Drax Group PLC (DRXGF) (Q2 2024) Earnings Call Highlights: Strong Financial Performance and ...

GuruFocus News
4 min read

In This Article:

  • Adjusted EBITDA: GBP515 million, a 24% increase over the prior period.

  • Earnings Per Share: Increased by 43%.

  • Dividends Per Share: Expected 12.6% increase.

  • Share Buyback Program: GBP300 million over two years, starting in Q3 2024.

  • New Facilities Raised: Greater than GBP680 million, maturing in 2027 and beyond.

  • Debt Repayment: Approximately GBP950 million of shorter-dated facilities repaid.

  • Net Debt: Just over GBP1 billion, with leverage of sub 1 times on a last 12 months' basis.

  • Pellet Production: Increased output from 1.9 million to 2 million tons.

  • Biomass Generation Cash Flow: Greater than GBP1 billion expected between 2024 and 2027.

  • Interim Dividend: 10.4p per share, expected to be 40% of the full year dividend of 26p per share.

  • FlexGen and Energy Solutions EBITDA: GBP98 million in the period.

  • Pellet Production EBITDA: GBP65 million, a 50% increase.

  • Biomass Generation EBITDA: GBP393 million, a 70% increase.

  • Capital Expenditure: Expected range of GBP360 million to GBP400 million for the full year.

Release Date: July 26, 2024

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

Positive Points

  • Drax Group PLC (DRXGF) reported a 24% increase in adjusted EBITDA and a 43% increase in earnings per share, indicating strong financial performance.

  • The company announced a GBP300 million two-year share buyback program, reflecting confidence in its financial stability and commitment to returning value to shareholders.

  • Drax Group PLC (DRXGF) has significantly strengthened its balance sheet by raising over GBP680 million in new facilities and repaying about GBP950 million of shorter-dated facilities.

  • The FlexGen and Pellet businesses are performing well, with both targeting more than GBP250 million of EBITDA in the long term.

  • The company is actively engaging with the UK government to support its role in delivering a net zero power system by 2030, highlighting its strategic importance in the energy transition.

Negative Points

  • There are challenges with the timing of the Open Cycle Gas Turbines (OCGT) projects, with delays in grid connections pushing commissioning dates into 2025.

  • The company faces uncertainties regarding the UK government's bridging mechanism for BECCS, which could impact future investments.

  • Drax Group PLC (DRXGF) is exiting its non-core SME business, reflecting a strategic shift but also indicating challenges in that segment.

  • The company is still working through permitting processes for its Longview Pellet plant, which has slowed progress.

  • There is ongoing uncertainty regarding the outcome of the Ofgem investigation, which could have regulatory implications for the company.

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