RNI Negócios Imobiliários S.A. (RDNI3) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to the conference call of RNI Negócios Imobiliários to announce the results of the fourth quarter of 2021. Today, with us, we have Mr. Carlos Bianconi, CEO and IRO; and Henrique Ravazzi, Investor Relations Manager. [Operator Instructions] Before continuing, we would like to clarify that statements made during this conference call relative to the company's business prospects, operational and financial projections and goals are beliefs and assumptions of the company's management and are based on information currently available to the company. Forward-looking statements are not guarantee of performance. They involve risks, uncertainties and assumptions because they refer to future events and therefore, depend on circumstances that may or may not to occur. Investors should understand that general economic conditions, industry conditions and other operational factors, the results of the company and may lead to results that will be materially different from those expressed in such forward-looking statements. Now, I would like to turn the conference over to Mr. Bianconi. Mr. Bianconi, please, you may start.

Thank you very much. Good morning. Thank you all who are here listening to us in this conference call for the fourth quarter of 2021 and for the whole business year of 2021. We'll be talking about our performance and some of the development of businesses, regions and volumes. So Ravazzi, could you kindly show the first slide where we are going first to focus on the highlights. So here, we have the main point that have been aligned behind the performance of the company. So first, the first bullet, talking about launches. So our launches were higher than our launches in the last 7 years, reaching BRL 761 million in 2021, which is 30% higher than the year of 2020. So this already places the company at a level of growth. We continue our growth and also with regards to the growth -- regarding the fourth quarter. So in terms of net sales, they were also superior in the last 7 years and in BRL 642 million and also the relationship of growth in 2020. And more specifically, in the fourth quarter, we have total of BRL 161 million, also 80% higher than the third quarter of 2021. Here, what I would like to draw your attention to net sales. And the highlight here is the evolution of unit price. We had an evolution of 8.4% increase in the average unit price of PCVA products. And also, we had a 57.1% increase in net inventory turnover ratio from 30.2% in 2020 to 47.5% in 2021. So definitely we have had a better performance, both in terms of price and speed of sales. And the company is still launching without carrying inventory. Net revenue totaled BRL 473 million in 2021, also a growth of 49% in contrast with 2020. More specifically, a total of BRL 217 million, also 119% higher than the fourth quarter of 2020. The adjusted gross profit was also the highest in 5 years totaling BRL 134 million in 2021, 60% higher than in 2020. The adjusted gross margin was 28.2% in 2021, also 1.9 percentage points higher than it was in 2020. And more specifically, talking about Q4 2021, it was 27.2%, 1.3% higher than Q3 2021. As a consequence of this performance, net income was higher than the last 6 years totaling BRL 14.8 million in 2021, the best result in 6 years at 244% increase as compared to 2020. Here we also are on showing to you an item regarding our financial performance. In terms of transfers we're also superior to the last 5 years with total to BRL 234 million in 2021, the best result in 5 years, which is 65% higher than it was in 2020. Of this amount, BRL 177 million corresponds to PCVA, both Horizontal and Vertical, which was significantly improved by the cash flow in Q4 '21 of BRL 16 million. Our cash consumption in the last 3 years And obviously, the company has been growing, developing. And so as a consequence, we end up burning cash. We started a process to recover it. In Q4, we had positive cash generation with the transfer. So the transfer started. So we have the transfers and also the transfers of products. And obviously, this leads to a lower debt and to cash generation. And then the last item, backlog revenue has reached BRL 432 million in Q4 '21, 79% higher than in Q4 '20. And then conforming the backlog margin of 28%. So here, we have the backdrop for the home performance of the company with all the items but here we have a message, which is a message of growth. We have seen a growth in all indicators. So this automatically leads to the company's performance, which has been growing systematically over the past few years. And we are going to intensify the payout of dividends that have accompanied our growth and something that we have been seeing ever since our turnaround. We are confirming our strategy of a company that grows in the fine macro regions in Brazil and their focus on agri business in Central West, [indiscernible], Sao Paulo, Parana, Santa Catarina and Minas Gerais. And this is where we see the agricultural frontiers of Brazil. Now I would like to turn the conference over to Henrique Ravazzi to talk about the financials.

Thank you very much, Bianconi. First of all, good morning everyone, all participants in our conference call. I am going to give you details about our financial and operational indicators, segregated by the products of the current strategy of the company and the legacy products. Starting with the products of the company's current strategy. And before going to numbers, as Bianconi said, the company has been having a quite significant growth. And this growth holds a lot to the current strategy, to the products of the current strategy. So in our current strategy, we closed the year of 2021 of BRL 682 million invested and launched and this corresponds to a percentage of evolution of 60% higher than in 2020, and the last quarter of 2021 has demonstrated a growth of 17% vis-a-vis Q4 2020. So these were the 2 launches that the company made in Q4 '21, RNI [indiscernible] vertical undertaking [indiscernible] and another 1 in Varzea Grande horizontal venture with BRL 190 million. The landbank for the projects of the company's current strategy has closed the year at a very good level, BRL 6.2 billion, And of this amount, 83% is allocated to the PCVA program, both horizontal and vertical. And this has had a growth of 75% as compared to the year when the company conducted the strategic transaction. And also showing a growth as compared to the last quarter of 2020, a growth of 3%, even though the company had more launches in 2021 than it had in 2020. So this shows the recovery of the landbank. We also have quite significant numbers in terms of net sales, and this is a quite significant growth that really stood out in this year and the same evolution will continue now in 2022. We have ended 2021 with a growth of 77% in net sales. And this percentage corresponds to a total of BRL 87 million, the company has also had 3% in the last quarter in terms of net sales compared to the 4th quarter of 2020. Our inventory for the current strategy products is 100% in construction where none of them is complete and this landback at market value represents BRL 688 million construction totaling 3,259 units under construction. Our financial indicators also have shown a quite significant growth. The company has ended Q4 with a net revenue, 108% higher than Q4 2020. Our adjusted gross profit also ended the year of 2021, 81% higher than Q4 2020, keeping an adjusted gross margin of 27%, and we can also see a growth in commercial or sales expenses, which doesn't go beyond what we had in growth in revenue, and this growth in commercial expenses takes place because of the volumes that the company has been practicing, which is much higher than 2020. And lastly, our net income and net margin ending the year of a growth of 68% and a net margin of 11% in Q4 2021. These are the numbers for our current strategy. Now going a little bit into legacy numbers. So the products that the company no longer -- stopped operating in 2019. So it's been losing its share or in relevance in our portfolio. And in 2021, we had a single launch to monetize our legacy landbank. This was launched in Riberao Preto, and this totaled BRL 179 million in the year, and this was the only launch that we had in the year, and this is a reduction as compared to 2020. Net sales ended the year at BRL 47 million, also demonstrating a reduction as compared to 2020. And as a reminder, in 2020, the company had 2 operations with a controller to be able to sell the legacy inventory. So this number is significant because of those operations. So market value landbank ends BRL 152 million in 2021, and its growth agrees with a launch that we have made in the third quarter, and this totals 57% in terms of units being built and with the unit -- 43% complete units of those 80% refers to Recanto das Emas. And the landbank has presented again a reduction as compared to 2020, and has a reduction of 55% as compared to 2019 when the company changed its strategy. The financial indicators, we ended the year of 2021 with a growth in net revenue as compared to the last quarter of 2020. The adjusted gross profit has also, had a growth as well as the adjusted gross margin. And admin expenses, also with a reduction of 6% and net income has ended the year with BRL 12 million negative as compared to the fourth quarter of 2020. And as a reminder, in the fourth quarter of 2020, we had strong generation focusing on corrections IGPM in the last quarter of 2020. And this factor or this is something that didn't happen this year. Now going a little bit into the issue of our debt and cash. So overall, Q4 was a quarter of generation because of the volume of transfers of the company. So we are ending 2020 with a debt of BRL 529 million. Of this amount 72% refers to production and debt, which is the company's core. And because of these volumes of transfers, the company is already demonstrating in Q4, a cash of BRL 16 million, which is also significant. The company had been consuming cash quarter after quarter and now we are generating cash again our last quarter. Additionally, on the same line as cash generation, you're seeing a reduction in the percentage of net debt as compared to equity, the company had been constantly demonstrating an evolution. And now in the fourth quarter the 2% reduction. Now this is our consolidated numbers, ending or closing '21 with indicators demonstrating a significant growth that was significant superior 2020 revenue -- net revenue ended the year 49% greater than it was in 2020, something that is very important for us to highlight regards the EBITDA. So this demonstrates an operational growth and a strengthening of the company's operation. So the company ends with a BRL 10.1 million and growing 63% in the year comparing 2021 with 2020. Our net income, we ended the year of 2021 with the amount of BRL 14.8 million. This represent a growth of 244% as compared to 2020. But before going to our closing remarks, now we are going to move to the question-and-answer session. So I would like to give the floor back to our operator, So that we can receive our questions.

[Operator Instructions] If there are no further questions, we would like to turn the conference back over to our speakers for his closing remarks.

Thank you. Well, let's move to our -- to the end of our conference call. And I think that being very objective. As usual, we made the presentation of the company's performance, and this performance has been confirming our assumptions, our guidelines and also our discourse with the market. So it's very important for the company to position itself and to execute very objectively in a diligent manner, everything that it presented, of course, considering everything. And this -- and we have been following this in the right way, in terms of the execution of the strategy and our review of the company's strategy in the years of '17 and '19, we defined the pillars. We confirmed the pillars. We didn't define. We define the regions, and that would be the focus of our businesses as usual. And in the end, we have been executing we have been executing and also the macroeconomic issues of our country. And in our demonstrations and in our financial statement, you can see all our rates and numbers with all themost significant percentages of growth as compared to previous years. So something that I would like to say in terms of investment, we have been able to reach our objectives. We don't give guidance, but we have targets, internal guidances, and we were able to reach everything that we had planned. It's very important that we launched the BRL 761 million, we approved. So in terms of this exercise, we have approved, and we are deciding the best time to launch it. So it's been approved and it's in evolution and everything so that we can continue producing businesses consistently. Obviously, these businesses are based on lots of study, analysis, a lot of care in terms of our commercial and financial performances, and the returns that they may provide. So we do not have any type of problem in terms of launching a project in terms of containing all the variables. But all the variables that we need to check in terms of going live in a project that has this variable. And everything that we always seek, such as sustainability and SOS. Sales, as we said, we have reached significant levels but the most important -- this is the third year with 0 inventory that the company has and so our inventory are all under construction. So we don't have a carryover cost. Of course, we have a financial level with a significant debt. But as in our company and everyone who has been following us, and we have a follow-on plan. And so in the capital market, this -- these numbers have not been totally favorable. So soon as we have a more positive or favorable environment, then we are going to break the barrier of being the only company that since the IPO in 2007, we didn't have any more market movements on the organic growth. So we are dealing with higher cost and inflation but the company has been able to keep its average margin that was preestablished. Obviously, we are reviewing all our projects to ensure market gain, and that's why we have confirmed. And for this reason, we are being able to maintain our resilience. Our target regions are the same. So the company's regions are kind of repetitive. It's the agricultural border of the country. So we have sales resilience and also in terms of income. And we will continue to make true the dream that people have of having their own home. And then we have these products. So also with PCVA, and we are also in line with all the maturities. And we have the monetization and reduction of the legacy. So we are consistently trying to find alternatives not to affect the value, but every year, reducing the company's legacy. And we don't want anything draining or affecting our results. So I would like to thank you very much for being with us today and our investor relation channels are always available to answer any questions you may have as we have always done. We want to answer your questions. So thank you all very much, and we are moving forward for the new year of 2022.

Thank you all very much, greetings for the conference call of RNI Negócios Imobiliários has now ended. Have a good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]