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Adapting The Bowser Game Plan

UNDERSTANDING THE UNDERLYING PHILOSOPHY TO HELP YOUR PORTFOLIO Aside from the in-depth, top-of-the-line analysis that The Bowser Report provides, there is another reason why subscribers have high returns: the Bowser Game Plan. This investment strategy has helped subscribers remain disciplined and realize profits for over forty years. For that reason, we always send new subscribers an explanation of the plan in some form. Still, we get a lot of questions and concerns. Sticking to a plan is essential for every investor. To succeed, you must either bring your own plan to the table or apply The Bowser Report’s. And, whatever the plan, it must align with your investment objectives, which vary from investor to investor. For example, some investors begin with a very limited amount of capital, restricting the size of their positions and their number of holdings. Therefore, these investors must develop or adapt plans to suit their needs and avoid losing money. While the Game Plan helps maximize profits and minimize risks for many subscribers, it is vital to understand the philosophy behind the strategy to better apply it directly or adapt its core strategies to fit your unique investment goals. BREAKING DOWN THE BOWSER GAME PLAN 1. DO NOT PAY more than $3/share for a stock. This is a fairly simple rule that we have always stuck to at The Bowser Report. Certain stocks are great buying opportunities at under $3 per share. Prior to publishing the first newsletter, founder Max Bowser noticed a trend that once a stock broke above the $3 threshold, it typically continued appreciating if the company’s fundamentals remained strong. The likely reason for this is that many institutions start taking positions when a stock surpasses $5 per share. Buying companies before institutional interest occurs increases the likelihood that fundamentally-sound, low-priced stocks will provide you with higher returns. 2. CREATE A PORTFOLIO of 12 to 18 stocks. Diversification is important. Diversification is essential when it comes to managing any portfolio. Most investors believe that investing in different stocks is how to diversify and minimize risk. However, this overlooks the fact that some of these stocks are within the same sectors, industries and even have similar sources of revenue. That’s why it’s always good to review our extensive analysis to ensure that our most recent stock pick doesn’t overlap with any of your current holdings. Another factor to consider when diversifying is how commissions can reduce your capital. A great free online brokerage is Robinhood, but if you use another broker, try not to over-diversify your portfolio. A simple rule of thumb is that if the commissions of buying and selling twelve stocks ($240 for the average broker) is more than 5% of your account value, then you should consider a smaller number of holdings. Regardless, we have found that holding twelve to eighteen stocks hedges against any potential big losses. The more stocks you own, the greater your chances of holding a winner, which will more than make up for the losers. 3. DO NOT SELL when a stock goes above $3/share and is moved to Page 5. Because I am also a day trader, the foundation of this rule is the backbone to my personal trading strategy. Never add to your losers, just your winners. That being said, a “winner” for The Bowser Report is a stock surpassing a share price of $3. By selling every time a stock breaks out of that price range, you are cutting your winner loose before it even has a chance to make you money. As you will later see, we emphasize taking your profits when your holdings double. If you take your profits as soon as it breaks $3, most of the time you’ll never give it the chance to double! 4. DO NOT SELL when a stock moves to a lower category. Just because a company isn’t performing well in the short term does not mean that it doesn’t have potential upside. If you are sufficiently diversified, you will have no problem with underperformers. The Bowser Report tries to focus on picking stocks that are going to be around for the long haul. That is why we focus on sales and earnings forming long-term trends, as opposed to just looking at the most recent quarterly results. By doing this, we are finding companies that will survive through short-term fluctuations in sales and earnings. All in all, try to avoid selling if you don’t have sound logic behind the decision. If you are not sure whether or not to sell, you can always refer to the next part of the Game Plan: the selling plan. 5. SELLING PLAN: Sell half of your holdings when the stock doubles from your purchase price. Sell the remainder after the stock drops 25% from its most recent high. If the stock drops 50% without doubling, sell all shares. This is easily the most important rule of the Bowser Game Plan. It highlights when to take profits and when to cut losses. Better yet, it has proven to work for Bowser subscribers for decades. Still, we’ve had subscribers deviate from the selling plan. Those who are successful outside of our selling plan find their success in thoroughly developed plans based on their own investment objectives. Investors deviating from the plan generally have vast investing experience, while individuals with little to no investing experience should stick to the Bowser Game Plan. An example of someone deviating would be an experienced investor who chooses to sell all his or her shares at one time as opposed to sizing out (i.e. selling half at one time and the other half later). There are countless other modifications to our selling plan, but those with no experience in developing a strict selling plan and sticking to it should use ours as a tried and true method. 6. RECORD proceeds from sales. It is important to always record your profits and losses in order to track performance. If you are only ever tracking your current holdings, you lose sight of where your portfolio began, and the profits it’s generated. Better yet, tracking buys and sells allows you to analyze your entries and exits. It also gives you the ability to see how well your plan is doing, and how well you are sticking with it. 7. PORTFOLIO EVALUATION = current value of portfolio + proceeds from sales. The same concept for #6 also applies to this rule. Value your portfolio and track your performance in order to better visualize your portfolio’s growth and your growth as an investor. ADAPTING THE GAME PLAN The big takeaway from breaking down the Bowser Game Plan is that disciplined investing generates profits. The Game Plan has been developed and fine-tuned over decades as a successful investment strategy. Those who are unfamiliar with strategy development or who tend to stray from self-developed strategies should absolutely stick to the rules of the Bowser Game Plan. However, no one situation is alike. Investment objectives vary depending on account size, risk tolerance, brokerage and other factors. That said, the Game Plan can and should be tweaked to suit your situation. Just make sure to do so in a regimented way! We touched briefly on brokerages in this article. We have our list of those we’ve had positive dealings within the past. Selecting which one is right for you is a whole other article in itself, but as long as the brokerage has stop orders, minimal commissions and good customer service, you should be fine. Overall, we would like to emphasize there is a need to have a structured game plan and to remain disciplined. If the Bowser Game Plan doesn’t fit your objectives, feel free to modify it in a structured and calculated manner if you have experience and are 100% comfortable doing so.

Thematic ETFs: Smarter Than Regular Smart Beta ETFs?

It’s been a true transformation for the ETF industry over the last few years. With a size of $3.137 trillion , the global ETF industry hit a record at the end of April 2016. The U.S. market alone boasts a size of over $2.2 trillion, derived from over 1,890 exchange traded products. While this joy-ride is something to delight in, crinkles of worries must be there on the foreheads of issuers. After all, with such gigantic and successful progress, ideas of new issuances are likely to fall short. There is always pressure for beating the benchmark, navigating tough trading times and last but not the least, peer pressure. Simply put, the days of plain vanilla ETFs or market-cap weighted ETFs are gone and products with several wining attributes, like low volatility or high dividend, are coming on-stream. Commonly, these next generation ETFs are called smart-beta ETFs. But it seems that the lure for smart beta investing is also diminishing these days. Beating the benchmark on a sustainable basis is tough in the present global backdrop that is fraught with issues. Plus, first-time craze also ebbs when a new investing theme turns older. Probably, this is why issuers are fine tuning the smart beta concepts to make them smarter. For example, Goldman Sachs introduced the ActiveBeta Index concept, Global X has a suite of scientific beta ETFs and so on. In fact, to make things more competitive and take them a few notches higher, Global X got itself busy in promoting the Thematic investing and launching more products based on it. Inside Thematic Investing As per Global X, its family of thematic ETFs looks to track companies that reap returns from ” structural changes in people and demographics , technology and innovation, and natural resources, along with companies that exhibit a particular set of desirable values.” As we can see that the above-mentioned criteria is long-term in nature and less susceptible to sudden changes in economic policies of various countries or a sudden jerk in the market emanating from some geo-political crisis. Instead, these factors look to cash in on some emerging trend in the global economy. As an investor, if you have faith in a particular segment over the long term, only then you should go ahead with that product. As of now, Global X has four categories in its thematic investment, namely technology, resources, values and people. Not that these ideas are fool-proof as products in technology and resources segments piled up losses previously; but new entrees in people and values segments seem striking at the current level. We’ll tell you why. People Products Global X Millennials Thematic ETF (NASDAQ: MILN ) This recently launched ETF looks to track companies targeted at the U.S. millennials generation (birth years ranging from 1980-2000). Since millennials seem to be the growth driver of the U.S. economy, outpacing baby boomers in 2015 as the largest generation and has the prospect of comprising 75% of the workforce by 2025, this surely emerges as a long-term bet. Per Global X , millennials now earn about $2 trillion, with income projected to grow to $8 trillion by 2025. Since millennials have a tendency of splurging on tech-savvy products and eating out, several tech or consumer discretionary ETFs can give MILN little competition. Global X Health & Wellness Thematic ETF ( OTC:BFIT ) There is a visible shift in consumers’ taste and preference for health and wellness products which give people a better quality of life. It is already a $3.4 trillion industry . As global life expectancy is projected to surge by 18% by 2100, contribution of health and wellness companies ought to be higher. This explains why investors can have a look at BFIT which revolves around stocks like Whitewave Foods Co, Adidas AG, Herbal Life Ltd, etc. Global X Longevity Thematic ETF (LNGR) This new fund tracks companies which depend on people across the globe living longer lives. Now, since older people invest more in health care related products and services, health care will rule this fund. Boston Scientific, AbbVie and Medtronic are the top three firms of this ETF. As a matter of fact, this fund may face tough competition from other health care and biotech ETFs like iShares Global Healthcare ETF (NYSEARCA: IXJ ) , iShares U.S. Healthcare ETF and Guggenheim S&P 500 Equal Weight Health Care ETF (NYSEARCA: RYH ) . Values Product There is only one fund as yet, namely Global X S&P 500 Catholic Values ETF (NASDAQ: CATH ) . The fund gives exposure to the companies within the S&P 500 whose business practices follow Catholic values and leave out those that do not. Companies involved in weapons, military products and child labor do not get an entry card into this ETF. The theme falls in the category of socially responsible ETFs, though CATH is quite unique in nature. Bottom Line Maybe defined in a different way, thematic ETFs seem quite similar to smart beta ETFs. It’s just that the ideas are innovative and thus the issuer can expect success ahead. Original post Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Companhia Paranaense de Energia’s (ELP) CEO Luiz Fernando Leone Vianna on Q1 2016 Results – Earnings Call Transcript

Companhia Paranaense de Energia (NYSE: ELP ) Q1 2016 Earnings Conference Call May 13, 2016 2:30 PM ET Executives Luiz Fernando Leone Vianna – Chief Executive Officer Luiz Eduardo da Veiga Sebastiani – Chief Financial and Investor Relations Officer Adriano Fedalto – Accounting Superintendent Sergio Luiz Lamy – President of Copel GeT Antonio Sergio de Souza Guetter – President of Copel Distribuição Analysts Miguel Rodrigues – Morgan Stanley Operator Good afternoon and thank you for waiting. Welcome to Companhia Paranaense de Energia Copel conference call to discuss the first quarter of 2016 results. We would like to inform you that all participants will be in a listen-only mode during the company’s presentation. Afterwards, we will have a session for questions and answers, when further instructions will be given. [Operator Instructions] Before proceeding, we wish to clarify that forward-looking statements that might be made during the call related to Copel’s business perspectives, operating and financial targets, and projections are beliefs and assumptions of the company’s management as well as information currently available. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions as they refer to future events and therefore will depend on circumstances that may or may not occur. General economic conditions, industry conditions, and other operating factors may affect the future performance of Copel leading to results that differ materially from those expressed in such forward-looking statements. Participating in this call, we have Mr. Luiz Fernando Leone Vianna, CEO of the company; Mr. Luiz Eduardo da Veiga Sebastiani, CFO and Investor Relations Officer; Mr. Gilberto Mendes Fernandes, Business Management Officer; Mr. Jonel Nazareno Iurk, Business Development Officer; Mr. Antonio Sergio de Souza Guetter, President of Copel Distribuição; Mr. Sergio Luiz Lamy, President of Copel GeT; Mr. Ricardo Goldani Dosso, President of Copel Renováveis; Mr. Franklin Kelly Miguel, President of Copel Comercialização; and Mr. Francisco Cesar Farah, CFO of Copel Telecom. The presentation will be made by Copel’s management and it can be followed at the company’s website, www.copel.com/invesor relations. Now, we would like to give the floor to Mr. Luiz Fernando Vianna, CEO of the company. Mr. Vianna, you have the floor. Luiz Fernando Leone Vianna [Interpreted] Good afternoon, everyone. My colleagues in the executive committee, all participants, welcome to our call to talk about the results of the first quarter of 2016. I would like to start by talking about important regulatory issues that bring or could bring relevant impact on Copel. The first point and it couldn’t be different, is the 4th Tariff Revision Cycle of Copel Distribuição. We certainly are a company to develop such as a process. As you have already had access to the documents available at the ANEEL website in the number #20 Public Hearing that shows a net remuneration base of R$4.8 billion with the new cycle. This increase means that our distribution company doubled in size in the last four years. However, it’s important to highlight the investment was not made only with extensions. We also invested quite a lot with the improvement in the quality of service that we deliver. And this led us to be recognized as one of the best distribution companies in the country. Now, with the beginning of the 4th cycle, all these investments will be remunerated. And for this reason, we are certain that we have adopted the adequate strategy for the business. The 4th cycle still brings about other important points such as the remuneration of special obligations and the trajectory of costs that will allow us to have a more adequate coverage for the PMSO expenditures within the cycle that starts in 2016. Nevertheless, the most interesting point is that the practices, [the clever strategy] [ph] by Copel Distribuição should suffer a reduction of approximately 10% with the beginning of the new cycle, which is targeted for consumers, because they will be spending less with energy and for the company as well, because it brings a substantial delinquency reduction and growth in consumption, factors that have been impacting our results in the last few quarters. However, it’s important to stress that the process hasn’t been concluded yet. The hearing is still open until May 19 and after this period the prices would be validated and rectified by the ANEEL administration. And conclusion is estimated for the end of June. According – continuing with the regulatory theme, as Resolution 706, coming from Public Hearing 04, will talk about an important advance into the issue of involuntary over-contracting of business. The new rule allowed us to consider part of the energy that we receive through the quota system as involuntary over-contracting, which was enough to mitigate Copel’s distribution risk [negative as seen] [ph]. In transmission, the Ministry of Mines and Energy got the news about the RBSE implementing, which are the transmission assets already existing in May 2000, by means of ordinance 120 of 2016 and ANEEL established the integration of RBSE to the regulatory asset base, the restatement of the value of the assets since 2012 and payments of indemnity by means of RAP since the tariff process of 2017. This is interesting to say that the cost of own capital to be considered in the restatement of the asset value is 10.4% in near-term, which allows us to have this adequate restatement of the amount to be indemnified. In the case of Copel, this amount has not been ratified by ANEEL yet. And I would like to mention that any effect on our results or conditions to the ratification of the final result of the evaluation report by the regulators, ANEEL. Just to remind you, in March 2015, we submitted to ANEEL the evaluation report to the amount of R$882 million referring to RBSE and the date of it was December 31, 2012. On slide number 4, I would like to highlight that we have important achievements related to the projects that we are building. Starting with Colíder, the Supreme Court of Justice in a decision supported by technical studies canceled the injunction that mandated Copel GeT to suppress 100% of the vegetation of the area to be flooded by the reservoir, and confirmed that the suppression of 70% of the area was environmentally adequate. With that, the work is then concentrated in the construction of the transmission line that will be linking the Colíder plants to the interconnected systems, and the electromechanic assembly of the equipment. Commercial operations should start in the first-half of 2017. We also had an important achievement related to the Baixo Iguaçu project in which we hold a 30% stake and we are building in partnership with Araucária [ph] in a recent decision. And they approved an additional 130 days for waiver of responsibility for the plant and the total number of days now is 756, which means at the beginning of the sale to other utilities was postponed to the end of 2018. And this is enough time for us to build the plant and start commercial operations. In the transmission segment, SPC Matrinchã concluded its construction work and over 1,000 kilometers of lines have already been planted and commissioned successfully. And now, we need a confirmation by the regulators in order to officially start operation of these projects. Besides Matrinchã other transmission projects are about to be concluded and start commercial operation. SPC Guaraciaba should start-up by the end of June, whereas SPC Paranaíba has already concluded construction of 346 kilometers of lines and should come on stream by the end of next month. Jointly, these three projects will bring about to Copel around R$158 million. Lastly, I would like to highlight that we have recently held two auctions for the sale of energy in the free market in which we have sold over 6 million megawatt hours in products, where delivery in two to five years, and starting delivery as of June 1, 2016 then January 1, 2017, and then January 1, 2018. Our strategy is to hold additional auctions in order to reduce the amount of energy, whose contracts have been terminated and allows a better predictability for the generation business. It’s important to highlight that the results already obtained allows us to make or give a significant step in order to reach this objective. Now, I give the floor to my colleague, Sebastiani, our CFO, who will talk in detail about the results for the period. Luiz Eduardo da Veiga Sebastiani [Interpreted] Thank you, Mr. Luiz Leone Vianna, our CEO. As he said, we have a participation of all these executives due to this important moment for the company. And thank you very much for participating in this call. As you will see on Slide #5, some events again impacted our results in the first quarter of 2016. We posted over R$120 million in provisions, of which R$84 million are related to labor litigation and R$32 million to civil loses. We posted R$38 million in allowance for doubtful accounts because of the economic crisis that we are going through in Brazil. And that has a direct impact on Copel Distribuição results. Economic crisis has been impacting energy consumption leading to a drop of 4.3% in the capital market of Copel Distribuição, in line with the drop in consumption that we see in the country. The decrease in Copel’s results is also explained by the lower results of Araucária TPP, which represented only [indiscernible] in the first quarter of 2016, accruing R$14 million loss in the period vis-à-vis earnings of over R$150 million in the first quarter of 2015, besides the drop in results which also impacted by the lower allocation of energy at Copel GeT to the short-term market aligned to the lower value of the spot price in the period. Slide #6 now, details of our operating revenue, with the reduction of 27% in the first quarter of 2016, being close to R$3 billion. The main reason for this decrease is the recognition of the result of sectorial assets and liabilities that was negative by R$527 million in the first quarter of 2016, when there was a positive result of R$561 million in the first quarter of 2015 due to the amortization of R$402 million in the period coming mainly from the recovery via tariff of the deferrals realized in 2013 and 2014, and the negative constitution of R$144 million coming from the reduction in the value of the CDE, the economic development account, and the lower cost with the purchase of energy vis-à-vis the current coverage. Revenue from delivery to end customers grew by 19% due to the adjustments of the tariffs to the Copel Distribuição tariff over last year. Nevertheless, these adjustments were affected negatively by the charges and by the slowdown in the captive markets of Copel Distribuição and the free markets of Copel GeT. Revenue from sales to other utility, that means the many of the sales of Copel GeT and all the sales of Araucária TPP had a 47% reduction in the first quarter of 2016, resulting in the lower dispatch of TPP, the lower volume of energy allocated [indiscernible] by Copel GeT, and lower spot price as we mentioned. Revenue from the use of the power grid grew by 44% due to the tariff adjustment applied by Copel Distribuição in June 2015 and also the increase of revenue of the transmission segment coming from the RAP adjustments and the startup of new Copel assets. Other operating revenues items made up by telco revenue, gas distribution and others grew by 6% and reflect mainly the 31% increase in the telco revenue which comes from the increase in the client base. On the next slide, Slide #7, we show the operating costs and expenses that were below R$2.8 billion in 1Q 2016, 23% less than the one that we had in the same period 2015. This can be attributed mostly to the 33% decrease in the cost with the purchase of energy because of the end of existing energy contracts that were replaced by energy contracts coming from the quota system, much cheaper and the reduction of the Itaipu tariff. Regarding the other costs, it’s important to say, that we had higher expenditures with charges for the use of the grid, due to the dispatch of TPP’s results by the order of merit. Manageable costs went up 12% in the first quarter this year due to higher personnel cost and third-party services due to inflation that reached 10% in the period. The provisions and reserves line, as I said before on Slide 5, represented R$121 million was impacted by labor and doubtful accounts provisions. But when compared to the same period in 2015, we see a 45% decrease in the period. But it’s important to highlight that in the first quarter of 2015 we posted R$73 million in allowance for doubtful accounts related to the difference between the contract of Colíder plants and the spot price, which means a higher amount of provisions at the beginning of last year. On Slide 8, we show the EBITDA that was 37% lower year on year, totally R$528 million in the first quarter this year with 17% margin over the operating revenues. The Copel GeT cash generation accounted for 86% of the consolidated EBITDA and Copel Telecom 5%, the other companies in the group accounted for 9% and the main contribution came from Elejor. Copel Distribuição closed the first quarter of 2016 with a negative EBITDA of R$29 million vis-à-vis a positive result of R$49 million in the beginning of 2015. But we have the effect we consider non-recurring, because of that we show on Slide 9, the comparison between the adjusted EBITDA of Copel Distribuição. As we know, the tariff for Copel Distribuição compensate for coverage for delinquency that for the current tariff cycle is of about R$13 million per quarter. However, the tariff increases and the economic stagnation have been contributing to an increase in the level of delinquency that is higher than the tariff coverage and ended up having a negative impact of R$22 million. The results of the distribution company in this sector decide in a non-recurrent fashion, we posted R$38 million in legal claims, provision for legal claims. And in February, we had some organizational adjustments that caused the transfer of part of our fuel cost from the holding company to subsidiaries with higher impact on Copel Distribuição. Considering these adjustments the adjusted EBITDA of the first quarter of 2016, which has been positive in R$38 million, 58% lower than the adjusted EBITDA of the first quarter of 2015, reflecting very clearly the impact from the market downturn, therefore the economic scenario that we have in the country now. On Slide 10, we show the consolidated net income of Copel, which reached R$136 million in the first quarter of 2016, 71% lower than year-on-year. Analyzing the results of the subsidiaries, you can see that Copel Distribuição posted R$39 million of losses in the first quarter of 2016, vis-à-vis a positive result of R$29 million in the first quarter of 2015. Copel GeT ended the period with R$165 million net income, 60% lower on a year-on-year basis, whereas Copel Telecom reached R$11 million net income, dropping 23% year on year. Specifically about Telecom, it’s important to say that the drop that we saw in the quarterly income is directly related to the increase in the financial expense that came from the increase in the debt that’s necessary to support the subsidiary’s expansion of services. Before opening for questions, I would like to talk about the leverage of the company. As you can see on Slide #11, the indebtedness of Copel measured by the net debt to EBITDA ratio grew in the last few years, then closed March at 3.3 times. It’s important to highlight that this ratio is as planned is below the limit imposed by the covenants that also lower than what we see in similar companies. This increase in the leverage was expected, but it has to do with the significant expansion [indiscernible] the company has been going through and will be reduced with the beginning of the cash flows from the different projects that we are building, many of them starting up in the next few months. So these were now our highlights. We are available to you now to answer any questions that you might have. Question-and-Answer Session Operator Thank you. Now, the floor is open for questions. [Operator Instructions] Mr. [Kaikobet Gonzales] [ph] from Citibank. Unidentified Analyst [Interpreted] Good afternoon, everyone. Thank you for the call. Now, talking about provisions, R$84 million related labor claims, could we go more in-depth, what was exactly that? And do you expect this to continue for the remainder of this year? Thank you. Luiz Fernando Leone Vianna [Interpreted] Thank you. I will give the floor to the accounting person of Copel. Unidentified Company Representative [Interpreted] Good afternoon, Kaikobet. Referring our provisions for contingencies in the first quarter of 2016, in fact we had a very [non-recurring thing] [ph] that was collected to – from the existing labor union, so very prudently we applied a conservative approach and this event represents about R$45 million in our provision. And with here our allowance for doubtful accounts is coming up because of delinquency represented R$30 million of this R$112 million. And the others are the ones that you are familiar with, R$45 million should be non-recurrent for the next few quarters. And we are monitoring very closely the issue of delinquency in order to maintain or to move down as much as we can this amount of provision for that specific end. Thank you. Operator Mr. [Jimmy Saskenia] [ph] from Credit Suisse. Unidentified Analyst [Interpreted] Good afternoon. I have two questions. The first one about provisions, you explained about the provision regarding expenses that there was a big reversal as well. Maybe you could mention what it was all about, could you point any commitment? And the second question has to do with what Sebastiani shared about the covenants. When we look at Slide #11, I understand that there are many projects that will be coming on-stream in the next few quarters. But when we look at the average for the last 12 months, we see deterioration in generation. And the situation has a negative impact may on the third quarter of last year. As we look ahead, okay, you have new projects coming on stream, but as we look at the average of the 12 months, generations and distribution worsened, because of Araucaria maybe. So do you believe there will be any break of covenant? Are you negotiating any of the covenants that you still have? Adriano Fedalto [Interpreted] Good afternoon, one again. This is Adriano from accounting making brief remarks about contingencies. Regarding this reduction, if I understood correctly vis-à-vis last year in 2015 the provision of R$75 million referring to the difference of price for the Colíder plant. And then, we had complied to the contract fully, but there was still a doubt about the price. We only took the full amount and we provisioned the difference of R$75 million prudently. As soon as this is judged, we will be able to reverse this provision in the future quarter as soon as we have a legal decision about that. Unidentified Analyst [Interpreted] Just to clarify, the reversal of R$15 million, you’re saying that we had provision R$75 million for Colíder, and you reverted R$50.8 million of this amount? Adriano Fedalto [Interpreted] No, no. I’m sorry, I’m sorry. There is some misunderstanding. The comparison that I am making is between 2015 to 2016. This is what represents the variation of minus R$47 million in our results. Unidentified Analyst [Interpreted] No. My question was about Slide #5. When you talk about the breakdown of provisions et cetera, there are reversals. On Slide #5, was it something specific that was reverted? Adriano Fedalto [Interpreted] Okay, I understand. So in 2015, we had two events that represent the R$50 million, R$24 million in benefits to employees regarding the Copel Foundation and we were able to revert R$24 million. And another one, which is trivial as well, difference of the context of almost R$28 million, almost R$29 million also is something non-recurring and that was reverted during this period. So if you add up these two events, we have this difference of R$50 million… Unidentified Analyst [Interpreted] Okay, very clear. And the other point is about the covenants. Sergio Luiz Lamy [Interpreted] The President of Copel GeT, good afternoon. Before Mr. Sebastiani make specific remarks about covenants, I would like to make one remark about the result of Copel Generation and Transmission, in the first quarter and the expectation for the second quarter, and of course it is linked to the issue of covenants. As we’ve said before, I would say that three factors came into play that was very relevant in this regard impacting the results of the first quarter. The first one was that last year, we have made an allocation of free energy, which was much stronger in the first quarter, and then this year we made a more linear allocation over the year and this tends to show better results as we evolve over the year. And the second answer was very much impacted also, and this has to do with the spot price with a sensitive recovery and a trend. We believe that the trend would continue to be there for the next few quarters. And we believe there will be more positive impact on our results coming from the increase in the stock price. And then, Araucaria also was a driver as we believe that, at least the second quarter or part of the third quarter. By the end of the second quarter and part of the third quarter, it will come back online due to the Olympics, so we have a positive outlook for better trend. Operator Now, Mr. Sebastiani. Luiz Eduardo da Veiga Sebastiani [Interpreted] One of the most important things that have already been mentioned by Lamy, and the worst moment that we see, which is the beginning of the first quarter and that was already mentioned, because of the economic scenario and the specific reality of this [last year] [ph], and what regards for instance to the non-residential [ph] GDP and the positive outlook that was mentioned by Lamy, so all that leads us to have a positive scenario for the future. The covenants are analyzed on a daily basis, all of the time, we track our covenants, and it was still below the average of the factors, and below the average of the covenants that we see, and that are only posted at the end of the period. So I understand we are concerned which is legitimate, also it is important also to clarify to you and to everybody that we have a permanent monitoring of the covenant, and observing a better scenario from now on for the next few quarters. We’ve driven high degree of comfort with the risk indicator. Unidentified Analyst [Interpreted] So you expect an improvement in the 12-month EBITDA, offsetting the deterioration of distribution and generation compared to last year, so you believe the situation will not worsen? Luiz Eduardo da Veiga Sebastiani [Interpreted] No. Our outlook as far as that is not negative. We have already established our covenants below the limit and below the average of the sector, and because of all the factors that I mentioned, our outlook is positive as we said. Unidentified Analyst [Interpreted] One last question. The issue of exceeding it, is it only for one quarter or two quarters? Did you have any type of debate? Luiz Eduardo da Veiga Sebastiani [Interpreted] It’s at the end of the year – the fiscal year. That will conclude the merger of the covenants with the contracts that we have in place. Unidentified Analyst [Interpreted] Thank you. Operator [Mr. Lacio Lusali] [ph] from UBS. Unidentified Analyst [Interpreted] Regarding to volume of energy that you sold, 300 megawatts sold in each year and the comparison with the price cut. So the price cut over time. It becomes more and more difficult to predict the EBITDA for distribution. What will be the record level of EBITDA? Can you have the visibility? And do you expect an improvement because of the next tariff revision? So how much do you believe the EBITDA will be going up? Unidentified Company Representative [Interpreted] This is [Lamy Matialon] [ph] In relation to the sale to commercialization company in 2016, while the generation company should 2017, 2018, 2019 and 2020. And the amount that we showed, I don’t have the exact figures here with me, but we were rather successful with a sense of selling all the energy that we are making available for this auction. So besides having been able to create all our available energy, we were able to reach average prices that are very satisfactory around R$128 per megawatt hour. I can send you the exact figures for each year later after this conference about the result of the auction, okay. I’ll give them to you later. Unidentified Analyst [Interpreted] Just to the order of magnitude, is there anything – it was reasonably significant, but always within a negotiation strategy? Luiz Fernando Leone Vianna [Interpreted] We’re going to the energy during – over several different auctions during the year. It’s an amount that will exceed the annual value as of 2017 of R$200 million, R$250 million just to give you an order of magnitude, okay. Unidentified Analyst [Interpreted] Okay. Operator [Rodrigo Guchelin from Gusachi] [ph]. Unidentified Analyst [Interpreted] Good afternoon. Thank you for the call. My questions were about the covenants, in your [indiscernible] volume of energy sold. It was not so clear to me, I mean, the volume of energy sold, it seems to me that at the beginning you’re having a more aggressive effort around 125 to 130, they’re also megawatt hour. Am I interpreting correctly, what you said? Luiz Fernando Leone Vianna [Interpreted] What’s your name please? Could you repeat your name? Unidentified Analyst Vudilu [ph]. Luiz Fernando Leone Vianna [Interpreted] Vudilu, good afternoon. The sound is very bad. So I would like to ask you to repeat the question. Unidentified Analyst [Interpreted] I had two questions, one about the covenant that you have already answered. And the other one, I need some more color about the order of magnitude of your energy sales of the Comitaligadura [ph] company. Is it according to the prices that are acceptable between R$130 and R$125 per megawatt hour, could you clarify this, please? Luiz Fernando Leone Vianna [Interpreted] We had a few auctions in place, in which we sold energy from the generation company, in one modality and the Comitaligadura in another modality. So, you are asking about the Comitaligadura company and because of that, I am going to give the floor to the president of this company. Unidentified Company Representative [Interpreted] Good evening. The [indiscernible] it was very concentrated and incentivized and the expectation that we have is attempting around R$165 as of 2017. For 2016, the amount is slightly lower, and with the purchase is more feasible. Within conventional, R$30, R$35 is slightly below this amount. Unidentified Analyst [Interpreted] Thank you. Operator Also Lusali from UBS. Unidentified Analyst [Interpreted] I had a question about distribution and the recurring EBITDA. How much it will increase with the implementation of the tariff revision? And since the move there R$200, R$250 average megawatts that’s already sold by the generation company is very high volume. So, it slightly better than between R$150 and R$200, that’s all I have just checked, okay. Luiz Eduardo da Veiga Sebastiani [Interpreted] Now, I’ll turn it Antonio Guetter, President of Copel Distribuição who will answer your other question. Antonio Sergio de Souza Guetter [Interpreted] Hello, [Murino. No, Marcelli] [ph], sorry, okay, and everybody, about the reduction in our EBITDA as we have said before, it tends mainly from distributions and also by the problems that we have the distribution company regarding the allowance for doubtful account. Because at the moment that the country is dealing with recession and reduction in consumption, and at the same time here in Paraná as another state, we have an increase in cost of energy, and this results a reduction in the size of our market and the increased delinquency. As a consequence, our allowance for doubtful accounts, we have been working very strongly, and our allowance for doubtful account even increasing our cost to – and also work with a client in order to revert this delinquency cost and we believe that this decision with tariff that we have a trend of change in 10% over June, we would be seeing a reversal in this current – of the EBITDA that was negative this quarter. I believe that the market will continue to be weak, and looking at the scenario that we have for this year, we believe we will not even have R$100 million EBITDA do you agree or may be a little bit more than that? [Indiscernible] as our CFO said, we have already reached the worst point of the year, and now we expect EBITDA – we already see that in terms of delinquency because we see already a reversal in our curve, because we put in place many actions in this regard. And we believe that the level that we will have by the end of this year will depend a lot on what a new administration the new government does, but we believe there will be a positive trend in the market reduction in delinquency whether actions regarding allowance for doubtful accounts, we will start to have the effects. Unidentified Analyst [Interpreted] How much of your EBITDA would increase because of the carrying provision, how much should we expect? Luiz Fernando Leone Vianna [Interpreted] I think you are following that, we expect to be doubled our asset. As a consequence, we believe that we will approximately double our EBITDA. Unidentified Analyst [Interpreted] Thank you very much. Thank you for the answer. Operator Miguel Rodrigues from Morgan Stanley. Miguel Rodrigues [Interpreted] Good afternoon. Two things. First, leverage. Net debt to EBITDA that you delivered it is already addressed by the CDE and what is the exact balance today? Going back to the energy portfolio, what about contracts will now come back on, are you going to accelerate expecting prices to pick up or do you tend to have new auctions and what is your intention regarding this? Luiz Fernando Leone Vianna [Interpreted] New covenants, net debt and EBITDA is not part of that calculation, okay. Sergio Luiz Lamy [Interpreted] Good afternoon. This is generation and transmission. Although we have an expectation trend and that’s a trend in the prices of energy from now up until the end of the year. Our strategy, a strategy based on the average price. So we are going to hold many auctions starting next month. So we do have many different auctions during the year not just for us to have an average selling price for the year, okay? Miguel Rodrigues [Interpreted] Let’s say the market conditions worsen, are you expecting R$125 to R$130, and do you expect market price is different from that, are you going to hold back on your auctions? Sergio Luiz Lamy [Interpreted] Our expectation is positive in the phase of having more favorable market prices. Of course, if this does not materialize, then we do have to address the amounts of energy to be sold due to the market prices with the decrease of rate, or increase of rate regarding the market prices and how they develop. Miguel Rodrigues [Interpreted] Thank you. Operator [Operator Instructions] There are no more questions, I would like to give the floor back to the company for the closing remarks. Luiz Fernando Leone Vianna [Interpreted] This is the CEO of Copel speaking. As we have said before, we had not only at Copel, but in the sector as a whole and in the country, we had a very unfavorable first quarter. We understand that the power sector was even better than the average for the country and our outlook, and we are very much convinced when we say we will be back in the second quarter. We will have better results than the first and place our bets on this new moment that the company’s starting to look and expecting a recovery, because of exchange and we are rather hopeful. We believe there would be improvements to the country and we will be able to close 2016 with a much better perspective than we have in the first quarter. Thank you. Operator Copel’s conference call about the results of the first quarter of 2016 is closed. 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