ISA Energía Brasil (ISAE4) Q2 2024 earnings summary

Executive summary

• Strategy emphasizes sustainable value creation, corporate longevity, and positive social/environmental impact, with significant progress in greenfield and retrofit projects and robust investment pipeline.

• Achieved strong growth in 2Q24, energizing 27 R&I projects in 1H24 and maintaining a pipeline with R$5 billion in approved investments for the next five years.

• Operates 23,000 km of transmission lines and 137 substations, transmitting 30% of Brazil's and 95% of São Paulo's electric power.

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

• Obtained all environmental licenses for the Piraquê project.

Financial highlights

• Net revenue in 2Q24 reached R$1,112.4 million, up 24.7% year-over-year; 1H24 revenue was R$2,220.5 million, up 24.5%.

• EBITDA increased 29.7% to R$891 million in 2Q24, with margin at 80.1%.

• Net income rose 62.9% to R$425.6 million in 2Q24; 1H24 net income was R$834.8 million, up 47.2%.

• Investments totaled R$640.2 million in 2Q24, up 69.6% year-over-year; H1 2024 investments reached R$1,475.3 million, up 60.2%.

• Net debt at R$9.3 billion as of June 2024, with leverage at 2.46x net debt/EBITDA.

Outlook and guidance

• RAP for 2024/2025 cycle set at R$5.94 billion, effective July 2024, with 56% from the renewed contract and 44% from auctioned projects.

• Focus on executing a R$15 billion investment pipeline over the next five years, with ongoing investments of ~R$5 billion in retrofitting and ~R$10 billion in greenfield projects.

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

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

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