Alupar Investimento S.A. (ALUP11) Earnings Call Transcript

Good afternoon, ladies and gentlemen. Welcome to Alupar's conference call to discuss the results for the third quarter of 2026. The audio and slides for this conference are being broadcast simultaneously with live interpretation service, which can be accessed via the interpretation icon below. [Operator Instructions] Please be advised that forward-looking statements regarding future events are subject to risks and uncertainties, which may cause actual results to differ from those expected. These statements reflect the company's views only as of the date they are made, and the company assumes no obligation to update them. Joining us for this conference call are Mr. Jose de Godoy Pereira, CFO of Alupar; and Mr. Luiz Coimbra, Director of Investor Relations at Alupar. I would now like to hand the floor over to Mr. Luiz Coimbra to begin the presentation. Please, Mr. Luiz, you have the floor.

Good afternoon, everyone. Thank you for being in our conference call for the third quarter of this year. We have an agenda here with 5 different topics. I'll start with the highlights of our quarter, the third quarter, then I'll talk about project status. And then we are going to analyze regulatory and company framework. Later, we are going to talk about results allocation and also review company performance in capital markets. In the next slide, you can see our first highlight is an auction we won in the latest auction in Chile, we announced it on Tuesday this week. It contemplates 2 new substations with 21 kilometers of extension located in the south of Santiago. This project is $11.9 million in CapEx of $85 million and energization predicted for 2031. With this project, now we have 3 projects under implementation in Chile. The following slide, I show another highlight. Our advancements in the implementation of another project, the project in Peru called [indiscernible] we had environmental license issued in September. It is equivalent to our installation license. So now we can start implementing the project. The project includes a new substation 9.5 kilometers of line extension $1.9 million of RAP and CapEx at $11.5 million. This project is part of a lot. We won including also Maravilla which is a substation. So both projects together in this slot have a CapEx of $20 million and associated RAP $32 million. The following slide, you can see the dividends approved for the second quarter this year. We pay around 60 days after approval. So we paid this interim dividend on the second of October. We paid BRL 69.2 million, equivalent to BRL 0.21 per unit. The shareholders who received those dividends were the ones registered in the company's database on the 13th of August. Going on the next session. We have a little of the evolution, the status of our projects under construction now. Starting with land. We had 2 projects with advancements. The first of them is [indiscernible] it had 85% of the areas acquired, and now we are at 94%. The areas of the substation we have had since the previous quarter, 100% acquired another project with advancement is [ TEP Palca ] advancing at 25% in substation land. When we look at our advances in the [indiscernible] project, the one I mentioned before in Peru, it's one of their highlights for September. And if we talk about construction projects, the most significant advancement was in 3 projects. The first is TCN which was at 79% in the second quarter, and now we are at 85%. We also advanced in TAP, which had installation license issued in July. We started implementing this project, and it's a 13% advancement. And finally, Maravilla, which is part of the Puna Sur a lot we received the installation license in May, and the project closed the semester now with 15% of advancement. We are also opening 3 RBIs reinforcing existing projects One is EATA, the other in ENGIE and ETVG, the 3 RBNI, total CapEx around BRL 480 million with associated RAP of BRL 74 million. Some projects are going to start operating at the end of the year and the others during next year. The following slide you're going to see regulatory numbers starting with revenue it increased 9.2%, highlighting 2 main points. The first of them is a readjustment of reps in 2026, we had an adjustment up for index contracts in IPCA and an adjustment of 95 for contracts index and GPM, and it's valid starting in July. Another important point here is the start-up of commercial operations of TCE. It's our first transmission asset in Colombia and it started operating in October last year, adding BRL 45 million to our revenue. When we look at EBITDA I'm going to highlight here that it goes from BRL 743 million to BRL 773 million. The main highlight is that the first increase by BRL 92 million that I just mentioned. And another impact important is the reduction in BRL 37 million in our equity equivalent. The only one that's not consolidated by the company is T&E. It started operating on the 16th of September last year, and we have 14 days last year. And now in this quarter, it has been operating. So we transited all financial expenses to this quarter and had a lower result as compared to the same period last year. Profit went from BRL 298 million to BRL 214 million. We had an improvement in financial results from BRL 31.8 million 62% of our debt is indexed by the IPCA, and IPCA had deflation this quarter of 0.9% and the same period last year, we had inflation of 0.39%. So we had a reduction in our financial expenses in this quarter. I'll also talk about income taxes. We had an increase of BRL 41.5 million in our income tax with a general improvement in the results of our transmitters, it was larger than the numbers for the third quarter last year. And we also had the due date of the expiration of our tax benefit of 2 transmitters in the [indiscernible] in the fourth quarter last year, and we had a rate that was higher for taxes in this quarter as compared to the same period last year. The following slide you will see corporate results in IFRS. Revenue increased by 22.1%, an increase in infrastructure revenue of BRL 242 million, BRL 153 million due to investments in Brazilian projects, BRL 69 million due to investments in foreign projects, especially Peru, and BRL 28 million in the implementation of reinforcements of the 3 assets I mentioned before. Also, we had the start-up operations of TCA, which contributed with BRL 45 million in this account. When we look at EBITDA, it goes from BRL 984 million to BRL 527.3 million, the main highlights here is an increase in revenue as explained, also an increase of BRL 334 million in infrastructure costs due to investments in implementation projects and reinforcements and the most important account here is this reduction of BRL 317.9 million in equity equivalent. The only asset we consolidate T&E and in the third quarter last year, it had a nonrecurring effect. We had the results of arbitrage defining a new revenue, an extension of the concession term and our results, our revenue in the third quarter last year was higher, so it's a nonrecurrent event. This year, it's stabilized. When we look at profit, it goes from BRL 489 million to BRL 133 million, basically a reduction due to the reduction in the EBITDA of BRL 457 million. Also, we have the debt profile of our holding company, no changes. We still have the issuing of debentures balance of BRL 930 million. The holding closed the quarter with cash at BRL 424 million net debt. Next slide, we have consolidated debt, the profile compared to the second quarter of this year. Most of our debt is indexed by IPCA. We have 62% of our debt indexed by this number by IPCA with 22% and 14% of the debt indexed in foreign currency in the projects we are executing. We closed with a total debt consolidated at BRL 15.168 million and cash portion of BRL 467 million. Our net debt -- yesterday, we have approved the interim dividends allocation. For this quarter, BRL 69.2 million, the same amount paid and the interim dividend of the second quarter, we will be paying within 60 days to shareholders who are on our database on the 12th of November this year. And finally, we have the evolution of company performance in the capital markets. The year-to-date, Alupar's shares are valued by 2.64% and the IE Electric Energy Index is devaluated at 3.24%. Another point I highlight is the increase we have been able to achieve in average financial volume for negotiations comparing this year to last year, we have an increase by 29.5%, an average daily negotiation of BRL 36.4 million. And thus, I close my presentation, and we can continue to the Q&A session.

[Operator Instructions] Our first question is from Mr. Ricardo Bello from Safra.

I have 3 points to highlight here. First, can you talk a little more about BS you acquired in the Chilean auction also potential optimizations in the CapEx and possible potential synergies and if you were looking at this. How do you see competitive environment in Latin America, if you are participating in other auctions in Latin America and how your appetite is for the battery auction next month.

Specific return rate. We don't usually give this guidance to the market, but I think each of you can calculate -- we have shown the data about the auction, the main CapEx and our RAP number. So you can calculate based on that. Also about Latin America. What happens is, I think this auction in Chile is an example of what happens. The lots are very small here, very different from here where we have great scale. So since we have many assets, in all these countries, we reached great synergies and can be competitive. But if we were to bid on the slot only 10 lots or auction, and we won just one. So competition is even higher than here companies such as [indiscernible] COGS also is participating there for a long time. Ferrovial, Transelec as well is the greatest transmitter in Chile. So competition is very similar and even a little greater because you have more international payers participation and the players that we have here as well. [indiscernible] all these players sent bids. So if we hadn't had some scale in these countries and infrastructure, especially because we are executing several EPCs, several construction. At the same time, we can dilute the construction costs for those assets. and that allowed us to be more competitive in this project.