MRV Engenharia e Participações (MRVE3) Q1 2025 earnings summary

Executive summary

• Operational and financial indicators improved quarter on quarter, with net revenue reaching R$2.18 billion in 1Q25, up 17.5% year-over-year, and launches growing 81.2% year-over-year to R$2.89 billion.

• Despite run-offs from Resia and a portfolio sale, management remains confident in meeting guidance, with strong positioning in Brazil's low-income housing market.

• Resia deleveraging initiated with asset sales, impacting short-term earnings but expected to drive strong future cash generation; US operation posted a net loss of US$52.3 million due to asset sales and impairments.

• Preliminary, non-audited results show stable pre-sales, but temporary transfer delays and new payment methods impacted cash generation.

Financial highlights

• Net revenue increased by 17.5% year-over-year, with 9,454 units built in Q1 2025 and launches reaching R$2,888 million, up 81.2% year-over-year.

• Gross margin reached 29.6% after interest, up 3.7 p.p. year-over-year.

• EBITDA improved 43% year-over-year and 22% sequentially, but adjusted net income attributable to shareholders was R$26 million, down 67% from 4Q24.

• Cash generation was negative at R$50.8 million, mainly due to delayed transfers and changes in Caixa payment modalities.

• 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.

• Backlog of untransferred units is being addressed in 2Q25 as regional program issues are resolved.

• Resia asset sales planned to generate $500 million to $800 million in cash by end of 2026, supporting deleveraging.

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