Good morning, everyone. Welcome to Hidrovias do Brasil's earnings conference call for the first quarter of 2026. Joining us today are Decio Amaral, Chief Executive Officer, and Andre Saleme Hachem, Chief Financial Officer and Investor Relations Officer. This event is being recorded and will be available on the company's investor relations website. Ensuing the comments of the management, there will be a question- and- answer session when further instructions will be provided. We emphasize that the simultaneous translation tool is available on the platform. To access it, simply click on the interpretation button at the bottom of the screen and choose your preferred language. Before proceeding, we would like to underscore that forward-looking statements are based on the beliefs and assumptions of Hidrovias' management and the information currently available to the company.
These statements may involve risks and uncertainties as they relate to future events and depend on circumstances that may or may not occur. Investors and analysts should bear in mind that events related to the macroeconomic environment, this segment, and other factors may cause results to differ materially from those expressed in the forward-looking statements. That said, I would like to turn the floor over to Mr. Decio Amaral to begin the presentation.
Good morning, everyone, and thank you for joining our first quarter 2026 results call. We began 2026 in a challenging operating and market environment. In our Brazilian operation, navigability conditions remain normal, supported by the high volume of rainfall in January and February. On the other hand, the same scenario, combined with the ongoing works in Transamazônica created significant access difficulties at Miritituba.
Additionally, the first quarter 2026 was marked by the simultaneous handling of two products and shipments were only completed in January. This context brought about handling challenges and important lessons for upcoming program. In the South, despite lower navigation draft levels compared to the same period previous year, we were able to move volumes that were practically equivalent, highlighting the process made with a dredging program throughout 2026. To achieve this performance, the operation was carried out with smaller convoys than those used in the first quarter 2025, with lower loading per barge requiring a higher number of trips. We remain focused on our operational discipline, and we are, of course, facing significant operational challenges. We remain focused on operational discipline, efficiency, and better asset utilization, preserving performance in a quarter marked by significant operational challenges.
We are able to progress thanks to the initiatives implemented in 2025. Financially, we have a more balanced financial structure, maintaining leverage at a level compatible with the business strategy and reinforcing discipline in the capital allocation. I will now turn the floor over to our CFO, Andre Hachem, who will comment on the quarter's results. I will be at your disposal at the end of the presentation.
Thank you, Decio, and good morning, everyone. Before going into the numbers, I would like to highlight that starting this quarter, we are presenting our results under a new segmentation aligned with how we manage our business. Results are now reported across two divisions, Brazil, which includes the northern operation, Santos, and their respective administrative expenses, and Paraguay. Let us begin with Brazil's results on slide seven.
In the quarter, we handled 1.7 million tons in the north with a year-over-year decline, mainly reflecting challenges in the intake at ETC, and because of simultaneous handling of two products due to the higher corn volumes moved at the end of 2025. In Santos, we handled 474,000 tons in the quarter, an 8% increase compared to last quarter, reflecting the unit's operational improvements on a consolidated basis for the Brazil division. Total volume reached 2.1 million tons in the quarter with recurring adjusted EBITDA of BRL 111 million and a 45% margin. Looking ahead to the second quarter, navigability conditions in the North remain normalized, of course, we observe the same situation as I'd observed in the same period last year.
Moving to Paraguay, we moved 1.1 million tons in the quarter, maintaining stable volumes compared to the first quarter 2025. As Decio mentioned, the result was achieved despite a less favorable hydrological scenario. To enable this, we operated with smaller convoys while capturing the benefits of the dredging and rock removal programs carried out in 2025. It is also worth highlighting the effects of exchange rate conversion. The average exchange rate in the first quarter 2025 was $5.29 per dollar compared to $5.85 in the first quarter 2025. Recurring adjusted EBITDA totaled BRL 71 million with a 36% EBITDA margin, reflecting high operating costs in the period, especially due to exchange rate effects and the use of smaller convoys, which increased cost per ton.
Looking ahead in the second quarter of 2026, we see a navigability scenario closer to normal, combined with a favorable cargo with a higher share of iron ore. Moving on to the consolidated results, we will please turn to slide nine. In the quarter, we handled 3.2 million tons, a 6% decline compared to last year, mainly due to the North in a context marked by the challenges of the ETC as we mentioned. Net operating revenue totaled BRL 445 million compared to BRL 489 million in the same period last year, impacted by lower cargo volumes in the North during the quarter. Additionally, Paraguay's operations was also affected, which impacted the translation of results. Recurring EBITDA totaled BRL 182 million in the quarter with a 41% margin, reflecting weaker operational performance in Brazil, offset by the expense reductions during the period.
In the debt slide, we had an increase of 0.4x in our leverage of 2.7%, explained by a higher cash consumption as we resume operations. On the year-over-year basis, we continue to show meaningful deleveraging with a reduction in net debt following the capital increase and improved results in recent quarters. We maintain a balanced capital structure with a long-term debt, an average maturity of 4.7 years, weighted average cost of 108% of CDI, and our entire foreign exchange exposure properly hedged. With this, I conclude my remarks. We will now go on to the question-and-answer session.
Should you wish to pose a question, please click on the Q&A icon at the bottom of the screen and type in your question. If you wish to pose a question live, please click on Raise Hand. Our first question is from Pedro from Itaú BBA.
Good morning, Decio, Hachem.
Thank you for taking our question from Itaú. I would like to approach two questions. First of all, gain a better understanding of tariffs. You have an alteration in the north along with Santos. If you could give us more color on the evolution of the integrated system year-on-year. I would like to explore the issue of competitiveness. There are other logistic workers. If you could comment more on the integrated system, your competitiveness compared to other logistics models. The second question, let's explore the part of volumes, especially in ETC. The expectation of improvement throughout the year because of a better access to ETC. Which are the risks of El Niño, for example, and the volatility caused by this in the second half of the year, and the ramp-up of volumes because of this throughout the year? Thank you.
Good morning, Pedro.
This is Hachem. To begin with the first question on competitiveness, there's an important issue to remember in the first quarter. We had greater difficulties in loading because of the port situation. We had less navigation and lower volumes, of course. This was represented in three different events. The volumes that we report are those of navigation, and that is why the results of the first quarter were less favorable. That is why you see a lower or less favorable tariff in the first quarter. This explains most of the effect. If we were to normalize this month after month, naturally, as I have remarked, we don't see a favorable condition as we had last year. Last year, of course, we had a more favorable price. The moment, we have to be more aggressive than last year.
When we look at the coverage as a whole, we had in-house problems, and not truly competitiveness problems that would alter the northern arch and the southern arch. The problems are mainly coming in-house, and the problems of competitiveness vis-à-vis last year and this year, of course, are not favorable, but they will be normalized. There won't be significant changes year-on-year.
Pedro, this is Decio Amaral. Thank you for the question. To speak a bit about the issue of competitiveness and the volumes in El Niño, I see a trend for the improvement of competitiveness in the northern arch. We're in the middle of works for the new access to Transamazônica. This should be ready until the end of this year. Part of the execution of these works this quarter hampered a bit our work.
This will be resolved during the year. One of the great bottlenecks is reaching Miritituba. This should be eliminated before the next harvest, because this does interfere with the differential of freight, with a difference of five to six days. We have made strides in terms of competitiveness in the sector. Now, your second concern about El Niño, we constantly follow up on forecast. For the time being, navigation conditions are normal. Now, we do work with the National Water Agency, and if we're close to any disruption in navigation, we will have the proper dredging in a timely way. This is a conversation we hold with DNIT, the organ responsible for carrying out the dredging, so that we can mobilize on time. For the time being, the forecast indicate good navigation conditions. We follow up on this week after week.
Thank you, Hachem and Decio.
Thank you very much. Our next question comes from Filipe Nielsen from Citi. Your microphone has been activated, Filipe.
Good morning.
Good morning.
Thank you for taking my questions. I have two. I would like to better understand the dynamic of the simultaneous operation that you had in January. You mentioned this was a detractor. Perhaps we could have a mixed window throughout the year. Which were the learnings that you had, which was your learning curve, and if you have already thought about improvements for the coming windows? To go back to what was said, a follow-up on the contracting of freight for corn. The second question refers to your CapEx. We see a somewhat lower CapEx compared to the annual CapEx.
Which is the curve so that you can comply with the guidance of BRL 270 million for the year, and which are the stages, the projects that you are implementing for this?
Filipe, this is Decio, and thank you for the question. Your question on simultaneous operation is very good. To explain what happened this quarter, we had several concurrent effects. We had the works of Transportoaria emergency works on the present-day waterway and works on the opening of the new waterway. They were simultaneous works that caused some interruptions in the reception flow. To maintain the level of service for our customers, we rented capacity from third parties, and we suffered less, but we did incur on a higher cost. Our focus, of course, was to maintain service levels for our customers.
When we speak about the private terminal, we had the simultaneous arrival of containers with corn and soybeans. We have a segregation of products in the warehouses as we were at the end of the harvest. We had to wait a bit to complete the ship, and this delayed some of the unloading at the private use terminal. The return of the convoy to seek products from third parties meant we had to navigate at a higher speed, increase the use of fuel, and to maintain the volume of shipment, because this is a period where we normally carry out our annual maintenance. We also rented lifting capacity from third parties. In that quarter, we did incur on higher costs to maintain the service levels for the customers, to maintain the simultaneous deliveries of corn and soybean.
The coming year, we won't have the works in Transamazônica. We will have a more controlled flow. Of course, this will aid and abet the operations at the private use terminal. This problem should not repeat itself. We have a similar dynamic to that of last year commercially. We have a significant volume of contracts, and we follow the natural rhythm of negotiation. Nothing different compared to last year. If you could speak about the CapEx, we have postponed some investments. As we did in January, we postponed some stopovers in the north. We will resume them during the year. The CapEx is not linear this year, but is very similar to what we had last year.
Thank you. Everything has been made very clear.
Thank you very much. Our next question comes from João Ramiro from XP. Your microphone has been activated. You may proceed.
Good morning, everybody. Thank you for taking my question. We have two questions. If you could give us more color on the modular projects. You were at test phase and implementation. Which has been the evolution, and what can we imagine for the rest of the year? On the Floating Device , which are your terms, you said the term would be 2027. Is this still holding true, or will you anticipate this for 2026, and which will be the reflection on volumes? The second question regarding operations, we see that you have been suffering from the higher costs because of the increased number of trips to offset that worse volume of draft. In the second half of the year, the draft should be better.
What will happen with a normalized draft and the initiatives of derocking and dredging last year, if this will allow you to have improvements? Thank you very much.
João, this is Decio Amaral. Thank you for the question. To speak about Cábrea and Tombador. Cábrea began its work in the first quarter, and they will begin the conditioning in the second half, working at full operation capacity as foreseen. This project continues with the manufacturer schedule. It will go into conditioning and will be part of the system the coming year. We have an interesting effect here. We had a volume very similar to that of last year in the south at a higher cost because of two reasons, basically.
We have the benefit of the dredging, and this is an important point, we were able to achieve the same volumes. Had we not had dredging in the south, the volumes would be lower. We still have not been able to use a convoy with 16 barges. We only use 12 barges. This captures the volatility of the business because of the effects of dredging that continue on this year. This restriction began in Brazil much later. It's more advanced in other countries. We see a half glass, an empty glass in this case. We anticipated maintenance of our fleet to have the benefit of availability in the period of higher water.
In the period of higher waters, we can operate with 16 barges, guaranteeing availability of the products at a lower expense, we will see better results than we saw in the second half of last year.
As Decio said, simply to clarify this, when we look at the cost in the south, it depends on the number of trips and not of the volumes. We had more trips because of the lower number of barges, the cost enhanced. We should be able to normalize all of this presently.
Thank you.
Thank you very much. We would like to remind you that should you wish to pose a question, please click on the Q&A icon at the bottom of the screen and type in your question. To ask questions through the microphone, click on Raise Hand. The next question is from Rogério from Bank of America. Your microphone has been activated.
Good morning, Decio. Thank you for taking our question. We have two questions at our end. The first, it's not 100% clear to me all of the events that impacted your access to Miritituba and how much disruption this truly caused. If you could speak about these events. Secondly, which was the impact, if you can mention figures. Third of all, which is the expectation for the normalization of the events? This is my first question. Secondly, perhaps you could share with us the reason why the company has changed segmentation and no longer discloses results at the Santos operation. Do you have a potential subsequent event, new investments in mind? If you could share your rationale, this could be very helpful.
Good morning, Rogério. I will begin with the second question.
Regarding the change in reporting and disclosure, we're going through a significant process of turnaround, and as part of that process, we understood that in the Brazil segment, we should divide everything in navigation and terminals because navigation therefore becomes a different line of business. We have the terminals, but we can also operate for third parties. We understood it would be interesting to segregate navigation and terminals therefore. Now speaking about scale, it also makes sense to work with segmentation. In Brazil, the figures are quite lower, so we joined everything in the Brazil part, and in Paraguay we have a separate reporting. Another question, well, this is about your question regarding reporting. In Miritituba, let me underline the events. At the beginning of the year, we had an increase in rainfall. We began with a wetter harvest, increased rainfall.
At the end of Transportoaria, in that piece that leads to the terminals, we had a great deal of mud. We have two hills there, Santo Antonio and another one. When the harvest began, we had that excess of rainfall, and we detected several impediments in that region. Along with that, we had the works at the highway. The concessionaire is working on the conclusion of the roads that lead to the terminals, and this of course affected the transportation by trucks. Decio Amaral also mentioned that we were working with two products. When we work with two products therefore, we have disproportional work in terms of warehousing compared to what we have vis-a-vis our already stored product. This is what happened in that quarter, and of course we had several learnings. The combination of these two factors led us to lower reception levels.
Because of lower reception levels, we had lower navigation. Most of our invoicing in the north is linked to navigation and lifting. These are the factors that impacted us. In the month of April, we had normalization of these events, and in the second half of the year we should operate with normalized conditions in general. We remind you that we're also facing the highway work that will impact future events. Now, to give you more color, we have two simultaneous works. A new access, this is a work carried out by a concessionaire, and we have the paving of the main hills that exist, Salvamento and Santo Antonio, carried out by the operators themselves from Transportoaria with our backing. Now, the paving of that first hill, Santo Antonio, is 100% concluded. It has been fully paved, will no longer pose problems for this harvest.
The Maluha hill will conclude the pavement. It has two lanes now. The paving of the highway, once this is ready, it means we will no longer have these impacts that we were faced with at Transamazônica in the last few years. Transamazônica is using the same yard, enabling us to intelligently control the flow and avoid the problems we had last year. We believe that we have mitigated the impacts of Transamazônica going forward and that bottleneck that we had at reception.
Perfect. If you allow me a follow-up, how much of these difficulties of access are due to the new access and the two highways?
One will be concluded now, the other at the end of the year. I think the main problem was the pavement of the present-day access. We had restrictions, go and stop operations during the work.
The problem was the pavement of the access. That go and stop operation interrupted flow while the pavement was being done. This problem no longer exists, and one of the routes of access has already been fully paved. Thank you. As we mentioned at the beginning, to try to mitigate problems for the customers, we had to work with third parties to partially mitigate this effect. To continue on with reception that was not fully mitigated, it should be fully mitigated in this coming quarter.
Thank you.
Thank you very much. With this, we conclude our question and answer session. We will now turn the floor over to Mr. Decio Amaral for the closing remarks. You may proceed.
Thank you very much for your questions, for your attendance, and we will be back very soon to speak about our results for the second quarter.
Have a very good day.
The Hidrovias conference call ends here. Thank you for your attendance. Have a very good day.