Nexa Resources (NEXA) Q4 2020 earnings summary

Executive summary

• 2020 revenue was ~US$2bn, down 16% YoY, while Adjusted EBITDA rose 15% to US$403m, supported by lower costs, reduced exploration spending and Brazilian real depreciation.

• Zinc production of 313kt met guidance; metal sales of 585.4kt exceeded projections despite a 6% YoY decline.

Financial highlights

• Revenue totaled US$2,132.5m in 2020 versus US$2,548.4m in 2019; lower average metal prices and traded volumes drove the decline.

• Adjusted EBITDA reached US$403m, up from US$349m in 2019; Adjusted EBITDA margin was 20.7%.

• Reported net loss was US$652.5m; property, plant and equipment impairment was US$557.5m.

Outlook and guidance

• Aripuanã production is scheduled to begin in early 2022; project completion was rescheduled to December 2021 after revised investment estimates.

• Nexa Way targets at least US$120m of annualized EBITDA improvement by end-2021, following a US$98m impact in 2020.

• 2021 investments were expected to return to levels similar to the pre-pandemic period, while prioritizing operational safety and long-term business sustainability.

• Bonsucesso engineering studies resumed in 1Q21; Magistral feasibility work was expected to finish in 1H21, with detailed engineering planned for 2021.