Eucatex S A Indústria e Comercio : 4Q22 Earnings Release

4Q22 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 4th quarter of 2022 (4Q22). 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 the previous year.

4Q22 Conference Call

(Portuguese only)

March 24, 2023

11 a.m. (Brasília)

www.eucatex.com.br/ri

English transcript will be available after the

event

4Q22 Earnings Release

Highlights

4Q22

• Net Revenue of R$639.1 million (-9.9%)
• Recurring EBITDA of R$117.7 million (-19.9%),with Margin of 18.4%
• Recurring Net Income of R$86.2 million (-44.7%)

2022

• Net Revenue of R$2,510.6 million (+2.5%)
• Recurring EBITDA of R$485.7 million (-13.1%),with Margin of 19.3%
• Recurring Net Income of R$260.2 million (-31.4%)

Amounts in R$ million	4Q22	4Q21	Var. (%)	2022	2021	Var. (%)
Net Revenue	639.1	709.6	-9.9%	2,510.6	2,449.4	2.5%
Gross Profit	214.3	247.5	-13.4%	812.7	870.6	-6.7%
Gross Margin (%)	33.5%	34.9%	-1.4 p.p.	32.4%	35.5%	-3.1 p.p.
EBITDA adjusted by non-cash events	111.2	105.1	5.9%	474.1	599.3	-20.9%
EBITDA Margin (%)	17.4%	14.8%	2.6 p.p.	18.9%	24.5%	-5.6 p.p.
Net Income (Loss)	82.0	128.4	-36.1%	257.5	427.9	-39.8%
Recurring Net Income (Loss)	86.2	156.0	-44.7%	260.2	379.2	-31.4%
Net Debt	530.2	380.8	39.2%	530.2	380.8	39.2%
Net Debt / EBITDA (LTM)	1.1	0.7	59.4%	1.1	0.7	60.2%
Recurring Adjusted EBITDA	117.7	147.0	-19.9%	485.7	558.9	-13.1%
Recurring Adjusted EBITDA Margin	18.4%	20.7%	-2.3 p.p.	19.3%	22.8%	-3.5 p.p.

2

4Q22 Earnings Release

Management Comments

The 4th quarter of 2022 was marked by a more visible slowdown in economic activity, reflecting the monetary policy that raised the basic interest (Selic) rate to 13.75%, and the loss of purchasing power due to persisting inflation. During 2022, the Company's operating segments saw a decline in demand. The most probable hypothesis for the negative performance in the Company's operating segments is that the service sectors, which resumed their activities with the end of restrictions on the circulation of people due to the COVID-19 pandemic, combined with the decrease in disposable income, took away funds that in 2021 were used for home-related purchases and spending. A situation similar to that seen in Brazil is also playing out in the United States, the main destination for the Company's exports.

In 2022, the Company sought to maintain the pace of its operations and did not halt production at any of its units, despite the drop in domestic demand already in the initial months of the year. The strategy was to increase exports, which were still buoyant in the first half of the year. Despite the efforts in this regard, the problems caused by higher sea freight and lack of ships, in addition to the increase in costs, also led to an increase in the lead-time of exports, causing significant delays in arrivals at destinations. In case of the U.S., the main destination for the Company's exports, the economy was already cooling down. In such a scenario, the Company's inventory levels increased to much higher than planned forcing it to take steps to adjust them, which should produce results in 1Q23.

Costs with exports remained high, as evident from the increase in selling expenses, due to both sea freight and distribution expenses, which increased significantly in relation to 2021. Moreover, the drop in demand "pushed" the Company to products with lower margin per unit and did not allow it to transfer the increase in costs to prices.

In this context, the Company has been focusing on developing and launching new products, reducing the costs of current products and pursuing closer commercial relations with clients, all of which should reflect in the results of the coming quarters.

The slowdown in the economy affected the markets where the Company operates. The ABRAMAT (Brazilian Construction Materials Industry Association) index, which measures the performance of construction materials industries, ended 2022 down 7.0%, with a projected growth of 2% in 2023.

Indicators for the panels market, which includes MDF/HDF/MDP/Fiberboard sales, according to data from IBÁ (Brazilian Tree Industry) and the Company, dropped 15.6% in the domestic market and 44.0% in the export market between 4Q21 and 4Q22. In the year, domestic sales fell 14.9% but exports increased 7.1% compared to 2021.

In February 2023, the Company signed a mediation agreement the Municipal Government of São Paulo and the São Paulo State Prosecution Office, bringing to end a dispute in multiple jurisdictions. As consideration and to discharge Eucatex from all related lawsuits, the Company undertook to pay

3

4Q22 Earnings Release

approximately US$ 7 million to the government as soon as the accord is approved by the courts, which is expected to occur in April this year.

At the same time, Banco BTG Pactual undertook to acquire a significant interest of around 33% of the preferred shares of the Company, until then held by some foreign investment funds.

The Company's control group will not change with the entry of BTG Pactual and a shareholders' agreement was signed outlining the issues related to corporate governance and transparency towards all market players, including migration to the Level 2 special listing segment of B3.

Operating Performance and Results

Net Revenue

Net Revenue Breakdown (R$ million)	4Q22	4Q21	Var. (%)	2022	2021	Var. (%)
Furniture Industry and Resale Segment	247.4	286.0	-13.5%	907.1	973.8	-6.8%
Construction Segment	233.8	238.9	-2.1%	946.9	838.2	13.0%
Export	133.0	181.1	-26.6%	598.3	613.0	-2.4%
Other (*)	24.9	3.6	593.3%	58.4	24.5	138.5%
Net Revenue	639.1	709.6	-9.9%	2,510.6	2,449.4	2.5%

(*) Metal profiles, land and energy sales

Total Net Revenue in 4Q22 was R$639.1 million, compared to R$709.6 million in 4Q21, down 9.9%, but increased 2.5% year on year.

Furniture Industry and Resale Segment

In the Industry and Resale Segment, composed of MDP/MDF/THDF panels and Fiberboard, revenue declined 13.5% in the quarter, reflecting the 12.7% decline in average price on account of a "poorer" sales mix in relation to 4Q21. Compared to 2022, revenue declined 6.8% due to the same reason.

The Furniture Industry and Panel dealers faced a difficult year and the IBÁ figures reflect it. Industries and the entire chain sought to adjust their inventory levels and orders across the industry decreased.

4

4Q22 Earnings Release

Construction Segment

In 4Q22, Net Revenue from the Construction Segment - composed of Laminated Flooring, Doors, Wall Partitions and Architectural Paints - decreased 2.1% in relation to 4Q21 but increased 13% in 2022 in relation to 2021. Highlights include the Company's initiatives to expand its portfolio, including the launch of new products and expansion of its client base.

For 2023, the Company has planned the launch of the Eucatex Porcelain Flooring line, among other products, which drive revenue growth in the segment.

According to data from the Brazilian Tree Industry (IBÁ), the Laminated Flooring market decreased 33.6% in 4Q22 in relation to 4Q21, while the full year decrease was 23.7%.

According to ABRAFATI (Brazilian Paint Manufacturers Association), the Paint Market decreased 2.9% in 4Q22 and 6.7% in 2022 compared to the same periods in the previous year.

These are the two main markets served by the Construction sector and show how challenging the year was.

Export Segment

Revenue from the Export Segment decreased 26.6% and 2.4% in 4Q22 and 2022, respectively, compared to the same periods in 2021, due to lower sales volume and an unfavorable mix. Most of the export revenue comes from the U.S., where, like Brazil, demand increased significantly in 2021 due to the physical distancing policy and the sharp focus on home improvements, which did not repeat in 2022.

Recurring Cost of Goods Sold (COGS)

COGS decreased 8.0% in 4Q22 compared to 4Q21, due to lower shipments of panels and lower costs. However, while costs of raw materials decreased, some items, such as fuel and wood, are still expensive, the latter due to high demand in the state of São Paulo. In 2022, COGS increased 7.4% despite the lower volume, which shows that the effects of higher costs were more significant in the initial months of the year.

Fair Value of Biological Assets

In 4Q22, the fair value of biological assets was R$27.2 million, mainly affected by the increase in wood prices, among others.

5