Iochpe-Maxion (MYPK3) Q2 2024 earnings summary

Executive summary

• Profitability improved in Q2 2024, driven by higher commercial vehicle demand in Brazil, productivity gains in North America, and better price adjustments to costs.

• Net operating revenue grew 1.1% year-over-year to R$3.84 billion, with gross profit up 12.2% and gross margin at 12.4%.

• Recurring EBITDA rose 14.1% year-over-year to R$411.1 million, with margin improving to 10.7%.

• Net income was R$36.9 million in Q2 2024, impacted by a non-cash deferred tax provision due to exchange rate variation.

• Geographic diversification and new product launches helped offset weaker vehicle production in Europe.

Financial highlights

• Net operating revenue: R$3.84 billion in Q2 2024 (+1.1% YoY); gross profit: R$476.6 million (+12.2% YoY); gross margin: 12.4% (+1.2 p.p. YoY).

• Recurring EBITDA: R$411.1 million (+14.1% YoY); recurring EBITDA margin: 10.7% (+1.2 p.p. YoY).

• Net income: R$36.9 million; EPS: R$0.24627.

• Net debt/EBITDA: 2.97x in Q2 2024 (vs. 2.72x in Q2 2023); liquidity ratio: 2.52x (vs. 1.63x in Q2 2023).

• Gross debt: R$6,357.9 million; 82.5% long-term, 17.5% short-term; average term 4.2 years.

Outlook and guidance

• Global light vehicle production expected to decline 2.0% in 2024, with commercial vehicles down 1.5%.

• Excluding China, declines are steeper: -2.9% for light vehicles and -5.3% for commercial vehicles.

• Margins expected to remain at or above two digits, with historical levels targeted by 2025.

• Brazil's light vehicle production forecast to grow 3% and commercial vehicles 30% in 2024.

• Europe projected to see a 4-5% drop in light vehicles and 10% drop in commercial vehicles for 2024.