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

Executive summary

• Net revenue reached R$ 3,493 million in 2Q24, up 34% year-over-year, with 6% organic growth, mainly driven by the GRSA acquisition, the largest in company history, consolidated from June 2024.

• Adjusted EBITDA ex-IFRS16 was R$ 350 million in 2Q24, up 16% year-over-year, with a 10.0% margin.

• Adjusted net profit was R$ 166 million in 2Q24, up 11% year-over-year, with a 4.8% margin.

• Customer base reached 4,556 as of June 2024, with over 156,000 employees nationwide; NPS at 75%.

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

Financial highlights

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

• Organic revenue grew 6% year-over-year in both 2Q24 and 1H24.

• Adjusted EBITDA margin for 1H24 was 10.4%; GRSA's margin in June was 5.6%.

• Net debt/EBITDA ex-IFRS16 was 2.2x at 2Q24, up from 0.8x in 2Q23, mainly due to acquisitions; pro forma 1.9x including GRSA full-year EBITDA.

• Cash and equivalents at June 2024 were R$ 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.

• Integration of GRSA systems expected to conclude by December 2024, with full synergy capture by mid-2025, targeting a 10% EBITDA margin.

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

• Management anticipates challenges in integration and organic growth for the remainder of 2024.

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