Nexa Resources (NEXA) Q2 2024 earnings summary

Executive summary

• Net revenues for Q2 2024 reached $736 million, up 27% quarter-over-quarter and 17% year-over-year, driven by higher LME prices and increased smelting and mining sales volumes.

• Adjusted EBITDA for Q2 2024 was $200 million, up 64% from Q1 2024 and up to 180% year-over-year, with margin rising to 27%, reflecting higher by-product contribution, zinc prices, and improved operational performance.

• Net leverage ratio improved to 2.72x from 3.75x in Q1 2024, supported by increased EBITDA and reduced net debt.

• Aripuanã transitioned to ongoing operations, achieving positive operational cash flow, stable plant performance, and utilization above 80% in June.

• Free cash flow in Q2 2024 was $149 million, supported by operational performance, debenture issuance, and improved working capital.

Financial highlights

• Q2 2024 net revenues: $736 million (+27% QoQ, +17% YoY); H1 2024 net revenues: $1,316 million (+2% YoY).

• Adjusted EBITDA: $200 million in Q2 2024 (+64% QoQ, up to 180% YoY); H1 2024 Adjusted EBITDA: $323 million (+58% YoY).

• Adjusted EBITDA margin rose to 27% in Q2 2024, up from 21% in Q1 2024 and 11% in Q2 2023.

• Free cash flow generation in Q2 2024 was $149 million, compared to $34 million in Q2 2023 and negative $144 million in Q1 2024.

• Total cash at June 30, 2024, was $474 million, up from $324 million at March 31, 2024.

Outlook and guidance

• 2024 CapEx guidance remains at $311 million; exploration and project evaluation guidance at $72 million.

• CapEx for 2025 expected to be similar to 2024, with potential increase if Cerro Pasco project is approved.

• Cost guidance maintained for the year, with expectations to remain within guided ranges despite inflationary pressures.

• Mining and smelting volumes expected to remain stable or slightly increase in Q3 2024.

• Net leverage target set below 1.5x in the short to medium term.