Transcript of the 1Q25 Earnings Conference Call

Good morning, ladies and gentlemen. Welcome to Simpar's conference call to discuss the results for the 1Q25.

The session is being recorded and a replay will be available on the Company's website, ri.simpar.com.br. The presentation is also available for download.

Please note that all participants will be in listen-only mode during the presentation. We will then begin the Q&A session, at which point further instructions will be provided.

Before we proceed, I would like to remind everyone that forward-looking statements are based on the beliefs and assumptions of Simpar's management and on information currently available to the Company. These statements are subject to risks and uncertainties as they relate to future events and therefore depend on circumstances that may or may not occur. Investors, analysts, and journalists should be aware that macroeconomic conditions, industry trends, and other factors may cause actual results to differ from those in the forward-looking statements.

Joining us today in this conference call are Mr. Fernando Simões, Chief Executive Officer, and Denys Ferrez, Executive VP of Corporate Finance and IR Officer.

Now I will turn the call to Mr. Simões, who will begin the presentation. You may go ahead.

Good morning, everyone. We are starting the results of Simpar for the 1Q25. On behalf of our more than 57,000 employees, I would like to thank you all for your time and attention. Thank you so much.

Before we get into the main highlights and performance indicators for the quarter, I would like to remind you that over the last three or four years, that is from 2021 to 2024, in alignment and defined with the Board of Directors, a strategic plan with a cycle of major investments aimed at building scale, reach across companies and services, always thinking of resilient markets where our services are essential.

At the end of 2024, after completing this investment cycle, also guided by our Board, we started a new cycle of development that is focused on extracting value from everything that has been built.

This is what we are now executing, and this is what you are going to see. It's still at early stages, it's still incipient, but already showing in the 1Q25, benefiting from everything that was built.

It's important to stress that this is fully aligned with our strategic plan defined by the Board of Directors. Less CAPEX does not mean that we are losing ground in business or operations. On the contrary, investments were made to expand our reach and market share in each sector where we operate, and that's exactly what we are doing.

We do not need higher CAPEX because that has already been built. The scale, reach of our companies is already given. Execution, value extraction, this is what we have to do now.

So we are starting with slide three, with the main highlights for the 1Q25. We posted net revenue from services, a growth of more than 16%. Total net revenue, that also includes asset sales, more than 15% growth over the same period last year.

EBITDA reached R$2.9 billion, up 20% from the same period last year, which shows that our EBITDA margin is increasing. It increased by 1% and is now 27.5%. And that execution, that is, we had CAPEX 75% lower in the same period, but with growth in revenue and EBITDA that was significant. If we think of the net CAPEX for the 1Q, EBITDA was 4x greater than our net CAPEX. And again, we are enjoying everything that was invested in previous years.

Our developments, our deliveries, together with our ability to manage finance well, we raised R$3.3 billion in the 1Q25. And the results of these actions, operational efficiency, improved performance, led to a reduction in our leverage ratio from 3.8x to 3.6x times. So these are some of the main highlights on slide three.

Now on slide four, here I am going to be very briefly with our listed subsidiaries that have already published their earnings recently.

So on page four, when you start with JSL, this is a company that has double-digit organic growth around 12%, 13%, 14%, even 15% in recent quarters. It also improved its EBITDA margin with EBITDA growing faster than revenue in most quarters, which clearly shows margin gains.

And JSL has a unique positioning because it offers the most comprehensive logistics service portfolio, the broadest industrial diversification, serving virtually every industry segment, raw material supply, intralogistics, or final delivery to consumers.

So this diversification supports strong cross-selling. So the Company starts with a client through one service, then expands to others, and it has made very strategic complementary acquisitions, maintaining the structure and independence of each unit, which dedicated focused objectives and resulted in strong performance with a unique management model.

And even with all that, JSL still has less than 2.5% market share, which means enormous room for organic growth without creating expectations. The idea is to generate value with less CAPEX and deliver services that have sometimes complex solutions in regions that are often underserved, but the Company is recognized by its clients for high-quality delivery and operational efficiency. That's why opportunities keep growing, as you may have seen in the latest earnings release.

Now, ON page 5, let's talk about Movida. The company has been executing its strategic plan with excellence. We can see an increase in net revenue of more than 18%. used vehicle

sales operation thanks to its strong retail-oriented store network, that stands out when compared to competitors. So Movida has grown sales volume with vehicles that carry lower average prices, aligned with customer purchase power in the regions where it operates.

And also, average daily rental rates supported by pricing intelligence. They are growing. Remember that we come from an origin of asking for the right and fair price, but also providing value and a differentiated experience to customers. And this experience is crucial for you to think about Movida's market share gains.

I would say that Movida is probably having a very important growth in market share because of what it offers to customers in their experience. Proof of that is that it's being able to adjust prices in a way that's fair to both customer and company, and this price intelligence is just touching. We can have room for even further adjustments and, again, having to do with occupancy rates and management.

And this is also happening in GTF. We see improvements in yield, that is, in line with strategic plans, doing more with less through operational efficiency. And we believe these improvements at Movida still have room for new growth cycles and will bring more efficiency gains and attract more customers to the rental business, and increasing market share, not through pricing, but through service quality, customer focus, and deliveries that stand out over truly delighted customers.

On slide six, we have Vamos. Vamos is already the market leader in scale, volume, and size, but we believe this market is still in its early stages and offers enormous growth opportunities. And Vamos has a unique positioning for that.

Revenue, significant growth, unique positioning. And here at Vamos, I would invite you to think about the deployments and CAPEX over recent quarters. Sale of used assets, buildup of backlog. If we analyze this and project forward, we talked about that, remember the possibility, after the five-year contract is completed, the Company can extend the contract for another two or three years. And we are seeing this in numbers.

If I am not mistaken, more than 70% of maturity contracts have been renewed for one, two, three years with the same assets and, in some cases, with price adjustments. Extremely important.

And the ability to sell used assets. Why? Because people have strong demand for five-year-old trucks. More than supply. So there is significant potential for used asset sales. And Vamos broke records here. More than 80% growth in used vehicle sales year over year.

That's it. We are very pleased with everything Vamos has accomplished, but there is still significant upside: lower inventory, less working capital, improvement in utilization, asset deployment, efficiency, sales of assets, and, again, in a market that is very underpenetrated. Everybody talks about the lease of trucks, machines, but Vamos may be very well the largest forklift leasing company in Brazil, with contracts exceeding five years. So many avenues of growth with resilience, high-quality assets that clients really need.

Now, page seven, we have Automob. This is the Company where we have consolidated all our dealerships, car, trucks, machinery, and equipment. All over the country, it's nationwide presence, and we are very pleased with the consolidation.

But it's important to note that we are still starting executing the Company's strategic plan for the consolidations. Even though it's just the beginning, we are already seeing improvements in productivity. Higher used vehicle sales per store, a strong ratio of used to new vehicle sales volume.

So we are growing faster than the market on new and used vehicles, and performance indicators are improving, but synergies are being captured gradually. And this is not going to be caused by layoffs or closing stores. Quite the opposite, it's selling more, so that SG&A and costs will be lower.

And offering differentiated services. That is part of the strategic plan, offering differentiated services. So better F&I performance, higher margins on parts, aftersales service, just beginning with huge future potential, and I believe that you can follow that together with us.

So when I think of Automob up in terms of maturity, and I am talking about size, about what is already consolidated, I think we are going to have that in the end of 2026. Again, enjoying the base that we have today fully until the end of 2026. So, huge opportunities.

On slide eight, we talk about CS Infra, a company focused on infrastructure concessions with low CAPEX required, and a strong service-oriented DNA. That's a big differentiator for the coming years, I believe. Governments will be more focused on delivering services to the population, to industries, or public safety, social infrastructure, environmental education.

This is what we are focusing on, projects with low CAPEX and a high concentration of service, and that margins can contribute, services can contribute, and create value to you. So we have the ports, the highways, and we have lots of things, both in CS Infra, but also in the presentation of our results. This is a company that is also just beginning, but huge opportunities in social infrastructure service concessions.

Page nine, Ciclus Ambiental, a company that holds and operates the largest waste treatment center in Brazil, one of the largest in the world, in the city of Rio de Janeiro. In addition, it won and implemented a concession to manage final waste disposal and collection in the city of Belém, which is now fully operational, more than 80% revenue growth, sustainable development, and built in infrastructure and incremental concession.

What really sets our company apart is that we are heavily focused on cost, not price. That is, we are extremely competitive on price, but our results come from cost efficiency, execution, our people, and that gives us a strong competitive advantage in the sector, because part of the sector comes from logistics, in where we have huge experience and knowledge. So many opportunities to improve results and grow inorganically through new PPPs and concession contracts.

Page 10, we have CS Brasil, a company that provides fleet outsourcing and mobility service with vehicles, drivers, and operational support. We have huge opportunity of growth, although on page 10 you can see that growth has been more modest than the other companies.

Page 11, the bank, BBC, the credit portfolio has been increasing significantly, very cautiously in terms of management, in terms of granting credit. You see that we have very low delinquency rates, well within market standards, and even better.

And we are very happy with what we did, but we believe in the potential of growth of BBC, with return now with scale and size within our ecosystem. The financing of new used cars and trucks, and also relationship with truckers. So huge potential to grow in the bank as a whole within our ecosystem.

Now I am going to turn to Denys, who will walk you through the main financial highlights for the Group. Denys?

Thanks, Fernando. Good morning, everyone. I am starting with slide 12, talking about consolidated financial results. On the 1Q25, the Group posted net revenue of R$10.531, 15% increase over the same period last year. Of that total, R$8.4 billion came from net revenue from services, which also grew 16% year over year.

Looking at the right chart at the center of the page, we reported EBITDA in 1Q25 of R$2.865 billion, margin of 27.5%. That EBITDA increases by 20% the same quarter last year, and the margin of 27.5% is 1% higher.

As for the margin of 27.5%, it basically talks about services, asset sales, and dealerships that have a different business model. But see, the service margin in 1Q25 was 48.5%, as you can see on the right side, that's 1.4 p.p. better than last year. And even the dealership margin improved, reaching 4.5% up from 4% in 1Q24. Remember, in our execution plan, we still have room for further improvements on both fronts.

Talking about operating income, in the bottom left part of the page, EBIT totaled R$1.792 billion in the quarter, up 14% from the 1Q24. As for net income, which was impacted by higher interest rates in the economy, we posted R$26 million reais in the quarter, compared to R$122 million in 1Q24.

All that said, I am going to turn to the next slide, where we bring our CAPEX. In 1Q25, total CAPEX was R$700 million, a significantly lower level than the previous periods, and fully in line with the planning we devised at the end of last year.

As expected, the largest portion of CAPEX came from Vamos, and then all other companies posted significantly lower volumes. Movida had a fleet dynamics vis-à-vis its seasonality with a negative net CAPEX.

With that, we are going to move on to slide 14, where we show the impact of this net investment. On the right-hand side, again, we bring back the historical comparison between EBITDA and net CAPEX going back to 2020.

Most of the time as we were building our financials, net CAPEX exceeded EBITDA, sometimes by as much as 2x. And now, when we analyze 1Q25 EBITDA and do the same for net CAPEX, we got a completely different ratio.