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Q & A Highlights

Q: Can you explain the dynamics of the supplier line and whether there is a need to issue new debt to manage payments to suppliers? A: Gustavo Moscatelli, CEO, explained that the company typically increases its fleet at the end of the year to capitalize on peak rental months. They advanced the purchase of 12,000 cars to the end of 2024, which will be managed through operational cash flow and a recent BRL450 million bilateral funding. No new debt issuance is planned, and March is expected to be a record month for cash generation.

Q: What caused the drop in GTF margins, and what should we expect for future quarters? A: The drop in GTF margins was due to increased maintenance during collective vacation periods, which is a seasonal occurrence. Margins have already rebounded to 76% in early 2025, and further improvements are expected due to pricing adjustments and cost reduction initiatives.

Q: Can you provide more insight into the rental car utilization rates and demand stability? A: The company has shifted its product mix towards more profitable occasional rentals, which have lower occupancy but higher ticket prices. This strategic shift has improved profitability despite lower occupancy rates. Demand remains strong, with March expected to be the best month ever for the company.

Q: How do you view the current car price trends, especially in relation to the FIPE table? A: New car prices have been adjusted upwards by OEMs, and further increases are expected. This stability in new car prices supports stable or potentially increasing used car prices, which could improve margins and reduce depreciation rates.

Q: What is your strategy for fleet management and its impact on leverage? A: The company advanced the purchase of 12,000 cars to the end of 2024, which will be sold off in early 2025. The fleet is expected to remain stable throughout the year, focusing on operational efficiency and profitability improvements, which will help reduce leverage.

Q: How do you plan to manage capital allocation given the current macroeconomic scenario? A: The strategic plan for 2025 focuses on creating long-term shareholder value through price adjustments, cost reductions, and deleveraging. The company is prepared to adapt quickly to any changes in the macroeconomic environment.

Q: What is your outlook on competition, particularly from smaller rental companies? A: Larger players have an advantage due to better access to credit and lower costs. Smaller companies face more challenges in the current economic climate, which could reduce their presence in the market, benefiting larger players like Movida.

Q: How do you see the industry evolving, particularly in terms of depreciation rates for Rent-A-Car and GTF? A: The industry is maturing, with a focus on operational efficiency and price adjustments. Movida is leading these initiatives, which have transformed its results and positioned it as a benchmark in profitability within the sector.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.