Ultra(US:UGP)2020-11-07 01:19Financial Data and Key Metrics Changes - In Q3 2020, Ultrapar's net revenues were BRL 21 billion, an 11% decrease compared to Q3 2019, primarily due to lower revenues at Ipiranga [28] - EBITDA amounted to BRL 1,038 million, a 6% increase year-on-year, or 5% growth excluding nonrecurring items [28] - Net income was BRL 277 million, a 10% decrease from the same quarter last year, mainly due to higher depreciation and amortization costs despite EBITDA growth [28][30] Business Line Data and Key Metrics Changes - Ultragaz: Sales volume fell 1% year-on-year, with bulk segment volumes growing by 1% and EBITDA reaching a record BRL 222 million, an 18% increase from Q3 2019 [13][14] - Ultracargo: Average capacity increased by 11% year-on-year, cubic meters sold rose by 14%, and net revenues were BRL 160 million, an 18% increase from Q3 2019 [15][17] - Oxiteno: Specialty chemicals volume rose 8% year-on-year, with EBITDA growing by 110% to BRL 169 million, driven by higher sales volume and real devaluation [19][20] - Ipiranga: Sales volume dropped 11% year-on-year, with EBITDA at BRL 566 million, a 17% decrease compared to last year but an increase from Q2 2020 [21][23] - Extrafarma: Gross revenues were BRL 523 million, a 3% decrease year-on-year, but EBITDA reached BRL 28 million, a record since acquisition, reflecting a 52% increase from Q3 2019 [26][27] Market Data and Key Metrics Changes - The economic recovery in Brazil positively influenced sales across various segments, particularly in bulk and industrial sectors [5][8] - Ipiranga's network ended the quarter with 7,107 service stations, with a focus on higher throughput stations to grow volumes [21][25] Company Strategy and Development Direction - The company is focused on analyzing refining assets that Petrobras intends to sell and expanding its new business, Abastece Ai, which has already accumulated 1.8 million active digital accounts [9][10] - Strategic personnel changes include the appointment of a new CFO and CEO for Extrafarma, aimed at enhancing operational efficiency and profitability [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted a recovery in economic activity and expressed confidence in the resilience of Ultrapar's portfolio, with expectations for continued growth in the fourth quarter despite seasonal weaknesses [5][9] - The company aims to maintain financial discipline while pursuing growth opportunities, including potential partnerships for refinery acquisitions [41][70] Other Important Information - The company reported a cash position of BRL 9.8 billion, supported by strong operational cash generation and new funding [31][32] - CapEx was slightly above EUR 1 billion year-to-date, reflecting a 5% decrease compared to the same period in 2019, with a focus on cash preservation [29] Q&A Session Summary Question: How does the new board member contribute to capital allocation? - Management emphasized the importance of governance and the positive impact of the new board member's experience on capital allocation strategies [35][38] Question: What is the strategy regarding Petrobras' privatizations and natural gas? - Management indicated a desire for strategic partnerships in bidding for refineries but also expressed confidence in executing independently if necessary [36][41] Question: What is the outlook for Ipiranga's volumes and margins? - Management acknowledged a gradual recovery in sales volumes and a focus on defending their network, with expectations for continued improvement [43][44] Question: Can you elaborate on the CBIO provision and its impact on Ipiranga's results? - Management clarified that the BRL 66 million provision was primarily for the current year's CBIOs, with expectations for further adjustments in Q4 [46][48] Question: What are the future plans for Extrafarma and its profitability? - Management highlighted ongoing operational improvements and a focus on digital strategies to enhance profitability, with no immediate plans for divestiture [77]