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Edited Transcript of TRAXIONA.MX earnings conference call or presentation 28-Apr-20 3:00pm GMT

Q1 2020 Grupo Traxion SAB de CV Earnings Call

May 7, 2020 (Thomson StreetEvents) -- Edited Transcript of Grupo Traxion SAB de CV earnings conference call or presentation Tuesday, April 28, 2020 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Aby Lijtszain Chernizky

Grupo Traxión, S.A.B. de C.V. - Co-Founder, Executive President & Director

* Antonio Tejedo Obregón

Grupo Traxión, S.A.B. de C.V. - VP of Investors Relations

* Rodolfo Mercado Franco

Grupo Traxión, S.A.B. de C.V. - CEO & Director

* Wolf Silverstein

Grupo Traxión, S.A.B. de C.V. - CFO

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Conference Call Participants

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* Luis Yance;Compass Group

* Marcos Barreto Guerrero

Citigroup Inc, Research Division - Research Analyst

* Martín Lara

Miranda Global Research - CEO & Founding Partner

* Pablo Monsivais Mendoza

Barclays Bank PLC, Research Division - Assistant VP & Lead Research Analyst

* Rogério Araújo

UBS Investment Bank, Research Division - Director and Equity Research Analyst

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Presentation

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Operator [1]

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Greetings, and welcome to the Traxión's First Quarter 2020 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Aby Lijtszain, Chief Executive Officer. Thank you. You may begin.

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Aby Lijtszain Chernizky, Grupo Traxión, S.A.B. de C.V. - Co-Founder, Executive President & Director [2]

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Thank you. Welcome, everyone, and many thanks for joining us today. I hope you and your families are well and healthy. I am very sorry about what is happening in the world. I really hope that this situation normalize quickly. In spite of this sad situation, Traxión delivered solid and positive quarterly results. It is important to highlight that our revenues saw a healthy growth of 12% while keeping a strict control in cost and expenses. Moreover, the company continued to be more efficient in asset utilization and operations. It was indeed a very favorable period. Rodolfo, Wolf, Antonio will discuss those metrics in a moment.

We face the COVID-19 contingency with a solid financial position, a strong balance sheet and a cash on hand. Our business is essential to the economy, and we plan to continue operating. 100% of our debt is in pesos and currently below 2x net debt-to-EBITDA. On the other hand, approximately 10% of our revenues are denominated in dollars, and all our cost and expenses are in pesos. We have been rearranging our revenue base in our 2 business lines.

In the passenger segment, schools shut down and many corporate supported home office. Nonetheless, the structure of contract in this business contributes to minimize the impact of the situation because they consider a fixed revenue base. Under such circumstances, these clients know that they have full availability and their service secure when they decide to resume activities. Moreover, there are other corporate and industrial clients that have not stopped and have caused to increase their fleet capacity because they need their employees to continue commuting while keeping social distance during the ride.

Now in the cargo and logistics segment, we started seeing a decline in the auto industry and in the export circuits. However, our diversity and flexibility enabled us to quickly move into other sectors such as retail and basic consumer goods and allow us to shift our fleet towards other regions. With these actions, we retain a good portion of our kilometer volume.

In the logistics front, we continue ahead with our plans to develop an asset-light business, and we have made significant progress. We expect to have more details for you shortly. All of that was possible thanks to a unique operating platform. Traxión has a diverse client base, a flexible fleet, broad geographic footprint, prominent brands, modern systems, a tremendous commercial muscle and a seasoned management team. This is our most important competitive advantage. This is what enabled us to build a solid and resilient business.

In financial terms, we decided to grow all the available credit facilities to reinforce our cash position. Wolf will give you more details in a moment. Finally, we have worked very hard to deliver these positive quarterly results. We speak to our clients every other day in order to know about their needs. We're in close contact with our suppliers and we are conducting great efforts to manage the operational shift in an efficient way. We are keeping our people safe and healthy. We operate under strict sanitary measures, and our personnel has received constant training and information about all relevant matters of the contingency. I am convinced that Traxión will end up in a better position than competitors when the cycle normalize.

With this, I conclude my remarks, and I hand over the call to Rodolfo, please.

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Rodolfo Mercado Franco, Grupo Traxión, S.A.B. de C.V. - CEO & Director [3]

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Thank you, Aby. Hello, everyone. I hope you are well. Setting aside the effects of COVID-19 pandemic and Mexico economic situation, Traxión delivers impressive figures once again. And there are very important milestones worth mentioning during this first quarter. I will focus my comments on these achievements.

Our fleet grew 2.9% with a kilometer volume increase of 4.6%, which is proof that the company continues running with a strong operating leverage. In the cargo segment, we boosted our specialized services. Refrigerated freight grew more than 65%, while the auto loading tank service increased more than 85% compared to the first quarter of 2019. Within this business line, we now added tank and trailers to start the fuel transportation service, which we expect it to be a great opportunity in the near future.

As Aby mentioned, we increased our asset utilization by 2.9%. We have continued growing our kilometer volume while reducing our fleet compared to the same period of last year by being more efficient on its allocation. Moreover, in terms of productivity, we reduced our driver turnover almost 20%, which is meaningful given to the high ratios of the industry. We achieved this by encouraging a deeper sense of belonging among our staff through our initiatives developed by our own human capital department. This represents a major milestone for our company, and it's a trait we are excited to promote.

In terms of logistics, there are many elements to discuss this quarter, but what is probably the most relevant is that we converted more than 40,000 square meters of warehouse we had with temporary clients to permanent contracts with 3-year containers.

Furthermore, we received the awards of (inaudible) as the best supplier and supplier with perfect deliveries. Traxión increased its profit in logistics by more than 38% this quarter on a per square meter basis by achieving efficiencies in both preoperating and ongoing costs. Moreover, throughout our last-mile platform, Traxión multiplied 4x its e-commerce volume compared to the first quarter of 2019.

Shifting to the personnel and student transportation segment, there are several financial and operating highlights to discuss. First, revenues increased by 16.3% in the first quarter, and it's important to highlight that this was mainly driven by fleet optimization since our fleet only grew 4.1% in the same period. EBITDA grew 17.1% with a margin of 23%.

Second, in the operating side, revenues per kilometer grew 10.9%, while the cost per kilometer increased by only 7.6% mainly due to a cost optimization program implemented by management in the last month of 2019 that has delivered really good results.

As you can see, it was a very interesting quarter, full of great news. And even though the recent contingency is causing global economic and social stress, we have a great management team, and we are focusing on seeking all the opportunities in our industry.

Having said this, I will hand it over to Wolf. Thank you.

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Wolf Silverstein, Grupo Traxión, S.A.B. de C.V. - CFO [4]

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Thanks, Rodolfo. Thank you, everyone, for joining. It was indeed a challenging quarter, and this has been a challenging month as well. Now I will walk you through some details of the company's leverage, working capital cycle and also the actions we are taking on the financial front to face the contingencies in the most effective way possible.

Given the COVID-19 outbreak, we decided to take measures to continue to have a strong balance. As you already know, we drew approximately MXN 1.1 billion of additional credit facilities that are now available in our cash. Besides this, the company still have additional credit lines. We'd rather have the cash on hand to face this contingency properly capitalized.

As you can see, during the first quarter, we exercised MXN 121 million of CapEx, almost entirely for renovations of the cargo fleet and that we're planning in late 2019. We're currently evaluating the essential CapEx needs for the next months. We will keep you posted on any updates. Moreover, we have cut all nonessential expenses and investments until we get a better view of what to expect. We are being extremely disciplined with cash utilization.

Now moving on to our debt maturity. If you remember, last quarter, we had around 26% of our debt due to expire in the next 12 months. Well, be advised that approximately 40% are short term, renewal of working capital facilities, while the remaining 60% is a portion of our long-term borrowings, including the syndicated loan. In that line, we are currently evaluating options to refinance the amortizations coming due. We expect to reach favorable agreements with our lenders with no constraint for the company.

In terms of working capital, we also expect to start experiencing some changes in the working capital cycle. Given the contingency, we are planning to minimize whatever impact could appear. We are being assertive and conducting great efforts to optimize our working capital.

In terms of suppliers, we speak to them any other day to gain insights about their capacity with no changes so far. All of them continue to have the capabilities to deliver. On the sideline, we are speaking with other potential suppliers to have options in case we need them.

Moreover, I want to discuss the impact of the recent oil volatility. The average fuel price in the first quarter increased marginally, only 0.4% compared to the same period of 2019. However, the international oil prices began to fall dramatically at the very end of March. Having said that, we are expecting to have a positive effect shortly. Thank you for your attention.

I will now hand over to Tonio, so he can discuss in more detail the good results we posted yesterday.

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Antonio Tejedo Obregón, Grupo Traxión, S.A.B. de C.V. - VP of Investors Relations [5]

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Thank you, Wolf. Hello, everyone. Thanks for joining. I hope you and your families are healthy. I will be brief with my remarks. I just want to highlight the most important financial elements of the quarterly results and then open the floor to Q&A.

Perhaps one of the most relevant aspects to mention is that operating income grows 200 basis points higher than revenues, reaching a 14.3% increase compared to the first quarter of 2019. This is indeed proof, again, that the synergies and efficiencies achieved in the cost and expense structure are sustainable over the long run. Furthermore, the other important element to discuss is that cash flows from operating activities grew 48.5% to reach MXN 478 million, which was mainly driven by the growth of net income and by a better working capital management. EBITDA margin maintained a level of over 20%, which is where we always want it to be and where we feel comfortable, especially as the logistics business is taking off and gaining relevance in the company's P&L.

Moving on to costs. The most relevant change is in the facilities, services and supplies line, which rose 38%. This is mainly due to third-party services contracted in the logistics business to serve some clients with which the company started working in the later part of 2019. The nature of such services requires that Traxión utilizes assets of third parties to operate properly. Because of that, such costs needed to be recorded in this line, resulting in a higher cost, both in absolute terms and as a percentage of revenues compared to other quarters. This also brought a positive effect in the cost of fuel since those third-party services I already mentioned, include a portion of fuel. Moreover, and most important, the fuel cost reflects an efficiency in terms of kilometer volume versus fuel consumption, which is also very good news.

Finally, in another item, comprehensive financial results showed a reduction in expense to reach MXN 102 million, which was mainly driven by a foreign exchange gain of MXN 60 million stemming from the U.S. dollar-denominated revenue that results from the importation side of the business.

Well, thank you for joining. I'll open now the floor to Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Rogério Araújo with UBS.

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Rogério Araújo, UBS Investment Bank, Research Division - Director and Equity Research Analyst [2]

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So I have a few questions here. The first one is regarding the COVID-19 crisis. Do you have any expectations on revenue reduction in the second quarter of this year and maybe EBITDA reduction as well with that situation? And my second point is regarding potential cash burn. So is Traxión burning cash at this moment with the current operations? And if the answer is yes, how much cash burn you're having each month if the situation remains like this? So I can do my other question later.

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Antonio Tejedo Obregón, Grupo Traxión, S.A.B. de C.V. - VP of Investors Relations [3]

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Hi, Rogério, this is Tonio. Regarding your first question, we do expect some changes in the revenue mix in the second quarter. However, it's too early to tell how much we can expect about the results of the company for such quarter, but let me tell you something. What we do expect is once the contingency starts receding, we are going to be one of the sectors that's going to get back on business faster. All right?

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Aby Lijtszain Chernizky, Grupo Traxión, S.A.B. de C.V. - Co-Founder, Executive President & Director [4]

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And I would like to add that we'll expect a very big impact because in the cargo side, where all our trucks are working right now. In the personnel transportation, we have some that are not working but protected with the fixed revenue contracts. So the reduce of the revenues, it's not very big. And the second?

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Antonio Tejedo Obregón, Grupo Traxión, S.A.B. de C.V. - VP of Investors Relations [5]

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Rogério, can you repeat your second question? Sorry.

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Rogério Araújo, UBS Investment Bank, Research Division - Director and Equity Research Analyst [6]

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Yes. No, sure. It's regarding cash burn. So this situation, is it leading to a cash burn in the month operationally? Or -- so as you mentioned, there is not a huge impact on the revenue front. As I understand, this is valid for both the passenger transportation and also the cargo transportation businesses. Is that correct? And so my other question was regarding cash burn. Is Traxión burning cash with the current operations? And if yes, by how much? So this is only important to check the -- how many months of operation with the current cash position would hold in this situation before Traxión has to make additional debt or so on?

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Wolf Silverstein, Grupo Traxión, S.A.B. de C.V. - CFO [7]

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Hi, Rogério, how are you? This is Wolf. Just to answer the second question. We're not burning any cash right now. We still have the same cash position that we ended with the first quarter. So we are -- as Aby already mentioned, we're still working almost full in the cargo side and also working almost the same, as Aby already mentioned in the passenger segment. So we're not taking any additional cash from the company to make all the operations on a regular basis.

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Rogério Araújo, UBS Investment Bank, Research Division - Director and Equity Research Analyst [8]

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Okay. Sounds good. It's very clear. So my last question is regarding your assets, so both the buses and the trucks. Do you expect, after this crisis, the demand for used vehicles to drop? Or it's too early to say at this moment?

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Aby Lijtszain Chernizky, Grupo Traxión, S.A.B. de C.V. - Co-Founder, Executive President & Director [9]

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For now, our view is that we don't expect the demand is dropping. So we expect when the contingency is over, we are going back to work on a full year basis.

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Operator [10]

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And our next question comes from the line of Pablo Monsivais with Barclays.

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Pablo Monsivais Mendoza, Barclays Bank PLC, Research Division - Assistant VP & Lead Research Analyst [11]

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I have a quick question from my side. Can you please shed more light on how were you able to accommodate client demand within your cargo and logistics businesses? Also, any color on how personnel transportation segment should look like in coming months? And my second question would be how are your collections with clients performing so far? We saw an increase in your accounts receivables, so wanted to have more insight if this is more of a seasonal impact or it's because some clients are deferring some things?

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Aby Lijtszain Chernizky, Grupo Traxión, S.A.B. de C.V. - Co-Founder, Executive President & Director [12]

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Okay. The first question, thanks to the way the business is build up, we are very diversified. We could move the trucks from one segment to the other one because we already have the clients in the consumer segment. So when the automotive went down in demand, we could very quickly move to consumer to work with retail. So it was a -- it was something really quick that we could do and allowed us to maintain our volume of kilometers. So we didn't got an important impact in the cargo side of the business.

And talking about the second question about collectables, we're still collecting the same way as we did before. We don't have any problems right now with collectables.

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Pablo Monsivais Mendoza, Barclays Bank PLC, Research Division - Assistant VP & Lead Research Analyst [13]

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And just one follow-up, and probably this is also kind of a similar question to Rogério's. What is your view in your guidance? I mean the EBITDA and CapEx guidance wasn't touched, if I understood correctly, this quarter. I know that you're supposed to give more insight of that going forward. But how are you feeling about this? I mean, most likely, EBITDA and CapEx should go down. But what are you factoring in right now?

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Antonio Tejedo Obregón, Grupo Traxión, S.A.B. de C.V. - VP of Investors Relations [14]

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Hi, Pablo. This is Tonio. Thanks for your question. Regarding the guidance, we don't have enough elements right now as of today. We don't have enough elements to either remove or revise the guidance. Obviously, in case this -- as you said, in case this situation changes, we're going to communicate immediately. The first quarter, we had no relevant impact as we have been rebalancing our operating base. We need to see how further measures from both the U.S. and Mexico are evolving in order to evaluate properly what's going on with the guidance.

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Operator [15]

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Our next question comes from the line of Marcos Barreto with Citi.

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Marcos Barreto Guerrero, Citigroup Inc, Research Division - Research Analyst [16]

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My first 2 questions are on the personnel transport segment. So the first one is what is the average tenure of the contract? Is it 1, 2 years? And the second question is what happens to your personnel transport client that has signed the contract but might now require to -- going to work from home because of the -- because of COVID.

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Aby Lijtszain Chernizky, Grupo Traxión, S.A.B. de C.V. - Co-Founder, Executive President & Director [17]

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Okay. Well, I want to answer the first question. The average tenure is 2.5 years. And the second question, we didn't get it. Can you repeat it, please?

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Marcos Barreto Guerrero, Citigroup Inc, Research Division - Research Analyst [18]

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Pardon me. Can you repeat that, please?

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Antonio Tejedo Obregón, Grupo Traxión, S.A.B. de C.V. - VP of Investors Relations [19]

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Marcos, could you repeat the second question? We weren't able to hear you well.

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Marcos Barreto Guerrero, Citigroup Inc, Research Division - Research Analyst [20]

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Yes. What happens with personnel and transport clients that already signed a contract, but they now require employees to work from home, so they're not going to give what they asked for.

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Rodolfo Mercado Franco, Grupo Traxión, S.A.B. de C.V. - CEO & Director [21]

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Hello, how are you? I'm Rodolfo. The major clients we have in the personnel transportation are workers that are working in the companies, not employees in offices. So the home office only applies for the corporate business we have. It's a really small part of personnel transportation business. So mainly the big transportation of passengers we do is for workers that go to their plants to make things.

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Marcos Barreto Guerrero, Citigroup Inc, Research Division - Research Analyst [22]

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Okay. And my last question is would you provide more color on how you have adjusted your cargo and logistics segment to capitalize on higher domestic last-mile delivery, please?

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Rodolfo Mercado Franco, Grupo Traxión, S.A.B. de C.V. - CEO & Director [23]

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Yes. The cargo domestic, we have switched to the -- our business in cargo from international transportation to domestic but it has helped us also with the last mile. The last mile business we have, it's -- we do both B2B business and B2C. So the B2B business is getting a little slower, but the B2C business is getting much, much demand -- much more demand that we get to usual. So we're still seeing the balance in the forthcoming weeks, but we think we will have a good balance in both B2B and B2C business in last mile.

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Operator [24]

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Our next question comes from the line of [Jorge] (inaudible) with Morgan Stanley.

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Unidentified Analyst, [25]

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My question is a little bit of a follow-up on Rogério's question. It would be to help us think about the EBITDA margin for the year. So I just wanted to know if you could provide what is the breakdown between fixed and variable costs for each segment. And also, what amount of fixed costs do you think you can cut? And also still on the EBITDA margin side, I think within the COVID outbreak scenario, we could see further revenue mix shift to the cargo and logistics side, which was already in the company's plans from our standpoint. And I think that could imply some additional pressure on margin. So just wanted to check if that's a reasonable reason in line. And if you can estimate maybe very roughly what could be the additional mix shift and, consequently, the impact in margins coming from that.

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Wolf Silverstein, Grupo Traxión, S.A.B. de C.V. - CFO [26]

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Hi, [Jorge]. This is Wolf again. Just trying to answer you a part of the question. First, as Rodolfo already mentioned, all the shifting things in the revenue side, we're still trying to make all the mix that we need to make like a stabilized revenue for the company. In the cost side, we have some same measures with the revenues line. We're trying to cut any costs that are not essential for our operations right now. We're trying to maintain, at some point, the margin that the company has already for this year and also for 2019. So we're trying to work very hard on that side also. It's just not the fixed cost that we are working on, it's also what the new revenues that we can collect in this period. So we're trying to work in both, in revenues and in cost side. So I hope -- or we hope that we can manage this situation for this quarter also.

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Operator [27]

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Our next question comes from the line of Luis Yance with Compass.

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Luis Yance;Compass Group, [28]

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Congrats on the result. A couple of questions on my side. And the first one is a follow-up on the previous question. I know it's kind of hard to forecast to give some guidance even for the second quarter. But what can you share -- could you share a little bit what you've seen so far in April in terms of revenue growth and EBITDA growth so we can get a sense of how bad things are shaping up in the second quarter? That will be my first question. And then the second one, on the cost side, you mentioned some of the initiatives you've been making. Could you talk a little bit more about, on the salary side, whether you're planning to reduce your workforce or at this point, you're keeping it the same or whether you can lower salaries in that front? And also on the fuel side, you mentioned that you only saw a minor decrease in the first quarter. I was wondering how is that looking for the second quarter. Have you started to see a catch-up on domestic fuel prices that could benefit?

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Aby Lijtszain Chernizky, Grupo Traxión, S.A.B. de C.V. - Co-Founder, Executive President & Director [29]

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Yes, Luis. We don't -- I mean, right now, things could change day by day. But right now, we don't expect a big impact in revenues. So I mean there is -- we don't expect to have something material. But the important thing is as we are cutting expenses, the impact in our -- in the EBITDA, we see that it will reduce less than the revenues. And talking about the salaries, we're on the way to implement some measures to also reduce costs, I mean, as a complete plan for the company, because we are reducing costs in the 360.

(foreign language)

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Rodolfo Mercado Franco, Grupo Traxión, S.A.B. de C.V. - CEO & Director [30]

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Degree.

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Aby Lijtszain Chernizky, Grupo Traxión, S.A.B. de C.V. - Co-Founder, Executive President & Director [31]

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Degree.

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Rodolfo Mercado Franco, Grupo Traxión, S.A.B. de C.V. - CEO & Director [32]

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Yes. We're trying to -- we have big plans to reduce cost, fixed cost. We will have some issues to reduce cost, and some of them we're still seeing to maybe reduce some salaries. But we think it's still too early to tell, and we're still seeing good things maybe in May there. Some of our clients come back to work. So we do have a strong plan of reducing cost. That includes, of course, some salary cuts if we have to do them. But we're still seeing what is the effect in May of this contingency.

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Luis Yance;Compass Group, [33]

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Great. And then how about fuel costs? Are you seeing a bigger decline now in this quarter?

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Rodolfo Mercado Franco, Grupo Traxión, S.A.B. de C.V. - CEO & Director [34]

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Yes. We have -- with the oil prices in the world, we have seen the same oil cuts and diesel prices go down in our country. So we are getting good benefits around that issue, too.

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Antonio Tejedo Obregón, Grupo Traxión, S.A.B. de C.V. - VP of Investors Relations [35]

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Hi, Luis, this is Tonio. Just complementing what Rodolfo said. The price of fuel has 2 main elements to consider. On one side, there's the oil price, which has been falling dramatically. There's exchange rate, which has partially offset the effect so far. So let's -- we need to take those considerations first. And other thing -- another thing is that the oil prices started falling at the end -- at the very end of March. So in the first quarter, you don't see any change. Actually, the price, the average price from one quarter to the other in terms of -- comparing 2019 with 2020, it was marginally changed. It has -- it showed no significant change.

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Wolf Silverstein, Grupo Traxión, S.A.B. de C.V. - CFO [36]

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And just to comment on that for your question Luis. For this quarter, maybe we expect to have a benefit on that. As you can see in April, maybe the benefit will be more than March, approximately could be between 2% and 5%. So we're expecting a better price for the fuel in the next months.

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Luis Yance;Compass Group, [37]

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Okay. Great. And then let me ask you another question, more on the balance sheet, perhaps more to Wolf, I guess. One, in terms of CapEx, I know you mentioned that you've been -- you're looking to reduce some nonessential CapEx, et cetera. But I was wondering if you could give us a bit of a range of what we should expect to see in terms of CapEx for this year given that you may have some commitments that you still have to -- I mean just to get a sense how much you can reduce it relative to your initial guidance. And also, on the cash balances, you mentioned you took part of your lines of credit, but you still have some available. How much more do you have available in case you need it? And for the short-term debt, when can we -- when do you expect to sort of close the negotiations and push the debt that is coming due this year?

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Wolf Silverstein, Grupo Traxión, S.A.B. de C.V. - CFO [38]

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Thanks, Luis. For the first question, so far, we have decided to defer approximately 60%. That will be around MXN 700 million of the CapEx for this year. So we are expecting to exercise the remaining 40% during the second quarter, maybe a part of that in the third quarter, but mainly in the second quarter. And answering the second question, all the lines that we have right now, it's around 10% in additional debt of the full debt the other company has in the balance. So it will be around another MXN 700 million. So we can use that line in any moment. And we're trying to negotiate -- as I already mentioned, I hope we can do something maybe in the late of the second quarter to have a better note -- notice of that thing also.

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Operator [39]

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Our next question comes from the line of Martín Lara with Miranda Global.

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Martín Lara, Miranda Global Research - CEO & Founding Partner [40]

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No. I don't have any more questions.

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Operator [41]

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There are no other questions in the queue at this time. I'd like to hand the call back to management for closing remarks.

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Aby Lijtszain Chernizky, Grupo Traxión, S.A.B. de C.V. - Co-Founder, Executive President & Director [42]

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Thanks. Our way to manage the business and the policies we have adopted over time have enabled Traxión to go on in this situation in the best possible way. I founded this company over 2 basic principles. The first is diversification, which has allow us to build a solid and resilient business. And the second is prudent use of debt. I know that the sweet spot for leveraging this industry is below 2.5x net debt-to-EBITDA. We are currently under 2x. Our business is an essential part of the Mexican economy. So pretty sure that Traxión will keep operating right now with efficiency and excellence, be close to clients and continue to be prepared to face adverse conditions. Be advised that we remain committed to transparency and communication with the market. Feel free to reach out in case you have any questions. Please stay home and be safe. Have an excellent day.

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Operator [43]

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Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.