AXIA Energia S.A. Q4 FY2023 earnings call

• Simplification of administrative structure with focus on single-centered guidelines, aiming to reduce PMSO to BRL 7 billion in 2024 through voluntary dismissal plan.
• Investment capacity increase with projects like Coxilha Negra, Manaus-Boa Vista connection, Baguari, Teles Pires, Retiro Baixo; CapEx growth is substantial and higher than state-owned days.
• Restructured commercialization department to be client-centered, aiming for thousands of clients.
• Leaders' summit with 520 leaders to address cultural challenges and emphasize efficiency and responsibility as a private company.
• ESG focus, including coal thermal plant acquisition and gas plants, and efforts to remove non-recurring events for predictable results.

Revenue increased year-on-year due to asset consolidation and reduction in power bought for resale, leading to EBITDA increase. Recurring costs and IFRS numbers had differences, with provisions including impairments in assets like Coxilha Negra and Joao Borges, mark-to-market operations in energy projects, and provision for bad debts in relation to Amazonas Energia. Total contingency inventory decreased from BRL 19 billion to BRL 17 billion, and compulsory loan inventory dropped from BRL 1.88 billion to BRL 900 million. Leverage was 2.2x, with comfortable level potentially around 3.5 to 4 depending on variables.

• Energy market prices projected to be BRL 65 in 2024, BRL 150-170 in 2025/2028.
• Trading focus on client orientation, using 2024 prices with a quarter lag.
• Investment levels in 2023 were high, expected to continue in 2024 with gradual decrease as constructions finish.

• Macroeconomic conditions impacting performance.
• Uncertainties in negotiations with the reconciliation chamber regarding CDE receivables.
• Legal and regulatory uncertainties related to Amazonas Energia, including potential changes in law affecting concessions and debt payments.

Q: Do we have any news about the CDE receivables?

A: Discussions with the reconciliation chamber are confidential.

Q: What is the comfortable leverage level?

A: Depends on contract portfolio and debt environment, comfortable level around 3.5 to 4 but variables require caution.

Q: Update on Setasi sale and Amazonas?

A: Can't comment on Setasi; Amazonas is being monitored with efforts to mitigate risks and seek legal changes to make concessions more flexible.