M. Dias Branco (MDIA3) Q3 2024 earnings summary

Executive summary

• Net revenue in 3Q24 was R$2.4 billion, down 12.1% year-over-year; 9M24 revenue reached R$7.2 billion, down 11.1% from 9M23.

• EBITDA in 3Q24 was R$228.9 million, a 48.1% drop from 3Q23; EBITDA margin fell to 9.5% from 16.1% in 3Q23.

• Net income for 3Q24 was R$125 million, a 51.9% decrease compared to 3Q23; 9M24 net income was R$470 million, down 34.3% from 9M23.

• Results were impacted by intense competition, lower sales volumes, price reductions, commodity volatility, and Real depreciation.

• Actions underway include commercial team consolidation, cost structure optimization, SG&A reduction, and export strengthening.

Financial highlights

• Sales volume in 3Q24 was 419,000 tons, down 6.9% year-over-year; 9M24 volume was 1.3 million tons, up 1.2%.

• Gross margin in 3Q24 was 32.9%, down from 36.3% in 3Q23; 9M24 gross margin was 34.7%.

• SG&A as a percentage of revenue increased to 23% due to lower average prices, though nominal expenses remained stable.

• Net cash from operating activities in 3Q24 was R$67.2 million, with R$188 million in working capital consumption; ended 3Q24 with R$2.1 billion in cash and a net cash position.

• Capex in 3Q24 totaled R$85 million, mainly for plant improvements, machinery, and new product lines.

Outlook and guidance

• Corrective actions to optimize SG&A, pricing, and commercial structure are underway, with more significant impacts expected in Q4 2024 and into 2025.

• Management is focused on efficiency, productivity, and adapting to market realities to restore profitability.

• Ongoing initiatives include pricing policy review, logistics optimization, and export market prioritization.