Renova Energia S.A. (RNEW3) Earnings Call Transcript

Good afternoon, and welcome to the Results Communication of Renova Energia Fourth Quarter 2024. I'm Bruno [indiscernible] RI analyst in the company. [Operator Instructions] Present in this session, Vitor Hugo da Silva, CFO and the RI; Ricardo Martin, Head of RI and Mergers and Acquisitions. Before start, we are recording this event. It's going to be available at the company's website and also the material. We are going to start the presentation, and then we open up the floor for Q&A session. We emphasize that the information contained in this presentation and any statements during this video conference regarding Renova's business prospects, projections and operational and financial targets constitute beliefs and assumptions of the company's management as well as information currently available. Forward-looking statements are not guarantees of performance. They involve risks and uncertainties that may or may not occur. Investors should understand that general economic conditions, market conditions and other operating factors may affect Renova's future performance and its results that differ materially from those expressed in such forward-looking. I pass the floor to Vitor for this results presentation.

Good afternoon. It's a great pleasure to be on a Monday with you all. And the objective of this event is the subsequent event of December 31, 2024, operational and financial highlights, Caetite Solar Complex in Bahia, context of the energy market in Brazil, energy production data and wind, generation lost to curtailment and consolidated financial results of Renova. Before talking about figures, I'd like to highlight the resilience, determination of 2024 in a very challenging year. We adjust ourselves to the market changes with efforts and dedication of our team, reflecting our capacity of renewing and commitment with the excellence on -- with a great satisfaction on February 13, 2025, we concluded the judicial recovery plan. This is a new era of the company, reinforcing our readiness for challenges and opportunities. And in March, we received the credits to be finalized maximum value is BRL 545 and postponing the term to readjust B3 that was granted up to April 30, 2025. This extension will observe the positive impact and credit capitalization. So we have a natural fit in the market. April 31 or over 1 year, we do not have to fit the company anymore. Results and operational highlights of the company -- operational and financial highlights. 231 gigawatts hour net generation, 974 (sic) [ 973] gigawatts hour. Net revenue, BRL 91.3 million, a growth of 81% compared to the final quarter in '23. BRL 57 million energy results, increase of 52% in the same period. Adjusted EBITDA, BRL 8.8 million, net loss BRL 67.6 million. And cash balance -- generation was 972 gigawatt hour (sic) [ 973 gigawatt hour ], curtailment of 40%. Net revenue, BRL 259.3 million, 14% growth compared to 2023. The result is BRL 192 million in 2024, superior in 3% of 2023. And adjusted EBITDA BRL 52 million, a net loss of BRL 117 million, and we closed the year with a cash balance of BRL 144 million, increasing BRL 126 million in 2024 2023. Caetite Solar, we are still working in the connection lines. And this line was estimated to have the connection in the end of the year, but there were changes in the project and delay. The advance of the line is 75%, in the end of the year was 58%. So it's a meaningful advance compared to last year. This accelerated pace and the conclusion is as soon as possible. Now the context of the energy market in Brazil, the growth in the fourth quarter, 1.6% compared '23, '24, as we see in the graph, highest growth in the industry, 4.2%. In the year, the growth was 5.3% , 5.2% in trading and 7.1% households. The higher impact is the time, higher time, higher consumption of energy. That's why we had stronger growth in industry and households. PLD monthly on the right-hand side, we see a mismatch of prices Southeast and Northeast, September, October. October is the biggest impact in the quarter. And this impact for Renova is beneficial in the curtailment because Renova buys the energy on PLD and PLD Northeast is lower than Southeast. Energy production date -- data - wind. On the left-hand side, we see the power curve reaching higher power at 13 meters per second. And observing the graph, we can see the wind was lower than the estimate for last year of the wind over 10 meters per second. In the accrual and the average in the quarter, the wind was 7.8 meters per second. In the last quarter, 7.4 with the slightest reduction and certificate 2023, 11.3% under the certificate and the last quarter, 16.2% under the certificate. Generation loss to curtailment in gigawatt hour. We have 2023 graph, 2024 graph as well. Curtailment '23, there was a loss of 37 gigawatts, 15 5% of our generation. In 2024, the loss was 42.2 gigawatt hour, representing 15.4% of our generation. Observe the yearlong in the lower graph bottom, we see the generation of 2024 was lower than '23, 10.1%, but the curtailment was twice as much in 2023, 102 gigawatt hours and in 2024 218.8 gigawatt hour. But considering the curtailment, the generation would be higher than last year, 0.6% although the wind in '24 was worse than the wind in '23, we see an improvement operating our machine. Consolidated financial results, when we see consolidated net revenue quarter-over-quarter '23, '24, we see an increase of 80% compared to the previous year, representing BRL 40.8 million. When we see yearly consideration, the revenue of 2023 was BRL 227 million; 2024 BRL 259 million, 13.8%. The curtailment was higher than last year, even though our revenue was better than last year, showing improvement of our park. The EBITDA the fourth quarter, BRL 240 million, different nonrecurring effects like the price to the market, positive impact. 2024, we have a worsening of less BRL 20 million. The accrual in 12 months, we had 60% worsening nonrecurring effects that we had in 2023, not repeating in 2024. So we closed the year with BRL 119 million of EBITDA. Adjusting the EBITDA, not considering nonrecurring events, we see that in the quarter, it was worse 21.8%, closing the quarter in '23 (sic) [ '24 ] in BRL 11 million and 2024 (sic) [ 2023 ] BRL 8.8 million worsening is 28% (sic) [ 21.8% ]. Removing the curtailment adjusted effect, excluding the curtailment, we see an improvement of 5.8%, closing year of '23 in BRL 83.3 million without the curtailment in '24, the EBITDA no curtailment would be 88.2%. Removing the curtailment, the reduction is 22.1% in '23, BRL 67.5 million; in '24, BRL 52.4 million. The highest influence was curtailment for the company. Consolidated financial report, net loss and cash flow. Net loss for fourth quarter '23 (sic) [ '24 ] there was impact of BRL 125 million, market was the biggest impact '24 (sic) [ '23 ] the loss was BRL 67.6 million. When we see the year-round, the accrual in 12 months, the loss in '23 was BRL 9.2 million. Here, this is also the effect of MTM of the trading company. And in '24, the loss is BRL 117.1 million. Observing cash flow of the company, we have cash generation of BRL 168 million; JRP payment, Class II and Class III, BRL 43.4 million; investments, BRL 1.6 million positive because we sell assets, Casas dos Ventos. So we closed the year at BRL 144.2 million, adding BRL 126 million compared to the same period in '23. Judicial recovery now to the left-hand graph, we see the changes in balance, BRL 1 billion in our debt in '23, and we closed '24 with BRL 1.487 billion in our debt. The growth in Class II is about monetary correction and interest. The debt is connected to CDI plus 0. And Class III, there was new credits [ incoming ] BRL 51 million. That's why we see this increase. Observing payments of judicial recovery and payments to Class II, BRL 18 million; Class III, BRL 24 million; extraconcursal BRL 0.5 million. In total, BRL 43.4 million. And on the left-hand side, the bottom, we have amortization flow with a concentration in 2035. We see amortization from 2025 on. Open up the floor to Q&A. I open to Ricardo now, and I conclude the results presentation right here.

Thank you, Vitor. If -- now we are going to open the floor for Q&A. [Operator Instructions] Our first question comes from [ Mr. Alberto ] investor. Is battery a solution for curtailment?

Battery is a possible solution for curtailment. The cost of battery is very high to be invested by the company, but it would be a solution for curtailment when the network is not available to support energy. If you place the battery, you charge in this period that you have to turn it off. Yes, it would be a solution for curtailment, Yes.

Next question, [ Alberto Invest ]. We would like to know if you have projects in Pernambuco state. Do we have projects in Pernambuco?