Ouro Fino Saúde Animal Participações (OFSA3) Q2 2024 earnings summary

Executive summary

• Revenue excluding Foot-and-mouth disease (FMD) vaccine grew 7.3% in Q2 2024 and 7.0% in H1 2024, driven by strong performance in production and companion animal segments.

• Profitability improved with gross margin, EBITDA margin, and net margin all expanding; adjusted EBITDA rose 51.3% YoY in H1 2024.

• New product launches, including Ferappease and upcoming swine vaccines, are expected to drive future growth.

• International operations faced a 15.4% revenue decline due to FMD vaccine discontinuation and challenging conditions in Mexico.

• Interim financial statements for H1 2024 were reviewed by independent auditors with no material modifications required.

Financial highlights

• Net revenue for Q2 2024 was R$217.2 million, with gross margin improving to 48.2% in Q2 and 48.1% in H1 2024.

• Adjusted EBITDA for H1 2024 was R$57.0 million (+51.3% YoY); adjusted net income in Q2 2024 reached R$15.3 million (+97.8% YoY).

• Net income for H1 2024 was R$29.7 million, reversing a net loss of R$73.8 million YoY.

• Operating cash flow generation reached R$100 million in H1 2024; cash and cash equivalents increased to R$343.2 million.

• Basic and diluted earnings per share for H1 2024 were R$0.55327, compared to a loss per share of R$1.37260 YoY.

Outlook and guidance

• Management expects continued growth in core business lines, supported by new product launches and ongoing R&D investments.

• Several product launches are planned for H2 2024, including two new swine vaccines and three new pet products.

• Leverage is expected to decrease further, targeting near-zero net debt by year-end.

• No significant operational impacts identified from the Rio Grande do Sul floods.