Q2 2026 Equatorial SA Earnings Call Transcript
Key Points
- Adjusted EBITDA reached BRL3 billion, representing 2.5 times short-term debt, reinforcing strong liquidity.
- Wire B market grew 4.2% (5% adjusted for billing schedule), driven by concessions in Para, Amapa, Goias, Maranhao, Rio Grande do Sul, and Piaui.
- Compensation payments to customers reduced by 18.3% year-over-year, reflecting improved service quality.
- Distribution segment gross margin increased 10.4%, driven by higher Wire B tariff and market volumes.
- Adjusted EBITDA in Distribution segment increased 8%, supported by higher gross margin and cost discipline.
- Acquisition of Copasa stake marks a strategic milestone, expanding presence in water and sanitation sector.
- Acordo Gaucho program added BRL911 million in liability, with 75% discount on interest and penalties, improving debt terms.
- Raised BRL7.6 billion in capital markets, extending average debt maturities and reducing CDI-linked spreads to CDI plus 0.57%.
- DEC improved across all distribution companies, with 5 out of 7 within regulatory limits; Piaui returned to limit.
- Regulatory progress: Ministry of Mines and Energy published Normative Ordinance 140 for curtailment compensation, aiding renewable segment.
- Adjusted net income decreased 80.1% due to higher financial expenses from increased interest rates and debt balance.
- Net debt-to-EBITDA ratio increased to 3.1 times, up 0.4 times quarter-over-quarter, due to Copasa acquisition payment.
- Renewable segment adjusted EBITDA declined 22.6% due to lower power generation.
- Expected credit losses rose to 1.26%, reflecting increased delinquency and higher billing.
- Water and Sanitation segment EBITDA fell 10.4% year-over-year, though excluding one-time item, it would have grown 24%.
- Default levels deteriorated, particularly in low-voltage market, due to economic environment.
- Goias remains above DEC regulatory limit by 0.06 hours, and Rio Grande do Sul has specific contractual DEC target.
- Removal costs increased, impacting adjusted EBITDA, especially in companies under tariff review.
- Leverage is above ideal level in high-interest-rate environment, with covenant at 3.3 times.
- Curtailment compensation process still in early stages, with regulatory implementation ongoing.
Good afternoon, everyone, and welcome to Equatorial Group's earnings conference call for the second quarter of 2026. Joining us today are the company's CEO, Mr. Augusto Miranda, Vice President, Leonardo Lucas, Regulatory Director, Mr. Cristiano Logrado, Director of Financial Strategy and IR; Ms. Tatiana Vasques; and Mr.Liu Aquino, President of Echoenergia.
At the end of the presentation, they will be available to answer your questions. Please note that simultaneous interpretation is available on the platform. (Operator Instructions) This conference is being recorded and will be available on the company's Investor Relations website along with the presentation being shown today. (Operator Instructions)
Before proceeding, we would like to remind you that the forward-looking statements are based on the beliefs and assumptions of Equatorial Group's management and are based on information currently available to the company.
These statements may involve risks and uncertainties as they relate to future events and therefore, depend on circumstances that may or may not occur. Investors,
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