Neoenergia S.A. (NEOE3) Earnings Call Transcript & Summary

Good morning and welcome to the conference call regarding Neoenergia's Second Quarter 2021 Results. This presentation will be led by Mr. Mario Ruiz-Tagle, CEO of the company; and Mr. Leonardo Gadelha, CFO of the company. This conference call is being broadcast simultaneously over the Internet via webcast and can be accessed at ri.neoenergia com, where the respective presentation is also available. [Operator Instructions] This conference call is being held in Portuguese and simultaneously translated into English. [Operator Instructions] In addition, this event is being recorded, and its replay will be possibly available on Neoenergia's Investor Relations website. It should be noted that this presentation may contain forward-looking statements that represent Neoenergia's expectations and projections about future events and assumptions. These expectations involve assumptions and uncertainties and therefore maybe results are consequently different from those discussed and anticipated here. They involve risks, uncertainties, assumptions because they're related to forward-looking events and are -- will be related to circumstances that might or not occur. Investors should understand that overall economic scenario, the industry scenario and other operating factors might affect future results of the company and might produce results that materially differ from those expressed in such future-looking projections. Mr. Mario Ruiz-Tagle, you have the floor now, sir.

Good morning to all. Thank you very much, operator. I would like to thank all of you who have joined us today in this earnings call. We're going to present the second quarter results and also the first half 2021 results. Solange Ribeiro, the joint (sic) [ Deputy ] CEO is together with us; and our CFO, Leonardo Gadelha; Leonardo (sic) [ Eduardo ] Capelastegui, the Planning Director; Fulvio Machado also; and Mr. Renato Rocha, our Investor Relations Director at Neoenergia. I will be brief. I'll talk about the main highlights of the period, and Leonardo will then present the results for each of our business segments. And we will later have the Q&A session and final remarks. I would like to point out that Neoenergia once again has presented a robust result, reaffirming our growth and business execution strategy, the resilience of the market and our concession areas and the successful operating management of the company, which has produced excellent performance and an accelerated execution pace in the transmission -- wind transmission projects as well as the expansion of our distribution segment. I should also mention that we are very happy to have for the first time a full quarter with the first results of Neoenergia Distribuição Brasília. We have been already obtaining results from this unit with good, positive forward perspective. We're going to look at the results of the second quarter year-to-date. In relation to distributed energy, our 5 distributors have presented a 12.2% growth in the second quarter this year over the same quarter 2020, indicating that despite the fact that COVID is not fully under control, the energy market in our concession areas has proven to continue growing. This market performance has a positive outlook for the second half of the year, where more people will be vaccinated and the economy will be more robust and recovering. Moreover, we are now also getting into a higher climate season. We've had a 108% growth in relation to our shareholders over 2020, which indicates the market growth, the control of expenses and fewer losses as well as the excellent results and readjustments and tariff reviews of Coelba, Cosern and Celpe last April. And at some point, these were considered a potential regulatory risk, but the positive results in Renewables segment and Liberalized segment as well as the expansion projects in transmission mainly and also the readjustment under the terms in the concession agreements have allowed for this higher volume of EBITDA in this quarter. Net income in the second quarter, just as the first quarter, was above BRL 1 billion, 137% higher than the second quarter in 2020, a result that indicates a solid growth of the company. Within 6 months, we have surpassed the net income of 2018 full year and almost that of 2019. Historically, the second quarter has one of the lowest performances in the energy sector because of the low temperatures, also considering our outstanding execution capacity and our growth projects, expansion projects in transmission and wind farms and solar parks and as well as investment in distributors. Our CapEx was BRL 1.7 billion in the second quarter 2021, 24% above the executed in the second quarter 2020, and BRL 3.5 billion in the first semester in 2021, 51% above the same period in 2020. I should point out the efforts during a pandemic, where we had to rise up to challenges in logistics and operations, mobility restrictions and special working conditions to prevent the spread of the virus, COVID-19. With this in mind, our CapEx execution plan is strictly in line with what we had planned despite of the aforementioned. The second semester of 2021 was completed with 3x net debt-to-EBITDA ratio. Leverage is under control, and we are considering the funding for Neoenergia Distribuição Brasília acquisition. And we continue, of course, working in many different initiatives, the Sustainability Committee. And so corporate responsibility has been set up, reaffirming our commitment to sustainable growth and to controlling and fighting climate change. We are focusing on our diversity policy. We have created new groups of electrician training workshops for women only, preserving also the Brazilian heritage project. And this semester, this half, we have also created a specific section that is dedicated to highlight the key initiatives of ESG at Neoenergia, indicating that environment and social responsibility and governance are part of our DNA. The sixth point indicate the excellent and sustainable results we have attained this quarter and that we will continue to have in 2021. And now on Slide 5, we will see the evolution of our transmission project. But first, I would like once again to point out that all of our projects are within budget and also within the deadlines in terms of the business, therefore showing the profitability -- the 2-digit profitability that we had forecasted. So by April -- or December 2017, we have been making headway to complete all that we had planned to be delivered by 2021. We have surpassed expectations in terms of CapEx savings and deadlines in our business plans, which will bring BRL 300 million in annualized RAP to the Neoenergia Group, with the 2 lots in -- of 2017 that are being delivered. As you all know, we have -- some of the lots of the 2017 auction have been delivered with excellent operating results. No risks to the operation. We also announced to the market the delivery of the first line of the Santa Luzia segment, and we are going to distribute the Chafariz energy and the solar park, Luzia, as well, indicating the synergy and the strategic positioning Neoenergia has in the region. In the December 2018 lots and December 2019 and 2020 lots, we are also progressing in terms of licensing, construction, also in line with our business plan, ensuring 2-digit returns, as predicted. It's important to mention that with the expenses that have been predicted for 2021, EBITDA in the transmission business or in (sic) [ under ] IFRS 15 next year will go down by 50%, becoming effective cash. On Slide #6 on renewable projects, in the Chafariz wind farm in Paraíba, we have accelerated growth in line with our business plan with 25 generators in testing phase, which corresponds to 86.25% megawatts (sic) [ 86.25 megawatts ] capacity. Operations -- commercial operations at the first 2 wind farms will probably begin over the next weeks. And the total complex will have commercial operations started throughout the second half of 2021, which has -- actually is going to happen ahead of the contractual term. In line with the Oitis wind farm, which is also in an advanced construction phase with 27 of the 103 foundations completed, we'll begin operations in the first half 2022. With 566.25 megawatts installed capacity, we have 96% of the energy dedicated to commercialized -- to trading in ACM (sic) [ ACL ]. I should point out that with the operations at the Oitis and Chafariz wind farms, the group will own half of the wind power designated to the free market sold at prices that assure the 2-digit profitability of the project, indicating -- once again reaffirming our commitment to the ESG agenda by investing in renewable energy. Our solar parks in Santa Luzia will begin to operate in the second half 2022, and construction works began in May, 3 months ahead of time. And as shown, the deliverables in 2021 are very exciting and in line with what was planned since 2019 with results that surpassed the expectations. I should once again point out that you may rely on our execution capacity under such conditions as the pandemic in -- that started in 2019. And therefore, we have ensured -- through close partnership with our suppliers, we have been able to deliver within the terms, the contractual terms. I would now like to share with you what we had in the first 120 days of our turnaround process in the Neoenergia distribution Disco. We have -- we would like to show you how in the first 120 days we used our levers to do our turnaround in Neoenergia distribution and losses. Of the 80,000 clandestine connections, we have regulated 11,000 of those connections. We've also had 15,000 inspections and 40 (sic) [ 40,000 ] updates regulations in the Federal District park, which translates into adding 78 gigawatts-hour, corresponding to BRL 45 million in additional revenue -- annualized revenue, 3x higher than the recovered energy by the company in 2020. Therefore, the total losses have -- rate has reacted. This semester, we closed at 13.6% (sic) [ 13.86% ], below 7% points than those 14.13% last year. In terms of delinquency, we've also had excellent returns, beginning with cutting connections in those illegal consumers, something that we could not do before because of a public civil action, but we turned that around through an injunction to resume cuts. And we have had 22,000 deals, obtaining BRL 52 million (sic) [ BRL 53 million ], plus 157,000 (sic) [ 657,000 ] collection actions by other means and collection campaigns promoting new forms of payment to our clients, bringing, through these measures, BRL 85 million to the company. With the collection rate, we reached 92% in April, 100% in May, 94% in June. In OpEx, we should also point out that we are readapting our management system. At this time, we've reduced 25% our total headcount. We have a new voluntary disconnection (sic) [ dismissal ] program, and we seek to add value through the training of our electricians who will become more efficient and effective. And through our corporate guidelines, they will be integrated to the business continuously and be part of our result culture to attain as fast as possible the planned OpEx this quarter. If we just consider the current expenses, BRL 94 million, in this voluntary dismissal program, we have a 26% reduction compared to the [ PNCO ] in the second half 2020. And DEC and FEC, we also have good news with the different -- some changes in management. We have attained records in quality, and we have also prevented 400,000 clients to have had cuts in their supply through the preventive maintenance project. Today, we confirm that if we continue on this track, we will attain the regulatory levels of DEC/FEC original levels in the first half 2022, ahead of the operating plan. In terms of the acquisition, we have signaled we would have investments in concession. We have had 120 days 2.8x more CapEx than the same period in 2020. In purchase, the procurement area, Neoenergia has attained important savings and has ensured supply and delivery of the main equipment since we have incorporated Neoenergia Distribuição Brasília in our umbrella agreement. And this has allowed us to make more with less, to make it faster and better. We are also preparing our asset base, looking at the periodical tariff review in October. And we should also mention that in the period, we have reached BRL 210 million in investments this quarter. Finally, I would also mention that in the financial area, we have concluded our liability management, and we have now more debts that are more aligned to the Neoenergia's costs. And we will go back to the fiscal levels we've had with positive income. We are happy to mention that roughly 80% of our integration plan activities have been carried out successfully, and the key takeaway is that Neoenergia Distribuição Brasília will continue growing and has produced the expected results so far. I will now turn it over to our CFO, Leonardo Gadelha, who will share more information on our second quarter 2021 results and year-to-date for the first half 2021.

Thank you, Mario. Good morning to all. I will now give you an overview of our results in the second quarter 2021. As Mario mentioned, it was a strong and consistent quarter. So on Slide 9, we have the evolution of the consolidated gross margin, 58% in the half -- first half also through the strong recovery of our distributors, defense in Parcel B with readjustments and tariff reviews and the Liberalized results that were better. In terms of losses, on the right-hand side, we see that disregarding the consolidation of Neoenergia Brasília, our expense levels were 11% above the second quarter 2020. We should note that in this quarter in 2020, we had an expressive reduction in activities because of the pandemic, the COVID-19 outbreak and cuts. In the first quarter, if we disregard the positive impact 2 arbitrations with the Holding in the first quarter 2020 and the consolidation of Neoenergia Distribuição Brasília, we had a 5% variation. And therefore, we have been successful in cost management despite inflation, customer base growth, headcount growth, despite the programs that are in place and growth in other business units. On Slide 10, we can see the consolidated EBITDA, 108% growth in the third -- second quarter with BRL 2.3 billion in the first half 2021. On the right-hand side, if we disregard the effect of the DNR (sic) [ VNR ] and IFRS 15, as we normally do, these are noncash in the EBITDA, we had a 63% variation in the quarter, and it was, therefore, a strong quarter. And Networks was responsible for 87% of the EBITDA, Renewables, 8%, Liberalized 5%. And net income in this quarter amounted to BRL 1 billion, in line with the first quarter this year and the 137% growth in relation to the second quarter in 2020. On Slide 11, we have CapEx. And in this quarter, we had BRL 1.7 billion. I should also point out this amount, BRL 875 million (sic) [ BRL 885 million ], in distribution, BRL 510 million in transmission, indicating that projects and construction works have made progress. And in wind farm projects, also very soon to be completed in the Chafariz project and the construction works in Oitis that are underway. So in this quarter, CapEx -- realized CapEx was very similar to that of the first quarter 2021, which is in line with our CapEx plan for 2021. We expect for this CapEx to grow in the second half through the transmission works and wind farms in the conclusion of Chafariz and construction works in Oitis going forward. On Slide 13, we are going to talk about our Networks and operating data. We see the variation of the energy that was supplied and injected in the 5 distributors. As announced to the market a few days ago in consolidated, there was an increase in demand by 11%, which includes Neoenergia Distribuição Brasília for comparison purposes. It's pro forma. So excellent performance in all distributors, all Discos. Elektro had the highest growth, but there is a recovery of the economic activity that is indicated by the results of all of them, which started in the fourth quarter in 2020. And we have the distributed -- the supplied energy in our 5 distributors with growth above the injected energy in this quarter, with a 12.2% increase in aggregated, also considering Neoenergia Distribuição Brasília pro forma in the second quarter 2020. And disregarding this adjustment, the increase would have been 25%, which is reflected in the results that we are looking at today for the quarter-over-quarter results. The total number of consumers reached 15.6 million, 1.4 million growth, 340,000 actually considering the Neoenergia Brasília pro forma. This quarter alone, comparing the first quarter to the second quarter, we have 198 new consumer units, an expressive number. On Slide 15, we have the loss evolution in this quarter. Once again, we had excellent performance with loss reduction in all distributors except for Cosern with a slight increase but still within the regulatory limits, just as Elektro is also within the regulatory limits. It is important to mention that we attained results despite the restrictions posed by COVID-19 and the measures to fight losses such as replacement of meters, regulation of illegal consumers, public lighting and the police law enforcement actions. On Slide 16, we will look at the PCLD (sic) [ PECLD ]. We had excellent performance in the second quarter in regards to delinquency. The PECLD remained below the pre-COVID levels, which were around BRL 100 million for the 4 distributors, the 4 distribution companies, in the second quarter. Disregarding Neoenergia Brasília, PECLD was BRL 92 million, therefore a consistent trend, which highlights the actions -- the successful actions that were taken, especially in the third quarter -- second quarter 2020. And this was seen in the 4 distribution companies. And on the right side, we have highlighted some of those actions. Now speaking about Neoenergia Brasília particularly, as we can see at the bottom of the slide, we had the effects of the actions Mario has mentioned. We also had a reversion in the PECLD amounting to BRL 62 million. That's the result of the same methodology that was applied for PECLD in our distributors, meaning we have identified that the provision criteria used in -- previously was excessively -- was too conservative since they could not make cuts, and it was also impacting accounts receivable that were to be due. And looking at the different customer segments, we had this reversion. Of course, it is a specific effect, but noncash is an important reflex at this point in time of this turnaround action in Neoenergia Brasília. On Slide 17, we can see the quality indicators for DEC and FEC and with a consistent improvement in both indicators in our distribution companies even amidst the pandemic, with slight variations, but they're still within the limits, except for Neoenergia Brasília, but now already moving towards a positive trend. In terms of Networks, network results on Slide 18, we have this growth from 65% in gross margin in the second quarter driven by the market and recovery and the readjustments in Parcel B and the customer base growth as well as the IFRS 15 effects and driven by the construction works progress. In consolidated network OpEx on this slide, we had growth this quarter, 11%, considering the consolidation of Neoenergia Brasília in relation to the second quarter 2020, with very low activity levels resulting from the cut prohibition and from the pandemic restriction. So we had the normalization of activities this quarter starting this year, 2021, and we have also had an increase in customer base and growth in transmission -- the transmission business, as we -- as shown in the OpEx. And now talking about EBITDA in Networks on Slide 19, we've had 123% growth in the second quarter, and this considering the VNR, IFRS 15 effects. Looking at cash, this response to 75% growth compared to second quarter 2020, the strong performance in Networks, looking at EBITDA/cash ratio. And at the bottom, we have broken down distribution and transmission. Transmission grew 74% and distribution and 126% with the IFRS 15 effect, with the construction works making progress. And also, profit in Networks grew 176% this quarter, reaching BRL 1.72 billion (sic) [ BRL 1.1 billion ] this quarter. And now on Slide 21, we have a summary of the results for the Renewables and Liberalized segments. In the second quarter, the EBITDA for Renewables had a 20% (sic) [ 12% ] decline, reaching BRL 140 million, and that resulted from the seasonality of agreements in the hydroelectric plants with a 22% (sic [ 23% ] decline in the quarter, as shown below on the left side. In wind energy, EBITDA went up 8% through the readjustment of agreements in inflation index. And in the annual accrued, EBITDA grew also as a result of the higher winds in the first quarter and seasonality of contracts in hydroelectric plants and renewal of agreements in BRL 130 million in the first quarter this year. Profits reached BRL 40 million in Renewables this quarter. In Liberalized segment on the right side of the slide, we have had an EBITDA of BRL 124 million this -- in 2Q, a 77% growth compared to the previous quarter; also with Termopernambuco, considering the number of days in operation, reaching an EBITDA of BRL 135 million in Termopernambuco alone this quarter. A very strong quarter, therefore, for the Liberalized segment driven by the thermoelectric plant and the BRL 87 million in net income, 102% growth quarter-over-quarter. And in -- closing my part on Slide 23, we have our capital structure, how it has evolved this quarter. By the end of the second quarter, our net debt reached BRL 25.6 billion driven by the realization of CapEx in the quarter and the increased costs with the acquisition of Neoenergia in the CVA. Despite the fact we had a strong operating results we have disclosed, the net debt-EBITDA ratio decreased to 3.03 by the end of the quarter. It is an expressive decline compared to the first quarter. And in the first -- as the first half of 2021, we expect to have more leverage, as expected, and also in line with our CapEx plan, which will accelerate now in the second half of 2021. And the leverage will once again go up in the third and fourth quarters but still below what we had forecasted. The debt structure, well, gives us a comfortable position because 87% is long term, and it is actually broken down over the next years -- 4 to 6 years, extension in this half. We have had very important operation. We have reached in this first half BRL 8 billion in funding. And so far, we had disbursed BRL 8 billion in different funding strategies, different sources, commercial banks, market debentures, investment banks, indicating that, yes, we're making progress and improving. At this moment, we're working on the takeout to acquire Neoenergia Brasília, which we'll be doing 2022. So we are comfortable. We'll continue striving for the optimal conditions in the market for the debt takeout and ensure, of course, the CapEx by the end of this year and throughout 2022. So we are assured that we are prepared to conclude 2021 as a very important year for Neoenergia. We have the CapEx for execution, and we're delivering our -- these relevant projects by the end of the year. Well, with all that has been said, these were my closing remarks. I will turn it back to the operator so we can have our Q&A.

[Operator Instructions] Our first question is from Mrs. Carolina Carneiro from Crédit Suisse.

I have 2 questions, please. One, on the Brasília unit, you've mentioned during the call that you have a new program for voluntary disconnection (sic) [ dismissal ], and I would like for you to share a little bit more on this voluntary resignation program and how it will be after the turnaround for this specific unit. And the second question has to do with the expectations of the tariff review process for the units you have also mentioned. If you could please share more and give us an overview of your forecasts.

Thank you for your question. As mentioned, yes, in fact, we are now incorporating to our expense and OpEx management culture in the Brasília unit. We are making headway, and things are going well. Therefore, we are comfortable to say that the original target we had set is around BRL 120 million in regulatory OpEx in -- over the next years in terms of income or profit. In terms of the voluntary resignation plan, yes, we are also looking at the new service structure and the assets that we are acquiring and investing in. And salaries, the salary structure is also going to take us to this direction. In regards to your second question on the tariff review and -- in Neoenergia Distribuição Brasília in October, since Solange Ribeiro, our associate -- our Deputy CEO, is here with us, I'll turn it over to her to tell you more on that.

Good morning to all. Yes, the tariff review process and public consultation... [Audio Gap]

There is no sound. Sorry, no sound is coming in. Mrs. Solange Ribeiro cannot be heard. Ladies and gentlemen, please hold a moment.

Hello? Hello? Can you all hear me? Operator?

Yes, we can, sir (sic) [ ma'am ]. Oh, hold on a moment, please. Ladies and gentlemen, please hold on the line.

Okay. We're back after technical issues. Carolina, in regards to your question on Distribuição Brasília and the tariff review, we expect to continue using the same methodologies we have been using now with all the experience we have had in such processes. We have a smaller volume of investments in the period compared to our company. And public hearing will be on August 3. We are beginning, well, conversations with ANEEL. I do not foresee any additional hurdles, and we are on track with our discussions with the regulator. Thank you.

[Operator Instructions] Our next question is from Lily Yang from HSBC.

I have 2 questions. One is about risks in terms of rationing for 2022 depending on rainfall levels. Would you say there might be a voluntary program for light supply cuts, power supply cuts? And could you give us an idea of the memorandum of understanding about the green hydrogen project in Termopernambuco? And a third question, if I may, would be on the prospectives of brownfield acquisitions in the next 18 months. Which segments might be of interest, if there's interest in acquisitions?

Thank you, Lilyanna, for your questions. Well, in relation to the risk of rationing power, rationing or supply rationing, the government have created a committee to optimize hydro energetic usage and using water to -- water reservations to ensure the water supply for hydroelectric generation. Our expectations, of course we're keeping up with the climate reports that are being produced and disclosed. And during the rain seasons in 2021 and 2021 -- 2 next seasons, we are planning to, of course, look at the average rainfall, and reports are coming out this week. And as a result, considering the information that will be disclosed, we will look at the management capacity and the sector to adopt the measures that seek to look at the demand and supply to reach the -- a balance and to try to prevent the rationing. It is important to take preventive action to, of course, maintain the recovery of the economy, which will be instrumental after the pandemic process, and the vaccination rates have been leading to strong economic recovery. It is -- it would be a second pandemic, so to speak, to face a crisis in the electric sector. We are more prepared, of course, to rise up to challenges of this nature. We have a more sturdy electric or power matrix -- power grid in 2021, and we expect to -- well, as regards the hydroelectric plants, all of our plants have a [ GCS ] insurance, and therefore, we do not foresee major impacts in hydropower plants. As for the agreements with the Pernambuco government on the Suape Port to have a pilot project for green hydrogen, this is also part of the global policy of Iberdrola Group, which we're part of. It's a small pilot with, of course, low investments. Initially, it would supply the hydrogen needs for the Termopernambuco plant only, and we would use our strategic position in the Suape Port to meet the hydrogen needs of other plants -- manufacturing plants that operate in the region. And as the project evolves and if it grows and obtains more relevant investments, we will disclose information to the market. For now -- we will make announcements to the market. For now, it will supply Termopernambuco needs only. Yes, it is part -- we have in our growth plans other agreements with other companies that use hydrogen. We're looking at opportunities to use our renewable potential to develop technologies for green hydrogen. As for your last question in relation to acquisition forecasts, we have clearly defined for 2021 as the year of deliverables execution. We're going to attain our targets for results that are planned for the year. We will continue, of course, considering alternatives in terms of ownership structure. We've had the bid of [ CA ], [ LCTC ] in 2021, the transmission -- of [ CTC ] transmission now and other assets, and we are -- have decided not to participate since there was not enough synergy or creation of value above 2 digits for our investors. However, we will continue to grow our pipeline in Renewables, in solar parks, wind farms, and we have also the offshore projects we are working on for mid- to long-term plans. And these are our avenues for growth. It's important to point out growth in the Networks. In transmission, where we continue looking at alternatives, we were not involved in the July auction because we didn't see value added there, but we are looking at activities for December and also 2021 and 2022. There are lines that will ensure supply -- energy supply in our concession areas where we could also consider this participation. Finally, I would like to mention we have a robust investment plan in distribution. The regulator, well, continuously requires investments to be made, at times in expansion, at times in quality. The regulator is now focusing on supply quality, improving the GEC for areas that require massive investments. And we are going to, of course, monitor the investment plan. This might open a new avenue for growth. I would point out expansion in customer base over 1 year. Year-to-date, we've had 3 -- 110,000 new consumers, disregarding 40,000 -- 38,000 consumers from Brasília, so -- over 2020 because at the time, Brasília -- Neoenergia Distribuição Brasília was not in our scope -- in Neoenergia's scope yet. So yes, there's -- prospects are good for growth. We're growing the -- there is an important recovery in the economy, and it has been surprising. And Neoenergia, of course, will be present to also supply more energy throughout this phase.

We will now close the Q&A session. I would like to turn the floor to Mr. Mario Ruiz-Tagle for his final or closing remarks. You have the floor, sir.

Thank you very much, operator. We apologize for the technical glitch. We had -- but fortunately, we were able to continue. Of course, technology will not get in the way of our excellent results at Neoenergia. My final remarks, I would like to reassure our commitment to all the stakeholders of Neoenergia. As mentioned before, 2021 is the year of execution of deliveries, of results. And by the end of 2021, I firmly believe Neoenergia will be bigger, will have grown. The first half of the year is pointing to that direction. Historically, our markets have had excellent performance in the second half and the robust recovery of the economy and the power, of course, industry in our concession areas. And by abiding to the agreements with ANEEL and the tariff reviews, we have, of course, completed and will continue to follow this year with Neoenergia distribution -- Distribuição also. Well, disregard any regulatory risks that might have been considered for 2021. Once again, I would like to highlight that we have been fully compliant with the regulator requirements and with the investments we have been making that are so important for Brazil. We have repeatedly said that Neoenergia has been capturing efficiencies and controlling costs as part of its DNA, and this is a key value to us. Once again, we have proven to control our expenses and create value for our shareholders, and we have done so despite the inflation pressure we've been under this year. And we have actually controlled expenses because of the anticipation of acquisitions last year, as a measure to support our partners to overcome the financial crisis resulting from COVID. We're making headway day after day in our business units, expansions with distribution, transmission, wind farms. We continue and reaffirm that we will deliver ahead of the contractual terms. And we will continue to grow our pipeline, as mentioned in Renewables, transmission, also looking at new opportunities in acquisitions that might bring us 2-digit profit to our shareholders. The turnaround of Neoenergia Distribuição Brasília is here to stay, as shown by the figures. No doubt we will create value in the Federal District to our shareholders, to our workers and our clients. To our shareholders who trust in the work we do, I would like to once again point out that we have the right team in place, fully committed and engaged to deliver the expected results. We are the best company in the industry, the best industry in the economy to contribute to sustainable growth in Brazil. I would like to conclude that -- by saying once again we're very optimistic as we have been throughout the late -- these times. The pandemic is still around. And once again, I would like to thank all of our workers, suppliers, partners, regulatory -- regulators. Despite of the challenges, they have fulfilled their roles, surpassing challenges, making sure energy reaches the homes of our users whenever they need it and providing them quality of life. We firmly believe the vaccination process will continue, and we will soon have the recovery of the economy and economic activities. And we will be actively involved in the process, providing the best possible energy. Please take care. Thank you very much. I wish you all an excellent day.

Thank you, sir. Neoenergia earnings call is adjourned. Thank you all for participating, and we wish you an excellent day. Thank you for using Chorus Call. [Statements in English on this transcript were spoken by an interpreter present on the live call.]