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

Ladies and gentlemen, thank you for waiting. Welcome to the RNI Negocios Imobiliarios S.A. conference call to discuss the earnings of the first quarter of 2022. We have with us today, Carlos Bianconi, Chief Executive Officer, Investor Relations Officer; and Henrique Ravazzi, Investor Relations Manager. [Operator Instructions] Before we proceed, we would like to clarify that any potential statements made during this conference call related to company business perspectives, operating and financial goals and projections are based on the beliefs and assumptions of RNI management as well as information currently available. Future considerations are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events and, therefore, depend on the circumstances that may or may not occur. Investors must comprehend that the overall economic conditions, industry conditions and other operating factors could affect the future performance of the company and could lead to results that materially differ from those expressed and said future considerations. Now I'd like to give the floor to Mr. Carlos Bianconi. Mr. Bianconi, you may begin.

Good morning. Good morning to everyone. Thank you very much for taking part and attending our financial statements disclosure and performance disclosure. So I'd like to ask Ravazzi to begin the presentation. Go ahead, Ravazzi. Well, first of all, I'd like to show the highlights and the main pillars that have guided the company's performance in 1Q '22. So basically, we have the launches up to -- and many launches to the -- many information to be disclosed in addition to the backlog revenue. So we've launched BRL 207 million in 1Q '22 and pretty much in -- a little bit lower, but pretty much in line with 1Q '21, but I'd like to highlight that we launched 2 projects in this case and 3 last year. In the last 12 months, we've reached BRL 741 million (sic) [ BRL 747 million ] PSV launched. So the company levels have been increasing systemically in the past years. In the second item, we have net sales where we achieved BRL 156 million (sic) [ BRL 656 million, ] which is also LTM. And specifically, in 1Q '22, we totaled BRL 171 million, accounting for 9% of growth year-over-year and 6% higher quarter-over-quarter. So in the two comparisons, we had significant growth. The highest level considering the first quarters of the past 6 years. So as I mentioned in the first item about the launches, in net sales, we've also increased the levels of the company. In net sales, we'd like to highlight the evolution of the average unit price, so we had an increase by 11.8% in 1Q '22 year-over-year. For the specific products of the PCVA program, Casa Verde e Amarela, so it's to gain price without affecting the purchasing power of our customers. We also achieved a growth of 5.6% quarter-over-quarter, meaning the end of last year, 2021. And the inventory turnover ratio for the PCVA program present an evolution of 25.4%, meaning an increase of 25.4% in this quarter year-over-year, going from 16.9% to 21.2%. Now about net revenues. So now here in accounting, our income statement, we achieved BRL 517 million in the last 12 months, showing a 48% growth year-over-year. And specifically, in 1Q '22, we totaled BRL 133 million. And here as well, we have 49% growth year-over-year. Here, I'd like to highlight the highest level considering the first quarters of the past 6 years. In adjusted gross profit, we totaled BRL 39.5 million in 1Q '22, which is also 44% higher year-over-year. And specifically, in adjusted gross margin, we achieved 29.7% in 1Q '22, meaning 2.5 percentage points higher over 4Q '21. So at the end of 2021, when we compare the evolution with the first quarter, you can also see an improvement in that. And I'd always like to highlight that we're going through a very complicated moment with inflation in our costs, but we've been able to manage the company in a secure manner and also preserving 2.5 percentage points of our gross margin. On the next item, transfer and financing totaled BRL 102 million in 1Q '22. Here, we have 238% higher year-over-year. When we compare to the last years, this is the highest level considering the first quarters of the past 6 years. Obviously, there's an influence here and it influences cash generation in the first quarter of '22 by BRL 6 million. And for '21, we also had cash generation. And once again, we had cash generation in the first quarter. It's a huge challenge for the coming company because we were burning cash systemically in the past years. But as we said, as we would stabilize and decrease the rate of growth, we continue to grow, but decrease that rate. We would decrease or lower cash burn and even lead to cash generation, and that's what we've been able to do, thanks to the monetization of assets and the transfer of customer source. Here with a lot of support from Santander Bank and Caixa Economica Bank, with the transfers in the PCVA program and at Santander in relation to the transfer of the SBPE Horizontal developments. And last, the backlog revenue achieved the level of BRL 464 million in 1Q '22, also reporting a growth of 52% when we compare that to 1Q '21 and also 7% higher quarter-over-quarter. So we ended the year growing and started this year 2022 with growth as well. With a margin of 28.4%, reporting a growth of 0.5 percentage points when compared to 4Q '21 or end of year. So here, we have all the pillars where we pay utmost attention to, and we continue with diligence being mindful and with a lot of attention so that we can grow the company in a sustainable way and safe way and develop our operations as we have explained to all of you in the countryside of all of Brazil. So now I'm going to hand over to Ravazzi to talk about the financial performance. Ravazzi, floor is yours.

Thank you, Bianconi. Good morning, everyone, once again. I'm going to show our operating and financial indicators, considering the separation between the current strategy and our legacy. Starting off with operating data and the current company strategy. The launches have achieved the level of BRL 668 million in the last 12 months. First quarter 2022 showing a small reduction year-over-year. And specifically, in 1Q '22, we launched two projects totaling BRL 207 million. The two projects have a growth in relation to the sale of the units that are higher than 14% compared to the ones that were sold in 1Q '21. So we have gained in prices in the units that were launched. And these two developments or projects were the Urban RNI launched in the city of Piracicaba in the state of Sao Paulo. The PSV is BRL 82.6 million, 464 units to be sold, and it's part of the PCVA. And the other one to be launched is RNI Reserve Blumenau launched in the city of Blumenau, the state of Santa Catarina, with a PSV of BRL 124 million, and we will offer 617 units. It's also a vertical project in the PCVA program and have already had success in sales in the first quarter. The evolution of our strategic landbank, we've maintained the levels of 4Q '21, presenting growth of 14%. And of that amount, 89% is for the Verde e Amarela Program, horizontal and vertical. Our net sales has also shown expressive growth in 1Q '22, reporting 10% growth year-over-year, ending at BRL 161 million. And in the last 12 months, we have BRL 610 million of net sales in the products for the current strategy, reporting a growth of 38% year-over-year. Our inventory turnover ratio has been maintained 19%, 18%, so it's a healthy speed in our sales. The inventory at market value ends this quarter at BRL 738 million, presenting a growth of 14% year-over-year. And that matches the number of launches that we had in 2021 and beginning of 2022. And out of that -- and that total is equal to 3,612 units. Our inventory at market value of the current strategy, 100% is construction. Our financial indicators in the current strategy, we're reporting growth in net revenues of 37% year-over-year. Our adjusted gross profit also represents growth compared to 1Q '21 of 30%, with margin of 30% to 29%. And in this quarter, the company recorded new growth of adjusted gross profit. We had already reported a growth in 4Q '21 quarter-over-quarter. And now in 1Q '22 more margin growth. So we've been gaining that. Selling expenses are growing, and that's mainly connected to our sales volume that grew significantly; however, it does not exceed the growth of net revenues. So net income and net margin dropped this quarter, and that's mainly a result of the ongoing works, and we haven't expedited them this quarter. We maintained the balance. This was already part of the plan. And as of 2Q '22, that should come back strongly. The operating data of the legacy, we entered the first quarter without any launches for the legacy products. These products lose their relevance quarter after quarter. The net sales have totaled BRL 10 million in 1Q '22 with an inventory turnover ratio of 7%, so that's compared to the last 12 months. Inventory at market value, it ended the first quarter of BRL 146 million, and the balance in inventory is a result of a launch that we had last year, the Magnolia in Ribeirao Preto City. It was the only one and the purpose was to monetize the landbank, together with a partner and in between the periods. So from 4Q '21 to 1Q '22, we have a drop of 3% in the inventory at market value. So 57% -- excuse me, 43% in construction and 57% has been concluded, and 86% is from Recanto das Emas project. The landbank also has a high drop year-over-year of 31%, and has maintained the same when we compare 4Q '21 to 1Q '22. Financial indicators for the legacy. We have 1Q '21 of net operating revenue that was negative, and now it's positive. Adjusted gross profit and adjusted gross margin has also maintained its growth when compared to 1Q '21. Selling expenses, once again another quarter with a drop compared to the expenses reported in other quarters. And in this case, a drop of 44%, and also a drop in net income reported in 1Q '21 BRL 7 million negative. Now going into debt and cash flow. So the company ends 1Q '22 with an indebtedness balance of BRL 514 million, where 70% of that balance is for financing construction. It's the production debt for the company. And in this quarter, the company can highlight the operating cash generation, and that's connected to the levels that our financing has achieved, as already mentioned in the highlights by Bianconi. So the company generated BRL 6 million of cash in 1Q '22. And I'd like to remind you that in 4Q '21, there was also cash generation. So we're no longer burning the cash, and we're starting to generate cash. We also had another drop in net debt over shareholders' equity. So since fourth quarter, the company started to present that reduction. And in 1Q '22, we're reporting a reduction of 1.5%, [ compliancely ] our consolidated income statement. The indicators in the first quarter presented expressive growth year-over-year, ending the quarter with net revenues at BRL 133 million, so 49% higher year-over-year. Adjusted gross profit also has growth of 36% year-over-year. But the two most important points are margin gains. The company presented margin gain, not only in gross margin of 1.3 percentage points compared to the fourth quarter of '21 and 2.5 percentage points higher compared to 4Q '21. So since the fourth quarter, the compared of '21, the company has already recovered its margins. And now in 1Q '22, that's happening again. The EBIT ends the quarter at BRL 6.4 million, showing our operating efficiency once again and our net income of BRL 3.04 million, pretty much in line with the net income reported in 4Q '21. That's our results presentation for the first quarter of [Technical Difficulty] so that we can clarify any doubts that the market may have.

[Operator Instructions] As we have no questions, I'd like to hand back over to our speakers for their final remarks.

Very well. I believe that the behavior of our company has been in line with what we have demonstrated to our investors. So I believe that the figures speak for themselves and have satisfied everyone who is watching. So the performance of the company ratifies our entire strategy, the execution of a strategy that was well thought of back in 2018 when we went back to the MCMV program, Minha Casa Minha Vida, which is currently called PCVA, Casa Verde e Amarela, and the macro regions that were studied and identified, and we are confident about our projects. We've launched the projects in the more interesting moments, and the performance has been gradually taking place in a consistent manner. We ended the year with many challenges resulting from inflation and the high in interest rate in 1Q '22, specifically, a war was started, even though the pandemic is reaching the end, but company's performance has remained firm and resilient. We've been able to evolve not only in relation to launches, but also in sales performance and also raising prices as the figures show, in the quantity and quality of projects, meaning we are selling more at a better price. Always focusing on offering the possibility for our customers buying without affecting the local market and exploring more resilient sales in each one of the places where we operate. We are open and available at our IR channel with Henrique Ravazzi. And we hope we've met all of your expectations. Thank you very much, everyone. And we will continue firm with our strategy, preserving the performance that was established for the company as well as the evolution of the PCVA projects and the super economic projects, which together with the SBPE Horizontal, which are very good value for money in horizontal development that we will explore in farming areas in the country. Thank you, everyone. Have a great week, and we are always open to clarify any doubts in our IR channels.

The RNI Negocios Imobiliarios conference call is now adjourned. Thank you for your participation. Have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]