Good afternoon, and welcome. Thank you for waiting. Please, welcome to the Tegma Logística call results for results from the first quarter of 2023. We have together with us today, Nivaldo Tuba, President Director, and Ramón Pérez , Financial Director and Relations with Investors. This is being recorded and all participants are listening to the presentation of the company. Following this, we will start the questions- and- answer session, when instructions will be given as to how to proceed.
If any of you need any assistance during the call, please ask for help from an operator by typing asterisk zero. This event will be available for seven days after the closing of the event. We would like to pass the word now to Nivaldo, who is the director of Tegma, who will start the presentation. Mr. Nivaldo, please go ahead.
Good afternoon, everyone. I am Nivaldo Tuba, CEO of Tegma. In the name of the company, I want to thank you once again for the participation in one more teleconference of earnings report of our company. With me, I have Ramón Pérez , our Financial Director and IR director, and Ian Nunes and Felipe Fogaça of the IR area. Starting our presentation with slide number two. As we usually say, we make a disclaimer about our perspectives. Then we talk about the vehicle market in Brazil.
As you can see in the first graph, domestic sales in the first quarter of 2023 were 16% above the same period last year. This performance is the fruit of acceleration of big sales and retail sales after almost two years of falling. It is worth pointing out that in the first quarter of 2022, it was highly impacted by questions of supply chain, issues with the car builders. It was the worst quarter since 2004. These are also the reasons why the production in the first quarter of 2023, shown in the graphic below on the left, grew 11%.
Finally, exports have presented, once again, growth, reflecting the good performance of sales in countries such as Argentina and Mexico, where even though there has been fall off in sales for Chile and Colombia. Going to slide four, we show a change which we realized in our methodology of the calculation of market share in the division of automotive logistics, trying to simplify this indicator. We can see on the graph below, which presents a comparative among the new and old methods of calculation.
Our market share has been very close for annual periods, independent of which criteria is used. The history of our market share was adjusted in a way to maintain its comparability. In our file of historical series, which is available on the IR site, it is possible to see the memory of this calculation of both criteria in the quick analysis tab. On slide five, we present the principal indicators of the automotive logistics division.
The number of vehicles transported in the first quarter of the year was 18% above, compared to on an annual basis, and the market share recovered to a level close to 25%, similar to the market share that we had in the recent quarters of last year, and close to the normalized share of Tegma. The recuperation of the market share reflects the good performance of the principal clients of the company. Finally, the average distance for travel was slightly superior in the annual comparison due to the principal, to the growth of the average distance traveled in the participation in domestic travel.
Having said this, after these highlights, I am going to pass it over to our financial director, Ramón Pérez, so he can talk to you about our results, cash flow, and other indicators. After that, we will be at your service for any questions and- answers you might have.
Thank you, Nivaldo. Good afternoon, everyone. Going to slide six, we can talk about the results of the automotive logistics division, where we can see on the graph above that there was growth of 47% in net revenue of the division in the first quarter of 2023. Explained principally by the increase of 18% in the quantity of vehicles transported in the period, an increase of 1.4% in the average distance traveled, and by the readjustments of rates in transport realized during 2022 and 2023.
We also point out the good performance of Fastl ine, our unit for logistics of used vehicles, which has presented an excellent revenue evolution. This logistics service have been benefited by the special moment for the sale of stocks of used cars by the industry. Below that, we also see the growth of EBIT as well as EBITDA in the first quarter of 2023, on an annual comparison, accompanied by the increment of the respective margins of both items.
This evolution is the fruit of the motives mentioned above and reflects the growth in revenue, allied with our discipline in the control of expenses, offering consequently a better dilution of fixed costs and expenses. On slide seven, we present results of our integrated logistics. We have almost reached the stability in net revenue in divisions since the first quarter of 2023 on the annual comparison, and it comes from the falloff in the quantity transported and stored for the chemical operation.
\It is also important to mention that the revenue from the chemical operation in the first quarter of 2022 was positively impacted by the tying up of two extra ships. On the other hand, the operation of domestic electronics has recovered due to the recomposition of the prices realized for that division. In the graphs below, we see both the EBIT margin as well as the EBITDA margin have both retracted in the first quarter of 2023 in comparison on the annual comparison.
These oscillations are the reflection, principally of the discrepancy of the revenue of storage of the chemical operations, originated by the tying up of these two extra ships in the first quarter of 2022, even though there has been an improvement in the margins of the electronics division. Going to slide eight, looking at the consolidated results, the net revenue was BRL 336 million in the first quarter of 2023, increase of 39% on an annual basis, reflecting growth of the automotive logistics in the period.
Below, we see both the EBIT and EBITDA have presented a strong expansion in the annual comparison, fruit of the growth of revenue of the automotive logistics division, bringing better dilution of fixed costs. Beyond that, also our discipline in the control of costs and expenses in both operations. Finally, net profit for the first quarter of 2023 was BRL 34.7 million, 87% above the annual comparison.
This express ive growth comes from the positive operations performance of the automotive logistics division, the resilient results of the integrated logistics, the growth and expansion of the margins in the joint venture with GDL, and the positive financial results, consequent to the generation of cash in the capital structure, which is deleveraged, in our deleveraged capital structure. Going forward on slide number nine, we show on the graph on the left that the cash cycle in March of 2023 was 44 days.
It is at a level similar to that of the last two quarters, considerably below that of March 2022, due to the regularization of commercial questions, which impacted negatively this period in the previous year. In relation to the CapEx of the company, it was BRL 5.5 million in the first quarter of 2023, representing 1.6% of net revenue, with no individual investment to highlight. Finally, on the right, we see the free cash flow of the company, which was BRL 59 million in the first quarter of 2023.
The fruit of a positive operational performance, and also, even though it is below the free cash flow of the first quarter of 2022, which was positively impacted by the regularization of late receivables, late payments. On slide 10, we show the details of our capital structure. The first graph, we observe the actual cash position of BRL 242 million, which is well above the payments of the net debt in the next few years. On the graph next to that, the cost of the debt was elevated in comparison to December of 2022, totalizing a CDI + 2.7% in March of 2023.
This increase occurred due to the payment of a payment of BRL 10 million with an export credit note, which had a cost below the average cost of debt of the company. In the table below, we can see that our net cash position in March of 2023 reached BRL 152 million, well above the position of December of 2022, due to the generation of cash by the company in that period. Finally, on the right-hand side, our rating was reaffirmed by Fitch in April of this year as being A Local, a Stable perspective, even in a scenario of great uncertainty in the automotive market and the credit crisis that is affecting some sectors of the market as a whole.
Looking at the next slide, we are going to look first of all at the evolution of our return on capital and our net capital. The ROIC of the first quarter of 2023 in black was 27.4%, 2.1% points above the fourth quarter of 2022, fruit of the evolution of our positive results. Same is true for the ROE on the orange line, whose expansion during the first quarter of 2023 is also due to the good results of the joint venture with GDL, which has improved our financial results.
Below that, we observed the evolution of the EVA in the first quarter of 2023, maintained a tendency of recovery observed since the middle of 2022. This evolution is a reflection of the generation of value by the company above the cost of capital, and the fruit of its operational performance on both divisions, and the resilience of our logistics margins in the automotive logistics division, and the positive results of Fast line. On the right, we show the history of dividends and interest on capital paid by the company.
On the black line, we indicate the payout of these distributions. in 2022, it was 60% of the adjusted net profit, or 70% of the net profit without considering legal reserves and fiscal incentives. On the orange line, the dividend yield corresponded to 8.2% per year. Finally, on the last slide, we showed the performance of our stock in comparison with the Ibovespa index. Tegma shares, as we can observe in the first graph, presented a performance equal to the stock market in 2023, in spite of the uncertainties in the automotive sector.
As we look at the graph below, the shares of Tegma are being sold at multiples below average, as happens with the largest part of listed companies in Brazil, influenced by the macroeconomic scenario. With that, we thank you all for your attention, and we open for any questions- and- answers which you might have.
Ladies and gentlemen, we will now start questions- and- answer session. To make a question, please type asterisk one. To remove your question from the list, type asterisk two. Nivaldo will read the questions made during the webcast. Reminding you that to make a question, please type asterisk one. To remove your question from the line, just type asterisk two. Please wait while we collect the questions. First question is from Victor, from the company Vinci.
Good afternoon. Can you hear me? Are you hearing my question?
Yes, go ahead, Victor. Can you hear us, Victor? Victor? Go ahead, Victor. Victor has been disconnected. Please remember that to make a question, type asterisk one. To remove your question from the line, asterisk two. Thank you. Please wait while we collect any new questions. We will now start the question done during the webcast.
Good afternoon, this is Ian from Tegma, and I am going to start with Lucas Daniels' question, who wants to be an investor . Thank you. Congratulations on your results. Can you please comment on the operation of logistics of vehicle logistics, used vehicles, semi-new? I'm going to pass it over to Nivaldo.
Good afternoon, Lucas. Thank you for the question. Yes, we're going to talk about Fast line. This market of used vehicles, semi-new vehicles, this logistics works in Brazil in an informal way. The adoption of Tegma as a possible operator will bring technology and a great deal of much more legitimacy to this operation. It's worth pointing out that the market of used cars in Brazil is approximately six times larger than the new vehicle market in sales.
Especially Tegma can utilize all of its expertise and technology and all of its infrastructure that it has through the operation of new vehicles and apply it to used vehicles. This conjunction of factors has been bringing a favorable development for us. Therefore, we've had a growth in revenue and in earnings.
Thank you, Nivaldo. Next question comes from Artur . Your CapEx for 2023 will be below that of the recent years, or was this quarter an outlier? Pass to Mr. Ramón .
Good afternoon. No, there's no reason to believe that we have an amount well below other years. We have a proposal from the administration and the company management, which has been approved, in which we mentioned BRL 51 million as a goal for CapEx. In the first quarter, we normally comment that we have a lowering of this value, which accelerates during the year. So there's no reason to believe that the amount would be lower than that which we had indicated for our team here.
Next question from Felipe Viana from 3R. Thank you. Congratulations on your results. Can you give us a little more detail about the development, about the performance of GDL, and how does this growth rhythm go?
Well, good afternoon. GDL has been maintaining in the first quarter, the same speed, the same velocity of growth from the last year, the end of last year. We could note the maintenance of their clients, the maintenance of the domestic logistics, and in fact, an increase in automotive logistics. Today GDL has an occupation of patios and vehicles which are well above that which it had last year. So with that, we can explain part of the good results which we have earned in the first quarter.
Thank you, Nivaldo. On the next question, Victor from Prumo. Good afternoon, Victor and Tegma. Analyzing the expenses and administrative expenses, the quarterly average is BRL 20 million per quarter, and the expenses in the first quarter of 2023 was BRL 22 million. How do you explain this as the nominal stability or the real falloff in real expenses in this period? Can you also speak about the demand, which seems in the first quarter, there was a pent-up demand effect, based on a small lower base of comparison.
But going forward, how do you see your daily sales in April? The first question for Ramón . The second question is for Nivaldo.
Okay. In relation to the first part, it's difficult to say indicative factor for funds in relation to so many, because we're able to maintain our expenses, and our expenses are under control. But I can also affirm that we are obsessive in relation to this control expenses. We have performance goals connected with these controls, and approximately three or four years ago, we implemented a specific system for matrix budgeting, which helps us to control our expenses and also to disseminate the best practices in the company.
Very interesting. We have monthly meetings, involve the entire company, not only the area of the controllership, but the entire company. This, I think, is one of the secrets of reaching these controls, our expense control. Continuing on the answers, complementing what Ramón said, during April, sales have been approximately 11% above compared to April of last year. It's important to mention that April, due to the lower number of business days, the daily sales were 17% higher than the previous period.
It was a positive performance, and we can say equally or reaching the level that reached in the middle of 2021. As far as clients, there was no significant changes in market share versus the market share of March. What there was a small absolute increase in volume.
Next question, Orbe. Do you believe that there is space for some type of return on capital through extraordinary dividends for the repurchase of stock repurchase?
We have to mention our current strategy, which we have been following for some time, of growth, inorganic growth, to answer this question. The principal utilization of our resources is focused on this growth, inorganic growth, on which we have been working with a great deal of energy. However, we have not given up on the idea of an eventual distribution of resources through the mechanisms which you mentioned, in case we do not have a success in our initiative from the standpoint of this temporary initiative that we are looking at.
Everything is on the table, and these questions are constantly under consideration.
We have a few more questions. The following is from Marcelo from BTG. Congratulations on the results. On the question from my side, how is the competitive environment for the new entries in the market, especially the Chinese companies? How have the stops of production in the first quarter affected you? Production risk. I am going to pass it over to Nivaldo.
Marcelo, as far as the Chinese competitors, we can talk about BYD and Great Wall Motors. BYD is already a reality in the Brazilian market. We have received from GDL that their logistics, we received vehicles through Vitória, which is run by GDL. There they are inspected and made available for sale in the market. So there is already a constant rhythm of receipt of these vehicles. Also, Tegma does this distribution for internal transportation. We have the entire chain of this brand.
As far as Great Wall, there is underway a process of bidding for the transportation needs of that company. These cars may also possibly come in through Vitória port and will be handled by GDL. Speculation about factories exist in Salvador, Curitiba. We do not have any effective information, any final information about those information.
Next question comes from Luiz, from Safra. Good afternoon. Can you speak about the possibility of M&A in the short term?
What can I say? As I mentioned previously, we mentioned in other amount of the meeting that we have been working on this a lot in this sense, and we have counted on the support of a specific consultants on this question. We have several M&As signed, NDAs signed with several potential targets. We have nothing concrete or finalized yet. Nothing concrete to report as of yet. We are working on these. Nothing that can be announced.
All I can say is, all I can do is ratify the idea that this is our strategy t o get the logistics, integrated logistics, a sector in which we can grow, maintaining our margins, creating value for our stockholders with enough profitability as we can prove in the company results of our logistics, our integrated logistics. So we see this sector as a blue ocean for opportunities where we can utilize our expertise and our specialties for acquisitions which are harmonious with the type of business that we do today. We can utilize the capacity to leverage resources so that we can consolidate this sector.
Thank you, Ramón. Next question, which we received from Victor. It is Victor fell and he has sent it via chat. Can you please tell us how the principal clients? He must be referring to the sale of new vehicles. I am going to pass it over to Nivaldo.
Victor, thank you. Victor, sales in April were 10% or 11% above what we had last year in the same time period. Due to the lower number of business days, these sales were actually better, and our market share was very similar to market share of March. The question of brand, we can point out GM, Volkswagen, Toyota, the three principal brands that we work with here among our consumers.
Thank you, Nivaldo. One more question from Gabriel from Santander. Good afternoon, everybody. Congratulations on the results. Two questions from my side about the methodology adopted that refers to the change in the methodology for calculation of market share of logistics. Despite these modifications and this automotive market share, can you give us a little more color as far as the motivation for this alteration? Do you believe that it is more faithful and more truthful?
What is finally your strategy in relation to market share? Thank you. I am going to pass this over for Ramón to answer.
In relation to the motivation, as we mentioned, we have utilized data that were in some ways estimates, or where we did not have real security about the inventory of the car companies, the position of stocks of their inventories. Which always made this number just a little bit, it was not exactly 100% trustworthy. It created some uncertainties. So now we are utilizing a denominator of the number of licensing of new cars. It is more simple. In our database, we have adjusted in the past, there is a graph that we present here, which shows the variations are small.
It is important to be able to compare the evolution of this indicator. I think your question also, you asked something about our strategy in relation to market share. Finally, our market share, we do not have much we can do about it. It is connected to, and it depends on the regions which we attend, principally, where we have our lines established, and also the clients that we attend. We attend almost the entire market, but some of them are well-known by you all. They have a bigger participation than the average.
So if these clients are successful in the sales of their models, this affects our market share. On the other hand, if some of these clients have a more effective, for example, by the lack of components or these shutdown of factories, more than others, this will also affect our market share. In the long term, it has been around 25%, 26% with several variations, but it does not have much oscillation in time. Another aspect that is important, also mentioned in a previous question, has to do with our capacity to attend to new entries in the market.
Therefore, I can ratify what was said in other opportunities that we have positioned ourselves very aggressively, participating in with the objective of taking part of this cargo which is now being set up for us.
We have a question, one more question via telephone from Luiz Capistrano from Itaú BBA.
Good afternoon, everybody. Thank you for taking my question. In relation to the market for new cars, I wanted to check with you about the retailing is still very weak. If you had any discussions with the automotive manufacturers, if you can give an overview, a general overview of what is in more advanced step. There's a lot to be discussed, but I wanted to see if you could give us an idea of what you think has the most chances of happening. Do you think that the government is really able to implement these things, these updates and these discussions?
As far as the market of Fastline, if you could talk about the potential for that market, the view of growth, if there's a chance by the end of the year of seeing this really taking up as a new separate business sector. Give us some more color about that sector. Thank you very much. Thank you for the opportunity.
Luiz, this is Nivaldo speaking. Let's go. First quarter, despite all of these difficulties of sales that happened and the shutdowns of some of the factories, these shutdowns were motivated to regulate stocks. In other words, even though they were productive, production stopped, vehicles were still being transported from the patios to the distributors. So our movement continued to operate. Question of subsidies and possible incentives beyond those which are being given by the automotive dealers, not through the government, but by the dealers themselves, are in the discussion.
The access that we have through probably another company, other organizers, is very nebulous. We don't know exactly what may come ahead. The sales at retail have fallen off, but at the same time, direct sales have grown quite a bit. When I say direct sales, I'm talking about sales aimed at the rental company. There is a change, a cultural change in Brazil, in which the adoption of a rented vehicle is going through a type of transformation, increasing its volumes. Fastline, as we mentioned, the used market has a huge potential for developing six or seven times larger than the market of new cars.
The possibilities of Tegma utilizing all of the expertise that it already has, all the infrastructure that we have, all the system infrastructure we have, will bring to this market a new logistic mode. So there's a whole field of development in the Fastline situation. Okay, Luiz?
Thank you. Thank you. Thank you for those answers.
Just to remind you, to make a question, please type asterisk one. To remove your question from the line, please digit to type asterisk two. Please wait while we collect any new questions. We now close at this time the session of questions- and- answers. I'd like to pass the microphone back to Nivaldo for his final comments. Sir Nivaldo, please go ahead.
I wanted to give my special thanks to all of our employees, Tegma employees who worked preparing these good results for the first quarter. I also want to thank all of you who have participated in this video call. We hope to see you again soon in the next quarter. Thank you very much.
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