Good morning, ladies and gentlemen. Welcome to Companhia Paranaense de Energia, Copel's video conference to discuss the earnings for the third quarter of 2026. This video conference is being recorded and will be available on the company's website at ri.copel.com. Presentation is also available for download. Please be advised that all participants will only be watching the video conference during the presentation, then we will begin the Q&A section when further instructions will be provided. Before proceeding, I would like to note that the forward-looking statements related to Copel's business perspectives, projections, and operational and financial targets are based on the beliefs and assumptions of Copel's management and on information currently available. These statements may involve risks, uncertainties, and assumptions as they relate to future events and therefore may differ materially from actual results.
This video conference will be presented by Mr. Daniel Slaviero, CEO of Copel, and Mr. Felipe Gutterres, CFO of Copel, as well as directors of the subsidiaries who will be available for the Q&A session. I would like to now turn the floor to the CEO, Daniel Slaviero, who will begin the presentation. Daniel, please, you may go ahead.
Good morning, everyone. I thank you all for attending our conference. It is a pleasure to share the results of this quarter, the third quarter of 2026. We have delivered another period of excellent operational and financial performance, a reflection of our discipline and capital allocation, and the execution of our strategic plan. Now moving to the main highlights of this quarter. Copel's performance reflects the soundness and resilience of our integrated business model. In operational terms, we posted a significant increase, above 42%, in hydroelectric generation compared to the same period of 2025, driven by the biggest rainfall in the south region, which also required special attention to the management of our reservoirs.
Distribution, that was a big highlight in this quarter. The billed grid market at Copel DisCo went up 5.8%, driven by the economic conditions of our state here in Paraná, which is positive, and higher temperatures. But on the other hand, in this segment, we also went through the severe events, effects caused by the El Niño, and we will talk more about this later, but also the benefits of our investments, especially in the last cycle in modernizing and automating our network, which allowed us to have more agility in restoring the structure and supplying power.
As for the financial results, recurring EBITDA was of BRL 1.8 billion, robust growth of 35% vis-à-vis the third quarter 2025. Net income was higher than BRL 670 million, a relevant increase compared to the same period of 2025. In addition, we have concluded the divestment of our stake at Dona Francisca, generating additional cash of BRL 151 million to the company. This transaction, just as happened with Baixo Iguaçu last year, illustrates one of Copel's main features. We are agnostic capital allocators focused on operations that generate value to the company. In terms of our financial leverage, we are very disciplined at 2.7 x, in line with the standards of our optimal capital structure, thus reinforcing the financial soundness of the company.
In terms of the awards, I would like to highlight three reasons of pride for us here at Copel. First is the ONS Award in Operational Quality. Copel was generated as the best generation and transmission company and the second-best hydroelectric power plant, which makes us very proud, and Rogério leading all of the Copelians of Copel GeT. We won for the second time as the best transmission company in AC transmission. For the fourth consecutive year, we were winners at the ANEFAC Awards for the transparency and excellence of our financial and accounting efforts. So congratulations to Felipe and all of the accounting and controlling team that has won this for the fourth consecutive year. In ESG, we were the highlight by B3's ESG 2026, included in the three major sustainability indices, ISE, the Carbon Index, and the Diversity Index, underscoring our leadership in sustainability and governance.
As I mentioned in the beginning, I think a big topic here for this industry this quarter were the impacts of El Niño and how Copel responded to those impacts in distribution, generation, transmission, and trading. Here, it's an unprecedented sequence of a series of extreme weather events in many regions in the state of Paraná. In the month of September alone, we had eight major storms and one tornado with winds faster than 125 km per hour. Everyone saw that in the media, not only here in the state, but in the South and Southeast, and that has been impacting the electricity sector. At Copel Distribution, our integrated contingency plan was agile and effective, with mobilizing a peak of more than 1,000 simultaneous employees, replacing more than 3,700 utility poles this quarter.
In a regular year, Copel usually replaces 5,500 poles, so more than 70% that amount in a single quarter. Another highlight is the more than 2 million intelligent meters, smart meters, who have been playing a very important role monitoring our network. Our objective is always to provide the best service to our customers, but we must recognize and pay our solidarity to the population who has been harshly impacted by the weather events and their more immediate consequences of energy or power outages. We are here to provide the best possible service to our clients in the state of Paraná. In generation and transmission, we operated safely and coordinated with the communities by the riversides, along with the ONS, to opening the floodgates at the reservoirs and the Iguaçu River bed.
In transmission, we restored five high-power towers that were affected by the storm without interruption in the energy flow in our network. In TradeCo, Felipe will talk more about this, and Rodolfo will be available at the Q&A as well, but our strategy of hedging and protecting our results worked perfectly well, very well coordinated. We made advanced sales for 2027 at the prices when they were at very attractive levels, hedging operations, making the most of windows that are favorable in the management of our portfolio before the drop in the spot price. When we saw the high rainfall and the price resilience in the medium and long term, we see a new level of the PLD or the spot price. Thus, our strategy for contracted and uncontracted energy being very effective and positive for the company.
I'd also like to highlight that we successfully neutralized the impact of the south submarket, making the most of the opportunities during the years, protecting our margins. That comes to reinforce the competitive advantage of being an integrated, resilient company with the best, most technically competent and management personnel. Here is the development of the works from the LRCAP, in sync of our third wave of transformation, expanding our assets with very strict financial discipline and execution capacity. The physical progress of the works at Foz do Areia and Segredo consolidates our traditional capacity to execute that Copel has been showing in the Brazilian electric sector and our investors. We are on time in the conclusion of works of the LRCAP, with all of the disciplines that this investment will bring to the company in the longer term.
At Foz do Areia this quarter, we've invested more than BRL 1.3 billion. The work schedule is in line with the business plan, as I mentioned, and our technical team has been overseeing production and suppliers on site, be it in Brazil or abroad. In Segredo, the total investment of BRL 3.6 billion in the period, Foz do Areia, BRL 1.3 billion for the 3.5 years of works, of construction. Digging works in Segredo continue going well in the adduction tunnel and within schedule. Both of these works remain focused on meeting the deadlines, the efficiency of costs, and the strict social environmental responsibility and committed to our value generation in the long term.
Before concluding my part and turning to Felipe for the financial highlights of the quarter, I would like to reinforce the invitation for the Copel Day next Thursday, November 19th, directly from NYSE, the New York Stock Exchange, whoever will be able to attend. If you're not able to go there, you may follow online. There will be an excellent opportunity for us to detail our long-term strategy, the growth agenda, and the value generation policy. We count on your presence either online or in person. We will be very happy to talk to you in the Q&A sessions and talk a little bit more about the future of our Copel. I turn the floor to Felipe, our CFO, to discuss the results of the period. Felipe, please.
Thank you, Daniel. Good morning, everyone. Moving on with the financial highlights, our consolidated recurring EBITDA reaching BRL 1.8 billion in the third quarter of 2026, significant growth of 35%, BRL 468.5 million additional compared to the same period of last year. This performance highlights the simplicity and predictability of our business model, Copel DisCo and Copel GeT, together added to BRL 1.8 billion, representing more than 99% of our consolidated EBITDA. Looking at the evolution per segment compared to the third quarter of 2025, the main driver was DisCo, with BRL 456.8 million higher, 70.2% higher, driven by the tariff adjustment and the increase in the billed market.
GeT contributed with 4.5%, BRL 32.6 million down due to the lower level of curtailment of wind generation and the transfers of the energy development account, CDE, in the RTA of 2026, seasonally affecting the transmission. That is due to the accumulated collection of charges in the cycle. In the following quarter, the following the ATA will turn this back to our consumers. This impact was offset due to the lower cost of energy purchase with a favorable hydro scenario. Commercialization, GenCo added [inaudible] due to the increase in the volume, BRL 36.4 million higher.
In the next slide, we talk about the DisCo. Recurring EBITDA of DisCo grew 70.2%, as I said, BRL 1.1 billion, and this significant growth is sustained by three essential factors: the reflection of the RTP approved in June 2026, with an average impact of 8.6% in the Part B, a significant portion of our asset base, a 5.8% increase in the billed grid market, totaling 8,810 GWh, due to the economic strength of the Paraná economy. Due to the Microsoft bug, we are having an issue here, sorry. The 5.8% increase in the billed grid market, totally 8,810 GWh that I mentioned.
Our continuous operational efficiency, although the recurring PMSO presented an increase of 8.3%, this was driven by the strategic reinforcement of 8.1% of our field operational teams to provide support of the severe weather events in the period, and the salary adjustment of the collective bargaining agreement of the 2025/ 2026 cycle, and the provisions of extraordinary positions for personnel, showing consistency in the manageable expenses, considering the increasing or significant growth of availability revenue. Going to GenCo, we had a recurring EBITDA of BRL 689 million in the quarter, down 4% since last year, as I mentioned.
The main challenges this period were the severe effect of the deviation in wind power generation, reducing the efficiency by BRL 43.6 million due to the increase in curtailment set forth by the ONS, which in the previous quarter, or last year, went from 34.1% to 42.3% in the third quarter of this year. It is worth noting that due to the contractual characteristics in our wind power auctions, this impacts the contracted revenue and not an exposure of energy purchase in the spot market, and that is the dynamic that led to the biggest impact in generation deviation in the period. Another factor was the reduction of BRL 32.7 million in ACL sales, in line with our commercial strategy, a temporary variation of BRL 21.8 million in transmission revenue, as I mentioned before.
These are the main effects of the CDE transfers, as I explained. On the other hand, we control this effect with the savings of BRL 42 million in electricity costs, benefiting from a very favorable hydro scenario in this quarter, with an average GSF of 77% compared to 65% 3Q 2025, and additional gains of BRL 17.5 million from MCP transactions with a capacity of hydro modulation, the hourly allocation. Now, on trading strategy, slide 12, our strategy remains a main driver of value and protection of Copel's results. Our commercial focus was targeted into intra-year management, locking attractive prices and making the most of opportunities to guarantee revenue predictability, considering the volatility of the spot price due to the El Niño.
A highlight was the sale of energy for the 2027/ 2028 period, reducing our hydropower capacity for 26% in 2027, 40% in 2028. Our analysis of proprietary energy and management of portfolio risk was validating. We launched the short-term products with the capturing sales price higher than the current values. With that, we fully liquidated our position that was still open for 2026 and successfully concluded our sales strategy for 2027 before the drop in prices. Our revenue from hydropower modulation reached BRL 44 million, and our delinquency in the free market is 0.01%, demonstrating the robustness of our credit granting criterion or strictness.
On slide 13, post-consolidated PMSO recurring PMSO charge, BRL 778.5 million in the third quarter, and this reflects the decision to strengthen the frontline of the company, focusing on personnel influenced by the collective bargaining agreement of 5.8% in the 2025/2026 period, and plan and incline an operational team in DisCo. We internalized the O&M activities of some of our wind activities. The prioritization of teams has an offset by improving the availability of assets. It is also important to note that discounting inflation, the actual growth of personnel was only 4%, even with the 8.1% increase of the teams. We also had a 25.7% increase in materials and O&M after the investigation of preventive maintenance, as well as reinforcing the capacity of the company to meet the occurrences related to the severe weather events during the third quarter.
On the other hand, we had the efficiency in this with a significant reduction in others of 31%, results of losses with deactivating assets at the distributor company. Our net income, recurring net income, grew significantly, almost 80%, reaching BRL 673 million in the quarter. This strong value generation was driven by the excellent consolidated operational performance, with an increase of close to BRL 468.5 million in EBITDA and an improvement of BRL 156 million in equity income, a direct reflection of the best performance of our affiliate transmission companies. These positive values exceeded consistently the increase in the BRL 115 million in the income tax collection, with a net financial impact of BRL 40.3 million due to the higher average balance of the debt in the period.
On slide 15, we detail our investment timeline in the third quarter. Consolidated CapEx totaled BRL 991 million, in line with the investments made in the previous quarter. The distribution of this allocation reflects a regulatory focus to expand capacity, estimating 57% of the total investment of BRL 560 million for DisCo, focusing on modernizing the networks, automating processes, and continuously improving the regulatory indicators, FEC and DEC. At generation transmission, we invested BRL 109 million, and this total BRL 165 million, more or less, were directly invested in the expansion of Foz do Areia and Segredo in the LRCAP level, and the BRL 7 million dedicated to improvements and structural reinforcements in our transmission grid.
To conclude the financial details on slide 16, we have the profile of our indebtedness, closing the quarter with an adjusted net debt of BRL 19.8 billion, 2.7 x net debt over EBITDA, maintaining an extremely comfortable level in line with our fluctuation band and below the center of our target of 2.9 x. Our debt remains very well-structured, indexed mostly to the CDI, 66%, IPCA, 31%. Our nominal cost of debt went down from 12.62% per year in September 2026 to 92.46% of the CDI, a consistent reduction of 60 basis points compared to the 13.22% in September of 2025. The average duration of the debt is 4.8 years, with the soundness of our balance sheet and the robustness required to meet our investment program. That concludes my presentation, opening the Q&A session. Thank you.
We will now begin the questions and answers session for investors and analysts. If you would like to ask any questions, please click raise hand. If your question is answered, you may leave the queue by clicking lower hand. First question, Ricardo Bello, Safra. Please, Ricardo, you may go ahead.
Good morning. Thank you for taking my questions. I have two. First, I'd like to understand more about your expectations on the battery auction next month and how you see the discussion about the production of the charges. Now with this scenario, and my second question, with this tighter interest scenario, what's your mindset in terms of investments and the expenses already contracted in the LRCAP level and others that you may do in distribution as well?
Hello, Ricardo. Let me break down your question. The first part about the battery auction, what we're seeing is still that it's very undefined of who's going to pay for that, how this is going to be split. On ANEEL's opinion, this was kind of left open. This is a discussion that's still going to take some time, and this has been bringing some uncertainty to the auction overall. But on Copel's view, we deep-dived into the details of the auction, and we do not see competitive advantages for us. The expectation is that it's going to be very tight competition due to the number of projects that applied, the dynamics of the auction, and the size that's going to be defined. But in our view, the return rates would be below what we consider a minimum profitability, so that's already settled.
Copel is not going to participate in the battery auction on December 2nd and 4th. Felipe, about the interest impact in our CapEx?
Generally speaking, all the pluriannual program is maintained, program of investments. Our interest in any other investment project considers our investment framework that you know, where these investments must address our minimum rate of return with a more adverse event or scenario, it's always considered. But our overall view is on the long term, and we have to consider within our perspective to make this decision in a longer scenario.
Adding to that, right, Felipe, I think our CapEx plan, as you said, and distribution with a robust plan, we'll bring more details next week on the Copel Day about GenCo and the LRCAP, whereas it's maintained because they have excellent returns for the company, even in an environment with more adverse interest rates. Now, in terms of analyzing other inorganic opportunities, Copel does not have anything hot in the pipeline yet at this time, but we expect that the company is getting more and more selective and disciplined in this analysis because the environment is more excessive and more complex for this analysis, considering the size and duration of the new interest rate perspective. So we reinforce that, just concluding, Ricardo, everything that I mentioned on item one, this underscores what I talked about Dona Francisca and the characteristics of Baixo Iguaçu.
Copel is extremely disciplined when analyzing its investments, and investments with low return rates don't make sense. I'm sorry, his audio is muted. So they don't make sense for us, including those that were not going to meet our minimum return rates.
Excellent, thank you.
We have a question here, whether we can talk about the capital structure for the LRCAP, and what are the rates that we're seeing in the market?
We've been discussing a financing structure that's already at advanced stages, where we combine financing more focused on infrastructure at an interest condition along with the BNDES, as well as a design that adds to the structure and issuance of infrastructure debentures. We are seeing interesting rates. Obviously, here is a long-term financing where we access these rates better. Here, we should see from this financing study, we should see good conditions to add to the LRCAP projects return.
Our next question, Guilherme Bosso, Goldman Sachs. Please, Guilherme, you may go ahead.
Good morning, Daniel, Felipe, Copel team. Congratulations on the results. I have a question in line with what Ricardo asked. What's your mindset now for the capital allocation in this macro context being more challenging? Could this imply somehow in the review of the optimum leverage structure if it remains adequate to the company? What are the main projects the company is studying today? Also, in this context of a deteriorated FX scenario, will that impact somehow CapEx and FTA in Segredo, or are they already hedged? Thank you.
Guilherme, I think in terms of your question and the strategy, the long-term views, and so on, we'll get into more details at our Copel Day. I reinforce the invitation to all of you. We'll talk about this on Thursday in more detail. But our view is very strong that this is a company as integrated as ours, with the possibilities for growth that we have, the LRCAP, the reversible. We have a very relevant opportunity here for growth. Felipe, now about Guilherme's question on foreign exchange and its impact on the LRCAP CapEx.
Starting with the capital structure and the impact on the capital structure, note that all of the stochastic analysis of the optimum capital structure considers a series of scenarios of critical variables, and one of the most relevant ones is interest rates. Higher interest rates for longer is a scenario that the company has run when we redefined the standards of the optimum capital structure. So, it should not see any change due to this short-term scenario of the What I mean is the scenario that we see now in the interest rates. On the other hand, this increases the process that we do very strongly, the discipline in the analysis of investments and capital allocation within the optimum capital structure and the different bands and how we use each of these bands to also exercise the optionality. So the standards here remain full.
As for the CapEx, our contractual negotiations with suppliers create a hedging structure for the imported part. So, yes, these fluctuations always bring an impact for the chain, but in our case, we have contracts with this provision about the prices. It's all hedged.
Excellent. Thank you.
Once again, in order to ask a question, click on the raise hand button. If your question is answered, you may remove it from the queue by clicking lower hand. Our next question, Fillipe Andrade, Itaú BBA. Please, Fillipe, you may go ahead.
Good morning, Daniel, Felipe, Copel team. Thank you for taking my question. I would like to hear from you about two topics. First, the energy trading strategy. We see accelerated sales in the medium term, and you recently talked about the adjustment to that exposure to the sub-market of a part of the portfolio. Just to confirm, if you have addressed this exposure fully for 2027. The second question, we saw now in the second half of this year, the MME about the expectation of reserve capacity auction next year and maybe a contraction of reversible energy next year. Considering the company has been leading the discussion in this front, do you have any visibility in the discussions you have been having with the ministry of how this product could potentially be offered in the auction?
Would it be a dynamic similar to what we see currently for fixed revenue? Do you believe this format will be different? Thank you.
Great, Fillipe. Rodolfo, please.
Good morning, Fillipe. Focusing a little bit more in sub-markets on the strategy, answering your question, part has already been mitigated, a large portion, but we understand that the best movement for this type of hedging, swapping sub-market, is when the price is not stressed. Considering the rainfall we have been seeing in recent months, this window has been opening. We are making use of that to do a lot of our exposure. For 2027, we are at a very comfortable position in terms of sub-market as well.
Also to reinforce, Rodolfo, I think this is the efficiency you and your team and the pricing team has been reinforcing the strategy and being able to act ahead of time, considering the market movements, but always maintaining our tradition of the hedge, a relevant natural hedge so that we are not short. In the third quarter, when there is higher GSF variations, we may liquidate, and that is part of our strategy. With a good volume of contracted, especially for 2029, 2030, you can follow our energy balance more than 50% and uncontracted energy as well. That is part of a main lever of value for us here, Fillipe. As for the reversible ones, also allow myself to invite you again, you as well, you will be there with us at Copel Day next week.
This is one of the main topics, our vision on the reversibles, the amount of projects we are going to have available, registered, the model of the auction that we are seeing. There is some information. Most of the information is not available yet, but this is actually a theme that I invite all of you to watch on Copel Day next week, on the 19th.
Excellent. Thank you.
Thank you, Fillipe.
Once again, in order to ask a question, simply click raise hand. If your question is answered, you may remove it from the queue by clicking lower hand. Please hold as we collect more questions.
There is no further questions. Just a final comment here, Rogério, about the work timeline, LRCAP, how is it going? Anything to add?
Good morning. The execution of the works related to the LRCAP is 100% within schedule and within costs, moving along very well. The fact that we already got the licensing and the contracts prepared allowed us to be very agile. The rotors at Foz do Areia of machines five and six are pretty much ready. I had the chance to see the parts already ready outside of the country, so they are going to be shipped to the country. There are parts already going down in Foz do Areia. The first electromechanical assembly started in Foz do Areia of generator five, moving along very well, digging the tunnels.
There have been of 132 m, we already digged 84 m. It is going very well. Local workforce, we have been able to find the majority locally, which was great news both for us and the regional towns. It is moving along very well, Daniel. We are very excited and happy with the progress of the works.
Excellent. As very quickly, objectively, a distribution company, a main highlight of this quarter, and fighting the effects of El Niño.
Yes, Daniel, just highlighting our contingency plans. Our preparedness plan for this period is being proven very well. We have the reinforcement adjustments in teams and the preparedness for addressing these aspects. So our expectation is to be able to meet regulatory standards, meeting all the regulator standards. Financial terms, the results show soundness that is a lot due to the tariff cycle. Again, highlighting that it is very challenging to deal with the super El Niño, and it is expected to continue until mid-February, but we will continue to work relentlessly to provide good services to our customers, which is the goal of any company.
To conclude, I would like to highlight that the quarter reinforces another feature that Copel has. It is a predictable company. It is a company that is consistent, disciplined, seeking to deliver sound results quarter after quarter, seeking more and more to serve our customers better and better in this environment. I would like to thank you all for your participation and highlights, and greet all my Copelian colleagues for the awards and recognitions we received this quarter, reinforcing our commitment to discipline and capital allocation, generation of value to our shareholders, to the company, and provision of excellent services to our customers. Thank you very much. Have a great day.