Construtora Tenda (TEND3) Q2 2024 earnings summary

Executive summary

• Record net pre-sales reached R$1.019 billion, up 34.4% year-over-year, with consolidated adjusted gross profit of R$228.9 million and adjusted gross margin at 29.5%, a 7.1 p.p. improvement year-over-year and 2.6 p.p. sequentially.

• Net income was R$4.5 million (net margin 0.6%), or R$21.8 million excluding equity swap effects; recurring net income in the Tenda segment was R$41.5 million.

• Net debt decreased by R$241.9 million year-over-year; corporate net debt/equity closed at 0%, below covenant limits, removing prior restrictions.

• Alea segment sales quadrupled year-over-year, with SoS above 30% and adjusted gross margin at 9.7%.

• Operational cash generation for the Tenda brand for the 7th consecutive quarter.

Financial highlights

• Adjusted gross margin improved by 7.1 p.p. year-over-year to 29.5%; adjusted EBITDA reached R$91.2 million (margin 11.7%), up 89.6% year-over-year.

• Net income for the period was R$4.5 million, compared to a loss of R$10.5 million in 2Q23.

• Prepaid R$171.4 million of high-cost debt and issued a R$200 million bank credit note at CDI + 1.69%.

• Cash and equivalents plus financial investments totaled R$721.9 million at quarter-end.

• Backlog margin improved to 35.9%, up 4.5 p.p. year-over-year.

Outlook and guidance

• 2024 guidance: Tenda adjusted gross margin between 29.0%–31.0%; Alea between 9.0%–11.0%.

• Net pre-sales guidance: Tenda R$3.2–3.5 billion; Alea R$400–500 million.

• Adjusted EBITDA guidance: Tenda R$375–425 million; Alea R$-50 to -30 million.

• Guidance revision postponed to next quarter due to launch volume below expectations in 1H24.

• Management expects continued improvement in operational and financial indicators, with sector and macro conditions seen as favorable.