Engie Brasil Ene Sa S/Adr

I am Adriana Wagner, interim IR manager of Engie Brazil Energia, and I would like to make a few announcements before we start the video conference. At this moment, those connected are in listener mode only. Later, when we open the Q&A session, participants will be able to send them through the Zoom Q&A option. I would also like to remind you that this video conference is being recorded. We've made our website available at www.ange.com.br slash investors. the results of the presentation and earnings release, in addition to complete financial statements and other documents filed at CVM, where analysis of financial statements, operational results, ESG indicators, and progress in the implementation of new projects are disclosed in detail, among other highlights for the period. Before proceeding, I'd like to clarify that statements that may be made during this video conference regarding business outlook of the company should be treated as forecasts, depending on the country's macroeconomic conditions, the performance and regulation of the electric sector, in addition to other variables. Therefore... They may be submitted to changes. We remind you that journalists who wish to ask questions can do so by e-mail sending them to the company's press office. The present Engie Brazil Energy has performance in the first quarter of 25. We have here Mr. Eduardo Takemori, CFO, and Investors Relations Officer. I now turn over to Mr. Takemori. Good morning, everyone. It's a pleasure to have you with us here today. We have the highlights for the quarter, and I would like to remind you that this quarter we were able to add over 900 megawatts of installed capacity in our portfolio, which is a very important landmark. We have reached 10 gigawatts of installed capacity. And if we include the generators that were implemented later on, we're very close to 10 giga. And we have approximately 11.6 megawatts of capacity in our generation park. And this without counting the fact that in the first generation, quarter, we signed a contract for the acquisition of the Santo Antonio do Jari and Cachoeira Caldeirão hydropower plants, which will expand our portfolio in an additional 612 megawatts once the operation is completed. From the point of view of our adjusted ETEDA, we have had the effect of the partial sales of taffy in the first quarter of last year. We also had an increase from 8.2 to 12, an adjustment of 12.4%, and the adjusted net income with an increase of 3.8%. I would like to highlight, and this was approved In the past, we have the distribution of complementary dividends for the fiscal year of 24 totaling 715 million. and shares are traded ex-dividend starting May 7, and payment will take place on December 23-25. The total distributed profits for the fiscal year was 1.8 million, and we will talk about it later in our other slides. Regarding our indicators, we had improved performance We have had significant achievements and had a reduction of 0.48 to 0.45 between the first quarter last year and the first quarter this year and the number of accidents, which is very significant. From the point of view of the workforce, we had an improvement in the last 30 months. We went from 30% to 32% in the total share of women in the company, and we went from 38% to 34% in the total of women in leadership positions, which is quite a significant advancement. Now, on the bottom of the slide, we have our social responsibility investments. Even with lower level of activities, we had more people engaged in relationship programs.

And then finally, in terms of

ISE, the company celebrates the 20th consecutive year as part of the Corporate Sustainability Index, ISE, achieving fourth place overall among the 82 selected companies, showing that we are in the right track. From operational highlights here, We have a very interesting effect going from the left. You can see that we went to 5.4 megawatts in the first quarter, decreasing from 5.9 in gross power generation. So we went from 6.4 in average to 5.4, a significant reduction. But this was caused especially by the reduction of the hydropower plants. As you will remember, last year, we had expressive rains, and this led to a normalization in the rest of the country that explains an expressive part of this reduction in hydropower plants. And when we look at other generation of the complementary sources, we can show We have doubled the generation. And if we look in detail, we had improved performances in the operational plans. We can see the right side bar. We went from 487 megawatts to 991. On the right side bar, we can see the effect of the inclusion of new enterprises, so both from the point of view of M&A and also organic growth. which started last year. In the first quarter, this contribution was basically the contribution of organic growth. And this was only seen at the end of the month.

A very expressive growth showing that we are finally

concluding the investments we've seen in past years. In the next slide, we're going into the most important sectors right now. We all know that the first quarter was emblematic. It resulted in expressive results. You can see on the table the curtailment, which was 19%. Naturally, we have two main factors leading to this increasing curtailment. The first one

We had critical events in the north of the country. It can happen this year from the point of view of our results.

So this growth above an average was reversed and the system was not able to deal with it.

So even though this containment was very high,

So it was somehow used in terms of a generation that was already expected.

So when a solar generation...

We generated only 965, but when you include it in terms of the overall generation, so it represents a 4% decrease in the total generation. So you can see here the benefit of a diversified portfolio. And it enables us to have a rebalance in the next session. We introduced our energy business strategy, and in this slide, I would like to highlight higher figures which show an expressive evolution in the number of clients and consuming units. We've reached 1,800 clients, and I'm very happy to announce this. And we had over 980 consuming units, an increase, as you can see. From the point of view of uncontracted energy, in the gray bars on the right side, you can see that we had a decrease of approximately 1% of our total portfolio, 26, 27, and 28, and accelerated in 29. This is very compatible with our expectations for the first quarter, and you will probably remember that last year, We accelerated our process. We volunteered to do it. And with all of these elements, we imagined that we would have this level of sales that you can see here, demonstrating that we had significant growth in sales. Other areas which have contributed for us to reach this level of sales. Now I turn over to you, Adri. Adri? Hello, thank you, Taka. Good morning, everyone. I'm going to move on with expansion in slides 13 with an update on the projects that we're implementing right now. The first project, we have the Serra do Surá wind complex. We reached 98% in the constructions in the first quarter of 25. And then we have the electromechanical assembly completed and taking into account the most recent position until yesterday, we reached 155 generators and the other 33 are being tested and the whole... operational piping is either being tested or is operating. We also have the photovoltaic complex, ASUSOL, with implementation activities reaching 93% in the first quarter of 25. And this far, we have four of the five plants with business operations and other six being tasked. And we continue with operations and we'll continue monitoring and updating the status and progress over the next quarters. And I will now move on to transmission projects. The first one in a more advanced stage, Asa Branca, energy transmitter in 2023 we started it and the implementation moves on as already informed in previous quarters activities are related to civil constructions and assembly of the metal structures for the first parts of the construction and we will continue updating it according to asabranca's advancement And the next one is Graúna. This was purchased in September last year at an auction. It's in the earlier stages. In 25, we signed the main contracts for... and we will continue updating the status of the implementation of this project over the next quarters. We talked about the construction projects, And now we have another slide on contract signing for the acquisition of two hydroelectric power plants in the state of Amapá. This happened on March 21st. We have Santo Antonio do Jari and Cachoeira Caldeirão. They are both 100% operational with long-term contracts, and we will add installed capacity to our portfolio as soon as we have the closing of the operation, which is expected to take place in the upcoming months. I would also like to highlight that the mean time for these concessions will be regarding the closing expectations. I would also like to remind you that this is an acquisition process, and that's why we included this slide here. This will happen after closure of this operation. And then this is a traditional slide on Giral HPP. It is a power plant where our controller, Angel Brazil Participations, has a participation of 40%. There's nothing really new here, but I would like to reinforce that the company has done really well with 100% availability in the first quarter as we've seen in prior periods. And in this last slide of this expansion session, we have a summary of the projects under construction. You can see it on the left side of the slide. two for generation and two for transmission. On the right side, we have the projects under development. They are in our portfolio waiting for business conditions so that their implementation is feasible. With this, I close this session to make it very clear what is under construction and what is under development. With this, I conclude the extension session and turn back to Takamoru for the financial performance. Our financial performance shows very good levels despite the natural decline we had this quarter. because of the amount of invested capital that was allocated for the company. This was to be expected.

And in blue, I would like to highlight that since 2024,

we have approximately 25% of contribution from tax. And we chose to make these investments in 2016 and 2017. And today, this represents 25% of our adjusted editor. even after the partial sales of our participation at time.

In the next slide, we have the net operational revenue.

Our profit was of 15%. Our contribution, as you can see, in terms of energy, is approximately at the same level. We went from 2.25 billion, and the contribution of transmission, we went from 300 to 700 million BRLs. especially because of constructions, and I would like to remind you that this is what we've achieved, and we have other elements, variation and generation, and basically we have the increase of the sales volume and the average price aligned with last year's, even though the average price is still quite profitable. And basically, this was neutralized by...

the lower contribution of hydropower plants, as we had already mentioned in the beginning.

In the slide of our shares, we can see the contribution of our and our participation on the net income. you can see that after the adjustments of all costs and expenses, it generated approximately 950 million of net income with a contribution of 167 million BRLs to our editor. And basically, This is the blue bar that you'd seen, 167 million VRLs. And this is basically what we'd seen last year. In this slide, as we always do, we go from an absolute entity In this period, we will make the first adjustments. There was a very significant non-recurring element last year, which was the conclusion of TAG, and we observed a more recurring starting point. going from 1.8 billions reaching 2 billions in the year. But of course, this has an expressive effect on FRS effects, basically because of the increases and also the construction margin for Asa Branca.

And then we had an evolution of the of 1.67 billion moving, going to 1.8 billion.

And basically, this is a combination of price and volume and also the existing assets with a lower amount of purchase of energy. Naturally, we need to buy less energy and the accumulated effect is For generation, in the second bar, we subtract the benefit. We have the effects of the rain, especially in the first quarter last year. And also, we have a better structure of operational expenses. basically as a result of the operation of new assets, including costs that we had already mentioned before. And now, moving on to net income, it's important to analyze the non-recurring effect and the net income of the partial sales of TAG last year And when we remove this 826 of net income, we go from a starting point of 793 million BRLs reaching 826. Even though it is superior to the first quarter of last year, we had two elements that somehow have reverted We had the financial results greater than last year. In other words, it was more expensive. And basically, this is because we had a lower financial revenue. Even though our cash position is very similar, this happened because we had a decrease in debentures, and so it was not possible to see the effect for the whole period. So it's not just a multiplying at the end of the quarter. And so this is explained by this lower revenue. and higher cost of accounts payable. And the second element of highlight here is depreciation and amortization. As you know, we have different assets with significant depreciation. And as of now, we can see an increase of 77 million BRLs when compared to last year. And we had better results and paid more taxes. now regarding our balanced debt we show you an evolution in the gross debt going from 24.4 billion at the end of last year to 26.6 billion now with a greater leverage going from 3.5 times of adjusted ETSDA. But when we take into account the cash and equivalents, we reach 20.6 billions of net debt. And that generates a ratio of approximately two, very similar to what was seen in the first quarter, or actually at the last quarter of last year. So we're comparing the first quarter this year to the last quarter last year. Now, regarding the debt profile and composition, it's very adequate for our ability to pay, and I would like to highlight that We volunteered, had an indexation related to CDI for the cost of debt and also to make it more attractive for our cash position expansion and implementation of our projects. Our debt, which was mostly IPCA, is now two-thirds of the debt, and CDI with a more significant share of 30%. And we will see that the nominal cost of that is 11.6%, equivalent to IPCA plus 5.8%. And now, on the last slide, I would like to highlight that we did something very innovating in terms of part of our debt, trying to optimize the portfolio, generate value to our shareholders. and doing this as smartly as possible. We worked with our partners and the commission uses carbon credits As far as we know, this is the first operation of this kind in Brazil, which makes us very proud. With that, we can generate value to our partners and our shareholders.

Now, capex.

we can see 4 billion in 25 and naturally now with the signature of the contract we've already indicated what the additional value to be invested is going to be in these assets and these hydroelectric power plants that we are about to purchase, leading our investments to 7.1 billion BRLs. And the levels of 26 and 27 remain the same, 2.1 and 2.3 billion BRLs. And when we provide a little bit more information about these amounts, basically for 25 in green, we see that it's almost half of the investments in Asusol and Asurua. And half, or the other half, 2.9%. is for investments in as a branca so we're getting into a phase of more specific investments and then in the upcoming years 26 and 27 basically all of the investment will be to conclude as a branca now So we have an important CAPEX for the upcoming years. Now, dividend policy. You can see the effects of dividends. We have 2.3%. billion, resulting in a payout of 55%. Naturally, our interest is to maximize this payout, but because of the expansion and growth Management made the decision to keep it at 55% of the management commitment with a minimum payout of 55%. With this, we close the more formal part of the presentation and open for the Q&A session. Yes, exactly. Thank you, Taka. We are now going to start the Q&A session, and I would like to remind you that to ask questions, you should use the Q&A tool in the Zoom bar. Our first question comes from Vitor Cunha, sell-side analyst from Itaú PBA. He asked if we could give more details regarding the allocation strategy of physical warranty for the year. In addition, the company had a negative impact by the difference of prices in grocery stores in the Northeast and Southeast. Well, thank you, Victor, for your question. Unfortunately, we cannot give any further details about this because this is considered a sensitive topic which affects our ability, our commercial ability. But in the first half of the year where we had the main price differences in grocery stores, We had a very limited position. The second half, it was different, of course, because of the resource which is actually available for us. In the first quarter, the impact was quite limited. Naturally, we do have this exposure, but I would like to highlight that these prices were caused by a different element. In the second half, we have a lot of wind energy generation leading to these natural movements. What happened in the first quarter was, in fact, potential generation in a very specific timeframe, aligned with very expressive generation in Belo Monte and the transmission network leading to very high containment levels. And I would like to highlight that this is part of the new pricing models, all of that. led to more significant changes in the first half. Today, with the situation that we can see, we do not see a very significant difference. It is there, but not as intense as before, and perhaps the impact will be lower. and easier to be managed by the company.

Thank you, Taka.

Next questions. We have two questions from physical persons investor, Felipe and Mateus. Their questions are similar. and they ask why the company disseminates dividends and does not make payment after the announcement. And also they would like to know if the dividends will be readjusted according to the inflation rates and also what the dates for dividend payment is going to be.

We've had...

significant investments. Last year, we made investments of 10 billion BRLs. Because of that, we had to take a series of measures to protect our ability to make payments and also make conservative decisions. Unfortunately, We were not able to pay and shorten these time frames. But this is not a recurring fact.

Thank you, Taka. Would you like to compliment?

No. Okay, the next question is from Filipe, a physical person investor, and he asks if the company thinks that leverage is reaching a peak or if it tends to grow after the latest acquisitions. No, it will continue increasing. And what we always see is that our capacity to generate cash, our profile, Today, we have AAA rating for long-term decks, and naturally, we monitor it very carefully because we intend to remain with this AAA rating so that we can capture resources in a very competitive manner. This level, for you to have an idea, is in the order of 3.5 times. This is an acceptable level of debt. I can't tell you exactly what level we're reaching in the upcoming quarters, but yes, there is a trend for it to grow. Because of the new investments we've made, as you Well mentioned. Well, thank you, Taka. We have another question from Daniel from Los Afros, outside, and he asks if we could give a little bit more detail about the expectation of the company on the resolution of curtailment. When do you expect curtailment levels to be reduced, and what would a reasonable curtailment level be from now on? regarding the reimbursements when do you expect to receive them and what is the process for it well I can't tell you that we are trying but we haven't been able to Also, some of the information is very sensitive for me to share, but I can tell you that curtailment is something that is here to stay. It affects every country. And in Brazil, we've made a series of decisions that have led to this offer. So this is something we knew that was coming. And this level of curtailment is only significantly reduced if we have the Lin Yang coming in and this will only happen between 29 and 30. So we have to wait four more years and we would be very irresponsible to consider that this is going to be solved from a physical point of view. Another physical aspect we have here is that naturally the level of containment, both for the penetration of renewable sources in the region, a combination of water and other factors, but also on risk aversion in the transmission network. We know that there are some specific criteria And apparently, there is a significant effort by the operator and other agents to find ways to increase the transmission capacity. And depending on the solution, this can lead to significant containment decrease, which could be between 1,000 or even up to 2,000 even without having a significant change in the system operation. And that, depending on the timing of these new parameters and solutions in the short term, may be solved in the next few months, but it depends a little bit on the conclusion of what we're doing. And even if we solve the transmission issue, we will have levels of containment caused by the lack of demand for this energy, and this is something that we see during the week, where you still have some significant cuts, and so we cannot imagine the country without physical procurement. And then you also asked about when reimbursement is going to be made. It's difficult to anticipate. We do have established rules for it, and we expect to receive it by the end of the year. But naturally, this depends on CCE's mechanics and some rules for wind energy, and it depends on the effort and ability to execute it.

We have another question from .

He would like to have more details about the operation. involving the payments using carbon credits, how it was structured and what the company or how the company sees this market and if we have more room for such initiatives given the company profile and potential to generate carbon credits. Well, Mateus, I'm very happy that you are interested by it. We will now talk about how we can do it. but definitely we have more opportunity for such initiatives. And regarding green funding and creative operations, they are all welcome. We generate more value to our shareholders. So this is relevant and there is more room for such operations. But I'd like to remind you that Engie generates carbon credits. It's an important carbon credit generator. We have a large portfolio of products. We can meet demands in any state.

Thank you, Taka.

The next question is from Guilherme Lima, Santander analyst, and he asked if we could comment about a possible proposal of increased energy transmission among the subsystems to increase the generation of renewable energy in the Northeast. Well, I think that we've already commented this answer before, so in practice, yes, there are different actions. that we can take. We will try to share this with the end consumers or part of this with the end consumers. Cotainment is caused by a natural evolution, and we as a generation agent have to take risks, but we have cotainment caused by risk aversion or the short-term availability And this should not be included in the generation segment. Part of it is regulated. And so, we do have this regulatory aspect, but we also have the optimization of the system and a series of actions that can be taken

We have operational aspects.

Thank you, Taka.

The next question is from Nayeni Mendez, a physical person investor, and he is congratulating you for the results and asks if there is any update on green hydrogen. Thank you very much. Green hydrogen is at a less mature and developed stage. than we imagined. We had a development of projects, but right now we have decided to give one step back and wait for the technology to evolve a little bit more, both for the value chain we would have to buy and pay, And it's difficult for us to make this feasible, to make these projects feasible. We've not given up. Angie, globally, still makes some effort. We have two projects, or there are two projects being implemented worldwide. But here in Brazil, we need to focus a little bit more on the delivery of our wind and solar energy, expansion of transmission. in our portfolio first. So we've decided to pause and wait a while.

Thank you, Taka.

We have some more questions which will be sent directly to participants. I would now like to turn over to Taka Moka for his final considerations. Well, thank you all for your participation. This quarter, we've been able to demonstrate that despite all adversities we've had in the electrical sector in Brazil and worldwide, we've been able to keep excellent ETEDEL levels, demonstrating that all of the investment we've made We will continue seeing the effects of these new assets, be it from the point of view of generation and transmission. We will be seeing it in the upcoming years. Thank you all for your participation. While we remain available, I wish you a wonderful day.