GuruFocus -
- Incoming Orders: Increased by 15.3% compared to Q3 2023, totaling $332.8 million reals.
- Order Backlog: 36% higher than Q3 2023, with a significant portion for 2025.
- EBITDA: $23.6 million with a margin of 8.9%.
- Revenue Growth: Romi machines revenue increased by 36.1% compared to Q3 2023.
- Gross Profit Margin: Stability observed, particularly in Romi machines.
- Net Income Margin: Decreased from 8.2% to 5.1% in Q3 2024.
- Cash Flow: Consumption due to BMW production needs for Q4 deliveries.
- Geographic Revenue Distribution: Stable in Brazil, reduced in Europe, increased in the United States.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Romi SA (BSP:ROMI3) achieved a 15.3% increase in incoming orders compared to the third quarter of 2023.
- The order backlog is 36% higher than last year, indicating a strong recovery in the domestic market.
- The company has successfully consolidated its machine rental business, contributing significantly to revenue growth.
- Romi SA's participation in international trade fairs has enhanced its market presence and potential for future orders.
- The company is developing parts for a new client in the energy industry, which presents promising prospects for future growth.
- EBITDA margin decreased from 12.1% to 8.9% due to higher operating expenses and lower revenue volumes.
- Net income and net margin have declined, with margins dropping from 8.2% to 5.1% in the third quarter of 2024.
- The agricultural machinery sector has reduced production volumes, impacting demand for rough and machine cast iron parts.
- The foreign market, particularly Europe, has seen a reduction in share, affecting overall revenue distribution.
- Cash flow consumption increased due to the need for capital to complete BMW projects, impacting short-term liquidity.
A: This is a specific development for one particular client in wind power. Romi has manufactured parts for turbines in the past, and this order came through the domestic market. Currently, there are no requests for serial production, but we are preparing to re-engage with this industry.
Q: What is the impact of machine rental on the company's total results, and which industries are demanding this solution?
A: Machine rental, which started in 2024, is focused on ring machines and serves various industries. It is challenging to separate rental revenues from total revenues as it is integrated into the value chain. Approximately 70% of our business is sales, and 30% is rentals.
Q: Is it feasible to recover EBITDA margins to two digits in the fourth quarter based on the order backlog, or will this occur in 2025?
A: We do not provide guidance for the fourth quarter or 2025. However, with significant incoming orders in the second and third quarters of 2024 and BMW delivering all projects in the fourth quarter, it is possible that the fourth quarter will be our best.
Q: Do you anticipate recovering machine parts for wind power generators?
A: We have a new client in wind power for building generator foundations in Brazil. Orders are being commissioned, and we are developing parts with a positive outlook for more orders next year.
Q: What is the perspective on return and investments in terms of profitability, and is there a perspective for dividend payments in 2024?
A: Dividend payments are deliberated by the board and shareholders. We have regularly paid dividends and JSCP over the past five years. Our stock performance has been below Bovespa recently, but over a longer period, it aligns or exceeds it.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.