Gentlemen, thank you for waiting. Welcome to our conference call for Ultrapar to talk about the third quarter of 2021. This event is also a simultaneous webcast that may be accessed through Ultrapar’s website at ri.ultra.com.br. You can also visit this event through the MZiQ platform. The presentation will be conducted by Mr. Frederico Curado, Ultrapar’s CEO; and Mr. Rodrigo Pizzinatto, Ultrapar’s CFO and CIRO. We would like to inform you that this event is being recorded. [Operator Instructions] A replay of this call will be available for 7 days right after we wrap up our session. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act. And these forward-looking statements are based on the beliefs and assumptions of Ultrapar management and on 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 turn the conference over to Mr. Frederico Curado. Mr. Curado, you may now begin the conference.

Good morning, ladies and gentlemen. It is a pleasure to be here once more to talk to you, thank you for being here. We had a really active quarter when it comes to strategic guidance. This applies to our portfolio and our corporate governance. In August, as we already disclosed, we signed a contracts with the sale of Oxiteno to Indorama at a value of $1.3 billion. With that contract, adding to those 2 previously announced, Extrafarma and ConectCar, we concluded the phase of our divestment projects, which will result into a more synergistic portfolio and also in a greater potential for value creation, in our point of view. Furthermore the, reduction of our indebtedness, we will restore our ability to invest in new businesses. So mentioning now, discussing the details of those 3 transactions, we have the closing of ConectCar transaction, not in the quarter, actually in the first of October, so the first day after the end of the quarter. So it’s done and the proceeds of BRL 165 million are already in-house. In the case of Oxiteno, we already have the approval of the transaction by the antitrust agencies of both the United States and Colombia and pending only those of Mexico and Brazil, CADE in Brazil. Extrafarma, also still waiting for CADE approval. So we project, we expect the conclusion of those 2 cases in the first half of 2022. Finally, on portfolio, we also announced the end of negotiations with Petrobras for the acquisition of REFAP. That, I mean, does not change our focus on concentrating our investments on energy and infrastructure verticals, both the verticals, and paying special attention to the energy transition process in Brazil. Now talking about the governance. We had, in this quarter, a very important definition on the succession process…

Thank you, Fred. Good morning, good afternoon. It’s a pleasure to be here once more to talk about Ultrapar’s results. So let’s get started with Ultrapar’s consolidated results on Slide #4. As you can see in the graph in the upper left side, our EBITDA totaled BRL 1,017 million in this third quarter, 2% below that of the third quarter of 2020. It was mainly driven by the drop in Ipiranga’s result, attenuated by record EBITDAs at Oxiteno and Ultracargo. Ultrapar’s net income was BRL 374 million, 35% above that of the third quarter of 2020, due mainly to the one-off reversion of income tax levied on monetary adjustments of tax credits in the amount of BRL 196 million registered in this third quarter. Such effect derived from a favorable decision of the Brazilian Supreme Court that the monetary adjustment of tax credit should not be taxed. If we exclude this effect, the net income for the third quarter of 2021 was BRL 178 million, a 36% reduction year-over-year. The main reason for the reduction was the BRL 138 million worsening in financial results, which reflects the temporary negative effect of mark-to-market of our bond’s hedges. As our policy seeks a neutral exchange rate exposure, the bonds are hedged until maturity, which amplifies mark-to-market results in volatile scenarios. Nevertheless, as our intention is to hold the hedging instrument until maturity, this temporary effect will be back to 0 over time. Our September year-to-date CapEx totaled BRL 1.2 billion, a 16% growth year-over-year, mainly concentrated in expansions in Ipiranga, Ultracargo and Ultragaz. We recorded BRL 1.9 billion accumulated cash flow generated by operating activities compared to BRL 2.6 billion in the 9 months of 2020. The lower cash flow generation resulted from increased investments in working capital, led by soaring fuel…

[Operator Instructions] Our first question is from Gabriel Barra, Citibank.

Let me ask you about capital. When we look at what was said before, with the reorganization of the portfolio and with this new strategy with Extrafarma and Oxiteno, which is now a leaf you have turned, and when we think about the strategy of the 2 biggest competitors, we do apologize, but the sound quality is really bad and it’s not possible to translate his question right now. Let’s talk about the strategy for the third quarter, which should be more complicated. You’ll probably see volumes being imported by distributors and I would love to understand your strategies.

Thank you, Gabriel. Let me answer the first question, and then Rodrigo will be able to answer the second question. Yes, we do expect a lot of deleveraging with these divestments. By mid-2022, we forecast that we will have overcome all of this. Of course, we do have organic opportunities, but I think what is going to change the needle here is inorganic opportunities. We are working on it. Of course, I can’t give you a lot of details on what we’re planning for, but this is only natural. We’re getting closer and closer on a better perspective for this value chain and we want to invest in this value chain. To do that, we want to leverage what we do well. This is important. We need synergies, either strategically speaking, operationally speaking or in a management sense. Biofuels are also something very likely for us. Our M&A team is working hard on these analysis. We need a more clear definition. And when we do have it, we will be making announcements to our industry. REFAP does not change our focus on infrastructure and on energy. Of course, this was a relevant investment opportunity. And when it no longer represented a relevant opportunity, investing in it no longer made sense. With regards to Ipiranga, Rodrigo will go into details.

Gabriel, as you were saying, in the third quarter, we saw the recovery of margins throughout the quarter. Increases in inventory in the third quarter were not relevant. Now for the fourth quarter, if we think about what we have for the 9 first months and what we did in 2021, you see that our results in reals per cubic meter are BRL 75 to BRL 110, which shows continuity in the recovery of results from Ipiranga in the fourth quarter. We do expect to see more normalized results throughout 2022 as well. When it comes to strategy for the fourth quarter, when it comes to supplies, Ipiranga, including Petrobras purchasing and imports, has already catered to all of its demand in volumes for the fourth quarter.

Our next question is from Guilherme Levy, Morgan Stanley.

My first question is a follow-up to the first question regarding Ipiranga. For October or maybe for the beginning of November, what do you expect for the gross margin? I’m asking because you mentioned that the fourth quarter of 2021 should be similar to the fourth quarter of 2020. And the gross margin last year was a little bit lower. So what do you expect in this sense? Do you have any expenses putting pressure on this result? And here’s my second question regarding imports. What is the level of imports Ipiranga is using right now? And what should we expect into the future if we consider our strategy and the price positioning used by Petrobras in the last few months? At this level of pricing, does importing makes sense? Is it a one-off transaction? This is my question. Thank you.

We don’t have the final results for October, but this was a good month. So we believe the gross margin will be aligned with what we saw in September. But again, I repeat, we don’t have the final figures. For us, when it comes to imports, this has to do with demand. We’re going to import according to our needs. And strategically speaking, this is relevant, this is good. We have good supply with Petrobras, but as Rodrigo was saying, we are taking an import stance to make sure we’re able to supply our network through the end of the year. We may be importing around 10% of our volume for the first quarter. Now Rodrigo, results for the fourth quarter.

Guilherme, I think what he said is what we should say. October is being a good month, even better than September. And the gross margin for the fourth quarter of 2021 will be higher than the fourth quarter of 2020. So a little bit above what we had year-on-year because of similar effects compared to the third quarter.

Our next question is from Regis Cardoso, Credit Suisse.

Let me go back to Fred’s previous comment. I think he said what is going to change the needle is inorganic opportunities. I do believe this was certainly true for an acquisition like the refinery. But what we have seen from your peers in this segment of natural gas, biofuels and renewable energy is more peripheral allocation. So let me try and understand what you see for the size of these opportunities? For example, inorganic opportunities and potential for the generation of value with an internal turnaround. Can you please comment on that? Do you see a structural reason for the margin gap between Ipiranga and its peers? Because we’re thinking about initiatives that could lead to an improvement in future results for Ipiranga and to close this gap in margin. So this is my first question. Now as for my second question, in the guidance for the year for Ipiranga, we have results for the fourth quarter going from a little bit over BRL 500 million to BRL 600 million. When it comes to margin, it’s around BRL 70 per cubic meter to BRL 100 per cubic meter. What would it take for you to get the low or the high of this gas? Is it inventory? Is it imports or exports? What would it take you to the low figure and the high figure in this forecast?

I can start. Any investments for us is diversification. We are looking at different points in this chain. For example, we looked at Sulgas. We analyzed their business and we used our discipline for analysis of risk and return. We didn’t believe there would be appropriate returns in this case. That is what we took into account. Now we can talk about smaller projects or bigger projects. And I know I’m being really general here. But of course, I have to, I cannot mention any names. But I can tell you that we are looking at a big portfolio of alternatives. And the big take-home message here is that diversifying into other activities within these 2 verticals of energy generation and infrastructure is important. I didn’t talk about this, but Ultracargo is looking beyond fuels and chemicals to understand how, if and why it could invest in other activities. First and foremost, we need to deleverage our statement. We need to recover our ability to invest, and we are doing this. Regarding Ipiranga, generally speaking, let me take your question as an opportunity to give you a brief context, a brief overview on this. Our planning for Ipiranga is not in the wrong direction. We may have had some flaws in the execution of this plan, so yes, certain things are certainly changing. We are focused on the execution of this plan. First, we have de facto prioritization. For example, we have 14 strategic initiatives. And of course, all of them are important. But we need to figure out what truly makes a difference. We are answering this question, and that is why we are now focused on 4 big pillars. We have logistics, efficiency and supply, for example. In July, we had a shortage of products, and this is not acceptable. Rodrigo just said that we have a guaranteed supply for the fourth quarter. I know this is supply 101, but it’s incredibly important because any shortages will have an impact on margin. Now when we think about the quality of our network, we have a legacy process of low-demand stations. And we are not shifting gears and changing directions here, but we are working on intensity and focus so that we can work with higher averages of sales and higher volumes. In this quarter, we had a reduction in the number of stations, but our goal is not to work with the number of stations, but the average volume and the averages for stations. Ipiranga had already mentioned this, but I think we can expect more consistency and more coherence in the execution of our planning. Rodrigo, I think these are the brackets we have, right?

Thank you for your question. Regarding Ipiranga’s guidance, let me tell you what would lead us to the bottom or to the top. We would have the bottom figures if we had strikes or loss of imports. Now we could reach the top with better inventory gains and better imports. With volumes, we don’t anticipate any changes in trends, but the bottom and the top could be reached through these factors.

Our next question is from Thiago Duarte, BTG Pactual.

Let me ask you 2 questions. First, let’s go back to this conversation regarding Ipiranga. And I actually would like to understand the diagnosis of what brought us here from the second quarter, and this important evolution that you are showing month by month for the third quarter. When we discussed the results for the third quarter, you mentioned a few points regarding market conditions and volatility in the prices of ethanol for the second quarter. Now you mentioned a few new elements. And I believe Rodrigo said that this evolution in the quarter led to relevant gains in inventory. I know we do have a number of variables here at play. But could you please share a bit of the diagnosis you have for this industry and for the competition? What do you expect as changes or reassessments more strategically speaking?

I think right now, for the fourth quarter and the expected margin, we need to understand what is the cruise speed, strategically speaking. We need to understand the diagnosis of everything that happened in the past 6 months. And I think this will be important to write our way forward.

Now my second question when it comes to capital allocation and opportunities in renewables and natural gas has to do with the renegotiation for buying the refinery. Strategically speaking, this is really different for us, a company wanting to allocate capital to buy this kind of asset. And companies looking at opportunities in other chains, for example, renewables and gas, as you mentioned before. So I would like to understand these changes. Why didn’t this purchase go ahead? Was it about pricing? Was it about risk? If we take into account the price of fuels in Brazil, for example. Or was this a change in strategic thinking? So I just want to think about diagnosis on what to do with the capital that is available to you right now after selling off a few assets.

Thank you, Thiago. Let me start with your question regarding Ipiranga. As I said before, I think we had the most gaps in execution at Ipiranga. In previous quarters, sometimes we had inertia, and I do really believe this was a one-off, for example, in July. When we look at margins in August and September, we see Ipiranga as a profitability -- as with the profitability it should have. And of course, in this industry, this has an impact on everyone. We had and we still have to deal with our relative efficiency. That is why I’m saying we need to focus on what makes the difference, which is good planning, good procurement, good distribution. Let me tell you an anecdote. Recently, we changed our imports procedure. We always had the CIF or actually, it’s not CIF, it’s GAP [ph]. That’s a one-off transaction, but it’s BRL 20 in difference per cubic meter. It’s a lot. So we are trying to change this process so that we get to a more sophisticated planning. In addition to products, we need planning. Let me give you an example. For pricing in July, we had some mistakes in the pricing management. We didn’t have the transfers that we needed to have because of cost increases. So this had tremendous impact on our margin in July. So that is why I’m talking about inertia. And yes, there are many factors, Thiago, but we need to look at Ipiranga as a business that is not that complex. If it does what it needs to do well, which is buying well, storing well and distributing well, it will go back to the levels of profitability it’s always had. And obviously, this industry has an impact on every player, but there’s no reason why we would be…

Our next question is from Vicente Falanga, Bradesco BBI.

Fred, I have 2 questions. Fred after Sulgas, do you see any other potential business with gas distributors in Brazil? Can think about compass. I just want to understand your plans for the distribution of natural gas. Now my second question has to do with procurement directly from distributors. What do you think about that when it comes to risks and opportunities?

With Sulgas, it’s really simple. The minimum price for auctions for us would be a return of investments which is not compatible with what we would expect. It’s as simple as that. And we always look at this industry under these lenses. We need to see opportunities. We need to think, for example, about potential private enterprises, but we always think about risk and return ratios on these investments. And I’m not really sure if I was able to understand your question. But I think you want to hear about ethanol for stations?

I believe his question was about the impact of direct ethanol sales to stations.

I apologize. We saw an approval in the models used to sell biodiesel. Petrobras would buy in auctions for biodiesel, but apparently now distributors will buy directly from biodiesel producers. So what do you think about this when it comes to risks and opportunities.

Vicente, we don’t anticipate any big impacts. This is positive for this industry, and this will promote more visibility. But there’s no relevant impact on the price of diesel in the short term in our opinion.

Our next question is from Luiz Carvalho, UBS.

We have three points. First, I would like to hear your take on the changes that we saw regarding the top management of the company. The position of CEO, the new position. Lutz, he may be in a temporary position as the CEO of this company. We have Linden arriving at Ipiranga. What do you believe could change when it comes to approaches? This would be really useful. My second question is for you, Fred. We know there is a minimum payout expected in the bylaws when it comes to distributing dividends. Right now, the company doesn’t have such a comfortable leveraging. We know that this leveraging could go a bit down with resources in the sale of Oxiteno. But as you were saying in the call, but you mentioned you saw opportunities for inorganic growth. Now would you schedule a new meeting to change this distribution rule? Do you think right now the best approach from a standpoint of return to investors is truly to return capital through dividends? Or does it make sense to protect cash in this company? Just think about some kind of acquisition or organic growth, not necessarily dividend payout. And my last question is re Ipiranga. In the past years, we saw performance well below our peers for Ipiranga. And I think my question in the previous call had to do with this because we saw, in a way, erratic behavior by Ipiranga when it comes to margin and market share. You need consistency. And you mentioned the last months have been better, but the third quarter was still really bad. And Petrobras also announced changes in behavior, forcing players to import fuel to meet the demand. In what we discussed in the past was that Ultrapar or Ipiranga is falling behind a bit when it comes to peers. And I would like you to please tell us what you think about this scenario regarding Petrobras’ behavior and how the company is getting ready to face this notice.

Luiz, thank you. Rodrigo can answer the third question. Well, this is the last term by Pedro. He will be out in April of 2023. And Marcos, who is at the Board, intends on taking his place. Of course, the meeting will prevail, but this is his intent. So we have this opportunity because Marcos is close to business. I will finish the current term as CEO for 16 months approximately until April of 2023. And he knows the company really well. But you’ll get even more in-depth knowledge about the company after this experience. So everything has been well planned for the future. We have an excellent relationship with him, and we have been working together, by the way. And I was invited to the Board. This wasn’t something that we agreed on before, but I got this invitation, and I will be able to keep on helping through the Board. So I think we have planned well for the future. And we’ll have a really nice transition. Marcos is really close to what we do on a day-to-day. And Linden has actually been in this group for a while. We joined the group basically together when he came to Iconic. I know his work at Iconic, and I consider his work excellent. I think his results speak for itself. We had important knowledge, important acknowledgment from the partners. And we brought him to Ipiranga at the beginning of the year, and we were already thinking about a succession plan with Marcelo. So Linden was brought over because of succession plans. Of course, our timing was not perfect. And with all the changes at the Board, we also had these succession changes at Ipiranga. Linden knows this industry really well. He spent his whole life working with fuel. He…

Fred already mentioned this in other replies, but Linden at Ipiranga has been focused on consistency in execution. We need to reduce the number of initiatives. We need to keep it simple. And in these 4 pillars of logistics, management, pricing and resale, Fred already mentioned a few anecdotes that show the evolution. We had evolution in pricing, which was a part of the problem in the second quarter and in the month of July. We had organizational changes in the sales team. We also had the interaction between team selling and team’s pricing, and this was corrected in the third quarter. And in our opinion, this partially explains our evolution for the results. More specialized teams as well. And Linden has been mentioning this in every conversation, which is consistency. In a strong market, there is value. But in the spot market, we don’t need something that is a perennial sale. We need a spot sale as well when we think about return. We need consistency in execution for spot sales and for the transfers of pricing. This has helped us in September, and it will keep on helping us in the fourth quarter. When it comes to exports, we don’t have a gap when compared to our competitors. What we do is active training. From the standpoint of supply, we don’t have any competitive issues. And right now, supply either through Petrobras or imports has already been guaranteed for the fourth quarter. We don’t anticipate any issues in this sense.

Our next question is from Isabel Saffioti [ph].

When it comes to Ultragaz margins which recovered well, do you think the current margin levels are sustainable for the next quarters? What should we expect from now on, especially in a scenario where prices go up? Secondly, could you please talk about the trading strategies which you mentioned in the previous call? What progress have you made? Do you have any strategies that have changed in this sense?

Thank you for your question. Let me talk about Ultragaz. As we were saying in previous quarters, we had a gap between price increases and transfers, pricing transfers. And we closed this gap, and we don’t anticipate any problems with it in the future. When it comes to trading, especially with Linden and Chris in this structure leading Ipiranga, we didn’t make a lot of progress in the last few months because we are recovering the points that Fred and I were mentioning. These are the points where the company is focusing in the short term.

Our next question is from Christian Audi, Santander.

I have 2 questions. My first question is related to leveraging. With the Oxiteno procedures and what happened, what kind of leveraging do you see for the company for mid next year or the next -- the last half of the year especially with the new opportunities for growth that Fred mentioned. Now second question. Let’s go back to Ipiranga. When we look not only at the fourth quarter, but when we look at next year, I would love to understand the main factors or elements of upside. Rodrigo, I know you mentioned logistics, for example. But if we could choose the 3 most important elements that could help us in continuous improvement for Ipiranga margins in 2022, what do you think gives us the best upside?

Dear speakers, we can use the backup line. Go ahead, please. Please wait. Ladies and gentlemen, please wait. We are reconnecting to our speakers.

Christian, I apologize, but I just got your question regarding leverage. Let me answer it. With the transactions that have been announced, after these sales are done, we’re going to reduce leveraging in 1 to 1.5x our net debt. Now for a comfortable leveraging point, we should have 2.5x and below. So that’s comfortable leveraging. If we think about new transactions, this is the level we’ll be looking for.

And there was another question. Yes, there was another question. Let’s go back to Ipiranga, Rodrigo. Not only for the fourth quarter, but for the year of 2022, can you please mention the 3 biggest factors that are related to upside when it comes to this operation. Which 3 elements could help your margin grow? I know you have been working on a number of fields, you’ve been working on transportation, you’ve been working on freight. But with the changes in management and the changes in this industry, what would you say is the biggest upside for 2022 when it comes to margin? Is it an improvement in gross margin? Is it cuts in SG&A? What do you think?

Christian, I think we have 3 big lanes here. In all of them, we need to look at processes, look at teams and look at our organization. We need efficiency in supply and efficiency in logistics. This is key. It’s also about the quality of our network, either with our gallon throughput or our image, and the quality of our stations and the high level of service for end customers. And finally, we have pricing. Pricing is key. We have been perfecting and adjusting these processes. In organization, as Rodrigo was saying, we are working on pricing. This is an important explanation for July, for example. It also explains the recovery in this quarter. Now in a nutshell, we need to focus on the gross margin. we have a bigger problem with the gross margin, not with SG&A. Of course, we should look at freight as well, and we are doing it. But we need to work on gross margin. That is how we’re going to go back to winning this game.

Perfect, Fred. Given this scenario and given the range you gave us of BRL 75 to BRL 100 for the end of the year, what levels of margin would be feasible, taking into account everything you have been doing in these 3 pillars. What kind of margin could we expect for 2022?

Christian, is your question regarding margins or CapEx?

Margins.

The margins, the gross margins for the fourth quarter, well, the reference could be the month of September.

For 2022, do you think you’ll be able to keep this margin throughout the year? I just want to get a better reading at this to understand where this margin could be headed for next year.

With the current margin or actually with the current market conditions, yes, there is no reason for the margin to be reduced. It all depends on the market. Under regular market conditions, then yes, we could keep this margin.

Thank you. As we don’t have any further questions, I will be handing it over to Mr. Rodrigo for his final remarks. Mr. Rodrigo, you can give us your closing remarks.

Thank you, ladies and gentlemen, for your attention and for your questions. We got a question through the webcast and we’ll be replying directly to you. Once again, thank you for your attention and time, and we’ll see you again in our next earnings release presentation in February. Thank you.

This concludes today’s Ultrapar’s results conference call. You may now disconnect. Thank you.