Tecnisa S.A. (TCSA3.SA) Earnings Call Transcript & Summary

As usual, we'll start with the presentation by the executives and then we'll then move on to a Q&A session. [Operator Instructions]. Now I'd like to turn the floor over to Mr. Fernando who will start the presentation, please.

Good afternoon, everyone. Thank you for being here. Let's get started. Starting with the results, as Leonardo said, we always have split into strategy, operating performance and financial economic performance. I'll talk a bit about our strategy. We are keeping continuity of launches in Jardim das Perdizes and we should remember that our PSV to be launched is BRL 4 billion, of which BRL 2.1 billion is Tecnisa's share. Our solid landbank to guide the business plan today is of nearly BRL 5 billion and BRL 2.7 billion is Tecnisa's. We should say that our major focus is on commercial and marketing strategy. And we always control hard on administrative expense reduction. We have reduced over time and have earned productivity for the semester, we had a 19% reduction. And we also work on backlog gross profit, which has totaled BRL 187 million. I should also explain a bit about that. We have had an important event where we have signed an MOU with Cyrela for the sale of a portion of Jardim das Perdizes for up to BRL 510 million that's BRL 0.5 billion. And this is how it will work. BRL 450 million will be paid upfront and BRL 60 million contingent upon the sales performance of the projects. For Jardim das Perdizes something that is nearly guaranteed. So we're talking about BRL 510 million operation. So that is where we are working on, and it still not has been completed. We signed an MOU, and we have 30 October as the forecast to complete. So we have as well as Cyrela been working hard to be able to complete this operation by October 30. I should also highlight that in this operation, we don't have the project that has already been launched included. So you can see here the diagram, as you can see, what we have in Sao Paulo, which is major. We're talking about the gray area, which are those included in the proposal A1, D2, D3, D1-2 e3 Phase 1, Phase 2. So D1 Phase 1, which says there Figueiras is nearly completed and we will deliver by the beginning of next year. Those are the lots that are being discussed. And we have the E1 there. The blue one is not part of this transaction. Tecnisa has some 52%. And with this transaction, the proceeds will be primarily used to reduce corporate debt. It's no mystery that financial costs are hard and especially with the SELIC rate. So that is a greater reason for us to carry out this transaction. So as Leo and Anderson said, we will be open to answer any questions that might come up. Okay. When it comes to guidance, last year, we had BRL 1.6 billion, and we had reached BRL 1.7 billion and now the guidance was BRL 1.6 billion, no was of BRL 1.7 billion and we reached BRL 1.6 billion that is why we reached 95% of the guidance, nearly reaching it. And [ 4Q ] we have BRL 1.5 billion. And if we have this transaction completed, we'll have to review it, but we carry on and we are working on this transaction. We think will be completed and signed, but all of what we're saying, it will not include this. So then we would have a guidance of BRL 1.5 billion for 2026 (sic) [ 2025 ] and BRL 2.1 billion for 2026. Okay. So here, I should highlight the BRL 4.9 billion that I mentioned in PSV that we do have where BRL 2.7 billion is Tecnisa's shares. It's important to say that for this BRL 2.7 billion, we already have BRL 1.8 billion approved as projects and if this will not -- if the transaction doesn't come through, we will launch this right away. For Tencasa, our low-income segmentation where we have together with CP Residencial, we have Zait and Chácara Santo Antônio neighborhood. We're talking about 90 million PSV to be launched in July 2025, as we had said. And we have 30% stake and we talked about the important transaction for us, important partners that we have. CP Residencial is one of these major partnerships we have. The building, as you can tell, is good located in Chácara Santo Antônio and Sao Paulo. And it comes with all that you see. You have the pool, yoga area, sand court, gym, pet place, gourmet space among other amenities that these projects deliver. Here, I highlight the gross sales for the quarter where we can see BRL 139 million being reached. That's what's important to be highlighted here. And the graph will show and compare the second quarter of 2024 with this year. And this shows how we work with sales for each of these developments and how we have reached now the second quarter of 2025. And you can tell that all of them have been increased substantially sales where we have [ Figueiras ] nearly completed and nearly 100% sold. We should highlight also administrative expense that is something that really does worry me and we have been able to reduce our expense 19%. When I consider the first quarter of 2025 to the second quarter that reaches 19%. And when you can see a longer period, we have a 13% reduction. This is our pace to reduce increasingly more something I'm proud of is although we have this way of work showing greater productivity for everyone and versatility for the third year in a row, we were able to get the Great Place to Work certification being one of the great companies to work at. And here, I should highlight the backlog gross profit. We know that we can only do that once the construction is completed or is progressing, and we have worked on it to see this positive result. So this is the amount we have for the second quarter, reaching BRL 187 million, 39% of increase of which actually is the backlog gross margin of 39%. But what I should highlight is that for Jardim das Perdizes, in the next slide, we will explain this development alone. It already reaches 46% where the other one you have a lower margin still good 26%, but it's lower. So I always highlight here Jardim das Perdizes the same thing. It's a good side of the bad thing. The bad thing was 8 years of problems with [indiscernible] lack of auctions. We're stuck. However, the lots had been bought some time ago, and that brings us great margins today and a trend. As I said, 46% and we are taking major steps to always reach that. Now I'd like to pass the floor to my colleague, Anderson, our CFO, to carry on. Go ahead, Anderson.

Thank you, Fernando. Good afternoon, everyone. So here for profitability of the operation. We have here the third quarter and BRL 84 million and this is pretty much aligned with what we have with the first quarter, and we have less inventory. So that shows there is an increase of 1.2% and we completed in 13%, although it's a very challenging scenario that we have out there for the economy. So we consider this a good performance. And right here, we have the net sales. So we see the second quarter reaching BRL 64 million, again, aligned to the first quarter of 2025. Compared to 2024, it is not as effective because we had launches in 2024, and this year, we did not much because of the transaction we are working on as has already been mentioned. We just didn't have launches because since we signed the MOU, we had to stop the launch. Otherwise, we would have done that in May and the other one in August. In this next slide, I talk about what we have. We are at BRL 596 million for inventory and market value. And this shows that we are delivering well sold developments. So when we talk about the maintenance of the unit is included here, showing that once it's delivered, we're able to generate cash already selling the units. So here, you see the geography, distribution mostly Sao Paulo, just a slight 3% in other states. And in terms of status, we have 94% under construction. And right here, we should highlight The Highlights Pinheiros building located in the neighborhood of Pinheiros. It's 1 tower with 110 units, 45 studios and 2 stores and it's BRL 166 million for PSV, 100% Tecnisa and the units of 77 all the way to 86 square meters and the studio smaller from 26 to 34 and 2 stores and the benefits and amenities to our clients and owners of the apartment. As you can see, by studio, endless pool, private workstations, and we have versatility in the blue print. And coming to the financial economic performance, for the quarter, we've had a net revenue of BRL 84 million, including the projects where we have Jardim das Perdizes as well. And it was a bit less than the first quarter of 2025 because we had to work hard when it came to the challenges that the sector has with labor force. So we had a review some of our programs, and we had to adjust some expirations. That's why we had to adjust the budget for indirect costs, and that's where we had less revenue for the second quarter. And we have here for the [ semester '22 ] and what I should focus is the adjusted gross profit. So you can see we had a 15% for the first semester of 2024 to 18% where we are at 3% growth showing that Jardim das Perdizes is increasingly more giving positive results to our company. Next slide. Here, the receivables schedule debt and the debt maturity schedule. As you can see, BRL 621 million total receivables was until 2029 where in the short term, we will have BRL 384 million until 2026. When we see the ones that we'll have, we're talking about BRL 329 million in debt maturing until 2026. And we should remember that we have BRL 596 million of the inventory to work with the long-term debt for 2027. So we have a 2-year there maturity date to come. So here, we show you the net income, so we have BRL 59 million loss in the second quarter, much because of the budgeting and the increase of financial costs because of the SELIC rate. And for backlog gross profit where we have BRL 187 million that was recognized with the completion of the constructions. Right here, I show you the cash flow where we have BRL 172 million where we have in it BRL 577 million equity where we have a reduction because of the loss of the period at BRL 329 million and the adjusted cash generation, where we have a BRL 68 million there showing the increase of the interest rate and some of the deliveries that ended up being postponed as we had to revise our schedules and also the start of some of the construction where we launched 3 years -- 3 projects in the last year at Jardim das Perdizes and that takes up cash. But I should highlight that for the next quarters, we have many deliveries to be made. So you will see in the slide here that we have here receiving those that will reach BRL 326 million that will improve us from what we have for the company. And I close the presentation here, and I'm open to any questions at this point.

Okay, we'll start now the Q&A. [Operator Instructions]. Let's wait a few minutes to see if we do have any questions coming in. Okay, no further questions. So we will conclude our call. Thank you, and we are available for future questions. [Statements in English on this transcript were spoken by an interpreter present on the live call.]