Construtora Tenda S A : Dados Econômico-Financeiros

Construtora Tenda S.A.

Notes to the individual and consolidated Interim financial information

For the period ended September 30, 2022

(Convenience Translation into English from the original previously Issued in Portuguese

NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION FOR THE PERIOD ENDED September 30, 2022

Contents
Management Report September 30,2022 ...........................................................................................	03
Audited financial statements
Balance sheet ..........................................................................................................................................	32
Statement of profit or loss ...................................................................................................................	34
Statement of comprehensive income ..................................................................................................	35
Statements of changes in Equity..........................................................................................................	36
Statement of cash flows........................................................................................................................	37
Statement of value added.....................................................................................................................	38
Notes to interim financial information................................................................................................	39
Independent auditor's report on the financial statements...............................................................	62

Earning

Release

3Q22

We continued with a positive evolution in sales price of 19.6% YoY and 5.0% QoQ, resulting in a Net SoS of 20.3 (-12.7pp YoY and -2.5pp QoQ) at Tenda.

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São Paulo, November 3rd, 2022 - Construtora Tenda S.A. ("Company", "Tenda"), a leading Brazilian homebuilder and real estate developer focused on affordable housing, announces today its results for the third quarter of 2022.

HIGHLIGHTS

FINANCIALS

• Net Revenue of R$ 573.2.0 million for the quarter (-20.5% YoY and -8.6.0% QoQ), due to costs increase, DDP and other non-recurring effects;
• Gross Margin of New Sales of 32.1% in September (+10.7p.p. vs Jan/22) and 30.4% at 3Q22 (+1.6p.p. QoQ);
• Adjusted Gross Margin of 5.6% with 8.1% of Tenda brand in this 3Q22.
• Backlog Margin of Tenda brand reached 25.7% (-6.4p.p. YoY and +0.8p.p. QoQ);
• Operating Cash consumption of R$ 47.6 million for the quarter, in which Tenda brand was responsible for R$ 32.1 million.

OPERATIONS

• Launch of 5 projects totaling R$376.2 million (-41.6% YoY and +51.9% QoQ), with an average price of R$210.2 thousand (+41.4% YoY and +5.5% QoQ). We emphasize the price gain spread across all regions;
• Gross SoS (speed over gross supply) of 24.6% (-14.7p.p. YoY and -5.6p.p. QoQ) with an increase in the average sales price, which amounted to R$184.5 thousand, (+18.9% YoY and +4.7% QoQ);
• Cancelation totaled R$ 85.8 million, representing 14.9% over gross sales. The average price was R$165.9, with a difference of -12.4% against the average net sales price of 189.4 in 3Q22.
• Net Pre-Sales totaled R$514.0 million (-33.8% YoY and -11.0% QoQ) with net SOS of 21.1% (-11.8p.p. YoY and -2.1p.p. QoQ) and average price of 188.0 thousand (+19.6% YoY and +3.2% QoQ);
• Net SoS of 21.1 (-11.8p.p. YoY and -2.1p.p. QoQ), with Tenda brand of 20.3% (-12.7p.p. YoY and -2.5p.p. QoQ);
• PSV transferred ended the quarter with R$562.9 million (-22.6% YoY and +20.4% QoQ);
• Landbank totaled a PSV of R$14.8 billion (+20.2% YoY and +8.9% QoQ). Land aquisition of R$1.5 billion with an increase in the percentage of swaps that now represents 49.0% of the total landband (+7.4 p.p. YoY and -1.4 p.p. QoQ).

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MESSAGE FROM THE MANAGEMENT

3Q22 continued to be a very challenging quarter for the Company, but at the same time with very promising signs that we are on the path to return to profitability, with the continuous increase in new sales margins and low consumption of operating cash. Despite the improvement in the inflationary scenario, the INCC is still at 10.1% in the last 12 months until October 2022, as well as the IPCA also remains above the target, with this, not only Brazil, but also advanced countries, follow with its restrictive monetary policies. On the bright side, our labor market continues to recover, albeit at a slower pace and despite the still uncertain inflationary scenario ahead, October inflation in the productive sector showed deflation of 0.3% in October 2022, which, maintained this trend, may benefit the price of inputs previously impacted by the opposite effect.

However, this combination of recent high inflation and a more restrictive credit scenario has had an impact on households' purchasing power. Data from the Credit Protection Service (SPC Brasil) showed a deterioration in consumer delinquency, which came above expectations in September, with 39.7% of total adult Brazilians with bad credit. This had an impact on our DDP, as we will see later.

In 3Q22, we launched 5 projects with a total PSV of R$376.2 million under the Tenda brand. This was the third quarter of our recovery, in which we imposed great control on the Company's operations, aiming, above all, at rebuilding our margins and deleveraging our balance sheet.

Launches in the quarter had an average price per unit of R$210.2 thousand, reflecting an increase of 41.2% compared to launch prices in the same period in 2021, and a sequential evolution compared to 2Q22 of 4.5%. This is a result of a greater concentration of launches in SP, combined with an increase spread across all the regions in which we operate.

Average Price Launches (R$ thousand)

We managed to deliver another quarter with a strong increase in sales price (5.0%) keeping pro-solute stable as a percentage of sales value. As a result, our gross margin from new sales was 30.4% in 3Q22, 32.1% in September 2022, which shows another good recovery compared to 28.8% in 2Q22. We continue with our goal of margins improvement quarter by quarter. The backlog margin also benefited from this strong improvement in the new sales margin and, despite the pressure on costs, it rose 0.8 p.p. in the quarter, to 25.7%.

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