Engie Brasil Ene Sa S/Adr

Good morning. We're going to start the earnings results video conference for the first part of 26. I'm Adriana Wagner, Investors Relations Analyst of Engie Brazil Energy, and I would like to make a few announcements before we start the video conference. Right now, you are connected in listener mode. Later, when we open the Q&A session, participants will be able to send them through the Zoom and Q&A options. It is worth reminding you that this video conference is being recorded. It is available at our website, www.eng.com.br, the results presentations, and the earnings release, in addition to a complete financial statement and other documents. The detailed analysis are available. available ESG indicators, and progress in implementation of new projects, including other highlights of the period. Before proceeding, I would like to clarify that all statements 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, and therefore are subject to changes. We remind that journalists who wish to ask questions can do so by email, sending them to the company's press office. To present Energia Brasil performance in the first quarter of 26, we have here with us Mr. Eduardo Sotomayor, CFO, Pierre Leblanc, Chief Financial and Investor Relations Officer, Mr. Guilherme Ferrari, Managing Director, Renewables and Batteries, and Mr. Leonardo Depine, Investors Relations Manager. I now turn over to Mr. Sotomayor to begin his presentation. Good morning, everyone. We're here for another quarter with a sustainable and resilient result showing that we have an intensified portfolio. And all of this provides very good resilience to the company. And of course, it has shown its value in the long run for the company. I will start with the highlights showing exactly this, our sustainable growth. We have an expansion in Jaguara with 195.78 megawatts for 15 years. We already had two turbines and a plant, and we will have a CAPEX of 1.2. This only shows that we are pursuing opportunities to generate flexibility in the system by adding these two turbines in Jaguar. We also had Anael's bid, a successful bid. We secured lot two and sub-lot three. These are two projects with guaranteed revenue. We will have annual contracted are 18, the order of 122.8 million. They're located in the states of Santa Catarina and Paraná. And we also have stations in Ceará and Rio Grande do Norte where we can expand our operation. Now, moving on to the board of directors where we approved the adherence to the mechanism for renegotiation of the liability recorded as public access use.

And this will lead to very good results for the company.

We also had speech ratings reaffirmed, and these are all very positive results. Also, we had the approval of distribution dividends in the order of... 557.8 million VRRLs for the fiscal year of 25. Another important celebration for us is that we remain in Down Jones for the 21st consecutive year. We're very proud of this. We have a problem with Satya's connection. Please move on.

I had a connection problem.

So now we're going to talk about the financial results. As we mentioned before, we had sustainable growth with a 10% increase in the adjusted ETH that has an impact on our new plants in Asurwa and Jasi and Cachoeira in the state of Amapá. And therefore, our profit was as expected we have high interest rates which affect our financial results. But in the long run, this will be adjusted and profits will overcome our expectations. The main drivers of our results are the generation segment with the acquisition of new plants, In the transmission segment, we had a very slight reduction, but these are factors that have a certain degree of volatility, but in the long run, it is also adjusted during construction. We also have CAPEX adjustments. we have the result of equity income, which was a bit down as well. The financial results, as I mentioned, high interest rates, our depreciation and amortization also had a reduction as well as the financial result. and as a result, we have income taxes that increase to 28 million. In the next slide, we've shown these indicators on a constant basis, but I would like to call your attention to an indicator that has worsened as a function of the number of our works. In the first quarter of 25, we had a lot of people working, and then when you have two events on the total result, the impact was very little. The denominator is lower, and therefore, there is some relevance. We had two events with accidents and leave. They were not significant, but it is a liability. Our idea is to reduce the number of accidents as much as possible, even if these accidents are not very severe, because we want to preserve the health of our employees and then moving on with our strategy focusing on investments, innovation, social responsibility and engagement with the communities. Our company needs to be strong in these concepts, these principles of sustainability and governance as well and we try to show you these indicators. I will now turn over to Guilherme. He will talk about something very important. Our results are supported by the availability of our assets, and Guilherme will talk about this in detail.

Thank you very much, Sata.

Good morning, everyone. So quickly going through our assets compared Comparing to the first quarter of last year, we had a significant improvement, and this was basically due to the Salto Osório unit, which was being modernized last year. Other assets also recovered, and an important factor is the Asurua project with 800 megawatts. and therefore the performance of this asset has improved. We also have continuous improvement in Santo Agostinho. This is something we are pursuing along with our team so that we can recover the availability of these assets. We mentioned this in our last presentation. We had a recovery plan. and we have had good results and the latest reports for the sector. Some of our assets have a greater capacity. This is constant work by our whole engineering teams so that our assets will have better performance. We had a problem in Serra Penada. It wasn't significant. Next slide.

Now, regarding curtailment.

This is our main problem. This is something that all of the renewables have gone through. but we have a significant benefit, which is our portfolio. Satamini has mentioned it. Despite the significant impact of curtailment in our assets, in our hydroelectric power plants, and this is very specific, but we compare it with our portfolio, and the curtailment has an impact of 4% in our total generation. Curtainment is aligned, as we can see here, in the first quarter. It's aligned with wind and solar energy, but the amounts are well aligned with the curtailment. An important aspect if we compare it to last year's result, is due to the new assets, Asuroa and Asusol, which increase our basis in absolute figures, and that has an impact. Energy generation. When we compare it to the first quarter of last year, we have new assets. along with the improved performance demonstrated in the previous slide. Also, regarding the hydro power point, so we have a slight change compared to last year. This is because of the problems in the south and the reservoirs. It wasn't relevant and it was not impactful in terms of our operational results. I would now like to invite Kelly to talk a little bit about our business strategy. Good morning. Well, regarding the business area, We do not have any relevant highlights. We maintain our strategy to hire gradually, and we can see on the graph above on the right side our availability year over year, and we can see that it goes down quarter after quarter. contracts that are more prolonged some of them to 2030 and even beyond that on the left side we can see our availability in our hedge which have demonstrated to be adequate for um our weather conditions the market is constant in the free market you can see the future availability and that's where we apply our strategy to contract gradual sales. And maybe the most significant highlight here is a significant increase in the number of consumers. We had an increase of over 34% when compared to the first quarter of 25. In terms of consumer units, we also had over 29 percent of increase with almost 5 000 additional consumer units this is what i wanted to share and i and i turn over back to you well uh thank you very much kayla now we'll talk about the financial performance going through our revenue we had a significant revenue increase of 13 the main highlights is the sales volume in the Sudoeste, which is operational now, and Cachoeira, which was also not included in the first quarter of last year. We had significant changes in price this year. Prices in the Northeast are higher than last year, which turns energy more valuable in that market. That has an impact on sales volume and CCE's results. Other aspects were not as relevant. Transmission had a split 12 results. In the beginning of last year, Casa Branca had a very strong capex. And in this first quarter, it was very low. So this leads to a 13% increase in our revenue. Now we have TAG with an important contribution. and we delivered 133 million in the Northeast Amash. We are reviewing it. So, conservatively, they only took into account the energy that was, in fact, transported. So, when we have the review, this will be adjusted and will generate a better effect in the upcoming quarters. The ETIDA, we can see an accounting ETIDA with an increase of 10%, also the adjusted ETIDA, and the regulatory ETIDA, as the market likes to see, had an increase of almost 16%. In the operational results, we can see more favorable prices among other factors, which led to an increase of over 300 million. We have four important additional assets, and from a regulatory point of view, we had an additional 32 million in ETEDA because of these new assets, especially Aza Branca. And 30 million less TAG, comparing quarter over quarter. And in net income, the ETRA had an important contribution. We also had a decrease because of the new assets, and in the financial results, our leverage is a bit higher than it was last year. We have five billions of net debt this quarter, and last year, we had higher amounts, and that has an impact. we had a 4% decrease in the net income. Now, going through our balance debt, it is as expected. We had a decrease compared to the end of 25. Our cash was robust in the quarter in the end of March. We had good results. Our debt closed at $5 billion. It was $5.5 billion, and therefore, our leverage has improved in this quarter. And in this next slide, we can see the debt profile and composition. We pay about $2 billion per year after 26, where we have a higher concentration. but the composition remains diversified, IPCA 53%, CDI about 40%, and TJLP 6.2%. Our investment flow for 2024 and 2025, it was very robust because of the M&As. and the large projects which were being developed. From now on, we will focus on the three large transmitters, which will still demand some paybacks, especially in Casablanca. We also have new assets that were acquired in the bid and Jaguara's expansion, which is already taken into account here. and also assets from the Colibri project, 1.5 billion for Colibri and then Jaguara, but they were already distributed over time. In Jaguara, we go all the way to 2030, and we can see the results are demonstrated on the slide. And then last important financial highlight that Sapa has already mentioned, we have the UBP renegotiation. We have 30 days to sign the contract and then another 30 days to pay. And if we follow this schedule, this will happen at the end of June. The accounting values between December, with the new agreement, we have a little bit less than $4 billion in the balance. The balance will be corrected according to the CDI. and we will discount payments from December until now. So we do not know what the exact gain is going to be, but it will be accounted in the end or during the second quarter. And now closing the presentation and moving on to expansion, I will quickly talk about Azabranca and Graúna, the two large implementation projects. We have good news from them this quarter. Azabranca had a license to install BC&D segments, and we now have a normal implementation flow. And in Graúna, we had a prior license, and therefore, it is all according to plan. So this is the first presentation of Colibri. This is the asset we acquired in the latest ANAELS bid. The south lot, which we call Colibri Sul in the state of Santa Catarina, between Graúna and Gralha Azul. And we also have A, B, C, and D sub lots, which are part of lot three. which are located in Ceará and Rio Grande do Norte. As Sata mentioned, the wrap is of almost 3 billion. It was a significant victory in the second bid. Now, to detail, I will turn over to Guilherme. We had a successful expansion of Jaguara. It was an opportunity that our team has been developing in the last two years, the developing team, the implementation team. It is an asset which is well aligned with our strategy. It's important to have flexible plans. We have, we're still negotiating the provider, we hope to conclude this in the near future. So to reinforce, it is an asset that we hired. It's a 15-year contract term. And moving on to the next slide, talking about Giral, a quick update. I would like to mention two important facts about GDAL. Number one, we have an average generation that is higher in the first quarter as a result of the expanded quota. We have been working with a higher rate since the beginning of the year, and as of the 2028, it will be fixed. In the last weeks, we received information about the extension of Giral with additional 600, and so we moved to 2,257 from 2,182. Transfer process, we do not have much news about this. This was closed at the end of last year. We continue working with this process and we expect that in the near future, we will be able to have an update on this process. Thank you very much. We're now going to start the Q&A session. To ask a question, please submit it to the videos conference Q&A app. We have a question from Safra, a cell analyst. First, could you update us on the process for the acquisition of Jirao? Number two, we've seen a mismatch of prices in some markets with a higher frequency. How is the company dealing with this phenomenon, taking into account the location of your assets? I can answer this. Well, I will talk about Jirao initially. As I mentioned, we... discussing the alternatives, and in due time, it will be shared with the board of IBEs, and we will communicate it to the market, and therefore, we're still analyzing Girao's incorporation. Now, regarding the submarket price difference, This is something that is, of course, mapped in our risk management. We've been dealing with this forever, but, of course, the frequency of these events have intensified, and they are correct. But how do we deal with them? Definitely, this has an impact on future decisions of the pipelines, of the company's pipelines. and in the short term, we have business strategies. So, when we say that we have a hedge, this hedge is segregated according to the different submarkets, and so are the rules. All of this is taken into account, and Sassamini has already mentioned this during this conference. The geographic distribution and technological distribution also provides a little bit more resilience to us. This is done by means of business management, portfolio management, adjusting our sales, our resources, our hedges, and looking at the portfolio as a whole. Perfect. Thank you very much, Keller. I would like to remind you that to submit a question, you should send it to Zoom's Q&A tool. Right now, we all have this question, and therefore, I would like to turn over to the speakers while we have another question. Good morning. Could you comment about the market perception of energy contracts and the expectation of El Nino for the second quarter of 26 and possible changes in C-Bar. The question is from Maria Carolina Carneiro. Well, in fact, this perspective of a strong El Nino in the upcoming weeks and months and will continue until next year As you know, El Nino will lead to more rain in the south and less rain in the north and northeast of Brazil. The impact in terms of physical operation of the system depends highly on what we call the south. The El Nino in Rio Grande do Sul has less impact on our system because we have less reservoirs. But in Santa Catarina and Paraná, the relevance is a little bit more significant and also in the south and southeast and so the fine adjustments of el nino will make a difference how has the market reacted there is a trend towards a reduction in the future but it won't be significant in the third and fourth quarter We have other factors and because of our profile, there might be a price implication. Regarding CIVAR, this is a relevant regulatory discussion. You can see there are two very different opinions on the model but this is our vision that the model is good as it is with these parameters because we can see very little almost nothing and in the price model we have the risk for the operator and we have more adequate pricing for the system but of course this includes volatility. We depend on volatile parameters or we might have risks. Volatility may be exaggerated. This is what some segments of the market see. They believe that the price is too high. But if we decrease risk aversion, we will have secondary effects on on what we have to pay and that will have an impact on the consumer and therefore we, the C-Var as it is, should be the option that we use. This is our chosen option, our preferred option. I turn over back to you. Thank you, Taylor. We now have a next question from Rafael Oliveira and Mateus Oliveira. The questions are related. taking into account the payout of 56% in the pipeline with new projects, what are the conditions for the company to have distribution without compromising future investments? I think I can answer this. Two or three years ago, when we, reduced the payout to 55%. We had investments to make, and because our leverage is between 3 and 3.5, for now, it makes sense to keep the 55%. And we will analyze it on a case-by-case basis and re-evaluate things as new facts arise. But for now, it is as it is. I will compliment. As the leverage goes down, we tend to increase payout. This is only normal. And what makes that leverage not go down? It is when we identify investment opportunities with that will add value to the company and this is what we've been doing the company has offered reasonable dividends of 55 is higher than the usual payout in utility companies in the electric sector and the debt happens at the same time we're growing. This is very positive for our investors. We will keep this, we'll identify, continue identifying opportunities, and then we will pay more dividends as the market allows. And as the market has better result perspectives, we will contain our debts, and the payout will be lower. But I'd like to remind you that 55% of payout is a good one, and it's a little bit above the market average. Perfect. Thank you very much. Our next question is also from Maria Carolina Carneiro from Safra. She asks about future bids. and if you know whether we will have another bed for this year and whether you would be interested in participating.

Yes, definitely.

We do have projects that we are developing. A lot is still not clearly defined, but I think that we'll probably have five, auctions this year with volumes between 2 and 5 gigas. But we still have some regulatory issues to be defined and we believe that in the upcoming months we'll be able to sort this out and have more auctions this year. Perfect. Thank you, Guilherme. Our next question is from Antonio Luiz Rizzo, buy-side analyst of Interacel. He asks about Giral. Will the company's debt increase? I can answer this one. This is what the committee is discussing. how we can bring this asset into Brazil Energia and that may lead to an increase of our debt or not. We're still discussing this. We must preserve the company's debt balance based on manageable amount which will not put the company's rate at risk because this is one important competitiveness. aspect of the company. So our related committee is discussing this. The discussion is not over, and we hope to conclude it in the near future. When we have a definition, we will share with all of the stakeholders via our official channels. Thank you. Perfect. Thank you, Satamina. We now end our Q&A session. And I would like to turn over back to Satamini and other participants for their final considerations. Well, I would like to thank you all for your presence here today and to highlight that we are a company that looks ahead in the long term. Of course, the market has variations, volatility, and this increases as the number of new technologies increases. We deal with them on a base-by-bases, managing our risk very professionally. Today, as we mentioned before, we have a diversified portfolio in terms of generation and mission. We have, in the area of generation, we have a technology portfolio with an adequate balance of technologies to face challenges in the market, which is increasingly more volatile. We are very responsible with the future development of the company, always trying to pursue opportunities. This is the message I would like to leave you with at the end of our call. Well, I thank you all for your participation. The video conference is now over.