Alupar Investimento SA

BOVESPA:ALUP4

Earnings Call Transcript 2020-Q3

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the teleconference Alupar for their results concerning 3Q '20. The audio and the slides are being transmitted simultaneously by the web in the IR site of the company, www.alupar.com.br/ri. The presentation is also available for download. [Operator Instructions].

We inform that the statements about future events are subject to risks and uncertainties that may make that these expectations do not come true, different from what expected. Those statements issue the opinion only when they are made at the very date and the company does not have to update them.

We have here Mr. José Luiz de Godoy Pereira, CFO and Director of Relations with Investors; and Mr. Luiz Coimbra, Manager of Investor Relations. Now I give the floor to Mr. José Luiz de Godoy, who will begin his presentation. Please, you may go on.

[José de Godoy Pereira, executive]

Good afternoon, everybody. Thank you for coming to our meeting from Alupar 3Q '20. We will organize the presentation as following. We'll go to the relevant points and then we open for financial demonstration. Ms. Coimbra will present that. And finally, we'll open for questions that you might have in relation to the company.

So starting here by the relevant facts, I go through the [ interim ] operation through start-up of many projects; one, a reinforcement that was done in the second transformer bank of 230 kV. And this project will add an additional revenue into next year of BRL 3.1 million. On October 3, we had the start-up of another reinforcement in the substation of Gaspar 2, the installation of a fourth autotransformer 150 kV. And that project grew also at revenue of BRL 2 million per year, additional RAP, and that's part of the ETB complex. Therefore, we have 50.2% of that project.

And now talking about the projects that were under construction. We had here, the start-up of the second part of ETB. ETB is a project that has 2 transmission lines, one in Juazeiro to Ourolândia, the other one from Bom Jesus da Lapa II to Gentio do Ouro. Juazeiro to Ourolândia was started in the 24/07 and the other one at 16th of October. This project has a RAP that goes for '20 to '21. It will be BRL 143 million a year and has RAP and CapEx ratio is 19%.

We also started TPE. This project is a project that's complex. It's the largest project that we had ongoing. It's part of the integration Northeast and Southeast. And this project is BRL 1.2 billion and RAP cycle BRL 243 million. We started it in October 25. What means in anticipation of 16 months and what was expected by now with RAP-CapEx ratio 20%.

So with those projects that I have mentioned, we updated the general status of other projects. So starting by TPE and ETB on Page 7. They are 100% finished. Then for TCC, which is a project that's complementary to TPE, but it's a different concession contract that we gained on the same date. Almost all the items are concluded, except physical work advance. And we have the expectation of having an anticipation of this project.

And now we go to ES. This project, we're not working with the anticipation [ chronogram ] because it's -- there's another project that's depending on it, and that part is not ours. So that we can energize this to have revenue from that will depend on the energization of that other project or depend also on [indiscernible]. So we're not working with the possibility of anticipating this project.

We also have TSM, which is a transmission line in Vale do Paraíba, São Paulo to Rio. And this project had a challenge that was huge. You can see that we are 99% advanced in land negotiation, and we have 47% of physical advance and the work. So we have good expectation of anticipating this project too.

And finally, the ETC project, which is a transmission line in Colombia. It goes to Bogotá and Pereira, which is a city in Colombia. In this project, the license has not been issued. It's delayed impacted -- COVID impacted on the license. We had expectation of having it by June this year. However, it was not issued, and we had many issues in relation to environmental license because one of the requirements is public hearing and many terms what was not possible because of the pandemic. So we had to postpone that, and we were able to do that last week. We finished this process of public hearings, however, the issuing we expect to have it between December and January '21. So that we can start the project. We had to do the public hearings in a virtual way, which is new. It's first project to adopt this way of public hearing. We developed whole technology so that, that was done. However, it was finished.

With that, we updated the general status for of the projects. And now Luiz Coimbra will talk about the results and financial information.

[Luiz Coimbra, executive]

Good afternoon. Thank you for being here for the 3Q '20. I'll begin my presentation on Slide 9, only to show you the highlights of the IFRS figures and then I'm going to give you more details on the figures. Then I'll be talking about indebtedness, and I'll finish showing the performance of shares.

Here on Slide 9, the net revenue is BRL 1.491 billion, increment of 18.5% vis-à-vis 1.259 billion for 3Q '19. EBITDA grew 17.4% with a total of BRL 728.4 million. Adjusted EBITDA 87% vis-à-vis BRL 600.6 million registered in the same period last year. The net income BRL 181.2 million as compared to BRL 212.5 million in 3Q '19.

Now Slide 10. I'm going to go into more details started by revenue. Revenue BRL 445.4 million, 1.8% higher than BRL 437.5 million registered in 3Q '19. The transmission segment had a growth of BRL 20 million. The most important impact here, we had an increase of BRL 36.7 million in the income of ETC, EDTE considering the commercial aspect. Then we had a growth of BRL 15.5 million in the income because of the consolidation of assets. We had a reduction of BRL 28.6 million in the income for some of the transmissions, Transleste, et cetera, because RAP fell 50% for the 2021 cycle because of the 50th anniversary. And at last, we had an increase of BRL 24 million in the -- because it was impacted by the readjustment. We had a revocation that established a readjustment of 98% for the contacts in index and PCAs, and also for the ones in GBM.

In the generation segment, we had BRL 2.4 million, especially because of the fall in trading. BRL 31 million in this quarter as compared to BRL 44.7 million last year.

Now the EBITDA analysis, regulatory EBITDA, BRL 341.5 million with a growth of 4.1% as compared to BRL 327.9 million that were registered in the same period last year. The most important impact in EBITDA was an increase of 7.6 in our earnings, as I have explained, and a reduction of 4-point-something in G&A, especially in one of the holdings that had extraordinary expenses in the third quarter. And also something important was revenue and expenses. We had a reduction of BRL 3.3 million basically because of the increase we had in other revenues with the transmitters here listed because of the CCI contracts. And at last, we had a reduction of BRL 2 million and equity and earning and the transmission TME in ETB. In this quarter, the only transmitter that is in the patrimonial equivalence or equity earning is TME and here, net liquid -- net earnings, you can see the figures on the slide. And the most reported impact here the first one was this increase of BRL 3.6 million in EBITDA, as I have just explained. And then we had an increase of BRL 25.3 million in the financial results and had a reduction in the financial revenue, which is because of the cash because of the investments that we did and also reduction in CDI when you compare 3Q '19 to 3Q '20.

And finally, we had an increase of BRL 8.2 million in the minority participations, and this was impacted by the growth of BRL 5.2 million in TME and ETB transmitters because these companies were consolidated in 3Q '19. We had an increase of BRL 0.3 million in EBTE because of its commercial start-up in January this year.

And now on the next slide we will be presenting the holding indebtedness. We had a debt of BRL 120.8 million with cash position that with a total debt of BRL 28 million. The short-run debt BRL 174.7 million, most of it BRL 163.6 million because of the 6th installment of the 6th issuing of the debenture is in April '20. About debt indexation, 81% of the debt is indexed in CDI and 19.9% in PCI -- in PCA, which is the second transmission of debenture.

Now the next slide. We'll be talking about consolidated indebtedness. The debt profile of BRL 8.739 billion, with a cash position of BRL 2.468 million, with a total of net debt of BRL 6.272 million. In relation to the debt structure, we didn't have any significant variation. And so most of our debt, 56% is indexed by a PCA followed by CDI with 22%, and here emphasizing that referring new projects that are being implemented in Colombia and Peru, they closed in the quarter, representing 12% of total indebtedness of the company.

Now the next slide. We show the amortization schedule profile of consolidated debt remained long. We have 44% after 2025, in holding, the 6th admission will be in 2021. And the payment for the 7th installment are in '24 and '25 in relation to the subsidiary dams. Amortizations are well distributed and I mentioned to the cash capacity projects. And in this quarter, I think we did not capture any bridge. So we remain with the 2 loans that are concerning the projects on implementation in Colombia and Peru.

And now the last slide of this presentation, where we demonstrate the performance of shares, and this performance has to do with yesterday's figures. So Alupar in the y-o-y, 9.61%, IBOV 9.37% and IEE 1.54%. For the year, we had a devaluation of 20.4% in March. So it's recovering. And also, I'd like to emphasize the volume of financial volumes. We -- every quarter, we are showing this to you. So the average in this quarter is BRL 19.5 million, better than last year, the same quarter. With that, I close my presentation, and we can go on for Q&A.

[Operator]

[Operator Instructions] Q&A is closed. We would like to give the floor to Mr. José Luiz for his final consideration.

[José de Godoy Pereira, executive]

So thank you again for participating. And the company is here for whatever you want to ask, any doubts, any questions about the company and about the sector. Thank you, and see you soon.

[Operator]

The call is closed. We thank you for your participation, and have a good afternoon.