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

Good morning, ladies and gentlemen, thank you for waiting. Welcome to RNI Negócios Imobiliários S.A. conference call to announce the results of quarter 3 2024. Today, we have with us Mr. Fabiano Valese, CFO and IRO; and Henrique Ravazzi, Investor Relations Manager. [Operator Instructions] Before proceeding, let me stress that any forward-looking statements that may be made during this conference call relative to the company's business prospects, projections and operating and financial targets are based on beliefs and assumptions of RNI's management as well as information currently available to the company. These forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions. They refer to future events and therefore, depend on circumstances that may or may not occur. Investors should be aware that general economic conditions, industry factors and other operating aspects may affect the future results of the company and may lead to results that differ materially from those expressed in such forward-looking statements. Now I would like to hand the conference to Mr. Fabiano Valese. Mr. Valese, you may proceed.

Good morning. First, let me welcome all of you, and thank you for your time and participation. It's very important to have your presence in this conference call today. We're going to go over the results of quarter 3 2024. We're going to very transparently share with you the evolution of our indicators, and we want you to have a good understanding of our operational and financial performance. Before going to the numbers, let me highlight 3 very important pillars that we saw this quarter and that we will keep pursuing looking forward. The first one is the price gain for My Home My Life. This is an indicator for which we have been performing really well. And in quarter 3, we continued the good performance, and we will keep evolving in this indicator looking forward. This is a very important indicator that really contributes to our gross results and also gives us security regarding the cost variance of the company. The second point here is the resiliency of our net sales. If you've been following our calls over time, you know that we are advancing over time and the reduction in our inventory will be very clear during our presentation. So even with the reduction in our inventory and reduction of cancellations after the creation of our policy in the end of last year, that provided us with stability. We have now a stable number of cancellations. This is what provides us with this good performance regarding our net sales. And finally, about the completion of our works. In the past few quarters, I highlighted that the performance was slightly below expected, particularly in the South of Brazil due to weather effects. I think you've heard that in previous calls, but we are evolving. This quarter was the best quarter of the year for this indicator, and we will certainly keep working hard to keep evolving. So now let's go into today's numbers. Here, we have the highlights of quarter 3. The first highlight is the evolution of the average that I just talked about. So our price for My Home My Life products improved comparing quarter 3 with quarter 2, there was a 9.4% improvement. And when we compare quarter 3 '23 and Q3 '24, we had 44.9% improvement -- comparing -- sorry, comparing quarter 3 2020 to quarter 3 2024, the improvement of 44.9%. Another improvement that we had was the average price gain in resale of cancellations. When we resell cancellations as we can see here in this presentation, the gain was 8.9% in quarter 3 '24, totaling BRL 36 million. And in the past 12 months, the total value of the sales reached BRL 133 million, reflecting a gain of 9.6%. Cancellations are a part of our business. But when we resell these cancellations, we are able to achieve -- we were able to achieve a gain -- an average price gain of 8.9% this quarter and 9.6% in the last 12 months. Here, we also give highlight to the completion of works of our development. We -- so 4 of our projects have now the works are now completed, totaling BRL 512 million in PSV for quarter 3 and resulting in the delivery of 2,26400 units. I'm going to talk more about this and give you more details later. And another important indicator that we have here in our highlights is the adjusted gross margin. Now when we look at the chart, in quarter 3 '23, we were at 31.1%. Then with all the changes that we had and we already commented on in previous quarters and review of our policies and reduction of our cancellations, completion of works and general policies of the company, there was a drop in this indicator. But then starting quarter 1, 2024, we resumed our evolution first quarter, 23%; then second quarter, 24%; in quarter 3, the increase was 29.9%. So we can say that we have truly resumed the growth of this indicator after the adjustment of our policies. Now I'll hand the conference over to Ravazzi, and he's going to go into the operating results of the company.

Thank you, Valese. Good morning, all. Thank you for your time. Thank you for attending our call. Now let's go over our operating results. Let's start with our land bank. Our land bank remained flat. We ended quarter 3 at BRL 5.3 billion. This is a strategic land bank that involves My Home My Life products, brackets 2 and 3 and Horizontal SBPE. Our inventory at market value saw a reduction in quarter 3 and ended the quarter at BRL 403 million. This reduction is explained by what Valese talked about by the suspension of our launches and compared with the 9 months -- the first 9 months of 2023, it's a 52% reduction. The company is working on this inventory to try to monetize it as best as possible as I'm going to give you more details about later. Our gross sales were flat compared to quarter 2, particularly when we consider the reduction in our inventory, but we had a growth in our gross VSO. It reached 35.3%. So despite the reduction in inventory, the volume is resilient. In the first 9 months of '24, we totaled BRL 595 million in gross sales. Cancellations are also an important indicator. There was a decrease compared to the historical series of date of the past 2 years. We are at our lowest level, BRL 48 million. In quarter 3, we also saw a reduction in SBPE cancellations quarter-on-quarter and also for My Home My Life. The only one where we see a slight increase is Urbanism or subdivision. So BRL 49 million, which is also a significant decrease compared with quarter 3 '23 and in the accumulated of 2023. These cancellations, of course, have an impact on the price gain that we're working with. In quarter 3, we had a total of 36 million units that were resold after being canceled with an average price gain of 8.9%. And in the past 12 months, the total was BRL 133 million in PSV of resold units with an average price gain of 9.6%. Net sales also showed resilience with an increase in the net DSO and the net SOS. We closed quarter 3 at BRL 134 million, slightly above quarter 3 last year. Here, we see the price versus cost analysis. This is work that we have been doing. And of course, this has an impact on the comparison with the cost. So we ended quarter 3 at BRL 298 million of price gain against a price increase of BRL 205 million with a delta of BRL 92 million -- positive BRL 92 million. The evolution of our average price for My Home My Life product, as you heard from Valese, this is an indicator that quarter after quarter has been increasing. In quarter 3 2024, we ended the quarter at BRL 238,000. The average price of My Home My Life products, very consistent with what the market shows. The growth rate is 9.4%, a 94% increase year-over-year. And in our historical data, this growth is very relevant, practically 45% compared with quarter 3 2020. So these were the works that we completed during quarter 3 '24. We delivered 4 projects, 3 of them are My Home My Life products and one is SBPE. The -- My Home My Life products that were delivered are Moradas Parque in Pacatuba. It accounts for a total PSV of BRL 85 million with 560 units. NI Altos dos Jerivás in the city of Pelotas with a total PSV of BRL 80 million and 491 units and Garden RNI in Bady Bassitt, a neighboring city to São José do Rio Preto with a PSV of BRL 70 million and 430 units. And finally, RNI Origem do Sol, a very robust project, SBPE project with a PSV of BRL 277 million and 783 houses were delivered. This project is in the city of Várzea Grande state of Mato Grosso. So the total -- in our total deliveries, we reported more than BRL 0.5 billion in delivered PSV and 2,26400 units. This completion PSV is higher than that of the past 3 years. Our financial results. Now I would like to hand it back to Valese.

So here, we have our net revenue. As I mentioned in the beginning, considering we improved the completion of our works, we are improving our POC, and this leads to a higher net revenue. The net revenue in quarter 3 was BRL 176 million, the highest of this historical data set. And I already mentioned this in the beginning, but here, we also see the adjusted gross margin, which was a highlight in quarter 3 after a tipping point, and now it is stabilizing, and we have good prospects of improvement for our adjusted gross margin looking forward. On Slide 11, we have our income statement. In the first line, net operating revenue, we can see what I just talked about. In quarter 1, we had BRL 148 million, quarter 2, BRL 123 million and now BRL 175 million. So there was an increase in our net sales and this is closely related with the completion of our works, which we have been able to improve recently and which leads to an improvement in these indicators. When we look at our gross profit in quarter 1, BRL 22 million; in quarter 2, BRL 17 million and now in quarter 3, BRL 38 million. So we can see an increasing trend. And with the increase in our gross profit, this led to an improvement in our margin. In quarter 1, there was -- our margin was 15%. And now in quarter 3, it is at 28%. Sorry, we have to correct this later. There was a typo here. Our operating results were practically flat. So operating income was BRL 30 million in quarter 1 and now BRL 30 million in quarter 3. One variation that we saw was in our financial results. In quarter 1, we had a net interest revenue of BRL 37 million. That's when we sold the urbanism asset. So the result was an outlier. It differed from our pattern, from our usual pattern. Then in quarter 2 -- in quarter 3, it improved. As we mentioned, the cancellations are dropping in all segments, but in urbanism from the second to the third quarter, there was an increase, and this reflects on the cancellations in our financial or in our income statement. And the final result in quarter 1, we had a BRL 50 million loss in quarter 2, BRL 24 million and in quarter 3, BRL 9.4 million. So we can see a positive evolution here. And this is very related to what I mentioned about our gross profit. The gross profit is improving and the completion of our works also in the south of the country advancing. So this is what led to these superior results compared to the previous quarters. And finally, we have our net cash on the top and our gross debt on the bottom. As for our cash, in quarter 3 to -- in quarter 4 2023, we had an increase. I mentioned in that presentation that we sold some nonstrategic assets than in quarter 1 again. And then there was a decrease in our cash because we use this cash to pay our debt. So that we see a reduction in our debt on the bottom chart. When we look at our total debt in quarter 3 '23, we reached BRL 807 million in debt and in quarter 3 '24, BRL 570 million. So there was a reduction in our debt. Now when we look at our corporate debt, the reduction was 45%, the highest that we had in this period from quarter 3 '23 to quarter 3 '24 for the corporate debt. These were the indicators that we wanted to share with you today to give you more clarity about the results of this quarter. Once again, I'd like to thank you all for your time. It's very important to have you here in our conference call with us so that we can share these results with you. The company truly believes in the evolution of its business. We see a clear evolution quarter after quarter, as I mentioned in quarter 4 '23 after quarter 4 '23, we had adjustments in many of our policies that had an effect on the following quarters, but we are already at a recovery stage, and we believe we will continue this path of recovery looking forward. And I'm available if you have any questions. Thank you. Thank you, and have a great day.

[Operator Instructions] Since we have no questions. I would like to hand the conference back to the speaker for his final remarks.

Well, if you think of any questions later, our IR channel is always available to answer your questions. Once again, thank you for attending our call. I want to highlight the importance of this moment we're going through, and we are at your service should you have any questions later. Thank you all for attending.

Thank you all. The RNI Negócios Imobiliários conference is now closed. Thank you all for attending, and have a great day. You may disconnect your lines now. [Statements in English on this transcript were spoken by an interpreter present on the live call.]