Allos S.A. (ALOS3) Earnings Call Transcript & Summary

Welcome, and thank you for waiting. Welcome to the earnings call of Allos for the discussion of the results of the second quarter of '26. We have here with us Mr. Rafael Sales, President; Vicente Avellar, Director of Operations; and Daniela Guanabara, financial Director and IR Director. [Operator Instructions] This call is being recorded. [Operator Instructions] When we will provide you with additional instructions. This event is being webcasted. It can be accessed at the IR web page. And then you can find also the presentation. The replay will be available for 1 week Questions can only be asked through the Zoom app. If you're connected via webcast, your question should be delivered directly to the IR team on the e-mail provided by the company. Any forward-looking statements that are done during the earnings call regarding the business perspectives of the company, operational goals are based on beliefs and premises of the company as well as based on information that is currently available. These are not guarantees of performance. . They involve risks, uncertainties and premises and they depend on circumstances that may or may not occur. General economic conditions and other factors can affect the performance of the company can lead to results that are differently from those forward-looking statements. I'd like to give the floor to Rafael Sales. The floor is yours.

We had a quarter of great results with the acceleration of the revenue, gains of profitability, even though we had uncertainties and the interest rates are high affects the demand and the capacity of financing of the economy. . The growth of the revenue, the discipline of expenses and the maturation of the new verticals showed once again the benefits of our scalability and the fluidity of our operational model. Second quarter, the sales grew 5% getting to BRL 10.5 billion in the quarter, same-store sales 2.6%. The sales were affected by factors such as the World Cup and Easter which will be in April, the effect is more in March. That's why the sales results of Easter were concentrated in the first quarter. Even though we grew above retail, which reinforces the leadership of our assets and with stimulus of purchases and the experience in the regions. Talking about the result. The revenue, BRL 720 million, the growth of 12%. We have the media verticals and the real estate development. The same-store rent grew 6.4% with a real gain regardless of the IGPM tax rate that is negative. And our shopping malls have performed in a very strong way. So there should be space for brand. Now adding to the revenues and the discipline of expenses, the EBITDA is BRL 255 million. growth in regards to the second quarter of last year, and the FFO grew BRL 330 million, advancing in regards to the previous quarter, except the effect of Shopping Tijuca, the growth of EBITDA and FFO is 5%. And that result makes us very happy because we're going through a very difficult moment in the Brazilian economy. With the consumer levered at very high levels. We've taken provisions so we can attract our consumers and get close to our tenants, creating new opportunities of events and to ensure growth that will be challenging for the real estate -- the retail immerse. Growing the FFO in such a year is a reflection of such a work and the preparation of our company for navigating in the diverse scenarios that the country can provide with many challenges for the sustainability of the company. That's why I wanted to thank our team for the spectacular work that they've developed since the creation of Alos. We also need to comment the digital. Our platform has gained relevance. And we have a growth of in regards to the previous year. The GMV is known by the company, which is BRL 1.6 billion, an advance of 41% regards to the previous year, where which is equivalent to a penetration of 21% in the mature malls and 17% of the total base. The benefit program is working in recurrence. So comparing the behavior of the customers, we see an increase of 15% in the frequency of visitations to the shopping mall and the number is 31% in the enterprises of biggest maturity and engagement. Now going to Slide 5. I wanted to comment that on this quarter, -- we're doing important launches for our malls. So the project has generated a result of BRL 50 million. In Campinas, we have the master plan of Parkeon Pedro, which which is services in general. For 330,000 square meters the VGV potential is BRL 4.4 billion and this has been guaranteed it will be a hotel, and it will be the first one to get into implementation in this year. The fifth tower of the residential complex of ParkShopping Maceio, which consolidates this region of Shopimo, as one of the biggest areas of the residential launches in the city. We have contracts for 63 towers that will be added throughout the next years. In this expansion, we have Sapinhoa, which is pay our gastrolemic space. The project has transformed a parking lot into a rooftop with leisure and high-quality experiences. 22 operations of bars that some 44 meters of ABL. And last but not least, I wanted to comment on the updates of portfolio that we are conducting this year. And we concluded the sale of shopping Coritiba and our participation in Velagacilas in 5% in shopping tab, and we signed 1.6% additional shopping receive at a cap rate of 9%, and these transactions give continuity to the process of strengthening of the portfolio and the reallocation of higher performance. That is more dominant. Now I give the floor to Daniel, and I'll come back to the Q&A. Thank you very much.

Thank you, Rafael, and have a nice day today. So the commercial and operational highlights, the malls are well occupied, taking care of the quality of the mix and offering the best experiences for the visitors. We have an occupancy rate of over -- and we have 20,000 square meters signed. The highlight is on reading for Shopping Leblon, first store of Rio de Janeiro and the second unit -- now in Shop. And the occupancy is for the net delinquency, 1.4%, 50 bps a below the last year, a great improvement in regards to the previous year. The Media segment capped an accelerated rhythm of expansion. We have a project that is multi-platform that is dedicated to the World Cup. And CCX Bank, Coca-Cola and amongst others. And we are advancing in media and the airports with the new launches in 2026. The new terminal of Uberlandia, the consortium will consolidate in 2 airports in this year. The revenue of media has grown in regards to the second quarter of 25% and has represented 10.6% of the growth gross revenue of the company and advances of 420 bps year-on-year. This development has been a higher volume of business with the strengthening of all the verticals of working. We're advancing in efficiency, simplification. In the second quarter, the expenses of SG&A have gone back in nominal terms, facing the second quarter of '25 even with the effects, which reflects the simplification program. It's a continuous discipline program aligned with the culture of Alos always preserving the excellence in execution. The average rate of the finances of the company has been dropping. In the quarter, we got to a spread of CDI plus 10.5% as a result of the management of the liabilities that we've done. We have a CRA of BRL 1 billion below the CDI with distributions in 10, 15 years reinforcing the indebtedness. The profile of the debt is 98.6% indexed to CDI rate and 1.4% prefix with a leverage that is stable and controlled in 1.7x. The net debt over EBITDA, even with the payout of BRL 1.2 billion in dividends of 2026. Thank you for your interest for Alos. And now they are going to now open for Q&A. We're going to start the Q&A just for investors and analysts.

[Operator Instructions] Our first question is Igor Altero.

So media understand what motivated this movement. What is the end game that we have of ahead, the level of growth that we can see and how is the evolution airport, what can we expect of growth? And if you can comment what is the metric of profitability, if you can share the level of margin.

Good morning. Thank you for the question. We expected a growth that is very relevant in this quarter because of the fact that we didn't have the airports in the previous year. So it's natural that there is a bigger growth. And the operation of the airport is doing well as expected. We've managed to use all the areas, just 1 operator, and our partners are doing the sales of the media spaces in the shopping mall, and it's natural that we have an improvement in the results. Besides, we have new airports. I'm going to let Vicente give more details as to what we want for the end of the year.

Well, in fact, it was a quarter very positive, the semester as a whole. The semester, as we commented, the World Cup has an impact that is very positive because of the packages that we've created, along with the partners within the shopping malls and also our digital platforms. And as Rafael commented, the vertical of airports in the comparison also helps. The positive point is that we grew grew 20% in the lines of media and shopping malls and residential buildings. So the business as a whole has evolved a lot besides these new verticals and these new fronts, I'm very optimistic with the year. And as we commented, now in August, we have the other 6 airports. These are regional airports -- so the metric of profitability, can you share some. We are not opening the results of -- hello separate -- we are cautious when we open. -- we're going to analyze through the year, the ramp-up of the airport, so we can make a decision when we open profitability and return on investment. Thank you, Rafael. .

Our next question is from Tainan Costa from UBS.

On our side, a point that really cause our attention is same-store sales. And it's positive besides the deceleration of the growth but it called our attention very positively with the impact of Tishapascua in the calendar. So we just wanted to get a reading how is the third quarter any trends are changing and acceleration, deceleration, whatever you can give us on June in regards to the sales. And the second question is in these lines of revenues. It is what we anticipated. If you can give some details. And what can we expect on the behavior of this line of ahead? These are the 2.

Thank you for your question. The same-store sales was affected, obviously, because of Easter and the World Cup. And in July, and this is similar to what we've seen before. So the quarter should close more normalized. And we cannot weigh just 1 year of a lot of growth. And the families are in debt. This generated the result, so we captured market share in the markets that we are in. In regards to the revenues, let's talk about the reasons for this effect.

Well, Julia, we had 2 main effects here. The first 1 is a receivable in regards to this to a and we registered the revenue for the real estate. We have tower in Uberlandia. We have 150 million in these lines. So these are the 2 main effects.

Our next question is Matheus de Carvalho Meloni.

Well, on my side, 2 themes. Well, first, I wanted to talk about -- if you can give us an update is on the schedule. If you can give us some more color on what are the changes on the assets for sales to understand what is this and if everything has to be done, if this expense is related to this transaction. And did you do any type of transaction that you have to do something similar. This is the first theme and the second theme is to understand how is the schedule to normalize the operation of the shopping mall in regards to the revenue of the insurance and what can we expect in the next quarters? If there is anything else and that's threshold. A little bit more color on this theme.

On the first question in regards to what we are registering this fund. So really, we cannot comment anything in regards to schedule. And we can now go deep on this one. Regards to other expenses. These are the results of a restructuring that we've done in April and is the objective of simplifying our company to gain more efficiency, and this is connected to our process of portfolio management. And this incorporation refers parts of the accounting effects with the Fusion that is connected to these assets. And as you can see, it's with the deferred tax that we also received. So it has a normal procedure, and we are negotiating the insurance as we get as we are proving the expenses.

Our next question is Pedro Peroni, 0Bank of America.

Rafael, so we've seen a market that is -- well, we see the selling of the assets 2 movements and real estate and pacings, I wanted to see if we can see this dynamic for the context of Alos. Thinking about appetite for the capture of the fund, you can explore, that, that will help.

Thank you, Pedro. We are following the real estate fund. And we're seeing the windows of opportunity. And we are concluding the reduction of Tablo and investment in CampoGrande Village Casillas, and we also concluded the disinvestment of Curitiba. And shopping in atonia and announcing the shopping Recife. And we are always looking at the opportunities for the future. .

Our next question is from Elvira. Elvis, you may proceed.

Good morning, Ralph. Talking about the operational costs. I wanted to understand what do you think about perspectives in this along these lines? I mentioned that this quarter, there should be a problem in regards to shopping Taco a one-off the service line has gained relevance. And given the profitability that is different from the other lines of revenue. I wanted to explore that line where it should move ahead. Second topic is about leverage and the distribution of dividends. when you announce the guidance of leverage at the end of last year, the macro was very different. And well, to continue with the train of thought, the interest rates are worse. So do you -- are you a bit more cautious about this target leverage in the next 2 years? And in fact, continuing to give the strategy of return of capital in this same level that you have presented.

Thank you for the question. First, the issue of cost operational costs. There was a variation quarterly that we cannot annualize, we have pinpoint issues. Certainly, there is the effect of a both in the expenses. And if you look without this effect, we would have a drop of 7.5% and in regards to 2025. you to do it? The delinquency is 1.2%. The health of the business is -- well, is preserved. -- and the growth of profitability -- and it's not an easy scenario to do business in Bersobut at the same time, we've seen that we are well protected. We extract good results regardless of this difficult scenario. In terms of -- well, connecting to the second question, our capacity to continue to pay dividends. Our guidance for this year, it's not for all years. We need to approve it for every cycle of results, so the official guidance for 1 year is for 1 year. And in fact, we are still having a balance that is deleveraged. And it's a scenario of cost of capital is in this level. The opportunities of investment are less. So 1 thing led to another, and we end up deleveraging the company more and more. So we can pay more dividends. So it's natural that we keep a level of leverage that we are committed to because it would make sense to have a capital structure in the balance of the company.

Thank you. Our next question is Herman J. Lee, Banco Bradesco BBI.