By Brazil Stock Guide – Equatorial Energia (B3: EQTL3) placed shareholder remuneration at the center of its third quarter, announcing R$1.8 billion in interest-on-equity (JCP) and renewing its share buyback program after closing the company’s highly profitable transmission divestment. CEO Augusto Miranda opened the call stating that the group delivered “a very successful quarter on both the operational and financial fronts,” noting that the sale of eight transmission assets “finalized one of the most successful capital allocation cycles in Brazil.”
Buyback Renewal Aims to Preserve Optionality Ahead of Election-Driven Volatility
Vice-president Leonardo Aquino told analysts that the repurchase plan “was reaching its end” and that renewing it now is strategic: “We are heading into a year of high volatility because of the elections. In these moments, having optionality makes even more sense.” He emphasized that the buyback supports multiple needs — smoothing market swings, providing flexibility for incentive plans and maintaining share availability for tactical moves.
Aquino also explained the partial unwinding of preferred shares: “This is a tactical movement. The instrument was very important during our acquisition cycle. As we recycle capital and strengthen the balance sheet, it makes sense to gradually disarm that structure.”
Analysts pressed for clarification. Daniel Travitzky, from Safra, asked whether the company is adjusting its long-term remuneration philosophy: “How should we think about dividends and buybacks going forward?” Aquino replied that the combination of cash generation, divestment proceeds and leverage control “gives us room to maintain active tools of shareholder return.”
Liquidity Strengthens as Debt Profile Extends and Cash Pile Surges
The group closed the quarter with R$16 billion in cash, equivalent to 2.1x short-term debt. “We had an intense funding window,” Miranda said, citing R$9.4 billion in issuances that extended the average maturity to 5.8 years and lowered spreads. Aquino added that debt management included R$800 million prepaid during the quarter and another R$2 billion prepaid between October and November.
On leverage, he highlighted that the ratio stood at 3.3x net debt/EBITDA, noting that the metric was temporarily affected by the Sabesp concession accounting: “Even with the adjustment, we remain within comfortable levels.”
Distribution Business Leads Results with Strong Recovery in Rio Grande do Sul
Distribution performance once again anchored consolidated results. The segment grew billed market by 2.6% and raised adjusted EBITDA by 8.1% — or 11% excluding the GD effect from 2024. “We ended the quarter with losses below regulatory limits for the eighth consecutive period,” Aquino said.
Rio Grande do Sul’s recovery was a highlight after last year’s extreme weather. “Once we were able to operate fully, the results appeared promptly,” Aquino explained. The region saw a 9.1-hour reduction in DEC year-on-year after R$1.3 billion in investments.
In the Q&A, Itaú BBA’s Luiza Candiota questioned the volatility in “other operating revenues and expenses.” Aquino responded: “This line has brutal volatility,” citing one-off reversals in Goiás and Rio Grande do Sul and intensified asset removal costs due to a 200% increase in maintenance and renewal works.
Maranhão Concession Renewal Enters Final Stage
Miranda told investors that the renewal of the Maranhão concession “is now at the final stage,” following approval by Brazil’s Federal Audit Court (TCU). “We are awaiting homologation by the Ministry and then contract signing,” he said — a sign of progress in Equatorial’s long-term regulatory stability.
Saneamento and Renewables Report Strong EBITDA Growth
Sanitation EBITDA rose 68% year over year, driven by accelerated metering rollout. Renewables also posted 68% EBITDA growth despite curtailment effects. The company said MP 1304 — approved by Congress — “introduces advances that help distribute curtailment risk more evenly,” according to Aquino.
Price Signals, White Tariff and Smart Metering: Sector Structural Shifts
XP’s Raul Cavendiche asked about MP 1304 and new price signals. Regulatory director Cristiano Logrado explained that the shift toward time-differentiated tariffs is structural: “The trend is clear — the market will rely less on physical guarantees and more on flexibility.”
On smart meters, Logrado said deployment requires regulatory updates: “If I replace meters but keep the obligation of physical invoice delivery, many benefits are lost.” He supported the government’s cautious approach of starting at 4% per year: “Digitalization must be done with care.”
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