AXIA Energia S.A. Q2 FY2025 earnings call

Key Points - Simplification of shareholder structure and cost reduction, with liability management reducing compulsory debt from BRL 20 billion to under BRL 12 billion. - Completion of connected works like Coxilha Negra Wind Farm and Manaus-Boa Vista connection. - Investments near BRL 2 billion, with consistent improvement in commercialization. - Announcement of BRL 4 billion dividend payout. - Continuation of initiatives to increase result predictability, build budget for 2026. - Dividend strategy based on long-term horizon, assessing capital structure over 5 years and optimal leverage ranges for generation (3-3.5x) and transmission (3.75-4.25x).

Shareholder remuneration saw BRL 4 billion in dividends. Generation margin contributed 21% more versus Q1 and 16% more versus Q2 2024, mitigating a drop in transmission revenue. Compulsory loans were reduced by BRL 1.2 billion to below BRL 12 billion. Investments grew 116% versus the first quarter of 2025. The contribution from generation to margins was a key segment performance aspect, with generation margin up 21% vs Q1 2025 and 16% vs Q2 2024.

Forward-looking Statements - Continuation of initiatives to increase predictability, reduce costs, and manage liabilities. - Assessment of capital structure over a 5-year horizon to determine optimal leverage. - Plan to provide more predictable dividends based on long-term vision for energy and capital allocation strategy.

Risks - General economic conditions and other operating factors affecting actual results. - Uncertainties in energy prices and regulatory remeasurement impacts. - Potential gaps in energy balance and impacts from GSF auction. - Variations in actual results differing from projected due to uncertainties.

Q: Give more details on trading strategy for the second quarter and recurring CapEx in improvements.

A: Italo discussed trading strategy with distributed teams in regions focusing on finding value-added clients, portfolio analysis for sales strategy. Elio mentioned investments growing from near BRL 1 billion in 2022 to over BRL 3 billion in 2024, with 2025 expected to be above BRL 4 billion.

Q: Follow-up on reinforcements and improvements, internal process and IFRS/regulatory differences.

A: Robson talked about robust process for identifying and pre-executing investments, alignment in the company, and adjustment based on eliminating revenue/cost differences between companies.

Q: Returns on investments in reinforcements and improvements, and liquidity in energy market.

A: Eduardo mentioned regulated investments have robust methodology with regulators adjusting over time. Rodrigo Limp discussed organic liquidity in the market, with strategy to allocate energy considering studies and focus on strengthening sales in North and Northeast.

Q: Future focus of the company and dividend payout practice.

A: Ivan mentioned focus on consolidating initiatives, using M&As and auctions for growth, and continuing with predictable dividend payouts. Juliano talked about company modernization using new technologies like AI to generate more value.

Q: Impact of GSF on gains and trading strategy regarding sales and liquidity.

A: Eduardo explained strategy of concentrating sales in first quarter to mitigate rest of year risks, with simulations considering GSF behavior. Italo discussed detailed client mapping and using tools to allocate energy for maximum value, focusing on expanding client base through partnerships and open market channels.