SIMPAR (SIMH3) Q2 2024 earnings summary

Executive summary

• Net revenue reached BRL 10.3 billion in Q2 2024, up 36% year-over-year, with record gross revenue of BRL 11.3 billion (+34%).

• EBITDA was BRL 2.7 billion (+17% y/y), with adjusted EBITDA at BRL 2.6 billion; EBITDA margin (ex-dealerships/asset sales) rose 4.6 p.p. to 48.5%.

• Net income reached BRL 159 million, up 59% year-over-year and 76% over Q1 2024; adjusted net income was BRL 185 million.

• Diversified portfolio with leadership in key sectors, 75% of EBITDA from long-term contracts, and strong asset liquidity.

• Focus shifted to extracting value from built assets, operational efficiency, and cost reduction, signaling a new cycle for the group.

Financial highlights

• Net revenue from services was BRL 8 billion (+33% y/y), with service EBITDA margin expanding by 4 percentage points to 48.5%.

• Consolidated EBITDA margin was 26.4%, impacted by higher vehicle sales and dealership mix.

• Net CapEx for the quarter was BRL 2.2 billion, 25% lower than Q1 2024, focused on highly liquid assets for long-term contracts.

• Annualized ROIC reached 12.3%, exceeding the cost of capital by 3.8 percentage points.

• Net margin improved to 1.6% in Q2 2024 from 1.0% in Q1 2024.

Outlook and guidance

• Management expects continued organic growth, operational efficiency, and further deleveraging, targeting leverage below 3x in the mid-term.

• Value extraction from recent investments and cost reduction initiatives are expected to drive future profitability.

• No need for equity follow-on; focus remains on organic cash generation and operational improvements.

• JSL expects further margin expansion and growth from new contracts; Vamos anticipates continued rental growth and dealership normalization.

• Movida targets 4.2% p.m. yield in RAC for 2024, with improved fleet mix and margin stability.