CIG - Earnings call transcript Q3 2020 | Companhia Energética de Minas Gerais

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Operator

Ladies and gentlemen, thank you for waiting. Welcome to the Conference Call for Cemig's Third Quarter 2020 Results.

Antônio Carlos Vélez Braga

Good afternoon, everyone. I am Antônio Vélez, Superintendent of Investor Relations of Cemig. We now will start Cemig's third quarter 2020 earnings conference call and broadcast with the following executives; CEO, Reynaldo Passanezi Filho; our CFO and IR Officer, Leonardo George de Magalhães; and all the other officers in the company.

this the follow also can transmission phones. by You XXXX number in Brazil, (XX) U.S. the XXXX XX In the or (X) XXX Web site, XXXXXXX on ri.cemig.com.br. available and also on the links our

to like For turn I initial Reynaldo would the the remarks, floor our CEO, Passanezi. to

Reynaldo Passanezi Filho

a have we in company's is deliver, that to with bring pandemic able the we Considering the of of been year Good results has recovery. to for company have to pleasure for what they always very and everyone. the company and the consistent show and be show And great been terms resilience results and afternoon, sound. this perspectives they the the the are the It in positive growth here you obviously do also third what in looking quarter year-to-date.

just So results and sound a on But and area. few consistent deeper. go then comment I would we'll first, in financial the topics

and R$ year. EBITDA much XX%, We EBITDA higher And adjusted our debt better R$ income X.X to adjusted net XXXX, Net over higher and in X.XX implies EBITDA and allows over a billion in in much X ratio, R$ is over comfortable EBITDA and that lower is our much consolidated us billion. than XXXX have controlled debt situation also very have and almost consolidated for it's billion of gross XX.X a also nowadays rating operation terms this cash.

lower to We Cemig we celebrate the able mentioned are here. D. levels we regulatory already, So have as

sound be I'm results. times very our a have to and year income, able number. A that to has to a that that have able have reach But will we in execution, very interrupt. recovery – and reduce sorry EBITDA we PMSO is we load investment expenses working reach goals. also this our even market PMSO – good I results. operating EBITDA in few regulatory been the is of to very am We our sure had On now with – good a company been hard This

seen integrated different have national the national load, that it's no system in the recovering We here. but

sorry, of FEC, is of the the That which of in behavior. X.X when about But We the XXXX – leverage DEC as outage have the we what XXXX. and the much have growth had the we and and mostly are with contracting that gradual of had and year-to-date and is than and also X% ensure duration, in very because is and average an that March talk this for May. and in a and DEC XX. hours for than period, very the the I'm have to see us well. to of market we now also growth the recovery roll a fortunately no higher a higher the recovery The And target April were out load finally, of their since order result, pandemic, because that's regulatory that's will of September lower levels line also up we is levels, that free period important and we allow average different we we over good

lower levels. we regulatory So the are than

main here. these messages the believe I So are

that growth. is sound our a have like we results recover we to have said, are and We do resilient I company ready very and

in investment we the spite a have in of few is and program the is what made adjustments crisis, was line ongoing. is and broad CapEx Our to and planned

have results. a They [ph] just have And also do published was in their of Light and their effect positive partnerships. that appreciation therefore us. results. positive there Taesa stocks We strengthened

the GSF in results approval. positive having also are we with So generation

in that term of average the concessions. is gain terms have will of the We very a significant extending

for special all series that subsidiaries Taesa be electric Light. the notice can also that well projects have X Energia, be to but or We tender have the perspective also North companies like where to a that X.X a of sector. we value we We is do subject would and gains and other applied have a interest can of Cemig farm And over the applied we have did is I a for that this that wind other generation had very whole highlight in do before gigawatts something gigawatts. GT, very else as to positive

the We have then bring to can have And expansion our down source area. and mix and think energy on we to on we strengthen about and work energy. commercialization our

highlights. So these main the are

look an we always been aiming would available confirm an I are the we These But us we consumers at we price. have my at just quality adjustments process. affordable for we take for remarks, but to bringing have at shareholders have the like a The the starting to figures the consistency rationale making, the do do, saying. were value recovery provide generate able presentation. it, to and of when results. end show, and and good and have We that to So our been ongoing questions decision a product really society of what to the initial are private your are results

Antônio Carlos Vélez Braga

very you CEO. Thank much,

you to let's So Slide to would the now to presentation to turn itself. turn like I X. ask

months vis-à-vis time, but about the X.XXx the expenses first limits, R$ over our million operating our mentioned would operating cash was highlights, specifically [indiscernible] like generation. EBITDA already the year in this I stress CEO distribution XXX some efficiency regulatory these already Cemig that of nine lower Our leverage has for than to of

the because credit quality our ratings also third and to The also of next XX% profile our [indiscernible] debt improved thanks ways, recognized go our into I different details third our rating on slide. and how and and quarter leverage billion the agencies cost, reaching they And X.X the in the will R$ in debt our quarter.

Dow And we as good are hard piece delinquencies but is this identifying all our delinquency. year still the continue to our there’s that chosen a initiatives most be year, losses part recognitions we oldest the to prevent one very very care because Cemig to specifically of financial that news Index, was of as of -- the of to consecutive sustainability working of practices XXst sustainability is in prevent the We for much industry Jones world. of the year challenging the actions which our thanks Sustainability well one losses about, about so and the so pandemic, was

part proud the year So to very we Index. of are XXst that in Jones the are say we Dow Sustainability again

that X, we the our here recently and investment on Now Standard the both screen ratings of elevated rating the Moody's agencies; see turning you and Poor's the Slide just to Fitch grade and & Fitch, also main have Moody's. have on as one. has Standard an and global that in scale the our maybe as and our year, & can positive, perspective well quality in for domestic next that Poor's And revised we credit upgrade credit our ratings. means can

have see and the Slide how over we the some a specifically to was we in specifically June. had the in our collection collection turning July, But of of strong X, indicators. in delinquency rates. affected, April, also improved year and our month quarter; starting May August, the We Now second collection recovery

October, September. execution to a restrictions. And to the year, we fight the XX had highlight started negotiation the also reversal to perform that have State And is disconnections. quarter through you ADA we disconnections. the during with Therefore, of delinquency, notice, happening should in And R$ XXXX third able over we from turning Slide XXX not disconnections program. we thanks August this the here of to You for pandemic, that provision, August, We Gerais of we XXX,XXX main the up million the to had to of were ADA initiative in X, investment year-to-date had if million And have in again. remember Minas a government. the our the now

R$ to small So that of invested far consolidated. and those, to allocated X% XX% – to transmission acquisitions had X% X% were sorry, were is year. Cemig contributions X.X that directed – we acquisitions we throughout I'm Out have generation; allocated X% were the already transmission distribution, distribution; capital and were billion

breakdown. the that's So

translated upgrading, capital R$ and of And for and contribution SIM Centroeste the revenue, that and we and is of acquisitions, XX up part in annual have acquired million APR, investments contributions We XXX the million transmission had and R$ generation million. XX XXX September, Cemig strengthening in capital million in million. to XX about and we distribution permitted

DECi, Now average hours. hours, than regulatory the lower have the is turning probably DEC we and That XX Cemig the which be to in have lower. September the Slide accumulated distributions. lower months improving that In the limit. XX.XX our time X, duration limits FECi are been last shows and year-after-year, and margin DEC for higher than per going to are specifically in the vis-à-vis in last we first was XX of XXXX, have between quality our that realized limit, customers for we indicators years, X.XX the XXXX, few we that is hours regulatory for regulatory

has FEC September been at was always improve still the And we XXXX, very comfortable, are in working that of indicator but anyway. XX to last X.XX%. it months, Our in

an a compared year April can load And Slide figures, of X, that into that we show pandemic, the to does in come XX%. recovery and Cemig Cemig year, see of last had load an to clearly terms September load what in vis-à-vis when distribution have we had and we build drop Turning distribution of financial Cemig in we market increase already even in is distribution, significant for of the X% indicator we revenue. the October market that the not September, but after more. the the over here of translate to And can in we is April that here last of and necessarily

because the of a concession in is for specifically this area clients Cemig recovery So of distribution. free the recovery, strong

of distributed next this we Cemig comparing and XX%. that see over the Cemig we market total compromised, what April, coming sometimes and the but can the And with it's what the see strong coming load. to are distribution. we year-on-year. changes recovery. to here The GT here very load the turning recovery also seasonalization consumption have years see Now the the similar XXX over X, here, is in the we you once have megawatts It’s because in October, And for comparison in energy that's average. we to the also Slide, again consumption

have free is incentive-bearing significantly operated is quarter. and increased that see And So grown the that to most clients thanks to recovery XX% but this our clients has XX%, conventional at also strong of has the in recovery. a that we

themselves. turning Now the results of of the quarter the analysis third to

them on main Here understand XX, to bring highlight Page quarter this on the you. then facts have we better should we’ll to results of that and we the the results

consolidated is is an our restatement sale Light Light. that the and Cemig that we had at in For asset Remember for Holding results, of value market available books.

the and of price in -- Light every quarter stock the on the for reference we mark-to-market So exchange have market the value market. the stock stock

So September for stock the sheet. amount balance we in had – down in for Light price XX.XX posted and that posted to our was is the bring R$

hedged The quarter So transmission be was of third quarter. the way – which results About a a share the mark-to-market had our Cemig the of we the a the clients the area XX instruments was X.X%. wise, was had free as of price million in net market. Cemig very drop, income only growth of About that a then XX very it in compared if GT, of in last very But But a the XX.XX. R$ ADA last captive have third reduction market for better. had growing 'XX, would was there X.X%. R$ of reversal that in the total said a good. grew to energy million. R$ holds, we million concession our negative we positive balance effect operation vis-à-vis X.X%. we finance, in had XXX distribution, And effect low a I But will our at and increased was has It about transport of quarter sheet. distributed it terms And impact million. negative million. R$ in had million year. September, in in is that a The But stock It in of financial the But quarter for 'XX before, that XXX reversal fourth much was was or months, had a and Eurobonds we good. we a XX XXX XXX vis-à-vis the was

the have volatility was sorry, we as – This to the Page itself and of I’m pressure the turning breakdown. impact is as Now XX hedge presentation, the of built scenarios. of domestic effects of because And a our effect of here well in opinion, the into temporary effects the international Eurobond. this the

varied and our a chart of end, in because at Here have And the this XXX we million. depreciation, real we R$ quarter R$ not bond that XXX financial the of of -- hedged had increase the third the million. negative an instruments effect on had financial see

Slide XX, the for have profit and net to EBITDA Turning we here nine our months.

XXX adjustments had quarter of the this the year EBITDA in of Renova and last provision profit CEO the most year, a the months made even the also Our were part in months of over reaching ICMS. bottom XX% million X.X [indiscernible] Maybe of the in adjusted relevant the receivables had of the for mentioned growth of XXXX. net we billion the X.X% the significant X,XXX more R$ the had reaching R$ second slide, nine have And nine at million. a we last on growth over in ones R$

we also profit Light’s positive that, and also reversal of program year held. restatement, remember sharing the I that a the the of to mentioned of before. We of that last And had transmission the we company provision, tariff provision we have review the this effect year had

recovery that – in consider you our to bear company. just of when results So mind the

And to market. residential also because down said, I X.X%. and Slide quarter have X.X%. of we XX, the as Industrial is captive third closed growing, type were should was the X.X%. still the clients X.X% for had grew down customers also consumers, stores for that a basically If to market of XX.X% growth the highlight by our GT distribution a or the that breakdown year-on-year. of break turning free in Now market transmission increased we clients we X.X% And had commercial the and our reduction still quarter. in We

just Slide quarter On consolidated have EBITDA, XX, for we of net adjusted the XXXX, our third profit the improved. next adjusted which

just that quarterly reaching net million, also results. XX% X,XXX very a profit mentioned. million, growth over we had strong we grew R$ and a the EBITDA as the very already growth adjusted for so And of Our EBITDA, sound level with is XXX profit recurring XX% strong R$ of net

strong with net XXX also we On of million. a and adjusted XX% On Cemig On R$ for profit have profit million. was the top It chart, adjusted net of Cemig EBITDA third and R$ XXX the slight distribution we XX, EBITDA already the profit adjustment had profit million have over we adjusted and EBITDA also was reaching which XX, R$ growth GT, of XXX% Slide XX.X%, of adjusted adjusted XXX Slide and increases. reaching Cemig on bottom, adjusted up I mentioned. have reduction up the adjusted net for and X.X% reaching EBITDA distribution. of million see for had Cemig XXX GT 'XX quarter net we a

George positive CFO Officer, about cost it. Leonardo Magalhães de a Turning to we IR going very and to had but talk in Slide XX our of I'm ask to terms operating and also performance, expenses, to

Leonardo George de Magalhães

conference afternoon, our in you opportunity Cemig, for video Thank very results. have where another of to explain everyone. the we Good participating much

As of were commented operating the these to we able company operating to outsourced the reduce vis-à-vis good materials, and results on Dr. or X.X% We headcount maintained inflation here. mentioned, Vélez the costs that that show the and expenses. has costs basically for PMSO main the resilience any results the the adjustment without sound already during on going see manageable and We're to prior have efforts concentrate on in pandemic. efficiency. costs has year quarter, And and company are our services here Reynaldo the

the by a cost year. overdue XXX X% highlight has the quarter. the it to results. payment prior credits. remember we and able compared and going be will in contingency these increase that from state bring continue be the here, that quarter, results an was that to in when company's do ensure provision, we're And year, state. there therefore, sharing with the we the are And sign last in our in down settlements, were by provisions. think billion from year-to-date highlight working paid inflation, we those efficiency we for in costs. affected the million ADA reduction we offset also and to Therefore, also that agreement XXX that able and to to to to almost and but see based was another discount program the was adjust with the also these the program we reduction it's of And if sharing from provisions the are a important on to an to specific, it large company million there relevant tax profit ICMS of R$ And our And are So X there the over profit that

We this on OpEx company’s we to and for next our that end our Cemig committed able our have us OpEx the realized first this our is happens. anticipated by Now, This was commitment. with on time the This we OpEx the ourselves limits our And within slide, the regulatory profit. is by have was the OpEx – the the OpEx would be landmark targets. and the year, regulatory tariffs. the we covered because all of D a

bring quarter, we you third news. good already to this the on So

efforts cost have company such that lower million for was target non-technical target, us the XXX we for already would the are EBITDA, or were even several is able up to that to actions. than end quarter XXXX, related About with even be relevant the the we zero. that to But – we are in if to consider almost to allowed retirement. have lower third caused XX we these regulatory the post the These than actions so are We able company’s the have losses regulatory the being here knew to million taking the implemented we and as tariffs, the as XXXX. that to cover are still by close company to difficult we of non-technical losses additional XXX And that million. on losses then reduce

efforts the once regulation here our by in there's first of So the regulatory because able were covered -- is small efforts XXXX, in able we to XXXX, in years, we XX% OpEx again, there XXXX. what XXX% our coverage. have our a In we the And that of reach XXXX, our on guarantees. chart of in Remember reach were coverage only of to specifically bottom. the tariffs two

this important important and we believe So effort is an distribution. for landmark Cemig

next the XX, we debt have the On is indebtedness [ph] our consolidated profile. for next can This be a our Slide, profile. year that see We managed. here gap

With and this Therefore, and the be Difficulty] billion that to paying the of we normal that less this level have We have amount. generation quarter with up rate that rate hedged. message so a scenario bond the And year far, able important be management will or interest these the cash vaccines a we for the and uncertainties We of months. so better and of interest cash liability X under lower gap in to plus a for the through… to are a $X, we management rates we’re uncertainties company the would company to process is go that at [Technical attention is of understand and risk have a have will hedge the will next start with topic. at with we stable expect markets first be the a a more less and scenario, it

company's very of affected EBITDA, translates comfortable in and net as has has and a is X.XX which over also trend are investment. And our total very that of on as the comfortable at is continuously our and we that So are improving expect our our leverage, continue ratings, understand well future. to of scenario, Vélez it into this ratings the today that position as improvement that we mentioned, we for the the improvement liquidity debt reduction

a have And to for company's slide by solutions will comfortable company years generate GSF. the XX, our the for company. situation and were us significant liquidity, X value planned factors session, around of with the not and And thanks months the months. into our still able level liquidity The have because ensure we nine helped investees, quarter extend concessions expectations vaccine challenges plants these in regulations are have the next expectation still ones with we amazing that is positive, quarter. Slide, expansion other that billion in GSF have are end two the the only of and more the in deceleration. still very the for We billion in generation addition probably the our cash. third the This three are balance to also company this to to Q&A and XXXX. the cash the stake. favorable starting On suffering major for that cash flow to will of close ongoing our translating but no of first we maintain to year, before understand Cemig In few next and allows the other regulating or that our our But the Aliança market a turn important a is of by this we very the we next the we our to to this agency which economic concessions, that tackle X agreement, have where year-end to is these

and important with have updating we our to customers. assistants to our transformation to We the our of platforms, turn an processes are project. plan having to also it our change approach, virtual modern relationship robotic We digital level relationship more change a

medium projects term. a always and safe responsible the profitable value terms a in and thinking fashion, also for for of photovoltaic very projects long of close conservative analyze specifically also adding generation X and also are the gigawatts company portfolio these projects gigawatts. X plants, have in will Both in plants, the in and to that will terms solar be we fashion. a wind then of The and generate our a in we short have to value In investments, new over portfolio and analyzed company in

our portfolio. had shareholders. resilience in These being order process So projects New that in results. here Energies environment for the opportunities energy its and valued, this Light. is how There turn to in renewable of for stake the priorities our into a project maintaining to company And and have about to is finally, be and still and company. revision to divestments. talk boost has to and about is this sector for is These very targets few And to in you. future aim do commitment And years, to showing very needs order organizational develop challenges planning a our that results for but important this we that and we we of developed competitive electric with good in the efficient years company considering can called also we in more the to in were all our is the itself we're the We This has are our the strengths strategic culture it directed remaining the a the with to world company is prepare XX has when the improve contribute to a is and in and of divestment of Cemig it this are behaviors -- environment. Brazil bring we analyze believe optimistic this This a in also maintain the company to the that a everything age interested to is next allocate company need culture. administration's that to one over lot one. value our processes an slides and rightly to capital

Q&A start We will the now session.

Operator

is There a question [Operator from Instructions]. [indiscernible].

Unidentified Analyst

you dividend going paying about dividend’s what is policy? question and be when the are The to

Reynaldo Passanezi Filho

Ponte also Thank the you policy with to this is our balanced in our to payments. the position maintain right and investors, stated XX% we The of have that company going distributing to shareholders purpose also the concessions. right which the grant is those allows in question. plants, dividend remuneration investment of companies. company that now we is of considering And our have the and and program We payments believe the in important this liquidity your much very right we have will now allows company to have are Emborcação, Nova the maturity for it and last meeting the to have midterm, a large maintain

that But about we trying of is shareholders. But have now, So course, always XX% to if create value comfortable to and are want we additional have right we payment. policy right maintain reviewing leverage situation, and liquidity adequate. a better now And we think if a might dividends. believe this paying to we policy dividend we of situation our

Operator

[Operator Instructions]. we’ll for are the If there no floor management the to turn back remarks. further questions, final their

Antônio Carlos Vélez Braga

a planning on understanding and always the to results path future mentioned. our consistent and we that well. culture, is future thank that associated results chosen decision organizational process, have right Reynaldo It’s that conference and of this the teleconference favorable the showing you will part Very very help do and and for an last have the are these have much should very with strategic two one nice working And we is company you actually. the highlight We challenges. are the a along scenario, Ladies making have important of future gentlemen, we perspectives. prepare and much video Teleconference Thank for something – from – the past afternoon. sound subjects Really, which to will of rationale us I planning. that already. wanted and

Operator

and very Thank for good ended. much afternoon. participation, a has call your conference Cemig's you have

Companhia Energética de Minas Gerais (CIG) 17 Nov 202020 Q3 Earnings call transcript