MRV Engenharia e Participações (MRVE3) Q2 2024 earnings summary

Executive summary

• Achieved record net pre-sales of R$2.5 billion in 2Q24, the highest in company history, with over R$1 billion pre-sold in June alone.

• Gross margin on new sales reached 34% in 2Q24, with reported gross margin at 26%, reflecting continued margin recovery.

• Adjusted net income attributable to shareholders was R$76 million in 2Q24, reversing a loss from 2Q23.

• Direct financing portfolio grew 127% year-over-year, with 58% of assigned receivables in 2Q24 from this source.

• Subsidiaries Luggo and Urba are transitioning to asset-light models, with Luggo showing strong rental demand and Urba returning to profitability.

Financial highlights

• Net revenue reached R$2.09 billion in 2Q24, up 18% year-over-year, and EBITDA rose 18.6% to R$286 million compared to 2Q23.

• Gross profit increased 39% year-over-year to R$544 million, with gross margin improving by 3.9 p.p. to 26%.

• Adjusted profit attributable to shareholders was R$76 million in 2Q24, up from R$54 million in 1Q24.

• Cash generation (adjusted) was R$7.7 million in 2Q24, with guidance of R$300–400 million for 2024.

• Net debt in Brazil decreased 23% year-over-year to R$2.59 billion, with net debt/EBITDA LTM at 3.08x, down from 7.95x in 2Q23.

Outlook and guidance

• 2024 guidance targets net revenue of R$8–8.5 billion, gross margin of 26–27%, and net income of R$250–290 million.

• 1H24 results are in line with annual plan, with R$3.9 billion net revenue and 26% gross margin.

• Company expects further SG&A dilution and continued gross margin recovery.

• Cash generation guidance of R$300–400 million for 2024, with R$130 million achieved in 1H24 (excluding debt swaps).

• Confident in meeting or exceeding full-year guidance for revenue, margin, and cash generation.