Tegma Gestao Logistica SA (BSP:TGMA3) Q4 2024 Earnings Call Highlights: Robust Growth and ...

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Wed, Mar 12, 2025, 1:07 AM 4 min read

Dividend Distribution: BRL39 million or BRL0.59 per share, representing 66% of net income for 2024.
Domestic Vehicle Sales Growth: 14% increase year-on-year in Q4 2024.
Vehicle Production Growth: 17% increase in Q4 2024.
Vehicle Exports Growth: 41% increase in Q4 2024.
Vehicles Transported: 202,000 units in Q4 2024, up 15% year-on-year.
Automotive Logistics Division Revenue Growth: 41% increase in Q4 2024.
Automotive Logistics EBITDA Margin: Increased from 15.1% to 20.1% in Q4 2024.
Integrated Logistics Division Revenue Growth: 1% increase in Q4 2024.
Integrated Logistics EBITDA Margin: Decreased from 29% to 21.8% in Q4 2024.
GDL Net Revenue Growth: 37% increase year-on-year in Q4 2024, totaling BRL65 million.
Joint Venture Net Income: BRL13 million in Q4 2024, up 39% year-on-year.
Consolidated Net Revenue: BRL624 million in Q4 2024, increasing 38% year-on-year.
Consolidated EBITDA Margin: Expanded by 3.9% points in Q4 2024.
Net Income: BRL85 million in Q4 2024, up 67% year-on-year.
CapEx: BRL17 million in Q4 2024, 2.7% of net revenue.
Free Cash Flow: Positive at BRL28 million in Q4 2024.
Net Cash Position: BRL135 million as of December 2024.
Return on Invested Capital (ROIC): 39.5% in Q4 2024, up 4.8% points quarter-on-quarter.
Return on Equity (ROE): Increased by 3.2% points in Q4 2024.
Dividend Yield: 9.7% for 2024.

Warning! GuruFocus has detected 6 Warning Signs with BSP:TGMA3.

Release Date: March 11, 2025

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

Positive Points

Tegma Gestao Logistica SA (BSP:TGMA3) proposed a dividend distribution of BRL39 million, representing 66% of net income for 2024, with a dividend yield of 9.7%.
The company was a finalist in the 2024 Ambrasca Award for best integrated report, showcasing its commitment to sustainability.
Domestic sales of new vehicles in Brazil increased by 14% year-on-year in Q4 2024, driven by improved economic conditions.
The Automotive Logistics division saw a 41% increase in net revenue in Q4 2024, supported by operational performance and tariff adjustments.
Net income for Q4 2024 rose by 67% year-on-year, with a net margin expansion of 2.4% points, reflecting improved operating results.

Negative Points

Tegma's market share in the Automotive Logistics division contracted by 0.3% points to 24% in Q4 2024 due to lower-than-average performance of key automakers.
EBITDA margin for the Integrated Logistics division fell from 29% to 21.8% in Q4 2024, impacted by reduced volumes in the chemicals operation and delayed freight cost pass-through.
The company's expenses increased by 10% above inflation in 2024, driven by higher spending on legal and consulting fees related to various issues.
The cash-to-cash cycle at the end of Q4 2024 was 40 days higher than the previous quarter, indicating potential inefficiencies in cash management.
Despite robust performance, Tegma's shares continued to trade at multiples below their historical average, suggesting potential undervaluation concerns.

Q & A Highlights

Q: Can you elaborate on the tariffs dynamic and the mix of services, particularly regarding yard management and vehicle transfers? A: (Nivaldo Tuba, CEO) Tegma adds value by not only transporting vehicles but also providing logistics services like yard management. This service has been increasing and we plan to expand some yards to offer these services in a more integrated way, which will enhance our tariffs and revenues.

Q: What are the company's expectations for dividend payout in 2025, considering the healthy financial position? A: (Ramon Perez, CFO) While we don't provide specific guidance, our payout policy is around 50-55%. Despite a 66% payout in 2024, we aim to maintain financial flexibility for potential M&A opportunities and increased CapEx. The current payout level is deemed appropriate given these strategic considerations.

Q: How do you perceive the mood of automakers and volume expectations for 2025? A: (Nivaldo Tuba, CEO) The outlook has improved slightly since our Investor Day. The first two months of 2025 saw an 8% sales increase, aligning with growth expectations from regulatory bodies. This growth is driven by both intermediate and traditional automakers, with Fiat outperforming the market average.

Q: What is the expectation for GDL's performance, especially with the increase in imports of Chinese vehicles? A: (Ramon Perez, CFO) We expect revenue growth in 2025, supported by BYD's increased budget and new investments in warehousing. GDL will continue to serve a diverse market, including new Chinese brands entering Brazil, maintaining volumes similar to 2024.

Q: Can you provide an overview of Tegma's strategic focus for 2025? A: (Nivaldo Tuba, CEO) We aim to balance revenues between Integrated Logistics and Vehicle Logistics. With a new officer leading Integrated Logistics, we are optimistic about 2025, despite challenges. The first two months showed strong domestic car sales, and we expect this trend to continue.

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

This article first appeared on GuruFocus.

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