Valley National Bancorp

NASDAQ:VLY

Good day, ladies and gentlemen, and welcome to Enel Américas Third Quarter 2024 Results Conference Call. My name is Gigi, and I'll be your operator for today. [Operator Instructions] Please be advised that today's conference is being recorded.

This presentation contains statements that could constitute forward-looking statements. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of Enel Américas and its management with respect to, among other things, Enel Américas' business plans, Enel Américas' cost reduction plans, trends affecting Enel Américas' financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere; supervision and regulation of the electricity sector in Chile or elsewhere; and the future effect of any changes in the laws and regulations applicable to Enel Américas or its subsidiaries. Such forward-looking statements reflect only our current expectations, are not guarantees of future performance and involve risks and uncertainties.

Actual results may differ materially from those in the forward-looking statements as a result of various factors. These factors include a decline in the equity capital markets, an increase in the market rates of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere and other factors described in Enel Américas' integrated annual report. Readers are cautioned not to place undue reliance on these forward-looking statements, which state only as of their dates. Enel Américas' undertakes no obligation to release publicly the result of any revisions to these forward-looking statements, except as required by law.

I would now like to turn the presentation over to Mr. Jorge Velis, Enel Américas', Head of Investor Relations. Please proceed.

Thank you, Gigi. Good morning, ladies and gentlemen, and welcome to our third quarter 2024 results presentation. I'm Jorge Velis, Head of Investor Relations of Enel Américas.

In the coming slides, our CEO, Aurelio Bustilho; and our CFO, Rafael de la Haza, will be presenting the main figures of the period.

Let me remind you that this presentation will follow the slides that have already been uploaded in the company's website. Following the presentation, we will have the Q&A session. If you want to make a question, please send it through the webcast or write us to our corporate email, ir.enelamericas@enel.com.

Let me hand over the call to Aurelio, who will start by outlining the main highlights of the period.

Thank you, Jorge. During the third quarter, we saw a significant increase in investments in Grids business of 30%, reaching USD 0.4 billion. This is aligned with our strategy of having a more resilient network and improved service quality for our customers.

Regarding operational indicators, in Generation business, we have continued to adding new renewable capacity, reaching 800 megawatts of new capacity in 2024.

In Grids business, we saw an increase in energy demand, mainly in Brazil, as a consequence of higher temperatures. EBITDA in the third quarter reached USD 0.94 billion, which is 6% lower than third quarter of last year. This is mainly explained by the depreciation of Brazilian reais, which had a negative impact of minus $91 million and by lower EBITDA in generation business in Colombia, explained by the hydrological situation of that country that we will later analyze.

These negative effects were partially compensated by better results in Argentina and in Generation business in Brazil. Gross debt reached $5.7 billion, as of September, a 30% reduction, compared to December last year, explained by the reduction in debt we have implemented mainly in Brazil, which has been done with the proceeds coming from the sale of Peruvian assets. These allowed us to decrease financial expenses by 33%.

Before going into details of our operational and financial performance of last quarter, I would like to have a focus on 2 very significant situations that we are facing in these days. First, the climate events that we suffered in Sao Paulo, a few weeks ago; and the hydrology situation that we are seeing in Colombia.

Let's begin with the situation of Enel São Paulo in the coming slides. On October 11, Sao Paulo suffered the most intensive wind storm in the last 30 years, with wind surpassing 107 kilometers per hour, which caused severe damage to our electricity grids and disrupting electricity supply to almost 3.1 million customers. Thanks to the use of automation systems and remote control of the electrical network, the number of affected customers was reduced by 1 million on the same night. And by the end of next day, 80% of customers had their service back.

In response to the storm, the company immediately activated its operational plan for extreme weather events and increased the number of teams on the ground. The company mobilized a professional from its distribution companies in Río and Ceará as well as teams from Chile, Italy, Spain and Argentina. With this, the number of professionals on the ground reached 2,800 on the ground. In addition to this, Enel Sao Paulo delivered 500 generators for essential services, such as hospitals.

We continue to work in order to strengthen our infrastructure and improve our emergency protocols. As we have mentioned, we have -- we are investing BRL 6.2 billion in 2024-2026 period.

Now let's have a focus on hydrology situation of Colombia in the coming slide. Hydrology in Colombia is in a very stressed situation since the last 2 months. After El Nino phenomenon affected the country last year and the first months of this year, we entered into a neutral phase with the high probability of La Nina to arrive, meaning higher rain probability. However, La Nina has not arrived and we have been in a dry neutral phase for the last 2 months, with a very few rainfalls in the country.

Hydro reservoir are below its historical level, and thermal generation has increased in a significant amount. This, of course, is impacting the spot price, which, as you can see in the lower right chart, has been increasing significantly since July. We have been impacted by this situation due to a reduction in hydro generation and an increase in energy purchase at higher prices.

We are working in order to minimize the impact with several actions, such as not increasing sale position in energy contracts, operational optimization of our brands, optimization and monitoring of spot market through conversation with regulators and associations. The coming weeks are going to be crucial in terms of rainfall in order to determine the situation that we could face next year.

Now let's analyze our investment during this period in the coming slide. During the third quarter of this year, our CapEx decreased by 37%, compared to the same period of last year, reaching $450 million. This is mainly explained by lower CapEx in generation business due to the completion of renewable projects and a slowdown in developing new projects in line with our strategy. However, it is important to highlight that investment in grids business increased by 30%, reaching $0.4 billion.

If we isolate the impact of currency devaluation, CapEx increased by 44%, compared to the third quarter of last year. 63% of total investments were devoted to Brazil and 28%, where we are reinforcing our commitment with improving service quality. In terms of business line, 78% of total CapEx was devoted to grid and 19% to renewable generation. Growth CapEx reached $149 million, lower than last year due to lower investments with renewable capacity.

Let's now analyze our renewable development on Slide 7. During the first 9 months of this year, we added 0.8 gigawatts, 800 megawatts of new renewable capacity, mainly located in Brazil. This implied an investment of $24 billion, and it represents a higher amount of new capacity, compared to the first 9 months of last year. We are currently working on additional 0.5 gigawatts of capacity under construction located in Colombia. As you can see on the right side of the slide, we are working on 3 solar projects in Colombia, Guayepo II, Guayepo III and Atlantico, which will be finished between 2025 and 2026.

Let's continue with generation operational highlights on next slide. In generation business, at the end of this quarter, our installed capacity reached 12.9 gigawatts, an increase of 11%, compared to the same period of 2023. From this amount, 98% is renewable, and investments in generation business as of September reaching USD 4 million -- USD 400 million.

In the bar chart on the right, we are showing our energy balance, both for Enel Americas consolidated and for Colombia stand-alone given the hydro situation we are facing in that country. The first column represents on our production plus energy purchase and the second column represents the total energy sales.

We can see that in the third quarter, at Enel Americas' level, we are increasing -- we increased our sales by 10%, reaching 18 terawatt hours. From this, 12.2 terawatt hours came from our own production and 5.8 terawatts came from purchases to third parties. This sales increase was mainly explained by Brazil.

In this case of Colombia, it is important to highlight the significant reduction in hydro generation as a consequence of the droughts affecting the country. We were able to partially compensate this with our increased renewable capacity, but it was necessary anyway to increase the energy purchase to comply with our contracts. This increase in energy purchase, mainly the spot price in the swap market, was the main reason for -- to our results were negatively affected during this quarter in generation business.

Let's now continue with grids operational highlights on Slide 9. Electricity distributed reached 26.4 terawatt hours in the third quarter, which represents an increase of 3%, compared to the same period of last year, compared by higher sales in Brazil, mainly to higher -- due to higher temperatures.

Regarding number of customers, we had an increase of around 424,000 in the last 12 months, reaching 22.5 million customers. Smart meters increased by 2x, reaching [ 1,200 ] in this period, mainly due to the deployment of Sao Paulo. Net RAB and net RAB per customers increased despite currency devaluation impact, reflecting the significant investments that we are doing.

In terms of quality indicators, we are seeing that Argentina -- we improved SAIDI; in Colombia, improving SAIDI and SAIFI. In Brazil, we had a struggle against difficult, extreme weather conditions that affected our metrics. And as we mentioned, we are working hard in order to have a more resilient grid system.

Finally, regarding energy losses. We improved in Sao Paulo and Ceará. We remained flat in Edesur and Enel Colombia and slightly worse in Enel Rio.

Now Rafael will comment on the financial results of the period in the coming slides. Please, Rafael.

Thank you, Aurelio. [Foreign Language] EBITDA in the first 9 months of the year reached USD 3 billion, 6% higher than the same period of last year, mainly explained by better results in grids business in Argentina due to tariff increase, improvement in grids business in Colombia and better results in generation business in Brazil.

On a quarterly basis, EBITDA reached $939 million, which is 4% lower than third quarter of last year, mainly as Aurelio explained before, due to hydro conditions in Colombia and currency depreciation in Brazil.

In terms of net income, during the first 9 months of this year, we reached USD 2.5 billion, including, and this is very important to underline, a positive impact of USD 1.7 billion coming from the sale of Peruvian assets. As you know, we recently completed at the sale of our generation of distribution assets in Peru.

Isolating this effect, we reached USD 0.8 billion in this period, basically in line with the same period of last year. Our gross debt decreased 30%, and our net debt decreased by 65%, mainly due to the cash received from the sales of Peruvian assets and liability management actions that we are implementing. We will analyze in detail our debt later on.

On Slide 12, we will see EBITDA evolution and breakdown. Page 12, starting from $1,000 billion -- $1,000 million of EBITDA in the third quarter of 2023, we see that the generation business decreased by $57 million, mainly explained by hydro conditions in Colombia while in grids and customers improved due to better results in Argentina and Colombia. With this, we get to an EBITDA of $1,000 million for third quarter 2024, which is exactly in line with last year.

FX had a negative impact of $61 million, resulting in a reported EBITDA for this quarter of $939 million. From our reported EBITDA 55% came from Brazil, 36% from Colombia, 3% from Argentina and 6% from Central America. In terms of business line, Grids continues to represent the higher portion of our results, representing in this period 52% of our total EBITDA, generation of 39% and customers contributes with 9% of the total.

As for our EBITDA breakdown on a cumulative basis, Page 13, during the first 9 months, we see that EBITDA grew by 7% in homogenous perimeter. I mean, without considering Peru. Generation business decreased mainly due to hydro conditions in Colombia. Grids significantly increased due to better results in Argentina and Colombia, while customers business also improved.

FX had a negative impact of $45 million, reaching a reported EBITDA of USD 3,011 million. From this, 57% comes from Brazil, 37% of the total from Colombia, while in terms of business, grids contributes with 52% and generation 37%.

Now we will focus on cash flow of our company, Page 14. Starting from an EBITDA of USD 3 billion, we see that a net working capital amounted to $0.4 billion, a significant reduction compared to the previous year, but this is -- that is mainly explained by normalization of net working capital in Brazil, some delays in the CapEx, and this is explained substantially the net working capital difference with net working capital when compared to the previous year.

Taxes paid during the period amounted to USD 0.5 billion in line with last year, while net debt -- while net financial expenses have an important decrease in the third quarter due to the liability management that we have done. But on a cumulative basis, we remain basically with last year -- in line with last year, reaching $0.5 billion.

With this, funds from operations amounted to USD 1.6 billion, an improvement of USD 0.7 billion, compared to the same period of last year. After investments for $1.5 billion, including $0.7 billion of growth CapEx, we get to free cash flow -- positive free cash flow, which is very important at USD 0.1 billion.

Let me now analyze the debt of our company in the following slide. Gross debt amounted to $5.7 billion, a decrease of 30% compared to December 2023, mainly explained by debt reduction in connection with the use of proceeds coming from the sale of Peruvian assets.

In this sense, we reduced our debt in Brazil by $1.4 billion, and we see also a reduction EBITDA in this charge in Colombia, mainly due to FX effect and the Enel Americas corresponding to a bridge loan with Enel Finance International that was paid after we received the funds from Peru. Net debt reached $2.3 billion, a decrease of 65%, compared to the end 2023, and this includes free cash flow of $0.1 billion that we saw in the previous slide.

Net dividends paid for $0.3 million, extraordinary operations for $4.1 billion, mainly related to the payment received from Peruvian assets; an FX effect for $0.4 billion in the period.

In terms of currency and country, we see that Brazil remains the largest contributor, while the debt at holding level represents 10% of the total, and this is around [ $600 million ] of the Yankee bond expiring in 2026.

Finally, regarding the cost of debt, we can see a decrease for this period going from 12.2% to 10.5%, mainly explained by our liability actions in Brazil and lower interest rates in Brazil and Colombia in both.

On the next slide, Aurelio will conclude -- our CEO, this presentation, with some closing remarks. Aurelio, please. The floor is yours.

Thank you, Rafael. We are reinforcing our commitment in Brazil by implementing a strong investment plan in Grids business, aiming to having a more resilient network and improving quality for our customers. We had solid operational indicators in this period.

In Grids, energy demand increased by 3%, while in generation, we have increased our renewable capacity by 0.8 gigawatts during the year. Despite the difficult scenario that we are facing, mainly due to the hydro situation in Colombia and currency devaluation in Brazil, we were able to obtain solid economic results and maintain a sound financial position, which allows us to execute our CapEx plan.

Finally, let me thank all the teams that worked very hard and relentlessly in the -- facing the extreme situation in Sao Paulo, the difficulty in establishing the connection and the clients that we have. And thanks to all the teams in Sao Paulo, Rio, Ceará, Chile, Argentina, Italy and Spain, that we are working together in almost all fronts on the field, on the streets, on the back ops, in the offices the company in order to establish this adverse situation. So with that, we are proud to this recovery. There are more to come. We have our investment plan in order to face this situation.

Let me announce that on November 22, we will present our 2025-2027 strategic plan. And in the coming days, we'll send you the invitation with all the details. Let me hand it to Jorge to close this presentation.

Thank you, Aurelio. Thank you, Rafael. Thanks, everybody, for your attention.

Now we will begin the Q&A session. And the first question comes from Javier Suarez from Mediobanca.

The first question is, can you quantify the possible impact of the ongoing drought in Colombia in your latest presented guidance? And second question is, can you update us on the latest regulatory developments in Argentina?

Yes. Thank you for the question. Maybe I can hand it to Rafael to tell you the detail, but we expect that the hydrological situation will be, let's say, completed by the impact during this year. We do not expect for the coming periods, not affect on this.

Of course, it's not possible to predict weather situation and whether this kind of phenomena in more than in a medium or long term. So -- but considering the impacts on this, we are talking about something around for this period of $150 million that you recognized is part of the effect -- the major part of this effect until September, but not related to the coming years because it's not possible.

And related to Argentina -- Argentinian impacts. We are -- we had the [indiscernible] of the VAD, the value of the distribution. And we are happy that the cognition of inflation. But of course, there are more to -- more details to come, and I handle it to Rafael if he can give you more color regarding the impacts.

Thank you, Aurelio. Thank you, Javier. Very good question. As Aurelio said before, the impact is around [indiscernible] for the period due to the dry extraordinary; situation that we are seeing in Colombia. In any case, we expect once this extraordinary situation will conclude, we will finalize our recovery mechanisms to partially or totally mitigate these impacts.

In the meantime, what we are doing is what we have explained at the beginning of the presentation, I mean not [indiscernible] some position in energy contracts, operational optimization of our plants, optimization and monitoring of the spot market and having full conversation with the regulators and association to repeat mitigate this extraordinary impact for 2024.

Thank you, Rafa. Thank you, Aurelio. Please remember that you can send the questions to our webcast. And we're not seeing any new questions. We'll wait just a few seconds in case any question arise.

Okay. We have a question from [ Fernando Gonzales ]. Could provide more color on the measures you are adopting in Colombia to face poor hydrological conditions in case higher rainfall doesn't arrive in the months ahead?

Yes, thank you. Thank you for your question. We are -- as was explained in the previous slide, we are focusing in the end of this year, 2024, right? And our actions, of course, it's -- we are not increasing our PPAs, our sales on big contracts, right? We are maintaining what we have today, the commitments that we have today.

We are optimizing our plants and monitoring spot markets. And lots of conversation with regulation and association because we are facing a situation right now, Fernando, that we are not able to generate with our reservoir in order to meet our contracts. So we have water in our reservoir, but without being able due to these regulatory measures to meet our contracts, our PPA commitment. That's the important point here. So we are analyzing the possibilities, we are analyzing the regulation.

But today, it's not working, the general regulatory scheme method that we can generate to meet our contracts. So that's the very important point that it is affecting not only us, but all the system. We are analyzing internally our -- I mean, our position, our an important aspect in order to -- not to review, but to keep on reinforce the way and the methodology of generation and system and generation -- the regulation of the generation, the way and the methodology, this is very important.

Of course, moreover, we need to analyze and keep on analyzing the situation of the seasonality, the season of the country. But as for today, we have been very prudent in order to not increment our energy contracts or PPAs.

Thank you, Aurelio. Next question comes from Tomas Gonzalez. During the quarter, you paid $1.4 billion debt. That is part of the $2 billion debt you announced will be reduced shortly. When do you expect to prepay the remaining $600 million debt? And if you can tell us which should be a reasonable financial cost in a yearly basis, considering you are recurring the cost of debt?

Second question, innovation and considering further debt reductions. When you expect to pay Sao Paulo pension fund? And finally, will you please give us an update on the concession renewal process currently held in Brazil? And what are the expectations for this process?

Thank you very much, Tomas, for the question. I will go for the first one, which is the one related to financial aspects. In a -- let me say, normalized basis, Enel Americas will be in terms of financial cost below USD 500 million per year. So this is a normalized total consolidated financial costs, financial expenses that we expect to see for the next coming years. So a very significant reduction -- but of course, there is a combination of both different things.

The first one is the reduction of the interest rates expected in the different countries in which we are operating substantially in Colombia and Brazil. And then due to the liability actions that we have commented before that the company is implementing with the cash we see from the sales in Peru.

Substantially, as you know, to reduce the most expensive debt that we have in Brazil. So USD 500 million or below USD 500 million per year would be a normalized financial expense. And in relation to the remaining USD 600 million, Tomas, we are analyzing different alternatives. One of them could be continue reducing-- I repeat if there is a positive window, continue reducing the debt that we have in Brazil. And it will be our focus in Brazil to reinforce the current situation.

And of course, we have as well the reduction of an objective of the Sao Paulo Pension Fund. This will be the remaining part of the USD 600 million. But let's see, what opportunities we have. Let's see what are the most accretive plans for our investors. And depending on this, we will proceed.

And regarding [ automatic ] concession renewal. ANEEL probably should open a public hearing in this month, in October. And -- well, it's perfectly -- I mean, it's pretty much in line with the Decree published in June of this year, right? So there's no big difference.

Of course, we are analyzing and we need to look at the details and so on. But in general, it's in line with the Decree. This process will wait -- will end in the beginning of December, right? According to the time line that was published, probably we'll see this process closer to our estimation. Of course, it can change, but it would be closed by April next year. That's when we think and recording more than we think, according to the time line that will be concluded. So -- but as I told you, as I'm telling you, it's pretty much in line the proposal from the regulator in this public hearing, pretty much in line with the Decree.

Of course, we are analyzing the Decree, as well we'll contribute with -- in the discussion not only as a distribution association, but also as -- [indiscernible]. I think it's more in the correct way. Thank you.

Thank you. Next question from [indiscernible]. On October 24, Enel Group CEO, Flavio Cattaneo, met with President, Gustavo Petro, to discuss the energy transition. Local media reported Enel stated it would invest around EUR 2 million in energy transition projects. Could you provide more color about this?

Well, thank you for your question. I think -- well, of course, it's in line with Colombia is a country that we consider it as a relevant country for investment. So it is important this kind of compensation -- of relationship with the most important stakeholders.

And the investment plan, we are -- we need to detail it in the next strategy then. But it is in line with this confidence that we are best in Colombia. I mean, like Brazil, as you can see, is a relevant country for [indiscernible] renewal in the next strategic plan that will we'll give more color on this detail. But again, it's in line with the strategy.

Thank you, Aurelio. Next question from [ Rodrigo Mora ].

Two questions. First one, related to the drought situation in Colombia. Could it longed to be end of first quarter 2025? And second question is about Enel Sao Paulo. And then opened a process to end the concession of Enel Sao Paulo. What actions the company can take to convince the authority to avoid this process?

Yes. Thank you, Rodrigo. Regarding Colombia, as was explained before, it's not easy to predict hydro and climate situation in more than 3 months, right? It's not -- not Aurelio is saying, but the science is saying -- keep on saying this, it is difficult to predict as we now the climate events in the long term or the medium term.

But we expect that this -- especially this situation, considering the hydrological season that, in general, closes in the beginning of a year or in the end of summer season. We probably see this situation more clear by the end of this year or by the beginning of next year. So -- and let's see.

And we are -- as a company, we are taking all the measures in order to protect our reservoir, our contracts and our position. And again, there are some regulatory measures that changed a little bit what was being done or what's been reinforced in the previous period. It's very important that the company should need to -- or should generation and use its generation in order to meet PPA. When you doesn't -- when you don't allow this, it's not correct. This is our view. But anyway, we are taking all the measures in order to protect our reservoir and our PPAs.

Regarding Enel Sao Paulo, it is important to introduce -- in distribution it is very important to keep on improving our investment plans, right? And our plan to reintegrate more people to work on our core operational activities. It is important to keep on report investments in distribution. It is important key, and we are doing this, right?

Regarding the notification for Enel, it's a normal process. I mean, it's a process that we are just presenting. We need to present our information -- the information of our operation and information that we've done. Enel presented this requirement under its own declaration that its extreme events, I mean, under extreme events we will present these extreme events will present what we are doing, and we are confident that this process will be managed very well.

And we are hopeful that what we are doing is what it needs to be done, and we are confident that the results will be better in the next extreme event. Like it was in the compared to the extreme event that we had in the November last year, we improved and recovered and all the actions. It's clear that we improved it. So we'll present this, and we are confident that the situation with will [indiscernible] I think that's it.

[indiscernible] just to give you more color on this, Rodrigo. On Page #8, you see that due to the fact that we have executed -- yes, we have already, let me say, operating with more renewable capacity than the one that we had in 2023, we have produced -- we have moved from 0.2 to 0.8, as you may see on the right side of this chart. And this has partially mitigated.

So let me say, the potential impact due to the dry season that Aurelio already explained before. So thanks to, let me say, new projects that are already operating in Colombia. We have -- or we saw, let me say, a better impact than the one that maybe in other conditions, we could see. And also this is -- let me say, an anticipated movement due to the new capacity and renewables, that we are using to reduce or to mitigate or repeat the impact of the current situation in Colombia in terms of more...

Thank you. We are receiving a couple more questions about the situation in Sao Paulo. But I think Aurelio already covered the current status. So we'll move to questions from Felipe Flores.

Are the tax effects in Peru over after the negative impact of this quarter? Or should we still see news about this in the next quarter?

It's a good question. But I think it's -- I don't know if you want to give more color.

It seems -- the only thing is that we need to pay in 2025, the remaining part due to the capital gain, but this is just natural, let me say, actions. So the capital gain has been already registered in our balance sheet, but the tax will be paid in the next coming year, I mean, in 2026, due to the capital gain registered in the company.

Now from [indiscernible]. Can you explain reasons for the year-over-year improvement in net working capital, which your expectation for net working capital by the end of the year? You highlighted the fact that free cash flow is positive by September. Should we expect a positive free cash flow by year-end?

Thank you, Javier. The answer is yes. We see a positive free cash flow before the dividend payment, at the end of the year, an amount which is very similar to the one that we have announced today. So close to USD 100 million -- USD 130 million. So the answer is, yes.

And in relation to the net working capital reduction or absorption. When compared to the previous year, this is mainly repeat due to the delays in CapEx and to a lower CapEx when compared to previous -- to the previous year in generation substantially -- the Generation business.

Thank you, Rafael. And The final question is from to [indiscernible]. In regards to Colombia, is there any update in [ La Guajira ] region for the of the development of renewable projects, mainly due to the delay of transmission lines in the zone?

No news. We are still seeing delays on this kind of permitting on this area, right? That's why we moved to different areas as what we were explaining in our development plans. But La Guajira, we still see some delays, especially in -- well in transmission line, but not only this, but especially we are not seeing many support from local government to -- in order to move forward with the project. So that's why we are seeing some delays on this. And let's see, we are monitoring the situation over there and in order to see if the scenario changes.

Thank you. And the new concession contract says that the disputes would have to given up [indiscernible] disputes to sign the new concession contract. You receive penalties related to last year of new policy issues and has contested then incurred? You will probably receive time for this year's policy event. How do you see this point of the concession contract? Would you be willing to pay this penalty to sign the new concession contract?

[indiscernible], thank you for your question. We are -- it is something that we are analyzing. It's not exactly like this because when you're not -- I mean you -- you don't have to give up to any law discussions. It's not general like this. And we have all the companies in Brazil, as you know, all the legal aspect and legal environment. They have lots of claims, lots of discussion not only related to quality, but also related to many other things, and it's not like this that we need to give up to everything. That's not our reading.

If it is, of course, it's sustainable. That's my view. Again, we are analyzing the details of how the way we are leading business. It's not related to reaching a general discussion related to claims, related to quality, related to underground cable, related to the possibility of commercialization or anything. It's related to issues that were [indiscernible] responses. And I prefer to finalize it better and give you more complete view.

Thank you, Aurelio. Well, as there are no more questions, we conclude the results conference call. Let me remind you that the Investor Relations team is available for any doubt that you may have. Thanks for your attention.

This concludes today's conference call. Thank you for participating. You may now disconnect.