Cury Construtora e Incorporadora S.A. (CURY3.SA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Cury's Q2 2025 Earnings Video Conference Call. This conference is being recorded and will be available for replay at the company's website, ri.cury.net, where the respective slide deck can also be downloaded. During the company's -- [Operator Instructions] Before moving on, we'd like to stress that any forward-looking statements made during this conference is based on Cury's management beliefs and assumptions as well as information currently available to the company. These statements may involve risks and uncertainties since they relate to future events, therefore, rely on circumstances that may or may not occur. Investors, analysts and journalists must understand that events related to the macroeconomic environment, the industry and other factors could lead to materially different results than those expressed in said forward-looking statements. Today, we are joined by Mr. Leonardo Mesquita, Commercial Vice President; Mr. Joao Carlos Mazzuco, CFO; and Mr. Ronaldo Cury, IRO. Now I'd like to turn it over to Mr. Ronaldo Cury, who will start the presentation. Please, Mr. Cury, you can proceed.

Good morning, everyone. Thank you once again for your interest in Cury and for joining our Q2 2025 earnings conference call. Today, joining us from Cury are Leonardo Mesquita, our Executive Vice President of Sales; and Joao Mazzuco, our CFO. During this call, we'll walk you through the key highlights of Cury's operational and financial performance. At the end, we will open the floor for a Q&A session. Next, let's hear a message from our CEO, Fabio Cury.

The first half of 2025 was marked by consistent progress for Cury across multiple fronts. The company recorded BRL 5 billion in new launches and BRL 4.4 billion in net sales, plus BRL 2.6 billion in net revenue and BRL 400 million in net income. In Q2, we posted record net revenue and net income with ROE reaching 70.1%, underscoring the efficiency of our business model and our ability to convert equity into returns. We also achieved operational records this quarter, including land bank expansion and transfer. New land acquisitions increased our presence in key central areas of Sao Paulo and Rio de Janeiro. Cash generation remained solid despite recent changes implemented by Caixa Economica Federal, demonstrating our financial resilience and disciplined execution. The implementation of the new Bracket 4 of the Minha Casa Minha Vida housing program, which raised the price cap to BRL 500,000, is already having a positive impact. This quarter, 92.8% of our sales were priced within this program threshold, broadening our eligible customer base and strengthening Cury's performance in the affordable housing segment. We maintained a strong pace of launches with notable projects in August, such as Next Guarulos with 13 10 units, MPSV of BRL 334 million and Residential Cartola in San Cristovao Rio de Janeiro with 512 units, and PSV of BRL 179 million. Both projects strengthen our presence in strategic regions and enhance the attractiveness of our portfolio. As for organizational culture, Cury was recognized as a Great Place to Work, reflecting our commitment to an ethical, inclusive work environment aligned with the long-term strategy. Cury was also included in B3's first review of the theoretical portfolio for the IBOVESPA Index, effective from September 1. This milestone highlights our progress and growing relevance as a listed company. We closed Q2 with optimism and confidence, ready to seize new opportunities and continue building a promising future for Cury -- for Cury, its clients, employees and shareholders. Now I'd like to discuss the highlights of our operational and financial performance for Q2 2025. In operational terms, we launched BRL 2.2 billion and achieved BRL 2.3 billion in net sales with BRL 103.3 million operating cash flow, our 25th consecutive quarter of positive cash generation. Financially, we posted BRL 1.3 billion in net revenue, adjusted gross margin of 39.8%, net margin of 19.8% and ROE of 70.1%. Now I'd like to turn it over to Leonardo Mesquita.

Good morning, everyone. Last quarter, we launched 9 projects, 6 in Sao Paulo and 3 in Rio de Janeiro, totaling BRL 2.2 billion in PSV, as previously mentioned. Key highlights include the One Granja Julieta Sao Paulo launched in April with BRL 221 million in PSV with all units sold. Fidailaobos Maestro, Sao Paulo West area launched in May with BRL 203 million in PSV, also fully sold. Andres Pixinguinha, Porto Maravilha, Rio de Janeiro launched in May with BRL 397 million in PSV over 70% of units sold. Moving to the next slide, let's review sales performance. In Q2 2025, we recorded BRL 2.3 billion in net sales, a 29.3% increase year-over-year and 7.4% above Q1 2025. Our SOS was 47.5%, up 2.1 percentage points from Q1 2025 and down 3 percentage points from Q2 2024. On Slide 10, we can see the average price per unit, which increased both in the quarter and year-to-date. This quarter, the average sales price per unit was BRL 309,700, a 2.7% rise compared to Q2 2024 and a 0.2% dip compared to Q1 2025. For this quarter, 92.8% of sales had a unit price of up to BRL 500,000. To wrap up operational metrics, our land bank at the end of Q2 2025 had a potential PSV of BRL 21.1 billion, representing 72,928 units. On Slide 12 -- 11, we also see BRL 103 million operating cash this quarter. Now let me turn it over to our CFO, Joao, for further financial details. Please go ahead.

Good morning, everyone. On Slide 13, we highlight our net revenue. This quarter, we reached BRL 1.3 billion, a 34.9% increase year-over-year. For the first half of 2025, revenue totaled BRL 2.6 billion, up 39.6% compared to the first half of 2024. On Slide 14, our gross profit. In Q2 2025, it rose 39.3% year-over-year and 12.2% from Q1 2025. Gross margin was 39.6% this quarter, up 1.3 percentage points year-over-year and 0.6 percentage points increase quarter-over-quarter. For the first half of 2025, gross profit rose 44.1% compared to the first half of 2024 with a 1.2 percentage point increase in gross margin. On Slide 15, we share net income attributable to Cury, which totaled BRL 236.7 million in Q2 2025, up 37.5% year-over-year and 10.9% compared to Q1 2025. For the first half of 2025, net income reached BRL 450.2 million, up 43.6% year-over-year. On Slide 16, total net income for the entire operation. It totaled BRL 267.2 million in Q2 2025, up 52.4% year-over-year and 14.3% quarter-over-quarter compared to the first quarter. For the first half of 2025, net income exceeded BRL 0.5 billion, a 52% year-over-year increase. On Slide 17, details about our debt profile. We closed the quarter with BRL 1.3 billion in gross debt and BRL 1.5 billion in cash, resulting in net cash of BRL 227.8 million. Net cash decreased BRL 33 million since March 31, 2025, mainly due to BRL 154 million paid -- dividends paid. It's worth noting that for the first half of 2025, Cury paid BRL 390 million in dividend. Our net cash to equity ratio closed the quarter at 14.4%. On Slide 18, we report our return on equity with ROE reaching 70.1% for the 12 months ending Q2 2025. We generated BRL 708 million in earnings and distributed BRL 694 million dividends over that period paid to our shareholders. Thank you very much. Now I'd like to turn it over to the operator.

[Operator Instructions] First question from Mr. Pedro Lobato with Bradesco BBI.

Two questions. First, can you give more color about the announcement made yesterday? And was that caused by dividends paid or are they related? So can we still expect 100% of payout this year as you did last year? And my second question is related to land bank. I see it's green. ROE is also increasing. So what about this land bank that's being added? Does it follow the same ROE and profitability parameters?

Pedro Thank you for your question. Let me start by answering the plan to repurchase dividends. There is no intention of replacing dividends by repurchasing shares. As for dividends, we always have 70% to 80% of payout vis-a-vis profit earned. If we have a surplus of cash and if it's possible to pay them out, we will do it just as we did 2 years before. There is no intention on holding cash, but this is a decision that will be done timely. As for repurchase, we have a plan to repurchase shares. But once again, that will be done in a timely manner. When we find that appealing, we will be ready to do so. But as for the dividend payout policy, it's the same.

Pedro, this is Leo. As for land bank, the goal is the same. We keep on looking for areas in Rio de Janeiro and Sao Paulo with a good infrastructure. This is the policy that we have been keeping. And there are no changes regarding our land bank strategy. Nothing has changed.

Our next question comes from Mr. Andre Mazini with Citi.

Two questions. First, about the launches in the region of Sao Cristovao from Pixinguinha, you mentioned 77% and now Cartola also in August. So can you talk about this region, consolidated neighborhood such as Tijuca, for example, and maybe a turnaround. So can you please address that region and also the land bank considering the port area, the new port? And do you believe that the results will achieve the same as the first one? Second one about direct sales. What about the scope of that strategy? And will Bracket 4 be used in order to decrease the size of your portfolio? We see that, that has increased. It seems that there is a 24% sales vis-a-vis what was expected last year, which was 17%.

Andre, let me answer your first question. The concept that's being built at the port area in Rio de Janeiro, and just as you mentioned, you called it new port, the major goal is to promote full integration to the port area and Sao Cristovao. For those of you who know Rio de Janeiro, we'll have a neighborhood starting at Quinta de Boa Vista and ending at the Museum of Tomorrow. The city hall of Rio de Janeiro also plans on expanding public transportation, reaching Quinta de Boa Vista. And today, we see also construction works on Leopoldina. So there is this project, not only by Cury, but also the city of Rio de Janeiro administration so that this area becomes appealing to future residents. And as you mentioned, we already have a consolidated infrastructure in the area of Quinta de Boa Vista. Cartola is just next to the subway and train station, the Sao Cristovao station. And we see that as a continuation, an area to be tapped so that low-income and mid-income people can live there. It's the best place for them to actually live at. And as for your second question about the portfolio, increased portfolio and Bracket 4 of Minha Casa Minha Vida. Well, Bracket 4 started last June. And now we see more transfers. So today, we also see a change when brokers offer potential customers this product. So today, they presented the new funding type. So this is a customer that was not used to this model. Cury is unique when working with transfers still when at the project level. And they can do that. And I believe that this will be -- this model will be further used by our customers. So I believe that this will lead to either a decrease or stabilization of our portfolio as we start to focus on Bracket 4.

Our next question comes from Mr. Igor Altero with XP.

Let's think about pricing power with the improvement on the program and also a more stable inflation rate, especially related to construction items. So your margin will probably increase, right? And second, we also see the program focused on the middle class. So which would be the new measures for this mid-income people. We know that affordability is an issue. We see that this is also an issue regarding housing.

This is Joao. To talk about increasing gross margin. Today, we have inflation of items. Well, that is being stable, but we also -- we keep on having the pressure regarding labor. So we don't see that inflation rate index going down. But when you talk about the stabilization of inflation rate, that allows us to carry on with our budget and also sustained gross margin, increasing gross margin from now on. This is not our major scenario. I'd like to keep this gross margin going around 39%. It increased this quarter because this was a very good quarter and also the first half, especially regarding the quality of launches, new launches. That increased our gross margin as well as our REF margin, right, but that can be diluted by future inflation rates. And REF margin is deferred revenue and profit margin. Now just to add on what you talked about pricing power. We know that our pricing is really high compared to other companies. So we have also the current legislation. Well, pricing power, affordability, we don't consider increasing our gross margin. About new funding program for the middle class, with this implementation of Bracket 4 using royalties from the pre-SALT program. So in order to offset this decreased funding coming from other sources. So this is a means to offset the SBPE funding. We also have the Brazilian Central Bank involved. We all know that especially the savings program is facing challenges. So the Central Bank is working in order to develop and to have a new funding line.

Our next question comes from Mr. Matheus Meloni with Santander.

First of all, congratulations for another successful quarter. I have 2 questions. First, about the provision for doubtful debts or allowance for doubtful accounts, PDD. So what do you expect for the next quarters? And the other question is for Leo. Can you give us an update about this the program in Rio de Janeiro in Casa Minha? That's it.

Mattheus, actually, it was about this PDV. I'd say that delivery is a landmark. We know that this is a portfolio with risks. It's under construction, and this is one of the elements regarding that. But I believe that's important to say that we faced some challenges, but we need to consider the year in which we delivered the units. But as I mentioned, we have a very broad policy. So if you check that against some other indicators, our full payment guarantee portfolio has increased. Our revenue has increased. So if you go over just PDD and if you compare it against historical levels, it's very consistent. So we don't see a decrease or a negative impact on our customers. I believe that, that is aligned to our operation and our financial results as a whole. And we expect to have that index stabilized.

Regarding the second point -- second question, I don't foresee anything new. So far, the state government has not mentioned any new programs, if that was your question, if I understood your question correctly.