Engie Brasil Energia S.A. ($EGIE3)

[Interpreted] Adriana Wagner, Investor Relations Analyst of Engie Brasil Energia, and I would like to make a few announcements before we start the video conference. [Operator Instructions] It is worth reminding you that this video conference is being recorded. It is available at our website, www.engie.com.br/investors. The results presentations and the earnings release in addition to a complete financial statements and other documents. The detailed analysis are available, ESG indicators and progress in the 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 forecast 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 e-mail, sending them to the company's press office. To present ENGIE Energia Brasil performance in the first quarter of 2026, we have here with us Mr. Eduardo Sattamini, CEO, Pierre Le Blanc, 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. Sattamini to begin his presentation.

[Interpreted] 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 2 turbines in the 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 2 turbines in Jaguara. We also had Aneel's bid, a successful bid. We secured lot 2 and sub lot 3. These are 2 projects with guaranteed revenue, we will have annual contracted RAP in the order of BRL 122.8 million. They are 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 operations. Now moving on to the Board of Directors where we approved the adherence to the mechanism for renegotiation of the liability recorded as public assets use and this will lead to very good results for the company. We also had Fitch Ratings reaffirm the -- and these are all very positive results. Also, we had the approval of distribution dividends in the order of BRL 557.8 million for the fiscal year of '25. Another important celebration for us is that we remain in Dow Jones for the 21st consecutive year, we're very proud of this. We have a problem with Satta'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 EBITDA. That has an impact on our new plants Assuruá and Jari 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 profit will overcome our expectations. The main drivers of our results are the generation segment with the acquisition of new plants, BRL 265 million. 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 doing constructions. 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 results. And as a result, we have income taxes that increased BRL 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 hour works. In the first quarter of '25, we had a lot of people working. And then when you have 2 events on the results, the impact was very little. The denominator is lower and therefore, there is some relevance. We had 2 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, the principles, 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 details.

[Interpreted] Thank you very much, Satta. Good morning, everyone. So quickly going through our assets. 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 Assuruá 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 teams 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 this sector. Some of our assets have greater capacity. This is a constant work by our whole engineering team. So that our assets will have better performance. We had a problem in [indiscernible], 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. Sattamini 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. Curtailment 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, Assuruá and Assú Sol, which increased 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 in Serra do Assuruá and Assú Sol along with improved performance demonstrated in the previous slide. Also regarding the hydropower plant. So we have a slight change compared to last year. This is because of the problems in the South and the reservoirs. But it wasn't relevant, and it was not impactful in terms of our operational results. I would now like to invite Keller to talk a little bit about our business strategy.

[Interpreted] 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. We have 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 has demonstrated to be adequate for 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% of increase with almost 5,000 additional consumer units. This is what I wanted to share, and I turn over back to you.

[Interpreted] Well, thank you very much, Keller. 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 [ Serra do Assuruá ] 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 our energy more valuable in that market. That has an impact on sales volume and CCEE's results. Other aspects were not as relevant. Transmission had a flick 12 results in the beginning of last year. Asa 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 BRL 133 million in the Northeast [indiscernible] we are reviewing it so conservatively. The 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. EBITDA, we can see an accounting EBITDA with an increase of 10%. Also, the adjusted EBITDA and the regulatory EBITDA 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 BRL 300 million. We have 4 important additional assets. And from a regulatory point of view, we had an additional BRL 32 million in EBITDA because of these new assets, especially Asa Branca and BRL 30 million less TAG comparing quarter-over-quarter. And in net income, the EBITDA had an important contribution. We also had a decrease because of the new assets. In the financial results, our leverage is a bit higher than it was last year. We have BRL 5 billion 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 balanced debt. It is as expected. We had a decrease comparing 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 BRL 5 billion. It was BRL 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 BRL 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 '24 and '25, it was very robust because of the M&A and the large products, which were being developed. From now on, we will focus on the 3 large transmitters which will still demand some CapEx, especially in Asa Branca. 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, BRL 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 demonstrated on the slide. And in last important financial highlights that Satta has already mentioned. We have the UBP renegotiation, we have 30 days to sign a 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 a new agreement, we have a little bit less than BRL 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 Asa Branca and Graúna, the 2 large implementation projects. We had good news from them this quarter. Asa Branca had a license to install BC&D segment, and we now have a normal implementation flow. And 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 Aneel's 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 3, which are located in Ceará and Rio Grande do Norte as Satta mentioned, the RAP is of almost BRL 3 billion, it was a significant victory in the second bid. Now to detail this, we will -- I will turn over to Guilherme.

[Interpreted] We had a successful expansion of Jaguara. It was an opportunity that our team has been developing in the last 2 years, the development team, the implementation team, it is an asset which is well aligned with our strategy. It's important to have flexible plants. 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 Jirau, a quick update. I would like to mention 2 important facts about Jirau. 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 2028, it will be fixed. In the last weeks, we received information about the extension of Jirau 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.

[Interpreted] [Operator Instructions] We have a question from Safra's analyst. First, could you update us on the process for the acquisition of Jirau. Number two, we've seen a mismatch of prices in sub markets with higher frequency. How is the company dealing with this phenomenon taking into account the location of your assets?

[Interpreted] I can answer this. Well, I will talk about Jirau initially. As I mentioned, we are discussing the alternatives. And in due time, it will be shared with the Board of IBs and we will communicate it to the market. And therefore, we're still analyzing Jirau'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 been intensified, and they are correct. But how do we deal with them? Definitely, this has an impact -- future decisions of the pipelines -- the company's pipeline. 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 Sattamini 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.

[Interpreted] 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 will have this question. And therefore, I would like to turn over to the speakers. Well, we have another question. 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 [ CVAR ]. The question is from [ Maria Carolina Carneiro ]

[Interpreted] 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 Brasil. The impact in terms of physical operation of the system depends highly on what we call the south, the El Nino [indiscernible] 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. So the fine adjustment 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 [ CVAR ], this is a relevant regulatory discussion. You can see there are 2 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 decreased risk aversion, we will have secondary effects on what we have to pay and that will have an impact on the consumer. And therefore, the CVAR as it is, should be the option that we use. This is our chosen option, our preferred option. I turn over back to you.

[Interpreted] We now have a next question from [ Rafa Oliviera, and Mateos Oliviera ]. 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.

[Interpreted] I think I can answer this. Two or 3 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 reevaluate things as new facts arise. But for now, it is as it is. I will complement as the leverage goes down, we tend to increase payout. This is only normal. And what makes 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, 55% is higher than the usual payout in utility companies in the electric sector. And that happens at the same time we're growing. This is very positive for our investors. We will keep this, we will identify -- continue identifying opportunities and then we will pay more dividends as the market allows. And as the market has better results 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.

[Interpreted] Perfect. 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 bid for this year and whether you would be interested in participating.

[Interpreted] 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 5 auctions this year with volumes between 2 and 5 gigas. 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.

[Interpreted] Our next question is from [ Antonio Luiz Rizu ] buyside analyst of [indiscernible] He asks about Jirau. Will the company's debt increase.

[Interpreted] I can answer this one. This is what the committee is discussing. How we can bring this asset into Brasil 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.

[Interpreted] Perfect. Thank you, Sattamini. We now end our Q&A session, and I would like to turn over back to Sattamini and other participants for their final consideration.

[Interpreted] 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 increase. We deal with them on a base by basis, 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. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]