Alupar Investimento SA

BOVESPA:ALUP4

Earnings Call Transcript 2024-Q1

[Operator]

Good afternoon, ladies and gentlemen, welcome to the teleconference of Alupar for the discussion of results related to the first quarter of 2024. The slides in the recording are being streamed in English. [Operator Instructions]

And we have uncertainties that cannot meet the expectations, will be different from what people desire. And the company doesn't need to update that.

So we have here José Luiz de Godoy, the CFO of Alupar; and Mr. Luiz Coimbra, the Investment Superintendent of Alupar.

Now I'll give the floor to Mr. Luiz Coimbra. So please, you can continue.

[Luiz Coimbra, executive]

Good afternoon, everyone. Thank you for the participation here on this call for the first quarter of 2024. I will start with the highlights for this first quarter, the status of projects, the first -- the financial results for the first quarter, profit allocation and for the last one, the capital markets.

I will start with Slide 3. We have the first event we had on 19 -- on April 19, we had our EGM. And then we had the value of BRL 347.4 million, which is BRL 1.14 per unit and out of this value BRL 36.6 million, which is BRL 0.12 unit has been already paid for the back on the third quarters of 2023. And the next event, which is BRL 78 per unit will be paid until July. And the shareholders are the ones who are registered in the base of the company on the EGM, which was held on April 19. And continuing with the results, which was approved on the April 19, stock bonus, which is BRL 362.8 million and the value was of BRL 90.92 per share or BRL 29.76 per unit and the bonus was 40% and the shareholders on this EGM received this amount on April 24.

And going to the 5th slide, we have some actions, which was the Block 15 of a new auction, which was on March 28. We had a line of 509 kilometers in Minas Gerais state. And then we have a CapEx of BRL 1.3 billion, which will give a return to the company of BRL 64 million. And then it was -- the ratio was 11.7%. And this new asset is for 2029.

And now we have the status of a project, which are all the projects here for last year that haven't been started yet. We will start them this year or next year. We have 3 projects that are a little bit more ahead. The first is in Colombia, so 96% of physical advance. Then we have the license of some towers.

And the second one is LEE that you know very well. We started this in the end of the last year. It's on the schedule. We have 28% of physical advance, which is the NE. We are working inside the indigenous and outside indigenous reserve. And the other one is the ELA, which we have 48% of this. And then going to the next one. We have the station Manoel da Nóbrega with like BRL 13.3 million is reinforced for this. And then the number is 48% of this revenue.

And now going to the 8th slide. We go to the financial highlights. Our net revenue for this quarter is BRL 996.5 million. We had the 2 main impacts here on this revenue for transmission. The first was the increase of 26% of the structure because of the implementation of ELTE, which we had more investment in this period. And then the second was the reduction of 32%, basically because of the money -- of the currency correction. And then comparing to the first part of 2023, the GPM was the total of 0.29% in the view of the 0.60 and the PCA was 1.83% compared to the 2% that we had last year.

And when we look at the EBITDA, it was aligned to the first numbers of 2023, which was around BRL 900 million. I will highlight 2 accounts here. This reduction that we had here on the net revenue, we had also an increase for the asset, which was around BRL 50 million because of the T&E, which was impacted on this number of [ 301 ] because of the scenario that we have today. When we look at the net revenue, it was BRL 254 million. There was an increase of 10.5% compared to the quarter of 2023.

Going to the next one, we have the regular thorough results, which was BRL 795 million. For the transmission, the revenue had an increase of BRL 2.0 million. We had the homologation in July of 2023. And the PCA was positive. But on the other hand, we had the other -- the GPM, a decrease for them and we had a reduction of BRL 5.2 million because of the reduction of the other revenues.

In the first quarter of the last year, we had the whole revenue for the whole year, which was the revenue that is available for the transmission line. In this quarter, we had only for this period. When we look at the EBITDA, it was the total of [ BRL 690.2 million ], which is a very good number comparing to what we had the last year. The main impact here on this account is the reduction of BRL 4.2 million that I have mentioned. We had an increase of BRL 2.7 million of the personnel costs, basically, we had the operation of 39 assets, the Wind Energy Park in San Juan, [ Central Asia ] that they started last year and the solar one that we had in the beginning of this year.

Besides this impact, we also had an increase of our retail. Another interesting account that is very important to highlight, which is the equity pickup which was BRL 2.7 million of increase because of the improvement of T&E increase. So in 2023, we had the recognition of this balance of Bovespa, which also impact some other parks here.

On the right, we have the growth, and there was an increase of 6.8% comparing to the same period the last year. And the main accounts here, I will detail 2. One is the deduction that had an increase of 7% because of new projects such as the wind and the solar ones and also the reduction of BRL 30.5 million on the financial result, which was positively impacted on the main index that we have, which is the IPCA that is responsible for 48% of our debt and the CDI as well.

And now we have the indebtedness of our holding, which has a number of BRL 680.4 million, which is a negative debt of BRL 397.6 million. And the debt that we have consists of only one debt and it's 100% of debentures issuance. And now in the fourth quarter, we will have 50% of this debt will be done. And now we have this consolidated debt, which closed in the first quarter with a balance of 11 -- around BRL 11 million in the cash flow with [ BRL 299 million ] with a net debt of BRL 8.734 billion. And when we look at this consolidated debt, most of our debt, which is 48% that is for the PCA following the CDI with 34%. And the currency closed with 12% of the company related to the projects that we have in Peru and Colombia.

And now going to the next one. We have the profit allocation for this first quarter. According to our policy that was approved in the end of 2024. The Board of the company recommended to distribute the dividend, which is BRL 66.6 million, which is BRL 0.21 per unit, and the payment will be done in 60 days from approval. And then the stakeholders that were on the base of the company, which will be on May 16. So then they will receive this amount. This graph on the left, we show the evolution of the dividend. Remember that last year was a transition for our policy. And when we look at the first quarter, we paid BRL 36 million. And now we are paying is BRL 66 million, which is an increase of 82% comparing to the first quarter of last year. And the payout was much higher, which was 26% always based on the regulatory number. And in this first quarter is around 45%, the payout.

And now the last one, we show the evolution of the company for the capital markets. The ALUP11 has a devaluation of 0.78%. The IE, which is the energy index, there is another devaluation of 6.89% IBOVESPA has an accumulated devaluation of 47% in some -- 4.47%. Our financial volume is BRL 25.9 million.

And I close my presentation, and then we can go to the Q&A session.

[Operator]

[Operator Instructions] And our first question comes from [ Victor ].

[Unknown Analyst]

I have 2 very simple questions. I would like to know that for 2024, we can expect that the payout will be in the same level as it was last year? Or if the payout to the increase, how does the company wanted to leverage this? And the second is for the auction that we have in September. I wonder if the company has been studying something. And if they will be together with another company as they did last year?

[Unknown Executive]

Good afternoon. Related to the first point, yes, we will continue working on our policy for dividends and our expectation is to keep this policy to give more visibility to the investors. And related to the second point, it's still early because the auction will be only in September. We studied the possibility of participating in it. So we still don't have a clear view of it. We don't know if we will work as partnership. It's very early to say something about it. If we will work on it and how we will do it. So...

[Operator]

Our next question comes from Mr. Daniel Travitzky from Banco Safra.

[Daniel Travitzky, analyst]

I'd like to understand a little bit more when we look ahead at this auction business, we had a sequence of the large auctions for transmission. Now we will have the next one, which will be smaller. How do you see the future for those investments? We see that there is -- maybe we can wait like some -- I just wonder how this will be -- how you see that for the country? If you can talk a little bit about the opportunities that you have seen abroad, it would help me.

[Unknown Executive]

I think that we've had a period of several auctions for the last 2 years. The 2 last ones were stronger. I believe that for the next 2 following years, as we hear, there will be the same -- actually, the speed will be lower and then it will depend on the characteristics of the market, the economy. I know there are some plans for other projects, even another continuous line project, which is something very important. So we will be following this.

In the -- abroad is the same thing. The markets are smaller than Brazilian market and we've looking at those opportunities, projects and then we are trying to see how we can have the best performance to be more competitive and have better conditions to deal with this return.

[Operator]

The next question comes from Mr. Andre Sampaio.

[Andre Sampaio, analyst]

Could you say something about the increase of Alupar for new markets? The idea is to keep the only Peru, Colombia, does it make sense to look at the U.S.A.?

[Unknown Executive]

We already have an international presence. The first project that we had abroad was in 2006. So it's been more than 20 years, actually, almost 20 years. So we've been working on the LatAm market. I think there are other opportunities in this market, as well as in other countries, but we've been focusing on those 3 markets because they represent 40% of the GDP of our country. So we have a relevant presence there.

The American market is something that is more complex. Everybody knows that there is a very big demand for the grid reinforcement especially because of the artificial intelligence as well as the migration of the [indiscernible], but then there is something that has to be analyzed. We have already being in a bid to a bid, which was in Canada. I think that it can be something interesting. But of course, that it has to be studied well.

[Operator]

The next question comes from [indiscernible].

[Unknown Analyst]

The transmission sector has historically been known for distributing dividends to its investors. What dividend do you -- does Alupar consider to be a reasonable return for its shareholders?

[Unknown Executive]

We have disclosed the policy for the payment of dividends last year. And then we work -- we're working related to the growth that we have. So it will depend on the rose -- actually on the profit that we have and the according -- as it grows, we try to increase that. And then we've been able to provide the growth of our revenue -- of our results. So if we have a very high dividend now and then we'll have to decrease this dividend ahead. So that's why we prefer to work with a stability in order to make the company grow even more and to pay the dividend to the shareholders as it grows.

[Operator]

[Operator Instructions] The Q&A session is closed. Now I'll give the floor to Mr. José Luiz to do the final remarks.

[José de Godoy Pereira, executive]

I would like to thank you the participation of everyone here in the disclosure of the results. And I would like to invite you if you want learn any more about, our IR team is available to talk to everyone, even though you are not a shareholder but in case you want to become one, we can help with that. So thank you. Good afternoon. See you in our next presentation.

[Operator]

The Alupar conference is finished and I thank you for being here, and good afternoon.

[Statements in English on this transcript were

spoken by an interpreter present on the live call.]