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, including LD Celulose's 49% share; consolidated adjusted and recurring EBITDA fell 21.8% to R$345.6 million, reflecting cost pressures and seasonality.

• Net revenue for 1Q25 was R$1,902.5 million, down 1.7% year-over-year, mainly due to challenges in the Tiles Division and sector demand pressures.

• Recurring net income totaled R$83.8 million, a significant improvement from R$26.9 million in 1Q24, with recurring ROE at 4.9%.

• Results reflect seasonality, cost pressures, and a strong prior-year comparison, especially in the Finishes/Tiles Division.

• Sustaining free cash flow was negative R$142.8 million, impacted by lower EBITDA and investments in the new Tiles factory.

Financial highlights

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

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

• Net debt increased 9.0% year-over-year to R$5,364.4 million, with leverage at 3.45x adjusted and recurring EBITDA.

• 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 projected to maintain strong results, supported by resilient furniture industry demand and stable wood prices.

• LD Celulose is expected to sustain robust performance, with maintenance shutdowns scheduled for upcoming quarters.

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

• Focus remains on portfolio optimization, asset efficiency, and sustainable value creation as the investment cycle concludes.