Serena Energia (SRNA3) Q3 2024 earnings summary

Executive summary

• Energy production increased 19% year-over-year in 3Q24, driven by new assets like Assuruá 5 and Goodnight 1, though same-asset production declined due to weaker resources and curtailment.

• EBITDA for 9M24 reached R$1.19 billion, up 12% year-over-year, but 3Q24 EBITDA was flat versus 3Q23 due to resource and operational challenges.

• Net income for 3Q24 was R$46.6 million (adjusted), down 55% year-over-year, mainly due to higher depreciation, financial expenses, and lower energy prices in Texas.

• The company maintains a highly contracted portfolio, with 94% of 10-year assured energy output locked at R$223.2/MWh.

• Distributed Generation (DG) projects are progressing, with most assets expected to be fully connected by 2025.

Financial highlights

• Net revenues in 3Q24 were R$1,060.1 million, up 22% year-over-year; energy gross profit rose 25% to R$683.9 million.

• Adjusted energy gross profit was R$676.3 million (+6% YoY); unit gross profit fell 11% to R$223.6/MWh due to lower prices and curtailment.

• 9M24 EBITDA totaled R$1,194 million, with EBITDA-to-operating FCF conversion at ~73%.

• Net financial result was -R$227.1 million, up 7% YoY, reflecting higher debt costs.

• Cash and cash equivalents plus marketable securities totaled R$1.8 billion.

Outlook and guidance

• 2024 adjusted EBITDA guidance is maintained at R$1,821 million (range: R$1,721–1,920 million), with Q4 expected to be the strongest quarter.

• Curtailment impacts are expected to decrease in 2025 due to grid expansions and improved generation profiles.

• Management is evaluating alternatives to address negative working capital and upcoming bond maturities.

• Long-term, EBITDA is projected to grow up to 4.5% annually over the next decade.

• No material uncertainties identified regarding the company's ability to continue as a going concern.