Alupar Investimento SA

BOVESPA:ALUP4

Earnings Call Transcript 2020-Q4

[Operator]

Good afternoon, ladies and gentlemen. Welcome to the conference call of Alupar to discuss the earnings release of the fourth quarter '20. Audio and slides of the conference are being simultaneously transmitted through the Internet in the RI website www.alupar.com.br/ri. The presentation is also made available for download. [Operator Instructions]

We would like to inform you that forward-looking statements are based on the beliefs and assumptions of the company. In other words, they involve risks and uncertainties, and they just reflect the opinion of the date they are made, and the company does not expect to update them. We have here with us José Luiz de Godoy Pereira, CFO and [ IRO ] of Alupar; and Luiz Coimbra, IR Manager.

I would like now to hand it over to José Luiz de Godoy, who is going to start the presentation. Luiz?

[José de Godoy Pereira, executive]

Good morning, everyone. Thank you very much for being here in our presentation for the earnings release of the fourth quarter '20 of Alupar Investments. I am going to go through all relevant points of the fourth quarter and also share with you some highlights that we have all experienced in 2020. Then I'm going to hand it over to Luiz, who is our Investor Relations Manager, to talk about the numbers and then we go into Q&A.

Well, 2020 was a very challenging year. First of all, COVID infection, which has impacted all different industries, and all companies worked together towards helping fight the pandemic. We have worked within the areas where we are located, and we have also made some general -- offered some general support. We invested in fighting the pandemic at a total of BRL 6.4 million. We donated over 4,000 different products for different communities, such as hand sanitizers, PPEs, some staple food and other items.

We are also part of a program that hired doctors for Hospital das Clínicas in São Paulo together with BTG and other companies in São Paulo. It was a program together with the [ investors of ] São Paulo and Hospital das Clínicas. We donated 7 vehicles: 4 ambulance, 2 trucks and 1 car. We also donated some x-ray machine.

And we've made some other minor donations as well, benefiting 551 (sic) [ 551,532 ] people in 70 municipalities in 7 states. Similarly to other companies, we tried to focus all our initiatives throughout the year to reduce to some extent the effect of COVID pandemic in all different areas of industry and people. And we also made another donation of BRL 3.3 million supporting cultural organizations. This is something that we do yearly.

Now let me emphasize some of the highlights of our industry, a very important event in generation with GSF. Finally, in December, the rule was put forward for the agreement of GSF, something that had been discussed for a while. It means that this is going to release some payments that were with CCEE. Now companies are free to make agreements. It was a very important move to the whole industry. It has an impact in our balance sheet because we had to account all the indexation of the amount in which we had an injunction. So we had to account for the indexation of this amount that we had due with CCEE, and because of the injunction, it was not included. We just had 2 main PCH, Queluz and Lavrinhas, to SHPP.

As we haven't signed the contract [ agreement ] yet, we haven't accounted for the numbers of the final agreement in our company balance. In Queluz and Lavrinhas, the 2 companies which were the most impacted SHPPs, we are going to have a term extension of 4 years in each of them. But as we haven't stopped waiting for the injunction, there is still one final move before we can really acknowledge and really recognize and account for the revenue. Some companies have done that, but we preferred not to do it until we have a final decision, which is going to take place in 2021 when the agreement is really formalized.

The new projects started running in operations. First project was a transmission line from Juazeiro to Ourolândia and transmission line from Jesus da Lapa to Gentio do Ouro in Bahia, a very challenging project that was highly impacted by the pandemic during a critical moment of the operation. Total unitized CapEx of BRL 755 million to an RAP of BRL 143 million with a RAP/CapEx ratio of 19%.

There was also another project coming into operation, TPE, the largest project in execution. It's a transmission line from Poções to Padre Paraíso II, 334 kilometers; a second transmission line from Padre Paraíso II to Governador Valadares, 207 kilometers more; a substation of 500 kV in Padre Paraíso and Governador Valadares in a capacity of 1,200 MVA; and a bay of 500 kV in Poções III. Very successful project. We could advance it within 16 months even though the project was highly impacted by the pandemic as well. But we concluded the project with a CapEx to be unitized of BRL 1.2 million (sic) [ BRL 1.2 billion ] and RAP of BRL 243 million with a RAP over CapEx of 20%.

Another project which had got an environmental [ non-authorization ]. It was an old project that was launched in 2014. And it had just on hold because the environmental permit had been filed because of a problem in the air base in Santos. There are 2 substations and 2 transmission lines, 40-kilometer transmission lines. The project was on hold, just waiting for resolution. There was a change to the flight plan process there in Santos, and the project could be resumed.

We've renegotiated. We agreed on the conditions offered by ANEEL to renegotiate the contract terms. The contract was agreed, and now it's being resumed with estimated CapEx of BRL 450 million, RAP of BRL 57 million and it's going to be implemented within 36 months. The amendment was signed now in January, and the concession is good up to September 2044.

Another important event was the reassessment and affirmation of our rating. We maintained a AAA rating according to Fitch Ratings and also BB for international scale, once again reaffirmed by Fitch Ratings.

Now if you are following the presentation, now we are on Slide 9, and we have here the status of our ongoing assets. Our next project to go into operations that you can see is TCC. The project had a physical execution of 99%. Now it's in full operation. When we prepared the presentation, it was 99%. It's a project that has been concluded and also being concluded in advance than what had been planned.

Then we have the project of ESTE, which is being executed through [ TPE ]. We have already covered 53% of the construction work. All the other items have been completed, including also the land negotiation, hiring, cables, all the equipment of substation. 18% is what had already been delivered in the construction site, and also receiving of metal structures, 100%. Our expectation is to have this project within schedule as planned with ANEEL. But we didn't want to anticipate it because we depended on the connection with another project, which is not being advanced. So we are going to finish the project within what had been planned, which is in agreement with ANEEL's time line.

The third project which is ongoing for 2021 is TSM. This is a project which is moving ahead quite well. The main challenge was land negotiation. We have achieved, however, 99% of land negotiation. Right now, we have 100% completed and also hiring is finished. The construction works have already complied with 60%. We have received all our materials, and we are in full execution. And we expect to have it completed throughout the year of 2021, and we might even complete it ahead of schedule.

And finally, TCE, which is a project in Colombia going from Bogotá to Pereira in Colombia. It's a project that still does not have its environmental permit fully issued. There was one first opinion of the agency issued with some restrictions, but there are still some points to be revisited. And this is part of the process, something expected in projects there in Colombia. So we have already presented our response concerning all the restrictions. They have identified restrictions to 10 towers. So we've already submitted our response, and we are waiting for their opinion, waiting for the final authorization.

So now let me hand it over to Luiz Coimbra, who's going to talk about financial issues, and then we are going to go into the Q&A session. Thank you.

[Luiz Coimbra, executive]

Good afternoon, everyone. Thank you very much for being here for the conference call of the earnings release of the fourth quarter. I'm going to start with Slide 11. We are going to go with IFRS, and then I'm going to go into regulatory data. Next, indebtedness of the company, also dividend sharing. And finally, I'm going to show you a slide with the shares of Alupar.

Slide 11. In the first chart, we have net revenue IFRS BRL 2.4 billion as opposed to BRL 1.3 billion, which was the fourth quarter '19. This variation resulted primarily from 2 factors: first, an increase of BRL 953 million resulting from monetary indexation of some contracts which are indexed by IGP-M, which had 19.8% from July to December '20, and assets which started operating throughout the year of 2020. A second point was an increase of BRL 428 million resulting from change of assumptions of our margins of construction and OEM and also compensation because of the formal -- official letter published by CVM in December '20.

EBITDA was BRL 1.69 million (sic) [ BRL 1.69 billion ] as opposed to BRL 664 million same period last year. And the main impact here was BRL 1.1 million (sic) [ BRL 1.1 billion ] in the revenue from transmission. Net income totaled BRL 509 million as opposed to BRL 166.3 million observed in the fourth quarter '19.

Now in the next slide we can see regulatory data. Starting from net revenue regulatory, it was impacted BRL 93.7 million because of the start of operation of 3 transmission assets of: EDTE, we started operating in January; ETB and TPE, which started operation in October '20. So revenue showed 18.1% increase, amounting to BRL 545.6 million as opposed to BRL 462 million observed in the same period last year.

Regulatory EBITDA amounted to BRL 416.2 million, 26.9% above the BRL 327.9 million observed in the fourth quarter '19. And the 2 main impacts on EBITDA were: BRL 95.6 million increase in revenue, which I have just explained; and secondly, a BRL 18.4 million reduction of SG&A, especially because of a reduction of BRL 7.2 million of Alupar Holding and BRL 10.9 million of [indiscernible] La Virgen. These companies had some extraordinary expenses in the fourth quarter '19. In terms of net income, it amounted to BRL 42.9 million as opposed to BRL 86.2 million net income observed in the fourth quarter '19.

I would like to talk about the financial result, which showed BRL 137.2 million increase compared to the same period last year. I think the 2 highlights here are the following: there was an increase of BRL 14.7 million concerning exchange variations in foreign projects, so it has no cash effect; and the second important point was an increase of BRL 43.4 million concerning of the GSF liability of Queluz and Lavrinhas, and the liabilities, in this case, are just based on IGP-M. It's also important to mention that the company in March this year paid fully all its liability for these 2 PCH or SHPP Queluz and Lavrinhas.

Now let's see here indebtedness of our holding. We had debt of BRL 816 million, cash and cash equivalents of BRL 744 million with net debt of BRL 72 million. Short-term debt was BRL 169.6 million. BRL 165.5 million amounted to the second [ parcel ] of the debenture, which is due now on April 5. Concerning the index, 79.7% of our indebtedness is linked with CDI and 20.3% is based on IPCA.

Now on the next slide, we can see gross debt of consolidated numbers. Gross debt was BRL 8.9 million (sic) [ BRL 8.9 billion ], cash and cash equivalents of BRL 2.183 million (sic) [ BRL 2.183 billion ], net consolidated debt of BRL 6.791 million (sic) [ BRL 6.791 billion ]. Concerning the structure of our debt, there was no significant difference. Most of our debt, 55% of it, is indexed by IPCA, followed by CDI by 23%. All the projects in Colombia and Peru finished the quarter, amounting to 12% of our total indebtedness, no significant variation.

And in the next slide, we can show our amortization schedule. Consolidated debt profile is still very extended. 38% of [ the dues ] will be as of 2026. Our holding will have also the sixth issuance of debenture [ concentrated ] this year. And the seventh is it will be distributed in the years 2024 and 2025. [indiscernible] of subsidiaries and amortizations are very well distributed throughout the year, and they are sized by the amount of generation from each project. In this quarter, we didn't obtain any new bridge. So we maintained our 2 bridge loans related to the projects in Colombia and Peru. The long-term debt of the project in Colombia, TCE, has already been signed and resources will be released once the permit is finally issued.

Now going into the slide of profit allocation. The Board of Directors recommended distribution of BRL 246 million, which amounted to BRL 0.28 for common and preferred shares of the company, equivalent to BRL 0.84 per unit. Payment will be done into 3 parcels: first and second one amounting to BRL 87.9 million to be paid on May 31, 2021 and August 30, 2021; and the last parcel, BRL 70.3 million to be paid on November 30, 2021. Profit allocation based on regulatory total profit amounted to a total of BRL 246 million, which is a payout as we can see in the slide.

Now carrying on. We can see in one of the last slides showing the performance of our shares based on the exchange market. Yesterday, we can see that the Alupar shares had a decrease of 9.19%, considering the loss of 5.41% of IEE and 3.39% of IBOVESPA.

Observing the chart. When the COVID-19 pandemic started here on March 18, Alupar share had its greatest decrease amounting to BRL 20.24. Then the share picked up again, and yesterday, it closed at BRL 20.64. Of course, it still falls far behind from what we used to negotiate in the beginning of 2020 before COVID, but the share is picking up its full strength again.

Another important highlight to make is that we closed the fourth quarter with BRL 20.4 million in terms of financial volume, above BRL 20.2 million that we closed the fourth quarter '19. And this is a very important activity to us because quarter-over-quarter, we've been improving liquidity. So it's a very important point to make.

So with that, I would like to close my presentation, and now we can go into the Q&A session. Thank you very much.

[Operator]

[Operator Instructions] The first question from the webcast comes from Fernando Sampaio of Brasil Capital. Considering the closure of the project [ TSM for 2021 ], when do you expect to have the additional participation in the call on the project?

[Luiz Coimbra, executive]

José Luiz, would you answer this question, please?

[José de Godoy Pereira, executive]

I'm sorry, I failed to unmute myself. Well, we want to exercise as quickly as possible this call option. But we also have to follow up the covenant and also the ratio of net debt over EBITDA of the company. We have been paying our most expensive debt in the first half of the year. Now in May, we have the sixth issuance of debentures, which was a higher debt. It had been issued a long time ago, and it has IPCA plus 7.3%. So we are going to settle this debt, and then we are going to go into other debts, including the exercise of the call for shares. So we expect to have it as quickly as possible, always following how well we can really leverage our activities in the company.

[Operator]

The next question comes from Fernando Sampaio of Brasil Capital. Considering the payout of 110% of regulatory profit in 2020 and a decrease of leverage for 2021, what would be the expected payout for upcoming years?

[Unknown Executive]

Well, our expectation is to increase the payout as our cash generation increase with more projects coming into operation. We expect to increase the payout in upcoming years. I wouldn't have a precise number to tell you, but -- especially because it depends on opportunities that we have to make CapEx investments. But we want to increase the payout in a relevant fashion.

[Operator]

The next question comes from Fernando Sampaio of Brasil Capital. How much do you expect of IGP-M revenues in the next cycle of price increase?

[Unknown Executive]

Difficult to say because it hasn't been concluded yet. The last analysis we did, it was about 28% of year-to-date IGP-M. We have nearly 40% of our consolidated revenues. Of course, there is also the inclusion of minority shareholders to be considered, but this is what we have for IGP-M indexation. I don't know exactly what will be the final number, but IPCA is always showing a rebound effect. It's also going up. So I don't know really what's going to be the difference between those 2 index. But IPCA, in our opinion, will probably incorporate the difference of IGP-M because it reacts faster in terms of foreign exchange, but IPCA catches up the variation within the long term.

[Operator]

The next question, from Fernando Sampaio. In Queluz and Lavrinhas, because of GSF, the energy that is there, is it available to be sold?

[Unknown Executive]

Yes. Our contract of [ PPI ] are just coming to an end in 2024 -- '25, actually. And then from then on, we are going to have energy available to be sold. So if there is an excess of energy -- if we get a 4-year extension, it will be negotiated in the free market. This [ plant ] already sold energy in the free market.

[Operator]

The next question from Rafael Nagano of Crédit Suisse.

[Rafael Nagano, analyst]

My question concerns

[Audio Gap]

by TNE saying that finally the contract is being acceptable. Can you tell us a bit more about the next steps? Any ideas of indemnification? Anything along those lines?

[Unknown Executive]

There was a recent first -- low-level court decision accepting the arguments of TNE. First, it went to ANEEL asking for a termination, and ANEEL accepted it because of environmental [indiscernible] because it could not go through the indigenous land, then it was not approved. The next step was that the Minister did not accept the decision of ANEEL. And at that time -- and it was 2016, I guess. We said that, yes, we are going to have the license, the permit negotiate with indigenous populations and have the [ full ] transmission accepted. And then in 2016, as much time had elapsed, we asked for a termination [ in decision ]. And since then, no license, no permit has been issued. It was just a low court decision, first level court decision, where they accepted our arguments.

So as there is no permit so far, we cannot execute the contract -- a concession contract by the government. But no license, no permit has been issued by FUNAI and IBAMA, those 2 agencies. So the low court decision states that we would be entitled to have a contract termination and be paid indemnity because of material loss. That would require a final sentence and settlement where we would really define all incurred costs throughout the time and the project to finally get indemnification. It's still a low court decision, and we are still negotiating. And we want to keep on negotiating this contract as best as we can to really transform that into reality.

There are some points concerning a financial economic rebalancing and readjustments. But yes, it all depends on the permit. The first step will depend on getting this environmental permit and license, and we have always complied with our duties. We have provided data to the environmental agencies, carry on with our part of the deal, doing everything we could to really transform the project into reality.

[Operator]

The next question by [ Diego Paternostro of Moat Capital ]. Can you please tell us whether there is anything about a rebidding of TNE?

[Unknown Executive]

Well, I've just answered that, right? It's a relevant factor to replan and financial and economic issues, how we would do that. We are working on it. And a new bidding, well, I don't know. It's difficult to say from our side. Our intention is to put the project into operation. This is what we want. But to do it, there are a number of conditions that have to be met. Let's see how the things move on.

As you see, an important issue is that a rebidding right now -- maybe the press have been talking about that, right? But it would face the same problems. The main problem is the environmental licensing, is the permit. So this is that -- this is what has to be addressed first. Until it's discussed with indigenous population and the agencies, it will be no use having a rebidding process.

[Operator]

Questions by [indiscernible]. Great results. When and if the company is ready to grow, when will you be ready to share more dividends similarly to other companies in the stock market?

[Unknown Executive]

Well, we've been through a cycle. We are still going to have some remaining investments for upcoming years. But we've been growing significantly in terms of CapEx, and it means that we will have a very relevant increase in our cash generation. Once the cycle is over, we want to increase our dividend payout substantially, unless there is another opportunity that comes to place. And we believe it's going to generate additional value to the company.

We've seen very significant competitiveness in the market and very aggressive moves. But in our opinion, they do not produce any significant return on investments. But we are always paying attention to potential opportunities. Said that, the cycle of investment, we -- you don't find a cycle of investment as relevant as ours in such a short period of time. But probably as of next year, we are going to have better payout to pay.

[Operator]

The next question by [indiscernible]. What is the company's appetite for projects in Brazil as opposed to projects abroad?

[Unknown Executive]

Well, we really don't care whether the projects are in Brazil or abroad. We look for countries that have well stabilized regulation, and regulation tends to be very similar in most countries. We've already operated in Chile. Now we are in Peru and Colombia, and regulatory affairs are very similar to that of Brazil with some minor differences. In terms of projects, we don't see major difference between executing a project in Brazil or abroad. There are advantages and disadvantages regardless of where you are. Concession, for example, in Chile, Colombia and Peru, they are [ 10-year ] concession, which is an advantage. But at the same time, it's all indexed by dollar exchange rate with something relevant, especially because it is based on the U.S. inflation rate. Considering that the inflation tends to be going up, it might be something interesting as well.

But in terms of execution, we are highly experienced. We've already run a number of construction sites in Brazil. And from a technical perspective, there is no major difference. In addition, when you execute these projects with strong currency, you have access to credit market. [ At ] conditions here in Brazil, we have limited access to credit because of the market size, and our rates are based by BRL and there is no mismatch of currency. This is a point that tends to limit us somewhat. When we operate in strong currency, for example, the project for Colombia, we had a funding with a Japanese bank. So as there is no geographical limitation, we can have access to cash, which is much more interesting and much broader than what would be done here in Brazil.

[Operator]

Next question comes from [indiscernible]. Does the company intend to be actively involved in future transmission auctions?

[Unknown Executive]

Oh, yes. Alupar, and if you look through our track record, we were awarded the first transmission project in the year 2000, the first real project when nobody knew what transmission was. We had the first project [ filed ] in year 2000 with a transmission project. We've been through all stages, and we have been competing with companies with different characteristics of our companies that participate in the first auction and are still there. We are probably the only one still in the market as an active player. We are going to keep on assessing these opportunities. Whether we are going to succeed or not, I don't know. It really depends on what we expect in terms of profitability and what we expect to have, especially CapEx cost because we have very clear and close monitoring of CapEx. But yes, we intend to keep on taking part in auctions.

[Operator]

Next question from [ Bruno Valero ] of [indiscernible]. Can you please tell us about the advance in potential sales of FGTS-FI?

[Unknown Executive]

Cannot tell you much about that because it's not on us really to decide. What we've seen is that they've announced their interest to sell them some net shares, including Alupar. But sometimes, the negotiations go ahead. Sometimes they are on hold. There are a number of internal approvals. Difficult to say. It has already been announced in the media some time ago. But if you ask me to tell you exactly when it's going to happen, I don't know. Even if that had been a definition, it will depend on internal approvals and all that. Once they have it all sorted out, this will be announced to the market.

[Operator]

Next question from Daniel Travitzky of Safra. Could you please tell us about other initiatives of growth of the company. Do you think about going into sun power energy? What about transmission? What is your expectation for future auctions?

[Unknown Executive]

Sun power, yes, there is a project that we are asking for authorization. We have a project of wind energy. We have received the permit of the first part, 3,000 megawatts -- 3,000-megawatt [ plant ]. And we are expanding our role in the free market of energy. Our expectation is to work in this market and do something different from what the companies are really proposing. I think we can see good perspectives of marketing solar power and wind power plants.

[Operator]

Next question from [ Vitor Sousa ] [indiscernible]. Why does the -- how much -- why do you consider regulatory and not corporate law [indiscernible] to pay your dividends?

[Unknown Executive]

We do consider corporate law, but our parameter to the market is a comparison with the regulatory financial result. The corporate law has a number of distortions. Regulatory is very close to the regular flow, with a number of provisions, of course, such as was the case this year where we had a provision for GSF but didn't account for -- in our revenues because we haven't signed really yet. But it's closer to cash flow. You see the company pays as we have cash available, and it's much closer to the regulatory balance sheet.

With the new approval of the law, there is a relevant differentiation concerning regulatory numbers and corporate numbers. The balance -- corporate balance sheet has a more economic understanding and [ no ] effective cash generation. Therefore, part of it, especially now that we have to include profit during the implementation of the project, part of the profit is not realized, is not accounted and cannot be distributed because there is no cash counterpart. As the market really focus on regulatory profit and revenues, we prefer to use this parameter to the market, but we always base on the effective profit of sustainable corporate performance.

[Operator]

Next question from Carneiro from Crédit Suisse. Can you tell us about the new projects that will be sold in the free market? What is the demand for this energy? And what about availability of suppliers?

[Unknown Executive]

There is a market boom. With the new rule without subsidies of wind and solar power as of 2024, there has been increased interest because once there is no more subsidy, prices will go up. At the same time, what we have observed -- and we are trying to come up with an equation. The higher the extension of the contract in PPA, the lower the price. So we are trying to come up with something at an intermediate level so that we can have a more attractive price. And it's not only price. It's the whole project [ load ]. There are some projects with a [ load factor ], which are highly competitive, which is a different component that is part of the equation.

Concerning suppliers, many have been talking about projects and say they are going to offer projects and -- but effectively, I think we're talking more about providers than suppliers. We can see some go into the market to try to come up with a project without having it ready. I don't know how this is going to go from now on. And we don't need anything. We can raise funds regardless of conditions. So of course, this also reinforces our position as providers.

[Operator]

[indiscernible] Can you please tell us more about the wind power [ addressed for the car ]? Will it be verticalized? Or are you going to outsource construction?

[Unknown Executive]

We're going to have [ a mixed ] project, 7 wind power [indiscernible] 260 megawatts of installed capacity. We normally do not verticalize any projects. In the projects where we have a stronger footprint, we have the integration. We work as an EPC. An EPC company does not have a [ portfolio ] verticalization. So [ integration ] is done in-house. In terms of power -- wind power plant, we purchased a kit, so it's somewhat more complex. But we are responsible for civil construction, infrastructure that we integrate together with other suppliers as well. So we are also coming up with an equation to do it the best way possible.

[Operator]

Next question from [indiscernible]. Do you also want to go into other kind of business, such as sanitation and others?

[Unknown Executive]

Not really. We don't consider that, at least not now. This is a market with a different kind of regulation, and we prefer to focus on the electrical part of it. It's easier for the company to have also a plant or a project outside Brazil or outside Latin America than just going into an absolutely new market that we are not very familiar with. But maybe there are other things which we have more synergies. Right now, we are not considering any specific alternatives, but things are very dynamic. Maybe in the future, we can go into different areas, but nothing has been considered so far.

[Operator]

Next question from [ Pedro ]. Alupar intends to grow only based on greenfield assets?

[Unknown Executive]

Not really. We've been also part of some acquisition process. We've been bidders in a number of them. As we have been growing and growing somewhat fast, we haven't been able to close any of these deals. But I think there are some opportunities in the market that might make sense to M&A and make sure that we are paying constant attention to the M&A market as well.

[Operator]

Next question from [ Pedro ]. With [ FCL ] going up, does the company think about growing more, pay out more dividends or both at the same time?

[Unknown Executive]

The increase of payout is a consequence regardless of growth. As the company is going to have an increase in cash generation, this is going to be inevitable, and growth is a result of opportunities that are created with assets and return on investments.

[Operator]

Next question from [ Gabriel Sambran ]. I would like to hear an update about line [indiscernible] because the contract termination is going in the court. Are you following the same lines? Have you got any validation about how much will be the indemnification?

[Unknown Executive]

This is going to be ascertain by an accounting specialist analysis based on all costs that have been incurred. As I told you before, still low court decision, and we are still negotiating resolution to really be able to build the project. Of course, we have to do everything at the same time, but we're still working to put the project in operation. Let's see what are the next steps.

[Operator]

[Operator Instructions] The Q&A session is finished now. I would like now to hand it over to José Luiz for his closing remarks on behalf of the company.

[José de Godoy Pereira, executive]

Thank you all very much for your participation in this earnings release call. I would like to invite you to contact us should you have any questions. Our Investor Relations team [indiscernible]. Thank you very much. See you next time.

[Operator]

The conference call of Alupar finishes now. Thank you very much for your participation. Have a good afternoon.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]