EZTEC Empreendimentos e Participações S.A. (EZTC3) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to EZTEC's 2Q '25 Earnings Conference Call. [Operator Instructions] Hello. I'm Pedro Lourenco, Head of Investor Relations at the company. Joining us for today's presentation are Mr. Flavio Ernesto Zarzur, Vice President and Chairman of the Board of Directors; Mr. Samir El Tayar, Vice President of the Administrative Board; Mr. Ernesto Zarzur, Counselor; and Mr. Emilio Fugazza, Chief Financial and Investor Relations Officer. Please note that this event is being recorded. [Operator Instructions] If you experience any technical issues, simply rejoin using the same link or meeting ID, which is available on our website at ri.eztec.com.br. You can also access the presentation slides on our website under the Download Center. All financial information is presented in Brazilian reais in both BR GAAP and IFRS applicable to real estate development entities in Brazil, unless otherwise stated. Before we begin, we'd like to remind everyone that any statements made during this call relating to the future business outlook of EZTEC, including projections, operational and financial goals reflect the beliefs and assumptions of the company's management as well as information currently available. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions as they relate to future events and depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operational factors may affect EZTEC's future performance and may lead to results that differ materially from those expressed in such forward-looking statements. Now I'd like to hand it over to Mr. Emilio Fugazza, our CFO and Head of IR, who will begin the presentation. Please, Mr. Emilio, you may proceed.

Thank you, Pedro. Good morning, everyone. It's a source of great pride for me to be here presenting the results for 2Q '25 EZTEC alongside our President, Vice President of the Board, our Board Member, Marcos Zarzur. We're here to talk about our launch performance to begin and one of the most iconic performances of the recent past. Here on the right, you can see BRL 1.106 billion, which represents the largest volume posted by the company even in a very challenging scenario, and these launches were all very successful. Now on the next slide, you can see the region in Vila Prudente. This is a type of venture that EZTEC is very accustomed to working on, especially in the east end of the city. This is a plot that will also hold 2 more launches in the coming years on the same plot of land. Here, we see Alt Studios in Chacara Santo Antonio. This is a very interesting history. It's one of the plots of land that the company ventured into in the commercial sector, and this and 2 other launches were transformed into residential launches. They were all sold very quickly. In the case of Alt Studios, we already have 38% sold. And just to remind everyone, we did this with DOT.360 in Pinheiros, which is already 76% sold. SP 360, which we launched this year in Moema near Avenida dos Bandeirantes is 73% sold, and now Alt Studios. They all are studio shaped. They have no parking garages, and they are very highly liquid. Next, we have Moved Osasco. This project has the traditional EZTEC characteristics. It's a mid-income venture, and it was launched right at the door to Banco Bradesco in Cidade de Deus. This space, which is called Moved, is BRL 218 million, this phase. It's 1 of 2 for a project that all in all should reach BRL 500 million in PSV. These apartments have already been 44% sold in just 25 days since launch -- pardon me, 45 days since launch. This is highly representative performance, and it really made us excited to launch the second phase of the project. Now talking about upcoming launches, we have Blue Marine, which we are already incorporating. Its PSV is BRL 360 million. It's located in Saude in the south zone of Sao Paulo, 704 units. It's an important project for the company. It's going to lift the level of our launches in 3Q to something very close to 2Q. And about POP Osasco, this is a partnership in a –- a partnership with another company in My Home, My Life in Osasco. This has 473 units that range from 24 to 43 square meters, 1 or 2 bedrooms each. And this brings us to net sales. Without any doubt, 1Q is the first quarter in gross sales in the company's history. Our sales grew significantly compared to Q1. And I must highlight that in the second quarter of '24, our company had net sales at approximately BRL 1.2 million, and we're now at BRL 1.7 million. In other words, almost BRL 500 million more than the previous year. This highlights the company's desire to change its level of sales and launches and its operating level as well. This is something the company has successfully managed to do through campaigns such as the EZTEC and Lindenberg campaign with many launches. This campaign had excellent results such as Lindenberg Ibirapuera, which sold extensively, Park Avenue as well, which sold very well as well and drove our property results. So in fact, we have almost BRL 1 billion in net sales in just 1 half of the year. So this brings us to a year that is going to be better than 2024. And this also brings us the last operating topic, which is deliveries. This is a highly important topic because it generates cash by generating new direct receivables and new income. We only had BRL 300 million in deliveries in the first half of '25, but now in the second half of '25, we are moving along to have more than BRL 2 billion in deliveries. Here on the slide, you can also see pictures of Unique Green, which is already built and ready for final delivery. We're now performing final deliveries in the first days of the second half. This venture has 87% of units sold, and the margin was very significant for the company. Haute Brooklin also has approximately 72% or 73% sold. This venture is ready. It's ready for residents to move in. And it should be delivered in the coming days for -- in the next few days. Park Avenue, Monte Libano, Expression and Exalt and Park Avenue, these ventures are on average 76% sold. So generation of inventory for the company is very low, in fact. Nevertheless, it will drive the growth of sales. And in the second quarter, it represented BRL 86 billion, and it was very important for generating our revenue and adding to the company's revenue. And so this brings us to our financial highlights, starting with net revenue. Our performance in net sales was better. This also brings us to improved net revenue. This is actually the highest net revenue in the company's history. Of course, we do have one-off factors and traditional factors. Better construction results because we didn't have significant holidays in 2Q, such as Carnival, and we didn't have vacations as well because of New Year, but we also recognized more revenue from Agami and the suspensive clauses for Park Residents and SP 360 as well. Finished stock, as I mentioned, was also sold very successfully, and in Praia Grande as well. These were important for us to keep our business turning. We purchased 50% participation in Moving (sic) [ Moved ] Osasco, and we sold the Praia Grande plot. So at the end of the day, we didn't have to spend any money on the Osasco investment with the launch that we performed. Here on the left, we see the graph showing that our accumulated revenue is almost at BRL 1.7 billion, when 12 months ago, it was BRL 1.2 billion. Again, this is growth of approximately BRL 500 million in revenue in 12 months. We see that the company is step-by-step improving ever since it made the decision to increment its operating volumes. Now on the next slide, we see gross profit. Without any doubt, the highlight is our gross margin, reaching almost 41%. Of course, there is involvement from the plots as well, which improves this margin. But without one-off events, the margin would already be higher than 38%, which, in a way, meshes very well with our backlog margin here at the company, which we have been consistently keeping above 40% or even 41%. Next, we see the company's financial results. They remain absolutely flat over the quarters. Since 3Q '24, we remain at or above the levels of Q3 '24. This is linked to the IGP and IPCA indexes. And in this case, there was only a 0.79% variation. And in the case of IPCA, 12%. This is a portfolio that is fully growing. And I'd like to remind you that in practice, there's a specific situation here, not just for generation, but also for payment. In the year '25 alone, estimated payments surpassed BRL 100 million. And in 2026, they surpassed BRL 90 million. This means generating cash coming from the portfolio that helps us to highlight and support the company's expenses of all sorts. In the next slide, we see the most important results in the quarter, which are the growth of net profit. This was significant both year-over-year and quarter-over-quarter. We had 49% growth in the quarter or 60% growth in the semester. Our net profit reached BRL 493 million, which is significant given that only 12 months ago, it was at BRL 267 million. This is consistent growth, because even when we consider one-off events -- those one-off events tend to continue to occur because of aspects in our pipeline. So whether they're greater or lower, the company's operations have been improving. And these events, which will empower turnover of the company's land, are also contributing. Thus, the company's ROE reaches approximately 10%. But I must remind you that within this ROE, we do have a BRL 5 billion plot landbank, and this is also attributed to our commercial region. This will have its own destination. This is going to occur, but it will occur at a more specific one-off situation within a longer timeline. So looking only at the residential and corporation property, we have approximately BRL 4 billion in landbank. This puts us firmly in the 2-digit range, where we want to be. Of course, we want to be in the high 2 digits, but it's one step after the other, of course. When we look at our capital structure, we see something very interesting. The company's capital structure shows that in terms of its liquidity and debt, we can see on the graph on the left, with EZTEC S.A., we have corporate debt of BRL 686 million. So we are net cash in the holding. And I must remind you that BRL 309 million is a significant volume of funds that is strongly due to payments that are occurring from these ventures that are already at the end of the cycle at the delivery phase. So either I have the payments or withdrawals back to the holding that are occurring. And those BRL 309 million SPEs also pertain to the financing. We have roughly BRL 346 million of which concern directly the Esther Towers. So we see that we are moving along very peacefully, very confidently in terms of our use of debt. And this debt is highly competitive. The cost of debt for production is just under 9% per year. And our corporate debt in debentures and CRIs are also performing well in terms of their government mandated rates. So we're very comfortable, very secure here. And so the administration actually proposes to increment dividends in the second quarter, a 25% increase, as we have done in many years, up to 50% in this semester. Of course, this is no -- of course, not a promise for future semesters, but it is an indication of our possibilities at the moment. This means BRL 66 million being distributed, approximately BRL 0.30 per share. This means the company will have distributed BRL 300 million over the past 12 months, responding to a BRL 500 million profit. Payment will occur on August 29 and the ex-dividend date on August 15. This concludes our section on financial statements. I'll now pass the floor to the President of the Board to give his initial consideration. Flavio?

Good morning, everyone. We are here with Samir, Vice President of the Board; Marcos, my brother, who's also a Board Member. And it is a source of great pride for us because the strategy we have selected was very much on point. We're very happy with the result of this quarter. We have a clear strategy that Emilio has described for you, at least over the next 12 months. And we believe that we will remain on this strategy, our strategy of improving performance and return on our equity. This is a strategy we've been aiming to establish ever since the end of the pandemic. Can we open for questions?

All right. Pedro, please.

We now open the session for questions. We'll begin with sell-side analysts who cover the company following the preestablished order that you see on the screen as long as the speaker has the Raise Hand function enabled. Time permitting, we'll also address questions submitted through the chat. If it's not possible to answer during the session, please send your questions through e-mail to the contact listed on our IR website, so our Investor Relations team can follow-up with you. Our first question comes from Mr. Pedro Lobato from Bradesco.

First, I'd like to understand your first half of the year was very strong in terms of launches. So correct me if I'm wrong, but I believe this rhythm should continue along through the second half of the year. I'd like to see where -- what you believe should be done in terms of directing sales force for this new vintage. And also considering this considerable level after the deliveries, you've been doing great work selling this balance of finished inventory. So I'd like to understand how you aim to balance all of this. And the second question pertains to the landbank. This caught me by surprise, but I'd like to see if you've mapped any potential opportunities similar to this one and the magnitude thereof looking forward.

I'll begin by describing what we see before us in the short-term. In practice, we have a launch for next week, Blue Marine, over BRL 370 million SoS. We had over 100 visits already. We believe we're going to have very strong leverage sales. And as we implement each phase of the launch, we are going to perform the next future launches. So we're very comfortable in that sense. Something else I must make clear pertains to finished inventory. As Emilio mentioned, we have a BRL 2 billion delivery now, and during this delivery period, we normally perform the delivery, then we make the fund transfers, some of that is linked to direct receivables. So we don't push so intensely to turn over that inventory in the early stages. Remember, this is EUR 2 million overall. So even the recent deliveries don't yet have the sales push dynamic. Marcos, do you want to add something?

Yes. In terms of sales, here at EZTEC, we have a large sales team. And in the incorporation phase, we quickly direct them to wherever they need to be to make those sales in specific one-off actions such as Emilio mentioned, where we sold many apartments in partnership with Lindenberg. So at the right moment, they direct the sales team to wherever it's important for them to be. So you can rest assured that even though we have many launches, performance should be similar to or even better than the first half of the year. And just to mention landbanks, in practice, here's what happened. This land that we sold in Praia Grande, this is a plot that we purchased many years ago. At the time, we bought it very cheaply. And Praia Grande is not part of our strategy. So we decided to divest. You asked if there's more on the pipeline. Something that's very clear and objective for us is that we have many plots of land that we've signed partnerships with low-income companies. When we sign a partnership like that, very often, they pay us for part of the plot and then they perform the incorporation with My Home, My Life. So part of this volume that we sold and that we sell flows with partner companies. Emilio, do you want to add anything?

Yes. I agree with everything you said. And I can't mention ahead of time, but as it occurs, we are going to bring all of the relevant news to you. There's a lot that we have already signed and needs confirmation. There's always more on the pipeline, but it occurs gradually to bring us the best possible return on our investment. And to emphasize what Marcos said, I'd like to remind you that sales is actually being transferred within our own building. Tec Vendas is one of the best real estate companies in Sao Paulo and it receives support and investment from EZTEC to be a state-of-the-art real estate company. It is extremely well managed. And concretely, they have managed to respond to the company's needs when it comes to expansion of sales. So that's why I always say we need to take things step by step because we are gradually putting more and more strength into our launches. The real estate company responds at its own pace, but constantly and consistently even in a challenging scenario that we're in right now. So you can be confident in the Tec Vendas real estate company. Did we answer your question? Pedro?

Yes. Yes, you did.

Our next question comes from BTG Pactual from Gustavo.

I have a few questions as well. First, could you comment about the product mix on these launches? Flavio mentioned a bit about what you have in mind for the pipeline. I'd like to understand if there's anything from My Home, My Life or you have studios planned or high-income vintages planned. Could you talk about the different segments? And my next question pertains to dividends. Emilio presented the payout at roughly 50%. The company has generated cash in the quarter with a large volume of deliveries. Looking at the inventory, as Flavio mentioned, cash generation should actually grow over the coming 12 months. So do you have the plan to keep payout roughly around 50%? Could we even go beyond that? What is your take? What is your outlook for the coming 12 months?

All right. First, I'll talk about dividends, then Emilio will talk about the mix. On the topic of dividends, today, the Board, the upper management aims to continue to pay something along the order of 50%, but this will be studied quarter-by-quarter. Based on the past few months' behavior, this is the level we're at today. Now we'll see if we have greater demand or not. We'll assess and take things as they come. But I would say that the highest likelihood is that we'll stay at the 50% level. Emilio will talk about the product mix, and you'll see that it's very diverse.

Just to remind you, this is not guidance. This is only a direction of the capacity that the company has today. Talking about launches now. We are moving to have a half of the year that is firmly in line with EZTEC's style, which is middle class. What we have here varies from lower to upper middle class. We have a launch in Saude, which is Blue Marine. We have a launch scheduled for Mooca, another for Sao Caetano. We have another phase in our Osasco project. And we have a project for smaller, but very well-positioned apartments. So I would say that it's smart living, as Pedro likes to mention, in the Chacara Santo Antonio region. So on average, we're talking about many different apartments. In all, it's a large volume of apartments because the average size of each apartment is low but focused on middle class, and in Osasco specifically, focused on My Home, My Life. Did we answer your question?

Yes, you did.

We now have a question from Citi from Mr. Andre Mazini.

The first is about the profitability level. It's very nice to see the ROE coming back into the double digits at 10%. So what are your next steps that you perceive to keep the company at the double digits and also to keep growing at the ROE level? And my second question is about real estate financing. There's a lot of news on the media talking about the lack of SPPE and interest rates for people who need bank mortgages. So what do you think about that? And given that, do you see a need to go back to using the direct receivables portfolio that you have used in the past?

All right. Let me tell you one thing. Our decision to improve our return on equity is intensive. Basically, what Emilio said in terms of launch volume, our goal is to spend less money buying land and to consume our landbank. That's one solution for me which is staunchly in our sight. Emilio can go into more details about the rates and the transfers. But remember, in the first quarter –- or, sorry, in the first half of the year, we launched a CRI, and with the aim of keeping rates low, we said that if our clients had any issues, we would use our direct receivables portfolio. There was a growth in the direct receivables portfolio, but not at the level that we had expected. In addition, the bank transfers and payments were all done very adequately. But now moving closer to the end of the year and the start of '26, we're going to have a more intensive delivery schedule, and then we'll see how things behave. Remember, we do have cash to compensate for that.

Let me begin by talking about ROE. All right. Andre, we are working on 3 separate fronts. The first is what you see. We sold a plot of land. We applied the profits. That's one way of doing business. There's more occurring as well, perhaps the most substantial of which is for us to sell part of a plot of land and receive part of return on our own operation. This is occurring in tandem. To give you one example, last year, we sold [ Huwa Misanidos ] along with [ Quomecs ]. This launch was done precisely as I described. We sold half of the land to [ Quomecs ]. They are running that My Home, My Life venture. And when it comes to EZTEC's operations, we are increasing the volume of launches. So we're working more intensely than we did in the past. That's another way through which we are aiming to increase our operations volume. The third point is for Esther. Esther Towers, we are accelerating that construction to start working on the transfers either by actually selling them or by renting them or preparing them for the clients. And the goal is for these units to give us profit. In terms of financial -- housing financing, yes, they are rather low. We've seen conditions where banks begin financing at a given level. They see that they cannot fit enough clients, and the bank itself goes back, restudies things, realizes they're going to lose business. They go back and start offering another rate slightly lower. And this brings that level of success that Flavio mentioned. We have seen banks really working very hard to make those transfers. The bulk of that transfer is going to be BRL 2 billion. It's going to come now. And we see that banks, above all, want to make things happen. They don't want to lose direct receivables to us. This has accelerated things. But again, we'll see what happens over the coming months. Andre, did we answer your question?

Yes, you did.

Our next question comes from Goldman Sachs through Mr. Jorel.

The first is about cash generation. We saw that there was cash burn in first quarter. You generated cash in the second quarter. The first half is net in terms of cash. But you mentioned you have many deliveries coming up now. So I'd like to understand your vision, your perspective about cash generation for the second half of the year. And if we could even go beyond and think about '26, what do you think about that? My second question is more high level. I'd like to understand what you think about all the discussions we've been seeing in the papers about the real estate credit system that we see. There was an article published today that there's going to be a discussion in the Brazilian Monetary Council talking about the end of [ Popensa ] directions and the compulsory changes to incentivize funding from market instruments. So broadly, I'd like to understand how you perceive that? What you think about all that? Do you think it's a net positive or negative? Do you think it could help or hinder?

On the topic of [ Popensa ], here's what I can tell you. We do business with My Home, My Life, but primarily, we work in the middle- and upper-income tiers. So we are completely against the change of guidance for [ Popensa ]. No, [ Popensa ] needs to be directed to real estate financing. We are opposed to any change. We've been working to -- and we've been understanding that -- we want to promote the idea that housing is an intangible asset that makes people's lives improve. So we cannot lose that. We are staunchly opposed to that. We are hand-in-hand with Abrainc and Secovi, and we've been working there actively. We believe that things should remain as they are today. But Emilio can add.

Thank you, Flavio. I'll just -- I'll work backwards and add to what you said about real estate financing and credit. Abrainc has an extremely important role in a very focused fight for our real estate sector, and it has performed its mandate brilliantly over the past few years. This is a fight that is necessary because our sector basically survives thanks to real estate credit. Of course, these discussions, sometimes there is a bit of a disparity. When you have -- when you look at the compulsory change, for instance, it goes against the very role of the central bank, whose role is to contain inflation, to set interest rates. So what we want is for the economy's interest rates overall to drop, because as they are today, it's not viable for us to think about a long-term plan for the sector at this level of interest. And we believe the interest rate will drop, because today, banks already use LCIs or LIGs as additional instruments. And the mean cost is going to drop as a result. Just to give you an idea, today, we have banks that are already offering almost 14% plus TR. We've managed to transfer at 12% plus TR. But these are very significant rates, and we want these rates to drop consistently. There's no point in just releasing the [ Compelsaido ] and have that last for just 6 months. We need that benefit to persist. And this is what Abrainc has been doing and promoting. In terms of generating cash, firstly, we want cash generation to take place. We want to see cash being generated. We are and have been giving clear signs over time, unequivocal signs for our shareholders about the fact that our commitment is to give shareholders return on investment. For 2 years now -- more than 2 years, we've been paying dividends quarterly. Last year, we had an extraordinary payout of over BRL 150 million. At this moment, we increased payouts to 50%. So we are sending messages to make no doubt that this is our commitment. But today, we cannot talk about adding to this or making changes to this policy before, in fact, everything I described occurs. This is a scenario that makes us cautious. We see the tariff effects occurring. We have the CPS, which is the tax reform that is now coming to effect in our sector. This is going to have an impact. We don't yet know to what extent the banks are going to practice those transfers at those percentages. So while the sea is still stormy and agitated, we can't make any more waves. We have made those -- that payout of 50%, and that's what we have for now. Did I answer your question?

Yes.

Our next question comes from Itau BBA from Ms. Juliana Veiga.

I have 2 questions. First, I'd like to ask about the studio launch strategy. We've seen very much success. So I'd like to get your opinion about the launch of studios moving forward. Is this going to remain a focus for the coming quarters? My second question is about Esther Towers. What has the demand been like for renting those units or even reselling those units over the coming years?

All right. Well, studio launches. For the upcoming 6 months, I would say that we have some small-sized apartments with studios yet to be launched, but I would say that it's no more than 20% or 25%. It's not more than 25%. Our strategy is highly focused on middle-income apartments such as the one we have in Osasco, Sao Caetano. We're looking at 50 to 80 square meter sized apartments. That's where we're aiming at. Because we understand that this sector was very poorly serviced in the recent past. We had a lot of My Home, My Life, which performed, and we also built a lot in upper income and extremely high-income levels. But middle income and middle class has a challenge, which is the interest rate. The interest rate is very rough on the middle class. But we understand that having a dearth of supply is also a problem. And remember that while the building is being constructed, that middle class client is going to come in during construction. So they have, on average, 3 years. That's going to be corrected by the INCC, and INCC should hopefully remain in the 4.5% to 6% or 6.5% level, whereas interest is very high. And in the meantime, we hope that in 2 years from now, those interest rates will follow the curve you predict and move to 12% CDI rate, which is going to be more palatable for people. So that's what I believe and it's what we're trying to focus on. Now as for Esther Towers, it's 2 steps. Here -- this Esther Towers is a unique and iconic project. We believe that we must first rent it out and then only sell it at another phase, of course, when interest rates are more decent and humane. And with full return to office, maybe 3 or 4 years from now, we'll have a better opportunity to put that building up for sale. I think that's what's likely to happen. But again, I'm an optimist and I'm always going to have faith, and I think there's a way to move forward. But of course, if we encounter hurdles, we will maintain our strict financial discipline to move through those hurdles.

Juliana, did we answer your question?

Yes. Yes, you did.

Our next question comes from JPMorgan through Marcelo Motta.

I have 2 quick questions. First, could you comment about the status of the third quarter, specifically about sales, whether you mean finished sales or launches that you performed in the first half of the year? And the second question is a follow-up. You mentioned during your presentation about the one-offs, the sale of land and partnerships in the My Home, My Life projects. I'd like to understand if you have any other strategies. I must confess I didn't understand if you're selling SPE or land in My Home, My Life. Could you also give us a preview of the timing and scope? And do you have any other strategies to reduce the wait?

All right. Marcelo, it's a pleasure to talk to you. First, I'll talk about sales of the third quarter. Remember that it starts in July, which is a holiday month. Nevertheless, we had very reasonable sales for a holiday month because we are following on the coattails of everything we launched in the second quarter. As a result, we can point to Moved Osasco, which regularly sold 10 to 15 units per week. This is something that makes us excited and drives us to launch the second phase until this year. We're so eager that we're actually going to start constructing this second phase now in our fourth quarter of '25. So sales remain positive. And Flavio mentioned 2,000 visits to Marine and Blue Marine. These are 25 to 80 square meter sized units. So they're small units on average at a location that is extremely interesting. It has almost no competition and it has the potential not just for volume, but also for price. So we are very excited for the third quarter. Now you asked about one-off events. What I can tell you is, roughly -- I mentioned that we launched Connect Joao Dias with [ Hautes ], and we are going to continue our project in the Guarapiranga project. In Guarapiranga, we have a large plot of land. This is in our land bank. It's BRL 1 billion in VGP -- in PSV, sorry. And when that is confirmed and when the deed is -- comes out in next year, then we're going to sell 50% of our stake in that venture. This is something that should occur in the next few days. We are moving strongly toward that timeline. But to be more specific, first, we need to see what happens before I can actually confirm any numbers for you. Flavio, do you want to add anything?

Here's what I think. Once this delivery is complete by early January -- remember, there's parts that have already been delivered and more that are yet to be delivered. When that occurs, we'll be able to better use that inventory for sales. That's what I believe. And it's a strategy we will pursue. So for launches, we have smaller sized one, and for the remaining, we're still in the first phase.

Marcelo, did we answer your question?

Yes, that was very clear.

Our next question comes from Safra Bank, Mr. Rafael Rehder.

I have 2 of them. First, I want to ask about the second half deliveries, but more focused on construction. We've been hearing from many corporation companies that some construction projects are delayed or significantly delayed. I'd like to hear what EZTEC has been experiencing in that sense. And secondly, with regard to landbank acquisition, there's a pipeline, there's that extra property. Do you see any other opportunities or other launches in the upcoming horizon are likely to come from owned landbank properties?

First, I'll ask about -- I'll talk about our deliveries. Well, we had a change of direction in our engineering company. This change of management is occurring gradually. It is focusing on costs directly and objectively to deliver the results of our construction now for '25. In terms of execution, the challenges that the sector faces are challenges we face as well. This is not just a matter of scarcity and availability. It's also a matter of cost. And we see that the engineering company has been managing that very skillfully. Yes, many of these construction projects delivered in 2025 are within the appropriate term. Nothing is going to break those terms. And as a result, we've seen very positive feedback, specifically with regard to the quality that the construction is delivered in. We do not foresee any type of problems for 2026 or forward. We are now in a totally different level of organizing our production. Our pipeline is very organized for the coming years. Now in terms of purchasing land, we made a decision over the past few years to significantly restrict our land purchases. And if you look historically, the last plot of land that the company actually purchased, they were the Sao Caetano properties that we purchased last year in 24 installments collected by IPCA after the project is delivered. So that generates a great baseline for us. And before that, only the [ Pagodoceilo ] land, which is the one I'm launching with Tokio Marine -- Blue Marine, sorry. So the Board will ratify that -- should ratify that by December. Now whether it's going to be done through cash or in other formats, they will occur. But the bulk of our launches for this year and for the next year are all fully linked to properties, to plots that already exist in our landbank. This means very strong turnover of our assets.

I just want to highlight one more thing on that topic. Let's talk about the pandemic phase and post pandemic. The engineering industry, civil construction industry suffered significantly by a change in level. And we made a decision to make a change. We changed the directors for the engineering company, and we've seen a lot of success there. We've invested in equipment, in systems, because this is a reality that needs to be faced, which is the challenge in finding labor overall. So everything we can do to prevent labor costs and keep things more systematic are things we're going to do. That's our reality. And we must always keep our eyes open to that, because it's very difficult for people who want to work in this type of field, it hasn't been easy.

Rafael, did we answer your question?

Yes, you did.

Our next question comes from Santander through Ms. Fanny Oreng.

I have 2 questions. First, the performance of your launches has drawn lots of attention. It's been performing very well. Do you attribute that good performance to this blank space where Flavio mentioned that companies are fleeing from middle class and you're focusing on it? Or is it due to a change in your sales strategy, maybe focusing on launches or focusing less on inventory? So that's my first question. My second question is, you mentioned recurring dividends, but I'd like to understand in a scenario where you have approval for those dividends, would you perhaps pay out more heavily in extraordinary dividends if there is approval over the next 6 months?

All right. Fanny, I'll tackle dividends first. The matter of dividends is strongly and completely linked to the confidence that we feel in these scenarios over time. We have significant volumes of delivery. We have a high expectation in terms of the direct repayments, direct receivables. We are going to deliver BRL 2 billion. And within those BRL 300 million, if I'm not mistaken, something like 25% of that was the creation of direct receivables portfolios. It's not yet fully seen because it's been recorded in the cartorios, but not yet in the systems. But this is a significant part of our direct receivables volume because they involve the SAC table payments, which is also significant. So every quarter, the company's Board analyzes the different prospects and alternatives for doing anything differently, as happened now. But there's no specific guidance for this. There's no promise of recurrence or anything better than what we see right now until we go through this whole period, which I mentioned, which is going to last approximately 1 year. I'll mention launch performance first. First, thank you for your positive feedback. There's a lot to be considered. There is a new gaze. Our President and our development directors have been working with sales. They've had a critical meeting where they discussed timelines and how to practice certain sales. The way they have been working in the whole sales process and training that the sales force have been receiving from their management. As I mentioned at the beginning, Tec Vendas has a new home now. It's at the same building, but it's a totally different office, and it places Tec Vendas at an extremely high level of professionalism. They are one of the most highly managed and organized real estate companies in Sao Paulo. So it's not due to the launch or the quality of one product. It's because of the quality of these products and the development of our processes and the mindset within the sales process. Flavio?

What Emilio is saying is that we are placing them to sell more quickly in the first 6 months. What we did in the past is we sold less percentages in order to raise the price. What we've been doing now is we've been pushing for more sales, and as a result, we've been seeing a lot of good results. These products that we have are very well positioned, of course, and which allows us to have products located at the desired location. So in the next half of the year, we're going to focus on products between 50 and 80 square meters, especially. We have Blue Marine that has some smaller apartments, yes, but if you look at the average, those 25 square meter apartments are not most relevant, the middle-sized units are what composes the bulk of the units. And we believe that when we look at the credit analysis we perform with people, they are going to be -- when it comes time to the transfer, they're going to be more comfortable financially than they are during the credit analysis phase. I want to mention that the company has been focusing and honing its skills more and more because it's all about moving our product forward through the pipeline. And the company has been moving forward this with, I'll call it, the new Tec Vendas. They're more high tech. They are more motivational. It's very important for real estate brokers to have a good mindset because their job is based on dreams. And so the first client we need to sell these units to are the brokers, and we've been doing that.

Did we answer your question, Fanny?

Yes, you did.

Our next question comes from UBS from Ms. Ana Julia.

I have a question about gross margin. Even excluding the sale of the Praia Grande land, those came -- the gross margin was at a very high level. Could you explore that in more depth? And can we expect similar results for the 2H '25 and '26? Or a level that's more in line with the previous quarter? And the next question is a follow-up about land purchases. In the release, you mentioned that you should take a different stance with regard to the purchases. So for your pipeline in the '25, '26 and '27 launches, are they all located already within the pipeline? And so what should -- what would make the company go back to purchasing land?

Let's start with gross margin. I love this topic. The first thing we need to highlight about the gross margin is we are currently at a year of deliveries, and engineering has been delivering us those constructions with some savings and other expected savings. So those savings have been included in our statements with the [ ABITSI ] for those ventures. And what happens is, with our -- when we look at our finished inventory, those savings are firmly included. When you look at that horizontal line chart showing the performance for each year, you see the gross margin for each year, and you can see that gross margin is growing quarter-by-quarter. Of course, this is an effect from the INCC, but it's also an effect that we were able to realize some savings in the deliveries that we are making. Now whether that's going to persist? Well, given that the savings are included, the ones I've brought in, that means that my finished inventory is going to exist. So the margin of finished inventory is growing, which is good. Secondly, there is a technical effect. There is the adjustment to present value. Adjustment to present value is a pain point for us because when we launch a project -- let's look at SP 360, for instance. It sold very well. But when we launched it, I needed to make that adjustment to present value. So I set aside some of that revenue to reposition it back at the end. And so this means we are draining gross margin from the beginning of the project, and we add back the gross margin at the end of the project. So EZTEC is in that phase. For many of these deliveries, we're recomposing the margin for those projects. And on average, they are lacking part of the gross margin they should have. And often, when things get tighter, we take steps to counteract it. But we are at a significant level, at high 30s, and tapping on the 40% level. This means that the company is firmly working on the backlog that it has demonstrated with -- over the past few quarters. So with regard to purchases, I wouldn't say that we hit the brakes on purchases. No. For many years now, we have been making fewer purchases. I mentioned a couple such as Sao Caetano in '24. So what do we see for purchases -- for land purchases in '25? Well, I'm talking about [ Estra ]. That means we'll add to the pipeline a significant volume because it's valued at over BRL 3 billion. There's one or another project in partnership with Lindenberg in addition, and Lindenberg is working on developing those businesses. They're at work on their end. For us, I would say that above all, we will need to see whether or not the [ Estra ] plan will be ratified. That's going to set the tune for us moving forward. [ Flavio ], did we answer your question?

Yes, you did.

Our next question comes from XP through Ruan Argenton.

I have just 2 questions. First, I'd like to get some more detail about the high-income scenario. You mentioned extensively that you're focused on the mid-income tier, especially for the second half. But last year, we saw you were highly focused on high-income partnerships and trying to explore things with Lindenberg in that segment. I'd like to see what your strategy is for high income moving forward. The strategy of perhaps turning over those sales more intensely, is it perhaps due to the size of high income moving forward? Or do you think the market is above offer, is in oversupply for high income? Could you mention about the performance for the more iconic high-income projects you have in inventory? That would be great, too. And my second question is about credit. We mentioned about credits for people, PF, but also about companies, PJ. Where do you see the origination cost for that credit? Today, the credit is rather attractive in terms of rates, as you mentioned, but what do you see about the origination cost for upcoming projects? Do you perhaps consider other funding sources for production moving forward? Or are you going to persist with the more traditional financing sources?

On the topic of high income, we are partnered with Adolpho Lindenberg. We've allowed them to develop those upper income projects. Now of course, we may come to acquire that [ Estra ] land. It's a mid- to high-income plot of land. Each different plot of land has a different strategy. And when I talk about the strategy that we have for our mid income and some partnerships for low-income properties, those are the third and fourth quarter projects we see. But we didn't abandon high income. We're just not so focused on that in the short-term. I mean Lindenberg is one of our arms for high income. We're not going to close our eyes to upper income at all.

I'll mention the upper income first, and then I'll talk about credit for companies. First, the second quarter, Galeria Eztec, Lindenberg project really bore fruit. We sold 4 units at Park Avenue. These are apartments valued at over BRL 10 million, BRL 4 million a meter. And in the Ibirapuera project, we've sold over 70%. That's our project on [indiscernible] with 81 units on the order of BRL 7 million. We sold 8 units in the second quarter. I mean, upper income does have competition. So this means that buyers, the final client, generally, they make a purchase when they can see something on the horizon. So Park Avenue is finished. We'll deliver it in '25. Lindenberg will deliver in very early '26. So when I look at our launches, it's going to sell at the right time because it's a very beautifully created project of ours. I'm very proud of it. But it's a project in execution that surpasses 3 years, almost 4 years. So we need to be a little patient because that's the speed of sales for upper-income projects. Lindenberg has some spectacular launches to be implemented. We want them to do very well because we own 47% of that. And of course, half of the result is ours. Now on the topic of company credits, to answer your question. No, we are not currently investigating other funding sources for PJ for companies. Even though credit has become more expensive and has grown more expensive over the past few years, we have managed to obtain some competitive alternatives with banks, and we are persisting with company financing with banks. Of course, banks are trying to use their LCIs as a baseline for prices for the credits that they offer us, and that's why I say we need to -- what we need to try to do is to focus on keeping that interest margin down so that this will help us in both people and companies, PF and PJ. Ruan, did we answer your question?

Yes. Yes, you did.

Our next question is from Bank of America through Ms. Carla Graca.

First, I'd like to ask a follow-up on Esther Towers. We saw some very positive numbers for vacancies in Sao Paulo offices. Could you give us updates on what rentals are like and what vacancies now that we are closer to the launches now that some time has passed? And what about rent prices? Is it something that's unique in the region? And what about mid income performance? What do you expect to see in terms of net SoS or gross margin?

With regard to Esther Towers, we cannot disclose who any potential interested parties are. We do have a list. The fact is that the cost of rent is much lower than what we expect, what we hoped, what we wish, but we're currently anchoring that. And then later on, we'll improve that average cost. We do have demand for almost the whole building, but it still requires a whole range of negotiation. And I believe it's going to be maybe something like 40% if -- don't quote me on that. So this is the reality at the moment, and we need to keep our feet firmly on the ground. With regard to our launches, I mentioned previously we're changing our posture and our mindset when it comes to our expectations in terms of SoS. As Flavio mentioned, what we expect for SoS up until 6 months is much higher than what we expected before because we no longer have the same intention to retain inventory to realize in the future as we did in the past. So yes, our goal is to raise the company's operating level with all the confidence that EZTEC can perform. That means selling more -- perhaps selling more at a slightly lower gross margin. But we do want to make the company reach a new operating level. This means that the company's goal is to bring those clients into our house. And then we will adjust those accounts receivable over time to work on profit down the road. So what we expect is to see the same performance at least as we've seen in Moved Osasco. We had spectacular performance in Villares Parada Inglesa that we launched last year. It was launched in the fourth quarter, and we already have a significant percentage of sales, 80%. So we are working at higher levels than historically, delivering some more sales with a slightly reduced gross margin. Did I answer your question?

Yes, you did.

Gentlemen, since we have gone over time for our webcast and we have answered all the sell-side analysts that cover the company, I'll pass the floor to our directors for final remarks. Please remember that remaining questions can be submitted through our e-mail at the ir.eztec.com.br website. Thank you.

Well, I'd like to thank you all for joining us. I hope we have met your expectations for these questions. Remember that Emilio and Pedro are available to answer your questions and talk to you, AND Marcos and Samir are also available if they have anything more to add. I'd like to say that I'm very, very satisfied to keep -- very happy to keep improving EZTEC. It's always been a very efficient company. Thank you.

And I'd also like to remind you that EZTEC is increasingly better, but we can always get even better and better. We've accomplished so much. I remember my dad. He always said, "We could do things better than we have been doing." And I'm sure we're going to continue improving. Nevertheless, kudos for the results.

Thank you, Marcos. Thank you all for joining us and for taking part in our webcast with your questions. We remain at your disposal. Have a great day, everyone.

Thank you. Thank you all for joining us. Have a great Father's Day here in Brazil, a great weekend. This concludes our webcast. Please check out our material on our website. And thank you all for joining us. Take care, everyone. [Statements in English on this transcript were spoken by an interpreter present on the live call.]