Third Quarter and Nine Months of 2021 Results November 19th, 2021
São Paulo, Brazil, November, 19th 2021 - Metalfrio Solutions S.A. (FRIO3) ("Metalfrio"), the world's leading cold solutions provider, announces its results for the third quarter of 2021 ("3Q21") and nine months of 2021 ("9M21"). Financial and operational information given are in accordance with accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS), in Brazilian Reais (R$). Comparisons are with the third quarter of 2020 ("3Q20") or nine months of 2020 ("9M20") or as indicated.
3Q21 AND 9M21 HIGHLIGHTS
- Revenues increased by 22% in 3Q21 to R$415 million and 40% in 9M21 to R$1,487 million benefiting from both, new customers acquired during the pandemic (diversifying our customer base) and the strong recovery in the Brazilian market.
- Revenues from Services increased 18% to R$69 million for 3Q21, compared to R$59 million in 3Q20. During 3Q21 the company implemented new price adjustments that benefitted the service's margin.
- EBITDA in 3Q21 increased by 19% to R$32 million compared to R$27 million 3Q20. EBITDA 9M21 reached a record result of R$140 million, an increase of 42% vs 9M20, whilst the LTM EBITDA was R$172 million (LTM Adjusted EBITDA was R$179 million).
- Net Loss of R$38 million in 3Q21 and a Net Loss of R$13 million in 9M21 vs Net Loss of R$157 million in 9M20 as a result of better Operational and Financial results.
Commenting on the results, the Company stated:
"Metalfrio continued to benefit from recovering market conditions to sustain the Revenue growth momentum as well as EBITDA improvement despite the high inflationary pressure related to raw material cost escalation, lower purchases from key accounts, wide-ranging supplier base disruptions including the shortage of electronic components.
During 2021, Metalfrio demonstrated versatility to adjust its sales mix to attend both key accounts and middle market, with healthy margins, whilst continuing to deliver its innovation pipeline. The lower sales to key accounts has been compensated through emphasis on gains with medium/smaller companies. Going forward, with the continued recovery of the key account placements Metalfrio will benefit from this expanded sales scope.
Our industry continues facing challenging conditions as the commodity super cycle and raw material shortages ensue, with normalization now expected only during the next year. Nevertheless with the introduction of new products, intensified cost optimization programs and adjustments in commercial policy the Company is already improving its Gross Margin when comparing the 3Q21 with previous quarter.
Metalfrio´s strategy includes integrating products and services related to commercial refrigeration, such as, logistics, field maintenance, refurbishment, parts sales and equipment rental, providing additional value added through our Services Solutions. Services margin has been improving as new clients have been incorporated into our national platform and the investments made in technological solutions are allowing us to manage our operation more efficiently and deliver better performance.
After establishing a competitive market size, Metalfrio believes it is the right time to seek better margins exploring internal savings opportunities.
(R$ million) | 3Q21 | 3Q20 | % Var | 9M21 | 9M20 | % Var | ||||||||||||
Net Revenues | 414.9 | 341.0 | 21.7 | 1,487.3 | 1,058.7 | 40.5 | ||||||||||||
Gross Profit | 57,1 | 56,6 | 1.0 | 227.5 | 188.4 | 20.7 | ||||||||||||
Gross Margin | 13,8% | 16,6% | 15.3% | 17.8% | ||||||||||||||
EBITDA | 32,1 | 27,0 | 18,8 | 140,3 | 99,1 | 41,6 | ||||||||||||
Adj. EBITDA | 32.4 | 33.3 | -2.6 | 141.9 | 114.3 | 24.1 | ||||||||||||
Adj. EBITDA Margin | 7.8% | 9.8% | 9.5% | 10.8% |
Third Quarter and Nine Months 2021 - November 19th, 2021 * Metalfrio | 1 |
Third Quarter and Nine Months of 2021 Results
November 19th, 2021
Net Revenue
Consolidated Net Revenues increased 22% in the third quarter to R$415 million, setting a new record level for 3Q sales, benefitting from higher volumes, price adjustments and sales in hard currencies. For the nine months of the year, revenues increased by 40% to R$1,487 million. Net Revenues of the last twelve months (LTM) were R$1,874 million.
Net Revenues 9M21
(R$ million)
South America
Central and North America
Europe, M. East and Africa
Total
3Q21 | 3Q20 | % Var | 9M21 | 9M20 | % Var |
195.8 | 111.7 | 75.3 | 557.7 | 364.9 | 52.9 |
48.7 | 36.4 | 33.8 | 153.1 | 124.2 | 23.3 |
170.4 | 193.0 | (11.7) | 776.5 | 569.6 | 36.3 |
414.9 | 341.0 | 21.7 | 1,487.3 | 1,058.7 | 40.5 |
South America
Sales in 3Q21 reached R$196 million, an impressive increase of 75% when compared with 3Q20 and in terms of units sold, the Company achieved 37% of growth. Metalfrio has also implemented a new commercial strategy of cross-selling that includes the offering of products as well as logistics, maintenance and rental, leveraging its sales team and distribution channels.
The quarter continued to experience consistent market share gains in the middle-market commercial refrigeration as result of the Company's strategy of diversify its customer base with higher gross margin.
For the 9M21 Revenues increased by 53% as a result of a better market condition, improved commercial policy as well as reaching a wider portfolio of customers.
In the Service Segment, the passing on costs increase to customers have started positively impacting the gross margin since June 21.
Central & North America
The region experienced a 34% increase in Revenues vs 3Q20, also benefitting from new customers' sales in the middle market segment. For the period of nine months, Revenues improved by 23%.
This region also experienced a change in the mix of customers as a result of reduction of purchases from domestic Key Accounts offset by the increase of Sales in the distribution channel as well as the gradual resumption of exports to USA.
Europe, Middle East and Africa (EMEA)
Sales in EMEA decreased by almost 12% comparing 3Q21 vs 3Q20, but considering 9M20 vs 9M21 presented an increase of 36% reaching a total amount of R$777 million due to different seasonality patterns.
While Key Accounts decreased their purchases (as a result of the Covid Pandemic), Metalfrio focused on Non Key Accounts that achieved 75% of participation of the total revenues during this quarter.
Sales in 3Q21 had the product mix shifted more to horizontal line and standard products, also as result of Key Account dilution.
Another item that contributed to higher Sales in EMEA in 9M21 was an increase in the average realisation price, mostly due to product innovation and sales in hard currencies and the continued growth in Services, as passing on the cost increase of raw materials to customers' price.
CAGR 11%
Third Quarter and Nine Months 2021 - November 19th, 2021 * Metalfrio | 2 |
Third Quarter and Nine Months of 2021 Results
November 19th, 2021
Gross Profit (R$ million) & Gross Margin
Gross Profit for the third quarter remained broadly flat when compared with 3Q20, totaling R$57 million with a different geographical breakdown, with South America increasing its GP by R$22 million whilst EMEA saw a seasonal decrease as consequence of the different seasonal profile and adverse product mix of mostly standard and horizontal products with lower margin which offset most of the gain obtained in South America.
For the 9M21, raw material inflation decreased Products Gross Margin, impacting negatively all geographies, but the revenues growth was enough to compensate the lower margin generating a higher total gross profit amount, also supported by higher Services margin. Gross margin in 3Q21 decreased to 13.8% from 16.6% temporarily as the effect of price adjustments versus some normalization in costs will be sequentially margin accretive. Comparing 9M21 vs 9M20, the Gross Margin decreased to 15.3% from 17.8%.
Operating Expenses (SG&A)
SG&A expenses for the nine months increased 21% to R$169 million. Almost all the increase is related with selling expenses including freight as consequence of higher sales. As percentage of Revenues, SG&A decreased to 11.4% from 13.2%, a decrease noted in all regions as consequence of the positive operating leverage.
EBITDA & EBITDA Margin
EBITDA for the third quarter increased by 19% to R$32.1 million, as a result of a strong South America performance which was partially offset by a weaker EMEA performance. For 9M21, EBITDA achieved R$ 140 million, versus R$99 million in the same prior period, resulting in a record LTM EBITDA of R$172 million (LTM Adjusted EBITDA was R$179 million).
Adjusted EBITDA Margin was 9.5% for 9M21, compared to for 10.8% 9M20, as a result of lower gross margin, partially compensated by better SG&A dilution.
Reconciliation of EBITDA and Adjusted EBITDA
EBITDA (R$ million) | 3Q20 | 4Q20 | 1Q21 | |||||||||
Operating result | 13.3 | 14.7 | 25.5 | |||||||||
Depreciation and amortization | 13.7 | 16.9 | 16.0 |
2Q21 | 3Q21 | 3Q21 vs |
3Q20 | ||
50.1 | 16.8 | 26.0% |
16.7 | 15.4 | 11.8% |
EBITDA | 27.0 | 31.6 | 41.5 | 66.7 | 32.1 | 18.8% |
Other extraordinary expenses/(income) | 6.2 | 5.4 | 0.8 | 0.5 | 0.3 | |
(i) | ||||||
Adjusted EBITDA | 33.3 | 37.0 | 42.3 | 67.2 | 32.4 | -2.6% |
- Extraordinary expenses in 2020 and 2021 are mainly related to due to COVID-19.
Third Quarter and Nine Months 2021 - November 19th, 2021 * Metalfrio | 3 |
Third Quarter and Nine Months of 2021 Results
November 19th, 2021
Financial Result
Net Financial Result for the third quarter improved significantly compared to the same period last year, mainly impacted by lower FX variation while Interest Expenses increased as consequence of higher interest rates in Brazil.
FINANCIAL RESULT (R$ million) | 3Q21 | 3Q20 | Var. 21/20 | 9M21 | 9M20 | Var. 21/20 | |||||
Result with cash investments | 1.4 | 2.1 | -30.0% | 6.5 | 10.5 | -38.2% | |||||
Securities market Value Change | 0.0 | 0.0 | nm | 16.8 | 0.0 | nm | |||||
Other financial income | 0.0 | 0.1 | -40.1% | 0.5 | 1.2 | -59.2% | |||||
Interest and Other Income | 1.5 | 2.1 | -30.4% | 23.8 | 11.7 | 102.3% | |||||
Interest on loans and financing | -16.0 | -14.1 | 13.1% | -48.1 | -44.0 | 9.3% | |||||
Securities market Value Change | -8.8 | -1.3 | 565.5% | 0.0 | -34.4 | nm | |||||
Other financial expenses | -13.2 | -7.1 | 86.8% | -36.1 | -26.5 | 36.0% | |||||
Interest and Other Expenses | -38.0 | -22.5 | 68.7% | -84.1 | -104.9 | -19.8% | |||||
Hedge Operations Result | -1.4 | 1.3 | nm | -8.9 | 0.4 | nm | |||||
Net FX Variation | -6.9 | -29.7 | -76.6% | -8.7 | -116.1 | -92.5% | |||||
Net Financial Result | -44.8 | -48.8 | -8.2% | -77.9 | -208.9 | -62.7% | |||||
Net Profit/Loss
Net Loss reached R$38 million in the third quarter of 2021, almost at the same level of 3Q20. Considering 9M21 vs 9M20 (Net Loss R$13 million vs Net Loss R$157 million, respectively), the Company presented a significant recovery in financial items. From the operational perspective, Metalfrio experienced a good improvement in South America, keeping the other regions at almost the same level 2020. Such loss was also negatively impacted by the increase of profit tax rate in Turkey and provision for deferred tax in Mexico, as it is important to note that profit before tax increased from loss of R$151 million in 9M20 to gain of R$14.3 million in 9M21.
Working Capital
In 3Q21 working capital less financial assets and liabilities reached R$390 million, explained mainly by inventory increase. The inventory increase is explained by the impact of the inflation on raw materials as well as the preparation for new sales in 4Q21 and 1Q22.
WORKING CAPITAL (R$ million) | 3Q20 | 4Q20 | 1Q21 | ||||
A) Current assets (less fin. assets): | 770.4 | 675.4 | 1013.7 | ||||
Accounts receivable | 325.8 | 222.0 | 415.2 | ||||
Inventory | 296.9 | 319.0 | 451.2 | ||||
Other | 147.6 | 134.4 | 147.4 | ||||
B) Current liabilities (less fin. liab.) | 408.8 | 506.0 | 663.1 | ||||
Accounts payable & Confirming | 305.9 | 377.2 | 524.2 | ||||
Other | 103.0 | 128.8 | 138.9 | ||||
Working capital (A-B) | 361.6 | 169.4 | 350.6 | ||||
Days of receivables | 72 | 42 | 67 | ||||
Days of inventory | 94 | 89 | 102 | ||||
Days of suppliers | 97 | 105 | 118 | ||||
Cash cycle | 69 | 26 | 50 |
2Q21 | 3Q21 |
921.6 | 909.4 |
409.1 | 376.6 |
357.6 | 374.6 |
154.8 | 158.2 |
633.8 | 519.2 |
493.5 | 392.0 |
140.3 | 127.2 |
287.8 | 390.3 |
51 | 68 |
64 | 94 |
88 | 99 |
27 | 63 |
Chg. 3Q21/ Chg. 3Q21/
3Q20 4Q20
139.0 234.0
- 154.6
- 55.6
10.6 23.8
110.3 13.2
86.1 14.8
24.2 -1.6
28.7 220.8
-4 25
0 5
2 -7
-6 37
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Third Quarter and Nine Months of 2021 Results
November 19th, 2021
Fixed Assets
Property, Plant and Equipment (PP&E)
In 3Q21 net property, plant and equipment was R$285 million, reflecting investments related to machinery in EMEA and equipment for the rental business in South America.
Intangible assets
Total intangible assets increased R$6 million, reaching R$174 million vs R$168 million in 3Q20.
FIXED ASSETS(R$ million)
Net PP&E
Intangibles
Total
3Q20 4Q20 1Q21 2Q21 3Q21
261.7 | 289.1 | 293.6 | 272.4 | 285.2 |
168.0 | 178.7 | 179.5 | 172.3 | 174.3 |
429.7 | 467.8 | 473.1 | 444.7 | 459.5 |
Chg. 3Q21/ 3Q20 Chg. 3Q21/ 4Q20
+23.5-3.8
+6.3-4.4
+29.8-8.3
Capitalization and Liquidity
At 3Q21, cash and cash equivalents were R$361 million, R$76 million lower when compared with the prior year. Gross Debt at 3Q21 was R$1,249 million, a slight decrease compared to 3Q20. Metalfrio is currently in negotiations with its key creditors and expects to be successful in extending the maturity of most of its debt in Brazil significantly improving its liquidity. Metalfrio is committed to reducing its indebtedness as cash generation after Covid Pandemic normalizes.
LIQUIDITY INDICATORS (R$ million) | 3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 | Chg. 3Q21/ | Chg. 3Q21/ | |||||||
3Q20 | 4Q20 | |||||||||||||
Cash and equivalents, bonds and | ||||||||||||||
437.4 | 508.3 | 487.8 | 423.1 | 361.1 | -76.3 | -147.2 | ||||||||
securities | ||||||||||||||
Short term debt (ST) | 822.1 | 476.0 | 572.8 | 684.9 | 828.6 | 6.6 | 352.6 | |||||||
Long term debt (LT) | 434.4 | 672.0 | 740.3 | 496.1 | 420.7 | -13.8 | -251.3 | |||||||
USD denominated debt | 71.4 | 55.8 | 62.2 | 45.8 | 46.5 | -24.9 | -9.3 | |||||||
BRL denominated debt | 519.9 | 505.7 | 511.8 | 497.7 | 543.9 | 24.0 | 38.2 | |||||||
Euro denominated debt | 614.5 | 572.6 | 725.4 | 625.2 | 658.9 | 44.4 | 86.3 | |||||||
TRY denominated debt | 50.7 | 14.0 | 13.8 | 12.3 | 0.0 | -50.7 | -14.0 | |||||||
MXN denominated debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||
Gross debt | 1.256.5 | 1.148.1 | 1.313.1 | 1,181.0 | 1,249.3 | -7.2 | 101.2 | |||||||
Net cash / (Net debt) | -819.1 | -639.7 | -825.3 | -757.9 | -888.2 | -69.1 | -248.4 | |||||||
Shareholders' equity | -2.4 | 12.8 | 20.6 | -15.8 | -31.0 | -28.6 | -43.8 | |||||||
Cash and equiv. / ST debt | 0.5x | 1.1x | 0.9x | 0.6x | 0.4x | n/a | n/a | |||||||
ST debt / (ST + LT) | 65.4% | 41.5% | 43.6% | 58.0% | 66.3% | n/a | n/a | |||||||
Shareholders´ equity
Shareholders´ equity at 3Q21 was negative R$31 million, which compares to R$13 million at 4Q20. Despite presenting a Net Profit of R$33 million in Klimasan during 9M21, Metalfrio accounted a decrease in Equity of R$29 million due to the accounting Cumulative Translation Adjustment (CTA) which converts foreign currency denominated balance sheets to Brazilian Reais directly adjusting Shareholder´s equity. This had a material impact mainly in the EMEA Balance Sheet, as during the first nine months of this year, the Turkish Lira (TRY) devaluated by 12% against Brazilian Real (BRL).
During the 3Q21 the subsidiary Klimasan performed an Asset Value Update of its Building and Land in Turkey and Russia, following local applicable regulations. This revaluation resulted in an improvement of R$136 million of these assets and consequently, an increase in Shareholders' Equity of this subsidiary by R$116 million. This update is in accordance with IFRS and was recognized in Turkey, where this subsidiary is listed (Istanbul Stock Exchange). However such update is not in compliance with accounting practices adopted in Brazil and therefore not recognized in Metalfrio's equity.
Third Quarter and Nine Months 2021 - November 19th, 2021 * Metalfrio | 5 |
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Metalfrio Solutions SA published this content on 19 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 November 2021 23:23:04 UTC.