Good afternoon, everybody. This is Ian Nunes. Welcome to the conference for the discussion of the results with reference to the fourth quarter of 2023. This conference is being recorded, and the replay can be accessed on the site of Investor Relations for the company. We also inform that all the participants will be listening to the conference during the presentation, and after that, we will start the question and answer sessions, when instructions will be given to you. For those listening to the conference in English, we make in the chat a link for the presentation in the English version, since we will be projecting only in Portuguese. I would like to now pass the word to Nivaldo, CEO of Tegma, who will start our presentation. Please, Nivaldo, please go ahead.
Good afternoon, everyone. This is Nivaldo Tuba, CEO of Tegma.
In the name of the company, I want to thank you for your participation in our results call on the fourth quarter of 2023. Together, I have Ian, Felipe Fogaça of the Area of IR. As is customary, our presentation will start with slide two, where the participants will see our disclaimer with relation to our prospective declarations. Going to slide three, I am going to talk about the highlights of the fourth quarter. As the first point, we would like to comment about the proposal for the payment of dividends and interest on capital, with reference to the year 2023.
We proposed for the approval in the general assembly, which will be held on April 11, the payment of BRL 47.5 million or BRL 0.72 per share, which, together with the anticipations from August and November, will correspond to 82% of the net profit, adjusted by the constitution of legal reserves and fiscal incentives. We would like to amend these, if they are approved, will be paid on April 23, benefiting those stockholders who are in the stockholder list on April 11. The total amount paid is the highest registered in the company since the IPO. As a second highlight, we are talking about the important project of the gooseneck trucks, which we have converted from diesel to a totally electric battery-powered production. The vehicle will have an autonomy of approximately 500 km. We have initiative.
It is an innovative initiative and will be utilized only in the transport of new cars to Paraguay in one of the routes that Tegma passes through the Mercosul. Initiatives like this and our firm commitment to continue to evolve projects that mitigate the environmental impact of our operations. Our third highlight, we have a reformulation of the institutional presentation in the area of Investor Relations. The new version has sought to bring more information with respect to other initiatives of Tegma beyond the logistics for new vehicles. Information about our joint venture with GDL, our startup, Rabbot, and the operation of logistics of newly licensed vehicles, the Fastline, which will bring more information about the Brazilian automotive market. On slide four, we are going to talk about the principal data of the new vehicle market in Brazil.
As we can observe in the first graph, domestic sales in the fourth quarter of 2023 were 15% above the previous year. This performance comes from better economic conditions in the country, a lowering of unemployment, improved income, as well as the improvement of the financing conditions for new vehicles in the country. Domestic sales in 2023 were 11% higher compared to the previous year. This number, much higher than those estimated by the market, surprised, came from the improvement of the national economy and the better financing conditions and a better international competition with the entrance of Chinese players in the electric vehicle segment. As far as the production, it presented a reduction of 4% in the fourth quarter of 2023, as we can see in the graph in the lower left.
This fall off can be explained by a strategy of sales of the car builders who decided to sell off their stocks at that time, something like 20%. It caused an increase of 41% of the sale of imported vehicles in the country, with a relevant participation of 18% in domestic sales in the fourth quarter of 2023. Another important impact on the production can be observed in the graph next to it, which shows the exportations of vehicles in Brazil, which retracted more than 30% in the fourth quarter of 2023. This is due to the reduction in the market of several countries in Latin America, beyond the competition of the Chinese vehicles in these markets. On slide five, we show the principal indicators, the operational indicators of the automotive logistics division.
The number of vehicles transported in the fourth quarter of 2023 was 175,000 units, 6.3% higher than the previous year. A reflection of the growth of domestic sales, as we explained in the previous slide. Our market share remained practically stable when compared to the previous year, at a level close to 24%, and was affected by the performance below normal of important clients of the company. Finally, we like to say that the average distance of the trips was 4.8% higher than the annual comparison, due to the increase of participation of domestic trips and long distance in the total, and also the growth of export trips via trucks to Mercosul countries.
After these initial highlights, I am going to pass it over to our financial director, Ramón Pérez , who is going to talk about our results, our cash flow, and other indicators, and we will then open up for questions and answers.
Thank you, Nivaldo. Good afternoon to everyone. Looking at slide number six, we are going to talk about the results for the division of automotive logistics. Looking at the graph above, you see there is a growth of 11% in net revenue in the division in the fourth quarter of 2023, which is explained principally by the increase of 6.3% and 4.8% in the average distance traveled by these cars. The growth of 18% observed in the end year of 2023 is principally due to the growth, the number of vehicles transported, and to the readjustments of the tariffs for transport realized during the year.
It's also worth remembering that the large oscillation in the price of diesel in the last two years has caused both positive and negative changes in our prices. Finally, we point out the good performance of Fastline, our unit of used vehicles, which has had a very positive effect on our revenue. Below, we see the evolution of the EBITDA in the fourth quarter of 2023 and the annual comparison, as well as the margins. We can see that the margin in the fourth quarter of 2022 is adjusted by the non-recurring event, reduced in BRL 5.5 million, our expenses of the division in that period. The reduction of the margin EBITDA in the fourth quarter of 2023, of 16.5% to 15.1%, reflects three factors. Commercial discounts conceded to clients related to a disconnection between the pass-through of diesel prices from previous periods.
Together, which add up to BRL 3.5 million. The realignment of our prices in the division to current prices based on the current fuel prices, as well as the increase in administrative expenses. This final has several causes, which are detailed in our earnings release. In the year of 2023, the EBITDA of the division reached BRL 218 million with a margin of 15.3%, 0.7 percentage points below that of 2022. In the same way, the reduction on the EBITDA margin in the year comes from the commercial discounts mentioned in the fourth quarter, together with what happened in the second quarter. The realignment of tariffs based on diesel prices and the increase of administrative expenses, also detailed in our earnings release. On slide seven, we show the results on the division of integrated logistics.
We can observe that the net revenue of the division in the fourth quarter of 2023 increased 9% due to the growth of our operations of chemicals and electroelectronics, and the recovery of the volumes, and a new contract, as is explained in the last quarter. Already, the stability of net revenue came from the operational impact from the renewal of the fleet of silo trucks, and the consequently loss of volume of transport and storage. In the graph below, we can see that the EBITDA margin was retracted in the fourth quarter of 2023, impacted negatively by events which, even though they had characteristics non-recurring, were not adjusted to the EBITDA and added almost BRL 2 million in the fourth quarter of 2023 altogether. These events are detailed in our earnings release.
I'm going to pass the word back to Nivaldo, who's going to talk about our joint venture, GDL.
Thank you, Ramón. Looking at slide eight, where we show a general overview of our joint venture with GDL. It was created in 2018 through the association with another important and traditional player in the market based in Espírito Santo, Silotec. GDL, the current logistic operator in that state, with 1 million square meters of storage area, employing more than 500 people and attends a wide range of clients in different sectors. The principal services are movement, general storage, and customs warehousing of diverse cargos. The company also has two distribution centers offering services and management, value management for vehicles and heavy machines, as well as previous inspection to the delivery of those assets, the so-called PDI, pre-delivery inspection. On slide nine, we show the highlights of GDL.
We can see on the first graph. The net revenue in the fourth quarter of 2023 grew 55% in the annual comparison, reaching BRL 48 million. While in 2023, the net revenue was BRL 160 million, a growth of 36% compared to 2022, maintaining the tendency of growth observed in the most recent years. This performance of net revenue is principally the fruit of the growth in the service of logistics and imported vehicles. We should point out that the sale of imported vehicles in Brazil grew by 42% in the fourth quarter of 2023 when compared year on year. It was impacted by the aggressive strategy of the Chinese car manufacturers coming into the market, as well as the importation of electric vehicles starting in January of 2024. On the graph below, we will show the evolution of the net revenue and the net margin of this joint venture.
The growth of net profit, which was BRL 34 million. The increase of the net margin, both in the quarter as well as in the year, reflects the growth of revenue together with the operational efficiency of costs and expenses. With that, together with the low need for investments and the dividends distributed by GDL reached BRL 29 million, the highest since it was created. We also point out that the ROE maintained a growing curve, reaching 64% in 2023. I'm going to send it back over to Ramón, who will continue with the consolidated results.
Thank you, Nivaldo. Looking at slide 10, we look at the consolidated results. The net revenue in the fourth quarter of 2023 was BRL 454 million, which represents a growth of 11% on the annual comparison, reflecting the growth of both divisions in that period.
In the same tendency, the net revenue of 2023 presented growth for the second consecutive year, reaching BRL 1.6 billion consequent principally of the Brazilian recovery. We saw that in the fourth quarter of 2023, the EBITDA margin retracted 1.5 percentage points, reflecting commercial discounts given and the realignment of tariffs prices to the actual current price of diesel, both in the automotive division as well as negative non-recurring events in integrated logistics area, which were not adjusted to the EBITDA. The EBITDA for the year of 2023 reached BRL 265 million, corresponding to a margin of approximately 17%. Finally, the net profit in the fourth quarter of 2023 was BRL 51 million, 10% below the previous year due to a non-recurring event which impacted positively the net profit of the fourth quarter of 2022 of BRL 8.2 million.
If we don't consider that, the net profit of this quarter would be 5% above that, with a reduction of 0.6 percentage points in the net margin. This fall in net margin is due principally to the retraction of the operating margins as was mentioned previously. The very good financial result in the results of our joint venture with GDL. In relation to our net profit of 2023, which was BRL 182 million, we can state a growth of 14% compared to 2022, an evolution in line with our revenue. Beyond the operational results of the operators of the company, it's worth mentioning the recent performance of our invested company, GDL, as was previously mentioned. Looking at slide number 11, we present on this graph on the left, the cash cycle of December 2023, which was 42 days.
Six days better than the cycle of September 2023, but equivalent to a cash cycle of December of 2022. We did not identify any factor in our cash cycle that would not be habitually observed in our business. As far as the CapEx of the company, the total investments in the fourth quarter of 2023 was BRL 11 million or 2.3% of net revenue. Principally with the acquisition of siloed trucks for the renewal of our fleet, which totaled BRL 4 million and investment of BRL 2 million, which is part of the project for the implementation of the new ERP. CapEx within the year of 2023, on its first part, totaled BRL 33 million. An investment that was most stood out in the minute was the renewal of the fleet of siloed trucks for the operation of chemicals and in the amount of BRL 9 million.
Finally, on the right, we show the free cash flow of the company, which in the fourth quarter of 2023 was BRL 2 million negative. This behavior close to zero was principally due to the increase of our amount of accounts receivable from September to December of 2023, fruit of the dynamics of the receipt at the end of each year of the car companies due to the final operational results of that period. The free cash flow of BRL 141 million in 2023 was slightly lower than 2022 as a relevant component of the taking advantage of the tax credits in both periods. If they were expunged, the free cash flow in 2023 would be BRL 127 million, 21% above 2022, reflecting principally the growth in the automotive market and the quantity of vehicles transported, and the operational performance of both divisions. On slide 12, for our capital structure.
On the first graph, we can see the current cash of BRL 233 million, which is above the payments on our debt. The gross payments on our debt for the following years. In the fourth quarter of 2023, we contracted BRL 5 million in a credit line of the FINAME BNDES, the acquisition of silo trucks aimed at the transport of chemical products. We can see on the graph next to it, the average cost of the debt was CDI plus 1.6% in December of 2023. On the table below, we can see that our net cash position in December of 2023 was BRL 131 million, a reduction compared to September, due to the increase in the cash cycle versus September of 2023. Finally, on the right, our rating attributed by Fitch in 2023 is A local with a stable perspective.
Looking at slide 13, we can see the indicators for profitability of the company. Return on capital invested in the fourth quarter of 2023 in gray was 27.2%, compared to 28.7% in the previous quarter. Again, in the case of ROE, on the orange line, we saw a decrease in the return calculated. These variations were due principally to the re-adequation of the operating margins of Tegma when compared annually, and what has been seen since the previous quarter. On the graph below, we see the EVA in the fourth quarter of 2023 is also reduced compared to the level of the previous quarter. Basically, due to the same factors which impacted negatively the ROE. On the right, we show the history of dividends and interest on capital paid by Tegma. On the gray line, we indicate the payout for distributions.
Considering the proposal of payment of dividends and JCP to be approved in the AGO on April 11, 2024, Tegma will distribute BRL 121 million reference to 2023, which represents 82% of the net profit, without considering the constitution of a reserve for fiscal incentives or the legal reserves. On the orange line, we see that the dividend yield for the distributions with reference to 2023 corresponds to 7.6%. Finally, on the last slide, we show the performance of our stock when compared with the Bovespa index. The shares of Tegma, as we saw in the first graph, had a very close performance, particularly close to that of the stock exchange during 2024. This has impacted positively by the operational resilience of the company and the tendency for the recovery of the automotive market, and negatively by the reduction of liquidity of our stock.
As was seen on the graph below, the Tegma shares, as occurs with many listed companies in Brazil, are traded at multiples slightly below their historic average, influenced principally by macroeconomic questions. With that, I thank you all for your attention and open for the session of questions and answers .
Okay, so now we will start up the questions and answer session for investors and analysts. If you would like to make a question, please press the raise your hand button. If your question has already been answered, please leave the line by clicking on lower your hand. If you have any written question, please write your question in the Q&A field in the lower section of your screen. The first question that we have received comes from Valcirio Pato. Valcirio, I believe you are muted. Okay. Okay. We can hear you now, Valcirio. Go ahead and ask.
Yes. We can hear you now.
This BRL 3.5 million that you said was not regular in the fourth quarter, is an amount that would have been received in previous quarters, and then was compensated in this quarter. Is that what you were saying?
Good afternoon, Valcirio. This is Ramón speaking. In a certain way, yes. These commercial discounts can be considered as sort of a trigger, which is for the adjustment of diesel prices, which varies up and down. And we have to make these adjustments in our tariffs due to those prices practiced in previous quarters, previous months, based on the price of the diesel. So in a certain way, yes. It's amount that had been received previously, and the prices were then readjusted. Our prices were then adjusted based on that.
We have a question in the Q&A from Eduardo Pileso. With regards to the question of the distribution of dividends, the decision to increase the payout from 70%- 82% in 2023, does that reflect the cooling for the inorganic growth?
Again, this is Ramón. I'm going to answer your question, Eduardo. Thank you for your question. Thank you for joining us on our call. In truth, no. This decision to increase our payout was more connected to the capacity of the company to generate operational cash in a consistent way, and the recognition that our capital structure has been quite deleveraged, which as you all know.
We think that this increase of the payout will have a marginal effect on our leverage capacity, remembering that as we presented in our DFs, we closed the year with BRL 130 million in net cash above our net debt, and EBITDA close to BRL 265 million, just to show our capacity to accept financing to confront any inorganic growth that may appear. I also would like to repeat that in the name of the administration, that we maintain our strategic direction of seeking out this growth through M&A operations. We believe that this flexibility necessary for obtaining resources is a competitive advantage that we have. But all this needs to be done with the necessary discipline, which is a trademark of the capital discipline, which is a registered trademark of Tegma, that we are disciplined with use of capital.
Let's have a question here from Guilherme Ávila from Tarpon.
Congratulations on the results. How do you evaluate the performance of the automotive market in the first half of the year, the first two months of the year?
Thank you. Yes, it was a very good two-month period. We registered growth of domestic sales of close to 23%. On the productive side, we had a reaction in February and the production grew by 7% in this two-month period. The sale of imported vehicles, even with the return of part of the import tax, which happened in January this year, grew by 70%. On the other hand, the exports remain with their tendencies to fall at 28%. In the second quarter of February, we had a slight reaction in the second half of February.
I believe also that we've had lots of good news related to the investments were announced by the automotive manufacturers in Brazil. We're talking about investments of approximately BRL 100 billion in the auto industry by 2030. This is also accompanied by the predictability of the MOVER program, which was set up by the federal government. Still, as a positive aspect, we can say that the automotive credit, there is data which is very positive in January of 2024, where we saw growth of 40% of the concessions, a fall off in non-payment, and a lowering of average interest rates. So adding it all together, our evaluation by the administration of Tegma in this period was positive.
Thank you, Nivaldo. We're going to open the microphone now for Pedro, who has a question for us.
Can you hear me?
Yes, go ahead.
Congratulations on your results.
I wanted to come back to the question of the discounts, but to understand if these negotiations have been finalized or if there are still negotiations to be done, which can be done in the first quarter. That's the first question. The second thing is to understand in the question of GDL, where we saw strong growth this year. You commented that it was caused by the part of imported vehicles, but what would be the other areas of growth for GDL for the coming years? What would be the growth areas for GDL?
Thank you, Pedro. This is Ramón. I'm going to answer your first question. I'm going to pass it to Nivaldo to answer your second one. In relation to the commercial discounts, these occurred due to the volatility in the price of diesel in the recent quarters.
Currently, there is no other commercial discount of this type on the horizon. Obviously, it's a variable that we do not control. We cannot say with 100% of certainty that this won't happen, because we don't control that. I would mention that diesel prices has presented much less volatility. That's all I can say about that subject. We don't see any big changes in diesel prices for this quarter. I'm going to pass it over to Nivaldo now to answer your question about GDL.
Yes, Pedro, the vehicles GDL was the main lever of the evolution of GDL in 2023. As far as the drivers for future growth, without doubt, vehicles continue to be their biggest driver. We have perspectives of short-term and medium-term, at least until the beginning of 2026, with very strong sales of vehicles.
Not only when we talk about Chinese vehicles, which are coming into the market, but also multi-brand vehicles, imported vehicles, which continue to use the Vitória Port as their principal entry point in Brazil and will consequently utilize the logistics operations of GDL. Of course, before this boom of vehicles in 2023, we had the registration of growth of GDL with other logistics operations, where we saw multi-product clients, and we dedicated to the operations of clients with high added value and products which had the need for special storage. In other words, refrigerated or air-conditioned storage. These are the drivers which GDL bets on.
We have a very good portfolio of clients, which is quite pulverized, and even though there is a reduction in the vehicle market, something that we do not really foresee for the next 24 or 30 months, we still have, in the rest of our products and the integrated logistics of these other products, sustainability of our corporation in the Espírito Santo.
Thank you, Pedro. Now pass to the next question. Marcelo from BTG Pactual has for us. Marcelo, your microphone is open.
Hi, everybody. Good afternoon. Thank you for this space. I wanted to mention two questions on my side. The first one is about Fastline. We talked to some of the rentals that the used car market has some difficulties. How do you feel this on your end? Also, with reference to your market share.
We saw in the second quarter of 2023 that your market share was hitting 26%, and this dynamic of fall started with the second half of the year. How did that hit you, and how do you see this number going forward?
Thank you, Marcelo. Fastline, you have to compare results, where we see it growing quickly. Quantitative growth. It's very much based on the car rental market, a growing market in Brazil. So we see that this is a very large horizon. We also see the motorcycle market, the transportation of motorcycles, smaller motorcycles from Manaus to São Paulo and other regions in the southeast, with a very fast-growing volume. We see Fastline as a horizon for growth, which is quite interesting. When we talk about a reduction of the imported vehicles, this volume, it occurred.
However, with this dynamism and high turnover, and the biggest facility of the purchase of new vehicles, the accompaniment of used cars will happen. Our expectations as far as Fastline are still quite positive, as well as I mentioned, as was the case in the first two months for new cars. The question of market share, we felt this reduction since it was a lower concentration in our transportation in some of the brands, some of the relevant brands in our share. This also really did happen, and we understand that was a one-time situation, which should be reestablished and restabilized starting at the end of the first quarter. We have the Chinese entering our market, who have been using our transportation as a growing movement, and this will bring a rebalancing of our market share.
Thank you very much.
Thank you for the question, Marcelo.
I am going to read next question, which we received from Lucas Xavier. In 2023, there was a significant increase in expenses. Do you expect a decrease or stabilization in 2024?
I am going to pass that over to Ramón .
We do not expect a reduction. As we explained in our report, we made some adjustments in our headcount of the company, and especially in the fourth quarter when the expenses not extraordinary, but are non-recurring expenses from the standpoint of legal fees for different fees, different contingencies, which were sort of one-time expenses, and the tendency towards stability. But we always maintain a very close control and are concerned with the discipline to keep our expenses at the right level in relation to our revenue.
Final question is a doubt, which is more of an accounting question, more than economic from Gustavo.
Congratulations for the results.
The PIS/Cofins credit, which in 2022 was BRL 92 million and BRL 106 million in 2023. Can you comment on that line and how long this credit should last, and how much of it can still be applied to your results?
This was a decision made by the company long time ago to register this credit of PIS/Cofins on the line of costs instead of deduction of gross revenue. Some companies decide on this criteria, but this line comes from the proportion, both of revenue as well as costs with freight. This line, if you can accompany in the long term, it has a constant proportion in relation to revenue and freight costs. This was the decision of the company to register this as a cost, and it will remain as such till such a time as we decide to reallocate it to the line of deductions of gross revenue. Okay.
I think that with that, we have answered all the questions. With that, I am going to pass the microphone over to Nivaldo for his final comments.
Guys, thank you very much for joining us, for your attention to our explanation, and ratifying that we ended the year of 2023 complying with our mission, fulfilling our budget, and attending the distribution of dividends. We initiate 2024 with a series of challenges. We are very optimistic about the first two months. Within that was what we imagined, and the market, in general, bringing to us and to logistics operators optimism for the automotive market. That optimism is not just Tegma, it is in our transport area, but it also covers our connected companies, and especially Fastline and GDL, where operations are going ahead very well. Thank you all very much. Have a great afternoon.