Neoenergia (NEOE3) Q1 2025 earnings summary

Executive summary

• Injected energy in the concession area grew 3.6% year-over-year, reflecting strong market demand and operational performance, with distributed generation also increasing significantly.

• EBITDA reached R$3.7 billion, up 6% year-over-year, while net income declined 11% to R$1.0–1.1 billion, mainly due to higher financial expenses and contract changes.

• Asset rotation advanced with the sale of 50% of the Itabapoana transmission lot to GIC, supporting deleveraging and resulting in net debt deconsolidation and cash proceeds.

• CapEx totaled R$2.2 billion, mainly allocated to networks and transmission, aligned with the investment plan.

• Early renewal requests for key distribution concessions were submitted, and successful tariff reviews and adjustments were achieved.

Financial highlights

• Gross margin increased 6% year-over-year to R$4.9 billion, driven by distributor market growth and positive tariff adjustments.

• Adjusted (cash) EBITDA was R$2.8 billion, stable year-over-year, as negative tariff adjustments and contract changes offset gains.

• Net debt at quarter-end was R$44.4 billion, with a net debt/EBITDA ratio of 3.49x (or 3.41x considering Baixo Iguaçu cash entry).

• Average debt maturity is 5.88 years, with an average cost of 11.1% per year and diversified funding sources.

• Financial result was a loss of R$1.56 billion, up 21% year-over-year, due to increased debt and higher CDI rates.

Outlook and guidance

• Transmission investment cycle to conclude by end of 2025, with focus shifting to organic growth in distribution from 2026.

• No significant new investments expected in renewables or transmission due to market conditions; focus remains on distribution.

• Fast deleveraging anticipated post-2025, with potential review of dividend payout policy as leverage decreases.

• Expectation of double-digit growth in coming quarters, supported by positive tariff reviews and market expansion.

• Sustainability targets for 2025 and 2030 remain on track, with strong ESG ratings and index inclusion.