Good morning, ladies and gentlemen. At this time, we would like to welcome everyone to Ultrapar's 1Q'19 Results Conference Call. There is also a simultaneous webcast that may be accessed through Ultrapar's Web site at ri.ultra.com.br and MZiQ platform. Please feel free to flip through the slides during the conference call. Today with us, we have Mr. André Pires, Chief Financial and Investor Relations Officer, together with other executives of Ultrapar. We would like to inform you that this event is being recorded, and all participants will be in a listen-only mode during the company's presentation. After Ultrapar's remarks are completed, there will be a question-and-answer session. At that time, further instructions will be given. [Operator Instructions] We remind you that questions which will be answered during the Q&A session maybe posted in advance in the webcast. A replay of this call will be available for one week. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor and Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ultrapar management and on 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 for 4Ultrapar and could cause results to differ materially from those expressed in such forward-looking statements. Now I'll turn the conference call over to Mr. Pires. Mr. Pires, you may begin your conference. André Pires: Well, thank you very much. Good morning, everyone. It's a pleasure to be here with you to discuss Ultrapar's fourth quarter 2019 results and our perspectives and priorities for the…

Thank you. The floor is now open for questions. [Operator Instructions] And our first question comes from Fernando Kunal [Ph] from Citibank. Please go ahead with your question.

Hi, good afternoon, everyone. Thank you for taking my questions. Some of my questions are going to be on the follow-up of the Portuguese call. So the first one is related to the sequential sales you have seen in Ipiranga, when we look at month over month, this quarter, that means January against December 2018, February against January and [indiscernible]. We see that sales volumes are performing behind your top two fierce competitors. Can you comment why this has happened and what do you expect in upcoming quarters in terms of volume growth, and also if you could provide a rough number of fuel station openings for 2019? The second one is related to SG&A in Ipiranga. You mentioned in the last call that SG&A improved 10 highs [ph] per cubic meter, but when we tried to exclude the impact of ICONIC expenses it seems that on a recurring basis, it has only improved around 5 PIS, could you help us quantify it, how much you have achieved in SG&A cost cutting initiatives? And the third one is if you could comment on the returns expected in which you took the decision to participate in the port concessions auctions, given that you'll be spending around BRL500 million in expansion Capex for the next couple of years, I'm just wondering what drove that decision and what can we expect in terms of better returns on this decision? Thank you. André Pires: I'm going to start with the third question Fernanda, thanks for the questions, but starting with the port concessions, basically the vision for this concessions was basically the same type of vision we have for Ultracargo and for Ipiranga, which is the fact that structurally, we see Brazil as a country that will in the long run be short on…

Okay, thank you very much for the answer.

Our next question comes from Leonardo Marcondes from Itaú BBA. Please go ahead with your question.

Hi, André. Thanks for taking my question. So last year, we saw global companies joining the Brazilian Food distribution market through acquisitions and in the last few months, we've seen export players increasing their volumes even with reduction in imports. So I would like to know, if you could evaluate the competitiveness on both pricing and branding new gas station France in this new environment. Also on this, I would like to know if you guys track those stations that are not renewing with Ipiranga, I mean if there are, if most of them are going to do all big fuel distributors or if they are choosing more original or local distributors, if they're choosing to become white flags or even if they are shutting down. So that's my question. Thank you. André Pires: All right. So, Leonardo, thanks for the questions. In terms of the competitive environment with the new players that came into the market, I think you were referring to the new let's say international traders that ended up investing in distribution, we haven't seen any major change in their behaviors that we could interpret as a significant change in a competitive environment. The competitive environment remains let's say very tight under pressure. You're right. I mean the white flag gas stations that I think everybody anticipated that when petrol does reduce the arbitrage potential of the spread between local and international prices this would let's say reduce their competitive advantage but they've been proven very resilient especially in a market where we do not see growth coming from the side of the consumer. So I think the business model has been proven resilient in an environment like that. But both ourselves and our competitors remain also very competitive although we have not seen that such a strong market share gain from the part of independent or white flags as we saw when we had this big arbitrage opportunity. So I think we're on holding on fairly well. But the competitive environment remains under pressure. As for the stations that are not renewing the contract with us, I mean basically their destiny it is basically the three different batch study that we follow, some of them basically leave the business. We eventually sell their real estate or invest in the real estate to do something else parking lot or real estate development, something like deposit or something like that, similar others or most of them they go back to be a white flag divest minority of this churn goes to our peers. I mean traditionally and then it continues to be the case in most part of the churn is due to going back to white flags or leaving the business something else with the plot of land and there's not. I mean it's a vast minority of these players that are branded by our competitors.

Okay, that's perfect. Thank you.

Our next question comes from Gabriel Francisco from XP INVESTIMENTOS. Please go ahead with your question.

Hi André, thank you for the call. It's going down in the last question a little bit from my colleague. But if you are seeing lower arbitrage opportunity then I agree. We all agree with that. Where does this resilience in the white flags and players that used imports it's coming from because we would expect is that this ruling at the end of the day benefit, those who are the traditional big players and who have scales and why are we what's keeping you from expanding market share and expanding margins if your competitor has a lower advantage. That's my number one question. My second question regards it's a little bit of a Oxiteno and Ultracargo, we have seen disruptions in our skiing operations and some have mentioned disruption that could affect the [Indiscernible] conflicts in terms of the supply chain. Are any of Oxiteno's operations indirectly affected by the disruptions with them or Ultracargo, Ultracargo they started the business in the region? That is my second question. Thank you. André Pires: Hi, Gabriel. Thanks for the questions. The question number one about the competitive moves of the white flags, well, they have a business model that is efficient especially in an environment that we do not see a lot of growth from the part of the consumer, the wallet the fact in the fuel distribution business in an environment where unemployment remains high, disposable income remains low. It's very, very efficient for players that do have a business model that are more lean, they had some scale in the areas that we operate. They have basically lower overheads, less investments in their gas stations. So when the main decision making impact is price, I mean they have a business model that remains very resilient and very competitive. We structurally believe that a gas station that offers differentiation through convenience to innovation over time tends to recover this market share. But for that, we need an economic dynamic that is different in the economic dynamic we are living in. So to answer your question, the expected recovery in terms of market share from the big players versus the white flags I think are very dependent today on the recovery of economic activity, as for the issue with [indiscernible] there is no impact for Oxiteno whatsoever and neither there is an impact for the Ultracargo, so this is not related to any of our two businesses.

Thank you. That was very clear.

Our next question comes from Frank McGann from Bank of America. Please go ahead with your question.

Okay, thank you very much. Yes, just continuing with Ipiranga, it appears that you did not add any stores in the quarter. And also for the company as a whole, CapEx is quite low. So I was just wondering what your thoughts are in terms of growth, in terms of service stations this year as well as in the other businesses and an overall CapEx if you could provide a little bit of a view on that? André Pires: Okay. Hi Frank. Thanks for the question. Well, yes I mean basically when we look at the first quarter of 2019, we have the same number of gross additions and churn. So we added 43 or inaugurated 43 new stations. And the churn was coincidentally also 43 and the reason, I mean there are few reasons for that. First as you know there is a seasonality in terms of inauguration of gas stations in our business to reimburse you as well. Normally this is analysis more towards the second semester of the year, so it was a weaker quarter in terms of inaugurations. Nevertheless, we reduced our backlog from 300 to 250, 250 gas stations that had been already contracted for, paid for and has to be inaugurated. When you look at CapEx, the CapEx was really below what we would, we were expecting for the first quarter take into consideration our budget, also partially due to some seasonality impact and partially due to waiting for the right moment and looking for the ideal returns in terms of the investments we were making. It's important to mention that normally doing a regular year at Ultrapar, there is a catch up after the first and the second quarters towards the end of the year as well. However, it doesn't mean that we're…

Okay, great. Very, very interesting. Thanks. If I could follow-up to just a kind of a bigger picture question, in terms of how you're seeing the downstream business, I mean, you're obviously in a key portion of that with distribution and you've mentioned that potentially you could look at Petrobras refinery offerings, but whether you would do that or would end up doing anything or not on that front, do you see the opening up of the refining business to potentially include more players as having is potentially affecting the business in a way that would positively or negatively potentially impact Ipiranga? André Pires: It's a very good question Frank. I think conceptually an environment where you do not have a monopolistic supplier, right? Being the -- being among the largest retail players in the market like that would give us very important bargaining power when we're talking to a supplier, right? So a more diversified supply base. I think it's positive for a large distribution company such as ourselves is also positive for the end consumer, it will become a more fluid competitive environment. Obviously today, I mean, we are in an environment where the fact that we are very important, a large player and eventually send specific regions of the country like the South or southeast, we are very big business users, any advantage from a cost point of view, right, so, an environment with very clear rules and more players. I mean, it's basically technically or conceptually more positive for players such as Ipiranga. Obviously, as I mentioned before, I mean we have like an obligation, right, to be very close to this process to investigate if it makes sense for us to participate or not. But in any case, from a distributor point of view, conceptually, a change such as this one is very close.

Okay. Thank you very much.

Our next question comes from Luiz Carvalho from Banco UBS. Please go ahead with your question.

Hi, André. Thanks for taking the question again. I just like to make one, actually two additional questions. One question and then one follow-up, the first one in about Oxiteno, I remember in the past you mentioning that for every sense of real appreciation, which should see it around BRL 40 million of additional EBITDA in the company right? I just like to chat -- to check with you if this correlation is still valid now because despite of a weaker Real, we did not see -- how can I say this offset on the results as of now. And the second one, I like to come back to one question made in the Portuguese call maybe in a different way, in terms of the comparison, on EBITDA growth for 2018. What numbers, what the number you're using for the achieve for the -- for the let's say 2018 verses 2019, can we use the feature for the number or should make the DNA adjustment? Thank you. André Pires: Hi, Luiz. Thanks for the questions. No, in terms of Oxiteno, yes, for each BRL 0.10 of currency devaluation, you can estimate BRL 40 million to BRL 50 million of additional debt [ph], this is absolutely -- remains absolutely the case. But what happened in the first quarter was that the acceleration of the devaluation happened more towards the end of the first quarter, if you compare to the first quarter of last year, and this impact was not enough, was not sufficient when compared to the impact of the very strong drop of the glycol or the price of the glycol or the margins of the commodities, but this remains the case and this should help the results in the second quarter definitely even with the pressure on glycol margins, the currency devaluation should benefit the results on the second quarter. As for your second question that's a very, I mean, basically, I'll try to repeat to answer the question the same way but essentially trying to extend a little bit more. We see growth in our consolidated EBITDA comparing apples-to-apples, right? I mean you saw in 2018. We had one-offs that some of them impacted negatively the EBITDA, some models impacted positively EBITDA, so if you take out these non-recurring items, we will see growth on the EBITDA is our expectation track to see EBITDA growing 2019.

Okay. Thank you very much.

[Operator Instructions] Our next question comes from Lilyanna Yang of HSBC. Please go ahead with your question.

Hi, thanks for the opportunity. You mentioned the active portfolio management and sometime in eyes of growth opportunities, right? So give your leverage as a 2.65 times today the slowly improvement in the economic environment. And could you give more color on the growth opportunities, it does not seem to be on refining. It looks like it could be more on logistics, is there something out there and help, would you from that growth meaning. Yes, how sizable that could be? And any color on that would be helpful. And a second question is more on Ipiranga. So is it possible to see Ipiranga closing the profitability gap to rise in combined seaways and how they think Ipiranga could achieve that? Thanks. André Pires: Hi, Lilyanna. Thanks for questions. In terms of vision for the portfolio, we see some opportunities that we started in a way to execute with the auctions that we want recently for terminals import. So basically, we see in the short-term in Brazil opportunities that are related to logistics infrastructure. So we are focusing on and executing on the earth. And we see and we follow-up very closely the initiatives that Petrobras and that has been in a way, either announced or commented by Petrobras as its objective to reduce some of its exposure in some sectors. So obviously refining is one of them that we are following up and I mentioned during the Portuguese call and we consider ourselves a pure distribution company. It's not part of our regional strategy to become a producer of refined fuel, but eventually, if the opportunity makes sense, we are going to investigate. Actually, we're going to investigate other opportunities that are eventually available related to some other Petrobras assets. Now in terms of funding this growth and basically,…

Okay, thanks. Maybe on the Ipiranga question and the profitability gap to [indiscernible] if you can comment. André Pires: Yes, in terms of the profitability gap, well, basically I mean as I mentioned before, I mean we've been improving our unit value SG&A per cubic meter, with this sequentially improving our EBITDA since the second semester of last year, we don't have a focus specifically in closing the gap. Our focus is to keep on improving our profitability. So we think that we are track for that for stability has been improving. EBITDA per cubic meter has been improving as well. And we see that this trajectory should continue. Obviously this will happen more consistently and a more strongly if we see the economy healthy, right, if we see some headwind, some tailwind from the economy. So unfortunately for the beginning of this year, this hasn't happened. But then we are focusing on this improvement, and we are very consistent in working towards that.

Okay. Thanks, André.

Ladies and gentlemen, this concludes the question-and-answer session. At this time, I would like to turn the conference call back over to Mr. Pires for any closing remarks. André Pires: Well, thank you all for the participation on the call. As always our IR team is available to answer some of your other questions. Thank you very much. And hope to see you all on the second quarter results call in August. Thank you.

Thank you. This concludes today's Ultrapar's 1Q '19 results conference call. You may now disconnect your lines at this time.