Good morning, ladies and gentlemen. Welcome to the conference call of Marcopolo S.A. to announce the results of the first quarter of 2022. This conference call is also being broadcast at the investor relations website of Marcopolo at ri.marcopolo.com.br. Simultaneously in Portuguese and English, where the slide deck is available for you to download. Right now, all participants are connected in listen-only mode. Later on, we are going to start a questions and answers session when further instructions will be provided. Should you need any assistance during this conference call, please request the help of an operator by pressing star zero. You should be reminded that this conference call is being recorded.
Before continuing, I would like to clarify that statements made during this conference call about Marcopolo's business prospects, operational and financial projections and goals, and also, statements made about its growth potential are forecasts based on the expectations of the company's management regarding the future of the company. Forward-looking statements are highly dependent on the conditions of the domestic market, the overall economic performance of the country, and on international markets, and therefore, are subject to change. Today with us here in Caxias do Sul, Rio Grande do Sul, we have Misters James Bellini, CEO, José Antonio Valiati, CFO and Investor Relations Officer, and Eduardo Willrich, Planning and Investor Relations Manager. First, we are going to hear Mr. Valiati talk about Marcopolo's performance in the first quarter of 2022.
We are going to hear Mr. James Bellini to talk about the outlook for the rest of the year. Now I would like to give the conference over to Mr. Valiati. Please, Mr. Valiati, you may start.
Good morning, everyone. We would like to thank you very much for your attendance of our conference call for the first quarter of 2022. Now, going to slide number four, where we are going to give you a brief overview of the company's profile. Marcopolo is a global reference as a bus bodybuilder with operations in all market segments. Our buses are acknowledged for their safety, comfort, quality, and in-built technology. We have been a publicly traded company since 1978, and we have more than 70,000 shareholders today.
We are present with 11 manufacturing plants in nine countries in five different continents, and we have more than 10,000 employees. In the first quarter of 2022, the Brazilian production for bus bodies was 4,000 units, 32.3% higher than in the first quarter of 2021. The growth in the year-on-year comparison reflects the pandemic and the recovery of the manufacturing industry. The production meant for the domestic market has grown, whereas the production for exports has increased 76.2%. Now moving to the next slide. In the quarter, Marcopolo's production meant for the Brazilian market has shrunk 4.3%. The production for exports from Brazil have grown 62.8%. Our external units, we have witnessed a reduction of 14.2% in production.
The production was negatively affected both in Brazil and internationally by employees who were on leaves because of the Omicron variant in January, as well as for the shortage of parts. The company is prepared to produce more than we did in the first quarter of 2022, and we have accelerated the manufacturing ramp-up after March. The more consistent increase in production levels depends right now on an improvement on the supply of parts, especially frames. The consolidated net revenue has reached BRL 958.6 million in the quarter.
BRL 588.5 million come from the Brazilian market, BRL 172.9 million comes from exports, and BRL 192 million comes from our operations overseas. The highlight of the quarter was the increase in revenue in a domestic market despite a small drop in the number of units. This is a consequence of transfers of cost prices and a better sales mix. Exports revenue was negatively affected by the variation, whereas international operations suffered from the drop in deliveries associated to Omicron variant in January and a shortage of frames along the entire quarter. The revenue distribution in the segment of intercity buses accounted for 31.3% of the company's revenues, thereby reversing the trend of concentration in urban buses that was the most prevalent during the pandemic.
The better mix have benefited this segment. Volare remains as a positive highlight with 30.3% of our revenues. In retail and bids are still strong as it has been along the past two years, and they support our sales. Urbans also had a good share of our revenues, getting close to historical levels with 28.8% share of our revenues. Bodies and frames and parts accounted for the rest of the remaining shares of the revenue. Now moving to the next slide. In the quarter, the company's gross profit was BRL 112.3 million, and the gross margin was 11.7%. You should be reminded that seasonally, the first quarter is usually the most difficult every year.
As operations pick up after the pandemic, we are likely to see this repeating. The gross margin was positively affected by transfers of costs and prices and also by a better sales mix, both in Brazil and export. However, these effects were negatively offset by the appreciation of the BRL in our deliveries to the international markets and by inefficiencies generated by the shortage of parts and frames. The EBITDA of BRL 51.3 million with a margin of 5.4%. It was positively affected by the better sales mix, better margins after the price recomposition, higher dilution due to the results of the equity. EBITDA suffered a negative impact by labor provisions, by the appreciation of the BRL as compared to the dollar, and inefficiencies generated by the shortage of parts and frames.
If we were to adjust the EBITDA margin by the FX rate when the sales were done, the EBITDA margin in Q1 2022 would be 7%. The consolidated net income in the first quarter of 2022 was BRL 98 million with a net margin of 10.2%. The result was positively impacted by the variations in the FX rate, the appreciation of the BRL over the dollar considering the portfolio of orders in dollars. This was affected by the FX rate when orders were placed and confirmed. The effects of the valuations or devaluation of the BRL are computed in the operational margin or in the financial result, as it was the case in Q1 2022. This impact is operational, and it is a consequence of exports from Brazil.
Now, I would like to turn the conference over to James, who's going to talk about the market scenario and our prospects.
Good morning, everyone. Welcome to our conference call. First, we are going to talk about the performance and prospects for the Brazilian market. The Brazilian market is already seeing the recovery of heavy intercity buses and vehicles used for tourism in regular lines of long distance, already balancing the portfolio, the volumes that were used for the transportation of employees that is so important to support production during the pandemic. Double-deck models, especially, generation eight of higher added value, are again occupying our production lines. The sales of heavy intercity buses represented approximately 35% of the volumes delivered to the Brazilian market, in contrast with 13% in the first quarter last year.
Urban demand is still causing a positive surprise, especially because of the economic reopening after the pandemic. The return of users to public transportation are having a positive impact. This need is related to allocations by cities and reinforcement of subsidies adopting the best international practices in public policies for public transportation. Delivery to the program Road to School are also reinforcing this segment. The micro and Volare market keeps a good performance with retail bids at stable levels vis-a-vis 2021 with great results. The first quarter of 2022, the company delivered 816 units to the Road to School program. Of these, 455 are urban and 361 are Volare models.
If we add these units to the 399 delivered in Q4 2021, we still have 2,685 units of 2021 bids to be delivered in 2022. A new bid was conducted on April 5th, and the company is waiting for the approval of the result at any time for the production and delivery of up to 3,850 additional vehicles in the next 10 months. Marcopolo has maintained the leadership in the Brazilian bus market in the first quarter with a market share of 53.4%. Now on slide 12. Exports also show recovery from a weaker performance in 2021 due to the pandemic. In the market where tourism gives signs of recovery in important markets in Latin America, especially in Argentina. Urban buses to Chile and Africa, and chartering have helped in Q1 2021.
To adapt profitability after devaluation of the BRL, we have cost transfers and updates of the prices in dollars. In the Q1 2022, international operations have suffered from problems similar to those experienced in Brazil, particularly with the effects of Omicron variant in January and the lack of frames throughout the quarter. Productions and deliveries fell short of the potential of our operations, and the problem should continue in Q2 2022. As a positive highlight, Volgren has firm orders for the entire year of 2022. Marcopolo Argentina Metalsur follows a path of recovery of results, working with a mix of nobler products based on the recovery of the road market in that country.
MAC, Marcopolo China, continues to be challenged by the pandemic and implementation of lockdowns in China, which ends up affecting the purchasing interest of customers in neighboring markets and the supply of parts. Among affiliates, the Colombian Superpolo is expected to maintain good results with a volume of recovery in the post-pandemic period. In Canada, the challenge is also the shortage of parts. Now on the next slide, on the prospect for upcoming months, it's important for us to pay attention at the shortage of materials, especially frames that are causing an impact on deliveries. Our deliveries could be 15%-20% higher in the first quarter were it not for the supply chain issues. We expect these volumes to be normalized after June, and I would like to reinforce that these deliveries or orders are not being canceled.
They are just being postponed. As we get closer to the half of the year, we are going to start also feeling the effects of the change in engines caused by PROCONVE P7 after December. This will accelerate sales coinciding with a positive seasonality of the second half of the year that we expect to go back to normal this year. Another concern, permanently monitored by the company, are prices or inflation. Despite the transfers of prices, we could not drive margins back to normal levels. We are seeking alternative sources, and we are working to offset higher costs by increasing efficiency until we go back to sustainable levels of profitability. This problem is something that is not happening just in Brazil. It's also happening in our international operations.
Lastly, we should also mention the benefits that we are now reaping from the restructuring operations that we have had over the past two years. Despite the impact of the pandemic on results, we have kept a healthy financial status. We have developed or invested in the development launch of G8 that is being acknowledged by our customers. Also Marcopolo Attivi and also the new Marcopolo Next. We believe that we will be able to recover results even if volumes does not go back to our best historical volumes. This is due to our capacity and courage to make Marcopolo in the last three years in a much leaner and agile and efficient company. Now we can move to our questions and answers session.
Ladies and gentlemen, we're now going to start our Q&A session. This forum is dedicated to analysts and investors only. Journalists that are attending, executive officers will be available to answer your questions after the end of this conference call at the telephone 54 2101 4660 . Repeating 54 2101 4660 . This is for journalists to ask questions. Now, if you want to ask a question, please press star one. If you want to take your question from the list, please press star two. Our first question comes from Aline Jun from BTG.
Hello, everyone. Thank you very much for the conference call. I have two questions here. The first one, in the Caminho da Escola bid in April, are you also going to deliver urbans? And how many of the 3,800 units are going to be urban?
The second question is about the timing for the regularization of the supply of semiconductors and frames. You think that this problem is going to get better after June? Do you think it would be solved both for frames and semiconductors? After June, could we expect this problem to make it possible for you to deliver this 15%-20% more that you claim that have been affected by the shortage in materials? Thank you.
Thank you, Aline, for your question, and I am going to answer the issue of the Caminho da Escola. We have about 500. Yes, we have urban frames as part of that package.
As to semiconductors, the idea would be to grow or potentially even more than 15%-20%, were it not for the lack of those parts in the very short term. When we look at April or May, the trend is to produce even more than 15%, considering the ramp-up that we are having after a seasonally weaker first quarter. We can almost say that 15%, if we had normal supply, would be the minimum growth that we should expect.
Okay. Thank you very much.
Our next question comes from Luiz Capistrano from Itaú BBA.
Good morning, everyone. Thank you very much for taking my question. Congratulations on your performance. We have two questions.
Number one is related to what can we expect in margin in the second quarter, considering that we are seeing inflation in raw materials, but demand seems to be very high for you, which could permit a transfer along the quarter in order to offset, or to, this problem or to bring margins back to normal. How do you see these two forces balancing out during the quarter? Regarding the second round of the Road to School program of 3,500 new buses, and when should we expect this approval? And once it's approved, once the bid is approved, how many of those units should we expect to be delivered still in 2022?
Thank you very much for your question, Luiz. As to margins, in fact, when demand goes up, there's always more room for us to recover margins.
It's not as simple or as easy as it may sound to transfer prices. There is resistance and difficulties in that respect. Our expectation, and this might not happen this year, is for it to take a long time to recover our historical margins and to seek an EBIT and operational margins that we have historically had at Marcopolo, even to levels before the pandemic. As to the Road to School program and the expectation of when the results of the bid are going to be approved. Well, at any time. In practice, it can be approved at any time. We think that this is going to happen in the next few weeks, and we are waiting. As to volume, it depends very much on the normalization of delivery of frames.
Potentially, Road to School, the usual time frame is one year, and we have that time to deliver these 3,850 units. This time would go until March 2023, considering that we should deliver the frame by December and then build the bodies by March 2023. Within that logic, we wouldn't have the whole year, but potentially, yes, we could deliver the 3,850 units. It will depend on the compliance of cities with this contract with the federal government. The overall picture is that, yes, we could deliver all these 3,850 units.
Great, Eduardo. Just one last question of follow-up, assuming that in fact, cities will have good compliance and that they confirm the 100% units of the bid, part of it will be delivered in 2023, right?
Yes, right.
Okay, thank you.
Our next question comes from Marcelo Motta from JP Morgan.
Hello, good morning, everyone. I have two questions. First, could you comment how you're seeing the lag in terms of price transfers? And you said that you cannot transfer on a 100% of prices this year. But this lag today, how much is it? Is it 5%, 10%, 20%? I would like to understand what is the ideal level of price increase for you to have better margins. And number two is about competition. You mentioned, obviously, Marcopolo has come out very well from the crisis. The market is recovering.
How do you see the competitors in terms of, how are you coming out from the crisis?
Good morning, Marcelo. In terms of price transfers, obviously Marcopolo seeks to transfer the costs, especially related to supplies, raw materials and materials and everything, to transfer it to our sale prices. When we say we cannot transfer everything all at once, it's because the first impact of the cost increases that we have had since 2020, 2021, and we still are seeing them. We're still seeing price adjustments. So this is a continuing process. For many years, we have been dealing with. It's been many years since we last saw such high inflation, especially in the manufacturing industry as we have seen in the past two years.
There is always some resistance from customers to negotiate or not accept all the price transfer that we need. But rest assured that we are doing our math, we are doing our calculations appropriately. Yes, we are transferring the costs that we receive, our costs to our sale prices, even if this will lead us to a small loss in market share. The company is very focused on this. It's not about wanting or not wanting to do it. It has to be done. This is what it is about, and we are doing it.
Thank you.
Marcelo, thank you. This is James. As to the competition, I think that this is very much in line with what Valiati said. We have been noticing that the competition is also at a growing pace of price transfers.
However, at a pace that's slightly slower than ours or lower than ours. What we've been trying is to seek a balance between good market share, however, giving up businesses that are not so profitable in order to assure our margins. We are doing our best in seeking this economic balance because it's useless for us to have a very, very high market share at the expense of our margins. We've been seeking this balance and, well, thank God, and also to the demand increase, we've been able to reach this balance in a very healthy way.
Thank you very much.
Our next question comes from Victor Mizusaki from Bradesco BBI.
Good morning, everyone. Congratulations on your results, and I have two questions.
The first one, I heard some news that Marcopolo signed yesterday a contract for People Mover. Could you talk a little bit about that? How much more revenue this will bring, when we are going to start seeing this in Marcopolo's results? And the second question is about backlog. What is the evolution of Marcopolo's backlog? And one last question, just to clarify the impact of the FX rate in Marcopolo's margins in the second quarter. As part of this margin in the first quarter affected the financial performance, should we expect it in the second quarter, this financial impact to go back to the operational margin?
Thank you, Victor. As to People Mover, we are not allowed to talk about its share in the revenue, but the results will start to be seen immediately. As to the backlog, depending on the segment, we have a quite long backlog, more than three months, especially in urbans and our manufacturing plants, especially in Brazil and Ciferal and our factory in São Mateus that we have a dedicated capacity for the manufacturing of micros, Volare, and urbans. In these segments, considering micros and Volare and urbans, we have a quite long time. As to the Road to School program, this will add even more to our portfolio.
For heavier buses, we are also longer with about two months of portfolios, slightly shorter than the other one, but we see a strong recovery in the area of intercity buses with this change in chartering, in contrast with heavy intercity buses for long distances, reversing the logic that we had during the pandemic with chartering prevailing in volumes.
As to the FX rate, as I said before, at Marcopolo, we always try to protect our business. Whenever we close an order, we contract the FX rate in order to assure the profitability of the operation.
In a Q1 with a low conversion rate of the BRL to dollar over dollar, we had significant gains that is reflected in our financial, partly offsetting a lower margin from exports that had already been done in the quarter and partly advancing the results of the deliveries of the portfolio that we still have to deliver in our exports. The important thing is that, as per its policy, Marcopolo tries to assure the profitability of our export operations, and the results come either in the financial result line or in the gross margin, when we see our sales revenues in terms of our sold products. As a reminder that our sales revenue uses the FX rate on the day of the billing. There is an offsetting between financial revenue and gross margin.
Thank you.
As a reminder, if you want to ask a question, please press star one. Yeah, if you want to take your question from the list, please press star two. Please stand by while we collect questions. We are now closing our questions and answer session. I would like to turn the conference back over to Mr. Valiati for his closing remarks. Mr. Valiati, please, the floor is yours.
Once again, we thank you very much, everyone, for your attendance. Our investor relations department is available to ask any questions that you may need to ask. Thank you very much, and have a good week.
Marcopolo S.A. conference call has now ended. We thank you very much for your attendance. Have a good afternoon.