Grupo SBF (SBFG3) Q2 2024 earnings summary

Executive summary

• Achieved record 12-month adjusted EBITDA of R$716M (+48%) and net income of R$338M (+154.6%) LTM24 vs LTM23, with 2Q24 setting historical highs for net revenue, gross profit, EBITDA, and net income.

• Net revenue reached R$1.7B in 2Q24, up 7.6% YoY, with gross margin expanding 2.5 p.p. to 49.8%.

• Adjusted EBITDA was R$176M (+90.5% YoY), margin at 10.3% (+4.5 p.p.), and net income of R$73M in 2Q24, reversing a R$0.9M loss in 2Q23.

• Net debt reduced by R$756M YoY, with leverage at 1.06x (down from 3.13x in 2Q23).

• Working capital efficiency improved, with a 41-day reduction in the financial cycle and inventory days down 21.2%.

Financial highlights

• Consolidated net revenue: R$1.71B (+7.6% YoY); gross profit: R$853M (+13.1% YoY); gross margin: 49.8% (+2.5 p.p. YoY).

• Adjusted EBITDA: R$176M (+90.5% YoY); adjusted net income: R$73.2M (vs. -R$0.9M in 2Q23); EBITDA margin: 10.3% (+4.5 p.p. YoY).

• SG&A/Net Revenue improved to 39.5% from 41.5% in 2Q23; SG&A growth below revenue growth.

• Operating cash flow reached R$233M in 2Q24 (vs. R$17M in 2Q23), driven by EBITDA growth and working capital improvement.

• 24% improvement in financial cycle (41 days vs 2Q23); inventory and receivables days reduced.

Outlook and guidance

• Management remains focused on expanding net income, reducing leverage, and efficient working capital, with cautious expansion in new stores.

• Strategic planning aims to generate cash flow and prepare for new growth opportunities, with continued margin improvement expected.

• Fully hedged for 2024 collections, minimizing FX risk for gross margin.

• Optimistic about innovation pipeline, especially with Nike's Olympic cycle products and new technologies.