Grupo Vamos (VAMO3) Q2 2024 earnings summary

Executive summary

• Adjusted EBITDA rose 31.6% year-over-year to R$875.7 million in 2Q24, driven by strong rental segment growth and operational gains, despite non-recurring losses from floods and agribusiness downturn.

• Adjusted net profit surged 92.8% to R$205.5 million, reflecting rental segment expansion and cost discipline.

• Non-recurring losses totaled R$97.9 million, including R$19.3 million from climate-related asset impairments and R$78.6 million in bad debt provisions, mainly in agribusiness.

• Rental and used asset sales growth offset weakness in agricultural dealerships, maintaining leadership in truck and machinery rental and sales.

• Focus on optimizing working capital, deleveraging, and disciplined capital allocation to sustain profitability.

Financial highlights

• Net revenue increased 28.2% year-over-year to R$1.88 billion in 2Q24; adjusted EBIT rose 29.9% to R$680.0 million.

• Net rental revenue grew 41.9% to R$1.1 billion; used asset sales revenue rose up to 57.1% year-over-year, with gross margin between 23.7% and 33.0%.

• Net debt at quarter-end was R$10.7 billion; leverage ratio for covenant purposes was 3.39x.

• Adjusted net margin improved to 10.9% in 2Q24.

• Working capital reduced by R$1.2 billion since 3Q23.

Outlook and guidance

• Expectation of continued strong demand for rentals and used asset sales, with contracted CAPEX of R$1.2–1.3 billion per quarter.

• Backlog of deployed rental contracts reached R$14.1 billion, supporting future revenue visibility.

• Inventory levels projected to decline in H2 2024 as purchases slow and redeployment of returned assets accelerates.

• Focus on cost reduction and working capital normalization, especially in agricultural dealerships.

• Anticipate gradual recovery in dealership margins as inventory levels normalize.