Equatorial Energia SA

BOVESPA:EQTL3

Earnings Call Transcript 2022-Q4

[Operator]

Good afternoon, and thank you for holding. Welcome to the Equatorial Energia S.A. conference call to release results for the fourth quarter 2022. With us today, we have Augusto Miranda, CEO; Leonardo Lucas, CFO; Christiano Logrado, Regulation Director, Tatiana Vasques, IR superintended and Tinn Amado, CEO of Echoenergia. This event is being recorded. [Operator Instructions] This event is being broadcast simultaneously through Internet via webcast and can be accessed at the address www.equitorialenergia.com.br where you will find the respective presentation. You can flip through the slides at your own conclusion. The replay of the event will be available soon after the closing.

Now participants of the webcast can register to website questions for Equatorial Energia. Before proceeding, please bear in mind that the forward-looking statements made during this conference call referring to the business prospects of Equatorial Energia, operational and financial goals are based on the beliefs and assumptions of the company management as well as the information currently available. Now these forward-looking statements are no guarantees of performance as they involve risks, uncertainties and premises as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that overall conditions, sectoral conditions and other operational factors could lead to results that differ materially from those forward-looking statements.

I would like to give the floor to Augusto Miranda, who will begin the presentation. You may proceed, sir.

[Augusto da Paz Júnior, executive]

A good afternoon to all of you, and thank you for joining us. This afternoon, we're going to present the results for the fourth quarter 2022. We entered the year advancing in our operational efficiency agenda and ESG. This was a very important year for our trajectory. We opened up new avenues, especially in terms of energy and we also worked in ESG and sanitation. In this quarter, we made strides in our role as a consolidated in the distribution of energy. We extended the activities of the company to the Center West, adding a few additional companies. In our operations, we continue to focus on solid commercial performance and of course, recovery index that we can ensure the turnaround process our [assets]. The results that we are sharing will show you the advance that we have made.

In '22, we also had significant strides in the ESG agenda. We have been able to advance in terms of the decarbonization of our operation, and we trained the first team of electricians and Pará. At the same time, we're also teaching this course to management and to those who work in the company. And finally, we have strengthened our governance, especially with the transformation of our audit commitment.

We will now move on to the slide where we can speak about the highlights. Now in this quarter, we have the advance of distributed energy that had a growth of 5% compared to the same quarter in '21, reaching 9.141 gigawatts hour. To continue speaking about distribution, we have a significant reduction of debt vis-a-vis the third quarter '22. Once again, the reductions were between 5.2% to 15.5%. In the Generation segment, we obtained a volume of 1.359 gigawatts hour, an amount 4% higher than in 2021, benefiting from the increase in installed capacity and offsetting the lower availability that we had. In terms of our economic and financial highlights, we ended the quarter with a consolidated EBITDA of BRL 2.3 billion, 33% higher. Thanks to the performance of the Distribution segment and consolidation of the new assets.

In the value generation agenda, we concluded the closing of CELG-D on December 22, we also issued debentures in the amount of BRL 7 billion, thus lengthening our debt in a very challenging scenario. In March, we concluded the issuance of debentures thus contributing to a reduction of leverage and enhancing our liquidity. I would like to give the floor to Leo so that we can begin with a consolidated vision of our economic and financial performance.

[Leonardo da Silva Lucas Tavares de Lima, executive]

Well, thank you, Augusto. Very quickly, we're going to speak once again about our economic and financial performance through a consolidated vision. We have taken away the effects of VNR and IFRS, our gross margin grew approximately 26%, and this growth is linked to the good performance of the distribution segment that had the thrust of the significant growth in the market and the strong reduction in losses.

Another highlight is the contribution of the renewable sector that was not part of our portfolio previously. If we consider the new assets Echoenergia and CSA, we had a growth of approximately 5% year-on-year. Now in terms of adjusted OpEx, we had a growth of only 3.8% in the annual comparison. If we disregard the asset CSA, and of course, this was not accounted at that time. The growth shows the focus that we had in our cost discipline, especially if we keep in mind the present day scenario is an initiative that are justified because they allow for an improvement of quality. And the highlight is for the segment of distribution where the PMSO remained stable, growing only 0.4%. And of course, we have the sale of other assets. At the lower part of this slide, we have a comparison of our adjusted and consolidated EBITDA for the quarter. We had an advance of BRL 2.2 billion in the fourth quarter, a growth of 50% was a very strong effects due to the distribution and of course because of the new assets amounting to BRL 2.4 million.

On Slide #6, we show you the information on investments and the schedule for the tariff reviews that are planned ahead of us. The total volume increased 70%, vis-a-vis the same quarter of the previous year. Now in a consolidated way, the company grew by BRL 5.3 million throughout the quarter. With the concentration in the distribution sector, where we invested BRL 5.1 million. We focused on strengthening the network, improving quality.

Now the investments for the year are considered to be higher than the recurrent investment. This is because of the delay of investments during the pandemic and the tariff processes that we had in 2022. We have also consolidated new assets that are in the process of being consolidated. We show you a list of the tariff review processes for this year. We have 4 tariff processes. And we will also have the review for Equatorial Alagoas expanding almost into 2024. These are extraordinary tariff reviews, similar to some of the processes that we had success with in Piauí and others. And in another 3 years, we will undergo another tariff review.

Now the regulatory WACC was approved, representing 11.25% before taxes. And this poses the great opportunity to enhance our consolidated base. We represent almost BRL 90 million in terms of our net asset base. On Slide #7, we share with you the debt information for the company. And we are looking with a pro forma before the effects of the acquisition of CELG-D with a leverage of [ 3.8% ] and of course, the acquisition and consolidation of that asset. We have BRL 7 billion debt because of sales and you will see this in our statement for this quarter. Now we also have BRL 1.5 billion and we have added to our calculation, the EBITDA of sales with a strong impact that will not be recurring as you can see in the bottom part of the slide.

Now although this asset has contributed to preserving our net debt. It will help us quickly with a reduction of leveraging perhaps because of the tariff review and because of the recognition of new asset base. This also will be a growth in the market, and we will be moving away from this [indiscernible] during [indiscernible]. We would like to remind you that we have had excellent effects in terms of collection reaching 100%. And we have an additional cash generation with an impact on EBITDA. In March of 2022, we announced an investment agreement with the issuance of preferential shares, also included Equatorial Piauí. And this once again, will help us to reduce our leverage.

And if this impact of deleveraging has happened last year, it would be 2.8x instead of 3.8x. Now we raised BRL 2.1 million to adjust our capital structure as a subsequent debt, it's important to mention that at the end of January, we had the issuance of debentures to the amount of BRL 7 billion in a very challenging market context. Now this issuance was due to almost wholly pay out our obligations of CELG for payment until the end of 2023. So this operation of liabilities has helped us to balance out the company, and we have improved our debt profile with this operation. We ended the quarter with BRL 15.2 million.

If we adjust it by the liability management carried out in January, the cash over debt would have been 3.9x if we consider the liquidity situation given to us by what we did in March. We're now going to go on to Slide #9 to show you a very general overview of the distribution segment. As you can observe in the slide, distributed energy had a growth of 4.9% in the fourth quarter. And Injected Energy had a lower growth of 2.3%. Now this result reflects the advance of our process to combat losses. And in this quarter, this was accompanied by a collection index of 7.7%. Now the collection performance in the fourth quarter captures the positive impact of the reduction of the ICMS [indiscernible] and collection continues to be very high, especially if we consider the very challenging macroeconomic scenario. It is important to record that the consolidated level was positively impacted by the review process of our matrix and because of the adjustment and adjustment to present value of the accounts receivable representing BRL 58 million. Now the negative effect is that we have accounts receivable for more than 10 years.

Now by showing it to you this way, we're able to [indiscernible] the process forthcoming a challenging macroeconomic environment, we once had a very significant collection with an expressive reduction of losses, growth below the inflation and almost new growth of 0.4%. Now this was allied to a growth in margin and an expansion in tariffs. And all of this resulted in a strong growth of 78% for the period. At the bottom of the slide, once again, we have a very overall vision of the operational indicator vis-a-vis the previous quarter with a significant enhancement in all areas. This points to the operational excellence after the acquisition of 1 more asset. And of course, we will be consolidating CELG in the coming quarter. And all of this was done below the regulatory levels of FEC.

The generalized improvement of our operational indicators reflects the results of the investments that we carried out of BRL 1.7 billion throughout the year. We now go on to the next slide, Slide #11. In Slide #11, we're going to very quickly see the performance of the transmission sector, the RAP is below BRL 3 million for 2023. The regulatory EBITDA had a reduction of 4%, adding at BRL 297 million. Now this variation is mainly due because of the adjustment in the fourth quarter and adjustment in the tariff processes. If we disconsider this, impact on EBITDA, it would have been lower.

Now in the next slide, we have a consolidated network of almost 92%. We now go on to Slide #13 where we're going to look at the results of Echoenergia. We are bringing you the historic performance of Echoenergia. 2022 was highly impacted and there was a reduction in ability with a negative impact on generation. And as a comparison, we show you the generation of the year, with P90 and P50, this is a vision of the year 2022, proportional to the entry of this asset and a vision of previous years. Now these results became regularized are 100% operational. The good news is that in March, there was a negative impact on generation in the Northeast because of a higher volume of rainfall. We also observed the average wind speed. Now there was a growth of 0.3% in EBITDA buildup for Echoenergia between the fourth quarter 2022 and the fourth quarter '21.

We would like to highlight that the average sales price had an increase of 3.5% vis-a-vis what was reported at the beginning of our commercialization strategy. We're looking for clients that will offer us greater benefits. We now move on to the next slide. We ended the quarter with clients connected to our network or sanitation network. This is a very important network and corresponds to 14% more after the first year of operation. We have completed only 6 months of concession regarding the operation of sewage and the beginning of invoicing of this service continue on as a highlight showing us very clearly the performance we have been able to achieve. Now the coverage index of this service represents 41% for water and 7% for sewage, especially in terms of number of clients, we have made great slides. And we're, of course, having a significant evolution, a growth of 39% vis-a-vis the third quarter '22.

Now we have disbursed the BASA line. We remind you that this is very important, and we are finding lines to fund this for the first year of concession. The term is for 26 years with a cost of IPCA. I would now like to return the floor to Mauro.

[Unknown Executive]

Well, thank you. Before closing, I would like to refer to a new chapter of our history, the acquisition in December of CELG, which means we have had this for only 3 months. We have made great strides, accelerating in the main front for this asset as part of one of the main strides. I like the work for the tariff review, which is one of the main triggers to generate value. We're focused on guaranteeing a better recognition at the end of the cycle. This will enable us to make the necessary adjustments for this area of concession, all of this is underway. And we're working with negotiations programs for energy efficiency, enhancing our relationships significantly with the community.

Now we have been creating regional superintendency that enable us to work more closely and bring us closer to our customers. Another important point is the liability management that we carried out in January, we reached [indiscernible] in December with BRL 7 billion from the old controller and the majority of this was 12 months. January, we use the resources of the debenture representing BRL 7 billion with majority at the end of this year, BRL 6.5 billion have been used for the payment of this space, and we're honoring the debts of the company. Now one of the great benefits we have from this concession is the quality. And we have a commitment with the community, we're extremely enthusiastic with the opportunities that are arising from CELG with more than 3 million customers.

We go on to Slide #18 now. Very recently, we had an expressive growth in the group. We expanded our business portfolio. We have started to go on new growth avenues. We have had transformational growth especially in distribution that is our core business where we acquired new companies. We are expanding our presence geographically, and we have access to more than 3 million customers. All of this will generate a great deal of return for the investors. Now in this context there is a possibility to extract even more value. And we clearly foresee opportunities and inorganic growth in the coming years, as we have always done. Now all of this has been supported by a significant governance structure of the company.

In 2021, we created the committee of strategy for a new business, and we put together an operational committee working with sustainability and governance. Now -- we carry out audits and risk management. This is something that is part of our bylaws. And we have people that have broad experience in this segment. Now to strengthen our management, we created regional super intendencies in 2021 and a Vice Presidency of Distribution to see the integration of businesses and to comply with our strategy. Now to strengthen the governance, the management has included an additional seat in the Board with the inclusion of a member, [ Eduardo Parente ] that has broad experience in this field. We will also create 2 new advisory committees, the regulation and Innovation Committee and an operating committee to go more in depth for strategic points for our company.

Now with these changes, the company, therefore, will have 5 advisory committees. Additionally to this, we have [indiscernible] from our Board of Management, and he will have a role that is equivalent to the executive Chairman and the view is that he will offer support to the CEO. Now the capital structure, new business strategy and talent element, all of them supporting the CEO in a variety of topics that arise from the different areas, we believe that with these changes, we were strengthened to be able to fly even further and have organic and inorganic addition of [indiscernible]

We now go on to Slide #19 for our final comment. I would like to refer to the outlook through 2023. Well, of course, all of this focus is on acquisitions, the closing of the CELG in December. This is a greatest acquisition of our history and generation, bringing in more than 3 million customers. I'll also highlight the significant improvement in quality indicators. Now we wanted a consistent reduction in some of our indicators now with our new capital structure, we have reduced the leverage and have done this in the first quarter of 2023. We have reduced leverage to support the strategy of the group. 2023 will be a year with a large variety of tariff review processes. In the past, we have contributed significantly towards reduction of leverage. We know that the macroeconomic scenario requires caution but we also are working in a transformational way and that [indiscernible] strengthening our portfolio.

I would like to return the floor to the operator, so we can go on to the Q&A session. Thank you.

[Operator]

[Operator Instructions] Our first question is from Marcelo Sa from Itau Bank.

[Marcelo Sá, analyst]

Now regarding the regulatory part, you seem to be very optimistic. Do you think that the tariff reviews will continue on in 2023, and which will be the most important one? I imagine that you're analyzing the company leverage is under somewhat more pressure. What are you planning to do? Will this be a follow-on? Or will you make [indiscernible] in your balance or perhaps more create financial exercises?

[Augusto da Paz Júnior, executive]

Well, regarding the operational flow, we have -- could you [indiscernible] who works in the regulatory part. Now last week, or 2 weeks ago now concluded the second stage of this tariff review and should continue on. Now the final review will be in August. And we believe that we're going to apply a more expanded methodology. Now please speak about the second part of the question, Leonardo Lucas.

[Leonardo da Silva Lucas Tavares de Lima, executive]

We normally don't speak about assets, we do this only privately, but we would like to highlight the distribution is our core business. And this is the segment where we tend to analyze all of the new operations that come about, always attempting to detect opportunities that will be compatible with the use of our capital. Now we look upon this so that we can, of course, add value in each of the deals that we carry out.

[Operator]

Our next question is from Andre Sampaio from Santander Bank.

[Andre Sampaio, analyst]

I have 2 questions. I would like to speak to the beginning of projects for the renewable energy, your CapEx, if you can already convey something to us? And the second question refers to the discussion on the renewal of concessions, if you could remark on the timing and what is happening with the public concession and how you're going to begin those discussions, that would be very important?

[Augusto da Paz Júnior, executive]

Well, to make this meeting have a more dynamic dialogue, we have Tinn with us here from Echoenergia, perhaps he could refer to this question answer for the question.

[Tinn Amado, executive]

Andre, thank you for the question. Referring to the pipeline that we disclosed, we spoke about 2 new complexes, [indiscernible] and [indiscernible] we don't give items in terms of CapEx. What I can say vis-a-vis what we foresaw in the past, we have a slowdown, a significant slowdown in the cost of [indiscernible] better than we had forecast during the acquisition of Echoenergia and the rest has been impacted, of course, but the use as a whole are positive review point of CapEx vis-a-vis what we have projected.

There is also a question regarding the contracts. We have seen that our product, which is our flagship and that will guarantee savings is running at better prices than we had estimated. So we're now beginning to scale this up, we have several digitization projects, the enhancement of commercial processes to be able to scale this up to have a fully contracted energy. This is a good product, the clients have [indiscernible]. It is a very simple process. The process is highly digitized to allow us speed and of course, the price is much better than we had foreseen during the acquisition of this asset.

[Augusto da Paz Júnior, executive]

Well, thank you Cristiano, please.

[Cristiano de Lima Logrado, executive]

Now the extension of concession. Since the end of the year, we're awaiting a position of the government regarding this issue. But recently, Minister [indiscernible] one of his speeches brought this subject and reinforce the fact that this will be a tension for concessions in the field of distribution. There will be the opening of a public hearing, possibly in the second semester, and they would approach this topic once again. We're awaiting this, and we continue to discuss this along with [indiscernible] .

[Operator]

Our next question comes from the webcast from Antonio Junqueira from Citi.

[Antonio Rodrigues Dos Santos Junqueira, analyst]

What will happen with the competition environment for sanitation and transmission sector of this year and in 2024.

[Augusto da Paz Júnior, executive]

Thank you very much for the question that transmission auction, and we're speaking of 3 stages and BRL 50 million for the auction. This will bring about new opportunities. And of course, will enhance labor on the part of [ material ]. And we think that this action could represent an opportunity in both of these fields. And of course, what we're seeking in these auctions are low prices. And in terms of sanitation, simply to reinforce the auctions. These are very large, much more that we can let go by or ignore. Now another interesting aspect is that this will entail contracts. It will entail the environmental part going forward. These are very important aspects that we have to consider in transmission auction. We don't want to make mistakes, of course. And in fact, this is going to be a very large auction. It makes no sense to ignore it. Regarding sanitation, we have to wait to see what is going to happen. We are at the beginning of a new government. We are hearing discourses of several new instructions. I think we have to wait to better understand the changes to understand what will happen going forward. It's what we have already said. There is a volume of investments that have to be made to comply with that idea of universal services for everybody.

Now in terms of short-term visibility, we believe we need to wait some more time and see which are the opportunities that arise. Well, that issue of the laboratory [indiscernible] things and then become part of the segment, carry out tests. Well, we're already part of the segment -- the segment require BRL 700 million to be able to offer universal services. Many people are left without energy and sanitation services. However, the rules have to become more clear before we can truly be willing to enter this sector more broadly.

[Operator]

Our next question also comes from webcast from Henrique Peretti from JP Morgan.

[Henrique Peretti, analyst]

Good afternoon to everybody. The company has announced the construction of 600 megawatts of solar energy. What is the CapEx and the justification for the construction of this once the prices are extremely low?

[Unknown Executive]

I'm going to answer here, if you allow me. Regarding the CapEx, we have already referred to that with Andre. We don't offer guidance. We received positive news in terms of Capex especially in terms of the panel. Now regarding the market price. I would like to remark the following: the products that we're using to trace CapEx is completely different. When we acquired Echoenergia we mentioned we would look for shorter-term contracts at lower prices, market prices, and this is precisely what we're doing. And this is what has offered us good results. Better results and those of the market and better results that we expected when we acquired Echoenergia. Why? Because consumers prefer to have a simple product. We have an educational tariff instead of having that complexity of having to contract energy from a market. So this price is lower than the market price, vis-a-vis the [indiscernible] contracting market or the wholesale market.

[Operator]

Our next question also comes from the webcast from Antonio Junqueira from Citi.

[Antonio Rodrigues Dos Santos Junqueira, analyst]

After some time, what was your view on the sanitation business? Will it generate a good return on capital? Could you share with as your perception up to this moment.

[Augusto da Paz Júnior, executive]

Junqueira, as I mentioned, this asset since our country has been very, very positive and has a small platform and Equatorial didn't want to deal with a very large company. This has added something positive to the company, and we have Marcelo who has a great deal of our experience. Where we have some figures to enhance some units in terms of water provision. Now the operation is being done upstream presence. So we're merely defining the operations. I remind you that last year this was an incipient process. And I remind you that once the market has fully carried out its laboratory test, this company is going to allow us to feel extremely satisfied.

[Operator]

[Operator Instructions] Our next question is from Marcelo Sa from Itau Bank.

[Marcelo Sá, analyst]

Regarding the growth of volume in distribution, it seems that you have been doing better than the other companies in the sector throughout 2022, which is your expectation for this year?

[Augusto da Paz Júnior, executive]

Marcelo, thank you for the questions. Well, as we showed you in the results, we serve these regions [indiscernible] different for growth in 2024. Alongside that, I would like to highlight some operational data that once again shows you that growing trend in all of our concessions. Now a reduction of expenses and the growth of course, represents a very good mix. When we compare ourselves to our companies in 2020, they are above all of the regions. And this is because of our expenses, and last year, we had the greatest loss reduction in this sector, and we have set up a combat team against losses. So we begin the year fully equipped and this is very important for our results.

This is what we observed in the first month of the year. Another interesting point, the number of losses in an annual [indiscernible] has had an interesting evolution we're, of course, adjusting our invoicing processes, and we won't have to pay for this bill. Looking forward, we should already observe a more enhanced performance. There has been interesting growth, and we continue to have that opportunity to cut losses and we continue to deliver this opportunity. This is our expectation, therefore, that we will have stronger growth in energy distribution. I was -- this week -- I just returned today. I went there to have a look from myself in terms of the losses. Is perhaps due to the fact that the former company did not have the capacity to invest, clients were begging the company to resolve the problem. So I went there as an experience for 5 days and we see that the clients had several requests that were ignored by the previous owner. We had clients with connections that were not legal and have returned very hopeful from this concession at present. And we're beginning the year with a team that have been completely set up differently from last year. We are working on the training of people. As we mentioned at the beginning, we're working with contracts, all of business been aligned. So of course I am referring to the region of [indiscernible], where we had to work with a great deal of works, we are negotiating terms, we're debating this. We're doing this in a very masterful way. As we're concerned and we now have a well-prepared company. And because of this we are quite optimistic and we are going to enhance what we do in the region of [indiscernible].

[Operator]

Our next question comes from Ricardo from Canal Capital.

[Unknown Analyst]

Excellent figures and congratulations to Equatorial management. Regarding the M&A process, what is happening the acquisition of [Life]?

[Augusto da Paz Júnior, executive]

Marcelo, we truly don't like to specifically mention an asset. So I will not be able to respond to this. As Leo said, there is some opportunities of distribution that would be very convenient.

[Operator]

Our next question also comes from the webcast from Ricardo from Canal Capital.

[Unknown Analyst]

Excellent figures and congratulations on your portfolio management regarding the M&A plan, what is happening with the acquisition of [ Life ]?

[Augusto da Paz Júnior, executive]

This is a question that is being I have been at Equatorial since 2004 when I took office the challenges that we face. If you look at 2018, we are 2 completely different companies. This is a good moment to truly thank Equatorial team. When we look at the Piauí, this is a company with less than 3 years, Alagoas and Rio Grande do Sul were there. 3 months ago, we entered [indiscernible] and the process is extremely clear. So you can see that this is truly teamwork, the work of people. So people that do not hold back their effort to roll up their sleeves and truly work. If you look at what we had in 2018, we had 10,000 employees now with the new people that have come into the market, we see that the people are growing. And this [indiscernible] allows us to dream that we will continue growing organically an in a rational way with quality.

[Operator]

[Operator Instructions] Our next question comes from Andre Sampaio from Santander Bank.

[Andre Sampaio, analyst]

Good afternoon, everybody simply to complement on the project coming into operation works if you have planned anything.

[Augusto da Paz Júnior, executive]

Well, thank you, Andre, for the question. Normally, we don't give guidance in terms of this operation. We do have a window that we have explained in the release and the construction, of course, will be very similar to previous construction. And otherwise, we do not offer guidance in terms of the COD, the coming [indiscernible] operation.

[Operator]

Our next question comes from Marcelo Sa from Itau Bank.

[Marcelo Sá, analyst]

I have a question regarding one of the points of the EBITDA and the relevant provisions that you carried out in the quarter. You stated that this was a nonrecurring item. And we're going to see something similar during this first half of the year? Or is it something specific to the fourth quarter?

[Leonardo da Silva Lucas Tavares de Lima, executive]

This is Leo speaking. Thank you, Marcelo. Traditionally, in the fourth quarter, we have the update of our matrix and we update our performance in the new series of the year. And well, this effect normally happens in the fourth quarter, we had an effect of BRL 119 million in terms of this reorganization of our matrix in the fourth quarter and this reorganization of the matrix updated account payable, accounts receivables. Part of this is received in the fourth quarter, part of this further on. We don't work with a separation, but traditionally, this happens in the fourth quarter. These are 2 different effects that do not happen during the year, and this was an adjustment to present value with a variation of BRL 51 million. Now this accounts receivable adjustment to present value was due to the provision for bad debt also for the fourth quarter.

We continued with the collection of older debt and we have launched an adjustment for losses for the last 10 years. Now whatever has extended for 10 years, we're writing down as a loss, BRL 41 million, I believe, because of the introduction of this new criteria. These are the effects that we have because of our provision for bad debt. 100% of collections for the year basically. And this thanks to our collection and commercial teams that have been working very intensely and very broadly making it possible to have this significant result in terms of collection.

Now we have been working with this provision matrix for several years without being concerned with the quarter and the quality of our provisions for each of the accounts receivable. So this is something recurrent that takes place every 4 quarters and that refers to account receivables from previous years as there is a separation between what is recurrent and is not recurrent. We end up highlighting this. We don't treat as nonrecurrent part that is recurrent. And we have paired this in the release. Now we have the adjustment to present value and the introduction of this criteria for losses, which is something new.

[Operator]

Ladies and gentlemen, at this point, we would like to conclude the question-and-answer session. We return the floor to Mr. Augusto Miranda for the closing remarks. You may proceed, sir.

[Augusto da Paz Júnior, executive]

Thank you all for your attention, for your attendance at our call. Once again, I would like to reinforce our commitment with our agenda and what we seek for our investors is to deliver consistent results, always focused on a highly disciplined financial management. IR team is available to support you, should you have any questions after the call. Once again, thank you for your interest in the company. And have a very good afternoon. Thank you once again.

[Operator]

The Equatorial Energia conference call. And here, we would like to thank all of you for your attendance. Have a good afternoon.

[Statements in English on this transcript were

spoken by an interpreter present on the live call.]