Petz’s Profit Decline, Simpar’s Surge, and Sabesp’s Steady Growth

Petz (PETZ3), a leading pet retailer, reported a Q1 2024 adjusted profit of R$6.9 million ($1.35 million).

This was a 64.1% drop from last year’s same period. The decline came from lower operational leverage, rising depreciation, and higher financial expenses.

Furthermore, recent investments drove depreciation and amortization upward. Currently engaged in merger talks with Cobasi, Petz aims to identify potential synergies.

Consultants will conduct strategic consulting and due diligence in the coming month.

With documents signed between June and July, Petz will submit merger plans to Cade. They anticipate finalizing the deal by Q1 2025.

Adjusted EBITDA for Q1 2024 was R$60.1 million ($11.8 million), a 7.5% year-on-year drop.

The EBITDA margin decreased 0.7 percentage points to 6.4%. Gross revenue rose 2.3% to R$934.2 million ($183.2 million) over Q1 2023.

Gross profit remained steady at R$363.9 million ($71.4 million), while gross margin dipped to 39% from 39.8%.

By March 31, 2024, Petz’s net debt had reached R$10.7 million ($2.1 million). This stood in stark contrast to last year’s cash reserve of R$42.8 million ($8.4 million).

However, their net debt to adjusted EBITDA ratio improved from 0.2x to zero.

Simpar’s Q1 Profit Surges by 36% to R$122 Million ($23.9 Million)

Simpar (SIMH3) oversees JSL (JSLG3), Vamos (VAMO3), and Movida (MOVI3). They reported a Q1 2024 profit of R$122 million ($23.9 million), a 36% rise.

Without ICMS tax subsidy benefits from last year, growth could have been even higher.

Denys Ferrez, Simpar’s CFO, noted profits were four times higher after removing tax effects.

He emphasized a 298% increase aligns with their ongoing growth strategy. Thus, Simpar remains dedicated to maximizing value creation across its eight subsidiaries.

Adjusted EBITDA was R$2.4 billion ($470.6 million), up 21.4% from last year, and 14.8% higher than Q4 2023.

Although the adjusted EBITDA margin fell by 1.1 points year-on-year, it still reached 33.1%.

Net revenue reached R$9.14 billion ($1.79 billion), rising 22.9% from last year.

While Vamos faced challenges, leasing remains their main focus, and JSL maintains consistent performance.

ROIC stood at 12.4%, excluding investments that didn’t generate revenue.

Net capital expenditure (capex) was R$2.9 billion ($568.6 million), primarily used for high-liquidity assets.

Simpar’s traditional leverage stood at 3.5x net debt to EBITDA, down from 3.8x in Q4 2023.

Their ratio drops to 2.1x when including secondary market cash flow. Issuances maintain a 2.3x ratio with added EBITDA.

Simpar continues targeting small companies with solid structures and low leverage for acquisition, especially by JSL.

Sabesp’s Net Profit Increases by 10% to R$823 Million ($161.4 Million)

Sabesp (SBSP3) reported a Q1 2024 profit of R$823 million ($161.4 million), rising by 10.2% from last year.

This result, however, failed to meet analysts’ R$1.04 billion forecast. The adjusted EBITDA grew by 19.4% to R$2.43 billion ($476.5 million).

The EBITDA margin increased from 35.7% to 37%, while the adjusted EBITDA margin (excluding construction revenue) rose from 45% to 46.5%.

Net operating revenue, including construction revenue, climbed by 15.1% to R$6.56 billion ($1.29 billion).

Additionally, revenue from sanitation services reached R$5.66 billion ($1.11 billion), up 15.3%.

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