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

Good morning, and thank you all for holding. Welcome to Even's earnings call concerning the results of the second quarter of 2026. [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 ri.even.com.br, where the complete material concerning this earnings call will be available. [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 a 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. Marcelo Morais, CEO. I will now give the floor to Mr. Marcelo Dzik.

Good morning, everyone. We are pleased to present Even's results for the second quarter and the first half of 2026. Let us begin with the main indicators for the first half year. Launches totaled BRL 281 million in the period. Net sales amounted to BRL 408 million. In the quarter, we delivered a project with 2 phases that amounted to a PSV of BRL 122 million Even share. And in the first half year, 2 projects were delivered amounting to BRL 590 million of PSV. Concerning our financial indicators, the gross profit for the period was BRL 112 million, translating to an adjusted gross margin of 33.4% which represents an important increase of 7.5 percentage points in the annual comparison. The backlog and inventory margins were 38.8% and 32%, respectively. Even's net income in the second quarter was BRL 31 million with an ROE in the last 12 months of 11.1%. In the first half year, comprehensive net income, which is when we include the results of sales in SPEs we control was BRL 77 million. On the next slide, we present net income history of the operation in Sao Paulo for the last 14 quarters. We can see consistency in profit generation quarter-over-quarter and an increase in profitability, mainly driven by the gradual recovery of margin and by gains in operating efficiency and capital allocation. On this slide, we show you some images of the quarter's launch, Renato 410, a high-end luxury development located in neighborhood with a PSV of BRL 231 million Even share. Now we present the sales performance. Net sales volume in the quarter was BRL 156 million with a consolidated SOS of 4%. And in the first half year, net sales volume was BRL 408 million. Regarding cancellations, we ended the quarter with BRL 69 million. In the first half year, the volume of cancellations was BRL 118 million. We continue to have a very healthy receivables portfolio that is increasingly concentrated on high-end projects. Moving on to the next slide. We delivered in the quarter the project Joaquim in Brooklyn neighborhood with BRL 122 million of PSV and a total of 153 units. Next, you can see some images that highlight the quality of our delivery. We ended the period with an inventory worth BRL 3.5 billion, mostly in the high-end and luxury segments. These are products that are well located and with good liquidity. It is worth noting that our finished inventory represents only 8.3% of total volume. And out of the inventory under construction, 67% is scheduled for delivery from 2029 onwards. The projects to be delivered in 2026 were 80% sold by the end of the second quarter, as we can see in the graph on the bottom right-hand corner of the slide, next to the breakdown of percentages sold by year of delivery. Our Land Bank amounts to a PSV of BRL 5.3 billion. It is located mostly in prime neighborhoods in the south and west sides of the city of Sao Paulo and is concentrated on the high-end and luxury segments. On the next slide, we present our solid capital structure. We ended the period with BRL 787 million in cash. Net debt totaled BRL 699 million, which represents 30% of the company's shareholders' equity. In this quarter, operating cash burn was BRL 95 million, driven by the disbursements related to the acquisition of an exclusive plot of land in Vila Nova Conceição neighborhood. Also in this quarter, we paid out BRL 30 million in dividends. With that, I now give the floor to Even's CEO, Mr. Marcelo Morais.

Good morning, everyone. Thank you, investors, analysts and employees for attending this call. In this half year, we witnessed a more challenging period where we reduced the volume of launches and were more mindful of sales and the cost of construction since the international environment still generates uncertainty about the cost of inputs. In this context, Even is protected on 3 fronts. The first one is the receivables portfolio, which is robust and indexed to the INCC as well as larger than the cost to be incurred for the completion of all our construction work. The second one is our construction company, experienced and with proven capacity to deliver our projects while meeting deadlines and keeping costs under control. The third one is our capital structure with around BRL 800 million in cash and leverage at 30%. This combination allows us to go through the cycle overcoming our challenges and at the same time, taking advantage of opportunities that come along. An example of this was the purchase in the first half of the year of a building to be demolished in Vila Nova Conceição near Praça Pereira Coutinho, where we will develop a project with a PSV estimated at BRL 225 million Even share, in addition to 4 other plots of land in Pinheiros and Jardins that amount to BRL 1.3 billion in PSV Even share. For the second half of the year, we are preparing special launches on high-end projects with cutting-edge architecture that are more resilient to market fluctuations and with proven demand. Among them, I would like to highlight 2 exclusive locations, a project on Avenida República do Líbano and another 1 near Esporte Clube Pinheiros. Our financial results remain consistent and continue to evolve. We have a robust cash position, ample operating capacity and a high-quality pipeline of projects for coming cycles. Thank you again for your attendance. We are now available for questions.

[Operator Instructions] Beginning with our first question comes from Herman, Bradesco BBI.

I have 2 questions. The first one, a highlight of the quarter, which is a gain of BRL 55 million. I would like to understand the rationale for this operation, if it was reducing risk or increasing value and if we will see other similar operations looking forward. And the other one is concerning gross margin. We see that it's a very healthy level, but the accounting gross margin fell in relation to previous quarter. I would like you to explain this drop and what we can see looking forward.

Herman, thank you for your question. Dzik here. I have 2 questions. Concerning the sales of our equity in some operations, this follows the rationale we have been applying in other operations along the years. The idea is to take advantage of our capacity to generate news without increasing our cost and our risks. So this was a high-volume project. We sold part of it and generated a very good result with this operation. Concerning margins and the consequences of our gross margin without being adjusted, they were caused by the decrease in our net revenue and the maintenance of our financial expenses and also the volume of cancellations in the quarter. When we consider the carryover of the financial expenses and the cancellations that came in line with a lower net revenue, we see a decreased gross margin, but our adjusted gross margin is in line and more important than that, when you look at our backlog inventory, it's reaching very good levels, and we look at a wider window, we see a growth in 2024, 2025 and intention is to continue this evolution.

Our next question comes from Matheus de Meloni, Santander.

My first question is concerning -- I would like to understand how you see the competition in Sao Paulo's market. And I would like to understand if you have some kind of specific lever you can operate to increase sales because the margins are a little tighter. And the second question is concerning what you expect in terms of launches for the second half and further. And if it's part of your strategy to reduce the volume of launches and focus on sales of inventory. I'd like to see where your mind is at regarding this issue.

Matheus, Marcelo here. Thank you for your question. First of all, concerning the competition, what we have been following is that the largest volume in the city was last year. But this year, we have seen a decrease in this volume even from our competition in the search for new areas, new land. We do not operate on the Minha Casa, Minha Vida affordable segment. So we have been feeling that for next year, competition will decrease even further as we have been seeing in the market right now. This does not give us any slack, but the market adjusting to the size of demand, and we will keep on our cycle. Concerning your second question about launches, we have one more launch for this half year that we put off because we're waiting for a clear vision from the market. We have been having a lot of visits, a lot of interest to purchase, but we have seen a delay in the decision to -- so the period between the first visit and signing the contract is around 90 days. So this is too long in relation to what we saw last year. So the interest is still strong, but the decision is still focusing on what Brazil will be like in 2027 in terms of interest rate, what's the best thing to do with the money. So this is because of the market. And Dzik now will talk about launches a little more.

A few questions here. The volume of launches this year. We have just mapped out the market. So if you look at our operation here, Even and RFM in a simplified way for projects of -- units of over BRL 2 million where we are concentrated when we compare with the first quarter of last year, the decrease in volume of launches was really significant, more than 50%. And this, of course, decreases the competition and makes it easier for the sales of our projects. But the launches for the year, as Marcelo said, let me give you some references. So the previous 2 years were around BRL 2 billion, our participation. But we see this year something close to BRL 2 billion. We are more selective, of course. We are focusing on more on higher-end projects with a proven demand. Let me give you 2 examples. One near Pinheiros neighborhood that's a very high PSV, near República do Líbano is another one, and we will launch in the second half year. There was a potential. We have a good land bank to launch a little bit more than that. But given the market circumstances, the scenario nowadays is something close to BRL 2 billion, not above that.

Our next question comes from João Pedro Rodrigues, XP.