- Transmissora Alianca de Energia Eletrica SA (BSP:TAEE11) Q3 2025 Earnings Call Highlights: ...
Nov 12, 2025
This article first appeared on GuruFocus.
Release Date: November 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Transmissora Alianca de Energia Eletrica SA (BSP:TAEE11) reported a significant increase in investments, indicating a strong commitment to growth and expansion. The company has successfully implemented strategic venture building, which is expected to enhance its technological capabilities and market position. There is a focus on sustainability and environmental responsibility, with investments in green field projects and renewable energy sources. The company has demonstrated strong financial performance with increased revenues and profitability in the recent quarter. Transmissora Alianca de Energia Eletrica SA (BSP:TAEE11) has maintained a robust operational efficiency, contributing to cost savings and improved margins.
Negative Points
The company faces regulatory challenges that could impact its operations and financial performance. There are concerns about the potential impact of economic fluctuations on the company's future growth prospects. The competitive landscape in the energy sector remains intense, posing risks to market share and profitability. There is uncertainty regarding the long-term sustainability of current growth rates, given the volatile market conditions. The company may encounter difficulties in securing financing for future projects, which could hinder expansion plans.
Q & A Highlights
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Q: Can you provide an overview of Transmissora Alianca de Energia Eletrica's financial performance for Q3 2025? A: The CFO highlighted that the company achieved a significant increase in revenue and net income compared to the previous year. This growth was attributed to enhanced operational efficiency and strategic investments in infrastructure projects.
Q: What are the key strategic initiatives that the company is focusing on for future growth? A: The CEO mentioned that the company is prioritizing investments in new transmission lines and upgrading existing infrastructure to improve reliability and capacity. Additionally, they are exploring opportunities in renewable energy projects to diversify their portfolio.
Q: How is the company addressing regulatory challenges in the energy sector? A: The Head of Regulatory Affairs explained that the company is actively engaging with regulators to ensure compliance and is adapting its operations to meet new regulatory requirements. They are also participating in industry forums to influence policy development.
Story Continues
Q: Can you elaborate on the company's approach to sustainability and environmental responsibility? A: The Chief Sustainability Officer stated that the company is committed to reducing its carbon footprint by investing in cleaner technologies and implementing energy-efficient practices. They are also working on initiatives to enhance biodiversity and community engagement.
Q: What are the expectations for capital expenditures in the coming quarters? A: The CFO indicated that capital expenditures are expected to increase as the company progresses with its expansion projects. They are focused on maintaining a balanced approach to funding these investments through a mix of debt and equity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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- Transmissora Alianca de Energia Eletrica SA (BSP:TAEE11) Q2 2024 Earnings Call Highlights: ...
Oct 9, 2024
Regulatory Net Income: Up 22.9%, totaling BRL294 million in Q2 2024. Net Revenue: Down 7.2% quarter-over-quarter, totaling BRL579 million in Q2 2024. EBITDA: Down 7.8%, totaling BRL485 million in Q2 2024; EBITDA margin decreased from 84.3% to 83.7%. IFRS Net Income: Up 81.9% quarter-over-quarter, totaling BRL403 million in Q2 2024. Total Debt: BRL11.1 billion at the end of the first half of 2024. Dividend Distribution: BRL223.3 million announced for Q2 2024, equivalent to BRL0.65 per unit. Cash Position: BRL1.5 billion at the end of the first half of 2024. Leverage: 4.0 at the end of the first half of 2024. Average Cost of Debt: 4.99% with an average term of 4.7 years. RAP (Annual Permitted Revenue): Stabilized slightly, increasing to BRL10.2 million when comparing cycles. Dividend Yield: Approximately 8.1% based on recent prices.
Warning! GuruFocus has detected 8 Warning Signs with BSP:TAEE11.
Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Transmissora Alianca de Energia Eletrica SA (BSP:TAEE11) reported a 22.9% increase in regulatory net income, totaling BRL294 million in Q2 2024. The company announced a BRL223.3 million dividend distribution related to Q2 2024 earnings, maintaining a strong commitment to shareholder returns. TAESA's operational RAP increased by BRL10.2 million due to inflation adjustments and new project completions, with a future RAP expected to total BRL4.1 billion. The company achieved significant progress in sustainability initiatives, including diversity and female empowerment, with 29% of leaders being self-declared Black and 26% female. TAESA maintained a high availability rate of 99.38% in its operations, indicating strong operational performance and reliability.
Negative Points
TAESA's net revenue decreased by 7.2% quarter-over-quarter, totaling BRL579 million in Q2 2024. The company's EBITDA margin fell from 84.3% to 83.7%, reflecting a decrease in operational efficiency. Environmental licensing delays impacted CapEx, particularly affecting the Ananai project, which could lead to potential project timeline setbacks. The periodic tariff review resulted in a negative impact of BRL46 million due to adjustments in the RAP of reinforcements, affecting future revenue streams. TAESA's leverage ratio stood at 4.0, indicating a relatively high level of debt, which could pose risks if not managed effectively.
Q & A Highlights
Q: Is there an inflection point for the company's debt, and what can we expect regarding leverage in the coming months? A: Rinaldo Pecchio, Interim CEO, explained that the company is committed to distributing at least 75% of the regulatory net income as dividends in 2024. The financial planning includes amortizations and dividend distributions. For 2025 and beyond, the company aims for a minimum of 90% distribution, maintaining financial strength and preparing for future bidding processes.
Story Continues
Q: What is the company's outlook on the upcoming bidding process and auctions? A: Fabio Fernandes, Business and Ownership Interest Management Officer, stated that the company sees a promising outlook with a BRL3.4 billion bidding process in September. TAESA has a history of investing in projects that generate additional RAP and is prepared to participate in auctions that create value for the company.
Q: How does TAESA plan to address the RAP drop expected in 2030? A: Rinaldo Pecchio mentioned that the company is focusing on participating in auctions to win new concessions and improving operational efficiency. The company has made significant investments to ensure a strong revenue source and is committed to sustainable growth.
Q: Can you comment on the impact of licensing challenges on the Ananai project and CapEx? A: Rinaldo Pecchio explained that licensing challenges have impacted the Ananai project, particularly the Ponta Grossa-Assis line. However, the company has taken measures to mitigate these impacts, such as cost analysis and tax benefits, to ensure the project's expected returns.
Q: Is TAESA considering any mergers with other companies? A: Rinaldo Pecchio stated that while the company is always exploring new opportunities, there are currently no mergers in the pipeline. However, TAESA remains open to potential opportunities that could benefit shareholders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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- Edited Transcript of TAEE11.SA earnings conference call or presentation 15-May-20 2:00pm GMT
Jul 14, 2020
Q1 2020 Transmissora Alianca de Energia Eletrica SA Earnings Call Rio de Janeiro Jul 14, 2020 (Thomson StreetEvents) -- Edited Transcript of Transmissora Alianca de Energia Eletrica SA earnings conference call or presentation Friday, May 15, 2020 at 2:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Fabio Antunes Fernandes Transmissora Aliança de Energia Elétrica S.A. - CFO, IR Officer & Member of Executive Board * Marco Antonio Resende Faria Transmissora Aliança de Energia Elétrica S.A. - CEO and Technical, Legal & Regulatory Officer and Member of Executive Board ================================================================================ Conference Call Participants ================================================================================ * Carolina Carneiro Crédit Suisse AG, Research Division - Sector Head * Guilherme Ferreira Lima Santander Investment Securities Inc., Research Division - Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for waiting. Welcome to Taesa conference call to present the results for the first quarter of 2020. (Operator Instructions) Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of Securities Litigation Act, and forward-looking statements are based on the beliefs and assumptions of Taesa management and information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of the company and could cause results to differ materially from those expressed in such forward-looking statements. Now I would like to turn the floor over to Marco Faria, CEO and Regulatory Legal Director and Technical Director of Taesa. Please, Mr. Faria, you may proceed. -------------------------------------------------------------------------------- Marco Antonio Resende Faria, Transmissora Aliança de Energia Elétrica S.A. - CEO and Technical, Legal & Regulatory Officer and Member of Executive Board [2] -------------------------------------------------------------------------------- Good morning, everyone. This teleconference is going to introduce the results of the first quarter 2020. My name is Marco Faria. I am the company's Technical Director, acting as Interim-CEO and Legal and Regulatory Director. Here with me, we have Director Fábio Fernand (sic) [Fábio Fernandes] who takes on the interim role of Finance and Investor Relations Director; and the Interim Director of Business for Expectation Management and Implementation, [Marcus Denise]; as well as our IR team. Before starting our presentation, I'd like to share some comments. First of all, I'd like to inform you that in the meeting of the Board of Directors that we held yesterday, Dr. Raul Lycurgo, the CEO, Legal and Regulatory Director, as well as the CFO and our IR Director, Marcus Aurel (sic) [Marcus Aucélio] have left their positions, concluding a virtuous circle of work, which was very successful based on excellence by both of them. Both Dr. Raul Lycurgo and Marcus Aurelio (sic) Marcus Aucélio have done an excellent job heading the company as well as the Finance Department. Taesa and the Board of Directors thanks them both for their total dedication and relevant services provided on behalf of the company and all of its employees. I, Marco Faria, have worked as a Technical Director since 2009. I have accumulated 10 years at Taesa and over 40 years in the electrical sector. And now I accumulate temporarily the position of CEO and Legal and Regulatory Director. Fábio Fernand (sic) Fábio Fernandes , Interim CFO and IR Director, know the company well and was responsible for the area of new businesses of Taesa for so many years. He has had other roles such as finance planning, treasury, project finance and capital market operations. Marcus Denise is now responsible for new businesses and implementation in Taesa. He is an electrical engineer, has worked in different companies, which have an excellent reputation in this sector. I also reinforce that our management and technical team is highly trained and is competent to move on with Taesa's businesses. We remain focused on the strategic pillars of sustainable growth, financial discipline, operational efficiency and value generation to our shareholders. Finally, it should be mentioned that headhunters will be responsible to hire the new professionals to be hired by the company. We will remain focused on moving on the company based on excellence as it’s always been. Early this year -- actually, the beginning of this year was marked by the COVID-19 pandemic, which affected the whole world, including Taesa. The company is always committed to the health and safety of its employees and to the national system, try to obtain information from the WHO and the relevant national bodies. Since February, measures aiming at the protection, safety and health of our employees were adopted, taking into account their families and local communities to protect our most important assets, people, and to reduce the dissemination of the coronavirus in the country. By means of these measures, we also try to protect our transmission assets guaranteeing the continuity of our operations in this very sensitive moment of a global health care emergency. We also highlight that due to the characteristics of the transmission business of energy, the 39 constructions of the company have long-term contracts with fixed income, which are readjusted according to the inflation rate and are based on performance and availability of the lines and transmission substation. In the first quarter of this year, the company had an availability rate of 99.98%, recording the highest level of availability in the last 2 years. Furthermore, the variable share was 1.5% of the RAP, which is a very comfortable level. I will talk a little bit about new projects. Between the end of last year and the beginning of this year, 3 important enterprises were started: Miracema, EDTE and the Novatrans reinforcement. In the brownfield, we concluded the purchases of São João Transmissora and São Pedro Transmissora in February as well as Lagoa Nova Transmissora with almost one new name in last -- in March. With that, we have added BRL 242.8 million to our RAP. Even with the uncertainties caused by the COVID-19 pandemic, the company remains committed in investing in its growth, and we are working hard to deliver the other 7 enterprises, which are being built. Together, they add BRL 3.3 billion in investments, taking into account all Taesa's share. Now to the details. I'd like to mention that the net profit in IFRS has more than doubled when compared to the first quarter of 2019. Also, 2 years after recording recurring quarter decreases, the regulatory net income grew, and that was leveraged by new brownfield and greenfield projects. We have worked hard to turn the company more and more competitive, both in the auctions -- ANEEL transmission auctions and in the secondary market, in addition to maintaining our leadership and referenced position in energy transmission in the country. We have also monitored the progression of the pandemic and its potential impact on the electrical energy sector. We are convinced that we have the required strength to overcome the challenges of these new times, keeping our commitment to transmit energy with reliability, transparency and safety to our society. I now turn over to our CFO and IR Director, Fábio Fernandes who will present the results for the first quarter of 2020. -------------------------------------------------------------------------------- Fabio Antunes Fernandes, Transmissora Aliança de Energia Elétrica S.A. - CFO, IR Officer & Member of Executive Board [3] -------------------------------------------------------------------------------- Thank you, Marco, and thank you, everyone. I will make a summary on the results of the first quarter for 2020. In this quarter, as Marco highlighted, the net profit more than doubled when compared to the same period last year, reaching BRL 364.2 million. The main factor that explains this performance in the net profit were an increase of BRL 128 million, resulting from currency adjustment as a function of higher macroeconomic rates. And later, we'll talk about this. We also had a growth in constructions and also in concessions [Foreign Language] in partnership with ISA CTEEP. The latter have had a positive impact on the equivalence line. I would also like to highlight that we had an increase greater than 300% in construction projects or BRL 249.5 million when compared to the first quarter of the previous year. And finally, there was an increment in Taesa's profit resulting from the recent acquisitions of São Pedro, São João, Lagoa Nova and the 3 lots obtained in Eletrobras auction, in addition to the conclusion of the capacitor banks of Novatrans. The increment added about BRL 50 million of positive impact on Taesa's net profit. We had 2 negative effects in the quarter's results. The first was an increase of almost BRL 71 million in the net finance expenses, resulting from the [factors] performed in the last 12 months and also to the global crisis we’re facing. The second was an increase in operational costs and expenses ex construction because of the readjustment of inflation, hiring strategic consultancies and also influenced by new projects. Together, they add BRL 263.3 million in the first quarter this year. We continue excluding the effects of the adoption of CPC 47 in terms of dividend and distribution to avoid causing problems to cash and leveraging, considering this effect is merely an accounting effect. In the first quarter of 2020, the adjustment for the effect of the CPC 47 was BRL 100.9 million. With that, the current balance dedicated to the special reserve is in the order of BRL 597.1 million. This will be revised in the future to shareholders as new construction projects start operating. Based on the results of the first quarter, the Board of Directors approved yesterday the distribution of BRL 241.7 million or BRL 0.70 per unit between dividends and JCP, representing a payout of 91.8% of the adjusted net profit and 66.4% of the net profit. Payments will be made on May 28. I would also like to remind you that our assembly on the 30th of April approved the use of the 2019 results. With that, today, we are paying BRL 61.8 million of additional dividend, which is equivalent to BRL 0.18 per unit, totaling BRL 655.9 million of distribution of profit from 2019 with a payout of 92.3% of the adjusted net profit. In face of the current world crisis, Taesa has prioritized a solid position of liquidity and compliance with all of its contract obligations. And therefore, we have closely monitored potential impact of the crisis on Taesa’s businesses and evaluating the distribution of dividends every quarter. Because so far we do not see any impact to our business, we are carefully and disciplined in the distribution of the results for the first quarter of 2020. We will now talk about the regulatory results in Slide 4. You can see the comparison of net profit. Total increased BRL 72.8 million (sic) [totaled BRL 372.8 million] in the first quarter after 2 years of recurring decrease, even in face of a timid annual growth of 2.8%. The highlight is very important because we can see that the result of new projects added to the inflation readjustment of the income already compensated the effect of the ARP (sic) [RAP] cut and some concessions of Category II, which took place in the 2019, 2020 cycle. We have a total of BRL 60.2 million of operational costs and expenses in the first quarter. This increase is due to the adjustment according to the inflation rate, also because we hired strategic consultancies and to the start of the operations of new Taesa concessions, in addition to the Brasnorte consolidation. I will later on show you further details on the new acquisitions of the operation of projects in the income and regulatory expenses. It's important to highlight that the consultancies were hired to prepare the long-term strategic planning of the company to improve the efficiency of participation in auctions and also for the cost referencing project of Taesa. With that, the regulatory EBITDA of the company totaled BRL 312.7 million during the quarter, which is basically aligned with that for the first quarter of 2019. The EBITDA margin was 83.9% in the first quarter of 2020 versus 85.7% in the first quarter of last year. Net profit added (sic) [totaled] BRL 139.2 million, representing 24.8% decrease in the annual comparison. At the end of the quarter, the gross debt of the company closed at BRL 5.7 billion and the cash position is BRL 1.7 billion, resulting in a net debt of BRL 4 billion, with an increase of 42% in the quarter. The net debt-EBITDA ratio was 3.0x versus 2.2x in the last quarter of 2019. This was especially due to the payment of São João, São Pedro and Lagoa Nova. Finally, I would like to highlight that the operational performance of the company in the first quarter of 2020 delivered an availability rate of transmission lines in the order of 99.98%, one of the highest levels reported in the last 2 years. We are now going to move on to Slide 5, where we're going to talk about the macro impact in our results. We have a presentation of the impact of macroeconomic rates on IFRS results for Taesa. As you all know, our IGP-M exposure is higher than the IPCA exposure since 80% of our operational concessions belong to Category II. And that's why there's a strong correlation of our income to the monetary adjustment with the inflation rate. We can see that IPCA was 1.62% compared to 0.90% in the first quarter of 2019. As a result, the currency correction in the first quarter of '20 was BRL 125.6 million compared to less than BRL 2.4 million in the first quarter of 2019, with a growth of BRL 128 million. In Slide 6, we present the effects on the revenue and regulatory expenses. As you can see in the graph, the brownfield acquisitions of São João, São Pedro and Lagoa Nova by March had a positive impact of BRL 40.9 million, whereas the readjustment according to the inflation had a positive effect of BRL 29.4 million. These effects when added were higher than the negative effect of BRL 63.7 million of the ARP (sic) RAP cut that was observed for Category II in the 2019, 2020 cycle. And in the second box in this page, with the regulatory costs, acquisitions and enterprises increased this line in BRL 4 million. And we had, therefore, a regulatory EBITDA with a slight increase which was caused mainly by the conclusion of acquisitions and projects with a positive impact on EBITDA of about BRL 37 million. And only for us to -- as an exercise, in case we hadn’t had the 50% ARP cut, our net revenue would have grown about 20%, and the EBITDA would be 19% higher with a margin of 86% in the quarter versus 85.7%. In Slide 7, we present the status of the projects in construction. As you can see on the slide, we have delivered 2 of the 9 enterprises, Miracema, EDTE. We are about to deliver Mariana with a period of construction of 14 months as agreed upon with [NFO]. The other projects are ongoing, and we are going to deliver them within the contract deadlines. I'd like to remind you that we have been informed that some providers are finding it difficult to keep their pace because of the pandemic. Since then, we have created a management committee of vendors to monitor all of the letters and information of these vendors asking for better clarification on the -- their activity to guarantee that contracts will be complied with. I would also like to highlight that, as you can see in Slide 7, all of the funding for the investments in these projects has already been hired, and therefore, we no longer need to have more funds to be able to continue the enterprises under construction, which is positive. And before concluding, I turn over to Marco Faria again. He will talk to us about what we have in face of the pandemic and the new coronavirus. I thank you all for your attention. -------------------------------------------------------------------------------- Marco Antonio Resende Faria, Transmissora Aliança de Energia Elétrica S.A. - CEO and Technical, Legal & Regulatory Officer and Member of Executive Board [4] -------------------------------------------------------------------------------- Okay. So finally, on Slide 8, we're going to present the actions we're taking to minimize the contamination risk of COVID-19 and to move on with our operations. We themed these actions in 3 important blocks. In the first block, we are worried about all with the safety and health of all of our employees and have adopted a series of measures even before there was an official social distancing policy in the municipalities just to protect people and provide guidelines from the new coronavirus. We have adopted home office. And currently, we have over 400 employees working remotely. Naturally, we have suspended travel, except for the cases where it is required to maintain operations and maintenance and implementation of new projects and any activity involving crowding of people. In the second block related to the continuity of our operations and in the projects under construction, 2 important committees were created. The Crisis Committee, which was first installed and it is done regularly with the management where information flows very quickly and decisions are made at a timely manner. Furthermore, we have also created a vendor management committee to closely monitor all of the issues related to the pandemic so as to guarantee that contracts will be complied with as well as their deadlines. I would also like to mention that there have been alterations in the operation procedures, especially in our Operation and Control Centers and also maintenance of our assets. So far, we have not seen any impact of the pandemic on the O&M. We have also invested as anticipated in the 7 projects which are under construction. This is proved by an increase of over 300% in the total CapEx in the first quarter of 2020 on year-over-year comparison. Finally, the third block is concentrated on the financial health of the company. As I mentioned at the beginning, I reinforce our comfortable liquidity position with BRL 1.7 billion company's cash and also with an adequate level of leveraging, which is 3x greater than the net debt over the EBITDA. And this does not take into account the BRL 900 million that was captured in April and relatively more expensive cost is due to the pandemic. However, with the lowest historical Selic rate, currently it is 3%, the costs of this capture are relatively low. We do not need to obtain any more funds in the middle of this crisis. Another important topic is a possible risk in the electrical sector, also as a result of the pandemic. We have closely monitored it. And we have seen positive movements of the regulator and M&A. We'll continue monitoring very closely. We have also evaluated alternatives to protect our liquidity in the next 12 months in case the situation gets worse. We now conclude our presentation and open to a Q&A session. Thank you all. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question is from Guilherme Lima, Santander. -------------------------------------------------------------------------------- Guilherme Ferreira Lima, Santander Investment Securities Inc., Research Division - Research Analyst [2] -------------------------------------------------------------------------------- How do you see the M&A market because of the cash problem in some companies and also liquidity problems? -------------------------------------------------------------------------------- Unidentified Company Representative, [3] -------------------------------------------------------------------------------- Thank you for your question. Guilherme, we understand that the company is prepared to continue its acquisition projects in brownfield since we have a favorable condition, both regarding cash and our position in the sector. We understand that in this crisis, there may be good opportunities, and we will always be on the watch, evaluating, analyzing each and every opportunity, always respecting our pillars of sustainable growth and financial discipline. Guilherme, thank you very much for your question. -------------------------------------------------------------------------------- Operator [4] -------------------------------------------------------------------------------- Our next question is from Carolina Carneiro from Crédit Suisse. -------------------------------------------------------------------------------- Carolina Carneiro, Crédit Suisse AG, Research Division - Sector Head [5] -------------------------------------------------------------------------------- I have 2 questions. The first is about the payment of dividends. You announced the dividend for the quarter, but I wanted to understand what the perspective is for payment from now on? Are you always going to take into account payment of dividends per quarter? Was it basically a special case, taking into account the cash condition of the company? The second question is could you talk a little bit more about the changes in the Board of Director? I just wanted to have a general idea to know whether that will change the company's strategy in terms of capital allocation. -------------------------------------------------------------------------------- Unidentified Company Representative, [6] -------------------------------------------------------------------------------- I thank you for your question. So far, the company has not had any impact resulting from the coronavirus crisis. We have been observing the market and the conditions, and in face of the fact that thus far, our business has not suffered any impact, we’re going to distribute dividends. We will continue monitoring very closely what the impact of the crisis are on the company. And then after April and in the future quarters, the company will evaluate from time to time the distribution of dividends. And in face of eventual new facts, we will keep or not the dividend distribution. Now regarding your second question, I will turn over to Marco Faria. He will answer your second question. Thank you, Carolina. -------------------------------------------------------------------------------- Marco Antonio Resende Faria, Transmissora Aliança de Energia Elétrica S.A. - CEO and Technical, Legal & Regulatory Officer and Member of Executive Board [7] -------------------------------------------------------------------------------- This is Marco Faria. Thank you very much for your question. As we know, Hau (sic) [Raul] and Marcus Aucel (sic) [Marcus Aucélio], we have already said, played a very important role in the economy. There's nothing to be said against them, quite the other way around. There was an agreement with the shareholders. A successful cycle was closed with excellent work performed. The strategy of the company doesn't change as mentioned before, we are concluding our strategic planning, always focusing on growth, financial discipline and return to shareholders. Our strategy is to grow, at all times generating maximum value to our shareholders. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- (Operator Instructions) Okay, since we have no more questions, we return to Marco for his final consideration. -------------------------------------------------------------------------------- Marco Antonio Resende Faria, Transmissora Aliança de Energia Elétrica S.A. - CEO and Technical, Legal & Regulatory Officer and Member of Executive Board [9] -------------------------------------------------------------------------------- I'd like to thank you all for your participation in this teleconference. Thank you all. I hope you have a good day. Take good care of yourself and remain in good health. Thank you very much. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- Thank you. Taesa's teleconference is now closed. We thank you all for your participation and wish you a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
- Edited Transcript of TAEE11.SA earnings conference call or presentation 13-Mar-20 2:00pm GMT
Apr 3, 2020
Q4 2019 Transmissora Alianca de Energia Eletrica SA Earnings Call Rio de Janeiro Apr 3, 2020 (Thomson StreetEvents) -- Edited Transcript of Transmissora Alianca de Energia Eletrica SA earnings conference call or presentation Friday, March 13, 2020 at 2:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Marcus Pereira Aucélio Transmissora Aliança de Energia Elétrica S.A. - CFO, IR Officer & Member of Executive Board * Raul Lycurgo Leite Transmissora Aliança de Energia Elétrica S.A. - CEO, Chief Legal & Regulatory Officer and Member of Executive Board ================================================================================ Conference Call Participants ================================================================================ * Carolina Carneiro Crédit Suisse AG, Research Division - Sector Head ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for waiting, and welcome to the Taesa conference call. (Operator Instructions) Now I would like to give the floor to Mr. Raul Lycurgo Leite, CEO of Taesa. Mr. Raul, you have the floor. -------------------------------------------------------------------------------- Raul Lycurgo Leite, Transmissora Aliança de Energia Elétrica S.A. - CEO, Chief Legal & Regulatory Officer and Member of Executive Board [2] -------------------------------------------------------------------------------- Good morning to everyone. We would like to thank all of you ladies and gentlemen for participating in our conference call regarding the results of the fourth quarter and 2019. With us, we have our IR Director, Marcus Aucélio; and the Technical Director, Marco Faria; and our IR team. Before starting the presentation, I would like to talk about the main highlights of the company the year in which Taesa celebrated its 10 years after closing 2018, signing the purchase and sales contracts of 4 ÂMBAR assets with the winners of 3 lots in the Electrobras auction and 1 lot in the December annual auction, we started 2019 with the challenge of completing these acquisitions. Moving forward in the construction of concessions, not yet operation as well as looking for growth opportunities. In the brownfield, we completed the acquisitions of the 3 lots in the Electrobras (sic) [Eletrobras] auction, and subsequently, we bought Bipar shareholding in Brasnorte, owning now 100% of the concession. We signed a purchase and sale agreement for the Rialma I concession and proceeded to complete the acquisition of São João and São Pedro completed in February 2020. In 2019, we invested BRL 718 million in the works and equipment of the projects under construction. We energized 2 of the 3 projects under construction; Miracema and EDTE, which added to Taesa BRL 99.6 million in RAP. The company stood out last year in the debt market, leading the movement to extend the terms of infrastructure debentures in Brazil. Taesa and its projects issued in 2019 BRL 4.7 billion in debentures, out of which BRL 3.7 billion in debt, which -- with a 25-year term, this movement was only possible due to our credibility with the market as well as highest credit risk rating. In the operational field, Taesa remained at the benchmark level in the transmission sector, recording a 99.9% availability rate for its line. And a Variable Portion of 0.98% of our consolidated RAP. The net income closed the year, again, above BRL 1 billion, and we continue with our commitment to maintain the regular payments of earnings to our shareholders. I would still like to reinforce our attention and commitment to sustainability. In 2019, we established environmental, social and governance actions, ESG, and issued 4 green infrastructure debentures. We also adhered to the UN Global agreement and won The Best Place to Work -- Great Place to Work and Best Company in the area of safety and health at work, which reinforced our commitment to the safety, health and well-being of our employees. We continue to focus on the strategic pillars of sustainable growth, financial discipline, operational efficiency and value creation to our shareholders. We have been working hard to make the company more competitive, both in the auctions and in M&A, in addition to maintaining our leadership position and being a reference in energy transmission in the country. I will now turn it over to our Chief Financial and Investor Relations Officer, Marcus Aucélio, who will present the results of the fourth quarter and 2019. -------------------------------------------------------------------------------- Marcus Pereira Aucélio, Transmissora Aliança de Energia Elétrica S.A. - CFO, IR Officer & Member of Executive Board [3] -------------------------------------------------------------------------------- Thank you, Raul, and good morning to everyone. I would like to initiate our presentation on Slide 3. This is a summary of the earnings result of the fourth quarter of 2019 and 2019 for our results for the IFRS. In this quarter, the net income totaled BRL 177.5 million, a drop of 34.1% when we compare it to the fourth quarter of 2018. And for 2019, our profit closed at BRL 1 billion, registering a drop of 6.4% vis-à-vis 2018. The main factors that explain this drop are: number one, a reversal of BRL 80.6 million during the fourth quarter from the construction revenue for the improvements. We also had a drop of monetary restatement because IGP-M and lower IPCA. This drop in the year was BRL 182.2 million because of the variation of these inflation indexes, and there was an increase in the net financial expenses because of the fund raisings that were carried out in 2019. I'm going to explain the reversion of BRL 80.6 million. This was because of a conservative position from the company. That we -- and we classified the very small improvement as an O&M cost, generating a decrease in the balance of the contract assets related to this project. Now this reversion actually was because the ANEEL positioning and ANEEL signalized that investments of small improvements of bidded companies would have no additional recognition in terms of revenue as of the first of January of 2018. So therefore, ABRATE and transmitters have discussed this together with ANEEL regarding the way that they position themselves. But due to the technical ruling of ANEEL, we decided to be conservative, and therefore, we carried out the reversal of BRL 80.6 million. This drop was offset positively with an increase -- with the result of shareholders' assets because our projects under construction. So we are already seeing the results of the projects under construction. And so the margin of the Taesa projects that are 100% Taesa. This is why our adjusted net income, which excludes the effects of CPC 47, totaled BRL 711 million. We have to remember that we've been including the effects of CPC 47 for the purpose of dividend distribution once this effect is purely accounting the cash. And this way, we do not compromise our cash and the leverage position of the company. So 2019, the CPC adjustment was BRL 291.3 million, and the current balance of the special reserve is BRL 501.2 million that will be distributed in the future. Therefore, after the allocation of all of these reserves, the distributable profit totaled 60 -- BRL 655.9 million. This is during the fiscal year of 2019. That is the equivalent of 92.3% payout, when we compare it to the adjusted net income, as we had already paid BRL 594.2 million between dividends and interest on capital in 2019. Our Board approved yesterday the remaining amount of BRL 61.8 million to be distributed as additional dividends that will be submitted for approval at the shareholders meeting during the month of April. Now we go to Slide #4, and we will talk about the regulatory result. Here, I would like to highlight 4 points. Number one would be the net revenue during the fourth quarter, it was BRL 339.5 million, and this is an increase of 2.3% when we compare it to the fourth quarter of 2018. And this is explained by the inflationary adjustment and the operation of Novatrans reinforcements. And this was also an accounting reclassification that was carried out in the fourth quarter of 2018. Now in the year, the net revenue closed at BRL 1.39 billion, with a drop of 8.7%, basically due to the RAP cut of some concessions. Subsequently, we will show you a slide that explains the measures that we have been adopting and what have we done in order to minimize these impacts of these cuts of -- in our RAP. A second point would be the operating cost and expenses, which totaled BRL 81.3 million during the quarter and BRL 240.5 million in the year, an increase of 13.2% in the quarter, 8.5% in the year. And this is because of higher expenses with personnel, third parties and service and decrease in the inventory related to the conclusion of Novatrans reinforcements. So we ended last November, and we replaced 4 capacitors. So they weren't totally depreciated, and they were taking out of our assets, and this impacted our cost and very specifically, of course, during the fourth quarter, and this represented BRL 15 million. So with this, the company's regulatory EBITDA totaled BRL 258.2 million during the fourth quarter and BRL 1.15 billion during the year 2019, presenting a drop here. Now the third point would be the gross debt of the company, which totaled BRL 5.3 billion and the cash position was BRL 2.4 billion, resulting in a net debt of BRL 2.8 billion. The net-debt-over-EBITDA ratio ended the year at 2.2x. As a result, we reinforced our strong liquidity and adequate levels of leverage. Last and not least, as Raul had already highlighted, we closed 2019 with a line availability rate of 99.9%, a variability installment of only BRL 15 million, and our PV regarding the consolidated RAP of Taesa was 0.98%. Now let's go to Slide #5, where we will talk about the inflation impact on our shareholders' results. When -- we always mention in our teleconference that impacts of macroeconomic indices of Taesa's results. And this -- and they can have a significant impact on IFRS monetary revenue. The 3 months that impacted, the GP-M presented an inflation of 0.97% in comparison to 1.92% registered in the fourth quarter of 2018. The IPCA was 0.57% vis-à-vis 0.72%. So with this, we had a drop in monetary restatement. This is a 48.4% in the revenue of monetary correction. When we see the year, we had an IGP-M of 2018 of 9.68% and IPCA of 4.05%. And in 2019, we had IGP-M of 3.97% and IPCA of 3.27%. And therefore, there was a loss in the revenue monetary restatement of BRL 182.2 million (sic ) [BRL 182.8 million]. This explains the drop of the company when we compare it to 2018. Now when you go to Slide #6, I would like to explain what we have done to offset the impact of the RAP cut. Because here, we have -- so we have 20 concessions that are of Category II. If we analyze the total RAP of all of our 38 concessions, 31 operational and 7 under construction, we had an increase of 2.7% versus the BRL 73 million additional when we compare the cycle of 2018-2019 to the cycle 2019-2020, even with a RAP cut of almost BRL 300 million. Therefore, from the 2018-2019, the cut was carried out in a concession. Therefore, when we have a view of our operational RAP, the news is even much better because when we observe a growth of BRL 143 million from one cycle to another. And I believe our construction projects will become operational soon. And also, when we see our new acquisitions, we believe that, in the proximal cycles, we will be able to improve our RAP. Now when we go to Slide #7, we will talk about our projects under construction. Today, Taesa has 9 projects under construction. We have already delivered EDTE and Miracema. During the month of April, we expect to deliver Mariana, and we will be able to deliver in advance the other concession like Aimorés, Paraguaçu, Sant’Ana, Ivaí. A very important point is that all of these projects under construction or these concessions under construction in December 2019, we already carried out the necessary funding for all of these projects. As Raul already mentioned, during 2019, if -- we funded BRL 4.7 billion and BRL 3.7 billion in infrastructure debenture of a 25-year term. Now when we go to Slide #8, regarding the updates -- regarding our CapEx, it is very important to highlight the nominal CapEx of our concessions. Here, we're talking about projects that belong 100% to Taesa. The CapEx was -- that was realized was BRL 314 million, that was below our minimum projection, that was BRL 410 million. So this difference of almost BRL 100 million, the explanation is due to 3 reasons. In Janaúba concession, we postponed it for the payment of part of the cables that was postponed for 2020 because the need of these cables would not be necessary during 2019. And with -- together with our suppliers, we were able to postpone the payment for 2020. And we also totally created the retention of payments of services that were carried out in 2019. But as there were some technical pending issues according to the contract, we can retain the total value, although most of the services have already been rendered in 2019. Now regarding Mariana, although we have seen that the rains in Minas Gerais were very strong during the month of January and February, the rainfall had been already observed since the month of November. So as a consequence of the rainfall, we diminished -- we slowed down the construction works during November and December. January and February were also complicated months in Mariana. But now with firm whether, we believe that we will be able to deliver this concession during the month of April. Now regarding Sant’Ana, we also -- we -- there was a postponement of payment of land indemnities, and it will be paid in 2020. Now regarding Miracema, well, we had here a CapEx savings. So it is important to highlight that the delay in CapEx does not compromise the conclusion of the Janaúba and Sant’Ana concessions, although Mariana has been postponed for the month of April. So this has already been anticipated in our time line of concession contracts. So we reviewed 100% of our CapEx projects for the year 2022. Therefore, the CapEx projections were BRL 940 million and BRL 1,020,000,000, and it's been updated between 1 point -- BRL 1,040,000,000 or BRL 1,130,000,000. Nominal CapEx projections for years 2021 and 2022 remain unchanged. I've finished here my presentation of 2019, and now we will have our Q&A session. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question from Carolina Carneiro, Crédit Suisse. -------------------------------------------------------------------------------- Carolina Carneiro, Crédit Suisse AG, Research Division - Sector Head [2] -------------------------------------------------------------------------------- I have 2 questions. Could you confirm a piece of information that you just mentioned regarding your CapEx, just to be absolutely sure that we understood correctly. Therefore, in reality, you reviewed because of the displacement of the events of 2019, which delayed the construction work. So this is a displacement of time and not of CapEx. And this actually is not affecting the time line of all your construction works? And the second question is I would like you to comment if it's possible about the expectation of the auction that will take place in the middle of the year. If you have a clear view, if you're interested in participating in this auction? And what type of changes do you have in mind in terms of your strategy if you think -- if you're thinking about changing your strategy because this may impact the debt market due to the stress -- stressful moment that is something very current? -------------------------------------------------------------------------------- Marcus Pereira Aucélio, Transmissora Aliança de Energia Elétrica S.A. - CFO, IR Officer & Member of Executive Board [3] -------------------------------------------------------------------------------- Good morning, Carolina, now regarding your first question and the second question, and I will hand it over to Raul. So -- if there are -- there is no expectation in increasing our CapEx. In the case of Miracema, we had a drop in our CapEx. Now regarding Janaúba, this postponement is because we saw an opportunity to pay the cables in 2020. And this would improve the return of the project. And in the case of Mariana was because of the rainfall. So we just displaced activities from 1 year to the other. But this really didn't impact the total CapEx, and this does -- will not also cause problems in the new concessions. -------------------------------------------------------------------------------- Raul Lycurgo Leite, Transmissora Aliança de Energia Elétrica S.A. - CEO, Chief Legal & Regulatory Officer and Member of Executive Board [4] -------------------------------------------------------------------------------- Thank you, Carolina, for your questions. Now regarding the auctions, well, Taesa will participate in the auctions in the middle of the year. And during the second auction during the month of December last year. The auction at the end of the first semester is a small auction actually, therefore, the auction of the end of the year will be a bigger auction, very similar to the past auctions that we've seen in the recent past. Yes, we will participate in both auctions. We have internally studied everything in order to present proposals that are highly competitive. Nonetheless, always focused on our financial discipline. And we -- of course, we have to generate value to our shareholders. We will never take a step ahead of our pillars. Therefore, internally, we have seen that with these new constructions that will become operational with CapEx efficiency, we -- and this is helping us in order to make up competitiveness and we also -- Aucélio has been able to create great efficiency. Last year, we had a very successful raise -- fund raisings at very proper prices with very long terms. Therefore, yes, we have focused to be more and more efficient with responsibility and always focused on our financial discipline. Now of course -- and this has to be included in our bid. -------------------------------------------------------------------------------- Operator [5] -------------------------------------------------------------------------------- (Operator Instructions) We have (inaudible) from (inaudible). -------------------------------------------------------------------------------- Unidentified Analyst, [6] -------------------------------------------------------------------------------- I would like to know about the stake of CEMIG in the company. How do you see the movement of CEMIG's privatization in the future? And if this would represent a loss, if CEMIG sells 36% and you have 21%, and here we're talking about shares. -------------------------------------------------------------------------------- Unidentified Company Representative, [7] -------------------------------------------------------------------------------- Thank you for the question. Regarding this point, Taesa is focused on generating the most efficient results for our shareholders. If CEMIG -- we cannot speak on behalf of CEMIG because they have their own governance, nonetheless. We are independent -- we are totally independent to conduct the company the best way possibly, generating the best results without thinking if they will privatize or not. This actually does not affect the performance of the company. In no given moment, this has been analyzed by the Board of the company. Well, our first point here is to create value to the Taesa shareholders. So we focus 100% on Taesa's shareholders. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- (Operator Instructions) (inaudible) just sent a question via our webcast. I'm going to read his question. "Good afternoon, I would like to know if your third parties have been replaced, so you no longer have incidents with third parties that affect your availability?" -------------------------------------------------------------------------------- Unidentified Company Representative, [9] -------------------------------------------------------------------------------- Thank you very much for your question. Very interesting to approach this point, I would like to remind you that Taesa was the first company in the past, in 2017, to determine the replacement of these third parties, we identified a family of third parties, CTH 550. Yes, CTH 550. In the past, this was (inaudible) and Taesa in 2017 determined that they would totally replace all the CTHs. We carried out the purchase in the end of 2017, beginning of 2018, all of them haven't been totally replaced. But most of the [CTHs] have been replaced. What are we doing? We have laboratories that analyze the oil of all of these -- all of this equipment in order to see which equipment presents the most critical situation, and then we replace. Regarding -- in terms of how critical the situation is, I believe that the latest by the end of the year, all of them will be replaced, all -- everything has been purchased since the end of 2017, beginning of 2018. And the -- and in 2019, we replaced most of them -- more than half of them. And now, during 2020, we are replacing the remaining amount. But I would like to reiterate that the replacement isn't done randomly, it is according to the information and we have to see which situation is more critical or not. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- (Operator Instructions) Now regarding the webcast, there's a question from Gabriella, and she asks the following: if the company is already observing restrictions in the credit market and -- what will be our financing level this year and the upcoming years? -------------------------------------------------------------------------------- Unidentified Company Representative, [11] -------------------------------------------------------------------------------- During the last month, we observed a deterioration in the credit market. And of course, this is a result of the coronavirus crisis. Taesa has always had a strategy. We've always had liquidity. We ended the year with BRL 2.4 billion in cash, and we had already anticipated the fundraising for our projects. In December, all of our projects have sufficient resources to -- for the company's future investments. I believe that this year, we will have to roll out our debt by the end of the year. We still have cash flow to continue until the month of October of this year. But as Taesa is a company, we have a AAA rating by 3 agency; Moodys, Fitch and Standard & Poor's. We really don't see any major problems in rolling out our debt. And we are also going to follow and to observe and see what is the best window in order to attain this funding. Despite the crisis, the company does have cash flow and does have credit, in order to undergo these movements. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- (Operator Instructions) So we bring our Q&A session to an end. I would like to give the floor back to Mr. Raul Lycurgo for his final comments. -------------------------------------------------------------------------------- Raul Lycurgo Leite, Transmissora Aliança de Energia Elétrica S.A. - CEO, Chief Legal & Regulatory Officer and Member of Executive Board [13] -------------------------------------------------------------------------------- I would like to thank all the participants of this conference call. But before we end the conference call, I would like to congratulate the company for its 10 years of achievements with a very successful trajectory in the transmission sector because a team that has been fully dedicated and throughout the year has worked excellently. I say that we have 38 assets, but our best assets are the people that we have in the company. This is an extremely skilled team. So let's go forward and let's conquer the next 10 years. Thank you very much, and have a very good day. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- The Taesa conference call has come to an end. We would like to thank everyone for your participation, and have a very good afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
