MRV Engenharia e Participações (MRVE3) Q4 2023 earnings summary

Executive summary

• Core homebuilding net pre-sales rose 45% YoY to R$8.548B in 2023; net revenue reached a record R$7.236B and gross margin improved 3.4 p.p. to 22.7%.

• Adjusted shareholder profit was R$82M in 2023 versus an adjusted R$167M loss in 2022; core cash generation was negative R$201M for the year, despite R$131M generated in 4Q23.

Financial highlights

• Core 4Q23 net revenue was R$1.893B, up 20.1% YoY; gross profit rose 46.7% to R$463M and gross margin increased 4.4 p.p. to 24.5%.

• Core adjusted shareholder profit was R$52M in 4Q23 versus losses of R$52M in 3Q23 and R$83M in 4Q22; full-year adjusted profit was R$82M versus a R$167M loss in 2022.

• Consolidated net revenue was R$7.430B in 2023; consolidated net loss was R$112M in 4Q23, improving from R$301M in 4Q22.

• Full-year core selling expenses increased 14.4% YoY to R$721M and G&A rose 14.3% to R$455M; financial result improved to negative R$92M from negative R$206M.

Outlook and guidance

• Strategic vision targets 40K units/year, 35% gross margin, 15% net margin, 15% cash generation, R$10B net revenue, and R$1.5B each in net margin and cash generation.

• Against MRV Day projections, 2023 actual net pre-sales of R$7.2B and gross margin of 22.7% met the stated ranges; net debt/equity was 45% versus 54–58%, while cash generation was negative R$201M versus R$0–200M projected.

• Urba expects gross margin in upcoming quarters to recover to levels above 3Q23 after a project-specific budget revision affected 4Q23.