Armac Locação Logística e Serviços S A : Dados Econômico-Financeiros

Earnings

Release

2Q 2022

CONFERENCE CALL | August 10th, 2022 | 11:00 BRT | 10:00 NYC

Portuguese | Ph.: [phone] | Webcast | English | Ph.: [phone] | Webcast

Earnings Release 2Q 2022

Barueri, Aug 9th, 2022. ARMAC (Armac Locação, Logística e Serviços S.A. - B3: ARML3) announces today its results for the 2nd quarter of 2022 (2Q22). The Company's parent company and consolidated interim financial statements for the periods ended June 30th, 2022 and 2021 have been prepared in accordance with the accounting practices adopted in Brazil, including the rules issued by the Brazilian Securities Commission (CVM) and the pronouncements issued by the Brazilian Accounting Pronouncements Committee (CPC), and are in conformity with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and provide all the significant information related solely to the interim financial statements, which is consistent with the information used by management. The financial statements were prepared in Reais

HIGHLIGHTS

• FLEET SIZE: 7,522 machines and equipment for rental; addition of 624 units in the quarter (+9.0%).
• CAPEX: R$ 241.0 million in 2Q22, growth of 5.6% and monthly organic CAPEX of R$ 80.3 million.
• GROSS REVENUE: R$ 250.5 million in 2Q22; gross revenue from rental and services of R$ 238.4 million, growth of 15.6% vs. 1Q22 e 203.2% vs. 2Q21.
• ADJUSTED EBITDA: R$ 102.8 million with margin of 48.1% in 2Q22, growth of 167.3% vs. 2Q21 and 17.2% vs. 1Q22.
• ADJUSTED NET INCOME: R$ 30.8 million and margin of 13.7%, growth of 10.3% vs. 1Q22.
• INDEBTEDNESS: cash position of R$ 884.0 million; gross debt of R$ 1,569.9 million; net debt / Adj. EBITDA LTM of 2.10x.

	R$ million		2Q22		1Q22		QoQ			2Q21		YoY
	Rental Fleet Size (# Equipment)	7,522	6,898	9.0%		1,902	295.5%
	CAPEX	241.0	228.3	5.6%		208.1	15.8%
	Gross Revenue	250.5	215.8	16.1%		79.3	216.0%
	Gross Revenue from rental	238.4	206.3	15.6%		78.6	203.2%
	Adjusted EBITDA	102.8	87.7	17.2%		38.4	167.3%
	% net revenue from rental	48.1%	47.2%		+0.9 p.p.		54.2%		-6.1 p.p.
	Adjusted EBIT	71.7	60.6	18.3%		27.2	163.9%
	% net revenue	33.6%	32.6%		+0.9 p.p.		38.3%		-4.8 p.p.
	Cash tax earnings	60.2	53.5	12.3%		23.9	151.9%
	% net revenue	26.6%	27.4%		-0.8 p.p.		33.4%		-6.7 p.p.
	Adjusted Net income	30.8	28.0	10.3%		10.8	185.4%
	% net revenue	13.7%	14.3%		-0.7 p.p.		15.1%		-1.4 p.p.
	Net Debt	686.0	438.0	56.6%		473.8	44.8%
	Net Debt / Adjusted EBITDA LTM		2.10x		1.69x	24.4%			4.71x	(55.5%)
	Adjusted ROIC	28.3%	27.5%		+0.9 p.p.		32.6%		-4.3 p.p.
	Adjusted ROE	19.9%	17.8%		+2.0 p.p.		56.9%		-37.0 p.p.

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Earnings Release 2Q22

MESSAGE FROM MANAGEMENT

Dear Investors and Interested Parties,

In the second quarter, we continued the execution of our business plan and the strategy we have outlined for 2022. Our priority continues to be to mature the organization and strengthen our culture to better serve our customers well and maintain our long-term growth trajectory.

In this quarter, we reached important financial milestones, such as annualized gross revenue of R$ 1.0 billion and quarterly EBITDA above R$ 100 million. These are still modest numbers compared to our ambitions, but they represent a relevant scale in our operating market.

The larger scale contributes to accessing capital at costs that have become a relevant comparative advantage over our competitors. In July/22, we concluded the issuance of our first agribusiness receivables certificate (CRA), of R$ 500 million at DI (Interbank Deposit) + 1.65% and IPCA + 7.58% and maturing in 2029. With the resources, we anticipated in July the settlement of the last debts with a spread higher than 3% of our balance sheet, extending the total duration of our indebtedness, and we will use the remainder to carry out the CAPEX for the second half of the year. The demand for our services remains strong, mainly due to the commitment of our frontline to our customers and a favorable environment in the sectors we serve. Most of the R$ 241 million invested in the quarter have not yet come into operation but are already committed to projects to be implemented in 2022.

In relation to the machinery market, sales are still strong, with prices of new equipment at high levels and some at the margin still suffering increases. We ended this quarter with a fleet that has a gross acquisition value of R$

1.6 billion, which in our view would have a replacement cost at least 60% higher for a new entrant nowadays. This comparative advantage will grow even more with the CAPEX that will be carried out in the coming quarters. It is worth to emphasize that our long-term strategy is not about using this advantage to increase our short-term return, it's about reconciling our target return on capital employed with unbeatable rental prices to reduce our customers' operating costs.

One point we would like to highlight is our customers' growing understanding of the value generated for society when assets are shared and recycled. Eliminating the waste that exists in yellow line machinery value chain due to idleness and pre-mature disposal is our mission and reason for existing. We see a very fertile environment for the growth of our services in the coming decades.

Finally, we would like to thank those who make ARMAC happen daily on the front lines and all our business partners who trust us, whether providing their products or consuming our services.

Thank you!

Fernando Aragão and José Aragão

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Earnings Release 2Q22

RENTAL FLEET AND INVESTMENTS

We ended the second quarter of 2022 with a total rental fleet of 7,522 units, consisting of yellow line machines, platform lifts, forklifts, trucks and power generators. During this period, there was the addition of 624 units, representing a growth of 9.0% in relation to 1Q22 and 295.5% related to 2Q21.

					6,225	6.898	7,522
Number of							YoY
				2,894			+295.5%
machines and
		2,768
equipment for		1,902							QoQ
rental
		356		3,331			+9.0%
			2,412
		2Q21	3Q21		4Q21	1Q22	2Q22
						Organic		Inorganic

Organic CAPEX totaled R$ 241.0 million in 2Q22, with expansion of 5.6% against the previous quarter and representing an average monthly CAPEX of R$ 80.3 million vs. R$ 76.1 million in 1Q22.

R$ million

Acquistion of fixed assets

Financing for the acquisition of fixed assets

PIS/COFINS credits generated on the purchase of PP&E

Purchase of intangible assets

Organic Capex

Monthly CAPEX

2Q22	1Q22	QoQ	2Q21	YoY
228.2	215.7		137.0
-	-		55.9

12.4	12.0			15.1
0.4	0.6			0.1
241.0	228.3	5.6%	208.1	15.8%
80.3	76.1	5.6%	69.4	15.8%

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Earnings Release 2Q22

GROSS REVENUE

In 2Q22, gross revenue reached R$ 250.5 million, a growth of 16.1% compared to 1Q22 and 216.0% related to 2Q21. Gross revenue from rentals reached R$ 238.4 million, growth of 15.6% e 203.2% related to 1Q22 and 2Q21, respectively.

						215.8	250.5	YoY
					185.5	12.1
Gross					9.5	+216.0%
				1.9
	109.7
Revenue
79.3		206.3	238.4	QoQ
(R$mn)	0.4	183.6
	+16.1%
0.7
	109.3
	78.6
	2Q21	3Q21	4Q21		1Q22	2Q22
				Rental & Service		Sale of PP&E

In 2Q22, 62.4% of gross revenue derived from rentals to longstanding-activity sectors, in line with the Company's long-term strategy.

	37.2%					37.6%
Revenue by
	2Q21			2Q22
client class
(%)	62.8%	62.4%
				longstanding-activity sectors	Infrastructure

NET REVENUE

In 2Q22, net revenue reached R$ 225.9 million, growth of 15.6% compared to 1Q22 and 215.5% compared to 2Q21. Net revenue from rentals reached R$ 213.8 million, a growth of 15.0% when compared to 1Q22 and 201.3% to 2Q21.

						195.4	225.9
					167.1	12.1	YoY
					9.5		+215.5%
					2.0
Net Revenue		99.3
(R$mn)					213.8	QoQ
71.6	0.4	165.1	185.9
	0.7				+15.6%
	98.9
	70.9
	2Q21	3Q21	4Q21		1Q22	2Q22
				Rental & Service		Sale of PP&E

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