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, Financial) 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.
Q: How will Sabesp's results be consolidated into Equatorial Energia, considering your 15% stake?
A: (Leonardo Da Silva Lucas Tavares De Lima, Vice Chairman of the Board, Executive Officer) There will be no consolidation. We will register equity equivalents of Sabesp in Equatorial's earnings, as we are reference stakeholders with a 15% participation.
Q: What is your expectation regarding the fee structure and potential changes from the Ministry or Congress?
A: (Cristiano de Lima Logrado, Executive Officer) The Ministry has suggested a social fee and redistribution of expenses, but the financial balance of contracts will be maintained. We believe the current buzz around fees will be resolved while preserving economic balance.
Q: After the private capital increase, will the company's capital structure be balanced, or will further inorganic movements be needed?
A: (Leonardo Da Silva Lucas Tavares De Lima, Vice Chairman of the Board, Executive Officer) We maintain robust discipline and are prepared for future opportunities. The capital increase is a strategic move to optimize our process and prepare for potential market opportunities.
Q: What is the strategy for addressing quality issues in Goiais, and what can be expected in terms of CapEx and OpEx?
A: (Leonardo Da Silva Lucas Tavares De Lima, Vice Chairman of the Board, Executive Officer) We have mapped issues in Goiais and are implementing a recovery plan. We are investing heavily in CapEx and reinforcing regional offices to address weak points and improve operational metrics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
