Equatorial Energia SA
BOVESPA:EQTL3
US |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
|
US |
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Mastercard Inc
NYSE:MA
|
Technology
|
|
US |
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
|
US |
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
|
US |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
|
US |
Visa Inc
NYSE:V
|
Technology
|
|
CN |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
|
US |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
|
US |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
|
US |
Coca-Cola Co
NYSE:KO
|
Beverages
|
|
US |
Walmart Inc
NYSE:WMT
|
Retail
|
|
US |
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
28.5
35.84
|
Price Target |
|
We'll email you a reminder when the closing price reaches BRL.
Choose the stock you wish to monitor with a price alert.
Johnson & Johnson
NYSE:JNJ
|
US | |
Berkshire Hathaway Inc
NYSE:BRK.A
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Mastercard Inc
NYSE:MA
|
US | |
UnitedHealth Group Inc
NYSE:UNH
|
US | |
Exxon Mobil Corp
NYSE:XOM
|
US | |
Pfizer Inc
NYSE:PFE
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
Nike Inc
NYSE:NKE
|
US | |
Visa Inc
NYSE:V
|
US | |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN | |
3M Co
NYSE:MMM
|
US | |
JPMorgan Chase & Co
NYSE:JPM
|
US | |
Coca-Cola Co
NYSE:KO
|
US | |
Walmart Inc
NYSE:WMT
|
US | |
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Good afternoon. Thanks for waiting. Welcome to the conference call of Equatorial Energia S.A. referring to the second quarter of 2022 and the earnings release. We have here with us today, Augusto Miranda, CEO; Leonardo Lucas, CFO; Tatiana Vasques, Investor Relations Superintendent; and Tinn Amado, CEO of Echoenergia.
This event is being recorded. [Operator Instructions] This event is also being broadcast live via webcast. It may be accessed through Equatorial Energia S.A. website, www.equatorialenergia.com.br, where the presentation is also available. Participants may view the slides. The replay will be available shortly after the event. Let me remind you that participants of webcast may pose their questions through Equatorial Energia S.A., which will be answered after the conference call is completed.
Before proceeding, let me clarify that forward-looking statements made during this conference call related to business, perspectives of Equatorial Energia comprise benefits and assumptions and they are based on information currently available to the company. They involve risks and uncertainties because they relate to future events and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that conditions related to macroeconomic conditions, industry and other factors could also cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Mr. Augusto Miranda, who is going to start the presentation. Mr. Miranda, you may begin your presentation.
Good afternoon, everyone. Thank you for attending our call. Today, we are going to present the results for the second quarter of 2022 of Equatorial Energia. As you are going to see, the results of the quarter brings evolution and diversification of our group demonstrated by the growing contribution of recently acquired assets. Let's start with Slide 3. Here, I'll start with economic financial highlights of the group. We ended the quarter with recurring consolidated EBITDA of BRL 1.8 billion. This is the highest quarterly EBITDA record in our history. This figure was 48% higher compared to the second quarter '21, capturing the performance of distribution and also consolidation of new assets, such as Echoenergia, CEEE-D and CEA. We invested about BRL 1.2 billion in the period, a volume of 152% higher than that in the second quarter '21, primarily with investments in distribution.
We closed the quarter with a cash position of BRL 10.4 billion, 3x higher than our short-term obligations. This liquidity has been essential to give a strong quality and flexibility in the current macroeconomic scenario and also in considering value creation opportunities. In addition, our leverage closed this quarter at 3.5x, measured by the net debt over EBITDA ratio with reduction compared to the first quarter of the year. Regarding the performance of our distributors, I would like to highlight the 2.3% expansion in the volume of energy distributed, especially in the state of Pará, Maranhão and Alagoas. For comparison purposes, this figure consolidates CEEE-D and CEA in the second quarter '21. This result has been achieved successfully, thanks to our initiatives to fight losses, which have shown consistent reduction in most of our distributors.
In addition to the growth of GD, we ended the second quarter of '22 with consolidated level of losses of 23% in the 12-month indicator. Speaking of operational highlights, the volume of gross energy generally in the quarter was 843 gigawatt of water. This is the first quarter in which we have fully consolidated the performance of our renewable generation asset, Echoenergia. For comparison purposes, the volume of generated energy showed a growth of 0.2% compared to the second quarter '21, negatively impact by the influence of the wind in the period but offset by the beginning of the operation of [indiscernible] to complex. Finally, I would like to highlight the advances in the value creation and the tariff events of the period. Last month, we started the effective operation. Again, last month, we started the effective operation in the sanitation sector in Amapá, beginning the activities of CSA on July 13.
With this further operation, Equatorial Group is now more than an integrated energy player, it has become a multi-utility. Operational results of CSA will be part of our consolidated performance in next quarters, the third quarter '22. Additionally, since last quarter, we've had tariff events contributing positively to our operations, especially in Equatorial Para in the sanitation operation in Amapá with the application of the correction formula as provided in the public announcement and in the transmitters, the readjustment of RAP for '22, '23 cycle. Now, let me hand it over to Leo on Slide 5, where we are going to see the consolidated view of the group's economic financial performance. Leo, please?
Thank you, Augusto. Good afternoon, everyone. Carrying on with our presentation, let's talk about the economic financial performance of Equatorial Group in a consolidated view. The consolidated gross margin grew 54%. The growth is mainly linked to the performance of the distribution segment, benefited in a general way by the higher wire bill tariff, market growth and reduction of losses, with special emphasis on the performance of Equatorial Para. It has also contributed positively to have a consolidation of new assets in Rio Grande to Amapá and Echoenergia in the area of renewables. And if we disregard the new assets, then the consolidated gross margin grew 33%. [indiscernible] Group reached BRL 774 million in the period.
If we exclude the new assets, the growth of adjusted OpEx was 16% compared to accumulated inflation of about 12%, showing the initiatives that have been adopted to improve quality and the continued intensification of collection and fight against losses. The good operating performance combined with the consolidation of new assets in the last quarters resulted in an increase, which was consolidated with rather an increase in consolidated adjusted EBITDA of 47%, totaling BRL 1.8 billion. Among the main adjusted effects, I would like to highlight the customary adjustment related to the effect of the write-off of assets and losses when we deactivated assets and rights, a consequence of the higher volume of investments in addition to the creation of liabilities for the return of PIS/COFINS credits in MaranhĂŁo and PiauĂ, the later with a consolidated amount of BRL 87 million.
In the orange columns, we show that if we exclude the main non-cash effects of the correction of the financial assets, IFRS in transmission, the growth this quarter would be 33%, going from BRL 1.1 billion to about BRL 1.5 billion this quarter. Now moving on to the next slide. As we can see on Slide 6, we invested in the quarter totaled BRL 1.2 billion. It represents a significant increase of 152% over the same quarter last year or BRL 716 million. It has been led by higher investments in distribution. This variation, I would like to show the higher CapEx executed in Para plus BRL 215 million in Maranhão, plus BRL 170 million, focused on strengthening and expanding our network and the program life to everyone. And the investments in Rio Grande [indiscernible] Amapá, which contributed with additional BRL 192 million and begin to demonstrate the progress in the CapEx spends of these assets in the early stages of turnaround.
It's worth remembering that in upcoming year, we are going to have important tariff revision process in Pará, Piauà and Amapá. The investments are located in the distribution segment. This quarter totaled more than BRL 1.1 billion, an increase of almost 170% when compared. Now let's move on to the next slide. On Slide 7, we show a profile of the company's indebtedness and the leverage level measured by net debt over adjusted EBITDA ratio. Leverage in the quarter reached 3.4x in comparison to 3.7x observed in the previous quarter, the first quarter '22. This variation captures the increase in the consolidation period of Echoenergia and the increase in cash and cash equivalents, reflecting the operational performance. It's worth noting that adjusted EBITDA does not consider 12-month EBITDA of the acquired assets differently from our covenants.
In the covenant view, which does not adjust EBITDA for non-recurring effects, the multiple of debt by EBITDA in the second quarter of '22 was 3x. Net debt totaled BRL 23 billion and a robust cash position of BRL 10.4 billion. This amount is enough to pay more than 2 years of our amortization schedule whose average term at the end of the period was 5.5 years. Now concerning our short-term debt on June 30, the balance of cash and cash equivalents represented a coverage of 3x. Therefore, I would like to point out that in July, we concluded debenture exchange operation in Para, in which the resources of the 6th issue were used to set the remaining balance of the fifth issue of debentures, which would mature in the short term in 2023. This operation has contributed to lengthening of the debt profile, which has not been captured in the position in June. Now moving on to Slide 9, we are going to start seeing details the distribution segment.
Let's now talk about the evolution of the energy market. Here, for comparison purposes between quarters, we show you a view of the second quarter '21 adjusted with data from Para and Rio Grande do Sul, which were only consolidated in following periods. The volume of injected energy expanded slightly but maintaining the growth trajectory of previous quarters with 0.8% growth and positive performance in most of our distributors. In isolation, we can see that some concessions presented contraction impacted mainly by climate effects with emphasis on the occurrence of cyclones in Rio Grande do Sul and the effects of distribution generation activity, especially in Tioga.
As we can see in the graph below, the positive highlight in the consolidated comes from the growth in the volume of energy distributed in our concessions at levels above the injected energy, growing 2.3% and driven by the good performance in the states of Maranhão, Para and Alagoas, mainly as a result of the actions to fight losses. Individually, we can see a reduction in Amapá, and as we commented before, it should present higher volatility in this first months due to the adjustment of commercial process. In Rio Grande do Sul, it's worth to point out the great seasonality of consumption in the region, which has in the first quarter, it's strongest period. An important point is that, as of this quarter, we now have presented the effect of distribution energy on the volume of injected energy and the impact of its compensation on distributed energy.
If we exclude the effect of compensation of distributed generation, the volume of energy effectively built grew 1.1%, highlighting Para and Maranhao, which grew 4.8% and 3.6%, respectively. If we analyze by classes, the highlight is for growth of industrial class, demonstrating the consistent recovery of the sector compared to last year, followed by other clients, capturing the recovery of consumption in the public sector. Finally, the number of customers benefited from social tariffs also has continued to grow. More than 287,000 customers were added to our concessions in the past 12 months, meaning 11% compared to the second quarter '21. Now Slide 10. Here, we present the performance regarding collection, default of our distributions. As in previous quarters, the main highlight of the period is the result on the front of fighting losses.
In this quarter, once again, all our concessions registered a reduction in the level of 12-month losses, except for Rio Grande do Sul and Amapá, which are going through adjustments of processes. In consolidated terms, Equatorial Group reduced its level of losses by 1.3 percentage points in comparison to the second quarter '21, showing the success of our actions to fight losses. Regarding Rio Grande do Sul, it's important to point out that in the third quarter '21, there was a billing adjustment of 98 giga, with negative impact on 12-month indicator. Without this effect, the 12-month loss of CEEE-D would be 17.5%, representing a reduction of 1 percentage point in a consolidated level, which would present a reduction of 1.44 percentage points if adjusted by this effect.
Still looking at the accumulated situation, our collection performance remains at very high levels, even considering our more mature assets, reaching a consolidated level above 100%, which is an excellent result. Among the distributors, I would like to point out that 4 out of 6 distributors ended the quarter with collection rates above 100%, allowing the effective recovery of overdue receivables. It's important to note that this performance has not captured yet the positive effect of ICMS reduction in the states, which are going to see in upcoming quarters. Regarding PECLD, excluding CEA, which experienced reversal in the period, our distributed ended the quarter with a consolidated level, slightly above that recorded in the second quarter '21 but below what we consider to be recurring levels. Now next slide, Slide 11, we can see a general understanding and the performance of our concession and annual numbers, a 12-month view.
And I start by highlighting that most of our distributors operate with a safe below the regulatory levels. As shown in the graph, the challenge identified throughout '21 continued to move on impacting our results, especially in MaranhĂŁo. So during the first half, we began mobilization execution of CEEE-D plan, which increased investments and mobilization of teams directed to network adjustment, increasing volume of pruning and cleaning of streets, aiming to improve operational indicators of the group's concession. In Maranhao, the results of these programs have been noticed. In June, we closed with the lowest monthly SAIDI according to the past 18 months, and this plan is aligned with our commitment to improve the quality of supply in our concessions and the consequent evolution of these indicators. Moving onto Slide 12. Here, we bring the results of the distribution segment and its contribution per company.
An important indicator of our discipline with respect to growth of PMSO and the efficiency of our operations is the 12-month PMSO consumer per month, showing the side chart, considering only the more mature assets, that is excluding Rio Grande do Sul by consumer reached BRL 224 this quarter, 14% higher compared to the accumulated inflation between the periods, which were about 12% measured by APCA. When CEEE-D and CEA, it's important to note the reduction in expenses in the quarter of 19% and 34%, respectively, in those 2 companies, showing the advances in our turnaround process. Looking at EBITDA of our operation in the lower chart, we see the contribution per distributor in the adjusted EBITDA. Excluding new assets, adjusted EBITDA advanced 41% in the period, benefiting mainly from the increase in Para, resulting from higher revenues and the strong reduction in losses in the comparison between the periods.
Considering the new assets, the distribution segment reached BRL 1.5 billion in EBITDA, of which BRL 239 million are effect of NRV. The positive highlight of the period was the good performance in the state of Para, contributing with BRL 52 million and capturing the adjustment of the reduction in number of employees and the positive effect of the reversal of contingency. In Rio Grande do Sul, I highlight the quarter's performance impacted by the volume of unbilled income influenced by seasonality of consumption between periods. This effect alone has negatively impacted the concessions EBITDA by BRL 118 million. Now moving on to the next slide. Here, on Slide 14, we quickly demonstrate the performance of transmission. Since the second quarter '21, we have had all our assets in full operation in a very successful history of implementing these projects. Together, our transmission portfolio adds up to RAP of over BRL 1.3 billion for cycle '22, '23.
In the second quarter '22, regulatory EBITDA of transmission reached BRL 276 million, growth of 8% with EBITDA margin, which was quite strong of 93%. It's worth noting that this expressive margin of 93% now reflects the scenario with all assets in operation. Increase in EBITDA occurs mainly due to the effect of the tariff adjustment from previous year with positive impact in the numbers of the second quarter '22. Now moving on to Slide 16. Let's look at our most recent acquisition, Echoenergia, in generation. It's worth pointing out that this period is the first period in which we consolidated the full quarter in the group's results. Speaking of operational performance, the volume generated in the quarter was 843 gigawatts, a small growth of 0.2% compared to the second quarter '21, despite the significant reduction in wind speed when compared between periods. The lowest wind speed was offset by the additional capacity installed between the periods.
In the complex [indiscernible] which contributed with 135 gigawatt this quarter. Reflecting generation, EBITDA of Echoenergia grew 9%, reaching BRL 111 million. As pointed out in the first quarter, I would like to highlight there is great seasonality in generation throughout the year with the first half, the generation historically about 30% to 40% of the energy generated throughout the whole year as shown in the chart. And now I just hand it back to Augusto.
Thank you, Leo. Before closing, I want to talk a little bit about the opening of our performance in sanitation, starting to operate in sanitation with the beginning of the operation of concession in the state of Amapá, on July 13. The challenge is to universalize water and sewage services, so essential for the population. And therefore, even though the numbers will be consolidated only as of the next quarter, the third quarter, I would like to share the main advances we have achieved since our arrival there. We have already more than 300 employees in Amapá, focused on the operation of the concession. These hirings were made possible, thanks to partnership with local organizations, such as C&I for recruiting, selection and training of some and operators, generating new employment opportunities for the local population.
We started the installation and replacement of meters that are more than 1,500 hydro meters installed, a process that started with the clients with the highest consumption. We have also advanced in registering customers. More than 24,000 visits have been made in this process, leading to 5,000 new customers. Operationally speaking, we have already replaced the chlorine gas in the water treatment process and the recovery of a sewage treatment station, which was not in operation, allowing the total billing for this service. We have also structured water quality control labs. We are very confident in the success of our operation where we keep on moving forward with great strides towards generating value for this asset. Now let's see the next slide, Slide 20. I would like to close by reinforcing our recent achievements and perspectives for the year 2022. Among the points we mentioned, one of the highlights is for certainly the side of the sanitation operation.
The tariff events of the period, including here the adjustment of Equatorial Para at the beginning of the month, should also be highlighted. And I would like to remind you that the sanitation operation has already had its first adjustment approved at 12.2% application of parametric form, whose tariff will be effective as of September. Now concerning distribution, I would like to highlight the market growth in most of our concessions and the consistent reduction in losses that we have been delivering every quarter. But above all, I would like to highlight the excellent collection performance in the quarter with consolidated levels above 100%. As the main perspectives for the year, the following topic should be highlighted. In distribution, we are focused on advancing the turnaround process in Rio Grande do Sul and Amapá, focusing on improving quality of operation and reducing losses.
Renewable generation and commercialization or trading, we continue to advance in the integration of Echoenergia in the group's business, unlocking the full potential of the business and the group's performance as an integrated player. But as a perspective, we'll have the advance in the trading plan recently approved, focusing on specific products designed for our priority public, in addition to continuous monitoring and negotiations, to take advantage of the best moment to execute the pipeline. In sanitation, with the concession in CSA Amapá, now we are going to focus on evolution of the operation with necessary investments to ensure the recovery of infrastructure and expansion of coverage and commercial performance. Finally, we will continue to move on, considering opportunities to strengthen our portfolio and generate value. I would like now to hand it back to the operator for the Q&A session. Thank you.
[Operator Instructions] The first question comes from Carolina Carneiro by Credit Suisse.
And I have 3 questions. First, concerning Echoenergia, and based on the performance of wind and generation for the quarter, do you think that the initial guidance of EBITDA for the year, is it still reachable or should it be reviewed? Secondly, concerning also Echoenergia, you've talked about starting to sell primarily to small retail customers, so to speak, small contracts, I don't know whether it's too early to talk about that. But to know if you have any updates concerning some contracts for retail or small businesses? And finally, the strategy of the group at large, we've seen the news throughout the recent weeks talking about a distribution asset in Goiás to be offered for sales and Equatorial would be one potential buyer. So I'd like to hear from you whether this asset is something that is within your potential targets and whether you would like to show interest in it?
Thank you, Carolina, for your questions. All very appropriate. The first 2 items concerning Echoenergia, I'm sure Tim can answer them. So Tinn, and Leo and Tate can complement that, and then I'll try to answer the last question. So Tinn, please.
Concerning the guidance of EBITDA given in the beginning of the year, we have had a generation, which was full short than what we expected but the first half of the year is less important for the total result of the year than the second half. So it amounts to 34% and 60% to 70% in the second half. So when you talk about EBITDA, considering that the operational cost is linear, it has a stronger effect when we have, of course, limited in. So said that, we are positive that, we know that the result is not good, so we would have to generate more in the second half of the year to offset that. It's not the same scale because of seasonality but we would have to generate more. So this is the expectation, generate more in the second half and compensate to meet the guidance that we gave in the beginning of the year.
Now speaking of retail and our plan, as Augusto pointed out, we have started our plan of commercialization and trading. Since the very beginning, when we took over Echoenergia, we had a dual track, speed up the process of migration of smaller customers and a more sophisticated plan involving greater technology, and that's what was Augusto referring to. But regular commercialization is in place and we've got very exciting results and results that have exceeded our expectations that were used in the acquisition process. As we embark more technology with that second track that we have put in place, we are not only going to improve profitability but also speed it up. But the first results are very promising and we've been achieving very interesting prices for Echoenergia. So Augusto, back to you to answer the third question.
Well, concerning your third question, yes, Equatorial is interested in expanding its distribution. It's our core business. That's how we started. But we don't talk about any specific opportunities. We wouldn't like to talk anything specifically about it.
The second question comes from Pedro Manfredini of Goldman Sachs.
I have a question about PMSO. We've seen a trend in distribution since the dynamic has been more under control, and we've been seeing an increase in the PMSO and we've seen that in distributors of Equatorial with an increase in PMSO expenses because of the loss reduction plan. So my question concerns your cost run rate in terms of SG&A and cash, thinking about mid and long term, do you expect it to impact your OpEx just to deal with losses? And then once you get to a plateau of losses, then you can go back to lower levels of PMSO or is it the level of PMSO that we should expect to see from now on so that you can keep to maintain low losses?
Pedro, thank you for the question. But let me set the context here. This is a moment of high inflation, increase in interest rates, and it means increased costs for suppliers. It's a natural process. In addition, we are present in areas that have been growing. And we are observing an expansion of our company, an extension of our clients' portfolio, which also cost and impact the basis. When I analyze quarter-over-quarter, our base of clients has grown 3.3%. So of course, it already incurs an additional cost. Another important point is the inorganic growth of Equatorial in the past 12 months. So yes, it increases the cost of corporate areas. So there used to be 2 companies. And now there are more companies in the group but it tends to really be translated into a gain of scales in the future. So we have expanded during the pandemic inorganically but in the short term, everything will tend to settle.
When we analyze the more mature companies with an increase of PMSO per consumer in the past 12 months, it grew less than 2 percentage points above the inflation, thanks to our best efforts to keep on delivering good results in losses and revenues. So our process also of collection, decrease in losses and some recent initiatives to improve quality indicators, SAIDI and SAIFI. So you can see very significant results in collection, in losses. SAIDI has decreased somewhat but now in June, we have presented the best in the past 18 months. And in July, I can anticipate that we are maintaining the same trend, showing that we are properly focused. The plan is generating the effect it expected to reach. And by applying that, we can reduce expenses in the future. So things have moved on. When we analyze the CapEx, and maybe Leo can jump in and say something about consolidated PMSO, just to close that to Pedro.
When we are speaking of quality, there are also the effects of CapEx, which bring contribution to improvement of indicators. CapEx, thanks to the effect that to be seen late so that you can adjust the cost issue. So adjustments that you make or near, then you can see the upcoming year. So these are effects that start to show their effect within a 2-year period on average. So that cost related to quality tends to be a level still waiting for CapEx effects to be translated into numbers.
You've mentioned the collection and mentioned 100%, in addition to reduction of loss, you also want, of course, to have a better collection and revenues. Can you tell me about this strategy? What have you been doing? What is your target audiences to collect what had been missed in the past? What is your strategy? If you could say something about that, that would be highly appreciated.
Well, Pedro, you see that in our history, we have increased our efficiency in the area of collection. In 2016, we started structuring the process. We hired a consulting company to bring intelligent tools. And we've been improving it, and we are still focusing on it, clusterizing clients smartly, and it's a constant effort. If you look the net turnover of Equatorial, it's going down monthly by monthly because of the intensification of these efforts and always evolving people. Equatorial is based on merit. So employees and partners, they are engaged in the daily operations, and this is what leads to very strong results. Leo, would you like to add something?
Our billing plan is very broad. There are multiple portfolios. We have goals just unfolded by region, by level. It's a very broad plan and we have different initiatives. There are also the contributions left by our consulting company. There is a constant management of these initiatives, also those clients eligible to social tariffs now showed that out of 5 companies that evolve the most, 4 of them were part of our group with the social tariffs. So we are really working very hard and improving interaction with our clients in digital channels, which started during the pandemic and it's something that has produced good results. We have been reinforcing our structure right at the operation. We have much more robust teams in our regional offices so that daily operation can be strengthened and this is something that also contributes.
The so-called default campaign with constant digital channels, especially during the pandemic, I think it's a multiplicity of factors. Just to give you one more example, it's worth showing the incentives obtained in the state of Amapá, in which there is an additional discount for low-income populations for energy and 25 cubic meters for sanitation. So these consumers will have their energy and water and sanitation deals for free because of these incentives. So these results are obtained consistently despite the pandemic, despite the increase in interest rate or any other tariff impact because this is something that we've been focusing on and is translated by the figures.
Next question from Henrique Peretti from JPMorgan.
I have one question about the second quarter, the credits of PIS and COFINS.
Sorry, we cannot hear you. Could you please repeat it somewhat louder?
Yes, I would like to ask about the provisions for the second quarter. How have you decided to have the provisions of PIS and COFINS credit? How did you come to that with your talk to the auditors and what are we going to do from now on? And I would like to know more details about the decrease of share in the PPA of CEA? Can you please go into further details?
Leo, please.
Let's start with PIS and COFINS credit. Considering the change in the legislation, which has made a definition of returning those credits and also considering the 10-year period of credits, even considering that we still can resort to some court measures to address it from now on, we thought that we should start writing off these items. It has had an impact of EBITDA of BRL 80 million and, in result, BRL 200 million considering also indexation. This is a measure that we adopted of write-off, these credits, but it does not mean that this is something that comes to an end here. There are going to be discussions. There are companies with higher amounts. We are discussing the strategy, and we are fully engrossed in it. And eventually, we can tell you further details. For the time being, that's as far as we can go.
Now speaking of Amapá, in Amapá, there is an item called RD, which is payment to suppliers. And there is a discount, which is part of it, which is given once a payment is made. It is a kind of a sub-credit that represent a discount. So once you make payments in the first quarter and the second quarter, at a higher amount, it has generated relative gains and it has impacted the results of CEA but the impact has to be neutralized in the consolidation with Equatorial. At first, there has been a gain at CEA because of the discounts but considering the assessment that the Equatorial had of CEA, it was already in the price. So PPA makes the adjustment on the other side to neutralize that. As both are non-recurring effects, the adjusts are done on both sides, CEA and Equatorial but they are non-recurring effects. There is still a balance to be paid of the total amount, something that we're still considering it has high cost, but it's an excellent use for our cash because of the high cost it has.
So this is the summary and we can talk further than outside the line if you want. It's important to highlight that the balance of liabilities that CEA has, there is few balance of sub-credit B. And as we pay sub-credit A regularly and within term, there is a discounting sub-credit B. So the liability of CEA does not reflect its discounting in every quarter until the end of the payment of some credit, we are going to have some discounts and the effect in consolidation.
And one last question. The collateral of this energy of 615 million, what is it?
I believe Tinn can answer that.
I'm sorry, I couldn't hear his question.
Of the collateral of 615 of megawatts, is it considering [indiscernible].
There are some impresses with [indiscernible] depends on when the undertaking the business is granted. I can check that, that can be easily found in the website of NL but I can find it and let you know later.
The next 3 questions are signed through the webcast, Andre from Santander.
First question. Could you please explain in details about why there has been a worsening of result of CEA compared to the quarter of 2022?
Well, Andre, this is an interesting point. And I think Leo will have the opportunity to talk about that.
Now trying to explain. The first quarter in Rio Grande do Sul, it is the strongest in terms of volume and it's followed by a quarter, which is possibly the weakest in terms of volume. There is a migration towards the beaches and it's one of the main causes of this difference in volume among quarters. There is a non-build revenue with an adjustment of provision of consumption. And in the first quarter, it was BRL 54 million positive, whereas in the second quarter, it was BRL 170 million and BRL 180 million negative. So analyzing this delta, it's more than EUR 170 million of non-billed revenue. It's the main item that can explain the difference among quarters. Of course, non-build revenue as this bill start to be read and collected, then you're going to have the recovery of the total amount. You see Andre, this seasonality effect is really important. I don't know if that's clear or if you need any further clarification.
Now there are 2 more questions. Could you please talk about the auction of the sanitation in Sierra? What's your expectations and the process of Salvi, when can we expect to hear more about that?
As we are a company in sanitation, we are paying attention to the opportunities. We always try to be attentive to them in distribution or in anything else. We are not going to really emphasize anything. We've been looking for the segment. We've just started doing it but we don't like to talk about specific opportunities, as we told you before. Now concerning competition in the Sierra auction, it's difficult to anticipate. We've been making some predictions but we've got it wrong. So in common sense, speaking based on common sense, now there is high inflation, higher interest rate and more difficulties, it may reduce competition, but this auction is not a concessions that will be chartered upfront. I don't know. We would have to wait and see what will prevail in the terms of the auction.
The next question is also from the webcast by [ Yuri Gulah from Investimentos ].
What have you been mapped in terms of acquisitions as the investment in new mapped assets, how would that impact dividend payout? Is there more pressure for upcoming quarters?
Well, we are a company in expansion, you've seen that. And therefore, the profile of investments of Equatorial probably already take that into consideration. It's a very important characteristics for a company with that profile. Recently, we've been providing the dividend according to the minimum requirement, this is the profile of Equatorial. Considering what Augusto has just said, we are a company in full growth. We are operating different avenues of business, always looking towards new opportunities, there is no pressure. Because of the preference of our investors and considering the scenario of opportunities, we naturally expect it to be maintained.
The next question comes from Flavia Sounis of Goldman Sachs.
I would just like to ask a follow-up on Andre's question about the build C3S. So the effect is fully attributable to seasonality or is there anything else that we should take into consideration? And to think ahead, will it be at the same level of variation between the first and second quarter in upcoming years, just to understand how to see that from now on?
Exactly, the fact is really strong in terms of market between quarters. it's a characteristic of the concession. Of course, fluctuation of non-build revenue will result from that and a number of other aspects such as the reading calendar and other potential oscillations but structurally, there is a difference in volume of the 2 quarters, and this is something expectable.
With that, we close the Q&A session. I would like now to hand it over to Augusto Miranda for his closing remarks.
Thank you all very much. To close, I would like to reinforce once again our commitment with continuous value generation, something that we focus to our shareholders, delivering consistent results in all segments of operation, always focusing on financial management, which is well disciplined. Our Investor Relations team is at your disposal to support you should you have any further questions. Once again, thank you all very much for your interest in our company and for being part of our conference call. Have a great afternoon.
The conference call of Equatorial Energia S.A. is finished now. Thank you very much for your participation. Have a good afternoon.