Cyrela Brazil Realty SA Empreendimentos e Participacoes

BOVESPA:CYRE3

Earnings Call Transcript 2023-Q2

[Operator]

Good morning, ladies and gentlemen, and welcome to Cyrela Brazil Realty S.A. Second Quarter 2023 Earnings Call. Today with us, we have Mr. Raphael Horn, our CEO; and Mr. Miguel Mickelberg, CFO and IRO.

This call 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 Investor Relations website at www.ri.cyrela.com.br. [Operator Instructions].

I would like to inform you that any statements that may be made during the call related to Cyrela's business perspectives, operating and 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 will lead to results that differ materially from those expressed in such forward-looking statements.

To open Cyrela's second quarter 2023 earnings call, I'd like to turn it over to Mr. Raphael Horn, our CEO. Mr. Horn, you may proceed.

[Raphael Horn, executive]

Good morning, everyone. Cyrela 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 converge into 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 BRL 2.7 billion, totaling 25 projects and BRL 3.7 billion in the first 6 months of 2023. From the sales perspective, BRL 2 billion was sold in the quarter and BRL 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 Cyrela by Yoo, launched in June 2023. It is located in the West Zone of the city of São Paulo with a PSV of BRL 563 million, and the project had approximately 60% of its units sold in the quarter. The operating performance influenced the financial results, which allowed the company to reach more than BRL 1.6 billion in net revenue in the quarter, totaling BRL 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 BRL 279 million with a net margin of 17.1% and ROE of 13.8%. Furthermore, Cyrela's low 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's 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 clients, stakeholders and other stakeholders for their trust. We'll now talk about our operating results.

[Miguel Mickelberg, executive]

Thank you, Raphael, and good morning to everyone. Let's start on Slide 5. We'll address Cyrela's launches. In the second quarter 2023, we launched 17 new projects with a PSV of BRL 3.5 billion, 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 BRL 2.7 billion in launches in the Cyrela's stake. Excluding swaps, the volume launched in Cyrela's stake was BRL 2.5 billion in the quarter.

On Slide 5, we'd like to highlight the -- on the Sky Cyrela by Yoo in the city of São Paulo with a PSV of BRL 163 million. The project was launched in June with 60% of the units sold.

On Slide 6, we'll talk about our sales performance. In the quarter, presales came to BRL 2.5 billion, 55% higher year-on-year and 62% higher quarter-on-quarter. Cyrela's stake and the volume sold was 81%, totaling BRL 2 billion. Excluding swaps, sales were BRL 1.8 billion in Cyrela's stake.

On Slide 7, 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 8, we'll talk about our inventory. At the end of the quarter, inventory at market value totaled BRL 9.8 billion, 12% higher quarter-on-quarter. In Cyrela's stake, the inventory totaled BRL 7.7 billion. The change in our inventory can be seen in the chart to the left.

On Slide 9, we'll talk about our finished units. We sold 11% of the finished units at the beginning of the period. Adding the inventory of projects delivered along the quarter, pricing of units at market value Finished and has remained stable quarter-on-quarter at BRL 1.3 billion and BRL 1 billion in Cyrela's stake.

We'll talk about delivered units on Slide 10. Cyrela delivered 12 projects in the quarter with a PSV of BRL 1.3 billion. Year-to-date, we have delivered 22 projects with a PSV of BRL 2.4 billion.

On Slide 12, we'll talk about our financial results. Net revenue was BRL 1.6 billion in the quarter, 31% higher quarter-on-quarter and 27% higher year-on-year. Year-to-date, Cyrela's revenue was BRL 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 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 BRL 279 million in the quarter compared to BRL 151 million in the second quarter of 2022 and BRL 164 million in the first quarter 2023. Year-to-date, the income stands at BRL 443 million, 42% higher than in 2022. Our return on average equity, the net income of the last 12 months over the average holders' equity was 13.8%.

On Slide 14, we'll talk about our debt. Gross debt at the end of the quarter was BRL 4.7 billion. The cash position was BRL 4.3 billion. Thus, our net debt was BRL 375 million. 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 Cyrela'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 BRL 22 million as opposed to the cash consumption of BRL 48 million we had in the second quarter of 2022 and BRL 35 million cash consumption we had in the first quarter of 2023. Year-to-date, cash consumption totals BRL 13 million below the cash burn of BRL 100 million in 2022.

Raphael and I will be available for questions now. We can go on to the Q&A session. Thank you.

[Operator]

[Operator Instructions] The first question comes from Gustavo Cambauva, BTG.

[Gustavo Cambauva, analyst]

I have 2 questions. The first has to do with Vivaz and Minha Casa, Minha Vida. How is it that you see that after the changes there have been and what are your expectations for growth in Vivaz? So your perspectives on the Minha Casa, Minha Vida after the changes? And this could be for the medium term once things are more established or more stable with Vivaz?

My second question also has to do with Minha Casa, Minha Vida because how that's growing. Automatically, Cyrela is more exposed to Minha Casa, Minha Vida when you combine Vivaz and the other JVs. So what are your thoughts, but it makes sense to maybe reduce exposure in other JVs, [indiscernible] once Vivaz is growing. How exposed Minha Casa, Minha Vida is for the company in the medium term for the company?

[Unknown Executive]

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 landlord, right? So we don't really think about how much is going to be Vivaz next year or -- these discussions are much more as they come as it's part of the plan of the company. So we don't really have an expectation how Vivaz 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 Vivaz is going to be in the coming years. That's going to be really related to our land bank, plots of land that we decided to buy and then any specific planning around it.

Low end products are going through a good moment. I speak not only about Cyrela, but also when we look at low end products from the other players. So if there are good opportunities in land bank, we will buy more, but there's no specific strategy. If Cyrela's going to be big and Minha Casa, Minha Vida want to combine JVs and Cyrela, that's now 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 Vivaz 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're already large in the segment because our partners are very profitable, and we're very happy about that. So we don't see it like that.

There are 2 different operations. We have our organic operations and our partners operation. We don't see any segment with -- as 1 that should have a maximum exposure. We like every segment and the bigger they can be, the better.

[Operator]

The next question comes from Ygor Altero from XP.

[Ygor Altero, analyst]

I've got 2 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 of 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?

[Unknown Executive]

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 it was going [indiscernible] going to plan to crisis, and we were okay with our pipeline and hoping that the macroeconomic situation wouldn't worsen. We don't really believe it, but this is how we check, right? So we are land bank by us. So we will put together our plans for 2024 or projects for 2024 as 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 1 quarter, we don't think that everything is going to be rocking for the next quarter. And if we sell too quarterly, we're going to be crying -- well, I'm going to be crying ever. So we're going to be working 14 hours a day doing what we love, and whatever else happens, happens either to support us or to be an obstacle.

In 2 months, Brazil worsens its macroeconomic situation again and then everyone is disheartened. I'll be talking about cash generation now, Ygor. At the start of the year, we had mentioned we expected a cash burn this year, especially at around BRL 300 million to BRL 500 million. The operating performance in the first quarter surprised us positively. And we had BRL 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 cash generation. So it's a bit too early to give you any more substantiated forecast for next year, but we're going according to plan.

[Operator]

Next question from Pedro Hajnal from Credit Suisse.

[Pedro Hajnal, analyst]

I have 2 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 or 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 kind of your sleeve if you decide to accelerate volumes in the second half of this year or next year?

[Miguel Mickelberg, executive]

Pedro, this is Miguel. As for land bank 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 Raphael 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 in 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 -- is slow.

So, you mentioned projects that we deal with Cyrela 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.

[Pedro Hajnal, analyst]

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?

[Miguel Mickelberg, executive]

With about 2/3 of our pipeline for the year of 2024. So this 1/3 is probably what we have bought this year to launch next year.

[Operator]

Next question from Tainan Costa from UBS.

[Tainan Costa, analyst]

2 points, 1 around margins and 1 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 so you have performed really well. So what grounds this performance? So if you could give us some color around these points, that would be great.

[Miguel Mickelberg, executive]

This is Miguel. As for the gross margin, we did bounce back. We had been saying that we expect the 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 growth depending on the launches. We are buying land bank in a very good moment. So in 2021, we bought land bank 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 per Rafa, 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 we launched in this quarter should have a margin 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 Raphael is going to answer about the second question about the macro.

[Raphael Horn, executive]

The ones buying are end users. That's the good news. Most of our products are for end users and the other 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 1 of the reasons why we have a relatively okay performance.

Other reasons, well, God always helps us, right? So God always helps us, 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 the results could have been better in some cases. So we are happy, but we can always have been better, right? It could have been better. And Cyrela really looks after our clients. And this care, we show to them is mutual, 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 an apartment, so that's great. But, we know that the clients will find a product that is really some -- as a product that stands out from the market, right?

And we know that our team is very confident. We have a hard-working team. We always think about the team, and we always count on God to help us and the macroeconomic scenario, too.

What else to clear there? We work hard and hope for the best.

[Operator]

Aline Caldeira from Bank of America.

[Aline Caldeira, analyst]

Raphael and Miguel, I would 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 you think could benefit you?

[Miguel Mickelberg, executive]

Good morning, Aline, this is Miguel. As to the master plan in Rio de Janeiro, it's 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 just 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 give you or -- as because we don't really have a clear opinion yet. As for the land bank, excluding Barra da Tijuca, we normally have a short-term land bank, so to speak, right? So we don't yet expect a positive impact on that because of the changes in the massive land.

[Operator]

The next question comes from Bruno Mendonca from Bradesco.

[Bruno Mendonca, analyst]

Around SG&A, we see a nominal debt year-on-year even when you include commercial expenses. So it's growing less than revenue is growing. Do you have any specific initiatives to reduce G&A? So that's my first question.

And the second question, as you do with CashMe. But you could also start of talking about G&A. Where do you think there will be stability and how big a portfolio can be with this stabilized G&A?

[Miguel Mickelberg, executive]

Thank you, Bruno, for your question. We don't have any specific initiatives to reduce our G&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 G&A in check. Our objective is that it won't rise more than inflation. We've been very disciplined in that. We don't expect G&A to have any negative impact on our results, and Raphael?

[Raphael Horn, executive]

Well, concerning cash, we're as expected. We have [ BRL 150 million ] in our portfolio. And we're not talking about massive growth, let's say, [ BRL 100 million ] a year. Well, we're meeting the expectation for the years. We may get to BRL 3 billion in portfolio, BRL 3.5 billion.

But, let's cross everything you get it. We have to be careful with delinquency rates. And well, it is a company that we really like. But it's a good level for Cyrela. Nothing that any bank should be concerned about.

[Bruno Mendonca, analyst]

Can you talk a little bit more about the cash with the low interest rates? You had to increase original sourcing rates. So this [ BRL 800 million] a year for sourcing. If we have lower interest rates in the future, can we lower that. How do you see that?

[Miguel Mickelberg, executive]

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 this [ BRL 800 million ] 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 [ BRL 3 billion ], then we're currently working with [ BRL 800 million ] a year. We plan the company for it to be profitable and for it to originate [ BRL 800 million ] a year. If we can originate [ BRL 1.2 billion ] a year, that's great. But if we can't, with [ BRL 800 million ] we're are good. We're not fortunate tellers. You may think we are, but we're not. We'd plan things simply because that's what we can see.

[Operator]

Fanny Oreng Avino from Santander is asking a question.

[Fanny Oreng Avino, analyst]

Congratulations for the results. You bought 2 plots of land in Porto Alegre. So I'd like 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 we'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?

[Unknown Executive]

Porto Alegre is not an easy city and we bought 2 plots of land. And if we did that, it's because we thought those 2 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 2 plots of land because we like those 2 plots of land. No one woke up in the morning saying, "Hey, we want to grow in Porto Alegre. Brazil is not [indiscernible] 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 on this quarter, but we like them both.

[Unknown Executive]

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 is a lack of labor [indiscernible] first, right? But we see a decrease in the number of units launched in the cities when 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 Minha Casa, Minha Vida could have an impact. And our engineering team is concerned about that. I mean, or is attentive to that. But we see the position is better than it was 1.5 years ago.

[Operator]

Next question is from Daniel Gasparete from Itau.

[Daniel Gasparete, analyst]

I've got 2 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 dynamic 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 negative impact for the company?

[Miguel Mickelberg, executive]

I know that Raphael said, it's something that you look at by landlord, but I guess ready. 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 a 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 do we expect the banks will keep the 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. I need some good years or some years of good macroeconomic context for prices to start to go up. And again, we expect the scenario to be the same as it is. Nothing is easy, right? In Brazil, as we say, if it's very bad, that it's bad, but if it's just sort of bad, that is not too bad. Brazil is never too good or too bad. We just navigate the waters. We serve the seas. One who 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 plan -- master plan, doesn't change things much. What really changes things to macroeconomic situation in Brazil, it's not the master plan of Sao Paulo that is going to unleash 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.

[Operator]

Next question from [indiscernible] from Citibank.

[Unknown Analyst]

Congratulations on your results. 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 -- could you replace what you have? I mean you've been launching faster than you've been buying, right? And thinking about [indiscernible] you see that all. 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 the pipeline for 2023 won't allow for more projects, so how do you see the possibility of launching products a bit faster to re-submit it for approval [indiscernible] your opinions?

[Raphael Horn, executive]

Thank you for your question. Quantifying impacts, again, there 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 little benefit. In some cases, it can't. Qualitatively speaking, you can present the project but 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 products that we're working with are going to be launched. And in 2024, that really depends on our calendar and our time line. 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 per land plot.

Miguel didn't say we're on 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 volume is small, it's okay. If we can make more money in 2025 than 2024, that's great. We're going to do it, but the volume is fine.

[Operator]

Next question from Raphaël Leyder from Safran.

[Raphaël Leyder, analyst]

I only have 1 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. Would you have an expectation of increasing your direct clients for fiduciary portfolio?

[Miguel Mickelberg, executive]

Thanks for your question, Raphael. 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 impact 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 note, 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 compensate, 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 Raphael already said that, we find it difficult for things to go down much, but the reduction in the SELIC 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 the rates for origination for sourcing.

[Operator]

Next question comes from Marcelo Motta from JPMorgan.

[Marcelo Motta, analyst]

When you think about the client for 1 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 location, you have shares [indiscernible]. 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 trend as well?

[Miguel Mickelberg, executive]

Hi Motta, this is Miguel. As a mortgage, our sales force doesn't do this type of pitch with the clients. And credit analysis, we'll 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 the risk 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 the client when you're selling a unit, right? So that does not happen in Cyrela.

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 3 JVs that are listed. We have shareholders agreement that guarantee. We continue to have a substantial share up to 2027. And as Raphael already said, and I have to stress, we're very happy to have them as our partners. And the 3 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 3 years ago are able to deliver on their promises and have good performance.

As Raphael said, we feel very lucky to have these banners.

[Operator]

Next question from Jorel Guilloty from Goldman Sachs.

[Wilfredo Jorel Guilloty, analyst]

I've got 2 questions. 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 '23-'24, but I'd like to hear more about the breakdown when it comes to the product type. Do you see it to be like 50% high and 30% mid-end and 20% for the rest? Or could we have more in the mid-end?

[Unknown Executive]

Thank you, Jorel, for your question. I thought this question about the dividend was going to come earlier on the call. Well, as you know, we always pay a lot of attention to our capital structure, and we don't like to work with 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, the things are going on well. Things are going well. Cash generation is a bit better than expected. We have earned -- you've burnt less cash than expected. And the micro and macro scenario are also going better than expected. So let's see how the next months -- it's fair, how they perform. When we have extraordinary dividend payout, 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 we look at regions and segments should be similar to what we already is.

[Operator]

All right. So this is the end of our Q&A session. I now turn the floor over to Raphael Horn for his final remarks.

[Miguel Mickelberg, executive]

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.

[Operator]

This is the end of our conference call. If you have any questions, please send them to ri.cyrela.com.br so that you can speak to our IR and analysts. Have a good day. Thank you.

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