Companhia Paranaense de Energia

BOVESPA:CPLE6

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen. Welcome to Companhia Paranaense de Energia COPEL video conference call to discuss the earnings for the Second Quarter of 2024. This video conference is being recorded and will be available on the company's website, ri.copel.com. The presentation is also available for download. Please be advised that all participants will be only watching the video during the presentation, and we will then begin the question-and-answer session when further instructions will be provided.



Before proceeding, I would like to note that the forward-looking statements are based on the beliefs and assumptions of COPEL's management and on the 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, analysts and journalists should consider that events related to the macroeconomic environment, the industry and other factors could lead results to differ materially from those expressed in such forward-looking statements.



This video conference will be presented by Mr. Daniel Slaviero, CEO of COPEL; Mr. Felipe Gutterres, CFO of Copel as well as directors of the subsidiaries who will be available for the Q&A session.



I would like to turn the floor to COPEL's CEO, who will start the presentation. Please, Daniel, you may proceed.

[Daniel Slaviero, executive]

Good morning. Thank you, everyone, for attending our video conference. We are very pleased to present another quarter with solid growth, especially at COPEL distribution which reached 41.6% EBITDA efficiency. In COPEL's consolidated result, we had an adjusted EBITDA of BRL 1.3 billion and net income of almost BRL 0.5 billion, a growth of 54% compared to the same period of last year. Felipe will detail these results later in the call.



We have also concluded the payment of the balance of dividends related to the 2023 results in the amount of BRL 632 million. And in line with our practice in recent years, we will forward the first discussion on dividends for the 2024 financial year at the September Board of Directors meeting, so next month.



I also write news that reinforce our robustness and resilience has maintained our credit rating at AAA. In a capital-intensive business such as the electricity sector, it is important to maintain the highest possible rating because it demonstrates the company's sound financial profile and contributes to having a low cost of capital. This is fundamental for our growth plan.



This year, as we have been saying in the past months and quarters are the strategic pillars of this new phase of COPEL, operational excellence, efficiency, cultural transformation and discipline in capital allocation. This is the basis of our future growth and the ability to generate value in a sustainable way. I will address the main developments we had this quarter in each one of these pillars.



First, it is with great satisfaction that I register here the addition of three new talents to our team. Felipe Gutterres, our new CFO with extensive experience in management and capital market, Andre' Gomes with deep knowledge of the electricity sector as Director of Regulation and Market and Rodolfo Lima, who worked in all links of the commercialization chain as General Director of COPEL Mercado Livre. In addition to a wide background in the respective areas of expertise, all of them bring a renewed vision and valuable experience to all of -- enjoying all of the other employees and collaborators at COPEL in this cultural evolution process. We're very happy and once again, welcome to all of you to this opening with our earnings conference call, especially you Felipe and Rodolfo, Andre [indiscernible].



In the efficiency pillar, I take this opportunity to update you on the status of the voluntary severance program. The total of 1,437 professionals who joined this program next week more precisely on Wednesday, August 14; 1,078 employees will leave the company. 180 people have already left early in the past month and 179 employees who hold critical positions had their departure date postponed, divided into transits, majority of them by December '24 and the remaining by the beginning of '25.



It is important to note that we prepared a meticulous rightsizing study of the company that provided among other things, the mapping of critical position, a knowledge transfer plan and the adoption of new technologies to improve the efficiency of our operational activities.



But I can tell you that what makes us most proud in this process was the internal mobility and career transposition program among professionals that the company already has. It was an effort to make the most of our internal talent and provide opportunities for growth for these employees. So this materializes one of the main internal benefits of COPEL becoming a corporation.



It's important to note that all of these initiatives have a single objective. We continue providing a very high-quality service to our customers. Notably, a process of this magnitude will go hand in hand with the digital transformation plan. We have several partners helping us on this journey, but I'd also like to highlight our partnership with Google Cloud, which has brought benefits on separate fronts, such as process automation, scalability and flexibility in data processing, artificial intelligence and maximization of intragroup synergies. I remind you that in the coming months, we'll be at the final phase of our ZBB project. And as we've been saying, the results will be presented at our COPEL day in November.



Moving towards the end of my opening remarks. In terms of operational excellence, I'd like to emphasize our energy trading strategy, which is allowing for a good balance between the contracting levels and the mix of the portfolio. We have observed an improvement in the energy price scenario in recent months with increasing volatility, this is a reality. And we've also seen the PLD taken off from the floor at various times. And this ends up, of course, providing change in the perception of medium and long-term prices. We can detail this more. Rodolfo can detail this more in his address in the Q&A. We've been thriving in this new trading environment to make the most of the best price movement to execute our energy sales strategy, which, as I said, is being led by Rodolfo.



Finally, I'll address one of the most dear topic for this administration, the efficient capital allocation. At this time, the priority has been the necessary divestments to focus on our core business of electricity and decarbonization of the generation matrix. But we've had two good news over the last month, the conclusion of the sale of the Araucária thermal power plant with the receipt of BRL 320 million for our share in the business and the sale of 51% stake that COPEL held in Compagas for BRL 906 million with the base date of December '23. The completion of the sale of this asset is contingent on the approval from the relevant regulatory bodies, and we expect that to occur in the coming months.



I would like to thank all of the team involved in these transactions, especially the leadership of our Director, Cassio Santana, leading the new business area, and it was decisive to him and his team were decisive for these events. And I would also like to thank all of our partner companies, financial institutions, lawyer firms and all of the companies who have assisted us in both transactions.



We are now halfway through the sale process of small generation assets. One of the lots is the Figueira, and we will probably have something to tell you in coming months. We are convinced that prudent capital management is a precondition for sustainable growth. We're focusing on allocating our resources in a way that maximizes returns and support projects that are aligned with our values and commitments to the environment and to society. I invite Felipe to provide more details of the company's earnings in the second quarter, and we will then open for the Q&A. Thank you.

[Felipe Gutterres, executive]

Good morning, everyone. I'm very excited to speak with you as COPEL's CFO with an honor to lead our financial team and very motivated to contribute to the growth and continued success of our company. And making with this introduction, I'd like to highlight a fundamental aspect of our business model, which is COPEL's integrated performance and its diversified portfolio. We generate transmit, distribute and trade energy, which provides us a number of strategic benefits while also making our portfolio more resilient. Our asset base is not replicable, and it paves the potential growth platform on several fronts. Our integration generates multiple opportunities to maximize operational efficiency, process optimization, intragroup synergies increased profitability in this new moment for the company, which is what we're very focused on, as Daniel said.



[Indiscernible] our EBITDA came from distribution, 16% from promised 36% from generation. Our consumption profile is concentrated in industrial, residential and commercial mainly, but I draw attention to the importance of Agri business as well. We operate in 10 state with GeT. And we have 5 million consumers in Paraná, which is the fourth largest economy in Brazil, growth 2x the growth of national GDP, with a per capita GDP higher than the national average in addition to an unemployment rate significantly lower than the national average.



On the next slide, I address our EBITDA performance. Our adjusted EBITDA was BRL 1.3 billion in the second quarter of this year, an increase of 5.7% compared to the same period of last year. This robust performance came strongly from the 32% growth in COPEL Distribution EBITDA, which stood out as one of the main drivers of the positive results in the period, representing 44% of the group's EBITDA. COPEL [ GeT ] felt resilience in the face of a more challenging scenario for energy prices. Average price of 175 in the second quarter of 24.6% lower than last year, contributing with BRL 676 million of EBITDA, with for 53% of the group's EBITDA combining generation and emission companied with our trading company that generated an EBITDA of BRL 35 million in the period.



In the next slides, I will Zoom in on the business unit, starting with distribution. COPEL Distribution generated EBITDA of BRL 556 million in the second quarter, 32% better than 23%, mainly due to the growth of the build by market. An increase of 6.2% in the grid market in the state of Paraná during this period. The control of management costs, which is also a relevant point. We had a reduction of 5.2% in cost with personnel and administrative due to the reduction of 176 employees. If you consider INPC of 3.7% between the second quarter of '22 and the second quarter of '24, the cost of personnel and administrators [indiscernible] real terms of 7.2%.



Looking at adjusted EBITDA for the last 12 months, we reached 2.4 million -- EUR 700 million above the regulatory level, which is equivalent to 42% improvement. We maintained strict control of our manageable costs with period only 0.5% in the consolidated results compared to the second quarter of '23. All inflation in the period was 3.7%.



Moving to generation and transmission, we see a reduction in the average energy price of the portfolio in the second quarter of 2014. It was $175.7 million, down 6% compared to the previous year, among the factors that affected that pre-PMC but it's worth mentioning that last year, we had a contract in ACR 778 average megawatts with a sale price of around 250 per megawatt hour, which ended last September, so that the comparison has that impact.



To be noted, we had a lower performance of wind complexes impacted by a greater curtailment in the period, as we can see in the chart and also with wind below the certification. In addition to the need for some maintenance that caused unavailability -- we also used this period of lower winds to advance on maintenance. And that all resulted in a revenue frustration of million BRL 27 million in the quarter. On the other hand, we increased the volume of energy sold, and we had a reduction in electricity purchase for resale by BRL 38 million due to the better hydrological conditions, average GSF 99.3% compared to 94.3% in the second quarter of last year. In transmission, we had an increase of BRL 31 million in revenue from the availability of the electric network just as a result of the periodic tariff review applied to the transmission contract. With all these effects, COPEL GeT resilient and recorded an adjusted EBITDA of BRL 676 million, 3% below the same period of last year.



Moving on to trading. We had an adjusted EBITDA of BRL 35 million, 7.2% higher than quarter-on-quarter, a result of the reduction in the average price of energy purchased for retail and the increase of 4.2% in the volume of energy sold. We maintained strict control of our costs and manageable costs, which varied only 0.3% quarter-on-quarter, while inflation in the period was 3.7%. We had an increase in cost of third-party services of BRL 25 million, which is within our plan to advance in prevention and maintenance activities in the distributor network, especially aimed at achieving adequate quality levels in our concession area. These activities include, for example, the intensification of streaming and mowing and the vicinity of distribution lines. But we reduced other operating costs and expenses by BRL 17 million, basically due to lower losses related to the activation and Fosun assets, lower insurance expenses. Personnel costs also decreased by BRL 5 million, minus 1.7%, mainly due to the reduction of 258 employees, partially [Foreign Language]. We had a growth of 54% quarter-on-quarter with an increase in EBITDA, [indiscernible] partly offset by the monetary variation on the balance of the brand payments. In the quarter, in the half year, we had an income of [ 1 million ].



And now I'd like to talk to you about CapEx. We performed this for a CapEx strongly led by the investment plan in distribution with focus on the remuneration base, efficiency and quality. We've realized 86% of the expected and the investments are moving along in line with our expectations. To finalize, I bring the overview of our indebtedness, given the robustness of our cash cost -- our cash flow to the $2 billion raised in the last year's primary offering for the payment of the brand [ Punes ], we maintained a leverage of around 1.9x in the net debt over EBITDA ratio. This scenario will change as soon as we make the payment of the grant bonus that should occur in the fourth quarter, as well as the payment of indemnities related to the PTV or the voluntary severance program. Our average -- I remind you that our covenant limited to this 3.5x net debt over EBITDA. Our average amortization period is around 4 years, but I'd like to find out that we have the BRL 6 billion that mature after 2029. I'd like to highlight that one of my priorities to deepen the study on the company's optimal capital structure and promotion debate internally with the Board to define the most efficient level for the company.

[Daniel Slaviero, executive]

We now get into the Q&A session. Thank you, Felipe, for your presentation. And I'd like to say that when you have the priorities in a study of the optimal analysis of a new capital structure considering our private legal nature. This will take some time, but we intend to address this in the coming months with this in-depth study that is debated internally.

[Operator]

Thank you. We will now begin the questions-and-answer session. [Operator Instructions] First question, Daniel.

[Daniel Travitzky, analyst]

Good morning, everyone. Thank you for this opportunity. I have 2 questions here. The first is about capital allocation and the capital structure. I just want to understand a little bit more of your strategy. Especially here, considering the divestment you had at [Foreign Language]. If you can talk a little bit more about the destination of these funds. A lot of people ask us about dividends, whether you're considering something along those lines from now on? That's the first question. And my second question is more in terms of cost. We saw the cost of the distribution company growing year-on-year below the inflation. So I'd like to understand how you see this moving forward? If it's still something that we can see going down significantly in these cost lines at a distribution company or if we've already reached a more recurring level going forward? So how do you see this evolving?

[Daniel Slaviero, executive]

Excellent. Daniel, my namesake. So first, on cost allocation, then then I'll turn to Felipe and [ Emerson ] to add. But our line here is really a study for an optimal capital structure that was mentioned. So this is a discussion that was closely linked -- two are migration to [indiscernible], that's part of our strategy. But since that's also linked to factors that are not under the company's full control and scope, we have a limit for a more concrete indication towards the end of this year, beginning of next year. In any case, we will be doing this work in the study of the capital structure that can move along regardless of when the migration is going to occur in the new market, but that's part of our strategic view.



As for the dividends, we will maintain the policy of payments of 50% and the extraordinary events may and will be part of our studies for the payment of ordinary and extraordinary dividend. So as they materialize, especially the [Foreign Language] side because of its relevance and value, we will certainly consider that in our movement here for the payment of dividend. Reminding you that we have a robust investment plan for 2024 and '25, we're also preparing for the capacity auction. The ordinance will probably be published in coming weeks and the auction probably will occur in December of this year. So it is an opportunity for allocation. But considering the company's cash and raising capacity and the extraordinary events that are developing. This will enable a very detailed analysis of our payment of a minimum of 50% that is in our policy. But as things develop, there may be room for extraordinary dividends.



In terms of the cost structure at the distribution company, what we saw here this quarter were some investments, some costs of BRL 20 million to -- as reinforcement for the climate event. So we cannot say that the cost structure that we have today is what we need. We are still moving along the way in our commitment of 17% of general per pound on the PMSO reference of '23. So we have here a target between BRL 460 million and BRL 480 million of a reduction in three years. And that's what we're going to update you about on COPEL day and whatever the ZBB work science and opportunity. So the distribution company still has room for reduction opportunity.



For the people who are leaving the company, it's a large containment with a distribution company of those 1,437. It's around 830, 840 people but also in the efficiency of centralizing contract, renegotiating supplies and procurement. So there are some drivers that we see as opportunity to stabilize at a slightly lower level than what we have at least in MSO. And in B, reasonably lower than what we saw in the third quarter. Emerson, anything to add?

[Unknown Executive]

Yes. Thank you, Daniel, for your question. The distribution company does have a plan, as Daniel said. And with the migration to a corporation, we've already been able to eliminate some inefficiencies from a mixed economy period, but there are still some opportunities, especially coming from investments in the automation of the network and digitalization processes at the distribution company, as well as changes to processes, as Daniel already mentioned. So it is to be expected movements in the lines of cost reduction. And I think that to conclude and open to the next question, I think we would see -- we will see all of these efficiency improvements at COPEL who will the '25 budget because we'll have an impact in the last quarter of the reduction in fee that's significant, quite significant, and we are within the estimates to rehire between P&L from EUR 100 million to EUR 120 million. You remember our commitment at last Propel day quickly within those numbers, but we are executing and performing very much in line with our strategic plan. And during 2025, when we're going to see a new level of PMSO for COPEL as a whole.

[Daniel Travitzky, analyst]

Excellent, thank you very much for your answers.

[Operator]

Next question, Bruno Amorim, Goldman Sachs.

[Bruno Amorim, analyst]

Good morning. Thank you for this opportunity. I have a follow-up in the capital allocation discussion and 2 questions related to that. First, if you can talk a little bit about -- I know you're still revisiting the discussion on capital structure. But if you can tell us about the leverage levels that you believe are healthy for the company, the company is running close to time that seems quite comfortable. And the second question for capital allocation is about the segments or areas that you understand may offer opportunities for capital allocation outside of its current portfolio, either in terms of geography or sectors that you may be interested in.

[Daniel Slaviero, executive]

Excellent Bruno. As Felipe mentioned, that 1.9x, 2x is a little bit unreal because we have 2 billion of cash on the primary. There's going to be the grant bonus of the 3.7 adjusted by the select rate by the fourth quarter, that's going to be close to 4. And there's around BRL 600 million of that voluntary severance program. So with that, you get a little bit higher than 2.5, 2.8x. We get close to that level. So not to point that still for a private company, this seems to be a comfortable level. How much we're going to target for the future is something that's still being analyzed and discussed with Felipe and his team, who will run a deep dive on that, as I said, in the coming months.



So it's expected that this will be fully concluded by the beginning of the first quarter of 25. As for growth opportunities, I believe we've been saying recently that no company generates long-term value simply by cutting costs and selling assets. I think this is a phase that the company is going through that still working in some remaining inefficiencies that are inherited -- inherent to a state held company that has to bid for everything and can't simply contract. So I think there's a beginning, a middle and an end to that.



I think the next main stage for the company is to make good capital allocation and good capital allocation is not necessarily only linked to investments. There may be share buyback, that could be good capital allocation or maybe you can pay more dividend, which could also be good capital allocation. So that's our job, and that's what's part of the company. But in terms of investment, I believe the priority here for us is in the short term to extract more from our current assets. So the capacity auction is a major avenue. There's a transmission auction that we are trying because there's a lot of synergies, but we have not yet made any decision. No final decision because I think, of course, of the 4 of statements 3 belong to COPEL. So maybe it makes sense, but we're still looking into it in more detail because of the return of the segment that's also tighter, always tighter. But there is reported and improvement, and we've just been through a review of the transmission companies. That was very interesting. So I would say that we are looking at opportunities that transcend any geographic aspect of Paraná.



COPEL has already has companies in 10 states. We have no limitations to act outside of those 10 states where we are already present. This is something that still depends on the opportunities that will come up. At this time, we're not seeing anything too concrete other than these improvements or expecting more value of the company's current assets.

[Bruno Amorim, analyst]

Great, thank you.

[Operator]

Next question, Marcelo Sá, Itaú BBA.

[Marcelo Sá, analyst]

Good morning. Thank you for the presentation. I have a few questions. If you can give us an update in the process of selling lots and SHPs, if you can talk a little bit there. And if you can talk about the CapEx estimation for Poste and the capacity auctions, whether you can give us this number or not. Thank you.

[Daniel Slaviero, executive]

Good morning, Marcelo. That's all. If you can give us an update in the real estate sale process, what stage we're at, how this is moving along -- and then I'll talk a little bit about the SHPs. And the CapEx estimate since its topic has very, very low infrastructure investments. There's no environmental issue. We have not been sharing this estimate because they're strategic, very strategic. And basically, you have very little costs that are not bought inherent to the turbine itself and [ Foz do Areia ], which is mature. But [indiscernible], please?

[Unknown Executive]

Good morning, everyone. At COPEL, we call this sale of real estate as the Parana project. It's a very bold sale project. And I start with Padre [ Bostinho ], where the old operations center for generation trait and was located and all of the residential villages at the hydropower plant. The residential village in Casillas was already sold. And now we're doing this process with Foz do Areia, [indiscernible], GPS and Segredo. And we are at the final stages of signing the purchase and sale agreement of those pieces of real estate. We have a binding proposal from a fund that is interested and made an offer that COPEL considered very good positive considering the return on these assets, and we are at the final stages of signing this agreement. And from this moment, we will already receive installment from the sale of those pieces of real estate.



So I consider this sale, especially of the residential villages that are very difficult with high costs and we'll reduce our maintenance costs of those villages and also surveillance and management of those villages are very positive moving towards the conclusion that we would be able to confirm with the signature of this contract at the beginning of August. As for the SHPs and those assets, Marcelo and everyone -- we've concluded the nonbinding proposal stage. We move to the last 3 lots there, the small Central, the midsize and the [indiscernible] thermal power plant, we refer the best -- we moved the best proposals to the second phase. So they are undergoing the due diligence process.



This is something that we could have in our planning. The signing process should occur in the fourth quarter of this year. If I may add about the capacity auction, I'd like to add something if you allow me. COPEL is prepared for the auction that shall be held in December. That's what the government, the Ministry of Mines and Energy and the National Electricity Agency, have been disclosing. They will hold the Acton in December. So COPEL is prepared with the suppliers and 3 contracts already in place to be able to participate in this auction. In December, we're waiting for the publication of the ordinance that establishes the time line for this auction. It's a very important investment where we have the discipline of capital allocation and the policy defined by COPEL.

[Marcelo Sá, analyst]

Thank you. If I may just a doubt about the auction from the methodology, especially for the hydro power plant. I think there's a lot of doubt in terms of penalties. I mean, do you already have in mind how this is going to work? Because when we talk with some companies, they say, "Oh, we're going to look into it, but it's important to understand the details, we are not able to conclude yet whether or not it makes sense. But at this point, the conversations you've had with the ministry, are these detailed clearer to the companies? Or do you still need to wait for the publishing of the invitation.

[Daniel Slaviero, executive]

It's not clear yet, Marcelo, and [ Vital ] has been working on that. But we are all on the same page. All the companies are on the same page. We've been getting a lot of intersections with them, but it's not clear. What we see very intensively is a concern from the ministry for this to occur in reasonable terms so that we can guarantee the competitiveness in this hydro product. And since it's the first time where the power plants will be in a capacity auction to have very adequate conditions in terms of the criteria of how the operation is going to develop in coming years. But really, we are also waiting for the final details, but it seems to us as with other examples that the ministry provided that there will be -- they will be reasonable in the final conditions of the ordinance. Yes. And we expect to have that defined with the publication of the guidelines ordinance. And then with the invitation to bid and the contract that will be issued for the public hearing -- but we have a lot of interactions with them and COPEL's technical teams have been looking at these interactions and the information provided, and we are already being able to evaluate in a best way for this auction to bring the results expected by the company.

[Marcelo Sá, analyst]

Thank you.

[Operator]

Next question, Guilerme, Santander. Guilerme.

[Unknown Analyst]

Good morning, just a question about the company's commercialization strategy. If you can update us on your expectations to evolve on the contracting level, we've seen this quarter the contracting level compared to other generators still a little bit lower. So how do you intend to evolve this and you can give us a price perspective. If the 3G price makes sense for the second half of the year, that's it.

[Daniel Slaviero, executive]

Rodolfo, if you may?

[Rodolfo Lima, executive]

Yes, of course, Guilerme. So the beginning of the quarter, especially due to the rains started with very low prices in the long term. So what we did was monitor those prices. They recovered in the period. So for June, we understood that it was already at an interesting price. And we started to contract on those terms. And that's the strategy. We know that the current system will become increasingly more volatile, considering the matrix and the expansion, and there will be good windows for contracting. So it's this change in pace according to price that we've been working on.



So April and May, we understood was not the moment to run after contracts. But after the hike in June, July that we've seen now until the end of the year, we will start to find good windows to buy it better for '26. Noting that for 2024 and 2025, we sold all the energy that we had this minor adjustment, but nothing relevant. So we're talking more on the long term.



Talking about the CD. It is compliant, but of course, the further away it is from the supply period, the less liquidity you have and the higher average price to have around it. So we have a lot of time in commercial intelligence to try and capture these -- it's not on animal. So you see a lot of room for variation. And just to add here Guilerme, around 76 megawatts that we've sold for 25, for example, that pretty much exhausts what we have and or availability, always considering a natural hedging of [ CSF ] . [ CSF ] this year is around 13%, 87, 88 -- so we always consider that with avoid any expense with energy purchasing. But when we look at the longer-term perspective, this volatility that Rodolfo mentioned that everybody knows, this update in the methodology and the price verification, you already see an acceleration in the long-term energy price above 170, 175. So there's already an improvement. And we really believe in the capacity that the hydro power plants have of providing power energy, especially in big moments and we'll start to work strongly for that to be valued and materialized in prices due to the stability that hydropower plants provide to the system.

[Unknown Analyst]

Great, thank you.

[Operator]

Over to -- next question, a written question from [ Matias Ruling ]

[Unknown Analyst]

Congratulations on the results. Felipe and Rodolfo welcome. My question is, will we participate in the transmit auction to grow in the sector.

[Daniel Slaviero, executive]

Hello Matias, I think we talked a little bit about that. You see that on Filipe's slide, we already have. In terms of network of almost 75% of our EBITDA, be it for transmission at P&T or distribution. So in the segment's portfolio, it is a good investment that brings a lot of stability to the company's revenue. Now specifically on transmission auction and the auction now in September, it's inherent to have a lower rate. So considering the level of discount and the company shares, we are thinking very carefully to see what the strategy is, whether or not we're going to join. And if we enter the auction, we need to have a return expectation that is more suitable and proportional to what we see today in the price of the shares. So bed down. And as I said, we have a fiduciary responsibility in terms of capital allocation and where the best capital allocation is. If it's investment in what segment, what investment profile or, as I said, their buyback programs, possibly or payment of dividends, extraordinary dividend as our policy allows for.



With all of that said, the front mentioned segment is something that we like due to stability and our expertise and our capacity being a private company, predicate and anticipation of the deadline. But this will all be weighted and considered for us to -- if we decide to participate, to have a good strategy. And if we succeed great, and if we don't, well, it's how it is, it's part of the game. What makes us look specifically at that low, as I said in the beginning, is that it does bring a lot of synergies to our current operations. There's very little incremental costs in this process. So that makes those a diligent but to [indiscernible] and everyone to be engaged in study. What the biggest [ bettors ] auction of September will bring.

[Operator]

If there are no further questions, we now conclude the question-and-answer session and turn the floor to Daniel for his closing remarks.

[Daniel Slaviero, executive]

I would like to thank you all for your participation once again and thank all of the COPEL people for their work and their commitment and dedication this quarter. So once again, COPEL's execution capacity. I think this is like a trademark for us, and we are relentless in the perfect execution of our strategic plan, either with asset divestment or our process of focusing on the core business, in the simplification of our structure and participation, that's something we're also looking at and cost control and a very important moment, which is the reduction of almost 1/4 of the company guaranteeing the same levels of quality and service provider. So the results of this quarter reinforced the consistency of the company's work. And as I've mentioned now being able to have this plan, this mix between professionals who have already been here who know the company, adding new talent who come with new prospective new angles, new experiences that can give us momentum and greater agility to the cultural transformation process that the company is going through. So I think that this vision of a consistent company that is focused on delivering all of the commitments made with our employees, our shareholders and society as a whole is a very typical brand of COPEL. Thank you all very much. Have a great day and will remain available to you.

[Operator]

COPEL's conference call has now concluded. We thank you all for your participation. Have a great day.





[Statements in English on this transcript were spoken by an interpreter present on the live call.]