Source: Expert XP by Vladimir Pinto and Bruno Vidal – 11/14/2024
Orizon reported positive 3Q24 results, with an adjusted EBITDA of R$ 132 million, aligning with our estimates. During the quarter, the company sold carbon credits, generating additional revenues of R$ 37.4 million. This, coupled with growth in the waste management business, explains the positive YoY performance. Furthermore, the company announced several agreements to explore the biomethane segment, utilizing landfills and thermal plants from other players at Orizon’s landfills in João Pessoa and Jaboatão dos Guararapes. We maintain a positive outlook on the company, with a Buy recommendation and a target price of R$ 56/share.
Financial Highlights: Adjusted EBITDA reached R$ 132 million, in line with our estimate of R$ 130 million. The result reflected the sale of 1.1 million tons of carbon credits, implying a higher gross margin (64.1%) and improved results from waste processing activities. Net results surpassed our estimates due to lower-than-expected income tax expenses (R$ 3.1 million vs. R$ 19.7 million expected).
Operational Performance: Waste volumes increased 5% YoY, mainly driven by Ecoparque Paulínia (+34,000 tons), Porto Velho (+29,000 tons), Barra Mansa (+26,000 tons), Nova Iguaçu (+21,000 tons), and Santa Luzia (+20,000 tons). Additionally, biogas grew 16% YoY and decreased 1% QoQ, while carbon credits generated increased 16% YoY and remained stable QoQ, mainly due to the start of biogas and carbon credit operations at Ecoparque Sergipe (Dec/23) and Maceió (Jan/24).
Net debt reached R$ 1.1 billion in the quarter. The net debt/EBITDA ratio stood at 2.71x (vs. 2.78x in 2Q24), reflecting the execution of annual investments, which will partly come into operation in the coming quarters.
Capex reached R$ 178.9 million in the quarter, mainly related to growth projects (R$ 162.5 million). The most relevant growth project was the biomethane plant in Jaboatão dos Guararapes, which accounted for R$ 70.1 million in capex.
