• Adjusted EBITDA for Recurring Income: 62% for specific units like malls.

• Consolidated Sales: Remained at double-digit levels.

• RevPAR Growth: Above 23% average in hospitality and gastronomy.

• Aircraft Movement Growth: 41% increase in airport activities.

• Fuel Filling Growth: 75% increase in liters filled.

• Adjusted EBITDA for Rental Houses: 191% increase.

• Assets Under Management: BRL1.7 billion for JHSF Capital.

• Revenue from Malls: 16% increase in sales.

• Same-Store Sales Growth: 7% increase.

• Gross Margin: 74% for the second quarter.

• Adjusted EBITDA Margin: 76% with an 85% increase.

• Average Daily Rate Growth: 11% in hospitality.

• Gross Revenue in Gastronomy: 11% increase, reaching BRL33 million.

• Adjusted EBITDA for Airport: 71% increase with a 64% margin.

• Residential Rental Growth: 185% increase with an 88% gross margin.

• Contracted Sales Growth: 25% increase, reaching BRL275 million.

• Gross Revenue for Real Estate Development: 80% increase.

• Adjusted EBITDA for Real Estate Development: 12% increase.

• Consolidated Gross Revenue: BRL436 million, 4% increase.

• Adjusted EBITDA: BRL200 million, 27% growth year over year.

• Net Profit: BRL168 million, 6% growth year over year.

• Net Debt to Adjusted EBITDA Ratio: 1.56 times.

• Warning! GuruFocus has detected 6 Warning Signs with BSP:JHSF3.

Release Date: August 15, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• JHSF Participacoes SA (BSP:JHSF3) reported solid consolidated growth across its business segments, with significant margin improvements despite a challenging macroeconomic environment.

• The company achieved a 62% adjusted EBITDA for recurring income, highlighting strong performance in its mall operations.

• The hospitality and gastronomy segment saw a 23% increase in RevPAR and the successful opening of the Surf Lodge in the Boa Vista complex.

• The airport segment experienced a 41% increase in aircraft movements and a 75% rise in fuel sales, with the successful third edition of the Catarina Aviation Show.

• JHSF Capital reported an increase in assets under management, reaching BRL1.7 billion, and successfully issued a BRL700 million CRI under favorable conditions.

Negative Points

• The company faces challenges from the macroeconomic environment, which could impact future projections and growth.

• Despite growth, the hospitality and gastronomy segment operates with lower margins compared to other segments due to its asset-light business model.

• The real estate development unit reported a 12% increase in adjusted EBITDA, which may be seen as modest compared to other segments.

• The company is still in the ramp-up phase for its airport operations, indicating that full potential and returns are yet to be realized.

• There is a need for ongoing capital recycling and focus on high-end assets, which may require strategic divestments and investments.

Q & A Highlights

Q: How is JHSF's strategy regarding the mall platform and its investment? Has it reached the ideal level, or is there more to come? How does this relate to the strategy of recurring income? A: Augusto Martins Junior, CEO, explained that JHSF is focusing on capital recycling and high-end target assets. The company will continue investing in high-end malls like Faria Lima Mall and the Reserva center at Boa Vista Village, aligning with their strategy for recurring income and client lifestyle.

Q: Can you explain the positive tax impact this quarter? A: Breno Perez Vicente, CFO, clarified that the positive tax impact was due to a lower credit of tax liabilities for this quarter, which was a specific occurrence.

Q: What is the long-term outlook for the airport business, and is there any global benchmark JHSF models after? A: Mara Boaventura Dias, Chief IR Officer, stated that JHSF models its airport business after exclusive executive aviation airports in New York, London, and Paris. The Catarina airport is positioned as a high-quality service provider, and there is still room for growth, especially with the expansion of hangars.

Q: Does JHSF have an open buyback program, and how does it view net debt in relation to buybacks? A: Breno Perez Vicente, CFO, confirmed that JHSF has an open buyback program with about 9 million shares available monthly. The company maintains a healthy leverage level and is focused on reducing rates and leveraging opportunities.

Q: What are JHSF's plans for international expansion in hospitality and gastronomy, and how do they plan to improve margins? A: Augusto Martins Junior, CEO, mentioned that JHSF plans to expand internationally with new Fasano hotels in Miami and London. The company focuses on asset-light business models, which typically have lower margins, but JHSF's margins are higher than the industry average.

Q: How does JHSF plan to address the amortization program for 2025, and what are the alternatives? A: Augusto Martins Junior, CEO, stated that JHSF is exploring alternatives for 2025, focusing on extending duration and reducing costs. The company aims to maintain healthy leverage levels and improve its capital structure.

Q: What are the next projects like Braganca, and is there any forecast for them? A: Augusto Martins Junior, CEO, indicated that JHSF is progressing with the Fazenda Santa Helena project in the Braganca region, aiming to create a new development hub similar to Boa Vista.

Q: How does JHSF view the sustainability achievements, and what are the future goals? A: Augusto Martins Junior, CEO, highlighted the LEED certification for Catarina Fashion Outlet and the sustainable airports program. JHSF aims to continue its sustainability efforts, including the Catarina Carbon Free initiative to neutralize aviation kerosene emissions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.