Good morning, ladies and gentlemen. Welcome to the first quarter 2023 conference call for Multiplan. We have here today Mr. Eduardo Peres, Mr. Armando d'Almeida Neto, Mr. Marcello Barnes, Mr. Vander Giordano, Mr. Hans Melchers, and Mr. Richard Svartman. Today's live webcast and presentation may be accessed through the Multiplan website at ri.multiplan.com.br. Should any participant need assistance during this call, please press asterisk zero to reach the operator. Before proceeding, let us mention that forward-looking statements that are based on the beliefs and assumptions of Multiplan's management and on information currently available to the company. They involve risks and information that is currently available to the company. These are not guarantees of performance. They involve risks, uncertainties, and premises. These are related to the forward-looking statements and depend on circumstances that may or may not occur.
Investors should understand that general economic conditions, macroeconomic scenarios, industry, and other factors may affect the results of the company, and such results may differ materially from those expressed in such forward-looking statements. Now, I'll give the floor to Mr. Eduardo Peres, who will start the presentation. Please, the floor is yours.
Hello, everyone. I would like to thank you for your presence, all the investors here in this call, and I would like to go over a few issues, a few details of this first quarter. Once again, I'm going to comment the excellent results of Multiplan in this year. We have the trend of strong growth regardless of the external challenges. The company has presented two-digit growth in sales, reaching BRL 4.6 billion, increasing 16% in regards to the same period of 2022. Our gross revenue has grown 9.9%, totaling BRL 498,600,000.
The revenue rent has come to the total of BRL 384 million, so 8.8% growth. We generated an EBITDA of BRL 357 million, 21% higher than the first quarter of last year. FFO, BRL 261 million, almost 24% higher. Our net income has reached the standard of BRL 207 million, with a growth of 20.8%. I would like to highlight, if you compare the beginning when we were listed, since we were listed 16 years, the net income has increased 20 times from BRL 10.2 million in the first quarter of 2007 to BRL 207 million, which is what we see in this quarter growth. These results have allowed us to invest ever more in our strategy, which was always to invest in our own assets and improve them.
If you just take into consideration this first quarter, we've invested BRL 215 million in CapEx, and we have two expansions ongoing, about 18,000 sq m of the total area, and foreign study too, totaling 52,000 sq m of expansion of a total of 200,000 sq m that we still have the capacity to grow. Also, we continue to invest in improvements, adapting to the new trends. At the same time, we diversify our mix of tenants of stores proactively. Now, we've registered this period, 115 stores subletted just in the first quarter. If we just take into consideration the first part of the first quarter, we got to 170 contracts signed. Besides the investments, we've returned BRL 75 million in interest rates over our own capital, and we kept the low leverage, which helps us to seize the opportunities that make sense for us. Digital innovation.
Now, in that context of digital innovation, the super app Multi is growing, and it is at 4 million downloads registered thus far. Another news, the parking is done now through the reading of the license plate. Now, the registration is done through Multi, and so the app is another tool that will facilitate the lives of the consumers, of our clients, so we can communicate better with them, and we can get to know their habits, so we can improve the operation due to everything that we are just mentioning. We are interconnecting the digital and physical world to facilitate life and positively transform the experiences of our users, of our clients. Well, also generating value for our tenants. Corporate governance. Well, finally, for the first quarter in this year, we have increased our corporate governance area with the creation of an internal audit.
We are perfecting our whistleblower channel, and we are increasing the transparency and the controls. We are always promoting the best practices. Well, last but not least, I would like to thank all of our employees, our tenants, for the excellent work that was done this quarter. The shareholders, investors, analysts, the journalists, thank you for your trust deposited on Multiplan. Now, let us go for the Q&A.
Thank you. We will start the Q&A session now for investors and analysts. Should you have any question, please type asterisk one. Star one. If your question has been answered, you can type star two. The questions will be answered as they are received. First question. Aline Caldeira, Bank of America.
Good morning. Thank you for accepting my question. I want to talk about the occupancy cost. Well, it is consistently higher than what it did in the past. I have two questions, actually.
Could you discuss how much of that increase is due to the stores that are more open in the portfolio, and how much is the space becoming more expensive in regards to what it was? Second question. The occupancy trajectory, how do you expect it, given that there is a normalization of the level of growth that we have seen already in April?
Thank you. Aline. Thank you. Thank you for the questions. Well, you reminded me of a commercial. Tostines, which is basically a biscuit here. To do an analysis. We have invested a lot in this quarter, for example, in events, 257 events that have helped increase our sales. Well, if you see the cost, they are aligned. So you invest your cost. There is an increase, of course, in the occupancy cost, but you lower the occupancy cost in that sense.
We are getting into a very healthy environment of the occupancy cost, where you have a negative inflation, well, at least accumulated. You have the selling at 16% in this quarter, and I would like to remind you that since we started to get to the range of the pre-pandemic numbers, which was in the fourth quarter of 2021, it was five consecutive quarters delivering growth in sales. Double digits. It is very strong. Now we are seeing everything in the world is normalizing, and in Brazil, it was even quicker. But we can see that the inflation is at a threshold that is much lower, so it makes it a lot more easy. We have the strategy for investment via campaigns, improving our investments. We can talk about that. Obviously, we are growing through expansion.
Our expectation is therefore very positive that we will continue to grow our revenues, and consequently, that will impact the occupancy cost, and the growth in sales will lighten the load as well. I hope I answered your question.
Yes, thank you.
Our next question. Antonio Castrucci , Santander.
Hello, thank you for accepting my question. Two questions, actually. We would like to understand how the rent readjustments will be given the IGP-DI negative conversion, and if you can explore a bit more on the drivers of the sales of Shopping Vila Olímpia in São Paulo. They were very positive. Could you comment on that?
All right, Antonio, thank you very much. Thank you for your questions. Readjustment in rent. Well, when it is negative, then it is zero. Well, the next year it will be negative, so you do not readjust with inflation, so it is zero.
The next year, the inflation is 3%. This year is one. You readjust by the difference. That is the way that we do the renewal of our tenant contracts. Vila Olímpia, you can see recovering very well in sales quarter after quarter. There are things that are structural, of course. The region of Vila Olímpia is a unique region that has primarily had an influence of offices and that all through time changed, and it is still changing. You can see the number of people that chose to live close to the mall. Well, during the period of pandemic that the people were working from home, there was a negative effect, of course, in the shopping mall, but now we have a positive effect in the shopping mall.
More than that, it is a changing of the mix, the commercialization strategy, what the tenant can offer, so we can bring a great growth of Vila Olímpia, not just in this quarter, but many, many quarters. If you take into consideration the last 12 months, Vila Olímpia has grown almost 47.1%, 35% just on this first quarter. On the long term, which I think that we are always seeking, and this is the right path, we can see a region that is very strong, very dense, good revenue. For us, it is a privilege. Well, it is in a good income neighborhood. Well, a terrain such as ours in Vila Olímpia, you do not find the size of the terrain needed for a shopping mall of that magnitude anymore.
Well, thank you very much and congratulations on the results.
Our next question, Pedro Lobato.
Hello, good morning, everyone. Thank you for the presentation. Two points. It is the dynamic trend on the revenue. It was lower than what we expected. So how is the issue of the benefits of the quarter? Second, I want to understand the project that is being built of the stock, the land bank. What can you tell us this quarter? Are you going to keep a price and be patient, or you are going to be more flexible, looking at the next phases?
Pedro. Armando. Do you mind repeating the first part of the question? It was very low. On the first question, the first part of the last question.
The first question about revenue. I just wanted to understand how that dynamic unfolded. It is lower than what we expected, the issue of the benefit on the quarter. Do you have any low-hanging fruits that can be used in the next few quarters?
All right. In regards to the taxes of our revenue, these are cumulative credits that we got through tax, and this is lower than what's possible in the next quarters. The Golden Lake, actually, this is a challenge for the real estate, and this is impacting financing. We have high interest rates. There is credit that is more restricted, so it's natural that you have a deceleration. In Porto Alegre, during the summer months, it's seasonal when people leave the cities. What we have here is not the selling of a building. We have an enterprise. It's not about what's going to happen in the next six months. It's the next 10 years. This is what we are pursuing. So I can tell you that the civil real estate, we can see construction booming. We can see the works that are impeccable. They're growing strongly.
All the infrastructure is growing, and this is a very attractive enterprise. Our expectation is that the sales will regain strength as we see more access to real estate financing and lower costs, and the economy can have a clear direction and not all the uncertainties in the first quarter. It impacts definitely. The market is cyclical, but I believe that we're going to reach the prices that are projected. The INCC has increased the rate. Since it's our own building, we can build our own buildings, we can negotiate and capture the inflation reductions in construction. So we can have that margin, we can work the levers better. Pedro.
Okay. Thank you.
Next question. Aline Costa, UBS.
Hello. Congratulations on the results. I wanted to know the homework that you've done in regards to the trend when you have a break of the satellite stores. The second one is how can we see of tax advantages with the larger stores? You have more rent per square meters, but they attract also more public. So can you tell us more about the mix and what is the ideal point for the main stores and the satellite stores?
Hi. This is Eduardo. Work with the larger stores or smaller stores. It all depends on what you can do, can or cannot do. It doesn't depend a lot of our will. I would like to make the whole shopping mall satellite. It depends on the moment that you are living. Today, you have an install crisis in all the big stores. You cannot occupy big store, big spaces, because there was the event of the Americanas scandal event. Also the credit for these stores is much more difficult to access.
It would be ideal for us to have a balance of 50/50, which is what we have in all the shopping malls. Yes, that's what's happening. There's a lot of demand. It's much more difficult for you to occupy the larger spaces because the investment is much higher, the companies are better structured, but at the same time, you have a retraction of the credit for this segment. So we have to take into consideration the large American event that happened in the first quarter that de-occupied the large spaces. I don't know if I answered directly your question, but No, yes.
Just to complement, we worked on that with an internal goal of X percent of the main stores and then the satellite stores. So it's natural, but we are not pursuing an objective. As Eduardo commented, we have the opportunities. If you take the example of Diamond Mall, it's a satellite. There's no big stores, no crown jewels per se. It's not a lot what the company wants, but it's what the market is ready to do. Did I answer?
The next question now is from Ygor Altero from XP.
Hello, good morning. Thank you for the conference. Thank you for the opportunity to ask you a question here. The first one is the following. We're looking at some possibilities on growth for the company, considering that you had a low leverage level for the first semester, but I wanted to know what the occupancy rate is for the next few months, especially for the second quarter, and what's the dynamics for the entire year as well?
Hello, Ygor. This is Eduardo Peres. Thank you for the question. To answer your question, I would say that we still believe in the approach of trying to improve what we already have. There are opportunities. We're going to look at those opportunities, of course, that is actually our responsibility to do that.
But we will have to analyze the situation and see what elements are the most important. We've grown so far by defending our assets. A company that is not able to defend its assets is a company that is not going to work, not going to grow. It's important to think about revamping our products to make it grow. As for the occupancy rate, I think it's been a bit more difficult in the first quarter than what we expected. We would have liked to have better results, but now we're focused on improving that occupancy rate. Not because of the expenses per se, but because of the lack of satisfaction for people going to a mall. People will go to a mall to try and see new stores, to see things happening, to see it being a dynamic place.
That's why it's very important to have good occupancy rate. Multiplan makes things. We're not just a building that is waiting there for people to enter. We're making things happen. That's what I'm trying to say.
Oh, and by the way, Ygor, in March, the occupancy rate was the same as December. We know that the first quarter is usually seasonal. There is usually an effect in that regard, but the end of March, 95.2 is similar to the fourth quarter rate. That is very satisfying. As Eduardo was saying, this is something that we have to do on a daily basis. We need to continue to work on occupancy rate. We're looking at two different operations, and we're improving the portfolio. I hope I answered your question, Ygor.
Thank you. Thank you, Armando. Thank you, Eduardo. That's great.
Our next question is from Daniel Gasparete, Itaú BBA.
Good morning. Thank you for the conference. I also have two quick questions. The first one is the following. I agree with what Ygor was saying about levers. I wanted to know more about the distribution of capital, thinking about growth, dividends, et cetera. If you could tell me more about that. Also, I wanted to know about your perspective on the second semester. Maybe you're going to open a little bit below 10%. So I wanted to know for the next quarter what you're going to invest mostly on, if you could tell me more about that.
Hello, Daniel. Good morning. Thank you for your question. About the levers. We've had the lowest leverage in the past 10 years, 1.54, and since you were mentioning what Ygor mentioned before, I wanted to say the following.
In the first quarter, we invested BRL 215 million, BRL 216 million, basically. Along 2022, it was BRL 194 200 000. So, we were able to reduce leverage even though we had a higher investment level. I think this is a very good thing. We're looking at a higher interest rate, and this gives us a great advantage. We have more efficiency, we're reducing expenses. If you've read the newspapers, you've seen that it is very difficult to do. So it gives us an opportunity to use our money in way that we think it's appropriate. What we usually say is there are three pillars. Investment, whether it is in terms of acquisitions or expansion or revitalization for buildings. The second pillar would be returning that money to investors, and we've done that in terms of volume, and it's been a record.
Last year it was higher than in 2021, which was better than 2020. So we've been able to make that go up. The third pillar would be thinking about progression. We're talking about a very good strategy now for the next quarters. Within that leverage that we're working on, we'll continue to work with these three pillars for cash flow, for the use of our cash flow. We've always told you that we've been very comfortable with this threefold growth. We would like to have fourfold growth. At these times, we usually like a lower leverage, and also we like to have the opportunity to change our direction if it is necessary. Also, another thing that was mentioned here, sometimes we also have to think about improving our portfolio, especially when the situation is difficult.
Now, as for the second quarter, I am sorry, I forgot the exact figures here. I am not going to be able to tell you the numbers, but we are working to promote our malls, Daniel. It is a volatile situation. Of course, it is difficult to have a perfect forecast. But what we are doing is, here at the company, we are organizing ourselves in a way that we can generate more value for our tenants.
So we are trying to manage on a daily basis intensively. We are trying to do that perfectly to make it better for our tenants. We had a record in the first quarter, and we have a lot planned for the future ahead of us. We have everything planned for the entire year. We are looking at very good projects. We are working intensively, really. And this is what you have to do in tough situations.
If we had a country that was growing in an accelerated rhythm, that would be easy. We would just follow along. But in this case, we are looking at turmoil in a way. We are looking at different directions, and we need to be very assertive, very efficient in our management. That is our main strategy. We want to generate more value per square meter, and that is what we have been doing over the past few years.
If you think about when we were listed and ever since we were listed, we have been growing steadily. One more thing that my colleague was mentioning here, we had sales of 6.1% up to end of April. Anyway, just think about this perspective. Sales in April 2022 versus what we had in April 2019. We had a 33% change. We opened ParkJacarepaguá, of course. But even if we remove that, it is 29.9%.
So we grew 6.1% versus up on 29.9%. So if you think about 2019 versus 2018, that was pretty much a similar number. So we are looking at something similar in difficult times with different interest rates. So I think it is very positive for the future. It is hard to say what retail is going to look like in the future. But we are managing the best way we can to create a better atmosphere for the future of retail. And that is why we are bringing the app, Multi. We are bringing so many functionalities as well to help tenants have a better performance.
Excellent, Armando. Thank you. Have a great weekend.
Our next question is from Hugo Grassi from Citibank.
Hello, everyone. Good morning. Thank you for the opportunity to ask you a question. Congrats on the results. Well, I am looking at some of the results that were a bit lower against the previous quarter. There was a growth of 9% year-on-year, and the other lines were double-digit growth. So I wanted to confirm with you the effect of Americanas S.A. on this line. If you could tell us more details on that, talk about the perspective for Lojas Americanas that you have. If we could maybe start thinking about a change in that trend.
Hello, Hugo. I think you are right. That is where we have the effect of Lojas Americanas. I think it would be tough to tell you more about that because of confidentiality. So what I can say is this is part of the game, for lack of a better word. We sometimes see a few operations, such as home and office, going a little bit down in the curve.
There are many factors that you cannot really say that have to do with the performance of that certain segment. It is also a change in mix. There are some other factors at play, and there is also the comparison base. I am sorry, I cannot really answer your question because of confidentiality.
No problem. Thank you.
Our next question is from Marcelo Motta, JP Morgan. Hello, Marcelo Motta. Are you there? We cannot hear you. Hello, Marcelo Motta. You can unmute your microphone. Maybe we will continue with our next question. I think Marcelo Motta's connection is not good. Okay, now Jorel from Goldman Sachs then.
Thank you. I have two questions. First one has to do with margins. I see margins are better, and we have seen some acceleration. Now we are looking at a different dynamic in IGP-DI and IPCA as well. I think the curves are usually a little bit better than IGP-DI. I wanted to know more about the margins, what the perspective is. Do you believe we are going to see these margins sustained or not?
What do you think is going to happen? Also, I have another question here, which is more of an overview. I think things are going very well for the company. We see that trends are good, et cetera. But I wanted to know what your main concerns are right now for the future. What do you think would be concerning in terms of the short, medium, and long term? If you could share that with us.
Hello, Jorel. I will answer the first question, and I will think about the second question as I do that. It is really an important overview, an important perspective here. Well, in terms of margins, it is true, we had better margins across the board. ROE was better, EBITDA also better. According to the projections of the analysts, it is going up. It is much better than before.
Yes, overall, very good margins as was presented, and that is thanks to the diligence of the company. It is because we are not just focusing on revenue, but also reducing expenses. If we think about Mall's expenses, that was a very factor. There was a reduction in overall expenses. Also, failure to pay was much better. That also had an impact. We had some provisioning, but still, we had very good results.
I think, again, we were focusing not just on improving or having better revenue, but also reducing expenses. Of course, we are not just going to stop working on all these elements. We are going to continue to focus on all that. That is one of the main strategies. I think that is clear. We may have a different inflation rate, maybe lower, but I think anyway, that is going to be positive. That is also connected with sustainability.
Well, this is Eduardo Peres, Jorel. I am going to start answering the second question, if that is okay.
Yes, of course. Go ahead.
You were asking about our concerns at Multiplan in short, medium, and long term. I think we are aligned with everyone else. We are concerned with the macro situation. What we may have in terms of tax reforms or what is going to happen with the inflation rate, with the growth of the country. I think it is about external factors, basically. Nothing internally, because internally, the company is doing well. We are investing in our assets. We are expanding such assets to have better performance in the future.
Excellent. Yes, I would agree. Thank you.
Oh, and by the way, what I think about what Eduardo was saying is the following. We are a company that is always trying to focus on the future and do things in a better way. I think we are looking at the long-term growth. If you think about our report, if you see our report, we have a good history of performance ever since we were listed. If you see the results, they are maybe not great results in the short run, but we are looking at a very good, steady growth in the long run, ever since we were listed. I think part of that has to do with the constant concern that we have of doing better, of managing things the best way. Thank you, Jorel, for the question. Do we have Marcelo Motta with us now?
Yes, Marcelo Motta is now connected. JP Morgan.
Hello, good morning.
Hi, Marcelo. You may ask your question.
Okay. I have two quick questions. One has to do with the expansions. Eduardo was saying in the beginning that there are four projects. I do not know if he can maybe give us more details, what kind of triggers, so that we will see you, and also when the announcement is going to be made. Thinking about those macroeconomic concerns, if we think about the VAT reform in Brazil, do you think that is going to have an important impact for tenants? Of course, we do not know the fees. We do not really know how it is going to work. But I wanted to know what you have been thinking about that, what the possible outlook is, and how to mitigate any possible risks.
Hello, Marcelo. This is Eduardo Peres. Well, it is true. When it comes to taxes, tax reform, we are just estimating, I would say, what might happen. We do not really have a fixed or a solid proposition. There are some projects. There are many conversations going on, and we hope that is not going to affect the economy as a whole. Hopefully, that is what is going to happen. Brazil will continue to grow.
For expansions, we have been thinking about Morumbi, we have been thinking about São Caetano, Jundiaí, and Maceió. We do not really know when. It is going to depend on the demand, and it is going to depend on where there is more pressure for stores to complement the atmosphere, the environment of the mall. There is no specific trigger to say, well, we are going to begin with this or that. I think the main trigger here is capacity of investment. We do not really want to go beyond the limit of investment per year.
This year, we are developing ParkShoppingBarigüi and Diamond Mall. We are looking at two large expansions that need our attention. I am not going to just go ahead and launch such expansions if I am not able to consolidate these two. The main focus is for malls to be able to grow and offer more in that regard. As for when, it is hard to say, because we really need to have mature operations and deliver what we are doing right now to then continue. Okay?
Okay, perfect. Thank you.
Thank you for all the questions. We will close now the Q&A session. We invite all the participants that have any questions, they can get into the investor relations website or department for further clarifications. Now, Eduardo Peres, please, the floor is yours.
Thank you very much. I would like to thank everybody's participation, the investors that took part in this call, and to reaffirm our commitment with the investment, with the attention to the operation, and management of our shopping malls. I would like to highlight our concern and the importance with the transparency of the company. Thank you very much. Thank you. The earnings call for the first quarter of 2023 of Multiplan is closed.