Armac Locação Logística e Serviços (ARML3) Q2 2025 earnings summary

Executive summary

• Gross revenue reached R$491.4 million in 2Q25, up 8.1% year-over-year, with strong asset sales and rental performance, though rental revenue declined 3% due to discontinued contracts.

• Management transformation and strategic adjustments focused on decentralization, contract portfolio optimization, and data-driven fleet management, now completed and maturing.

• Operational cash flow for 1H25 surged 94.4% year-over-year to R$460.1 million, with annualized recurring managerial operating cash flow at R$540 million, excluding asset sales.

• Asset sales network expanded, with five new pre-owned equipment stores opened and up to 20 expected by year-end, supporting ongoing fleet renewal and regionalization.

• Cost and expense reduction initiatives improved competitiveness, but results were impacted by R$23–25.4 million in discontinued revenue and non-recurring demobilization costs.

Financial highlights

• Adjusted rental EBITDA reached R$168.5 million in 2Q25, up 11.2% sequentially, with margin expanding to 45.6%, a 3.7 p.p. increase sequentially.

• Net loss of R$6.7 million in Q2, impacted by R$25.4 million in non-recurring expenses and higher financial costs; excluding these, net cash earnings were R$36.5 million.

• Operational cash flow for H1 2025 was R$460.1 million, up over 90% year-over-year.

• Gross CapEx for H1 2025 was R$301.1 million, with net CapEx expected to be near zero by year-end due to asset sales.

• Asset sales totaled R$138.5 million in H1, up 206.1% year-over-year, with gross margins around 7%.

Outlook and guidance

• Management expects rental EBITDA margins to sustainably exceed 50% in the coming months as cost and expense reductions take full effect.

• Utilization rate at 72.7%–74% in Q2, with expectations to return to 80% as portfolio optimization continues.

• Asset sales proceeds will be fully used for fleet renewal, targeting net CapEx of zero and reduced financial obligations in 2025.

• No specific guidance on number of new stores or asset sales volume, but ongoing regional expansion and continuous fleet renewal planned.