Earnings call: Cosan reports stable growth amid strategic shifts

Cosan Ltd. (NYSE: NYSE:CZZ) conducted its Third Quarter 2024 Earnings Conference Call on November 7, 2024, with Mr. Rodrigo Araujo at the helm. The company highlighted a disciplined approach to capital allocation and liability management in a challenging interest rate environment. Cosan reported a slight increase in EBITDA to RBL 8.2 billion from RBL 8.1 billion in the same quarter of the previous year.

However, net income decreased to RBL 300 million from RBL 600 million due to changes in dividend accounting. The company's net debt remained stable at RBL 21.7 billion, with a debt service coverage ratio of 1.2x.

Key Takeaways

• Cosan's EBITDA increased marginally to RBL 8.2 billion in Q3 2024.
• Net income dropped to RBL 300 million, affected by dividend accounting method changes.
• The company's net debt was stable at RBL 21.7 billion, with a debt service coverage ratio of 1.2x.
• Strategic acquisitions included Compagas by Compass and Pax Group by Moove.
• Safety metrics showed a slight increase in incidents, yet remained within acceptable levels.
• Raízen faced reduced sugarcane crushing due to weather but saw improved sugar results.
• The company is preparing to address callable bonds in January 2025 and is optimizing its portfolio.
• Nelson Gomes announced his departure as CEO of Cosan, with Marcelo Martins taking over at Raízen.

Company Outlook

• Cosan is focused on optimizing its portfolio and managing liabilities effectively.
• Plans are in place to address callable bonds in January 2025.
• Raízen is refocusing on core operations, particularly in mobility, sugar, and ethanol.

Bearish Highlights

• Net income was impacted by dividend accounting changes.
• Safety metrics saw a slight increase in incidents.
• Raízen's sugarcane crushing was reduced due to adverse weather conditions.

Bullish Highlights

• EBITDA saw a slight increase despite market challenges.
• Rumo reported increased transportation volumes and tariffs.
• Compass saw a rise in natural gas distribution.
• Moove achieved a 9% EBITDA increase despite lower volumes.

Misses

• The debt service coverage ratio is below the ideal target of 1.5 to 2x.

Q&A Highlights

• Management discussed potential private placements with Compass and Moove, dependent on favorable valuations.
• The decision against IPOs for Moove and Compass was based on unfavorable market conditions.
• There are ongoing efforts in debt reprofiling, with successful recent debt issuances.
• The U.S. elections did not directly impact Cosan's liability management.
• Support was expressed for potential gas release initiatives in Brazil.

Cosan remains committed to strategic adjustments and maintaining strong investor communication, as evidenced by the company's disciplined approach to capital allocation and liability management. The company is navigating a dynamic macroeconomic environment with a focus on portfolio optimization and effective management of liabilities. Despite challenges, Cosan continues to execute strategic acquisitions and manage its debt portfolio successfully. The leadership transition marks a new chapter for the company, with Marcelo Martins set to continue the legacy of strong management and strategic focus.

InvestingPro Insights

Cosan Ltd. (NYSE: CSAN) continues to demonstrate resilience in a challenging market environment, as evidenced by its recent earnings call and supported by data from InvestingPro. Despite the slight decrease in net income reported in the earnings call, InvestingPro Tips indicate that net income is expected to grow this year, suggesting a potential turnaround in the company's financial performance.

The company's focus on disciplined capital allocation aligns with the InvestingPro Tip highlighting that Cosan's liquid assets exceed short-term obligations. This financial stability is crucial as the company prepares to address callable bonds in January 2025, as mentioned in the earnings call.

InvestingPro Data shows that Cosan's P/E Ratio stands at 8.46, which is relatively low and could indicate that the stock is undervalued, especially considering that the company is trading near its 52-week low. This valuation metric, combined with the InvestingPro Tip that analysts predict the company will be profitable this year, may present an interesting opportunity for investors.

The company's commitment to dividend payments, as noted in the InvestingPro Tip that Cosan has maintained dividend payments for 15 consecutive years, is particularly noteworthy. With a current dividend yield of 4.02%, according to InvestingPro Data, Cosan offers an attractive income opportunity for investors, despite the reported decrease in net income.

For investors seeking a deeper understanding of Cosan's financial health and growth prospects, InvestingPro offers 8 additional tips that could provide valuable insights into the company's future performance and investment potential.

Full transcript - Cosan SA ADR (CSAN) Q3 2024:

Operator: Good morning, everyone, and thank you for waiting. Welcome to Cosan's Third Quarter 2024 Earnings Conference Call. For those who need simultaneous interpretation, we have this feature available on the platform. To access it, simply click on the interpretation button via the globe icon at the bottom of the screen and choose your preferred language, English or Portuguese. For those listening to the conference in English, there is an option to mute the original Portuguese audio by clicking on Mute Original Audio. Please note that this conference call is being recorded and will be made available on the company's Investors Relations website at cosan.com.br. You can also download the presentation, including the English version, in the chat icon. During the company's presentation, all participants will have their microphones disabled. Following the presentation, we will begin the Q&A session. We would like to highlight that the information provided in this presentation and any statements that may be made during the conference call regarding business outlook, projections, and operational and financial targets of Cosan are based on the company's management's beliefs and assumptions, as well as information currently available. Forward-looking statements are not performance guarantees. They involve risks, uncertainties, and assumptions, as they refer to future events and, therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions, and other operational factors may affect Cosan's future performance and lead to outcomes that differ materially from those expressed in such forward-looking statements. I will now turn the call over to Mr. Rodrigo Araujo.

Rodrigo Araujo: Hi, everyone. Good morning. Thank you for joining us in our earnings call for the third quarter of 2024. Starting here with management priorities, I think that's something that we've been reinforcing over time. The fact that we're focused on being quite disciplined in terms of capital allocation and looking at improving leverage by doing liability management and portfolio management at Cosan, especially to navigate this higher interest rate scenario. We continue to be focused on the execution of what we have in the portfolio. Continuing to deliver the expected results from the business plans of the different businesses, of course, always with high safety standards and focused on developing our talent pipeline. And on this quarter specifically, it's relevant that we had a lot of different movements in management positions within the group. And they were clearly supported by the pipeline of executives that we have internally and have been developing over time, and I think that it shows the ability that we have to have people ready to occupy different positions within the group and to have management positions occupied by people that are being developed internally. And also, it's important to highlight that we continue to support the agenda of contracted growth, investing in the opportunities that we have in the different structural projects of the different businesses within the group. In terms of portfolio management and liability management this quarter, first I will highlight in Cosan the fact that we amortized RLOG debenture that we announced last quarter. So basically, taking out all of the amortizations from ‘24 to ‘26. We also recently issued the debenture in the domestic market in Brazil to support the liability management of our 27 bonds that are still outstanding and become callable at par January 25. In terms of portfolio management. In Compass, we completed the acquisition of the control of Compagas, the natural gas distribution company in the state of Paraná in Brazil. We also concluded the sale of Norgás, basically relevant portfolio management with inflows that support the growth of Compass portfolio. In Moove, we concluded the acquisition of Pax Group that brings important flexibility in terms of industrial operations for Moove. And in Radar, we concluded the sale of Vista Alegre farm. Looking at the highlights of the Q3’24, first if you look at EBITDA under management that is aligned with the Q3’23. We also had positive net income of around RLB 300 million, comparing to a little bit over RLB 600 million in ‘23. Basically, the main differences are the impact of the dividends from Vale that we received in ‘23, and we accounted for Vale back then at fair value, and now we have the equity pickup method. And also in this quarter, we have the negative impact of the TRS of course on shares in Cosan. In terms of safety metrics, we see a slight increase compared to the second quarter of ‘24. Basically, we had a quarter with a higher number of accidents in the third quarter. Of course, we continue to be very focused on having the highest safety standards and improving our safety metrics. We continue to be within the acceptable level, and even though we're focused on reducing any incidents or accidents, we still have our safety metrics within the acceptable levels. Looking at dividends received this quarter, slightly above BRL 300 million. Net debt basically flat compared to Q2, BRL 21.7 billion, and our debt service coverage ratio of 1.2x in the last 12 months, slightly below Q2 ’24. Looking at the portfolio and the results of the different businesses, starting with Rumo, we had higher volumes transported in Rumo with higher tariffs as well, which resulted in higher margins in the third quarter. We also gained market share in the Port of Santos. So, we had an important quarter in terms of operational results in Rumo. Compass increased the volume of natural gas distributed, and we also have the progress of Edge operations. We continue to connect new consumers in the open natural gas market in Brazil. So, we have the recovery of volumes and the progress of Edge operations resulting in stable EBITDA, Q-on-Q. We also have in Moove, even though we had lower volumes this quarter, we continue to have product mix and commercial strategies supporting our EBITDA increase. We had 9% EBITDA increase Q-on-Q in Moove. In Radar, even though the results of the lease of agricultural properties were in line with last year, we had lower EBITDA mainly because last year we did the appraisal of the land in the third quarter. This year, we expect to have the appraisal occurring in Q4 ‘24. So, that's the difference between quarters. In Raízen, we had the impacts of drier weather and fires reducing the sugarcane crushing levels for this quarter. And we also had lower ethanol prices impacting the company's EBITDA for this quarter. This was partially offset by better results in the sugar business. And we also had the contribution of Vale to our EBITDA through the equity pickup method of around RBL 500 million. So, looking at the EBITDA under management, we came from RBL 8.1 billion in 2023 to slightly above that RBL 8.2 billion in 2024. Finally, looking at our debt profile and our financial metrics, as we mentioned, you see that net debt was slightly above Q2, RBL 21.6 billion to RBL 21.7 billion. We also had Vale shares appreciating slightly Q-on-Q, RBL 11.3 billion. And we also had our interest coverage ratio reducing slightly from 1.3x to 1.2x for the last 12 months. In terms of the maturity profile, the amortization profile, you can see that we've already tackled all the amortizations that we had from 2024 to 2026. And we are currently doing a local debt capital market transaction in Brazil to do the liability management of the 27 bonds. They become callable at par January next year. So, that's the next target in terms of liability management. Especially comparing to last year, you see that we improved the maturity profile to 6.4 years. And the average cost, we've been able to reduce the average cost to CDI plus 1.37%. So, we've been able to navigate the favorable debt capital scenario in Brazil to not only lengthen the maturity, but reduce the spreads at the same time. Finally, looking at our cash flow for the period, the main highlight is the fact that we ended up the second quarter with a higher cash balance. That was mainly because we liquidated the debt, the debenture transaction in Brazil in the end of the quarter. And we only prepaid the RLOG debenture during the third quarter. So, this RBL 1.2 billion of liability management happened during the quarter. So, basically, that's the main reason for the cash balance to come down from RBL 3.9 billion to somewhere around RBL 2.5 billion. So, thank you very much for joining our call for the third quarter. And we're going to move on to our Q&A session.

Operator: We will now start the Q&A session with Nelson Gomes, Rodrigo Araujo and Fernando Tinel. To ask a question, you must click on the raise hand icon at the bottom of the screen to enter the queue as your name is announced. A request to enable your mic will appear on the screen. You should accept it to ask your question. We ask you to ask at most two questions. Participants in English, questions should be asked in writing in the Q&A box. Our first question from Isabella Simonato. You can ask your question.

Isabella Simonato: Good morning, Nelson. Rodrigo, thank you very much. Nelson, I'd like to take this opportunity, since you're here, considering the changes that were announced, the management changes. I wish to understand the context in which that takes place. It is relatively clear, but more than that, I'd like to hear how you see Raizen as we speak. Apparently, when we look at all changes, there is a greater focus on Raizen because of your transfer. What can we expect from Raizen under your management? Thank you.

Nelson Gomes: Isa, good morning. Thank you for the question. What we have noticed from the market coincides with our motivation to promote that change. We noticed over the past few months a clear need for a change or an adjustment in Raízen's portfolio and the way Raízen is conducting its business recently. That's why we made the decision to make that change, to promote the change, not only of the CEO, but also the CFO, so that we begin a new phase on how to manage that Raízen portfolio management. Looking at the context to your question, what is my perception? It is that over the years, we moved away from our current business. We created a number of peripheral initiatives that, over time, stole the attention of management, growing the structure, making the structure perhaps way too complex for the market to understand all the revenue sources in our portfolio. And we now enter into a post-investment phase to make sure that the investments made will have an appropriate return to investors and that we should return to Raízen a focus to its core business as it deserves. So, we will focus on mobility and sugar and ethanol. And the peripheral activities will be treated as we deem needed over the next months and years. So, it is a change. It was a need perceived by Cosan and Shell (LON:SHEL). It is important to mention that, to your question, the change was made in common agreement with the Shell partner. This is my last call with you as Cosan. Starting now, I will meet you at the Raízen calls starting next quarter.

Isabella Simonato: Excellent. If I may ask a follow-up question. What do you consider peripheral activities? And E2G, it has been a major investment made by Raízen with the potential returns and benefits, but it has required a lot of capital. Where does it fit in that focus on your core business?

Nelson Gomes: E2G is part of core, like sugar and ethanol. So, right now, we have two plants in operation, COPE [ph] and Bonfim. COPE [ph] was the first one. Bonfim, that has been operating for almost 12 months. We have two plants that will be commissioned starting this week, and two plants that are under construction. At some point we will re-discuss and re-assess E2G. But plants under commissioning today, [inaudible], and those under construction, Gaza and Vale do Rosário, will be concluded. And as I said, my work there will be to make all those investments made in the past few years, which includes, obviously E2G. Well, we have to make sure that those returns will go back to shareholders. Right now, no decision has been made about the continuity of E2G expansion. It is now time to conclude those two plants that are under commission to operate well. To conclude those that are under construction within the deadline and within budget, and then assess a possible decision for other plants or not.

Isabella Simonato: Thank you very much.

Operator: Our next question is from Thiago Duarte from BTG. You can ask your question.

Thiago Duarte: Thank you. Good morning, Nelson, Rodrigo. I would like to discuss the debt service coverage ratio. When we look at the dividend sources in the past 12 months, what is eye-catching is Compass with a capital reduction, assuming that this type of event will not occur, and imagining that the dividends from other operations will not be very different with the current levels of interest rates. It seems that that ratio will drop even further in the future quarters. So, my question to you is, do you believe that this is a realistic scenario that I'm assuming? And what is the degree, not discomfort through, but what is the level of this coverage ratio that will generate more discomfort? There are different levers that have been discussed a few times in the calls. The possibility to generate inventory returns, but to improve those numbers, I wanted to understand the debt service coverage ratio that makes you more comfortable.

Rodrigo Araujo: Thank you for the question. Good morning. I'll start to your first point about dividends and the increased dividends. At the end, you talked about the profile of our liability to match the duration of our debt with the CapEx cycle of the business. This is something we did over the year. Over time, we expect the maturity of our business capacity to increase in dividend payments, as we had at Compass after a relevant CapEx cycle. But we know there is a limit for that to happen. Being quite pragmatic to your question, your vision is correct. Our ratio is closer to the number this quarter, perhaps a little below, so your analysis is correct. Assuming that we are not going to take any measure, that point is important. Our focus in having speed, in having portfolio management of Cosan will be aligned with that. We conducted a first phase, which was to adapt the profile. That is the profile that will give us the necessary time for the maturity of portfolio management to take place. As you said, we had all the liability management for 2024-2026. We will now do for 2027 and then 2028. But you are correct. We have a sense of urgency that we need portfolio management to enter into a healthier level and an organic level. Something we can carry without depending on extraordinary dividends of the businesses. The sense of urgency to us is clear, Thiago. More than a minimum, I think the sense of urgency is already there. We look a lot more at the optimum level. As I said, between 1.5 and 2 is what we should look at as ideal. More than thinking of a minimum, so I think the sense of urgency is clear on our side and we are working on that. Thank you for the question.

Thiago Duarte: Super clear, Rodrigo. Thank you very much. And as far as what can be done with the portfolio, you are not pointing to any direction as yet?

Rodrigo Araujo: Well, you know that we’ve been working on options. Obviously, some of the businesses where we have a greater stake, we have more flexibility to do portfolio management, maintaining control and capturing a relevant part of the upside. Marcelo alluded to this recently. One of our priorities, Thiago, is to do that without jeopardizing the quality of the final portfolio. So to look at a portfolio mix, that after management will be okay. This is relevant. The sense of urgency is there. We have alternatives. We have different alternatives on the table, but we don't want to adopt something that will make the quality of our portfolio worse.

Thiago Duarte: Super clear. Thank you.

Operator: Our next question, UBS.

Matheus Enfeldt: Good morning, Rodrigo. My first question is more conceptual. I apologize if it's way too philosophical. What does it mean to be in the Cosan group for subsidiaries? How does Cosan contribute at the board level only in practice? What does it mean when you say that you support the growth agenda of your businesses and to see how Cosan monitors projects, results, the strategy of subsidiaries? Or if part of Nelson's scope so far was to monitor the CEOs of subsidiaries or the structure within Cosan, then he is responsible for that monitoring? More process and flow. That was it. Thank you.

Marcelo Martins: Matheus, this is Nelson. I'll try and answer. This is part of our daily life. What does it mean for a company to be part of Cosan's portfolio? Well, access to a management model, a culture and a way of doing business that we still believe is irreplicable in the market. We had more successes than failures assessing the last few years, and we will keep on looking for more successes than failures moving forward. So challenges will always exist. I think my role so far at Cosan and Marcelo's moving forward is not to demand the subsidiaries, but to be close to them, to build together and to look for opportunities to unlock value as we did with most of our portfolios so far. If we look at our track record of all assets that we acquired over time, in the vast majority we significantly unlocked value, which allowed us to follow this trajectory of acquisition over the past 15 or 16 years, ever since I joined the group. So that's what it means. But to me, most importantly, my first answer is to be part of a management model, a culture, a way of doing business that unlocks value to shareholders.

Matheus Enfeldt: If I may ask a follow-up question, how did you come to the conclusion that perhaps Raízen needed change? Just to understand how that decision was made, how that discussion took place, the timing. I'm sorry, the question is perhaps way too philosophical. I just wanted to understand the thought process.

Marcelo Martins: Matheus, there is no right or wrong to that question, but over the past few months, what we noticed, as I said when I answered Isa's question, always analyzing with our partner Shell, we felt a need to adjust the course. And once we came to the conclusion it was necessary, we made that decision swiftly and effectively, making the necessary changes in common agreement with the two shareholders. It is a natural assessment and we do it continuously with all our businesses. And with Raízen, it was time to change at the end of a cycle, but we deemed necessary to make a quick change, because the shareholders felt the need to make that change. Thank you.

Operator: Our next question is from Monique Greco from Itaú. You can ask your question.

Monique Greco: Good morning, Nelson, Rodrigo, Fernando. Thank you for the opportunity to ask a question. I'll ask two. One about Vale, if you can share with us an update about the investment in the company, the main expectations, about the performance of that investment in the near future. The other question is about Moove and Compass. How are you reconsidering the possibility for an IPO of those businesses, considering the challenging market context? What are the alternatives that are on the table today for future transactions for Moove and Compass?

Marcelo Martins: Good morning, Monique. Thank you for the questions. I'll start with Vale and then Nelson can chime in. As for Vale, we had some important moves recently, a successful succession process. The beginning of a management focused on some points we consider to be important to unlock and generate value at Vale. So, we believe we can create value in that process and we see events that we consider to be important to unlock value in the company. Obviously, we monitor the macro scenario. What will happen or is happening in China, that's also an important indicator for us to monitor over time. But there is no change about our perception. It's always important to reinforce that the asset is liquid. We are happy with what we are being able to deliver in terms of value creation, but the asset is liquid. It's something that we monitor constantly. So, that's the current status.

Nelson Gomes: Monique, as to Moove and Compass, for different reasons and different times, we decided not to move on with the IPO. This decision is never easy, but in the case of Compass in 2021, when we made the decision not to go ahead, at the end it was the right decision, because we ended up having two rounds of private placement. That brought a greater evaluation of the company and that's why we decided not to follow with the IPO. In the case of Moove, besides the deterioration of the domestic scenario by foreign investors, the quality of the book didn't please us. It was short term and therefore, because of those two reasons, we decided not to move ahead, which doesn't mean to say that over the next months and years we will not have an opportunity of liquidity like private placement. We don't rule out private placement opportunities with Compass or Moove. On the other hand, it has to be at the right valuation for us to go ahead with that. A specificity at Moove is that we clearly notice CVC's desire, our partner, to exit. There is no hurry in that regard, because the business is performing very well. But at some point, CVC might wish to exit. We will be looking for liquidity events for both companies, but at the right valuation.

Monique Greco: Thank you.

Operator: Our next question comes from Bruno, Goldman.

Bruno Amorim: Good morning. Thank you. I have a follow-up question to Rodrigo's comment on your debt reprofiling. You are issuing debt at attractive costs. Can you comment on those conversations with investors, debt investors? I ask that because the equity market seems to pacify a certain level of stress. What has been the feedback of your investors in the issuance of debt? Because the debt market seems to be more concerned than the equity market with the current situation of the company. Could you make a comment on that?

Marcelo Martins: Good morning, Bruno. Thank you for the question. Overall, what we see clearly is a different behavior of the debt market versus the equity market, not only due to resources flow. We have a large flow of resources in the market being directed to the credit market in Brazil, but also because of higher interest rates, so that's constructive. We always look at that. We analyze comparable costs in reals, in BRL, and we see the local market today more interesting the international market at different times. So overall, that's it. As for operations, we conducted two operations of reasonable size recently, and we see an ability to execute operations. We are focused on liability management. So, there is an allocation rotation in credit as well, but we haven't seen any type of restriction. We've been very successful in executing operations. Thank you for the question.

Bruno Amorim: Thank you. Have a good day.

Operator: Next (LON:NXT) question from Falanga from Bradesco.

Vicente Falanga: Thank you for taking my questions. My first question goes to Rodrigo. I wish to know if the U.S. election somehow affected your liability management for 2027 that you were working on. My second question, I should have asked it at Compass, but Congressman Laércio has worked intensely to approve gas release. I wanted to understand how you see that opportunity of a gas release to add, should it be approved. Thank you.

Marcelo Martins: Good morning, Vicente. Thank you for the question. I'll start with the first, and Nelson will talk about Compass. About the U.S. elections affecting liability management, we didn't see that. Not only because of the U.S. election, but because of a number of factors. The year was very volatile in the interest rates in the U.S. Going back to what we did from the very beginning of the year, the issuance we made in January was Treasury 10 years at 410. Three weeks after, the 10-year Treasury was 470. Two weeks after, it was 380, and now it's 450. So it was volatile, not only because of the U.S. election, it was volatile the year, this year, in the U.S. market overall. But the operation we conducted, we were looking at comparable costs, and the impact of the U.S. election was null. Before the operation, we already saw lower costs to conduct the operation in the domestic market, and that didn't change. So there was no direct impact of the U.S. election.

Nelson Gomes: Vicente, to gas release, we always advocated the major lock for the price of gas to be more competitive in Brazil, was the absence of supply. Throughout our work since Comgas was to generate opportunity, so that we can have more gas supply to Brazil, and gas release is nothing but a generation source to supply gas to the country. This makes the market move. This will have more gas available in the market, and availability will make gas more competitive. So that type of initiative on the part of the government or the Congress has our support. It is in the right direction for a more open and competitive gas market and more abundant supply. So it does have our support.

Vicente Falanga: Thank you, Rodrigo and Nelson.

Operator: Our next question from Regis (NASDAQ:RGS), XP (NASDAQ:XP).

Regis Cardoso: Hello. Good morning. Thank you for taking my question. I joined the call a little late. I apologize if the question was already asked. Nelson and Rodrigo, what was the motivation to change the management team? And Nelson, what type of strategic change do you believe would be necessary at Raízen?

Nelson Gomes: Regis, good morning. This is Nelson. Thank you for the question. That was the first question of the call asked by Isa. I'll try and summarize the answer. But if you want to follow-up with our team, we can clarify that. But the motivation comes from a need identified to adjust the route in one of our companies, which is Raízen. And when we identified that need to adjust the course, we analyzed our resources available and we allocated to Raízen what we imagined had the best fit at the moment. I emphasized in my answer to Isa that this was a decision made between the two partners, the shareholders, Cosan and Shell. And once that decision was made, we implemented that swiftly. So in a nutshell, this is what I answered. There were some questions along those lines.

Regis Cardoso: Thank you. I'll listen to the recording later.

Operator: The Q&A session has been concluded. I turn it over to Nelson Gomes for his final thoughts.

Nelson Gomes: As I said at the beginning of our Q&A session, this is my last call as Cosan. I want to thank you all for the constructive relationship we've had, all our debates and conversations over 2024, while I was a Head of Cosan. I wish to thank our internal team that helped us build this new way of working with the market over the year, the whole team of our businesses that contributed for us to truly have a Q&A focused on each business. So the beginning of the earnings calls helped us clarify our gas business. So it was a continuous evolution over the years. So I have to thank all of you listening to us, all of you with me in this journey. I also – since Marcelo Martins just entered the room, I wish him, I wish Marcelo all the success. I want to thank Marcelo for the time at the Board, at Raizen where we made tough but right decisions. And again, I wish Marcelo and the team success in this new phase at Cosan. And I'll see you at the next call across the bridge at Raizen. Marcelo, over to you.

Marcelo Martins: Thank you, Nelson. We all know each other. I want to thank Nelson for this enormous contribution he made to the group. As CEO of Cosan, as you know Nelson has been with us for nearly 16 years. He did an outstanding job. He gave very important contributions to the company during that period, and I think he is taking on a significant challenge in the group, which is the CEO of Raizen. He was undoubtedly the right person for that. All the moves were a consequence of the decision to place him there, because we believe that he not only knows the group, but Raizen at depth. He knows exactly what needs to be done. He is incredibly talented at forming teams. He's taking part of the team with him. He can make not only important strategic changes at Raizen, but Nelson has proven to be a major leader and cultural influencers in the companies he was a head of, and he will do the same at Raizen. I want to thank him for his contribution so far. I wish him luck. I'll be with him in this journey with Raizen, and we will continue in our communications as of next quarter. Thank you.

Operator: This Q3 earnings call for Cosan is over. Our department for Investor Relations is available to take questions. Have an excellent day!

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