Neoenergia (NEOE3) Q2 2024 earnings summary

Executive summary

• Net operating revenue rose 4% year-over-year to R$10.98 billion in 2Q24, driven by higher energy volumes and customer base growth.

• EBITDA increased 12% year-over-year to R$2.97 billion in 2Q24, with adjusted (cash) EBITDA up 3% to R$2.4 billion.

• Net income attributable to controlling shareholders was R$815 million in 2Q24 (+12% year-over-year).

• Total injected energy grew 8.2% year-over-year in 2Q24, reflecting higher temperatures and customer growth.

• Significant progress in transmission projects, with new lots delivered and RAP releases exceeding R$200 million.

Financial highlights

• Gross margin was R$4.11 billion in 2Q24 (+3% year-over-year), with operating expenses up 4% due to inflation and customer growth.

• Net debt/EBITDA ratio increased to 3.27x in 2Q24 from 3.17x in 4Q23.

• Capex reached R$4.2 billion in 6M24, with R$2.4 billion allocated to distribution.

• Financial result improved to -R$1.19 billion in 2Q24, aided by lower CDI and IPCA rates.

• Provisions for delinquency (PECLD) fell 25% in 2Q24, reflecting improved collection.

Outlook and guidance

• Transmission investment cycle expected to conclude in 2025, with full RAP release for key projects 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.