Grupo SBF (SBFG3) Q2 2024 earnings summary

Executive summary

• Achieved record adjusted EBITDA of R$716M (+48.0%) and net income of R$338M (+154.6%) LTM24 vs. LTM23, with 2Q24 marking historical highs for net revenue, gross profit, EBITDA, and net income for a second quarter.

• Net revenue reached R$1.7B in 2Q24, up 7.6% vs 2Q23, with gross margin expanding 2.5 p.p. to 49.8%.

• Net profit of R$73.2M in 2Q24, reversing a R$0.9M loss in 2Q23, and significant reduction in net debt and leverage to 1.06x.

• Working capital efficiency improved, with a 41-day reduction in the financial cycle and 48-day inventory reduction vs. 2Q23.

• Operating expenses and SG&A/net revenue ratio improved, supporting profitability and cost control.

Financial highlights

• Net revenue: R$1.7B (+7.6% vs 2Q23); gross profit: R$853M (+13.1% vs 2Q23); gross margin: 49.8% (+2.5 p.p. vs 2Q23).

• Adjusted EBITDA: R$176M (+90.5% vs 2Q23), margin at 10.3% (+4.5 p.p.); net profit: R$73.2M (vs -R$0.9M in 2Q23).

• SG&A/net revenue: 39.5% in 2Q24 (-2.0 p.p. vs 2Q23); 38.9% in 1H24 (-2.4 p.p. vs 1H23).

• Financial cycle improved by 41 days vs 2Q23; inventory days down 21.2%, receivables days down 23.3%.

• 1H24 net revenue: R$3.2B (+4.7% vs 1H23); EBITDA: R$335M (+48.2% vs 1H23); net profit: R$126M (vs R$16M in 1H23).

Outlook and guidance

• Focus remains on expanding net income, reducing leverage, and efficient working capital through end of 2025.

• Fully hedged for 2024 collections, minimizing FX risk for gross margin.

• Expect continued margin recomposition at Fisia in H2 2024, with gradual improvement each quarter.

• Optimistic about innovation pipeline, especially with Nike's Olympic cycle products and new technologies across brands.

• Strategic planning aims to generate cash flow and prepare for new growth opportunities.