Good afternoon, ladies and gentlemen, and welcome to Plano & Plano's Q1 of 2025 earnings conference call. This call is being recorded, and the replay will be available at the company's investor relations website. The slide deck is also available for download. All participants will be in a listen-only mode during the presentation. Later, we will have a Q&A session when further instructions will be provided. Before we proceed, we would like to inform you that any statements that may be made during the call related to Plano & Plano's business perspectives, operating and financial targets are based on the beliefs and assumptions made by the company's management and on currently available information. Forward-looking statements do not guarantee performance, and they involve risks, uncertainties, and assumptions as they refer to future events that may or may not occur.
Investors should understand that overall conditions, sector conditions, and other operating factors may affect the future of Plano & Plano and lead to results that differ materially from those expressed in such forward-looking statements. Joining us today are Mr. Rodrigo Fairbanks von Uhlendorff, Mr. Rodrigo Luna, Mr. João Luís Ramos Hopp, and Anselmo Soares, CEO, Vice President, Executive Vice Presidents, and CFO respectively. I would now turn the floor over to Mr. Rodrigo Luna, Vice President. Over to you, Mr. Luna.
Good afternoon, and welcome to Plano & Plano's 1Q 2025 earnings conference call. Before we take a look at the company's operating and financial results in the Q1 of 2025, I would like to highlight some important points in our trajectory that reaffirm the company's commitment to sustainable and consistent growth.
We are following a path of strong execution with a structured pipeline in the approval phase, and currently with over 34,000 units under construction, scattered across our 64 construction sites. With quality and delivering value to our shareholders, customers, and partners and, more importantly, the satisfaction of our customers as our top priorities. The company has been investing in people, processes, and digitization to cope with the increase in current and future business volume. Our engineering department works continuously on the improvement of construction techniques, bringing appropriate solutions for each segment in which we operate, whether in the most industrialized and standardized construction for low-income consumers or in the more sophisticated products for middle-income consumers. Our 2025 launch plan remains robust and in accordance with our goals. We have been working hard on project approvals and preparation in line with our growth plan for this year.
In 1Q25, our launches reached a PSV on a 100% basis of BRL 1.2 billion, a 153% increase compared to the BRL 465 million in 1Q24. Net sales in the quarter came to a total PSV of BRL 855 million, a 44% growth when compared to the BRL 594 million in 1Q24. Our net sales in the quarter came to BRL 855 million, a 44% growth when compared to the BRL 594 million in 1Q24. As for our financial results, our net revenue came to BRL 608 million in 1Q25, a 21.5% increase year-on-year.
While net income in the Plano & Plano's share reached BRL 67 million, increasing by 62% year-on-year. These figures bear witness to our operating efficiency and our ability to generate sustainable value for our shareholders. Return on average equity reached 51.8%, consolidating our position among the best performers in the sector among publicly traded companies. This profitability is the result of a conservative position in cash exposure and a great deal of discipline and austerity in the conduct of our businesses, keeping the company asset-light.
We also highlight the recent updates to the monthly gross family income limits allowed for families served under the Minha Casa, Minha Vida program, with the program's tier one adjusted to BRL 2,850. This update allowed the company to increase the number of units classified in this tier, increasing the segment's share from 9% to approximately 20% of the inventory, where we have been performing with higher SOS rates compared to the other Minha Casa, Minha Vida tiers. We also identified an important opportunity with the expansion of the Minha Casa, Minha Vida program and the creation of tier four. This segment, tier four, includes products priced between BRL 350,000 and BRL 500,000 for customers with a monthly family income of up to BRL 12,000.
These customers will now be financed by Caixa Econômica Federal with more favorable conditions than usual market conditions. At the end of 1Q25, we had a significant inventory classified in tier four and available for sale, with roughly 21% of our total inventories PSV. This segment continues to be a key piece in our growth strategy, strengthening our presence in different market niches. Finally, we ended the quarter with a land bank on a 100% basis, totaling a sales potential of around BRL 31 billion, the highest in our history, signaling even more promising prospects for the future. These results bear witness to the solidity and sustainability of our business model, reinforcing our long-term vision and our commitment to excellence. We are optimistic about 2025, given our relevant position in Brazil's main market and the pipeline of approved projects or in the approval phase.
I will now turn it over to João Hopp, who will present the operating and financial results in 1Q25. Thank you.
Thank you, Luna. Good afternoon, everybody. In 1Q25, the company launched five products totaling an overall sales volume on a 100% basis of BRL 1,178 million, a 153% rise year-over-year. In the quarter-over-quarter comparison, there was a 6.6% drop. Our 2025 launch plan remains robust, and we continue to work hard on project approvals and preparation in line with our growth plan for the year. When we look at the launches in the Plano & Plano's share, the PSV was BRL 856 million, a 104.7% increase compared to the BRL 418 million launched in 1Q24.
In the quarter-on-quarter comparison, we had a reduction of 33.5%. In recent periods, the company has shown a sustainable growth in its launches. Considering the total launches in the last 12 months, including the private market and the Pode Entrar program since December 31, 2022, the company grew at a compound rate of 51.3% per year. We highlight that the PSV of launches is a good proxy for future revenue, given that it is just a matter of time for the sales to be completed, materialized, and the works to evolve, generating revenue at this new value, this new level of BRL 4.6 billion. As we will see later, revenue in the last 12 months ending in 1Q25 are at BRL 2.7 billion, in line with launches in previous periods.
Total sales on a 100% basis in 1Q25 reached BRL 855 million, a 44.1% increase year-on-year. Quarter-on-quarter, the growth was 21%. Total sales in Plano & Plano's share in 1Q25 reached BRL 769 million, a 41.4% year-on-year growth. In the quarterly comparison, it was a 17.8% growth. When we look at the last 12 months sales track record, the company also shows constant growth. Considering total presales, including the private market and Pode Entrar programs since December 31, 2022, the company grew at a compound rate of 40.6% per year, a performance that reflects the solid evolution of the business.
The company ended the Q1 of 2025 with inventory available for sale equivalent to 0.95 years of sales based on the last 12 months volume. In a year-on-year comparison, this indicator dropped by 0.79 years. We should remember that this inventory is almost entirely made up of units under construction. The company delivers the vast majority of its projects sold out. It is worth highlighting the recent updates to the monthly gross family income limits allowed for families served by the Minha Casa, Minha Vida program, in which Tier One had its monthly gross family income limit adjusted to BRL 2,850. This adjustment allowed the company to increase the number of units under this tier, where we have performed with higher SOS rates.
Furthermore, we identified an important opportunity with the expansion of Minha Casa, Minha Vida with the creation of Tier Four. This tier includes products priced between BRL 350,000-BRL 500,000 for customers with a monthly income of up to BRL 12,000, and they have access to funding by Caixa Econômica Federal with more favorable conditions. This segment is a key piece in our growth strategy. The company's net revenue came to a total of BRL 608 million in the quarter, 21.5% higher year-on-year. In 1Q25, revenue was 90.5% lower quarter-on-quarter, largely due to seasonal factors in the period. Plano & Plano has shown growth in financial results year after year.
At the end of 1Q25, net revenues in the last twelve months came to BRL 2.7 billion. Since 2020, net revenue in the last twelve months grew by virtually 200%, demonstrating the consistency and effectiveness of our growth strategy in line with the constant evolution of our launches. We ended 1Q25 with BRL 2.5 billion in backlog revenue, including BRL 856 million in backlog gross profit. This performance reflects a growth of 5.8% in relation to the gross profit from future fiscal year results presented in 2024 and confirming solid future results for the company. As we recognize these revenues over time, we remain confident that the economies of scale resulting from the expansion of our operations will be reflected in our financial results, further strengthening the company's growth and profitability trajectory.
At the end of 1Q25, the private market backlog margin reached 38.1%. The company has managed to maintain its backlog margin at healthy levels with small fluctuations resulting from the mix of products sold, especially in the recent past, with a greater share of urban Tier One products, with a slightly lower gross margin than Tier Two and Three products rather, but that is offset by lower selling expenses, keeping the contribution margin of all Minha Casa, Minha Vida products practically stable. Adjusted gross profit came to BRL 207 million, a year-on-year growth of BRL 33 million. Adjusted gross margin in the private market, that is excluding the Pode Entrar program sales, was 36.5%.
Considering the company's total results, the adjusted gross margin increased slightly from 33.9% to 34% year-on-year. Therefore, we continue to present healthy margin levels that reflect the company's operating efficiency. Now, in selling expenses, there was a year-on-year improvement in the expenses over revenue indicator. The decrease was 2.1 percentage points from 10.9% of the net revenue in 1Q2024 to 8.8% in 1Q2025. This indicates economies of scale and efficiency in the customer acquisition journey. Regarding administrative expenses, there was also a year-on-year reduction in its share of our revenue, going from 7.2% of revenue to 6.9% of our revenue.
The nominal increase in administrative expenses compared to recent quarters comes from the growth of the internal structure to respond to the growing demands of an operation that already reached more than BRL 4 billion in launches in the last twelve months. We would like to remind you that administrative expenses are largely linked to the launch process, which will only have an effect on revenue over time. Net profit in Plano & Plano's share in the last twelve months at the end of 1Q25 showed a quarter-on-quarter growth of 7.3%, going from a profit of BRL 344 million to BRL 369 million. Net margin in Plano & Plano's share was 13.7%, a quarter-on-quarter increase of 0.4 percentage points.
Net margin on a 100% basis rose to 15.6%, a 0.5 percentage point increase compared to the last twelve months ended in 4Q2024, showing the company's gain in operating efficiency. Our long-term trajectory should also be highlighted. Net margin, both on a 100% basis and in Plano & Plano's share grew when compared to the last twelve months ending in the Q1 of 2024. In 1Q2025, adjusted EBITDA came to BRL 95 million, a year-on-year increase of BRL 34 million. The adjusted EBITDA margin was 15.6%, a year-on-year increase of 3.5 percentage points. The company's operations burned BRL 142.7 million in cash in 1Q2025, largely as a result of one-off events.
The cash burn posted in the quarter reflects planned decisions aligned with the company's sustainable growth strategy, including payment for land in cash, payment of dividends to partners in successful ventures that generated profit and cash flow from the Pode Entrar program, which is in an accelerated phase of construction with the respective payment predefined in the contract. As of March 31, 2025, the company's gross debt totaled BRL 622 million, while cash and cash equivalents were at BRL 465 million. As a result, the company came to a net debt of BRL 157 million at the end of 1Q25, and the net debt over equity ratio was 18.1%. This concludes the presentation. We are now available to take your questions. Thank you.
Thank you. We will now begin the Q&A session for investors and analysts.
If you wish to ask a question, please enter your name and organization in the Q&A field. Please stand by as we collect the questions. The first question comes from Pedro Lobato with Bradesco BBI. Please go ahead.
Good afternoon. Thank you very much for taking my question. I have two questions. The first one is about the Nid Alphaville project. I think it was reapproved by the city hall, so I would like to know a little bit more about your launch timing, your perspectives on it. The second question about your comments on the acceleration of the construction works of the Pode Entrar program which caused the cash burn. I would like to know your rationale behind this, and what's your perspective on cash generation going forward. Thank you.
Hello, Pedro. How's it going? Well, about Nid, the project was approved by the city hall.
It was not reapproved. We just had some requests from the notary's office, and the documents are at the notary's office. We are not rushing, though. We are going to launch the project in a well-structured manner with a proper planning in place. It is already in our pipeline, and as soon as we feel it is time, we're going to launch it. If everything goes according to plan, it should be launched towards the end of the Q2 or in early pre-Q25. It all depends on how things are going to move ahead. Things are going well, so our expectations are very high. The project was approved by the city hall, and soon you are going to see the project being launched to the market. Now, about your question about Pode Entrar program, I think your question is about the cash burn, right?
The contract of Pode Entrar provides for specific payment rules with installments happening biannually, quarterly, and the balance will be due only after the unit is delivered and cleared. With that fixed schedule of payments, since the beginning, the company worked with a positive cash. We work with the program cash and not the overall cash. The construction works are accelerated now, so there is a mismatch between the pace of construction and the payment schedule. As a one-off effect, we had to burn BRL 35 million more in cash in our constructions, more than we received in payments. The program is profitable. It creates cash. In the first contract of BRL 693 million, 10% of that amount is retained.
We are probably going to deliver the units in November or December, and we are going to receive those 10% in early 2026. That's how Pode Entrar works.
Okay, thank you.
Ana Julia Zurfkowski will ask the next question with UBS. Please go ahead.
Hello, good afternoon. I would like to know more about the changes in Minha Casa, Minha Vida. You mentioned in the release the share of this program in your volume and also the creation of tier four. So if you can give us more color about the mix across all the tiers going forward, that would be helpful.
Hello, Ana. This is João Hopp. Well, about the tiers and the segments. In 2020 through 2023, we worked more on tier two and three, and we invested more in the lower income segment, which is now tier four.
The changes that happened in 2024 allowed us to also serve Tier 1 customers. Going forward, the mix will be more balanced across these tiers, 1 through 4. We should remember that Tier 4 is under the Uni brand. There's a balance with slight fluctuations here and there, but you can consider that Tier 1 is 20%-35%, and another 30% in tiers 2 and 3, and another 20% or 30% in Tier 4. About FAR. We are not operating in that segment, Tier 1 FAR, and we don't have plans for it.
This is Rodrigo Uchoa Luna, Ana. There is an advanced negotiation because of demand from the federal government because they are adjusting the last details about this segment, but there's nothing that we can announce to you at this moment.
Okay, thank you.
The next question comes from Ruan Argenton with XP. Please go ahead.
Good afternoon, everybody. Thank you for taking my question and for the presentation. I have two questions. The first one is about the challenges in your launches. Approving the projects was a challenge for the company to grow more. I'd like to know your perspective on this. What do you think about the pipeline approval in 2025, and how does it compare with the beginning of 2024? Is it more challenging? Is it easier?
If you can mention other challenges that are significant right now in terms of launches, it would be helpful to know more about them. The second question is about the private market gross margin. There was an increase this quarter. I would like to know more about the underlying reasons behind that growth. I'd like to know a little bit more about the margins in the private market. Thank you.
Thank you, Ruan Argenton. This is Rodrigo Luna. We are very optimistic about our plans for 2025. Everything is going according to our plan. We can see a strong growth in 2025 in comparison with 2024. The pipeline of projects for approval is moving in a very well-structured way, although we still have challenges. As we always say in our calls, we want the PSVs to be higher on average than previous years.
As we do that, we position ourselves in a better condition to have more structured phases as soon as the projects are approved. Therefore, we will be able to work in a more organized way. We are very optimistic, as I said. Obviously, there are challenges. The market has a high demand right now. Consumers are looking for our products. Again, we are very confident that we are going to deliver our results as planned in 2025.
This is João. About the gross margin, it would be important to highlight the work that was executed in the past quarters and years by the engineering department.
Over the last twelve months, our construction inflation index is below the national construction rate at 5.5%, and the national construction inflation is at 7.5%, so that helps us in our gross margin. We manage our products continuously, project by project and phase by phase, pursuing the best prices according also to the affordability for our customers. Of course, we need to strike a balance between price margins and SOS. We monitor those indicators weekly so that we keep them according to our strategy. We have a good perspective about the growth in gross margin in the private market. We want to be at 34%-36% in this category, and we delivered 36.5% in gross margin in the private market in 1Q25.
Now, Mr. Rafael Amodeo will ask the next question.
Good afternoon. Thank you for taking my question. I have two questions. First, I'd like to know more about land bank acquisition. This quarter, your capital allocation was a bit higher than you expected. I wanted to know if your strategy has changed or maybe the scenario is more challenging, so you need to have more cash to buy good land bank. I'd like to know more about that. The second question is about the Minha Casa, Minha Vida program. Do you think there's more room to improve prices above the inflation, keeping a higher gross margin? Or do you think it is an opportunity to improve your SOS and reduce costs? Those are my questions.
Thank you. Hello, Rafael. This is Rodrigo Luna.
Well, as you saw in the presentation, in 1Q25, we continued with a strong land bank acquisition. We have BRL 38 billion. BRL 31 billion, rather. I apologize. We continue with the same business model. We want to be asset-light. That has not changed. There were 2 deals that were isolated but very interesting, and they are in line with the products that we want to develop. In those 2 situations, those 2 plots of land, we needed to invest a bit more capital, but we have not changed our strategy, and we are not envisioning a tougher or different scenario than our expectation since many years, actually, considering our business model.
What I can tell you is that that was a one-off situation, and because of that, we now have good opportunities to restructure our capital so that we can deal with those investments. Now, when it comes to margins, João addressed that point in the previous question. Well, for this year, we still see a yellow line when it comes to cost increases and the inflation in the sector, and that's why we are operating in a very cautious manner in the engineering department, so that we keep prices under control. Month after month, we calculate the variation so that we can pass those costs on to consumers in our prices.
As I said, we are pursuing margins in the range of 34%-36%, consistent SOS so that the company remains healthy in terms of profitability and is strong in terms of cash generation and financial robustness.
Thank you. Thank you very much. Enjoy the weekend.
The next question comes from Daniel Gasparete with Itaú BBA.
Hello. Thank you for the presentation. Part of my questions have already been addressed. I just wanted to talk some more about the margins. Luna said that the margins should be between 34%-36%, but from what I understood previously, there's room for more considering the projected inflation vis-à-vis the actual inflation. I would like to know more about that. The second question is about competition. From what you said, Luna, about the company's priorities, I think that was very clear.
I'd like to know if you have seen already more demand for new launches or maybe more competition for land bank due to the changes in the Minha Casa, Minha Vida program.
Thank you for the questions. Well, about margins, of course, we are monitoring the market at large, not only our operations, but the competitors' operations as well. There is indeed room for growth, but we are going to optimize our SOS, the margins and the launches. This is really sort of an art to plan the coming months in terms of sales to achieve the desired margins. We know that there is some room for improvement for sure, but we want to aim at sustainability, and a sustainable level would be between 34% and 36%. There is room for improvement, and we are pursuing it.
If possible, we want to deliver more. We should also consider that there is an issue of present value. You can trade a little bit of margin for SOS, increasing the NPV of the project. We try to do that as well. When it comes to competition, the major companies are consolidating the market because in the pandemic, the small and medium enterprises suffered a lot. Economies of scale are extremely important right now because the major companies have more ability to invest in technology and get to know the customers better, decreasing customer acquisition costs, and all of those things can only be done by large companies. We can see that movement in major companies and not so much in new entrants that would be bothering us in terms of land bank competition. That is not happening.
Our risk perception is much lower than the risks that other companies have when it comes to getting credit because the smaller companies' balance sheet is not so balanced. It's not so healthy as ours is. The Selic interest rate is at 14.75%, reaching 15% now. Credit is extremely important for companies which proves how correct the thesis presented by Luna previously is. Now we have that adjustment in the Minha Casa, Minha Vida program, and that adjustment had to be done so that the program can really capture the changes and the new ones in the economy. Of course, these things do not cause a change overnight. Once these changes are implemented, you don't see the effects of that on the very next day.
It is a long process, and as time goes by, the affordability goes down. This is what's happened in the Minha Casa, Minha Vida for the last 16 years, and we are used to it. It is a part of the game. The companies that are better positioned usually are the ones that capture those movements faster because they already have projects in the pipeline. They already have projects launched and units for sale. In those companies, you see more value and the ability of increasing the SOS and consolidate the plans for 2025.
Okay. Thank you. Enjoy the weekend.
You too, Gasparete. Thank you.
The next question comes from Mr. Elvis Credendio. Please go ahead. Good afternoon. I have two questions. First, about revenue.
We know that the company's projects have a bit longer construction cycles, and if you could give us more color on the company's revenue going forward and also the disbursements. Whatever information you can give us about that would be very helpful. My second question is about the Minha Casa, Minha Vida Tier One. You now have more exposure on Tier One due to those changes in the Minha Casa, Minha Vida program, and I'd like to know how much stronger is your SOS really now so that we can have a better feel of what the SOS will be going forward.
Thank you very much for the question.
Well, when it comes to revenue, if you look at 2022, 2023 and 2024, if you look at our revenues, you are going to see a seasonality because the Q1 is the quarter in which people come back from the year-end holidays. We also have Carnival, which decreases the number of business days in February or March, and we also had very strong rainfall in those months. That causes an increase in production, industrial production and construction after the Q1. That usually happens, as you can see in our track record. The Q1 of the past three years, 2022 through 2024, accounted for 15% of the year's production, so it can be used as a proxy. 15% is usually how much the Q1 accounts for in the year-long production.
This is a good proxy that you can use. As you know, we don't give guidance officially, so this is just an indication for you to use. About Tier 1, the SOS for all customers under Tier 1. We sell the units in five months or six months. In some projects it takes a bit longer, others are faster, but it's usually six months. We should remember that the Tier 1 projects usually have 80% of the units for Tier 1 and 20% for Tier 2. The Tier 1 units are the ones that are sold out in six months. That's the SOS that we envision for Tier 1.
If I can ask a follow-up question about revenue. You said that there is a seasonality effect and that it accounts for 15% of the year.
In the year, you should have BRL 600 million, so the Q1 should account for BRL 40 million, right?
I'm talking about results and operations. I'm not giving you a share of the revenue, actually. In terms of the results for the company, it would be about 15%.
The next question comes from Antonio Castrucci with Santander.
Hello, good afternoon. I have two questions about the others line item. I can see that there was a significant improvement in comparison to the previous quarters. I'd like to know about delinquency in your customer portfolio, and also about your credit portfolio and policy. The second question is about selling expenses. Your selling expenses have been decreasing for three quarters in a row now, and I can see that you have economies of scale.
I'd like to know what you have been doing to improve selling efficiency, and can we expect further efficiency, further economies of scale, or do you think that this is the ideal level?
Thank you for your questions. Well, I think that you are talking about the first factor in the other provisions, which is provision for bad debts and delinquency. We can see our last twelve months. We usually use the last twelve months for that provision. Indeed, there was a curve towards the end of the year when we had the payments becoming due at the end of the year. That causes an increase in delinquency, but then it starts to go down. If we consider the last twelve months, considering the payment schedule, the provision is diluted over time.
There is a gradual decrease in our provisions as well. That's it for delinquency. Delinquency is at a very stable level right now. Now, about selling expenses. There are many actions that are put in place to improve our customer acquisition cost. I'm going to mention two. We have some points of sale in São Paulo in major avenues, and the fixed investment is more concentrated in the points of sale, serving the units that are in the neighboring regions. We optimize our points of sale and stands. Information technology is helping us a lot. We have a very strong customer database, and year after year, we can deliver better leads to the sales force, and that causes our conversion rate to improve a lot. I remember a few years ago, three or four years ago, our online lead conversion was below one.
It's about 0.6%, and it is now at 1.96% with technology and a better understanding of the customer's profile. There is another factor, which is Tier 1 of the Minha Casa, Minha Vida program. These products are very difficult to generate profitability, but our engineering department can deliver a cheaper product, and we negotiate with our brokers. We pay lower commissions as well. Tier 1 in our mix, as it sells a lot, the selling expenses in percentage terms goes down a bit. Of course, we need to have control on all of those line items. Of course, there is room to reach higher margins and further decrease selling expenses, but I think that we are at a good level.
Again, if you wish to ask a question, make sure to enter your name or organization in the Q&A field or raise your hand. Please stand by as we collect more questions. This concludes the Q&A session. I'd like to turn it over now to Mr. Luna for his closing remarks. Please go ahead.
Well, thank you very much for your attention, for participating in our earnings call about 1Q25. We'd like to reaffirm our commitment and our concern about our customer satisfaction. Plano & Plano is a company made by people for people. We are optimistic as well about the results in 2025 with a strong demand. Now with the adjustments made for our customers' affordability, we are even more confident about the results coming in 2025. Enjoy the weekend, enjoy Mother's Day, and see you next time. Have a good one.
This concludes Plano & Plano earnings call for today. Thank you for your participation. Have a good one.