Companhia Paranaense de Energia (COPEL)

Good morning, ladies and gentlemen. Welcome to Companhia Paranaense de Energia Coppel's video conference call to discuss third quarter 2025 earnings results. This video conference is being recorded and the replay can be accessed on the company's website, ri.coppel.com. The presentation is also available for download. Please be advised that all participants will be in listen-only mode during the company's presentation, and then we will start the Q&A session when further instructions to participate will be provided. Before proceeding, I would like to stress that forward-looking statements are based on the beliefs and assumptions of Coppel's management and on information currently available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore should be treated as forecasts dependent on the macroeconomic environment, the country's economic situation, the performance and regulation of the energy sector, in addition to other variables, Such forward-looking statements are therefore subject to change. This video conference will be presented by Mr. Daniel Slaviero, CEO of Coppel, and Mr. Felipe Guterres, CFO, as well as officers of these subsidiaries. They will be available during the question and answer session. I would now like to give the floor to the CEO of Coppel, who will begin the presentation. Please proceed, Mr. Slaviero.

Good morning, everyone.

I'd like to thank you all for joining us in this video conference call. I'd like to start highlighting the healthy operating and financial performance of the company in this third quarter. We posted recurring EBITDA of 1.3 billion BRLs, up almost 8% over the same period last year, and a recurring net income of 375 million BRLs. These numbers show how solid and consistent Cobel's results are. Another point that deserves a highlight is the strong investment made in the period, 981 million in capex in the third quarter alone, totaling 2.6 billion in the nine months of 2025. This level of investment reflects our commitment with quality of service, expansion and modernizing our asset base and ensures that we are preparing for a historical tariff review in the distribution company in 2026. In line with our commitment to continuously optimize our portfolio, this month we completed the divestment of four photovoltaic solar plants doubling 22 megawatts peak and distributed generation in a deal evaluated at 78 million euros. This follows our commitment to simplify our portfolio. Additionally, With the completion of the Baishui-Gua Su HPP divestment in the start of October, our leverage ratio is at 2.8 times net debt over EBITDA ratio, well on target of our optimal capital structure. This fact reinforces two things. Firstly, our excellence in executing the commitment that we set forth with the market. And secondly, this Baixa Iguaçu would deal with its characteristics It represents the essence of this new phase of Copel, a company that is agile, attentive to opportunities, and focused on creating value. On the operational side, we recorded the sales of almost 5 GWh, and the build market of the disco grew 1.7%. Still, comparing with a very high base recorded in Q3 2024, These indicators reinforce the resilience of our business, the abundance of our concession area and the trust of our customers. On the side of generation, it is important to put things into context. The results obtained by the Genco were recorded in a very challenging scenario. In this quarter, we had a GSF of approximately 65% and a curtailment of almost 35%. Fortunately, these assets subject to curtailment are very small in the structure base of Coppel. On the positive side, we had an increase of PLD, pot market, of close to 50% compared to Q324, totaling about 250 BRLs per MWh. The intelligence of our strategy and trading structure, led by Rodolfo, and risk mitigation coupled with the positive effect of optimizing our portfolio in special, the modulation of the hydrate source made all the difference. To end the slide, in this period, for the first time, we had the consolidation of the results of Mata de Santa Genebra, the transmission company, and the Mauara HPV, ensuring a more robust and efficient portfolio, which can This reinforces our differential, the fact that we are an integrated company with a solid presence in all four segments where we operate. I take this moment to give you an update on the process to migrate to Novo Mercado. The structure of the deal is already known to all of you, but I would like to record the steps that have been completed. On August 22nd, we had the approval of the common shareholders in the special general meeting, and we got waivers of the venture holders and all of the necessary issuances, and we have handled the unification of preferred shares, Class B to Class A. Lastly, we had the approval conditioned by B3 to migrate to Novo Murtado. And now, next Monday, November 17th, at 11 a.m., We will have the special general meeting and the agenda is to ratify the conversion of preferred shares into common shares in a rate of 1 to 1, plus a new class C preferred share redeemable. I would like to invite all preferred shareholders to take part in this special meeting and to give us their vote. This is a decisive step for us to consolidate a simpler, more transparent shareholder structure and one which is more aligned with the best practices of the market. In parallel, unification of shares into one single class will bring more liquidity to our security and to our share, which is a relevant factor to attract new investors. Should this measure be approved, we will be prepared to complete the whole process by year-end, which will open up a path to distribute part of the dividends referring to the first event of the exercise, as set forth in our dividend payout policy. This will be a historical moment in our journey to create value at Coppel. we launched to our employees the new elements of the Coppel culture, a reason of existing ambition and our values. This T-shirt that myself and my partners are wearing today is part of this event and part of the internal communication process. This year, we revisited the company's strategic planning and thus built a vision for Coppel 2035. We cannot think about strategy if it's not coupled with culture and vice versa. A strong culture is a central pillar to sustain a long-term vision and a very bold one, I should say. More than a concert, we believe that our culture is a competitive differential for Cabral. All these elements of culture, as well as strategic planning, will be presented to the market in our Cabral Day. By the way, before I give the floor to Felipe, who will detail the financials of the quarter, I would like to reinforce the invitation for you to sign up to our Coppel Day, which will be held next Wednesday, November 19th, directly from Rio de Janeiro, the wonderful city, with an online broadcast starting at 9.30 a.m. It's going to be a big event. Thank you very much. Thank you, Daniel. Good morning, everyone. I'll start highlighting the consistency of our results, Coppell's discipline in capital allocation, and the operating efficiency of our business, which is proven by the robust numbers reposted in the quarter, even in a more challenging business environment. In the quarter, our recurring EBITDA quality grew 7.8% over Q3 2014. reflecting the health of our operation and the efficacy of the measures adopted for efficiency. Copelgen was responsible for 53% of this result, and Visco for 49%. I'll give you more color on Copel generation and transmission in a minute. Recurring EBITDA of Copelgenco grew 11% over Q324, driven by a combination of factors, better performance of assets, integration of new enterprises or endeavors, and consolidation of strategic asset results. In the transmission company, the highlight was the increase of 119.4 million BRLs in EBITDA with the consolidation of Mata de Santo Genebra and the average increase of 2.2% in RAP of the transmission companies. In the generation segment, we were able to mitigate impacts through a smart trading strategy, optimization of the portfolio, capture of the positive effects of hydric modulation despite an adverse event with GSF of 64.9% and curtailment of 34.4%. The result was positive, especially given the 23% million increase in short-term market sales, 21% up in volume sold, incremented 10 million BRLs in bilateral contracts, 7 million coming from revenues of regulated contracts. I highlight the set of suppliers, Jean Daida, and the consolidation of the MOA HPP. These results were partially offset by greater curtailment, which generated a negative effect of 39 million more in the generation deviation in the quarter. Now moving to Cabral-Descon. The distribution presented a recurring EBITDA 7.2% up in this quarter. This result is the result of a 1.7% growth in the build-grade market with an average adjustment of 6.8% at TUSD occurring in June in RTA and the efficient management of costs highlight going to 16% reduction in personnel year-on-year. Now moving to trading. couple, recurring, posted a drop of 7.3% million in the margin, mainly due to the effect of legacy contracts of electricity, starting from intermittent sources, as well as a 39.1% decrease in the PMS of expenses, a reflex of the advancement of the process of restructuring the trading company. On the other hand, sales volume for 2026 to 2030 grew 96.2% in relation to Q225, adding an amount sold of 431 megawatts, which shows the potential of expansion of the business. So, ending the analysis of it, I highlight the advances obtained in operating efficiency in Q3. PMSO expenses, recurring months, totaled 718.7 million, a 4.1% reduction over the same period last year. This is a reflection of the discipline in cost management, which is a priority across the company. Main highlight was an 18.4% reduction in personnel and administrative expenses driven by structuring measures such as the voluntary severance program, which contributed to adjusting the headcount. We also saw a reduction of 8.5% in costs with patient plans and health plans, reinforcing the positive impact of rationalization actions. In addition, we reduced the 3.6% drug expenses with materials, while third-party services posted a 4.7% increase, reflecting the hiring of specialized services for maintenance and operation. The other spline, for 10%, basically related to the write-off of the activation of assets, especially in this scope, given the high level of investments in the period. We reduced costs to preserving safety of the operation and quality of services provided, which reinforces our commitment to operating efficiency and excellence. In Q325, Coppell presented a recurring net income of $374 billion. 0.8 million down 36.5% over the same period last year, which is the result of a 7.8% EBITDA increase offset by an increasing negative financial results, driven by a robust investment cycle funded by the company within the parameters of an optimal capital structure. In addition, in the comparative period, we had in cash 4 billion beer belts, which we used to pay the granting bonus for the renewal of generation assets for another 30 years. Another highlight is the CDI increase year-on-year, which negatively impacted the cost of debt. Income tax and social contribution was higher than past year as a result of interest on equity that we executed in 24 and have now been executed in 25. In others variations, I highlight the impact of reduction of equity income of Market Center Geneva that started being 100% consolidated. Now, talking about investments in the quarter. On the slide, we can see consolidated capex totaling 981.4 million euros, maintaining the planned rhythm and aligned to the company's plan. Year-to-date. Investments total 2.6 billion, with a focus on assets that broaden the remuneration base, modernize the infrastructure, and ensure quality of service. Most of the resources was directed to the segments of distribution and generation, highlights going to projects that strengthen the reliability of the energy system, increase installed capacity, and promote operating efficiency gains. We continue with a disciplined capital allocation, prioritizing projects with attractive a return and aligned with the long-term strategy of the company. Coming to the end, I speak about the capital structure. Net debt over EBITDA ratio was three times in the quarter within the range established in our study of optimal capital structure. But if we consider The sale of Mashiwa's Zul HPP completed in October. This ratio would have been 2.8 times, reinforcing our financial discipline. MedTech totaled $16.6 billion. They diversified makeup among financial institutions and market instruments, the ventures and securities. This diversification is strategic, reduces risk and improves the forecast of predictability of the financial flow. Important to mention that the company has a triple A rating reflecting the solidity of our balance sheet and the dimensions of our manifest of capital allocation. As for the CDI equivalent cost of debt, we had a debt costing 98.46% of the CDI to 88.7%. showing our efficiency in funding and managing our debt. We continue to pay attention to market dynamics, and we remain committed to maintaining a healthy capital structure that would allow Coppel to continue to invest with safety, competitiveness, and a focus on value creation for shareholders. With this, I come to the end of the presentation, and we can now start the Q&A session.