Cyrela Brazil Rlty S/Adr

Good morning, ladies and gentlemen, and welcome to Surela Brazil Realty SA second quarter 2023 earnings score. Today with us, we have Mr. Rafael Horn, our CEO, and Mr. Miguel Mikkelberg, CFO and IRO. The score is being recorded and simultaneously interpreted. You can hear the translation by clicking the interpretation button. To those listening to the English translation, you can mute the original audio by clicking Mute Original Audio. Also, you can find the slide deck in English on the company's Investors Relations website at www.ri.sirela.com.wr. During the company's presentation, all participants will be in a listen-only mode. After the presentation, we will hold a question and answer session. To ask a question, please click the Q&A icon and enter your name and organization. When your name has been called out, a request will pop up on your screen to unmute your microphone before you can ask your question. We would like to inform you that any statements that may be made during the call related to Cirella's business perspectives operating in financial targets are all projections made by the company's management that may or may not occur. Investors should understand the political, macroeconomic, and other operating factors may affect the future of the company and lead to results that differ materially from those expressed in such forward-looking statements. To open Sorella's second quarter 2023 earnings goal, I'd like to turn it over to Mr. Raphael Horn, our CEO. Mr. Horn, you may proceed. Good morning, everyone. Cirella delivered solid operating and financial results in the second quarter of 2023, consolidating a good performance for the first half of the year. With the macroeconomic scenario converging to a better outlook for the sector and for the country, the company was successful in executing its strategy. The company launched 17 projects in the quarter with a total PSV of 2.7 billion, totally 25 projects and 3.7 billion in the first six months of 2023. From the sales perspective, 2 billion were sold in the quarter and 3.2 billion in the year, highlighting the speed of sales of the launches, which was 40%. We emphasize the iconic project on the sky, Serala Bayou, launched in June 2023. It is located in the west zone of the city of Sao Paulo with a PSV of 463 million, and the project had approximately 60% of the units sold in the quarter. The operating performance influenced the financial results, which allowed the company to reach more than 1.6 billion in net revenue in the quarter, totaling 2.9 billion in the year. The gross margin reported was 32.3%, presenting a slight improvement when compared to previous periods. The net income was 279 million, with a net margin of 17.1% and ROV of 13.8%. Furthermore, there is also a level of indebtedness with a net debt over equity indicator at only 5.9%. That leaves the company in a very comfortable position for its next steps. It is important to note that the company remains cautious and alert to the best market opportunities to continue within its intended business plan for the coming quarters. We're aware that the challenge continues and would like to thank our client stakeholders and other stakeholders for their trust. We'll now talk about our operating results. Thank you, Rafa, and good morning to everyone. Let's start on slide five. We'll address the Rails launches. In the second quarter 2023, we launched 17 new projects with a PSV of 3.5 billion Rails, 51% higher year-on-year and 161% higher quarter-on-quarter. The company's stake in the volume launched in the quarter was 78%, totaling 2.7 billion in launches in the Sorella stake. Excluding swaps, the volume launched in Sorella's stake was 2.5 billion in reels in the quarter. On slide five, we'd like to highlight the On the Sky Surrella Bayou in the city of Sao Paulo with a PSV of 163 million reels. The project was launched in June with 60% of the units sold. On slide six, we'll talk about our sales performance. In the quarter, pre-sales came to 2.5 billion, 55% higher year-on-year and 62% higher quarter-on-quarter. Cirela's stake and the volume sold was 81%, totaling 2 billion. Excluding swaps, sales were 1.8 billion reals in Cirela's stake. On slide seven, we'll address our sales speed. The company's SOS in the last 12 months was 48.1%. Looking at the sales speed by launch period, projects launched in the second quarter 2023 have been 40% sold. On slide eight, we'll talk about our inventory. At the end of the quarter, inventory and market value totaled 9.8 billion reels, 12% higher quarter on quarter. In Sorella's stake, the inventory totaled 7.7 billion. The change in our inventory can be seen in the chart to the left. On slide nine, we'll talk about our finish units. We sold 11% of the finished units at the beginning of the period. Adding the inventory of projects delivered along in the quarter, or along the quarter, pardon me, pricing of units at market value, finished units remained stable quarter on quarter at 1.3 billion and 1 billion in surplus stake. We'll talk about delivered units on slide 10. Cerella delivered 12 projects in the quarter with a PSV of 1.3 billion. Year to date, we have delivered 22 projects with a PSV of 2.4 billion. On slide 12, we'll talk about our financial results. Net revenue was 1.6 billion reals in the quarter, 31% higher quarter on quarter and 27% higher year on year. Year-to-date, Cirella's revenue was $2.9 billion, 18% higher year-on-year. In the second quarter, the gross margin was 32.3%, compared to 31.3% in the second quarter of 2022 and 30.7% in the first quarter of 2023. In the first half, the gross margin was 31.6%. On slide 13, we can see our net income and profitability. Our net income was $179 million in the quarter compared to $151 million in the second quarter 2022 and $164 million in the first quarter 2023. Year-to-date, the net income, or rather the income, stands at $443 million, 42% higher than in 2022. Our return on average equity, the net income of the last 12 months over the average householder's equity was 13.8%. On slide 14, we'll talk about our debt. Gross debt at the end of the quarter was 4.7 billion rials. The cash position was 4.3 billion. Thus, our net debt was 175 million rials. 75% of the total gross debt is long-term. Our net debt over equity ratio was 5.9%, 0.6 percentage points lower quarter on quarter. The low debt level confirms Cerelo's financial solidity and puts us in the right path to maximize return to shareholders. On slide 15, we'll talk about cash generation. In the second quarter of 2023, we had a cash generation of 22 million reals, as opposed to the cash consumption of 48 million we had in the second quarter of 2022 and the 35 million cash consumption we had in the first quarter of 2023. Yet to date, cash consumption totals 13 million below the cash burn of 100 million in 2022. Rafael and I will be available for questions now. We can go on to the Q&A session. Thank you. We'll now start the Q&A session. I'd like to remind you that to ask a question, you can click the Q&A icon, write your name and the company you're representing. When your name is called out, a request to unmute your microphone will pop up, and then you can unmute your mic and ask your question.

The first question comes from Gustavo Cambauva, BTG. Good morning. I have two questions.

The first has to do with Vivas and Mia Casa, Mia Vida. How is it that you see that after the changes that have been? And what are your expectations for growth in Viva? So your perspectives on Mia Casa, Mia Vida after the changes. And this could be for the medium term. Once things are more established or more stable with Vivas. My second question also has to do with Minha Casa, Minha Vida. Vivas is growing. Automatically, Cirella is more exposed to Minha Casa, Minha Vida when you combine Vivas and the other JVs. So what are your thoughts? Would it make sense to maybe reduce exposure in other JVs? Paniplano, once Vivas is growing,

How exposed Minha Casa Minha Vida is for the company in the medium term for the company? Hello, Kambava, how are you doing?

We buy landlord per landlord. We're not very focused on the segment. We like very high end. We know how to do mid-end and low-end as well. And thank God we have a very competent team to buy a landlord, right? So we don't really think about how much is going to be Vivas next year or, you know, these discussions are much more as they come as part of the plan of the company. So we don't really have an expectation of what Vivas is going to be. We're concerned about the total results and we're concerned about doing our projects as best as we can. So I can't really tell you anything about how big or how small Vivas is going to be in the coming years. That's going to be really related to our land bank, lots of land that we decided to buy, than any specific planning around it. Low end products are going through a good moment. I speak not only about Cirella, but also when we look at low end products from the other players. So if there are good opportunities in land bank, we'll buy more, but there's no specific strategy. If Cirela is going to be big and Minacasa, Minavida, once you combine JVs and Cirela, that's not how we see it. We're big in that segment because we have good partners, we have fantastic partners. We really are lucky.

So we're big in that segment. But when you look at Vivance,

standing alone, we see it one way, and we also see the way that our partners are doing it separately. We're not going to sell our share with our partners because of that. We're not scared of becoming too big. If that happens, I mean, we already are large in that segment because our partners are very profitable, and we're very happy about that. So we don't see it like that. There are two different operations.

We have our organic operations and our partners operation.

We don't see any segment as one that should have a maximum exposure. We like every segment and the bigger they can be, the better.

That's it. Thank you. All right. That's very clear. Thank you. Have a good day. The next question comes from Igor Artero from XP. Morning. I've got two questions. So you've got a good sales moment.

Do you think this could be an important trigger to continue to accelerate the speed of launches in the second quarter 2023 and in 2024? So I'd like to hear what your thoughts are on launches for the second half in 2024. And cash generation is my second point. The company continues to grow.

At this rate of growth, can you deliver anything in cash generation? Thank you. Hello again.

Brazil is a challenging country, so we don't get too excited as we don't get too disheartened. We don't say, hey, this half of year was brilliant. We're going to rock. So last year, everyone thought we were just going to plunge into a crisis, and we were okay with our pipeline and hoping that the macroeconomic situation wouldn't worsen. You don't really believe it, but this is how we tick, right? So we are land bank buyers, right? So we will put together our plans for 2024 or projects for 2024 according to the land bank that we can buy. So we try to shield ourselves from these fluctuations we see in the market or in our sales. And if we sell too much in one quarter, we don't think that everything's going to be rocking for the next quarter. And if we sell too poorly, we're going to be crying. Well, I'm going to be crying either. So we're going to be working 14 hours a day, doing what we love and whatever else happens, uh, happens either to support us or to be an obstacle. In two months, Brazil worsens its microeconomic situation again, and then everyone is disheartened. I'll be talking about cash generation now, Igor. At the start of the year, we had mentioned we expected a cash burn this year, especially at around 300 to 500 million reals. The operating performance in the first quarter surprised us positively, and we had 47% million burnt in the half of the year so probably have a cash burn in the second half of the year and it should be lower than our forecast for the whole year next year we expect a more neutral cash position But there are many variables to be factored in. Land bank, the performance of our inventory and launches, all of that has an impact on our cash generation. So it's a bit too early to give you any more substantiated forecast for next year.

But we're going to go into that. That's crystal clear. Thank you.

Next question from Pedro Rajnal from Credit Suisse. Good morning, everyone, and thank you for taking my questions. I have two too. As for land bank, I wanted to hear from you how you see the market at this point. Do you have all of the plots of land that you need for the launches of this year, next year? And how much should that represent for the PSV of the projects? And my second question, similar to the first, I know this is not the aim of the company, right? To increase volume, but I wanted to understand What your ability would be to grow volume if the market improves? Do you have that card up your sleeve if you decide to accelerate volumes in the second half of this year or next year?

Thank you. Good morning, Pedro. This is Miguel.

As for LatinBank and our pipeline for next year, we basically have our pipeline ready for next year. We expect to have a volume similar to that of this year. And of course, as Rafa said, we look at every plot of land we have. And if more opportunities arise, there should always be room for more land bank to be bought and for us to launch. But we have our pipeline ready. And as for the possibility of accelerating launches this year, that's something we cannot. the processes for approvals and the bureaucratic perspectives from a legal perspective is always slow. You mentioned projects that we deal with. So CERLA has been growing very much in the past years. We have grown every year, basically. So that means we didn't have any... land bank that we held back and we delayed to launch. So we cannot increase our pipeline for this year, no. If I may ask a follow-up question. So the pipeline for 2024, the land bank bought recently, how much does that account for in PSV, pardon me? with about two thirds of our pipeline for the year of 2024. So this one third is probably what we have bought this year to launch next year.

Beautiful, thank you and have a great weekend. Next question from Tainan Costa from UBS.

Good morning, Rafael. Good morning, Miguel. Two points, one around margins and one about the macroeconomic scenario.

We see very strong growth year on year.

How can we see that the margins are going up, but the hedge is more stable or dipping slightly? Does that have to do with the gross margin of different launch periods, with the gap between them? And my second point has to do with the macroeconomic scenario. Even with a slight improvement, there are still many unfavorable points for the sector, right, considering the interest rates and whatnot. And still you have performed really well.

So what grounds this performance? So if you could give us some color around these points, that'd be great. Good morning. This is Miguel.

As for the gross margin, we did bounce back. We had been saying that we expected gross margin to be higher than we presented in the first quarter. That was a bit of a one-off with margins a bit lower in the first quarter. And the margin in this quarter is closer to our expectations. So we don't see an increase in the short term for the margins. In the medium term, we may have, of course, an expansion or growth depending on the launches. We are buying land bank in a very good moment. So in 2021, we bought LandBank and there was inflation, so it was difficult to produce a good margin back then. But now we have a more favorable scenario.

Now, as for REF, we have the margin close to 30.

The quarter almost always has a margin lower than the total margin of the project because you don't know what the swap is going to be at the start. So the projects that were launched in this quarter should have a margin of about 34% in the future, but now they show 30% because of swaps.

But we have had our margins a bit lower. but that was really as per our expectation. And Rafa's gonna answer the second question about the macro. The ones buying are end users. That's the good news. Most of our products are for end users and they're the ones buying it.

Now, macroeconomic scenario is tough, but we're having good performance. Well, the macroeconomic scenario is better than expected, I believe. Brazilian GDP, the economy didn't hold, right? But we can't celebrate too much. Brazil is a very unstable country, so we can't be celebrating too much that the macroeconomic situation has improved. But, well, the macroeconomic scenario improves, certainly, but it's been hard. It's not easy. But I believe this is one of the reasons why we have a relatively okay performance. other reasons well god always helps us right so god always helps us um have good work and everyone makes mistakes we make mistakes we left some money on the table in some cases so we could have had even better development performance in some of them so we know that results could could have been better in some cases so we are happy but It can always have been better, right? It could have been better. And Cirella really looks after our clients. And this care we show to them is neutral, right? So we really value our brands. And there may also be a reason why we sell better. So if you're investors and you're thinking about buying a... an apartment, so that's great. But we know that the clients will find a product that is really some, it's a product that stands out from the market, right? And we know that our team is very competent. We have a very hardworking team. We always think about the team and we always count on God to help us. And the macroeconomic scenario too.

But our secret there, we work hard and hope for the best. All right, Rafael, Miguel, thank you. Aline Calder from the Bank of America. Morning, Rafael and Miguel. Thank you for taking my question. I'd like to talk about the master plan for Rio de Janeiro. Can you talk a little bit about how that could impact you?

If that would change the strategy you have in the region. Also, if you can give us some color on the land bank you have in the region, what do you think could benefit you?

Thank you. Morning, Eleni.

This is Miguel. So the master plan in Rio de Janeiro is still in its infancy, right? So there's a lot of uncertainty there. We can't yet have an opinion about it. there is a chance that in regions like the north of the city and the center, we could have some restrictions lifted around the size of the flats and the size of the parking spaces. So that could have an impact. And if these perspectives come true, we can have more opportunities in these segments specifically. But again, it's still way too early and we can't That's because we don't really have a clear opinion yet. As for the land bank, excluding Paro da Tijuca, we normally have a short-term land bank, so to speak. So we don't yet expect a positive impact on that because of the changes in the master plan.

All right. Thank you, Miguel. That's very clear. The next question comes from Bruno Mendonca from Bradesco. Hello, everyone. Good morning. Thank you for taking my question. Around SG&A, we see a nominal debt year on year, even when you include commercial expenses. So it is growing less than revenue is growing. Do you have any specific initiatives to reduce GNA? So that's my first question. And the second question has to do with cashmere. But you could also start off talking about G&A. Where do you think there will be stability and how big a portfolio can be with this stabilized G&A? Thank you, Bruno, for your question.

We don't have any specific initiatives to reduce our G and A. When we look at our overhead, that's a number that's more difficult for you to see because we have consolidations. But well, I mean, we see a slight increase year on year, slightly above in inflation, and the volume we've grown in launches and sales has been much bigger. So we really had operating leverage. Looking forward, we believe we'll be able to keep our GNA in check. Our objective is that it won't rise more than inflation. We've been very disciplined in that.

We don't expect GNA to have any negative impact on our results. And Raphael? Well, certainly in cash, we're as expected. We have 1 in 50 in our portfolio. And we're not talking about massive growth. It's 100 rand a year, 100 million a year. Well, we're meeting the expectation for the years.

We may get to 3 billion in portfolio, 3.5. Let's cross over. When we get to it, we have to be careful with delinquency rates.

Well, it is a company that we really like, but it's a good level for Sorella. Nothing that any bank should be concerned about. Can you talk a little bit more about the cash? with the low interest rates, you had to increase original sourcing rates. So there's 800 a year for sourcing. If we have lower interest rates in the future, can we lower that? How do you see that? Well, the rates that we give have to do with the rates that we get. So the loan rates have increased in Brazil, so we had to increase our loan rates too. It's difficult to forecast or predict these things. I can see these 800 a year. If things change, I can't give you an answer.

We don't really know the macroeconomic forecast, right? So if the rates drop to three, then We're currently working with 800 a year. We plan the company for it to be profitable and for it to originate 800 a year. If we can originate 1.2 a year, that's great. But if we can't with 800, we're good. We're not fortune tellers. You may think we are, but we're not. We plan things simply because that's what we can see.

All right, thank you. Fanny Orengi from Santander is asking a question. Good morning, Miguel. Good morning.

And thank you for the results. You bought two plots of land in Puerto Alegre. So I'd like to to see how you see the region. We know that you have much less presence there than you do in Sao Paulo. So what are your expectations? Is it better than you expected for the region? And what is the expectation on return rates? And my second question has to do with Sao Paulo. We see a number of companies that are normally mid-end to high-end, they're migrating to do Minha Casa, Minha Vida, and they're talking about accelerating that as a whole, which could potentially lead to an impact when you think about workforce and labor. How is it that you see this potential risk in the market in Sao Paulo?

Does that make sense? Porto Alegre is not an easy city.

And we bought two plots of land. And if we did that, it's because we thought those two were good. But on a macro level, it doesn't mean we're going to be growing a lot in Porto Alegre. Again, everything here is bottom up. I mean, I don't mean to be repetitive. We bought two plots of land because we like those two plots of land. No one woke up in the morning saying, hey, we want to grow in Porto Alegre. Brazil is not for amateurs and nor is Porto Alegre. So we need to be careful with what we do in Porto Alegre.

So we're very attentive, but we like them both. I don't know which one we included in the balance of this quarter, but we like them both. Thank you for your question, Fanny.

It's very difficult to predict what the increase in milling is going to be and how fast it's going to be.

If you have an increase in milling that is sudden, then there's a lack of labor or workforce, right?

But we see a decrease in the number of units launched in the cities compared to 2021, possibly compared to 2022 too. This is not the worst moment. We have grown a lot in milling. And there was a moment that was difficult to go through.

We struggled a bit with labor. but the increase in the number of Miyakasa and Miyavita could have an impact.

And our engineering team is concerned about that, I mean, or is attentive to that.

But we see the situation is better than it was one and a half years ago. All right, thank you, Rafael and Miguel. Next question from Daniel Gasperetti from Itaú. Thank you for taking my question. I've got two questions.

The first has to do with the follow-up of sales in the second half. We know the macroeconomic scenario fluctuates a lot, but would it be intuitive to think that with the decrease in interest rates, we could see an improvement in the sales more than you had in the first half of the year? How do you see pricing dynamics? Do you think pricing could start to go up again? And there was a question around the master plan in Rio de Janeiro, but what about the master plan in Sao Paulo? What is your perception as to that? Will that have a positive or a negative impact for the company? I know that Rafael said it's something that you look at by land plot, but... Hi, Gasperetti. Again, we have to be realistic. As I said to Bruno, we don't expect any improvement. If it doesn't get worse, that's good enough. If the macroeconomic scenario doesn't get worse, that's good enough. Of course, if the banks reduce their interest rates for clients, that's going to be better. But we expect the banks will keep their interest rates at the same level for clients, even if the interest rates of the country goes down. For prices to start to go up, I think it will take a while. We need some good years or some years of good macroeconomic context for prices to start to go up.

And again, we expect this scenario to be the same as it is. Nothing is easy, right? In Brazil, as we say, if it's very bad, then it's bad. But if it's just sort of bad, then it's not too bad. Brazil is never too good or too bad. We just navigate the waters. We surf the seas.

When people get too excited, it's not good because then there's a price war. We expect things to be the same as they are. It's a difficult scenario, but if you're cautious, you can weather it. Now, the master plan in Sao Paulo, it should be positive for the margin. But that doesn't change things much. I mean, not the master plan. It doesn't change things much. What really changes things is the macroeconomic situation in Brazil. It's not the master plan of Sao Paulo that is going to unleash a massive change in the market. It's going to be positive, but marginally so. We won't start buying land bank left, right and center because of that.

Thank you, Miguel. Thank you, Rafael. Have a good weekend. Next question from Hugo Grassi from Citibank.

Hello, everyone. Congratulations on your results and thank you for taking my question. I'd like to insist on the master plan point. We're a bit more excited. It could be a change in the parameters.

And I would like to understand, first of all,

How much advantage can you take of this opportunity considering the volumes you can do? You've been buying land bank for to replace what you have.

I mean, you've been launching faster than you've been buying, right? And thinking about the... You see that or... So the rules become a bit more favorable. Could you quantify in any way what would the impact be positively in your PSV? And Miguel said that a pipeline for 2023 won't allow for more projects.

So how do you see the possibility of launching projects a bit faster to resubmit it for approval so they can hear your opinions?

Hugo, thank you for your question.

Quantifying impacts. Again, that is land plot by land plot. It depends on the land bank available, how much you can verticalize it. In some cases, verticalizing it can yield a lot of benefit. In some cases, it can't. Qualitatively speaking, you can present a project more better defined. So it is a benefit, but we can't quantify it. We're not going to resubmit for approval for any projects in 2023. The projects that we're working with are going to be launched. And in 2024, that really depends on our calendar and our timeline. But we could see some benefits if you're submitting for approval for a new project in this situation. I don't think we're in a difficult position for 2024. We're not concerned about 2024. Again, we're not a company that worries too much about volumes. We are relatively comfortable with what we already have for 2024. And now we're going to be looking at the situation

land plot per land plot.

Miguel didn't say we're in a tight spot. He said we're comfortable. We're okay. And if the projects improve, then, I mean, no problem. We can push it from 2024 to 2024 and if the volume is smaller, it's okay.

If we can make more money in 2025 than in 2024, that's great. We're going to do it, but the volume is fine. All right, thank you. Next question from Rafael Rida from Safra. Good morning, everyone. I only have one question. The savings account funding for individuals, not for corporate clients,

You don't see the rates going down in the short term, but do you see any risk if we continue at this level of sales where the situation might become a bit more difficult, the cash inflow could be lower? Do you have an expectation of increasing your direct clients or fiduciary portfolio? Thank you for your question, Rafael. Looking at the balance sheet of the main banks, the credit for individuals has gone down. So I think the biggest movement has already happened and that hasn't had an impact for us. We have the benefit of having the real estate credit with the banks. And there's a good volume every year. So we haven't had any impacts when you think about LTV or anything of the sort.

We continue to have the credit availability for our clients.

Looking forward, I mean, it's difficult to know it, but I think the main reduction coming from the banks has already taken place.

The real estate portfolio is still growing. But this will depend on the dynamics for the banks, right? The bank will always try and have the volume that is coming compensated, right, offset.

So I don't see any lack of funding in the future. I think it's going to be very different to 2016 or 15. And Rafael already said that. We find it difficult for things to go down much, but the reduction in the select interest rate could have a positive impact. You could have net deposits, and that would help the banks have a bit more appetite and increase their rates for origination, for sourcing.

All right, that's clear. Thank you. Next question comes from Marcelo from JP Morgan.

When you think about the client from one point and you have the broker, the agent still having the financing costs at 10 or 11, right?

or with the SELIC rate changing, we could have a change there. Do you think there could be better rates for the future? And capital allocation. You have shares from Currie-Levy and Rolando. What do you expect on that front?

Do you think you could get to the highest price or you can think that the balance sheet is solid?

So I'd like to hear about your investment front as well. Hi Marta, this is Miguel.

As a mortgage, our sales force doesn't do this type of pitch with the clients. And credit analysis will continue to think that the funding rate or the loan rates are going to still be the same. We're very conservative there because of the volatility that we know there is in Brazil. And the interest rates curve, loan rates, that's a high level of sophistication, right? It's difficult to have this conversation with a client when you're selling a unit, right? So that does not happen in Cirella. As for capital allocation, we can't talk much about our plans, obviously. any divestments. But what we can say is that we have a long-term agreement with our three JVs that are listed. We have shareholders agreement that guarantee we continue to have a substantial share of them up to 2027. And as Rafael already said, and I have to stress, we're very happy to have them as our partners. And the three of them have published or released rather their results this week, and their results were very good. So we're very happy to see that these companies that joined the market three years ago are able to deliver on their promises and have good performance.

As Rafael said, we feel very lucky to have these partners. That's very clear. Thank you. Next question from Jarrell Guilty from Goldman Sachs. I've got two questions. Good morning.

Well, considering the macroeconomic situation and I'd like to hear from you if you see a possibility of special dividends, what your framework is going to be and how that could be in the context that we currently have. And you talked about loan rates and what your expectations are for 2023-2024, but I'd like to hear more about the breakdown when it comes to the product type. Do you see it could be like 50% high-end, 30% mid-end, and 20% for the rest?

Could we have more in the mid-end? Thank you. Thank you, Gerald, for your question. I thought this question about the dividends was going to come earlier on the call. Well, as you know, we always pay a lot of attention to our capital structure.

We don't like to work with a heavy equity level. We have to have a number of launches that is higher than our equity so that we can have an ROE that is relevant for our shareholders. Last year, at the end of the year, we saw a substantial cash burn for this year, thinking about the macro and the micro scenarios that were very challenging. But things are going on well. Things are going well. Cash generation is a bit better than expected. We have earned less cash than expected. And the micro and macro scenario are also going better than expected. So let's see how the next months fare, how they perform. When we have extraordinary dividend payouts, it's only close to the end of the year. So it's possible that we will resume these discussions.

But let's see how performance plays out. As for the breakdown of launches for next year, generally it's the same. We could have an increase in the economic front.

We had sort of slowed down on that front because of inflation. And now with a better scenario, we're more excited. So we may have some growth there. But the breakdown, when I look at regions and segments, should be similar to what we already is.

All right, that's clear. Thank you.

All right, so this is the end of our Q&A session. I now turn the floor over to Rafael Horn for his final remarks. Thank you very much, everyone, for joining the call. This is Miguel speaking, and let's continue to do our best to deliver good results, hoping that the micro and macroeconomic scenario will play along. Have a great weekend. Thank you. This is the end of our conference call. If you have any questions, please send them to ri.sirela.com.br so that you can speak to our IR analysts. Have a good day. Thank you.