Tecnisa SA

BOVESPA:TCSA3

Earnings Call Transcript

[Operator]

Good afternoon, ladies and gentlemen. Welcome to the teleconference on the results concerning the first quarter 2021 TECNISA. Here, we have with us Mr. Joseph Nigri, CEO; and Mr. Flavio Vidigal de Capua, CFO and involved in IR. We inform all the participants that this meeting is being recorded by the web and the RI site by TECNISA www.tecnisa.com.br. And in the platform, where the presentation will be available for download. [Operator Instructions]

Before we proceed, we would like to say that forward-looking statements contained here are based -- are related on current forecast and outlooks. They are premises by the directors as well as information that are currently available for the company. Future considerations are not guarantee of performance. They involve risks, uncertainties and premises. And these rely on future events depending on things that may or may not happen.

Investors should understand that conditions related to macroeconomic industry and et cetera, may affect the future results of the company and may lead to results that are materially different from those that will be expressed here. I would like to give the floor to Mr. Joseph Nigri, who will begin his presentation. Please proceed.

[Joseph Nigri, executive]

Thank you. Good afternoon. Welcome. I would like to talk a little bit before going into detail our initial message. I think we have been able to meet our plan or strategy, in spite of some hurdles. We have been able to do what we proposed to do. Our result, our net result was with less losses than in the other quarters -- previous quarters. So we are going forward.

We're not yet on the positive side, but we'll get there. And what we said we're going to do what was reducing the inventory. We reduced 77% sales of strategic assets. 4 land plots were sold. We improved the debt profile. We picked up launching. The sales that maybe was the item that was the one that was lowest in our expectancy with the cost of jobs and repairs in costs. Although slowly, I trust that it's going to be successful because of credit availability, although taxes are -- have gone up -- interest, I mean, have gone up. We do believe that it's going to remain healthy. And this increase in the rates will -- may be beneficial. With the pandemic, housing is more and more valued.

On Slide #4, we'll be talking about our strategy. Our landbank has gone through renewal. We have good plus that we acquired in Sao Paulo. We have a volume that guarantees that our plan, our guidance will come true. We also trust that we are going to meet the guidance with what we have launched up to today. We reached 36% of our guidance, and we have 8 projects with the municipalities. So we're quite comfortable with that.

Our cash has been reinforced to face any volatility in first, feel comfortable to capture opportunity in land plot, we monitor what's going on with the pandemic. As I said, we sold nonstrategic assets, and we also pursue to optimize our G&A structure.

We had in this quarter, the reduction of 2 statuary jobs, Technical Director, [ John Susantis ]. He is no longer part of our team. Fabio [ Fillasboas ] is now Vice President and Technical Director. [ Romel Zorello ] also has left. And there is a vacancy there added to one more job in the officers, meaning a reduction in our costs. And I want to thank all of them for their contribution during all these years.

And we're still looking for solutions to have a structure that's leaner and leaner. Especially we're considering moving from our headquarters. We believe that concerning hybrid or home office and that came to stay. We may have a smaller office, and it does not have to be necessarily in Faria Lima. It may be on the cheaper side.

Slide #5. We go back to the guidance here. We -- BRL 1.2 billion is the 4 of our goal. We launched BRL 436 million corresponding to 36%. Until December, we intended to launch about BRL 800 million or BRL 1 billion. And we count on a project that -- and with the municipality that will give more than that, leaving us some buffer for 2022.

On Slide 6, I comment about our most recent launching highlight Campo Belo with PSV BRL 165 million. This is a product in our line of smart homes with focus and wellness. And the commercial launching has not been done yet, but we decided to communicate the launching since during the emergency phase, it was closed and some customers that had gone to the stand before it closed, they manifested that they wanted to buy. So we decided to launch it and sign the sales for these units.

But we're still preparing an event, if you can call it that, some landmark to launch this project. We have it on the media. We have put many actions to launch that.

So I give the floor to Flavio Vidigal, our CFO, that will go into detail about the first Q of this year. And I will be available at the end of the presentation for Q&A. Thank you.

[Flávio De Capua, executive]

Thank you, Joseph Nigri. Thank you for your participation. I wish you all good afternoon. We talked about operational performance. Nigri has mentioned that we are comparing to first Q last year, we had BRL 79 million on gross sales. On this quarter, BRL 56 million on gross sales. Our net sales, BRL 56 million, representing a PSV of 15% because of less sales on the quarter.

Next slide, we talk about inventory. Our inventory was close in BRL 317 million. And we have 2 highlights here. As mentioned in terms of strategy by Joseph, our geographic distribution of the stock, about 80% is in Sao Paulo because of what was done through the last periods of concentration in Sao Paulo. And also, we have under construction we have -- we have lowered the finished inventory. 72% between under construction and were not started yet, only 28% finished, and we are reducing this number of 28%.

Next slide. We have a land bank that's quite robust, considering the investment that we did in the acquisitions on the previous quarters. In the first Q '21, we're still doing this. We finished with BRL 5.5 billion of PSV. Of this BRL 2.6 million as TECNISA's share comes from Perdizes. 2 plots were acquired in the first quarter, one in Saude, the other one in Chacara Flora. And later on, after we closed the quarter, we acquired one more in Chacara Santo Antonio with a potential PSV of BRL 102 million.

So if you look in the map, our land bank is quite concentrated in Sao Paulo and we will be commenting something more about that and also have not in Sao Paulo, what we sold, not in Sao Paulo.

On the next slide, we have received some questions. So we decided to open this quarter to show our composition of our land bank in Sao Paulo. We have 21 land plots on the west side. It's a PSV of BRL 3 billion, BRL 2.6 billion in Jardim das Perdizes, in the southern region, BRL 1.5 billion of PSV represented by 9 land plots. And on the East Zone, one plot with BRL 270 million in PSV. As Nigri mentioned, our guidance, BRL 800 million to reach the minimum point of guidance. We have 8 projects that are to be approved with the potential of BRL 1.2 billion.

And of that, we have around BRL 127 million in Jardim das Perdizes about to be approved. And BRL 365 million of PSV that are not in the land bank as yet. So in Sao Paulo, we have about BRL 4.8 billion in land bank TECNISA's share.

Now next slide, it's relevant to make an opening for you who have always reported a land bank in the state of Ceara and we participate on an SP with 25% in Aquiraz in Ceara, where we had an area, as you can see here that is quite large, where we developed projects that were launched on the darker area, 20 hectares. And then along with our partners, we decided to sell some areas, where in the first quarter of this year, we sold this area in red, a total area of about 9 hectares.

In those areas, as you can see in blue, they face the sea, the ocean. So it was sold by BRL 58 million total and TECNISA's share is 25%. And that sales represented a profit of BRL 10 million in sale. We have in stock on that area, about 59 hectares, which is in gray here. In about 23 hectares have the same characteristics of this area that we sold on the first quarter that faces the ocean.

So we have quite a volume to be developed by the partners or sold. We intend to sell. And today, we have negotiation for 3 hectares and an initial talk for 9 hectares. Besides that, later on at the end of the quarter or the second quarter, we signed the sales of 3 nonstrategic assets in Curitiba, Manaus and São Paulo, representing a total of BRL 18 million to be received by financial exchange, physical and cash respectively, 3 different sales. So when we look at the land bank map on the next quarter, we will have our concentration in Sao Paulo concerning -- or according to our strategy.

Next slide. If you recall in the previous quarter, we had a session of credit of BRL 80 million where basically we had received in the first quarter 80% the resources and that increased a lot the level of volume that we transferred in the quarter. So we had a transfer volume of BRL 102 million, TECNISA'S share represented by 455 units.

Now next session, financial performance. We had a net revenue of BRL 33 million. The gross profit, BRL 2 million better than fourth Q '20. Now it's BRL 9 million. And we had a reduction in the loss we had from BRL 30 million to BRL 26 million, reinforcing the trend we have that we mentioned that as the year went by, the loss would get smaller. And in this result, we do not have as yet the results of the launching that we did on the fourth Q last year. The -- those developments are still with a suspended clause. And as long as this is settled, we can add them here.

Talking about financial position. We closed the period with BRL 749 million in net equity. You can see that the portfolio went BRL 206 million on cancellations in the first quarter, there was a reduction for BRL 68 million. And we still have this BRL 106 million that we may carry or put in our balance.

Next slide. We are adhering to our policy of having a good cash, considering that we are still in the pandemic. So we are more cautious as far as cash volume and also in using our equities. We closed with BRL 30 million and net debt, 10% increase as compared to 4Q '20. And the growth went from BRL 519 million to BRL 558 million. In February, we capture BRL 112 million, maturing 5 years. What contributes to taking our financial equity longer. You can see in '21, '22, that's BRL 120 million vis-a-vis the cash that we have, BRL 328 million.

Now next, Slide 19. Cash generation. We did the credit session, our cash generation adjusted was of BRL 50 million in BRL 10 million when we consider the acquired plot too, as I mentioned. We invested BRL 40 million in plots. In the last 12 months, we generated BRL 14 million. And to finish my presentation, we talk about the net debt over equity. We still have a healthy position on that indicator. 29% of net debt on PL. If you -- if we don't consider, if we add on that, our cash position, BRL 106 million, this indicator falls to 16%. So we're quite comfortable for our launching plan as it has been commented.

With that, I close the slides, and we open for Q&A.

[Operator]

We now open the Q&A session for investors and analysts. Since this teleconference is being simultaneously translated for English, please ask first 2 questions in Portuguese. And then we will open for questions in English. The questions in English should be done all at once without follow-up by the participants. [Operator Instructions] First question, Mr. Ygor Altero, Santander.

[Ygor Altero, analyst]

2 questions. The first one about launching. It seems that you are ready to accelerate that. You mentioned 8 projects that are already under the bureaucracy. And how is it going? And if you could give more details on your expectation in relation to Jardim das Perdizes, how is it going to be this launching? This is the first question. And the second one about the land bank. You -- do you have land bank ready for this new growth moment?

[Joseph Nigri, executive]

Hi Ygor, this is Joseph Nigri. First question you asked about the projects that are still in the red papers. They have not been approved, but there is one that we expect for this month, the other one for next month. So it's going to achieve the year guidance. Jardim das Perdizes, we have Agua Branca law that is being passed. It has been approved in the first level, not on the second one yet, but we decided to follow different pathway, a different avenue.

So we're counting to launch Jardim das Perdizes this year. How? The -- I'm going to explain very quickly for those who don't know how the urban operation works. The land has a basic coefficient of 1x the area. And if you buy CPAC, you can use 4x the area. So what are we doing? The basic coefficient is for free. A plot where we're going to have 4 towers, we do one tower with a basic coefficient and when CPAC comes, when that law is approved, we launched the other 3 towers. So we're going to have some PSV there for this year.

And we really are expecting that this law will be approved because it's important for the city for that region, the sector to develop for the city, for the municipality to generate jobs and taxes so that they can develop that region that has so much infrastructure, transportation and has little residential units on the land bank. Yes. It's organized. At least for the next 2 years, for 2023, we would have to, again, have new acquisitions.

We'll do that slowly the moment that we are living through. The prices are high with all these stores of costs, et cetera, we're being very selective, very. So I believe that we're not going to do many acquisitions. We'll give priority to swaps and so on. And we are watching what's going to happen with [indiscernible], the dynamic of decentralization, is it going to happen or not? So we are obviously analyzing opportunities.

These areas of plots does not stop, but we are very selective, only very special business. This -- is that -- well, if you want to ask anything else, please do.

[Operator]

Next question, Gustavo Cambauva, BTG Pactual.

[Gustavo Cambauva, analyst]

2 questions. The first has to do with the sales that you did in plants. I would like to understand -- you mentioned Ceara's land bank. Aside that, is there anything else that maybe you are looking at within the land bank? Is there anything else that maybe you are thinking about selling? And second question is about the inventory. When we look at it, you made this plant's transactions that was good -- that were good. And looking at the inventory, do you still have something on the sleeve in Curitiba, Brazil, I think you have a little bit more inventory. I would like to understand all those places. What's your take?

Is the market little bit better? Is it similar to Sao Paulo? Is it recovering? Do you intend to do something more structured in Brazil or maybe a sale or like in retail? Or what's your take on that?

[Flávio De Capua, executive]

Okay. Come back about plot sales. What we have has been announced, we actually should have other plants. [Technical Difficulty]. Curitiba we have one. For [ Paliza ], we have those that Nigri explained to you. This is under negotiation. So it should happen sooner or later. About the inventory, you commented Brazilian Curitiba, right? Brazil, as that large project that we had, it's been sold 95%. So we do have some inventory there, but it's going, moving. It's selling.

I think the property has been solved. We have it, and we're going to sell. Curitiba is different, another story, because almost everything is a hotel. We have a hotel in Curitiba because of a large development, we did close to [ Batel ]. It has rooms there for stores, et cetera. We sold everything. However, hotel is there. And you can imagine how hotel market is doing right now, how the share is doing now. That hotel is mostly for business people. So it's with low liquidity, we're trying to do a transaction studying what we can do, maybe transform it into residential, but it's not something to be done overnight.

And we did a -- we wrote off that asset because we understand that it's not worth what we had considered. Aside that, I think, there's nothing else that really stands out, okay?

[Operator]

[Operator Instructions] Now we are going to start reading the questions that came via webcast. Good afternoon. This is [ Anders Angelas ] from [Technical Difficulty]. We have a question from [ Antonio Raushu ] with sales and plus TECNISA. Last, but also includes [indiscernible] Fortaleza still has plots to sell. Thank you.

[Flávio De Capua, executive]

This is Flavio here. As I told you, Fortaleza, we have those plots that we presented. Curitiba, after we sold, we had 2 plots there. And now we have only one. One for sale. And in Manaus, yes, we have 0 plots.

[Unknown Executive]

[ Maxon ] from [indiscernible]. What's your forecast for launching of Jardim das Perdizes?

[Flávio De Capua, executive]

This answer -- this has been answered by Joseph. But as you mentioned in the presentation, we have a project to be approved by the municipality, about BRL 127 million TECNISA's share to be launched probably throughout this year, depending on the approvals. And as we launch, we have this investment already realized, as it has been mentioned by [ Mr. Evandro ].

[Unknown Executive]

Now [ Mr. Glanio ]. Comparing [ Sidel ] developer that [indiscernible] the sales in the first quarter, why couldn't TECNISA do the same thing?

[Joseph Nigri, executive]

Glanio, this is Joseph. Well, if you look -- if you analyze our launchings, we had 2 at the end of last year in December, and this one that we communicated now from Campo Belo that we didn't even have time to sell as yet. So it was the end of the year. Carnival, et cetera, and the emergence phase that we had to be closed for 45 days. So that was really a hurdle. In the case of Sidel, our other competitors that already had projects that had been launched or their inventory was ready or almost ready, in this sales, I think the market was not so compromised.

For us that were launching, it was worth. The ready stock inventory could sell well. What we could not achieve was to sell the launches. But the products are good. They are in very good places. So we will sell.

[Operator]

Since there are no further questions, I would like to give the floor to Mr. Nigri for his final remarks.

[Joseph Nigri, executive]

So it was a pleasure to be here with you. Thank you. Should you have any question, we are available. I want to wish you all good afternoon, a nice weekend. And I hope that we can meet again on the next call.

[Operator]

This call is hence adjourned. We thank you for your participation, and have a nice afternoon.