Eucatex (EUCA4) Q3 2024 earnings summary

Executive summary

• Net revenue for 3Q24 was R$774.4 million, up 13.1% year-over-year; 9M24 net revenue reached R$2,104.2 million, up 4.5% year-over-year.

• Recurring net income for 3Q24 was R$51.2 million, a 28.6% decrease from 3Q23, mainly due to higher financial expenses and increased income tax; for 9M24, recurring net income was R$140.1 million, down 19.1% year-over-year.

• EBITDA margin in 3Q24 was 16.1%, compared to 17.9% in 3Q23; recurring EBITDA in 3Q24 was R$151.3 million, up 8.0% year-over-year, with a margin of 19.5%.

• Investments in 9M24 totaled R$232.3 million, with 60% allocated to forestry, 32% to panel factories, and 8% to paints.

• Export and construction segments showed strong growth in 3Q24, while industry and resale segments had mixed results.

Financial highlights

• Gross margin in 3Q24 was 18.3%, up from 17.9% in 3Q23; 9M24 gross margin was 20.8%, up from 18.3% in 9M23.

• Net debt at the end of 3Q24 was R$550.9 million, a 7.5% decrease sequentially from 2Q24; Net Debt/EBITDA ratio was 1.0x at 3Q24.

• Operating expenses were 18.3% of net revenue in 3Q24, up 0.5 p.p. year-over-year.

• Gross profit in 3Q24 was R$247.4 million, with a gross margin of 32.0%, down 1.7 p.p. year-over-year.

• Net margin in 3Q24 was 6.6%, down 3.9 p.p. year-over-year.

Outlook and guidance

• Forecasted investments for 2024 are R$268 million, focusing on forestry and industrial expansion.

• Management expects continued growth in construction and export segments, supported by government housing programs and new product launches.

• Market conditions remain challenging, with construction and furniture segments showing mixed performance.