Rossi Residencial SA

BOVESPA:RSID3

Earnings Call Transcript 2024-Q1

[Operator]

Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Rossi's conference call to discuss the results of the first quarter of 2024. Today, we have with us Fernando Miziara, CEO; and Persio Careli, Company Director.

This meeting will be recorded and has simultaneous translation into English. You can select the webcast with the desired audio at ri.rossiresidencial.com.br. [Operator Instructions]

Before proceeding, we would like to clarify that any statements that may be made during this conference call relating to the company's business prospects, projections and operational and financial goals constitute beliefs and assumptions of Rossi's Board of Directors as well as information currently available for the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events and, therefore, depend on circumstances that may or may not occur. General economic conditions, industry conditions and other operating factors may affect the future results of the company and may lead to results that differ materially from those expressed in such forward-looking statements.

I would now like to turn the call to Mr. Miziara, Rossi's CEO. Please, Mr. Miziara, you can proceed.

[Fernando de Mattos Cunha, executive]

Good morning. Thank you. 2024 started, and the company is still working responsibly, focused on its operational and financial restructuring, driven by the latest events in 2023, particularly with the approval of the reorganization plan that was key for deleveraging the company, and we focused more on the delivery times of our operations. We are dedicated to preserve cash and also to improve sales and transfer performance with the goal of always making of this year a milestone of growth in our company.

This work has already reflected of some of our indicators as, for example, gross sales, which reached BRL 8 million in Rossi's share, a 38% increase regarding the first quarter of 2023, meaning that we have a very high resale performance in the first quarter; in terms of growth of BRL 1.5 million in the consolidated vision, an improvement when compared to the gross loss of BRL 12 million, which we had in the first quarter '23; in terms of cash inflow, considering the amount of transfer and receipt of BRL 15.6 million, a positive variation of 110% in Rossi's side when compared to the same period in the previous year.

With this operating performance, we reached cash availability of BRL 27 (sic) [ BRL 27.2 million ] in Rossi's share, a growth of over 300% compared to the same period in 2023. This balance, in turn, will be key so that the company will start paying its creditors in the next few months, as has been planned in our reorganization plan.

Finally, we should highlight the continuous effort made by the company searching to reduce its administrative expenses, which, when compared to the first quarter '23, decreased by 7%, be it through the readaptation and reduction in staff or renegotiation of contracts and review of internal processes.

We are aware of the current and future challenges. But we will go on with our strategic plan, and we hope that very soon, we will be able to resume our cycle of launch of new projects and thus generate value to our shareholders.

Let's look at the presentation now. Starting with Slide #2, which is on sales made by the company. At the top of the slide, we see that gross sales reached BRL 8 million in Rossi's share in the first quarter, 33% above the first quarter of 2023. This improvement in sales reflects the approval of Caixa Econômica Federal units, which made it possible for us to resume sales of products financed by this bank after approval of the reorganization planned by the creditor. We can also see that speed sales in the first quarter of 2024 remained above the level of 7 percentage points, which was the level we had in the last 3 quarters of 2023, with the growth of 2.4 percentage points when compared to the first quarter of 2023.

At the bottom of the slide, we highlight the share of sales of delivered units, which was 100% since all units that were being built have already been delivered, and we can also see the geographic distribution of these sales, with emphasis on nonstrategic regions, which accounted for 81% of total sales in the quarter, with a significant part of the sales being from real estate located in the state of Rio de Janeiro.

Moving now to next slide. At the top, we see cancellations over the last 15 months. In the first quarter 2024, cancellations were BRL 9.2 million on the Rossi side, 23% lower than in the first quarter of 2023. Cancellations are directly related to the company's asset to monetize its defaulted accounts receivable. The company achieved a resale rate of 100% in the first quarter 2024, maintaining its successful effort to sell canceled units, thus contributing to increased short-term cash generation. In the graph at the bottom of the slide, we can see the distribution in relation to the construction stage and the location of the units canceled in the first quarter.

On the next slide, we show the company's inventory profile, with a total PSV of BRL 109 million in Rossi's share. In addition to the natural effect of net sales, there was a decrease of BRL 4.9 million in our inventory, which is related to the revaluation of the price of the canceled units, which returned to the company's inventory to be resold at their current market value.

In the upper right corner graph, we show the inventory breakdown according to its year of launch. And in the graph at the bottom of the slide, we see that finished units currently account for 100% of our inventory, and the more majority, or 48%, of the same PSV is located in nonstrategic regions.

I now give the floor to Persio, our Director, so that he can present and make his remarks regarding the company's financial performance this quarter.

[Persio Luiz Careli de Carvalho, executive]

Thank you, Fernando. Good morning, everyone. Going on with the presentation in Slide #5, we show the trend of corporate debt in SFG -- SFH in the last quarter. The company had a significant reduction in its debt at the end of fiscal year 2023. Since after the approval of the reorganization plan, a significant amount of our debt will be paid off under the terms of the reorganization plan.

In this first quarter, the company's corporate debt totaled BRL 173 million while the SFH debt balance was calculated at BRL 149 billion, an increase of 4.5% when compared to the last quarter of '23. This variation refers to the interest on contracts in this period.

At the bottom of this slide, we show the trend in the cash balance in the last 15 months, which reached BRL 27 million in March, an increase of more than 200% in relation to the amount in the same period of the previous year. This significant increase in cash balance is related to the increase in gross sales in the last 12 months, which impacted the volume of transfers and settlements made by our customers.

Moving on to Slide #6. At the top, we can see the trend of the company's transfer speed, which, in this quarter, was 17%, a 7-percentage-point reduction when compared to the last quarter of 2023. Now when we analyze in absolute terms, the number of new contracts signed and the number of settlements, we can see that the transfer was BRL 6 million in this quarter, maintaining the level of the last quarter of 2023.

Moving now to the bottom of the same slide. We can see the cash inflow reached BRL 16 million in this quarter, an increase of 109% when compared to the first quarter '23, mainly reflecting the sales of Caixa Econômica Federal units released after the approval of the reorganization plan, as mentioned by Fernando. We hope that with this release and with the release of these legally ceased units, which has already been happening since the request for reorganization that the sales performance will continue to improve so that we will be able to see an increase in transfers and receivables from the company's customers. We should also highlight that since the company has delivered all the latest projects launched, there are no more costs to be incurred in our constructions.

Moving now to Slide #7. We see the trend of the main metrics. In the top left corner, we show net revenue, which totaled BRL 8 million in the first quarter of 2024, contributing to the company's positive result in gross profit in the period. Still on this slide, we show in the bottom left corner our SG&A, which maintained the level as in 2023. It is important to highlight that we continue to review our internal processes and the renegotiation of our contracts, which resulted, in this quarter, in a 7-percentage-point reduction when compared to the first quarter of 2023. Finally, in the bottom right corner, we see that the company had a negative result of BRL 26 million in the quarter, an improvement when compared to the negative result of BRL 49 million in the same period of 2023.

I'll now give the floor to the operator for the question and answers. Thank you.

[Operator]

[Operator Instructions] I'll give the floor back to the company for the final remarks.

[Fernando de Mattos Cunha, executive]

Well, once again, I would like to thank the whole Rossi's staff for the amazing work that was done for the approval of the reorganization plan of our company, which will enable us to have a new future for our company. We will keep the market informed on any relevant fact that may happen. And once again, thank you all very much.

[Operator]

Thank you. Rossi's conference call is hereby finished. We thank you all for joining us, and have a nice day.

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