MRV (MRVE3): BTG sees weak results, impacted by Resia

BTG Pactual classified MRV 's (MRVE3) 4Q24 results as weak, with a net loss of R$250 million, above market projections. The negative result was driven by larger-than-expected losses at Resia, its US operation, in addition to higher financial expenses and taxes on the reversal of tax benefits in the US.

The company's net revenue totaled R$2.38 billion, an increase of 22% compared to the same period last year, in line with estimates.

Adjusted gross margin was 29.9%, up 250 basis points year-over-year but still 40 basis points below expectations. This performance was impacted by higher provisions for construction costs.

Adjusted EBITDA totaled R$179 million, up 111% from the previous year, but still 47% below projections, reflecting Resi a's losses. As a result, the final loss exceeded initial expectations of negative R$150 million.

Despite the loss, MRVE3 generated R$312 million in cash in the quarter, driven mainly by the sale of receivables. This amount was distributed among:

• R$203 million in low-income operations, aided by R$377 million in securitizations;
• R$16 million in Luggo, its multifamily operation in Brazil;
• R$ 19 million in the subdivision segment (Urba);
• R$74 million in Resia, thanks to the sale of projects that generated R$475 million.

As a result, MRV ended 2024 with a net debt of R$6.2 billion, which represents a debt/equity ratio of 82%. In addition, the company has approximately R$3.8 billion in liabilities related to credit assignments, which are not accounted for as debt.

MRV's fourth-quarter balance sheet was weaker than expected by BTG, with losses above forecasts at Resia, in addition to higher financial and tax expenses.

Despite the company's discounted valuation, with a P/TBV of 0.6x, margin recovery in Brazil has been slower than expected, the report says, due to continued provisions for cost overruns.

Furthermore, the outlook for Resia remains challenging, amid high interest rates in the United States. Given this scenario, BTG Pactual indicated that it will update its model for 2025, considering a more conservative scenario, as the current numbers seem overly optimistic.

Analysts still recommend buying MRV shares , with a target price of R$17 per share MRVE3 .

At around 2:45 pm this Tuesday (25), MRV was down 1.87% on the Ibovespa, with MRVE3 shares trading at R$5.24.