Aguas Andinas (AGUAS) Q2 2024 earnings summary

Executive summary

• Revenue for 6M2024 increased by 0.9% year-over-year to CLP 339,687 million, with EBITDA up 2.8% to CLP 176,262 million and net income rising 3.8% to CLP 76,507 million, driven by higher tariffs, operational efficiencies, and asset sales.

• Efficiency initiatives under the Transformation Plan generated CLP 1,154 million in savings by mid-2024, contributing to improved margins.

• Lower inflation (CLF variation at 2.1% vs. 2.8% in 2023) and improved bad debt management positively impacted financial results.

• Significant rainfall and lower temperatures in Santiago impacted water consumption volumes and operating costs.

• The VIII Tariff Process began in late 2023, with new tariffs to be implemented for 2025-2030.

Financial highlights

• EBITDA margin improved to 51.9% from 50.9% year-over-year, with EBITDA increasing 2.8% to CLP 176,262 million.

• Net income margin increased, supported by higher income from land sales and improved bad debt ratios (1.9% of revenues vs. 2.5% in June 2023).

• Operating costs and expenses decreased 1.1% to CLP 163,424 million, mainly due to lower transfers and efficiency gains.

• Positive financial impact from asset sales and lower tax payments.

• Cash and cash equivalents at June 30, 2024, were CLP 107,760 million, up CLP 14,317 million from March 2024.

Outlook and guidance

• Water availability is expected to remain normal for the second half of 2024 due to favorable rainfall, snowmelt, and high reservoir levels.

• Ongoing efficiency and digital transformation initiatives are expected to continue generating cost savings.

• CapEx needs for the next two years expected to rise, focusing on resilience and new water sources, pending regulatory approval.

• No additional financing transactions required in 2024 due to prior bond issuance and refinancing.