Engie Brasil Ene Sa S/Adr

Good morning and welcome to the ENGIE Brazil Energia fourth quarter 25 and year 2025 earnings results. video conference i am adriana wagner investor relations analyst of ng brazil and i would like to make some announcements at this moment the people connected are in listener mode later when we open for the q a session participants will be able to send their questions through the zoom q a option it is worth remembering that this video conference is being recorded we have made available at our website www.ng.com.br investors the results presentation and earnings release besides the complete financial statements and other documents filed at the CVM where analysis of financial statements, operational results, ESG indicators, and other relevant information is included. Before proceeding, I would like to clarify that all statements that may be made during this video conference regarding the business outlook of the company should be treated as forecast depending on the country's macroeconomic conditions, the performance and regulation of the electric sector. They are therefore due to changes We remind journalists who wish to pose questions that they can send them to the company's press office to present the performance of Engie Energia. For the fourth quarter, we have with us today Pierre Leblanc. the IR, Guilherme Ferrari, Director of Renewable Energy, and Leonardo Depinet, the Investor Relations for the company. I turn the floor over to Mr. Pierre Leblanc. thank you very much Adriana I am going to speak to you address you in Portuguese and well of course please excuse my accent thank you so much for your participation we're going to present to you the Results for the fourth quarter 2025. For the last quarter, well, we had a very intense quarter with several achievements that extend to the coming year. We concluded a four-month sole and the photovoltaic sole as well that are fully operational in Azabranca sole photovoltaic complex. We are 100% in commercial operation since February 26. and we have been growing with financial discipline, operational excellence, always seeking to face the regulatory challenges and, of course, working with the opportunities the market offers. We have a document of related parties that has just been implemented to document pool transparency in our processes. For the market in general and for all analysts, we have significant regulatory advances when it comes to UVP, and these will bring significant results for 2026. I would now like to turn the floor over to Mr. Depine. Well, thank you very much. Yes, I would like to go on to the financial highlights. Our EBITDA for the fourth quarter with a slight drop vis-à-vis last year, impacted by several effects. mainly a delay in the obama licensing and when we look at 2024 compared to 2025 an increase of four percent in adjusted ebitda well last year we had the capital coming from the sale of drugs not repeated this year adjusted net income with a drop that was expected because of our leverage, 15% year-on-year, also in adjusted EBITDA, once again due to the sale of TAG, an event specific for 2024. Let's go on to the ESG KPIs. Emission intensity, we continue with levels way below the references and, of course, always seeking reduction. In health and safety, we are within the range of set forth, which already are quite challenging. We continue to increase our percentage of women in the workforce, especially in the fourth quarter. There was a slight reduction. We had new assets where the population is mainly made in Asura and Sol. Now, in terms of investments and innovation, We were able to increase this vis-a-vis last year, where our level was quite high. And in social responsibility, as most of the investments are incentivized, the incentivized resources this year were much lower. Last year, we had an extraordinary revenue due to the sale of TAG, but we reached 100% of our target, a reason of pride. engage people somewhat lower figure once again due to that drop in investments we continue i will give the floor to guillermi to speak about operating highlights uh thank you Good morning to all of you. And we would like to speak a bit about our assets here. In the year 2025, you see a significant improvement in the uptime of our hydropower plant. We have 96.2% standing as a reference for the year in wind and photovoltaic assets, a recovery in photovoltaic, a significant recovery. We worked with an enhancement plan in some of the assets we had acquired, as well as in wind assets. In wind assets, we enhanced the performance of the Sant'Agostino project that faced some technological problems. The situation is still not ideal, but we're seeking to enhance the performance. As Pierre mentioned, what was important was the coming into operation of Serra Diaz-Jurua with very good performance in their equipment. So in uptime, we have complied with our target. And, well, of course, there's the impact of curtailment that hampers some of our plants, and we're attempting to minimize this as best we can. Now let's speak about curtailment. In fact, the curtailment is that great fencer of renewable and intermittent energy. We are working on our results for the fourth quarter. Now, vis-à-vis last year, there has been a significant growth compared with 2024. Now, what we are harping on significantly is the massive entrance of distributed generation. Now, this displaces non-conventional renewable energy, and so far we have not found a solution for this. We're seeking a regulatory solution to decrease distributed generation. generation to reduce the impact on intermittent sources. A very relevant point I would like to mention here is the solidity of our portfolio when we compare our total generation with the impact of curtailment. It dropped to 6% thanks to our HITRIC resources. This means that we have greater resiliency compared to the impact of curtailment. A few remarks regarding generation per se. We see generation with an increase in the last quarter. Now, compared to the last year, there was a reduction of practically 11% once again because of the hydrology. A worse hydrology, this means a worse generation. But I do highlight that with the entrance of Atsosol and Asurua in renewable energy, energy, non-conventional renewable energy, we had an increase in the year 2025 vis-à-vis 2024. Now, these are the highlights when it comes to generations throughout the year 2025. Now, in energy sales, we continue on with our gradual sale of energy our commercial capacity of course we have hedge preservation for fluctuations but at the same time we also have room to be able to capture higher prices Evidently, we have a profile that is reduced through our contracting. If we analyze this beginning in 2031, we have a significant drop of 900 mega in our commercial capacity. And we're not considering this in the management of our portfolio. The concession of Salto Santiago that matures in 2031 will, of course, have an impact, and it's important that we are able to renew this concession. As mentioned, we have a dropping profile of decontracted energy throughout the years 27 28 29 we have more contracted energy and along those lines we're seeking opportunities for better energy prices Another highlight, of course, refers to expansion. As Pierre has already mentioned, in the two projects, Serra do Azurua and Azul Sol, Serra do Azurua wind complexes, complexes in full operation, with 188 turbines working very well. And the uptime of the machine is doing very well. This was an investment where our indices of health and security were extremely good. We had the delivery Before anticipated in our forecast, as well as the investments, we were able to see a reduction in our investment vis-à-vis our original business plan. Let's go on to the photovoltaic project Asusol. Now the message, once again, is very similar. 100% in commercial operation beginning in February 13, 2026. The plan had been set forth last year. This is a project that we delivered before the official term. with a reduction of the budget that had been foreseen, and the performance has been very good compared to the tracker system in virtues. Everything is highly adherent to what we had foreseen. In the next slide, a point that was mentioned by Pierre at the beginning, Giral. Last year, Giral had an improvement in performance. Some investments were carried out to improve the uptime And of course, this means a greater generation for the year 2025. This is a well-contracted asset until the year 2034, 100% contracted and a part in the free contracting market. that is with the PNDES is a highly interesting asset and this has been mentioned in other meetings or calls that we have had and announced at the end of last year. We are now in a process of analyzing the transfer of the state to Engie Brasil Energia from Engie Brasil Participações. We created that committee of related parties. I represent as well. So I have Manuel Lopez and Karen that are independent advisors. And we're working on this process once again to offer enormous transparency to everything that we will be presenting, our negotiations, ensuring that we maintain that transparency. since the beginning and that the minority shareholders can participate in this process. This should take place during the coming months and we believe that very soon we will inform the market about future steps and recommendations that we expect from this committee of related parties. We return the floor to Zé Piné, the transmission project under implementation. Aza Branca with one third of the operation, the other two thirds are in the final stage of installation now for 2026. And until the first half of 27, we will have all of the other segments coming into operation. In the case of Grauna that began one year later, We have 5% in commercial operation. It's a brownfield segment between Minas Gerais and Espiritu Santo, and speeding up the pace this year and the coming year, those segments in red in Santa Catarina and Paraná, and a part between Sao Paulo and Minas Gerais, all proceeding as expected for Graúna. This will represent the Great Capex for 26-27. Here we have a summary of our expansion. And in the pipelines, our usual projects, the wind and solar projects that are awaiting the proper market situations to be developed. No commitments so far. Now, we'll now go on to the financial performance. beginning to the right we show you our diversification in the pies at the bottom we have one third or one fourth he says 25 percent from transmission of energy and gas transportation the other four coming from mainly hydroelectric, but also wind and solar. To the left, because of accounting reasons, are ROE and ROIC, with a slight drop through time. The CAPEX has been updated, and the revenues are are not fully performance as Shari and Afso Sol. These figures should be more stable beginning in 2026, perhaps with additional growth. Now, if we look at net operating revenue change, We had a significant moment in our revenue last year, 15%, 15 million coming from price and sales volume because of the new assets, a drop of 200 million due to a specific event in 24, indemnities in Santo Agostino, an increase in our trading activity, and of course, an increase in our transmission activity now we're speaking of what is reported in ifrs almost 1 billion refers to the construction of azabranca well 14.6 increase as you will wear aware we'll go to TAG that had profit of almost 4 billion BRLs last year and 687 million, which is our stake, 17%. Vis-a-vis 2024, it is somewhat lower. It was 714 million BRLs. in 2024 because of specific financial events and accounting restatement. Now the performance of this asset continues to be very good, generating an excellent contribution for the company.

EBITDA change.

The reported EBITDA, the graphs at the ends, a drop of 12.5% because of the non-recurrent entrance of the fill of tax. When we look at adjusted EBITDA, an increase of 3.7% and adjusted EBITDA, excluding the IFRS effect, a cash EBITDA, which is what the market looks at, And once again, we can show the growth because of a combination of price and volume. Our operational performance indemnization of Santo Agostino has been removed 250 new costs and expenses because of the Commercial entry of new assets, transmission with a reduction, well, an increase year after year of 65 million and a slight decrease in equity income. Now the result is 2.9% increase year on year. Let's look at our net income change. First of all, an adjustment for the sale of CAG. and we look at the center a drop of 15 percent here you can see more clearly that that drop is due to financial results at present it is better leveraged the assets are already operational all of this goes through results depreciation also goes through results for depreciation and amortization, a new expense of almost $1 billion because of these new assets that once again are not generating their full EBITDA potential that they will do through time. This led to that drop of 15%. Our leverage or balanced debt, we ended 2025 very close to what we had in September of net debt, 29.3. We then went to 29.6 with a slight reduction in cash. So our net debt went to 3.3, a marginal increase. to 3.3 because of the investment cycles that we have carried out. We should now reach that new level, a new plateau with something closer to 3, 3.5%. This is the debt profile. We have a good debt lengthening through time with no pressure on cash. So we are readjusting and contracting the debt. The maturity is 2048. A great deal of tranquility because of this 58% IPCA, 36% CDI, and 6% TKLP. Now the next slide. showing all the efforts we have made since 2022, especially in 2024-25, where between the two years, we had 16 million in CAPEX. Now, presently, we are concentrating on Graúna and Azabranca. This is where our efforts are committed. We have a marginal CAPEX for expansion and modernization Jaguara and the normal maintenance, Capex, which means that our Capex levels will be somewhat calmer going forward. We still have a leverage above 3%. Therefore, we maintain our dividend payout at 55% and dividend yield on quotes standing at 4.2%, somewhat below last year, but maintaining our policy of 55% payout. Well, this is the presentation. I would like to return the floor to Adriana, and we will go on to question-and-answer session. We will now begin the question-and-answer session. Should you wish to pose a question, please send it through the Q&A icon of this conference. Our first question is from Daniel Trawicki, Safra analyst. He says, Good morning. I would like to know your outlook on the annual resolution on the anticipation of concessions of public goods. What did you think of this proposal? Does it make sense to adhere to the terms? And if you do this, when do you think the process will be concluded? How is this part of your capital allocation and leverage processes in the company? I will begin to answer if Pierre and Guilherme wish to add. Well, some events are made public, others are well-known, others we cannot comment on. They depend on internal approval. We have been following up on this process. It's MP 304, 303. This week, finally, it was approved by ANEL. We have to wait 120 days for the process to be concluded. In the first 60 days, the companies will have a period to adhere, 30 days for signature, and another 30 days for payment. And this process will be concluded at the end of June of this year. We have four plants. with a higher volume of . So we're carrying out this work in-house for assessment. And in the coming weeks, you will have news on whether we will adhere or not. And this will depend on statutory approval, of course. Any comments, Guilherme or Piet? No, I have no comments.

Thank you.

We would like to remind you that should you wish to pose a question, please send your questions to the Q&A. Our next question is from Victor, a sales site analyst from Itaú. Can you give us more details on the energy balance of the company for 2026? Does the company believe that it has sufficient power to comply with the contract signed because of the high curtailment and HSS expectives for the year? I can get this one. As we showed you in the graph, there is reserve energy that we always preserve once again to cover GSF as well as curtailment. Presently, we are in a very adequate position with... very limited, almost nil exposure. And in 2026, our portfolio management is quite adequate. And when we analyze the budget for the coming year, of course, we see which will be the GSF and Kirk Chalmers that are foreseen. And we include this in our portfolio management, evidently. Simply to add, Guilherme, last year during Investor Day, we showed our projection of curtailment for 2026 going forward. We are ready for higher levels of curtailment vis-à-vis the market consensus, so we do have a very good energy balance to get through this year.

Thank you.

We continue with the questions. One from Mr. Olivera, cell site analyst from BPI. He would like to understand the conditions to return to 100% payout. For three consecutive years, the payout has been 55%. Is one of the conditions a leverage level, and at which level would you return to this?

some color on that. So, right, we see today is around 50-55%. We, for the time being, the point is that we foreseen in 26, 7, 8, 9, potential great investment in Brazil. and we need to keep our flexibility in our balance sheet to realize this kind of investment. So we prefer to keep some room in our balance sheet in order to meet, of course, our comments and to have the possibility and the ability to invest for growth for the next decade. We are here for a long time. Benji is in Brazil for a long time again, and we will focus more on investment growth today. So that's why we keep Today it's 55% dividend distribution, which is good already, and we don't foresee to increase at least for 2026, but it's a board decision, it's not my decision, and we force the percentage of dividend distributed. But let's see. So it's always an open discussion.

Thank you, Pierre. We have a compliment from Victor from Itaú BBA, a new question. Which is the curtailment and GSF level that you consider in the energy balance?

Well, this is not guidance that we offer openly.

We don't believe in levels that are very different vis-à-vis 2024. And yesterday, last year, we posted this. The curtailment level is between 20, 25% depending on the source, the thermal levels, and variations of taxing this, but we don't imagine low levels of curtailment for this year. And for GSF, there shouldn't be great variations compared to last year. Thank you, Depine. Once again, should you have a question, you can send it through the Q&A icon in Zoom. Adri, I have received a question from Juliano . Well, we have diversified the matrix. We have made great investments in the last few years. He deems that this was a good strategy. He's asking where we would like to invest in coming years with growth in mind. Guilherme, if you could refer to this. I think this is a very valid point. It's not my area at present, but speaking of transmission, we have been quite active in the transmission market. There's another one at the end of the year. This is what we're looking at because of diversification of our portfolio. Now, when it comes to renewable energy, in the last few years, we have made some M&A movements. We have acquired solar plants last year, two plants, hydro power and others, so we're very attentive. to growth. Our growth is limited with intermittent renewable energy because of the supply and because of curtailment. So in the short and middle term, we don't foresee opportunities for new projects, for wind and solar projects. But, of course, we can grow in the field of batteries. We have done this already. And the capacity make that will happen last year in our Jaguara plant. We can also participate, so our growth at present is in transmission. These are the two opportunities that we have to participate in these auctions, M&As, if the opportunity comes about, of course, and finally, greenfields. And once again, this is not something we foresee for the coming year. No opportunities that will come about for development and construction of new parks.

Very well.

Thank you very much, Guilherme. Well, we would like to conclude our Q&A session, and I will return the floor to the speakers for final remarks. Thank you all very much. Thank you, Guilherme and Pierre, for your participation. And we hope to see you in the first quarter, 2026. Thank you. We would like to thank all of you for your attendance. We thank our directors, Leonardo de Pinet. Have a very good afternoon. Thank you. Have a good afternoon.