Hidrovias do Brasil (HBSA3) Q3 2024 earnings summary

Executive summary

• Severe draft restrictions in the South Corridor in Q3 2024 led to a 43% drop in volume and a 90% decline in Adjusted EBITDA for the segment, with iron ore navigation halted since mid-August.

• North Corridor maintained stable or slightly higher Adjusted EBITDA despite a 16% volume drop, supported by higher tariffs and increased fertilizer volumes.

• Coastal Navigation and Santos segments delivered strong EBITDA growth, benefiting from normalized operations and the start of new salt operations.

• Net loss of R$49 million in 3Q24 (vs. net profit of R$71 million in 3Q23); 9M24 net loss of R$176 million (vs. net profit of R$209 million in 9M23).

• Capital increase of R$1.2–1.5 billion approved to support growth, value creation, and liability management.

Financial highlights

• Net operating revenue in 3Q24 was R$488 million, down 10% year-over-year, mainly due to lower South Corridor volumes; 9M24 revenue was R$1,484 million, down 6%.

• Adjusted EBITDA + JVs in 3Q24 was R$175 million, down 33% year-over-year; 9M24 was R$610 million, down 21%.

• Adjusted EBITDA margin in 3Q24 was 36% (down 12.7 p.p. year-over-year); 9M24 margin was 41%.

• Net loss was R$49 million in 3Q24; 9M24 net loss totaled R$176 million.

• Operating cash flow in 3Q24 was R$172 million, down 41% year-over-year, with cash consumption of R$72 million in the quarter.

Outlook and guidance

• Management expects draft restrictions in the South Corridor to be temporary and not reflective of installed capacity.

• Capital increase aims to fund new investments, enable growth, and support the company's agenda.

• Over 60% of 2025 harvest volumes already contracted long-term, with expectations of continued strong volumes and tariff gains.

• No early debt maturity or short-term pressure; main debt amortization scheduled for 2031.

• 2025 expected to be a transition year with dredging projects, aiming for normalized navigation and operational improvements by 2026.