Nexpe Participacoes SA

BOVESPA:NEXP3

Earnings Call Transcript 2021-Q1

[Operator]

Good afternoon, ladies and gentlemen, and thank you for standing by. At this time, I would like to welcome everyone to Brasil Brokers' First Quarter 2021 Earnings Conference Call. We would like to inform you that this call and the slides are being broadcast simultaneously through the Internet on the company's website at www.brbrokers.com.br/ir, where the presentation is available for download. Also, this event is being recorded. [Operator Instructions]

We would like to inform that questions can only be asked by telephone. So if you're connected through the webcast, your question should be sent directly to the IR team at [e-mail]. Before proceeding, let me mention that forward-looking statements made during this conference call in relation to the business prospects of the company, operational and financial projections and goals are beliefs and assumptions of Brasil Brokers as well as information currently available to the company.

Forward-looking statements are no guarantees of our 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 Brasil Brokers and could cause results to differ materially from those expressed in such forward-looking statements.

First, Mr. Daniel Guerbatin, the company's CEO will present the operational results. Then Ms. Andrea de Rizzio, CFO and IRO, will present the financial results. Mr. Guerbatin, you may succeed.

[Daniel Guerbatin, executive]

Good afternoon, everyone. Thank you for attending this earnings results conference call to discuss the results of the first quarter 2021. In the last 12 months, the world, as we know it, underwent significant transformation, and we are currently living a new reality. With the advent of the vaccines today, we have an improved perspective in the areas of health and economy. Although we still have enormous challenges to phase resulting from the effect of the COVID-19 virus, which is still present in our lives.

In the past months at Brasil Brokers, we intensified a transformation, which is not only structural, but also encompasses our cultural transformation with the purpose of becoming an ever more efficient and digital company in order to offer the best experience to our customer, through an ecosystem that generates more convenience on the real estate journey. Aligned to such a purpose, Brasil Brokers operates by means of strategic pillar, focus on profitability, digital transformation, customer experience and ecosystem.

In this transformation phase, we are making massive investments in technology, process improvement and team training. On Slide 2. The highlight is the comparison of this first quarter with the first quarter 2020. Net revenue grew by 47%, and our administrative expenses reduced by 18%, resulting from our no waste measures. Gross results grew by 48%, driven by a more positive revenue and the alignment of variable costs, an effort that we started in the second half of last year. Credimorar reported a 90% increase in the total number of financed units. And as to the brokerage of finished units we posted an advance of 22%, driven by an improvement in efficiency of the company.

We are already on the verge of its breakeven point, and we are ready to start a positive cycle. On Slide 3, we show the main highlights for this first quarter 2021. Credimorar continues to play a relevant role in our gross revenue, and the segment of finished units continues to consolidate its share in our portfolio of products and services.

The primary was the segment that faced the most difficulties due to the closed sales stance, especially in the city of São Paulo. The number of labor liabilities has been decreasing every quarter with a drop of 85% in the new filings of new lawsuits when compared to last year, whose volume levels were already low.

As to Credimorar, there was an increase in revenue and credit origination with partner banks and continues to be the largest platform of real estate [ money ] bank platform. Desenrola has been growing in the number of operations and has been growing within its strategic planning to become a digital platform for sale, purchase and rent and has operated as a broker in 741 units last quarter.

The traditional model has also undergone a transformation, aiming to reach a better operating efficiency and its pros results was 6% better than that of the same period of last year.

On Slide 4, we can observe a significant improvement in the sale of finished units, whose PSV was 28% higher and sold 22% more units. Our commercial area has also been working together with the marketing department in order to find new opportunities, promoting efficiency to the process. The sales funnel has been showing enhanced conversion rates of leads and visits, a result of the effort of the follow team and driven by the technological developments we've made in the past few months. We have significantly expanded our presence in the city of São Paulo in the segment, and we still have room for advance.

On Slide 5, when we address rents, the management operations are nearly 100% under the control of Desenrola. We made significant progress in processes and technological development in [ the spirit ], and that brought a higher number of brokerage operations, although both the portfolio and the revenues stood at stable levels due to the high default rate and commercial cancellations due to the pandemic.

On Slide 6, we provide more details about Credimorar, whose numbers are all positive. We have been the largest partner of the Bradesco Bank for a long time, and we have recently established partnerships with Santander and Itaú Banks. We have grown quarter after quarter. Origination in Brazil, Bradesco as well as in other bank institutions, and we are already relevant to the 3 banks in terms of real estate credit origination.

We have significantly enhanced our technological platform [indiscernible] so that the journey in the process can be faster and more transparent for all partners and clients. On Slide 7, we can see a large quantity of PSV and the unit launches, whose performance was excellent in Rio de Janeiro, considering the market conditions with the sales stance open and fewer pandemic-related restrictions. In São Paulo, unfortunately, because the launches were made soon after the lockdown, the PSV was adversely affected, and we recorded low performance for the quarter.

The good news is that these launches have good liquidity for the future quarters. I would now like to turn the call over to Andrea de Rizzio, our CFO and IRO.

[Andrea de Rizzio, executive]

Thank you, Daniel. Good afternoon, everyone. I will continue our presentation now on Slide 8, where we will provide further details about our results.

First of all, I would like to point out that I'm very happy with the results of the company, driven by a lot of folks' charity and efforts in the last few months. Our gross revenue realized in the first quarter 2021 reached BRL 38 million, 45% higher than that in the same period of 2020 despite the pandemic and the restrictions imposed by government agencies.

Administrative expenses in the first quarter 2021 were 18% lower than in the same period of 2020 and 15% lower than in the fourth quarter. This demonstrates the continuous control in the expenses of the company.

We reported an adjusted EBITDA with no labor liabilities, negative of BRL 700,000, very close to breakeven point, which considering the history of the company, is a very representative result. This once again shows that the new Brasil Brokers is on the right track.

On Slide 9, we show that the EBITDA together with the structural actions directly reflected the generation of operating cash of BRL 1.9 million in the first quarter 2021, an essential aspect for the company's sustainability.

Total cash burn was due to investments in technology and labor liabilities. With the later, amounting to approximately BRL 7 million. On Slide 10, we address our inventory of labor liabilities, which decreased from 408 lawsuits in 2019 to 300 cases in 2021, a 26% reduction in the number of lawsuits, reinforcing what has been said previously, the filing of lawsuits has been substantially reduced where in the first quarter 2021, we had the filing of only 2 cases, representing a 95% reduction in relation to 2019. In summary, this is an item that has been successfully addressed by the company.

Finally, considering all the challenges faced in the first quarter, with restrictions imposed due to the pandemic, I once again emphasize my satisfaction with the results achieved, which reaffirm that our strategy is on the right path and that the growth curve will be exponential, considering a strategy for the medium to long term with increasingly digital platforms of the company of tech which make us all scalable, attractive, competitive and profitable.

I reaffirm once again that we hold on to the best corporate governance practice, social responsibility and transparency for the company's employees, customers, Board of Directors and shareholders.

I thank everyone for attending this call, and we can now begin the Q&A session.

[Operator]

[Operator Instructions] We have a question from [ Leandro Corler ]

[Unknown Analyst]

Do you think of spinning off Credimorar?

[Daniel Guerbatin, executive]

[ Leandro ] thank you very much for your question. All companies of the group are companies that are operating separately. Each one has its own tax registration number, Credimorar as well. So in practice, the company is already a separate company. Let me try to understand your question. If you would like to add to your question, if you would like to ask a different question. So that we can understand whether or not this is what you were expecting as an answer.

[Operator]

Next question comes from Mr. [ Rafael Tusciani ] with Longitude Capital.

[Unknown Analyst]

What's the estimated impact and the seasonability of the real estate market in the balances of Credimorar? In other words, the good movement of the real estate sector resulted in a positive impact on the numbers of the controlling company. Is there any operating impact should this good moment be reversed?

[Daniel Guerbatin, executive]

Thank you for the question, [ Rafael ]. Credimorar is experiencing a very interesting moment due to the market, of course, select interest rate and because we are living a moment in Brazil which is very favorable to the real estate credit. However, the company has been making an internal work of organic growth of its base of production and also establishing partnerships with banks.

Last year, we had a partnership with nearly -- only Bradesco, practically. And even though we had grown with Bradesco, we have established partnerships with Santander and Itaú, increasing the origination of real estate credit. I understand that even with some problems in the real estate sector, even if minor, since we believe that 2 digit of our interest rate. And in the recent past, we operated at this level of select interest rate with 2 digits, we are far from this, in fact, and Credimorar is expected to grow very strongly in the years to come.

[Operator]

Our next question comes from Mr. Jonathan.

[Unknown Analyst]

What's the perspective of operating in new cities with Desenrola?

[Daniel Guerbatin, executive]

Thank you for your question. Desenrola has a business model that allows for a licensed or franchising moment. Since it was first created, it had this idea implemented to be expanded to other markets where the company -- we didn't have a proprietary-based assets. I do not believe this is the right moment for this to happen. We are still at the level of stability for the Desenrola platform to stabilize in the markets we currently operate. However, this is a possibility to look into the future in the medium or long term.

[Operator]

This concludes the question-and-answer session. At this time, I would like to turn the floor back to Mr. Daniel Guerbatin for his closing remarks.

[Daniel Guerbatin, executive]

Thank you, everyone, for attending our earnings call. And the company has been undergoing a major transformation. And I thank all our shareholders, advisers for all the support you have been giving us. Especially, I would like to thank our employees, autonomous third parties, operators, all those who have been performing so well in the performance of our projects and processes and have provided so much support to our growth. Good afternoon, everyone, and thank you.

[Operator]

Thank you. This concludes today's presentation. You may disconnect your line at this time. Have a nice day you all.

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