SIMPAR (SIMH3) Q3 2024 earnings summary

Executive summary

• Reported record gross revenue of R$11.9 billion in 3Q24, up 29% year-over-year, with net revenue from services at R$8.4 billion, up 26% year-over-year, and net income of R$125 million, reversing a loss from the previous year.

• EBITDA reached R$2.7 billion (+30% y/y), with margin from services at 32.1%, reflecting operational efficiency gains.

• Strategic reorganization proposed to create a focused rental company (VAMOS Locação) and NewCo, the largest dealership group in Brazil, enhancing scale, governance, and value creation.

• Leverage reduced to 3.7x net debt/EBITDA (3.4x annualized), with a focus on capital allocation, asset quality, and operational synergies.

• Record asset sales of R$2.3 billion (+44% y/y) and extension of key contracts, such as Ciclus biogas to 2050.

Financial highlights

• Consolidated net revenue was R$10.9 billion, up 31% year-over-year; EBITDA grew 30% to R$2.7 billion, with a margin of 25.3%.

• Net income reached R$125 million, with adjusted net income at R$160 million, reflecting one-time items.

• Net capex was R$1.8 billion, down 17% quarter-on-quarter, focused on long-term contracts and fleet renewal.

• Annualized ROIC at 12.8%, 4.4 percentage points above cost of debt after tax.

• Free cash flow before growth reached R$4.9 billion in 9M24 (+19% y/y).

Outlook and guidance

• Focus on deleveraging, operational efficiency, and extracting value from built foundations, with lower investment needs and improved cash generation expected.

• Management expects further efficiency gains, margin expansion, and leverage reduction as recent investments generate cash.

• CS Infra targets 2026 EBITDA of R$180–250 million for ports and R$55–60 million for highways.

• Priority for 2025 is to reduce net debt, with dividends expected at the mandatory minimum.