Even Construtora e Incorporadora S.A. (EVEN3.SA) Earnings Call Transcript & Summary

Good morning, and thank you for holding. Welcome to Even's earnings call concerning the results of the third quarter of 2025. [Operator Instructions] We would like to inform you that this event is being recorded and will be made available on the company's Investor Relations website at ir.even.com.br, where the complete material concerning this earnings call will be available. It is also possible to download this presentation by way of the chat icon in both Portuguese and English. [Operator Instructions]. We would like to clarify that any statements that might be made during this teleconference regarding Even's business prospects as well as its operating and financial projections and goals are based on the beliefs and assumptions held by the company's management and on information currently available. Forward-looking considerations are not the guarantee of performance and involve risks, uncertainties and assumptions since they refer to future events and therefore, depend on circumstances that may or may not happen. Investors should understand that general economic conditions, industry conditions and other operating factors may affect Even's future outcomes and may lead to results that materially differ from those expressed in these future considerations. Here with us today are the Chief Executives of the company, Mr. Marcelo Dzik, CFO; and Mr. Marcio Moraes, CEO. I will now give the floor to Mr. Marcelo Dzik.

Good morning, everyone. It is a pleasure to present Even's earnings for the third quarter of 2025. Let us begin with the year's main indicators. We launched Sao Paulo Bay in the quarter, a unique development with a PSV of BRL 1.5 billion, 50% of which was already sold in the quarter. In the year, launches have totaled BRL 2.1 billion Even's share. And in the quarter, net sales totaled BRL 821 million Even's share, adding up to BRL 1.5 billion in the year, which has contributed to a realized net revenue of BRL 1.4 billion in the first 9 months of 2025. In the year, we reported a gross profit of BRL 363 million for an adjusted gross margin of 30%. Gross margin in the third quarter of '25 was 37% and REF and inventory margins remain at high levels. We reported BRL 90 million of net income in the quarter that when added to the comprehensive net income reported in the first half year amounted to BRL 220 million, which means an annualized ROE of 14.8%. Operating cash burn in the quarter was BRL 94 million, but in the year, cash generation amounted to BRL 140 million. The next slide shows the net profit history for Sao Paulo's operation in the last 11 quarters. We can observe the consistent profit generation quarter-over-quarter and an increase in the profitability level, boosted mainly by the gradual recovery of margins and by the gains in operating efficiency as well as in capital allocation. In the next slide, we show you the quarter's launch, Sao Paulo Bay, a high-end project with 280 units and a PSV of BRL 1.5 billion that was 50% sold at launch. For the next quarter, we are preparing a special launch through RFM. [indiscernible] office is located in Jardins neighborhood with tight units of 530 square meters and an approximate PSV of BRL 800 million, of which BRL 270 million is Even's share. We will now show you our sales performance. The volume of net sales in the quarter was BRL 821 million with a consolidated SOS of 19%. Concerning cancellations, we ended the quarter with BRL 70 million, which is the same level as the previous quarters. It is worth noting that our receivables portfolio remains solid and more and more concentrated on high-end projects. Moving on to the next slide. We delivered 2 projects, Portugal 587 and Go Portugal, which accounts for BRL 399 million in PSV and 275 units. For the next 12 months, we estimate the volume of deliveries at around BRL 1.3 billion. Here, you can see some photos that demonstrate the company's high quality of execution. We ended the quarter with BRL 3.6 billion in inventory, mainly in the high-end and luxury segments with well-located and highly liquid products. The finished inventory accounts for only 12% of total volume and 60% of the inventory under construction has delivery scheduled for no sooner than 2029. The projects to be delivered this year were 79% sold as of September 30, as can be seen in the graph on the bottom right-hand corner. Considering the ones to be delivered next year, 76% were sold. We purchased 5 lots this quarter with a PSV of BRL 2 billion Even's share, and our land bank comprises 23 lots or phases, amounting to a PSV of BRL 4 billion, located mainly in prime neighborhoods in the south and west sides of Sao Paulo City and concentrated in the high-end and luxury segments. In the next slide, we demonstrate our solid capital structure. We ended the quarter with a robust cash position of BRL 813 million Net debt amounted to BRL 298 million, representing 13% of the company's shareholders' equity. In this quarter, operating cash burn amounted to BRL 94 million. However, in the first 9 months of the year, we generated BRL 140 million in operating cash. I would like now to give the floor to Even's CEO, Marcio Moraes.

Good morning, everyone. I'd like to begin by thanking you, analysts, investors and others for attending our earnings call for the third quarter of 2025. We had a strong quarter in operating and financial terms. We launched Sao Paulo Bay, an extremely relevant project that has shown great sales performance. We purchased over BRL 2 billion worth of PSV Even's share on 5 lots, 4 of which are located in the Faria Lima Urban Operation area and have [indiscernible] already purchased. The other one is in a special location on [indiscernible] Avenue. We delivered an increase in margins and ROE with a net income of BRL 90 million in the quarter. The sales performance in the year has been consistent at roughly 50% above the volume of sales in the same period of last year. Our inventory is at a very healthy level, concentrated in the high-end luxury segment with extended delivery deadlines, which allow us to work on the sales strategies that will help us capture the most value. The company has solid financial structure, allowing us to take advantage of good business opportunities even in an environment of more restrictive credit. Additionally, yesterday, we announced a payout of BRL 150 million in dividends, reinforcing our commitment to generating value for our shareholders. We remain focused on projects with high added value in Sao Paulo City and attentive to the market sales dynamic in order to keep our track record of delivering growing results. Thank you once again for attending this call. Let us now proceed to the Q&A.

[Operator Instructions] Let us now proceed to our first question comes from [ Juan Argento ] from XP.

I have 2 questions on my side here. The first one concerns the dividends. We see that you are consistent in paying out dividends when we think in terms of yield. But at the same time, the company is going into a phase of evolution of great projects. We see some launches. We have been following the last few quarters. And we saw at least in this quarter, a level of replacing land that was very high. How do you think this payout of dividend should evolve from now on? And how do you see the capital structure paying out this dividend in this quarter? It will leverage in relation to the current level. But how do you balance your capital structure with the dividend payout? And if you think this will continue happening? And my second question is concerning the perception of sales of inventory. Launches have been performing very well. Sao Paulo Bay has demonstrated that. But I would like to understand how you perceive the demand for units in inventory. There are many construction work we have been monitoring, and we know this phase is a little more difficult in terms of sales for the high-end projects. But how do you understand the situation in light of the current market situation? How do you expect the sales of inventory will evolve?

Thank you for your question, Dzik here. I will answer the first question, then Marcio will take the second one. So talking about dividends, we announced the payout of a relevant amount, and we have been following this for this previous quarter. We do not have a fixed policy because we want to adapt to market conditions and the cycles of our projects. We have launched our projects with extended deadline. So we have a lot of construction work ahead. So we'll always try to understand the environment so we can define our payout. So in the past few years, we were able to keep the company balanced. And moving ahead, we'll try to understand the scenario to define this. Concerning leverage, we are at a very optimal level of leverage around 30%. We have been going a little under that, but this isolated number doesn't mean much. We like to understand the projections that are longer term and the quality of this leverage of this debt and the deadlines and the maturities we have been following this strategy, and we'll keep doing this in coming quarters.

Juan, Marcio here. Concerning the sales of inventory, what we have been noticing is, yes, the inventory has been growing a little in Sao Paulo in our niche of high-end luxury. We have noticed the increase, but it has not concerned us too much because our inventory in Sao Paulo in the high end is around 450, 500 units. What we have noticed, and we believe this in the future that we are keeping this replacement. The launches are performing very well. And this is a natural side. During the launch, we sell better. And because the construction side is a little longer, the buildings are taller and the delivery cycles are over 2 years. So we have a period during the construction where the activity is a little lower, but the finished units are performing well. We are very careful the way we sell our products and how we choose the regions. We are always paying attention how this issue of inventory is moving along. If it increases too much, we know that we will increase our level, but this is how we are working now.

Our next question comes from Matheus Meloni, Santander.

My first one is -- I'd like to understand the granularity on how you understand Faena's performance. And then the second question concerning P&L. I'd like to understand in the higher income, it was a little negative in this semester. I'd like to understand a little bit better this point and how you can elaborate a little bit more on the costs.

Matheus, Marcio here. Let me answer you about Faena. We have a performance -- a sales performance of over 50%. We started construction work now in August. We are on the fifth underground level. It's a very long-term project, and we also have the financing to production. We still belong to the previous batch. And this allows us a lower interest rate. So we can see -- hold on, on the sales perspective to gaining price. When we are reaching the 15th, the 24th, we're going to see an increase in sales because the project is amazing. But because of the cycle I mentioned before, we are slowing down sales. But concerning the construction costs, which is -- was your last question, the construction cost has been steady. We have been following INCC index. We had some slight increase in concrete. But while energy and power, the most basic materials in construction, steel, while these 2 commodities are still remaining at a lower level, we expect the INCC to not run away. Labor has always been a problem. It's more scarce, but we still -- but we also see that from 2027 on, we're going to have a change in productivity in construction because of the new taxation. So we're going to get rid of some industrial -- we're going to benefit from some industrial taxes that we didn't benefit before. And this will help us with some -- but I think we're going to see the reflects of this new taxation in the future. And now Dzik will answer the other question.

Dzik here. Yes, we did have a BRL 9 million loss in a process of equivalency and the main cause was that we revised some costs with RFM. We have some improvements in terms of projects that are in the very high end and very complex projects. So we revised some of these costs. So in the quarter, we saw this loss of BRL 9 million. But in the consolidated of the year, our results have been very good and we've been planning. And this very high-end projects that RFM will launch in the fourth quarter, [indiscernible]. So yes, the result in the quarter was a little negative. But overall, in the year, our projects have been delivering the results we were expecting.