Ultrapar Participacoes SA

BOVESPA:UGPA3

Earnings Call Transcript 2021-Q4

[Operator]

Good morning, ladies and gentlemen, and thank you for holding. At this time, we would like to welcome everyone to the Ultra Group's Fourth Quarter '21 Results Conference Call. There is also a simultaneous webcast that may be accessed through Ultra Group's website, ri.ultra.com.br. through the MZiQ platform. Please feel free to flip through the slides during the conference call.

The presentation will be conducted by Mr. Rodrigo Pizzinatto, Ultra Group's CFO and IRO. And during the Q&A session, we will have the presence of Mr. Marcelo Malta, the company's CEO. We would like to inform you that this event is being recorded. [Operator Instructions]

Please bear in mind that the forward-looking statements made during this conference call referring to the business outlook of the Ultra Group projections and operational and financial goals are based on the beliefs and assumptions of the Ultra group management and on information currently available to the company.

They involve risks, uncertainties, and assumptions as 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 affect the future results of the Ultra group and lead to results that differ materially from those expressed in such forward-looking statements.

We will now turn the conference over to Mr. Rodrigo Pizzinatto, who will begin the conference. You may proceed, sir.

[Rodrigo de Almeida Pizzinatto, executive]

Good morning, everyone. It's a pleasure to be here once more to talk about Ultrapar's results and starting off with a short retrospective of 2021, which was an important year for the group with large-scale transformations. It was a great year for Ultragaz, Ultracargo and Oxiteno, which posted record results and profitability. Ipiranga extra farm on the other hand, didn't achieve desired levels of profitability, even when considering the improvement seen in the operations during the second semester.

On this note, at Ipiranga, we have carried out several changes in operational adjustments to resume the company's profitable growth trajectory over the course of 2022 and 2023. In addition, in 2021, we also made significant progress in reviewing our portfolio with the signing of the sale agreements of Oxiteno and Extrafarma, which are still pending of approval besides the completion of the sale of our equity interest in ConectCar last October.

Finally, I'd like to highlight the significant renewal of our management and governance structures, which reinforces Ultra's pillars of perpetuity and growth. along with our new members of the Board of Directors that added complementary experiences and skillsets, we have also carried out the succession of the executive leadership position of Ultra Group and Ipiranga in addition to planning the succession of the Chairman of the Board of Directors.

I will now go through our presentation, sharing with you our comments on the results of the fourth quarter and of the year of 2021. After that, we will move on to the Q&A session in which we will count on Marco's participation. Well, then, starting with Slide number 2, I would like to highlight 2 topics on the earnings report. The first one concerns the 2021 financial statements. Due to the signing of the sale agreement of Extrafarma and Oxiteno over the last year, we have classified these companies as assets and liabilities held for sale and discontinued operations. Our annual financial statements released yesterday already reflect this classification. To better enable comparison with previous periods, both the earnings release and this presentation consider the company's pro forma consolidated information that is Ultrapar's data also comprise Oxiteno and Extrafarma results, adopting the same concept that we have been reporting in the last few years.

The second topic I would like to draw your attention to is in relation to the nonrecurring effects, both in 2021 and 2020. We had some one-off impacts that have affected our results, which we have explained in our releases throughout the year. By reading the explanations, you will notice that we have excluded such effects, both positive and negative, so we can analyze the operating performance of our businesses and Ultrapar.

Moving forward now to Slide 3 to talk about Ultrapar's consolidated results. As you can see in the chart in the upper left side, our recurring EBITDA, totaled BRL 1.44 billion in the first quarter of 2021, 32% higher than that during the fourth quarter of 2020, driven by better results at Ipiranga, Ultragaz, Oxiteno, and Ultracargo. Looking at the year's results. Our recurring EBITDA totaled BRL 4.55 billion, an increase of 22% compared to 2020 with record results at Ultragaz, Ultracargo, and Oxiteno and a gradual recovery in Ipiranga and Extrafarma results.

Ultrapar's net income in the fourth quarter was BRL 390 million, 10% lower than the fourth quarter of '20 due mainly to the worsening in the financial results then evaded by the increase in EBITDA. The worsening of the financial result was driven by 3 factors: first, higher extraordinary tax credits in fourth-quarter '20, which totaled BRL 160 million; second, the temporary negative effect of mark-to-market of hedges of the bonds, which has no cash effect. And third, the CDI rate increase over the greater average balance of net debt despite lower cost of debt.

In 2021, Ultraprev's net income was BRL 884 million, 5% lower than 2020 due to the decline of the financial result and Extrafarma's impairment, which also has no cash effect attenuated by higher EBITDA. Our Board of Directors as already informed approved the payment of BRL 186 million in dividends for the second half of the year, equivalent to BRL 0.17 per share. Investments totaled BRL 1.9 billion in 2021, an amount 27% higher than that in 2020, in line with the plan announced in December '20 for the year and directed mainly to Ipiranga, Ultracargo, and Ultragaz. We recorded a cash flow generated by operating activities of BRL 2.6 billion in 2021 compared to BRL 3.1 billion in 2020. The lower generation resulted from investments mainly in working capital throughout the year, driven by higher fuel LPG and raw material costs despite the higher EBITDA.

Moving on now to Slide number 4 to talk about liability management. We ended the year with a net debt of BRL 11.7 billion, an increase of approximately BRL 1.2 billion compared to the net debt of 2020. The increase is explained by 3 factors: -- the payment of dividends in 2021 in the amount of BRL 698 million. worse financial results, as I mentioned in the previous slide, with an impact of BRL 290 million and the FX variation of the portion of bonds designated for hedge accounting. The exchange rate rose from 5.2% in 2020 to 5.58% in 2021, adding BRL 201 million on a net debt position with no cash effect. Throughout the year, we have been carrying out a liability management to improve our financial results, including assessing the market through incentivized issuances of infrastructure debentures and an Agribusiness Receivables Certificate along with anticipating the payment of debt with higher costs.

We have also reduced the surplus cash level, reducing the effect of carrying costs. By these measures, the average cost of debt went from 154% of CDI in 2020 to 114% of CDI in 2021. And finally, our leverage went from 3.0x net debt to EBITDA in December 2020 to 2.9x at the end of 2021 due to higher EBITDA level in the last 12 months, and we also kept the duration stable at 4.6 years.

Let's now move on to Slide number 5 to talk about Ultragaz. Sales volumes during the fourth quarter were 2% lower than that in the first quarter of 2020, despite the 1% increase in the bulk segment due to the 4% reduction in the bottled segment as a consequence of lower demand for LPG bottles. In the bulk segment, we had also an increase in the volumes sold to the industrial, commercial and services segments, which were more affected by the pandemic in 2020. In 2021, the volume sold was 1% lower than that in 2020, with a 4% reduction in the bottled segment as a result of greater demand for LPG bottles in 2020, mainly periods of greater social isolation and a 5% increase in the bulk segment reflect a higher number of sales to industries commercial and services segments.

Ultragaz SG&A in the first quarter of 2021 was 6% higher than that year-over-year. Due to the greater personnel expenses, provision for doubtful accounts, resulting for the updating of accounting parameters. Higher expenses with sales, sales commissions, and freight all attenuated by lower expenses with information technology. Ultragaz EBITDA totaled BRL 222 million in the quarter, 44% higher than that in the fourth quarter of 2020 due to the pass-throughs of LPG cost increases offset by a higher concentration of expenses in the quarter. In 2021, Ultagaz EBITDA was BRL 729 million, similar to the level reported in 2020, mainly because of greater operational efficiency and expenses management. Regarding the current quarter, we expect results to continue expanding relative to that of the first quarter of 2021, driven by higher operational efficiency despite of the lower demand in the bottled segment.

Now moving on to the next slide, Slide number 6, to talk about another great quarter of Ultracargo. The average installed capacity reached 917,000 cubic meters in the first quarter of 2021, a 9% growth year-over-year on the back of the start-up operations of the Vila do Conde term in December 2021 and the expansions in tank capacity implemented in Itaqui port over the last 12 months. Ultracargo's net revenues were BRL 187 million in the fourth quarter, a 13% growth year-over-year, led by contractual adjustments, improvements in the mix of products and terminals, and the expansions above mentioned.

In 2021, Ultracargo's net revenues reached BRL 713 million, 11% higher than that in 2020 due to the same reasons of contractual adjustments, mix, and expansions. Combined costs and expenses were 5% higher than those in the fourth quarter of 2020 as a result of higher depreciation costs arising from expansions in capacity in addition to higher information technology expenses to support productivity gains and digital transformation projects. Ultracargo's EBITDA was BRL 101 million in the quarter, 32% higher than that in the fourth quarter of 2020 due to the expansions with profitability gains, contractual readjustments, and productivity gains. The EBITDA margin reached 54% in the fourth quarter of 2021, well above the 46% margin of the fourth quarter of 2020.

In 2021, Ultracargo's EBITDA reached a record level of BRL 396 million, an increase of 22% compared to the recurring EBITDA of 2020. And for the current quarter, we expect a continuity of the positive operational performance of Ultracargo with similar levels of results as those seen in the last quarters. It is worth noting that we will gradually ramp up the Vila do Conde operations throughout 2022.

Moving now to Slide 7 to talk about Oxiteno. Volumes sold in the fourth quarter of 2021 were 6% lower year-over-year, mainly driven by the 34% reduction in commodity sales due to the prioritization of specialty chemicals in the mix of products during periods of scheduled shutdowns. The volume of specialty chemicals decreased 1% as a result of lower sales to the Home & Personal Care segment, offset by higher sales to the Crop Solutions segment. We also registered a 35% growth in the U.S. plant. In 2021, the volumes sold by Oxiteno was 3% higher than that in 2020 with an 8% growth in specialty chemicals driven by higher sales in the Crop Solutions and Coatings segments, in addition to 25% higher sales in the United States, while commodity sales dropped by 17%. Oxiteno's SG&A increased by 16% year-over-year as a consequence of higher expenses with freight and storage resulting from higher unit costs in Reais and personnel expenses in line with the progression of results.

It is worth mentioning that in the fourth quarter of 2020, Oxiteno's results were benefited from the constitution of extraordinary tax credits in the amount of BRL 85 million. Oxiteno's EBITDA was BRL 252 million in the quarter, an increase of 42% when compared to the recurring EBITDA of the fourth quarter of 2020. Such an increase is due to better margins, which were affected in 2020 by the negative effect of the zero-cost collar hedging and of the more devaluated exchange rate, attenuated by higher costs and expenses. Oxiteno registered a record EBITDA level in 2021 in the amount of BRL 104 million, an increase of 75% over the recurring EBITDA of 2020. And for this first quarter of 2022, we expect Oxiteno's good results to continue with a recurring EBITDA higher than that of the fourth quarter of 2021.

Moving on to Slide 8, let's talk about Ipiranga. Volumes sold were 2% lower year-over-year, with a 7% decrease in the auto cycle largely due to greater participation of gasoline instead of ethanol interproduct mix, while diesel increased 2%. In 2021, Ipiranga posted sales volume 5% higher than that of 2020 due to lower effect of the pandemic in the fuel consumption in Brazil in 2021, with an increase of 3% in autocycle and 6% in diesel. We ended the first quarter of 2021 with a network of 7,104 service stations, 16 more than the third quarter of 2021, with 127 and 111 closures in the quarter.

The average volume contribution of the new service stations is 438 cubic meters per month, while the closed ones had volumes below 19 cubic meters per month. In addition, we ended the first quarter of 2021 with 206 AMPM company-operated convenience stores, 57 more than we had in the third quarter of 2021. SG&A increased 50% in the quarter with some large effects. The first is the one-off concentration of extraordinary provisions of our contingencies in the amount of BRL 88 million, which involves mainly civil and fiscal proceedings with recent decisions that increased the risk profile of such losses.

In addition, we also had the impact of inflation on expenses, higher provision for doubtful accounts and the growth of AMPM company-operated stores, which went from 55 stores in the fourth quarter of 2020 to 206 stores in this last fourth quarter. It is important to keep in mind that in 2020, Ipiranga had temporarily held back expenses on several fronts due to the pandemic, which contributes to this reported increase. The other operating results line totaled BRL 15 million in the quarter, lower than that in the first quarter of 2020, mainly due to lower extraordinary tax credits, attenuated by higher merchandising revenues with suppliers and lower costs with CBios. The disposal of assets line totaled BRL 128 million in the fourth quarter of 2021 due to the registering of a capital gain reflecting the sale of ConectCar of BRL 76 million and the higher sale of real estate assets in the last quarter.

With that, in the fourth quarter of 2021, excluding ConectCar capital gain, Ipiranga total EBITDA of BRL 627 million, 29% higher than in the fourth quarter of 2020. This growth is the result of better margins and higher results from the disposal of assets, partially offset by higher expenses and lower sales volume. In 2021, excluding the capital gain from ConectCar, Ipiranga's EBITDA totaled BRL 2,010 million, 17% higher than that in 2020 due to better margins and higher sales volume attenuated by higher expenses. We started this year by implementing important operational adjustments in order to recover Ipiranga's profitability over the coming quarters. For the first quarter of 2022, we see results is still below our expectations and of the levels seen during the first quarter of 2021. Keeping in mind that the first quarter of 2021 was benefited from more relevant inventory gains. We also remain attentive to the macro environment in the fuel sector.

Now moving on to the final slide to talk about Extrafarma in Slide number 9. We ended the quarter with 399 stores, a network, 1% smaller than in the fourth quarter of 2020, a result of a more rigorous approach to underperforming stores. It's also worth noting that 12% of the stores are still in the ramp-up phase. Gross revenues were BRL 528 million in the quarter, a 4% reduction year-over-year due to the lower number of stores and a strong base of comparison in mobile phone sales in the fourth quarter of 2020 as an effect of the pandemic in that period. Extrafarma's gross revenues in 2020 were BRL 2.1 billion, stable compared to 2020.

During this quarter, we have registered an impairment of assets with no cash effect in the amount of BRL 33 million due to the difference between the book value and the value announced in the transaction with Pague Menos is still subject to closing adjustments. Extrafarma's recurring EBITDA totaled BRL 24 million in the quarter, a decrease of 30% year-over-year as a result of lower sales and the effects of inflation and expenses, mainly personnel, partially offset by reducing expenses and productivity gains measures.

In 2021, Extrafarma's recurring EBITDA was BRL 74 million, 12% lower than that in 2020 for the same reasons I mentioned in the quarter. For this first quarter of 2022, we expect a result above that observed in the first quarter of 2021 and below that of the fourth quarter of 2021 due to the seasonal variation between periods.

So now I conclude my presentation. I appreciate your attention and your interest, and let's now move to the Q&A session. And Marcus and I are available to answer your questions now. Thank you.

[Operator]

The floor is now open for questions and answers only for analysts and investors. [Operator Instructions] Questions will be taken in the order they are received. [Operator Instructions] Please hold while we pull for questions. [Operator Instructions] Our first question is from Gabriel Barra from Citibank.

[Gabriel Coelho Barra, analyst]

Good morning, Marcos and Rodrigo. Thank you for the presentation. I have 2 points that I would like to discuss with you. The first perhaps is the main concern of investors regarding Ipiranga. When we look at margins, there was a significant improvement in the last quarter of the year without a doubt a relevant gain. But when we compare this with the 2 main competitors, Haina, that has already reported results. It was a very strong quarter for everybody. And Ipiranga is still underperforming in this sector.

Now we take advantage that Marcos Lutz is in the call with us and can interrupt with analysts. If you could discuss which are the coming steps at Ipiranga, if you have important results, changes in terms of your team, and which is the diagnosis presently regarding Ipiranga and which would be your future steps. We speak a great deal about sourcing, pricing. If you could further explain which will be the gains for the company regarding Ipiranga, perhaps this would help us to understand what will happen with the margins.

The second point that I would like to discuss with you refers to capital allocation for the Ultra Group as a whole. This plan of deinvesting from Extrafarma in the past, you had the possibility of acquiring a refinery which did not materialize. If you could explain what is the mindset of the company in terms of the future of Ultra after the sale of Oxiteno and Extrafarma, which are the growth priorities going forward? And are you going to focus on the billions that you have presently in your portfolio? Or are you thinking about other avenues of growth in the short term, concomitantly with this turnaround of Ipiranga. Thank you, these are the 2 points for discussion.

[Marcos Lutz, executive]

Gabriel, this is Marcos. Now these 2 questions would take 6 hours of coal to truly respond to them. But I will be very clear and straightforward.

Ipiranga does not have a structural reason, quite the contrary to have a performance below that of the 2 competitors nationwide. It has a brand that is deemed to be by the end consumer as being a prime brand. It has a very similar structure. And in truth, there is no gap that would justify the differences in terms of results that we have had. And evidently, it has an issue of software, people, and processes that need to catch up. We have undergone a highly relevant transformation in the company. I feel extremely comfortable with the team that we have at present and the focus of each of the teams. And this catch-up will end up being something natural.

We began to catch up somewhat in the last quarter, although the figures do not reflect this. We do have things beyond the financial results that show to us that we have had enhancements, the Net Promoter Score, for example, as a company, we are the company that most increased its network for the brand in the last quarter as well as in the last month of this year.

We are making great strides in our pricing structures as mentioned, we're very close to the 100% that we would like to attain to consolidate a new culture to deal with pricing going beyond the pricing infrastructure that is very well established. And in terms of sourcing and trading, we still need to make great strides. We do have only one area that is well advanced. So we still have a long path to go down. And you don't do this in 4 months. It will take us a year or 2 years approximately. This catch-up the gap will have to be closed, and it will be closed.

And in the final analysis, this is my response. I don't know if I was very vague, but we do have multiple initiatives which I do not control. They are underway with the team, and I see that they will produce very positive results.

Now this is the response that I would like to give to your questioning. And altogether, they will make a big difference now for the Ultra Group as a whole, I can say the following: Ultrapar in the future should become a company that will generate value in the future, it will be a company that will invest in businesses that they touch will increase value. It has a strong culture, a strong team, stringent discipline. And in the long term, this is something that will be built evidently, this is not something for the medium term or something that will be done through acquisitions. Presently, the focus is how to carry out this catch-up for Ipiranga. We do have 2 businesses: Ultracargo and Ultragaz with very good performance with very relevant accelerated expansion paths going forward. And of course, eventually, minor M&As, especially in the 2 businesses that I have mentioned to accelerate a structured growth. This would make sense for us. So summarizing this is what I would like to share with you.

[Gabriel Coelho Barra, analyst]

Very clear indeed. And the first point, if you allow me to ask a very broad question, if you could further explain the issue of logistics, I know that this has already been discussed, and this is not a gap that you have -- but perhaps there will be a logistic gap among the B2C groups in the sector. You will observe that this gap does exist.

[Marcos Lutz, executive]

Well, I observed that there exists a gap. And this gap does not justify the gap that we have in results. And there are regions where we are better than the competitors in the South, for example, we have a better infrastructure. There are regions in the country where so far, we are still structuring ourselves, we need to work harder.

And what I am underscoring here is that there is a great deal to do. Some of this is already underway. We have some things that are being inaugurated by the sick of the logistic infrastructure depends on 3 or 4 significant players. Large part of the volume is something that we share with companies. We truly cannot say that this will justify BRL 20 per cubic meter. Of course, not. This is a minor issue. Now the software linked to the logistic perhaps does have a greater gap the intelligence of freight, of how to program, how to carry out deliveries. Perhaps there, we do have a gap that we're going to pursue. But in the software category and not in the hardware and CapEx category.

[Operator]

Our next question is from Regis Cardoso.

[Regis Cardoso, analyst]

Good morning to all of you.

[Operator]

I'm sorry, we were not able to hear you well. Your voice is somewhat muffled.

[Regis Cardoso, analyst]

There we are. Has it improved?

[Operator]

Yes, it has improved.

[Regis Cardoso, analyst]

Thank you for taking the questions. Thank you for the presentation and Marcos and Rodrigo. Thank you for your participation. We have 2 questions. First, regarding capital allocation. Ultrapar has a very relevant cash position. And perhaps it is preparing for a transformational acquisition, but it seems that this did not go through. The question therefore is, if you foresee other opportunities, perhaps a smaller size or opportunities with the same size that are as representative as this acquisition. If you could remark on these industries that you imagine that the Ultra group could expand to. We have already spoken about natural gas and biofuel. But in fact, there has never been a more decisive movement in that direction or ultimately a different type of solution, the payoff of debt, debt that you have a broad the debt of Oxiteno that is packed to the dollar. Therefore, how do you intend to allocate your capital?

A second issue to take the discussion once again towards Ipiranga and I do thank you for your response to the previous question. Have you identfied a set of low-hanging fruits that is to say opportunities that could be expanded in an accelerated way. Or do you have a learning from your previous experience, of course, you could make the most of in the company.

[Rodrigo de Almeida Pizzinatto, executive]

Very well. We'll begin with the end -- we don't have a key that if we flip will increase the company capital by BRL 15 million and fortnite. In the final account, what does exist is an industry without great novelties -- we're speaking about doing things in a normal way, and we have been doing this for years in terms of distribution. Now the present-day CEO is highly focused on operations. He has a culture in the past for this.

So what we want to do is focus on the basics, perform them well, and this will suffice to allow us to grow more than the competition. In some cases, it will depend on the market moment. This is our focus. There is no expectation to change everything in a single quarter. We want to carry out structural rule changes in the company. We are in a very comfortable position. We can say that this is fully feasible. There is nothing terrible pending over our heads. And with the sale, we have a historical relationship with excellent ties.

So all of these issues, which were issues of concern when I was outside nowadays enable me to feel more comfortable with this process. We're carrying out efforts day after day with the commercial team and Frederico, the Commercial Director does this.

Things, of course, are advancing. And as I mentioned, we already see concrete results and increase in our branded network. And this is something I would truly like to underscore -- there is no miraculous key that will transform the company. This does not exist. Now when it comes to our portfolio, I truly don't want to be repetitive. There's another question where I answered the same. We're not going to do anything gargantuan or gigantic now. The refinery that was a project at this point in time, perhaps will not be propitious for us because of the interest rate and the lack of stability of oil.

If we penetrate the sector more we have different positions, and we have a very well-protected point for sales. So I'm quite calm with this, and we will have a portrait of the company with a reinforced balance -- and if we think of our focus 12 months ago, in terms of the CDI, we now find ourselves in a completely different world compared to 12 months ago. And if we carry out an M&A at large scale, we're going to leverage Ultragaz more specifically.

[Operator]

Our next question is from Guilherme Levy from Morgan Stanley. You may proceed sir.

[Guilherme Levy, analyst]

Good morning, and thank you for taking my question. My first question, if you could speak about the draft bills in the Congress to change the way that the taxes are collected and what this will represent for the distribution sector going forward. And if the way in which taxes are collected could have an impact on Ipiranga still this year? My second question, referring to Extrafarma, if you have a more updated timing for this company. And if you hope that the antitrust company will come up with some sort of remedy for this situation.

[Marcos Lutz, executive]

I will answer the first question, and then we will go on to Extrafarma in the last 12 months. Brazil and perhaps the entire world have felt the pressure of fuel in the world and in several regions, especially those that are more political and difficult to follow up on. We have a hard time of seeing final results. We have had provisional measures, draft bills, regulations, and many things of that sort. And our comment and our focus is a lighter way of collecting taxes because the model that we have in Brazil has an enormous impact. Brazil should have a better infrastructure for fuel distribution, it does not have one because part of the segment truly is working with fiscal evasion and creates hyperbolic noise in the sector.

So along those lines, the draft bill that is about to be voted will allow for organization. It will not resolve the issue, but it will make it easier for the governments to collect taxes, perhaps reduce taxes in some cases, enabling the entire system to become simpler. And I do see positive impacts for the consumer and for the sector, at least for those that are serious who want to carry out structural investments and allow the country to grow when it comes to fuel. I look upon this positively. This will be voted on after the Carnival holiday. I will now give the floor to Rodrigo.

[Rodrigo de Almeida Pizzinatto, executive]

Thank you for the questions. Regarding Extrafarma, we hope that the antitrust agency decision, the CADE will have a decision on the second quarter at the most in the third quarter. Now the situation is quite complex. They're attempting to regulate the process. And this statement of complexity, of course, does not mean a remedy. If the remedy comes up, we do have a contractual clause that will resolve this.

[Operator]

Our next question is from Leonardo Marcondes from Itau BBA. You may proceed, sir.

[Leonardo Marcondes, analyst]

Can you hear me?

[Marcos Lutz, executive]

Yes.

[Leonardo Marcondes, analyst]

Thank you for taking my question. And in truth, my question is a follow-up on the capital allocation question. I would like to know your opinion on if there is a more attractive sector that you are evaluating now to avoid going into details that you cannot share with us. Perhaps if you could share if there is a sector that you deem to be attractive and where you intend to go into after a more in-depth assessment if there's any link in the chain that would make any sense for you? That is my question. Thank you very much.

[Marcos Lutz, executive]

Leonardo, we like sectors with high profitability and low risk, of course. Notwithstanding this and joking apart, what I believe could be an example, the natural gas market, for example, is one that we deem to be interesting, but it's not simple. We looked at the privatization of a distributor in Rio Grande do Sul However, we were not able to enter the sector with profitability as an umbrella for investment for the company. Evidently, everything is what is below the world of energy, which is where we find ourselves now and whatever is surrounding this, our focus at present will be to look in-house -- if opportunities arise, if we're able to conclude some conversations, we have small negotiations once again under this umbrella of Ultracargo and others, and we're going to prepare the organization for the long term so that we will become an organization that when it makes an investment we will create value vis-a-vis the other controlling companies to make a difference. I believe that this is fundamental to guarantee that this structure will be in place for larger movements.

[Operator]

Our next question is from Luiz Carvalho from UBS.

[Luiz Carvalho, analyst]

Thank you for the recovery of Ipiranga. In truth, I have 3 questions here. The first question, making the most of Marcos Lutz presence in the call, if we could look at this from another outlook, in 60 or 50 days, you have participated in the commission. And what can you say to us in terms of a 2-year plan or a 5-year plan, what is it that you would take into account as the main accomplishments or the main objectives within those 3 horizons that you have just mentioned.

The second question, and it's a question that I have posed previously in other calls. It refers to your dividend policy. Very clearly, the company policy is foreseen in the bylaws, and we understand that you will have an inflow of cash from Oxiteno and Extrafarma. But if we look at the 3.0x leverage of the company, it would not make too much sense to pay dividends. Is there any survey or an intention of making this process more flexible?

If you allow me a last question. Ipiranga in truth is a highly acknowledged brand. And if you could give us further examples of what has already changed now that perhaps a CFO or the Head of Training will change? What is something more palpable that you have perceived as a change in Ipiranga?

[Marcos Lutz, executive]

To avoid speaking about dividends, I do agree with your vision. As you know, this has to be reviewed as part of our bylaws. In my reading, this will have to be debated, but through assembly. This is what I can share with you at present. When it comes to Ipiranga and Linden's shoe soles, he's visiting all the clients.

This is only the tip of the iceberg. It is a process of the company to getting closer to clients to understand operational problems and much more. And for a person like Linden, this will represent a huge contribution after every trip comes back with a huge list of things to do, organization, new data and much more. And of course, he does not do this alone. He does it with his Board through reviews. And in the final account, this ends up being a backlog of actions to improve our efficiency at the other tip just where we make a difference.

We have resiliency, we have quality and despite past associations. Well, he still is with us embracing this project and this resumption, this recovery. And the other question is the 100-day plan. It's so difficult to speak about this. It's a dream. And it's not a dream that will become real instantly. It's a benchmark in the sector. And as all companies, we have broad growth projects to be able to double our results. But first of all, we have to work with that catch-up. And once we have caught up, we have to have a very sound growth pipeline.

Evidently, we have to work on this first stage properly to go on to a second stage. And what we have to have in our culture is to always take the first step before going on to the second step. When I was a child, I would try to leap to the third step, of course, but it's about this. We need, in fact, to build one brick on top of the other and the 100-day plan is a plan which is already underway, and the processes have all begun to change.

Unfortunately, of course, we can't say, well, we have gotten here, we can now hire 100 people or hire a new consultant. It's not about this. It's about hard work, effort, resiliency. It's more connected to all of this. And what happened in the past perhaps was this desire that those 100 days would resolve everything. Perhaps it worked in the past, but we need a transformation -- and during the phase of Marcelo, many castles were brought down and restructured. And this new construction is also working in an accelerated way. We don't have a big bank to share with you, unfortunately.

[Operator]

As we have no further questions, we would like to return the floor to Mr. Rodrigo Pizzinatto for the closing remarks. Mr. Pizzinatto, you may proceed, sir.

[Rodrigo de Almeida Pizzinatto, executive]

Thank you very much for your questions, for your attention. For those questions that have come through Internet, the IR team will return the contact. Thank you very much once again. Have a good day.

[Operator]

Thank you. The earnings result from Ultra Group conference call ends here. You may disconnect your lines now.