Neoenergia (NEOE3) Q2 2024 earnings summary

Executive summary

• Injected energy increased 8.2% year-over-year in 2Q24, driven by higher temperatures and customer growth.

• Net income reached R$815 million in 2Q24, up 12% year-over-year.

• Cash EBITDA rose 3% to R$2.4 billion in 2Q24, with cumulative growth of 92% since IPO.

• Transmission projects advanced, with R$0.2 billion of RAP released in 1H24 and further releases expected.

• CapEx for 2Q24 was R$2.3 billion, with R$4.2 billion invested in 1H24, mainly in networks and transmission.

Financial highlights

• Revenue and gross margin grew 3-5% year-over-year in 2Q24, with net operating revenue at R$10.98 billion.

• EBITDA increased 12% to R$2.97 billion in 2Q24; cash EBITDA up 3% to R$2.4 billion.

• Net income for 2Q24 was R$815 million (+12% year-over-year); 1H24 net income was R$1.94 billion (flat year-over-year).

• CapEx totaled R$2.3 billion in 2Q24 and R$4.2 billion in 1H24, focused on network expansion and transmission.

• Provisions for delinquency (PECLD) and loan loss provisions improved across most distributors.

Outlook and guidance

• Transmission investment cycle expected to conclude in 2025, with annualized RAP projected to reach R$1.2 billion by year-end 2024.

• Focus remains on recurring CapEx in distribution, operational efficiency, and expanding the renewable portfolio.

• Regulatory changes allow for 30-year renewal of distribution concessions, impacting 4 of 5 distributors.

• No participation planned in the September 2024 transmission auction due to lack of competitiveness and land issues.

• Progress in defining conditions for early renewal of distribution concessions.