ISA Energía Brasil (ISAE4) Q2 2024 earnings summary

Executive summary

• Achieved strong growth in 2Q24, with net revenue up 24.7% to R$1,112.4 million, net income up 62.9% to R$425.6 million, and EBITDA up 29.7% to R$891 million, driven by tariff updates, project energizations, and improved equity income.

• Advanced sustainable growth strategy, energizing 27 R&I projects in 1H24 and maintaining a robust pipeline with R$5 billion in approved investments for the next five years.

• Completed a successful follow-on offering of 93 million preferred shares, increasing potential liquidity by 50.3%.

• Net results benefited from reduced financing costs and lower IPCA.

Financial highlights

• Net revenue grew 24.7% year-over-year in Q2 2024, reaching R$1.1 billion; semester revenue up 24.5% to R$2.2 billion.

• EBITDA increased 29.7% to R$891 million, with margin up to 80.1%.

• Net income rose 62.9% to R$425.6 million in the quarter; 1H24 net profit totaled R$834.8 million, up 47.2%.

• Investments totaled R$640.2 million in Q2 2024, up 69.6% year-over-year.

• Net debt/EBITDA at 2.46x, below covenant of 3.0x.

Outlook and guidance

• RAP for 2024/2025 cycle set at R$5,936.4 million, with 56% from the renewed contract and 44% from auctioned projects.

• Ongoing investments of ~R$5 billion in retrofitting and ~R$10 billion in greenfield projects over the next five years.

• No participation planned in the September transmission auction due to focus on current pipeline.

• Dividend policy to maintain at least 75% payout of regulatory net income.

• Regulatory review (RTP) to apply retroactively from July 2023, with effects through June 2028.