Metalfrio Solutions SA

BOVESPA:FRIO3

Earnings Call Transcript

[Luiz Eduardo Caio, executive]

Welcome, everyone, to the webcast of Metalfrio Solutions related to the fourth quarter of 2024 as well as the full year of 2024. I invite you to follow the slides that are made available in our website. Slide #2 show the highlights of the period with a net revenue growing 15% in the quarter and 11.3% in the year, surpassing the threshold of BRL 2 billion, which is a mark that the company was seeking for a couple of years now. It was a small deterioration in gross margin in the quarter, but maintaining the sound 17% margin for the full year. And 9.7% growth in EBITDA for the year, reaching BRL 225.9 million.

And finally, if it were not for exchange rate and deferred tax effects, net profit for the year would have been BRL 36 million. Moving on to Slide #3, where we see net revenues for the quarter again. We see net revenues of BRL 615 million for the quarter, posting a 15% increase over the same period of last year, with positive contributions coming from Brazil and South America.

In Slide #4, we see the revenue picture for the full year, reaching BRL 2.2 billion with a growth of 11.3%, with a small drop in South America and solid growth in both North America and EMEA.

Now that we will talk about the split of revenues between products and services. I invite you to move directly to Slide #6, where we see the picture for the full year. As per South America, as you see, the drop comes from products with minus 4.9% and the growth and a comes from services growing 10.3%. All in, the Brazilian operation had a decrease in revenues of almost 1%, which is fundamentally due by the decrease in volumes of key accounts across the year.

Conversely, when we look at North America and Mexico and Central America, there was a growth of 12.2%, reaching BRL 368 million. And that growth comes from products of 15.6%, and there was a drop in 19.3% in services, which is due to the drop in business with ABI, namely in Mexico. Looking at the picture of Europe, Middle East and Africa, served by our factories in Russia and Turkey. You see a growth of 25.3% in the year. And I have to say that there is a portion of it that comes from exchange rate, maybe around 13%, 14%, but there's still a good growth coming from that region in all categories, both products and services.

Moving on to Slide #7, please, where we start to talk about EBITDA for the quarter. And there you see a growth of 8.5% year-on-year. And here on the split of regions, there is a seasonal effect because this is the high season in Brazil, whereas it is the low season in Turkey. And then we see this outstanding contribution of the South American operation to the overall profitability of the company.

Now Slide #8, EBITDA for the full year. You see there a growth of 9.7% year-on-year, reaching BRL 226 million with 10.3% margin. Here, the picture is deseasonalized among the different regions. But still, Turkey is suffering very much with the margin erosion coming from the imbalance of local inflation, which affects all local costs, especially the labor on the one side and foreign currency exchange rates, which is the reference for our revenues.

So there is a gap that really goes directly into the margin of the organization, making its contribution less relevant than in the previous years. It's important to note that the Mexican operation, which serves North America and Central America, is posting growth in EBITDA margins consistently year after year.

Looking at the picture of our balance sheet. Slide #9, you can see the important improvement in our capital structure translated into the total shareholders' equity moving from a minus BRL 330 million to a positive BRL 434 million, which is a result mainly of the contribution of the capital increase that took place earlier in the year of 2024.

In Slide #10, operational cash flow. I will initially call your attention to OCF operational cash flow, totalizing BRL 105 million for the year. Posting the third consecutive robust operational cash flow generation for the company. And here it's important to say that the big contribution comes from the South American operation.

In the bottom right part of the slide, you see the dramatic reduction on the leverage of the company, evolving from 6.4x net debt to EBITDA in the fourth quarter of 2023 to 2.72x in the fourth quarter of 2024.

And that brings me to my last slide, where we show the working capital items evolution, which has been the driving force of the company over the last 2 years in improving cash flow, combining a solid EBITDA generation with improvements in all categories of the working capital.

So all in, a cash cycle reducing to 59 days, which is a full 21 days less than in the same period of last year. For 2025, we remain focused on cash generation so as to strengthen our balance sheet even further.

Thank you so very much for your attention, and please refer to us at the company or in our website at any time for clarifications. Have a good day.