Equatorial SA (EQUEY) Q2 2024 Earnings Call Highlights: Strong EBITDA Growth Amid Investment ...

GuruFocus News
4 min read

In This Article:

  • Adjusted EBITDA: BRL2.5 billion, an 11% increase compared to the same period last year.

  • Investments: BRL2.1 billion, a 20% decrease from the second quarter of 2023.

  • Net Debt to EBITDA Ratio: 3.2 times.

  • Cash Flow Position: BRL12.6 billion.

  • Distributed Energy Growth: 8% increase compared to the second quarter of 2023.

  • Gross Consolidated Margin Growth: 11.5% increase.

  • Distribution Sector Margin Addition: BRL367 million.

  • Cost and Expenses Reduction: 0.8% decrease compared to the second quarter of 2023.

  • Transmission Segment EBITDA: BRL280.2 million, a 2.1% growth.

  • Sanitation Segment Coverage Increase: 56%, a 14 percentage point increase from the same period last year.

  • Renewable Energy EBITDA Impact: 6.8% decrease due to curtailment.

  • Capital Increase: BRL2.5 billion, with a share price of BRL33.

Release Date: August 15, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Equatorial SA (EQUEY) achieved an 11% increase in adjusted EBITDA, reaching BRL2.5 billion, driven by the distribution segment.

  • The company successfully became a reference investor in the Zabeth destatization process with a 15% acquisition, valued at BRL5.6 billion.

  • Equatorial SA (EQUEY) leads the ranking of institutional investors in all eight categories and was awarded as the most honorable company in the utility segment.

  • The company reported a robust cash flow position of BRL12.6 billion and a cash flow per debt ratio of 2.2 times.

  • Equatorial SA (EQUEY) has made significant advancements in renewable energy, with a 1.8 gigawatt installed capacity in solar projects.

Negative Points

  • The company experienced a 20% decrease in investments compared to the second quarter of 2023, attributed to the finalization of solar projects.

  • Equatorial SA (EQUEY) faces challenges with the integration and capital expenditure requirements of Sabesp, needing to double its annual CapEx to meet universalization goals.

  • The renewable energy segment saw a 6.8% decrease in adjusted EBITDA due to curtailment issues.

  • The company has a high net debt to EBITDA ratio of 3.2 times, indicating significant leverage.

  • Equatorial SA (EQUEY) is dealing with operational challenges in regions like Goiais, which still lags behind in meeting regulatory goals.

Q & A Highlights

Q: Can you explain the company's strategy and challenges regarding the Sabesp acquisition and the expected CapEx to meet universalization goals? A: (Augusto Miranda Da Paz Junior, Chairman of the Board) We are awaiting a court decision to proceed with board nominations and take control of Sabesp. The CapEx is challenging, but Equatorial's past experience with BRL11 billion in CapEx across various segments gives us confidence in our ability to meet these goals.

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