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Strong quarter and deleveraging progress: Q1 revenue rose to $263.2M (from $125.1M), adjusted EBITDA doubled to $125.2M and adjusted net income was $72.4M ($0.69/sh); available liquidity was $146M and net debt fell to $491M, reducing leverage to about 1x, with deleveraging the top capital-allocation priority.
Currency/hedge impact: A stronger Brazilian real raised reported C1 cash costs by roughly $0.06/lb, but Ero realized a $7.3M FX gain in Q1 and says its foreign-exchange collars protect cash flows below BRL 5.54, implying an estimated $45–50M realized FX gain for the full year if the real holds.
Operational outlook and projects: Caraíba hit >1M tonnes throughput but faces grade variability, Tucumã costs remain in line with guidance, and Xavantina is transitional after ventilation/cooling upgrades; management expects production and concentrate sales to be weighted to the second half and is installing tailings filters and advancing the Pilar shaft to boost throughput exiting 2026.
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Ero Copper (NYSE:ERO) executives said first-quarter results reflected a year of portfolio investments and risk management initiatives, while also highlighting the impact of a stronger Brazilian real and broader industry cost pressures.
During the company’s first quarter 2026 earnings call, President and CEO Makko DeFilippo described three themes he said are shaping the current operating backdrop: strong enthusiasm for copper amid “tight supply” and a lack of quality development assets; “sector-wide cost inflation” that is “a ground truth reality”; and growing investor attention on Brazil, which he said has contributed to a “considerable strengthening of the Brazilian real against the U.S. dollar,” directly affecting Ero’s cost base.
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Executive Vice President and CFO Wayne Drier said first-quarter revenue was $263.2 million, up from $125.1 million in the first quarter of 2025. He attributed the increase to stronger copper production at Caraíba and Tucumã, higher realized copper and gold prices, and the contribution of gold concentrate sales at Xavantina.
Drier reported consolidated copper C1 cash cost of $2.39 per pound, up about 8% year-over-year. He said part of the increase was driven by the stronger Brazilian real, which raised reported C1 costs by about $0.06 per pound versus the company’s budgeted BRL 5.40 exchange rate.
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However, Drier said the currency impact was offset on a cash flow basis by a $7.3 million realized gain from Ero’s foreign exchange hedge program during the quarter. He added that Ero’s existing foreign exchange collars “protects our cash flows below the 5.54 level,” and estimated that if the real remains at current levels, higher reported costs would be offset by an estimated realized foreign exchange gain of about $45 million to $50 million for the full year.
Adjusted EBITDA doubled year-over-year to $125.2 million, and adjusted net income attributable to shareholders was $72.4 million, or $0.69 per fully diluted share, Drier said.
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On liquidity, Drier said Ero ended the quarter with $91.2 million of cash and $55 million available under its senior revolving credit facility, for total available liquidity of $146 million. Net debt was $491 million at quarter-end, down $11 million from year-end 2025 and down about $70 million year-over-year. He said the improvement in trailing results reduced the company’s net debt leverage ratio to about 1x from roughly 2.4x at the end of the first quarter of 2025.
Drier said continued deleveraging remains the company’s “top capital allocation priority.” Having reached its 1x leverage target, he said the $145 million drawn on the revolver is the next debt-reduction focus, while the company also expects to fund internal growth projects and “over time” begin returning capital to shareholders.
Executive Vice President and COO Gelson Batista said the company’s operational work “is starting to come through in the numbers,” while noting quarter-to-quarter variability driven by mine sequencing, weather, and planned investments.
At Caraíba, Batista said throughput exceeded 1 million tonnes in the first quarter, marking only the second time the operation has achieved that level. Copper production declined from the prior quarter due to lower head grades, plant stop sequencing at Pilar, and reduced feed from the Surubim open pit after heavier-than-average rainfall constrained mining rates in January and February. Caraíba’s first-quarter C1 cash cost was $2.79 per pound, which he said reflected those dynamics and the stronger Brazilian real.
Looking ahead, Batista said Caraíba’s processed tonnes and grade in the second quarter are expected to be “broadly similar” to the first quarter, with stronger second-half production expected as mining rates normalize and the mine accesses deeper, higher-grade Surubim benches. He also said higher grades and tonnage from Pilar and Vermelhos are expected in the back half due to sequencing, and that cash costs should decline in the third and fourth quarters, supporting reaffirmed full-year cost guidance.
At Tucumã, Batista said copper production decreased modestly from the fourth quarter due to lower processed grades, partially offset by higher throughput. Tucumã’s C1 cash cost was $1.97 per pound, which he said was in line with expectations and full-year guidance. For the balance of the year, he said processed tonnes are expected to increase from first-quarter levels while processed grades moderate, leaving production slightly weighted to the second half on higher throughput. He said costs are expected to remain relatively stable for the year, supporting reaffirmed guidance.
At Xavantina, Batista said the first quarter was transitional as the company completed upgrades to ventilation and cooling infrastructure needed to support higher mining rates as the mine deepens. He said those investments weighed on first-quarter gold production and costs, and that management expected the first quarter to be the weakest gold production quarter of the year. He said mining rates and throughput are expected to pick up through the end of the second quarter and remain higher in the third and fourth quarters, with 60% to 65% of Xavantina’s production expected in the second half. Costs are expected to “decline significantly from Q1 levels,” he said, allowing the company to maintain full-year gold production and cost guidance.
Management also discussed the timing of gold concentrate sales, which can be affected by rainfall and drying conditions. Batista said Ero sold about 4,300 ounces of gold and concentrate in the first quarter, and that concentrate sales volumes declined from the fourth quarter because the rainy season can limit the company’s ability to dry material before transporting it to port.
DeFilippo said the company had approximately 12,000 tonnes of concentrate on site in the drying phase and expects sales volumes to ramp “pretty meaningfully” in the second quarter as drier conditions improve drying and transport. He said the rate of sales remains dependent on the number of sunny days, and added the company is unable to provide forward-looking guidance on concentrate sales timing.
To improve continuity through future rainy seasons, Batista said Ero is finalizing installation of an industrial dryer and a mobile filter press. DeFilippo added that the company has not seen grade trends that differ from the resource assumptions on sampled volumes, citing “right around 1 ounce per ton or a bit higher” as a benchmark.
On Tucumã’s tailings filtration circuit, Batista said Ero has two initiatives aimed at increasing capacity and throughput: three modular tailings filters expected to be delivered to site in the third quarter and operational in the fourth quarter, and additional filter plates for existing filter presses expected to increase capacity per press by about 7%. He emphasized that potential throughput benefits from these initiatives are not included in 2026 guidance, though management expects them to enable a “significant increase in plant throughput as we exit 2026.”
DeFilippo also said the Pilar shaft project is progressing, with the company having completed the “second leg” and starting the “third and final leg.” He said the company is still targeting reaching shaft bottom by the end of this year or early next year, which he described as the project’s critical path.
On cost pressures, Drier said Ero is “reasonably well-insulated” given its operating structure, but he noted that the ongoing Middle East conflict could add $0.05 to $0.10 per pound to operating costs if diesel and other inputs remain at current levels. DeFilippo told analysts that Ero is not seeing supply shortages and has proactively built inventories of key imported consumables, drawing on contingency planning from prior disruptions such as COVID-19 and a trucker strike.
Asked about labor inflation, DeFilippo said the company negotiated an average 5% labor increase in the fall, typically aligned to inflation. He noted that historically such increases were absorbed by Brazilian real depreciation, but the recent strengthening of the currency has increased the importance of Ero’s hedge program.
DeFilippo reiterated the company is focused on executing against reaffirmed full-year guidance, noting the copper business achieved about 24% of the consolidated midpoint in the first quarter and that production remains expected to be weighted to the second half. He also said Ero has drilled more than 60,000 meters at the Furnas project, while the project’s preliminary economic assessment reflects only the first 28,000 meters. DeFilippo said the company is planning a mid-year update on exploration results and progress on key pre-feasibility study work streams.
The company also said it plans to host a Capital Markets Day on September 14 in São Paulo.
Ero Copper Corp (NYSE: ERO) is a Canada-based natural resource company focused on the production of copper concentrate from its Brazilian operations. The company’s flagship asset is the Vale do Curaçá mining complex in the state of Bahia, which includes multiple underground mines and a centralized processing facility. Ero Copper’s primary product is copper concentrate, which is sold to smelters and end users around the world.
The Vale do Curaçá complex comprises the Pilar and Surubim underground mines, supported by a fully integrated processing plant.
The article "Ero Copper Q1 Earnings Call Highlights" was originally published by MarketBeat.