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Edited Transcript of JSLG3.SA earnings conference call or presentation 15-Aug-19 2:00pm GMT

Q2 2019 JSL SA Earnings Call

Mogi Das Cruzes Aug 23, 2019 (Thomson StreetEvents) -- Edited Transcript of JSL SA earnings conference call or presentation Thursday, August 15, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Denys Marc Ferrez

JSL S.A. - Chief Administrative, Financial & Investors Relations Officer and Member of Executive Board

* Fernando Antonio Simões

JSL S.A. - CEO, President, Member of Executive Board & Director

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Conference Call Participants

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* Victor Mizusaki

Banco Bradesco BBI S.A., Research Division - Research Analyst

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Presentation

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Operator [1]

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[Interpreted] Good morning and welcome to the conference call of JSL to discuss the earnings regarding the second quarter 2019. Today, with us are: Mr. Fernando Simões, CEO; and Denys Ferrez, CFO; and Investor Relations Officer. (Operator Instructions) We would like to inform you that this conference call is being recorded and simultaneously translated.

Before moving on, we would like to let you know that any statements made during this conference call relative to the company's business, outlooks, operating, financial and operating goals are based on the beliefs and assumptions of JSL's management and rely on information currently available to the company.

Forward-looking statements are not guarantee of performance. They involve risks, uncertainties and assumptions because they refer to future events and, therefore, depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operating factors may affect the future performance of the company and lead to results that will materially differ from those in the forward-looking statements.

Now we are going to turn the call to Mr. Fernando Simões. Please, Mr. Simões, you may go on.

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Fernando Antonio Simões, JSL S.A. - CEO, President, Member of Executive Board & Director [2]

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[Interpreted] Good morning, everyone. We are now starting the release of JSL earnings for the second quarter '19. We are going to talk about the main numbers of all companies and JSL consolidated.

We're starting on Page 2, talking about the main highlights for the second quarter '19. We had record consolidated net revenues of BRL 2.4 billion, which means growth of 23% over the same period last year. The numbers show the resilience of our revenues, regardless of the economic scenario

(technical difficulty)

Brazilians, which is due to positioning of all group companies, the diversification of its service portfolio and the segments in which we operate. All them contributing in a different shade and manner for the development of our customers.

We had also record EBITDA of BRL 518.2 million, 32% higher the same period last year and also a significant increase in EBITDA margin basically due to scale and efficiency gains in each businesses.

Vamos had EBITDA of BRL 136 million, 20% up the same period last year with growth of 12.7% over its net revenues in services. That shows Vamos that continues to deliver robust results, aligning with growth and profitability.

JSL Logística, EBITDA of BRL 130 million, growth of 31% year-on-year, with growth of 2.5% over the net revenue from services the same period. Again, better margins are due to our focus on efficiency, reducing costs and eliminating contracts with lower returns. Important to remind you that growth of margins and better result take place in that moment that the industry has not recovered yet. As it does, our margin and numbers can be even better.

CS Brasil, EBITDA of BRL 81 million, growth of 61% year-on-year, with growth of net revenue from services of 13%. That shows substantial improvement of margins in results especially because of a greater share of services in fleet management and outsourcing and exclusion of lower profitable businesses.

In Movida, we had EBITDA of BRL 154.9 million, growth 31% year-on-year and a record sales of used cars, with more than 16,000 units sold, up 83% year-on-year. At the end of July '19, Movida concluded a public offering of primary shares, of BRL 532.5 million, secondary offer, of BRL 300 million, shares, altogether BRL 832 million for the group strengthening its capital structure for a new growth cycle and increases the liquidity of its shares, returning to JSL, the parent company, the financial support made in '18.

All companies in the JSL group consolidated showed record net income of BRL 71 million, growth of 44% year-on-year. That reflects the positive effect of the company reorganization of all JSL companies which were independently organized with management focused on each business.

Now going to Page 3, we are going to show another important step in the evolution of JSL group's earnings. As of the second quarter of '19, we are releasing JSL Logística and CS Brasil independently. With that, we are going to improve the understanding about the businesses, simplify the valuation of the companies and highlight the independence and dedicated management teams; again, in line with our commitment of seeking the most transparency before the market.

The bottom part of slide, we have a time line of how we release results. Until the fourth quarter '17, we released results of CS Logística, CS Brasil and Vamos all together, although both Vamos and CS Brasil were already independent companies and had been some for many years.

As of the first quarter '18, we separated Vamos, but we still released the results of CS Brasil and Logística together. And now, as of the second quarter '19, we're breaking down information of CS Brasil and Logística in separate. And then, from now on, you're going to see the results of Logística, CS Brasil, Vamos, Original, our dealership network, BBC Leasing that no longer is called JSL Leasing, is called BBC Leasing and Movida. And thus, we will meet the demands of the market to know the numbers of companies in separate does make it easier for you to assess each business and their particularities.

With this objective, I now draw your attention to Page 4 when we are going again to show each company in separate what we release, what we are going to release from now on and the activity of each company by business line. So on Page 4 in the middle, you have what kind of information we provided until the first quarter '19, then this, together with Logística

and CS Brasil.

Now we are going to talk about different business lines. Logística

to the left, with: road cargo transportation and dedicated road cargo logistics; commodity logistics; warehousing services; internal logistics; urban distribution; and chartered services, that is, employee transportation for companies. And CS Brasil with the following activities: fleet management and outsourcing, light and heavy vehicles; urban transportation of passengers; and urban cleaning.

Again, CS Brasil is a company that was established in 2009 in which was centralized public services, similar to what Movida provides, Vamos provides and even of what JSL Logistics provides, but in this company, these are the indicators that we have for technical capacity certificates to take part in public bids.

So on Page 5, we have JSL Logística and its business lines. We have the largest portfolio of logistics services in Brazil. We have road cargo transportation; commodity logistics; urban distribution; internal logistics; warehousing; and chartered services. The services are crucial for the Brazilian industry. Quite modestly, we have major diversification of services and segments in which we operate which much contributes for the resilience of our revenue.

On Page 6, we show more about JSL Logistics. We work in 16 different economic sectors, with several dedicated services mainly through an asset-light model which is clear in the pie chart to the left. You see that 66% of our services are asset light. Also, more than 80% of our services are dedicated customized services to our clients.

And still on Page 6, to the right, you see the revenue from services by economic sector. It's very important to highlight to you that when you talk about 80% of dedicated services, you're talking about continued services with long-term contracts. And asset-light operations means that along our history, specifically in the last 4 years, we transformed customized services within the Brazilian industry into asset-light operations with associates, independent contractors and small businesses that provide services to us under the umbrella of our DNA of services and technology which improves the constructability our clients and offers the better value for money.

Going to Page 7. We are going to talk about the main highlights from JSL Logistics numbers, which reflects the business model we showed before. With this transformation in the past 3, 4 years in logistics, more dedicated service, less asset -- more asset light and more customized services by means of intelligence and our DNA, we have an increase of revenue, still small from '18 to '19, but allows increase in net income, improvement in EBITDA and margin of more than 30% compared to -- in '19 and a significant drop in net CapEx. All of those main numbers show what you saw in the previous page: that is, a new business model that brings to us the belief that any improvement in the economy will substantially contribute to us increasing our results.

Now on Page 8. We break down all the business lines of CS Brasil. We have a business model that generates results and contributes to the efficiency of public services in Brazil. The main activity is fleet management and outsourcing with light, heavy vehicles, with and without labor. The most share is fleet management and outsourcing and the least share with labor.

In the last 12 months, we have net revenue in this business line of BRL 543 million, 67% of the company's revenue. In municipal passenger transportation, urban transportation, we have net revenues of BRL 214 million, 26% of revenues. And in urban cleaning, only BRL 57 million, which accounts for 7% of company revenue. These are the main business lines in which CS Brasil operates.

Now we are going to Page 9 where we show the business model of CS Brasil. This is a company, just to remind you, in which we have indicated we centralized our certificates of technical and financial capacity to take part in public bidding processes. These processes in Chart 1 show how do we capture opportunities safely by means of specialized website searches and that informs on bidding processes whether short term and long term. Our teams (inaudible) take a look at the contract, check on pricing, make the decision about taking part or not. And in the first half of '19, 88% of the shares were in electronic auctions by means of bidding online.

We have in our compliance a bidding room, 100% monitored electronically and with a governance process in place that gets safety to take part in the bidding process at the highest level of governance. If we win the bid, we have the second (inaudible), and we give you examples of contracts. We are here to guarantee assets availability. Generally, they are projects with 5 years. Readjustments already defined in the bidding process, mostly of them are annual, whereby the assets provide the services where they would sell the asset.

Still on Page 9, on your right, we have gross revenues in the last 12 months with the amount of 12 municipalities, more than 3,000 employees and more than 16,000 assets. As I mentioned earlier, CS Brasil and its business model is very close to the mix of many of our companies, Movida, Vamos and (inaudible) of this of what JSL Logística does in terms of labor.

Now we are going to Page 10 where we talk about the company's main numbers. CS Brasil has focused its operations and given priority to fleet management and outsourcing, with relevant share in mixed capital companies, that is, public and private ownership. To the left, we have superb revenues from services by business lines. And here shows, as we mentioned, growth in fleet management and outsourcing and a slight drop in urban transportation and in urban cleaning, flat numbers.

And to the right, we show growth of revenues with mixed capital companies and growth in the gross management -- gross revenue of fleet management and outsourcing from BRL 107 million to BRL 143 million, growth of more than 30% in this line.

It's important to remind you that both PP companies and private companies are trying to copycat the models of efficiency of publics and of private companies. And with CS Brasil, it's sufficient to capture these opportunities.

On Page 11, we show what happened to CS Brasil and the group as a whole, which is improvement of its results. So we talk about net revenues with lower growth but with huge growth in EBITDA, more than 60% in the last 12 months, and net income with growth of more than 47%. At the end, that shows better efficiency in management, change in portfolio, focus on market growth, more profitability.

Going to Page 12. After showing you the results of JSL and CS Brasil, again, completely separated, we now, on Page 12, show the results of the second quarter '19 vis-à-vis the second quarter '18. So here, we have Logistics with net services revenues with growth of 2% and EBITDA with growth of more than 30% year-on-year; net result of BRL 23 million, which means growth of 59%.

CS Brasil with growth in net revenues of 4%, with EBITDA up more than 61% above that of last year; and net result of BRL 29 million, growth of 46%.

Vamos growth in net revenues of 12%; EBITDA with growth of more than 20%; and net result, even with higher financial expenses, we had growth in line with our revenues that was 11%, with net results in the second quarter '19 of BRL 37 million.

Now Original, our dealership network of cars, although a smaller business, extremely complementary [to others] with net revenues up 27%; and growth of EBITDA 50%; net result of BRL 5 million, growth of approximately 7%.

Now we have BBC Leasing. As a reminder, JSL Leasing is now called BBC Leasing, which also shows significant growth of revenues, more than 30%; net results of BRL 2 million. This is a small business, extremely complementary and with high synergy with our other companies.

Movida, our rent-a-car company, we have net revenues of BRL 956 million in the second quarter '19; growth of 56% year-on-year. In terms of net revenue from services, we had growth of 22.8% to BRL 338 million; and that EBITDA grew 31%, BRL 155 million in the second quarter '19; net result, BRL 41 million.

And still on Page 12, when you talk about our main numbers of JSL consolidated, we have net revenues of BRL 2,389 million, growth of 23%. In that, net revenue from services had growth of 12.5%, BRL 1,714 million. EBITDA for the group consolidated numbers were BRL 518 million, growth of 32.5%. Growth of EBITDA -- again, the growth of net revenues of 12.5% and the net result of the company consolidated was BRL 71 million, which means growth of 44%.

As we can see, where we have growth in net revenues of 12.5%, we have growth of EBITDA of 32%, and the bottom line result grew 44% in the same period. That shows what we believe in. It is the company's strengths are starting to reap the fruit of all our work in company restructuring in the past 4 years.

Now I'm going to turn the call to Denys Ferrez that will give you details on our consolidated numbers. Please, Denys?

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Denys Marc Ferrez, JSL S.A. - Chief Administrative, Financial & Investors Relations Officer and Member of Executive Board [3]

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[Interpreted] Thanks, Fernando. Good morning, everyone. We're starting on Page 13 talking about JSL consolidated numbers.

In the second quarter '19, we had net revenues of what was a record BRL 2.4 billion, an increase of 23% year-on-year. And even compared to the first quarter '19, we had growth of 8%. EBITDA totaled BRL 518 million, growth of 32% year-on-year. And margin on services, up 30.2%, growth of 4.5 percentage points, expected dilutive gains in the several companies, the several lines of business.

To give you an example, Vamos contributed with BRL 136.6 million, growth of 20%, reflecting resilience and predictability in its future revenues. That's a business that is growing consistently with quality of services. Vamos accounted for 26% for our total consolidated EBITDA.

JSL Logistics contributed with BRL 130.8 million, growth of 31% year-on-year, very much based on its search for operational efficiency, reduction of costs and rebalance of processes with a suitable profitability in its contract portfolio, accounting for 25% of our total consolidated EBITDA.

CS Brasil, that is now being shown with numbers being separate, contributed in the quarter with BRL 81.4 million, growth of 61% year-on-year because of its greater focus in the rental of assets and also with the objective of managing portfolios, changing contracts with lower profitability into contracts with more profitability; and accounting for the consolidated EBITDA with 16%.

Movida has disclosed its earnings on the 13th this year, is showing positive results for the fourth consecutive quarter. In terms of EBITDA, it contributed to consolidated numbers with BRL 154.9 million, growth of 31% year-on-year due to everything that has been presented which goes to growth and improvement of its operations. And Movida showed in the consolidated results

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along the last year's periods that encompasses phases to build some of this business and also going through one of the most severe crisis in the country. So our companies are well organized, light with people that are focused and will certainly deliver a lot more than we have so far.

Going to Slide 14. We talk about investments for the second quarter. On the left, we see consolidated CapEx. Gross CapEx in the second quarter '19 was BRL 1.8 billion, of which BRL 1.1 billion for business expansion and BRL 731 million for the renewal of assets.

Talking about renewal of assets, we have the total value of assets sold, BRL 687 million. When we deduct gross investment from sales, we have a net CapEx of BRL 1.1 billion for the second quarter. That was focused on Movida in the bottom right part with investments of BRL 686 million; then Vamos, BRL 330 million of net CapEx, most for growth; and CS Brasil, third, with BRL 40 million of net CapEx, also most for growth. And the business unit that less demanded net CapEx was Logistic with BRL 27 million investments that reflect the transformation of the company. And now the company basically comprises asset-light operations, as it was shown in previous slides by Fernando.

With that, net CapEx was 96% integrated to the expansion of our business; that is, expecting more cash generation for the future.

Now we are going to the next slide where we talk about our indebtedness consolidated numbers. On Page 15, we have a chart with a time line of -- for our gross debt amortization in gray and orange; and to the left, the cash position of the company in the end of the second quarter.

The company had BRL 3.1 billion, which is 1.5x the short-term amortization. In the quarter, we had several operations in the group to extend the debt schedule. And we were able to have transactions with 7-, 8-year terms; a total volume of approximately BRL 1.7 billion, BRL 1.8 billion, BRL 900 million in Movida, BRL 300 million in Vamos, BRL 450 million in JSL, BRL 100 million in CS Brasil. And with that, our profile, when you compare to the profile of the previous quarter, is much better. And we still have ongoing BRL 2 billion operations that already address the [bonds] that are going to mature in 2021. And if you consider the cash volume, it covers up to the end of 2020. With these sections, we are managing our liability quite well in a very comfortable manner with opportunities to reduce cost vis-à-vis what we're doing today despite the extension of times.

Also, on this slide, I would like to say that we delivered a net debt/EBITDA ratio of 4x, following our trend of a drop. And again, if we analyze the EBITDA of this quarter, understanding the investments made, we can see what kind of leverage we would have if we were already

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recent investment. That gives a net debt-to-EBITDA ratio for the first 6 months of '19 annualized of 3.7x. That would be our intrinsic leverage until you have

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of current reality.

Our gross debt was about BRL 10 billion with liquidity of BRL 3 billion, as I mentioned, net debt of BRL 7.4 billion. Our objective is to continue to reduce our leverage, move it ahead, the transaction, as it informs the market of follow-on, enabling the company to move onwards without being in consolidated views, being far from our objectives of reducing our net debt/EBITDA ratio, which we have been talking about repeatedly.

With that, we need 2 objectives: having a stronger growth for Movida and keeping our objective of reducing the net debt/EBITDA ratio.

With that, we go to the next slide, Slide 16, talking about the profitability breakdown of JSL consolidation -- the group's profitability. We have Vamos with net income of BRL 69 million and a ROIC, 12.2%; Movida net income of BRL 83 million; CS Brasil net income of BRL 40 million and ROIC of 9.4%; JSL Logistics, remembering again that separated from the CS Brasil numbers, net income of BRL 61 million and ROIC of 9%; Original, our dealership business, with BRL 6 million net income and ROIC of 10.3%; and BBC Leasing, before called JSL Leasing, with net income of BRL 3 million and ROIC of 17.6%.

All this income together lead us to BRL 263 million, as you can see in the center of the circle that we call net income of the company. Minus financial expenses related to investments made in each one of these companies, we have financial expense after taxes of BRL 131 million.

With that, we have for the half year a consolidated net income of BRL 132 million, 77% above that of the first half

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consolidated ROIC for the first half of '19 when we get to annualized numbers is 9.6%. I would like to draw your attention, when we do the math for the second quarter, that is 10%.

With that, I'm going to turn the call back to Fernando. Please, Fernando?

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Fernando Antonio Simões, JSL S.A. - CEO, President, Member of Executive Board & Director [4]

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[Interpreted] Thank you, Denys. Once again, I would like to thank you for attending the call. And we are going to open for your questions. If you have any need for

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Questions and Answers

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Operator [1]

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[Interpreted] (Operator Instructions) Our first question comes from Victor Mizusaki from Bradesco BBI.

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Victor Mizusaki, Banco Bradesco BBI S.A., Research Division - Research Analyst [2]

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[Interpreted] Congratulations on your results. I have two questions. The first with regard to leverage. You said that if you take a look at the numbers of the first quarter annualized, your net debt-to-EBITDA ratio would be 3.7x. Just to confirm, this number does not have a positive impact of the leverage coming from the Movida operation, is that right?

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Denys Marc Ferrez, JSL S.A. - Chief Administrative, Financial & Investors Relations Officer and Member of Executive Board [3]

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[Interpreted] This is Denys. No, it does not include the benefit.

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Victor Mizusaki, Banco Bradesco BBI S.A., Research Division - Research Analyst [4]

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[Interpreted] Okay. Would you have the number including the Movida?

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Denys Marc Ferrez, JSL S.A. - Chief Administrative, Financial & Investors Relations Officer and Member of Executive Board [5]

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[Interpreted] If we were to get all the resources raised by Movida, that would make the 3.7x or an indicator on the same base would drop by 0.4. If you think of EBITDA in the last 12 months and the proportion of this amount. So it would be 3.3x or 3.6x. But we are not encouraging people to follow this rationale because, in the end of the day, the primary part of Movida is meant to release it for a next cycle of growth, so this amount is to be used for the growth of Movida on the balances to the benefit of the deleverage. It is what I mentioned in the beginning. We continue to have our commitment of

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gradually reducing our leverage ratio, decreasing

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Victor Mizusaki, Banco Bradesco BBI S.A., Research Division - Research Analyst [6]

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[Interpreted] With regard to the CS Brasil operation that you are now disclosing in separate, we see a change of mix in CS Brasil in terms of revenue. You are focusing more on fleet management of light vehicles. How can we see this change of mix in terms of ROIC for the future?

And second, still about CS Brasil, when you show on the slide the leverage per segment, CS Brasil has low leverage. I would like to understand if this is an opportunity for growth or if that is part of the type of business that the company offers.

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Unidentified Company Representative, [7]

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[Interpreted] Okay. This is a very good question. Well, we have been showing improvements although we don't have a history in the sector as a whole and in CS Brasil. And the focus on fleet management and outsourcing, I would dare to say, will make this ROIC to go -- that is, if you were to exclude from the base of CS Brasil the new contracts that have been the focus of growth, that is fleet management, outsourcing with growth of 34%, if you

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the revenues at the start -- year-on-year and you have had a much higher

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So the trend is ascending, and that will contribute for the bottom line of this company. I believe the ROIC can be up to 11%, to answer your first question.

Second question. The leverage of CS Brasil is indeed low, and that, in part, has to do with allocation. We are working with that. But it's also an opportunity for growth. And that should be more in line with what we see in other group companies. And perhaps, we are going to reach that within a year period by relocating that, especially when you're talking about the holding investment and also by building new contracts. We have already shown an important part, but there are still others to come.

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Operator [8]

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[Interpreted] Our next question comes from [Sarah Delphian] from (inaudible).

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Unidentified Analyst, [9]

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[Interpreted] Can you hear me well?

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Unidentified Company Representative, [10]

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[Interpreted] Yes, we can hear you well.

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Unidentified Analyst, [11]

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[Interpreted] Okay. Good. Well, clearly, the quarter brought very good results, good numbers at least on our side. The most important highlight is the significant improvement in transparency and the breakdown of operations, separating business units in different box. Movida and Vamos were separate, but now the separation of JSL and CS Brasil makes our lives easier for analysts and investors. And now we indeed can see what you offer in terms of services, in logistics, exposure to sectors, clients, much clearer information.

Now, given that you have those business units in separate now and with management dedicated to them, I have 2 questions. First, on Slide 5, you show 6 subdivisions of logistics. So where you have the best expectations? And where you see differentiated performance out of the 6 sub-products of logistics?

And the second is given this separated management structure, that will probably give Denys and Fernando more time, what is your focus now? Is it managing the balance sheet? Is it seeking for new businesses? What will the free time, if we can say that you do have free time, will mean for the development of the group? And what kind of difference or new strategy can you make?

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Fernando Antonio Simões, JSL S.A. - CEO, President, Member of Executive Board & Director [12]

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[Interpreted] Okay. This is Fernando speaking. Well, first, about business units. We have been increasingly seeking to have the greatest transparency for the market as a whole to understand our service portfolio and companies. It's important to mention that CS Brasil has been an independent company since 2009. We are just now disclosing information in separate so that we can understand the company. So the next step, the last step that separated logistics just showed that all our companies are very independent as companies, as business units.

The only company that still operates with the corporate taxpayer of the listed company is JSL Logistics. But the idea is to give more transparency for people to understand which -- each business, their returns and services.

So on Page 5, when we talk about what logistics is, what is important in the logistic portfolio? We have the largest portfolio not because we want to. It's just a consequence of our DNA of providing services and catering to the needs of customers as a whole.

So on Page 5, 4, 5, these are inbound operations. These are operations inside the customers that contribute to their profitability. Item 2, commodity, again, you are inside industrial productivity, in mining, in forestry. So most of these services are services with high value-added long-term contracts with very clear termination clause and also clauses for improvement that give opportunities of gains for both parties. So we believe that all of them can continue to grow, expecting the economy to resume. We still have idlers in this area. So when the economy recovers, in addition to having better results, we're going to have more opportunities of services. And why? Very few people realize but we have the labor reform that contributes to item 4, internal logistics; to warehousing services. We can grow much higher because companies will outsource with companies that offer them confidence and safety.

So we see we have opportunity of growing all these segments. Our focus is to have asset-light operations that contribute to the productivity of customers with the best cost-effective -- the best value for their money.

And now that we are separating companies, we work with the operation of the companies, and we want to understand how we can provide the best information to you. Denys is working with controllers, they have been sharing financial results. So this is our work.

Now the execution -- the day-to-day execution is not for us, thank God. And I think this is the major trend in our company. We have teams making it happen. We see that our operation are very complex in the whole of our portfolio, and that happens apart from us. And I think this is the greatest advantage.

Now what our focus is, and we have been talking about that recently and will continue to do so, to seek better result, focus on services, offering more value-added to customers and return to shareholders, to have a better capital structure as Denys mentioned. And with that, certainly, we are going to have opportunities for this company to grow and develop even now with better returns. But indeed, with this position, it is much easier to see the results of each business, each company in separate.

I think that's it. I think I could address all the points you raised.

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Unidentified Analyst, [13]

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[Interpreted] Yes, you did. And once again, congratulations not only because of the numbers, but the performance of your share reflects your initiatives. Congratulations.

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Unidentified Company Representative, [14]

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[Interpreted] Thank you. Very good sides, very good to hear from you and the idea is to give details on Logistics, CS Brasil in terms of results and activities. Thank you.

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Operator [15]

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[Interpreted] Our next question comes from [Lucas Lage].

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Unidentified Analyst, [16]

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[Interpreted] Congratulations on your results. We have 3 questions. I'll try to be very brief. First,

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do you see the closed results for Vamos for '19? The numbers reported in the first half were very strong. Should we expect a deceleration? Or should the numbers continue to grow along the year? Just give us an idea of the closing for '19. So this is the first question. I'm going to ask just 2 seconds later.

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Unidentified Company Representative, [17]

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[Interpreted] We do not see a very strong result. We see with results above what we expected. This is a company with a resilience in revenues and in business model. So without creating expectations, it's not only in line with what we expected, a bit above, but with resilience, a differentiated business model and without reflecting the amount of CapEx that was invested, that has still not translated in revenues, EBITDA, or result. So without creating expectations, we believe we are -- have a lot more to see, much more than we saw before. And the business model has huge potential to grow. Even if the company does not recover, many companies have to modernize equipment and trucks, so the business opportunity is huge.

And it's important to highlight that this is not a company that rents trucks, machinery, equipment. This is a company that has a unique business platform, completely different from anyone else in the market. It buys trucks, it sells trucks, it has a dealership and it has a relationship with customers because of the history of our group of delivering differentiated services way beyond any other company quite modestly.

So this is just the beginning. And more and more, you're going to see the resilience of this company in terms of the delivery of results and the execution of its objectives. I think that's the line. The results were above and what you wanted to see from now on.

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Unidentified Analyst, [18]

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[Interpreted] In terms of Logistics, you did show the mix of asset light. If we were to think of a slower economic recovery in '19, '20, do you see any change in terms of mix?

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Unidentified Company Representative, [19]

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[Interpreted] Okay. [Lucas], if I understood it, the mix and the profile of the business model in the segments in which we operate, in the services we provide is going to be the same. We have a huge opportunity in agribusiness. For the Midwest Brazil, we have seen opportunities. But the profile of business is what you see because it has always been like this, in fact. It was too much contaminated because you had Vamos inside 3 years ago, you had CS, you had Movida with flat fleet management and outsourcing. So by separating the segment, you can see logistics as it is. And in the past 3 or 4 years, we replaced our own fleet with associates and independent contractors. That was a transformation of logistics into asset light.

But it wasn't as happy as people would expect. It had less assets than people thought. But in the last 3, 4 years, we really went through a transformation to change its business model. And I believe it's going to grow like this. Even if the industry does not recover, and I think our numbers show that, we are going to improve with no return from the economy because revenues, we grew 2% in the last 2 quarters. If you get the first quarter '18 and the first quarter '19, our EBITDA grew by 35%. The second quarter, revenues grew by 2%; EBITDA, 30%. So that shows with little or almost no growth, we continue to improve our service margins. And that shows the capacity of our teams for the company to survive even in the poor economy it is.

So if the economy continues bad, we are going to continue improving our businesses. And if it does, we can produce results even better than what you're seeing now.

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Unidentified Analyst, [20]

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[Interpreted] Perfectly. Final question, just to understand the GTF of CS Brasil, making it parallel to Movida and Vamos. What would be the overlap of customers in terms of fleet management and outsourcing comparing CS Brasil, Movida and Vamos?

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Unidentified Company Representative, [21]

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[Interpreted] [Lucas], just for us to understand our governance quite clear, it's very clear to us we have the nonrelated parties, that is, each company continues its activities. Fleet management and outsourcing in public and mixed companies are services provided by CS Brasil. Generally, when you have competition and bids, you need a certain level of indebtedness, technical certificates, you need dedicated management. And that's what we did, focusing the services in CS Brasil. We started with urban transportation, public transportation. That's how we started.

So when you have rental cars outside the segment, you have Movida. And when you have rental of heavy vehicles that are not public services or mixed capital companies, so these are energy, sanitation companies that like [Saberte] that have their own revenues, and they are controlled by a public-private ownership. So in this kind of services, we have CS Brasil.

When you have private companies, light vehicles are inside Movida. And when you have heavy trucks, equipment machinery, you are

(technical difficulty)

So they are completely separated. There is no conflict and (inaudible) independent. So this is the line that separates each business and activity.

So what I say is that CS Brasil is a bit of Movida because it has cars; a bit of Vamos, it doesn't have many trucks but it has long-term contracts, 5 years. 2 years is in the bidding process slot, and that can be renewed up to 5 years. And the recurrence of renewal is almost 80%, 90% of contracts that are renewed as provided in the bids. And they are renewed up to 5 years. So it's a mix of Vamos and Movida because of the kind of activity it provides.

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Operator [22]

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[Interpreted] (Operator Instructions) As there are no further questions, I would like to turn the call back to Mr. Fernando Simões for his final consideration. Please, Mr. Simões, you may go on.

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Fernando Antonio Simões, JSL S.A. - CEO, President, Member of Executive Board & Director [23]

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[Interpreted] Well, I would like to thank you once again for attending. But before we close, I would like to make a final comment, although we already mentioned that. Vamos, I think it's important to highlight the deliveries the company has been making not only in terms of revenues, but bottom line results. And most important than that, its gross CapEx been executing, showing the opportunity of the market for the segment and, again, with an economy that still hasn't started its recovery. But that shows the resilience of the company and that it is a unique business platform.

Movida released its results the day before yesterday, and that shows the maturity of company management, the transformation of the sales of used vehicles, the volume of Seminovos

(technical difficulty)

is extremely important for the company, that shows the company is repaired. That's what shares [that come out] from now on quarter-on-quarter, increasingly better results since it has already completed its base for growth, including in the sale of used cars.

And in logistics, answering more your questions, I think what's the most important is the transformation of the logistics business and its operating model, a transformation in which the company has been through in the past 3, 4 years. This is a company that is -- it is catering the needs of the market. And more important than that, our team has been able to manage and have the company a leader again in a segment with more than 200,000 companies. That shows our capacity of management and transformation in the most adverse market we have seen. So we are improving returns. And this is a company that is today extremely asset light, that is positioned in several market segments, and this is very important, and in different segments of the economy. That shows that we depend on our clients, but we are fortunate enough not to depend on a single client due to the diversification of our portfolio and our services. So most important, we are ready for a new movement in the economy. If it recovers, no matter how small recovery it is, we are going to have substantial better results.

And CS Brasil, just to close, we talked about that, is very much in line with the company. It started with urban transportation, but it is in line with our budget to use resources, seeking for better returns and longer-term contracts. And little by little, it is replacing urban transportation services for fleet management and outsourcing in light and heavy vehicles. This is the big picture.

And just to close, I would like to once again tell you that we always say that we are very happy with our deliveries. But our greatest satisfaction is to talk to you. And that shows, along quarters, that we are changing the return of the company, the profile, the characteristics of our products and services.

It's important to tell you that JSL group as a whole has more than 71% in the revenues of rental, machinery, equipment in Vamos. Only 29% comes from logistics services. So that shows that regardless of the economy, contracts are anchored in long-term agreements that meet the needs of a new business level for Brazilians today. So I think this is very important, for those of you who follow us, to see how we are positioned in our business profile.

And finally, just to close, we are very happy with our deliveries. We know that we want to improve returns for the shareholders, but you saw the CapEx executed in the first quarters. We haven't received revenues from that. This will contribute for the company. Most of the CapEx was made in new businesses and revenues will come. So this is a company in constant transformation, in markets, segments and we do not grow by acquisition or mergers but by generating better results.

Once again, I thank you very much. And I hope that in the third quarter, we are going to have even better results. Thank you very much for attending. I thank all our team that prepared this material, trying to communicate with you better and the team that delivers the operation on the day to day.

Thank you very much. May God be with you.

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Operator [24]

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[Interpreted] The conference call of JSL is now closed. We thank you very much for attending and wish you a good day.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]