Log-in Logistica Intermodal SA

BOVESPA:LOGN3

Earnings Call Transcript

[Operator]

Good day, everyone, and welcome to Log-In Logística Intermodal conference call to discuss second quarter and first half 2020 results. [Operator Instructions] This conference call with the slide presentation is being broadcast live over the web on the company's website at www.loginlogistica.com.br/ri. In case you do not have a copy of Log-In Logística's release posted on Monday, August 10, after B3 trading hours ended, you can download that at the company's Investor Relations website.

With us today are Mr. Marcio Arany, CEO and Transformation and Innovation Officer; Gisomar Marinho, CFO and IRO; Mauricio Alvarenga, Commercial Officer; and Ilson Hulle, Terminals Officer. They will be presenting the company's performance and the main highlights of the quarter. They will then be available to answer your questions.

Mr. Marcio Arany, you may begin.

[Marcio Da Cruz Martins, executive]

Good day to all. I am Marcio Arany, the new CEO of the company. I would like to thank everyone for joining us on this conference call to review second quarter results of Log-In Logística Intermodal.

The second quarter of 2020 presented double challenges for Log-In given the whole process to face the COVID-19 pandemic. Several actions adopted last quarter as well as the lessons learned along the way were fundamental for the company to continue to operate fully its terminals as well as all its shipping services, thus contributing to the logistics needs of our customers. And since our main value was safety, we executed all of our activities, ensuring the health and safety of our people, either working from home or in our operations.

Moving to Slide 3. I would like to highlight some results of the second quarter. We had a positive consolidated EBITDA of BRL 57.5 million, down from BRL 76.5 million in Q2 '19. However, if we exclude nonrecurring events, second quarter 2020 adjusted EBITDA is BRL 67.7 million against BRL 54.4 million in Q2 '19. In other words, up 24.4% year-on-year, showing extreme resilience of our operations.

Coastal shipping posted a positive EBITDA of BRL 59.2 million in the second quarter of 2020 against BRL 69.2 million in Q2 '19. Comparing adjusted EBITDA without nonrecurring events, Q2 '19 EBITDA would be BRL 47.1 million, posting a marked growth of 25.7%. Later, our CFO will comment on these comparisons. TVV's EBITDA remained resilient at BRL 19.3 million, down only 6% year-on-year.

Another important point to highlight is that we successfully completed the third debenture issue on June 10, 2020, raising BRL 71.4 million, with final maturity in May 2025, with the goal of reestablishing the cash position of the company due to the acquisition of Log-In Endurance vessel. I would also like to highlight the start of operation of the vessel Log-In Endurance on May 1, 2020, in the Atlantic South Service, SAS. With that, the company concluded the fleet recomposing plan and now operates and owns 100% of its fleet with 6 own vessels.

I now turn the call over to our CFO, Gisomar Marinho, to present our Q2 2020 results.

[Gisomar Marinho, executive]

Okay, Marcio, thank you. And I wish a good day to everyone joining us on this call. We begin on Slide 3 with the company's highlights for 2020.

Actually, forgive me, we begin on Slide 4 with the company's consolidated net operating revenue, NOR. In the second quarter, NOR totaled BRL 234.6 million, down 13% compared to Q2 '19, considering that this was a quarter affected by the slowdown in economic activity caused by the COVID-19 pandemic. In the first half of 2020, net operating revenue, NOR, was BRL 505.9 million, practically flat compared to first half of 2019.

The NOR reduction can be explained basically by the following factors: a weaker vehicle transportation activity between Brazil and Argentina; using roll-on, roll-off vessels; and lower container volume of coastal shipping and TVV due to economic activity restrictions because of the pandemic. And NOR was positively impacted in the quarter by a successful commercial strategy focused on absorbing volumes from the industries less affected by the pandemic, such as food and beverages, hygiene and cleaning and pharmaceuticals and the positive impact of U.S.-denominated revenues in the Feeder and Mercosur segments, given the depreciation of the Brazilian real in the period.

Please go to Slide 5 for our...

[Operator]

Sound cut. We have a sound cut. Please hold. Please hold.

[Technical Difficulty]

[Marcio Da Cruz Martins, executive]

This is Marcio Arany again. Gisomar lost connection, so I will continue with the presentation while Gisomar reconnects.

I'm on Slide 5. We have the consolidated cost of services rendered. In the second quarter, CSR was BRL 162.2 million, down 14.5%. And this reduction was mainly due to the following factors: lower chartering costs of roll-on, roll-off vessels to transport vehicles due to lower volumes; and efficiency of operations and negotiations with the suppliers to mitigate the impact of the pandemic.

In the first half of 2020, cost of services rendered, CSR, was BRL 376 million, up 4% over first half '19. And this increase can be explained by the factors such as increase of running costs due to the start of operation of the company's proprietary vessels, Log-In Polaris in December 2019 and Log-In Endurance in May 2020; costs with additional vessel, chartered vessel, Bomar, until mid-March for the maintenance of vessel Log-In Jatobá; and CSRs will increase because of bunker average price, 16.2% higher in first half '20 when compared to the same period of the previous year.

[Gisomar Marinho, executive]

Marcio, I'm back.

[Marcio Da Cruz Martins, executive]

Okay. So I turn the floor back to Gisomar.

[Gisomar Marinho, executive]

Thank you, Marcio. And I apologize, my phone connection crashed, but I'm back.

Now moving to Slide 6, we present the company's consolidated operating expenses. In Q2 '20, operating expenses totaled BRL 26.2 million, up 1.2% year-on-year. However, there was a nonrecurring expense of BRL 10.2 million recorded in Q2 '20 due to the early recognition of the company's first program of the second stock option plan with no cash impact. Excluding this event, operating expenses would have fallen by 38.2%, mainly due to measures adopted to reduce general and administrative expenses with a view to mitigate the effects of the pandemic.

In the first half of 2020, operating expenses fell by 5.4% to BRL 40.3 million against the first half of last year. Lower operating expenses are explained by the reduction in G&A expenses, reversals of legal contingencies and recognition of PIS/COFINS, which altogether have surpassed the negative impact of the nonrecurring expense of BRL 10.2 million, as mentioned.

Please go to Slide 7. Here, we break down the company's AFRMM to separate the period or the current AFRMM from noncurrent AFRMM, in other words, extra AFRMM. Current AFRMM revenue amounted to BRL 11.3 million, up by 79.4% in Q2 '20 over Q2 '19. In the first half of '20, AFRMM, current AFRMM, was BRL 21 million approximately, up 62.3%. In 2019, there was the recognition of a nonrecurring AFRMM from a lawsuit decided in favor of the company in Q2 '19 of BRL 15.9 million and of extemporaneous AFRMM accounted for in Q1 '19 of approximately BRL 7 million.

Well, this increase in AFRMM revenue in Q2 '20 was due to the start of operation of our own vessels, Log-In Polaris, in December 2019, and that brought up AFRMM increase, and of Log-In Endurance, which started operating on May 1, 2020. And it started recognizing AFRMM in the months of May and June. Such vessels replaced 2 chartered vessels that did not generate AFRMM. Currently, 100% of the company's fleet is composed of 6 own vessels, which can generate AFRMM.

Now moving to Slide 8, please. Here, we present Log-In's consolidated EBITDA and adjusted EBITDA. In the first quarter of 2020, adjusted EBITDA was BRL 67.7 million, up 24.4% when compared to first quarter 2019. Adjusted EBITDA margin was 28.9%, growing 8.7 percentage points. In the first half of 2020, consolidated adjusted EBITDA was BRL 120.9 million, up approximately 3%, with adjusted EBITDA margin of approximately 24%, up 0.8 percentage point.

Now moving to Slide 9 for the company's financial performance. In Q2 '20, the financial result was a negative BRL 43.1 million compared with a negative BRL 36 million in Q2 '19. This result was impacted by a negative currency variation of BRL 22.5 million due to the depreciation of the Brazilian real in Q2 '20 of 5.4%. In the first half of 2020, the financial result was a negative BRL 180 million approximately versus a negative BRL 65.2 million in the first half of 2019.

In this quarter, the negative currency variation of BRL 140.4 million was due to a strong depreciation of the Brazilian real of 36% along the first half of 2020. It is worth pointing out that this is basically an accounting impact. The cash effect on the amortized debt in the first half of 2020 was only BRL 800,000. The currency variation is mainly related to long-term financing with BNDES ending in 2034, whose installments are indexed to the U.S. dollar in the amount of approximately BRL 452 million for the construction of vessels and other liabilities such as container lease contracts and a sale and leaseback obligation.

Now moving to Slide 10. We see a comparison of our consolidated income statement for the second quarter and first half of 2020. Log-In's net operating revenue totaled BRL 234.6 million in the second quarter of 2020 and approximately BRL 506 million in the first half. In Q2 '20, EBITDA totaled BRL 57.5 million, and adjusted EBITDA was BRL 67.7 million, as previously mentioned. In the first half of 2020, EBITDA amounted to BRL 110.7 million, with an adjusted EBITDA of approximately BRL 121 million.

In the second quarter of this year, we posted a loss of BRL 14.8 million due to a nonrecurring expense of BRL 10.2 million and a negative foreign exchange variation of BRL 22.5 million. In the first half of 2020, we posted a loss of BRL 129.4 million due to the previously mentioned nonrecurring expense and a passive foreign exchange variation of BRL 140 million occurred in the first half.

On Slide 11, we present our EBITDA by business and the explanation of adjustments given the nonrecurring events. We can see on the table that Q2 '20 posted an EBITDA of BRL 57.5 million, which was impacted by a nonrecurring expense of BRL 10.2 million related to the early recognition of the company's first program of the second stock option plan, as we have explained before. Excluding this event, adjusted EBITDA was BRL 67.7 million compared with the Q2 '19 adjusted EBITDA of BRL 54.4 million, BRL 15.9 million due to the recognition of AFRMM lawsuit ruled in favor of the company and BRL 6.2 million related to IFRS 16 cost adjustment, representing a 24.4% increase in comparable basis.

In the first half of 2020, adjusted EBITDA totaled around BRL 121 million compared with an adjusted EBITDA in the first half of 2019 of around BRL 170 million. BRL 23 million stemming from the nonrecurring AFRMM recognition that we mentioned before, representing a 3.1% increase in comparable basis.

I now turn the floor to Mauricio Alvarenga, our Chief Commercial Officer.

[Mauricio de Alvarenga, executive]

Thank you, Gisomar. Good day, everyone. I am Mauricio Alvarenga, Chief Commercial Officer, and I will comment on the coastal shipping business in greater detail.

So please go to Slide 12. On the left chart, we posted an 8.4% reduction in container volumes handled in Q2 2020 over Q2 '19. In the second quarter, we felt a direct impact from the pandemic, especially in the segment of durable goods, such as automobiles, electronics and home appliances. Although the demand for general cargo handling dropped more than 40% in the quarter, cabotage was shown to be a favorable option for industries to maintain their logistics working and also to control their costs in such a challenging moment. In the half year, we posted a negative variation of 2.8% in volumes handled.

Moving to Slide 13. The NOR, net operating revenue. In the chart on the left, we can see the variation in container NOR, which, despite a reduction in volume observed in the previous slide, showed resilience in the second quarter, very much in line with the NOR of the previous year, up 5.2% in the first half of 2020, increasing from BRL 337.9 million in the first half of 2019 to BRL 355.4 million in the first half of 2020. As for the container NOR, the highlight goes to a higher NOR per TEU, up 8% in the quarter. U.S.-denominated revenues, Mercosur and Feeder, contributed to this increase.

On the right-hand corner, we have the evolution of the total coastal shipping NOR, including vehicle transportation revenues. The 11.9% reduction in the quarter stemmed from lower vehicle transportation activity between Brazil and Argentina segment much impacted by the pandemic.

Moving to Slide 14. Here, we bring you a graph with the evolution of the contribution margin of coastal shipping since the first quarter of 2019. We're talking about NOR minus variable costs of the business. The depreciation of the Brazilian real vis-à-vis the U.S. dollar, together with the ongoing work to improve the mix of handled cargo, had a very positive effect on coastal shipping profitability, which posted a contribution margin of 64.2% in the second quarter of 2020, the best result since then.

Moving to Slide 15, please. The graph shows the evolution of average bunker fuel price in the last 2 years. We can observe a significant increase in fuel price starting in September 2019, reaching a peak in the first quarter of 2020. Then we saw an abrupt drop in February of this year as the pandemic intensified around the globe, with a resulting reduction in fuel consumption on the back of social isolation. We maintained our commitment to our customers to adjust the bunker rate on a quarterly basis. As you know, we expect a gradual recovery of bunker price according to the evolution of oil prices.

Please go to Slide 16 for a detailed view of coastal shipping EBITDA. Coastal shipping EBITDA totaled BRL 59.2 million in Q2 '20, down 14.5% in the yearly comparison. Here, it is worth highlighting the adjusted EBITDA. If we exclude nonrecurring effects from AFRMM and IFRS 16 in the leasing of containers, which positively affected EBITDA in Q2 '19, adjusted EBITDA in Q2 '20 was 25.7% higher. In the half year, adjusted EBITDA totaled BRL 102.4 million versus BRL 100.2 million in 2019, up 2.2%.

Going to Slide 17. In the graph, we detail the EBITDA evolution comparing second quarter '20 with second quarter '19. From left to right, I highlight 2019 nonrecurring effects, which contributed to a second quarter 2020 EBITDA of BRL 69.2 million. In the second quarter of 2020, the lower NOR as well as lower total fixed costs resulted mainly from lower volume of vehicles transported. Here, it is worth of note, the G&A reduction, which positively contributed to the EBITDA.

Moving to Slide 18. This graph details EBITDA evolution in the quarter. We detail EBITDA's evolution comparing the first half of 2020 with the first half of 2019. From left to right, please note that NOR in the half year was BRL 6.4 million higher than the same period of 2019, and EBITDA was BRL 102.4 million, in line with 2019, if we exclude nonrecurring effects of the first half of 2019.

Lastly, I would like to speak about COVID-19 in our coastal shipping business. Without a doubt, we had an atypical quarter, with partial or almost total social isolation in some regions of the country. Many of our customers decided to put their employees on collective vacation or halted their operations. Even in this adverse scenario, our coastal navigation business proved to be strong and resilient. In this period of crisis, we were able to accelerate the process of cargo conversion and won new customers coming from the road modal. In the next quarters, we will continue strong and our purpose to contribute to the development of a more efficient and sustainable transportation matrix in Brazil.

I now turn the conference over to Ilson Hulle, our Terminals Officer.

[Ilson Hulle Filho, executive]

Thank you, Mauricio. Good day, everyone. It is a pleasure to be here once again in this conference call to share with you the good results of the Vila Velha Terminal, TVV.

Q2 '20 was challenging. Just like the global port sector, TVV did suffer the impact of the pandemic on its volumes given the strong retraction of global trade during this period. But I would also like to highlight that our business showed strong resilience in its financial results on the back of a series of actions employed as soon as we realized that a possible crisis was coming. Our team worked as hard as ever. We identified new opportunities. We reinvented ourselves and innovated. And the consequences are presented here.

On Slide 19, I present the performance of TVV. In Q2 '20, we handled 38,400 containers in lower volume compared to Q2 '19. Nevertheless, it is worth noting that in the second quarter of 2019, we were in a completely different economic situation compared to now.

Looking in greater detail, we see in the quarter a strong impact of COVID-19 on the U.S. economy, which led to slowdown in the shipping of granite slabs to that destination, one of our main export products. It is important to highlight also that the slowdown was concentrated in Q2 '20, and that with the reopening of the U.S. economy, we already see a strong resumption of this business.

We also benefited by good volumes of coffee exports to Europe, United States and Asia, which contributed to mitigate the impact of the crisis. It is worth remembering, as I mentioned in the first quarter conference call, that we are living a good moment in the business of coffee exports in the Espírito Santo region. Harvesting should finish with record volumes and consumption was shown to be stable. International prices are above average of the last few years, and the current exchange rate favors the local producer. Our expectation is that these volumes will continue strong in the second half of the year.

In the graph on the right, referring to general cargo handled. The second quarter of 2020 also presented a reduction compared to second quarter '19. Again, I must stress, in the second quarter of '19, we were in a completely different situation compared to now. In addition, we operated volumes of steel products at TVV last year. And this year, these same volumes and projects are concentrated in the second half of the year.

I also highlight that our exports to Asia of granite blocks remain stable in the year-on-year comparison and without feeling a great impact of COVID-19. And to conclude, I highlight our efforts to capture a new bulk and general cargo business in the second half of the year when there should be a concentration of these volumes in a scenario of economic recovery globally.

Going on to Slide 20, we see the evolution of TVV's net operating revenue, which in the second quarter was BRL 43.6 million, down versus Q2 '19. This drop stems directly from a reduction in our handling activities because of the pandemic, as previously explained. On the other hand, we were able to offset this reduction in revenue with some initiatives to cut down costs and expenses. And TVV's EBITDA was almost in line with last year's EBITDA. We'll detail this on the next slide.

On Slide 21, we show you TVV EBITDA, which was BRL 19.3 million in Q2 2020, down by only 5.9% compared with Q2 '19. Here, I must highlight the huge effort made by our team to reinvent our business and seek opportunities to reduce costs across the board during new projects with a focus on increasing productivity. These efforts led to great results already accounted for in this quarter.

I should also stress that when we look at TVV's financial results in the first 6 months of the year comparing with last year's first 6 months, our EBITDA was 12.4% higher, which shows the strong resilience -- the strong strategy to diversify TVV's business and the strong resilience of the business in this extremely challenging year.

Lastly, I want to highlight our EBITDA margin, which in Q2 '20 was 44.3%, 6.7 points higher than a year ago. And when we look at the first 6 months of the year, we see an EBITDA margin of 50.6%, 9.6 points higher than that of the first 6 months of last year, again, showing the resilience of this business.

On Slide 22, I detail even more what I've just said. I present TVV's EBITDA's evolution comparing second quarter '20 with second quarter '19. The highlight goes to our cost of services rendered, CSR, of around BRL 8.2 million, which contributed to -- contributed significantly to our good EBITDA in the quarter, which was one of the most challenging ones ever.

I now turn the floor back to Gisomar. Thank you.

[Gisomar Marinho, executive]

Thank you, Ilson. Now moving to Slide 23. We present the company's indebtedness. Gross debt of Log-In is BRL 1,430,000,000, and net debt amounts to BRL 771.3 million, with an average cost of 5.9% per annum. Log-In's indebtedness continues to be long term, with only 7% of the debt maturing in the short term. In other words, 93% of the company's debt is long term.

The dollar -- the percentage of dollar-denominated debt in a loan for the construction of vessels from BNDES was 32%, given the foreign change depreciation occurred in the second quarter of 2020. In June 2020, Log-In completed its third issue of debentures, raising BRL 71.4 million, with a 5-year period to rebuild the company's cash, given the acquisition of Log-In Endurance vessel, which happened in the first half of this year.

Please go to Slide 24. Here, we present Log-In's leverage in Q2 '20. The ratio was 3.2x, given the increase in gross debt, given the impact of the U.S. dollar, as mentioned before, and the reduction of last 12 months EBITDA. However, the trend is that this level of leverage will be reduced in the coming quarters.

Now moving to Slide 25. We present the subsequent events. We have a new CEO. In June 2020, the Board of Directors appointed Mr. Marcio Arany Da Cruz Martins to be the CEO, Chief Executive Officer, of the company as of July 1, 2020, replacing Mr. Marco Antonio Souza Cauduro, who remains as a Board member.

Marcio Arany is an engineer with more than 30 years professional experience in operations, transport and logistics. In the last 6 years, he was Log-In's Chief Commercial Officer and Transformation and Innovation Officer. In June 16, 2020, Fitch Ratings Brazil assigned, for the first time, the BBB+ rating with a stable outlook for the company. In other words, the corporate rating of the company is now BBB+ with a stable outlook.

With that, I end my presentation, and I turn the floor back to Marcio Arany.

[Marcio Da Cruz Martins, executive]

Thank you, Gisomar, Mauricio, Ilson. We will now open the floor to questions. We are all available. Thank you.

[Operator]

[Operator Instructions] First question from Osmar Camilo with Goldman Sachs.

[Osmar Camilo, analyst]

I have 2 questions, quick questions. How do you see revenue per TEU for the third quarter, given that higher added value products are now picking up again and they can contribute to growth in the quarter -- in the next quarter? In addition, regarding volumes, how do you see the recovery of volumes in the third and fourth quarter? And I would have a subsequent question. I'd like to have an update on the [ BR ] of the Sea.

[Unknown Executive]

Thank you for the question. Regarding revenue, future revenue, what we have seen is a consistent resumption of revenue volumes. If we zoom in the second quarter, April was worse than May. And May improving, so we see a resumption going back to, we should say, normal levels. This is what we are seeing.

And this stems from 2 things. One factor you mentioned, yes, we're improving the cargo mix. We see a more -- the different and traditional cargo mix. And also, volumes are picking up. A lot of the companies that halted operations for a month in May, they resumed activities, and they are starting to ship their products.

Regarding the highway of the sea or [ BR ] of the sea, well, we've heard a number of things about it, about the highway of the seas, many versions. Our opinion on that is that it will be positive. We believe that the highway of the sea will come to help coastal shipping companies and the modal, particularly Log-In.

Our 2 main competitors are international carriers operating in Brazil. Log-In is a smaller player. But from what we heard, one of the goals to be met by the highway of the sea, Log-In will be more competitive in this scenario.

[Operator]

Next question from Gustavo Teles with Itaú.

[Gustavo Teles, analyst]

Well, to begin, congratulations on the results and congratulations on the new format of the release. I think it looks really good.

I'd like to understand, and perhaps a follow-up question to the previous one, how do you see specifically demand from São Paulo and Mercosur? How do you see the impact of these markets on the margin? Do you have a more optimistic expectation towards the next quarter, more towards normality?

And I think that in terms of cost, you did excellent work. When we look at cabotage, variable costs performed really well. So I'd like to understand, were these initiatives to offset this moment, this difficult moment of COVID-19? And how much of the cost reduction could be considered perennial?

[Unknown Executive]

Gustavo, thank you for the questions. To answer the question, I'll turn the floor to Mauricio Alvarenga.

[Mauricio de Alvarenga, executive]

Gustavo, well, let me try to speak about demand. You asked about that. I think that in line with what Marcio answered in the previous question, I think it's worth noting that in the second quarter, in particular, we had to work strongly to absorb new road modal cargoes, particularly in those segments that were less impacted by the pandemic. And that made us change a little bit our client base.

This is true. With the resumption in -- with a good outlook of resumption in the second half of the year as the economy rally, as the industries resume their activity, we will go back to a somewhat normal reality. And this demand that we captured along the second quarter will contribute to our work to improve the cargo mix. So along the second half of the year, we'll continue that kind of work considering the demand that we already had and demand in the second half.

As for the Mercosur, this is more of a delicate topic because Argentina has a fragile economy. We have seen some indicators about the Argentine economy, which are not that good. We have a good client base. But we look at Argentina with more care in terms of expecting better volumes.

You asked about costs. We have been doing intense work across the board to control costs with our partners as well. As we had difficult moments in Q2 '20, we brought in our partners to this discussion. We worked together with them to ensure competitiveness of our cargoes in the modal. Of course, along the coming months, we'll have to revisit everything and see how the outlook will be, and we'll work with our partners accordingly. I don't know if I answered your question, but this is what I can say for now.

[Gustavo Teles, analyst]

No, this was perfect. And if I may ask a third question, how do you see the competition of the road cargo transportation? There's a lot of idle capacity. This modal was very much impacted. Have you seen this translated into pressure on prices when carriers are seeking to have more volume? How do you see competition on their end?

[Unknown Executive]

Well, I guess, there are 2 ways of looking at the situation. First, it is true, Brazilian highway fleet was idle in the second quarter. And of course, that leads to competition. On the other hand, coastal shipping, cabotage shows a good competitiveness level compared to highway transportation. So as much as road transportation will act, we believe that this will be a short-term action.

In the long term, it will not have an effect competing with coastal shipping. Coastal shipping is more advantageous when we consider longer stretches. But yes, in the short term, there might be fiercer competition. But this, I believe, will be a short-term effect.

[Gustavo Teles, analyst]

Great. Excellent. And if I may, 1 more question regarding ICMS. There was a discussion about reduction of ICMS in some states, but that discussion didn't advance much. And I know that some states want to take this agenda forward. And I would like to know if there was any progress with local producers other than Petrobras?

[Unknown Executive]

Gustavo, you're talking about ICMS of fuel, right?

[Gustavo Teles, analyst]

Yes, exactly.

[Unknown Executive]

Okay. What we have seen is that this theme have not advanced much in the agenda of the highway of the sea. You're probably following this. We don't have an expectation regarding that item of the highway of the sea. But we do see initiatives of some states because ICMS is a state tax. So the example would be the states of Pernambuco and Espírito Santo with some initiatives in that sense. And we said this with good eyes. If that comes to fruition, it will contribute to some regions, particularly the state of Pernambuco and the state of Espírito Santo. Of course, we need to have Petrobras offering of products. Petrobras does not offer products in all regions, so we need the states to work with Petrobras to offer products so that cabotage can supply these regions.

[Operator]

Our next question comes from Alexandre Kogake, Eleven Financial.

[Alexandre Kogake, analyst]

My first question would be on the bill of law proposed by Senator Kátia Abreu. Then you have rebuilt your cash position after the acquisition of the Log-In Endurance vessel. What are the expectations regarding investments and the use of cash in the coming quarters?

[Unknown Executive]

Thank you for the question, Alexandre. Regarding the bill of law by Senator Kátia Abreu, expectation is that Kátia Abreu and the federal government will come to some kind of understanding regarding a joint action. But we don't have a lot of visibility regarding the final draft of the bill of law. I think that Senator Abreu wants to increase the competitiveness of the modal, and we believe that this will end up being beneficial for Log-In, as I mentioned.

Regarding our cash, the recomposing of our cash position and investments. Like we said, we issued debentures to rebuild our cash considering what we spent with Log-In Endurance. And we are always open to investment opportunities. We don't have anything established. We don't have a clear target. I want to make this clear to everyone. But Log-In is always open to opportunities that will generate synergies, synergies with coastal shipping activities or synergies with new markets as opportunities arise. So the follow-on proceeds will be used for expansion. This is clear, and it is earmarked in Log-In.

[Operator]

We received some questions over the webcast. Some of them have been answered. Excuse me, would you like me to read the questions?

[Marcio Da Cruz Martins, executive]

There's no need. There's a question about the follow-on. We've talked about the Brazil, Argentina market. There is 1 question here related to the ports law. This might be an interesting question to mention. This is a question by [ Dimitri Matoszko ]. And I will turn the floor to Ilson to answer.

[Ilson Hulle Filho, executive]

Thank you, Marcio. The questions sent by [ Dimitri ] has -- recently, Congress approved MP 945, which changed the ports law. I'd like to understand the consequences of this change for Log-In. What can impact Log-In's operation? And what would be the positive and negative impact?

Again, [ Dimitri ], thank you for the question. I would like to highlight that the Senate approved on July 30 a bill of law to convert the NP into a law. But this is awaiting President Bolsonaro's approval. He hasn't done it yet, so we are waiting. Provisional Measure 945 was edited in April of this year, and the main goal was to mitigate the impact of COVID-19 pandemic in Brazilian ports. And I think that this was quite relevant given that we were going through the pandemic, and this came to preserve the health of port workers.

After the addition of this provisional measure, a number of changes were made at TVV to ensure the health and safety of our port workers in accordance with the provisional measure, such as removing from operation workers in the risk group, over 60 years of age with comorbidities, that could be at additional risk. And the provisional measure, MP, was established, that if these workers were taken home, that they be paid well at home. And we complied rigorously with what was set forth in the MP.

And in Espírito Santo, we signed an unprecedented agreement with the port authorities to help pay these workers who were quarantined at home. And this MP also guaranteed that the port of Vitória and the Vila Velha Terminal, in particular, could operate full time since the beginning of the pandemic. So the Vila Velha Terminal never interrupted its activities, not 1 day since the beginning of the pandemic, which ensured the supply of the region where TVV operates in terms of imports, exports and cabotage business, thus ensuring the supply of food and economic activity in the Southeast region.

We are still waiting for the ratification by the President this MP became a law. And during this process of voting and debate at the Senate and lower house, a number of other measures were added. And this was a mini reform in the law of ports, and we are now anxiously awaiting the benefits of this change. Basically, some new measures were included in the law to create more competitiveness of public ports compared to private ports, so some leasing and concession rules were -- became more flexible, making public ports more competitive.

And this is the expectation. TVV's considered a public port, and we are anxiously awaiting the approval of this law by President Bolsonaro. Thank you for the question.

[Operator]

As there are no more questions, I turn the floor back to the company's management for their final statements. Gentlemen, over to you.

[Unknown Executive]

Well, some final messages. First, we continue with our business strong and providing very positive results. We had a critical quarter, but we can see that operational -- from the operational standpoint, we are doing quite well.

Second, take home message. Our team remains motivated and safe, working from home and following all the health and safety criteria.

And finally, I would like to thank all of you for joining us in this conference call. I wish you all to remain safe and healthy and collaborating with social distancing so that we can come -- go back to a normal situation as quickly as possible. Thank you very much, and have a good day.

[Operator]

Thank you. This concludes Log-In Logística Intermodal conference call. Please disconnect your lines, and have a good day.