Nexa Resources (NEXA) Q4 2023 earnings summary

Executive summary

• FY23 revenue was $2.573B and Adjusted EBITDA was $391M, down 49% YoY; net loss was $289M amid lower metal prices, reduced smelting sales and Aripuanã ramp-up costs.

• Zinc production rose 12% to 333kt and operational guidance was achieved overall; Q4 Adjusted EBITDA increased 28% QoQ to $105M.

• 2024 priorities include completing the Aripuanã ramp-up, advancing Pasco integration, extending mine lives, maintaining ESG commitments and strengthening the balance sheet.

Financial highlights

• FY23 revenue was $2.573B versus $3.034B in 2022; Q4 net revenue was $649M, down 19% YoY and 3% QoQ.

• FY23 Adjusted EBITDA was $391M versus $760M in 2022; Q4 was $105M versus $120M in Q4 2022, up 28% QoQ.

• FY23 net loss was $289M versus net income of $76M in 2022; adjusted net loss was $41M for FY23 and $7M in Q4.

• FY23 operating cash flow was $247M and free cash flow was negative $41M; FCF was positive in Q2–Q4, including $43M in Q4.

• Adjusted EBITDA excludes reconciliation items totaling $101M in Q4 and $248M for FY23.

Outlook and guidance

• Complete Aripuanã ramp-up with safety, stability and positive cash generation; nameplate capacity is expected by mid-2024, with pump replacement expected to conclude in Q1.

• Advance Pasco integration toward formal technical committee and board approval in 2024; pursue mine-life extensions and growth options.

• Maintain financial and operational discipline, prioritize cash generation, preserve liquidity and conservative leverage, and begin deleveraging when appropriate.

• Management expects continued exploration focused on new ore bodies and resource-classification upgrades through infill drilling.

• From 2024, Três Marias waste filtration is expected to reach 95%-100%, following a 74% average in 2023 and over 90% in December.