Companhia Paranaense de Energia (COPEL)

Good morning, ladies and gentlemen, and welcome to Companhia Paranaense de Energia, Coppel's video conference to discuss the earnings for the first quarter of 2026. This video conference is being recorded and will be available on the company's website, ri.coppel.com. The presentation is also available for download. Please be advised that all participants will only be watching the video conference during the presentation. Later, we will begin the Q&A session and further instructions will be provided. Before proceeding, I would like to note that the forward-looking statements made during this conference call related to COPEL's business perspectives, projections, and operational and financial targets are based on the beliefs and assumptions of Coppel's management and on information currently available. These statements may involve risks, uncertainties and assumptions as they relate to future events and therefore may differ materially from actual results. This video conference is presented by Mr. Daniel Slaviero, CEO of Coppel, Filipe Guteves, CFO of Coppel, as well as directors of the subsidiaries who will be available for the Q&A session. I would now like to turn the floor to Coppel's CEO, Daniel Slaviero, who will begin the presentation. Please, Daniel, you may proceed. Good morning, everyone. I thank you for attending our video conference. I would like to start with the quarter's highlights when we delivered... robust results, even facing an operational and market scenario that was extremely challenging. In generation, we faced an adverse environment with GSF of 92% and curtailment of almost 21%, a significant worsening compared to the first quarter of last year. This context reflected into an average PLD of approximately 360 BRLs, more than twice as much as the same period of 25. In this context, we were still able to transform the scenario into an opportunity with relevant gains in hydraulic modulation of approximately 70 million BRL and in the sub-market management with accumulated gain of approximately 70 million BRL. These results reflect a commercial strategy that is efficient and translates into consistent financial performance in the quarter. Coppel reinforces its excellence in consistent, robust work in this quarter with results above expectations. And as a consequence, recurring EBITDA reached 1.8 billion BRLs, an increase of almost 17%, and recurring net income of virtually 640 million BRLs, 10.7% above the first quarter of 2025. As for capital structure, we closed the month of March with leverage of 2.8 times net debt to EBITDA, preserving a healthy financial position, compatible with our optimum capital structure. Before moving on, Another very important topic present in our discussions is terrorist review. The work plan is on schedule, executing all of this process, expected to conclude on June 2026 in about 60 days. And what's new in this quarter was the released by the regulatory agency in the level of the public consultation carried out at the beginning of April, the value of our Popel's updated RAB, which is higher than what we had been releasing to the market, but it's still pending the final approval by Enel. I again would like to reinforce the technical hard work done by our team over the past few years which will certainly positively reflect on the next tariff cycle. I would also like to point, in this quarter, one of the main targets we had is to always be continuously improving customer experience. And here I have relevant news, commented by Distribution, Vilela and all of Coppel Disco, which was the launch of Coppel Agro, a relationship front entirely dedicated to one of the most dynamic sectors of the Paraná economy, which is agribusiness. We've structured exclusive teams to serve these customers 24-7, customer service, operation center, team dispatching and follow-ups. this closeness to farmers, to producers, allow us to understand more and more precisely the needs of each activity, in particular in the protein sector, and to be able to respond promptly to these demands, providing better service to our customers. Finally, as for shareholder payment, we announced in April that the IOC declaration in the amount of 706 million BRLs that will be paid in September 26. And to this amount, we add the values disclosed in December last year, which will be paid in June of this year. And now, we must mention the successful LRCAP auction where we, in August, the inorganic growth phase, that third wave that we've always been talking about in earnings conference calls or on recent COPEL days, which was a significant victory of adding 2.1 gigawatts of capacity to our portfolio to the national electrical system with the expansion of the power plants of Foz do Areia and Segredo. The result of the hydro power in the capacity auction reinforces the relevance of this source in delivering what the system needs the most, reliability, power, and high availability. While we fulfill a strategic agenda of our strategic 2035 plan, this is growth based on discipline, focused on our core business's with outstanding returns for the company and our shareholders. At the bottom of the slide, you can see the timeline of all the work year by year. We've already started moving in the work sites, implementing there, and the distribution team can bring you more details so that we can fully execute the business plan as the works develop. We provide more details to the market. Here we also had excellent news, very pleasing news this week. That was a very special recognition that Coppel received once we started to join the Dow Jones Best-in-Class Index in the global segment. featuring amongst the companies with the best ESG practices. This is one of the main international references for corporate sustainability. Being part of this index means to be among approximately 10% of leading companies in their segments according to a very strict assessment run by S&P Global. More than a steal, This recognition reinforces that sustainability is integrated to our strategic decisions and the way in which we run our business in the day-to-day of Coppel. And it strengthens the perception of our company in the international market, further expanding our attractiveness to investors, and confirms the soundness of our governance. To conclude my part of the opening remarks and turn the floor to Felipe to discuss the quarter's results, we've been monitoring wide discussion in this sector regarding market security and liquidity, and we have some clarifications of our view and our position. First is that price formation in the electoral sector is central to the good operation of the market because it connects the physical operations of the system to the economic decisions made by the agents. For the signal to be efficient, it is crucial that there is adherence between the models and the actual operation. In this context, the mechanisms of risk aversion like CVAR have a crucial role. They allow us to advance situations where they need viscosity guaranteeing a more balanced operational trajectory, especially in an environment with more hydrological uncertainty. We must look at the actual example of the south submarket this year. Even facing a very adverse hydrology scenario, the operator maintained reservoirs close to the minimum operating level slightly below 30%. And this was done following the dispatch recommended by the models with the current parameters that pointed the need for appropriate thermal dispatching. And if it had not been signaled with this risk aversion patterns, we would be in the south in a much more severe hydrological scenario. And this is just another piece of evidence to show how the current perimeter of 15 to 40 is well calibrated and shall not be changed in our view. Another recurring criticism is related to price volatility, especially intraday. It's important to note that the hour price went into effect only in 2021, precisely to give the proper signaling of price, as there is excess or lack of energy and power throughout the day, again, getting closer and closer to the challenges of the actual operation of the system, to the effective actual costs of the operation. And this reality occurs in all developed markets in the world. And the price range that we have in Brazil between the minimum and the highest PLD price is one of the smallest compared to other markets. It's actually quite common in other countries to see negative prices throughout the day, because that reflects the reality of the operation, where you have areas with surplus of energy and other times where there's scarcity, especially at the end of the afternoon. And finally, my last comment about this market liquidity and the problems that some trading companies are facing, which can be clearly noted, is that considering the financial volumes involved, it is very clear that some companies have operated beyond their economic capacity and they are struggling to honor their commitments. In this scenario, it's only natural that sellers and even buyers of energy are more restrictive in terms of credit to those companies. With that, I turn the floor to Felipe Guterres, our CFO, to detail the earnings of the quarter, and later we will open the Q&A session. Thank you, Daniel. Good morning, everyone. Turning now to the financial results, recurring EBITDA for the company reached approximately 1.8 billion PRLs, up 16.7% compared to the first quarter of 2025. This is a significant result reflecting the soundness of our operational strategy and our commercial strategy, even in a quarter marked by a higher hydrological volatility. This performance, came relevantly in the GenCo, which was the main driver of growth in EBITDA, exceeding 30.7%. The highlight here is the positive result of modulation and the difference of price in sub-markets, in addition to gains in the free market, with growth in volume and higher price. Coppel-Disco also contributes significantly, with EBITDA above 10% compared to the first quarter of 2025, sustained by the grid market result growth, and the variation of costs being under control. Moving on to the 10 co-results, generation and transmission EBITDA was driven mostly by the results of modulation, totally to 167 million more than the reported in the first quarter of 25, due to the increase of average PLD in the southern sub-market. The increase of 99.2 million in revenue and bilateral contracts resulted from a combination of higher volume and price of sales, Volume grew 11.7% and price 4.7 and a greater revenue with the availability with the results of 93.3 million BRLs with the consolidation of Mata de Santa Genebra in the results of June 25. In the pressures, we had a higher cost of energy purchase for resale due to higher PLD and GSF of 92% in addition to the wind generation Deviation and the higher impact of curtailment totaled 20.7% in the first quarter of 26 compared to 8.8% in the first quarter of 25. Even with this scenario, the message here is execution, active commercial management, and capturing of opportunities with cost control, including the decrease of the MSO in the segment. In distribution, recurring EBITDA was 10% above the first quarter of 25, reinforcing operational results. I'd like to stress here the growth of 2.1% in the build grid market, reflecting the greater economic activity in concession area and the growth of customer base in the period and the annual tariff adjustment in June 25 with an average effect of 1.3% in the B part that we also captured in the comparative period. The trading strategy is now on the next slide. We continue to evolve consistently supported in three well-defined pillars, optimization of portfolio, the offer of flexibility and modulation to end customers, as well as continuous and disciplined activity and risk mitigation. In the quarter, the active management of the portfolio enabled the capturing of relevant opportunities, with the activity on sub-markets contributing to about 70 million BRLs in addition to positive effects in the hour curves that added another 70 million BRLs to results, approximately. These effects reflect decisions made based on technical criteria, disciplined reading of the market, and adherence to the established risk limits. Another relevant factor was hydrology risk. We closed the period with GSF of 92%, and when curtailment levels much higher than what we observed in the same period of last year, reinforcing the importance of a structured, active, and consistent commercial strategy, especially in more challenging scenarios. in operational views as we are experiencing. In energy balance, we have a gradual balance expansion of the availability of the portfolio, starting at 16% in 2026 and reaching 53% in the horizon from 2029 to 2030, which is in line with the strategy of capturing attractive prices in different scenarios to sustain the results. As for the hydrology of risk exposure, we maintain a comfortable long position in Hydro, 19% in 2026. Complementing our commercial performance, I highlight our strict credit management, maintaining sound governance in the selection of counterparts, which guarantees an extremely resilient portfolio with very low levels of delinquency, which allows us to operate safely in ASL, guaranteeing that profitability captured in trading converts effectively into cash generation. We continue maintaining flexibility, discipline, and Certification in portfolio management with hedging operations and customized solutions to clients, consolidating trading as an important driver of results. Now on PMSO, on cost management, we see a positive evolution in discipline of costs over the quarter. The variation posted reflects distinct movements in the main lines. We had a 10.3 million BRLs increase in the others line due mostly to the lease of equipment and software. focused on operational efficiency and growth of 2.9 million BRLs in materials for Genco. On the other hand, this was offset partially by reductions in manageable lines with a drop of 26.3 BRL, 26.3 million in third-party services. If we isolate PDDPLR and ILPN, expenses with personnel increased 7.6 million for 2.2% in this quarter, as we kept up with the salary adjustments of 5.01% defined in the collective bargaining agreement. In practice, discounting the inflation, the cost would be stable compared to last year. When we talk about P&SO management, we reinforce our continued commitment to cost efficiency. This effort in discipline is in contacts with business that are significantly different from previous years, the increase of standards of service requiring adaptations and implying additional costs. Within the rationale of efficiency and customer focus, I highlight initiatives that are relevant, like Agro, as Danielle mentioned, where we created a dedicated structure to enhance our relationship model with agribusiness and increase the level of customer experience. Our focus in cost efficiency this year will be on optimizing the base of suppliers, dimensioning our workforce, developing long-term contracts, and the reduction of commercial costs and sale of non-strategic real estate. In net income, we posted a result 10.7% above last year due to the very robust operational results, partially offset by higher financial expenses, leverage results of a company that operated in a more structured, optimized capital structure, actually, than the first quarter of 25. On CapEx, in the quarter, we invested 581 million BRLs, 75% of which were invested in the distribution company and the remainder balanced on generation and transmission. The priority of these investments, this CapEx, targeted towards operational pillars, service quality, and sustainability of long-term performance. Finally, getting into indebtedness, giving you more color on leverage, we remain in a comfortable position in line to the optimum capital structure, closing the period with 2.8 times net debt to EBITDA, which is precisely in line with the optimum point of the capital structure. Our debt is 63% linked to the CDI, 34% to IPCA, and 3% to the long-term interest rates. We closed the month of March with nominal cost of debt of 13.05% a year, equivalent to 89% of the CDI, a result of our active management of liabilities that seek a balance between duration, cost, and profile of indexing. This concludes the presentation. We will move on to the Q&A session. Thank you. We will now begin the questions and answers session. In order to ask a question, please click on Raise Hand. If your question is answered, you may leave the queue by clicking Lower Hand. In order to ask a question in writing, simply submit it on the Q&A icon, giving your name and company. 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Our first question, Ricardo Bella from Safra.

Ricardo, please, you may go ahead.