Nexa Resources S.A. (NYSE:NEXA) Q3 2023 Earnings Conference Call October 31, 2023 9:00 AM ET

Company Participants

Rodrigo Cammarosano - Head of Treasury and Investor Relations

Ignacio Rosado - President and Chief Executive Officer

Jose Carlos - Senior Vice President of Finance and Group Chief Financial Officer

Conference Call Participants

Operator

Good morning and welcome to Nexa Resources Third Quarter 2023 Conference Call. All participants will be in a listen-only mode. This event is being recorded and is also being broadcast via webcast and may be accessed through Nexa's Investor Relations website where the presentation is also available. [Operator Instructions]

I would now like to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations for opening remarks. Please go ahead.

Rodrigo Cammarosano

Good morning, everyone, and welcome to Nexa Resources' third quarter 2023 earnings conference call. Thanks for joining us today. During the call, we will be discussing the company's performance as per the earnings release that we issued yesterday. We encourage you to follow along with this onscreen presentation through the webcast.

Before we begin, I would like to draw your attention to slide 2, as we will be making forward-looking statements about our business. And we just ask that you refer to the disclaimer and the conditions surrounding those statements.

It is now my pleasure to introduce our speakers. Joining us today is our CEO, Ignacio Rosado; our CFO, Jose Carlos del Valle; and our Senior Vice President of Mining, Leonardo Coelho.

So now I will turn the call over to Ignacio for his comments. Ignacio, please go ahead.

Ignacio Rosado

Thank you, Rodrigo and thanks to everyone for joining us this morning. Please let's move now to slide 3 where we will begin our presentation. Let me start by providing you a brief overview on our third quarter of 2023. We continue to experience a scenario of downward pressure on metal prices driven by negative external factors such as inflation and high interest rates in the US in addition to uncertainty about the performance of key sectors of the Chinese economy. Although the prices of our main metals have performed at levels below our expectations, we remain committed to our financial discipline which made possible to have a positive cash generation in the third quarter of this year.

Our operating performance was in line with expectations in our mining and smelting segments in both segments. We also provided cash cost guidance revised downwards. Total revenue reached $649 million and was down 8% year-over-year, mainly due to lower Zinc LME prices and smelting sales volumes. Compared to the last quarter, net revenues increased by 4% as a result of higher mining production and metal sales volume in the period, which were partially offset by lower LME metal prices. Consolidated adjusted EBITDA for the quarter decreased by 32% year-over-year, reaching $82 million. This performance was mainly explained by lower LME prices. Compared to the second quarter of this year, adjusted EBITDA grew 14% due to higher metal sales, mine production and lower costs in Brazil. We revised the Aripuanã production range downwards for the year, given the limitations we found related to the design capacity of the flotation pumping system, which resulted in the extension of the ramp up phase.