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

Good morning, ladies and gentlemen. Welcome to Cury's Q1 2025 Earnings Conference Call. This conference call 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. [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's beliefs and assumptions as well as information currently available to the company. These statements may involve risks and uncertainties as they relate to future events. Therefore, they 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 such forward-looking statements. Joining us today are 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. 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 Q1 2025 Earnings Conference Call. Today, we are joined by Leonardo Mesquita, our Commercial Vice President; and Joao Mazzuco, our CFO, together with me. During this conference call, we will cover the key highlights of Cury's operational and financial performance. At the end, we'll open the floor for a Q&A session. Now here's the message from our CEO, Fabio Cury.

2025 marks Cury's 62nd anniversary, and it's already started on a strong note, surpassing records for our launches and operational sales and generating cash flow for the 24th consecutive quarter. This performance is reflected in our financial results, with no levels of net revenue and net profit while maintaining a high gross margin. We also received excellent news from the Brazilian government regarding the implementation of Bracket 4 in the Minha Casa Minha Vida program with operations beginning in May. This new bracket allows the program to serve families with a monthly income of up to BRL 12,000 and properties valued at up to BRL 500,000. We believe this will boost our performance not only in 2025, but also in the coming years. It represents significant opportunity, enabling Cury to offer a broader portfolio of products and price ranges. With this update, approximately 95% of our portfolio will be covered under the Minha Casa Minha Vida program. In the first quarter of 2025, we launched projects totaling BRL 2.8 billion, comprised more than 9,000 units and sold BRL 2.1 billion worth of units, representing over 7,000 units, a 30% increase compared to the same period to 2024. Beyond operating growth, we achieved important financial milestones. Strong sales drove net revenue up, gross margins remained solid, and we reported record net profit for the quarter. Our return on equity hit 67.5%, highlighting the efficiency of our business model and our ability to convert operational growth into value for shareholders. Consistent with our track record of delivering results and sharing profit, we have already paid BRL 329 million in dividends so far in 2025 using profits accumulated in recent periods. We plan to continue strengthening this commitment throughout the year. The outlook for Q2 remains promising. To date, we have already launched the BRL 1.4 billion worth of projects, with the highlight being the second phase of The One – Granja Julieta launched in April, which has already sold 90% of its 624 units, PSV of BRL 221 million. In May, we launched Residencial Pixinguinha with 968 units and PSV of BRL 364 million, the largest development ever in the Rio de Janeiro Porto Maravilha's region. Our pipeline of launches continues to be strong, maintaining a solid first half, aligned with our strategic plan from previous years. It's also worth noting that our business remains protected by structural safeguards that go beyond inflation, allowing us to sustain high margins even during periods of inflationary pressure. We are disciplined in controlling construction costs, and stay vigilant amid global, political and economic uncertainties. Our growth ambitions are balanced with a focus on profitability and financial stability. On the ESG front, we have made significant progress by updating our compensation policy to include environmental, social and governance indicators as part of the variable remuneration of our directors. This measure strengthens our governance and aligns our entire organization with sustainability goals. Overall, our results so far confirm a strong start to 2025, reinforcing our confidence in another successful year driven by aligned execution, focused efforts and readiness to capitalize on the positive momentum in affordable housing. We remain committed to generating value for our shareholders. Now I'll turn it over to Ronaldo.

Well, from now on, I will highlight our key operational and financial results for the first quarter of 2025. On the operational side, we launched projects totaling BRL 2.8 billion, achieved net sales of BRL 2.1 billion, and a record net SOS of 45.4%. Additionally, our operating cash flow was BRL 25.7 million. Turning to the financial highlights. We reported net revenue of BRL 1.2 billion and adjusted gross margin of 39.2%, net profit of BRL 234 million and net margin of 19.2%. Now I'd like to turn the floor to Leonardo Mesquita. Please go ahead.

Good morning, everyone. In [ Q1 ] 2025, we launched 14 projects, 9 in Sao Paulo, 5 in Rio, totaling PSV of BRL 2.8 billion, as previously mentioned. The key highlights of the quarter were: the The One Chácara Santo Antônio in Southern Sao Paulo launched in March with a PSV of BRL 211 million, and all units have been sold. Supreme Anália Franco in Eastern Sao Paulo launched in February with a PSV of BRL 203 million. All units have also been sold. And Arcos do Porto launched in March in Porto Maravilha area of Rio de Janeiro with a PSV of BRL 174.5 million. More than 60% of the units have been sold. Now let's take a closer look to our sales performance. In Q1 2025, we achieved BRL 2.1 billion net sales, up 35.7% year-over-year and a 47.9% increase over Q4 2024. Additionally, our net SOS for the quarter was 45.4%, 1.7 percentage points higher than Q4 2024 by 2.5 percentage points lower than Q1 2024. Slide 10, the graph on the left shows that in this first quarter, our sales mix was focused on the higher end of the program, including some units outside the Minha Casa Minha Vida program. The other 2 graphs illustrate the increase in the average price per unit, both for the quarter and for the full year. In Q1 2025, the average sales price reached BRL 310,000 per unit, up 6.2% compared to 2024, but down 2.3% compared to Q4 2024. We have completed our overview of the operating indicators where at the end of Q1 2025, our landbank with a potential PSV of BRL 19.8 billion representing 68,218 units. See on Slide 11, I highlight our operating cash flow, which amounted to BRL 25 million in the quarter. Now I'd like to turn it over to our CFO, Joao, who will provide more details on our financial results. Please, Joao, go ahead.

And on Slide 13, we highlight our net revenue. In the quarter, revenue reached BRL 1.2 billion, representing a 45.2% increase compared to the same period last year. Over the past 12 months, we recognized BRL 4.3 billion in revenue, a growth rate of 37.6% year-over-year. On the next slide, we present our gross profit, which increased by 50% in Q1 2025 year-over-year and by 17.4% compared to Q4 2024. Our gross margin, which reached 39% in the quarter, was up 1.2 percentage points compared to the first quarter of 2024, but slightly down by 0.1 percentage points compared to Q4 2024. On Slide 15, the key highlight is Cury's net profit. In the first quarter, net income attributable to Cury totaled BRL 213.5 million, a 51.1% increase year-over-year and up 28.8% compared to Q4 2024. Over the past 12 months, we recorded a total profit of BRL 722.1 million, reflecting a growth rate of 36% year-over-year. On Slide 16, we present the net profit focusing on the entire operation. In Q1 2025, this indicator reached BRL 233.7 million, representing a 51.7% year-over-year increase and a 23.7% increase compared to Q4 2024. Over the last 12 months, the net profit grew by 40.1%. Slide 17, details of our gross debt structure. We closed the quarter with a total gross debt of BRL 1.2 billion, resulting in net cash of BRL 261 million. This marks a reduction compared to BRL 429.9 million recorded on December 31, 2024. This reduction is attributed to dividend payout made in the quarter totaled BRL 175 million or BRL 0.60 per share. Our net cash to equity ratio for the quarter was 19.2%. On Slide 18, once again, we highlight our return on equity with an -- ROE of 67.5% in the first quarter of 2025. This results reflect the cash generation in operation and profit distribution. Thank you very much. And now I'd like to turn it over to the operator.

[Operator Instructions] Our first question comes from Tainan Costa with UBS.

I'd like to start talking about growth. If we go over what you have reported, we're talking about [ 4B ], and that would account for [ 10B ] over a year. We know that you have been working hard in the first half of the year, but is there room to keep this pace? Because we know that usually, companies, they used to lower in the second half. But if you have a very good control of cost and now with the Bracket 4. Well, this is my first question. Second question is about the pipeline. We were really excited with the news, but is there any trigger that actually led to this revenue about what was expected? Was it sales or any other factor?

Good morning, Tainan. This is Leonardo speaking. Well, as we have been sharing every year, we plan to start the year in a very robust way. So this is a means for us to really track growth and limits. But when you prepare for taking the next step, we also take into account all the issues that may arise. But I believe that considering our perspectives, and now Bracket 4, well, which has been discussed for a long time, the company also planned on how we can responsibly act especially if this scenario was positive just as it is. Especially thinking about efficiency, there is also potential growth, particularly in projects in which we can anticipate. But this is a step by step. It's not only a commercial factor. There is also -- we need also to examine engineering and many other factors before we actually move towards growth. But I would say that this year, we were better prepared for this positive scenario. Of course, we need to prepare for also gloomy scenarios, but I believe that our planning this year also focused on this positive scenario that we see, and that's why we are also examining opportunities to take advantage of this momentum. As for your second question, I'd like to turn it over to Joao.

Good morning, Tainan. Thank you very much for your question. The answer is very simple. You already mentioned sales. When you see this gross sale, let's compare Q4 to Q1. So we see sales growing by 50%. Of course, this also contributes strongly to our revenue. As you know, you know that, as we have always mentioned, we don't move forward with construction because there is also the rainy season. End of the year, people come back from vacation middle of January, then we have Carnival. So this growth actually came from sales. And we expect, as Leo mentioned, to reassess and to have a good revenue for 2025.

Our next question Ms. Carla Graca with Bank of America.

I have 2 questions. You mentioned there's news about Minha Casa Minha Vida. So with Bracket 4, what do you expect to see regarding launches? Will there be a change in your mix? And also, what about margin considering Bracket 4? My second question is about landbank. If I'm not mistaken, you mentioned that ideally, you would be close to BRL 20 billion. But now with these changes with Bracket 4, would that also change? Are you considering acquiring more land? Or is there anything out that's going to change?

Good morning, Carla. As I mentioned, Cury had already positioned itself regarding percentage of products excluding Minha Casa Minha Vida. That makes us feel more confident in capping on such projects. And both in Rio and Sao Paulo, we have units that could be sold outside the program. And that's how we could benefit from these types of apartments. And now with this new bracket, we see that we can increase our portfolio and then also increase prices, but that will depend on each project, considering also where we are building our units, that also allows us to benefit more from the land we have from our landbank. And the Porto region really fits very well this new bracket that was just established. So this is our perspective. So to keep on tapping on that. As for quantity, the program really fits what we have been doing so far. So we will certainly examine everything in order to understand where we can find other opportunities. As for the landbank, we are pursuing growth. And we always talk about landbank for the next 2 to 3 years. And I'd say that there is a trend. And with the Bracket 4, new opportunities come up. And yes, we wanted to really have a landbank that fits this new reality of our new launches. So it's very likely that what you said will happen.

Our next question comes from Ygor Altero with XP.

I'd like to focus on Bracket 4. And how much have you mapped already, and that could actually move towards a higher tier and then also generate cash? So I'd like to discuss when do you think that, that can happen? And the second question is about margins. So your margin both growth, well, they are now at very high levels. So now with this improving the program, [ INCC ] seems now to be also stable. So looking forward, do you see room for increasing that?

Ygor, in answering your first question, opportunities to also convert our customers from direct sales to Bracket 4, we are already working on that, but we have not mapped the potential yet. Typically, we do have a certain conversion, approximately 10% historically. So customers who start with direct sales and then switch. So we understand that this potential can grow, but we have not mapped in that sense, have not mapped yet. And I believe that it's worth discussing direct sales because our direct sales takes place so that it doesn't hurt our cash flow. So direct sales, you saw how much we have sold. You can see the profile of our cash. So today, 60% comes from direct sales, and without having any negative impact on our -- or any impact on our cash flow. So this conversion can benefit us, so from direct sales to Bracket 4. But it's important also to discuss how relevant this is. So today, more than 50% of our direct sales customer, they have already paid for the unit when we delivered the keys. And then the average debt of our customer -- direct sales customer is that they pay at least 60% of that unit during construction works. Typically, they pay above that percentage. So if you consider that, so that balance, it accounts for approximately 20% only when they deliver -- when they hand them the keys. So there is benefit in this conversion from direct sales to bank because of Bracket 4, but I don't know how much relevant this will be because of the factors I mentioned. Now for the second question, the gross margin. As for gross margin, well, just as we usually tell you, we have a margin that is very stable. And this margin is sustained by this project, and we want a margin that is close to that, our launches -- our -- margins of our launches. We know that, that has impact because of our strong sales performance. So first thing that sustains that is that the launches present a strong margin, but we also say that we expect that this rough margin is diluted because of inflation. So we do have some effect for the future, but we're still working based on the scenario of diluting this rough margin over time considering inflation so that our accrued margin stays in the range of 39%. So we are not considering increasing our gross margin.

Our next question comes from Mr. Pedro Lobato with Bradesco BBI.

Two questions about expenses. So we saw a relevant dilution on the selling expenses. So what has contributed for that if we consider this level also for the entire year? And then on other expenses, please correct me if I'm wrong, but I believe that the major factor is provisions, right -- accruals. So is that a bit higher? And what do you expect for the future?

Thank you, Pedro. Well, as for the commercial side, I'd say that as you can see, we had a very robust sales as there is a delay when it comes to expenses because today, you sell, and then you have commission, you have all the paperwork costs. So I'd say that the trend is that expenses will go back to the levels that we are used to. I'd say that this is mostly delay in this expense -- a postponement of these expenses and not a new reality. Now let me turn it over to Joao.

As for accruals, we have a policy that takes into account many factors. So just to mention some of them. Of course, the aging of some payments is relevant, but we also need to take into account, for example, that customer has already received the keys or if we're talking about a customer that is -- has a unit that's still under construction works. And we know that after delivering the keys, it's more difficult to recover that loss. But this year, we will be delivering many units. In Q first, we had 12 of 14 deliveries. So after you deliver the keys, then we move towards an accrual policy. So there are 2 factors besides the growth of our portfolio because of strong -- our strong cash because of sales, but also these changes in the status of some projects. So thereafter -- before and after delivering the keys to our customers. So we can expect that as for our accruals for this quarter is a new level for the company from now on.

Our next question comes from Gustavo Cambauva with BTG Pactual.

I'd like to follow up on what you mentioned earlier, right, about the aging of the portfolio. So do you see more default? Is that right? Is my understanding correct? Because when you talk about the levers, so you have some finished units, did not increase that much, but revenue did. So my question is, did you see an increase in debt in default and also for the future? I understand that volume of unit vis-a-vis sales. So -- and my second question is also a follow-up. Leo has already talked about the Bracket 4. But when you think about your competitors, they say that this change in the program will also be increased on SOS, but your SOS is already very high. So would you -- are you considering increasing the price? Or are you considering also increasing your SOS, so considering a 30-day sales funnel? So what do you see? Has affordability increased? Are you considering in subgroups of price?

Cambauva, good morning. There is -- there was no increase in default. So our portfolio is steady. Our customers, we talk about increase in the average price. So this is a better customer, so to speak. So if you go over how much we have been -- if you have been following our accrual, because at the end of the day, revenue is the result of what we sell. And part of that will not be recovered. So you have to consider that, right? And the main factor here is the delivery of units. So considering future deliveries, well, the level of accrual will be aligned to that. It's not that the quality of the customer worsened, but we know that there is also some that will still be -- that will still have to pay the unit for us after we deliver the keys, right? And that's why we use different criteria for before handing in the keys and after handing in the keys, but there was no increase in the default rate.

Just to clarify, once you see that credit, you already know the balance after delivering the key, but don't you have an accrual for that? Or how do you manage that?

Well, there is no accrual between before and after the keys. Before -- because although I know that there is a balance, I'd not -- we don't know about the default perspective, right? Well -- so at the very beginning, there is no default, but we have an accrual for that. Now for those that will have balances still after delivering the key, we need to -- we have an accrual for that, of course. And the more we can recover, the better. And that's why I talked about aging of that customer as a relevant factor so that we can also establish our policy. So we know that this customer will have a balance after delivering the keys, but we also work in order to really receive them in advance. You know that we have many projects in order to encourage our customers to pay in advance, even for future bills. So although we know that there is a balance that based on the contract, he can keep that balance to -- after we hand in the keys. We have a policy for that, but we still consider this customer, especially in construction works, that we can recover that balance.

As for your second question, Cambauva, about our SOS, as I mentioned earlier, we -- our SOS is considerably high. And now you want actually to enhance value of such units. The funding was affected. And today, I -- we can say that we know this funding better and also more favorable purchase, so for some projects, and we needed to examine that for each project. So just as Fabio mentioned, we are now launching a trial project at Porto Maravilla called Pixinguinha. It's very likely that this project will also provide us with a better SOS even after adjusting some factors. And that we also -- just as I mentioned at the very beginning, will also give us the capacity also to anticipate next step. So I think it's a mix. So for some projects, we will try to really capture price and then some to improve our SOS. So this was extremely important for our operation, this new bracket, Bracket 4. And we started it a week ago. So today, we already have some customers that have already been approved for taking part in that, and we are now also working on transfers. So this will become a possibility. So once the customer comes and visit us, we will treat that just as we did for Bracket 2 or 3. So the real estate agent will start using that just as a regular sales tool.

Our next question comes from Fanny Oreng with Santander.

I have a question regarding production costs. How much do you expect production to increase? Because if you check the gap sales against production, this has been increasing over the last quarter. So what's your expectation for 2025?

Hello, Fanny. Our growth expectation, just as we have mentioned, is to be around 30%. We believe that, that is a very healthy number for engineering to absorb. And what is taking place is that we have been growing above that level. With that, we see an increase in our revenue. So when you go over our revenue, considering units sold only, so for the last 12 months, you will see that this has been around 60%. So there are 2 aspects, right? We have an increase on our PSV. And another factor that's important for increasing production is the growth of areas that has -- areas that have already been built. This is increasing around 30%. This is the number that is in our release. And our expectation is that we remain at this level. So 30% for 2025, and this is once again a number that our engineering team can absorb. So it may vary around that.

Hello, Fanny, this is Ronaldo. I'd like just to remind you that there was a change also in the profile of our product. Our product was simpler. It was built in 24 months. And most of our projects, considering also changes in zoning, which led us also to have more units in the project, well, that -- these projects take longer, 36 months. So this could also contributed to your perception when you think about PSV. I don't know exactly which metric that you're using in order to measure the progress of our projects, but we are within the timelines we have set.

Our next question comes from Rafael Rehder with Safra.

I have one question. I'd like to discuss labor. You have a mix that is a more intensive labor. So what to expect for 2025 considering that the number of construction work is increasing in Sao Paulo? And also, can you talk also about what do you expect as for what should be paid based on union agreement?

Hello, Rafael. Thank you very much. As for labor, we understand that this is a pain for this industry, but we have been preparing ourselves for the shortage of labor. But for many years, we took measures in the past in order to meet these challenges, so training professionals internally, engineering -- engineers. And also, we have worked with our contractors so that they could train and attract new employees, also the verticalization. We have also our own installer. So these are the measures that actually allows us to navigate throughout this period in which you see the shortage of labor, and we do that better than most our leverage of what you see. As for collective bargaining agreement, we understand that this will be aligned to the INPC rate. So there are still discussions between the union and from the union -- Sao Paolo and other unions from different states, but we believe this is going to follow INPC rate.

Our next question comes from Mariangela Castro with Itau BBA.

I have 2 questions. First, I'd like to go back to accruals and to understand how Bracket 4 can actually change that because I understand that you are going to deliver more this year, and your portfolio has increased. So with Bracket 4 and also considering some other changes in the Minha Casa Minha Vida program, do you expect to change anything in order to decrease your portfolio? This is my first question. And the second question, Leo talked about studying the market. And also considering rate, what are the challenges for growth? Is it demand in order to absorb another [ 5B ] in the second half? Or is it raw material or material? So what prevents Cury from reaching BRL 10 billion in 2025?

Mariangela, let me start talking to you about accruals. Bracket 4, the trend would be to improve this scenario, right, to improve this scenario. So today, customers who will be part of Bracket 4 today, they are on SBPE or direct sales. Most of these customers will continue on direct sales. Are they will be above Bracket 4 or because of funding capacity. So we treat that differently, right? For direct sales, right, we manage that differently as a cancellation. Now for those on Bracket 4 today and SBPE, and that moves to the improved program with a better interest rate, they will also benefit from better conditions. So a Bracket 4 customer is a customer with a better profile. We know that our customers' income has the impact on what is paid, right? So for this customer, Bracket 4 today will become a better customer because the interest rate will also be better for these customers. And perhaps we would see also improvement in what is paid. It doesn't mean that we are going to change criteria for accruals, but would certainly benefit from having Bracket 4 also considering what is paid.

So just a very quick follow-up, we have talked that we are discussing margins and also SOS. Do you think you can keep SOS, also margin, but also decrease of what's being paid?

Yes, at the end of the day, it will be a mix, right? So there is this possibility. More -- this is what we have discussed internally. As for your second question, Mariangela, regarding growth, what we have been discussing, it's important that, well, before we actually start selling, we have assessed that project technically commercial -- from the commercial engineering standpoint. So this should be -- all these should be considered and in a very smart way. So just as mentioned, in Q1, we launched a project called the The One – Granja Julieta. Second phase was suppose to start in August, but we will start in April because engineering was ready. It's in the same plot of land, and now we are starting Pixinguinha. So it's 2,700 units, actually 1,000 units. So depending on the acceptance, this is where we will be able to -- they have already been technically assessed, so we don't need a new engineering import. So we need to consider not only commercial factors, but also engineering factors. So -- and also with the increased landbank, we can also better understand where we can benefit more and take advantage of this momentum. So now by combining commercial and engineering, we are assessing where we can benefit and also considering this very positive momentum.

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

I have 2 questions. First, can you please add some color on how you are aligning compensation to ESG metrics? So what goals should be achieved in order to increase or decrease bonus? And do you have -- have you established goals for these 3 pillars, E, S and G? And also about funding sustainability for Bracket 4. If I'm not mistaken, 15% comes from [indiscernible] project. Do you believe that this will be sustained? And I believe that the Brazilian government would also establish some governance measurements for this presale fund. And has that already taken place?

Thank you, Mazini. Okay, so for ESG goals, that will be applied now starting 2025. So as for our companies goes to launch cash generation profit and now ESG, yes. And we encompass sustainability, governance and also social, so very tangible measurements. And this will -- more detail will be provided in our sustainability report. And also, we will publish policies in our website. As for the presale fund, I believe that this will be a recurrent fund. Yes, the government really wants to have -- to keep that funding. A Board has already been established for that fund. There is a member from the Minister of Finance, [indiscernible], one from also [indiscernible] and also one from Ministry of the Cities, our International Secretary [indiscernible]. So I don't know if we have already held a meeting. And we expect also to have that -- to have an amount approved for every year so that we have this as a recurrent funding. And considering the discussions we see, it seems that this funding will increase. And they will allocate part of it for housing. This is what we expect, right?

Our next question comes from Mr. Marcelo Motta with JPMorgan.

Two questions. So can you please talk about this noise if -- from the HMP in Sao Paulo? There were some investigation carried out last year. And also last week, there was a piece of news talking about the [ Mir ] and some cap for lower-income housing. So is there something new? Or have you heard of anything else related to that? And my next question is a follow-up about the landbank. How it is for you to keep on increasing your landbank and also while maintaining your operational efficiency, right? So I don't know whether your landbank, maybe of BRL 30 billion for the next 2 or 3 years. So how easy will it be for you to make agreements and also to pay for that land during the sales phase? So how can you work around in order to really also consider increasing the number of launches and manage the landbank?

Hello, Motta, good morning. Thank you very much for your question. As for [ AGS ] in Sao Paulo, what we know is what has been published by the media outlets. So the [indiscernible] has been working with the city hall, and we believe that a cap will be established. Cury was the first company in the market stating that they would not sell to investors any longer because that generated some questions. So we support that measure. But our major concern is if that actually happens, if there is a price gap, we expect that this gap to be aligned to the programs to inflation, and that is -- that increases every year. But we find that a positive measure in order to really put an end to any potential distortions related to the rule. As for landbank, I'm going to turn it over to Leo.

Good morning, Motta. As for landbank, of course, it's not easy, but I'd say that especially in Sao Paulo, well, we see regulations, you saw expansion in areas for our activity that -- so areas that are being now made available. So that's very important, and that actually opens or give us new opportunities. In Rio de Janeiro, we also have in the Porto Maravilla region, which is now extended beyond the northern region, and there are also some regulation changes. So I'd say that because of the many changes that have been implemented vis-à-vis new regulations and some of -- not regulation, but the legislations of Sao Paulo. So at this point in time, we have many funds should be tapped. Also, this is part of our operation on how we do business. So more important than reaching a specific volume is to keep numbers and parameters that we consider to be the pillars of our company in order to reach the results that we achieve.

Our next question comes from Mr. Marcelo Audi from -- with Cardinal.

I'd like to ask a question about cost. We saw an improvement in the exchange rate and also stabilization of metal and some other products. So what can you talk about cost? So how have things evolved from Q4 to first Q of 2025, so services in general and materials? So also, what about their margins? And what do you expect to see in the next 6 months?

Hello, Marcelo, thank you very much for your question. Well, the picture at the end of Q1 2025 is better than the one at the end of Q4 2024. I'm talking about materials. As far as services, I'd say that it's stable. We did not see -- we don't see much changes. As for materials, the dollar was approximately 6.3, the exchange rate, right? And commodities were -- there was also pressure on commodities such as steel and fuel, plastic and every other materials that we need. Now as for services, same scenario. So pressure is the same at the end of Q1 2025 vis-à-vis Q4 2024 that although the picture looks better, we keep on being conservative regarding visibility, also rough margin, gross margin, so we keep being conservative.

With that, we close our Q&A session. We have concluded Cury Constructora videoconference. Thank you all for participating, and we wish you a great afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]