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

[Interpreted] Good morning, ladies and gentlemen. Thank you so much for waiting. I am [ Gabriela Medero ], responsible for our company. Welcome to Renova Energia Group's earnings conference for the first quarter of 2024. Present with us today are Vitor Hugo, CFO of the company; Sandro Yamamoto, Director of New Business and Regulation; [ Ricardo Martins ], IR Manager. Before we begin, we would like to inform you that this event is being recorded and will be made available on the company's website as well as the promotional materials. We will start with the presentation, and then there will be a question-and-answer session. Renova do not estimate any questions cannot be answered. It would be noted that information contained in this presentation and any statements that may be made during the video conference regarding the Renova Group business project, projections and operational and financial targets constitute that the beliefs and assumptions that 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 and the issuance market conditions and other operating market factors may affect the Renova's future performance, and these results they differ materially from the ones expressed in such forward statements. I would like to hand over the floor to Mr. Sandro for his opening remarks, and then Mr. Vitor will present the financial results.

[Interpreted] Good morning, everybody. It's a pleasure to be with you all this Thursday morning. Before we start, I'd like to briefly introduce myself here at Renova for 9 months. Some may know in this electric sector [indiscernible], in public and private health companies such as Eletropaulo, and Brazilian Association of Wind Energy. I've been at Renova for almost a year with the aim of bringing more expertise in electricity trading and regulation institutional relationship to help the company. Next slide, we are going to talk about our assets. We have Phase [ AE ] 430 megawatts of installed capacity. This complexness, half of the energy created in auctions. The other is the market municipalities and investing BRL 2.5 million in our main asset. Next slide, we have our Caetité in Bahia, 4.8 megawatts of power, energy treated distributed generation and with the transmission line for the second semester. The mill is ready. We just have to conclude the line. And now next slide, let's talk about our pipeline. Renova, the knowledge of the AM company because of the amount of the projects and the quality of our development 7 gigawatts in estimate power, wind power in the Northeast region with environmental line, great part of our projects include permitted by [indiscernible] last year. Solar from 2.5, we go up in our current projects either region considering several days. In addition, we also have a Solar+ Caetité, we call it here at the company. 420 megawatts already in advanced stages, considering the availability of the connection of these clusters. Going to the next slide, talking about the market conditions comparing on the left-hand side, energy consumption in Brazil, first quarter '23, the first quarter and '24. Brazil had an increase of the consumption of energy because of the climate aspect increasing the temperature, also increasing the activities, commercial activities and services in Brazil and a small increase in the free market, considering captive market because of the migrations of market. Differences PLD. The first quarter 2024, PLD in the floor regulatory floor, 2023 BRL 69 2024. And now approved a new floor, BRL 61, because of climate conditions, too much rain. Brazil is still in the regulatory floor on PLD. Now I pass the floor to Vitor. He's going to talk about financial aspects of the company. Vitor, you have the floor.

[Interpreted] Thank you so much, Sandro. Good morning. I will talk about the highlights of the quarter. It's always compared with the first quarter '24 and '23. Energy generation Renova produced 160 gigawatt hour reduction compared to 2023. We are going to explain why some slides explaining this variation. Net revenue [indiscernible] compared to the first quarter, '23 BRL 42.6 million and BRL 66 million, they act the same as we had the energy presence. Energy margin reduction, the first quarter BRL 24 million compared to BRL 52 million last year. EBITDA was BRL 4.7 million and loss in this period, the BRL 61.9 million compared to the loss of last year, BRL 44.4 million. Final cash is BRL 14 million, not considering financial applications. The first quarter payment of creditors was [ BRL 10 million ] 300,000 repayment creditors to digital recovery plan meets under discussion in the net of the plans with the bank to be out of traditional recoveries and discussion. The discussion is about the meet for previous addendum -- new addendum the conclusion of [indiscernible], in 2018 the estimate after 5 years of management [indiscernible] in favor of Renova impacting the cash in BRL 22 million 2nd quarter '24 and BRL 55 million is a result. The next slide. We see the energy production side, the first graph to the left hand side on the frequency of wind and the power curve in this red line is the power curve of the machine. We see that the machine this generation 4-meter per second. When do we need this level in the machine experiment and it makes 50% at 8 meters per second. 8 meters per second has 50% capacity of the machine. Observing the graph for 2023 and '24. '23 is the gray one, '23 the graph has moved more higher winds, and '24 is smaller winds. We have an accrue of frequency with less wind. And when we observe the machine with going under 4 meters per second, we see the quarter, 37% in 2024. The machine did not work because there was not wind enough compared to last year, 21% of the time. We're seeing 17% compared to the last year. When we see capacity factor 8 meters per second, 50% the machine we see the accruing '24, [ 70% ]. 73% is under 18 meters per second. Last year, 57.1%. So these 2 effects of the machine not working, not operating under 4 meters per second, and the wind not reaching 8 meters per second, bring an impact in our revenue and energy generation. Under this the graph of wind frequency, we have abnormalities of wind 100 meters. So this red line, there was the worst wind in the quarter, January, February and March. And the position is with the red part is suffering a lot in this first quarter compare because of the wind radar. Observing the graph on the right-hand side [ 8 ] meters per second. We see less year the average was 8 meters per second, and this quarter, 6.3 meters per second. Comparing the certificate last year was a year a quarter that has high wind 10% above the certificate of wind and this year's 12.9%, a variation of 23% compared to quarter-after-quarter in the certificate. The first quarter of the year is the worst moment of wind for the company, we do not have wind. So our wind is in the second semester. And here, we can see that there was a meaningful effect compared to 2023. It was worse on wind aspect. Next slide, we are going to see here energy production. Energy production in the first quarter '23, 279 gigawatt hour. No restriction, 0 impact. 2024, our production is 160 gigawatts hour. The curtailment effect is 10.6%, representing 6% of our generation. It's not possible to generate because of the curtailment. They then turned in news that are going to operate by 6% was soft because of curtailment of the transmission line. Northeast, Southeast. The next slide here on behalf of the impact of net revenue. Net revenue first quarter 2023 was BRL 66 million and first quarter '24 BRL 42.6 million, a reduction of 35%. In addition to the impact that I mentioned before curtailment and we then bought the contract to expansion last year. A contract with a price that was superior to the current price impacting the result of the company is contract to suspend it. We do not have a final decision about its contract, if it's going to be suspended or extend. We are still discussing the justice with light this contract. Observing EBITDA comparing '23, '24. There was a worst in the EBITDA BRL 27 million -- BRL 27.9 million. The first quarter '23 was BRL 20.9 million and this quarter is negative BRL 7 million. Adjusting the effects of event that happened in '24, EBITDA adjusted BRL 4.7 million compared to '23, BRL 16 million and net profit of the company a loss minus 44% last year and this quarter, the loss is BRL 61.9 million. So we hear the cash flow of the company first quarter '24 because the year BRL 17 million generating cash of BRL 9.9 million payment plus [ 3 ], BRL 10.3 billion, investments, BRL 2.7 million and expenses to pay the sectors and equipment to implement the [ parque ] and developing projects and BRL 200,000 of [ NOK Class 2 ]. So we closed the quarter with BRL 14.3 million. Next slide. With the judicial recovery plan. We have the debt of BRL 1.371 billion, 1.4% variation. The direction of the balance especially in Class 2 that was permit corrected by the CPI, BRL 1.25 billion, BRL 1.52 billion. And Class 3, the payments that I mentioned before, BRL 10.3 million, BRL 284 million, BRL 276 million. The company is still resuming and discussing the addendum of the plan for us to and when we finally are back to communicate more information about the current plan. Passing the floor now to Ricardo for a Q&A session.

[Interpreted] Good morning, everybody. We will start now the Q&A session. [Operator Instructions]. We do not have questions. So we would like to conclude this teleconference of results Renova Energia. Thank you so much for your attendance and we are here available in the RI contact of the company for further questions. Everyone, good day. Thank you so much. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]