Good morning, ladies and gentlemen, and welcome to the earnings call of the second quarter of 2024 of Multiplan. We have here today the Executive Director of the company, and we invite all the participants that the earnings presentation is available for download at Multiplan Investor Relations website. Before we would like to continue, I'd like to say that any forward-looking statements that are based on the beliefs and assumptions of Multiplan Management and on information currently available to the company, and it's available for the company. Any of these forward-looking statements are not insurance of performance, and these forward-looking statements depend on circumstances that might occur or not. Investors have to understand that industry conditions and any other operational factors might affect the future results of the company and might lead to results that differ materially from those stated in the forward-looking statements.
Now, I'd like to give the floor to Mr. Eduardo Peres, the CEO. He will start the presentation. Please, Mr. Eduardo, the floor is yours.
Good morning, everyone. Thank you for being here in this call of the second quarter of 2024. Today, we have a fortuitous event. It's been exactly 17 years today that we were listed. For us to celebrate this date, we would like to start by the financial and operational results of the company. Over the last 17 years, this company has been growing incessantly with growth of two digits in all indicators, financial and operational. In the second quarter of 2024, it wasn't different. The earnings grew 14%, and the semester we grew 20%, and we continue to advance towards the growth of the company. As previously stated, well, yesterday at Curitiba, we delivered 15,000 square meters of ABL. The tenants were much impressed.
We also, in July, have another 5,000 meters in Belo Horizonte. So, out of the 70,000 that we developed, we still have in development in Morumbi, Maceió, Jundiaí, São Caetano, Brasília, that will come shortly in GLA. Well, we were impacted by the events that happened in Rio Grande do Sul. Regardless of that, the company continued to grow. BarraShoppingSul, Golden Lake, and Canoas were not impacted by the rains and the floods, and they were working so we could have, well, they worked at shelters due to the floods in Rio Grande do Sul. In the following month, in BarraShopping and Canoas, they were growing in the 40% range, recovering the sales that were dropping at the month of the tragedy. It's very important for the company that we continue in this path of growth with success. Another very important part is the digital innovation.
Multi has gone over the part of implementation of the access of Multi and the shopping malls, and we are trying to find other benefits for the clients. Multi, just so you know, over the last 12 months, we had 2 million accesses, 12 million accesses, 2 million downloads. So, the digital strategy of the company has been growing day by day. I'd like to finish by adding that over the last 36 years that we've been working here, I have never seen such a prosperous period as the one that we are undergoing right now. The company grows. People's performance is full performance in everything that they do. I'm going to close here so we can open the space so you can ask the questions that we can debate on any other issues that you might like. Thank you.
Now we're going to start the Q&A session for investors and analysts. Should you have any questions, please click on the Q&A button and write down your name and question. We will answer the questions as we receive them. First question, Mr. André Dibe from Itaú BBA. Please, the floor is yours.
Hi, everyone. Thank you for the presentation. Thank you for the opportunity. Actually, I have two. First is regarding the rent, the rent dynamic, specifically the drop year-over-year on important assets on BarraShopping and MorumbiShopping. I wanted to understand what do you think that justified this drop in rent? Maybe there is the works of revitalization, but another thing, when these works are going to stop impacting the rent collection in the future? Secondly is capital allocation. After the recent Canadian manifestation to stop being an investor, well, if they do not exercise that preference, do you think that it would be, there would be a movement for repurchasing the shares from OTPP on this front?
Sorry, André. I didn't understand the final part of your second question. Sorry, I didn't—what was the term of the second question?
In regards to, well, what you published on Ontario Teachers' Pension Plan, then they have the interest in not—and if Empar doesn't exercise the preference, right, are you going to intensify the buyback? And what else would you take into consideration in that sense?
André, thank you. Eduardo here. In regards to the option that Ontario—well, this is a partners' discussion. It doesn't go through Multiplan. There is the whole rule for purchasing and selling that is in the bylaws for the shareholders. So it doesn't go through us. In regards to repurchasing the shares, we've done a strong movement of the buyback this year. It makes sense when we finish this period. If the share continues at the threshold that we continue today, we're going to continue to repurchase in a very intense way. Now, there is a question about rent and BarraShopping. So besides the works for improvements, MorumbiShopping, yeah, yeah. Can you continue?
André, Armando here. A good example for us to have is New York City Center. New York City Center, sorry. This is the first shopping mall that we've revitalized. And it's just been 6 months since we finished the works. We have a lot of examples that are consolidated by ParkShopping. That was 2019. But let me bring you these numbers. We had a growth in sales astronomical, 16% higher. You see that the rent of New York City Center grew in this quarter, 20.7% in the quarter, in the semester, over 21%. This is an example of the positive effects of the improvement works. But once again, we cannot make an omelet without breaking the eggs. When you do that, you cause a temporary discomfort in the shopping malls. You use two examples, which are Barra and Morumbi, that are going through a big revitalization.
Morumbi is undergoing, besides that, an expansion. It's in the short term, you're going to have nice space for kiosks and other operations. You're changing the floor. You're doing a lot of changes, but it's temporary. To complement what Armando said, I have no doubt that at the end of these improvement works, besides having the malls updated, the rent will grow. This is what we've realized.
We've been following up on all the improvement works that have been done. As it was mentioned before, you bring a warmer, more modern environment, and that stimulates the good tenants to work with us. That happened in Belo Horizonte. That happened in several assets, as Armando has mentioned. Second question about the capital allocation. I think that it's very clear what we are doing, but let's separate it in two blocks: block of the short-term opportunity and the medium-long-term opportunities. First is the repurchasing of shares, short-term. This is the way that we work with the market. This semester, we repurchased more shares than in the whole of 2023. We saw the prices. We saw the negotiations and the multiples. We showed it at the earnings, what was our opinion. The other point is on the medium-long-term, which are the expansions and purchasing participations.
Whenever we invest the money, we want to have the best return. With an expansion, you don't have an immediate return. Well, you have to do the expansion of Barigüi, for example. I didn't just comment the date, but we started this project of Barigüi 12 years ago. So yes, this is what I mentioned: medium to long-term. But we have certainly to invest, allocate capital in these investments in these expansions. It's the best investment that we can do today. It's clear to us that in 12 months, we allocated BRL 1.7 billion over that between expansions, which are about CAPEX. It's about BRL 700 million and BRL 800 million of repurchasing the shares and returning the money to the investors over interest over our own capital. Did I answer it?
Yes. Clear. Thank you.
Next question. Pedro Lobato, Bradesco BBI. The floor is yours. Good morning, everyone.
Thank you for the opportunity. First question, Golden Lake. I want to understand how do you see the real estate dynamic and what is the expectation for the next phases besides that? Still at Golden Lake. Did you have any issues with budgeting? Did it change the margins? I thought it was 30% of gross margin. Is that the expectation still looking up ahead? Second question in regards to CAPEX. First semester, you got to BRL 410 million of CAPEX. I wanted to understand what is the expectation of the year for the year. We see some issues with the workforce, the lack of specialized workforce. Would that impact your CAPEX?
Pedro, Eduardo. Well, sorry that I didn't mention this, but about Golden Lake, it was in my speech, and it was, well, we had very small impact in a big work, regardless of everything that happened in Rio Grande do Sul. That's because of engineering that always looks at the last 100 years of events to imagine what would happen. The enterprise was not affected by the floods, but we know since 1941 that it could happen. So that's why you build at a higher ground. But in fact, today we have 76% of sales at Lake Vitória, and we are working towards launching Lake Eyre in August of this year. There was an impact in the cost of the work. I believe no. In the long term, well, there might be.
Yes, maybe some providers are going to have some issues in being able to fulfill the deadlines that were agreed at the beginning of the works, but nothing that goes beyond the deadlines that we have wiggle room for. Well, we still have a good rhythm for sales, and I believe that this will intensify with the launching of Lake Eyre. Then you have to bring a different public with a different public for this enterprise. And CapEx will accelerate. Well, what you've asked. We're going to continue to work with this. This is a year of a lot of development with a lot of investment. We've had the end of the work of the expansion of Barigüi very strongly, a good work. Now at the end, it tends to increase the expenditure.
We also have all these revitalizations that happen, these improvements that happen that will change the cash flow of the company. But certainly, the return is guaranteed. We are certain of what we are doing. So DiamondMall, another one that will have a launch, and it was delivered for the tenants now in November. So we're going to intensify the expenses. Did I answer it?
Clear. So the specialized workforce, has it been a concern for you in some of these works, or is it stable?
In the southern region, during the rain periods, of course, we had issues. Now it's normalized.
Thank you very much. Have a nice day.
Next question. André Mazini, Citibank. The floor is yours.
Good morning, Eduardo, Armando, the whole team. Two questions. First, about the real estate sales line of the BRL 73 million, half was RiverOne and half Golden Lake, so half and half. Do you have—well, you have the second phase of the Golden Lake and the second part of this year, but also there are the works you sold the terrains in Ribeirão Preto. So there would be 50/50 in selling those real estates, and the—well, it would be BRL 50-100 million arranged that makes sense in that line. And the second follow-up of the revenue of rent, regardless of the occupancy has increased. Well, we have three factors of the drop in rent that would justify the drop between the IGP-M, very low, the situation at Rio Grande do Sul that was seven days, leniency, and the expansions, retrofits.
What are the three factors that explain the slight drop in rent revenue for this year? Year-on-year comparison.
André, good morning. Selling of real estate, now talking about Ribeirão Preto. It's a strategy of the company to sell what we're not going to develop. Of course, we have exclusivity in the commercial activity of the shopping mall. So the movement that you saw at Ribeirão Preto will be repeated in different places. It doesn't make sense for us to have a land bank eternally if we're not going to develop these lots. So it's much more productive and profitable for the company to transform this money and bring this to other businesses that we believe that we have better investments. It's a movement that we're trying to do in different states. How much? It's difficult to calibrate. What is residential? What is the land, the plot? Well, we want to just have what we will develop. Now, Ribeirão Preto, it was four businesses.
We sold four terrains in Ribeirão Preto, four land plots. Now, there's nothing else that we're going to sell or develop in Ribeirão Preto. Everything is sold, announced, confirmed, one business. The others have been signed. You will have knowledge up ahead. André, just to complete here, you asked about the VGV. Of the BRL 560 million for the VGV for Golden Lake, BRL 338 million has been sold. And what is being placed on the budget, it's in accordance to the building. So there is a lot of revenue that will be in the books as the works evolve. In regards to the question of the rent, you listed the three main points.
The inflation index that was negative, and now it's in a positive field, but it's still not positively in the rent contracts, the effect of Rio Grande do Sul, and the effect in merchandise that was the largest effect because of the revitalization works. So those are the points that that's why the rent is 1.2% lower. There is another point that you didn't consider, which is the issue of the towers. The rents of towers, it was 1.9% lower. And the shopping malls was just 0.9% lower because of timely issues. We look at this very positively up ahead, the recovery in rent.
Thank you, everyone. Next question. Gustavo Cambauva, BTG Pactual, please. The floor is yours.
Good morning, everyone. I wanted to hear from Eduardo. Well, since you are from the controlling group, about that point of Ontario, OTPP, that you commented in the previous question. Well, I know that you have a lot of limitations on what you can discuss, but I wanted to hear more from the standpoint of the family. You even commented that the price of the share is discounted. The company has done a lot of buybacks, and the valuation, even for the family, this is a moment that is interesting of increasing their participation in the company once you have that opportunity on the table.
So I wanted to understand on how you see that from the timing standpoint, given the price of the share at the current moment. And I wanted to hear from you. Well, you've always had that shareholder agreement. You had total control over 50% of the shares. I wanted to understand how do you see, well, is there a percentage that you think that it's minimum to have as a part of a control block? Can you have less than 50%? Does it have to be more than 50%? How do you see this? Thank you.
Gustavo, thank you for the question. Unfortunately, I cannot answer your call here. This is the call of Multiplan and not the Peres family. I cannot advance anything in regards to that. We try to do the due diligence of Multiplan. It's a different agenda from the family. As it was, this is a shareholder discussion. And here, there is the day-to-day of Multiplan that is very dynamic so that the company continues to grow as it has been growing over the last 17 years. I have nothing against answering anything, but I cannot speak for the family as a whole.
Thank you, Eduardo. Now, given the public data that the control of the company is done with the block of 40%, even though the shareholders have over the 50% of the company, but the shareholders' block is with linked shares of 40%.
Thank you, Armando.
Thank you. The next question comes from Ygor Altero, XP. Please, Ygor.
Hi, everyone. Thank you for the opportunity. Two questions. First, from the standpoint of recycling, I wanted to understand how is your—what do you think you're doing to capture? So I wanted to understand what makes sense from the selling, what in the dynamic, and we've seen the partnerships that Iguatemi did with Banco do Brasil. So to earn more buyer power, does it make sense of a similar structure so you can have more buyer power without being—well,
Hi, Ygor. This is Eduardo. Thank you for the question. Now, the recycling of assets, well, we have an approach of several sources to buy the assets, but it doesn't really, well, it's not the philosophy of the company as a whole. We've been growing. We want to continue to grow. Unless there is a very clear reason, we're not going to try and sell any assets. This is not what we want. When you talk about partnership, because of the level of leverage of the company, we are very deleveraged, and we are ready to do any important movement that we didn't even think about doing, maybe buying another company or buying an asset. Not that this is the path that we want to follow today. We know that the moment here is growing with the expansion so we can complement on what we've done in the past.
Today, the best vector for the growth of the company is through the expansions. Well, I wouldn't say that there isn't a chance of a transformational acquisition. Well, there's always a chance, but I cannot see the growth of the company looking at the neighbor's lawn, so to speak. So that's our opinion. Thank you.
Next question comes from Fanny Oreng from Santander. Please. Your microphone is, well, he had a problem in her machine. We will return to her question later. So next question, Jorel Guilloty, Goldman Sachs. Please, the floor is yours.
Good morning, everyone. Thank you for taking my question. One about IGP-M, the other about the shares. Well, we see that the IGP-M has been increasing a lot. So I wanted to know at which point do you believe that that might have a positive impact for the growth of your rent? Would it be at the end of this year, next year? And the second question is about the improvement works. Now, we are at the peak of the impact of this in the rents, and I wanted to know how this is going to be impacting. Is it going to be another six months, another year? That's it.
Jorel, good morning, Armando. Speaking, thank you for your questions in regards to IGPM. There are models. We see that IGPM, if it's positive, it's going to impact gradually from the second quarter onwards. Second question about the improvement works. It really depends on the schedule of the works. So it's 13 malls that are going through improvement. So it's difficult to see the moment that you start to have an inflection. It really depends on each work on this flow. But what we see in a very positive way, as it was said before in the post-revitalization and impact both in sales and brand. I think that Marcelo Martins wants to do a comment.
Well, Jorel, just to discuss this. We have, in fact, several works of improvement. They're going to start to produce positive effects. Well, they are, but at the end of this year, this is going to happen. So I believe that at a certain moment, there will be an equilibrium. Well, there was something that was lost because there was a difficulty with the tenants and improvement works and temporary operations. But the effects that they generate that is positive for those that work that go to the mall is immediate. Just so you can have in mind that it doesn't produce, well, it has an effect when people feel that the assets are changing.
Just to show, Barra & Morumbi, we are planning on continuing this year, and then we continue next year, and then we finish. Barigui, we launched the expansion next year. It's going to be ready this year. Pátio Savassi, there is a part this year and next year. DiamondMall, there is the expansion. We have the improvement two, three years. So it's a mix that is complicated. But I am analyzing the financial part. I don't think that there is going to be any higher peak than this one because in several of the malls that happened, there's still going to be allocations. They're selling well. And we are not talking about Barigui is going through a total transformation, 15,000 meters of ABL with 50,000 of actual work of building. So they suffered a lot in this period.
The metallic structure, 3,000 tons of metal structure to assemble this expansion. But I am certain that up ahead, it will be compensated.
Now it's clear. Thank you.
Thank you. So Fanny Oreng is reconnected. So Fanny, your microphone is enabled. Fanny, can you hear me?
Yes. Thank you. I have two questions. First, in regards to the future provisioning, we see that the health of the tenant is well. But when you look at the stock of PPD and the high level of the company you have a large stock provisioning. So I want to understand what we can expect up ahead in terms of provisioning for the companies. Is there any space for seeing the provision in the future? That would be the first question. Second question, since Marcelo is there talking, I wanted to talk about the margin of Golden Lake.
I want to see if the rains in the south had had an impact in the profitability of the project. Can you discuss this? So these would be the two questions. Thank you.
Fanny, Armando, thank you for the question. Marcelo is going to answer the question. The first is yes, we can see a better environment so that should impact positively the future provisioning, reducing the provisioning. That's our expectation. Some quarters, we had a negative or very low influence if you see the quarters. So that's it. And we see also sales that are collaborating a lot. The number of people increasing, the shopping mall very good. So it creates a positive movement. Marcelo, would you like to answer the second one?
I think the Golden Lake, as Eduardo anticipated, was very well impacted. It's very safe and resilient. So we've seen a lot of people looking for Golden Lake as an alternative for living there, which is a process that we've been doing for two, three years. We've anticipated all the works of common areas such as the spa so they can be ready at the end of next year. As Eduardo has anticipated, we might have an impact in the deadline, but the margin is 30%. And we will launch now Lake Eyre at the presale in August and September. And we're very excited about that because the market really started to see our Golden Lake as a place to live. I think that's it. And Fanny, just to complement.
Thank you for your participation. And what Marcelo is saying is that this is visible. You feel that there is a change in importance because the quality of the enterprise and the planned neighborhood that we are doing had a value before the tragedy, and now it has a different value. So I believe in the appreciation and the improvement of the good project of the Golden Lake in the next stages.
Would it make sense to have an increase of price given, well, it's much higher than Guaíba? Being above the Guaíba has a high value for those that live in Porto Alegre.
Yes. We still do not work with this hypothesis. Lake Eyre, we hope to have, well, a bit in, well, we hope that this is actually going to happen. When we did the Golden Green many years ago, people didn't understand what we were doing. There was a difficulty in selling that.
And now Golden Green is one of the most expensive square meters in Rio de Janeiro. So I am certain that this will be reflected in Golden Lake. Well, definitely the Golden Green, we did the other works, Golden Lake is bigger than Golden Green. We are developing the spa, the area, the club. I mean, everything that might integrate the condominium and give it life. So from the middle of next year, you're going to have that ready. And really, the appreciation of the square meter is going to be higher. Thank you.
Next question, Aline Caldeira, Bank of America. Please, the floor is yours.
Good morning, everyone. Thank you for the opportunity to ask the questions. Well, I wanted to talk about two things. First, about the result of the parking. Because of the flow that was affected by the rains in the south and the discounts of those clients that downloaded Multi. So what is the result for the parking lot? There might be a promotion. And also, how do you understand that adherence to Multi might add to the potential improvement of the shareholder agreement? And the second doubt is concession. Looking at the mix, today, the turnover is much closer to what it was pre-COVID. It's much more stable. Do you see a qualification of mix as a lever of growth of rent, or you've done a very strong work in that sense over the next years, or are you comfortable with the portfolio of tenants? And it would be nice if you can see that type of opportunity for a specific asset. Thank you.
Aline, Armando talking. Thank you for your question.
In regards to the parking lot, if you look now, so for those that have Multi, there is that access. Well, the grace period is ending, and it will have a positive impact in the revenue of the company. Some of the tariffs in some malls are revisited from time to time, so we can accommodate the flow of the shopping malls over there. So it's normal that we also have these adjustments of tariffs. And more than that, we've seen an increase of flow of vehicles in the shopping mall. That also contributes positively. Now, remember that we're going through the time that we're going to into Christmas, which is very important. So the access, well, we want to know our clients better. What we wanted with the Multi app is that we wanted to integrate the client to the shopping mall. They're very excited with the Multi Access.
Multi is much higher than this. It's much better than this. It has a lot of goals. The events have grown a lot. There is the number of accesses, over 400,000 accesses. So in regards to your second question and the mix, well, this is a part of the day-to-day of the question. So really, the turnover has decreased a lot, but it's still high. If you get 10 years ago, it was 3%-4%. Now, the turnover is 6%. In last year, that drop, we had a big area in Porto Alegre that we did the exchange of mix. So now we have the turnover up ahead, and now it's normalizing. So we have the stores. So now we have 100,000 over new stores. So at the end of the year, we're going to have to continue to do the essential work of the management.
And this is one of the pillars of growth on the long term. And to complement the journey of Multi, when we imagined Multi as service providers, we thought that this would be the shopping mall, that this is the home of the people. And this is what's happening. It's cheaper. It's easier, the access to promotions. And so Multi still has a lot of long ways ahead to get to where we want. We've been receiving and have the inputs of information of the clients that we didn't have in the past. And when we had the other access to the parking lot, we didn't know who the clients were. Now, more than half of that we can map. Over 50% use the Multi app, and we know where the people are coming from. Did we answer our leading?
Thank you very much.
Next question, Jonathan Koutras, J.P. Morgan.
Please. Good morning, Eduardo, Armando and the team. Well, the question on my side, the first is the tax reform. There is always a reading of the potential impact and the reviews. It seems that the last review is going to affect the sector, but I wanted to hear your opinion. And the second one, still at Golden Lake. In August and September, as Eduardo commented, it would be the first phase of BRL 560 million or something lower.
Jonathan, Armando, first, the tax reform, well, we have to take one day at a time. You had the finishing of the approval at the lower chamber, and now there is a Senate. We have to evaluate what's going to happen before we can have a definition of what are going to be the impacts of the tax reform for the real estate sector and specifically for the property sector. That's all that I can tell you. Golden Lake, Marcelo, would you like to talk about the VGV?
Well, the phase of Lake Eyre, it's going to be apartments of 180 sq m and 120 sq m. There are two towers. So VGV is lower because the private area is lower. Return of BRL 300-some million estimated of VGV returns for this first phase.
Thank you.
Next question is written by Marcelo Queiroz Vieira from the Investment Club.
Good morning, everyone. Could you comment on the process of changes in the charging at the parking lot? Well, the ending, the discount, valuing this effect for the third quarter of 2024. Now, can you discuss the digital media of the shopping mall, and in which way do you see the use of media in the Multi app? What is the number of utilization, the acceptance number for the Multi app? Thank you.
Thank you, Marcelo. Thank you for the question. The first part of your question, answering about the effects of discount, they are done. Now, we are aiming for Multi. Well, the positive effects, you're going to see them in the future. We had 6 million, almost 7 million, 7,700 downloads over the last 12 months. No, the record, sorry. We have here about 12 million access at Multi. Last year, Multi was amongst the top 10 of App Store. So to monetize through the ads and the media is within it's not our objective. The objective is that it is that the function of it is complete. The journey hasn't finished. We have the toolbox, and now we start to grow the amount of functions. So there might be a possible way of growing, and there is the loyalty and also the media.
So the media in Multi, not within the app. Okay. So I think I answered. So we are also expanding the internal media of the shopping malls and changing the tokens. I hope that I answered your question.
Thank you for all the questions and your interest. We're going to close now the Q&A session. And we invite all participants that still have questions to get in contact with the Investor Relations Department. I'd like to give the floor to Mr. Eduardo Peres for the finishing. Mr. Eduardo, the floor is yours.
Thank you very much for your time with us in this call. Once again, I'd like to reinforce what I just mentioned. I don't want to be the larger. I want to be the best and most profitable. This is the mindset of this company. Well, yesterday at Curitiba, we could realize and feel the passion of everyone that works in this company. Everywhere that you go, you see that. You see that people work with their hearts on their sleeve. It's a pleasure to have a company like this with our collaborators. I would like to thank everyone that works with us that do a brilliant work. Thank you.
Thank you. The earnings call for the second quarter of 2024 of Multiplan is closed. Thank you for your participation. Have a nice day.