Comp En De Mn Cemig ADS Q3 Earnings Call Highlights

Key Points

• Recurring earnings improved: Third-quarter recurring EBITDA rose 31% year over year to about BRL 2 billion, while recurring net income increased 17.9%. Reported EBITDA of BRL 2.7 billion and net income of BRL 1.7 billion included a BRL 1.1 billion benefit from reversing tax provisions.
• Investment and concessions remain priorities: Cemig plans to invest close to BRL 7 billion in 2026 and had completed about 75% of the program; leverage was 2.43 times EBITDA. It renewed the Sá Carvalho concession for 30 years and is pursuing renewals for Emborcação and Nova Ponte.
• Distribution gains supported results: Cemig D’s third-quarter net income climbed to BRL 500 million from BRL 269 million, helped by market recovery and a tariff adjustment. Billed market growth was 1%, with residential demand rising 6.9% while rural and industrial demand declined.

Comp En De Mn Cemig ADS NYSE: CIG reported higher recurring earnings for the third quarter of 2026, as its distribution business benefited from market recovery and a tariff adjustment while the Brazilian utility continued a multibillion-real investment program.

Recurring earnings before interest, taxes, depreciation and amortization, or EBITDA, were approximately BRL 2 billion, up 31% from a year earlier, CEO Marco Aurélio Martins da Costa Vasconcelos said on the company’s earnings call. CFO and Investor Relations Officer Leonardo George de Magalhães said recurring net income rose 17.9%.

Including nonrecurring items, the company reported quarterly EBITDA of BRL 2.7 billion and net income of BRL 1.7 billion. Vasconcelos said a favorable court ruling involving social security and the company’s profit-sharing program led to a reversal of tax provisions with a BRL 1.1 billion impact in the quarter.

Investment program and concessions

Cemig plans to invest close to BRL 7 billion in 2026 and had completed approximately 75% of that program, Magalhães said. The company invested about BRL 4.1 billion in distribution and nearly BRL 500 million in transmission. It also invested BRL 132 million in gas subsidiary Gasmig and BRL 258 million in Cemig SIM.

Magalhães said the investment program extends into 2027 and is aligned with the distribution tariff cycle ahead of a review in 2028. He said the company generated approximately BRL 6 billion in cash during the first nine months of 2026 and ended the quarter with around BRL 5.4 billion in cash.

Cemig secured a 30-year renewal of its Sá Carvalho generation concession. Management also expressed optimism about renewing the Emborcação and Nova Ponte concessions. Magalhães said Brazilian electricity regulator ANEEL had issued a positive opinion on those renewals and that the company was in discussions with the Ministry of Mines and Energy.

The CFO said Cemig’s leverage was 2.43 times EBITDA and its debt maturity schedule was almost seven years. Management also highlighted the company’s AAA ratings from major domestic agencies.

Distribution earnings improve

Cemig D, the distribution business, reported third-quarter net income of BRL 500 million, up from BRL 269 million a year earlier. Magalhães attributed the improvement in part to a market recovery and a tariff adjustment that took effect on May 28.

The distribution business’s billed market grew 1% year over year. Residential demand increased 6.9%, while rural demand fell 4.5% and industrial demand declined 2.5%. Magalhães attributed the rural decline to rainfall reducing the need for irrigation and said industrial customers had migrated to the free market.

Distributed generation grew 24.8% year over year and represented almost one-quarter of the company’s market, he said. Management expects that growth to moderate as newer categories of projects become less attractive.

Magalhães said distribution operating expenses were 16.5% below the regulatory limit. He also reported that the company’s service interruption duration and frequency indicators were below regulatory maximums.

Trading recovery and acquisition outlook

Cemig’s consolidated trading operations posted positive EBITDA of BRL 18 million in the third quarter, compared with a loss of BRL 37 million a year earlier. Magalhães said a change in strategy, reduced submarket effects and lower energy prices following increased rainfall helped the business close positions on favorable terms.

At Gasmig, recurring EBITDA declined slightly as customers migrated to the free market, reducing margins, Magalhães said. The subsidiary’s tariff review remains unfinished, but regulator ARSAE has published a weighted average cost of capital of 8.24%, which he described as adequate to remunerate investments.

Asked about acquisitions, Magalhães said higher interest rates made deals more challenging. Cemig is prioritizing investments in Minas Gerais, particularly distribution and transmission reinforcements, but would consider an acquisition that creates shareholder value.

Fredstwon Pereira, transmission asset management superintendent, said he expected a forthcoming battery auction to be highly competitive, with aggressive prices and many registered projects. He added that demand for the auction was not yet known.

About Comp En De Mn Cemig ADS (NYSE:CIG)

Companhia Energética de Minas Gerais S.A. (CEMIG) is a Brazilian electric utility headquartered in Belo Horizonte, in the state of Minas Gerais. Founded in 1952, the company is controlled by the state government of Minas Gerais. CEMIG generates, transmits and distributes electricity, with a power portfolio that includes hydroelectric and renewable energy facilities. It also participates in electricity trading and provides natural gas distribution services in Minas Gerais through its business interests in Gasmig.

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