Grupo Multi (MLAS3) Q3 2024 earnings summary

Executive summary

• Achieved first positive net income since 2Q23, with R$1.5M in 3Q24, driven by margin recovery and exchange rate gains after several loss-making quarters.

• Gross profit reached R$199.3M (+2.6% vs. 2Q24), with gross margin improving to 24.6%, moving closer to the long-term target of 30%.

• Revenue from the ongoing portfolio grew 3.2% sequentially, but net revenue dropped 8% year-over-year due to non-recurring events and logistics delays.

• Inventory efficiency improved, with discontinued lines reduced to about 1.4–1.5% of total inventory, but in-house inventory rose to 60% due to late arrivals.

• Logistics disruptions, especially in global shipping routes, delayed deliveries and increased inventory in-house.

Financial highlights

• Net revenue reached R$759.6M in 3Q24, up 3.2% from 2Q24 but down 6.4–8.5% year-over-year, mainly due to supply chain delays.

• Gross margin improved to 24.6%, up 2.1–2.7 p.p. from 2Q24, led by Office & IT Supplies.

• EBITDA was R$4.2M, marking the second consecutive quarter of positive results but still under pressure from high commercial expenses.

• Net cash position at R$175.6M, with cash covering 2.8x short-term debt and cash and equivalents at R$739.9M.

• Cash consumption was significant (R$140–282.7M), mainly for inventory replenishment and longer supplier payment cycles.

Outlook and guidance

• Expectation for robust Q4 revenue due to high in-house inventory and strong October sales.

• Focus on improving gross margin through portfolio streamlining, assertive pricing, and cost control.

• Ongoing efforts to pass through FX-driven cost increases to customers, with price negotiations underway.

• No specific EBITDA margin guidance, but management is committed to gradual improvement and profitability focus.

• New distribution center to be rented in Manaus to expand logistics capacity.