LPS Brasil - Consultoria de Imóveis S.A. (LPSB3) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and thank you for waiting. Welcome to the earnings webinar of LPS Brasil to discuss the results for the year of 2024. This event is being recorded. [Operator Instructions]. Before proceeding, we would like to clarify that any statements that may be made during this webinar regarding the business prospects of Lopes, projections, operating and financial goals constitute the beliefs and assumptions of the company's management. Forward-looking statements are not a guarantee of performance and involve risks, uncertainties and assumptions as they refer to future events and depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions and other operating factors may affect the future results of the company and lead to results that differ materially from those expressed in such forward-looking statements. First, Mr. Marcos Lopes will make the introduction and present the operating results. Followed by Francisco Lopes, who will present the results of CrediPronto. Then Cyro Naufel will talk about the financial results. And after that, we'll start the Q&A session. Now I turn the floor over to Mr. Marcos Lopes. Please start.

Good afternoon, everyone. I would like to thank you for participating in another LPS Brasil conference call in which we'll present the results for the year of 2024. Taking part in this presentation are our Vice President, Francisco Lopes Neto; our Investor Relations Officer, Institutional Officer, Cyro Naufel; and our CFO, Robson Paim. In the year -- the year 2024 began as a very challenging year in the real estate market with credit restrictions and high interest rates. There was an appreciation of the real estate market due to inflation and increased costs in the primary market for construction. However, from the second quarter onwards, there was a greater availability of credit in domestic market, boosting sales in the real estate sector, especially in the economic and high-end niches. Lopes had consistent results in the year. We participated in 197 launch projects with Rede Lopes stores. There was a setback in Sao Paulo because the master plan was reviewed, which created a backlog in licenses and approvals for new projects in the middle of the first half of the year, causing several launches to be delayed and even postponed to 2025. In sales, Lopes brokered BRL 13.7 billion, a volume 25% higher than the previous year. The company ended the year with 185 stores, of which 170 are franchises. Lopes is constantly assessing its operations, terminating some contracts that were not performing satisfactorily. Even with the decline in the number of stores and franchises in the year of 2024, the brokered volume was 26% higher than in 2023, reflecting a consolidation of the model. CrediPronto exceeded 2023 origination by 44% with more than BRL 4.1 billion and over 8,000 contracts. The joint venture presented a market share of 5.8% among private banks, demonstrating good strategic market positioning. The average portfolio balance reached BRL 16.8 billion at the end of 2024. Due to the good performance of transactions during the year, the company generated net revenue of BRL 192.3 million and EBITDA of BRL 64.4 million in 2024 with an EBITDA margin of 33.5%. After these initial remarks, I would like to move on to the presentation, starting on Slide 4 with the highlights of the period. Now on Slide 4. Rede Lopes' operations participated in 197 projects in 2024, reaching BRL 27.7 billion in launched volume, a figure 15% higher than that of 2023. The total transactions closed brokered totaled BRL 13.7 billion in the year, an increase of 25% compared to the previous year. CrediPronto's volume originated BRL 4.1 billion in contracts, which represents an increase of 44% compared to 2023. Regarding financial results, the company's EBITDA was BRL 64.4 million in 2024, 7% higher than 2023. The company's EBITDA margin was 33.5% for the year. Net income before IFRS increased by 11%, totaling BRL 40.6 million in 2024. Moving on to Slide #5. We'll comment on Rede Lopes launches in 2024, which totaled BRL 27 billion for the year, 15% higher than 2023. The state of Rio de Janeiro launched BRL 9.4 billion in the year, making the Rio de Janeiro market more relevant for the company. Sao Paulo launched BRL 10.4 billion, being impacted mainly by the review of the master plan in the capital of Sao Paulo, as I mentioned previously. On the map, we can see the locations where Lopes launched projects in 2024 in addition to Sao Paulo and Rio de Janeiro. Continuing the presentation on Slide 6, we see the results of transactions closed. Rede Lopes brokered BRL 13.7 billion in 2024, 25% more than in 2023. The company is currently present in 23 states with a total of 185 stores. On the next slide, #7, we present the intermediation of Rede Lopes by geographic region of Brasil. The state of Sao Paulo accounted for 41% of the volume brokered in the year, totaling BRL 5.6 billion, followed by Rio de Janeiro with 31% and BRL 4.3 billion. The other regions combined represented 28%, totaling BRL 3.8 billion with emphasis on operations in Parana and Sierra states. On Slide 8, we present the division of Rede Lopes intermediation broken down by primary and secondary markets. The primary market continues to account for the majority of Rede Lopes intermediations, representing 76% of the GSV intermediated in 2024 and 75% of units sold. In 2024, the average ticket for the primary market was BRL 826,000 and for the secondary market BRL 772,000. On Slide #9, we present the company's evolution in indicators related to Lopes Labs. In the upper graph, we see that organic visits to Lopes portal reached 11 million in the last 12 months view at the end of 2024, a volume 8% higher than 2023. Leads from organic searches generated by Lopes portal totaled 181,000 in the last 12 months view, 12% higher than 2023. These were my remarks regarding the operating results. I now turn the floor over to Francisco, who will speak about CrediPronto. And then Cyro, who will present the company's financial results.

Good afternoon, everyone. It's a pleasure to present the results of CrediPronto. Once again, we had significant results in 2024. We went from an origination volume of BRL 2.8 billion in 2023 to BRL 4 billion in 2024. This caused the portfolio to go up almost 10%, 9.6% when compared to the end of 2023 and the end of 2024, going from BRL 15.3 billion to BRL 16.7 billion, almost BRL 16.8 billion. And this shows that this volume originated in 2024 is the third highest volume in the history of the company. We had 2 prior record highs during the pandemic in 2021 and 2022. So we recovered and had a significant increase compared to previous years, and compared also to very busy years that were 2021 and 2022. This dynamic is very important, the credit dynamics. It's very important for the industry as a whole, and it has to do with SBPE volume of funds. And we've seen that in 2024, the overall funds went from BRL 737 billion to BRL 777 billion. And now in the beginning of the year, there is a withdrawal as it happened in the beginning of 2024. We see the same happening in the beginning of 2025. So let's wait to see if there is enough funds in savings so that credit could be granted to the market. The demand is strong. It is present. This will be accompanied by the dynamics of the real estate market during the year. There is demand for new units. So during the next quarters, we'll see the development of the market in terms of demand for new units. The production is high. There are many deliveries as well. So the composition of the inventory of units in the market is quite robust and the strategy of people who want to make loans is good because there's very low delinquency in our credit portfolios. So this industry is quite efficient in terms of having solid real estate credit. We see the average at 63%, the volume of contracts, more than 1,100 average contracts per month in this last quarter, which is almost 3x higher than the fourth quarter of '23. And the financed volume in the fourth quarter is twice the amount financed that's 200% above the fourth quarter of '23. In terms of results, what we have in terms of Slide 12, we recognize the results. So on the fourth quarter, these are the results of September, October and November. So we have the BRL 2.8 million, BRL 3.3 million. So it's quite solid. And compared to the previous quarter, we have grown. So BRL 29.4 million were recognized as profit in the period. And this is what you can see in this statement, profit statement. So we are basically stable, which is the recognition of 50% of profit plus costs we had. So these were the comments I had to make about CrediPronto. And I now turn the floor over to Cyro Naufel, who will comment on the financial results of the company. Thank you and see you in the next call.

Thank you, Francisco. Good morning, everyone. Now let's see the financial results of the company. On Slide 13, we see the behavior of the net revenue of the company, which totaled BRL 56.7 million in the fourth quarter of '24 and a total of BRL 192.3 million in the year of 2024 at the year-end that is broken down as we can see in the bar chart. 15% of net revenues comes from franchises, 29% from CrediPronto and 55% from our own operations. Moving to the next slide, we can see the performance of operating revenues on Slide 15, which company is in control of expenses, and there has been a variation of 5% when comparing the year 2024 to 2023, going from BRL 127.9 million in 2024 and BRL 122 million in 2023. In the lower chart, we see a continuous search for improvement in the company. In the year of 2024, we had the best performance of expenses per BRL 1,000 in transactions. So BRL 7.2 for each BRL 1,000 in transactions. So that's the lowest amount of expenses in the company in the last 15 years. On Slide 16, we see the EBITDA and EBITDA margin. Our focus has been on operational efficiency, keeping the margin above 30%. In 2024, we reached the 33.5% of EBITDA margin amounting to BRL 64.4 million. On slide 17, we see the impact of IFRS, especially amortization of intangible assets, which is deferred from -- these are noncash effects. This is why we suggest to analyze the results of the company without considering IFRS impacts for a better understanding of our performance. On Slide 18, we see cash flow and cash in banks. And the evolution of the cash balance showing that the company has kept control even in challenging quarters. In the fourth quarter of 2024, we had a cash ratio of 60 with a final balance of BRL 52.8 million, 69% variation upwards when compared to 2023. When we consider financial investments, the total balance is BRL 76.4 million, 13% above the final balance of 2023. And the company has 10.3 million shares available in treasury. These are the comments we had to present about the financial results. And now let's start the Q&A session. Thank you.

[Operator Instructions] [indiscernible].

Thank you all for attending this call. We end this call. The margins have been maintained. We have tried to maintain efficiency in the activity of our operations. CrediPronto had wonderful results and the company as a whole is trying to improve its efficiency. I thank you all again for attending and we'll be present here in the next conference call. Have a good afternoon.

The conference call of LPS Brasil has ended. We thank you all for attending. Have a good afternoon.