Dexco (DXCO3) Q3 2024 earnings summary

Executive summary

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

• Adjusted and Recurring EBITDA (pro forma, including LD Celulose) reached R$676.7 million in 3Q24, up 47% year-over-year; YTD figure was R$1,791.8 million, up 24%.

• LD Celulose delivered record operational results, with adjusted EBITDA of R$443.0 million (margin 60.5%) in 3Q24, contributing significantly to consolidated EBITDA.

• The company announced the exit from the electric showers and faucets business, selling the operation to Zagonel S.A., as part of its portfolio optimization strategy.

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

Financial highlights

• Consolidated net revenue: R$2.24 billion in 3Q24 (+26.6% YoY); R$6.17 billion in 9M24 (+13.5% YoY).

• Adjusted and recurring EBITDA: R$459.9 million in 3Q24 (+59.7% YoY); R$1.28 billion in 9M24 (+29.3% YoY).

• Net income for 3Q24 was R$92.6 million, down 69.5% year-over-year due to non-recurring items and higher financial expenses.

• Net debt at quarter-end was R$5,214.7 million, up 10.8% year-over-year; net debt/EBITDA (LTM) improved to 3.10x from 3.47x.

• Sustaining free cash flow YTD was R$146 million, up 37.1% from the prior year, despite higher investments in projects and reforestation.

Outlook and guidance

• The company remains focused on maximizing operational profitability, completing the 2021-2025 investment cycle, and improving 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 pressured by inflation, high interest rates, and construction cost increases, which may slow consumption and investment.