Good morning, everyone. Thank you for waiting, and welcome to Cosan's Second Quarter 2024 Earnings Release Video Conference Call. [Operator Instructions] Please note that the information contained in this presentation and in statements that may be made during the conference call regarding Cosan's business prospects, projections and operating and financial goals constitute the beliefs and assumptions of the company's management as well as information currently available. Forward-looking considerations are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not materialize. Investors should bear in mind that overall economic conditions, market conditions and other operating factors may affect Cosan's future performance and lead to results that differ materially from those expressed in such forward-looking statements. I will now turn it over to Mr. Rodrigo Araujo.

Hi, everyone. Welcome to our earnings call for the second quarter of 2024. So starting here with our priorities, management priorities. Just I'd like to reinforce what we've been discussing over the last couple of quarters. We're mainly focused on having a lot of capital discipline, especially given the leverage at the holdco level and much more challenging interest rate scenarios with higher interest rates for a longer time. So we're focused on executing the projects of the portfolio on delivering what we set up in the business plans. And of course, always focused on managing our talents in the group and providing the highest safety standards. With capital discipline, of course, we're able to support the contracted growth of the portfolio by making sure that we continue to invest in the structural projects of the different businesses. So moving on to the next slide. We have our EBITDA under management moving from BRL 6.2 billion last year to BRL 7.1 billion in 2024. We had a negative net result of around BRL 200 million in this quarter. And looking at our safety record in this quarter, we had 0.24 LTIF, which is quite close to what we had in the first quarter of 2024. And of course, we're always looking for better results in terms of operational efficiency and safety, but this result shows the track record of evolving safety standards within the group. In terms of dividends and interest on capital received on this quarter, we see a very important result and an important evolution when compared to last year. Of course, we highlight dividends paid by Compass and Moove, which, of course, more and more become relevant dividend payers within the portfolio. You see that we had a slight decrease in our corporate net debt, and an…

We will now begin the Q&A session with Mr. Nelson Gomes; Mr. Rodrigo Araujo; and Ms. Ana Perina. [Operator Instructions] Our first question is from Luiz Carvalho, UBS.

Great, and congratulations on reducing the debt this quarter. Rodrigo, let me take the opportunity of your presence to discuss the liability management at the holdco level. That's probably one of your priorities given your leverage ratio and the potential to deleverage. So it's probably a great opportunity to create value. You've mentioned it, but if you could give us a bit more color on the priorities? So you had the initial filing at Moove for a potential IPO. How do you see these advances and uncertainties when it comes to Compass with the Subida da Serra? You also touched on Vale. What can we expect in terms of position size without losing representativeness at the Board? So if you could give us an overview of what we can expect over the next 12 to 18 months, that would be great. Second question, based on the debt reduction this quarter, doing the math and considering the holdco discount, it looks wide open. So how concerned or are you concerned about that? And what could you potentially do to have a fair pricing when it comes to the assets?

Luiz, thanks for the questions. To your first question, I'm giving you an overview. You know that we've been quite vocal about that. We are highly focused on capital allocation. And obviously, leverage is a priority in our agenda. It is a point of concern. Since the company's capital framework was adjusted, we've been working on that, looking at interest rates, so that we can have interest coverage that is sustainable over time. So you know we've been working on that. And I think in terms of liability management and the structure as a whole, we did what was most urgent. I think the first half of the year was highly active. We earn well on Vale's collar financing completely. We also did some fundraising to address the 2 amortization towers we had for '24 and '25. So our profile is much more suitable to the group's investment cycle. We will have major investments over the next 2 to 3 years without any maturities until '27. So in terms of profile, I think we're looking pretty comfortable with what we've done so far. Obviously, if there are any opportunities considering the right cost, prices and maturities, we do have options like bonds outstanding. There are other potential transactions that can be done, but it would be much more strategically. It's about the right timing and opportunities. Now moving on to your point about our portfolio, what we see are -- the business is executing on the plan. When we talk about disciplined capital allocation, considering the current interest rates, and that can be reflected on all of the group's companies, everyone has been more disciplined. You've been seeing what companies have been doing in terms of investments and divestments in their portfolio. And that will be an increasingly more natural…

The next question is from Gabriel Barra, Citi.

I have questions about a couple of topics. And the first one is about Vale. There was a reduction, as you mentioned, you've unwield the collar, there's the co-spread and over 4% position at Vale. So how are you thinking looking forward considering deleveraging? How should we consider Cosan's investments in Vale? Is it still a company's core asset? So if you could -- I know you can't comment on your exact plans, but if you could give us a bit more color, it would help us understand how the company is deleveraging. Second, point is about the debt service coverage ratio. You were talking about 1.5%, you're close to 1.3%. And the second point I'd like to hear on is a trend. How would you deleverage? How much deleveraging should we expect over the next few years?

Thank you, Gabriel. Thanks for the questions. I'll start with the first question, which is about Vale. As you said, we have readjusted our position looking at deleveraging Cosan. In terms of the portfolio as a whole, and that goes to our investment in Vale, but it also applies to our other major businesses in the portfolio. We don't expect to make any great changes in our portfolio mix and the verticals and the relevant businesses in the portfolio. But in the specific case of Vale, obviously, we'll be monitoring it very closely. There are many relevant events that are ongoing that have the potential to happen over the next 12 to 18 months. And so we're monitoring that very closely. There are no expectations of any changes. But obviously, we are balancing, leveraging with the size of our stake so that we can continue to have an influence. So no changes on the horizon, but we will be monitoring it closely. About the interest coverage. Obviously, we know that the dividends flow is something that happens over the whole year, and it's not linear. There will be fluctuations in that number, although we have celebrated the increase to 1.3. The dividend payout cycle is not a linear process, but bringing it to 1.5x. And just to share some of the rationale, 1.5 is something we believe is enough to cover the debt service, we can cover the holdcos' existence costs, and that's on our agenda. So how can we make the holding company more efficient, more streamlined when it comes to costs and in addition to paying out Cosan shareholders, we can organically deleverage over time without necessarily depending on portfolio management. So the 1.5x is based on that rationale. So having a more sustainable 1.5 would allow us to be more organic. We have no set date to get to that, but I don't think we'll be going over that level consistently before the end of '25. So we're working to get there as soon as possible, but there is no set date, it's much more something that we see as sustainable to manage our portfolio going forward. And obviously, I have been very vocal when it comes to how important it is to deleverage, but it's also important to point out that we don't want to compromise the quality of our portfolio to do that. Obviously, deleveraging is key. Obviously, there's a huge opportunity to transfer value from debt to equities. It is on our radar. It's important to us, but that needs to be done by keeping the same level of quality or improving it. So we're not just looking at one side of the equation without looking at the whole. Thank you for the questions, Gabriel.

The next question is from Monique Greco from Itau BBA.

Rodrigo, I have a follow-up question about your comments. For some time, you have been reiterating the importance of making sure you have the right CapEx execution considering a more challenging macro environment, especially considering the interest rate. And now you've just said that we have been seeing some natural movement in terms of managing portfolio at a subsidiary company. So considering the current investments made by the subsidiary companies and what's on their plan, what would you say are the main challenges to execute on your CapEx? And where do you think there's more room to adjust the investment plans to face this challenging macro scenario? The second question is about Radar. Usually, there's an assessment in the second quarter, and it didn't happen this time around. So how are you seeing the current land market, both in terms of liquidity and appreciation? And also if you could comment on your JV with Nuveen for the land portfolio management, that would be great.

Monique, thanks for the questions. I'll start with your first question about our CapEx execution and discipline and portfolio allocation. And Ana can take your question about Radar. About our CapEx execution, the main point is the challenge in a more complex interest rate scenario and the need for higher returns applies to everyone. Cosan and all the other businesses, obviously, those businesses that are going through a more CapEx relevant moment, they have the challenge of return on their projects. But also the CapEx execution challenge. We know that it's never -- CapEx is never an easy thing in Brazil. So there's the return issue and there's the execution issue, which is also very relevant. In terms of portfolio management. I did touch on that, but I think it's important to put it into context. If you look at our portfolio, we've seen that across all businesses. Terminals have been sold and partners have changed at Rumo. There have been strategic decisions at Compass to keep part of the portfolio and divesting part of the portfolio, acquiring what's strategic, divesting where we don't think we're the best shareholders. At Raízen, part of the distribution -- distributor generation business has been sold. So it's hard to say where challenges are bigger or smaller. The challenge is everywhere in terms of opportunities to optimize or reduce CapEx. I think we find that across our portfolio, and we'll always be highly disciplined when it comes to looking at that consistently. I don't want to talk about any specific opportunities, but the main point is we will be looking at that consistently, whether it's growth CapEx, which we'll do as best as possible so that we can make sure we have the growth we want, capture portfolio growth, but as efficiently as possible,…

The next question is from Bruno Montanari from Morgan Stanley.

I have a couple of follow-up questions, please. One about recycling the portfolio. The largest contribution, will it come from internal decisions from the subsidiary companies, so more dividends coming into the holdco or potential moves carried out through the holdco? So listing new businesses, private placements and up to what point can Cosan influence the decisions that might be made by the subsidiary companies? And your spread on CDI has decreased slightly with the refinancing. Do you think you've reached the maximum spread compression? Or can you work on it and reduce the cost of debt a little bit more?

Thank you, Bruno. I'll start with the first one, and then I'll talk about the spread. With regards to our portfolio, it's a combination of things. Obviously, I mentioned this in my last answer, but I'd like to reiterate the fact that we want to see businesses grow. We want to capture value that comes from strategic projects. Obviously, we're not going to compromise the quality of our portfolio or the execution of strategic projects. Obviously, as I said, return levels that are required in the current scenario are higher and that's clear to everyone. Evidently, in terms of moves made at the holdco level, we're working towards that, but selling large businesses is not something that happens overnight. So we're constantly looking at opportunities, but it's also important to point out that we want to make sure that we keep the quality of our portfolio. So anything that happens at the holdco level will combine deleveraging and high quality across the portfolio. In terms of having an influence on the decisions made by the subsidiary companies, ultimately, what we bring in terms of value creation to the portfolio is bringing in the right challenges, best practices, having a vision of the whole, because we look at the portfolio, and we're able to see that. We're able to share synergies across the different businesses at different times. So making sure we have the right return levels is key. And that's the contribution we make towards creating value. That doesn't mean we're going to change any decisions. We want to make the decision-making process more robust and have the right challenges. We wouldn't pretend to run the everyday business. We want to make a contribution to the capital allocation process. In terms of the spread and liability management, clearly, there are consistent opportunities to reduce cost and to bring the average cost down through different operations. What used to be more urgent, as I said at the beginning, we've already done that. So now we need to find timely opportunities in terms of the right time for cost, improving duration, lower costs, but there are opportunities to tighten those spreads, and we will be making the most of those. Thank you for your questions.

The next question is from Bruno Amorim from Goldman Sachs.

I have a follow-up question about capital allocation. You've been talking a lot about focusing on the current portfolio, developing the ongoing projects the subsidiary companies, what might trigger a change in that behavior? And what would make you more comfortable in terms of the debt service coverage ratio to invest outside your current portfolio?

Thank you, Bruno. Thanks for your question. I did mention having a coverage level that's closer to 1.5, because that would make us more stable and more organic in terms of indebtedness. An important point, I think, I should stress is, we give you a summary, but we have lots to do in our pipeline in terms of portfolio, complex projects, structural projects, and we need to have focus. So in addition to the leveraging benefit, discipline in capital allocation, we need to have focus. We need to execute on things that we can manage properly. So what we can manage and focus on is what is currently in our pipeline by either keeping the same level of quality or improving it. So focusing on doing a few things, well, is very important. I mean that's a soft aspect, but it's a key aspect, if you want to be successful. Thanks for your question.

The next question is from Lucas Ferreira from JPMorgan.

Rodrigo, I don't know if you'd be able to share it with us because your portfolio is quite complex. Your coverage ratio has some instability in terms of FX, it's being discussed if the BC is bringing the interest rate up 150 bps, and the FX will be net positive in terms of paying out dividends at your subsidiary companies. But are you putting all that into the equation, what you have in terms of payables and receivables? How unstable are those variables? And would that be helpful or not looking forward to get to that 1.5x? And my next question is more qualitative. How do you see the business scenario in Brazil and around the world in terms of the economic environment? Is it making the group a bit more cautious or more risk adverse? Does that speed up the company's priority to look into potential investments or to work on specific leverage or coverage target that is a bit higher than expected?

Thanks, Lucas. Thanks for your questions. I'll start with the interest rates and being sensitive to it. Obviously, I'm not going to share a guidance when it comes to that. But obviously, the potential interest rate increase makes everything more challenging. It does make the scenario more challenging. You know that we swap our debt to floating CDI. There are specific things like the perpetual bonds, we don't swap the principal. So I'm not talking about the debt level, because the spot effects affects the debt level. But in terms of interest rates, we do swap substantially looking forward. But yes, you are right. FX going down, but interest rates do make it more challenging. So focusing on good capital allocation and deleveraging also has to do with that so that we can have a lower debt level that makes the interest rate cycle less painful. So that's another perspective. As for the business environment and the economy as a whole, obviously, if we go back 2 years, money was extremely cheap all over the world. And now it's a much more challenging environment. Interest rates have gone up across the board, especially in Brazil. And in the short to the midterm, we don't see it going back anywhere close to the interest rates we had in 2022. So we're going to have to coexist with this new environment. And you're right, we have to be more disciplined, I'll say, disciplined instead of cautious, because sometimes in this kind of environment, you have to be a bit more aggressive. But we have to have more discipline because interest rates won't be going down. So we need to learn in a world where capital allocation is the name of the game. That's why we have a very solid message. And that's why we keep repeating that, that's what we'll be focusing on. Thank you for your questions.

The next question is from Pedro Soares, BTG Pactual.

Rodrigo, I've got an objective question. We have discussed a potential restructuring of preferred shares connected to Vale's funding. I think you mentioned that, that is a possibility. Could you share with us whether it would make sense to consider that option again in terms of the timing to maybe speed up the holdco's ability to deleverage by increasing dividends through Compass and Raízen?

Thanks, Pedro. Good morning, and thanks for your question. It's important to stress that any changes to preferred shares can only happen after the fourth year of the structure. So that's not something we'd be able to do in the short term. On the other hand, it doesn't mean that we'd be interested in doing that now. It's always important to point out that the structure of preferred shareholders is a structure with an equity characteristic that is served by the business dividend flow. So looking at the capital structure as a whole, anything -- and this is a key point to share with you. We want to have flexibility. We're looking at lower costs, short-term maturities, but also flexibility. I talked about the outstanding bond '27. We have other structures in addition to the bond '27 that are outstanding, because we want to have flexibility. If there is a liquidity event in the company, we need to have room to pay for it. So it's a combination of things, an ability to deleverage, but we don't want to be completely tied down without preparing structures. So in summary, the preferred share structure has a very competitive cost in our portfolio. So it's not on our radar to make any changes to that structure. Thank you for your question.

The next question is from Gustavo Sadka from Bradesco.

My question is about the discount at the holdco level. One of the ways of looking at it is either the discount is high or you don't have mark to market, they haven't been appraised at Cosan. And piggybacking on the question about the macroeconomic scenario because it's a more challenging scenario, can we consider other mark-to-market options in addition to the private placement, as Compass has done in the past or selling a stake in these businesses, could that be a mark-to-market option?

Thanks, Gustavo. Thank you for your question. We're always considering options, and those options do exist. Obviously, there's nothing in the pipeline right now, but we're always looking into it. Let me just separate what you said about the capital market. We know a huge challenge in the Brazilian capital market. It's not necessarily the same thing in the American market. It's a much more thriving market and much more functional than the Brazilian market as a whole. But generally speaking, we consider all kinds of opportunities. There's nothing we don't look into. We don't assess, we don't consider. There are no short-term events. Let me just make that clear, but it is something we do look into, yes. Thank you for your question.

This concludes the Q&A session. I will now turn it over to the manager for their closing remarks.

Thanks, everyone, for joining us on our earnings release conference call. The IR team is available to answer any remaining questions, and I'll see you in the third quarter earnings release conference call. Thank you, and have a great day.

Cosan's Second Quarter 2024 Financial Information Video Conference is now concluded. For further questions, please contact the Investor Relations department. Thank you for joining us, and have a great day.