ROMI S.A. 3Q23 Earnings
Release
October 24, 2023
Share price at 10/23/2023 | Earnings Conference Call |
Simultaneous translation (Portuguese - | |
ROMI3 - R$ 11.57 per share | |
English) | |
Market value | October 25, 2023 - 11 a.m. (São Paulo) |
| 3 p.m. (London) | 10 a.m. (New York) | |
R$ 1,026.6 million | |
US$ 204.6 million | Click hereto access the conference call |
Number of shares | ID 844 2424 1429 |
Common: 88,734,045 |
Earnings Release | |
3rd quarter of 2023 | |
Summary | |
Net Operating Revenue per Geographical Region | 11 |
EBITDA and EBITDA Margin | 13 |
Adjusted Profit for the Period | 13 |
Evolution of Net Cash (Debt) Position | 14 |
Financial Position | 15 |
Capital Markets | 16 |
Vila Romi Residence | 17 |
ESG at ROMI | 18 |
Attachment I - Income Statement by Business Unit | 22 |
Attachment II - Financial Statements of BW | 23 |
2
Earnings Release
3rd quarter of 2023
Message from Management
We remain focused on the continuous improvement of our operations, as well as the introduction of new technologies into our product portfolio, with the aim of providing our customers with the best solution for their success. We have also been working on developing our human capital, represented by a committed, engaged team aligned with ROMI's purposes.
Although the domestic market and, mainly, the foreign market are experiencing a moment of instability, we are convinced that our competitive advantages will continue to allow us to evolve and add more and more value to all stakeholders. We continue to strengthen our investments in innovation through new technologies, such as connectivity, big data, new generations of machines, improvement of our processes and human development, which will allow us to capture market opportunities, both in Brazil and abroad.
Additionally, our solutions, such as machine rental and PRODZ, a fintech specialized in financing Romi machines, have responded very well, even in a more volatile environment, allowing us to mitigate reductions in certain markets and maintain solid and profitable business.
We had solid cash generation in the quarter, demonstrating ROMI's ability to react and adapt quickly to market fluctuations.
Luiz Cassiano Rosolen
CEO
Santa Bárbara d'Oeste - São Paulo, October 24, 2023
ROMI S.A. ("ROMI" or "Company") (B3: ROMI3) domestic market leader in the Machine Tools and Plastic Processing Machines markets, as well as an important producer of Rough and Machined Cast Iron Parts, announces its results for the third quarter of 2023 ("3Q23"). Except where otherwise stated, ROMI's operating and financial information is presented on a consolidated basis, in accordance with the International Financial Reporting Standards (IFRS).
Statements contained in this release related to Romi's business outlook, projections of operating and financial results and references to the Company's growth potential are mere forecasts and have been based on Management's expectations regarding its future performance. These expectations are highly dependent upon market behavior, the economic situation in Brazil, the industry and international markets. Therefore, they are subject to changes.
Investor Relations Contact
Fábio B. Taiar - Investor Relations Officer
(19) 3455-9418 | dri@romi.com
3
Earnings Release
3rd quarter of 2023
Highlights
Adjusted EBITDA in 3Q23 was R$ 32.9M with margin of 12.1%
Adjusted EBITDA R$32.9 million
margin of 12.1%
Order Backlog R$557.3 million
Incoming Orders R$288.6 million
- The gross margin of the ROMI Machines Unit in 9M23 increased by 1.9 p.p. compared to the same period of 2022, with the growth of the domestic market and the machine rental business;
- The incoming orders for rental machines grew by around 26.5% in 9M23 when compared to the same period in 2022, demonstrating the consolidation of this new business;
- The B+W Machines Unit in 3Q23 posted a significant increase in operating margins, reflecting gains in operational efficiency and the increase in revenues from services provided and spare parts;
- The order backlog of the B+W Machine Unit reached R$259.7 million, an increase of 47.6% compared to 3Q22.
- The cash generation in 3Q23 was R$20.5 million.
Other Highlights
- On September 12, 2023, the Company's Board of Directors approved the payment of interest on capital in the gross amount of R$17.8 million (equivalent to R$ 0.2014 per share).
- ROMI and BW were present at EMO Hannover, the world's main production technology fair, where they presented new technologies and new generations of machines. The participation in the event solidifies the ROMI brand in the international market.
- ROMI scores 8.1 in the Ethos 2023 Report, maintaining the continuous improvement of its ESG practices.
4
Earnings Release 3rd quarter of 2023
Quarterly | Acumulated | |||||||||
R$'000 | 3Q22 | 2Q23 | 3Q23 | Chg. | Chg. | 9M22 | 9M23 | Chg. | ||
3Q23/2Q23 | 3Q23/3Q22 | 2023/2022 | ||||||||
Revenue | ||||||||||
ROMI Machines (units) | 355 | 291 | 281 | -3.4% | -20.8% | 905 | 777 | -14.1% | ||
Burkhardt+Weber (units) | 2 | 2 | 1 | -50.0% | -50.0% | 5 | 3 | -40.0% | ||
Rough and Machined Cast Iron Parts (tons) | 7,294 | 3,542 | 2,725 | -23.1% | -62.6% | 19,374 | 10,499 | -45.8% | ||
Net Operating Revenue | 398,690 | 308,636 | 272,795 | -11.6% | -31.6% | 1,056,087 | 840,586 | -20.4% | ||
Gross margin (%) | 34.3% | 29.7% | 29.6% | 31.0% | 30.7% | |||||
Operating Income (EBIT) | 78,067 | 33,561 | 42,413 | 26.4% | -45.7% | 146,977 | 113,019 | -23.1% | ||
Operating margin (%) | 19.6% | 10.9% | 15.5% | 13.9% | 13.4% | |||||
Operating Income (EBIT) - adjusted (*) | 68,603 | 26,755 | 19,539 | -27.0% | -71.5% | 137,513 | 77,061 | -44.0% | ||
Operating margin (%) - adjusted (*) | 17.2% | 8.7% | 7.2% | 13.0% | 9.2% | |||||
Net Income | 64,920 | 32,625 | 44,491 | 36.4% | -31.5% | 128,424 | 113,246 | -11.8% | ||
Net margin (%) | 16.3% | 10.6% | 16.3% | 12.2% | 13.5% | |||||
Net Income - adjusted (*) | 55,771 | 26,036 | 22,348 | -14.2% | -59.9% | 119,275 | 78,437 | -34.2% | ||
Net margin (%) - adjusted (*) | 14.0% | 8.4% | 8.2% | 11.3% | 9.3% | |||||
EBITDA | 92,068 | 48,038 | 55,768 | 16.1% | -39.4% | 184,629 | 155,477 | -15.8% | ||
EBITDA margin (%) | 23.1% | 15.6% | 20.4% | 17.5% | 18.5% | |||||
EBITDA - adjusted (*) | 82,604 | 41,232 | 32,894 | -20.2% | -60.2% | 175,165 | 119,519 | -31.8% | ||
EBITDA margin (%) - adjusted | 20.7% | 13.4% | 12.1% | 16.6% | 14.2% | |||||
Investments ( | ** | ) | 42,418 | 32,805 | 39,902 | 21.6% | -5.9% | 99,775 | 94,127 | -5.7% |
- 3Q22, 2Q23 and 3Q23: EBIT and EBITDA are adjusted by the amounts of R$ 9,464, R$ 6,806 and R$ 22,874. respectively; and Profit by the amounts of R$ 9,149, R$ 6,589 and R$ 22,143, respectively, referring to the recognition of the impacts of the Vila ROMI Residence project.
9M22 and 9M23: EBIT AND EBITDA are adjusted by the amounts of R$ 9,464 and R$ 35,958, respectively, and Profit by the amounts of R$ 9,149 and R$ 34,809, respectively, referring to the recognition of the impacts of the Vila ROMI Residence project, as described in the section "Vila ROMI Residence".
- Of the investments made in 3Q22, 2Q23 and 3Q23, the amounts of R$ 17,197, R$22,947 and R$25,890, respectively, refer to machines manufactured by the Company that were allocated to the machine rental business.
5
Earnings Release
3rd quarter of 2023
Corporate Profile
Founded in 1930, ROMI is a renowned company operating in the Brazilian industrial machinery and equipment market. Over the years, it has emerged as a key manufacturer of rough and machined cast iron parts, establishing itself as a key player in the industry. Notably, ROMI is publicly listed on the B3 exchange's prestigious "New Market" segment, which is dedicated to companies with a strong commitment to corporate governance.
Specializing in an extensive range of machine tools, ROMI manufactures Conventional Lathes, Computerized Numerical Control (CNC) Lathes, Lathing Centers, Machining Centers, Vertical and Horizontal Heavy and Extra-Heavy Lathes, and Drilling Mills. Additionally, ROMI manufactures Plastic Injection and Blow Molding Machines, as well as ductile or CDI gray cast iron parts, both raw and machined.
A distinguishing feature of ROMI's products and services lies in its incorporation of Industry
4.0 technologies across its products and services. These advanced capabilities facilitate the intelligent utilization of data generated by ROMI equipment. The data can be processed internally through built-in artificial intelligence or transmitted via networks (connectivity) to a central analysis site.
These high-quality equipment and solutions are globally distributed and widely adopted across various industrial sectors. Industries such as agricultural machinery, capital goods, consumer goods, packaging, tooling, hydraulic equipment, sanitation, automotive, and wind energy rely on ROMI's machinery for their operations.
ROMI operates a network of thirteen manufacturing units. These units encompass four facilities dedicated to the final assembly of industrial machinery, two foundries, four units for machining mechanical components, two units for manufacturing steel sheet components, and one unit for the assembly of electronic panels. While eleven units are based in Brazil, two are
6
Earnings Release
3rd quarter of 2023
located in Germany. The Company's production capacity amounts to approximately 2,900 industrial machines and 50,000 metric tons of castings per year.
Benefiting from its extensive history, diverse product portfolio, and global presence, ROMI has established itself as a trusted leader in the Brazilian industrial machinery and equipment market. The company's unwavering commitment to innovation, quality, and customer satisfaction sets it apart, ensuring continued success and a strong market position.
Current Economic Scenario
The third quarter of 2023 continues to indicate an unstable environment for investments, both in the domestic and international markets. We also note that the set of recent indicators shows a scenario of strong industrial activity, with high use of installed capacity, however, the perspectives regarding the future economic scenario have been unstable. The Business Confidence Index presents a fluctuating scenario, reflecting local and global geopolitical and economic instabilities. On the other hand, recent signs of a reduction in interest rates and control of inflation in Brazil could have a positive impact on general market confidence and boost new investments.
During the third quarter, we observed a recent fluctuation in the Industrial Entrepreneur Confidence Index (ICEI), which reached 50.5 in October. Although investors currently face a challenging environment for making investments, industry leaders continue to express optimism through the index, even amid a more complex environment for investments.
Industrial Business Confidence Index - ICEI
Source: CNI - ICEI, October 2023
According to data from the National Confederation of Industry (CNI), the Installed Capacity Utilization Index (UCI) of the national industry reached 70% in September 2023, indicating that industrial activity remains solid.
7
Earnings Release
3rd quarter of 2023
Average Installed Capacity Utilization (UCI)
Source: CNI - UCI, October 2023
The past few years have been characterized by a volatile business environment marked by uncertainty. These conditions have presented significant obstacles in effectively managing production volumes. As a response, the Company has implemented a series of strategic measures to optimize its operational structure, enhance planning and manufacturing processes, and improve its ability to swiftly adapt to fluctuations in demand.
The Company has strategically prioritized the development of new product generations aligned with the technological advancements of Industry 4.0. This strategic focus has yielded significant advancements in technological content, resulting in a successful market reception of our recent product launches, both domestically and internationally. Looking ahead, ROMI remains committed in launching new machine generations and integrating cutting-edge technologies into our product portfolio, ensuring our continued relevance and competitiveness in the industry.
Furthermore, we have expanded our international presence and introduced innovative customer solutions, including machine leasing and financial support, facilitated through the establishment of a fintech division. These strategic initiatives continue to solidify our position and instill a strong sense of confidence in our ability to seize opportunities, both domestically and internationally.
8
Earnings Release
3rd quarter of 2023
Market
The Company holds a prominent position in the market, driven by its notable competitive advantages. Ongoing investments in cutting-edge product development and innovative solutions, alongside an extensive nationwide distribution network, contribute to its market leadership. The Company's unwavering commitment to customer satisfaction is exemplified by the provision of a dedicated in-house technical assistance service, machine rental options, attractive customer credit packages in local currency, and efficient product delivery. As a result, the ROMI brand enjoys a long-standing reputation for excellence and prestige, as recognized and valued by its discerning customers.
Incoming Orders
Order Entry (R$ 000) | 3Q22 | 2Q23 | 3Q23 | Chg. | Chg. | 9M22 | 9M23 | Chg. |
Gross Values, sales taxes included | 3Q23/2Q23 | 3Q23/3Q22 | 23/22 | |||||
ROMI Machines | 240,161 | 212,684 | 182,804 | -14.0% | -23.9% | 716,219 | 595,202 | -16.9% |
Burkhardt+Weber Machines | 41,254 | 47,635 | 66,566 | 39.7% | 61.4% | 136,394 | 114,201 | -16.3% |
Rough and Machined Cast Iron Parts | 82,207 | 21,379 | 39,244 | 83.6% | -52.3% | 319,416 | 121,299 | -62.0% |
Total * | 363,622 | 281,698 | 288,614 | 2.5% | -20.6% | 1,172,028 | 830,702 | -29.1% |
* The informed amounts related to incoming orders and order backlog do not include parts and services.
In the third quarter of 2023, we noticed the continuity of uncertainties and their impact on the confidence of industrial entrepreneurs, which have fluctuated, without a defined direction throughout the year. The use of installed capacity remained at high levels, which demonstrates a domestic market with good prospects for stability until the end of 2023.
In the foreign market, the current levels of inflation, the rising interest rates and the political instabilities are affecting investment prospects. As a result of the reduction in demand in the foreign market, at the ROMI Machines Unit, incoming orders showed a 23.9% drop in comparison with the same period in 2022.
As previously mentioned, the new generations of products, with important technological evolutions in the mechatronic part, in thermal compensation and in their connectivity, also allowed the Company to seek competitive alternatives to enable new business to its customers, such as, for example, the leasing of machines. In the third quarter of 2023, 68 new machines have been rented, or 77 new contracts (27 machines in 3Q22 or 38 new contracts), which represent approximately R$ 19.4 million (R$13.8 million in 3Q22). Since the date this solution was launched to the market, in June 2020, 613 machines have been rented, or 735 contracts, representing R$195.2 million. Such contracts are valid for 12 to 24 months.
In 3Q23 The German subsidiary BW has received significant new orders, leading to a substantial increase in Order Entry. These new orders are expected to materialize throughout 2024.
The Cast and Machined Cast Iron Parts Unit had a reduction of 52.3 % in incoming orders, primarily due to a decrease in new projects related to the wind power sector. This is largely
9
Earnings Release
3rd quarter of 2023
due to the impact of declining electricity prices, which has prompted a review or postponement of certain projects.
Order Backlog
Order Backlog (R$ 000) | 3Q22 | 2Q23 | 3Q23 | Chg. | Chg. |
Gross Values, sales taxes included | 3Q23/2Q23 | 3Q23/3Q22 | |||
ROMI Machines | 394,019 | 271,745 | 241,210 | -11.2% | -38.8% |
Burkhardt+Weber Machines | 175,982 | 199,688 | 259,707 | 30.1% | 47.6% |
Rough and Machined Cast Iron Parts | 246,154 | 62,966 | 56,369 | -10.5% | -77.1% |
Total * | 816,155 | 534,400 | 557,286 | 4.3% | -31.7% |
At the end of the third quarter of 2023, the order backlog dropped by 31.7% compared to the same period in 2022. However, when compared to 2Q23, the Burkhardt-Weber Machinery Unit showed an important recovery in order entry in 3Q23, presenting an increase of 4.3%.
Operational Performance
Net Operating Revenue by Business Unit
The net operating revenue posted in 3Q23 reached R$272.8 million, a 31.6% decrease in comparison with 3Q22, especially as a consequence of lower sales of large parts at the Rough and Machined Cast Iron Parts Business Unit.
Quarter | Accumulated | |||||||
Net Operating Revenue (R$ 000) | 3Q22 | 2Q23 | 3Q23 | Chg. | Chg. | 9M22 | 9M23 | Chg. |
3Q23/2Q23 | 3Q23/3Q22 | 23/22 | ||||||
ROMI Machines | 227,557 | 202,947 | 193,997 | -4.4% | -14.7% | 608,088 | 562,186 | -7.5% |
Burkhardt+Weber Machines | 22,333 | 45,900 | 29,345 | -36.1% | 31.4% | 76,595 | 90,868 | 18.6% |
Rough and Machined Cast Iron Parts | 148,800 | 59,789 | 49,453 | -17.3% | -66.8% | 371,404 | 187,532 | -49.5% |
Total | 398,690 | 308,636 | 272,795 | -11.6% | -31.6% | 1,056,087 | 840,586 | -20.4% |
ROMI MACHINES
This Business Unit's net operating revenue reached R$193.9 million in 3Q23, showing a reduction of 14.7% when compared to 3Q22, reflecting the decrease in incoming orders from the foreign market, which was largely offset by the significant increase in revenues from machine rental, a business launched by ROMI in mid-2020.
10
| Attention: This is an excerpt of the original content. To continue reading it, access the original document here. |
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Indústrias Romi SA published this content on 24 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 October 2023 21:22:04 UTC.
