By Brazil Stock Guide – Equatorial SA (EQTL3) reported an 11.3% increase in adjusted EBITDA in the first quarter, as Brazil’s multi-utility group benefited from growth in its distribution business, a larger regulated market base and a stronger liquidity position.
Adjusted EBITDA reached 2.879 billion reais in the quarter, compared with 2.587 billion reais a year earlier, according to the company’s first-quarter earnings release. Net operating revenue rose 12% to 12.750 billion reais from 11.384 billion reais in the same period of 2025, the company said in the release.
The company, which operates in power distribution, generation, energy trading, services, sanitation and telecom, said consolidated adjusted gross margin rose 13% to 4.346 billion reais. The increase was driven mainly by the distribution segment, where margin gains totaled 488 million reais.
Equatorial’s distribution business remained the main engine of the quarter. The adjusted gross margin of distributors excluding VNR reached 4.088 billion reais, up 14% from a year earlier. Equatorial Maranhão contributed 168 million reais to the increase, followed by Equatorial Pará with 108 million reais, CEEE-D with 71 million reais, Equatorial Piauí with 64 million reais, Equatorial Alagoas with 51 million reais and Equatorial Goiás with 26 million reais.
The company said the Fio-B tariff adjustment added 198 million reais to distribution margin, while market growth contributed 127 million reais. Consolidated Fio-B market volume increased 3.8%.
Net income adjusted for nonrecurring and noncash effects declined 23.6% to 359 million reais from 470 million reais in the first quarter of 2025. On a same-assets basis, adjusted net income was nearly stable, falling 0.3% from 360 million reais to 359 million reais.
Reported consolidated net income was 607 million reais. Net income excluding minority interests totaled 424 million reais.
Equatorial also reported operational improvements across its distribution concessions. The DEC reliability indicator improved year over year in five of the group’s seven distributors, while all distributors met the regulatory limit for FEC. Total consolidated losses stood at 18.0%, 0.9 percentage point below the regulatory level.
The company’s collection ratio ended the quarter at 97.52%. CEA, Equatorial Alagoas and Equatorial Goiás recorded collection levels above 100%, while Piauí, Maranhão and Pará remained affected by tariff review processes and higher bills, according to the release.
Capital expenditure rose 12.2% to 2.585 billion reais in the first quarter from 2.304 billion reais a year earlier. Distribution accounted for 2.536 billion reais of that total, including 1.931 billion reais in electric assets, 464 million reais in special obligations and 142 million reais in non-electric assets.
Equatorial said the increase reflected investments in expansion, service quality and loss reduction. Special obligations were boosted by spending on Brazil’s Luz para Todos program, remote electrification initiatives and progress on a new substation in Alagoas.
Gross debt reached 57.1 billion reais in the quarter, up 4.3% from the fourth quarter of 2025. Net debt for covenant purposes totaled 44.3 billion reais, bringing the net debt-to-EBITDA ratio to 2.7 times. Excluding the capital gain from the sale of transmission assets, the ratio would have been 3.1 times.
Cash and financial investments reached 11.6 billion reais, equivalent to 2.5 times short-term debt. The average debt maturity increased to 6.1 years from 5.6 years a year earlier. Equatorial raised 3.2 billion reais in the quarter and an additional 1.7 billion reais in April.
In renewables, Echoenergia reported consolidated generation of 1,107.1 GWh, down 5.4% from the first quarter of 2025. The decline reflected weaker wind speeds across parts of Brazil’s Northeast and constrained-off events.
The financial impact of constrained-off reached an estimated 33 million reais in the quarter, with 181 GWh of curtailed energy, equivalent to 14.1% of energy output. The company said curtailed energy volume rose 7% year over year, while the financial impact increased 57%, reflecting higher spot power prices.
Echoenergia’s gross energy profit rose 1.6% to 270.6 million reais, while adjusted EBITDA fell 4.4% to 152.1 million reais.
In sanitation, Equatorial reported an increase in water coverage to 71.6% from 63.2% a year earlier. Sewage coverage rose to 15.6% from 15.0%.
The company also highlighted ESG-related developments, including its continued presence in the ISE B3 sustainability index in 2026 and a 16.7% reduction in SF6 emissions intensity. Social investments totaled 8.940 million reais in the quarter, compared with 270,000 reais a year earlier.
Equatorial said it adhered to the Acordo Gaúcho involving 911 million reais in liabilities, with a 75% discount on interest and penalties and the possibility of paying part of the amount with discounted precatórios. The group also signed concession renewal contracts for Equatorial Pará and Equatorial Maranhão.
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