Vulcabras (VULC3) Q2 2024 earnings summary

Executive summary

• Net revenue reached R$761.0 million in 2Q24, up 5.1% year-over-year, with 6M24 revenue at R$1,358.3 million, up 4.9% from 6M23.

• Recurring net income for 2Q24 was R$139.7 million, a 4.4% increase over 2Q23; recurring EBITDA was R$175.4 million, up 4.0%.

• Gross profit in 2Q24 rose 8.0% to R$323.6 million, with gross margin improving by 1.1 p.p. to 42.5%.

• E-commerce net revenue surged 72.9% year-over-year in 2Q24, now representing 13.0% of total net revenue.

• Achieved 16th consecutive quarter of growth despite subdued consumption, tax changes, and flood impacts in Rio Grande do Sul.

Financial highlights

• Gross volume sold in 2Q24 was 8.2 million pairs/pieces, down 1.5% from 2Q23; 6M24 volume was 14.9 million, down 0.5% from 6M23.

• Domestic market net revenue grew 8.6% in 2Q24, while foreign market revenue dropped 35.0%.

• Recurring net margin was 18.4% in 2Q24; recurring EBITDA margin was 23.0%.

• Net cash position of R$63.1 million as of June 30, 2024; net debt/EBITDA (LTM) at 0.1x in 2Q24.

• Advertising expenses increased to 5.3% of net revenue in 2Q24, up from 4.8% in 2Q23.

Outlook and guidance

• Management targets continued organic and inorganic growth, maintaining net debt near zero.

• Monthly dividend stream of R$0.125/share announced, with potential for extraordinary dividends.

• Buyback plan increased to 10 million shares, reflecting confidence in fundamentals.

• Management notes that future results may differ due to economic, market, and industry uncertainties.