Good morning, everyone, and welcome to Light's third quarter 2026 earnings call. This event will be held in Portuguese and simultaneously translated into English. If you'd like to change the language you are listening to, you can select it by clicking on the Interpretation button at the lower part of the screen. We'd like to inform you that this event is being recorded, and a recording will be available on the company's investor relations website, along with the material used in this presentation. They are already available for download there. At this point, all participants are connected in listen-only mode. After the company's presentation, we will begin the questions and answer session. If you would like to ask a question, you can send it by clicking on the Chat button or the Q&A button at the lower part of the screen.
Before proceeding, I would like to highlight that any statement made about this presentation, and about the company's business perspectives, projections, and operational and financial targets are only beliefs and assumptions by the company's management. They are based on the information that is currently available to them. Remarks about the future are not a guarantee of performance. They involve risks, uncertainties, and assumptions. They refer to future events, which therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operational factors may affect the company's future results and may lead to results that differ materially from those expressed in these forward-looking statements. With that, we will begin the company's presentation with Mr. Alexandre Nogueira, CEO, who will make the opening remarks, followed by Mr. Leonardo Gadelha, CFO and Investor Relations Director, who will go into the company's financials.
We will hand it over to Mr. Alexandre Nogueira. Go ahead, sir. Good morning, everyone, and welcome to Light's third quarter 2026 earnings call. We were very pleased with this quarter, and I'd like to walk you through the key highlights on slide three. This quarter marked the conclusion of a cycle. On September 9, Light's judicial reorganization was officially finished, with all obligations set forth in the plan fulfilled. This achievement was only possible thanks to the efforts of our employees, the trust of our creditors, and above all, the support of our shareholders. This quarter also saw the company's return to the capital markets, with the distribution company raising BRL 1 billion and an upgrade of our credit ratings.
Fitch raised Light SA's rating to B- on the global scale and BB on the national scale, while S&P raised Light Distribuição's long-term ratings to brBB+, both with a stable outlook. These changes reflect the completion of the debt restructuring and the improvement in the group's capital structure, with a leverage ratio of 2.24 times at the end of the quarter. During the quarter, consolidated recurring cash EBITDA totaled BRL 432 million, a 10.5% increase year-over-year, and BRL 1.45 billion year-to-date, a 25.7% increase compared to the first nine months of 2025. Energy distributed during the quarter totaled 5,811 GWh, a 4.2% increase year-over-year, driven by higher temperatures. Year-to-date, energy distributed totaled 18,727 GWh, in line with the previous year.
In terms of operations, the average emergency response time over the last 12 months was 557 minutes, 14% lower than a year earlier and 61% lower than in 2022, which was when the company's operational transformation began. This makes us very proud and confirms that we are on the right track. The regulatory indicators for DEC and FEC remain within ANEEL's limits during a period marked by extreme weather events, such as the windstorm on July 29, when we mobilized up to five times our normal workforce and restored power to 78% of affected customers within 24 hours. Moving on to slide four, I'd like to review with you the path that has brought us this far, highlighting achievements that are very significant for Light.
In May, we signed the renewal of our concession for another 30 years through 2056, a condition stipulated in the judicial reorganization plan to unlock the capital increase and debt conversion. In July, we obtained court approval for the BRL 1.5 billion capital increase, of which BRL 1.35 billion was capitalized in Light Distribuição, in accordance with the judicial reorganization plan. After that, we completed the conversion of the convertible debt into shares with a face value of BRL 2.2 billion. In September, we conducted the company's first capital market offering following the exit from our judicial reorganization, raising BRL 1.0 billion through Light Distribuição commercial papers. This is a concrete sign that the company has regained access to the capital markets. Looking ahead, our focus is now on the first periodic rate review under the new contract. The public hearing for the 2027 review is scheduled to begin in December.
We will actively contribute to ANEEL in this process, consolidating the new framework for sustainable remuneration in light of the new concession agreement. In summary, a concession has been renewed for 30 years. We have a renewed, strengthened capital structure and a defined regulatory agenda. I now turn the floor over to Leonardo Gadelha, the company's CFO, who will detail our results for the third quarter of 2026. At the end of his presentation, we'll be here together for the question and answer session. Leo, over to you.
Thank you, Alexandre. Good morning, everyone, and thank you for joining us. We will begin on slide five. Let's look at the market dynamics for the distribution division. Energy distributed in the third quarter totaled 5,811 GWh, a 4.2% increase year-over-year, equivalent to 234 GWh more than in the third quarter of 2025. This result was primarily driven by higher temperatures.
The quarterly average was 22.8 degrees, 1.1 degrees higher than in the third quarter of last year, which saw the harshest winter in recent years. This benefited the two most important segments for the company, the residential segment, which grew 6.1%, and the commercial segment, which increased 5.4% year-over-year. For the first nine months, energy distributed totaled 18,727 GWh, remaining virtually stable over the period. Moving on to slide six, we will discuss losses. Over the past 12 months, total losses on energy injected into the grid were 31.1%, relatively stable compared to the level seen in recent quarters, even despite this increase in distributed energy in the third quarter. Non-technical losses in the low-voltage market, meanwhile, were 78.6%, reflecting temperature patterns during the period and management challenges in areas with severe operational restrictions.
The breakdown between high-risk and conventional areas remains stable, as we can see on the lower right side of the slide, with areas of severe operational restriction accounting for 85% of non-technical losses compared to 86% a year earlier. Turning now to our financial indicators on slide seven, we see the company's consolidated results. We can see that total gross cash margin amounted to BRL 1 billion for the quarter, a 7.4% increase, and BRL 3.1 billion year-to-date, up 11.5%, driven by growth in the distribution, generation, and sales segments. Operating expenses, or PMSO, totaled BRL 360 million for the quarter, a 2.1% decrease, reflecting lower third-party service expenses in distribution, which offset the increase in personnel costs due to headcount adjustments and promotions that have taken place in the last quarters. Year-to-date, PMSO totaled BRL 1.033 billion, up 7.8%, driven by personnel expenses resulting from workforce restructuring, promotions, and salary adjustments.
As a result, recurring cash EBITDA was BRL 432 million for the quarter and BRL 1.45 billion for the year, representing a growth of 10.5% and 25.7%, respectively. We now continue on slide eight, which gives us a breakdown by segment. In distribution, gross cash margin was BRL 871 million, up 5.6%, driven by improved market conditions, which grew 4.2%, and the 1.28% adjustment to Parcel B in March 2026. There was also a higher level of demand from Group A. Year-to-date, these same factors drove the gross cash margin to BRL 2.535 billion, up 7.1%. Operating expenses, or PMSO, fell 5%. We are disregarding non-recurring expenses from RJ. So without this effect, our PMSO was BRL 335 million, reflecting a decline in third-party services due to the shift toward in-house operations. For the year, PMSO rose 7.3% due to higher personnel expenses resulting from workforce restructuring and a shift toward in-house operations.
As a result, the distributor's recurring cash EBITDA reached BRL 316 million in the quarter, a 10.6% increase, and BRL 977 million year-to-date, a 19.8% increase. In generation and wholesale, we are looking at these two segments together. The cash gross margin was BRL 140 million, up 14%, driven by higher generation, an improvement in the GSF, and a lower average PLD. Year-to-date, the cash gross margin reached BRL 544 million, up 33.9%, for the same reasons. PMSO totaled BRL 26 million for the quarter and BRL 78 million for the year, both due to the restructuring of the marketing division and rising personnel costs at the generation division. As a result, recurring cash EBITDA totaled BRL 113 million for the quarter, up 9.9%, and BRL 465 million for the first nine months, a 34.8% increase. Moving on to slide nine, we have an overview of investments for the period.
CapEx totaled BRL 425 million for the quarter and BRL 1.2 billion year-to-date. This is in line with our plan. Maintenance and network expansion accounted for 48% of the total, and they are aimed at strengthening the company's resilience and the quality that customers experience on a daily basis. We remain committed to executing the investment plan and to continuously improving quality. Finally, we continue with slide 10, which has our capital structure. As Alexandre said, this was a very important quarter where we were able to conclude our debt conversion and our capital increase. We can see that at the end of the quarter, our total net debt was at BRL 5.9 billion compared to BRL 7.3 billion in June, with a leverage ratio measured according to our covenants of 2.24 times, down from 2.85 times in the second quarter. This reduction reflects the success of the debt-for-equity swap plan.
The cash position at the end of the quarter was BRL 2.2 billion, up 17.9% for the quarter, driven by the inflow from the Light Distribuição commercial papers, and it was partially offset by investments, which have led the cash to this level. At the end of the quarter, 95.8% of the gross debt was already long-term. As shown in the table to the right, the repayment schedule is well distributed, with the first significant maturity in 2028 amounting to BRL 1.7 billion. This is aligned with the next rate review for the distributor, which will take place in March. In terms of index composition, we can see that 80% of the debt is bound by the IPCA at a very competitive cost, the remainder, 24%, is bound to the CDI, and 16% to the USD, at a very competitive cost again.
This is consistent with the electricity sector's revenues, which provide a natural hedge for our debt service. With that, I conclude my presentation, and I will now turn it over to the moderator so we can begin the Q&A session.
Thank you. We will now begin the questions and answer session. If you would like to ask a question, please click on the Q&A button at the bottom of the screen. The first question was asked by Daniel, a sell-side analyst from Safra. He has two questions.
With the losses plan delivered to ANEEL, what is your vision for the next steps for this plan to be accepted? Do you think you will have enough time to include it in RTP? The second question was, how do you see the evolution of OpEx and CapEx for the next years?
Good morning, first of all. Thank you for sending us your question. I will answer the first part, and Leo will answer the second one. Yes, we have delivered a loss plan to ANEEL for the tariff review process, and what we imagine will happen now is that this plan will serve to subsidize the company's next tariff review. We believe that for the next few days, we will advance on this topic. Thank you.
Daniel, thank you once again for your question. Your second question was about our OpEx and CapEx perspectives for the future and for the next years. Right now, we are at the stage in which we discuss the budget or we go deeper into details for the next few years, especially 2027. What I can tell you is that when it comes to OpEx, we are making a strong effort with discipline across all lines in PMSO. We are very confident that we will be able to sustain the same level that we had this quarter. We are at a level in which we will have more stability.
For the future, for the next years, we should be pursuing growth below the inflation. So with maintenance and even sustaining our OpEx areas. We have already been working on efficiency for our operations, so we now have an opportunity to try to maintain the OpEx line. Considering CapEx, it was necessary. I mean, Light has a strong demand for our CapEx in our network here since CapEx was affected in previous years. We announced a CapEx plan amounting to BRL 10 billion in five years. We are committed to executing this plan. Of course, in order to do that, we expect to have a successful review in March. That is what we can say for now, but I hope that answers your question.
This concludes the questions and answer session. We now conclude the company's conference call. On behalf of Light, we would like to thank you all for being here and underscore that the investor relations team is always available to answer any questions you may have. Thank you and have a good day.