EcoRodovias Infraestrutura e Logística S.A. ($ECOR3)

Good morning, and welcome to EcoRodovias' First Quarter of 2026 Earnings Presentation. With us here today are Marcello Guidotti, CEO; and Andrea Fernandes, CFO. This presentation is being recorded. [Operator Instructions] The slides of this presentation are available on the company's Investor Relations website in the Results Center section at ri.ecorodovias.com.br. After the end of the earnings presentation, the recording will be available in the same section. Before proceeding, we would like to clarify that the forward-looking statements that may be made during this presentation relating to EcoRodovias' business prospects, projections and operational and financial targets are based on the management's beliefs and assumptions as well as on currently available information. They involve risks, uncertainties and assumptions as they refer to future events and hence, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors may affect the future performance of EcoRodovias and lead to results that differ materially from those expressed in such forward-looking statements. I will now turn the floor to Andrea Fernandes, who will discuss the results. Andrea, you may proceed.

Good morning. Welcome to EcoRodovias' earnings presentation for the first quarter of 2026. We thank everyone for attending. We start the presentation with the highlights of the quarter. Consolidated traffic grew 20.6% in the period, while comparable traffic advanced 0.4%. For another quarter, we continued with the growth of adjusted cash costs ex-Ecoporto below inflation, ending the period with an increase of 3.2%. Operational performance and efficient cost management boosted adjusted EBITDA, which reached BRL 1.4 billion. Due to the termination of the Ecovias Sul concession agreement, we had the full amortization of the remaining balance of the intangible noncash assets. As a result of this amortization, we had a net loss of BRL 10 million. Excluding Ecovias Sul's results, net income in the quarter would be BRL 77 million. Another highlight in the period was the investment of BRL 974 million. We won a new concession, Rota das Gerais located in the State of Minas Gerais, which has synergies with Ecovias Rio Minas and Ecovias Norte Minas connecting the Southeast and Northeast regions of the country. Finally, we highlight the approval of the dividend payment of BRL 210 million related to the 2025 fiscal year as from June 12, 2026, as well as the comparable performance of vehicle traffic in April, which grew by 5.1%. On Slide 5, we present the operational performance driven by the 1.5% growth of the heavy vehicles, especially on Ecovias Capixaba, Ecovias Norte Minas and Rio Minas. The growth of comparable traffic in the first quarter was influenced by a stronger comparison basis in 2025, the more intense volume of rainfall in the 2 first months of this year and the delay in grain harvesting. Even vis-a-vis the scenario, we already observed a reversion of this trend in the month of April when we posted an increase of 5.1% in comparable traffic. Moving on to Slide 6. We show adjusted net revenue of BRL 1.8 billion in the quarter, an increase of 8.5% due to the growth in vehicle traffic, tariff adjustments and the start of collection at Ecovias Raposo Castello and 3 new plazas at Ecovias Noroeste Paulista, although affected or reduced by the termination of the concession agreement of Ecovias Sul. For another quarter, the results of our innovation and efficiency initiatives underpinned by the digital operating model ensured that the adjusted cash cost growth remained below the inflation of the last 12 months, reaching 3.2%. This raise is mainly due to the increase in personnel due to the collective bargaining agreement. Finally, the chart on the right shows that the evolution of revenue, combined with efficient cost management caused adjusted EBITDA to reach BRL 1.4 billion in the quarter with a margin of almost 78%. On the next slide, we present the evolution of the quarter's results. Starting from the net income of the first quarter of 2025, we highlight the EBITDA, which was driven by operating performance and cost management. As mentioned before, in this quarter, we had the full amortization of Ecovias Sul's intangible assets with a negative effect of BRL 151 million in the results. In addition, the increase in financial expenses due to the funding contracted for the CapEx execution have also contributed to the reduction of results in the period, leading to net loss of BRL 10 million in the first quarter of '26. Excluding the results of Ecovias Sul, net income for the quarter would have been BRL 77 million. On Slide 9, we present some highlights regarding the evolution of our work. In the quarter, we executed BRL 974 million in investments. Highlights include the progress of approximately -- works of approximately 45 kilometers of additional lanes in the regions of São Carlos and São José do Rio Preto in the interior of the state of São Paulo by Ecovias Noroeste Paulista and the road widening works in the States of Goiás and Tocantins by Ecovias Araguaia. Moving on to Slide 10. We ended the quarter with consolidated leverage of 3.9x. The leverage of EcoRodovias Concessões e Serviços remained stable at 3.7x. We highlight the percentage of gross debt indexed to inflation, which reached 72%, the same index of the tariff adjustments of our concessions, reinforcing the natural hedging effect of results. On the next slide, we present a robust cash balance in the quarter as well as the gross debt amortization schedule. We also highlight the lengthening of the debt profile after the conclusion of long-term financing, which resulted in the improvement of the average maturity to 7.9 years. On Slide 13, we present the main sustainability highlights of the period. In May, we were selected for the 15th consecutive year to be part of B3's Corporate Sustainability Index portfolio. In addition, we obtained the preliminary license for the project of the third lane of the Imigrantes highway, an important step for the delivery of the studies to the state government, reinforcing the environmental feasibility of this project. Finally, we'd like to highlight the advances in the tasks of using B100 biodiesel in the fleet of Ecovias Noroeste Paulista, which reached the mark of 100,000 kilometers driven. This result demonstrates in a preliminary way the technical and operational feasibility of using this biofuel as an alternative to fossil diesel. We close this presentation by highlighting that the recent win of the Rota das Gerais concession is in line with our strategy of selectivity and capital allocation, prioritizing synergistic assets adherent to our capital structure and with the potential to maximize shareholder returns. We will continue to focus on the execution of our investments so that the works delivered contribute to the improvement of fluidity and safety on the highways and boost the growth of vehicle traffic. We will also remain attentive to the opportunities for contractual amendments within our current portfolio. We would now like to move on to the question-and-answer session. Thank you.

[Operator Instructions] Our first question, Rafael Simonetti, UBS BB.

On my side, the question is about CapEx. I'd like to know if the execution for the first quarter was in line with your plan and what we can expect for the coming quarters and the year overall in terms of ramp-up evolution?

Thank you for the question. CapEx in the first quarter was slightly below our forecast for the first 2 months of the year, especially in the region of Tocantins, Goiás. In the center of Brazil, there were a lot of rainfalls. The volume was high. So that delayed some work sites. Because of the type of works being done, rainfall doesn't allow us to do that, but this is already being recovered. We aligned the guidance given of 5B to the end of the year and the work sites now getting into the dry season, we'll be able to recover for lost time.

Next question, Matheus Sant'Anna, Bradesco.

I have 2. First, we saw a very strong trend of traffic in April. When we look at the year-on-year growth among all the months, it was the strongest. So what do you see improving for the platforms to be stronger in April? And what should we expect going forward? And the second question was just to understand the progress on the discussions of the amendment for the third lane at Imigrantes. These are my 2 questions.

Matheus, about traffic, January was also -- January and February, we had more rainfall. So the comparison base for last year was strong. Last year, '25 compared to '24 had grew for 6%. And still, we remained at positive levels. There were a lot of rainfall in the region, and it's recovering. April was a month with some important holidays. May, we're seeing as well that started well with light vehicles, heavy vehicles as well. But we maintain a trend very much aligned to the history, the need of a 1.5%, 1.8% and depending on the period. We expect that during the year, we'll be around that 2.5% consolidated growth. The other question about the third lane, something new that Andrea mentioned that's extremely important that's obtaining the preliminary license. That's an essential landmark because starting from that, meeting all the conditions, they issued the permanent license and the project and pricing are at the later stages. We have until June to deliver to turn in everything. We may be able to turn in ahead of time. So the first part is concluded on the obligations of the projects, environmental license, conditions are met. And starting from that, we'll discuss the way to execute it and how this will be rebalanced. This investment will be rebalanced.

Next question, Julia Orsi, JPMorgan.

I have two points. First, the CapEx follow-up. We've been seeing an increase in recent years in the price of diesel and cap. We'd like to understand a little, how much of your CapEx contracted for this year? What would be the exposure for these 2 lines? If there's any estimation of an impact in the balance of this year, considering the increase on these 2 inputs. And another point is the follow-up about the rebalancing. In addition to the third lane, I understand that there are other discussions that are occurring in parallel. Can you give us more details about these processes, thinking about the size of these projects as well?

Julia, thank you for the question. About CapEx, this year, I think we have everything almost pretty much contracted, around 80% of our CapEx is already contracted. And the inputs that are affected by the price increases are CAP, the petroleum asphalt, cement -- cement and diesel that represent about 9% each of our total CapEx. They had an increase in the impact we estimate for these 2 already considering the adjustments that happen now as if they remain stable until the end of the year. There would be an impact of around BRL 100 million until the end of the year. So these 2 increases on the CapEx of BRL 5.4 billion. So this type of increases, these outstanding increases due to geopolitical aspects that already occurred in the past and will be analyzed by the granting authority for potential discussions of rebalancing. About the question on contractual rebalancing, we have the ones here in São Paulo that have already been informed, the rebalancing due to the pandemic, to COVID. We also have Araguaia, a rebalancing to be received this year on the inputs that impacted the Araguaia contract. It was an agreement that started right on the pandemic. So it was more affected, and we are already at the end stages of negotiating the rebalancing package to receive this rebalancing. Araguaia has an escrow account that is the protection of the contract. So it's hypothetically a cash rebalancing. So São Paulo, Araguaia, and I don't think we have any other rebalancing being discussed in addition to the contractual amendments. The third lane, obviously, is a study that will be rebalanced, and there are other discussions of small investments in Ecovias and other places that will be objective to contract amendments and rebalancing, yes.

Next question, Pedro Tineo, Itau BBA.

A simple question on my side. Looking at the scenario of the increase of fuels, I'd like to think how you're understanding the movement of your routes, demands, and traffic and to underscore a little bit the scenario of the second half of the year with the elections, the World Cup, what can we consider in terms of potential benefits or obstacles for some of your routes, some of your highways?

So again, we are seeing traffic recovering in April, beginning of May as well. I think that the impact of diesel will be in the freight costs will be diluted throughout the year. And then it will be passed through to products and inflation. So we are not seeing any type of abrupt moves outside of expected. We have been going through over the past few years through many situations of price shocks or -- but they're limited. Brazil has its matrix and its use of diesel, but we don't see any major hiccups, and we don't expect any hiccups considering what's coming again. Elections in Brazil happen every 2 years pretty much. So we don't -- it's quite normal. Again, we expect the traffic until from now to the end of the year, in line with previous years and no need of 1.5%, 1.8% of the GDP. Andrea also mentioned that there may be minor effects, but the fuel being more expensive may discourage traveling in regions that require airplanes. People will replace flying to traveling to regions that are accessible by highways. So there's a possibility of increasing the traffic of [indiscernible] there's also the expectation of El Niño that may generate heat or hot weather in the region. So there may be a hotter winter like we had 2 years ago. So these dynamics at the end of the year, one kind of offsets the other. We lose on one side, win on another. So that's good to have such a diverse portfolio, such a resilient portfolio. So I think we are reasonably optimistic.

Our next question, Gabriel Frazao, Bank of America.

I have a question about the evolution of CapEx to realize, especially in 2 concessions, Ecovias Norte Minas and Ecovias Imigrantes. We noticed an increase in this CapEx to be realized that Norte Minas close to BRL 400 million and a drop in Imigrantes close to [ BRL 350 million ] already excluding the amount disbursed in the quarter. So if we could hear from you if these adjustments reflect any adjustment to inflation or if it was just a mismatch of this CapEx? Is it the write-off of those investments in the obligations like the grantor and ITR? That would be my question.

Thank you for the question. You are correct. These are 2 moves that are unrelated, although they are happening in the same quarter. We've been monitoring at Ecovias dos Imigrantes. They've updated in the last few years, all of the IPCA balance, and that ended up creating an additional buffer. So we reviewed the CapEx and readjusted the flows at Ecovias dos Imigrantes. They are longer, there is almost 10 years of concession and the CapEx is well known. So we made this adjustment of the balance at Imigrantes. At Norte Minas, it's a different situation. We were monitoring. Norte Minas concluded all its contractual obligations, but the CapEx at Norte Minas was delayed in recent years. We've had discussions of rebalancing and adjustments of CapEx that have been concluded. And we got it right with this leap in CapEx by Norte Minas until the end of the concession. In terms of repayment. It's a relatively small amount because it's spread out throughout the lifetime of Norte Minas. Now we understand that the investment balance at Norte Minas is that. It's 2 separate moves that are not related. But yes, there have been adjustments in these 2 concessions this quarter.

The question-and-answer session is concluded. We would like to turn the floor to Andrea Fernandes for the company's closing remarks.

I would like to thank everyone for attending. The team and myself remain available for any questions you may have. Have a great weekend.

EcoRodovias' earnings conference call is concluded. We thank you all for attending. Have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]