Good morning, ladies and gentlemen. At this time, we would like to welcome everyone to Ultrapar's first quarter 2022 results conference call. There is also a simultaneous webcast that may be accessed through Ultrapar's website at ri.ultra.com.br and MZiQ platform. Please feel free to flip through the slides during the conference call. The presentation will be conducted by Mr. Rodrigo Pizzinatto, Ultrapar's Chief Financial and Investor Relations Officer.
In the Q&A session, we will have the presence of Mr. Marcos Lutz as well, Ultrapar's Chief Executive Officer. We would like to inform you that this event is being recorded, and all participants will be in a listen only mode during the company's presentation. After Ultrapar's remarks are completed, there will be a question and answer session. At that time, further instructions will be given.
Should any participant need assistance during this call, please press star zero to reach the operator. We remind you that questions which will be answered during the Q&A session may be posted in advance in the webcast. A replay of this call will be available for seven days. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on the beliefs and assumptions of Ultrapar management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.
Investors should understand the general economic conditions, industry conditions, and other operating factors could also affect the future results of Ultrapar and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Mr. Rodrigo Pizzinatto. Mr. Rodrigo, you may now begin the conference.
Good morning, everyone. It's a pleasure to be here once more to talk about Ultrapar's results. Starting off with slide two, I want to highlight two important topics on the earnings report. The first one I already mentioned on our last conference call, related to our divestments. Due to the signing of the sale agreement of Extrafarma and Oxiteno, we have classified these companies as assets and liabilities held for sale in December 2021 as discontinued operations.
Our financial statements reflect this classification. However, to better enable comparison with previous periods, both the earnings release and this presentation consider the company's pro forma consolidated information. That is, Ultrapar's data also comprise Oxiteno and Extrafarma's results, adopting the same concept that we have been reporting. The second topic relates to two adjustments we have incorporated in our recurring EBITDA from this quarter going forward.
One adjustment is the exclusion of results from disposal of assets of Ipiranga from the EBITDA for a better comparison of the company's operating performance with competitors. It is important to highlight that despite the fact that disposal of assets is not our core business, it is something we manage very closely, given that we still have a relevant stock of real estate assets to demobilize.
This means that there is quite a lot of value in cash to be generated, and there will be a recurrence in this line over the next quarters as we move forward with the sale of these assets. The other adjustment is the exclusion of extemporaneous tax credits from the EBITDA, which we have already been highlighting in the results explanations to provide a better understanding of the recurring performance of the businesses and their comparability with competitors.
These credits will be monetized in due course by compensation of payable taxes. Well, now moving forward to slide three to talk about Ultrapar's consolidated results. As you can see in the chart in the upper left side, our recurring EBITDA from continued operations totaled BRL 873 million in the first quarter of 2022, 16% higher than that in the first quarter of 2021, positively impacted by improved results from the three businesses. The total recurring EBITDA, which includes Oxiteno and Extrafarma, was BRL 1.225 million, 24% above year-over-year.
Ultrapar's net income in the first quarter was BRL 461 million, 236% above that in the first quarter of 2021, mainly on the back of a stronger EBITDA, as well as the net effect of the cessation of depreciation from discontinued operations in the amount of BRL 65 million in compliance with IFRS five. Effects attenuated by increased depreciation and amortization from the continuing operations.
Our board of directors, as you should already have seen, approved the payment of BRL 450 million in interest on equity, equivalent to BRL 0.41 per share on account of the mandatory dividend for the year of 2022. With the 15% withholding income tax, net interest will be BRL 0.35 per share, except for corporate shareholders that are proven to be immune or exempt.
The complete amounts of this distribution are included in the notice to shareholders we released yesterday. Moving on the bottom left chart, CapEx from continuing operations totaled BRL 304 million in the quarter, 28% above that of the first quarter of 2021, mainly due to greater investments in Ipiranga. Including Oxiteno and Extrafarma, CapEx totaled BRL 382 million.
I want to highlight that at the end of April, we announced our investment plan for 2022, which includes BRL 1.7 billion in investments on continuing operations. This amount is greater than the investments made over the last two years. In the last quarter, we also registered an operating cash consumption of BRL 1.183 billion compared to BRL 128 million in cash generation in the first quarter of 2021.
This consumption resulted from investments made in working capital, driven by increases in fuel and LPG prices despite the higher EBITDA. Moving on to slide four to talk about our liability management. We ended the quarter with a net debt of BRL 13.4 billion, an increase of BRL 1.7 billion compared to the net debt of December 2021.
The increase is mainly explained by three factors, the consumption of cash with working capital during the first quarter I've just mentioned, the payment of dividends made in March 2022, and a lower financial result impacted by the higher interest rates. Our leverage therefore went from 2.9x in December 2021 to 3.1x in March 2022 due to the increase in net debt partially offset by the higher EBITDA level over the last twelve months.
Our average cost of debt was DI minus 0.3% a year in the quarter, substantially below the cost of DI plus 2.3% in the first quarter of 2021. As a result of the initiatives we have been taking to reduce the carrying cost of debt, which I could explain in more details in the Ultragaz. I remind you that this cost of debt does not include the negative effect of the cash flow hedge in the financial results, which amounted to BRL 48 million in the first quarter of 2022, an effect that we will no longer have with the conclusion of the sale of Oxiteno.
With the inflow of funds from the sale of Oxiteno in early April, I want to call your attention to the repurchase of the 26 and 29 notes, which are our debts with the highest cost, repurchase we did last month. We repurchased $600 million in notes out of a total of the $1.4 billion outstanding at an average premium of 101.75, which will contribute to a further reduction in the cost of our debt. Before presenting the next slide, I highlight that with the conclusion of Oxiteno sale, we stopped detailing the explanations about the performance of the discontinued operations. Moving to slide number 5 to talk about Ultragaz.
Sales volume during the first quarter was 2% lower than that in the first quarter of 2021, mainly resulting from the 3% reduction in the bottled segment on the back of lower market demand. The bulk segment on the other side increased by 2% in the quarter, with higher sales to the industrial, commercial, and service segments.
SG&A in the first quarter was 21% higher year-over-year due to greater personnel expenses, mainly collective bargaining agreements and increased variable compensation, which is aligned with the progression of results of Ultragaz, in addition to higher expenses with legal proceedings and freight. Moreover, I remind you that in the first quarter last year, we had some expense contingencies.
Ultragaz's EBITDA therefore reached a record level for its first quarters of BRL 213 million, an increase of 42% over the first quarter of 2021, resulting from the pass-through of LPG cost increases despite higher expenses. For the current quarter, we expect a continuity of good results with seasonally better volumes in the second quarter. Moving on to the next slide, number six, to talk about another great quarter of Ultracargo. Average static capacity of the company reached 955,000 cubic meters in the first quarter of 2022, a 13% growth year-over-year on the back of the startup of operations of the Vila do Conde terminal in December 2021 and the expansions in tank capacity implemented in Itaquí terminal over the last 12 months.
Ultracargo's net revenues were BRL 197 million in the first quarter, 15% higher than that of the first quarter of 2021, led by contractual readjustments and higher amount of cubic meters sold due to the capacity expansions. Combined costs and expenses were 11% higher than those of the first quarter of 2021 due to higher depreciation costs arising from capacity expansions and the effect of inflation on inputs and materials, partially offset by lower IT and personnel expenses with productivity gains. Ultracargo's EBITDA reached a new record level of BRL 140 million in the first quarter. 23% higher than that of the first quarter of 2021, resulting from the expansions with profitability gains, contractual readjustments, and lower expenses due to operational improvements highlighted by Décio also in the Ultra Day.
EBITDA margin reached 58% in the first quarter, higher than the 54% EBITDA margin we registered in the first quarter of 2021. For the current quarter, we expect Ultracargo's good operating performance to continue at levels close to those achieved in the first quarter of 2022. To conclude my presentation, moving on to slide seven to talk about another quarter of recovery for Ipiranga. Volume sold remained stable compared to the first quarter of 2021, with a 2% growth in diesel volumes, attenuated by a 2% decrease in the auto cycle volumes, largely due to greater participation of gasoline instead of ethanol in the product mix.
We ended the first quarter of 2022 with a network of 7,131 service stations, 27 more than that of the fourth quarter of 2021, with 82 openings and 55 closures in the quarter. The average volume contribution of the new service stations is 310 cubic meters per month, while the closed ones had average volumes of 28 cubic m per month. In addition, we ended the first quarter with 1,881 ampm stores, with same-store sales growth of 13% year over year. Ipiranga's SG&A increased 14% in the quarter due to higher freight expenses in line with the increase in diesel prices, higher provision for doubtful accounts, and higher expenses with ampm company-operated stores, which increased from 79 units in the first quarter of 2021 to 229 units this quarter.
The other operating results line totaled negative BRL 110 million in the first quarter of 2022, down BRL 91 million compared to the first quarter of 2021, mainly due to higher expenses with carbon tax credits. The disposal of assets line totaled BRL 26 million in the quarter as a result of the sale of seven real estate assets. Ipiranga's EBITDA totaled BRL 620 million in the quarter, 10% higher than that in the first quarter of 2021. Recurring EBITDA was BRL 594 million, 7% above the first quarter of 2021, as a result of recovery margins despite higher expenses.
Ipiranga's recurring EBITDA margin was BRL 110 per cubic meter, compared to BRL 104 per cubic meter in the first quarter of 2021, and BRL 94 per cubic meter in the fourth quarter of 2021. An evolution supported by the ongoing results recovery plan presented by Linden in the Ultra Day, as well as by market conditions. For the current quarter, we expect volumes to be seasonally stronger than that of the first quarter of 2022, with profitability levels close to those of the last two quarters. With that, I now conclude my presentation. I appreciate your interest and attention. Now let's move to the Q&A session. Marcos and I are available to answer your questions. Thank you very much.
Now we will initiate our Q&A session for investors and analysts. Should you have a question, please press star one. If your question is answered, you can leave the queue pressing star two. Questions will be answered in order of arrival. Please put your telephone off the hook after you pose the question. This way, we will offer better sound quality. If you are participating via webcast, click on Questions to the Speaker to send your questions to the officers of the company. Our first question from Luiz Carvalho, UBS.
Good morning, and thank you for taking my question. I have two. One about Ipiranga. I want to understand the recurrence of the gross margin. Do we believe the second quarter, this quarter has been robust? And what do you expect from changes in the company? And what can you say about volume? My second question is regarding capital. You've sold Oxiteno by the end of April, then on second Q, you will have a result without Oxiteno. You will have the cash of the sale of Oxiteno. I would just like you to elaborate on these things. Thank you very much.
Good morning, Luiz. Thank you for your questions. We had difficulties in hearing your audio. If I understood correctly, was the margin, the gross margin from Ipiranga, and the second question would be Oxiteno's capital allocation. Was it more or less what you asked? Yes. I will start by capital allocation. We have a cash entry due to the first payment of Oxiteno sale, and we announced a bond buyback program, $1.3 billion, and we received $600 million that were used to buy back the bonds. Because this is the highest outstanding debt that is the highest interest that is CDI. Now we have 110 CDI. We use part of these funds to reduce our most expensive debt, and the other part is for our cash because we have the maturity of debts that are coming close now.
Now we are working with our indebtedness to reduce the transfer cost. Now, regarding recurrent margins, they are recurrent, and there are more structural commercial margins. Although during Q1, we observed a lot of volatility in volume and in prices. Today, as we have mentioned, we have a pricing area that is correctly structured and can capture these variations and correctly price point by point where things should be done. We must observe the quarter with attention. During the past six months, we've seen an operational improvement in the commercial margin. I am very comfortable to say that we are doing what I said in the past, is to come closer to the sector peers, and we will continue doing this throughout the year.
Thank you very much.
Our next question, Thiago Duarte, BTG Pactual.
Thank you for taking my question, and good afternoon. I would like you to elaborate two things about Ipiranga. Number one, we've seen a significant gain in liquidity due to your increment in your gas stations. I believe that this is not your main focus. You are focused on ampm, and you showed important figures in your presentation. This is the best addition in a number of years when we see the first quarter of the year. I would like to know how you see the scenario for banners, because as we've seen in the fuel market, there is a great domestic disparity vis-a-vis the parity. We believe that Ipiranga and the other banners present a guarantee that they will guarantee supply, and this is very favorable for your banner.
I would like to know if you have verified this and what will this mean to you in terms of base growth in average gallons sold. Number two, going back to Marcos' answer regarding the margin recurrence, I would like to know that if when you see this margin from Q1, do you consider this margin, especially when we talk about the gain of stock because the difference in prices that we've seen throughout the quarter. Although, Marcos, your past answer suggests this, I would like to know that if the starting point of the quarter makes sense of like in terms of replenishment margin.
Well, number one, our focus is yes, is good relationship with resellers. There is a side effect is that it increase a number of gas stations with quality.
We have gas stations of high volume and quality and a certain resiliency. The team's interpretation that is close to the reseller and that communicates with them and approaches them correctly is that, as a matter of fact, we have a natural market share in the reseller that is above the market share of reseller. We will increase our banners vis-a-vis the churn. I believe that we will continue seeing this effect. We have a quality pipeline, and therefore we have a structural space. In addition to this, there was a distortion in the Brazilian market that is being corrected. There were many uncontracted players on the supply side, and they had commitments in the sales area. When you have a more adequate market where everybody has to go after their products and everything that we have contracted.
As Ipiranga, we have the purchase contracted. The difference is in the spot when you have short periods like we saw at the end of February and March, as a matter of fact, who is contracted has a structural advantage vis-à-vis who doesn't have contract. I believe that this has many people are valuing a long-term contract relationship that provides you more efficiency to have a chain, and whoever supplies can contract ships and receive the supply to deliver. We've done all of this with quality. This is why we have a sound result on Q1. We had risks during Q1, and I believe that we came out with a lot of competency. On the second side of your question regarding the margin recurrency, well, there is a gain of stock.
We do know the negative is that we had an increase of working capital that you can see in the reported figures, and this in a certain way at a given moment may drop. We know that when it drops, we have a parachute effect. The effect here is that we correctly price throughout the curves upwards and downwards. That was a moment of volatility, and our pricing area was very accurate, consistent, and extremely transparent with the resellers so that everybody could understand what was happening so they could weather through this quarter. These results are real results that we have gained in stock as part of the gas station business. If I could strengthen a message, our focus is in gaining gallonage of the network. During Ultra Day, we have 10, 15, and we are focused on improving or closing.
Although we're working on new banners, we are analyzing the banners that do not provide us good profit.
It is clear. Thank you very much.
Our next question is Vicente Falanga of Bradesco BBI.
I have two questions. Rodrigo, as you mentioned at the beginning of the presentation, if you could, what is the tax effect of the payment regarding the sale of assets? My second question would be the Ultragaz margin that was significant because there was a transfer of GLP, and I would like to know how is your resourcing outside of the Petrobras system, and if you could talk about the margins.
Good morning, Vicente. Thank you for your question.
Regarding interest rate on capital, this was the first time that we declared this because Ultrapar as a holding did not have tax gain, and the expenses of interest rate over capital is deductible. For the first time, we've had a relevant gain in the holding after selling Oxiteno, and we analyzed how we could balance all of this. The minimum mandatory dividend for 2022 with the tax optimization of the tax gain. This is why we declared BRL 450 million of interest rate over our own capital. Regarding taxes, regarding Oxiteno sale. When we held the call saying that we were selling Oxiteno, we expected a disbursement of $70 million.
We are still analyzing and seeing the strategy, but I can say in advance that from that amount, with the use of credits and loss and the interest over capital, we advanced a disbursement volume below $20 million. Now, regarding your second question regarding the Ultragaz margin. Ultragaz has the margin similar to Q4, therefore it is maintaining the profitability presented last quarter, and the prospects continue positive. This is a result of the improvement of market condition and the increase in productivity that Ultragaz achieved that we mentioned on Ultra Day, and sourcing that was mentioned. Sourcing will benefit throughout this year with gradual effects, but the effect on Q1 was very insignificant on the result and on our working capital.
Perfect. Thank you very much, Rodrigo.
Our next question, Bruno Montanari, Morgan Stanley.
Good afternoon. Thank you for taking my question.
One, regarding Ipiranga in terms of imports. Ipiranga was less active in imports on Q1. I would like to know how the sourcing strategy is evolving for imports and maybe the pace to increase imports throughout the second semester of the year. My second question regarding working capital. It is difficult to calculate if prices remain stable, how much of the investment of working capital could be reinvested in the business in the next quarters. The third question, just to confirm something. Now the cash entry of Oxiteno, has there been another adjustment regarding closing adjustments? We've seen some intercompany operations before the closing of this operation. Just to make sure that we have the right numbers in terms of cash entry.
The first two questions are easy to answer. One, we weren't less active than the other players.
Proportionally, our import activities were the same. If prices continue stable, working capital remains stable. It doesn't go up, doesn't go down. If the prices go down, it goes down. If the price goes up, it goes up. This is a mathematical answer, straight to the point. Bruno, as you stated, we started settling some intercompany debts between Oxiteno and other companies of the group. This is the effect when you compare continuous operation with discontinued operation. We have the hedge accounting with Oxiteno that was to hedge the part of the bond that we have in dollar. With the sale of Oxiteno, we no longer have the hedge accounting of our bond, and our debt is 100% hedged in reais because we no longer have loans in dollars because of the sale of Oxiteno.
Thank you.
Our next question, Christian Audi, Santander.
Thank you. I have two questions. One, going back to capital allocation. How will you prioritize? I know you talked about the improvement of the debt cost, CapEx, dividend payout, and potential M&A. If you see opportunities of participating in the energy transition process, what is more important for you? What are you prioritizing amongst these four points where you could invest your cash? Talking about leverage. Now, once Oxiteno's funds come in and all this cash comes into the company, could you give us what net debt EBITDA ratio you will have?
I'm going to start talking about our leverage position, and Marcos will talk about capital allocation regarding our debt.
If we include in 2022 what is coming out from the funds received after selling Oxiteno, the declared dividends and half of the value of the sale of Vestepar, well, we will reduce our debt to 1x. I am not including the second payment of Oxiteno. We have $150 million paid in 2024, and the other payments will be in the other two years. What we will receive this year net of these declared interest on capital, I believe that our net debt will drop 1x net debt over EBITDA.
Now, capital allocation. This present moment is timely moment to reduce our leverage and we are doing this and we are reprogram our liabilities. As a matter of fact, we will reduce our costs and the net debt outstanding. This is our priority.
This is not a moment of being above three times net debt over EBITDA, number one. Now, the rest is a matter of capital allocation because of return rates. We will be disciplined when we allocate capital. We will analyze our non-organic opportunities. As I said during Ultra Day, we will analyze small things in the first moment, but what we are going to do is to be disciplined when we allocate capital and the profit has to be according to the risk that is assumed in this operations. What I can promise is that we will have strong allocation discipline. I can't promise a target because we have to see what's going to happen with the Russians as well.
What about dividends?
One thing depends on the other. The dividend in practice is the surplus capital that I don't invest organically or inorganically. It's a matter of math.
Our next question, Citi, Gabriel Barra.
Can you hear me? Most questions have been posed. There are just two points. One, Extrafarma. You talked about the antitrust agency in the material fact. What are the next steps of the company regarding the closing of the sale? Something that drew my attention during the Ultra Day was the backlog that you have of gas stations, of Ipiranga gas stations. Could you talk about what you have within the network that has to be improved, and what is the timeline to do this? I would just like to understand how you would improve these gas stations that are contaminating this margin because the margin is lower than the company's margins.
Thank you, Gabriel, for your questions. Starting by Extrafarma, I believe that you saw the decision of the antitrust agency and eight municipalities were pointed out. This process, right, is in the court of the antitrust agency, and it's difficult to know how long it will take the court to give us a ruling, but this will be between June and September. That is the limit time to conclude this process. This is the best estimate. If it's a quick trial in June or September, that is the limit date. Now, the closing of gas stations, now 15% of the network has profit levels below what we expect.
We believe that network will be closed in one or two years, or they will go back to profit levels as we're going out of a pandemic and volumes are more normal and we're accelerating the process of the type of assessment of the network and what kind of network we want. We have to remind you that there is always a certain churn level in our network.
Our next question, Bruno Amorim, Goldman Sachs.
I have two questions. Two points on Ipiranga regarding your suppliers. Rodrigo talked about last year's price of fuels, they increased, that increased this line. When we see the amount, suppliers, this tripled since the beginning of 2020. In Ipiranga, there was an increase higher than the price of fuels.
I want to understand what is Ipiranga's financing strategy if you increased the percentage of that comes through suppliers, if there are other financing alternatives, and if in the future, part of this increase in the suppliers goes away, is there if you will improve the commercial conditions with your traders. This is good, but many times this represents a cost which is reflected on the price and the price of fuels, too. My second question, that would be, I want to know if you can tell us what the gain of stock is in the Ipiranga per cubic meter and the CBIO impact on Q1, and what do you expect in the upcoming quarters?
Well, good morning, Bruno. Thank you for your questions. You are asking about. You are talking about our partner suppliers.
Well, this math, this number increased in the past two years. The marginal cost is a cost close to our debt marginal cost. Therefore, there is not a high transfer cost, and we use these lines thinking about the optimization of cash flow. If you have a short-term need, this step makes more sense than having a long-term debt. This is part of our debt management, and we always see it from the economic point of view because we can have a long-term debt if it has a more attractive cost. We can reduce this line throughout the time and to increase the long-term debt if it makes sense. We have to see, you know, if it's short-term, long-term. The second question about inventory or stock gain. There was a gain of stock during the first quarter.
There was a loss in imports. This is part of the day by day in the business. Nothing different from what we've seen in the past quarter and based practically the same as Q1 last year.
Regarding CBIOs, any estimates how much you will spend per cubic meter vis-a-vis what was observed during Q1?
Bruno, we will follow our fair share of the CBIO purchase, and the price of the market will be reflected on the result. It's very difficult to predict this because the cost of CBIOs is transferred to our products, and it is reflected on the company's margin.
Thank you.
Thank you. As we have no further questions, I will give the floor to Rodrigo Pizzinatto for his final comments. Mr. Rodrigo, you can continue with your final remarks.
Thank you for your attention and then for your questions. The questions that we weren't able to answer will be answered by our IR department. I thank all of you and see you on our next call.
Thank you. The Ultrapar earnings results conference call has come to an end. Please disconnect your lines. Thank you very much.