Good afternoon to all. I am Ian Nunes, IR Manager of Tegma. Welcome to the conference call to discuss the earnings of our second quarter of 2026. This conference call is being recorded, and the replay may be accessed on the company's website. We inform that all participants will be in listen-only mode during the presentation. After the presentation, we will have the Q&A session when further instructions to participate will be provided. For those listening in English, we have in the chat the link to the presentation in English. Please note that we will be showing only the version in Portuguese during the call. I'd like to give now the floor to Nivaldo, CEO, who will begin the presentation. Nivaldo, you may proceed.
Good afternoon, everyone.
Ladies and gentlemen, I am Nivaldo Tuba speaking here, CEO of Tegma, and on behalf of the entire company, I thank you once again for participating in our earnings conference call. With me here are Ramón Pérez, our CFO and IRO, and Ian Nunes, our IR Executive Manager. As usual, we'll start our presentation on slide two, where you can find our disclaimer regarding forward-looking statements. On the next slide three, we'll discuss the highlights of the quarter. The first being the approval of a payout of 62% of the company's net income for the first half of 2026 as dividends and interest on equity. This distribution corresponds to BRL 1.14 per share and a 3.8% dividend yield. The record date will be August 6th and the payment date August 18th. The second highlight is an initiative from the Integrated Logistics Division.
The division began providing a new service, a new container management service for BYD between the Port of Salvador and the customer's plant in the city of Camaçari. This new service adds to the others we already provide through our Vehicle Logistics Division and reflects a broader move to position Tegma as a full-service provider in the eyes of its customers. The third highlight concerns investments approved by the Board of Directors to be made in yards, totaling BRL 30 million. These investments include the purchase of a yard and improvements to others in the city of Camaçari, near the BYD factory, as well as improvements to land near the PACE factory, which is the automotive hub of Ceará in the city of Horizonte. These investments reflect the increased demand from customers for yard management and warehousing services and reinforce Tegma's position as a full-service logistics operator.
The fourth highlight is a source of a lot of pride for Tegma. Perhaps the numbers do not adequately reflect the complexity of these two ship unloading operations involving 12,000 BYD vehicles that recently arrived at the Port of Itajaí in the state of Santa Catarina. The efficient mobilization of personnel, trucks, and yards is reflected in the success of these operations, which managed to unload the cargo from two ships carrying 7,000 and 5,000 vehicles within 70 - 80 hours and transport them to a Tegma yard in Araquari, also in the state of Santa Catarina. I would like to congratulate all teams involved. Moving on to slide four, let's look at the main indicators for the automotive market in the second Q 2026, such as domestic sales, which posted robust growth of 24%, as shown in the top graph.
This performance is the result of promotional conditions offered by automakers and dealerships and the result of increased auto loans and continued low unemployment rate, as well as rising consumer confidence. Other factors driving this performance have been the electrification of the fleet and the performance of sustainable cars, as well as the government's tax exemption program for less polluting vehicles. This sales level, I should say, is the highest since 2014. On the bottom left, we see local production, which grew by 13%, reaching nearly 700,000 units. This figure mainly reflects growth in vehicle registrations. We also see the 23% drop in exports to the right, which is a reflection of lower purchases from Argentina and Uruguay, as well as increased competition from Chinese automakers in those regions.
On slide five, talking about the operating indicators for the Automotive Logistics Division, we highlight that the number of vehicles transported, both domestically and exported, increased by 21% in the quarter, reflecting a market share of 23.8%, up 1.3 percentage point in the year-over-year comparison. This performance is the result of above-market growth from Tegma's key customers. Average distance traveled increased by 8%. This was driven by longer domestic trips and their growing share of total trips. Very well. Following these initial highlights, I'd like to turn the floor over to our Chief Financial Officer, Ramón Pérez, who will discuss our results, cash flow, and other key indicators. Ramón, please.
Good afternoon, everyone. As can be seen in the top chart, the net revenue of the automotive operation in Q2 2026 was BRL 693 million.
In other words, a 40% increase year-over-year on the back of a 21% increase in number of vehicles transported and an 8% increase in the average distance traveled, as well as tariff adjustments during the period. In the bottom chart, the division's adjusted EBITDA margin in Q2 was 19%, up 1.6 percentage point year-over-year. This result reflects revenue growth combined with stable expenses during the quarter, despite the change in ICMS credits, which had an impact of 0.8 percentage point in the year-over-year comparison. It is worth noting that the division's EBITDA and expenses for the quarter were impacted by an indemnity involving the former subsidiary, Direct Express, in the amount of BRL 7.2 million. The Integrated Logistics Division posted net revenue of BRL 47 million, up 6%, mainly by virtue of the new container logistics service for the automotive industry launched in this quarter.
As shown in the bottom graph, EBITDA margin reduced by 4 percentage points in the year-over-year comparison, a reflection of the following factors: loss of a transport contract in Q3 2025, the change in the method used to calculate ICMS tax credits, and the lag in passing on diesel price increases from suppliers to clients. With regard to GDL, net revenue dropped 13%, reflecting greater use of customs clearance for vehicles while still on the water, a higher volume of vehicles arriving via Ro-Ro vessels rather than being stored on racks, the use of DUIMP, and this is the Federal Revenue Service's electronic import declaration, which reduces the need for warehousing in secondary zones, and lastly, unfavorable exchange rate variation affecting bonded warehousing revenue.
Regarding margins, in addition to lower cost dilution due to the drop in revenue, the decline is explained by higher operating costs, such as yard rental costs on a year-over-year comparison. These areas will be decommissioned as the vehicle inventory declines. Now, talking about Tegma's consolidated results, we recorded net revenue of BRL 740 million, up 37%, explained by the performance of the Automotive Logistics Division and improvement of its operating indicators, but also due to new contracts for integrated logistics. Adjusted EBITDA, which disregards the impact of the non-recurring indemnity, grew 46% in Q2, with adjusted EBITDA margin improving during the period, driven by substantial revenue growth and stable expenses. Net income in Q2, on the bottom right, grew 24%, but the margin contracted by 1.2 percentage point due to lower equity income, as well as higher financial expenses.
Moving on to slide 10, the chart on the left shows the company's cash-to-cash cycle at the end of the second quarter, which was 39 days within the usual range of recent quarters. CapEx for the quarter was BRL 15 million, and this was linked to the purchase of a plot of land in Camaçari for BRL 4 million. The acquisition of the company-owned fleet for used vehicle logistics totaling BRL 1.7 million, and improvements to yards in Camaçari and Cariacica totaling BRL 2.1 million. The company's free cash flow was BRL 1 million negative, a decline compared to Q2 2025 by virtue of high working capital consumption given the significant growth in automotive logistics revenue. On slide 11, we present a detailed view of Tegma's capital structure.
In the chart on the left, we can see that the company's cash now stands at BRL 197 million, which exceeds gross debt repayments for the coming years, resulting in a net cash of BRL 56 million. The company's gross debt stands at BRL 141 million at an average cost of CDI+ 0.94%, a reduction compared to the cost in March 2026 due to financing secured through the BNDES Renova Frota Program for the acquisition of our own fleet at a very competitive cost of CDI- 2.2%. As for profitability indicators, due to all of the factors mentioned before, both ROIC and ROE, as well as EVA, all rebounded this quarter after three consecutive quarters of decline. On the right, we show the history of dividends and interest on equity paid.
This half year, only yesterday, we approved the payment of BRL 75 million in dividends and interest on equity to be paid on August 18 with a record date of August 6. On the next slide, as shown in the top chart, we see our share performance compared to the Ibovespa index and compared to the Small Caps index, taking last year's closing price as base zero. As we can see, despite our operational performance and the financial results achieved so far, Tegma continues to trade at multiples slightly below their historical average. With that, I would like to thank everyone once again for your participation and interest in our company, and I'd like to start now the Q&A session.
Thank you, Ramón. We will now start the Q&A session for investors and analysts. If you would like to ask a question, please press the Raise Hand button.
If your question has been answered, you can leave the queue by clicking Lower Hand. If you would like to ask a question in writing, please type your question into the Q&A field at the bottom of the screen. First question from Gabriel Rezende. You can unmute Gabriel's mic, please.
Hello. Thank you, Ian. Good afternoon, Nivaldo and Ramón. Thank you for taking my question. I would like to tap into the margin dynamic given that we've seen strong industry volume, I mean lightweight vehicles. I believe we should continue to see this at a healthy level in the coming months. I'd like to understand what explained this positive margin surprise in Q2. We could see that the company had some challenges in terms of EBITDA margin and profitability. There were a number of factors involved.
The company had ramping up, perhaps the marginal volume of the company impacting some of the operations. We were expecting a lower margin for this quarter. We had this positive surprise, close to 18%, in the automotive segment. There were challenges in previous quarters. How should we expect the margin for the coming quarters? Is there any price pass-through that happened in Q2 which was not totally considered in Q2? Perhaps we will see the full effect of that only in Q3? Thank you very much.
Hi, Gabriel. This is Ramón speaking. Thank you very much for the question. In fact, in the previous quarters, as we tried to explain to detail both verbally and in our earnings releases and reports, there were some effects related to the operation which impacted our margin. We spoke about the factor of transport on barges.
We spoke about issues related to relocation of teams. As you said it yourself, when the operations are ramping up, there is some friction, there is some impact that can hinder the margin. This didn't go away, not totally at least. The operation is still very much heated. Again, there are some operations which are, I should repeat the term, still ramping up. We can still see some positive impact coming out of that. Anyway, in addition to volume, we tried to highlight this in the report, we had a positive effect of the longer distance traveled. You see, these are the two drivers for our revenue. Actually, in Q2, we had a tailwind. We had volume, longer distance traveled, reduction of those operational impacts that were having an impact on us.
As for your question regarding room for this to grow even more, it's kind of hard to affirm that. What I can say is that we're always working to stabilize these operational effects that can hurt our margin, always aiming at operational leverage, always aiming to improve our margins. A margin improvement can still come up. We cannot commit to that. We cannot make any promises in that regard. The fact is that in this quarter, we were able to cancel some issues that were temporary. They can happen again. They were temporary. The impact that we discussed in prior occasions related to the new methodology to calculate ICMS tax credits, because this is something that has come to stay.
Thank you, Ramón. Gabriel, any other questions?
No. Actually, Ramón, it's quite clear what you mentioned about the operational side. I just want to confirm the pass-through of tariffs. Perhaps there was a pass-through in Q2.
Should we see this positive impact expanding or the full impact of this tariff pass-through in Q3?
Absolutely. Some adjustments take place earlier, but the main adjustments of tariffs for the main customers will happen in April, May. You are correct. The full impact will be seen as of now.
Excellent. Thank you very much, Nivaldo, Ramón, Ian.
Again, if you want to ask a question in audio or using the chat, we are here for you. We haven't received any more questions. Just give me a minute. Apparently, there is one question in the Q&A. Here's a question in writing by Mr. Fernando Guerrero. "Good afternoon. Can you speak a little more about contracts with the automakers in the coming quarters?
Any negotiation at an advanced stage?" Nivaldo, can you answer that?
Guerrero, thank you very much for your question. This is all very dynamic, particularly when we speak about the new Chinese entrants in the market. New automakers are coming to the market, and we are paying attention. We are always participating in the bidding processes in an attempt to offer transportation services, but also yard warehousing services and so on and so forth. This always is negotiated under confidentiality. Unfortunately, I cannot give you any names. All I can say is that we're always paying attention to everything that is happening in the market.
We have another two questions. A question from Nelson Chaves. I'm sorry, it just got here. "Is there any possibility the company will go back to the debentures market?"
Hello, Nelson. Thank you for the question.
What I can say about this is, I'd like to remind you that the company is a very de-leveraged company. We have surplus cash. We actually consider this a competitive edge on our end because it means we have a lot of flexibility. Yes, we do have room to take advantage of the situation, either for investments in current operations or for organic growth. Actually, we have invested some CapEx. We have announced this after the good news, after the revenue growth in new markets. Also, we can use our CapEx for inorganic moves. As for the instrument that we will use for that, it is very hard to say. It really depends on the amount of a possible funding. We need to achieve a certain critical size for us to access the debentures market.
This is not out of the equation. It will really depend on our needs. More recently, we have used other types of instruments which are perhaps simpler and faster to operationalize and with a lower cost for structuring. This is not out of the equation. It's not out of our radar. We've been in that market in the past. It's been a while. That's all I can say for now to answer your question. Thank you very much for the question.
We have another question from Fabio Alfredo. "Can you explain whether the increase in average kilometers is simply due to BYD's greater share of the mix, or is there any other factor at play?"
You are correct. BYD does have an important share to increase the distance traveled, particularly for the vehicles loaded in Cariacica, in Espírito Santo. Less relevance for the ones loading in Camaçari.
There are routes that run from Rio Grande do Sul to Pernambuco, and we do cover those routes. This also drives an increase in average distance traveled, so it is the mix. You're right when you mention BYD. Since you mentioned BYD, we have to highlight vehicles loaded in Cariacica.
As we have no more questions, I'll turn the floor back to Nivaldo for his final statements.
Very well. Again, thank you very much for your participation, for your interest in our company. I would like to highlight that we posted very good numbers at Tegma, very interesting volumes transported. We are always paying attention to the evolution of the automotive market. If we look at the second quarter of 2026 compared to Q2 2025, vehicle registrations grew 24%. In Q1 2026, vehicle registrations grew 20% compared to Q1 2025.
I would like to highlight in this scenario of evolution, the effective improvement of our Integrated Logistics Division, not just with the well-known operations to you, which is carrying solids, packaging, logistics in general, but also through new businesses related to the integrated logistics of the automotive industry. We highlight here our effective participation in the logistics of the BYD factory, transporting containers, some raw materials, and of course, enjoying results that we didn't have in previous years. We're bringing to surface integrated logistics as another way to balance the earnings and the revenue of the company. I would like to end. I don't want to give you a spoiler, but I'd like to say how ANFAVEA is seeing the second half of 2026, because the first half was very disruptive, given all of the expectations we had.
ANFAVEA is expecting a 13% sales increase for 2026, and this reflects a growth of approximately 7% in the second half of 2026 compared to 2025. We're waiting and we are prepared, and we're prepared for growth, for the continuity of this growth in vehicle logistics, but perhaps at a lower pace. We were expecting this in Q2, and in the end, it happened differently, but in a positive way. This is what we had for today. Thank you very much for your attention. Let's keep going. Let's keep working. Thank you very much.