Romi (ROMI3) Q2 2024 earnings summary

Executive summary

• Order entry in 2Q24 reached R$321 million, up 13.9% year-over-year, with ROMI Machines orders up 18.6% and machine rentals up 46.2% compared to 2Q23.

• Order backlog at quarter-end was R$662.9 million, up 24.0% year-over-year and 11.4% sequentially, supporting a positive outlook.

• Net operating revenue for 2Q24 was R$295.2 million, down 4.4% year-over-year, mainly due to lower revenues from cast iron parts and B+W Machines.

• Adjusted EBITDA for 2Q24 was R$33.3 million (margin 11.3%), and adjusted net profit was R$24.9 million, down 4.5% year-over-year.

• Investments focused on machine rental business and manufacturing modernization, with R$34.6 million allocated to rental machines in 2Q24.

Financial highlights

• Gross margin in 2Q24 was 28.6%, down 1.1 p.p. year-over-year; adjusted operating margin (EBIT) was 6.0%, down 2.7 p.p.

• Net income for 2Q24 was R$31.0 million, with a net margin of 10.5%; adjusted net income was R$24.9 million.

• EBITDA margin was 13.4% in 2Q24, adjusted EBITDA margin 11.3%.

• Net cash position as of June 30, 2024, was negative R$76.5 million, with R$302 million in cash and short-term investments.

• Interest on capital of R$21.4 million (R$0.23/share) approved in June 2024.

Outlook and guidance

• Strong order backlog and increased order entry provide confidence for continued growth in 2024.

• Management expects positive impacts from the Accelerated Depreciation tax benefit through 2025.

• Ongoing focus on innovation, new product launches, and expansion of machine rental and fintech (PRODZ) businesses.

• Cautious optimism persists amid volatile macroeconomic and geopolitical conditions.

• Rough and Machined Cast Iron Parts expected to see gradual recovery, especially in automotive and construction, with new business and part numbers supporting future growth.