Sequoia Logística e Transportes (SEQL3) Q1 2024 earnings summary

Executive summary

• Completed the acquisition and integration of Grupo MOVE3, creating one of Brazil's top 3 logistics operators with national reach and over 4,500 clients, with combined results from March 28, 2024.

• Mapped and began executing over BRL 100 million (R$104M) in annualized synergies, including a 20% workforce reduction and warehouse consolidation, with execution underway and expected to impact results from Q3 2024.

• Finalized comprehensive financial restructuring, converting up to BRL 582 million in debt into convertible debentures and equity, and securing new working capital.

• Launched a new mega sorter, one of the largest in Latin America, with a BRL 70 million investment, increasing capacity to over 1 million packages per day.

• Launched 6th private issuance of mandatory convertible debentures, raising BRL 55 million for the MOVE3 acquisition.

Financial highlights

• Combined pro forma Q1 2024 EBITDA was BRL -15.7 million, with a margin of -5.7%, reflecting the pre-synergy phase of the integration.

• Q1 2024 net operating revenue was BRL 276.1 million, gross profit BRL 10.8 million, and gross margin 3.9%–4%.

• Net loss for Q1 2024 was BRL 122.1 million, with an adjusted net loss of BRL 111.9 million and net margin of -40.5%.

• Cash position as of March 31, 2024, was BRL 20.6 million; total assets were BRL 2,114.9 million.

• Debt reduced by BRL 241 million through conversions and renegotiations, with BRL 116 million injected for working capital.

Outlook and guidance

• Synergy capture and cost reductions, including a 20% headcount reduction and warehouse optimization, are expected to generate over BRL 100 million in annual savings, with effects visible from Q3 2024.

• Positive cash flow and improved results anticipated from Q3 2024 as integration and operational improvements take effect.

• Focus on operational excellence, profitability, and prioritizing high-margin business units for growth in the second half of 2024.

• Growth initiatives planned for the second half of 2024, including contract reviews and commercial acceleration.