Cosan SA Q3 FY2024 earnings call

Management Priorities

• Focused on disciplined capital allocation, leverage improvement via liability and portfolio management, execution of portfolio plans, high safety standards, and talent pipeline development.

Portfolio and Liability Management

• In Cosan: Amortized RLOG debenture, issued domestic debenture for liability management of 27 callable bonds. In Compass: Acquired control of Compagas, sold Norgás. In Moove: Acquired Pax Group. In Radar: Sold Vista Alegre farm.

Q3’24 Highlights

• EBITDA under management aligned with Q3’23. Net income around RLB 300 million vs. ~RLB 600 million in 2023 (impact of Vale dividend and TRS). Safety metrics slightly increased but within acceptable levels. Net debt flat at BRL 21.7 billion, debt service coverage ratio 1.2x, cash balance changed due to liability management.

Rumo: Higher volumes transported with higher tariffs led to higher margins. Compass: Increased natural gas distributed volume, progress of Edge operations, stable EBITDA Q-on-Q. Moove: Lower volumes but 9% EBITDA increase Q-on-Q due to product mix and commercial strategies. Radar: Lower EBITDA mainly because no land appraisal in Q3’24 unlike Q3’23. Raízen: Impacted by drier weather, fires reducing sugarcane crushing, lower ethanol prices, but partially offset by better sugar business results and Vale equity pickup. Revenue contribution details were not explicitly provided in absolute terms with percentages in the transcript.

Forward-Looking Guidance

• Focus on portfolio management to improve debt service coverage ratio towards an ideal level of 1.5-2x.
• Continuing liability management, including dealing with 27 callable bonds in Brazil and working on portfolio mix to maintain quality.

Risks

• General economic and market conditions affecting future performance.
• Safety incidents and accidents needing improvement.
• Impact of TRS on shares in Cosan.

Q: Isabella Simonato asked about management changes and Raizen's focus.

A: Nelson Gomes said the change was due to perceived need to adjust Raizen's course, focusing on core business like sugar and ethanol, with E2G part of core but reassessment to come.

Q: Thiago Duarte asked about debt service coverage ratio.

A: Rodrigo Araujo said focus on portfolio management to get ratio to 1.5-2x ideal, with urgency to improve without relying on extraordinary dividends.

Q: Matheus Enfeldt asked about Cosan's role in subsidiaries.

A: Marcelo Martins said it's about access to irreplicable management model unlocking value.

Q: Monique Greco asked about Vale investment and Moove/Compass IPO.

A: Marcelo Martins spoke on Vale value creation, Nelson Gomes said no IPO plans yet but private placement possible at right valuation.

Q: Bruno Amorim asked about debt issuance feedback.

A: Marcelo Martins said no restrictions, successful in executing operations.

Q: Vicente Falanga asked about U.S. election impact on liability management and gas release.

A: Marcelo Martins said U.S. election had no impact, Nelson Gomes supported gas release for competitive gas market.

Q: Regis Cardoso asked about management team change motivation.

A: Nelson Gomes said it was due to identified need to adjust Raizen's route, a decision between Cosan and Shell shareholders.