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Edited Transcript of MOVI3.SA earnings conference call or presentation 14-Aug-19 4:00pm GMT

Q2 2019 Movida Participacoes SA Earnings Call

SAO PAULO Aug 23, 2019 (Thomson StreetEvents) -- Edited Transcript of Movida Participacoes SA earnings conference call or presentation Wednesday, August 14, 2019 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Edmar Prado Lopes Neto

Movida Participações S.A. - CFO & Chief IR Officer

* Renato Horta Franklin

Movida Participações S.A. - CEO

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Conference Call Participants

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* Stephen Trent

Citigroup Inc, Research Division - Director

* 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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Good afternoon, ladies and gentlemen, and thank you for waiting. At this time, we'd like to welcome everyone to Movida's Second Quarter 2019 Results Conference Call. Today with us, we have Renato Franklin, CEO; and Edmar Neto, CFO and Investor Relations Officer.

The amount in this presentation, unless otherwise stated, are in millions of reals adjusted for IFRS 16 as of the first quarter of 2019. (Operator Instructions) Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Movida management and on information currently available to the company.

They involve risks, uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Movida and could cause results materially different from those expressed in such forward-looking statements.

Now I'll turn the conference over to Mr. Renato Franklin, CEO. Mr. Franklin, you may begin.

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Renato Horta Franklin, Movida Participações S.A. - CEO [2]

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Thank you. Good afternoon, everyone, and welcome to Movida's conference call to discuss the second quarter '19 results. First, I invite you to Page 2 where we will show the main highlights of the second quarter. The first highlight is our gross revenue that reached BRL 1 billion this quarter, is an increase of 54% against last year.

Here, more important than this growth of the revenue is the positive fundamentals that we have been seeing in the market that is allowing the whole industry to keep the growth pace of [2 district] in the last 4 years, allowing us to do a selective growth focusing on profitability, growing the company, but bringing better clients and more clients to the company every quarter and every month.

Our results have increased by the eighth quarter in a row. More important is the strong market fundamentals. And you can see that the net operating income has increased by 43% against last year, totaling BRL 40 million.

This net operating income calculated without considering the effect from untimely tax credits in both quarters, Edmar will talk more about that later, increased by 44% compared to last quarter. And this means that our net service margin has increased to 1.7 percentage points, reaching 11.7%. It is an evidence of the evolution of operational efficiency and profitability that the company is evolving every quarter, again, eight quarters in a row, okay?

The third quarter -- the third highlight, talking about EBITDA. Our EBITDA increased by 31% reporting a record of BRL 155 million this quarter. This is an increase of 2.9 percentage points in the service margin that reached 45.8% this quarter. It is the highest margin that we have been delivering, again evolving quarter by quarter. And the fourth highlight here is the biggest highlight for the quarter. That was the performance of Seminovos that doubled the sales compared to the second quarter '18, representing a volume of over 16,000 cars this quarter. And the initiatives that we mentioned since the third quarter '18 to recover gross margin have resulted in an increase of 1.3 percentage points compared to the first quarter '19.

And again, we have been evolving in EBITDA margin, gross margin. EBITDA margin reached 1.8 -- minus 1.8% in this business line. It's the best margin in the last 3 years, and now we have been hopeful to resume growth in RAC and to reinforce here our commitment to reach breakeven in the short term in this business line.

And it's a good highlight for sales that allows us to go to the market with the follow-on -- the successful transaction of the follow-on last month, and resuming growth in Rent-a-Car and fleet management that is linked to the next highlight. The expansion of 30% in the final fleet for the period, totaling 106,000 cars. When we saw these volumes in August [looking] the high season just ahead of our sales, we bought more cars in the end of the second quarter, having bought 6,000 cars in RAC and 5,000 cars in fleet management, allowing the company to reach a different scale. And with the follow-on, we can keep the growth pace for the following quarters.

The fifth highlight is regarding capital markets. We can see here that we -- Movida was much better recognized by the capital market with the follow-on operation that was successful. We increased our ratings by S&P and Fitch to AA and AA minus. And with the follow-on that was again successful, the transaction totaled BRL 832 million in the primary and secondary distributions. And as a result, our free float reached 45%, it was 29% before the follow-on. And the liquidity of our stock exchange increased a lot, reaching BRL 55 million per day since the closing of the offer.

This level of liquidity brings more attention to our stock and attracts a wider range of shareholders further in reaching our base. The value per share generated from the book building process was BRL 15 exactly twice our IPO value in February '17, indicating a new growth cycle in recognition of our investors, allowing us to start a new cycle for the company now.

And the last one, we have the honor to receive the Valor Inovação Brasil award as the #1 company in this sector regarding innovation. Movida was awarded according to the research conducted by the consulting company Strategy& in partnership with Pricewaterhouse and Valor Econômico. Additionally, we were also recognized in the event, "The Best Stock Exchange Companies" promoted by InfoMoney, and Movida was awarded among the 3 best companies in the New Talent Award this year.

In addition, we were included in the list of the More Reliable Companies in the ranking of Institutional Investor, ranking as a top 3 in all categories in the Transportation sector. And this shows that we are in the correct path, the correct direction. Of course, there is much more to be done. But Movida is already a different company in a new level compared to the 1 year before. Of course, what we see for the future is a much better company, even better company with more evolutions quarter by quarter evolving the whole company [et al].

Let's move on to page 3 to give more color about our fleet. Slide 3 shows in detail the growth of our fleet which basically doubled compared to the IPO date. Out of these 106,000 cars, 71,000 cars are in RAC and 35,000 cars are in fleet management. When you look at Rent-a-Car as a preparation for the high season, in July, in RAC we concentrated at the end of this quarter a growth of over 6,000 cars. That's why you see a lower occupancy rate in RAC, but of course the company reached better scale to deliver more revenue in the third quarter [in] the second half of the year on.

Regarding fleet management. We have grown 62% since second quarter '18. This is the highest growth rate in the sector and generate an increase in revenue that's already contracted for the third quarter '19.

Again, we maintained the selective and sustainable growth, focus on profitability, and customer satisfaction with low mileage cars, and you can see that in our EBITDA margins of fleet management that we have been delivering, improving every quarter. Edmar will give more details about that later.

Let's move on to Page 4 to start to talk about the results of each business unit. On Page 4, please start with Rent-a-Car.

In RAC, you can see the growth of the revenue 16.7% of growth in net revenue. This means that we added 15% of fleet. You can see in the bottom part of the page. And even with lower occupancy rates, because we added lots of cars in the second quarter, the revenue per car increased 1%. This means that we have been able to increase the price in each channel. Of course, in terms of mix the channels that have delivered huge growth, like Movida Mensal Flex, the monthly car for individuals. They delivered lower daily rentals and but daily rates. But even with that, we deliver higher revenue per car in average because we have been able to increase price in all channels, although the demand that we're facing and the [rational] competition that we're facing here. Very positive fundamentals. The penetration here, they say that we reached 3% of the population of Brazil who is renting cars on a day. It used to be 1% 2 years ago or 3 years ago, and it's 3x now. Good. Much larger demand. But the main point here is, it's very low penetrated yet, a big room to keep this growth for the medium term, let's say.

Regarding the gross margin, we have been delivering much better operational margin, [plus] gross margin includes depreciation. Remember that in the third quarter '18, we increased depreciation, and Edmar will give more detail about that later too. It's more than BRL 20 million of additional depreciation this year.

That's why gross margin was impacted the year it was operational. We have been better.

Let's move on to Page 5. Talk about fleet management. On fleet management, the growth of the revenue is even higher, 40% against last year, reaching BRL 99 million in the second quarter.

Again, the growth for the second half of '19 is already contracted. We have a lot of cars implemented in the end of second quarter and lots of cars bought in the second quarter to be implemented in July and August. Then you see the same pace of growth for the following quarters.

Regarding revenue per car, it is stable although we have interest rates going down. We -- and the mix of contracts are even better with low mileage and good contracts. But the average monthly net revenue per car is stable, allowing us to increase a little bit the EBITDA margin.

Looking at gross margin, is the same effect of RAC. It's just depreciation, doesn't impact the gross margin here. But EBITDA margin has been the highest one of the industry every quarter in a row -- always -- 8 quarters in a row, evolving a lot these business units, and there's a big room. The demand here is even higher. We have been seeing -- for us we are focusing medium and small companies that delivers better margin. But the number of bids that we receive in leads are very high, allowing us to be even more selective and to see some small improvement in the margin for the future.

Let's move on to Page 6 to talk about the main highlight of this quarter, Seminovos business units, our Used Car Sales performance. You can see here the huge growth in terms of volumes of cars sold, reaching 16,000 cars, 80% of growth compared to the same quarter last year.

Net revenue rose in the same proportion, 84% and the average ticket is growing too, as you are seeing higher ticket in terms of purchasing cars. Of course, 15 months later, you will see higher average tickets in terms of car sales too. Then we expect this average ticket to keep growing, allowing us to sell the cars that we have in our operational fleet. In terms of administrative expenses over net revenue, you see that G&A now is 5.1% of our revenue. Remember that we told the market that this number should be closer to 6% at that time, and people challenged us. Now that it has evolved, we have reached this 5.1%. It's a good level to dilute our fixed cost. And of course, we still see room to improve car sales on retail. On retail, we reached all 39 cars sold per store per month. It's a huge evolution against last year that was 28 and against 17, this was less than 20. That is much better number. But we still see room to keep growing this number, reaching close to 45 cars per store per month at the end of this year, and allowing us to reach breakeven of EBITDA margin in the short term.

Saying that, I will give the floor to Edmar, our CFO, to continue with the presentation. Edmar, please.

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Edmar Prado Lopes Neto, Movida Participações S.A. - CFO & Chief IR Officer [3]

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Thank you, Renato. Good afternoon, everyone. I invite you to go to Slide 7 where we put together a presentation that shows the results of each business unit without the IFRS 16 impact, and also taking out the tax credits that were granted both in the second quarter of '18 and '19. So we're apples-to-apples here.

The lighter bar at the right hand side of each of the segments show the book value that you're seeing in our results. So starting with RAC, we see that EBITDA went to BRL 86 million in the second quarter of '19. This is an increase of 21%, an additional 1.7 percentage -- 1.3, I'm sorry, percentage point of margin in the same period. This is primarily due to our operational expansion, dilution of cost.

The costs in the quarter were impacted mainly due to the faster fleet turnover, and 16,000 cars were sold. And this is a higher volume of taxes; that is IPVA, the ownership car tax that we have in Brazil and also everything related to implementation.

Also we prepared for the high season. So we tried to anticipate as maintenance as we could.

On the lighter bar, again, you can see EBITDA went to BRL 95 million for the quarter for RAC, reaching a margin of 40%.

For the fleet management business. EBITDA came at BRL 67 million. This is an increase of roughly 50% against the same period of last year, a 4.5 percentage points of, again, of change compared to the second quarter of '18. The highlight again on the border for sure comes from Seminovos. Seminovos, the margin improvement was 2.5 percentage points, growing from a minus 4.6% to 2.5% negative again.

On the -- in our books, you see minus 1.8%, again showing that the trends are, again, on our side, if you will. We're getting closer and closer to the breakeven level that we said that we would by year-end. On the bottom part of the page, you see the same kind of analysis for the EBIT. Again, EBIT has been impacted by depreciation from one year to the other. And to go over that I will invite you to go to Slide #8 to go over depreciation.

Again, second quarter numbers, for depreciation per car was just over BRL 1,200 for the RAC. This is an increase of more than 30% when you compare to the second quarter last year, when it was just over BRL 900.

Again, we changed depreciation during the third quarter. So the full impact due to be seen in the next quarter. The bottom part of the chart, you see the same analysis for fleet management, and the increase here is even bigger.

Depreciation moved by 132%. Depreciation per car went from BRL 1,500 to BRL 3,400 almost on an annualized basis, again, very important move from this side.

On a consolidated basis, the full impact is an additional BRL 23 million for the quarter depreciation wise, alone.

Next page, and that's Page 9, please. Would you turn to this one. This is where we make a comparison apples-to-apples as for the operational net income.

Last year, and this is always without the IFRS for comparison reasons. Last year, we had a tax credit of roughly BRL 12 million. 2/3 of that were at RAC and 1/3 at Seminovos. And operational net margin was 10% with a full number of BRL 40 million. Taking the same concept to this year where the net income would be BRL 43 million. Operational net margin of almost 12%, and the tax credit came at BRL 3.1 million. This is only fleet management at this time. So again, an important improvement in terms of the operational figures for the company in one year.

This is a 44%, as Renato mentioned before, a 44% improvement in terms of net income.

Next page, this is Page 10. This is where we go over the consolidated results. So we start with revenue. The last 12 months, BRL 3.1 billion, but as Renato mentioned, currently we're running at very close to BRL 4 billion of net revenue. For the quarter, net income -- sorry, net revenue moved up by 57%, primarily due to the fact that Seminovos is indeed in a different level. We almost doubled the revenues coming from that business, as Renato mentioned.

In terms of EBITDA. This is a new record for us, BRL 155 million for the quarter. That's a 46% margin for services. And the last 12 months' EBITDA is, again, a new record, BRL 566 million. This is getting closer and closer to the BRL 600 million we said we would.

EBIT, again, almost BRL 400 million for the last 12 months, 30% margin in terms of the services. This is also effect of the depreciation.

For the quarter, EBIT came at BRL 100 million and the margin was just over 29%.

At the bottom of the chart, right-hand side. Again, net income and margin 13.3%, BRL 176 million for the last 12 months. And for the quarter BRL 41 million. We had a tax benefit this quarter. We call it Lei do Bem, which would be innovation in technology and wellness, whatever, law here in Brazil that we took this quarter. We have -- we understand that we will be able to do that from now on, on a unit basis. Values, of course, will change, and this is related to the investments to the CapEx we do in, again, innovation and technology. So having said that, I will turn the floor -- sorry, I have a few -- one page to go -- couple of pages to go, which is the CapEx. That's Page 11.

The first highlight that I want to make is the CapEx -- the total CapEx for the last 12 months. We are at BRL 3.4 billion. This is an increase of 61% compared to the same period of 2011 (sic) [2018]. RAC CapEx increased, as Renato mentioned, as a preparation for the high season in July. Again, there is a contract, our growth for the next quarters in terms of the revenue. And it is also a function of the improvement in Seminovos.

Again, as we said, we would not go back unless we have a Seminovos [being] at a different [level]. In terms of fleet management, the expansions have been very, very sound and [instead, where since] early 2018 when we said that we would focus in SMEs, in profitable contracts with good margins and with low mileage as for the cars we are selling.

Again, bottom part of the chart. The highlight for sure is the cash generated before growth which reached BRL 808 million, again proving and showing that this business is very, very profitable and sustainable.

Assets sold increased by almost BRL 400 million. And even with the growth, free cash flow to firm was primarily stable from 1 quarter to the other, I mean, '18 compared to '19.

Let's move to Slide #12 where we go over cash and debt. By the end of the quarter, we finished 2 transactions of local debentures in the total amount of BRL 900 million, which again took us to a different level. This was the first time that the company issued money with a tenor of 8 years again, with a reduction in the spread and with very good tenors, showing that the market -- the capital markets have indeed supported us.

As a result of these inflows at the third last week of the quarter, our cash came at BRL 1.5 billion. This is more than enough to pay down our debt until the end of 2021. I would also like to highlight that out of our total BRL 3.1 billion of debt, 60% of that are already beyond 2022, showing that the capital structure is indeed adjusted and well prepared for the new cycle of the company. On the right-hand side, we show leverage.

Leverage, again, came below 3x. And this is where we have been flowing for the last year or so. And this is a level where we feel confident with the current interest rates in Brazil and with the current profile that we have, as I have discussed previously. Again, this is a different level for the company, a different capital structure. And again, we're ready to -- for the next growth cycle. Having said that, I will turn the floor back to Renato for his final comments.

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Renato Horta Franklin, Movida Participações S.A. - CEO [4]

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Thank you, Ed. Moving forward to Slide 13, we have our profitability KPIs.

The upper part of the page, we show the traditional bridge of net income, showing the huge improvement from BRL 100 million to BRL 176 million, which is a growth of 75% against last year.

Again, we'd like to say here and to show that the operational improvement was a major contributor to this growth. BRL 67 million came from RAC in terms of EBITs, including yearly higher depreciation and a BRL 33 million came from fleet management. Of course, we see room to improve Seminovos and to give some contribution here, but the main shifts for net income would be always the services business units, Rent-A-Car and fleet management that have been growing a lot and evolving in terms of efficiency.

And then in the second graph, we show the ROIC in the last 12 months that totaled 10.7%, an increase of 1 percentage point compared to the second quarter '18, and which, due to the reduction in net cost that Edmar showed, represented a spread of 5.3 percentage points.

That is the lowest cost of debt that we have delivered, 5.4%, and we still see room to keep reducing this cost of debt, increasing the spread that we have here in terms of ROIC.

In terms of ROE. ROE has increased a lot, 3.7 percentage points against second quarter '18. A good evolution and a good trend since the IPO, and of course, we still have room to keep improving ROIC gradually, improving ROE in a more strong way, and reducing cost of debt to increase even more the generation of value of the company measured by this spread between ROIC and cost of debt.

Saying that, I invite you to Page 14 to highlight here the main initiatives that represent the evolution of the company in the second quarter '19, and the part of the focus of the company for the following quarters.

First, our devotion for serving is Movida's main cultural foundation. When we talk about NPS, about customer satisfaction, and customer experience, this is the most important competitive advantage of Movida.

In this regard, we implemented the Customer Service Executive Office to ensure that such culture is disseminated and further absorbed by all of our staff.

Our NPS, which is already above 75%, was adopted as the compensation metrics for the whole management team and now being measured with more efficient way and lots of initiatives to improve even more these NPS. The 2 others were Pré-Check-In and 27 hours. They are products that were created based on our clients' needs. When we talk about Pre-Check-In Launch, it uses the QR code technology to optimize the client's routine.

We -- of all the companies, remember that Movida is the only company in Brazilian car rental market that allows the clients to pre-pay the booking and do everything in the app. Generate the QR code for all the groups, it's not for some specific car, small group of cars. It's all cars, in all locations, you can do the Pre-Check-In and speed up the whole process of getting a car, reducing friction. And of course, when you reduce friction, you bring more customers to the market and more customers to the company, allowing us to keep growing the company in a sustainable way.

The 27 hours Test Drive allows us to start transformation in used car sales industry that today is still the same of 20 years ago. And as we are a rental company, we can provide for our clients that they can buy online a car or [in the] store and instead of doing just a quick test drive they can get the car for a whole day, 27 hours, travel with their families, show the car to friends and everything else. And the next day, if they buy the car, they will not pay for this daily rental. If they give up from buying this car, they just pay a daily rental, of course for a higher daily rate, and then everything is good. If the conversion rate here is very high, then we expect to roll out these solutions to all stores [in these few approval cost it] and 1 store here in São Paulo. Seminovos margin improvement of course is the main highlight of this quarter and the main focus of the company for the following quarter to reach breakeven until the end of the year.

Then we have here sustainability report release. We have published for the first time our sustainability report dedicated to Movida based on 2018 data. We have also launched this quarter the Foresta Urbana project with the adoption of the central worksite at Avenida Faria Lima, increasing Movida brand awareness and showing our connection with mobility, micro mobility business, with bicycle, e-bikes, tricycles and other things.

Additionally, in the Father's Day, we announced our vision to the Empresa Cidadã Program by extending the maternity and paternity leave terms as a symbol of the appreciation for our employees and their families and what the company is working more here, our people.

These initiatives represent an evolution, towards environmental, social, governance transformation in our sector. And it's a commitment of the company. And the last one is our main commitment here 5.3 percentage points of spread in ROIC over cost of debt and of course our challenge here and our focus is to improve that, increasing the results of the company and reducing cost of debt.

Saying that we would like to pass through the Q&A session, first to go deeper in any points that you want to go deeper, and clarify anything with additional color here. Thank you all again for participating in our conference call.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Victor Mizusaki by Bradesco.

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

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I have 2 questions here. The first one, I think about Seminovos. In the second quarter, Movida sold like 16,000 cars. And I would like to understand if it's possible for Movida to try to accelerate the fleet renewal of some fleet management contracts in order to maintain this high volume of cars sold? And then breakeven margins in Seminovos?

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Renato Horta Franklin, Movida Participações S.A. - CEO [3]

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Thank you for your question, Victor. You are completely right. Since 2 years ago, we started to add in our contract the right to renew the cars in advance. And of course, as we were not selling enough cars, we were not being able to execute this option. Now we have sold lots of cars, in response to renew in advance some cars hundreds of cars were renewed during the second quarter of fleet management in advance, just to try the concept and it was very successful. They delivered the same appreciation that we delivered in RAC, it's an important transformation that could happen in fleet management. We are considering to do a few thousands of cars of fleet management till the end of the year to fill the Seminovos stores and allow ourselves to sell more than 15,000 cars every quarter until the end of the year, making it a little bit easier or more comfortable to reach the breakeven margin in the end of the year. And you are correct. We are working on that. It's part of the plan. Thank you.

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

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Okay. And my second question about financial leverage and CapEx. In the second quarter, the net CapEx was around BRL 700 million. And the financial leverage was at a comfortable level of like 2.8x net debt-to-EBITDA versus like 2.7x in the first quarter. But I mean you just raised equity, and I don't know if you can give any color in terms of what can we expect in terms of fleet growth in the second half?

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Edmar Prado Lopes Neto, Movida Participações S.A. - CFO & Chief IR Officer [5]

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Victor, this is Edmar here. Thanks for the question. We were very vocal during the follow-on, saying that our leverage should be somewhere between 2.5x and 3x in the mid-term. Because, again, as I mentioned with the new capital structure and with the new level of interest rates in Brazil, we think this is, let's say a good place to be [stashed] again that we have access to the capital markets and that we are selling more cars than we were in the past. As for the outlook, with the follow-on, we expect to have an additional 10,000 cars until mid-year next year, okay? That depends a little bit on the rental of fleet which doesn't depend much on us. And again in terms of the RAC we will try to, let's say to focus on the high season. But again expectations are that we should be -- we should add these 10,000 cars until midyear next year.

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Operator [6]

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Our next question comes from Stephen Trent by Citi.

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Stephen Trent, Citigroup Inc, Research Division - Director [7]

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Apologies in advance, I did have some trouble with your presentation, but just 2 for me. When we think about the next 3 or 4 years, what's your ideal view with respect to how much EBITDA the company could generate from fleet management versus car rental and Seminovos?

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Renato Horta Franklin, Movida Participações S.A. - CEO [8]

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Thanks, Stephen. Looking at EBITDA, of course what we see in terms of revenue is that we will get almost the same proportion that we have today in terms of fleet management and Rent-a-Car, okay. A little bit higher proportion of fleet management considering using these 10,000 cars, as Edmar mentioned. Half of this in RAC and half of this in fleet management.

With the macro scenario that we have been seeing, and I believe that we will see the same scenario for the next 4 years, which is the horizon that you are asking us, we do not have our guidance for the market. But I believe that we will have the same margins of RAC and fleet that we have been delivering to date, just marginal improvements quarter-by-quarter.

And with that, of course in terms of EBITDA, fleet management will be very relevant here. Seminovos we will not be relevant because we aim to achieve close to 0. It's just marginal positive EBITDA in Seminovos, although it's a high revenue it's marginal for us, and then it will not be relevant in the consolidated number. I don't know if I answered your question, but it's something like the numbers that we have today, the proportion that we have today in the consolidated numbers.

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Stephen Trent, Citigroup Inc, Research Division - Director [9]

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No. That was a good answer. I appreciate that. And just one other thing while I have you on the line, and once again, sorry if I missed this in the presentation. In terms of the Rent-a-Car growth, to what degree should we expect Uber or Rideshare companies to be, have the lion's share of that growth over the medium term?

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Renato Horta Franklin, Movida Participações S.A. - CEO [10]

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Perfect. Ride hailing is a large industry in Brazil with a large demand for car rental, okay, that we have more than 250,000 cars of demand today in the market for car rental.

For ourselves, we do not aim to increase the participation of ride-hailing in our business. We aim to keep ride-hailing between 7% and 10% of the total car rental -- Rent-a-Car fleet for us, but for the whole market, I believe it will be much higher. Of course, when you ask us about 4 years from now, if we find a solution in terms of capital structure to allow us to grow independently ride-hailing, we can grow much more in Uber. Without that, because of the higher depreciation that we see ride-hailing, we prefer to focus on mostly cars for individuals and in daily rentals for individuals through our mobile app to deliver higher ROICs, higher returns over invested capital. That's why I think with this whole scenario, that I believe that Movida will be the highest profitability levels of -- in terms of ROIC in the future like this type of -- this period that you are asking us. Because we are focusing on better, higher return segments and niche, instead of just growing in all segments. But it's a huge demand. It will be a huge market. In my view, it will be a good point to keep competition very rational, because some companies focus on that, we focus on others, and it's good for everyone.

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Operator [11]

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(Operator Instructions) This concludes the question-and-answer session. At this time, I would like to turn over the call back to the management of the company for closing remarks.

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Renato Horta Franklin, Movida Participações S.A. - CEO [12]

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Again, thank you all for participation in this conference call. I would like to highlight here that Movida is in a different level now. And for each step forward, we would like to thank our people, employees, associates, investors and other shareholders and stakeholders for their continued support. Here we are very proud of the evolution of the company, but much more confident with the evolution that we will deliver in the following quarters, making Movida in a very different level one year from now.

We have too much things in the oven to be delivered. And of course, investing a lot in our mobile platform and allowing Brazil car rental market to keep growing. Today it is, with rational competition and higher daily rates, increasing profitability.

As a last message, as you already know that we strongly focus on transparency and disclosures to the market. We would like to invite you to visit our new IR website, our whole team are always available, but we brought some tools to facilitate interaction with investors, such as the ChatBot and smart search by voice. The same technology that we use for our customers, now they are available for our investors too. Then our staff is 100% at your disposal, as always. And thank you again. Have a nice day, and let's wait for the following quarter. Thank you.

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Operator [13]

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Thank you. This concludes today's presentation. You may disconnect your line at this time. Have a nice day.