Eucatex S A Indústria e Comercio : 3Q22 Earnings Presentation

3Q22 Earnings Release

Eucatex (B3: EUCA3 and EUCA4), one of the largest manufacturers of panels in Brazil, with operations also in the paint, varnish, laminated flooring, partitions and doors segments, announces today its results for the 3rd quarter of 2022 (3Q22).The consolidated financial statements are presented in accordance with the International Financial Reporting Standards (IFRS). Except where stated otherwise, the amounts are in millions of Brazilian real (R$ million) and comparisons are with the same period last year.

Highlights

IR Contacts

José Antonio Goulart de Carvalho

Executive Vice President and

Investor Relations Officer

Waneska Bandeira

Investor Relations

[phone] [e-mail]

www.eucatex.com.br/ri

Public Meeting 2022

(Portuguese only)

November 11, 2022

11 a.m. (Brasília)

www.eucatex.com.br/ri

English transcript will be available after the

event

3Q22

•Net Revenue of R$ 672.8 million (+2.9%)

•Recurring EBITDA of R$ 126.2 million (-17.1%),with Margin of

18.8%

•Recurring Net Income of R$ 47.5 million (-31.9%)

9M22

•Net Revenue of R$ 1,871.6 million (+7.6%)

•Recurring EBITDA of R$ 368.0 million (-10.7%),with Margin of

19.7%

•Recurring Net Income of R$ 173.9 million (-22.1%)

3Q22 Earnings Release

Amounts in R$ million	3Q22	3Q21	Var. (%)	9M22	9M21	Var. (%)
Net Revenue	672.8	654.0	2.9%	1,871.6	1,739.8	7.6%
Gross Profit	200.2	234.6	-14.7%	598.4	623.1	-4.0%
Gross Margin (%)	29.8%	35.9%	-6.1 p.p.	32.0%	35.8%	-3.8 p.p.
EBITDA adjusted by non-cash events	122.5	119.9	2.1%	362.8	494.3	-26.6%
EBITDA Margin (%)	18.2%	18.3%	-0.1 p.p.	19.4%	28.4%	-9 p.p.
Net Income (Loss)	45.1	70.5	-36.1%	175.5	299.6	-41.4%
Recurring Net Income (Loss)	47.5	69.8	-31.9%	173.9	223.2	-22.1%
Net Debt	492.8	380.8	29.4%	492.8	380.8	29.4%
Net Debt / EBITDA (LTM)	1.0	0.7	28.8%	1.0	0.7	28.8%
Recurring Adjusted EBITDA	126.2	152.2	-17.1%	368.0	412.0	-10.7%
Recurring Adjusted EBITDA Margin	18.8%	23.3%	-4.5 p.p.	19.7%	23.7%	-4 p.p.

Management Comments

The economic scenario in Brazil and worldwide remains challenging in 3Q22. Interest rates should remain high for longer than expected, which, combined with the uncertainties resulting from the electoral process, affected the economy as a whole. In relation to the same period last year, the full resumption of other economic activities, especially in the services sector, also contributed to reducing demand in the Company operating segments.

The Company's operating markets slowed down in 3Q22 compared to the same period last year. Demand in the domestic market remained weak. In the export market, expectations of a U.S. economic recession, with interest rate hikes combined with high external logistics costs, has been undermining Brazil's competitiveness, which has adversely affected the Company's exports. Due to the systematic lack of containers, in 3Q22, the Company chartered vessels to ship its production. Though these operations were successful - and cheaper than traditional shipments - these entail longer lead times, requiring higher inventory levels.

Though inflation on prices of inputs still affected the 3Q22 results, the prices of some commodities started decreasing, which should help maintain margins.

Regarding the markets where the Company operates, the ABRAMAT (Brazilian Construction Materials Industry Association) index, which measures the performance of construction materials industries, ended 9M22 down 7.6% and is expected to decline further 2.2% by the end of the year.

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3Q22 Earnings Release

Indicators for the panels market, which includes MDF/HDF/MDP/Fiberboard sales, according to IBÁ (Brazilian Tree Industry) figures and the Company's estimates, dropped 11.9% in the domestic market but grew 5.6% in the export market in relation to 3Q21.

On September 28, the Company announced to the market that it started selling porcelain flooring under the Eucatex Porcelanato brand. The Company's strategy is to expand its market share of products for construction and decoration by offering a comprehensive portfolio of products for the entire home, thus underscoring its commitment to its customers, shareholders and the market in general.

Initially, these products will be distributed in the state of São Paulo and will be extended to other states next year, as is already done with other product lines of the Company.

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3Q22 Earnings Release

Operating Performance and Results

Sales volume in the Company's Wood segment, considering both domestic and export markets, decreased 3.4% in 3Q22, compared to the same period last year. Performance in the quarter was impacted by the decline in both domestic sales (-2.0%) and exports (-8.0%).

In the Domestic Market, operations at both Furniture Production and Resale were lower than in the previous quarter, reflecting the effects of the monetary tightening policy and the recovery of other sectors of the economy.

The reduction in exports reflects the lower economic activity in the U.S. market, which affected the Central and South American markets, which are vulnerable to the effects of the U.S. market.

The Paint Market contracted 12.6% in 3Q22 and 8.4% in 9M22, according to data from the ABRAFATI (Brazilian Paint Manufacturers Association). The Paint market remains extremely competitive, which impedes the Company from fully passing on the costs incurred last year to prices. However, we notice a trend of stability in costs, which by itself is a positive development for the sector.

Operating Performance basis 100 - 2005

Physical Sales	3Q22	3Q21	Var. (%)	9M22	9M21	Var. (%)
Wood Panels (DM)	166	169	-2.0%	137	147	-6.9%
Wood Panels (EM)	267	290	-8.2%	233	255	-8.8%
Paints	387	410	-5.7%	412	411	0.2%

DM - Domestic Market / EM - Export Market

Net Revenue

Net Revenue Breakdown (R$ million)	3Q22	3Q21	Var. (%)	9M22	9M21	Var. (%)
Wood Segment	505.8	518.1	-2.4%	1,444.6	1,399.2	3.2%
Paint Segment	143.7	125.7	14.3%	394.0	319.3	23.4%
Other (*)	23.4	10.2	129.7%	33.0	21.3	55.1%
Net Revenue	672.8	654.0	2.9%	1,871.6	1,739.8	7.6%

(*) Metal profiles, land and energy sales

Total net revenue in 3Q22 was R$ 672.8 million, compared to R$654.0 million in 3Q21, up 2.9%.

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3Q22 Earnings Release

In the Wood Segment, revenue decreased 2.4% in the quarter, reflecting the reduction of 5.0% in prices. In 9M22, revenue decreased 0.8%.

In 3Q22, the Paint segment increased its share of Net Revenue by 14.5% compared to the same period last, due to the 21.3% increase in sale prices on average, which offset, albeit partially, the increase in costs. In 9M22, growth was 23.5%.

Recurring Cost of Goods Sold (COGS)

COGS increased 10.5% in 3Q22 compared to 3Q21. The 3rd quarter of 2022 was also affected by the increase in commodity and wood prices and in logistics costs, mainly in shipments to the Export Market. Any stabilization or decline in commodity prices in 3Q22 may benefit the Company, since the main inputs are influenced by these prices.

Fair Value of Biological Assets

In 3Q22, the fair value of biological assets was R$10.5 million, affected by the expansion of planted areas in the quarter and by the changes in the assumptions used, such as costs, prices and fees. Wood prices continue to be under pressure and, though price increases have slowed down, the trend still points to further increases.

Recurring Gross Profit and Gross Margin

Gross Profit was R$200.2 million in 3Q22, as against R$234.6 million in 3Q21, a decrease of 14.7%, reflecting the increase in the costs of raw materials and other inputs that were not passed on fully to prices.

Recurring Operating Expenses

Breakdown of Expenses (R$ million)	3Q22	3Q21	Var. (%)	9M22	9M21	Var. (%)
General and Administrative	(17.0)	(18.3)	-7.3%	(58.1)	(57.3)	1.3%
Selling	(85.5)	(76.3)	12.0%	(239.4)	(212.2)	12.8%
Total Operating Expenses	(102.5)	(94.6)	8.3%	(297.5)	(269.5)	10.4%
% Net Revenue	15.2%	14.5%	0.7 p.p.	15.9%	15.5%	0.4 p.p.
Other Operating Income and Expenses	(1.0)	0.9	-206.5%	0.1	5.9	-98.0%

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