Grupo Multi (MLAS3) Q2 2024 earnings summary

Executive summary

• Net revenue reached R$ 884.9 million in 2Q24, up 21.1% from 1Q24, with gross profit of R$ 194.3 million and gross margin of 22.0%.

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

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

• Net income remained negative at -R$ 69.0 million, but net margin improved by 3.5 p.p. versus 1Q24, mainly due to exchange rate variation.

• Inventory optimization and product mix reduction initiatives are underway to drive operating leverage and reduce complexity.

Financial highlights

• Net revenue for 2Q24 was R$ 884.9 million, up 21.1% sequentially and 21% quarter-over-quarter.

• Gross margin was 22.0% in 2Q24, with continued products at 25%.

• 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 stands at R$ 313.7 million after amortizations.

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.

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

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