Helbor Empreendimentos S.A. (HBOR3) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and thank you for waiting. Welcome to Helbor's conference call for the discussion of the results of the second (sic) [ Third ] quarter of 2024. We inform all participants that this webcast is being recorded and translated simultaneously. [Operator Instructions] Before we proceed, we would like to clarify that any statements made during this webcast regarding the company's business outlook, projections and operational and financial goals are based on beliefs and assumptions of Helbor's management as well as information currently available to the company. Forward-looking guarantee -- are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operational factors may affect the company's future results and could lead to results that differ materially from those expressed in such forward-looking statements. Now I would like to give the floor to Henry Borenstein, CEO of the company. Please, Henry, you may proceed.

Good afternoon, everyone, attending the Helbor earnings conference call. Together with CFO and Investor Relations, Leonardo Piloto and Marcelo Bonanata, our Sales Director. We are here to discuss the company's results for the third quarter and the year-to-date results for 2024. We closed Q3 with a consolidated sales of BRL 494 million and 100% of this corresponds to the sale of completed in under construction units. Year-to-date, we sold the total of BRL 1.5 billion of PSV, of which 86% were finished in other construction units and 14% new launches. In line with the company's strategy, no new developments were launched this quarter. Regarding deliveries, 3 developments were handed over this quarter. Totally, a net PSV of BRL 449 million, all located in Sao Paulo with an average sales rate of 94%. It's also worth mentioning the success of the “Só a Helbor Tem” event, é Mogi das Cruzes, which generated BRL 47 million PSV sold, recording another excellent sales performance. On the economic financial side, we reached a net revenue of BRL 965 million for the last 9 months with a gross margin of 32.3%. The net income of the parent company amounted to BRL 25 million year-to-date, representing BRL 0.19 in earnings per share. The leverage ratio measured by the net debt to equity ratio showed a decrease, reaching 68.8%, for reasons we will explain during this presentation. We are confident in our ability to deliver the planned results for 2024, with a focus on reducing the inventory of completed and under construction units, we'll be able to generate cash and reduce the company's leverage. Before I finish, I would like to mention that our founder, Mr. Henrique Borenstein was honored this year master Real Estate award in the Hors Concours category for his long and devoted work in the real estate market. Additionally, the company was recognized for the W Residences São Paulo case in the Mixed Use Development Category, a multi-purpose project that has the first W in Brazil. Now Leonardo Piloto and Marcelo Bonanata will present the main operational and financial data of Helbor. Over to you Leonardo and Marcelo.

Good afternoon everyone and Leonardo. I would like to thank you for your presence. Okay. On the first screen, we are going to talk about the Land Bank. Our total land bank is BRL 11.207 billion. The Helbor shares is 7.813 billion. And I think it's important to mention that in the last months, we went through the review of the master plan and we have our PSD adjusted. And we've sold some lots and mainly, we adjusted some accounts with a new master plan. It's important to say that 77% of this Land Bank is located in the city in Sao Paulo and 23% in the metropolitan region. In the next slide, we present some developments we would like to highlight to you. The first land lot that I would like to address, not only on our side but the market is considered one of the best land lot in Sao Paulo that is located at República do Líbano is the closest one to the Ibirapuera Park of almost 6,000 square meters where is our pearl in our Land Bank. And then I would like to highlight and we have some land lots in the [indiscernible] of almost BRL 6,000 in this neighborhood between the Street Lorena and Pablona an iconic project, we are developing 2 land lots in the neighborhood of [indiscernible] many people know the complexity we face, especially launching in the Genolis. So there is a lack of good land lots and new launches. And the potential of that neighborhood. We have one land lot in Bahia, looking out to Bahia , another one that one at Rua Itai, an iconic corner. And the last highlight is that [indiscernible] marginal highway with almost 25,000 that developed. It's a new neighborhood and that we are developing in the city of Sao Paulo, as we have done in so many other situations. Now talking about launches, this is a year that, as Henry said, we wanted to sell our inventory to continue our strategy of selling our inventory in the first quarter, we had a launch in the second one, second quarter 3. On the 3 quarters strategically, we decided not to launch anyone to better accumulate this project. We had a PSD of BRL 616 million. And I would like to give a spoiler to you that we on the weekend -- on the last weekend, we opened the development in Mogi das Cruzes. The first one is Helbor Alegria. And I'm not going to say it was a surprise, but it's a great joy and happiness, reaping all fruits the good work we have done. We sold the entirety of the project on one weekend, and we are considering opening the second 5, that would be only in March of last year, bringing it up to this year. So we are analyzing it, but perhaps we're going to open the second stage this year, showing the market potential. This is very important. The contracted sales for BRL 494 million that we sold in the last -- 25% increase in relation to the third quarter of 2023, a 7% as regards to the quarter of '24. But in the 9 months, we had BRL 1.469 billion sold, a 32% increase concerning the same period of last year. So it's a very consistent sales that we had in the first quarter. Now talking about sales, all of our supply. We are working on levels we ever. We had a total of 19% in the last quarter against 13% last year and 17.7% in the second quarter '24. Helbor share, 18.8% again 17% the second quarter '24 and 13.1% as are the third quarter of '23, showing once again how great our sales are. Now as regards our inventory, today, we have a total inventory of BRL 2.3 billion. Albert share is BRL 1.2 billion. 97% of this inventory located in the Southeast region. Here, we have a table showing that we go through almost all economic levels from the medium low to the high. I'd like to say that Helbor navigates very well in all segments. I would like to highlight that 83% of our inventory is under construction, only 17% is the finished inventory. We have had higher levels today, BRL 397 million is our total inventory and settlement, only BRL 84 million is the inventory that we save from legacy, where it has been over BRL 2 billion in a very tough moment in our market. So we are getting at the end of them and the majority of this inventory is concentrated in commercial in [indiscernible] and then at the end of the Alphaville, which was a hotel we transformed in residential building and one in Santos, wants, which was a hotel and we transformed into residential this quarter, we started selling them. So we are at the end of our legacy even year-to-date, only 17% of our inventory of finish units or units are finished units. And finally, let's talk about the deliveries and the year-to-date in the first 9 months of '24, we have a total of BRL 1.778 billion delivered and 2,137 units. It's important to highlight that 89% of these projects are underway. It is showing that the company is working hard to sell its inventory and to get as close as possible of the total sales. And now I would like to ask Leonardo to talk about these projects that were delivered. So how are we doing in this area? This table has a very important which on the one before last column, where we talk about the percentage that was paid off. It's important to remember that every time we deliver a project, the market has a that a lot of money is coming in. And we have a portfolio. Instead of selling, we give credit to our buyers, and then we have to own land. On the average, everything we have delivered 85% of the units were hand over. And so we are doing very well. So it's important to remember that we have delivered, had passed on a lot of things, and we still have 80% for the company to receive, which is about BRL 450 million of receivables that will come in, in the next months only in the completed projects. Now the next one, the next slide. So we also have a new information showing how we have going change in semester of the absolute value of transferred. Last year, BRL 119 million in third quarter '24, BRL 511 million. This was the highest amount we arrived here. And also, we had the equity equivalents and consolidated so that you can see what is accounting and not. On the right hand, we have the comparison of 9 months, and we have transferred double of the 9 months as compared to '23. So we are very excited with this subject, and we are working intensely to monetize our receivables concerning the recent deliveries. Now 14 Here, we detailed. And although we have delivered mainly this year, we have BRL 3.5 million of PSV already launched and under construction, and we are working hard to deliver them. So this year, we also be with a lot of deliveries. In 2025, we'll deliver 1.5% PSV part of Helbor 57, all the projects are 70% sold once again. So we have these deliveries and transfer next year, and it will be for generating income for the company. Now let's talk about the financial data in the next slide. So going very briefly, some slides are very similar to the previous quarter. In the revenue, we grew 7% year-on-year and we grew 4% in the year-to-date, in line what we have done in previous periods. Slide #17, we show our growth in net market consolidated 31%, 32%. We have been saying that we can deliver a gross margin of around 30% on a recquented manner. The last quarters are very good in sales term and has pulled our margin. The net margin was stable around 10% -- now on Slide 18, we show the net revenue in line with the previous quarter, B 24.8% and a decline concerning the third quarter of '23 on account of the deliveries. So when we are delivering the projects, they remain in the inventory. So we talked about iconic projects such as W residents that had a huge margin of inventory, and they are no longer in the revenue to be recognized from the third to fourth, we had this drop of 16.6%. Now moving to Slide 19. We show our expenses with general and administrative expenses. We had here a quarter that was in line the third quarter '23, our expenses grew 3% in spite of the inflation of 4.5%. And in the last chart on the right, we show the last 12 months, an increase of 15%. But the most important information here is that the gross amount we have of general and administrative expenses vis-a-vis the net operating revenue is stable. And bear in mind, this is a year of delivery, a lot of construction work, and we had to reinforce some errors because operationally, the company was very busy with a lot of work to deliver with the projects. But even so, we continue to deliver operating revenue aligned with what we did last year concerning the net operating revenue. And moving on to Slide 20. We talked about the quarterly results, one another quarter, we delivered BRL 9 million net. And it's important to mention, we have delivered the BRL 9 million of net result even with a negative result of BRL 11 million with the sale of a land lot in Cuiaba, but we decided strategically to disinvest a land lot with some losses, but we brought this money in but the negative was shown in the state of income in the quarter was in line with BRL 9 million of net profit. Moving to Slide 21. It's a new slide where we show the market. We brought the grade of our debt. We compared how we closed the debt in the third quarter and in the third quarter. And it's important to mention here, and I'm going to take here the line above when we talk about corporate, we paid BRL 205 million of corporate debt. On the other hand, we raised BRL 152 million of corporate debt. So in practice, we paid net BRL 53 million of corporate debt. And in the line below, we show how much we paid. And it was BRL 165 million. Bear in mind that we continue in an intense process of construction work, we continue taking the finance of construction. We paid BRL 165 million, released BRL 111 million. We had a net amortization of BRL 54 million in the corporate plan. It's important to bear in mind that the company continues with a lot of ongoing construction works, and we continue taking the production financing, which is very healthy, and we'll continue taking this money for our construction work. And here, we had 2 interesting information. We paid BRL 50 million in interest, and we had an increase of accrued and not paid of BRL 75 million and made our debt to go up due to this accrual with the balance -- with a negative balance. It's important for you to understand the dynamic of the corporate financing. We pay a lot of debt. But on the other hand, we also take on some debt because we continue financing some construction work to deliver to our clients. Now let's move on to Slide #22. That's also a new slide that contains a lot of information. And before talking about the numbers, there are 2 things I would like to highlight, and they are very important to understand the concepts. The first one, our accounting does not reflect the timely delivery. We only consolidate in the balance those that I have control over its management. On the other hand, there are several projects, high-quality projects that we split the control with our partners. So it goes through a nonconsolidated result or view. For explanation, we have BRL 2 billion of PSD of launched and sold and under construction and finished that we did not consolidate in our balance sheet. And we decided to bring this table where we consolidate that. And we have this situation I have just described. Just to understand, so we consolidate this we had a cash burn of BRL 21 million, but the SOS that we do not consolidate, but we are partners. We have generated the third column of the third quarter. The net is the generation of BRL 4 million of cash. So this is the first concept I wanted to bring you. And more and more, we are going to break this down. And if you want to know what they are made of, they are on Page 16 of our earnings release. So we have a lot of information of high-quality information. So the second explanation is that over the second quarter, we took a credit line of BRL 250 million with Bradesco, and this is consolidated in our balance sheet, 100% and we gave in guarantee the land lot at Rubic but we have 60% of the land lot and our partner has 40%. The approved credit was at Bradesco is 100%. So we have guaranteed our 60% and our partner guaranteed 40%. As our partner is a debtor and guarantor of this operation, it was fair to transfer part of the debt. So in practice, the BRL 100 million left from Helbor's cash, and we transferred this to our partner. This is the explanation. It's not that we have paid our shareholders, no. So we have distributed to Helbor share and to our partner due to the fact that he's the owner and also guarantor of the operation. On the middle column and on the right-hand side, we have isolated this effect in practice. In the second quarter of this year, BRL 20 million we have borrowed lent to this partner, and it was BRL 5 million or BRL 10 million of cash burn. On the third quarter, we sent the other BRL 80 million to this partner. So we go from a consolidated cash burn of BRL 21 million of cash burn to BRL 62 million of generation. In our opinion, this is the most accurate view because here, we are isolating this loan that is going to this and leaving a number with no pollution. And so the transfers are helping us in our deleveraging process. In the middle column, we have the consolidated and nonconsolidated. So we have a cash of BRL 62 million and nonconsolidated BRL 26 million. And the sum total of both the company has generated BRL 87 million in cash this quarter. I think that's all. Now giving more details of this loan, how we are going to pay this off. The BRL 250 million is a bridge loan until we make the final financing of this project, where we are going to bring some investors that are going to buy a small portion of this project at the street and then we are going to pay our debt and also our partner will pay. And we want to clear the loan in the fourth quarter. So this is very clear. Now I talked about Republica do Libre. Now going -- moving on to Slide #23. We are doing here a new breakdown concerning our total debt. We closed this semester with BRL 205 billion, and we have a new breakdown so that everybody becomes familiar on how we see this. So we marked in green 516 million and BRL 526 million, they are self-paid off. There is. They are going to be paid with their own guarantee and the housing financial system. We are going to deliver the construction work. So the secured CRE, we have 3 units in guarantee. So every month, we sold then transfer and we pay this. They are self-liquidated debts and the non-self-liquidated in gray. So they are Chris that depending on the generation and CCB bank note important is BRL 260 million of the República do Libre Street. So 2/3 of this debt in CCB will be via this operation I talked about in the Republica do Libre, and we are going to finally remove it from our balance sheet. It's very important to make it clear how the company's debt work and explain a good deal is paid with the monetization of the guarantee itself. Moving on to the next slide. we took here a part of our balance sheet, basically our current liability, and we are zooming in the finances because when you see BRL 910 million of loans in the short term. Again, we are going to break down and to explain in detail our strategy so that this does not affect us. 910,000 of that, BRL 314,000 is the housing financial system itself paid off and these are units we are going to sell the units and pay and zooming the CCB, which is the majority, BRL 508 million. We show that over 50% of this amount is the working capital for the Republica do libre that we are going to finally pay off in the fourth quarter. So in practice, what we are going to have as corporate debt are BRL 130 million plus BRL 66 million of the guaranteed account. So I'm giving a lot of detail explain of the BRL 910 million in the short run. So it's BRL 130 million and BRL 60 million is already well taken care of so that we can postpone this time frame. Now talking about leveraging, we left the second quarter '24 from 71% to 68.8%. We had a deleveraging concerning the net debt concerning the shareholders' equity. The consolidated shareholders' equity grew and some had the funds raised by the partners. So in addition, we had this the shareholders' equity grew went up, and this helped and this made us to have our indicators slightly lower than the second quarter. With that, I finish the presentation. And now we are open to answer your questions.

So you can type in the Q&A, and I'm going to read and answer your questions.

The first question by [indiscernible] analyst of sell-side BBI. Thank you, Herman, for your question. I want to understand the cash expense that led the company to cash burn, for example, and the loan with the partner, if you have bought the land lot now. I'm going to read the second. We have not bought any new land lot, but this is very relevant. So we made some acquisitions in the past that had installments to pay during the quarter. In the third quarter, we paid for land lots we had bought some time ago. So that's -- this is the reason why we say the payment of the land lots that helped us to do the cash burn. And in addition to -- it's not only the payment, but also the granting of the city government has also -- is also included here.

So the first one, you talked about the partner. Thank you, Herman. Just to make it clear, the breakdown that Leo showed concerning debt, irrespective of the loan that was done, taking into account the nonconsolidated, that's part of our business. It's a very important part of PSV. We have generated cash and the cash generated ex Muto or ex loan is much better. Now going back her concerning the technical aspect where we did the Republica do Libre, there was a CRE that was about to mature. We talked to Bradesco, our partner bank. We obtained a new credit line to pay this debt and to extend the liability. But the approval of the credit was with 100% of the landlord, but we do not own 100%. But the debt was consolidated in our balance sheet. And obviously, our partner said, I'm also the guarantor. So it's fair for me to remain with part of the loan, so momentaneously. And it's important to highlight, and I have emphasized that, that this is an operation that's going to be settled in the fourth quarter. So we are well -- we stand well to liquidate this definitely in the fourth quarter. So we are going to pay off our part, and we will receive BRL 100 million from our partner. It's -- as it is temporary in a transparent manner, we wanted to give this transparency to the market. And why the cash generation was lower than we expected. We decided to be transparent and to say that this is going to be solved in the next quarter. It's important to highlight that bear in mind that this landlord, the company bought in another market condition, and it had the utilization of 2x the area. So the benefit of this new master plan, we have gained a great potential in this land lard and in others, too. So what I mean that we are -- we rest assured that we to do this operation based on the land lord and will be self-settled. The company has the PSV to support all of that.

The next question is by Francisco [indiscernible]. Thank you for your question. He asked why the cash flow in the third quarter were high?

I'm going to answer part of it. Francisco, this is a very important year for deliveries of the company. And the moment of delivery of the company when we do all or nothing, that's the moment we can no longer pay the installment and have to take on the long-term financing. So usually, there is an increase in cancellations, but we are in peace because both in the credit and commercial, we are working very closely. Every time the client asks us for a cancellation, we reopen it for sales. And these units that are discarded, they are the first ones to be sold. They are usually at high floors, and they have a very good liquidity. those that are being canceled? Yes, undoubtedly. First, we have to say the termination of cancellation. A deep one was from 2016 until 2019. Then the market collapsed and the country collapsed. Today is a natural cancellation. We have also seen that between 5% and 10%, there is no accrual of delivery together. But we've been working together with the transfer sector, and we've been selling. We're opening up and people signal their cancellation for some reason. They can't get the financing and at life changes. And what we see as Leo very well said, the liquidity in many cases, we even get a better price at the time of resale. So this is very important of the development different from 2016, where the inventory went down 30%, 40%. Today, we see some units even have a price increase as compared to the original sale. So in many cases, we did the cancellation, we retained 50%. The cancellation law is consolidated. And on average, we have resold these units with an 8% increase. and Francisco, I think it's a moment we are going to see that, but it does not scare us. I think we have very good news. That's a way of oxygenate the portfolio, gain price and accelerate that. So we have 0 concern with this topic.

The next question by Herman from Bradesco. The metric net debt equity improved, but that went down, implying that the equity went up more in spite of the lower profit in the proportion.

No, I remarked that a little before. So the SP is consolidated and the capital of some SP went up. And so the consolidated shareholders' equity went up a little bit. That's why the ratio, net debt and equity went down a little bit on equity went down a little bit.

Another question by Francisco Silvera from Darwin. He asked about the speed of sale of the Figueira Leopoldo.

Francisco, thank you very much for your question. And the high standard ultra-high is natural to have a percentage of sale. We start the construction work, and we have the resumption of the cruise flight near the delivery. 3 months ago, we sold a unit in a week, we left a decorated unit. In a week, we are able to have a volume of visit of people who were waiting for this event. and started affecting this development. So we are in the natural course, and we have to deliver up to mid next year, but it's a moment of the maturation of this development. We have no doubt concerning the location and the quality of these products, a very appropriate product, but the ultra-high standard have the right moment to resume the speed of sale. We are very optimistic, and we are very self-assured. And we won a price with this project to cooperate with Marcelo. I would like to remind you, there is development in front of us. And they sold at the end, even for a higher price. Again, we believe that's a good product in a good neighborhood has appropriate price, which is very important. But undoubtedly, we want to sell everything at the very beginning, but the ultra-high standard, people wait until the end of the construction work and because people -- the buyer already lives well and is not in a hurry. And which is interesting is that we have the contact with the majority of these clients. They monitor the construction work together with us. And this is a high moment. The decorated unit is ready and close to the delivery. In a week, we had a movement we had for a long -- we didn't have a long time. So we -- another one that we sold last week, and it happened the same. The building will be delivered in the first quarter of next year. So we are also -- we're waiting and now we have said sold one unit, there is another one underway. That's the way it goes.

The next question is by -- investor in the company.

I have 3 questions. How many launches will be made in Q4? -- Since in Q3, we didn't have any launches. Second, taking into account the increase in Selic, we are talking about 14% for 2025. How are you preparing for that? And lastly, do you have any plan to rebuy the shares?

Would you like to answer the first part and answer the others? As I gave a spoiler, we -- in this past weekend, we launched of the first phase of Helbor Alegria in Mogi das Cruzes and 100% of the units were totally sold. We had for the fourth 3 only the first phase of Helbor Alegria. But due to the speed of sale, we had -- and it's a single development, we are analyzing the opportunity. We have created a natural demand. There is the possibility of opening the second phase still this year. We are considering that, and we will open the second phase. That's what we are planning for the fourth quarter. In the third quarter, since we as we had no project, there is -- there was a common agreement. We are going to fill the market in each project as to the possibility of success. Just to launch and present to the market the BSD, that's not our goal. So in the third quarter, we concentrate ourselves in showing -- selling our inventory, conducting our events and decreased inventory was not the right moment for launches. So much so, we did the first launch, and we were taken by surprise with the speed of sales. Supplementing Marcelo, thank you for the question. The company's strategy for those who monitor us since the beginning of this year were less withhold the launches, let's stop buying land lots and let's concentrate in showing what we have in inventory under construction and finished units. To our surprise, to be honest, we had a speed of sale greater than we expected, 32% more than last year. It was the company's strategy, this policy concerning launches. So next year, we are going to launch new projects, always very careful concerning the commercial aspect of each project, but we started this year with this strategy to close this year with a deleverage in our balance sheet. So if we launch more, we had product on inventory, and we decided to generate cash with the inventory.

Okay. Daniel, you asked about the increase in the Selic that will be 14% of 2025. We had a more conservative scenario. And obviously, it was higher than we expected. We didn't expect the Selic rate to go down. What we have done to prepare ourselves is to focus on our deliveries and on lending, and this is going to help our deleverage and the exposure of the corporate debt, especially the CDI.

May I supplement Leo? An important fact, Daniel. We have a major debt in our balance sheet, which is a corporate debt, and it became a pre debt and -- for the -- this was very good for the company. Giving more details, we did a Cree in the first quarter '24, where more than 70% was spread, 12% per year. At that time, it seemed to be an expensive debt, but it was appropriate and luckily. And we not only count on CDI, and we are protected concerning this debt. About the second point, we have to be a very flexible company to adjust to the macro scenario. We do not control, but we serve on it and it's part of it. If we see that the macro is worsening, we are going to step on the brake concerning the launches for 2025. We have talked very little about that. There is another question we are going to answer, but that's what we have decided. If the market is on the buy side and the interest rate is not too high, we are going to continue a more robust pipeline if the market changes. We are going to change with it. We are going to be very flexible to accelerate the cash generation and second, to be flexible and not to have a very rigid debt and strategic plan that prevent us to adjust to the macro. And Leo, now talking about the Selic when we talk about the interest rate for the client, the interest for the client still continue at 10.5%. In the boom from 2008 until 2014, we had interest rate of 14% at the end. And now we are talking about that 10.5%. The majority of our projects are in the medium and medium high. And today, for these 2 standards, there is very important, the capacity to solve the debt. Throughout time, the client is able to absorb this debt. It's a change in the Brazilian consumer behavior. So we are able to perform because 10.5% for Brazil today is very good and the client is buying because of that. And at this point in time, talking to the banks, we don't see any signal and the CDI is not in the mortgage market. We see the signal of going up. And this is not going to block or lock our market. Answer your question about the repurchase of shares. We would love to do that, but we are not going to do that. At this point in time, we are not going to do that. The focus of the company is the sale under construction and finished units, and we think that is being negotiated at below what we think fair. We would like to do that. But for the time being, the best way to oxygenate is to pay our financial debt. That's it. I think we are able to change in the future this strategic decision.

The next question by -- a sell-side analyst of BTG.

Now could you give us an expectation of reducing your leverage for the next quarters?

About the loan, I think I have talked a lot. If you have any questions, please let me know. Concerning the reduction of our leverage, we also talked a lot about that. We began the year -- the first quarter of this year. We said this would be a year that we would concentrate on leverage. So we continue with the same state of mind. We are going to deliver a deleveraging in the next quarter because a good deal of the deliveries were delivered. And also, we are going to exchange the financial debt of Republica do Live bringing some investors that we have a small share in the project. And this is going to help us with the financial deleveraging. For 2025, as I said throughout the presentation again, it's a very important year for deliveries. We think there will be more deleveraging along the year again. It's not going to be a huge deleveraging, but it's going to be very important for the company. I don't want to give you a projection, but we expect that in '24, we are going to finish lower than '23 and '25 lower than '24. The major message here is that the operational area of the company is in line. We have margin, we are selling and the market is anxious about deleveraging. And the major message is that we are focused on that. And as Leo said, in the last quarter, we are going to see more deleverage and even more next year on account of the deliveries. We have to understand that sometimes we want to do, but the developer does not live on that. So sometimes you take 4 or 5 years to deliver a project. And sometimes we cannot transfer something in a specific quarter. As inside, as we are driving our machine, our company, we know what's going on. And we can say is that the deleveraging is going to happen this year and a major portion next year.

Herman Lee from Bradesco BBI asked another question concerning the pipeline for launches in 2025. Let's go.

Herman, thank you for your question. Based on -- because we have lowered our level of inventory. We have always had an inventory for 24 months. And now it's 14 months. The expectation we have is for next year to resume the launch. We had a land bank of high quality. and very sturdy, as you can see. And the expectation is to have more launches than 2024. But undoubtedly, Herman, we are going to be cautious, beginning the year, see the macroeconomics, the product project by project and 2 years. I cannot give you a guidance for next year, but the company's expectation differently from 2024 is that '25 will be a greater resumption as compared to 2024. And also Herman because if we don't do that, Marcelo will not have anything to do. He's going to be fired because if we have an inventory for a year, it's been a long time. I don't see the company with this scenario. We have to launch anyway.

Next question by Marina, the sell side, Ita.

Thank you for your question. So how are you feeling the cost and inflation pressure in the sector? And what's the expected margin for the next quarters?

Thank you, Marina. This is Henry speaking. Undoubtedly, I think that the greatest concern inside Helbor is the cost of construction and mainly what's happening in the lack of labor -- and this is leading us to a higher price for each new project. What I can say, which is the company's strategy and in a way, it helped us to face this problem. The company has a very good land bank, as you saw, focus, especially in Sao Paulo and premium neighborhoods. We had and the market also had the benefits of some land lots that were bought before. And the sum of good land bank and the market is selling, we don't have price decline. We were able to readjust our tables or price less to face this new wave of costs. So the project we are closing today are more expensive than 2 years ago. And the price of sale also went up. So this has helped the company. And that's why although we are not buying land lots, we have a very good land and large land bank, but we are very much focused on the location. So -- and this gives us peace of mind when we launch a project. So you also asked about margin. And during the presentation, I said that we think the company can deliver 30% of margin depending on the mix during the quarter. In spite of the price increase in the new hiring, the sales price has offset at least partly the cost issue.

The last question by Rafael. He asked us what segment Helbor wants to act on?

I think that it's very important when you analyze a developer, this segment is guided by its land bank. Helbor has a profile of leaving Minha Casa Minha Vida in the medium high and ultra-high. Our land bank indicates that we have these 4 pillars or segments. Our land bank is guided by that. So it's very much concentrated and totally concentrated in the state of Sao Paulo in the metropolitan region and also the Greater Sao Paulo [indiscernible] and Sao Paulo, the city as a whole. And we have been navigating on it for 47 years, being successful in this market. The segment is medium, medium, high and ultra-high standard. And this is well aligned with our Land Bank. Would you like to add anything?

That's true. I agree. and mainly the residential segment. In the past, the company had a greater diversity of products, and we served in the commercial rooms with the cancellations, we saw that when there is a crisis in the real estate market, it is more difficult to get out of the crisis. So we focus mostly in the residential in the state of Sao Paulo, mainly in the city of Sao Paulo. And these are well-located land lots. It's there. If we look at Rep, Lorena and [indiscernible] Tacolomi, all these locations, there is a land lot was an important swap that we are going to disclose that the company is well focused. And we -- what we want to do is the deleveraging. We are focused on that. We are not going to launch it just for the sake of it. We are going to do it only if it's the right moment as it was in the M. sold -- where we sold 100% of the project. We basically went through all questions and some of them were repeated, and that's -- and we tried not to answer them again. We would like to thank you all. We would like to give you a final message. I would like to thank all of you who participated in the conference, the whole team at Alba and Thiago, Luis, Marcelo, and his enriching participation in our call and to thank the company as a whole. I think that we are on the right path. A is doing very well. And for sure, we are going to surprise the market and deliver what we have promised to deliver. Thank you, everyone. [Statements in English on this transcript were spoken by an interpreter present on the live call.]