CPFL Energia SA

BOVESPA:CPFE3

Earnings Call Transcript 2021-Q2

[Carlos Cyrino, executive]

[ Good morning to everyone. Welcome to the presentation of the results of the second quarter of CPFL Energy. My name is Carlos Cyrino. I'm the Director of the Investor Relations ]. And today, I will be conducting once more our event. Today, we have Gustavo Estrella, President of the CPFL Energy; Mr. Pan, Director, Vice President, Finance and Investor Relations; and the other executives of the company.

All the presentation will be carried out in Portuguese with interpretation for English. All you have to do is click on the interpretation button that is in the bottom part of your platform. For those who want to see the presentation in English, it's also on the site of Investor Relations of CPFL Energia. I'd like to inform all the participants that after the presentation of the company, we will start the questions and answers. [Operator Instructions] Remember, this event is being recorded.

I'm now going to give the floor to Gustavo Estrella for us to start the presentation of our results.

[Gustavo Estrella, executive]

Cyrino, thank you. Good morning to everyone. So now we're going to show our results of the second quarter 2021.

I'm going to go straight to Slide 4 with the highlights. We have positive highlights. We have an increase in load in the concession area of 13.7%. And this demonstrates that the recovery is consistent with the consumption of energy.

Our EBITDA is BRL 2.54 million, it's a growth of 70%. In the second quarter, the net income, we have BRL 1.126 billion, an increase of 143.6%. Our net debt, we closed this with BRL 15.7 million, and a leverage of 1.88x is very comfortable. We also highlight that we should have some important events with the import -- payment of dividends and also purchases. This is an indicator, which is very comfortable.

Our investments are also an important highlight, with a growth of 57%, BRL 1.19 million. And our target for this year is -- we also had a tariff adjustment of the RGE 9.95% for the consumers now in June '21. And here, we have a declaration of dividends with -- of 2020, EUR 1.731 billion, BRL 1.50 per share. I think that it is emblematic for the company.

In the same quarter, we announced the dividends of 2020 -- the complementary dividends. At the same time, we also do an important movement of the growth of the group with the acquisition of another company. As we always say, the strategy of the group is always to balance the growth with the yield. So I think we're doing these 2 things at the same time, in a combined way and in a responsible way. This makes the strategy of the group very balanced.

In this -- besides the CEEE-Transmission, we have the Gameleira complex, and we have Costa das Dunas, Figueira Branca. The last park will start to the end of the year. We also highlight the operation 2.5 years before the official date of ANEEL. We also have in our ESG agenda, we have the index of the Stock Exchange of London given the help that we have focused on the ESG topics.

We've also had in this ESG agenda -- we were recognized by the World Finance Corporate Governance Awards for 2021. This is a very important recognition for governance linked to the company. It's the only company in Brazil recognized this way. So it's very important for our group.

And last, we have the CPFL Santa Cruz, which has won for the second time, the ANEEL Quality Award in the category from 30,000 to 400,000 clients. This is also very important in the quality topic of our group.

Now let's move to the next slide. So here, we can see the energy sales, as I said, it's a robust growth of [ 2019 ], 3.7 in the concession area. We've put the comparison here with 2019 and 2020. That was the beginning of the pandemic. When we had a worst movement of energy consumption.

And in the second semester, we already had recovery. And in the comparison to 2019, we can see the growth. So I think this is a signal, a clear signal of robust recovery in relation to the energy consumption. And the good news here is that this has been especially due to the industries. So this shows an important recovery of the economy. I think it will be over 5%. So this recovery of the industry is very important, as we can see in the second quarter, 27% very expressive and very positive. I think it has the power of really energizing the economy in a very positive way.

Here, we can see within the industrial activities, we can see all the main segments within industrial class. So we had important growth. We've put here in order of importance and in order of size, how much it represents of the CPFL Group. It is led here by the segment of food, which corresponds to almost 18% of our total industrial consumption growth already in the comparison to 2019, 5%. The exception is vehicles, they had an important recovery, but still a bit below 2019, but this also shows a very robust recovery in the segment of vehicles.

So let's move now to the next slide. Here, we can see the delinquency and the losses. The second semester confirms a trend that we've already noted since March this year. We have this in our results calls. It's a trend of an increase of delinquency. It confirms here. We can see a large growth compared to the first semester of 2021 and almost stable in relation to the second semester of 2020. But this is a concern.

We have intensified all our actions to mitigate delinquency, increasing the cuts we have here. 665,000 energy cuts this semester. It is a large number, it's 30,000 energy cuts per month. And this is to try to control this level of delinquency, which, for sure, concerns us now.

When we look at the right side of the slide, we can see the benchmark, and this is a trend not only for CPFL, but in the sector, in general, we can see a clear trend of the increase of delinquency with other distributors. So we have had a lot of challenges. We're still in an uptick of the economy. He have our clients, especially those with lower revenue, they're still suffering a lot.

So informal jobs, we know that this recovery has been a bit slower than the economy in general. So this has reflected in our results. So this is a point to pay attention and to monitor the next month. There's not only losses, we have here an almost stability in relation to June. So it's been recurring. We have stability in the rate of losses, and we have a huge effort here to monitor and to stabilize these indicators.

So let's move now to the next slide. This is -- refers to generation. We can see an increase of the PLD this increase is even larger. We see this is 583 megabytes hour, and this is very much linked to [indiscernible] of our country. And we also should pay attention, and this should remain high for the next month.

The GSF has an improvement, if you compare to 2020, but the GSF here in the second semester of this year in high levels. As for the flow, we have an almost stability, a little bit higher to remember in the South of the country, there still is a bad hydrology, but in the past it was extremely negative. So this stability here is very much related to the base of comparison with 2020. But this reflects the lack of rains that we've been having.

In relation to the SHPPs, there's a concentration here in the state of Mina Gerais, and the State of Sao Paulo. So this is always reflects -- reflex of the hydrology when we compare to 2020.

And now let's talk about the wind parks -- wind farms. We've had expressive growth in megawatts per hour, and this reflects the improvement of the performance of winds. We had a very negative performance in the past with levels much closer to the curves, and this reflects an increase of generation. And especially considering the availability of the wind farms, we can see historical recovery, which is very important, especially, I think we have a very good level here -- 96%. And with favorable wins, we have much better generation of energy.

So now let's move to the next slide. This has to do with the results. So now I'm going to give the floor to Mr. Pan.

[Yuehui Pan, executive]

Good morning to everyone. Thank you, Gustavo. In the slides, EBITDA in this quarter was a bit higher than EUR 2 billion, an increase of 70%. The segment of distribution has a good result. Again, with an increase of over 100%, the largest variation was in the market and tariffs, BRL 407 million, especially due to the increases of tariff that we had and the readjustments in 2020 and 2021.

Another important effect was the gain of the concession finance asset that had an increase of BRL 283 million due to the higher IPCA. In the second quarter of 2020, the IPCA was negative, 0.62% and in the second quarter this year was positive over 2%.

We also had a gain of BRL 21 million referring to other revenues. Here, basically, it's the rental of poles that reflects the increase of the IGP-M during the period. The PMSO had an increase of BRL 54 million due to an increase in assets, legal expenses and a low base of comparison last year. The expenses linked to inflation had an increase of 5.4% below the IPCA, which was 8.335% during the last 12 months.

The PDD was the largest -- BRL 21 million as -- or the highest, as we've shown previously. In the pension plan, we had an increase of EUR 14 million. The other effects of the EBITDA all added were EUR 3 million. In generation, the EBITDA was EUR 728 million, an increase of 37.3%. The main effect was the update of the contract prices, EUR 134 million.

Several contracts that are updated by the IGP-M had their prices adjusted during the other months. Another positive effect was the higher generation of energy of our wind farms with EUR 52 million and the seasonality of the PCH contracts, EUR 39 million. On the other hand, we had some negative impacts during the period, an increase of the UBP due to the IGP-M EUR 18 million, GSF minus EUR 5 million, other effects, minus BRL 3 million.

The segment of trading service and others had an increase of BRL 21 million. Trading improved the results and BRL 15 million due to the recognition of PIS/Cofins over the ICMs in CPFL. In the Service segment, another BRL 5 million. CPFL efficiency is a highlight once more. On the other hand, we had a reduction of BRL 30 million in trading due to a lower margin during the period.

Now on the next slide, we are going to show the performance of the net earnings, which was EUR 1.125 million during the period, an increase of 143.6% in relation to last year. In the financial results, we had an improvement of BRL 63 million due to the increases and fines BRL 63 million. This was due to the high IGP-M. Gain of MTM EUR 41 million and recognition of the monetary update of the PIS/Cofins over the ICMS and CPFL EUR 40 million. And the expenses with the net debt have been increased of BRL 84 million. This was explained by the increase of the IPCA. The depreciation varied BRL 2 million, and the taxes had a negative impact of BRL 246 million due to the better result during the period.

The next slide, we show the results of the first quarter. The EBITDA grew 38.4% or over BRL 1 billion. Here, we can highlight the distribution that has increased 42% favored by the good performance of the market and tariffs due to this -- the growth of the IGP-M and financial assets. Another highlight is generation with an increase of 28%, EUR 302 million due to more wind generation and readjustment of contracts.

Now the Commercialization segment had a gain of PIS/Cofins over ICMS, while the Service segment has been improving its results, especially CPFL efficiency. The net earnings have increased 52%, reaching almost BRL 2.1 billion. This result was a bit impacted by the negative MTM, BRL 249 million, which registered a strong gain in the beginning of 2020 and this affected the comparison base. Besides this, we have higher costs of the debt, pressured by IPCA. These effects have been partially compensated by increases and more fines. We have a positive effect of BRL 5 million in depreciation and amortization and larger taxes due to better operational results.

Now let's move to the next slide. The debt -- net debt totals BRL 15.7 billion, and the EBITDA has reached BRL 8.3 billion. The leverage measured by the net debt EBITDA is 1.88x. In relation to dividends, after the acquisition of the CEEE-T, we're bringing excellent news.

Besides the payment that was carried out in June, we now have the declaration of the 50%, which was left, resulting -- results of 2020, totalizing a payout of 100%. The dividends worth BRL 1.7 billion, equivalent to BRL 1.50 per share will be paid up to the end of 2021. We are trying to pay the earliest possible.

On the charts, on the lower side, on the left, we have the costs -- gross debt costs, nominal and real. This is due to the variation of the IPCA during the period, but the real cost is negative.

Now in the composition of gross debt, we can see that the highest exposure is indexed to the CDI with 73%. But we also have 24% of the debt linked to the IPCA, and this affects a bit more the financial expense in the recent period.

At the end of the second quarter of 2021, we had cash flow of about BRL 2.7 billion with a coverage rate of 0.59x the short-term amortizations. The medium-term of amortization is 3.16 years.

Now let's move to Slide 13. Here, we have the Capex. And we've had an acquisition of more than BRL 1 billion, an increase of 57% compared to the same period last year. In the division per segment we had in distribution, a total of BRL 738 million that's into the increase in modernization and maintenance of the -- and maintenance. For generation and transmission, BRL 224 million to continue the projects of Gameleira, Cherobim and the recovery plan, maintenance of parks; and BRL 36 million for the transmission projects, Maracanau, Sul and Sul -- Sul I and Sul II.

For the segment of trading and services, we destined BRL 22 million CapEx of the semester. We did an investment of BRL 1.7 million, an increase of 48%. Per segment, distribution, total invested 1.3, generation and transmission invested BRL 340 million and for trading and services, BRL 38 million.

Thank you very much. Now I'm going to give the floor back to Gustavo Estrella.

[Gustavo Estrella, executive]

Okay. Thank you, Pan. So moving on, as I had said, I think the Gameleira wind farms are very important, 2.5 years before planned. We have Costa das Dunas, Figueira Branca, and Gameleira it's about 57 megabytes of installed capacity, the total capacity. We also have the Touros Park, which is going to be working by the end of 2021. And with this, we were able to sell this energy in the spot market, therefore, improving the rates and the entry in operations.

So let's move now to the next slide. Here is, that we're very happy with this acquisition that we did of the CEEE-T transmission. It's a very important. It's 4.3% of all Brazilian transmission lines. This puts us in an important scale in the transmission and an area that we already know, we know very well. So I think we'll have a very important synergy of operations with our distributor.

So I believe it's an asset not only due to the strategic importance for our group in the direction of growth, but also due to the return of -- that we expect. I think this is a challenge that we have. We are preparing ourselves to have disclose of this operation until October, when you start this integration. We have a very positive expectation to be very well succeeded as we had when we acquired AES Sul in 2016-'17. So I believe the idea is that we have a similar process, and we will demonstrate everything that the company can do to generate value with this asset.

Okay. Next slide, please. And last but not least, I think this is our agenda of ESG, our sustainability plan. This is a project which is very important for CPFL. It's a research and development project. We have, today, the implementation of electrical vehicles in -- there are 22 vehicles with 18 stations, we already -- we have already implemented half, and we hope that in the next months, we will conclude this project. It's going to be the first advanced station with 100% of the fleet electrical.

And I think this will be a pilot plan for us, and we're going to test the technology, the recharging, durability of the vehicles. So for us, it's an extremely important project. And our expectation is that in the future, all the vehicles will be electrical. It won't be different with cars or fleet. And we can do this in an optimized way and do this the most we can. This is a very important project, not only for the region, but for the company in general. Just to remember that this project is part of our public compromise with the sustainability plan.

So gentlemen, I think these were the main messages that we had. So now we're available for the session of Q&A. Thank you very much.

[Carlos Cyrino, executive]

Gustavo and Mr. Pan, thank you very much for the presentation, we're now going to open to the session of question and then answers in the order that they requested. [Operator Instructions]

We have a first question here from Frederico Sampaio is from Franklin Templeton. [Operator Instructions]

Well, I am going to move on. And then after Frederico is able to ask a question, we'll put you in the line again. So let's call now Andre Sampaio. He is an analyst from Santander.

[Andre Sampaio, analyst]

Can you hear me?

[Gustavo Estrella, executive]

Yes, we can hear you.

[Andre Sampaio, analyst]

Good. I have 2 questions. The first question is about the growth strategy. So you have decided to pay the dividends that was way from way back, and I'd like to understand, moving forward, what are the next steps? Are you going to integrate the CDE transmission? And what's the growth plan from now on? Are you able to continue growing in transmission? Are you -- is it generation? So what are you planning to do? The question that I ask is because you mentioned that the nonpayment of dividends had been due to the growth strategy. Now that you've paid the dividends, that means that there's no more growth or the idea is to do the 2 things at the same time?

[Gustavo Estrella, executive]

Thank you, Andre for your question. Well, our strategy has always been to balance growth with the payment of dividends. And I think our strategy continues in the same line. Our analysis is that we could pay the dividends without compromising growth opportunities. So we did this. We paid the dividends. I think this payment is important for the strategy of the company in general. And when we look in perspective, opportunity in growth. I think that one thing doesn't invalidate the other. So that's the idea.

You mentioned some examples. We continue looking at growth opportunities with financial discipline to investments that will bring us return on the investments. So first of all the growth plan continues, and we are always evaluating opportunities. As for our leveraging, I think we have the capability of continuing to grow and paying dividends. That's what we intend to do.

[Andre Sampaio, analyst]

I'd just like to follow-up here in relation to this first question. Is there any specific asset that you're more interested in and that is in the market, some specific sector that has called more attention? And the second question that I ended up by now to asking was in relation to an update of yours in relation to the drought crisis? Do you think that the situation has worsened? Should we be more concerned than in the first result?

[Gustavo Estrella, executive]

Well, I think, in general, the assets that come to the market that these are the ones that we're going to look at in CDE generation, we already partners in several hydraulic plants, so it's natural that we look at these assets. The sale so -- sorry, it's an asset for us to evaluate. So I think there are several alternatives and opportunities on the table and we have to look at one by one to see what makes sense and what works. I think we have good opportunities. I think that's the good side. It's where we can, in fact, deal with what is most interesting to us, and also what will give us a return.

As for the rationing, I think the crisis is serious. We see that we have records of -- recurring records of low hydrology, the expectation, low term, low -- short-term, sorry, I think it is concerning. We do not have a rationing scenario. As a base case, the scenario is that we have one year with no rationing, but the risk exists. We celebrate a metrics which is clean and renewable, but it is 80% clean and renewable. Over 60% hydraulic if we don't water, we have problems. And so look at the scenario, all the statistics that we have and the perspective of consumption versus our real generation capacity, rationing is still not on the table, but we know that this risk exists if we continue having a worsening hydrology.

One thing that is worthwhile mentioning is that we have a scenario short-term looking at October, November, December, that's when we start going into the hotter months. And when we have more peaks of consumption. And this will be our main risk. How do you attend to the demands in the peak? So I think with all these initiatives that the government has discussed to try to avoid or dislocate this peak, I think this is the way to go so that we avoid any type of option. So at this moment, when the consumption is high, I think this is the way to go, and we're in the right direction.

Now when we go to 2022, what we have is a scenario which is -- looks more comfortable. We have the expectation of new generation over 10 gigs of new capacity, and this comes in during the year, and it's going to help to alleviate this pressure. And also in transmission you know that now our main restriction in transmission is between the Northeast and the Southeast. Here, we have new capacity in the Northeast with these wind farms and solar energy. We're going to have an increment in the transmission capacity in these areas of 28% in 2022. So you have more transmission, more generation and the expectation that hydrology, hopefully, there will be an uptick again. So I think that '22 the scenario is a bit more comfortable. Perhaps up to the end of the year, we have more challenges, but once again rationing is still not on the table.

[Carlos Cyrino, executive]

Let's move on to the next question is Marcelo Sa from Itau BBA. I think that Marcelo has left.

Well, let's move to the next one. Is now Giuliano from UBS.

[Giuliano Ajeje, analyst]

I have 2 questions. The first is talking about dividends with growth. How much do you think would be the target of net debt/EBITDA between 2.5, 3? What is your target? And when you talk about growth, you have the asset that you mentioned generation [ CT3E ], and you have partnership in 3 plants, right? So is your interest only in the plants where you have partnership with the CT3E? Or can you migrate to other plants? That's the first question.

Estrella, the second question is still related to growth, the transmission business. And remembering that you are controller, you still deal in the energy? What's the relation with you and the control to dispute these assets? Are you going to be concentrated where you already are as the same as what happened in the past? Or from now on, you're going to be competing with State Grid Brazil holding. These are the 2 questions.

[Yuehui Pan, executive]

The first question, I think we have a target. It's a reference of leverage to maximize the allocation of capital. We have -- this is about 2.5% EBITDA level. This is a healthy level of leveraging. So we, with the acquisition, we with the payment of dividends with the perspective of business growing. I believe that we can continue this balance of growth and with space and opportunity to -- for new assets. As for the CT3E generation -- in fact, interests bigger interest would be to acquire assets where we already have participation. You're correct. They are 3. BAESA and CERAN so these are 3 that we already have participation. We know it very well. So the motivation for us to participate in this process, for sure, would be to look at these 3 assets.

And last but not least, in this relationship with State Grid, I think we have a dividing line, which is very clear, where we work and where they work. So looking at that niche strategy, we have geographical location, size of assets, fit with our current business, the main drivers that we have to invest in transmission. But also a division in relation to tension. So if we get the [ 3T ] transmission level, average level is a lower voltage transmission. It has much more characteristic of interaction with the business of distribution than the transmission in high voltage. And this also has to do with dividing the 2 companies in this transmission, operation and lower tensions, which is CPFL, and they are focused in transmission with higher voltages. So once more up to now, we've gone through end situations of assets coming on to the market, tenders, and I think that it's been easy to define who is fighting for what. So we don't have this dispute or the internal dispute between the 2 companies. We don't have that.

[Carlos Cyrino, executive]

Let's go to the next question. I'm going to return to Marcelo from Itau.

[Marcelo Sá, analyst]

So the question about the hydrological risk, the government has announced some measures to be able to incentivize the change of consumption in the peak times and also measures so that the residential consume -- reduces the consumption. Could you comment these measures? And do you think this will have any relevant impact on the demand?

What you think of these proposed measures and to understand if there's rationing risk, if the final effect to the distributor how would this pan out and the economical and financial balance. You would have the reduction of the volumes of contracts and in the end, you would have a positive effect. So I'd like you to please comment on these topics.

[Yuehui Pan, executive]

Marcelo, thank you for your question. Well, first of all, there's a huge [ definition ] in relation to these topics. I think we've had rationing in -- the market was completely different. So you can't use those measures of 2001, the way that the market is today -- more open, many more players, so different sources of generation, the complexity nowadays much, much higher. So perhaps as basic premises in any initiative as this -- from an incentive measure for non-consumption, up to reduction in the peak of consumption or rationing, which would be an extreme measure. I think this has to be discussed widely to preserve the contracts and especially the distributor contract. This was done in 2001 in a different context, it was done. Our vision is that it shouldn't be different now.

I think any measure that is linked to rationing or rationalizing the consumption of energy, this has to be discussed and how this affects the concession contracts of the distributors and some measure has to be taken to avoid a negative impact. So I think this is a basic premise. We have followed closely these discussions. And once more, the complexity of implementing a measure such as this is much, much bigger than in the past, but this precondition has to be preserved in any condition. I think this is our position. And I think that this has to be followed ever since a simpler measure of rationalization till the more serious measures.

If we are in a scenario of rationing, I think we have to have a discussion very similar to what we had in 2001, where we had compensation measures and rebalancing the contracts. It cannot be different. The sustainability of the sector long term, I don't see that it would be different in such a situation.

Talking about generation, specifically, for example, when -- let's say the government makes a campaign to reduce consumption. So what happens is that you will reduce and you will worsen the [ GSE ] that will be negative for hydric generators in general. Then if you have an official declaration of rationing, let's say, 10% load reduction, you reduce the volume of the sale of contracts, and then this would have less negative impact than another effect. I don't know if you have thought of this for the generation effects.

Look, if we come to a measure such as this of 10% rationing, I think the impact that you have in the whole supply is large. We can't see an isolated effect of one segment or another. So once more, I think we'll have to sit down. This is going to depend on the type of generation we have, some that have -- they are different. We have the free market. There's so many variables on the table that I don't think -- I think we'll have to have an ample discussion of all the rules of the sector, that's why it's so complex. But in an isolated fashion, I don't think that we can imagine that we preserve the regulation the way it is for some and for others. I think it's going to be an imbalance for each segment for the business and in each segment for each player that is in this business. So we -- if there is rationing, if we will have to have a huge re-discussion to rebalance the sector in general.

[Carlos Cyrino, executive]

Let's go to the next question, it's from Carolina.

[Carolina Carneiro, analyst]

I have 2 questions about regulatory issues. The first one, if you could please comment about the discussions of a possible new update of accounts. ANEEL has updated from BRL 6 to BRL 9, but there's a pending discussion of this going up to BRL 11. And comment a little bit how do you see the coverage today compared to the plants of the sector due to the situation that you mentioned, also the regulatory agenda, because of short term, we don't talk about losses, regulatory issues, so do you have an expectation of when these topics will come back to the ANEEL agenda.

[Andre Luiz Gomes da Silva, executive]

I'm Andre. I'm the Director for Regulatory Issues. Well, the first question, we're still discussing. It's a public consultation of ANEEL. And what we have here in this last month, the costs -- the hydrological costs and these costs have increased, so in general, we've signaled -- the distributors have signaled that it would be prudent to regulate this red flag. But we're still discussing this. So ANEEL has not yet defined if it's going to maintain the flag in the current status or if it's going to update? This is a discussion when this last update was done, and it's now opened the second phase of public consultation. We do not have further details about what ANEEL is going to do. It's in a discussion phase.

As for the regulatory agenda, it has in fact been sort of run over by a series of other topics. The pandemic itself had other topics that sort of ran over the agenda, but the discussions, they continued in parallel and all the distributors, society as a whole contributed. We continue following these topics, especially the regulatory operational costs or the losses, as you mentioned. And we are going to continue monitoring this because these tariff revisions, they take place in 2023 for the larger part of the distributors. So we have to have some sort of a definition between the second semester of next year -- second semester of this year and the first semester of next year to be able to apply this in 2023.

[Carlos Cyrino, executive]

Thank you, Andre. Well, folks, so we don't have any more questions. And we are now ending the session of questions and answers. If there's any question, our Department of Investor Relations is available to answer.

For those who we have a new site with much more information. Don't forget to access and leave your feedback. It's very important for our continuous improvement to have more transparency and with more information for you. So I'm going to give the floor back to Gustavo Estrella for his final words.

[Gustavo Estrella, executive]

Thank you. Well, I want to thank you for your participation. I want to say that this -- we're very proud of our team, we're very proud of everything that we achieved. I think that we are delivering robust and expressive results, good results, allied here to a dividend declaration, which reinforces our commitment with our shareholders. And at the same time, we're able to deliver growth, the CDDE and the Gameleira complex, I think all this together shows the perspective that we have for our CPFL business, for our growth plans. We're here in discussions of strategic planning for the next years of the company, and this gives a lot of strength to go in search of quality, efficiency and new opportunities of growth. Once more, thank you very much, and I wish you a great afternoon.

[Carlos Cyrino, executive]

Thank you. We now end the results of the second quarter of 2021, CPFL Energy. Thank you all for the participation. Have a great afternoon. And a wonderful weekend. Goodbye.

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