Companhia Paranaense de Energia Q4 FY2024 earnings call

• Formation of a new C-level, with Fernando Mano joining Copel Geracao e Transmissao. - Financial results: Year-to-date fourth quarter had adjusted EBITDA of BRL1.3 billion and net income of almost BRL600 million; full year closed with adjusted EBITDA of BRL5.1 billion and net income of BRL2.8 billion. - Key deliveries: Renewal of 3 main power generation plants, payment of BRL4.1 billion grant bonus, asset swap with Eletrobras, sale of small hydropower assets, exercise of preemptive rights and sale of Baixo Iguacu, and a share buyback program with BRL120 million executed. - Copel Distribuicao's strong contribution to results, with robust dividends proposed (BRL2.3 billion total for 2024, 86% payout, 8.4% dividend yield).

In the fourth quarter of 2024, Copel's financial performance varied by segment. Copel Distribuicao generated EBITDA of BRL715 million, which was the highest recurring result in the history of the distribution company, 23.6% higher than the same period in 2023. Copel Geracao e Transmissao (GeT) had an adjusted EBITDA of BRL613 million, affected by wind curtailment, unavailability of wind turbines, and other factors. Trading had an adjusted EBITDA of negative BRL15 million in the quarter, reflecting a lower trading margin due to price variation in submarkets. In terms of revenue contribution, Copel Distribuicao contributed significantly with an EBITDA efficiency almost 46% above the regulatory level.

• Focus on concluding the investment program for Copel Distribuicao, aiming for quality services and integration for the next tariff review. - Emphasis on operating excellence across all businesses. - Focus on bidding for the capacity reserve with two relevant assets. - Consistency in the energy trading strategy, having sold significant volumes of energy for future periods. - Strict execution of efficiency targets as per the 2025 budget.

• Macroeconomic environment risks affecting results. - Curtailment issues impacting wind parks, including 13.1% curtailment in Q4 2024 compared to 8.3% in Q4 2023, and temporary unavailability of wind turbines at Brisa and Cutia. - Transmission auction results with historically lower expected returns. - Regulatory discussions on curtailment and its potential impact on operations.

Q: Bruno Amorim asks about capital allocation and the study of the optimum capital structure.

A: Daniel Slaviero and Felipe Gutterres discuss the capital structure study, stating the company aims for an optimum structure, with focus on dividends, buybacks, and leveraging around a target of 2.5 net debt to EBITDA.

Q: Guilherme Lima inquires about the timing of the optimum capital structure study and capacity auction.

A: Daniel Slaviero responds the study results will be presented in May along with first quarter earnings, and discusses the capacity auction with confidence in hydro products' competitiveness.

Q: Maria Carolina Carneiro asks about regulatory discussions on curtailment and asset portfolio optimization.

A: Daniel Slaviero and Felipe Gutterres address curtailment as a persistent issue with efforts to mitigate, and mention asset portfolio optimization with completed major moves and focus on future good allocations.

Q: Francisco Navarrete asks about wind asset performance and recovery.

A: Daniel Slaviero and Fernando Mano explain wind asset issues due to curtailment, one-off maintenance, and corrective actions being taken to address them.

Q: Unidentified Analyst asks about Copel's participation in transmission auctions and beyond state borders.

A: Daniel Slaviero states no intention to participate in 2025 transmission auctions, but mentions Copel's potential to expand beyond Parana state borders in distribution.