Direcional Engenharia S.A. (DIRR3) Earnings Call Transcript & Summary

[Interpreted] Good morning, everybody. Welcome to our earnings release of Direcional Engenharia with regards to the fourth Q '24 and the whole year '24. So I'm André Damião, investor -- and I am here with Ricardo Gontijo, CEO; Paulo Sousa, Financial Director. We are going to do this the same way we've all done in the last quarters. We're going to show you the main results, financial for the quarter and the year. And then we open for questions. [Operator Instructions] This is being recorded and we are going to put it in our site. And we're live too. If you want to follow the link, it's in our IR page and also the link to download the material that we're going to show you here. Now I will give the floor to Ricardo. And I'll come back during the Q&A session.

[Interpreted] Good morning, everybody. Good morning. I'd like to thank you for your participation in our call with regards to the results of '24. And to begin here. I think the main highlights are here, [ parting ] from Page 3, which are very important items to be addressed here in this presentation. So we're closing the year of '24 very happy with the results that the company as a whole has delivered. This, no doubt, was the best year in our history. We had the greatest volume of launches, BRL 5.8 billion; the largest sales, a little more than BRL 6.3 billion; the largest revenue -- [ 350 ] went through our balance sheet. And the ones we consolidated, when we consider the complete revenue, we have the shared governance -- and not consolidated. We reached BRL 4.5 billion in revenue, a growth of [ more than 4% year after year ]. Also, we had the greatest adjusted gross margin, 39.5% in the fourth Q. The deferred revenue grew consistently quarter-after-quarter, also reaching the greatest level in our history, 43.9% in the fourth Q. This is a clear indicator that there are good continuity perspectives in terms of delivery of gross margins that will be most resilient and solid. We also had the largest level of net income, BRL 638 million, last year, growing 93% compared to '23. And the last quarter, the fourth Q '24, our operational gross -- [ net margin ] reached almost 38% -- 33%. So all of this data shows we are growing in a consistent way, the way we like to say -- that makes sense to grow. When we grow -- gaining in efficiency and seeing all the results from our operational leverage in the company. And as a result, in the fourth quarter, we had the greatest ROE of 33%. This is the greatest level we've had in the company, with very solid and consistent growth [ since our follow-on ] that was done in mid-'23. Also, in spite of us having all this extremely strong growth, we are returning capital to our shareholders in a very relevant way. In '24, we paid BRL 577 million in dividend yield. If we consider Direcional's market cap in the beginning of January '24 compared to the volumes of dividends paid, it was a yield of almost 15%, so these are results that make us very satisfied. This is the fruit of a long cycle, seeds that were planted some years ago. And now we see the results, so I would like to use this moment to thank all our employees, our team, our shareholders, suppliers, customers that trusted in our work and allowed us to deliver these results. Also, before we go to operational data, I would like to make a comment. The fourth Q is traditionally a Q that is very rainy in the country. We never begin works in the fourth Q, so parting from October, we just deliver all the works and the property. Because it's -- we can't move and do earth filling works in -- [ productivity is just big ] because of the rain. So the fourth Q and the months of January and February, we deliver the works, but we don't begin. Our works begin in the beginning of February and the end of February. And since we have revenue proportional to the advance of works -- so the first -- fourth and the first Qs, we don't have too much growth in revenue because of the seasonal issue of our business, but I would like to make another highlight here. That revenue acknowledged because of the advance of the works -- and since it didn't begin, it will -- since it will only begin [ parting ] from February or March, it's already contracted. It's in our deferred revenue. It's in our future exercise margins. Now margins that are reported, gross margins, and the deferred revenue that had a strong growth this fourth Q is the result of our execution. And this gain has a lot of merit. So I would like to close these highlights with these disclaimer here to you, with this kind of information for you, so that everybody can be in the same page and with the same level of information with regards to issues relative to our sector and execution of our works in the places we work in Brazil. Page 6, operational highlights. We reached in the year of '24 a total volume of launches of BRL 5.8 billion, so from 2017 on, we had an average growth of 30% a year, which is relevant. And when we see our net sales, we reached BRL 6.3 billion in the year, so when we look at the last 5 years from 2019 to 2024, the growth was almost fivefold, 5x, the growth of sales in the company. So when we analyze and compare '24 to the previous year of '23, the growth was almost 60%. So most of the value that we have generated has come from all this effort we've done in the commercial area. And also, in spite of -- had an increasing sales volume, we had also expenses dropping, sales speed growing and gross margin growing. So this is the result of performance improvements, training, not necessarily that sale that was simple or through discounts -- and definitely we believe really are not really a need here in the moment, as we have been able to prove with regards compared to our numbers last year. Page 7, the net sales speed. We closed the fourth Q with a net sales speed of 25%, in keeping with the previous semesters. And this VSO growth was the huge highlight and the greatest value generated for the company in '24 and '25 because of the capital costs we have in our country today when we analyze margin levels we've worked with. And also we analyze inflation perspective, which in our view are behaving well. So the net sales speed will continue being our priority for '25. Now I will give the floor to Paulo so that he can show you the main financial highlights. And I will be at your disposal, at the end of Paulo's presentations, for our questions-and-answers session.

[Interpreted] Thank you, Ricardo, for the introduction and the presentation. Firstly, I would like to thank everybody, for your participation here. And also very quickly, financial highlights, adding to what Ricardo said and showing you and adding to it. So revenue. Our gross revenue year-after-year, we reached 42% growth anchored on the sales of -- sales and works. The growth was 1% with net revenue that we consolidate. 6% total revenue considered the one not consolidated. So if we look historically, when we look at our historical numbers, clearly it is possible to see what Ricardo said. In the fourth Qs and the first Qs, the revenue is flat; and grows relevantly in the second and third Q. And so here, this year, was not different. This is only different when we have a huge sales volume fourth Q versus third Q and first Q versus [ fourth Q ], which is pushed by sales, not because of the works which is impacted because of the rainy season. It always rains in the end of the year and this quarter in Brazil. Next slide, the gross margin. We closed the year with 38.5% gross margin. It was our best year. And perhaps the highlight is the fourth Q, 39.5%. The gross margin grew a little -- 8 percentage points in the year, but the quarter closed still more. So now it's even more. To the right, when we look at deferred revenue. We have BRL 2.8 billion in deferred revenue. And as gross margin, very sustainable, 43.9%, margin gain of this quarter, which indicates sustainability related to the gross level margins we are delivering currently in our results. Now with regards to expenses. '24 was 1 more year of dilution of expenses of SG&A. We grew -- here we -- the revenue grew more than 40%, and expenses 20%. So here, this represents a dilution of 6.7%, over the gross revenue, to 5.6%. And so here also consider what is not consolidated in the results here, 5% compared to 4.3%. So here, this KPI, we are a benchmark in the segment in the sector. And we're going to still work to remain with benchmark levels. Fourth Q, there was a specific increase when compared -- expenses compared to revenue -- over revenue. This is because of the -- it's there is a readjustment in the payroll in the office. And so there is an impact in the fourth Q. And also, during the year, we correct things; and we should have an year very similarly to -- similar to '24. Selling expenses. So here, like the previous years, we can always improve things, right? We can always go after more efficiency, but those that track us: These expenses, these sales expenses, over sales, have gone more than 12% over, when compared. We are -- we closed in 7.9%, in keeping with the previous year; low volatility, quarterly volatility. Generally it's [ 1 above, 1 below ]. So sales expenses are very well equated here. And the highlight is to grow sales in the level we grew and sales expenses not following this. We grew in the right way. It was not [ paying more ] to sell where we delivered sales. Next, a quick comment on the final results, our operating net income. We remove nonrecurring results -- BRL 638 million, which is our result. We reduce it to BRL 567 million (sic) [ BRL 577 million ], removing the nonrecurring effects we had within the exercised. So we remained with a net margin of 17.2% in the year, 78% growth. And in the quarter, we delivered a net margin of almost 18%, compared to a -- and the net profit was BRL 66 million (sic) [ BRL 166 million ]. So when we consider this chart, it's a -- it's like a stairs. Every year, we grow a bit, net margin growing, returns growing even more. Lastly, one of the most important slides here for us, which is the capital structure. We look at this business. Every decision parts from this slide here. We begin talking about our budget based on the capital structure. We see where we can get. We closed with the latest cash position, BRL 1.6 billion; a debt completely long. These are the gray bars here. Many people see here -- they see double the average of what we had in the last years and the question whether this is a challenge. Yes, it is, but it's okay because these are due -- debts that are going to be due. It's -- one is going to end in the -- 87 months, and the other, 84, so this is not a challenge for us, the months, right? So here, in terms of our growth with regards to the first quarter, we issued [ BRL 350 million ], with an average deadline, average term, [ parting ] from the seventh year, 7, 8, 9, 10, all the way to 10 years. So we added more bars here -- more than 84. And so we increased our cash value and elongated or stretched our debt schedule. Today, we have the longest debt in the sector, when we look at our peers. And lastly, the last one, the most important, is we closed the year with net cash less 3.1 -- BRL 68 million -- minus 6.1 (sic) [ leverage ratio negative 3.1% ], completely unleveraged; growing without leveraging the company, delivering results, paying dividends, not raising the levers -- the leverage. And so this is very important for us for decision-making. We look at what is right and important. And I think this is a very important point. Also, in the beginning of the year, our rating was reaffirmed by the S&P Global. And that's it. So these are the main highlights for our capital structure. Now I think we can open for Q&As. And we are available for any questions you might have.

[Interpreted] Thank you, Paulo, Ricardo. So now we will begin with the Q&A session. Our first question, Elvis, BTG Pactual.

[Interpreted] With regards to gross margin, I think I would like to explore more the expansion here with the deferred revenue and the statement of account and to -- if it came from the works, whether you -- when you begin to recognize these economies or new sales are contributing to the expansion of these margins; and what we can expect for the next quarters in terms of net sales -- so cash generation. So what are you planning here in terms -- what do you expect in terms of portfolio of sales of special-purpose vehicles?

[Interpreted] So with regards to gross margin, which was your first question, I would say there are some effects. There is no works recognition effect here in this gross margin in the quarter. We had in the end of the last year a certain volatility with regards to our currency, the real. And in our view, in spite of the fact that we are very comfortable here with regards to inflation, the budgets of our works, we are always going to try to find some kind of way to revert the budget to allow it to happen when we are comfortable with regards to the total budget of the works, which would be in the end phases of the works after 70% advance. And here in these quarterly results, we still don't have a reversion of budget in the works being -- taking place. New sales. We have operated with very similar margins in terms of what we've had recurrent in the last 12 months. And the main reason for the increment of gross margin has been the exchange of harvest of projects. We're delivering projects that were launched 2 years ago. They have margins lower than projects launched in the last 12, 18 months because of this exchange of harvest. And so we're not recognizing the revenue of projects with previous margins. And the increase of the deferred revenue is because of new sales done with margins superior to those works that are in the last results, still going through the income statements. And they leave the deferred revenue with lower margins and entering the income statement with higher margins. So when you have this in the quarter, this is very important [ and results ] and a clear indicator of the resilience that our gross margins will have when we look from there on. I've always had and I've always said in the last years -- so I've always -- being considered -- very considering, saying that you shouldn't perpetuate this gross margin because the gross margin in our business should be closer to 35%, but what I think we can say is that, with these deferred revenue, BRL 2.8 billion -- and last year are -- was more than BRL 3 billion. I would say that there is a strong deferred revenue to be recognized in the next years, giving us comfort that our gross margin will remain solid. As we have new sales and the way Minha Casa, Minha Vida is going to work -- so obviously we're going to try to do the best work possible to remain with solid levels. And it's clear to me: Priority is net sales speed. We believe we're working with margins, in healthy margins. When we look at capital cost in Brazil, we see net sales speed as a priority here in this moment so that we can deliver this growth. Specifically, we analyzed BRL 6.3 billion in sales. Compared to total net sales (sic) [ total net revenue ] of BRL 4.5 billion, we are selling almost 40% above what we are doing. So there is an important growth here in revenue. So we believe that the increments of operations will work with less demand for turnover so that we can return capital to our shareholders as much as possible. So the main focus here of the company for the maintenance of a return or ROE will come from the turnover and not so much margin. And so this is what we have gone for, cash generation. Now we'll go -- give the floor to Paulo so that he can go into more details here with you.

[Interpreted] Thank you, Ricardo, Elvis. So our business, our cash dynamics, right, as most of the businesses, when you grow, you need to have a turnover. And so what we did in the last years, and this is almost recurrent, is to anticipate receivables in -- our vision generates value and allowed us to remain with low leverage and grow without exposing -- without exposure of leverage. When we look at '24, in our -- we generated operating cash, cash as a whole; and this, purging the non-recurrence of cash that did not enter because we sold assets, right? So -- and also, in the fourth Q, we were close to the breakeven with regards to operating cash generation. When we look in the pipeline or in the future. Although we have accelerated sales, our launches in the year was lower. When we look in the future, the growth is not focused. It is turnover, so the trend is for this cash generation to grow more. We will continue anticipating receivables. It generates value. It increase, speeds up turnover and cash generation; and allow us to operate with less -- lower invested capital levels. So it's difficult to give you a forecast here, but the de-acceleration of growth; or the need for turnover because of the lower number of launches in '23, '24 -- speeding up works and more net sales speed, we see operating cash generation greater for '25 than '24. And if we stabilize today, we stop growing today, in 1.5 year or 2 years, we should have cash because the cash goes back. We don't need turnover for business and cash begins to come back. And we have cash generation just equal to the profit, operating profit. Did I answer your question?

[Interpreted] Yes, you did. Excellent. Just going back now to the gross margin to see if I understood correctly. Eventually, internal costs -- operating less than the budgeted. Eventually, if you continue with internal costs below the budget, you would have economies of work over these more elevated gross margins. Is that it? Does it make sense to ask this?

[Interpreted] Yes, it does make sense. There is no margin increment this quarter because of a one-off event which is an eventual reversal of budget. This is a recurring result. There was no impact of a specific reversal in budget to explain this. This is after operations and because of the exchange of harvest. In case there is some kind of recognition of economies, there might be a specific increment of gross margin because of this, but this was not the case in this fourth Q.

[Interpreted] Next question, Daniel Gasparete [indiscernible].

[Interpreted] Ricardo, Paulo, André, 2 questions. The first ones: We've heard a lot about eventual changes in the income curve. There was -- I would like to know and we want to know if this is immediate for the first semester or it's going to be left for the end of the year. And also, with regards to gross margin, the economies of works, can we dream and know that there will still be economies of works and gross margin can be even greater than what we see here?

[Interpreted] With regards to Minha Casa, Minha Vida, the parameters of the program were changed in mid-'23, 21 months now. In the middle of this year, we will have 2 years without more relevant changes with regards to the parameters of the program. Although there's no kind of periodicity for these revisions to happen, it is possible there might be some kind of adjustment for the reality that occurred here in this period of the last adjustment and the current date. This is -- there is perspective there might be changes in the parameters. We see some people, some technicians and -- addressing this issue. In our point of view, these parameter adjustments should happen in the short term, but it is difficult to be certain with regards to this because, when parameters are announced, this is when -- in fact, they have a meeting beforehand. And we never know whether these eventual -- when these proposals or the changes become public, so we wait to see eventual adjustments. And here I think it will be positive, for us to have new families in our market. With regards to gross margin. If input prices and labor costs continue under control, I would say that what we have considered as a future inflation expectation in our budgets adopted for recognition of the revenue, well, we -- I would say that our cost increment is below what we have provisioned for or considered in our budget. It is difficult, because of the volatility we've had in the world as a whole, to have any kind of -- to think about this. With regards to see whether things -- eventual economies will materialize or not, we will only be certain when our works are being concluded effectively. If today, I say we could have some kind of savings, but I think it's too early to consider any kind of gross margin change because of the economy, which is it's not the one -- that it's not the one that we've seen recurrent in our statements of accounts. So I think -- income statement. I think we have to be very cautious here managing our business, in the recognition of [ eventual ] gains when compared to the budget we had during the launching of the project, but I would say the scenario is positive, Gasparete.

[Interpreted] Even after the acceleration of inflation of materials and labor, the inflation of the operations is going below what we believe, right? And the question: Did this speed up or slowed down? Is it closer to the estimated...

[Interpreted] Gasparete, it is below the invested. And the distance increased during these first months of '25, so we have stronger comfort now in March with regards to our budget than what we had in November, December last year, when we had a lot of volatility because of the exchange rate. I would say we in Direcional have operations that's basically divided in 8 metropolitan regions, state capitals. And we work in 2 cities, 2 metropolitan regions inland São Paulo. So an operation where we're not so concentrated in 1 or 2 or 3 cities, but we're not extremely spread out, pulverized, because we are concentrated in the metropolitan regions of capitals, right? So what I would say is that we have lower exposure here with regards to one specific place. I would say the greatest cost increase we've seen comes from difficulties of labor in São Paulo and more recently in Belo Horizonte too. Except for any other place, we don't have such relevant challenges in terms of the availability of labor in the other places we operate in. So here in Direcional, we're going to have a greater resilience of our numbers and margins because there is no place that eventually might be going through a lack of labor and impact our operations in a very relevant way, because what -- the place that has the greatest representativeness is more than 20% of our business. So the productivity of our labor is greater. When we consider the increase of INCC, which is a Brazilian tax -- comes from -- because of the labor. And since we have lower representativeness of labor than the national index, I would see that, when the inflation comes from labor, we feel lower inflation than the one reflected in that specific index. So I would say we've had comfort with regards to costs of our projects compared to the costs of our...

[Foreign Language] [Interpreted] Pedro, Bradesco, Pedro Lobasto (sic) [ Pedro Lobato ].

[Interpreted] André, 2 questions here from our side. First, with regards to launch volumes, it is clear in the introduction, your concern with regards to macro, higher capital costs. And so I would like to understand. If there is -- when -- except for macro, what would lead you -- what animates you for launches in '25? And the second question, looking at the net sales speed, when we see the journey which is very strong here -- but in the last 3 quarters, it has stabilized around 25%. I believe that the improve of net sales speed will -- in '25, will it become -- come from the maintenance, up to 25% in the quarter? So these are my 2 questions.

[Interpreted] Pedro, I think, to answer your question, the capital is expensive in the moment in Brazil. We have been very selective with regards to the allocation of capital in projects and launches. And I would say, when we analyze the year of '25, we've been very cautious with regards to eventual increase of launches compared to what we have initially projected for the year. This is because of the execution of our works. So we have very clear in the company that it makes no sense to -- growth losing margin. I think, size in our business, we can only -- it just measures how much risk we're running, so growth has to come with consistency, where we can have benefits coming from operating leverage, which we have been able to demonstrate in our numbers. We have grown. Gross margin has grown. Our negotiation capacity with suppliers have grown. Synergies in the places we work in has grown. So -- even likewise, with expenses, sales expenses, we begin to have synergies. You have sales expenses dropping, and in this sense, it makes sense to grow. We're in keeping with this. When we analyze '25, the challenges. Where we have a team qualified and trained, this is the point we have analyzed very [ criteriously ] to define a new launch or not. And for '25, definitely we don't want to have a number of work sites ongoing that is over what we have projected for the year. So eventual increment in attractiveness to increase launches certainly will happen in the end of the year, for eventual -- to begin eventual works only in '26, but Pedro, our priority is not the growth of launches. Our priority is to maintain elevated sales to deliver growth, revenue growth, with the large -- the least demand of turnover. So we want to have most of our things sold so that the demand for turnover is reduced. So net sales speed is a priority larger than the increment of launches itself. And to answer your questions. In spite of the fact that it is not a priority of -- an increment of launches is not our focus. Anything -- any movement here would only happen if we see a demand for new launches so that these works can occur without additional demand of turnover. So we have to have a huge gain of affordability, inclusion of new families in our addressable market so we have greater demand for our products. So in this moment, I think there is no way of -- assuming this as an assumption. I think the -- everything is in the limit now, but there is not, no space for significant changes here. So I think, based on this context, we have to try to prioritize sales, continuity of capital return to the shareholders. And I think this is we're going to get, extract more value. Any other thought or any issue relative to the growth of launches in our operations depends on variables. And I think, in this moment, none of you should consider this as a priority or a premise when you look at the Direcional perspective. The priority is sales.

[Interpreted] Thank you, Pedro, for your question. Next question, Antonio Castrucci, Santander.

[Interpreted] Ricardo, Paulo, my question has to do with the portfolio you reported this quarter. You, we saw a robust growth. I want to know the company's structure for the company for '25 and also for the portfolio this year. Another point: How do you see demand [ for the sale ] of portfolio? Mainly, do you see space to realize these transactions with a premium in this macro environment? This is my question.

[Interpreted] Thank you for your question. Well, first, direct -- this is a modality where we finance our client. I mentioned this last quarter -- 100% of the amount of the unit. He pays us 40% during the -- before the keys, 60% after the keys. So this is a sale that happens in the larger -- in the greater income segment. Minha Casa, Minha Vida is different. So there are some important benefits here. One of them is that we are protected from inflation. And during the year -- we began the year with a kind of more disturbed inflation, so we decided to reduce incentives for [ off-plant ] transfer. So today, when we do [ off-plant ] transfer, the client has benefits, has better prices -- and also, compared to the direct table, where we have a greater sale price, no other incentive. And also there is a difference for the sales team. The payment of the direct table is lower. And here we reduce this incentive to increase the portfolio because of this benefit in terms of protection from inflation. Now our inflation scenario is less volatile. Capital is more expensive, so we began with these incentives again -- and directing our sales to the [ off-plant ] transfer sales. So we should see a less-relevant growth compared to '23 versus '24. So with regards to the demand, most of these incentives are usually during crisis periods. We've seen a lot of demand for this asset. There are many potential buyers, several different -- it's not only one type of customer. And today, we see strong demand even better than the last operations we did in December related to the previous one. Conditions were better than the previous one, and this was true for several consecutive operations. The next one is always better than the previous one. And we still see demand in this very volatile environment. If we go back to the past: The direct table has always existed here in our business. It was more or less relevant in our history. When we go back to 2015, 2016. In the worst moment we had in the market, this asset was very liquid, had a lot of liquidity. We always sold this asset, and it had liquidity in those years. We did sales with the direct sales in the last years. Prices change but not the same cases we have today. Also, the market developed a lot from here on, but this is something we've always done. So I believe this is an asset that will be very liquid during the year, without too much risk. We'll have to check this. We have to follow up on this. Ricardo?

[Interpreted] That's it, yes. I think you answered the questions.

[Interpreted] Yes, yes. I think your answer was very complete. Congratulations for your results.

[Interpreted] Next question, Ygor from XP.

[Interpreted] 2 questions here. Within the program improvement, the cap price, what do you see is most necessary if you have to do just one? Also, we saw the Caixa raising interest rates for the -- for Group 4.

[Interpreted] I think that it is clear that the cap price increment, in my view, would have a greater positive impact in operations of company because they include units financed in the SVPE (sic) [ SBPE ] segment within the [ unit holds ] that are eligible for Minha Casa, Minha Vida, which have a gain in affordability, but what we have to monitor is that we're not here for -- we're here for a very long-term business, right. So I think this has sustainability and the capacity of FGTS. It has a strong weight with regards to the budget of the program, so I think it would be healthier to have adjustments in the income rates, different income bands. Because resources, right, are very limited and have competitive costs, these loans should be directed to lower-income families, which would be best for our society. So I think that the -- and adjustments in income bands would be healthier and fairer in this moment. In terms of impact, I think it's a cap price, but here we're not -- I think our cycle is long. Loans, FGTS, has a fundamental role for the families in Brazil. And I think it's important to have consistency in the program so that we can have sustainable works. So also, if you raise cap prices without touching income, it's difficult because you might have a price that is higher, but if income is limited to BRL 8,000, the customer is not going to be able to buy that real estate for -- or that property for that cap price in place. It increases, so I think it is difficult and makes no sense to raise the cap without debt being here. So I think this has to come together with income, and eventually, this can be heavy for what the FGTS has capacity to finance. Unless there are other choices here in terms of prioritizing new properties, the ones that generate more properties -- and somehow, there is a more relevant impact here, but I would say that only the increase of the cap itself -- we've had -- we have to be very careful here to see of the capacity of funds being able to deal with this. [Foreign Language]...

[Foreign Language] [Interpreted] So now -- so this affected...

[Interpreted] I think that it's early because, January and February, where the income of the buyer is higher, I would say the seasonal impact of holidays in Riva is larger than Direcional which is more uniform. So Riva launches, we should have in March, so I think it's early to have any conclusion with regards to this. I can give you an idea, but my feeling is that impact is low, so I would -- I think Caixa continues having very relative income rates. And it ends up -- since we have -- most of Riva projects are also financed by Caixa, I think we end up offering a differential, when compared to other banks. And here in this context, if I were to give you a feeling, although we need more time for this, I would say the impact is lower.

[Interpreted] So our next comes from Rehder, Safra Bank.

[Interpreted] I have 2 questions here. The first one, I would like to talk about price transfer; how you see in the program, because of current conditions, of this movement. Do you still have ease in continuing with the same prices? And the second question, I want to understand the dynamics in the different places. I think the gains you've had in the last years was to stabilize [ PSO ]. And also I want to understand if there -- if you can still see some benefits here to improve the net sales speed and try to understand which ones are performing worse than the average of the company.

[Interpreted] So to leave the pandemic end of '22 or a little after '23 -- in the years of '21, '22, because of pandemic's -- or because of Russia-Ukraine conflict, we had strong inflation in our sector from materials. And this is where we needed to recompose margins because it had been tighter, the equation in our sector. So I would say that the increase of property price in '23 and '24 has been more relevant because what I see -- than I see in the next 12 months because of the need for recomposing cost increases that we had in our segment. And this happens gradually because of the competition we have in our sector. It happens slowly, price recomposition, because of the number of supply and the options that the client has when he decides to buy something. So when we look, price increases are lower than they were in the last 12 months. So because priority here is turnover, I would say that we're going to prioritize net sales speed in this moment with more stable margins compared to what we've had. So I would look at price. My expectation is that there isn't real increase of price above inflation. We should be close to inflation, close to cost increases. With regards to the different places we operate in. Where we began operations in the more recent operations of -- so the places we began operations since below -- before the pandemic, 5, 6 years. And this is where we have great synergy gains because of the greater maturity of operations [indiscernible]. Also I see opportunities in seeing a capture of synergies, a return increment over the capital we allocate in projects in Rio. So these are the different places where we have focused on trying to get increase in scale and where we see opportunities to have an increase of the return over capital we allocate in these places. So when we look at the consolidated company, you have different areas, places improving, others stabilizing very mature levels. I think we see an perspective of improvement. And we've done a lot of effort for this to happen, but this doesn't happen from 1 month to the other or 1 quarter to the other. It is a little work done every day, little improvements that we have every day that will happen. So Direcional, from [ '20 on now ], is -- even with the pandemic challenges, it was one step after the other. There is no miracle. We can't count with an improvement from 1 quarter to the other. This is not going to happen. It's one step after the other, and in time, it will become very perceivable.

[Interpreted] Congratulations for the results.

[Interpreted] [Operator Instructions] Next question comes from [ Ana Julia ].

[Interpreted] My question has to do with the beginning of the year of '25, if you can tell us the operating performance in these first 2 months. Do you see a de-acceleration versus the year of '24? Any detail you can share with regards to what you've seen in January and February would be just great.

[Interpreted] [ Ana ], I would say, well, we haven't seen too much difference here. I think we continue seeing solid demand. We continue performing well. The first quarter is usually a quarter where we launch less. The fourth Q, we launched a lot. So we begin launch in the first quarter, starting from the end of February, beginning of March, but it's still we've noticed a scenario very similar to what was last year. The first quarter seasonally is not as strong as the third one or the fourth one, although the first Q last year was positive. And this year, it's very positive too, so I think there is no kind of change here that is more significant, when compared to the previous years, in spite of the fact that in the mid-standard segment we had an increase in interest rates in the real estate credit, but we still see resilient demand. Nothing that I should say to you would justify any kind of change in perception or in the scenario.

[Foreign Language] [Interpreted] Kiepher Kennedy, Citi.

[Interpreted] Congratulations for the results. Most of my questions have been answered. Just another point: The company grew 60% sales this year, 40% in revenue, based on a number that was already robust that came from '23 because of the wonderful work the company has been doing. Because of the size of the company that you are in at the moment, I want to understand the challenges in terms of corporate structure; works management you -- the challenges, specific challenges in each region. My question has to do with additional challenges because of the company today and positive impact -- the negotiation capacity with suppliers. Also you mentioned that the cost of capital and the budget of the FGTS are the main drivers for an accommodation in growth, so I want to understand the size the company is in and how these factors should complicate to -- this -- to remain with the pace of this growth, right? So with the size, how can you think of an evolution of launches from here on? I want to understand a little bit about this challenge because of the size of the company. And also dividend this year. The company closed '24 with 2 digits in leverage. I want to know if there was an update with the Riva deal, capital allocation growing too.

[Interpreted] So I would say that we are in a moment where the company is very mature. The team is extremely experienced. They've been working together for a long time. They created the story. They designed this journey, delivered this journey, everybody together. The team has been with us for a long time, so from operation, operating point of view, we see consistency with everything we've done, and comfort. Of course, every day is a challenge. There's way too much opportunity for improvements, and we always go after this, but I would say, from what we have done, the way we've worked in, these are daily challenges. There's absolutely nothing that hasn't been done before or nothing the team has not experienced or -- so when we look to the future, when we get a total net revenue that goes through the income statement and [ STEs ] that we do not consolidate -- BRL 4.5 billion revenue in the last 12 months of '24. We sold BRL 6.3 billion. We still have revenue growth possibilities. And we will still continue benefiting from the operating leverage increment, so I think expense lines will continue diluting. We have to be disciplined to capture these benefits with greater-scale operations. I've seen improvements here with negotiations with suppliers where we can have more productivity in the cost. What we have done, we've been doing some years for this way, standardized product, construction processes. There's nothing new here. Everything is very consistent. And in fact, it's always what we've always done with more scale, so I think it's to collect the benefits and try to find synergies that certainly can be captured. Now I would like to give the floor to Paulo so he can tell us about the capital structure with you.

[Interpreted] Thank you for your question. When we look at '24 -- then we began deleveraged. We worked -- we are good dividend payers. We don't hold onto cash here if there is no use for it. And we concluded '24 paying exactly 100% of the dividends over our operating net profit, when we do all the adjustments I mentioned we did. We paid BRL 557 million (sic) [ BRL 577 million ] dividends. When I look at '25: We are prepared, budgeting the company, preparing the budget, to keep the same pace. We want to remain with this pace, which is what our shareholders expect. Obviously we have a market before us. Again, capital -- and operate in a deleverage way is a priority. So we have been able to use this strategy to continue recycling assets. There's a lot to do to comply with this mission, but we are working and aiming for this. Lastly, you talked about the Riva operations, which we just announced in the end of last year. We're working on the final adjustments of the documents to continue with the signature. According to what we said in the end -- in the beginning of December '24, there's still no novelty here, but the plan is to sign this according to the schedule. April and October were the 2 milestones we had in operations, at least April for the first part of the deal and October to close the deal. And we are following the schedule and everything is in keeping with this. Ricardo?

[Interpreted] Yes. This is it, Kiepher. I think we touched upon the main points.

[Interpreted] Everything is clear.

[Interpreted] Our next question, Jorel, Goldman Sachs.

[Foreign Language] [Interpreted] What I want to understand is the competition of smaller companies. We have seen that the market is doing well. [Foreign Language] [Interpreted] So do you see a greater competition from smaller companies? And also, with regards to the balance sheet, can you tell us more, if you have more net debt or net cash than the last 2 years? Is it more for net cash?

[Interpreted] Jorel, with regards to the competition, the market is similar to what we had last year. We haven't seen great changes with regard to the main players that work in this Minha Casa, Minha Vida segment. We haven't seen so many new companies. The ones that have always operated in the program continue. We have different companies in different cities. And I think it's a work that has worked in a very solid, balanced way between supply and demand. And I believe it will continue this way. Of course, when capital is so expensive, I think it's always more difficult to see new entrants. Until you have a certain scale, this demands a lot of capital. And with an expensive, scarce capital we have today, I think this is not the most appropriate environment for us to have a relevant entry of new companies, but the ones that have always worked in the segment, we see them working, performing, constructing, a scenario very similar to last year. I would say, with regard to the balance, we have always tried to work in a very conservative way in the company, of course never having a cash without use, in Direcional. In my point of view, I think we've done good work here between capital structure of the company and return of capital to the shareholders. We're going to work in this format, but I think in -- we're in a very volatile moment in the world, volatile Brazil. Cost of capital is the -- has been the largest in the country -- the greatest in the countries in the last 8 years. I've never seen such scarce and expensive capital as I see it today. And so here, based on this, we're going to be more conservative than we have been in the last years because of all the uncertainties, global uncertainties; and exchange -- change of President, United States -- of a new president; and conflict. And here in Brazil this volatility ends up being impacted, so we have tried to be as conservative as possible now. And when we look in the long term, nothing changes. We've been trying to work with a 10%, 15%, 20% leverage, but temporarily we might be more conservative with lower leverage to absorb eventual unforeseen events in a more adverse scenario but no change with regards to what we've always done, perhaps something more specific until things become clearer to us. But now in no way eventual -- a less leverage eventual -- meant more return. We had a greater ROE here. So we're always trying to generate value for our shareholders, and this is our priority. So I think this is it. This is what I can say in this moment where somehow there are many variables. At the same time, we still don't know where things will stabilize.

[Interpreted] We have no more questions here, so I would like to thank you for your participation in Direcional Earnings Release Call. Also, allow the IR team to answer any questions you -- might remain. And I will give the floor to Ricardo.

[Interpreted] I would like to thank everybody. Really we've been able to close the year in a very satisfied way with what we've seen and been able to deliver as a company and a team. I would like to thank you for your contribution, your participation. And we will continue doing the very best possible. Now, analyzing the current scenario and perspectives for '25, we're very optimistic of our business. Thank you very much, all of you, and have a very good... [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]