Dexco (DXCO3) investor relations material

Executive summary

• First quarter 2026 marked an inflection point with disciplined execution, margin expansion, and deleveraging, reflecting progress in the transformation plan and celebrating the 75th anniversary with a focus on sustainable profitability and operational improvements.

• Adjusted and recurring EBITDA reached BRL 478 million in 1Q26, up 38.3% year-over-year, with all divisions contributing, especially Wood and Metals & Sanitary Ware, while Coatings/Ceramic Tiles faced ongoing market challenges.

• Net income reached BRL 72 million, up 22.7% year-over-year, reflecting margin gains and operational improvements.

• Free cash flow was positive at BRL 235 million, supported by disciplined capital allocation and strong cash generation.

Financial highlights

• Recurring net revenue increased 6.1% year-over-year to BRL 2,019 million in 1Q26.

• Gross margin improved to 27.4% from 23.4% year-over-year.

• Adjusted and recurring pro forma EBITDA (including LD Celulose) was BRL 658.5 million, up 7.7% year-over-year.

• Operating free cash flow totaled BRL 226 million; total free cash flow was BRL 235 million.

• Net financial result was negative BRL 213 million, reflecting high interest rates and higher average debt.

Outlook and guidance

• Second quarter 2026 expected to remain volatile, especially for ceramic tiles/coatings, with no short-term demand recovery and focus on productivity and cost discipline.

• Metals & Sanitary Ware to prioritize margin expansion and price capture, monitoring demand response to price increases.

• Wood division expects stable demand and ongoing price capture but faces rising input and freight costs.

• LD Celulose anticipates continued high productivity and possible improvement in dissolving pulp prices.

• Management prioritizes deleveraging and a conservative liquidity strategy.