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Good morning, ladies and gentlemen, and welcome everyone to Orizon Valorização de Resíduos conference call to discuss results relative to Q3 2025. This conference is being recorded and a replay facility will be made available at the company's website, ri.orizonvr.com.br. The respective slide deck is also available for download at the company's results central at the company's IR website. All participants will be connected in listen-only mode during the company's remarks. After that, we'll start a Q&A session, and by then, further instructions will be provided. Before moving on, please have in mind that forward-looking statements are based on beliefs and assumptions on the part of the company's management and also on information currently available.
Such forward-looking statements might involve risks and uncertainties as they involve future events that depend on circumstances that may or may not materialize. Investors, analysts, and journalists should have in mind that events related to the macroeconomic scenario, to the industry, and other factors might lead to results being considerably different from those expressing these forward-looking statements. Here with us today, joining for the conference, we have Mr. Milton Pilão, CEO of Orizon, and Mr. Leonardo Santos, the company's CFO and IRO.
I'd like now to turn the conference over to Mr. Pilão, who will start with his opening remarks. Over to you, sir. You may proceed.
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Good morning, everyone. Thank you all for participating in our earnings call for Q3 2025 of Orizon. My name is Milton Pilão. I'm the company CEO. I have here with me, I'm joined by our CFO, Leonardo Santos. As we usually do, we'll be sharing the presentation in four different pillars. Number one, I'll start, and then Leo takes over for the second and third parts, and I'll be back at the end. Right off the bat, we'll be talking about the period's highlights on slide number four. Basically, this quarter was yet another quarter of consistent results from the company.
As you can see, we had net revenues at BRL 281 million in the quarter. EBITDA at about BRL 131 million . Which already shows running to the tune of BRL 520 million yearly before the positive impact coming from the biomethane plants, which will account for a higher impact as of Q4. So we are growing our EBITDA annually even before the biomethane ramps up. The adjusted net income at BRL 42 million, BRL 41.9 million to be exact, a recurring net income, which is quite significant.
Even being impacted by financial expenses coming from CapEx investments we've been doing both for Barueri, over BRL 400 million invested. It's a plant under construction, and also biomethane at Jaboatão and Paulínia. In terms of our consistency, in terms of predictability and final disposal, we have capped our growth at a good level, both in average price and also in waste volume. So once again, we see waste volume going up. We see average price going up above inflation, IPCA + 4 percentage points. Those are numbers we have shown recurrently for the past quarters, and we intend to be doing the same in the coming quarters. We are now midway of this growth curve in terms of volume and price. We should see this going forward for the coming quarters as well.
In terms of carbon credit, as we have said before, the last quarter, once again, significant sales and a good recurring net revenue in the quarter. We said that our investments back in the commercial front on restructuring our carbon credit sales would reap results, and that's what we see now. We see recurring revenue in the quarter, yet another quarter with 14 million revenue posted. In addition to that, to the financial impact, of course, the quality of our final consumer, of our client, of course, we cannot disclose all the clients that we have, but one of them I can mention because it made the headlines. Google. Google bought significant amount of carbon credits from the company, so we do have quality international quality clients buying carbon credits from us, which will, of course, disseminate and spread the good news around the world to possible potential clients.
So that we'll see Orizon as an important provider of carbon credits in international markets. In addition to that, our solid capital structure is worth mentioning in this quarter. We had this swap, by reducing costs of capital in part of our debt, we have prepaid about BRL 250 million of a debt and have a cost of CDI + 3.8% on a yearly basis, and we brought that cost down to CDI + 1.45% per year. Per annum, as you can see on the slide. Once again, bringing down our capital structure in terms of cost, in addition to extending our average term. Today, our average term for that debt is at about above 6.5 years. In other words, a very solid capital structure ready for future growth, both through M&As and also through investments in renewable natural gas, biomethane.
Lastly, we're going to be talking about the Jaboatão plant. We finally had the initial of the ramp-up of the plant. The plant went into operation at last. We had the authorization from the ANP, the federal regulators, so the Jaboatão plant already operational in Q4, and the biomethane plant in Paulínia also on track for its construction. It should be operational, as we said before, early in January. We should start injecting gas in January in Paulínia, our biomethane plant. On the next slide, if I may, we talk about the acquisition of the Oeste Paulista Ecopark in Presidente Prudente, a city in the west of the state. We have already announced that. An acquisition of the Ecopark, very similar to what we had in our track record for acquisitions.
It's a young Ecopark, recently licensed, with a useful life of over 50 years, a good gate fee at a region which is rich in a well-developed state as São Paulo. Already receiving 300 tons a day and the potential of very quickly grow and overcome the level of 600 tons as early as next year. With a high potential to develop and provide biomethane. We know that Presidente Prudente is the first city in Brazil to have a biomethane network connected to the grid to provide for the whole city. So in addition to have the very important Ecopark, it also has the additional benefit of working with biomethane. Lastly, talk about the biomethane plant in Jaboatão. I gave you a spoiler, but what you can see here on the slide, we have received the authorization from ANP for the 1397 on October 10th.
After the authorization was issued, it took us about 10 days to get the plant operational. There was a series of adjustments to be made before operation started. Operation really started on October 20th and early on, we call it the testing period, when we start the operation, and we are able to do the fine-tuning from both sides, of course. From balancing the network, we start injecting gas into ANP's pipeline, a significant volume of gas. You need to balance the grid, balance the instruments, and also you need to fine-tune several operational gateways. We are now going through that testing period. This period already accepts the injection of gas. But we are doing that gas injection through a period of variation of adjustments of fine-tuning.
We expect this testing phase to last until late November, and then starting in early December, we will have the full injection of gas at the plant. So that it can start next year in full steam in terms of gas injection, which is 110,000 cu m. That is the piece of good news I have in terms of Jaboatão. As for Paulínia, there is no slide, but I can tell you we are already going through the verification phases by ANP, and we hope to get authorization by the end of the year also.
I move it over to Leo now, who is to be talking about our operating highlights, and I will be back at the end to talk about our coming outlook.
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Thank you, Pilão. Good afternoon, everyone. We have the picture on the left-hand side. That is the Jaboatão plant. That helps investors to have a grasp of what we have already put up, established early operations. Paulínia is very similar. If you compare the pictures, very similar scenario, just about ready to start. Here on next slide, waste volume, a growth of 3% year-on-year. Small growth in terms of last quarter. Our highlight would be maturing assets coming into operation. No big structural major. Civil construction residue. A client in Barra Mansa, they showed a negative variation because of their activity. Nothing structural, to be sure. In terms of positive, we have assets maturing at a good pace.
In terms of energy generation and biogas, fine-tuning on nothing really major either in terms of the drops. You see no source of concern there. That, of course, reflects on the carbon credits. We had a generation of 800,000 credits per quarter, 820,000 a sale in this quarter BRL 14 million, just about 450,000 credits are sold and recognized in the new CPC. Those credits are sold and delivered to the clients. Or we can already see it is under accounts receivable, which will lead to the gate fee of BRL 5 to BRL 7 we have been reporting in our previous releases. On the next slide, operating highlights. The net disposal price above inflation year-on-year, very similar to last year, IPCA +4 . It is actually reported in Q4. Q3, sorry. We expect to maintain this growth pace in terms of real numbers.
We have been able to do that through adjustments and also through a mix of clients. Those two impacts justify the increase in prices above inflation. On the next page, we have financial highlights. Page 11, year-on-year, a growth of 12.8% in net revenue. Q3 2024, once again, we had a recognition of revenue of BRL 37 million for carbon credits. This year, we had something close to BRL 14 million. In other words, if we were to put carbon at the same basis, we have a growth in revenue even higher year-on-year when compared to margins and income, the drop in gross margins. Because carbon has a better margin, a direct conversion from revenue and gross margin, you see a margin adjustment year-on-year because of that gap between the sale of carbon from last year to this year. This was to Volkswagen.
I can mention them because this was published news. We recognized that in Q3 last year, 1 million credits. So that justifies most of that drop in margins that you can see here in Q3 when you compare both third quarters. For EBITDA, a small negative variation from last year, basically driven to that higher sales last year. As it was said before, last year, we only had that in Q3. In 2022, we had no sales. We started 2025, and we start to see carbon credits less chaotic, if you will. We saw sales in Cuiabá early in the first quarter, early second quarter, BRL 5 million sold in Q2, recognized in our numbers, and now in Q3 to the tune of BRL 14 million, as I said.
So we start to see carbon in a more recurrent fashion. That is worth emphasizing, as Pilão also said in his opening remarks. On the next slide, we have the CapEx, BRL 142 million. We have been reporting strong CapEx in the previous quarters, focused on growth. It is worth mentioning here a reduction when compared to last quarter because of the Barueri project going through schedule. Normal evolution of the works, less expenses in the quarter. The project will be operational early 2027, when we had relevant investments in the biomethane plant in Jaboatão and also final disposal projects. We see more detail going forward in terms of CapEx, just to give you an overview of where our CapEx sits.
My last slide about our financial highlights, talk about our capital structure. As I mentioned before, we gained a little more average term. We have been following strategies to work our liabilities even with no pressure, without a need for that. We have a gain in capital cost, but a gain in term, another seven years. So three, four years to go. We got more time now. We took advantage of this to work with our liabilities a little better. Our leverage level reflects a project that is still not operational. It is not very fair to compare that leverage with recurring EBITDA because some investments are not operational yet, as I said.
The average term is above 6.5 years, 6.65 years. Once again, in this quarter, that debt had a prepaid cost of BRL 5 million and BRL 6 million. The debt is CDI + 3.8%. It is the first debt that we took back in 2021, the first window after the restructuring of the company from the back in 2010s. So it had higher costs right off the bat, which can be deferred throughout the debt profile. So there is a cash effect to P&L, but which of course pressures the net results. We always need to talk about the adjusted net results because there are non-recurring effects as well.
I go back now to Pilão, and we can talk at the Q&A later. Thank you. Back to you, Pilão.
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In terms of outlook for the coming periods, that is the beauty of our business, I would say. To maintain our focus, to do more of the same. More of what is working. What we expect going forward in terms of organic growth is to continue to see price increases and volume increases. As I have said, the price, there is still a lot of room for improvement above inflation in our net DAT. We have already contracted several increases, which will account for important impacts both in Q4 and in Q1 2026. That is an agenda you will see unfolding.
In terms of volume, especially for the young Ecoparks, we know that is where we have a possibility to grow more in volumes. Not only the organic growth of 2% and 3% in volumes, which is only normal year-on-year. There is room to grow more. We should also see good volumes coming in, especially in Q1 of next year, but also in Q4, next quarter. Once again, a continuity of growth, both in price and in volumes. For biomethane, it is now in ramp-up. In Q4, it will have a more real impact on our results. What was before seen as CapEx will now be impacting our results. We will see Jaboatão, especially in December, impacting our numbers with the biomethane for Q4. Then for the whole of new year, we will have EBITDA numbers, which will be quite relevant.
You know the size of EBITDA that the Jaboatão plant brings in for the company. Those impacts will now become more material as of early of next year. Of course, Paulínia also will come along, as of Q1 next year as well. Other plants are already under construction. We maintain our focus on building new plants. Several other biomethane plants will start being built. Under the same outlook, I can also see a drop in CapEx for the new plant. Terms of payment, pretty much the same. The agenda around biomethane, not only does it have an impact on results as of Q4, but it will also continue to impact as new projects start to unfold, which will impact future quarters going forward.
In terms of carbon credits, our expectation, as I said before, is to continue to have recurring revenues, not only based on what we have already sold, but also based on what we expect to sell. That is an agenda which is quite heated at the moment and a good momentum. The sales we have made have brought on board a reference for us. After selling to a Google, if you will, we have other clients from the same area knocking on our doors to buy carbon credits. This mouth-to-mouth at a global level works, and we continue to have recurring revenues from that. Not only because of our sales efforts, but also because those credits which we sell, start to be registered. We talked about the Ecopark in Paulínia, which has a significant amount of credits to be generated.
We will start to have more supply because more projects are being registered, and going along a good level or a good outlook for demand coming from our commercial front. That is very much in line with our organic growth. As for the inorganic growth, as people usually ask, the M&A front, as we have shown before, we acquired an asset last quarter, and we continue to work to have a final pipeline of good acquisitions. What I can advance to you is that you will certainly see it both in Q4 and in Q1 2026, the announcement of new acquisitions of Ecoparks, which are now under conclusion, if you will, documentation, final phases of conclusion, of maturation. The agenda is still maturing, coming close to a completion, as I said. I think that is what we had. I have mentioned our outlook, perspectives.
We can now move on to the Q&A session, if you will.
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We will now start our Q&A session for investors and analysts. If you have a question, please press the button and click and raise your hand. If your question has been answered, you may remove yourself from the queue by clicking on lower hand. Our first question comes from Mr. Victor Cunha from Itaú BBA. Over to you, sir.
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Good morning, everyone, or good afternoon, actually. Thank you for taking my question. We saw a quarter where operating costs per ton of waste grew above inflation. If you could give us some context to explain that increase, or if we should expect a drop looking forward as investments unfold in terms of leachate treatment. If I may ask another question, the CapEx for maintenance in this quarter was about BRL 10/ ton and BRL 12/ ton for expansion. What can we expect in terms of CapEx for maintenance and expansion going forward? Based on numbers you have released, can we consider that to be recurrent numbers?
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Hi, Victor. This is Leo here. In terms of cost, investments in leachate help should improve in terms of what we have today, in terms of cost. There were some one-off events. The growth you had in Sergipe, for example, 50,000 tons in this quarter when compared to last year. That was a volume of waste which came at a lower margin. It does not come directly to the landfill, so there is a cost around transportation, but that is a one-off event. And that, of course, increased the cost per ton.
That is about BRL 500,000 a month, BRL 0.6, BRL 0.7/ ton. One-off, as I said, because of a transportation need. But leachate is certainly a point. Having expanded the treatment plant, we should see a reduction in cost in the coming two years. As for CapEx, we have reported CapEx levels at the same level for some time. We could think about something to that tune. It is recurring, so that level should be expected. For expansion, a little less because it is linked to specific activities around the assets. We could have a specific session to explain the behavior, if you will, on an asset-by-asset basis when you talk about expansion of landfills, leachate plants. Those are to be monitored on a case-by-case basis.
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Okay, thank you.
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Our next question comes from Mr. Ricardo Bello from Safra. You may carry on, sir.
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Good afternoon. I have three questions. Number one, about M&A. We heard about what you did last month. What is the pace for the coming months in terms of M&A and next year? Also, the auction for capacity reserve, if you could give us some context. What you expect to see going forward based on the most recent news for the auction. A third question, if we should expect the carbon credit line in a more recurrent fashion in the coming quarters. Thank you.
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Well, I think M&As, that is for M&As. Pilão did mention something. It is difficult to set a date. I like to joke and say that M&A is not like a marriage. You work. You cannot set a date, right? It has its own dynamic. We are working hard. That is as far as I can tell you. There are opportunities in the pipeline, a pipeline of mapped-out opportunities. We are quite excited, but there is no set date for that. That is what I can tell you. I think we are working within our mandate, focusing on what we had planned and announced to you, and we are quite excited in terms of new acquisitions, new businesses being made by the company.
In terms of the capacity auction, we have three plants that have a vocation feel for that. We have Jaboatão, João Pessoa and Paulínia. We will migrate to biomethane, so we do have long-term contracts already signed to provide biomethane. It is feasible to imagine we will be participating in those events. We have been putting together internal work groups to discuss topics around raw material, molecule providers, to be able to think about the flexibility we have. Those are plants that are within our assets, connected to the grid, some of them, biogas and biomethane on the side. We can do something nice. Those are smaller projects which might be timely. We are excited, as I said.
The schedule is moving forward, and we are keeping a close eye on that, quite in tune with the auction coming up. As for the carbon credits, I think it is nice to try and visualize that throughout history. We had 2022 and 2023 and 2024, strong years in terms of registration of projects, eligibility of those products for credit. We discussed with investors about whether projects are eligible or not. We are past that. Then we discussed the velocity of sales. We had one-off sales, and then this all is past.
We now have a first year where those events are more recurring or less chaotic, as I mentioned, less erratic. We will see that more recurring in our results and our numbers. We could discuss the pace or the curve, the growth, 5 million, 15 million per quarter. It is difficult to say. It depends on the dynamics with customers and clients. Today, we have a very wide array of clients we have been talking to frequently. We have redesigned our organizational structures to have a dedicated cell to customers and clients. We have a super senior person traveling around the world talking to those counterparts, and we have managed to achieve or to do good deals.
The revenues for the quarter is not coming from a single transaction. It is the sum total of several transactions. It is nice to understand and visualize that dynamic. Thank you.
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Thank you. Congratulations on your numbers.
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Our next question comes from Mrs. Martha Carrillo. She says: "Congratulations on your results. Much has been said about new acquisitions and new contracts for biomethane. Can we expect something for this year?"
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Thank you for your question. We talked about M&As just now. We are working strongly towards that. We are going to wait to see how those transactions unfold. The same for biomethane. Our discipline is around only having a project when we have a contract sold. We have another cell dedicated to that, talking to off-takers for the past two projects, in Guarapari and Curitiba. We did just that between two to six projects that we think are right to sell biomethane, advance conversations, but once again, it is difficult to set a date.
We have the counterparts, their own dynamics. We are talking about contracts which are not off-the-shelf contracts. There are specificities to be discussed. We have our legal team, our business team, with their hands or their plates full. We still have a month and a half with this year. Maybe we can do some of this still this year, but yet to be seen. Thank you.
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Once again, to ask a question, click on the raise hand button. If your question has been answered, click on the lower hand button, please. Now wait, please, while we pool for questions. Our next question comes from Mr. Joseph de Castro. He says, "What can we expect for 2026 and next years? Recently, I saw news of sales to customers such as Google and Volkswagen. Should we expect clients of that magnitude?"
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You are talking about carbon credits, right?
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Yes.
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The answer is yes. As I said before, our sales effort, just to be sure, our sales effort is international. Today, as we are still waiting for the carbon market to become official or rather regulated in Brazil, we basically sell abroad, volunteer international market. So North American clients, European clients, those are our main off-takers now for carbon credits. The beauty of what we have done is on our commercial front was to have taken business in terms of economic, social, and financial feasibility to those clients. If you were validated by a company like Google, I do not know if you have seen that, but Google came to Brazil. They had a movie, a footage. It is part of our social media, this little footage from Google, which is being shown around the world, showing our Paulínia Ecopark.
Showing the whole work done not only by the Instituto Orizon on the social side, but also highlighting the impact of our carbon credits and the relevance of that impact on the environmental social side in terms of eliminating Brazilian dump sites and on the correct waste disposal, the reduction of emissions coming from organic residue in Brazil. That is really, really nice. When you do that, you have Orizon stand out as a reference, as a role model, as an important player in this industry. Of course, this will help attract other clients, and you will see sooner than later. I cannot mention any names, of course, but you will see relevant, well-known names coming to our off-taker base for carbon in the coming months.
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Our next question comes from Mr. Daniel de Araújo from BNDES. Over to you, sir.
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I think you are on mute. We cannot hear you.
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You may carry on, sir. Our next question comes from Mr. Andre Aguiar from Método Investimento. Over to you, sir.
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Hello, everyone. Congratulations for the results, and thank you for taking my questions. The first one I have about Jaboatão's biomethane. During the testing phase, can you share some more data about the production average? Also about your net debt. What drove the higher impact in addition to the CapEx numbers in Q3? Thank you.
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I will wait for Leo to answer the CapEx answer, but I will talk about the first question. The testing phase, the testing period, you have two different parameters, volume and the spectrometer quality of the gas. Gas is being delivered at a quality level defined by ANP. Throughout the test, whenever we delivered gas, it matched the expectations of ANP at 100%, according to their specs. That is the good news. On terms of volume, the volume is impacted by tests, because you start to deliver in volume, then you increase. I will give you a practical example of what happened during the testing phase to make it more concrete. The plant is delivering 60,000 cu m per day.
Then Copergás informs us that they have a higher pressure on the grid balances. You have to decrease volume, and then you increase again. When you talk about testing phase, during the testing period, you cannot obtain normal levels, normal volumes, because that is what the testing phase is for, to actually balance the pipeline, balance the grid, fine-tune the instruments and measurement parameters. But that is all expected, and there is no impact on the quality of the gas. The plant today has already shown during the testing phase that it can reach the volume parameters and the quality parameters. So it is all according to specs.
Now, as long as you do not finalize this testing period, this final balancing, we cannot deliver daily volume at a stable pace. It goes up, it goes down, up and down, depending on the testing phase. That is why I say that we expect stability to emerge in December. It does not mean that October, November, you will not be measuring. We will. Those tests, you have variability, but I am already delivering, and I measure that at the end of the month. But stability in terms of volume will only be reached when we have a full month in December.
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As for debt, we see there is a fast CapEx space, and of course, debt follows along. It is worth mentioning that you have a strong cash composition front to make investments and have organic growth. But the answer is yes. The investment level justifies the level of net debt, which will gain more space in the balance sheet as our new projects become operational.
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Thank you.
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Our next question comes from Mr. Manuel Gaddis. He says, "The company has a cash position reported above BRL 1 billion and a leverage level which is under control. Can you talk a bit more about that strategy for new debt issuances and refinancing, given that there is no pressure on that front?"
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Thank you for your question. I think you have captured our strategy in your question. We believe it's worth taking advantage of the fact as debts reach their lockup position to extend our liabilities and freeing up space on our balance sheet to be able to capture growth opportunities in terms of acquisitions and starting new projects. That's exactly the strategy, as you mentioned, to have a robust cash position, controlled leverage, but we continue to issue debt to refinance, because that has a present value which is positive and allows us more time, more terms to capture growth opportunities.
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The Q&A session is now over. I'd like to turn the floor back over to Mr. Pilão for his final remarks.
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Good morning, everyone. Thank you so much for participating in our call, for your questions. Any additional question or comment, our IR team remains available. Once again, thank you. Have a nice weekend. See you next time.
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This concludes Orizon's conference. Thank you all for participating. Have a nice day.