Consorcio Ara SAB de CV (ARA) Q3 2024 earnings summary

Executive summary

• Revenues in 3Q24 reached P$1.86 billion, up 6% year-over-year, marking the highest growth in seven quarters.

• Housing revenues rose 6.8% to P$1.78 billion, with 1,475 homes sold at an average price of P$1,209,500, up 7.9% from 3Q23.

• Growth was driven by the "Build with Infonavit Loan" (Line III) program, with P$445.2 million in homes titled, to be recognized as revenue upon delivery.

• Segment growth: Affordable Entry-Level and Middle-Income revenues increased 9.5% and 12.5% respectively, while Residential declined 4.3% due to lower Acapulco sales post-hurricane Otis.

• Operating income for 3Q24 was P$192.2 million (margin 10.4%), net income P$173.8 million (margin 9.4%), and EBITDA P$272.9 million (margin 14.7%).

Financial highlights

• 3Q24 revenues: P$1,855.0 million (+6.0% YoY); 9M24: P$5,335.1 million (+1.8% YoY).

• 3Q24 net income: P$173.8 million (-5.8% YoY); 9M24: P$503.7 million (-4.1% YoY).

• 3Q24 EBITDA: P$272.9 million (-0.8% YoY); 9M24: P$797.2 million (+1.9% YoY).

• Gross margin in 3Q24 was 26.8% (down 10bp YoY); operating margin 10.4% (down 110bp YoY); net margin 9.4% (down 110bp YoY).

• Free Cash Flow to the Firm was positive by P$0.8 million in 3Q24 and P$238.9 million in 9M24.

Outlook and guidance

• Management will focus on revenue growth and maintaining positive Free Cash Flow to the Firm in the last quarter of 2024.

• Confidence expressed in achieving year-end goals, supported by team dedication.