WEG (WEGE3) Q3 2024 earnings summary

Executive summary

• Net operating revenue reached R$9,856.9 million in 3Q24, up 22.1% year-over-year and 6.3% sequentially, driven by strong external market growth, T&D, industrial motors, and recent acquisitions.

• EBITDA rose 27.9% year-over-year to R$2,224.6 million, with a margin of 22.6%, up 110 bps from 3Q23.

• Net income for 3Q24 was R$1,578.7 million, a 20.4% increase over 3Q23, with a net margin of 16.0%.

• Return on Invested Capital (ROIC) reached 37.1%, up 170 bps year-over-year; adjusted ROIC excluding non-recurring tax credits is 34.3%.

• Recent acquisitions (Marathon, Rotor, Cemp, Volt Electric Motors in Turkey) are expected to further strengthen the business and expand presence in new markets.

Financial highlights

• Gross margin improved to 34.5% in 3Q24, up 210 bps from 3Q23, supported by favorable product mix and productivity gains.

• SG&A expenses rose 31.6% year-over-year, mainly due to business consolidation and higher freight costs.

• External market revenue grew 40.6% year-over-year, while domestic market revenue rose 1.5%.

• CAPEX in 3Q24 totaled R$434.9 million, focused on modernization and expansion, with 64.6% invested in Brazil.

• Net cash position at quarter-end was R$4,114.9 million.

Outlook and guidance

• Management expects continued growth driven by product diversification, global presence, and operational efficiency.

• Positive momentum expected for short-cycle equipment and T&D, with solar showing signs of growth and wind business phasing out.

• Integration of recent acquisitions is ongoing, with focus on operational efficiencies and synergies.

• Margins expected to remain stable, with ongoing monitoring of product mix, exchange rates, and global economic volatility.

• Forward-looking statements highlight sensitivity to market, economic, and sector conditions.