Ultrapar Participacoes S.a. · BMFBOVESPA:UGPA3
Ultrapar Participacoes — Ultrapar Holdings — Merger or Acquisition (April 2007)
62 slides from Ultrapar Participacoes's merger presentation, Apr 16, 2007
Slide 1: (a) Based on discounted cash flow analysis (DCF) and comparable multiples (b) Market value
(a) Based on discounted cash flow analysis (DCF) and comparable multiples (b) Market value based on weighted average shares for the 12 months prior to date of announcement (c) Book value based on latest public company filing dated 12/31/2006
Slide 2: Ultrapar company description and major subsidiaries
Source: Public Ultrapar information Company description Ultrapar is a holding company for 3 separate operating companies: Oxiteno, Ultragaz, and Ultracargo Major subsidiaries ■ Ultragaz Participações LTDA - Ultragaz is the leading distributor of liquefied petroleum gas (LPG) in Brazil, and one of th
Slide 3: RIPI company description and major subsidiaries
Note: Families include Gouvea, Tellechea, Mello, bastos, and Ormazabal families Source: Public Ipiranga information Company description ■ RIPI is a holding company for certain Ipiranga investments and operates a refinery Major subsidiaries ■ Companhia Brasileira de Petroleo Ipiranga (CBPI) - A fuel
Slide 4: DPPI corporate structure
Corporate structure Note: Families include Gouvea, Tellechea, Mello, Bastos, and Ormazabal families Source: Public Ipiranga information Company description ■ DPPI is a distributor of fuel in Southern Brazil ■ The Company delivers fuel to retail gas stations, industrial sites ■ Approximately 65% of v
Slide 5: CBPI corporate structure
Corporate structure Note: Families include Gouvea, Tellechea, Mello, Bastos, and Ormazabal families Company description ■ The largest company in the Ipiranga Group by revenue, CBPI is a distributor of fuel in Brazil , except in Rio Grande do Sul, Roraima and Amapá ■ The Company delivers fuel to reta
Slide 6: CBPI economic value and book value
Economic value Book value - CBPI -------------- ----------------- (R$ million) 100% Proportionate 12/31/2006 TEV TEV ---------- Copesul 5,635 29.46% 1,660 (1) Shareholder equity - (R$ million) 1,555.2 IPQ Opco 1,452 100.00% 1,452 (2) Total number of shares (million) 106.0 100% IPQ SA. 3,112 (3)=(1)+
Slide 7: TEV perpetuity growth and EBITDA multiple
TEV (R$ million) (R$ million) Perpetuity growth(a) (Gordon's growth model) (a) Values converted into Reais at 2.14 R$/US$. Net present value and perpetuity value calculated in US$ TEV/ 2007 EBITDA (R$ million) Perpetuity growth(a) (Gordon's growth model) (a) Values converted into Reais at 2.14 R$/US
Slide 8: Cash gross margins per ton
Cash gross margins per ton are constant in real terms adjusted for Brazilian inflation
Slide 9: Note: Excludes depreciation Source: Company information and Ultrapar management guidance
Note: Excludes depreciation Source: Company information and Ultrapar management guidance
Slide 10: Selling and G&A expense assumptions
Selling expenses are constant as a percentage of sales, while General and Administrative expenses are adjusted for inflation
Slide 11: EBITDA and margin
EBITDA 600 ett bee 10% 10% 10% © 10% «10% = 10% 3 * = 200 eS Ss fa a 243 J 267 oe 100 o 20082 © 2000E 2010E «OIE OIE IE TUE NSE -2N1BE “Source: Company information and Urapar management guidance = TDA EBITDA margin
Slide 12: Depreciation schedule
Based on property, plant and equipment depreciation schedule
Slide 13: Net operating working capital
Net operating working capital assumptions are in line with Change in net operating working capital Net operating working capital (R$ million) 2005A 2006A 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E Net operating working capital 150.2 126.4 133.5 141.9 150.0 158.5 167.4 176.6 186.2 19
Slide 14: Specialties and commodities price assumptions
Specialties prices are constant in US Dollars and commodities prices are based on CMAI projections in US Dollars
Slide 15: Average price per ton
Average price per ton 5.000 3.852 3.388 = - a 3.602 3.040 — 2.267 1.878 2004 20054 20064 2007E-—«200KE©—«-2008E_«« NUE DOTTE2012E © 201SE «OE © 20ISE—2018E — Average Price — commacities —— Specialty products ‘Source: CMA, historia! information and Utrapar management guidance
Slide 16: Sales mix shift to specialties
Sales are expected to shift over-time from commodities to specialties and from exports to the domestic market
Slide 17: Production shift reduces EBITDA cyclicality
The production shift to specialties diminishes the cyclicality of the EBITDA margin
Slide 18: Depreciation schedule
Based on property, plant and equipment depreciation schedule
Slide 19: Net operating working capital
Net operating working capital assumptions are in line with 2006 Change in net operating working capital Net operating working capital (R$ million) 2005A 2006 A 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E Net operating working capital 259.5 361.2 368.0 400.0 504.5 543.7 580.0 611.8 64
Slide 20: Storage - m3
Storage - m3 _ 3 “Source: Company information and Utrapar management guidance
Slide 21: Storage - m2
Storage — m2 fom 3, Siac “Appr behead tpl: mapa epticn
Slide 22: Transportation - thousands of km
Transportation - thousands of km ‘Source: Company information and Uitrapar management guidance
Slide 23: Revenues
Revenues R$ milion 20068 2007 2008E 20095 2010E 2011 2012E 1 Transportation 2013E | 20M4E 2018 1 Storage area 2016E
Slide 24: EBITDA and margin
EBITDA 7 20% HM BH MH 28H 20044 20054 20064 «2007E © 2008E©-«« DUDE ««20TDE.« OIE ©» 2012E«2013E-«20E—201SE © -201E. ee EBTOA EBITDA margin ‘Sead: Cent etiadatehria Ro tthe pba
Slide 25: Depreciation schedule
Based on property, plant and equipment depreciation schedule
Slide 26: Net operating working capital
Net operating working capital assumptions are in line with Change in net operating working capital Net operating working capital (R$ million) 2005A 2006A 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E Net operating working capital 14.0 16.1 17.7 19.4 21.1 22.9 23.9 24.9 26.0 27.1 28.2 2
Slide 27: Ownership structure and share acquisition steps
Ultra RIPI minority* DPPI minority’ ‘CBPI minority’ veon veo Teese Te:ss0r% i rrr _ a Utragaz oxen RPL 1% 7 | be: = 21.0% iranga shares par conpais, posts and 2 10% \e¥eing Capi Tet Capa eer Notes: Assumes that all ON shareholders are bouaht out when Utrapar accuires convo of liranaa and tenders for
Slide 28: Ultrapar stakes acquired after steps 1 and 2
o After completing steps 1 and 2, Ultrapar will have acquired 41.3% of RIPI, 35.4% of DPPI, and 4.1% of CBPI o Ultrapar will spend R$876 million on steps 1 and 2 o These stakes are equivalent to 41.3% of the refinery, 38.5% of the distribution business of DPPI, and 16.9% of the distribution business
Slide 29: TEV perpetuity growth and EBITDA multiple
TEV (R$ million) (R$ million) Perpetuity growth(a) (Gordon's growth model) (a) Values converted into Reais at 2.14 R$/US$. Net present value and perpetuity value calculated in US$ TEV/ 2007 EBITDA (R$ million) Perpetuity growth(a) (Gordon's growth model) (a) Values converted into Reais at 2.14 R$/US
Slide 30: Brazil volume and market share
120,000 6.458 92.416 98,516 100,75 105,199 108,795 2005 2008 «= 2007. 2008S 2008S 20102011 20122013201 20152018 mM Brazil volume —w—Warket share (2) Core products: Gas, alcohol, nd diese! ‘Source: Based on company information and an extemal consultant, confimed by Ipiranga management AE Re
Slide 31: Blended gross margin per thousand m3
Blended gross margin per thousand m* 8/000 cubic meters 8 n+ 2008 2008-2007, 2008S 2009 20102011, 22,2013. 0t_ S201 2016 Note: Gross margins par thousand cubic meters adjustd fr raz infation ‘Soures: Based on company information and an extemal consutant,confimed by ianga management
Slide 32: EBITDA margins and selling expenses
EBITDA margins in 2008-2011 are affected by selling expenses relating to market share growth, stabilized from 2012- 2016
Slide 33: EBITDA
EBITDA 4,200 20% 21% 1.9% 20% 20% += -2.0% R$ milon 8 20044, 2006A —-2007E«2008E © 2008E DUET) 2012E OISE_-«2OT4E©—«2O1SE 2018 mmm ESTO —=— EBITDA margin cig dela sl alms el se ald ee ak ips oom
Slide 34: Selling expenses and market share strategy
Selling expenses increase in 2007 through 2011 due to CBPI’s strategy to increase market share
Slide 35: Selling and general expenses
Selling and general expenses R$ (00's) 4,600 4400 —_ euser eanses io ganmanethare 4,000 00 600 400 200 0 20044 20054 2008A«2007E © 2008E©««2008E_-« IDE. «OTE» 012E-«013E_-«« 20ME ©—«2015E©—«2018E ‘Source: Based on company information and an extemal consultant, confimed by Ipiranga management ‘Nota:
Slide 36: Depreciation schedule
Based on property, plant and equipment depreciation schedule
Slide 37: Net operating working capital
Net operating working capital assumptions are in line with 2006 Change in net operating working capital Net operating working capital (R$ million) 2005A 2006A 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E Net operating working capital 1,119 1,253 1,399 1,487 1,608 1,734 1,863 2,015 (+)
Slide 38: TEV perpetuity growth and EBITDA multiple
TEV (R$ million) (R$ million) Perpetuity growth(a) (Gordon's growth model) (a) Values converted into Reais at 2.14 R$/US$. Net present value and perpetuity value calculated in US$ TEV/ 2007 EBITDA (R$ million) Perpetuity growth(a) (Gordon's growth model) (a) Values converted into Reais at 2.14 R$/US
Slide 39: DPPI market share stability
Given its strong position in the region, DPPI presents little market share fluctuation
Slide 40: Blended gross margin per thousand m3
Blended gross margin per thousand m* R$'000 cubic meters zoos 20082007 2008S 2008 mada, tz 2101S NSN Note: Margins aguste for Brazil ination ‘Soures: Based on company information and an extemal constant, confimed by piangs management
Slide 41: Revenues
Revenues 8,000 7.485 esea 7008 7,000 6159 sag 5773 6,000 soa Se 4,708 sacs 4288 3,000 2,000 1,000 o 20044 20054 206A -2007E 2008 ©««2003E-««2010E NITE» 2012E-«2013E_««0ME © 21SE 20168, R$ milion 68 ‘Souce: Based on company information and an extemal consultant, confirmed by ipiranga management
Slide 42: EBITDA
EBITDA 200, 3.0% 27% 2am (23% 150 24% «22% == «22% «22% 2% 2% 2TH 19% = _ 100 " a . o 2007E -2008E | «2008E IDE. 201 © «2012E-01E_-««201E-« «OIE 2016E, mmm ESTA —e—ESTOA margin ‘Source: Based on company information and an extemal consultant, confimed by lpranga management
Slide 43: Depreciation schedule
Based on propery, plant and equipment depreciation schedule
Slide 44: Net operating working capital
Net operating working capital assumptions are in line with 2006 Change in net operating working capital Net operating working capital (R$ million) 2005A 2006A 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E Net operating working capital (+) current assets (-) current liabilities Change i
Slide 45: TEV and normalized EBITDA multiple
TEV (R$ million) - ---------------- (a) Values converted into Reais at 2.14 R$/US$. Net present value and perpetuity value calculated in US$ Source: Based on company information, confirmed by Ipiranga management TEV/Normalized EBITDA - --------------------- Note: EBITDA normalized for the industry c
Slide 46: Gross margin driven by cash spreads
Gross margin was driven by ethylene, propylene, and benzene cash spreads based on CMAI data adjusted for Brazil
Slide 47: Cash spread per component
Cash spread per component 200A 20054 20064 -2007TE©««20DKE NONE «OTHE DOE 2012E«2018E_ OME © OIE (OTE. — Ettyiene — Propylene — Benzene Note: Excludes depreciation ‘Source: B3sed on CMAl, company information, confrmed by Iprange management
Slide 48: EBITDA margins and ethylene cycle
EBITDA margins reflect the ethylene business cycle, based on CMAI data
Slide 49: EBITDA
EBITDA Th 20044 20064 20084 2007E« 2008E © 2008E©««O1DE «OTE 2012E-««201SE_-—«201KE-—««201SE—«2018E mmm ESITDA EBITDA margin ‘Source: Based on company information, contrmed by Ipiranga management
Slide 50: Depreciation schedule
Based on property, plant and equipment depreciation schedule
Slide 51: Net operating working capital
Net operating working capital assumptions are in line with 2006 Change in net operating working capital Net operating working capital (R$ million) 2005A 2006A 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E Net operating working capital (+) current assets 1,061 1,046 1,272 1,450 1,398 (-
Slide 52: TEV perpetuity growth and EBITDA multiple
TEV (R$ million) (R$ million) Perpetuity growth(a) (Gordon's growth model) (a) Values converted into Reais at 2.14 R$/US$. Net present value and perpetuity value calculated in US$ TEV/ Average EBITDA (R$ million) Perpetuity growth(a) (Gordon's growth model) (a) Values converted into Reais at 2.14 R$
Slide 53: Gross margin based on polyethylene and polypropylene spreads
Gross margin is based on cash spreads of Polyethylene and Polypropylene based on adjusted CMAI forecasts
Slide 54: Cash spread per product
Cash spread per product 20044 20054 -2008A-«-2007E©—«2008E—««2008E© «NIUE «2011 NE©—«-DISE_«2OT4E©—«201SE-—2018E —Polyethyiene — Polysropyiene das depreciation ‘on company information, confmed by Inrange management
Slide 55: Revenues
Revenues 1980 4,914 1,898 20044 20054 20064 2007E°-««200BE-—«-200KE_ «NUE DOTTE2012E201SE «OE © 20ISE—2016E ‘Source: Based an company information, confimed by Iprangs management
Slide 56: EBITDA
EBITDA 14.72% 14.6% 14.25 20044 20058-20064 2007E-««2008E- NUDE DOTDE««2011E2012E 013E_-««20KE©—201SE—-2018E mm ESTA t= ESITDA margin a a
Slide 57: Depreciation schedule
Based on property, plant and equipment depreciation schedule
Slide 58: Net operating working capital
Net operating working capital assumptions are in line with Change in net operating working capital Net operating working capital (R$ million) 2005A 2006A 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E Net operating working capital (36 ) (+) current assets (-) current liabilities Change
Slide 59: Share price ranges, LTM ending 3/16/2007
LTM ending 3/16/2007 - -------------------- ON - R$ PN - R$ ------- ------- Max N.A 56.95 W.A. N.A 43.08 Min N.A 31.77 - ----------------------------- Note: R$ per share Source: Factset 3/16/2007 to 4/2/2007 - --------------------- ON - R$ PN - R$ ------- ------- Max N.A 63.75 W.A. N.A 56.10 Min N.A
Slide 60: Share price ranges, LTM ending 3/16/2007
LTM ending 3/16/2007 - -------------------- ON - R$ PN - R$ ------- ------- Max 80.15 45.70 W.A. 45.81 32.75 Min 34.00 22.55 - ----------------------------- Note: R$ per share Source: Factset 3/16/2007 to 4/2/2007 - --------------------- ON - R$ PN - R$ ------- ------- Max 97.68 47.50 W.A. 91.57 44.
Slide 61: Share price ranges, LTM ending 3/16/2007
LTM ending 3/16/2007 - -------------------- ON - R$ PN - R$ ------- ------- Max 30.80 23.88 W.A. 21.72 18.32 Min 20.00 14.58 - ----------------------------- Note: R$ per share Source: Factset 3/16/2007 to 4/2/2007 - --------------------- ON - R$ PN - R$ ------- ------- Max 53.50 25.30 W.A. 52.55 23.
Slide 62: Share price ranges, LTM ending 3/16/2007
LTM ending 3/16/2007 - -------------------- ON - R$ PN - R$ ------- ------- Max 60.00 34.99 W.A. 41.69 24.99 Min 27.50 22.00 - ----------------------------- Note: R$ per share Source: Factset 3/16/2007 to 4/2/2007 - --------------------- ON - R$ PN - R$ ------- ------- Max 102.02 38.98 W.A. 96.53 34
Ultrapar Holdings — Merger or Acquisition (April 2007) on 6ix