Transcript: Cosan Q2 2026 Earnings Conference Call

Cosan (NYSE: CSAN ) held its second-quarter earnings conference call on Monday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

3 billion BRL, marking a strategic step to strengthen the capital structure. 85 billion BRL and a potential full divestment in Porto São Luís, aiming to optimize its capital and reduce debt. Cosan achieved a 20% reduction in expanded net debt and a 36% decrease in general and administrative expenses, reflecting its deleveraging strategy and cost efficiency. Q2 2026 ended with a negative net income of 320 million BRL, showing improvement due to better financial results and reduced expenses.

Operational highlights include Rumo's strong transport performance and Moove's significant EBITDA growth amid supply challenges. Cosan plans to delist its ADSs from the NYSE to simplify its structure further and reduce associated costs. Management changes were announced, including the departure of long-term executives and the return of a former executive, reflecting ongoing efforts to streamline operations. Future guidance includes an improvement in the debt service coverage ratio by year-end 2026, driven by strategic divestments and financial management.

Full Transcript OPERATOR Good morning everyone, and thank you for waiting. Welcome to Cosan's conference call to discuss the financial information for the second quarter of 2026. For those who need simultaneous translation, this feature is available on the platform. To access it, simply click the Interpretation button through the globe icon at the bottom of the screen and select your preferred language, Portuguese or English.

For those listening to the conference call in English, there is an option to mute the original Portuguese audio by clicking Mute Original Audio. br. During the company's presentation, all participants will have their microphones disabled. We will then begin the question-and-answer session.

We would like to emphasize that the information contained in this presentation and any statements that may be made during the conference call regarding Cosan's business outlook, projections, and operating and financial targets are based on the beliefs and assumptions of the company's management, as well as information currently available. Forward-looking statements are not guarantees of performance. 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 operating factors may affect Cosan's future performance and lead to results that differ materially from those expressed in such forward-looking statements. I will now turn the floor over to Mr. Fernando Tinel. Fernando Tinel, Director Good morning everyone, and thank you for joining our second quarter 2026 earnings call.

Before we begin, I would like to refer you to our standard disclaimer regarding estimates and statements, as well as trends and projections that may be addressed during this conference call. 3 billion BRL in net proceeds for Cosan and represented another important step in the execution of our strategy to strengthen our capital structure. Moving on to our next initiatives, we announced the sale of a portion of Radar's land portfolio located in Mato Grosso. 85 billion BRL, of which approximately 586 million BRL corresponds to Cosan's indirect stake to be received at closing.

I would like to remind you that completion of the transaction remains subject to customary conditions precedent and is expected to occur by October 30, 2026. Still in the context of divestments, Cosan recently announced an exclusive letter of intent for the full divestment of its stake in the terminal Porto São Luís. The proposal includes 300 million BRL to be paid at closing, in addition to the possibility of an indicative earn-out of 50 million BRL per additional berth linked to the future expansion of the port's capacity.

It is worth noting that completion of the transaction remains subject to the fulfillment of customary conditions precedent for this type of transaction. These initiatives, together with debt prepayments totaling nearly 9 billion BRL through June, reinforce our deleveraging path and the optimization of our capital structure, as evidenced by the 20% reduction in expanded net debt compared to the first quarter of 2026, as well as by approximately 36% decrease in general and administrative expenses, representing savings of 49 million BRL in the first six months of 2026 compared to the same period of 2025.

In addition, we just announced the delisting of Cosan's ADSs traded on the NYSE with the objective of pursuing deregistration with the SEC in the future, once again aiming to further simplify the holding company. 6% of its financial creditors, representing another fundamental step in the company's turnaround process.

Still on this slide, and now moving to Cosan's main financial indicators in Q2 2026, we ended the period with a negative net income of 320 million BRL, showing a significant improvement compared to the same period of the previous year, mainly driven by better financial results, lower effective income tax and social contribution expense, the reduction in general and administrative expenses, and finally the non-recognition of Raízen's results. As already mentioned in the previous quarter, these effects more than offset the one-off negative impact of 233 million BRL related to the impairment of TUP São Luís.

As for dividends and interest on capital, we received 399 million BRL from investees in the quarter, essentially composed of Compass. 2 billion BRL, 20% below Q1 2026, reinforcing the continuous deleveraging process at the holding company. I will comment on the main drivers of this performance later. 2x on an LTM basis, negatively impacted by the seasonality of dividends and equivalent distributions captured over the last 12 months, while still not fully reflecting the debt reduction initiatives and, consequently, the reduction in financial expenses.

Starting this quarter, we are providing a projection for this metric looking toward December 2026 in order to provide greater visibility that we reached an inflection point this quarter and how the indicator should evolve through the end of the fiscal year. 8 billion RTK in the period, a 9% increase compared to Q2 2025, mainly driven by the expansion of the grain portfolio in the North and South operations. 3 billion BRL, broadly stable compared to the same period of the previous year. Excluding the impacts from insurance indemnities for loss of profits and the reclassification of equity income, EBITDA would have grown by 4%.

At Compass, distributed volume remained stable compared to the same period of the previous year. Lower industrial consumption in the chemical, steel, and ceramics sectors was offset by the good performance of the residential and commercial segments, which delivered higher margins. As a result, together with load optimization initiatives carried out by EDGE throughout the quarter, EBITDA increased by 5% year over year. At Moove, EBITDA more than doubled compared to the first quarter of 2026 amid the supply crisis caused by the closure of the Strait of Hormuz.

The result mainly reflected the company's inventory management strategy focused on profitability, which led to higher sales volume and growth in operating revenue. Compared to the same period of last year, EBITDA was 6% lower due to a non-recurring comparison base that included the recognition of insurance indemnities and other one-off effects related to the fire at the industrial complex in Rio de Janeiro.

Finally, at Radar, the quarter's performance was impacted by the revaluation of part of the portfolio in view of the announced land disposal and by the reduction in net operating revenue, mainly explained by lower ATR prices observed in the period, which directly impacted the contribution from leases. 7 billion BRL compared to the immediately preceding quarter. This result reflected the liability management agenda we began in 2025 and have continued to execute throughout this year, including payment of the bonds maturing in 2029, 2030, and 2031, as well as the early amortization of debentures and commercial notes.

8 billion BRL in principal payments since the beginning of the year. In addition to the reduction in gross debt, moving now to the amortization schedule, these initiatives also contributed to reducing the concentration of maturities in the coming years. 5 billion BRL. 15% per year.

The effects of these measures can also be seen in the evolution of the expanded net debt. 2 billion BRL at the close of the second quarter. This movement was mainly driven by proceeds from Compass's IPO, dividends received from investees, and cash yield on financial investments. In addition, considering the recurring effects and the impact of the initiatives mentioned above, we have begun to operate at a lower level of financial expenses and without relevant non-recurring impacts.

Together, these results reinforce the progress made in executing the agenda to optimize and simplify our capital structure throughout the first half of the year. As we approach the end of our presentation, we will address the debt service coverage ratio and the main factors that influenced this indicator during the quarter. 2x compared to the immediately preceding quarter.

This variation mainly reflects the seasonality of dividends and interest on capital received from investees, with a greater concentration of distributions in the second half of the year, in addition to the fact that we are still not fully capturing the benefit from the reduction in financial expenses in a meaningful way. In addition, the company is now disclosing a projection for this ratio to be measured at the end of 2026. 8 billion BRL, including those arising from the sale of Radar in the amount of up to 586 million BRL.

The projection also incorporates the effects of the liability management actions carried out since the beginning of the year, which have not yet been fully reflected in the indicator. These effects include the reduction in financial expenses resulting from prepayments, cash yield on financial investments, and the cash impact of derivatives related to debt. It is worth reinforcing that potential new divestments that are still under evaluation by the company are not considered in this metric.

Considering all the factors previously discussed, we believe that this indicator should converge by the end of 2026 to levels closer to those historically observed by the company, within the published guidance range. With that, I conclude our presentation of the second quarter 2026 results, and thank you all for joining us. OPERATOR I will now hand it over to Mr. Marcelo Martins for his first remarks.

Marcelo Martins Good morning. Once again, thank you for being here. I do believe that for this quarter we have a set of positive news. They show that we are in alignment with our strategy and our communications with the market regarding the continuity of our simplification efforts at Cosan.

So let me go over the main points and let me talk about the management changes. In my opinion, this is a very positive piece of news for the market. But of course it's not as constructive if we think that some people who are a part of our history are leaving us now. Of course, our goal is to walk towards a leaner Cosan, a Cosan that is more aligned with the moment in history that we're experiencing, something in line with our business and our portfolio with a significant reduction of admin expenses.

We haven't reached the end of this process yet. However, I do believe we are making good progress in this direction. So we announced the sale of this port and of course this is something that the market expected. We were already in negotiation with a party with a binding proposal.

We also sold property from Hadar, especially in Mato Grosso. This also has to do with our goal of reducing this portfolio, something we had also announced to the market. And another big piece of news right now is the approval approval of Hyzin. Please remember that we had over 80% of approval by creditors.

And when we completed around three months since we began the negotiation processes with creditors, we also saw exceptional results. So we had some of our best historical results, especially in the distribution of fuels. And let me share something that we haven't published to the market, but which is also important. We had a climate survey at the company and we saw that our team was on board with the recent changes.

And we saw great alignment with our desire and our strategy to improve our results. Looking forward to not only do we want to have a healthy business, but we want a business that is in line with the goals of the shareholders that are going to be by our side as soon as we convert this debt. So we are on a path to improve our structure, our capital structure, which is significantly important for a business that has the potential to keep generating consistent results to this market. We also achieved significant reductions of admin expenses for Cosan.

Again, this is another goal that we're searching. This is very much in line with what we wanted for this moment. Of course, we want to keep working on this. We also announced that the delisting of Cosan shares outside of Brazil, this was another goal.

When we think about this, cost relative to general expenses at Cosan does not make sense any longer. These were significant costs. So it made sense for us to walk the path of delisting so that we could generate more efficiency for Cosan. So I believe we shared very positive pieces of news with the market and we do expect to see other positive news in the next quarters as we have been announcing to the market.

Let me just spend a little while talking about the changes in management. Maria Rita and Rafael decided to leave the company. And this happened while we were doing optimization and reducing admin expenses and restructuring our holding. And even though this is undesirable, because both of these people have contributed historically to us, Rafael has been in the group for 25 years, including Shell, and Rita has been here for 18 years, almost 20 years.

So of course these people contributed a lot to the business. Everyone here knows this. I don't have to repeat it. So it is unfortunate that this is happening right now.

But this is also in alignment with our intention to reduce expenditures and make Cosan more simple. This is another important step. We're bringing Cesario back. Not only is he known to us, but he has done exceptional work at the company in the past.

He spent eight years with us. He left in 2017. So nine years later, he is now back to the company and he knows it well. He knows the business well.

Some time has passed, but of course he is respected by lots of people here and he is definitely welcome back. Cesario, welcome back. Good luck. I know you're extremely competent, just like Raphael and Maria Rita, and I would like to tell everyone that the sacrifices that we're experiencing right now are a full share of our goals to improve Cosan and improve its structure so that we can keep rebalancing our capital structure.

So we are going to keep expecting this kind of investment and we're going to keep expecting this kind of efficiency. Once again, I would like to thank both of these folks for their historical dedication and their extreme competence. Welcome, Cesario. We can now start the Q and A session.

Thank you. OPERATOR Let's now start the questions and answers session. We have Mr. Marcelo Martins, Mr.

Rafael Bergman and Mr. Fernando Tinel to ask questions. Please click the button to raise your hand at the bottom of your screen. When we call your name, you're going to see a request to unmute.

Please unmute and ask your question. Please stick to one question per participant.