Eneva (ENEV3) Q2 2024 earnings summary

Executive summary

• 2Q24 EBITDA reached R$1,070.4 million, up 4.5% year-over-year (excluding Fortaleza), with margin rising to 55.3% (up 8.2 p.p.), driven by improved operating performance, cost reductions, and record energy exports to Argentina in July.

• Operational efficiency improved with higher availability at Jaguatirica II (+15 p.p.) and Futura I (+7 p.p.), and SG&A and O&M costs declined 14.9% and 7.7% year-over-year.

• Corporate restructuring included the merger of CELSE and trading companies, unlocking tax and administrative synergies and enabling use of accumulated losses.

• Key commercial milestones included new flexible natural gas contracts from Sergipe and Parnaíba hubs, and the first SSLNG contract, securing long-term revenue streams.

• Net income surged to R$1,066.7 million, up 186.5% year-over-year, mainly due to a non-recurring tax effect from the CELSE merger.

Financial highlights

• Operating cash flow reached R$933.7 million, up 41.4% year-over-year; investment cash flow was R$508 million, mainly for construction and upstream projects.

• Net financial result was negative R$990 million, mainly due to non-cash FX impact on FSRU lease; a non-cash negative impact of R$388.1 million was recorded in 2Q24.

• Cash position at Q2 end was R$1,700.1 million; net debt stood at R$17,828.7 million, with net debt/EBITDA at 4.36x, or 3.7x adjusted for receivables.

• Capex totaled R$771.9 million, mainly allocated to projects under construction, especially Azulão 950.

Outlook and guidance

• Ongoing due diligence for BTG thermoelectric portfolio acquisition (R$2.9 billion) and follow-on offering (up to R$4.2 billion) expected to close in Q4 2024, strengthening the balance sheet and enabling further growth.

• New gas supply contracts, including Linhares TPP (1.1 million m³/d for 15 years from Jul/26) and Copergás (40,000 m³/d for 3 years from Aug/24), provide new revenue streams.

• Ongoing projects such as Parnaíba SSLNG, Azulão 950, and Parnaíba VI are progressing, with key milestones and commercial operations expected between 3Q24 and 3Q26.

• Exports to Argentina expected to continue as long as demand persists, with potential coexistence of domestic and export dispatch in coming months.