Dexco (DXCO3) Q1 2025 earnings summary

Executive summary

• Proforma adjusted and recurring EBITDA reached R$611.2 million in 1Q25, up 10.2% year-over-year, with strong contributions from the Wood Division and LD Celulose, but consolidated adjusted and recurring EBITDA fell 21.8% to R$345.6 million due to cost pressures and a strong comparison base.

• Net revenue was R$1,902.5 million, down 1.7% year-over-year, mainly due to weaker performance in the Tiles Division and subdued demand.

• Recurring net income improved to R$83.8 million, reversing a loss in 1Q24, supported by LD Celulose equity results and operational gains in Metals & Sanitary Ware.

• Results reflect seasonality, cost pressures, and investments in the new Botucatu Tiles plant, with sustaining free cash flow negative at R$142.8 million.

• The acquisition of Guarani Florestal S.A. for R$86.8 million strengthened the wood supply chain.

Financial highlights

• Adjusted and recurring EBITDA margin was 18.2% in 1Q25, down from 22.8% in 1Q24, while pro forma margin was 24.7%.

• Net debt increased 9.0% year-over-year to R$5,364.4 million, with leverage at 3.45x Adjusted & Recurring EBITDA.

• Gross profit (pro forma) was R$470.4 million, down 15.3% year-over-year, with gross margin at 24.7%.

• Free cash flow decreased to R$346 million from R$442 million in 1Q24.

• Cash position at quarter-end was R$738 million.

Outlook and guidance

• The Wood Division is expected to maintain strong results, supported by resilient furniture industry demand and stable wood prices.

• LD Celulose anticipates ongoing high efficiency and productivity, with maintenance shutdowns scheduled for upcoming quarters.

• Gradual recovery is anticipated in the Tiles Division as the new Botucatu plant ramps up and operational efficiency improves.

• Continued investment in premium product portfolios and concept stores to strengthen market presence.

• Focus remains on portfolio optimization, asset efficiency, and sustainable value creation.