Ultrapar Participaçoes SA Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Overview: 2024 was a year of important improvements despite volatility. Growth in neutral gas and natural cargo, resilience in Ipiranga, strong operational cash flow generation. Large capital allocation with RMB 1.8 billion investment in Hidrovias, acquisition of Witzler, evolved management model, and planned CEO and CFO transition by April 2025.
• Consolidated Results: Recurring EBITDA in Q4 2024 was RMB 1.284 billion, a 23% year-over-year decrease. Annual recurring EBITDA was RMB 5.375 billion, a 4% year-over-year decrease. Net income 2024 was RMB 2.526 billion, same as 2023.
• Cash Generation: Operational cash generation 2024 was RMB 3.736 billion, 2% lower year-over-year. Received final payments from Oxiteno and Extrafarma totaling RMB 977 million. Capital allocation for acquisitions was RMB 1.782 billion, CapEx 2024 was RMB 2,213 million, a 14% year-over-year increase.
• Leverage and Reliability: Leverage increased to 1.4x in Q4 2024. Net debt reduction due to operational cash generation, offset by advance payments, discount reduction, and buyback program.
• Fuel Industry Challenges: Unlawful activities in the fuel sector, loss of RMB 29 billion annually due to tax evasion and fuel deuteration, non-compliance with biodiesel blend in diesel, and regulatory advancements.
• Investments: 2024 CapEx was RMB 2.230 billion, 59% allocated to expansion. 2025 investment plan was RMB 2.542 billion, 60% allocated to expansion.

Segment Performance

• Ipiranga: In the fourth quarter of 2024, recurring EBITDA was RMB 844 million, a 27% year-over-year decrease. Annual recurring EBITDA totaled RMB 3.3 billion, a 6% year-over-year reduction. Volume sold in Q4 2024 decreased 1% year-over-year. SG&A decreased 13% in Q4 2024 compared to Q4 2023. For 2025, Ipiranga expects profitability levels not below that of the fourth quarter of 2024 despite lower seasonality, helped by inventory gains in Q1 2025.
• Ultragaz: Q4 2024 recurring EBITDA was RMB 441 million, a 9% year-over-year growth. Annual recurring EBITDA was RMB 1.687 billion, a 2% year-over-year growth. LPG volume sold in Q4 2024 was 3% higher year-over-year. Ultragaz expects EBITDA similar to that seen in Q1 2024.
• Ultracargo: Q4 2024 net revenue was RMB 283 million, a 10% year-over-year increase. Annual net revenue totaled RMB 1.076 billion, a 6% year-over-year increase. Installed capacity remained at 1,067,000 cubic meters. EBITDA in Q4 2024 was RMB 169 million, a 9% year-over-year growth. Ultracargo expects EBITDA similar to that seen in Q1 2024.

Guidance

• Ipiranga: Expect profitability levels not below Q4 2024 in Q1 2025 despite lower seasonality and inventory gains.
• Ultragaz: Expect EBITDA similar to Q1 2024.
• Ultracargo: Expect EBITDA similar to Q1 2024.
• 2025 Investment Plan: Total investment plan RMB 2.542 billion, 60% allocated to expansion.

Risks

• Unlawful Practices: Impact on margins, market share loss, ongoing challenges in biodiesel compliance, tax evasion, and fuel deuteration.
• Economic and Industry Volatility: General economic conditions and industry conditions affecting future results.

Question and Answer

Q: What do you expect for 2025 regarding Ipiranga's margins and industry unlawful practices?

A: Rodrigo Pizzinatto discussed expectations for 2025, mentioning the impact of unlawful practices and regulatory advancements.

Q: Concerning Ultragaz's new businesses, what are the exciting aspects?

A: Tabajara Bertelli talked about new energy solutions, biomethane operations, and energy in the free market.

Q: How does Ultrapar plan to use its favorable balance sheet for investments?

A: Pedro Guedes mentioned focusing on quality in branded stations and opportunistic initiatives based on margins and benefits.

Q: What is the outlook for Ultracargo's CapEx and growth?

A: Decio Amaral stated Ultracargo has a robust pipeline with investments and no slowing down in plans despite high interest rates.

Q: What is the take on the government's gas program for low-income people?

A: Pedro Guedes and Tabajara Bertelli discussed supporting the program as positive for society and industry.