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

Good morning, ladies and gentlemen. Welcome to Cury Construtora's video conference call to discuss the results for the first quarter of 2026. This video conference is being recorded, and a 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, company's industry, and other factors could cause actual results to differ materially from those expressed in such forward-looking statements. Joining us today are Mr. Leonardo Mesquita, Co-CEO; Mr. Paulo Curi, Co- CEO of Engineering; and Joao 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. Thank you once again for your interest in Cury and for joining our first quarter 2026 earnings conference call. Joining me today from Cury are Leonardo Mesquita, our Co-Chief Executive Officer; Paulo Curi, our Co-President of Engineering; and Joao Mazzuco, our CFO. During today's presentation, we will discuss the key operational and financial highlights for the quarter. And at the end, we will open the floor for the Q&A session.

Next, we have a message from the management.

Good morning, everyone. Cury reports its first quarter 2026 results as a special moment in its history. In May, the company celebrates 63 years of operations and begins a new phase with the recently announced executive leadership structure while maintaining the strategic pillars that underpin its track record of growth, financial strength, and value creation. Throughout its history, Cury has successfully navigated complex scenarios and adopted the necessary measures to preserve its financial strength, operational efficiency, and ability to generate value. We remain attentive to the current geopolitical environment and focused on making the company even more efficient, prepared, and resilient. In this context, key real estate fundamentals such as acquiring high-quality land in prime locations and resilient markets become even more relevant and essential to navigating periods of greater complexity. In the first quarter of 2026, driven by strong market demand and execution efficiency, we achieved BRL 2.6 billion in launches and BRL 2.3 billion in net sales, given in Brazilian reals, the highest sales volume in our history. We also recorded SOS of 45.1% this quarter, reflecting company's commercial strength in the regions where we operate, especially as we expand our presence with high-quality, well-located products aligned with customer needs. Among our key financial indicators, record net revenue of BRL 1.6 billion, adjusted gross margin of 39.3%, net margin of 21.8%, ROE of 79.5%, a record for the company. It's worth noting that even in this context, the conversion of net income into operating cash flow remained at high levels, reinforcing the quality of our earnings and the company's ability to grow efficiently. We also maintained a positive operating cash generation of BRL 93.4 million, marking our 28th consecutive quarter of positive operating cash flow, a milestone that reflects our financial discipline, operational efficiency, and resilience while preserving a solid financial structure ready to capture future growth opportunities. We made significant progress with the expansion of income brackets and unit price caps under the Minha Casa Minha Vida program announced by the Brazilian government, with implementation beginning in April. New bracket allows families earning up to BRL 13,000 per month to acquire properties priced up to BRL 600,000, which should expand the number of families eligible for the program and provide greater flexibility for price adjustments supporting future results. The second quarter also began with strong operational momentum, highlighted by the second phase of Novo Mundo Carrao in Sao Paulo, with a PSV of BRL 424.5 million and 1,248 units, which already surpassed 50% sold within just 1 month of launch. On the sustainability front, Cury launched Raizes Cury in partnership with the SOS Mata Atlantica Foundation, reinforcing its commitment to forest restoration, biodiversity preservation, and carbon offsetting through the planting of approximately 15,000 trees in Sao Paulo and Rio de Janeiro by the end of 2026. With a track record marked by consistent results, strong management, and long-term vision, Cury closes the first quarter of 2026 with confidence and enthusiasm to continue building with responsibility and excellence and even more promising future for its customers, employees, partners, and shareholders. Now, I'd like to turn the call over to Ronaldo Cury.

Let's now highlight the operational and financial aspects of Q1 2026. This quarter, we achieved a record BRL 2.3 billion in net sales, a record landbank of BRL 24.9 billion, and a record net revenue of BRL 1.6 billion, all given in Brazilian real. We also reported record net income from operations of BRL 351.2 million, net margin from operations of 21.8%. On a Cury ownership basis, we posted record net income of BRL 302.9 million and net margin of 18.8%. We also generated BRL 93.4 million in operating cash flow, marking our 28th consecutive quarter of positive operating cash generation. Our ROE reached 79.5% this quarter, a new all-time high for the company. Now, I'll provide more color on our operational performance. During this quarter, we launched 10 developments, totaling BRL 2.6 billion in PSV, representing an increase of more than 100% quarter-over-quarter and a decrease of 5% year-over-year. Over the past 12 months, launches exceeded BRL 8.1 billion, representing 9% growth year-over-year. On the next slide, we highlight the main developments launched in the period. Novo Mundo Carrao in the eastern part of Sao Paulo launched in January with a PSV of BRL 410 million and with more than 80% of units sold. Luzes do Rio Condomino Candeeiro launched in January in the Porto Maravilha region of Rio de Janeiro, totaling PSV of BRL 184 million, with nearly 80% of units sold. Cidade Parque Guarapiranga launched in February in the southern region of Sao Paulo with a PSV of BRL 294 million, with all units sold. In terms of net sales, during this quarter, we reached BRL 2.3 billion, representing 9.5% growth compared to the first quarter of 2025, and 48.1% growth compared to Q4 2025. Additionally, our net SOS reached 45.1%, 0.3 percentage points below Q1 2025 and 5.8 percentage points above Q4 2025. Moving on to the next slide. The average selling price in Q1 2026 reached BRL 325,400 per unit, representing 3.4% growth compared to Q4 2025 and 4.9% growth compared to Q1 2025. Over the last 12 months, the average selling price reached BRL 312,600 per unit, representing a 1.3% increase compared to the same period last year. During the quarter, 86.5% of sales had a unit price below BRL 500,000. On the next slide, we present the breakdown of our landbank. We ended Q1 2026 with a record landbank of BRL 24.9 billion in potential PSV, corresponding to 82,119 units. Currently, current landbank is composed of BRL 18.5 billion in Sao Paulo and BRL 6.4 billion in Rio de Janeiro. We conclude the operational highlights with operating cash generation of BRL 93.4 million during this quarter, marking our 28th consecutive quarter of positive operating cash flow. Over the last 12 months, operating cash generation reached BRL 750.9 million, 58% growth compared to the same period last year. Now, I'd like to turn the call over to our CFO, Joao Mazzuco. He will provide more color about our financial results.

Good morning, everyone. On Slide 15, we highlight our net revenue. This quarter, net revenue reached BRL 1.6 billion, or 13.6% growth compared to Q4 2025, and 32.6% growth compared to Q1 2025. Over the past 12 months, net revenue totaled BRL 5.8 billion, a 34.6% increase compared to the same period last year. On Slide 16, we reported record gross profit of BRL 629.7 million in Q1 2026, 32.6% growth compared to Q1 2025 and 10% growth compared to Q4 2025. Our gross margin reached 39% this quarter, representing a decline of 1.3 percentage points compared to Q4 2025 and stability compared to the first quarter of 2025. Over the last 12 months, gross profit increased 37.7% compared to the same period of 2025 and 0.9 percentage point expansion in gross margin. On Slide 17, we highlight record 100% net income, which reached BRL 351.2 million in the first quarter of 2026, 50.3% growth compared to Q1 2025 and 18.2% growth compared to Q4 2025. Net margin reached 21.8% this quarter, an increase of 2.6 percentage points compared to Q1 2025 and 0.9 percentage points compared to Q4 2025. Over the last 12 months, net income totaled BRL 1.2 billion, representing 54% growth compared to the same period 1 year ago. On Slide 18, net income attributable to Cury. This indicator reached BRL 302.9 million in the first quarter of 2026, 41.9% growth compared to Q1 2025 and 12.1% growth compared to Q4 2025. Net margin reached 18.8%, an increase of 1.2 percentage points compared to the same period last year and a decrease of 0.2 percentage points compared to Q4 2025. Over the last 12 months, our operations generated BRL 1.1 billion net income, representing 47.5% growth compared to the same period last year. Net margin reached 18.4%, representing a 1.6 percentage points compared to the same period last year. In addition, our return on equity reached a record of 79.5%. And on Slide 19, our financial debt profile. We ended the quarter with total gross debt of BRL 1.4 billion and cash of BRL 1.8 billion. This resulted in a net cash position of BRL 407 million. Thank you very much. And now, I'd like to turn it over to the operator.

Now, we will open the Q&A session. First question from Andre Mazini with Citi.

Two questions. First, about commercial expenses, 7.4% of net revenue. We see an improvement compared to the last quarter. So this lower level vis-a-vis the top line, is that sustainable considering the current pace of launches? Or is it related to a specific factor? So will this go back to historical levels? My second question, considering the adjustments and improvement for the Minha Casa Minha Vida program, are you reviewing your product mix? And what kind of strategy we will apply for 2026, 2027? Will the average ticket increase considering the Bracket 4, which took longer than we had expected? Or do you believe that the current levels and the current mix will be maintained and perhaps just a slight increase related to pricing?

I'm going to answer the first question, then I'll ask Leo to answer the second one. Regarding commercial expenses, there is -- there are some that are related to our customers. And during the first quarter, we don't have many records, and that reflects the lower level of sales in Q4. We have reported commercial sales, and we only see 9.5% up to 10%. So for the first quarter of 2025, this number went down to 8.74%, to give you the right number. So it is below the average. And the first thing now, we see also a further decrease. What should we expect? We should expect it to go back to historical levels. So we see this fluctuation here. But we see this cost of registering properties and -- because it's a front-loaded cost, just as a payment of commissions. But as sales pace decrease, we also see an impact and also a gain in leveraging our commercial expenses. So we expect this level to go down, but still close to 9%, approximately 9%, which means that we will see this level in the future.

This is Leo answering the second question. We see that the changes in the Minha Casa Minha Vida program. First of all, the government is preserving the program, and the changes that are being implemented, they indicate that it is a long-term program. So we see these adjustments being made, and this will not lead to the need of changing products. We obviously try to capture price whenever possible. So some -- we can make some adjustments, and then we can certainly benefit from that. The goal right now is to really work on our products and consider the current funding available. I believe that our strategy has been well determined. And in the future, it will certainly work with this program and with funds set aside for this program.

Our next question comes from Gustavo Fabris with BTG Pactual.

I have two questions as well. One is about cost inflation. What about inventory levels and launches? And what is the company doing regarding pricing? Have you increased the prices also when we consider what to do? And I'd like to also ask you how comfortable you are with your current SOS, sales over supply index? Would it be time to withhold sales or, at least, in the short term, when there are some uncertainties regarding the war and inflation? So these are my two questions.

So Gustavo, this is Leo. You mentioned two things. So let me talk about the commercial aspect and also about pricing of the units. Our policy has been to benefit as much as possible regarding price. This has been our policy, and the results for this first quarter prove that. Even before an event that took place at the end of March, we had a very good quarter, and we really benefited from the price -- regarding price aspects. But now, we see the changes in the program. So the idea of just increasing inventory to gain price does not make sense from the commercial standpoint and for our business. We don't sell oil that you can store and then adjust price. So this type of reasoning does not make sense to us. But whenever you have a product with the potential of allowing you to earn more in pricing, then you would consider that. But then, you'll create the feeling of urgency to your customer and not only because some news came up and then next day, we are also going to address that. So our policy is to have developments in good areas where people want to live at, and then we can gain on price so that people buy that property rather than just readjusting prices. So more than ever before, our policy of being present at good areas is really a pillar of our company and have developments in this area, and not because of a single fact that happened.

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

I'd like to understand what's your take about sales in April and May. Do you also see the impact of improvements in the Minha Casa Minha Vida program? And also, about your take on debt and also on default. And my second question, also going back to costs. We see that, well, the war is lasting longer than expected. So do you do a budget adjustment considering that? Or what can you share for the future? Do you see vendors requesting price increase, for example?

This is Leo. Well, things did not change in April. It followed the pattern we were already observing. So good months, and we also have an excellent launch taking place in the city of Niteroi. So April was a good month, but not a wonderful month because there were many holidays. And in spite of that, it was a good month. And from now on, May, we will address the changes in the program. I'd say that for the Niteroi development, we are seeing results that are better than what we had expected. It's for Bracket 4, and we have included more units. So real estate agents are also feeling very comfortable in working with this product. And this helps us. We also need to take into account that we need to educate real estate agents for these new brackets. But I think that at the very beginning, we have really the best opportunity to capture that. And now this week, we have launches in Sao Paulo, and we hope to see the same momentum. And you mentioned one point that is a point of concern, which is debt. We know that today -- well, a question that we are always asked is about demand. What about the scope of demand? There are many people who do not -- who are not able to buy today, so -- because they are in debt. And that is certainly an issue. We examine that in depth. And Caixa Economica, they are also more careful in examining credit. And I believe that both Caixa and us, we are being very diligent. And I'd say that now, with interest rates going down and the economic scenario improving, we would see more people available to buy properties. And we know that today, there are many people that cannot afford that because they are in default. And let me now turn it over to Paulo to talk about costs.

This is Paulo, Matheus. Thank you. Okay. So we know that with the war, oil prices increased from USD 60 to USD 100 per barrel. With that, we had an increase in price of input. And the main input had this price increase. We have already considered that, but we see that as for oil, we are working with the price range between [ BRL 95 and BRL 105 ]. And we have already considered this level. If it increases above that, further adjustment will be required regarding our pricing. And with this price increase, there is a possibility of a decrease in demand. So some vendors -- well, we already started renegotiating with some vendors. And we felt that they are more willing to negotiate. So it's too early for us to actually see ourselves optimistic because news about the war change every day. So we need to be attentive, and we will work on that depending on the circumstances.

So considering this scenario, let's say you are able to renegotiate some cases. Would that also represent savings in the future?

Well, when you talk about savings during construction works, well, we cannot say that, that will happen. What I can say is that prices will be maintained at the levels we see today. This is our goal.

Our next question comes from Ana Julia Zerkowski with UBS.

I'd like to address pricing again. Can you please share what's your take regarding price increase and competition? Do you see other players increasing their prices? And if so, at what level, both in Rio and Sao Paulo? And my other question is about SOS. So what is your priority today? So considering today's inflation, which is the priority, margins or sales? You opened sales for the second phase of Novo Mundo Carrao. So was there a need of, let's say, reduced margins vis-a-vis sales?

This is Leo. When we examine our track record, we have always worked pursuing best margin and also the best SOS. I believe that that's why we generate cash. And I'd say that this explains a great deal about our business. So perhaps, I don't know if I'm not being clear, but we want to keep applying our strategy. This strategy has allowed us to achieve good margins and also good SOS. And this SOS may change. We should not forget that we are in a market in which SOS is tightly related to launches, and every launch takes place at a different city, different area. So to expect the same SOS for everything, well, that is not applicable. So it's not that we can have a means to regulate that. So this is not feasible. We need to think about more or less engagement or where we have more or less people. So we always work in order to see and have the best engagement. And we are looking for meeting our requirements, margin, and fast pace sales. So what we'll prioritize? That will depend on the project. So there are some projects in which we know that our margins will be better. And there are some others in which that's not true because of the income of our buyers, of our customers. So it's important to, once again, stress the fact that we don't sell the same product everywhere. So even if you are in the same neighborhood, one project in one street is not the same, just as three streets closer to that. The same about the sales pace, or let's talk about the city of Sao Paulo and other markets. So today, we see that Sao Paulo and the northern part of Brazil, for example, we cannot apply the same rules, same pricing. So it's important that we have a good understanding about that. So we will keep applying the same strategy, which is to really tap all launches so that we can have the best pricing and the best margin at that point in time, but also benefit from the number of real estate agents available because that's a good strategy for us to capture as much as possible. And that's also important for cash generation. And these pillars are the ones that brought us to the level we operate today.

Our next question comes from Herman Lee with Bradesco BBI.

I have just one question about gross margin. So it was expected that we would see a drop. But when you go over the rev margin, the decrease was much lower. So can you please address that?

When we make adjustments, we make adjustments to the budget. It's not possible for you to change one without affecting the other. And if you go back to our track record, gross margin and the rev margin, they do not necessarily go hand in hand or they do not present the same pace. So if you go back 2025, where there was a margin increase in the third quarter above 40%, and the rev margin did not change. It was maintained. It was around 43%. And why is that? Because the mix and the weighting of my revenue on the gross margin and rev margin are different. The rev margin is related to launches, especially when you have a company with a strong SOS. And when you see developments in the first quarter, launches in the first quarter, the Carrao, as mentioned here, also development in Guarapiranga, Rio Bonito, they are successful launches. So good sales. And also, that has impact on the rev margin and not much on the appropriated margin. So we comply with the accounting rules and the budget adjustment. And that's why you see this difference. But what we see is that both are still significant margins. We will keep on addressing inflation. And we do have means to work on that. So we want to really -- to achieve strong margins. And this is how we need to also work around them in the future.

Our next question comes from Ygor Altero with XP.

I have two questions. First, inflation of materials and also, considering also the construction itself. So who is more exposed considering type of construction? And also, about inflation. And what about labor? Labor was also a concern of the company, right? And we see that some construction works are also running late because of shortage of labor.

This is Paulo. Let's talk about impact on cost depending on the construction method. We are now working on temporary mold used to shape concrete because of the lack of -- shortage of labor. But the impact was the same considering measuring or concrete. And concrete and steel also presented the price increase. So what I can tell you is that we did not identify any advantage comparing the two methods. As for labor, since the engineering restructuring process, we saw an increase in our productivity in the first 4 months of 2026. This demonstrates that our internal efforts are now bearing fruits. So we were able now to have proper labor at construction sites. So now, we need to keep that running and then to meet the deadlines for construction works.

Our next question comes from Rafael Rehder with Safra.

I have two questions as well. First, to talk about the receivables portfolio. What can you share about that? Do you feel comfortable? And that also works as hedging considering inflation. But my question is, do you feel comfortable with the current level? And also, what about the default in that portfolio? My second question is about the dividend policies. So let's assume that the war will last longer. Would you then change your policy, those 80% payout that you have been discussing?

Well, this is João, Rafael. I wouldn't say that we have a number, a threshold that makes us feel comfortable or not. Of course, we always try to mitigate the growth of default, also working with non-recourse structure in order to have that and to have receivables coming from non-recourse structure that meet our needs. And as for the portfolio, talking about direct sales, that makes us feel comfortable because of our strong SOS, also highly appealing launches, well-located products. So our portfolio of direct sales, and let's say that we have canceling, there is no issue in reselling that. So as for receivables, if it's in line with our growth in operations, there is no issue. As for default, of course, we are closely monitoring that. This is intrinsic to our business. We know that there is a risk of default. And everybody is reading news about families becoming or presenting bad credit. So we monitor different parameters, but we don't see that change. When we go over receivables, also level of default over our portfolio and also considering the time line after sales, everything is under control, but we are attentive to that because we know that today, families are facing more challenges. Now, as for dividend payment, that will not be affected. We're talking about inflation. We're talking about impact on gross margin. We have adjusted our gross margin in a very conservative fashion, but our net margin is still very robust. We achieved an excellent net margin this quarter. And dividends come from this, right, come from the second line. We are also working with a forecast of a stronger growth regarding our financials, also with increase in our cash generation, and we monitor that year after year. So we don't see why we should change the dividend payout policy change. So for this year, we have already announced BRL 300 million. I believe that this is an indicator of what we are going to see regarding dividend payout.

Our next question comes from Mariangela Castro with Itau BBA.

I have just one question. My question is about the backlog margin and the gross margin. Can you please share if that comes from the price increase of input inflation because of the war or because there are some construction works that are being -- that are running late, which is something you had already communicated in previous quarters?

The adjustment we conducted was based on inflation levels. Many -- we see these adjustments coming also from investors. So we are considering what we have available, also considering some launches that took place in 2025, '26. And we expect to see an increase in the INCC rate. So we believe we have some cushion. As for construction works running late, we don't expect the costs of these units to represent or to have a great impact on the company. Sometimes these adjustments will be made at the end of the construction works. We can also certainly have some additional costs because the construction has been delayed. But that does not mean that we will need to necessarily adjust the margin or the budget, the cost when we consider future trends. So I'd say that it's a response to an expectation to see inflation going up.

Okay. So just to clarify, this drop in gross margin for this quarter, that's related to cost increase and also, something that related to construction delays also? Or the delays, did it have an impact on that or not?

What I can tell you is that we will only see some impact, but it was not a material impact. It was really related to expectation regarding inflation and on the cushion we have and also on the ongoing construction works budget. I think this is where we need to focus on.

Our next question comes from Igor Machado with Goldman Sachs.

I have two follow-up questions. First, it's about inflation. Can you please share how you see that affecting costs? And how much has your budget increased because of inflation? And at what level do you see the INCC set? And my other question is that considering the two construction methods, you mentioned already there is no benefit of one over the other. But are you making any changes related to the processes or the type of input you use? Or is there anything that you're doing in order to expedite the construction process itself?

Igor, this is Paulo. You asked if we are reinventing or changing the processes. It was mostly a matter of understanding our construction process, but we did not change the type of material. So there were no changes in the type of material, but on labor to have the necessary labor to carry out the services required. So we have now more people taking care of the construction site. So we changed that approach. And with that, we see an increased productivity because our construction work areas sites are very large. And you really need to have the right process and the right people. Otherwise, it doesn't matter what the process is. And as for the increase, there was an impact of 3% to 5%, depending on the project. And also, our -- we expect INCC to be around 8%.

Our next question comes from Marcelo Motta with JPMorgan.

Two questions. First, can you comment on the participation of third parties in launches and especially, in sales. So I'd like just to better understand that. And also, if you have more partners in order to dilute risk? And my second question is about the number of units that are ready. So 12,000 units, the number went down, although the number of units built has increased. Is that because of any regulatory issues? So can you please just address that changes in the numbers, please?

This is Leo, rather. With regard to partners, I think it's seasonal, and we -- that number should be very similar to what we have now. Starting in May, we expect to really stabilize the launches that we had planned. So to really go back to normal levels vis-a-vis what happened at the end of February. But there was a coincidence. The projects that had been approved included partners. So it was a coincidence of having those projects with the participation of more partners. They had already -- they were already included in the project. But I believe that we will go back to historical levels. And as for deliveries, it was also a seasonal impact. We have many units to be delivered this year. If I'm not mistaken, for the last quarters, we will see an increase in the number of deliveries. So it's really more of a seasonal fact that is not related to what happened in Sao Paulo because the occupancy permits that we needed, they were approved, and that did not generate any issues regarding the delivery of the units.

Our next question comes from Marcelo Audi with Cardinal.

I have a question about competition. Even before the war in the previous 4, 6 months, we would see that the environment was becoming more challenging for smaller players because of increase in labor costs, shortage of labor. So what can you comment about the competitive environment? Would that represent more opportunities to you? Or would you say that small players will be more aggressive regarding pricing?

The truth is that when you go over the legislation in both Rio and Sao Paulo, you need to think that land with high potential makes any development a great development. And I think that, that -- well, this has -- this led to make the environment more challenging to small players. It's not easy for you to buy this land at good sites, right? And you also need a strong sales team to, also, to sell the units. And I think that's also an issue for small players. And that is such a challenge that even major players, they face challenges in the city of Sao Paulo. This is a market in which you see large developments, and that takes a large sales team. Otherwise, you will face challenges. And we believe that -- considering that, that scenario favors us. So when we go to a new region with a large number of real estate agents, that allows us to improve the appeal to buyers vis-a-vis small players because the cost of construction is also very different when you consider the scale of the project. So I'd say that you're right, the environment now is more challenging for smaller players considering the volume of developments taking place in Rio and Sao Paulo. And as for labor, I don't know if Paulo wants to add anything, but I'd say that whenever the number of launches for the mid and the high income, that also favors us because pressure decreases. Pressure also takes place when you see more launches for the upper classes. The trend is that for the next months, and we did not see launches taking place this quarter. So probably this will have an impact just as we saw last year.

Well, the Q&A session is now closed. And with that, we conclude Cury Construtora's video conference. Thank you all for participating, and have a great day. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]