MRV Engenharia e Participações (MRVE3) Q2 2024 earnings summary

Executive summary

• Achieved record pre-sales, with net pre-sales reaching BRL 5 billion and over BRL 1 billion pre-sold in June 2024, surpassing pre-pandemic levels.

• Gross margin of new sales reached 34%, with reported gross margin at 26% in 2Q24.

• Cancellations are near zero, and SG&A contribution has improved.

• Subsidiaries Luggo and Urba are transitioning to asset-light models, with Luggo showing strong rental demand and Urba returning to profitability.

• U.S. subsidiary Resia is focusing on operational discipline, asset recycling, and zero cash burn, but continues to generate losses and has high leverage.

Financial highlights

• Net revenue for 2Q24 was BRL 2.09 billion, up 18.0% year-over-year; net pre-sales reached a record BRL 5 billion.

• EBITDA doubled to BRL 286 million, up 19% sequentially and 18.6% year-over-year.

• Adjusted profit attributable to shareholders was BRL 76 million, 41% higher than Q1 2024.

• Cash generation was BRL 32 million in 1H24, with expectations of BRL 300–400 million in H2.

• Net debt to equity improved to 41%, down from year-end 2023, and net debt/EBITDA LTM improved to 3.08x.

Outlook and guidance

• Confident in meeting or exceeding full-year guidance for revenue, margin, and cash generation; 2024 guidance reaffirmed.

• Gross margin expected to continue rising as legacy projects are replaced by higher-margin new projects.

• Anticipates further reduction in pro soluto, targeting close to 11% by year-end.

• Positive impact expected from upcoming adjustments to MCMV income brackets, expanding customer base.

• 1H24 net revenue reached BRL 3.9 billion, gross margin 26%, and cash generation BRL 32 million, in line with annual targets.