Orizon Valorização de Resíduos S.A. (ORVR3) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the extraordinary earnings call on the incorporation of Vital Engenharia Ambiental and its affiliates. This conference is being recorded, and the replay will be available on the company's website at ri.orizonvr.com.br. The presentation is also available for download on the company Investor Relations website. [Operator Instructions] Before proceeding, I would like to emphasize that forward-looking statements are based on the beliefs and assumptions of OrizonVR's management and on information currently available to the company. These statements may involve risks and uncertainties as they relate to future events and depend on circumstances that may or may not occur. Investors, analysts and journalists should consider that the results may differ materially from those expressed in such forward-looking statements. Participating in this conference are Mr. Milton Pilao, CEO; and Mr. Leonardo Santos, Chief Financial Officer and Investor Relations Officer. I would like to turn the floor over to Mr. Pilao.

Good afternoon to all of you. Thank you for participating in our extraordinary earnings call on what I deem to be a historical day for the company to explain the transaction that was disclosed as material that today with the company Vital, and I will give the floor to Leonardo, who will speak about financial and economic aspects, and I will then speak about strategic aspects. Thank you.

Good evening, everybody. Thank you for your time. We're sorry to do this at the very last moment, but it is important for the market to gain an understanding. In this first slide, the structure of the transaction that we're planning with this incorporation announced early this morning with the corporate governance parameters and the company's structure. This is the incorporation of Vital and its affiliates and Orbis, which is a greenfield project that will be part of a holding incorporated by Orizon. At the end, we have the shareholders of Vital Engenharia with 30% of Orizon. Basically, the payment of this transaction is being done through shares of Orizon in a volume already disclosed by the material fact. And in the same terms as the last follow-on that was carried out in -- of BRL 3.53 in 2027. We have a shareholders agreement that will be signed upon the close of this operation among the present day buyers of the company and the vehicle that controls Vital, the Queiroz Galvão family have a majority block made up of the present day controllers of Orizon. And well, we will have the control of these 2 blocks, the present day block and the family of Queiroz Galvão. They have a majority stake, of course, and we do have some Vital set up for this. So the management of the company will have 4 members of each block plus 3 independent members, the majority block will be the Chairman of the Board, the Vice Chairman of the Board, and we will have the main guidelines for the day-to-day of the company set forth by the majority block, the present day controllers, an annual budget, of course. And we have 12 months as of the close of the operation for the agreement and the long term for the agreement is of 20 years. Here, you see the shareholding structure a control block of 60%, a majority block of 50 plus 1 and the rest and the free float representing almost 40%, as you can see on the slide. In the next slide, #4, you can see some of the figures of this operation. Now this is a construction with payment in shares from Orizon. Orizon will incorporate Vital and deliver shares to Vital. Now the issuance of shares is of 42.2 million shares, the exact figures are in the material fact. Now based on an average of the last stock price, it's a stock price. We worked from BRL 57 to BRL 67 for 42,000 shares and subscription bonus. And here, we are trying to show you all of this in numbers considering the historical average of the price share of horizon BRL 2,300 million to BRL 2,800 million. And of course, all of this will vary depending on the analyst or depending on whoever is assessing this, we have a subscription bonus that is a market set bonus. We worked with some stipulations pointing to BRL 23, BRL 24, BRL 130-some million paid in bonus. The equity value once again, BRL 2,400 million to BRL 2,900 million, the estimated net debt, BRL 360 million, enterprise value, BRL 3,300 million and the EBITDA from Vital BRL 500 million at stake as mentioned in the material fact. And these are the parameters for this operation, comparing this with the present day multiples of Orizon. There's a great deal of growth when it comes to EBITDA with our biomethane projects and much more. But this will give you an idea of the value of this operation as a whole and the value generation through time, the company, of course, will offer more information. This is a listed company, and we normally do share information with the market, so we will be carrying future exercises working with simulations and projections for coming years for this combined company in the coming weeks or periods. On Page #5, the highlights after the transaction in volume, [ accompany ] of 14.3 million tons, we're annualizing our last quarters of 9 million tons approximately. We will be growing 60% in the volume of waste. In net revenue, the growth is greater because of additional activities such as integrated management, we will go from BRL 1.1 billion of net revenue to BRL 3.2 billion net revenues and EBITDA will be doubling in the company to BRL 980 million. Now we are adjusting the issues of revenue and the construction of cash based on the last 12 months, of course, based on the accounting of concessions, net income representing BRL 350 million for both companies and the net debt quite healthy of BRL 1.5 million combined debt for the 2 companies. We end here with Slide 5, then we will go on to the questions, and then I will give the floor to Milton Pilao.

Thank you, Leo. Well, first, let's speak about the businesses and to be quite simplistic, Vital has 3 broad divisions: the integrated management, final destination and collection. In the first, integrated management, people ask what is this integrated management. I respond that these are public and private contracts, long-term contracts that arise from the landfills that are their property. So you can add to the contract an additional revenue from collection without bringing with this what we mentioned about collection, the low margins, the low forecastability of revenue, the high competitiveness without investments. Now all of this, you leave aside when you add collection to the integrated management and the landfill as a barrier of entry will protect the margin and the forecastability of the revenues. This is what Vital has. They have 8 contracts of integrated management with 6 of their own ecoparks, one of the integrated management contracts from Maranhão and São Luis have a landfill and they have the contract, and they are not part of the same integrated management contract and the other refers to Angra dos Reis, where we could have doubtlessly future synergy when it comes to our landfills. Now these 8 contracts with 6 of their own ecoparks received 6.9 million tons, a gross margin, as you can see, that is -- well, you will understand what I am saying, how the landfill protects it, you are incredibly increasing the revenue of these landfills, increasing the gate fee of the landfill 4 or 5x and you have a higher margin than the landfill. So this is our way of thinking, and we will think about our 18 ecoparks when speaking about this. Now, this is the main integrated management contract in Brazil, the most streamlined one, especially in the city of São Paulo. So we start off with this integrated management contract that is truly awarded nationwide as part of all contracts. And the second point, we have final destination. This includes another 6 landfills, that received 2.5 million tons in a medium liquid environment. They're operating at BRL 81 per ton representing a gross margin of 40%. Now this is a business that you know from Orizon and it's some steps behind -- some stages behind compared to what Orizon has, they don't have the revenues of biogas, biomethane or carbon those valorization revenues that will be explored in this division of final destination and integrated management. And finally, they have 3 contracts for collection, representing a low percentage of the gross profit of the company and based specifically on 3 contracts. This is a part of the business that we have always spoken about. We continue with the thesis that we don't like this. But in a certain way, there is a way of resolving this problem because we have the Recife contract as the main collection contract from the company where we have our Ecopark Jaboatão dos Guararapes. So obviously, here, I think everybody will understand that this is the first contract that will migrate to an integrated management. We will include it in integrated management. And basically, the company will eliminate that long leg collection from its portfolio. These are the motivations for carrying on with this transaction. Of course, we're creating the largest company for residues waste in the company. We have 3 broad pillars in terms of motivation. First, the consolidation of our leadership not only for the sake of consolidating this, this will increase our bank of waste. We're going from 18 ecoparks to 30 ecoparks which means to say in locations that are complementary to ours, which is very positive. We have some in São Paulo there in Belo Horizonte, the capital of Minas Gerais where we are not there in Espirito Santo where we have no position. Now our waste banks will bring us all of this valuation going forward. And this is something we will be doing jointly through our ecoparks and they grew, and we prefer not to tell you where they will be because the projects are still under licensing. The new company will have 4 ecoparks in a mature stage of licensing. So besides the 30 in a few years because of their maturity, we will have an additional 4 ecoparks that will have a greenfield license. So we're broadening our presence to 15 states. We increased final destination to 14 million tons, 18.4% market share. Now this market share is much higher than that of the landfills, 31 million tons go to waste banks. And from the 50 million, we will have 14 million, 30% of the addressed market for landfills which, of course, brings us absolute leadership in that market. And as part of consolidation of leadership, we have the potential to produce biomethane, we go from 1.3 million to 2 million cubic meters a day of biomethane becoming the main player. It's not important to be the main player. This will enable us to have the body and capillarity to become a relevant player in the renewable natural gas market. So you will see that the company will make movements in the sale and distribution of gas in Brazil in a more relevant way and not simply as a passenger, as we have done so far through trading companies. Secondly, we have that new frontier of organic growth. We spoke about integrated management of our 18 assets. We have always attempted to help investors to understand that we make money from tons of waste received. We showed you graphs of waste, biomethane and others and what happened with organic growth. When you bring collection to integrated management and this will protect revenue, protect reception, protect the margin that the landfill brings you. What you are doing here is adding revenue, we will be able to add a collection revenue that normally is 4 or fivefold the revenue of the landfill. That is why the revenues of Vital are much higher than ours. We will be adding a great volume of revenues with a projected margin in that ecosystem where we operate in our 18 ecoparks. Doubtlessly, this is an expansion of revenues per real, something that is relevant. This is another relevant organic growth avenue. Secondly, you participated in some of the calls with us, and we will sell based on the market demand in some calls, the market was asking. What is happening with those PPPs from Caixa Econômica, BNDES, how will they position themselves as they only work with landfills, very well, we can now participate in them and give a response to the market demand. This is not only a Brazilian demand, it's a demand that exists elsewhere with connections, waste management, all of these will be integrated, and this will come to Brazil with direct collection in the water and energy tariffs, and we will receive a waste generator from the municipality. So we are preparing the company for this new era of private and public partnerships. This doubtlessly is our second pillar of motivation. Our third pillar refers to the evident synergies. During the interviews with the press, when the companies disclose their position or incorporation of their size, you always have that other question, are we going to gain synergies. I said, yes, we are going to gain synergies, but the other synergies are so large that these have been minimized. We will have a gain of scale in the operation in the purchase of equipment and everything that we do because landfills use the same chain. We will have strong operational efficiency. We will integrate complementary efficiencies, I said here, and I'm going to repeat a phrase to Vital. We assessed several acquisitions, taking away the financial side, if we had to bring in a company into our ecosystem, I would choose Vital. We have known Vital for more than a decade. We operate side by side with them. We know that the culture, the strategy, their way of thinking, the executives are very similar with our company. And I do not doubt that this will facilitate the integration. We have that union of strength that will bring about a great deal of value to the company. And finally, of course, the consolidation of the strategic positioning in the environmental attribute market. I had an interview half an hour ago with an international media. And they said, you are the largest platform of environmental attributes in Latin America. And what we are doing is unifying carbon credit, biomethane, CO2 and so many other products that will come out of our enormous asset base that we have just come up with. In the next slide and very quickly, this is simply to give you an idea of the number of assets that are coming together through this transaction. We have some pictures. And while they're somewhat small, of course, perhaps Leo can share this with you. And once the deal has been closed, we can carry out visits. We obviously visited all of Vital sites. They have 12 landfills in São Luis, Ipatinga, Juiz de Fora, Maranhão, Jurapaña, Campos, Foz do Iguaçú, Angra dos Reis, which means that we have a gigantic hall or group of assets that we're not necessarily buying. We're buying assets, not a positioning. And this clearly shows you the size of this. Many of the pictures were not even included here. So we do have an enormous list of assets for the company. In the next slide and in the next 3 slides, we will speak about what we expect to see in terms of gains, the next day through this company. It's important to recall that we have the same thesis with the Vital landfills that we have in our own landfills. So we have 14 million tons a year. However, we have 2 forecasts for relevant gains. First, in the gate fee -- the average gate fee. Vital is higher than ours. As part of the ecosystem, this will bring about a real gain of average gate fee in the coming months. This is not only a drive for Orizon, we're the only listed company. If you ask all the market players who have landfills, you will see the price growing in terms of real percentages throughout the world. So these assets will also grow alongside ours. And we have important gains in the coming years and months in terms of average gate fee for Vital as well and an enormous potential for volume we have 2 million tons above our 9 million once we close all of the deals around the 18 ecoparks. And Vital has 2 million tons approximately with its ecoparks without counting the ones that are undergoing licensing. We should get close to 18 million to 20 million tons in the coming years when the 30 ecoparks are very close to their stage of maturity. In the next slide, I speak about the Ecourbis concession contract important information. This is a concession that extends until 2044. It has 19 years ahead of it. 90% of gross operational revenue is fixed, BRL 125 million monthly rates guaranteed and only 10% or 15% are part of the biogas carbon and recycled energy that we will be able to give a thrust to in the recent renewal they carried out, the granting power took on the debt of the concessionaire of BRL 1.2 billion were paid in cash in 2024, BRL 800 million come along with the transaction. And those BRL 800 million will be paid in the coming years through that combined company. As part of the main goals of the concession, we're going to streamline the present day fleet for collection, substituting diesel with alternative fuel, biomethane or natural gas. And we are going to learn through our other assets to transform. This is being done broadly in the United States and Europe to transform the truck fleets that take waste to landfills with a substitution of diesel. If I could choose, this would be the best sale price for biomethane. This represents $27 per million BTU compared to $14 of biomethane. So here, we already have a significant gain when we sell our biomethane to fleets, not only the industry, and you can have a natural biomethane service station where the trucks can go to every day. This is a goal of the concession that will be put in place, and we're going to use our assets for this. We will have development of technical solutions geared to energy valorization of the waste. We're going to make the most of the expertise we have in our plant in Guarulhos, and we will be able to now work in São Paulo with the Ecourbis concession in advanced processes for the treatment and management of solid waste and with the -- which is the focus of the city hall. And this is the service that will definitely undergo a streamlining. Now by streamlining this service as Orizon was, it was modernizing the treatment of waste. We will now streamline the entire process for the treatment of waste. In this next slide, we speak about biomethane. Vital had a subdivision. They have GBio that adds gas to the thesis. We have BioE. Well, these will now become the same company. Now GBio is already operating with 30 cubic meters -- 30,000 cubic meters per day. There are some plants under construction for Titara, Ipatinga, Juiz de Fora, Macaúbas. They will be ready between 2026, 2028 with already contracted biomethane with 150,000 cubic meters per day. And this will lead to another 340,000 cubic meters per day once the pipeline is fully constructed. So as you can see below, BioE and GBio will have a potential for the generation of biomethane of 2 million cubic meters per day. We will become extremely relevant in the renewable natural gas market in Brazil. In the next slide, for all of those who follow up on us, well, you're quite aware of this slide. We have always shown this slide the totems of margin contribution per each activity in waste for Orizon. We have the gate fee, biogas, carbon credits, biomethane, circular economy, a stand-alone plant in Barueri, and we are now adding the gate fee that I have just explained to you, which is a gain that we have from integrated management. And the integrated management represents a significant gain of EBITDA with very high-margin, organic margins throughout the coming years. You will ask in how much time? Nothing for tomorrow, but in the coming 5 years, certainly, you will see several of these projects being implemented in the macro system of our 18 landfills. And finally, our last slide before we open for questions, showing you this combined company that will generate 15,000 direct employment, will manage 14 million tons of waste generated by almost 40 million Brazilians, thus avoiding 6.3 million tons of CO2 per year with an EBITDA of approximately BRL 1 billion. This is the start of EBITDA. We had already been growing 30% organically. We are now beginning with a new level, strong organic growth because the thesis remains the same. But this company arises with BRL 1 billion of EBITDA as the largest producer of biomethane in Latin America. I would like to thank all of you. I don't know if I spoke excessively, but it was necessary. Thank you.

[Operator Instructions] Our first question is from Erico Bruni from [indiscernible].

Congratulations for the transaction, which is a degree of maturity EBITDA when it comes to capturing gas and biomethane.

Thank you for the question. This is Leo. When it comes to the monetization of biogas, I think Vital began somewhat later than we did in the exploration of biomethane and gas. They still have a way to go. Now Vital has a longer path. They have their first operational plant in Minas Gerais and a large pipeline of projects, and we're referring to more than 500,000 cubic meters per day with their present day projects without counting the greenfield that are already operational. So they do have a long path but we see opportunities for growth as we see in Orizon, because of this transaction, huge potential to grow along those lines. And along with biomethane, we have carbon credits. Orizon was a protagonist in that activity. With the assets we're gaining in this transaction, of course, we will grow a great deal. We were speaking with our teams. We're speaking of 2.5 million, a substantial volume in carbon credits, biogas and biomethane, which is still at a very embryonary stage at Vital. Now they are excellent operators, and I have to praise them for that, and we have been here for longer. We're going to add to this. We have worked very diligently. We have followed up on their assets, and we're going to bring them into the group, put together assets that are extremely well operated, including biogas to capture as much revenues and other opportunities going forward.

Our next question is from Raul Cavendish from XP.

In terms of integrated management for the long term because of the fixed tariff, does the company have the opportunity to gain merits through a greater densification and others and the contribution margin of final destination, can we believe that, that will be more convergent with that of Orizon? And how much of this will come from optimizing gate fee and how much will come from optimizing costs?

This is Leo once again. In integrated management, I think you captured one of the avenues to capture value on that front, the tariffs, of course, are based on fixed fees. The more efficient we are in cost expenses and efficiency, the more we will gain from this project, and you see that this is the risk that the company is running. The better you perform, the better your margins will perform in this contract. Now regarding the landfill, yes, the margins are somewhat tighter compared to our assets. We spoke about the gate fee, the price, there is a minor difference in price at the start-up. Now the work to improve prices is something continuous. We will do this upon renewing contracts. We will work based on localities. We have to discuss it with the clients and defend a good balance. We have 18 assets. The price that is now up 2 digits should reach 3 digits, and we'll see what happens with this transaction. And we will have a higher gain. Orizon already works at a higher level, but there is that opportunity for gain in landfill and the final destination margin should be higher than 60% with prices at 3 digits, and those prices from Vital will not be different.

Our next question comes from [indiscernible].

Can we presume that Orizon will seek integrated management contracts and all of its landfills?

Yes, [ João ] because of what I said during the presentation, this for 2 reasons. The first reason is economic. As I mentioned, through building PPP contracts in the ecosystem of our present day 18 landfills were going to diversify revenues and, of course, enhance the result of the same asset. So the answer is yes, but not only for that reason, it's also the reason of the demand. We had already had demand of the 18 landfills. We have 3 to 5 of our ecoparks that will begin this process almost immediately, and ensuing this, we will try to replicate this throughout our entire base.

Our next question is from audio from Fillipe Andrade from Itau BBA.

I would like to gain an understanding on the gross margin that you're presenting here when you speak about the union with the Vital business, have you carried out some adjustment for integrated management, the gross margin reported by Vital in '23 was 40%. It dropped to 32% in 2024. Was there an one-off impact in that sense? And in terms of collection, gross margin was much lower, 8% in 2024. I would like to know if you have carried out some sort of an adjustment. And -- if you will prioritize the expansion of biomethane or opt for more M&As in the company.

Thank you, Fillipe. Will try to answer all your questions. Regarding the contribution margins of integrated management, the main contract with the largest customer from Vital is Ecourbis in São Paulo that had a concession that ended in 2024 and was renewed for 20 years. They also had a rebalancing of price. So there is that impact of the price change with an impact on margin, of course, this justifies a relevant part of that amount. Yes, we have made adjustments. We have a criteria to account for concessions. It's something that refers for infrastructure, real estate so that we can reflect the reality of the project. So these 2 effects combined will explain that difference in margin. And it is worthwhile adjusting this to be able to assess the integrated management activities of Vital. Well, in terms of collection, yes, their margins are more compressed. There are no benefits. There projects that seem to be like infrastructure that require high CapEx. That is why the margins tend to be more compressed. It's very typical for that activity. Now we're going to think of these activities that Orizon integrated with landfills, very much more similar to integrated management. Now when it comes to how to optimize the balance, how to allocate resources? The company naturally will continue to pursue acquisitions, but of course, we have more projects for organic growth. We are a larger company. And because of this scale, we can work with a higher number of biomethane projects to respond to your question. We will continue to be focused on acquisitions. We will not stop with this transaction. We are focused on the acquisition of landfills and on the development of energy projects. I think I have answered all your questions, Fillipe.

Yes, you have.

Our next question comes from João Pimentel from Citi.

And congratulations for the transaction. I have 2 questions. One that I heard before, but I would like to hear once again from you in a more detailed version. The first question refers to competition. We have historically seen Orizon purchasing companies, smaller landfills after the IPO with a good EBITDA. And a short time ago, there was a transaction, the acquisition of [indiscernible] with an account of 10x the market was somewhat frightened. They were fearful of the acquisitions that would exist in the market. They thought Orizon would pay more for their acquisitions, which is not the case. Now from the viewpoint of the balance, this is a very healthy company. If we look at their balance, extremely healthy. So which was a process of this transaction? Did you have other companies participating. If you can explain to us which was the advantage? What was that Orizon brought to this process to carry out such a decisive transaction, it seems to be a low cost acquisition. So which was the edge that Orizon had in this deal? The second question is easier in terms of carbon credit. How many of the landfills of Vital are already certified? Have they all been certified which is the certification? Is it a gold standard. Simply to gain a better understanding of that.

Thank you, João, for the question. I will answer here and Pilao will complement it. In terms of M&As, a transaction like this one. Well, it didn't have an organized process. We focused on what we have always had that reciprocal appreciation for the other partner. We worked with Vital and Pernambuco 10 years ago. And based on that, among their shareholders, we created that desire to work together and to think together. So we decided, well, it wasn't simply paying for something and then going home. Here, we're thinking of working together, creating a company of a different size and undergoing a journey jointly with integrated management projects and new acquisitions. The value proposition that we see in this company in the medium and long run, will capture much more than the transaction that we see at present. Our ambition or the ambition of the shareholders of Vital was not to lead this transaction. They're going to remain in the company with their present day controllers. It's not a very conventional transaction. We focused on it through the company teams, we are equal partners, and I think this was one of the main pillars for the success of this operation.

This is a very important point to complement what Leo said, we have been able in this market that you explained very clearly it will become ever more competitive. Of course, there is no doubt of that, not only competition with national players, there are international players coming into Brazil with that same appetite, and we use the only tool we had at hand to carry out a transaction that would bring more value to our shareholders. And for this, you have to have that other side that understands their journey, beliefs in the journey. Otherwise, the transaction will be only about money and higher multiples if a partner doesn't believe in the journey. And if in 5 years, this will be -- have a much higher worth instead of selling 9 or 10 times instead of the 6 times that are on the table. This is what happened. It's a partner that understands that journey of gaining value based on the valorization of the business. So I'm not speaking on my own behalf. I'm speaking on behalf of the family of our partner. We have a governance fit, we have a strategy fit. We, of course, were extremely cautious in the shareholder agreement to maintain the company management as it has always been in the hands of the original partners with myself and [indiscernible]. But regardless of that, we didn't want to have partners that thought differently from this. Now this is another fit. It's difficult to convey this to you. But after a year of conversations, we were able to clearly align this so that jointly, we can have a smooth journey ahead of us in pursuit of that enormous dream which is to make this company in the next 5 or 6 years, one of the largest companies, 5 or 8-fold larger than it is at present. I think this is what underlies the transaction. Now your question on carbon credits there were 6 ecoparks with projects with the gold standard. We have 6 projects at different stages. Three of them have already been registered and according to the gold standard, and projects at an advanced stage of registration with Juiz de Fora and Ipatinga and Campos and the latest landfill already have in their agenda that search for the registration. And we also have a very similar situation registration this year and the coming year. When we think of Orizon, Vital, now we can share with you the figures so that you will have a greater visibility of the carbon volume. One of them that is concluding the registration is from São Paulo alone, they generate 600,000 tons of carbon per year and a relevant volume is probably already registered. 3 million have already been registered apparently.

Our next question comes from Gustavo Faria from Bank of America.

I have 2 questions at my end. I would like to hear from you about the pricing power that the business will have in renewing contracts. How do you assess that difference in purchasing power because of that integrated management compared to the landfill business alone, where you are able to grow revenues above the inflation? And how do you assess the premium for the market risk among the 2 companies? A more specific question in terms of integrated management, how will the payment be? If you could speak about the difference risks and the difference of collection between the 2 companies?

Thank you for the question. Well, in terms of pricing power, the integrated management contract. As I mentioned at the beginning, has a landfill as the pillar of competition for the contract when you have one competitive pillar, you end up taking all of those services that are in the package to the same purchasing power that has higher competitiveness and a higher margin, you'll see that the margin of integrated management of Vital is very similar to our landfills. So there is no reason to have a lower margin compared to our landfill contracts. When it comes to the risk premium, once again, my vision is the same, the landfill dictates the game in this scenario. And once again, the risk premier is given by the most restrictive asset. The most restrictive asset in this package is the landfill. When it comes to receiving on tariffs, either you work with a single tariff, a closed tariff, which is the case of Ecourbis, you don't receive per ton, you receive in reais per month. There is a closed tariff that encompasses all of the services, and there are 2 modalities in those contracts, either you have a type of warranty that comes from protection fund or a protected account that will guarantee that you will receive even though Vital will be the head of the game or you have another modality, which I mentioned of charging directly from the user. Recently, we purchased a landfill from Presidente Prudente 3 months ago, and we went to the street, we went to the PPP from Presidente Prudente, it encompasses the landfill and the collection is done directly through the accounts of the water system, the water and sewage system of the region, SABESP. Now I believe Caixa Econômica worked with this modeling. And it took us some time to look at the translation of that reais per ton. And we saw that the reais per ton there was much higher because you are able to have a disconnection. In Brazil, we suffer a great deal to disconnect the price of the landfill from the price with which Brazil has operated waste areas for so long. And well, that is why we have such a significant price difference in Brazil compared to the rest of the world. And the gate fee will be a significant driver here when you collect directly from the water and sewage tariffs and their share is very small. The share of waste is minor compared to the tariff for water and sewage. And the perception is not that it will increase the bill of water and sewage if you're paying for the waste as well, and the gate fee per ton of ton is much lower than what we charge here. So in integrated management contracts, we will have gate fees much above those that we are operating within our landfills.

Our next question comes from Flavia from [indiscernible] Management.

Which is your margin of maneuver in your equity balance after this transaction?

Flavia, we were very careful in this transaction, because of the way it was structured because of the design of the present day shareholders of Vital that also will participate in this combined company. They want to be part of this dream and the growth of this company. So we are creating and maintaining a good balance and this transaction in the final account will deleverage the company further, and this will accelerate organic and inorganic growth with the purchase of new landfills or implementing biomethane projects.

Our next question comes from [ Fraser Hill ].

Thank you very much for the presentation, and thank you for the contribution. To clarify the issue on carbon credits is Vital selling credits presently? Do some of them have international accreditation? Are you going to sell carbon for all of your new assets? And how long will it take to do this?

Thank you for the question. We have a very victorious year when it comes to carbon in Orizon. When you reach your goal, you have to double your goal, so this will represent a headache for us in our coming exercises. We are generating carbon credits and selling them. We have common clients with Vital. We have 10 or 15 clients for carbon credits in the company, and we have also registered this with golden standard and other accreditation after the necessary approvals, especially the CADE antitrust agency, we can think of this as a single company, placing carbon credits in the market. And of course, with the idea that we will enhance the portfolio and have a higher volume of products for clients in several gold standards, in different locations and all of this will generate value for the final user. And of course, we will have environmental and social projects as well.

The Orizon earnings call ends here. We would like to thank all of you for your attendance. Have a wonderful evening. [Statements in English on this transcript were spoken by an interpreter present on the live call.]