SYN prop e tech SA

BOVESPA:SYNE3

Earnings Call Transcript 2024-Q1

[Operator]

Good morning, ladies and gentlemen. Welcome to video conference of SYN to discussion of the results of the first trimester of 2024. This video conference is being taped and the replay can be accessed in the site of the company ri (sic) [ ri.syn.com.br ] and the presentation is also available for download. We inform that all participants are only watching this video conference during the presentation. Following, we will have the session of Q&A where instructions will be delivered and before continuing, the declarations here have a basis -- suppositions of the administration of SYN, information present once are available. And these declarations can involve risks and uncertainties and that we have to say that our future events and its -- this depends on circumstances that can or cannot occur.Investors, analysts and journalists should take in considerations that these macroeconomic environment in this segment and other factors can make that the results be materially different from those expressed in these declarations. We are present in this video conference; Mr. Thiago Muramatsu, Director, President of SYN and Mr. Hector Leitao, Financial Director and relations with Investors.Now I would like to give the word to Thiago Muramatsu that will give the beginning of the presentation. You can begin, Thiago.

[Thiago Muramatsu, executive]

Good morning, all. Thank you very much who is accompanying our results of the first trimesters. And this is taped, of course. And I think that beginning in this opening and the performances and the financial issues of the first trimester, I would just like to give everyone an update of the operation that we are doing -- with XP, and we have advanced a lot. And one of the main conditions for us to advance with this transaction is the captures of resources through the emission of new [ quarters ] of XP has done recently. And this was concluded with very success, BRL 1 billion in this emission. And this is an important phase that we had to go through to finalize this.Now we continue in the phase is complementary of diligence and negotiations with the contract. Everything is going well, but we still don't have novelties in relation of this subject. And the trimester was a good trimester operationally for our buildings and also for our malls. And we also, at the end of last year we delivered the warehouse and we see some revenue in the area of logistics. And so with this we are going to open and speak about our operational performance in relation of occupation, physical and financial of our portfolio.We did not have big changes of what was the first trimester of 2023. It's important in '22, but in '23 it's more or less same level. The only novelty is that we considered these warehouses obviously an occupation that is lower because it was just delivered. It's in the phase of leasing. And so in the warehouse, we have more or less half of it, at least. But we have had a lot of people that are interested. And we are going to see a good evolution in the vacancy and evolution of this venture.In relation to the occupation -- financial occupation we have an impact that is less the vacancy of the warehouses. Even though it's a big area, it has a rent that is lower in the segment of businesses and shopping centers. And going into this detail of the occupation of the malls, we maintained ourselves stable physically. And it dropped a little financially, but it was a small drop. But what's important, half of the month of May, we saw that April was a good month for us in commercialization. So we had a lot of leases and less risk and less than we presented, like a month that is very positive to commercialize the shopping. So we believe in the next trimester, we're going to see an evolution that is very good in these numbers.In the sales. It was one of the items that we had in evolution that is very important. We grew in total sales almost 11%, and with this 7% -- almost 8% was of the sale of the stores. So when we look at the evolution of what we have in our portfolio, it is an important evolution in terms of inflation. And also we had good substitutions in the stores during this period. And we grew almost 2% in relation to what had been practiced in the previous leases. And we developed very much the area, especially of events and media in a way of attracting the public for our ventures, and this was a growth of the sales of 1%. When we look at the leases, we have a growth that is above what was in the third and fourth trimester of 2023. In the last 2 trimester, we grew almost 6% against 3 and 4.4, in the third 3. And this is also reflects obviously of the evolution of the sales.And now in the part of the performance, Hector is going to speak now.

[Hector Bruno de Carvalho Leitao, executive]

Good morning all. Following the operational results of the ventures, we concluded the trimester with BRL 50.9 million of resolved operational of the assets. This is a growth of 7% of previous year. Breaking the classes. Start with malls. We had a growth of 4.4% and concluding BRL 40.9 million, in this trimester, the result should have been 2 digits, if it won't be the [ TDV. ] And here, this is an effect of accountant of last year, mainly of the [ nonpayment ] of the Americana stores. According to the policies, after a year we have to consider this in the fiscal balance. And even this nonpayment that is equalized. This is a flow that was agreed with them of payment. But because of conservation -- for legal actions.In offices, we had a growth of 18% and BRL 90 million concluding, and mainly the main effect, the end of discounts, where we had found various ventures. So this is very pulverized especially in the building that had a positive impact and very relevant. Following of EBITDA, we had a growth of 15%, very expressive, concluding BRL 40 million, BRL 50 million in the trimester, which is very explained by the operational performance of the ventures of the projects, especially of offices. And the final, in the financial result, we had a good evolution. And also we also had a breakage of 19% in net, and this comes of various factors. The decrease of Selic, this 200 basis points of last year. We also have also a balance because of XP, because of the transaction. And also we have IPCA, which is in a lower level and also impacts in our debts. One of our debts that we have in our balance. And so, at the end of the day, we concluded of 28 point versus expenditure of last year.Finally, at the end of the day, the bottom line, the profit of the trimester was BRL 7.4 million, and also a debt and FFO into the generation of the cash flow of [ BRL 50.5 million ] versus the breakeven of last year. This is a good evolution in operational part and also the management of the debt. We opened the debt of the company we have. And we must highlight the decrease of the main cognate, which is the gross debt. We closed it twice, 4.4x of the previous trimester. And here we have the main impact of this transaction of BRL 300 million.We also, there's a disclaimer, with the rule, account rule, there's a big probability to conclude the transaction and us be with less than 10% less in 5 malls where we are selling, and we needed to disconsolate the cash flow of [ SPX ], and put assets available for sale, circulating assets. This value is BRL 1.2 billion, the cost of these assets of the -- so it's -- we have a notion of how this would be in terms of profit before the rate taxes, and to be more precise. And the cash flow of these SPX is almost BRL 68 million. So when we look at the patrimonial balance pro forma, there is a difference of this cash flow that is adjusted and it is also net, and we have to adjust it in the patrimonial issue, in [ FFS ], which are the contracts of our debts, we also had a drop that was expressive. And we concluded with 3x 2% versus 4.5 the previous trimester. And remember, it's 7%, so this is also a slack that's very expressive and that this honor -- and this is also the release is 1.4 and we concluded 5x before the previous trimester. We can continue.Concluding nothing changed from the last trimester. Our timeline of amortizations is pulverized in the following years. And we only have amortization for the next year of BRL 200 million -- BRL 239.56 million, BRL 162.57 million. And the biggest amortization in the tower of payments only in 2028. In relation to the transaction, we didn't make the decision of how much or when are we going to prepay in these debts and the distribution of dividends. This is a doubt that made out for all of us. But I think in the next trimester we're going to have this define the strategy and also the allocation of yield and capital of the company.These are the financial results and I have just ended.

[Operator]

[Operator Instructions] Our first question from [ Mr. Reynaldo Francisco ].

[Unknown Analyst]

He says, congratulations for the results. If it maintains the projections of BRL 3 million annually, how is the situation in the -- in opening and amplifying the shopping?

[Unidentified Executive, executive]

Good morning, Reynaldo, how are you? In terms of ITM, we continue with this projection, which is across this IPTU and maintenance of some securities and condominium. But I think differently than the previous trimesters, we have had some demands that are interesting there. And so, just to give the same destination or even demands that are different, there is an asset that we have worked a lot on. And in the moment, has generated some engagements. But looking conservatively, we consider this BRL 3 million of annual cost ideal.About the second part of your question, the amplification of Sao Paulo, we have approval of the Sao Paulo Mayor to do this. And now we are working in technical projects to start and probably in the second trimester of this year, this ideally. Thank you very much.

[Operator]

[Operator Instruction] [ Mr. Eduardo Granero ] with the next question.

[Unknown Analyst]

Is there a preview of acquisitions or these investments in the radar of 2024, 2025?

[Unidentified Executive, executive]

Eduardo, I think that we have acquisitions. No. But we have been starting acquisitions and also in this investment -- we have been working with some options for the 2 parts. But I think this is the business as usual. We've always done acquisitions and investments during our life. And so we are going to continue this. But today, we are focused in our time to conclude this transaction. Thank you very much.

[Operator]

[Operator Instruction] Not having any more questions, this session of Q&A ended, We'd like to give the word to Thiago Muramatsu that he makes considerations the final ones of this company.

[Thiago Muramatsu, executive]

I think, as I said in the beginning, this trimester was a good operational trimester. The second trimester that we are going through. It has been showing us that it is very active in terms of leasing and sales of stores. And so, we have an expectation that is positive for the second trimester of this year. And a good part of the energy, Me and Hector, especially is now dedicated to conclude this transaction. And so in the next trimester, we will have more news.Thank you all very much, and have a great day.

[Operator]

The video conference of SYN has just ended. We thank all for your participation, and have a great day.[Statements in English on this transcript were spoken by an interpreter present on the live call.]