Even Construtora e Incorporadora SA

BOVESPA:EVEN3

Earnings Call Transcript 2020-Q2

[Operator]

Good afternoon. Welcome to Even Construtora e Incorporadora Teleconference concerning the results for the second quarter of 2020. Present here with us is Leandro Melnick, CEO; and Carlos Wollenweber, CFO and Investor Relations Director.

We would like to inform you that this event is being recorded, and there are participants who will only be listening to the teleconference during the company's presentation. Immediately after that, we'll begin the question-and-answer session for analysts and investors only. Then further instructions will be provided.

[Operator Instructions] This event is also being broadcast simultaneously over the Internet via webcast and may be accessed at the website, www.even.com.br/ri. The replay of the event will be available as soon as it ends.

Before we proceed, we would like to clarify that any statements that might be made during this teleconference regarding business prospects of the company as well as its operating financial projections and goals are based on the beliefs and assumptions held by Even's Board and top management, and any information currently available to the company. Considerations about the future are not guarantee of performance and involve risks, uncertainties and assumptions since they refer to future events that depend on circumstances that may or may not happen.

Investors should understand the general economic conditions, the industry conditions and other factors may affect future outcomes for the company and may lead to results that materially differ from those expressed in these considerations.

The presentation slides are available for download in the Internet at the address, www.even.com.br/ri. I would like now to give the floor to Mr. Carlos Wollenweber, Even's CFO. Mr. Wollenweber, you have the floor.

[José Carlos Filho, executive]

Good afternoon, everyone. It is a pleasure to bring you Even's results for the second quarter. Through the quarter that began with huge challenges with the beginning of the pandemic in Brazil, we closed June with operating and financial results that give us reason to be optimistic. I would like firstly to go over the operating results, as you can see in Slide 2.

Since the beginning of the pandemic, we reinvented a way we saw property, migrated to a digital model with quick formalization, less bureaucracy. As a result, net sales for the quarter totaled BRL 301 million, surpassing by 18% the results for the first quarter, which is a very encouraging result. At the end of March, we reinforced our customer relationship team, which led us to begin serving our customers more promptly and efficiently. We create a more flexible collection process, which allowed us to keep our customer portfolio at a healthy level, at the same levels we had before COVID. We benefited from the new legislation regarding cancellations, which allowed us to keep reducing our volume of cancellations in the quarter, which is now only 14% of gross sales.

In this quarter, we continued launching in Rio Grande do Sul, following our 100% digital sales model. The launches in the quarter have given an excellent SoS of 61% with a considerable number of payments made in cash. Even -- this shows the good credibility the Even brand has in the region.

The next slide show the consistent improvement in our indicators of efficiency and capital structures. Over 5 years, we have reduced our administrative expenses by 55%, which represented 6.9% of the launch of PSV in the last 12 months. Since the change in management that Even underwent in 2016, we have brought our leverage, measured by net debt-to-equity, from almost 60%, down to 15.7%. In this last quarter, we generated BRL 155 million of operating cash and we used BRL 25 million to repurchase stock. And so our indebtedness was reduced from 22.5% to 15.7% in this quarter alone.

Our cash position is very robust at BRL 820 million. As a result of recent deliveries, our accounts receivables related to finished projects is worth BRL 359 million, which will contribute to operating cash generation in the coming months.

Moving on to the next slides which show you the launches in the quarter. We launched BRL 171 million Even shares, split between 2 projects in Rio Grande do Sul. The first project, 2 commercial towers in the project Carlos Gomes where the sale was success; and the other one was the second phase of a project in our Open line, which is now considered affordable segment. In São Paulo, given the quick recovery of the market, we already have 2 projects ready to be launched in August.

On the next slide, you can see the pictures of the projects that we have already lost. The Carlos Gomes project in Porto Alegre is a complex consisting of 2 commercial towers, 1 residential tower, and it is already an icon in the city located in the best business district, the business point in Carlos Gomes Street.

In the next slide, we show you the net sales for the quarter totaling BRL 301 million. In spite of the pandemic, we're able to keep the consolidated SoS in line with previous quarter. It's important to notice we're able to reduce the volume of cancellations by 32% in absolute numbers, which represented only 14% of the gross sales in the quarter.

Moving on to the next slide. You can see our inventory decreased by 5% in the quarter and now totals BRL 1.8 billion Even share. One point that regards attention is our inventory of finished units, which represents 45% of the total inventory. We remain optimistic about the reduction in interest rates of financing for individuals as well as the longer financing terms now offered by some banks, which are going to help us achieve a higher speed of sales for these projects and will translate into important cash generation for Even.

In the next slide, we show you the breakdowns of our land bank. In the quarter, we purchased 2 plots of land, 1 in São Paulo and the other 1 in Porto Alegre, both aiming at the upper middle-income segment. We already have BRL 6.8 billion Even share worth of land bank, representing 63 projects. It's worth noting, 64% of the land bank is formed by lots acquired from 2017 on. In addition, over 80% were acquired through swaps. And because of this delay in the launches that we suffer in the first quarter caused by the coronavirus crisis, it had very little impact in the return on capital for these projects.

In the next slide, we show you the project delivered in the quarter, which represented BRL 202 million of PSV, one of them in São Paulo named Benedito Pinheiros, the other one in Porto Alegre named Ponta da Figueira. I would like to point out the quality of our products often surpassing our customers' expectations.

As previously mentioned, perhaps the best news in the quarter was the strong cash generation, which can be seen in the next slide. Our operating cash totaled BRL 155 million. We reduced our net debt to 15.7% of net debt to equity, which is a leverage that puts them in a very comfortable position. It is important to highlight Even's consistent cash generation over the last few years.

Now moving on to the economic results on the next slide. We delivered net revenues of BRL 374 million in the quarter, and this figure will probably increase in the next quarters as we resume our launches at a faster pace. I would like to go into more details about our adjusted gross margin, which was 27.5% in the quarter. Breaking it down by business unit. In São Paulo, we delivered a very robust gross margin of 33.6% with an REF margin of 43 -- 36.4%, including an expansion of gross margin in São Paulo. In the Rio Grande do Sul business unit, margins remain very stable between 28% and 30%.

In Rio de Janeiro, however, it was -- the margin was considerably lower. Due to a more aggressive sales campaign this quarter in Rio de Janeiro, we delivered a negative margin of 10%. And when we look at REF margin, it is at only 5%. Our plan for Rio de Janeiro is to prioritize the sales of inventory and therefore cash generation rather than trying to maximize economic results for the business unit. As a result of the -- we delivered a net profit of BRL 27 million, which is a result slightly lower than previous quarters. We consider a very good result given the situation of crisis we are facing and faced especially in April and May.

Finally, moving on to Even's strategies for each of its business units. We emphasize that in São Paulo, the profitability margins that have been achieved for projects launched on land acquired after 2016 under Even's new strategic management, outperforming with solid margins of 35% on average. It's worth noting that the land bank that we launched in São Paulo, over 90% refer to land acquired under this new business model. Rio Grande do Sul is a region that has been delivering excellent results consistently for several years now, and we plan to expand our operations there.

And finally, we are phasing out Rio de Janeiro business unit, selling our finished units inventory, and we do not intend to launch new projects in the Rio de Janeiro. I'd like now to give the floor to Leandro, Even's CEO.

[Leandro Melnick, executive]

Good afternoon. This earnings release is a little different. We are beginning to see in all segments the real impacts caused by the COVID crisis, a global intense health crisis with great impact in the economy. It affected employment. First, because of the operating function. As a society, we were already leading. We have technologies. People already had a responsible corporate culture. And working from home was a natural move. It was extremely gratifying in our company to see that the company did not stop, continued producing within this moment of deep anguish and tension.

Our company had -- we grew buildings, our projects did not stop. They were delivered. The supplies -- the projects we made were made, contracts were signed. So the day-to-day work [ lessons ] occurred normally. The company did not stop 1 minute. It was a satisfying surprise, the way we faced this difficult moment.

Our sales area also [ continued ], also surprising. It was the biggest surprise. The real estate selling does not work 100% digitally. Interaction face-to-face is huge for relationship with people. The person is not buying a small amount -- she likes to see -- the person likes to see the project. And we manage to migrate successfully to a 100% digital process. But even then, it wasn't certain. We wouldn't be able to perform because people might not be ready to believe in this digital model. But more than 60 units were sold in the COVID quarter.

In São Paulo, in June, we had the best sales of inventory in the last 5 years. BRL 110 million were sold only of inventory in Rio Grande do Sul in June because it was the last month of the quarter. We had -- we broke the record of sales in the last 5 years in the company in Rio Grande do Sul, BRL 137 million worth of sales. It was positively surprising. We could never have imagined we would break records, sales records, in a [ company ] that was prepared to sell digital.

Another item that was worrisome was defaulting. We were expecting a generalized moratorium because of the COVID. But people honored their commitments, their obligations. And our volume of cancellations, which is a consequence of a portfolio with a high level of default, was the lowest in the previous quarters. It was only 14% on gross sales launches. We did not imagine this possibility.

In the end of the quarter, we launched 2 projects. Of course, at a different pace as of the usual one, but we are now accelerating, speeding up our launching process.

We tested our strategy. A [ wire test ] because our strategy, the company's strategy since the beginning, 2016 was our long-term strategy, was a strategy to go after high profitability, that wants the company to wish high profitability in bad years and good years. On average, looking after [ good revenue ] and the discipline we required in the moment of growth. And apparently, we have to put a lot of effort in growing.

It seems that the companies, at this moment, lose their disciplines to build a solid company, which is a company that leads to a company that faces crises well. And in a crisis like this one, caused by a virus, in this cycle of growth past this strategy. So the company faced this in a very good position. We had a good cash, BRL 820 million. At the end of the first quarter, we had almost BRL 1 billion of cash. It wouldn't be -- we prioritized cash in the last few years. We built our good cash. We are not an indebted company. We have the lowest leverage in the last 5 years. We generated BRL 155 million of cash in this quarter, a quarter plagued by the pandemic. And this is the result of a strategy. Our strategy that now is more visible, our strategy that requires discipline on certain axis. So a company, solid, safe company to be prepared for crisis. Of course, in a moment of expansion, it requires discipline.

We have the criteria of not growing in a disorganized way at any cost. But Even absolutely was able to build this financial solidity. We did not renounce our future because this loan indebtedness and high cash, we also have an excellent land bank. So responsibly, we are optimistic about the future because we have a qualified land bank, huge, qualified land bank built at a moment of crisis. So at a moment of technical economic advantage to build a land bank and the market is showing that it reacted in a positive way to this. In this month of July, we are continuing -- we see the continuation of these strategies, the launch -- very strong launches.

So the association of this land bank revealed strong sales and the precautious impact of low interest rates that we have now in Brazil that will change the economy in Brazil, even with the pandemic, which is a moment of higher risk.

This low interest rate is already showing its effects. So we believe that this low interest will have an effect even more relevant in the future. So it's a different moment, because we are concluding a very tense cycle and different because surprisingly, it was a very good positive result in our analysis, in our testing, our -- and now I'd like to move on to the questions and answers.

[Operator]

[Operator Instructions]

Our first question is from [ Benoit Genau ] from Bradesco BBI.

[Unknown Analyst]

I have 2 questions. The first regarding purchasing. Can you give me a scenario of what you see in terms of the competition, in terms of pricing, especially in São Paulo. And the second question, in relation to the operational aspects of the third quarter, we are almost finished in the first month of the third quarter. And you are giving us what we can expect in term -- in operating terms in relation to finished inventory.

[Leandro Melnick, executive]

Okay. So I'll begin buying the question about clients, and Carlos will answer the second one. It's a good question. We have a heated market, and this one of the most relevant points for our company. We believed in our strategy, that this behavior would end up giving us the good results, and we built a very significant land bank, not only volume, but in quality. Our land bank is highly qualified. Our last projects have shown this and we were able to sell for prices above what we planned and our strategies to buy land.

We are focused on building plans. We do not focus on ready land. We have a high-margin to buy land, so we can buy land by joining together small lots and build a qualified land. And we have several lands under construction. They are signed but not 100% configured in terms of pressure, but the price is already settled. So we are in the pipeline. We have, for São Paulo, a few projects. It's not still in our land bank yet, but the negotiations are very advanced.

Each case is a case. There are environmental questions, other questions, but the work is advanced, and we are enthusiastic about our strategy to build a qualified land bank in neighborhoods in which residents of San Paulo really want to live.

And moving on to the operating part. Everyone has already commented. July sales surprised us. They were very good in São Paulo. The sales of inventory, we can see an increase in price. So we sold inventory very well above our goal. So it's a market that's more normal with a gain in price, which is essential to us. Besides cash generation, we increased our margins. Talking about São Paulo, we are launching 2 projects in São Paulo, now in August. So we'll be launching at a faster pace in São Paulo, too, and we're very enthusiastic about these launches.

In the South, July was extremely good. Sales were really strong. We are enthusiastic about the region. And if the quarter continues as we cite in July, it is signaling a quarter that will be very good in operating terms.

[Operator]

Next question, Nicole from Bank of America.

[Nicole Inui, analyst]

I have 2 questions. If you can talk a little about administrative issues. There was a decrease in the second quarter. I would like to know where this drop came. And if we can expect this -- in this administrative in the next quarters? And the second question is about cancellations. It's amazing that even with the pandemic, the cancellations are actually decreasing. I like to know what you are expecting from now on in the cancellations.

[Leandro Melnick, executive]

So what is the great issue regarding cancellations?

[Nicole Inui, analyst]

If it's related to a specific project, some specific project or not. What changed in the second quarter in terms of cancellations?

[Leandro Melnick, executive]

Okay. Thank you. Talking about SG&A. Let's just start by selling expenses. We had a volume of launches that was low in the quarter. Our selling expenses were also very low. The reduction, because of the volume of launches. And when we look at administrative expenses, at the end of March, we took a very strong measure to hold on to hope and extend. We saw this. We put our research team working from home. We reduced the work hours and so we could reduce our administrative expenses in the quarter. We are already 100% back to normal. So we do not expect a reduction in the same level for the next quarter. The situation is already getting back to normal as it was in the fourth quarter -- last year's first quarter this year.

Regarding cancellations. The tendencies for cancellations to keep on decreasing. These are basically customers from projects we have already delivered. And we have spent 6 to 8 months, the customer does not have their own resources to settle that or sell. So the contract is not protected by the new cancellation law. So if the negotiation is a little more difficult. So over the last 3 years, we have a better legislation, more robust legislation. So it's natural that we can see the reduction in cancellations from now on.

Just a comment. It's the long term. The learning that we had from working from home, this can translate into a long-term legacy that shows us one way to reduce administrative expenses, one with possibility we can follow on from now on.

[Operator]

Next question is from Alex Ferraz from Itaú BBA.

[Alex Ferraz, analyst]

I have 2 questions. The first is regarding launches that you mentioned. You said that there are 2 projects that are about to be launched in August. What kind of projects are they? What kind of projects do you think will be more successful in this recovery? Is the demand high? I would like to understand a little better what you think that we have a good performance as we retake these launches.

The second question is a little bit more about the margin in Rio de Janeiro. Is it volatile? Some people said it was recovering, but this quarter was really weak. What exactly is happening? You decided to be a little more aggressive in order to sell. If you could elaborate a little on the margin.

[Leandro Melnick, executive]

So let's comment first. These 2 launches, these 2 projects, they are different. One in São Paulo, in its history, that's a very positive history in all segments. And this one is in at upper and upper middle income, and one that's for the affordable segment. So it was planned. We understand -- we have a very good demand from these 2 groups, the upper and the affordable segment in terms of interest rates in real estate safety.

It's amazing how well it's performing -- our inventory's performing in São Paulo, like Fasano project is -- high-end projects performed very well. In the affordable segment, the impact comes from the lower interest rates. It impacts the increase, so a bigger number of people that have access to this kind of financing. So at the first moment, so we are highly motivated, talking about the gross margin in Rio de Janeiro. Actually, the only volatility we have in this margin was in the first quarter of the year when we delivered about [indiscernible] construction work savings. Because we had savings in the construction, we [ revert ] this economy in the moment of delivering. We had a positive result with a 19% gross margin.

But practically speaking, that region, Rio de Janeiro, we are selling inventories practically at cost, considering the adjusted gross margin without the interest that were stored. It's a margin that's very close to zero. Sometimes negative, sometimes marginally positive, but close to 0. When we put the interest from the finance because we had a high volume of cancellations during the crisis.

In an interest of this unit that came back to our inventory, that was still the old that carried over these high interest rates. We had a marginal loss in the region and we have been having a loss for the last quarters. And this is probably going to happen from now on. So practically speaking, our strategy, as I mentioned briefly in the call, that we keep on speeding up sales in Rio de Janeiro, which is an important cash generation for the company.

We are not prioritizing profitability in Rio de Janeiro. Our idea is to phase out the region as soon as possible. And then take advantage of the cash generation to invest in our business, in the margins and results that we have been having, both in São Paulo as in Porto Alegre, which are margins and returns that are very healthy.

[Operator]

Our next question, Daniel Gasparete from Crédit Suisse.

[Daniel Gasparete, analyst]

This question is about cash generation that you mentioned. Can you talk a little more about the performance? We know this -- it had good numbers, but still below what we used to see in the previous quarters. So I'd like to understand what is a great generating factor to see this increase in cash generation? And as you saw, it's the highest cash level the company has had in its history. If you could mention, Carlos, the reinvestment. I would like you to see in terms of redistribution. As you can see, the company has already speed up this distribution.

[José Carlos Filho, executive]

Gasparete, thank you for your question. Cash generation was very good. It was spectacular, actually, for 2 reasons. First, we sold our inventory very well. It helped quite a lot, because when we sell inventory, the transfer is very quickly -- very quick, and we generate 100% of the unit in cash, and the margin was a little lower than the recurring margin. We delivered a margin between 33%, 33.5% in the quarter, and last margin was closer to 35%, 36%. So we sold more inventory in Sao Paulo and we sold the inventory in Porto Alegre very well.

It helped cash generation for the 2 regions. We also had, in Porto Alegre, the launch new -- of 2 towers, 2 commercial towers, the Carlos Gomes project. In one of the towers, we sold 100% of it in cash to one investor, and this helped a lot with cash generation. It was a record cash generation we had in the quarter.

And looking ahead, our G&A is very low. We managed to reduce the leverage the company has, a very strong reduction in leverage over the last 3.5 years. We are closing into a level of leverage that makes no sense to perform at a lower level of leverage. So the increase in return is based on 2 drivers. One is to increase the volume the company has, to increase revenues, profit margins. And so we have a higher net profit. And the second is to reduce the size of the equity the company has in our balance. With the level of indebtedness that is very low, we are in condition to look ahead and think in terms of payout increase.

The moment for this conversation is not here yet but the company's goal is to not carry over an equity in our balance as we have nowadays, which is BRL 1.8 billion. Now this or we have to launch a high level -- we have to have a high level of launch to make it viable. So increased cash generation, decrease the size of equity in our balance as we increase the net profit for the company. We'll start giving back returns on the same level as the best operators in the market. So our midterm strategy is this one.

[Daniel Gasparete, analyst]

Can we talk about the sales in Rio Grande do Sul? It was a tower that was 100% sold to 1 buyer. Can you give us a little more detail?

[José Carlos Filho, executive]

We cannot open because it's not what was exactly this. We launched 2 commercial towers. And one of the towers was 100% sold to 1 investor. And one remark regarding this, regarding the market. We -- it was a very interesting product. It was a very good project, they're cooperative in a context -- a cooperative complex. It was on a good avenue in Porto Alegre, and we could see that some cooperative conferences were -- had high demand and this [ conference ] have had projects for 10 to 15 projects. And they saw the quality of this new project. So it was basically almost 100% sold, the 2 towers, both for investors as for the final users. So as they are investors and users, we had a higher diversification that was very interesting.

[Operator]

Next question, André Mazini from Citibank.

[André Mazini, analyst]

So the investor buying in cash, do you believe that with the lower interest rate, not all investors, but also individuals, which is your goal, upper to middle income, do you believe that these people will pay in cash more often as the potential investments are yielding less return not only -- Fasano is a project where payments in cash in full were very prevalent, or this is going to start movement to other projects? Does it make sense, more payments in whole?

And the next question, if you can talk about the potential rent. Even -- does it make sense you are leveraging a little bit more to increase now Even's potential?

[Leandro Melnick, executive]

Regarding the first point. We are at the moment that we are analyzing because this -- the impact of this lower interest rates during the -- it happened during the pandemic so we are still analyzing. But continuing paying in full because the investor, it believes in the safety of the real estate market. And the buying family, it sees a way of realizing there. They're reducing the risks. So we can see, because of low interest rates with little discount, so at least for the moment, we can see the anticipation of these sales looking for shorter terms.

In the long term, the interest rate, we have an inverse impact, but a very different -- not inverse but a very different impact that will be expressed in the consumption, not only from the person that we say, did not have the -- could not afford this kind of finance. We've never seen in Brazil a long-term financing, 20 years and low interest rates. But the migration in the market is noticeable. There is a spread that the interest rate we had 5 years ago, people buy -- for every 100 square meters, almost 30 square meters more for the same installment.

So we can see these changes inside the customers. So we see customers looking for bigger apartments when we make an abrupt change in low interest rates. When the person realized that for the same installment, they used to pay, now they can buy an apartment 30% bigger. So this has an effect. Even in the middle of the COVID, people had this perception that the bigger apartment, the better. So this question of the in-cash is a momentaneous situation because of the crisis. And the interest rate, I see it will have an impact in this upgrade of purchases. And now, Carlos.

[José Carlos Filho, executive]

André, regarding the offering. We would love to talk about this, but we are in a quiet period, so we cannot comment on that.

[Operator]

Next question, Ygor Altero, Santander.

[Ygor Altero, analyst]

I'd like to understand the -- from the cash generation, we had BRL 150 million - BRL 155 million of cash generation. You commented that this strong sales. And looking ahead, do you believe this will continue, this cash generation -- this high cash generation will continue looking ahead?

[José Carlos Filho, executive]

So let's see, Ygor. No doubt, in the last 3 years, Even has been delivering a cash generation -- an average cash generation of BRL 300 million per year. This year, our cash generation tends to be an outline point in this curve because the second quarter was extremely good. So we are very excited with cash generation. But looking at Rio de Janeiro, we had the finished inventory, BRL 350 million of finished inventory in Rio.

Our goal is to speed up the sales of this inventory, not just in Rio, but nationwide. We have a finished unit inventory in the BRL 600 million in São Paulo, in Porto Alegre and Rio de Janeiro.

As Leandro commented, the reduction in interest rates was extremely significant. So a bank that had a bolder strategy in this last year, reducing the interest rate and prolonging the amortization. In 5 years, we reduced the installment by 13%. This is significant, and this movement will be followed by other banks. So all this will help with the speed of sales of inventory accelerates. And this is a very important cash generation for the company. So yes, we are very optimistic with this cash generation, which is making Even deleverage very quickly up to a point. As I said, that there is a point where it doesn't make sense to continue with the liquid cash. So it would be the moment to adequate -- to add the size of the equity in our balance.

And from the point of view of launches, I remember in the beginning of the pandemic, it was difficult to have approval for new projects. Do you see that the city hall is approving this on a more normal pace? Because we had highs and lows in relation to approvals. But recently, we are -- in the question of normalizing this number of approvals, we are going back to normal. We are able to organize this financing, and this is not an obstacle to launches.

And another point I'd like to highlight. When we began the year, we had a pipeline of projects that was much more robust then. At the end of the day, we'll launch in the year in a consolidated way. So we'll launch maybe 60% of our capacity. Of the capacity we had in the beginning of the year, especially if we look into São Paulo region, we launched very little in the first half. It will speed up these launches in the second half. So we're able to have more products than our condition to launch along the half year. So there's no bottleneck for launches of products this year.

[Operator]

Next question, Marcelo Motta, JPMorgan.

[Marcelo Motta, analyst]

It's a question regarding the margin in São Paulo. You commented a gain in prices for Sao Paulo, especially in the sales of inventory. When you look at this improvement in the REF margin, in percentage terms, can we think that it's all price or was there some savings in the construction? What is behind this improvement in the REF margin for São Paulo?

[José Carlos Filho, executive]

Motta, this is Carlos. In all our products and all the products we are launching, we are able to gain price. So we are very optimistic with São Paulo's margin. And keep in mind that margin is still not a pool. We have a volume of inventory that's a little higher, which is an older inventory but has a lower margin. And we have the margins for the launches in the last year, 1.5 years, 2 years. And this is increasing on price, and these margins are very good.

So at the end of the day, when we split these 2, we have the new products with the gross margin that, on average, is 36.5%, 37%, which is our REF has been signaling, which is everything we have been -- we have sold and not built yet. And we see the inventory of older products, which have a lower price. And we indeed have a strategy to speed up the sales of inventory because of this finished unit inventory. And this brings our margin lower -- to a lower level.

That's why the consolidated margin for São Paulo was 33.5%. So yes, we are very excited with margins for the new products we have been launching in line with our new strategy, that Even implanted for the way we purchase land, and we calibrate this with the strategy of the sales over supply -- the speed of sales for the inventory for projects already delivered. So the margins are different depending on the date of launch.

[Operator]

[Operator Instructions] Our next question, Daniel Gasparete, Crédit Suisse.

[Daniel Gasparete, analyst]

Excuse me for this question. Carlos and Leandro have shown great optimism for the reduction in the interest rate for real estate. Can you talk about what you feel from the banks? What is the horizon for us? What do you think these new products will benefit from this interest rate?

[José Carlos Filho, executive]

It's an international discussion of this, because of the impacts that these have. The way we see it, this will last for a relatively long time, does impact into -- does presents a hiatus in its productive capacity. So we have a good productive capacity, but to going back to the level of growth we had.

So this added to other -- macroeconomic data. This [indiscernible] of low interest rates is long-lasting, and we understand that the driver, the conductors of our economy, will continue doing this. The impact in the real economy has not started yet. So it's an interesting analysis. As the real estate market has been the one that suffered the highest impact because it has a huge part of its value restricted a long time, the impact of interest rate in our products is significant.

The same monthly installment, the person can buy a bigger product or a smaller product or the same product for a smaller interest installment. So in the real economy, because of the coronavirus, which the impact is extremely significant. So the piece is that interest rates will impact our -- affect our segment. Even in more than what the pandemic might generate, this is a reality now.

The number, the figures show that certainly, when this competition, the capital of the banks and at an international level, the interest rates will drop even further in the real economy. So this is still too early forming. We haven't had this in the real economy. But we in our segment, we have already seen an immediate effect in the middle of a pandemic so we have to remember that the purchase of a property, even with the low interest rates, it shouldn't accelerate because the person does not think about buying an apartment if their employment is at risk. So it's not the best moment for this. So the total impact, so in the real interest rate -- so the moment is absolutely perfect for buying property. And even then, sales accelerate. So it's not that easy. It's an objective conclusion based on data.

The real estate market, if we keep the low interest, we're going to speed up [ despite of ] what we see. An analysis. We have 2 views here. The individual, which is our customers, and the interest rate for the company, the corporate, which is financing the products. For us, the reduction in interest rates for the individual is more interesting to us. It makes our sales more significant. The corporate -- the company corporations, given the profile of our customer, as we see a lot of advances in installments, we see this term being short.

We are taking little financing to production. So we see the banks apply better financing conditions. Only in the quarter, we saw 3 banks improving their financing conditions, reducing interest rates, making the payment of installments more flexible, extending the term for the financing. This affects the credit analysis for new sales, especially for the sales of inventory. Because when we get the financing at the moment of sale, and our customer, in practice, can see the bank, the nonbank, with a negative spread. So it's what Leandro said.

Talking a little bit about companies, the corporate customer. Some banks are looking at poupança mais or CDR -- CDI mais, for companies to find which is not representative because it will impact the company, not the customer, the individual, which is what drives the sales. Our analysis is it that if poupança mais or Selic mais the spread is comparable with the prefixed interest, I prefer to buy a pre-interest rate rather than buy post-fixed interest rate, if I'm exposed to the interest rate going up.

So it's a product that we have to think carefully over. It's not a project nowadays. I think it's beneficial for companies. If they spread these -- the final interest rate compatible with a prefixed interest rate. So I've been talking to banks, but then they needed to rethink this. And poupança mais, which could be a good instrument for you to remove the uncertainty of getting a finance, a prefixed interest rate finance. So we would be at the first moment to be more competitive. But I think it's a product that still needs to become more mature.

[Operator]

[Operator Instructions] We close now the Q&A sessions. I would like to give the floor back to Leandro for his final considerations.

[Leandro Melnick, executive]

Thank you. Thank you all for your questions, for your participation, for the opportunity to show our results. Thank you very much.

[Operator]

Thank you. And this teleconference ends now. Thank you for your participation. Have a good afternoon.

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