Construtora Tenda S A : Dados Econômico-Financeiros

Earnings Release

2Q23

São Paulo, Aug 2nd, 2023 - Construtora Tenda S.A. ("Company", "Tenda"), a leading Brazilian homebuilder and real estate developer focused on affordable housing, announces today its results for the second quarter of 2023.

EARNINGS RELEASE 2Q23

HIGHLIGHTS

FINANCIAL

• Net Revenue at R$ 710.5 million in the quarter, increasing 13.3% compared to 2Q22 and 9.1% compared to 1Q23;
• Adjusted gross profit of R$ 158.8 million in the consolidated financial statements for 2Q23, an increase of 80.5% and 3.8% compared to 2Q22 and 1Q23, respectively. The adjusted gross margin reached 22.4%, an improvement of 6.0 percentage points compared to 2Q22.
• Adjusted grossmargin at 31.4% in 2Q23 year-to-date, with 1.5 p.p. increase compared to 1Q23;
• Operating cash flow of R$ 180.0 million in 2Q23 (a record value in the company's history), with R$ 102 million in the Tenda segment, even before including the sale of the "pro-soluto" portfolio. Total cash flow generation of R$ 129.0 million in 2Q23;
• Corporate Net Debt / Shareholder's Equity closed 2Q23 at 42%, compared to a limit of 85% established by the covenants for the period.

OPERATIONS

• Development of 16 enterprises year-to-date, amounting to R$ 963.7 million, an increase of 23.1% compared to 2Q22. The average price in the quarter was R$ 206.7 thousand per unit. In Alea, there were 113 units launched in the month of July;
• Net SOS Solid (velocity over supply) of 26.2%, an increase of 3.0 percentage points compared to 2Q22, with an increase in the average sales price amounting to R$ 203,3 thousand, compared to the average price of R$ 176,2 thousand per unit in 2Q22;
• Net sales amounted to R$ 758.5 million, up 31.3% versus the 2Q22;
• Land banking reached R$ 17,308.7 million in 2Q23, with increases of 27.6% and 3.2% compared to 2Q22 and 1Q23, respectively. During the quarter, acquisitions amounted to R$ 1,501.3 million, with the percentage of land exchanges representing 57.9% of the total land bank, an increase of 7.5 percentage points compared to 2Q22;
• Sales volume in the month of July reached the highest level since May 2022, with the sale of 1,588 units, 17% higher than the monthly average of 1H23, and the average price per unit was R$ 210,000, 3.5% higher than the average price practiced in 2Q23.

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RECENT EVENTS

Minha Casa Minha Vida Program

Minha Casa Minha Vida Program was resumed in 2023, with new rules and the goal of delivering 2 million houses by 2026. Listed below are the main changes in the new program:

• the initial range of Minha Casa Minha Vida now serves families with gross income of up to R$ 2,640.00;
• the maximum price of the property increased from R$ 264 thousand to R$ 350 thousand;
• new subsidy ceiling increases from R$ 47.5 thousand to up to R$ 55.0 thousand;
• reduced financing rates (table below) and the expectation of an increase in households with terms of up to 420 months;
• reduced tax burden due to the special regime (RET 1).

New Minha Casa Minha Vida program came into effect on July 7th and is targeted at people in urban areas with a gross monthly household income of up to R$ 8,000 (table below), or people in rural areas with agross annual household income of up to R$ 96,000:

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MESSAGE FROM THE MANAGEMENT

After the more challenging period the company has been through in recent years, we start this message with a lot of positive news for 2Q23: 1) record operating cash generation for a quarter, exceeding R$100 million in Tenda segment and R$180 million in the consolidated; 2) the completion of one more sale of a pro-solute portfolio, this time for a net amount of R$ 106 million; 3) now referring to July (first month with the new parameters of Minha Casa Minha Vida "MCMV" program), we reached the highest monthly sales volume since May 2022, with 1,588 units sold in the month (17% higher than the monthly average of 1H23) with a price of R$ 210 thousand per unit, (3.5% higher than the average price of 2Q23) and; 4) Alea projects already well advanced in the approval process amount to somewhere between 1,500 and 2,000 units launched in the year.

We therefore express our deepest gratitude to everyone involved in our company for their relentless commitment and hard work during this recent period. Our recovery journey has been remarkable, and the positive results we have achieved in recent quarters reflect our collective commitment to the company.

It is key to recognize the hardships we have faced in the past and how we have learned from them. Our losses led us to a deep thinking about our processes and brought the opportunity to improve our strategy for a sustainable future. We are committed to becoming an even stronger and more resilient organization, able to overcome challenges and reach new heights of size and profitability.

Our recovery has been driven by a several key factors. Firstly, we performed a deep review of our operating processes, aiming at improving efficiency and quality in all steps of our business. This initiative has been resulting in higher profitability, significant decrease in rework and waste and increased satisfaction of our customers. We also implemented a rigorous and strategic financial management, analyzing our costs in detail and identifying opportunities to optimize cash generation. In the process of regaining profitability, one of the clearest signs of our progress is our average selling price, which reached 203.3 thousand in 2Q23 (+4.6% vs 1Q23) and R$ 210 thousand in July (+3.5% vs 2Q23).

Price Evolution x Net Pre-Sales (PSV, R$ million) and Net SoS (%)

As expected, cost deviations have further reduced to R$ 9.9 million in 2Q23, down 66% versus 1Q23. We believe that we can finally claim to have turned the page on the issue of cost deviations. Since May, costs have been in line with budgets, a trend also seen in July. Therefore, we believe that we can finally say that the company does not expect further material cost deviations, as long as the scenario of stability that we have seen in INCC is maintained.

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Impact P&L Cost Variance (R$ Million)

INCC Cumulative*¹ (12 months)

		76
					-66%
	43		47
				29
15					10
1Q22	2Q22	3Q22	4Q22	1Q23	2Q23

20%
18%
16%
14%
12%
10%
8%
6%	INCC-M returning to pre-pandemic
4%
levels
2%
0%
jan/19 jul/19 jan/20 jul/20 jan/21 jul/21 jan/22 jul/22 jan/23

*1 - FGV

It is also worth noting that in June, INCC's methodology was reviewed so as to reflect the changes in the structure of construction costs over time, related to technological innovations, materials used and production processes. We believe this review will help keep the index in line with the trend in Brazilian construction costs and the company by increasing the weight of materials in the weighting.

Our gross margin on new sales also continued to evolve, with a 60bps increase in 2Q23 compared to 1Q23.

Evolution of Gross Margin from New Sales (%) and Gross Profit from New Sales (R$ million)

28.8	30.4	31.1	31.1	31.7

23.2

		232.9		225.3	260.0
	217.8	219.9
164.9
1Q22	2Q22	3Q22	4Q22	1Q23	2Q23
		Gross Margin (%)	Gross Profit (R$ milions)

As a result, our backlog margin Without financial items jumped 2.9 p.p. in 2Q23 vs 1Q23, to 34.9%, already within a healthy margin level, which is yet another indicator reflecting the expectation of continued improvement in our result going forward.

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