Rumo Sa

Good afternoon and thank you for waiting. Welcome to RUMO's second quarter 2026 earnings conference call. During the presentation, attendees will be in a listen-only mode and once the prepared remarks are concluded, further instructions will be provided and we'll begin the Q&A session. The presentation is being recorded and simultaneously translated Translation is available by clicking on the Interpretation button. If you are listening to the video conference in English, you have the option to mute the original audio in Portuguese by clicking on Mute Original Audio. Before proceeding, we would like to reiterate that forward-looking statements are based on Rumo's executive board's beliefs and assumptions and information currently available to the company. These statements involve risks and uncertainties. as they relate to future events and depend on circumstances that may or may not materialize. We recommend that you refer to the disclaimer on the second page of the presentation. I will now turn it over to Mr. Felipe Saraiva, Executive Manager of Investor Relations at Rumo, to begin his presentation. Please go ahead, Mr. Saraiva.

Good afternoon, everyone, and thank you for joining Rumo earnings call for the second quarter of 2026. Let me start with the highlights on page three of the presentation. In June, we started operations at the new BR-070 terminal, completing the first phase of the Ferrovia do Mato Grosso. The new railway strengthens our capacity to serve one of the most important agricultural regions in Brazil. I would like to call your attention to our operating performance over the last 12 months, already including the volumes we reported last night. We transported 91.2 billion RTK, including 35.4 million tons of grains in the north and operations. This is in line with the indications we shared with you at the beginning of the year. Adjusted EBITDA for the quarter was 2.3 billion BRL, stable year over year. It is worth remembering that last year's figure included roughly 100 million BRL from insurance proceeds and the reclassification of equity income. Excluding these effects, growth would have been 4%. Financial leverage remains stable at 2.1 times. Moving to page four with the operating results. We transported 23.8 billion RTK in the quarter, with strong growth in the northern operation. The main contribution came from grains, but also we saw good performance in fertilizers and liquid fuels. In the southern operation, growth was concentrated also in grains, which offset the more difficult dynamics in the sugar market. Now on page five, let me go through market share. We kept a good level of share in all of our major markets. If we combine our performance in Mato Grosso and Goiás, we gain 2 percentage points of share in our addressable market. In Santos, our market share was 50% and in the southern ports, 26%. On page 6, we have the operating indicators. Even with relevant growth volume growth, we kept our main operating indicators stable. Trends time in the northern operation was perfectly in line with the second quarter of 2025. and well-timed Santos improved in the period. Regarding energy efficiency, unit fuel consumption was flat year-over-year. On page 7, I will present the breakdown of our net revenues. Consolidated net revenue was 3.9 billion DRL, up 6% year-over-year. On yields, the northern operation was down 3%, mainly reflecting price dynamics in Mala Central with stable prices in Mato Grosso. In the southern operation, yields were down 1%, basically a mixed effect with a lower share of sugar in the portfolio. On page 8, we present IBIDA. As we mentioned before, IBIDA was stable in the quarter at 2.3 billion euro. We delivered contribution margin growth in both operations, and the others line reflects roughly of equity income that took place last year and did not repeat this year. On page nine, we will go through the financial results and net income. Net financial result was negative by $765 million, mainly reflecting a higher net debt base. Even so, we delivered adjusted net income of $688 million, in line with our operating performance. On page 10, we will look to the indebtedness of the company. Net debt ended the quarter at $17.3 billion, and financial leverage was stable at 2.1 times. We hit an adequate liquidity position with $5.9 billion in cash and a long-term debt immaturity profile. After the movements of the quarter, we closed the period with $2.4 billion in committed and undrawn credit lines. On page 11, I present the investments for the quarter. We invested $1.6 billion in the quarter, with almost $600 billion in recurring topics and almost $1 billion in expansion. In the northern operation, which concentrates our expansion investments, most of the investments were towards the expansion of existing rail networks into the Ferrovia do Mato Grosso project. I want to reinforce here that we moved investments forward in the north end operation and concentrated the spending on the Ferrovia do Mato Gros project in the first half of the year. As a result, CAPEX in the second half will be lower than in the first half. Now let me give you an update on the soybean market on page 12. The initial estimates for the 26-27 crops point to stability for the Brazilian soybeans, with production and exports at levels that are similar to the current crop. These figures are still subject to the uncertainties of the agriculture cycle and to the current weather outlook, which points to a strong Galinho scenario. In Mato Grosso, we expect a slight increase in planted area of roughly 120,000 acres with no relevant change in the outlook for production and exports. Moving to page 13 with the corn market. The current crop was confirmed at a high level, which should support a good export volume. For the next crop, preliminary estimates point to further growth in the planted area for the second crop of corn, the corn safrinha, driven by domestic demand for biofuel production. In this scenario, production and exports should remain close to the current levels, with the carryover stocks covering the increasing domestic consumption. This concludes my presentation, and we are now available for the Q&A session. Thank you.

Thank you. Joining us today are Mr. Daniel Rockenbach, Mr. Guilherme Machado, and Mr. Felipe Saraiva. Before we begin the Q&A session, I would like to turn it over to Mr. Daniel Rockenbach for his opening remarks. Please go ahead, Mr. Rockenbach. Good afternoon, everyone. I'd like to start by thanking Mr. Pedro Palmer for his support during the whole transition process. Rumor has just started a new stretch in the BR 070 and that delivery is directing the company towards a new phase. As of now, we will be focusing on productivity and operating efficiency and to improve the operational capacity of the installed capacity. Also value creation and return on invested capital. We have opportunities to generate even more cash in the coming years and That process will be bringing results as of 2027. To that end, APEX and OPEX reductions are the top of our priorities. We have made considerable investments. We have increased our asset base and areas of operation. Now we need to make sure that that capacity is used to its full potential, and we do see opportunities to that end. I'd like to thank everyone for their trust. and we are now available for the Q&A session. We will now begin the Q&A session. To ask a question, please click on Ray's hand. If your question has been answered, you can leave the queue by clicking on put hand down. We kindly request that you ask only one question at a time so everyone gets a chance to ask their question. If we have enough time left at the end, we will have another round of questions. First question is from Alberto Valerio from UBS. Good afternoon. Hello, Daniel. Pleasure to be speaking to you during this conference call. Thank you for this opportunity. My first question has to do with what the CEO just said about being more efficient, making the most of the investments that have been made, How can we look at that for next year? Would it be lower levels of capex, a year of cash generation, or maybe delaying Lucas? What does that mean for future projects at Rumo? Thank you. Hello, this is Guillerme. I'll take your question. Yes. As Mr. Rockenbach said, our clear objective is is to focus on cash generation. And the objective is to bring in results as of next year. And of course, one of the levers, one of the main levers is to revisit the investment program here at the company so that we can strike a balance between all the default we have in our contracts We need to keep our commitments and ensuring operational excellence, integrity of our assets, as well as safety and security. So there are opportunities. We have two key programs to acquire rolling stock and expand capacity in an area. We do have an opportunity to resize and rationalize the portfolio of those programs. especially by making the most of investments that have been made. We have acquired some rolling stock and through our rail engineering we have been operating longer trains and that has been bringing in results to our operation. So we will be focusing even more in extracting even more value from these assets because they can lead to further growth in the years to come. In terms of expanding capacity of An area we can reprioritize or delay the construction of yards. And. We can resize those programs overall. So we are looking into it. We have a budget process plan for next year, but capex for 2027 will be lower than that of 2026 for sure, and that will already give us. a perspective of short-term cash generation. So we have a very robust asset base and we have the ability to extract more value from them to lead to more growth and cash generation in the next few years. Thank you, Guillermo. That was very clear. The next question is from Andre Ferreira from Bradesco BBI. Hello, good afternoon. Daniel Godermes arrived. How are you? My question is, close to two months have gone by since the new terminal opened in BR 070. What's the ramp up curve of the terminal compared to the plan? How many plants? And what are you expecting for the end of 2026? And on price? will you have to have promotions to make it viable? Thank you. Hi, this is Guillerme. Well, right now we are commissioning the terminal. Operations are going well. They are safe. The ramp up is taking place. It started at the end of June and the first tests have shown that the terminal is performing satisfactory level in July we're operating at about 30 percent of the terminals capacity and the idea is to gradually use that capacity the terminal as the possibility to operate more than 800,000 tons a month so we want to increase that gradually as we use up our capacity the commercial dynamics isn't directly directed specifically to a terminal. So we'll be optimizing the company's margin within our origins portfolio and we'll optimize the capacity based on that. So ramp up is going well at the operation and we expect it to be mature by the end of the year and we should have the right size terminal to operate satisfactory. Thank you. Have a great afternoon. Next question is from Lucas Marchiori from BTG Pactual. Hello, everyone. Good afternoon. Based on what Rockenbach has said and the company's strategic review and the right environment to generate cash as of 2027, so I think we've understood the CapEx trajectory, but part of that will come from liability adjustment. So thank you for the new information and the release about the waiver of the concession fees, the disclosure of the provisions for the West and South networks. I'd like to understand how you're thinking about how the accounts will be progressing in 26, 27. We saw the waging. What about the fifth addition to the West network? what would be the most plausible solution for the West network and how much of that can be saved for the balance sheet for the company's liability. So I'd like to hear more about the balance sheet so we can get to the cash generation target for next year. Thank you. Well, about the West network, let me just emphasize that The settlement of accounts is regulated by the regulatory agency, but the company does believe that we have more assets than liability. Now, the additive of the West Network was important because it makes things faster, and it's also a technical conversation about the settlement of accounts. So we see it with very positive eyes looking forward. This is Sariva. Thank you for your question. In fact, one of the contributions we have towards better performance and cash generation, not only next year, but over the next three to four years, is reducing spend on the payment for concession fees. In 2020, we prepaid part of the concession fees and the contracts for the central and Paulista Networks, which we took over again at that time. So the company should be spending roughly 900 million reais this year to pay for concession fees. That will drop to 700 million BRL in 2027. And then in 28, 29, we're talking about 100 million BRL. And we do have that timeline available in the material we have disclosed to help you out. That was very helpful. Thank you, Felipe, Rocky, and everyone. The next question is from Daniel Gasparretti from . Good afternoon. Thank you for this opportunity. I'd like to hear more about cash generation. You talked about reducing OPEX. Could you give us some more color on the magnitude of that reduction? Also, if Mr. Rockenbach could share his vision about the commercial side, what kind of opportunities do you see And are you thinking about the business differently? And also, how do you see yields in the second half of the year? Thank you. Can you hear me? Yeah, I can. Can you hear me okay? Yeah. Sorry, we had some connection issues. So you talked about the OPEX cost structure, a little bit about commercial dynamics and about next year, right?