MRV Engenharia e Participações (MRVE3) Q1 2025 earnings summary

Executive summary

• Operational and financial indicators improved quarter on quarter, with net revenue reaching R$2,179 million in 1Q25, up 17.5% year-over-year, and launches surging 81.2% to R$2,888 million, despite temporary transfer delays impacting cash generation.

• Management remains confident in meeting guidance, supported by strong positioning in Brazil's low-income housing market and resilient demand.

• Resia deleveraging initiated with asset sales, impacting short-term earnings but expected to drive strong future cash generation; US operation continues its divestment plan targeting US$800 million in asset sales through 2026.

• Adjusted profit attributable to shareholders was R$26 million, a 67% decrease year-over-year, with adjusted net margin at 1.2%.

Financial highlights

• Net revenue increased by 17.5% year-over-year to R$2,179 million, with 9,454 units built in Q1 2025.

• Gross margin reached 29.6% after interest, up 3.7 p.p. year-over-year and 2 p.p. sequentially; gross profit rose to R$644 million, up 34.2% year-over-year.

• EBITDA improved 43% year-over-year and 22% sequentially.

• Adjusted cash generation was negative at R$50.8 million, compared to positive R$24.8 million in 1Q24, mainly due to high construction activity, delayed transfers, and changes in payment methods.

• Debt to EBITDA ratio improved to 1.27x from 1.84x a year ago.

Outlook and guidance

• Confident in meeting 2025 guidance for income, sales price, and margin, with cash generation expected to improve each quarter as backlog of untransferred units normalizes in 2Q25.

• Guidance incorporates delays from changes in Caixa's accounting criteria and regional program adjustments.

• Resia asset sales planned to generate $500 million in cash by end of 2026, supporting deleveraging.

• Leasing speed in US operations is accelerating, supporting plans for asset sales within the year.