Dexco (DXCO3) Q1 2025 earnings summary

Executive summary

• Pro-forma adjusted and recurring EBITDA reached R$611.2 million in 1Q25, up 10.2% year-over-year, including 49% of LD Celulose's EBITDA; core business contributed R$346 million, reflecting wood division resilience and LD Celulose's operational consistency despite sectoral challenges in finishing and covering divisions.

• 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 demand pressures in the sector.

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

• Q1 2025 performance was consistent with Q4 2024, with efficiency actions in working capital partially offsetting lower operating generation.

• Results reflect seasonality and cost pressures, especially in the Finishes Division.

Financial highlights

• Gross profit (pro forma) was R$470.4 million, down 15.3% year-over-year, with gross margin at 24.7% (down 4.0 p.p.).

• Adjusted & recurring EBITDA margin improved to 22.8% from 18.2% year-over-year.

• Free cash flow decreased to R$346 million from R$442 million in 1Q24; sustaining free cash flow was negative R$142.8 million, impacted by lower EBITDA and investments in the new Tiles factory.

• Working capital as a percentage of net revenue was 17%, reflecting typical seasonal inventory buildup.

• Q1 2025 investments included R$54 million for expansion and modernization, with R$25 million in the new Botucatu plant, R$18 million in metals and sanitary wear modernization, R$8 million in forestry expansion, and R$3 million for DX Ventures.

Capital allocation and financing

• Leverage increased to 3.45x net debt/EBITDA due to lower operating cash generation and project investments; net debt rose 9.0% year-over-year to R$5,364.4 million.

• Debt remains long-term focused, with an average maturity of 4.1 years and average cost of 106.8% of CDI; 79% of debt is long-term.

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

• Sustaining CAPEX was R$161.4 million, mainly for forestry base renewal and maintenance.

• Additional R$106.5 million invested in innovation and operational improvement projects.