Metalfrio Solutions S.A. (FRIO3.SA) Earnings Call Transcript & Summary

Welcome, everyone, to the webcast related to the results of Metalfrio Solutions for the third quarter of 2025. I invite you to follow the slides that we make available in our website so that we can follow those throughout this conversation. In Page 2, we see the highlights for the period, starting with net revenue of BRL 600 million in the third quarter versus BRL 532 million in the last quarter of 2024 with a growth of 12.8%. Gross profit of BRL 100 million with a margin of 16.7% that compares with BRL 101 million with a margin of 19.1% in the same period last year. Adjusted EBITDA of BRL 61.4 million with a margin of 10.2% in the quarter compared to BRL 66.1 million with a margin of 12% in the third quarter of 2024. Year-to-date, EBITDA reached BRL 197 million, a 20% increase over 2024 with a margin of 10.7%. In terms of net income, for the third quarter, we had BRL 13 million compared with BRL 0.8 million in the third quarter of last year. And the year-to-date net income totaled BRL 31 million. All these figures will be detailed in the next slides. In Page #3, we see the net revenue for the quarter the BRL 600 million achieved in this period with a 12.8% growth compared to the same period of last year. You see that all the growth comes from South America with BRL 40.3 million and Central America with BRL 28.6 million. The participation of South America then expanded to 42%, whereas EMEA dropped to 38% and North America grew to 20%. As for the 9 months figure, we see in the Slide #4, EBITDA -- I'm sorry, net revenue growing by 17.2%, reaching BRL 1.8 million accumulated for the year. South America contributing to an increase of BRL 101 million, Central America contributing with BRL 36 million and Turkey dropping by BRL 134 million. It is important to say that this drop out of Turkey and EMEA comes as no surprise, and this is the result of a change in strategy in the organization there in that region, which is focusing on more profitable customers and more profitable product lines. Taking the economic scenario in Turkey, the company judges that this should be the best strategy for the time being, and we see this drop as a result of that strategy. In Slide #5, we see the net revenue by region for the quarter with the picture of the services organization as well. Starting with South America. Sales in South America totaled BRL 253 million in the third quarter, an increase of 19%, reflecting a notable recovery among key account customers whose revenue grew 54% in this period. The service of Life-Cycle remained at the level of BRL 71 million. As for Central America, the region in the quarter grew turnover by 32% being 32% coming from Products and 20.8% coming from Services. There, the situation is much like Brazil, South America, a strong performance of the key accounts business. As for Europe, EMEA, pretty much stable revenues, just a 0.4% drop with an increase in Products by 31.3% and a decrease in Services of 8.8%. There, out of Turkey, the region that is performing better is Central Asia, whereas demand in Europe and North Africa remains soft. Looking at EBITDA for the quarter, Slide #6. We see a drop for the whole company of 7.1%. That drop comes from South America, BRL 4.4 million and from EMEA with BRL 25.2 million, whereas Central and North America remains quite stable. In Brazil, in South America, we had some one-offs reported this quarter that hurt the results that will not be present in the fourth quarter. Those one-offs account for around BRL 3.5 million, and they have contributed substantially for the drop in the results. In EMEA, we had a quite soft third quarter, and that's why you see this figure there. But already inviting you to move to the next page, where we see the year-to-date results. You see a growth for the whole company in terms of EBITDA, accumulated 9 months, a growth of 19.8% substantial contribution coming out of EMEA, good contribution from South America and Central America as well. So if you recall the leverage of the results that we are presenting, we are growing 12.8% in revenues in the quarter -- I'm sorry, in the accumulated for the year and 19.8% in terms of the EBITDA, which shows that the quality of the results of the company has improved. In Slide #8, we present the balance sheet of the 2 quarters, third quarter '24 versus third quarter '25. Major improvement there. I call your attention to shareholders' equity moving from BRL 430 million to BRL 446 million in the period. Talking about operational cash flow in Slide #9, you see -- I'll call your attention for the OCF figure, a solid cash generation accumulated for the year of BRL 32 million, which helped the company keep its indebtedness at the same level, helping the leverage measured in terms of net debt EBITDA with 2.73x, which is exactly the same of the third quarter of '24. And my last slide, #10, refers to working capital. You all know that the company over the last 3 years have kept a robust cash management system, which allowed the cash cycle to remain pretty much stable if we compare the same season of last year, third quarter of 2024. Having said that, I'd like to thank you for your time and your interest at Metalfrio, and we remain available here at the company to clarify any doubts that you might have. Thank you very much, and goodbye.