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

Good afternoon, ladies and gentlemen. Welcome to this Alupar call for the results of the third quarter of 2025. And this slide of it are being broadcast simultaneously and to access excess the English channel, you can access the lower part of it and choose the channel English, and you can also mute the original audio. The presentation is also available for download. And everyone will be just listening to the call, and then we will start the Q&A session. And some predictions about future events are subject to risks and uncertainties and maybe the expectations will be different. And those predictions should opinion only about all the date. And we have here Mr. José de Godoy Pereira, CFO of Alupar; and Luiz Coimbra, the Director of Investor Relations, and I will give the word to Mr. Coimbra Luiz to the presentation. Please, Mr. Luiz, you can continue.

Thank you everyone for being here. We will start with our program. I will speak about the first highlights of this first quarter. And then the status of the projects, and then I will also go through the numbers of this quarter and at last, I will talk about the performance of the market. Here is the first highlight to which is T&E. In the previous quarter, we had communicated about it and then the app, which was BRL 561 million and the extended deadline. And now in September, the work was concluded as well as the commercial operation connecting the last isolated point to SIM. And here, we have the commercial operation part, which is TC, which is 500 kilowatts that connects the region of Bogota and Pereira. It has 237 kilometers of extension. And then now with that, we have a new plant in Peru, in [indiscernible]. And those 3 sites together have a revenue of about $60 million a year. And going to the next highlight, we had the first step of [indiscernible], which is a project that comprises the center substation modernization. And then it has 4 steps. First, the concession signature with a revenue of [ BRL 90.4 million, ] which was being into the first part of it. And then the conclusion of the first step, then now the revenue is [ BRL 60.3 million out of BRL 84 million ] for the first step of the project and BRL 90 million remaining which is 33% of the whole project. For this, we have in anticipation of 11 months is regarding the first deadline, which will result in an additional result of [ BRL 50 million ] for the company. And the next is we have another highlight, which was the victory -- the achievement that we have the adoption in Peru September, and then it's 250 kilometers of transmission line and 5 substation, the forecast estimate is showing to [ $20 million ]. It has at a revenue of [ 30.8 million ] this year. And then conception of operation is for November 2029, and the conception deadline is from in 2030. This project consolidates this new cycle of growth that is in total in [ $50 million ] investments to 2029, which will bring an additional revenue of $137 million, as one was the dividend payment related to the first and second quarter of this year. We paid in July and October, [ BRL 138 million ] of dividends. And then with that, their total of [ 290.6 million ] which was [ BRL 0.90 per unit ]. Now we represented the status of the implementation projects here. We have separated them besides the hiring statutes and the work advancements in their initial currencies, with the with the licenses. The only project that is more advanced is stack that I've just mentioned. And this one after the operational of events, one has a physical advance of [ 23.8%. ] And now we will explain the regulator numbers, starting with the revenues this semester was [ BRL 897 million ] with 90.4% related -- comparing to the same period of the last year. And then contributes to a growth of [ BRL 574 million ]. The first is the increase of the rep. We have the homologation in July, which established an increase of 5% for all the contracts and another increase of 7.2% for GPM contracts and another factor is the commercial operation of north area. And then when we look at the generation part, there was a growth of [ BRL 27 million. ] Basically here, we had a gain because of the energy location strategy, which was bigger in this quarter comparing to the same period of the last year , which is wind park in the region of and the impact of it was lower, which was [ 33% ] in the same period last year, our -- this number was 15% less. And now the EBITDA, there was an increase of [ 13.5% ] comparing to 2024. There are 2 highlights here. First, this growth, the revenue and the other, there was an increase of [ BRL 37 million ] for which is the increased insertion of TNE. Now going to the profit, which was [ BRL 219 million, ] a revenue of 20.2% when we compare to the same period the last year. And here, we had the 3 main variations. The first [ BRL 87 million ] in the EBITDA and then we had a growth of [ BRL 21 million ] for the financial result, and this growth is because the increase of CDI, which was 3.60% and another one of [ BRL 2.59 billion ] net loss recorded in the first quarter of 2024. And then the last one, we had an increase of [ BRL 22 million ] in taxes. And then there was positive effect because of the fiscal benefit that we had in September 2020. Now speaking of those numbers, the revenue had a growth of 3.7%, and the impact on it was the same as the regulatory numbers. And for the transmission line, we had 2 main factors. The first, the increase of [ BRL 125 million ] in infrastructure because of the investment counterpart, we had a reduction of [ BRL 123 million ] because of the GPM reduction in this quarter there was a negative variation of 2.7% and the [ 31 ] there was a positive variation of 1.72%. And now speaking of EBITDA, it was a total of [ BRL 984 million ]. Here there are 2 variations. The first one was the revenue for the transmission line that I've just explained. And the next one is a positive variation of [ BRL 273 million ] for the state account TNE had an effect that was low recurrent because of the arbitrage result. Now speaking of the profit, it was [ BRL 489 million, ] which represents a growth of 34% regarding to the numbers that we had in the first quarter of 2024. There are 3 main accounts here, which is this growth of [ BRL 298 million ] in the EBITDA and the other one was the valuation of [ BRL 387 million ] in taxes because of the positive effect in the EET transmission. And then until last, we had a reduction of [ BRL 200.4 million ] in the participation if especially because of the profits regarding the taxes that I've just mentioned. Going to the next slide, we had the debt of the holding, the controller, so the growth that of [ BRL 890 million, ] that's the venture emission. And then there was swap [ 965% ] of ICD. And then we closed the cash with [ BRL 3 billion ] which brought a negative net debt of BRL 446 million. And then we have the growth that of [ BRL 12.4 million, ] and then we closed the cash with [ BRL 324 million, ] with a debt of [ BRL 90 billion ]. Actually yes, around [ BRL 90 million ] and most of our debt, 53% was for the IPC with CGI, which is 27%. And the others that represent 13. And then for the next at the board of the company approved the dividend distribution of actually, [ BRL 90 million, ] which represents the same value as last year. It was the high dividend ever paid. This is the acquisition of in [ 2022 and it's $0.30 ] per unit. The payment will be done within 60 days after the approval that it was yesterday and the date will be on [ November 13 ] after the negotiations. And now going to the next slide here. And then so through the year, the closing that we had yesterday, there is a value of [ third and 37.3% ] and the semi period, Ibovespa has a value of having 27.4%. Another point is the financial volumes for the -- accrued of the year we closed yesterday with an average of BRL 28 million a day, which represents a growth of 3.7% comparing to the same period the last year and closing by presenting time and we can go to the Q&A session. Thank you.

[Operator Instructions] The first one is from Mr. Noel Pedro from Santander.

So here Joanne Pedro from Santander. So actually I have 2. The first one would be about acquisitions. In the last month as we've seen that some transmission platforms were for sales. And I'd like to know about this process. And the second one would be about the transmission or battery auction opportunity, broaden I mean we would like to understand if there is another action this year and how the opportunities are for 2026?

So the first question is for the batteries in LATAM, right? First, the platform, what we have seen is that people have participating that in those platforms are the international funds. And there we have a company of a green field. Our capital cost is a little bit higher than the other companies. So it's not easy to get into those platforms, would compromise our capital and with a higher cost. And we don't know -- we don't have much competition. But if we consider the last auction here in Brazil, the return is much worse than the last sales of M&A assets. I don't know why some companies don't participate in the process of M&A and they are so aggressive in the greenfield, which I think that has given better results, at least now, but we have a portfolio of projects. And then now I think it doesn't make sense because of the return that we demand. Abroad, I don't think there are many things in the pipeline. All we have participated in some opportunities. And for battery, now we don't have anything. We are waiting for the regulation here to set up all the final rows and it's something, for example, we participate in Argentina of in a best project but because of the Argentinian we didn't go on with this project.

Our next question is from Mr. Daniel Travitzky from Safra.

I have 2 questions. The first is about the transmission auction, the asset that we had, there were some batches for construction of imports, compensators and the company participate one of them. If you can comment on this opportunity, the challenges for this type of operation and the company's expertise for this type of venture? How do you evaluate it? And the second one is about LATAM's investment, but it's to understand how you expect to leverage the company coming in and if is so, how will continue anticipating in those auctions in LATAM? I think those are the 2 questions.