Cosan S.A. ADS

Good morning and thank you for waiting. Welcome to COSAN's first quarter 2026 earnings release conference call.

Simultaneous translation will be available during the session by clicking on Interpretation, the button with the globe at the bottom of the screen, and choosing your preferred language, Portuguese or English. If you are listening to the conference call in English, you have the option to mute the original audio in Portuguese by clicking on Mute Original Audio. The conference call is being recorded and will be available on the company's IR website at cosan.com.br. During the company's presentation, attendees will be on a listen-only mode. The Q&A session will begin once the presentation is concluded. Please note that the information contained in this presentation and in statements that may be made during the conference call regarding COSAM's business prospects, projections on operating and financial goals are based on beliefs and assumptions of the company's executive board, as well as information currently available. Forward-looking statement. are not a guarantee of performance as they involve risks, uncertainties and assumptions and refer to future events that depend on circumstances that may or may not materialize. Investors should bear in mind that overall economic circumstances, market conditions and other operating factors may affect Cozum'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. Fernando Tinell. Good morning and welcome to our first quarter 2026 earnings conference call. Before we begin, I'd like to briefly go through our standard disclaimer regarding estimates, forward-looking statements and projections that may be discussed during this conference call. On the next slide, I'll start with COSAN's financial highlights and those of its investees. At COSAN, we ended the quarter with a net loss of 1.6 billion BRL, an improvement of 0.2 billion versus Q1 2025. This result reflects an impact of approximately 1 billion related to the prepayment of the 2029, 30 and 31 bonds, recorded in financial results and deferred income tax lines, with no cash effect and partially offset by the improved performance of the portfolio. Expanded net debt increased 18% quarter on quarter, mainly due to the absence of relevant dividends in the period and the effect of the debt prepayment carried out throughout the quarter. However, when compared to the same period in 2025, it decreased 34%, reflecting the proceeds from the capital increase received in the last quarter of that year. Finally, the interest coverage ratio reached 0.4 times versus 0.9 times in the previous quarter. The decrease was mainly explained by lower dividends received over the last 12 months, as the effect of Compass's capital reduction, which had positively impacted the indicator, no longer contribute to the numerator of this metric. Still on the same slide, we provide a brief overview of our investment financial performance. It was a quarter with solid results, largely in line with Q1-25, reflecting consistent business performance as well as the respective impact on Cozum through the equity method. As of March 31st-26, for purposes of Cozum's financial statement and this earnings presentation, Cozum no longer recognizes rising results. This change reflects the fact that the carrying amount of the investment was reduced to zero following the impairments recognized at the end of 2025, and as a result, Raven's results are no longer recognized under the equity method. Accordingly, management concluded that disclosing this information has become immaterial for COSAM's reporting, in line with the accounting practices set forth under the CPC. Moving on to the next slide, we highlight the operating performance of our businesses, which illustrates the solid results delivered this quarter. Starting with Rumo, the company posted record transported volumes of 25%, with the highlight being the strong performance of the northern operation, which contributed to the dilution of fixed costs and expenses, as well as market share gains in its operating regions, especially at the port of Santos. As a result, reported EBITDA was 7% higher than in Q125. I'd contrast the causes for slightly higher distributed gas volumes and EBITDA up 2% versus Q125, supported by an improved distribution mix and higher volumes at edge. I'd also highlight the startup of the new off-grid B2B LNG operations and OneBio's biomethane plant. Turning to Move, the company continues its post-fire optimization cycle, The period was marked by higher sales volumes and a 10% increase in lubricant sales, mainly in South America, resulting in EBITDA slightly above the prior year period, which continued market share recovery, reaching 16.4% in Brazil, according to IDP. Finally, at radar, due to lower income from land leases, EBITDA decreased 27% versus Q1-25, largely reflecting lower ATR and soybean prices. We now move to the next slide, where we highlight the key events and transactions of the quarter and the related cash flow movement, all aligned with our goal of reducing companies' leverage. Among the main uses of cash, we announced the early redemption of the first series of the fourth and sixth issuance of the benches, totaling a reduction of approximately 566 million DRL in gross debt, and we fully redeemed the bonds insuring in 29, 30 and 31. which totalled approximately 5.6 billion, resulting in an overall reduction of 6.2 billion BRL in the company's indebtedness. We ended the quarter with a solid cash position of 7.7 billion BRL. Lastly, as a subsequent event, we concluded Compass's secondary public offering of common shares, a transaction directly aligned with our capital recycling and deleveraging strategy. As part of this transaction, Cozans sold part of its stake in Compass at a price of 28 BRL per share, and as a result, the company may receive approximately $2.5 billion in cash proceeds, considering the additional allotment if the supplementary shares are fully placed. It is important to highlight that despite the partial sale, Cozan remains Compressor's controlling shareholder. On the next slide, we summarise the impacts of the initiatives carried out during the quarter on our indebtedness. We significantly reduced expanded gross debt by 6.5 billion BRL, extending the average maturity to 6.1 years, with a comfortable amortization schedule that is appropriate for the company's current stage. In addition, the average cost of debt, excluding the perpetual bond, was CDI plus 1.15% per year. Our expanded net debt, which considers the preferred share structure at Cozumdez, currently stands at 11.5 billion BRL, and continues on a downward trajectory when considering the lasting quarters. In summary, all actions taken on this front since the beginning of 2025 reinforce our focus and commitment to continue deleveraging and simplifying the holding company's portfolio. This concludes our earnings presentation. We will now begin the question and answer session. We will now begin the Q&A session with Mr. Marcelo Martins, Mr. Rafael Bergman, and Mr. Fernando Tunel. To ask questions, please click on the raise hand icon at the bottom of the screen to join the queue. When your name is announced, a prompt to activate your microphone will appear on the screen. Please unmute your microphone and proceed with your question.

We kindly request that attendees limit their questions to one.