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 for discussion of the results related to the second quarter of 2023. Here with us are Mr. Carlos Bianconi, CEO; Fabiano Valese, CFO and IRO; and Henrique Ravazzi, Manager of Investor Relations. [Operator Instructions] Before proceeding, we'd like to clarify that any forward-looking statements made during this conference call related to the business perspectives of the company, projections, and operational and financial goals constitute beliefs and assumptions of RNI's management as well as information currently available to the company. Forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions since they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors may affect future results of the company and lead to results that differ materially from those expressed in such forward-looking statements. I would now like to turn the call to Mr. Carlos Bianconi, you may proceed, sir.

Thank you. Good morning, everyone. We are here once again to discuss the results, performance of the second quarter of 2023 of our company, and we are going to go over the main highlights these results and the prospects of what's about to come. It's really very important that we should mention that the actions adopted during the period to be reflected on the quarter and sometimes on the future quarters. So we are going to provide details on the figures, so that we can have clarity on the financial performance and the expectations of what will come in the second half of the year. I turn the call to Fabiano Valese, for him to make the disclaimer in the sales, financial, operational front, and then we'll come back to you so that we can discuss the main drivers, the great opportunities that were materialized in the second half of the year and the second quarter -- first half of the year in the second quarter. So I would like to mention projects we have and all the actions we made and the fruits, which are likely to be a result of all those actions in the second half of the year.

Good morning, everyone. Thank you, Bianconi for your initial remarks. So let's now go to the highlights. But before that, I would like to mention some of the points that influenced the results of the company in this quarter. The first one is related to the physical progress of the work. In the last quarter, I mentioned that we were below what was expected in terms of the advance of the work because of the seasonality since its a rainy season, and we did not progress as much as we had planned. And in the second quarter, we were below of what we had in terms of progress of the work. So we have expectation of a drop and the -- in the [indiscernible], we decided to move slower, so that we could capture gains in terms of pricing of the feedstock and raw materials related to the work. Another point that influenced our results was associated to the volumes of cancellations that were above what we had expected in project that is SBPE. So the level of cancellations was higher. And this also happened in the second half of the year -- second quarter, and that affected our results. As of July, we are not going to have this effect. This project is nearly fully sold. And -- so in relation to this project [indiscernible], since we have another project in the area, we moved lower in terms of sales, so that we would not compete with the other assets. So these were the main points that drove our results. Now discussing the highlights, please, gross sales totaled BRL 523 million, in line with the first half of 2022. In the second quarter of 2023, we amounted to BRL 255 million. As for net salesl, we reached BRL 353 million, in line with the first half of 2022. In the second quarter of 2023. Net sales reached BRL 167 million. The average price was 10.2% in the second quarter, in comparison to the second quarter of '22 with an average price from BRL 220,000 to BRL 243,000. In the first half of 2023, the average price increased by 8.4%, from BRL 222,000 to BRL 241,000. As to the financed units, we reached BRL 229 million in the first half of 2022, a 1% growth in relation to the same period of the previous year. In the second quarter of 2023, unit financed amounted to BRL 134, up 41% of the first quarter of '23 and/or land bank in 2023 to BRL 6.5 billion, 100% of it acquired to financial swaps and 80% allocated to the products of Minha Casa Minha Vida, My House My Life. As to adjusted gross profit, we reached BRL 189 million, 13% higher when compared to the same period of the previous year. In the second quarter, we reached BRL 46 million, up 21% from the first quarter of 2023. Adjusted gross margin stood at 32.2% in the second quarter of '23, expanding 3.4 percentage points when compared to the first quarter of 2023 and 5.6 percentage points from the second quarter of 2022. Our backlog revenue ended the second quarter '23 at BRL 568 million, up 3% for the first quarter of '23. So we had this BRL 568 million, 3% higher when compared to the first quarter of 2023 and 20% higher than the second quarter of 2022. Backlog margin remained stable at 31%, up 1.5 percentage points when compared to the second quarter of '22. These were our highlights. And now I would like to turn the call to Ravazzi, so that we can see more numbers more, discuss the figures.

Thank you, Valese. Good morning, everyone. Once again, I'm going to continue with our presentation with our financial and operational indicators and talk about our current strategy. We ended -- when we end this part of the presentation, we are going to open the Q&A session, okay? Okay. So beginning, our operating indicators about the launches related to the new strategy. We had no launches in the second quarter. As we have mentioned and since we had no launches, the company focused on the sales of its inventory, I'm going to show more details about this and how the volume stand. And in the second quarter, we reached BRL 255 million that were launched in the first half of '23, a decrease of 31% when compared to the same period. Our total PSV reached BRL 660 million with products after the new strategy was adopted. When compared year-on-year, we reached at a level of BRL 614 million with 6% variation down when compared to the previous year that we reached more than BRL 800 million in PSV in approved projects. And these PSV are ready to be launched at the proper moment, according to the market. Our strategically land bank reached BRL 6.3 billion in the second half. We'd like to remind you that our strategic land bank is 100% acquired by financial swap, and the combination of this land bank is also focused on the region in the agribusiness. So it's 100% focused on the agribusiness regions. Now talking about our sales -- net sales, we ended at BRL 157 million in net sales, a volume, which is relevant, because when we look at the second quarter of 2022, we had 2 launches in the period. And that period was marked by 4 launches of projects. And in the first half of 2023, we had launched only in the first quarter, and we had no launches in this quarter. So we maintained quite relevant volume in compared -- as to our net sales. And when we compare the first half of 2022 and the first half of 2023, we see that the difference is not very relevant. And this was reflected in our inventory levels. The company has a reduction of 15% in relation to the inventory and the market value when we compare to the first half of 2023. Part of this amount in the inventory, 99% is an inventory under construction, and it's represented by BRL 807 million in terms of PSV 3,344 units. Our financial indicators were in line with the second half, and we had some variations also driven by the point mentioned by Valese. The extent of seasonality in the first half of the year in place our backlog, so our net revenue of the strategy ended the second half of -- second quarter of 2023 at BRL 138 million and the adjusted gross profit was maintained and adjusted gross margin of the new strategy was also maintained. This as a result that showed that we had a maintenance in terms of adjusted gross margin. Our EBIT was maintained in line with the second half of 2022, and we ended the quarter at BRL 10 million, and our net income were driven by the extent of the seasonality. As I mentioned, we ended the second quarter of 2023 at BRL 2 million. Now talking about operational and financial indicators of our activities, the company did not have any launches. We made no actions related to those products. So all the other indicators show the downward trend in this period. Net sales reached BRL 9 million in the second half of -- second quarter of 2023. And we reached BRL 18 million in the first half of 2023, down 10% in relation to the same period of the previous year. So we ended the second quarter with BRL 123 million in terms of inventory at market value. And out of the 46%, 93% is related to the Recanto das Emas area. Land bank was stable in relation to the [ first half ] of 2023, and it dropped 18% in relation to the second half of 2022. This land bank comprises 3 areas only. So the company has been trying to monetize this area in the second quarter and at BRL 376 million. Net revenue end the period at BRL 5 million. Adjusted gross profit and adjusted gross margin in the second quarter of 2023 ended at BRL 3 million. Selling expenses were maintained in line with the same period of the previous year, ending at BRL 2 million and net income with a loss of BRL 19 million in the second quarter. Now in relation to our consolidated results, the company end first quarter with BRL 43 million in cash. We had a reduction in the corporate debt at BRL 144 million, and our production debt BRL 593 million accounts for 80% of the total debt that we have. Our net debt including the production debt reached the same level as that of last year at 15.7%. In terms of our consolidated results, we focus on the growth of the performance of the adjusted gross margin at a very healthy margin, a growth of 3.4 percentage points in relation to the first quarter. And year-to-date, the company reached BRL 83 million, nearly BRL 84 million in terms of adjusted gross -- and adjusted gross margin of practically 31%. In the second quarter, the company delivered 2 projects, Parque Ohara, which is a vertical undertaking with a PSV of BRL 76 million and 450 units and Cipreste Jardim Botânico, which is also vertical assets with a PSV of BRL 49 million and 135 units. In the quarter, we delivered BRL 125 million in PSV and 585 units. So this was our presentation providing more details about our new strategy, our operational and financial indicators. And now we can open the Q&A session.

[Operator Instructions] There are no questions over the telephone. We did not receive any questions on the chat. So I can turn the call back to you. And you can make your final remarks.

I would like to ask you a favor possible, can we go back to the screen where we have the consolidation of the results. So I would like to talk about the consolidated results I would like to end the presentation discussing this point, since my philosophy, as many of our companies also have this philosophy, to share our understanding that you have sometimes to step back in order to move forward. In the second quarter of 2023 in comparison to the previous year, we see an improvement in our adjusted gross margin. And this related to the ex financial in terms of capital structure. Things are -- capital structure is indexed. So we grew a very important percentage in terms of qualitative terms. So we'd like to mention that when we look at our revenues of future years. So asset launched units sold, but are still to be built. And this is what Valese mentioned. We have 0 in terms of ready inventory. So all the inventory is about to be prepared. So we delayed some work front, because we are looking for opportunities of capturing better costs that is likely to happen in the second half of the year. So that shows that in that projected item, we have 31% already projected. And today, we are already retaining the 32%. So we see that we have qualitative potential to grow. In terms of structural -- commercial structures, they are in line or with some downturns. We have the equity method that was a bit negative and the financial result is associated to this. And this is why we had a downturn in terms of results. So we are looking for improving this. Because of the inflationary pressure, we have been making those actions. So it's clear to see that we are likely to have an improvement in our results in the future. So the message is the following: We have 6.2% of land bank. 100% of this land bank is related to financial swaps. So we do not have carryover costs in terms of land bank. And the second point is that we are a company that have BRL 2 billion in the phase of approval or already approved. So those products are accessible as the market and the new program, Minha Casa Minha Vida, My House My Life will be consolidated. And the new program of My House My Love was in 100% of the program. And now it's -- enters into this category at 100%. So we see now a great opportunity at the company that have been doing this work in order to prosper in order to bring in the best revenues for the future. And this is why I said that we may step back in terms of results, so that we can have major growth in the quarters to come. So I turn the call back to the officers.

Another point which is very important to mention is that we optimize the company at the level of structural that will bring gains associated with the optimization. And we are very enthusiastic with this new program of My House My Life. We see a lot of opportunities, as mentioned before. We can include in the program, more projects, more assets with a selling of BRL 350,000. So we are likely to have a very important second half of the year for the development of our company. Thank you, everyone. Thanks, everyone. Have a good day. Have a good week.

The conference call of RNI Negócios Imobiliários has come to an end. We would like to thank everyone for taking part in it and have... [Statements in English on this transcript were spoken by an interpreter present on the live call.]