Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tegma Gestao Logistica SA (BSP:TGMA3, Financial) announced a dividend payout of 60% of net income for the third quarter, reflecting a dividend yield of 10.7% over the last 12 months.
- The successful deployment of Oracle's ERP system marks a significant step in the company's digital transformation, enhancing process efficiency and customer experience.
- The company experienced a 46% increase in net revenue for the automotive logistics division, driven by a 19% rise in vehicles transported and a 2% increase in average distance traveled.
- Tegma's market share in the automotive logistics sector grew by 1 percentage point to 25.7% in the third quarter of 2024.
- The company's net income for the third quarter rose by 50% year on year, with a net margin expansion of 0.8 percentage points, attributed to improved operating results and equity income growth.
Negative Points
- The integrated logistics division saw only a 2% increase in net revenue year on year, hindered by lower than expected arrivals of ships carrying key chemicals.
- EBITDA margin for the integrated logistics division fell from 30.2% to 26.6% due to reduced volumes in the chemicals operation.
- Despite robust performance indicators, Tegma's share multiples remain below their historical average, indicating potential undervaluation.
- The company's working capital demands have increased significantly year on year, impacting cash flow and dividend payout decisions.
- Tegma does not provide specific revenue or CapEx guidance for 2025, which may leave investors seeking more clarity on future financial expectations.
Q & A Highlights
Q: How do you see the OEMs talking about vehicle production in 2025, and can you explain the surprisingly positive revenue and tariff for this quarter?
A: We are finishing the budget for 2025 and have had discussions with OEMs. They expect a stable 2025, similar to 2024, with a slight improvement. Regarding revenue, Fast Line has been on a growing trend, and we expect to end 2024 with a record vehicle handling, indicating a positive growth horizon.
Q: Could you provide some color on the dividend payout for this quarter, which was about 60%?
A: The payout in Q3 is consistent with previous years. The 80% payout in the previous quarter was an adjustment to align our free cash position. Our policy is to pay 50%, and the current payout reflects cash demands due to strong vehicle sales growth and M&A projects.
Q: Can you elaborate on the Automotive logistics division's performance, particularly the surprising gross revenue per kilometer traveled?
A: The National Index of Cargo Transportation adjustment was 10%, and there was significant revenue growth from yard management and other logistics services. Fast Line also posted growth above the division, contributing to revenue growth above inflation.
Q: Could you detail the outlook and guidance for revenue and CapEx for 2025?
A: We do not provide guidance for revenue or CapEx for future periods. However, our investor relations website offers a correlation between volumes and margins, which can provide insights into future results.
Q: What are the main factors contributing to the increase in market share in the automotive logistics division?
A: The increase in market share is due to growth in domestic sales and exports, as well as increased exposure to automakers. The average distance traveled also increased, contributing to the division's performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
