Dexco (DXCO3) Q2 2024 earnings summary

Executive summary

• Adjusted and recurring EBITDA (pro forma, including LD Celulose) reached R$560.6 million in 2Q24, up 12.1% year-over-year, with a margin of 28.1%.

• First half adjusted and recurring EBITDA reached R$1,115 million, up 17% from 2023, with LD Celulose posting its best operating results since startup.

• Net revenue rose 2.1% year-over-year to R$1,995.4 million in 2Q24, driven by strong Wood and Metals & Sanitary Ware performance, offsetting challenges in Tiles.

• Free sustaining cash flow was R$36.2 million, supported by working capital generation despite higher capex for reforestation.

• Recurring net income increased 41.2% year-over-year to R$126.3 million, though reported net income fell 40% due to non-cash deferred tax effects.

Financial highlights

• Consolidated net revenue for 1H24 was R$3,931.4 million, up 7.2% year-over-year.

• Adjusted and recurring EBITDA for 2Q24 was R$376.5 million (18.9% margin), up 7.7% year-over-year.

• Net income for 2Q24 was R$94.5 million, down 40% year-over-year; recurring net income was R$126.3 million, up 41.2%.

• Net debt increased to R$5,224.2 million, with leverage at 3.46x Net Debt/EBITDA.

• Market cap at quarter-end was R$5,302.9 million; share price fell 21.4% YTD.

Outlook and guidance

• Management expects local and global fiscal uncertainties to limit growth, with interest rate cuts likely paused.

• CapEx guidance for 2024 is R$1.1–1.2 billion, with normalization expected after 2025.

• Focus remains on maximizing profitability, cost control, and capturing value from 2021-2025 Cycle projects.

• High wood prices expected to persist, providing a competitive edge.

• LD Celulose expected to maintain strong operating results and price increases.