Ecorodovias Infraestrutura e Logistica S A : Earnings Release 2Q23

EARNINGS

RELEASE

2Q23

Earnings conference call and webcast in Portuguese with simultaneous translation into English

Tuesday, August 1, 2023

11:00 a.m. (Brasília) / 10:00 a.m. (NYC)

Replay: [phone]	For more information:
Code - Portuguese: 219051#	Marcello Guidotti
Code - English: 219052#	Andrea Fernandes
	Camilo Gomes
	Thiago Piffer
	Gustavo Silva
	[phone] / 2612 / 2674 / 2686
	[e-mail]

DIAL-IN:
[phone]	[phone]
Password: Ecorodovias

www.ecorodovias.com.br/ri

EcoRodovias Infraestrutura e Logística S.A. announces its results for the second quarter of 2023 (2Q23) and first half of 2023 (1H23). Except where otherwise indicated, comparisons are with the second quarter of 2022 (2Q22) and first half of 2022 (1H22).

Operating and Financial Highlights

Consolidated traffic: increase of 37.1% in 2Q23 and 29.3% in 1H23, mainly due to the start of toll collection by EcoRioMinas, Ecovias do Araguaia and EcoNoroeste.

Comparable vehicle traffic1: growth of 4.6% in 2Q23 and 4.3% in 1H23.

Adjusted consolidated net revenue2: R$1,282.4 million in 2Q23 (+67.8%) and R$2,412.3 million in 1H23 (+57.3%).

Comparable net revenue3: increase of 22.1% in 2Q23 and 22.2% in 1H23.

Adjusted consolidated EBITDA4: R$918.2 million in 2Q23 (+98.3%) and R$1,722.8 million in 1H23 (+83.5%).

Comparable EBITDA5: increase of 34.7% in 2Q23 and 35.5% in 1H23.

Net income: R$123.7 million in 2Q23 (vs. loss of R$13.1 million in 2Q22) and R$236.7 million in 1H23 (vs. loss of R$1.2 million in 1H22).

Capex: R$924.0 million in 2Q23 and R$1,535.1 million in 1H23. Considering the payment of EcoNoroeste's concession fee, capex amounted to R$2,209.0 million in 2Q23 and R$2,820.1 million in 1H23.

Consolidated leverage (net debt/adjusted EBITDA) of 3.9x in June 2023, stable in relation to March 2023.

Digital Transformation and Innovation Program

Productivity gains in management and operations

• Increase of 2.6 p.p. in toll collection through automatic vehicle identification (AVI) in 2Q23: 68.9% of total toll revenue (66.3% in 2Q22).
• Increase of 2.0 p.p. in toll collection through self-service and digital means in 2Q23: 8.1% of total toll revenue (6.1% in 2Q22).
• Testing of High-SpeedWeight in Motion (HSWIM) system, through the "regulatory sandbox6," at Ecovias do Cerrado, replacing the fixed vehicle weighing stations. This pioneering initiative in Brazil increases operational efficiency and facilitates the inspection of excess cargo while ensuring smooth traffic and user safety.

Energy efficiency

• In 1H23, the Company installed 12 solar plants at the toll plazas of Eco050, Ecovias do Cerrado and Ecovias do Araguaia. Currently, EcoRodovias has 24 solar plants installed at the toll plazas of Ecovias dos Imigrantes, Ecopistas, Ecosul, Eco135, Eco050, Ecovias do Cerrado and Ecovias do Araguaia. By 2030, EcoRodovias will generate enough power to supply up to 100% of the low voltage consumption of the toll plazas at these concessionaires.

1. Excluding EcoRioMinas, Ecovias do Araguaia and EcoNoroeste.
2. Excluding Construction Revenue.
3. Excluding Construction Revenue, EcoRioMinas, Ecovias do Araguaia and EcoNoroeste.
4. Excluding Construction Revenue and Costs and Provision for Maintenance.
5. Excluding Construction Revenue and Costs, Provision for Maintenance, Ecocataratas, Ecovia Caminho do Mar, EcoRioMinas, Ecovias do Araguaia and EcoNoroeste.
6. "Experimental regulatory environment in which the regulatory agency permits companies to operate with rules different from the others for a certain period of time to enable the testing of a certain innovation" (source: ANTT).

Material Events

Regulatory / Operational - 2Q23

In April 2023, EcoNoroeste signed the concession agreement with the granting authority and, on May 1, started operations and charging tolls on a stretch previously operated by AB Triângulo do Sol, whose toll revenue represents around 80% of the concessionaire's projected total toll revenue. The start of toll collection on the stretch currently operated by TEBE is slated for March 2025. Moreover, the fixed concession fee of R$1,285.0 million was deposited in April.

In April 2023, Eco135 raised its tolls by 5.75%, mainly based on the variation in IPCA.

In June 2023, the federal government published Decree no. 11,539, under the scope of the Investment Partnerships Program (PPI), which determined that the public bidding process for the federal project for Highway BR-101/ES/BA ("Eco101") was qualified for reopening. According to the decree, Eco101 and the ANTT will sign an addendum to the concession agreement within 90 days of its publication.

In June 2023, the Ministry of Ports and Airports issued an order maintaining the duration of the lease agreement of Ecoporto of 180 days until a public policy is determined for use of the area, which could be altered, extended or revoked at the discretion of the government.

Regulatory / Operational - 3Q23

In July 2023, Ecovias dos Imigrantes increased its toll tariff by 3.94% based on the variation in the IPCA index. In addition, the Investment Partnership Office ("SPI") authorized an increase of ten centavos (R$0.10) in toll tariff per toll plaza, for an indeterminate period, to mitigate the financial imbalance caused by the Covid- 19 pandemic and the postponement of tariff adjustments from July 2020 to December 2020.

In July 2023, Ecopistas raised its toll tariff by 3.94% based on the variation in IPCA. In addition, the SPI authorized an increase of 5.91% of the contractual adjustment of 3.94% to remedy, as from July 1, 2023, the imbalance caused by the non-transfer of the 2013 and 2014 tariff adjustments, leading to a total 10.08% increase in toll tariff.

Financial

The Annual Shareholders Meeting of the Company held in April 2023 approved the declaration of dividends totaling R$58.4 million, corresponding to minimum mandatory dividends, which will be distributed in due course to shareholders after a deliberation by the Board of Directors.

In April 2023, Ecopistas issued incentivized debentures totaling R$1,180 million in two series, the first amounting to R$472 million, at the cost of IPCA+7.55% p.a. and maturity of seven years and the second amounting to R$708 million, at the cost of IPCA+8.15% p.a. and maturity of 12 years, while EcoNoroeste issued debentures worth R$1,400 million, with R$400 million subscribed to by the IFC at the cost of CDI+2.50% p.a., for a term of 30 months, for deposit of the fixed concession fee of R$1,285.0 million.

In May 2023, Ecosul issued debentures worth R$140 million with a maturity of two years at the cost of CDI+2.20% p.a.

In June 2023, EcoRodovias Concessões e Serviços issued debentures worth R$650 million with a maturity of two years at a cost of CDI+2.65% p.a.

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ESG

In May 2023, EcoRodovias published the 2022 Integrated Report, dedicated to disclosing its environmental, social and governance indicators, as well as the main events and accomplishments in the year (click herefor the report).

In May 2023, EcoRodovias stood 8th in the ranking of Caliber ESG, an international consulting firm specializing in corporate reputation management, out of the 32 companies listed in the B3 Corporate Sustainability Index (ISE). Caliber ESG's ranking is aimed at measuring the stakeholders' perceptions of sustainability aspects of companies.

In June 2023, MSCI ESG Ratings upgraded EcoRodovias' rating from A to AA.

Financial Indicators (R$ million)	2Q23	2Q22	Chg.	1H23	1H22	Chg.
Adjusted Net Revenue	1					1,282.4	764.1	67.8%	2,412.3	1,533.7	57.3%
Adjusted EBITDA	2							918.2	463.1	98.3%	1,722.8	938.9	83.5%
			2				71.6%	60.6%	11.0 p.p.	71.4%	61.2%	10.2 p.p.
Adjusted EBITDA Margin
Net Income								123.7	(13.1)	n.m.	236.7	(1.2)	n.m.
3								924.0	739.9	24.9%	1,535.1	1,287.3	19.3%
Capex
Net Debt								11,925.5	8,734.8	36.5%	11,925.5	8,734.8	36.5%
Available Cash								2,293.3	1,276.8	79.6%	2,293.3	1,276.8	79.6%
Net Debt/Adjusted EBITDA	2	LTM	4	3.9x	4.1x	-0.2x	3.9x	4.1x	-0.2x
Comparable financial indicators
Comparable Net Revenue	5				933.1	764.1	22.1%	1,874.6	1,533.7	22.2%
Comparable EBITDA	5						661.1	490.8	34.7%	1,334.7	985.0	35.5%
						6		70.9%	64.2%	6.7 p.p.	71.2%	64.2%	7.0 p.p.
Comparable EBITDA Margin

1. Excluding Construction Revenue.
2. Excluding Construction Revenue and Cost and Provision for Maintenance.
3. Excludes the fixed concession fee of R$1,285 million paid by EcoNoroeste to the government.
4. LTM = Last 12 Months.
5. Excluding EcoRioMinas, Ecovias do Araguaia and EcoNoroeste.
6. Excluding Ecocataratas, Ecovia Caminho do Mar, EcoRioMinas, Ecovias do Araguaia and EcoNoroeste.

CONSOLIDATED RESULTS

Consolidated Gross Revenue by Segment

GROSS REVENUE (R$ million)	2Q23	2Q22	Chg.	1H23	1H22	Chg.
Highway Concessions	1,311.5	758.0	73.0%	2,443.3	1,530.9	59.6%
Construction Revenue	727.2	572.8	26.9%	1,201.6	942.8	27.4%
Ecoporto Santos	133.4	139.3	-4.2%	304.0	279.4	8.8%
Ecopátio Cubatão	17.1	9.5	79.2%	28.0	17.1	63.4%
Services	94.0	83.2	13.0%	189.3	166.3	13.8%
Eliminations	(93.7)	(80.6)	16.3%	(188.2)	(161.2)	16.7%
GROSS REVENUE	2,189.5	1,482.2	47.7%	3,978.1	2,775.3	43.3%
(-) Construction Revenue	(727.2)	(572.8)	26.9%	(1,201.6)	(942.8)	27.4%
ADJUSTED GROSS REVENUE	1,462.3	909.3	60.8%	2,776.5	1,832.5	51.5%

Adjusted gross revenue, excluding construction revenue, amounted to R$1,462.3 million in 2Q23 (+60.8%) and R$2,776.5 million in 1H23 (+51.5%). In 2Q23, the increase was mainly driven by the growth in vehicle traffic, toll adjustments and start of toll collection by EcoRioMinas (partially in September 2022 and March 2023), Ecovias do Araguaia in October 2022 and EcoNoroeste (partially in May 2023). Comparable gross revenue, excluding the start of toll collection by EcoRioMinas, Ecovias do Araguaia and EcoNoroeste, increased 18.9% in 2Q23 and 19.5% in 1H23 mainly due to the growth in vehicle traffic and toll adjustments.

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Highway concessions: R$1,311.5 million in 2Q23 (+73.0%) and R$2,443.3 million in 1H23 (+59.6%). In 2Q23, the increase was due to the growth in vehicle traffic, toll adjustments and the start of toll collection by EcoRioMinas, Ecovias do Araguaia and EcoNoroeste. Comparable gross revenue, excluding the start of toll collection by EcoRioMinas, Ecovias do Araguaia and EcoNoroeste, increased 22.8% in 2Q23 and 21.3% in 1H23 due to the growth in vehicle traffic and toll adjustments.

Ecoporto Santos: R$133.4 million in 2Q23 (-4.2%) and R$304.0 million in 1H23 (+8.8%). In 2Q23, the variation was caused by the reduction in warehousing operations.

Ecopátio Cubatão: R$17.1 million in 2Q23 (+79.2%) and R$28.0 million in 1H23 (+63.4%), mainly due to operational growth.

Consolidated Operating Costs and Administrative Expenses

OPERATING COSTS AND ADMINISTRATIVE EXPENSES	2Q23	2Q22	Chg.	1H23	1H22	Chg.
(R$ million)
Personnel		141.6	122.6	15.5%	277.4	242.4	14.4%
Conservation and Maintenance	54.1	42.5	27.2%	98.0	80.9	21.1%
Third-Party Services		79.5	77.2	3.0%	156.3	145.6	7.4%
Insurance, Concession Fees and Leasing	49.8	31.7	57.1%	96.0	65.9	45.6%
Other		39.7	35.4	12.1%	87.7	69.4	26.4%
CASH COSTS		364.7	309.4	17.9%	715.4	604.2	18.4%
ADJUSTED CASH COSTS	1	285.1	285.1	0.0%	591.4	564.8	4.7%
Construction Costs		727.2	572.8	26.9%	1,201.6	942.8	27.4%
Provision for Maintenance		33.7	35.2	-4.4%	53.2	59.3	-10.4%
Depreciation and Amortization	200.7	138.2	45.2%	384.0	272.0	41.2%
OPERATING COSTS AND ADMINISTRATIVE EXPENSES	1,326.2	1,055.7	25.6%	2,354.2	1,878.3	25.3%
1) Excluding costs and expenses at Ecocataratas, Ecovia Caminho do Mar, EcoRioMinas, Ecovias do Araguaia and EcoNoroeste.

Operating costs and administrative expenses totaled R$1,326.2 million in 2Q23 (+25.6%) and R$2,354.2 million in 1H23 (+25.3%), mainly due to the increase in construction costs (non-cash), depreciation and amortization. Cash costs, excluding construction costs, provision for maintenance, depreciation and amortization, came to R$364.7 million in 2Q23 (+17.9%) and R$715.4 million in 1H23 (+18.4%), mainly due to the start of toll collection by EcoRioMinas, Ecovias do Araguaia and EcoNoroeste.

Adjusted cash costs, excluding the start of toll collection by EcoRioMinas, Ecovias do Araguaia and EcoNoroeste, amounted to R$285.1 million in 2Q23, stable in relation to 2Q22, and R$591.4 million in 1H23 (+4.7%). In 2Q23, adjusted cash costs remained stable, mainly due to Third-Party Services, thanks to lower expenses with studies for new auctions and the accounting of new lease agreements (light / heavy vehicles and equipment), in compliance with CPC 06 / IFRS-16.

EcoRodovias ramped up its digital transformation program, launched in 2022, which is one of the drivers of the EcoRodovias Value Agenda (EVA) Project to maximize the Company's value. Diverse digitization, innovation and operational and corporate efficiency initiatives are being rolled out, such as the automation of operations, collections, payments, sourcing and human resources processes, whose results will be evident during the course of 2023 and 2024. These advances will be gradually reflected in the Company's results. Some of the more advanced actions are detailed on page 21.

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