Melnick Desenvolvimento Imobiliário (MELK3) Q2 2024 earnings summary

Executive summary

• Severe floods in May 2024 in Rio Grande do Sul caused an atypical quarter, halting launches, closing sales stands, and disrupting construction, which significantly impacted operations and financial results.

• Immediate focus was on humanitarian aid, employee support, and community recovery, followed by resuming operations and reopening sites.

• Recovery in sales and construction was observed by July, with launches and sales rebounding strongly and optimism for future market recovery.

• No project deliveries in Q2; one project delivered in H1 2024 with 96% of units sold.

Financial highlights

• Net revenue for Q2 2024 was R$ 140.8 million, a 42% decrease year-over-year; H1 2024 net revenue was R$ 385.9 million, down 29%.

• Gross profit for Q2 was R$ 5.6 million (margin 8.6%); H1 gross profit was R$ 59.8 million (margin 19.2%).

• Net loss for Q2 was R$ 28.9 million (margin -16.9%); H1 net income was R$ 1.6 million (margin 4.8%).

• Adjusted EBITDA for Q2 was R$ -30.1 million (margin -21%); H1 EBITDA was R$ 2.5 million (margin 0.7%).

• Cash and marketable securities at quarter-end totaled R$ 506.3 million; net cash position was R$ 185.4 million.

• Dividend payments in Q2 2024 totaled R$ 41.4 million, maintaining a recurring dividend policy.

Outlook and guidance

• Launches resumed in Q3 2024, with R$ 283.2 million in PSV and strong sales momentum; year-to-date launches total R$ 806.5 million, up 10% year-over-year.

• Management expects Q3 results to approach pre-flood levels and Q4 to normalize, with optimism for the second half of 2024.

• 91% of units scheduled for 2024 delivery are already sold; 2025 deliveries also progressing well.