Good morning, ladies and gentlemen. Thank you for waiting. Welcome to the earnings release conference call of CCR S.A. to discuss the results regarding the Q2 of 2020. We inform that all participants will be in listen only mode during the company presentation, and later on, further instructions will be given when the Q&A session starts. Should any of you need assistance during this call, please request the help from an operator by pressing star zero.
Before proceeding, we would like to clarify that statements that may be made during this conference regarding the business prospects of the company, forecasts, and operating and financial goals are based on beliefs and assumptions of CCR management, as well as on information currently available to the company.
Considerations about the future are not guarantee of performance since they involve risks, uncertainties, and assumptions, and therefore depend on circumstances that may or may not occur. investors should understand that general economic conditions, industry conditions, and other operational factors may affect the business prospects of the company and lead to results that differ materially from those expressed in such future considerations. Now I would like to turn the floor over to Mr. Eduardo de Toledo, Vice President of Corporate Management of CCR. Mr. Toledo, you may proceed.
Good morning, everyone. It's a pleasure to be here with you. Today at the conference we have Waldo Perez, our CFO and Investor Relations Officer, Marcus Vinicius Macedo, Investor Relations Manager, as well as an entire RI team. Especially today, we have the presence of Marco Cauduro, who is the new CEO of the CCR group, to whom I hand the floor now.
Good morning, everyone. It's a pleasure to be here with you to speak about CCR, its current moment, its plans for the future. During more than 20 years of existence, the company had only two CEOs. now I'm the third CEO and the first person outside the group. The challenges are big. It's a complex moment or times for Brazil and the world.
We're confident that we have the staff and the resources to advance towards the future, keeping the leadership in mobility. People, culture, and sustainable growth are the pillars that will sustain our new phase. They will be the leading characters of the development cycle that we envisage for the near future.
We'll continue to work so that the historical tradition of valuing talents will be recreated and improved. At the same time, we're continuing with the initiatives of revaluing our corporate initiatives, our culture t hat's where people express themselves and contribute to the company. We'll continue to focus on sustainable growth and commitment to diversity, s afety of our customers and employees are key.
Amongst all that, we are committed to ethical management in line with the vision of Brazilian society and of the countries we operate in w e have more than 15,000 employees in Brazil, U.S., and Latin America, and they will be key to generate value for all stakeholders. I am aware that the leadership of this process and having a north will be key to enter new businesses and grow in the business where we are leaders.
And in order to face these new challenges but i believe that together, as a group, we know that we are contributing to resume the economic activity, generating jobs and revenue, and innovating in searching for new opportunities. I would like to finish by thanking you for the opportunity of sending this positive message about the future of CCR, but also to say about this important moment that we're going through in Brazil and worldwide. I turn the floor over to Eduardo de Toledo.
Thank you, Marco. That Marco's joining the company, that completes the renovation process of the management of CCR. Most of the people come from CCR, who have a deep knowledge of the business, and this staff is completed by people hired from the market that bring new knowledge and new points of view to the company.
Talking about the quarter itself, even though Q2 2020 has been impacted by the pandemic, there's been a clear improvement in performance of results throughout months, i f we look at the weekly traffic of the roads, that becomes very clear.
The last week that was published to the market, that goes from 31 July to 6 August , we had, for the first time after the beginning of the pandemic, a reduction of traffic of only one digit, 6.3% on comparable basis, to be more precise. This resumption of the activities is always happening in the urban mobility concessions, although less intense. For airports, that's a bit slower, but it has started. We're still limited in the number of flights.
Regarding the financial position, we made the decision, as communicated to the market, to anticipate all the contracts of financing we had planned for this year. We ended June with BRL 6.3 billion in cash and investments that have immediate liquidity, which allows us to have cash to deal with anything that may happen until the end of the year f inally, I would like to emphasize as well that during this quarter-
-we reinforced the team dedicated to prospecting for new businesses to be prepared for this new cycle that starts. That's the summary I had to make, and now I turn the floor over to Waldo, who will talk about these financial results in more detail.
Thank you, Eduardo. Good morning, everyone f irst, I would like to thank all of you to attend the call. Before talking about the earnings of this quarter, I would like to say that the earnings release is available at the company website, www.ccr.com.br/ri.
As mentioned by Eduardo previously, we've seen that this Q2, the results were impacted by COVID-19 pandemic, especially due to the reductions in the lockdown that was established in mid-March that caused a lower number of vehicles to traffic the roads, and also reduction of users' demand in airports and urban mobility t alking about the main highlights of the quarter-
-we highlight the pro forma traffic of vehicles that decreased 18.2% when compared to the Q2 2019. Excluding ViaSul traffic, it fell by 22.1%. The performance of light vehicles was 42% lower than the same period of last year. The traffic of heavy vehicles was much more resilient, with a drop of 4.3% when compared to the same period of last year.
We now highlight the main pro forma figures for the Q2 of 2020, now c onsidering the business that we don't have control over or which we share the control, consolidated proportionally to the interest of CCR in each line. For the figures of the same basis, we also include new projects and assets that the company changed its interest as we detailed in the earnings release.
The net revenues adjusted on the same basis had advanced BRL 1.7 billion in the Q2 2020, with a decrease of 25.8% when compared to the same period of last year. The adjusted EBITDA on the same basis had a reduction of 41.5%. The EBITDA margin changed. It's 13.3 percentage points lower than the Q2 2019, reflecting the same effects previously mentioned. The net loss on the same basis amounted to BRL 164.7 million in the Q2 2020, compared to a profit of BRL 329.5 million in the same period of last year.
Impact caused on demand of our business, we had several restriction of mobility imposed since mid-March due COVID-19 pandemic, and in addition, due to the higher effect of depreciation amortization due to some concession agreements of RodoNorte that are coming to its end. In the Q2 2020, investments totaled BRL 229 million, and concessionaires that invested the most were RodoNorte with BRL 69.6 million, ViaSul with BRL 61.5 million, and SPVias with BRL 25.8 million.
With regards to the pro forma net debt, we reached BRL 15.6 million in the Q2 2020, with an increase of 9.1% when compared to the Q2 of 2019, and 4.4% when compared to the Q1 of this year. The leverage of the company, measured by the net debt over adjusted EBITDA, had a slight increase when compared to the Q1 of 2020, went from 2.4 x to 2.8 x in the Q2 of this year.
This index reflects a very comfortable situation and supports our strategy of growth and financial discipline. Despite the high volatility caused by COVID-19 in the financial market, CCR continues to have a broad access to credit facilities.
In addition, I would like to mention that continuing with the strategy adopted by the company and communicated in the Q1 of this year to provide funds to go through this uncertainty period caused by the pandemic, as mentioned by our CEO, we completed the advances of fundraises-
-estimated for the rest of the year w e completed this quarter, we were able to raise BRL 6.1 billion of funds i n July, BRL 604 million that were planned for this year. In addition, we prioritized investments that contribute to the conservation of our cash position, as mentioned again previously by Eduardo. For further details, please check the COVID-19 section of our earnings release. We're now open for the Q&A session. Operator, please, you may proceed.
Thank you. We'll now start the question and answer session. To ask a question, please press star one. To remove your question from the queue, please press star two. Our first question comes from Regis Cardoso from Credit Suisse.
Good morning, everyone. Thank you, Marco w elcome to the company, Eduardo and Waldo. I would like to benefit from the presence of Marco to ask him about his vision about this new growth cycle for the company. I think it's interesting when you talk about entering new segments. It seems to me that this new cycle of growth will be more targeted to diversification rather than focusing on core activity and streamlining.
I would like to understand if I got it correctly. Do you mean diversification in terms of more services? more urban mobility? Or even entering the sanitation area? Are there any other industries or sectors that you plan to enter?
That's the first question t he second question is about costs. In the Q2, it caught my attention the fact that there was not a significant cost reduction in the company. I would like to understand if there is any particular reason for that, and whether you believe that the rebalancing methodology could predict a reduction of cost in the period, and therefore you would lose value because of that. Also about the contractual requirements. Do you envisage this happening in terms of extension of the concession periods? or tariffs? and if there is any preference between both?
Just a third question to Waldo, a bit more specific a s you see the loss in traffic, the accessory revenues from financial assets, especially urban mobility, became more significant as a whole. Waldo, could you remind us of the nature of such revenues and whether they should accompany traffic, because this line became more significant altogether. Thank you.
This is Marco Cauduro t hank you for the question. I will start answering, but then I'll ask Eduardo and Waldo to help me, especially the third question w ell, as in my initial comments, this is a new time for me i m now taking over this leadership. I think that a key pillar in this new phase of the company is to sediment the organizational culture of the company, people management, our esprit de corps, and our execution capacity. At the same time, as you well know, the company has a need to recycle its asset base and its concessions.
In addition to a pipeline of opportunities, according to the infrastructure transformation of Brazil, that's important. As a leading company in this process, the company continues to capitalize on these competence that have brought us here with a high competence, the capacity to develop projects and render them operational and execute them.
Therefore, the company will remain focused on mobility structure, road concessions, and these are the areas we're currently operating, capitalizing within our competencies that have brought us to this point. We know that there is an interesting pipeline of roads, as well as mobility infrastructure and airports as well.
The strategic north of the company is to continue to operate in excellence within these modus that we operate in. At the same time, within a structure of new businesses that assesses new opportunities with a main focus on the modus that we already operate, or the operation modes, there are some related investment opportunities that we could explore according to our current competencies that could make sense but t oday, there is no strategic direction already determined.
But we have the fiduciary duty of due diligence of the company to wait for opportunities and be ready to explore them when the opportunity for growth appears. Now I would hand the floor over to Eduardo de Toledo and to Waldo that will answer the other questions. Thank you.
Thank you for your questions, Regis. Speaking about the other questions you've asked, in terms of costs, it is important to take into account that in the case of CCR particularly, there are international airport operations, both in the Caribbean, in the United States, and although we have undertaken important cost reductions, there has been an important devaluation of a Brazilian currency, the real.
If you exclude this effort or this effect, I'm sorry, this effort becomes more clear because it's not shown due to the exchange rate effect w e had a cost reduction of hours of work, of wages and salaries but, w e must bear in mind that we must maintain the service levels of agreements we are part of. So we are making such reductions, but always taking into account the service level commitments.
Going to your third question regarding the agreement requirements in terms of preference, we do not have a preference. We believe these renewals of concessions should make sense to the granting power. It is their right to determine how this will occur, o f course-
-if you have a concession that is close to its termination, to its end, the rebalance by contract extension, for example, could have a very strong effect in a longer-term concession t he present value of an agreement extension for one that is close to its end, that adds more value so t hat will be taken into account by the granting powers when it's time to determine how this rebalance will take place. As to the last question you asked about the loss in traffic or the decrease in traffic, I think Marcus could help us answer that.
Hi, Regis. How are you? Marcus Vinicius speaking. In the table of other revenues, you could see that the mobility projects had an increase in revenue t hat's related to revenues for mitigation of demands that these projects have. When the demand is below the expected demand, there is a compensation or is an offset that comes from revenue, and each project has its specificities f or example, in the subway of Bahia, Metrô Bahia.
We had a significant reduction in demand, about BRL 100 million. The mobility of Lines 15 and 17, the mitigation revenue was BRL 30 million, and that's the effect you see there. The explanation is in the table of revenues in the earnings release. That's linked to traffic, e ach project has a different rule for mitigation.
Later on, if you want, we can get in touch and discuss that in detail. It depends on how traffic performs t here are some brackets of demand, and according to the bracket, there is a revenue to be offset by the government, to be paid by the government in the period following that one.
Okay, great. Thank you for your answers v ery complete. Thank you.
The next question from Victor Mizusaki from Bradesco BBI.
Good morning. I have two questions, actually three. The first one is to Marco. When we look at the new portfolio of CCR, even before the pandemic, some assets in the portfolio did not attain the expected result. There's one that had a request for anticipated termination, but TAS and Confins.
Given this pandemic scenario, everybody agrees that the airline industry has been highly affected and their recovery will be very gradual, and therefore, this will have a relatively significant impact on airports. I would like to understand on your side, in terms of this vision about portfolio, does it make sense to maintain the operation the U.S. TAS?
When you see on the cost that has a negative effect on cost due to exchange rate and also Confins. Or rather, it would be interesting to ask for the early termination of this concession. The second question is whether you're interested in taking part in the auction of sanitation in Alagoas in September. The last question for Eduardo, just to clarify the rebalance issue, is this more about the Coronavirus or is it also about São Paulo? Thank you.
This is Marco Cauduro speaking. Victor, thank you for the question. I've been in the company for 30 days, although I have some hypotheses about the long-term performance of the company and choices of portfolio for the future, we're developing a work with the team and reassessing some decisions made in the past, and also thinking about future strategy.
Today, our vision is that the market we operate are all strategic for the company. I'll let Eduardo help me in that regarding TAS, our vision at first, and the vision of the Board of Directors, is that all modes are strategic. They all offer opportunities of growth with rates of return that are rather consistent regarding the policy of the company and, w e have the competencies to explore their maximum potential value of all these businesses.
Of course, with my joining the company, it is natural to review the strategic positioning of the company, but our vision and conviction is that the transportation modes that we operate in are strategic for the company e ach one has different economic characteristics and expected return, but we can get the best of each one.
Regarding the auction, the company has a structure of new businesses, a staff that's dedicated to explore new opportunities for growth, and as I said before, sanitation is one of these possibilities within the transformation agenda of the infrastructure industry of Brazil, and we are evaluating potential businesses in that area. Edu, would you like to answer the question?
Yeah. Okay. You mentioned Confins, MSVias, and TAS l et me talk about the three C CR MSVia is clearly, we are looking to explore this alternative that the government created that's very much welcome, which is the early termination or return of the concession. We are going well in that process, and there is a possibility that we may have an amendment until the end of the year, so as to adopt this amicable termination of the agreement.
In terms of TAS, all the airports are facing difficulties, but TAS works on cargo movement, and we see our contracts grow, specifically focused on some electronic commerce providers. TAS is doing well, w e're quite pleased with the business results in the U.S., and this is an important basis for originating other businesses with interesting prospects. Finally, regarding Confins, obviously, the airport industry's suffering.
On the other hand, the government is treating this industry very seriously and providing the help that the industry needs so t he government has postponed the granting to December, t he government is working hard on providing a solution so i believe that the prospects for Confins are quite positive right now. Of course, it's been affected by the pandemic, but it has good prospects, and of course, we're taking several initiatives to improve the business.
We have demonstrated that we're trying to potentialize the results of Confins. Just to comment on the three points that you mentioned. Finally, about this rebalance, we are talking directly about Coronavirus and how this could happen in terms of suspension of deadlines, concessions that would terminate earlier.
You could review the investment program to schedule them differently with the longer periods given the pandemic. Specifically about São Paulo, clearly, these conversation rebalances are going to the extension of terms. This is the way that's being used to meet the requirements of São Paulo and to solve problems from the past.
Just a follow-up on this point, t here's been a decision on ARTESP regarding Imigrantes signaling a term of 90 days to reach an agreement on the side of CCR. Does it make sense if there is a similar term?
I think that the government has treated this issue in a way to solve the problems of the industry as a whole, to solve the problems from the past, to try to potentialize on future investments t hat's the view of the government. What happened at EcoRodovias is similar to what's happening with us t his is how they're dealing with the industry as a whole.
Okay. Thank you very much. Great.
Excuse me. I would like to remind you that if you want to ask a question, please press star one.
Thank you all very much. I would like to end this earnings release conference call saying that during moments like this, that we're going through, the strength of CCR is very clear and t his strength comes from a team that's highly qualified and engaged. It's very clear in the way that CCR has dealt with this difficult moment we're going through. This strength and power makes me absolutely confident that CCR has all the potential to play a key role in this new cycle that is starting. I would like to thank you all for your attendance, and I hope to see you soon in the next conference call. Thank you.
The conference call of CCR has now ended. We thank you all for attending, and have a good afternoon.