Movida Participacoes SA (BSP:MOVI3) (Q2 2026) Earnings Call Highlights: Record Net Income and ...

Negative Points

• High interest rate environment continues to pressure financial results, despite operational gains.

• Average fleet age in Rent-a-Car extended to 12.5 months due to strong demand, potentially increasing maintenance costs.

• Used car sales volume declined due to fleet retention for rental demand, impacting inventory turnover and sales capacity utilization.

• SG&A expenses increased due to expansion of retail stores, with dilution expected only in coming quarters.

• Guidance for Q3 2026 net income (BRL130-150 million) is conservative and only in line with Q2, despite expected seasonal strength.

Q & A Highlights

Q: How does Movida's fleet composition compare to new Chinese car entrants, and does the depreciation rate reflect future expectations for these launches? Additionally, was the increase in net debt in the quarter due to supporting stronger vacation period demand, and should we expect a reduction in the third quarter? A: CEO Gustavo Moscatelli explained that Movida's fleet is strategically positioned with 84% of its cars being entry-level vehicles with an average balance sheet value of BRL73,000, which is significantly lower than the BRL130,000 average price of new Chinese cars in the market. This differentiation provides comfort that there is no pressure on residual values. The depreciation rate is carefully monitored monthly and already considers new entrants. Regarding the fleet increase, the company added 18,000 cars for July to cater to high seasonality and strong demand, but has already accelerated sales in July and August to optimize capital allocation. The company is gaining market share with 22% growth in rental days, justifying the strategic fleet planning.

Q: How are you balancing utilization, pricing, and volumes given the significant expansion in utilization this quarter, and do you see room for further growth or should utilization stabilize in the coming quarters? A: CEO Gustavo Moscatelli emphasized that the company's growth in market share was achieved profitably, with a 22% increase in rental days alongside a 7% price increase and a 2.2 percentage point improvement in utilization to 76.2%. He noted that there is still an upside of 3 to 4 percentage points in utilization, meaning the company can generate significantly more revenue per car with its existing fleet without increasing the number of vehicles. The company remains cautious about the macroeconomic environment with high interest rates, but its healthy leverage at 2.66x and record ROIC of 16.7% demonstrate that the strategy is working and risk is well-managed.

Q: What is the rationale behind the recent fleet expansion, and how do you view the balance between the GTF and Rent-a-Car segments given the changing return profiles? A: CEO Gustavo Moscatelli clarified that the fleet addition was purely to capitalize on seasonality, similar to the summer vacation period in December. The company saw exceptional demand during July's winter vacations with high prices and utilization rates. He emphasized that the company is using its invested capital to generate the best returns with the lowest risk. Comparing to competitors, Movida grew rental days by 22% versus 6% for competitors, and prices by 7% versus 5%, demonstrating a superior strategy. The company will continue to allocate capital where it generates the best risk-adjusted returns.

Q: What is the optimal average fleet age for Rent-a-Car, and does the recent increase in fleet age impact service costs and availability? A: CEO Gustavo Moscatelli stated that the average fleet age is currently 12.5 months due to high demand, but the company is targeting to bring it down to between 10.5 and 11 months, which is considered optimal. Despite the slightly higher average age, there has been no pressure on service costs; in fact, margins improved due to cost reduction initiatives, particularly in car servicing. The company's operational efficiency has allowed it to absorb the additional month of fleet age without issues, and reducing the age further will provide another lever for improved results.

Q: What is the company's target for the vehicle sales cycle, and what is the current installed capacity for selling used cars? A: CEO Gustavo Moscatelli explained that the total vehicle cycle is between 21 and 23 months, which corresponds to an average fleet age of about 11 months. The company has significant installed capacity to sell between 25,000 to 30,000 cars per quarter, supported by its retail network of 124 stores and new low-cost auto shop structures. The company plans to reduce the fleet age by about 1 to 1.5 months, which will increase sales volumes. The infrastructure is well-positioned to handle this increased volume without needing additional investment.

Q: Can you provide more visibility on the GTF contract profile and yield increases? Is there any change in strategy or mix that explains the higher yields? A: CEO Gustavo Moscatelli confirmed that there has been no change in the utilization profile, mix, customer size, or economic sectors for GTF contracts. The yield increase is purely a result of more diligent pricing and contract signing. The company's dedicated fleet operations account for about 40,000 cars, while the growth has been in commercial fleet with utilization of approximately 2,500 kilometers per month. The yield improvement is driven by the company's pricing model and increased discipline, not by any change in the contract mix.

Q: What are the assumptions behind the third quarter net income guidance of BRL130 million to BRL150 million, which seems conservative given the strong seasonality? A: CEO Gustavo Moscatelli indicated that the guidance is intentionally conservative and cautious given the volatile macroeconomic environment. The company prefers to provide a range it is confident in delivering, with the potential for upside. He noted that with July already closed, the number does have upside potential, and the team is focused on delivering even more. The guidance implies net income of approximately BRL400 million for the first nine months, which is already 26% above the full year 2025 net income, demonstrating the company's strong performance trajectory.

Q: What is driving the improvement in service costs per car, and why did SG&A increase as a percentage of revenue? A: CEO Gustavo Moscatelli attributed the service cost improvements to several initiatives, including the expansion of pit stop stores for verticalized maintenance, prep centers for used car preparation, and direct purchasing of parts from auto parts companies. These initiatives are generating significant productivity gains, with a 25% reduction in maintenance costs compared to external providers. The SG&A increase is primarily due to the opening of nearly 15 new stores in the quarter, most of which were opened in the first half of the year. The company expects SG&A dilution to return to previous levels within one or two quarters as volumes from these new stores ramp up.

Q: How should we think about the future trajectory of GTF yields, and what is the optimal level for the third and fourth quarters? A: CEO Gustavo Moscatelli explained that GTF rates will continue to grow as new contracts signed during the quarter carry a monthly yield of 3.7%, well above the current portfolio average of 3.2%. As older, lower-yielding contracts mature and are replaced with higher-yielding ones, the

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