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

Good morning ladies and gentlemen, welcome to Helbor's Second Quarter of 2025 Earnings Conference Call. This video conference is being recorded and can be accessed on the website of the company. The presentation is also available for download. [Operator Instructions] Before proceeding, I'd like to emphasize that forward-looking statements are based on the beliefs and assumptions of Helbor's management and current information available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore, depend on circumstances that may or may not occur. Investors, analysts and journalists should consider that events related to the macroeconomic environment and other factors may cause results to differ materially from those expressed in the forward-looking statements. Mr. Borenstein, CEO; Mr. Roberval Toffoli, CFO; and Marcelo Bonanata, Chief Commercial Officer. Now I'd like to turn the floor over to Mr. Borenstein, who will begin the presentation. Please proceed.

Welcome to Helbor’s Second Quarter 2025 Earnings Conference Call. It's a pleasure to be here with you. Today, I'm joined by our CFO, Roberval Toffoli; and our Commercial Director, Marcelo Bonanata, who are participating in this presentation and will be with us in the Q&A session. In the second quarter, we remain steadfast in our commitment to financial discipline, operational efficiency and creating value to our shareholders. Even in a challenging macroeconomic environment, we made significant progress in our delevering strategy and operational margins. Total gross sales in the second Q '25 reached BRL 467 million, representing a 12% decrease compared to the same period in 2024. Helbor's share of this volume was 60%. Year-to-date, gross sales totaled BRL 1.086 billion, an 11% increase compared to the first half of '24 with Helbor accounting for 51% of this total. Total sales velocity in the second quarter '25 reached 18.3%, an increase of 0.6 p.p. Helbor's share of SoS was 18%, 1 p.p. increase compared to the second quarter of '24. For the first half of the year, total SoS was 35.2%, a 6.7 p.p. increase compared to the previous year. Helbor's share of the VSO reached 31%, 4.7 p.p. increase over the year. During the quarter, the company launched the BRK by Helbor project with a net PSV of 12 million, 100% Helbor. Year-to-date, 4 projects were launched with a total net PSV of BRL 703 million. In 2Q '24, we delivered 3 projects, My Way Guanabara, My Place Jardim Botanico First Phase, and Jardins por Artefacto totaling a net PSV of BRL 399 million, where 60% is Helbor's share. Year-to-date, 5 projects were delivered, totaling a net PSV of BRL 996 million with 52% Helbor share. Onlendings in the quarter totaled BRL 423 million, 60% of which was Helbor, representing a 9.8% increase compared to the second quarter '24. For the first half of the year, Onlendings totaling BRL 901 million, a 21% increase. On a final level, we -- on a financial level, we ended the quarter with a net debt equivalent to 54% consolidated net equity. This performance reflects our continued focus on strengthening the capital structure and maintaining the company's deleveraging strategy. Helbor closed the second quarter of 2025, reinforcing its commitment to efficient management, sustainable expansion and delivering value to its shareholders and partners and customers. We are confident that the consistency of our strategy will continue to support solid results. With this, I invite now Marcelo Bonanata to present the main operational highlights. Then we'll be able to available to the Q&A session.

Good morning, everybody. It's a pleasure to have you here with us. In the first slide, we explain our land bank, our strategic -- you see the development of our projects. We have a land bank, which is our raw material in the company. Our total VGV is BRL 11.5 billion with the 70% Helbor's share, almost BRL 8 billion. These are some land banks that are private or for the company. And you can see the best land bank of the state of Sao Paulo. We have Republica do LÃbano very close to the Ibirapuera Park is shaking the market already many people with expectations on this project, which will be of very high level. Then we have another one at Jardins neighborhood with a very high standard large apartments and high apartments. We have some also a project at [indiscernible] in the Higienopolis neighborhood that will be launched by the end of this year; Rua Itacolomi, one of the most desired streets in the Higienopolis [indiscernible] and our project of Semp Toshiba with more than 26,000 square meters. I'd like to also mention it's a process of recycling of our land bank. We started last year selling spot of lands in areas that were not so valued and those that we could not compete as the East zone, we ended up negotiating the terrains with this the characteristic of Helbor today. It's very important, the movement we did last year about BRL 150 million selling terrains. This policy continues. The company has a good land bank and those who are not part of what we want, we decided to sell these. We have more 5 lands to do this recycling, and they will occur in this quarter end. The idea is to sell this piece of land and to create cash and help our deleveraging. We have 2 lands, one in Rio de Janeiro and other in the East zone that we sold to Cury, one of the largest economic company of the country, and we became partners. It's a good strategy of the company because in addition to sell the land, we enter in a very interesting segment. In this slide, we show one launch in the second quarter, and it's important to stress that we decrease our inventory level. We are very attentive to the market to any macroeconomic movement. So we can launch at the right time and not to tell you that we launch for the sake of launching. So we are really improving, and we launched a very interesting project at Brooklyn and it's a very differentiated project selling very well. In the previous slide, I'd like to talk about Fazenda Itapety. We have 39% sold, but this is the last phase and more than 60 allotments are already sold. We sold it so well that we anticipated and BRK every week, we have new proposals. So we are already at 30% of the sales. And Fazenda Itapety with 164 allotments. We had some commercial phases. And today, we have more than 30% of the lots sold. It's an absolute success. And we are working on the renewal of the project, a second development at Fazenda Itapety, about 600 lots. On the next slide, we have the contracted sales. We closed the quarter with BRL 467. And I'd like to draw your attention to the closing of the first quarter that was 30% above last year. This year, we were able to exceed in the first quarter. We are selling well, very attentive to the market moment, especially according to the macroeconomic moment and Helbor's share also increased. When we decrease the level of our inventory, we need to be aware of our SoS. This, we closed with 18.3%, even above the average. And in the first semester, we closed with 35.2%, a great increase in relation to the first quarter of last year and Helbor share also with 18% and at the semester, an increase of 4.5 percentage points. On the next slide, we see our inventory. Our total inventory is BRL 2.2 billion. This has been pulverized, but now we have a concentration in the Southeast region and Helbor share inventory is of BRL 1.3 billion. We have a very standard and high standard segment presence. This is the market niche that we are doing well. On the next slide, we are talking about the ready inventory. This had -- in this ready inventory, we have BRL 466 million. But in this most of them were projects delivered at the end of last year or this year. So our legacy, our past inventory of commercial and hotels today, we have only BRL 15 million. This is our legacy. Last year, we had at 52 and this year, just 15. In the next slide, we talk about our deliveries. We had 3 deliveries with a total PSV of BRL 399 million and 63% Helbor share. We have here Jardins por Artefacto. It's a very high standard project, 1 flat per floor. We have only 2 or 3 units in inventory, another project Campinas, My Way Guanabara, and My Place Jardim Botanico that is the only city that we are today outside the state of Sao Paulo. Now talking about the inventory, when we look the high -- medium and high, it's not one of the 3 rooms for family, but we have it for investors as BRK, we are focused on high liquidity and all these apartments, when you hit the price, it is really strong. We hit the price, the product and the characteristic like BRK, which is a project close to urban mobility of metro stations support backing the desire of those who want to invest. We have an oxygenation of these apartments where today, we sell so short and the investors are very happy, and we see a great demand in this segment, and we have very good products. Now the deliveries, especially these 3 products we delivered this semester. Next slide, we talk about the onlendings in the company. We cannot sell if you do not [indiscernible] coordinator and we give all the subsides to our buyer and coming back the money to the company. So our onlendings in the semester increased 20,000. And it's nice to mention that the second semester onlendings should be even higher, but several projects were ready at the end of the quarter. Unfortunately, we could not, they were delayed and the new projects will come really in the next quarter. The volume we are estimating is the peace of mind we have that we will deliver. We have 2 more deliveries this year, one in Osasco and the other in Sao Bernardo. This is for this quarter. So this is for this year. It will not be like last year that in spite of being a good year, something came to this year. And now on the next slide, we show you where we have 16 developments under construction with a PSV of BRL 3.8 billion with deliveries until 2028. We are showing what we delivered in the first quarter, second quarter and the expectations for deliveries for the 3 quarter totaling about 10 developments delivered this year with a PSV -- a total PSV of 2.2 million and Helbor share 1.1 million. And then we have the expected delivers in '26, '27 and '28, especially observing the inventory of each of them. We are preparing for the end of this month, a great event called Só a Helbor Tem only Helbor has. We've been running this for more than 10 years. It is the largest sales of inventory apartments, and this will be totally here. Now I give the floor to Roberval.

Thank you, Marcelo. Very good morning, everybody. Let's talk about the financial results. When we look at the net revenue in the second quarter, we had BRL 285.6 million representing a drop of 15% of the same year and 5% compared to the first quarter of this year. This variation has a direct relation with the sales because our revenue is according to the physical advance of the works. 62% of the sales came from under construction against 50% of the first quarter of '25. Ready units represent 25% of the sales and launches 7%. In the year-to-date, the net revenue was 5% below the first quarter -- first half of '24. In the first quarter of '25, the mix was compound -- about 50% of units is under construction, 25% ready and 25% launches. In the first half, this index was 53%, 33% and 14%, respectively. Now going to the right side of the slide, we have gross profit and margin. In the second semester of '25 was a drop of 11% in relation to the second quarter of '24 and 3% in relation to the first quarter of '25, reflects of sales profile, as I mentioned previously. The gross margin was stable, which is very important for us compared to 32.2% of the second quarter of '24 and 31% of the '25. For the semester, profit was BRL 185.7 million with a gross margin of about 32.8%. On the next slide, we have the backlog result. The projects sold under construction that will be recorded at the results of the company according to the development of the works. We closed June with BRL 484 million of backlog revenues with a growth of 38.6% compared to '24. More than 7% of this value comes from Alegria Patteo Mogilar in Mogi das Cruzes launched in '24, Open Mind -- launched in Sao Paulo in the second quarter of '23 and Patteo Vila Mariana in Sao Paulo, first phase launched in the second quarter of '24 and second phase in the fourth quarter of -- so, the backlog margin was 26.8%. Now going to the next slide, the expenses. Our [indiscernible] were of BRL 22 million, an increase of 3% over the second quarter of '24 and 2% in relation to the first quarter of '25, highly influenced by the increase of expenses with staff concerning the readjustment of salaries. In the semester, general and administrative expenses summed 56% (sic) [ BRL 56 million ]. Commercial expenses in the second quarter were BRL 28 million, a 16% increase compared to the second quarter of '24 and 11% to the first quarter of '25. The expenses were BRL 54 million when summed up, 14% increase in relation to the first semester of '24. In the next slide, we have the net profit consolidated of BRL 2 million of the part of the controller. This result includes, in addition to what I mentioned, BRL 8 million equivalent to Alden, Figueira Leopoldo [indiscernible]. In the semester, consolidated profit were BRL 56 million, BRL 9 million belonging to the controller, the holding company. Now we have the indebtedness profile. We closed July with BRL 1.740 billion, a 13% reduction in relation to the end of '24. 50% of this debt is self-liquidated. The net debt, we closed the quarter with BRL 1.503 billion, equivalent to 54.3% of the net equity. This was smaller and this index is 1.5 bps lesser than '24. And in spite we had 0.7 bps, especially due to the lower volume of our own lendings in the second quarter of '25. As Henry mentioned, it was due to the deliveries of the quarter. Deliveries happened basically in May and June. So, the necessary time to have this onlendings. Now we have the cash generation. consolidated was BRL 35.6 billion impacted by the reduction of the own lending that dropped 11%. That is BRL 54 million compared to the previous quarter. In the non-consolidated, we had BRL 21 billion, highlighting Caminhos da Lapa, Reserva Caminhos da Lapa and Elo Duo Caminhos da Lapa. So, considering the consolidated and nonconsolidated, the total of the quarter was BRL 14.5 billion. And to close the presentation, we will stress our priorities. Focus on active commercial management with distinct strategies for the legacy of the inventory and new cycle, effective land bank management, prioritizing new opportunities and the sales of nonstrategic land that do not fit our long-term strategy. We also expect the delivery of 5 projects totaling BRL 1.3 billion. And these 5 projects are expected to be delivered in the third quarter. We still have time to perform the onlendings. Launches in strategic locations in Greater Sao Paulo and Mogi das Cruzes always aligned with our best market opportunities. And finally, we will continue with our disciplined cost management and deleveraging, cost management and especially in the deleveraging, ensuring profitability and financial sustainability. With this, we close our presentation, and we open the Q&A session. Thank you very much.

[Operator Instructions]

[indiscernible] How Helbor is prioritizing the capital allocation in new launches, acquisition of land and deleverage?

Thank you for your question. Let's start talking about land. The company is not buying land, not looking to new opportunities because our land bank is very robust and in strategic places. We are in a moment of recycling the land bank and sell some land that is not a priority for the company and focus on what we want. Only if we have -- we see something very, very special. If it was a swap agreement, we could add new land, but there is no need for that. Concerning launches, we have a very good discipline for this. Marcelo mentioned, we have a very low inventory. So, we need to launch to put more product on the shelf. This is the reality, but we are very selective. I'm not talking about capital, but technically, we could launch much more than what we plan. But we prefer to be more cautious because this macro economy, high interest rates. So, we are very selective to launch only what we are sure of a good performance. But good performance does not mean to sell during the weekend. A good performance is like the [indiscernible]. We have sold it almost everything, and we start building. So, this is our reality. I think I have answered your question.

[Operator Instructions]

Next question from [indiscernible] Any update about the mutual rescission in this [ tri ]?

Well, this mutual rescission is slightly high in this quarter is a result of our work with on lending. It's natural when you have the delivery of the project and on lending, you have a higher level of mutual rescission. Sometimes you have 15% of mutual rescission. Well, but you may say you delivered only 3 projects. Okay. But in the next quarter, we start to own lending process, and this generates a slightly higher number of mutual rescission due to our proactivity of approaching the clients. It's important also to mention that on lending is part of the business, especially when you are close to the deliveries, sometimes the person has a change in life, but the message here is that after the change in law, the issue of 50%, the mutual rescission is very low in relation to the volume of the deliveries. Another point; how are the banks doing according to this mutual rescission. They are doing well. We have a strong partnership with Bradesco, and we continue the onlendings. Everything is running smooth. Well, we are monitoring the onlendings and mutual rescission comes back in a very healthy way because the -- we are in a very important moment not to lose this sale structure. Sometimes, if I delay it, I lose this project. So mutual rescission are favorable because we have greater valuation to our inventory.