Good morning, everyone, and thank you for waiting. Welcome to Aeris Earnings Conference Call for the Q3 of 2024. Here with us today are Alexandre Negrão, CEO, and José Azevedo, CFO and Investor Relations Officer. This event is being recorded, and all participants will be in a listen-only mode during Aeris' presentation. After that, there will be a Q&A session when further instructions will be given. Should any participant need assistance during this call, please send a message using the chat on the right side of the screen. Before proceeding, let me mention that statements made in this call regarding the business outlook of the company, operational and financial projections, and goals are based on the beliefs and assumptions of Aeris Management. Forward-looking statements are not a guarantee of performance.
They involve risks and uncertainties because they refer to future events and therefore depend on circumstances that may or may not occur. Macroeconomic conditions, industry conditions, and other factors could also cause results to differ materially from those expressed in such forward-looking statements. Now, I will turn the conference over. We start with highlights for operational performance. Then we go into the results of the quarter, followed by Q&A and the final remarks to wrap up. Now, I would like to turn the conference over to Mr. Alexandre Negrão. Mr. Negrão, you may continue.
Thank you, Aeris. Good morning, everyone. Welcome to another earnings release call. I would like to enter into the highlights for the quarter on slide four. We mention the highlights of our services area. As we have said during the year, we have a ramp-up of two new lines that started in July going into August, and the resumption of exports that are still low in this quarter, but they will grow. Now, speaking of services, I think the main highlight is that the composition of services, the service revenues accounting for 15% of the total revenues of the company. Of course, despite the drop in the revenues, the main point is that in the last five years, we've seen a high growth in the area of services, and then we'll have more details about that by Azevedo, so the important is the solid and continuous growth that we see in our services area. About the ramp-up, we are now in the ramp-up of Vestas line, as announced last year. It's going very well. It's above our expectations. A ramp-up is always a complicated phase in terms of operational expenses and working capital.
The company suffers economically and financially speaking, but we are performing above our internal expectations, so this has been a pleasant surprise, and of course, all the work we have done internally to get ready for this ramp-up. Also, the resumption of exports. We believe that the international market will continue to guide the company in coming years, and after a year and a half, we were focused for a year and a half in the domestic market, and now we are resuming exports. Now, moving on to slide number five. We have less than 12 months delivery, 2.2 giga, and a backlog of 10.8 giga. Now, moving on to the next slide. Our mix of turbines has changed a bit with an average power of 4.9 mega. As far as slide seven, no major comment about it. Only the two gray lines that are the two new lines, the non-mature production lines. We expect them to be mature in the beginning of the Q2 of 2025. This is our expectation for these two gray lines to be stable. Now, moving on to slide eight, I turn the floor over to our CFO.
Thank you, Alexandre. Starting on slide eight, we summarize the main numbers and explain in more detail in the following slides. In the Q3 of 2024, we had a revenue of BRL 367.4 million and an EBITDA of BRL 27.4 million with a margin of 7.5%. Investments amounted to BRL 29.4 million as expected, and we had a net loss of BRL 56.7 million, basically impacted by financial expenses. On the next slide, we show a reduction of 13% in revenue in the quarter due to the decommissioning of two lines, as mentioned in the last quarter, and also impacted by the ramp-up of two new lines, as well as the postponement of some orders by existing customers. Looking by segment, it's worth highlighting the return of production for exports, which, despite the low volume, is a sign of recovery with good future prospects. We must comment on the performance of our services branch, which is a segment that has been growing well since 2019 with a CAGR of 47%, allowing us to diversify our revenue. Moving to slide 10, our EBITDA was BRL 27.4 million with a margin of 7.5%.
Comparing to the last quarter, there is a significant difference, but it's worth noting that the last quarter, we had some one-offs such as the ramp-up fee for new lines. Furthermore, this quarter, we started production in two new lines and continued with the company's right-sizing process, both of which led us to incur extra cost as planned. Now, talking about investments on slide 12, we invested BRL 29.4 million in this quarter, and almost one-third of this amount is related to the ramp-up of the two new lines, and the rest is maintenance. Moving to slide 13, we show the evolution of inventories. There was a reduction of BRL 45.5 million in raw materials and BRL 3.2 million in work in progress and finished goods. We stand firm in readjusting our working capital to the company's current reality with a focus on cash, obviously. In order to wrap up, on slide 14, we show a summary of our capital structure. We closed the period with cash of BRL 881 million, enough to cover short-term obligations. In terms of leverage, we ended the Q3 with 3.2 times net debt over EBITDA.
We reached the end of the presentation, so let's open for the Q&A session. Thank you very much. Ladies and gentlemen, we'll now start the Q&A session. If you want to ask a question, please use the chat located on the right side of the screen. Should you prefer to join the conference call and ask a question using your microphone, please request the audio link using the chat. Our first question comes from Arthur.
Considering that Aeris is consistently growing but with declining new contracts, wouldn't it be the moment to consider strategic diversification in addition to services and blades?
Good morning, Arthur. Thank you for the question. Yes, we've been looking at other industries. We are studying new products as well as diversification in services. Within Aeris, we have Aeris Tooling that manufactures tooling specific for customers and for the plant, and we are also restructuring this area so that we can have higher sales potential. It is still a small area within the company, but we believe that it could be an area with significant growth. Certainly, the highest growth or the highest growth potential in the next two or three years comes from services. Although we may start manufacturing a new product or a new business, there is a ramp-up for that to get the business mature, so services will help us during this more difficult period of sales of blades in the market.
This is why we are improving our services, widening the range of services offered. We are structuring this area in a more consistent way, increasing market penetration. Today, we send market quotes not only to Brazil and the United States, but Argentina, Mexico, Chile, Colombia, Guatemala, so we are opening the markets, and we want to have a strong source of revenue in US dollars and also spread to other countries as well as different products available, so there are things in our pipeline that we intend to launch in the next five years that are new products that we'll bring and manufacture in the next five years. But in the next two years, the source of revenue that will be most significant is the services in the format that we are structuring now.
Next question from Ramon.
Good morning, Aeris. Congratulations on the resilience and results. I would like to understand what do you envisage for the advancement of renewable energy in the United States given the election of Trump?
Good morning, Ramon. Thank you for the question. About Trump's election, we particularly see it as positive. First, because in our opinion, it consolidates a closing of frontiers with China. So we're likely to see more tariff barriers regarding Chinese products, and we know that Chinese products are a strong competitor when we talk about exports. So the first positive aspect is that. The second aspect that we find positive is that we believe there should be a drop in interest rates and more rapid growth in the economy, which also improves the need for wind energy, wind power. The third point that is positive is that although he is not declared to be in favor of wind energy, the programs that are in place.
You need Congress approval to dismantle or to cancel. And these are programs that positively affect Republican states such as Texas. So I think that a change in the rules of wind energy in the U.S. would cause the Republican state to be affected. So in addition to need the Congress to do to change that program, which is not easy, the Republican states would be negatively affected. So in the near future, Trump decreases incentives. What we'll see is what we saw in 2018 and 2018, which is a quick run to increase facilities and installations to use the benefits available. Certainly, Trump's election will accelerate the demand in the U.S., something that we would expect for 2027 and 2028. Maybe we'll come in 2025 and 2026 more quickly. So in summary, despite Trump being against benefits for wind energy, we believe that his election was positive for the industry.
Next question comes from Fernando from Galapagos Capital.
I would like to discuss a bit about the EBITDA margin of the company. The high variation in the margin in this Q3 compared to the Q2 is explained only by the ramp-up of plants or also by the increase in blades of 4.5 gig in the mix of the company.
Hi, Fernando. Good morning. How are you? Well, let me explain as if it is speaking. Basically, the difference I gave ramp-up, but in addition to ramp-up, there is the end of contract with the customer. There is also a change in the mix because these are two new lines that are being started, and it is also a little smaller. So this is what causes an impact on the blades. Basically, that's it.
The next question comes from Maria from BTG Pactual.
How does the company plan to benefit from the growing wind market in the United States? Is it necessary to have a local capacity in the country, or could we export? In addition, would you like to comment on the entry of Chinese companies in that market?
Good morning, Maria. As I said previously, we remain optimistic about the US market, and we can even see an acceleration of projects. It is not necessary. The IRA benefit is a bit complex, and it has several parts to it. There are benefits for the owner of the wind farm, for the manufacturer of the wind turbine, as well as manufacturer of components, as we are of blades. So even if we don't manufacture the blade in the United States, our customer, which is the manufacturer of the wind turbine and the customer of our customer, can use the benefit even if we send the blades from Brazil. It's not that our blade needs to be made in the U.S. for our customers to enjoy the benefit. So this causes us to be still competitive exporting from Brazil.
So since we have idle capacity here in Aeris, it makes sense to think about exports before thinking about having a plant in the United States. So it is possible. We are betting on the US market as well as the Latin American market, especially South America, because we believe this can be two drivers for exports in coming years.
The next question comes from Ricardo.
Is there an evolution of offshore projects in Brazil? Is everything waiting for new regulation?
Good morning, Ricardo. We don't have many major news for the offshore markets yet. I believe that soon regulation will be made. Recently, there was a regulation made for the green hydrogen, and I believe that offshore rules will be enacted soon, in the beginning of next year, more precisely. It's a long-term project, but when we think about project for 2030, 2031 to be commissioned, you're thinking about a production that should start around 2027 and 2028 because offshore is a more complex product. So when you talk about 2027, 2028, agreements and contracts have to be made 2025, 2026. So when you start counting it backwards, you're talking about next semester or the beginning of 2026. We'll start to have some in-house movements here to start to supply to that market.
This ends the Q&A session. I would now like to turn the floor to Mr. Alexandre Negrão for his final remarks.
Well, once again, thank you for your presence, for attending the call. I think your message is that we'll continue to adjust our capital structure to the new size of the company. 2024 has been a challenging year, but I believe that our operating margins and all the in-house work that we are doing caused us to perform pretty well above what we expected here. Once again, I would like to congratulate all our employees for the exhaustive work of adjusting the company and adjusting our structure so that we may continue our activities in this market gap. We remain confident, looking not only at the export market, but also looking at the domestic market.
Something we didn't comment on, but I would like to talk about. In this last quarter, we saw a resumption in the order of PLD that was at a standstill for a year and a half, which made it impossible to have new projects. The spot price was too low, and so no new projects were started. Now, in this Q3 , with a higher spot price and the lack of rainfall, the spot price started to increase with the volatility way above what it had in the last months. In addition, we see the government sensitized by the situation of this industry and doing its share so that we're able to have a new wave of demand as we had in Brazil in 2021 and 2022 with new development of projects. So we've been for one year and a half with not a single project sold in Brazil, OEM, and something of a big impact.
So I believe that with the effort of the government, along with the spot prices that are increasing, and we will have new projects negotiated in coming quarters, maybe at the end of this year or beginning of next year. So in the last calls, we have highlighted the external, the international market, but we cannot forget about the domestic market, which will also be a growth driver. Maybe not as strong as it was in 2021 and 2022, but certainly much better than it is now. So we remain confident that new projects will come to Aeris next year. In addition to the maturing of the ramp-up lines, then we'll have a stable production in the future. So that's it. Thank you very much for your trust, for your attention, and I wish you all a great day.
Thank you, Alexandre. The conference call of Aeris has ended. Thank you all for your presence.