Q2 2026 Dexco SA Earnings Call Transcript
Key Points
- Recurring net revenue grew 5.2% in Q2 2026, with gross margins up 1.6 percentage points, reflecting improved pricing and mix.
- Adjusted recurring EBITDA for Dexco operations rose 3.6% year-over-year, with year-to-date growth of 30.1% and margin expansion of 4.6 percentage points.
- Metals and Sanitary Ware division achieved a strong margin recovery, with EBITDA margin jumping from 1.8% to 11.8% in Q2, driven by price increases and go-to-market initiatives.
- Wood division maintained robust performance with 96% capacity utilization, EBITDA margin of 30.9% in Q2, and 19.2% EBITDA growth in the first half.
- Free cash flow turned positive, reaching BRL356 million in Q2, supported by working capital discipline and reduced capital expenditures, leading to a leverage reduction to 2.72x.
- The company successfully sold a tiles plant and closed an underperforming facility, contributing to deleveraging and cost rationalization.
- Ceramic Tiles division remains under pressure with a 12.8% year-to-date revenue decline and only a 0.9% EBITDA margin, reflecting a structurally challenging market.
- LD Celulose results were negatively impacted by lower dissolving pulp prices and adverse foreign exchange effects, leading to a 36% drop in EBITDA margin.
- Wood division faces cost pressures from rising oil byproducts and resins, which may not be fully offset by price increases.
- The company expects continued volatility and uncertainty in the ceramic tiles market, with no signs of short-term improvement.
- High interest rates in Brazil (around 14%) are consuming significant cash, with interest expenses of BRL380-400 million in Q2, pressuring net debt reduction.
- Metals and Sanitary Ware volumes contracted 15% in Q2 due to a value-over-volume strategy and downtrading, which may limit future growth.
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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