Dexco S A : Quarterly Results Report

Quarterly Results - 2Q22 / 1H22| GRI 102-52

HIGHLIGHTS

Adjusted and Recurring EBITDA of R$446.2 million and R$949.9 million in 2Q22 and 1H22 respectively, little below the same periods of 2021 mainly from the high inflation seen during the period;

Greater investment in expansion projects led to the consumption of R$669.6 million in Free Cash Flow in the semester, of which R$536.8 million was invested in Dexco`s growth plans;

WOOD	DECA	TILES	DISSOLVING
			WOOD PULP

722.8k m³ sold in 2Q22 and 1.455.7k m³ in the semester, the same level as the previous year;

Increase in the cost of inputs and freight impacting margins for the period;

Adjusted and Recurring EBITDA of R$260.3 million in the quarter and of R$619.3 million in 1H22.

Gain in market share even amid shrinking volumes

Better price positioning led to a +20.3% in unit revenue versus 2Q21 and +29.0% over 1H21;

Adjusted and Recurring EBITDA of R$112.9 million and R$185.3 million in 2Q22 and 1H22 respectively.

Price increases and mix led to +37.2% in Unit Revenue for 2Q22 and +36.5% for 1H22; Cost pressures compensated by higher revenues, with significant gains in gross margins;

Record Adjusted and Recurring EBITDA in the semester with R$145.3 million and R$73.1 million, 1.3% greater than for 1Q22.

Ramp-up of factory production with an expectation of achieving total operating capacity before the end of this year;

DWP prices remain favorable in the market, giving the project a boost.

As at 06/30/2022

MARKET CAP | GRI 102-7	SHARES IN ISSUE
R$7,249.3 million	760,962,951
CLOSING SHARE PRICE	TREASURY SHARES
R$9.87	26,489,405

	Videoconference:
DEXCO INVESTOR RELATIONS | GRI 102-53	July 28, 2022 at 9:30h | GRI 102-50
[e-mail]	For participants in Brazil:
Carlos Henrique Pinto Haddad	Webcast
Investor Relations Director	For participants outside of Brazil:
Natasha Utescher
Webcast
Investor Relations Manager
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2Q22/1H22

Consolidated Financial Results

In BRL '000	2Q22	2Q21	%	1Q22	%	1H22	1H21	%
Highlights
Volume shipped Deca ('000 items)	7,464	8,053	-7.3%	4,858	53.6%	12,322	14,597	-15.6%
Volume shipped Tiles (m²)	5,188,084	6,927,953	-25.1%	5,363,620	-3.3%	10,551,704	12,313,064	-14.3%
Volume shipped Wood (m³)	722,757	755,902	-4.4%	732,974	-1.4%	1,455,731	1,557,490	-6.5%
Consolidated Net Revenue	2,213,567	1,974,129	12.1%	2,131,002	3.9%	4,344,569	3,742,255	16.1%
Gross profit	775,744	720,485	7.7%	742,946	4.4%	1,518,690	1,326,924	14.5%
Gross profit - Pro Forma (1)	781,906	693,253	12.8%	742,946	5.2%	1,524,852	1,299,692	17.3%
Gross margin	35.0%	36.5%		34.9%		35.0%	35.5%
Gross margin - Pro Forma (1)	35.3%	35.1%		34.9%		35.1%	34.7%
EBITDA according to CVM No. 527/12 (2)	561,809	1,085,288	-48.2%	600,877	-6.5%	1,162,802	1,549,898	-25.0%
EBITDA Mg CVM No. 527/12	25.4%	55.0%		28.2%		26.8%	41.4%
Adjustments for non-cash events	(151,178)	(69,168)	118.6%	(70,818)	113.5%	(222,112)	(90,688)	144.9%
Non-recurring events (3)	5,060	(478,313)	N/A	-	N/A	5,060	(469,734)	N/A
Dissolving Wood Pulp	30,556	(37,629)	N/A	(26,384)	N/A	4,172	6,624	-37.0%
Adjusted and Recurring EBITDA (4)	446,247	500,178	-10.8%	503,675	-11.4%	949,922	996,100	-4.6%
Adjusted and Recurring EBITDA margin (4)	20.2%	25.3%		23.6%		21.9%	26.6%
Net Income	169,191	716,600	-76.4%	223,715	-24.4%	392,906	889,299	-55.8%
Recurring Net Income (1)(3)	202,909	251,197	-19.2%	198,322	2.3%	401,231	473,637	-15.3%
Recurring Net Margin (1)(3)	9.2%	12.7%		9.3%		9.2%	12.7%
INDICATORS
Current ratio (5)	1.44	1.68	-14.3%	1.31	9.9%	1.44	1.68	-14.3%
Net debt (6)	3,689,344	1,770,715	108.4%	3,259,939	13.2%	3,689,344	1,770,715	108.4%
Net debt / EBITDA LTM(7)	1.72	0.91	89.0%	1.48	16.2%	1.72	0.91	89.0%
Average Shareholders' equity	5,623,571	5,340,346	5.3%	5,619,954	0.1%	5,623,571	5,340,346	5.3%
ROE (8)	12.0%	53.7%		15.9%		14.0%	33.3%
Recurring ROE	14.4%	18.8%		14.1%		14.3%	17.7%
SHARES
Earnings per share (BRL) (9)	0.2306	1.0416	-77.9%	0.3011	-23.4%	0.5317	1.2921	-58.8%
Closing share price (BRL)	9.87	23.80	-58.5%	14.68	-32.8%	9.87	23.80	-58.5%
Net equity per share (BRL)	7.82	8.23	-5.0%	7.50	4.3%	7.82	8.23	-5.0%
Treasury Shares	26,489,405	4,411,301	500.5%	26,489,405	0.0%	26,489,405	4,411,301	500.5%
Market Cap (BRL1.000)	7,249,254	16,359,482	-55.7%	10,782,072	-32.8%	7,249,254	16,359,482	-55.7%

1. Cost of Goods Sold: 2Q22: Deca Restructuring: (+) R$ 5,610 thousand; Restructuring Tiles (+) R$ 552 thousand; 2Q21: Exclusion of ICMS from PIS and COFINS base: (-) R$ 27,232
   thousand. Selling Expenses: 2Q22: Deca Restructuring (+) R$ 227 thousand.
2. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization): measure of operating performance in accordance with CVM Instruction 527/12.
3. Non-recurringevents detailed in the attachment to this material.
4. EBITDA adjusted for non-cash events arising from variation in the fair value of biological assets and combination of businesses, in addition to extraordinary events.
5. Current liquidity: Current assets divided by current liabilities. Indicates the amount available in R$ to cover each R$ of short-term obligations.
6. Net Corporate Debt: Total Financial Debt (-) Cash.
7. Financial leverage calculated on the rolling EBITDA over the last 12 months, adjusted for events of a purely accounting and non-cash nature.
8. ROE (Return on Equity): measure of performance obtained by taking the annualized Net Earnings over the period, annualized, and dividing by Average Net Equity.
9. Net earnings per share is calculated by dividing the earnings attributable to the company's shareholders by the average weighted number of ordinary shares issued during the period, excluding the ordinary shares held by the Treasury.

2

2Q22/1H22

Market & Business Scenario GRI 203-1

We are currently facing a period of inflationary pressure. Inflation over the last twelve months has already exceeded double digits in Brazil and has been strongly impacting the world's main economies, further aggravated in the first half of 2022 by the conflict between Russia and Ukraine, which led the Brazilian Central Bank to announce consecutive hikes in the basic interest rate, which reached 13.25% in June. Despite these increases, real estate sales continued to grow in the quarter and year-to-date, while the number of new properties launches remained above the sector's historical level for the year. The retail sector for building materials, on the other hand, has been feeling the impacts of inflationary pressure on consumer purchasing power and, as a result, has shown variable sales, which is reflected in the Company's results for the period.

Faced with this scenario, Dexco was able to compensate for the fall in sales in the retail channel through price adjustments and improved product positioning. However, this was not enough to offset the higher costs of its main inputs and national and international freight, which led to a 10.8% fall in Adjusted and Recurring EBITDA in 2Q22 versus 2Q21. Despite this, year to date, Dexco ended the period with an Adjusted and Recurring EBITDA of R$949.9 million, only 4.6% lower than in 1H21, which illustrates, once again, the Company's long-term differential and that its operations are performing at a new level.

For the quarter, the main highlight was the improvement in the Deca Division's results, which, even faced with a fall in sales volumes, managed to gain market share and implement its pricing strategy and, as a result, report record results for the quarter once again, with Adjusted and Recurring EBITDA of R$112.9 million, and R$185.3 million year to date, the best 1st semester in its history. Deca showed a fall of 5.3% and 3.7% in deflated gross sales for the second quarter and for the semester, respectively, versus the same periods in 2021. While, according to data from the Brazilian Association of Construction Materials (ABRAMAT), the gross and deflated sales of the construction materials industry showed an average decrease of 6.9% and 8.5% in the same comparison.

The Ceramic Tiles market closed out the quarter with a 13.3% fall in sales volumes and 85.0% factory utilization, while the semester showed a fall of 12.4%, according to data from the National Association of Ceramic Tiles Manufacturers (ANFACER). Dexco's Tiles Division reported a slightly higher fall than the market for the semester, due to a fall in retail sales even despite an increase in sales in the external market. However, price adjustments and efficient cost management led to an Adjusted and Recurring EBITDA of R$73.1 million for the quarter and R$145.3 million for the first semester.

The Wood Division, as in the previous quarter, continued to perform solidly, sustaining the sales volumes seen in 2Q22, despite the challenges presented by instability in the international supply of urea, coupled with exchange rate volatility, which contributed to a fall in the Adjusted and Recurring EBITDA of 21.8% versus the second quarter of 2021. Year to date, the fall is 12.6%, with pressure on domestic demand offset by a strong uptick in exports. The wood panels sector closed out the quarter with a 7.0% fall in sales versus 2Q21, reflecting a 14.2% fall in domestic demand against a 46.7% rise in exports. For the semester there was a fall 10.0%, according to data from the Brazilian Tree Industry (IBÁ). The Wood Division, for its part, reported a lower fall in sales than the market, showing a gain in market share across both periods.

Also during the quarter, operations began at the new dissolving wood pulp unit, LD Celulose, with the first sale to the market made in July, the market being mainly directed to China. Dexco is very satisfied with the progress made in ramping-up the new unit and forecasts that the Division will start to report positive results before the end of the year.

It should be noted that even faced with significant market volatility, Dexco has been able to prove its resilience in implementing and sustaining price adjustments and in its effective product positioning. The Company remains alert to market movements, especially with respect to inflation, which is already showing signs of stabilizing, and is continuing its program of productivity projects and price adjustments.

3

2Q22/1H22

Consolidated Financial Results GRI 103-2e 103-3

EXCLUSION OF ICMS FROM THE BASE CALCULATION OF PIS AND COFINS

A decision by the Federal Supreme Court, published on May 14, 2021, decreed that the ICMS (a form of VAT) to be excluded from the PIS and COFINS (social security contributions) base calculation is the one shown on the invoice. In 2021, the Company and its subsidiaries recognized accumulated credit of R$614.7 million (before tax effects), R$8.9 million in 4Q21. In addition, in the second quarter of 2021 there was a reversal of the accounting provision previously constituted due to the limitation imposed by the COSIT Solution 13/2018, to the amount of R$141.7 million before tax effects.

The impact of this amount was distributed in the year between the Cash Cost of Goods Sold to the amount of R$27.2 million, Other Operating Results to the amount of R$496.6 million, and the Financial Result to the amount of R$221.6 million. This result has been treated as non-recurring for 2021, which is why the Company is reporting the result on a pro forma basis for the lines impacted.

At the time of reporting interim financial statements, a res judicata on the Company's legal submission has yet to be issued with regards to the extinct company registration (CNPJ) of Duratex S.A., following the association with Satipel and Duratex Florestal Ltda covering the period from 2001 to 2015.

NET REVENUE

Dexco ended the second quarter of the year with a rise of 12.1% in Net Revenue versus the same period in 2021, mainly arising from sustaining prices and improving the product mix, factors which were sufficient to offset the fall in sales seen over the period. With this result, the Company closed out the semester with a 16.1% increase in Net Revenue versus the first semester of 2021.

Net revenue breakdown 2Q22 (%)

14%

Wood

Deca

28%58%

Greater channeling of products to the external market was	Tiles
also an important contributor to the revenue gains in the

periods above, especially the sales from the Colombian unit, whose revenue closed 27.4% higher for the quarter and 30.4% higher for the semester, compared to the same periods in

2021. It is important to note that the high cost of international freight, allied to the lower availability of maritime shipping, caused a fall in the volume of exports in 2Q22 compared to the prior quarter, a challenge that should ease as these factors stabilize, given the Company's priority in diversifying its markets and thus building greater robustness to its results.

BRL '000 - consolidated	2Q22	2Q21	%	1Q22	%	1H22	1H21	%
Net Revenue	2,213,567	1,974,129	12.1%	2,131,002	3.9%	4,344,569	3,742,255	16.1%
Domestic market	1,790,261	1,641,777	9.0%	1,659,901	7.9%	3,450,162	3,056,416	12.9%
Foreign Market	423,306	332,352	27.4%	471,101	-10.1%	894,407	685,839	30.4%

COST OF GOODS SOLD

The Pro Forma Cash Cost, Cost of Goods Sold net of depreciation, amortization and exhaustion and of the net change in biological assets and benefits calculated with the exclusion of ICMS from the PIS and COFINS base calculation, ended the second quarter of the year at R$1,386.6 million, an increase of 16.9% in relation to the same period of 2021. This increase arose mainly from the intense cost pressures on its main inputs, urea in particular. For the semester, the Pro Forma Cash Cost was 21.1% higher than for 1H21.

Despite the inflationary pressures, the improved product pricing and mix led to growth in the Pro Forma Gross Income of 12.8% and 17.3% in 2Q22 and 1H22, respectively, in relation to the same periods in 2021, thus enabling an increase in Gross Margin across both of those periods.

4

2Q22/1H22

BRL´000 - Consolidated	2Q22	2Q21	%	1Q22	%	1H22	1H21	%
Cash COGS	(1,392,758)	(1,158,759)	20.2%	(1,283,576)	8.5%	(2,676,334)	(2,177,224)	22.9%
Non Recurring Event (1)	6,162	(27,232)	N/A	-	N/A	6,162	(27,232)	N/A
Cash COGS Pro Forma	(1,386,596)	(1,185,991)	16.9%	(1,283,576)	8.0%	(2,670,172)	(2,204,456)	21.1%
Variation in fair value of biological assets	155,617	67,625	130.1%	71,092	118.9%	226,709	85,454	165.3%
Depletion of biological assets	(39,740)	(32,684)	21.6%	(38,047)	4.4%	(77,787)	(59,714)	30.3%
Depreciation, amortization and depletion	(160,942)	(129,826)	24.0%	(137,525)	17.0%	(298,467)	(263,847)	13.1%
Gross Profit	775,744	720,485	7.7%	742,946	4.4%	1,518,690	1,326,924	14.5%
Recurring Gross Profit (1)	781,906	693,253	12.8%	742,946	5.2%	1,524,852	1,299,692	17.3%
Gross Margin	35.0%	36.5%		34.9%		35.0%	35.5%
Recurring Gross Margin (1)(2)	35.3%	35.1%		34.9%		35.1%	34.7%

1. Non-recurringevents: 2Q22: Deca Restructuring: (+) R$ 5,610 thousand; Restructuring Revestimentos (+) R$ 552 thousand; 2Q21: Exclusion of ICMS from PIS and COFINS base: (-) R$ 27,232 thousand.
2. Pro Forma Gross Income / Pro Forma consolidated Net revenue.

COST OF SALES

The return of live events, such as Revestir Fair and events with clients, which did not take place in 2021 due to the restrictions arising from the COVID-19 pandemic, coupled with the bringing forward of CasaCor event and the significant increases in the cost of national and international freight, led to an increase of 38.0% in the Cost of Sales for the quarter versus 2Q21. In addition, one-off promotional and advertising activities, especially for Deca and Tiles Divisions, increased spending by R$86.4 million, which also explains the increase of 10.9% versus 1Q22.

For the semester, this increase was 39.0% versus the same the same period in 2021, with a greater volume of exports in the period, which led to a significant increase in freight costs.

BRL´000 - Consolidated	2Q22	2Q21	%	1Q22	%	1H22	1H21	%
Sales Expenses	(313,986)	(227,600)	38.0%	(282,837)	11.0%	(596,823)	(433,588)	37.6%
% of Net Revenue	14.2%	11.5%		13.3%		13.7%	11.6%
Non-recurring events (1)	227	-	N/A	-	N/A	227	4,390	N/A
Recurring Sales Expenses (1)	(313,759)	(227,600)	37.9%	(282,837)	10.9%	(596,596)	(429,198)	39.0%
% Recurring Net Revenue(1)	14.2%	11.5%		13.3%		13.7%	11.5%

(1) Non-recurring events: 2Q22: Deca Restructuring (-) R$ 227 thousand; 1Q21: Restructuring of Deca and Coatings (+) R$ 4,390 thousand.

GENERAL AND ADMINISTRATIVE EXPENSES

Pro Forma General and Administrative Expenses closed the second quarter at R$77.5 million, 31.4% greater than for 2Q21, while for the semester this figure was R$151.3 million, 31.5% greater than for 1H21. The Company's focus on the digitalization and automation of processes was the main driver of this increase, albeit with the objective of significantly increasing the productivity and efficiency of the Dexco team and, thus optimizing future spending in this regard. In addition, the return of face-to-face activities led to an increase in travel expenses, which were absent in 2021, as they were in 1Q22, which explains the increase in these expenses quarter on quarter.

It should be noted that in 4Q21 there was an increase in employees' base salary of approximately 10.0%, arising from the collective bargaining agreement, and this will impact General and Admin expenses throughout 2022 when compared to the prior year.

BRL'000 - consolidated	2Q22	2Q21	%	1Q22	%	1H22	1H21	%
General and Administrative Expenses	(77,544)	(67,274)	15.3%	(73,772)	5.1%	(151,316)	(123,869)	22.2%
% of Net Revenue	3.5%	3.4%		3.5%		3.5%	3.3%
Non-recurring events (1)	-	8,262	N/A	-	N/A	-	8,775	N/A
Recurring General and Administrative Expenses(1)	(77,544)	(59,012)	31.4%	(73,772)	5.1%	(151,316)	(115,094)	31.5%
% Recurring Net Revenue(1)	3.5%	3.0%		3.5%	0.0%	3.5%	3.1%

(1) Non-recurring events: 2Q21: Brand restructuring (+) R$7,700 thousand, Dissolving Wood Pulp (+) R$562 thousand; 1Q21: Dissolving Wood Pulp (+) R$ 513 thousand.

5