Construtora Tenda (TEND3) Q2 2017 earnings summary

Executive summary

• Record sales under the new model rose 20.9% YoY; launches increased 7.6% YoY and 50% QoQ, with a 29.3% net sales margin.

• Strong operating performance and transfers supported BRL 63m of Q2 cash generation; land bank reached BRL 5.1bn, up 13%.

Financial highlights

• Net revenue grew 20.7% YoY and adjusted EBITDA increased 40.4% YoY in Q2.

• Q2 net income rose 141.3% YoY to BRL 20.8m; H1 net income nearly tripled to BRL 39.7m from BRL 13.4m.

• Cash generation was BRL 63m in Q2; transfers increased 37% YoY.

Outlook and guidance

• Management expects cancellations to return to stable operating levels in H2 2017 after the unilateral-cancellation review.

• Cash generation is expected to remain positive at a smoother pace; land acquisition outlays were expected to reach BRL 45m–50m by mid-2018.

• Management projected margins slightly above 30% in the current scenario, while noting near-term REF margin is not a reliable long-term indicator.

• Curitiba launches were expected by year-end or early 2018; three additional markets were under review for potential expansion in 2019.