Vibra Energia SA Q4 2024 Earnings Call (English, Portuguese) Transcript

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

Question: Luiz Carvalho - BTG - Analyst : We have two questions at our end, the first geared to Augusto. You spoke about all of the nonrecurring impacts on your margin. You also spoke about the regulatory environment regarding biodiesel and the lack of mixture. If you could quantify these impacts, these one-off events, with more clarity. And which is your recurring margin for the quarter? Now the issue of biodiesel, as several others that always happen in this sector, does not seem to be an isolated fact, something that will be limited to the fourth quarter. There's a difference of BRL0.30 per liter between the distributor that buys 14% and the one that does not. How do you think this will play out in the future? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2025 / 1:00PM, VBBR3.SA - Q4 2024 Vibra Energia SA Earnings Call (English, Portuguese) The second question, I go back to the last comment made by Ernesto to speak about capital allocation. Now if you could comment on Comerc and how you view this company in the Vibra portfolio? What is it that has to be done from the strategic viewpoint looking two to five years forward discussion on the payout to shareholders in interest on equity and dividends, you did make announcements. Wouldn't it make sense to have a buyback therefore? So the first question about margin, the regulatory agenda. The second question about capital allocation.

Question: Gabriel Barra - Citigroup - Analyst : I have two questions. When we look at the quarter results, I don't know if you shared this with us, I was somewhat disappointed because of two factors. In November when we were discussing the third quarter results, you had a very positive vision for the fourth quarter. And the worst month had already happened, which was October, if I'm not mistaken. You said that November and December would be better months doing away with that negative impact of October. The impact of BRL125, well it does cause a certain disappointment, first of all, in terms of margin; secondly, because of margin volatility. This is something we had debated at length. And this is what did happen in the fourth quarter. I would like to hear more about you from that, which is your diagnosis regarding that situation and the strategic decision of the company. You focused on rationalizing volume, improving margins, but you did have that problem in the fourth quarter with the situation being contrary to what we had imagined. This would help us understand the dynamic for 2025 for the company. The second point factor regarding CapEx. We have discussed the rationalizing of CapEx because of the higher interest rates. Well, how do we think about this rationalizing? You spoke about an advance into agribusiness, investing in logistics during Investor Day. Now how can we think about this in a scenario of higher interest rates? Are you going to work with anticipation? Is this a way of rationalizing this? So if you could focus more on CapEx and how to do this based on cash generation and perhaps paying out more interest on equity?

Question: Bruno Amorim - Goldman Sachs - Analyst : First, a follow-up on the issue of tax evasion or informality. Could you quantify the potential gains that will emanate from the resolution relating to ethanol more specifically? 10% of your volume refers to ethanol in a simple account, your margin in ethanol is 0. If you resolve that problem, we could have an upside of 10% for your consolidated EBITDA. Does it make sense to think about these lines if the problem is fully resolved? A second question, a follow-up of the damage -- potential damage going forward. You have had a ROIC of 15% in the last quarters. It's a ROIC above the cost of capital, which is steep. So how far can this return on invested capital go? We used to argue that the return was very low and that your margins had to increase. Now the question presently that ROIC of 15% to 20%, doesn't this adequately price the competitive edge of Vibra? Or is this not your opinion? Can you continue to deliver higher returns going forward?

Question: Bruno Amorim - Goldman Sachs - Analyst : I'm sorry, Ernesto, a follow-up. You're referring to 4%, 5% with federal taxes or once the entire problem of tax evasion is resolved?

Question: Monique Greco - Ita· BBA - Analyst : We have one question specific to the dynamics of 2024 and a broader question for 2025. First, your share dynamic. In the fourth quarter, we saw a different dynamic in B2B and retail segments. You moved back a bit in B2B. You maintained your share in retail. What explains those different dynamics between the segments? And what will happen going forward? The second question regarding lubricants, Augusto spoke very quickly about the plant you are ramping up. What happened in 2025 in terms of growth for lubricants? At which level would you like to get to in the plant, which is the EBITDA goal that you have for the year? And when answering about lubricants, if you see any impact, any change in the recent market dynamics because of the parallelization that happened in the new plant now in February.

Question: Bruno Montanari - Morgan Stanley - Analyst : First, the cleaning out of service stations. You have done interesting work in reducing the network. Is there more potential in doing this and eliminating service stations that are not attractive for the company? And which is the gain in margin that this efficiency could bring about regarding cash generation? What other levers, besides the operational ones, can you use to reach a good level of cash generation, if you could increase the sale of assets, if you have more work to be done in working capital? And a third very quick question. What do you foresee as the main risk for 2025 that could impact your cash generation goal or your annual averages that you mentioned formerly?

Question: Matheus Enfeldt - UBS - Analyst : I think this has been discussed, but I would like to speak further about B2B, the closeness that the company is looking for in agribusiness with middle or lower-sized customers. What have you done in terms of this? You spoke about new products. What else has to be done to build bases, bases with different formats, pricing with a different format perhaps? And perhaps this is one of the points that you will leave for 2026 as your focus is on CapEx in 2025. In terms of B2B, we have heard about your intention of coming closer to the end consumer of competitors as well with direct sales and other formats. We saw something along these lines with coke in the past. Which has a risk here? And what could happen that means that you will no longer work as a go-between in this chain, a risk for B2B in truth?