Alupar Investimento SA

BOVESPA:ALUP4

Earnings Call Transcript 2023-Q1

[Operator]

Ladies and gentlemen, you're welcome to Alupar's teleconference to discuss the financial results of the first quarter of 2023. The audio and slides of this conference are being simultaneously transmitted over the Internet on the company's IR website, ri.alupar.com.br. The presentation is also available for download.

[Operator Instructions] Before proceeding, let me mention that forward statements are based on the beliefs and assumptions of the company's management and on information currently available to it that they involve risks and uncertainties because they relate to future events and therefore, depend on circumstances that may or may not [ occur ].

Investors and analysts should understand the conditions related to macroeconomic conditions and other factors also could cause results to differ materially from those expressed in such forward-looking statements.

In the teleconference, we have José Luiz de Godoy, our CFO; our IR, Luiz Coimbra. Please Mr. José Luiz, you may proceed.

[José de Godoy Pereira, executive]

Well, good afternoon, everyone. Thank you for being here at our meeting for the presentation of the results of the first quarter of 2023. I'm going to open the session by discussing the most relevant topics we've had throughout this period. And then after that, I turn over to Luiz Coimbra, our IR Superintendent, who will make comments, and then we'll open for the Q&A.

We can clarify any aspect you wish about the company or the market. So I'm going to start with the most relevant factors.

We've had in the first quarter -- starting on Page 3. The first one was the signature of the TNE shareholder agreement. It is a company with a specific purpose responsible for the transmission line, which will connect to Boa Vista, and it is being signed by Alupar and Eletronorte. This agreement determines how the management of the company is going to be during this period.

[Audio Gap] And in Bahia, this is a partnership between Alupar and . And this was the last project we had together with Perfin, and we still had the option to buy. As you know, we had an option to buy 30% of the shares of the Perfin shares. And this was done -- now in the past month, we purchased 14% of the social capital. The project is [ 466 ] kilometers long and an RAP of BRL 66 million per year.

And the third subsequent event was the extraction license for the out project with Rangoni and other substations on the coast of [ Sao Paulo ] state. We also have Manoel da Nóbrega and an addition segment with Rangoni and another segment.

And then, with what we obtained recently, was the license for the Manoel da Nóbrega segment. And so after that, we will only have to issue the license for the transmission line of the Domênico Rangoni, which is in the northern shore of the state. It is -- it has an RAP of BRL 67.8 million per year and an estimated reinforcement of additional BRL 13.2 million.

And then the fourth relevant event in the period was the dividend payment. They were approved and actually, they haven't been paid for yet, but they were approved on April 17 during our assembly. And payment should be made on May 16, 2023.

I would also like to highlight that this dividend was equivalent to 1.44 set BRLs per unit. And then I will show you what we've paid in the last 4 years, and this was the largest amount -- the largest payout of dividend made by the company throughout this period, BRL 1.44 per unit.

And then finally, the fifth relevant event in the same meeting on April 17, we paid our shareholders in the order of 4 shares for every 100 shares owned. And therefore, we issued 35.2 million shares, which will be distributed among the shareholders, who were at the [ shareholder ] basis on April 17, 2023. Every shareholder, then, will receive 4 shares for each 100 shares day on.

I now turn over to Luiz Coimbra. He's going to talk about our numbers. And then at the end, we'll open for Q&A.

[Luiz Coimbra, executive]

Thank you very much. Well, good afternoon, everyone, and I thank you for the participation in our teleconference for the first quarter of 2023. I'm going to start the presentation on Slide #9, and then I will move on with the regulatory numbers.

So I start on Slide 9, talking about net revenues. It was BRL 1.004 billion. We had a reduction when compared to the first quarter of last year, resulting from the monetary adjustment because of the macroeconomic factors. In this first quarter, we had 0.4% when compared to the first quarter last year, and [ IPCA ] was compared to 3.20 in the same quarter last year.

Also, when we evaluate our EBITDA, it totaled BRL 811.6 million when compared to BRL 1.131 billion last year. This reduction in revenue, I've just explained. And then we had BRL [ 18 ] million in other expenses.

In the first quarter of last year, we had an extraordinary revenue of BRL [ 16.9 ] million because we see the reimbursement by the project insurance company. And when we evaluate profits, it totaled BRL 270 million. We had an impact of our [ EBITDA ] and an increase in BRL 69 million the financial results. And now we're going to show you our regulatory results.

Our net revenue was BRL 795 million, a growth of 11.5% when compared to the same quarter last year. This results from the [ ECTE ] transmission line in February last year and also readjustments of [ 11.63% ] for contracts that were indexed based on IPCA and also the contracts that were indexed according to the GPM.

And when we analyze our EBITDA, it totaled BRL 674 million this quarter. We had a growth of 8.1% when compared to the first quarter of '22. The main impacts here were the increase of BRL 88.3 million in the revenue that I just explained.

And we also had an increase of BRL 17.7 million in other with the same impact we had with profits, and this was included in other revenues. We had a revenue of BRL 16 million that were received because of reimbursement made by the insurance company.

And then when we analyze the net profit, it totaled BRL 144 million this quarter. We had an increase of BRL 59.3 million in the financial result. And there was an impact of our expenses due to two reasons. First, we had an increase in CDI, which was 12.3% accrued in the first quarter this year when compared to the 39% in the amount accrued for the first quarter of '22.

And we also suffered the impact of our exchange rate. In the first quarter last year, we had a valuation of nuevo sol, which is Peru's ccurrency, in case of the dollar, of 0.2%. With a positive impact, this account of BRL 59.4 million. And then this quarter, the nuevo sol had a much lower currency exchange rates.

And then moving on to the next slide, we can see the indebtedness. The controller included a gross debt of BRL 68 million. The cash was BRL 1.11 billion with a negative debt of BRL 308 million. Also, we have a 7th issuance of debentures, and it will be due in '24 and '25.

In the next slide, we can see our consolidated debt. The growth of debt was BRL 11.7 billion. We closed with a total debt of BRL 8.705 billion. And then in terms of our consolidated debt, most of our debt, 48% is indexed to the IPCA, followed by CDI with 33%. And for the Colombia and Peru projects, they closed this quarter with 6% of our total debt.

And then in the next slide, we can see our dividend policy, which was approved in '22. And the Board of the company recommended BRL 33.6 million for dividends corresponding to BRL 0.12 per unit. Payments will be made to shareholders within 60 days of approval date and will receive these dividends, those who have been enrolled on May 15.

And then in the next slide, we can see the company performance in the capital market. Alupar shares have an increase, as you can see here on the graph. IBOV had a depreciation of 0.8%. And I also like to highlight the financial volume. We had an average accrued of BRL 28.8 million negotiated per day when compared to BRL 25.6 million negotiated daily in the same period of '22, representing a growth of 12.4%.

With this, I end my presentation, and we can start our Q&A session.

[Operator]

[ Operator Instructions] our first question comes from Rafael Nagano, Credit Suisse.

[Rafael Nagano, analyst]

Good afternoon, everyone. We have -- I have two questions. One is regarding [ ATME ]. And I apologize if you have already commented about this, but I had problems connecting today. I want to know about the reductions of [ ATME ] so that we can have more investments.

And the second question was regarding Lot C in the second auction. I would like to know if you had any progress with that.

[Unknown Executive]

Well, regarding TME, the agreement was signed. This reduction happened naturally. We still do not know what our final position is going to be. It depends on the total capital amount, and we'll have to see whether we will have to leverage within [ ATME ].

But the main issue is that [ Audio Gap ] but we have a discussion to define the final amounts, and it needs to be carried out throughout this year, and we have a lower leverage if -- and therefore, we intend.

Among other things, but more specifically about what you're talking in terms of classification reduction, we wanted to pay this off so that we do not have any amount that would affect our ability to move on with our projects. There are other aspects as well. We have eventual agreements with Eletrobras in the future.

There are different issues that have been discussed, and they are part of the shareholder agreement, also, the company's management, how it is done, both during the construction period and then later during the operation period.

You also asked about Lot 6, right? Well, this is in the [ PCU ]. They are discussing it, and we'll make a decision. But we still don't know exactly when this is going to be determined. I don't know whether we're going to have any changes or not or whether it's going to be reviewed and whether we would capture the resource or not in this case.

[Operator]

Our next question is from Andre Sampaio, Santander.

[Andre Sampaio, analyst]

I'm going to make a quick question regarding dividends so that I can better understand what your expectation is after the auction or after the next auctions this year. If they are not successful, do you have a clear planning regarding extraordinary payments based on this new policy?

[Unknown Executive]

Well, this year, we've already closed our budget for the year. and we will announce what we're going to distribute. We have met the -- what was determined by our dividend policies. We pay every half of the year, and this has been already established.

And therefore, this year, with or without an auction, even if we win something in the auction -- and that's hard to know because it will depend on how aggressive the bids are.

But If you win any project this year, you have at least a couple of years to obtain the licenses, if everything goes well according to the current schedules for installation. And then within this period, payments are smaller. They start having after the installation license.

[Operator]

Our next question will be via web. Peterson Silva from Alfa Company. Regarding the next transmission auction, will Alupar participate along or in a consortium?

[Unknown Executive]

We are negotiating alternatives. We don't know yet. And projects vary, and we have a lot of possibilities. We can participate alone or in a consortium. We still haven't defined that, but everything is being analyzed here internally. Thank you very much.

[Operator]

[Operator Instructions ] Our next question is via web, [ Joanne ] Santos. Gentlemen, I am an investor an entrepreneur. As an entrepreneur, I live off dividends I receive from different companies. I do not have a salary. So having said that, will Alupar be able to grow and distribute dividends at the same time from now on? In 2016, the company chose to grow and did not pay for dividends.

[Unknown Executive]

Well, it's not that we left dividends aside, we paid less as dividends, and that's usually when we implemented something new and we had a difference between our balance. And that's why we created this dividend payment policy. And so this policy anticipates that we will pay 50% of the regulatory profits, and we will keep 50% so that we can invest in new projects.

And with that, we will continue managing it like that, analyzing opportunities and the payment of dividends, which is also relevant for our shareholders. Thank you.

[Operator]

[Operator Instructions] Our next question is via web. I have two questions. Is the company comfortable with the commitment made in face of the debt in '24 and '25? Question number two, what does the company think about the percentage for the next exercise? .

[Unknown Executive]

Excuse me. My microphone was muted. Regarding the level of debt, yes, we are comfortable. I think we have an adequate debt level, but that is not an absolute issue. It depends on whether the interest rates are lower. It increases our ability to leverage if the interest rates are higher, you should have a little bit less debt.

But we have about a 3 to 3.5x our [ EBITDA ], and we have been keeping a AAA rating, and therefore, we're very comfortable.

Regarding the payment of dividends, we will comply with our policy. This is why we wanted to disseminate this dividend payment policy so that it's clear to our shareholders what our policy is, is this is something that the market was demanding from us so that shareholders could plan and better understand. So we will comply with our policy.

In a scenario where we will keep an opportunity to invest, we can even increase the amounts determined by our policy.

[Operator]

Our next question by Roberto .

[Unknown Analyst]

Will we have enough capital, labor and [ FX ] to face projects in June and the next ones?

[Unknown Executive]

Well, I think it is going to be a significant challenge. In terms of capital, we have less capital available. Also, we have a series of limitations. They are not only restricted to Brazil. We have a very complex global scenario with an increase of inflation and interest rates in the U.S.

And I would say that obtaining capital is going to be a larger challenge than it has been in the last auctions and cycles of the project. In terms of labor and our employees, I think that this is an even greater challenge than obtaining capital.

Most of our employees have had difficulties in this last cycle, especially because of the COVID. COVID had a direct impact. They started having a series of restrictions, they couldn't work, they had to demobilize, fire employees because they couldn't work.

And therefore, many companies and many construction companies were -- and some of them have not survived. And those who have survived, have a very delicate financial condition, and they've been carrying this liability since COVID.

[Operator]

The Q&A session is now over. We would like to turn over to Mr. Luiz for the company's final considerations.

[Luiz Coimbra, executive]

Well, we tried to answer your questions, but we wanted to make ourselves available to answer [ eventual ] questions, please feel free to talk to our IR team via e-mail or by phone. We are available to answer [ eventual ] questions.

Thank you very much for participating in our presentation, and I will see you next time. Have you all a great afternoon.

[Operator]

Alupar's teleconference is now over. We thank you all for your participation, and wish you a good afternoon.