Dexco (DXCO3) Q3 2025 earnings summary

Executive summary

• Transformation plan launched to drive operational focus, efficiency, and value creation, with a focus on deleveraging, go-to-market, tiles turnaround, wood innovation, and Deca competitiveness.

• Portfolio simplification underway, including removal of 600 SKUs to streamline operations and focus on higher-margin products.

• Pro-forma adjusted & recurring EBITDA reached R$1.9 billion for 9M25, including 49% of LD Celulose's EBITDA, with strong Wood Division results and improved Metals & Sanitary Ware performance, but Tiles Division pressured by high inventories and soft prices.

• Consolidated net revenue for 3Q25 was R$2,128.0 million, down 5.0% year-over-year, reflecting a highly competitive environment and price/volume pressures across all divisions.

• Sustaining free cash flow was R$81.6 million, marking the end of the 2021-2025 investment cycle.

Financial highlights

• Adjusted & recurring EBITDA for 3Q25 was R$445 million (margin 20.9%), excluding LD Celulose equity equivalence.

• Recurring net income for 9M25 was R$647 million, a 5% increase year-over-year, but 3Q25 recurring net income was a loss of R$42.8 million due to higher financial expenses and lower LD Celulose contribution.

• Free cash flow YTD was R$1,234 million, with higher working capital needs due to inventory build-up and supplier finance suspension.

• Gross profit for 3Q25 was R$490.1 million, down 26.5% year-over-year; pro forma gross margin fell 7.7 p.p. to 24.9%.

• Earnings per share (3Q25): R$0.0134.

Outlook and guidance

• Continued focus on deleveraging, cost control, and efficiency to reinforce financial sustainability.

• Expectation of improved deliveries and better alignment of capacity and demand by 2026, with a gradual recovery in tiles and ongoing manufacturing reorganization.

• Dividend payments from LD Cellulose expected to begin next year, with a gradual ramp-up.

• LD Celulose expected to maintain efficient operations post-maintenance, despite volatile pulp prices and FX.