Tegma Gestao Logistica SA (BSP:TGMA3) Q2 2024 Earnings Call Highlights: Record Revenue Growth ...

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Wed, Oct 9, 2024, 3:07 PM 4 min read

Dividends and JCP: BRL80 million to be paid, corresponding to 80% of net profit for the first semester of 2024, with a 4.8% dividend yield.
Vehicles Transported: 167,000 units in Q2 2024, a 6.4% increase year-over-year.
Net Revenue (Automotive Logistics Division): 29% growth in Q2 2024.
EBITDA Margin (Automotive Logistics Division): Increased from 14% to 17%.
Net Revenue (Integrated Logistics Division): 27% increase in Q2 2024.
EBITDA Margin (Integrated Logistics Division): Decreased from 32.4% to 27.2%.
Net Revenue (GDL): 102% growth in Q2 2024, reaching BRL71 million.
Net Profit (GDL): BRL19 million in Q2 2024.
Consolidated Net Revenue: BRL473 million in Q2 2024, a 29% increase year-over-year.
Consolidated Net Profit: BRL64 million in Q2 2024, a 59% increase.
Free Cash Flow: BRL28 million in Q2 2024.
Net Cash Position: BRL177 million in 2024.
Return on Invested Capital (ROIC): 30.1% in Q2 2024.
Return on Equity (ROE): Increased by 2.2 percentage points.
Dividend Yield (Last 12 Months): 10.2%.

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Release Date: August 06, 2024

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

Positive Points

Tegma Gestao Logistica SA (BSP:TGMA3) announced a dividend distribution of BRL80 million, representing 80% of the net profit for the first semester of 2024, with a 4.8% dividend yield.
The company expanded its operations with a joint venture with GDL to handle increased volumes of imported vehicles, particularly electric and electrified vehicles, in Espirito Santo.
Net revenue in the automotive logistics division grew by 29% in Q2 2024, driven by a 6.4% increase in the number of vehicles transported and a 14% increase in average transportation distance.
The integrated logistics division saw a 27% increase in net revenue due to new contracts in the chemical sector and high demand for home appliances.
Tegma Gestao Logistica SA (BSP:TGMA3) achieved its highest quarterly revenue in five years, with a 29% growth in net revenue in Q2 2024, indicating a recovery in the automotive market and strong performance in industrial and integrated logistics.

Negative Points

The company's market share in vehicle transportation dropped by 0.9 percentage points to 24.9% in Q2 2024.
The EBITDA margin in the integrated logistics division decreased from 32.4% to 27.2% due to increased costs from emergency transportation and insurance expenses.
Exports from Brazil fell by 30% in Q2 2024, impacted by competition from Chinese OEMs and economic challenges in key Latin American markets.
The company is facing an administrative process with CADE, related to past accusations, which could impact its operations.
Tegma Gestao Logistica SA (BSP:TGMA3) shares underperformed in the stock market since April, affected by broader capital market conditions impacting small caps.

Q & A Highlights

Q: Do you have any update concerning the CADE situation? Also, how far can the improvement in margins go, and what are the medium and long-term perspectives? A: The CADE administrative process is in a new phase involving investigations from 2019. We are defending ourselves and expect a positive outcome. Regarding logistics, we have renegotiated rates and prices, leading to stable margins in the chemicals division and corrected issues in the home appliances sector. Our margins are stable, not growing.

Q: Can you provide insights into Q3 results, considering the end of Q2 impacts? Also, how do you see the future of Chinese vehicle imports with higher taxes? A: The automotive market is positive with improved economic conditions in Brazil. Sales are expected to be 15% higher despite challenges like floods. Regarding Chinese imports, higher taxes on electric vehicles may reduce imports, but OEMs are optimistic about opening plants in Brazil. Our investments are in rented yards, so we foresee no medium to long-term issues.

Q: What is your payout strategy for 2024? Will you continue with an 80% payout? A: The increased payout is due to positive operational results and financial leverage capacity for growth. While we aim to distribute at least 50% of results, the payout is adjustable based on capital allocation needs.

Q: How is the current situation of the automotive market affecting Tegma? A: The automotive market is improving with lower unemployment and better income levels in Brazil. Sales in July were the best since before the pandemic, growing 5% annually. However, exports face challenges due to competition from Chinese OEMs and economic issues in export markets.

Q: What are the impacts of the floods in Rio Grande do Sul on Tegma's operations? A: The floods caused a significant drop in deliveries in May, but there was a recovery in June. It's challenging to quantify the exact impact, but the market has shown resilience and recovery post-floods.

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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