Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Light SA (LGSXY) successfully finalized the payment of around 30,000 creditors as part of its judicial recovery process.
• The company achieved a capital increase of 300 million reals in its distribution business.
• Light SA (LGSXY) reported a solid consolidated cash position of 2.4 billion reals, an increase of over 300 million reals compared to December last year.
• The company's collection rate improved to 98.8% over the past 12 months, driven by multiple initiatives.
• Light SA (LGSXY) is undergoing an intense transformation, focusing on operational efficiency and customer-oriented approaches, which has led to improved revenue and reduced losses.

Negative Points

• The generation and trading segments experienced a decline in EBITDA by 16.7% year over year due to less profitable contracts.
• The company faces challenges with non-technical energy losses and payment defaults, which are crucial issues for its operation.
• Light SA (LGSXY) is under pressure to renew its concession contract, which expires in 2026, and must address high-risk areas within its concessions.
• The judicial recovery process involves complex restructuring, including the issuance of new bonds and convertible instruments, which may pose risks if not executed timely.
• There is uncertainty regarding the company's ability to meet potential capital increase requirements as discussed by regulatory authorities.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with LGSXY.

Q: What is the expected date for the swap? A: The company has started developing the material with its advisers, but there is no set deadline yet. They are working to complete it as soon as possible, expecting it to be done in the coming months.

Q: How are you coping with the record rating and PMT at 69%? Does the expected renewal include changes in this measurement? A: Alexandre Nogueira, CEO, mentioned that they are reviewing conditions and will contribute to the public hearing by ANEEL. They plan to offer differentiated incentives for high-risk areas in their concession, which is the case for Light.

Q: Should the right of preference for the convertible debentures be manifested by November 28th? A: No, it is not obligatory. It is optional, and the right can be expressed until November 28th.

Q: When will the new bonds be available to debenture holders and creditors after the judicial recovery? A: Rodrigo Tostes, CFO, stated that after the swap with B3, the bonds will be negotiable and available to the holders.

Q: Regarding the ANEEL discussion about leverage limits, do you believe the instruction will take place, and will you be able to increase your capital by the required amount? What happens if you do not fulfill that requirement? A: Alexandre Nogueira, CEO, responded that Light is closely monitoring the situation and the ruling. They are analyzing the current contract and have a differentiated view on the renewal of the concession. They are pursuing financial capacity as established in the decree.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.