Ultrapar Participacoes S.A. (New) American Depositary Shares (Each representing one Common Share)

Good morning.

Thank you for waiting. Welcome to UltraPAR's first quarter 24 results conference call. There is also simultaneous webcasts that may be accessed through UltraPAR's website at ri.ultra.com.br and through MZIQ platform. The presentation will be conducted by Mr. Rodrigo Pezzinato, Ultrapar's Chief Financial and Investor Relations Officer. And in the Q&A session, we will also have Mr. Marcus Lutz, Ultrapar's CEO, and the CEO of the businesses, Mr. Tapajari Bertelli, Mr. Desio Amaral, and Mr. Leonardo Linden. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company's presentation. After Ultrapar's remarks are completed, there will be a Q&A session. At that time, further instructions will be given. We would like to remind you that questions will be answered through the Q&A session and may be posted in advance in the webcast. A replay of this call will be available for seven days. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ultrapar Management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Ultrapar and could cause results to differ materially from those expressed in such forward-looking statements. Now I would like to turn it over to Mr. Rodrigo Pessinato, who is going to start our call. Mr. Pessinato, you have the floor.

Good morning, everyone. It is a pleasure to be here once more to talk about ultraparse results. And on slide two, I want to highlight that both the earnings released in this presentation consider ultraparse data from continuing operations in 2023 and 2024. With the conclusion of the sales of Ocusteno and Extra Pharma throughout 2022, UltraParts consolidated data since has no longer included the results of these two companies. And moving now to slide three, as you can see in the chart in the upper left side, our recurring EBITDA totaled R$1,306,000,000 in the first quarter of 24, 28% higher than that of the first quarter of 23. This increase is due to the higher EBITDA of the three main businesses, especially Ipiranga, results that I will detail in the next slides. Ultrapara's net income was R$ 155 million, 66% higher year over year, due to the EBITDA growth I've just mentioned and the lower net financial expenses. Investments totaled R$438 million in the first quarter of 2024, an increase of 20% year-over-year, mainly as a result of greater investments at UltraCargo. We had an operating cash consumption of R$573 million in the first quarter of 2024, R$138 million lower than the consumption we had in the first quarter last year. mainly reflecting the higher EBITDA of the businesses and the increase of R$265 million in draft discount operations in this first quarter. These effects were attenuated by higher working capital at Ipiranga. Moving now to slide four to talk about our reliability management. We ended the first quarter with a net debt of R$7.8 billion, an increase of R$1.7 billion in relation to December 23rd. This increase is mainly a consequence of the payment of dividends in March this year and the investment in working capital. We have a seasonal calendar effect in the first quarters, as you can see in the chart, resulting from the bank holiday at the end of the year. Added to this, Ipiranga recorded a higher level of working capital in the first month of 2024, with the effect on prices of tax increases, higher inventories, and lower supplies due to the reduction in imports, which have longer payment terms. Our leverage went from 1.1 times in December 23 to 1.3 times in March 24, due to the higher net debt that I've just mentioned, attenuated by higher EBITDA in the last 12 months. I'd like to point out that the numbers of net debt for the first quarter of 24 still do not include pending receivables of R$964 million related to the sales of Occitaneo and Extrafarm. As you can also see in the table at the bottom of this slide, the net debt in March 24 added to the and an extra pharma is 8.4 billion reais, which is approximately 900 million reais lower than the balance of the same period last year. And moving now to the next slide, slide number five, talk about another good quarter for ultragas. The volume of LPG sold in the first quarter was 4% lower year over year due to the 6% reduction in the bottled segment on the back of lower market demand and a more competitive environment after the pass-through of tax increases in some segments. The bulk segment remained stable with its growth offset by lower sales to condominiums. Ultragas SG&E in the first quarter of 24 was 1% lower than that of the first quarter of 23, due to initiatives to increase operational efficiency and lower expenses with sales commissions, partially offset by higher personnel expenses, mainly resulting from collective bargaining agreements. The Tragas EBITDA totaled R$401 million in the quarter, 4% above that of the first quarter last year. This growth is explained by initiatives to increase efficiency and productivity implemented in the last quarters by better sales mix and by inflation pass-through despite lower sales volume. And for the second quarter, we expect UltraGas to continue its good operating performance with EBITDA similar to that of the first quarter despite seasonally stronger volumes. Moving now to slide six to talk about another great result of UltraCargo. The company's average stock capacity was 1,067,000 cubic meters in the first quarter of 24, a growth of 12% over the first quarter of 23, due to the capacity additions coming from Opla, Vila do Conde, and Rondonópolis terminals throughout the second half of last year. These capacity additions still had a small impact on this quarter's results and should begin to gradually contribute to the upcoming month as operations ramp up. The cubic meter sold grew 21% year over year, mainly due to greater handling of fuels in Santos, Vila do Conde, and Aratu, and the startup of operations in Nopla and Rondonópolis. Trucargo's net revenues were R$ 263 million in the first quarter of 24, 11% higher than that of the first quarter of 23, as a result of the higher cubic meter sold and spot sales. Combined costs and expenses were 8% above that of the first quarter of 2023 as a consequence of higher personnel expenses, legal advisory with contractual renewal and depreciation in line with the capacity additions. Ultracargo's EBITDA totaled R$165 million in the quarter, a 16% growth year over year due to greater capacity occupancy with profitability gains, to spot sales and productivity and efficiency gains, despite higher expenses. EBITDA margin was 63% in this quarter, 3 percentage points above that of the first quarter of 23. And for the second quarter, we expect Ultra Cargo to continue its good results, with EBITDA levels close to those seen in the last quarters. And to conclude this presentation, moving now to slide 7, let's talk about Ipiranga's results. First, I'd like to draw your attention to a change we made in our report. Abastece aí which since the beginning of 2020 had been reported with the results of the holding company and other companies, is again consolidated into Ipiranga's results. To allow comparability between test periods, we added the results of Abastec AI into Ipiranga's for 2023 as well. And on page 3 of the earnings release, we have detailed the composition of these adjustments to allow a complete understanding. About the results, the volume sold by Ipiranga in the first quarter grew by 2% over the first quarter of 23, with a 7% growth in the auto cycle, driven by greater share of ethanol in the product mix, partially offset by a 3% decrease in diesel. We ended the first quarter with a network of 5,881 service stations, far more than in December 23. A total of 55 service stations were added to the network, and 51 were closed during the quarter. Furthermore, we ended the quarter with 1,532 a.m. p.m. stores, which seems to our sales growth of 6% in the first quarter. Ipiranga's SG&A increased by 5% over the first quarter of 2023 due to higher personnel expenses, mainly increased headcount and collective bargaining agreement, and provisions for adult flow accounts. These effects were partially offset by lower expenses with contingencies provisions. The other operating results line total a negative R$165 million in the quarter, a worsening of R$26 million year-over-year as a result of higher costs with carbon tax credits. The line of results from the disposal of assets total positive R$36 million, resulting from the sale of eight real estate assets. Ipiranga's debita total R$819 million in the quarter. Recurring EBITDA totaled 783 million, 48% higher year over year. The higher EBITDA reflects better margins, mainly due to commercial environment normalization and inventory gains in the first quarter of 24, despite three negative effects. The higher level of inventories in the sector due to distribution companies positioning for the planned tax increases in the first month of the year. due to tax distortions with emphasis on the AMAPA tax benefit, which was revoked last April, and irregularities in the biodiesel mixture, which had a share increase from 10% to 14% in the mix in the last 12 months. And for the second quarter, we do not anticipate significant inventory gains. On the other hand, we expect the normalization of the inventory levels in the sector and the reduction of the effect of tax distortions in NAMAPA. Therefore, we expect a profitability similar to that of the first quarter. And with that, I now conclude my presentation, and I appreciate your interest and attention. And let's now move on to the Q&A session to answer your questions. Thank you.