Serena Energia (SRNA3) Q4 2024 earnings summary

Executive summary

• 2024 EBITDA reached R$1.95 billion, up 19% YoY, with production rising 18% and cash earnings of R$767.2 million, reflecting strong operational discipline and cost optimizations.

• Net debt/EBITDA improved to 4.3x–4.4x from a 2023 peak of 6.8x, driven by deleveraging and robust cash generation.

• 90% of production is pre-sold for the next decade via inflation-linked offtake agreements, ensuring predictable cash flows.

• Major asset swap with EDFR completed, consolidating 100% of Ventos da Bahia and exiting Pirapora, impacting results from 2Q24.

• No new investments in 2024; focus shifted to capital recycling, asset optimization, and long-term offtake agreements.

Financial highlights

• Net revenues grew 36% YoY to R$4.13 billion in 2024, with EBITDA up 19% YoY to R$1.95 billion and net income at R$86.3 million.

• Commercialization margins rose to R$322.7/MWh, and O&M savings offset BRL 86 million of curtailment impact.

• Cash earnings for 2024 reached R$767 million, a 22.4% earnings yield.

• Curtailment and resource constraints negatively impacted EBITDA by R$180 million.

• Total cash at year-end R$1.92 billion, up 46% YoY; adjusted net debt R$8.52 billion, down 11% YoY.

Outlook and guidance

• 2025 EBITDA expected to be in line with or higher than 2024, with a conservative approach to Northeast resources and stable Texas prices.

• Guidance practice discontinued; future performance will be tracked through detailed analysis and quarterly production reports.

• Capital structure policy targets adjusted net debt/EBITDA between 3.375x and 4.125x by end-2025, with temporary increases for new investments.

• Focus on mitigating curtailment, increasing local loads, and securing long-term offtake agreements for Goodnight 1 & 2.

• Expectation of mean reversion in resource incidence and reduced DG connection delays in 2025.