Romi (ROMI3) Q3 2024 earnings summary

Executive summary

• Order backlog at the end of 3Q24 reached R$758.5 million, up 36.1% year-over-year and 14.4% sequentially, reflecting strong demand and successful new business models such as machine rental and fintech credit solutions.

• Incoming orders totaled R$332.8 million in 3Q24, a 15.3% increase over 3Q23, with ROMI Machines unit order entry up 34.5% year-over-year.

• Machine rental business expanded, now representing about 30% of ROMI Machines' business, with 267 new machines rented in 9M24, up 41% from 9M23.

• Operations in Germany (B+W) showed robust recovery, with order backlog up 46% year-over-year, though revenues and margins were down due to delivery timing.

• Management remains optimistic for the remainder of 2024 and 2025, citing a strong backlog, ongoing investments in innovation and technology, and a nearly full 2025 order book.

Financial highlights

• Net operating revenue for 3Q24 was R$264.8 million, down 2.9% year-over-year, mainly due to lower revenue from cast iron parts and B+W delivery timing.

• Adjusted EBITDA for 3Q24 was R$23.6 million, with a margin of 8.9%, down from 12.1% in 3Q23.

• Adjusted net profit for 3Q24 was R$13.5 million, with a net margin of 5.1%, down from 8.2% in 3Q23.

• Gross margin improved to 29.9% in 3Q24, up 0.3 p.p. year-over-year, driven by operational improvements in cast iron parts.

• Net cash position as of September 30, 2024, was negative R$153.7 million, reflecting investments in machine rental and inventory buildup.

Outlook and guidance

• Strong order backlog provides visibility for continued growth into 4Q24 and 2025, with management expecting Q4 2024 to be the best quarter.

• Management expects ongoing benefits from new business models and innovation, despite macroeconomic volatility and notes forward-looking statements are subject to risks.

• The Accelerated Depreciation tax benefit, valid through 2025, is expected to support sales.