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1 Operator: Good morning, and welcome to the JSL teleconference for a discussion about the results for 1Q18. Here with us today are: Fernando Simões, Chief Executive Officer, and Denys Ferrez, Chief Financial and IR Officer. Right now, all participants are connected as listeners only; later, we will initiate the Q&A session, when further instructions will be provided. Should you require any assistance during the teleconference, please ask an operator to help by pressing *0. We wish to inform you that this teleconference is being recorded and simultaneously interpreted. Before proceeding, we would like to point out that any statements that may be made during this teleconference about the outlook for the company s business, forecasts and operating and financial targets are based on the beliefs and assumptions of the executive board of JSL, as well as on information currently available to the company. Future considerations are no guarantee of performance. These involve risks, uncertainties and assumptions because they refer to future events and, therefore, they are dependent on circumstances that may or not occur. The overall economic conditions, the conditions of the industry and other operating factors may affect the company s future results, leading to results that are materially different from those expressed in those future considerations. I would now like to hand over to Mr. Fernando Simões. Mr. Fernando, if you please. Good morning everybody. On behalf of all of us here at JSL, I would like to thank you all for taking part. We are now going to announce JSL s 1Q18 consolidated earnings. Starting from page two showing the main highlights of JSL s consolidated 1Q18 earnings. We posted consolidated net revenue of R$1.9 billion in 1Q18, which was up 11% on the same period of last year. We posted R$1.5 billion consolidated net revenues from services in 1Q18, which means 18% growth. We had consolidated revenues from sales of assets of R$424 million in 1Q18 and an EBITDA of R$354 million, which means 22% EBITDA growth with a margin of 23.4%, which means an 0.8 p.p. improvement. We had R$25 million net income in 1Q18, which means a R$43 million positive variation against 1Q17. A consolidated net CAPEX of R$355 million in 1Q18. In 1Q, we also had the reopening of the bond program in January 2018, when we funded an additional US$300 million and rescheduled our debt profile to an average term of 4.2 years and diversified the funding base at a lower cost than the first funding round at the end of last year. We started a new development cycle for the Group, which will be promoted and make a great contribution through the new organization of our activities, creating independent and synergistic companies, simplifying comprehension of the structure, maintaining 1

2 agility and our understanding to serve by activity and resulting in more transparency for market that is monitoring us. Investment, financing and in particular the clients give us this opportunity to develop our business, with a company and management no longer by segment, but a totally independent company, thus contributing to a differentiated development and improving our results. On page three, we may get a better view of this new business organization. JSL as a listed company now operates with five business bases, one of them being Logística, and the others CS Brasil, Vamos, the vehicle dealerships and Movida. On this page three, you see how each of these companies is positioned and their shares, key numbers and service portfolios of each company. On this business base we now operate our business and our activities. With these business bases we started operating from the beginning of this year, bearing in mind that we already had this as a business unit and have been working with some of these segments for 15 or 20 years; we have just worked on organizational separation over the last two or three years, to implement as of January We now have on page four the net revenue numbers for each activity that we operate. Let s start with the table upper left, where we have Logística posting R$952 million net revenue, which means growth of 7% over the same period of the previous year, and we have R$885 million net revenue from services, a 10.2% growth in Logística. On page four, in Movida on the right, we had R$336 million net revenue from sales of assets and in the service part, for GTF and RAC, R$267 million revenue which means RAC grew 11% and fleet management and outsourcing grew 33.9%, which is in line with Movida s management focus on developing RAC and getting organic growth, but to have a transformation in the business level for fleet management and outsourcing, and this is what the numbers show has been happening. On page four, on the left, we have Vamos, which had R$228 million net revenue, of which R$209 million net revenue from services, which shows 40% growth. Bear in mind that the segment is leasing machinery, trucks and equipment long-term - more than 98% of contracts are for five years - without drivers or logistics services, but rather as equipment leasing. And there we have the three consolidated segments, still on page four, on the bottom right, in which we had R$1.936 million net revenue, which means 11.2% growth. We had growth in all activities we are operating, as the chart below shows. Bear in mind that in the main highlights on page two, the previous page, we show that in addition to our growth shown here on page four in our consolidated figures, there was growth across all of our activities. As page two shows, we had a positive variation with a 22% rise in EBITDA and improved margin, which shows continuous improvement of our numbers and our entire management focused on growth with improved results and therefore improved capital structure. Turning now to page five, where we are going to talk about numbers in more detail, I would like to ask Denys to take over now. If you please, Denys. 2

3 Thank you, Fernando. Good morning everyone. Talking about page five, about EBITDA and net income on a consolidated basis, I would like to point out that in the 1Q17 numbers, we excluded gains on the secondary sale of Movida shares at the time of the IPO in February last year, for comparative purposes, since in 3Q17 this figure was reversed from income and posted to shareholders equity. So I would like to start by talking about EBITDA, which totaled R$353.9 million in 1Q18 with a 23.4% margin, showing 22% growth in nominal terms and 0.8 p.p. higher margin. This EBITDA came basically from the logistics business, which here we are still showing together with CS Brasil s business activities, with R$143 million EBITDA, which accounted for approximately 40% of total EBITDA. Logística s EBITDA grew by almost 19% year on year, mainly due to the improvement in the economy and the rebuilding of margin with customers through higher prices, but also the Company s continuous management of costs and expenses. Another substantial contribution came from Vamos, which is a business that we started to report for you as of this quarter, and it accounts for about 30% of total consolidated EBITDA and includes the contribution from Borgato s business acquired in December last year, but also its own organic growth. So Vamos s EBITDA, which was R$105 million, grew 26% YoY, with a 50% margin. The third contribution, in order of size, was Movida s R$102.3 million EBITDA, which accounted for 29% of the Company s consolidated total and grew 20% with a 38% margin in 1Q18. The growth in EBITDA in the period was a reflection of growing revenue with higher margin in GTF and dilution of costs of the installed operating platform. As a result, the Company s consolidated result was net profit totaling R$25 million in 1Q, thus reversing 1Q17 s negative result and showing a positive variation of R$43 million when comparing 1Q17 and 1Q18. The evolution of results was supported by better operating performance from all business units, as well as lower net financial expenses in the period. So now I would like to move on to the next page, which shows JSL s investments on a consolidated basis in slide number six. In 1Q18, the Company s gross investment was R$782 million. Of this total, R$470 million was spent to renew assets and R$311 million to grow business. To set against gross investment, we had revenues from the sale of assets totaling R$427 million, which made a net investment of R$355 million for the period. Regarding this net investment related to business opportunity, I would like to point out that one of the great drivers of this investment for growth was the GTF segment s growth in Movida and the Vamos business unit s activities and outsourcing, and I have told many of you of the enormous potential that Brazil that still has to develop, since 3

4 Finame is now charging market rates rather than distorted rates. It is difficult to even measure the scale of this opportunity in this line of business. I would like to ask you to move on to the next slide, where we look at JSL s debt on a consolidated basis. At the beginning of the year, due to market conditions, we got an opportunity to reopen our offshore issue of bonds, which were originally launched in July JSL started its corporate issues on January 8 by retapping this bond in the form of an additional issue worth US$300 million, which helped lengthen average repayment for our debt to its current 4.2 years. In relation to leverage ratios, here we are showing the same net debt / EBITDA ratio we posted in December Obviously, it includes the last 12 months of Borgato, the acquired company, as required by our covenants. So it is still 4.4x. In relation to the other ratio for which we also have covenants, our net debt / EBITDA-A was 2x. Bear in mind that the maximum ratio we are allowed is 3.5x. With that, I would like to hand over to Fernando. If you please, Fernando. Thank you, Denys. Now on page eight, let s talk about JSL s results. At the top, we show 1Q18, where we have all the segments we are operating in: Logística, Vamos, Movida and the dealerships. We had R$1.936 billion consolidated net revenue in 1Q18 with R$211 million EBIT, which means a 14% margin, and R$353 million EBITDA with a 23.4% margin, as mentioned above. In addition to 22% EBITDA growth, we had an 0.8 p.p. improvement in EBITDA margin. We had a net result of R$25 million in 1Q18, which means a R$43 million positive variation against 1Q17. The table below shows the last 12 months net revenue of R$7.383 billion, with an EBITDA of R$1.293 billion, which means a margin of 23%, and an augmented EBITDA - bear in mind this is a reference to show that our cash flow is able to meet our commitments - of R$2.994 billion, with R$60 million net earnings in the last 12 months. As we can see, we have had improvements in all the numbers and segments we are operating in. It is important to note that in each case volumes are coming back, and that this is for a reason, such as the fact that Logística is occupying its operational bases again. We have Vamos following an increasingly widespread trend for companies to stay light on assets rather than invest, instead engaging companies that offer to do so on specially attractive terms in relation to scale and competitive price, which has posed growth opportunities for Vamos. We have Movida in the vehicle leasing segment, with a brand and services that - modesty apart - give it very special edge in a segment that is undergoing transformation and offering great opportunities for all those active in the segment. The 4

5 segment has enjoyed growing demand as city-dwellers increasingly prefer renting vehicles, and vehicle lease is becoming part of urban mobility. And we have the dealerships, which have had a hard time over the last few years but are now starting a new development cycle. It is important to note that the main dealerships in which we are located, which are Volkswagen branded, have new products and new volumes, and the average ticket for new cars has changed, contributing to improved results. In short, in all the segments we are operating in, although independently, there is synergy across the businesses and much room for improved volumes and margins. Without wishing to create any expectation, we believe that the economy has started to pick up again although there is no euphoria, but JSL as a whole, in all its segments, is particularly well positioned not only to tap this pick-up in the economy, but also to tap more synergy between companies and offer differentiated services, and I would say it is unique in some segments in which it operates. I want to thank you once more for your participation and now let s open up for questions and answers, so that we can settle any questions that have remained. Thank you all. Victor Mizusaki, Bradesco BBI: Good morning. I have three questions. Firstly, when we look at JSL Logística s gross margin from services, we see a strong evolution, both quarter to quarter and year to year. We are talking about gross margin rising 12% to 14%. Can you elaborate on that growth? Is there some leverage effect here? The second question relates to 1Q s net CAPEX. What guidance can you give us for 2018 and how is this expected to evolve in the course of the year? And the third question is about Vamos. Could you break down its revenues from services? Good morning, Victor. Looking at gross margin from Logística services, it is important to point out that over the last two or three years, in our business portfolio and the way we are divided by segment, Logística was the hardest hit unit. How was it hit? There was a very large fall in automobile volume; even foodstuffs were down; in the mining and steel sector, in particular, there was a very large fall. So that led to lower margins for Logística. In addition, Logística has won new contracts. Even with this fall, you can see that, historically, we have grown our volume revenue, including Logística. So that led to new services and pre-operational costs, and idle capacity in other operations we had. Remember that we made big changes in our business portfolio, dispensing with our own trucks and using third-party trucks in Logística. This all had an operational cost to be covered. 5

6 Apart from this cost of reformulating our Logística operating model, we re not euphoric about it, but some services have started to come back, in which we still have idle capacity in our operational bases, but services that we have assumed, or new ones, or increased volume in current ones, which has helped us lower our operating cost. So these were the main reasons for the improved margin in Logística. I m not sure if it s clear. Victor Mizusaki: That s clear, yes. Thank you. When we look at net CAPEX, our aim this year is in line with what we said at the beginning of the year, which is very similar to last year. But as you know and we always say, at a certain point, it is better to buy more in one quarter and less in the other, or sell more in one quarter and less in the other. So there may be this fluctuation, but we reconcile with our focus for our net CAPEX target - not wanting to create any guidance here - to be in line with last year s. This is our focus and this has been our target. Bear in mind that you may see a quarter spiking, but this is the focus for end-year. Therefore, we aim to improve our leverage, in other words our focus is lowering leverage. On the Vamos points, I ll hand over Denys to talk about Vamos. Good morning Victor. The press release gives this result from providing services, which was R$283 million gross. Or R$209 million net, but here also there is the volume of sales posted by the truck dealerships. Is that what you wanted? Or did you want a breakdown? If you need a breakdown, we ll try to get it during the call, but it s not available here right now. Victor Mizusaki: Fine. Thank you, Denys. Lucas Marquiori, Banco Safra: Good morning everyone. Two questions from my side too. Fernando, for almost a year now BNDES Finame rates have been less attractive and less advantageous than market rates. In the past, the market was very unsure as to how much this might impact your business, about whether it was positive or negative for you. I think it would be good if you could give us an overview - after almost a year of non-subsidized BNDES rates - as to how this has impacted your business, or posed new opportunities, or really helped you in this period. This is my first question. 6

7 My second question, Denys, we re seeing the Vamos business growing quite well. As you said, it is a very promising sector. I wonder if you could explain for the market how you intend to grow Vamos in line with your project of not adversely affecting leverage or deleveraging the balance sheet as a whole, to very clearly show how you will grow Vamos without affecting the balance sheet. These are my points. Thank you. Good morning, Lucas. We used to talk about the Finame rate in past conference calls, back then when there was Finame credit, but now we can say the Company has shown that it can develop without Finame. Without Finame as it was in the past with subsidized interest rates. A subsidized Finame rate is a complicating factor. Why? People often buy assets without having operations ready to go, and they create idle capacity. That s one aspect. The second most harmful aspect, just as harmful as subsidized Finame rates, is easy credit. With all due respect, when credit is easy, you are competing with someone who is buying an asset but often has nowhere to put it, and it comes out at any price because they have credit and compete against you on an unprofessional basis. So the end of the Finame rate, together with responsible credit, has posed business opportunities with fair remuneration and the market is more selective. This is one of the main points. The second point, which applies to both Logística and Vamos, the business we are in, is that when clients were competing, even in their manner of governance, it was often hard for them to get approval for a low-cost Finame loan, even if they did not want the asset. It was a normal tendency for him to go for one side, often even his own. That is a point that is over now, since Finame s interest rate is a fair market rate. So, anyone who had any doubts about whether or not to incur CAPEX in a business other than their own will now want to rent or take on any other type of operation. A very important business too, Lucas, is the question of used vehicle sales, because when there is Finame at a fair rate of interest, your used vehicles are worth more, because people will think there is no Finame rate for new vehicles, there s a cost, so I d better buy a used one. This also helps to keep our assets turning over and even helps their pricing. So there is obviously a very big effect. The worst has come this year, which was the transformation. Everybody who was thinking about what to do, and now they see what has happened, thinks there are no more subsidized Finame rates; this is the new reality for me and now they are starting to come back, so there is more demand for business. So I would say this: Finame credit was seriously getting in the way for a while. But this year has been the year for people to realize it s no longer available, so now there s a new cycle starting and everybody has gotten accustomed to life without Finame credit. So I think this can do a lot to improve margins for us; not a huge improvement, but quite a good contributory factor to improve our margins and the evolution of all our lines of business, be it Vamos or Logística. 7

8 Now I ll hand over to Denys. Good morning Lucas. Thank you for the opportunity to talk about Vamos. Before eventually looking at some structure that will enable us to avoid this impact on leverage; in our original plans, with deleveraging expected in relation to end-2017, there was already room for Vamos to grow at around 30%. Even with this growth, we have a tendency toward deleveraging. At the margin, we have also had an opportunity to draft indentures with some agents where the business will not impact our leverage, for example there was a R$30 million deal recognized in our balance sheet in December This business has been moving forward and formats are different, but we are very confident that there is a major trend toward development, which will likely remove any balance sheet restrictions so we can make the most of this capability to buy and use our leadership position in this segment, which I believe is now starting to emerge in a Brazil that in the past has always had distorted rates available from some government on-lending facilities. Lucas Marquiori: Clearly explained guys. Thank you all. Felipe Matsumoto, Santander: Good morning. Thanks for the opportunity to ask. Firstly, on this bond that reopened in January 2018, from which you funded an additional US$300 million, I d like to know if you had hedged this debt. If so, at what cost financially, more or less; how did it impact your previous debt, the average cost of your debt. Thank you. Felipe, thanks for asking. At JSL, we have a Board of Directors guideline that keeps us necessarily hedged against any exposure to currencies other than the Brazilian real. We have strictly followed this rule. So we re hedged. As for costs, bear in mind this was a seven-year bullet debt and its conversion basically factored in around 135% to 140% of CDI interbank rate, which we believe is a valid rate given the term and the nature of what it is financing, which is all those corporate ownership changes we have made and the development of our business. As for the cost of the debt, this additional cash will mean a cost in 1Q because we have actually made prudent changes since we expected this volatility we are seeing now. There was a highlight in the release stating there was a cost of carrying about R$11 million excess cash in 1Q, but as short-term debts are being paid down, this will tend to normalize, meaning it will tend to no longer exist. On the debt margin, the impact is not material, but I could give you some idea of how our gross debt cost is evolving. Our gross debt ended 4Q17 at 9.7%, while now, 8

9 despite the bond, it stands at 9.2%. Obviously, the basis for this is that there is a falling CDI interbank rate. So our net debt cost, which also shows the effects of carrying this excess cash, is at 10.5% and downtrending, since this cash is being spent. I hope this helped. Felipe Matsumoto: It did, yes. Thank you, Denys. Renato Hallgren, Banco do Brasil: Good morning. Thank you for taking my question. My question is about JSL Leasing. It was created in 2014 but here in this new business organization, I could not place it or identify it. How is it doing? I would appreciate it if you could tell us a little bit about JSL Leasing s strategy. Thank you. Good morning Renato. JSL Leasing is not highlighted, that s right. We eventually left it out because it is consolidated in Vamos. Bear in mind that our focus for Leasing is developing business related to our own. So in relation to trucks, machinery and equipment in general, we believe there are now companies that are interested in leasing rather than renting. With the Finame rate gone, even more so. Over the last few years, due to Finame rates, there was nothing that could compete with leasing. Now things are becoming more competitive. Another important point is that we do not see our business organization as an aggressive leasing firm in the market etc. Leasing is supplementary to our business, with a focus on rentals being converted into leasing. In the near future there may be companies who that not want leasing because they prefer renting, so we have that option too. That s why its included in Vamos. It can provide leasing services for truckers who work with JSL or any other operation of ours, whether they are using our assets or not. JSL has a prepaid card transacted through the trucker s card and it has sales in dealerships or in many cases in Movida s used vehicles, in automotive retail business of this type. So it is consolidated in the Vamos figures, as its leasing arm. That s where its numbers are consolidated. In our next release, perhaps we will separate more details of the different component parts of Vamos. Bear in mind that Vamos consists of truck dealerships, and renting out machinery, trucks and equipment, which is the main focus, the rest is supplementary in order to tap synergies; our leasing operations are part of Vamos; our Valtra machine dealerships that came with Borgato are consolidated, although Borgato s figures are not consolidated retroactively; and there are used truck outlets, which will be a new chain of used truck outlets, also consolidated in Vamos. 9

10 This chain of used outlets will be selling Vamos assets, and may sell JSL s assets too instead of having their own stores, they may starting selling so through Vamos s used stores. These are the companies whose numbers are consolidated in Vamos. Thank you very much, Renato. I do not know if I have explained that clearly or if there s a further point there. Renato Hallgren: That s fine. Thank you very much. Congratulations on the results. Leandro Fontanesi, Bradesco: Good morning. Thanks for arranging this call. I d like to go into Vamos a bit more. Looking at the 13.5% ROIC you posted in the release, that is a high number, higher than the other businesses. Could you tell us what the potential ROIC is for this business, from your point of view. Also, since you have now separated this unit, do you see it having its own management, a team for this company to have a life of its own going forward, as we have seen in the case of Movida, for example. Lastly, could you comment on how Borgato has been integrated since December 2017, so you have been operating it for nearly five months. Has this operation now been fully integrated? What did you see in Borgato in terms of the quality of its contracts and the operation as a whole? Thank you. Leandro, in terms of ROIC, this ROIC number of ours is showing a certain continuity. I would not predict any up or downside. Our ROIC has been quite sustainable. I ll leave the rest of the question for Fernando to take up. Good morning Leandro. Let s separate integration and the management team. Integration is an interesting matter. It is important to bear in mind that we (JSL) have been running these machinery, truck and equipment rental businesses for over 20 years as part of JSL. But over the last three years, we have been separating these businesses. So, we were already renting machines, trucks and equipment with or without services. All we have done now is just transfer them to a separate company. It already had its own commercial and operational managers. When you are renting with maintenance - we do not have drivers in Vamos, but we do have contracts with and without maintenance - customers are usually guaranteed a certain minimum level of availability. So we already have all this back office structure to provide this guarantee for this operation all over Brazil, so that customers can be sure of availability and maintenance. 10

11 Borgato was focused on agribusiness rentals. It was our main competitor in agribusiness, with a very efficient, fiercely competitive management, and it had been doing this for more than 20 years. And it had a network of Valtra machinery dealerships. It has two DAF dealerships, which is somewhat complementary, but insignificant in terms of their size, although important, and DAF is a good brand. So Borgato was already running this operation. So integration was very easy, because what was already there continued operating. The operations that were run by JSL, maintenance shops, back office, everything; Borgato s agribusiness operation was a well defined business - all five-year contracts so mobilizing and decommissioning is not as frequent as in other businesses that are much more accelerated. The Valtra dealerships already had their own managers running them. So the operations selling new equipment, etc. are already integrated. Management is already integrated end-to-end, including the administrative and operational parts; we have operations with their managers, with the owners of the businesses, like the MAN dealerships, we have this for each store with its owner running the business. Caio has been managing Borgato s business as a whole, managing the part corresponding to Vamos within JSL. So there is Gustavo as Chief Financial Officer (CFO). So I would say that it has its own end-to-end management of a company that is 100% independent of the Company s other businesses. I do not know if I have explained that clearly Leandro. Leandro Fontanesi: You have, very clearly. Thank you very much. Till Moewes, Schroders: Thank you for taking my question. Movida has around R$1.1 billion that is coming due until the next of year. I was wondering if you are pondering a bond issuance here. And, then, for the Group, I was wondering where do you see net by yearend, because over the course of last year it has been going up by 23%, and that is maybe not entirely what bond holders have been hoping for. That was asked in English so let me repeat it for the audience listening in Portuguese. The question was: Movida will soon have R$1.1 billion due for repayment so are there any plans to issue bonds, if I understood the question correctly, and how will our leverage be trending towards the end of the year. I will answer in Portuguese because they have simultaneous translation into English. Today we can talk about Movida s short-term investments. They could not do so yesterday, but a Material Fact has now been released. This matter has now been addressed with a firm guarantee from the banks for a volume of R$450 million, on top of Movida s existing liquidity of R$600 million. The Company total is R$2.2 billion. This means they have already practically done all their homework for the near term. 11

12 This transaction will be made in the local debenture market, I am just repeating Movida s announcement from yesterday. As to the Group s leverage, we ended 2016 at 5x and lowered the ratio to 4.4x in December We invested R$355 million in 1Q, which includes growing the business, and we kept it to 4.4x at the end of 1Q due to strong cash flows. We firmly believe that our leverage will continue on this course. I am not giving a precise number, but for sure it is significantly lower than our December 2017 level. I would like to add that since the Company works with many assets, every time there is a renewal process we have to buy before selling, so in the course of these intermediate quarters we may have some fluctuation, but our outlook for the end of the year is lower leverage, which is one of our targets. I hope this has helped, but I am available for more questions. Marcelo Burone, Debtwire:...net debt to EBITDA, I was just wondering the 4.4x. I have R$6 billion in net debt, and about R$1.3 billion in EBITDA, as per your page one. That comes out to 4.6x. I was wondering what you are using for the 4.4x. The second question relates to were you see leverage of 4.4x for the year of Do you expect that to decline? And the next question would be the adjustment, the net debt to EBITDA adjusted, how is that computed? Again I ll repeat the question asked in English. In fact, there is more than one question. I will ask him to please repeat, but for the first question he said that he cannot see how we reached the 4.4x EBITDA ratio for our consolidated net debt. To explain that, when we have R$5.98 billion in consolidated net debt, and our adjusted EBITDA that includes the last 12 months for the Companies we acquired, as stipulated in our debt indentures, this comes out at 4.4x. In fact, slightly lower. This was the first question. The third question, I think he asked about leverage again, I will ask him to repeat it in a minute, but if it is about leverage ratios, I will again answer that we are at 4.4x. We see a trend moving toward near 4x. We cannot be exact but its around this, just as a reference. So I would ask him to repeat any other question that has been missed out here. Marcelo Burone: A quick question: what is the EBITDA A definition? Does it come to 2.0x? Is that a number compared to the 3.5x covenant? 12

13 The question is about the local covenant, which is a maintenance covenant. Bear in mind that the bonds are subject to an incurrence covenant. Just to explain this clearly, we reached the 4.4x ratio using R$5.980 billion and R$1.350 billion for EBITDA. What is locally adjusted EBITDA? EBITDA A adds the cost value of the asset sold, since it is simply an accounting quantity that has no impact on cash. So our cash flow, or the Company s free cash flow is EBITDA in its traditional form plus proceeds from the sale of an asset. Bear in mind that traditional EBITDA includes the amount of the sale, which is an amount paid down, its financial value, and the accounting write down of the cost. So it does very little or nothing for EBITDA itself, but it is cash freed up that helps you meet your financial commitments. This is the nature of this local indicator. Note that this is shown on the operational level of IFRS formal cash flow. Operator: There are no further questions, so I would like to hand over to Mr. Fernando Simões for his final remarks. If you please, Mr. Simões, you may proceed. I would like to take this opportunity to tell you that we have been at work for over three years to build this new structure, to separate and transform business units into independent companies. Today is a very important time for us because it is the first time we are presenting this new organizational and business model with the key numbers separated by company and segment. This has some important implications. Firstly, we believe that by doing so we are meeting a demand coming from the market as a whole, both from those who are financing us and from our shareholders, who are so important for the development of our business model. Secondly, this is in line with our commitment to the market in general, since we are a publicly traded company, which means being totally transparent so that the market will increasingly understand our business. What is our goal in this respect? The consequence is to improve management of all our businesses for our customers, contributing to the perpetuation of the relationship and without doubt boosting profit levels for the Company as a whole. Modesty apart, note that all the businesses we are showing you, all the businesses we are operating, do have major growth potential, both Movida, which has clearly shown that the segment is being transformed, with more and more people renting automobiles 13

14 increasingly contributing to urban mobility; and our dealerships, in which our main network is Volkswagen, which has great development potential and has been transformed both in terms of average ticket and car of choice. VW has now announced that it will have 20 models by 2020, and this is the basis for our chain of auto dealerships. On Logística, an extremely important point to note that it still has idle operating capacity that is being complemented as the economy starts to pick up again, and now we have an operational base in which it is increasingly clear that we require low CAPEX and few assets since we are largely operating with separate third-party assets. This basis will develop and pose great opportunities for us. We have also worked on many urban distribution services. We have CS Brazil, for which public services increasingly want lower CAPEX so this too poses an opportunity for development. And we have Vamos, which modesty apart is uniquely well positioned and there is no other comparable company in Brazil. Why? Because of its network of truck dealerships; Vamos is Brazil s biggest network of Volkswagen truck dealerships, which means we can take in used trucks and sell them while providing leasing and rentals services through these dealerships. We have a network that now has eight used truck and heavy machinery stores throughout Brazil. We have a leasing company as part of it and a rental arm too, which is its core business, which the others are complementary but can tap a lot of synergy. All of this makes up a single company, which is Vamos, which is why I said that there is no other comparable business. As soon as Finame credit ends, the industry will be back and we want to come back on an increasingly competitive basis. These businesses that we have shown you will all be contributing to more growth for industry with the same CAPEX at lower costs. This is what leads us to believe in our major potential for transformation. As a shareholder, I would like to make it clear that I am sure that this new organizational model will make a huge contribution to our earnings and to our capital structure too. This is our main objective for this new cycle that is now beginning and we are ready to contribute to the transformation of our organizational model, but particularly our earnings and therefore our capital structure. On behalf of all of us at JSL, I would like to thank you for your time and participation and the confidence you have placed in us. Thank you very much. Have a good day everybody and God bless. Operator: The JSL teleconference has now ended. Thank you all for coming, and have a nice day. This document is a transcription produced by MZ. MZ tries to ensure the quality (real, precise and complete) of the transcription. However, MZ does not take responsibility for any failings, since the text depends on the quality of the audio and the clarity of speech of the speakers. Therefore MZ will not be liable for any damages or losses that may arise from the use, access, security, maintenance, distribution and/or transmission of this transcription. This document is 14

15 a simple transcription and does not reflect an investment opinion of MZ. The entire content of this document is the full and sole responsibility of the company that held the event transcribed by MZ. Kindly visit the Investor Relations (and/or institutional) web site of the respective company for additional important and specific terms and conditions regarding the use of this transcription. 15