Good morning, everyone, and thank you for waiting. Welcome to Aeris Earnings Conference Call for the Q4 of 2024 and the year of 2024. Here with us today are Alexandre Negrão, CEO, and José Azevedo, CFO and Investor Relations Officer. This event is being recorded, and all participants will be in a listen-only mode during Aeris' presentation. After that, there will be a Q&A session when further instructions will be given. Should any participant need assistance during this call, please send a message using the call on the right side of the screen, the chat. Before proceeding, let me mention that statements made in this call regarding the business outlook of the company, operating, and financial projections and goals are based on the beliefs and assumptions of Aeris Management. Forward-looking statements are not a guarantee of performance.
They involve risks and uncertainties because they relate to future events and depend on circumstances that may or may not occur. Macroeconomic conditions, industry conditions, and other factors could also cause results to differ materially from those expressed in such forward-looking statements. I would like to go over the agenda on slide three. We will start with the highlights, operational performance. Alexandre will present, and then he will turn the floor over to Azevedo. Azevedo will talk about the results. We move on to the Q&A, and then we have final remarks by Alexandre. Now I will turn the conference over to Alexandre Negrão.
Thank you, Lais. Good morning, everyone. We are on slide four talking about highlights of 2024 as well as of the Q4 . I think the main highlight is undoubtedly the services because we expected growth, but it has grown above our projections.
Services grew by 30% compared to 2023, and we thought that services would account for 5% to 6% of total revenue, but it was 10% for the year and 23% in the quarter. Revenue is dropping, but the point is that services tend to grow and have had continued growth, especially in the United States. Services operate not only in Brazil as well as in the whole Latin America and United States. We are based in Fortaleza and Houston. During 2024, we have structured services better. We have a robust strategic plan. We increased the headcount significantly, and we expect that in the future, services will account for 20% to 30% of revenue with more robust margins and solid revenues because that way we will not face the bumps and ups and downs that we face in blades. We do not expect to face that in services.
On the contrary, recently, we've seen that the new turbines with higher power have faced more quality issues. The service level for those blades is high. We also have older blades that are being discontinued that need maintenance or that need high maintenance because they're becoming old, especially in the United States. The highlight of services is that we see it with good eyes, I mean, in a positive way, and we do believe in its growth. The next highlight is in October, we started the production of the two new lines of services, one and three. It's going very well, and it's been one of the best or the best ramp-up that Aeris has ever had in its history. Both services and one and three were the two areas that we invested more funds in order to perform well.
That is also developing above our expectations. The production line should become stable in the Q2 . The third point, now I'll talk about the market, something we've seen lately, and also making a link to V163 that's dedicated partly to the domestic market in Brazil and partly to exports. We see an increase in exports, and they become a robust portion of our revenues. We will continue to export during 2025 and the whole year as well as 2026. That is also very good because it decreases the volatility of the Brazilian market or the domestic market within the company.
Although we believe that the company's growth will be highly based on exports, we've been doing important work with ABEEólica and ABIMAQ and the trade associations and all the associations of the wind industry to foster the industry again because the industry has gone through a very severe crisis. The government has shown a positive trend of it's been sensitized by our demands. We will work in order to have a consistent demand as we used to have in the past. These are positive highlights, things we achieved during 2024, and I believe they will have an effect in the short and medium term for Brazil and for the Brazilian industry. Now, moving on to slide five, we talk about the delivered megawatts on the right side. In 2024, it went from 3.1 gig to 1.6 gig, a 50% drop. It's quite significant.
In addition to selling less blades, we used a smaller machine and a backlog of 9.7 gig. Moving to slide six, as I said, while in 2023, our average production was 5 megawatts per machine, we're now at 4.1 megawatts average. In slide seven, we're talking about production lines. An interesting thing is that we have added a new piece of information to this slide, which is to include decommissioned lines, mature lines, non-mature lines, and also deactivated lines. What does that mean? It means that these are production lines we have in contracts today, but clients, because the contract has over five years, the client doesn't have an obligation to persist with the demand in that contract. These are deactivated lines. Deactivated lines are lines that customers or clients can ask for production or not. Of course, there's always a delay.
It's not that we are going to turn it on the next day after they call requesting production. You have to plan that. These are deactivated lines that can be productive in coming years. Now, moving on to slide eight, I now turn the floor over to José Azevedo, our CFO.
Thank you, Alexandre. Starting on slide eight, we summarize the main numbers in the Q4 of 2024 and year 2024. Revenue was BRL 211.4 million in the Q4 of 2024 and BRL 1,516 million in the year, both down almost 50%, and I will comment on that later. EBITDA was negative by BRL 1.6 million in the quarter and positive by BRL 138.8 million in the year. We invested BRL 94 million in 2024, and I remind you that we have two new lines in ramp-up which require greater investments.
Finally, we had a loss of BRL 833 million in the Q4 of 2024 and BRL 934 million in the year. Of this loss, BRL 751 million was an accounting write-off labor impairment in the Q4 of 2024. The write-off has a one-off effect that was due to the discontinuation of three contracts, Siemens Gamesa, Nordex, and WEG, which impacted the company's results. Moving on to slide nine, revenue, which dropped by 42.5% in the quarter and 46.5% in the year. This reduction was due to the start of ramp-up of two new lines, decommissioning of four production lines, in addition to the deactivation of three lines in November temporarily. Low market demand led one of our customers to deactivate three production lines, but they remain in the plant awaiting a possible return in demand.
On slide 10, we show the EBITDA in the quarter was negative by BRL 1.6 million in the year, positive by BRL 139 million, with a margin of 9.2%. EBITDA was impacted by the accounting write-off, labor impairment, and we also had a lower dilution of production costs due to the ramp-up of two new lines. On slide 11, we show investments quarter by quarter. We closed the year with BRL 93.9 million invested in line with the budget. In the year 2024, we had the ramp-up of two new lines with greater investments, as mentioned before. On slide 12, we see the cash flow. There was a significant reduction in operating cash, more precisely in working capital. On slide 13, we show the accounts with impairment entries. It is worth noting that this does not involve any cash disbursement. The accounts were first inventories with BRL 505 million written off.
We incurred a loss in working process due to the discontinuation of contracts that affected a significant part of our materials, especially raw materials. The other write-off was in accounts receivable from customers, which refers to provisions for losses related to discontinued contracts for which an allowance for bad debts was created. Finally, in the intangible line, where we face a phase-out of a discontinued project that initially planned to deliver 1,168 blades, but only 440 blades were delivered. On slide 14, we talk about our debts. Our leverage increased due to the variations in working capital and a consequent reduction in cash balance and the drop in EBITDA. We had a lower EBITDA. With this, we reach the end of the presentation. Now we'll start the Q&A. Thank you.
Thank you, Azevedo. Now we'll start the Q&A session.
If you want to ask a question, please click on raise hand, and questions will be answered on a first-come, first-served basis. There is also the Q&A button. You can write the questions as well if you do not want to ask them in the microphone. Thank you.
First question comes from Ricardo Peixinho from Tagus. What are the main markets for exports in 2024?
Good morning, Ricardo. For 2024, I think you mean. 2025, actually, I think you mean. The United States is the main market. That is where we see the main growth. Today, we are also sending quotes, price quotes, to other countries in Latin America. Our greatest potential for exports is Latin America and the United States. We are working with Argentina, Guatemala, Mexico, and the United States.
We are also in negotiation to export to Europe, although we know it is harder to access Europe given the distance. Transportation for us is crucial.
Next question is from Ramon from Axial Capital. How is your opinion about this increase in spot price with the potential demand from hydrogen and data center? Do you believe it could make feasible to fund new PPAs in 2025, 2026, and 2027 in Brazil? Could we have a new wind energy boom?
Good morning, Ramon. We see in a very positive note data centers as well as green hydrogen. In addition to the higher spot price, I believe last year we obtained higher incentives from the Brazil Climate Fund. It goes through BNDES with more attractive rates for the wind energy sector.
I don't believe, however, that we'll have a wind energy boom as we had in 2021 and 2022 because we believe that even with data centers and hydrogen and all, despite all the incentives in place, we need to work because solar energy is a strong competitor to wind, and the incentives are not equal for both. Solar energy has grabbed a lot of the market share of wind energy, a lot of the market of wind energy in Brazil. I won't believe we'll have a solar boom as we had in the past, but after this downward trend in 2024 and 2025, or I believe in 2026, we'll go back to delivering 2-3 gigawatts consistently. I believe with 2025 and 2026, we'll be very low, and we'll resume production and higher production during 2027.
The next question comes from Gabriel Paula from FTI Consulting.
What has the company done to address the growing leverage and payment liabilities with financial creditors?
Thank you, Gabriel. This is José Azevedo speaking. What we've done is the first thing we've done in the company, as you may recall, we started to work specifically in the production area to become more effective operationally and have a greater margin than we had a capital input. As demand dropped, which was a surprise to all of us, the first thing we did was to start a renegotiation to adapt the main debts to the new cash flow of the company, looking at the future backlog we have as of 2028 and the resumption of the market that were even mentioned by renowned consulting firms. This is what we're doing. We have liquidity.
We are waiting for the demand to resume, and we'll go back to work as soon as it happens. Our main focus is to produce and increase EBITDA.
The next question is from Breno Fortuna, with Hire Capital.
Good morning. Could you bring more details about the projections and the material facts, especially composition of cash generation between industrial services and exports? Could you also talk about initiatives to raise new money, either by capitalization or BNDES funds?
Good morning, Breno. Regarding cash per product, we don't disclose that. I cannot give you that information. Regarding BNDES, as mentioned previously by Alexandre, we're working with other trade associations to get some help during this low demand moment in the wind energy sector.
The fund from BNDES has a very good rate because it allows wind farms to invest, and we can then sell blades to build the turbines, especially in areas. What we're first doing is restructuring the company. However, if to get the cash improved, if there is some important or good opportunity, we can discuss that. It makes good sense. I mean, it makes sense for the swap of debts or something like that. Right now, we want our customers to have the support of BNDES. That's what's most important for us right now.
The next question comes from Catarina Bueno. What is the positioning of the company about the covenants defined for the ventures? How do you analyze this recovery of the EBITDA and payment of debt?
Hello, Catarina.
As published in the material fact, we are in the middle or the end of negotiation with the debenture holders and in three banks. Negotiations are quite advanced. We are on a good path. We believe that they will be successful. Having said that, we'll have a cash relief, so to speak, for the coming years. We'll be able to fill all the demand from the debt to meet the demand from the debts with our cash flow and also have cash enough to keep up with the resumption of demand from the market. It does depend on external factors. We are keeping a close look on all the projections, and we believe that in 2027, 2028, demand will go back up again, and then we'll be able to pay those debts. That's why we are renegotiating them.
The next question. Alexandre, could you talk a bit?
It's from Irina Vasconcelos. Could you talk a bit about the participation of Aeris with Abeeólica to promote the growth in the wind energy market? Also from Alexandre Moretti. Considering that Aeris Energy had a loss of BRL 133 million in the Q4 of 2024 impacted by write-offs related to the loss of Siemens Gamesa, Nordex, and WEG contracts, what strategies does the company intend to adopt to recover such contracts and improve its financial results in the next quarters?
Good morning, Irina and Alexandre. Thank you for the questions. This is Alexandre speaking. We'll answer both of them because they are related. About the work we've done not only with Abeeólica, but as well as with ABIMAQ and other associations in the industry.
As I said earlier, we're working to, one, foster demand and also make the industry competitive so that we can access not only the domestic market, but also the external market. Of course, these are long conversations. This is not something we'll see the result quickly, but the government has been sensitized and is considering because the Fundo Clima, the Climate Fund, shows how much the government is sensitive to that. Also, we've seen the government, both BND and BNDES, these development banks, also sensitized in deciding to support the domestic industry more. This is a continuous effort with those associations, and we continue to strive in order to resume domestic demand as well as the competitiveness of the industry as a whole. As for the contract, all our customers, both Siemens Gamesa, Nordex, and WEG, they continue to operate in other countries.
Siemens Gamesa has gone through a difficult time. They've had a lot of quality issues. They removed turbines. They stopped supplying onshore turbines, but now they are resuming that. Actually, they've announced a new project recently in which they are again selling their turbines onshore. They are also working heavily in the offshore market. Nordex remains with good demand, especially in Europe, and they also intend to come back to Brazil when the market demand resumes. We are working, always talking to Nordex. WEG is a smaller player, but they have in their strategic planning the idea of resuming operations in Brazil and the United States. WEG has recently announced that it's making or dedicating a plant to the US market. We are talking with them to again resume the production of wind blades here at Aeris for them.
We have a very good relationship with our customers. The end of the contract was merely due to a demand drop. Once the demand resumes, I am sure that Aeris will be in their radar and in the strategy of these players.
This ends the Q&A session. I would now like to send the floor over to Mr. Alexandre Negrão for his final remarks.
Thank you very much for attending this call. As expected and mentioned during this year, this 2024 has been a very challenging year, complex, with a loss of three contracts. This has never happened before in our history and a major challenge both domestically and internationally. We have seen Brazil with an increase in interest rates, which for our industry is awful. We are very much impacted by high interest rates, not only our industry, but industries as a whole in the industrial sector.
Wars and geopolitical scenarios cause us to be very much impacted because of freight prices and logistics costs. The year 2024 has been a very challenging year, but despite that, the company managed to have a good operation. We have had an operational year that was positive, and the company maintained a 10% EBITDA margin, which is very good for this industry. If we consider the challenges that we faced in the year, it was very good. Given all that, the loss of demand, the new size of the company, and that will be even smaller in 2025 than we were in 2024. We started in the last quarter conversations with creditors to reallocate the capital structure of the company.
These discussions are advanced, and once they are finished, I believe the company will be in a very solid position to go through 2025 and be able to focus on cooperation, on delivering a good production line for Vestas, and also having new contracts because this is our intention to sell services and sell blades. This is essential for our company, and it's essential that we are able to get new customers and resume higher demand soon. I would like to thank you all for your time and patience, and I wish you all a good year. Thank you. Have a good day.