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

Ladies and gentlemen, thank you for holding. Welcome to RNI Negócios Imobiliários video conference to discuss the results for third quarter of 2023. Present with us today are Gustavo Felix, the company's CEO; Fabiano Valley, Financial and Investor Relations Director; Henrique Ravazzi,, Investor Relations Manager. [Operator Instructions]. Before proceeding, please be advised that any forward-looking statements that may be made during this conference call regarding the company's business outlook, projections and operational and financial targets constitute beliefs and assumptions of RNI's management as well as information currently available to the company. These forward-looking statements are no guarantees of performance. They involve risks, uncertainties and assumptions, and they depend on circumstances that may or may not occur. Investors should understand that overall economic conditions, industry conditions and other operating factors may affect the future results of the company and lead to results that differ materially from the forward-looking statements. I would now like to give the floor to Mr. Gustavo Felix. You may proceed, sir.

Well, a good afternoon to all of you. This is Gustavo Felix. This is my first presentation as the CEO of RNI. I hope this will be one of many. In terms of the highlights, it has been 3 months since I arrived to the chairmanship or presidency of RNI, but I had been there 2 years before, which helped me capture future opportunities, and it allowed me to have a broader vision of the company without extreme radical changes. We're working in depth on all of the business fronts so that very soon, we can offer the market better and brighter news about our business. Now my arrival, it is important to underscore that we continue to be focused on the My Home, My life program. Of course, this is where we act mainly. And we also maintain strategic actions in terms of the Brazilian system for savings and loan the SBPE. And now if we consider that scenario, we are also seeking to reallocate our legacy assets. At this point in time, we're working more strongly to allocate our legacy assets, especially what we have in our inventory in RNI and that are off-plan properties. Now we can go on to the main highlights. Now to speak of the highlights for the third quarter and the 9 months of the year, we would like to underscore the gross sales. We had a retraction of approximately 9% vis-a-vis the same period last year. We consider this to be a good result because we had 46 points less in terms of launches, which means a little less than half the launches last year but an equivalent performance. In terms of cancellation, the growth, we grew 15% comparing the third quarter '23 versus the second quarter '23. As a reflection of the new governance, we're beginning to work more stringently when it comes to credit in our portfolio. And of course, we already see the reflection of this. And with the resale, we had a price gain of 12%. And this 12% gain allows the company to have better results, although the cancellations have grown. This is a good exercise that we're carrying on, and when we intend to expand it and following exercises. The price, the price has also risen since 2021 continuously. When we compare the 9 months '23 with the previous year, we have a gain of 8% in My Home, My Life. Now My Home, My Life, obviously, gives us our greater share, and we have been able to maintain the growth in prices. Now the finance units, last year was a record year. This was a year where we were able to finance most of our units, and we already had 12% increase in the 9 months of '23 vis-a-vis last year. This shows you that the quality of negotiations and that My Life, My Home unit, of course, have been managed in an appropriate fashion according to our business model. As we had no launches, we had a natural reduction of inventory of 11% between the third and second quarter and 22% vis-a-vis the first quarter '23. We're truly resolving our inventory and a point of comfort when we speak as the company, our adjusted gross margin. When we remove the financial defects, we have a gross margin of 31.1% realized. Now when we compare ourselves with equivalent player, I believe that we have a very interesting positioning as a comparison. And the RAF revenue is around that of 32%. We assess the competitors that have perhaps better outlooks. And we have revisited this as well, seeking the long-term enhancement. Now this is what I had to say about highlights, I will give the floor to Mr. Ravazzi to speak about the details of the company.

Well, thank you, Felix. Good afternoon to everybody. I'm going to continue on with the presentation to speak again about operational indicators of the company's strategic products and those that are no longer part of our focus. We begin with the strategic products. As Felix mentioned, this is a period where we launched 46% less than the year 2022. Now despite this, in the year 2023, we did have a launch in the first quarter totaling BRL 256 million. For the last 12 months, the company reached BRL 510 million in launches for the strategic products. Now when we compare sales, net sales and gross sales, the company ended the quarter with BRL 207 million of gross sales and for the 9 months of the year, BRL 689 million, a retraction of 8%, maintaining itself aligned. If we take into account the total number of units launched vis-a-vis last year, net sales in the first 9 months of '23 totaled BRL 449 million with a reduction of 18%. For the last 12 months, the company already record BRL 600 million in net sales for its strategic products. And here, we see, of course, the impact of the sales on our inventory. We show you a retraction of [indiscernible] vis-a-vis the second quarter. We ended this quarter with BRL 719 million of inventory at market price, and part of this is a construction regime represented by 2,935 units. Therefore, our entire strategic inventory is under construction. The LANDBANK once again aligned with the second quarter of '23. We closed this quarter at BRL 6.3 billion. We will now go on to our operational indicators for the legacy products. We ended the quarter with BRL 12 million in net sales, a potential sales value in landmark, BRL 30 million and a growth of 5% when compared to the same period last year. Nowadays, the LANDBANK is represented by 3 areas, 3 plots of land totaling 336 -- BRL 376 million, is a drop compared to last year, because these are areas that during this period have been negotiated by the company and ended up leaving our portfolio. The inventory market price also has a reduction of 15% compared to the third quarter '22 and a retraction compared to the second quarter of '23. We ended the third quarter with BRL 119 million. Now of these BRL 119 million, only 9% represents a concluded inventory, 49% under construction. The rest refers to plots of land. Now let's go into the debt and receivables consolidated figures. The company ended the third quarter was BRL 65 million in cash balance and the debt of BRL 807 million. Of these BRL 807 million, 82% is represented by financing for construction. This is a production debt, BRL 659 million. And our net debt ends the quarter standing at BRL 743 million. Valese perhaps would like to add something here. Valese?

No -- well, yes. Thank you very much and good afternoon. I would like to underscore a point here that presently, we are revisiting our capital structure, the company's capital stock. And this, with the intention of reducing our indebtedness, and consequently, improving the debt and profit ratio and decreasing the financial results that have a direct impact on our statements. Now how are we planning on doing this? We're working constantly, of course, but we can do this through a reallocation of nonstrategic products. So we're focusing on that. And as soon as we have a novelty, we will inform it to you. So our capital structure, therefore, will have this impact on our cash. Now here, we have our consolidated results. We have 2 points that relate to this. One is our net financial income, interest rates and debts are above what we believe they should be, and we are working on that. And this year, we also had the work of -- the percentage of conclusion of works below what we wanted. And of course, this had an impact on our net financial results. The percentage of conclusion certainly was not what we wanted. And we're going to focus on it, and you will see that the plan will be according to what we had foreseen. These are 2 line items that had a big impact at the last meeting. We had a volume of cancellations above what we had foreseen in the SBPE development in Várzea Grande. We had a higher number of cancellations and plan and, of course, has had an impact on our results. This also brings about an impact because in that same location, we have another development called [indiscernible] . We had strong sales. Because of these high cancellations, we had to prioritize the cancellations and then focus on our other development. Beginning in the next quarter, we already forced a situation of balance in the mismatch of these accounts. Well, Felix spoke that we're focusing on our governance, and it's good to underscore that we have remodeled our policy. It's more conservative, especially for pending accounts. And we have reviewed the cancellation process of the company. As Felix mentioned, we have a governance that is very well aligned. Now these are the figures we wanted to present to you. We can continue on.

Thank you, Valese. To conclude our presentation, in the third quarter, the company delivered one more development. Estacao RNI delivered in Guyana, which -- with a potential sales value of BRL 76 million. And it has 452 units. It is a vertical development that was concluded in the third quarter. Very well. This is our presentation of results for the third quarter. I would now like to open the floor for questions and answers. We're going to continue on with this. And once again, we are ready to take your questions.

[Operator Instructions] as we have no questions, we will return the floor to Mr. Gustavo Felix for the closing remarks.

Once again, a good afternoon to all of you. I would like to thank you for your attendance at our call. This is the first time that I'm presenting on behalf of the company. And we do hope to have better results going forward, generating more value for our shareholders. We have a great deal of work ahead of us. Doubtlessly, our capital structure at present is our main challenge. And as Valese mentioned, we're seeking different paths to resolve this. Of course, it is not something simple. We have some trends underway in the search of this solution. With this new management, we hope to be offering a greater clarity of purpose and a better scenario going forward. We deem this to be necessary. Now as I mentioned previously, our operational part requires very minor changes. We need a more stringent governance, attempting to enhance our present day results, removing the financial deficit, which is what has the greatest impact on the company. So basically, this is what we are working on as a management to present better results for shareholders in the coming quarters. I would like to thank all of you once again. Thank you very much. And with this, we will conclude our conference call. We thank all of the participants and hope to see you in the next quarter.

Thank you. The RNI Negócios Imobiliários conference call ends here. We would like to thank all of you for your participation. Have a good afternoon.