Ultrapar Participações S.A. (UGPA3) Earnings Call Transcript & Summary

Hello. Good morning. Welcome to Ultra Day 2024. It's a pleasure to be here with you. It's my first Ultra Day. Before we start, I have some safety remarks to make. There is no planned fire drill today. Therefore, if there is an emergency, our fire brigade team of the hotel will come and support us. The emergence exits are on the end of the room to the left. Our exit route is just falling straight in the corridor, the hallway and the meeting point is just outside the hotel lobby. Our morning has been organized as follows: we are going to have an introduction of all our businesses followed by an introduction of Ultrapar. And then we are going to close with the Q&A with all our executives. For those who are with us online you can submit comments and questions as we go. And during the Q&A session, we'll try to answer as many questions as possible. To start, I would like to invite Tabajara Bertelli, CEO of Ultragaz to start his talk.

Good morning, those that I haven't greeted personally, thank you very much for being here. It is a pleasure to be here and to spend the next minutes with you, telling you about Ultragaz. The founding business of Ultra. For some of you, we've been discussing our strategic plan for a while. What I've sum up to present to you today are the key highlights of our plan, what we have achieved so far. And our forecast for the upcoming months. For those who have been with us for the past 3 years, we've implemented most of what we planned. Let me start by telling you about the foundation of everything that I'm going to elaborate on. Our mission is very specific to the company because Ultragaz has its own specific attributes. A result of its own history, it was the introductive company of LPG and gas bottles in the Brazilian market, and we've captured lots of interesting things that can be used for the development of our business. Let me highlight a few points. Of course, there will be more, but this is a well-known brand known throughout the society. So the brand power can do much more than what we've done so far. It's a company with great capillarity because of its own structure, and there are some important indicators that you can see on the screen. We are represented in most of the cities with our reseller operations and therefore, we have a very good capillarity of operation. The company has developed a model of relationship. Ultragaz is a machine of relationship with its business partners, resellers and consumers, everything which was developed for LPG. But what we have observed in recent years has also proven that we have potential to go ahead with all the choices that we've made to Ultragaz. There are some challenges, of course, and we've created some unique solutions to them. But this is very encouraging. This is where we take a first step to our strategy. Before emphasizing the main avenues of growth, let's talk about the Brazilian LPG market. It is known quite well, but those abroad might not be familiarized with that. LPG market as a reference worldwide. it is among the 10 largest markets in terms of volume. But the way we operate, we don't have LPG for cars, we don't have heating applications because of the tropical nature of our country. So our market is the most developed market with a very sophisticated model in the world because we serve households. It has very high logistic complexity. We cover the whole country, a combined model of home deliveries very quick, and this is not replicated anywhere else in the world. Our delivery expectations are quite high, and this is supported by the capillarity that we have, we can meet the expectations. The area has developed a lot, and Ultragaz has played a key role in the development of our industry at large. Another relevant point important to us and to other countries, LPG is a clean energy solution. In Africa, for example, 80% to 85% of the population has no access to clean energy and LPG is a solution, and we are a reference to that. And there is still room for expansion in Brazil, there are still people who do not have access to LPG because of limited income. And we have a number of actions towards that. And finally, I would like to talk about market regulation. It has obtained the best of two worlds. On the one side, it developed a market focused on end consumer who are free to choose protecting customers and encouraging competition. On the other hand, it's a market that is very well organized and safe, safety of supplies and products, regulatory agencies, especially the Brazilian Agency of Oil and Gas has evolved significantly and has brought us to our current status. The whole LPG market can see the importance of regulation and how much it has led to our current successful nature. As [indiscernible] has said, let's start from the key pillar for all companies in our holding. Safety journey. Our product is somewhat more complex in terms of operation, and we are extra careful with our model of operation. We've been evolving in projects and implementations I think we've already made all the high core investments in our installations. Now we are working on the behavioral journey of people, this is the main topic that we've been emphasizing on and indicators indicate we are on the right path. In Ultragaz alone, we sell 10 million bottles per month. It goes in and out of resellers, a lot of handling throughout the year. So huge safety challenge. But we've been doing our work ahead of the future. And now we are expanding our work, bringing most of the logistics to the safe journey and bringing other elements of the supply chain. We are going to keep on focusing on that. We believe that this is a very good test behavior. Now speaking of our strategic model, I am going to emphasize what we are going to do. Our vision of development is to maximize investments with high generation of value. These are some details. The main purpose is to strengthen our reseller network that has this kind of retail profile, delivering specific services, which are better, higher, thinking about recurrence as well. This is one of our recent progression of our company. It has really transformed our results. In the corporate market, we are still focusing on dissemination. The corporate customers have put us in the leading position. We are also focusing on digital channels to interact with customers, partners, to improve operations, which is essential for our design. We've also made robust investments towards operational excellence. This is a model where we have more complexity of relationships, and we have to maintain that at levels of efficiency and quality to be perceived as a partner of value. So we need a platform over which we can provide a broader range of products beyond LPG, as I'm going to tell you later. Let me shed some more light on each of these elements. So let's start with the Residential segment. 70% of our volume comes from it. 100% through our reseller network and we want to be close to the end consumers, increase of value perception with partners that understand this importance and like this model. There is still market to expand in some geographical regions. Still, there is room for improvement, and we've been expanding our infrastructure to maximize growth into some of these markets. Proximity through digital channels is very important. Over 12% of our negotiated volume is through digital models. This is real-time operation. We have to capture orders through different channels, be in contact with resellers, observe delivery level of excellence. And this is why we have a number of qualification and development programs for our resellers, which are ultimately perceived as Ultragaz at the end consumer. We really believe in this growth, and I believe customers are going to adopt different channels. Channels are going to remain in the market and probably we'll have to have different profile of clients all at the same time. Here we have a consistent evolution of number of resellers. It's a mature market, as you know, but what matters is the process has already been started. We've expanded volumes, but we prefer resellers focused on retail, and we have fewer resellers, which are more wholesaler operators, more based on the transaction. This is a great level of profitability and perception of value and brand by customers. The other relevant segment is for the Corporate segment for bulk operation. It's our own operation directly with consumers. We have 60,000 customers, corporate customers. It is a process that we've been doing for a long time. We try to expand our portfolio expansion with profitability, of course, just focusing on our current markets, expanding our footprint, always offering additional value and capturing value based on what we've developed. Our main indicator is the time of relationship with our customers they all have a contract base. But it's great to see the satisfaction level going up and renewing the contract and the businesses with us, which is something really important. The plan of expansion is combined with extension of our infrastructure. We want to have our operations closer to our customers. It's our own operation. So we have long-term operations. We know exactly what are the areas we're going to focus on. And with that, as I've said before, we can offer a portfolio of energy solutions, different solutions for different industries that have different needs not only one single LPG solution. To show you our further progression, we can talk about our journey in those two segments. Closer to customers, more customers, complex operation. Therefore, we need operational excellence in execution. Execution of this plan is not obvious. We've been working hard to deliver the best. These are the indicators of this operations, just for you to have an idea. We've been added technology and automation in our productive processes. We've also seen the capture of benefits in logistics. Our model is much better developed now. We also have a number of opportunities in supply chain, which were used. And we've also started the implementation of so-called operational consortium, sharing some bases for storage and manufacturing, and I'm going to give you some more details. So here at the front, talking about operational aspects. We have won the second phase, which was the most complex and it's fully implemented, we are still missing a third and last phase that depends on some additional investments that we have already agreed on and this is going to happen early next year. But we were successful in implementations, and we can see a higher service level with our customers. We're closer to customers. We are much more competitive in some regions. And this agrees with our expectation of attraction in terms of benefits, financial benefits, will be fully perceived next year 2025 and part of it has been captured and will be captured over the next few months. So we are closing a package of improvement of operational excellence that we were very optimistic about, but there was a risk that we probably overcame according to plan. Now moving on, and we talked about the evolution of our core businesses in the two segments, operational excellence. And as we have been saying to everybody, we have a proposal of continued with the offers to the same markets, same customers, expanding the solutions that we offer, these are some of the movements that we have already done. So here, you can see the operation of compressed natural gas with biomethane. And we have also started our energy operations with two acquisitions. One has been just finalized. And with the first operation with what we call bioLPG but this is a fully renewable product with very, very high acceptance in the market, and we are expecting to continue this development with a product that has good prospects in the future. Now talking a little bit about the set of evolution and everything. I'll talk about our vision for energy. And as you remember, 2 years ago we started and distributed generation market acquiring a very small company, Stella and developing. And especially last year, we had a long journey of learning to understand what the journey would be like for our customers. And this is a focus on low-voltage market. This is very interesting actions targeting this market. We have just finalized the second transaction with the acquisition -- recent acquisition that just earlier this month, and now we are focusing on high-voltage segment with a business profile that is very similar to Ultragaz, which is marketing in a retail market. So -- and we have operations that in a very simplistic way, we look at the low-voltage model working with small customers and the retail much closer to business and stores, bars, restaurants, hotels and so on. So this combination, we can already see that it is very successful in distributed generation and it's a full steam for the integration of the second vertical, and we are going to complement our package for our existing customers with LPG, and we are offering now new products. Now an update about the progress on biomethane. And with CNG, we are continuing with compressed natural gas as awarded in the acquisition from [indiscernible]. So this year, operations that we didn't have for biomethane, but they were very difficult. Production was very small of biomethane and there were very few biomethane customers. And today, as we have assured supplies, so a significant volume of supply that we have assured some of it in operation, and another part is going to start operations over the next 2 years and many contracts with customers already finalized, and these are true pictures of real life operations with customers. And we are going to sign more contracts before the end of the year and possibly this is going to provide a significant contribution to our business. So we have designed this operational model, focusing very much on our core business and that is our main focus. Closer to customers in having [indiscernible] relationship with customers, capturing the opportunities, we are seeing a very good and positive evolution of what the company has been doing so far and also having a wider array of solutions offered to our customers. So this is all I had to say to you. And in closing it, we would like to show you an internal video that used to help us to disseminate our strategy and summarizes everything that I have said today. [Presentation]

Thank you so much. And I'll continue, would like to give the floor to Decio Amaral from Ultracargo.

Good morning, it's a pleasure to be with you here today. Thank you so much for being here. It's very nice to tell you what has changed and the progress after our last meeting almost 1 year ago. I would like to say that we haven't changed. Well, something that we haven't changed is the way we grow, the way we deliver our strategy, the way we create value. And how can we do that? First, with a great focus on safety, social environmental responsibility. Looking after our people with an inclusive and diverse environment, but something that tries and bring innovation with a challenge of always doing the best. We have -- we are always and always on the pursuit of finding excellent and adding value. We want to improve more and more our value proposition for customers so that they may see Ultracargo as a preferred company, a company that they want to work with, and we are very attentive to new growth opportunities and geographic relevance. So this is what hasn't changed. So first, what the most important thing for us is safety. Numbers speak for themselves, something that has evolved in the company. And how can we do that? I'm going to repeat what I said last year. We do this working concomitantly on 3 elements: mind where that we call our culture, a culture very people-centered, safety center and also centered on risk management. We work on hardware assets need to have maintenance, need to be thought and planned right from the design to permit safe operation. I need to maintain protection systems, control systems, valve calibration. Our safety level is no matter how good is the control, it is going to degradate a long time. And there is software. It is the management system, the monitoring of performance indicator, proactive and reactive indicators to be attentive to changes in the scenario, whenever there is a new product in operation. This is a new risk analysis. We need to have these 3 aspects combined all the time. But how can you keep this alive with lots of commitments from leadership. So this year, we have introduced a safety day. It's kind of common for you to stop the company to have some downtime when an accident happens. But we don't need an accident. So we have a downtime for 1 hour, all operations in Ultracargo, all our employees and contracted staff more than, 1,300 almost 1,400 people with a senior leader talking about safety, and it is the role model of leaders that assures that this really happens. Something that hasn't changed either, and I hope it won't change for a long time. Ultracargo is a leader in its industry, both in terms of geographic footprint as well as in static capacity. What has started to change, we are creating another element of diversification as compared to the competition by going in the interior and I'm going to talk more about this, but it has also changed that we grew from 7 million to 8 million tons handled and from 14 million to 17 million cubic meters sold already with the benefit of our acquisitions of Opla and Rondonopolis and another small acquisition last year. And I hope that this changes a lot in the future. In terms of social and environmental responsibility, this is important. And there are a few things that I would like to highlight. We have seen a strong increase in the number of women working in our operations. By next year, we want to have 30% women operating our terminal. And for many of them, this is their first job. So I go to terminals and I talk to them. These women are so proud to have the first job opportunity at Ultracargo. This is very valuable because income in the hands of women gets better to families. So behind of this, there are women that are entering the labor market and also with social consequences. So we wanted to have our operations more friendly to the environment. So we have renewable sources of energy, very strong waste management, water CO2 emissions, and then you can monitor our indicators in our annual report. But we can only do this with people. So we need to have good climate. So we work strongly on an inclusive provocative environment combined to our purpose and we were very happy to win the GPTW this year, Great Places to Work, demonstrating that it is possible. We can do that. And the last example that I would like to share with you is a new way of interactions between public and private sectors. We needed to buy an area in Santos for the connection with the terminal. So traditionally, you sign the check, and that's it. And then well, it's picks, you enter and then you make the bank transfer. This was easy. But what about the legacy. What is the best way to do this with a seating hall. They needed a school, a hospital in a poor area of the city of Santos. And then thought let's do it differently. So all the cargo is going to build with some partners, the school and the hospital, and we're going to swap with the city so that we have the land. So this means leaving a legacy. This is the execution of what we call social responsibility. So this is a legacy in a practical way, and maybe other companies and other public agencies, we have the same vision, and we can work in this way. Now a little bit about our customers. We have a diversified customer portfolio with good clients, most of our contracted capacity in the mid and long term, makes us confident that we can continue with this robust investment plan that you have been seeing us doing over the last few years. Our exposure to derivatives is 61% that are seeing our exposure to buy products is 61%. It accounts for a significant share of our revenues. And then we have a corn ethanol, sugarcane ethanol, 82% of our revenue comes from outside our group demonstrating that we are independent service providers that we are open to the market and this is likely to grow even further this external exposure as a result of our investments. Now a little bit about productivity and technology in a very wide-ranging way. If you take a look at the chart on the right-hand side. So our cost and expenses have been flat but cubic meter of capacity accumulated inflation over the -- this is productivity. We have been able to gain productivity every year above the level of inflation. And how can we do that? This is Ultracargo operational system based on lean, the Kaizen method. So we seek technology efficiency at very low cost, very efficient operations. This is the first element to assure a good value proposition for our customers. If you look, so we had 827 people. This year, 836 with 3 new geographies and these people operated 832,000 today, it's 1,000,067. This is productivity. It's important when you take a look at the chart on the left-hand side, it talks about our investments. So of the [ 832 to 1.67 million ] utilization level is very, very high. We could invest at the right timing, right geography, adding more value per cubic meter that we sell as we have been placing in the market. So productivity and accurate allocation of investments, this is very powerful. And you can see the effect in the final results of the company, and you are going to see it further ahead. Now transitioning into the future I would like to talk about the basis of the foundations for our strategy. These are 2 maps. On the left, we have the surplus and deficit of oil byproducts per state division for 2030 and the main ports for the entry of products where Ultracargo operates, so it can be [indiscernible] Vila do Conde, Itaqui, and Santos. So you can see the center west of the country growing with agro. So what changes for 2030 thinking of the growth of the ports is that Santos will be the structural importer of byproducts. So we say, well, this is an opportunity. The main ports they're to grow and we need to invest in this area. When you combine this with the chart on the right-hand side, you can see corn ethanol are vision for '23 with a huge increase in production in the Center West and consumption spread throughout Brazil. And if we were to talk about reverse logistics complementarity. So let's work on corridors, so we offer service. This is a little bit of our strategy. First of all, I'm going to share with you a video for you to understand a little bit better. And then I'll come back. [Presentation]

Well, lots of constructions, really ongoing construction sites, large country. Well, we are challenged by delivering results. Now speaking of the first logistic corridor, the chart shows the increase of corn ethanol and our forecast up to 2026. And the share of Mato Grosso in the growth. This is what's going to happen. We've seen yesterday, General Motors investing in flex fuel cars in Brazil. Flex are run by ethanol, and we have to improve the logistics, so that it gets as a competitive product. Corn ethanol is very competitive. And if we improve logistics, it can take over even a better part of the cycle -- auto cycle. In all our terminals, we have that product stored, but with inefficient logistics, imagine if we had efficient logistics. Concerning our oil derivatives in Sao Paulo, as of next year, we are going to have really structuring investments. Rondonopolis, Paulinia, and Opla receives that product connected through pipeline. So 1 million to make per year. With our investments in Rondonopolis and Opla, the quarter will go to 3.5 million capacity per year. We are going to have it completed by the first quarter next year. Expansion in Santos terminal to capture more volume, and there is going to be a connection as well. So Santos, Rondonopolis connected by railways being able to deal with complementary reverse flows. As it expands, Ultracargo then has more opportunities to offer efficient services to our customers. Now speaking of the second corridor. In Itaqui, there has been a huge growth that is going to be maintained but to increase the efficiency of the 4 terminals, we need to have efficiency of exiting the port. There is a lot being transloaded with trucks, but we need trains. So Palmeirante is a new terminal connected with railway systems that's going to increase the turnover of Itaqui terminal thanks to the Palmeirante unit that's going to be opened in the first half next year, very relevant quarter to us into Brazil. We are also going to capture truck ethanol being transported by trucks and that can also be then shipped through the terminal. How do we expect to be in our next meeting. Expansions in Santos, Palmeirante, and Rondonopolis fully completed. Itaqui at the last step of the production. That's going to be 15% increase in installed capacity. Itaqui and Palmeirante will be in full operation. And probably, we can have some more information about the strategy to expand in land in Brazil. As of Vila do Conde, similarly to other quarters, but in a [indiscernible] solution with more efficient flows. We are going to get ethanol coming up to the north by trucks, to be transferred to Vila do Conde we want to offer to our clients. Do you want to get to the center west region of Brazil? Well, we have 2 or 3 options to offer. We want to offer to our clients options, multiple options that they can decide to go on depending on the moment. To conclude my presentation, we've produced robust growth because to do it, we need money, we have to make money, margins matter. Last year, we had significant growth. Most of the growth has come from acquisitions, but not much. We've improved our asset base's efficiency is part of that. In the first half, we closed above last year's number. Terminals [indiscernible] use, high occupancy rate, and this is why we have this strong program to have capacity and to resume growth even at a faster pace. Well, that's it. Thank you all very much. I'll be here to entertain your questions during the Q&A to talk about any other topics you might want to bring about. Let me invite Linden now to talk about Ipiranga.

Good morning. Businesses start from the license to operate, at least that's how it should start. And safety is our license to operate. We've been investing resources, time to improve our processes, to improve our infrastructure and build a culture of safety that is compatible with our business. And I guess we've evolved very significantly and the numbers speak for themselves. Whenever we talk about safety, we have to understand that safety should be part of our culture. It should be part of our daily practice. We've increased the scope of incidents being monitored, the risks being monitored, and it gives us more learning opportunities, it gives us a chance to keep on correcting, improving processes and developing a culture of, really, diligence in safety. Before addressing Ipiranga, I would like to tell you about the market. As a society, we are all involved in the discussion about energy transition. The business of fuels in Brazil is consistently growing. It's a fact. This year, it has grown more than 5%. It is a resilient business. At the same time, it's growing, and we can see the share of biofuels which becomes increasingly more important, but it grows and changes somewhat its distribution. We've talked about that. There is more opening to international market, less dependence on Petrobras supplies, the capacity to bring products from all over the world. Therefore, there are more options. But we are still dealing with a factor, which is a challenge, which is irregular trade. Here, you can see on the chart on the right, 17% of the volume distributed in Brazil is distributed by companies classified as being irregular companies or companies that operate in the irregular market because of not paying taxes or not complying with CBio's goals or not complying with the regulations of mixtures, et cetera. And this is our main challenge. And I don't think it's news to any of you. This is something that has been discussed even through the media. For the past 2 to 3 years, we've seen a number of indications of irregularity in the Brazilian market. Special regimen -- tax regimen on imports, regular imports of Naphtha and others. The -- something unbranded, so unbranded products. According to the regulations in Brazil, the gas stations of a distributor can have a gas pump using products of another distributor as well. It doesn't make sense, something difficult to control because, yes, you have to communicate, but it's not communicated. And below that in the tanks of the gas station, there is no segregation, there is not one tank for one specific pump. One tank would support 1 or 2 or more of the gas pumps. 60% of the gas stations in Brazil have those regional brands or unbranded pump. So there is no purpose in having the regulations addressing that and saying that the stations would be authorized to distribute products with no control whatsoever. Said that, if we observe what has happened in the past 18 months, we can see some positive indications we've seen the approval of mono phase, single-phase taxation in diesel and gasoline, which we do somewhat the tax -- failure to pay taxes. We've seen some suspensions of licenses of companies which were repeatedly irregular and we've seen in the media, in the business, a willingness to address these topics, which is a positive thing. So yes, there is still a lot to be done. ICL that we invest and participate in, has a very important role to play. But I've been in the industry for 34 years, and I've been dealing with that for 34 years. But the exposure that we can see today in the media and all the involvement of players against the regular market had not been heard of before probably because we've got to a point where we have to decide whether we want a serious business or something that is open to irregular practices. I'm concerned about that. But I'm also optimistic I can see a number of effective actions put in place, which didn't use to be common in the past. This is an environment in which we operate. It's not going to change. I hope it gets better, but we cannot simply sit and wait for things to happen. We have to be prepared to deal with them. In Ipiranga, we've been investing in the 4 pillars that I've been emphasizing in our communication. They are our work guidelines focused on what really adds value to the business and what is really important for the health and progression of a business such as Ipiranga. In logistics, for example, efficiency. In supply chain and trading, we want to have options to bring more competence to the market. Competitiveness, I've already emphasized the importance of a very well adjusted pricing with clear policies. Something that will ultimately generate good competitiveness to our resellers. And finally, strong brand and culture that can engage our internal team, our resellers and customers. The work throughout the years has generated consistency at Ipiranga. These are some of the characteristics of our business. You all know them. But we've been experiencing significant improvement in our results. For example, market share of Ipiranga in the branded stations, it has improved in recent years in a business that has a number of adversities. And our NPS, the way we are perceived by our resellers, it's something that has been improving despite the fact that we are competing in a market with a number of challenges. Now speaking about the elements of our pillars, I would like to start from logistics and distribution. We need efficiency, we have to improve processes, we have to be more efficient in using our resources in redesigning processes that would improve the level of services delivered to our customers. It has provided good results, so significant reduction in our operating times, significant reduction in the number of incidents especially in our fleet. We've seen increase in fleet productivity, we've reduced the [ dam rage ], which is something quite important. But said that, this is a journey. We still have got a lot to do. We knew that the pillar of logistics and distribution would take longer to capture all the value. But for the next 3 years, we expect to have BRL 400 million in efficiency to be captured just from the pillar of logistics and logistics and distribution. Now supply and trading. As I told you, the basis of supply and trading is the volume we have. Our volume generates this comfort level to operate in the international market in the most efficient way. But we have to just balance between options and competitiveness. We bring products to Brazil or not, depending on where it's generated, 1/3 of sales through our trading are international sales. But we have really to balance optionality and competitiveness all the time. Businesses in Brazil are increasing. Brazil will keep on depending more and more on its capacity to originate product outside Brazil. And this is why it's so important to have a trading business, which is broad, capable of accessing products at the sources that can bring us enhanced competitiveness. Another important element concerns competitiveness. We've been emphasizing pricing because it was a low-hanging fruit that we attacked right from the beginning of our process and my coming into the company. But it's not only about price, it also involves market intelligence, efficient processes, consistency, transparency so that resellers understand what's behind the pricing rationale. Strong network we've been making divestments and really closing down some stations, it makes no sense to carry inefficiency. We've increased our share in selling of a premium product, it gives more margin to [ Ipiranga ] to resellers. And cost and capital discipline, which is something that should guide all our activities. And this year, we have started a process to replace our ERP and we already felt the need to do that for a while, and this is also going to add efficiency to Ipiranga businesses. Today, we have the chain with the best productivity in Brazil precisely because of all the work that we did with consolidation of our businesses. So even if we have fewer stations, we have the best average per station in Brazil. And now in terms of engagement, and I say engagement due to charm, it's about brand and culture. So we use these elements effectively to engage all stakeholders that have some relationship with the brand Ipiranga. So this is a very strong brand, it's been in Brazil for 87 years, it got all awards, all prices, very -- with great recall among Brazilians. And internally, it generates a feeling of participation in our team that is quite significant. And with customers, obviously, their identification of the brand takes place and is very traditional. And this is related to the value generation, the capacity to generate value for our customers through our value proposition. One of the points that were very critical for Ipiranga in a transition process was the capacity of finding a successor for critical position. So today, we no longer have this problem in Ipiranga, 80% of the critical positions have successors mapped and ready or almost ready to take office in no longer than 3 years. This is part of a process that started in identifying important talents, retention capacity and also capacity to train those people. At the same time, we built in Ipiranga an inclusive and diverse environment, I think that the result of this culture, we can see in our favorability index that has been growing over the last 4 years and have reached quite significant rates when we consider companies in the Brazilian scenario. Moreover, as you showed some social programs at Ultracargo, there are some that are very dear to us. One in the women operation today, we already have in our basis, women who are operators. This may sound obvious to you but this is not, I think, that 5 years ago, we did not have this in Brazil. Today, we already have women in Ipiranga driving those very, very big trucks with 60,000 liters, which is not common. But we have been developing this with women, have been attracting women to do this kind of work, and they are performing with excellence. And this is to have the talent. It's not just for showing in our report and they have -- they correspond to these opportunities. We also have inclusion, which prepared about 300 people that are disabled to operate, especially in technology, and we have health on the road that is very traditional which is this truck that you're seeing going through Brazilian road to our stations, and they provide care in those stations, not just for drivers and everyone working there, but for the entire community of that location. This is a significant program with a -- that has performed almost 700,000 medical appointments over 15 years. Now talking a little bit within the pillar of engagement by enchantment, we have ICONIC as part of our portfolio, ICONIC is a JV of lubricants of Ipiranga together with Chevron. And since the beginning, it has been the market leader in Brazil. We've been winning market share, we've been improving satisfaction rates in the relationship with customers. We work with 2 very high-reputation brands in the market. We have been expanding our businesses and we started exploring other sources of growth. So today and last year, we became basic oil distributors, and we are dealing with our portfolio, improving our product portfolio to place higher emphasis in products that we did not operate on. So intensively, we have invested in our plants, in our portal, in Rio too so that we could have higher logistic and operational efficiency. We have the main logistics center in South America capable of developing very high-quality products. And this is encouraging for ICONIC with expansion markets -- expanding into other markets. So this is important for our value proposition, AmPm, and we did work very similar to what we did in Ipiranga. So this was first work, we closed store, something that did not make sense to Ipiranga and didn't make any sense for the people who are selling and then we changed the store and we have higher revenues. Our operations of the business are more efficient and higher satisfaction of our customers in the front lines after executing our business plan. Today, our chain is healthier and stronger. Moreover, we've been doing quite interesting work in AmPm to bring into our value proposition to additional retail brands that add value to the perception of consumers. And obviously, this has generated very positive perceptions that our stores are offering and this ends up and leads to higher engagement of our resellers. Well, I think that in a nutshell, what really translates all of this is our bottom line. So the market has helped, yes, of course, this is obvious over the last 2 years, but obviously and clearly, Ipiranga has been evolving in its results as a result of this focus in things that really make a difference in that are our priority in the running of our business. Now I would like to share a video with you to summarize this. [Presentation]

Very well. Thank you so much. This is all of Ipiranga for all of us. Thank you so much. And I would like to give the floor to our baby employee Fabio Schettino, the youngest one in our family.

Good morning, everyone. It's a pleasure to be here representing Hidrovias on the first Ultra Day. This is a great satisfaction. I've been in the company right since its beginning and to have a new cycle under new management with very favorable prospects. I'm going to reverse the dynamics and those who are not so familiar our business. And first, I'm going to show you a video, and then I'm going to give you details about the presentation. Just 1 comment, what you're seeing here on the picture, this convoy that you see on the picture, this has about 350 meters and 300 meters of width and about 2,000 trucks is the load. And we have three diesel engines and 14 people crew. And I hope I'll be able to show you how efficient this mode of transportation is so effective in a country that is very favorable for river transportation. Thank you so much. [Presentation]

Okay. So let's start with other sister companies to talk about what is the dearest to us. And so we can't talk about anything without talking about safety. So number one, we'll talk about safety, we can't talk about anything else, not even sustainability without assuring and making sure that our employees are going to back home safe and sound. So this is a fundamental change in our approach towards safety. This changed 1 year ago. This increase in the rate is an increase that comes from the perception that we need to report accidents. Many of these 11 cases, they are low severity, but they should be reported. So this is the beginning. First, we need to get to know, measure and then manage. And this is very much reinforced in the culture of Ultra Group that reports this and that is contributing with benchmarks to us. And this is one of our pillars. And obviously, we are going to advance this. We have the look of a company -- we celebrated 14 years, and we joined the group that is more than 80 years old. So this is our concern and our focus on safety. This is a little bit about the history of our company. We celebrated the 14th anniversary just to see it started from a PowerPoint in 2010. Everything you saw in the video, except for the bulk ships was greenfield from scratch. So the company started its activities by mapping the 2 main locations, so Paraguay, Parana Waterway and the Amazon Basin and we had the biggest contract of river navigation in the world, and this is how our company started. So the turning point was this contract with Vale in 2014. We started operating Paraguay, Parana Waterway, taking more from Corumba to Argentina. We bought the land of the North Arc and so the North Arc had a small share in a logistic exports from Mato Grosso today, a significant share of all grains produced in Mato Grosso goes north through Arco Norte and started operating this in 2016 and then we started the bauxite bulk ships, and they are not pushers or barges. They are bulk ships with coastal navigation, also a long-term contract with Alunorte -- contract controlled by North hydro. And then we won the lease of the fertilizers and salt terminal in Santos and we started operating there in 2020 when we had our IPO and now obviously, in the new phase, under new management, then looking into the second half of growth or the growth cycle of Hidrovias do Brasil. Everything was very fast. Obviously, this company has been increasing and growing its EBITDA significantly, a weighed average growth of 25% year-on-year. And as a reminder, here, we had 4 years of hydrate crisis that we need to address and further on I'll give you more details about what we are doing to solve in a structuring way. But I can tell you, for Brazil, waterway transportation are related to rivers that can support navigation. So something good that they made it very clear and we're going to solve it in the medium and long term. And just 1 detail, my life was not going to become easier because my boss is a naval engineer and then now it's easier to interact with the group. In the South Corridor, we have 4 business lines. We take ore from Corumba from a mine that was controlled by Vale and today is controlled by J&F to Argentina, 2,600 kilometers, it's 300 tonnes of ore. This is the biggest contract that we have. It's take-or-pay contract even though the controller of MCR change is still assured by Vale International. So J&F bought this, and then we kept the guarantee or collateral and all the contracts with Hidrovias do Brasil, with no exception have a mechanism of fuel transfer on a tariff inflation transfer and labor too. So these contracts have stability in terms of cash generation that is really significant. We also operate with grains from Assuncao, Paraguay to be exported to Palmira in Uruguay. And we also have an operation of pulp for the finish in Uruguay, taking 1.4 tons of pulp from Uruguay to Palmira, Uruguay, everything that is manufactured to the barge and then it's transported and the next day. So it's very dynamic, and we have 50% interest of the grain terminal in Montevideo with 2.5 million tons for the outflow of Uruguay crops and also to complement ships that are not full for ports that where the draft is not so deep. We have 18 pushers, more than 200 barges. This is in dollar, everything dollarized and 100% contracted. So this is what we call the South Corridor. Water is important. Because rivers are seasonal. The thing is when it gets below the black or the red lines, it depends on the size of our pushers, some operate with more or less weight. It's a natural seasonality. We have a plan of low water level to operate. That's what we're doing as we speak. We've seen the media talking about water crisis. So either all pushers have all corridors or we prefer the smaller ones in the area of restriction and have the larger pushers just operating from the mid-low important flexibility, and this is a competitive advantage because we have some assets of 6.5 feet and the competition starts operating about 8, 8.5 feet. Now North Corridor, what has really made a difference for us. Over 50% of grains from Mato Grosso are exported through this corridor. We've built a transload station. So a truck goes rather than going to Rondonopolis, get the railway and go to Santos. It goes up through the road, transload in Miritituba, which is a district of Itaituba, it navigates through River Tapajos, and it goes through the terminal of Barcarena, as that is pointed out, there is a terminal of Ultracargo. We have an export terminal there. 7.2 million tons in the terminal and 6.5 million tons integrated in the North region. This is a vector of growth. World exports have been growing and export of our influence region of Mato Grosso and Paraguay. The terminal has been taken, really, it's busy. And this is why we are also considering making further investments there. Now speaking of productivity, when we started the operation, convoys of 16 barges were allowed. That was the standard at that time. So we asked the Navy why are we using the Mississippi pattern because the Amazon is much larger than the Mississippi River. And we've kept on increasing Convoys. Now we have one with 35 barges, 77 million tons. The turnover of terminals, it's a busy business, right? 39 turnover in our terminal, less than 10 days with the loads in the terminal. In Vila do Conde, we are talking about a turnover of 29x, 13 days maximum with the load in the docks. The more we transport the better. Now our 2 last business lines, port in Santos, 25-year lease. We started our operations with salt. The estimates are here, we had a very aggressive ramp up. The concession was in 2020. In '21 and '22, we've just made the investments in modernization and expansion and now we can see the spike of volume, 1.4 million tonnes in 2023. And in '24, we've added salt for the second half. And the last contract, coastal navigation, we are not using pushers and barges, but rather ships, vessels. We have bauxite from Port of Trombetas navigate through the Amazon up to the refinery of [ Alumina Alunorte ]. It's a 25-year contract, take-or-pay regardless of variation of volume, what is not performed in volume is paid in EBITDA. EBITDA is constant, even though there is fluctuation on volume. Now looking ahead, what are we getting ready for? We see an opportunity to have reorganization of the company, the company was too complex. It was a project finance at first. So we are going to have some tax optimization. And we are also going to analyze the capital structure, and we've heard that last week, there's going to be additional investments. In the South and North, we have to focus on climate impacts and mitigation. We can solve the problem, there's still going to be volatility, but in the mid and long term, we expect to guarantee constant navigation. Coastal navigation, it's a more regular business. We have to keep on focusing on operational excellence to expand our results. Adjusted EBITDA. Since 2020, the company has experiencing the water crisis but solving the problems of size of vessels and further investments, I'm sure we're going to have an increase in EBITDA. Thank you all very much. We'll be here for further questions later. Thank you.

Good morning, everyone. Great to be here, one more day of Ultra Day. I'm going to start talking about the consolidated results of Ultrapar. 2023, it's a year that is setting a new level of company results very much driven by the results of Ultracargo and Ultragaz, especially 2023 when we have new results of Ipiranga. Results added by the cash that investments of [ Oxiteno ] and Ultrafarma has result in decreasing indebtedness and leverage. In June 24, even considering BRL 1.3 billion for purchasing Hidrovias, we already have that performance. And our leverage is 1.5x to 2x EBITDA. We used to have access to a line of credit at Ipiranga, but we've maintained still our perception of risk. We've been using that excess of BRL 3 billion at 108% of CDI rate. And we are once again back into investment rate according to Standards and Poor after a long period of time. Now let's talk about net income. In 2023, it reached a different level over BRL 2 billion for the first time, BRL 2.5 million actually. And our ROIC return on invested capital. We've had the highest return on investment over the past 10 years. And our goal is greater than 20%. Because of the nature of our business, the investments we've made to improve them. And as we've heard, there's been an improvement in the distribution sector and the ability to deal with all oscillations of the market. Here, we can see the actions and Bovespa Index for the past 3 years. Once we have the improvement of Ipiranga's performance that has impacted this year, we've adjusted expectations still we can see a return much higher than what's stated by Bovespa's indexes. To conclude our results last year, we launched our ESG indicators for 2030. Our main highlights are the incorporation of all our investments and M&A projects, also ESG indicators. So they are part of our decision-making process. We are also reviewing our climate risk metrics for all our businesses. I would like to remind you that we've been observing indicators towards our goal of 2030, and they are all available in our website. I have 2 more slides to share with you. This year, we are celebrating our 25 years of our IPO. We've been focusing on governance and 2 relevant aspects should be emphasized, alignment of interest and respect for minority shareholders. And there are some important landmarks. First company in the 80s in Latin America to turn executives into relevant shareholders. After the IPO, we were the first Brazilian company that offered 100% tagalong rights to all shareholders. Then migration to Novo Mercado in addition to the renewal of our Board. We've also had here relevant share-based incentive plans. In recent years, we've also been thinking about the role of our holding, really looking ahead towards the future. In this role of generating long-term value, we can see here the main drivers. I'm not going to cover them all, but let me emphasize a few in drivers, discipline in capital allocation, consider sectors in which we can be the best shareholders and constant capital cost optimization. In values, there are 3 important points to make. We work together, collaborative work. We have an entrepreneurial attitude and we also have long-term vision. As our pillars, we have simple and efficient management model, deep knowledge of the areas where we work. This year, celebrating the 25-year or [ 25 ] anniversary of our IPO. We've launched our new brand, as we've shown you. And for the internal stuff, we wanted to show them our DNA. And this is the video that we are going to show you next. [Presentation]

Thank you. Let me now invite Marcos to close our presentation.

Hello. It's great to be here. I'll be very brief. Let me tell you a little bit about what we are building long term. I'm not very creative, but I always start talking by incidents. This is not only our obligation. This is not a requirement to make sure that everyone can get home safely every day with all fingers in the hands. It also means avoiding things that we do not want to happen. Waste, for example, loss of product, spills, not much productivity. So if the company has low incident rates, it can have high efficiency rate, a very interesting metric. And I recommend that investors should look for that because companies can do it well, can also do a number of other things equally well. But the fact is, we've been in the journey at the beginning of this journey, there is still a lot that can be improved in terms of efficiency and system. But I am very glad with our results. We've improved our analysis on it. It's really a very serious violation, not reporting incidents. At first, we start having more and more incidents reported, but that's good because then you have the right statistics to deal with the topic. Second slide, let me talk about people as a company strategy. And I've said that a number of times before, I believe some of you have heard me addressing it. There is one strategy that does not change, people. We think about market changes, energy transition. Yes, we have to adjust our strategy. But not here. Best teams, best players normally perform better. Doesn't matter what's the competition, sport, it's a given. And time does not change that. And you've heard and you've watched the videos, especially the one about the brand, we talk about people, kind of profile we look for, how we want it to be, culture, what people should think when they wake up in the morning and go to work. Very important journey in 2022. There was a very important renewal of our leadership. Now it's much more stable. These are executive managers, direct reports, officers, so leaders of the company. We've had a very relevant renewal. Now it's much more stable. Now speaking about investments in Brazil. We can still see a lot of value in our country. For those who are investment funds and have experienced the pressure of foreigners who decide to get the capital away from Brazil. I know it's not easy to sell our country. We haven't been growing significantly, a lot of risks going on and competing with investors that have made safe investments. But Brazil always has so many opportunities. It's very well positioned in terms of energy transition. We have huge opportunities in agribusiness, and we are getting exposed to that continuously. But as Ultracargo, Ultragaz, Ipiranga and Hidrovias, we are getting more exposure to agri business, and we are connected with this GDP, which is extremely resilient. The world doesn't live without Brazil in it. What's happening, and it's really a transformation to us is that regulatory elements are now a political priority. We can see governments talking about that, all levels of government talking about that. The legal department as well, just so much more attentive to it. That last number, BRL 70 billion of active debt, a country that has kept [indiscernible] trying to increase taxes to make ends meet, and there are BRL 70 billion in debt of companies that have really failed to pay their taxes in the area of fuels. We know that this is going to get corrected. This is a pendulum. It takes a long time. In the year 2000, in [ Polina ], there were about 90% of its volume for irregular distributors. So there have been even more situations. Now things are going back into normal rates. And as [indiscernible] has said, as a society, we should not accept that. We have to make a decision. We have to start deciding who we are going to do business with. We need more ethics there. And I can feel that in our discussions. Now speaking of Hidrovias, [indiscernible] was here, and this is a very strong step and exposure to agri business. It's a company where we can see a lot of value to be added and created. There is a journey of operational efficiency. We are a company of reference. We are now a shareholder holding 40% of the stake. It was a company that was over levered, and we are going to correct the course. But there are very important projects in the company. There is a demand that's been increasing. There is a suppressed demand that's further expanding and very, very interesting projects. And there is something for us to address, and I think this is what Escatino said. We should call it navigable beds in Brazil. The logic is the navigable beds. It's not waterways that needs investment. And we can help with that regard. It's high time we did that, considering how much the economy of Mato Grosso depends on the north waterways, they need to be much safer and assured so that there is no breakdown of the logistics. There's lots of water. The Amazon has a lot of water. It's nowhere and near getting all dry, but to keep navigability is difficult and we need investment. Now I would like to talk a little bit about the slide, and it shows the change that we are implementing in our governance. And we are creating more independence, accountability and speed or agility when CEOs will now report to a Board rather than reporting directly to me at Ultrapar and Ultrapar, as Rodrigo said, has a clear and clearer role. Ultrapar needs to be a capital source needs to look at businesses with a colder eye as a capital allocator and to find where it creates value as an organization. And once companies report to independent Board, they also need to start more and more to become more and more prepared to be independent, even in terms of their capital structures and strengthening governance and increasing how much the boards know about companies. The model that we have designed for that. At first, Ultrapar, CEO and CFO and the CEO of the company would have a Board together with 2 independent members that also sit on Ultrapar board. So it's kind of confusing, right. So each company of Ultrapar, Ipiranga, Ultragaz, and Ultracargo are going to have 2 independent board members from Ultrapar like a committee at Ultrapar who knows in depth about each company, but the final decision of the Board, this is a final decision, so there will be expanded independence. On the other hand, this generates a discussion that Rodrigo has suggested internally quite intensity and with lots of quality is that Ultrapar, we need to effectively pave its way for value generation. So it will need to create the discipline and capacity to do that. So this change is taking place right now. In my opinion, it's going to prepare the company to have a structure to add value in the long term and to become increasingly more resilient. And my last slide about the next 25 years. Of course, we do not know what lies ahead of us in the next 25 years. But very clearly, we have this management model. We always say we want to reinforce discipline in capital allocation. We are going to look after our capital structure always to make it more robust and investment grade, even though our country is not investment grade. This is very important to us. And again, thinking of the long term, we have this model of executive officers as partners with very, very long-term actions for our team as the core of our interest alignment. This is all I had to say. Now I'm going to give the floor to [indiscernible] so that we can continue. Can move on to our Q&A.

Thank you, Marcos. Thank you, everyone. So shortly, we are going to have our Q&A session. While the team organizes the stage, I'm going to use the opportunity to share with us how we are going to manage this session. [Operator Instructions] So for us to move on, once again, I would like to give the floor to the executive officers to come up to the stage...

Hello, everyone. I'm Melanie from JPMorgan. First of all, thank you so much for your presentation. It's always very good to have this closer contact. And I think that during all presentations, Ultrapar has focused on long-term value generation and what you're doing to expand to use agribusiness opportunities. As this is the first time we heard a little bit more about the waterways and everything that we've been seeing going on since last week. Not I would like you to explain a little bit more how did you define the strategy of increasing your stake at Hidrovias, what is your relationship like since March since you've increased your stake? And what is your expectation from now on? We see Hidrovias as a fourth pillar in your businesses, but if you could give us some more details about your strategies that I would appreciate.

Okay, very briefly. Well, there's a lot to come. We do not have a final understanding of all opportunities in Hidrovias. But as Ultra, I look at Hidrovias as a major infrastructure platform for agri business. I do not think that the views we have today will be the same in 20 years, but it is a company that provides services to agribusiness, infrastructure services. We can clearly see that the low-hanging fruit is an operational improvement. I think that, yes, there are opportunities to unlock investments for -- to expand current affairs. But once again, this can be a place that you combine the customer portfolio from agri business with a long-term strategy of Ultra. They haven't even been mapped for this company. And this is indeed the fourth pillar. It's not just dynamics. There are a few synergies in terms of combining it with any other activity in Ultra.

Congratulations for your presentation. Vicente from Bradesco BBI. [indiscernible], the government has launched a program to encourage consumption of LGP to stop burning wood to buy LPG. What do you think about this program? Do you like it? How could it be better? So there's a program talking about prices, stable prices. Could you tell us a little bit about that? And number two is about the law for bad payers. So I would like to praise you for the work with ICL. What is the law like if we think of these repeat debtors or repeat bad payers.

Well, first of all, so far, the main thing is the problem once you address, even in the world, we see many countries going different ways, this is a very serious public health. So they would there are statistics about that. We know how much this is harmful for the population, especially for women and children. And this is a worldwide problem. In Brazil, we do have this problem, not as intensely fortunately, not as bad as in other countries, but still a significant share of the population does that. We had a problem that had been implemented with gas vouchers. But it was a prominent in the end of the day, it was an amount that was given to the population, and they used it as they wished. Now with this evolution, the program is not yet ready. It's been launched, but there are a few details missing. It increases potential. And from what we have understood so far with no specific allocation. So it has a potential of reaching the population that did not have access to the product. And our thinking as a society, it's much more intelligent than what we did in the past of controlling prices and I demonstrated here. So the semination of the product is very large for all social classes, many different applications, controlling prices. It's very difficult. It wouldn't make any sense. And our social investment as a country would be more waste than benefit. So the concept here, I see something positive to effectively address this concern. Of course, we need to understand that there are many things still in the field when we should start discussions -- and this is very positive for society as a whole, and we need to understand the details. Just as other programs that we have seen outside Brazil that were implemented. I think that the success of this plan is to reduce the energy property in our country or for repeat bettors. So this has been going on for a long time with pushbacks and push forward. No, but climate is more mobilized. This is a project that will need a major political push. The executive bench needs to mobilize, to motivate. I see the press starting to get involved and everything of organized crime, involved with fuels and everything is also kind of stronger in the breast, getting more space in the media with a more positive climate to approve that. It's not simple. It's not easy, but I think that if you try and try it in the end, it may work. I would like to take the opportunity and praise you. So you published an article, it was very well done with significant repercussion and very significant. So thank you. I could thank you in private afterwards, but in public is better.

So this is Gabriel Barra from Citibank. First about the holding, I think Lutz talked about the new structure. Having slightly more power for the executive officers of each business line. So those of us who have been following up Ultra group for a long time. So you try and solve the pains of the past. And this is in 2021, when you joined, there's a new path. So you look at the holding in a different way. But there are 2 things that I would like to understand. Number one, how should the holding look at the assets of the company? Looking as a holding. So having 100% of Ipiranga, Ultracargo and Ultragaz. How can we expect a more active management of the assets from the holding? And in terms of Hidrovias, it's the only one which is not under that umbrella, but I think that you are likely to follow the same way to have a better alignment of the group as a whole. And if you allow me one last question, for a long time, we've been expecting the comeback of the fuel industry. This has a lot to do with informal comers and you said 2020 was the year of the pandemic. So the numbers aren't very much influence. If we look back in '19, '18 and looking at today's margins, this is -- I think this is not what it should be. What is your goal today in terms of return market share? How are you going to generate value? What is your focus today? And how are you thinking about this looking into the future?

Well, as to our current businesses, yes, you're right. The holding should look at all businesses as businesses that should look, divest, IPOs, increased stakes to actively manage that. The times we are living is not the right time for that. We look at the Brazilian stock exchange is the cheapest place for you to buy a company. So an IPO today of Ipiranga would be just a waste of money. But looking in the long term, yes, we should move towards a model where you could allocate more or less capital with slightly more flexibility, which we do not have today. This is one point. As a holding, we should help structure the limits for Ipiranga in terms of capital allocation and help Ipiranga to allocate its capital with more and more discipline. But we, as a holding, in terms of our taxpayer number, we should have more flexibility. And in the long term, it will exist, but there will be a time for that to be feasible.

Would you like to complement?

We see a great value in having partners and partners bring scrutiny and contributions. So if there is an equation company to invest at the right time that would make sense in the portfolio would be natural. But this is not a decision that we take in advance. And Hidrovias somehow follows that model, if you think. I am the Chairman of the Board; and Rodrigo is the Vice Chairman. And somehow, we have a model with us independence. And this capital freedom in Hidrovias, and we as holding can help anchoring capital as we are doing now, but we do not have 100% of responsibility for the company's capital, obviously.

It's a high goal. It's the goal that you define for us. There's no discussion.

Well, number one, yes, you are right. We have seen 3 or 4 versions of our presentation, not just mine, but the other companies to -- and each time we cut at a point. But each year has something unique about it. The pandemic and before and this and that and truck driver strike, everything has an impact, get a reference and let's go for it. But in fact, I think that there is space. And our goal has always been to have a return of at least 20% for our business. But we are dealing with things in the market that we cannot 100% control. If today, the margin is not as high as we think it should be. We need to work to make the company more efficient, to have governance and the use of capital, diligence and costs and opening our options to get to that profitability. So everything that we said today, our business has held back value. The thing is that Brazil because of irregularities have totally compressed margin in distribution. And this has nothing to do with final prices for consumers. So there is $0.10 of profit for the distributor and BRL 2.5 of taxes and other things. So it's not the $0.10 to $0.15. This is not going to change anything in perception. So this is not the point really. This is a model that we are within that we're work has a significant share of the economy that is not paying the BRL 2.5 billion of tax. So we should, in fact, look into that and look at prices and fuel margins in the country in the long term, and this is very similar to international market, which is twice as higher than ours. In Argentina, it's much higher than in Brazil...

I'm Pedro Soares with BTG. Going back to what you said last year, investments in Hidrovias was still at the level of speculation. But at that time, you emphasized that you saw the group creating a power of diversification for the future. Now that you are very well positioned in field distribution for LPG, liquid, your position in logistics, in waterways. But thinking about Ultrapar that moment of diversification, flexibilization, which will be maintained, will it be at the level of Ultra? Or do you think the moment has been -- it has been consolidated and how its subsidiary will go into diversification. And the second question to Linden based on everything you've said. And if we recall the most recent outer days, in 2022, you recognize the mistakes that had taken to poor results in the end of last decade. Last year, you showed much more optimism of everything that was coming and it has turned to be reality considering the margins and results you've reached. To some extent, you've answered that, right? But from now on, do you agree that the internal work has been almost completed, and now it's time to benefit from regulatory issues, [indiscernible] or did I get it all wrong.

It's a combination of both things. if we allocate business in our current companies, it's part of our practice. These businesses have to also bring opportunities of return on investments to justify having capital brought from the holding. And sometimes, there is internal competition for the resources available. But we want to have more and more capacity to do things outside our current portfolio. Rodrigo in his presentation clearly stated that it was a slide with lots of information. Go back to that specific slide and read it again. Our capital allocation to some extent, has been defined there, things where we can be the best shareholder for the asset and where we know well the industry. We have to know it. We don't have to be in it to know it, but we have to be knowledgeable about it. Hidrovias is a good example. I did not know about navigation in waterways, but there were people who had knowledge in our organization. We know about the market, the volumes. There were a number of things that really gave us the reassurance to do that. And things that reassure us that we can also change things be the ideal shareholder for the company. And the same may apply to other cases. There is no previous decision that things have to happen and 0 intention to create an empire. Things have to make sense in the entry price, risks and consider value generation and always be the best shareholder to the company. All elements have to be in place when we are deciding to invest. There is no obligation, but rather an intention if we come across these elements, we're just making investments, such as the case of Hidrovias. We have 1.2x EBITDA of leverage in the last quarter, 0 pressure to spend money. It's okay. We don't want to be highly levered. We can generate dividend, shareholders get happy, no problem. We do not feel the pressure to allocate capital because we are below ideal leverage, right? It's good to make it clear. On [indiscernible] Ipiranga, I think it's -- we are going to come up with improvement opportunities all the time. It's a never-ending process. What we've done in the past 2 years was to approach the low-hanging fruit, the obvious elements, but there is still a process there in place. I can still see a number of opportunities. I've talked about logistics where we can see value generation coming from. I've talked about [ RP ], but there are other things. In the process of Ipiranga recovery, we've brought added cost. And now we can work with SG&A, trying to reduce it. I can see so many more opportunities at Ipiranga differently from what we used to have in the past, which was just transforming and recovering the company. Now it's continuous improvement.

I'm Leonardo Marcondes with Bank of America. I would like to thank you. Let me focus on Hidrovias. So my 2 questions are to you, [indiscernible]. Could you please tell us more about what has changed the understanding of Hidrovias since the acquisition of Ultra. So what has changed in the discussions once you got the holding investing in the company? Secondly, capital allocation strategy. Could you please tell us more about the projects that should be coming after capital increase? And what would be the metrics or thresholds that we should bear in mind? Will it be ROIC, tier, what else. Thank you.

I normally say that having Nutra is having the right shareholder at the right time. There was a private equity, which is important, right, to transform a PowerPoint into our company. Since I've been there since the very beginning of the company, together with other people, I said if we needed a partner to do it again, please count me out. It was a joke, of course. But the company got to a point where there was no way out. We could no longer grow on our own. We needed a transition into a group that had operational knowledge and much more, let's say skills to grow. I think there are 2 main pillars of change. First, we have much more operational understanding because of the experience of Ultra Group. They have a very good track record. They have benchmarked, so much more experience. Secondly, we now have a long-term understanding and long-term vision. I'll give you an example. A minor concern is there is going to be more water volatility this quarter? If yes, how can we solve it. This is a key positive change for the new company. Everyone is full of energy because the management also saw ourselves in a dead log. We had to wait 3 or 4 years for the capital structure to allow us to capture investment opportunities. They are here. They are very attractive. The operational experience and long-term vision are the 2 factors that are going to be instrumental to the company. Concerning your second question, let's go back to the market. There is an expansion in the North. North has capacity. We've been expanding our capacity gradually and the capital increase is focused on expanding our terminal. This is what we have for the time being. [indiscernible] is here, part of the team coming from Ultra and further details will come to you later.

Well, thank you. I think it takes us to the end of our event. Unfortunately, we haven't answered all your questions, but our Investor Relations team will collect all questions, and we will have them answer to you later. I would like to thank our company executives, all of those who have helped us organize this event, internal teams. Thank you very much. It was great to be here with you. See you next time.