Fleury (FLRY3) Q2 2024 earnings summary

Executive summary

• Completed first year of business combination with Pardini, achieving significant integration progress, synergy capture, and expanded national presence and business diversification.

• Revenue reached R$2.14 billion in 2Q24, up 19.7% year-over-year, with pro forma growth of 8.1%.

• Net income rose 47.5% to R$173.6 million, with a margin of 8.8%, reflecting successful integration with Pardini.

• EBITDA reached R$522 million, up 21.7% (ex one-time expenses), with a margin of 26.4%.

• Acquisition of São Lucas Centro de Diagnóstico for R$69.8 million marks entry into Santa Catarina's B2C market.

Financial highlights

• Gross profit increased 24.7% to R$567.3 million, gross margin up 126 bps to 28.7%.

• Operating cash flow reached R$588.2 million, up 82.4% from 2Q23, with cash conversion at 77.8% of EBITDA.

• Capex for 2Q24 was R$97.6 million, down 8.1% year-over-year, reflecting disciplined capital allocation.

• Net debt/EBITDA at 1.1x, well below covenant limits, with average debt cost at CDI + 1.17%.

• Operating expenses were 12% of net revenue, with one-off business combination expenses of R$65.5 million in 2Q23.

Outlook and guidance

• Focus remains on cost discipline, digital acceleration, and capturing further synergies, with ongoing integration initiatives and process optimization.

• No specific margin or revenue guidance provided, but management expects continued efficiency and growth in B2B and mobile services.

• M&A pipeline remains active, with disciplined approach to asset quality and integration.

• Comfortable debt profile, with average term of 3.6 years and no concentration of due dates.