Valid Solucoes SA

BOVESPA:VLID3

Earnings Call Transcript 2021-Q2

[Olavo Vaz, executive]

[Audio Gap]

conference call of second quarter '21 Valid. I'm Olavo Vaz, Head of Corporate Finance and I'm going to be moderating this event.

Before we start the presentation, I'd like to make a few important announcements. This event is being broadcast live with simultaneous translation into English and the presentation will be available on Valid Investor Relations website and also here on the webcast platform. At the end of the presentations, we will begin the Q&A session. Questions can be asked anytime during the event and should be sent through the platform chat which is located in the left corner of the page marked with a red flashing light.

We also clarify that any statements made during this video conference concerning the company's business prospects, projections and operating and financial targets are based on beliefs and assumptions of our management as well as any information that is currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks and uncertainties and assumptions because they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that the general economic conditions in the industry as well as other operating factors can also affect the company's future and lead to results that materially differ from those expressed in such forward-looking statements.

Once the announcements have been made, I'm going to introduce the participants of today's video conference. You have Ivan Murias, our CEO; Renato Tyszler, CFO and IRO. I'd like to hand over to Ivan. And at the end of the presentation, we're going to access the questions sent to the chat to start the Q&A session.

Good morning, sir. You may proceed.

[Ivan Luiz dos Santos, executive]

Good morning, Olavo. Good morning, everyone. I'd like to thank everyone for your attendance and I hope you're all well, you and your family is very healthy. I'd like to go over the highlights of our results of second quarter 2021. Next slide, please.

Even in a quarter that was partially impacted by the pandemic, especially at the end of March, during the whole period of April, Valid has the highest revenue first quarter of its history with revenue and EBITDA growth showing a strong recovery after the pandemic period. We see this dynamic in all our business segments.

In the Global Telco segment, we see stabilization of the volume plus strong result in dollar base, consequence of a better mix, especially as we have told several analysts, this is very favorable from 4G to 5G. We see this especially in U.S. where the migration is more advanced, since we still have a future that is quite promising ahead in this business vertical.

In the VGS, Government Solutions, we see a growth. April was impacted in this quarter, but in May, being our greatest issuance of documents since February 2020 before the pandemic, June better than May, and we also observed July better than June. So it's a growing dynamic and we expect that the VGS point has been dropped in the past.

In the part of smartcards, we have a strong demand based on traditional banks, fintechs. And also we noticed a migration that is quite productive of contactless products to interface products that carry a dynamic of average price and margin.

As to Digital Solutions, they account for 18% of our revenue. As you can see with the details given by Renato, we are very proud that we are no longer a company that only had digital certification within our digital initiatives to have more verticals, to pay intelligent cities and links, and contemplating our digital revenue.

And lastly, something that people asked a lot and analysts asked a lot, with our eighth issuance of debentures completed in the second quarter, we also extend our liquidity horizon. We have the same leverage levels before the pandemic and we also have the non-disbursement of cash throughout this year, being able to recompose cash in terms of operations along the year and all the initiatives of cost reduction and also turning operations more efficient.

After the highlight, I'd like to hand over to Renato, who's going to talk about all the various fronts and I'm going to be with him and the team for the Q&A session that may arise during the presentation. Once again, thank you very much for your presence. Renato? Have a good day.

[Renato Tyszler, executive]

Good morning, everyone. Thank you, Ivan. Thank you, everyone. It is a pleasure to be here with you for the first time presenting Valid's results and fortunately bringing a quarter that has quite significant evolution in our results.

We can observe here on this slide, when we see the global results of the company, that we have here results that are better than the same quarter last year, but all lines. And we have to compare this that last year we had a second quarter with a strong effect of lockdown practically all months, and this quarter we've had a strong effect or impact basically in April, and from May onwards we resume volumes. Although it is a comparison to a complicated quarter last year, we will see during the presentation the growth and all lines is something that actually this presence.

When we take South America, we see a recovery of EBITDA in the second quarter, basically because of the return of the issuance of documents. And reminding you of this portfolio part is part of the Board -- an important part of it. And when you take last year when we had a small volume because of the lockdown, we had a negative margin. And as we have a return of volumes, you will see in the part that I'll present in the Government Solutions that this margin automatically returns and then we have an increase of margin that is much higher to the percent growth in terms of revenue.

When we compare this first 6 months this year and the first 6 months last year, we have some interesting highlights. The first one then we put on our highlights is that we had in the first semester 2021 the highest revenue in the history of the company. With 2 weak months, considering -- if you take March and April, we still had a lockdown and our volume dropped quite a lot in all lines. Even considering the 2 weaker months, we were able to be successful to have a record historical revenue. This is quite interesting point.

If we look at the second semester that we hope with the situation of vaccination, more control of COVID, we won't have the 2 months of lockdown. We have very promising outlook for second semester 2021. And once again, we're going to beat the record in terms of profitability and revenue.

Another interesting point regarding our results is that we managed to bring in the first semester this year, more balance between the business units. When we look, for example, the percent of a bit of each unit, we're more balanced. This, from the standpoint of portfolio management and risk reduction, brings us a very interesting situation in terms of evolution over the period.

We also have quite strong results, strong growth in the part of smartcards in 2021. We're going to talk about it further and this has been very important for our semester results. And most importantly, everything that we're seeing here, EBITDA, impacts our leverage and we moved from 3.5x last quarter to 2.5x only once versus a reduction for 1 quarter, extremely relevant.

Let's move on to the next slide. And we will talk about our business units. To the international business unit, we have as main highlights the significant growth of our EBITDA margins. So quarter-to-quarter, year-to-year comparison. And over the year, if you see, we had a 1-digit growth in revenue. If we take the difference of foreign exchange fluctuation, it was almost flat. We had a margin expansion that was extremely significant. You can see that we've grown 42% vis-a-vis first quarter and we had practically 60% growth in the accumulated year. This is super significant growth. And we have the operating aspect top line. We're selling more products that are 5G-based, 5G platform-based where we have more -- for better performance and we have also operational aspects of logistics globally that has also brought us quite good benefit.

It's very good to see that despite the revenue not very so much, you can see that based on the volume of SIM cards sold, relatively stable. Slight growth in this semester, but we seek this constant margin improvement, and you can see the results in the EBITDA part. It's quite interesting when we see the potential to -- for the second semester, if we remember our business, especially in Telco, is global. It has a much smaller volume in Brazil and very large international volume, and it also had impact in the first semester of some countries that had more stricter lockdown. So looking at second semester, imagining that we're going to have a more appropriate situation, less lockdown, we see quite interesting prospects for Telco in the second semester, both from the standpoint of volume, revenue and margin.

On the next slide, we're going to talk about our VGS, also Government Solutions. The main highlight for the quarter was the recovery of documents, issuance of documents in 2020. We had a recovery over the year. We had to basically -- we had a second quarter that was practically zeroed, locked down. Then we started the recovery in the third quarter, and fourth quarter, we had an interesting growth. But even so, we were below the pre-pandemic period. We saw there was a potential for us to keep on growing. And then we had the first quarter this year, we had a new lockdown. We had a new drop, and then you see that in the second quarter, we recover. We get close to the fourth quarter. And then the good news is that we still have growth potential because, if we compare it to the pre-pandemic period, we still have interesting volumes for issuance that we're going to actually adopt.

So if we look at fourth quarter this year, considering that we have advanced in the vaccination in Brazil and the situation of hospitalization is more controlled, we'll have interesting potential to keep on growing this business by the end of this year.

If you look at what I've mentioned in the consolidated slide, when we observe our revenue growth, we say that we're talking about 12% first semester EBITDA. We had a 63% growth. That was direct effect of this structure that I mentioned. It's a structure that we have fixed and semi-fixed. Now on the other hand, when we expand volumes and grow revenue, we manage to dilute this fixed and semi-fixed structure, and this directly impacts our EBITDA. We see that the EBITDA growth is much higher than our revenue growth.

And just reminding you that Government Solutions business, not only based on document issuance. We had other businesses linked to the government that are in this mat, of course, in the issuance is more relevant. We have other businesses. Just to remind you that the unit of Government Solutions is actually something we try to expand in terms of portfolios.

Moving to Business Solutions. I'd say that the highlight here is strong growth of smartcards. Here, just in Brazil, this business has grown by 3 digits compared to the quarter last year and the semester last year. And if we compare to the first quarter this year, quite recent, we even still have 2-digit growth. And this is something we see that it follows the trend of this profound transformation of the Brazilian financial system with the address of fintechs, digital banks, and also the fact that the digital banks -- new banks have brought to traditional banks.

At the end of the day, people are running after positioning themselves in this revolution and smartcards is something that will have greater penetration to the population, and we meet the demands of our customers so that we can follow on with this growth that they are experiencing. We are working hard in our production unit in Sorocaba so that we can meet this growing demand. And we're also closely managing the offer of chips that is global. And we're managing this offer of chips for smartcards so that we can ensure the production and servicing our customers both until the end of '21 and throughout 2022. So VBS is very much pushed by this, and we have other businesses linked to companies, and we're expanding. And no doubt, this semester, the highlight has been the smartcards.

Moving to our Digital Unit. I'd say the main highlight of this unit has been the record of issuance of digital certificates. We have followed this trend of digitalization in Brazil or digitization. We see people advancing or moving towards the electronic online market, and this actually leads to security and digital certificates. We're growing in this area and we'll keep on growing. The pandemic has only sped up this growth that had already been happening and we're going to continue on this wave with the growth of our certifying unit.

It's important to note that we've added to our portfolio, the acquisition of 2 marketplaces, Digital Parking to see. This is important to see the evolution of this business, which has great potential when we talk about smart cities. Digital Parking is one of the drivers of this initiative. On the other hand, we also see portfolio diversification. If we look at this pie chart at the bottom right of the slide, you can see that what before was all digital certification -- Here, we have practically half of our revenue coming from other products, Valid Link, Valid Cities, a part of smart cities, Digital Parking and also the Valid Pay, which is a part of -- means of payment, and we'll keep on advancing in the third and fourth quarter. We intend to present this pie chart even more diluted, showing that our digital front is still evolving.

This is where we invest great part of our CapEx. When we talk about development, we're talking about this part of Digital where we see great future, looking at the forthcoming years. And Digital accounts for 18% of South America revenue. So we move away from talking about Digital and we start showing the results that Digital is adding to the consolidated results of the company.

On the next slide, we have net income. I think the most important point for us to highlight is that despite our having a loss in the quarter of BRL 27.7 million, if we exclude the foreign exchange effect of our intercompany agreement so -- that was made so that we could reduce our indebtedness in foreign currency, well so we have an agreement between our company here and the foreign company. If we did not -- disconsidered the foreign exchange, we would be actually on a 0 basis. And the good news is that the prospects from now on, considering that the foreign exchange should stabilize in the range we see today, will be presenting profitability as of the next quarters. This is good news when we look at net income and the possibility of dividends, distribution and compensation to shareholders.

On the next slide, our cash flow. I'd like to highlight actually the main point, which is of re-adapting our capital structure. You can see that the 2 larger blocks are loans and debentures and financing. That was the restructuring we've just completed in the second quarter and we had the outflow of cash and on the other hand, the entry or the input in the debentures and also fundraising during the second quarter. Those are the main highlights in terms of cash flow. Our cash position is very well controlled up to now.

On the next slide is a kind of consequence of the previous slide on cash flow. For the first time, you could see the situation of our debt profile. After all the operations that we had in the second quarter, we see an extension to 2021. We have no longer payments of principle to be made, 2022, second quarter. And then we've managed to extend to dilute the main -- the payment principles until 2025. So this has reassured us greatly so that we can work on our capital structure over the next years.

We had important accomplishments in the quarter since the -- in this semester, actually: the capital increase in March, BRL 99 million, some fundraising and also our issue -- the eighth debenture issue was BRL 531 million in cash in the second quarter this year. That was quite an important event, showed all the trust of the financial market regarding our company, believing in its recovery, and this recovery that we are showing very clearly on this leverage chart.

You can see that we've had 3 quarters with leverage above 3, which is totally out of the company's standard, but because of the pandemic effect to our results, we had them. And now in the second quarter, quite quickly, we moved from 3.5x to 2.5x, quite strong drop and our speech made in the previous quarters, that was a temporary period. And this is materializing. We start having leverage at a level that we would like to have, and we hope to see that until year-end, following the same trend of reduction. So this reassures us greatly to work on our capital structure for the next 12, 24 months.

Then lastly, in terms of the slide, I'm not going to go over all the items, all the developments because of COVID pandemic in Brazil. Certainly, you follow all of this in the media. It's important for us to focus on what it means to us. And here, we see quite interesting impact that we still have potential for inventory reduction in the second semester of this year and we have more circulation of people that starts happening again with that -- all our digital fronts that depend on this. We're talking about the Digital Parking, mobile, everything that involves people going to the street that we're going to benefit in the second semester, as COVID situation improves and we start seeing the old normal back to our reality. So we see a second semester with a potential that is quite interesting, quite good outlook in terms of results from now on.

So we have a summary slide here, we have the main or key messages reforesting the initial messages shared by VA. We see the growth of 17% in our revenue and 70% EBITDA growth, considering the first 6 months this year against the first 6 months 2020. On the international business, we had a 6.6% revenue growth and 60% EBITDA growth and the VGS 12% revenue growth and 68% EBITDA growth. And in the business area, we have 43% growth and for 62% EBITDA. In VDS, 45% revenue growth and 18% in South America mix.

All of that, consolidating our capital structure with the same epidemic leverage levels of 2.5x EBITDA. So we see very strong results from the standpoint of recovery. So what we said before that we would leave this crisis period in the post pandemic period stronger than we actually entered. And that will keep on happening and we're going to be stronger looking at the second semester this year and next year.

I'd like to thank you all very much. And now we can open for the questions and answers.

[Olavo Vaz, executive]

[Operator Instructions] Okay. Let's start here. We have a question from Vanessa Faro. Could you talk a bit about the plans to use the funds raised? And the last follow-on additional question, do you believe you have reached a point of inflection regarding losses with profit in the next balance sheet? Renato, could you answer this one?

[Renato Tyszler, executive]

Sure. With regards to the first question, the proceeds of the follow-on that we made, the initial goal was to expand our debt. We had very strong maturities in '21, '22 with this -- with these funding or follow-on. We extended the debt, as we've shown on the chart, and now we have more diluted debt until 2025. So this has been the main goal of the use of these funds and thus we're doing exactly as planned.

Regarding the second question, yes, again considering that foreign exchange -- as I've mentioned previously, considering that the foreign exchange rate is maintained and stable as it is now. We believe that a profit point is going to be stable and as of the next quarter, we're going to have profit in our results.

[Olavo Vaz, executive]

Next question is from Carlos Sequeira. Congratulations on your results. Could you talk about the trend of the government segment at the end of the quarter? And along the third quarter, the suit for driving this license? Has it increased or been reduced? What lines are more sought, ID or driver's license? Ivan?

[Ivan Luiz dos Santos, executive]

Yes. Actually, we have 2 viewpoints, products and geographies. And the one before slide shown by Renato, we've seen that the dynamics of CNH or driver's license is a 100% of the pre-pandemic load. This is good news, right. When you open in geographies, obviously the states that are more advanced in vaccination are even ahead or above 100% and others are below. In the mix, the news for driver's license is quite positive. And there is an even more positive news -- a piece of news. If we are on the average of 100%, all the inventory of non-issued driver's license in 2020 that are maturing, they're going to start to be reinforced as of the second semester 2021 and I think this is something that is going to be continuing until the first semester 2022.

There are conversations between the national traffic agency and the state traffic agencies to have some leniency regarding maturity that is pertinent because of the pandemic period that we've had in March, especially. But from then on, people will we called upon to renew their driver's license. That should take this level 100% above the 100% that is actually going to use the inventory we had stopped in 2020.

So in ID, we -- since ID does not mature, our understanding is that it's going to be certainly the second dose and actually, the reduction of the pandemic. We're going to have a catch-up of the ID product, RG. Second semester will be driven by driver's license. It's a long tail that could be extended to over 2021. And ID is inverse. It will be speeding up over the second semester in 2021 and then we'll have a catch-up into 2022. So we have 2 drivers that create positive dynamic and should keep on sustaining for the next 2, 3, 4 quarters quite strongly, Carlos.

[Olavo Vaz, executive]

I'm going to ask you another question, Ivan, from Andre. He's asking about the initiatives in sign and score. When do you believe to sign with the first clients?

[Ivan Luiz dos Santos, executive]

Well, so far, we've been using the lab structure very much configured the first semester this year to identify which are our sort of betting horses here. So from what you saw on the pie chart that we're natural. A bit over 50% of revenue still is from Certify Digital. We see Valid Pay, Valid Link and Valid Smart Cities gaining increasingly more space. And as we see further ahead, as Renato said, the pie chart is going to have more initiatives of Pay, Link, Smart Cities gaining space in the company. But at the same time, we're looking at the portfolio and seeing what are our battle horses, how we can optimize our portfolio.

You can notice that we have BRL 6 million EBITDA, which means that, to a certain extent, our battening initiatives that management no longer believes in, that are not going to be so interesting. With that, we gear funds to other initiatives. So at this time, we would rather keep this framework. As soon as we have a product, it may be Link, Pay, City or ID. We're going to have a more individualized viewpoint. But the most important idea, Andre, is to realize the diversification of digital initiatives, how we have growth avenues and various initiatives and not only in one.

[Olavo Vaz, executive]

Next question is from Fabio. First of all, congratulations on the figures of the quarter Valid. This -- is Valid interested in moving into digital payments itself? The other question is whether Valid has a goal for leverage debt on EBITDA for the second semester? Ivan, if you can talk about the first part of payments and then Renato can talk about leverage.

[Ivan Luiz dos Santos, executive]

Sure. First part of your question. Yes, we do have that, but from a very specific viewpoint or angle. Let me give you an example. We have very strong relationship with banks, but in terms of means of payment, coupons or payment coupons with great utilities and large customers. It's the market that is very much dominated by banks that have a product portfolio, that service these large customers to move into this. It's very dangerous because banks can manage the margin of different products, and they may even not having greater profitability in a payment product. They offset with another product they offer to these large industries. But we have a viewpoint or an angle that is quite interesting, which are closed loops one, especially the government one.

So we are concluding just now in the second semester, a year of service rendered to school materials for the City Hall in Sao Paulo. Through this avenue, we believe that we have a lot of room. First, we drive from important knowledge, which is administrative, government relations, and secondly, means of payment, but within a more closed environment. So we believe that some of those payment initiatives that we show that are gaining greater stake, higher than 10% of our revenue in this second quarter, they will gain some space if we explore this avenue. Okay, Fabio. I'll hand over to you for the second part.

[Renato Tyszler, executive]

With regard to the second part, leverage, we will not -- we are not establishing a specific leverage goal, first, with the goal of fulfilling minimum leverage level. This to us is extremely relevant. But what we're going to work on here for the next quarters is to try to evolve. We're going to have quarter-after-quarter reduction in leverage, but without necessarily establishing a goal, a specific goal. But no doubt, we want to see this evolution. We want to see it second, third and fourth quarter with an evolution regarding the second quarter, especially for us to work more -- in a more reassured way in terms of capital structure as well as new investments as of next year-end. And because of this, we need to have low leverage levels to be able to do this with confidence.

[Olavo Vaz, executive]

Question from Diego. Any reason -- specific reason for loss of margin in documents and cards when we compare that to the first quarter 2021? Could you talk about the investment focus of opportunities today? Any new projects or bids? Renato, could you answer this question, please?

[Renato Tyszler, executive]

With regards to card part, we have an increase in volume. Here, we also have basically an increase in volume of absolute margin value, but actually a reduction in percent margin. This derives from the card mix that we end up selling. So we have an evolution in the market with the card that we call a dual interface card. This card has a greater added value from the price standpoint. It gives us an absolute margin that is higher, but the percent margin ends up being a bit smaller than the simpler card margin. So when we see that, there has been a sales evolution of the interface card in the second quarter vis-a-vis the first quarter. So this has an impact in the margin aspect.

The second part, what was it?

[Olavo Vaz, executive]

Investments that we see today, if we have any new projects, any bids, tenders on the radar.

[Renato Tyszler, executive]

Perfect. Investments -- from a CapEx standpoint, we have had necessary CapEx to maintain our manufacturing operations. We have CapEx for our maintenance and we've made specific investments plans, projects that bring fast paybacks. So we assess that on a project-by-project basis. So if the payback is fast and high, we make the investment. And we've made investments in the part of digital. So the digital investment from the standpoint of people of developers, I'm talking about knowledge and product development in the digital area and also development from the standpoint of the acquisitions we've mentioned, especially of Digital Parking. So you gain a concession and then you pay for it, and then you have a contract for X years. From the standpoint of tender, we calculate, and when we see they have interesting return, we take part in them. There is nothing we can disclose now to the market. But no doubt, we are keeping everything on our radar.

[Ivan Luiz dos Santos, executive]

Diego, let me add to that question on the margins. We've -- just to add to what Renato said, in the second quarter, we also had the options program allocation that was approved in the first quarter, both the government units and business units. They are the stronger ones. They get most allocation in terms of expenses that -- it's an expenses first that attracts and retains balance of this new management. And it's a one-off expense and the part of VBS, so the Valid Business Solutions. So we have a smaller margin in cards, but we should not forget that within VBS, we have all our solutions.

So of invoice issuance, we've just completed quite successfully the migration of our Sao Bernardo operations to Sorocaba. At the end of the migration, we have various expenses that are non-recurring, that are located to this business. But as Renato said, the outlook for mid -- long term is to keep on having those operations and printing that meet the customers, that form bundles. We issue invoices for Itaú and cards. This is same thing for large banks with the consolidated operations and the plan. The non-recurring effect is reabsorbed in the second -- The outlook for our third quarter onwards is to attain better margins considering our operating efficiency. I hope to give you more clarity on the points that you brought up.

[Olavo Vaz, executive]

We have a question from Ricardo, Ivan. He is asking what are the largest impacts and opportunities of the migration from 4G to 5G for Valid, both in Brazil and in the world.

[Ivan Luiz dos Santos, executive]

Ricardo, super promising, right. In practice, this is what we've been telling the market. When the idea is always to look into the forthcoming year from 2G to 3G, it was a migration that took approximately 6 years from 3G to 4G, with a migration that took approximately 4 years. And we believe that from 4G to 5G, we still have a horizon between 2 to 3 years. It varies according to the market development. And so United States and Europe should follow this path in the next year. The other geographies should take longer, perhaps 3 years. This helps us greatly because we believe that still between 85% and 90% of the ship market is still going to happen in the traditional ship, the physical one, but we have a great improvement in terms of average price once you move to a product that is more high end.

The same thing happens to card, as Renato was saying, when you migrate from contactless to the interface. We believe that with the migration of 5G in addition to the churn and volumetric sustainability, we have an important improvement of average price considering quality and higher band product.

[Olavo Vaz, executive]

We're moving on to the last question from Gabriele. Renato, Gabriele would like to get more details on the agreements, the intercompany agreements.

[Renato Tyszler, executive]

Okay. So what have we done? We had debt abroad from one of our companies, which was -- which is Valid Spain, so in local currency. What we did when we restructured the debt in the second quarter, we took a bit of the weight of our debt in foreign exchange, in foreign currency, and we actually have the debt in reais. We have approximately 25% indebtedness in foreign currency, and before that, we had approximately half-half. What was -- has been done. Actually, the money that we had from the fundraising in Brazil of the eighth debenture issuance and increase in capital, part of this, we actually had this loan with our Spain company, for example, and we made the pre-payment of the debt that we had in foreign currency.

So therefore, we eliminate the debt in foreign currency, and we are in debt in reais. So that was -- that's why we had a change half and half to about 25% of indebtedness in foreign currency. This is the loan agreement that we've had. And what happens with that. Since it is a kind of accounts receivable abroad once the real is appreciated, we have a loss, unlike what people are usually used to seeing when you have a debt. When you have a liability in foreign currency and real is appreciated, you have an improvement in net results. In our case, it's the opposite.

Now for example, that real is depreciating, considering foreign currencies, in this third quarter vis-a-vis second quarter, we see a positive result of foreign exchange fluctuation in financial results. But once again, this is not cash. This does not bring us any concern. This is just an accounting aspect of foreign exchange that we bring.

[Olavo Vaz, executive]

So this was our last question in our Q&A session. Ivan, I hand over to you for your final remarks.

[Ivan Luiz dos Santos, executive]

Okay. I'd like to thank you all very much for your presence to reinstate the 3 main messages of our earnings result conference of the second quarter today. We -- first, we've been able to present consistently growing results of approximately BRL 50 million. First quarter, EUR 61 million. Second quarter, now BRL 70 million, almost BRL 71 million, which point-to-point makes a difference of almost 40% in the past 3 quarters, especially in this management group currently in the company. Obviously, we do not control the macro and the political and macroeconomic variables, but the point of inflection is behind, and we can actually proceed observing the company from July, gaining a new dynamic in terms of results generation.

Second important point is the theme of the various drivers of result generation that's not very well approached. We see the Global Telco business doing quite well with over 100% EBITDA now compared to 2020, and with the projection of having a result of 100 -- approximately BRL 100 million EBITDA full year. This is quite a significant result for our global business unit that naturally gives us a hedge in foreign currency that is quite interesting. This is a super important driver. And not also went over the other ones, the recovery of VGS, as was the question of kind of here recovering, the issuance of documents of VBS business. Solutions very much impacted by card. And also, we see the dissemination of revenue, the generation in the digital products with the orchestration of a better word and the initiatives and where we're going to bet our ships, and we have a positive EBITDA, the digital initiatives that should be there. And it's very good when we conciliate everything and actually generate positive EBITDA in those initiatives.

And lastly, I think the third message is the liquidity itself. Getting back to pre-pandemic levels with no payment of principal in the forthcoming months in 2021 with cash generation that is consistent, and various initiatives of verticalization in the company. So this leads us to a positioning, and some questions have been towards the end of the year, earlier next year, to have cheap pockets for us to keep on putting money in the initiatives that are going to represent growth avenues for the company. So consistently growing results, various result generation drivers for revenue and liquidity going to the pre-pandemic period, should be the main takeaways of our conference call today.

I'd like to thank you all very much for your participation and have all our IR team, Olavo, Renato, everyone, executive management available to you. If you want to go into details and individual sessions, if you think it is timely and necessary. Thank you all very much for your presence. Have a good day and see you next one.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]