Vibra Energia SA Q2 2024 Earnings Call (English, Portuguese) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Monique Greco - Ita· BBA - Analyst : Congratulations for your performance. I have two questions actually. The first, Ernesto, is about something you mentioned during your presentation. The results are really consistent in terms of profitability and expense reduction combined with the gradual market share recovery. So in this strengthening of your management model that you say is important for the consistent results, who do you think is in processes or in the decision-making process, do you think have been the most important ones on this journey? So what would you say would have been the key ones? And what do you still see in terms of improvement margins for your management practices? And the second question is about your Q2 effect. When compared to Q1, the recurring margin dynamics was different when you look at B2B and service station chain. There was an increase in B2B margin combined with increased market share. But in your gas stations, there was a margin reduction, could you go into more detail about that difference? Can we conclude that you needed to hurt your service statement margin to prioritize market share?

Question: Pedro Soares - BTG Pactual - Analyst : My first question is about profitability and market share. If you take a step back and as you mentioned earlier today, one year ago, after the results of Q1 and two last year, the company and the whole industry had margins below BRL100 per cubic meter. And now one year later, even with the Russian diesel oil and other issues in spite of all the issues, you have margins that well above BRL150 per cubic meter. So there's been an improvement also in your market share, in your branded station, but still there was a decline in market share in the past 12 months in the network as a whole? Does that justify the better profitability and are [incredible] high levels with your most profitable customer? So now we no longer have tax complexities and the Russian diesel oil is no longer a competitive advantage for smaller businesses. Does it make sense for us to go on thinking that you've had this margin as of the 12 months or is it more than that? But now with a fair recovery not only in your profitable network but also in the other volumes that are [having] originate prices? I have two other quick questions. If you could give us an update on tax credit, especially for your expectations and monetization in case there's a favorable development? And with Comerc, if you could give us an update on the discussions regarding potential decision of exercising the purchase of the remaining stakes before the established deadline or any update regarding that?

Question: Luiz Carvalho - UBS - Analyst : Once again congratulations on your results. I have three questions. Ernesto, in your presentation, you spoke about ROIC, which is close to 20%, which is a significant recovery -- what do you think is a sustainable ROIC for the company in the long run? Second question, I'd like you to tell us about capital allocation. There's the buyback program. The announcement that JPC has been announcement. There's opportunities or a commitment going forward with Comerc as well. How do you see your capital allocation strategy given that your leverage level is now very comfortable? Accelerating buyback according to share valuation or maybe pay extraordinary dividends, what can we expect? The third question, maybe to Augusto, if you could give us a break down of the risk effects of the diesel oil and tell us about the Russian diesel oil import that you participated in recently. There was [three] license cancellation and they were very important in the state of Sao Paulo. If you could please quantify those affects, I would appreciate it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2024 / 1:00PM, VBBR3.SA - Q2 2024 Vibra Energia SA Earnings Call (English, Portuguese)

Question: Vicente Falanga - Bradesco Corretora - Analyst : I have two questions. I'd like to know more about what you in terms of market dynamics, volume margins, Russian imports. This is the first question. And the second question is about Comerc, BRL111 million EBITDA, if you divided that by further 48 plans, it means that it is -- it's a little bit under BRL1 billion EBITDA. When you acquired Comerc, I think the objective is by 2025, 2026, the goal was [BRL1.5 billion]. Do you think that's feasible? And which are the projects that might help you get there?

Question: Bruno Montanari - Morgan Stanley - Analyst : First question is about your cash cap. You said that there was a reduction of payment terms with suppliers, especially with your most important [one in] Petrobras was not offering a very long payment term. Did you review the contract with Petrobras? Can we expect the shorter payment terms to be kept in the short term? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2024 / 1:00PM, VBBR3.SA - Q2 2024 Vibra Energia SA Earnings Call (English, Portuguese) And in terms of market share and volume, I understand that there's a gradual improvement and that you expect to achieve your market share go in 12 to 15 months. But looking at 2024 so far and what you expect this year, do you think that the market share is going to be higher than 2023? So these are my questions.

Question: Bruno Amorim - Goldman Sachs - Analyst : I have a follow-up question regarding ROIC. I know that you have no guidance, but the thing is that your ROIC is much above your capital cost, which is positive. And again, I know you cannot quantify your ROIC. But qualitatively, if you could help us understand, in your minds, what is the set of competitive advantages that you have that could sustain the ROIC much about the cost of capital in the future? That could be helpful. SKU, I think, is the most obvious advantage you have, but if you could tell us more about what do you think are the levers for your competitive advantage? And therefore, what will enable you to sustain your ROIC much above your cost of capital in the future?

Question: Gabriel Barra - Citi - Analyst : One question that I can break down into three elements. When we look at market share, there are some important points. There's fierce competition in our industry today driven by price mostly. And that's where we see that, may be, you decided to let go of market share in markets where you didn't have your expected returns because of that. So how do you recover market share, but sustaining our profitability? So there are three things I'd like to you to tell us more about First, your entry in TRR. If you could tell us more about why going to TRR and how that can help you increase market share? Second, your brand, which is also very important in this business, especially in your branded state and in a process of discussing with the Petrobras. So I'd like to hear from you how you're dealing with that if you have new branding strategies or not? And sourcing. There's been a spectral in the industry in the past few years. The imports have become an important pillar in this business. And as you mentioned, this difference that that was before because of Russian diesel, for instance, oil and your lessons learned at the company. I'd like to hear from you, how are you dealing with that internally? And how important that pillar is for you to become more competitive? And if Russian products are marginal or not or if we could consider that will still be an important pillar in your competitiveness in the future?

Question: Leonardo Marcondes - Bank of America - Analyst : I have two questions. One about branding strategy. We saw that there was a slight decrease in number of service stations in the past. So if you could tell us more about your branded service stations strategy going forward? And the second question is about margin. There was the first quarter end that have more than [BRL150] per cubic meter margin in spite of the challenges that the industry faced in the first half of the year. In the past call, Ernesto has mentioned that the adjusted margin was [BRL140-plus]. So can we be more confident that the margin is [BRL150-plus] or even more than that?

Question: Leonardo Marcondes - Bank of America - Analyst : Just a follow-up question regarding branded stations. Do you see a long way ahead of you regarding the screening process? Or do you think that much has been done already?

Question: Regis Cardoso - XP Inc. - Analyst : There's a number of topics that I'd have to address with some quick questions. First of all, lease reduction. When we look at our net debt, it's down, but down because of leases. Maybe the -- there's the acquisition of your headquarters and your net debt that is down. Also, there's the out of court, BRL200 million agreement, if you could tell us more about what is that cash out? And another topic, as there is a screening process with service stations, but from a different point of view, your branding CapEx is very low for the second quarter in a row. And I don't know if that is on purpose, but if that's the case, provocation in your theory of growing EBITDA -- that you have unit EBITDA margin that is lower when you have new branded. Also expected a growing result for Comerc, and that's not what happened when compared to the first quarter. I don't know if that because of seasonality or why, so if you could tell us more about that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2024 / 1:00PM, VBBR3.SA - Q2 2024 Vibra Energia SA Earnings Call (English, Portuguese)

Question: Regis Cardoso - XP Inc. - Analyst : And I have a follow-up question. I don't know if it's too specific, maybe we can schedule a meeting later on. But lease, there was a reduction of BRL272 million in leases comparing quarter over quarter. Maybe it's the present value of your lease contract.

Question: Regis Cardoso - XP Inc. - Analyst : And the unit margin, anticipated cost. Did you do an analysis of how much that post-payment strategy can have an impact of your unit EBITDA margin so that we have comparable margins going forward?

Question: Rodrigo Almeida - Santander - Analyst : I have some follow-up questions. And a question about another topic that you haven't talked about. It's a question about CapEx and capital basis and [1.5 to 1.55] that you mentioned earlier, the recurring at -- and then the acquisition of the building. And then CapEx, I'd like to ask about capital allocation. And if you see the need for strategic reasons to invest in your subsidiaries because of working capital or to new business? And second, I don't know if you're going to be able to answer, but a follow-up question on your screening process with the service stations. If you could give us some rough figures and average volumes of the stations that came out? And the question about lubricant. The lubricant business is one that maybe could grow considerably. So speaking about your planned expansion what you expect in the second half of the year in terms of volumes and market strategy, new volumes and ramp-up expectation?

Question: Rodrigo Almeida - Santander - Analyst : Lubricants.

Question: Rodrigo Almeida - Santander - Analyst : A follow-up question, Ernesto, about lubricants and the additional volumes you expect what in B2B, in retail? So what should we be monitoring going forward in this ramp-up this year or next year, so that's in [1.14, 19.4]