• Recurring EBITDA: BRL1.506 billion in Q3 '24, 24% lower year-over-year.
• Accumulated EBITDA for '24: BRL4.93 billion, 4% higher than the previous period.
• Net Income: BRL698 million, 22% lower year-over-year; year-to-date net income is BRL1.645 billion, 17% higher than the previous period.
• Investments: BRL519 million in Q3 '24, up 37% year-over-year.
• Operating Cash Flow: BRL780 million in Q3 '24, 59% lower year-over-year.
• Net Debt: BRL7.968 billion at the end of Q3 '24, an increase of BRL268 million from June '24.
• Leverage: Increased from 1.2x in June '24 to 1.3x in September '24.
• Ipiranga Sales Volume: 4% growth in Q3 '24 year-over-year.
• Service Stations: 5,871 stations, a net decrease of 5 from June '24.
• AMPM Stores: 1,478 stores with 7% same-store sales growth.
• Ipiranga EBITDA: BRL967 million in Q3 '24; recurring EBITDA of BRL936 million, 34% lower year-over-year.
• Ultragaz LPG Sales Volume: 4% higher year-over-year in Q3 '24.
• Ultragaz EBITDA: BRL448 million in Q3 '24, 1% lower year-over-year.
• Ultracargo Net Revenues: BRL266 million in Q3 '24, 1% higher year-over-year.
• Ultracargo EBITDA: BRL168 million in Q3 '24, 3% lower year-over-year; EBITDA margin of 63%.

• Warning! GuruFocus has detected 4 Warning Signs with FNCNF.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ultrapar Participacoes SA (NYSE:UGP) reported a 4% increase in accumulated EBITDA for 2024 compared to the previous period, reaching BRL4.93 billion.
• The company achieved a 17% increase in net income year-to-date, totaling BRL1.645 billion.
• Ipiranga's sales volume grew by 4% in the third quarter, with a notable 5% increase in the auto cycle segment.
• Ultragaz reported a 4% increase in LPG sales volume year-over-year, driven by a 7% increase in bulk LPG sales.
• Ultracargo's net revenues increased by 1% in the third quarter, supported by better tariffs despite lower spot sales.

Negative Points

• Recurring EBITDA for the third quarter was 24% lower year-over-year, primarily due to Ipiranga's lower EBITDA.
• Net income for the third quarter was 22% lower compared to the same period last year, impacted by reduced EBITDA.
• Operating cash flow generation decreased by 59% year-over-year, influenced by lower EBITDA and higher working capital investments.
• Ultracargo's EBITDA decreased by 3% in the third quarter due to lower spot sales, with a 2 percentage point drop in EBITDA margin.
• The company's net debt increased by BRL268 million from June to September 2024, partly due to dividend payments and reduced draft discount operations.

Q & A Highlights

Q: Regarding Ipiranga's margins, do you expect further improvement in the competitive dynamics and margins in upcoming quarters? A: Leonardo Remiao Linden, CEO of Ipiranga, explained that the third quarter saw improvements due to better legal practices, particularly in oil and ethanol. However, diesel remains competitive, especially on highways. The market is balanced, and stable margins are expected to continue into the fourth quarter. The Brazilian market's structural dependence on imports will persist, though the sources may vary.

Q: How do social programs and competition with other energy sources affect Ultragaz? A: Tabajara Bertelli Costa, CEO of Ultragaz, noted that social programs like "Gas to All" are positive and aim to reduce energy poverty. LPG still has growth potential, and regulatory progress could expand its applications. Ultragaz is also preparing for other energy sources, maintaining LPG's relevance while diversifying.

Q: Can you explain the underperformance of CapEx and its impact on 2025? A: The company representative stated that CapEx was not linear and is expected to be below initial plans due to project savings and some carryover to 2025. Efficiency gains and adjustments to higher interest rates also played a role.

Q: What are your expectations for working capital in the fourth quarter, and how does it relate to Ipiranga's margins? A: Leonardo Remiao Linden mentioned that working capital was affected by increased volumes, higher gasoline prices, and strategic biofuel purchases. These are circumstantial and expected to offset in the fourth quarter. The margin level of 130 per cubic meter is conservative, reflecting market demand rather than a market share strategy.

Q: What initiatives are in place to combat illegal practices in distribution, and how does Ultrapar plan to support Hidrovias do Brasil? A: Marcos Marinho Lutz, CEO, highlighted ongoing efforts to combat illegal practices, including addressing tax evasion and biodiesel mixing. For Hidrovias do Brasil, Ultrapar is optimistic about expanding capacity in Arco Norte and supports the company with experienced personnel and strategic guidance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.