Nexpe Participacoes SA

BOVESPA:NEXP3

Earnings Call Transcript 2020-Q3

[Operator]

Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Brasil Brokers' Third Quarter 2020 Earnings Conference Call. We would like to inform you all that this call and the slides are being broadcast simultaneously through the Internet on the company's website at www.brbrokers.com.br/ri, where the presentation is available for download. Also, this event is being recorded. [Operator Instructions] We would like to inform that questions may only be asked through the telephone. If you are connected through the webcast, you should email your questions directly to IR team at [e-mail].

Before proceeding, let us clarify that possible forward-looking statements that are made during this conference are based on the company's management on projections, and they are actually part of the assumptions of the management as well as available information to the company. Forward-looking statements are not guarantee of performance involving risks because they involve future risks and depend on circumstances that may or may not occur. 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 these expressed in such forward-looking statements.

First, Mr. Daniel Guerbatin, Company's CEO, will make the presentation of the operational results. Then, Mrs. Andrea Rizzio, Financial Director, will present the financial results. Mr. Guerbatin, you may proceed.

[Daniel Abramant Guerbatin, executive]

Good morning, everyone. This is Daniel Guerbatin, CEO of the company. This is my first earnings call since I took over the presidency of the group, and I'm very excited on the operational results we have achieved and the challenges that lie ahead. We will talk about the third quarter in this call when the biggest challenge was maintaining the company's stability, delivering positive results and starting cultural transformation. We are on the way to a prosperous cycle with the digital transformation of the company and focusing on a better customer experience.

Moving on to Slide 2. The structure set up for the company of diversification of actions ensures that we go through crisis with minor upheavals. We took safety key measures that guaranteed us gross result in the third quarter, 80% higher than in the second quarter. We had a revenue growth in all units; it was very important factor. We preserved the cash level. And we've had a production record at our fintech Credimorar.

Now on Slide 3. We may see that the country is experiencing a gradual recovery of economic activities despite us still being in a pandemic period, and the housing market has adapted quite well to this new reality. Today, our revenue is well distributed, in which 40% comes from financial services, 26% from launches, 28% from finished properties that may be between sales and leases, and 5% from large corporate businesses. We've also had only 6 labor claims filed during this quarter, which shows the control that we have on our liabilities. Further ahead, Andreas will give you details on the labor judicial actions.

On Slide 4, we see the launch market, which was the one that was most impacted during the pandemic and is already showing signs of recovery. We are the leading launching company in Rio de Janeiro, and we see a great resumption in the São Paulo market where Abyara has had a high performance with our developer customers.

On Slide 5, we may see the great part of the company's investment will be in this segment of ready units. During the past year, we have made great progress in the development of Desenrola, which is already operating in Goiânia, Cuiabá and São Paulo. Technological and process advances were shared with Bamberg, our premium service brand in São Paulo, making us rich sales record compared to the last past years.

Now moving on to Slide 6, as in the secondary property market, the rental area has grown in our managed portfolio, and 75% of the leases are already being operated on our digital platform called Desenrola.

On Slide 7, we see that this is the 11th quarter -- consecutive quarter, in which our corporate area has had sales.

And on Slide 8, we see that our fintech Credimorar has become the largest Brazilian multibank platform and continues to grow and is a reference in the real estate credit.

I would now like to give the floor to Andreas, our CFO and IR Director.

[Andrea de Rizzio, executive]

Thank you, Daniel, and good morning, everyone.

I will continue our presentation now on Slide 9 which we're going to go into detail, the evolution of contingent labor liabilities a little more. The interest of new shares, more actions filed by autonomous brokers have been substantially reduced. And in this quarter, we only had the filing of 6 cases, representing a 50% reduction when compared to the third quarter 2019, thus maintaining our liabilities under control.

Since the beginning of the year, the company has already managed to reduce its labor lawsuits by 19% and is now strongly concentrated in the appeal phase with low volume in the initial phase. This reaffirms that the company has been able to consistently address this challenge.

Moving on to Slide 10. Following the actions implemented by the company to preserve the company's cash, we've slowed down the negotiation agenda and anticipated agreements in the labor lawsuits that we have been executing incisively in the last quarters, opting for agreements with installment payments. Even so, we were successful in reducing payments. We carried out 37 negotiations from January to September 2020, leading to a reduction of almost 10% in the amount on the rebate.

On the next slide, #11, I would like to highlight the main highlights of our results. Our growth revenue accomplished in the quarter reached BRL 33.7 million, an increase of 45% when compared to the previous quarter, returning to pre-pandemic levels. All business units showed growth in relation to the previous quarter, but it is worth mentioning the primary and secondary units where the numbers were more significant in relation to second quarter 2020, which emphasizes the resumption of the real estate market.

With all the challenges highlighted by Daniel, it is worth noting that today, we have a more financially stable company with numerous growth levers, which reflect the success of our diversification strategy.

Administrative expenses in this quarter totaled around BRL 20 million, 13% less than the previous quarter. The increase over second quarter 2020 refers to the end of discounts granted during the pandemic period and expenses with structural recessionary processes. Despite having a negative adjusted EBITDA of BRL 2.4 million, which was greatly impacted by the dismissal expenses, we managed to be more efficient compared to the first quarter 2020, which had a higher -- 8% higher revenue.

On Slide 12, we emphasized that the recovery of the market in conjunction with structural actions directly reflected the generation of operating cash of BRL 7 million in the third quarter 2020, a fundamental point for the company's sustainability. In summary, the diversification of our businesses and adjustments in the cost structure helped us to improve our results.

Finally, we are confident in the company's transformational plan, which we will aim to be more agile, light, focused on results and at the same time, preparing for a more technological future.

I thank everyone for their participation, and we can start the question-and-answer session.

[Operator]

[Operator Instructions] 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 Abramant Guerbatin, executive]

Good morning, everyone. Again, I thank you all who have attended our call. We have a great challenge ahead in our company, but I have no doubt on the potential of this company. Once again, I'd like to thank you all everyone for listening. Thank you very much, and have a good day.

[Operator]

Brasil Brokers earnings conference call is ended. We thank you all for your participation, and we wish you a very nice day.

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