EcoRodovias Infraestrutura e Logística (ECOR3) Q2 2024 earnings summary

Executive summary

• Consolidated traffic rose 18.1% in Q2 2024, led by EcoRioMinas and EcoNoroeste, with heavy vehicle traffic up 10.6% and new toll collections boosting results.

• Adjusted EBITDA reached R$1.1459 billion in Q2 2024 (+24.8%), with a margin of 73.8%.

• Net income for Q2 2024 was R$272.5 million, up 120.3% year-over-year.

• Investments totaled R$1.0236 billion in Q2 and R$1.8286 billion in H1 2024, up over 10% and 19% respectively, focused on road expansion and maintenance.

• EcoNoroeste will begin automatic free-flow toll collection in H2 2024.

Financial highlights

• Adjusted gross revenue was R$1.7 billion in Q2 2024 (+18.5%) and R$3.4 billion in H1 2024 (+23.5%).

• Toll revenue reached R$1.5757 billion in Q2 2024 (+23.5%), mainly from traffic growth and tariff adjustments.

• Adjusted cash cost rose 5.2% in Q2 and 4.5% in H1 2024; cash cost/adjusted net revenue ratio improved to 27.5% in H1 2024.

• Net income for H1 2024 was R$510.1 million, up 115.5% year-over-year.

• Financial result was a loss of R$402.5 million in Q2 2024, with interest paid up 36.7% to R$801.4 million.

Outlook and guidance

• Margin improvement expected through cost discipline, innovation, and operational leverage.

• Traffic growth expected to moderate to 4%-5% in H2 2024.

• Leverage projected to peak at 4-4.5x net debt/EBITDA between 2027-2028 as CapEx ramps up.

• Capex commitments for highway concessions stand at R$39.96 billion as of June 2024.

• Selective approach to new projects, focusing on synergies, technology, and manageable CapEx.