Rossi Residencial SA

BOVESPA:RSID3

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Rossi's conference call to discuss Q2 2024 Earnings Release Results. Here with us today are Mr. Fernando Miziara, CEO; and Mr. Persio Careli, Company's Director.

We'd like to inform you that this event will be recorded and simultaneous interpretation into English is available. You can select webcast language at ri.rossiresidencial.com.br. [Operator Instructions]

Before proceeding, we'd like to clarify that any forward-looking statements that may be made during this presentation regarding the company's business prospects, projections and operational and financial targets constitute beliefs and assumptions of Rossi's management team as well as information currently available to 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 company's future results and may lead to results that differ materially from those expressed in such forward-looking statements.

I'd like now to turn it over to Mr. Fernando Miziara, Rossi's CEO. Please, Mr. Miziara, go ahead.

[Fernando de Mattos Cunha, executive]

Good morning, and thank you very much, everyone. First half of 2024 was very challenging, and the company underwent to many changes after deleveraging and also addressing our liabilities according to our reorg plan. So we determined a new strategic guideline in which we focused in generating and preserving our cash and paying first creditors as outlined in our plan. That started in June, and it continued in July where we paid approximately BRL 7 million.

As for operating activities, we are focusing on our commercial profile. So we see a reduction in our inventory. And that relates to the fact that we are conservative regarding new launches. With that, the company was able to focus on marketing, the canceled units and we achieved a high resale percentage, 86% in the first half of the year, proving that we have been successful in selling such units. We keep on focusing and also striving in order to mitigate and preserve our cash. That allows us to really comply with our commitment and also to increase our cash balance.

Now BRL 38.6 million in June. That is key. And that's very important so that we can really comply with our reorg plan. I'd like to highlight the fact that our gross profit was BRL 2.8 million in the first half of 2024. A very positive result compared to minus BRL 9.2 million in the first half of 2023. As for operating expenditure with our reorg plan, we can also see very positive results, reducing our SG&A expenses that went down by 8% in the first half of 2024, vis-a-vis 2023. Considering such important achievements, we keep on really pursuing good results. So that diligently, we can really benefit from this new cycle and then start launching new projects.

Now let's start with our presentation. Slide #2, you can see sales. In the upper part of the slide, we can see that gross sales achieved BRL 5.8 million for Rossi, totaling BRL 14 million in the first half of 2024, 19% below first half of 2023. That reflects the decrease in our inventory and it relates to the fact that we are being conservative regarding new launches. We can also see that our SoS also is now 5.3 percentage points, demonstrating this drop by 3 percentage points compared to the first quarter of 2023.

At the bottom of this slide, you can see delivered units, they accounted for 100%, since we have finished all construction works. You can also see the distribution per region, specifically non-strategic regions that accounted for 44% of our sales. And most of those are related to units in the state of Rio de Janeiro.

Slide #3 in the upper part, we can see cancellations over the last 15 months. In the second quarter of 2024, you can see BRL 5.2 million for Rossi, 34% less than what we had in the second -- third quarter of 2023. That relates to our efforts in order to monetize our accounts receivable and in the phone. Resale's efficiency rate reached 86% in the second quarter of 2024, driven by its successful sales efforts of canceled units contributing to generate short-term cash. At the bottom, we can see the distribution regarding construction stage as well as where the units are.

Next slide, you can see the inventory profile and you can see BRL 106 million. Not to mention and that sale, as you can see also BRL 4.9 million decrease in our inventory. That relates to renegotiations of canceled units. So units that went back to our inventory to be resold at market price, current market price. And you can see also on the right upper side year of launch. At the bottom, you can see that finished units account for 100% of our inventory. And 49% of those are also related or are in non-strategic regions.

Now let me turn it over to Persio, our Director, and he will address our financial results for this quarter.

[Persio Luiz de Carvalho, executive]

Thank you very much, Fernando. Moving to Slide #5. Here, you can see our numbers, our debt evolution and SFH debt. As for corporate day, you can see for this quarter BRL 185 million, and as for SFH debt BRL 146 million, a 2% decrease compared to the first quarter of 2024. At the bottom, we can see that cash and cash equivalents. And you can see for this quarter, BRL 39 million. We also see that for this quarter, we also saw the non-strategic land accounting for BRL 18 million.

Next slide, Slide #6. In the upper part, we can see the transfer speed. For this quarter, we achieved 10.8%, a 6.5 percentage points decrease compared to the first quarter of 2024. Now when we go over absolute numbers and when we check contracts signed and settlement, you can see that transfer was BRL 2 million for this quarter.

At the bottom of Slide #6. As for cash inflow totaling BRL 9 million this quarter, and that came from selling apartment units as well as selling of non-strategic land that I mentioned earlier. I'd like to highlight the fact that we delivered all units. So we don't have any construction costs anymore.

As for Slide #7, we can see our financial highlights. On the top left hand, the net revenue, you can see BRL 27 million in this quarter with a positive impact so that the company achieved also a gross income -- positive gross income. We can also see our SG&A at the bottom. We are still reviewing our internal activities and also contracts, and that led to a decrease of SG&A compared to the first months of 2024 against the first half of 2023. And also, when we consider expenses, we also have the aging of our receivables portfolio. And finally, on the right-hand side at the bottom, negative net income of BRL 29 million, an improvement by BRL 43 million compared to the second quarter of 2023.

Now I'd like to turn it over to the operator and to open the Q&A session.

[Operator]

[Operator Instructions] If there are no questions, we'd like to turn it over to the company for their final remarks.

[Fernando de Mattos Cunha, executive]

So once again, we'd like to thank our amazing employees. They have been playing a key role during this period in which we started implementing the reorg plan, and we are committed to the market in being transparent and sharing all important facts that may take place in the future. Thank you very much, and have a great day, everyone.

[Operator]

Thank you very much. With that, we close this conference call. We'd like to thank you all for joining us. Have a great day. Thank you.

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