Good morning, ladies and gentlemen. Thank you for holding. At this time, we would like to welcome you to the CCR S.A. conference call to discuss the results for the third quarter 2019. We would like to inform you that all participants will be in listen-only mode during the company presentation. Soon this, we will go on to the question and answer session when further instructions will be given. Should any participant require assistance during the call, please press star zero to reach the help of an operator. Before proceeding, we would like to clarify that forward-looking statements made during this conference call, referring to the company's business outlook, projections, and operating and financial goals are based on the beliefs and premises of the CCR management, as well as on information currently available to the company. These forward-looking statements are no guarantee of performance.
They involve risks, uncertainties, and premises as they refer to future events, and therefore could depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operating factors could affect the future results of the company and lead to results that differ materially from those expressed in such statements. We would now like to turn the floor over to Mr. Eduardo de Toledo, the CCR Corporate Management Vice President. You may proceed, sir.
A good morning to all of you. It is a pleasure to be here once again at our earnings release call for the third quarter 2019. Today with me at the call, we have Arthur Piotto Filho, the CFO for CCR, as well as Marcos Vinicius Macedo and Flávia Godoy. Very well. First of all, what I would like to address you refers to what happened to Leonardo Vianna.
We move back in time to August of 2018, Marcos accepted the invitation to take on the position as CEO of CCR. The great acknowledgment that we all had for him, the Board of Management understood that he would be the ideal person to lead CCR in a moment of transition because of his deep knowledge of the business, because of his personal leadership, and his ability to run businesses considering all of his trajectory in the new business area in the company. He helped to create this company. As of that point of time, Leonardo created a complete renewal in all of the people that reported to Leonardo, the company CEO. That began in November with my coming in. I was the Vice President of Corporate Affairs. We also had the Vice President of Compliance and Governance, and this continued on during some months.
We, in the last few months, had new presidents for each of the four divisions of CCR. We have Eduardo Camargo, Fábio Russo, and others now once again taking office to lead the four divisions of the company. In this fashion, we now have this process of change and renewal of the top levels of management coming to a close. Because of this, the Board of Management understood that it would be the moment to look for a new CEO for the company. We did this with great transparency before the market, and at present, with a great deal of tranquility and dedication, we can do this as the company has deep foundations thanks to this new management team that has taken office and is leading the main areas of the company. Let us speak somewhat about our results.
I would like to highlight that, in my opinion, we had good results this quarter. The traffic on highways had good evolution, 2% vis-à-vis the same quarter in 2018. These 2% are quite consistent for light vehicles as well as commercial vehicles. Operating adjusted EBITDA rising 17.6% year on year, which means that we have consistent results. This is a good time in terms of the Brazilian economy. This is something we feel through the highways that we manage, that the situation is getting better, that we are in a better moment. When it comes to our projects in terms of operational excellence and governance that we mentioned in other calls, all of these are underway. They're doing well.
Very soon we will be convening an assembly to be able to adjust our bylaws to the changes that have been implemented. In the initial words, I would like to refer to our business outlook. What we had as an outlook at the beginning of the year has been confirmed, and in terms of the pace, there exists a great interest in new concessions, in building new concessions. As an example, we have the federal highway until the end of 2021. We will have 15,000 bids with 21,000 kilometers in São Paulo. We had the recent announcement of the FICO concession of only 1,200 kilometers in the south of Goiás, Minas Gerais. We also have concession for state highways. In terms of airports, we will have 6 different auctions announced by the government, with 37 new offers until the end of 2021.
We have a multitude of new projects in Brasília and São Paulo, which represent several opportunities, new issues, confirming the good moment for the infrastructure sector in the country. I would now like to turn the floor to Arthur Piotto, so he can refer to the details and results for the third quarter 2019.
A good morning to all of you. First of all, I would like to thank you for your participation and interest in the company. Before going on to the results, I would like to mention that the release is available at our site, www.ccr.com.br. To speak of the main highlights, we speak about traffic with a growth of 6% vis-à-vis the third quarter in the previous year, excluding the concession of ViaSul and once again, with very good figures.
The recovery of traffic took place with light vehicles as well as heavy vehicles, showing the positive performance growth with 2.2%. We also highlight the main pro forma figures for this quarter. That is to say, businesses where we have shared control or where we have no control, consolidated according to the CCR share. We exclude non-recurring effects, new projects and assets where the company has altered its share or interest to facilitate the basis for comparison. In terms of adjusted EBITDA, same basis, an increase of 5%, resulting mainly for a better operating result. Adjusted EBITDA, operating adjusted EBITDA reaching BRL 1.5 million this quarter, with an increase of 12% vis-à-vis the same period in 2018, with a margin of 16.3%. The maintenance of the operating adjusted EBITDA vis-à-vis the same quarter in 2018 shows an increase in the services for conservation for the NovaDutra DOSC.
Net income, same basis, reached BRL 352 million this quarter with a drop of 3% vis-à-vis the same quarter in 2018. At the same time, net income reached BRL 342 million, a slight drop that mainly reflects the greater depreciation and amortization due to the end of the contract of RodoNorte and NovaDutra. During this quarter, investments in maintenance and others total BRL 446.1 million. The concessionaires that most invested during this period were RodoNorte, ViaSul, and SPVias. When it comes to our net indebtedness, we reached BRL 13 million this quarter, an increase of 3.2%, and a reduction of 1% when compared with the third quarter of 2018 and the second quarter of this year respectively. The company leverage measured by net debt over EBITDA had a drop of 2.5 times in the second quarter of this quarter, 2.3 in this third quarter.
A rather comfortable situation that shows how assertive our strategy has been, as mentioned by Eduardo. We would now like to go on to questions and answers. Operator, you may proceed.
Ladies and gentlemen, we will now go on to the question and answer session. Should you wish to pose a question, please press star one. To remove your question from the queue, press star two. The first question is from Victor Mizusaki from Bradesco BBI.
Good morning. I have two questions. The first referring to Leonardo Vianna, the CEO. Leonardo caused a great deal of changes in urban mobility. When it comes to our pool, the changes in structuring of these projects now with Leonardo Vianna leaving, what will happen in the search of new assets for CCR, and what will happen with the new business area? Will they continue to offer support in this?
My second question, in the last conference call, we spoke about some of the expenses that you had with outside consultancy and attorneys, and you mentioned that some of these investigations were highly confidential. I would like to know if there is an update in this process.
Good morning, Victor, and thank you for your question. Let's begin speaking about Leonardo Vianna. In truth, three years ago, CCR carried out a significant structural change, which was the creation of the divisions. Upon creating the divisions, we no longer had an area for new corporate business. The intention was to increase the company's ability to generate new business, making the most of these new opportunities. Therefore, it has been three years that Leonardo has been managing new businesses, and this is done in each of the divisions. Each division has its own culture for new businesses.
Therefore, with Leonardo stepping down, this will not have an impact on the company when it comes to new business. Once again, all of the new businesses have been carried out by these new teams within that new configuration, so there should be no impact in this. Now, evidently, each of the people that are leading the division has this as a mission of working with new businesses. Of course, some of the people do come from new businesses, and they are now heading the new divisions. Regarding the second issue, the evolution of our confidentiality agreement and the outlook for this, well, this continues to move forward. Naturally, it is a continuum. As of the moment in which we signed these agreements, we committed to collaborating continuously as well. All of these issues are brought to the agencies, to the organs, with a great deal of naturality.
This is what we expected from the process. Thank you.
As well, if I could pose the last question. We have seen several problems with the concessions in Rio de Janeiro. CCR with Barcas had a problem with the yellow line, and we hear discussions regarding VLT. The question is, does it make sense to continue with your expansion in Rio de Janeiro? Which is your outlook of what is happening in Rio de Janeiro?
I believe that all of these issues in the medium and long term will resolve themselves positively. I deem the state of Rio de Janeiro as being a highly promising one because of the natural resources, because of the beauty. Now, Rio is a state with many virtues, with a great deal of natural resources, and all of the growth, especially future growth, will attract concessions.
I believe that these issues pertain to the short term. In the long run, they will cease to exist, and I believe the state will observe the need of dealing properly with concessions that already exist to be able to attract new investment. Thank you.
Thank you very much.
Our next question comes from Rogério Araújo from UBS.
Good morning to all, and thank you for taking my question. I have two questions. If you could give us more details on the depreciation and others of the NovaDutra, if the present-day investments have been paid out in less time, or if there has been a change in the depreciation curve of these investments. This is my first question.
Thank you. Hello, Rogério. Thank you for the question. Well, this refers to the investments that are being made presently.
What is happening is that we have to depreciate and amortize all the investments until the concession has been signed. This represents a shorter period. From the viewpoint of CCR, we could have an increase in depreciation. This will not represent an impact on our cash, and the depreciation enables us to fiscally make the most of the investment in a shorter period of time. We could consider this to be an advantage for the company to work with a speedier depreciation where we're closer to the end of the concession.
Very good. My second question refers to MSVia. It was stated that this week you would come to an agreement for a concession, maybe in 2014 to 2015. The idea was to reduce the toll and then set it up for bid again.
Are you in agreement with this, and which is your view of a resolution in this case?
When it comes to MSVia, our vision is that we have to return this. The conditions in which the government bid during this round were not complied with very clearly. There were some issues, some obligations that pertained to the federal government that were not complied with, that made it impossible to continue on with the concession according to the way it had been initially bid. The government should acknowledge this through an amicable decree.
It is an interesting alternative, we will decide whether we adhere to this or not once we have greater knowledge of the issues that have come about these days and that will have to be better detailed in terms of how this friendly return of the concession will be done and according to the way the government has suggested it. We believe that this is a way of resolving the issue very well. What would be just for the non-amortized investment? Now, the law that covers concessions makes it very clear that the investment may have to be preserved. This is the general principle. Once again, we are awaiting. There are several details regarding this issue, and we are hoping to receive more details to be able to assess if we can continue on with the concession or not. Very well. Thank you very much. Thank you for your response.
Our next question comes from Felipe Zanoglia from Credit Suisse.
Good morning to all of you. I have two questions. The first regarding traffic. I would like to know if you're speeding up the heavy vehicle traffic because there has been an economic recovery since October. The second question refers to your capital allocation strategy, and in terms of dividends, you have been paying out dividends during the last few years. How does this converge with your pipeline of projects that is about to come? You have a very good pipeline. The coming months, you're going to begin a very new project, the accreditation of NovaDutra. What's going to happen with a company that is paying out quite a bit of dividends but will need capital to grow? Thank you very much.
Felipe, thank you for your question. Let us begin with the first one referring to traffic. The growth was of 2%. The 2% refers to light vehicles and heavy vehicles. Therefore, we have had a consistent growth in both of these. The end of the quarter was stronger. The 2% are the average for the quarter. September was the strongest of the three months. In October, according to our first measurements, the month was stronger than September. We are under the feeling, therefore, that this increase continues with light vehicles as well as in heavy vehicles. Once again, it's looking good. It seems it's going to improve. When it comes to the dividend, our dividend policy is the one that we have of not retaining cash. Obviously, there's that steep cost of carrying over cash that you're not applying.
Our leverage is at 2.3 times, which shows that we have a very comfortable position when it comes to making the most of opportunities, increasing our indebtedness, of course, within very cautious parameters, ensuring that we're always financially conservative. To get to the point where we need more equity and this equity would come from a reduction of dividends, of course, this would be an alternative to have more equity. We're very far from that scenario. We still have a great deal of room to grow through a greater indebtedness, which is what brings greater value to our shareholders. This is the first step that we will take and perhaps subsequently think about equity through a reduction in dividends or some other alternative. Thank you very much. Our next question in English comes from Stephen Trent from Citi. Stephen.
Thank you very much, everybody, and thanks for taking my questions. I actually just have two I'll just rattle off real quickly. One, apologize if you mentioned, I didn't hear some of the answers so well, but on urban mobility projects, do you expect a lot of the new projects to be focused on São Paulo, or do you see opportunity in other areas? The second question was a follow-up on Felipe Zanoglia's question. With interest rates so low, has that led you to adjust your thinking, in terms of ideal leverage for the company? Thank you.
Stephen, thank you for your questions. I will respond slowly in Portuguese so that you can hear them through the translation. The first question referring to urban mobility, we have very interesting projects in São Paulo, in fact, Line 8-Diamond, Line 9-Esmeralda. That is to say, we have several projects that are being carried out for the state of São Paulo with interesting opportunities. We have projects for other states of the federation, in Brasília, Navegantes, even in Bahia. The subway in Salvador, Bahia, is of great interest for the population and the government. They are interested in extending the subway in Bahia, which means that there are opportunities in several states of the federation. This is very important for Brazil at present, and CCR focuses on this for its growth.
Regarding the drop in the interest rates and the issue of the limits of our leverage, I fully agree with you. The scenario with lower interest rates that we have observed in Brazil that was somewhat away from this movement, shows a convergence towards lower interest rates. The question is, which will be a healthy level of indebtedness? I believe that these levels of indebtedness deemed to be healthy can perhaps be increased because of these interest rates.
Okay. Thanks so much.
Our next question comes from Pedro Bruno from Santander.
Hey, good morning to all of you. Thank you for taking my questions. I have two. The first refers to the next auction for PIPA or Centro-Oeste de Viação. I would like to know what you're thinking in terms of this project. The CCR stance is to participate in this pipeline that is quite robust. This is a very specific project when it comes to size, and it's the next one that will be auctioned. My second question refers to the economic imbalance, especially in the state of São Paulo. For CCR, it's not only in São Paulo, but both the state and the regulators have conveyed a very active message when it comes to this imbalance, and we would like to know what you're thinking, what will happen with timing and the structure to reorganize this imbalance. Thank you.
Pedro, thank you for your questions. We're going to speak about PIPA initially. As you mentioned, this is a project with a significant dimension, 1,200 kilometers, perhaps one of the most interesting concessions we have had in the country. It is very attractive and interesting. Yes, we are focusing on it. So far, we don't have a stance. Once again, our presence in those opportunities depends on taking a good look and looking for the best possible equation, always being financially cautious and being careful with the variables to ensure that we're going to be creating value for our shareholders and stakeholders. We are considering this opportunity that is interesting because of its dimension.
When it comes to the imbalances in the state of São Paulo, now we do understand that from the part of the state, there is a desire to resolve what had happened, to resolve what was left pending in the past. Along with this, giving trust to new investment, quite positive, of course. We will require time because all of these conversations mean the participation of several actors. We have a positive outlook on this, and we're quite determined to continue on with this. Thank you.
Thank you very much for your responses.
Our next question comes from Lucas Marquiori from BTG Pactual.
Good morning. I have two questions. The first is a follow-up on Pedro's question, the negotiation of imbalances.
If you think it will be possible to also include a discussion on the contracts dating back to 2013, if this could become part of that package of negotiations, that legal discussion that is pending with the state of São Paulo, if you believe you could reach an agreement. The second question, somewhat more direct, what is happening with the new project, ViaSul and ViaMobilidade, if you could give us a better perspective on this. Thank you.
The first question, the negotiation of our imbalances. Yes, there is a desire on both parts to resolve the issues of the past, to come to an agreement on all of the pending action. It's precisely what we are doing, of course, is linked with new investment, always with the intention of resolving the issues of the past. This is precisely what is being negotiated.
Now in ViaSul, we have traffic above what we had forecast in our business plan. We're doing very well. CCR shows that our polls on customer satisfaction are very high. We've been working intensely towards this, and of course, we have received positive results. We continue with the process to open a new toll park the coming year. Everything is operating well, perhaps somewhat better than we had expected in terms of mobility. Line number 5 is doing well. It's doing so well that we have paid out the first dividend this month, something we had not foreseen. This for Line 5. Regarding Line 15, we have done everything that we had in terms of our obligations, and we're now awaiting to see the stance of the government. I think they're waiting for the conclusion of the investment before we can sign the contract. Thank you.
Thank you very much. At this point, we would like to end the question and answer session. We will return the floor to Mr. Eduardo de Toledo for his closing remarks. You may proceed, sir.
Thank you very much. I would like to comment on some issues. First of all, I would like to share with you very good news. Very recently, the ranking of the 10 best highways in the country came out, and it is very satisfying to say that CCR had five amongst the 10 best highways in the country. Five among 10 highways are managed by CCR. Once again, this points to the quality and service rendering and the concern that we have in rendering excellent service to our users. Another point that I would like to mention before concluding is that we're quite optimistic about the future.
The solidity, the robustness of the financial situation of CCR, our position of indebtedness, the access that we have to capital markets, our good performance, which very clearly enables us to have good operating performance and enables us to be quite bold when it comes to seeking growth. The technical quality and the engagement of our associates, all of this converging together enables us to be deeply convinced that we will be quite successful when it comes to achieving new business that will arise thanks to the resumption of the economy and the search for new infrastructure. We're very optimistic in terms of this. These are my closing remarks. I would like to thank all of you for your presence at this call, and I hope to see you again soon. Thank you very much. The CCR S.A. conference call ends here.
We would like to thank all of you for your participation. Have a good day.