Core Viewpoint - Investors in the Oil and Gas - Production and Pipelines sector should consider Ultrapar Participacoes S.A. (UGP) as a more attractive option compared to Enbridge (ENB) for value investing opportunities [1]. Valuation Metrics - Ultrapar Participacoes S.A. has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision compared to Enbridge, which has a Zacks Rank of 3 (Hold) [3]. - UGP's forward P/E ratio is 10.36, significantly lower than ENB's forward P/E of 20.86, suggesting UGP is undervalued relative to ENB [5]. - The PEG ratio for UGP is 2.61, while ENB's PEG ratio is 4.17, indicating UGP has a better balance between its price and expected earnings growth [5]. - UGP's P/B ratio is 1.20, compared to ENB's P/B of 2.14, further supporting UGP's valuation as more attractive [6]. - Based on these valuation metrics, UGP holds a Value grade of A, while ENB has a Value grade of D, highlighting UGP's superior valuation profile [6]. Earnings Outlook - UGP is currently experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model [7].

Core Viewpoint - Ultrapar Participacoes (UGP) is identified as a potentially undervalued stock, supported by strong valuation metrics and a favorable earnings outlook [4][8]. Valuation Metrics - UGP has a Forward P/E ratio of 11.20, significantly lower than the industry average of 19.06, indicating potential undervaluation [4]. - The PEG ratio for UGP stands at 2.82, compared to the industry average of 3.24, suggesting a more attractive valuation relative to expected earnings growth [5]. - UGP's P/B ratio is 1.21, which is appealing against the industry's average P/B of 2.38, indicating a favorable market value compared to book value [6]. - The P/CF ratio for UGP is 4.60, well below the industry average of 11.99, highlighting a strong cash flow outlook [7]. Investment Outlook - The combination of UGP's strong valuation metrics and positive earnings outlook positions it as a compelling value stock for investors [8].

Financial Performance - Ultrapar reported a net revenue of R$133 billion for 2024, a 6% increase compared to 2023[19]. - The company achieved a recurring EBITDA of R$5.4 billion and a net income of R$2.5 billion, with R$769 million allocated for dividends[19]. - Ultrapar's net income for the fiscal year ended December 31, 2024, is R$ 2,362,739,882.29 (approximately $2.36 billion) [60]. - Ultrapar reported net revenues of R$ 133,498.9 million in 2024, a 6% increase from R$ 126,048.7 million in 2023, driven by higher revenues from Ipiranga and Ultragaz[171]. - The cost of products and services sold increased by 6% to R$ 123,811.9 million in 2024, up from R$ 116,730.5 million in 2023, primarily due to higher costs at Ipiranga and Ultragaz[173]. - Gross profit for Ultrapar was R$ 9,687.0 million in 2024, reflecting a 4% increase compared to R$ 9,318.2 million in 2023[175]. - Operating income before share of profit (loss) of subsidiaries was R$ 5,073.1 million in 2024, an 11% increase from R$ 4,565.9 million in 2023[181]. - Net income remained stable at R$ 2,525.9 million in 2024, compared to R$ 2,517.8 million in 2023[183]. Investments and Capital Allocation - In 2024, Ultrapar invested R$2.2 billion, with R$1.3 billion (59%) for business expansion and R$900 million for maintenance[16]. - A significant investment of R$1.8 billion was made to acquire a 42% stake in Hidrovias do Brasil, marking the largest capital allocation in a single asset in the past decade[16]. - The investment plan for 2025 totals R$2.5 billion, with R$1.5 billion allocated for business expansions across Ipiranga, Ultragaz, and Ultracargo[20]. - Ultrapar's total net debt as of December 31, 2024, was R$ 7,755.6 million, with a net debt to equity ratio of 49%[146]. - The company’s gross debt increased from R$ 11,768 million in 2023 to R$ 14,302.1 million in 2024, with short-term debt rising from 17% to 25% of gross debt[155]. Governance and Management - Ultrapar's governance model was enhanced by establishing Boards of Directors in its businesses, improving agility and accountability[17]. - A planned transition for the roles of Chief Executive Officer and Chief Financial and Investor Relations Officer is set to conclude in April 2025[18]. - The Board of Directors is proposed to consist of 9 members, maintaining the current number from the last Annual General Meeting[62]. - The Company aims to balance relevant experience and skills in its Board of Directors to address strategic issues and future needs[65]. - The Board of Directors will determine the compensation for the Chief Executive Officer and other executive officers based on the proposal from the People and Sustainability Committee[94]. Sustainability and ESG Initiatives - The company is advancing its sustainability strategy, updating its 2030 ESG plan to be completed by 2025[18]. - The management emphasized the importance of sustainability initiatives, committing to reduce carbon emissions by 30% by 2025[121]. Shareholder Engagement and Rights - The company reported a significant increase in shareholder engagement, with meetings held within the first 4 months after the fiscal year conclusion[91]. - Shareholders participating in meetings must provide identity verification and proof from the depositary institution, ensuring compliance with regulations[92]. - The company allows remote voting for shareholders, adapting to modern governance practices[92]. - The resolution to increase the capital stock for payment in assets may only be made at a Shareholders' Meeting[90]. - The Company will allocate 5% of net profit to the legal reserve, up to a limit of 20% of the capital stock[129]. Market and Operational Performance - Ipiranga's sales volume grew by 2% to 23,569.7 thousand m³ in 2024, with a 5% increase in the Otto cycle[169]. - Ultragaz's sales volume increased by 1% to 1,746.7 thousand tons in 2024, driven by a 3% rise in the bulk segment[170]. - Ultracargo's billed m³ sold rose by 9% to 17,143.3 thousand m³ in 2024, attributed to new operations and increased fuel movement[170]. - The fuel distribution market recorded a volume growth of 4% compared to 2023, with a 6% increase in the Otto cycle and a 3% increase in diesel[199]. Compliance and Regulatory Matters - The company is required to submit to arbitration at the Market Arbitration Tribunal for any controversies arising between shareholders, directors, and executive officers[128]. - The rules set forth by the New Market Regulation will prevail over the provisions in the bylaws regarding tender offers[128]. - The company must adhere to Brazilian Federal Laws 6,385/76 and 6,404/76, as well as other applicable capital market regulations[128].

Core Insights - The article emphasizes the importance of in-depth research and insights for informed investment decisions in the Latin American equity market [1] Group 1 - The company has over 5 years of experience in equity analysis specifically focused on Latin America [1] - The research provided aims to assist clients in making informed investment decisions [1]

Financial Data and Key Metrics Changes - Ultrapar's recurring EBITDA for Q4 2024 was RMB 1.284 billion, a 23% decrease from Q4 2023, primarily due to lower EBITDA at Ipiranga and a loss of RMB 104 million from Hidrovias [10] - For the full year 2024, recurring EBITDA totaled RMB 5.375 billion, a 4% decrease compared to 2023, attributed to lower EBITDA at Ipiranga and the loss from Hidrovias, partially offset by positive results from Ultragaz and Ultracargo [10] - Net income for 2024 was RMB 2.526 billion, unchanged from 2023, due to lower recurring EBITDA at Ipiranga and tax adjustments [10] - Operational cash generation was RMB 3.736 million in 2024, a 2% decrease from 2023, driven by higher working capital investments [12] - Net debt as of December 2024 was RMB 8.9 billion, an increase of RMB 2.4 billion from December 2023, primarily due to investments and acquisitions [14] Business Line Data and Key Metrics Changes Ipiranga - Ipiranga's sales volume in Q4 2024 decreased by 1% year-over-year, with a 3% growth in the auto cycle and a 6% decline in diesel [18] - Recurring EBITDA for Ipiranga in Q4 2024 was RMB 844 million, a 27% decrease year-over-year, mainly due to reduced margins from unlawful practices and higher inventory levels [21] - Total EBITDA for Ipiranga in 2024 was RMB 4.445 billion, a 6% reduction year-over-year [22] Ultragaz - Ultragaz's LPG sales volume in Q4 2024 increased by 3% year-over-year, with a 3% rise in the bottled segment and a 4% increase in the bulk segment [23] - Recurring EBITDA for Ultragaz in Q4 2024 was RMB 441 million, a 9% growth year-over-year, driven by higher volume and better sales mix [24] Ultracargo - Ultracargo's cubic meters sold grew by 9% year-over-year in Q4 2024, with net revenue reaching RMB 283 million, a 10% increase [26] - Ultracargo's EBITDA for Q4 2024 was RMB 169 million, a 9% growth year-over-year [27] Market Data and Key Metrics Changes - The market share of unlawful companies that do not comply with regulations decreased by 2.9 percentage points in 2024, indicating a shift towards better compliance [17] - The fuel sector in Brazil has faced significant challenges due to unlawful practices, including tax evasion and non-compliance with biodiesel blending requirements [15][16] Company Strategy and Development Direction - The company plans to continue its fight against unlawful practices in the fuel sector to create a more competitive environment for compliant companies [18] - A significant capital allocation of RMB 1.8 billion was made to acquire a 42% stake in Hidrovias Brazil, marking the largest single asset investment in the last decade [8] - The company is focusing on quality over quantity in its service station network, aiming for stability and strategic growth [42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for improved margins in 2025, contingent on regulatory changes and a reduction in unlawful practices [40] - The company anticipates that the regulatory environment will continue to evolve positively, aiding in the fight against unlawful practices [110] Other Important Information - The company announced a dividend payment of RMB 493 million, bringing the total dividend distribution for 2024 to RMB 769 million [11] - The planned transition of CEO and CFO positions is set to be completed by April 2025 [9] Q&A Session Summary Question: Expectations for Ipiranga's margins in 2025 - Management highlighted that unlawful practices have significantly impacted margins and that improvements depend on regulatory changes [37][40] Question: Investment strategy given a favorable balance sheet - Management indicated a focus on quality service stations and opportunistic investments rather than aggressive expansion [42] Question: Growth opportunities for Ultragaz - Management noted that Ultragaz is being utilized as a platform for growth, particularly in new energy solutions [46][51] Question: Working capital management - Management discussed efforts to optimize inventory levels, particularly in Ipiranga, to improve working capital efficiency [53][56] Question: Capital allocation and potential diversification - Management confirmed that capital allocation decisions will depend on execution capacity and the potential for good returns on investments [62][63] Question: Concerns regarding Hidrovias capital increase - Management clarified that the capital increase aims to support growth and reduce leverage, with plans to formally announce it soon [90][91]

Financial Data and Key Metrics Changes - Ultrapar's recurring EBITDA for Q2 2024 was BRL 1.282 billion, a 37% increase year-over-year, primarily driven by higher EBITDA from Ipiranga [4] - Net income for the quarter reached BRL 491 million, reflecting a 106% growth year-over-year due to EBITDA growth and lower net financial expenses [4] - The accumulated net income for 2024 was BRL 947 million, an 85% increase compared to 2023 [4] - Operating cash generation for Q2 2024 was BRL 1.298 billion, BRL 400 million higher than the same quarter in 2023 [5] - Net debt at the end of Q2 2024 was BRL 7.700 billion, a reduction of BRL 123 million from March 2024 [6] - Leverage decreased from 1.3 times in March 2024 to 1.2 times net debt-to-EBITDA in June 2024 [7] Business Line Data and Key Metrics Changes Ultragaz - LPG sales volume decreased by 1% year-over-year, with a 2% reduction in the bottled segment [8] - Ultragaz's EBITDA was BRL 414 million, with recurring EBITDA at BRL 397 million, a 2% decrease year-over-year [8] Ultracargo - Average stock capacity increased by 12% year-over-year to 1,067,000 cubic meters [9] - Cubic meters sold grew by 19% year-over-year, leading to net revenues of BRL 264 million, a 2% increase from Q2 2023 [9] - Ultracargo's EBITDA totaled BRL 165 million, a 3% growth year-over-year [10] Ipiranga - Volumes sold by Ipiranga grew by 4% year-over-year, with a 5% increase in diesel and a 3% increase in the auto cycle [11] - Ipiranga's EBITDA was BRL 817 million, with recurring EBITDA at BRL 781 million, an 80% increase year-over-year [12] Market Data and Key Metrics Changes - The competitive environment in the LPG market affected Ultragaz's sales volume, particularly in the bottled segment [8] - Ipiranga's market share showed volatility, with expectations for stability in the branded network [21][22] Company Strategy and Development Direction - The company is focused on improving operational efficiency and logistics, particularly in Ipiranga and Ultragaz [30][31] - The integration with SHV is progressing, with full implementation expected by 2025 [23] - Capital allocation remains disciplined, with no immediate plans for new acquisitions but a focus on maximizing returns from existing investments [26][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the second half of the year, anticipating a more balanced market with normalized inventory levels [19][30] - Concerns were raised about market irregularities and the need for regulatory adjustments to ensure fair competition [40][41] Other Important Information - The company approved BRL 276 million in interim dividends for the first half of 2024, equivalent to BRL 0.25 per share [5] - The company plans to hold an Investor Day on September 6, 2024, to align expectations for the year [27] Q&A Session All Questions and Answers Question: Impact of non-recurring effects on SG&A and future margins - Management acknowledged a BRL 7 to BRL 8 per cubic meter impact on SG&A due to office relocations, which is expected to be a one-off effect [16][56] Question: Market share expectations for Ipiranga - Management anticipates stable market share in the branded network, with lower volatility expected in the third quarter [21][22] Question: Integration with SHV and expected synergies - The integration process is on track, with full implementation expected by 2025, and some marginal benefits anticipated in the upcoming quarters [23] Question: Capital allocation priorities and potential acquisitions - Management emphasized a disciplined approach to capital allocation, with no immediate plans for new acquisitions but a focus on maximizing returns from existing investments [26][47] Question: Dynamics of the spot market and inventory levels - Management noted that the second quarter saw high import levels, maintaining market supply, and expects a gradual normalization of inventory levels in the second half [45][51]

Financial Reporting - Ultrapar Participações S.A. filed its 2023 Form 20-F annual report with the U.S. SEC on April 23, 2024[5] - The complete audited financial statements are available for download on the company's website[5] - A hard copy of the financial statements can be requested free of charge via email to the Investor Relations Department[5]

Foreign Exchange and Economic Impact - In 2021, the Real depreciated by 7% against the U.S. dollar, while in 2022 and 2023, it appreciated by 7% each year due to economic recovery and fiscal improvements in Brazil [128]. - The company is exposed to foreign exchange rate risks linked to commodity prices denominated in U.S. dollars, which could adversely affect its financial condition and results of operations [129]. - Economic conditions in the U.S. and other emerging markets can materially impact the Brazilian economy, affecting the company's ability to borrow funds and raise equity capital [131]. Environmental Regulations and Climate Change - The company faces potential increased costs and operational challenges due to new environmental regulations and climate change concerns, including the adoption of carbon pricing mechanisms [135][137]. - The RenovaBio program in Brazil aims to reduce carbon emissions and promote biofuels, which could impact the company's operations and market share due to compliance costs and market volatility of CBios [138][139]. - The company may incur higher compliance and operating costs if it does not invest in research and development of less carbon-intensive solutions [141]. - Disruptions from climate change events, such as floods and storms, could harm the company's facilities and affect its financial position [143]. Business Acquisitions and Expansions - Ultragaz acquired Stella for R$63.0 million to enter the electricity segment, enhancing its energy solutions offerings [161]. - Ultragaz also acquired NEOgás for R$165.0 million, marking its entry into the compressed natural gas distribution segment [162]. - Ultracargo's acquisition of a 50% stake in Opla for R$237.5 million increased its total installed capacity by 90,000 m³, expanding its operations into inland liquid bulk storage [171]. - Ultracargo is building a greenfield terminal in Palmeirante, expected to add 23,000 m³ of capacity by Q3 2024, and is expanding the Rondonópolis terminal by 14,000 m³ [172]. Operational Strategies and Innovations - Ipiranga's turnaround plan focuses on pricing intelligence, logistics, supply and trading, and network management, aiming for consistent results [179]. - Ipiranga's AmPm convenience stores have a supply structure with four distribution centers to enhance operations and product quality [181]. - In 2023, AmPm initiated a pilot project with exclusive partnerships with brands like Pizza Hut and Krispy Kreme, integrating their products into AmPm stores [185]. - AmPm's new store concept includes a comprehensive digital services package available on major Brazilian marketplaces and delivery applications [184]. - AmPm is testing a new store model called AmPm Office, with two units established in 2023, located in commercial buildings and universities [186]. Financial Transactions and Capital Structure - Ultrapar sold Oxiteno for an initial payment of US$1,326.4 million (equivalent to R$6,283.6 million) on April 1, 2022, with a final payment of US$150.0 million (equivalent to R$749.4 million) due in April 2024 [191]. - Ultrapar sold Extrafarma for an initial price of R$737.8 million, with the last installment of R$182.7 million due in August 2024 [194]. - Ultrapar's capital stock comprises 1,115,404,268 common shares as of February 28, 2024, following the issuance of 191,778 common shares [210]. - On March 24, 2024, Ultrapar acquired 128,369,488 shares of Hidrovias for R$3.98/share, increasing its ownership to approximately 21.87% [211]. - Following additional transactions, Ultrapar's ownership in Hidrovias could reach approximately 26.90% [212]. Market Position and Performance - Ultragaz sold 1.7 million tons of LPG in 2023, achieving a market share of 23.4% in Brazil [216]. - Ultracargo has a total installed capacity of 1,067 thousand m³ in 2023, making it the largest private company in the liquid bulk storage industry in Brazil [217]. - Ipiranga holds a 17.7% market share in fuel distribution in Brazil, with a network of 5,877 service stations [218]. - In 2023, Ultragaz's network served approximately 60 thousand business customers and over 11 million households [219]. - Clients with contracts longer than three years accounted for 63% of Ultracargo's revenues in 2023, indicating revenue stability [233]. Corporate Governance and Management - Ultrapar's corporate governance structure includes independent board members and a robust compliance program, enhancing alignment of interests [239][242]. - The majority of Ultrapar's Board of Directors consists of independent members, promoting strong governance practices [245]. - Ultrapar's management team has a proven track record in the energy, mobility, and logistics infrastructure industries, with a focus on gender equality in leadership [246]. - The company has achieved an average compounded annual growth of net income attributable to shareholders of 18% from 1999 to 2023, without reporting a net loss in any year since its IPO [249]. - From 2020 to 2023, 89% of the senior executives were renewed, enhancing the management structure and governance of the company [252]. Sustainability and ESG Initiatives - Ultrapar has defined seven material topics for its ESG strategy, with specific goals set for 2030, aligning with the UN Sustainable Development Goals [273][277]. - The company published a Sustainability Report for 2023, detailing its financial, operational, and ESG highlights, prepared according to GRI standards [274]. - Ultrapar's risk management framework includes a systemic risk matrix to assess and monitor risks across its business operations [263]. - In 2023, Ultrapar achieved a lost-time injury frequency (LTIF) rate of 0.78, a 37% decrease compared to 2022 and a 19% decrease compared to 2020 [38]. - The company reported a process safety event (PSE) rate of 0.73 in 2023, down 29% from 2022 and 53% from 2020 [38]. - Ultrapar invested R$ 25 million in community initiatives in 2023, which is 21% higher than the amount invested in 2022 [38]. - As of December 31, 2023, Ultrapar's gross debt was R$ 11,768 million, slightly up from R$ 11,750 million in 2022 [280]. - The net debt decreased to R$ 6,121 million in 2023 from R$ 6,689 million in 2022, indicating improved financial liquidity [280]. - In 2023, 100% of the electricity consumed by Ultrapar was from renewable sources, maintaining the same level as in 2022 [38]. - The company achieved a 42% level of gender and ethnic equity in senior management positions in 2023, up 4 percentage points from 2022 [282]. - Ultrapar maintained an AA rating in the MSCI ESG Rating in 2023 and reentered the ISE B3 portfolio with a score of 83 out of 100 in corporate governance [38]. - The company neutralized 29% of its scope 1 emissions and 100% of its scope 2 emissions in 2023, consistent with the previous year's performance [38]. - Ultrapar aims to achieve carbon neutrality for scope 1 and 2 emissions from 2025 onwards as part of its energy transition strategy [38]. Sales and Distribution Developments - Ultragaz's total sales volume of bottled LPG in 2023 was 1,122 thousand tons, a slight decrease of 0.4% from 2022, while total bulk LPG sales increased by 6.4% to 616 thousand tons [306]. - The company has expanded its distribution network significantly, now serving almost all major population centers in Brazil, with new bottling and distribution plants established in Belém and Fortaleza [302]. - Ultragaz's digital initiatives include the Ultragaz app, which reached 5.4 million downloads by the end of 2023, enhancing customer convenience and logistics optimization [308]. - The company has developed a new IoT-based system for controlling seed and grain drying processes in agribusiness, optimizing LPG consumption [309]. - As of December 31, 2023, Ultragaz had 28 million bottles in circulation, with 26 million being 13 kg bottles [316]. - The consortium agreement with Supergasbrás, approved on August 16, 2023, will increase Ultragaz's filling bases from 19 to 24, aiming for operational synergies and cost reductions [314]. - In 2023, Ultragaz requalified 2.1 million LPG bottles, maintaining compliance with safety regulations [326]. - The company sources 17% of its LPG supply from private suppliers other than Petrobras, indicating a diversification in its supply chain [327]. - Ultragaz's contracts with bulk clients typically range from two to five years, fostering closer relationships and opportunities for expanding LPG consumption [312]. - The Lapidar Challenge program aims to standardize best management practices among resellers, enhancing customer experience and compliance with sector laws [319].

Ultrapar Participações S.A. (NYSE:UGP) Q4 2023 Earnings Conference Call February 29, 2024 9:00 AM ET Company Participants Rodrigo Pizzinatto - CFO and IR Officer Marcos Lutz - CEO Leonardo Linden - CEO, Ipiranga Conference Call Participants Monique Greco - Itau BBA Thiago Duarte - BTG Luiz Carvalho - UBS Gabriel Barra - Citi Bruno Montanari - Morgan Stanley Operator Good morning. Thanks for waiting. We would like to welcome everyone to the conference call of Ultrapar's Fourth Quarter 2023 results. There is ...

Ultrapar Participações S.A. (NYSE:UGP) Q3 2023 Earnings Conference Call November 9, 2023 9:00 AM ET Monique Greco - Itau BBA Leonardo Marcondes - Bank of America Thiago Duarte - BTG Pactual Luiz Carvalho - UBS Rodrigo Almeida - Santander Bruno Montanari - Morgan Stanley 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, we will open the floor for questions and at that time, further instru ...