Vibra Energia SA Q3 2024 Earnings Call (English, Portuguese) Transcript

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

Question: Gabriel Barra - Citigroup - Analyst : Hello, everyone. I hope you can hear me. Thank you for this moment. Congratulations on the results. I have two questions on my side. First about cash generation. This was very strong in this quarter. I see the company growing and we hope that it keeps on this pace in terms of very strong cash generation, leveraging it even more. Maybe the question here, which would be the how to allocate capital from now on what is the perspective of the market? Maybe Vibra will become one of the largest dividend payers in looking at your portfolio. You have bought Comerc, you have a high cash outflow in the beginning of next year, but hopefully we'll have dividends more dividends to pay. So I would listen to you how to allocate your capital your from now on in your company. Second, one of the issues we have discussed with investors is market share. I believe Augusto and Pousada discussed this showing how the volume has been resilient in this quarter and year on year. But in the Brazilian volume has growth very well this year. So we have lost some market share in the market is part of the strategy. Maybe what shows in this elevated result. But I would like to understand what would be the strategy for the for this next year. Should we expect the same layer of 18% of same level of 18%, 19% of increase of market share or where could you work next year? Focus on this, improve the return margin or market share, which would be the strategy of Vibra for 2025.

Question: Gabriel Barra - Citigroup - Analyst : Thank you very much once again and congratulations.

Question: Matheus Enfeldt - UBS - Analyst : Good morning, Ernesto, thank you for this opportunity and congratulations on the results. First question is on the regulatory framework. We have seen some advances and there was a project and all the support and some of state governments and Renova bill help or support and what are your priorities? What are Vibra priorities to in terms of the next few quarters, what can advance and can be more impactful for this industry? And then my second question, it has to do with the selling of assets. We have, we haven't discussed this so much in the previous quarters and result calls, but this has been good for the consolidated results of the companies. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 1:00PM, VBBR3.SA - Q3 2024 Vibra Energia SA Earnings Call (English, Portuguese) We have more than BRL200 million only this year alone. I mean, so if you compare with the agreement made last year to sell assets to monetize service stations, a good part of these assets has been completed if I'm not mistaken. So looking forward, what do you think in terms of number of service stations, the company still sees as feasible or can be better monetized in this perspective? Thank you very much.

Question: Matheus Enfeldt - UBS - Analyst : Thank you very much.

Question: Pedro Soares - BTG Pactual - Analyst : Good morning, Ernesto. Good morning, Augusto. I have two questions first, Ernesto, regarding your initial comment, so we could talk about results, not only the quarter results but also other results in terms of image. This was a quarter with less volatility, as you said before, low impacts on the inventory. But I would ask you to talk about this in July, August and September. So what can we expect for the next quarter for the fourth quarter? Maybe you have an expectation already. And my second question has to do with the growth of Vibra into the future. As Augusto mentioned, he talked about several paths of growth in the core logistics B2B service stations. And Ernesto, also mentioned that we, that you will follow tier conditions and attractive return possibilities. Could you talk about the growth breakdown between the core and new avenues for growth in terms of gas, maybe. If we could think on these new avenues of growth that you keep looking for new ventures that respect these conditions that you have, or unless something appears a very high tiers, unless this happened, you will focus more on the core for growth purposes. This is a small adjust adjustment in terms of this course and his speech, but I would like to talk about breakdown in CapEx moving forward.

Question: Pedro Soares - BTG Pactual - Analyst : Thank you, Ernesto, Augusto.

Question: Vicente Falanga - Bradesco - Analyst : Hello, Ernesto, Augusto, congratulations for the or the consistent results. This is the most important thing than any isolated result. Regarding [copep] I would like to understand if you have felt any benefits. Regarding that for the fourth quarter, we have less NAFTA in the country in the Southeast region as far as we know. So in your opinion, how can this translate into market share throughout this fourth quarter? Second question is in one of the slides, you said that you paid 782 dividends in the first nine months of '24 but BRL5.8 billion in profits. So the idea would be to pay 40% on top of BRL7 billion profits in the year or 40% on top of an adjusted profit without tax recovery.

Question: Vicente Falanga - Bradesco - Analyst : Perfect. This is clear. Thank you, Ernesto and Augusto.

Question: Bruno Montanari - Morgan Stanley - Analyst : Good morning, everyone. I have a follow up and two questions regarding Vicente question just I mean, so we should think about a cash profit effectively for a calculation of this 40%. Is that it? I just wanted to confirm now, going back to margin. I understand that in the guidance, when you talk about operating above [150] today, there is a large GAAP on top of this [150] given that the company in the recurrent basis has achieved around [170] and [175]. So in the short term, will the margin levels, I mean commercial margins that you've reached in this quarter? Are they sustainable in the short run? And my second question, I would like to explore this decision you made regarding to remove one major client. Could you give us an idea on how lower the return was or the margin was for this type of client versus a regular ser service station network or a regular B2B? And let me take this opportunity and ask you if you have other clients of this type that could be removed from the portfolio and cause an increase in return. Given that maybe they, these clients do not give you the best profitability profile. Thank you very much.

Question: Bruno Montanari - Morgan Stanley - Analyst : Thank you very much.

Question: Bruno Amorim - Goldman Sachs - Analyst : Good morning. Thank you. I have two questions. First about the core business. By the end of the third quarter, we have an import window that is open. Have you seen any movement on the part of the competition on any deterioration in the competition dynamics in the short run or not necessarily? And the second question has to do with Comerc, you have an evolution of EBITDA if you compare it with the second quarter, I would like to try and understand how much of this result is recurrent and sustainable or if the company has benefited from a short term increase in fuel and PLD and maybe that will decrease in the next few quarters because the company is running a BRL700 million in EBITDA in the first month. If you, if you continue with this BRL300 million, you surpass the guidance. So let me understand what happened. It was it given to the higher PLD in the quarter. What happened.

Question: Bruno Amorim - Goldman Sachs - Analyst : Thank you very much.

Question: RTgis Cardoso - XP - Analyst : Thank you very much. Congratulations on the strong results for this quarter. I have three topics to discuss one, the evolution of margins through time, particularly if you could give us a reading on this month of October that has just closed. And I would like to understand the effect of competition after the [parody] of, I believe this has an impact on the environment of competition. I would like to understand that a little better. And then I would like to understand CapEx if you have a budget or CapEx budget for 2025. And in the results, see, I see anticipated bonus below amortization for this and maybe in a given moment, you would have to compensate this past balance. If I'm not mistaken, I would like to understand this if you had a number for '25 and just a follow up regarding capital allocation. I don't know if you already have identified relative sizes among this's avenue lubricants service stations and so on. I ask you this with this, this given vision. Well, Vibra generates a lot of cash and then you would have a surplus of capital which is higher than the size of opportunities above all, considering that the lubricants plan is already completed. A lot of CapEx has been realized. There is the issue of flags. I would like to understand better where would be the highest potential for this capital location considered this high cash flow cash generation.

Question: RTgis Cardoso - XP - Analyst : Thank you, Ernesto and thank you, Augusto.

Question: Leonardo Marcondes - BofA Global Research - Analyst : Hello, Augusto, Ernesto. Thank you for allowing me to ask you. I have one question, most of them have been answered about ROIC. ROIC has been stronger in this past few quarters. But I would like to understand if you could tell us, where do you expect this ROIC to go? I know it's hard to establish a number or a goal given the volatility of this industry. But what's your expectation regarding this metric? Maybe more coming from the macro increase in margin, cutting costs, increasing volume or any special line in balance or do you expect a high increase of ROIC coming from the macro with the fight against irregularities and so on. And I would like to understand more about how this metric, how ROIC impact your calculation. You know that this is a critical factor in the remuneration of Vibra's executives. But if you could detail a little more, is there a threshold or it's a more evolution year-on-year than you expect or which is I just would like to take to listen to your take on these aspects, please.

Question: Leonardo Marcondes - BofA Global Research - Analyst : That's clear. Thank you very much.