Dexco (DXCO3) Q3 2025 earnings summary

Executive summary

• 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, partially offset by a stronger product mix in Wood and Metals & Sanitaryware divisions.

• Adjusted & recurring EBITDA (pro forma) reached R$566.5 million, including R$121.5 million from LD Celulose, with a margin of 20.9%.

• Net income for 3Q25 was R$14.2 million, but recurring net income was a loss of R$42.8 million, mainly due to higher financial expenses and lower LD Celulose contribution.

• Transformation plan launched in 2025, focusing on financial deleverage, go-to-market, tiles turnaround, wood innovation, and Deca competitiveness.

• Portfolio simplification and SKU reduction underway to streamline operations and focus on higher-margin products.

Financial highlights

• Adjusted & recurring EBITDA for 3Q25 was R$445 million (margin 20.9%), down 3.2% year-over-year, but up 0.5% sequentially.

• Gross profit for 3Q25 was R$490.1 million, with a gross margin of 23.0%, down 6.8 p.p. year-over-year.

• Free cash flow for 3Q25 was R$45.5 million, with sustaining free cash flow for 9M25 at negative R$43.7 million.

• Recurring net income for 9M25 was R$647 million, a 5% increase year-over-year.

• Net debt ended at R$5,585.1 million, with a leverage ratio (Net Debt/EBITDA LTM) of 3.48x.

Outlook and guidance

• Continued focus on deleveraging, efficiency, and operational discipline to reinforce financial sustainability and value generation.

• The end of the 2021-2025 investment cycle is expected to improve cash generation and reduce leverage.

• Gradual recovery in the Tiles Division expected, with inventories and production footprint being adjusted.

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

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