Orbia Advance Corporation, S.A.B. de C.V. (BMV: ORBIA*) (“Orbia” or “the Company”) has announced its unaudited financial results for the third quarter of 2024.
The company posted an EBITDA of $288 million in Q3 2024. Despite ongoing weak market conditions, Orbia maintained a strong operating cash flow conversion rate of 98% of EBITDA, reflecting its focus on cost optimization and cash flow management. The company remains cautious for the remainder of the year.
Q3 2024 Financial Highlights
(All figures compared to Q3 2023 unless stated otherwise)
- Net revenues of $1,887 million fell by 4%, driven by lower volumes across all segments except for Fluor & Energy Materials and Connectivity Solutions, alongside lower prices in Polymer Solutions and Connectivity Solutions.
- EBITDA decreased by 10% to $288 million, primarily due to lower revenues caused by weak construction activity and infrastructure investment, as well as reduced prices. Cost-saving initiatives helped offset some of the decline.
- Operating Cash Flow rose by $65 million to $283 million, achieving a conversion rate of 98% of EBITDA. This improvement was mainly due to lower tax payments and enhanced working capital management compared to the same period last year.
CEO Sameer Bharadwaj commented: “Our Q3 results reflect the ongoing challenges in many of our markets. We remain focused on maintaining financial discipline, optimizing revenue, and managing costs and cash flow to ensure Orbia’s long-term success. We are selectively investing in growth opportunities to be well-positioned as market conditions improve. During the analyst call on October 24th, we will provide a business update addressing current market conditions and our outlook moving forward.”
Additional Financial Details
- The decline in revenue was primarily due to lower volumes in Building & Infrastructure and Polymer Solutions and lower prices in Connectivity Solutions and Polymer Solutions. These declines were partially offset by volume growth in Fluor & Energy Materials and Connectivity Solutions.
- Cost of goods sold dropped 2% to $1,457 million, driven by lower volumes, reduced raw material costs, and operational efficiencies.
- Selling, general, and administrative (SG&A) expenses were down 4% at $305 million, maintaining the same percentage of sales at 16.2% year-on-year due to cost control measures, offset slightly by restructuring charges.
- EBITDA margin decreased by 89 basis points to 15.3%, mainly due to unfavorable product mix in Connectivity Solutions and lower revenues in Building & Infrastructure and Polymer Solutions.
- Financial costs remained flat at $79 million, with FX losses from the Mexican Peso depreciation offset by lower interest expenses.
- An income tax benefit of $56 million was recognized for the quarter, driven by the Peso’s depreciation. The effective tax rate was -120.4%, down from 3.7% the prior year, though excluding currency impacts, the effective tax rate was 27.2%.
- Net income to majority shareholders increased by 20% to $86 million, largely due to the income tax benefit.
- Operating cash flow rose 30% to $283 million, and free cash flow grew by $115 million to $142 million, driven by improved working capital and lower capital expenditures.
