Nexa Resources (NEXA) Q3 2024 earnings summary

Executive summary

• Net revenues reached $709 million in Q3 2024, up 9% year-over-year, driven by higher prices and improved demand, with consistent operational performance and financial discipline.

• Adjusted EBITDA rose 111% year-over-year to $183 million, with a margin of approximately 26%, and net income reached $6 million, reversing prior losses.

• Net leverage ratio improved to 2.2x from 2.7x in Q2, reflecting higher LTM adjusted EBITDA and reduced net debt.

• Portfolio optimization advanced with the sale of non-core assets, including Chapi mine and Pukaqaqa project, to focus on high-return assets.

• Aripuanã achieved its third consecutive quarter of EBITDA growth and first full quarter of positive operating cash flow, despite throughput constraints.

Financial highlights

• Q3 2024 consolidated net revenues were $709 million, up 9% year-over-year, but down 4% sequentially; 9M24 revenues totaled $2,026 million, up 4%.

• Adjusted EBITDA was $183 million, up 111% year-over-year, with a margin of 25.8%–26%; 9M24 adjusted EBITDA was $517 million, up 75% year-over-year.

• Net income was $6 million in Q3 2024, compared to a net loss of $64 million in Q3 2023 and $70 million in Q2 2024; adjusted net income was $22 million.

• Free cash flow generation in Q3 was $51 million, with available liquidity at $845 million and average debt maturity of 5.7 years.

• Net debt/LTM adjusted EBITDA improved to 2.2x from 2.7x in Q2 and 3.1x in Q3 2023.

Outlook and guidance

• 2024 consolidated production and cost guidance reaffirmed for both mining and smelting segments, with updated cash cost guidance reflecting a 64% decrease from previous estimates.

• 2024 CAPEX guidance reduced to $300 million, with focus on sustaining capital, brownfield exploration, and ESG/HS&E initiatives.

• Aripuanã throughput expected to remain at 90% of capacity through 2025 until a new filter is installed; updated production guidance to be provided in January.

• Commodity price assumptions for 2024 revised upward for zinc, copper, silver, and gold; prices expected to remain supported by strong market fundamentals and supply constraints.

• Net leverage target set between 1 and 1.5x to buffer against commodity cycles.