Good afternoon, everyone. I am Carolina Senna, Cemig's Investor Relations Superintendent. Welcome to Cemig's First Quarter 2026 Earnings Video Conference Call. Please note that this video conference is being recorded, and it will be available on the company's IR website at ri.cemig.com.br, where you will also find the company's presentation. Before turning to the results presentation, we would like to inform you that the appointment of Alexandre Ramos Peixoto as the new CEO of Cemig has been approved as of yesterday. Alexandre Ramos Peixoto replaces Reynaldo Passanezi, to whom the company recognizes and expresses its gratitude for the work carried out. Under his management, Cemig conducted a consistent financial recovery process, resumed investment levels and developed a strategic plan worth approximately BRL 70 billion through 2030. During this period, the company has strengthened its infrastructure, expanded the number of substations, modernized the grid and eliminated historical bottlenecks. Under his management, Cemig resumed sustainable growth and achieved the highest market value in its history, increasing it from BRL 8 billion to BRL 45 billion. His departure stems from the term limit restriction provided for the state-owned enterprises law 13,303/2016. It is precisely to give continuity to this trajectory that Alexandre Ramos Peixoto comes in, a career employee of the company with solid experience in the Brazilian electric sector. He's an engineer by training. He holds a degree in quality engineering and management from PUC, and a degree in management and strategic planning from the Federal University of Minas Gerais, in addition to an MBA in generation and sector planning. Throughout his career, he has worked at ANEEL, the Ministry of Mines and Energy (MME) and EPE, and at Cemig itself he served as Regulatory and Institutional Relations Officer. Since May 2023, he has chaired the Board of Directors of CCEE. So now we will start the conference. And with us, we will have: Andrea Marques de Almeida, CFO and IR Officer; Luis Claudio Correa Villani, Chief Information Technology Officer; Marco da Camino Ancona Lopez Soligo, Chief Generation and Transmission Officer; Marney Tadeu Antunes, Chief Distribution Officer; Iuri Araujo de Mendonca, Cemig SIM CEO; and Marcus Vinicius de Castro Lobato, Trading and Planning Superintendent. For the initial remarks, we would like to bring to the floor Andrea Marques de Almeida. She is going to be making the presentation.
Good morning, and good afternoon to all of you. It's a pleasure to be here again to bring you the results for Cemig, and we are very proud of that. We always start talking about the quarterly highlights. Cemig has the benefit of being a diversified company which is maintaining its results consistently. These are the operating results. And this quarter, it is just like the others. Of course, we reached results of BRL 1.79 billion in EBITDA and BRL 979 million in profit. And I usually say that we have to balance out all the plates here, and we have worked on our investment plan here of BRL 1.48 billion. We also have shareholders' remuneration, another important topic of our strategy, BRL 658 million. And we had small acquisitions, PCH Pipoca and Timóteo and Mesquita that we acquired in the quarter. And also, we talked about this at the end of the year about the post-employment agreement and all the impacts that we reported at the time. But this is an agreement that in fact is going to allow us to have effects over time. And we can already see a reduction in our expenses in the amount of BRL 80 million, and that's an important highlight as well. Now we have a snapshot of the quarter. The total of BRL 1.48 billion is in the main areas here. And distribution is always carrying the highest representativeness of our investments with BRL 1.28 billion. For distribution, we have the Mais Energia phase. We are delivering 6 new substations and 1 substation that was modernized in the Mais Energia program. And also, 765,000 kilometers of low and medium voltage networks. In transmission, we usually grow in reinforcements and improvements, and it was just like that. We have investments in the quarter, BRL 103 million, which added in terms of RAP, the annual permitted revenue, and that was positive for our cash generation portfolio. For generation, I think we have a lower amount. Gasmig is still moving on with its project, and the Midwest is the most relevant one, and Cemig SIM. Here, we start seeing that in our chart as a relevant investment with 7 new solar photovoltaic plants and added 19 megawatts of capacity to our portfolio. The quarter results are in line with the results of last year, considering that the highlights of the distributing company, the positive highlight here is that we effectively had in May the rebuilding of Parcel B, which was 7.78%. So comparing quarter to quarter, this is the main impact in the distributing company, and we also had an increase in residential consumption, which is positive. And in terms of challenges also known already by the market, we had the effect of price that starting 2025, energy prices are more volatile. And as you know, we have positions that need to be closed over time. And with the higher prices, the positions closing ended up causing negative results in the trading company and the generating company. Also, the main effect was GSF. And if we compare year against year, we had 0.92 in the first quarter of 2026. And the purchase of energy to tackle the hydrological risk allowed us to have an impact in the EBITDA of BRL 49 million. Now we go into the details of what I just mentioned. We have the level of prices. And clearly, we can see the change in the price volatility that started at the beginning of 2025. We started from January to March of 2025, the prices were around BRL 59 per megawatt, and then they went up. Last year, we also had a GSF close to 1, which is no longer the reality in 2026, when we have a lower GSF and the price is much higher. So we reached levels of BRL 382 per megawatt, impacting the management of the hydrological risk. That's an impact of BRL 49 million. Now turning into a zoom to our cost and expenses. The main item has been—and in the other quarters also it was the same—so it is a recurrence: third-party services. This quarter, maybe we had higher expenses in preventive maintenance as well as corrective maintenance. And obviously, we have the right-of-way clearing. And all of these services are in order to deliver a better quality of services to our clients. So they come with all the investments that we are making on the distribution branches. So this is to provide better services to our clients, and we'll go over that when we discuss our DEC and other expenses. Also with this large investment program, we have decommissionings. And we had a disposal of asset which has been part of our management. We are disposing of assets that in the past had some use for Cemig, but no longer have. Now talking about the impact already, the post-employment restructuring that we had up to December of last year. We see that if we compare that growth, including the post-employment effect, the growth has been 2.5% quarter-on-quarter. We will also be discussing how this increase can be seen in regards to the network kilometers, substations, which is also important for the distribution company. Now we talk about our debt profile and all the work that we have been doing to match the profile of the debt with the profile of our investments. We know that we have 5 years of investments in the distribution company up to the tariff review that's going to happen in 2028. That's why we are increasing to extend our debt. And so we reached 6.6 years of average maturity. And also important is that 76%, that is, the bulk of our debt is due after the tariff review rebuilding in 2028. So that profile has been extended so that it also matches with the recovery time of the tariffs that we'll have in the future. The last funding that we had in the quarter was a debenture combined with a loan of BRL 4.131 billion. And the last issuances have been made at rates lower than sovereign risk, and we were able to include BRL 2.6 billion to the distribution company in this quarter. We reached leverage of 2.45x net debt over recurring EBITDA, very healthy. And this leverage debt also includes the financing of the investment program, but this leverage is always going to be at very healthy levels for the whole program that, of course, will peak in 2028 when we are going to have that tariff review. And that cost also is very reasonable. It's 89% of the CDI. Of course, interest rates are high for everyone, but this is a cost that's very positive for the company. Now going over operating cash generation and how it has been used over the quarter. We start on the EBITDA of BRL 1.79 billion, and we discount the noncash effect, we reach the adjusted EBITDA of BRL 1.6 billion. We have the effect of the CVA Portion A variation account, which has had a relevant impact because of the higher price. The distribution company has a cash impact that is going to be recovered next year, dividends received, the working capital with a positive effect. And then you reach the operating cash flow of BRL 1.5 billion and how we have used it over the quarter. Income tax, social contribution, interest, leases and our investments, which is the most representative share here of BRL 1.6 billion. So the cash delta was negative, and we showed that and the cash availability that we have from one quarter to another. Now going into the details of these companies. As we said, Cemig D had a representative performance in EBITDA, an increase of 26.6%, reaching BRL 1.010 billion of EBITDA in the quarter, especially because of the effect I already mentioned of that adjustment of 7.78%. And also, we had an increase in the residential market. This is nice. It is representative, significant for us. As we know, residential tariffs are higher, so that has a good impact in our revenue. Now here, we have our energy market. So we have been saying that in the past quarters that there is a migration in the case of the transported energy from free clients to the basic network. We will no longer see this drop effect. After the second or third quarter, we will no longer be seeing this effect because it will then have been integrated in the quarter, but we do see that reduction. And we also talked about the positive effect that we had in the residential area. But we did have a period with a lot of rainfall and milder temperatures, and we see rural with a significant drop especially because of the rainfall period. And we still see the effect of DG, distributed generation, impacting Minas Gerais. And a piece of information is that DG represents 26%, and the captive market is very representative in our region. Regarding operating efficiency for Cemig D, we have already mentioned, I believe that the main effects have already been offset. We are working on an efficient management, and we have been working on the management of right-of-way cleaning and everything that we need to do to provide a better service to clients, and we are under the regulatory limits, as we should. Now for operating efficiency, our indicators for Cemig D are within the regulatory indicators for losses. Here, you have the losses indicator. For our spot price, we did have a change in criteria in 2025. We went from 24 to 35 months, and that's why we had a positive effect. And over the period, it balances out. So this was just because of a changing criteria, but we see that our delinquency is very low. We have positive indicators. And here, we are very proud to bring these results. Our DEC of 8.75, the best one in our history. And also FEC, that has a positive performance, bringing better services and better conditions to our clients. For Cemig GT, as I mentioned, and it's important to stress, Cemig GT today obviously has generation and transmission. And it also has a share of the contracts coming from the trading company. So the main facts, and I already mentioned, but the main one here is the management of hydrological risk. But when we break it down by business for generation, in fact, here, we had that hydrological risk and energy purchase at a much higher price. And in transmission, we had a lower IPCA. And we know that our contract asset is remunerated by IPCA or inflation, and that's the impact in the transmission company. Now turning to the trading area. Here, we see the main challenge in the quarter. And the main impact has been the closing of positions. And that was because we did not fulfill contracts that were not delivering P90 and some contracts that we are able to recover part of this amount at the end of the year because some of the positions have been sold and also because of some credit events, and I believe the whole market is seeing that. But the main effect here, yes, is really price. Cemig SIM is adding capacity to its portfolio, and it did have a significant increase in recurring EBITDA of around 100%. That's very nice to see Cemig SIM's growth and the addition of new operations that will be bringing more energy to our portfolio. And Gasmig this quarter also posted this effect. As clients migrate to the free market, this margin is reduced, and that is the main effect that we see in Gasmig. We will be seeing that happening over time because there is a migration of clients to the free market. And now we end the presentation, very proudly honoring our electricians. They are the heart of Cemig. We do exist because of them. They represent us, and they were the winners of the Rodeo champion team in Costa Rica. We went there for the competition. We did compete, we were the winners and we did not have any safety failure. And this is the main message. We want to be efficient, we want to provide the best services to our clients, but we also want to deliver service in a safe way. So a special congratulations to our champions because they move Cemig's energy. So thank you all very much. And now we will open the floor for the Q&A session.
Our first question is from Andre Sampaio, sell-side from Santander Bank. I'm going to read his question. Andre's question is: I would like to understand how the discussion on the plant's renewal is going? I will turn that question to Marco da Camino Lopez.
Hello, Andre. Thank you very much for your question. And this discussion about the concessions renewal for São Carvalho, Emborcação and Nova Ponte is going well. We have great contact and interaction with the Ministry of Energy and ANEEL, and we expect to renew these concessions in the next few months before they are due.
Okay. Still a question to Marco Soligo. So the question is for Marco and Marcus Vinicius: How can we reduce hydrological risk with alternative energy so that we can address these efficiencies?
Good afternoon. Thank you very much for your question. Well, to reduce hydrological risks, if we diversify our portfolio, we are able to avoid the dependency on a single source of generation. So our portfolio is already designed like that. We have our hydro plants, but also we have wind and solar components. So we do have the GSF impact, but we believe that this is at a lower proportion than if we had everything concentrated on hydro plants. The other way of managing that is really to contract ahead of time, and we are paying attention to that. There was a reduction of GSF at the beginning of the year. The second half of the year could be more concerning and GSF could be at a lower level, but we already have an adequate reserve for that to avoid significant impacts over the year.
Thank you very much, Marcus Vinicius. I have two questions to our CFO and IR Officer, Andrea Almeida. The first question is: what can we expect from the next tariff review in 2028? And the second question is related to the increase of the debt vis-à-vis the investments, considering that we have double-digit interest rates?
Well, talking about the tariff review, obviously, we are making the most affecting investments according to our plans in the distribution company. And we are sure that these investments will be well acknowledged in our tariff review. And of course, we will know that in the future, but we take into consideration the increase of the asset base, the depreciation, and we will see the impact of the rebuilding of the EBITDA based on what we will see in the five years. Maybe we will have BRL 22 billion. So considering these investments, we will have a rebuilding of the base. We reduce depreciation, and then we will get to a variation that's going to change the level of the EBITDA in 2028. We are very optimistic about the recognition of this investment because we are very cautious in our investments. Now moving to the other question on leverage. Cemig finds itself at a very healthy leverage stage. And we do believe that over the investment program, leverage tends to grow so that we can carry out the investment program of BRL 44 billion in the next five years. Leverage tends to increase up to 2028 when it's going to come down, of course, with the tariff review of the distribution company. So always considering very healthy levels. And so much so that we got another AAA. So now we have two AAA ratings by Fitch and Moody's, proving that Cemig's credit quality is very positive. So yes, we have high interest rates right now in the country, but we do have a return on our investments that is higher than the cost — and that's why we are focusing investments, especially in the regulated sectors of distribution and transmission. And yes, we do believe that these investments generate value for shareholders, and this leverage is at a level that is very comfortable for the company.
Thank you, Andrea. Our next questions are for Marcus Vinicius. First, from Ricardo Bello from Safra. He would like to understand which are the possible impacts with the change of the risk parameters of CFR in the price curve. Is that already impacting you at the trading level?
Thank you for your question. We are following up this discussion. We did have a public hearing, and the SMA is going to discuss the change of these parameters for next year. There is an initial assessment of maintaining them. But we have seen that in the public hearing, a lot of contributions arose considering a possibility to reduce the levels of CFR. Considering that we already have a more controlled situation and simulations show that it is possible to have the right protection at a lower price, so we would not be as risk averse. So if that changes, of course, we are going to see a price impact, and prices could be lower. And that would be beneficial for our position because we still have open positions. We have long positions for 2027 and 2028, which are the closure years and the ones that will be more affected by the spot price if that happens. And we are observing this movement as it might be interesting for us to start closing these positions.
Thank you, Marcus. Next question is for you again from Rafael Cohiya. He would like us to talk more about the strategy of the company's trading branch, considering that for 2026 we have a challenging GSF, and what are going to be the impacts in the market?
Thank you. 2026 is a challenging year for us. And we did discuss that in our Cemig Day because we did have a development of our margins in 2026 that would be the lower margin of our history. And it's going to recover in the future. But in 2026, because of the history of prices in the market, we contracted ahead of time. And we know that we had a decrease in the contracted margins and the contracts had a reduced margin. In addition to that, we have short-term elements that could reduce results: differences in submarket prices that are high in the beginning of the year; we expect them to drop for the rest of the year, but that's an impact; also reduction in some contracts. So there are factors that could turn this year into a more challenging one. But our vision is that in the future, these impacts will come down because of the systemic progress. And our margin, because of the market prices, is also going to evolve. Regarding hydrological risk, once again, we had in the first quarter a realization that was lower than the expectation. So the challenging situation usually comes in the second quarter. We believe that's going to happen according to what we are planning in a way that in the second half of the year, that's not going to be an impact as we had in the first quarter.
Thank you, Marcus. Another question now coming from João Fagundes from Banco Bradesco. Can you tell us how is the seasonal profile of our plants, is it like MREs? And what is our view on the risk parameters? You already talked about this, right?
Well, our seasonality is very close to MRE. We did have a small difference in January. Maybe we suffered this effect a little bit more because it's compensated in the rest of the year, but it is very close. And about CFR, as I mentioned, there is a perception you can see because of the contributions from the public hearing. We see that there is room for reduction. We had 45 contributions, and two-thirds of them were in favor of parameters that are less averse to risk. So we might have a review, and by having a review, we will see this beneficial effect when closing positions, as I mentioned.
Thank you, Marcus Vinicius. And we thank you all very much for your participation. The IR superintendents are available for any other questions you might have. So we end the videoconference for the earnings of the first quarter of 2026 for Cemig. Have a nice afternoon.