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

Good afternoon, ladies and gentlemen. Welcome to Alupar's teleconference to discuss the results for the second quarter of 2026. [Operator Instructions] The presentation is also available for download. [Operator Instructions] Statements reflecting views about the future are subject to risk and uncertainty. And therefore, there can be material differences from expectations. We are not obliged to update these forecasts. Joining us on this call are Mr. Jose de Godoy Pereira, Alupar's CFO; and Mr. Luiz Coimbra, Alupar's, Investor Relations Director. Now I'd like to give the floor to Mr. Luiz Coimbra to begin his presentation. Please, Mr. Luiz, you may go ahead.

Good afternoon, everyone. Thank you for participating in our conference call about the second quarter. This year, we prepared an agenda with 5 topics. I will start with the highlights for this quarter, then we're going to show the evolution of our projects and their status, then we'll talk about regulatory and IFRS numbers, then about results allocation. And finally, we'll talk about the company's performance in capital markets. Our highlights, the first we have is we won the [ Lot 7 ] of an auction. #1, 2026, Stage 2, it was an auction in 4 lots with a total CapEx of BRL 1.8 billion, Alupar 1 Lot 7 with a project in the city of Sao Paulo from the East to the region of Guarulhos, a 17 kilometers line underground with 345 kV. Predicted investment is BRL 1.1 billion, and the RAP, we won is at 96.7 billion, considering our CapEx, it will be a return in about 30% and the relation RAP CapEx is 12.4%. This is another project. We went in the city of Sao Paulo. We already have tech in the center station and the 2 projects will be synergistic. Our expectation is to be completed in 2031. Next slide, we have another highlight the issuing of the license for installation of TAP. It has been incorporated into TCP. It's a project of 351 kilometers linking as Minas and Sao Paulo. On the 10th of June, we talked about this license. We already had a license to increase solicitation. Now we received a full license contemplating the 551 kilometers of our line. It's the biggest project we have with a CapEx at about BRL 2.1 billion with an associated RAP of BRL 287 million. So with this license, we have already started the implementation of this project. Now I'd like to show our next highlight. Now issued a decision updating the RAP with an adjustment of 4.72% in IPCA contracts, 58.9% of our revenue is in IPCA. It has had an adjustment of 24.1% adjusted at the IGPM level. It has changed the way of presenting the RAP. Now it's presented indexed by the IGPM and gross values. Actually before it was gross values and now it's net values and Cofins. Next slide, you'll see our final highlight its payout. We had decided on that in the first quarter. We are paying interim dividends related to the first quarter. We have paid in June -- in July, we paid BRL 69.2 million equivalent to BRL 0.21 per unit with a payout of 48.9% based on regulatory numbers. Next session in our presentation is the advancement of our implementation projects. The first, if you look at the land area, we had significant advancement in our project in Chile. We completed the acquisition of 100% of the areas necessary to implement the project and also in another project in Peru, we have 60% of the areas negotiated. When we look at licensing, one of the highlights, as I mentioned, is the licensing of TAP. We had in July, and also 2 projects in Peru were licensed. One is [ Maravilla ]. It's should already license, and the other is and it has been issued a license for 2 requests, the [ Centenario and Savaria ]. The last line here, if you look at construction project progress, we have 2 projects with a significant advancement. The first is TCN, our project in Peru. It's the first project of transmission of our company in the country. In the first quarter, we had an advancement of 28% of the works, and now we reached 79% of work. Our expectation is that the start will become operative still this year. Other project that's very relevant is [indiscernible] about the Central Station. It's a project in phases. We are in the second phase of it, and 90% of it is concluded, and each phase, we conclude we get an associated license so that when we finish Phase 2, we have an additional RAP for this project added to the one for the initial phase in the first phase. So we'll have total for this project at BRL 46.6 million. And when we look at the project as a whole, it had advanced 31% in the first quarter, and we closed this quarter with more advancements. Next slide, we are going to talk about regulatory numbers when we look at our revenue, it went from BRL 858 million to BRL 946 million. The growth was in the transmission segment. We had a readjustment of RPs from the previous cycle with 5.32% in IPCA contracts and 7% in IGPM indexed contracts and also some assets. We had to see our first asset in operation in Colombia, October last year, also the start of operation of out in May and July. And also, we had the acquisition of an asset we call TBO. We acquired it and started accounting it in July. This was also not in the second quarter last year, and we have it in our second quarter this year. When we look at EBITDA, it went from BRL 680 million to BRL 724 million, and we show the revenue for transmission grew at 101%. We have resources, administrative and general expenses correlated to the increase in revenue because of the start of operation of new assets. We start having these expenses and revenue in our results. Profit goes from BRL 186 million to EUR 159 million. So we have a growth of 44% in EBITDA. The financial results have grown BRL 32 million. So profit goes down a little. We have an increase in IPCA at 65% of our debt is indexed by IPCA. And as compared to the second quarter last year, it's a lot higher. We had 1.42% this quarter against 0.35% last year. There was also an increase in income tax. By the end of last year, our benefit ended for [ IPC ] and ISN, it ended the fourth quarter last year and also the start of TCE, we have started having higher income tax on our results. Next slide, we show our corporate results. Net income has grown by 55.4% from BRL 1.047 billion to BRL 1.627 billion, growth of in 4%. We can show the first thing is an increase in the revenue. It grew by BRL 40.7 million and also monetary correction of the contractual asset. Last quarter, we had a deflation against the IGPM of 0.59. And this quarter, we had inflation of 4.13. So this increases this revenue. Another increased revenue is infrastructure. it's linked to the cost of infrastructure [ BRL 257.6 billion ] and the other accounts are similar to the regulatory numbers with an exception of an increase of BRL 109.7 million in equity pickup. The only asset we don't add STNE last year July, it had arbitrage results. It increased revenue and increased the deadline for concession of this asset. We had a new asset, no result, and therefore, this amount has much higher profit in this quarter and the equivalents is accounted for here. Profit goes from BRL 145 million to BRL 416 million, and the variation of EBITDA is accounted here in financial results, it's the same. We presented in regulatory. There was an increase in IPCA. So our financial results are higher negatively in BRL 43 million. Income tax has been reduced by 10.4% here. It's the opposite. And in the second quarter, in May, we had a tax benefit for one of our transmitters that [indiscernible]. And so it's a little higher than the regulatory number here. Next slide, we see the debt profile of our holding company. We closed at BRL 920 million with cash and cash equivalents at BRL 1.042 billion, and we have net debt at BRL 223 million. In this period, we have indexed debt at IPCA plus 6.5% and a swap operation converting to 96.6% of the TBI. So it's long term. We have BRL 910 million in the long term and BRL 9.6 million that we're going to pay in the short term. Next slide, we have the debt profile for consolidated debt. We closed the quarter with a debt at BRL 14.871 billion, cash and cash equivalents at BRL 5.371 billion and a net debt at BRL 9.499 billion. We don't have a lot of difference as compared to the first quarter. Most of it is indexed by the IPCA, 20% is indexed by ICB and 14% in cash, the projects outside Brazil. We have approved the distribution of dividends. Interim dividends will pay the same for this quarter as we paid the first quarter, BRL 69.2 million, BRL 0.21 per unit. The payment will be made in up to 60 days from the date of approval of the payment that was yesterday, and it will be paid to shareholders who are on our basis on the 13th of August. Finally, to close our presentation, I'll show the company's performance in the capital markets. We had year-to-date appreciation at 3.1% and average daily volume at BRL 30.8 million. I close my presentation now, and we can have our Q&A session.

[Operator Instructions] Our first question is from Mr. Ricardo Bello from Safra.

First, I'd like to know about perspective for Latin America, if you are participating in any events this year and also about the auction for batteries will have the end of the year. an auction that's going to happen in October for transmission. What are you looking at in terms of competition and opportunities. Our second question is about the expenses of the holding company. It's a little higher this quarter including all the operations you have in Latin America. So I'd like to know if we should expect this to be a new cost level in this line.

Well, about Latin American auctions, we are looking at it. There isn't a lot this year, but we're looking and we are trying to find because we have structured in these places. So these are smaller projects. We need some level of scale to be able to participate, but we are trying to know about batteries auctions. We have some projects registered. I think it's interesting for us to participate, but we have to have great discipline because there's a lot of offer there, and the amounts registered are really high. So it's a little early to tell. Another question is about expenses. I don't know if you're talking about consolidated expenses of the holding company, but we are considering all the holdings outside Brazil as well. So maybe that has impacted the results. But in Brazil, it was the [ PLR ]. It's paid now from last year. So therefore, it impacted a little more. I think that's the item that's most relevant in holding expenses. It happened in the second quarter.

[Operator Instructions] Our next question is from Mr. [indiscernible] an investor.