Release Date: July 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record high figures of revenue and EBITDA, driven by strong demand related to nearshoring.
- Net income almost doubled to MXN222 million, a 98% growth compared to the same quarter last year.
- Shift in focus to more profitable B2B business in the last mile division, expecting benefits by Q4 2024.
- Reduction in CapEx by approximately MXN600 million without affecting expansion plans.
- Strong cash flow generation and a prudent debt utilization approach, maintaining debt level below 2.5 times.
Negative Points
- Timing lag between CapEx investments and actual revenue generation, affecting immediate returns.
- Price disruption in the B2C parcel market for 18 months with no immediate signs of normalization.
- Restructuring expenses of approximately MXN25 million this quarter, with additional one-time expenses expected in Q3.
- Severe storms and border closures in the Nordic region caused temporary disruptions and additional costs.
- Margin compression in the logistics and technology division due to adjustments in the B2C service.
Q & A Highlights
Q: Under the revised CapEx plans, how should we think about your top line growth? Will it still be in the double-digit zone?
A: Yes, we will continue to see double-digit growth in terms of revenue despite the reduction in CapEx for 2024, driven by strong demand for our services.
Q: When you say you plan to be cash flow neutral, does that cover CapEx, working capital needs, and interest expenses?
A: For this year, it will cover CapEx and working capital. Once efficiencies are fully realized, we expect positive free cash flow, including financial expenses.
Q: Can you discuss the impact on margins from the personnel and cargo segments and when we should see improvements?
A: We expect margins to improve starting in the third quarter due to continued revenue growth, efficiencies in the last mile division, and adjustments in operating and administrative structures.
Q: Can you provide an update on M&A opportunities?
A: We continue to review opportunities and will pursue M&A only if it is very attractive for the company. We remain active in this area.
Q: Could you explain the margin difference between B2C and B2B last mile services?
A: Margins in B2C services were close to zero due to negative margins. With the efficiencies we are implementing, we expect high single-digit margins in the last mile services by the fourth quarter.
Q: How are you perceiving competition, especially with your price increases?
A: The price increase initiative is taking place mainly in the second half of the year and has been successful so far.
Q: Can you provide more details on the reorganization of the last mile division and its financial impact?
A: We estimate around MXN200 million in restructuring costs next quarter, but expect annual savings of approximately MXN700 million from these efficiencies.
Q: When do you expect to see the benefits of the MXN700 million in efficiencies?
A: We expect to see these benefits starting in the fourth quarter of this year, with efficiencies coming from various areas, not just the last mile services.
Q: How much of the cargo business impact stemmed from the border closure versus Tropical Storm Alberto?
A: Both phenomena caused border closures and delays, leading to a temporary revenue delay but not a permanent loss.
Q: Can you provide guidance on the number of buses expected by year-end in the people mobility segment?
A: We expect to have around 8,500 operating units by year-end, reflecting growth in line with our expectations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
