Good morning, everyone, and thank you for waiting. Welcome to the conference call to announce the results of the third quarter of 2024 of ISA CTEEP. For those who need, we have simultaneous interpretation available on our platform. To access it, just click on the interpretation button in the globe icon at the bottom of your Zoom screen and choose your preferred language, Portuguese or English. For those listening to the conference in English, you can mute the original audio in Portuguese by clicking on "Mute Original Audio" in your Zoom screen. This conference call is being recorded and will be available at the company's investor relations website at www.isacteep.com.br/ri, where you can find all the materials for our release. You can download the presentation from the chat icon in English too. During the company's presentation, all participants will be in listen-only mode.
Then we're going to start a questions and answers session. After the company's presentation, we're going to have a questions and answers session. Questions should be sent through the Q&A icon at the bottom of your screen. Please identify yourself when you send your question, which will be read out loud by the operator. Statements made in this conference call about ISA CTEEP's business prospects, projections, and growth potential are mere assumptions based on the expectations of the company's management for the future of the company. Such expectations are highly dependent on market changes, overall economic performance of the country, industry, and international markets, and therefore are subject to change. Forward-looking statements are not a guarantee of performance because they involve risks, uncertainties, and assumptions, because they refer to future events and therefore depend on circumstances that may or may not occur.
Investors should understand that general economic scenario, market conditions, and other operational factors may affect the future performance of ISA CTEEP and may lead to results that will be materially different from those expressed in such forward-looking statements. Today, with us, we have the executive officers of the company, Rui Chammas, CEO of ISA CTEEP, together with Silvia Diniz Wada, IRO. We also have all the other executive officers of the company. Now, I'll give the floor to Mr. Rui Chammas. Please, you may start.
Good morning. Thank you for attending the conference call of ISA CTEEP to announce the third quarter of 2024. I'm Rui Chammas, CEO of the company, and today we have our executive officers so that together we may present the results published yesterday and provide an update on the main topics of ISA CTEEP. Please, let's go to slide number three. We'll end the first nine months of 2024 reaffirming our strategy of creating sustainable value based on three pillars that in balance guide the decisions of the company's management. Thus, we generate sustainable value for our shareholders, being recognized as good payers of dividends or profits, while ensuring corporate longevity by investing in our assets, such as in projects that we own in auctions, and creating positive social and environmental impacts by playing a key role in the energy transition, connecting the generation of energy from renewable sources to energy-consuming centers.
Now, I'd like to address a few highlights of the quarter before we delve into the economic and financial results. I highlight the completion of the tariff review process of our concession in São Paulo, the Contract 059 that was renewed in July, and among other positive points, we remained as a cost reference, incorporated the incremental asset base for the enforcement and improvement projects with efficiency in terms of the price database. As you could see in July, Eletrobras sold BRL 93 million preferred shares issued by ISA CTEEP in a public offering, also known as a follow-on. With this move, it reduced its stake in the company and now holds 29% of the preferred shares and 22% of the company's total capital. I would like to reinforce that this corporate move does not impact our governance, neither our corporate strategy.
We continue to advance in our investment agenda with emphasis on the evolution of CapEX in reinforcements and improvement projects and greenfield projects like Piraquê, Minuano, and Riacho Grande, which are under construction and have received investments amounting to BRL 400 million this quarter. And the financial highlights. I share with you the company's net revenue, which grew 8% in the quarter while EBITDA grew 9% in the quarter, 19% in year to date. Net income for the quarter went down by 9%, impacted by the temporary effect of the periodical tariff review. Even so, the year to date net income grew 22%. These results will be further addressed by our CFO later on. As I mentioned in the beginning, we also continue to invest at a fast pace with a total CapEX of BRL 868 million in the quarter, a growth of 64% compared to the last period.
Now, on slide number four, so I will start talking about reinforcement and improvement projects. We received accumulated investment of BRL 960 million this September, a growth of 22.4%. In this period, we energized 56 projects that had a CapEX corresponding to BRL 477 million. It's worth remembering that our investment portfolio has about 5 million authorizations for projects to be carried out between 2024 and 2028 in reinforcements and improvements. As you can see in the graph on the left, the volume investment in these projects has grown. It's worth reinforcing that demands for investment and reinforcements and improvements are concentrated in renewed contracts, such as our São Paulo concession contract 059.
These projects increase the safety and reliability of the network while reducing the risks of equipment failures and maintenance costs and update our grid, which is fundamental for us to provide good quality services to our area, in addition to adding our RAP, an amount that varies between 12%-17% of the investment made. Investments in greenfield projects to ensure the company's longevity with real average shareholder return rates of double digits are represented in the chart on the right. The amount invested grew again with the progress of the constructions of Piraquê, Minuano, and Riacho Grande projects. Our portfolio also has seven projects under construction and BRL 10 million to be realized. When energized, these projects will enable BRL 1 billion additional annual revenue. Now, I would like to give the floor to our CFO, Silvia Diniz Wada, who will give you details about our financial performance in Q3 2024.
Silvia, please.
Thank you, Rui. Good morning, everyone. Before talking about the financial results of the quarter, I would like to address the periodic tariff review on slide number five. As Rui said, the periodic tariff review was a positive milestone by ratifying the value generation of the investments made under contract 055, which contains the transmission assets in the state of São Paulo. Among other parameters, the RTP involves the updating of prices and reappraisal of energized reinforcements and improvements in the last five-year cycle according to updated prices. Thus, in the RTP, assets are booked in the regulatory compensation base with the value of their reevaluation, with revenue adjusted.
That said, the highlight of this RTP was the reevaluation of investments made in reinforcements and improvements between 2018 and 2022 in the incremental asset base whose value recognized based on the updated price database was 89% higher than historical numbers. Thus, during this period, we energized projects with investments amounting to BRL 1.3 billion , which were reevaluated to BRL 2.4 billion. These projects generate an annual revenue of BRL 369 million . As a result, our net regulatory compensation base grew 2% compared to the last RTP and reached BRL 6.6 billion . We remain as a benchmark in efficiency in operating and maintenance costs, and we are going to receive an 8% premium on our costs until the next RTP.
In addition to the highlights that I mentioned, the RTP also brought an adjustment already expected, which reduced our revenue due to the movement in the Basic Grid of the existing system, reducing BRL 349 million from the RAP for the economic component of the RBSE. On the right side, you can view the time effects of our RTP on this quarter. Here are the three most relevant impacts. The first impact was the booking of all adjustment installments defined in the periodical tariff review, increasing the quarter's revenue by BRL 86 million . The table on the right-hand side shows the cash flow of these with the installments referring to the postponement being received in 12 months, and the installments referring to the retroactive periods will be received in 48 months.
The reevaluation of the investment I just mentioned, in addition to recognizing the efficiency of 89% on the price bank, resulted in two other non-cash retroactive effects with a negative impact in the results quarter, increasing depreciation of these assets between 2018 and 2022, amounting to BRL 87 million , increasing the value of the assets written off in a period amounting to BRL 15 million . In this manner, the non-recurring effects of the RTP had a positive impact in EBITDA of BRL 71 million and a negative impact in our net income of BRL 11 million. Now, on the next slide. The company's net revenue grew by 8% in Q3 to BRL 1.2 billion . In the first nine months of 2024, this growth was even greater, up 18% to BRL 3.4 billion .
This performance was driven by several factors, most notably the incorporation of the effects of the RTP contract as of July, with an increase in the net regulatory asset base and full recognition of its adjustment portions, cycle readjustment with correction by the IPCA index, receiving the allowed annual revenue for large reinforcements and improvements energized in the 2023-2024 cycle, and small reinforcements and improvements energized between 2018 and 2022, recognized in the periodical tariff review, startup of the greenfield projects, Itaúnas, which received 100% of its RAP in November 2023, and Triângulo Mineiro in August 2023. I would also point out that the RBSE RAP for contract 059 grew by 23.4% for the 2024-2025 cycle. In Q3, net revenue, considering consolidated plus non-consolidated subsidiaries, grew by BRL 97 million, or 7.7% compared to the same period last year, a total of around BRL 1.4 billion.
The growth in net revenue from non-consolidated projects was favored not only by the effects of updating RAP by the IPCA index for the 2024-2025 cycle, but also by the startup of reinforcement projects in Garanhuns in Q4 2023 and enabling 100% of Ivaí's RAP after obtaining the delivery and acceptance terms in Q1. We can move to slide seven, please. In addition to the growth seen in revenue, consolidated EBITDA also benefited from the sale of a plot of land in Jundiaí in the state of São Paulo to the amount of BRL 20 million. We will continue to map opportunities for new real estate businesses as a way of generating value. Personnel, materials, and services costs grew, mainly keeping up with the company's growth, with an increase in the workforce and an annual payroll readjustment in Q3 due to a collective bargaining agreement.
These increases were partially offset by more hours capitalized in reinforcement and improvement projects. As a result, the company's consolidated EBITDA grew by 9.4% in Q3, totaling BRL 959 million, with a 1.1 percentage point increase in margin to 81.3%. EBITDA for non-consolidated subsidiaries also grew, rising 6.3% to BRL 163 million in the quarter, with Ivaí and Garanhuns standing out. In the first nine months of 2024, consolidated EBITDA grew 19.3% versus the first nine months of 2023. The EBITDA of non-consolidated subsidiaries increased by 9.5% in the same period. Next slide, please. I would like to highlight the 21.6% growth in net profit net income accumulated up to September, a result of BRL 225 million higher than what was recorded in the first nine months of 2023.
In addition to the operating results presented and the non-recurring effects, mostly non-cash, related to the RTP, the company's net income for the third quarter was impacted by an increase in financial expenses due to a higher gross debt position to cope with the contracted growth. As a result, net profit for Q3 was BRL 431.6 million. The next slide shows the company's debt position as of September 30, 2024. We ended Q3 with a gross debt of BRL 11.5 billion and net debt of BRL 9.5 billion. This increase since December 31, 2023, can be explained by new funding to cover the company's investments, such as the 15th and 16th debenture issues carried out in the first half of the year, which totaled BRL 2.8 billion. As a result, the company's leverage ratio, measured by the net debt to EBITDA ratio, ended this period at 2.49 times.
I would also like to point out that we have just carried out the 17th issue of debentures to the amount of BRL 1.8 billion in two series. The first, BRL 1.05 billion, has a term of 12 years and a cost of 6.71%, the same cost as NTN-B 2040. The second series was BRL 750 million, with a term of 15 years and a cost of 6.6%, 10 basis points below the sovereign cost. The first series of this issue has an innovative feature with interest payments only in the 11th and 12th year, together with the amortization of the main debt, instead of paying interest every six months, as is the case with the second series. The average nominal cost of our debt is currently 10.79%, down from 11.06% in December 2023. This is equivalent to the IPCA cost plus 6.28% per year.
In July, Fitch reaffirmed our corporate rating at AAA on a local scale with a stable outlook, highlighting the predictability and security of our cash generation with revenue protected against inflation. I would like to stress that we continue to maintain a balance between sustainable growth, financial discipline, and distribution of earnings so that we can grow responsibly and profitably with good access to capital and maintain our practice of distributing at least 75% of the regulatory net income. Next slide, please. I'd like to take a look at the performance of our role in the capital market, and I'll start with ADTV, which is the average daily trading volume, where we've seen significant growth over the last few years, practically doubling from BRL 37 million in 2021 to BRL 74 million in 2024. This growth has enabled our preferred shares to enter the main Brazilian indices, such as IBrX 100 and Ibovespa.
Continuing on the right-hand side, we see our position in B3's trading ranking, and we ended Q3 in 59 out of 450 shares traded on the exchange. As a result, our cumulated negotiability index continues to advance and currently stands at 76%, 9 percentage points higher than what is required to join Ibovespa. I end my presentation here and give the floor back to Rui.
Thank you, Silvia. Let's move on to the next slide, please. Before closing our presentation, I'd like to mention our progress in the sustainability agenda. The accumulated result for the year shows a reduction of SF6 gas emissions, which have a major impact in the generation of greenhouse gases in the atmosphere. While at the same time, we have reduced some efficiency and energy consumption, partially offset by lower water consumption.
The highlight of this time was the Jaguar Connection program, which provides technical and financial support for carbon projects in priority areas for the preservation of Jaguar corridors. In September, we announced the new REDD+ Rio Muru Environmental Conservation Project, which will conserve about 40,000 hectares of forest on the banks of the Muru River in Acre within the Amazon biome. Finally, to conclude the presentation, we continue on the next slide. Slide 12 summarizes the values that underpin ISA CTEEP's strategy, as well as the topics covered during the presentation, which aim to maximize sustainable value for our shareholders and other stakeholders.
Our belief is that the company's work is based on the values that we have generating sustainable and environmental value, must be able to generate through innovation and operational efficiency pillars that are anchored across three dimensions: profitable growth, discipline in using capital to ensure that the company is perceived as able to capture resources competitively, as we've been doing, and paying dividends to our shareholders with a minimum of 75% of regulatory net income. So we are sure that we are creating value for our society and for shareholders. Finally, I would like to invite everyone to take part in our investor day, which will be held on November 12th. I'll end the presentation and hand the floor back to the operator for the Q&A session. We're at your disposal, and thank you again for being here. Thank you.
Thank you.
We are now going to start the questions and answers session. We kindly request you to identify yourself and to ask all your questions at once and wait for the company to answer them. And as a reminder, to ask a question, just click on the Q&A icon at the bottom menu of your Zoom screen. Our first question comes from João Pedro Herrero, sell-side analyst from Santander.
Good morning. How are you? First of all, congratulations on the results, and thank you very much for taking my question. Could you talk about the adjustment installment? Which part was booked, which is cash, and what is the term to receive that? Could you also talk a little bit more about the sale of the land in Jundiaí? In addition to this plot of land, is it possible that you sell other properties in future quarters?
Thank you for your question.
As to the PA, we have the details on slide five of the presentations that you've just seen. Giving you a little bit more detail, we have three main components. We have the share, which is the deferral or the postponement that should have been reduced in 2023, but it was deferred to 2024. These are the amounts of -BRL 378 million +BRL 104 million of RBSE. These will be received and paid along the 2024-2025 cycle, 12 months. Other adjustments, same thing. Now, as to the retroactive share of reinforcements and improvements, which comprises the reinforcement and projects that are small-sized, that had a retroactive revenue that was only booked in a tariff review. When they went live, we didn't receive the revenue immediately. This is going to be received in the next four tariff cycles.
So, BRL 89 million each year, and the last installment will be in the cycle 2027-2028, totally BRL 356 million. This is for the PA. As to the sale of the land in Jundiaí, this was one of the opportunities that we mapped in our real estate portfolio, which basically seeks to monetize assets that the company owns and that are not necessary for our transmission operations. So we could sell it for BRL 22 million. It has an accounting cost of BRL 2 million. So it provided a net revenue of BRL 22 million this quarter, and this amount was fully received in this quarter. As to other opportunities, well, we have mapped them. We are seeking to find other things that we can do in the next quarter and future years, but different amounts.
We have things like this amount and a smaller amount and bigger projects too that will take slightly longer until they mature. So this is an upside that we are always seeking.
Thank you.
Now, we have a question from Edson Mota, a buy-side analyst.
As to the 4819 Fund, could you update the status of the negotiation?
Hi, Edson. Thank you for your question. Well, this is an attempt of a settlement that is going to be led by the Chamber of Conciliation and Arbitration of the Electricity Sector and the Superior Court of Justice. And there is an agenda of meetings, debates, and other elements for each one of the parties. And then we are going to go into the negotiation.
In this negotiation, the lawyers of each of the parties need to be present and other representatives in trying to settle specific themes and trying to find an approach that is good for everyone.
Now, our next question is from [Foreign language].
With the fires in September and October, was any substation or transmission pole damaged?
Well, thank you for your question. This is the operations officer of the company. As to the fires in September and October, this is a period that we know we have intense fires. However, for the transmission assets, no damages, neither in substations or in transmission towers.
As a reminder, if you want to ask a question, please click on the Q&A icon at the bottom of your Zoom screen.
Please identify yourself when you post your question that is going to be read by the operator out loud. Please wait while we collect more questions. Our next question comes from Edson Mota, buy-side analyst.
[Foreign language] , good morning. Congratulations on your performance. Could you please give us an update on the execution of greenfield projects?
Good morning, Edson. Thank you for your question. This is the director of ISA CTEEP projects officer. So ISA CTEEP right now, we have seven projects being in execution that we won in auctions. Five of them are under construction, and two are obtaining the permits. Of the five projects in construction, there is one that is being energized, the Minuano project. We have one project in execution in the city of São Paulo, Riacho Grande, and it's an underground project that is going, advancing very fast with more than 75% completion.
We have the first of the macro projects of ISA CTEEP, Piraquê, that started in the state of Minas Gerais that is going on very well with a large number of towers already implemented. And we have Água Vermelha and Jacarandá, two smaller projects that are going very well. The other two projects are Serra Dourada and Itatiaia. And the two projects we are currently under the process of obtaining the permit, and everything is going as our plans. Thank you very much for your question.
Thank you. Our next question comes from Paulo Sérgio Miranda.
Which are the prospects of the company for the two transmission auctions that are going to take place in 2025, in September and March? What can you tell us today before those invitations to bid are published?
Hi, Paulo.
The expectations, so there is just one transmission auction, and then in 2026, we go back to our schedule of two auctions a year. Today, I don't think we have much to expect about these auctions because we are focusing on execution. So any opportunity along next year is going to be assessed within a logic of profitability and financial discipline.
Thank you. Our next question comes from José Paulo, a buy-side analyst.
Is ISA CTEEP thinking of bidding in the battery auction? How do you see this opportunity?
So we are monitoring the batteries regulation decisions, and we are very interested in that, very proactive. Today, there is a public consultation going on in terms of the battery bid for next year.
However, we think that at the same time as the discussion of the guidelines and the auction in itself, so the regulation is being discussed in terms of how the activity is going on. So the schedule is very challenging for the next quarter. But we do have projects we are preparing ourselves, and whenever there are opportunities, we are going to assess, and it's the same guidelines as we assess for the transmission auctions, so based on profitability and financial discipline. [Foreign language] .
The next question will be asked by Mário Antônio Canto, an individual investor. He's asking about sustainable indebtedness, excuse me.
Well, our debt needs to be used as a competitive advantage so that we can access capital at a good cost, and that will make us competitive and, of course, help us in paying out our shareholders.
So we think it's very important to consider that our strategy involves growth and also dividend payouts, consistently maintaining our 75% payout practice. So all of our decisions are based on balancing these two things, using our resources, and basically, we can do this through our financial discipline and also being very careful about the decisions we make in allocating our capital.
The next question will be asked by João Miguel Coelho dos Anjos, an investor from JF.
What is your expected drop in revenue with the end of RBSE, considering the new revenue from greenfield projects that will be incorporated until then?
Silvia will answer this question, but I just want to say that he's asking about the end of RBSE in 2028.
In 2028, we expect the last financial part of RBSE, and the economic portion will continue until the end of the year, until there is a tariff review. Right now, these portions are at BRL 1.5 million per year, and by 2028, we will have about BRL 1 million in RAP associated to the seven projects that are under construction and also the RAP related to the improvements and reinforcement projects that will be carried out or are being carried out from 2023 to 2027. They will all be added to the 2028 tariff review. A part of it will generate revenue during that time, and another part of it will be retroactively recognized in comparison to small projects. In 2028, 100% of the revenues from the investments made during these years will be recognized in our results.
We believe this will be more than enough to cover the RBSE that we will no longer receive.
Thank you. The next question was asked by Luiz Cangiota. He says, "Thank you for taking my question regarding dividends for 2024. Is there any space to pay through JCP? How much do you have in accumulated reserves from previous years that could be paid out?"
Thank you. Thank you, Luiz. We expect to pay 100% of interest on own capital, and we have about BRL 1 billion.
Please hold while we collect questions. [Foreign language] . The next question was asked by Paulo Sérgio Miranda from ABC.
Is the company going to expand to other countries in Latin America? Are there synergies that can be used for that?
Our current mandate is restricted to Brazil.
There are enough opportunities at some market that is big enough so that we don't see that we're running out of opportunities. ISA is present in other countries, in six countries in Latin America, but we exchange best practices and experiences. So this is the synergy that we use within the group, and that helps us with scale and relationship with other suppliers. But in terms of investments, ISA CTEEP is restricted to Brazil.
Thank you. The next question was asked by Alessandro Tircilho, an investor.
I'm a beginner, and I'd like to know if you can mention the three main goals for the company for the next year and how it will impact your results.
Thank you for your question, Alessandro. So in 2025, the company will continue focusing on the excellence of our operation, on maintaining our assets, on providing services for society.
We're going to continue executing the projects that we have, greenfield projects that we have won. We have six projects in execution. As we heard, one of them is in the end stage and should be delivered still this year. And we're going to continue executing investments in reinforcements and improvements, updating the assets we have in the Paulista concession, especially here in the state of São Paulo. And that's going to update and give us more capacity to serve the demand for connections in São Paulo. I think these are the main pillars in which we hope to advance our operations and projects. And this will be naturally reinforced by our disciplined effort on the financial side so that we can capture the resources we need for our growth in the best and most competitive way possible.
I think those are the main points that will create positive results for society and will have a positive social and environmental impact as well.
Thank you. That concludes our questions and answers session. We'll now hand it over to Rui Chammas, who will make his closing remarks. Go ahead, Mr. Rui.
Thank you. Thank you, everyone, for being here for this conference call. We had a large number of attendees looking at our results, so thank you for your questions. Our investor relations team is available to answer any additional questions or any comments that you might have. Thank you again for being here, and have a good day. We wish you happy holidays since we're getting close to December.
This concludes the 3Q 2024 ISA CTEEP earnings call. We'd like to remind you that the investor relations department is open to answer any outstanding questions.
Thank you, and have a good day.