Episode Details

Suzano (SUZ) Q2 2026 — Q2 2026 (quarter ended June 30; the 6-K cleared EDGAR 18:11 ET Wednesday August 12, AFTER the close, so Thursday August 13 IS the reaction session: it opened +1.12 pct, which was the high of the day, and CLOSED -0.37 pct at USD7.99 on 1.51x normal volume.) Suzano is the largest producer of hardwood market pulp on earth. It prices pulp in dollars and reports in Brazilian reais, and in Q2 2026 that split did all the damage: the realised pulp price rose 8 pct to USD599 a tonne, and adjusted EBITDA still fell 23 pct. THE CALL: HOLD (3/5, MEDIUM - THE RIGHT ASSET ON TOO MUCH DEBT) — base-case value ~$8.92 vs ~$8.11 today. KEY METRICS: - CALL: HOLD, 3/5. Fair value USD8.92 vs the USD8.11 close, +10.0 pct. Three roads weighted 40/30/30: mid-cycle EBITDA of R22.0bn at 5.75x gives USD9.38, free cash flow to equity at a 14 pct cost of equity gives USD8.02, pulp at 5.5x plus paper at 7.0x gives USD9.21. BEAR USD4.83, BULL USD14.03. Reais at R5.2132. - THE ANGLE - THE PRICE TURNED AND SUZANO STILL MADE LESS. Realised pulp price USD599 a tonne, +8 pct year on year and +7 pct sequentially; PIX/FOEX hardwood rose 13.8 pct in Europe. Adjusted EBITDA fell 23 pct anyway to R4,705M, and adjusted EBITDA per tonne fell 14 pct to R1,424. - THE CURRENCY DID IT, ON BOTH SIDES. Suzano's own bridge: pulp revenue -15 pct = volume -11, average dollar against average real -11, price +8. The identical tonne fetched R3,022 against R3,147. The cost base is in reais too: all-in cash cost R972 a tonne, +16 pct. Cash margin R2,050 against R2,309. - THE BEAT IS A TREE. Other operating income carried R1,158M of NON-CASH revaluation of standing timber - 64 pct of the R1,807M reported net income, against a R73M charge a year earlier. Tax it at Brazil's 34 pct rate and diluted EPS is R0.8372 (USD0.161) - a 35.8 pct MISS on the USD0.2501 bar, not a 12 pct beat. - THE PROFIT FALL IS ONE LINE. Net financial result was NEGATIVE R10M against a POSITIVE R4,425M a year ago, as exchange gains on dollar debt shrank to R197M from R3,444M. That swing alone exceeds the entire R3,204M fall in net income. Gross margin: 24.4 pct against 35.3 pct. - THE STACK: net debt R66,089M (USD12,767M) FELL 7 pct year on year, and leverage still rose from 3.1x to 3.4x in dollars because EBITDA fell faster. On July 1 Suzano paid USD1.3bn for 51 pct of a Kimberly-Clark tissue venture (22 plants, 14 countries). Pro-forma 3.65x. Net debt per ADR is USD10.35. - TWO FREE CASH FLOWS: the headline adjusted figure is R9,423M trailing, an 18.1 pct yield. After the R5,095M of expansion capex and R1,519M of dividends it adds back, real free cash flow is R2,809M - a 5.4 pct yield. The ADR is 1:1 (Note 1). Filed diluted EPS R1.45457; ROIC 10.3 pct from 13.1 pct. What to watch: UP: a weaker real, which lifts reported revenue without a single extra tonne; or the first disclosed earnings figure for the Kimberly-Clark tissue venture, which consolidates in Q3 2026. DOWN: the full-year cash-cost target of about R800 a tonne, which needs the second half to average roughly R778. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.