Good morning, ladies and gentlemen. Welcome to Vibra's earnings call. We'll be discussing first quarter 2024 results. This call is being recorded. The replay can be seen at the company's website, www.ri.vibraenergia.com.br. This presentation is also available for download. All participants are in listen-only mode during the presentation. There will be a Q&A session shortly after. Further instructions will be given then. Let me once again state that forward-looking statements are based on the company's beliefs, based on currently available information. These statements may involve risks and uncertainties because they relate to future events, and therefore depend on circumstances that may or may not occur. Investors, analysts, and journalists should take into account that economic-related issues to the industry and other factors may affect results of the company. We have Mr. Ernesto Pousada, CEO, and Mr. Augusto Ribeiro, CFO, are with us today.
There are other executives of the company available, too. I would like to turn the floor over to Mr. Ernesto Pousada for his presentation. You may proceed now, sir.
Good morning. Thank you for attending this first quarter earnings call. Let me point out that we've had record results for first quarter. The EBITDA margin we've had is a record number. We've had four consecutive quarters in which the company has delivered solid and consistent results based on the management strategies focused on results. We have noticed a recovery of our market share, just like we've been saying in past calls. That recovery started out very gradually, maintaining solid margins. Vibra is at a sourcing and cost positions. Our operational cost per cubic meter is just as competitive as any other major corporation in the marketplace. This will help us gradually recover our market share while maintaining appropriate profitability levels.
These are record highs, as you've seen. Our adjusted EBITDA margin of BRL 164 per cubic meter. ROIC has been our focus, and it keeps on evolving, reaching 17.6%. Adjusted operational expenses were down 11% when compared to the first quarter of last year. As I said, market share continues to pick up. We're going to recover that market share even further, but gradually, with no major swings from one end to the next. But maintaining that recovery with profitability by making use of our Vibra scale, we are... have become more competitive, maintaining control over our expenses, and this is going to be the outlook for the next quarters. As far as agribusiness is concerned, we have finalized investments in both Belém and Santarém, important bases for the agribusiness. We are setting up an infrastructure there.
We've hired a director with 22 years of experience in this industry. We want to expand in agribusiness by providing our competitiveness through our bases, our knowledge, and the strength of our corporation in a very important industry. Onto the institutional front, we've had very important activities in ICL for fair competition. Through an incentive, Amapá, two billion L, two million cubic meters of imported diesel oil. This has just concluded. We have managed to defend that and show that would bring in inappropriate competition, if I may put it that way. This impacted our first quarter results, and we will see that impact of that diesel that will not be coming in, so we're changing the levels actually in Q2, since we do not have that diesel oil coming in with that tax advantage. On to governance.
We have elected our board of directors by providing continuity to our goal of growth and value generation. We're going to maintain our process in accordance with the board and the different committees and the company's governance, taking the front stage to bring the company to a different level. We keep on improving our results, and I'm going to turn it over to Augusto shortly. But let me say that the company has been addressing costs so that our sourcing can be very competitive, and I can say that we're just as competitive as any other major player. And we'll keep on working in that direction so that we can expand our market share while maintaining profitability and return on capital to our shareholders. And now I turn it over to Augusto.
Good morning once again. It's a pleasure to be here.
It's a record high quarter, just like Ernesto said. Record numbers for a first quarter, 164 reals per cubic meter. But before I dive into the numbers, let me just give you some... an overview or some overviews of what we had in Q1. The LC 192, about BRL 789 million. The only two drivers is net profit and the company leverage. All the other indicators exclude that effect. It gives way more transparency so that you can analyze the company's results, not taking into account these effects, this first quarter, accounting of these numbers, of these effects. Going back to the numbers, a record high for our first quarter, as I said, a 122 growth when compared to the previous quarter for the adjusted EBITDA, a 105% EBITDA growth, BRL 1.4 billion.
The ROIC was 17.6, just like as Ernesto said, up 6.7 percentage points when compared to first quarter of last year. Net profit of almost BRL 800 million, 874% compared year-on-year. 1.26x the leverage. A reduction of 1.6, right, actually. The leverage level is 1.1 now. On to volumes. The dynamics was more complex in the first quarter, especially due to the transition of more highly appreciated inventory from last quarter to this first quarter. We had some tax adjustments. Inventory levels were slightly higher. On top of that, excess diesel available in the market, there was a delay in the planting season for the next crop year and the distribution of the previous crop year for both soybeans and corn. So a very challenging period.
We have managed to recover market share despite of all these challenges. I'll be commenting on those in the next slides. This is the track record of the company and Q1 results. The second line, that's the volume, the same information we had in the previous slide. That's how the volume differences played out. This is for both business units. We'll be seeing that in further detail shortly. Expenses at the bottom. I mentioned that last quarter, and I once again repeat that cost control is very important in any company, but most especially in Vibra. It's a distribution business. Margins are tighter, so we have to control expenses very tightly. Our goal is to be the best in the marketplace, to be very active on that front.
To that extent, in which that despite a volume reduction, BRL per cubic meter, that's unit measure, was smaller at 72 BRL per cubic meter than last year's first quarter, which was at 74 BRL per cubic meter. On to slide four, capital allocation. 1.1x the leverage in Q1, BRL 16 billion, 127 million, that's the gross debt. Our strategy is to keep on reducing gross debt while maintaining debt leverage under control. Net profit or net revenue, BRL 874. CapEx, in line with what we said, will be about BRL 1.4-1.5 billion between bonus and CapEx for 2024, and Q1 deliveries are according to schedule. Dividends.
Dividends payment for this year related to last year results, that's the second largest in our recent history, and we've already paid out the first installment of the 4 that are scheduled. We paid them out in February. There will be another one in Q2, and then three3, and then Q4. On to slide five. Let me address the business units, starting with the gas station network. Market share remains high. Premium products almost reaching 43%, and the mix between special and premium products, the volume mix remains the same according to the average of last year, about 20.5% when compared to the rest of the portfolio, but with gross profit growth. They account for more, from 25.3% last year to 27.7% in Q1 this year.
Once again, proving that our profitability does not come from gains and market share recovery and new projects, but also that mix effect by selling products with higher added value. Focus and relationships is maintained. Almost 75% growth in our adjusted EBITDA for our gas station network, and market share stability, despite a very competitive Q1. For our branded stations, we had somewhat of a market share gain, reaching 5.51%. On to the next slide, new avenues for growth in retail. 8,062 gas stations in Q1, and we have been continuously improving our quality. 163 stations left, but the balance is still positive in terms of volume. That, of course, helps us to have the best relationship possible with the best volumes possible to our retail gas stations.
Premmia, 12% sales growth and 8% in the same-store sales concept year-on-year. Let me now address Lubrax. We have a new VP that has just joined the company, Juliano. He has been focusing on cross-selling fuels and lubricants and new B2B contracts. The same period last year, we had 15% in our gross profit. We keep on working with our authorized distributors. Total sales for Lubrax was over 24% when compared to first quarter of last year. On to slide seven. B2B now. Focus is on profitability. 92% increase in the adjusted EBITDA, BRL 175 million in this quarter. Market share recovery as well, 30.7% for consumers when compared to 29.2. Market share increase in regional distributors, 17.9%, while maintaining profitability in our B2B business.
On to volumes now. The changes in volume, jet fuel continues to grow. We have a mature position in terms of market share, but this is a market that is, is on the recovery, almost 13% growth in jet fuel. On to slide eight. Ernesto talked about Santarém and Belém. There was a growth in Belém. Our capacity is 50, from 50 to 80 thousand cubic meters. In Santarém, we are expanding to 47,000 cubic meters. So we are focused on agribusiness for both North and the Brazilian Midwest, so we're very pleased with this expansion. On to slide nine, Comerc. Yet another good quarter. Growth was very relevant, projects are maturing, and we remain that vision. When you take into account the run rate for the next 12 months, EBITDA will be above BRL 1 billion. Almost 94% of what was scheduled has been delivered.
Distributed generation, 12 MWs were delivered, 81 power plants that are in operation. In centralized operations, let me just mention that we had a plant in Várzea, 128 megawatts, that will be delivered in Q3 this year. On to slide 10. This concludes my presentation talking about ESG. Emissions goals were down by 17% for both Scopes 1 and 2. On the social front, zero sexual exploitation for adolescents and children. We are gaining traction in that project, over BRL 1.5 billion investments. This topic is going to be addressed as it moves along, but we have already strike or struck some partnerships in states and cities, and we'll keep on signing these new partnerships as we move along that cause.
Finally, the board, as far as governance is concerned, so the board unanimously elected Sérgio, Sérgio Rial, as the new Chairman of the Board. We now have seven members in our board, and we are very pleased with that unanimous decision. Well, thank you. Before we move on to Q&A, let me just once again say that we are very pleased with the past four quarters. Results have been consistent. Some are record high. The market dynamics varied substantially. Regardless of the market dynamic, the company has been able to maintain its performance through its management strategies. We are now beginning to show our capacity to recover our market share gradually.
We have seen that in March, and also because of our competitiveness, our logistics assets, the sourcing that has been evolving dramatically in recent months, and our lower operational costs when compared to the industry average, we'll be able to deliver consistent and solid results as far as margins are concerned, and again, gradually recover market share. We—something that we've lost in the past 12-18 months. So we remain confident for the company's results in the next months and quarters to regain that leadership position. We will now have our Q&A session.
Luiz Carvalho from UBS asks the first question. You can unmute your mic.
Good morning. Congratulations, Ernesto and Augusto, and thank you for taking my question. I actually have two questions. Let me start with you, Ernesto. We've been talking about the company's capital allocation strategies. You managed to deleverage the company substantially.
You've announced dividends relating to 2023, and of course, there's the Comerc discussion, the culture that is going to be established in the future, the near future. Can you give us some color as to your future strategy for capital allocation? Would it make sense to increase dividends from now on? Are you going to combine that with Comerc? What's your take on that front? And my second question is about distribution. We've seen margins improving in the industry, and of course, Vibra benefited from it. Recovery on return on investment or invested capital has been positive. 15% in the industry, you have been at the 18% level. Could you give us some more visibility as to what you expect once you have that ROIC established, maybe looking 12-24 months down the road?
Thank you for your question, Luiz.
Let me start with the capital allocation. Let me address the second part of your question. What's on the table is the contract that has both put and call options starting in 2026, between 2026 and 2028. I have to make that very clear. That's what we have on our table today. Let me once again state that Comerc has been generating a BRL 1 billion EBITDA in the past 12 months. Very relevant numbers, and Vibra has a 50% stake. Let me point that out. Over 90% of the projects have been delivered, so Comerc has been delivering according to plan, and again, generating over BRL 1 billion a year. That's very relevant. On to capital allocation. We'll maintain our dividends distribution policy, and that is at minimum 40% of our net profit.
And of course, we'll always be considering opportunities as to how we're going to address those opportunities to allocate capital that can generate better results to our shareholders. Once again, we'll always be monitoring, looking for these opportunities, but there's nothing on our radar at this point in time. So keep on distributing at least 40% of our net profits. As to ROIC, the company's discipline is, of course, very strict. Our variable bonuses are related to ROIC. This is something that we keep pace with very closely. There is no guidance as to the better the ROIC, the better it is. Of course, return, we work on maintaining the company's margins at the highest possible level, that's the number one challenge. Growth, expansion, huge revenues, any percentage in margin represents a lot of money. Of course, there's a direct impact on ROIC.
Onto employed capital or allocated capital. We have more investments in the agri business, as we said late last year. A little over BRL 100 million CapEx for the agri business in some regions, but the allocated capital is more controlled. So ROIC will maintain at that higher level, but sustainably. That's what Ernesto said in the first part of the presentation. This is the fourth quarter in a row, and then you, after the third and fourth quarter, you establish a trend, actually. So the ROIC is expecting to reach that or to maintain it above 15% still in this year.
Let me just follow up on that answer, Augusto. Your margins were about 130, we're thinking about that, but my margins were higher.
Ernesto talked about that range between 130 and 140, and we're now seeing 140-160. So that's my question about ROIC. How would that play out in the margins you'll be delivering?
So you mentioned my name, let me try to address that answer. Based on what we've seen, a very complex dynamics played out in Q1. Many or a lot of products coming in through Amapá via that unfair competition practices, a lot of imports in later the last year. Despite that, we have maintained margins and recovered market share, still gradually. Again, the company has been showing its capacity to deliver. Maybe I think we should take a look at the past 12 months. That could give you an indication of what we expect, starting from that level and try to continuously improve those numbers.
Our management has been very stringent. We want to reduce volatility, and we've been able to prove that despite some swings, especially last year, we managed to reduce volatility. We have been focusing on image, and as our competition grows, we're going to recoup some of their market share. There are no targets established yet, so a good indication would be the past 12 months. Structurally, that should be 700+. The message remains positive. Everything we've done internally is to become even more competitive. More profitability will allow me to give me more room to recover market share. Ernesto, Ernesto gave you a last 12 months performance. Year after year, it's getting harder and harder, but Vibra has been growing its profitability and the market share, size, volume, and profitability.
This is something that we have to remain flexible to, of course, look for the best solution, but our vision remains positive.
Thank you, folks. Perfect.
Gabriel Barra from Citi asks the next question. You may unmute your mic.
"Hello, Ernesto, Augusto. Congratulations on the results. Let me address two issues. One of the few pushbacks was cash generation. Working capital was a little higher. There is the seasonality effect, but there is also the inventory aspect that hurt a little bit, especially in late March, because of the imports, as you said. What's that dynamics now in April? Is it back to business as usual? Could you please explain what was the main driver behind that higher inventory levels and a worse dynamics in terms of imports? Could you talk about strategy?
I know it's not easy to talk about strategy, but we were talking about imports, and there was a change in the company's perception of being more constant as far as imports are concerned, trying to rule the market to a certain extent. Has that changed in any way? On to my second question. You've been talking about the brand, right? Vibra. Just seeing that the number of stations were down, and I think it has to do with the market share, right? Can you elaborate on how the branded stations, what's their conversation is with Petrobras? What's your take as to having more branded stations? You talked about decoration last year. Are we to expect an expansion in that network or not?
Let me break down into three answers to your question. I'll talk about the brand, imports, and then Augusto will address cash generation and inventory.
As to the brand, nothing to add. We remain, or the contract with Petrobras remains valid all the way to 2029. There's no relations whatsoever between decreased number of stations. The contract is valid by 2029. There are 6 years of branding effort. There are nothing new under the radar there. As to reducing the number of stations, we're actually looking at the VMM growth. Stations that can generate profitability to gas owner, gas station owners, and to give the company good financial results. We do not have a preconceived plan. We'll constantly monitor the number of gas stations. This number can go down a little further. There are no plans whatsoever. "I'm going to reduce these number of stations." No, that's not the case.
But on a monthly basis, we do have a committee in place to manage exactly the number of stations, and one of the topics we discuss in the committee is, are there opportunities out there to maybe improve the quality of our resellers, including some, reducing others that do not yield those volumes that we expect? So these stations that were removed from the network were very low volumes, almost irrelevant impact in our results. Again, this number may vary a little higher, a little lower, but again, we constantly monitoring it. Again, it's not a program. This is done on a regular basis. Here's what we want to do, and let me emphasize that: our strategy in retail is to grow with our network. This is our focus. We'll keep on serving unbranded stations, and that inclusion can be either through new gas stations or the VMM growth.
As to imports, overall, we want to take a more conservative approach. We don't want to speculate in the marketplace. Even late last year, we imported a little more because of those tax-related opportunities, and even in January or February, but our move was more conservative. Results should come from management, not because of an opportunistic decision. We want consistent results quarter after quarter, and we want to deliver results from the next 2, 4, 5 years, just like Augusto said, "Raising the bar and delivering results at a different level."
On to cash now. It was a difficult quarter. You have to take sourcing decisions based on expected demand, as you've seen inventory levels. So market share, ambitions, price, and profitability. Profitability when compared to the gas stations network, and your inventory is right there in the middle, impacted from left to right.
So we wanted to strike the best solution possible for the first quarter. That's the result we showed you. Record high profitability for a first quarter, recovering market share from 4.2 to 4.6. Overall, market share growth. Good news is, of course, you can make adjustments. Either I sell more based on my projections, and/or I adjust my sourcing. I import less or maybe a smaller quota from one region. That equation has been proven right in early Q2. We may return to regular levels at the end of this second quarter. Let me just address demand in Q1 because of agribusiness. There was a delay in the planting season, and the production of last year was delayed. Moving that inventory was delayed, so the demand was below expectations from everyone, actually.
That actually impacted as well, and we see some different dynamics being played out. The market is more active, agribusiness is picking up again, and now it's a different scenario as far as the demand is concerned, especially in late April and early May...
That was very clear. Thank you.
Vicente Falanga, Bradesco BBI, is up next. You may unmute your mic, please.
Good morning, Ernesto and Augusto. Thank you for taking my call, my question. Well, here's my first question: What's your take on the impact of the floods in Rio Grande do Sul? What has the company done to mitigate the situation for both the company and the population there? My second question is about B2B. Despite lower volumes in some segments, and the market was flooded with supply, you have been able to maintain stable profitability. It's been very stable.
I would like to understand what you've been doing to keep on delivering good results.
Let me address the question, Augusto. Feel free to join in. Good morning. Onto the floods in Rio Grande do Sul, this is, of course, very sad. The entire company, and we as individuals, were impacted by this record flood. We had never seen such a thing, at least in Brazil. So all of us, as individuals, and of course, as an institution, we are fully committed to helping because it is a calamity. The pictures we've seen, the footage we've seen, it's difficult to absorb all that. But as a company, just like as an individual, as Ernesto, I think we should contribute so that the state can get back on its feet. We've taken several actions at Vibra. Our Canoas base was shut down for a short period of time.
We very quickly managed to restore its operations. That was the first base to resume operations. Fuel is very important to the region. So again, we have been, you know, doing whatever we can to restore operations. We were there by distributing food. The team was working around the clock. We had a team of volunteers from other units that decided to chip in to help out. Our Canoas team was resting at an Air Force base there, and this new team took over. Again, it's a huge effort to keep on operating and supplying fuel to the region. We keep on donating as a company, as Vibra, Movimento Brasil, at through IBP, with other major distributors, other major corporations, and the, we are providing fuel or jet fuel to the Air Force, to the Brazilian Navy. We've donated food, water, so the company's doing whatever it can.
We are inviting the gas station network so that they can contribute, too, to promote those donations. As to the impact to the business, this is relatively small. It's an important state, of course, but that's not the number one share in the country. Still, a very important state. We are at 40%-50% of the base. That could be operating at 100%, but roads are blocked, so that is not at 100%, as I said. We're now trying to consider some support to our resellers. We haven't finalized our plan, but we've been discussing with the unions in Rio Grande do Sul to find out ways to help resellers that had their gas stations flooded. There's fuel that has to be drained.
Again, several activities on behalf of Vibra to support the resellers in Rio Grande do Sul, so that they come back on their feet as soon as possible and to operate profitably. Of course, it's a very sad situation. We are working on several fronts to try to somewhat or somehow mitigate that excruciating pain. The second question about B2B, we have been working very hard, focusing on B2B, trying to maximize that focus, actually, focusing on our end consumer. But we understand how important it is, the TRRs, and we're going to be having more partnerships with these TRRs.... So B2B will be delivering even further, raising the bar to a certain extent. There are some B2B related projects that I'm sure will be delivering consistent results to improve margins. Again, bringing B2B to a different level and also helping Vibra take profitability levels to a different position.
Not to mention lubricants, 2023 had better results than 2022, and this year results, Q1 results, are better year-on-year, so that falls within B2B. In a nutshell, several indicators help us believe that we're going to stabilize B2B at a higher level. Let me give you some figures. The mixed lubricants and synthetic lubricants, they have more value added. It's not only a matter of price. Products with higher added value, services, so the value proposition is better, so profitability is better. I failed to mention, but the last bullet point, that was the Unitractor, 4,000 hours of operations before you have to change the oil. Of course, you have more appropriate prices, and you can add more value there. Year-on-year, last year, for example, we had some demurrage losses in late 2023 or 2022, 2023.
We corrected the problems last year, and benefits are clearer and clearer. Of course, B2B has its efficiency component. That's why we have managed to change the profitability levels also in B2B.
All right, that was very clear.
Pedro Soares from BTG Pactual asks the next question. Good morning, folks.
Good morning, Ernesto and Augusto. Actually, I have a follow-up about the gas stations network. I think, Ernesto, you made that very clear what your goal is. I don't know whether you could give us a breakdown on the gross inclusions and the gross exclusions of gas stations, because we can only see the net results. But the volumes of gas stations that are being excluded is insignificant, so they would be excluded anyway. Could you share what the volumes were of these new included gas stations compared to the average?
When you think about market share stabilizations or stabilization we've seen in this past quarter, I think this information could be interesting so that we can have a better picture for the future.
As to the breakdown of the inclusion of gas stations, I do not have that number here. But the main driver is what we're doing, actually. We should see some decrease in the number of gas stations, but we want to maintain some stability between 8,000-8,200 gas stations. I think it's a good number of gas stations scattered throughout the country. We'll keep on investing to have more branded stations, and we'll always look for gas stations with 200 cubic meters and above, so that's a good target. Of course, markets change. You have highway gas stations, 1.2, 2 million, 3 million liters, and you have urban stations.
200 cubic meters is interesting for an urban station. The company will reach or will strive for that 200,000 liters minimum, which is relevant, so that we can keep on increasing our VMM. This is a very important component to increase our VMM. I mean, adding gas stations above our monthly average.
That was very clear. Thank you, Ernesto.
Rodrigo Almeida from Santander is up next. You can unmute your mic, please.
Good morning. Good morning, Ernesto. Augusto, can you hear me? Yes, go ahead. I would like to address some other issues. You talked about OpEx, the transformation office. I would like to hear an update as to what we can expect as far as efficiency gains and use, usage.
I would like to ask you to elaborate on processes, efficiency gains, CIF versus FOB. And my second question is, can you give us an update onto about lubricants and the plant expansion? What is the relevance of this business down the road? And finally, as to tax credits, what can you expect in terms of what has been booked already in LC 194?
There are several projects as far as OpEx are concerned. You mentioned a few, CIF versus FOB. We have a platform in place. We want to render services to our suppliers or and our customers, especially to the credit CIF services. We do have monthly business meetings. We have the OpEx monthly business. We analyze every account for any opportunities before we decide to hire any consulting services, anything you can think of, consulting, training, and then the personnel package.
We discuss that at length, and that is why we can offset cost increases, collective bargaining increases in salaries, anything else that can impact costs. Our OpEx control track record is very good. There's one slide in our presentation about BRL a few million of sell-side within investors. We showed that profitability track record in the first 1-2 years. Most of that profitability comes from adapting expenses, number of employees, the size of investments in several projects, among other things. Vibra has been working hard in the past 4 years, and we've done excellent work. We're not expecting major OpEx reductions. The margin expansion will come, will be coming in line with gross profit, price, especially from that competitive advantage and maintaining OpEx under control. It's not going to be hurting our higher EBITDA, adjusted EBITDA margins. Again, we have that management discipline in place.
All projects are underway. Expenses are closely monitored. We have the transformation office, we have that channel for this project to expand our business units. The OpEx is something very closely monitored. The SG&A. SG&A is something that has been worked on very diligently. We will maintain that discipline and by providing incremental gains. Whenever there's room for improvement in terms of gross, gross profit, there are some opportunities in logistics. We've already done something last year that was very relevant, but there's still some room for improvement in logistics. What base? From what base to what base you're going to move product. We're adopting AI more and more so that we can maximize results out of that logistics efficiency. On the other hand, this is from the transformation office, so the focus remains the same to keep on improving, to boost volumes and margins of our special fuels.
We have maintained the volume, 20%, 20.5% of special fuels. However, profit moved from 25 to 27, so that shows margin and helping us to maximize additive enhanced fuel. We are introducing new lubricants for the agribusiness, Unitractor, that provides advantages to our customers and at the same time providing better margins. Again, there are several projects. Several projects can be to be to better serve customers and gain market share with direct customers, and margins are better there. So the focus will be there. So the transformation office has been delivering efficiency gains. Most of that inventory gains came from better integrated management, S&OP, as we call it. So this has been moving along according to plan, delivering results, not in the SG&A.
That will remain under control, as we said, but other more relevant gains will come from gross profit line, some top line. As to lubricants, by year's end, the plant will be at full capacity and a 50% production increase in that plant, so it will be in full operation. We'll keep on expanding, both in retail, but most especially in B2B. The cross sell for lubricants in B2B is huge there. Juliano joined the company, and he did some relevant work already, showing that we have very few customers that purchase beyond diesel. Again, this is an opportunity to cross-sell, and we're working with our sales team, mobilizing them. We have a lubricant director focused in this business to bring in results. We're working with the OEMs, something we did not do. Our lubricant business is going to reach a different level in years to come.
Gradually, the results will be very relevant. On to tax credit. The consumption of LC 192, expected to the second semester of 2025. As to LC 194, latter, the end of Q2 and then Q3 will, a decision will be published.
The last question comes from Bruno Montanari from Morgan Stanley. You can unmute your mic, sir.
Good morning. I have two questions. Let me go back to capital structure or capital allocation. There was a strong pressure for capital. Still, leverage remained flat at 1.1x. If that working capital goes back to the business, volumes will go up and margins remain healthy, are you considering a leverage that is below 1x? What would you do in that scenario?
Would you have leverage below optimum, or is it something that is a trigger to distribute supplementary dividends in the short term? That's a possibility. My second question: the entire industry is focusing in agribusiness. What's the competitive take in this specific niche? Are margins, are that attractive? Is there room for everyone, so that everyone can take a, a piece of that pie? Is this industry growing more than the average?
As to capital allocation, our performance is very good in that sense. By recovering working capital, we have a cash recovery as a consequence, but we do have other uses of cash. Paying dividends, for example. We do have a BRL 16.6 billion gross debt. We have a planning to reduce that gross debt, so use of capital is very well mapped out.
If we go beyond that one-time threshold, of course, that has to be taken into account. This is a decision to be taken by the board, whether you distribute or not, that extraordinary dividends. Out of that 1.92, that remains stable. Our leverage is 1.5 times, and we'll see 1.92 later this year. The end of Q1 next year, that leverage will be adjusted. That's why I showed you the indicators without that one-off effect. So if leverage keeps on coming down, imbalanced to a certain extent as far as capital usage is concerned, we may reconsider that, and that's up to the board. An extraordinary dividends payout would be or could be one of the options. But we still... We, we first have to have the problem. We'll, we'll cross that bridge when we get to it.
As to your question about the agribusiness, it's a very peculiar industry. Most is supplied through that TRR. You have a very direct relationship with the TRR. So Vibra is preparing itself. It's paving the road to provide specific service to the agribusiness. There are some fronts. We brought in a very experienced executive. They know, or he knows all these stakeholders or these prospects in this industry. We're going to set up a team more dedicated to be even more present. Vibra is expanding the Cuiabá base. Augusto showed the Belém and the Santarém base, more specifically. Imported diesel oil can come directly, and we can unload that diesel there at the Santarém base. So it gives us a huge competitive advantage to supply southern Pará, northern Mato Grosso, so that gives us an outstanding competitiveness.
The Cuiabá, Porto Velho, Dourados, we are considering possibilities to expand in Mato Grosso. I've just been to Mato Grosso recently. I'll be there in two months. So we have a unique competitive position in terms of size, its power, its strength, and our capillarity, and we are now being prepared. We're preparing ourselves to supply the agribusiness. So two years down the road, we'll be at a different position in agribusiness, and we are actually focusing on B2B. That was one of the levers to grow our B2B. This is going to come from the agribusiness activities.
That was very clear. Thank you, Augusto. Thank you, Ernesto.
This concludes the Q&A session. I'll turn it over to Mr. Ernesto Pousada for his closing remarks.
Thank you all for attending the call.
I once again would like to emphasize what I said at the beginning, and that's the consistency in delivering results. We've had consistent results four quarters in a row, despite market challenges, very different quarters, and this is going to remain the same in the near future. We'll consistently deliver results that are more solid, that are better, focusing on growth, not only in terms of margin, but also market share growth. And will happen gradually, leveraging the competitive advantage in terms of logistics assets, sourcing, and our unit OpEx, the lowest in the industry. So we remain very confident. We're very pleased with the results delivered in Q1, and we remain confident in the future of the company. Thank you all very much. Have a great day. This concludes Vibra's earnings call. Thank you for attending, and have a wonderful day.