Moura Dubeux Engenharia S.A. (MDNE3) Earnings Call Transcript & Summary

Good afternoon, everyone. We now start the presentation of results for the third quarter of 2024 of Moura Dubeux. I'm Alan Aquino and to present the results today, Diego Villar, CEO; Diego Wanderley, CFO; Diogo Barral, Director of Investor Relations. [Operator Instructions] I'd like to also remind you that any declarations that may be made during this conference based on premises of the directors of Moura Dubeux. The future consideration are not guarantees of this performance as they involve risks and uncertainties depending on factors that may or may not happen. Having made this disclaimer Villar, please go ahead.

Good morning -- good afternoon, everyone. Welcome, once again. It's a pleasure to be once again here presenting third quarter results for 2024 for Moura Dubeux, a year which certainly has been concentrated as the best in the history of the company in our 41 years of existence. In the third quarter, we brought records, both operationally, launches, sales, but the most important we bring is a record of profitability as well, bringing something that we have already brought with consistency informing the market where the company would get to and what's the size of our potential market. In fact, in the message from the administration present in our release, I talk a little bit about that in relation to the size of the market in the Northeast. The size of the condominium market during many years, we were questioned by the market in general, how deep the real estate medium [indiscernible] market was here in the Northeast. What is the size that Moura Dubeux is able to operate in the condominium of [indiscernible] regime. Now 5 years later, closing in December part cycles of presentation of results, we've started to build the confidence not only in Moura Dubeux, but in our market. We see that some highlights that I'm going to mention and highlight to you. I'm going to let Diego Wanderley and Barral explain further ahead. Both the operations, both financial numbers, and I'll be back at the end for the Q&A. We launched in the first quarter -- in the third quarter of '24 BRL 1.1 billion in net PSV. If we look at analysis for the industry reached BRL 2.5 billion in the last 12 months. And of this BRL 2.5 billion, BRL 2 billion were launched in condominium and [indiscernible] in the operation regime. This is an important point to point out both the launches in the third quarter and also in the vision of the last 12 months. In a disciplined myself, Diego Wanderley have explained to you that Moura does not operate in the limit of the capacity, both for execution as well as principally for the market in the volume of launches and sales used as a basic trigger for the making of decisions. What size we're going to reach in the next years. The next point is obvious, to try and enchant the client, to price him in the execution of the project. The other one is to not leverage the company. The decision for us is not based on the size of the market because today, we believe that the market is bigger for more debate than that, which we have been operating. We're cautious, did not generate any leverage in the company in a cycle of recurring dividends, which we have now begun starting in November. So much so that we are launching BRL 1.1 billion and selling almost BRL 1.1 billion in the third quarter in this strategy, lower leverage and lower risk, we prefer to take us to limit the size of the market in the condominium -- post condominium model. As you can see here, in the last 12 months, we launched BRL 2 billion in PSV, net PSV in the condominiums, kind of post condominiums and we look at a photo of adhesions to this type of business model, we reached BRL 1.6 billion in the last 12 months. Here, it's important to point out what we see -- some of these points when I commented in the message from the depth of this market. In 2019, when we operated only in the condominium market only in receive, we talked about a market of BRL 400 million to BRL 500 million just for the condominium model. Over time, not only did that market grow as well as 2 new avenues grew open for this type of business. One, for the expansion into the Beach Class into the beaches. Diverse projects is third quarter with the launch of Beach Class in the closed condominium model, almost the totality of these markets. These projects use the condominium model. When we left from BRL 400 million to BRL 1.6 billion in sales -- annualized sales, quadrupling the size of this market. Of course, when we look forward, we're not planning the company for BRL 1.6 billion condominiums because this could be seasonal. Over this market is certainly no smaller than BRL 1 billion based on what we've been producing in recent years. So it raised level of launches. We also elevated the level of sales. Just in the last 12 months, we had BRL 2.3 billion in sales -- of net sales, BRL 1.6 billion in the condominium market, BRL 636 million in corporation or development. And just in the third quarter, BRL 1 billion, we sold what we launched, which shows that we are -- we have not -- as you can see, the PSV of the last 12 months of the quarter, any period of time that you look at, you'll see that we have been doing ourselves in sales. In PSV, 53%, one of the best in our segment with those listed on the stock market, BRL 9.3 billion in Landbank, which we would also like to point out the Moura Dubeux, which is positive news, whether they be operational and financial, but also the quality of the product in the market has been able to very quickly replace our Landbank that we've launched. We launched BRL 1 billion and the Landbank grew, remains stable because we're very fast and able to replace this Landbank has been developed. A significant part is with physical swaps, financial swaps and a smaller part in cash, strengthening even more our capacity of low leverage, high profitability and return on capital by the stockholders of the company and also an improvement of profitability of our projects. We reached in the third quarter BRL 502 million in net revenue, which is important to us, what we've been signaling to the market and that you understand very well that as we have been winning revenue and maintaining our expenses stable, we've been improving the efficiency of the company, making it possible for us to have a higher level of profitability. Just to give you an idea, our G&A compared to net revenue in the third quarter reached 5%. If you look carefully and see how much we've had in the way of administrative expenses in the third quarter of '23 compared to the third quarter of '24, not even was up less than inflation, showing how much we are constantly after operational efficiency. We reached a number of almost BRL 90 million just in the third quarter, BRL 89 million of net revenue, net profit, which brings us in the last 12 months, BRL 240 million in net revenue -- accumulated net revenue and growing, improving return on our equity and improving our net margin and then growing even more the profitability of the company. This number has been advancing positively. In the second quarter, after the period in which we generate -- which we burn cash instead of generating, but now we also generated cash, taking the net revenue -- net debt of the company down to 4.2%, which is all very, very low. And we initiated my conversation with you showing our commitment with low leverage. The growth of Moura Dubeux based on what is marginal or exceeded the low leverage, we don't have any net debt above 20% compared to the net equity and the payment of at least BRL 100 million in dividends annually. Starting on November 22, there will be the liquidation of BRL 55 million in dividends, which represents BRL 0.65 per share. Now starting we have virtual payment of -- every 6 months payment of dividends for Moura Dubeux. Obviously, given conditions predefined that we have today a good cycle of projects, excellent sales, the low level of cancellations. So we're very confident that this will be the first of many payments of dividends. And the growth of Moura Dubeux, occupying space and the limits of mood and incorporate traditional development model, we are deleveraging and high profitability, and that's how we works our mood and our condominiums and our traditional corporation business, and development business. We are composing what will be the Moura Dubeux of the next 5 years. It's important to talk about the next 5 years because we now closed in 2024, 5 years as a publicly held company, 5 years of growth cycles, but what's more important, stability and margin match image and predictability of the market. Next slide, please. Next slide, please. In the third quarter, we had 4 launches from the left to right, Trairi 517 in a closed condominium model in Natal, PSV of BRL 92 million. After that Casa Mauá in a condominium model in Fortaleza with BRL 201 million PSV, and Infinity Salvador closing the cycle of the land of the [indiscernible] Hotel, which we launched in the second quarter and now we're building the most residential and business complex. And finally, Beach Class Manguinhos, also closed condominium in the southern coast of Pernambuco and [indiscernible] BRL 377 million with a PSV of BRL 409 million. The sum of these BRL 2.1 billion, as I mentioned on the previous slide, BRL 1.1 billion on the previous slide, showing how we will very quickly develop products. Remembering that we acquired the [indiscernible] in December of '23. And by July -- in July and now in the third quarter, we already have the launching of the entire complex development sales and improving the profitability of the project and selling very well, highly -- has more than 70% sold and the business part is already 40% sold in a very short period of time. Next slide. We should now launch in the fourth quarter, we've already launched the Candelária Mood in the city of Natal. Second in the BRL 117 million for Mood Kennedy in Fortaleza in practice, our fourth Mood in Fortaleza, BRL 147 million of PSV and the Mood Costa Azul of BRL 173 million of PSV and Moura Dubeux closed the year with BRL 2.5 billion in PSV -- net PSV launch. Our sales are heading very close to that as well. We're making good progress with the good performance of the sale of these projects. Next slide. I wanted to talk a little bit about our Mood project. In less than 2 years, in a presentation like this, we talked about the launching of this new company belonging to Moura Dubeux. We contextualized the segment that we would operate and why we were operating in that segment. The middle class is affected between income, payment capacity, payments products, which is between BRL 6,000 and BRL 9,000 per square meter, fourth level project, the fourth of the SPTA. We developed a construction model and this photo exemplifies well ARBORÊ just a few months away from delivering it. It was begun at the end of 2022, a project which has 90% of its construction done, excellent sales and what has the best its reality is anyone where you look was better than the projections [indiscernible] floors has already begun construction and Mood Kennedy on the other side of the street. We can see that Mood in less than 2 years has 4 projects launched, BRL 1 billion in PSV, 41% VSO in the last 12 months. This including, as I showed you, Mood launches, showing that there is space to accelerate even more. We have BRL 3 billion Landbank distributed all the cities in which we work, starting in the first quarter of next year. We have Mood in 7 of the 9 states in which we operate in the Northeast. So now we've been quick in developing a new company, a new model business model and fast in launching and fast in selling and executing. Next year, we already have 3 moods being delivered to add to the ARBORÊ. So with that, I close my highlights of the presentation. I pass it over one more. I meant to talk about our deliveries for 2024. We delivered 8 projects with BRL 811 million in PSV delivered in the first 11 months of the year. The 12 deliveries this year, we saw 4 more deliveries this year, which will be the Beach Class in Pernambuco, [indiscernible] Beach Class Meireles in Fortaleza and Boa Viagem. They have in common that they're ahead of the projected date and adding them all together, PSV for the year with a higher level of profitability than we had earlier, some more, some less. But the most important thing is that when we add it all together, we have good quality of receivables, which gives us comportment for this next cycle of generation -- cash generation for the company. And now I, in fact, close out my first presentation and pass it over to Barral to talk about the operational highlights and then Wanderley to talk about the financial numbers, and then I'll be back to talk to you at the Q&A that you may have for us at the end.

Thank you, Villar. Good afternoon, everyone. Now we're going to go into detail about our operational data, beginning with our launches. I think the events during this quarter, as was commented here at the beginning of the presentation, with a relevant volume, we can focus on the right-hand side. When we look at the accumulated for 9 months, the company launched almost BRL 2.1 billion, an increase of almost 80% in relation to the 9 months of the previous year. Looking at sales, we also see a level in the quarter as the event as was mentioned, we can look at the right-hand side, our accumulated for 9 months, we got to almost BRL 1.9 billion in sales, represents an increase of 72% in relation to the 9 months -- of the same 9 months of '23. Composition of our sales, when we look at -- we accumulate the development, the condominiums and close condominium, we get to general sales, BRL 1.8 billion, BRL 1.8 billion, and we get to a sale of BRL 1.5 billion with the cancellations in the lower graph, we improved compared to the second quarter, an indicator improved. We had BRL 75 million and represents 7% of our sales. But what's important to remember when we present a breakdown of these cancellations, it was -- or either there was just a change of ownership or migration between units, and it starts to represent 1.3% of our gross sales, which shows that we are continuing at a healthy level when considering our operations here. PSV, as we mentioned at the beginning, what we've advanced and we've got to consolidated PSV in the last 12 months, we got to 53%. When I look at this quarter in advance of... PSV in the quarter, it grew quite a bit, a significant improvement going from 32%. And down below, we have the PSV of launches, which continues at a very good level, 57% in the last 12 months and in the quarter, 45%. The stocks, which I think is important to comment here, even though we have presented an increase in our volume, which got to BRL 2.280 billion at the end of the first quarter. In second quarter, we were able to reduce that amount from 15 to 12 months of coverage and with units that are already done, representing only 5%, a level that we have been maintaining in our recent quarters. On the right-hand side, we have a breakdown region by region. You see there's a bigger concentration of our stock in our principal cities, Pernambuco, Ceará and Bahia. And down below, we see the type of project where we have basically happen to have 50% in stocks are in corporation development and the other part in our closed condominium model. Looking at the end of our operational data, as Diego mentioned at the beginning, it was very fast in recomposing our Landbank. We launched BRL 1 billion and was able to recompose the Landbank with BRL 1 billion, the same level of PSV, BRL 1.3 billion, representing 58 plots. The majority acquired through physical swaps, projects underway in the second and third quarter, 56 projects with 20 of them in incorporation and development model and the rest in the condominium model. Of this 56 projects underway, 48 are projects under construction right now. Our deliveries have also very detailed at the beginning. We had 8 during this year of 2024 and we have 12 for the year. We have 4 deliveries still to be made this year to close out the year. And to conclude what we had projected for this year of 2024, 4 of them in the incorporation model and 1 in the condominium model. I'm going to pass it over to Wanderley to talk about our financial indicators. Wanderley?

Good afternoon. We're going to continue now with our net revenue, which closed the third quarter with BRL 502 million, 66% above the 3 quarters -- third quarter last year and 38% above the second quarter of this year with a very much pushed by sales in the period and the recognition of the residential project in the Infinity and the Bahia project, which we launched in the second and third quarters. In the accumulated for the year, year-to-date, we closed with BRL 1.2 billion, 38% above last year, both in development as well as condominium growing. The corporation model, the development model at a more stabilized level in the recent quarters and the condominium model growing well with the recognition in the accumulated year-to-date, the last 12 months, almost BRL 1.5 billion in net revenue overcoming the total from last year of BRL 1.1 billion, showing the revenue at levels closer to what we have been doing operationally. And as we have been mentioning, we expected to get BRL 1.5 billion or a little more this year, and we're continuing at this level by the close of business in 2024. Looking at the net -- at the gross profit, we look at the most capitalized in the third quarter was BRL 117 million, almost 50% more than the third quarter of last year, 14% bigger than in the second quarter of '24. This growth in the profitability in the quarter, which had already been very strong for that quarter was even better due to the recognition of the returns of the 2 projects, which I mentioned previously. And this wind up influencing our margins looking at a piece of land that we acquired for 100% cash and any dynamic of recognition when it's purchased in cash, we recognize it both the cost as well as the revenue with the profit being the difference. And when it's a swap, it's only the difference to our results. So in this quarter, we had this one which was 100% cash, which had an impact on our margin, raising our nominal gross profit. So we finished the quarter with 34.43% margin for the year, 35.9%, 36.3% higher than the 9 months of 2023. And we look at the breakdown this year, 44% is from development, 56% from condominium and the gross margin in corporation has been improving in this quarter, and we've seen an improvement of 1 percentage point, and we continue with this routine that we have been commenting to looking -- trying to reach 30% and with the condominiums reaching 43%, a little bit below what we usually see due to the acquisition of land that we had to recognize it for cash. The gross profit in the last 12 months is more than BRL 500 million, which is what we have been running -- a level which we've been running the company. So we expect for the end of the year -- so we're at this level of profitability, which are very interesting and compatible with the operations of the company. Looking at the topic of expenses on the left-hand side, the commercial selling expenses reached BRL 47 million in the quarter, a representation of 4.4% of our sales. In this quarter, we had a large number of sales and part of those expenses are in the commercial has been diluted over the quarter. On the right-hand side, we bring the administrative expenses. We're quite a bit in line with what we reported in recent quarters, BRL 25 million. And we saw a large reduction, especially in relation to sales. Representativeness of this expense in relation to sales went to 2.3% and we look at this in relation to our net revenue, 5% of the whole operational increase -- income of the company. Following along with the EBITDA, the capitalized interest, we closed with BRL 91 million, a margin of 18.1%. In the last 12 months, we have 18.9%, a margin of almost 19%. If we look at the year, the 9 months for the year, we have BRL 235 million in EBITDA, 50% more than last year and with a margin coming close to 20%, very close to 20% been growing and improving on our operational side and the expenses are a little bit more fixed. So we've been gaining scale and increasing our margins. Net profit to close the financial statement. We delivered BRL 90 million in the third quarter with a net level of 17.1%, which gives us BRL 240 million in the 12 months, an ROI of almost 17%. This has been growing. We've been anticipating this that our return will increase especially with the beginning of the payment of dividends that the tendency is for this ROI to be growing. And we look at the year, BRL 206 million in net revenue overcoming the net revenue of last year, which was BRL 122 million in 9 months. And for the year as well, the year 2023, we offer more than BRL 206 million in the first 9 months. So we should overcome well at the end of the year, we should overcome well what we did in 2023. We look to appropriate going from development, we closed the quarter with BRL 266 million with a margin of approximately 34%. The level of profitability fell due to the accelerated rate of construction and the cycle of deliveries. And with that, the volume went down a little bit, but we see that as well in the condominiums. The margins fell a little bit due to the mix of projects to deliver and we have to recognize this in our results, appropriate in our results with a margin slightly below the average, but still very healthy as compared to recent quarters. On the right-hand side, we have the closed sales of BRL 38 million, a growth of 15% in relation to the previous quarter, quarter-on-quarter. And the administration fees for the condominium [indiscernible] for the closed condominium model, 20% of growth in relation to the previous quarter, increased by the number of condominiums launched in that period. Getting to the end, the last slide to talk about the generation and cash consumption. One more quarter of generation of cash. We're anticipating this would be the last quarter of cash burn with the cycle of dividends. Actually, we were surprised with the sales, we were able to contribute to our cash position. So we were able to generate BRL 23 million and this generated for 2 consecutive quarters, and we closed the third quarter with BRL 64 million in net cash, 4.2% of our net equity, very healthy indicator, which left us comfortable in increasing the distribution of BRL 40 million that we were planning, and we want up distributing BRL 55 million in dividends without changing the goal of the maximum rate, which we see for the company. With that, we close our results and pass it back over to Alan to take care of the question and answers and take care of your questions. Thank you.

Okay. Now we can start the question and -- question and answers. [Operator Instructions] The first question is [indiscernible]. I would like to know what is the expectation for launches for condominiums for next year. And if we have projects -- major projects such as the one in Salvador for next year? And the second question is talking about the relation of cash and the payment of dividends. If they would conform with the generation of cash, if we see the possibility of paying more dividends than the BRL 100 million, which were -- which were mentioned here?

Okay. As far as the first part of your question. First of all, good afternoon. We should launch next year more than BRL 1 billion in closed condominium projects. Obviously, during these 5 years, we've never given guidance. We always say that's an expectation of the market. Our focus on low leverage and high profitability for the company. Probably, we will try to give some guidance next year in the limit of the condominium model, again, working with a probably a ceiling of BRL 1.5 billion and a floor of BRL 1 billion or BRL 1.1 billion in launches per year. If we can, if its market, it is clients we will continue. BRL 1.1 billion seems very realistic, no problem with the products that we currently have. It's something that we should expect in this range could vary by 50%, but that's how we have always tried to educate you guys in the market. And yes, we do have large projects well developed in our expectation. I was commented to you about several opportunities, the launch of a 5,000 square meter property that we acquired in Pernambuco, in Fortaleza. We're building this project with [indiscernible] architecture firm. But at the current moment, the biggest -- the biggest architecture with international visibility, project of 2 towers, 2 condominium towers on a property which we're planning for condominium with a gross PSV of BRL 1 billion and we should have BRL 700 million, BRL 800 million. We have scale for that scale of the auto in Salvador. Second part of the question, we prefer always work with what we're strong believers in what's going to happen. We internally work as hard as we can to surprise you. Nobody was expecting BRL 55 million in dividends. No one is expecting cash, much less BRL 1 billion in net sales in the third quarter. We prefer to surprise but we can give as a signal that we've always said to the market in 12 months, November to November, BRL 140 million in dividends. As of the third quarter, we observed there was an improvement in the cash generation of the company. And I remind you all that in all of the parameters in the company we utilize to project the next 5 years and the company cash is as conservative as possible with cash on hand. Since we've opened our capital, we've been able to perform our cash burn better than we had projected. So the space, we will or if the stockholders decide to distribute another option to occupy more space in the market and operational capacity in the segment of products that we believe will not generate exposure, neither cash or risk for the company or for Mood. So we believe, and I hope I've answered your question. I hope I've completely answered your question.

[indiscernible] Raymond from Bradesco. He asks 2 questions in fact. He asks about the fall in the gross margin and the effect of the turn of the condominiums in our margin. And the second question, how has the demand been for Mood products?

I am going to answer this but Wanderley, if you want to add on, please feel free. Good afternoon, as far as the first part of your question, Wanderley mentioned this part, I believe the margin of Moura Dubeux is very stable. Obviously, seasonally, it may suffer a variation of 2% or 2% up or down due to the mix in the condominium project. In this condominium model, the land, which produces the authorization was acquired through a swap or for cash. Specific cash of the third quarter, we had a significant complex in the Othon project, whether it be through the Othon or the Infinity. And this land, we gave this explanation at the time of the acquisition, it was 100% cash deal in the auction of the bankruptcy of the Othon company. We added also the taxes that the company owed with reference to that land. So we capitalized a lot of resources in that land that when we pull that up in our revenue, and we saw the real cost of the land. Naturally, this gives us the margin of the condominium to a lower level than that which we usually see on the land is 100% swap, which is what happens in the majority of the [indiscernible] in the condominium model. So we don't -- the swap does not enter into our financial statement. When it's cash, it goes into the financial statements. This had a majority of the effect on the marginal reduction of our gross margin. So we should not expect the recurrence of this. It was the effect of a large project, which required a lot of cash and caused a variance in our margin, but nothing that worries us whether it brings any type of change in the gross margins in Moura Dubeux. As far as mood, I think your question specifically was how the demand has been. Mood products have been advancing quite a bit. We grew by BRL 1 billion with 41% of PSV. The only product in Mood products that we see the performance is the same as the viability, which are above the normal in receive. And again, we're used to badly discuss a better cut getting such good returns. So when we see something that's less, but we think it will find it strange, but we're very comfortable part of the equation, part of the segment and waiting for the keys to pass over to the purchases just as we had planned, the viability, if we add them all together are better, and we're -- and we believe that mood will continue to grow.

I have a question from Antonio [indiscernible] from Santander. He has 2 questions. Firstly, he asks about how is the appetite of the bank for the concession of co-funding for the SPP? And how is the percentage of clients who opt for a passthrough at the projects under construction? And what is the expectation of Mood for 2025?

I think I can answer that one. In relation to the appetite of the bank, all of the incorporation products, development products that we have were contracted with the FTDS. We have seen a concern in the market about this. And in fact, we were accompanying this with our commercial partners and the banks. We still don't have any -- we haven't felt any effects. There were specific questions that we were able to look at savings accounts, depending on the products, it can be just by the ADI, but we don't have any problem to complete the with the companies for our projects. In relation to Mood, we've been saying that it was more or less half and half, half to half would be the clients signed at the time of construction and wait for the actual occupational license as we've had a lot of resistance from clients. More than half are passing this after the delivery and a little bit less than half paying during the associated phase in the construction phase. We make it possible for them to finance 100% after the issuance of the residential license. However, it's something that increases the results overall. We always try to operate at the limit however today, we're not able to do 100%. We say we're doing a little bit less than half. And the expectation of launches, we're very confident that the -- all the projects of Mood are well above the viability levels. We delivered half, which is doing very well with the financial cost versus the cost of launch. And so the perspective is really good, very strong demand at the end of the line. And so we believe that this -- the Mood operation will grow in the 2025 period.

[indiscernible] Safra Bank. I had 2 questions. I think the first one is about the man of the pass-through and the difficulty of clients. I think you already answered that. But the second question is the expectation of cash generation next year for the company due to the 20 deliveries that are planned. And he wants to know how this gets along -- goes along with the other parts of our plans.

Well, in relation to the first part, I think I already addressed that well very well. We will have no problems. I think we always have a plan B if necessary. We created recently several partners in funds if we needed resources if the resources are difficult to find. But as far as the rates, we have the same level of rates and the cost of funding of the Moura. At the beginning after the IPO, we were capturing CDI at a more expensive spread. And in the last -- CDI lower, closer to what we see as the ideal rate. As far as the generation of cash for 2025, the deliveries in 2025 -- we're going to continue in this level. Today, we're way below the ideal level to run the company. We hope to run between 10% and 20% with 50% being the ideal point where we're able to improve our returns without running any risks for our stockholders. So we should be running at this level and distribute dividends as in accordance with the chgram, which you mentioned here. We're going to be holding back any launches if necessary so that the net debt will not grow beyond this 15% level. In relation to the generation of cash and the deliveries most of our deliveries were condominium model. There shouldn't be a big pass-through as it was last year in the second half of this year, which was a period of strong cash generation. So we're going to have very positive for next year for the [indiscernible]. The third quarter, we closed with more than BRL 400 million in brand to receive. A lot of this will be received in 2025 and will contribute for us to be able to maintain this cash level stable and to grow the profitability of the company with these launches. That we've done here when a company always surprises us, especially in the question of cash. When you look at the -- look at our most recent conversations, everything that we planned, we've come in better. The operation has already done better also because we're very conservative in relation to our cash. So in 2025, it's very comfortable in our planning. It's almost completely contracted, and we are continuing our operational side and doing what we've been doing.

I have a question from [indiscernible] from Itaú. She asks what are the perspectives for Mood and if we were to think of entering the [indiscernible] market, the low-cost residential market.

Good afternoon, myself Nossa Villar, as far as the growth of Mood, we believe that this is a market that without any difficulty, we can operate between BRL 1 billion and BRL 1.2 billion per year. On average, it doesn't make much difference from the city that we operate in, maybe 2 Moods in the big cities such as, Salvador and Fortaleza, not necessarily 2 at a time, but 2 in Fortaleza to reach between BRL 1 billion and BRL 1.2 billion annually. The size that we don't see any difficulty. We've grown very quickly in the last year. We have BRL 1 billion already. And so we're not concerned about that. If we get BRL 1.5 billion of condominiums and another BRL 1.2 billion in mood, we're talking about BRL 2.3 billion to BRL 2.7 billion between condominium and Mood, not including the traditional development sales. And answer to your question about the MCMV, we've done various studies and internal reflection due to the fact that Mood is a model -- a construction model identical to the MCMV, especially in the third band fundamentally, it has a cost of construction, which is not so far from the third level of MCMV. However, the price, which is at the fourth level. Some units get closer to BRL 350,000. So we said we decided if we're going to utilize -- if we did a aspiration in Mood in the lowest level, we go 100% into the third level with the reduction of financial costs, 2.5% on average -- 2.5% lower than the average. Utilizing engineering and the technology, which we already have, the Mood's projects have been guaranteeing a shorter cycle of production and the economic viability is in line. Why not take advantage and simplify it. However, since in Moura Dubeux, we're very optimistic about the numbers we've been presenting and the quality of what we've been presenting. On the other side, we're very cautious in making decisions. So we've been studying the correct time if we decide to test the market, just as we did with Mood, test the product, test the market, see how it performs and afterwards, make a business plan presented to you it's possible that at the correct time, there could be another avenue of growth, which could quickly reach the size of Mood and complete a cycle of profitability from condominiums, third band and Mood itself, making Moura Dubeux into the major real estate operator in the Northeast. We have several studies underway here in the company. Next question.

Next question is from [indiscernible] the small cap. He has 3 questions. The first will be on cash generation. He asked if we've already coming to the moment to be positive over the next quarters. The second question is as was mentioned that the level of sales and sales growth goes from BRL 3 billion to BRL 3.5 billion. We'd like to know what changed to cause this change in our leverage. And the third is about the distribution of dividends if it's planned to go into a chronogram of quarterly dividends.

Our idea is to make dividend payments always in April and November. That's our expectation. It could be -- if it's not April, it might be May. However, normally, it would be in April, November plan. Second part of the question is we see the company taking advantage of opportunities for growth, limited opportunities by our capacity of execution and limited by the condominium model plus Mood and not tolerating more than 20% of net debt after payment of dividends of BRL 100 million per year. So eventually, in 18 months, we present a cash burn, it will be within this parameter of expectation. One passed 20% and Mood condominium plan, if we feel comfortable in relation to the operational capacity of the development and execution of the project. And after the payment of dividends, BRL 100 million per year, it's going to be 50-50 or 40-60. At each point in time, we'll be regulated in the best possible way. As far as the size of BRL 3 billion or BRL 3.5 billion, this conversation starts as follows. What's the size of the market that Moura Dubeux has in the condominium and development and Mood is able to execute. The absorption of the market, the capacity, capacity for production, something close to BRL 3 billion or BRL 3.5 billion. How would this work? 1.5 million has been in the condominium, BRL 1.2 billion in Mood is BRL 2.7 billion. And the rest, BRL 700 million what we have incorporation or development projects with good performance of the sales performance foreseen and a lower risk of performance in our portfolio, much less than 30%, 60%, -- 30% to 70% of payments during the execution of the project, what we have been seeing in most of our projects and development projects, winning development projects. Our expectation, for example, next year in Salvador of 220, which works for the [indiscernible] projects we didn't even look at. We didn't have to even take any loans from the banks. This is a picture that shows something like BRL 3 billion to BRL 3.5 billion. Now are we going to do this next year? Will we do this in 2026? Yes, depending on macroeconomic conditions, cash, leverage of more, which cannot -- and capacity for execution, then. But it's not in our business plan for next year. We're going to see how we do over time, and then we will be able to go in that direction. Does that answer all your questions? I think finally, the cash generation, I answered that in the previous quarters. Next question.

A question here from Daniel [ Wellows ]. We would like to know about the positive impact on the financial effect on this quarter and what we can expect in this line for the next quarters.

I think Wanderley can answer that.

In fact, we had growth -- really relevant growth in the financial line with the sum of factors. INCC in this quarter was better than it had been. Principal for the best month of the year. On the -- the other factor was the payment of these land payments doesn't go through the gross revenue. At BRL 400 million in land payments for the profits in the period. And the third factor, which impacts us was the operation of cash. We have a cash position, which is much more important than it was in the first and second quarters, BRL 400 million in cash. So it's to be expected that this financial results will remain positive, but in numbers that are so high, it will depend really on what we are -- what opportunities we see. We much more connected when the rate will be higher, it's expected that this line will be expected to grow. When interest rates come down, it will be lower. Any more questions? Villar, if you want to make your final comments.

Once again, I want to repeat our commitment with consistency, quality of our results and our caution in relation to the cash management and our commitment to, in fact, be focused on the execution of these projects, potentializing the results for our stockholders. I'd like to remind everyone in Moura Dubeux that all of the protocols of services, our processes of execution, our processes for management process in the company as much as we have the competence and we provoke these lessons learned and which feeds our going to be facing decisions and making decisions which may not be within the spectrum that we're mentioning. These decisions have to be based always on 2 pillars: one, the quality of the products surprising the client, chanting the clients because whenever we have this in mind, it has a proposition on our plan, making the decisions of anyone who collaborates with us, whether it be an employee, a partner, it helps to generate a new cycle of business and a positive perception of the brand for the company which generates virtuous cycles of acquisition of land and the perception of our clients in relation to the valuations for our products. Second point, but it's not the second in our decision-making process. One eye on the right, one on the left is that we make it as profitable as possible capital of our investors and our stockholders. The second harvest of projects will only happen if the capital flows from our projects. So to be able to flow the best way to capitalize this to have to be a Moura Dubeux that's very strong to be very consistent in our cost, in our operational improvements and our profitability. We believe that when we look at the last 5 or 6 years of Moura Dubeux will be pay in an untiming way. However, one more question. In the next 5 years, we'll be able to do even more. It's obvious that this depends on the actual conjunction and our competency effort and efforts employed. However, what depends on us, we're going to do the best we can for this to happen, both in the vision of the client as well as in the vision of our shareholders. We open now a cycle of payment of dividends. We're deciding to go in each, as we mentioned, a minimum of BRL 100 million per year of payment and principally from a company with a very low leverage. This is our focus. And you have our commitment and from all of us that are part of Moura Dubeux to deliver these results. Good afternoon to all. Thank you very much. And we're at your service if you have any questions. I'm at your service next week. We'll start into a few roadshows to detail a little more these results with anyone who's interested, and we're ready to offer better clarification. Good afternoon, good Friday and a good weekend for all of you. Thank you all very much.