Even Construtora e Incorporadora (EVEN3) Q2 2024 earnings summary

Executive summary

• Results were presented on a deconsolidated basis after loss of control of Melnick in May; the South segment was reported as discontinued operations, with activity focused on São Paulo.

• Net sales were R$486m, with sales velocity of 19%; inventory sales of R$322m were the highest quarterly volume since 2020.

• Net revenue reached R$923m, up 78% YoY; gross profit was R$190m, up 73%, with a 26.8% adjusted gross margin.

• Consolidated net income was R$101.9m; reported income excluding Melnick was R$114m, including a R$42m SCP minority-interest effect, and adjusted income excluding that effect was R$73m.

• Faena São Paulo’s first phase launched with R$1.1bn PSV and 45% sold, including swaps.

Financial highlights

• Annualized ROE was 16.9% on an adjusted basis, up from 8.1% in 2Q23; São Paulo operation ROE was 26.6%.

• Adjusted EBITDA was R$151m, with a 16.4% margin.

• Consolidated net income was R$101.9m versus R$75.9m YoY; H1 net income was R$165.6m versus R$151.1m on re-presented prior-year figures.

• H1 consolidated revenue was R$1.327bn versus R$842.7m re-presented; gross profit was R$296.7m versus R$197.0m.

• Net debt was R$805.2m, with net debt/equity of 40.1%; cash and securities totaled R$628.4m at quarter-end.

Outlook and guidance

• Launches to be assessed selectively, prioritizing operating capacity and high-value opportunities in São Paulo.

• First high-end projects with RFM in Jardins were planned for 2024; the partnership was expected to contribute R$400m PSV annually, ~25% of future launches.

• High delivery volume expected over the next 12 months, with R$2.7bn PSV; profitability and margin improvement expected to continue into 2025.

• Dividend policy targets payout of 50% of profit, with potential additional dividends depending on Melnick sales and cash position.