Equatorial S.A.

Consolidated gross margin increased 7.7% year over year, consolidated EBITDA increased 0.8%, and net income before minority interest totaled BRL 653 million. Excluding SABESP equity income, EBITDA would have grown 4.1%; adjusted net income fell 80.1% because of higher interest rates and a larger debt balance tied to the investment cycle. Net debt/EBITDA ended at 3.1x, up 0.4x sequentially, mainly due to the BRL 5.6 billion Copasa acquisition payment. Investments in the quarter were approximately BRL 2.6 billion, down 4% versus the same quarter last year. Looking ahead, management said the tariff revision cycle should help convert current debt-funded investments into EBITDA over time, with revisions in Rio Grande do Sul and Amapá this year, Pará next year, and Goiás and Piauí thereafter. They also said Copasa will move into the normal CADE/EGM process, while the group continues to pursue cost discipline, tariff reviews, and liability settlements in the second half of the year.

Augusto Miranda emphasized that the quarter showed solid operational progress, especially in distribution quality and market growth, while underscoring that the company is managing a more leveraged balance sheet in a disciplined way. He framed the Copasa stake as a strategic milestone that fits Equatorial’s long-term value-creation strategy and highlighted the company’s ability to identify opportunities and execute. His tone was confident and measured, with repeated emphasis on quality, discipline, and sustainable results.

Leonardo highlighted the quarter’s financial drivers: gross margin up 7.7%, EBITDA up 0.8%, and distribution EBITDA up 8% on the back of a 10.4% rise in distribution gross margin. He noted adjusted net income was down 80.1% because of higher financial expenses from interest rates and debt growth, while leverage rose to 3.1x after the Copasa stake purchase. He also said the company raised BRL 7.6 billion in the quarter, including BRL 5.1 billion for Copasa at an average cost of CDI plus 0.8% per year, and that CDI-linked debt currently stands at CDI plus 0.57% per year. He pointed to an average debt maturity of 5.9 years excluding the Copasa raise, and reiterated that the company is extending maturities and lowering spreads while preserving flexibility.

Analysts pressed management on whether rising quality-related spending would continue and whether the company would take actions to optimize capital structure given leverage near the covenant level. Management said quality metrics are improving, 5 of 7 distributors are within DEC thresholds, and costs remain under control; on leverage, they said current investments are temporarily pressuring net debt but future tariff revisions should bring those investments into EBITDA. Another key topic was rising delinquency and default: management acknowledged a more deteriorated environment, said collection remains strong in high voltage, and described work to adapt tools and segment-specific collections strategies. On regulation, the company discussed ANEEL consultations on recoverable/non-recoverable collections and a new productivity methodology, saying it expects a conservative agency approach but sees potential positive effects over 2026-2027. For Copasa, management said the next steps are the CADE process, calling an extraordinary general meeting, and electing the board, which they said should happen soon.