Promigas S.A. E.S.P. (PROMIGAS) Earnings Call Transcript & Summary

[Technical Difficulty] above what we had anticipated and in transported volume, we were below what we have budgeted because the thermal plant didn't dispatch as we expected earlier year in the year. So as you can see in the bottom, the regasification volume is above what we had anticipated, 52 days of regasification. Well, in the budget, we had 18. So we are over-executing at this. [Foreign Language] when it comes to connections, we have the figure of almost 600,000 connections. So we have an impact between 22 million and 24 million people per day between Colombia and Peru. We are doing very well when it comes to gas, as to gas sales, we are above the budget 6,051 million cubic meters as to energy sales. We are a bit below, the energy demand has been below the budget. We are very happy with the change of deployment we are having in our projects of low emissions, 24% in the budget. It was 54 megawatts of solar [indiscernible] and we hope to end the year with 80. Let's move on. How are we preparing ourselves for El Niño phenomenon. Regarding this in the transportation infrastructure of Promigas, remember that this is strengthened by the regasification process of a stake at Mamonal in Cartagena and also the early commissioning of 5 directionality, where we connected the Caribbean coast with interior between both of them that by directionality and the stake infrastructure we consider that we are giving more reliability to the electricity and gas systems of Colombia, which is above the SPEC system. Well, as to SPEC, on one hand, we have received 5 methane tankers with 160,000 cubic meters. And during the second semester, we are going to be prepared and we are seeing this regarding regasification. On the other hand, as to the thermal volumes reached in June 2023, we are 43% above the budget, even that we are in 168.7 MPCD. So water is being deposited or it's been reserved and the same thing with the thermal plant. We've been thinking that this will start before the year, but we are seeing this already in the month of June. So we are prepared. We are trusted that we can withstand El Niño Phenomenon through our regasification infrastructure and through the bidirectionality system. It is working in an important in that. I want to devote part of this call to emphasize the actions put in place by the group in order to increase its competitiveness. On the first part, we've mentioned the way which we are applying a constraint policy of cost and control in order to maintain our competitiveness and profitability, but we are also putting in place actions in other fronts, in which fronts specifically, we want to increase the productivity of the businesses. Moving on to world-class practices, in the operational part as I previously mentioned, that's going to increase the productivity of the businesses. And we also want to prepare the others for other pressures and cost. So we are applying this [ great ] policy. That's the first front. There is a second front that is to promote corporate competitiveness and shared services. And there, we are promoting different assets regarding the businesses, we are going to see other examples, how to implement the shared services unit to another phase where we can manage purchases or procurements to other categories in a more effective manner, so we can capture more savings. And then a third front, where the objective depends on capturing synergies, cross-cutting synergies among all the transportation, distribution business units as well as the solution of Energy Solutions. Just so everything will work out with more synergy. Let's move on to the next slide. As I previously mentioned, we have 3 challenges. How can we grow in our core business and in Energy Solutions? We are trying to apply some of the initiatives that were previously mentioned. A second group that has to do with increasing the competitiveness in times of uncertainty. This has to do with the efficiency projects that we have been implementing and a third group that has to do with the business sustainability in the long term. And there, we are working on this. We have developed 54 initiatives that can be summarized in these 3 areas in order to materialize and expense and cost control. The capture of efficiency and more synergies at the corporate level, which are going to enable us not only to grow in our future with a regulated business, but other business areas to maintain the commercial competitiveness of our business and to give long-term sustainability to our businesses. Let's take a look at some examples of what we are doing, especially to increase competitiveness. In that front, at the commercial level, what have we achieved? In June, for the Department of Antioquia, in Transmetano, we came up with a new commercial policy. We are already seeing that we sold -- where we have created a portfolio to come up with a balance when it comes to security, reliability and equity to our clients, and we have obtained a positive response. So we are preparing for a more competitive system when it comes to transportation. The same thing is something that we're going to do in the second quarter for the area or the zone of Santander and the Southwestern part of Colombia. Producers trust our services every day in June, the broadening of the Bonga & Mamey compression capacity was broadened with Hocol. So we're going to reach 6,120 horsepowers when it comes to compression capacity in the processing business, the customers are increasingly calling us. They believe in our services, and we are contributing with a more integral solution. We are going with all our equipment capturing synergies to see their savings in their operations, and that's why they are increasingly calling us. I have talked about the early bidirectionality, Barranquilla Ballena in June, we entered into the first transportation contract of early bidirectionality. It's for the Atlantic and the interior part of the country with Termobarranquilla for 20 MPCD just to serve the thermal demand of the interior. And this is the result of this early bidirectionality project. Here, we are also working with CREG, so at the transportation level, they can recognize the investments that we need to do in compression in order to increase the directional capacity to 117 million cubic per day. So right now, we have 50 million or 50 in CFD. And another very good news, something we really feel proud of, after lots of negotiations that through SPEC our regasification plan to enter into a [indiscernible] for our TUA contracts that storage and regasification for 400 MMCFD. This contributes to corporate growth and guarantee annual revenues of more than $100 million, envisioning decarbonization projects that we have at the terminal mainly for the control of gas. So that's very good news for 5 years. We are going to guarantee $103 million via SPEC. So we are very happy about this, which other examples when it comes to our work to increase the competitiveness of our business, which is the result of those policies I've mentioned. We are committed with benefited more households with natural gas services, gas distributors requested resources to the national system in order to connect around 25,000 customers, I mean low-income families, and we are working to obtain those resources that's going to imply more consumption. And the idea is to benefit around 79,000 people. And this is a very important agreement. With the Governor's office of Sucre and Surtigas is working in order to take gas to 15 villages that are being served with virtual gas pipelines or they are outside the network. We are talking of small villages that are far from Surtigas distribution systems. And thanks to this agreement with the Governor's office, we're going to be able to improve and increase the access to the last mile of connection. And something else that is very important is that of Punche Perú we are going to benefit around 35,000 households in Punche Perú. So we are talking a $47 million that we received from the Peruvian government in order to connect these households and remote areas of Peru. Those works being carried out. And why are they given to Promigas Peru to those companies that we have here? Because of the quick deployment and operational capacity that we have demonstrated. The Peruvian government is looking -- in order to continue executing these funds with the companies that we have in Peru for that great capacity. So in order to continue benefiting beneficiaries, so we are doing this as part of our business plan and in an additional what we are doing now. Let's speak about Brilla, which is our nonbanking business. Here, we have launched a new credit offers in order to deepen this also with advanced analytics. So we are working with advanced analytic artificial intelligence regarding the payment capacity of our customers in order to increase what they have and also to have a more focused service, at June 2023, 700,000 clients are qualified for this. And the risk of the harvest that come from these models have decreased in 54%. This is through advanced analytics at Brilla. Now let's move on to sustainable mobility. How are we doing in the conversion of the trucks through the Gastrack fund. So we hope to close this in order to start the implementation in Colombia. This should take us that 12,500 cargo vehicles will go to the vehicle natural gas in 10 years at the national level, regardless of the size of those vehicles, they represent the consumption between 300 and 2,000 houses of income brackets one and two, each one of these vehicles that is converted. So this is a way to promote the consumption of natural gas. It is also important to mention the inauguration in Peru to broaden that green corridor in the northern part of Peru. In last June, we inaugurated Liquefied Natural Gas station, Alto Moche, together with service station at Chiclayo and Lima. This supplements the green corridor and will enable to massify the use of liquefied natural gas in the mobility sector and then will contribute to the decarbonization of Peru transportation. There, we had -- we counted on the Peruvian government, the Ministry of Mines and Energy, the Director of the Hydrocarbon agency and the idea is to broaden the operations in that front. Now I would like to mention what we have attained when it comes to new energies and low-emission businesses. We continue increasing the contracted capacity. We are in 80% of the goal that we had set for the year, 69.2 megawatts already signed, 42 megawatts of operational maintenance, 29.2 gigawatts of energy sales and all this that we are achieving enables to reduce through our photopic system of 7,500 tons of equivalent CO2 tons in the year. We are very happy about this because we want to close the year with 87 megawatts. We are doing great [indiscernible] were executed at June 30, 2023. So it's above what we had budgeted. So this is going very well, and we are very happy with the execution that we are moving forward, and it's throughout Colombia. As you can see on the map, it's not only on the Caribbean coast, but it's been deployed throughout the country. This shows the geographic footprint and the operational capacity of Promigas. As to the efficiency program, we are being doing very well in -- when it comes to savings capture, we had anticipated for this year to capture COP 20 billion in the efficiency program. At June 30, it's COP 11 billion. In this program, we are very happy with the results. And in the long term, by 2028, we have the objective of capturing COP 378 billion in net present value. And this is in savings of that strategic supply purchases by category. And other things that we're going to put in place and this represents $160 billion, operational excellence, $145 billion -- digital transformation, $41 billion and administrative efficiency is $18 billion. So you are already seeing the results. We've seen the controlling costs and expenses. This has enabled us to comply with these goals and the idea is to continue with this until we attain the compliance of [ COP 378 ] at the bulk present value. As to those efficiencies, as I mentioned upfront, we have some generators, practices, operational excellence, the savings, just the way in which we check our gas pipelines and how we value their -- we evaluate, value their integrity we are avoiding duplicities. We are going over this in a different way without risking the integrity. Here, the idea is based on the use of technology and optimization at the analytic level in order to define the frequencies which will need to execute those integrity evaluations. And we hope to capture COP 7 billion of what we have for this year. So by August, 95%, 62% by July, and this is part of what we are executing in this network as to administrative efficiency, a lower energy consumption, strategic supply and efficiencies in fees, we are reducing consultancy costs, and we have reached COP 3 billion and mainly the way we are negotiating our insurance policies but we have very important savings. For example, COP 1 billion. This is how we are going to reach that figure this year. And this represents the COP 11 billion at June 30, above the budget. So we are 95% on track of all the initiatives we're working on. We have accomplished 95%, and the benefits are 10% above the budget. The idea is to accelerate this focusing on higher impact initiatives. Also, the implementation of agile methodologies, synergy groups among all the business area, as we have appointed an internal task force for the follow-up. Why did I want to emphasize this program? Because we do consider that we need to prepare the organization for a setting that is more competitive, a more complex regulatory environment and the way of maintaining competitiveness and to continue growing our business. And this can be done through a lighter structure and through a cost and expenses control policy, which is more effective. And this guarantee our sustainability in the long term. And here, I would like to focus on our social footprint. Can we consider our social footprint, how can the Promigas social footprint be defined? We are having an impact not only on our natural gas and electricity users by offering a safe, reliable and accessible service. But also we are having an impact on them by making -- participate in inclusive businesses. At present, we have a portfolio of more than 700,000 credits granted to these customers, 5 million customers, by means of which they can have access to goods and services. Many times because that these customers are not banked, so we are banking them in a certain way. And this when it comes to social impact, which is great and very significant. Now also a social impact through strategic social investment that we carry out with the foundation, Fundación Promigas. We hope that this year, we are going to be able to allocate resources of COP 40 billion or more through the Promigas foundation. Last year, through strategic social investment, we were able to allocate COP 35 billion through the foundation. And this year, we want to reach COP 40 billion, and this way, we are based on the good results of the foundation, leveraging important third-party resources. So that's something we're working on. So we can join external and internal resources. And the fourth way which we have social impact is through our human talent and our suppliers' chain. As we have been putting in place very active policies not only to increase diversity and inclusion within the Promigas human talent but also to support our providers, [Foreign Language] how are we envisioning the impact with all the groups of interest that we work with? Now let's take a look at the figures in detail. We bring well-being and quality of life to 788,000 people. If we take into account the users that we have connected during the second quarter to 120,000 users that indicates that we are transforming the life of around 800,000 people because -- whether they access natural gas service or they access electricity, people that in the past, they did not have access, whether, because they're not using far wood anymore, we are serving 1,024 areas of Colombia and Peru. 213,000 users were connected to natural gas and 5,000 to electricity in the department of Cauca. If we take into account the social income practice, we see that most of those users in Colombia and in Peru, belong to income bracket 1, 2 and 3. If we take the case of Colombia, 25,000 households that we connect belong to income bracket 1, the lowest -- the poorest families. And in Peru, 33,000, if you multiply that by the average size of a household of 3 or 4 people. So more than 50,000 connections that we attained in income bracket 1 transformed the lives of 250,000 people. So the impact is quite significant. And in that sense, we feel very happy with the social performance of the organization. If we take a look at the side of Brilla, since the program started more than 15 years ago, we have given a 5.3 million credits, almost 800,000 active credits with Brilla. And this year, in the second quarter -- in the first and second quarter, we have placed 240,000 equivalent credits for the amount of COP 600 billion. What's the interesting thing about it -- defaults, it is below that of the financial sector and that's amazing. We have a default portfolio below that of the financial sector, that's something we feel very proud of. And it's a product that is highly valued by people. We also would like to highlight that 95% of the credits are taken by families of income brackets 1, 2 and 3. Those that are usually unbanked or they are not part of the banking system. And we have also designed educational credit policy. It's with at a preferential rate, 25%. So we hope to get positive results regarding this educational credit policy, which is very competitive regarding what you can find in the market. So hopefully, it's going to have a wide acceptance by users. Something else that is very important is that 67% of the credits have been given to women of those 240,000 credits. We have that 67% of them were granted to women -- I mean, we have also launched the Brilla app, it is being used by over 28,000 users. We are very pleased with that. I mean, digital transformation is working well, and it's being used for purchases or for different solutions they can access through this. This is a business that is growing significantly, it accounts for 20% of the EBITDA of distributors. That's something we also feel very proud of. As to strategic social investment, another element that helps maintain sustainability in the long term. As I previously said, we are expecting not to place this year around COP 40 billion this year. We have invested up to 58% during the second quarter of the budget execution, COP 22 billion invested through Fundación Promigas. Through the foundation, COP 9.2 billion of the third parties, 96% of the 2023 goal. We have attained this by the second quarter of this year. That's something we feel happy about. And the foundation, given its capacity and investment has earned the respect of third parties, and they're giving us money to execute their projects. As to suppliers and employees, we have 2,167 direct employees. We have the 47% of women under the age of 30. And we have that 61% men in Peru, we have 2,167 different employees. And through our suppliers, we contract around 7,000 contractors that benefit from Promigas contract. And before going into details regarding financial results, I would like to mention, it's a part of sustainability. And how are we doing regarding decarbonization, implementing all the group's decarbonization policies. And we are moving forward in a positive manner, during the first quarter we were able to avoid 1,451 tons of CO2, during the second quarter, 3,904 tons of CO2. This year, we want to reach 10,000. So we are moving on, we have to do a lot in the second part of the year -- the second half of the year in order to comply with our objective. 54% of decarbonization initiatives are in place 12 out of the 22 initiatives of the program, but we're going to continue paying attention to this area during the second quarter. Now I would like to give the floor to Aquiles, who will speak about the detail of financial results.

Thank you very much, Juan Manuel. As to the financial statements, it is worth mentioning our budget discipline, which started in August, September using zero-based methodology for the preparation of these budgets. And this way, we eliminate certain things on the previous period that could destroy the results of that this year. So we believe that the estimate that reflects the activities of the year that is going to start as justifying expense in added value, eliminating some aspects that could have had at the previous year that should not be repeated. And based on that, we are going to come up with a procedure, and we have exceeded the expectations that we had this year regarding the budget. As to revenues, we are above the budget and 4% with respect to last year. We are complying in 93%, as was mentioned by Juan Manuel, based on the estimates of specialized sources regarding the stat probabilities of the thermal plants, which are the ones that use our transportation capacity. We hold -- we thought that the phenomena El Niño was going to start earlier and with a higher intensity that will have given us revenues because of the dispatch of these plans. Regarding the variation of 2022, we can explain that last year, we had a WACC -- a higher WACC that decreased in September of [indiscernible]. As a result of regulatory standard, this was offset by a low [indiscernible] gas distributors as well as in SPEC and the increase in availability and greater regasification throughout the year. As to expenses, we are very careful when it comes to that, and we have a strict control of it. Where we see the revenues are not responding as expected. So we have an execution of 88% regarding what we expected an increase compared to last year. I mean, it's a base 0 budget. So we go over each expense, the value it adds. We have new business units as [Foreign Language] that didn't exist last year that includes a new VP, and also income and a high penetration, mainly when it comes to solar energy, there is an increase vis-a-vis last year. Remember that inflation was of [ 13.12% ]. And that's our wage increase started, an increase in our -- improving our insurance program as the contraction of new consultancies, mainly in commercial and new business area, offset these 2 effects, partially by a low construction cost when it comes to concessions. The EBITDA, one of the most important measures of our performance is increasing 9%, compared to last year, and we are executing 10% above our budget, mainly because of the control of expenses that we have mentioned without ignoring the quality and the security of our service and also the capture of efficiencies compared to what was expected, also the indemnities of insurance to necessitate the same thing and then this corresponds to the successful closure of a claim that we had -- that was being negotiated given the emergency we had in 2021 in Gibraltar Chitangá station. Growth in the EBITDA is because of the increase of 13% in operational revenues in spite of a reduction of 52% in concession revenues, mainly Gases del Norte del Perú, Gases del Pacífico. Remember -- related to low investment levels regarding the previous year. This is an accounting standard. We have complied with investment plans and also the commissioning of the projects or affiliates in Peru even before was expected. And we have also mentioned that we received an indemnity because of the previous mentioned emergency versus what was received last year. Here, we have 2 damages that had to do with the emergency 1 because of business opportunity. So what we had this year is high level, we had last year that because we have [indiscernible] accounting effect of income because of contract, the EBITDA will grow 21%. This is important to know because that represents cash, but it is a record of our financial statement. If we go to the final line, the net profit in the second quarter '22 versus '23, net profit increases 24%. And it is executed at 124%. We have an over execution of this profit as a result of a responsible control, responsible austerity when it comes to expenses on gases and the result of our affiliates in the participation method regarding 2022 replaces the expenses and financial costs. Regarding the business tab with the CPI and the rates and also the precautions that we had as of November last year, when we took it in order to guarantee all the obligations of the cash flow for CapEx and to comply with the banking obligations of 2023, 2024. We took COP 1.8 trillion by the end of 2022 as part of our corporate finance strategy that has given us very good results regarding the availability of liquidity and rates that we have been renegotiated throughout the year because these were credits that were taken without a sanction for prepaid. If we go to the accrued financial expenses, the budget is executing 96%, Promigas as an important incident in the consolidated because of what we mentioned, the El Niño Phenomenon didn't show up when expected and it hasn't had the intensity based on what we were expecting. With that regarding the variation of 2022, in March 2022, it is important to mention that we received an indemnity by Reficar, they terminated -- an early termination of a gas contract, but it was replaced with another flexibility that benefited Reficar, Promigas and with an additional term and the contract now expires in 2035. So that's a win-win negotiation. As we already mentioned, Also, the new tariff methodology affects us. It reduced work -- work-based and the parameters used for the calculation of almost 500 real points before taxes. And this was offset by the general performance which is higher in our participation method in Promigas affiliates. In -- I mean, each one of our management areas income per contracts and concessions showed the less revenues, less CapEx because Gases del Norte del Perú, they're building networks for the connection of users. This obviously represents less investment. And also we have to take into account all the value, but the criticality of this -- and this is something that we achieved before expected given the concession granted by the Peruvian government, Promigas has reduced investment in 2022. For example, we remodeled the gas pipeline in the Bananera zone [indiscernible], we had to change part of this pipeline that is located in the regional [Foreign Language]. As to cost expenses, we have executed 96% of the budget. We have deployed a strict control when we see the compliance of the income in order to offset the expenses and this -- with respect to the zero-based budget to justify each expense with [indiscernible] in Promigas, we have had savings in consultancy, less fuel consumption, given the operational conditions of the transportation system. We have had less maintenance expenses for optimation in time -- always looking after the regulation quality standard and companies such as Gases de Occidente. SPEC, the less representative rate of the market has favoring expenses related to leasing for the reclassification and storage. And that -- and also pending consultancies to be executed. We have to wait until they are needed, as they cannot value Promigas Peru, Gases de Occidente and Surtigas, more controls in staff in Promigas and its affiliates. We always insist on that, looking after the execution of expenses with respect to the previous year, increase is explained because the annual wage adjustment in all the affiliates. Remember, the [ 13.2 - 12 ] amount that we mentioned before, this was given to the employees of the company's. And this is offset by what we mentioned about construction. Regarding the consolidated EBITDA, it was mentioned by Juan Manuel, 6.5% of execution. There's an over execution of 6% mainly because of the responsible execution of cost and expenses, capturing efficiencies regarding what was expected. And also the indemnity of the insurance that we mentioned. With respect to the previous year, we also had an increase of expenses because inflation compared to revenues, mainly Promigas and the transportation companies because of the new WACC, W-A-C-C, that we have mentioned. As to the last line, we approved financial statement, we are 13% above the consolidated figure. As a consequence of cost and expense control less cost in transportation with respect to 2022, this item accumulates the impact of lower EBITDA and lower financial costs led by the CPI-denominated rates and also the IBR. And this is part of a preventive measure on corporate financing. Moving on to individual financial statements of Promigas, not consolidated anymore. The explanation justifies part of what we have been saying, 96% of revenue compliance because of the delay in El Niño phenomenon and it's lower intensity in 2022, the change of WACC to [ 10.94 ] and the reduction of income because of [indiscernible] 15, which is the accounting standard. Cost and expenses control over then, executing 99% of the budget during the second quarter. And once we see the full semester, you see this. If we go to the last line, the individual slide, we see that the participation in a strict control and execution in cost and expenses lead to an execution in the second semester of 24% above reaching a figure of COP 257 billion versus COP 270 billion that we were expecting in the budgetary activity. As to the accrued figure, 2023 -- the whole semester, this justifies what has happened, and we can say that revenues have been executed in 64% cost and expenses in 97% and because of this, the EBITDA is being executed in 111%, that is reaching COP 697 billion versus COP 629 billion, which was the expected. The same thing, net profit, 13% more than what we expected in our plans and programs reaching COP 503 billion versus COP 445 billion, that is what we expected in the budget. This is what I wanted to say regarding the financial statement.

Thank you, Aquiles. Juliana, now let's open the Q&A session.

Okay, it's noon time, but we are here to answer any questions that you might have. The first question is from [indiscernible] from MetLife, can you say something about the additional income because of the new approved WACC?

Florencia, thank you very much. As you know, we went from a WACC of 10.96% to 11.88%. We have been applying this WACC as of August 1. And it is going to imply additional revenues of COP 4.5 billion per month. So from year-to-year end, we are going to have accrued income because of this new WACC of around COP 22.5 additional billion based on what was budgeted.

We have another question from Florencia of MetLife, could you update us on your rehiring strategy and the consolidated...

Yes, Florencia. Thank you very much. As you know, we have been implementing a commercial policy by means of which through different structures, we want to contribute with more flexibility and to share benefits with our customers. This has given positive results, because by the end of the year, we expect to increase the term of all the contracts that we have to 6.5 years. A lot to have, such a small term, so 6.5 years is something that gives us peace of mind. And before year-end, we hope to renew 6.5% of all the capacity that expires in November 2023. In other words, 96%, that's 100 million cubic feet per day. So we are going to have 4% that remains there, that is a temporary contract to sort out an internal failure. So we are going to renew 96%, and we're going to increase the term of these contracts to 6.5 years.

The next question is from [indiscernible]. And I would like to ask Ricardo Fernández, our Transportation VP to answer. Have you considered requesting the application of [indiscernible] to Promigas as of when are you estimating to receive the new tariffs, any retroactive impact? This is the effective process regarding the nontariff methodology 375. We have presented our request, we have given our tariff figure as of January 2020, it is estimated that CREG will approve what we call the second stage which includes the rest of the variables. Remember that the first stage was applied, which is passing this from dollars to pesos and a WACC reduction.

This is the effective process regarding the nontariff methodology 375. We have presented our request, we have given our tariff figure as of January 2020, it is estimated that CREG will approve what we call the second stage which includes the rest of the variables. Remember that the first stage was applied, which is passing this from dollars to pesos and a WACC reduction. And now we have the second stage, which is the rest of variables investment on volumes, et cetera. And we hope that, that will take place by the end of 2023.

The next question is [indiscernible]. Can you give us more details about the project with MG Energy for the construction of 20 million or 20 MMCFD gas pipeline, what is the stage or the condition of those conversations?

Thank you very much for the question. We need to be very careful about this because these agreements are under strict confidentiality measures. So the only thing I can say is that we're moving on, but we cannot provide you with any more details. There is another question regarding if we are interested or not in participating in the pipeline that is going to bring gas from offshore -- the Ecopetrol project. We have data, we are interested, but we cannot give more details because of the confidentiality agreement.

We have a question from Daniel [indiscernible] is independent, which are your shared services?

Thank you, Daniel. We have different processes under our scope at the financial level, we have accounting taxes at the level of financial services, accounts payable and the payment of themselves, faster data. We have suppliers, customers, financiers. As to supply, we have everything that has to do with the purchase of goods and services, suppliers, management. And as to technology, we have applicative support project management. That is what's covered for all the affiliates when it comes to shared services.

We have a question by Ricardo Rios, independent analyst. Are you considering acquisitions or only organic growth?

Thank you very much for that question. We have been said many times that there is a need to grow in organically, in other geographies. We were very active in a process with a distributing company in Brazil, in Espirito Santo, in the month of March, you were aware that we participated in that bidding process up to 15, the round, well, we didn't win it, But we are active looking for opportunities in the Brazilian market. We have not stake still. We cannot tell you which rounds we are participating in. We are looking for infrastructure and distribution projects and also opportunities in the U.S. market. And we are doing this in a very active manner. This is what we say. We have a project pipeline. As you are aware of that pipeline goes through different filters. And to the extent that opportunities show up. We do whatever is necessary, and you'll find out about it, but that's part for inorganic growth plan.

We can entertain one last question. What has not been answered now will be answered by email. It is by Ricardo Rios, independent analyst, which is the impact of the recently imposed sanctions to some other companies.

Wilson? Are you referring to the superintendency sanctions? Wilson?

[indiscernible] Yes. Well, good afternoon I will start answering that the public service to bring tendency more than 1 year ago, open some investigations against all the public service companies of the country, water supply, gas and electricity companies for eventual default or noncompliance of the regulation issued by CREG, when the pandemic started, CREG said that we had to defer the payments that should be made by users given the economic conditions that they were facing. So that needed adjustment in the invoicing software, and these adjustments will not be made overnight. Even with distribution companies, we were the first ones to have those adjustments set forth by CREG that took a month, most of the country's companies took 2 or 2.5 months. And because of that condition, the superintendency imposed assumption and for having invoiced with averages and not with real [indiscernible]. We have talked with the superintendency about this with the different trade union. This is an unfair sanction. But they proceed with the sanction. Now withstanding these all the companies are going to present the lawsuit before the administrative contentious court. However, that's not that relevant to us. It's something that is general in the country.

Thank you, Wilson. As we mentioned, and my apologies that there is not that much time for too many, however, we want to emphasize the different actions that we have been implementing within the group in order to be more competitive in an environment with high levels of uncertainty with regulatory restrictions. And we have been very successful up to now. by controlling costs and expenses in the organization. Thanks to these policies, controlling our cost and expenses. During the first and second quarter, we have been able to have an EBITDA that is much higher in spite of a reduction in income. And as a result of this, our profit exceeds in a relevant way, what was anticipating in our budget. We are very happy with that. And we believe that through all these actions, we are going to increase the competitiveness of our core business in order to have more efficiencies, and we are with a more prepared organization for coming periods. Thank you very much for your attention. And thank you very much for your relevant and timely questions. I will see you in 3 months. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]