Wilson Sons Holdings Brasil SA

BOVESPA:PORT3

Earnings Call Analysis

Wilson Sons Reports Strong Revenue and Profit Growth in Q3 2024

Wilson Sons experienced robust growth in Q3 2024, with net revenue rising 24% to BRL 767 million, driven by enhanced operational performance. EBITDA surged 47% to BRL 399 million, bolstered by container and towage results. Net profit soared 129% to BRL 217 million. Container terminal revenue increased 26%, with a 30% rise in handling metrics, while towage revenue grew 19%. For 2024, the company expects continued momentum, with terminal volume increasing by 27% year-to-date and toward further operational efficiency and financial discipline, aiming to sustain this upward trajectory.

Solid Performance Underpinned by Growth

In the third quarter of 2024, Wilson Sons reported a significant revenue increase of 24%, totaling BRL 767 million, primarily driven by enhanced operational efficiency across its various sectors. This growth trajectory, coupled with a consistent pattern of improvement seen over the first nine months of the year—18% growth in reals and 12% in dollars—demonstrates resilience, even amidst fluctuating market conditions.

Strong EBITDA and Profit Growth

The company's EBITDA surged by 47% to BRL 399 million in the quarter, fuelled by exceptional performance in its container terminal and towage segments, alongside a one-time gain from an asset sale. Year-to-date, EBITDA rose by 24% in reals and 18% in dollars, indicating a robust operational health that bodes well for future profitability.

Net Profit Achieves Notable Heights

Net profit for the quarter skyrocketed by 129% to BRL 217 million, aided by a favorable deferred tax impact. This impressive increase signals Wilson Sons' ability to leverage its operational strengths effectively. Year-to-date, net profit showed a healthy 26% increase in reals and 18% in dollars, showcasing durable earnings power.

Container Terminals and Towage Performance

In the container terminal segment, revenue jumped 26% to BRL 277 million, buoyed by heightened operational activities and ancillary service gains. The company experienced an impressive 30% rise in container handling, indicating strong transshipment and core operational flows. The towage segment also thrived, with a 19% revenue increase to BRL 387 million, reflecting improved operational metrics despite some challenges posed by currency depreciation impacting dollar revenues.

Strong Volumes and Strategic Positioning

Looking at the broader operational context, aggregate terminal volumes increased by an impressive 27% by October 2024. The Rio Grande location saw a remarkable 29% growth in container handling, while Salvador recorded a 25% increase. Towage operations also demonstrated resilience, with a 4% rise in harbor maneuvers and an uptick in the average ship size attended, driven by increased commodity volumes.

Liquidity and Leverage Indicators Remain Robust

Financially, Wilson Sons presents good health with bank debt declining by 6% in reals. The bank leverage ratio improved from 1.4x to 1.1x EBITDA, underscoring a decreased debt burden and improved earnings. Ending the quarter with BRL 324 million in cash emphasizes the company's liquidity position, further reinforcing investor confidence.

Future Growth and Capital Investments

Wilson Sons is preparing to further enhance its fleet with new tugboat constructions expected to begin in early 2025, with deliveries staggered through mid-2026. This strategic move is poised to bolster operational capacity in the coming years, positioning the company for sustained growth in its towage operations.

Outlook for Continued Excellence

The management expressed optimism for the future, reinforcing its commitment to operational excellence and stakeholder value creation. With significant growth already realized in 2024, the company anticipates maintaining this positive trajectory, driven by continued trade flow expansion and operational improvements across its business segments.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, everyone, and welcome to Wilson Sons Third Quarter of 2024 Results Conference Call. Joining us today are Mr. Fernando Salek, the company's CEO; Mr. Arnaldo Calbucci, the COO; Mr. Michael Connell, Investor Relations Officer; and Mr. Marcelo Torres, Controller. This call is being recorded.

[Operator Instructions] Financial information is presented in Brazilian reals and complies with international financing -- financial reporting standards, unless otherwise stated. Page 2 of the presentation contains the usual disclaimers regarding forward-looking statements.

I would now like to hand the conference over to Mr. Fernando Salek. Go ahead, sir.

[Fernando Salek, executive]

Thank you. Good morning, everyone, and welcome to our results conference call. Let's start the presentation with Slide 4, highlighting our safety performance.

In the 12 months until September 30, our lost-time injury frequency rate was 0.39 incidents per million hours worked, once again outperforming the world-class benchmark. Our unwavering commitment to safety and the well-being of our employees is the cornerstone of our operations.

Continuing with Slide 6. Here, we provide an overview of our consolidated results. In the third quarter, net revenue increased 24% to BRL 767 million, mainly driven by improved operating performance across the board. In the first 9 months of the year, revenue increased 18% in reals and 12% in dollars.

EBITDA increased 47% to BRL 399 million in the quarter, mainly driven by excellent container terminal results and towage results as well as a one-off gain from the sale of our older Guaruja I shipyard. For the first 9 months of 2024, EBITDA increased 24% in reals and 18% in dollars.

Net profit for the quarter increased 129% and to BRL 217 million, mainly driven by stronger operational results. This result also benefited from a net positive deferred tax impact of BRL 21 million, an effect of translating nonmonetary items from dollar to real in our dollar functional currency subsidiaries. Year-to-date profit increased 26% in reals and 18% in dollars.

We now continue on Slide 7. On this slide, we highlight the financial performance of our main businesses. Container terminal revenue rose 26% in the quarter to BRL 277 million, driven by improved operational activity and gains from ancillary services. EBITDA increased 28% and to BRL 141 million, driven by higher volumes and economies of scale, resulting in a margin expansion of 93 basis points. Container handling increased 30%, driven by robust gains in transshipment and gateway flows. In U.S. dollar terms, revenue was up 11% and EBITDA rose 13%.

Towage revenue rose 19% in the quarter to BRL 387 million driven by higher volumes and improved mix. While revenues from special operations increased in Brazilian reals supported by positive exchange rate variations due to the depreciation of the Brazilian currency. They declined in U.S. dollars due to reduced salvage assistance activity. Harbor maneuvers increased 1%, mainly driven by a greater number of ships carrying grains, iron ore, vehicles and steel products. In U.S. dollar terms, revenue increased 5% and EBITDA rose 1%.

In our nonconsolidated joint ventures comprised mainly of the offshore support vessel operation. Revenue rose 30% to BRL 176 million thanks to improved fleet utilization and higher daily rates. Operating days increased 9%, driven by new contracts and renewals. Net profit for the quarter rose significantly to BRL 11 million reflected in the company's results as equity income.

Moving to Slide 9. On this slide, we present some of our liquidity and leverage ratios, which remain solid. Bank debt in reals decreased 6% compared to the balance on June 30, mainly due to amortization in the period. In U.S. dollar terms, loans decreased 4% to $288 million. In the cash flow for the third quarter, we highlight BRL 309 million from operating activities, BRL 95 million in investments primarily allocated to tugboat construction and container terminal maintenance, BRL 111 million in dividend distributions as well as BRL 119 million in bank loan amortizations. As a result, we ended the period with BRL 324 million in cash and cash equivalents.

The bank leverage ratio for the 12 months ended in September 30, decreased from 1.4x to 1.1x EBITDA, both in reals and in dollars due to lower debt and higher -- or excuse me, higher earnings. At quarter end 75% of our bank debt was long term and 72% was financed by the Merchant Marine Fund at fixed interest rates.

Moving on to Slide 11. Here we would like to comment on our operating performance in the year to October which we believe adequately reflects a positive trajectory in the efficiency and momentum of our operations, underscoring the resilience of our businesses.

Our core terminal and towage segments delivered very solid results propelled by the continued expansion of trade flows. We exceeded our positive expectations for the first 10 months of 2024. For the year to October, aggregate terminal volumes increased 27%, driven by gains in all trade flows. In Rio Grande container handling surged 29% driven by strong growth in transshipment and deep-sea volumes. Similarly, Salvador had a remarkable 25% increase in operations with strong performances across the board. Our volumes by October have overpassed our 2023 figures.

In towage, harbor maneuvers increased 4% over the period, and the average size of ships attended rose 2%, primarily due to the rise in iron ore, grain and container volumes. In the offshore energy segment, our OSV fleet recorded a 9% increase in operating days, driven by new contracts and renewals. At our support bases, vessel turnarounds remained stable.

The presentation ends here. And as per usual, I'd like to invite you to the Q&A session. Thank you.

[Operator]

[Operator Instructions]

[Fernando Salek, executive]

We've received a question about when we will deliver the 3 new tugboats that we announced in the past. I'm going to let Arnaldo Calbucci answer this question.

[Arnaldo Calbucci, executive]

Thank you, Fernando. We're going to start building these tugboats in early 2025. Delivery for the first unit is expected by the end of 2025. The second unit will be delivered in early 2026. And the third will be delivered by mid-2026. As a reminder, the last one out of the 96 [indiscernible] tugboat was delivered in the third quarter of 2024.

[Operator]

[Operator Instructions]

[Fernando Salek, executive]

We received one more question here. It was sent in writing. And the question was if MSC has started its approval process with CADE. And what is the -- when do you expect to get an antitrust clearance?

This process has started. Our attorneys are working on this. And we expect the application to take place over the next weeks. So how long should it take? This transaction is going to continue. I mean, we're going to follow ordinary rights for this approval. And it will probably -- well, at least we expect it to happen in the end of the second half of 2025 or -- at least by the second half of 2025.

We received a question here from [ Carlos Matos. ] His question is if we have any forecasts about dates or estimates from the company's OPA?

Of course, the company's OPA depends on the transaction. So we don't have a specific date. After the closing, we expect to -- for it to happen within 4 to 6 months. This is the public acquisition offer, OPA.

[Operator]

This concludes the questions-and-answer session. We will now pass it over to Mr. Fernando Salek for the company's closing remarks. Go ahead, sir.

[Fernando Salek, executive]

Thank you. Well, by concluding the first 10 months of 2024, I'm proud to say that Wilson Sons continues to post robust growth in many of its businesses and operational excellence in all of them. Our main business strength has been notable, and it demonstrates the strength of our operational model and the efficiency of our strategy.

Looking towards the future, we continue committed to the highest safety standards, using our assets and allocating our capital with discipline. We're proud of the progress that we've made so far, and we're confident we will be able to navigate a more promising future.

I'd also like to restate our commitment to creating value for all Wilson Sons stakeholders and underscore that our values and the commitments that we have with our clients, employees, shareholders, partners and community remain unchanged. We will continue operating normally at the same level of excellence, safety and efficiency, which has always guided us. Our deep thanks to all of our employees for their commitment and for the exemplary work they've performed, which have been a mark of our company throughout our entire journey.

Thank you for being here. I hope you are well and safe. Have a great day. Thank you.

[Operator]

This concludes the company's conference call. Thank you for being here and have a good day.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]