Rumo S A : Earnings Releases 1Q21

EARNINGS RELEASE 1Q21

Curitiba, May 13, 2021 - RUMO S.A. (B3: RAIL3) ("Rumo") today announces its results for the first quarter of 2021 (1Q21), consisting of January, February and March. The results are presented on a consolidated basis, in accordance with Brazilian and international accounting rules (IFRS). The comparisons made in this report take into account 1Q21 and 1Q20, except when otherwise indicated.

Rumo 1Q21 Highlights

• The volume transported in 1Q21 was 13.9 billion RTK, 12.8% above 1Q20, on the back of the 16.4% increase in North Operation volume, despite the delay in the entry of the soybean harvest.
• EBITDA reached R$ 832 million, 44.2% above 1Q20, reflecting volume growth and 5.9% tariff increase. As a result, EBITDA margin reached 47.7%, an expansion of 7.2 p.p.
• Net income was R$ 175 million, compared to a loss of R$ 274 million in 1Q20, influenced by EBITDA growth and lower financial expenses resulting from MtM gains with derivatives, due to the advanced payment of 2024 Senior Notes.
• As a result of the prepayment of 2024 Senior Notes, gross debt decreased to R$ 13.6 billion, -16.7% compared to 4Q20. Net debt reached R$ 8.1 billion and leverage stood at 2.0x comprehensive net debt/adjusted LTM EBITDA.
• Capex reached R$ 937 million, in line with the investment plan, enabling the entry of Central Network into operation, whose capex reached R$ 365 million in the quarter.

	Summary of financial information			1Q21		1Q20			Chg.%
	(Amounts in BRL mln)
Total transported volume (millions RTK)	13,873		12,297		12.8%
Total volume loaded (TU '000)	2,864		2,545		12.5%
Logistics solution volume	1,078		1,146		-5.9%
Net revenue1	1,746		1,424		22.6%
	Cost of goods sold	(1,219)	(1,071)	13.8%
Gross profit	527		352		49.6%
Gross margin (%)	30.2%	24.8%		5.4 p.p
	Sales, general and administrative expenses	(108)	(105)	3.2%
	Other op. revenues (expenses)	(16)	(92)	-83.0%
	Equity pickup	1		2		-41.7%
Operational profit	405		158		>100%
	Depreciation and amortization	428		419		2.0%
EBITDA	832		577		44.2%
EBITDA margin (%)	47.7%	40.5%		7.2 p.p
Net profit (loss)	175		(274)	>100%
Net margin (%)	10.0%	-19.2%		29.2 p.p
Capex	937		561		67.0%

Note 1: Includes revenue from the right of way of other railways, revenue from sugar transportation using other railways or road transportation and revenue from volumes contracted but not executed according to commercial agreements (take or pay).

Earnings Conference Call

May 14, 2021

English* - 2:00 pm (Brasília time)

• With simultaneous translation to Portuguese
  Phone: + 55 11 3181 8565

• 55 11 4210 1803 Phone (US): [phone]
  [phone]

Password: RUMO

Investor Relations

Email: [e-mail]

Website: ir.rumolog.com

Earnings Release

1Q21

1. Comparable Result

In this section, we present the effects of Central Network in 1Q20 and 1Q21, as well as the effects of the early renewal of Paulista Network in 1Q20, to ensure the comparability of the results previously presented (comparable result). In the other sections, the result presented considers all the effects mentioned above.

	Summary of Financial Information			1Q21		Central		Comparable			1Q20		Central			Paulista			Comparable		Chg.%
	(Amounts in BRL mln)				Network		1Q21				Network			Network	2			1Q20
Total transported volume (million RTK)		13,873		(328)	13,545		12,29		n/a	n/a	12,297		10.2%
										7
Net revenue		1,746		(41)		1,705		1,424		-				-		1,424		19.8%
Gross profit		527		0		528		352		-				-		352		49.6%
Gross margin (%)	30.2%	-1.1%	30.9%		24.8%	n/a	n/a	24.8%	6.2 p.p
	Sales, general and administrative	(108)	7		(101)	(105)	12				-		(93)	9.1%
	expenses
	Other op. revenues (expenses) and	(14)	-		(14)	(90)	24			64		(2)	>100%
	equity pickup
Operational profit	405		7		412		158		36			64		258		59.7%
	Depreciation and amortization	428		(26)		402		419		(24)			-		395		1.6%
EBITDA		832		(19)		813		577		12			64		653		24.6%
EBITDA margin (%)	47.7%	46.3%	46.6%		40.5%	n/a	n/a	45.8%	0.8 p.p
Capex		937		(365)		572		561		(14)			-		547		4.5%

Note 2: Effects of the renewal process of Paulista Network (payment of fines not provisioned as a condition for renewal).

2. 1Q21 Executive Summary

Rumo's transported volume reached 13.9 billion RTK in 1Q21, 12.8% above 1Q20. In North Operation, volume grew 16.4%, on the back of the performance of fertilizers (+55.2%) and industrial products (+21.0%). The agricultural segment grew significantly (+15.8%), despite the late entry of the soybean harvest. In South Operation, volume increased 2.0%, reflecting the recovery of the industrial segment (+23.6%) and higher volumes of sugar (+50.9%). The grain segment declined, since, historically, the entry of the harvest in the south occurs later than that of Mato Grosso. Container Operation grew by 5.9% in volume, limited by the impact of a lower exports to India, due to Covid- 19, and lower exports of refrigerated products.

Quarterly volume - Consolidated and by Operation

(billions RTK)

Source: Rumo System

Rumo gained 2 p.p. of grain market share in the Port of Santos (SP) in 1Q21, reflecting a good operating performance since the beginning of the soybean harvest in February. Regarding exports of soy and soybean meal from Mato Grosso, Rumo gained 1 p.p. of market share.

Grain exports through the port of Santos (SP) and Rumo market share

(million tons and%)

Source: Shipping Agency and Rumo System

South Operation gained 2 p.p. in the grain transport market share to the ports of Paranaguá (PR) and São Francisco do Sul (SC), since Rumo's volume decreased less than the market, as a consequence of the delay in the entry of soybean harvest.

Grain exports through the ports of Paranaguá (PR) and São Francisco (SC) and Rumo market share

(million tons and%)

Source: Shipping Agency and Rumo System

Net revenue totaled R$ 1,746 million, +22.6% vs. 1Q20, as a function of higher volumes (+12.8%) and the increase in consolidated tariff (+5.9%), reflecting the readjustments in fuel prices (+20.0%). North Operation tariffs were up 3.1%, impacted by mix, as the growth in fertilizers and industrial products volumes reduced the average tariff; and in South Operation (+17.5%), the positive impact on tariffs was due to the concentration of volumes in March, month with the highest tariffs, and the greater harvest in Rio Grande do Sul state, which allowed for better contract negotiations.

Adjusted EBITDA reached R$ 832 million, an increase of 44.2%, due to the improvement in net revenue and a good cost performance. Variable cost rose 21.5%, on the back of higher volumes and the increase in fuel prices. Fixed costs and general and administrative expenses increased 9.5%, due to: (i) the entry of the Central Network into operation, and the expansion of Rondonópolis terminal, (ii) the effects of inflation and; (iii) the collective bargaining agreement. As a consequence, EBITDA margin increased 7.2 p.p., reaching 47.7%.

Rumo posted a net income of R$ 175 million, compared to a loss of R$ 274 million in 1Q20, influenced by EBITDA growth and lower financial expenses due to an extraordinary effect of the dismantling of the swaps related to the prepayment of 2024 Senior notes - which generated a positive effect on the result of R$ 203.3 million. This operation was carried out within a liability management process, resulting in the prepayment of a total cost debt (coupon + swap) of 144% of the CDI. As a result, Company's cash level returned to R$ 5.4 billion and gross comprehensive debt decreased to R$ 13.6 billion, -16.7%vs 4Q20. Net debt reached R$ 8.1 billion and leverage reached 2.0x comprehensive net debt/adjusted LTM EBITDA.

Regarding soybean market, in 2021, according to Agroconsult's projections, Brazil should have a record harvest of 137 million tons - an increase of 11.0 million tons compared to 2020 - of which 85 million should be exported. For Mato Grosso, according to the consultancy, an increase of 2 million tons in exports is projected, which should extend the window until July. In Rio Grande do Sul state, a strong expansion of production (8.3 million tons) is expected, recovering from the crop failure of 2020, and in Goiás, state that started to be served by Rumo in March, representing a new market, production is estimated at 13.4 million tons.

In the analysis of corn projections, according to AgRural, a reduction of 8 million tons in the country's production and a decrease of 6 million tons in the export volume are indicated. For Mato Grosso, exports should account 1 million tons less than in 2020. In Mato Grosso do Sul and Paraná, production is estimated at 20.0 million tons, and in Goiás, production can reach 11.1 million tons, which represents an additional volume opportunity, given the recently consolidated geographic expansion. Corn volumes contracted for the second half of the year are substantially higher than those negotiated at the same time in 2020 for the equivalent period, but there's still room for the evolution of agreements for the fourth quarter.

Source: Agroconsult

Note: (e) - estimate

Regarding environmental, social and governance aspects (ESG), Rumo delivers, in another quarter, positive advances in its main indicators. Fuel consumption decreased by 5.0%, as a result of the continuous investment in technologies, infrastructure works and more modern materials that, in addition to contributing to the reduction of fuel use, reduce emissions of greenhouse gases into the atmosphere. On the social side, we continue to reinforce our approach to the communities we go through with our more than 14 thousand km of lines, and the construction works to resolve urban conflicts in Paulista Network continues at a strong pace, bringing more quality of life to the population that lives around it. Also, internally, we formed affinity groups, one of initiatives in the field of diversity that explores the inclusion and development of an increasingly diverse and respectful environment. With regards to governance, the second woman joined the Board of Directors, reinforcing the commitment to the plurality of competencies within the Company. Finally, in April we issued the first debt linked to sustainability goals in the local market - SLB, Sustainability Linked Bond -, an operation that reiterates Rumo's commitment to sustainable development. These and other important initiatives, together with the results obtained during the year 2020, will be reported in the next sustainability report, in June 2021.