GPS Participações e Empreendimentos S.A. (GGPS3) Q2 2024 earnings summary

Executive summary

• Net revenue reached BRL 3.5 billion (R$3,493 million) in Q2 2024, up 34% year-over-year, with 6% organic growth, mainly driven by acquisitions.

• Adjusted EBITDA (ex-IFRS 16) was BRL 350 million, up 16% year-over-year, with a 10% margin.

• Adjusted net profit was BRL 166 million, up 11% year-over-year, with a 4.8% margin.

• Customer base reached 4,556 as of June 2024; NPS at 75%.

• Largest-ever acquisition of GRSA completed, expanding the food solutions segment.

Financial highlights

• Inorganic growth from ten acquisitions in 2023-2024, with GRSA contributing BRL 290 million in June alone.

• 1H24 net revenue totaled BRL 6,565 million, a 28% increase year-over-year.

• Adjusted EBITDA margin for H1 2024 was 10.4%; GRSA's margin in June was 5.6%.

• Net debt/adjusted EBITDA ex-IFRS16 at 2.2x post-GRSA, up from 0.8x in 2Q23.

• Cash and equivalents at June 2024 were BRL 1,182 million.

Outlook and guidance

• Organic growth expected to improve in H2 2024, but likely to remain single-digit; margin improvement anticipated only after April 2025, post-GRSA integration.

• EBITDA margin for H2 2024 projected between 9.5%-10%.

• Full synergy capture from GRSA expected by mid-2025, targeting 10% EBITDA margin.

• M&A activity paused until leverage returns to 1.5x, expected in H2 2025.

• Management anticipates integration and organic growth challenges ahead.