Earnings call transcript: Grupo Vamos Q3 2025 results miss expectations

Grupo Vamos SA’s third-quarter earnings report revealed a significant miss on earnings per share (EPS) compared to market forecasts, causing a notable decline in its stock price. The company reported an EPS of $0.0714, falling short of the anticipated $0.1035, marking a surprise miss of 31%. Revenue, however, aligned with expectations at 1.47 billion USD. Following this announcement, shares dropped by 5.31% in after-hours trading.

Key Takeaways

• Grupo Vamos’ EPS missed expectations by 31%, impacting investor sentiment.
• Revenue met expectations at 1.47 billion USD, representing a 25% increase year-on-year.
• Stock price fell by 5.31% in after-hours trading following the earnings announcement.
• The company continues to focus on asset redeployment and contract extensions.
• Fleet utilization reached a record high, with a 2 percentage point increase.

Company Performance

Grupo Vamos reported robust revenue growth in Q3 2025, with a 25% year-on-year increase, driven by strong performance in its lease net revenue, which grew by 12%. The company also achieved record sales of used assets, growing 87.4% compared to the previous year. However, the company’s earnings were pressured by higher costs and expenses, which affected its profitability.

Financial Highlights

• Revenue: 1.47 billion USD, up 25% year-on-year.
• Earnings per share: $0.0714, below the forecasted $0.1035.
• Net debt to EBITDA ratio improved to 3.3x from the previous quarter.

Earnings vs. Forecast

Grupo Vamos reported an EPS of $0.0714, falling short of the forecasted $0.1035, resulting in a 31% negative surprise. This miss is significant compared to previous quarters, where the company has either met or exceeded expectations. Revenue matched forecasts at 1.47 billion USD, indicating stable sales performance.

Market Reaction

Following the earnings release, Grupo Vamos’ stock fell by 5.31% in after-hours trading. The stock’s decline reflects investor disappointment with the EPS miss. The company’s shares are trading near their 52-week low of 2.87 USD, well below the high of 5.8 USD, indicating a challenging period for the stock amidst broader market volatility.

Outlook & Guidance

Looking ahead, Grupo Vamos aims to maintain fleet utilization above 90% and expects continued growth in used asset sales. The company is focusing on expanding its new asset contracts in 2026 and maintaining leverage around 3x. Despite the current challenges, management remains optimistic about future growth opportunities.

Executive Commentary

CEO Gustavo Coloto highlighted the company’s growth in leasing net revenue and asset base, stating, "We grew leasing net revenue by 12%. And in the same period, we grew fixed assets by 10%." CFO Jose Cesaro emphasized operational efficiency, noting, "It is possible to grow sustainably and sufficiently, increasing lease fleet and reducing idle inventory."

Risks and Challenges

• High interest rates in Brazil could impact financing costs and consumer demand.
• Macroeconomic uncertainties may affect the truck and vehicle leasing markets.
• Competition in the used vehicle market could pressure margins.
• Managing inventory levels and repossessions remains a priority to maintain profitability.

Q&A

During the earnings call, analysts inquired about margin pressures and inventory management. Management addressed concerns regarding repossessions, especially in the agricultural sector, and discussed strategies to mitigate macroeconomic challenges in Brazil.

Full transcript - Grupo Vamos SA (VAMO3) Q3 2025:

Conference Moderator: Morning, ladies and gentlemen. Welcome to the Conference Call to discuss the Results for the Third Quarter twenty twenty five. Today with us at this conference call are Gustavo Coloto, Chief Executive Officer of Vemos and Jose Cesaro, Chief Financial and Investor Relations Officer of Vemos. This conference call is being recorded and the replay will be available on the company’s website at ri.grupovamos.com.br. The presentation is already available for download in Portuguese and English.

We would like to inform you that all participants will be in listen only mode during the presentation. We’ll then start the Q and A session when further instructions will be provided. Before we proceed, we would like to caution you that any statements that may be made during this conference call regarding the company’s business outlook, projections and operational and financial goals represents the beliefs and assumptions of Vamos’ management and are based on information currently available to the company. Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur.

General economic conditions, industry conditions and other operating factors may affect the company’s future results and could cause results to differ materially from those in such forward looking statements. I would now like to hand over to Mr. Gustavo Cote, who will begin the presentation. Mr. Cote, you may go on, sir.

Good morning, everyone. Thank you for all joining us, analysts, investors and everyone else present at this meeting to discuss the results for the third quarter twenty twenty five. We’re very pleased with this quarter’s performance, which was marked by significant operational achievements that reflect the strength and resilience of our business model. We advanced our fleet utilization rate, reaching the highest level in recent year quarters and hit a record number of leased assets. Assets.

We also increased the return rate of our contracts with higher yields and important diversification across different sectors of the economy. Our used vehicles team once again delivered outstanding results, 85 growth in asset sales compared to the same period last year and 22% growth versus 2Q twenty twenty five, which had already been our record quarter for sales. Combined with the performance of the leasing and used vehicles division, we had recorded positive operating cash flow, reducing the company’s net debt, even while continue to make relevant investments and maintaining consistent growth in the leasing business. We reached our leverage guidance for the year, 3.25x net debt to EBITDA. Following the quarter end in October 25, we further strengthened our cash position, repaid debt and extended the average maturity of our debt.

Lazaro will go into more detail on this point shortly. Moving on to the next slide, I’ve outlined the strategies that allowed us to achieve these results. Let’s start with Slide five. Our main focus this quarter was sustainable and profitable growth. We maintained strict diligence in credit approval and continue to pursue higher profitability in our contracts.

This resulted in a nearly 38% year on year increase in contracted CapEx in 3Q twenty twenty five, driven by more profitable contracts. The internal average rate of return for new contracts reached 21.72%, the highest level since ’twenty two, and the average yield came in at 2.83%. This diversified sector demand, combined with our strategy of extending contracts without the need for new capital, reinforces the Vamos business model. Contract extensions are a key component of our operation. They benefit clients who have out paying the high prices of new assets and also benefit us as we extend future revenue without requiring additional capital.

It’s a win win. Recurring extensions ensure consistent growth in net revenue from leases, which rose 12% year on year. Extending contracts with the same used assets, combined with price adjustments above inflation is important because it reduces the need for net CapEx, working capital and decommissioning, freeing up capital for other investments. More than BRL700 million worth of assets had their contract extended with an average term of twenty two months, all of them adjusted for appreciation over recent years. On the next slide, we show our ability to deploy new contracts.

In a year marked by declining sales of new trucks in Brazil, Burmos maintained the same pace of new contract generation and execution capacity. During the year, we deployed 3,300,000,000.0 in assets to serve new contracts. Contract extensions with the same assets and the same Brinobu product combined, meaning assets that have been partially paid and adequately depreciated, already accounted for more than BRL 1,000,000,000 of all deployed assets. In other words, 32% were redeployed in new leasing cycles and contracts. Even with shorter contract terms, our future backlog contracted revenue remains strong at BRL13 billion.

I will now turn the presentation over to Cesario, who will go over our operational and financial performance. Good morning, everyone. Thanks, Colto. Moving on to Slide seven. I’ll start by discussing asset repossessions and early returns during 3Q twenty twenty five.

This quarter, repossessions represented an annualized equivalent of 5.6% of our fleet, $251,000,000 in assets and acquisition value that were repossessed or returned early, down 31% versus 2Q twenty twenty five when repossessions accounted for over 8% of the fleet. The improvement is mainly explained by lower exposure to the rain transportation sector, which now accounts only 1.2% of lease service revenue, as mentioned previously. We don’t consider the current 5% to 6% repossession level is a long term indicator. But given the challenges faced in specific sectors, such as grain transportation, along with Brazil’s challenging macroeconomic environment where credit conditions and delinquency have deteriorated. Importantly, since interest rates began rising October 25, we believe this percentage accurately reflects current market conditions.

And the company’s response to these challenges has been a significant increase in used vehicle sales, where we’ve consistently delivered strong quarterly growth. Finally, I’d like to highlight that our provision for doubtful accounts declined to just 1.7% of net lease revenue, thanks to successful collection of overdue receivables, lower repossession levels and continued revenue growth. It’s important to highlight that we don’t expect this to be the new level. We are confident that this indicator will continue improving compared to previous quarters. The company remains diligent in keeping delinquency levels healthy and gradually lower.

Moving to Slide eight, we show our key efficiency indicator, fleet utilization. We reached a new record utilization rate up two percentage points this quarter and three percentage points year on year compared to the same period last quarter. The improvement was made possible by lower repossession levels and the acceleration of used vehicle sales, which grew more than 80% year on year. Another highlight is the 10% increase in our total fleet from BRL 16,400,000,000.0 in September 24 to BRL 18,100,000,000.0 this quarter, demonstrating our confidence in the business model with consistent demand and attractive pricing measured by IRR. Slide nine shows the evolution of our inventory of assets available for lease or sale, which in September reached its lowest level of the year, down 11% versus June 25 and six percent compared to December 24.

The reduction was driven by the volume of assets deployed, including used assets through the Cinque Novo product, company guidelines to purchase new assets primarily on demand strong used vehicle sales significantly above the volume of decommissioned assets fewer assets repossessions at contract maturity, thanks to extensions and of contracts with our customers and also lower repossession volumes. In total, the BRL $279,000,000 down from new contract climate and BRL $3.00 4,000,000 from used assets reached BRL $583,000,000, BRL 132,000,000 above total recoveries. As shown on the right hand graph, the BRL $617,000,000 inventory of new assets in September represents an average inventory period of just two point four months, the lowest level since our IPO in 2021. Now we are going to move to Slide 10, where we show our diversified revenue base across sectors. This diversification allows us to mitigate potential negative effects in any given sector by offsetting them with strong performance in others.

This quarter, we saw higher contributions from commerce and e commerce, services, logistics, fuel transportation, mining, general cargo transportation, beverage, food industry, passenger transportation and engineering. Many of these grew due to seasonal factors in their respective businesses. In addition, great diversification has also reduced revenue concentration among our largest clients, as shown in the upper right graph. Finally, at the bottom right, we show that we now have nearly 4,000 active contracts and about 3.8 contracts per client, both record levels, demonstrating growth opportunities within our existing client base. Slide 11, I’m going to talk about financial lease results.

Lease net lease revenue reached a record high, up 12% year on year, driven by resilient demand, higher fleet utilization, record lease fleet, higher marginal yields, contract price adjustments, especially extensions and broad sector diversification. EBITDA from lease services reached million, also a record, driven by higher revenue and lower delinquency rates. EBITDA margin in 3Q twenty twenty five stood at 86%, nearly flat versus 2Q twenty twenty five, pressured by higher costs such as maintenance and asset preparation, personnel expenses at used vehicle stores and lower PISCONFUS credits due to reduced purchase of new assets, reflecting the company’s focus on extending existing contracts and increasing utilization of idle assets. Depreciation remained in line with projections and benefited from reduced idle inventory. The annualized depreciation per vehicle and depreciation rate, showing the lower left and center charts, reflect the normalization process for truck depreciation as the company sells assets with lower rates due to price appreciation since 2020 and replaces them with new trucks assets typically depreciating 7% to 8% per year.

For machinery equipment, this effect doesn’t apply since these assets didn’t appreciate the same way and continue to show around 10% depreciation rates. Finally, EBIT from leasing showed its first sequential increase since 2Q ’twenty four, driven by record EBITDA, but still impacted by higher costs and expenses, explaining the lower EBIT margin, which reflects the current phase of fleet utilization recovery. On Slide 12, we are going to talk about the results for used vehicles. The current truck and trailer market in Brazil continues to show lower sales volumes, while the used vehicles market has grown at double digits according to FINRABIN. Within this scenario, Vamos has more than doubled its sales volumes, setting new records, improving the quality and liquidity of our assets as well as the opportunities in up to ten year old used market, which remains fragmented and undersupplied.

Even with strong growth in used sales, Bemos still has a small share of Brazil’s used market. When we analyze, as we always do, the price correlation between new and used trucks, we see a strong alignment, which reinforces our confidence in depreciation rates. Now moving to the next slide, Slide 13, we bring the financial results for used vehicles. Revenue hit a record million, up 87.4% year on year. The gross margin on asset sales was 0.3% with 1.6% for trucks and minus 12.8 for other assets.

The performance reflects the company’s efforts to enhance asset liquidity, especially for those with long yard times and a tighter resale environment in those assets in 2025. To do so, we made targeted price adjustments to accelerate sales while maintaining a positive consolidated margin, focused on reducing idle inventory, depreciation and financial leverage. The company continues strengthening its sales structure by hiring more salespeople, opening new stores, forming partnerships with third party dealers and expanding its digital presence, I’m sorry, in the used vehicles market. These initiatives increased sales, but temporarily raised costs and expenses, impacting short term EBITDA margins. As shown at the bottom of the slide, the average used vehicles inventory period continues to decline, both for assets available solely for sales and for those available for lease or sales.

Total inventory of 2,100,000,000.0 in assets available for sale or lease has a net book value of BRL 1,700,000,000.0. Now moving to Slide 15, I’ll discuss the company’s consolidated results and quarterly performance of key indicators. Net revenue reached BRL1.5 billion in 3Q ’twenty five, up 25% year on year, driven by strong used vehicle sales and double digit lease revenue growth. EBITDA was pressured by higher costs and expenses related to fleet maintenance and preparation for sale or lease in Sempironovo product, lower margins on used asset sales and weaker performance from the industrial division. EBIT compared to the previous year was impacted by higher depreciation due to fleet growth, while net income for the quarter reached million, affected not only by the previously mentioned factors, but also by higher interest rates as the Selic rate since October 25 averaged this quarter 15% compared to 10.5% a year earlier, directly increasing the company’s financial costs.

On Slide 16, we show the evolution of our IROIC and ROI for continuing operations over the last twelve months, but a snapshot of the third quarter. Return on invested capital remains temporarily impacted by suboptimal fleet utilization. If normalized for a 91% utilization rate, a 70% EBIT margin and a 25% effective tax rate, normalized return on invested capital should be around 17%. This is not a projection, but a retrospective analysis. But that reinforces our strategy of pursuing growth through adequately priced contracts that balance return and credit risk.

Regarding ROI, yes, the main effect stems from lower net income, as mentioned earlier. Now I’m going to move on to Slide 17, where we show the movement in net debt. As we can see, company continues increasing operating cash, both from leases with higher utilization and EBITDA and from used vehicle sales, accumulating billion in cash over three months only, enough to cover BRL597 million in asset purchases and BRL588 million in interest payments, therefore, thereby reducing net debt organically. This was the first time in eight quarters that we reduced net debt while maintaining consistent growth. In other words, it’s possible to grow sustainably and subsufficiently, increasing lease fleet and reducing idle inventory.

Slide 18, we are going to talk a bit about liquidity. Our leverage measured by net debt to EBITDA closed the quarter at 3.3 times, slightly lower than in June 25. Another key indicator to mention is the coverage ratio of our debt and working capital by fleet value, which remains stable at 1.26 times. We view these metrics as conservatives as they don’t account for the BRL 13,000,000,000 backlog of contracted revenue to be performed in the coming years, nor for potential asset appreciation since values are recorded at book cost. At the September, we had about billion in cash and combined with undrawn committed credit lines, total liquidity reached BRL4.9 billion, enough to cover 100% of gross debt until September 27.

In October, we carried out two major debt issues, totally BRL 2,200,000,000.0, of which BRL 1,300,000,000.0 has already been used to prepay other debts. We have begun a liability management process, prepaying and improving our debt profile, already extending our average maturity from four to four point eight years and reducing short term maturity towers, that is from ’26 to ’28. Finally, we don’t expect a significant increase in our average cost of debt as a result of these liability management initiatives. Of course, there may be a temporary incremental cost due to the carry period between issuance and prepayments, but nothing that would materially affect our overall cost profile. That concludes my remarks.

I’ll now be available along with Cotso for the Q and A session. Thank you, Cesario, for leading the presentation up to this point. Now briefly share some final remarks. Third quarter twenty twenty five reinforced our sustainable growth model. We reaffirm our focus on new lease contracts with adequate profitability and operational efficiency, particularly in inventory turnover and used vehicle sales.

We have demonstrated our sales capacity and the liquidity of our assets. As shown, our 25% guidance has been reiterated and we are well positioned to achieve our goals. We have already met our leverage guidance for the year, maintaining a strong consistent pace of growth. We remain dedicated to continuously improving our debt profile as shown by recent issues and the extension of average maturity to four point eight years. Finally, I’d like to thank our employees, clients and investors for their trust.

We are committed to converting all our operational achievements into profits and returns for the company and shareholders. Thank you very much for joining us. And we now invite you all to join us in the Q and A session. We’ll now start Vamos Q and A session for analysts and investors. Our first question comes from Lucas Steves from Santander.

Mr. Steves, you may go on. I have two. Starting with leasing. We saw margins are a bit more pressured because of higher maintenance costs, preparation of assets for sale and also commercial expenses.

In my mind, it makes sense that giving the marginal aging of the fleet with more contracts extended with used assets due to the penetration of Cinque de Novo, maintenance expenses should be kept high in the coming periods. And the same preparation of assets for sale because the volume of sales continue to grow. In commercial expenses, you can reduce a bit, I believe. Does it make sense to think that leasing margin should be at the same level of the third quarter, a bit below historical levels as we saw? And the second question, more the margin of asset sales.

We saw margin close to zero, which makes sense given the liquidity of assets you have now. The question is, by the end of this less liquid assets, do you expect a rebound of these margins to levels closer to 5%? Or should we consider this margin as a new strategic direction of the company? Thank you very much for now and congratulations on your results. Hi, Lucas.

Good morning. This is Cesario. Thanks for your question. First question, the impact on our margin due to higher costs to prepare assets and costs with stores and the used vehicles operation. I think this has a huge influence due to the higher inventory levels that we have had since last year.

What we expect and believe that this is going to follow a path of normalization by the end of next year. So I would say that the trend for this level of costs that has been affecting our margin negatively will improve and will reduce as we have less pressure on used vehicles inventory coming from repossessions. So that also has to do with higher maintenance costs. If you think maintenance costs today have been a major detractor. And this is basically because the cost of maintenance and preparation of assets for sale or lease are very much connected to repossessed vehicles.

So as we go back to normal, we still will have this flow, but at a lower level than what we have faced today. So that would be the answer to your first question. Second question, as for the margin in asset sales, I think Cotu and myself mentioned that we are engaging our best efforts to increase the pace of sales in used assets. Quite often reducing prices. And consequently, we do have some impact on margins.

Not at the point that we are going to reverse a positive trend. But this quarter, as you very well mentioned, we were close to zero. I think the trend is along the next quarters to continue having margins close to zero. But the normal level would be to have some quarters with positively some positive margin, because we still have inventory, particularly of trucks with an important appreciation that has not yet been captured. We do not consider that when we are purchasing new assets.

But if you consider the inventory of assets that we have, many still being used by our clients, we believe there is a huge opportunity to capture margins that will benefit to some extent the results of our future quarters. Coto, would you like to mention something? Yes, just a bit more color with regards to the sales mix, which is what Cesarios mentioned. When you see the truck tractors, you see the sale of truck tractors had huge depreciation compared to last year, Fena Bravi data. Truck tractors are the most expensive assets, the heavier assets.

When we go to the point of sale, this reduces a bit our margin. But trucks for urban distribution, service provisions have had better margins. So this type of mix makes us to see in the short term shorter margins. And that should continue because the mix effect will continue until we end our inventory with tractors. But individually, for instance, Euro five trucks continue with double digit margins.

So as the inventory of truck tractors decrease, we are going to see better margins at the levels that you mentioned, Lucas. I would be between 5% to 6% as a mix effect to the future. But for now, close to zero. Thank you very much. Very clear answers.

Our next question comes from Andre Ferreira from Bradesco BBI. Mr. Ferreira? Congratulations on your efforts to reverse your inventory situation. Two questions.

The first, I’m trying to understand what can be a risk or a surprise for your results in 4Q twenty twenty five. You could if you could remind us seasonality. We are used to the seasonality of services. But repossessions, for instance, in the fourth quarter, customers start stopping operations. So perhaps you have a lower repossession because when customers stop operations, it is harder to know if the idle asset should be repossessed or not.

So what do you expect in terms of seasonality for asset sales? And how can that impact your inventory level? Second question. Agricultural sector has 1.2% points exposure in revenues. We don’t know if they are leased or not because we don’t know the yield of grand transportation, but we believe leased fixed assets.

So you have 190,000,000 worth of assets to be repossessed in this sector. Is that the rationale? Or is those contracts that Vamos should carry on? And then if you think of ex grains, we had requisition around BRL200 million. Do you see a deceleration in the sectors at the front end?

Or does it make sense to consider this BRL200 million per quarter in the short term? Short term, I mean, fourth quarter and beginning of next year. These are my two questions. Hi, Lucas. Sorry.

Hi, Andre. Thanks for your question. Well, first, risks to the fourth quarter, repossession levels and seasonality. Just as a reminder, the fourth quarter generally is a quarter in which we have some clients that have payments by drop. So we do have seasonality for some clients.

Nothing significant, but we don’t invoice these clients for some months between November and February, March next year. We have done that before, so that’s no surprise. But it might show a decrease in revenues, specifically for this segment of agricultural clients. We do not see anything that is going to substantially change our expectations in terms of repossessions. So far, I do not see anything out of the ordinary.

What we have been telling you for some time now and what we do expect is that this process will show improvements along the next quarters. Obviously, on the one hand, we have an obvious improvement due to the substantial reduction in the exposure to the grain transportation sector. But on the other hand, we have a very complex macroeconomic scenario in Brazil. So this is not only the agricultural segment. Every now and then, you see a client that is facing difficulties with regards to credit.

And that may require an early repossession or early return that in practical terms are the same. So we are not super optimistic with regards to reducing the levels that we are showing you substantially. But we do have some optimism when we do see macroeconomic scenario improving delinquency rates improving. So I think the trend for the future is that we are going to be in a more positive scenario. Level of repossessions, I did talk about expectations.

I don’t know if Coto would like to complement. Yes, sure. We are not expecting large repossession levels given the decreased exposure to the agricultural sector. But we do see Brazil with a delinquency level that is higher than historical levels. If you see our matured accounts receivable, it is going down.

We had a good volume of cash generation, reversal of good negotiations that gave us a good cash effect with reduction of provision for doubtful accounts. So we are working hard. We should see less repossessions, but Brazil is going through a challenging scenario. And if the macroeconomic scenario gets worse, we can see clients from different segments with difficulties. But internally speaking, we are really clearing our portfolio.

We raised our credit bar. So we think in the long term, reduction of delinquency and therefore, reductions in repossessions. As for your first question, Andre, just one comment on seasonality. In December, we do sell a bit less of used assets because December is a shorter month. We have the holidays.

So we do expect that, but that’s not a surprise. We do expect a strong quarter. And with regards to leasing, we do expect growth. Although, we do have some clients that because of seasonality, we do not invoice. But remember, in the intra crop market, more than 80% of our revenue is recurrent.

So it is not a surprise. And again, it’s not significant, okay? So we do not expect major surprises, just the seasonal effect of December, because it is traditionally a weaker month. Very clear. Thank you very much and have a good day.

Our next question comes from Guilherme Menges from JPMorgan. Mr. Menges? Hello, call to Cesaro, Rodrigo. Thanks for taking my questions.

Two. One is just an exercise of futurology. Short term strategy is very clear, reducing inventory, better utilization rate. Going to mid-twenty six, ’27, how do you think the company with this trade off of balance and growth? And what is the level of leverage you want to have?

And how much would that enable the company to grow in terms of fleet size? Second question, Cesaro, liability management. You did mention that you already started a process that is still going on. What should we expect in terms of new issuances? How do you see Vamuz has access to the local and foreign capitals market.

Hi, Guilherme, this is Gustavo to answer your first question. Well, reducing inventory levels and increasing operational efficiency leading our utilization to above 90%. That is lower inventory of new assets and normalized inventory of used assets. That will make us reduce leverage ratio and enable us to grow consistently. If you think of the current pace of contract renewals, 4,000,000,000 to BRL 5,000,000,000 a year, we see that, that has enabled us to grow consistently above 10% in revenue and EBITDA.

So naturally, that places the company at a very interesting pace of growth, where we can combine good growth with deleveraging when we work in a more efficient manner. That is having inventory levels is central. Inventory has to be reduced. And when we normalize that, the company can grow quite sustainably and always seeking opportunities because the market is still underexplored. Leverage will always depend on the scenario of interest rates.

If interest rates go down, we can be a bit more leveraged. If not, we are going to try to be at the three times level, which is the level that we consider healthy for the company. But Guilherme, that will depend highly on interest rates and the macroeconomic scenario. But I would say three times is a good benchmark. Cesario?

Yeah, just to add Guilherme, we have 3.3x in the current scenario. If you consider the normalization of used vehicles inventory that we have today, that is not considering the excess inventory and using the money to improve liquidity and liabilities, we would already have today a leverage ratio of three times approximately. Given the context and the capital intensive characteristic of our company, we believe that this is a bright level for a company that wants to continue growing. Of course, if we stop growing, we significantly decrease that. But we don’t want to miss out opportunities that we see to continue growing the company, gaining market share and scale.

So with regards to liability management initiatives, it is what we disclosed after the funding that we had in the October. We had some prepayments. We are negotiating with some banks, other operations to prepay debt and decrease the carryover costs in our cash. We believe our cash level is slightly above what we need. And we want to use this cash not to prepay things that mature in a long term, but to those more in the short term, ’26, ’27 and 2028.

So I am very optimistic that until the end of the year, we are going to have a debt profile that’s quite comfortable for the company and better than what we had in September. Although, what we presented in September was quite reasonable within expected in terms of a suitable number for the company leverage. So we have several discussions in the market with banks. The idea is to improve. But in terms of capital markets more specifically, we do not have any specific opportunity.

It may happen. We are always open to that. But we are generally moving on with banks to improve our credit profile or debt profile. I’m sorry. Very good.

Thank you very much. Our next question comes from Pedro Bruno from XP. Mr. Bruno? Good morning, everyone.

Thanks I want to go back to the very first question to somehow have a follow-up with regards to leasing margins and the impacts we have seen as a consequence of the strategy being implemented. We do see a positive effect of this strategy on the top line used vehicles recovery of growth in leasing, but you also have effects on leasing margin and used vehicles margin. So going back to the first question, with regards to leasing margin, what I wanted to understand is with the decision made a while back to accelerate the sale of assets, don’t you have a part of the prep and maintenance costs that come in advance, so to speak, almost non recurring? And if so, how much of this has already happened? In the end of the day, the question is similar to the first question of our call.

But I’m just trying to understand the progress of this margin for the future, but thinking under the lens of shouldn’t this costs be already happened or have them they already happened? And how much should we expect for the future? And in terms of used vehicles margin, Cesario or Coto did mention that you still have appreciated trucks in your inventory. And at the same time, I suppose that machinery and assets connected to the agricultural sector should be a bit more depreciated, so to speak. Automobile reported today, and they had an impairment of similar assets that were inherited by Vemos.

Do you have this kind of discussions? Are you considering the possibility of adjusting negative margins through some kind of impairment? These are my questions. Hi, Bruno. This is Gustavo speaking.

Thanks for joining us. Good day. Just to make it clear with regards to leasing margins, if you consider the non recurring that is why we have higher inventory levels. And again, it will take us some quarters to get back to normal as you can see. Projections are easy to make.

We are improving our turnover, but it’s still high as you saw in the presentation. So this non recurring expenses will continue while we have higher inventory levels. As we come closer to levels of close to 90% utilization rates and inventory turnover goes to four, five months, which is what we would like to see for the future of the company. And naturally, these expenses will no longer happen and then the nonrecurring would no longer happen. So you can connect that directly to higher inventory levels.

Likewise, we have some non recurring expenses with regards to sales efforts that is we are either holding promotions to sell faster or paying more premium to incentivize or to foster sales. So it makes sales, it makes sense for us to spend a bit more. But we should decrease this as we sell those inventory. So this is something to be monitored along the coming quarters. And Pedro, as for your second question, we haven’t identified so far a need for impairment.

We do see a mix effect, which is natural. It has always happened. So if you sell if in a certain period of time, you have a higher mix of a certain asset, you might have lower or higher margins. But so far, we don’t see the need for impairment. We do have constant depreciation exercises to calculate market value of our assets.

And if we do identify something out of the ordinary, then we can have the conversation. But for now, we haven’t seen the need to consider impairment with regards to our assets. They are appreciated. They are showing positive margins. No relevance for us to discuss impairment for now.

I hope I have answered the questions. Just to add to that, Coto mentioned that we are always revisiting depreciation rates. And I think this is a major difference in our business because we don’t buy to resell, we buy to lease. And our average time, five years, is sufficient for us to calibrate depreciation in such a way that we are going to avoid important changes in the price of assets. Then even if we do have something like that, that is I buy an asset to lease and then the asset has some kind of loss of value due to market conditions, I would still have five years to adjust that, not to have losses in sales through depreciation, different from a dealership that is buying and selling all the time.

We have a different business model and it’s not comparable to the expectation of impairment in a buy and sell business vis a vis a business that leases for five years. Very clear. Thank you. Our next question comes from Philippe Nilsson from Citi. You may go on.

Hello, good morning. Thanks for taking my questions. I have two. The first is related to new contracts. Trying to think how this impacts your expectations to buy new assets.

This year, we talked about the guidance already, but I would like to think about the next year. I remember recent conversations with the company saying that the demand for new assets was very strong, but you were prioritizing prices and holding up purchases to hold leverage and focus on reducing inventory levels? Does the demand continue strong? What is your appetite to buy new assets considering next year? And the second question is still thinking of deployed CapEx.

You see Saint Primovo a bit weaker in the nine months, an extension of contracts that is very strong. So also considering 2026, do you expect Cinque Novo to continue to be a product with a slightly lower share in deployed CapEx? And what do you consider the extension environment is going to be for next year? Felipe. This is Gustavo.

Thanks for your questions. We do see a very consistent demand for new assets, new contracts. We have just restructured our sales team for us to have more presence in some sectors that are very resilient and very solid, especially in more depressive times of our economy. So we are going to focus on large accounts. We have a new executive to focus on major accounts that naturally have less credit risks.

We also divided the company in more geographic managers. So we do have the demand and we are stretching ourselves for that. So you should expect focus on growth of new assets for next year. What we did, and it was part of our strategy, was to adjust our new vehicles inventory. We have the lowest inventory of the last three years.

This is part of our strategy because the cost of money is very high. So we see that the automotive industry has inventory to serve us. So there is no need for us to have major purchases in advance. We are going to continue to buy and plan inventory, but in a more efficient manner just to guarantee a lesser working capital in inventory. And this is going to continue for ’26, although we are going to see growth in new assets because we do have a pipeline we are working with and we prepared a new commercial structure for this to happen.

As for deployed CapEx for 2025, I would like to draw your attention to one thing. If you consider the volume of Cemper Novo so far, which is below expected, but together with the extension of the same assets, we have BRL1.50 billion in these two lines with deployed CapEx of billion. So we are talking about 32%. So our strategy of promoting a second cycle of leasing with a net liquid asset is being executed more in the extension line, because this is a product the customer knows and then they extend the contract with the same asset. And you see that we are doing very well there.

Same pre novo, We have to increase sales efforts. There are opportunities. I think there is the mix to be considered. The time for the customer to make the decision is a bit longer, because they don’t know the asset. They don’t know where it comes from because it was at a different client.

So this is a process that has not yet matured. So we do see growth for next year and the needs to increase our commercial efforts to lease more through the Sempra Novo product. We see it as an opportunity. For the fourth quarter, we said that in October, we had a record in Saint Prinov releases. So we are already doing well in October and we said that in the release.

And we do see an improvement for 2026. But still, it is work to be done. We are not yet where we want to be. But as a whole, the second cycle of our assets, which is our strategy in the combination of contract extension and Sempre Novo has already reached this year onethree of the whole deployed CapEx, which means that the opportunity is there. I hope I have answered your question.

Very clear. Thank you very much and congratulations. Our next question comes from Rafael Simonetti from UBS. Mr. Simonetti?

I think my main questions were already answered. But I would like to understand your mindset in terms of truck depreciation for the future. Future? And also how are you considering or what do you think of the pace of the sale of used assets? Well, as we have mentioned, we did benefit a lot from the assets that we bought before the turn from EUR 5 to EUR 6.

Those assets appreciated very much. And as a consequence, we have an average depreciation rate of trucks and this is on Slide 11 that has been increasing along quarters. But still this quarter we reported 4.3%, which is below depreciation rates that we consider reasonable and that we consider in new projects. That is whenever we are going to have a new negotiation to lease a new asset, we don’t consider 4% as a reasonable depreciation rate. Depreciation rate has to do with the type of asset, but also the use that this asset is going to have.

So you can have different depreciation rates for a same asset if it’s used more severely than others. So what do we see for the future is a depreciation rate that continues to grow to what we call a normalization process. That is, it should be closer to the 7% that we mentioned. But obviously, that can change as you have a continued appreciation of new assets. What I mean, if OEMs continue to pass through prices based on inflation rates and etcetera, and if inflation continues to be high, that will also influence the price of used vehicles.

And therefore, will favor us because we can have a lower depreciation rate. So that’s why the depreciation process is so complex in our business. And that’s why every year, we have to revisit the depreciation rate of all our assets, to run any risks, not to have surprises that can hit us adversely in a certain quarter. Rafael, this is Gustavo. As for the sale of assets along the last two years, and I call your attention to the last year 2025, we have been reaching expressive growth in a challenging macroeconomic environment, high interest rates.

Most of our assets sold are paid on-site or funded by third party commercial banks. And that has not been a detractor in our sales. Of course, it’s a barrier and it’s a difficulty, but we have been able to have substantial growth quarter on quarter. And we were able to do that without maturing some new structures that we just put into practice. We have new sales channels that are maturing, are already using results, but that are still maturing.

We have a sales team that was hired with a much larger number of sales personnel. So you see this affecting our balance sheet, but we haven’t still matured with an average sales per salesperson. And more and more, we are using digital tools. We are really varied our sales dynamics a lot. We have very strong retail sales strategies and all that is generating important cash for the company, because that’s immediate cash.

As I said, sales are on-site. So this is going to continue for 2026. And we expect this new channels to mature. We even increased some used vehicle stores. So we expect that to improve.

And along with that an improve in our utilization rates. So you should expect us to do more in used vehicles and growth is going to continue quarter on quarter. Our next question comes from Gabriel Hezejene from Itau BBA. Mr. Hezejene?

Hi, Koto, Cesario. Good morning. Sorry to stress the used assets, but I have some questions. Commercial strategy, could you tell a bit more about that? Do you think the company would offer more time for customers to pay instead of discount since you reached the leverage that you wanted in the third quarter?

And could that decrease your concern with higher depreciation rates, so better payment terms than discounts per se? So have you considered that? And the second point is still with used assets. What is your asset profile? You did talk about 2,000,000,000 in inventory to be sold.

Could you break down the profile of these assets, trucks, road equipment, other assets? And in trucks, is it trucks or truck tractors? Any specific mix that is a bit more difficult to be sold just for us to have a bit more color in terms of performance for the coming quarters? Thank you very much. Hi, Gabriel.

This is Gustavo speaking. Well, we never sell used assets installments. That’s not our business. We are this is the profile of our customer is a customer that even either have credit from banks. We work with banks that work with used assets, BBC inclusively and other banks that really pay attention to the clients that we have for used vehicles, fleet owners, independent drivers that have two, three trucks that are connected to some transportation companies.

So a large share of these customers already have credit approved by the bank and we get paid on-site. So we do not want to sell installments and we are not considering that now, because we are being able with our commercial strategies, with our retail tools, we are being able to reach important volumes. Always, we want more. But at this time, to take the credit risk for the sale is not part of our commercial strategy. As for inventory levels, we are always going to have some inventory that we would like to be between four to five months.

We are still at a higher level. We said that very clearly to you, and it will never be zero. But there is room for us to reduce more than BRL1 billion when you consider the slide on Page nine in used assets that today are carried in our inventory. And yes, given the fact that we had a higher volume of repossessions in grain transportation, we do have a volume of truck tractors that is slightly high, which really bring our margin down because we are engaging more sales efforts to sell those assets faster. So we are being able to sell a lot decommission a lot of assets.

But I would say that naturally, it is the truck tractors that really detract a bit of our margin and we are very much engaged in either releasing them or sell them. Very clear, Cotos. Thanks for your answer. Our next question comes from Roger Araujo from Bank of America. I have two follow ups on my side.

The first is the margin of used assets. If you could talk a bit about the factors that led the company to consider the situation more as a nonrecurring situation and not a reassessment of your depreciation rate? I’ll ask my second question after you answer. Rogerio. This is Gustavo speaking.

They used assets margin just to make it very clear our what we have just answered. The margin we have been mentioning to the market will allow the coming quarters to go down and it should be between 0% to 5%. And we saw that a bit more accelerated and that’s perhaps what you’re considering non recurrent, because we’re having a higher sales efforts for these assets that were repossessed and are abundant in our inventory. This is what we call non recurrent. Now, as Sergio mentioned, we are going to have a normal level of margins between 0% to 5% along the coming quarters.

It is just faster because of the mix effect. So if that’s what you mean by non recurrent, this is what we say. But as we knew, the margins were very high two, three years ago, when we had a huge appreciation because of the change from Euro four, five to Euro six. As expected, that margin was going to go down along the years as EUR 5 assets were to be sold. However, this reduction was a bit faster on a nonrecurring basis because we accelerated the sale of new products.

So that’s what we meant. Is it clear? Yes, this is what I was mentioning. Because car prices highly appreciated in the last five years, more than 100%, we would expect something close to 20% of margin if there was no discounts and mix effects. So from what I understand, you do believe that this is more related to mix and sales efforts?

My second question, asset repossessions. We saw 75% of contracts repossessed this year were relatively recent, signed between 2023 and 2025, when I believe that the company was a bit more mature in terms of analyzing credit. What are the additional measures to be adopted to reduce the level of repossessions? Wouldn’t it be premature to say to resume growth while you still have this indicator high? Shouldn’t you perhaps gear your exposure to sectors that have low repossessions?

Could you talk about this trade off? And what are you considering in terms of changes in sectors, repossessions and growth? Hi, Rogerio. This is Cesario speaking. Well, first, the efforts with regards to being very strict in terms of credit have not changed, quite the opposite.

What we have that is new is that now we have a macroeconomic scenario that is not happening, high interest rates, high delinquency rates that brings to the company some kind of pressure with regards on not expected repossessions in segments that should which can be related to the macroeconomic scenario or to a specific situation of a client that lost a contract that is having some kind of difficulty that was not expected two years ago. So I think the worst in terms of repossessions is related to grain transportation. I think that’s passed. Although this year, we still had the physical repossession of assets, the problem has been stopped. So we do not expect any surprises coming from grain transportation.

But all other sectors of the economy have to some extension exposure to the macroeconomic scenario. So we have to be quick to act. And this perhaps is another reason that won’t let us look forward as optimistic as we were in the past. Because we believed some sectors were able to recover, and they didn’t. So we are a bit being a bit more strict with regards to repossessions when we do see a client in difficulties being delinquent or because they are losing productivity.

So repossessions will never come to zero in our business. I don’t think there is a lease company in the road with zero repossessions. We did have some nonrecurring repossessions. And we believe that now we are walking towards normal levels. However, the macroeconomic scenario is very adverse.

And here, I’m thinking about the whole of the market, not a specific segment. And this is, Polto, just as a compliment. On Page seven of our release, you did talk about repossessions and you talked about ’23 to ’25. I think the best for you to consider the periods is the following, 2022 and 2023 together. We had approximately BRL2 billion of assets in the Midwest for grain transportation.

When the crop was very high, everybody had very positive expectation for grain transportation in Brazil. The asset was basically all repossessed. So under contracts to be repossessed, 02/23, the 1.2 was originated in 2022 and seven hundred in 2023, 1.9 altogether, grain transportation completely cleaned, ’24 and BRL 25 together is BRL 200,000,000 from other sectors, which we believe is a much more normal scenario with a higher credit bar. Of course, we are still facing an adverse macroeconomic scenario in Brazil, but we are on a clear downtrend. So you would say that most of the portfolio was cleaned.

It was green transportation. Unfortunately, it was a situation where we frustrated our investment. But ’24, 20 ’5, you see a portfolio that’s a lot more robust and much lower amounts. I think this is the way I think we should interpret the information of Slide number seven. Okay?

Very clear. Thank you very much. Due to the large demand of questions received in writing and the time, the questions will be later answered by the IR team by email. We’ll now turn the call to Mr. Gustavo Colto for his final remarks.

Well, once again, I would like to thank our team, our clients, our investors for their trust. And I would like to call your attention to five points very quickly. Record used asset sales, once again, a very strong quarter, fruit of the work, all the transformation that we are going through our used vehicles operations, thanks to our teams and clients. Second, our consistent pace of growth. Leasing revenue grew 12% year on year, And we see that we are expanding our internal return rates and yields and raising our credit bars.

So demands for new contracts is sustainable. Another important thing is that grow has been accelerated by the use of used assets, particularly in contract extension. This is the strategy of the company to give a second life to liquid appreciated assets with a very young age. A five year truck in Brazil is still a very new and can perfectly be extended at current clients or released to a new client. This is part of our strategy and enables us to grow revenue with less fixed assets.

Remember, we grew leasing net revenue by 12%. And in the same period, we grew fixed assets by 10%. And that shows a long time that we are going to have better yield and profitability once you’re using revenues you’re growing revenue more than you’re growing fixed assets, even considering that our fixed assets have inefficient rates, assets that we have to lease or sell. And we are engaging our best efforts on that. Of course, we want to have operational efficient, and we’ll continue to pursue utilization above 90%.

Our lease fleet has to be above 90%. This is our main driver in the short term in a sustainable manner. And finally, I’d like to call your attention to the generation of operating cash. In the quarter, we reduced net debt. As Azaria mentioned, we had operational cash and we were able to keep our growth.

So it is the business foundations that are good to proof and are delivering good results. Naturally, as we see inventory levels normal, the bottom line results are going to show. Once again, I’d like to thank you for joining us and for your trust. And we are now concluding our conference call. Thank you very much.

Vamos conference call is now closed. We thank you very much for your participation and wish you a good day.

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