AXIA Energia S.A. Q3 FY2023 earnings call

• Focus on operating efficiency, reducing RTMSO with two voluntary resignation programs, with benefits for consumers. • Accelerating CapEx, investing BRL 1.9 billion in the quarter, an 88% y-o-y increase, focusing on modernizing and maintaining assets. • Managing portfolio through initiatives like buying vagary, reorganizing entities, and consolidating assets. • Client acquisition by reorganizing the commercialization department in Sao Paulo and focusing on energy trading, with ongoing discussions for electrification solutions in sectors like steel, pulp and paper, and mining. • Announced certification of green energy plan into Viata, focusing on solutions like green hydrogen, confident in Eletrobras' green energy portfolio. • ESG focus, including being part of the IDIVERSA index, aiming for net zero by 2030, and certifying for green hydrogen.

Recurring regulatory EBITDA was BRL 6.2 billion, IFRS EBITDA was BRL 4.6 billion. Regulatory net income was BRL 2.7 billion, adjusted net income per IFRS was BRL 1.1 billion. CapEx in the quarter was BRL 1.9 billion, an 88% year-on-year increase. Transmission revenue increased while generation decreased slightly due to the ending of the quota regime. Revenue from transmission contributed significantly to the growth, and EBITDA grew by almost 50% during the period.

• CapEx expected to continue, with focus on improving operations, maintenance, and expansion. • Priority on high-quality existing assets and connecting them to efficiency agenda. • Continued efforts in client acquisition through commercialization reorganization and energy trading. • Ongoing green energy initiatives and expansion of client base.

• Market volatility in power prices, though Eletrobras is not afraid as it has diversified clients. • Uncertainties in the regulatory environment affecting tariffs and operations. • Potential impacts of macroeconomic conditions on forward-looking financial and operating goals.

Q: About power balance agreements, terms of contracts, and costs.

A: Eduardo Haiama and Italo Freitas addressed that while some clients have specific contract characteristics, flexibility in contracts is limited for most, and costs are expected to continue reducing through ongoing efficiency initiatives.

Q: About flexibility in free market contracts.

A: Italo Freitas stated some clients request flexibility, but it's limited to a small percentage of contracts and comes with a cost.

Q: About reduction in compulsory loan and provisions.

A: Unidentified representative explained improvements in compulsory loan negotiations leading to reductions, with further reductions expected in 2024, and adjustments in provisions due to settlement and classification changes.

Q: About Furnas integration and asset sales.

A: Ivan de Souza Monteiro mentioned Furnas integration is a priority, and ongoing asset sales, including thermal power plants, are proceeding without major interference from other factors.