Alupar Investimento S.A. (ALUP11.SA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to Alupar's conference call to discuss the results for the second quarter of 2025. The audio and slides for this conference call are being broadcast simultaneously over the English audio channel. [Operator Instructions] The presentation is also available for download. [Operator Instructions] We would like to inform you that forecasts of future events are subject to risks and uncertainties which may cause these expectations not to materialize that is to differ from what is expected. This forecast has expressed an opinion only as of the date they are carried out and the company undertakes no obligation to update them. So we have here Mr. José de Godoy Pereira, Alupar's CFO; and Mr. Luiz Coimbra, Alupar's Investor Relations Director. And now I will give the floor to Mr. Luiz Coimbra who will begin the presentation. So please go ahead.

Good afternoon, everyone, and thank you for being here. And we always start here with our program. We have prepared the 5 sessions. I will start talking about the highlights, then we will have the project's status and we'll have the regulatory numbers and the results destination. And then we will talk about the capital markets. So the first one that we had, we had a publication of the resolution of this increase of 11.4%. And then we also had the GPM contracts for us 57.9% of our revenue is for IPCA and the 26.5% for IGP-M and 15.5% for PPI, that are the revenues for the projects abroad. So then, it goes from BRL 4.291 billion for 2025, so BRL 4.782 billion. So it's a growth of 11.4%. So besides the increase that we had for this resolution. We had a positive impact of BRL 160 million because of the result from TMR. And we also had other ones that were approved. And going to the other one we have here the conclusion and the signature of the first concession contract, which was on July 9. And the second one defines the result. And then it fixes the revenue in BRL 395.7 million, and it's from March 2019, which is the same as BRL 561.7 million for 2025-2026. We also had a new schedule changing the last concession to September 2051 with 27 years of operation and the RAP value as well as the schedule works set up in the beginning of the process. And now going to the next one, we have another highlight. We're conclude in July, the line implementation of the last part was ELTE with 21 kilometers of line. In 2024 May, we had concluded this service stage of Manoel da Nóbrega in May, we had another reinforce and reinforcement and we will receiving BRL 90.9 million referring to those with the initiation of the last one we received the full front of it. And now going to the 6 slide, we have another highlight. So then on July 31, after the approvals by the regulatory bodies, including ANEEL, we concluded this last activation that was through one of our subsidiaries, which was a party. It's an operational asset. It's been operating since June 2023, and it will be until March '32, decreasing by it. It comprises 62 kilometers of the transmit line. There is a RAP associated BRL 21.7 million. This operation was carried out by the enterprise value on the BRL 75 million, and there is a likewise debt of BRL 53 million. And going to the next slide, another important highlight that we had, which was exiting of the fiscal benefit. This is a subsidiary low-priced project in Mato Grosso with 235 kilometers of the transmission line and a revenue of BRL 20.5 million. Indeed, it has a reduction of BRL 75 for the income tax. And then it will be from 2025 to 2034. The last one was the payment of the dividend in this quarter. We paid everything related to the last quarter of 2024. The first one of 2025, it was the amount of the 45 units. And then the last one was paid in June and the first was BRL 145.3 million, which is BRL 0.45 per unit. And now going into the next session. We have here the status of the implementation projects. We separated them in 3 groups. The first ones are the ones that are more advanced. We have TCE, which is the first one in Colombia. This work has been concluded, but now we are going to go to the commission in part with the regulatory bodies and all the agents that are impacted by this one and another project that has been -- has had a very expressive advance, which is TATP -- TES, sorry. And then the last one step, which had a significant growth. We had 10% of physical advance in the first quarter of 2025 and now we closed the number of 20%. Then we have another block that has 80 projects, 3 in Chile, 4 in Peru and 1 in Colombia. Those projects are for recent auctions than in the beginning, and we've had some advancements in the land and environmental licenses as well as equipment acquisition. And the ETES, we have 3 more projects that were not so significant. So they are still in the beginning of them and as they advance more, then we talk more about them. And now going through the regulatory numbers starting with the income, which was BRL 875 billion, which has a growth of BRL 66.3 million or 80.4% regarding the numbers of 2024. The transmission segment has contributed to the growth of BRL 27.3 billion. We had 2 impacts on it. The first was the commercial operation entrance in May 2024 for ELTE. The second was the increase of its reps as the approvals that we had in 2024. When we look at the segment of the generation, we had a growth of BRL 46.8 million in the revenue. And here, I'd like to highlight two main factors. The first is the largest allocation that we had in this quarter comparing to the second one last year and the second one was the increase of PLD, which was BRL 216 in the view of an average in the second quarter of 2024 of BRL 143. And now going to the EBITDA. It had around BRL 680.5 million in EBITDA growth regarding -- comparing the same numbers of lsat year. And the main variation here is the revenue, which is BRL 35.7 million and 27.8% for the generation. When we look at the profit here on the right, it goes from BRL 129 million in the second quarter of last year to BRL 186 million in this quarter, which represents a growth of 43.9% for the profit, and this growth was because of its 2 accounts. First, the increase of BRL 35.7 million in the EBITDA and in the second, BRL 27.8 million for the financial results. When we look at it, the financial revenue had a relevant increase, and then it was because of CDI, which was 3.7% in this quarter in the view of 2.53% in the same period of last year. And then when we look at the expenses, they grew BRL 6.1 million. We had a more relevant growth because of the CDI increase, but it was compensated by a reduction of currency variable, which was positive in this quarter, which was in Peru because of the value of the new currency comparing to now in the dollar. And now going to the next slide, we presented here the debt. There is a gross debt of BRL 1,864 million, and it is the case. That's the only debt that we have in the hold. It has a cost of IPCA of which is 6.5%, and we closed with a cash of BRL 294 billion, which was something negative. It is much more cash than that with BRL 425.5 million. Going to the next slide, we have consolidated debt. The growth one was BRL 12.734 billion, with a portion of the cash of BRL 3.696 billion with a net debt of BRL 90 million. When we look at the structure of it that was consolidated, we haven't had any significant change. 53 is for IPCA with the CDI, which is 25.6% and all the debt for the projects represented 13.1%. And with our program here, we will talk about the results destination and the allocation. So they can also approve the distribution of it of BRL 69.2 million, which is an increase of 21.2% regarding comparing the last quarter of the third quarter of last year, which is BRL 0.21 per unit. The payment will be done 60 days after the approval, which was yesterday. And the list, the record date will be August 7. And now going to the next one, the last one for our presentation. We present here the development, the performance of our company. We have here the accumulation which is 17.91%, and BOVESPA has 13.51% and the IEE has a value of 29.34%. Another highlight that I always bring here which is the average increase. We closed at an average of BRL 20.9 million with negotiations a day and it represents a growth of 12.5% comparing to 2024. I close my presentation, and we can go to the Q&A session. Thank you.

[Operator Instructions] And our first question comes from Mario Wobeto from Safra.

I wonder if the company has been here in the next transmission auction, the kind of the project, the company has been 34%. There was that are more related to you or if the ones that are abroad, there is still the priority?

Thank you for the question. The company will analyze that, we'll analyze the participation in the next auction. It's not first here. It depends on several matters, but we are analyzing this internally. Regarding the international matter, we always try to have the best opportunities where they are possible.

Our next question comes from Vitor from Itaú BBA.

We saw that this quarter that we had, we saw a positive performance in not only the positive one, but the average cost. Could you -- they're more with us about this performance if we can have the same performance for the second quarter of the year?

We have a policy of direct hiring with consumers, and we've expanded our portfolio of customers, which has enabled us to sell at better prices in the mixing and the generation was positive in the first quarter. So I think everything was flat on the result that we had.

Next question is Pedro [indiscernible] from Santander.

I'd like to understand a little bit about the current strategy of the company if there is any exposition limit abroad? And as a second question, if in other countries in Latin America that the company -- if the company sees that as a strategic plan?