Direcional Engenharia (DIRR3) Q3 2024 earnings summary

Executive summary

• Achieved record net income of BRL 160 million in 3Q24, up 133% year-over-year and 10% sequentially, with a net margin of 17.6%.

• Net revenue reached an all-time high of BRL 911 million in 3Q24, up 63% year-over-year and 8% sequentially.

• ROE (annualized, adjusted) reached 29% in 3Q24, the highest in company history.

• Strong operational performance with launches of BRL 1.7 billion in PSV and net sales of BRL 1.8 billion in 3Q24, up 76% year-over-year.

• Deferred revenue (backlog) reached BRL 2.6 billion, up 96% year-over-year, with a backlog margin of 43.4%.

Financial highlights

• Net income for 9M24 totaled BRL 457 million, up 97% year-over-year, with a net margin of 18.8%.

• Adjusted gross margin reached a record 38.7% in 3Q24, up 170 bps year-over-year.

• Adjusted EBITDA was BRL 221 million in 3Q24, up 59% year-over-year, with a margin of 24.3%.

• Cash and equivalents stood at BRL 1.5 billion, up 15% year-over-year.

• Net debt was BRL 91 million, with a low leverage ratio of 4.1%.

Outlook and guidance

• Management remains confident in achieving 2024 goals, citing strong sales, launches, and profitability.

• Deferred revenue and robust backlog margin support continued revenue and earnings growth in coming quarters.

• Gross margin expected to remain near current levels (~38%) for some time before normalizing to 35% in the medium term.

• Growth in launches and sales will be pursued only if it continues to drive performance improvements and high returns.

• Focus on optimizing capital structure and working capital, with potential for further dividend distributions if growth opportunities are limited.