Earnings Call: Q1 2025

May 16, 2025

Summary

Q1 2025 adjusted cash generation was BRL 45 million, backlog gross profit rose 7% YoY to BRL 192 million, and net loss narrowed to BRL 8 million. Guidance calls for BRL 1.5 billion of 2025 and BRL 2.1 billion of 2026 Jardim das Perdizes launches.

Good morning, everyone. Welcome to Tecnisa's first quarter of 2025 earnings conference call. Today with us, we have Mr. Fernando Perez, Chief Executive Officer, and Mr. Anderson Hiraoka, CFO and Investor Relations Officer of the company. I'm Leonardo Furlan, Executive Financial Manager, and we inform you that the recording of this event will be at the company's IR website. As usual, we will start with a presentation by the executives and then move on to the Q&A session. If you need support, please send a message via chat box. Now, I would like to turn the floor over to Mr. Fernando Perez, who will start his presentation. Good morning, everyone. Welcome. We are going to share some information about the first quarter as Leonardo has informed. For today, we will discuss the strategy, operating performance, and financial and economic performance. I'll start with strategy, and then I'll ask Anderson to walk you through operating performance and financial economic performance. Speaking of our strategy, we have five key pillars. We are continuing the launches in Jardim das Perdizes. We have a PSV to be launched of BRL 4 billion, whereas BRL 2.1 billion is Tecnisa's share. We continue with a solid land bank to guide the business plan of BRL 4.8 billion, whereas BRL 2.7 billion is Tecnisa's share. In item one, I'm only talking about Jardim das Perdizes, and in item two, I'm talking about the consolidated company's solid land bank. In the third item, we have a focus on commercial and marketing strategy. We are still working on controlling administrative expenses. I have some information to share with you about this and the operation profitability. In the first quarter, we totaled BRL 192 million of backlog gross profit, and in terms of cash generation, the adjusted cash generation amounted to BRL 45 million in the first quarter of 2025. Going back to the guidance we've seen in the past, we were talking about the launches for 2024. We have BRL 1.7 billion of launches and BRL 1.6 billion has already been launched, and now we have BRL 1.5 billion for 2025 and BRL 2.1 billion for 2026. Bearing in mind that this guidance is for Jardim das Perdizes, and we've observed very good margins of 46%-50%. Very good results. Moving on, I'd like to talk about the land bank, and currently we have BRL 2.7 billion, which is virtually what we've had in the fourth quarter. We've had a few launches, and I'd like to emphasize that we have BRL 1.8 billion in approved projects for Jardim das Perdizes. Now talking about Tencasa. For Tencasa, we have launched this new development called Meu Plano & Interlagos. This is the second phase launched in February 2025. The second phase is going to be BRL 193 million, and our stake is 10%. There are 917 units ranging from 31-46 sq m. This development is quite interesting and appealing, located in Interlagos in the south area of São Paulo City. Now talking about the commercial and marketing strategy, I'd like to demonstrate the progress we've made since the first quarter of 2024 to the first quarter of 2025. These columns represent our development, and in the gray column we see the sales in the first quarter of 2024, and the red column, the sales performance in the first quarter of 2025. In this quarter, as mentioned previously, we've reached gross sales of up to BRL 137 million. Now talking about the control of administrative expenses. This summarizes the effort we've been making towards efficiency gains. In December 2023, we had 135 staff in administrative activities. In December 2024, 97. Now in March 2025, 84, which means we have been gaining a lot of productivity. Now talking about the profitability of the operation. Our backlog gross profit has reached BRL 192 million, a 7% increase over the first quarter of 2024. If we look into Jardim das Perdizes, our main focus now, we can observe we've had BRL 147 million in the first quarter and other projects summed BRL 45 million, which total the BRL 192 million in backlog gross profit. Now talking about cash generation. We have significant indicators here. In this quarter, we have generated BRL 45 million of cash flow, a major increase in comparison to the fourth quarter of 2024. Backlog gross margin is ranging around 45% and we have all evidences that this margin will increase, but we have to admit this is a very decent margin and it's the good side of bad things, right? We've been stalled for many years, but now these margins are extremely appealing. Another important thing for us, for the third consecutive year, in spite of the turnaround work we've been doing, we have a very healthy work environment. For the third consecutive year, we've been recognized with a GPTW seal, which is a positive thing for us. Now I'd like to yield to Anderson to talk about operating performance. Thank you, Fernando. Welcome, everyone. Now, talking about operating performance, we can see the Tecnisa share in gross sales, BRL 83 million in the first quarter of 2025. In comparison to the previous quarters, there's been a reduction because the first quarter tends to be weaker. Also we see the net sales below, BRL 67 million. There is a difference between the gross sales and net sales, but I'd like to emphasize that half of these cancellations occurred due to unit changes, either because customers upgraded their units or chose higher floors. In the next slide, we look at inventory. BRL 654 million in inventory in the first quarter, and only 6% refers to concluded units. So we've been delivering projects with very little inventory, which is very positive for us. We can see the evolution from BRL 716 million. We sold BRL 83 million, then 16 cancellations, an adjustment of 5 which yielded BRL 654 million in the first quarter. Now for the geographic distribution, 99% is located in São Paulo, and for the status breakdown, 6% are concluded and 94% are under construction. So we will see the results from them further down the road. Now I'd like to talk about the delivery for this quarter Highlights Dr. Nelson Moretti, located in Jardim Prudência, a tower with 168 units where half is 68 sq m and half 85. For PSV, BRL 154 million, 100% of participation of Tecnisa in the shares and we can see some cash generation coming from this project. Now talking about financial and economic performance, our net revenues were BRL 117 million for this quarter, but I'd like to talk about adjusted gross profit of 31% with the adjusted gross margin. So there's been an increase in comparison to the first quarter of 2024. It was over 15%. So our margins have been increasing over time. Next, I would like to talk about our receivables. We shall observe that between 2025 and 2026, we have BRL 445 million in receivables contracted. When we look at the debt of BRL 336 million due during this period, we have a difference of over BRL 100 million. As of 2027, we have more debt than receivables, but we still have plenty of inventory. We are looking into the future with a lot of tranquility. When it comes to net income, we have reached the first quarter of 2025 with BRL 8 million in loss, which is a significant improvement in comparison to the first quarter and the fourth quarter of 2024. The backlog gross profit reached BRL 192 million in the first quarter of 2025, and this shall be increased over the next quarters. I would like to talk about the cash of BRL 238 million at the end of the quarter. Net debt reached BRL 510 million. There has been quite a reduction in comparison to the previous quarter. Equity, BRL 383 million and adjusted cash generation, as highlighted by Fernando, has reached BRL 45 million. With this, I conclude the financial and economic performance. Now I open to question and answers. We will now start the Q&A session for investors and analysts. If you have any questions, please click the raise hand button or type your question directly into the Q&A box. No questions so far. This concludes our call and we remain at your disposal for