Hidrovias do Brasil (HBSA3) Q3 2024 earnings summary

Executive summary

• Q3 2024 results were impacted by severe draft restrictions, especially in the South Corridor, halting iron ore navigation since mid-August, while other segments like Santos and Coastal Navigation showed operational resilience and EBITDA growth.

• Shareholders approved a capital increase of $1.2–1.5 billion (R$1.2–1.5 billion) to support growth, value generation, and strengthen the capital structure.

• Net loss of R$49 million in Q3 2024 (vs. net profit of R$71 million in Q3 2023); 9M24 net loss of R$176 million (vs. net profit of R$209 million in 9M23).

• Continued progress on ESG initiatives, including a pioneering agreement with SEMAs and BARDA to support riverside communities.

Financial highlights

• Net operating revenue for Q3 2024 was $249 million (R$488 million), up nearly 7% year-over-year in the North but down 10% overall due to lower South Corridor volumes; nine-month revenue totaled $767 million (R$1,484 million).

• Adjusted EBITDA for Q3 2024 was nearly €150 million (R$175 million), down 33% year-over-year; margin at 36% (down 12.7 p.p.).

• Ended the quarter with $776 million (R$776 million) in cash, despite lower EBITDA and higher dollarized debt costs.

• Leverage ended at 6.12x net debt/EBITDA, impacted by lower EBITDA and FX variation on dollarized debt.

• Depreciation and amortization increased 22% in Q3 2024 to R$113 million.

Outlook and guidance

• Q4 2024 expected to remain challenging due to seasonal draft issues, but operational mitigations and gradual recovery in draft levels are underway.

• 2025 anticipated as a transition year with execution of dredging projects and structural solutions, aiming for normalized navigation by 2026.

• No early debt maturity or short-term pressure; main debt amortization scheduled for 2031.

• Expansion capex focused on North modular project; maintenance capex increased due to restrictive operations.