Auren Energia SA

BOVESPA:AURE3

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen. Welcome to Auren's conference to discuss results regarding the Second Quarter of 2023. This conference is being recorded, and the replay can be accessed on the company's IR website at ir.aurenenergia.com.br. The presentation is also available for download. [Operator Instructions].

Before proceeding, we would like to clarify that any forward-looking statements are based on the beliefs and assumptions of Auren's management and current information 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, analysts and journalists must understand that events related to the macroeconomic environment, industry and other factors could cause results to differ materially from those expressed in respective forward-looking statements.

Here with us at this conference are Mr. Fabio Zanfelice, Auren CEO; and Mr. Mario Bertoncini, CFO and IRO. The Investor Relations team is also here with us. I would now like to turn the call over to Mr. Fabio Zanfelice, who will start the presentation. You may proceed, sir.

[Fabio Zanfelice, executive]

Thank you'. Good morning, ladies and gentlemen. It's an honor to have you here with us to disclose the results of Auren. Let's go straight to our agenda, please on Page 3. We will start with the highlights of the company, and then we'll talk about the market, the conditions of the energy market. We will then discuss the operating performance and then the financial performance. As our tradition, we are going to discuss our social environmental performance. And lastly, the closing remarks related to this quarter.

Moving on to Page 4. These are the highlights for this quarter. As for the operational aspects, increase of 24% in hydro generation in this quarter as a result of the [ better ] scenario Wind generation was 0.6% higher than P90 in this quarter. We would like to focus your attention to the projects of Ventos do Piaui II and III that reached 12% and 9.3% above the P90, respectively.

As for the financial aspect, our adjusted EBITDA reached BRL 436 million this quarter, with adjusted EBITDA of 30%. Disregarding the receiving of the dividends of -- dividends, we had an increase of 18% when compared to the previous period. A cash conversion ratio of 78%. And these are important highlights for the last quarter. One of them was the progress in actuarial risk management with the approval of PREVIC with a change in indexers of the liability. And now we have the next asset and liabilities. And another important is the commission of the securitization of HPP Tres Irmaos. This operation was disclosed in weeks ago at the cost of Selic plus 1.94% with the receiving of RMB 4.2 billion.

As for growth and innovation, we would like to highlight the solar project which have progressed quite a lot in terms of construction. Sol de Jaíba, we signed another tranche of BRL 200 million with BNB in the amount of BRL 500 million and has already been contracted by the bank. As well as Sol de Jaíba and Sol do Piauí, whose progress is as planned. And lastly, in the last quarter, our trading company reached the top position as a leader in the energy commercialization in 2023. So this is a hallmark for the company according to CCEE from January to June. So Auren has been the largest trading company of Energy in Brazil.

We're now going to discuss the energy market. And the highlight is always on the Afluente Natural Energy in the last quarter in spite of the fact that the Natural Afluente Energy was below the long-term average, 88.7% below, we continue recovering and maintaining the reservoirs at a very high level as we can see the graph on the right. in March 2011, in the beginning of the water crisis and in March '22, we reached 75% of the storage, and we reached now 88.7%. It's the highest level of storage, since the year 2000. Then there has been some recession in the flow rate of the reservoirs, but we have maintained quite a substantial level in the interconnected system in Brazil.

In the following page, we will talk about the operating performance. And since the hydrological asset can be very favorable, we had an increase in relation to the same quarter of last year, 24%. And it's also aligned with high affluence that we have seen, especially in the Paraná River Basin. Our generation stood at 19% when compared to the fiscal guarantee. And also in terms of GSF, we reached 94%. So we grew or we performed 4% higher than the sector. And the availability also reached 96.4%.

And in relation to Aneel's preference, which is 92.3%. In relation to the wind assets performance, as we mentioned, the consolidated performance of asset generation was -- as we can see in the graph, we'll be making a comparison between the generation of 2022. And also the curves of reference of the certification of P90, P50 and it's -- the generation was higher than that of 2022. And April was an exception when we see the resources of wind generation was much below the value of the long-term average.

But it has already been recovered. As we have seen in mid-May, and we also recorded generation higher than P90. As a consequence, in April -- of April, the performance was below the expectation. However, it was above P90 which is related to the fiscal reference. If we consider the half of the year generation, it has an average of 373 megawatts, which is 5% above P90.

On the following slide we show the numbers in the figures that we have been managing. The company has the number -- performance of WTG and we can see the project parameters of the wind assets. Both the WTG and the internal network, cost performance was higher than expected. In this quarter, we had an impact on the basic network that affected the performance of our assets. And this is something that happened as a one-off event, which is related to a substation of the basic network, and this was a problem that has already been solved. So there is no expectation to have an event such as this in the next quarter.

Now talking about the trading company, we reached 3.6 gigawatts that traded in 2023, more than 800 customers. And with all those numbers, we reached the position of leader in energy trading in 2023. And we have been reporting, since the mid period of last year. And since we are talking about -- so that the trading to avoid risks, we maintained the level of contracting, which is very high for the next years.

In the long term, the company has a level of contracting of 60%. So we continue increasing the level of the sales of the energy of the trading company, but we have not been exposing ourselves to the surplus of this period.

I'm going to turn the call to Mario to talk about the financial performance.

[Mario Bertoncini, executive]

Thank you, Fabio. On Page 13, we can see the highlights in terms of EBITDA. And net revenue in the second quarter of 2023 grew 7% in relation to the same period of last year, with energy at 24% higher than the same period. This performance was driven by a higher movement and results of the trading company as we have reported in addition to the operations of Ventos do Piauí II and III as mentioned by Fabio, that adds additional volumes to our portfolio.

In the graphs below, we can see the EBITDA evolution and EBITDA in the adjusted segment was BRL 436 million in this second quarter of 2023 and moving sideways, as compared to the same period of last year. But we would like to focus your attention to the fact that there was an adjustment of dividend. As we all know, Auren holds minority shares in consortiums of production of hydroelectric -- in the hydroelectric segment. And the EBITDA, we make the adjustments, the dividends that were actually received in the cash regime.

We never -- we disavow those dividends, we come to a EBITDA of -- which is higher than the previous quarter. And this better result, which is 18% of Auren itself is driven by the best wind power generation as with the entry of Piauí II and III and better results from the trading company that drive this higher EBITDA. And as for the dividends and shares, there was a decrease in the second quarter, specifically, a decrease of BRL 64 million in relation to the same quarter of last year. That does not mean that dividends and shares are lower than that of last year.

On the opposite, we expect an increase of the shares and dividends when compared to last year. What happened was a reallocation of those dividends along different quarters of the year, and there has been a better performance in this front as well. We ended the quarter with a net profits of BRL 137 million as a result of factors.

The first one was the operating performance, as we mentioned before, and the second, considering that the securitization of Três Irmãos happened at the end of the quarter. So we were favored by financial income coming from those receivables. And those receivables were adjusted according to the Selic, as we mentioned, and we were favored in the revenue.

In the second quarter, we have been maintaining a performance of the litigation liabilities. We have important reversals in the provision of those litigation liabilities as a result of negotiations, especially of important lawsuits in our portfolio and was reversed it as a gain to our company.

On Page 14, we show the highlights of the capital structure and we -- and as a result of the securitization that came into the cash as BRL 4.3 billion in June, we ended the quarter with a cash position and availability of BRL 6.3 billion, and therefore, a leverage of 0.3x net debt over EBITDA.

On the graph to the right on Page 14, we have the amortization schedule. And with a cash of BRL 6.3 billion, we have already amortized BRL 500 million in debt. And so this amount has already begun to amortize. And therefore, this amount that are going to become mature, as we can see in the graph, has already been reduced to BRL 178 million. So there is a residual amortization for this year. And the profile is very comfort with an average term of nearly 7 years.

As to free cash flow, we ended the quarter with the cash conversion ratio, which was very high of 78%. As from the adjusted EBITDA, we show the cash outflow, and we can see as CapEx and the debt service, and we ended at BRL 340 million. And considering the CapEx that was involved and the capital securitization, less the dividend of BRL 1.5 billion dividends that have already been paid, we come to BRL 2.9 billion.

Basically, we have a very solid cash position. So we continue maintaining Auren well prepared for the future growth by means of greenfield as we have done or any other actions in addition to providing the dividend as our expectations are.

So I'll turn the call back to Fabio.

[Fabio Zanfelice, executive]

Thank you, Mario. Now moving on to the end of our presentation, I would like to discuss our social performance, showing that education is one of the most important pillars of our company with actions that can improve and create opportunities for people in the communities where we operate. And so I would like to talk about the investment and of course in renewable energy. So these are projects in partnership with our own bank and the government of the NIM book. And we have already graduated nearly 90 professionals and we have also 270 professionals, who are in training process.

And this was part of a report of an important television program. And you can see the QR code at the bottom of the page, and we were very happy that the media recognized our initiative. In the same line, we continue providing qualification to other professionals that work with us. And today, we have a highlight of those, who are involved in the solar panel preassembly, which now is being done by women, 100% women in Sol do Piauí. We were very happy with the performance of those professionals that have contributed to the expansion of the company.

In the same line, we would like to say that 6% of the local labor have involved in the Sol do Piauí and Sol de Jaíba project. So we count on the local labor. So it's an honor for us to be helping those communities and all those people, who will and our partners for a long time in the future yet.

In the following page for the closing remarks, we would like to focus your attention to the leading position that we reached as the largest commercialization company in the country. And we would also like to mention the progress in actuarial risk management with the approval of VIVEST.

Another important point which is the final aspect related to Três Irmãos and also the negotiation that was completed last year. And this has been very successful in terms of chapter with the securitization of the receivables. And this will allow the company to continue paying the proper dividends to the shareholders and providing supports to the growth strategy.

And lastly, a topic which demanded a lot of dedication from the company was the progress in the actuarial risk. And there was a mismatch in the pension plan with the indexers in the assets and liabilities. So we made a lot of progress. So we have the proper approval, official approval. So the accounts are fully aligned.

I would like to thank everyone for having attended this presentation, and we are now going to open the Q&A session.

[Operator]

[Operator Instructions] Our first question comes from Rafael Nagano with Credit Suisse.

[Rafael Nagano, analyst]

I have a question on my side in relation to capital allocation. Last quarter, the transmission action was held. So in your mind, which is the segment that has been more interesting to you? And how does this influence the payment of dividend? Is there any possibility of additional payment in addition to what you have mentioned that it could be paid this year considering the securitization of Três Irmãos that provided a good leverage to the company.

[Fabio Zanfelice, executive]

Rafael, so our growth strategy continues in the second line, as we have disclosed in the past, the transmission auction was an opportunity that we saw at the beginning of this year. We expected that the competition was different from the previous years considering the size of this action and the requirement of CapEx. However, we observed that the competition continues to be very high.

As we mentioned, our target is to maintain the return to the shareholders, all the shareholders and we did not reach this objective in this auction. We continue observing all the movements in the sector, not only transmission segment, but we continue looking at the generation and renewable energies. And Mario still has been working hard exploring new opportunities and whatever is happening to the market and other opportunities that may come up. We have an M&A team, very devoted to building the growth of the company based on opportunities of growth or inorganic growth.

Aligned to that, we continue with our strategy of organic growth. We have in Sol do Piauí. We have an allocation of people focused on greenfields. We continue working on the same line. And we continue studying the good projects for the future even though it may not be very favorable at this moment.

So we understand that the situation is going to be different in the future. We have a lot of time we have already decided what would be the balance for the next 3 years. And we are in a very comfortable position, and we can evaluate all the possibilities. The leverage is very low, that we continue with a plan of paying dividends of -- to be in period of BRL 1.5 billion. And we announced this intention and we continue in the same line.

And we also have other obligations that will have to involve those resources. One is the investment in the greenfield projects and their way already. And the demand is BRL 450 million up to the end of the year and in addition to the BRL 1.5 billion in dividends, that is part of our intention. And at the end of the year, the leverage tends to be different from what we presented in this quarter.

In summary, in relation to the growth, we continue in the same line in relation to the future dividends. We still haven't discussed with the Board in relation to the change in the dividend policy. So it continues to be the way that was published last year, we continue with the same policy up to the end of this year. And at the end of the year, we are going to discuss the strategic planning and the structure of the company. We will have a vision that will be applied in 2024. At the moment, it has to be the same strategy that has been decided so far.

[Operator]

Our next question comes from Marcelo Sá with Itau BBA.

[Marcelo Sá, analyst]

I have some questions. First, I would like to understand how you see the capacity auction. We used to believe that at the end of the day, it will be involved 2 products, one of which is the hydro product and the other is the metro gas, adding WTGs that are already there. But I had a meeting and I learned that you're considering new alternatives and also the possibility of having solar with batteries and other ideas that came up. Could you make some comments about this and a public hearing would also be held to discuss this? And how do you see this opportunity?

And the second question in relation to the negotiation with the pension fund. Will this have any cost to be recognized or not?

[Fabio Zanfelice, executive]

Okay. I would like to invite [ Priscila ] to answer the question with me and then also Mario will be involved.

[Unknown Executive]

Thank you, Marcelo, for the question. In relation to the capacity auction, in fact, we had some guidelines from the ministry since last year and also from our team to have an auction with more competition. And this would include new technologies, of course, in addition to the possibility of having the renewal on the thermoelectrical product using the natural gas, which is already there.

I think the government has an intention to have a more competitive auction. And to that purpose, we are very engaged. We have the expectation of including the hydropower plants in order to make viable all the investments, which are already provisioned. And we may also have the opportunity, as you mentioned, to include the new opportunities. It's important to have a competitive auction that would bring in more competitive investment and distributed to the consumer. So this is our expectation. And we expected the auction to be held in the beginning of this quarter.

[Unknown Analyst]

Will the product be separate? For example, the government will define it with the technical requirement that would be available from this time to that time at some days, some figure specific, and then you would make the adjustments -- the technological adjustments? Or will there be separate product involved?

[Unknown Executive]

Well, in fact, Marcelo, I think it will depend a lot on the technical proposal. Some of the studies are still underway. And if we have the metrics that we can see in the same basis, there will be no need to separate in terms of product. But that will depend on the guidelines that will be established. But according to the studies carried out by the Ministry. I believe that if the methodology is well calculated we could have a very even competition, but it's still too early to know what would be more adequate. It will depend on the guidelines and the directions that will be provided.

[Mario Bertoncini, executive]

As to the second question, Marcelo, this is Mario speaking. When we changed the indexer of invest of the pension fund and when we changed the indexer, and it started to be valid as of June 1. In an isolated way, we test it for this purpose if there would be any material impact on the actuarial dividends at the moment. This was done specifically for that.

And we came to the conclusion that there was not a material change at that time. But when we consider -- because as you know, at the end of every year, when we consider the results of December, we disclosed all the calculations on the actuarial liabilities using different criteria of CPC 33. So this is also what we're going to do at the end of the year.

And considering the present moment, with the end of the long curve of interest and the better performance in the submarket, the trend is that we should have a good evolution of our actuarial asset. And I'm going to be very careful when I say that because we still have 6 months to go, but there is a trend that will be an actuarial liability, which is better than the one presented so far. We have been great because it depends on that curve factors that do not depend on us, but we are going to disclose the result at the end of the year. So the performance has been very favorable to Auren so far.

[Operator]

Our next question comes from Antonio Junqueira with Citi.

[Antonio Rodrigues Dos Santos Junqueira, analyst]

My question is a complement to the previous question. You've been considering the CapEx of the 2 products and all the dividends, we can see that the leverage is suboptimum. So Auren generates in a situation when the assets are very negative. My question is related to the future. Does the company think about having a dividend with a target leverage considering that your assets have a long maturity? So maybe you're going to go after the times the EBITDA and based on it, I'm going to be more aggressive in terms of dividends.

So when we make the calculations, we understand that the company could pay a dividend as large as that of the previous year and that wouldn't be a problem. But could you provide more information about the time of the events. So are they then going to be made close to the end of the year? And when does the company consider making this decision?

[Fabio Zanfelice, executive]

The trend is that the decision is going to be made closer to the end of the year as planned. In relation to your question, I'm going to see what I have already said to some of you. The company was more than one year ago, it requires a process. It needs to test the market for the period. And any changes in relation to the policy, which does not taking into consideration of the growth leads to a concern because we -- when we consolidated Auren, we wanted to have a policy on dividends, maybe defining a target.

But if we did so, we would have -- maybe have an opportunity because we could cause a frustration in the market, if we needed to make some changes. When we define the policy, it tends to be understood as simpler so that we can evaluate the opportunities and test the market. And obviously, we are going to do what's better for the company.

And after a period when we tested all the opportunities, and we did not reach the objective of an organic growth by means of assets or acquisitions that can offer a return aligned with the expectations of the shareholders, and we are then going to decide what's going to be done. If we didn't -- we are not successful in growing the company inorganically, hope this discussion will occur then, but we need to have -- to be given a period for the test to have a discussion based on experience and then make a decision.

So all of this process is already being discussed internally. So we have been done all the analysis considering where we are competitive and where we are not. And then the company is going to consider the actions based on the experiences we have along the time and what would be the best way of using the resources, striking a balance between the dividends and the growth considering the opportunities.

So this is part of the discussion of the strategy of the company. And this is something that we need to discuss in the next cycle of planning, but this is how we have been looking at the situation and what we have been considered. We are going to look into the future, considering how we are going to use the resources that we have been generating.

[Antonio Rodrigues Dos Santos Junqueira, analyst]

Okay, perfect. And little complaint to my question. Theoretically, in 2024, the company is going to think of over of what is going to be done. So the math would be done and so I understand that it's not in 2023 that we're going to have this idea?

[Fabio Zanfelice, executive]

No, I don't believe we are going to have a conclusion in 2023 because I believe that we have to '23 to make a decision. In 2022, we had M&As and now we may have an opposite reaction. It's just natural that we should have 1 or 2 years in order to use the market experience in order to make decisions. So it's not likely that we make any changes in the dividend policy in 2023. This is a discussion that's going to be made in the following year.

[Antonio Rodrigues Dos Santos Junqueira, analyst]

And another question, sorry I'm taking so long. We understand that when the resources did not perform so well this quarter. Of course, we heard that El Niño impacted the performance and everything else. But I am sure that you have been observing on this. And is there any climate events that will frustrate your expectation? So what have we learned?

[Fabio Zanfelice, executive]

We learned that when the El Nino is present, the performance is good, but this is not what happened. It's specifically in our case, April was a month that were affected negatively the quarter. We have wind resource that led to the worst performance in the region, where we operate. And you also understand that Brazil is big enough to have different profiles, depending on the region or in the region where we are operated, the profile is different from those assets that are operating in the coast. So you may have differences as we saw last year. And we performed well in some periods, different from other areas. So the location of the farms is very important.

In terms of El Niño and La Nina, we have expectation that El Niño will bring less rain to the northeastern region. And as a consequence, we would have wind resources, which should perform better. But this is something that is cannot be asserted for sure. This cannot be our basic scenario. We have a base scenario according to the average of history performance -- historical performance. Our frustration related to April is that we do not have any correlation between El Niño and La Nina. So that in May, it started recovering. And in June, it performed higher than P90. So if the policy was according to the average, the numbers would be positive.

[Operator]

Our next question comes from Mr. Guillame Lenoir with Santander Bank.

[Unknown Analyst]

I have 2 questions, quick questions on my side. First, I would like you to comment on the adjustment of maintenance agreement of the wind farms, [ the CNAs ], if you could mention the dynamics that caused all those adjustments and if we can expect growth, higher than inflation for the years to come? In the capacity auction, do you have any of data in the CapEx in order to be part of this auction?

[Fabio Zanfelice, executive]

Guillame, in relation to confident we have in the wind with the farms, this includes EBITDA and also involves higher expenses related to the maintenance agreement. We had a renegotiation of an agreement that ended in August last year. So we have a new price for the equipment, but this was not the biggest problem. And we see that with increasing the VDP III and III. And there are also some agreements with GE in Ventos do Araripe III. I think you wish provide this information without disclosing the value of the agreement.

What would -- what was the real increase? So the most important ones was the increase of VDP III and III and Ventos do Piauí related agreement. So we are going to publish what would be the growth of those agreements. And all of those agreements are bilateral. We cannot provide details. But in the consolidated terms, I think we can provide this information to you.

In relation to any capacity reserve, we had a reference of BRL 500 million to BRL 600 million. This is a reference that we have in relation to the grant agreement that demand that the other company will present within 24 months after the execution of the agreement if it was feasible to install the machines. This was the numbers that we had for 2020. It was part of a project that represent to [indiscernible]. But these values have not been indexed yet. So we have been preparing to the possibility of the government to demand an agreement of reserve. We are getting prepared to this so we are negotiating with those equipment in order to make adjustments to the CapEx of those 4 machines.

[Operator]

Our next question comes from Daniel Travitzky with Safra.

[Daniel Travitzky, analyst]

I have the questions on my side in relation to the trading strategy of the company. This would be my first question. When we compare the energy balance quarter-on-quarter, I would like to understand how you are organizing the trading strategy so considering the price scenario? That would be my first question.

And the second question is relating to the modernization of the sector. We recently saw that the government made some movements in -- towards increasing a program of energy transfer. So how have you been interpreting all those movements and how this would be conversing with the modernization of the sector? In the past, we have PL 414 that did not make any progress. So I would like to understand which would be the next steps of the government in relation to modernization, if the [ PL 141 ] would be applicable or if directions have changed? I would like to understand how you see this.

[Fabio Zanfelice, executive]

I'm going to turn the call to [ Hao ] to talk about the commercialization strategy.

[Unknown Executive]

Daniel, thank you for the question. It's very simple. In fact, as you know, we have a very high contracting level in the past quarters. But we have also been selling in the free market. So we continue capturing margins in the free market as well. And the highlight is the year of 2025 contracting level was very high. And we started purchasing products in order to sell to the final client. As you know, the levels aren't flat, but there are fluctuations along the weeks and along the months. So we saw a very important window for our purchase so that we can continue growing also in the retail market.

In relation to the position of the sector. We can talk about evolution -- in the electric sector, we see those changes with a lot of optimism in relation to what was being discussed in the PL 414. There are some topics which are centered to this discussion. One is the low voltage market opening, and this is done based on the sustainability of the sector. And we also consider whether or not some subsidies are available so that there can be no imbalance between the players. Otherwise, the -- there can be lack of efficiency. We believe in efficiency of the free market. However, this has to be done very carefully.

This opening for the low voltage leads to another topic, which we believe that needs to be solved and which is related to the distributed generation. And this is a discussion that has been -- has to be done in the low-voltage market. So there has to be a balance between the free market with the subsidies that are provided to this segment of distributed generation. We have nothing against the segment, but I think competition is always welcome.

Another central point in the PL 414 which is a point that we have been discussing a lot is considered energy availability, but we consider from the perspective of flexibility. And this is something that has to be considered in this sector. Everybody knows that the intermittent of the renewable energy is fundamental to the energy, but we also have some challenges related to this that have to be approached.

And hydropower plants have been providing the service, which is not compensated in the area because the energy sector has changed a lot since the MRE has been established. And this is something that has also to be discussed. And considering the energy sector on -- sector. There are other points that have to be considered, but also required a lot of efforts. Green hydrogen competitiveness in the country. All this has to be addressed. The company -- the country as an exporter of energy, which is clean renewable to the world.

All of those complex topics demand a more elaborated decision by the government, but we still not have the visibility or an opinion to understand how this is going to play out. As for the PL 414 we would like the freight market to be addressed and also the topic of flexibility that needs to be applied to the compensation. And in this discussion, the capacity reserve auction comes into play, and that would also address the topic of -- the need for flexibility in the future in the sector.

[Operator]

Our next question comes from Filipe Andrade with Itau BBA.

[Filipe Andrade, analyst]

I would like to have an update. We heard from other players, who have hydro assets and its relation to expanding the scope in the export scenario, especially when we consider that Brazil levels are very high. So I would like to understand if you're taking part in this discussion in order to increase the scope and also involving future investments, do you have any direction in the sense?

[Fabio Zanfelice, executive]

Yes, we have been discussing, especially based on the reasons you mentioned. The level of reservoirs are very high so there is a high likelihood that we are going to use these resources that cannot be wasted.

In a positive and a very cautious way, the government is also looking at the scenario in a conservative manner because if the rain period is not so good, there can be a competition between the imports and the need for future energy. The discussions are based on this, we are not going to waste the resources away, but we are not going to ignore that the resources can be necessary in the future. So we made a lot of headway, as you have seen. So it's a big progress to export this energy to neighboring countries as we saw this year.

And the big discussion that we see this year is that not only when we have all this but also to anticipate the movement. We have been discussing with the government of this topic, but it's still incipient and we are still deciding with some mishears of the government, which are discussing how this is going to be done in order to -- we can mitigate the risks in the future. And so that we can use this resource in a very profitable way. So all the discussions are doing well, but we still have to establish a methodology in order to execute this process.

[Operator]

The Q&A session has come to an end. I would like to turn the floor back to Mr. Fabio for his final remarks.

[Fabio Zanfelice, executive]

Thank you very much for the time you devoted to attend this disclosure of results. We are very happy with some of the targets were reached; the securitization, the maintenance plan of CESP. We continue to take part in our next earnings results call, and have a good day, everyone.

[Operator]

Auren's conference has come to an end. We would like to thank everybody's attention and have a good day.