Grupo Multi (MLAS3) Q2 2024 earnings summary

Executive summary

• Net revenue reached R$ 884.9 million in 2Q24, up 21.1% from 1Q24, with growth in all segments except Mobile Devices; government sales declined sharply year-over-year, but corporate and DTC channels grew strongly.

• Gross profit was R$ 194.3 million (22.0% margin), up 17.8% sequentially, driven by new manufacturing projects and improved ongoing portfolio margins.

• EBITDA turned positive at R$ 29.8 million (3.4% margin), a R$ 57.1 million improvement over 1Q24, reversing three quarters of negative operational results.

• Net loss was R$ 52.2 million, mainly due to negative exchange rate variation, but improved by R$ 16.8 million vs. 1Q24.

• Net cash position increased to R$ 313.7 million, with six consecutive quarters of cash generation and significant inventory reduction.

Financial highlights

• Net revenue up 21.1% sequentially to R$ 884.9 million, but down 10.6% year-over-year due to lower government sales.

• Gross margin at 22.0% in 2Q24, down 4.7 p.p. year-over-year, impacted by product mix and technology transitions.

• EBITDA margin improved to 3.4% from -3.7% in 1Q24; net margin at -5.9% vs. -9.4% in 1Q24.

• Free cash flow was R$ 115.5 million, mainly from inventory reductions.

• Net cash position: R$ 313.7 million, with cash and equivalents at R$ 1,022.6 million and gross debt at R$ 708.9 million.

Outlook and guidance

• Management remains cautious due to exchange rate volatility, rising international shipping costs, and potential supply chain disruptions from drought in the North region.

• Focus for upcoming quarters is on execution, sales recovery, margin improvement, and expense control to return to healthy profitability.

• Cost reduction initiatives underway, targeting R$ 50 million in annual efficiency gains.

• Inventory replenishment will focus on high-turnover, profitable items; cash consumption is expected to rise as investments resume.