Multiplan Empen Unsp/Adr

Good morning, ladies and gentlemen. Welcome once again to the earnings call regarding the second quarter of 2023 of Multiplan. We have here with us Mr. Eduardo Caminitz Perez, Mr. Armando Dalmeida Neto, Mr. Marcelo Varnes van der Jordano, Mr. Hans Melchers, and Mr. Richard Schwarzman. to inform you that the presentation of the earnings call is ready for download at the website ri.multiplan.br. Should you need any assistance, please request the help of an operator by typing asterisk zero. Before continuing, I would like to clarify that any power looking statements that might be stated during the earnings call regarding the business of the company and projections and operational goals are based on beliefs of the board of directors of Multiplans board of directors and information based on information available as of now. They are not a guarantee of performance and they involve uncertainties and premises. They are regarding forward-looking statements, events in the future, things that might happen or not. So, macroeconomic conditions, industry conditions, and other operational factors might affect the results of the company. It might lead to results that are materially different to before-looking statements. I would like to give the floor to Edward Lepetic who will start the presentation. Please, the floor is yours. Good morning. Thank you very much for everyone that is here. It is a great pleasure to be here with us. Today, we will start with a quarter that was exceptional for the company. We reached 5.2 billion in the quarter, an increase of 6%. In regards to the same quarter in 22, when we see the growth, The advance in June was already 7.4%. And to our great surprise, July has been an exceptional month. Going back to the two digit growth. And until the 25th of July, we measured and we were above 10%. That is a great surprise. It is a positive indicator. that makes us believe that we are gonna continue to grow in the future. Well, the company has had a growth of 247 million in this quarter. So this is, we are looking for efficiencies and this is the result of that everywhere over the last 12 months. We have over 800 million in revenue, 33.8% higher than 2022. I believe that this is one of the key things of the company. It is an extremely satisfactory number. Occupancy rates. We reached 96%. We are constantly seeking new tenants And we realized that over the last quarter, they are searching for optimized spaces. We had a little bit of a slowdown, but people, international brands, want to go back to Brazil and work in Brazil. So this is good for our expectations. 75 stores, over 75 stores. New stores, 42,000 in a land bank. We continue to rent very strongly. Our digital platform. The multi-app, it's evolved and added new functionalities, taking the experience of them all to our customers. 4.4 million downloads since its inception. Over 15 million accesses over the last 12 months. And we are here talking about the access of the mall. Well, access multi without, well, to the parking lot will be installed in most malls. We will not have the entryways anymore. So the consumers will have two ways of paying. You register in the multi app, and then you will have there a lot of benefits and discounts and then you get automatically on the mall or you'll continue to pay physically for your parking ticket to directly to Multiplan. I believe that this will bring less friction, more fluency and it's better for the company as a whole. Expansions. Let's continue with our growth strategy. Seven expansions. Two undergoing. Briefly, Morumbi Shopping, Maceió, São Caetano, Jundiaí, and we have added Brasília. For those of you that do not know the capital of the country, this year, While the park shopping is 40 years old, we are going to have a great event there. And this is the biggest GDP in Brazil. It's a city that is ever growing. 70,000 meters of ABL. And that will go through improvements. And we have that in most enterprises. But I wanted to highlight, what are we doing? At Part Shopping Brasilia, well, it's almost a reconstruction. We've gone through the pandemic. It was a shopping mall that had the movies. And we know what happened with that activity during the pandemic. We managed to revitalize things. And today we got to a bang to a moment where we have over 90% rented. So revitalization is key and an indicator of the malls. And you can see the gross leadable area. And now 26 million in revenue just in this quarter, 40 million just over the last semester. Well, Let's talk about real estate since we talked about the ADL or Gross Latable Area. We have discussed in several cities, well, in all the malls that we operate, Curitiba, Ribeirão Preto, here close by, we have the land bank of Barra Shopping even, We have several real estate enterprises. And we have Golden Lake, more focused right now. And this is what we are developing. But with improvement of the market, we will have the opportunity to launch more enterprises of them, such as that. I would like to highlight a project We have several initiatives in the community level, and I would like to highlight one from Barra Shopping. Barra Shopping, Rio de Janeiro, has a program from Multiplan that was created by a former collaborator employee in 2006. And here people can study and conclude the high school Secondary education in a free way. Tenants, employees, everybody can study. This program already reached 1,600 people. Anybody can take part. And we want to take these programs for every single mall. What is not installed in every mall is a logistics issue of the people that install that service, they can take this to the other real estate, the other equipment. We should do that soon. We would like to have that installed for the future. Well, this is a quarter that is very strong, that is very, very good for us and reinforces our strategy for growth for the future. We started the year with some doubts, but now we have a space for growing with more speed and in all directions. Thank you very much. Thank you everyone that is listening. Let's open for a Q&A. Thank you.

Thank you very much.

We will start now with a Q&A session for investors and analysts. If you have any questions, please type asterisk 1. And your question, if your question is answered, you can leave the line by typing asterisk 2. Questions will be answered as in the order they are received.

First question, Elvis Credencio from BTG Pactual.

The floor is yours. Good morning, Eduardo, everyone. Two questions on our side. First of all, about sales. You talked about the introduction that the sales in June improved in comparison to the previous months.

Our next question is from Senor Inge from Santander.

Hello, everyone. Congratulations on the results. Well, I have two questions. First of all, in regards to Multi, the app, I wanted to understand more on the revenue budget. There is others. Where exactly Multi is generating that revenue? How do you see, what are the opportunities in the Multi app? Because before it was simply something that, you know, was servicing the client better. And now we see that this is an app that can eventually have an upside for the company. So that's my first question. Second, Eduardo talked about expansions. I wanted to understand in regards to the timing of the expansions. It would be nice to understand that.

That's it.

Thank you.

Hello, Fanny.

First of all, first question that you asked about the multi-app. We have a few opportunities for using the monetization tool of multi, but that's not the main objective. The main objective is to facilitate the lives of, make life easier for the users and have more usability of the app. People are taking part of the process. This is growing. And we do not, we're not focusing on monetization. Here, the idea is not to do monetization. It's to create, actually. Our idea is to create a database that is important for the company so that you, as a customer, then we, as the company, can see where the model is going and we can leverage on the information of our customers. The second question is, Timing of the Expansions Well, thinking out loud, possibly we are going to launch between three to four expansions over the next year. I imagine that we're going to deliver Diamond Mall and Barigui until the end of next year. We're going to launch Morumbi, Maceió and Brasilia. at the end of this year, the renewals, and so on and so forth. The idea is not to do all the expansions in order in the market. Otherwise, we're going to have a decrease in value because of the amount of stores in the market. So that's the train of thought. Does it make sense? Yes, it does. Thank you very much. I would like to compliment one thing. Don't forget the funny. Our next question is from . Good morning, everyone. Sorry I dropped off the line in the middle of my question. Two questions on our side. First of all, sales. In July you commented that there was an acceleration in comparison to the second quarter.

Could you explore this better?

Is there any assets that's been growing more? Any segments that have been catching your attention? And also the expectation for the growth on the second semester would be nice. So the second question, same store rent, which you mentioned that was above the records. So it would be compatible to keep this growth rate with the same store that you are presenting. And what are the levers that are triggering this growth? Thank you very much. Thank you for your question. Well, I wanted just to compliment the The previous question, funny. One way to monetize, we mentioned over the last call, it's important that we, well, we have the payment of the parking lot. You remember the booth where people were working and now we are substituting this by the app. This is just one of the several examples of operational optimization that we are doing right now. And we are improving not only revenue with that, but We're improving our capabilities. So we saw that in the middle of June, there was a change in standards. It's improving.

In July, we have had a very good July over the last 25, over the first 25 days.

There are several factors for economy. But what I can say on my side is that we have the first semester, several events in the malls, and we have an extensive schedule. So we want to bring the people to the mall. People can be together, creating a sense of community, and that will also improve the sales. And with an overview of the growth of the GDP is over 2%. You come up incorrect with the numbers. There is also the FGTS release. There is a lower inflation interest rates. Are better, so our vision is optimistic and also. We are increasing the occupancy rate. The number of stores are a record for our tenants. So this is positive for us to continue with the operational efficiency and decrease of expenses in regards to the same store rent is high. And we have the real growth And we have a long record of 15 years, 13.5%, 3.6%. It's a bit higher. And it shows that this is not a performance. Well, this is the record of the company of delivering good results in real growth. And we can bring better operations. And There is an incredible change that is happening. It would be, well, it's better that the inflation is decreasing. Does that make sense?

Okay, thank you. Our next question is from Igor Aldero, XP Investments.

Hello. Congratulations on your results. Two questions. First, to understand the expansion of the occupancy rate, it was very strong. We also have another detail that has to be added, but it seems that the tax reform doesn't impact the tenants so much. Do you think that? And the second question in regards to Golden Lake. It seems that with a decrease in the curve of interest rates, there is a positive effect. Do you have any appetite of increasing the dynamics with a more favorable interest rate? Let's comment on what you mentioned. Very important point. which is the tax load or in the tax reform I am certain that if we didn't have that discussion well the uncertainties that will happen and of course we have uh you know that sets the break of everyone uncertainty so as you start to clarify the horizon of what will happen and what will not happen I think that the growth in sales The store rent will increase. And in the beginning of the year, that impacted us very strongly. And now people start saying, well, it's not a ghost, as I imagine. And you start to have trust where it's supposed to be. Is it where we want it to be? No, there are many doubts.

And we managed to do an investment.

Well, we have the four first buildings that we launched at the end of 2024. And we have products almost ready to launch that some consumers have researched. And we believe that we should do some sort of launch in 2024. in real estate. Okay.

Thank you. Next question. Hello, everyone.

Thank you for the presentation. So two questions. First, the capital structure. Given the continuous trajectory of reduction in the leverage, I wanted to understand how do you evaluate the capital allocation of the company besides the opportunities that you've mentioned on the expansions? That would be better for the capital distribution and also in a macroeconomic scenario would be would there be development in the greenfield? And if positive, where do you think that there would be more demands to receive projects? And the second one, occupancy cost. How, well, you have the trajectory in the future with a scenario where the sales are gonna grow a bit larger. So what is, well, with the occupancy cost normalizing, And how would the promotion fund be working in this equation?

Thank you. Excuse me, ladies and gentlemen, let's wait for the reconnection of the speaker. Excuse me. Ladies and gentlemen, you may continue. So you can hear me, right? Yes. Did you hear my question?

I heard it. Sorry. I was talking about expansion. Once again, we have a very good record based on growth and expansion. The expansion has a function, not only of taking more services and offering more benefits for our customers but the impact in the whole is very big so we are very excited about the expansion and these two effects uh you complete and then you work with the whole and then you increase profitability and much more services for everyone i with what i have seen I've realized that the movement specifically of July is that we continue to look at benefits. We never stop looking at that. I don't have a specific region or thing to talk about, but we're always open to opportunities as the sales grow. Then we will continue to develop the greenfields. Armando here also completing the question. If you look at the capital allocation, we have a slide on that on the strategies for shareholders, which is to do the rebinding of the shares and getting money and investments. 940 million reais allocated recently. If you compare it to any cash generation metrics, there is a big growth. In regards to if you compare it to last year, the strategy of the company to deleverage last year is much more than just the great results and strong growth of the company and a bigger margin in efficiencies, which are consequences of this leverage.

So these are the expansions.

In regards to the occupancy cost, there is, we are preparing ourselves for the events. There were 504 events and we have a schedule for the semester. You gather the money first so you can prepare for the events, Christmas, one and so forth. So it is, We are always trying to help the tenant and this will not change in the future. The important thing.

Oh, I think that's it. Do you have any more questions, Andre? No? You answered. Thank you very much. Next question. Hi, everyone.

Good morning. First point that I wanted to talk to you. in regards to costs and expenses. When we look at the expenses of property, we see the occupancy with the marketing expenses in the land bank. And looking at the presentation, given that June we have an occupancy which is 40 bps higher than the average occupancy. So Are we going to have the expense where the properties are going to drop? How do you see the marketing expenses? What can you imagine from now on? And also in regards to GNA, we always have lower than the net revenue in the last semester. So how do we see this point from now on, the second point? Also, in regards to other revenues, if you can comment with us and give us more opening on what triggered that growth of other revenues, please.

Thank you for the questions.

You asked me a lot of questions anyway. Marketing. Marketing in the past. had a growth. For example, if you're going to Baguad, the shopping mall, 1922, we opened in November 21. So there was a lot of promotion, events, marketing, where we had an impacted growth of the enterprise. But the expense lines, they're very much controlled. If you look at the expense is 5% in nominal terms, nominal terms in regards to last year, 1.6%, 5% is the ideal. And this was very positive. The expenses of property, property expenses, which are significant, are reducing as the location increases. And so we are very optimistic. The company is well-directed. We are always is doing reinforcing the areas, infrastructure, qualifying, improving. This is a part, but it's not an expressive change. There is a significant change in terms of sale. Well, in regards to other revenues, that's traditionally the shopping mall that this quarter is specific There was a monetization, which is a very expressive part of the app, of course. So that's why that line was higher than what you expected in the past.

The 30 questions are answered. Thank you. Next question.

Hi, everyone. Good morning. Thank you for the presentation. I wanted to understand the turnover. As you mentioned, it has a higher level than their historical records. And you talk about a very proactive management. So I wanted to understand what is the proactive management at the commercial level. And maybe there was a pressure on the side of the company of closing operations that didn't make sense. And then we can switch to them by other. And at the same time, I wanted to see with the new context, There is a differentiation with the lower inflation scenario. So there is the levers of real growth or any cause for negative growth. So I wanted you, well, the active management that we do when we talk about that, we do not We do not escape vacancy. And I think that the substitution is healthy because who chooses who stays in the mall is not us. We can't even choose who gets in. But those that stay are the ones that go to the mall. So you make a choice and then You go with the public that goes there, and then you have to change. I see that with good eyes. It's good for the enterprise, and this turnover is happening at this level. Maybe higher than in the past, but we never had problems to change anyone. We've had several Rental Contracts

How the contract is changing and we adapt the contracts to the new realities.

Specifically, we are always adapting and we are keeping the basic clause that bring more protection and comfort against inflation.

Thank you. Have a nice day. Next question.

Thank you. I have two questions. The occupancy rate, you saw a great improvement. So when I see the average, well, the historical records pre-COVID, the average, I wanted to know, Does that your goal that you want to go back to the 98% pre-COVID? What would be the timeframe for this to happen? Second question. The turnover has increased a lot. And as you say, we are increasing the advocacy rate. So I wanted to understand the rent. How should we think about the rental in the square meter of the new contracts versus what you have now at the malls? These are materially higher because anything that you give us would help. Thank you.

Thank you for the question.

We want to go back to a pre-pandemic level and talking about numbers and timing, right? Well, we are ever looking in for the occupant, for the maximum occupancy because it's not, well, we have that expense, but when the person goes to the mall and they see that there is this and that, it's more than finance. You're not offering The possibility of the people to use and consume and use the service. We want to have the maximum occupancy until the end of the year. There are some bold goals from the team, the commercial team. They've done an incredible work. Everybody is excited and we will continue to have We have the rent and we have the records of the company. We don't have to go rent. No, that's not our mindset. And just remember that the decreased inflation, the rent is dearly affected by it.

Thank you. Next question, Andre Mazzini, Citibank. Hi. Good morning.

Thank you for the call. Two follow-ups. First of all, the change in stores, 4.8% of the total debt. But you commented that it was driven by the supermarkets, which was the big one in Barra Shopping Zoo. So the number of stores never changed. That was the all-time high because of KBL or it was a big tenant or it was the first one. The second one with the deflation and negative GDP. So you're saying that the all-year GDP will be negative in 2.7%. So to confirm the understanding, that if it continues to be negative one more time, it's negative for a little time, and the impact is positive 5.6% in the second quarter. But if it's negative for the rest of the year, until the beginning of 2024, we would indicate a negative. So we would have positive. So you consider the decrease in inflation and then a contract. But then you need a water month to complete for the future. Would you give us details? Okay. The number of stores. You got us talking and off the top of my head, the detail was very high. As Eduardo has commented, and we are very happy The commercial activity is very strong. And it was pondered. Then we have the reforms. It's much easier to work with this. And it makes us very excited looking up ahead, not only with the quantity, but the quality. This is very positive and it reflects in sales. that we hope that they are going to be better in the second quarter, as we said in the past. With the GPD negative, as you look up ahead, you have 4%. I think it was 4.2%. But my understanding is that one, is that you do not give the negative inflation. You keep the minimum rent, as we commented before.

Thank you. Thank you for all the questions and your interest.

We close now the Q&A session. And we invite the speakers that have questions to get in contact with the Investing Relations Department. I would like to give the floor to Mr. Eduardo Perez for the last ideas. Please, the floor is yours. Thank you very much. Thank you to all the investors that had the patience to be with us and hear our explanations. My final thoughts are we are very optimistic for the future that lies ahead. We see the increase in Good things are yet to come. Better things are yet to come. Growth can be made more evident than the first quarter. Thank you very much for this very successful call. Thank you. This is Jeremy's call of the second quarter of 2023. Community plan is closed. Thank you for your participation and have a nice day.