ISA Energía Brasil (ISAE4) Q3 2024 earnings summary

Executive summary

• Net revenue reached R$1.2 billion in 3Q24, up 8% year-over-year, and R$3.4 billion in 9M24, up 18.2% from 9M23, with consolidated EBITDA of R$959 million (+9.4% YoY) and margin of 81.3%.

• Net income for 3Q24 was R$431.6 million, down 9% YoY, but up 21.6% for 9M24; IFRS net income in 3Q24 was R$1,107.2 million (+135.6% YoY) due to RTP one-off gain.

• Record investments of R$867.9 million in 3Q24 (+64.3% YoY), mainly in greenfield and retrofitting projects, with significant progress in projects like Piraquê, Riacho Grande, and Minuano.

• Operates 23,000 km of transmission lines, 136 substations, and transmits 30% of Brazil's electric power under 35 concessions with RAP of R$5.2 billion for 2024/2025.

• Completion of the Periodic Tariff Review (RTP) for São Paulo contract, with positive effects on revenue and efficiency.

Financial highlights

• Net revenue in 3Q24 rose by 8% YoY to R$1.2 billion, driven by tariff review, new projects, and inflation adjustments; net revenue ex-RBSE up 21.2% YoY.

• EBITDA margin in 3Q24 was 81.3% (+1.1 p.p. YoY); 9M24 margin at 80.8% (+0.7 p.p. YoY).

• Net income for 3Q24 fell 9% due to temporary tariff review effects, but year-to-date net income rose 21.6%.

• CapEx totaled R$867.9 million in 3Q24, up 64.3% YoY, with R$491.5 million in greenfield and R$376.4 million in retrofitting projects.

• Sale of land in Jundiaí generated R$20 million in net revenue.

Outlook and guidance

• 2024/2025 RAP cycle set at R$6,281.9 million, with 57% from renewed contracts and 43% from new concessions.

• Seven greenfield projects under construction, with remaining ANEEL investment of ~R$10 billion and RAP of R$1,028.9 million for 2024/2025.

• Retrofitting investments of R$5 billion authorized by ANEEL to be executed by 2028.

• Focus remains on executing current projects, especially greenfield and reinforcement initiatives.

• RAP/CapEx ratio expected between 12% and 17% for upcoming projects.