Q2 2026 Orizon Valorizacao de Residuos SA Earnings Call
Speaker #1: And then answer session at which time further instructions will be provided. Before proceeding, I would like to emphasize that forward-looking statements are based on the beliefs and assumptions of Orizon VR's management and the information currently available to the company.
Speaker #1: These statements may involve risks and uncertainties, as they relate to future events and therefore depend on circumstances that may or may not occur. Investors, s, analysts, and journalists should consider that events related to the macroeconomic environment the company is industry and other factors may cause actual results to differ materially from those expressed in such forward-looking statements.
Speaker #1: Participating in this conference today are Mr. Milton Pilo, Chief Executive Officer, and Mr. Leonardo Santos, Chief Financial Officer, and Investor Relations Officer. I will turn the floor over to Mr. Pilo.
Speaker #1: You may proceed, sir. A good day to all of you once again. Thank you for participating in our call. Please forgive us for our delay.
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Speaker #1: We had a drop of energy here very well. I am here with Leo, and I will begin our results presentation. I will speak about the overview of our business initially.
Speaker #1: All of you know that this quarter was marked by the closing of the largest acquisition in our history. We integrated Vitao on June 22, 2026, going through the signing in December.
Speaker #1: We went through the antitrust agency received approval, and now Orizon will be the largest residue platform in Latin America. Now, it is a consolidated thesis allowing the company to now have 15.4 million tons of waste per year, 34% of share in the market, and this is geared to landfills.
Speaker #2: later.
Speaker #1: I remind you that part of the waste is sent elsewhere, but for the landfills we have a 30% share with 30 eco parks distributed in 15 states of Brazil.
Speaker #1: This is how we consolidate our position as a leader and as a platform in consolidation. Here you see an overview of the figures, and Leo will go to these in more detail.
Speaker #1: We have the volumes received per quarter, almost 4 million tons, adjusted net revenue, 981.7 million BRLs, adjusted EBITDA 291.7 BRLs, volume collected 915,000 tons, our net debt of 2,241.21.8 times net debt EBITDA ratio, and 103.1 gross profit adjusted gross profit for the company.
Speaker #1: Now, besides what we have on the screen, I would like to offer some qualitative comments in the destination part. In the one-off expenses, we had in this quarter about our destination division.
Speaker #1: I think you have perceived that this is a company's basic department, a very resilient department with price gain, volume gain, stable growth quarter on quarter.
Speaker #1: Pointing to the resiliency of this base business of the company, now with the business with Vitao, we will have a significant amount of new revenues and stability and resilience for the Orizon business.
Speaker #1: Added to our proven growth agenda in this business, this is a business that grows quarter on quarter with higher volumes and with excellent prices in all of the destination departments.
Speaker #1: Now, the base business of the company always performing according to expectations. Secondly, I'm going to speak about biomethane, our platform for strong growth. Of course, there was a delay in the ramp-up of biomethane in Paulina, and Jaboatão, in the delay in the ramp-up is due more to the contracts signed with the off-takers who had the right to have a ramp-up and received natural gas, a lower amount than the planned capacity.
Speaker #1: So we had to maintain the plant below its capacity for some months until achieving the 6 months of the contract to be able to work on the ramp-up.
Speaker #1: Now, the plants of Paulina and Jaboatão still are operating with an OPEX that was forecast. So technically, these plants are now ready for that leap that we have spoken about in all of our previous figures.
Speaker #1: The good news here is that the ramp-up of Jaboatão ended at the end of May. Since June, therefore, we do see strong results at this plant.
Speaker #1: Both recurrent in June and July and August, and that you will see in the third quarter with a very strong ramp-up in biomethane. And we're now going into cruise speed performing with costs at a lower that we had projected in our business plan.
Speaker #1: Additionally, to that, we have that proper outlook that in the third quarter we won't have that cruise flight. We have a screen where we look at the production of these plants and Paulina at present is producing 110 cubic meters and Jaboatão 90 cubic meters.
Speaker #1: If you look at the figures prior to this, you will see that both of them are now in a strong ramp-up and the expectation for Paulina is to reach more than 150 cubic meters in the fourth quarter.
Speaker #1: But in the third quarter, we will already see important results. The ramp-up of biomethane, therefore, left behind. There was a delay due to contracts not due to technical concerns, but this is overcome in the third quarter.
Speaker #1: Now, the third point we had relevant one-off expenses this quarter impacting our EBITDA of 281.7 million. It should have been much higher. Were it not for these non-recurrent expenses, one-off expenses, we separate them in three points transaction expenses.
Speaker #1: We carried out a transaction of some billion highs and expenses tend to be very steep. Auditors, attorneys, advisors, all of which impacted our EBITDA this quarter.
Speaker #1: This will not happen again. An advance of the LR cap costs as you know, we won the LR cap. The Paulina plants is already working with this beginning in August, but we did have operational expenses to put the plant running and after the third quarter.
Speaker #1: These expenses will no longer exist and we will have recurrent revenues. And third, I think we have the advance of LRPs of Vitao. Now, Vitao advances and left behind the balance of Vitao with an impact on our results.
Speaker #1: Having said that, when we look at the 12-months going forward without a doubt, you will see that the annual EBITDA will be expressively higher than the LPM we see in the second quarter because of the impacts I have just mentioned.
Speaker #1: Qualitatively, I wanted to mention this point as being the most important with an impact on our results. Let's go on to the next slide where we speak of our integration plan and map synergies there are several points to be mentioned.
Speaker #1: First of all, the commercial growth and new contracts this is a very important point that we mapped in the contract that came from Vitao.
Speaker #1: We had merely mapped landfills, but there are additional gains that we can show you in the GI contracts. With still small margins and a rebalancing stock because of past debts and non-captured readjustments that will come to the surface in Maceió and Sergipe.
Speaker #1: So now we begin to see something we had not seen before the acquisition and we see that in the GIs there is potential of additionality of results of these assets secondly, operational efficiency we have a strong team acting to bring us the operational cost of the landfill similar to the cost of Orizon.
Speaker #1: The reasons have already been identified and we do have an attack plan that will come to light in the coming months. We will bring the Vitao assets to the same level of Orizon, assets now the energy transition and along with the plants that we had already built and Vitao also had some so the ramp-up and the plants of Paulina Jaboatão and Metagás we have six plants under construction that will come into operation in the next 12 to 18 months.
Speaker #1: Additional EBITDA additionality for the company supplies and scale. We have seen significant gains. We have remodeled our entire supply area now with scale that we have imagined for the company.
Speaker #1: We begin to look at the purchase of diesel of inputs and we become ever more relevant in the market. We began to perceive that the union of this platform brings about significant gains because Vitao had been operating as a standalone company in some cases.
Speaker #1: There also will be synergy in SG&A doubtlessly we will be doubling some areas and throughout the next 12 months we should see gains in SG&A.
Speaker #1: The SG&A for this month has been impacted by the one-off expenses, but besides that, we also have efficiency gains for the next 12 months and finally the capital structure.
Speaker #1: We have a strong cash generation, low leverage. Which means that we will have an opportunity to reduce our capital cost and lengthen our debt profile.
Speaker #1: Our debt profile is quite lengthened, but we're presently operating at a debt level lower than that of Vitao and we will bring that cost of capital up to what we have at Orizon.
Speaker #1: Let's now go on to the highlights and events. The second part here were still speaking about our legacy. It's important to zoom in into a growth above GDP of legacy Orizon, in volume and price.
Speaker #1: This is important for us. We had a growth in the volume of residues of our eco park that was considerable, 10% and 6.3% as you can see on the screen in assets.
Speaker #1: Additionally, we have a real gain of price 4% or 9% year to year to 94.4 BRLs per ton. And we also have a gain of 91.1 gain per ton.
Speaker #1: This 91 has a bit of one-off of a specific asset, but it did have a price gain so this window for the price gain of landfills is something we should look at in the long-term.
Speaker #1: People ask me how far will it go. Now, the price of final destination in Europe and the United States and USA it is $80 in the European Union.
Speaker #1: 100 Europe euros and here we operate at $15. So we have real gain in final destination that should persist during coming years. And these levels will have a positive impact on our final destination.
Speaker #1: To the left below the consolidated recurrence of carbon credits in the past. We migrated to the voluntary market. We are now proving that carbon is a reality with recurrent revenues.
Speaker #1: In this quarter and the three previous quarters. And you should expect this recurrence in the coming three quarters. Leo will speak to you about novelties that are not for the short term but we will have positive outlooks for this window.
Speaker #1: The ramp-up following our present-day schedule in the contract in the second quarter. The figures that are here that are quite low. We had 130,000 cubic meters per day of biomethane now this figure was driven by June when the ramp-up had ended.
Speaker #1: April and May were low. Here we show you 85 to 100. This will increase day after day. We have 110 cubic meters per Paulina and 90 cubic meters per Jaboatão.
Speaker #1: Above what you see on the screen. So we will continue with that cruise flight and in the third quarter we should consolidate the operation very close to 100,000 square meter and Paulina a cruise flight above 150,000 already in the fourth quarter.
Speaker #1: So this after we have finished the ramp-up and the leverage as I mentioned 1.8 times. We have 1 billion to deleverage the company already contracted and the entry of EBITDA factors which I have already explained to you that will bring strong deleverage to the company in the coming months.
Speaker #1: We now speak about our new board. The board has taken office. We had a meeting yesterday and we have built a board. With highly constructive members we have advisors indicated by Vitao and we have Luiz Henrique and independent advisor that have created a team of excellence in our board.
Speaker #1: We now have differentiated governance and we will create committees going forward. This board will have a very good participation and offer excellent contributions to the company going forward.
Speaker #1: Finally, the breakdown of our actions. We have split the shares 10 days ago. Dividing the number of shares per four and because of our time constraint we had common shares left in the market and to the right our base our share base is a combination the holding company has 60% of the company 40% of free float and the 40% of free float half of which is made up by foreign investors that are very present and this is what I wanted to say to you about this slide.
Speaker #1: Finally, a subsequent event that we disclosed yesterday the acquisition of the landfill in Hondonopolis I mentioned that we're going to continue with our inorganic growth agenda acquiring more landfills.
Speaker #1: Of course with capital discipline for Rondonopolis we paid five times EBITDA there are no other revenues here of biogas carbon credits of biomethane we have the potential of valuation of this asset and I spoke about discipline in capital and Rondonopolis is in a state where we have a very important asset that is why we are bringing everything into our operations to have greater control of raw material within the states.
Speaker #1: This is another asset that we own since the closing of the operation. We presently have 31. I will now give the floor to Leo to speak about our operational performance.
Speaker #1: Well, good morning everybody. And I I think we had a complete outlook in the first part but we do have other highlights that are worth mentioning.
Speaker #1: We have a specific highlight on the company's performance in biomethane to illustrate and give you comfort on the ramp-up of the two main plants in the company at present.
Speaker #1: We have three operating plants Paulina, Jaboatão, and Metagas in São Paulo. Now we have two plants at come from Orizon Legacy. They were in corporated in the transaction announced in June.
Speaker #1: And we see a volume of cubic meters of biomethane in the consolidated margin of these plants in significant evolution. And here we are bringing you some color of what has happened in July and August until yesterday.
Speaker #1: Based on a daily average in volume of cubic meters generated produced of biomethane in BRLs and expected margins we do have considerable growth. These projects begin to have consistency and strong maturity growth.
Speaker #1: This quarter I'm not going to speak about a cruise flight because the Paulina plant has a great deal of biogas and we think it will grow a great deal until 2027 but at different levels in the second half of this year.
Speaker #1: In the first bullet a portrait of today. Jaboatão producing 90 square meters. Paulina 110,000 square meters and in the release you were able to see the behavior of these plants in June.
Speaker #1: And the initial premises of our business plan that we discussed with the market. Margin capex and schedule. At the bottom of the page we offer you some color.
Speaker #1: The confirmation of the schedules for the coming into operation of the plants that we had already disclosed to the market in 2026. The Belo Orizonte plan Macaubas incorporated recently in 2027.
Speaker #1: The coming into effect of Itape B and you are E in 27. Tremembé and Metagas with an expansion still in 2027. And we have Guadapara in Curitiba for 28.
Speaker #1: Well in the next page we're speaking about our positioning in carbon credits. Now carbon I think began to be explored by Orizon as something erratic initially as something that did not allow us visibility or did not allow us to perpetuate this for quite some time.
Speaker #1: We have been working strongly on carbon credits to have consistent performance and recurrent sales quarter on quarter. We have created long-term sales. We have long-term contracts.
Speaker #1: We say that we have sold 12 million these are sales billed during one quarter and behind this we have a range of top level customers national and international from excellent companies with very good international rating and this is a portfolio that we have developed through time to the left we show you how we have developed these projects from the viewpoint of certifying entities AC carbon and others but also including rating agencies independent ratings of quality agencies which accredit us and positions us differently vis-à-vis the customers now the customers tend to look only at data but not at the quality and social environmental data about the project and we do have to take a good stance in this market.
Speaker #1: Now in regulatory agencies we highlight what is happening in the Brazilian market. We are certified. We have technologies that are being debated within the SBCE.
Speaker #1: We have public hearings. The international transfer especially for government for carbons generated in Brazil with a direct impact on Orizon portfolio. And what happened at Corcia that goes through traditional aviation companies that are acquiring carbon credits.
Speaker #1: It's already in the first phase consolidated in 2026 and we have other mandatory phases that will begin in 2027. Now we have a pipeline of the projects we incorporated.
Speaker #1: From Vital. We show you which of the products that are registered and each different environment. We have some based on the Paris Agreement and dozens of other projects that will be registered in the short and mid-term.
Speaker #1: We do have 12 landfills accompany has 31 after the disclosure of Rondonopolis. So we have quality a good quantity of projects and a project and quality of carbon credits.
Speaker #1: Page 15 we speak about our integrated management initiatives. Now the landfill is all very beautiful. It is a cash cow. It is resilient. It's almost a natural monopoly but when it is impacted it requires something additional something that is a fixed return index to inflation and this is what will allow us to carry out all services destination collection and other activities.
Speaker #1: The company has eight projects in integrated management and these could be integrated in all of the landfills. Integrated management proforma response to 48% of gross profit for those who are looking at energy.
Speaker #1: There is the wrap we're speaking of something very similar it's very easy very simple to model and there are contracts that have a welldefined risk indicator for the concessions for others there are non-tariff revenues additionally and the possibility of having other sources of revenue in the contracts and we consider this front as a lever for value creation at Orizon in conferences and in our day-to-day we begin with final destination and we see how to maximize the value under management.
Speaker #1: We have bio gas carbon credits circular economy and we have consider this an activity with high potential for generating value. In the next page we speak about our average price.
Speaker #1: Some years ago we were speaking about the potential we saw at Orizon of price gains above inflation and quarter on quarter we have had deliveries above inflation in our get gatefields for destination.
Speaker #1: We observe the same in Vital to bring you some color Vital had a specific contract that works with stronger prices in the mid and long-term contract we did our diligence and we're looking at this more deeply day after day and we see we have the opportunity of maintaining prices above inflation 3.5 or 4 which is what we have obtained every quarter.
Speaker #1: Now that small drop regarding the first quarter is due to mix we had growth of volume in that quarter growth of residue volume and the mix therefore did have an impact here required a slight adjustment.
Speaker #1: This is not something structural. About volume the company delivered more volume than the first quarter in the Orizon platform along with Vital also compared to the previous year.
Speaker #1: Our volumes are growing. And regarding the first quarter we delivered somewhat less but what is more important here are the volumes in landfills and in integrated management volume does not represent a considerable issue.
Speaker #1: It becomes more important when the payment is fixed and we have a range of contracts under concession we have a range that will not move very much it might increase 5% upwards or downwards and we're speaking of consistent growth above economic activity and because of the ramp up of our assets we have several landfills with still significant opportunity in the area of influence regions that are serviced with non-appropriate practices in destination these landfills are being closed down and of course we will begin to receive these residues in our landfills in a more appropriate fashion before we go through the financial highlights we highlight adjusted net revenue a growth vis-à-vis the first quarter totaling 981.7 million in this first second quarter proforma from legacy Orizon and Vital profit 334 million adjusted EBITDA of 281 million as we mentioned at the beginning.
Speaker #1: Continuar com a agenda de crescimento inorgânico, né, comprando mais aterros com disciplina de capital, vendo aí o múltiplo de EBITDA que nós pagamos aí em Rondonópolis, né, da ordem de 5,7 vezes EBITDA só, sob gate fee, dado que não tem outras receitas ali, nem de biogás, energia, biometano, crédito de carbono.
Speaker #1: Né? Seja a questão dos bônus de subscrição, potenciais aí capitalizando a companhia entre março, maio e setembro do ano que vem. Tem uma janela ali de 120 dias, seja o ramp-up operacional dos ativos—biometano ainda não está contribuindo de forma relevante nesses números que a gente vê aqui na tela, começa a contribuir mais forte agora no terceiro tri.
Speaker #1: São todos... Isso é todo potencial de valorização em cima desse ativo. Além disso, eu acho, falando sobre a disciplina de capital aqui, vale a pena também colocar que Rondonópolis está presente num estado onde a gente tem ativo importante.
Speaker #1: Seja as novas plantas já contratadas também, seja a Barueri, que começa agora no começo de 2027, ou ainda outras plantas de biometano que já estão contratadas.
Speaker #1: A gente tem aí algumas em construção, como já mencionamos. Então, acho que a empresa fica com o balanço apropriado para crescimento orgânico e inorgânico, continuando a reforçar seu posicionamento de liderança nesse setor, como protagonista nas iniciativas de valorização de resíduo.
Speaker #1: Então, portanto, aquela... aquela estratégia de interiorização das nossas operações, para ter controle ainda maior da matéria-prima dentro dos estados. Então, é mais ativo: passamos a ter, a partir de...
Speaker #1: Desde ontem, desde o closing dessa operação, são 31 aterros e não mais 30 aterros. Agora eu vou passar para o Léo a palavra para falar um pouquinho sobre o nosso desempenho operacional.
Speaker #1: Now let's see which is the impact of recovery of companies when we compare the first quarter with the second. I think it's easier to understand that this is something non-recurrent is that one time impact last year in Orizon this was paid in the second quarter and this is simply to clarify the value for the second quarter.
Speaker #2: Bom, bom dia, pessoal. Pilon, obrigado. Acho que já foi bem completo na primeira parte, mas acho que vale a pena alguns outros destaques para a gente aqui.
Speaker #2: On slide 13, we bring a specific highlight about the company's performance in biomethane, in order to illustrate and provide reassurance regarding the ramp-up of the company's two main plants.
Speaker #1: And we see this also in adjusted net income in the next page we speak about our capital structure. We'll go back to the comment made by below upon beginning the presentation of our leverage 1.8 times with a highly lengthened depth debt of 2.2 billion and our rating is BRAA plus from S&P Global.
Speaker #2: Hoje, a companhia tem três plantas operacionais, vamos relembrar: Paulínia, Jaboatão e aqui em São Paulo, na Metagás. Trouxemos aqui as duas plantas que vêm dos ativos do legado Oris, vamos chamar assim.
Speaker #2: A Metagás vem incorporada na transação agora anunciada em junho. E a gente vê, tanto operacional em volume de metro cúbico por dia de biometano quanto na margem consolidada dessas duas plantas, uma evolução importante do primeiro para o segundo trimestre, e já trazendo aqui para vocês um pouco de cor do que está acontecendo em julho e agosto, até ontem, anteontem, numa média diária.
Speaker #1: Now we still have some fronts that are going to continue to chain we have the subscription bonds capitalizing the company between May and September of the coming year we have a window of 120 days biomethane is still contributing relevantly to the figures that we see here the contribution will increase in the third quarter the new plants contracted by the way D for example that begins at the beginning of 27 as well as other plants under contract so we have an adequate balance for both organic and inorganic growth reinforcing our clear leadership in this sector to for valorization of waste.
Speaker #2: Então, vocês conseguem ver que, tanto em volume de metro cúbico gerado, produzido de biometano, quanto em reais, a margem é esperada com crescimento importante. O que coloca que a companhia e esses projetos começam a ter uma consistência e amadurecimento forte ainda nesse segundo semestre, entrando em 27. Não vou dizer em voo de cruzeiro, porque a planta de Paulínia tem bastante biogás ali, e a capacidade é importante.
Speaker #2: Então a gente espera aí crescer bastante ainda em 27, mas já num patamar diferente ao longo desse segundo semestre. A gente trouxe aqui no primeiro bullet a foto que o Pilon comentou há pouco, do dia de hoje, né.
Speaker #2: Jaboatão produzindo 90 mil metros cúbicos por dia, e Paulínia, 110 mil. A gente deu um pouco de cor no release também de como é que foi o comportamento dessas plantas em junho.
Speaker #1: And this light balance has a great deal of potential for both organic and inorganic growth and we can expect from this company that in the short and mid-term we will have a dividend policy and we will be able to allocate part of those dividends for our shareholders.
Speaker #2: E as premissas iniciais dos business plans, que a gente conversou com o mercado quando contratou as plantas, a gente está verificando in loco, seja em margem, capex e cronograma.
Speaker #2: Aqui embaixo dessa página, a gente traz um pouco de cor para vocês, a confirmação dos cronogramas de entrada em operação das plantas, que a gente já vinha reportando para o mercado.
Speaker #1: Very well. This last slide is a bit more of the same but I do like to present it because it's the beauty of our business that should not be forgotten.
Speaker #2: A gente tem aqui ainda, em 2026, a planta de Belo Horizonte, de Macaúba; são ativos plataforma agora, na transação com a Vital. Em 2027, você tem a entrada de projetos Santa Itapevi, Côrtex Tremembé e, ali na virada de 2028, projetos de Guatapará e Curitiba.
Speaker #1: It's the plurality and the amount of additionalities that we have in the business when you capture the residue it's incredible how many potential additionalities you can have.
Speaker #2: Temos também uma expansão aqui em São Paulo da Metagás ainda em 2027, e projeto em Minas Gerais também incorporado no pipeline da Vital ali entre 2027 e 2028.
Speaker #1: Because in the real world these additionalities will tend to drag more because of regulatory problems before they come into operation some can be positive when you have many additionalities you allow strong organic growth for the long term and this is what we observe at Orizon and basically this is what you see on the slide.
Speaker #2: A próxima página traz para a gente informações sobre crédito de carbono, como que a gente está posicionado. O Pilon falou um pouco aqui na introdução. A gente acha que o carbono começou essa jornada com a Oris e, acho que não só com a Oris, mas com todas as empresas desenvolvedoras de projetos aqui no Brasil, como algo errático, né.
Speaker #2: Algo sem... a gente conseguir ter uma visibilidade de perpetuar ou de olhar isso de forma recorrente. Acho que a gente tem tido bastante sucesso e um trabalho forte feito pela equipe de carbono aqui da Oris, de conseguir entregas consistentes e vendas recorrentes, trimestre a trimestre.
Speaker #1: We have divided this in capture and course ramp up and maturity consolidation agenda of the sector and agenda for execution growth and the leveraging for capture underway.
Speaker #2: Lembrando que cada transação é uma transação. A gente tem desenvolvido ou discutido com clientes vendas de longo prazo, contratos de longo prazo, mas a gente tem...
Speaker #1: What we observe is an important avenue in the rebalancing of commercial possibilities. This is one of the new ones I think you're quite aware of other operations improval in the capture of biogas corporate expenses optimization of our capital but when it comes to final destination in the line line item of destination we have an excellent avenue of growth with commercial negotiations as we have already done with several assets in our history.
Speaker #2: Quando a gente fala aqui em vender uns 12 milhões, são vendas construídas e entregues no trimestre, em geral com transações de cliente. Então, se por trás disso aqui tem uma gama de clientes, clientes de alto nível, estamos falando, muitas vezes, de clientes nacionais e internacionais, grandes companhias, de excelente rating de crédito. É um pouco desse jeitão que tem essa carteira que a Oris desenvolveu ao longo do tempo.
Speaker #2: Aqui a gente destaca, do lado esquerdo, como é que a gente tem desenvolvido esses projetos, não só sob a ótica das entidades dos padrões ou certificadoras, como a VERRA, o Standard, ou a Cercarbono, mas também trazendo agências de rating e avaliações independentes de qualidade desses projetos.
Speaker #1: In organic growth the ramp up we have biomethane plants that have been left behind with strong results in June, July, and August and significant agenda for construction.
Speaker #2: A gente trouxe aqui o nome de algumas delas, e isso nos credencia e nos posiciona diferente junto aos clientes. Os clientes, sobretudo do mercado voluntário, olham não só o carbono evitado, mas olham também a qualidade do projeto, os impactos socioambientais do projeto, e a Oris não tem conseguido se colocar de forma muito bem junto a esse mercado.
Speaker #1: We do have plans under construction and they're following the schedule. There is no forecast of delay of the new biomethane plants that will come into operation and of course be part to of our capex.
Speaker #2: Aqui, na agência reguladora, na agenda regulatória, a gente destaca a questão do mercado regulado brasileiro, que já tem grupos de trabalho, sendo credenciadas metodologias, sendo discutidas num ambiente da CBCE, da SBCE. Temos aí as consultas públicas, as discussões todas do artigo 6º e das transferências internacionais, sobretudo para governos dos créditos de carbono gerados aqui no Brasil, e que impactam diretamente o portfólio da Orizon.
Speaker #1: The ramp up of eco parks that I have just mentioned and the projects under implementation within the schedule. Finally the consolidation agenda where two points are very important.
Speaker #1: The fuel law for the future has released the mandatory figure of 0.5% this year and the commitment of the government to release fossil fuel producers well there is a mandatory market for the purchase of renewable gas.
Speaker #2: E aqui a gente traz como destaque ainda do mercado internacional e os avanços que tiveram na CORSIA, que passa pelo ambiente das aéreas, das empresas aéreas internacionais comprando carbono, já com uma primeira fase consolidada de 2024 a 2026, e vindo as próximas fases agora obrigatórias a partir de janeiro de 2027.
Speaker #1: This will give greater thrust to biomethane all of this should happen at the end of September beginning of October. With this percentage that is mandatory 0.5% on Thursday I participated in the biogas convention the mayor of São Paulo Ricardo Nunes if you visit his profile you will be able to see what is happening.
Speaker #2: Aqui no meio, a gente relembra o mercado, agora já com o pipeline dos projetos que a gente incorporou da Vital. A gente tem quais projetos estão registrados, e aí em cada ambiente.
Speaker #2: Então você tem projeto no Gold Standard, no VERRA, no CDM, que migra agora para o Artigo 6 do Acordo de Paris, e temos aí mais dezenas de projetos a serem registrados no curto, médio prazo, né.
Speaker #1: This will give thrust to the biomethane market for mobility and drive several cities bringing about another strong demand for biomethane with better prices than we sell to to the industry.
Speaker #2: Lembrando que aqui são 12 aterros na tela, a companhia tem 30 indo para 31, aí nesse disclosure de Rondonópolis. Então temos aí um mix de qualidade e quantidade de projetos, volume e preço de carbono.
Speaker #1: And several states are beginning to move to create public and private partnerships where ready to participate in these partnerships and concessions where beginning processes in locations where we have a landfill for new integrated management contract.
Speaker #2: Próxima página, página 14, a gente fala sobre as iniciativas de gestão integrada. A gente dá aqui highlight: gestão integrada. Acho que o aterro é muito legal, muito bonito, tem uma característica de cash cow, de resiliência, de quase monopólio natural, uma reserva de mercado na área que ele está impactada.
Speaker #1: And in the M&A area we have several millions we recently acquired Rondonopolis and in the coming months you should expect new acquisitions new M&As bringing in more landfills to the company base.
Speaker #2: A gestão integrada anda muito com esse perfil também, de... e mais com um tempero adicional, que é a contraprestação fixa indexada à inflação. Então, você recebe, em geral, valor em reais, milhões, para fazer a totalidade dos serviços, que inclui a destinação, mas que também vai da coleta, do transbordo, de outras atividades.
Speaker #1: Finally on the part of the leveraging well we have significant contracted the leveraging and in terms of capital allocation dividend payout we're never going to stop being a growth company.
Speaker #2: Acho que o mais emblemático aqui, a gente destaca a ICOURBS aqui em São Paulo, mas a companhia tem 8 projetos de gestão integrada, podendo multiplicar isso para todo o seu portfólio de aterros, em todos os municípios que a gente atende hoje.
Speaker #2: Gestão Integrada já responde no pró-forma por algo como 48,5% do lucro bruto consolidado. Para a gente que está acostumado a olhar energia, tem a tal da RAB aí, a receita fixa, a gente está falando de algo semelhante.
Speaker #1: We're never going to stop using most of our cash for reinvestment and growth. Despite the Brazilian interest rates and despite the macroeconomic situation Orizon can allocate money in high return companies returns above inflation of course and above average market investments and we're going to do this for many years.
Speaker #2: Então é muito fácil de prever e de modelar. A gente está falando de contratos que têm algum nível de matriz de risco definido, entre o que é do poder concedente e o que é do concessionário. Em geral, traz algum componente de receitas não tarifárias adicionais, então você tem oportunidades de ter outras fontes de receita nesses contratos.
Speaker #1: Every time we acquire a landfill there is a base of 2 million of biomethane to be invested. So there is growth looking forward. We have projects for new landfills projects to make our operation more efficient that will bring strong return to the company.
Speaker #2: E a gente vê essa frente como uma grande alavanca de criação de valor para a Orizon. Acho que quem está com a gente nas conferências ou liga no dia a dia enxerga como a gente pensa, né.
Speaker #2: A gente começa na destinação final, e como a gente maximiza o valor do resíduo sob gestão. Como é que a gente adiciona valor a esse resíduo?
Speaker #1: This doesn't mean that our management aim is to have a portfolio where most of the resources are being reinvested in the company but we will have some space for the payout of dividends.
Speaker #2: Então, temos aí biogás, crédito de carbono, biometano, energia e economia circular. Trazemos agora para esse portfólio a gestão integrada como uma atividade com alto potencial de geração de valor.
Speaker #2: Na próxima página, página 15, a gente traz uma chamada específica sobre o preço médio. Quando a gente, há alguns anos atrás, né, Pilão, falava sobre o potencial que a gente vê na Orizon de ganho de preço acima da inflação, a gente tem conseguido buscar, a cada trimestre, uma entrega acima da inflação no gate fee de nossos ativos de destinação.
Speaker #1: We will use our resources for growth. That's our dream and I think it will be possible in the short term giving the uncontracted leverage of the company in coming years that is what we wanted to present to you today.
Speaker #1: I thank you once again for your attendance and beg forgiveness for our delay. We're now going to open for questions and answers. We're going to go on to the question and answer session for investors and analysts.
Speaker #2: E estamos vendo agora a mesma coisa em Vital também. Já estamos trazendo um pouco de cor do que aconteceu. Vital tem ali contrato específico em um ativo que tem preço muito mais forte, contrato de curto, médio prazo, mas a gente começa a ver...
Speaker #1: Should you wish to pose a question please click on raise hand. If your question has been answered you can withdraw from the Q and lower your hand.
Speaker #2: Já vimos na diligência, e agora, com um pouco mais de profundidade, tanto no dia a dia, que tem também uma grande oportunidade de manter esse ritmo de preços acima da inflação, entregando de novo algo da ordem de IPCA mais 3,80, IPCA mais 4. É o que a gente tem reportado trimestralmente.
Speaker #1: The first question comes from Maria Carolina Carneiro from Safra. Good morning. Could you update us on the coming phases of Vital integration? This quarter seemed to have margins under pressure.
Speaker #2: Antes que alguém me questione, essa pequena queda em relação ao primeiro tri é muito mais mix do que qualquer outra coisa. A gente tem crescimento grande de volume de resíduos nesse trimestre e aí, naturalmente, não anda necessariamente com os clientes de forma uniforme.
Speaker #1: Does the company intend to undergo reorganization? Which are the lines that offer a greater synergy potential and which are the main lines that you have in Vital operating lines?
Speaker #2: Então o mix contamina pouco, e aí tem pequeno ajuste, mas nada estrutural. Sobre volume, acabamos de falar do crescimento de volume, né. A companhia entregou mais volume que o primeiro tri, já combinada a plataforma total, Oris mais Vital, e também em relação ao mesmo período do ano anterior. Em coleta, também a gente entrega mais volume que o ano anterior; em relação ao primeiro trimestre, a gente entrega pouco menos.
Speaker #1: I'll see if I was able to write everything down. Maria Carolina thank you for the question. Now about the greater pressure on margins this quarter.
Speaker #1: This is due to specific events natural during these moments of transition. We carried out an adjustment and some events in adjusted EBITDA that are detailed in the release the coming into operation in Paulina.
Speaker #2: Mas acho que o mais importante aqui são os volumes dos aterros, né? Na coleta, na gestão integrada, a questão do volume não tem grandes impactos. Na verdade, tem impacto que não necessariamente é o mais positivo, na medida em que os preços...
Speaker #1: The impacts in biomethane of Paulina as well and mobilization of the contracts of collection and the on the other hand I think we had a highly victorious quarter in terms of management.
Speaker #2: As contraprestações são fixas, e você tem uma banda, em geral, nos contratos de concessão, que é aquela contraprestação não se move. Às vezes, 5% para mais, para menos, ou 10% para mais ou para menos.
Speaker #2: No aterro em que você recebe o gate fee, na primeira parte da apresentação ali em cima, a gente está falando de crescimento consistente acima da atividade econômica, e sobretudo pelos ativos em ramp-up, né.
Speaker #2: Como a gente sempre comenta, a gente tem muito aterro, com ainda uma oportunidade grande de volume naquela área de influência, em geral regiões que ainda são servidas por práticas não adequadas de destinação. Então, é natural que os órgãos reguladores, que as autoridades vão influenciar.
Speaker #1: We should expect consistency and a very strong margin. When it comes to final destination we're going to have gains in the real price in this turning an increase in the biomethane accounts.
Speaker #1: We're going to gain margin in the short term and in integrated management. We have seen something that is very clear. And because of the levels contributed by Vital last year in the fourth quarter until the second quarter of 2026 in terms of synergy opportunities in procurement the capture of biogas.
Speaker #2: Antes de eu vir para o Pilão, vou passar rapidamente pelos highlights financeiros. A gente destaca aqui, no primeiro quadrante, a receita líquida ajustada, crescimento em relação ao primeiro tri, em relação ao mesmo período anterior.
Speaker #1: We have a great opportunity the final costs of the assets that have been recently incorporated. So this is not something that will happen overnight.
Speaker #1: There's a time for the initiatives to mature we have the weaning time the capture of biogas should be something in the long term and we have a great deal of fruit to harvest in coming quarters.
Speaker #1: I would like this to happen in one two or three quarters. We hope it will not be more. And then we will have the benefit of the synergies we have mapped out.
Speaker #1: Now regarding the projects that are in our pipeline in integrated management for Vital we have a great deal mapped already that will have a fit with a landfills that were in Orizon Legacy in municipalities and states that are discussing long-term modeling in the format of concessions and private public partnerships.
Speaker #1: All of these make sense. So we're going to give room to these in the value chain. And we're going to also be able to capture in long-term contracts other factors that we mentioned in the transition with Vital Vital has a fully operational schedule I think it was carried out very successfully considering the months we had between the signing and the closing.
Speaker #1: Natural que, no balanço leve, tem muita oportunidade de crescimento, orgânico e inorgânico. Mas, fazendo muita conta, é fácil esperar dessa companhia que, em algum momento, no curto ou médio prazo, a gente tenha uma política de dividendos e consiga aí também alocar parte desse recurso para o acionista.
Speaker #1: We have worked strongly on culture on processes on management in-house well the company is operational and the final schedule if you look at it it is have Vital Legacy have Orizon Legacy this shows you the respect that we have for the capacity of the executive of Vital that have come to our group.
Speaker #1: So we are becoming integrated the new board is working in a unified fashion and we have great complementarity now they have characteristics we did not have we have characteristics they did not have and we're all highly motivated with the new board that will operate this company.
For our shareholders very well.
Speaker #1: I would like to mention a point Carol given the volume of opportunities we have ahead of us are great challenge is to select the priorities we will tackle first.
The last slide is a bit, uh, more of the same, but I do like to present it because it's the beauty of our business that should not be forgotten. It's the plurality and the amount of additionality that we have in the business.
Speaker #1: Now there's that beauty of a huge volume of additionalities but to manage well is to prioritize and to work one step after the other for a good execution.
Speaker #1: We have been working very strongly to develop this and the agenda for synergies is an agenda for rebalance and gain in volume and prices and in the landfills that come from Vital we're beginning to look at Vital landfills.
Uh, when you capture the residue, it's incredible how many potential additions you can have, because in the real world these additions will tend to drag more because of regulatory problems before they come into operation. Some can be positive. When you have many additions, you allow strong organic growth for the long term. And this is what we observe at Orizon. And basically this is what you—
Speaker #1: We will be looking at this in the coming quarters. We also have to work more strongly on making the Capex more effective. We're working on this within the company and we can expect a great deal of additionalities in the synergies we will observe in coming months.
See on the slide. Uh, we have, uh, divided this in capture and course ramp-up and maturity, consolidation agenda of the sector, and agenda for execution, growth, and deleveraging for capture underway.
What we observe is an important avenue in the rebalancing of commercial possibilities.
Speaker #1: Our next question comes from Andr Sampaio from Santander. Your microphone has been unmuted. You may proceed. If you could confirm that the microphone has been unmuted.
Uh, this is one of the new ones. I think you're quite aware of our other operations—improvements in the capture of biogas, corporate expenses, and optimization of our capital, but...
When it comes to Final Destination in the line item of destination, we have an excellent avenue of growth.
Speaker #1: Yes. It had been unmuted but I think there is a technical problem. He sent the question in writing. Andr from Santander. If you could give us an update on Integra residues in São Paulo.
Speaker #1: I would like to hear more details on the potential for rebalancing mentioned about the Vital operation. Well we have participated trying to offer contribution to the program Integra residuals and it exists in Minas Gerais setting up private public partnerships and concessions.
Uh, with commercial negotiations, as we have already done with several assets in our history, in organic growth and the ramp-up, we have biomethane plants that have been left behind with strong results in June, July, and August, and a significant agenda for construction. We do have plants under construction, and they're following...
Scheduled. There is no forecast of delay for the new biomethane plants that will come into operation and, of course, be part two of our KEX.
Speaker #1: Now these programs are interesting for us because in states like São Paulo for example large cities are well serviced by landfills and eco parks set up around the city.
The ramp-up of Echo Parks that I have just mentioned.
Speaker #1: The problem that Integra is trying to resolve is to bring small cities lead them towards resolving their problems in residue destination. Now giving given our capillarity and positioning in the state of São Paulo we are participating actively and perhaps not this year because it is an electoral year but we do expect public private partnerships in metropolitan regions and we will always be well positioned because of the eco parks we operate in the state of São Paulo.
And the projects under implementation are within the schedule. Finally, on the consolidation agenda, there were two points that are very important. The fuel law for the future has released the mandatory figure of 0.5% this year. And the commitment of the government to, uh,
Speaker #1: The second question about rebalancing in some of the GIs of Vital we identified there were opportunities and a stock to realign prices destination prices with reception prices and throughout our history in the last 10 years in Nova Guasu João Pessoa we have shown how to do this in a smart way transform the stocks for non-given realignment in the past or debts transform this enterprise and others in concessions and we have an opportunity in this field.
Release, uh, fossil fuel producers. Uh, well, there is a mandatory market for the purchase of renewable gas. This will give greater thrust to biomethane. All of this should happen at the end of September, beginning of October, with this percentage that is mandatory—0.5%. On Thursday, I participated in the biogas convention. The mayor of São Paulo, Mr. Nunes—if you visit his, uh, profile, you will be able to see.
What is happening? This will give trust to the biomethane market for mobility and drive several cities, bringing about another strong demand for biomethane with...
Speaker #1: We also have the new GIs. You will see this well at the beginning of 2026 we set up one and it is active in a region where we already operate a landfill.
Speaker #1: So these two fronts our fronts we will be exploring in the coming months. Our next question comes from Paula de Champs in Carbon Credits.
States are beginning to move to create public and private partnerships. We’re ready to participate in these partnerships and concessions. We’re beginning processes and locations where we have a landfill for new integrated management contracts. And in the M&A area, we have several million. We recently acquired Rondo Police, and in the coming months, you should expect new acquisitions—new M&As—bringing in more landfills to the company base.
Speaker #1: Could you offer us the total potential of generation of carbon credits for the company if you combine all of these assets and the prices that are being practiced 30 to 40 credits can we base ourselves on that or is there a relevant expectation for price increases this is Leonardo.
Finally, on the part of the leveraging.
Well, we have significantly contracted the leveraging and, in terms of capital allocation, dividends payout,
We're never going to stop being a growth company.
Speaker #1: Thank you for the question. The 30 present day assets and the new assets were incorporating as we evolve in our agenda the 30 present day assets 28 are operational two others are licensed they should generate 6 to 7 million carbon credits per year when all have been registered and are performant.
We're never going to stop using most of our cash for reinvestment and growth, despite the Brazilian interest rates and, uh, despite the macroeconomic situation. Orizon can allocate money in high-return companies, returns above inflation, of course, and above average market investments, and we're going to do this.
Speaker #1: Now when you say 30 to 40 are these GIs BRLs 6 to 7 in terms of prices now the initiatives we have observed in for advance in the regulated market international agreements should allow the company to have a better price once these environments are properly set up.
Speaker #1: This is a price level we see historically for Orizon. When we look at what was happening advances in the regulated market by lateral agreements of international aviation for example this is the right space to have higher prices certainly two digit prices I can't say if 10 20 or or 12 or 20 that's not our role to give prices but a price multiple times higher than what we have at present once the regulated markets have been set up with a 6 to 7 million carbon credits generated the prices should be much higher.
For many years, every time we acquire a landfill, there is a base of $2 million of biomethane to be invested. So there is growth looking forward. We have projects for new landfills, projects to make our operation more efficient, that will bring strong return to the company. This doesn't mean that our management aim is to have a portfolio where most of the resources are being reinvested in the company, but we will have some space for the payout of dividends.
We will use our resources for growth; that's our dream, and I think it will be possible in the short term, given the uncontracted leverage of the company in the coming years. That is what we wanted to present to you today. I thank you once again for your attendance and beg forgiveness for our delay.
We're now going to open four questions and answers.
Speaker #1: Our next question comes from Andre Methodo from Investimento. Good afternoon. Below Leonardo we have two questions here. One referring to the reprocessing of recyclable residues is there the possibility of setting up a new technology to bring about more efficiency for that process regarding the dividend policy according to the bylaws you're going to distribute 5% of your profit now with the incorporation of Vital have you already sat at a table to speak about a possible and future dividend policy.
We're going to go on to the question and answer session for investors and analysts. Should you wish to pose a question? Please? Click on raise hand. If your question has been answered, you can withdraw from the queue and, uh, lower your hand. The first question comes from Mia Carol, Lina Carno from saffra good morning. Could you update us on the coming phases? Of beta integration? This quarter seemed to have margins Under Pressure, does the company in 10 to undergo reorganization, which are the lines that offer a greater Synergy potential, and which are the main, uh, lines that you have in vital operating lines. I'll see if I was able to write everything down. Mia Carolina. Thank you for the
Speaker #1: Let me speak about the first time I'll leave the dividends for Leo. In the processing of recyclable residues we have created several technologies to enhance the efficiency of the plants.
Now, about the greater pressure on margins this quarter. This is due to specific events, natural during these moments of transition. We carried out an adjustment, and some events—
Speaker #1: We have the largest mechanized plant operating in Jabot in Guadarapis. Presently we're building a very large plant. We have a plant under construction in Duke de Casia for recyclable residues.
Speaker #3: operation in Paulinha. The impacts in biomethane of Paulinha as well. And mobilization of the contract of collection and the on the other hand, I think we had a highly victorious quarter in terms of management.
Speaker #1: As I mentioned in prior calls we're anchoring the modeling in a risk division where I have a gate fee a dedicated gate fee and if we are able to make the separation of recyclable residues more efficient or if there are changes in the market if we can obtain more revenues we will share this with the public powers.
Speaker #3: We should expect consistency and a very strong margin. When it comes to final destination, we're going to have gains in the real price in this turning.
Speaker #3: An increase in the biomethane accounts. We're going to gain margin in the short term and in integrated management. We have seen something that is very clear.
Speaker #1: This was a good model because it divides the risk matrix takes away from Orizon. The problems we had in Jabon that do not have that dedicated gate fee differently from Duke de Casia.
Speaker #3: And, because of the levels contributed by Vitao last year in the fourth quarter until the second quarter of 2026, in terms of synergy opportunities, in procurement, the capture of biogas, we have a great opportunity.
Speaker #1: So the plant arises with a guaranteed return having said that we're working with AI systems to facilitate the selection of residues. The evaluation of new technologies for plastic film for example that does not have a mark in demand and a stronger regulatory action to days ago Europe set forth a new standard making it mandatory to consume recyclable plastic.
Speaker #3: The final costs of the assets that have been recently incorporated. So this is not something that will happen overnight. There's a time for the initiatives to mature.
Speaker #3: We have the weaning time, the capture of biogas, should be something in the long term, and we have a great deal of fruit to harvest in coming quarters.
Speaker #1: This has not happened in Brazil. Worried to happen we would expand demand increase revenues with benefits for the company but while regulation does not mature the present day model within the risk matrix is to guarantee the gate fee about our dividend policy Andre you're right our policy is very conservative for a company that has a great potential for growth.
Speaker #3: I would like this to happen in 1, 2, or 3 quarters. We hope it will not be more, and then we will have the benefit of the synergies we have mapped out.
Speaker #3: Now, regarding the projects that are in our pipeline, in integrated management for Vitao, we have a great deal mapped already that will have a fit with the landfills that were in Orizon Legacy in municipality, and states that are discussing long-term modeling in the format of concessions and, private-public partnerships.
Speaker #1: So we need to ask the board to redefine allocation or payout. Certainly we're once we head in that direction we will review that point and we'll find a space for balance financial discipline.
Speaker #1: All of this will be revisited at the right time when we have clear visibility of how everything will behave in the future. Thank you.
Speaker #3: All of these make sense. So we're going to give room to these in the value chain. And we're going to also be able to capture in long-term contracts other factors, that we mentioned in the transition with Vitao.
Speaker #1: Thank you very much. Our next question comes from Joana Fred from Itau in the release you mentioned that the expectation of strong deleveraging in the coming years the payment will be part of your capital allocation strategy.
Speaker #3: Vitao has a fully operational schedule. I think it was carried out very successfully, considering the months we had between the signing and the closing.
Speaker #1: How is the company thinking about a possible dividend policy which would be the main criteria there level of leverage needs for investment cash generation and growth opportunities.
Speaker #3: We have worked strongly on culture, on processes, on management in-house. Well, the company is operational, and the final schedule, if you look at it, it is have, Vitao Legacy have Orizon Legacy.
Speaker #1: Hello Joana this is Leo once again. I think you went through several of the points that we'll have to be addressed in the policy.
Speaker #1: Leveraging minimum cash policy the windows that we will have if it is twice a year or once a year of course this will have to be dealt with.
Speaker #3: This shows you the respect that we have for the capacity of the executive of Vitao that have come to our group. So we are becoming integrated.
Speaker #1: We have carried out studies about how other companies are dealing with that how they dealt with that. We can't forget that we have a great potential for growth and how to better allocate our capital how to deal with this better.
Speaker #3: The new board is working in a unified fashion, and we have great complementarity now. They have characteristics we did not have. We have characteristics they did not have, and we're all highly motivated with the new board that will operate this company.
Speaker #1: There are several opportunities that justify growth which is what we will do and we will have the capacity to show you that this is the best way of allocating these resources but with room for a balance and greater flexibility in that case we will create a policy observing all of those parameters dates and windows making the policy clear and more predictable for our investors and shareholders.
Speaker #3: I would like to mention a point, Carol, given the volume of opportunities we have ahead of us. Our great challenge is to, select the priorities we will tackle first.
Speaker #3: Now, there's that beauty of a huge volume of additionalities, but to manage well is to prioritize and to work one step after the other for a good execution.
Speaker #3: We have been working very strongly to develop this, and, the agenda for synergies is an agenda for rebalance and gain in volume and prices and in the landfills that come from Vitao.
Speaker #1: Our next question comes from Rafael Abreu investor previously Horizon stated it had lack of interest to operate in the urban cleaning system. Now this will this activity be part of your business in recent statements and podcast.
Speaker #3: We're beginning to look at Vitao landfills. We will be looking at this in the coming quarters. We also have to work more strongly on making the CAPEX more effective.
Speaker #1: I heard that this will be part of the company. What has led to this new positioning this is Leo and then Pilo will complement the answer.
Speaker #3: We're working on this within the company, and we can expect a great deal of additionalities in the synergies we will observe in coming months.
Speaker #1: We're not working on urban cleaning for the sake of urban cleaning. We work with collection more integrated with final destination and it's important to clarify that the company will not pursue collection or urban cleaning projects that are not linked to the landfills.
Speaker #3: Our next question comes from Andres Sampaio from Santander. Your microphone has been unmuted. You may proceed. Andreas, perhaps you're on mute. We cannot hear your question.
Speaker #1: It's a way of monetizing the volume of revenue residues we have under management. We have to control destination and maximize the value of residues creating biogas electrical energy biomethane all of this will go through our integrated management and we should highlight the advances that we have had in zoning in public policies municipalities and states are seeking long-term contracts for this activity through public private partnerships long-term concessions and of course they justify that and give us greater comfort visa the short-term contracts now when you look at this from the viewpoint of landfills this allows us to think about more predictable profitability and revenue streams.
Speaker #3: If you could confirm that the microphone has been unmuted, yes. It had been unmuted, but I think there is a technical problem. He sent the question in writing.
Speaker #3: Andres from Santander. If you could give us an update on Integra residues in São Paulo, I would like to hear more details on the potential for rebalancing mentioned about the Vitao operation.
Speaker #3: Well, we have participated. trying to offer contribution to the program Integra residues and it exists in Minas Gerais or setting up, private-public partnerships and concessions.
Speaker #1: This is what has changed our way of thinking we're still thinking about how to add value and this is what we are doing at Horizon in this journey and everything converges in the right direction when we join together with one of the main companies in Brazil they have expertise good contracts a mobilized team and technical expertise.
Speaker #3: Now, these programs are interesting for us because in states like São Paulo, for example, large cities are well-serviced by landfills and eco parks set up around the city.
Speaker #3: The problem that Integra is trying to resolve is to bring small cities lead them towards resolving their problems in residue destination. Now, giving given our capillarity and positioning in the state of São Paulo, we are participating actively and perhaps not this year because it is an electoral year, but we do expect public-private partnerships in metropolitan regions and we will always be well-positioned because of the eco parks we operate in the state of São Paulo.
Speaker #1: That transition with Vital comes at a very important regulatory moment public policies are being discussed within the framework of sanitation and Vital is a company that has executed all of this very well besides the two landfills that we have been able to incorporate.
Speaker #1: The next question is from Banco Dikoval Giovanna which is the leverage level that you deem to be appropriate to continue carrying out acquisitions. The company is at 1.8 times but says there are analyzing M&As.
Speaker #3: The second question about rebalancing in some of the GIs of Vitao. We identified there were opportunities and a stock to realign prices. Destination prices with reception prices.
Speaker #1: Are you thinking of deleveraging which is the revenue concentration in the main public contracts and how do you assess the risk of the counterpart of the concessions.
Speaker #3: And throughout our history in the last 10 years in Nueva Iguazú, João Pessoa we have shown how to do this in a smart way transform the stocks for non-given realignment in the past or debts transform this enterprise and others in concessions.
Speaker #1: Giovanni this is Leo once again. 1.8 times with a very lengthened term for debt that is a good balance of leverage and duration. That's an important point.
Speaker #1: We have 1.8 times. It's different than having an duration of 5 to 6 years. Now there's a great deal of capex invested that so far is not generating cash.
Speaker #3: And we have an opportunity in this field. We also have the new GIs. You will see this well, at the beginning of 2026, we set up one and it is active in a region where we already operate a landfill.
Speaker #1: Biomethane the project in Badu several projects from Vitala as well that will have to be captured 1.2 million hes that will offer us greater profitability in the short term additionally to this we have capitalization of 1 billion between May and September.
Speaker #3: So these two fronts are fronts we will be exploring in the coming months. Our next question comes from Paula. Deschamps in Carbon Credits. Could you offer us the total potential of generation of carbon credits for the company?
Speaker #1: Last year for the underwriting we have in the market that is at the right price and that will deleverage the company to one times net debt EBITDA.
Speaker #3: If you combine all of its assets and the prices that are being practiced 30 to 40 credits, can we base ourselves on that, or is there a relevant expectation for price increases?
Speaker #1: All of this will allow us to continue to grow organically and unorganically. An optimal level of leverage two or three times well it should never be more than 2.5 or three times but with a very lengthened term and we're still far from that when we look at the capitalization the short-term market we had a follow on everybody in the market knows of our situation.
Speaker #3: This is Leonardo. Thank you for the question. The 30 present-day assets and the new assets were incorporating as we evolve in our agenda. The 30 present-day assets, 28 are operational, two others are licensed.
Speaker #3: They should generate 6 to 7 million carbon credits per year when all have been registered and are performant. Now, when you say 30 to 40, are these GIs?
Speaker #1: The answer and question session ends here. We would like to return the floor to Mr. Milton Pilon for the company's closing remarks. Well we've gone beyond our time.
Speaker #3: BRLs? 6 to 7 dollars in terms of prices. Now, the initiatives we have observed in for advance in the regulated market international agreements should allow the company to have a better price once these environments are properly set up.
Speaker #1: Thank you once again. We apologize because of our blackout at the beginning and thank you all very much for your attendance at this call.
Speaker #3: This is the price level we see historically for Orizon. When we look at what was happening advances in the regulated market bilateral agreements of international aviation, for example, this is the right space to have higher prices.
Speaker #3: Certainly, two-digit prices. I can't say if 10, 20, or or 12 or 20 dollars. That's not our role to give prices. But a price multiple times higher than what we have at present once the regulated markets have been set up with a 6 to 7 million carbon credits generated.
Speaker #3: The prices should be much higher. Our next question comes from André Método from Investimento. From MTDO. Your microphone has been unmuted. Good afternoon. below Leonardo, we have two questions here.
Speaker #3: One referring to the reprocessing of recyclable residues. Is there the possibility of setting up a new technology according to the bylaws? You're going to.
