EZTEC Empreendimentos e Participacoes SA
BOVESPA:EZTC3
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
12.76
19.01
|
Price Target |
|
We'll email you a reminder when the closing price reaches BRL.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Good afternoon, ladies and gentlemen. At this time, we would like to welcome everyone to EZTEC's Fourth Quarter 2019 Results Conference Call. Please note that this event is being recorded. [Operator Instructions] Today's event is available through a live webcast that may be accessed through the EZTEC Investor Relations website at www.eztec.com.br/ir, by clicking on the banner webcast. The following presentation is also available for download on the webcast platform. The following information is stated in Brazilian reals and in BR GAAP and IFRS, applicable to real estate developers in Brazil, except where stated otherwise.
Before proceeding, let me mention that any forward-looking statements made in today's conference call regarding the business outlook, forecasts, and financial and operating targets is based on the beliefs and assumptions of EZTEC's management and the information currently available to the company. Forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of the company and could cause results to differ materially from those expressed in such forward-looking statements.
Now I will turn the conference over to Mr. Hugo Soares, IR Coordinator, who will begin the presentation. Please, Mr. Hugo, you may begin the conference.
Thank you very much, and good afternoon one and all. I'm here to discuss the results presentation for the fourth quarter of 2019 as well as the year of 2019 as a whole. And with me, we have Emílio Fugazza, our CFO and Investor Relations Officer.
Now to begin with just generally getting into the operational and financial outlook for the year, we just experienced in 2019, where the underlying reality of the moments we lived was of an effectively spectacular momentum and performance over the course of the year, which hints to a lot of the fundamentals and of the capacity to execute that EZTEC has been able to perform.
So as you look to net sales, what you see is the performance of BRL 1.5 billion sold in 2019. And you can see the momentum going forward as sales -- up until the second week of March, we're actually able to deliver BRL 548 million, effectively on the same pace of the fourth quarter 2019 and possibly improving.
As far as launches, what you realize is that we had what, in effect, was the largest volume launched in the company's history. And again, as a subsequent event, we had significant launches, 4 launches specifically, already in 2020, which delivered another BRL 615 million, which was, in effect 27% of the guidance that we had admitted for the year.
As far as the Landbank, we were sitting at a BRL 7.4 billion potential sales value for Landbank in 2019. And considering the Landbank's acquisition under negotiations in the first quarter of 2020, we were basically up to BRL 9 billion. To the extent that the operations unfolded over the course of the year, you see that performance translating into results, which pumped gross profits up to BRL 328 million in the year 2019, where you have a gross margin performance, effectively, on par with the company's historical standards of profitability.
As you see operations increase and the net revenue base increase, there's an increased room for net profitability. As you see, net income increasing to BRL 285 million, diluting the operational expenses, leaving a net margin of 35%. Keep in mind that BRL 112 million of net income were exclusively on the fourth quarter, going to say what a remarkable performance the quarter had on the back of EZ Parque da Cidade, which we'll discuss in a bit.
As far as our -- the company's liquidity, ever since the follow-on, the company is sitting still on a BRL 1.3 billion amount of cash. Where on top of it, there is a complementary liquidity coming from a portfolio-ready receivables from the projects that -- from the sales that EZTEC finances directly. We have as much as BRL 519 million of securitizable receivables, awarded at a 10%-plus inflation rate.
That has been the outlook of 2019, but naturally getting ahead of ourselves to the reality that we're living today. Going to subsequent events. There is -- we will have a general meeting coming soon where we are set to distribute the mandatory minimum of BRL 66.7 million, which is practically BRL 0.29 per share. But most importantly, we -- just yesterday, we've admitted the material fact where we announced the discontinuity of the launch and guidance on the back of the coronavirus outbreak and the pandemic as a whole. And its repercussions on the company's operations as far as not being able to approve new projects in the City Hall or to open sales stands that keep on launches going.
On top of that, the Board of Directors just recently approved a stock buyback program under the understanding that the share price was not reflective of the company's underlying reality and Brazilian business model, where there is the option to liquidate as much as 10% of the company's free float within the next 3 months.
Now if you could please move to Slide #4, where I'll discuss EZTEC's operational track record historically. Once again, we hint on the fact that the year of 2019, the moments that the sector and EZTEC, in particular, were experiencing was of extremely solid fundamentals and outstanding execution that delivered basically the highest performance in launches of the company's history as you can see by the LTM figures. And this, perhaps most importantly, accompanied by a equally impressive gross sales performance, which lasts a little room for gross inventory formation.
Keep in mind that those sales, as they happen, they happen in a remarkably secure way. And by that, I mean that when people bought it, they were already committing a substantial down payment. So in the average of the projects sold launched in 2018 and 2019, we had clients commit the 52% of the ticket price as down payments up until the time of the project delivery. So basically talking about a cycle that was sustained by self-financed projects.
If you could please move to Slide #5, we will discuss our Landbank outlook. So ever since the follow-on, we've had the mandate of seeking new acquisitions. So you see some of that taking effect already over the course of the fourth quarter as our Landbank moves up to BRL 7.4 billion. And considering the projects that had been negotiated, some of that is still optioned acquisitions for the first quarter of 2020. We're basically up to BRL 9 billion. Do keep in mind that the profile of the projects that we currently have sitting in our Landbank is the -- is a profile that is mostly concentrated within the city of São Paulo, in relatively consolidated regions of the city of São Paulo. There's just a small chunk in the metropolitan area. And it's well distributed among different types of profiles, leaving very -- many avenues and strategic alternatives for us to deal with this upcoming time of unpredictability.
So please, if you move to Slide #6, just getting in-depth towards the operational performance of the year. On the last half of the slide, you see the increase in performance in launches over the course of the past years. First of all, keep in mind that we basically met the entirety of the guidance for 2019, which -- where we had committed to up until BRL 2 billion in launches, so that has been fulfilled. And going to 2020, we went a long way into a strong start for the year. Naturally, we had the discontinuity of the guidance on the back of the fact that there is a de facto unpredictability of what the scenario will be. Especially as we can't determine ahead of time whether we're talking -- whether we're ahead of a 30-day interruption activity, is it a 45-day interruption, a 2-month interruption. So all that leaves a little room for us to be able to pinpoint what the launches volume will be. Although to the extent that there's an opening in the window for new launches, the company is still ready with projects that are triggered -- they're just lacking the final approval from the City Hall, so that we can push on with launches as soon as that moment arrives.
If you look at the right side of the slide where we discuss sales performance, one thing to keep in mind is that, naturally, launches -- the uptake in launches has been driving the gross sales performance out of the park. But if you look underneath the launches figures, you realize that there is still a very consistent ready inventory sale, despite the actual volume of ready inventory has been diminishing continuously. And perhaps more noticeably, an increase of the stake of construction -- of projects under construction as part of our sales portfolio as naturally we have more projects that have been launched and are currently sitting on our portfolio available for clients. Cancellations have been capped on check, less than half of what they were in 2018, leaving our net sales figures at more than BRL 1.5 billion.
Now if you could please move to Slide #7 regarding the inventory. What you notice, again, is that the size, the sheer magnitude of the ready inventory available has systematically diminished to the extent that right now it represents as much as 28% of our inventory. Do notice that when we look at the ready inventory in the South Zone of São Paulo, most of that refers to EZ Mark, our commercial project in São Paulo. Despite the fact that it is sitting on our inventory, most of that is already rented. We're basically discussing a rental level of BRL 70 to BRL 90 per meter monthly income. And it's the type of stuff that has -- that doesn't burden the company in any way as it prevents us from having to deal with real estate tax and covers the carry costs. So in no way is our inventory a burden to the company going forward.
If you could please move to the Slide #8, where we talk about the launches. We tried to bring the highlights of each given quarter for the entire year of 2019. And here, above all, it should be noticeable that there is a wide plethora of different types of projects that we have been able to successfully deliver. And that shows -- just given the speed of sales, as you can see on the data below Fit Casa Rio Bonito, for example, on the top fourth -- top last quadrant, was 95% sold by the time we speak. And on the second quarter, you have Patrio Ibirapuera. So while Fit Casa Rio Bonito was a Minha Casa Minha Vida project on the low end of the spectrum. We have Patrio Ibirapuera on the extreme high end and equally, nicely sold. So if you consider just -- if you don't take into account the ID project, the attachment to the project, we're basically talking about a project that has been 100% sold.
Moving on to the third quarter, Haute Ibirapuera also has delivered as much as 80% of sales by this point. And on the fourth quarter, our main event of the evening, EZ Parque da Cidade, the big project of BRL 568 million in PSV that mobilized the company's full commercial effort, but it didn't take long to actually feel the impact -- the sales impact as we're currently able to have sold as much as 60% of the project.
On the next slide, on Slide #9, we put emphasis on how EZ Parque da Cidade had an outstanding performance. And I already point the Air Brooklin as a subsequent event. It was the main launch of 2020. Also a residential project. We very much appeal to investors, where we saw, again, much down payments taking place. And a lot of interest from the various parts of the project. As you can see the sales curve hit 60%, basically, within the first 5 weeks of the project.
Moving on, Slide #10. You can see the whole portfolio of the projects that were launched in the first quarter of 2020. Most of them sold very recently. But from whom we have little doubt of their capacity to continue sales and inventory liquidation.
Now I would ask Emílio Fugazza to discuss about the company's financials for the year 2019. So please Emílio, if you could.
Thank you very much, Hugo. Let's go to Slide #11, financial performance. Let's start with net revenues. Net revenues came in BRL 309 million fourth quarter 2019, an increment of 64% coming from third quarter 2019. That's important. It's important to mention the fact that as Hugo told you before, that only EZ Parque da Cidade came with net revenue of BRL 106 million, so almost 1/3 of the whole fourth quarter 2019 net revenues coming in this quarter. Apart from EZ Parque da Cidade, we have Haute Ibirapuera. Haute Ibirapuera is about BRL 30 million in revenues. And Haute Ibirapuera come in with BRL 30 million and a 43% gross margin. That's important. So an increment of net revenues because not only we have strong sales in 2019, but also because of the volume of construction we have been doing so far. So now we have almost 15 sites under construction from projects launched between 2018, 2019.
So talking about gross profit. Gross profit was BRL 123 million for quarter 2019, but the gross margin was 40%. It's important to bear in mind that this drop from 47% third quarter to 40% in the fourth quarter, it's because in the third quarter, we had Patrio Ibirapuera. Patrio Ibirapuera is a very high-end project in the neighborhood called Moema in the city of São Paulo, South Zone of São Paulo. We sold the project for BRL 17,000 per square meter. It's a project of more than 50% gross margin. And on average, in the fourth quarter, we have not only strong sales coming from Parque da Cidade, but also Haute Ibirapuera coming in a gross margin of 43%, but also Fit Casa. Fit Casa is our project of Minha Casa Minha Vida, the low-end program.
So Fit Casa Bras in the downtown São Paulo was a project of 46% gross margin. Fit Casa Rio Bonito is a project of 44% of gross margin. Projects Cidade Maia, for instance. Cidade Maia is a middle end. It's a project in the city of Guarulhos, as you know very well. The net revenue of this project was BRL 32 million in the fourth quarter, but the gross margin of this project was 47% and increasing. Because in the fourth -- in the first quarter 2019, the gross margin of Cidade Maia was 41%, second quarter, 42%, third quarter, 46%, and now 47%. So that's the kind of views that we have of prices coming up in the whole 2019.
Talking a little bit about expenses, G&A expenses, SG&A expenses. Let's talk about the G&A expenses. Fourth quarter was BRL 26 million on average, the same state, the same number of the whole 2019. But the good news are coming from the ratio. So when you compare the volume of expenses, G&A expenses, to the volume of net revenues we faced this quarter, we see 8% ratio, G&A/net revenues. That's why we are not increasing the volume of people in our company. We are not moving or changing a little bit the process, the standards of the company. And even though trying to release -- trying to show the same -- trying to show a kind of confidence that it's completely prepared for the volume of projects, for the volume of sales, we are facing, we are showing today. So that's why we think that as we have more sites under construction to come. And obviously, after passing the crisis, more projects launched, more sales to come. We are going to see issue of over 8% or 9% or 10% G&A over net revenues.
In terms of selling expenses. Selling expenses we have now a ratio of 4% over gross sales, which can show you the strength of tech vendors. Our own brokerage team to sell 90% of the whole inventory of our company. It's important to bear in mind that nowadays, tech vendors is a kind of company counting on more than 1,500 brokers working under the same flag, under the administration of tech vendors. It's a kind of a very specialized team. They know very well the public of São Paulo, the people of São Paulo, buying apartments nowadays. They understand very well -- they understand, indeed, the projects and the products that EZTEC have been developing. So we think that the path we have been following up, so far, it's a kind of thing that can provide a very good administration for sales. And after passing the crisis, we are counting on them to keep on the same track.
Moving on to Page #12, financial results. On top left, on the chart on the top left, we had BRL 29 million of positive financial results. Meaning that last year, 2019, the IGP, which is our inflation index over the contracts we have been providing to our clients, was about 7%. So the whole amount of contracts we have been carrying in our company, which is something around BRL 519 million, are all adjusted by IGP plus 10.4% on average. So 10.4% on average. That's mostly responsible for [Technical Difficulty] of financial -- positive financial results.
Equity income on the top right, on the chart on the top right, came in at BRL 10 million, meaning mostly because of EZ Parque da Cidade. As Mr. Hugo told you before, we have launched this project in 2019. All in all, it's sold to something around 40% -- 35% to 40%. And even in the fourth quarter 2019, we recognized the revenues coming from this project. All in all, was a recognizement of BRL 33 million. Take in mind, that the stake we have -- we hold from this project is about 76%. So the net income coming from this project -- stake of EZTEC was BRL 10 million.
In the bottom right of this slide is results to be recognized, the backlog margin. It's about 44%. So 44% means how strong is the gross margin of this company coming in the near future as we are doing the construction and recognizing the revenues from this project. But 44% is the average of the project sold so far. So it's not only about Parque da Cidade or even the Fit Casa, the low end projects or middle income. So all in all, EZTEC has, on average, projects sold that the units are coming in a gross margin of 44%.
Another kind of things that's important to bear in mind. The volume of people paying an advance, paying on average 52 -- 53% of the whole price of the units under the period of the construction. So in the meantime, we are doing the construction, we are receiving -- collecting as a cash something around 52% of the whole price. The meaning of it is, so we are not taking -- we are not borrowing money from the banks to fulfill the needs of the construction. And that's not going to impact -- they are not going to impact the gross margin of the company because we are not going to use for 80% of the whole projects the money coming from the banks. That's important to bear in mind.
And finally, let me take a look -- deep look in the net income of this company, was BRL 108 million in the chart in the bottom left of this slide. BRL 108 million, came in at a net margin of 35%. 35%, the most important part of this number is that. So taking out BRL 29 million from the [Technical Difficulty] of BRL 108 million means that the operational results of EZTEC in fourth quarter 2019 was about BRL 80 million. So BRL 80 million, comparing to the third quarter 2019, let me remind you. So the net income was BRL 61 million, and the financial result was BRL 23 million. So taking now the financial results from the net income was about 40%, 4-0, 40% net income -- operational results in the third quarter. So the increment was a 100% operational results from third quarter to the fourth quarter of 2019. That's important to bear in mind. The strength of the P&L, we are showing today as the path of the construction and sales was getting stronger and stronger.
So on Page #13, it's only to guide that the company is carrying about BRL 519 million of performed receivables
[Technical Difficulty]
direct receivables, meaning that we have something around 2,000 units compared to almost the same thing in 2018. So in 2019, despite the fact that the interest rates coming from the commercial bank were dropping dramatically. So from 9% from 8% to nowadays, 7% to 7.3%. So we could keep the volume of the portfolio of the receivables remaining the same. So origination plus the use was almost the same of the payment we collected in 2019. That's very important to remind you, because it's a completely different kind of people taking the -- borrowing money from EZTEC to buy the apartments, our own projects. It's the kind of people that they have the needs because of the recent crisis that we passed between 2015 to 2017, hurt a lot of people. So they can count on money coming from the banks, but not 100% of the money. So mostly, they are taking something around 50%, 40%, but this is not enough. They need at least 80% to buy an apartment in Brazil, which means that 40% or 50%, they have no, the remaining 40% or 50%, to give to EZTEC as payment. And that's why -- that's among the top direct financing provided by debtor, that's the main idea.
So moving to Page #14, let me use this slide in order to show you the strength of the balance sheet -- of EZTEC balance sheet. So we are ending 2019 showing a book of BRL 3.8 billion for liabilities of only BRL 400 million, to be more precise BRL 397 million of liabilities over shareholders' equity of BRL 3.8 billion. In terms of assets, you can understand that we are going into this crisis, into this moment coming from the coronavirus with a position of assets of BRL 1.3 billion of cash and equivalents. So our liquidity is about BRL 1.3 billion. Let me remind you that in the fourth quarter 2019, we had only BRL 40 million of gross debt. The whole company, there was only BRL 40 million of gross debt. Now March 2020, we have nothing, nothing, one single penny we have in gross debt. So BRL 1.3 billion of cash equivalents is net cash. In terms of performed receivables, we have BRL 573 million. So part of this coming from our portfolio with the agreement signed, so with all the assurance that we can take these units back whenever is happening kind of default. And the remaining BRL 60 million -- BRL 50 million to BRL 60 million are performed receivables under process to bring the contracts to the banks.
In terms of ready inventory, the cost of the ready inventory, BRL 335 million. So let me remind you that the volume of performed inventory we have nowadays is about BRL 600 million. The cost of this inventory is about BRL 335 million, which means that the gross margin of the inventory is about 45%, not less than that. So a very healthy performed portfolio of units. In terms of Landbank, as a Hugo told you before, the Landbank of our company fourth quarter 2019 was BRL 7.4 billion, at a cost of BRL 897 million. So the cost of the Landbank -- so we have no exchange agreements. We have no swap agreements. All paid in cash, so which means that is a kind of a healthy Landbank to use whenever we think is the most profitable time to use this Landbank.
So that's the situation. Let me take a look on Page #15, talking about subsequent events. The first event is the general [Technical Difficulty]. We don't know for sure what is going to happen by the end of April, by the law, we have to call for the general meeting of investors by April 28, 2020. It's a moment that we are going to propose a BRL 67 million in dividends, which means something around BRL 0.29 per share, which means 100% increment coming from 2018. So the total amount of net income reported 2019 was BRL 281 million. For this BRL 281 million, we're going to take the legal reserve, which means 5% and then we're going to pay a dividend 25% of the remaining volume, which means BRL 66.8 million to be paid at the year of 2019.
So another subsequent event is the stock buyback program. So the Board of Directors has approved up to 10% of the free float to acquire. This is simply because, obviously, the company has done -- it's a follow-up by BRL 36 down to BRL 25 per share. The volume of money we have here, the quality of our assets, these trends we are going to enter in, the point of the crisis does. So these have to be taken in mind about the share price we have today. So we are trading in a kind of price that cannot be understood by this management. And that's why we think that the 10% is not going to hurt the balance sheet of our company. It's not going to hurt everything we have to pay to our employees, to our suppliers, to deliver our construction. So that's why we have been thinking about the next 3 months. The decision, obviously, of canceling those shares or selling again those shares, we're going to take in an opportune time after this crisis passing to.
So -- and finally, the slide on Page 16 only to you guys living in other countries, living abroad just to understand what we have invested here in Brazil, specifically in city of São Paulo. Obviously, we are going to take all the care for our -- taking care of our employees. We try to make a reduction of more than 50%. Nowadays, we have, here on our headquarter, less than 50% of the whole staff. The majority of them, they are doing home office. And obviously, it's going very well. So we have acquired -- we have rent a lot of TI -- IT equipment to support all the employees of our companies. And obviously, the projects that are going through, they -- all the movements to manage the companies are going through, part of them by home office, part of them inside our office.
We are trying to avoid that our employees coming to our companies using public transportation. Nowadays, we are doing some kind of reimbursement of taxis or Uber cabs expenses to provide them more protection to come to the office if it's necessary. Everyone who are trying to be tested by the coronavirus are -- have the expenses, eventually not be covered by the health insurance paid by for the company. And finally, obviously, the removal from the office of all the collaborators within the risk groups.
Let me remind you that we haven't so far received any kind of news from the government to stop the constructions. So so far, the sites are ongoing. So the constructions are ongoing. Obviously, we think that in site of the constructions, the health, the environment, the health environment is a little bit more interested in healthier than in the headquarter because it's open space. The construction sites are open space, much more air, much more fresh air. And that's why I think we are not facing some lockdown in our construction sites so far. And that's why we are going to keep as this way.
But on the other hand, in terms of sale stands, now we have, from the government, the news to stop. So we cannot receive our clients in the sale stands. And that's why -- that's the kind of thing that is much more complicated is to improve the sales because people want to see the apartment model, the model of the building, of the apartment. They want to talk with the brokers. They want to talk with the people to understand if it is a good deal or not. So it's a kind of thing that we cannot doing anymore. So our sales stands are completely closed. But our brokers can count on a lot of systems that we have been investing since 2013, 2014. That's a kind of system that we would -- can contact our client by phone and we can contact our clients by mail or chat or WhatsApp, whatever.
So we think that in the next few weeks, we are going to improve the way we are getting in touch with the people. And obviously, because of our company is vertically integrated, we can ensure that all of the process are under our control. So so far, we are open. We are working. Part of the company, home office. Part of the company in site. The sites and the construction is okay, but the sales stands completely shut down. So that's why we think that we are going to face the challenges we have with a lot of serenity to cause a minor impact in everyone.
Thank you very much, guys. And we are completely open to questions. Thank you.
[Operator Instructions] Our first question is from Nicole Inui with Bank of America.
Thank you so much for the call and the presentation. So just talking a little bit about the construction sites. You said that they're not closed right now. But just to understand, if you came to a point that you had to close the construction sites, if you could talk a little about what would be the running costs for EZTEC? How many of the construction workers are on your payroll? How many of them are third party? And then my second question, I know it's still early. We don't know what's going to happen going forward. But we are expecting Brazil to enter into a recession now. So if you think about when launches restart again, how would you think about changing the mix of those launches expecting a weaker economy going forward?
Nicole, thank you very much for the questions. Nowadays, the problem is, we're not talking about risks. We are talking about uncertainties. And that's why it's very hard to make any kind of plan. But in terms of sites, we think that, obviously, in some moments, we are going to face that the sites are going to shut down completely. We are not receiving any kind of news coming from the authorities to do that. And we think that also in Europe, in Spain, in France, the sites are already opened, at least in the last week. So the problem is, obviously, the majority of the people working in our sites are third parties, because we have the whole team of management. But the -- only skilled people, they are coming from the third parties. And that's the problem, because we don't think that the third parties -- that they -- the companies are so small, they have no working capital to support a shutdown of, I don't know, 1, 2, 3 months, whatever.
So we have been doing a lot of discussing -- a lot of discussion with other companies, with our union of the companies, to understand what we're going to do. We're going to support the salaries of these people. We're going to support the payment of the third parties. So what are we going to do? We don't know. Because it doesn't matter what EZTEC's going to do. Because if EZTEC is doing something but my competitor, the other constructor, is not doing the same thing, the third party is going to break the same way. So that's why we think that we have to do something for the whole sector, not only for EZTEC.
And obviously, in terms of some kind of impact in terms of schedule to deliver the construction, we have no concerns about it. In Brazil, definitely, we have been delivering our towers in terms of the total schedule, it's about 3 years. So 36 months, 3 years. So we have a huge amount of months to be used if there is a huge problem to be stopped completely for at least 3, 4, 5 months. I think that up to 6 months, we're not going to face a huge problem in terms of delivering the project on time. But there will be a huge impact for the third parties. And we have to maneuver. We have to address something about it, but we have no decision so far.
Nicole, this is Hugo. Just trying to complement what Emílio just said. I think that much of the solutions that got to be provided come from the fact that we already had in place, historically, just as a part of the business model, some components to address -- just to manage the risks from regular operations. For example, when Emílio said that there's a 36 month window for the construction to happen. When we schedule any given construction for any given launch, in any circumstances, we already embed some 2 to 3 months cushion, just as a safety margin. So in a circumstance in which we're discussing, let's say, a temporary paralyzation of 2 or 3 months, that's already within just the regular controls that we would usually have, with no bearings on the capacity to deliver on the contractually mandated date.
Now as far as the relationship with suppliers and contractors, just historically -- and this, again, is a matter of business model, EZTEC has always managed a base of suppliers where you have a pulverized base of people working for you. Where basically, you're talking about some 50 people -- 50 different companies, where you're not exclusively dependent upon any single one of them independently, which mitigates some of the idiosyncratic risks of any of them individually going under. But also more systemically, we really try to maintain a long-lasting partnership relationship with the suppliers that we do have. So among those 50 people -- those 50 companies, there's a very low turnover. So then once we go back to the actual construction and we -- let's say, we're past the deepest moment in the crisis, we can rest assure that our construction sites will have some degree of priority, and our engineering will be attended for. So that's the general idea.
Nicole, in terms of Brazil entering in a recession, so not only Brazil, the whole world. So what is happening now? In terms of projects, trying to take -- going to an approval process. Let me remind you that under the management of São Paulo municipality, we have more than BRL 5 billion of projects to take in the license of their, which means that we are a little bit prepared for everything. So we have corporate towers. We have low-end projects. We have middle-high, middle-end projects. We are not -- there are no concerns about what kind of projects we're going to see to be sold. The most is specifically because in our BRL 7.4 billion now or BRL 8.4 billion -- BRL 8.5 billion of Landbank, we have pretty much everything. We don't know for sure.
So far, the projects we were selling in the first quarter 2020, the majority of them were projects focusing on investors. So the majority of the price were projects very well-located in the city of São Paulo. And people were changing the bonds-fixed income coming from the banks to -- in order to buy new apartments in the city of São Paulo, because they were expecting that the prices were going up. Nowadays, we don't know. We don't know which is the new reality in terms of prices. We don't know the new reality in terms of who is going to buy a new apartment. But obviously, we're going to see a kind of market, which is -- kind of coming from people inside this crisis, talking to each other inside their homes, inside their families, talking about their needs in these new environments. And obviously, we're going to focus on that. So for now, we have less visibility of what is going to sell by the end of this crisis.
This concludes the question-and-answer session. At this time, I would like to turn the floor back to Mr. Emílio Fugazza, IRO and CFO, for any closing remarks.
Thank you very much. Thank you very much for everyone. So we are going to start all over again by 45 days, by the end of April -- beginning of May, third quarter 2020 results for EZTEC. Further doubts, please let me know, including Hugo and the whole IR team. Thank you very much, everyone.
Thank you. This concludes today's presentation. You may disconnect your lines at this time, and have a nice day.