Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Intelbras SA (BSP:INTB3, Financial) reported a 2.1% increase in revenue year-on-year, reaching BRL 1.185 billion.
- EBITDA grew by 15% year-on-year, nearing the BRL 160 million mark.
- The company achieved a return on invested capital (ROIC) of 22.7%, aligning with management expectations.
- The security segment, which accounts for 56% of revenue, saw substantial growth due to improved product supply.
- The information communication technology (ICT) segment experienced a 16% year-on-year and 21% quarter-on-quarter revenue increase, driven by a new portfolio.
Negative Points
- Net income was impacted by foreign exchange rates, remaining stable compared to the previous year.
- The gross margin experienced a slight decrease due to supply challenges in Manaus and higher exchange rates.
- Operating cash flow was lower than usual due to inventory restructuring and anticipated supply chain issues.
- Expansion capital expenditures (CapEx) are expected to decrease, indicating a potential slowdown in future growth investments.
- The company faces competitive pressure from new market entrants, particularly in the security segment.
Q & A Highlights
Q: Marcelo Santos from JPMorgan asked about the impact of FX and shipping costs on gross margins in the security segment and the timeline for local manufacturing in ICT to improve margins.
A: Paulo Daniel Correa, Security Superintendent Director, explained that logistics and FX rate issues impacted margins, but improvements are expected to align with the first half of the year. Henrique Fernandez, Communications Superintendent Director, added that local production has started, and margin improvements are anticipated in the third and fourth quarters.
Q: Felipe Cheng from Santander inquired about the dynamics of security revenue growth and any mismatches between sell-in and sell-out.
A: Paulo Daniel Correa clarified that there was no mismatch between sell-in and sell-out in the second quarter, and the market performed well, with production and manufacturing replenishing the market naturally.
Q: Bernardo Guttmann from XP Investimentos asked about the contribution of new partnerships to ICT revenue growth and concerns about a new Chinese competitor.
A: Henrique Fernandez noted that both new products and existing product acceleration contributed to growth, with partnerships aiding this. Paulo Daniel Correa stated that competition is always monitored, but the company remains confident in its competitive pricing and solutions.
Q: Andre Salles from UBS questioned the impact of logistics challenges on security revenue growth and the company's plans for increased cash generation post-CapEx cycle.
A: Paulo Daniel Correa mentioned that logistics challenges had minimal impact on revenue growth. Rafael Boeing, Analyst, explained that cash generation might not increase immediately due to inventory restructuring and anticipated logistical challenges.
Q: Cesar Davanco from Santander asked about the unexpected increase in SG&A expenses and future margin expectations.
A: Bruno Teixeira, Chief Investor Relations Officer, explained that expenses were in line with forecasts, with the first half's EBITDA margin serving as a reference for the year's expectations. Altair Silvestri, CEO, added that spot adjustments for costs and FX rates were made, with expectations to perform better than historical margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
