Ultrapar Participacoes S.A. 2026 Q2 Earnings Call

Good morning, everyone. It is great to be here with you for another Ultrapar earnings conference call. We delivered another quarter of strong operational results at Ultrapar with significant growth in EBITDA and net income. We achieved a record operating cash flow generation of 4.8 billion BRL, driven by solid operational performance and working capital release at Ipiranga. This significant cash generation contributed to the reduction of our leverage to its lowest level since 2018. This improvement in our results enabled us to anticipate this year's dividend distribution. We approved the distribution of 1 billion and 85 million BRL in dividends relating to the first half of the year, equivalent to 1 BRL per share or dividend yield of 3.8%, in addition to a share buyback program of up to 18 million shares, returning part of the value created to our shareholders.

We also continue to advance our growth and productivity agenda. At Ultracargo, I would like to highlight that for the first time, Ultrapar was included in The Dow Jones Sustainability Emerging Markets Index. With that, I will now hand over to Alexandre Palhares to detail the results of the businesses.

Thank you, Rodrigo Pizzinatto, and good morning, everyone. Before discussing the performance of our businesses, I would like to briefly remind you of the criteria and standards used in the analysis in this presentation, which can be seen on slide 3. Moving on to Ultrapar's consolidated results on slide 4. Once again, we present results that combine operational consistency, cash generation, and capital discipline, reflecting the quality of our portfolio and the execution capabilities of our businesses. We ended the period with recurring adjusted EBITDA of BRL 3,657 million. This result reflects improved results across all businesses and especially Ipiranga's strong results, as I will comment on shortly. Net income was the highest ever reported by Ultrapar, totaling BRL 1,677 million, an increase of BRL 527 million or 46% compared to the second quarter of last year.

This result was driven by higher operating results of the businesses, partially offset by higher depreciation, amortization, and financial expenses, reflecting, among other factors, the consolidation of Hidrovias do Brasil in May 2025. CapEx for the quarter totaled BRL 517 million, reflecting lower investments at Ultracargo as we approach the conclusion of its expansion cycle and lower investments at Hidrovias do Brasil, partially offset by higher investments at Ultragaz and Ipiranga, mainly related to the implementation of new ERP. We achieved record operating cash generation of BRL 4,789 million in the quarter. Compared to a BRL 939 million cash generation in the second quarter of 2025, this result reflects strong operational result, the working capital release, mainly at Ipiranga, and the additional contracting of BRL 833 million in draft discount for suppliers, which preserves liquidity in an environment still marked by volatility in international markets.

Excluding this effect, operating cash flow would have totaled BRL 3.956 billion. Moving to slide 5, we see that we ended the quarter with net debt of BRL 8.864 billion and leverage of 0.9 times, the lowest level since 2008, as Rodrigo Pizzinatto mentioned earlier. Strong operating cash generation enabled a reduction of gross debt through the payout of debts in Hidrovias do Brasil and Ipiranga. Before discussing the business figures, starting with Ipiranga, I would like to provide some context regarding the environment in which we operated during the quarter on slide 6. As we discussed during our first quarter earnings call, the conflict in the Middle East brought significant volatility to global oil products markets and required rapid adjustments across the entire supply and logistics chain. In this environment, distributors with supply capabilities, logistics scale, and a long-term commitment to serving the market became increasingly relevant.

As shown in this chart on the left, Ipiranga doubled its diesel imports during the first half of the year, increasing its share of total imports in Brazil, despite lower overall imports compared with the same period last year. Brazil recorded one of the lowest pass-through fuel price increases to consumers, as we can see in the chart in the center of the slide. This reflects government efforts through subsidy mechanisms and Petrobras pricing policy. Our ability to ensure supply under these circumstances, supported by a significant increase in diesel imports, strengthened Ipiranga's competitive position and contributed to 8% volume growth in the first half of 2026, compared with market growth of 3%. Moving to slide seven, we can observe the positive effects of the government's effort to combat irregularities in the fuel distribution sector.

Unlike the temporary impacts associated with the conflict in the Middle East, this represents an important structural improvement that contributes to a fair competitive environment. The chart on the left shows the reduction in the market share of distributors classified by ANP as illegal operators. Their market share declined from 24.4% to 20% during the period. This loss of share by irregular players allowed tax-compliant distributors to regain market share. Ipiranga stood out in this context, gaining 0.9 percentage points of market share. Beyond creating a fairer competitive environment, reducing distortions and illegal practices benefits society as a whole through higher tax collection and consequently greater public resources. The governments of São Paulo and Rio de Janeiro alone estimate that these initiatives may generate approximately BRL 6 billion in additional annual tax revenues.

The chart on the right shows the average retail fuel price in Brazil during the first half of the year, which stood at BRL 6.14 per liter. Taxes accounted for BRL 1.53 of this amount, while Ipiranga's EBITDA margin was BRL 0.36 per liter. It is important to note that this margin does not include financial expenses, depreciation, amortization, or income taxes. Although distributors' profitability represents only a small portion of the final pump price, it is what enables the sector to continue investing in infrastructure and ensuring fuel supply throughout the country. Moving to slide eight, we present Ipiranga's second quarter results. The total volume sold was 6,173,000 cubic meters, an 8% increase compared to the second quarter of 2025, with an increase of 10% in diesel and 6% in the auto cycle.

This result reflects the positive effects resulting from the recovery of the competitive environment in the sector, in addition to the effects related to the ongoing conflict in the Middle East. We ended the quarter with a network of 5,855 service stations, 29 more than in March of this year, resulting from 101 stations opened and 72 closed in the period. Ipiranga's recurring EBITDA totaled BRL 2.782 billion in the quarter, with a margin of BRL 451 per cubic meter, reflecting the combination of structural and conjuncture factors I mentioned earlier. For the third quarter, we continue to face the effects of the conflict, although we expect a lower impact from short-term factors. On the other hand, we continue to see the structural benefits arising from the ongoing improvement of a fairer competitive environment, driven by the continued progress in combating irregularities across the sector.

As a result, we expect margins to be below the level reported in the second quarter of 2026 and closer to those observed in the first quarter of this year. Moving now to slide 9 with Ultragaz results. The volume of LPG sold in the quarter was 3% lower when compared to the same period last year, with a 4% decrease in the bottled segment and a 2% decrease in the bulk segment. The decline in the bottled segment reflects lower market demand in the LPG and competitive dynamics, while the decrease in the bulk segment is due to lower demand from the industrial segment.

Even so, we presented a consistent recurring EBITDA totaling BRL 468 million, a 6% increase compared to the same period last year, reflecting a more favorable sales mix in LPG, which offset the lower volume and the effect of BRL 70 million in asset write-offs in second quarter 2025. For the third quarter, we will continue our efforts to recover market share. As a result, we expect EBITDA to remain at a level similar to that reported in the third quarter of 2025. Moving to slide 10, we present Ultracargo's results. Average installed capacity reached 1,156,000 cubic meters, an 8% increase in the annual comparison, reflecting capacity additions in Palmeirante, Rondonópolis, Santos, and Opla. The cubic meters sold increased by 19% compared to 2025.