Good morning, everyone. I am Carolina Senna, Cemig's Investor Relations Superintendent. Welcome to Cemig's Third Quarter 2024 Earnings Video Conference Call. We inform you that this video conference is being recorded and will be available on the company's IR website where you also find the company's presentation. Should you need simultaneous interpreting, the feature is available by clicking on the Globe icon located on the bottom of the screen. Upon choosing Interpretation, select the language of your choice, Portuguese or English. Should you choose to follow the call in English, you may also select Mute Original Audio. We are now starting Cemig's Video Conference with Reynaldo Passanezi Filho, CEO; Dimas Costa, Chief Commercial Officer; Leonardo George de Magalhaes, CFO and IR Officer; and Marney Tadeu Antunes, Chief Distribution Officer. For the initial remarks, I turn the floor to our CEO, Reynaldo Passanezi Filho.

Good morning. Good morning, everyone. Welcome to the earnings video conference call for the third quarter of 2024. Once again, very consistent results, results that prove the significant turnaround of the company as well as its financial softness. We do have some highlights that are very special. They have already been announced over this period of time and they are very positive. We right now have the best rating in our history, AAA. We couldn't be better. This is the best rating in the company's history and this is the best rating possible. We have over six notches of growth in a period that is lower in five years. So this is really an acknowledgment by Fitch. Thanks to our consistent results, our cash generation and also EBITDA over net debt, that is one of the best in history. Also in this quarter, we concluded the sale of Alianca Energia. This has been announced 45 days ago. We have received BRL2.7 billion and now we are recording in this quarter a capital gain of BRL1.6 billion. And also we have very positive results of our transmission tariff revision with a gain of BRL1.5 billion in the IFRS and the adjustments of ARTT for transmission. Therefore, we're reaching the best EBITDA in our history. BRL5 billion in this third quarter. These are wonderful results. In addition to the consistency of the results effectively with these events, we are reaching, again, the best EBITDA in our history as well as AAA, which is the best rating possible. I would like to highlight these results to all of you that are here with us. And this is reflecting the permanent commitment in certain results and that what I really like to focus on is the focus and growth in investments. Once again, the…

Good morning, everyone. Thank you very much for being here in this video conference. For these results, I would like to start by thanking you as well. I'd like to thank Reynaldo for his trust in these period in which we worked together here in the Board and also thank him for his leadership in this transformation process in the company. The figures tell it all, but he created the base of the company in order to ensure to -- that we would have the sustainable growth for this company in the next few years. Thank you very much, Reynaldo. I would like to welcome Andrea. Great professional, a renowned professional and she's going to have a relevant role in providing continuity to our strategy and the continuous generation of value to our shareholders. And also I would like to thank our investors for the relationship all of these years. The foundation is one of the important topics of the company. They have an important role with all their participants and we will try to do the best work possible for Luiz. So thank you very much for that appointment. And of course, now we will just depend on the regulating agents. So we had a number of positive results. One of them was the sale of our company and Alianca. And also we had the tariff review. And we did have the effects of the tariff review now. So it's important to mention that we almost doubled our remuneration base and we forecast BRL3.5 billion investments for the next years for transmission lines in the state of Minas Gerais. Important investments that we understand that they are important for the country and also for the company and they would generate value to shareholders when we compare to returns and…

Thank you very much, Leonardo. So now moving on, and this is the slide that we always show you with the results. The IFRS result and the recurring results here. As Reynaldo mentioned, we had the best EBITDA in our history, thanks to the tariff review and Alianca sale and this shows the success of our divestment plan. Net of the recurring effects which are the tariff review and Alianca, I'll say we had a drop of 10% but most of that was affected by what Leonardo already told us that has to do with commercialization or trading activity that it had the difference between -- because of the submarkets price and now with the rain effect, we will no longer have this price difference. Now analyzing PMSO, we see that we have grown 2.9%, a highlight for outsourced services. Also right-of-way clearing tree pruning when we compare quarters to quarters. Just to give you an idea of right-of-way clearing, we cleaned 40,000 kilometers of right-of-way clearing, that is to mitigate interruptions of energy that is -- that are provoked by climatic events. We already see rains here and sometimes we are affected by these events. And that also so that we can keep on providing services at the best quality possible for clients avoiding hours of interruption of energy because of some type of event. And also under other expenses, when we compare the same quarters '23 and '24 because of the asset deactivation and we have the largest program of divestment in the company in the distribution sector. So it is natural that we have a higher deactivation of assets over this program over these years where we are executing the program. In our cash flow, as Leonardo mentioned, the company has a robust cash generation. When we look at the year-to-date and these nine months just for operating cash, we have BRL5 billion. We had two fundings for Cemig D that were very successful so that we could foster our investment program. Just this year Cemig D will be investing over BRL4 billion in its concession distribution. Also we had interest on equities or dividends paid. The payment of these dividends that is done in two installments at the end of the year and in June. So we had investment activity which also meant a cash outflow. And we had Alianca divestments and we ended the quarter with BRL6.7 billion that will be used in the next quarters also by dividends payment because of investments. And also let's remember that we have our last share of the Eurobonds of $380 million which will also be paid now in December. Now I'll turn the floor to Leonardo to talk about our successful 11th issuance of debentures.

Yes, once again, a successful issuance of debentures. This is already a AAA company. But in the last issuance, we know clearly that we already being considered a AAA company. These issuances, when compared to our basis to the market, the market really trusted the company. Thanks to our low leverage, our good financial structure. So we had issuance of BRL2.5 billion, all of them placed in the market banks. It had a huge demand. It was higher than our offer. We issued a CDI of BRL1 billion and a second series of BRL1.5 billion. With IPCA, we have a natural hedge. And our revenue from distribution also is attached to IPCA. And we have good terms here, seven years and 12 years. Cemig has an average maturity up to last quarter of 2.7 years. And so after December next year, so it's going to be 5.4 years our debt profile. So we adjusted our debt profile, we extended the debt profile. And right now, we have very high rates. But considering our market situation, we have been able to pay off our investments and to finance that in the market so that they can be feasible using third-party or capital. Now turning the floor to Carol. She will go back to the profile and additional information.

Now moving on. As Leonardo mentioned, we had a recent issuance for Cemig D of BRL2.5 billion with an extension of our debt profile. We still have low leverage, especially thanks to Alianca's funds incoming. But this leverage is going to be used because of our investment program which is the best in history as well as in December, as I mentioned, we will be paying Eurobonds, we will no longer have debts and dollar after 2025 and also we'll be paying dividends. So this leverage will naturally increase because of the events that I just mentioned. Moving on to Cemig D. We had no non-recurring event in this quarter. We have significant results over each quarter. In EBITDA, there was a drop when compared to '23 and that was because of a higher increase in outsourced services expenses. As I mentioned, over 40,000 kilometers that we had to clear the right-of-way to mitigate possible adverse events stemming from climate events. And also we were affected by market losses from captive market to DG. Now talking about the market, we had a significant increase of 4.5% mainly affected by transported energy showing how the Minas Gerais state is growing in terms of energy demand, new clients that are coming to the state and also a demand the Cemig D's concession services. And the captive market is kind of sideways. We had a significant improvement in the residential clients because of high temperatures. But distributed generation is still affecting our captive client which is migrating from that segment. And if we were not to have the adverse event of distributed generation, we would have grown 6.6%. Now for regulatory losses, we always say that, in 2021, we committed ourselves to be within the regulatory limits. So we had a slight mismatch…

Well, this is a slide that we always like to bring you every quarter because this is the commitment from the company, to be transparent. And these commitments are in line with our strategy. And we usually say that if we go back and what we said that we were going to do in 2021, 2020, during the pandemic and look at what we had talked about, our strategic planning and what we had for the future, we can clearly see that the company is delivering exactly its strategic plan. Here we have some of the objectives that have already been met, such as the bonds and the Cemig's in the regulatory OpEx, quality index also in the regulatory limits. Also we divested from more complex holdings, also Cemig Distribution investment program. So it's BRL23 million from '23 up to '28. So the ongoing projects that in progress, a number of them are at full speed and we are already market leaders in energy here in Brazil. We are meeting already that commitment of this leadership that we already have in the pre-market and now also in retail trading showing Cemig's competence and Cemig's team competence in generating value. Also digital transformation. We are investing a lot in technology to prepare Cemig for the future. And also we are implementing initiatives to comply with non-technical losses within regulatory levels. So here we are talking about assets where we would like to reallocate capital and thinking about the future, other projects. Also we have renewals of generation concessions. We are just paying attention to the topic and also technologies for energy transition. That's something else that the company is very much aware of so that we can have a relevant position in the future so that we can have a good position on how to deal with energy transition topics. Now I'll turn the floor to Carolina. We will have a Q&A session and I would like to thank you all very much.

Thank you, Leonardo. So now we will start the Q&A session. Please ask all your questions at once and wait for the company's answer. [Operator Instructions] Our first question is for Marcelo Sa, a sell-side analyst from Banco Itau. Please, Marcelo.

Hello, everyone. Thank you very much for your call. I have two questions. The first one is that I would like to understand this bill of law authorizing Cemig to become a corporation. But I believe it would have to have the approval of another bill that was sent a while ago. So why sending this bill now before that prior project approval. And second I would like to know if there is anything new in terms of Taesa's stakeholding.

Thank you, Marcelo. I will ask Mr. Reynaldo to answer your question.

Good morning, Marcelo. It is obvious that the best entity to answer this question would be Minas Gerais administration, the controlling shareholder. It is a strategy that is coming from the controlling shareholder. Yeah, we know that there are two things there. We have this bill of law now and now we have the constitution amendment proposal. If just the bill of law is approved, our understanding, and it's just an initial understanding, is that we will need a referendum. So if this bill of law is approved regardless this constitution amendment proposal, according to the constitution, we would have to have a referendum. About Taesa, we do not have anything new about it. And if anything comes up, we will then publish a notice and you will know about it.

Thank you, Reynaldo. Next question from Daniel Travitzky, sell-side analyst from Safra Bank. Please, Daniel.

Hello, everyone. Thank you for this opportunity. I have two questions. They are related to the results. I would like to better understand the purchase and sale of energy in this quarter. There was an increase in that line. I would like to understand how was the quarter on that topic. And second question has to do with leverage. You mentioned that you were expecting leverage to increase after payments of dividends and the Eurobonds. So where do you project this leverage at and what is your mindset for additional dividends distribution up to the end of the year? Thank you.

For the first question about energy trading, I will ask the support of Dimas Costa. And about leverage, I'll turn the floor to Leonardo.

Good morning, everyone. Thank you for your question, Daniel. Let me understand it. You were asking us about the quarter -- the quarter's purchase of energy. Cemig, this year, sometimes we have an open -- positions. We were not in that situation, so we did not need to buy to purchase energy. But we did have a price difference. Today, we have an energy that we purchased. We have one-fourth of that energy coming from the Northeast. And usually that energy in September-October is stressed, because there is a restriction in transmission. And there is a price difference in the markets. And because of the lower prices, it's around BRL200, BRL300, BRL600 that is more -- usually more or less the amount. But this year, the price detached. It went to BRL300 and BRL400 in September and October. So out of the 1,100 megawatts that we acquired from the Northeast, we were able to hedge around 300 and the other 800 is at a risk and we have to manage that risk. But in addition to the impact, therefore, we were not open, and -- but we did have that difference. We had to buy energy in the Southeast and settle in the Northeast. And this is the regular dynamics of those that have -- that has -- have energy in the submarket and have to sell it in another. And also we had some trading companies that and some large trading companies did not deliver what they had promised in September and October. So we had to cancel contracts with no losses for Cemig and for other -- two other small ones, just for 2025, they will be reused and a large one, which was the largest impact then we were able to negotiate with it. It did not post energy to us and that amount of million or millions of Reals was converted in a price reduction in the contract for 2025. So actually there was a deferral. When you check the results, a lot of the impact in addition to the price difference was this deferral that we had to a trading company. Not only to help the trading company, but also to help ourselves, because no one wants judicialization, especially when you have a large amount of money involved and that was then transferred to 2025.

Thank you, Dimas. Now moving on. On the question of leverage, I'll turn the floor to Leonardo.

Hello, Daniel. Thank you for your question. Well, this topic regarding dividends and leverage reflect Cemig's situation. This is a company with a very low leverage, with a large investment program with access to the capital market to be able to finance future investments and what we are usually telling the market is that because of this large investment program, we also have large investments for next years is that our leverage is grow -- is going to grow considering dividends of 50% of the IFRS results, we would reach 2027 with a leverage between 2 and 2.5 considering the level of investments that we have now and this leverage will go down in 2028 with Cemig's Distribution tariff review. But we understand that even without talking about extraordinary dividends higher than the payout today that we have today, which is the 50% of the IFRS, we believe that these are very attractive dividends. The company just last year and the prior years, we have already paid higher -- the highest dividends in the elect sector. Also in this year, for the results that we already have, we can say that these will be very good dividends. And then I believe that this is a sustainable strategy because we can pay great dividends considering the company's profits and we are also investing, we are increasing leverage slowly without hindering the credit quality of the company. So this is a strategy that we see in the market that's very successful, very few companies have it and that's going to generate value for shareholders in the next few years. And in 2028, we will have a greater cash generation with a tariff review for the distribution company and also transmission, thanks to all the investments that are forecasted and we are executing these years.

Thank you, Leonardo. If there are no further questions, we now end the Q&A session. Now I would like to turn the floor to Reynaldo Passanezi, our CEO, for his final remarks. Please, Mr. Reynaldo.

I would like to thank you all very much for being with us in this video conference. Have a great week and we will continue working on consistent results on our investment program and meeting our targets. Have a nice day and a great week.

Thank you. Our video conference for the earnings call of the third quarter of 2024 has ended. IR Superintendents are available to take any further questions you might have. Thank you very much to all of you and have a great day.