Good morning, everyone. Good morning and welcome to Neoenergia's third quarter 2025 earnings release call. To hear the simultaneous interpretation, please click on the Interpretation Globe icon in the platform at the bottom of the screen and choose your preferred language: Portuguese or English. For those listening to the call in English, there is an option to mute the original audio in Portuguese by clicking on Mute Original Audio. We inform you this call is being recorded and will be made available on the company's IR website, ri.neoenergia.com, where the complete earnings release material is available. It is also possible to download the presentation using the link sent via chat, including in English. During the company's presentation, all participants will have their microphones muted. We will later open the Q&A session. To ask a question, click on the Q&A icon at the bottom of your screen to join the queue.
When announced, a request to open your microphone will appear on your screen, and you then must open your microphone to ask your question. We recommend that all of your questions are asked together. Information contained in this presentation and statements that may be made during the call relating to Neoenergia's business prospects, projections, and operational and financial goals are beliefs and assumptions of the company's management, as well as information currently available. Future considerations are not guarantees of performance. They involve risks, uncertainties, and assumptions, as they refer to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions, and other operating factors may affect Neoenergia's future performance and lead to results that differ materially from those expressed in such forward-looking statements. The presentation will be led by Mr.
Eduardo Capelastegui, CEO of the company, and Leonardo Gadelha, CFO of the company. I will now give the floor to Mr. Eduardo Capelastegui.
Thank you very much, operator. Good morning, everyone. I would like to thank you for joining us today for our earnings call of the third quarter 2025. I'm Eduardo Capelastegui, CEO of Neoenergia. Once again, we are very proud of what we will be sharing with you today. Here with me are Solange Ribeiro, Vice President of Regulation, Institutional Fund Sustainability; Eduardo Gadelha, CFO; Giancarlo Bassell, Executive Director of Operations; Julieta Bassanato, Asset Control and Planning Officer; Renata Rocha, our IR Officer. I'll make a brief presentation covering the main highlights of the period, and Leonardo will then present the results in more detail. We will then have a question and answer session and close with our closing remarks. Beginning on slide three, we have the highlights of the third quarter. Firstly, I would like to highlight the fantastic result we've obtained in the ABRADE 2025 award.
Renew Energy won eight out of twelve awards in which we participated. Neoenergia Coelce is elected the best distributor in Brazil as the best distributor in the Northeast, additionally receiving an honorable mention for health and safety. Neoenergia Elektro was elected the best distributor in the Southeast, the best distributor in management quality and innovation management, and the best in operating management. Finally, Neoenergia Brasília was the best in the performance evolution category, recognizing the enormous transformation this distributor has been experiencing since its privatization in 2021. These awards confirm once again the leadership of Neoenergia in the operation of distribution concessions in the country, providing quality service to over 40 million Brazilians. Regarding this quarter's results, the injected energy, considering distributed energy, performed very well in our concession areas, growing 2.3% over the same period in the previous year.
Our operating expenses remain under control, growing 5.6% over the previous year, therefore in line with inflation. Cash EBITDA reached R$2.8 billion, with a 13% growth in the quarter, reflecting the market growth in the distribution market growth. Adjustments in the B portion of Neoenergia Cazerne, the excellent tariff review of Neoenergia Pernambuco last April, control of operating expenses, and lastly, the entry into operation of the transmission line. I'd highlight the case of network, where the cash EBITDA also grew a significant 13%, reaching R$2.5 billion in the third quarter. Net income was R$924 million in the quarter, 10% above the profit, the net income of the third quarter in 2023, driven mainly by the increase in EBITDA. Capex reached R$2.6 billion, which brought our net remuneration base in the distribution companies to R$43 billion.
On the growth front, we increased our stake in the Corumbá plant through our acquisition, going from 70% to 85%, with a minimum bid of R$92 million, which represents an extremely competitive EBITDA ratio of five times. Also in growth, we are moving towards the end of our investment cycle in transmission, delivering the last four lots in the next two months. On the regulatory front, in the quarter, we had the signing of the extension of the Neoenergia Pernambuco concession, the first distributor in the country to have its concession extended in advance. We expect the signing of other three distributors in the coming months: Neoenergia Coelba, Neoenergia Cosern, and Neoenergia Elektro.
Additionally, we had in the quarter the tariff adjustments for Neoenergia Electro and Neoenergia Brasília, which had increases in the B parcels of 1.3% and 8.3%, respectively, as well as the pass-through tariffs of the increasing subsidies recently approved by the government. Moving to slide four, we can see the progress of our transmission projects, which, as mentioned, are entering their final stages, the final stages of construction. We'll start with the lots from December 2018. The Guanabara lot with 98% physical progress already has one section completed, a contract assessing of R$69 million. The other one is under construction with a wrap of R$98 million expected by the end of this year.
In the Valle do Itajaí lot, we had already R$142 million or 51% of the released wrap in operation, and we are at 95% physical progress, also completing the project by the end of 2025, when we will release another R$136 million, amounting to almost R$280 million. In the Morro de Chapéu lot from the 2020 action, physical progress already reaches 99%. We already have R$166 million released, meaning 76% of the wrap. The remainder, R$52 million, was expected to be released over the next weeks. Regarding the lots won in the June 2022 auction, we're still to be delivered. The largest of all, lot number two of Alto Pastaíba, which has been 95% completed. This lot, we have R$104 million wrap already released, and the remaining R$328 million will be delivered over the next two months.
Therefore, we have already released in 2025 around R$300 million in new wrap and will release an additional R$600 million in the coming two months, amounting to R$900 million in new wrap in the 2025 released. In this way, by the end of this year, we will reach a significant milestone of R$2 billion in wrap fully operational, concluding our investment cycle in transmission that began in 2017. It is worth remembering that the partnership established with GIC in 2023 remains strong and very active. Ever since GIC has acquired 50% of nine transmission lots built by Neoenergia, the last of which, as you're aware, was Itamar Poada acquired by them earlier this year, and also participated with us in the recent transmission auctions.
As you know, they have the right of first offer for another seven lots, still 100% owned by Neoenergia, including these four lots under construction that I have just mentioned that will be completed in the next two months. I will now give the floor to our CFO, Leonardo, who will share more details about our results in the third quarter of 2025. Thank you, Leonardo. Thank you, Eduardo. Good morning, everyone. I will begin with the analysis of Neoenergia's consolidated results on slide six. The evolution of the gross margin in the quarter was 10% compared to the third quarter 2024, reaching R$4,556 million in the quarter. This increase is mainly explained by the positive effect of the tariff adjustments and revisions at the end of April of the distributors in the Northeast, Electro and in August.
We have maintained a good cost benefit with a growth of 5.6% in the quarter, closing the quarter at R$1,082 million. As a result, the EBITDA showed a 14% growth in the quarter and cash EBITDA at 13% growth, reaching R$2,804 million, reflecting the improved margin of the distributors and good cost control. The network's EBITDA represented 89% of the consolidated EBITDA and the generation of clients, 11%. Neoenergia's net income in the quarter was R$924 million. Therefore, a 10% increase compared to Q3 2024. On the next slide, we have our capex in the quarter. We invested a total of R$2.6 billion. Therefore, at the pace of the last quarters and in accordance with the plan, the total year-to-date amount is R$7.6 billion. As usual, capex was mainly all in networks, representing 98%.
In the quarter, the highlights were R$1.8 billion in distribution, the expansion and improvement of the networks, R$730 million in the progress in transmission works related to the completion of the last four projects, as Eduardo mentioned. On operating performance in networks, on slide nine, we see the variation of injected energy in our five distribution companies, which was already disclosed to the market, showed a growth of 2.3% compared to Q3 2024. Therefore, a growth equal to the previous quarter and also due to the milder temperatures. The total number of consumers reached 16.9 million, representing an increase of 342,000 new customers in the last 12 months. Moving to loss performance, we had another quarter with a good performance at the index. We continued with three out of our five distributors within the regulatory limit.
Brazil and Pernambuco are not within the limit, but distance to the regulatory compliance is smaller than in the previous quarters. Besides the new regulatory levels defined for both, we indicate we are getting to very close levels to compliance. On slide 11, we see in the third quarter, BCLD, the loan and loss provision reached $116 million, an improvement compared to previous quarters. In the charts below, we see that the collection rate generally indicated some trajectory compared to the previous quarters. On the next slide, we move to the quality indicators, GCFEC, NECFEC. In our distributors, they continue on a downward trend, all of them in line with the regulatory standards. We also like to highlight the chart with the current percentages of compliance sets per distributor, underscoring the good quality performance.
Now, on the network results on slide 13, we can see that in the third quarter, we had an 11% growth in gross margin, mainly explained by the tariff adjustments and provisions of the Northeastern distributors in April and Electro more recently. Operating expenses in the quarter grew by 9%. Therefore, we see a one-off pressure in the quarter due to increased maintenance focused on quality, on increasing collection actions to improve revenue collection in the market. Even so, network EBITDA grew by 16% and network cash EBITDA 13%, reaching $2,455 million in the quarter. We also see the breakdown between distribution and transmission, where cash EBITDA grew 11% in distribution and in transmission, 47% with the entry of new projects.
The regulatory EBITDA of transmission assets was $252 million, $140 million from 100% Neoenergia assets, $112 million from the JV with GIC, which we account for using our equity method. On slide 15, we see the generation and client business moving here to slide 15. We see the generation and client business, which consolidates renewables and liberalized segments. In the quarter, EBITDA of the segment was $394 million, a 2% growth compared to the same quarter 2024. However, year-to-date result is still negatively impacted by Tecno Pernambuco, which in the previous contract had a higher margin. On the right-hand side, we see the breakdown by business line. The EBITDA in HPPC in the third quarter was $95 million reals decreased compared to Q3 2024 due to the effect of the deconsolidation of the Bashugasu plant. Wind power, $269 million EBITDA, 3% reduction due to lower wind speeds in the quarter.
Solar EBITDA was $8 million in line with Q3 2024, and the Tecno Pernambuco EBITDA was $6 million due to the new contract with no dispatch in the quarter. Finally, in the client business, our EBITDA in the quarter was $17 million, a $6 million growth compared to the third quarter in 2024. Moving to slide 17 and concluding, we have our capital structure, and we see we closed the third quarter with a net debt of R$47 million, therefore higher than the second quarter due to the pace of capex and the greater effect of the tariff variations as a consequence of the executive order 1300, which brought the tariff for low-income consumers to zero. In the case, consumption went up to 80 kilowatts per month, and this significantly increased the tariff asset of our distributors before the approval of the executive order.
This is a temporary effect, and then we will have it going back to what it was. Our net debt ratio closed at 3.52 times, but disregarding the additional tariff effect, it would have been 3.47 in line with the second quarter in 2025. The structure of our debt remains very comfortable, well-distributed with an average term of 5.77 years and a competitive average cost. We're still benefiting from a credit market that is at high demand with AAA-rated securities bonds and to conclude our capex plan for the year, as we can see in the chart here. Having said that, I will now hand the floor to our operator to open the Q&A. We will now open the Q&A session.
Bear in mind that if you wish to ask a question, you should click on the Q&A icon at the bottom of your screen to join the queue. When you hear your name, you will receive a notification to open your microphone. You should then open your microphone to ask your question. Please make all of your questions in a bundle. Our first question is by Ricardo Bell from Safra. Thank you, Ricardo. We will open your microphone. Ricardo, you may proceed, Ricardo. Ricardo, you may proceed, please. Ricardo, you may proceed, please. Vamos à nossa próxima pergunta. So we will move to our next question by Enrique Simões from UBS. We will open your microphone now, Enrique, and you may ask your question. Oi, bom dia, pessoal, tudo bem? Hello, good morning, everyone. Estou aqui do meu lado. Just a brief question.
Como vocês estão vendo a conclusão das obras de transmissão? How do you see the conclusion of the transmission lines and what about the negotiations with GIC? How are they going? Thank you. Thank you, Enrique, for the question. As regards the transmission line construction works, as mentioned previously, we have four or five sections to be concluded. We are making good progress, above 95% execution. We are expecting to conclude by the end of the year. Between November and December, we expect to deliver 100%, to have completed 100% of the lots that are still under construction. Starting January next year, January 1st, all of them will be in operation, R$2 billion approximately, in operation starting January 1st, 2026. As regards GIC, this partnership remains strong, solid in regards to the auctions.
Also now, when we deliver the lots, the remaining lots, we will proceed as we did with the previous lots. Our GIC will evaluate our lots. We're talking about seven lots now, this time around, Guadalajara, Puerto Iguazú, and Paraiso, approximately 1,200 in REP, a significant amount. Now GIC is conducting the assessment of the assets. It will submit a proposal whenever. We're not obliged to sell; they're not obliged to acquire, but it is a solid partnership, and we believe it will continue evolving in this direction. It will submit a proposal according to its own criteria, and we will then, of course, have meetings, conduct discussion. It's an interesting proposal. As in the past, we will move to 50% investments, as you are aware. In summary, this agreement is holding strong and solid. This is an important phase now.
These assets will be the objects of the new transactions, as in the operations phase as well. We are concluding the constructions and entering into the operation phase. Everything according to the plan, no surprises. We have been engaging in conversation with GIC about these seven lots as mentioned, which represent a significant volume, capex and REP as well. Thank you. A nossa próxima pergunta é do Ricardo Bello. Our next question is from Ricardo Belo from Safra. You may open your microphone, Ricardo. Por favor. Ricardo, pode prosseguir, por favor. You may proceed, Ricardo. A nossa próxima pergunta é. We have one more question from Raul Salazar Anales from XP. We will now open your microphone, Raul. You may ask your question now. Good morning, everyone. How are you? Thank you for this call. I have one question related to 3304 and the cartelment discussions.
I'd like to know what role Anel has played in these conversations as an interested stakeholder in the process. Could you give us an overview of the role Anel has had in these discussions? If you can tell us what can be expected, what the reports will contain. There's been conflicting, clashing information about maybe something broader, broader information, and afterwards we've heard something different. We'd like to hear from you where we're standing with regards to 1304 and cartelment. Thank you, Raul. As regards cartelment, for knowing that GIC, as you're aware, the impact is quite limited on us. To give you some figures, in the third quarter, it was a $40 million impact in the first nine months of the year, $70 million, of course, it's $70 million.
But compared to other players in the industry, our impact is much lower, which does not mean to say we're not playing an active role in the discussions with the sector, with the regulator. This is a big discussion in the executive order 1304, knowing that GI is contributing to find a structured solution to tackle this issue going forward and also looking at the past year to date in the sector. We have, of course, billions; it amounts to billions. Therefore, yes, we are taking part in this process, and we firmly believe that this executive order, the MP 1304, will include an interesting proposal in this regard. Excellent, thank you. A nossa próxima pergunta é do Daniel Travici. Next question is by Daniel Travici from Safra. We will open your microphone now, Daniel. You may ask your question. Oi, pessoal, bom dia. Hello, to all.
Good morning, thank you. I have two questions. One regarding costs, an interesting cost management in this quarter. I'd like to know if this will be a recurring level going forward, how you see this will evolve in the coming quarters. And one question about the opportunity in transmission. There will be an auction this Friday now. Are you considering participating in this auction? And if so, how would you actually be involved in this opportunity? Thank you. Thank you, Daniel. In this third quarter, we had extraordinary effects in some distributors, mainly the Energia Coelba, where we had R$20, 25 million in assets. We're making relevant investments in Bahia, so we had an impact, but it's not a recurring effect. We do not expect it to happen again. This was Coelba, but we also had something at Elektro.
It's not asset, but it's regarding rescission costs in the quarter. I would say these were the most relevant one-offs in regards to the increases in the quarter. To your question, these are one-offs, and we do not believe they will happen again in the coming quarters. We, of course, are committed to growing above the inflation as we have over the past years. Bear in mind, we have a primarized operating model. We have strict cost control and productivity that is more assertive, more accurate. We do not really rely on the market evolution in terms of cost. Most operators are proprietary, our own. So we firmly believe that we can say we will continue on this growing trend with inflation. To your second question, transmission lines, with the past quarter, we mentioned that we will not go to auction now in the transmission auction this Friday.
We have analyzed the lots, assessed the lots jointly with our strategic partner, GEIC, and we have not closed. We've decided not to go to auction. We're looking at the two-digit loss. This is what we require to go to transmission auctions or to any other advanced methods we might consider. So with this in mind, we will not be going to auction this Friday, this week. Excellent, thank you. A nossa próxima pergunta é do. Our next question is by Andressa Paio from Santander. Gostaria de... And he would like to hear an update on the possibility to see changes in the dividends policy of the company. And we expect more dividends with the reduction of leveraging next year. Okay, André, bom. Thank you, André. Cumprimos o que vem falando nos últimos... We have been keeping to what we've said over the past quarters, 2025.
This is our last year where we're making massive investments, mainly because we've concluded our investment cycle in transmissions. Therefore, starting next year, we will invest only in distribution, $6 to $7 million. Together with the cash flow increase resulting from the new assets in our operations, we will begin the deleveraging process. How fast it will happen will depend on the divestment pace with GIC. If we do not divest with GIC, we will also reduce the debt. If we do, it will be more accelerated. Anyhow, in 2025, we will reach our cap in regards to debt. Of course, throughout 2026, we will most likely, by the end of 2026, start considering reviewing our dividend policy since the debt will be declining and the cash will be growing. As managers, of course, we have to submit proposals to our board.
This is one of them. This is one of the alternatives. Yes, Andressa mentioned in the previous quarters, we are thinking that in the second half of 2026, in late 2026, we will get back to this point, to this discussion with our board. Thank you. The Q&A session is now adjourned. We would like to give the floor to Mr. Eduardo Capelastegui for his closing remarks. Thank you once again, operator. I would like to share one final message reaffirming our commitment to all of our stakeholders at Neoenergia. We are remaining focused on deleveraging and on the importance of leverages, effectiveness, and safety in our operations. Of course, also adding value through optimal capital allocation and maintaining sustainable growth with our results. We better represent this through the expected growth of our EBITDA cash since our IPO has grown over 120%.
We firmly believe in the regulatory robustness of Brazil, which once again has proven with the signature of the approval of the concession of Neoenergia Pernambuco, which brings us the safety we need to ensure higher investments and higher quality to all the citizens in Pernambuco. We will now continue with the process to approve the other three concessions. The proper capital allocation is also key to us in order to leverage to improve value for our shareholders together with the GIC progress and transformation. These are excellent examples of such. Additionally, the network of business remains important to focus on Neoenergia in transmission. The progress in transmissions will take us from January to 2026 to operate R$20 million in assets, with a RAP higher than R$2 million annually.
In distribution, we are the highest when it comes to revenues, investments, and number of customers in the industry. We are also number one in terms of operations, as shown by the Aberabi Awards. We're committed to continue investing in providing quality services, increasing continuously to our almost 17 million customers. For shareholders, I would like to highlight once again that we have a strategic, clear pathway going forward and the right team that is engaged and fully committed to deliver the results we need. I'd like to conclude, as usual, by thanking all of the employees of Neoenergia who have fulfilled their roles, their past challenges, delivering results, and created value to our shareholders. Thank you very much. I wish you all an excellent day. A conferência de resultados referente ao terceiro trimestre de 2025 da Neoenergia está encerrada.
The IR department will be available to entertain remaining questions. Thank you to all of the participants. We wish you an excellent day.