Equatorial Energia SA
BOVESPA:EQTL3

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Equatorial Energia SA
BOVESPA:EQTL3
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Price: 28.76 BRL -1.24%
Market Cap: 35.8B BRL
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Earnings Call Analysis

Q2-2024 Analysis
Equatorial Energia SA

Strong Quarter with Key Acquisitions and Solid Financial Performance

This quarter, Equatorial announced achievements such as becoming the reference investor in Zabeth's privatization and acquiring STA-7. The company reported an 11% increase in adjusted EBITDA to BRL 2.5 billion, driven by the distribution segment, though investments decreased by 20% year-over-year. Equatorial increased its capital, including BRL 2.5 billion for the Sabesp acquisition. The company's net debt to EBITDA ratio improved to 3.2x, indicating a robust financial position. Operationally, distributed energy grew by 8% compared to the previous year, and the company's gross consolidated margin increased by 11.5%, emphasizing disciplined cost management.

Introduction to a Promising Quarter

Equatorial had a remarkable quarter marked by several advancements and achievements. On June 28th, the company became the reference investor in the Zabeth privatization process with a 15% acquisition, valued at BRL 5.6 billion. Further, they initiated a capital increase of BRL 516 million and announced another increase with a maximum approved value of BRL 2.5 billion at BRL 33 per share. This proactive capital management is anticipated to facilitate the continuation of robust investment and expansion efforts.

Solar Energy and Sustainability

The company has made significant strides in solar energy, especially with the operational launch of EcoEnergia's solar projects boasting a 1.8 GW installed capacity. Equatorial's leadership in sustainability is underscored by its ranking as the most honored company in the utility segment, reflecting its commitment to renewable energy and environmental stewardship.

Financial Performance

The financial performance this quarter was very strong. Adjusted EBITDA reached BRL 2.5 billion, representing an 11% increase from the previous year, thanks mainly to the distribution segment. Investments totaled around BRL 2.1 billion, which is 20% less due to the completion of solar projects by EcoEnergia. Importantly, net debt to EBITDA ratio was reduced to 3.2x, showcasing improved financial health.

Operational Highlights and Market Performance

Operationally, Equatorial demonstrated impressive efficiency and growth. The distributed energy segment grew by 8% compared to the previous quarter. Despite this increased volume, the company maintained system losses below regulatory limits for the third consecutive quarter. Enhanced operational discipline and cost management allowed for a 0.8% reduction in costs and expenses compared to the previous quarter.

Achievements in the Distribution Sector

In the distribution sector, Equatorial's gross consolidated margin grew by 11.5%, buoyed by an increase of BRL 367 million in margin from the distribution sector due to market growth and rising fees. Even though the market expanded, the company's disciplined approach ensured losses remained below regulatory thresholds. This led to an adjusted EBITDA growth of 17%. The sanitation segment also saw a remarkable performance, highlighted by a 14% increase in SSA coverage compared to the previous year.

Strategic Acquisitions and Investments

Equatorial's strategic acquisition of a 15% stake in Sabesp signifies its intent to consolidate its position in Brazil's sanitation sector. The anticipated acquisition will likely involve significant capital expenditure to meet universalization goals, but Equatorial's past performance and technical prowess suggest a strong capability to manage this integration and expansion effectively.

Market Outlook and Future Plans

Looking forward, Equatorial is well-positioned to continue delivering strong financial and operational results. Despite climatic challenges in regions like Rio Grande do Sul, the company's response and recovery plans have been robust. Efforts in reestablishing operations and investing in infrastructure are expected to yield positive outcomes, further strengthening their market position. The focus on maintaining operational cost discipline while evaluating new market opportunities remains a key strategic priority.

Earnings Call Transcript

Earnings Call Transcript
2024-Q2

from 0
Operator

[Interpreted]. . . second quarter of 2024. here with us we have the Company CEO, Mr. Augusto Miranda, the Vice President of Finance, IR(sic) [ RI ] in New Businesses, Mr. Leonardo Lucas, Director of Regulation; Mr. Logrado, Director of Financial Strategy and RI; Tatiana Queiroga Vasques, and Mr. Liu Aquino, President of Echoenergia, who at the end will be available to answer any of your questions. Let me tell you that we have simultaneous translation available on this platform. In order to access this, you click on the interpretation button at the bottom of your screen and choose your preferred language. This conference is being recorded and will be available on the company's Investor Relations website, ri.equitoriaenergia.com.br as well as the presentation, the slide deck here.

[Operator Instructions] Before moving on, we take this opportunity to emphasize that the forward-looking statements are based on beliefs and assumptions of Equatorial Energia's management in the current information available to the company. These statements may involve risks and uncertainties, since they relate to future events, and therefore, depend on circumstances that may or may not occur. Investors, analysts and journalists should take into account that events related to the macroeconomic environment, the segment and other factors, could cause results to differ materially from those expressed in respect to forward-looking statements. So we'll now begin the presentation by handing the floor over to Mr. Miranda. Please, Mr. Miranda, the floor is yours.

A
Augusto da Paz Júnior
executive

[Interpreted] Good afternoon everyone. And thank you for your presence. Now moving on to Slide #3. Let me show you the highlights. Well, this quarter was marked by some advancements and achievements. So on June the 28th, Equatorial was made reference investor in the Zabeth destatization process with 15% acquisition in the company. The value was BRL 5.6 billion. BRL 5.6 billion were -- were financed with an extension of -- of 8 months. We also bought [ STA-7 ] with BRL 1 billion. And we still have some conditions for the closing of this operation.

On June 18th, we had a capital increase, reaching BRL 516 million, the same amount of dividends for 2023. And yesterday, there was a new capital increase with maximum approved value of BRL 2.5 billion, BRL 33 per share, around that. We started operating in the solar projects of EcoEnergia. We have 1.8 giga installed capacity. And we -- I'm pleased to say that Equatorial leads the ranking of institutional investors in all the eight categories and also was awarded as the most honorable company in the utility segment.

Now let me talk about the operational and financial highlights of this quarter. We reached an adjusted EBITDA of BRL 2.4 billion(sic) [ BRL 2.5 billion ] in this quarter, 11% increase if compared to the same period last year due to distribution segment. This has to do with some of the investments we made. Additionally, we consider the Intesa results in '23. The growth of EBITDA would be 3.1%. We have invested around BRL 2.1 billion in this quarter, 20% less than the second quarter of '23, due to the finalization of solar projects of Eco. And we started this quarter with a liquid debt for EBITDA of 3.2x, a robust cash flow position of BRL 12.6 billion in the quarter and cash flow per debt at 2.2x.

We also highlight is the distributed energy, which presented consolidated growth in another quarter, growing 8% versus the second quarter of '23. Even with this strong growth in volumes and distribution for the third consecutive quarter, we are below the regulatory limit of losses. Now Leo will talk about the consolidated view on the economic performance of our company. Leo, I hand over to you.

L
Leonardo da Silva Lucas Tavares de Lima
executive

[Interpreted] Thank you, Augusto, and good afternoon, everyone. Let me briefly talk about the financial economic performance that we consolidated in the group. Here, the figures are adjusted by nonrecurring and noncash events. Our gross consolidated margin grew 11.5% and let me highlight the distribution sector, which added BRL 367 million in the margin of this quarter, related to the growth of the market and increasing the fee. Even if the market growing, we maintain the consolidated losses below the regulatory limit, we're still discipline regarding costs and expenses that we adjust for the group, which presented a reduction of 0.8% against the second quarter of '23.

With these results, we reached an adjusted EBITDA of BRL 2.4 billion(sic) [ BRL 2.5 billion ], 11.1%(sic) [ 11% ] above when we reached the last year for the same period. Considering the Intesa earnings and results, the growth would be 13.1%. Let me also highlight that in this quarter, we reduced the net debt per EBITDA to 3.2x, and we increased the average cost of that. Regarding the second quarter of last year, we have(sic) [ had ] availability and short-term cash coverage of 2.2%. We also have investments with an increase of 24% with the new operation of solar plants.

Now let's move on to Slide #7, where we present to you the performance, the operating and financial performance of the Distribution segment. On your left, we can see consolidated operation of our distributing companies with high volumes of injected and distributed power. And a reduction of losses. And for the third consecutive quarter below the threshold, the regulatory threshold. Collection and [ PCLD ] regarding the nonperforming loans, you can see the numbers here. If you consider the last year, we added a new distributor according to the DAC regulatory limits. If you include Maranhão.

On your right, you see adjusted gross margin with a growth of 12.4%. The main highlight is the addition of BRL 390 million of Equatorial, the gross margin due to the growth in the market and also the increase in the fee. With the adjusted PM sale by consumer in year-over-year was reducing 0.4%. And the nominal PMSO grew above -- below the inflation. This has to do one of the main values of Equatorial. Even if the market is growing throughout the quarters, we are disciplined in terms of core costs and taking the opportunity to increase our gains. This reflected in an adjusted EBITDA increase of 17%.

Now moving on to Slide #9. We discuss other segments in our group. In terms of transmission, we have the [ santeza ] view. In '23, there was a regulatory EBITDA of BRL 280.2 millions, a growth of 2.1%, maintaining the highest EBITDA margin in the transmission segment in Brazil. We would like to highlight that from June the 1st on, there was a wrap readjustment for the cycle of '24-'25, with a readjustment of 4%, which will have reflections and impacts from the next semester on. And after the Intesa fee review, the [ Bernal ] to connect it to the selling of the company was BRL 80 million and Equatorial acknowledge that on June 14th.

In the sanitation segment, there was a covered SSA level, 50% -- 56%, an increase of 14 percentage points if we consider the same period last year. An economy regarding -- an economy of 3.1% and versus the second quarter of '23 and 1.9% regarding the first quarter of '24. In terms of renewable energy, the adjusted EBITDA had an impact a decrease of 6.8% in curtailment. Renewable energy is important to reduce cost of energies for the population. Curtailment was 64. The idea is to decrease carbon in the environment and water consumption in the country. As this plants are [ cutted ] out of the systems, there are two major impacts. In the short term, it's necessary to work with thermal plants and use more water. And then we increased the marginal cost of operations, and this reflects on consumers' bills and that is a risk allocation, which goes in an opposite way as we define in our investment. And we conclude that the trend is to invest less in the renewable energy, which is against the global trend of decarbonization and energy -- a better energy mix and transition. Now back to Augusto. Thank you.

A
Augusto da Paz Júnior
executive

[Interpreted] Thank you. Well, we are happy to say that Equatorial is leading the ranking of utilities in Latin America. This is the first place in the utilities company rank in all the eight categories of the survey. And let me thank all the analysts of active research and our stakeholders for believing in us. Moving on regarding our deliveries and trying to improve our services, we now launched a new RI website. You can access this new website by using this QR code you can see on the slide. So we rely on transparency and our commitment towards the continuous delivery of results and the strength of our team, strength of our mission allows us to reach these achievements. And we are leveraged to look for new goals, look for new challenges as we'll be able to see on Slide #12.

Let me introduced to you a new investment of Equatorial in the sanitation segment, Sabesp. Equatorial was -- was turning to the reference stakeholder of Sabesp, 15% of the social capital of the company. We studied this process in depth, and we believe this new regulatory and governance process, having Equatorial as the reference shareholder will bring major opportunities from the financial standpoint and regarding the implementation of the universalization concept. This combination places us in a privileged place to consolidate us in the sanitation segment in the country.

So the -- in the opposite side, when we acquired Sabesp and EBITDA for the past year, we see that even with the BRL 6.9 billion increase in the net debt regarding the 15% in participation, there was a covenants result of 3.6x below the leverage of the second quarter of '23. Here, I would like to say that yesterday, the Board approved an increase of capital of BRL 2.5 billion in the price per share of BRL 32.50 -- BRL 33.50 per share. This will be used for the funding related to Sabesp acquisition, including the total value of capital, the covenants view would be 4.3x. On the lower part of the slide, we opened the -- we're still waiting for the [indiscernible] sentence and soon publish the call for bid for the new -- for the election of the new Board for this company.

Now talking about perspectives for 2024, we've had an excellent semesters from the financial and operational standpoint. We know how important our role is to continue delivering, growing and beneficial results, benefiting all of our stakeholders with energy, establishment for our customers in Rio Grande do Sul after the climate -- climatic event that took place there. We are working hard to address the CapEx needed for the recovery of damaged infrastructure after the flooding.

We keep on advancing regarding the turnaround in Goiás, strengthening the network and improving the operations, along with the state government and other shareholders we'll start implementing the Sabesp governance model. We hope to bring a lot of value to all of our stakeholders. We will keep on being careful with operational cost discipline. At the same time, we evaluate other market opportunities. Now let's move on to our Q&A session. Thank you very much.

Operator

[Interpreted] [Operator Instructions] Our first question comes from Daniel Travitzky from Safra.

D
Daniel Travitzky
analyst

[Interpreted] Well, I have two questions on my side, especially talking about Sabesp. I would like to understand the company's view the step-by-step in your Equatorial idea moving forward, talking about the definement of the board, new management and the schedule regarding Equatorial's -- in this group and also the CapEx in Sabesp, because the company will need to double its annual CapEx to beat the universalization goals. So I just want to understand how -- what do you expect to be the main challenges related to this challenge and how you plan to deal with these topics?

A
Augusto da Paz Júnior
executive

[Interpreted] Good afternoon, Daniel. Thank you for your question. Well, in fact, there is this cut expectation. We are waiting for this. That is this cut, waiting -- still waiting for the sentence to be passed, and this the AGE will be nominated and the counsel will be nominated and consequently the Board. And we will follow this schedule as quick as possible, so we can take hold of the company. Regarding the CapEx, this is a challenging CapEx. We know about that. We know how hard it is. We are aware of this responsibility and this challenging position and we are firming the proposition of making this universalization according to the motivation of this acquisition. We are studying this challenging, assessing this challenging. And Daniel, let me tell you that last year, Equatorial had BRL 11 billion in CapEx. So having executed a CapEx of this magnitude in different segments, we believe that this capacity that Equatorial has shown this -- with this experience, the technical -- the technical staff has or has acquired, we truly believe we will be able to deliver our propositions.

Operator

[Interpreted] Next question comes from Pedro [ Juset ] from IS Invest.

P
Pedro Juset
analyst

[Interpreted] I would like to know if you could go into more detail about how the consolidation of Sabesp's results into Equatorial Energia will work, considering your 15% stake participation in the company?

A
Antonio Rodrigues Dos Santos Junqueira
analyst

[Interpreted] Leo, please, can you answer this question?

L
Leonardo da Silva Lucas Tavares de Lima
executive

[Interpreted] Thank you, Pedro, for your question. Well, in fact, there won't be -- there won't be a consolidation. We have this 15% participation. We have become the reference stakeholders. We will register equity equivalents of Sabesp in the results in the earnings of Equatorial, okay?

Operator

[Interpreted] Well, next question comes from Andres Sampaio from Santander.

A
Andre Sampaio
analyst

[Interpreted] I have a quick question here. I would like to listen to your thoughts about fees, we have a lot of buzz regarding the potential of bringing something to tackle this issue related to fees. What is your expectation regarding this position coming from the ministry, from the Congress in the national department. And could you also talk about the opportunities related to new auctions on sanitation, is this under your radar or with the Sabesp consolidation you -- you plan on really focusing on Sabesp only?

A
Augusto da Paz Júnior
executive

[Interpreted] Good afternoon, Andre. We believe that this fee issue has generated some buzz, yes, but we understand that this issue has been solved. And I would like to call Cristiano, so he can share more details with you -- with us all.

C
Cristiano de Lima Logrado
executive

[Interpreted] Yes. Good afternoon. Well, the Ministry, the National Ministry, made some comments, but he didn't go into detail on how this process would go regarding the fee structure, but he maybe he said that maybe there will be a social fee, which is beneficial for larger companies. There will be more grants and more subsidies. He talks about the reallocation, redistribution of some expenses, but this will be Tier A expenses in my view.

So I believe that the Ministry, the Ministry talked about the Parcel A or Tier A expenses, preserving the economical balance of contracts and agreements. So it's still waiting to know more about this process. If they will have a provisional measure or something that will go through Congress. But finally, the financial balance of the contract will be maintained and the distribution of fees according to this agreement will also be maintained. That's our belief.

A
Augusto da Paz Júnior
executive

[Interpreted] Yes, Andre, regarding the second part of your question, this -- regarding Sabesp, we have always said that we hope that -- considering the strength of this combination to exactly consolidate this company in Brazil. This is what we mean to do. And we are focused -- yes, we are focused on organizing this process, organizing best governance and with focused on universalization, which is important to us. But of course, we will keep an eye on other opportunities, other market opportunities that are out there.

Operator

[Interpreted] Next question comes from Henrique Peretti from JPMorgan.

H
Henrique Peretti
analyst

[Interpreted] Good afternoon, Augusto. I would like to ask you about the private capital increase. Simple question. Do you believe that after this capital increase, the capital structure of the company will be well balanced, and no other inorganic movement will be needed after the payment of Sabesp, and after the bridge loan that you have hired that you have agreed upon?

A
Augusto da Paz Júnior
executive

[Interpreted] Well, Henrique. As you can see, we've made some movements even before Sabesp. We worked with Intesa, SET, and other agreements, other movements. Yes, we are increasing the capital, but not so much in keeping an eye -- keeping an eye on future opportunities and Leo will also share some details.

L
Leonardo da Silva Lucas Tavares de Lima
executive

[Interpreted] Thank you. Just to highlight that we always maintain a very good discipline when we thought about acquiring Sabesp. We maintain a very robust discipline in trying to streamline our process, optimize our process. And after we complete, advanced the studies on Sabesp, maybe we will also tackle some transmission segments, finalizing with this takeout check with a low volume, 1/3 of it, to complete the structured takeout with a weighted cost, that is highly attractive, I would say. And so the return we expect to have with leverage, considering the costs. I believe that considering all of these factors, this scenario is even more attractive. We are in the scenario of deleveraging, but this adjustment will finalize this process and will make us ready to keep on searching for our vocation. Whenever you see a good opportunity, we go for it. It's important to be ready as soon as possible to do that.

Operator

[Interpreted] Next question comes from Antonio Junqueira from Citi.

A
Antonio Rodrigues Dos Santos Junqueira
analyst

[Interpreted] Hello everyone, hope you're doing well. Well, my -- I have a question regarding the private subscription. Do you have any signalization, you have a minimum, right? A bare minimum -- what would happen if you don't have minimum membership, and after having this longer period working capital, I think it's 18 months, right, Leo? What triggered this decision right now, maybe -- maybe could you decide on that on the next few -- 6 -- few or 6 months?

A
Augusto da Paz Júnior
executive

[Interpreted] Yes, Leo will answer.

L
Leonardo da Silva Lucas Tavares de Lima
executive

[Interpreted] Thank you for your question. As I said, as I mentioned, whenever we go through a transformational acquisition process, we try to share of funding to have a funding that provide us with a time, with a window of time, to deal with things, to equate issues. Which doesn't prevent us from taking this time in our favor to deal with the issues. And by the end of this window, this period of time take the best of this opportunity. This is the third private capital increase we've had. We've had previous -- two other previous experiences, taking opportunity from the movements related to dividends.

And considering the size, this is something, I would say, I would call a surgical movement representing our accounting for 1/3 of the operation. We understand that this moment is a -- the right time for us to solve that, to equate this. We did that and decided to move forward and we will advance regarding these studies on preferential shares in the transmission segment. This is a segment we are focusing on, putting under -- putting it in practice, so we can finalize this and keep on -- in our dis-allocation movement and considering this new chapter, which is a very promising chapter on sanitation with this combination of competencies and strength, which is also very interesting. It's interesting for you to be ready. Everything was pre-discussed and we understood that this is the right moment to take this step.

A
Antonio Rodrigues Dos Santos Junqueira
analyst

[Interpreted] Regarding -- if you have any idea on membership when the bond -- I mean, when the share is above BRL 32, the possibilities are huge. But do you have any investors [indiscernible].

L
Leonardo da Silva Lucas Tavares de Lima
executive

[Interpreted] Well, based on our experience, as I was mentioning, we've had this accumulated experience with two previous operations. So naturally, till 20 -- the 20th or the 21st, people will have this window of time. And after that, we'll have more visibility, even because of the -- the closing of the process. And we are pretty confident, but we still need to wait. We need to wait for this time to pass. We have seen a dynamic with a stronger flow right now. These things change, but right now we see a high tend flow, I would say, which can account for this positivity of this moment.

A
Antonio Rodrigues Dos Santos Junqueira
analyst

[Interpreted] Just one quick final question. I just wanted to confirm when we will know the names of the nominees for the Sabesp Board or the people who make part of this board.

U
Unknown Executive

[Interpreted] Well, we still have to wait for -- the -- we're still deciding still talking with other stakeholders. But I would say that soon enough, you will know about these -- these names. We still have to wait for the lawsuit to be solved and for the sentence to be passed. But in due time, soon enough, we will disclose this information to the market.

Operator

[Interpreted] Next question comes from Mr.(sic) [ Ms. ] Candiota from Itaú BBA.

L
Luiza Candiota
analyst

[Interpreted] I just wanted to listen to you about the strategy to approach or to discuss this quality issues. What can we expect in terms of CapEx and even OpEx increase for the next few months and years? If we consider the case of Goiás, which is still lagging behind when we analyze the subsets and the regulatory goals for the next few years.

U
Unknown Executive

[Interpreted] Thank you, Luiza. Well, Luiza, if you look at Equatorial's history, you will -- you can understand that in the -- in the last in one year, even in Maranhão we had the ability of focusing and taking advantage of Equatorial technical staff. So it's an experience that we have. And if you look at the subsets doing the negotiation with the regulatory agency, there is a longer period for you to [ adequate ] them. We have two concessions, one with a maturity date in '28 and another maturity date in 2030. In Pará, in [indiscernible], even in Maranhão, it's above the platform set by Anel.

And if you consider Amapa, the state of Amapa, for example, we are there with 12 sets, 10 are in conformity already. And in the state of Piauà , we are complying with all the steps. So I would say that we are -- we have been complying with the steps set for us. And -- well, in the case of Goiás, Goiás has the largest -- it's the largest concession that we have. It's an asset base of BRL 4 billion, there's a lot of assets there and we have some DAC and FAC results for this goal that was recently established, and we've been complying with that.

And in Goiás, we had mapping. We created a mapping for the inspection of the company there. We have mapped all the issues that they are facing there. And we are -- I would say that we are happy with the results we have reached so far. So Equatorial has worked with that for the past 20 years, and I believe we will be able to tackle all of these issues and challenges.

L
Luiza Candiota
analyst

[Interpreted] That's super clear, thank you.

Operator

[Interpreted] Next question comes from Gustavo Pereira from Bank of America.

A
Arthur Pereira
analyst

[Interpreted] I have a question about EcoEnergia and how you see the strategy of energy commercialization strategy has to do with the business plan with the asset acquisition and what can you expect regarding a change in the commercial strategy for EcoEnergy in the next few months, considering the forward energy price and also the impact that you have seen recently?

A
Augusto da Paz Júnior
executive

[Interpreted] I believe Leo may -- can answer this question. So from the acquisition standpoint, what do you think?

L
Leonardo da Silva Lucas Tavares de Lima
executive

[Interpreted] Thank you for the question. Well, regarding this comparison regarding the business plan, what can we say? Right now, what we see is a scenario in energy that is -- that has decreased a little in the past few years, but our strategy is slightly different. We capture clients in the retail which help us a little. But in fact, there are scenarios with lower prices. I think that's the reality for everyone.

And another point. I mean, another observation right now is this discussion on curtailments. This is a new topic. We have been discussing this from an institutional standpoint and from the legal standpoint too, and there was no estimation for this type of risk related to curtailment. I'll say these are the two main issues we've been dealing with. But my colleague will talk more about what we have done regarding these issues.

C
Cristiano de Lima Logrado
executive

[Interpreted] Thank you , Leo. Well, good afternoon. Let me start on the curtailment and sign off. Many people have talked about curtailment in the regulatory bodies, regulatory agencies. I don't think it will persist through time. It's more of a situational issue. We need to tackle this from the regulatory standpoint and also from the operational. The system operating -- or the system operations standpoint. This is how we see things today.

Now talking about the market the fact that the price of energy is detached from the lower level, this also generates opportunities because we have [indiscernible] plans focused on retail. Now we have the opportunities of looking for energy in the wholesale market with better prices considering this volatility. So we consider this as an opportunity to find complementary solutions.

A
Arthur Pereira
analyst

[Interpreted] That's perfect. Just one follow-up on the normalization of curtailments. So, in your -- in your idea, this normalization will lead to a -- to a better physical balance of energy in the system or the most of this normalization would come from regulatory solutions?

C
Cristiano de Lima Logrado
executive

[Interpreted] Well, Leo, if you'll allow me to answer.

L
Leonardo da Silva Lucas Tavares de Lima
executive

[Interpreted] Yes, yes, please go ahead.

C
Cristiano de Lima Logrado
executive

[Interpreted] Thank you. Well, both things are expected to happen simultaneously. So there is no single pathway to solve that. There -- We expect new transmission lines to come into the system, and they will help the system. There are some local exceptions. They are being developed along with mathematical modeling along with I&S. We expect these things to have a shorter, faster -- shorter term and faster result. It's hard for us to estimate how long this will take or how long they will take to be mature in the system, but also regarding how to work with the ministry and regulatory agencies. It's important for us to make the system advance.

Operator

[Interpreted] Next question comes from Bruno Amorim from Goldman Sachs.

B
Bruno Amorim
analyst

[Interpreted] I'd like a follow-up regarding the question about the evolution expected for the operational indicators in the next few years, especially in Goiás and C3E. What do you expect in terms of PMSO evolution in these assets, considering the goals you have set for the operating metrics in the next few months and years?

U
Unknown Executive

[Interpreted] In fact, in Rio Grande do Sul we've had a very hard problem. You all know about the climatic event, the floodings in Rio Grande do Sul some months ago, which had a different characteristic. Well, in 2023, we've had some climatic events. These events were associated with winds and winds would have a very aggressive impact on the network, 150 kilometers per hour winds, wind speed. However, in '24, I mean, this year, the problem was the flooding. There were many areas, Porto Alegre, many areas in several cities were simply completely flooded. So we had to wait for the water to go down so we could work on the system. So it's important to highlight that during that period, we have had a very important social action. It makes us happy. We were able to use our emergency infrastructure to help rescue people and intensify social measures.

Now in Rio Grande do Sul, there is a recovery plan in practice. We believe -- we believe in Rio Grande do Sul we can already observe that the market, the regional market is showing positive signs. Signs that are similar to the market last year. So this recovery makes us feel happy, and we are also intensifying these investments. We are investing there in Rio Grande do Sul regarding this recovery plans. And in the state of Goiás. In Goiás, we keep on with BRL 9.4 million in other opportunities with a massive CapEx this year and we reinforced the superintendency in the regional offices. There were some structures with some weak points and the OpEx was too overwhelmed. We had to wait for the CapEx to make sense. And now we see some results from the TMA [ fact and SEC ] results. And now we will intensify these efforts. Now that we know more about this operation. We have completed 1.5 years of operations. So we will streamline these efforts in a more efficient and wise way. I would say that we are happy with this asset and we will truly give the Equatorial face to it or the Equatorial way to it.

Operator

[Interpreted] Next question from Filipe Andrade, Itaú BBA.

F
Filipe Andrade
analyst

[Interpreted] I would like to talk about preferentials. You mentioned that you are analyzing on operation of transmitting companies. Maybe you could create a group of [ SPF ] with some -- to work in the preferential in this vehicle. Just to explain. I ask this to understand what is your strategy regarding this transmission assets. You have indicated it was an opportunity to reinforce your capital structure. So could you share more information regarding that?

A
Augusto da Paz Júnior
executive

[Interpreted] As Leo mentioned, we do have some alternatives in line with what you said.

L
Leonardo da Silva Lucas Tavares de Lima
executive

[Interpreted] Yes, the same model, the same model.

Operator

[Interpreted] [Operator Instructions] Well, the Q&A session is now closed. We'd like to give the floor to the directors to make the company's final consideration and closing remarks.

A
Augusto da Paz Júnior
executive

[Interpreted] Thank you very much. I would like to once again state how committed we are with generating value to our shareholders through consistent -- consistent delivery of results in several segments. I would like to remind you that our Investor Relations team golden medal in all categories available to help you and answer to all of your comments and questions after this call. I would like to thank you for being interested in this company and for participating in this conference.

Operator

[Interpreted] Well, the conference is now closed. Thank you for your participation, and have a good afternoon.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]