Equatorial Energia SA

BOVESPA:EQTL3

Earnings Call Transcript 2022-Q1

[Operator]

Good afternoon, and thank you for standing by. Welcome to Equatorial Energia First Quarter Results Conference Call. Here with us, we have Mr. Augusto Miranda, CEO; Leonardo Lucas, CFO; and Tatiana Vasques, IR Superintendent. This event is being recorded. [Operator Instructions] This event is also being broadcast simultaneously via webcast and may be accessed at www.equatorialenergia.com.br where the presentation is also available.

Participants may view the slides in any order that they wish. A replay facility will be made available shortly after the event is over. Those following the webcast may post their questions on our website. They will be answered by the IR team after the conference is finished. Before proceeding, let me mention that forward-looking statements made during this conference call concerning the company's business outlook, also operating and financial targets are based on beliefs and assumptions on the part of the company's management and also on information currently available to the company.

Those forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not materialize. Investors and analysts should understand that conditions related to the macroeconomic conditions and other factors could also affect the results of the company's future performance and thus differ materially from those expressed in these forward-looking statements.

I now will turn the conference over to Mr. Augusto Miranda, who will conduct the presentation. Please, Mr. Miranda, you may carry on.

[Augusto da Paz Júnior, executive]

Good afternoon, everyone, and thank you for participating in our earnings call today. We will be presenting numbers of Equatorial Energia for Q1 2022. The performance in this quarter shows once again our ability to generate results which are sustainable through efficient management and at the same time that we pave the way for our future operational fronts.

Starting on Slide #3, if I may. Starting with our economic and financial highlights. We closed the first Q with a consolidated EBITDA recurring, totaling BRL 1.7 billion. The amount was 56% higher than the one posted in Q1 2021. Both by the performance of the distribution, but also by the consolidation of new [ ESG ] assets, Echoenergia and CEA. We invested BRL 701 million in the quarter, up 11% from Q1 2021. And the highlight here is the volume executed in distribution, which grew by 50.3%, offsetting the lower CapEx in transmission which already has all assets in operational mode.

We closed the quarter with 3.7x in our net debt-to-EBITDA ratio. The leverage in this quarter already brings embedded impact of the consolidation of Echoenergia and its acquisition finance and also reflects funding made recently to invest assets in turnaround and new areas of operation.

We continue to have a robust cash position at BRL 8.9 billion, which is key to reassure and provide us with flexibility in the current macroeconomic scenario. As for the performance of our distribution companies, 1 quarter where we had expansion of our sales volume for energy by 3.5% of growth when compared to the previous period. The highlight for the state of Pará and Rio Grande do Sul.

For comparative purposes, this number consolidates CEEE-D and CEA in Q1 2021.

It's important to say here that we have managed to deliver growth above the level of the injected growth, which sat at 2.0% in the period, showing success in fighting losses, which has dropped in 5 of our 6 concessionary companies. We closed the first quarter with a reduction of 0.3 percentage points in the last 12 months indicator reaching 23.3% total.

Overall, our assets have improved consistently its performance in losses. They reflect on the final number, as you'll see throughout the presentation. Another important point in the period is the start of the reporting of our performance of generation of energy, even though we are still consolidating Echoenergia only as of March 3. Considering the first 3 months of Q1 '22, our parks generated 934 gigawatts hour, the highlight for the Serra do Mel 2 throughout the quarter. Now once the closing is over, we are now focused on integrating that platform, which counts with 1.2 gigawatts in installed capacity in addition to another 1.2 gigawatts in developments.

Recently, we announced the management of Echo management team, leaders led by Tinn as CEO, our old new business M&A Director, Tinn, in addition to knowing deeply our business plan for Echo will have a fundamental role to play in integrating this asset. So we will be able to explore the several synergies which are present. Additionally, it's worth mentioning that we're looking to preserve Echo's management with people who had already been there as Leo, the COO, who's been with the company since its foundation.

Also last week, we communicated the conclusion of the sales of Geramar. Geramar was a conventional generation asset on which we had 25% and whose sales contract was signed last December. The completion of this operation marks the exit of the group from the diesel generation industry.

Lastly, we have approved in our last shareholders meeting, the payout for 2021, over BRL 700 million in dividends to be paid out in line with the volume paid out in the previous year.

I now turn the floor over to Leo on Slide 5, where we'll see a consolidated view of our economic financial performance. Over to you, Leo.

[Leonardo da Silva Lucas Tavares de Lima, executive]

Thank you, Augusto, and good afternoon, everyone. Moving on with the presentation. Let's talk about the economic financial performance of Equatorial in consolidated figures. On Slide #4, the adjusted PMSO for the group totaled BRL 647 million. The growth is linked mainly to new consolidated assets, specifically the new distribution assets, CEA and CEEE-D which together totaled BRL 152 million. If we not -- do not consider the new assets, the OpEx growth adjusted was of only 7.5%, a variation below the inflation in the period, which was 11.3%.

The good operating performance along with the PMSO discipline, which can be seen here, resulted in an expressive increase in the company's consolidated EBITDA at 56%, totaling about BRL 1.7 billion in this first quarter of 2022. The main highlight is the contribution coming from new assets for distribution and especially Rio Grande do Sul, which posted BRL 171 million of EBITDA in the quarter.

In addition to the performance of the other assets, which were benefited by higher [ VOB ] tariff for most distributors, market growth, decrease in losses and also by the growth in EBITDA for transmission. We can also see in the chart the start of the consolidation of Echoenergia, which can be seen here under generation.

On the orange column on the left-hand side, we show that if we do not consider the main noncash effects from the correction of the financial asset of IFRS in transmission and if you also disconsider the accounting report of stock option in the first quarter, the growth in the quarter would be of 35% or BRL 369 million, going to -- from BRL 1.1 billion to BRL 1.4 billion in the quarter, significant growth.

Moving to the next slide, please. As it can be seen, we have invested BRL 701 million in the quarter. This amount is 11% higher that posted in the same quarter of last year. The main highlight has to do with an increase in investments in distribution, especially in the state of Pará, focused on strengthening expansion of our network and the program Luz para Todos, in addition to the consolidation CEEE-D, which contributed with BRL 69 additional million.

Investments allocated in the segment came at BRL 675 million, an increase of more than 50% when compared quarter-on-quarter. If we disconsider investments in PLPT that increase was 30% when compared to Q1 2021. Now moving on to the next slide, please.

On Slide 7, we see our debt profile and the level of leverage as measured by net debt EBITDA ratio. Adjusted EBITDA, mind you, the leverage in Q1 2022 came out at 3.7x when compared to 2.5x posted in the previous quarter. As we can see, this increase comes from the effect of the acquisition of Echoenergia be it because of the debt, which is now consolidated at BRL 3.3 billion or be it because of the acquisition finance of BRL 4 billion, which was needed for the operation. It's worth mentioning, however, the adjusted EBITDA does not consider the EBITDA for 12 months of the acquired assets unlike what our governance do.

From the standpoint of our covenants, it just does not adjust EBITDA for its nonrecurring effects, but does it pro forma in the last 12 months of the acquired assets. The multiple net debt-to-EBITDA for Q1 was actually 3.1x. Additionally, it's worth mentioning it's also important that the CEEE-D and CEA are still in turnaround and Echoenergia is in ramp-up since the Serra do Mel 2 complex just became commercially operational.

Net debt totaled BRL 22 billion and a robust cash position at BRL 8.9 billion. This amount is enough to pay back more than 2 years of our amortization schedule, which has an average duration of 5.5 years. As for our short-term debt of March 31, the availability balance accounted for 2.6x of coverage.

Moving on to Slide #9, please, where we'll go into the detail about the distribution segment. We now talk about the evolution of the energy market. Here for comparison purposes quarter-on-quarter, we see a view of Q1 '21 adjusted by or for Amapá and Rio Grande's data. The volume of energy continues to expand as it happened in previous quarters, with a growth of 2% in the quarter and an increase in most of our concessions, especially in Pará and Rio Grande do Sul.

As you can see on the chart, in the bottom part of the slide, this growth is followed by an increase in the volume invoiced by our concessions in a consolidated manner at levels above the injected energy, growing 3.53%, boosted by the result of actions to fight losses individually. In addition to the highlights for Pará and Rio Grande do Sul, we can see a reduction in Piauí influenced by the climate and expansion of GD in the region, distributed generation. In addition to the variation in Amapá, which will present a higher volatility in the first quarters of consolidation because of adjustments in procedures for billing and also adjustments in the client base.

As we look in a breakdown by classes, the highlight is the good growth level of all consumption classes, especially commercial at plus 6.7%, showing a recovery of the sector when compared to last year, followed by others at 4.8% positive, which reflects mainly a recovery of the consumption by the public sector.

Lastly but not least important, the amount of clients who were benefited by the social tariff also grows. We added another 308,000 clients through our concessions, an expansion of 12% when compared to Q1 2021. At CEEE-D and CEA, the growth of clients of low income was 35% and 42%, respectively.

Now moving to Slide #10, please. Here, we see our performance in terms of collection and delinquency for our distributing companies and also our losses performance. The main highlight in the period is the result in losses in this quarter. Once again, all our concessions saw a drop in its level of losses for the past 12 months, exception for the CEA, which is going through an adjustment phase.

In consolidated numbers, Equatorial reduced by 0.3% its loss level when compared to Q4 2021, which shows the success of our actions to fight losses. When we look at the year-to-date numbers, our collection performance remains at high levels for our more mature assets, reaching a consolidated level of 98.5%.

Across distributing companies, the highlight was our Alagoas and Piauí states with an index of 100.8% and 100.3%, respectively, in the quarter, in addition to the significant improvement in Amapá with 109.2% of collection, allowing a recovery of receivables, which was -- which were in arrears.

As per PECLD, is considering CEA, which saw a reverse in the period, our distributing companies closed the quarter at a consolidated level, very close to what we had in Q1 2021. In other words, close or below to 2% of the ROB.

Moving on to Slide #11, please. Here on Slide 11, we have an overview of our quality performance for our concessions and also annual indicators, all in year-to-date numbers. When compared to fourth quarter '21, we saw a drop in SAIDI and SAIFI for Pará, Piauí and Rio Grande do Sul which show our commitment to improving quality in supplying energy across all concessions and the consequent evolution of those indicators. Currently, 5 of our 6 concessions operate with a SAIFI level below the regulatory 1.

Moving on to Slide 12. Here, we have the result of the segment of distribution and its contribution share for the company. We start by the top chart considering only the more mature assets, the adjusted PMSO because of nonrecurring effects grew below inflation when compared to Q1 2021, having increased 11.1%, individually and in percentage terms. The variations in Piauí and Alagoas are the most representative and they come mainly from the intensification of collection services, fighting of losses and more expenses with maintenance, including assets acquired last year in Rio Grande and Amapá, the adjusted PMSO grew by 50%. But here, it's worth mentioning that the level of expenses for those companies is in steep reduction. CEEE-D and CEA saw reductions of about 30% in PMSO showing advances in the turnaround process and capturing positive results from the PDVs done in Rio Grande do Sul.

On the side, the information about PMSO/consumption shows that the level of efficiency of our operations showed a potential to reduce in Rio Grande do Sul as well. When we look at the EBITDA of our operation on the bottom chart, we see a contribution per distributing company and adjusted EBITDA. Excluding new assets, the adjusted EBITDA grew 13.8% in the period, driven mainly by an increase of the EBITDA in Pará coming from a higher [indiscernible] revenue and a strong reduction of losses when compared with the previous period. The perceived effect in Maranhão comes from the impact of the tariff effect of last year and also by the effect of the variation of the PECLD when compared to the excellent results posted in Q1 2021, resulting in a lower level of PECLD in that period.

Considering the new assets, the distribution segment reached BRL 1.3 billion in EBITDA out of which BRL 163 million came from an effect of the VNR. But here, the highlight is for the significant increase coming from Rio Grande do Sul at BRL 171 million EBITDA in Q1. And CEEE-D now captures the result of actions executed last year, such as the reduction of CEEE-D expenses. The effect post revision, a reduction of losses and a growth of markets. The first quarter tends to be a period which is more significant for the region as people consume more in the coast of the state, the coastal areas, which is in our concession area.

Moving on to the next slide. On Slide 14, we talk about transmission, and we show the performance of the transmission segment. Since Q2 2021, we have had all our assets in operational mode, a success story of implementing those projects. Also, our portfolio of transmission adds up to [indiscernible] of BRL 1.2 billion annually in this first quarter 2022. The regulatory EBITDA of the segment for our transmission reached BRL 272 million, an increase of 30% with a margin of 94%. The increase in EBITDA happens by the interest in operation of the project, more specifically, SPV 6 in March 2021 and SPV 3 in May 2021.

Now moving on to Slide 16, please. Now let's look at our most recent acquisition, Echoenergia in the segment of Generation. The acquisition of Echo was completed in March at a price of BRL 7 billion. The operation was addressed mainly by funding raise during the follow-on of Equatorial and BRL 4 billion in debentures issued by the holding for that specific acquisition in the quarter.

The main highlights have to do with the operation of complex Serra do Mel, which added 206 megawatts of installed capacity and whose ramp-up happened throughout the quarter. And by the start of integration of Echoenergia to the Equatorial group with a change of management as announced in April.

In terms of operating performance, the generated volume in the quarter reached 934 gigawatts hour, a growth of 2.3% when compared to Q1 2021. Despite significant reduction in wind power when we compare periods. Reflecting the generation scenario, Echoenergia's EBITDA grew by 2.2%, totaling BRL 127 million with side comments that we only consolidate the results as of March, which happened throughout the first quarter. And there is great seasonality in generation throughout the year that means we take into consideration. Generation in the first half has historically reached only 30% to 40% of the energy generated the whole year. So a lot of volatility also happening, affecting the first half of the year.

I now turn the floor back over to Augusto for his final comments.

[Augusto da Paz Júnior, executive]

Thank you, Leo. I'd like to close by reinforcing our accomplishments in the period and outlook going forward. Among the points we have raised, one of the highlights is without a doubt the conclusion of the acquisition of Echoenergia in March, a platform already consolidated in renewable energy, which allows Equatorial to act as a player integrated in our value generation chain. I also highlight the closing of Geramar more recently in April, but which marks the exit of the company from the diesel generation segment.

As for distribution performance, I'd like to highlight the growth of market across most of our concessions and the reduction in losses, which we have delivered quarter-on-quarter. Above all, I highlight the excellent performance in collection in the quarter, 3 of our 6 distributing companies collecting more than 100%.

I highlight our goals with an average effect below 20% and a positive impact in Parcel B of 8.3%. In Amapá we concluded in April, the voluntary dismissal program, 167 employees brought into the program with a payback of 18 months. The objective here is to renew the company. Part of the open positions will be filled in the coming periods. Additionally, in our last shareholders meeting, we approved the allocation of results proposed in our balance sheet and consequently, the distribution or payout of dividends. They will be BRL 0.64 per share, and they make up a total of around BRL 700 million to be paid out to our shareholders.

As many perspectives for the year, I highlight the following topics. In distribution, we are focused on advancing the turnaround process for Rio Grande and Amapá, whose initial results are possible to realize and the results announced this quarter. In Sanitation, we'll start our operation in Amapá, the CSA so-called now in July.

Despite the fact that we're still in assisted operation phase, we have advanced on several fronts. We hired the anchor company for the commercial front, service, reading, meters and invoicing for the same supplier of energy. We have also hired a technical anchor responsible for changing the hydro meters, and we are already doing that for larger clients. We have also contracted a company to file all the clients and we have advanced in recruiting, selecting and training new plumbers and operators.

In the renewable generation segment and trading we advanced in 2022 in the integration of Echoenergia to the business groups, unlocking all the potential we have in generating and trading energy. We'll continue to assess possible opportunities to strengthen our portfolio.

Now I turn the floor back over for the operator for the Q&A session.

[Operator]

[Operator Instructions] Our first question comes from [ Rafael ] from Crédit Suisse.

[Unknown Analyst]

My question is about Echoenergia. How do you see the scenario for closing new contracts? The prices you've seen in the market, are they attractive enough based on the higher CapEx we've seen around?

[Augusto da Paz Júnior, executive]

Actually, Rafael, if you look at the pipeline, we have been very careful in analyzing all that, the Echoenergia deal. And we do have time to execute that CapEx. That's good to remember that if you look at prices, they have stabilized, which reassures us to choose the right moment. We understand that, that price will go down, and this will allow us to have better opportunities to execute that pipeline. In addition, that CapEx dynamics is a down-trending movement, I'd say. And because of the COVID situation, we see those variations, but it is something you can already envision, right? And that number is becoming increasingly more stable. We are closely monitoring that and we will be joining the PPAs within or under the new strategy. And the idea is to allocate that pipeline portfolio as timely as possible.

As for pricing, we have a well-positioned strategy for A4 growth. So within our concessions, there is a subgroup, which allows us to -- how can I put it? It is a very representative group, the A4 that allows you to generate value, focusing only there. So preferably, you can do that. So this subgroup will allow us to generate a premium within Echo provided we have -- we're talking about incentivized energy. So this will be good for Echo and for our clients at the same time.

[Operator]

Our next question from Flavia from Goldman Sachs.

[Flavia Andreatta Araujo Sounis, analyst]

Okay. I have 2 questions. First one about Echo. We saw that wins were weaker in Q1. If you could break those numbers down in terms of Q2, second quarter for us to have an idea of what we can expect in terms of generation for this current quarter, second quarter.

And also a second question about delinquency, the -- on average, for the consolidated numbers, the amount hasn't changed much when compared to revenue. But when you look -- when you break it down per subsidiary, there was a significant increase in one of the regions, Pará, Piauí where we have more mature concessions. So I'd like to hear from you what do you expect for the rest of the year if you expect a deterioration in terms of delinquency rates?

[Augusto da Paz Júnior, executive]

Thank you for your question. About Echo. The second half will be the defining period for the year. Most of the wind power will be tapped in the second half, and we have less volatility there. So only based on the first half, it's difficult to make a conclusion. It is, as you said, weaker [ rains ] and a lot more volatile. So we have to wait and see.

As for the PECLD, as you were saying, Leo, just a second. Flavia, just to be sure, in addition to what Leo said, as for Echo, up until now, we are very much in line with expectations in terms of winds and of generation. For Q2 to your question for Q2 yes. Now speaking a bit about the PECLD that's a subject we've been discussing thoroughly. We like to say that we have progressed in terms of defining the social tariff and identify those who are entitled to it, to map out those clients. So in Amapá, we'll have a full discount for low-income clients for those up 150-kilowatt watts and for water up until 20 cubic meters of consumption we will have a 0 bill at the end of the month.

So along those actions that seek to send relief to some consumers are around collection measures and so on. We have been advancing strongly on those fronts. So what we see under PECLD, those are numbers below 2%. And especially, anyhow, we have delinquency rate, which is quite low, the PECLD, the delinquency rate, very low. So there was an increase, but not because the number is high in itself but because last year, the level is very, very low. Of course, it is a point of attention to us, but we have managed to perform well for the past periods. And we are always focused on this topic, PECLD, delinquency rates. We have constant workshops. We have intelligent tools for our team to work around that. We are trying to find ways to mitigate that. And the digital channels now, of course, allow for us to address delinquency more efficiently.

So we have a whole portfolio of actions to fight delinquency. Even with the reduction that we see and losses as well, right?

[Operator]

Our next question is from Arthur Pereira from Bank of America.

[Arthur Pereira, analyst]

I have a question about costs. When we look at consumers alone, you see an increase, especially across older DisCos, Pará, Maranhão, Piauí. How much of that increase in costs is related to the drop in losses and whether you have a one-off impact, which might be considered relevant in this most recent quarters, boosting those numbers? Maranhão specifically, it got my attention, the other operational expenses line. I'd like to understand what are those other operating expenses, please?

[Leonardo da Silva Lucas Tavares de Lima, executive]

Thank you for your question. We've been coming from a level around inflation that -- well, we have always thought that this final number is a reduction of reductions and increases. It's a balance. We're always trying to increase efficiencies and to eliminate deficiencies but we have always focused on global efficiencies and not only cost efficiency. So if we have a project that will add some costs, but will also bring efficiency which is the case for delinquencies and others, where we have a good balance to recover. So it's worth a while to go after that. Accounts receivable in Pará is an example of that.

And also, when we fight losses, and also around quality issues. We have intensified some actions around quality as well. So the number that we see, it is a mix of reductions of some inefficiencies and an increase in costs that will bring more efficiencies down the line, which is the case for delinquency measures, delinquency fighting measures.

[Operator]

Our next question will come from the web from Santander.

[Andre Sampaio, analyst]

Last night, Eletrobras increased provisions relative to debt and receivables, with the Amazonas Energia concession company. Do you believe that assets of Oliveira Energia could be sent to market in the short run to address their financial difficulties?

[Augusto da Paz Júnior, executive]

Andre, thank you for your question. I wouldn't like to comment on the results of a peer. So I'll have no comments about that, if you understand. I wouldn't like to comment on peers results, if you understand.

[Operator]

Next question also from the web, Antonio [indiscernible], a shareholder.

[Unknown Shareholder]

I'd like to know if after all the investments made in the past years, if the company has a plan around dividend payouts.

[Augusto da Paz Júnior, executive]

Thank you for your question. Our history has been built around strong returns and growth. For some years now, we have been paying out the minimum mandatory dividend, especially when we have acquisition opportunities, even though we are now enjoying a low leverage level or even when we have higher levers, but trying to deleverage the company. So it's worth mentioning in that respect that today, we are at 3.7. But if we look at the last 12 months and with the adjusted EBITDA, we're talking about 3.1x leverage. But we are present across several growth avenues.

In an economic environment which lends itself to expansion via, for example, M&A, other businesses, so when we -- since you don't like -- we don't have a locked, let's say, "locked" preestablished, fixed payout policy. If we understand that there are opportunities to generate more returns, that payout policy tends to be that, in other words, paying lower dividends. Unless we understand we have a combination of a very low leverage and very few growth opportunities out there. As we've done in the past, actually, we had a policy of paying more dividends when the scenario is like that.

It's worth mentioning that this is a growth company, and we have grown significantly with cash generation coming from more mature businesses. So when we have good opportunities to allocate capital, we will probably do that and we'll be paying lower level of dividends.

[Operator]

Our next question, [ Luiza ] from Itaú BBA.

[Unknown Analyst]

I'd like to know how can you compare the effective generation to the P50 and whether you think you will meet P50 in the year's consolidated results. You will overcome P50.

[Augusto da Paz Júnior, executive]

Well, thank you for your question. We cannot make that comparison in the quarter. We explained that the quarter is very volatile this first quarter and most generation is concentrated in the second half of the year. What I can tell you now is that our plants in the past -- our generation plants with the exception of the old ones. When we generated above the physical guarantee that was the case. But now it is difficult. It's impossible to compare quarter-on-quarter, especially using the fiscal guarantee because there is a seasonality effect. So the comparison always needs to be made based on the 12 previous months with the coming year.

[Operator]

Our next question [indiscernible] from Clube de Investimento Infinity.

[Unknown Analyst]

What is the company's strategy about leverage? Is the idea to recover levels of 2x net debt-to-EBITDA.

[Leonardo da Silva Lucas Tavares de Lima, executive]

Whenever we have a lower leverage level, it's always a moment which is very thought-provoking. What are we going to do? And we're always looking at possible projects or potential opportunities in our radar for us to allocate our capital. That level that we are enjoying now 3.7, if we look, as I said in the 12 months, previous months, we're talking about 3.1. So with the exception of the timing, the idea is to deleverage the company now. We try to look at the transmission segment, a segment where we can work with a higher leverage levels, something close to [ 4%, 4.5% ], depending on the interest rate level. In distribution, a comfortable level would be [ 2.5% ], perhaps if we talk about a more mature company, we could get closer to a high level, if you depend on less CapEx.

And in terms of generation, this is what we can do 4x -- around 4x. So what Equatorial is going to do is to provide guidance around those ranges. And we are always paying very close attention to those numbers because to a large extent, that will define our future actions. Some actions require more consumption. When you talk about Sanitation, but others, such is the case for transmission. When you have greenfield projects, you have a few years before we start using your CapEx.

So the leverage pressure, if I may, only appear down the road. As our portfolios are diversified, we need to work using a sort of a buffer for us to continue to grow across different growth avenues.

[Operator]

Our next question, Daniel Almeida from [indiscernible].

[Unknown Analyst]

What will be the allocation of that robust cash that the company is holding now?

[Augusto da Paz Júnior, executive]

Okay. Thank you for the question. I think a robust cash is always a good problem for one to have. A robust cash position is good for a few things for you, for example, to face a period where you have higher interest rates or the like. It's also good for our M&A and growth agenda. And it's also good for us to be able to revisit some more expensive debt, either more expensive or with a higher cost with different tax shield models and so on. So the idea is to use that cash position in an intelligent manner to extract value.

[Operator]

This concludes the Q&A session. I'd like to turn the floor back over to Mr. Miranda for his final remarks.

Mr. Miranda, you have the floor.

[Augusto da Paz Júnior, executive]

Well, thank you. Thank you all. And to close, I'd like to reinforce our commitment with value generation as we deliver consistent results and with a disciplined management policy. We plan to move on. Our IR team is available to support you if you have any questions or comments after our call. Once again, thank you for your interest in the company and for being part of our call. Have a nice day, everyone. Thank you once again.

[Operator]

Equatorial Energia audio conference is now over. We'd like to thank you all for participating. Have a nice day, everyone.

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