Ambipar grows above guidance with less capex; CFO says it’s the “new normal”

Ambipar has just reported a second quarter with record revenue, exceeding market consensus – as well as experiencing a growth rate higher than its own company guidance, which is to grow 10% this year.

Net revenue of R$ 1.4 billion increased by 17.5% year-on-year, making it the highest quarterly revenue in the company’s history. The Refinitiv consensus had pointed to revenue of R$ 1.3 billion.

EBITDA was also a record, growing 18% year-on-year to R$ 436.4 million – consensus expected R$ 390 million.

“The result should positively surprise the market, as we were able to extract a lot of value from our contract pipeline,” CFO João Arruda told the Brazil Journal. “For the semester, we are 440 bps above our guidance.”

The newly appointed CFO, who took office on Monday, said one of the key drivers for EBITDA growth was the integration of Ambipar’s purchasing areas in Brazil.

In the environment vertical, for example, there was a 200 bps increase because Ambipar unified the buying and selling of products like plastic, paper, and cardboard for the recycling industry.

However, the environment vertical’s EBITDA margin dropped from 37% to 36.2%. According to Arruda, a reforestation project contract with AstraZeneca, signed a year ago, impacted the comparison base.

The response division, which includes consulting, training, and crisis management services, saw its EBITDA margin increase by 120 bps, mainly due to an improved sales mix and accelerated integration of acquisitions.

Arruda also said that the second-quarter results show that growth will come – even with lower capex.

In the second quarter, Ambipar made capex of R$ 132 million, a 17.5% reduction year-on-year, reaching the lowest capex-to-net-revenue ratio in the company’s history, at 9.3%.

According to Arruda, without the non-recurring investments in the Giri project in Chile, this percentage would be 8.2%.

“These numbers are the company’s new normal. It’s no surprise that we committed to a leverage of 2.5x by June next year,” he said.

In the second quarter, leverage reached 2.82x, a reduction of 0.3x compared to the previous quarter.

The executive said that leverage should decrease more significantly in the second half with the start of a sale-leaseback plan for thousands of trucks and yellow-line machines.

“We’ll start in Brazil, but in the long term, the same will be done in other countries,” said the CFO.

Today’s result comes after weeks of a spectacular short squeeze on the stock, following the controlling shareholder increasing their stake from 66% to 73%, and the company itself repurchasing its shares.

The stock has already risen 800% since the end of June amid brutal intraday volatility.

“It’s an atypical situation, beyond our control,” Arruda said. “Our focus is the result: delivering value generation to shareholders and deleveraging the company.”

Arruda said he intends to get closer to the market to understand investor demands. However, despite the recent surge, he sees the company trading at low multiples compared to international peers.

“Before this movement, we were trading at around 5x EV/EBITDA, and now we are at 11x. There are peers abroad that trade above 17x, so the potential is still vast,” he said.

Ambipar’s stock has risen 320% in the past 12 months. The company is valued at R$ 13.7 billion on the stock exchange.

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