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Estre Ambiental, Inc. Reports 2017 Full-Year Results

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Estre Ambiental, Inc. Reports 2017 Full-Year Results

Adjusted EBITDA Increases 7 Percent To R$414 Million From A Modestly Lower Sales Base

PR Newswire

SAO PAULO, June 20, 2018 /PRNewswire/ -- Estre Ambiental, Inc. (NASDAQ:ESTR) ("Estre" or "Company"), one of the leading waste management companies in Latin America, today announced financial results for its full year ended December 31, 2017. The results are stated in Brazilian Reais ("R$") and prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, except as otherwise indicated.

2017 Results Highlights

  • Net revenues in 2017 declined 2.0 percent, from R$1,393 million in 2016 to R$1,365 million in 2017. Higher sales to commercial and industrial clients and from landfill operations were more than offset by lower sales to the oil and gas segment.  Sales to public collections clients were down modestly, with timing delays on certain new contracts deferring those revenues into fiscal year 2018.
  • Net Income in 2017 was a profit of R$52 million from a loss of R$361 million in 2016. This improvement was attributable in large part to R$373 million in deferred tax assets recognized in 2017 in the context of our participation in the tax refinancing program offered by the Brazilian Federal Government. Adjusted EBITDA increased to R$414 million in 2017 from R$386 million in 2016, as lower costs and expenses more than compensated for the decrease in revenues. Adjusted EBITDA Margin improved from 28 percent in 2016 to 30 percent in 2017.
  • Estre completed its business combination with Boulevard Acquisition Corp II, and received a cash investment of US$140 million as a result of the transaction.  The majority of the proceeds were used to reduce and to restructure the Company's debt, resulting in a Net Financial Debt/EBITDA leverage of 3.3x.

Selected Operating and Financial Highlights

Non-recurring events such as our participation in two tax refinancing programs offered by the Brazilian Federal Government for a limited period of time in 2017, our business combination with Boulevard Acquisition Corp II and the findings of our internal evaluation process regarding supplier relationships have affected our 2017 results. In order to not distort comparability between periods and to show additional meaningful information to investors to demonstrate the operating performance of our core business, we present certain non-IFRS measures to eliminate the effects of these events that our management considers to be isolated in nature.

Table A annexed to this earning release provides detailed information describing the impact of these events that our management considers to be non-recurring and reconciles these non-IFRS metrics to our IFRS numbers for the fiscal years 2017 and 2016. Whenever we mention a measure as "Adjusted", we will be referring to the numbers indicated on Table A annexed hereto.

Highlights (in R$ million)

2016
Restated

2017

Chg.





Net Revenues

1,393

1,365

-2.0%

Growth




Operating Costs

879

843

-4.1%

 % of Net Revenues

63%

62%


Net Income

(361)

52

114.5%

 % of Net Revenues

-26%

4%


CAPEX (1)

120

144

19.7%

 % of Net Revenues

9%

11%










Adjusted Operating Costs (2)

883

817

-7.4%

 % of Net Revenues

63%

60%


Adjusted Operating Expenses (2)

125

134

7.4%

 % of Net Revenues

9%

10%


Adjusted EBITDA (2)

386

414

7.3%

 % of Net Revenues

28%

30%










Adjusted EBITDA - CAPEX

266

270

1.7%

 % of Net Revenues

19%

20%






(1) CAPEX is Acquisition of PP&E as stated in Cash Flows excluding Advances to Suppliers and including Capital contribution in subsidiaries

(2) Adjustments detailed in Table A of Annex

 "Business performance in 2017 remained solid with Adjusted EBITDA growing 7 percent," Estre Chief Executive Officer Sergio Pedreiro noted. "This result was achieved despite a modest decrease in net revenues compared with the prior year.  Growth in our strategic landfill operations and higher sales to commercial and industrial clients were more than offset by weaker sales to a less active oil-and-gas industry in Brazil."

"Estre is well positioned to succeed as a leading full-service company in the waste management industry in Brazil, Pedreiro said. "It is our commitment to execute against that opportunity and leverage our leadership position more aggressively.  There is a long runway of underserved demand, and we are uniquely positioned to service that demand through our culture of compliance, our full-service offerings, our operational excellence, and our enhanced capital structure."

FISCAL YEAR 2017 RESULTS

Revenues by Segment

(1) Considers Elimination of intersegment transactions entered into the ordinary course of the business R$84 million (in 2016) and R$102 million (in2017)

Net Revenues (in R$ million)

2016 Restated

2017

Chg.

Collection & Cleaning Services

922

929

0.7%

Public

843

831

-1.5%

C&I

79

98

24.2%

Landfills

450

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