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

Good afternoon, ladies and gentlemen, and thank you for waiting. Welcome to Helbor's Fourth Quarter 2024 Earnings Conference Call. This webcast is being recorded and simultaneously translated. [Operator Instructions] Before proceeding, we'd like to inform that any statement made during this webcast related to the company's business perspectives, projections and operational and financial goals are based on the beliefs and assumptions of Helbor's management and on information currently available to the company. Forward-looking statements are not guarantee of the company's performance. They involve risks, uncertainties and assumptions because they relate to the future events and, therefore, depend on the circumstances that may or may not occur. General economic conditions can lead to future results that differ materially from those expressed in such forward-looking statements. Now I will turn the floor to Mr. Henry Borenstein, President. You have the floor, Mr. Borenstein.

Good afternoon, everybody. It's a great pleasure to be here for Helbor's results presentation with Marcelo Bonanata and Leonardo Piloto, who will present the fourth -- the results of the fourth quarter of '24 and the accrued. In 2024, we kept our strategy according to strategic reasons, reduction of the ready inventory and delevered cycle. The highlights. Total gross sales, BRL 574 million in the fourth Q of '24 and BRL 2 billion in the year, 33% above 2023. 56% belongs to Helbor's share. Our VSO, we had 20.5% in the fourth quarter '24 and 52% in the accrued of the year '24. Launches. We launched 3 new developments in the fourth quarter '24 with a PSV of BRL 50 billion (sic) [ BRL 505 million ], 80% Helbor's share, totaling BRL 8 million (sic) [ 8 launches ], 57% of this BRL 1 billion Helbor's share, reinforcing the strategy of the company that was launching less developments in '24. Deliveries and onlendings, we had BRL 1.9 billion totally onlendings, 27% -- with 61% referring to Helbor's share. Our cash generation was BRL 263 million in the fourth quarter and BRL 135 million for the year. Our leverage reduction and the net debt over shareholders' equity of 56%, a reduction in relation to the end of 2023. The result shows our robust growth, improve in capital and capacity to market adaptation. We still generate value -- long-term value to our investors. Now I give the floor to Marcelo Bonanata, who may share the highlights, the operational highlights.

Good afternoon, Henry and Leonardo, and good afternoon, everybody, and I'd like to thank you for listening. This is our land bank. Our gross land bank is BRL 11.5 billion. It's worth to highlight that almost 40% is concentrated in the city of São Paulo. And what is also important is that we reached a maturity level where today, our land bank is well aligned with what we want to offer our clients. And during the years '23, '24, we sold some lands that did not have the profile of location and income, and we acquire other land banks to replace them. So this is one of the better assets is our land bank, a quality land bank that is translated in the final product within our profile. We are very happy with a very robust land bank that we built over the years in certain points when the market was not so hot as it is today. And great part of this is in São Paulo, almost them, 80%. And talking about Great São Paulo, this is the composition of this BRL 11.5 billion. Now let's talk about the launches, 8 launches and BRL 1.1 billion of PSV. It's important to note that of these 8 launches, only 3 are new developments. We have the described Fazenda Itapety, Roya. We launched in the past, Fazenda Itapety in 2022 very successful. Roya, we launched last year. Metropolitan was the second phase, the opening of the second phase. Patteo Vila Mariana, we opened the first phase at the end of the second quarter and the second at the end of second quarter. Américas in Rio de Janeiro, a partnership with Cury, very successful. And at the end of the year, we launched Alegria. Very surprisingly, the first phase was expected in October and the second only in 2025, but the first phase was such a success that in almost 4 days, we have sold almost the total of the development. And right after we launched the second part, we anticipated due to the market. So the total 8 developments, 3 new ones and BRL 1.1 billion of PSV. Going to the next slide, we see the sales. And it's important to make a reflection on how big was our sales in comparison of the fourth quarter of '23. We had an increase of 35% in contracted sales. We went from BRL 426 million to BRL 574 million and BRL 2 billion PSV, a 33% increase in relation to 2023, which has been a very good year. So we expected -- we exceeded all expectations.

Well, that's -- you're right, Marcelo, this reinforced the focus of the company, especially in selling the inventory that was in development. The launches had also a good performance, but the great volume was the ready ones and under development. This translates into our strategy to reduce leveraging. We see that 82% of the sales were ready and under construction. Of course, we need to have a good performance during launch, but also to have a strategy to have a performance in those under construction. And we see our SoS. We see this increase every quarter. And in the fourth quarter of '23, we went from 13% to 20.5%, which is a very acute velocity in sales, and 52% at the end of the year shows the strategy of the company, how we are prepared. We were prepared to '24 and getting all these results. Now our inventory, the total inventory of BRL 2.4 billion, 97% located in the Southeast region. This is extremely important. In this BRL 2.4 billion, BRL 1.4 billion is Helbor's share. And of this BRL 1.4 billion, BRL 1.1 billion is spread in the high, medium high and ultra high, so developments of high quality. And also, we have an inventory of quality. It's important to talk about our inventory as well. When we talk about especially the ready inventory, we had the problem in 2015, '16, and we lived with this legacy, but this legacy is getting to the end. We used to have -- and if everything goes right, we will remove this slide from the presentation. Yes, that's what we want. It's important to highlight that we have a very acute position with the ready inventory. And now we have BRL 52 million at the end of this legacy, and the new inventory are deliveries we've made. So we are very comfortable with our inventory because it's of really high quality, and it's turning very well. Well, our deliveries. 2024 was a very important of launches and sales, but also deliveries. We have a year of very few deliveries. But this year, we have almost BRL 2 billion of deliveries in 2024 and with 91% of the units sold. So we are not only delivering quality developments, but it's important for the cash of the company where we are able to do the onlendings and have the return. This performance of the developments delivered in 2024, I'd like to mention W, W Residence that we delivered in March '24. At the end of the sales and at the end of the year, we opened the W Hotel, the first W Hotel in Brazil with a very interesting performance. So it's an icon in the market that Helbor had the pleasure to create to idealize. Now we will touch on onlendings, and I'd like Leo to talk about it.

This was also an important year. Yes, we have the deliveries over the year with the increase of onlendings unit. We had a growth quarter after quarter. And in the total of the year, we made BRL 1.700 billion on onlendings, which is the double of 2023. And this was boosted by the deliveries we did. And on the next slide, we show that looking ahead, what are our next deliveries. We have 18 developments launched or under construction, close to the deliver and more 1B to be delivered. I'd like to highlight the developments of the first quarter '25. They are well sold above 80%. Comparing '24 to '25, the year of '25 will be a year of strong onlendings, very similar to what we did in '24. It's important to say that most of the deliveries will happen in the first semester. Yes, this is important. We -- in '24, the deliveries were concentrated in the third and fourth quarter. Now we start the year that the deliveries will be in the first semester, which will help even more the onlendings. Now let's go to the financial data. Starting with the net operating revenue, in line when you compare '23 to '24. For K '23 and '24, a slight drop of 12%, but nothing of impact. And in this slide, we show our gross margin reported in the quarter was of 38%. And I'd like to highlight and make it clear that in this 38%, we have the reversion of all those legacy units that we sold. We sold -- the units we sold in '24, some were a legacy that were already provisioned. And since we sold it with a slightly higher price, we had this 38% margin. So excluding these effects, the margin is around 31%, in line with what the company says that we delivered 30%. This is a nonrecurrent event, and nobody should report that the margins of the company would be 38%. No, just the opposite, we continue with 30%. This is the backlog and the margin launched and sold. We had an important increase of 4 p.p.s compared with the fourth Q of '23, reflecting the increase over the year. 70% of what we have to backlog margin are -- come from the launches we did last year, Mogilar, Vila Mariana, among others. And with this, we have the -- we closed the accounts. These are the general, administrative and commercial expenses. What we see here is the part below how much these expenses represent according to the net income or revenue, about 7% to 8%. And we had an important savings in commercial expenses year after year, going from 7% to 5%, reflecting the improvements that Bonanata did over the year. We are now less dependent on premiums and commissions. On next slide, this is a very important information in line with our strategy of gradually increase the participation in our projects. We are comparing year after year. Last year, the company profited BRL 133 million (sic) [ BRL 173 million ] and received BRL 51 million, representing 29%. This year, we increased our participation from -- of 35%. So we had 6 p.p. in the value in relation to last year. And this should be a trend. Helbor now holds a higher share in these developments. Yes, exactly. We did some strategic movements to have a higher participation, a higher share in the projects. So our share in '25 will be even higher than the previous year. Now on Slide 20, this is one of the most important lines of the company, which is our debt. And we say that 50% of the total debt is self-liquidating. It is paid by the amortization of the guarantees being receivables or units in inventory. We showed that of this BRL 233 million in the long term, we did a breakdown, BRL 200 million we paid in the first quarter, BRL 76 million we rolled in the first quarter. They are in the Note 33. We anticipated the payment and the rolling out in the first quarter. The others will be paid with the deliveries. BRL 22 million will be paid with the amortization of the guarantees. The resting 43%, we are well aligned to conclude the rollout or to get new money. So 60%, we need to solve over the entire year. So in spite of the short-term number being very important, the company is very active in this short-term liability and management this and compensates with the volume of onlendings we will have over the year. Yes. With the inventory/receivables, this matches with the amortization of our assets. On Slide 21, the top message here is aligned with what we designed for our strategy. We went from 70% net debt in the fourth quarter '23, and we delivered 56% in the 4Q '24, well aligned with what we said we would sell the inventory, the strategy and relevant deliveries over the year and that we would accelerate onlendings. So we have a decrease of 13.2 p.p.s, and we are very happy with this important goal that we've achieved. Yes. The important -- for those who follow Helbor, everything we promised, everything we said, we delivered. That's the point. Yes, we were very objective with our launches. We could have launched much more, but we launched just the necessary, very close to the selling of ready units and under construction, selling of nonstrategic assets. Now Slide 22. This corroborates the previous slide, the generation of rates. And the consolidated company generated BRL 263 million, and we have the cash generation when we include the consolidate where we have the partners and we have the equity, we generated BRL 107 million in '24, reflecting an important part in the company in assets that were out of the radar and now in the third quarter of last year, we have included. We closed '24. We don't have any guidance, but just for you to know what we are doing, we are designing in-house, and we are driving the company. Bona will continue with an active commercial management with very good products with good acceptance in the market. This is in line with our strategy of location and income. We will sell even in partnership with someone. We will deliver more 11 strategic launch in São Paulo, Mogi, always focusing on medium and high income and the cost management. And consequently, we will continue with the reduction of the leverage. The trend is to continue with this. We depend on deliveries. Sometimes 1 month delay is enough to delay or postpone the cash generation. With this, we close the presentation, and we open to the Q&A session.

The first question is from [ Matteo ].

Congratulations for your results. We saw an express improvement in the backlog margin of the company, increasing 3.2 p.p. Can you detail the factors that gave this improvement? And also, could you talk about the perspectives for launch in 2025?

So this increase reflects what we launched during the third and fourth quarter and the sales backlog. The sales were summing over this time, making the margin -- the backlog margin to get a great representativeness. So the projects of the previous years were a little smaller. This is what explained the 3.2 p.p. increase.

Matteo, here is Marcelo Bonanata. Well, we closed '24, and we have possibilities of launching many interesting things, but very attentive to the market. We did this last year. If you remember, we had a committee for that. We had a development that we could not boost the sales, and we decided to leave it for the beginning of this year. In the first quarter, we launched something that we have a very heat market, and we want to fill the market. Our sector depends on macro economy. So we are -- we pay attention to the market. The market is buying. This is important, but we need to analyze the condition of every development.

Now that's Marcelo. Those who follow Helbor know that the company has capacity, operational capacity and launching, but we went through this process of deleverage. It was our strategy to launch less. And this year, we know it's a challenging year, high interest rates. We have a scarcity [ outstanding ] and also labor. So Helbor is in a position that we are able to deliver what we promised, and we will be very disciplined in every launching. It's useless to launch for the sake of launch and create inventory, creating problems in-house. So we have many, many things being approved. They will be here on our shelves, and we will see launch after launch, how the market is and how this macro situation of the company evolves.

The next question is from [ Gabriel Silva ], an individual investor.

In case leverage is in an acceptable level for management, do you intend to distribute a higher percentage of the net profit to the shareholders?

Well, thank you for the question, but we understand that we will continue to attribute what we usually do. What we have in our internal scenarios is that deleverage will continue to happen, but it will not be overnight. So we are continuing focusing this deleveraging process and also to launch good projects and good products. So do not predict an increase in the net profit to be distributed. I think that due to this instability, we left some questions answered. If you want, our RI team is here available. We again apologize for this technical problem. And with this, we close our results information. I'd like to thank all who attended this call. We will now see a very challenging year, but the company is well focused. And operationally is what we say: we are selling, we are delivering and we are onlending. So we have an expectation of having a very good year. I'd like to thank Leo, Marcelo, and thank you very much for your attendance. [Statements in English on this transcript were spoken by an interpreter present on the live call.]