Equatorial Energia (EQTL3) Q1 2025 earnings summary

Executive summary

• Adjusted consolidated EBITDA rose 14.5% to R$2.9 billion in 1Q25, driven by distribution, renewables, and Sabesp equity consolidation.

• Net operating revenue increased 18.3% year-over-year to R$11.7 billion, with net income nearly doubling to R$556 million, though adjusted net income fell 16.4% to R$411 million due to higher financial expenses and non-cash effects.

• Investments reached R$2.3 billion, up 34% year-over-year, mainly in distribution and electrical assets.

• Operational quality improved, with regulatory losses below limits for the sixth consecutive quarter and DEC reductions across all distributors.

• Sale of transmission assets announced with enterprise value up to R$9.4 billion; IFC green loan of US$100 million signed for Equatorial Alagoas.

Financial highlights

• Gross operating revenues rose 12% to R$15.5 billion; net operating revenues up 18.3% to R$11.7 billion year-over-year.

• Adjusted EBITDA margin was 24.7%, down 0.8 p.p. from 1Q24.

• Net debt increased 20.1% to R$44.1 billion, but net debt/EBITDA ratio improved to 3.2x, with cash/short-term debt coverage at 1.4x.

• Distribution segment gross margin rose 5.1%, with adjusted margin up 6.6%.

• Renewables segment EBITDA up 13.7% to R$134 million; Echoenergia's adjusted EBITDA rose 37.5% to R$159 million.

Outlook and guidance

• Transmission asset sale expected to close by year-end or 4Q25, supporting further deleveraging.

• Ongoing focus on cost discipline, network strengthening, and operational quality improvements.

• Continued evaluation of capital allocation opportunities and value creation.

• Awaiting regulatory approval for 30-year extension of key distribution concessions in Maranhão and Pará.

• Tariff review processes ongoing in Maranhão, Rio Grande do Sul, and Goiás.