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

[Interpreted] Thank you for waiting. I'm [ Gabriela Medero], responsible for the [ RI ] area of the company. Welcome to the teleconference of the earnings result conference related to the fourth quarter of 2023 and the closing of 2023. Present with us, we have Sergio Ros Brasil, our CEO; Vitor Hugo da Silva, our CFO; and [indiscernible], Manager of [ RI ]. Before starting, I would like to inform that this event is being recorded and will be available in the site of the company, just like the material for information. We will start the presentation, and then we will have a question-and-answer session. We emphasize that the information contained in this presentation and any statements that may be made during the 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 the information currently available. Forward-looking statements are not guarantee 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 lead to results that differ materially from those expressed in such forward-looking statements. Now I would like to hand over to Sergio Ros for his initial considerations, and then Vitor Hugo will make the presentation of the earnings results Sergio?

[Interpreted] Thank you, [ Kamila ]. Good morning to everyone. It's a pleasure to be with you this morning, and we will start our explanation concerning the results. First of all, until the beginning of the year, I was the President of the Administration Council of the company. And since May 2022, I had this position. And in February this year, I accepted the challenge of being the Executive President of the company. Geoff Cleaver is now in my place, and he's been in the company for 15 years. And now the Board, the administration, we have Geoff Cleaver as President of the Council, and I am the member of the Council. Daniel Famano; and Matheus Antunes; Alexandre Americano; Antônio Ricardo Alban; and Allones Santos are member -- are substitute member. The statutory Board. I'm the CEO; Vitor Hugo Alexandrino, CFO; Paulo Roberto joined us at the beginning of the year as Legal Director. And at the end of last year, our team, we also had Rodrigo Bota in our team as Director. A little bit of the company. We closed the year -- an important year, it was the first year where we can present the Alto Sertão Wind by 100% operational. Concerning the Alto Sertão III, the main asset of the company, it is among the 10 biggest parks, largest parks in Latin America. Additionally, to our Alto Sertã plant, we also own a project, a solar complex called Caetité Solar Complex, approximately 4.8 mega. The location of Alto Sertã -- let me, then I think go back here. We are in Guanambi municipality, Caetité. It's a park with 26 wind parks, capacity of 432.8 megs and [ 155 ] turbines in operation. Caetité Solar Complex. It has a capacity of 4.8 mega capacity. It is totally ready and what is in its final phase of implementation is the connection where basically we depend on the licenses to implement its construction. Concerning the pipeline of Renova, it's a huge differentiation. We have 7.1 gigawatts of capacity, approximately 2.3 giga of projects, solar projects. Concerning the year of 2023, we had a generation of energy of 1,000 gigas. The net revenue is BRL 207 million, an increased concern compared to last year. Our margin of Energy's margin is BRL 185 million, an increase compared to last year. We had an EBITDA adjusted of around BRL 67 million, a margin of 29.6%. And we ended the year with a closing cash balance of BRL 23 million, and we lost BRL 23 million. With important points, we had the payment of creditors within this, the judicial recovery plan of Renova. Now concerning some important factors. We had an increase in the context of market and increase in consumption, about 4.4% and the PLD remained practically at the same level throughout the year with an expectation at the beginning of this year to remain just like remain the same. Vitor, I will hand over to Vitor Hugo for him to discuss the results.

[Interpreted] Good morning, good morning to all of you. I will be presenting the results. Thank you, Sergio. The energy production, when we look at the energy production throughout the year, we see in the quarter, the first quarter, 275 gigawatt hour, then 321, 280 and 202 this variation from the third quarter of reduction has an impact in the restriction of transmission in the system. The system has a restriction and ends up disconnecting the wind parks of operation. And there was the issue of maintenance of our, in December we had maintenance in the generators to guarantee the generation of energy throughout 2024. So these were 2 important impacts: the restriction and the maintenance of equipment. Then the next slide, we have the net revenue data consolidated from the first quarter of 2022 until the fourth quarter of 2023. And we had -- the company generated more revenue throughout the quarters. And when we compare the last quarter of 2022 with the first, the last of 2023, there was a reduction of 21%. As I mentioned previously, there was the issue of restriction of energy, which was 29 gigawatt hour in the last semester in the maintenance. When we look at the next graph comparing the 1 year against the other, we closed the year of 2023, with BRL 227 million of revenue and 2022 was BRL 206 million. So it was an increase of 10.4%. So excluding, there was an increase of 20%, 22%. So last year, in 2022, we did not have a park working full that's why we have this increase in revenue when you compare 1 year with the other. In the consolidated financial results, when you look at the EBITDA, when you look at the first block, the quarter against the quarter, the last quarter of 2022 versus the 2023, we see a reduction of 71% compared to the last quarter 2022 versus 2022. We had an EBITDA of BRL 240 million. The biggest effect of 2022 was the reversion of [ equality ] of BRL 219 million. In the graph next, we have the effects not recurring, the extraordinary effects. When we compare the EBITDA adjusted of 2022 versus the adjusted of 2023. There is a reduction of 71%. The last quarter, in this quarter, we had an EBITDA of BRL 11 million. So as I mentioned, concerning the restriction of the line of transmission that serves our park, it's [ on restriction ] and the maintenance of equipment. We're looking at one full year against the other, 2022 against 2023. With the EBITDA without readjusting we closed BRL 56 million and 2022 with BRL 303 million. Looking now at the effect of EBITDA of adjusted 2022 versus 2023. When we compare with the full year, we had a year of 2022 BRL 75.4 million and the 2023 with BRL 77.5 million (sic) [ BRL 67.5 million] , a reduction of 10.5%. If we take out the effect of the say, of EBITDA. If you look at the generation of wind generation 2023 is better than 2022 because in 2022, we did not had the full functioning of the park throughout the year. It started, the last unit has started in 2022. Now if we see the net revenue profit, when we say a quarter against quarter, the fourth quarter of '23 against '22, when we look at the accounting effect of 2022, we closed with [ BRL 750 million ]. In 2023, with BRL 125 million, BRL 126 million. The adjusted between an increase of 261%, taking out the effect of the reversion of a parity that is 2022 would have closed with a loss of BRL 78 million. And now we have a profit of BRL125 million. When we see 2022 versus 2023, we have, the whole year of 2022, we closed with a profit. In 2023, we had a loss. So in the adjusted, when you look at the adjusted effect, the profit of 2022 would be a loss of BRL 276 million. In 2023 would be a loss of BRL 16.1 million, a variation of 94.2% better than 2022, taking out the extraordinary effects of the company. Now if you talk about the consolidated financial results, the cash flow we closed September of 2022 with BRL 27.6 million, and we are closing the year with BRL 17.6 million, a variation of BRL 10 million negative. That is a worsening the operational results, which is the effect of the issue of payments of our LER contracts due to the low generation due to the ASIII wind cycle. The payment of Class II and Class III, there was a payment of [ BRL 4.3 million ] and investment, we had an investment of BRL 2.7 million. And if we can talk about the indebtedness and judicial reorganization, it's stable. The third quarter of 2023 and first of 2024, we had a debt of BRL 1 billion, and it was -- our debt was corrected. Part of our debt is connected to [ CGI]. We are closing with [ BRL 1.3 billion ] of debt, and we paid throughout the year over BRL 70 million payment. BRL 44.8 million Class II, BRL 25.3 million Class III, totaling BRL 72.4 million. Now let's go to questions and answers.

We will start the session of questions and answers. [Operator Instructions] Our first question comes from [ Leandro ].

[Interpreted] Excuse me, what is the expectation of finishing the judicial reorganization, the judicial.

[Interpreted] We expect throughout the year of 2024 to leave this process of recovery. It's an issue. It depends on the judicial on the legal -- the court. It depends on the judge. But the expectation of the company is that throughout this year, we managed to fulfill all the steps and leave this regime of recuperation, judicial recuperation.

Our next question coming from [ Leandro ].