Grupo Traxión (TRAXIONA) Q2 2024 earnings summary

Executive summary

• Achieved record-high quarterly revenue of Ps. 7,369 million, up 23.2% year-over-year, and record EBITDA of Ps. 1,259 million, with net income nearly doubling to Ps. 222 million, a 98.2% increase, driven by strong nearshoring demand and operational expansion.

• Logistics & Technology segment led growth with a 40.5% increase, now 36.8% of total revenue, while Mobility of Personnel grew 20.1% and Mobility of Cargo rose 9.0%.

• Implemented a strategic shift from B2C to B2B in last mile operations due to prolonged price disruption, focusing on more profitable, complex solutions for large e-commerce clients.

• Initiated a company-wide efficiency program, including headcount reduction and cost optimization, with non-recurring expenses of Ps. 25 million this quarter and further costs expected in 3Q24.

• CapEx for 2024 reduced by Ps. 600 million to Ps. 3,600 million, with no impact on growth targets; company expects to be cash flow neutral for the year.

Financial highlights

• Consolidated revenue: Ps. 7,369 million (+23.2% YoY); EBITDA: Ps. 1,259 million (+8.3% YoY); Net income: Ps. 222 million (+98.2% YoY).

• Logistics and Technology division contributed nearly 37% of consolidated revenues, growing over 40% year-over-year; margin in this division was 7.2%, impacted by B2C adjustments.

• Cargo division faced temporary cost increases due to fleet reshuffling and weather-related disruptions, but revenue per kilometer grew 8.5% year-over-year.

• People mobility segment increased average fleet by about 1,000 units year-over-year, with temporary EBITDA margin compression due to new city launches.

• Adjusted EBITDA margin compressed by 230 bps to 17.1% due to cost increases and last-mile restructuring.

Outlook and guidance

• 2024 revenue and EBITDA guidance reaffirmed, targeting approximately 19% growth, mainly from efficiencies and logistics business expansion.

• CapEx guidance for 2024 reduced to Ps. 3,600 million (12% of revenue), improving profitability and cash flow, with no impact on growth objectives.

• CapEx to revenue ratio expected to continue declining in future years, supporting improved return metrics and cash flows.

• Management expects to be close to cash flow neutral for 2024, with future growth funded by internal cash flows and leverage, not equity markets.

• No plans to raise equity; leverage to remain below 2.5x net debt/EBITDA.