Dexco (DXCO3) Q2 2024 earnings summary

Executive summary

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

• 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$818.4 million, up 16.8% year-over-year.

• LD Celulose delivered record quarterly EBITDA of R$376.3 million (55.9% margin), with Dexco's share at R$184.1 million; net income was negatively impacted by non-cash deferred tax effects.

• Recurring net income for 2Q24 was R$126.3 million, up 41.2% year-over-year, though reported net income fell 40% due to 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 1H24 was R$59.4 million, down 80.9% year-over-year, mainly due to deferred tax and exchange rate effects.

• Net debt at quarter-end was R$5,224.2 million, up 14.5% year-over-year, with leverage at 3.46x Net Debt/EBITDA.

• Free sustaining cash flow for 2Q24 was R$36.2 million, supported by working capital generation.

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.