obviously, it depends on the market behavior and a higher added value because of the painting and other factors in relation to what was last year.
Yes. If you check, our increase was 80% of the net revenue. Part is increase in volume and part increase in price. We are growing volume because we have the opportunity. We want to capture this increase in volume, but also with our premium position that it's not only product, but you have the assembly, the delivery of work on time. Another point that I want to highlight, it was an exceptional year. The financial results show this, but the indicator that best show this is that all the works were delivered on time. This has a huge value to the client in a year that the industry was not only increase in volume, pandemics, and supply chain, but we complied with all the promises. We fulfilled all the promises to our clients. So this is the premium positioning that brings improvement in margin.
Okay. Thank you, Piero.
Thank you, Werner. It's a pleasure.
The next question is from Fernanda Rosano.
Good morning, Piero and Paulo. Thank you for receiving our question. Can you elaborate on the advance of the product segment? Can you comment on the distribution center and the increase in annual comparison? Thank you.
Thank you, Fernanda, for your question. You touched in one of the important pillars of the commercial strategy, the after-sales. We sell the project, but the project exists for 20, 30 years. So we want to be together with the client following the life cycle. First the warranty, then the routine maintenance, and then possible upgrades and expansions. So the after-sales is this, is R&S, parts and services in Portuguese, is increasing significantly over the years, and the distribution centers are part of this strategy. Not only the DCs, of course, we have a strategy behind it, services and parts, but the DC needs to put the parts close and fast on the hands of the client. We have five distribution centers, and we are planning to go towards the north with other distribution centers to improve our footprint.
The R&S is important because it is a less cyclic market, is a market of recurrent sales. It is less subject to the harvest itself. It's much more stable revenue. It's not only a commercial strategy to be closer to the client during the life cycle, but also to help our cyclicity in the financial results.
Concerning the actions in the commercial area, first, in the beginning of December, we had our head commercial. Now we have Bernardo Nogueira, our Commercial Director, that is here with us. He succeeded Tadeu, that is still in the organization after more than 35 years working with us. He will continue with special projects and servicing corporate clients. In this process, we restructured the commercial area. We have four areas, and one important area is the area of terminal and ports that we added to the industry that is not directed to a farm, but to corn ethanol that requires more robust equipment. We will also be closer to these clients of terminal and ports. With this, I think I answered your question. We believe that we have many initiatives to be taken, focusing on each of these segments. Thank you, Fernanda Rosano, for your question.
Just reminding you, to ask a question, please press star one. The next question is from Renata Cabral from Citi.
Good morning. Congratulations for the results, and thank you for taking my question. In the beginning of the year, all the industry and other sectors suffered because of the pandemic. Apparently, the situation is improving, but I would like to know how this has impacted Kepler Weber and what do you expect for the future? Then I will ask my second question.
Thank you, Renata. Important question. Absolutely. One of the biggest challenges was COVID-19, the pandemic. Last year, we also suffered with this. We were impacted, but it was a great learning for us. Our team did an exceptional work to guarantee the continuity of our operations. We operated regularly the whole year last year. Last year, in March, was very critical because we did not have the vaccine. This is true. This year, with this last variant of the Omicron, we had a significant increase of cases. By the end of January, we had 150 people in sick leave. Yesterday, we had 90 people, so this number is decreasing. These are leaves, very simple. We do not have any concerns about their health, but it is important for the operation. We have now 20 people positive to COVID-19.
We have the test very frequently, and when we have any suspicions, the employee goes to leave of absence. But if we look in terms of delay, we follow the deliveries daily. We have a delay of one day in January. Maybe we had one more day in January for billing that we did one or two days after. This shows our assertivity in delivery. For a three-month project, this is not that much. I would say yes, this was of concern. We are now in a better situation. We see a reasonable trend of drop, and we had very few impact in our deliveries.
Perfect. Thank you. My second question concerns the perspective for the agribusiness sector. We also see the corn harvest that is of concern. How this impacts your portfolio? Do you still have a positive perspective?
Good question. Because we can say how we are looking for this year. We have a robust portfolio that provides stability for the first semester. In these first 45 days of the year, we saw a continuity of the market with good results. I would say that in the first semester, we are confident for the stability of our deliveries. Now, let us go to the second semester, which is the next harvest for agriculture. They start in June. Yes, you are right.
Due to climate reasons, especially in the south of Brazil, because of the size of our territory, we have different climates. In the south here, close to Paraná, Rio Grande do Sul, other regions having exceptional productions. It is a sign of alert, but I think that the second harvest in these regions will start now. It also depends on the climate for the second harvest in this area. The price is helping because this drought also impacted Argentina, which is a big producer, and is sustaining the soybean prices in the international market. Yes, we are keeping an eye on possible challenges, but so far there is no significant alert. We need to adjust the company's strategies for any challenges that come up during the year.
Perfect. Thank you for your information.
Thank you.
If you want to ask a question, please press star one.
Now, we will take the questions asked via the internet through the webcasting. Let's see the questions. The first one from Carlos Herrera. He asks two questions. How do you see the price of steel for 2022? The second, do you think it makes sense for the company to assemble silos? Carlos, the first part, Piero can help us in the second part. The price of steel, we mentioned this already. The price. We see these news of a price increase, but we did not receive any of this, and we work on this. Today, we start the year normalized. The difference between price and cost is normal, and we will keep on working on this during the year. The second part, the possibility of Kepler renting the silos. Piero.
Yes, this question is very interesting because we as a company, we are looking to studying how to convert this demand in effective sales. One of the more concrete initiatives, we are building our own financial structure to finance silos. Also, we are thinking about rental or leasing. We are thinking of building pilots to see if this rent solution will make easier the producer decision. Sometimes the producer wants to have the benefit in the rental than to make a decision of investing of millions to buy the silo. Yes, we believe that this can be a solution. It has its challenges, as you know, because it is not a simple solution as industrial warehouse or an office because are very specific commodities.
But we believe as financial partners, we can provide a solution, and we are working on this to see if we can run some pilots to be an embryo to a new financial structure so we can enter in this rental/leasing line.
Now, a question from Mr. [Sergio Uba]. Congratulations for the results. With the pace of the growth in the Storage segment, can I understand that the company is with a good market share? Can you provide us a quantitative number of this?
As I said previously, all the market work, including us, with a high capacity in 2021. We saw a balance in market share with all players. But I want to stress that Kepler is a market leader. We have a 40% market share, which is 3- 4 times higher than the second market player. We have a significant market share compared to other players, and we want to continue with this leadership.
A question from Vitor Colli: "How is the productive chain right now and the inventory for this period?"
Vitor, the productive chain, it is not normalized yet, in our opinion. If you compare with last year, that was quite unstructured. We see an improvement, but it is not normalized. I can give you some examples. Still, our main raw material, it is normalized. This is a positive factor, but other components, we have some delay issues concerning freight and containers, because there is a shortage in the market. All of this is in a manageable level, and our priority is to service the client and not to let the client feel and see these problems. Anyway, the supply chain improved compared to last year.
The increase in inventory, your second question, yes, we had an increase for some reasons. First, because we are in a different level of billing. We have a higher inventory because we have expanded portfolio. We have some increase in raw material, and this increases the value of the inventory. The third is that our stock level matches our portfolio. It is not the case of increase because to have a precaution with the portfolio. No, we have a portfolio and our inventory matches the delivery time. It is much more a macro factor of increasing the level of activity.
Vitor is asking another question related to new business. "Concerning Sync and the new technologies, is there any movement to sell services to clients, increasing the recurrency?" Piero is excited now.
Sync is part of our digital journey, our onboard digital platform. It starts with an upgrade of our electronic equipment that allows the digital monitoring, automation of the equipment, and we are evolving to the improvement of the service to the client, to the client's success. I think that on slide 15, we show the movements we had in the second semester of last year to consolidate this digital journey going towards service, which is Kepler Digital, our operational center that follows clients' operation online. We will continue with this digital journey, not only with equipment and automation, but also with digital services to help the client to better manage their plants. We have several opportunities. We have interaction with after sales, and we aim to occupy this territory of services, which is also important for the recurring revenues. We have several plans.
We are increasing the number of plants with this Sync automation and connection with our operational center, and all the new plants are being delivered with this platform. We believe that this is a journey to show the client the benefits he has with this. I am sure this will generate a higher, a better satisfaction of the client, and will be based on the digital information that will be available.
Thank you, Piero. We have two questions related to margin. We will answer them together. The first from [Rafael Rangel] and other from Guilherme Marinho. Congratulations for the result. Is it possible to keep this high margin that we had in the 4Q21? Guilherme asks, is it possible to keep this gross margin of 21%? The company does not anticipate the margin, but we can provide you an idea of it. In 2021, was a very favorable year to Kepler Weber. The market was favorable. Our customers were capitalized with low interest rates in the great part of the year. The company was prepared in spite of COVID-19. The company knew how to deal with this, and we captured those opportunities. This gave us a higher scale of productivity that resulted in a positive expansion of the margin.
If we compare to 2022, some of these factors are present, others are not. We have the capacity. We improved our investments. In this scenario, we see a near We had a good semester, and with this, we are able to deliver. It depends on several factors that I mentioned, but the company, in my opinion, is organized, is delivering very healthy margin, and we will continue to work to improve this. Piero?
Just complementing. We are always keeping an eye on the market to capture any opportunity. We saw what we need to define, but this is our objective, maximize margins according to market conditions, and the market conditions in Brazil were good. In spite of mentioning that we had some drops in some regions, probably this harvest will be a record if we compare to others. The expectations are good, but we need to look the trajectory of the Brazilian agribusiness.
We have two questions related to the repurchase program. We have two questions very similar. The first one is from Luiz Gustavo. What motivated the company to cancel the rebuy program?
The company, we had the board meeting yesterday, and we closed this program that is started in December 2021. It's a buyback program. A program. The company acquired more than 4,000 shares, resulting in 15% of the entire planned program. This accounts for approximately BRL 15 million. Now we will have an assembly that will be held soon, and the company decided to put part of the resources that we would be investing in new shares buyback in a proposal of additional dividends.
So you can see our explanatory notes. The company is suggesting, and to be approved in the assembly, BRL 85 million. All the rules we have, the distribution after the reserves would give a 50% distribution of the reserve balances, something more than BRL 50 million, but we can have BRL 65 million as a proposal. In summary, part of the resource that would use in the buyback program, we are anticipating now as a dividend, very similar and even faster.
Maybe, Paulo, what I'd like to add is that we from the executive management and the board, we are always looking to the capital structure because it's very important, and we've been optimizing this capital structure, not only in the payment of dividends, but last year we had the bonus, the capital reduction. With this, we're trying to optimize the capital structure, and we are management the company's cash the best way for its improvement, growth, and a better remuneration to the shareholders.
Now we close the Q&A session. We go back to Mr. Abbondi, CEO of the company, for his final considerations.
It is a pleasure after such a rich discussion to close our conference call where we show exceptional results. I'd like to share with you my view about the company. 2021 was my third complete year with Kepler Weber. I am really pleased to be part of this team and to lead this team. It was a very exceptional year because of the several factors as we discussed, the financial figures show it, but we have a very structured way to reach this point. First, the company has a robust brand that was built over 86 years of history, exceptional market coverage, and also many other things in terms of productivity, commercial management, market positioning that I add expectations and deliver very good results.
More motivating is to look to the future and see that we have several opportunities for Kepler Weber to continue this leading trajectory and growth in terms of results and market. During this call, we showed some, but we have some important examples. The Post-Harvest segment with the distribution centers and opportunity of continuing with the client, generating satisfaction, relationship, and recurrent revenues is an area that requires a lot. The opportunities in the digital universe, leveraging our digital platforms to services, it is another way to grow. A deficit in storage in Brazil is a challenge for us because we think we are part of the solution, part of this equation to make Brazil solve this problem because it creates impacts not only in food security but logistic.
We talk about the funding or financing structure. We are building the potential of renting silos. We are looking for opportunities to fill this gap. To conclude, we have many challenges ahead, which is good, but we are well prepared and highly motivated for this journey. Very soon we will celebrate 100 years of the company.