Lavvi Empreendimentos Imobiliários S.A. (LAVV3) Earnings Call Transcript & Summary

Welcome to Lavvi's earnings call for the second quarter of 2026. The presentation and comments on the results will be presented by Dida Horn, CEO; Sandra Attie, CFO; and Naira Pesce, IR Manager. There is simultaneous translation available on the platform to access click-on interpretation at the bottom of the screen and choose your preferred language. This conference call is being recorded and will be available at the Investor Relations website at ri.lavvi.com.br, as well as the slide deck that is to be used for this presentation. [Operator Instructions] Before proceeding, we would like to take the opportunity to emphasize the forward-looking statements based on the beliefs and assumptions of Lavvi's management on information currently available to the company. These statements may involve risks and uncertainties considering that they refer to future events that may or may not occur. Investors, analysts and journalists should understand that events related to macroeconomic scenario, industry and other factors could lead results to be materially different from those expressed in such forward-looking statements. Now we are going to start the presentation, giving the floor to Mr. Dida Horn. Mr. Horn, please, you may start.

Good morning, everyone. Thank you so much for joining. The second quarter has been a very important quarter for Lavvi. We had a launch that I consider a landmark for the company, Jardim da Hípica, the largest project in our history. It's a project that will really been unique plot of land in the front of Clube Santo Amaro. The exact kind of product that we want to be in place in the market. Customers responded very positively. We ended the quarter with BRL 565 million in sales, or 44% of the PSV launched. So I think this speaks a lot about the quality of the project. Of course, the macroeconomic scenario remains challenging. We have seen an increase in cancellations and we are monitoring this closely. At the same time, we see a very consistent demand for our projects, especially when we deliver well located projects and brands that add value. About Novvo, we also had a very strong quarter. Santa Marina, our most recent launch, ended the quarter more than 50% of its PSV sold and reached an SOS of 75%. This demonstrates that we still find a very healthy demand in the low-income segment. In the consolidated, we ended the quarter with BRL 875 million net sales, backlog of BRL 3.1 billion and gross margin of 38.8%, indicators that make us very confident about the future. On the financial end, we had a net revenue of BRL 495 million and net income of BRL 83 million. We keep renovating our portfolio and we have a Landbank of approximately BRL 9.5 billion PSV. Looking into the future, our vision remains the same. We are going to continue to address our projects with discipline to allocate capital in a way that makes sense. And we believe that this combination, good plots of land, differentiated products, good brands will permit the company to grow with profitability and to generate value to our shareholders. Once again, I would like to thank our shareholders and partners once again and especially the work of all Lavvi's team. Thank you very much. Now I would like to give the floor to Sandra, who's going to give you more details about the operational results.

Thank you, Dida. Good morning, everyone. Now on the operational results. In the second quarter, we had 2 launches that totaled BRL 1.4 billion of potential PSV, or 848 Lavvi's. On Slide 5, the first we much expected, Jardim da Hípica, biggest launch of BRL 1.3 billion PSV closed the quarter sold by 44%. So there are 2 residential buildings with 84 to 200 square meters and an apartment tower with units ranging from 21 to 57 square meters. There is an immersion room, decorated apartments and a wonderful square of 10,000 square meters that can be seen by -- from any product in the region. On the following slide, the first phase of Novvo Santa Marina in the region of Água Branca, City of Sao Paulo that closed 51% sold in the first half of the year. Then you can see our launches and sales. Compare year-on-year, there has been an increase of 8% in launches and 12% in sales, keeping SOS at 22% in the quarter comparing first 6 months, even though there was a drop of 6%. Sales were 3% higher than in the first half of 2025 with a highlight to Hípica, accounting for 64% of our sales. We have been feeling that the market is more difficult. Customers are worried with the INCC, pointing to 2 figures. So at the bottom on the right, you can see the cancellations of the first 6 months higher than previous periods with customers more indebted claiming financial difficulties. These cancellations are not concentrated on any projects and were not massive at the time of transfer due to lack of credit. In addition, 40% to 45% of the units were resold in the quarter. So we have a very healthy portfolio which makes it possible for customers to transfer despite the high income -- high interest rate scenario. We are trying to find alternative for our customers to keep them in our portfolio. On Slide 8, you can see our SOS for the last 12 months is still at 50%, very much helped by the sales of My Home, My Life, reaching 79% SOS in the period. On Slides 9 and 10, you can see our inventory closing at BRL 3 billion or 2.4 in Lavvi's share, 7.2% concentrated in 3 projects. One was delivered in less than 1 year and 2 this quarter. Now moving to Slide 11, and there has been the delivery of Greenview in the district of Butantã in the city of Sao Paulo, building with small units and the other one with 152 units with 152 square meters. And on Slide 12, we have Grand Square, 78% sold. Most of them have transfers moving on. We have 84% and 88% in terms of financial settlement. On Slide 13, you can see the Landbank, closing the quarter with BRL 9.5 billion of potential PSV or 6.9% Lavvi's percentage. BRL 1.5 billion is for My Home, My Life segment, representing 21% of the Landbank in our share. In the current scenario of high interest rates and high inflation, so it's important for us to operate in My Home, My Life, which seems to be resilient despite the more challenging times. Now I would like to give the floor to Naira for the financial results of the quarter.

Thank you, Sandra. Good morning. Now starting on Slide 15. Good morning. Now starting on Slide 15, Lavvi's second quarter financial highlights were net revenue of BRL 495 million, up 33% over the previous quarter. Adjusted gross margin adjusted, adjusted by [indiscernible] 37.6%. Net income of BRL 83 million with a net margin of 16.7% ROE of 24%. Backlog of BRL 3.1 billion with a gross margin of 38.8%. Adjusted cash burn of BRL 28 million or generation of BRL 72 million in the ex-land. Net debt was BRL 525 million at the end of June. Now moving to Slide 16. In the first chart, we see the revenue of BRL 495 million in the quarter, a growth of 3% in the annual comparison and 33% compared to the first quarter of 2026. The main highlight was the launch of Jardim da Hípica, which accounted for a large share of the sales in the period and increased the share of new sales in the composition of revenue. In the first 6 months of the year, net revenue reached BRL 868 million, 6% higher than the first half of 2025. In the second chart, the adjusted gross profit totaled BRL 186 million with a margin of 37.6%. In the quarterly comparison, this growth reflected mainly the higher volume of revenue with emphasis on Santa Marina. In addition to the higher gross profit, we had margin expansion in the quarter going back to the levels of 2025. On the right, we can see the negative financial result by BRL 3 million in the quarter. This performance mainly reflects the increase in financial expenses after the issuance of the CRI launched at the end of 2025. On the bottom side, the SG&A totaled BRL 27 million. The increase compared to the previous year is mainly related to expansion of the workforce to support the company's growth. In the semester, we also had investments in systems and technology to improve internal processes. Subsequently, commercial expenses totaled BRL 49 million. This increase mainly reflects the investments made in the promotion of Jardim da Hípica, which had a comprehensive communication strategy than other of the company's launches. In addition, we had high expenses related to ITBI and registration of units included in My Home, My Life because of the launch of Novvo Santa Marina. Finally, the net income attributable to controlling shareholders, BRL 70 million with a net margin of 16.7%, especially by commercial and financial expenses. Moving to Slide 17, we can see that the company has a historical evolution. In the last 12 months, Lavvi reached approximately BRL 1.8 billion in net revenue and BRL 361 million in net income. Another important point is the gain in the relevance of Novvo, which has been increasing share of the company's revenue and reinforcing our strategy of diversifying our business. On Slide 18, we've seen an annualized ROE of 24%, a level that remains quite healthy and reflects the company's ability to generate value. On Slide 19, you can see the backlog. Revenue from backlog sales ended the quarter at BRL 3.1 billion, up 21% year-on-year and 11% compared to the previous quarter. The gross margin -- the backlog margin reached 38.8%, the highest level in recent years, mainly reflecting the launches of Jardim da Hípica, Novvo Santa Marina, Novvo Vila Prudente and the [indiscernible]. This represents approximately BRL 1.2 billion in future gross profits to be booked over the next few years as works evolve. Going to Slide 20, the company recorded adjusted cash burn of BRL 28 million in the quarter, excluding dividends. In ex-land, there was a generation of BRL 72 million, reflecting the good operational conversion capacity of projects under development. We ended the quarter with a net debt of BRL 525 million and leverage of 3.6%. Finally, on Slide 21, we reinforce that the third installment of the dividend approved by the Board of Directors will be paid on August 14, 2026, totaling BRL 70 million, continuing our strategy of generating and paying out value to our shareholders. Thank you very much for your participation. And now we are open for questions and answers.

[Operator Instructions] The first question comes from Elvis Credendio from Itaú BBA.

you had a very successful quarter in terms of your launches. But the mid- and high-income market as a whole has been deteriorating. We've seen the performances getting worse in Q2. How confident are you with the pipeline for the second half of the year, considering the slightly more challenging market? Are you going to make any changes? And still on that, I know it might be too early to think about 2027, but thinking about the macroeconomic scenario, what are you thinking in terms of volume, of product mix? So are you going to increase My Home, My Life? So can you tell us a little bit more about this.

So there are some mid and high income segment launches in the second half. And despite the difficulties in the market, we are very confident about those launches. We believe that we have land at very differentiated locations with very good projects what we are going to launch. We have a lot of land in Moema, Very good position, big size. So our theory when we have something that is very good even at very difficult times, we can sell such as Hípica that we have seen hundreds of units at a very difficult time in the market. So we have very, very good locations of sale places. And the other one, that's a lot of land that we bought from a hospital. It's right in front of a hospital. There are lots of hospitals around it, and we are focusing on this public. So we think that we have differentiated products and plots of land to sell even at difficult times. About My Home, My Life, yes, we have increased the operations. We are doing very well in everything that we have launched. So we want to increase and we are very much focused on buying land. We have lots of plots of land being negotiated with a higher SOS. So we think that very soon it's going to get to 1/3 or even 40% of our sales will be with My Home, My Life project.

Next question comes from [indiscernible] Gabriel Moreira from XP.

I have 2 questions. The first is about low income sales .Do you see any bottleneck, especially in July. If there is a bottleneck, whether this has affected the pace of transfers and the Hípica. So -- do you have a schedule for future phases of the project?

Gabriel, this is Sandra. Thank you very much for the question. I'm going to mention the transfer to banks. We are not seeing any bottleneck in our transfers. So sales are taking place at a very good speed and transfers are going on normally.

And about Hípica well, about Hípica, we have launched lots of things now, this semester, many large units, and we have recently opened a unit with small units. And our expectation is to have new launch in the beginning of next year. So our expectation is to launch in the first half of the year that are units that have been very well sold. The best one, 85 square meters, and we have more units like that. So our strategy is to focus on those launches next year. And in this manner, we are always active in projects such as [indiscernible]. It's not a sprint, but it's a marathon. We are selling and selling and selling all the time. As there are new things in little by little, we can keep -- always have novelties. And so we want to get the units that we think that are going to be very high. And then you can attract more sales for the project as a whole.

Our next question comes from Herman Lee from Bradesco BBI.