Helbor Empreendimentos SA

BOVESPA:HBOR3

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen. Welcome to Helbor's First Quarter 2025 Earnings Conference Call. This video conference is being recorded, and the replay can be accessed on the company's website, ri.helbor.com.br. The presentation is also available for download. [Operator Instructions]

Before proceeding, I'd like to reinforce the forward-looking statements are based on the beliefs and assumptions of Helbor's management and current information available to the company. These statements may involve risks and uncertainties related to future events and, therefore, depend on circumstances that may occur or not. Investors, analysts and journalists should take into account that events related to the macroeconomic environment can -- may cause results that differ materially from those expressed in the respective forward-looking statement.

With that, we have Mr. Henry Borenstein, CEO; Leonardo Fuchs Piloto, CFO; and Marcelo Bonanata, Commercial Director. Mr. Henry will begin the presentation. Please, you may proceed.

[Henry Borenstein, executive]

Good morning. It's a pleasure to begin our results call at Helbor. We have Leonardo Piloto and Marcelo Bonanata to present the results of the first quarter of 2025.

The beginning of this year was marked with special events of the company showing the solidity of our strategy, assertiveness of commercial initiatives and efficiency in our projects. Main highlights, total gross sales, BRL 619 million in the first quarter, with an increase of 40% when we compare to the first quarter of '24 and 44% belongs to Helbor's share. The SoS was 25.5% (sic) [ 21.5% ] and PSV (sic) [ SoS ] of Helbor's share was 17.6%.

We launched the 3 developments in the first quarter with a total PSV of BRL 491 million, 30% Helbor's share and the total SoS of 48%. We delivered 2 developments with a net total of BRL 597 million, 45% Helbor's share. The onlendings exceeded BRL 477 million, an increase of 44% compared to the previous year and 64% Helbor's share.

The cash generation considering consolidated companies of BRL 16.5 million in the first quarter of '25. Leverage reduced from 2.1 p.p. and this is the net debt.

The results of the first quarter reflects the continuity of our solid growth, evolution of capital structure and capacity of adaptation to a dynamic market. We keep our commitment with generation of sustainable value.

With this, I invite Marcelo Bonanata to show the main operational details. At the end, I will be available for questions and answers.

[Marcelo Lima Bonanata, executive]

Good morning. Good morning, everybody. We'd like to thank you for your attendance.

On the first slide, we will talk about our land bank. Today, we have a potential PSV of BRL 12 billion with a 71% Helbor's share. We highlight here some developments. Of course, all our developments of high quality, but these are some lands that are iconic in Sao Paulo. One of the main one is Republica do Libano, very close to the Ibirapuera Park, almost 6 (sic) [ 6,000 ] square meters, a very prime land in Sao Paulo.

We have another land at Jardins with 5,000 square meters of very high-standard large apartments with some of them at the higher -- an area with a very beautiful view. We have another in Higienopolis area, Bahia street, with a total view to [indiscernible] estate. And Itacolomi at [indiscernible] 2 lands that we have 2 complementary products, 1 complements the other that will be launched in the third quarter of this year.

And another -- the highlight is an old land we had the former Toshiba plant area. It is iconic projects that we have there. 26,000 square meter with almost BRL 2 billion of total PSV. This is a new area in Sao Paulo with several years to be developed, but it's a good market reserve, and we believe very strongly in this piece of land.

When we talk about land bank, we see that most of this land bank today in the Southeast region and talking about Sao Paulo and -- bigger Sao Paulo, we today are working in a very nice manner of the recycling of our land bank. We had a piece of land in Rio de Janeiro [indiscernible] markets that we have no longer any partnership. And that we want -- do not want to be there and even some piece of lands in Sao Paulo that do not fit in our medium, high and very high level. So we have a PSV of BRL 116 billion, and we acquired very high standard piece of lands to recycle our land bank. And we have other piece of lands that we can still negotiate to making the company or taking the company into the pathway we want.

[Henry Borenstein, executive]

Yes. That's what we want, and those pieces of lands that are not in strategic points for Helbor. We have some other piece of lands that are in our pipeline, and this may happen in the next quarter. Marcelo highlighted the same piece of land, it is very similar to what we did in Caminhos da Lapa. And today, it is one of the best Helbor's development. So this fits our project. And as Marcelo mentioned, it's a differentiated piece of land and is in -- Itacolomi is last piece of land with a view to the park.

In this quarter, we launched 3 developments, the last phase, well, the first launch of Fazenda Itapety in Mogi, and the last phase we launched in this quarter. We have only less than 100 units to sell with a great valuation potential for the square meter, clients very satisfied. We launched another development at Analia Franco in partnership with Cury within this process of recycling of our land bank. We are in a partnership with the Cury, which was sales success, 92% sold. And a launch in Sao Bernardo, a big piece of land with the [ 55 ] square meters. And we have a second phase now, and this development is responding well. So we had 3 new products launched into the market.

In the following slide, we will talk about the contracted sales highlighting that we had an increase of 40% in relation to the quarter of '24. In the fourth quarter, we -- is a quarter that sells more. This is one of the quarters that we sell the most. And we are happy, but we are not excited. We are with our feet on the ground knowing about the macroeconomic reality, we are going through.

We had a good sales of our development, but we are still selling our ready inventory and the inventory under construction. We had the largest event of inventory in Brazil, and it was another success we did this in Mogi and in Sao Paulo. This boost our sales, both in developments under construction and ready ones.

In this slide, we see the results of these contracted sales and boosting our sales oversupply, Helbor's share, the ticket is 17% because we had the launch with Cury, but the 17% or 21% are very significant indicators with the reality that we have now in the market. So this shows that we are going on the right path.

Our inventory is of BRL 2.3 billion and 97% in the Southeast region. We'd like to highlight this because we had [indiscernible] developments all over Brazil. And today, we are hardly focused in the Southeast region. We are distributed by average high, high level, very high level, which is this recycling that we are talking about. And this goes through the high and very high standard. It's our characteristic today. We believe -- we strongly believe in this segment, but even our competitors and partners say that the quality of our land bank and our products allow us to work with the high and very high-level segment.

And we show here our inventory with a great relief when we see the ready inventory in 2018 in the acute decrease we had in our country of almost BRL 2 billion of ready inventory. And today, we have a little more than BRL 200 million. But the legacy inventory, we -- over and over, we say that it is mostly gone.

We concluded a development in Sao Vicente thinking will this day come and it aim -- so if you look at our legacy inventory, we have almost BRL 22 million (sic) [ BRL 23 million ], and the rest of the ready inventory were just delivered. And this is normal, this transition momentum from ready to what has just been delivered. And when we talk about legacy, 100% of this inventory, all residential with a good quality, and this is very important. Do you have any comments on this legacy?

[Marcelo Lima Bonanata, executive]

Well, the legacy inventory has jeopardized our balance sheet. The real estate has a price increase, and this hurt the company because we had to sell the real estate and now it's over. We see the new development with the proper margin. So this is good. Leo, would you like to make any comment? Because when you came in, when you joined us, we were trying to 0 this.

[Leonardo Piloto, executive]

Yes. In inventory -- ready inventory, we've always had it, but it's important to remember that the profile in 2018 and '19 had a different profile with different products. Our -- today, our ready inventory is basically residential with a very high degree of quality. So this is something that we will go through easily, so it's not a problem. It's a reserve of opportunity. All of these products had their price increase and helped the margin of the company.

[Marcelo Lima Bonanata, executive]

The next slide. We show the 2 deliveries we had in the first quarter in a very iconic project, the Patteo Klabin. The last phase was delivered in this first quarter. This is a giant development. Just for you to have an idea, we have 1,000 square meters of -- we have 300 apartment units and larger apartments of more than 100 square meter. We have more than 80% sold, and Leonardo will touch on this, 63% on the onlending. So we are really happy complementing the delivery of Patteo Klabin.

And as Henry mentioned, we delivered one more phase of Caminhos da Lapa, smaller apartments. We developed this with [indiscernible], 72% sold, 66% onlending, and we are transforming the region -- the entire region with an investment in the road mesh and transportation mesh. And renewing manufacturing area that now is becoming a very good residential area. And we still have a launch for this year, a very giant one.

And when we started, we started with BRL 6,500 square meter, thinking that something would happen. And today, we sell it, and we will reach BRL 14,000, BRL 15,000. It is the cheapest square meter we have in Sao Paulo. So it's very nice to see and show everything you develop and imagine in areas that were used to be manufacturing areas.

And in terms of onlending, Leonardo, please take over.

[Leonardo Piloto, executive]

This is a very important moment. Thank you, Bona. This slide shows our onlending performance, we grew 44% in relation to the first quarter '24, slightly below that quarter. I'd like to highlight that even with the credit restriction scenario and many other points, our customers, they are getting credit conditions with our partner banks. And we don't see restrictions for individuals who acquire our development. This is important and keeps us with the peace of mind. We have a credit to our clients, and we will continue with this with all this noise in the market and media. But what we see on our day-to-day our clients, they have credit, obviously, with the higher cost, but is still available.

The next slide shows our delivery time line. It's important to stress that these are the ones to be delivered in the first quarter. They have been -- they are on the onlending process and doing well. And until the end of the year, we have 8 more deliveries. This will be very important with all this being delivered and onlend. This will help us in our deleveraging process.

Now Slide #15. These are the financial results. Net operational revenue basically a stable year-by-year, quarter-by-quarter. You see our net operational revenue in gross margin, it's important to say that the company, we have a gross margin of about 30%, and we are able to deliver 31.5% in this quarter. We have a great growth. We see the modeling this higher margin. Our margin is around 30%, slightly above or lower eventually. This is what we are signaling to the market.

In the next slide, we have the backlog margin of an increase of 7.7 p.p. -- 0.7 p.p. And in the fourth quarter, it's important to realize that 65% comes from new projects. Everything we have is the cycle going on in the company and the new launches will show the backlog results.

In the next slide, we have our SGA (sic) [ SG&A ] in a very good behavior as we did in the previous quarter. It's important to see in the gray line below, the 9% of the GA over the revenue and commercial expenses also in line with the previous quarter.

The next slide shows the net profit of the holding company comparing, we had a 7% increase. And when we compare the fourth quarter '24, it's important to remember, we were assessing some units that we have on rental, but this is something that is nonrecurrent, and this will -- happen in the fourth quarter. So the comparison basis first quarter '24 and first quarter '25.

In the next slide, we are showing at the left side, the important reduction of the gross debt of the company from the fourth quarter '24 to one -- to the first quarter of '25. And we show on the right side, the debt breakdown. But most important, what we had in 2025, we had a very higher number to test when we showed in the last call of BRL 800 million. But a good part of the debt was liquidated, and we are showing the visibility in the short term, showing that our liability management is working even in a more complicated credit and interest rate market.

Now the next slide showing that the trajectory of our debt under the net equity is decreasing. We went from 72% at the end of '23 and now 53%. It's important to remember that this trajectory go through the end of the year. It doesn't mean that we will have this every quarter. We are working for it, but the leverage is closely related to the deliveries on lending and other subjects. This strategic trajectory will get down until the end of the year. We will go back to the margin we want. This is a healthy debt and necessary for the sector. So in 2026, this will increase a little bit.

Now the next slide showing one more quarter with cash generation. We have 2 tables. The upper table are the companies that we consolidate in our balance sheet and the SPRs that we do not consolidate, basically, Leopoldo or the allotment is not consolidated in our balance sheet. We also consider the cash totaling BRL 17 million on cash generation, including consolidated and nonconsolidated.

And these are our priorities 2025. Bona and Harry mentioned this, but just to reinforce an active commercial management with good projects with a very attractive inventory and ensuring a consistent sales results. Second point, land bank management. We decided in the company where we should be operating and where we decided not to be present, we are with this strategy of selling the land bank that is not aligned with the company's strategy.

We have 8 more deliveries. This is very important for the company to serve our clients very well with the quality, and this helps us when we do the onlending. The next point, strategic launchings in greater Sao Paulo, big São Paulo and Mogi. We will launch, let's fill the market and see how the market will react. We still have products that we want to do, but we will not go to the market unless we fill the market.

And the last point is the discipline in cost management and leverage reduction. In the last 24 months, we've been talking about leverage of reduction, and we are delivering it. So these are our priorities with total transparency, and we are focused on delivering what we are committed to do.

With this, I close the presentation, and we will open to the Q&A session.

[Operator]

[Operator Instructions] The next question is from Daniel [indiscernible]. I'm sorry for misspelling your name.

[Unknown Shareholder]

I'm Helbor's investor, and I'm following the results, and debt is getting down quarter after quarter. In one of the presentations, you project a launching of 2 developments -- to launch the 3. And what about the 7 launch for the second quarter?

[Unknown Executive]

Yes, we were expecting to launch 2. And 1 of these 2 is not a new launch, is the last stage of Fazenda Itapety. And the other is one that we sold to Cury, but we became partner, but the management is from Cury, it's a different economic segment. But this reflects the sales, 92% of units sold.

I cannot tell you the number of launch we have in the third quarter, but we have prepared. We have projects that had signaling for this next quarter and working in the prospection part, but tell you to affirm that we are going to launch, will be a smaller number than the 7 that we mentioned because we want to launch products that will be well leveraging in a good moment of the market. We are not going to create new inventories. All launches have a natural sales curve, but we need to reach this natural curve. Launching for the sake of launching, it's better to wait.

[Unknown Executive]

I'd like to add. Those who follow us see that we are reducing leverage and reduction of inventories and delivery of margin. So we are very cautious to -- with everything that is happening. Obviously, we will have some products on the shelf, so to say, and we see product by product. If the market has buyers and a good sales performance, we will launch. Otherwise, we wait for a better moment.

[Operator]

The next question from Tomas [indiscernible].

[Unknown Analyst]

What is the amount of a piece of land in this quarter? What was the impact on cash? And there was an accounting impact, and there were any piece of lands sold in 2025?

[Unknown Executive]

During 2024, we sold 4 pieces of lands, no one in the first quarter. But in the second quarter, we sold already one of them. On accounting impact, since our old piece of lands, we were able to overcome the acquisition price, the cash generation coming from a piece of land. We didn't have any payment in the first quarter 2025, resulting from a land selling. So we have no impact, neither negative or positive. I don't know if it is clear, but if it's not please, we will clarify later. Let us know.

[Operator]

The next question from [ Juliana Vega ], Itau BBA.

[Unknown Analyst]

Well, I have 2 questions. I'd like to understand a little bit more about the gross margin expectations until the end of the year, considering that in the second and third quarter of '24, we had margins above this. And did you see any reduction in relation to the next -- to last year?

[Unknown Executive]

Well, Juliana, it's important to remember that the margin we report is a mix of under construction and ready inventory. We have some ready inventory with very high margins as W almost 50% of margin. What we see as recurrent margin is something around 30% when you compare to the previous quarter, we had W Moema with higher margins. That's why in '24, we had higher margins. But we see for the future is around 30%. This is the first nuance. And I'd like to clarify that reported margin is a composition of ready inventory that is ending and the positive margin, okay?

The second question, Bona will take over.

[Marcelo Lima Bonanata, executive]

Juliana, first. Thank you for your question. And I'd like to say, when you say demand from the very high-income level. Today, what I feel is that the beginning of this year is much more acute than the average of last year, especially because in the high level, high standard, we have a moment for this demand. Today, what we have in our inventory of high -- very high standard are ready units because first, the [ person ] lives well, they don't have a need for housing. So it's some moment that they buy before being constructed or buying closer to the delivery. So we have [indiscernible] Leopoldo that we will deliver in the next month. And this demand really increased.

And in relation to the very high level, we do have a demand, a very important demand. And many clients come to us because of the new lands that we have, these are iconic projects. We know that we have a good speed of selling in these developments, mainly because of the product -- because of the project because it's a special project. And the person will see if they lose this opportunity, we'll -- hardly they will have another.

And the prices in the city of Sao Paulo, they are gradually increasing, but not increasing randomly because you have to include [ cost margin. ] This increase is being absorbed by the consumer. The client is realizing that if they miss the opportunity that fits what they want, tomorrow, maybe they won't have any other opportunity. So we see it with good eyes with our foot on the ground, but this is a very good opportunity.

[Unknown Executive]

I'd like to add the question is focus the high revenue. Those who buy a very expensive apartment of BRL 20 million, it's because they have liquidity. If they take a loan with the bank, they can have a very good financial gain because when the CDI decrease the remuneration of this buyer is lower, they can prepay, but they can do this at any time. It's important to remember that to the very high level, those who have money applied on CDI, it's a very good moment because they have -- their cash is still with them.

[Operator]

The next question is from Luis [indiscernible] from Blue Bank.

[Unknown Analyst]

I'd like to know if the company intends to do new operations in the capital market, whether the portfolio anticipation or cooperated debt? Comparing this strategy with the CRI issues.

[Unknown Executive]

Luis, it's important to remember that we are a company of an intensive investment. We go to the capital market and the banking market, but always with a good planning and visibility. So going directly to your question, we will still have [ debt ] resources from the corporate plan and also associate the capital market, therefore, [ increase ], a moment that we consider timely. And to build the proper capital structure we want in the company. So we will continue to operate on both sides, the corporate plan as a business mode of the company and the capital market.

[Operator]

The last question from Tomas [indiscernible] from [indiscernible].

[Unknown Analyst]

How much the sales of '24 generated cash?

[Unknown Executive]

Tomas, thank you. We already received for the sales of land of '24, BRL 65 million, a good part that this land sales over '24 and now in '25, and also financial exchange, and they will be added to the BRL 65 million we have already received.

[Operator]

We are closing the Q&A session. We would go -- give the floor to Henry to company's final remarks.

[Henry Borenstein, executive]

Thank you very much. Helbor continues with a clear strategy. As we've been reporting for more than 2 years, the leverage reduction, inventory reduction at the right way and nothing has changed. And this year, just like last year, will be a year of great deliveries. These deliveries will happen until June or July because they -- and it's very good because the onlendings will be along the year, and it will be very similar to last year's, and this will help us in our deleveraging.

In terms of launchings, the main message is that we are very cautious. The company has been doing this for more than 40 years. We've been through good and bad wins. This is a challenging year with a high interest rate. But the company has good products, good projects. We have a sales team that is exceptional. Last year, we break the record. We have 600 brokers in Sao Paulo, 80 in Mogi. And that said, but we are being cautious, and we'll continue with our strategy.

I'd like to thank you for your attendance, Marcelo, Leo and our RI team. Thank you.

[Operator]

Helbor's video conference is now closed. We thank you -- we thank everyone for their participation, and have a nice day.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]