Ultrapar Participacoes SA

BOVESPA:UGPA3

Earnings Call Analysis

Ultrapar's Q3 2024 Financial Performance: EBITDA and Net Income Declines

In the third quarter of 2024, Ultrapar reported a recurrent EBITDA of BRL 1.506 billion, a 24% decrease year-over-year, primarily due to reduced performance from Ipiranga. However, the year-to-date EBITDA rose by 4% to BRL 4.93 billion. Net income fell 22% to BRL 698 million, offset by a reduction in financial expenses. Investments surged 37% to BRL 519 million, mainly in Ipiranga. Operating cash flow decreased by 59% year-over-year to BRL 780 million, reflecting lower EBITDA and increased working capital investments. The company remains committed to capital allocated towards expansion projects across its traditional businesses.

Ultrapar's Third Quarter Performance

In the third quarter of 2024, Ultrapar experienced a significant decline in financial performance, with a recurring EBITDA of BRL 1.506 billion, down 24% year-over-year. This decline was primarily attributed to lower earnings at Ipiranga, one of its core subsidiaries. However, on a year-to-date basis, the accumulated EBITDA stood at BRL 4.93 billion, marking a 4% increase from the previous year. The company's net income for the quarter fell by 22% to BRL 698 million but saw a year-to-date rise of 17%, reaching BRL 1.645 billion. Overall, the results suggest a mixed performance, with strength in year-to-date figures offset by a decline in the most recent quarter.

Ipiranga's Challenges and Prospects

Ipiranga, a key segment within Ultrapar, reported a 34% year-over-year decrease in recurring EBITDA, amounting to BRL 936 million for the quarter. Sales volumes for Ipiranga increased by 4%, driven partly by a shift towards ethanol from gasoline. Despite these gains, Ipiranga faced competitive pressures that affected margins, with operators witnessing historically low profitability in Q3 2024. However, the outlook remains cautiously optimistic, with expectations to maintain an EBITDA margin above BRL 130 per cubic meter in the upcoming quarters. This reflects management's commitment to navigate through recent challenges and improve competitive positioning.

Ultragaz and Growth in LPG Sales

Ultragaz reported a minor decline in EBITDA, reaching BRL 448 million, which was still just about 1% lower year-over-year. The volume of liquefied petroleum gas (LPG) sold saw a 4% annual increase, indicative of a growing market demand. Despite facing headwinds from increased freight costs, management expressed optimism for Q4, anticipating a potential increase in earnings driven by the new energy sector. The continuation of social programs promoting LPG usage is expected to support this growth.

Ultracargo's Stability Amid Lower Sales

In the logistics sector, Ultracargo showcased stable performance with net revenues rising by 1% to BRL 266 million. However, EBITDA declined by 3% to BRL 168 million, mainly due to lower spot sales. The operational capacity saw slight enhancement, increasing by 1% year-over-year. Management expects continued stability despite slight fluctuations and anticipates future growth from ongoing expansion projects.

Debt Management and Financial Position

Ultrapar's net debt as of September 2024 increased by BRL 268 million to BRL 7.968 billion, driving its leverage up from 1.2x to 1.3x. The company recorded an operating cash flow of BRL 780 million for the third quarter, a 59% decrease from the same period last year, reflecting operational strains. Looking ahead, management anticipates a recovery of working capital, which could provide a positive cash flow environment going forward.

Guidance and Strategic Outlook

Management reaffirmed its commitment to growth, planning to invest selectively in expansions across its core businesses. Expectations for the fourth quarter indicate a possible revival in margins for Ipiranga, alongside continued strength in the LPG sector from Ultragaz. Investment in new energy sources is expected to contribute between 3% to 5% of future EBITDA, further diversifying income streams and driving profitability.

Earnings Call Transcript 2024-Q3

[Operator]

Welcome to Ultrapar's Third Quarter '24 Results Conference Call. There is also a simultaneous webcast that may be accessed through Ultrapar's website at ri.ultra.com.br. and through MZiQ platform.

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 CEOs of the businesses, Mr. Tabajara Bertelli; Mr. Decio Amaral; and Mr. Leonardo Linden.

We would like to inform you that this event is being recorded. [Operator Instructions] A replay of this call will be available immediately after it for 7 days.

Before proceeding, I would like to state 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 all 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 would like to turn the conference over to Mr. Rodrigo Pizzinatto who will start our conference. Mr. Pizzinatto, you may begin.

[Rodrigo de Almeida Pizzinatto, executive]

Good morning, everyone. It is a pleasure to be here once more to talk about Ultrapar's results. And before I begin, I want to remind you of the reporting criteria and standards presented in Slide 2. And now moving on to Slide #3. As you can see in the chart in the top left side, our recurring EBITDA totaled BRL 1.506 billion in the third quarter of '24, 24% lower than that of the third quarter of '23, mainly due to Ipiranga's lower EBITDA year-over-year. As you can also see that the accumulated EBITDA for '24 is BRL 4.93 billion, 4% higher than that of the previous period. Ultrapar's net income was BRL 698 million, 22% lower year-over-year due to the lower EBITDA I've just mentioned, partially offset by the lower net financial expenses.

The net income year-to-date is BRL 1.645 billion, 17% higher than the previous period. I want to highlight that the share of profit of Hidrovias was recorded with a 2-month delay, contributed positively with BRL 9 million in the third quarter of '24. Investments in its turn totaled BRL 519 million in the third quarter of '24, up 37% compared to that of the third quarter of '23, mainly driven by higher investments in Ipiranga. We had an operating cash flow generation of BRL 780 million in the third quarter of '24. It would have been BRL 1.020 billion if we do not consider the reduction of BRL 240 million in the draft discount operations in the third quarter of '24. The cash flow generation was 59% lower than that of the third quarter of '23, mainly due to lower EBITDA and higher investments in working capital.

And moving now to Slide #4 to talk about our liability management. We ended the third quarter with a net debt of BRL 7.968 billion, an increase of BRL 268 million compared to June '24. The increase in net debt quarter-over-quarter is mainly due to the reduction of BRL 240 million on the direct discount balance in the quarter and the payment of BRL 276 million in dividends in August. These effects were partially offset by the receipt of BRL 222 million of the last installment of Extrafarma sale. Our leverage went from 1.2x in June '24 to 1.3x in September '24 due to the lower LTM EBITDA and the higher net debt that I just mentioned.

As you can also see in the table at the bottom of this slide, the net debt in September '24 added to the draft discounting vendor is BRL 9.470 billion, BRL 1.8 billion higher than the balance in September of last year, mainly resulting from the acquisition of a shareholding stake in Hidrovias.

Moving now to the next slide, #5. Let's talk about Ipiranga's results. Ipiranga sales volume in the third quarter grew 4% compared to the third quarter of '23 with a 5% growth in the auto cycle boosted by a greater share of ethanol over gasoline in the product mix and a 2% growth in diesel. We ended this quarter with a network of 5,871 service stations, 5 less than in June '24. We added 61 service stations and closed 66 throughout the quarter. This level of closures reflects stricter contract compliance. I remind you that the number of stations is not the main driver of volume growth as observed in recent quarters. Furthermore, we ended the quarter with 1,478 AmPm stores with same-store sales growth of 7%.

Ipiranga's SG&A was down 4% compared to the third quarter of '23 due to lower contingency expenses, offset by higher provisions for doubtful accounts and higher personnel expenses, mostly collective bargaining agreements. The other operating results line totaled negative BRL 124 million in the quarter, an improvement of BRL 55 million year-over-year, a result of lower expenses with carbon tax credits. The line of results from disposal of assets totaled BRL 31 million, resulting from the sale of 7 real estate assets. Ipiranga's EBITDA was BRL 967 million in the quarter. The recurring EBITDA totaled BRL 936 million, 34% lower year-over-year. We observed an improvement in the competitive environment in the third quarter compared to the second quarter of '24, with a reduction of sector irregularities.

We also had inventory gains as a result of the gasoline price adjustment in July. And despite these effects, in the third quarter of '23, we had record margins at Ipiranga, benefiting from the combination of more relevant inventory gains and more favorable import parity and a normalized level of inventories in the industry. We have been operating in recent quarters with profitability above BRL 130 per cubic meter, despite the irregularities that have affected the entire sector. In this fourth quarter, with the market conditions we have observed, we expect to maintain the strength.

And moving now to Slide 6 to discuss Ultragaz results. The volume of LPG sold in the third quarter was 4% higher year-over-year due to a 7% increase in sales of bulk LPG, mainly reflecting higher sales to industries. Sales of bottled LPG increased by 2%, driven by higher market demand. Ultragaz's SG&A in the third quarter of '24 was 1% higher than in the third quarter of '23 due to higher personnel expenses, mainly due to collective bargaining agreements, provisions for doubtful accounts and freight costs in line with higher sales volume. These effects were compensated by initiatives to increase operational efficiency and lower expenses with sales commissions.

Ultragaz EBITDA was BRL 448 million in the third quarter of '24, 1% lower than that in the third quarter of '23. The higher sales volume and the more normalized commercial environment of the bottle segment were offset by higher freight costs and expenses. For the fourth quarter, despite seasonally lower volumes, we expect a higher EBITDA with greater contribution from Ultragaz new energy segment.

And finally, moving to Slide 7, let's discuss Ultracargo's good results. The company's average static capacity of 1,067,000 cubic meters was 1% higher than that of the third quarter of '23 due to the addition of the Rondonópolis base. The cubic meters sold remained stable year-over-year. The start-up operations in Rondonópolis and the higher handling in Opla, Vila do Conde and Suape were offset by the lower spot sales at Santos, Itaqui and Aratu.

Ultracargo's net revenues were BRL 266 million in the third quarter of '24, 1% higher than in the third quarter of '23, driven by better tariffs despite lower spot sales. Combined cost and expenses were 10% higher than that in the third quarter of '23 due to higher handling of the new terminals. Ultracargo's EBITDA totaled BRL 168 million in the third quarter, 3% lower than in the third quarter of '23 mainly due to lower spot sales. The EBITDA margin was 63% in the third quarter of '24, 2 percentage points lower than that of the third quarter of '23. And for the fourth quarter, we expect an EBITDA similar to those seen in the last quarters.

Very well. This concludes my presentation, and let's now move to the Q&A session to answer the questions you may have. Thank you very much for your attention.

[Operator]

[Operator Instructions] The first question comes from Monique Greco from Itaú BBA.

[Monique Greco, analyst]

[Interpreted] I'm going to ask one first question about Ipiranga. Going back to what Pizzinatto has just said about expectations of margins. We got into the second half of the year with an expectation of have a much better competitive dynamic, healthier increasing demand, normalization of inventory. Do you think that the improvement of the dynamic with volumes and so on has already been reflected in this adjustment of margins that you've made in this quarter? And when Pizzinatto, you said you want to have the levels over 130. Do you think that -- do you still expect an improvement of this dynamic in upcoming quarters? Would we expect some improvement still being perceived in future margins? This is my first question.

The second question combines Ipiranga and Ultracargo. What about import of diesel at the forefront. We've seen smaller representativeness of independent importers in the total imported amount in the country. So I'd like to hear from Linden -- how do you see the impact of that in the competitive dynamic of distribution? And if I could also ask Decio, do you think that small -- lower spot imports can impact Ultracargo's operation?

[Leonardo Linden, executive]

[Interpreted] This is Linden speaking. First, concerning the dynamic of the third quarter, this fight against illegal practices has improved oil and ethanol. We had a 5% increase of volume over the second quarter of this year, an improvement for regular gas and ethanol, but we've observed a competitive market for diesel on the highways and in spot market, the cost of diesel has been increasing, biodiesel and also imported diesel. It has applied pressure to the price at the stations, especially the highway stations had difficulty to adjust prices. So one thing offset the other, and this was somewhat what we observed in the third quarter.

Now looking ahead, we believe that better legal practices will always be positive to the industry at large. And we hope that this is going to progress as is so that we can have better and better conditions. We still see competitiveness in diesel, especially in the highways and in spot market. I think this is the kind of balance that we've been observed in terms of supply.

The market seems to be well balanced. It was a stable quarter. If you look during the 3 months of the quarter, you will see somewhat stable margins. There were no major oscillations or volatility. I think that this is something that's going to be repeated in the fourth quarter.

Concerning imports, yes, there has been some decrease in imports, not significant really, just a minor drop. Changing this logics of product coming from the Gulf, from the East European countries. But the Brazilian market is structurally dependent on import. And this is going to keep happening. Maybe things will change somewhat in terms of where the gas comes from.

[Décio de Sampaio Amaral, executive]

[Interpreted] Thank you, Monique. If you compare this quarter with the same quarter last year, you were going to see a smaller spot volume in this quarter, the inventory levels increased somewhat. Our tanks are fuller.

At Ultracargo, the product comes regards of being cabotage or imported. We are very well positioned in Vila do Conde, Itaqui, Suape. The product has to come into the tanks because we need to sell in these regions. Even if there is a reduction of imports. Still, we are going to go into cabotage and the market will just compensate. We are still investing in improvement of structural deficit. And this is why we've been investing in spot handling. There are going to be major opportunities of import and product cabotage.

[Operator]

The next question comes from Pedro Gama, Citi.

[Pedro Gama, analyst]

[Interpreted] The first question is about Ultragaz. We've been hearing the market discussing about natural gas and LPG. On the one side, we see that the social programs are encouraging the use of LPG, but constantly discussing the margin of distribution of LPG in recent years. What is your opinion about the social programs and the effects they have on market? And how do you see LPG in competition with other products such as natural gas, ethanol and other energy sources in the country?

Second question about Linden and increased volumes at Ipiranga. Last month, the first station of Texaco was open. What's the strategy for the brand in Brazil? And how does it adjust with the whole strategy of Ipiranga in the country?

[Tabajara Costa, executive]

[Interpreted] This is Tabajara speaking. I'm going to start with the question about Ultragaz. The program gas to wall, liquefied gas to wall is a social program of the current federal administration. We've talked about the effect and impacting energy poverty rates. The government is really focusing on it, and this is something positive. We are going to support as much as possible, but there is still a lot to happen before we know how the program is going to evolve. It will probably analyze the possibility of resellers so that the benefit brought by LPG to the society can reach 100% of households in the country even though I have to say there is still a lot to be done.

You've talked about competition in terms of energy sources. We can see more room now for applications of LPG. There are some limitations of LPG use in some specific applications. We expect the regulatory progress to really release and approve that. Especially in bulk, we've been seeing other uses and applications for LPG. And we are also getting ready for the use of other energy sources that the company has in its portfolio, so that we can really have a complete, let's say, reach of options. For LPG, we still see a very relevant opportunity of growth. So I think those are 2 potential positive elements for the industry.

Now Pedro, concerning volumes in Ipiranga, the growth of volume in the second to third quarter of Ipiranga has nothing to do with Texaco. We just opened 1 gas station, 1 service station on the fourth quarter. It's much more market thing. And our actions in our own network. Now concerning the brand Texaco, what we've been doing here with the brand is introduce a different model of business in the country. We are going to have a strategy of regional exclusivity and they will have an exclusivity of the brand in a region that is going to be defined among the parties, and it's going to be a lighter model in terms of investments.

We don't have any specific guidelines in terms of product from them exactly because we are in a process of reproducing, understanding the model. We have a very good route to follow with Texaco. What do you see volume is from Ipiranga, and it's going to be more focused on Ipiranga, which is our main sales outlet than Texaco.

[Pedro Gama, analyst]

[Interpreted] My question was really to understand your strategy. So that's very clear.

[Operator]

The next question comes from Matheus Enfeldt, UBS.

[Matheus Enfeldt, analyst]

[Interpreted] Kudos to the result. CapEx, it's been running below what we had expected and what had been announced in the beginning of the year in all your business units. I would like to understand why -- understand in further details to what extent this is going to impact 2025? Is there a gain of efficiency projects that you haven't done because of higher interest rate, change in assumptions. Just to understand a bit more because CapEx has underperformed -- has been underperforming, knowing that it tends to be sped up in the fourth quarter.

Now building up on the previous question about Ultragaz, what about the other proposals of regulatory adjustment, use of other brands, the end of support, no users. Could you maybe tell us more about the regulatory adjustments provided by the Brazilian agency of oil and gas ANP?

[Unknown Executive]

[Interpreted] Thank you, Matheus, for your question. The plan that we shared for 2024 of CapEx was not linear. We tend to accumulate it in the end of the year. And we expect to close it below what was initially planned because of some savings in our projects and because of some carryover to 2025. Let me now hand it over to Tabajara.

[Tabajara Costa, executive]

[Interpreted] You see Matheus building up about -- your questions about regulatory affairs. It's all part of one same package, and the natural progression of regulation, we've already discussed about that in the past. And we've always taken a very active role. We know a lot about the topic. We see the international reference, and we tend to be highly regulated. It provides more safety, more competition. In such a large country, there is no fraud or illegal practice in products, which is a result of the operational security that agents have and clients have. So it's a very positive thing, high security and a highly competitive market.

The models that have economic rationale can always be analyzed, but it should always take to the economic improvement of the system, making sure that we still maintain the same level of security of inspection without opening room for illegal practices because, of course, it always impacts safety and security and nobody wants that. So I think that the security practices that we have are always very positive. This is what should prevail. I think this is the most, let's say, appropriate solution for the society at large.

[Operator]

Now the next question comes from Pedro Soares with BTG.

[Pedro Soares, analyst]

[Interpreted] I have two questions. First, about working capital. There was quite a use of working capital. I would like to hear more about your expectations for the fourth quarter and also inventory levels. Can you tell us more about the dynamic of the quarter, maybe there were some strategic actions, but was there anything else that resulted from the ethanol competitiveness in auto cycle, just giving more pressure to oil, gas, is it something temporary? Should we expect more over demand for next quarters?

And one other question about margins at Ipiranga. The level of 130 seems to be conservative, not only because of the results you've reached, but also because it's below what we observed in the first half of the year. Do you think that this is a level that maintains expected return on investments being healthy levels and also allowing some market share gains? Or no, are you just being conservative as a management team?

[Leonardo Linden, executive]

[Interpreted] Pedro, I'm going to answering about Ipiranga, Linden speaking, and then Rodrigo can build up on it. Concerning turnover, I think there are 4 components involving Ipiranga and the working capital. First, increase in volume, 5% increase in volumes, secondly, highest price of gasoline and a strategy of anticipation of the buying of biofuel, we've seen an opportunity. And fourth option is a reduction of [indiscernible] That we had throughout the year half. Having a position in biofuel as well as the program [indiscernible] are just circumstantial situation and that will be offset in the fourth quarter.

Concerning margins, yes, we tend to be more conservative we always say that we see margins over 150 per cubic meter, but we have been more conservative for this quarter and trying to understand the market demand. And it's not a share strategy. Let us make it very clear, not a shared strategy.

[Operator]

The next question comes by Eduardo Muniz with Santander.

[Eduardo Muniz, analyst]

[Interpreted] The first question is about the initiatives against illegal practices in the area of distribution. We've seen the focus of many of the players in the ecosystem. It's something getting stronger, and we've seen that some of the special regimens were just put to an end. What do you also expect to reach this year and the first quarter next year, what else do you expect to be approved to improve competitive market?

And secondly, concerning Hidrovias do Brasil, what are the main points that Ultrapar wants to contribute with Hidrovias do Brasil to really double the initiative of Arco Norte with the private use terminal it is it something that you can lend to them as Ultracargo. What are the other options that you could get, given some more information to us?

[Marcos Lutz, executive]

[Interpreted] Well, Eduardo, yes, there is an improvement. I think there is still a lot to be done in terms of fighting against the legal practices. We've seen that things can really get better if we have appropriate fight against illegal practices. When you talk about tax evasion, we have to work with ethanol and [ mononophasia ]. Ethanol is still a relevant problem with regular trading. There is also a law that would impose sanctions to those longtime debtors. There is also the RenovaBio with another legislation.

There is a very important share of distributors that do not meet their goals of [ CBIOs ] getting really impacts producers and manufacturers because they could be investing in the production of biofuel and they are not. And finally, we expect to have a better control over not mixing biodiesel. For example, right now, where biodiesel costs more than 7 per liter, a great difference to D100 and these are situations in which some mix may happen. So these are all open fronts of initiatives.

I cannot tell you whether this is going to happen in this quarter, next quarter or when exactly. But we've been having very interesting discussions led by a number of companies and always supported by the regulatory authorities as well. We have to evolve in this agenda. It's still a problem in our industry.

In terms of Hidrovias do Brasil, we are part of the Board, and we believe the company is capable of running projects with quality. Ultracargo is developing 4 terminals simultaneously. It has a very good active track record. And of course, it's a company that will provide support if considered to be necessary by Hidrovias. But right now, we are thinking about long term, giving a support to the company in existing projects, which were still waiting for approval by shareholders to execute. So we are very optimistic about the possibilities of expanding their installed capacity of the North area, Arco Norte.

[Unknown Executive]

[Interpreted] In addition to what Marcos Lutz has just said, Hidrovias have a very good team dedicated to this topic, but we are also contributing with some people that were transferred to Hidrovias to be part of the initiative. Our project manager is someone highly experienced in conducting complex projects. And certainly, it's someone who's going to help in these initiatives.

Now combining all questions about illegal practices and just to give you some dimension about that. If Ipiranga does not mix biodiesel in November and December alone, Ipiranga will be additional EBITDA of BRL 1 billion because of the difference of prices of biodiesel and diesel. This is how much illegal practice affect the industry. And this is why we have to fight against that so that we can have fair competition.

[Eduardo Muniz, analyst]

[Interpreted] If I can have a follow-up for Hidrovias, any expectations of approving some excess capital with Hidrovias?

[Unknown Executive]

[Interpreted] No news so far.

[Operator]

The next question comes by Leonardo Marcondes, Bank of America.

[Leonardo Marcondes, analyst]

[Interpreted] Most of them have been answered. I'm going to ask one about Ultragaz. Pizzinatto has just mentioned that you expect an increased share of -- coming from new energy sources. Could you please give us some more information about that, the dynamics of this new segment? And could you please tell us how much that contribution of that share would be?

[Unknown Executive]

[Interpreted] Well, Leonardo, based on what Rodrigo has said, when we started, this is a combination of our strategy. We've had a very good evolution of our strategies in the long term, closer to our customers, in all the different segments that we operate, such as bulk. They have evolved a lot and they are probably going to evolve more in the fourth quarter. That's what we expect. We can see the maturity of the investments we've made in other energy sources, biomethane and electricity. We've already talked about our expectations of 3% to 5% of EBITDA being resulting from that. But they are not segregated operation. We've been really combining businesses to add more value to our clients. This is something that is becoming a reality and really impacting our results.

This is probably going to be intensified in upcoming quarters. We have been offering a broader perspective and a broader range of products. So we expect that improvement in the fourth quarter and in upcoming quarters next year.

[Operator]

The next question comes from Bruno Montanari, Morgan Stanley.

[Bruno Montanari, analyst]

[Interpreted] Just a quick follow-up and one question. Going back to working capital, should we wait? Should we expect more working capital released in the fourth quarter? Is it going to be expressive because of the investments you've made in previous quarters. And let me ask a question to you, Lutz. How do you anticipate the development in Brazil, thinking about economy, politics, U.S. election when making decisions about investments in existing businesses, and also in new initiatives that you might have.

[Unknown Executive]

[Interpreted] Let me quickly answer about the working capital, and then Lutz can answer the question. Yes, it would probably mean a recovery of working capital. Working capital movements are always significant up or down. We expect to regain a lot of what we've invested in the other quarters.

[Marcos Lutz, executive]

[Interpreted] I don't expect any radical changes in the country, anything that would be relevant to Ultrapar's businesses. In terms of investments, we've made investments in Hidrovias, which is still going to go through a maturation. There are a number of upsides a company with a great future. All the other 3 traditional business that we have, have expansion projects. We've been allocating capital to them. We are still maintaining our position, which has deleveraged and always observing closely the economy.

The U.S. election, well, I don't anticipate any impact on our strategy, at least for now.

[Operator]

The next question comes from [ Elena Kalman with XP ].

[Unknown Analyst]

[Interpreted] I have a quick question here. About your strategy of service stations, we've seen a movement but I would like to get your update on what do you expect to develop further the strategy of the network of service stations and the number of stations?

[Unknown Executive]

[Interpreted] Nothing is changing really compared to what we've been doing with the branded network. We make investments selectively, and we have a natural attrition of this kind of business. The main initiative of closing down some of the units is over, if you get the official numbers of a and b of self-stated number of stations, you will see that they are very close. This is a sign of the accuracy of number of stations that we report. And from now on, business as usual, make select investments and exclude or close stations that wouldn't make sense to be maintained.

[Operator]

Thank you. If there are no further questions, I would like to hand it over to Mr. Rodrigo Pizzinatto for his closing remarks.

[Rodrigo de Almeida Pizzinatto, executive]

[Interpreted] Thank you all very much for the questions. Any unanswered questions can be answered by the Investor Relations team, and I hope to see you in our next earnings release conference call. Thank you all very much.

[Operator]

Thank you. The earnings release conference call of Ultra is closed now. Please disconnect now. Thank you very much. Have a great day.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]