Serena Energia (SRNA3) Q2 2024 earnings summary

Executive summary

• EBITDA for H1 2024 rose 22% year-over-year, reaching R$703.1 million, but missed projections due to resource shortfalls, DG connection delays, and lower US energy prices.

• Net revenue and gross profit increased significantly year-over-year, with net income turning positive in H1 2024.

• Major business combination completed: full control of Ventos da Bahia acquired, boosting installed capacity and consolidating results.

• New long-term contracts and supply deals signed, including for high-performance computing and AI clients in Brazil and the US.

• Despite short-term underperformance, consistent multi-year growth aligns with the business plan, supported by strong long-term initiatives.

Financial highlights

• H1 2024 EBITDA was R$703.1 million, up from R$575.7 million in H1 2023 (+22% year-over-year), with gross profit reaching R$1,031 million.

• Adjusted EBITDA for 2Q24 was R$335.3 million, up 15% year-over-year, but 10% below projections.

• Net income improved but remained negative in 2Q24; LTM net income remains negative.

• Energy production reached 4,266 GWh in H1 2024, up from 3,463 GWh in H1 2023.

• Twelve-month trailing EBITDA neared R$1.8 billion, below the R$2.3 billion guidance.

Outlook and guidance

• Annual EBITDA guidance was revised down by 5% to a new center of R$1.821 billion, reflecting weaker resources, DG delays, and lower Texas prices.

• Long-term contracts signed in H1 (130 MW average, mostly 10 years) are expected to increase EBITDA margin by up to 3 points.

• Management expects positive working capital in 2024 and H1 2025, supported by refinancing and potential asset sales.

• Optimism for long-term energy prices in Texas, driven by data center and AI demand, with ERCOT projecting a 40-GW increase by 2030.

• Second half expected to benefit from stronger wind seasonality and completed maintenance, with over 60% of annual production typically in 2H.