Direcional Engenharia S.A. ($DIRR3)

Good morning, everybody. Welcome to our earnings release of the first Q '26 Direcional Engenharia. Welcome to our investors, market analysts that follow up on us and all the participants of this conference. I'm here with Ricardo Gontigo, CEO; and Paulo Sousa, CFO and Director of Investor Relations. This goes to analysts, market analysts, we're going to show you the main results of the quarter, and then we're going to have our questions-and-answer session. [Operator Instructions] We are live in YouTube, the Direcional channel. You can see it in our IR site, and you have the link to download the material we will show you. We're recording the event so that we can have them, as always, in our results center. I would like to give the floor to Ricardo, who will give us the main highlights of the quarter.

Good morning, everybody. It's a huge pleasure to be once again with you and show you the results of the first Q '26. Thank you very much for your participation here. Well, let's begin with Page 3, where we would like to highlight to you the main points we consider most relevant in our operations. In our view, we had the first Q in the company -- the first best Q in the company in all our metrics that we analyzed. We had a record in launches, over BRL 1 million (sic) [ BRL 1 billion], and we know that it is a quarter that is a weaker quarter because of seasonal issues in our country. And also launches grew 12% compared to the same Q last year. And also, this was the first Q that was record in terms of gross sales. This is a huge highlight in our operations here, grew 29% compared to the first Q last year and reaching BRL 1.9 million (sic) [ BRL 1.9 billion ] in the first Q of the year. Also, it was record in terms of gross margin when we adjusted by the rates we paid in the finance to productions of our projects, right? It reached a record of 42.9% when we do this adjustment based on the financing to production. And also, the net margin came as a record for the first Q, reaching BRL 213 million. And when we analyze the recurring net profit, which -- the net profit -- the recurring net profit was BRL 200 million in the quarter. Also, here with regards to the net profit, I'd like to stress that we delivered this result even after payment of BRL 804 million in dividends in December. So naturally, this year, we began this first quarter with a leverage level over the -- above the margin we closed in the fourth Q last year, and because of this, financial expenses have been higher. And this net profit level was also reached after the sale of 15% of the share in Riva, our subsidiary that works with a segment above the Direcional brand that works in. And so we had this net profit even after all of this that happened. So I think this is very, very important to stress. And also, I'd like to highlight to you, here in the lower right chart, we separated the net margin and the net margin before minority interest. And so when we compare the minority line in the first Q '25 to the first Q now, '26, after the sale of the stake in Riva, it's natural for this to have risen. But when we exclude minority interest to do a comparative analysis between the first Q last year to the first Q this year, we can see that we delivered a level of net profit before minority interest that was record, 21.9%, not considering minority interest in our results. So this shows that in spite of us being -- delivering a record level in terms of net margin, as well as this, we have benefited from a greater operating leverage in the company, allowing the expense lines, specific SG&A, having a dilution, allowing us to deliver a record net margin. So our growth is a result of gain in net margin and also because of the benefit from the operating leverage, where we have translated greater operations into greater dilution of expenses. So we've gained efficiencies in all the lines of our statements of account. To close here, also, I'd like to highlight that we closed the quarter with an annualized ROE of 38%, which is a return that I would say is a benchmark in all business segments that we can compare to, not only real estate development, but a series of other segments. The different things in our business, different businesses in our business where we believe an ROE of 38% is very important to highlight, and it is a value that we've given back to our shareholders. And we've worked for several semesters even with very high costs that we have in this country and we've been able to deliver this result. Page 4. The main theme at the moment in the last weeks in the main interactions that we've had with investors has been the impact of the increase of the oil price in the cost of our product. Here, I would like to stress to you a certain comfort we have with regards to our margins and our capacity to maintain margins in an eventual scenario of cost increases. This is not what we've seen so far. So far, we've seen costs under control. But because of the representativeness that oil has in the cost of the products of civil construction and materials' freit before -- freight, before we go into this analysis and the potential impact that this rise in costs might have in our margins, I would like to show you how we are going through a moment where there was significant cost increase. In my point of view, it should have been significantly higher than any impact coming from this issue of oil and the war in Iran, which was a COVID period, the pandemic. So when we consider 2021, this was the -- that was where we had the greatest crisis because of the pandemic everywhere, producers with restrictions producing these products. So we reached an INCC-M 14%. So it reached almost 20%. And even with -- in this context with a very challenging period, you see the INCC of 14% in 2021 had an increasing impact here. There was a gap in the increase and the reflect of this in our gross margins reported in the statements of our [ company ]. But even with an NCC that is extremely high, elevated, our gross margin in '22 compared to '21 had a drop of 1 percentage point. So we can show you in practice how this company was able to navigate in a much more challenging environment at the moment that we consider. And an INCC of 14% has an impact of 1 percentage point in the company only. So in '23, we practically completely recovered the gross margins impacted in '22. And then we went to these record gross margins we've been able to deliver in the current period. So having been able to show you in practical terms how we have been able to navigate in very high inflation environments and extremely challenging operations during the pandemic, when we go to the scenario we have in '26, first, I'd like to stress that what we have seen in terms of cost impact of certain products because of the oil price is not even close to what we believed at the time. And also, we believe to currently be much more prepared for eventual inflationary scenarios, which is still what we have at the moment, but still we have to be prepared for this. And I'd like to say that we are much more prepared than we were at the time, specifically -- and now on Page 5, we made the breakdown of the things that gives us comfort with regards to our capacity to operate in this scenario that can be a cost moment, a rise in cost. But look at the accounts receivables we have today adjusted and corrected by the inflation. And in '21, '22, we didn't have this. So today, Direcional has more than BRL 2.7 billion in receivables adjusted by the inflation. And the greatest part of these receivables comes from Riva operations, where part of our clients opt to finance the purchase of the equipment directly with the company. So BRL 1.8 billion comes from this portfolio of receivables in Riva. We have another BRL 900 million in our Pro-Soluto portfolio, Direcional. These receivables are -- majority are grossly adjusted by the INCC. And this somehow has a certain correlation. In spite of our vision, the INCC -- in eventual rising crosses, INCC should be above the IPCA. So most of these receivables are corrected by the INCC. And during some time now, we were questioned because we had part of these sales done with financing that was done directly with us because this client pays around 40% the amount of the value of the property during works, 60% after delivery of keys, and this increments capital in our projects and this has an impact in the return we deliver over the capital we invest in the projects because they're more capital intensive. But still, in a moment such as this, these receivables give us comfort with regards to our hedge in case there is an eventual rise in prices. So what in a certain moment meant a slight reduction in the return the company delivered, now it is a hedge considering a more inflationary scenario. So part of our way of work, it's a result of this and also what we've always tried to say in Riva. We believe it was positive to have part of our sales done with this accounts receivable correction, inflation and INCC. And its return today shows that this company strategy was assertive because we have a high part of the cost here hedged with this INCC correction. Also, we have a little more than BRL 5 billion in inventory already launched, mostly in construction, where we always have the option of rising the price of our products, increasing it in case the products are -- considering an expected inflation in the subsequent months after works begin. So BRL 5 billion in inventory we have. It gives us the flexibility to adjust prices, right? It's another lever, giving us the comfort. And in case it's necessary, we can work the pricing -- of our pricing -- of our products here. Net sales speed is in a better pace. Although we've had an important increase in the net sales speed in the last quarters, we have tried to work with a net sales speed of 25%. It is lower than what certain players or than what certain analysts believe would be net sales that would allow us to maximize returns of profits to the company. But this level, this gives us strong comfort that we have because we have BRL 5 billion in stock and allows us to adjust prices in a more inflationary scenario, allows us to maintain margins. So net sales speed at the moment -- we were criticized for having a net sales speed lower than a return, but this is what allows us to have the comfort to know that we can maintain healthy margins without huge challenges at the moment. Cost line. We have -- from all our works that are ongoing, we have a cost, a deferred cost of almost BRL 4 billion, the total backlog construction cost, right? So this is enough to hedge 52% of the backlog of construction costs in our works. And we have all this inventory that we can give a new price in this inflation scenario. So when we compare BRL 4.4 billion in cost with BRL 2.76 billion accounts receivable, this means that we have only BRL 1.7 billion of the cost that we need to hedge in a higher inflation scenario. And to hedge this BRL 1.7 billion, we have BRL 5.1 billion in inventory. [ Also ], the cost that is not hedged by accounts receivable is 1/3 of what we have in terms of inventory ready for commercialization, so for sale. So an eventual increase of this inventory, it doesn't even have to be even closer than what the INCC has to be. I would say that 30% of our inventory from the BRL 5.1 billion is equivalent to BRL 1.7 billion in cost that is not covered by accounts receivable and that has INCC correction. 30% of this inventory would be enough to hedge the stake -- the part of the works cost that is not covered by accounts receivable. So I would say that this is our comfort with regards to our capacity of maintaining very solid margins here in this inflationary scenario. So I want to make this message very clear to the market. We have been much contacted and demanded by all of you so that they can understand how we see this impact of the oil costs in our margins. And I would say that in our point of view, we are very much prepared for this scenario. And once again, I want to stress, it is not exactly what is materializing in terms of the cost of our works but for which we certainly are preparing ourselves. We are very well prepared rather. So now going to Slide #7, the operating highlights in the first Q this year, we launched a little more than BRL 1 billion. So it was a 12% growth compared to what was launched in the first Q last year. And in the last 12 months closed in March '26 when compared to the last 12 months closed in March '25, we noticed an important growth in our launches, 27%, and we reached almost BRL 7 million [ BRL 7 billion ] of launches in the last 12 months. Net sales growth was even more relevant. We grew 19% in net sales in this first Q of '26 compared to first Q '25, 29% growth in gross sales. We had a growth in this first quarter justified from some challenges, some regional checks we had in certain states that increased state subsidies to one that already came from the Fundo de Garantia, Guarantee Fund. So with this, the cancellations grew in these states. So a growth of 29% in gross sales compared to the first quarter '25 was translated in 19% of gross sales quarter after quarter. BRL 1.6 billion in net sales, record for a first Q in this company. And when we analyze the last 12 months closed in March, we delivered BRL 6.4 million (sic)[ BRL 6.4 billion ] in net sales. Page 8, net sales speed. This is an important point to stress. We had an important increment in the first Q when compared to the fourth Q last year, and also the first Q is seasonally weaker. So we believe that in the quarters before us, right, we will have a VSO over this level, always being very cautious with eventual cost increases because of PIO, as I said before. And also important to stress that this net sales speed in the first Q, we delivered a strong increase in the Direcional segment. In the fourth Q, we showed the launches of Direcional was concentrated in December. So Direcional's -- were impacted. And now this first quarter, we show you that there is no type of problem in terms of sales speed, in the sales speed. It has been recovered. It is in line with Riva. So both segments operating with sales speed that are very solid, and also 23%, 24%, right? And also because of the cost of our product and also because of our capacity to mitigate eventual cost increases in the following months, I would say that the sales speed is still our greatest priority here. Now I would like to give the floor to Paulo. And at the end of his presentation, I'll be with you for questions and answers.

Thank you very much for the presentation. Good morning, everybody. Once again, very expressive results in the first Q '26. And beginning with the financial highlights here, I would like to make some comments with regards to revenue. To the left here, the blue bars, in the first quarter '26, we delivered BRL 1.2 million [ BRL 1.165 billion ] compared to -- a 30% increase compared to last year. Sales grew 19%. So here, this is the result of sales and works. They certainly grew from the first Q '25 to '26. And this is a reality, even this being the first quarter with much rain. And we noticed this in the fourth -- the fourth Q, it rained less, but it lasted until April. And even in this scenario, works went well. Revenue dropped a bit compared to the fourth Q because of the rain, but still compared to the previous year, 30% growth, 12-month vision, 29%. And now we have BRL 4.6 billion in revenue. We have been growing very relevantly sales compared to works and delivering results. To the right, we have here the SPEs (sic) [ SPVs ] we do not consolidate in the results. We had BRL 1.2 billion in SPEs (sic) [ SPVs ]. This is -- these are noncontrolled, right? So almost all the works -- we do almost everything in the works. We manage the business. So the revenue growth here was 25% in 12 months. There was a dilution of these SPEs (sic) [ SPVs ]. And this is a scenario we should continue considering for the future. And we've reached BRL 5.8 billion. So this shows that revenue is getting closer to sales. Ricardo showed you BRL 6.2 billion in net sales. So we're catching up now. And this means that our works are within schedule and, in fact, very close to sales. Next slide, gross margin. Ricardo stressed this. So in numbers what he said, in the first quarter, 42.9%, 0.1 percentage point compared to the previous quarter. Since revenue dropped, the net profit dropped too. In the year, we delivered a gross margin of 42.4%, a very relevant growth compared to the 12 months that closed in '25, more than 200 in margin. So this is the result that we were able to extract from this cycle that closed now in the first Q and where we were able to transfer prices a lot from the margins of our products and also in a cost scenario where we went through a very important moment, delivering the works with adequate costs. To the right, we have the deferred revenue, BRL 4 billion deferred revenue. So these are units sold and not constructed yet, not built yet. Very high margin, 44.4%, very solid, a slight drop compared to the past quarter. But we always say that the deferred revenue margin is the main sign that our gross margin is solid. And when we look at these current levels, we are comfortable and we know that our gross margin will continue at a high level. So this is a quarter we closed with an important inventory of deferred revenue with very high margins. Next slide. Now going to EBITDA margin. Here, we have an important growth of the EBITDA margin compared to the gross margin we had. We were able to have some dilution in terms of expenses in the last quarter. And to the right, as Ricardo said, net profit in the quarter, our net margin was 17.2% already adjusted nonrecurring results. And when we look at this gross margin before minority interest -- and this is the great difference when we compare. The minority interest, specifically the Riva one, allowed us to -- our margin to be to the side. But here, it grew when we compare '24 or even '25 to now, and giving us strong returns, 38%. The fourth Q was around 44% because we had an important payment of dividends in the fourth Q. This year, we still haven't paid dividends. And this is what adjusts the equity. So here, once we pay dividends, ROE grows again. And lastly, in this slide we'll begin by saying that this is the beginning of everything, right, capital structure, all -- everything apart from this capital structure. We closed the Q with a net debt. And also here, I consider all the debt, 24%. And when I look at only the corporate net debt, excluding net linked to projects, and this gives us a comfort because it's aligned to the development of the project. Net debt is 2% over to equity. And here in the middle is our cash position, really BRL 2.4 billion. So this is the net debt. So we have a lot of cash. We work to put cash in the company to go through this period of elections and other [ items ]. And to the right, and even with this very large cash, we have a debt amortization scale that is much stretched. We have 66 months. This is the longest period in terms of debt in the sector. So we're very comfortable to be able to operate in this moment to reduce this leverage and pay dividends without much leverage discussion. So now I will give the floor back to Andre, so we can begin with our Q&A session. And we are here to answer any questions you might have.

So we will begin with our questions. Our first comes from BTG, Gustavo [ Fabris ].

With regards to inflation and cost, I would like to see what the company has done in terms of efforts here with regards to price. Did you raise -- and also what you have in terms of inventory, did you have to increase the granting of Pro-Soluto? Could you give us some color here? This would certainly help us. And the second question, in keeping with price would be demand, how have you seen demand increase here in this first Q? I know that we have to view how the changes of the program, how this -- what's going to happen. But anything here will help.

With regards to pricing, as we said, we are very comfortable with our capacity of continuing operating with solid margins. Even with this eventual cost increase, we're very comfortable with what we have seen. We have clearly been able to show how we operated in a period in the pandemic. This was a scenario which was much more, in my point of view, challenging than what we have today. We've been working with the repricing of certain products, anticipating and preparing ourselves, creating space for eventual cost increase of certain products. So now in the end of April, we have been trying to work with this repricing here. And also, it is important to say with regards to Pro-Soluto, no flexibilization, much to the contrary. We changed our credit engine for the concession of Pro-Soluto. We have been much more restrictive, and we are not at all going to do any kind of flexibilization, anything that might mean a loss in the quality of the client of which we are trying to sell to. So since last year, since September, October, we've been more restrictive here and we've changed nothing in our policy. And also, we have no intention of changing, normal life. And in spite of operations here, you saw sales speed in the first quarter growing compared to the fourth and we saw something very positive in terms of demand. April was a strong month in terms of sales. We continued seeing important demand. And the adjustments going to 3 and 4 of the program allows us to have important affordability. So no concern here, not even a yellow light here, okay? With regards to the margin, no way, not with costs. We have important comfort here.

Next one, Matheus Meloni, Santander.

So here, just to understand price increases, understand if you see an ease with regards to the price of new launches and price of inventory. Do you have the same capacity? And also, I want to understand the kind of impact this would have in the sales speed path looking in the future? And the second question, I want to understand how you see the Belo Horizonte master plan, the changes to come, the approval here and benefits that this might bring to Direcional? And also an update on regional programs. This was mentioned last year. So if you could give us an opinion here, it certainly would help.

Matheus, I'm going to answer your first 2 questions. I would say that the pricing of our product launches and inventory is very similar. There is no big difference between our pricing capacity, the prices for new launch or something that is in inventory. The main point we have here where we see huge value in accelerating the sale of inventory product with a greater production. So they are being traded with very healthy margins. We have always said to the market that we have worked with gross margins that are superior to the recurring gross margins in our business. We would launch projects with gross margins that are inferior, the ones that we have delivered in the company. And even with ones that are inferior to the ones we are delivering, still we would have a return over the capital that is very interest, which would justify the launch. So I want to say that we have a deferred margin that is over 44%. We have margin of the stock -- inventory, things that are already constructed very healthy. New ones are done with lower gross margins, which makes sense here. So this is why we always say to the market that parting from a certain moment, our gross margin should converge to one that is lower than what we've operated in. This does not mean that there would be a reduction in the return that the company delivers. I think it's natural. And in this moment, we have prioritized the sales of inventories with a greater advanced percentage because of the cash generation done here. Launches are lower than our deferred margin because it makes sense for us in terms of capital allocation. Now from the point of view -- in terms of the impact in net sales speed, we are delivering something that is above what we delivered last quarter. But it's not necessarily what we need to do. We need to -- I think in this level we've operated in, we can deliver a very healthy return and cash generation that is very healthy because the pace of growth of our revenue had a natural reduction. Our revenue growing 30% year after year, it is obvious that you have greater demand for working capital. And in the second quarter, when rains end, many works begin. But with this net sales speed level, we believe we will give a healthy return, cash generation, too. But we've had an important cash generation -- operational cash generation in the first quarter, and now it's going to be gradual from here on. But we want to operate with net sales speed above what we delivered this first quarter. We are comfortable with our costs in this moment. And we are ready for eventual rising price increases. But a higher VSO would give even more value to our shareholders, although it's not mandatory. Belo Horizonte master plan, it was approved. It is very positive for the central region in the city. I think it's going to be very beneficial to the city as a whole. There's going to be a strong revitalization of the area. But still, we are waiting very optimistically for the approval and beginning of approvals from the architectonic and architectural point of view and environmental point of view. And I think it can be an important growth vector for the company. And always considering the relationship, the supply, demand ratio, right, coefficient here, and considering the sales speed reduction we had in Belo Horizonte. We're not going to build what is not sold. We will only build what is sold and has demand. So I think we are interested here. We have a strong exposure in the country. More than 20% of our business is in Belo Horizonte. And I think this can be an important avenue for us, too. Now the third question, I will give to Paulo to answer with regards to the regional aspect.

Matheus, with regards to the regional aspect, since the end of last year, we stopped selling checks in some states, Manaus and Ceara. The local government has promised the sector that the checks will come back. But eventually, we are -- we have been waiting to see what happens. So today, we have check in Brasilia, Sao Paulo, Pernambuco recurringly. Manaus and Ceara, these were states that had a lot. But as Ricardo said, they impact the extracts of the first quarter because we sold with the expectation of receiving a check and it didn't come in time. So we had a greater volume of cancellations. And now even without having these checks recurrently, we had some return in Manaus. We did some transfers with checks this year, clients that had already existed from last year. But now we'll only operate -- we have check and budget, and everything is working just like in the states where checks remain like Pernambuco, Sao Paulo and Brasilia. So I don't know if there is any specific point you'd like to know more.

No, no, it was just an update. I think your answer was very clear.

Next question, Ygor, XP.

Congratulations. Two points from our side. Ricardo talked about the oil prices impacting freight. So I want to know if you have an idea just how much freight grew and how much it represents in your cost? And also the second point, with this scenario with costs that are more pressured, does it make sense for the company to hold on to the pace of launches? Or can you still grow with launches with this more pressured inflationary environment?

Ygor, we have tried to do work to see just how much freight represents our works. Of course, we don't know just how much the freight will represent the product of our supplier, right? You might have a chain impact here, right? Not only the price of what we buy from the plant and take it to the cost. You have the cost, for example, getting certain material all the way till it comes to the plant. So we don't exactly know in the chain just how much freight represents. But the number we have here related to the cost of our works is around 3%. So I think freight clearly has an impact. But since it represents in the first analysis -- well, initial analysis, 3% of the cost is not where we're going to have a greater impact in our business. For example, concrete is around 16%, 18%, 19%. So if anything rises here, there will be an impact superior to freight isolatedly. So freight is not the greatest point of attention. But still we're very well prepared for a scenario of cost increases. And I would like to repeat here, until the moment, in our provisions, our cost budget, everything is covered. So we are anticipating eventual future impact that is more significant with accounts received that was huge. We didn't have this in COVID. Riva was less expressive. Now we have much greater amount to receive. So the scenario is much more comfortable than what we had in the past in the pandemic. And we have shown everything with much less variable than what we could work to offset cost increase. And this is the message. You can be okay with cost. Of course, we're always prepared, always monitoring. And until this moment, the sales speed generates more value and should be the greatest point of attention than cost. And with regards to eventual changes and adjustments that we had projected here in our launches pipeline, no change, no adjustment. Life follows normally. All projects to be launched being worked on, approved. All the launches happening. So until this moment, I believe that the market has demonstrated to us -- because it was hurt in the past, not because of Direcional, but impacts in the sector as a whole. I think we were able to navigate well here. Perhaps here, I see the market with a greater concern than necessary really with regards to this reality we have been going through so far. Nothing changes in terms of launches.

Next question, UBS, Ana Julia.

We have a cost here with regards to margin. You mentioned this. Just to understand if you could tell us the level of provisions you already have in the launches of new projects. And considering this first Q, how much additional provisions is inserted in this margin? Or do we begin seeing this additional provisioning more for the second quarter? Second question, we want to understand what were the reasons of this margin difference between the Riva brand, 43%, Direcional, close to 39%. If there was a specific reason or a mix? Or is this a trend that should remain from here on?

First, with regards to provisions. Our budget, we have that rule of 36% inflation in -- provisions for inflation. And once this budget continues, if there is savings -- and looking in the past, we have been able to deliver many works below the projected inflation for 2 reasons: INCC that work below this 6%, and others because we were able to be more efficient. And this savings comes at the end of the works. When we look at the end of the first Q, our launches were budgeted with regards to the works and how they would close. So every -- we update the budget, and it is considered to check results. So the first results arrive -- well, we already have what we expect in terms of works to finish the works. And we made no relevant change of the 6%. Looking at the long-term curve, this should be the inflation. We always look at this spot parting from that price, right? The second question, Riva, Direcional difference. Well, it's related to the mix, right? There's no structural change in both companies. It is much more of a mix than what was sold. Direcional sold a lot in Rio de Janeiro, Riva a lot in Minas Gerais with greater margins. So it has to do with the mix, not structural change. When we separate deferred revenue, it's very balanced here. Inventory margins also, it's not easy to check. But here in our numbers and the way we manage them, there's no change of -- change between both companies. It is a continuity. And it was a number I paid a lot of attention to because of this movement you manage. It's a mix. It's a seasonal effect. I don't know if I answered your question, Ana.

Yes, you did.

Next question, Safra, Rafael Rehder.

Two points here that I would like to address. Firstly, how you see the health of the credit of the consumer, because on one side, Minha Casa, Minha Vida is in the best moment of history, but has been concerning contracting levels we have observed FGDS (sic) [ FGTS ] and then the [indiscernible] program of the government. So I want to see how you see this -- the potential impact in the health of the credit of the consumer. Secondly, I want to understand how you see the increase of INCC can impact the demand of the consumer going to -- well, when you transfer this in Caixa, it is not readjusted by the INCC, but Pro Soluto ends up catching things, right? So here installment becomes more expensive, right? So it can impact purchases now.

Well, the first question on credit. Well, it is not now we see this greater indebtedness of families. What we've noticed in these last quarters is a long curve. It's a long curve, right? But it is a lower conversion rate, but not relevant. And since the demand for the program is big, we saw this generating more leads and coexisting with this lower conversion rate. And what we've done, we've used a lot of technology to speed up to better process our client pool here and coexist with a lower conversion rate. It is marginal. And so we delivered net sales speed growth, net sales in all quarters. So it is not something that it concerns. Demand is big. The pool of clients is big. So now with Minha Casa, Minha Vida also the more vulnerable families to this scenario you design -- you talked about here, there is a difference in the sector because the demand is very big. Now here, going -- what we see and what we've seen in the past -- because the program has gone through readjustments, cap readjustments. I think level 2 is the one that is tighter, right? But still the other 2, 10% increase in levels 3 and 4. We had very recent adjustments. So the cap for 3 and 4 is not -- doesn't seem to be a problem. But perhaps a discussion from the best level, 1, because they buy at the limit, very close to the limit. So any price increase normally becomes Pro Soluto at the first moment, right, until you have readjustment in Minha Casa, Minha Vida. Ricardo, would you like to add to this?

I think the point here, Rafael, adding to what Paulo said, an eventual higher INCC and its impact in the correction of the Pro Soluto is not what inhibits the decision -- the purchasing decision of the client. I think the INCC impact would come an eventual rise in prices. And because of this, a client that might have enough money to buy this might not have this in the future. And this would mean a reduction in the market where we can work when -- but a client deciding not to buy because of a concern with the higher INCC leading to Pro Soluto is not something that happens. The consequence would be increased -- in case this happens and the client cannot buy because of what Paulo said. But for the moment, I don't see any kind of impact in this sense. We have to wait to see the inflation in case this oil price increase remains for a long time. But for the moment, there is no concern with the reduction in demand.

Herman, Bradesco.

Two questions here. The first, cancellations, that were greater. And it is -- there was an impact in Minha Casa, Minha Vida now. Should this happen in the second quarter and should things remain more pressured? And also a quick update with default with arrears in your portfolio. So this would be very useful.

So first question with regards to cancellations. Yes, the main offending factor here in the last 2 quarters was the end -- a nondelivery of checks in some state programs, Manaus and Ceara, as I mentioned. And this ended up leaving clients that had bought -- waiting for check. There was no check, subsidies dropped and the client was not able to continue with that purchase, and we continued to cancellations. We've done a good part of the work here. I think still -- there's still some work to be done. We're still being able to transfer with some checks that came from previous -- the past budget. But the work is being done. But an important point is that these units, as we were able to see in the first quarter, are being canceled and sold -- resold very quickly. These are units with a lot of liquidity, specifically Manaus, because in spite of check in Manaus having ended at the turn of the year -- in the end of the year, the Manaus subsidy for Minha Casa, Minha Vida increased. So there was an increase of subsidies for the family there. So demand there was very long. So all cancellations that happened, we were able to resell in the month or the subsequent month. So in case there's anything else, certainly, I believe that we will be able to very quickly recover sales. We're going to have greater gross margin, greater cancellation without impacting the net sale with gain in margins. These units, we were able to increase the price a little bit also in this period, this window between the first sale and the second. So in my point of view, I think we're very quickly going to solve this problem at this point. And this does not impact results. If you have greater -- you end up with net sales that are very similar. And the second question about delinquency. We don't see any scenario change in our receivables, much to the contrary. In keeping with what Ricardo said, we changed our credit policy last year. We implemented new credit work ranking and rating the clients, delving into our credit score issues. And in the midterm, we will be able to see this -- we will see a scenario where the portfolio improves, Pro Soluto, for example, with some provisioning in the long term. I'm very optimistic with this new scenario, credit scenario we're working with.

Piero Trotta, Citi.

Two questions. The first one refers to works savings. I want to understand if in the first quarter, there was a relevant level recognized coming from works economies. And in the next quarters, for example, what you have in terms of results to receive with a higher -- do you have a greater amount to receive in the next quarters? And this is my first question. And also with regards to cash generation, in your point of view, what are the main levers to improve this cash conversion in these next quarters? Is it related to working capital, a reduction of receivables, greater transfers? What do you see that can help to improve this conversion of profit in cash? And what do you expect for '26?

Piero, I'll try to answer your first question. We had been telling the market that works where we had done eventual provisioning because of the NCC (sic) [ INCC ] in case the expectation did not materialize or cost increase was inferior to what we had estimated in the year, when works gets to the end, we know things are going to happen and we revert the budget. So what I can say, in the first Q, the net effect between budgets that were higher because of costs of certain products and works that began to get to the end where we referred the budget, the result was an increase, but mitigated by eventual economies that we had works at the end. So there was a margin -- there was not a higher margin impact. We provisioned and increased budget at a higher production than what we did to reduce budget. So we have works that are more advanced, and we believe there will be savings, and this would be an eventual mitigating factor of potential incremental costs. And also with regards to accounts receivable corrected by the INCC and what we have in inventory, when we consider all these points, we have comfort that we will not have impact in the margins, eventual cost increases that might materialize in the future. So you had the -- the net effect was because of budget in the first quarter. Paulo, I'll give you the second question.

With regards to the cash burn or cash generation -- among the alternatives you gave me to choose here, sale and transfer. I will consider that one. Speed -- the net sales -- sales speed accelerated. We had a fourth Q with a slower net sales speed. But now in this first Q, we've been able to recover the level we were in. And because of the works and the VSO aspirations that we have, we want to work strongly in sale with quality and a transfer speed that improves every day in order to have this cash in-house as fast as possible. I don't think we have to change anything in the way we work in. Today, a little bit of the portfolio that we have a direct hedge, right? When we finance the customer, the client, this credit is corrected by inflation. We were able to address this, right? And in my point of view, it's accelerate sales and transfers to have the cash back in-house, and parting from there, have an operational cash burn independent of what we do here, right? Focus on the operating factors. So when we consider the quarterly curve since '24, certainly, there is a certain seasonality, there are better or worse quarters, but we have more operational cash generation.

Next, Jorel Guilloty, Goldman Sachs.

Two questions. I want to go back to the net sales still, 24%. Do you consider this a healthy level within this scenario of cost increase in construction? Because in 2021, when it went well through the inflation wheel, the sales speed was 10% -- 10 percentage points less than now. And I want to know if 24% is the right number. Second, do you believe that in this inflation rise scenario, if this can impact this even more, specifically the lower -- the smaller players so that they can give -- decide not to build? Or if you can gain more market share? And here, if you would increase launches in this scenario, right -- vis-a-vis this scenario?

Jorel, thank you for your question. Regarding sales speed in '21, the VSO is lower than we had today. But at the time, capital was much cheaper than the capital cost today. So considering capital cost today and the very relevant hedge we have with regards to eventual cost increase -- because this is not what we see. There's nothing very significant until the moment in practice, right, in our daily work. But considering that we're going to have a significant increase before us, I think that this hedge that we have because of accounts receivable today covering more than 16% of the cost during works, I think we should operate with a sales speed above what we had in the past. And all of this is much healthier, right, compared to the past. And once again, operating above 24% would be even better. So I think the ideal level would be 2%, 3% above the 24%, although 24% is a very healthy level in our point of view. But the context we are entering in this scenario, which is potentially more inflational, but with the receivables and the inventory that we had where we can adjust price with strong flexibility, gives us comfort to know that we can operate above this with no problem whatsoever. The anticipation of our cash flow, the acceleration of our cash generation today generates much more value, and we're very comfortable with the margin level we have here in the company. And also, we have a reported gross margin adjusted per interest rate, 6 percentage points above, as well as the accounts receivable and the inventory, where we can be flexible to work on prices. So here, a higher net sales in this current context is ideal. Yes, this impacts competition -- I think competition. Companies that have a weaker capital structure, they need to work with a percentage of constructions that have been sold much greater. So their revenue is much more blocked in nominal terms, more than us. And I think cost increase certainly would have a strong impact in the reduction of the competition assuming there is more leverage or a capital structure that is weaker to enter this inflationary moment. And this is a scenario we've also experienced in the past, and it might repeat again, right? So I think, yes, this is a possibility. And in case there is a reduction in the supply because -- with higher demand, we certainly can cover this demand, offering more products, incrementing a number of launches. But this is not the base scenario. And please do not begin putting in your numbers and increasing cost, although we can absorb this demand. And also because this inflation, right, might hurt companies that have a weaker capital structure.

[ Juliana Vega ], Itau BBA.

Two questions here. Firstly, I want to talk about cash flow, cash generation and an increase of inventory for this, right? And also, I'd like to understand the efforts of the company for the sale of inventory. You have a sales team to be able to supply -- to be able to cover this increase of sales speed of inventory specifically. And also, my second question has more to do with the update of projects and partnerships that you're doing with -- in the northeast, sales performance, and what you see in terms of launch line -- pipeline. And also because the company has been very vocal with regards to the level 3 focus in the region. If, in fact, this is where you have been able to operate better? Or do you believe you can remain with the plans that you had before for this partnership?

Juliana, as I've said, with regards to the sale of inventory, we try to prioritize with a greater -- with a larger advance of work because this is where we have greater cash generation. We've had a very positive performance in Rio de Janeiro during the beginning of this year. There, our inventory with a greater advance percentage, and the margins is even lower than the inventories in the other regions. So I would say that if we have a better performance with margins below -- but still what we've done is strong effort here, training, recruiting sales team, an important -- also with our sales online, right, our digital channel. So we've done a lot here, a lot is happening here. And we've had results here in our Rio operations, where we saw great opportunity in sales speed gain. And in this moment, I believe that it has made sense to make this effort. With regards to the partnership with Moura, we have the first launch now. I think it's too early to talk about the sales speed. We are very optimistic of operations in Levels 3 and 4 in the northeast. Perspective is good. We already have 1 and 2 levels operating in the city. Now we're working with 3 and 4. And I think it's very positive to see this perspective when we join both brands toward this kind of product. We still don't have results -- complete results here, but we are very optimistic with this work being done with them.

Next question, Marcelo Motta, JPMorgan.

If you could tell us about the partnership -- the corporate transfers, resources to maximize return. There, we see BRL 27 million, BRL 28 million. But you say that BRL 30 million is net. So perhaps you are having some expenses related to transaction here. I want to understand if this is it.

This is exactly what we've done in other operations. This is a project where we have capital volume. And when it comes to -- close to approval and launch, we bring somebody that has a lower capital cost interested in investing. So this buyer enters with capital almost reimbursing us, right, in the business. It's like what we did in the past. This kind of operation has dropped. We've seen this happen less. But we had one more, a small one, in this quarter. Nothing very different with regard to the others.

Next, Victor Tapia, Bank of America.

First point here. With regards to launches perspective, I think Ricardo made very clear, the potential you're not thinking of reducing things here. I just want to understand better what we can expect in terms of an increase considering a controlled cost scenario, strong demand with the revision of the program, master plan. So what, in fact, has to happen for you to feel comfortable in reviewing the launch of volumes and increase it? And what we can expect in terms of additional launch volumes? First point. Second, going back to that slide of receivables, I just want to see if I understood. When you say that you have a market value inventory of BRL 5.2 billion and incurring cost of BRL 2.2 billion, we understand that this inventory is slightly greater than the gross margin. Am I right here? I tried to make a calculation. I just want to see.

With regards to launches -- well, once again, I think in this moment, far from being in a scenario where we can already anticipate eventual increases, we don't know exactly how costs will be and the supply from other companies operating in the sector. I think that our priority is cash generation. We want to build what is sold. So if we see sales speed rising in a relevant way, we have the conditions of being able to cover eventual -- or to meet the eventual demand with new projects. We have a lot of projects being approved, and we are at the pace where we could do launches. We're very comfortable with execution and our engineering in order to build these projects very efficiently. We're much -- it's much better than we were 1.5 years ago where we had a strong ramp-up in work sites. But we have to observe demand and performance of our clients and always monitoring supply. We have the conditions of launching more, but I think it's very early to consider this and get to any kind of conclusions with regards to this. I think we have to wait to see. With regards to receivables and margin, there is a small detail that Paulo will explain to you. But the margin of this inventory is very similar to what we had reported, and Paulo will show you the difference, Tapia.

Here we have in the inventory cost, only the -- its stock is -- we've already had a percentage of completion, right? So we have to consider this to incur. And when we compare this to the inventory -- and if you want, we can help you with the calculations. And here, we have more than BRL 2 billion to incur. So this is in our inventory in the assets of the company, and margins are very similar of our inventory and our deferred revenue. So this is the word.

Okay. Yes, it was clear. Just a quick follow-up here. Can you somehow quantify? From what I understood, it's going to be sales speed. There is a level -- something in the sales speed where you would be more comfortable. We want to try to understand when this could happen.

I think, Tapia, we should work with a sales speed of around 25%. 24%, I think it is very solid, but I think we can work with 25% because we're comfortable with costs. This would allow us to deliver an even greater return. A level -- a sales speed at a level where we could -- to increase launches would be 27%, 28%, and there we would begin increasing launches, to give you a number here. But we're still working. It's a little early to say anything here. But this would be the number that would encourage us to increase launches.

So we close here our questions-and-answer session. Now I will give the final word to Ricardo for his remarks.

So firstly, once again, I want to thank you for your participation, for your questions. I think in this call, certainly, we were able to clarify the main themes that have been reasons for questions, the contact we've had with the market. Also, I want to say that we are in the second quarter beginning a large amount of works, many works, right? We still see increase in revenue. Our works are under control. We've seen strong demand for our product. So we continue here without any reasons for concern, and we hope to continue delivering results that are very consistent in the following quarters. Thank you very much. Have a very good morning, everybody. Very good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]