Ultrapar Participações S.A. Q2 FY2026 earnings call

• Overall Financial and Shareholder Performance

  • Delivered strong Q2 2026 operational results with significant EBITDA and net income growth, generating a record operating cash flow of R$4.8 billion driven by solid performance and working capital release at Ipiranga.
  • Reduced net leverage to 0.9x EBITDA, the lowest level since 2008.
  • Approved an early dividend distribution of R$1.085 billion (R$1 per share, 3.8% dividend yield) for H1 2026, plus a share buyback program for up to 18 million shares to return value to shareholders.
  • UltraPAR was added to the Dow Jones Best in Class Emerging Markets Index, a milestone for the company.

• Ipiranga Operational Highlights

  • Doubled diesel imports in H1 2026, increasing its share of total Brazilian diesel imports amid global oil product market volatility from the Middle East conflict, strengthening its competitive position. Ipiranga achieved 8% H1 2026 volume growth, outpacing the overall market's 3% growth.
  • Gained 0.9 percentage points of market share as government crackdowns on illegal fuel distribution reduced illegal operators' market share from 24.4% to 20%, creating a structurally more fair competitive environment for tax-compliant distributors.

• Ultragaz Operational Highlights

  • Maintained consistent EBITDA growth despite lower sales volume, supported by improved sales mix that offset prior year write-down impacts.

• Ultracargo Operational Highlights

  • Completed most of its current expansion cycle, with installed capacity up 8% YoY and volumes up 19% YoY as new capacity ramps up, despite reduced fuel import storage demand from closed import windows since March 2026.

• Hidrovias Operational Highlights

  • Continuing operations posted 5% YoY volume growth driven by stronger cargo handling in Paraguay and Santos, which offset lower volumes in the integrated northern system and weak fertilizer demand.

1. Ipiranga: Total volume sold of 6,173,000 cubic meters, an 8% year-over-year (YoY) increase (10% growth for diesel, 6% for auto cycle). It operates a network of 5,855 service stations, a net increase of 29 from Q1 2026. Recurring EBITDA for the quarter totaled R$2,782,000,000, with a margin of R$451 per cubic meter. Ipiranga contributed ~76% of UltraPAR's total recurring adjusted EBITDA for the quarter.
2. Ultragaz: LPG sales volume was 3% lower YoY, driven by lower bottled segment demand and competitive dynamics, plus lower industrial bulk segment demand. Recurring EBITDA totaled R$468 million, a 6% YoY increase, with favorable sales mix offsetting lower volume and a R$70 million asset write-down in Q2 2025. It contributed ~12.8% of total recurring adjusted EBITDA.
3. Ultracargo: Average installed capacity increased 8% YoY to 1,156,000 cubic meters, with volumes sold up 19% YoY from ramp-up of new capacity. Net revenue totaled R$265 million, a 7% YoY increase, and adjusted EBITDA was R$159 million, a 13% YoY increase. It contributed ~4.35% of total recurring adjusted EBITDA.
4. Hidrovias: Total volume handled decreased 14% YoY, primarily due to the sale of the coastal navigation operation in November 2025; continuing operations volumes were 5% higher YoY. Recurring adjusted EBITDA totaled R$322 million, 8% lower YoY overall, with continuing operations EBITDA down 1% YoY. It contributed ~8.8% of total recurring adjusted EBITDA.

UltraPAR consolidated results: Recurring adjusted EBITDA totaled R$3,657,000,000; net income hit a record R$1,677,000,000, a 46% YoY increase; Capex was R$570 million; record operating cash flow of R$4,789,000,000; net debt was R$8,864,000,000 with leverage of 0.9x EBITDA.

• Ipiranga: Q3 2026 EBITDA margins are expected to be lower than Q2 2026 levels, and closer to Q1 2026 margins, as short-term impacts from the Middle East conflict decline while structural benefits from reduced illegal competition persist. The structural positive impact from illegal market crackdowns on volumes and margins is expected to be permanent.
• Ultragaz: Q3 2026 EBITDA is expected to remain at a level similar to Q3 2025, as the company focuses on recovering market share.
• Ultracargo: Q3 2026 market dynamics and overall results are expected to be similar to Q2 2026 performance.
• Hidrovias: Q3 2026 market and navigation conditions are expected to remain similar to Q3 2025, so performance will be in line with the year-ago quarter.
• Capital allocation: The company's comfort zone for optimal leverage is 1.0x to 1.5x EBITDA, appropriate for volatile market conditions and high interest rate environments.

• Volatility in global oil products markets driven by the ongoing Middle East conflict creates supply chain uncertainty and impacts import demand and pricing dynamics.
• Ongoing competitive pressure in the LPG segment has pressured Ultragaz volume and market share, requiring focused investment in reseller network expansion to recover position.
• Fluctuations in fuel prices create working capital volatility: every 10% change in fuel prices changes working capital requirements by approximately R$300 million, impacting overall liquidity.
• Weak demand in the industrial sector and fertilizer segment negatively impacts Ultragaz bulk LPG demand and Hidrovias cargo volumes.
• Forward-looking statements are inherently uncertain, and actual results may differ materially from projections due to general economic conditions, market changes, and other unforeseen operational factors.

Q: Given strong cash generation, what is the company's approach to capital allocation between shareholder returns, M&A, and reinvestment in existing businesses? How prepared is Ipiranga to capture market share gains from the formalization of the informal fuel market in Rio de Janeiro? / A: Shareholder compensation (dividends and buybacks) will scale with business profit growth. The company will actively evaluate investment opportunities in existing and new businesses that offer strong long-term cash generation potential without excessive capex requirements; if attractive acquisitions are not available, excess capital will be returned to shareholders via higher dividends and buybacks. For Rio de Janeiro, Ipiranga is already actively branding more new stations, supplying informal stations converting to formal operation, and closing non-compliant illegal operations, and is well positioned to capture market share from ongoing market formalization.

Q: After Q2 2026's high margins, what is the expected mid-term margin trajectory for Ipiranga, and how will fuel subsidies impact Q3 2026 margins, working capital, and competition? / A: Q2 2026 margins reflected two overlapping impacts: permanent positive structural gains from the crackdown on illegal competition, and temporary positive short-term impacts from the Middle East conflict's effect on supply. The structural margin and volume gains from reduced illegal activity are permanent. After Q3 2026 margins normalize to Q1 2026 levels, the permanently higher structural margin will be sustained. The market environment remains competitive but fair for all tax-compliant players.

Q: What is the company's optimal leverage target for capital allocation, and what is the expected working capital trajectory for Ipiranga in Q3 2026? / A: The company's comfortable optimal leverage range is 1.0x to 1.5x EBITDA, which is appropriate for volatile market conditions and the current high interest rate environment. For Q3 2026, working capital needs will increase as the import mix declines, since domestic fuel purchases have shorter payment terms than imports. Fuel price volatility also creates working capital swings: a 10% price change moves working capital requirements by ~R$300 million, creating ongoing dynamic changes to working capital needs.

Q: How do you assess branded station growth opportunities for Ipiranga, and what is the outlook for Ultragaz's market share after recent declines? / A: Ipiranga has seen increased demand for branding new and converting existing stations, as it has a strong, well-known high-quality brand. The company will continue to pursue these opportunities while maintaining strict capital and quality discipline, with no expected major deviations from historical capex levels. For Ultragaz, bottled LPG market share declines stemmed from over-expansion outside the company's target reseller segment. The company is now focused on improving reseller quality and supporting the existing reseller network to win back customers in the high-value market, with this focus expected to continue in coming quarters.