EBR — AXIA Energia S.A.

Summary of AXIA Energia's Q3 2025 Earnings Call

1. Key Financial Results and Metrics:

• Revenue: Experienced a decrease due to regulatory changes and a one-off effect from extending the Tucurui contract last year. Transmission revenue increased post-tariff review, but generation revenue was negatively impacted.
• EBITDA: Slight decrease attributed to the divestment of thermal power plants, offset by reduced operational costs and increased transmission revenue.
• Net Income: Reported a significant decline compared to Q3 2024, primarily due to provisions related to nuclear contracts. Adjusted net income showed a 68% decrease due to asset sales.
• Dividends: Announced a record dividend payout of BRL 4.3 billion, totaling BRL 8.3 billion for the fiscal year 2025.

2. Strategic Updates and Business Highlights:

• Divestments: Completed sales of stakes in Eletronuclear and EMAE, alongside the last thermal power plant, positioning the company as 100% focused on clean and renewable energy.
• Acquisitions: Acquired a 50.1% stake in Tijoa Energia for BRL 247 million, enhancing operational capacity and reducing legal disputes.
• Investment Focus: Committed to BRL 10 billion in investments for operational efficiency and active participation in auctions, awarded four lots in the latest transmission auction.
• ESG Initiatives: Partnered with Google Cloud for AI-driven weather forecasting to enhance operational resilience and invested BRL 51 million in water conservation efforts.

3. Forward Guidance and Outlook:

• 2026 Pricing Resilience: Management expressed confidence in stable pricing for 2026, anticipating average prices around BRL 240, supported by a flexible energy matrix and improved rainfall patterns.
• Future Auctions: Plans to actively participate in upcoming capacity auctions and continue optimizing capital allocation based on market conditions and operational performance.

4. Challenges and Points of Concern:

• Declining Metrics: Notable declines in net income and revenue from generation, raising concerns about the sustainability of profitability amidst regulatory changes.
• Market Volatility: Potential risks associated with energy pricing volatility and the impact of legacy contracts from the company's previous government-owned status.
• Investment Needs: Ongoing need for investments in Eletronuclear, which may pose financial strain if not managed effectively.

5. Notable Q&A Insights:

• Capital Allocation Strategy: Management clarified that dividends are based on realized cash flows and not on anticipated asset sales. Future dividend payments will depend on maintaining financial health and meeting capital allocation methodologies.
• Regulatory Environment: Executives expressed optimism about recent regulatory changes, which are expected to address industry distortions and improve expansion dynamics.
• Modulation Gains: Discussions highlighted the current lack of liquidity in modulation products for hydroelectric power, indicating a need for regulatory development to enhance market opportunities.
• Tijoa Acquisition: Management emphasized the strategic advantages of the Tijoa acquisition, including potential for expansion and resolution of prior legal disputes.

Overall, AXIA Energia's Q3 2025 earnings call reflected a company in transition, focusing on divestments and clean energy investments while navigating challenges in revenue and net income. The outlook remains cautiously optimistic, supported by strategic initiatives and a commitment to shareholder returns.