Neoenergia (NEOE3) Q3 2024 earnings summary

Executive summary

• Net operating revenue rose 23% year-over-year to R$12,257 million in 3Q24 and 8% to R$35,363 million in 9M24, driven by customer base growth, higher volumes, and tariff adjustments.

• Gross margin increased 43% year-over-year in 3Q24 and 11% in 9M24, supported by tariff adjustments and improved renewable generation.

• Cash EBITDA reached R$2.5 billion in 3Q24 (-5% year-over-year), with distributor EBITDA at R$2.1 billion, up 4% year-over-year.

• Adjusted net income was R$908 million in 3Q24 (-7% year-over-year) and R$2,923 million in 9M24 (+2% year-over-year), reflecting normalization after one-off events in 2023.

• Early start of the Termopernambuco Capacity Reserve contract in October 2024, ahead of the original June 2026 schedule, ensures fixed revenue for 15 years.

Financial highlights

• EBITDA was R$2,963 million in 3Q24 (-8% year-over-year) and R$9,440 million in 9M24 (-1% year-over-year).

• Net income for 3Q24 was R$841 million (-46% year-over-year) and R$2,783 million in 9M24 (-20% year-over-year); adjusted for non-recurring items, net income was R$908 million in 3Q24 (-7%) and R$2,923 million in 9M24 (+2%).

• Capex totaled R$6.7 billion in 9M24, mainly allocated to networks and transmission.

• Financial result improved to -R$1,135 million in 3Q24 and -R$3,615 million in 9M24, benefiting from lower CDI and IPCA rates.

• Opex increased 3% to R$1.0 billion in 3Q24 compared to 3Q23.

Outlook and guidance

• Transmission investment cycle is expected to conclude in 2025, with major project deliveries and R$1.1 billion total RAP by 2025.

• Ongoing investments in network expansion, digitalization, and renewables align with long-term growth and ESG targets.

• Tariff adjustments for Neoenergia Elektro (+0.69% Parcel B, effective August 2024) and Neoenergia Brasília (+5.0% Parcel B, effective October 2024) support future revenue.

• Disciplined capital allocation prioritizing profitability and asset rotation.

• Positive outlook on regulatory developments and ongoing participation in public consultations to shape sector reforms.