UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

 

 

FORM 6-K

 

 

 

REPORT OF FOREIGN PRIVATE ISSUER 

PURSUANT TO RULE 13a-16 OR 15d-16 

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of October, 2023

 

Commission File Number: 001-41638

 

 

 

AMBIPAR EMERGENCY RESPONSE 

(Exact name of registrant as specified in its charter)

 

 

 

Avenida Angélica, nº 2346, 5th Floor 

São Paulo, São Paulo, Brazil, 01228-200 

Tel: +55 (11) 3526-3526 

(Address of principal executive office)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F  x             Form 40-F  ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Yes ¨ No x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  Yes ¨ No x

 

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.  Description of Exhibit
99.1  Second Quarter 2023 Earnings Release

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: October 10, 2023

 

  AMBIPAR EMERGENCY RESPONSE
     
  By: /s/Thiago da Costa Silva
  Name: Thiago da Costa Silva
  Title: Director

 

 

 

 

 

Exhibit 99.1

 

 

 

 

 

INDEX

 

LETTER TO SHAREHOLDERS 3
AMBIPAR RESPONSE 5
HIGHLIGHTS 6
GROSS REVENUE 6
NET REVENUE 10
COST OF PRODUCTS/SERVICES (CASH) 10
GROSS PROFIT 12
EBITDA 12
FINANCIAL RESULTS 13
NET INCOME 13
CAPITAL STRUCTURE 13
ROIC 16
CAPEX 17
ANNEXES 18

 

 2

 

 

LETTER TO SHAREHOLDERS

 

To our shareholders

 

In 2023, Ambipar Response (hereinafter referred to as "Response" or "the Company") proudly completed its listing on the NYSE American, achieving a gross capitalization of US$ 174 million. This listing not only amplifies our visibility but also fortifies our financial position, grants us access to the world's most advanced capital markets, and places us at the forefront of corporate governance standards.

 

As this letter marks our inaugural results release, we have structured it into three main sections:

 

1. Historical Overview and Strategy

2. Capital Allocation

3. Final Thoughts

 

Historical Overview and Strategy

 

The trajectory of listing Response on the NYSE American dates back to 1995 when Tercio Borlenghi Junior started a small in-house Emergency Response business to protect their own logistics operations from environmental risk when transporting HAZMAT. Fast forward decades, this original family-owned business effectively became a big company, subsidiary of Ambipar Group, listed as a public company.

 

From those early years, and most prominently from 2010 to current days, Ambipar Response has undergone through incredible transformation. Our Company witnessed a rapid acceleration in our global growth, a solidification of our value proposition, consolidation of its leadership in several markets, and a notable increase in brand awareness.

 

We expanded and streamlined our operations into four core business units: emergency response, marine response, industrial response, and environmental response. We also established a presence in four key regions, adopting a matrix management approach. Our primary objective is to offer a comprehensive suite of services from these business units in the regions we operate.

 

Our clientele operates in sectors that are fraught with operational and environmental risks – encompassing manufacturing, chemicals, pulp and paper, mining, and Hazmat logistics. Clients require specialized services providers capable of executing higher risk services – such as tank cleaning, decontamination, decommissioning, environmental consulting, emergency response, confined space cleaning, handling of contaminant materials - that ultimately safeguard their assets, personnel, and the environment.

 

Our vision for Response is to be the premier global provider of such risk environmental services, delivering a standardized and complete portfolio of services to our clients wherever they may be.

 

 3

 

 

Our business model emphasizes standardization and readiness at scale, built on four pillars:

 

1.Highly trained personnel
2.Standardized equipment and procedures
3.Centralized command centers
4.Technical expertise

 

These pillars underpin our rapid growth while ensuring we maintain the highest quality of service in the field.

 

Scale is instrumental in achieving optimal returns on investment. It enables us to share assets and personnel across vast geographies, ensuring efficient asset utilization and maximizing the potential of our resources – akin to "squeezing more juice from the same oranges."

 

Capital Allocation

 

Our business presents great organic and inorganic investment opportunities.

 

We are constantly presented with opportunities to deploy capital at attractive returns to invest in service centers, vehicles, vessels, helicopters, equipment, and personnel. Throughout our journey, we’ve also come across acquisitions as a way to accelerate growth, bring great people and services to our Company.

 

As evidenced by our organic growth, operational margins, and ROIC, our acquisitions have become part of the Ambipar Response ecosystem and consistently added economic value and positioned us to keep on growing profitably. The underlying reason relies, among others, on rebranding acquisitions to Ambipar Response, upgrading assets, training personnel, bundling services and training sales teams enables Response to achieve constantly growing results.

 

Final Thoughts

 

Many of the markets we operate in, notably North America, are fragmented and demand standardized, high-quality services to cater to their vast dimensions and extensive industrial and supply chains. We have successfully established leading positions in Brazil and LatAm and intend to replicate our successful playbook in other regions. This presents a timely opportunity.

 

Our NYSE American listing has endowed us with an additional currency – the AMBI shares – enabling us to pursue strategic acquisitions and attract individuals keen on contributing to the construction of a global leader in environmental risk services.

 

We extend our heartfelt gratitude for your partnership as an investor and shareholder. Our commitment remains unwavering: to build a reputable, profitable, and purpose-driven company, always prioritizing our mission to protect the environment, businesses, and communities.

 

As we embark on this new chapter as a publicly-traded company, we are resolute in our commitment to attract shareholders who resonate with our vision and are willing to support us in the long run.

 

 4

 

 

 

Ambipar Response has 4 businesses units:

 

1.Emergency response: specialist in crisis management and response to environmental emergencies, with command coordinated by a control center, managing services simultaneously, scalable and standardized. It has 5 HAZMAT training camps, training person according to National Technical Standards Fire Protection Association (“NFPA”, in the USA), a reference in the development of technical standards for emergency response. Also comprises Fire Response for the prevention and combat of forest and industrial fires and Medical Response to emergency medical care services.

 

2.Marine response: port support solutions, such as transporting people, material and ranch, dredging support, preventive fencing and emergency bases. It also offers solutions for maritime support, such as transporting materials to platforms, combating oil spills, chase-boats for seismic vessels, and vessels for FPSO support (Floating production storage and offloading).

 

3.Industrial response: meets demands for cleaning, maintenance, decontamination and treatment, painting of industrial and naval tanks, which typically involve a hazardous environment or material. It also performs decommissioning of FPSOs, vessels, platforms and industrial plants. It can perform these services for radioactive materials as well.

 

4.Environmental response: rehabilitation of fauna and flora, licensing, auditing and environmental due diligence, soil remediation, risk study, preparation and execution of environmental monitoring programs. Team formed by biologists, oceanographers, geologists, geographers and engineers.

 

For more details, watch the institutional video.

 

 5

 

 

HIGHLIGHTS

 

BRL million   2Q23    2Q22    Chg.    1Q23*    Chg.    6M23*    6M22    Chg. 
GROSS REVENUE   660.4    363.3    81.8%   627.1    5.3%   1,287.5    713.7    80.4%
DEDUCTIONS   -48.3    -30.7    57.3%   -30.9    56.3%   -79.2    -59.2    33.8%
NET REVENUE   612.1    332.6    84.0%   596.3    2.7%   1,208.3    654.5    84.6%
GROSS PROFIT   157.9    89.1    77.4%   144.1    9.6%   302.1    182.0    66.0%
GROSS MARGIN   25.8%   26.8%   -1.0p.p.   24.2%   1.6p.p.   25.0%   27.8%   -2.8p.p.
EBITDA   150.3    82.6    82.0%   139.1    8.1%   289.4    167.9    72.3%
EBITDA MARGIN   24.6%   24.8%   -0.3p.p.   23.3%   1.2p.p.   23.9%   25.7%   -1.7p.p.

 

* 1Q23 EBITDA and EBITDA margin adjusted to exclude extraordinary expenses and non-cash from NYSE American listing.

 

GROSS REVENUE

 

RESPONSE
COMPOSITION
OF GROSS REVENUE R$
million		  2Q21   3Q21   4Q21   1Q22   2Q22   3Q22   4Q22   1Q23   2Q23 
GROSS REVENUE   215.2    262.4    281.5    350.4    363.3    431.8    667.8    627.1    660.4 
Brazil   70.1    82.2    77.1    112.5    122.8    159.4    202.5    208.7    244.5 
International   145.1    180.2    204.4    237.9    240.6    272.4    465.3    418.4    415.9 
Latam (ex Brazil)   36.9    47.7    50.1    57.9    58.7    44.1    50.3    55.8    54.3 
Europe   42.4    50.1    48.1    47.8    50.5    51.8    64.7    56.1    46.0 
North America   65.8    82.4    106.2    132.2    131.3    176.5    350.3    306.5    315.5 

 

 

 

Gross revenue reached R$660 million in 2Q23, 81.8% higher than 2Q22 and up by 5.3% compared to 1Q23.

 

6 

 

 

 

 

Response  2Q21   3Q21   4Q21   1Q22   2Q22   3Q22   4Q22   1Q23   2Q23 
Organic Growth YoY   19%   33%   15%   40%   20%   14%   35%   27%   28%
% companies’ revenue +12 months / total revenue   51%   50%   57%   59%   66%   67%   54%   72%   70%

 

The organic growth rate, calculated on a "same store sales" ("SSS") basis, that is, the YoY gross revenue variation of companies and operations that have been for 12 months or more in the Ambipar group compared to the same quarter last year. We have historically seen high rates of organic growth.

 

BRAZIL

 

COMPOSITION OF
GROSS REVENUE
R$ million		   2Q23    2Q22    Chg.
2Q23
x2Q22		    1Q23    Chg.
2Q23
X1Q23		    6M23    6M22    Chg.
6M23 x
6M22		 
RESPONSE                                        
GROSS REVENUES   660.4    363.3    81.8%   627.1    5.3%   1,287.5    713.7    80.4%
Brazil   244.5    122.8    99.1%   208.7    17.1%   453.2    235.3    92.6%
Subscriptions Brazil   39.6    33.7    17.3%   38.2    3.6%   77.8    67.5    15.3%
Services Brazil   204.9    89.0    130.1%   170.5    20.2%   375.5    167.8    123.7%

 

Attended Services     2Q22   3Q22   4Q22   1Q23   2Q23   Chg.
2Q23
x2Q22		 
Brazil  Gross Revenue (BRL Million)  89.0   123.5   165.5   170.5   204.9   130.1% 
   Number of Services Provided  1,853   2,435   2,594   2,727   3,075   65.9% 
   Average Ticket (BRL Thousand)  48.1   50.7   63.8   62.5   66.6   38.7% 

 

7 

 

 

  · Gross Revenue in Brazil grew in all comparisons, mainly driven by the provision of scheduled industrial services and emergencies in the road and rail sectors.

  · The average ticket rose YoY and QoQ reflecting higher complexity of attended services.

  · This result is the result of integration and cross-selling between the business areas.

 

LATAM

 

COMPOSITION OF
GROSS REVENUE
R$ million		   2Q23    2Q22    Chg.
2Q23
x2Q22		    1Q23    Chg.
2Q23
X1Q23		    6M23    6M22    Chg.
6M23 x
6M22		 
RESPONSE                                        
GROSS REVENUES   660.4    363.3    81.8%   627.1    5.3%   1,287.5    713.7    80.4%
International   415.9    240.6    72.9%   418.4    -0.6%   834.3    478.4    74.4%
Latam (ex-Brazil)   54.3    58.7    -7.5%   55.8    -2.6%   110.1    116.6    -5.5%
Subscriptions Latam   34.6    34.4    0.5%   36.1    -4.1%   70.7    65.6    7.7%
Services Latam   19.7    24.3    -18.7%   19.7    0.1%   39.5    51.0    -22.6%

 

Attended Services     2Q22   3Q22   4Q22   1Q23   2Q23   Chg.
2Q23
x2Q22		 
Latam (Ex Brazil)  Gross Revenue (BRL Million)  24.3   9.6   14.8   19.7   19.7   -18.7%
   Number of Services Served  82   80   104   95   90   9.8%
   Average Ticket (BRL Thousand)  296.4   119.6   142.3   207.6   219.4   -26.0%

 

  · Latam gross revenue had a negative exchange rate impact between 1Q23 vs. 2Q23, due to the 3.4% appreciation of the Real against the Chilean Peso. On a Local currency view, Revenues showed slight growth.
·In Latin America, we had a YoY retraction due to exchange variation, and an oil spill response in the region during 1H22.

 

8 

 

 

EUROPE

 

COMPOSITION OF
GROSS REVENUE
R$ million		   2Q23    2Q22    Chg.
2Q23
x2Q22		    1Q23    Chg.
2Q23
X1Q23		    6M23    6M22    Chg.
6M23 x
6M22		 
RESPONSE                                        
GROSS REVENUES   660.4    363.3    81.8%   627.1    5.3%   1,287.5    713.7    80.4%
International   415.9    240.6    72.9%   418.4    -0.6%   834.3    478.4    74.4%
Europe   46.0    50.5    -8.9%   56.1    -17.9%   102.1    98.3    3.9%
Subscriptions Europe   4.6    3.8    20.5%   4.8    -4.9%   9.4    7.4    27.1%
Services Europe   41.5    46.7    -11.3%   51.3    -19.1%   92.7    90.9    2.0%

 

Attended Services     2Q22   3Q22   4Q22   1Q23   2Q23   Chg.
2Q23
x2Q22		 
Europe  Gross Revenue (BRL Million)  46.7   48.1   60.0   51.3   41.5   -11.3% 
   Number of Services Served  5,874   5,922   5,974   5,947   5,798   -1.3% 
   Average Ticket (BRL Thousand)  8.0   8.1   10.0   8.6   7.2   -10.1% 

 

·In Europe, we had a quarterly drop in revenue, due to a lower industrial demand.
  · In addition, the Real appreciated against the basket of currencies in the European countries where we operate.

 

NORTH AMERICA

 

COMPOSITION OF
GROSS REVENUE
R$ million		    2Q23     2Q22    Chg.
2Q23
x2Q22		    1Q23    Chg.
2Q23
X1Q23		    6M23     6M22      Chg.
6M23 x
6M22		  
RESPONSE                                                
GROSS REVENUES    660.4     363.3    81.8%   627.1    5.3%   1,287.5     713.7      80.4 %
International    415.9     240.6    72.9%   418.4    -0.6%   834.3     478.4      74.4 %
North America    315.5     131.3    140.2%   306.5    2.9%   622.0     263.5      136.0 %

 

Attended Services     2Q22   3Q22   4Q22   1Q23   2Q23   Chg.
2Q23
x2Q22		  
North America  Gross Revenue (BRL Million)  131.3   176.5   350.3   306.5   315.5   140.2 %
   Number of Services Served  2,597   2,991   3,117   3,228   3,660   40.9 %
   Average Ticket (BRL Thousand)  50.6   59.0   112.4   95.0   86.2   70.5 %

 

9 

 

 

  · North America operations continue their growth trajectory. In the comparison with 2Q22, the growth was 140.2%.

  · Continuing the process of integrating operations in North America, Witt O’Brien’s now brings together all the L1 and L2 US operations. So, we consolidate WOB into the North America revenue line. We continue to cross-sell L3 from leads generated by L1.

  · Canada stood out with a strong performance on emergency response and industrial services, following good demand and positioning to serve the Oil and Gas market on its western provinces.

 

NET REVENUE

 

R$ million  2Q23   2Q22   Chg.     1Q23   Chg.      6M23   6M22   Chg. 
Gross Revenues   660.4    363.3    81.8%    627.1    5.3%     1,287.5    713.7    80.4%
Deductions   -48.3    -30.7    57.3%    -30.9    56.3%     -79.2    -59.2    33.8%
Net Revenues   612.1    332.6    84.0%    596.3    2.7%     1,208.3    654.5    84.6%
% Deductions / Gross Revenues   -7.3%    -8.5%    1.1p.p.    -4.9%    -2.4p.p.    -6.1%    -8.3%    2.1p.p.

 

  · The variation in net revenue accompanied the evolution of gross revenue by geography, and the revenue deductions for each region. There was no significant change in the tax structure of each market, with higher deductions in the Brazilian market than in the international market.

 

COST OF PRODUCTS/SERVICES (CASH)

 

RESPONSE
COST OF SERVICES R$ million  2Q23   2Q22   Chg.     1Q23   Chg.     6M23   6M22   Chg. 
Personnel   253.4    120.2    110.9%     237.6    6.6%     491.0    238.2    106.2%
Third parties   92.2    49.5    86.1%     88.8    3.8%     181.0    96.4    87.8%
Maintenance   24.7    8.1    207.1%     19.8    24.6%     44.6    14.7    203.2%
Travel   19.2    4.6    313.3%     17.2    11.7%     36.4    9.2    293.6%
Freight   0.8    1.2    -32.1%     1.5    -45.6%     2.2    2.3    -2.6%
Rentals   11.7    9.5    23.2%     10.7    9.4%     22.4    19.1    17.2%
Fuel   12.8    18.7    -31.7%     12.6    1.6%     25.3    30.9    -17.9%
Materials   5.2    3.5    46.3%     7.9    -35.1%     13.1    6.8    93.2%
Telecommunications   2.9    0.6    406.5%     3.7    -22.7%     6.6    1.2    439.0%
Marketing   5.3    0.7    656.4%     3.1    71.5%     8.4    1.2    583.0%
Taxes   4.2    6.2    -32.3%     10.8    -61.1%     15.1    15.6    -3.3%
Others   21.9    20.8    5.3%     38.4    -43.0%     60.2    37.0    62.6%
TOTAL   454.1    243.6    86.5%     452.1    0.4%     906.3    472.6    91.8%

 

10 

 

 

RESPONSE

COST OF SERVICES R$ million   2Q21   3Q21    4Q21    1Q22    2Q22    3Q22   4Q22    1Q23    2Q23 
Net Revenue   190.3    233.4    255.6    321.9    332.6    398.1    632.3    596.3    612.1 
Personnel   73.0    91.3    96.4    118.0    120.2    137.7    271.5    237.6    253.4 
Third parties   19.8    28.8    27.7    46.8    49.5    45.1    69.0    88.8    92.2 
Maintenance   8.6    4.5    6.2    6.6    8.1    15.5    27.8    19.8    24.7 
Travel   2.4    3.8    4.3    4.6    4.6    6.7    17.2    17.2    19.2 
Freight   0.6    0.8    0.9    1.1    1.2    1.3    13.4    1.5    0.8 
Rentals   7.3    7.2    7.1    9.6    9.5    3.3    8.6    10.7    11.7 
Fuel   5.4    6.6    9.0    12.2    18.7    19.8    7.5    12.6    12.8 
Materials   2.3    3.2    3.5    3.3    3.5    10.4    5.2    7.9    5.2 
Telecommunications   0.4    0.5    0.7    0.7    0.6    1.0    4.2    3.7    2.9 
Marketing   0.9    0.3    1.5    0.5    0.7    5.5    4.1    3.1    5.3 
Taxes   2.1    3.6    3.7    9.3    6.2    5.9    -1.3    10.8    4.2 
Others   9.2    9.0    14.4    16.3    20.8    30.5    27.0    38.4    21.9 
Total   132.1    159.4    175.3    229.0    243.6    282.8    454.2    452.1    454.1 
                                              
Percentage of Net Revenue

RESPONSE		 
COST OF SERVICES R$ million   2Q21   3Q21    4Q21    1Q22    2Q22    3Q22   4Q22    1Q23    2Q23 
Net Revenue   190.3    233.4    255.6    321.9    332.6    398.1    632.3    596.3    612.1 
Personnel   38.3%   39.1%   37.7%   36.7%   36.1%   34.6%   42.9%   39.9%   41.4%
Third parties   10.4%   12.4%   10.9%   14.5%   14.9%   11.3%   10.9%   14.9%   15.1%
Maintenance   4.5%   1.9%   2.4%   2.1%   2.4%   3.9%   4.4%   3.3%   4.0%
Travel   1.3%   1.6%   1.7%   1.4%   1.4%   1.7%   2.7%   2.9%   3.1%
Freight   0.3%   0.3%   0.3%   0.4%   0.3%   0.3%   2.1%   0.2%   0.1%
Rentals   3.9%   3.1%   2.8%   3.0%   2.9%   0.8%   1.4%   1.8%   1.9%
Fuel   2.8%   2.8%   3.5%   3.8%   5.6%   5.0%   1.2%   2.1%   2.1%
Materials   1.2%   1.3%   1.4%   1.0%   1.1%   2.6%   0.8%   1.3%   0.8%
Telecommunications   0.2%   0.2%   0.3%   0.2%   0.2%   0.3%   0.7%   0.6%   0.5%
Marketing   0.5%   0.1%   0.6%   0.2%   0.2%   1.4%   0.6%   0.5%   0.9%
Taxes   1.1%   1.5%   1.4%   2.9%   1.9%   1.5%   -0.2%   1.8%   0.7%
Others   4.8%   3.9%   5.6%   5.1%   6.2%   7.7%   4.3%   6.4%   3.6%
Total   69.4%   68.3%   68.6%   71.1%   73.2%   71.0%   71.8%   75.8%   74.2%
Gross Margin   30.6%   31.7%   31.4%   28.9%   26.8%   29.0%   28.2%   24.2%   25.8%

 

Costs remained stable as a percentage of revenue when comparing 2Q23 vs. 1Q23, reflecting the company's business mix. There were no highlights in the composition of costs in this quarter. The largest cost components – Personnel, Third Parties, Maintenance, Fuel and Travel – represented more than 85% of total costs.

 

11

 

 

GROSS PROFIT

 

Quarterly Gross Profit(R$ million) and Margin (%) 

 

 

 

Gross profit grew over 2Q22. Gross margin for 2Q23 reached 25.8%, a result of 1.0 pp. lower than 2Q22 and up by 1.6 pp. compared to 1Q23. The improvement in gross margin in relation to 1Q23, is due to better performance in Brazil and Canada.

 

EBITDA

 

Quarterly EBITDA (R$ million) and Margin (%)

 

 

 

* 1Q23 EBITDA and EBITDA margin adjusted to exclude extraordinary expenses and non-cash from NYSE American listing

 

EBITDA registered an 82.0% growth in the 2Q23 versus 2Q22. The EBITDA margin in 1Q23 and 2Q23 reflects a mix with more consulting services, structurally with lower margin.

 

12

 

 

FINANCIAL RESULTS

 

R$ million   2Q23    2Q22    Var.    1Q23    Var.    6M23    6M22    Var. 
Financial Results   -50.9    -16.6    207.0%   -29.7    71.5%   -80.6    -23.3    245.7%
Financial Expenses   -48.9    -18.9    158.2%   -48.2    1.3%   -97.1    -28.9    235.5%
Financial Income   -2.0    2.3    N.M.    18.5    N.M    16.5    5.6    193.2%

 

In 2Q23, Ambipar Response presented a negative net financial result of R$51 million, resulting from the increase in interest rates and the increase in debt. The debt increase was mainly for capex and M&A.

 

NET INCOME

 

R$ million   2Q23    2Q22    Var.    1Q23    Var.    6M23    6M22    Var. 
Net Income   47.1    34.9    35.0%   -67.6    N.M.    -20.5    82.4    N.M. 
Net Margin   7.7%   10.5%   -2.8p.p.   -11.3%   19.0p.p.   -1.7%   12.6%   -14.3p.p.

 

Ambipar Response registered net income of R$47.1 million in 2Q23, with a net margin of 7.7%.

 

Compared to the same quarter of the previous year, net income grew by 35%, with a reduction of 2.8 p.p. in net margin. Profit growth derives from the growth in operations, while the drop in margin is explained by the negative financial result and the contribution of business segments and regions to the consolidated result.

 

The portion of net income allocated to non-controlling shareholders grew in 2Q23, as we made several acquisitions of companies throughout the year of 2022 where founding partners remain in the business as minority shareholders. This way of carrying out acquisitions ensures that we maintain expertise and continuity in the acquired companies, and it is a form of long-term alignment.

 

CAPITAL STRUCTURE

 

On June 30, 2023, financial gross debt reached the amount of R$ 1,256.4 million, a reduction of R$ 61.7 million in relation to the balance determined on December 31, 2022, mainly due to the issue of debentures and funding of loans and financing. Considering Related Parties, the total amount of gross debt was R$ 1,863.3 million a reduction of R$ 224.7 million.

 

13

 

 

R$ Million   2Q23    4Q22 
Short Term   201.2    151.8 
Loans and financing   62.1    67.7 
Debentures   139.1    84.2 
           
Long Term   1,055.2    1,166.3 
Loans and financing   592.9    649.8 
Debentures   462.3    516.5 
           
Short Term   16%   12%
Long Term   84%   88%
           
Financial Gross Debt   1,256.4    1,318.1 
         Related Parties   606.8    769.8 
Total Gross Debt   1,863.3    2,087.9 

 

Financial Gross Debt R$ Million  Financial charges - % p.a.  Maturity  2Q23  4Q22  
Working capital  0.84%+CDI and 6.36%  March 2027  529.3  597.7  
Investment financing  14.40%  June 2027  98.7  108.7  
Financial leases liabilities  14.26%  September 2027  27.0  11.0  
Debentures  CDI + 2.65% and 3.5%  February 2028  601.4  600.7  
Total        1,256.4  1,318.1  

 

Financial Leverage based on Covenants criteria reduced from 1.51x to 0.94x in the comparison between December 2022 and June 2023, due to the cash generation related to the Company's IPO occurred in March. Also in June 2023, considering Related Parties loans, the leverage was reduced from 2.59x to 1.90x.

 

14

 

 

R$ Million   2Q23    4Q22 
Financial Gross Debt   1,256.4    1,318.1 
(-) Cash and equivalents   691.8    271.6 
(=) Financial Net Debt based on Covenants criteria   564.6    1,046.5 
Pro forma annualized EBITDA¹   601.4    691.9 
Financial Leverage (x)   0.94    1.51 
(=) Net Debt Including Related Parties²   1,145.5    1,790.1 
Pro forma annualized EBITDA¹   601.4    691.9 
Financial Leverage (x)   1.90    2.59 

 

1-Calculated as the EBTIDA for 2Q23 multiplied by four. 2- Considers the amount of Related Parties Loans.

 

The debt maturity schedule has its most relevant portion in the year 2027.

 

 

 

 

*1Q23 net debt non audited by PCAOB standards. Considers Related Parties’ Loans.

 

15

 

 

ROIC

 

BRL million  2Q23
LTM		   4Q22
LTM		   Chg.
2Q23 LTM x 4Q22
LTM		 
(+) EBIT   427.5    336.8    26.9%
(-) Tax¹   -128.2    -101.0    26.9%
NOPAT   299.2    235.7    26.9%
(+) Average Shareholders' Equity   730.8    385.1    89.8%
(+) Average Net Debt   1,127.5    907.8    24.2%
Average Invested Capital   1,858.3    1,292.9    43.7%
(-) Average Intangible   1,273.4    907.5    40.3%
Average Invested Capital ex Intangible   584.9    385.4    51.8%
Operational ROIC² (%)   51.2%   61.2%   -10.0p.p.
ROIC (%)   16.1%   18.2%   -2.1p.p.

 

1- Considers a 30% tax rate; 2- Disregard intangibles

 

Return on Invested Capital minus intangible assets (“operating ROIC”) allows for an approximate estimate of the return on investments made in operations.

 

Return on Invested Capital (“ROIC”), which incorporates intangible assets into the invested capital base, mainly composed of goodwill paid for acquisitions.

 

M&A investment, at first, presents a lower ROIC, due to goodwill paid on acquisition. Once acquisitions become part of our operations, the expected return on the marginal investment made tends to follow the Operating ROIC, since the invested capital is allocated to the acquiree's operations and does not include goodwill.

 

In the medium term, therefore, we expect convergence between the company's ROIC and the operational ROIC.

 

16

 

 

 

CAPEX

 

In 2Q23, addition of Fixed Assets was R$41.9 million. In Response, we invested in Latin America in the new training camp in Chile and in the acquisition of equipment to be used in outsourcing contracts.

 

As for 6M23, Brazil still demanded capex for helicopters, which are typically demanded to fight fires in the rainforest and transport people to remote areas, and we continued investing in vehicles for industrial services and emergency response in North America.

 

Additions to Fixed Assets
R$ million		   2Q23    2Q22    Chg.
2Q23 x
2Q22		    1Q23    Chg.
2Q23 x
1Q23		    6M23    6M22    Chg.
6M23 x
6M22		 
(+) Response   41.9    26.1    61.0%   69.0    -39.2%   110.9    90.9    22.1%
(+) Brazil   11.6    8.9    29.4%   43.8    -73.6%   55.4    58.8    -5.7%
(+) LATAM (ex-Brazil)   19.8    1.9    933.4%   1.1    1662.9%   20.9    2.0    967.3%
(+) Europe   1.8    0.5    261.6%   1.8    -0.5%   3.7    3.7    0.3%
(+) North America   8.7    14.7    -40.4%   22.2    -60.6%   30.9    26.4    16.9%

 

Additions to Fixed Assets
R$ million		   2Q21    3Q21    4Q21    1Q22    2Q22    3Q22    4Q22    1Q23    2Q23 
(+) Response   20.8    46.2    12.9    64.8    26.1    69.9    72.5    69.0    41.9 
(+) Brazil   16.4    32.5    7.1    49.9    8.9    52.3    37.9    43.8    11.6 
(+) LATAM (ex-Brazil)   0.7    2.0    2.1    0.0    1.9    0.7    4.0    1.1    19.8 
(+) Europe   0.1    2.6    2.8    3.2    0.5    2.4    2.1    1.8    1.8 
(+) North America   3.7    9.2    0.9    11.8    14.7    14.4    28.5    22.2    8.7 

 

   1Q23    2Q23 
Expansion and Maintenance Capex   

Capex

(R$ Million)

    % Group Revenue    

Capex

(R$ Million)

    % Group Revenue 
RESPONSE - Service Expansion   38.0    3.3%   24.3    2.0%
Response Brazil   25.6    2.2%   6.3    0.5%
Response Latam (Ex. Brazil)   0.6    0.1%   18.0    1.5%
Response Europe   0.3    0.0%   0.0    0.0%
Response North America   11.5    1.0%   0.0    0.0%
RESPONSE - Service Maintenance   31.1    2.7%   17.7    1.5%
Response Brazil   18.3    1.6%   5.3    0.4%
Response Latam (Ex. Brazil)   0.5    0.0%   1.8    0.2%
Response Europe   1.6    0.1%   1.8    0.2%
Response North America   10.7    0.9%   8.7    0.7%

 

17

 

 

ANNEXES

 

·Balance sheet
·Income Statement
·Cash flow
·Reconciliation of Non-GAAP Measures

 

BALANCE SHEET

 

ASSETS
BRL thousand		  06/30/2023   12/31/2022 
Cash and cash equivalents   691,829    271,607 
Trade and other receivables   718,742    711,892 
Current income tax and social
contribution recoverable		   6,935    6,388 
Other taxes recoverable   37,474    29,740 
Prepaid expenses   35,221    37,806 
Advances to suppliers   58,336    29,864 
Inventories   26,160    18,128 
Dividends Receivable   -    - 
Other accounts equivalents   50,518    36,498 
Total current assets   1,625,215    1,141,923 
Related parties loans   25,886    26,180 
Non-current income tax and social contribuition recoverable   2,854    2,854 
Non-current other taxes recoverable   395    392 
Deferred taxes   25,567    25,420 
Judicial deposits   6,056    826 
Other accounts receivable   26,727    37,599 
Investments   -    7,620 
Property, plant and equipment   611,396    516,081 
Right of use   48,479    68,275 
Goodwill   1,188,856    1,192,302 
Intangible assets   369,278    420,197 
Total Non-current assets   2,305,494    2,297,746 
Total assets   3,930,709    3,439,669 

 

18

 

 

BALANCE SHEET (continued)

 

LIABILITIES AND SHAREHOLDERS EQUITY
BRL thousand		  06/30/2023   12/31/2022 
Loans and financing   62,122    67,656 
Debentures   139,082    84,187 
Trade and other payables   129,218    155,523 
Labor obligations   84,500    114,941 
Dividends Payable   43,189    76,909 
Current income tax and social contribution payable   17,395    12,998 
Other tax payable   23,206    33,719 
Obligations from acquisition of investment   160,473    141,698 
Lease liabilities   16,157    14,411 
Other bills to pay   76,848    36,345 
Total current liabilities   752,190    738,387 
           
Loans and financing   592,906    649,762 
Debentures   462,321    516,533 
Other taxes payable   7,669    7,986 
Related parties loans   606,823    769,792 
Provision for loss on investments   -    - 
Deferred income tax and social contribution   211,513    190,833 
Obligations from acquisition of investment   37,130    81,728 
Provision for contingencies   382    607 
Lease liabilities   29,492    32,648 
Warrant and Earn-out   41,336    - 
Other bills to pay   9,223    4,305 
Total Non-current liabilities   1,998,795    2,254,194 
           
Capital   1,434,717    261,920 
Earn-out variation   (2,349)   - 
Share issue expenses   -    - 
Profit reserves   -    302,817 
Capital transactions   (91,432)   (110,218)
Accumulated translation adjustment   (225,745)   (89,165)
Adjust previous exercises   -    - 
Retained earnings   (64,325)   - 
Equity attributable to owners of the group   1,050,866    365,354 
Non-controlling interest   128,858    81,734 
Total Equity   1,179,724    447,088 
           
Total shareholders' equity and liabilities   3,930,709    3,439,669 

 

19

 

 

INCOME STATEMENT

 

R$ million   2Q23    2Q22    Chg    1Q23*    Chg.    6M23*    6M22    Chg. 
Gross revenues   660.4    363.3    81.8%   627.1    5.3%   1,287.5    713.7    80.4%
Deductions   -48.3    -30.7    57.1%   -30.9    56.3%   -79.2    -59.2    33.8%
Net Revenues   612.1    332.6    84.0%   596.3    2.7%   1,208.3    654.5    84.6%
Cost of Services provided   -454.1    -243.6    86.5%   -452.1    0.4%   -906.3    -472.6    91.8%
SG&A   -7.6    -6.5    17.5%   -5.1    49.4%   -12.7    -14.0    -9.7%
EBITDA   150.3    82.6    82.0%   139.1    8.1%   289.4    167.9    72.4%
EBITDA Margin (%)   24.6%   24.8%   -0.3p.p.   23.3%   1.2p.p.   23.9%   25.7%   -1.7p.p.
Financial Results   -50.9    -16.6    207.0%   -29.7    71.5%   -80.6    -23.3    245.7%
Financial Expenses   -48.9    -18.9    158.2%   -48.2    1.3%   -97.1    -28.9    235.5%
Financial Income   -2.0    2.3    N.M    18.5    N.M    16.5    5.6    193.2%
Taxes   -15.1    -6.6    126.5%   -20.2    -25.5%   -35.3    -19.9    77.2%
Current Taxes   -16.0    -7.6    109.3%   -13.6    17.6%   -29.6    -14.7    101.4%
Deferred Taxes   0.9    1.0    -6.1%   -6.6    N.M    -5.7    -5.2    9.1%
Net Income   47.1    34.9    35.0%   -67.6    N.M    -20.5    82.4    N.M. 

 

*1Q23 EBITDA and margin excludes extraordinary expenses and non-cash from NYSE American listing.

 

20

 

 

CASH FLOW

 

BRL thousand   2Q23   2Q22   6M23    6M22
Net income for the period   (68,028)   34,876    (20,522)   82,382 
Adjustments to reconcile income to cash from (applied to) operations:                    
Depreciation and amortization   37,305    24,456    73,090    42,264 
Expected credit losses   141    23    (15)   (28)
Residual value of written-off property, plant and equipment and intangible assets   (1,767)   3,818    9,456    23,433 
Provision for contingencies   (361)   (427)   (225)   (144)
Income tax and social contribution - Deferred   (929)   (989)   5,703    5,227 
Interest on loans and financing, debentures, leases and exchange rate variation   52,615    (25,894)   78,049    (20,361)
Changes in assets and liabilities:                    
Accounts receivable   73,473    (49,946)   13,227    (71,614)
Recoverable taxes   (2,420)   2,916    (7,544)   45 
Prepaid expenses   (6,154)   (13,001)   2,751    (14,711)
Advances to suppliers   (16,933)   (22,035)   (28,406)   25,248 
Inventories   (5,787)   (1,711)   (7,982)   (2,043)
Other accounts receivable   (18,096)   (21,067)   (7,018)   12,723 
Suppliers   (31,464)   79    (52,106)   3,409 
Salaries and social security charges   (5,619)   7,289    (32,317)   9,500 
Taxes payable   (1,867)   990    1,989    (3,518)
Other accounts payable   (16,135)   58,115    43,412    3,478 
Total   (31,002)   (38,371)   (73,994)   (37,483)
Cash generated from operating activities   103,081    (2,508)   71,542    95,290 
                     
Interest paid on loans and financing   (5,681)   (3,113)   (24,803)   (5,724)
Interest paid on debentures   -    -    (46,891)   - 
Interest paid on leases   (660)   (950)   (1,411)   (1,185)
Income tax and social contribution   (4,926)   -    (12,154)   (595)
Total   (11,267)   (4,063)   (85,259)   (7,504)
                     
Cash from (invested in) operations   91,814    (6,571)   (13,717)   87,786 
                     
Cash flow from investing activities                    
Cash spent on companies' acquisitions; net of cash received   (21,523)   2,588    (25,169)   (140,365)
Payment of obligations from acquisition of investments   (20,452)   102,837    (64,923)   (40,116)
Acquisition of property, plant and equipment and intangible assets   (38,416)   64,238    (108,955)   (78,715)
                     
Net cash used in investing activities   (80,391)   (41,284)   (199,047)   (259,196)
                     
Cash flow from financing activities                    
Attributed to shareholders                    
Profit distribution - prior periods   (16,744)   -    (47,900)   - 
Increase in minority interest   100,214    -    699,532    - 
Capital Increase   (104,040)   -    -    - 
                     
Attributed to financing                    
Related parties   144,077    112,131    104,509    (101,675)
Lease payments - Principal   (24,413)   825    (28,392)   (7,332)
Proceeds from loans and financing   20,100    4,995    37,765    7,255 
Proceeds from debentures   -    -    -    335,500 
Funding of debentures   542    -    1,028    - 
Payments of loans and financing - Principal   (17,553)   (22,590)   (63,980)   (33,396)
Payment of Share Issuance Costs   -    (5,299)   -    (5,299)
Net cash generated from financing activities   102,183    90,062    702,562    195,053 
                     
Increase (decrease) in cash and cash equivalents   113,606    42,207    489,798    23,643 
Exchange rate change in cash and cash equivalents   (157,180)   (20,742)   (69,576)   14,669 
Cash and cash equivalents at the beginning of the period   735,403    135,765    271,607    118,918 
Cash and cash equivalents at the end of the period   691,829    157,230    691,829    157,230 

21

 

 

Reconciliation of Non-GAAP Measures

 

Reconciliation of our Loans and Financings and Debentures to Total Gross Debt, Financial Net Debt based on Covenants, Net Debt Including Related Parties and Financial Leverage, Financial Leverage including Related Parties

 

R$ Million   2Q23    4Q22 
(+) Short Term Loans and financing   62.1    67.7 
(+) Short Term Debentures   139.1    84.2 
(+) Long Term Loans and financing   592.9    649.8 
(+) Long Term Debentures   462.3    516.5 
Financial Gross Debt   1,256.4    1,318.1 
(-) Cash and equivalents   691.8    271.6 
(=) Financial Net Debt based on Covenants   564.6    1,046.5 
(/) Pro forma annualized EBITDA(1)   601.4    691.9 
Financial Leverage (x)   0.94    1.51 
           
Financial Gross Debt   1,256.4    1,318.1 
(+) Related Parties Loans   606.8    769.8 
Total Gross Debt   1,863.3    2,087.9 
(-) Cash and equivalents   691.8    271.6 
(-) Related Parties Assets   25.9    26.2 
(=) Net Debt Including Related Parties   1,145.5    1,790.1 
(/) Pro forma annualized EBITDA(1)   601.4    691.9 
Financial Leverage Including Related Parties (x)   1.90    2.59 

 

1-Calculated as the EBTIDA for 2Q23 multiplied by four.

 

Reconciliation of our profit for the period to EBITDA and EBITDA Margin

 

R$ Million   2Q23    2Q22    6M23    6M22 
Profit for period   47.1    34.9    (20.5)   82.4 
(+) Income tax and social contribution   (15.1)   (6.6)   (35.3)   (19.9)
(+) Financial Results   (50.9)   (16.6)   (80.6)   (23.3)
(+) Depreciation and amortization expenses   (37.3)   (24.5)   (73.1)   (42.3)
(+) NYSE American Listing expenses   -    -    (121.0)   - 
EBITDA (a)   150.3    82.6    289.4    167.9 
Net revenue (b)   612.1    332.6    1,208.3    654.5 
EBITDA Margin (a)/(b)   24.6%   24.8%   23.9%   25.7%

 

22

 

 

Reconciliation of our gross revenues to Gross Profit and Gross Margin

 

R$ Million   2Q23    2Q22    6M23    6M22 
Net revenue (a)   612.1    332.6    1,208.3    654.5 
Cost of Services provided                    
Personnel   (253.4)   (120.2)   (491.0)   (238.2)
Third parties   (92.2)   (49.5)   (181.0)   (96.4)
Fuel   (12.8)   (18.7)   (25.3)   (30.9)
Freights   (0.8)   (1.2)   (2.2)   (2.3)
Maintenance   (24.7)   (8.1)   (44.6)   (14.7)
Taxes   (4.2)   (6.2)   (15.1)   (15.6)
Marketing   (5.3)   (0.7)   (8.4)   (1.2)
Materials   (5.2)   (3.5)   (27.5)   (33.2)
Telecommunications   (2.9)   (0.6)   (6.6)   (1.2)
Travel   (19.2)   (4.6)   (37.2)   (9.2)
Depreciation   (37.3)   (21.2)   (73.1)   (42.3)
Rents   (11.7)   (9.5)   (22.4)   (19.1)
Others   (21.9)   (27.3)   (178.6)   (24.6)
Total Cost of Services provided   (491.5)   (271.2)   (1,113.0)   (528.9)
(-) SG&A   (7.6)   (6.5)   (12.7)   (14.0)
(-) Depreciation   (37.3)   (21.2)   (73.1)   (42.3)
(-) NYSE American Listing expenses   -    -    (121.0)   - 
Cost of Services provided (cash) (b)   (454.1)   (243.6)   (906.3)   (472.6)
Gross Profit (a)+(b)   157.9    89.1    302.1    182.0 
Gross Margin   25.8%   26.8%   25.0%   27.8%

 

Reconciliation of our operating profit to ROIC

 

R$ Million   2Q23
LTM 		    4Q22
LTM		    2Q23
(A)		    1Q23
(B)		    4Q22
(C)		    3Q22
(D)		    2Q22
(E)		    1Q22
(F)		    4Q21
(G)		 
Operating profit2   427.5    336.8    113.0    103.3    138.1    73.0    61.4    64.2    73.9 
Income tax adjustment1,2   (128.2)   (101.0)   (33.9)   (31.0)   (41.4)   (21.9)   (18.4)   (19.2)   (22.2)
Net operating profit after tax (a)2   299.2    235.7    79.1    72.3    96.7    51.1    43.0    44.9    51.7 
Total Shareholders’ equity3   730.8    385.1    1,179.7    1,204.4    447.1    435.8    387.1    317.6    337.9 
(+) Financial Gross Debt3   1,149.7    907.8    1,256.4    1,092.8    1,790.1    929.0    679.9    656.2    483.8 
(-) Cash and cash equivalents3   504.8    270.3    691.8    735.4    271.6    668.1    157.2    135.8    118.9 
(+) Related parties loans (current and non-current)3   588.9    509.2    606.8    607.2    769.8    595.5    365.1    333.3    482.2 
(-) Related parties assets3   32.1    35.5    25.9    26.0    26.2    41.6    41.0    34.1    34.7 
Invested capital (b)   1,858.3    1,292.9    1,558.1    1,573.8    1,612.5    892.3    730.2    707.1    595.4 
ROIC (a)/(b)   16.1%   18.2%                                   
                                              
(-) Goodwill3   1,028.9    811.2    1,188.9    1,178.8    1,192.3    861.6    720.3    696.6    584.9 
(-) Intangibles assets3   245.0    96.4    369.3    395.0    420.2    30.7    9.9    10.4    10.5 
Invested capital ex Goodwill and intangible assets (c)   584.9    385.4    767.1    723.3    624.7    472.5    336.7    266.7    226.4 
ROIC (a)/(c)   51.2%   61.2%                                   

 

 

1 Income tax adjustment is defined as operating profit for the period multiplied by our normalized effective tax rate for the period, the numerator of which is income tax and social contribution and the denominator of which is profit before tax.

2. Considers the sum of the last 4 quarters.

3. Considers the average of the last 5 quarters.

 

23

 

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