Good morning, ladies and gentlemen. Thank you for waiting. Welcome, everyone to Ultrapar's First Quarter 2021 Results. This is also being simultaneously streamed through webcast and you can reach through ri.ultra.com.br and MZiQ platform. Today's teleconference will be led by Mr. Frederico Curado, Chief Executive Officer of Ultrapar; and Mr. Rodrigo Pizzinatto, Chief Financial and Investor Relations Officer, together with other executives. We would like to inform you that this event is being recorded. And all participants will be in listen-only mode during the company’s presentation. After Ultrapar’s remarks are completed, there will be a question-and-answer session. At that time, further instructions will be given. [Operator Instructions] We remind you that questions, which will be answered during the Q&A sessions, may be posted in advance in the webcast. A replay of this call will be available for one week right after it's over. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. That is important to note. Forward-looking statements are based on the beliefs and assumptions of Ultrapar management and our information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Ultrapar and could cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Mr. Frederico Curado. Mr. Curado will start our teleconference.

Good morning, everyone, and welcome to our conference. Let me start by saying that the first quarter of this year was an improvement over last year, and also was slightly better than what we had anticipated, representing a great start for Ultrapar in 2021. I can't start earnings call without highlighting the competence that our teams have continuously demonstrated throughout those 15 months of pandemic, both from the point of view of the safety of our people, but also the continuity of our operations, which have not suffered any interruption. And we maintained a high level of service to our customers and consumers. So congratulations to the more than 16,000 people of Ultrapar. Well, all of our businesses presented a great operational and financial performance in the beginning of 2021. Ultragaz – starting with Ultragaz. The company continues its journey of innovation and growing productivity with another good quarter of great balance between healthy margins and market share, by the way, this is the best first quarter of Ultragaz history. Ultracargo also had another excellent quarter, so did Oxiteno, which continues to show great competence and take advantage of opportunities derived from a favorable exchange rate and substitution of imports in Brazil. Ipiranga also had a great quarter, beginning to reap the fruits of investments that have been made in developing internal competency and trading and also the improvements in our operational performance. By the way, as you may have seen, we are restructuring Ipiranga’s commercial area. We have created a new position of a Commercial Vice President, which will be dedicated to the network – managing the network of resellers and also our corporate clients. And very happy to confirm that Leonardo Linden who is an industry vet, and until now he was the CEO of our JV with…

Thank you, Fred. And good morning, everyone. It's a pleasure to be here with you once more to talk about Ultrapar’s results. And starting with Slide number 4, let's begin with Ultrapar’s consolidated results. As Fred just mentioned, we started the year with positive news despite the worsening of the pandemic in Brazil, and the more volatile economic environment. Our EBITDA reached R$996 million in the first quarter, representing a 13% increase over the EBITDA we reported in the first quarter of 2020. As you may recall, in the first quarter of last year, we had R$71 million of non-recurring tax credits from Oxiteno. If we exclude this effect recurring EBITDA grew 23% in this quarter, demonstrating the resilience of our portfolio with growing results across all business segments. Despite the EBITDA growth, net income was 19% below that of the first quarter of 2020, due mainly to two factors. We had R$149 million of non-recurring tax credits in the first quarter of 2020, of which R$71 million positively affected EBITDA as I already mentioned and R$78 million benefited financial results. The other factor refers to the negative mark-to-market effect of FX hedging instruments, which negatively impacted our financial results. In this first quarter, the more turbulent economic environment affected the mark-to-market of long-term hedging instruments contracted to protect our bonds that mature in 2026 and 2029. As we intend to hold these instruments to maturity, these effects are only temporary as mark-to-market gains or losses will be neutralized over time. I remind you that on the fourth quarter, and in the first quarter of 2020, the mark-to-market effect was positive given the better economic environment in those quarters. It's worth mentioning the relevant investment in working capital we had this first quarter, as you can see in the bottom…

We will now start the Q&A sessions only for investors and analysts. [Operator Instructions] So the first question comes from Mr. Guilherme Levy, Morgan Stanley.

Good morning, everyone. Thank you for accepting my question. I have actually two. The first one, in terms of fuel, I understand that the window for export was a bit narrow for the first quarter. So I would like to understand from you what is your expectation for the next quarters when we consider the level of price that Petrobras is practicing at this moment? And if you could also tell us a bit how that could change to have that more in the long run to have a refinery coming into the portfolio of the group? And the second question is for Curado. And you said that you have a specific EBITDA continuation. So the EBITDA, I'd like to know a bit about the expectation until the end of the year. And if you could tell us also to what extent the Texas plant is already running since the first closing? Thank you.

Good morning. Guilherme, thank you for the questions and talking about imports. You are right, for this first quarter, we had a very narrow window especially for gasoline. And right now, for diesel, it's quite stable one; and for gasoline, it's still closed. So we're still following up on the progress of the internal price compared to imports. And our level of importation in the first quarter was less because we anticipated this closed window for the first quarter. For the second question Oxiteno. The outlook is positive for this year, where we will be keeping the reference of values that we have [Technical Difficulty] and the plant in the U.S. for the first quarter, as it was already mentioned, is pretty much – it was pretty much closed because of the climate in the region and impacted the other operations in the region as well. For the U.S., obviously there's a negative impact, although there is increase in volume. In terms of the first quarter, it had a negative impact in the U.S. But overall for Oxiteno, it was positive. Because the effect in the U.S. and also the ship in the Suez Canal, I mean and the frost, all of that had an impact.

Thank you.

Our next question comes from Andreas Hachem, Itau.

Thank you. I mean, first for Oxiteno, of course, there were many questions saying that there would be a possibility of the investments. So with this petrochemical scenario where we have something much more heated up and when we talk about the current scenario, how do you see this whole dynamic? What would you say? Do you have any expectation for this year or something that would be further to the next? That's the first question, then I'll get my second question in.

Well, thank you, Andreas for your question. This is Fred here. Well, our big process is of analysis and allocation of capital and to understand what is the portfolio that has a more possibility of generating value. So the investment is a possibility to be able to get the portfolio right. So this won't change with this current scenario. This is more about a long-term and the company has an exceptional performance for 2020 and in beginning of 2021. For that reason, this is a discussion that in terms of valuation that also comes into play and also the portfolio to the value of the company. But there's nothing specific decided on to talk about here. And once we do, we will release that information to the market.

Thank you for that. And the second question related to Ipiranga. I'd like to understand a bit more. You had a shared dynamic was a bit of a change. You have a recovery at the end of the year. So I would like to understand was there any support in terms of volume of Ipiranga? And the second question for Ipiranga, I would like to understand a bit more how was the inventory effect, although there was the tax PIS/COFINS that does affect. I understand that there was a balance that was positive at the end. So I'd like to understand a bit about that?

Good morning, Andreas. Thank you for your questions. So for Ipiranga, there was a cyberattack that had a very small impact in the beginning of the quarter. The operations was one or two days off and then was back right away. So the effect in the results of Ipiranga was very small. That's why we just highlighted the fact that there was an impact in the market of Extrafarma, where there was a greater one in January when there was the cyberattack. The most impacted market was the white label. And we were able to recover in February, March with the gains of trading positioning and allowed us to take steps forward. So to answer the second question, when you talk about inventory, the present is part of the day-to-day of a distribution business. So price difference of the magnitude and speed that we had in this quarter allowed us to have the immediate response to it. So it's important to take a look in the long run more than in the short. So from the gains we had in terms of inventory and trading, we are talking about R$150 million.

Okay, great. Very clear, thank you.

Our next question comes from Christian Audi, Santander.

Thank you. I would like to ask two questions. First, in terms of Oxiteno, I would just try to see if you could tell us how was the progress of margin of Oxiteno for the first quarter when it comes to the margins in March were better than in January or vice versa? Or how do you see the progress for the second quarter? What is your outlook into margin? And the second question, Fred, this is mostly for you, strategic-wise, I would like to understand how do you when it comes to the potential purchase of the refinery in terms of present elections next year, understanding that this brings to light the topic about pricing. And also when it comes to Oxiteno, how do you reconciliate what you said about the result of the company doing quite well. And at the same time, before it was a company that you were analyzing, if it was worth to be sold or not? We can see that by capital allocation. And the third point, is it you are more excited about the opportunities for natural gas energy now than three months ago, because Brazil has changed greatly when we talk about the macro political economic status? Thank you.

Good morning, Christian, thank you for your question. Well, starting here with the first question about the margin of Oxiteno. The first quarter, we had really good throughout the quarter, which varies mostly for total margin, and that's why we talked about it. I mean, we had a volume of commodities was quite under what we usually have. When it comes to the priority, we had to be able to have the market with the supply of what's the agribusiness demanded. So thinking about the frost in the American market and the Suez Canal ship issue that really brought greater issues there, but for the second quarter, we were talking about a greater participation, I mean, of the commodities in terms of it dropping. And Fred, the second question is for you.

Hello, Christian, thank you very much. I mean, I think there are three questions there. Is that right? Let me try to go to the first one about refinery. We had a negotiation with Petrobras, with the Refap in terms of all the contracts and some complementary contracts. And there was no halt to the negotiations. With the change of leaders in the company, our perception and what we realized is that there was even a confirmation or even a speeding up, I would say, of the whole process. So you most likely saw the press releasing the information that Petrobras was able to really have a supplement in terms of the target of due dates to have the contract signed in the choice of the buyer and in the case, it's us. And also for the bidding of the assets that haven't really been sold for both cases. So Refap being the other. So we believe that Petrobras, when it comes to this – those reaffirming these investments. And the second question is about price policy. That is definitely a threat in Brazil. But let's recall that this is one of the big motivators and drivers to break the monopoly Petrobras, when it comes to downstream of refining, which is exactly that point. That is one of the drivers definitely from the agency standpoint, and that won't be very different. I mean, if you were going to have the increase in Brazil. So if we think about being relevant together, we're talking about 20% of the capacity. And we have [Technical Difficulty] Refap and these are the four big ones. So we're getting to 50% if we add them all. So this is quite relevant. And the other relevant factor is that Brazil is a – in quarter, we…

For that reason, I would say that the alternatives are all very good, and you can still have value generated on that. And if it's for the shareholders, definitely, and we would like to see a suitable compensation for such. And I mean in terms of the analysis, definitely, we have a focus on refining – I mean this is a focus of all of us, but we have taken progress in the analysis of such in that way, we will be getting into this at some point, and it's very early to detail exactly how. But this is an intention that is very clear to us to get into it, definitely.

That is very clear Fred, thank you for all the details, and thank you for answering my questions. Thank you.

Thank you, Christian.

[Operator Instructions] Our next question is in English from Frank McGann, Bank of America.

Okay. Just to follow-up a little bit on the last question, and I'm not sure if I heard exactly what you were saying. But the – as you look and you talk about becoming much more of a company focused in downstreaming in the fuel markets and such and restructure the business a little bit to accomplish that, I'm just wondering what – beyond refining, what types of businesses or segments of the business, could you potentially find attractive to expand? And any thoughts you have on that? And then just a couple detailed questions. One, with Oxiteno, any – is maintenance going to have any effect on production levels of – in the next several quarters for the rest of this year? And then Extrafarma, you mentioned that the R$6 million cyberattack effect on EBITDA could potentially be covered by insurance. When you reported the numbers, are we to assume that the R$6 million hit was already in the – included in the first quarter and that the recovery then will be an addition to earnings later on?

I should remind you all that this call we have in Portuguese with the simultaneous translation. Fred, please you can answer the first question. And you can repeat the question in Portuguese.

Well, the question is two other than refining, what else we are looking into. When it comes to the downstreaming sector for oil and gas. And the answer here is that natural gas is a focus we have that is in our analysis. We've been over a year now focusing on analyzing to understand the whole chain of natural gas and understanding of what point in the chain we can use the competencies of our group and the synergies we have with other parts of the portfolio to be able, therefore, to take a decision for investment and to get into that specific sector. Obviously, as a background, that Petrobras will leave the monopoly is being more and more reduced and the possibility of a private investment in oil and gas and natural gas are increasing. Also associated to that to the infrastructure, we have a major company, which is Ultracargo on infrastructure, where we are focused on the fuel and chemical sectors. And when we look into this downstream chain, we look not only into the synergies with Ipiranga and with Ultragaz, but obviously, also Ultracargo. Rodrigo, the questions for Oxiteno and Extrafarma is on you, please?

Okay, Fred. So Frank, starting with the volume of Oxiteno, when we think about the second quarter, we see a maintenance and a similar volume of specialties and an increase and come back in terms of volumes for the commodities. Therefore, we see a greater volume in the second quarter than what we see in the first quarter. And we shall recall that our management of results of the second quarter with exchange rate that we are at right now, we will most likely have EBITDA similar to what we had in the first quarter. And your second question about the negative impact of the R$6 million of Extrafarma after the cyberattack and the expectation of recovery in terms of the impact. Well, we have the policy of insurance against cyberattack, and our expectation is to have a recovery of most of that value. Since we have a premium to pay, and we have a discussion now to talk about exactly what would be the right amount for it for this recovery. So once we do, it will have a positive impact on Extrafarma results for this year.

Okay. Thank you very much.

Our next question comes from Thiago Duarte, BTG Pactual.

Good morning, Fred and Rodrigo and everyone. I would like to get back to the discussion with referring to productivity network and market share progress. Have you – you've already made a year along the last quarter, the more network expansion, the focus is on increase of productivity. On the other hand, when we look into the numbers, I mean, we see something very high, something that is similar to the last two years. I mean my question then is to understand at what stage are you in this process and understanding of improving the productivity of the network. When we think about market share for the quarter, as it was already mentioned, it was more a month over month. But when we look at the resale share, we see with auto cycle, it didn't evolve as much as we saw with the diesel. So for that reason, within such context, it would be interesting to know what you have to say about what stage it's on? And in terms of convenience stores, that's my second question. There was an increase of two stores, but there was a 24 stores of AmPm that you showed there also. If you can talk about the results – the initial results in terms of what you had and how you see the results of owned stores as well, and that would be quite interesting to see? Thank you.

Good morning, Thiago; thank you for your questions. Let's talk about Ipiranga then. Ipiranga has followed its strategy to have stations with greater number of gallons and to filter out the ones that do not have the number of gallons that fits what we need. So we're still in the process. That's why we have the filtering process that is similar to what we have. I mean, we have a positive progress there, just so that you can have a better understanding of the process. The stations we have, the new ones from 2019 and 2020, they have about 300 to 450 cubic meters per month; 220, 2019; 250 for 2020. So we see an increase when it comes to screening the best stations to have our brand. But the ones that are being filtered out for the first quarter, we had a throughput of 50 or less than 100 cubic meters per month. So we are going from a low gallon performance network to have a higher one and with a greater potential as well, which is good for the reseller and some healthy for Ipiranga. Obviously, that has an impact over time in market share. The market share has an impact that is very specific, we had at the start of the year with the pandemic, where we didn't sell to white label because of margins at some point. And in the first quarter, we had greater opportunities to have a good result selling in these markets, and we have an evolution because we're working in trading with ethanol that is a bit further on than fossil fuel. When it comes a bit about our own stores. And let me explain to you about productivity. We are at a very stable level with the pandemic since we have…

Excellent. Thank you very much; thank you for the details.

Thank you.

Our next question comes from Mr. Luiz Carvalho, UBS.

Hello, Rodrigo. Thank you for all the questions. And we have two here, Fred, the first one, for you in terms of capital allocation. When we do – we see the leverage of the company, we see something closes 3 times EBITDA over EBITDA. And this is something we see over time, and we've been seeing it, although in the last quarters. We can see something a bit better when it comes to the operation. We haven't seen the leverage being reduced to a level of what we had before, if we think about a further past from now. I would like to understand how you see the leverage? And when it comes also to the investment that you want for refining and also the potential of the investments. As you have mentioned, Oxiteno, I mean, Extrafarma, is there anything that we can see something a bit greater if there is an unmatched of the investments? I mean, and the second, I'm not sure, if you've already mentioned in the call because I came in a bit late. When we look at the margins of Ipiranga for this quarter, you said R$105 million and thinking about what we had something around R$111 million, but we did calculate here and we see the spot stain. I mean, I know there was a close window there for imports, but I understand that it was most relevant in terms of R$20 per cubic meter. So the question is, if this makes sense. And with that in mind, I want to know if the margin would be something close to 85%, which is a bit even under they had guided. If we believe that the volume will be back to what we had in 2019, by this year, we're talking about a margin from 1,900 per cubic meter. Just to understand if that makes sense, this whole rationale here. Thank you.

Good morning. Luiz, let me get to the first question. Well, I believe just to say quickly, In terms of investments and cash when it comes to leverage, we – and the inertia of the company is quite big. So from 2018, we started to have a specific attention to cash generation, cash flow. And we, therefore, had some inertia that was quite important in terms of investments that we're about to come through for Oxiteno in the U.S. We still had some major contributions. And we had a concentration action in Ipiranga in 2017 of brands – branded stations, as Rodrigo said, filtering out the network, having the improvement of the gallons per station. So this is a response from what we had in 2017, where there were many that were stations that came with our brand and increased the number of stations and this all brought more to the networking. By 2018, I would say, mid-2018, the cash usage was very high in Extrafarma, until we change the expansion plan that was accelerated to one that would concentrate on the network. So this is, when it comes to the capital and for EBITDA last year, we wanted to have the leverage in the second quarter, we got in the way, I would say, because the second quarter of 2020 is – has been with us for a year now. So this is the last quarter where we still have that being part of the calculation. So this will definitely be a relief. So we have a guidance for this year where you already now, where it’s a bit open because Ultrapar – I mean, we'll have that, but we will have an increase from what we had last year. So you'll see an average for the quarter of…

Thank you, everyone.

Thank you.

Our next question comes from Regis Cardoso, Credit Suisse.

Good morning, Fred. Thank you for the question. We've talked most of the points here, perhaps some quick follow-ups. First, the one that has to do with what Ipiranga said for Oxiteno. And on the other hand, Oxiteno had also a very strong quarter. And my question here is more about organic. So the question is if we're seeing a forecast for weaker quarter for Oxiteno when it comes to the spread and if there is that when it comes to the guidance of the year? And the second question, going back to the leverage and capital allocation. Fred, maybe if you could also tell us a bit of how you see the increase of – the SELIC increase, so there is the floating debt there, in my concern when you have a high rate with the fluctuation if it would not take up your future cash generation. So it falls down to this question. How much of a priority is to reduce the leverage? What would be your tools to take that on? Or if it's not the case, maybe the answer should be that this is not a concern at all. Thank you.

Good morning, Regis. And the first question for Oxiteno, we see that we don't expect a big contribution make for the rest of the year. It's something that's very important to define the results of Oxiteno is the exchange rate. And when we decided the guidance interval, we took the exchange rate into consideration. So when we think about the next quarters, I mean, the exchange rate progression and the margin and leverage are the top elements to think about the guidance and something depending on what we would have for it. So in terms of leverage, being very objective, it's a priority, definitely, it is. I mean, we are far from being in a situation in being fully concerned with liquidity. I mean, we don't have any bad in our debt. So it's much more a matter of restoring the possibility of having new investments. So there is a portfolio. It's true that's very important. But there's also a liability managed work that Rodrigo has been on and structuring it. So there is a concern, yes, it's a priority, but it's not one where it surprises us, but very focused on having the leverage brought down.

If I could add to that, when it comes to the financial results, this oscillation that we had in the market that had a negative impact, we shall remember that in the fourth quarter will be a positive one. If it was positive in terms of financial results in the fourth quarter, that could be an impact in the balance of the debt because the hedge is within the balance of the debt. And when it comes to other topics, which the idea is to bring that together with the bad debt that was contracted and most of them have oscillations. And when we think about [Technical Difficulty] there are a short-term oscillations, but they neutralize over time until the due date with no effect.

That is very clear. Thank you, Fred; thank you everyone.

Thank you.

Since there are no more questions, I would like to pass the floor for Mr. Rodrigo Pizzinatto, for your final considerations.

Thank you, everyone, for your questions, for your participation. I should say, again, that we will have Ultra Day. Because of the time of the session, we will be answering the questions that we got on the webcast through e-mail. Our IR team will be answering you. So thank you, everyone, and have a great day. And I'll see you on our Ultra Day on the 14. Thank you.

Thank you. The call release of Ultrapar is over. Thank you, everyone, for your participation.