JHSF Participacoes SA

BOVESPA:JHSF3

Earnings Call Transcript 2024-Q2

[Mara Dias, executive]

Good afternoon. Welcome to the JHSF webcast on the Second Quarter 2024 earnings release. Present on behalf of the company today, we have Augusto Martin, CEO; Breno Perez Vicente, CFO; and myself, Mara Boaventura Dias, Investor Relations Officer. And we also count on Sullivan here our interpreter of sign language.

We are streaming on YouTube and Zoom available on our company's IR website at ri.jhsf.com.br. If you're watching on Zoom, ask your question in the Q&A session. And if you choose to open your mic, click on raise hand.

Before proceeding, let me mention that forward-looking statements during this presentation related to business projections are based on assumptions of management and on information currently available. They involve risks, uncertainties as they relate to future events, changes in macro policies and politics may also affect the forward-looking statements.

Now I'd like to turn the floor to Augusto, who will start the presentation. Augusto you may proceed.

[Augusto Juniror, executive]

Thank you, Mara. Good afternoon, everyone. Thank you very much for being here in our 2024 release.

And this is a very positive quarter because it brings very important achievements in 3 topics before getting into the highlight of the slide. The main 3 topics that bring important results to us at this second quarter, the solid consolidated growth of our businesses. And the second one is significant growth of our margins in all our activities, even in a very challenging macroeconomic scenario. And a third macro point is a successful strategy of growth of our businesses of recurring revenue, reaching a significant reference in terms of cash contribution, which is already over 75% of the total generation. So this to our business, brings an improvement of the risk of our company with better forecast for our future and also reduce impact of the macro scenario.

Getting into the details here on Slide 3, we have here the margin evolution in all businesses. This is a macro summary, a very important representation of our adjusted EBITDA for recurring income of 62%. When it comes to specific units as all, very positive performance for the quarter. Consolidated sales remained double-digit levels. And here, we should say as first announcement, the first phase of the Usina São Paulo, which is Casa Fasano, and I will explain that in Hospitality and Gastronomy, we should highlight on the growth of RevPAR of 33% average. We're also increasing also the Surf Lodge new opening in the Boa Vista Complex.

For airport and evolution of our airport activities, 41% and in movement of aircraft, 75% in liters sold and the successful third edition of the Catarina Aviation Show. On our rental houses business with JHSF residences and clubs, a commercialization of new units that were delivered for Fasano Residences at the Cidade Jardim Complex and Golf Residence at Boa Vista Village at 191% increase of adjusted EBITDA.

For JHSF capital, we're still at an increase, reaching 1.7 billion assets under management in the portfolio with successful capturing at the first tranche together with eB Capital, and the first of around BRL 160 million.

And finally, to just show the great success of the quarter, a very important advance in our capital structure. First, an efficient capital recycling with the sale of minority stakes and intensifying the field focus on high-end assets. I'll give you details, but just to already know that, and we've already communicated. And recently, the successful issuance of our CRI of BRL 700 million with terms and rates under unprecedented conditions for the company. And now going business for business. Let's start talking about malls. We have quite an increase of 16% in terms of sales where we have here a growth of our total and this shows above of what our sector has in reflects our focus on high-end markets and in our malls at the Cidade Jardim, where we have growth in the Catarina Fashion Outlet of 20% and Cidade Jardim 12% growth. What's new here is the delivery in the next months of the first operation at Villa Sao Paulo, which is a new also called Sao Paulo at the Marginal Pinheiros Expressway, right connected to Cidade Jardim Complex.

So we will launch Casa Fasano. Casa Fasano has always been integrating part of the major events in Sao Paulo and it's back launching with a new address here at Usina Sao Paulo at a fully focused project, which is iconic and will become the most important venue in Sao Paulo right next too much in a Marginal Pinheiros Expressway, which is the development that we have for the new access of the express way. It is very exclusive with full view to the city, landscaping of [indiscernible] and a capacity to get up to 1,000 guests and will count on exclusive Fasano catering.

So this is a very important launch to us for the next few months and brings to the City of Sao Paulo the most sophisticated venue for major events. And we still have here forecasted for the semester data center at our Boa Vista Village that will have 15,000 square meters of GLA and very important for the within the Boa Vista Complex, and this is also furthest than semester. And we also -- we will start L'Avenue at the shopping mall with Cidade Jardim, a very iconic restaurant here, which will bring something very important to our mix here. Specifically for the sales indicators, we see 7% of stores sales and 7.5% at the same areas sales. So we have an important growth. And when we look into rentals, we also see a 2.4% at same store or same area. And this brings to us a result that is significant in terms of growth where it shows 41% for the first comparison here of the second quarter, and we have a 74% gross margin, which shows an increase of last year. And adjusted EBITDA, we have here an 85% increase in 76% of EBITDA margin -- with the growth in the margins.

Getting to Hospitality and Gastronomy, we see on the vertical of Hospitality an increase that is quite important on the average of a daily rate of 11% of revenue -- RevPAR of 23%. And occupation rate, much better reaching 51% in the second quarter compared to 2023. And when we talk about Surf Lodge Hotel, which is our new hotel at Boa Vista Village, operated by Fasano with 16 new rooms, all facing the pool with the Surf practice with these perfect swell technology. It's a one-of-a-kind architecture with [indiscernible], and we have the decor of [indiscernible], right there facing our Surf beach at Boa Vista Village.

When we talk about Gastronomy, we also have an increase in number of couverts sold of 2% compared to the same period last year, an increase that is significant when it comes to the average couvert of 10% year-over-year. And getting into the results, we also have 11% of gross revenue, reaching BRL 33 million. And the important point is the margin growth, reaching 34% have an increase of nearly 2%, which for the sector is very important. For the adjusted EBITDA, we have 12% increase, 20% of EBITDA margin and also 1% year-over-year.

Airport for the Sao Paulo Catarina, where we're talking about the expansion that was very positive from 9 to 12 hangars, which they are already 100% taken, and we start to study the next expansion from 12 to 17 hangars and this expansion and the success of the operation brings a 40% increase and a significant growth when it comes to fuel billing, which is at 70% -- year. And also, we should highlight that Catarina Aviation Show an event that became the major win in this segment, 3x bigger than the first edition and 34% in terms of aircraft movements compared to the previous year. So it has become a very solid event in the sector and focused on high end.

We also bring the opening of the new domestic and international terminal, making our airport even more aligned with the demand and the quality that our customers demand, a significant increase in domestic and international market share because of the growth of the aircraft movements and also at the hangar. 74% of international flights which is quite significant compared to the market, and this has an impact and the growth of our results, where we have 118% growth with a gross margin growing 46% and adjusted EBITDA, 71% and 64% margin showing the important growth and very positive results that our airport business has brought to us as a whole. Getting into our other business, the recurring revenue, the JHSF residents, which is residential rental or high-end consumers with high quality and service delivered. Now for the rentals, which we already have for sales. So this is mid, long term. So in terms of the qualities of concierge, maintenance, hospitality, so the full linen bed, bathroom residency ready, you can just move in with your suitcase. So we have here the new units of Gulf -- residents at Boa Vista Village and we start with where we show the growth of our recurring revenue in this vertical after a year of operation of Boa Vista Village Surf Club, which is a huge success. And we have had great experience from our consumers, the family and professionals in this area. We have one of the perfect waves always, and this has been very joyful to us to see that the success of the operation itself.

And definitely it will reflect on our Sao Paulo Surf Club that is under construction, we should have the launch in the first semester of -- second semester of 2024, and we'll have this very close Sao Paulo and also very close to the [indiscernible] region. It will be another opportunity for our clients to surf not only at Boa Vista, but also in Sao Paulo. This unit presents significant results of growth as we have been communicating for some time in terms of our investment, in terms of residential rental. We see here 185% growth and 88% gross margin with adjusted EBITDA reaching 191% with a margin of 79%, 6% growth year-over-year.

Getting to real estate development, the company has been for some time now disclosing its strategy of not ever putting down its quality, but also in terms of the price of our inventory to keep it that way with our assets. So the company has been working on that. And also all the units will be sent not only for sales that has always been with our history, but now with our rental business, having part of these units, so that is not sold, but rented for our revenue resident business. In that way, we have here a growth of 25%, of contracted sales of the first quarter of 2024 compared with it reaching BRL 275 million for the second quarter and linked to that because it's very important to talk about the launch of Reserva Cidade Jardim, also the opening of the Marginal Pinheiros Expressway and also giving you a possibility to reach the Reserva Cidade Jardim and our Casa Fasano, and this gives the results for this quarter.

When we look at gross revenue and revenue to be appropriated, we see an important increase when we talk about to be appropriated, reaching BRL 821 million to be appropriated for the second quarter compared to BRL 159 million appropriated and BRL 1.443 billion, where we see that is a portfolio that has nearly a null delinquency level for our accounts receivables. So very important for our cash flow.

When we look into the results of the real estate development unit, we see the gross revenue of 80%, an increase compared to the same quarter of last year. And also in terms of the adjusted EBITDA, a 12% increase compared to the same period last year. This improvement in the margin comes from 2 reasons. First, because of the mix of products that allows us to have a greater margin because of the mix sold. And the other one is the strategy of the company to keep the price of its inventory that makes margins also benefit. So the combination of the mix plus price is what we have in terms of improvement on gross margin, but keeping a trend of the company to operate with important margins. That way, we consolidate recurring income of our company.

As I said in the beginning, with significant growth in all financial indicators of recurring income with substantial margin gains. So we look into the gross margin of company of 25% of gross revenue, I mean, for the same period reaching BRL 270 million for recurring income. And the gross profit, we see BRL 57 million, 157% to BRL 133 million, I mean, 54% growth compared to the same period last year, adjusted EBITDA reaching BRL 125 million, a record for the recurring income unit with 50% margin and a net profit of BRL 78 million, 33% net margin compared to the same period last year.

This representation of BRL 125 million adjusted EBITDA shows the importance of our recurring business as a whole for the company and brings to us a greater diversification of our activities. So JHSF as the real estate development for sales now for rental and all the other businesses of recurring income in its own verticals that was developed in the last years, always focusing on business and the growth of our recurring income set brings greater diversification in terms of the risk of the company, greater forecast of our results because of the growth of recurring income and smoothing impact of the volatility of the macroeconomic scenarios.

So it is a quarter that the company is satisfied with this advance we have taken in terms of results of the recurring income and will be kept because of the investments in our strategy of greater focus on this business balancing out with the real estate development. When we add this with the consolidated results other than recurring income, we see the growth in consolidated results with margin gains in all areas, including real estate. So we have a gross revenue BRL 436 million and 4% increase, a gross profit of BRL 248 million with 63% of gross margin, 6% increase year-over-year. Adjusted EBITDA, reaching BRL 200 million, 27% growth year-over-year, 51% margin, so 10% compared to the previous year and a net profit of around BRL 68 million, 6% growth compared to previous year, 43% net margin and 15% better than the same margin of the previous year.

Adding into capital structure, two main transactions are important to be explain here. First, our strategy to have a capital recycling and more efficient in the events we had of selling minority stakes of some assets and intensify our focus on high end which is our main focus here, which the focus on high end and the quality for our clients and all the different activities. And this recycling of capital is very important, and it brings us BRL 522 million and the result of both M&A at the Bela Vista Mall in Salvador, 1% stake and 18% in Ponta Negra.

And also talking about capital structure, it was very important, the successful capital market emission under unprecedented conditions for the company, the company had already gone through other important capturing as this one. But with private placement with private locations, at this volume is the first time the company goes to the market to issue the real estate suitable certificate and it's twice as much as what was offered in the books, and we have a spread, and this proves the institutional governance and view and the capital structure of the company of its businesses, proving the quality of our company.

So this brought to us very appealing rate, mostly for a tenure and an average rate of CDI for this long one, which is 0.59% per year, increasing our average maturity and reduces our average cost of capital. So these are the two very important shifts we made in the company that not only the recurring income, real estate development, increased margin, revenues, market share, but now for capital structure, two main achievements that bring relevant benefits to the company.

Talking about our cash availability and indebtedness. We have today a healthy position when we talk about the previous quarter where we have reached 1.56x, the net debt compared to adjusted EBITDA. So we will continue at healthy levels in terms of leverage. And for that reason, this result comes through the growth of generating cash that we'll have with our different businesses and recycling and minority stakes in assets of the company and greater participation of third parties in our structure through JHSF Capital. So the combination of these 3 main drivers are the ones that will keep bringing us a healthy level of leverage. One which today is at 1.56x adjusted EBITDA.

When we look into the timeline of our debt when we talk about this real estate receivable certificate will give us an appraisal of 4 to 6 years, a duration that is very well distributed in spread and also brings a solution when it comes to the 2024 due date. And with this high demand that we had and the success of this real estate receivable certificate and also because we did not really meet the specific demand because of the size of the bookings, so we anticipate and we already start to talk in the next few months with the strategy for the 2025 due date. Making the company spread even more and have very structured spread, dealing, improving our capital structure and also in terms of cost. Because of the recent success of this structure now with the Real Estate Receivables Certificate, we now start to check with the 2025, so we can have that with the same profile.

Finally, before getting to Q&A, just as we have also here sustainability, the disclosure of our sustainability report. This is the fourth consecutive year, which is -- has been a highlight in the sector for some time because of the clarity of information, we have a new format, it's an executive booklet with indicators, making it easier, very detailed information, easier access to understand the company's structure and also clarity when it comes to the goals for 2025.

We should highlight here the Catarina Fashion Outlet. This is a great achievement for us. So it's the first LEED certificate in the gold category, it's the first in Latin America. It's a big achievement of our whole team and also the first place in the Sustainable Airports Program, and that was held by ANAC our agency -- aviation agency in the category of airports handling up to 200,000 passengers and also the launch of Catarina Carbon Free, which will neutralize 100% of the volume of aviation kerosene sold in the airport.

These are the main sustainable highlights, and I pass the floor to you Mara, so we can carry on with our Q&A.

[Mara Dias, executive]

Thank you very much for your participation. [Operator Instructions] Now let's collect all the questions, please bear with us.

The first question is from Matteo Santander. Can we have his mic open, please.

[Unknown Analyst]

Hello, everyone. Thank you for accepting my question. I guess from our side we have two questions. First, as [indiscernible] when it comes to an investment in the mall platform, we are ready to [indiscernible] but I want to know if you think it has reached an ideal level or if there's anything more to come? And how will that relates to the strategy of recurring income, that's the first one.

And the second one, I want to understand a bit more for the quarter, we saw an important information in terms of tax, and we talked about a lower credit. So I'd like to understand a bit more on what happened for the quarter. I believe that's my question.

[Unknown Executive]

Thank you for your question. Let's talk about strategy, and you can talk about the [indiscernible] detail. As we have been communicating for some time that capital recycling of minority stakes of the company for the most part was very important because of the development that JHSF brings to these assets. So it's something we've been taking a look -- close look in to always. We have great assets but not as aligned with the structure of high-end targets. So will people looking into these segments so with Bela Vista and Ponta Negra that we had related to that and the company will continue more and more focusing on the assets and malls of high-end target, which is a specific situation where we can see with Faria Lima mall, which is at the exclusive spot, which is the crossing of Faria Lima with Leopoldo Street, and this really focuses on high-end target assets and also the launch of the [indiscernible] Center at Boa Vista Village that is also aligned with our structure for high-end target. So the company will carry on investing on this type of asset that is related to high end with recurring income and the lifestyle of our clients and also observing the opportunities of capital recycling for those that can be productive to our structure and to our leverage.

[Mara Dias, executive]

Matteo, for the positive tax this quarter, we lowered the credit of tax that we had in our liability. That's why we had this positive impact. It was specific for this quarter.

[Unknown Analyst]

I see, thank you very much. That's very clear.

[Mara Dias, executive]

I think now I will read out some questions. And the first one from [indiscernible], he says that the airport has bought great results and has complemented with the recurring income, and he wants to understand for the long term how we see the airport business? And if there's any benchmark globally that we model after?

And I can answer. There are 3 that we really modeled after those who know it's very specific niche. Catarina already isn't much over in terms of quality and service. So there are the 3 that's most important [indiscernible], if I'm not mistaken. Though these are in the New York London impairs the top capital in the world and the Executive Aviation abroad has exclusive service. So there are different airports, not within the commercial airport and they have exclusive service, with all the attention they need. So we modeled after them when we brought this to Brazil because our clients would compete in the major airports here with all the flow of commercial passengers. So that's how we went after that.

It is fair to say that Catarina has evolved. And if it's not the best on even compared to sustainability and the programs we have, the airport can be easily in one of the top ones in the world, very competitive. And if you'd like to add in terms of long term, we still are at a ramp-up of commercial aspect. There is much to build the capacity of hangars. So we are really taking the opportunity of share increase, especially here at Congonhas Airport.

So there is still a path to be paved and after results those who don't know, we have a CapEx that has been relevant and was relevant in the past. So we're talking about very good where we had to work on -- we had a relevant CapEx and now relevant for hangars. It's not as relevant from what we already have, quite the opposite to the operational leverages. So there's much result to capture.

[Unknown Executive]

And to add to that, and to give you more color into it. We are midway. We have 12 hangars, and we have the demand for another one in the company. Today we have '23 yet. So we have had that is something that's been talking to clients to plan the next of 5 and that can give us a really quick return, interesting return. But we should take advantage of this market and the good moment of our airport.

Mara said quite well, the leverage, the operational leverage. Much of the CapEx has been done and now we call it marginal CapEx because what we have to do and to have more aircraft, we're ready middle heavy jets, we are a reference. And we are really looking into it more and more. And for the next months and semesters. We will have greater capacity for more aircraft. And to reinforce also when it comes to the reference, this is very common at JHSF where when we develop a new asset, a new business, what we do at the company is always check the benchmark that we have globally the best operations that are high-end targeted. And that was the homework we did with the airport, and that's what we do with the other ones and that has a successful [indiscernible] here. The international part uses the executive airports globally. And the feedback we have is that definitely, today, we have one of the best operations globally in terms of quality, sophistication, excellence. And now what we had with a positive feedback and they will intensify a bit more with the launch of the new domestic boarding, wholly new with a project that is beautiful with [indiscernible] and 6 projects. So what we already had shown good results with our customers, it will be more and more special.

[Mara Dias, executive]

We still have some questions here that were sent. Now we did, so if anybody else would like to have their mic, open just click on raise hands.

[Unknown Executive]

One more thing to add about airport, this growth that we have, of the expansion, and the next hangars and CapEx that will be marginal since the infrastructure has already been structured and it's up and running. This -- which is very important for recurring income is that the company starts to -- and we have been looking into that very strongly, that company starts to have an operating leverage that is stronger and faster especially because of the developments that we've had for the CapEx already. We had that with the airport to the malls when we look into the rental ones, we also had many of investments already carried out with the properties. So this is definitely an important result.

When we talk about recurring income, in the airport is one more avenue to have important growth when it comes to recurring income. So this demands a capacity and the next expansion is another point that will emphasize this accelerated growth for recurring income.

[Mara Dias, executive]

Thank you. [indiscernible] has two questions. One if we have an open buyback and how we see net debt here on for buyback?

Yes, we do. We have a bit 9 million shares. On a monthly basis, you can follow with the CVM announcement, and we are open to and also use for the stock option of the partners of the company once a year, we use some of these shares in treasury.

[Unknown Executive]

Let me just add one point here. I don't know if you'll recall, that Augusto mentioned the rate of the leverage related to EBITDA and for asset which we have said we are at 0.30 and 0.60. That is a good point. And the leverage of the company, Augusto said, well, and how we have looked into it and how we're addressing it, always looking to the best opportunities to reduce rates, it's important to emphasize that we went to much investment in the last few years. I'll highlight a few.

We had the third expansion of the Catarina Fashion Outlet of Cidade Jardim of Fasano Itaim. We have the launch after 1 year of operation of Surf in the countryside of Sao Paulo at the village. So there are many assets that are just started to operate, bringing margin to the company, and we'll see. We have the rental houses. So these are the results we'll see in the next quarters of the year.

So when we think about the ROI that has already been performed. We see an increase that will be very important to contribute to the company. So we're looking into it. We're always paying attention. We're very comfortable with the level of leverage of the company. And obviously, we are always paying attention to opportunities when it comes to M&A that we went through many M&As and minority stakes. We always check the possibilities. And these are topics that we're always looking into. So I believe the demand for the Real Estate Receivables Certificates is important.

Looking forward and the market has understood that we have the strategy, and that's the way to go. And for the next few years, it is common to be able to go strongly with this capital and reduction of leverage of the company.

[Mara Dias, executive]

It's important also the profile.

[Breno Vicente, executive]

Yes, that's right. The idea is not only have leverage, but a great distribution over time and to be able to access the market. We are a company with long cycles. When we have a project, it's a long maturation. So we look into the capital market, a long funding so that we can really have this funding these long-term investments with what we have with the capital market.

[Augusto Juniror, executive]

And to add to that, Breno, at this point about keeping healthy levels of leverage as what we have today, 1.5x is definitely one that we have been always going after to keep a healthy leverage and the effort will be more and more to increase the duration. So we're already looking to the rollout for 2025. Thinking on the duration as we had from 4.8 to 5.4 for the duration of the portfolio, with the Real Estate Receivables Certificates and the cost of the new rollout and funding. So it is a strong work from our financial team to accelerate the rollout and the improvement of the profile of the company.

[Mara Dias, executive]

There's one more question. And [indiscernible] here asked to explain a bit more about Hospitality and Gastronomy, the international expansion and talk a bit about the margin, 2Q margin.

I'll just give you a disclaimer for those who do not know. Our business, especially the malls, we allocate capital and we start to work on the property. And for Fasano, the characteristic in Hospitality and Gastronomy as a whole, we do not allocate capital. So usually, most of the assets are not ours. It's asset-light business. So as a rule, the margin is different from one that I have investment of our capital. So the margin of Hospitality and Gastronomy hotels and restaurants is 1-digit the average in the market, and we're reaching 20%. So we're at a level much higher than the average that we have in the market.

So if you compare with that of malls or residential homes, definitely, this is -- seems like it's lower, but just a disclaimer so you can understand.

[Unknown Executive]

For the expansion of our business and when we talk about JHSF for Hospitality and Gastronomy, we have internally in and also domestically and internationally. Domestically, as we said, we have, in the second semester, the Surf Lodge Hotel and the Boa Vista Complex -- the Boa Vista Village operated by Fasano with 60 rooms. So it will be launched soon. And we also will have the Grand Lodge Hotel also at the same complex that will also be right after that. And possibly other units that are always being studied here in Brazil. But the expansion from a hotel standpoint will be strongly internationally. So we already have the operations in Punta del Este with Fasano las Piedras, and New York with Fasano Fifth Avenue, and we are developing an accelerated speed, Fasano Miami at a very special spot which is an important driver for us for the international expansion. It's important to look at the address [indiscernible] a special place where our high-end commerce will go to. That's true for Miami, for New York and also what we have already announced Fasano [indiscernible] a very special spot between [indiscernible] and [indiscernible]. And that is also our first flag in Europe.

Other than that, we have an important plan to have 20 international operations, and this plan is undergoing while our team is checking opportunities in other locations. But overall, this is a business that we are very much focused on in terms of our expansion because we know the success of the international presence that we already have in New York and Ponta so that we can have that in the main capitals worldwide, and that's what we are doing and to contribute to our international expansion.

[Mara Dias, executive]

The next question comes from Juan from XP. Go ahead Juan.

[Unknown Analyst]

Just a follow-up of the other question of leverage, just to understand, if we look at the amortization program, 2025, I know that diluted a lot with the Real Estate Receivables Certificates. But I want to understand what do you think will be the need of growing this amortization? Do you think cash generation should offset.

And when it comes to timing, when will you start to look into that and what are the alternatives in terms of market again. I mean, the greater demand for understanding if this is the right moment or not, or if there's any other strategy? What are you looking into this amortization for 2025?

[Unknown Executive]

Thank you. Thank you for that question. Well, we had many people frustrated with the demand we had of the Real Estate Receivables Certificates so we had to stop issuing. So we're already looking into the alternatives for next year. We want to have it significantly and obviously, aligned with the market conditions and of duration and of cost, duration is something important for us as the contribution in terms of the efficiency and performance of our capital structure. So as we were able to have quite a reduction with this issuance, we will find another, we'll go after another at the same level or even better. That is a target we have.

So this will take place intensely, that's something we're already doing and respecting this stretching the time and reduction of costs that will drive us in terms of the volumes that we will address the possibilities of the company for the midterm.

[Mara Dias, executive]

We're nearly reaching an hour. We have a question here that I'll read. I think I have time for one more which is a dear shareholder. [indiscernible] , he's always here. He always wants to know about next projects like [indiscernible] that we have announced and if there's any forecast there.

[Unknown Executive]

Thank you for your presence. We are taking steps forward in the process in the region of [indiscernible] , it will be a very important. One, it will be Fazenda Santa Helena that brings specific characteristics of the [indiscernible] region. And I believe we'll launch a new center, new hub as we have already Boa Vista. And I believe we'll have this new development hub in the [indiscernible] region. So we're taking steps forward here.

Obviously, we do not have control over them. And what we have doing is to have the company get all the strength to be more efficient so that we can over the second quarter take steps forward in developing this area.

[Mara Dias, executive]

Thank you, Augusto. For those that could not ask questions and those who are here are, on YouTube our international relations is ready. So we have our website that you can reach.

[Unknown Executive]

Thank you, everyone, for being here with us. Thank you. Good afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]