Allos S.A. ($ALOS3)

Welcome, and thank you for waiting. Welcome to the earnings call of Allos for the discussion of the results of the first quarter of '26. We have here with us Mr. Rafael Sales, President; Vicente Avellar, Director of Operations; and Daniela Guanabara, financial Director and Investor Relations Director. We would like to inform that this event is being recorded. [Operator Instructions] This is being transmitted simultaneously via webcast and can be accessed at the address ir.allos.br, where we have the presentation. The replay of this event will be available after its closure for 1 week. I would like to say that the questions can only be done through the Zoom app. Should you be connected via the webcast, your questions should be submitted directly to the IR team via the e-mail ir.allos.br. Before proceeding any forward-looking statements that are done during the earnings call, regarding the business perspective of the company, projections, that and operational goals, financial goals are based on the beliefs of the Board of Directors based on information that is currently available. Forward-looking statements are not guarantees of performance. They take into account risks and uncertainties and they depend on circumstances that may or may not occur. Investors should understand that macroeconomic conditions can affect the performance of the company and can lead to results that are materially different from those stated in the forward-looking statements. Now the floor to Rafael Sales. He will start.

Good morning, everyone. Thank you for your interest in the results of Allos. 2026 started with a strong operational development, first quarter an acceleration of sales of our shopping malls, 6.5%. In regards to the growth of last year, it's a rhythm of growth that is much higher than what we saw at the end of last year. In the same way, the same-store sales grew 5%, 250 bps of growth in regards to the first quarter of last year. We'd like to highlight the food court segment, 8% convenient services, leisure, we had a hike of 6%. These numbers reinforce and more and more experiences are one of the main attractions of our shopping malls and they reinforce the connection with the consumers. Speaking of the result, we got BRL 683 million, a growth of 11%. In regards to the first quarter of last year, the growth would be 13% if we exclude the effect of Shopping Tijuca. This is due to the development in media. Real estate still has relevance. The same-store rent got to 5.5% of growth even in a quarter that is IGB negative. The results show our capacity to execute the contracts with the positive spread that are relevant and sustain the real growth of revenue of the company, the EBITDA of the quarter BRL 490 million, growing 12% and the margin, 72.2%, with an expansion of 57 bps, reflecting the growth of revenue and the reduction of expenses. FFO also grew got to BRL 300 million. I'd like to highlight that there is the biggest level of provisioning in the quarter because of the Shopping Tijuca. If we exclude the effect, the effect of the EBITDA would be higher, 17%, FFO would be 8%. Next slide. Let's talk about the update in our digital platform, we continue strengthening the relationship with the consumers are growing rather than new. First quarter, 2.3 and GMV capture confirmed the growth in engagement, an increase in the recurrence of the shopping malls of 16%. The program, the shopping mall already existed or more mature. And we have a growth of 25% in recurrence in this quarter. So they are growing expressively for the media and activation of our benefits program that attracted several segments and tripled the revenue. Now talking about the real estate development, important approval. And we have 345 apartments, several apartments we have received a question and the local buyer, the Diamond group. So only by leaving Ceara by the North Shopping Mall is advanced, 93% of the units sold, Passeio das Aguas, 3 towers in the group. Now to Reserva and we have a recurring flow for the shopping mall. In these quarters, we have BRL 24 million of real estate revenue, reinforcing the thesis that this is a growing recurring business in our -- and we total 72 over 740,000 area -- meters of area and the cash generation is BRL 340 million until 2036, and this project is developed without the need of capital allocation by Allos. Now before going -- giving the floor to Dani, Allos we have the strategic movement since the integration of the company went through the optimization of the portfolio. We have the strategic media due to the capacity of allocating capital, strengthening the balance and the return for the shareholders. And we have a comfortable capital structure. And the shareholder at the same time, then we see opportunity of investment actively. We are doing in this moment a natural evolution of the strategy, reallocating capital from the sales of recent assets to reinforce our -- the position of our assets and quality. We are working with dominant shopping malls our management where we have this potential for growth. This movement is in line with the long-term strategy, which is concentrating the portfolio, biggest cash generation, and we can extract the most synergies. In that sense, at the beginning of the year, we had a partnership with Kinea for the generation of Kinea Allos Mall, which is a new vertical of business, which generates recurring revenue. The structure increases the future of M&A optimizes our portfolio and reinforces our capacity for the remuneration of the shareholders. And additionally, we have this week, these investments, we have participation in assets that are part of our portfolio. that reinforce our operational metrics. I return with the Q&A. Thank you.

Thank you, Rafael. Good morning. Next slide, we see that the rate of occupancy closed the quarter at 96.3%, with a seasonal impact, but we had a healthy share threshold. We are raising the signature of 140 new contracts in the period. We are highlighting Life Fitness, Olive Garden at Tamborea and the Kopenhagen at the North Shopping, where we are strengthening the mix of our enterprises. Now talking about the operational indicators, the cost of occupancy closed the quarter in 11.1%. And the delinquency net was impacted by Tijuca Shopping getting to 3.6%, disconsidering this effect, the indicator would be 2.8%. In the first quarter of '26, Allos has a strategic landmark where the implementation of the sales model, 100% unified with the full commercial strength in one multiplatform. We are operating with an ecosystem of high capillarity present in 140 shopping malls, 6,000 residential condominiums and 13,000 digital screens, reinforcing the efficiency of our commercial platform. In the quarter, we advanced in the expansion of the strategic objectives with the integration of the airports with Aena that is 18 term loans. And besides, we have the fidelity of AMS, and we are converting this into a new powerful media channel. Helloo is increasing the announcer announcers with 6 new shopping mall clients and an increase of 16% in domestic screens and cross-sell between the airports and other verticals with relevant brands of retail. The operational advances are based on the position of the market on the low with connecting with what is matter, what is important. With a qualified impact and relevant experiences, Allos has a strategic role in the generation of non-real estate revenues and economic transaction between brands and consumers. So in the first quarter, the growth of media grew 52% in regards to the first quarter of '25, representing 7.4% of the gross revenue of Allos. In advance of 220 bps on year-on-year. This performance reflects a bigger volume of business and the increase of all the verticals that we work with. We're still advancing consistently in our agenda of efficiencies and operational simplification. As we indicated, the relevant impacts are we are expected for 2026 and in this first quarter, with the results are there. So we have a reduction of 13.2% in the expenses. The organizational adjustments and the increase of processes. This is a continuous work with the alignment of Allos culture, keeping excellence the execution. In the financial management, we still have a lot of efficiency. The rate of financing of the company in the quarter was plus 0.7%, a result of several actions of liability management that we realized in the last quarters, the emission of BRL 1 billion, that was below the CDI with payments in 5, 7, 10 years, reinforcing the long-term profile of our indebtedness. The current profile of our debt is 98.4% and extruded CDI, 1.6% prefixed. With a leverage of 1.7x, the net debt EBITDA that gives flexibility to study new process for capital allocation, even the remuneration for the shareholders. We have a new slide. And keeping in mind, from the fusion until May of 2026, BRL 4 billion return to the shareholders we're dealing with interest of our capital, repurchasing our shares. And this is 40% of the value of Allos considering the closing of the first day of negotiation at B3 in January of '23. Thank you for the interest in Allos. We are opening for the Q&A.

[Operator Instructions] First question, Ana Julia Zerkowski, UBS.

On our side, we want to understand the sales of April. Do you see any trend that is different from the first quarter? Was there an impact relevant from the calendar and understanding what is the operation of the tenants of taking back 100%. Should we wait something for the next quarters. Last point, thinking about what was provisioned. The expectation for the reversal up ahead.

Ana Julia, so the sales and the operation of Tijuca and then provisions. Ana, About the sales of April, we see a trend that is very similar to the first quarter. So it should continue along the same lines with the first quarter. And Tijuca, this month, we have the reopening of 0. It was the floor affected by the incident. And through the next months, we have the reopening of the several stores in that in the floor and a lot of the tenants are refurbishing their stores and doing new projects. So we should have a positive impact as the stores are reopening. And we still have the expansion rooftop along with the lines of what is estimated, we should open the rooftop expansion. In June, and according to our expectations, this should help with the consolidation of the result of Tijuca from the second quarter onwards.

Ana Julia, so insurance and provision, we are dealing with our insurance company. These processes are long, and the company advances the Dow. And receives from the insurers. There was a big impact on the first quarter because the shopping mall was closed. So as Vicente said, as the stores are reopening, we will replenish the impact. The impact should be lower. And as we received from the insurance, we are going to reverse this through the P&L, which is the first quarter, which is the first reversal already.

Next question, Matheus Meloni, Santander.

My side, 2 things. First, the revenues in the first quarter, what can we expect for the next quarters? Will it be the recurrence and the impacts of the P&L and the G&A. We see an advance in efficiency. So we want to understand what can we expect up ahead in the SG&A and what are the possibilities of improvement.

Matheus, on the real estate revenues, we have 2 million square meters to develop we are working over the last 4 years. And intensely over the last 3 to create a pipeline of approval. So we can have the stream of cash flow, recurrent projected and we have a ramp up. Our idea is we have the ambition of having a revenue that is recurrent with a relevant amount for the company. And we have a lateral benefit, most important than the direct revenue, which is the qualification of the consumer that goes to our mall. And with the habit that benefits a lot the hours of less occupancy and less frequency for the shopping mall. So these programs are developed with these characteristics. So the numbers that we are reporting are bearing their fruit. All this initiative, it starts with this revenue, and it's very nice. But mainly, can you imagine when you have Cyrela opened in ParShopping, imagine the qualification is going to be the best condominium. So it's going to be a nice example that this is a dynamic for the future with this acceleration that we have in the hiring. So we expect that this accumulation we'll get to a higher number in the next years. And the entry of new projects will be more in the shopping mall as we reported last month of an interesting project that it took 7 years to get the approval. Now we're going to develop almost BRL 2 million of EGV. It's an area that didn't have development for many years. So the real estate revenue but also qualification and improvement of the fall. SG&A we already discussed. I'm going to simplify. Allos is a long-term project of building management model for the organizational structure from a new dimension of the company, which is consolidated. And now we can extract value without losing quality. And an evolution of NPS even when the Well, our business, the most important thing is to attract the consumers that make the tenants which should be in our shopping malls. That is a priority. And now with a more profitable. We don't have a specific guidance of SG&A. But it's a trend that should consolidate nominal drops, it's what's expected. And we expect that the work will continue gradually and carefully so we can extract value.

Follow-up on the first question. This line should be constant or we're going to see these impacts or this is specific for a few projects. Well, certainly is more constant looking at the year, because the approvals they have been concentrated in a few media. So the business is seasonal. In terms of well, because of this effect. And the projection for this year is recurring in the quarter-on-quarter depending on the approvals. But when we have that of millions of revenue, 500, which is important, and it will be filled out not only for the future but for the next years. For example, one of the contracts that we signed is -- we have contracts that we signed last year, and they're going to be building in the next 5 years, some this year. So there's going to be multiple over the years. So that's important that we have this pool full that we use the qualification of our surroundings with vision not only of revenue, but also communication and management.

Next question, Andre Mazini, Citi.

Two. First, can you give us an update on the fee with Kinea? Was there any news about the relevant fact of last month, the management -- the fund will be managed by others and Kinea. What is economics here in terms of administration rate management and even performance, is there something of that like that. And about the delinquency, net growth in the quarter, which is above what was running in the previous quarters. I wanted to understand if there is a deterioration in the base of tenants? Or is it more a one-off thing?

Thank you, Mazini. Unfortunately, the first question, CDM registry, the Brazilian SEC, we can now talk about it. That's why it's a relevant fact. That's what we can discuss. So that the project with Kinea, we are now in this structure of -- period of restructuring. We can account it. Delinquency. Of course, removing that, we have the base of Tijuca. We cannot consider that this is the recurring. So if we're thinking about 2.8, which is the effect without Tijuca, certainly with the scenario Brazil, many years of hikes in the interest rates, there is a possibility that show that after everything that happened in Brazil, the amount of difficulties in real estate. We have 2.5% of delinquency in the first quarter, which is the term of the year. So we are leaving this cycle, horrible of high interest rates of lack of fiscal restraint in a better way than the last crisis. So we did very well. I'm talking about Allos. I mean all of our peers, they could go through the first scenarios of investment macro economics, base of doing business in Brazil. If you think about it, when we have an interest rate of 15%, 17%. The Dilma government -- the inflation was 4%, 9.5%. So we had a base of revenue that was growing. And the tenant could get more price. We didn't need so much margin. So we are in universal because there is the interest rate, a better perspective. The risk of inflation is an external risk, and we are getting at a better place. That's why we don't see a big problem with delinquency in the next quarters.

So since you couldn't comment on the fee, about the media. The revenue, BRL 55 million increased ,60% year-on-year by the entry of the airport. So we got the 17 airports of Aena, which is what you want? Is it steady state more airports? What can we think about Allos in terms of other types of real estate.

So I'm going to get you the third question. I'm going to give the floor to Vicente.

Mazini, thank you for the question. We still have 7 airports to absorb this year. Actually 6, we got Uberlandia this month and 6 airports thereafter. There is still a great part of the contract, Congonhas. The main 1 of the 17 that we are working, but there is still an important base even in cities that we have shopping malls, this is an effect that is effective. We can leverage the revenue of media of the airport and connecting with the shopping mall network. And we become a vehicle that is very powerful of media in this city, Congonhas Airport. It's important to notice. Just now in April, there was the exclusivity total for the contract of Congonhas. There was still some operators with contracts until next last month, that made the revenue be a bit divided. There is a potential upside in companies. Looking ahead, which really just reinforces how much this growth is being healthy, and it's important for Allos.

Next question, Bradesco BBI.

Can you hear us? Because we didn't hear the question.

Our next question comes from Jorel Milan from Goldman Sachs.

I have a few.

Jorel, you can talk.

Okay. Sorry, I was on mute. So my questions are about inflation and the impact. First, I wanted to know how do you see the impact of the cost of construction that we see that is accelerating is that impacting your appetite for your pipeline for the developments and also does that affect the yearly cost that you're projecting? And the second one, about your inflation in consumption? Well, you have the tenants, how the inflation impacts the future losses, do you see them ready to give more discounts? Or do you think that they are more limited because the inflation is impactful?

Great points. A great deal are conceptual and economic. I think that we went through the worst phase the exposure of the capital. We have the pressure of inflation is not that big. The pressure was more because of the fiscal. And I think that we have a lower interest rate, and we're going to have an easier environment when you don't have that level of cost that we have. Now we haven't seen concerning level. The inflation is lower, because of IGP and now some are going to reflect the height of oil. But this is a factor by which we don't have any control. We have to be ready with good contracts. And we have to attract the consumer to the shopping mall. So it's difficult. It's difficult to predict. A new macroeconomic scenario. As the manager of the company, but we understand that this is not stopped. The first point, the reason why we have projects that are shorter quicker for the development, 4G expansion is because of the uncertainty. The levels of uncertainty is the cost of construction in Brazil. So in fact, we are doing projects that are quicker. The budgets are simpler. And of course, we are aiming to do something more transformational, something more important. When we have an interest rate that is more accommodated, that's where the inflation perspective is anchored. 2 important factors to reduce this uncertainty, that's why the CapEx is lower than last year, and we are monitoring all the projects thus far, all the works were delivered in the time on budget with all the projects that we're doing with our partners in Maceio. This one that is at commented with Tijuca also time on budget and probably working with Torain the commercial demand that is going to fill out quicker. So what is driving this result stronger than what was projected. And not so much the INCC, the question of the quality of the projects.

Next question, Herman Lee, Bradesco BBI.

Can you hear me now? One question. Regarding the recent MOUs. There is a format that is not usual, which is locking the assets. Can you give more context about this movement. That would be very interesting to understand if this movement can be more recurrent.

Thank you, Herman. So I understand that you're asking about entry. The increase in the participation in Campo Grande and Caxias do Sul because of a reduction of participation. Well, what happens? Caxias do Sul sale has a different dynamic. We don't have a position of leadership, the shopping mall. It's a good mall. But it has a very mature brand. And we want to be leaders in the main markets. So this is something reasonable with an operator that can extract value for their local position. That's the logic. Here, with the exchange in participation, we do this movement in the sense of keeping governance at Tablo, use as an exchange rate where is another investor, so we can increase the participation in calls that have development potential and direct growth quicker. Campo Grande which is something that demands more area that grows higher than the average of Brazil and also because we think we can get to a participation of having a better permission than what we have. with an increase of participation in assets that will generate value in a quicker way. So that's the logic. It's difficult to see these opportunities because there is interest on both sides. So we might sell the pertubation on a shopping mall and do a test by a different shopping mall or even with a new shopping mall, we have the objectives of having a return rate that is adequate to the cost of capital. That's number one. There is something that would justify the return rate or the qualification of the portfolio and reinforcing our potential for growth with a known discipline with the capital allocation.

Next question, Joao Pedro Rodrigues, XP.

Congratulations on the result, the experience of Tijuca. I wanted to ask you a question. And I think at this point, maybe you can comment. Good deal with Kinea. Without getting into numbers, we go to the end of last year. You mentioned in the third quarter that I don't know if it was the exact words, but it was not great and you needed to releverage and we have the announcement of the dividends, the range that is expected for this year in the month of December next year. So this year, you announced in this deal with Kinea, that potentially you can raise a value that is more significant. And I imagine that it's going to keep the company deleverage with a capital structure that is suboptimal. So one thing doesn't and all the other you need to releverage. And what can be you should have at a series of new investments given the message that you passed of leveraging the company more.

Well, thank you for the analysis. I think it's very good. It's very difficult to say. Well, we have -- of course, you imagine oil at 120. So that's why it's important that we do careful movements. This -- we have to be ready for any scenario. The company has survived any scenario that is macroeconomic rupture. So it's difficult to say what we're going to do with the resources. But now we show I think as a company, I am creating an option and if this business works out. We can have a good problem of deciding where we're going to allocate the capital and how were the projects of the return to the shareholders. But one thing that we realized is that the most important thing for the return is we returned BRL 4 billion in the next 3 years for the shareholders. If you look at the market cap of the company in January of '23, we concluded the fusion. We returned the equivalent of 40% of what was the market cap for that moment. And the company is worth BRL 15 billion. So predictability of sales is what makes our differential in terms for the investor. So given the conviction that this is based on cash flow and capacity for healthy leveraging and with predictability for the next years maybe that's going to be the most important in this effect once we've done the reduction with repurchasing and with the dividends paid before. So given this predictability, is the most important for us and creating opportunity for growth with projects that create and make sense. And not growing at any cost, which is not the characteristic of the company. We're growing with return with good results for the shareholders and what doesn't generate results for the shareholders. is not what we seek as a company. So if we have to leverage the company, it's going to be a good news because we're not creating something new.

Our next question, Elvis Credendio, Itau BBI.

If you can talk about sales. The second quarter specifically, when you see the rhythm and the beginning of the second quarter. And the other question is more to understand the specificities of the values by the exporters, and that's it this receivable is an action that we received in an arbitrage that we have to have been surprised. So we received the resources with a former partner in the terrain that we had and now were received.

And I'm going to let Vicente reinforce.

Our perception is very similar to what we've seen in the first quarter in April and May. We have a positive expectation for Mother's Day. It's moving along the same speed. We are trusting that is going to work.

Next question, Marcelo Motta, JPMorgan.

Two quick topics. One out -- the other one is a bit weaker first quarter is weaker. But just to think if there is a difficult economy, when you see the range of 350, 450, maybe the inflation is pressuring more. So why don't you get some color. And another point, I don't know if you can add a lot of VAT of the tax for next year? And is there any news thinking about the delinquency of the sector, but this is with the delinquency macro for a long time, and this can remove the strength for or give more space for the legal discussion. I just wanted to understand these points.

Motta, well, this is important. CapEx. If we can do the top rates now because of the inflation, it's because we were successful in the approvals and the development. It's well budgeted. So we are very well higher than planned. So we are -- we have projects that are very good, and there is a release with a huge shopping mall in Parquitao Pedro. These are projects that can work well because the revenue gets in well quickly. But these are projects that qualify the shopping mall without the need you create a new area without creating an expansion. These projects, they are going to generate growth for next year. So we are convicted them. We are not doing trendy bets. We are working with the numbers because of what we have in Brazil next year, we hope to be better. So in terms of taxes, my impression is that I am certain that about the construction with the passing on of the taxes. Any place in the world with IVA goes on the price that is hired. We don't have legal permission of doing it in a different way. And we worked very close to have a scenario with the mildest but possible for the tenant. We had the industry that less impact -- has the less impact for the commercial partner with hospitals and dispo. And our industry is the one that is best positioned to take care of this relationship in a fair way and not only us, but all of our peers are going to have the same magnitude because it's the right thing, and we fought for a lower aliquot and we hope not to have problems with the implementation of the tax. So complementing we have emission in 2026. We are issuing service invoices and in that segment, which is rent, we have a determination of starting to issue on August 1. What we're looking at is the refinement of the systems to be able to fulfill this efficiency, complementing the impact, and we're dealing with the tenants. There is a period of trend could get will make this transition better. We have an impact in revenue of rent below 3% next year. So with this transitional period and with all the benefits of the sector, we can go over this phase in a softer way.

[Operator Instructions] Since we don't have any more questions, I'd like to give the floor to Rafael Sales for the closing of the event.

Guys, thank you once again. Thank you for the interest in our results. Our IR team is available and we are going to do the meetings with investors, and we are going to clarify any questions. Thank you and see you in the next quarter.

The first quarter of '26 earnings call of Allos is closed. Thank you for your participation. Have a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]