Q2 2026 Dexco SA Earnings Call Transcript
Key Points
- Dexco SA (BSP:DXCO3) reported a 5.2% increase in recurring net revenue to BRL2.2 billion in Q2 2026, with gross margins expanding by 1.6 percentage points.
- The company achieved a significant improvement in free cash flow, turning from a consumption of BRL262 million in Q1 2025 to a positive generation of BRL158 million in Q1 2026, with operational free cash flow reaching BRL682 million in Q2 2026.
- Financial leverage was reduced to 2.72x, down 0.67x year-over-year, supported by a BRL200 million reduction in net debt during the first half of 2026.
- The Metals and Sanitary Ware division posted a strong recovery, with EBITDA margin jumping from 1.8% to 11.8% in Q2 2026, driven by successful price adjustments and go-to-market initiatives.
- The Wood division maintained robust performance with a 30.9% EBITDA margin in Q2 2026, benefiting from operational efficiency, price discipline, and gains from forestry trading operations.
- The company concluded its investment cycle, reducing project investments from BRL267 million to BRL109 million in the first half of 2026, allowing for greater cash preservation.
- The Ceramic Tiles division continues to face a challenging market, with industry demand contracting 8.7% year-to-date and capacity utilization falling to 65%, leading to persistent pricing pressure.
- LD Celulose's results were negatively impacted by lower dissolving pulp prices and adverse exchange rate effects, with EBITDA margin dropping to 36% in Q2 2026.
- The company experienced cost pressures in the Wood division due to rising prices for oil byproducts and resins, which required price adjustments to mitigate the impact.
- Metals and Sanitary Ware volumes contracted 15% in Q2 2026, reflecting a downtrading trend as consumers migrate to lower-value products amid price increases.
- The company's net income was affected by noncash foreign exchange fluctuations on its US-denominated asset base, creating deferred tax volatility that impacted reported results.
- Despite improvements, the company's leverage remains elevated at 2.72x, and management emphasized the need to reduce absolute debt levels further, with interest expenses consuming significant cash.
Good morning, ladies and gentlemen. Welcome to Dexco's earnings call for the second quarter of 2026. This conference call is being recorded, and you may watch a recording of it on the company's website, ri.dex.co. The presentation is also available for downloading there. This call is also available in English. Simply click on the globe icon on the lower part of the screen and select English. (Operator Instructions).
Before we continue, we would like to underscore that any statements about the future are based on the company's beliefs and assumptions and on information that is currently available to the managers. They may involve risks and uncertainties since they refer to future events, which, therefore, depend on circumstances that may or may not occur.
Investors, analysts and journalists should take into account that macroeconomic factors, industrial factors and others may make these results to differ materially from those expressed in these forward-looking statements. We have with us on this call the company's CEO, Raul Guaragna; and CFO, Lucianna Raffaini, along with the Investor
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