M. Dias Branco (MDIA3) Q3 2024 earnings summary

Executive summary

• Net revenue in 3Q24 was R$2.4 billion, down 12.1% year-over-year; 9M24 net revenue was R$7.2 billion, down 11.1% from 9M23.

• Net income for 3Q24 was R$124.7 million, a 51.9% decrease compared to 3Q23; 9M24 net income was R$469.5 million, down 14.1% year-over-year.

• EBITDA in 3Q24 was R$228.9 million (margin 9.5%), down 48.1% year-over-year; 9M24 EBITDA was R$843 million (margin 11.8%), down 15%.

• Results were impacted by intense competition, lower sales volumes, price reductions, commodity volatility, and Real depreciation.

• Management is implementing commercial team consolidation, cost structure optimization, SG&A reduction, and export strengthening.

Financial highlights

• Sales volume in 3Q24 was 419.3 thousand tons, down 6.9% year-over-year; 9M24 volume was 1.32 million tons, up 1.2%.

• Gross margin in 3Q24 was 32.9%, down 2.7 p.p. year-over-year; 9M24 gross margin was 34.7%.

• Net cash from operating activities in 3Q24 was R$67.2 million, with a net cash position of R$28.6 million and R$2.1 billion in cash at quarter-end.

• Capex in 3Q24 was R$84.6 million, mainly for plant improvements, maintenance, and new product lines; 9M24 capex was R$197.6 million.

• SG&A as a percentage of revenue increased due to lower average prices, though nominal expenses remained stable or decreased.

Outlook and guidance

• Management is focused on efficiency, productivity, and adapting to market realities to restore profitability.

• Ongoing initiatives include pricing policy review, logistics optimization, and export market prioritization, with more significant impacts expected in Q4 2024 and into 2025.