Dexco (DXCO3) Q3 2024 earnings summary

Executive summary

• Net revenue for 3Q24 rose 26.6% year-over-year to R$2,239.1 million, driven by strong Wood and Metals & Sanitary Ware divisions and improved product mix.

• Adjusted and recurring EBITDA for 3Q24 was R$459.9 million (margin 20.5%), up 59.7% year-over-year; pro forma including LD Celulose, EBITDA was R$676.7 million.

• LD Celulose delivered record results, with 3Q24 recurring EBITDA of R$443 million (margin 60.5%), and Dexco's share at R$216.9 million.

• The company exited the electric showers and faucets business, selling the operation to Zagonel S.A., while retaining the Hydra brand.

• CEO succession was announced, with a structured transition planned through April 2025.

Financial highlights

• 3Q24 consolidated net revenue: R$2,239.1 million (+26.6% YoY); 9M24: R$6,170.5 million (+13.5% YoY).

• Adjusted and recurring EBITDA: R$459.9 million in 3Q24 (+59.7% YoY), R$1,278.1 million in 9M24 (+29.3% YoY); pro forma 9M24 EBITDA including LD Celulose: R$1,791.8 million (+24%).

• Sustaining free cash flow for 9M24: R$146 million (+37.1% YoY).

• Net income for 3Q24: R$92.6 million (-69.5% YoY); recurring net income: R$125.1 million (+32% YoY).

• Gross margin (pro forma): 32.6% in 3Q24; adjusted and recurring EBITDA margin (pro forma) was 30.2%.

Outlook and guidance

• The company remains focused on maximizing profitability, completing its 2021-2025 investment cycle, and optimizing leverage.

• Wood panel market outlook remains strong, with high factory occupancy and healthy demand expected to continue.

• New ceramic tiles factory in Botucatu to begin operations in 2025, supporting future growth.

• LD Celulose dividend payments to shareholders are scheduled to begin in 2026, with potential for acceleration if performance remains strong.

• Market conditions remain challenging for Tiles, but Wood and Metals & Sanitary Ware divisions are expected to sustain strong performance.