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,