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

Good morning, ladies and gentlemen. Welcome to Helbor's Third Quarter of 2025 Earnings Conference Call. This video conference is being recorded, and a replay can be accessed on the company's website, ri.helbor.com.br. The presentation is also available for download. [Operator Instructions] Before proceeding, I'd like to emphasize that forward-looking statements are based on 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, the industry and other factors may cause results to differ materially from those expressed in the respective forward-looking statements. We have here Mr. Borenstein, CEO; Mr. Roberval Toffoli, CFO; and Marcelo Bonanata, Commercial Officer of the company. I'd like to turn the floor over to Mr. Borenstein. Please, you have the floor.

Welcome to Helbor's earning conference call of the third quarter. It's a great pleasure to share this moment with you. Today, I'm joined by CFO, Roberval Toffoli; and our Commercial Director, Marcelo Bonanata, who will contribute to the presentation and participate in the Q&A session. The third quarter of 2025 was marked by significant operational progress and the Helbor's strategy to strengthen its participation in projects, optimize its portfolio and increase value creation for shareholders and clients. I'd like to highlight the gross sales of the third quarter reached BRL 479 million, a 3% decrease in relation to the same period in 2024. Helbor's share was 66%. For the year-to-date, gross sales totaled BRL 1.6 billion, a 6.5% increase compared to the first 9 months of 2024, with Helbor accounting for 55% of this total. The total sales velocity, our VSO in Q3 2025 reached 16.9% and Helbor's shares VSO was 16.3%. Year-to-date, total VSO was 42.6%, in line with the same period of the previous year. Helbor's share VSO reached 37.5%. During the quarter, the company launched 3 projects, 2 in the city of Sao Paulo, Stay Moema and Collage Bela Vista and the third phase of Patteo Mogilar, in Mogi das Cruzes. The total net sales value of the launches was BRL 587 million, 93% Helbor's share. Year-to-date, 7 projects have been launched, totaling net sales of BRL 1.3 billion, 70% of which corresponding to Helbor's participation. In Q3 '25, 3 projects were delivered, Reserva Caminhos da Lapa, Phases 2 and 3, New Patteo Osasco, and Figueira Leopoldo with a total net sales value of BRL 731 million, 49% Helbor's. Year-to-date, 8 projects were delivered, with a total net sales value of BRL 1.7 billion, 51% of which was Helbor. Onlending in the quarter totaled BRL 610 million with 62% Helbor's, a 20% increase from Q3 '24. Year-to-date, onlending totaled BRL 1.5 billion, a 23% increase compared to the previous year. In financial terms, we ended the quarter with a net debt equal to 54.5% of the consolidated shareholders' equity, a reduction of 1.2 percentage points. This performance reflects our continuous focus on strengthening the capital structure and maintaining the company's deleveraging trajectory. As a final point, I'd like to highlight the sale of 2 plots of land in line with Helbor's strategy to divesting nonstrategic assets. The plots were Rua Alvarenga, in Sao Paulo with a sale price of BRL 18 million, representing 80.34% Helbor's, Rua Principe Ranier, in Campo Grande, Mato Grosso do Sul state with a sales price of BRL 14 million, representing 50% stake held by the company. Now I invite Marcelo Bonanata to present the operational highlights. I'll be available for Q&A at the end. Thank you very much.

Good morning. I like your participation here in our conference call. Good morning, Henry and Roberval. The first highlight here is our land bank, where our total land bank is BRL 17.7 billion, 62% of Helbor's part. We'll show the evolution where we have some important events. We launched BRL 3.7 million, and we sold 2 lands with totaling BRL 102 million, in line with our strategy of our land bank in cities as in the city of Cuiaba, Campo Grande and regions that we are no longer operating. So, this is a very important work. And we see that the company has not stopped. We acquired a piece of land here in Mogi das Cruzes. This is already approved for launching in next year. And the VGV, we reached [ BRL 11.0 billion ]. On the right, we can see that by segment, we have a concentration in average and very high and high levels standard and showing the diversity of the land bank we have in segment and products. The company is not niche in only one segment. This shows our trajectory. And just to complement, this land was acquired via Audi and with a swap operation. So, we sold 2 lands that we have a cash entering. These are the 3 launches we had in the third quarter, showing you what we've been announcing since last year. This year, we will recover the launchings. We need to recover it very cautiously, very high moderation. But always when we have an opportunity, we launch. We did 3 in the third quarter with 93% of Helbor's participation of BRL 587 million. The first one is in Moema, a compact product. This product, we will deliver -- 100 of the unit is already decorated. We have a place for checking. So, it's a very well-accepted product. We didn't have any stand, no decorated unit to show. We have today more than 30% sold. We see a very nice velocity in sales. Then in Mogi das Cruzes, we are launching the last phase of Alegria. Alegria was launched last year, and this last phase was scheduled for the first quarter of 2026. But with the velocity we sold in the 2 first phases, we anticipated the third phase because we created a good demand in the city. We see 100% Helbor share, this [ 180% ] and then Collage Bela Vista, neighborhood at Avenida Brigadeiro, we launched in the last weekend of September. We have 461 units. These are compact units for investor, but in this region, we also meet the final consumers' desire. We have already sold 30% of the units. All these develops with a good velocity. This is the main important point. And in the 9 months of '25, we launched 7 projects with a total PSV of BRL 1.3 billion, 7% Helbor's share. In the contracted sales, we increased 6% year-to-date. And then we had a drop of 3% in relation to the third quarter of '24, but we grew 2.5% in relation to the second quarter of '25, totally BRL 479 million. In the 9 months year-to-date, we have BRL 1.5 million sales against BRL 1.4 million. So, a 6% increase in relation to this 9 months of 2024. And also, we put the segments here under construction launches, and we have a balance here. We had lots of sales under construction and finished products, which is our focus, but also highlighting the launches, and we keep this proportion. And in the 9 months, we reached BRL 1.5 billion. In our commercial strategy, as Henry mentioned, well focused in our inventory. We launched with opportunities in our VSO is in line. It drops in relation to the third quarter of '24. But due to the launches, especially Collage that we launched in the last weekend with 461 units. So, we didn't have time to sell everything. So, over the period, we sold almost what we sold in the weekend. So that's the reason for this drop, but it's a good opportunity. And in the 9 months, we closed with 42.6% over 42.9% Helbor's, 37.5% of PSV, very robust, keeping our inventory low and generating just for launches. In total inventory, we have BRL 2.4 billion, which 98% is located in the Southeast region. And according to the standard medium high, 786 high, 681 medium, 556 ultra-high, 333, economic 24 and commercial, just a little bit 14, a total of BRL 2.4 billion and BRL 1.6 billion Helbor's share. It's important to highlight our strategy, especially related to the finished inventory and our legacy that will practically close in this cycle. In 2018, we had BRL 1.9 billion in ready finished product. And today, we have BRL 584 million. And of them, only BRL 12 million in legacy inventory. So, we are finishing inventory that unfortunately was created in mutual agreement. We had a high concentration of commercial and hotels, but we finish it. So, our inventory is concentrated in the end user and residential. We have most of them finished products. And this year, specifically big developments, which is normal to have this inventory, but we have a sales velocity that is also important, but only BRL 12 million. I hope that very soon, we can zero this. This is a legacy that came from the mutual agreements. And every sales is a very bad margin, and this is finishing. And the numbers show this. In the third quarter, we had 3 deliveries totaling BRL 731 million, 49% Helbor's share. One of them was Caminhos da Lapa. We always highlighted since 2016 in partnership with Tegra, we are developing a new neighborhood in this region, a new infrastructure of the streets in the region with lots of trees and investments in the region and a location where we see a growth development and a possibility of migration where people can live in the apartment, which size is a dream of the people with a better quality of life. This is what we've been developing with them. We have more than 2,000 units delivered. We launched a development in October. So, we are very happy with this location where Caminhos da Lapa is. And we delivered the last phase with BRL 306 million, another one in the city of Osasco, BRL 104 million, 7% Helbor's shares, a total success, medium segment well located in the city of Osasco. The interest rate increased a lot, and we were afraid of being more difficulty for on lending and mutual agreement. We had very few mutual agreements and we have almost unanimous satisfaction of our clients. This is a very good success and with the modernity that we are bringing to new projects. And the last product we delivered Figueira Leopoldo, a very ultra-high segment, BRL 321 million, 50% Helbor, located at Rua Leopoldo Magalhaes is one of the prime addresses in Sao Paulo. Since high segment is acute, you leave it with sale velocity, and we know that we'll have a fast velocity where the development will be totally delivered and well done. In the 9 first month of '25, we delivered 8 projects with a PSV -- total PSV of BRL 1.7 billion, 51% Helbor share. In the onlendings, we had 19% in relation to the third quarter of '24 and 44% in relation to the second quarter of '25. In the 9 first month, we grew 23%. Would you like to say something about this? Well, the onlendings are doing well, and the expectation is that in the fourth quarter, we will have more onlendings. That's it. And in the last slide, this is an overview, an X-ray of everything we have already delivered and will deliver 16 developments under construction with a total PSV of BRL 3.8 billion with deliveries until 2029. 86% of these deliveries are sold and 91%, we had the onlendings and the others third quarter, 69% sold with 61% onlended. In the fourth quarter, we have these expectations of 2 developments to deliver, and we are showing 2026, '27, '28 and '29, the expectations of this under construction developments. And that's my final part. Now, Roberval.

Thank you, Marcelo. Good morning. I'd like to thank your presence and let's see the financial highlights. Starting with Slide 15, looking at the net revenue on the left. In the third quarter, we had BRL 232.6 million, a 32.9% decrease compared to the same period of last year and 18% compared to the second quarter of this year. This negative variation is directly related to the sales mix since our revenue is recognized under the [ POC ] method that is based on the physical progress of the works. In third quarter, 40% of sales corresponded to units under construction, 35% of complete units and 25 launches. In this second quarter, the composition was 68% under construction, 25% completed and 7% new launches. So, in the third quarter, the net revenue was smaller because the volume of launches were very representative, 1/4 of the sales. For the year-to-date, the net revenue reached BRL 817.4 million, 15.2% lower than the same period in 2024, also reflecting the sales profile. In the first 9 month of 2025, the mix was 47% units under construction, 29% completed and 25% launches. While in the first 9 month of '24, this distribution was 49%, 36% and 40% respectively. Moving to the right side of the slide, we have gross profit and gross margin. In the third quarter, gross profit was BRL 70.7 million, a drop of 36.8% compared to the same period in '24 and 22.6% in relation to the second quarter of '25, reflecting again by the sales profile. The gross margin was stable at 30.4% in the third quarter. The year-to-date gross profit totaled 256% -- BRL 256 million, sorry, with a gross margin of 31.4%. Moving to the next slide. We discuss the results to be earned, which represent the recognition of sold projects and those still under construction to be recorded in the company's results as the work progress. We ended September with BRL 550.7 million in backlog revenue, 70.6% increase from the third quarter of '24. More than 70% of this amount comes from the following projects: Alegria Patteo Mogilar launched in the fourth quarter '24, Open Mind launched in the second quarter '23 and Patteo Vila Mariana also in Sao Paulo. The backlog margin of the third quarter was 26.4%. Moving to Slide 17, looking at expenses. General and administrative expenses, excluding depreciation and amortization was BRL 28.6 million, an increase of 22% over the third quarter '24 and 1.6% compared to the second quarter '25, mainly influenced by the rise in personnel expense due to the 5.5% salary adjustment resulting from the annual collective agreement signed in the second quarter '25 and the adjustment of fees. In year-to-date, general and administrative expenses was of BRL 84 million, a 10% increase. Commercial expenses in the third quarter totaled BRL 18 million, a 36% reduction compared to the third quarter of '24 and 36% compared to the second quarter of '25. This reduction is mainly explained by lower expenses for advertising and publicity commissions and sales stand. The year-to-date expenses totaled BRL 72 million, representing a 5% reduction compared to the first 9 month of '24. And this reflects a temporal treatment due to the cost allocation in the results of the company's projects. Moving to Slide 18. The consolidated profit of the quarter was BRL 13 million, BRL 500,000 attributable to the parent company. This result includes, in addition to what I have already mentioned, BRL 4 million in equity income, mainly from Figueira Leopoldo and Reserva Caminhos da Lapa. For the year-to-date, consolidated profit was BRL 68.9 million, of which BRL 9.7 million is attributable to the parent company. Moving to Slide 19, we discuss the debt profile. We ended September with a consolidated gross debt of BRL 1.8 million, a 12% reduction from the end of '24, driven by prepayments, renegotiations and new issuance with longer maturities. 50% of this debt is self-liquidating. We ended the quarter with BRL 1.5 million of net debt equivalent to 55.5% of shareholders' equity. This is 1.2 pps lower than the end of '24. Now the cash flow generation. In consolidated terms, we generated BRL 1 million in nonconsolidated, this was BRL 34.6 billion, highlighting Reserva Caminhos da Lapa. Considering both consolidated and nonconsolidated figures, the quarter's revenue totaled BRL 35.6 million. And to close the presentation, going to the last slide, we will reinforce our priorities for this year, focus on active commercial management with a specific strategy for legacy inventory and new cycle, effective management of the land bank, maximizing new opportunities and prioritizing the sale of land that does not fit into our long-term strategy. Remembering that in '25, we sold 3 piece of lands and completed the construction and guarantee delivery of 2 projects by December, totaling a PSV of BRL 331 million. Strategic launches in Greater Sao Paulo and Mogi das Cruzes in line with the best market opportunities. And finally, we will remain committed to cost management discipline and leverage reduction, ensuring profitability and financial sustainability. With this, I close my presentation, and let's go to the Q&A.

[Operator Instructions] The first question is [indiscernible] from Bradesco BBI.

I'd like to understand the dynamic of this weaker revenue that dropped quarter-after-quarter in a year that in spite of launches and strong sale. A second question, how this dynamic with minorities will impact the net profit?

Thank you for the question. This is Henry. In the first one, the revenue is well associated to the sales of new launches. Launches had a greater participation in the sales volume. And since we have not started the works yet, we didn't include this revenue according to the part. And the other question is relating to the minorities. Well, quarter-after-quarter, Helbor is showing that we have a higher participation. Marcelo mentioned this in the third quarter, the participation, the Helbor shares were 99%. And we see this number increasing because most of our land bank, Helbor has 100% positioning or a very significant position. This is related to our strategy of getting more revenue and also the leverage we can do over time.

This is Roberval. Just adding to what Henry mentioned, this quarter of '25, we had 25% of sales related to launches. In the third quarter of '24, we didn't have any launches. And this justifies this drop in the revenue.

[Operator Instructions] The next question is from Elvis, Itau BBA.