Qualicorp Consulting and Insurance Brokerage (QUAL3) Q3 2024 earnings summary

Executive summary

• Net revenue for 3Q24 was R$393.6 million, down 11.2% year-over-year and 1.3% sequentially; 9M24 net revenue was R$1,196.0 million, a 10.4% decrease year-over-year.

• The company maintained a stable operational environment, focusing on turnaround strategy, resilience, and sector reorganization, with operational efficiency and commercial realignment supporting business stability.

• Adjusted EBITDA for 3Q24 was R$172.0 million (margin 43.7%), down 4.9% from 2Q24; 9M24 Adjusted EBITDA was R$541.6 million, 10.5% lower than 9M23.

• The Affinity segment accounted for 91.8% of consolidated net revenue in 9M24.

• Net income attributable to controlling interest for 3Q24 was R$10.8 million, down 18.8% year-over-year; 9M24 net income was R$41.0 million, compared to a loss of R$5.7 million in 9M23.

Financial highlights

• Managed portfolio closed at 663,000 lives, a 23% decrease year-over-year, with revenue stability supported by concentrated readjustments in Q3.

• Adjusted EBITDA - CAC in 3Q24 was R$143.3 million (margin 36.4%), nearly flat year-over-year.

• Free cash flow before debt and dividends was R$113.7 million in 3Q24, with a 79% conversion rate from Adjusted EBITDA minus CAC.

• Net debt at quarter-end was R$1.0 billion, down 6.8% from 2Q24, with leverage at 1.44x Adjusted EBITDA LTM.

• Cash and equivalents stood at R$883.6 million at the end of 3Q24.

Outlook and guidance

• Management remains focused on operational efficiency, commercial realignment, and capital allocation, aiming for sustainable growth and value creation.

• Strategic initiatives include product portfolio expansion, regional launches, and new partnerships to strengthen the portfolio and drive future growth.

• Expectation of continued reduction in fixed, variable, and recurrent expenses in coming quarters.

• Capital allocation will prioritize efficient CAC investment and debt reduction.