Nexpe Participacoes SA

BOVESPA:NEXP3

Earnings Call Transcript 2021-Q3

[Operator]

Good evening, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Brasil Brokers' Third 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] After the company's remarks are completed, there will be a Q&A session. [Operator Instructions]

We would like to inform that questions can only be asked by the chat option in the webcast. So if you are only connected by phone, the company invites you to join through the webcast too.

Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Brasil Brokers' management and on information currently available to the company. 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 that could also affect the future results of Brasil Brokers and could cause results to differ materially from those expressed in such forward-looking statements.

Mr. Daniel Guerbatin, the company's CEO, will present the operational results and Mrs. Andrea Rizzio, CFO and IRO, will present the financial results. Mr. Guerbatin, you may begin the conference.

[Daniel Guerbatin, executive]

Good afternoon. Welcome to the third quarter earnings conference call, Brasil Brokers. Today, we decided to make this call at the same time of our weekly open meeting so that all our staff could watch it together with our investors and future investors. We are on Slide 3. In the beginning of this year, we defined the strategic planning of the company for the next 5-year cycle, and we reaffirm our purpose to make each real estate experience unique.

In order to attain that purpose, we have worked with 4 strategic drivers: profitability, customer experience, digital transformation and ecosystem. All our management indicators everyday work focus and decisions we make reflect one or more of these strategic drivers.

In order to make clear how we do things around here in the last Investors Day, we announced our 6 values: entrepreneur spirit, fair play, power of relationships, innovate and create value, delight customers and driven by results. These 6 values build our culture and support our purpose. This new culture of Brasil Brokers is in line with the best practices of the new economy and strengthens the results obtained in last months.

We are growing continuously. And this quarter, our revenue was 13% higher than the previous quarter. We improved our EBITDA by BRL 6 million when compared to the previous quarter, and it's also the second continuous quarter in which our adjusted EBITDA is positive.

In this third quarter, we launched, Credintegrados, a system of Credimorar that it will improve the experience of our customers and boost the performance of this business segment. We started a transfer plan to move our system to the cloud that will be more flexible for growth.

We also started the transformation of all our systems that were monolithic into micro services, and that is part of our digital transformation strategy. Since something that is produced for 1 vertical can be used for another vertical, improving the performance of the company as a whole.

We remain focused on reducing waste and ensuring that the revenue per headcount ratio is stable or better at each quarter. Our digital transformation efforts are stronger at Credimorar and Desenrola. And as I said before, they overflow to other companies and verticals of Brasil Brokers Group.

Now I turn the floor over to Andrea Rizzio, our CFO and Investor Relations Officer, who will bring us more details about finance and performance. Then I'll be back to talk more about operations.

[Andrea de Rizzio, executive]

Thank you, Daniel. Good afternoon, everyone. Starting our presentation, Slide 4, I'll speak a bit about our earnings in the last quarter. Gross revenue realized in the third quarter of '21 reached BRL 50.5 million, 58% higher than the same period of 2020. When looking at year-to-date in 9 months, we reached a total of BRL 136 million, 13% higher than in the entire year of 2020.

When we speak of our gross income year-to-date in 9 months of 2021, reached BRL 72 million, 16% higher than the amount of last year. On Slide 5, let's look at administrative expenses. That had a substantial drop in proportion to gross revenue. They went from 59% in the third quarter of 2020 to 49% in the third quarter of 2021. That reflects the company's control of administrative expenses and the fact that restructuring processes did not affect the company's sustainability.

We present a positive adjusted EBITDA with no labor liabilities for the second consecutive quarter and amounting to BRL 1.2 million in the third quarter of 2021. In this quarter specifically, we had additional one-off gains with the objective that -- whose objective was strategic for the company. Therefore, if we were to consider the EBITDA 100% from operations, we would have reached the amount of BRL 3.5 million, an excellent performance.

On Slide 6, we will detail a bit more our cost indicators, where in the third quarter, our fixed costs were around 37% of gross revenue and our revenue per headcount grew from 28 to 35, showing a gain of efficiency of 25%.

Slide 7 shows us that this set of actions and indicators that are positive had a direct reflect on the generation of cash from operations of BRL 2.5 million in the third quarter of 2021 and a total cash burn of BRL 11 million due to investments in technology, structural consulting services and payment of liabilities from previous years.

This -- although we don't have a slide that shows our liabilities, it's worth pointing out that the inventory of labor liability was reduced from 373 claims in the first quarter of '20 to 261 claims in the end of September 2021, a 30% reduction in the amount of labor claims.

In the period of 2021, only 4 new labor claims were filed and therefore, we consider this topic solved in the company. And in the next earning calls, it will only be addressed in the release.

Finally, I take this opportunity to invite all of you to access our new Investor Relations website that represents Brasil Brokers. There, you may find the content of this call as well as all our previous presentations, financial statements, material facts, notices to the market and updated ownership structure.

I finished the results part, and I turn the floor over to Daniel, who will continue the call speaking about the performance of each of our operations. Thank you.

[Daniel Guerbatin, executive]

Thank you, Andrea. On Slide 8, we show a snapshot of our digital transformation. We now have 52% of our leads coming from digital channels and 75% of our sales already come from digital channels. Therefore, the use of digital leads combined with our track record of better customer experience and customer relationship is almost 50% better than off-line leads.

The explanation for that is that we developed systems and processes that improve the performance in terms of funnel of the leads coming from digital channels. On Slide 9, we see that Credimorar continues to follow its path of growth and has attained in the last quarter a PSV of BRL 1.257 billion coming from several products, housing credit, home equity and consortium.

We see on the Slide 10 that the performance of intermediation of ready properties in this vertical is composed of brands such as Desenrola, Bamberg and Brasil Brokers. We maintain the PSV when compared to the last quarter and continue with our plan to concentrate sales on properties above BRL 1 million. Almost half of our sales already happened in this market segment.

On Slide 11, I detail the leasing operations of Desenrola, our main initiative in this market segment. And we have improved continuously our processes and systems and already we're able to show a superior performance in conversions of the funnel when compared to traditional operations in our record -- track record.

On Slide 12, we see information of the intermediation segments of launches that works with Abyara in São Paulo and Brasil Brokers in the rest of Brazil. And there, although the PSV launched -- PSV contracts and number of units launched has dropped, we are selling more, which shows that our performance in those developments that we chose to participate in, has improved.

And therefore, we serve better the developers with more commissions to associate brokers and a better EBITDA for the company. The next 2 slides show some initiatives connected to ESG and diversity. We understand that modern companies should look at these issues in a strategic way and all initiatives have the total engagement of all our staff.

One of -- the 1 I'm most proud of is the Movement Gigantesca. Then on Slide 14, I explain more in detail. This movement has crossed the path of more than 400 people among staff members, partners and suppliers. We had gatherings, talking about several topics linked to diversity, and I believe that a more diverse company and inclusive will bring more innovative ideas, engagement and certainly better results. Thank you, all. And let's now open for the Q&A session.

[Operator]

[Operator Instructions] We have a question from [Indiscernible] He's asking. Could you us an overview of how the company is going to the fourth quarter of '21? How do you see the year of 2022? And what are the main risks and opportunities of the company?

[Daniel Guerbatin, executive]

Well, we see the fourth quarter of '21 in a very good manner. Although with uncertainty because we're now starting the fourth quarter. But we do see that the first month of October had a behavior that was very similar to other months. The company continues to grow in terms of revenue. We still see a very good quarter. Andrea, would like to add to that?

[Andrea de Rizzio, executive]

As for 2022, there's a lot of uncertainty. Apparently, it will be a more complex year because of elections -- presidential elections, and we are cautious about our budget and the way we structure the company for next year. Today, the company is rather flexible. We have a model in which we're able to adapt well to market conditions, and we have a structure at which forecasts are done on a monthly basis.

And we can, therefore, are able to follow the plan and adjust the plan as it unfolds. But we do see very good prospects for next year. We have talked to developers, banks and although everyone is cautious, people see and envisage a good year.

In terms of risks and opportunities of the company, the company has invested a lot in digital transformation, which always brings a risk associated to execution. This year, so far, everything we set ourselves to do, we were able to execute and the performance has been even better than planned in the beginning of the year.

The -- our staff, our associates have really put a lot of effort to deliver the best results. So I understand that there is a risk associated to it. Of course, especially in the execution, but many opportunities as well. The company is very diversified in terms of revenue sources. So we're able to absorb the market opportunities.

[Operator]

[Operator Instructions] This ends the Q&A session. At this time, I would like to turn the floor back to Mr. Daniel Guerbatin for his final remarks.

[Daniel Guerbatin, executive]

Well, Brasil Brokers remains at its digital transformation and a sustainable growth path. We are following the strategic plan that was agreed to with the Board of Directors in the beginning of this year and reviewing it every month. And we're able to cause that to reach all collaborators, all staff members because we're doing a management system through KPIs. And we are on the right path, and our results show the -- this good transformation. Thank you all for attending, and have a good weekend.

[Operator]

The conference call of Brasil Brokers has now ended. We thank you all for attending, and have a good evening.

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