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

Good morning, ladies and gentlemen, and welcome to Cury Construtora's video conference call to discuss the results for the third quarter of 2025. This conference is being recorded, and the replay will be available on the company's website at ri.cury.net. The presentation is also available for download there. [Operator Instructions] Before we begin, I'd like to remind you that any forward-looking statements made during this call are based on the beliefs and assumptions of Cury's management and on information currently available to the company. Such statements involve risks and uncertainties as they relate to future events and therefore, depend on circumstances that may or may not occur. Investors, analysts and members of the press should take into consideration that various factors related to the macroeconomic environment, the company's industry and other factors could cause actual results to differ materially from those expressed in any 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 the call over to Mr. Ronaldo Cury, who will begin the presentation. Please, Mr. Cury, go ahead.

Good morning, everyone, and thank you once again for your interest in Cury's and for joining us for this conference call to discuss the results for the third quarter of 2025. With me today representing Cury are Leonardo Mesquita, our Commercial Vice President; and Joao Mazzuco, our CFO. Throughout this presentation, we will highlight the main aspects of Cury's operational and financial performance. And at the end, we will open the call for a Q&A session. Next, we have a message from our CEO, Fabio Cury.

Good morning, everyone. In the third quarter of 2025, we celebrated 2 important milestones in our company's journey, the 5-year anniversary of our IPO and our inclusion in the Ibovespa Index, the main benchmark of B3. These achievements reflect market recognition and reinforce Cury's position as one of the industry leaders, supported by a track record of consistent growth and value creation for our shareholders. Another key highlight this quarter was the delivery of solid results once again, reaffirming our balance between growth, profitability and operational discipline. We reached BRL 2 billion in launches, BRL 1.8 billion in sales and BRL 233 million in cash generation. Among our main financial indicators, net revenue totaled BRL 1.4 billion with a gross margin of 40% and a net margin of 20%, resulting in an ROE of 70.6%. This performance enabled the payment of BRL 200 million in dividend this quarter alone, totaling BRL 529 million year-to-date, reinforcing the efficiency of our business model and the strength of Cury's execution. During the quarter, we launched our first project in the São Cristóvão region of Rio de Janeiro, which benefits from the same urban development incentives as Porto Maravilha, the Residencial Cartola. The project includes 384 units, PSV of BRL 126 million and over 60% of units sold. Another highlight was Astro Santa Marina located in the west zone of São Paulo in the Água Branca neighborhood with a PSV of BRL 262 million and 994 units, reaching 85% sales. We began the fourth quarter with a strong pace of launches, including Alto Chácara Santo Antônio in São Paulo with 552 units and a PSV of BRL 204.4 million launched in October and already over 60% sold. This performance highlights the strength of our commercial team and our solid presence in the strategic regions. Our current inventory level represents less than 6 months of sales, reflecting the health and agility of our operations. In August, we published our third sustainability report, reinforcing our commitment to transparency, governance and sustainable value creation for all stakeholders. This report expands our indicator coverage and strengthens our ESG journey, consolidating key advances across environmental, social and governance dimensions. With a consistent track record, solid management and long-term vision, Cury closes the first 9 months of 2025 with enthusiasm and confidence to continue building responsibly, an even more promising future for our customers, employees and shareholders.

Thank you very much, Fabio. From now on, let's go over the highlights of our operational and financial performance for Q3 2025. As for operational performance, Cury recorded BRL 2 billion in launches, BRL 1.8 billion in net sales, reaching record highs in 3 operational indicators, 4,908 units built, a land bank of BRL 23.3 billion and operational cash generation of BRL 233.1 million, marking our 26th consecutive quarter of positive cash flow generation. On the financial side, we reported record net revenue of BRL 1.4 billion, a gross margin of 40%, record net income of BRL 283.2 million, net margin of 20% and ROE of 70.6%. Now I'd like to turn it over to Leonardo Mesquita. Leo, please go ahead.

Good morning, everyone. In the last quarter, we launched 9 projects, 6 in São Paulo and 3 in Rio de Janeiro, totaling BRL 2 billion in PSV, as previously mentioned. The main highlights of this quarter were Astro Santa Marina in São Paulo's West Zone launched with a PSV of BRL 262 million and 85% of units sold. Singular Butantã, also in São Paulo's West Zone launched in July with a PSV of BRL 245 million and over 80% sold. Residencial Cartola in the Porto Maravilha region of Rio de Janeiro launched in August with a PSV of BRL 126 million, reaching over 60% of units sold. In the next slide, we'll take a closer look at our sales performance. In Q3 2025, net sales reached BRL 1.8 billion, an increase of 27.1% year-over-year and a 19.2% decrease compared to Q2 2025. Our sales over supply ratio, SOS for the quarter was 40.6%, 3.3 percentage points below Q3 2024 and 6.9% below Q2 2025. Slide 10. The average selling price per unit this quarter was BRL 299,700, representing a 2.2% decrease year-over-year and a 3.2% decline quarter-over-quarter. Over the first 9 months of 2025, the average price per unit was BRL 306,800, up 2.3% year-over-year. In the quarter, 93.1% of sales were unit priced up to BRL 500,000. Slide 11, land bank. Our land bank reached a record BRL 23.3 billion potential PSV, totaling 79,193 units. Of that, BRL 18 billion located in São Paulo and BRL 5.3 billion in Rio de Janeiro. We closed the operational indicators with a record operational cash generation of BRL 233,000 million -- actually, BRL 233.1 million, marking the 26th consecutive quarter of positive cash generation. Now I'd like to turn it over to our CFO, Joao. Please go ahead.

Good morning, everyone. Let me continue on Slide 14, our net revenue. For this quarter reached BRL 1.4 billion, up 34.2% year-over-year. For the 9 months of 2025, revenue totaled BRL 3.9 billion, representing 37.6% growth compared to the same period last year. Next slide, our gross profit. It increased 38.3% year-over-year and 6.3% versus the previous quarter. Our gross margin reached 40% this quarter, an increase of 1.2 percentage points compared to Q3 2024 and 0.4 percentage points from Q2 2025. Over the first 9 months of 2025, gross profit grew 42% year-over-year with a 1.2 percentage point improvement in gross margin. Slide 16, net income attributable to Cury. It reached BRL 255.3 million in Q3 2025, up 49.6% year-over-year and 7.9% from Q2 2025. Year-to-date, net income totaled BRL 705.5 million, representing 45.7% growth compared to the same period last year. In the quarter, we once again delivered ROE growth, reaching 70.6% on a trailing 12 months basis. Slide 17. Total net income and considering the full operation, it reached BRL 283.2 million, up 56.8% year-over-year and 6% quarter-over-quarter. For the first 9 months of 2025, net income exceeded BRL 784 million, a 53.7% increase compared to the same period in 2024. Slide 18, we highlight our indebtedness. So we closed this quarter with a gross debt totaled BRL 1.3 billion with a cash and equivalents of BRL 1.8 billion, resulting in net cash of BRL 450.2 million, an increase of BRL 20.4 million compared to December 31, 2024. It's worth noting that in 2025, Cury has already distributed BRL 529 million in dividends, and our net cash to equity ratio closed the quarter at 27.4%. Thank you very much. And now I'd like to turn the call over to the operator.

[Operator Instructions] First question comes from Ygor Altero with XP Investments.

Congratulations for the results. I'd like to ask about improvements mentioned yesterday at the meeting you had. How does that benefit the market? And how much are you exposed to a lower income bracket? And also with regards to potential adjustments to higher income brackets, when should that happen, in your opinion? I'd like also to ask you about the income tax exemption that the government recently approved for individuals receiving up to BRL 5,000 per month.

Thank you so much for your question. This is Ronaldo. With regards to improvement of Minha Casa Minha Vida program, we have been reinforcing that, that's very important so that we can keep our margins. This is very important so that we can keep everything on track and protecting the margins at the level they stand right now. Approximately 2 months ago, there was an expectation that a major adjustment will take place in November, but that did not happen. At the end of October, ABRAINC, CBIC, they held meetings with the technicians from the ministry, and they mentioned that they were actually present that package into different parts. Yesterday, they actually approved a budget of BRL 160 billion. And whenever you discuss budget, many other things are left to be approved. And besides the budget, yesterday, an adjustment was also approved regarding the cap of a Tier 2 and also adjustment regarding income. So actually, adjustment in the discount. So let's say you have a family that has an income of BRL 4,000 and that benefited from the discount. Now families can benefit if they have an income up to BRL 4,700. For Cury and also when we go over our land bank, 15% to 20% of our sales are for Tier 1 and Tier 2 of the Minha Casa Minha Vida program. But the impact is not that relevant. Now as for your second question, I certainly believe that, that will benefit us in the coming years, the government giving a tax income exemption for families receiving up to BRL 5,000. We still have many buyers who do not have a regular work. And in that sense, the CaixaBank, they actually considered the income of [ BRL 2,850 ]. Now if the family will now state how much they make, if they make up to BRL 5,000, we will increase affordability. And we believe that, that will be very helpful in the future -- in the near future.

Next question comes from Fanny Oreng with Santander.

Congratulations for the results. Two questions. First, what's your take about gross margin for the next 12 months? Because we see that there is a decrease in some index and also your target margin. We also need to consider your target margin. And we see an increase in your margin. So what can we expect for the next 12 months? I know it's not a guidance, but what can you share about that? My second question is about SG&A. So in the third quarter, you have the bonus. And now I understand you are actually working on that along the year. So what about seasonality of SG&A for the next quarters?

Thank you for your question. Gross margin. It's true. Every quarter, we have been having an increase in our gross margin. For the future, I'm going to insist on my answer, we will keep the margins, and of course, now at a higher level, considering our year-to-date numbers. But I'd like to insist that we have no expectations of continuous growth of this gross margin. So let's keep it at 40%. If we think about long term, we have many indexes. INCC, they have been going down. But we still expect to see this target margin being diluted. So we mentioned 39.5% to 40%. So let's talk about 40% and more or less. But we expect to keep the gross margins from now on. And there is a challenge. We need to keep on launching new projects along this rate of 41.5%, which is our target margin. And this is a challenge. So for every new project, you should be able to keep this high margin. It's always a challenge, not only to us, but to the entire market. As for SG&A, it's true. There was a dilution of the bonus between the second and the third quarter. But we should also to consider operational leverage. Our revenue has been growing robustly, 38.5% along the year, 35% this quarter. So operational leverage is important. And if you remember, a year ago, at the beginning of last year, when we talked about G&A, we mentioned that we were making some adjustment, some internal adjustment in order to be prepared for growth. And we had already seen a robust growth from '23 to '24 and from '24 to '25. So we had the carryover of G&A in the first quarters of 2024. And of course, we keep on making some adjustments. But right now, we are bearing the fruits of what was done and the robust growth. Translating that into numbers, 2022, G&A over revenue was approximately 6%. At 2023, that went down to 5.8%. 2024, because of the changes we've made, it did not go down that much. But now we are certainly benefiting from operational leverage. And our target is to keep it at 4.5% to 5%.

Next question, Piero Trotta with Citi.

Congratulations for the results. I have 2 questions. First, about price transfers. What can you talk about that and above inflation? Has that changed based on what you had in the past? So how are you managing price transfers above -- or price adjustments above inflation? And also, what about your pipeline? What about launches for the next quarters? For the fourth quarter, we understand that is seasonally not that strong. But what about the first quarter of 2026? We know that your first quarter is a quarter in which you have more launches. Can we expect the same for 2026?

This is Leo answering your question. With regards to price adjustment, this is part of our business strategy. Whenever we see an opportunity, we try to do that. And that is more at a micro level, not a macro level, and we do that based on projects. Because we operate at very good regions, we do -- we strive in order to gain price, and that's part of our policy. So the idea is to carry on doing that and not because of the current scenario. As for launches, as you mentioned, we do not launch many projects in the fourth quarter. We do not like launching projects in December. And we always have the expectation. Well, actually, we then work in order to reduce our inventories at the end of the year, by year-end. And perhaps we won't see the need of having increased launches in the first quarter of 2025. And also because of the new tax exemption given by the government, we will be able now to wait so that I believe we can have a more balanced year compared to previous years because the changes regarding income tax exemption, I believe we will benefit with that along the year.

Next question, Tainan Costa with UBS.

I have 2 questions. First, what's your take about competition in Rio de Janeiro and São Paulo? Is there anything that you'd like to highlight, the price or land? And the second question about Rio de Janeiro. You have now launched a project in São Cristóvão. So what can you tell us about that in that region? And also in the northern region of Rio, do you see an opportunity to expand over there?

As for competition in Rio and São Paulo, we know this is where we find more competition. But at the same time, this is where we will have demand. And these are the 2 cities in which we see housing policies in order to really have no projects wherever you have infrastructure. And this has been a major driver for these 2 cities and also for housing, considering also the social aspect. So affordable housing. So despite the competition -- and we do have a lot of competition. When you consider areas that can attract people, I think that this still keeps these 2 markets very healthy despite fierce competition. So that gives us an opportunity that goes beyond just meeting a gap. So closing a gap. So despite competition, I believe the market is very healthy. As for Rio de Janeiro and São Cristóvão neighborhood, we carried out a budget study, and we will launch a project in that region at the beginning of next year. And that is a continuation of the Porto Maravilha project. Today at Porto, more specifically at Santo Cristo region, we have many units that have been launched, and that region now became a very appealing area, and the price of a square meter has been increasing. And I believe that now the São Cristóvão region will also promote that. And that will allow us to also offer apartments to lower income brackets. And that will also support the neighborhood, just as we did in the central region of Rio de Janeiro. So from Quinta da Boa Vista up to the Tomorrow Museum, in which we have a gigantic infrastructure available. And in January, we will launch a major project over there. And we also have a robust land bank as well as a great commercial team. Thank you very much, and have a great day.

Next question comes from Pedro Lobato with Bradesco BBI.

I have a question about the Tier 4, bracket 4. We see that the response to bracket 4 is not as robust as expected. So it's about 6 to 7 units per month. So what's your perception about that? Do you see that improving internally? And what about the sales team? What have been sharing with you? Is there any bottleneck? What have your -- what has your sales team been reporting to you?

Cury has always sold on a basis in which, for example, for bracket 4 and also for the [ RSV ] in São Paulo, we can tell you that bracket 4 is very important to us, and we see an increase of credit. But what can we talk to you about this bracket 4 and the market? Perhaps that's important. It's important to explain why it's taking longer to increase the number of units sold. Traditionally, many companies worked in the previous SFH. The usually sold based on savings and then transferring when delivering the unit. But in order to benefit from bracket 4, they will really benefit when they actually deliver the unit. And perhaps this -- I think that it's true. The market is now adapting to this -- to selling to this bracket based on the current model we have. But we will see that it is healthier. And I think the market will follow that. For those who are in between different models, it will be -- it will take longer for them to adjust. But now we have this clear now model in which we have transfers when delivering the unit. We're talking about transferring the loan. And that is very different from Tiers 1, 2 and 3, right?

Next question comes from Carla Graca with Bank of America.

I have 2 questions. First, I'd like to talk about launches. I think you are very close to reaching BRL 10 billion in launches. And we also talked about -- some years ago, we talked about reaching BRL 5 billion in launches. Now can you please give us some color about demand engineering? Would that actually -- would that be feasible? And also dividends, we see a strong cash generation, especially in 2025, and now with the new tax legislation. So do you plan to increase the payout of dividends this year?

I'm going to answer the first question, and I'll let Joao answer the second. About launches. This number, you gave us BRL 10 billion. As you mentioned, we worked with some previous numbers. We measure our performance based on inventory so that we can launch new products with quality and liquidity. And today, we focus on consolidating and maintaining the current indicators and of course, taking advantage of growth opportunities. The company has already taking a leap. And now more than growing just for the sake of growing, we want to consolidate ourselves as a robust, effective company, just as we have been doing. We are very proud of our financial indicators and the good performance for many years. So right now, our focus is to keep on growing robustly, always measuring what we are going to do next based on our inventory rather than just setting a target number to be reached. As for our land bank, our land bank today is very comfortable, and we want to be increasingly selective. We believe we do have a good land bank, and we want to be very selective. We want good location so that we can benefit from liquidity and pricing and also that are aligned to growth and our engineering capacity. If we respect that and if the opportunity emerges, we will certainly gain more market share.

Carla, thank you. This is Joao. Dividends. First, bottom line, we do have an interest in also paying dividends. We have our target, and we have already surpassed our target. As I mentioned, we are not going to just keep cash. We will certainly pay that to our shareholders. So we will -- there is also a tax that will be levered starting next year. And that's why we certainly have interest in paying dividends once again this year. I know that you have been talking to colleagues. We have also been consulting many law firms, and there are many questions about what we can -- and what we should and should not do. There is also this conflict of the -- what you have established in the company's legislations and also on deferring payment of dividends. We are awaiting to see if any amendment will be enacted in order to really discuss the payment of special dividends at the end of the year. So what we will pay out is based on our leverage. We will also respect the covenants of our corporate debt. But just to sum up, just as in previous years, we always set aside some amount to be paid out at the end of the year.

Next question comes from Elvis Credendio with Itaú BBA.

Two questions. First, about sales. Can you please comment about the sales pace at the beginning of the fourth quarter, considering also the Chácara Santo Antônio? And also, I'd like to understand the sales base. So what is happening vis-a-vis the third quarter? And the other question is about the market size, especially in São Paulo. The city of São Paulo is not the market of Minha Casa Minha Vida, but now with this funding, I'd like to understand, do you believe that can you still keep on growing in São Paulo, considering the market size? And do you see Cury playing a role in that? And what about your capacity? You mentioned a 30% growth per square meter per year. Can you keep that number?

Let me answer your first question. October was really good. We have good launches. We just launched some new development now in November. And we try to reduce inventory this quarter so that the beginning of next year, we can really focus on the regions where we will have launches. So it's a micro assessment. We check inventory so that we can start next year well. And I can tell you that this quarter has started well. September was also a very good month. I think that the market keeps on responding very well. As for your second question, and I had already mentioned that. São Paulo is very appealing. São Paulo represents a strong market. And what we see regarding the offer of units at very good neighborhoods is a very important movement that is taking place. Perhaps you're not examining in depth. But for us who have been in the market for many years, I can tell you that in order to offer units at very good locations and considering also the income bracket of our population. So at Chácara Santo Antônio, we have apartments for 3 people according to what we have, okay? HS1, HS2, [ RSV ] so we have people in that region, R2V, people that can afford buying an apartment for 2 people at a cost of BRL 240,000. Yesterday, there was a piece of news talking about a new [ XP ] building, and it just sits across this new launch, so to give you the opportunity to live close to the workplace. It's not only a matter of numbers. And at the same time, what we see in São Paulo that's very unique to São Paulo is that when you go over the São Paulo legislation vis-a-vis the other municipalities surrounding the city of São Paulo, it's really impressive to see that other municipalities, they have a very outdated legislation regarding housing, and housing in this surrounding municipalities are much higher. The requirements are more stringent. And that's why we see this good response to offers in the city of São Paulo. Everything I mentioned today, the strategic land bank, if we can acquire a land in areas with great infrastructure appealing to the population and affordable to the brackets we work with, there are many opportunities to the population of the city of São Paulo so that they can improve their quality of life. So we have Chácara Santo Antônio. We have the neighborhood of Barra Funda. We have the neighborhood of Mooca. Imagine the entire eastern part of the city of São Paulo, if they can afford buying an apartment in the neighborhood of Mooca, paying BRL 230,000, BRL 240,000. So there are macroeconomic also factors impacting that. And as for the growth of our company, once again, we do not have a target related to our growth. Of course, today, we have reached the level of a large company. This year, we have already delivered many units. Today, we will launch approximately BRL 8 billion, and we have established a company that can deliver that. And now we are striving in order to keep on growing in the future. So year-after-year, we see growth. And as a company today, we are going to do our best so that we really plan the future step by step. We don't want to expedite just something -- but not at the right time frame.

Next question comes from Rafael Rehder with Safra.

Two questions. First, about HIS. So how has that become a barrier to you, HIS1 and HIS2 and the cap established for that? And I'd like also to talk about the workforce. I know this represents a challenge. Many companies are addressing that. What have you been doing in order to decrease the pressure for labor, perhaps to verticalize some operations, the work you do today with contractors, or what have you been planning to do? And also from the qualitative standpoint in order to reduce that pressure, the shortage of labor?

As for HIS cap, HIS is the affordable housing categories defined by municipal regulations. So for the city of São Paulo, every year, they publish the price of units that will be exempt from the ITBI tax. There are some other parameters for the city of São Paulo that are adjusted every year. And we believe that, that will happen, just as it does for other parameters. And with that, I believe that HIS table pricing will be healthy. As for labor, our engineering has been consolidating itself as a large engineering unit. We have delivered many, many units. And we named this year as the year of delivery. The logistics of delivering thousands of units. I can tell you that our engineering department has grown mature, faced challenges they had this year, and they succeeded in delivering. And our goal is to keep on doing that, but with less pain. So we are certainly examining other construction models. Our engineering department will actually determine what they're going to do and when. But it's important to examine other options. And today, we can certainly examine them and then decide when we are going to apply such options. And we want our engineering to have more options, which will be translated into increased robustness and also to be able to operate at a higher level, but with a very -- with a stronger structure.

Our next question comes from Marcelo Motta with JPMorgan.

Can you please comment about the land bank and competition, the trade-off of using some areas in São Paulo, vis-a-vis also the price of the land and the capacity to sell the units? And as the company grow, will that increase so to also increase your land bank?

Our current land bank, we have reached a land bank level that we find to be very good. Today, more than increasing our land bank is to have a good land bank, a good land bank with quality. You know we sign contracts and then we start paying at approval. For many cases, there are still some resolutions taking place. So in order to carry that into our results, so far, we were able to have that without having impact on our balance sheet. So this is not a concern, but if we are in a market that we know that there is a competition and we know there are locations with good quality, so we know that we need to position ourselves strategically at areas with infrastructure. Everything I mentioned about legislation, and considering that prices in São Paulo are more tied to income rather than location. Well, location becomes very important. Product quality is very important. Let's say, in the eastern part of town, São Miguel and Mooca, if you are going to have a similar prices, that will give your product uniqueness, and that's what we want. So to offer products and strategic locations with good quality. This is what we have been doing over the years. And this is our focus regarding land bank to keep our policy regarding land acquisition. And since we have achieved a good volume, so now we are considering quality.

We have concluded our Q&A session. We have concluded Cury Construtora video conference. Thank you all for joining us, and have a good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]