Cosan S.A. ADS

Good morning, everyone. Thank you for waiting and welcome to COSAN's first quarter earnings release video conference call. Simultaneous translation will be available during the session by clicking on the interpretation button at the bottom of the screen and choosing your preferred language, Portuguese or English. Those listening to the video conference in English, you have the option to mute the original audio in Portuguese by clicking on Mute Original Audio. The video conference is being recorded and will be available on the company's IR website at cosan.com.br. You can also download the presentation through the chat icon, also in English. During the company's presentation, all participants will be on a listen-only mode. The question-and-answer session will start after the presentation. Please note that the information contained in this presentation and in the statements that may be made during the conference call regarding call zones, business prospects, projections, and operating and financial goals constitute the beliefs and assumptions of the company's management, as well as information currently available. Forward-looking considerations are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore depend on circumstances that may or may not occur. Investors should know that overall economic conditions, market conditions and other operating factors may affect Cozen's future performance and lead to results that differ materially from those expressed in such forward-looking statements. I will now turn it over to Mr. Rodrigo Araújo.

Good afternoon, everyone. Welcome to Covenants.

Good morning, everyone. Welcome to our earnings call for the first quarter of 2024. I'm Rodrigo Araújo, CFO of Cozum, and I'm here to go over the main highlights of the quarter and some details in terms of strategy and management priorities. So, starting with our priorities for the year, as we've been constantly reinforcing, we were highly focused on discipline and capital allocation, being, of course, mindful of our leverage at the holdco level and the upcoast. and also with the high interest rate environment that makes our capital allocation decisions and discipline even more important. So we're focused on liability management and portfolio recycling throughout the portfolio. We've been of course highly focused on execution in our portfolio to make sure that we maintain our track record in terms of execution. We deliver what's been promised in terms of the different guidances and plans of the operating companies. Of course, making sure that we're always enjoying benefits of the talent pipeline of high-quality people that we have and maintaining continuously high safety standards in the group. And finally, we're focused also on supporting and making sure that we execute the contracted growth that's coming from the operational companies. So the structural projects of Lucas do Rio Verde to connect the Brazilian Midwest and agriculture area in Rumo, the second generation ethanol plants in Raizin, and the natural gas regasification terminal in Compass, for example. So, going through our highlights of the first quarter of 2024, our EBITDA under management finished in 7.1 billion highs in the quarter. The difference when we compare to the first quarter of 23 was mainly related to tax credits that were recognized in high easing in the first quarter of 23 and were not recognized in the first quarter of 24. In terms of net income, we had the negative result of 192 million reais compared to the first quarter of 23 that was negative 904 million reais. Mainly, the differences are the tax liabilities that we recognized in the first quarter of 23. And also, this was partially offset by the results of equity pickup, the negative equity pickup from Haize in the first quarter of 2024 and the negative impact of the market to market of our TRS in the first quarter of 2024. In terms of safety, our results in the first part of 24 are pretty well aligned with the acceptable limits that we have, even though it's slightly worse than 23. Fortunately, we had no fatality in this first part. We continue to be highly focused on maintaining a very high safety standards and improving Our results focused on zero fatalities and zero accidents. In terms of dividends and interest on capital received, it's pretty well aligned with the first quarter of 23. Our net debt, R$22.7 billion, pretty aligned with the fourth quarter as well. And finally, in terms of interest coverage, that is, of course, a metric that, as you guys know, we've been following closer since the fourth quarter of 2023. We evolved from one time to 1.1 times for the last 12 months. so focused on improving our interest coverage in terms of sustainability of our leverage at the whole level. Looking at the overall figures for the portfolio, in Homo we increased transported volumes and had an important increase in the average tariff. We are also advancing in our project of Lucas do Rio Verde to connect Mato Grosso in the north of the Midwest of Brazil. In Compass, we had an increase in industrial consumption that was partially offset by the higher temperatures that reduced the residential consumption of natural gas. We had a negative mix impact given the fact that we had higher industrial volumes and lower residential volumes. We also had the positive impact coming from Edge, the company of marketing and services that we started up in the fourth quarter of 23. And we also had the conclusion of our regas terminal in Santos in Brazil. MOVE had stable volumes of lubricant sales, but substantially higher EBITDA with much healthier margins, continuing its schedule and agenda to improve performance over time. In Hadar, our land business, the recurring EBITDA was pretty aligned with the first quarter of the last year with respect to the leases of the agricultural properties in the portfolio. And the fair market value of our properties was R$16.3 billion. Annually, we reassessed the fair market value. This was done in the fourth quarter of 2023. And Cozum's stake is around R$5 billion. In high easing, we had record sugarcane crushing levels, 84 million tons. with an important productivity recovery, especially in the first three cuts. So the sugarcane productivity, the investments that we did over the last couple of years are showing important results in terms of recovering productivity in the sugarcane. We also had healthier margins in the fuel distribution segment in mobility and also higher sugar prices. They were offset by lower, partially offset by lower ethanol prices. When we compared to the first quarter of 23, we had the negative impacts of tax credits that were recognized in the first quarter of 23 and were not recognized in 24 and also of lower ethanol prices. Finally, with respect to Vale, this was the first quarter that we consolidated the results, the equity pickup of Vale's results. We have also concluded the unwinding of our collar financing structure by the end of April. So we finished during the quarter the unwinding of part of the collar, and then in April we sold around .78% of our stake in Vale, mainly focused on reducing the leverage at the holdco, so reducing the gross debt at the holdco level. So, we concluded the unwinding of the entire structure. And we also, in May, unwound the first tranche of the call spread, the forward, synthetic forward structure that we had, around 0.25% of optionality in terms of additional value stake. So, overall, if you look at the figures in May, we have 4.15% of direct stake. and 1.43% of the synthetic forward to call spread that we still maintain as an optionality. So looking at the EBITDA under management, the overall figures, as I mentioned before, the main changes here are the better results in HOMO from higher margins and higher volumes, and the negative results from the lack of recognition of tax credits in the first quarter of 24 in Haizen, and the lower ethanol prices that were offset by sugar prices and volume. So we're getting to 7.1 billion HOMO. of EBITDA under management. Looking at our debt profile, as I mentioned, if you look at the green figures in the first part of 24, and then April we concluded the unwinding of the color structure that is pointed there as Cosano 8. And finishing the gross debt of 23.8 billion reais in April. Looking at the net debt to EBITDA, the pro forma, adjusted when we include the fair market value of Vale's share. It's pretty aligned with the fourth quarter, so coming down from 1.8 times to 1.7. The overall cost of our debt, CDI plus 1.54%. In terms of the amortization profile, if you look at the figures in the lower part of the slide, we increased the average duration of the portfolio from 5.8 years to 6.5, doing liability management and improving the profile. So, basically, we substantially reduced the amortizations between 2024 and 2027 to better navigate the capex cycle in the portfolio. And finally, looking at the cash flows in the period, we received 911 million reais in dividends. So debt payments of 3.8 billion reais. We issued a bond in January 24, 3 billion reais. So after interest and other expenses, we come down to an end balance of 2.6 billion reais. So we used part of the company's cash to reduce the overall gross debt. So those are the main highlights for the first quarter of 2024. Thank you for joining us today. And let's move on to our Q&A session. Thank you.

We will now begin the Q&A session with Mr. Rodrigo Araújo and Mrs. Ana Luisa Perina. To ask questions, please click on Raise Hand at the bottom of the screen to join the queue. Upon being announced, a request to activate your microphone will appear on your screen. please unmute your microphone to ask your question. We kindly request that each participant ask a maximum of two questions. If you are listening to the call in English, please ask your questions in writing by clicking on the Q&A button. So, our first question is from Luis Carvalho, Southside UBS. Luis, you can now unmute your mic and go ahead. Hello, good morning. Thank you, Rodrigo. Thank you, Ana, for taking my two questions. Rodrigo, could you give us a bit more detail about your leveraging? Have you got a leveraging target in terms of debt coverage? Or, if I can rephrase my question, as of which point will you be looking at capital allocation or investments or accelerating dividends, buyback, and still along the same lines. Would it make sense for Vale to wait for an additional reduction, given the influence that you already have there with a member of the board? How do you see that? And my second question is about regulatory issues at the HODCO level. COSAN, OPCOs have some ongoing discussions about the concession regulations, the authorization for the regas terminal, the subida da terra, also surrounding valley, renewing the tariffs at Congas. How do you see all these conversations? I know that this is essentially down to the companies, but how are you seeing all of those discussions at the Holdco level? Thank you. Hello, Luiz. Good morning, and thank you for your question. So I'll start with leveraging. Our set target We don't really have a set target, but to be healthy is about 1.5 to 2 times the interest coverage. So that would allow us to cover the debt service while keeping the hold cost commitment and our current dividend payout level with organic deleveraging over time. So we don't really have set time to get to that. We do have levers we can pull to get to that coverage level. But that's what we consider to be healthy. As I said during the last conference call, you'll be hearing us talk a lot more about interest coverage, aiming towards having Dividends inflow and interest coverage outflow and dividend payouts to the shareholders. So you'll be hearing us talk about that a lot more. About Vale's position and the position size, we did quite a lot. in the first quarter. It's been an extended first quarter because it's been part in April, part in May. So essentially what we've done since the beginning of the year, first we have unwound the collar structure. That collar structure was very important when we went forward with the acquisition, but it consumed part of the dividends that came in from Vale to keep the strike fixations So we're making adjustments so that we can have more access to dividends and have a duration that is more compatible with our capex flow in the portfolio. The duration was two and a half. Now we've switched to seven and a half years. So we have changed our amortization profile as well. And we've also adjusted the size. The first thing we did, we sold the 0.78, as you know, to reduce gross debt at the holdco level. So that sale considered exactly what you said, political influence, stake in the company, supporting the constructive agenda at Vale, and Kozan's stake in the company. We believe that 4% won't make that much difference in terms of our influence in the company, but it makes a huge difference in terms of growth at Kozan. So, Obviously, we're looking into the ideal size all the time. It might be less than that, but let's assume that 4.15 taken on through the share buyback as the maximum level. And what we've always also done was that synthetic forward structure we had, considering that we were not going to exercise the first tranche, which was due in November 24, we executed it, because in practice, we believe the theta of the option going again, so it will lose value over time, and Given that it was still in cash, we chose to execute that. And it's not material. It's roughly 15 million, right? So we executed the first tranche. We kept the rest because the rest doesn't really have a relevant carryover cost. But we'll continue to have the optionality to have the share upside. There are some implicit benefits there. So we're not keeping it to increase our position, that 1.43%. won't be increased, we won't be increasing our position, but we do have the optionality as this agenda moves forward with value, we might be able to capture additional value from this cost spread without the implicit carryover cost. Now, as for the regulatory side, we have been monitoring that quite closely. Louise and It's key that we are very close to the business, and that is one of the group's characteristics. We know how to navigate this kind of scenario very well. And what we did recently, now that Nelson has joined us, we have made our institutional relations structure much more robust at Koslan, so that we have this... connection among the business so that we can foster this joint regulatory agenda, because there are many touch points. We have shared regulatory issues within a group, and one of the roles COSAN plays is to share that, especially when it comes to regulatory issues. And with our member in Vale's board, we can also make contributions to that agenda at Vale. So that's it for our regulatory agenda. Luis, obviously, we're monitoring everything you've mentioned very closely, but we're also preparing to be able to create value to that agenda as shareholders and to make sure that we have more exchanges so that the portfolio can gain increasingly more. Thank you for your questions. Very clear. The next question is from Isabella Simonato, Southside Bank of America. We will now unmute you. Isabella, please go ahead. Thank you. Good morning, Rodrigo. Hello, Ana. Hello, everyone. As a follow-up to the question about your leveraging, you've been making some important moves since the beginning of the year, and my question is about whether you have any strategic moves in mind in terms of managing Kozan's gross debt. And looking at the normal cost of deleveraging, as you said, you know, depending on the dividends and the up-cost performances, when we look at each one of them, and we have talked about that a while back, They all have capex, some more than others, but they all have enough capex to do it. So, what is the most relevant source of dividends to ramp up this deleveraging process, in your opinion? Are there any opportunities that are similar to what you're doing at the whole call level, at any of the opcalls that will allow them to become relevant? a major dividend payer so that this process can be accelerated. Thank you, Isabella. Thanks for the questions. So I'll start with the first one about leveraging and everything we've been doing. I've also talked about our profile. As I said, I think it's important to reiterate that. Just as important as our level, it's important to have an adjusted profile to this capex cycle, as you said. And that's been part of what we've done, and we will be doing more. We'll still perform some operations to adjust our profile, both in the domestic and international markets, so we will be more active in terms of profile DCM. As for the level, and M&A operations. As you know, we do have some assets. We don't really have any relevant updates on those, but they are potential M&A targets, such as the port. We talked about it last quarter in terms of maturity levels to list, compass, or move. We're not expecting anything for 2024, but we are looking into potential listings when it comes to move and compass. And as Luis said, we're always looking at the ideal position at value. So this is a great asset with liquidity. We're always looking at the size of our stake in it, and we will be monitoring it over time. In terms of performance, capex, and dividends, well, number one, we need to make sure that we are executing on the structuring projects. I mentioned a few of them during the presentation. Look at the Rio Verde, the Regas terminal, second-generation ethanol, We need to make sure that those structuring projects are in place. What we have been discussing and fostering is that some companies are closer to the end of their capex cycles, others are right in the middle of it. Compass, for instance, is already paying out more dividend this year. So we see some results coming from this very intense CAPEX cycle. There won't be any CAPEX looking forward, but the last few years have been very intense when it comes to CAPEX. And based on the numbers, you'll see that MOVE is also concluding the integration of its acquisitions, making their cash generation capacity more robust. So you've seen that, and that will obviously translate into potentially more dividend payouts. And what we're always also seeing is that we're fostering managing our portfolio to focus on other structuring projects and recycling our portfolio especially at Rumo and Ryzen, which have a more relevant CapEx cycle over the next few years. You know, we'll include bringing in partners to help fund structuring projects, the announcement of the additional capacity at CentOS, as we've mentioned. We looked for partners to work with us on that project. Ryzen has recently announced the sale of GD, and, you know, looking at what's core, looking at what can be recycled within the portfolio, we expect to become increasingly more active in our capital discipline. And Isabella, obviously, that has to do with Kozan as a shareholder, but also with each individual company. And it's important to reiterate that we are in a very challenging market environment right now. We started off the year with considerable interest rates looking forward, so every single business in our portfolio needs to have capital discipline. It's key to reiterate that, because navigating high interest rates requires excellent capital discipline, and you'll be hearing a lot more of that from the different And that comes from the current scenario. Thank you, Isabella. Thank you, Rodrigo. Could I ask a follow-up question about Ryzen?

It's interesting that you're talking about partners for structuring projects that are core to the subsidiaries. Do you think

given the pipeline, which is considerable, and there's a long time to develop the pipeline, would it make sense to start thinking about a strategic partner to go into that segment as well, or is it too soon to say? I think, generally speaking, let me give you a broader answer. It makes sense for any project. If this partner adds value If the partner is in line with the shareholders... We'll always consider them. We have no restrictions when it comes to strategic partners. Obviously, some assets are more challenging than others. You know that second generation ethanol dynamics is very closely related to the first generation ethanol. It's got its specificities. But, yeah, we're definitely looking at partners for structuring projects. If there are partners who can add value, not only financially, but partners that can help us create value, then we will always consider them. Very clear. Thank you very much. Next question is from Gabriel. Barra, Southside, City. We'll now unmute you. Gabriel, please go ahead. Hi, Rodrigo. Hi, Ana. Good morning. Thank you for answering my questions. I have a couple of follow-up questions. The first one is about Vale's position. so you've made some considerable adjustments to the position. Is this the ideal position, in your opinion, or can we expect further adjustments to Vale's position? And what may be the potential triggers to additional adjustments? Or are you comfortable with the current position? Second follow-up question is about listing. You mentioned MOVE, maybe in 2024, COMPASS a little bit further down the line. I think MOVE's thesis has been working very well. You've had some great results, and COMPASS as well. But there are some micro points. And going back to the first question about the REGAS terminal, Subida da Serra, and my question is about what might be a trigger to list COMPAS. Would it have to do with market circumstances or more domestic issues before listing the company and waiting for the right time to do it? And you've been very clear when it comes to capital allocation, the company's capital structure, focusing on deleveraging. But every now and again, we're asked about SABESP. Kozan has always been a major player in capital allocation and looking for opportunities. So given the company's current capital structure, could you consider capital allocation here, or are you really deleveraging and thinking about adjusting your capital structure in the short term? Or might there be room for potential acquisitions, or short-term investments. That's it for me. Thank you. Thank you, Gabriel. Thanks for the questions. So let's start with Vale. There is no magic number when it comes to the ideal position. So we'll be monitoring what is more adequate to Kozan's capital structure, how our agenda is advancing in terms of value generation. You know, that we are always considering levers to create value. As you know, we've made some public announcements recently about the CEO succession process. There have been some major regulatory discussions, as we mentioned at the beginning of the call. So, many things are happening. They are key to potentially unlocking value for the company in the midst of the the short to the mid-term. And so we need to consider all of that with the fact that we want to have an active voice. We want to be a shareholder that exerts influence. So it's not cast in stone that this is the ideal position, but from this upwards, I think 4.14, 4.15, for the time being, you can take that as the maximum level. But if at some point we believe we should decrease that position based on Cosan's capital structure, we might consider that in light of liquidity. So that's where we are right now. And the triggers, I think I've mentioned most of them. As for listing Compass, let me start by the end of your question. There is no market, but that's not the main point. That's one of the points. I think the Brazilian market We all know how challenging things have been this year, but despite that, it's not just about the regulatory agenda. There are many key things in the company's plan, a major pipeline to be executed, and if those are well executed, and we as shareholders and Compasses Management are focusing on executing them, then they will succeed. lead to value creation. We have edges rollout. The company started last year. As you know, we have very positive prospects for the terminal to create more optionalities, a commercial agenda for the company, unlocking more value. which is key. We also have Congas' tariff review cycle this year, the rollout, strategic rollout of the distribution companies, assets in our pipeline, and we may increase our share there. We also have investments in the assets that we are committed to selling, very close to closing those on assets that are not core to us. So, All of that is crucial, and removing uncertainties is always a good thing for any M&A. So, back to what I said at the beginning. In the Brazilian capital markets, there is no room for that kind of operation right now. And just to reiterate something I said earlier when Isabella asked her question, We want to have enough room in Cozumel's capital structure. And when I talk about profile, that's what I mean, that we can do that when the time is right so as to create as much value as possible for Cozumel and its shareholders. We don't want to be under pressure to do anything at the wrong time, at a time when it doesn't make sense for the company and that we leave value creation on the table because we're being pressured by capital structure. So, you know, we're very aware of that. And as for capital allocation issues, Well, let me reiterate what I said during the presentation. We have a lot to do in our portfolio. Major capex in our company's value creation agenda. We've been working on that at value with recent investments. and to be very open there is no space to increase indebtedness in cozen's capital structure right now we're working towards reaching the ideal point the sweet spot to have a higher interest coverage than we have right now we have been moving forward but we want to increase that so we have a lot to do and now is not the time we've been very active we have been making considerable contributions based on our experience, on how close we are to the regulatory agency, and what we do here in the state of Sao Paulo. So we have been making contributions to that process, but I don't see any room in the company's capital structure for any additional allocation. Thank you for your questions. Thank you, Rodrigo. Very clear. Next question is from Regis Cardozo, Southside XP. We will now unmute you, Regis. Please go ahead and ask your question. Good morning, Rodrigo. Hi, Ana. Thank you for taking my questions. A couple of different subjects I'd like to touch on, please. First is Vale. Rodrigo, could you give us some more color on the benefits? You talked about increasing the duration, but what about the service of debt, carryover costs at Vale, with your call spread position right now, ultimately, do you think you could have just a financial settlement? But anyway, if you could talk about the specific financial instruments and give us an update on your investment thesis. So what you thought at the beginning, has it been materializing or not? Second subject I'd like to touch on is your business portfolio composition. We're talking about service debt of the debt coverage. And could you talk about the company's current portfolio, including businesses, sectors, currencies? ability to pay, and the conviction about the investment flows at the up-cost to service the hold-cost debt. Thank you. Thank you, Regis. Thanks for the questions. Well, to give you an overview of what we have been doing at Vale, and then I'll go into the strategic side of the thesis. Since the beginning of the year, the color unwinding, as you said, is about duration, but it goes beyond that. It has to do with capturing the results we expect for the company. It is about dividends. Considering last year, part of the dividends we were to receive were reverted to keep the strikes of the fixed collar. So as I mentioned at the beginning, The color structure was key in terms of funding at the time of the acquisition, but you need to monitor it constantly to be able to unwind it, because it becomes expensive over time, considering dividends. So, in October 2022, if you'll remember, we hadn't elected a member of the board yet. There are many things yet to happen. There were a lot more uncertainties that we dealt with over time. That has helped to unwind the color structure. So, in addition to have full access to dividends, there's also another soft side to it, but just as important, which is reducing complexity. That is also important. That is a value lever for COSAN shareholders, even though it's quite an encompassing portfolio. Reducing complexity is key. even though it's not a hard aspect, it's also been important. So, the current snapshot is cost spread plus direct stake, and it also unlocks the dividend payout. As for the future structure, what we have right now is the 1.43. We're not considering exercising that right now, but it could be through a financial settlement, so much so that we've already done it with the first tranche, which is that 0.25. So it can be a financial settlement. And there's no carryover costs. And now going into your second question about the thesis. There have been some challenging times, especially at the beginning of this year, end of last year. Looking forward, I think the company is going through a better time now than two or three months ago. There were a lot of uncertainties, a lot of noise around the company. We still see positive fundamentals for the company and its ability to deliver results. Cash generation Even more, we've closed the value-based metal deal, so there have been some important things happening. And it's important to clarify that there are some aspects, you know, the succession process, which is ongoing, unlocking the regulatory agenda. These are value-diversed, and obviously, as a relevant shareholder in the company, we want to make sure it happens. Our main thing to monitor in the thesis and the strategy is to make sure that that agenda moves forward, and we hope that that will happen this year. But we will be monitoring it closely, and given the assets' liquidity, even if we are constructive in terms of moving the agenda forward, we need to be pragmatic as well. So we'll consider both sides over time. As for the current portfolio, I think the portfolio is healthy. It's got a healthy combination of assets, such as Compass as a gas distribution company. Those are very resilient assets. Their regulatory nature has to be resilient. And Vale also helped towards being more exposed to hard currencies and assets such as Move and Raisin with a key future upside agenda based on the pipeline that's being executed or the strategic CapEx agenda. So, in broad terms, we're very happy with our portfolio mix. As I said earlier, I think what we have been doing at Cozum and at the invested companies is to keep an eye out for opportunities to expose our position to non-core assets, looking for partners in this challenging high interest rate scenario. But generally speaking, it's a very healthy portfolio. There are opportunities to recycle the portfolio at the whole coal level and at the invested companies level. But we're very happy with the portfolio's quality. But there are, obviously, opportunities to recycle it, and we should become more active when it comes to that. Thank you for your questions. Thank you, Rodrigo. Could I ask another follow-up question, please? And considering the portfolio mix, where do you see COSON 9 and 10, the intermediate holding companies? Is that a way to balance the OPCOS exposure profile or – Well, no. No, this is an equity structure. We haven't given any voting rights out to anyone. It's more to do with access to dividends. It's much more financial. It's not a direct divestment. We see it as a contribution to dilute risks from an equity perspective, not in terms to decrease exposure. Great. Thank you for the detailed answers. The next question is from Vicente Falandra's health site, ProDesco BBI. We will now unmute you, Vicente. Please go ahead and ask your question. Thank you, Rodrigo. Let's start with radar. We didn't have a mark-to-market effect this quarter, so looking at the company's net income, it was about 126 million. So we're talking about 13%. Is this the metric we should be looking at? And if so, there seems to be still good returns, even in this high interest rate scenario. What would be the cash yield that would accelerate selling land? And about move, could you give us some more detail about the strategy behind the margin exposure, considering the strong results? But there's also been considerable work in capital consumption. Are the two things related? And if not, is it seasonal? Can we expect that those things will be reverted this year? Thank you. Thanks, Vicente, for the questions. About radar, let me mention a couple of points. Obviously, we do see some healthy yields. But our way of looking at it, obviously yields are important. The company right now can generate cash and pay out dividends. And looking forward, it can sustain the payment installments of the purchase all the way through to 26. So we're very comfortable. with the dividends that will allow us to remain neutral because the dividends will help us amortize the acquisition payments. But yield is a part of the equation. That's how we look at the business. So let me take a step back. And we announced this at the beginning of the year.

We started managing the portfolio

as a whole in an integrated fashion to help us learn and have more visibility of other areas other strategies because this is a rotation business it's that's its nature and you will be seeing that happen over time so what we expect as shareholders is that this is a self-funded business we're not going to increase our exposure in terms of additional equity it should be continue to pay our dividends so that we can pay for the acquisition commitment. And the crop rotation at Raisin is healthy. So, yes, healthy yields. We have captured and surfed that wave like any other agricultural company. the margins are looking even more constructive for next year. And now we want to be able to make that rotation to do what we did in the last 30% cycle. We're ahead of the curve and we want to be positioned in new crops with new strategies before that cycle is over. So that's the strategy behind that.

As for move, we have a very clear and solid strategy.

We need to target the right clients. If we think conceptually about the strategy, the company was a business underneath a major oil company, then it went under a retail business with lots of specificity. The lubes business within a traditional distribution business presents opportunities for one we can create a value agenda, which is what happened at Move. In the integration process, especially the acquisition of Petrochoice, which is more recent, it happened in 2022, the integration will accelerate the margin capture process. We've had even better results than we imagined when we made the acquisition, so we want to accelerate the value implementation agenda. Last year was the company's best year, historical year, and we're very positive about this year. We should be delivering even better results than last year. Now, as for the working capital, it's a very cyclic business. We know that the second and the third quarter tend to be stronger, so that working capital fluctuation is natural. the fourth and the first quarter. There are scheduled downtimes. There are many things that take place that make this a cyclic business. And working capital will go back to normal levels over the year. There's a high organic cash conversion cycle. So, yeah, working capital is cyclic by nature. Thank you for your question. The next question is from Bruno Montanari, Southside, Morgan Stanley. Or now, I'll mute you. Please go ahead. Good morning, Rodrigo and Ana. Thank you for taking my questions. In terms of liability management, within your preferred shares, considering Vale's operation at the two intermediate holding companies. Is there any chance to rethink or restructure that operation so that you'd be able to have more dividends going into Cosan's holding company? And the second question, I know that your number one focus is on controlling, leveraging, increasing your debt service interest coverage, but considering the opcos from the holding company point of view, what has been using up management time the most? Thank you. Thank you for the questions, Bruno. Well, as for the preferred shares, well, the structure will allow for that as of the fourth year. And in terms of access to dividends, based on the structure modeling, it tends to be very efficient because it matches the business dividend flows. It's a natural match. So, obviously, we'll be monitoring that over time. We're always looking at potential opportunities. But right now, we have other less efficient debts, which are the target of liability management. So we're not focusing on bringing that structure forward. Even because of its equity structure, the payment is associated to the business payment. So it's a positive equity prospect. As for the businesses, well, generally speaking, The company's main focus is on where we have more CapEx, considering the current interest rate scenario. And for many reasons, due to the fact that we know it's hard to execute on CapEx in Brazil, there are many challenges. So wherever we have a more robust CapEx agenda, that's where we need to spend more time because it's more challenging. Now, when we look at leveraging levels at the invested companies, they're all getting organized and getting ready to navigate the cycle. So that's it in broad terms. And obviously, as I said at the beginning, when Luis asked his question, the regulatory agenda also is time-consuming. We need to do it properly, we need to make sure it's right, it's organized, and that takes time. We've talked a lot about value, but just to reiterate, it's a different investment to the other ones where we are in a controlling company position. So being able to replicate and restrengthen our analysis ability also takes up time of management. So that's it. Thank you, Bruno, for your questions. The next question is from Tiago Duarte, Southside BTG Patrol. Tiago, we will now unmute you so you can ask your question. Please go ahead. Hello, good morning. Thank you. Hi, Rodrigo. Hi, Ana. Pleasure to be here talking to you. Let me combine. I mean, Rodrigo, you talked about many different things in your answers to the many different questions. So let me try and put the pieces together and come to a conclusion. Do you think that to get to a 1.522 coverage level as the guidance or as a level that you're comfortable with considering the burden that will represent to the holding company and the holding company's ability to pay out dividends. Do you think that organically speaking, moves IPO, assessing your stake at Vale and the dividend flow that you're considering, do you think that if nothing else, is done, structurally speaking, you will be able to get level, and if so, when will you reach that level? So that's the first part of my question. The second part is, in a recent past, I think just before you joined the group, you discussed the possibility of looking at the portfolio more broadly speaking, and you mentioned that in a previous answer. You used to call it a permanent portfolio and a non-permanent portfolio. So, you mentioned portfolio recycling. Up to what point are you considering that, in addition to these more trivial moves such as the IPOs of a couple of companies. Thank you, Tiago, for your questions. I'll start with the first one. I mentioned many things that we're doing. You know, adjusting our positions, the port, potentially listing assets. So that's a combination of organic and inorganic initiatives. I don't really have a time set for when we will do that buy. You know, there are a number of variables to be considered. Some of the businesses are exposed to the commodity cycle, so that needs to be taken into consideration. So, we don't have a set target in terms of timing, but it is a combination of organic and inorganic initiatives. I mentioned the port, for instance, adjusting our position size, you know, all of those levers have to be taken into consideration. As for the portfolio, we need to consider the scenario. It's not just about... what the company is going through. It's what the company is going through and the current scenario. Looking at the last few years, we have made some major commitments across the portfolio and that requires management focus, shareholder focus. We need to make sure that we are executing not only business as usual, on a daily basis, but the different cycles, there have been some considerable changes. We don't have to go too far back. If we go back three or four months, we were talking about an interest rate, and now we're like 200 basis points below. So that's considerable if you have significant capex levels. So I think it's a combination. of considering what we can do well, but it's also a matter of a more challenging macro scenario. If you think about the current macro scenario, this year, at the beginning of the year, we were talking about 5%. reductions in the American interest rate. And now, is it going to be one? Is it going to be two? Is it going to be none? And the same applies to the Brazilian market. During the last interest committee meeting, that's exactly what we saw. So that has to go into the equation. We need to be able to execute things well, but considering the macro scenario, there's no point in keeping the same plans if the scenario is changing. So that's what we need to consider. We need to think about what we can do and do well simultaneously, but in a more challenging macro scenario. That's it. Thank you for your questions. Thank you. Thank you. This concludes the Q&A session. I will now turn it over to Mr. Rodrigo Araújo for his closing remarks. Thanks, everyone, for joining us on this earnings release call. Thank you for the questions. Myself, Ana, and the whole team, financial team at COSAN, are here if you have any follow-up questions. Thanks, and see you next quarter. Colson's first quarter 2024 earnings release video conference is now concluded. For further questions, please contact the Investor Relations Department. Thank you so much for joining us and have a great day.