ISA Energía Brasil (ISAE4) Q2 2024 earnings summary

Executive summary

• Achieved strong growth in 2Q24, with net revenue reaching R$1,112.4 million, up 24.7% year-over-year, driven by tariff updates, new project energizations, and retrofitting projects.

• Net income rose 62.9% to R$425.6 million in 2Q24, with a net margin of 38.3%, reflecting operational improvements and higher equity income from subsidiaries like Madeira and Garanhuns.

• EBITDA increased 29.7% to R$891 million in 2Q24, with a margin of 80.1%, supported by project startups and inflation adjustments.

• Significant progress in greenfield and retrofit projects, with seven greenfield projects under execution and 27 retrofit projects energized in 1H24.

• Eletrobras sold 93 million preferred shares, reducing its stake and increasing share liquidity by 50.3%.

Financial highlights

• Net revenue grew 24.7% year-over-year in 2Q24 to R$1,112.4 million; 1H24 revenue reached R$2,220.5 million.

• EBITDA rose 29.7% to R$891 million, with margin up to 80.1%; net income surged 62.9% to R$425.6 million.

• Investments totaled R$640.2 million in 2Q24, up 69.6% year-over-year, mainly in greenfield and retrofit projects.

• Net debt/EBITDA at 2.46x, with net debt at R$9,321.7 million as of June 2024.

• Joint ventures and non-consolidated subsidiaries contributed to equity results and revenue growth.

Outlook and guidance

• Focus on executing a R$15 billion investment pipeline over the next five years, with R$10 billion in greenfield and R$5 billion in retrofit projects.

• RAP for 2024/2025 cycle set at R$5,936.4 million, with 56% from the renewed contract and 44% from auctioned projects.

• RAP/Capex ratio expected between 12% and 17%; regulatory WACC for 24/25 set at 7.26%.

• No participation planned in the September 2024 transmission auction due to current investment commitments.

• Regulatory review (RTP) to apply retroactively from July 2023, with effects through June 2028.