WEG (WEGE3) Q1 2025 earnings summary

Executive summary

• Net operating revenue reached R$10,078.6 million in 1Q25, up 25.5% year-over-year, driven by strong performance in energy generation, transmission, and distribution (GTD), and recent acquisitions.

• EBITDA rose 22.8% year-over-year to R$2,173.0 million, with a margin of 21.6%, slightly down due to product mix changes and higher solar project deliveries.

• ROIC stood at 33.2%, down 570 bps year-over-year, mainly due to increased capital from acquisitions and non-recurring tax incentives in Q1 2024.

• Net income was R$1,546.0 million, down 16.4% year-over-year but up 8.8% from 4Q24; net margin was 15.3%.

• Integration of acquired businesses (Marathon, Rotor, Cemp) and the acquisition of REIVAX supported revenue growth.

Financial highlights

• Domestic market revenue grew 14.0% year-over-year; external market revenue increased 36.3%.

• Adjusted for acquisitions, consolidated revenue would have grown 16.3% year-over-year.

• Gross margin was 32.9%, down 30 bps year-over-year, mainly due to product mix and higher raw material costs.

• SG&A expenses rose 36.6% year-over-year, mainly due to consolidation of acquired businesses and higher freight costs.

• Cash flow from operations was R$540.5 million, with R$701.8 million spent on investments and R$2,003.0 million consumed in financing activities.

Outlook and guidance

• Management expects continued double-digit revenue growth, supported by favorable energy transition trends and a diversified global presence.

• Solar revenue is expected to decelerate in the second half of 2025 as current project deliveries are completed.

• Strategy focuses on expanding opportunities, mitigating risks, and maintaining healthy operating margins.