Earnings Call: Q3 2024

Nov 13, 2024

Summary

Revenue rose 39% YoY in 9M and gross sales increased 62%, while adjusted cash generation reached BRL 86 million. A BRL 43 million Q3 net loss and Belaterra litigation remained key concerns.

Recording in progress. Third quarter of 2024 earnings call. We have Mr. Fernando Perez, Chief Executive Officer, and Anderson Hiraoka, CFO and Relations Officer of the company. I am Leonardo Furlan, Executive Manager. We will start, and then the recordings will be made available. Then we will have the presentation by the executives of our earnings. I will turn it over to Mr. Fernando Perez. Good afternoon, everyone. Thank you very much for coming. We will show you our earnings in the third quarter and some additional information. Okay. Let us now move on to the slides. Just a minute. Wait technical team. I apologize. We are having a slight technical problem. Okay, very good. I will be discussing our strategy, then Anderson will discuss our operating performance and our financial and economic performance. Our main strategic drivers. First, of course, we have resumed our launches in Jardim das Perdizes. In the first nine months of the year, we resumed the launches, and we have BRL 1.6 billion. That was the strategy in Jardim das Perdizes. We are reaping the good part. It was in a standstill for a while, but everything has been sold. We should remember that we purchased 250 million CEPAC for all of them to avoid any type of risk. We now continue at full steam. By the way, today we have three building projects underway, Pitangueiras, Figueiras, and Oliveiras, and we are expecting to start the Cerejeiras project, and after December 1st, we will start the Flamboyant building project. We are expecting to finish. We will definitely complete the year with five building projects underway. We concentrate in the Jardim das Perdizes. That BRL 4.8 billion, in the Tecnisa, it is BRL 2.7 billion. That is our share. Our focus is still very strong on our commercial and marketing strategy. We had an increase in our gross sales as compared to the third quarter of last year. Control administrative expenses. This is a continuous concern. We also have data of our operations. As you will see in today's presentation, our accounting result or earnings are still negative as a result of what took place in the past, also with our debt interest rates. But the operation shows that we have a backlog gross margin of BRL 190 million in quarter 3, and we are also generating cash, and that is BRL 86 million up to the first nine months of the year. We are always very concerned about innovating as well. We have a lot of innovation. In more details, we have Flamboyant that was launched in September 2024, and the PSV is almost BRL 600 million. Our share is 52.5%. The typology, 210 units from 155 to 186 square meters. We have six two-level or duplex units from 304 to 365 square meters. This land has 5,000 meters, a little more, 5,600 square meters. Almost 5,000. In this development, we wanted to have two towers, and then we made the decision to have just one tower. The idea was for this project to have wonderful leisure, a great area with cinemas, gyms, spas, Pilates, recreational courts, swimming pools. It is a very, very special, very high-end tower. Guidance now. You might remember, we have offered our guidance for Jardim das Perdizes. In 2024, we said we would launch BRL 2 billion, and we are now saying that we have already reached 95% of this. We have achieved 95% of this. The guidance was BRL 1.7 billion, and we are now at BRL 1.6 billion. Then we have BRL 1.5 billion in 2026, BRL 2.1 billion in 2026. In the margins, we grew before the launch. The total of the 3 years, 5.3, 2.8 to Tecnisa, BRL 2.8 billion. As this land was purchased a long time ago, our gross margins are again very interesting, up to 50%. Then some information about our new brand, low-income brand. It's Tencasa. The first launch was made together with Plano & Plano in July. The PSV of the first phase, BRL 198 million. Our share is rather small, 10%. 917 units in the district of Interlagos in a partnership with Plano & Plano, a great partner. This slide is about how solid our business is. Our PSV of BRL 4.8 billion and BRL 2.7 billion is attributable to Tecnisa. We've already approved BRL 935 million, and we have an additional BRL 816 million that have already been approved, million reals. The variation of our land bank, I have my notes here, I'm just checking them. It decreased for 2 reasons. This 331, this was launched with the Reserva Flamboyant. We also launched the Meu Plano development project, so it also led to a decrease. Now, Belaterra, and we might discuss this today. What we did was we aborted that launch, so we now have the 180 for our profitability. That's why it is BRL 2.7 billion. This other slide is about gross sales. Up to date, we have BRL 244 million in gross sales, and that accounts to 51% year-over-year. Our SoS that we can see here is 244. In the 3 quarters, on the right-hand side chart, we can see an increase of 87% again, year-over-year. You might ask me questions about this, and I'll try to answer it in anticipation. Our speed of sales decreased a little because our great success, Flamboyant, it was launched on the last day of September, and as a result, it changed the calculation of our sales speed. But this will be recovered in Q4. This shows our profit. We have over BRL 190 million in balance. As the projects continue, we measure all the data, and we had a growth of 24%, again, compared to the quarter of last year, the same quarter last year. Then Jardim das Perdizes and the other projects, we have a breakdown of them. Jardim das Perdizes' balance, it was 122 in the other projects, 69, and in total, we have BRL 190 million. Now our backlog gross margin. It's at 46% in the third quarter of 2024. We're expecting to grow with the Jardim das Perdizes, which is a very promising venture. With the next launches, we are expecting that these margins will further increase. I'd also like to highlight our AI, which is ISA. We will probably have someone like us. We know that this happens, but we are currently unmatched. Our AI is the most effective. It answers questions, it speaks many languages. It sends floor plans. As consumers, we don't like to talk sometimes to a robot. Sometimes you ask a broker a question, and then ISA has been really a huge success. It's there 24/7, speaks many languages, answers many different questions with all the information we might need. So we have been awarded a prize that was held by Aberimest for the development of ISA, our artificial intelligence, which is highly effective to serve our clients. I'll now give the floor to Anderson, who will discuss our operating and economic, financial and economic performance. Good afternoon, everyone. I'm moving on to our next slide. That's our operating performance or sales performance in the third quarter, BRL 160 million. This is our share, Tecnisa's share, and that was a PSV of 16%. That was a decrease in the third quarter of 2024 because of the launch of Flamboyant, as Fernando Perez mentioned. On the right, we have BRL 565 million in gross sales. That's an increase of 62% in the nine months as compared to the same period in 2023. Net sales, we have reached BRL 87 million. With the Belaterra project, as announced in the previous call, we have a lawsuit that was promoted by the public prosecutor's office, but before a decision is reached, we cannot start the construction project. If you take away all the other quarters, this was already provisioned for Tecnisa's earnings. The year-to-date results, BRL 471 million in net sales. That was a 43% increase year over year. One more thing I would like to say. As Anderson Hiraoka explained, this development, it was approved by all secretariats and all departments of the local government. The public prosecutor, which was encouraged by local dwellers, decided to start this process. There was even an injunction for us to stop selling, but they were not successful. We hired lawyers specializing in the area and also architectural firms. The situation is under control. It will take 2 years on the first level and maybe another 3 or 4 in the second level of the judiciary. This is why we decided to stop it or interrupt it for a while. In other words, it was not the clients who canceled it. It was us and our clients, they love these apartments. They're really good and they wanted to continue, but we believed it was more cautious to stop it, return their money, wait for the situation to be solved. This is what I wanted to add. Next slide. We started the semester with 185. 65, sorry. We had the cancellations. With Belaterra, we made the adjustment. From 885, we finished the quarter with BRL 801 million. On the right-hand side, we see our geographical distribution. That's 99% in São Paulo, located in São Paulo. Underneath, our distribution per construction phase. 53% were not started, and we have 2 projects that started, one in November, the other in December. Serro Geloso and Flamboyant and the others, they're completed. The remainder is under construction. Only 4% have been concluded, completed. We have very little inventory. Moving on to our financial and economic performance. We see our net revenue at the top left. That's BRL 148 million in Q3 2024, a decrease from the third quarter. Sorry, the second quarter because of the sales, without which we would be even better. In the year to date, we have BRL 494 million, a 39% increase year over year. Below, we have adjusted gross profit in Q3 2024. That's BRL 25 million. There was this reduction because of the budgets we needed to make. Again, we are stable and we had this 14% increase and at the year to date, the adjusted gross profit was BRL 75 million. Now, our schedule of receivables and debt amortization. Again, in the short run, from 2024 to 2025, we have 33 in receivables. It is BRL 335 million, and then you have BRL 244 million. In other words, we have much more receivables, cash plus receivables, BRL 522 million. When after 2026, although the debt is greater than the receivables, we have a significant inventory level that is more than enough to pay that debt off, with BRL 80 million, BRL 81 million in inventory. Next slide, our net earnings. We had a loss of BRL 43 million in Q3. As Fernando Perez mentioned, our backlog gross margin, BRL 190 million considering the construction works, and we are speeding up the process. Cash, again, at the end of Q3, we have BRL 255 million. A decrease again, because our debt was paid off. Then we have our net debt. There was a reduction of our net debt with this adjustment of BRL 3 million. Now our shareholders' equity shows this. Cash generation in our operations. We reached BRL 86 million in adjusted cash generation. This is the end of our financial and economic performance, and we are now having our Q&A session. If anyone has any questions, please raise your hand. You can hit the raise hand button and we are ready to answer them. As we have no questions, this is the end of our call. We are at your disposal if you have any questions. We can close our conference call now. Thank you, thank you everyone for attending. We are here at your disposal for further information. Thank you. Have a great afternoon.