Dexco (DXCO3) Q2 2025 earnings summary

Executive summary

• Pro forma adjusted and recurring EBITDA reached R$1,313 million in 1H25, driven by strong Wood Division and LD Celulose performance, with LD Celulose operating at full capacity and delivering robust margins.

• Consolidated net revenue for 2Q25 rose 6.3% year-over-year to R$2,121.7 million, led by Wood Division and forestry trading, partially offsetting declines in Finishes and Tiles.

• Adjusted & Recurring EBITDA for 2Q25 was R$442.7 million, up 17.6% year-over-year, with a margin of 20.9%.

• Recurring net income for 2Q25 was R$29.9 million, down 71.5% year-over-year, mainly due to a high base in 2Q24 and negative financial results.

• Sustaining free cash flow was negative R$90.6 million, reflecting higher working capital needs and inventory replenishment.

Financial highlights

• Excluding LD Celulose, adjusted and recurring EBITDA was R$443 million in 2Q25 (margin 20.9%) and R$788 million in 1H25 (margin 19.6%).

• Wood Division adjusted and recurring EBITDA was R$427.9 million in 2Q25, up 34.3% year-over-year, with a margin of 29.9%.

• LD Celulose 2Q25 EBITDA reached R$529.1 million (margin 60.5%), with Dexco's share of net income at R$259.5 million.

• Net debt at quarter-end was R$5,499.3 million, up 5.3% year-over-year; leverage at 3.39x net debt/EBITDA.

• Sustaining CAPEX for 2Q25 was R$205.5 million, down 22.7% year-over-year; total CAPEX for 1H25 was R$366.9 million.

Outlook and guidance

• Operational discipline and efficiency gains are expected to support improved profitability in 2H25, with a positive outlook for Wood and Tiles Divisions.

• Botucatu plant ramp-up and manufacturing optimization to drive efficiency in Tiles Division.

• Metals & Sanitary Ware Division anticipates operational improvements and cost control from factory reorganization.

• LD Celulose faces a scheduled maintenance shutdown in H2 2025, but outlook remains positive.

• Dividends from LD Celulose expected to begin in 2026, with potential for earlier distribution as de-leveraging progresses.