Earnings call transcript: Vibra Energia Q3 2025 misses EPS, stock rises

Vibra Energia (VBBR3) reported its third-quarter 2025 earnings, missing analysts’ expectations on earnings per share (EPS) but exceeding revenue forecasts. The company reported an EPS of 0.44 USD, falling short of the forecasted 0.5104 USD, marking a surprise of -13.79%. Despite this, Vibra’s revenue reached 48.56 billion USD, surpassing the anticipated 48.1 billion USD. Following the earnings release, Vibra Energia’s stock price increased by 3%, reflecting a positive market reaction despite the earnings miss.

Key Takeaways

• Vibra Energia’s Q3 EPS missed analyst expectations by 13.79%.
• Revenue exceeded forecasts, reaching 48.56 billion USD.
• Stock price increased by 3% post-earnings announcement.
• Strong operational performance with a 7% YoY growth in adjusted EBITDA.
• Significant reduction in net debt and leverage.

Company Performance

Vibra Energia demonstrated robust operational performance in Q3 2025, with a notable adjusted EBITDA growth of 7% year-over-year, reaching 1.8 billion BRL. The company also reported an adjusted net income of 546 million BRL and achieved its best operating cash flow in seven years at 3.5 billion BRL. Vibra’s strategic focus on debt reduction was evident with a net debt decrease of 2.3 billion BRL, lowering leverage from 2.9x to 2.7x, with a target of 2.5x by year-end.

Financial Highlights

• Revenue: 48.56 billion USD, exceeding forecasts by 0.96%.
• Earnings per share: 0.44 USD, below the forecast of 0.5104 USD.
• Adjusted EBITDA: 1.8 billion BRL, a 7% increase YoY.
• Operating Cash Flow: 3.5 billion BRL, highest in seven years.
• Net Debt Reduction: 2.3 billion BRL.

Earnings vs. Forecast

Vibra Energia’s actual EPS of 0.44 USD was below the forecasted 0.5104 USD, resulting in a negative surprise of 13.79%. However, the company’s revenue of 48.56 billion USD surpassed expectations by 0.96%, indicating strong sales performance despite the earnings shortfall.

Market Reaction

Following the earnings announcement, Vibra Energia’s stock rose by 3%, closing at 24.32 USD. The positive market reaction suggests investor confidence in the company’s revenue growth and strategic initiatives, despite the EPS miss. The stock’s performance is notable given its proximity to the 52-week high of 25.37 USD.

Outlook & Guidance

Vibra Energia expects a stronger fourth quarter with improvements in volumes and margins. The company is focused on further deleveraging, aiming for a leverage ratio below 2x in upcoming quarters. Additionally, Vibra plans to expand its presence in the gas, service stations, retail, and B2B segments.

Executive Commentary

CEO Ernesto Pousada expressed optimism about future quarters and 2026, highlighting the company’s focus on volume growth with margin enhancement. He also emphasized Vibra’s commitment to combating illegal practices, which has positively impacted market share.

Risks and Challenges

• Potential volatility in global oil prices affecting margins.
• Regulatory changes in the energy sector.
• Competition in the expanding service station market.
• Macroeconomic pressures impacting consumer demand.
• Challenges in maintaining sales growth amid market saturation.

Q&A

During the earnings call, analysts inquired about Vibra’s working capital management and branding contract strategies. The potential impacts of energy sector reforms and the company’s dividend and capital allocation strategies were also discussed, providing insights into Vibra’s strategic planning and risk management.

Full transcript - Vibra Energia SA (VBBR3) Q3 2025:

Conference Moderator: Good morning, ladies and gentlemen. Welcome to the earnings release call of Vibra Energia to discuss the results of the earnings release of the third quarter of 2025. This conference is being recorded, and the replay will be available through the website of the company, ri.vibraenergia.com.br. The presentation is also available for download. We would like to let you know that participants will be in listen-only mode during the presentation. Immediately after, we are going to start the question and answer session when further instructions will be provided. There is translation available by clicking on "Interpretation." Click and select the language of your preference.

For those listening to the conference in English, the original audio may be muted by selecting "Mute original audio." Before moving on, we would like to mention that forward-looking statements are based on the beliefs and assumptions of the company management and on information currently available. They involve risks and uncertainties because they relate to future events and, therefore, depend on circumstances that may or may not occur. Investors, analysts, and journalists should understand that conditions related to macroeconomic conditions, the industry, and other factors can also cause results to differ materially from those expressed in such forward-looking statements. We have here with us today Mr. Ernesto Pousada, CEO of Vibra Energia, and Mr. Augusto Ribeiro, CFO, in addition to some executives of the company. I would like now to hand it over to Mr. Ernesto Pousada to start the presentation. Thank you. You may proceed.

Ernesto Pousada, CEO, Vibra Energia: Bom dia a todos.

Conference Moderator: Good morning. It’s a pleasure to be here, reviewing with you the results of the third quarter of 2025. In the first slide, we have one more quarter with very consistent execution and very important regulatory advances. In the quarter, the operating cash flow was BRL 3.5 billion. As we said in the previous call, a very active management of working capital. This is the best operating cash flow of the company for the past seven years. We also experienced a reduction of BRL 2.3 billion in net debt, reducing leverage. It had been 2.9 times in the second quarter, and now we are moving towards 2.5 times for the fourth quarter, reaching in this quarter 2.7 times. We have reviewed the COMEX guidance because of the market situations, containment, so we have provided new guidance.

In the quarter, there was also an important regulatory progression so that we can have really an industry of fields where all players can play by the same rules. We are highly confident that what we have been observing will be consistent, continuous, and will be maintained throughout time. The country, the industry see it as something very relevant for upcoming years. There is no silver bullet to overcome the difficulties over a short period of time, but I’m really positive that this is going to be maintained, and in the coming quarters, we are going to show you more and more advances. Adjusted EBITDA margin was BRL 177 per cubic meter, with an increase of our commercial margin. It reached BRL 169 per cubic meter. There was an increase over the first and second quarter this year. 23.8% is our market share.

We maintain our gradual journey of increase in share. The company has been progressing in growth, increasing its market share, and showing growth of sales margin at the same time. There were an addition of 117 new service stations, but our pipeline of branded stations is very robust, and we are very confident that in future quarters, we’ll keep on opening new service stations, reaching new levels of branded stations. There was also a 6% increase of the monthly average volume over the second quarter of 2025. Lubricants. We had a record volume in the quarter, and we have also created a business unit for lubricants led by Marcelo Bragança, so that we can have further focus on lubricants, speeding up the growth of the business. ROIC in the quarter was 13.8%. It’s a quarter that reinforces once again our consistent execution, highly focused on deleveraging and cash generation.

Let me now hand it over to Augusto. Good morning. Before we start. As we’ve done in previous quarter, our numbers do not include LLC income. The third quarter of 2024 was the last one. Here we have just some direct comparisons. It impacts our power to make comparisons, but I’m going to make clarifications. Except for leverage and net profit, all the other elements exclude that. Vibra, in the third quarter, reached BRL 1.8 billion of adjusted EBITDA. As opposed to the second and third quarter of 2025, there were some extemporary tax, credit, inventory impacts, and it somewhat impacts the quarter-over-quarter analysis. Adjusted EBITDA of Vibra, there was a growth of 7% of adjusted EBITDA year over year for Vibra. Operating cash flow, BRL 3.5 billion, very significant number. As a result of everything that we’ve done in terms of operations, active management of suppliers, inventory management.

We’ve mentioned that in the second quarter of 2025, there was the risk of draft discounts, then the negative exclusion impacting all the results. In addition to stronger results and increase in margin, it’s normal to expect margin increase in the second half of the year, but our third quarter was really special. Adjusted net income, we call it adjusted net income because we exclude the effect of future contracts of COMEX, and we’ve reached BRL 546 million adjusted net income. This is a slide that I particularly like. This is where I can show you a description of the results of Vibra, not quarter over quarter, but also a long-term understanding of the performance of the company. In terms of volume, there was a 6% increase over the second quarter of 2025, and year over year, as we mentioned before, there was the exclusion of.

Fuel oil, which has lost relevance in our portfolio. If we exclude that, the company has grown 0.5% in volume. With our strategy of growth, branded stations, we probably will have increased volume for the upcoming quarter, especially 2026. Adjusted expenses, there was a 4% increase over the second quarter of 2025. There are some additional events, so expenses, which were 100% just during the year of 2025, which were not in 2024. Some specific channels developed throughout the year, and they generate additional freight expenses. They are positive in results, but they impact expenses. On top of all of that, and of course, this is all part of our strategy of growing margins, but we can see that there is an opportunity, and Ernesto and I have been emphasizing that. We have been increasing and will keep on increasing our focus on expenses, cost, or expenses.

We are going to focus on that. We are going to say more to tell you in upcoming quarters. Now, concerning adjusted EBITDA margin, we have reached BRL 177 per cubic meter. The commercial margin is what we sell, distribute, have cost, operational expenses. It is the margin that we have the most control over, and we work it day after day to improve it. In the third quarter of 2024, it was BRL 155. Now, the third quarter, BRL 169, BRL 175. Now, let’s see the next slide. In terms of capital allocation, our leverage and net income include the effect of LLC. We excluded the effect in 2.9 times. You probably recall that we mentioned our ambition to get to 2.5 times by the end of 2025. We are on track.

We’ve reached leverage of 2.7 times in the end of the third quarter with a reduction of net debt, as shown by Ernesto, of BRL 2.3 billion and cash generation of BRL 6.4, 6.5 billion. That cash, part of that has been used to reduce our gross debt, BRL 600 million in the quarter, but we’ve already started the fourth quarter maintaining our discussion in best capital allocation to have continuous reduction of our gross debt, especially because of interest rates. CapEx, we probably will close 2025 above 2024, but with a completely different mix. If we consider, for example, bonus for clients in 2024, it was about 21% of the total CapEx. This level in 2025 is about 40% without increasing significantly our CapEx. You see, trying to improve investment leverage and coming up with internal funding.

This is the strategy that we are going to maintain throughout the next quarter and also next year. Adjusted net income was BRL 546 million, and we’ve announced the payment interest on rate of BRL 350 million to be paid in the first quarter next year. Next slide. We can show you retail. When we make the comparisons quarter over quarter, excluding inventory effects, having them really comparable, there was an increase of 15% as opposed to the second quarter and 11% period over period. This profitability helps us in terms of expansion of service stations. Our volume has been increasing. That is the increase in terms of total volume, and our market share, which is stable in our branded network with growth. If we bring together what’s like and our branded stores, we have had a growth of 3 percentage points when we have branded and non-branded market share.

The next slide, we have 7,922 service stations. We are now going to start showing you not only our net balance, but also inclusion and exclusion. There were 117 new stations, and we decommissioned 184 with an increase of our average volume of 6%. BRMN. We added 123 stores year over year and advertised few. We maintained our market share leadership with 41.4%. Growth of 5 percentage points in our total mix of sales with 21.7% coming from the volume of advertised fuel. Now, B2B. Adjusted EBITDA was BRL 563 million, increasing volume in the third quarter compared to the second quarter of 7%. Diesel had a 9% increase in the same period and aviation fuel 10% as opposed to the second quarter of 2025. In market share, our strategy. In B2B. Is to focus on our direct clients. And always trying to be the most competitive one, but.

In TRR, it depends on spot sales, very strategic to the company. As competition varies, we tend to have market share variation. When we observe direct clients, last year it was about 9% market share. B2B today is 30.4%. Still maintaining our strategy of profitable growth, and this is going to be our continuous strategy despite the fluctuations in between quarters. Next slide is about a specific announcement of the new business unit. We are going to bring you further information in 2026, but lubricants have shown a very significant increase in share in Vibra. We had a 6% growth over the second quarter of 2025, 13% year over year. Consecutive records, July, August, and September, month after month. The ninth consecutive month that we’ve got top of mind for Lubrax brand, and we have 1.2 percentage points of market share year over year. Focusing on the company management.

New CEO, Marcelo Bragança, who is the head of this unit. Very much focused on added value product mix. Review and focus on channels and regions where we believe there are further opportunities for operation. I believe this is going to really support our growth in lubricants. Here we have Comarch. EBITDA at stake was highly impacted by curtailment, 238. There was a material fact that adjusted our guidance now within a bit of range, and you know why. Curtailment has been increasing. As a consequence, it is partially offset by efficiency in expenses. Our nine months this year compared to last year, there was a 10% reduction in Comarch. New energy plants came into operation, and this balance, therefore, takes us to about BRL 1.6 billion, which is what we are going to try to find for 2025.

Operating cash flow, 622, nine months, and 198 in the third quarter. Considering we finished the recent projects, now we are going to convert EBITDA into cash. Reaching very significant numbers, 83.5% of EBITDA stake in the quarter. Now let’s go into our operational units of Comarch. 2.2 megawatts or gigawatts peak for the period in the third quarter of 2025. CapEx of GDs coming to its end, but most of it has been completed. Centralized generation, 820 gigawatts per hour in the third quarter. When we consider generation versus P50, influenced by curtailment, we reached 65%. Distributed generation, 166 gigawatts per hour. With an increasing generation as opposed to P50, reaching 91.2% in the third quarter of 2025. In our trader, we still can see the market with high volatility in future prices of energy and reduced liquidity. The company has been managing its book, being very conservative.

We prioritize company results as opposed to working on marginal risks. Therefore, we’ve been providing better results than just running for risk. Risk, liquidity, counterpart. We’ve noticed in the beginning of the year that some of the traders had problems of credit, and Comarch had a new material exposition into exposure, I mean, just 2 million exposure, something like that, which shows really our very good management and assurance. If the market offers better conditions, then we can go back into growing. Let me now hand it over or back to Ernesto. Speaking about our initiatives in ESG. We are still focusing on complying with the movement of zero-sex violence against children and adolescents. There was a very important meeting with 70 CEOs trying to get enhanced drive. Vibra is leading a movement like that so that we can leave a legacy to our country.

We’ve also launched here in Cidade Nova, here in Rio de Janeiro, a plan called Cidade Inova 2030. We agreed on some indicators for the community. We celebrated on August 25, the National Volunteer Day. Many volunteers were engaged in actions of education, culture, and health to change the community and really leave a legacy back. In terms of environment, Vibra will be at COP30 talking about energy transition. We have been a pioneer, the first company to import SAF, sustainable aviation fuel, and we had a partnership. We made a partnership with Embraer to run some tests and start using this biofuel. Vibra has a commitment of living legacies and also living benefits to the country and to the communities where we work. Before going into the Q&A, once again, our company has been showing consistency and the focus of management on delivering results.

In the results of the second quarter, we said that we were going to work on cash generation and reducing leverage. We went from 2.9 to 2.7 times, and we are moving towards delivering 2.5 times leverage of net debt over EBITDA. Capital allocation is still a priority of our management. Always focusing on where to best allocate capital, one of the main drivers of our management. We are highly optimistic with future quarters and 2026. A better regulatory landscape is just so important, and as Vibra, we are going to capture the opportunities out of it. We have a pipeline of branded stations, which is quite robust, robust to show the results of retail, very positive and very exciting, showing that the regulatory environment or landscape privileges those that have a position such as ours of leadership, of commitment with quality and providing appropriate services.

The pipeline of new branded stations is very robust. We are so glad to have Marcelo Bragança taking over the unit of lubricants. We are going to have enhanced focus, which will mean speeding up the growth of the results of lubricants. In addition, we’ve had operating efficiencies. Augusto pointed out that we’ve been working on reducing our cost on logistics, bringing more efficiency, and then adding more reels per cubic meter to our margins by reducing costs. As of January next year, we are also going to move towards SG&A adjustments so that we can bring down costs. Working strong and focused to have continuous results and highly optimistic with the next moves. Said that, I hand it back to the operator. We are now going to start our Q&A session for investors and analysts. Our first question comes from Vicente Falanga with Bradesco. Ernesto Augusto, good morning.

Thank you. It’s good to see the company generating that much, much cash as expected by the market. I have two questions. Could you give us some ideas about the volume for October, November, after the operation of hidden carbon, especially for São Paulo and Rio de Janeiro? We would like to hear a bit more about optimization of working capital. We’ve noticed that it’s related with ethanol, but could you give us more details and to what extent this will be recurring? Thank you. Thank you for your question. Volumes have been increasing. The third quarter, in terms of volumes and margin, showed increased levels. We’ve reached a peak in September of the third quarter. In October, we have maintained the same pace in terms of increased margin and increased volumes, so we can see a greater traction in volumes, especially Rio and São Paulo, as you mentioned.

Especially in the auto cycle, but also with diesel. The fourth quarter, in terms of volumes and margin, is likely to be better than the third quarter. In terms of working capital, some factors that influenced the third quarter were mentioned in the second quarter. We expected that to happen in the second quarter of inventory management. It did not work, but now it was realized. There was also the draft discount in June. Some clients used credit limits and draft discount, and in the third quarter that had exactly the opposite effect. We have had active management of our suppliers that was done over the board of our whole portfolio of suppliers, trying to capture all opportunities, which takes me to the second point. What is recurring, what we can expect on the fourth quarter. We focused on working capital, such a large company with this potential. The better we manage.

The cash flow, the better for the company. Of accounts receivables, payables, and inventory levels. What we’ve been working on is focusing on inventories, bringing down the number of inventory days. This is all possible. Last year, we had BRL 1 billion reduction. Thanks to the reveal, daily meetings, everything that we’ve already shared with you. We are now obtaining the results of all these initiatives, and we are going to focus on efficiency gains in the fourth quarter as well. Thank you. The next question comes from Rodrigo Almeida with Santander. Bom dia. Good morning, Ernesto and Augusto. Algumas dúvidas aqui do nosso. I have some questions. Super interessante. First. It’s quite interesting to see the points of better volumes and the robust pipeline of branded units. Maybe you can tell us more about regions. Profile. Are we talking about urban stations, road-based stations?

De bônus ou não, assim, a gente tentar entender pouco melhor. So that we can really try to understand better. Where you intend to have your brand. Minha segunda pergunta é. My second question concerns. Also working capital and what Vicente has already asked. Could you give us some examples? The adjustments you’ve had with suppliers, maybe some examples that you could share with us. I don’t know if Petrobras is an important vector of adjustment here. We would like to have a bit more information there to try to understand. The variation and what we can expect from now on. Thank you. Obrigado, Rodrigo. Obrigado pela. Thank you, Rodrigo. Thank you for the questions. Speaking about volumes, as you’ve pointed out. Dá pouquinho mais de cor, né? Eu acho que assim, o crescimento. Growth. More exponential growth. Is observed in Rio, São Paulo, the Midwest of Brazil.

Esse ambiente mais regulado, where a highly regulated landscape tends to be impacted, right? Because we used to have illegal practice there, now we have resumed volumes there. It’s observed in all areas. Increase of branded stations, but our current network of stations selling higher volumes, we’ve been increasing the monthly mean volume. Addition of new stations. It’s important to mention that the decision was made in the end of last year to speed up the branded stations, not something recent. We are reaching a record volume of new branded stations, and the same with non-branded stations, but then structured, especially non-branded stations that we want to be closer with, to have that relation of continuity. Vibra will always optimize results. If you look closely in the quarter, we started with higher market share in the beginning of the quarter. And then it somewhat reduced because we had.

Working on speeding up our brand, so always margin, pace, share. I am very optimistic with the growth in volume and in margins for the next quarter. Augusto? To building up on it, trying to get a good balance between anticipated or post-anticipated bonification. Não tem grandes. We haven’t made any major changes here. That’s something that we’ve been monitoring closely because this is how we work in this area. Concerning suppliers, no silver bullet once again. We’ve had an action with all our suppliers trying to optimize results. If you analyze the track record with our suppliers, the results of the third quarter are very similar to our track record throughout the years. Minor ups and downs, but very similar. Trading also has an impact depending on the mix, where you imported from, and then you have more or less flexibility. All in all.

The efficiency was more obtained in accounts payable. The fourth quarter, we have that leverage in accounts payable. It’s not going to be that major, but we will have to keep on working. We hope to obtain more internal benefits, our own internal efficiency in our strategy of inventory management, than from accounts payables or receivables. Perfeito. Obrigado, pessoal. Great, thank you. Nossa próxima. The next question comes from Regis Cardoso with Exped. De Ernesto Augusto, obrigado pelo espaço, pelas perguntas. Good morning and thank you for taking my questions. Pensando no fluxo de caixa. One topic concerns cash flow on the fourth quarter. Can we focus on the line of suppliers where you had some increase there? A de é muito Petrobras, né? Fuel distribution is Petrobras, your main supplier. Anything through Comarch or any other.

Areas of your business that would justify the release of that line of suppliers? Is it just a normalization of maybe some not that common action in the past? My question is, should we expect parte dessa do, part of that flow being reduced here or not? O segundo tema, talvez, the second topic, de margens. I would like to talk more about margins and market share for the fourth quarter. In the release, you said that you expect an improvement from both sides. What can we expect when we consider volume, market share? Vamos dizer, já dava para sentir de fato o efeito da carbono oculto. Can we perceive the effects of hidden carbon operations? Is it something that’s going to come? Can we expect substantial margin improvement in the fourth quarter? Thank you. Thank you, Regis. Working capital was already mentioned. We have.

Improved our management of suppliers, but it’s just something that we used to have in the past. We can see the effect of different suppliers trading. I think there is less of a possibility to improve there, but we are not going to return that to previous levels. It’s going to be maintained in addition to expected fluctuation, right? We do not expect material fluctuations in this line. It’s going to be sustained as is. Concerning margin and market share, we’ve been observing a market in terms of volume, which is quite strong. Our ambition is that the fourth quarter can have good volume compared to previous four quarters. There is always seasonality, but we are expecting the fourth quarter to be strong in terms of volume and also some improvement of margins compared to the third quarter. O nosso foco, que eu venho falando há algum tempo.

Our focus, and I’ve been emphasizing for a while now. Grow. Volumes with margin. Vibra volume has been decreasing throughout this because of the loss of fuel oil, and it’s getting to its limit, you see? From now on, we are going to see Vibra volumes increasing. In 2026, losses from fuel oil will be less and less relevant. With the growth we’ve been observing in diesel, gasoline, ethanol, we are going to see Vibra consistently growing again. Considering the new regulatory environment, we are sure there is going to be margin progress as well. Good news. A follow-up in cash flow. Non-movable investment, since there is a line that still has some upside. Do you think you can reduce that, as it’s running over depreciation? Thank you. Yes, we’ll keep on working there.

We are trying to find all different advantages there in all lines, right, when involved fixed assets. The next question comes from Leonardo Marcondes with Bank of America. Good morning. Thank you for taking my questions. The first question is a follow-up of Rodrigo’s question. About your branding contracts. Can you please tell us what is your decision-making process into anticipated or not? What is the contract that you’ve been signing with your new contracts? With Comarch. We would like to hear from you about a nova view of the electric sector reform and what would be the impact on Comarch in the short and long run. I’ll start asking. Our branding contracts is taking us to have a payment by performance. Você deliver volume and we offer bonus. And we are focusing on getting closer to two-thirds of per performance and one-third not.

It always involves some anticipated payment and part of that per performance. This is the model that we’ve been following for branded stations. Quando a gente olha a nossa estratégia. When we analyze our strategy. Que esse é investimento de bom. We understand that this is an investment that provides good returns in a business that we know how to do it. Low risk rate. It’s something that we’ve been doing for a while, so we know how it works. We’ve been reallocating our CapEx so that we can keep on growing. This is something that we want to do and we’re going to spend up in upcoming quarters. Good returns, one investment and low risk levels. This is what we are going to look for in all our different contracts. Speaking about Comarch, it’s too early, I have to say. Things are ongoing.

We do not know really what the impact will be of 1304 we will have over Comarch. As it has been approved, it is a bill, right? A bill that has been discussed in the Congress. It would impact attainment, but you know, we still have a lot to go on, approval of the president, regulations of the ministry, and now it is going to take a while. Anything that is said now is just going to be speculation. We have to wait a little more. All approvals of our branding operations have to be approved by finance involving ticket and everything. Now we have much more stable operations. We know a lot about this business. In addition to payment before or by performance, we have enough basis. We do not need CapEx. The incremental ROIC for slow growth like that is the lowest risk kind of investment to Vibra.

It makes sense to make this investment. This balance of prepayment or postpayment or by performance payment, we always try to strike a balance. Considering regions and where we are operating. That is clear. Thank you. Just a quick follow-up. Concerning the average duration of your contract signed with new stations. In the past, it used to be five years. Do you still maintain the same duration of the contracts or have you made any changes? Exactly the same kind of pattern, about five years. Great, thank you. Great results. Nossa próxima pergunta. The next question comes from Bruno Marin with Goldman Sachs. Oi, bom dia. Vocês me ouvem? Can you hear me all right? Obrigado. Good, thank you. Great results. I have two questions. First, a follow-up on the discussion of capital allocation.

As you’ve mentioned, you got into a deleveraging journey, and that’s going to be lower than in the next quarter and probably throughout the year. How are you thinking about compensating shareholders? What level of leverage would you consider to be comfortable enough to increase the share of dividends, buyback? In terms of capital allocation, could you please tell us more about industries in which you would focus more on future acquisitions of assets? Any segments that you have in mind? My second question is a follow-up on the initial comment of Ernesto about fighting against illegal and informal practices in the industry. You were closer there. Can you tell us more elements about what’s going on? Will this agenda be maintained? It has gained momentum. Is it going to be maintained? We’d like to hear that from you. Capital allocation. About deleveraging. Vibra.

Is still trying to get a better level of leverage that would be below two times. Our ambition is to finish the year with 2.5 times leverage, and we are going to maintain our policy of distributing 40% of dividends. To get to levels below two, we will still need some quarters. To really obtain better levels. We can see capital allocation as being very important in upcoming quarters in the area of gas, service stations. We are going to focus on growth, better regulatory environment or landscape. We are going to focus on retail and B2B and increase in volume. In retail, it requires some additional capital, and we’ll be prepared to make the investments and really take the best of the opportunity. Vibra wants to be a winner in this game in which the regulatory landscape is getting better and better. Concerning the informal practices.

There are some aspects to highlight. This year alone, there was a change in CBIOs, the single-phase ethanol. Tax solidarity being applied by some of the states. Also, the hidden carbon operation closing. Some companies which operated illegally. This is generating opportunities to Vibra and to all of those that operate accordingly. I think we’ve come to a non-return point. The country has taken a different stance against all the illegal practices that we used to experience in the industry. For the first time ever, we’ve brought to the government, to the society, and to our industry and association that understanding. There is an opportunity to the country, generating taxes, reducing informal practice, illegal practice, and crimes that have been perpetrated in the industry. I think we’ve reached a point of no return, and now gradually we will go on and on. There is no.

Silver bullet once again, but we are going to keep on working so that we can gradually solve each and every one of the problems that we face. There are a number of ongoing bills in the Congress of Brazil. We have associations. We’ve been working in different initiatives, and we are going to observe a gradual improvement. The problem was not created in six months, and it will take much more than six months to solve it. It will take some years until we have a complete elimination of that, but I believe we are going to have gains quarter over quarter. Great, thank you very much. The next question comes by Taso Vasconcelos with UBS. Bom dia, Ernesto Augusto. Good morning. Primeiro, follow-up aqui nessa sua última fala sobre. First, I’d like to hear from you about dividends. Acho que ficou claro a percepção de reduzir o endividamento.

We understand that you want to go down your indebtedness level below two times. If you anticipate some amounts to this year. Não é uma opção. Is it still an option or because of cash generation that you’ve presented and the indebtedness going down gradually? That would be a possibility. Seja feito de forma mais. Even though you have gradual allocation next year in terms of sharing more and reducing interest rate. Now, in terms of Lubricant, what have you been doing? What are your main strategies of growth for the segment? Do you focus on organic expansion, M&A, and what do you expect of changes in your constant changes as a result of the reorganizations that you have announced? I’m going to start. Dividends. We are still analyzing the whole situation. There are legislative changes going on. We are analyzing all situations and eventually you’ll let you know.

A bit more about what we’re going to do if there is anything to be shared concerning dividends. We still do not have anything specific. We’re still maintaining our program of 40% distribution of dividends over net profit. Concerning your question about lubricants, I can mention a few things. We’ve observed significant growth, and we’ve had some acquisitions of distributors, which are highly active in São Paulo, in the Midwest, some areas where we operated below our expected levels. We are talking about sales of obtaining further growth and further alignment with our authorized distributors so that they can be stronger in their operations. We are still working in our operations, in our manufacturing, to have more efficiency and cost reduction as we expand the EBITDA of the lubricant business. What we expect is accelerated growth. We want to grow. We can still see relevant growth coming in Brazil.

Gaining more market share, and in segments where Lubrax operates. We still see a possibility of growth, organically speaking, in Brazil and in Latin America. We also think about growing outside Brazil. We are expanding in Argentina and others, but for our ambition to be realized of being a leader in Latin America, we will need organic growth, maybe not an acquisition, maybe a strategic partnership, and we will keep on working to identify the best way to really have the position of Latin American leaders in lubricants. In Brazil, we still see great opportunities of organic growth. Moving towards our expansion to be the leaders in Latin America, we will have to come up with strategic partnerships to consolidate growth. Marcelo’s leadership will help us act more specifically, faster. Growth had been happening, but now the idea is to speed up growth and have better results. Tá claro.

That’s great. Thank you very much. A sessão de perguntas e respostas. Our Q&A session is finished now. We would like to hand it back to Mr. Pousada for his closing remarks. I am going to close with the same level of optimism. We are highly optimistic for upcoming quarters with expansion in retail, with branding operations focused on our own network, partnership with resellers so that they can be well positioned to serve our end consumers. Our success is the success of resellers, and we want to be next to them. We are going to keep on growing, growing with them, and also branding more stations and taking it all over the country. Now we have enhanced focus on lubricants.

It’s going to lead to accelerated growth, and in upcoming quarters, we are going to focus on cost efficiency, cost reduction, adding value, and bringing more results to the company, increasing further our margins. Highly optimistic and leverage, on our main focus, which is to reduce the leverage levels, have significant cash generation, and allocating capital. Thank you very much. Have a great day. Thank you. Our call is completed now. Thank you very much for your participation. Have a great day.

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