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

Good afternoon. Welcome to the Alupar teleconference for the results of the Fourth Quarter of 2024. This is being recorded and translated into English. [Operator Instructions] All the participants will be just hearing it, and we will have the Q&A session. And the future events can have some uncertainties, and some expectations can't be carried out. Those predictions have only to date when they are carried out, and the company doesn't update it. We have here José Luiz de Godoy Pereira, the CFO of Alupar; and Mr. Luiz Coimbra, the Investor Relations Head. And I will give the word to Mr. Coimbra, who will start the presentation. So please, you can start it.

Good afternoon. Thank you for the participation here. If we look at the program of our call, I will highlight the main events of this year. And then we will talk about the projects. We'll present the numbers of the company. And at last, we'll talk about the performance of the company in the capital market. The first thing that we have here is the payment -- the dividend payment for the quarter. So it was 200 -- actually, the first one BRL 36.6 million, which is 0.0 (sic) [ 0.04 ] per share, and the payment was in the beginning of this year on January 6. This amount represents the significant growth of this regarding the number that was distributed last year. Going to the next slide, we have another relevant highlight, which is the rating of the company on January 10 that kept our number with this scale, with a national scale because it gives access to the market, and then it turns us into a competitive market. The other thing was the contract of this company here for acquisition of the RIALMA IV, which is the old transmission line of [indiscernible] and the number of it is BRL 20.6 million, that's the value. And this is related to [ June 2024 ] and it includes the operation and the regulatory approvals as well as ANEEL among others. Going to the next session, we'll talk about the status of some ongoing projects, some of them are significant. The first one is the CE. It is the transmission line that we are building in Colombia. It is very advanced, it was pending on the license of 7 towers. So last October, we had the approval of those towers -- actually 6 ones. And now in the end of January, we had the approval of the last one. Another one that is more important was the North region with ECP, and it has 35% of this physical advanced. And then another project that was very important was the ELTE that had a very important, very important relevance to us, and it's well evolved. It's inside our expectation as well as our deadline, and we intend to conclude it to the end of this year. And then next one, which of [ 8% ] of physical advance. And it has 5 steps, and we have the recognition of the revenue with every step. Now we are in the first step of it which means 11.8% in the total revenue. After that, we have another block with 5 projects, 1 in Colombia and 3 in Chile, 1 in Peru, very advanced. We had the environmental license. And the other ones, we had [indiscernible] by the variance of the industrial and engineering, [indiscernible] that evolve in the next quarters. We will bring more details about them. Continuing here with our program, now we will go to the company's numbers is having here with the [indiscernible] revenue was BRL 1.123 billion so variance of 27.9%. The main impact on this was increased monetary correction because of the inflation. So the GPM was 3.48% in the view of the other one that was less last year in the IPCA was 1.40%, in the third quarter, 0.78%. Looking at the EBITDA, it was BRL [ 700 million ], around that. So a growth that was very similar to last year. And the main thing that I would like to highlight here is the revenue growth, which was -- and also, we had another growth for the infrastructure for the projects of transmission that are being deployed. We had a growth of 6 -- 2 actually, with the PLD that was the average of [ BRL 260 ] in the view of [indiscernible] the same number that we have in last year. Same account, the same growth that I will be highlighting is this to [ 39% ] that it was because we've improved on the [ ENTE ] because of the evolution of the deployment of the project. Moving to the profit, it was only -- actually it's a growth of 63% regarding -- the same growth in 2023. Here I just would like to explain the other tax, which was BRL 81 million. And this is because of tax income one the installed incentive in 3 transmissions. Still speaking of this, we have the regulatory results. The net revenue was BRL 787 million, which had a growth of 10.8% regarding last quarter of 2023, and the transmission -- contributed to a transmission the 33%. We had 2 impacts. First the commercial segment for the South region. Second one was the resolution from ANEEL in 2024 that established the adjustment of those areas. And then another one mainly because of the PLD increase, the operational sales -- sale operationals, especially in [indiscernible] which is in Colombia. Going to the EBITDA, it was a number of BRL 654 million. So it was higher than the same -- higher than the number last year. Here, we had the increase of the revenue, and it was compensated by BRL 43 million for the acquisition of energy, the same impact that we had on the revenue. So looking at the profit, it was a total of BRL 98 million. The main impact was an increase of the 38 in the EBITDA that I have just mentioned. We had an [indiscernible] in the financial result because of the financial expenses. Here, we have these 3 main [indiscernible] towards 55% of it. The second one was the devaluing of the real. We had the impact on the -- currency impact. And the last one we had dealt and then this -- so then it impacted the result. Going into the next slide, then we have presented here the debt. So it's BRL 835.3 million with the position of the cash of around [ BRL 1 billion ]. And then we had this net debt of BRL 471 million. And then we paid the last debenture, which has a cost of 1.40. And then we also did a new [ factor ], which is 6 more -- which goes to the CDI, which is 96.35. And then we have here consolidated debt, which is the gross, which is BRL 12.630 billion (sic) [ BRL 12.683 billion ] which is cash, which is BRL 9.138 billion in the debt -- which is the debt. And when we look at consolidated debt, we didn't have significant improvement with debt is 55%, which is related to the IPCA. And to the currency, that was 15%. So going on here, now we show the results in compliance with all the dividends approved in the end of 2024. The Board recommended this for the approval. And then we will have another -- the distribution of the dividends of BRL 76 million, which is BRL 0.29 per share. So -- and then all the shareholders that are registered in the company by the end of this date, then they will start being paid again on April 17. Then we have the results in the end of April, which will represent the growth in 2024. Going to the last slide, the Board also recommended for the approval the increase of the capital, which is BRL 349 million with the --and then with the mission of other shares. And then the rationale here will be new for -- shares for every 100 shares. And then we have here 38 million of actions coming with the rationale of it. Then we have the [indiscernible] numbers for the market, so the [indiscernible] value here is 8.45%. So -- and then we have IBOV phased by another point here have always highlighted here is our liquidity, which was BRL 27.80 million, which shows an increase of 15.4% comparing to 2023, which was [ 2.24% ]. And then I finish my presentation here. Now we can start the Q&A session.

[Operator Instructions]. Our first question here comes from [indiscernible] from Itaú. Your mic is open.

Good afternoon, thank you for accepting my question here. So I'd like to ask about the impairments. So even though the company is not so representative, everything that is part assets of the company, which was below the third quarter of 2023. But I think that it has helped the company to have other [indiscernible] regarding the acquisition of energy. So if you can talk a little about the regulatory details such as reimbursement, players and everything regarding the renewable energy.

I think that the fourth quarter reflected on a project that we had of wind energy that had the [indiscernible] because of a delay of a transmission line. It was a project that was that belong to [ Starlight ], but then it was sold, and it had a great delay. And then it was something that was [ fire ] and it has to be dealt in a different way. And then it is clear that it's a restriction because of lag of some things. Regarding the general information, we need to have a lots of dialogue among players from the sector and the other bodies. I think that we need to have an agreement in order not to have a problem as we had in the past as well as other ones. We need to think about this model. I also think that there was a general failure because of many agents -- actually, many agents shouldn't have access to some things. It has -- so we should have a broader study to see who we should give access to in the -- robust this system is to support everything. You must be following the media because we have some thoughts of things regarding this topic. And then let's see how things will be in the future.

Our next question is from Mario Wobeto from [ Safra Bank ].

Hello and good afternoon. Can you update us about the TME project, what is the expectation of the company about the rep? And what is the value that you would like to have? And what is the operation -- when does the operation start? And what is the expectation regarding LatAm projects? Can you talk about the leverage trajectory if you're going to continue with the bonus regarding the shares?

Regarding the TME, the projects will advance to 75% of a physical advance. I think that we are going towards the right direction. We will get to the end of the year with this project, even though it's very challenging, but I'm sure that we'll get to the end of the year. There isn't a definition regarding value. I don't know if there is any schedule for that, but a -- and regarding -- I don't remember what the last question was.

The journey of the leverage, if you are going to continue with the bonus of the shares?

Yes, we work with this leverage. We work within something that is reasonable. The bonus we've been doing this in those the last years, and I think it been -- and it has been very important to the company, to the shareholders. And I think it's a policy that we can keep as well as our dividend policy that we've developed that we represented to the market, and we are going to fulfill this.

Next question comes from [ Mr. Guil ] from Santander.

Good afternoon. Thank you for accepting my question and congratulations for the outcomes. The first question is about things regarding abroad in the LatAm. Is there any country that you would like to focus on this year? And the second question is about Chile, if there will be an increase of opportunities?

It's very early to say, I don't know exactly. I think there should be an analysis about the root cause for this -- by part of this breakdown of the system. It's very early to say what happened. Only after this investigation that we'll have the conclusion of it. Regarding LatAm, we are present in those 3 countries, Peru, Chile and Colombia. We've been there for many years. And every time we see an opportunity, we try to do something, but we are focusing on those markets where we know better.

[Operator Instructions] Our next question comes from Mr. Pedro. And he says, has the company started exercising its buyback plan? Could you talk about the [ 4 ] yearly reimbursement? And how this impacts or benefits the company?

We have this plan, this open plan, and we are going to keep it. And when we think that it's a proper time, we will acquire it. Of course, that there are other remarks, which is the liquidity, which is another concern that we have. So we have to look at the market. And -- but our expectation is to keep this open buyback program.

Next question comes from [ Mr. Peterson Silva ] from [indiscernible]. He says, the electricity sector is highly attractive to investors due to the high yield distributed to the shareholders. However, when we compare this to other companies in the sector, including those with higher levels of debt, Alupar stands out as one of the companies that distribute the least dividends. How does the Board see this? And what are the prospects for the future with regard to dividend distribution policy?

We have a policy that was approved and was communicated to the shareholders and is available here on our website, which is the dividend distribution. Regarding the payment of it, I think the main point here is to generate value to the shareholders. So I think if we compare ourselves to other companies. So as we are smaller, we have a growth that has been higher than the sector if we are comparing to the average. So we can retain some part of the profit to keep the company.

So the Q&A session is closed. Now we will give the word to Mr. José Luiz for the final remarks about the company.

So the teleconference is closed. Thank you for attending this teleconference and, I wish you a good afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]