Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vibra Energia SA (PETRY, Financial) achieved EBITDA margins above BRL150 per cubic meter for the fourth consecutive quarter.
- The company reported a record adjusted EBITDA margin of BRL176 per cubic meter and a ROIC of nearly 20%.
- There was a quarter-over-quarter volume increase of 2.6%, indicating growth in market share.
- The company generated BRL100 million by reducing inventory levels.
- Vibra Energia SA (PETRY) announced a dividend payout of BRL1.6 billion, the second highest in its history.
Negative Points
- The company experienced a decrease in market share in non-branded stations.
- There was a significant drop in volume in the B2B segment last year.
- The recurring margin dynamics showed a reduction in service station margins.
- The company faced challenges with working capital due to a mismatch in accounts receivable and payable.
- There was a slight decrease in the number of service stations, which could impact future growth.
Q & A Highlights
Q: What have been the key management practices driving Vibra Energia's consistent results and margin improvements?
A: Our management model includes a transformation office that monitors project status weekly, ensuring pace, intensity, and discipline. We also have daily business dynamics meetings to discuss demand and necessary actions. This routine of result-focused management and new projects has been transformational, helping us achieve consistent margin improvements.
Q: Can you explain the difference in margin dynamics between B2B and service stations in Q2 compared to Q1?
A: In Q2, we accelerated our B2B initiatives, which led to an increase in B2B margins and market share. The service station margins saw a reduction due to competitiveness issues, but overall, our results improved with new B2B projects. We expect continued strong results in the second half of the year.
Q: How does Vibra Energia plan to sustain high ROIC levels in the long run?
A: We focus on maximizing all elements that drive ROIC, including rigorous capital allocation, strict inventory management, and leveraging our competitive advantages like capillarity and logistics. Our management model includes monthly capital allocation discussions to ensure we are making the best investments to sustain high ROIC levels.
Q: What is the company's strategy for market share recovery and profitability in branded and non-branded service stations?
A: We prioritize sales to branded stations and have reduced market share in non-branded stations to focus on profitability. We aim to recover market share gradually and sustainably, maintaining or even increasing margins. This involves developing long-term relationships with customers who value Vibra as a supplier.
Q: Can you provide an update on the tax credit situation and the potential decision regarding the purchase of the remaining stake in Comark?
A: We are awaiting the jury's decision on the tax credit. Regarding Comark, we are happy with its performance and entering a deleveraging cycle. Most projects have had their prices defined, and we are confident in the cash generation potential, which supports our investment strategy.
Q: What are the expected impacts of the new lubricant plant on Vibra Energia's business?
A: The new lubricant plant, operational by the end of the year, will be the largest in Latin America and one of the top five globally. It will offer significant competitive advantages in terms of cost and product quality, enabling us to grow our lubricant business significantly in both retail and B2B segments.
Q: How does Vibra Energia plan to handle the competitive environment and illegal operations in the fuel market?
A: We are enhancing our logistics and trading capabilities to remain competitive. Additionally, regulatory agencies are becoming more active against illegal operations, which should improve the competitive environment. We believe this will create growth opportunities for Vibra, given our scale and capabilities.
Q: What is the company's approach to capital allocation given its comfortable leverage levels?
A: We are focused on maximizing shareholder returns through buybacks, dividends, and strategic investments. Our capital allocation strategy is rigorous, with monthly reviews to ensure we are making the best decisions for long-term growth and profitability.
Q: How does Vibra Energia plan to grow its market share in the B2B segment?
A: We are accelerating B2B initiatives and focusing on direct customers and smaller customers with better margins. We have a new sales structure and are using different channels, including telesales, to reach new customers. This approach is expected to drive market share growth while maintaining profitability.
Q: What are the company's plans for the service station network and branding strategy?
A: We are selectively screening our service stations to focus on those with strong relationships and higher volumes. While the number of service stations may remain stable in the short term, we expect gradual growth in branded stations, contributing to increased market share and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
