Log Commercial Properties e Participacoes SA

BOVESPA:LOGG3

Earnings Call Transcript 2022-Q1

[Operator]

Good morning, ladies and gentlemen. Welcome to the video conference LOG Commercial Properties First Quarter 2022. Today with us, Mr. Sérgio Fischer and Mr. André Vitória, Director of Relationship with investors. The translation is available upon clicking on the icon, interpretation. If you choose to keep up with -- in English, you should silence the original audio. [Operator Instructions]

The foreseeable projections are based on projections and current market conditions. Political factors and many other factors may affect the future of the company and may differ from those that are actually shared with the group today.

Now with you, Mr. Sérgio Fischer. Mr. Fischer, the floor is yours.

[Sérgio De Souza, executive]

Good morning, lady and gentlemen. Welcome to the First Quarter 2022. We have a new business model. We have modular assets, 70,000 square meters, and we have foreseeable for this year, more than 400,000. Activities that are constructive, 103,000 square meters, and our expectation is to seal 2022 with more than 400,000 square meters fields. The capacity of execution are, as you see, 6 projects and many warrants. This vacancy is stabilized 1.6%, the least in history. The trimester, where you could see the numbers there.

E-commerce is expanding activities overseas. We have 2 new contracts with very important players overseas. We have [indiscernible] and that speaks for the strategy that we bear in mind for our clients. We have the trends. We keep up with the trends of growth and e-commerce in Brazil, 25% of growth in the income. The penetration of e-commerce will keep on growing more than 2 digits for the next few years.

And they are -- most of our activities, 65% are related to e-commerce. 240,000 square meters of projects have been approved, and we have been working to have projects ready and prepared to go the condominiums. We have been working to keep up with what has to be done to keep the quality, the management of more than 1 billion square meters. We are very happy with our growth in 2022, and we are prepared to grow throughout Brazil.

[André de Ávila Vitória, executive]

Thank you, Sérgio. We have maintained during this first quarter, our capacity to generate value, BRL 98 million, and that will keep on being observed caps, and they tell about our assets in the market. The differential of LOG keep on being worked on and despite what is going on in the marketing, and globally, we keep on our way. We have seen also the results.

Financially, the growth, profits, 11% up, growing by 19%. And the default at the end of the semester, only 0.4%. We have expectations in structure and our employee. Liability management that has been executed by the company over the last 12 months. The first quarter has been very positive. The fundraising in the order of BRL 300 million certified receivables and CRI, 5 years in the average -- the average period. Despite the problems in the market, it has been actually softened these aspects actually and their rentability translated in a very good profit, BRL 122 million.

And we have our commitment to help the communities. We have more than [ 4,400 ] hours that actually -- are actually working, and we are expanding [indiscernible].

Emissions in our operations, we are working solidly. We have our strategy of decarbonization. We have our new report of sustainability with the global impact and the UN. We are aligned with the UN goals.

Now we are going to a Q&A session.

[Operator]

[Operator Instructions] Our first question, Ms. [indiscernible] from Citibank.

[Unknown Analyst]

Congratulations on the results. Recycling, we have a market that is more difficult on the account of the interest rates, what kind of investors you're going to focus? How do you see the market? And [indiscernible] is behaving steadily, and what we're going to do while we have that?

[Sérgio De Souza, executive]

This is Sérgio. Thank you for the question. [ 3% ] interest rate, we used to have access to many more revenue -- we have some asset funds. We have buildings. We have growth in the closing of capital, and those sales are very important for company.

Last year was a record BRL 300 million in assets in sales. And we want to actually beat that record, and the expectation is actually that we can actually dispose that value as soon as possible. We know the quality of our portfolio. The quality of the assets of LOG reduction of spreads, but it was actually very superficial to start with. Nevertheless, we were able to identify opportunities for further growth and raise funds for recycling.

[Operator]

[Operator Instructions] [indiscernible]

[Unknown Analyst]

How is the appetite for the asset as of the company?

[Sérgio De Souza, executive]

Thank you. I think I touched upon that dealing with Renata's question. It's very strong. We have some funds when it comes to our constructions and our new projects. And I believe that very soon we'll have good news.

[Operator]

[Operator Instructions] Mr. [indiscernible] from Santander.

[Unknown Analyst]

Congratulations on the results. I'd like to point if you would like to -- if you could actually develop further in terms of what impacted the EBITDA. And we [indiscernible] contract that will actually mature in the next 12 months, if I've to make myself clear.

[Sérgio De Souza, executive]

I'll start dealing with your questions, and I'll pass on to [ Mattis ]. We are in a very positive moment. We have been able to deal -- manage the leasing prices, [ 0.6% ] despite the inflation. We have dealt with the integrality of the inflation.

Now contracts that you mentioned, we see as an opportunity. The sector is very good, and the indicators are operational, the vacancy as well a record number. We have been able to deal with the prices to raise funds and soon we'll have news about that as well.

[André de Ávila Vitória, executive]

This is André. In terms of overhead expenses, it's first trimester -- quarter. We have seen growth and results. The nonrecurrence actually was dealt with our structure of personnel. We'll see that -- we have expectations actually for the next quarters. That is very positive considering the increase in our results concerning the variable profitability.

[Operator]

[Operator Instructions] Mr. Elvis Credendio from BTG Pactual.

[Elvis Credendio, analyst]

Pre-leasing, we don't have much a deal actually available. And on that note, actually, I would like to know what you have in terms of foreseeable for 2023 and the average lease, your estimates? And you have an addition of 100 million square meters. We believe that we can get to BRL 24 per square meter. Furthermore, I would like to know how are the dynamics for modular projects?

[Sérgio De Souza, executive]

Thank you for the questions. Pre-leasing, we have products that are ready, and we have a lot of construction work ongoing to be delivered in 2023 and other projects that even at the very early stages. They are actually being leased. That is taken into account, 2023. We are preparing to have 2023 bidding our records, BRL 24 per square meter. We started this quarter with very strong numbers, and we have aimed to maintain that.

Now [indiscernible] BTS that has a ticket that is higher, new leasings, even modular ones and retail. The average tickets that we have in the company around [ 1650 ]. You'll see different numbers for upcoming leasing. The new leasings are coming with new numbers and positive ones.

[Operator]

Mr. Andre [indiscernible].

[Unknown Analyst]

First of all, congratulations to the team of LOG, especially at this point in time. I have a first question. The Betim Industrial Park that investment is actually major. And when we have warehouses and other buildings. We have lots. I would like to understand better investments. What takes -- that takes. Second question. In your mind -- in the back of your minds, do you hold the idea of building a new -- starting new constructions in the smaller cities? I think -- I hope I was clear, which were respectively about Betim and your projects concerning cities that have small populations.

[Sérgio De Souza, executive]

I'll start in the second. The new plan -- new projects, we look at an area that would hopefully have a demand. There is a construction that is very relevant. We have regions with 500,000 inhabitants to consider a project.

GDP, we have some BTS there in that region, and we are going to start more aggressively selling land lots, generating more further value for the reminiscing lots. And we are planning further activities for selling lots. The other regions of the country, we are looking for opportunities on a daily basis. But for now, we don't see anything different in the near future.

[Operator]

[Operator Instructions] Pedro from BBI.

[Pedro Lobato Garcia Fernandes, analyst]

My question is more in terms of funding. You are able to raise BRL 300 million. How is your in strategy for the coming feature? Is there anything new? Or you have the trends -- will keep on the trend of the debt?

[Sérgio De Souza, executive]

It's actually an addition of both. Our net debt is 20%. So there is room there. Despite the growing interest rates, I mentioned earlier, recycling, we are working to have another record year, taking into account better results even further than planned for 2022 and 2023, especially.

[Operator]

Our next questions are in writing, Mr. Antonio Carlos [indiscernible].

[Unknown Analyst]

Congratulations on the results. Raw materials such as steel will impact the results of the company. Have you made anything in mind concerning that?

[Sérgio De Souza, executive]

This is Sergio. Thank you for your question. In the last 12 to 18 months, we have been paying attention to steel and [indiscernible] growing. We have kept our yield of growth, and we believe to be at a plateau, and I don't see much growth due to that.

We have reached the peak and the new negotiations, as I mentioned, are on a level that is lower than last year. And we understand that the yield concerning new assets will happen.

[Operator]

Mr. [indiscernible]

[Unknown Analyst]

The 400,000 square meters, would you be able to mention the CapEx for such a project?

[Sérgio De Souza, executive]

This is Sergio. We have a foreseeable CapEx of BRL 400 million. That's considering ongoing construction work and what will be delivered next year will be running on BRL 800 million and probably something that for the next year.

[Operator]

[Operator Instructions] Mr. Antonio Carlos [indiscernible].

[Unknown Analyst]

Congratulations once again. The increase of interest rates and DIs will help fund raising in the company and equity-wise?

[André de Ávila Vitória, executive]

This is André. In order to finance our growth plan, we have assets. The expansion of that, we maintain at a healthy level. The net debt is 20%, and we still have room for raising numbers in that sense.

[Operator]

[Operator Instructions] This Q&A session is adjourned. Mr. Sérgio?

[Sérgio De Souza, executive]

Thank you for the monitoring of the call. We have the macroeconomic scenario, very concerning. In terms of ABL, we'll deliver 130,000 square meters and in the third quarter, 220,000, and that will be part of this strategy for preparing the house for 2023. Next year will be very solid. Next year will have a record, hopefully beating this year. Equity is coming on the spreads very meaningful. We are working on that. And we are getting very meaningful results. We have further growth, new BTS in areas that have not been dealt with so far.

From our side, that's all. I thank you and see you soon.

[Operator]

The Q&A session is over. You can send questions to [e-mail]. We thank your presence, and have a great weekend.

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