Nexa Resources S.A.(NEXA) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net revenues reached $764 million, an 8% increase sequentially and year-over-year, driven by higher zinc prices and stronger operational performance [13][19] - Adjusted EBITDA was $186 million, a 16% increase from the last quarter and a 2% increase year-over-year, with a healthy margin of 24% [13] - Net income was $100 million, or $0.52 per share, with free cash flow of $52 million, up from the previous quarter [6][18] Business Line Data and Key Metrics Changes - Mining production reached 84,000 tons of zinc, a 14% increase from the second quarter, primarily due to a record quarter at Aripuanã [5][6] - Smelting segment sales were 150,000 tons, reflecting a 3% sequential increase, with net revenues of $541 million and adjusted EBITDA of $23 million [10][11] Market Data and Key Metrics Changes - LME zinc prices trended higher, closing September at around $3,010 per ton, supported by low exchange inventories and a weaker U.S. dollar [19] - Copper prices remained around $10,300 per ton, driven by strong fundamentals and demand from electrification and infrastructure spending [20] Company Strategy and Development Direction - The company is focused on five strategic catalysts to strengthen its competitive position, including the Aripuanã project and the Cerro Pasco Integration Project [4][5] - The growth strategy involves evaluating opportunities in mining-friendly jurisdictions, with a commitment to disciplined capital allocation [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full production capacity at Aripuanã by the second half of 2026, with ongoing improvements in operational stability [9][26] - The company anticipates a positive contribution from working capital in the fourth quarter, aiming for a neutral cash flow impact for the year [39] Other Important Information - The company reaffirmed its $347 million CapEx guidance for 2025, with a focus on sustaining activities and strategic projects [14][15] - The company received recognition for its ESG efforts, including a seal of excellence in gender equity and progress in reducing emissions [24] Q&A Session Summary Question: What is the expected leverage level and strategies for reducing gross debt? - Management aims to reduce gross debt by $500 to $600 million over the next four years, targeting net leverage closer to one time for greater flexibility [30][32] Question: What are the next steps for the installation of the fourth filter at Aripuanã? - The fourth filter has arrived in Brazil, with commissioning expected to start in April next year, allowing for full production capacity by mid-2026 [36][37] Question: How flexible is the CapEx for 2026 in light of potential lower zinc prices? - The company has some flexibility in CapEx, particularly in sustaining and discretionary projects, while maintaining a conservative approach to budgeting for zinc prices [44][46] Question: What is the current status of workforce turnover at Aripuanã? - Turnover has improved to 18-20%, down from previous highs, with ongoing efforts to enhance retention through community development and employee programs [50][53] Question: What is the outlook for silver production given the current market conditions? - Silver production is constrained by existing mining plans, but a silver streaming agreement may provide additional cash flow in 2026 as production thresholds are reached [60][61]