Good morning, ladies and gentlemen. Welcome to Ambipar's Earnings Call for the Second Quarter of 2024. 2025, sorry. We have Mr. Joao Arruda, the CFO, and Pedro Petersen, our Investor Relations Director at Ambipar. We'd like to let you know that this earnings call is being recorded, and you can replay and listen to the recording on the company's investor relations website. We'd like to let you know that all participants will only be watching with their mics off. Soon after, we'll begin the Q&A session where more information and instructions will be provided. Before we proceed, I want to remind you that certain information in this earnings call can have projections or forecasts on future expectations. Such information is subject to risks that are known or unknown that could make certain expectations not become concrete or be substantially different than what was expected.
Now, we'll pass the floor on to Mr. Arruda as he begins the presentation. Please, Mr. Arruda, you may proceed.
Dear investors, welcome to Ambipar's Earnings Call for the Second Quarter of 2025. We ended the semester with relevant advances, even despite a scenario of high interest rates and more moderate economic activity. The period maintained a trajectory of operational consistency, growth in the volumes of treated waste, and in the provision of industrial services. We continue to integrate our environmental services platform, focusing on the quality of customer service and financial discipline. For the fourth consecutive quarter, we've maintained stable leverage, closing the period at 2.5 x net debt to EBITDA. Now we'll move on to the quarter's highlights. The net revenue was BRL 1.8 billion, a growth of 25.2% compared to the second quarter last year, and an increase of 1.8% compared with the first quarter of 2025.
We reached an EBITDA of BRL 585.7 million, an increase of 34.2% versus the second quarter of 2024, and 6.1% compared to the first quarter of 2025. Our EBITDA margin reached 33.1%, which was an expansion of 2.2 percentage points compared to the second quarter of 2024. Our operating cash flow reached BRL 431.9 million, with a cash flow before financing, which considers operating cash flow discounted from leases, CapEx, and acquisitions, of BRL 103 million. Our operating ROIC, excluding intangibles, reached 28.8%, an increase of 0.6%. Our consolidated leverage was stable, reaching 2.66x net debt to EBITDA. Besides this, our average term ended at 5.3x at the end of the quarter. The ramp-up of the industries continued to contribute to these excellent results. On the next slide, we'll approach the operational KPIs, and then we'll get into the results.
In the environment, the volume of treated waste grew 64.9%, with a highlight of specialized handling and metals, also levered by contracts in the mining sector and also scrap metal capture segments. We maintained a volume valued almost 4x greater than that for the final estimation. Our consolidated average ticket increased 6.3% compared to the previous year. On the next slide, we'll show you response results. Our utilization rate of labor reached 81.3%, an increase of 15.7% in regards to the second quarter of 2024 and slightly above the previous quarter. This raised the revenue per employee to BRL 113,000, as you can see on the center of the page.
On the right side of the page, you have a mix of revenues keeping concentrated as a subscription and field services, representing almost 99% of the total revenue, which reinforces the predictability and the resilience of this division in the business. Now let's move on to the next slide. We reached a consolidated net revenue of BRL 1.8 billion in the second quarter of 2025, which grew 25.2% in regards to the same period last year, and 1.8% compared to the previous quarter. In the half-year comparison, we grew 30.9%, reaching BRL 3.5 billion in net revenue. As you can see, the environment was the subsidiary that most contributed with the growth in the year. Despite this, the response team continues to work in different geographies to accelerate growth, especially in North America. Now we'll head to the next slide where we will talk about our EBITDA and the margins.
The EBITDA in the second quarter of 2025 reached BRL 585.7 million, representing a growth of 34.2% compared to the second quarter of 2024 and 6.1% compared to the previous quarter. In the semester, our growth was even greater. We had growth of 40.3% compared to the previous year, reaching a consolidated margin of 32.4%. The margin also performed satisfactorily, and this was basically supported by four factors: greater contribution from the environment, which valued metal waste, sold carbon credits from reforestation, and expanded specialized handling of materials, all services with higher margins. Secondly, the best international performance and response, initial efficiency, gains from the Conecta Project, and integration of people. Finally, some work that we began to perform for contractual and price adjustments. On the next slide, we're going to talk about our net income.
In this quarter, we had a loss of BRL 134.1 million, and in the first half of the year, we reached a negative of BRL 299 million. We believe that the most appropriate comparison would be the half-yearly one, where we present certain stability about higher financial expenses, which is an indication that the efficiency and organic growth initiatives have compensated for the higher financial burdens. Now, on our next slide, we're going to talk about our CapEx. This quarter, we were able to keep a strategy of centralizing our investments in equipment and vehicles in the holding to expand scale and improve negotiations with suppliers. In the quarter, our CapEx reached BRL 271.9 million, which was influenced by the anticipation of purchases to ensure price and availability.
In the first half of the year, our CapEx as a percentage of our net revenue was 13.3%, a level that is closer to our historical average. Let's move on to the next slide now about cash flow. Our cash flow before our debt services, as you can see on the right side, was BRL 282.3 million in the first half of 2025, which is BRL 161 million above the first half of last year. We still have cash conversion growth, and this will allow us to close the gap for cash generation to handle the financial expenses. Once again, our integration and efficiency efforts are going to be super key in this process. Now let's move on to the next slide where we can talk about the level of debt. We were able to keep our leverage relatively stable with a slight increase from 2.5 x- 2.56 x.
We're going to continue the deleveraging process, seeking to operate with even lower levels of debt, cutting down on costs, and prioritizing investments that can generate profitable growth. In a high-interest environment, we're pleased to maintain stable leverage, relying only on operating cash generation. Now we'll head to the next slide to talk about our debt profile. In this quarter, there were no significant issuances or amortizations. We had an extended debt term of over four, five years, sorry, and an index based on CDI mainly. Our robust growth with an ongoing cut on costs and eventual interest rate cuts should lead us to cash generation growth and possible potential deleveraging the group. Now we'll head to our last slide where we can talk about our strategy, which is focused on five main pillars: our team, governance, integration, financial discipline, and clear communication.
As a team, we've been increasingly in tune and focused on generating results from our operations, our service, our shared service center, and also at the corporate level. I want to highlight reinforcements in the governance, health, and safety teams that have really raised our level. In governance, we've been implementing a global hotline, which is the highest standard to guarantee that what's right is practiced in all geographies and positions. In regards to integration, we're really happy with 22 incorporations of entities that took place up until June this year to have more efficiency in our tax processes and integrating processes and functions. In financial discipline, we kept our leverage stable, and we were able to standardize our performance assessments for managers based on cash flow generation. In communication, we've been talking more, but we've also been listening more.
In our roadshows with investors, we've heard from the market about the importance of remaining focused internally and evolving in our governance. Both of these agendas are priorities for the company. In 2025, we've seen more challenges than what we expected: tariff and political disputes, uncertainty in industrial activity, and higher interest rates, which are all obstacles that we're going to overcome, anchored by our solid business model. We remain committed to strengthening Ambipar and generating sustainable value for shareholders. I also want to thank our employees for their daily commitment that makes this all possible. Now we'll open it up for Q&A. We'll begin our Q&A session. This is for investors and analysts. If you have a question in writing, please send it through the Q&A icon. Let us know about your name, company, and your question. Please wait while we collect questions.
Our next question comes from Andre Ferreira, Bradesco BBI.
If you could talk about the savings that you expect with the reorganization in May?
Good morning, Andre. This is Pedro. I just want to recap here and talk about the corporate restructuring with the acquisition of shares from the minority shareholders in our operational subsidiaries. This is a transformational movement, and we've been very excited about this. It effectively transforms Ambipar in a partnership, aligning everyone that's considered key to the delivery of our results. We've already seen a major difference ever since the announcement in the alignment, team spirit, and with everyone involved in the reorganization. The team involved has already been participating in relevant projects that are essential to our journey for integration and cash generation.
Here I'm talking about process revision projects, personnel efficiency, and where we review responsibilities, merits, and eliminate any exceeding amount of people in certain positions. These are all units that are going to be incorporated, merging the same tax ID, which should lead to tax savings as well, sharing fleets also of customers. When you add up all of these effects, it really is very relevant how we've been seeing this internally. It's just important to highlight that we're still completing some documentation and approvals in this process so that we can complete this corporate restructuring. Within our strategy for the completion of this process, even despite financial expenses, it's a real essential and transformational movement for the group.
If I could also add on, Andre, good morning and thanks for the question. The first step and the first big lever for value creation here and gains should come from this project that focuses on accelerating the reorganization of the companies we already have. As we've seen, up until June this year, we performed 22 incorporations of tax IDs, corporate tax IDs, or in Brazil, what we call the CNPJ. In Brazil, we have 180. We've already done 22, so we were able to accelerate this process prior to this reorganization, but we should accelerate this even more with the speed of the incorporation once we complete this process. As Pedro mentioned, we're still in this completion and closure process. That's the first big value lever. Then we would be able to generate fiscal savings. As these numbers become more material, we'll be able to provide this to the market.
If you look at last year, our tax expenses and what we spent and what we should end the year with due to this reorganization and the savings is really material. This is an important number. We're not going to bring this to the market because we don't have the final number yet. As you all know, we've been supported by PwC in this process. It's an important vertical. The next vertical that will also enable significant gains in this process, as Pedro mentioned, is the elimination of roles and positions that have two people doing the same things. Basically, personnel is definitely an asset, but also a big cost weight. We need to search for synergies whenever we can and capture these. That's another vertical we've been looking at carefully in detail since this process is ongoing.
Finally, one thing we've been also looking at is equipment allocation in different verticals. When I had the minority shareholders, this was a challenge in the process where you naturally would centralize the use of equipment in the group, but that's mainly due to the guidance that's been coming along. We've been now able to allocate this in a more centralized manner. That brings in important gains. As we advance, we'll share this information in the market. Finally, the centralization of other relevant costs, procurement, and supplies in a more centralized manner is something we're looking at carefully with a big focus. Once we've completed this process, we would then provide more clarity from a financial perspective and the numbers also. These should be the big value creation levers as well.
Our next question is also coming from Mr. Andre Ferreira at Bradesco BBI.
Hi there. What do you imagine will be the leverage curve in the end of 2025 and 2026?
Andrea, I think it's important to give you a broader perspective about the last exercises in the company. We've been really focused on this in-house and our cash generation efficiency projects with the goal of reducing leverage through the different strong points we have and cash generation of the business itself. If we look at three or four quarters back, as presented in our presentation, we've been reducing our leverage in this longer term. More recently, with the increment of the interest rates, as we grew a lot over time, we incremented the company's debt level to be able to handle this growth. We have been paying higher financial expenses. Basically, in the last quarter, we had a bit of stability in this metric. That is what we've been working on now.
We consider it to be satisfactory if we look at substantially higher financial expenses than what we had last year. The company's cash generation and the EBITDA growth has allowed us to keep a pretty stable leverage.
If I could just contribute to this, Pedro, when we look at this result, we see it was very successful, and this is a reflex of the work we've been doing and these efficiency projects as well to bring in more results for the group before the debt service. If you look at this, Andrea, you'll see in our free cash flow before our debt services in the first semester last year compared to this year, there is an increment of BRL 460 million.
What this means is if you look at our EBITDA for the first half of the year last year, before the debt services, you have a metric of 15% cash conversion, as we call it. In the first six months of 2025, the cash conversion went from 15% last year to 25%. Of course, we've been working on this, and this is not Ambipar 's privilege exclusively, but we're facing a more adverse interest scenario. We're all in this scenario, and that has kind of eaten away from these gains. We've been delivering this in the financial services. We look at the historical results, and that's not only for this quarter, but the last four quarters with very stable results. We should be very close to the history.
Our next question comes from Mr. Andre Ferreira at Bradesco BBI.
Could you guys talk about the increase in the CapEx and net revenue in the second quarter if it was a one-off or if you and what you imagine will be the recurring number for 2025 in the second semester in 2026?
Hi, Andre. Pedro once again. We have some different contract engagements going on that take this CapEx a little upwards, let's say. As well as we've, you'll see that we performed more CapEx through the holding because we've been trying to have this strategy to centralize our procurement, to negotiate with greater scale, and provide predictability to our suppliers. Of course, providing more predictability with a more clear partnership and higher volumes and better prices as well and savings for Ambipar whenever we buy vehicles and our overall fleets. Basically, we've noticed we've been working on this efficiency route in investments as well.
In this quarter specifically and in this process, we have anticipated a few procurements with two suppliers specifically due to these processes with our contract and renewals and our fleets. If we were to exclude these accounts, we would be talking about a CapEx level that's relatively similar with the previous quarter. We continue to be very focused on keeping our investments with a level that's more similar to the recent history. When we occasionally have this increment, we transition to the holding and structure this segment with more scale and predictability with our suppliers.
Just to add on here, this is a bit of the result with the integration and also bringing in a bit more predictability in this process for equipment acquisition.
In this quarter, we have a one-off effect with the centralization because we had two purchases with important suppliers, but in a more centralized manner for different verticals in the group. Prior to this work with reorganizing our shareholding structure, as I mentioned previously, the idea had been to bring in more safety, better cost conditions, not only for CapEx, as I mentioned, it's an important project, but also for different initiatives with purchases of tires, energy, maintenance. This is the new guidance in the company. That's just to share a bit of the results in the quarter. We should really be pursuing this and what we've been communicating with the market in regards to our CapEx for the year.
I want to remind you all to submit questions in writing. Please send them through the Q&A icon, informing your name and company, and then your question. Please wait while we collect more questions. Our next question comes from Mr. Julian Rios at SMBC Nikko Securities.
Could you explain what is driving CapEx intensity for both the expansion and maintenance in 2025, with CapEx reaching 13.3% of our net revenue in the first half of 2025 versus 9.5% at the first half of 2024? What would be the CapEx guidance for investments in 2025? Do you expect to have a free cash flow that's positive after cash interest for 2025?
Thank you. Julian, thanks for the question. I think we've covered CapEx a bit in the previous question, but just to highlight this a bit more, we expect to and have been working on keeping historical levels. We don't provide guidance as a company policy, but it's what we've been working on a lot.
Just this quarter, we had this increment when it comes to centralization and efficiency, and this can happen. If you look at longer horizons, the trend we've been working towards is to keep up with the historical level. In regards to cash flow, 2025 is still a more challenging year. We've been handling a peak of interest rates where our debt is exposed. Our bonds are hedged according to CDI, but 90% of our debt is index. We had an increment that was very significant for financial expenses. With all of the efficiency projects we've been working on internally, we hope to have a stronger year throughout 2025, especially if we have a reversal or reduction in the interest rates in Brazil.
To submit a question in writing, please select this Q&A icon to provide your name and company. Please wait while we collect more questions. Our next question is from (Kalebe Teixeira Fonseca).
Good morning. Could you talk about the evolution of our response margins in North America?
Hi, (Kalabic). Thanks for the question. We're excited with North America, and it's important to remember we have new leadership in the region that's been working in that market for 20 years with a lot of proximity with the port sectors, infrastructure sectors, refining oil and gas. More and more, we've been working on this and grown our pipeline of contracts in these sectors. Our view is that from now on, we'll really be commercially successful in more long-term contracts in the region. In regards to margins, naturally, when we grow our revenue in the region, we'll have scale gains, and that should also lead to healthy margins. In this quarter specifically, we had a bit more of non-recurrence.
You can see there was a bit of a reversal in the expenses, which is why we're above normalized levels. If we look at contracts and what we see as healthy operations in that region, then we should consider historical levels that are in line with peers in the region. We would be talking about double-digit levels, however, below what was achieved in this semester.
The submitted question in writing, please send it through the Q&A icon, informing your name, company, and question. Please wait while we collect more questions. Our next question is from Julian Rios at SMBC Nikko Securities.
Do you imagine any negative or positive impacts in both areas in the company? Any increases in acquisition costs or operational expenses? Some impacts in revenue generation or gross margins? Thanks.
Thanks, Julian, for the question. Our company has a characteristic of being a service provider, protecting our customers environmentally or from a labor safety perspective. That's a very unique characteristic for our business. We don't have that many transactions, let's say, among or between countries. We don't export that many services or equipment, and we provide services locally. We don't expect substantial impacts of the tariffs in our business. We also don't expect increases in costs of supplies or operational expenses because these are mainly equipment, fleets, vehicles. We haven't seen significant inflation of these goods. These operational expenses are really connected to personnel. In these initiatives, very little impact. Generally speaking, that's what we've noticed.
In regards to the revenues or margins, when we consider our characteristic of services, capacity, and all of the different sectors, this is a demand for services geared towards sustainability, waste management, recycling, environmental compliance, cleaning, industrial cleaning, maintenance of facilities, and monitoring. We have a lot of diversification geographically in services. At this moment, we see some customer sectors that maybe have variations in demand, but once again, there haven't been relevant impacts in revenues or margin.
To submit a question, you should select that through a Q&A, letting us know about your name, company, and question. Please wait while we collect more information and questions. The Q&A session has ended, and we'll pass the floor on to the company for their final remarks.
To wrap up, I want to thank all of the Ambipar employees for contributing daily to sustainability and safety of our customers and the overall society. The earnings call at Ambipar has officially ended. We want to thank you all for your participation and have a great day.