Sequoia Logística e Transportes S A : Release 3T22 English

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Earnings

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October 19th, 2022

(Wednesday)

9h BRT

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English

(Simultaneous Translation)

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B3:SEQL3

R$ 5.72

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(10/17/2022)

140,270,473

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RELEASE 3Q22

3Q22

3Q22 EARNINGS RELEASE

São Paulo, October 18, 2022 - Sequoia Logística e Transportes S.A. ("Sequoia" or "Company"; B3: SEQL3), a leader in e-commerce and technology logistics operations, announces its results for the third quarter of 2022 ("3Q22"). All numbers are compared to the same period of the previous year, unless specified.

As of 2022, the Company will no longer adjust Gross Profit and EBITDA for the effects of IFRS 16. To better represent the business' economic reality, Net Income will be presented excluding the amortization of intangibles generated in the acquisitions (" Ex Intangibles"). The reconciliation of Net Profit is presented on page 12 and the impacts related to IFRS 16 in the EBITDA on page 11.

3Q22 HIGHLIGHTS

• Number of Orders reached 20.8 million, an increase of 65.1% growth. Strong B2C growth with 19.2 million orders, up by 72.0%.
• Gross Revenue of R$ 538.2 million, organic growth of 20.7%.
• B2C Gross Revenue of R$ 343.6. million, an increase of 30.7%.
• EBITDA reaches R$ 67.4 million, up by 19.8%. EBITDA margin reaches 14.9% (-0.1 p.p.)
• ROIC reaches 44.3% (+11.9 p.p.).

*Thousand, unless otherwise indicated
Destaques	2T22	2T21		6M22	6M21
B2C	19.2	11.1	72.0%	56.6	30.4	86.4%
B2B	1.6	1.5	12.4%	4.6	4.0	14.7%
Quantity of Orders	20.8	12.6	65.1%	61.3	34.4	78.0%
B2C	343.6	262.9	30.7%	1,104.2	749.9	47.2%
B2B	148.0	136.9	8.1%	427.1	385.5	10.8%
Logistics	46.6	46.1	1.1%	140.0	134.3	4.2%
Gross Revenue	538.2	445.9	20.7%	1,671.3	1,269.7	31.6%
Net Revenue	453.1	374.2	21.1%	1,398.7	1,069.5	30.8%
Gross Profit	85.6	71.5	19.7%	257.3	191.0	34.7%
Gross Margin	18.9%	19.1%	-0.2 pp	18.4%	17.9%	0.5 pp
EBITDA	67.4	56.2	19.8%	181.6	125.0	45.3%
EBITDA Margin	14.9%	15.0%	-0.1 pp	13.0%	11.7%	1.3 pp
Adjusted EBITDA¹	67.7	57.8	17.2%	176.1	134.6	30.8%
Adjusted EBITDA Margin	15.0%	15.4%	-0.4 pp	12.6%	12.6%	0.0 pp
Adjusted Net Profit²	8.6	17.1	-50.0%	8.1	31.0	-73.9%
Adjusted Net Margin	1.9%	4.6%	-2.7 pp	0.6%	2.9%	-2.3 pp
ROIC³	44.3%	32.4%	11.9 pp	-	-	0.0 pp
1 Excludes non-recurring expenses with: (i) mergers and acquisitions; and (ii) other income/expenses.
2 Excludes intangible amortization from acquisitions and non-recurring expenses.
3 Sum of Adjusted EBTIDA LTM plus Depreciation LTM, multiplied by (1 - Income Tax Rate) divided by Residual Value + Working Capital (The Income Tax and Social
Contribution Rate used to calculate the ROIC was 34% ).

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3Q22

MESSAGE FROM MANAGEMENT

B2C reaches 19.2 million Orders and grows by 72%.

The 3Q22 maintained the strong trend observed in previous quarters with Orders totaling 20.8 million, up by 65.1% year-over-year and in line with the historical mark recorded in 2Q22. Total Gross Revenue grew by 20.7%, 100% of which was organic, to R$538.2 million.

At the same time that the number of Orders strongly grew, the average ticket of the B2C and B2B segments fell year-over-year and quarter-over-quarter, in line with the growing volume trend of light items (up to 3 kg) in the B2C segment and the downturn of heavier and higher value-added items in the B2C and B2B segments. This trend increased in 3Q22 and reflects the lower market demand for higher value-added products.

The B2C segment, boosted by light items (up to 3 kg) and lower GMV (Gross Merchandise Value) categories, maintained the historical mark of Orders reached in 2Q22, reaching 19.2 million Orders, up by 72.0% year-over- year, 100% of which was organic. The Gross Revenue of this segment totaled R$343.6 million in 3Q22, moving up by 30.7% organically. The strong increase reflects the Company's success in seeking new growth drivers allied with its flexible business model that aims to innovate and adapt logistics solutions to different types of customers, despite the slower growth of the e-commerce market in the period and, mainly, the downturn of heavier and higher GMV items.

The slowdown observed in the higher GMV market, that impacted the B2C Heavy and B2B segments, is a consequence of the hike in the interest rates, with a direct impact on consumer credit access, and the downturn in the economy caused by the pandemic. As has been widely reported in the media, the performance of these products in 2022 has shown a reduction in the annual comparison and according to data released by the IBGE (Brazilian Institute of Geography and Statistics), items with higher added value, such as furniture, appliances and electronics, tend to 8.7% drop from pre-pandemic levels.

With this result, the number of Orders grew by 78.0% and Gross Revenue moved up by 31.6% (27.3% organic) in the first nine months of 2022. Despite the challenges faced in 2022, we are confident in delivering a strong result and maintaining positive prospects for the coming years, when we will continue to explore the important growth drivers that we have been building through an integrated model between the B2C and B2B segments, with innovative solutions that will generate great benefits for our customers (large shippers), e-commerce, and small- and medium-sized sellers.

Gross Margin reaches 18.9%, contributing to the maintenance of the EBITDA margin.

The Gross Profit grew by 19.7% year-over-year in 3Q22, reaching a gross margin of 18.9%, similar to the figure reported in 3Q21 and 0.7p.p. higher than in 2Q22. Despite the positive impact on the gross margin arising from the strong volume growth in the Light items category in the B2C segment, the Heavy items category in the B2C and B2B segments has been impacted by lower market demand for higher value-added products, which has mitigated part of the positive effects achieved.

Given this macroeconomic scenario and understanding that the recovery of higher value-added items can take between 18 to 24 months, the Company has made adjustments to its service structure in the Heavy items and B2B segments targeting satisfactory profitability levels, through efficiency improvements, adjust the structure to a lower volume, and close loss-making contribution margin routes. We maintain our positive outlook for these segments, been the adjustments in the operation aimed at seeking a better balance in the short term in the face of macroeconomic challenges.

In 3Q22, EBITDA increased by 19.8%, to R$67.4 million, with a margin of 14.9%, in line with 3Q21. In 9M22, the EBITDA margin increased by 1.3 p.p., while the EBITDA margin adjusted for non-recurring effects remained at 12.6%, the same level reached in 3Q21.

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3Q22

SFx, the best multi-origin pickup solution, maintains strong growth and reaches 13 million Orders

SFx, our multi-origin digital pickup solution, continues recording strong growth with 13 million Orders in the quarter. The platform continues to grow and now serves 27,000 pickup points (vs. 22,000 in 2Q22) in 644 cities. Currently, the platform mainly serves SMBs (small- and medium-sized businesses) that offer their products in large marketplaces, and SFx's integration with the other solutions that make up the Company's digital ecosystem (Frenet, Drops, and Lincros) will be increasingly essential to the greater penetration of this solution in the direct sales market of small- and medium-sized businesses (SMBs), which represent great potential for Sequoia and are currently mainly served by post offices.

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3Q22

OPERATING REVENUE

Our activities are segmented into three categories: (i) B2C (business to consumer) transport, (ii) B2B (business to business) transport and (iii) Logistics services.

Gross Revenue by Segment

*thousand
	3Q22	3Q21		9M22	9M21
B2C	343,600	262,900	30.7%	1,104,200	749,900	47.2%
B2B	148,000	136,900	8.1%	427,100	385,500	10.8%
Logistics	46,600	46,140	1.0%	140,000	134,300	4.2%
Gross Operating Revenue	538,200	445,941	20.7%	1,671,300	1,269,700	31.6%
Taxes levied	(85,132)	(71,774)	18.6%	(272,600)	(200,200)	36.2%
% Gross Revenue	15.8%	16.1%	-0.3 p.p.	16.3%	15.8%	0.5 p.p.
Net Operating Revenue	453,068	374,167	21.1%	1,398,700	1,069,500	30.8%

In 3Q22, the Company's Gross Revenue totaled R$ 538.2 million, an increase of 20.7%. In 9M22, Gross Revenue reached R$ 1,671.3 million, an increase of 31.6% compared to 9M21. We highlight the expansion of B2C Gross Revenue, which grew by 30.7% in 3Q22 and 47.2% in 9M22. In 3Q22, B2C Light goods (packages weighing less than 3 kg) showed strong growth, while, due to macroeconomic scenario, B2C heavy goods and B2B segments (white and brown goods, and larger electronics) has shown a slowdown over the last quarters and low growth in the YoY comparison.

Taxes on Gross Revenue totaled R$ 85.1 million in the quarter, representing a decrease of 0.3 p.p. in the ratio of Taxes on Gross Revenue versus the same period of the previous year, as a result of the mix of States in the transport services that have different ICMS tax rates, considering the origin and destination of the packages. In 9M22, taxes totaled R$ 272.6 million, showing a growth of 0.5 p.p. percentage in relation to gross revenue in the YoY comparison.

Gross Revenue (R$ million)

2000.00											1,671
							1,270
1500.00			539	538	595	538
1000.00	446
500.00
-
	3Q21	4Q21	1Q22	2Q22	3Q22		9M21	9M22

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