Construtora Tenda (TEND3) Q2 2024 earnings summary

Executive summary

• Record net sales and net pre-sales exceeded BRL 1 billion, with strong contributions from the Alea segment and robust sales velocity; 14 projects launched totaling R$940 million, up 23.2% from 1Q24.

• Gross margin improved by 2.6 percentage points quarter-over-quarter, with consolidated adjusted gross margin at 29.5% and Alea's margin at 9.7%.

• Net income reached R$4.5 million (net margin 0.6%), or R$21.8 million excluding swap effects; recurring net income in Tenda segment was R$41.5 million.

• Corporate net debt reached zero, lifting previous covenant restrictions and improving liquidity; net debt decreased by R$241.9 million year-over-year.

• Alea segment sales quadrupled year-over-year, with SoS above 30% and margin improvement, though it still posted a loss.

Financial highlights

• Adjusted gross profit was R$228.9 million, up 14.5% year-over-year; adjusted EBITDA reached R$91.2 million, up 89.6% year-over-year.

• Net income would have been nearly BRL 22 million if not for a non-recurring swap effect.

• Prepayment of BRL 171 million in high-cost debt, replaced by a BRL 200 million bank credit at a lower rate (CDI + 1.69%).

• Operational cash generation for 7 consecutive quarters for Tenda brand.

• Backlog margin improved to 35.9%, up 4.5 p.p. year-over-year.

Outlook and guidance

• Guidance for Tenda likely to be revised upward in Q3, with sales and EBITDA already above upper limits; Alea's gross margin guidance on track.

• Net pre-sales and adjusted EBITDA for Tenda in 6M24 reached 53.5% of the midpoint of annual guidance; Alea segment’s adjusted EBITDA in 6M24 reached 68.0% of guidance.

• Launches expected to accelerate in H2, aiming for consolidated launches near BRL 4 billion in 2024.

• Expectation to maintain PDD (provision for doubtful debts) within 3%-4% for the year; actual PDD at 2.8% in 2Q24.

• Guidance revision postponed to next quarter due to lower-than-expected launch volume in 1H24.