Good day, and thank you for waiting. Welcome to Tegma Gestão Logística S.A.'s conference call to review second quarter 2019 earnings results. Today, we have Mr. Gennaro Oddone, CEO of the company and IRO, and Mr. Ramón Pérez, CFO. We would like to inform you that this event is being recorded, and that all participants will be in listen-only mode during the company's presentation. After Tegma's remarks are over, there will be a Q&A session when further instructions will be provided. Should any participant need assistance during this conference call, please press star zero to reach the operator. The replay of this event will be available right after the end of the conference call for a period of seven days.
Before proceeding, let me mention that forward-looking statements that might be made during this conference call relative to Tegma's business perspectives, projections, and operating and financial goals are based on the beliefs and assumptions of Tegma's management and on information currently available to the company. Forward-looking statements are not a guarantee of performance. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Tegma and could cause results to differ materially from those expressed in such forward-looking statements. Now, I will turn the conference call over to Mr. Gennaro Oddone, Tegma's CEO and IRO, who will start the presentation. Mr. Oddone, you may begin.
Thank you. Good day, everyone.
We will now start another conference call to discuss Tegma's results. Thank you for your interest in our company. I would like to start on slide two with our agenda. We will begin with the highlights of the quarter, followed by market performance and some of Tegma's operating indicators. Then we will focus on second quarter results and talk about cash flow investment, and that in the second quarter of 2019. Lastly, we will speak about the capital market and expectations. On slide three, we show you Tegma's quarterly highlights. In this quarter, we acquired 20 trucks for our own fleet of the automotive logistics division. This purchase is part of the plan to renew part of our 109 owned trucks, aiming to modernize our fleet and bring gains in terms of maintenance.
In parallel to this purchase, 28 trucks will be sold, resulting in an overall reduction of eight trucks of our own fleet. The investment made for this operation totaled BRL 5.2 million. We also acquired eight aluminum bulk commodity trailers to replace the outsourced equipment used to transport sulfate and soda ash of Tegma's chemicals operation. This new equipment, developed by Tegma, increases load capacity, productivity in unloading sulfate and soda ash by means of a greater flow, in addition to reducing highway toll costs, as there will be one less axle when compared to a B-train. Our primary contract for this operation was renewed until the end of 2021. The investment made amounted to BRL 3.1 million.
We also finalized our investment in improvements made to Toyota's yard in Sorocaba, which have been made since the second quarter of 2018 with the acquisition of a plot of land of 40,000 sq m. Total investment was BRL 23.3 million. On July 25th, the board of directors approved an investment amounting to BRL 10 million for acquisition and ground improvement in an adjacent plot of land of 20,000 square meters. This expansion is justified by Toyota starting to ship vehicles directly from this new yard, with vehicles no longer having to pass through the consolidating yards in São Bernardo do Campo. Still on the highlights of the quarter, on slide four now, we refer to our startup accelerator called tegUP.
The first investment we made, Frete Rápido, focused on implementing new clients, which should bring in recurring revenues as of September of 2019 and should start showing better results in the next Black Friday. In addition, the startup was recognized as an excellent digital transformation tool for shippers, being awarded as top 10 at The Innovation Show event that took place also in July. On the right, you can see that in July, we received some awards that we would like to mention. The first in a rank created by InfoMoney, a financial magazine in Brazil, in partnership with Ibmec, a financial college, and Economatica, a financial data company. Tegma was awarded best-listed company in the industrial goods category. We were also recognized in the ranking 2019, 100 Open Startups. Ranking 36 in the top 50 open corps category.
This award is the result of a work that we are developing at the company, mainly in our startup accelerator, tegUP, which has already completed two selection cycles with a total of 123 startups enrolled. On slide five, we show the performance of the automotive market and Tegma's indicators. Starting with the graph on the left, it is possible to see that domestic sales increased 11.5% in Q2 2019 compared with Q2 2018. This result has been positively influenced by direct sales, which accounted for a significant share of 45.5% of vehicle licensing in the first half of 2019 versus 40% in 2018. On the other hand, exports in dark gray were down 40.8%, reflecting the crisis in Argentina, the main economic partner of Brazil for vehicle exports, despite a slight increase in sales to Colombia and Mexico.
Looking at the graph in the middle, we can see that production resumed growth up 5.2% in the annual comparison due to increased domestic sales, together with an 18.5% drop in imports, as we can see on the graph in dark gray. Lastly, on the graph on the right, we see that in Q2 2019, we transported 208,000 vehicles, 7.4% more compared to the second quarter of 2018, resulting from a 16.8% increase in domestic deliveries and from a 30.8% reduction in the volume of exports in the annual comparison. This performance reflects a rise of 1.5 percentage points in market share as a result of two main clients gaining share in national vehicle licensing in the quarter. Average distance traveled in Q2 2019 was 1,058 kilometers, influenced mainly by a decrease in the share of exports in total vehicles transported.
On slide six, we show the evolution of the result of each division. We see revenue on the left, profitability, EBITDA and EBIT in the graphs in the middle, and net consolidated income on the right. We remind you that the numbers shown here do not include IFRS 16 in 2019. We can see that the automotive logistics revenues in the second quarter of 2019 had a 14.9% growth, due mainly to a higher number of vehicles transported to an increase in average distance traveled by vehicle, as well as to price adjustment that happened in May and to higher revenues from other services. The net revenue of integrated logistics grew 0.5%, despite the loss of one client in the Rio de Janeiro warehousing operation. This growth is explained by an improved performance of our industrial logistics operation.
Talking about the EBITDA by operation in the second graph, we see that the 15.7% growth of the automotive EBITDA in orange represents a margin of 15.1% and a gain of 20 basis points comparing with the same quarter of last year. EBITDA margin of integrated logistics remained stable year-on-year at 18.4%, mainly due to higher transportation costs in the industrial logistics operation for home appliances and due to the loss of one warehousing client. In the third graph, we can see the evolution of the EBIT margin of these divisions. The logistics EBIT margin for vehicles in orange grew 120 basis points in the period due to higher revenues, to cost control, and to a negative adjustment in depreciation in the second quarter of 2018, despite higher expenses.
The EBIT margin evolution of integrated logistics of 30 basis points compared with Q2 2018 is due mainly to improvement in industrial logistics and lower warehousing performance, as previously mentioned. Net income in Q2 2019, in the graph on the right, totaled BRL 32.5 million. However, if we take into account that in the second quarter of 2019, we had BRL 0.5 million of negative impact from IFRS 16. The result for the second quarter in 2019 was 17.1% higher in the year-on-year comparison, due to higher revenues in the Automotive Logistics division and operating improvement in the quarter, together with lower financial results and a lower income tax rate. With that, I turn the floor to Ramón, our CFO, to discuss return, cash flow, and debt.
Thank you, Gennaro.
On slide number seven, we show on the graph on the left the evolution of our return on equity in gray and the return on invested capital in orange. In Q2 2019, in the quarter-on-quarter comparison, ROIC remained practically stable. As regards to the evolution of return on equity, the slight increase reflects an improved result in the quarter, as well as a reduction in shareholders' equity used for the calculation, which is the prior 12 months. In the graph in the middle, we can see that the generation of operating cash ex IFRS 16, in orange, during the second quarter of 2019 was BRL 45 million. A significant increase when compared to Q2 2018.
Because of the receipt of BRL 12.3 million, referring to a favorable ruling by the court in a lawsuit in which Tegma requested to be exempted from contributing to FUNDEF, a tax on revenue from customs bonded services at its operation in Cariacica, in the state of Espírito Santo, plus an operating improvement despite a cash cycle increase in the quarter. Deducting from this cash generation a higher cash CapEx in gray, which was BRL 15 million in Q2 2019, especially due to the renewal of our own fleet of trucks in the Automotive Logistics division and the acquisition of bulk commodity trailers, as explained in the highlights for the quarter. We have a free cash flow of BRL 30 million, and I would like to remind you that this is excluding the IFRS 16 effect.
Finally, concerning our financial leverage, we see on the graph on the right a stable net debt in this quarter. This is explained by the events previously mentioned. On slide number eight, talking about the capital market and expectations, we show you Tegma's share performance on the left. With our shares appreciating 76% in the last 12 months, a higher performance than the market, which appreciated 26%. We believe that economic agents now see an improved economic outlook with the approval of reforms, such as the pension reform, and that the market has a better perception of our company's potential. These, we believe, are some of the factors that led to our shares being traded at a higher price.
In terms of liquidity of our shares, daily traded average of the last 12 months has been around BRL 7.3 million, an increase in relation to the average of the previous 12 months. In the middle, we see the performance of Tegma's multiples. We can see that Tegma continues to be traded at a multiple of enterprise value over EBITDA for 2019 of 14x , and a multiple of P/E 2019 of 8.1x . On the right, we can see that our rating remains at B1 by Moody's without any update reflecting the improvement in the market scenario or the company's fundamentals. We also show the list of sell side analysts with their estimated average price for the end of 2019. I turn the floor back to Gennaro.
Thank you, Ramón. Now we will start the Q&A session.
Ladies and gentlemen, we will now begin the question and answer session. If you want to ask a question, please press star one on your touch tone phone now. If at any time you would like to remove your question from the queue, press star two. Mr. Oddone will read the questions coming from the webcast. Our first question comes from Pedro Bruno with Santander.
Thank you. My question has to do with the evolution of revenue in the Automotive Logistics division. We saw an evolution in reals per vehicle per kilometer. When we compare year-on-year, there was a 1% reduction versus a recent positive track record of 5%-10%. Even when we look quarter-on-quarter, this metric dropped 4%. Despite our very positive operating results that you presented. I would like to understand what can explain this, and how should we think about this impact looking forward, looking at the results of Tegma from now to year-end.
Hello, Pedro. Good morning. Thank you for the question. Let me explain. Our total revenue consists of vehicle transport asset multiplied by the number of kilometers. That is how we get to the calculation. But here, we also calculate revenues coming from movement between yards, particularly because of transfers. Moments when the industry has higher inventory and they hire us to transport vehicles to other yards, including some of our own yards. When that happens, that generates an additional revenue per yard parking services. We also have one main client that changed their logistics of imports of vehicles.
Imports of vehicles that previously would come in through the Rio Grande port, and now they are going through the Santa Catarina port. There was a reduction in revenue in this transfer, where we did not compute mileage. Because we would not be able to compute this, or we would be computing this implicitly. However, on the other hand, this generated an additional revenue from service provision. Because now we are responsible for this yard and for this activity. Whenever there is a need for additional services. Basically, this was the impact. What I can assure you is that if we were to exclude these effects, our revenue growth by kilometer would be around 3%-4%.
Excellent. Very clear. Thank you, Gennaro.
As a reminder, if you want to ask a question, please press star one. Mr. Ramón Pérez will read a question from the webcast.
The question refers to a ruling of the lawsuit that determined the exclusion of ICMS from the calculation of PIS and COFINS. I believe that this refers to the subsequent event that is included in our income statement. Indeed, as I think it was mentioned in previous opportunities, we had already recognized an amount in the fourth quarter 2018 regarding this topic. We have a ruling, a legal decision in a lawsuit that we filed in 2008 that claimed the exclusion of ICMS from the calculation base for PIS and COFINS. A number of Brazilian companies joined this lawsuit. In 2017, in the month of March, as we have disclosed to the market before, there was the decision of the so-called leading case, which determined the exclusion of ICMS from the calculation base. But this decision had not been applied to our claims.
What happened recently is that that general ruling, the decision of the leading case, was then extended to our lawsuit. This was a step that we were expecting, which was important so that we could, in the future, record these credits in our balance sheet, in our bottom line. Well, it so happens that there is still one pending item because there were motions for clarification. There was a modulation about this decision, and the whole market is now waiting for the result of this modulation, this evaluation, which will deal with a time item. In other words, since when these credits can be recognized. Best case scenario would be five years prior to the filing of the lawsuit. The lawsuit was filed in 2008, so we can get credits coming from this procedure starting in 2003.
There is another point which is quite technical about the way to calculate these credits. Whether companies should use the paid ICMS or the highlighted ICMS. Tegma and other companies are still waiting for the result of this so-called modulation, and we are working internally to verify the exact amount of these tax credits since 2003. We are getting all of the documentation, and in the coming months, we should have more news on this topic.
Again, as a reminder, if you want to ask a question, please press star one. This concludes today's question and answer session. I would like to invite Mr. Gennaro Oddone to proceed with his closing statements. Please go ahead, sir.
Well, again, thank you. I would like to thank you all for participating in this conference call. We remain available for further clarification through our investor relations department. Thank you very much and have a good day.
That concludes Tegma's conference call for today. Thank you very much for your participation. Have a good day, and thank you for using Chorus Call.