Good morning, ladies and gentlemen. At this time, we would like to welcome everyone to Cosan’s Second Quarter of 2021 Results Conference Call. Today with us, we have Mr. Luis Henrique Guimarães, Cosan’s CEO; Mrs. Paula Kovarsky, Head of IR and EESG; Mr. João Arthur Souza, Head of Finance; and Mrs. Ana Luisa Perina, IR Manager.

We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the Company’s presentation. After that, there will be a question-and-answer session for industry analysts. At that time further instructions will be given.

[Operator Instructions] Today, we have a simultaneous webcast that may be accessed through the Company’s website www.cosan.com. And the slide presentation may be downloaded from there as well. There will be also an audio replay for this call available on that website.

Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Cosan management and on information currently available to the Company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.

Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Cosan and could cause results to differ materially from those expressed in such forward-looking statements. Now, I’ll turn the conference over to Mrs. Ana Luisa Perina, who will start the presentation.

Mrs. Ana Luisa, you may begin..

First, an increase in transported volumes, especially in the North operation, driven by the performance of industrial products and the agricultural sector also capturing additional volumes from Central Network; and second, a better market outlook and higher fuel prices, allowing for yield expansion.

Moreover, Rumo has also recorded continued efficiency gains, but those effects were partially offset by the pressure on costs and expenses, mainly related to higher fuel costs and inflation. This explains the reduction in adjusted EBITDA margin year-on-year. Investments were in line with the plan.

According to which, around 30% of total CapEx was allocated to the Central Network. As announced this last Friday, Rumo decided to discontinue its guidance for 2021 due to expectations of reduced corn production for the harvest year. Long-term projections, however, remained unaltered.

Let’s turn to slide 10, where I will present the consolidated figures for Cosan on a pro forma basis.

Combining the consistent performance posted by each business line, leveraged by the resumption of demand in the sectors in which we operate and a better pricing scenario for renewables and sugar, pro forma EBITDA and net income posted quite strong growth, overcoming the challenges seen in the second quarter of 2020.

On top of that, Cosan Corporate recorded a positive impact related to the exclusion of the ICMS from the PIS-COFINS import calculation base for lubricants activities held in previous periods. Moving on to slide 11 to point out the financial highlights of the second quarter.

The higher EBITDA led to a leverage reduction to 2.8 times net debt-to-EBITDA, closer to ideal levels for the group, which is between 2 to 2.5 times. And it’s worth noting as well that the capital injections in Raízen and Compass were not yet accounted in the period.

The better performance of the businesses also boosted operating cash flow, even considering that working capital in the second quarter is seasonally affected by the sugarcane harvest dynamics. On investing cash flows, the higher spending compared to previous year is in line with subsidiary’s investment plan. And finally, on financing cash flows.

We had lower debt issuance compared to second quarter 2020, when cash positions were strengthened due to the beginning of the pandemic. Therefore, Cosan pro forma ended the quarter with a free cash flow to the equity of almost R$800 million.

A quick note here, we just concluded the issuance of R$2 billion in long-term debentures at Cosan as part of our ongoing liability management process. Before concluding my presentation, I just want to point out the main highlights of our EESG agenda, which keeps improving on a daily basis. Please go to slide number 12.

Raízen, Compass and Rumo recently released their 2020 Annual Sustainability Report, prioritizing the material aspects and reiterating the commitments established by each one of them. Also, Cosan was recognized for its good ESG practices. And once again, we were selected to be part of the FTSE4Good portfolio.

On diversity, the group made considerable progress collecting experienced agreement for Rumo and Raízen’s Boards. This allowed for those companies to receive the Women on Board Association stamp. And finally, as mentioned in the beginning, Raízen becoming a publicly traded company is also consistent with our EESG strategy.

Its investment thesis is based on paving the way to a greener future. And in that sense, we have already made significant advances, fostering the renewables market by developing a guaranteed supply of second-generation ethanol and biomethane.

At Cosan, we will remain focused and continue to do our homework to do -- to overcome the crisis and be prepared to capture the opportunities that will arise with the resumption of economic activity. With that, I conclude my presentation and we may move to the Q&A session. Thank you..

Now, I would like to turn the conference over to Mr. Luis Henrique Guimarães to his opening remarks..

Good morning, everyone, and thanks for being with us on this second quarter call. I just want to reinforce a couple of messages that came from the presentation.

First, a big pride to believe in this team here who has delivered a lot on the second quarter and the subsequent month of July, where we have done very important structural actions that will perform in the future and will continue to deliver strong performance from the group. So, first up is Compass.

So, the start-up of the terminal of LNG here in Santos, the progress on the acquisition of Gaspetro, the discussion of extension of the concession in São Paulo that is on the concession contract and a lot of activities about performing the team and ensuring that we are well-prepared for this next phase of geographical expansion.

So, a lot of things happening. On the group, with Raízen, we already talked about the IPO, but also lately the acquisition of Paraguay and the new contracts that will allow us to build new ethanol second-generation plants; the expansion of OXXO very sharply into Campinas and now entering São Paulo in the last few months.

The same with Rumo, a lot of new performance done in Santos with a conclusion of some important construction that will reduce our lead time within the port; the implementation of the Rio Verde terminal ahead of the schedule, which was very important for the Central Network; as well with Moove, where we continue to search for new areas of expansion around the globe, and we expect to have some news in the future as we perform very strong results.

Also, when you look at our funding, a lot of activity as well. We have done some funding related to sustainability performance in Rumo, some refinancial in the whole. It’s all preparing the Company to continue to have a strong liability management.

As well as on the people side, where we have increased the diversity in our Boards in Cosan, in Compass, in Raízen, et cetera. So, what I want to convey here for you investors that we haven’t stopped with the COVID. In reality, we have accelerated, and we continue to build strong foundations for the future.

We have some setbacks, like you know, on the electricity trading -- directional electricity trading. We took decisive action, as always, to control the damage as well as to reposition ourselves to the future. So, it’s a lot of learnings on that, but as well as action in terms of our way to perform in the future.

All-in-all, in our view, a very strong quarter from a financial result, but more important, I believe, is the energy of the team and the ability of the team to deliver even in adverse conditions in the market as well as on the COVID.

We’re very excited about the vaccination process in Brazil and the opening of the markets, which are translating in higher volumes in all our business and expect that to continue.

Of course, the Delta variation is cause also of concern, but we are optimistic given that Brazil has definitely turned the corner in terms of the acceleration of the vaccination. So, with that, I will turn back for the question-and-answer..

[Operator Instructions] Our first question comes from Mr. Thiago Duarte with BTG Pactual..

Well, hello everybody. Hello, Luis, Paula, Ana. I have two questions. The first one is a broader one related to what we should think of the group in terms of growth and capital allocation going forward, I think more towards Luis, that question.

I mean, as you mentioned, you guys reached pretty important milestones this year with the simplification, Raízen IPO.

So, just if you could comment, Luis, a little bit on what you expect -- or how should we expect, especially in terms of timing, the next moves, right, either with regards to the IPO of Compass or the IPO of Moove or even in terms of further investments for Cosan and the possibility of entering new segments and generating new investment ideas.

So, if you could comment a little bit on those, I think it would be helpful. And the second question, it’s more related to Compass and especially the acquisition of Gaspetro.

My understanding is that there’s still some variables that are not in your control, right, especially in terms with the right of first refusal for Gaspetro minorities as well as state governments. From what I read in the press, some of them are willing to exercise their right of first refusal there.

So, if you could comment on which developments you expect to happen for the acquisition to make sense, or which of these variables that you don’t control would be deal breakers for Compass and Cosan for the acquisition? I hope that was clear. Thank you so much..

No. Very clear, Thiago, and thanks for the questions. So, regarding the first one, I think when you look at the plans of each of the companies or each of the four verticals we have, they are very solid, right, from an inorganic and organic point of view.

So, I think each one of the CEOs and the management teams are really busy around delivering what they have projected and what they have approved with the Boards and specifically the ones we mentioned there.

So strong growth on Raízen, strong growth from Compass, strong growth on Rumo, and a lot of opportunities for further geographical extensions for Moove, which, of course, we need to find the targets and execute on them. So, I’m very easy around that because I think we have solid teams and very solid plans, well-financed and well-funded for that.

Of course, you always have the execution risk and you always need to deliver. But, I think over the last couple of years, we have concentrated a lot in building efficiency as well as ways to develop that. Regarding your broader question around where could we go from there.

I think you have seen us expanding a lot of time, both internally on the organizations but also on the group as a whole in three big areas. One is finding synergies between the companies, meaning things that we could do better together.

One example I think I gave to you guys on the last teleconference was around information safety, information security, a big topic for corporations, a big topic for business and Boards. And we have worked well together as a team to develop our -- increase our walls and increase our protection.

This only was possible because it was an effort combined with the companies. Another one was joint procurement of items that we buy everywhere in the companies, like services, car rentals or truck rentals, equipment, et cetera. We also -- you see a delivery of savings and more efficiency on that front.

The second one is on the journey of helping our customers and partners of decarbonization. So, all our companies have a lot of opportunities to help customers and suppliers in the value chain to reduce their carbon impact that we believe is a big value going forward in terms of generating more value from the products and service we provide.

So, all the companies are with a strong agenda on that area. And the third one is digitalization.

So, there’s a lot of efforts specific in each company, like the number of transactions that Comgás is doing with their companies that have moved from telephone or personal to online and to the application; the Shell Box growth -- exponential growth every month in terms of volume and number of transactions; Prezi, [ph] which is a small investment we have with a partner on the trucker side, again, every month, getting records of transactions and so on.

So, we will continue to look at the opportunity to maximize the value we see in our ecosystem as we have a lot of connections within Brazil, meaning we have probably one of the more dispersed groups in terms of points advanced around the country, a strong customer base and a lot of recurrency.

All our business that customers use some several times a month, some several times a week, so in like Comgás and the future Gaspetro every day. So, we believe there’s a lot of value on being closer to the customer with a lot of knowledge on what they do and how they are served, and we all look at about how can we increase that.

So, Thiago, this is how we are playing.

Of course, we are always looking for opportunities to deploy what we believe we do better, which is capital allocation, execution, bringing efficiencies to business and deploying strong management teams and supporting the management teams that have been incorporated in our journey via acquisition or other means. So this -- we will continue to do.

And if there is a good opportunity, we will, of course, communicate the market and give the full transparency on what we are aiming for. In term of Compass and Gaspetro, your question is completely correct.

So, we have 30 days right of first refusal for the states and the other shareholders on each of the individual concessions that are part of the Gaspetro portfolio. And we have 90 days for Mitsui, which is the partner at Gaspetro level.

And of course, we already have done the first file with Cade, which will, of course be adopted, depending if any of the right of first refusal are exercised. Our view on that is, of course, we cannot predict which the orders will do.

But, if you look at what I believe is the agenda of most of the states in Brazil in general, which is to go to a more liberal privatized sector, we expect that will be good news that a company like us, together with a solid investor and a solid partner like Mitsui, will be able to do with the concessions on that.

But again, it’s too early to give a forecast. There is nothing there that is at the moment a showstopper. We continue to be very enthusiastic about these investments.

We’ve always said that it would be a long journey, right? There’s a lot of work to be done to get to the final rights structure and to be able to replicate completely the model that was very successful at Comgás in terms of sales, execution, marketing and all of the other elements that have made Comgás grow so much since 2012 and has accelerated over the last few years.

But, we continue to be enthusiastic, and we think that the state governments will be good partners, and they will work for the benefit of generating more value for the society and for the concession itself.

At the end, they will continue to be the owners anyhow, given the concession model, which the state is the ultimate beneficiary of all the progress done on the concession..

Our next question comes from Mr. Luiz Carvalho with UBS..

Luis, if I may also make a kind of a broad question. Last week, you had -- I think, last Friday, you had a meeting with Mines and Energy Minister, Bento, in Rio.

And lots of, I’d say, the company businesses are facing somehow significant regulatory discussions in May fronts, right? There’s a discussion about the natural gas, and of course, as the last question about Gaspetro and also the discussion between the A&P and ARSESP regarding the distribution/transport pipeline, for example, in São Paulo.

Recently, we had this provisional measure signed by the federal government, talking about the fuel distribution business.

So, if you can basically share a bit of light in terms of what are the main discussions and what are the main concerns the group has in terms of each of the businesses from a regulatory perspective and where you’re working in order to try to make that -- not for the Company, specifically, but basically for the sector last impact, if I may? The second question, you recently signed an agreement to buy a company -- a fuel distribution company in Paraguay.

You already have assets in Argentina. So, just trying to get a bit more sense in terms of the potential path in terms of internalization of the -- internationalization of the Company, if you see other geographies that might be of interest of the company as Moove you already have assets outside of, I would say, Latin America.

And if I may, a last one here. Despite of the leverage of the company that you just announced close to 2.8 times when we assess the recent IPOs, both Compass and Raízen, the initial numbers that you presented publicly are way above what the market is pricing.

So, would that make sense to try to look to buybacks at some point and as the reference that we see in Cosan listed is way below what you guys thought in terms of value for both IPOs? Thank you..

a model where a retailer has a contract with a brand, and he uses that brand on the canopy. And for that, he has exclusivity contract to use their products. It’s very traditional on any license business or franchise business. So, if you go to McDonald’s, you’re going to have McDonald sandwich.

If you go to VW workshop, you’re going to have a VW car and new VW car being sold. You’re not going to have a Fiat; you’re not going to have a Renault. You not have a Mortadella sandwich on a McDonald’s outlet. And this is the same that happened today. You have a second model which is the retailer brand. So, you can have your own retail site.

You have your own brand. And you buy from whoever you want, and you just want to identify the product that you are reselling on that side. And you can change that more often as you wish.

So, what the MP has created a third model, in case the license company will allow the licensee to sell a different product than theirs, he could do it, which today is not allowed. A&P would find retail outlet that would have a brand from a third party and will not sell 100% that part. So, there is no obligation. There is no mandate.

It’s a private relationship. So, if someone wants to do that, it’s okay. Just to be very straightforward, and I think Mussa has made it very clear on the Raízen call, under the Shell Canopy and the Shell brand license, we only have Shell products because this is the way we believe is the value for the consumer.

We differentiate with better fuels, with digital solutions and other service requirements that attract more customers that have been improved by the way Raízen has been gaining market share since its inception 10 years ago. The same is happening in Argentina and the same will happen in Paraguay.

So, it’s not a matter of when, it’s a matter that we will stick to our model that we believe is the most successful, and by the way, is the one used in 100% of the markets in the world, right? So, our only plea there, Luiz, is about equality of competition, isonomy of competition.

Brazil and the regulators and the government needs to understand that -- the legislators need to understand that without that certainty, investment will not come. And we desperately need investments in all the areas of infrastructure, energy, et cetera. So, we will continue to fight against that. We will continue to be very vocal about that.

We’ll continue to take the issue to the legal [ph] more equipped because it’s around R$24 billion that the government is losing. And we are doing a lot of reforms, reducing cost of the states and other measures that some of them don’t get close to R$ 24 billion per month -- per year, sorry.

So, we need to take that serious, and this is what we believe. So, no free ride and no tax evasions, the only things we have. The rest, we love competition. We will continue to compete. We’ll continue to be trying to be ahead. We love good guys that will push our teams further because this is what makes market better.

Moving to your second question regarding Paraguay and the portfolio, I think we have said in a couple of years now that we are looking for good opportunities outside Brazil, and Paraguay is a good market. It’s a small market, but profitable with good structure where the Shell brand has been out for several years now and has a very strong recognition.

And we believe that by the JV we did with the best retailer in Paraguay and a very solid family business with people that are very competent that we have been discussing for a long time, we will be able to do good inroads on that market, benefiting from the infrastructure of Argentina because the trading and all the market comes from the same logistic route.

And as you asked for the future, we will continue to look for opportunities in other markets, not necessarily on Raízen only, but as you know, Moove is our most international market -- most national company, sorry. And we will continue to look for opportunity there. I think it’s good for us to have a balanced portfolio.

Of course, Brazil is always going to be our lead market, but having other market is important to differentiate from other competitors that we have and be able to have different cycles of results and ability to invest. Regarding your third question, we will always going to look for.

When we believe that the market is discounting our share, we will look for that as one of the ways to invest on. And we have done that a lot over the last few years. But we will continue on our journey to have the companies underneath Cosan open each one -- or each time. And Thiago has asked the timings for Moove and Compass.

When the time comes, Thiago, sorry to not be precise, it will come. But we are very happy with the partners we have. As you know, CVC is our partner in Moove, and we have Atmos as our partner in Compass and already treat and manage this company as open companies and listed company anyhow from the point of view of governance, Board, et cetera.

So, they will be prepared to do that when the timing is correct..

So, if I may just add a couple of points here on the leverage question, Luiz. As you all know, our target is to be between 2 to 2.5 times net debt to EBITDA as a group. So, we’ll always seek for investing our cash position in a balance between opportunities on gross debt amortization, doing our liability management process.

This is a recurring process for us at Cosan. As we said in the presentation, we just issued debentures, R$2 billion worth of local debentures to do liability management. So, these opportunities will be always analyzed by our teams, and we’ll always seek for the best capital allocation within this range that we believe is comfortable for the company..

[Operator Instructions] Our next question comes from Mr. André with Itau..

So, I have two questions. The first is more specific to this quarter’s results on Compass. You registered on the trading business, a loss of R$380 million, if I’m not mistaken.

Could you comment on these positions which led to this loss, have already been closed down and these are the costs of dispositions, or you still have active exposure on this trade? So that’s my first question. My second question is relating to synergies between Compass and Raízen.

As we think about the future of renewables and then we think about transition energy, gas could also play an important role, right, especially when we think about the heavy vehicle fleet.

How do you expect or how will you pass the contract synergies between Raízen and Compass going forward as they move on with different shareholder base and though they have Cosan, a controlling shareholder? Thank you..

Okay. Andre, it was not totally clear, your voice, but I think I got it. If I don’t respond to what you have asked, please intervene.

But regarding the commercialization process or trading -- directional trading business in Compass and if you -- your question was if we will have more numbers on the next quarter or the following quarters, the answer is no. So, what you have seen is basically the positions for the future are neutralized.

It doesn’t mean that there is no position, but they are balanced between short and long. So, there is no effect in terms of price valuation going forward. Okay? In terms of synergies between Compass and Raízen, yes, there is a lot of, I’ll call, markets that could have been accessed by both companies.

And as you know, as you look at these companies and look at them what’s best for each individual company. So, you could see some business, eventually, the two companies competing in a certain market or in a certain offer. And we will not intervene on that, just to be absolutely clear. It will be what’s best for the companies.

But also there are opportunities for them, of course, to do things together if the opportunity arises. As you said, there is a lot of biomethane that you’ll be able to go through the natural gas network. There will be a lot of distributed energy, combination of renewables and natural gas stabilization.

But, they will do the business as it makes sense for each of the companies, not looking at Cosan as a shareholder in both of companies. But as you rightly said, we have different shareholders in different companies, and we will not benefit one of shareholders in relation to the other.

But we believe, as you know, is our DNA in our companies on the holding to do partnerships, to work together. We never believe that it’s best to do it ourselves if there is opportunity to do, if someone that has complementary skills, complementary customer base and complementary people that will be able to do it faster, better and do it bigger.

So, it could happen, some joint projects or joint activities between the two companies. But again, always looking for the interest of each individual companies, and at the end, the customer..

Our next question comes from Mr. Regis Cardoso with Credit Suisse..

A follow-up on the previous question regarding Compass and then the second one on capital allocation. So, first one on Compass. I mean, there was a significant loss in this quarter, I think nearly R$380 million. And I wanted to understand, first, if that led -- that was the trigger to your decision of neutralizing the directional exposure.

And also related to that, how and whether that changes the business plan you had previously set for Compass? Because I believe you were very ambitious about expanding in the natural gas business, but you were still a player in the electricity sector, right? So, how does that change? So, that’s the follow-up on Compass.

Then the second question, and I think that’s more for you, Luis. How do you see Cosan’s role going forward, now that the companies are -- let’s say, you’re good on their standalone basis, and most importantly, they’ve recently raised capital, right? That’s true for Rumo, that’s true for Raízen.

Compass might be on the road to raise capital for themselves as well.

So, what will be Cosan’s role? I mean, is it a role of paying down debt to increase efficiency from a fiscal perspective at the holding level? Is it a play of, let’s say, buying back stocks to further increase the stake of the existing shareholders? Is it a play of distributing dividends, or is it allocating that capital to something else, something new? Thanks..

Thank you, Regis. Regarding the trade -- directional trading, yes, we saw a tremendous volatility in the market, given the weather patterns and a very different behavior, if you look at the history of this market over the last 30 years. Of course, this has triggered us to take decisive action.

And the team led by Nelson and the Compass management team took decisive actions to neutralize the position and also to think forward how we would deal with that, what seems to be potentially a different pattern of this market going forward.

So, we’ve always been on this market for the expansion of the trading of natural gas, as you have seen by the pre-agreements with Raja [ph] and Yara announced over the last few weeks there with going to move customers from the captive market to the free market, which we are very supportive and is already very well regulated on the Comgás area, but we believe that it will evolve through the Brazilian market in the all the concessions.

And as we move with Gaspetro, we will work hard on that with the local regulators to achieve that because we believe it’s good for the development of the market. It’s good for the growth of the volume, which is the big challenge of this market.

So, we have done that to create that knowledge, ability, et cetera and also, of course, we believe that on the buying and selling of energy on a common market base of -- common customer base with electricity and gas has value, right? So, we created -- but of course, the directional business over the last couple of months and quarters was very, very volatile and implied on the loss that we already discussed.

So we are concentrating now going forward, the team, on the long and short business, not on the directional business, which we still believe that there is good opportunities on the electricity side. But of course, our main focus has always been and continues to be on the natural gas and on the biogas opportunities for this market.

And trading and commercialization is an important part of the Compass model. This has not changed. What has changed is our risk and focus appetite on the directional -- commercialization directional trading.

Regarding the role of Cosan, I think -- I don’t think that changed much of what we have been doing over the last few years, Regis, because I think, of course, you are seeing the progress that we said that we’re going to do the collapse. We did the collapse -- that’s going to open the companies underneath. So, we are on the progress of that.

So I see you say, what’s next, right? So what’s -- so we’ll continue to have a small team at the holding level to work together with the companies.

So, in terms of the culture, in terms of the support, in terms of the challenging management, looking at people, looking at capital allocation that we always have been doing over the last 20 years or 15 years, we will continue to look at opportunities around the business if there is other opportunities that are not natural for the business to do it themselves that we could contribute doing ourselves and supporting the business going forward.

We will continue to advocate the three pillars that we talked early, the ESG -- EESG on our side, and pushing the companies to be even more aggressive in terms of decarbonization and how they, together, can leverage relationships with other big groups in Brazil that we can deliver logistic and energies at lower carbon intensity.

We’ll continue to push the people agenda and the digital agenda around that. And in the meantime, of course, we’re going to look for buybacks if it makes sense. We’re going to look at the liability management.

But, it’s a role of trusting a lot on the management teams of each companies, empowering them a lot to do what they need to do on the day to day and on the movement they are doing, but ensuring that they have the support to do the big moves and the big dreams they have in all the companies like they have very recently as we talked before.

So, on the Raízen path on both distribution, Marketing and Services and renewables on the platform; Compass, on increasing their geographical footprint, but also in terms of new business on LNG and potential power generation, Moove to its international business and Rumo with its expansion and reduction of lead times.

So, it is what we’re going to continue to do..

Clear. Luis, if I may, a third question here about Compass. I just wanted to make sure, when you revised downward the CapEx for Compass that it did not affect the investments for the regulated business for Comgás, it was 100% related to the LNG terminal.

And if I may, just a second one there, what do you reckon will be the competitive advantages of Compass over other suppliers of natural gas? I think, being fully integrated with the Comgás network, looks like it’s going to be one of them to have a lower cost of transportation for the gas.

And if you believe that, let’s say, having the route for connect directly in São Paulo if that too could get in the city gate of Comgás without necessarily going through the transportation network, and if that happens, if that gas will be constrained to the state of São Paulo? Thank you..

Regis, on your first question, the CapEx numbers of Comgás are not changed for these years. So, we will continue to follow our regulatory commitment with the state and the agency. What has happened that the start-up of the terminal here in Santos is a little bit delayed. So, this is why you’re seeing like an adjustment on our expectation of CapEx.

But, we will continue to build our network in São Paulo, continue to connect over 100,000 customers a year and continue to grow our base of commercial and residential, and of course, industrial customers on the São Paulo concession, which has proven very successful as you’ve seen from the numbers on the last few quarters and going forward, right? So, we create a lot of resiliency in this business to have a lot of less dependence on the, call, more seasonal business that can be the industrial business and very much more reliable on the commercial that will have, we believe, good recoveries on the next quarters going forward, but more important on the residential segments what we could observe during the COVID and the lockdowns, how important is this business from a point of view of profitability of the Company and reducing our exposure risk.

So, this is what we’ll continue to do. And again, as we, myself, but what we expect to do on the concessions under the Gaspetro that we will be doing. Regarding the competitive advantage of Compass, I think there are several. One is the ability to source gas from different sources.

And the terminal in São Paulo is one that’s important because they will be an alternative of competition of the local gas supply. So, we’re going to have a kind of a marker to the local suppliers to be competitive. And of course, we’re going to buy from the local suppliers. We’re going to buy from Bolivia.

Compass will buy from the terminal, but it will depend on who will be more competitive at the time. And in terms of the routes, we are looking for routes that we expect that several companies -- we would love them to do more routes.

So, the reason we are involved in Route 4, we always said is to be a kind of a leading agent that are doing the work for this to happen. You know how long things take in Brazil, right? So, from projects, from [Technical Difficulty].

Please, one moment. The speaker will be back soon. Excuse me, Mr. Luis, you may proceed..

So, Regis, I hope you are back here. So, talking about the gas and the projects and the ability for us to have more gas in a market that we believe Brazil has, as you know, Itaipu, a size of Itaipu in terms of reinjection.

So, we would love this gas to come to the market to be able to develop the market, get Brazil more competitive on an industrial basis. And of course, it will benefit Compass, but will benefit the whole society in our other businesses that are related to GDP. So the Route 4, we are the kind of the leading player to motivate others to join.

We have no intention to be the biggest checks on this. We have no intention to have control over these investments. We are really doing that because we believe that in Brazil things take a long time. And if there is no one that’s pushing that spending a little of the initial money, especially having the right people developing that, it never happens.

So, it will be connected to the infrastructure that exists in the country, transport and all other infrastructure. So, our competitive advantage will come from our ability to source better, our ability to serve customers better, our ability to do the different -- how you call, the different verticals we have.

So, the distribution vertical, the infrastructure vertical, the commercialization vertical and the power generation vertical in a way that’s better than our competitors on that. So, we believe that this portfolio that we have created and is creating is differential from the other markets.

But, as you know, the gas market is huge if it goes right, right, in terms of the increase of demand. It’s not a problem of supply. There’s enough gas in Brazil, in Bolivia and in the world. What we need to do is to develop demand. And we believe that Compass has been the leading company in developing demand.

So, we are the company that’s spending more time on the demand side, where most of the other players are spending more time on the supply side.

And this is what we are trying to create, an important capacity with partners, channels and our own sales force and marketing force to develop applications, solutions and ability to create this market that in certain states doesn’t exist, certain segments doesn’t exist.

And we will continue to convert customers from different energies, like from diesel, from biomass, from other sources of energy to gas where it makes sense. So, this is our great differential. We are focused on developing the gas market, and we will do that based on our strong experience that we have developed over the last few years..

[Operator Instructions] This concludes the question-and-answer section. At this time, I would like to turn the floor over to Mr. Luis for his closing remarks..

So, I just want to thank you all for being with us today. And thanks for all the support you have been giving the company as investors.

So, very important movements we did over the last six months, as I said, starting the collapse, going through the private placement with Atmos and Compass, going to the IPO of Raízen, also on the debt market, a lot of action.

So, we will continue to value your support and be very responsive to the way we allocate capital, looking for synergies, looking for efficiency within our portfolio and be able to deliver strong results over the course of the next months. We are, as I said, at the beginning, enthusiastic about the recovery of the Brazil with the vaccination progress.

Of course, there is some challenges on the environment. But, we are very confident that our teams and our company is well positioned to continue to deliver and be able to achieve the guidance we have given to the market for this year and the years going forward. So, thanks for your time. And have a great week. Bye, bye..

Thank you. This does conclude today’s presentation. You may disconnect your lines at this time, and have a nice day..