Cosan S.A. (CSAN) Earnings

Management highlights

- Capital Structure & Deleveraging Initiatives * Completed Compass' secondary offering IPO, generating BRL 2.3 billion in net proceeds for Cosan, strengthening the balance sheet. * Signed a sale of part of Hadar's Mato Grosso land portfolio for BRL 1.85 billion total, with Cosan expecting BRL 586 million from its indirect stake at closing (expected by October 30, 2026, subject to customary closing conditions). * Executed an exclusive letter of intent for full divestment of its port terminal stake, with BRL 300 million payable at closing plus a potential BRL 50 million earn-out tied to future port capacity expansion, also subject to closing conditions. * Completed nearly BRL 9 billion in debt prepayments through June 2026, reducing expanded net debt by 20% vs Q1 2026. Cut general and administrative expenses by 36% YoY in H1 2026, representing BRL 49 million in savings. * Announced plans to pursue ADS deregistration with the SEC to simplify holding company operations and reduce ongoing compliance costs. - Operational & Strategic Milestones * Raizen's out-of-court reorganization plan received approval from 81.6% of its financial creditors, marking a key step in its turnaround process. * Completed BRL 8.8 billion in principal debt prepayments year-to-date, including full prepayment of bonds maturing 2029, 2030, and 2031, as well as early amortization of debentures and commercial loans. Reduced 2028 scheduled amortization by over BRL 2.5 billion, extending average debt term to 6.2 years with an average cost of CDI plus 1.15% annually. * Reported a Q2 2026 net loss of BRL 320 million, a significant improvement YoY, driven by lower financial expenses, lower tax contributions, G&A savings, and the non-recognition of Raizen's results; this improvement offset a one-off BRL 233 million impairment charge for TUP San Luis. * Received BRL 399 million in dividends and interest on capital from investees in the quarter, primarily from Compass. - Organizational Changes * Long-tenured executives Maria Rita and Rafael Bergman departed the company as part of cost reduction and holding simplification efforts. Cesario, a former executive with 8 years of prior experience at Cosan, rejoined the company to support the simplified structure. An internal climate survey confirmed strong team alignment with ongoing strategic changes.

Guidance

- The company projects that its debt service coverage ratio will reach a range of 0.8x to 1.2x by the end of 2026. This projection assumes total 2026 dividends and distributions received between BRL 1.2 billion and BRL 1.8 billion, including up to BRL 586 million from the Hadar land sale, and incorporates the full impact of 2026 liability management actions that have not yet been fully reflected in the LTM metric. Potential future unannounced divestments are not included in this projection. - Management confirms an ongoing ambition to further reduce recurring general and administrative expenses beyond current levels. Additional G&A reductions are expected for 2027, with internal targets already set for lower holding costs as the simplification process progresses. - The current 0.2x LTM debt service coverage ratio at the end of Q2 is temporarily depressed by dividend seasonality (distributions are heavily concentrated in the second half of the year) and has not yet fully captured the financial expense reduction from completed debt prepayments.

Segment performance

1. Rumo: Transported 23.8 billion RTK, a 9% year-over-year increase driven by grain portfolio expansion. Reported EBITDA of BRL 2.3 billion, broadly stable YoY; adjusted for one-off impacts, EBITDA grew 4% YoY. It contributed 31.5% of total reported investee EBITDA for the quarter. 2. Compass: Distributed volume remained stable YoY, with lower industrial demand offset by stronger residential/commercial segment performance (which also delivered higher margins). EBITDA increased 5% YoY. It contributed approximately 33.2% of total reported investee EBITDA. 3. Moove: EBITDA more than doubled quarter-over-quarter vs Q1 2026, supported by strong inventory management during the Strait of Hormuz supply crisis that boosted sales volume and revenue. EBITDA was 6% lower YoY due to a favorable 2025 comparison base that included one-off insurance indemnities from a prior industrial fire. It contributed roughly 6.8% of total reported investee EBITDA. 4. Bradar: Performance was negatively impacted by portfolio revaluation tied to announced land disposals and lower net operating revenue driven by reduced ATR prices that reduced lease contribution. It contributed the remaining share of total reported investee EBITDA.

Risks & headwinds

- All announced divestment transactions (the Hadar land sale, the port terminal stake divestment) remain subject to customary closing conditions, and completion is not guaranteed. The Hadar transaction is expected to close by the end of October 2026, but may be delayed or fall through if conditions are not met. - Forward-looking projections for the debt service coverage ratio and performance depend on realized dividend distributions from investees, the successful completion of announced divestments, and continued favorable operational performance from portfolio assets, all of which are subject to unforeseen changes. - Moove's strong Q2 2026 performance benefited from temporary sector tailwinds tied to the Strait of Hormuz supply crisis, which may not repeat in future quarters, leading to potential quarterly earnings volatility. - The company's deleveraging and debt coverage targets depend on the successful execution of planned asset monetization, which is subject to market conditions and buyer demand that may result in lower proceeds or delayed sales than currently expected.

Analyst Q&A

• Q: Given the ongoing holding simplification and G&A reduction efforts, how does management view the future of Cosan's stakes in Rumo and Moove, including potential sales or an IPO for Moove? /

  A: Management confirms it is moving forward with plans to sell a portion of its Rumo stake, and discussions with potential buyers are ongoing. No further updates are available at this time, and material updates will be disclosed to the market once finalized. For Moove, management says the company delivered a strong expected quarter, and they have full confidence in Moove's management team after it navigated last year's industrial fire successfully. An IPO for Moove is not appropriate in the current market environment, and management is not considering a sale of its Moove stake at this time.

• Q: Can the company be more ambitious on recurring holding company G&A targets after the recent simplification steps like ADS delisting? /

  A: Management confirms that further G&A reductions are achievable and are a clear priority. The ADS delisting process will reduce compliance and documentation costs once SEC deregistration is complete, and the recent management restructuring that combined overlapping teams will accelerate cost savings. Internal forecasts already include lower G&A for 2026, and additional reductions are expected in 2027, with cost reduction remaining an ongoing priority.

• Q: Should we expect significant improvement in the debt service coverage ratio after Q2, and is there more planned structural change to simplify the holding further beyond current deleveraging? /

  A: Management confirms the coverage ratio will see significant improvement, which is why the company published year-end guidance. Temporary seasonality of dividend distributions hurt the Q2 ratio, and dividends will return to expected normal levels in the second half. The biggest driver of deleveraging is portfolio changes, but the full impact of 2026 transactions (Compass IPO proceeds closing in Q3, Hadar sale proceeds in Q4) will only be partially reflected in the 2026 LTM ratio. There is no additional structural change news to announce beyond the ongoing consistent simplification effort already disclosed.

• Q: What is Cosan's strategy for monetizing the Bradar land portfolio, and when will Moove's earnings normalize after the strong Q2 tailwinds? /

  A: For Bradar, the announced portfolio changes are aligned with prior disclosed plans: management will continue monetizing high-quality land assets when market valuations are attractive, with no need to sell at discounted prices, and the recent changes improve corporate efficiency by eliminating unnecessary holding layers. For Moove, Q2 did benefit from supply crisis tailwinds, but the team has a proven track record of adapting to adverse market conditions. Even with higher raw material costs expected going forward, management expects consistent recurring performance from Moove, which has also deleveraged to its lowest level since the Petro Choice acquisition, demonstrating disciplined execution.