UGP - Earnings call transcript Q1 2022 | Ultrapar Participações S.A.

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Operator

Good morning, ladies and gentlemen. At this time, we would like to welcome everyone to the Ultrapar's First Quarter 2022 Results Conference Call. There is also a simultaneous webcast that may be accessed through Ultrapar's website at ri.ultra.com.br and MZiQ platform. Please feel free to flip through the slides during the conference call. The presentation will be conducted by Mr. Financial Relations Chief Ultrapar's Pizzinatto, and Officer. Investor Rodrigo we the presence in the Mr. have session, Q&A And of will Marcos Lutz as well Ultrapar's Chief Executive Officer. to all in like being the would inform this that We event company's recorded presentation. and listen-only participants a be will mode during you is are Ultrapar's remarks a session. there completed, After be will question-and-answer be time will given. that At instructions further [Operator replay call this days. of Instructions] seven will A be available for

XXXX. Litigation the mention of Before statements under of forward-looking me made that safe proceeding Reform the Securities let being are harbor Act

statements the currently Ultrapar to risks, Forward-looking on and, management on that and they the economic also and operating expressed involve therefore, statements. could of based from not occur in and assumptions in events circumstances because may are the the affect beliefs call They to assumptions materially on available forward-looking uncertainties, future. or future the depend relate general may industry factors information results and other conditions, Investors Ultrapar could those results such that should of future differ and to conditions, understand company.

will conference you over Rodrigo, Rodrigo Mr. the Pizzinatto. begin now may the I turn to Mr. Now conference.

Rodrigo Pizzinatto

with on everyone. X. highlight to It's a off once want here to I about the topics earnings morning, Ultrapar's report. We're two starting be important talk to results. Good more pleasure Slide

agreements liabilities The and as XXXX related of assets sale our sale the Extrafarma first operations. have to Oxiteno, these on of for one, companies call, signing and I last in our the discontinued conference already mentioned to divestments. Due held classified December we

classification. this reflect statements financial Our

also have reporting. the previous that that consolidated company's the Extrafarma's and enable earnings presentation However, is comprised consider been release we results and information with concept comparison adopting the forma both Oxiteno same better to Ultrapar's data periods, pro this

we that quite quarters is a assets going performance company's adjustments something estate is move we demobilize. of It that The second our be with with we results this in Ipiranga quarter relevant is and It not for important recurring means of cash a a lot is disposal there next incorporated have EBITDA real will the despite from of operating to in One forward as comparison the highlight be value given better the This of business. generated assets relates from EBITDA that line core adjustment the still assets these a disposal fact this of very to of assets. managed the that is from talk sale to exclusion forward. have to in we the of over of there recurrence topic closely competitors. two our

The other compensation due explanations by adjustment businesses recurring performance is to results of results. been of extemporaneous compatibility monetized in of highlighting credits taxes. These EBITDA, tax the forward with have already now better talk understanding from and of a their the exclusion Slide provide in the to the will course moving be credits Ultrapar's X consolidated to payable Well, competitors. which about

attenuated operations. depreciation above the a monetization by and from operations quarter of that the mainly net of depreciation the XXXX, in X. side, recurring on XXXX businesses. quarter was above and XX% you that chart continued by million, which the cessation upper effect discontinued from Ultrapar's As of of in first of back stronger increased the as for with XXXX, year-over-year. first see R$XXX the EBITDA, improved The our the net from first of positively R$XXX R$XX includes total IFRS operations million quarter left recurring the the higher the continuing first in from in can EBITDA, XX% in Extrafarma amount the three the Oxiteno totaled impacted well results of quarter as in EBITDA million than in in income compliance was XXX% R$X.XXX million, Effects

of Directors, Our on per Board dividend equity approve on should as to of equivalent in account XXXX. the million of mandatory R$X.XX have share interest already you payment of the the R$XXX for seen year

XX% per except immune that this to amounts shareholders or corporate income notice in R$X.XX will The the yesterday. shareholders of exempt. we share, the net to are proven are be interest for withholding With complete be tax, included released distribution

EBITDA. Moving in highlight billion R$XXX capital investment in due totaled working in million. our despite cash at by we on, quarter, operations. Including quarter that last million first XXXX, and R$XXX left which the of continuing quarter, includes to This Oxiteno resulted chart for two in Ipiranga. made R$XXX to investments operations, driven compared the This in of R$X.X bottom in XXXX. greater operating an greater the end of the made consumption that In on investments R$X.XXX continuing the higher I amount last totaled Extrafarma, we announced from CapEx the generation of investments the quarter mainly million of above want from than billion, years. fuel to and is plan consumption April, prices the XXXX, first in on investments CapEx register LPG the cash also over increases XX%

financial of Slide talk about the net our December net R$X.X just of higher working of explained by lower first billion XXXX. the is mainly X interest with to by March of reliability the in a the with cash and quarter, to increase I management. of capital factors, billion, the debt the payment the R$XX.X quarter on result made mentioned, debt impacted during rates. compared an We Moving ended XXXX The increase consumption three to dividend

in increase XXXX that the higher the offset partially last by to times to debt X.X in the EBITDA therefore level over XX months. March leverage Our from X.X times December went due XXXX, in

minus the first Our average DI XXXX. X.X% was quarter a substantially the debt DI in plus the of cost below of of year X.X% in quarter, cost

with remind debt include the that the As taking of hedge details sale not have result, to I you million could initiatives, financial reduce of cost more of the longer caring to the we conclusion the Ultragaz. Oxiteno. XXXX, of cost of R$XX I amounted of debt, an which a been in the the quarter that the will result effect we in the have this effect first which in explain in of does cash no negative flow

in outstanding With I early notes, your our and are of with highest notes debt. which cost of repurchased want to the funds in an inflow will reduction billion total last we of of $X.X the contribute purchase XXX month. our in the out repurchase the three We the $XXX which a premium at XX average of Oxiteno further to to April, million the a call quarters, of and from the attention did sale of XX debts cost

operations. next we the conclusion stop slide, presenting the of the of with highlight explanations Before the that the I discontinued Oxiteno performance detailing sale, about

quarter side on to collective X% segment commercial increased Number with resulting SG&A quarter The the the expect due is reduction of higher expenses remind Moving first of I variable to reached of bulk bottled through that then and year, was first resulting LPG on cost from better in proceedings mainly agreements with expenses Ultragaz. freights. of Sales quarter first higher X% the you XXXX, first quarters from to continuity first talk the the with X, despite results volume Ultragaz, segment higher an personal Moreover, than industrial, the increase into in volumes pass- about back the first higher quarter, for quarter legal during good quarter. by progression quarter were million, in we level mainly R$XXX market X% and year-over-year which and Slide with we Ultragaz XXXX, a other in XX% the of quarter EBITDA greater second aligned to sales increased expenses, expenses. the segments. addition the in had of in of bargaining the And the that XX% current that the lower over therefore increases seasonally the record contingencies. demand. lower of of the last in compensation, results some services for

the first gains, capacity Combined new next company XXXX, the Ultracargo. of XX% of installed margin great expansions. the quarter expect good XX% the of in and current due than And back of meters growth performance presentation, EBITDA higher first of X, of to stable XX% capacity also XXXX. to product quarter XXX,XXX in close of to Day. Décio greater contribution meters of slide, the and due the month. those were quarter quarter decrease first net higher of to cubic tank first inflation due in of depreciation of operating a were expenses first from X,XXX terminal We another the the December XXX a Volumes to quarter. by volumes, Ultracargo’s in network meters XX those XXXX, expansions profitability a first of the XX% XXXX Ultracargo’s the reached And capacity of the expenses by readjustments revenues first largely my the the fourth in higher first the XX with about and expansions of sold last now of on that quarter cost conclude contractual that lower Slide offset the million openings to the the Itaqui the of achieved first number of on about a the auto contractual year-over-year by months. stations, startup improvements from of operations on Vila is the over quarter, of by productivity volume quarter arising inputs X, EBITDA with EBITDA to quarter the remains first new and another quarter of causes in we quarter, in closures the ethanol average R$XXX and of highlighted to IT the registered XXXX, XX service readjustments, X% reached for for participation and with XXXX. cycle in the than million sold to the in the do in in expenses level of XX on Conde R$XXX more the materials talk volumes, services term in levels of XXXX of a cubic quarter growth higher gasoline implemented gains. Average than that X% first XX% capacity with XXXX The and and quarter Ultracargo’s expansions led XX% lower a instead than XX reached in due Ultra resulting Moving cubic personnel Ipiranga. the effect operational to amount higher attenuated continue than XXXX, and ended compared quarter in of margin quarter, quarter higher per to mix. diesel the stations to with talk recovery partially the record of moving we

ones cubic the XX average While had volumes per closed of month. meters

addition, the freight due growth SG&A increase units in ended XXXX first X,XXX to we the operated prices, stores quarter. with the provision same-store diesel XX and to with doubtful AMPM in stores, increased expenses year-over-year. line XX% quarter higher units with quarter Ipiranga’s expenses In XX% first in quarter of sales of higher company with the from which increased AMPM for higher accounts XXX this in

totaled was the meter, of was as despite the R$XXX per margins R$XXX plan the margin recovery recovery of cubic expenses. assets R$XXX XXXX, XXXX results in R$XX million, the operating R$XX quarter to first million down XXXX, R$XXX XXXX that a with result cubic quarter seven carbon conditions. as meter line quarter, XXXX. well quarter the to as compared higher the presented assets. quarter first other million X% by above first higher The the recurring the of in by quarter of real as million of a in estate million evolution XXXX, year-to-date, ongoing of Linden A supported higher and totaled Ipiranga’s meter Ipiranga’s credits. totaled market XX% to the in of EBITDA per R$XX fourth first quarter tax of R$XXX negative recurring per the EBITDA disposal in mainly EBITDA by than compared cubic An result line quarter, in due also in of sale the results expenses first of

are to For the And those volumes to of of that, current quarter, two be to I XXXX last quarter answer let’s interest you very now seasonally we your Q&A levels And the close Marcos stronger my Thank the presentation. now and attention. your I Appreciate and session. to questions. move of quarters. with with that the first expect than available conclude profitability much.

Operator

Instructions] Luiz first [Operator question Our Carvalho, from UBS.

Luiz Carvalho

quarter, the say and question gross do understand changes morning, robust. this question. for Good company? that quarter my of in And what capital. one you I And to My I about expect margin. volume? the thank about can believe taking has you have second what recurrence We want is regarding the Ipiranga. you from to been second

by Oxiteno will like will on without to Thank have and second the the would just you much. with end of of things. Oxiteno. sold on You’ve Q you you April. cash very you result these Then sale the I elaborate to have of a Oxiteno

Marcos Lutz

Good difficulties hearing for in morning, your questions. Luiz. you We Thank had your audio.

– – the the you the Your was less and allocation. be second gross it margin from correctly, I or question Was understood capital if would what more margin Oxiteno’s asked? Ipiranga

Luiz Carvalho

Yes.

Marcos Lutz

I will start by capital allocation.

outstanding to debt. due R$X.XXX the And of is the billion bonds, received we payment first the to we is were entry is million – that cash buyback CDA. a buyback program Oxiteno payment this highest have bond transfer That sale. because that R$XXX highest used We the announced

of we part for debts Now is expensive we And the our reduce maturity funds because most now. We these part our XXX close coming to have of to that use other are have debt. the cash CD.

we now, the working So reduce indebtedness are transfer cost. with our to

Now regarding and are structural are there margins, more recurrent commercial recurrent margins. they

of volume ended point should capture. in we and correctly price structured Although volatility area that we is things have have a be a pricing by correctly done. point as we observed Today, can and mentioned, during QX, and variations These where lot prices.

So observe we’ve past we the but seen commercial in operational attention, an improvement during the with six must months, margin. quarter the

the said sector doing very will is in And you that throughout am the much. come peers. very doing to continue comfortable what say this to we I closer we So year. Thank past the to I are

Operator

Our Thiago Bank. Pactual next BTG question Duarte,

Thiago Duarte

I Ipiranga. seen a for your one, net, gain focus. in good taking main Thank stations, you your not afternoon. in to Number like my I is this question liquid about two you that due and significant gas would we’ve things – in elaborate believe your to

number the focused we and addition first when important quarter on in the see the in average showed of is are bad your year. presentation, a You you’ve figures but this years of

scenario other as vis-à-vis, like that banner. I fuel We Ipiranga banners to is the see believe very we’ve for would is So flags, domestic favorable for great and there a you guarantee And market, will present disparity they the this the the that know how seen parody. guarantee in supply. because your a

in this and margin, going sold. talk of I would this like from terms to to like know that consider mean what you back to the this if answer if you that when throughout average you of QX, when verified we the Recurrence, to is know margin gallon in So price two, regarding And Marcos seen have about gain I will this, we’ve in would base you recurrence. margin because quarter. difference especially see number growth the do stock, the

this, like point I Although know answer of suggests Marco’s the your would starting sense past if of makes to margin. replenishment the in like that quarter terms of

Marcos Lutz

there is with yes, increase number of one, resellers. gas quality. And of our a stations relationship is that is it’s is, with side number good focus Well, effect

stations certain and volume and resiliency. high gas of have quality We

team’s the as market reseller. Is that with close vary, is reseller is market in a a the we have reseller and of them them communicates is fact, So and that the interpretation natural correctly. matter approaches share of share that the that above to

we is effect, area. this. And space that commitments seeing the and – corrected. structural the banners vis-à-vis, the market on distortion they There So players supply to increase Brazilian side, our addition had were There in the many churn. will uncontracted have a in sales have the was at this that being believe continue we we therefore, pipeline. quality we I will a in the

market at have the spot, March, end have have that products has short everything So when February matter have we who as fact, structural their periods, as purchase everybody where is vis-à-vis, you after and go when to contract. have like a contracted, more doesn’t who of the at the saw we we and advantage in contracted, of a Ipiranga contracted. has you differences a The

And believe We’ve long-term a that you ships supplies So efficiency people the many deliver. is done supply provides a to lot with I contract can have chain. has valuing this risks that a whoever have more all and been with to came are relationship receive of This during we QX. this I we sound QX of has why competency. and We a this believe that result quality. had out part on contract –

a it stock. we figures. negative On in may an effect the consistent you with moment throughout the we correctly can a pricing second is have question understood a of see when here We transparent we was And That of margin But area we the your do side was volatility. happening. certain drop. and very a curves, pride reported a is gain so the of was upwards well, the of that that And at the way drops, capital downwards. could working there’s that But everybody the had given parachute increase know our this what effect. know accurate, regarding in recurrence, and moment extremely that resellers that

we not the banners are have network. are weather is results could are with XX I we gas we banners, strengthen and a this station Ultra our working gaining quarter. we they of message, profit. closing. could the improving that during XX, good us in are These gallon is or focused have that results gained, we business. the through of edge part Day, And So focus provide new And on do although stock If analyzing

Thiago Duarte

It is much. clear. Thank you very

Operator

Bradesco Falanga question BBI. is with Our next Vicente

Vicente Falanga

And payment How I the significant assets? about of second you that my was system mentioned effect of your to GLP. was would a the could transfer resourcing your talk could two out outside regarding is have like the beginning be Petrobras the if the the as margin question you would the presentation, there know. what – And if of the of Rodrigo, sale gas – of and questions. at of I tax you is because Ultra margins.

Rodrigo Pizzinatto

Good question. morning, you Vicente. Thank for your

of Regarding this we we’ve with holding time that did selling the had the The of a holding this. the how over we for tax minimum for interest rate after capital the tax and this million. first million in And gain, Oxiteno, own we is rate not analyze a deductible. our of regarding capital, relevant disbursement dividend saying cleared of R$XXX expenses held interest and as we did XXXX we mandatory and time the and of that that on strategy. and that first this we tax we we Oxiteno, could declared amount use optimization over selling of balance was Ultrapar are say we all expected because rate gain a is gain we why that interest have million, the the sale, with loss taxes, still the over seeing were can disbursement below advanced Oxiteno analyzing And $XX capital. I $XX But from the – regarding volume credits call and in when advance selling interest capital, the

and But condition Ultragaz question, year is effect achieved margin, second in Ultra on quarter a the the it benefit sourcing margin your was profitability result improvement QX regarding with regarding the market productivity This capital. that has and very well Now mentioned was our is QX, maintaining positive. on Ultragaz on presented working continue the similar and in mentioned on of that increase last Ultragaz the to the effects. throughout sourcing a this that of gradual result prospects day in we therefore significant the

Vicente Falanga

Rodrigo. Thank very Perfect. much, you

Operator

Bruno from question next Montanari Morgan Stanley. Our

Bruno Montanari

some prices regarding throughout was the imports for question. entry the working Oxiteno, Ipiranga of I seen numbers to the of business have afternoon. in another is regarding second something the the on to If strategy to adjustment for imports My cash make maybe in imports been sourcing that before has my – how in closing the remain sure it year. semester in this the if to know and terms is second calculate. of and cash could just quarters taking capital, much entry. operation, next closing the stable, intercompany investment quarter? QX, difficult Thank now less question increase Just regarding pace of operations working third adjustments we’ve in we you be there reinvested how would capital a active evolving like imports. Good One right terms of to the confirm on Ipiranga the we of

Rodrigo Pizzinatto

import it prices down. questions price other down. go if same goes Maybe are activities If easy first weren’t stable, less the go than goes It It up, players the active well One, go to two the our up. up. The doesn’t prices working answer. stable. we remains Doesn’t capital the continue down. were proportionally, goes –

intercompany straight between this we So a settling mathematical answer compare effect group, point. this the of you other the this and is operation. stated, as is continuous that’s to Bruno, companies when continued the operation Oxiteno you some with started

have we hedge dollar debt head we of two reais a sale hedged the the bond have our that close longer the no in So, Oxiteno. sale our of dollars we in part of the counting that Oxiteno, because have of with we XXX% have is and in longer hedge no was bond because of account with Oxiteno the the

Operator

Thank you.

Christian next Audi, question Our Santander.

Christian Audi

you talked M&A. cost, have about back the payout, CapEx, how two improvement Thank questions. you to and prioritize? will going capital allocation, potential know dividend I the I debt you. One, of

invest us opportunities four for about cash will all you? could in comes If you in of company, have? give see you this once where the important talking energetic what What your more cash points you EBITDA leverage? funds what amongst debt is you are ratio could come Now, into an process, net Oxiteno’s these participating you prioritizing the and

Rodrigo Pizzinatto

funds not our half Oxiteno, they value leverage allocation and from out the If is our payment reduce including the debt the Oxiteno. of in dividends we I will at am one received And of what the XXXX, selling of our Marcos position [indiscernible] debt. after declared include time. second about will to talk we and regarding capital about going I'm start talking coming

will rate capital. and $XXX in we this one will be over believe years, I paid EBITDA. drop other net interest net net in declared the payments two the other year, what XXXX, have debt our will of million debt over these time receive We that

Marcos Lutz

capital we matter and this timely debt This to fact, outstanding. are costs will net of our our This moment we present three being and over number one. This are And reduce EBITDA is allocation. Now our a and leverage, a the moment reprogram we reduce priority. net liabilities. moment doing not is as our debt times, of above is

is rates. the Now a rest matter of capital return allocation because of

will our We disciplined opportunities. capital, when allocate be we non-organic will we analyze

risk that will promise I assumed to Russians in discipline. see operations as promise is allocation what's As capital the a day, things have during target that this will is what to analyze because has a we strong I to well. moment, are and what in to disciplined we we allocate Ultra be but the I when be have the profit happen to said, we is first we can't according can with going small to do going

Christian Audi

And what about dividends?

Marcos Lutz

it's dividend is in One organically The capital thing or of on surpluses. depends the surplus invest inorganically, math, the a matter it's practice other. don't the I that

Operator

Our Citibank, question Barra. Gabriel next

Gabriel Barra

me? hear you have posted. Could Most can – questions you hear been

that gas something the Just material the Ipiranga fact, gas stations gas talked because Day anti-trust the would within improved? will is talk Ultra attention the like about are network to you two you or the timeline agency you have do do the stations improve drew just margins? And what during how steps the next to company's closing is of Extrafarma, the you was, what margin of regarding my sale that understand was and the this? the backlog the about company these you be Could one the in there that that are and points; than station. lower contaminating has what I this margin, to have

Marcos Lutz

decision questions. you, out. agency I Gabriel, you believe and municipalities that Thank anti-trust Extrafarma, the by saw aid of were the for Starting your pointed

give a limit in is take long court the – rig process. to us between be to agency, know difficult will rule of ruling, to court the and but is conclude process to September. this the it this June the Now this anti-trust and it's how That time will

if or So bed in estimate, trial is so quick limit this the date. is June the that it's September

now of they believe what closing – profit below gas the one in station, We that will two will years, expect. we Now has will profit or go of we network we're – levels pandemic levels of or more network be the XX% closed and has And a the kind of network normal. process accelerating and what back are of volumes to out of want. assessment profit type the of going as of we the network we're the

We you our these, churn certain always that a is there there remind always – is in have to in level network.

Operator

Bruno Our next question Amorim, Goldman Sachs.

Bruno Amorim

was this the I of an understand want fuels. XXXX, the two what see last have the but increased – than year, questions. suppliers. financing is increase tripled increased about line, well beginning I Rodrigo, of Ipiranga they Ipiranga that to strategy. higher talked when since Two that your regarding price price [indiscernible] the amount, fuel of we this the suppliers Ipiranga's

us Is the many comes, the suppliers, alternatives, this other the if cost, future the the If you is there increase commercial which you is If financing per times of comes with the can you do question, increase in reflected the quarters? upcoming impact cubic on on what you would the CBio price that And to stock my second But of what traders, there, away. price improve the good. want gain QX. suppliers. will of Ipiranga in goes and for are be expect and in is tell I conditions your percentage, this due. meter through And that it and know, part represents if fuels a of this

Marcos Lutz

you questions. your for Bruno. morning, good Thank Well,

this You to past we are cost cost number this about and high Well, is math, cost about, of in cost. these suppliers. are a our lines thinking a cash two is not partner there marginal debt asking our optimization years. transfer marginal you the about the The Therefore, talking increased use close flow.

see cost, If it management, our it reduce a we term short have the can this – sense debt. part its has increase to term from term of time attractive will a debt. have having you long view, long line economic but short the if more If debt have term. it this makes makes a point more debt, this a term we to can because debt if throughout always and is term And need, sense long of the we than and see, we long this

Bruno Amorim

about The second gain? inventory your stock question

Marcos Lutz

a past from the as in was of This stock is and different day-by-day year. There quarter. Well, QX same quarter business, the what during first a the loss we was gain and we've nothing practically based part the in there gain last of in imports. seen the

Bruno Amorim

And much spend cubic regarding was CBios, QX? you estimates what will observed any per vis-à-vis during meter how

Marcos Lutz

Bruno, we the CBio fair price on this on to will products purchase because difficult cost transferred Thank very will you. of and is share the It's company's the CBios the to of of margin. our predict reflected market result. is follow and the be reflected our the it

Operator

Thank you.

the to As we have Rodrigo with Pizzinatto will floor give final further final questions, his no Mr. I continue can you your for Rodrigo, comments. remarks.

Rodrigo Pizzinatto

questions. you all will and your weren't we call. you you and I by able answered be our our of see thank Department. answer on then for for The that questions attention thank your next So to IR

Operator

end. conference an results Please to lines. you. Thank Ultrapar your earnings call you The much. Thank very come disconnect has

Ultrapar Participações (UGP) 12 May 222022 Q1 Earnings call transcript