Neoenergia (NEOE3) Q3 2024 earnings summary

Executive summary

• Achieved robust results in Q3 2024, with distributed energy up 6.2% year-over-year and strong performance in concession areas, driven by market growth and improved loss management.

• Cash EBITDA for distributors reached R$2.1 billion, up 4% year-over-year, while consolidated cash EBITDA was R$2.5 billion in 3Q24.

• Anticipated the Termopernambuco Capacity Reserve contract, bringing forward its start to October 2024, adding value and stability to the electric system.

• Completed the acquisition and IPO of Neoenergia Cosern, streamlining the corporate structure and converting to Category B.

• Net operating revenue rose 23% year-over-year to R$11.8 billion in 3Q24, driven by customer base growth and higher volumes.

Financial highlights

• Gross cash margin (excluding IFRS 15 and VNR) declined 4% year-over-year to R$3.498 billion, while consolidated cash gross margin rose 1% to R$11,150 million in 3Q24.

• EBITDA was R$2,963 million in 3Q24 (-8% year-over-year), and cash EBITDA fell 5% to R$2.485 billion.

• Net income for 3Q24 was R$841 million; adjusted net income was R$908 million (-7% year-over-year) due to lower EBITDA and non-recurring events.

• CapEx reached R$2.6 billion in Q3 and R$6.7 billion for the first nine months, in line with the annual plan.

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

Outlook and guidance

• CapEx for the year is expected to be approximately R$9 billion, with continued focus on network investments and digitalization.

• Transmission investment cycle is nearing completion, with major project deliveries expected through 2025 and R$1.1 billion RAP by year-end.

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

• Focus on organic growth, operational quality, and disciplined capital allocation prioritizing profitability and asset rotation.