Good morning, ladies and gentlemen. You are most welcome to Ultrapar’s 3Q 2022 Earnings Presentations. We are broadcasting on the web -- on the net and can be accessed at ri.ultra.com.br. The presentation will be conducted by Mr.

Rodrigo Pizzinatto, Ultrapar’s Chief Financial and Investor Relations Officer and in the Q&A session, we will have the presence of Mr. Marcos Lutz; Ultrapar’s CEO; and the CEO’s of the businesses, Mr. Tabajara Bertelli; Decio Amaral; Leonardo Linden as well.

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 Ultrapar’s remarks are completed there will be a Q&A session and that further instructions will be given. [Operator Instructions] A replay of this call will be available for seven days.

Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ultrapar 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 Ultrapar, and could cause results to differ materially from those expressed in such forward-looking statements. Now, I will turn the conference over to Mr.

Rodrigo Pizzinatto, who will begin the conference. Mr. Pizzinatto, you have the floor..

Good morning, everyone. It is a pleasure to be here once more to talk about Ultrapar’s results and starting off with slide two, I want to highlight an important topic on the earnings report that relates to our divestments.

Due to the signing of the sale agreements of Oxiteno and Extrafarma, we have presented the results from these two companies as discontinued operations in our financial statements since the end of 2021.

With the sale of Oxiteno on April 1st and of Extrafarma on August 1st, their respective results are no longer comprise in Ultrapar’s results as of their respective closing dates. In this regard, we highlight that Ultrapar’s discontinued operations in this third quarter only consider the results of Extrafarma for the month of July.

From the fourth quarter onwards, our results will only reflect continuing operations. At this moment, both the earnings release and this presentation consider the company’s pro forma consolidated information, that is Ultrapar’s data comprise the sum of continuing and discontinued operations.

Well, now moving forward to slide three, with Ultrapar’s consolidated results for the third quarter of 2022.

As you can see in the chart, in the upper left side, our recurring EBITDA from continuing operations totaled R$890 million in the third quarter of 2022, 50% higher than that of the third quarter of 2021, driven by improved results from the three businesses.

Ultrapar’s net income in the third quarter was R$83 million, R$292 million lower than the net income of the third quarter of 2021, mainly due to one-off effects which affected the results from both quarters.

In the third quarter of 2021, we had the positive effect of income tax reversion over monetary adjustment for tax credits in the amount of R$196 million, which I remind you that occurred due to a favorable decision from the Brazilian Supreme Court in that quarter. And in the third quarter of 2022, we had two negative effects.

The first relates to closing adjustments from the sales of Oxiteno and Extrafarma in the amount of R$75 million and the second relates to the mark-to-market of hedges in the amount of R$40 million. These effects were partially offset by the higher EBITDA from their continuing operations.

Investments from continuing operations totaled R$524 million in the third quarter of 2022, 23% higher than that of the third quarter of 2021, mainly due to higher investments in Ipiranga.

I want to highlight that the Board of Directors has approved an additional investment of R$265 million for Ipiranga this year, in addition to the investment plan for the year 2022 that we have already disclosed, driven mainly by more opportunities to bring new service stations.

We registered in this quarter cash generation from operations of R$1.3 billion, compared to R$604 million in the third quarter of 2021.

The higher cash generation resulted from working capital cash release on the back of fuel price reductions during the third quarter of 2022, as well as inventory management, despite the lower EBITDA as in the third quarter of 2021 included the results from Oxiteno and Extrafarma.

And moving now to the slide number four to talk about our liability management, we ended the quarter with a net debt of R$7.4 billion, a reduction of R$725 million compared to the net debt at June 2022.

The reduction is mainly explained by the closing of the sale of Extrafarma in August, which resulted in the receipt of R$372 million related to the first installment and the outflow of leasing obligations that was consolidated within our net debt of R$380 million, in addition to the working capital cash release I just mentioned.

These two effects were partially offset by the payment of interest on equity that we made in August. Our leverage decreased from 2.2 times in June 2022 to 1.9 times in September 2022 on the back of the net debt reduction and the EBITDA growth from continuing operations.

I’d like to point out that the numbers of net debt of the third quarter of 2022 do not include pending receivables of R$1.1 billion related to the sales of Oxiteno and Extrafarma, as you can see in the accounts receivables of our balance sheet. Should they be considered, our leverage would be 1.6 times net debt-to-EBITDA in the third quarter of 2022.

The average cost of our debt went from CDI plus 1.3% in the first nine months of 2021 to CDI plus 0.5% in 2022, due to the extensive review of the debt and financial investment profiles that we have carried out in the last two years. Now moving on to slide five to talk about another great quarter of Ultragaz.

The volume of LPG sold in this third quarter was 1% lower year-over-year, due to a 3% reduction in the bottled segment on the back of lower market demand. The bulk segment on the other hand grew by 5% with higher sales of special gases, entered the commercial and service segments.

Ultragaz SG&A in the third quarter of 2022 was 20% higher than that of the third quarter of 2021, due to higher expenses with personnel, mainly collective bargaining agreements in variable compensation aligned with the progressions of the result, along with higher expenses with sale commissions.

Ultragaz EBITDA reached a record level of R$332 million, a strong 51% growth year-over-year. This growth is mainly explained by better margins due to efficiency and productivity initiatives implemented in the last month to better sales mix, the inflation pass-through effect, partially offset by higher expenses.

For this first quarter, we expect results to be similar to that of the third quarter, despite seasonally lower volumes. Moving on to the next slide, slide number six to talk about one more quarter of record results of Ultracargo.

The company’s average installed capacity was 955,000 cubic meters in the third quarter of 2022, a 9% growth year-over-year on the back of the start-up of operations of the Vila do Conde terminal in December 2021 and the tankage capacity expansions implemented in the Itaqui terminal over the last 12 months.

Ultracargo’s net revenues totaled R$225 million in the third quarter of 2022, 26% higher than that of the third quarter of 2021, led by contractual readjustments and by higher cubic meters sold due to capacity expansions.

Combined cost and expenses were 18% higher than those in the third quarter of 2021, mainly impacted by costs and expenses of the Vila do Conde terminal, which started operations in December 2021, accounting for about 60% of this increase and a higher depreciation costs arising from capacity expansions and investments made in the last 12 months and the effect of inflation over personnel and inputs.

These effects were partially offset by productivity and efficiency gains in the last 12 months. Ultracargo’s EBITDA reached a record level of R$136 million in the quarter, a growth of 34% year-over-year due to capacity expansions with profitability gains, contractual readjustment, as well as productivity and efficiency gains.

EBITDA margin was also at a record level reaching 61% in the third quarter of 2022, 3 percentage points above that of the third quarter of 2021. And for this current quarter, we expect Ultracargo’s good operating performance to continue, with results at similar levels to those seen in the last quarters.

And to conclude this presentation moving now to slide seven to talk about Ipiranga’s results. Volume sold increased by 3% over the third quarter of 2021, with a 4% growth in diesel and a 2% growth in the auto cycle.

As we had anticipated in the last conference call, Ipiranga’s margins were more pressured in the third quarter of 2022 compared to the ones we reported in the first half 2022.This occurred especially due to the inventory losses with the reduction of prices announced by Petrobras and the reduction of the ICMS tax rate.

Along with the decreased costs, the market had higher volume of imports and product availability, pressure in the commercial margins. Despite the more pressure margins, we highlight an important release of working capital this quarter due to the reduction of fuel prices and inventory management.

This contributed to an improvement in the return on invested capital, which reached the highest level of the last two years, although, we are still far below its potential.

I want to highlight that, as of this quarter, we started publishing a new financial spreadsheet in the Investor Relations website, with the evolution of the return on invested capital from our main businesses.

We ended the third quarter with a network of 6,940 service stations, 70 stations less quarter-over-quarter, which is aligned with our strategy of managing the legacy of low potential stations that Linden mentioned in our Ultra Day -- Investors Day.

A total of 84 new service stations were opened, with an average volume contribution of 275 cubic meters per month and 154 were closed, with average volumes of 32 cubic meters per month.

Despite the reduction of the number of service stations, the net effect in the volume was positive, reinforcing our strategy of more density and higher standards in our services station network. In addition, we ended the third quarter with 1,672 AmPm stores and same store sales growth of 17% year-over-year.

Ipiranga’s SG&A increased by 8% in the quarter, due to higher expenses with freight influenced by the increases in diesel prices and higher sales volume, higher expenses with personnel, especially due to collective bargaining agreements and higher variable compensation aligned with the progression of results and higher expenses with AmPm company operated stores, which increased from 149 units to 255 units or year-over-year.

These three effects were partially offset by higher reversals for provisions for doubtful accounts.

The other operating results line totaled negative R$176 million in the third quarter of 2022, down R$181 million compared to the third quarter of 2021, mainly due to higher costs with carbon tax credit and extemporaneous tax credits recorded in the third quarter last year.

The disposal of assets line totaled R$49 million in the quarter, as a result of the sale of equipment in eight real estate assets. Ipiranga’s EBITDA totaled R$533 million in the quarter, 34% higher than that of the third quarter of 2021.

Recurring EBITDA was R$483 million, a growth of 41% year-over-year on the back of improved margins and higher sales volume, despite increased expenses the higher costs with carbon tax credit.

For the first quarter, we still see a high degree of uncertainty concerning the domestic prices in parity of gasoline and diesel, in addition to effects of obstructions in roads. With that in mind at this moment, we expect profitability levels in this fourth quarter close to those reported in the third quarter.

With that, I conclude now my presentation. I appreciate your interest and attention, and let’s now move on to the Q&A session. Like, last quarter, the CEOs of our three main businesses as well Marcos and I are available to answer your questions. Thank you very much..

[Operator Instructions] Our first question is from Luiz Carvalho, UBS Bank..

Thank you for this opportunity. Can you hear me? I have got two questions. The first one for Marcos Lutz. Lutz, a good part of what we are being discussing have been discussed since you arrived new allocation, capital process -- capital allocation process, this is based on concept.

Yesterday, you mentioned a few best practices or new Board members, and I would like to know, how you are seeing this process? This as you are in the other Group as well, how do we see this process of Board renewal for next year? And one question to Linden, we are analyzing free cash flow for Ipiranga and when we exclude impacts below the EBITDA line, exclusivity benefits, interests and leasing, et cetera, we see that there is a cash generation that is decreasing since the end of 2021, of course, the operational margin is okay, let’s say, given the scenario in the industry.

But Ipiranga cash generation, let’s say, it’s suffering.

I would like to understand how you are seeing this matter?.

Thank you for your question. We adjusted our policies to -- we too accept only legal restrictions. There is not a lot of new things and policies. And the other question, it’s a little early to announce exact numbers.

But we can say that the engagements of the Board mentioned a year ago are really yielding renewal, good transition and the company is being prepared for the next 10 years in a very positive way. I am very happy with that and I find what we are doing for long-term governance very adequate. Over the next three months, all this will be much clearer.

We will see what we are being -- we are deciding as a Board for next year. Things are working in the way I find the most adequate one..

Good morning, Luiz. First of all, there is an investment question, we are investing more this year than we did last year. You have seen that we approved an additional investment fund, because we have a very positive network growth. We are following the profiled -- profile we have designed.

We have good sales level -- volume sales and there is the impact of higher prices, this consumed some capital throughout the year.

But this trimester, in this trimester have very positive capital performance not only due to lower prices, it was due to a better inventory management, stock management from 16 days to 10 days and there are vectors that point to on the one hand a higher cash consumption, but on the other hand consistency of our work. This is what I’d say..

Thank you, Lutz, for your answer.

It would be reasonable to think that due to the investment by the company, we might expect an expansion of the margin and EBITDA per cubic meter to 2023, 2024, is it reasonable to spend so?.

There was an interruption in your question..

My question is this one, would it be reasonable to think that due to the level of investment of the last a few years, there will be a normalization or an expansion of EBITDA per cubic meter in 2023, 2024 in Ipiranga?.

Well, from the investment point of view, it -- this kind of number makes sense above 15% and we hope this contributes to our company profitability..

Thank you very much..

Our -- now Thiago Duarte, BTG Pactual Bank..

Thank you. Good morning to all of you. I’d like to discuss Ipiranga, discuss further with Linden in the context of the approval of this additional investment for this year.

My question is, these opportunities, better opportunities to license in service stations to brand services stations, well, of course, is different to separate -- is difficult to separate those two questions.

But to which extent do you think this is a result of the new capacity Ipiranga has to improve the commercial response to retailers and to which extent it reflects not only what has been done over the last trimester? But also based on what we have seen last year, we have seen difficulties such as restricted import window, difficulty to compete with large players.

So I would like to know whether how much of this positive scenario is due to one thing and to how much does it come from the general industry situation? My second question is, can you imagine or give us an indication of the investment volume for next year. It should not be a one-off opportunity. These would be my two first questions.

And another one, from Rodrigo’s presentations pointed out to the effects of expenses on Ipiranga’s margins, and he mentioned, reversion -- provision reversion -- reversal of provisions. I don’t know whether you are able to say how much of this consolidated figure comes from Ipiranga.

I would like to know that if possible?.

Okay. If I forget something, you tell me. As to investments, we have the two factors. Of course, today the market in general values the supply capacity, infrastructure behind businesses. And so of course, we get close businesses leverage by the value a company such as Ipiranga can offer.

We have not only at the service station level, but on the financial market as well. There is a component of a better environment, of course. But, of course, Ipiranga has improved as well.

If we see our history, investment history throughout the last few years, you can see that our rhythm is speeding up, and of course, there is a process of recognition that the company is following a good path. We still have a lot to do, but we have to say that those two factors are at play here. We are opening new service stations.

The level of activity is quite positive level to the market. In terms of investments for next year, we cannot disclose that now. We will say that at the right time and the effect of expenses. Well, what you mention the impacts of reversals of provisions for doubtful accounts, it’s the order -- at the order of R$20 million.

It’s based on negotiations of debts and recovery of a few cases that were being discussed. But throughout the year, this expense is quite neutral, not positive, not negative for the year..

Thiago, we will disclose in December our investment plans for 2023 for Ultra..

Okay. Great. It was really my question which aimed at reflecting on your investment for next year, but we can’t wait to December..

Now Gabriel Barra from Citibank..

Hello. I’d like to focus on Ipiranga as well in a different way. The CapEx, well, Linden has commented on that. But I would like to understand that the CapEx increased, we have seen that as a sector not only your company’s, it’s interesting for new brandings.

But I’d like to understand your focus in our region and how can you brand new service stations and I’d like to understand, what is the return in terms of these new branding service -- new branded service stations, what is profitability for them, so that we can calculate? And then to the operation, if you take data for this year, we are discussing 430 service stations, what can you still do and what can do -- should we expect.

And you mentioned an increase in average volume in service stations, but your focus here is to focus on higher volume service stations and you can see here, there is decrease in volume here.

Is this a result of new measures and what can we expect in terms of reduction of SG&A? And my last question is concerned, cash generation, we have here this -- the figure in working capital, there was higher consumption.

Please tell us, what we can expect for the next trimester, a reduction in working capital or an improvement in return on invested capital, the CapEx increase..

Well, our activity is higher and the CapEx increased depending on the comparison term you get one thing or another. In 2020 and 2021, we slowed down due to market slowdown. There is an increase relative to that. But our CapEx is not far from what Ipiranga used to invest historically. Our main focus is qualified growth, our expansion of our network.

We are looking for larger service stations with higher average volume or higher volume to have a more efficient network. But we do invest 1.5 times -- we make one-off investment in a certain spots. We are looking for real return above 15% and we are finding those investments. We are finding this way. And to the operation, well, there are no news here.

I mentioned Ultra Day, because we presented our four pillars, the ones we mentioned throughout the last 12 months. And we have said that we were looking to operate rate service stations, do away with those that are not contributing on the contrary.

Our volume increased 7% relative to the previous trimester, based on that part of this exclusion of service station is a part -- a natural part of the business. And the other part is the results of our speeding up this process.

At SG&A, we had this benefit of speeding of reversal of provisions for that doubtful accounts and now I will mention Ultra Day.

I said it was very important to invest in processes, in our efficiency gain -- operational efficiency gain, hence of course, we look for a more efficient SG&A and there is space to increase our efficiency and this will benefit our audiences.

In terms of cash generation, well, the bulk of this generation is due to price reduction, strong one at the beginning of the trimester.

And once more, there is a qualitative work we have been doing, a better inventory management, better discussions with our suppliers, better deadlines, all this has had an positive impact R$900 million and based on price reduction but not only..

Thank you..

Our next question is from Regis Cardoso, Credit Suisse..

Thank you for this opportunity. I congratulate you on your results. Two main topics. The first one is discussing Ultragaz. You reported your return on invested capital in Ultragaz is over 25%.

I would like to know how do you assess this level of return and is it an old basis that has or this will have an extraordinary effect on margin that is high, and if the return are this, do you see opportunities to keep on investing and having the same level of return looking forward? On the other hand, it was extraordinary due to the margin effect and we should expect normal results? Well, this concerns Ultragaz.

My other topic is concerns turnaround, it concerns Ipiranga mainly.

If your expectations -- what are your expectations in terms of recurrent margins? We have a very negative effect on Q3 in terms of inventory loss, et cetera, and I think, that the recurrent margin level should be different? And so now could you please comment on examples of what has been done of what is to come and I’d like to understand whether in this turnaround process that has passed halfway and what should we expect?.

Thank you for your question. The first one, in terms of the results level, the return level, Ultragaz is a company that has been investing for a long time. In terms of this trimester performance, we can see an evolution relative to what we have discussed in previous meetings. In terms of implementing the strategy, it’s the same, it’s not different.

This trimester, we have evolved in terms of commercial, operational efficiency and innovation. We have been capturing additional values and our vision and our challenge is to keep up with this profitability level. We have seen that these levels have been achieved and these levels help company profitability. Let me start from the end of your question.

You asked, what has been done, then we can tackle the part of what we expect. I will mention Ultra Day once more. We presented the four pillars for Ipiranga pricing, logistic efficiency, trade and renewing relationships. We have advanced on pricing and relationships, I called engagement by enchanting.

We have discussed pricing everything that changed in smart processes, tools, team tools and now our work is more consistent and transparent, which means pricing smartly in a Continental country with different markets.

We have made great progresses, we still have a lot to do, but we have advanced in relationships and it reflects on the new business we are doing. We have positive trends in NPF, many indicator show we have advanced, we have made progress. In logistics and trading, we have made progress, but they are more structural and so it comes with time.

In logistics, there is an efficiency gain and in trading, it increases as our execution capacity growth. We have internal factors that we expect will have an impact on our margins. But when you mention margins, there is the -- there are external factors we cannot forecast.

We have supply levels in Brazil and many other things that have an impact and come from the external area and we cannot control and so at the internal level, we open different fronts that are generating efficiency. So there is an important evolution on the return on invested capital based on company’s work.

And so let me summarize, we are evolving very well. I am happy with everything we have done on those four pillars and they have consequences for our business in terms of profitability and ability to invest, closing good deals, and as well as on the return on invested capital, whose attendance trend is positive. We cannot say we have done everything.

There is a lot to do and we are on the right path..

Linden, the roadmap you mentioned, where things to do.

Can you mention your expectations in terms of this -- what is a satisfactory level and how long it will take to implement the measures?.

Well, I see this is an endless process, open ended process. But of what we have identified as a need in a turnaround moment, how long would it take to implement all those measures and to capture results. As I said, it’s a process. It takes time. We have captured part of it and there is still another part to be captured.

We believe that the relevant part of that will come over the next two years in terms of logistics mainly. In terms of vision, this business has to come back to a 20% return on invested capital, and I am not saying this will happen next year, but this is our vision in terms of how this business can generate return..

Thank you. Thank you, Tabajara. Thank you, Linden..

Our next question comes from Leonardo Marcondes, Bank of America..

Good morning. Thank you for taking my questions. Let me follow up on Regis question’s on Ultragaz.

I’d like to see -- to know how you see business margins for next year, more gain in efficiency and productivity, if you can do that and from where would these gains come from? And my next question is on Ultracargo, the company is doing very well, but I’d like to know how the Presidential elections affect the business plan.

Petrobras might once again invest on refining and the country stops importing fuel at the long-term..

Well, let me complement what I have said about Ultragaz. We believe that our strategy will evolve. We will go on from the level we achieved up to now. It’s not -- we don’t think it will be very different from what we have now.

But we will keep on implementing our strategic plan to move on, follow our plan, implement innovation to capture efficiency and this has an impact on our results. We achieved important level -- levels and we will move on from there..

Thank you for your question. Decio from Ultracargo. The fact that Petrobras might start refining at the mid-term does not change the fact that north and northeast have a production deficit.

When we invest, we study the logistic merit of the investment with the transportation by coastal ships in the ethanol and fuel markets, and this is a product we will deal at our terminals. We trust this investment, this activity and our business plan looking forward..

Our next question is from Bruno Montanari, Morgan Stanley..

Good morning. Thank you for taking my question. I need a few follow-ups. I know you will not give details on the effects of margin on Ipiranga. Over -- concerning the average of the two last trimester, what would be a good alternative to hand away with the effect of volatility.

And for Tabajara, would you please tell us about the process of investment -- maturation of investment on new gas verticals.

You mentioned you have new business and should we see an evolution of the new verticals over the next trimesters over the next years?.

Bruno, this is Leonardo. I think that the -- it’s too simple to base our perspectives on the average. But if you have a good gain and a good loss, let’s say, we have a good average.

We have had different scenarios on supply, which has an impact on our business, a low offer on the market and it’s a different market and this volatility is the rule in Brazil in 2022. This is what I had to say..

Yes. Yes. This is what I wish I wanted to know..

It’s hard to hear, so -- we have discussed this on Ultra Day, Ultragaz capillarity. We have seen this with Stella and we will engage when we see that the value is relevant. We will keep an eye on that..

Thank you..

Thank you. As there are no more questions, I will give back the floor to Mr. Rodrigo Pizzinatto for his closing remarks. You have the floor..

Thank you all of you. The questions we were not able to answer will be answered later on. We will contact you. Thank you very much. We will meet again in February..

Thank you. This concludes today’s Ultrapar’s results conference call. You may disconnect your lines at this time..